Mahindra and Mahindra Financial Services on Thursday announced its entry into the leasing and subscription business. “The new vertical would operate under the brand name Quiklyz,” it said in a statement.
Under the leasing and subscription model, consumers would pay a monthly fee to access the vehicle of their choice across all car brands, at a lower price point compared to regular car ownership.
“Corporate and businesses are also looking for alternate ways to have access to vehicles which can match their requirements without the burden of traditional ownership models,” the company noted in the statement.
Mahindra Finance and Mahindra Group ecosystems would give an edge to Quiklyz with the business utilising all common infrastructure of Mahindra Finance.
Making it convenient for consumers
Ramesh Iyer, Vice-Chairman and Managing Director, Mahindra Finance said, “With Quiklyz, we aim to make the process of ownership convenient for our consumers both for individual and corporate segments alike.”
The company expects that the changing millennial mind-set, asset light business models, car scrappage policy, rapid vehicle launches by automotive OEMs, emergence of EVs and sharply reducing average holding period of new cars will accelerate leasing and subscription.
“A very important set of consumers for our new business will be the millennials who aspire to not only owning a vehicle, but to do so in a hassle-free manner,” said Turra Mohammed, SVP and Head, Leasing and Subscription, Mahindra Finance, adding that for corporates as well, leasing is fast emerging as a viable option both for providing cars to their employees and obtaining vehicles for their business use.
Founded in 2014, Mumbai-based GOQii is mostly known for its health monitoring wearables. Now, wanting to become a full-service preventive healthcare company, the start-up found its “demonetisation” moment when the pandemic hit, precisely six years after it came into being, though the company’s products and extended platforms were way ahead of its times. GOQii integrated its wearable devices with insurance packages in 2017 followed by the launch of its remote exercising platform GOQii Play.
Vishal Gondal, founder and CEO, GOQii shares the roadmap for the start-up, his plans to become a customised insurance aggregator and why competition from Chinese wearables counterparts doesn’t bother him.
Although you started early, do you find the increasing competition from Chinese wearables companies and newer Indian brands has hindered your growth and valuation to some extent?
We are not competing with any of these Chinese hardware companies. I am going after a consumer who wants to be healthy and we want to be their long-term healthcare partner. We are a healthcare company and not a device company. One part of the business involves tracking high-quality health data which we get from the wearables. The second component is analysing this data and advicing the users through coaching and content on our app platform. And third, once the user becomes healthy and their health risk assessment rate improves, based on the clinical outcome, we are partnering with insurance companies to provide them insurance coverage. We also have a GOQii store where we provide users health food and a whole host of things, where one can buy these products within the app.
So, we track, advise and give rewards. Rewards are given through the e-commerce platform, insurance packages and better banking plans.
The app tracks sleep, steps taken, activity, meals, nutrition awareness, BMI, health risk assessment, and even blood group. It can be connected to medical devices like blood glucose-monitor, and fitbits. Based on this, a health score is given which is integrated with a Bajaj Health Insurance Card. The better the health score, the user gets a premium discount from Bajaj.
Alternatively, users can also look at GOQii cash score, which can be used to get discounts on buying products from our e-commerce. Then there is a GOQii arena, a place like social media where users share what they eat, their daily activities etc., which helps in getting the health score, and based on it the insurance discounts will be decided.
How did the pandemic play out for GOQii? What is your long-term goal for the start-up?
My long-term goal is to become India’s biggest insurance company. I don’t really have people would be having higher health risk. Wearables is just a means, the larger goal for me is to create a cohort of 100 million healthy people. I am promising to make my users live longer and healthier. Now, if the user wants this too, they, in turn, become the best customer for health insurances, life insurances, loans and to offer health products.
Last year we sold 2.5 lakh kilos of healthy food. Every month, I sell 5,000-7,000 bottles of ghee and honey. We have curated these healthy products.
In our app, we have options to check ECG, blood pressure, and blood oxygen levels. These are clinical data and help in deciding the health risk assessment score.
Like I said earlier, I am not competing with wearable devices. I want to be your insurance provider, lifestyle and healthcare products seller which makes the addressable market for GOQii much larger. Wearables in not the biggest revenue contributor for us, it is e-commerce. My business starts not when you buy the device but when you join and get onto our platform.
What is the stickiness level for the app?
One of the best things about our programme is that it is a paid programme; our average customer spends ₹4,000-5,000 per year on the programme, hence they are serious customers.
