Category: Banking & Finance

HDFC Bank | IndusInd | DCB: RBI allowing promoters to have 26% stake to benefit HDFC Bank, IndusInd & DCB: Siji Philip, BFSI News, ET BFSI

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“RBI has remained silent on the NBFCs getting converted into banks and also large corporates getting more into the banking game. We feel that the RBI is taking a more calibrated approach and looking at how NBFCs are getting attuned to larger scale regulations which were announced earlier,” says Siji Philip, Senior Research Analyst, Axis Securities.

The RBI’s new circular on bank ownership has come out allowing 26% stake to promoters. Already reports are coming in of the Hindujas looking at increasing their stake in IndusInd and a $1.1 billion financial chest for that sense being readied; HDFC Limited now has headroom when it comes to HDFC Bank. Bandhan Bank there could see action as well. Your view?.
Whatever steps were announced on Friday in terms of the promoter shareholding definitely is a positive because there was uncertainty and some expectations were building up. Raising the promoter stake from 15% to 26% would definitely be a positive, more specifically for banks like IndusInd where the promoters have earlier shared their intention of increasing their stake. In the case of HDFC Bank, HDFC Limited can increase its stake, Aga Khan promoters can raise their stake in DCB. So for these kinds of banks, it is definitely a positive step.

There are certain guidelines which have been announced and the recommendations are on track on gradual calibration with the entire financial industry. RBI has remained silent on the NBFCs getting converted into banks and also large corporates getting more into the banking game. We feel that the RBI is taking a more calibrated approach and looking at how NBFCs are getting attuned to larger scale regulations which were announced earlier.

RBI clearly is still reluctant on issuing bank licenses to large corporates. To add to that, payment banks are also allowed to convert into SFBs but only after a gap of almost five years. With large numbers of fintechs and SFBs now, is there a need to issue more licenses?
We feel that RBI has always been about granting banking licenses and if the payment banks get listed, definitely a watch period is required to see how things pan out, how the entire financial system gets attuned to the various new entities which are coming in with the likes of fintechs.

Just a three-year proposal, which was given in the earlier recommendation, would be considered a slightly shorter duration compared to a five-year duration where one can see the gradual working and how it plays out in the financial system. That would be one of the key reasons why the five-year period has been kept rather than switching to a three-year period.



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Omicron Covid variant: Policymakers, markets will shoot from the hip without data, says Uday Kotak

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With the Omicron variant scare gripping the world, people, markets, and policymakers worldwide will shoot from the hip in crisis management without data, Uday Kotak said on Monday.

“Omicron variant scare today, something else tomorrow. People, markets, and policymakers worldwide will shoot from the hip in crisis management without data. Welcome to the ‘never’ normal world we live in!” Kotak tweeted.

Kotak’s comment comes even as many countries have once again begun shutting down cross-border travel. Currency and stock markets around the world crashed on Friday as a knee-jerk reaction.

Meanwhile, WHO designated the variant B.1.1.529 a variant of concern, named Omicron, on the advice of WHO’s Technical Advisory Group on Virus Evolution (TAG-VE). This decision was based on the evidence presented to the TAG-VE that Omicron has several mutations that may have an impact on how it behaves, for example, on how easily it spreads or the severity of illness it causes.

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Paytm Payments Bank rolls out ‘Paytm Transit card’

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Paytm Payments Bank (PPBL) has rolled out a ‘Paytm Transit Card’, aiming to equip millions of Indians with one physical card for all their everyday needs — from travel in metro, railways, State-owned bus services, toll & parking charges to payments at offline merchant stores, online shopping and more.

The first phase of rollout is being launched in collaboration with Hyderabad Metro Rail, Ahmedabad Metro and the Delhi Airport Express Line.

The card linked to the Paytm Wallet can be used for all transactions of a user — from travel in metros, buses and trains, to pay toll and parking charges, payment at offline and online stores to withdrawal of cash from ATMs.

Users can top up the Paytm Wallet account to use the card and do not need to maintain any separate account. Satish Gupta, MD & CEO of Paytm Payments Bank said, “The launch of the Paytm Transit Card will enable millions of Indians with the power of one single card that takes care of all transportation as well as banking needs. This will drive financial inclusion and accessibility for all. We are glad to be a part of the NCMC initiative and will continue to work towards the digitisation of the transit ecosystem in the country while driving the adoption of smart mobility solutions.”

With this launch, users won’t have to worry about carrying multiple cards for different purposes and just use the Paytm Transit Card for all their payments.

The launch of the Transit Card is aligned with the firm’s initiatives to bring out products that make banking and transactions seamlessly operable for all Indians. ‘Paytm Transit Card’ would help promote National Common Mobility Card (NCMC) and the Digital India initiative further.

How it works

The physical card will be delivered at the doorstep of the user or can be purchased at designated sales points. The prepaid card is directly linked to the Paytm Wallet, where users can just top-up the wallet to use the transit card and do not need to create any separate account.

The Paytm Transit Card is already live in the Delhi Airport Express line and Ahmedabad Metro. With the Paytm Transit Card, people can use the same card in these metros as well as other metro stations across the country.

Paytm Transit Card is the firm’s second product in the mass transit category after the success of PPBL FASTags. .

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Bharat Financial top management resignations: Board defers relieving them till completion of review, says IndusInd Bank

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The top management of Bharat Financial Inclusion Ltd – Shalabh Saxena and Ashish Damani have resigned from their positions, but the board has decided to defer the consideration to relieve them until an ongoing review is completed, IndusInd Bank said on Monday.

A review of disbursal of nearly 84,000 loans without customer consent due to a technical glitch at BFIL is going on at the microfinance company.

“Shalabh Saxena and Ashish Damani, currently employed with BFIL in the capacity of the Managing Director and CEO and the Executive Director and CFO, respectively, have tendered their resignations pursuant to emails addressed to the Chairman of the Board of BFIL on November 25, 2021,” the private sector lender said in a stock exchange filing on Monday.

The announcement comes after Spandana Sphoorty (SSFL) had on November 22 announced the appointment of Saxena as its new Managing Director and CEO and Damani as the President and Chief Financial Officer.

BFIL is the wholly-owned microfinance subsidiary of IndusInd Bank.

Both of them have offered to assist in the ongoing review of transactions related to BFIL, for which the bank has appointed an international audit firm to conduct an independent review and ascertain the veracity of the anonymous complaints, the bank further said.

“The Board of BFIL has deferred consideration of the decision to relieve them until the completion of the ongoing review,” IndusInd Bank said.

The lender has nominated J Sridharan as Executive Director on the Board of BFIL and appointed Srinivas Bonam to oversee the day-to-day functioning of BFIL, it further said.

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PNB puts up National Steel & Agro Industries for sale to recover Rs 200cr dues, BFSI News, ET BFSI

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State-owned Punjab National Bank (PNB) has put up a Madhya Pradesh-based steel and agriculture company for sale to recover its outstanding of nearly Rs 200 crore. The National Steel and Agro Industries Ltd has a balance outstanding of Rs 199.90 crore to the bank.

“We intend to place the account for sale to ARCs/NBFCs/other banks/FIs, on the terms and conditions stipulated in the bank’s policy, in line with the regulatory guidelines,” PNB said in an auction notification.

The lender has set the reserve price (on cash basis) at Rs 95 crore for the sale process.

For the prospective bidder to expedite the process of due diligence exercise and for verification purposes of the buyer, the bank said it will make all possible efforts to bring copies of documents at one place.

However, the bank at its sole discretion may withdraw the account offered for sale, without assigning any reasons, it added.