The way we are looking at health data is just the way you manage finances. Otherwise, there are always tools to analyse and monitor your financial position but not for health on a day-to-day basis. We have half a million app users at present, who are all paid users.
The State Bank of India (SBI) has announced that as part of its festive season offering it will be offering credit score linked home loans at 6.7%, irrespective of the loan amount. According to press release issued by SBI, earlier a borrower availing a loan greater than Rs 75 lakh, had to pay an interest rate of 7.15%; now with the introduction of the festive offers, a borrower can avail home loan for any amount at a rate as low as 6.7%.
“The offer results in a saving of 45 bps which translates to a huge interest saving of more than Rs. 8 lac, for a Rs. 75 lac loan with a 30 year tenure,” stated the press release.
Further, the rate of interest applicable for a non-salaried borrower was 15 bps higher than the interest rate applicable to a salaried borrower. SBI has said that it has removed this distinction between a salaried and a non-salaried borrower. “Now, there is no occupation-linked interest premium being charged to prospective home loan borrowers. This would lead to a further interest saving of 15 bps to non-salaried borrowers,” stated the bank.
The lender has also waived off the processing fees completely and will be offering attractive interest concession based on the credit score of the borrower.
“This time, we have made the offers more inclusive and the offers are available to all segments of borrowers irrespective of the loan amount and the profession of the borrower. The 6.70% home loan offer is also applicable to balance transfer cases. We believe zero processing fees and concessional interest rates in the festive season will make homeownership more affordable,” said C.S. Setty, Managing Director (Retail & Digital Banking), SBI.
BENGALURU: Shares of Vodafone Idea Ltd surged nearly 20% and banks with exposure to the telecom firm jumped on Thursday, a day after the Unino Cabinet approved a relief package for the troubled sector.
A four-year moratorium on airwaves payments due to the government and raising the tenure of airwaves held by firms were a part of the package, along with a change in the contentious definition of adjusted gross revenue (AGR) to exclude non-telecom income.
Analysts said that the measures could restore the idea of a three-player telecom market for the time being, but it does not provide a long-term solution.
“For long-term sustainability, Vodafone Idea will require not only capital infusion, but a sizeable tariff hike for 4G pre-paid customers. In the absence of this, the industry can slip towards a duopoly,” said Pranav Kshatriya, vice president of institutional equities at Edelweiss Securities.
Troubles for the telecom sector, which had already been disrupted by the entry of billionaire Mukesh Ambani’s Reliance Jio and forced some rivals out of the market, had been compounded with the huge dues to be paid to the government.
Vodafone Idea, a combination of the India unit of Britain’s Vodafone Group and domestic telecoms firm Idea Cellular, alone still owes the government about Rs 50,000 crore ($6.81 billion).
Shares of the company climbed 20% to their highest since June 29, while rival Bharti Airtel rose up to 1.4% before shedding early gains.
IDFC First Bank, Yes Bank and IndusInd Bank, which, as per Nomura, have exposures to Vodafone Idea at 3%, 2.4% and 1.7% of their loan books, respectively, climbed as much as between 5% and 13%. Analysts say the default risk has been largely taken out in the near medium term.
Indian Banks’ Association (IBA) will oversee Enhanced Access and Service Excellence (EASE) reforms in public sector banks along with “door step banking” services. Until now the work being done jointly by consultancy firm Boston Consultancy Group (BCG) and IBA, according to a report.
This year PSBs will focus on introducing and promoting new analytics-based offers to existing retail customers like pre-approved car loans, EMI offers on e-commerce purchases and also for existing MSME customers.
EASE focuses on six themes of customer responsiveness, responsible banking, credit offtake, PSBs as Udyami Mitra, deepening financial inclusion and digitalisation, and developing personnel for brand PSB.
It is part of the reforms agenda devised on the recommendations made at the PSB Manthan held in November, 2017 involving senior management of PSBs and representatives from government.
The overarching framework for the reforms agenda is “Responsive and Responsible PSBs”.
As per the proposed reform agenda, banks will leverage partnerships with third parties, including agritech firms and strive to automate processing and sanction of agricultural loans based on field visit, borrower interaction, and risk assessment in states with digitised land records.
Under the co-lending model with non-banking finance companies, banks will take 80 per cent exposure, while NBFCs will provide customer service and grievance redressal.
Indradhanush failure
The government’s earlier recapitalization programme Indradhanush had failed to meet desired objectives.
According to an earlier report by India Ratings, while the scheme envisaged to recapitalise banks based on their performance and its ability to support credit expansion, in reality the capital infused was largely consumed to tide over losses resulting from provisions required for non-performing assets (NPAs). The Indradhanush plan was announced in August 2015 to help turnaround public sector banks.
The credit rating agency had said that unless structural changes are implemented, the requirement for capital infusion is likely to continue even though the quantum required may be lower. This is because large part of the current stress in the balance sheets of PSBs has already been recognised and provided for.
Shimla: The Central Bureau of Investigation (CBI) has registered a case against a Delhi-based private company, which has its industrial unit in Himachal Pradesh, and others including its promoter & CMD; director/guarantor & two corporate guarantors; unknown public servant(s)/unknown others, for allegedly conspiring with each other to defraud banks, while causing a loss of around Rs 1,528.05 crore to the consortium of 16 banks led by Bank of India.
The consortium banks were – Bank of India, Union Bank of India, Andhra Bank, Punjab & Sind Bank, Indian Overseas Bank, State Bank of Hyderabad, Central Bank of India, Corporation Bank, HDFC Bank Limited, Oriental Bank of Commerce, Saraswat Co-operative Bank, State Bank of Patiala, UCO Bank, Allahabad Bank, Standard Chartered Bank & DBS.
The case has been registered against Indian Technomach Company Limited, its promoter & CMD Rakesh Kumar Sharma, director/guarantor Vinay Kumar Sharma, Gurupath Merchandise Limited (corporate guarantor), Kolkata, and Thunder Traders Limited (Corporate Guarantor), Kolkata, and unknown public servants/others.
CBI officials said searches were conducted on Wednesday at various premises, including at Kangra and Paonta Sahib in Sirmaur district, Himachal Pradesh.
It was alleged that the private company, engaged in manufacturing of ferrous and non-ferrous metal, obtained credit facilities/loans from the consortium of 16 nationalised/private banks from 2008 to 2013 with Bank of India as lead bank.
The accused had allegedly conspired with an intention to defraud the banks through said acts and diverted funds from the loan account, thus causing a loss of Rs 1528.05 crore to the said consortium of the banks.
The account was classified as NPA in the books of accounts of Bank of India with effect from March 31, 2014 due to overdue status of the account in line with IRAC guidelines. The account was red-flagged by Bank of India, as advised by RBI in May 2015 and was declared a fraud in February 2016.
According to the IBBI, of the 4,500 cases that have been admitted, only 14% of cases have been resolved, 38% are still ongoing and 63% have been closed. Experts say, there is a destruction of the value of assets due to delays.
When the Insolvency and Bankruptcy Code (IBC) came into force five years ago, it was hailed as a landmark reform. However, many questions have been raised due to the delay in the resolutions of companies.
The five-year old regime that follows a creditor-in-control model has side lined systems like SARFAESI, Lok Adalats and Debt Recovery Tribunals. Under IBC’s model, the promoter loses control over the management and debt is auctioned to other interested parties.
However, the supreme court fears that the IBC would also fail like its predecessor because of judicial delay.
“Judicial delay was one of the major reasons for the failure of the insolvency regime that was in effect prior to the IBC. We cannot let the present insolvency regime meet the same fate,” Justice DY Chandrachud observed in a 190-page judgment.
Litigations by promoters not wanting to let the company out of their hands is one of the major factors under judicial delay.
The Supreme Court on Monday had urged the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal to adhere to the the 330-day deadline for clearing pending resolution plans.
According to the Insolvency and Bankruptcy Board of India, of the 4,500 cases that have been admitted, only 14% of cases have been resolved, 38% are still ongoing and 63% have been closed. Of these, 75% ended up in liquidation, but were already sick or defunct, which made chances of recovery lower. Of the ongoing cases, 75% have already exceeded 270 days and took more than 400 days on average.
The IBC was passed as a law in June 2016, with Jayant Sinha as one of the main proponents of the regime. The IBC requires a corporate insolvency resolution process (CIRP) to be completed in 180 days, which can be extended by another 90 days to a maximum of 270 days.
Who is affected? Operational or financial creditors, the company undergoing the CIRP and its employees are among the parties affected due to the delay.
“The recent ruling of Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited and Anr highlighted difficulties experienced by parties by reason of a slow CIRP, which affects the subsequent implementation of the plan. These delays, if systemic and frequent, have an undeniable impact on the commercial assessment that the parties undertake during the course of the negotiation. Delay in CIRP increases non performing assets and destroys the value of assets,” said Ashok Paranjpe, managing partner at legal firm MDP & Partners.
What are the reasons for delay in resolutions?