PNB has set December 8 as the last date for completion of due diligence exercise. The last date of submission of binding bids is December 9, while the date for opening of bids is fixed as December 10, 2021. PTI KPM MR MR



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Depositors of 16 stressed cooperative banks to get up to Rs 5 lakh, BFSI News, ET BFSI

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New Delhi, Nov 28 (PTI) Customers of 16 stressed cooperative banks will get up to Rs 5 lakh deposit insurance cover on Monday by Reserve Bank of India’s subsidiary DICGC as part of its mandate under a new law. The Deposit Insurance and Credit Guarantee Corporation (DICGC) had earlier prepared a list of 21 banks but five, including Punjab & Maharashtra Co-Operative Bank (PMC Bank), are out of the list as they are either in merger process or out of the moratorium.

Parliament in August passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 ensuring that account holders get up to Rs 5 lakh within 90 days of the RBI imposing a moratorium on the banks.

Following enactment, the government has notified September 1, 2021 as the date on which the provisions of the Act would come into force. The mandated 90 days from the notified date comes to an end on November 29, 2021.

The depositors of these banks, who have not yet submitted their claims, are advised to contact the respective banks, a public notice from DICGC said.

“The claims should be supported by officially valid documents of identity and written consent to receive the amount lying in credit of their deposit account (willingness declaration) subject to a maximum of Rs 5 lakh along with alternate bank account details into which the said amount may be credited,” it said.

Depositors submitting valid documents, as mentioned above, will be paid by credit to the alternate bank account specified by depositors or on their consent, to their Aadhaar linked bank account, it said.

For the second phase, the last date for submission of documents is December 10, 2021 while date of payment is December 31, 2021, it added.

Besides PMC Bank, depositors of Hindu Co-Op Bank Ltd, Pathankot of Punjab, Rupee Co-Operative Bank Ltd and Needs Of Life Co-Operative Bank Ltd from Maharashtra and Bidar Mahila Urban Co-Op Bank Ltd of Karnataka are out of this.

It is to be noted that the RBI had in June given in-principle approval to a consortium of Centrum Financial Services and fintech startup BharatPe to acquire the stressed PMC Bank.

Clearing decks for the takeover, the RBI in October gave licence for small finance bank to the consortium. Recently, the DICGC said there may be a need to invoke the provisions of Section 18 A (7) (a) of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021.

As per the Section 18 A (7) (a) of the Act, if a stressed bank is under the resolution process, the period for disbursement of Rs 5 lakh can be further extended by 90 days.

Last year, the government increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020.

Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit. It was raised to 12 paise per Rs 100 in 2020. It cannot be more than 15 paise at any point in time per Rs 100 deposit.

It is to be noted that the enhanced deposit insurance cover of Rs 5 lakh is effective from February 4, 2020. The increase was done after a gap of 27 years as it has been static since 1993. PTI DP MKJ



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Axis Bank’s Thapar, BFSI News, ET BFSI

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Misconfiguration is one of the key risks to cyber attacks, said Rajesh Thapar, the chief information security officer of Axis Bank. Banks may bring in the best tool or technology but if it isn’t configured right, you are opening doors to cyber risks, he added.

Banks are facing an unprecedented surge in cyber attacks, and the nature of these attacks are constantly evolving the complex theft landscape.

While ransomware attacks, Denial of Service (DOS) attacks, phishing are common, with more digitalisation, the nature of such attacks is changing.

“Cyber risk is now becoming a business risk. Earlier cyber risk was a cyber risk from infrastructure perspective but today, with all the digitalisation happening, cyber risks are more becoming a business risk as it can impact a customer’s confidentiality which can lead to customer distrust. It can impact regulations, the company can be non compliant to some of the legislations and get penalties for it “, added Thapar.

Balancing customer experience alongwith security in an organisation is necessary yet complicated. Now, there is a huge pool of data, which needs to be protected and this data is the first target for hackers.

Manish Sinha, director sales engineering, India and SAARC at McAfee Enterprise, said “The risk is not just hackers attacking these data threads, the threat is them selling it away to third parties, which is more harmful to the organisation in all ways. Data leakage is a serious concern. To battle it what’s required is a unified approach for data protection in a holistic manner across the banking platforms.”

Misconfiguration a key risk to cyber attacks: Axis Bank's Thapar

Cyber attackers and hackers are being very sophisticated now in their attacks. The average dwell time of these hackers in the network, before being discovered, is increasing. More the dwell time, greater the damage, making time a very critical factor of the extent of cyber attacks.

“Security operation models are evolving. The identification and prevention of cyber threats and attacks were in a periodic cycle of assessments but now it will be in a continuous cycle of assessments. Attacks are happening all the time so organisations will need to carry out the continuous assessment model to beat cyber threats and attacks”, said Thapar.

Talking about the future model to control cyber attacks, Sinha said that the bigger challenge for the next generation cyber security teams is to prioritise the threats after identifying it. “This should come from alot of AI based engines or algorithms, which are running, and also from global threat intelligence, which can relate to the threat actors from the banking space globally, and finally look out to the regional advisories,” he said.



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Crypto Bill should look at capping foreign currency exposure, registering authorised dealers: IndiaTech

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Amidst several ongoing discussions on the draft cryptocurrency Bill, industry body IndiaTech on Friday said the Bill might seek to cap foreign currency exposure an investor can have annually while buying crypto assets.

The Bill is also expected to define and register authorised dealers or exchanges in a regulated manned.

 

Following the meeting of the RBI and cryptocurrency industry stakeholders earlier this month, IndiaTech had made several suggestions to the central bank, most of which have been kept confidential, apart from a white paper asking for stricter Know Your Customer (KYC) rules to be followed by the Indian crypto exchanges.

Also read: Cryptocurrency firms say no plan B as of now

Rameesh Kailasam, CEO, IndiaTech.Org, told BusinessLine: “The draft crypto Bill should ideally also cover aspects as to how much of foreign currency exposure one can have for buying crypto in an year.

“Also, what type of crypto, from whom you can buy and where such authorised dealer equivalents should be registered. Reporting mechanisms and authority for suspicious transaction reporting by exchanges would also be necessary.”

Also read: A sudden and complete ban on crypto trading unlikely: Experts

At present, the thriving crypto industry in India which already has two unicorns, has been self-regulating and operating in a grey area with nearly no rules to monitor them. This has left many retail investors clueless when there are platform crashes, loss of money and technical glitches during high volume of transactions.

Coupled with this, RBI’s regular warnings to the banks to avoid servicing cryptocurrency exchanges has only left the exchanges more troubled.

Meanwhile, RBI governor Shaktikanta Das has been reiterating his views on not allowing cryptocurrency in the country, calling it a major concern to macro-economic and financial stability of the country.

Changing bank accounts

Some of the retail investors, BusinessLine spoke to, said the exchanges even have to keep changing bank accounts at regular intervals to keep business running, about which they update them over emails.

An industry insider said: “Stability in this sector will only come through regulation. Sudden withdrawal of banks from providing services to the exchanges based on RBI’s notices and recommendations leave exchanges with no choice but to keep changing bank accounts to service the investors.”

Protecting smaller investors

The major focus of The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be to protect the interest of small-time investors with limited resources while improving the health of the overall ecosystem.

A few steps towards the same would be to have a centralised filtering mechanism for cryptocurrencies and allowing only a few that are reliable and eligible for the Indian market, IndiaTech recommended. The bill might even specify limits of exposure to cryptocurrencies in an investor’s portfolio mix.

“There needs to be a filtration mechanism formulated on what crypto assets, tokens etc. will be allowed to be traded in India. It is important that a mechanism should ideally be formulated on what kind of cryptocurrencies will be eligible for trade in India,” Kailasam said.

He said that out of over 10,000 cryptocurrencies, there are only 150-200 cryptos that are allowed to be traded at present, as Indian crypto exchanges already follow a similar filtration process.

Kailasam emphasised that investor education is fundamental and dos and don’ts for customers must be clearly brought out as this sector also requires huge amount of customer diligence.

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Cryptocurrency firms say no plan B as of now

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Most cryptocurrency companies in India are closely following developments around the proposed legislation on cyptocurrency but at present don’t have a plan B in case of a complete ban on trading.

“As an industry, we are in sync with the fact that INR is the only legal tender in India and crypto is an asset or utility which people buy and sell.

“If tabled in the Parliament, there will be discussions and deliberations around this bill. The process of crypto regulation is in the works, and we need to have faith in our lawmakers,” said Nischal Shetty, Founder, WazirX.

Regulation over prohibition

Gaurav Dahake, CEO and Co- founder, Bitbns, also expressed confidence that the government will embrace regulations instead of prohibitions.

“We are not putting in any efforts for any kind of alternate plans as we believe that all these speculations are initial hiccups before the whole cryptocurrency ecosystem gets regulated. Well-appraised regulations and a more defined framework will work better in favour of the economy than a ban,” he said.

Also see: 50,000 jobs at stake as govt brings laws to regulate cryptocurrencies

Experts said most cryptocurrency companies are incorporated overseas and will be able to continue operations abroad. However, a ban would lead to immediate losses and at least some would have to transfer operations abroad.

“Businesses in and around crypto assets may transfer their operations offshore but an immediate ban would definitely lead to some losses,” said Rashmi Deshpande, Partner, Khaitan & Co.

Blockchain: Part of Web 3.0

Many cryptocurrency companies also work on blockchain technology apart from trading.

“CrossTower is more than just a crypto platform. Crypto is a part of blockchain and blockchain is part of Web 3.0. We are focused on blockchain technology and innovation around Web 3.0, the next revolution in internet technology,” said Vikas Ahuja, CEO of CrossTower India.

Based in the US, CrossTower has users in the US, India, and other over 70 countries.

“When the Indian government is talking about banning certain cryptocurrencies, that doesn’t necessarily mean they’re banning this giant game of blockchain or interrupting the next level of innovation on digitising the trading world for the country.

“We believe they are trying to make it safe for consumers by providing safeguards, which is the best thing for crypto trading in India to grow smartly,” Ahuja said.

RBI’s digital currency

According to industry sources, many of these cryptocurrency companies had moved overseas after the 2018 restriction by the Reserve Bank of India.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, has been listed as part of the Government Legislative and Financial Business that will be taken up at the Winter Session of Parliament.

Also see: A sudden and complete ban on crypto trading unlikely: Experts

The Bill seeks to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.

The Bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

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Indusind Bank’s Hindujas welcome RBI move to up promoter holding to 26%, BFSI News, ET BFSI

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The Hindujas, who had earlier applied to RBI seeking to increase their holding in Indusind Bank, on Saturday welcomed the RBI move to allow promoter holding of up to 26 % in private sector lenders. IIHL Mauritius, the Hindujas’ entity which is the promoter of IndusInd Bank, had applied to RBI to increase its holding to 26 % from the previous cap of 15 %, seeking parity after promoters of rival Kotak Mahindra Bank were given the permission to have their holding at 26 % after dragging the RBI to courts.

“We believe this measure of increased promoter holding will be of benefit to all stakeholders: the regulator, the banking institution and its clients, particularly at this time when Indian economy is poised for exponential growth,” Ashok Hinduja, the chairman of IIHL, said.

The RBI on Friday came out with revised guidelines on private sector banks, allowing for 26 % promoter ownership but did not go ahead with an internal working group’s recommendation to allow corporates to promote banks after protests from various quarters including former governors.

Hinduja said IIHL now awaits operational guidelines as it gives the promoters an opportunity to inject capital to increase stake up to 26 %.

The increased promoter holding will lead to enhanced financial strength of the bank and its clients will be protected, he added.



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