According to Paranjpe, delays are due to three reasons. First, the NCLT taking considerable time in admitting CIRPs, second the late and unsolicited bids by resolution applicants after the original bidder becomes public upon passage of the deadline for submission of the resolution plan, and third due to the multiplicity of litigation and appellate process to the NCLAT and the Supreme Court.
“Such inordinate delays cause commercial uncertainty, degradation in the value of the Corporate Debtor and makes the insolvency process inefficient and expensive,” he said.
The COVID-19 pandemic has also played its role in causing delays in the IBC process. The recovery rate fell to 39.3% as of March 2021 from 46% as of March 2020. Of the total outstanding amount of Rs 1.32 lakh crore, only around Rs 25,944 crore was recovered in fiscal 2021, or a rate of 19.7%.
Why is timely resolution important?
The main of goal of IBC is a time bound insolvency resolution, value maximization of assets, promotion of entrepreneurship and availability of credit, Paranjpe points.
“The Ebix Singapore matter has effectively highlighted the importance of a faster resolution process, otherwise which would either result in a down-graded resolution amount of the corporate debtor or a delayed liquidation with depreciated three assets, which frustrates the core aim of the IBC,” he said.
Why are banks accepting steep haircuts? Recently, Jayant Sinha, chairperson of the standing committee on finance, informed the Parliament last month that there were steep haircuts, as high as 95%, and over 71% of the cases were pending for more than 180 days, indicating that there has been a deviation from the original objectives of the IBC.
“Slowing economic growth and inordinate delays in the completion of CIRP proceedings are the two biggest reasons forcing lenders to accept very steep haircuts,” Paranjpe said.
In terms of recovery value under IBC, mostly big companies, situation is unsatisfactory and there are several major cases in which corporates have suffered whopping haircuts of over 70% and in some cases, even 95% due to delay, he added.
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The process of setting up the bad bank, securing a guarantee from the government and finally getting the institution off the ground could take some time, bankers expect. In the meantime, they are trying to maximise recoveries in as many cases as possible.
Banks are continuing with their regular practice of putting up large stressed assets for sale to asset reconstruction companies (ARCs) and other investors even as the process for setting up the National Asset Reconstruction Company (NARCL) has been set in motion. The possibility of quicker and better-yielding resolutions in some assets is the reason behind this, according to bankers and other industry executives.
“We are exploring our options in cases where we think there is a possibility of achieving quicker resolution outside the NARCL. Also, many of the assets which are being canvassed separately for sale to ARCs are not part of the list of assets identified for transfer to the NARCL,” a senior executive with a mid-sized private bank said.
The process of setting up the bad bank, securing a guarantee from the government and finally getting the institution off the ground could take some time, bankers expect. In the meantime, they are trying to maximise recoveries in as many cases as possible.
KSK Mahanadi Power, Sathavahana Ispat, Srinagar Banihal Expressway, MSP Metallics, Sew Infrastructure and Coastal Energen are among the assets for which lenders are running the resolution process. There are also instances of one-time settlement deals as in the case of Jindal India Thermal Power.
Nirmal Gangwal, managing partner, Brescon & Allied Partners, said sales to ARCs and strategic investors are parallel processes and the NARCL process will be an additional one which will also come in handy. “The setting up of NARCL is an ongoing process. In the meantime, if the outlook for some sector suddenly turns positive or there is interest for an asset from an ARC or a strategic investor, bankers would like to explore whatever is good for them,” he said.
Pricing could be another reason why banks are choosing the auction route for resolution. An industry executive who spoke on condition of anonymity said that the pricing in case of transfers to NARCL will be quite low. “Banks may be getting 40-50% recovery in some of these sales, whereas in NARCL they just get 10 cents to a dollar and that too not in a full-cash deal,” the executive said.
Most deals between banks and ARCs nowadays are all-cash deals where the entire amount goes directly into the bank’s profit. “So, the NARCL is actually meant for cases where lenders are unable to find a resolution or where they feel there is a need for warehousing for some time,” the executive said.
Some cases understood to be under consideration for transfer to the NARCL list are already undergoing insolvency proceedings such as Amtek Auto, Castex Technologies, JP Infra, Videocon Oil Ventures and Lavasa Corporation.
NARCL has recently applied for a licence to the Reserve Bank of India (RBI) after raising Rs 149 crore as paid-up capital from its constituent banks. Lenders have identified 22 stressed accounts, worth around Rs 89,000 crore, to be transferred to NARCL in the first phase.
The much awaited ‘bad bank’ — National Asset Reconstruction Company Ltd — moved a step closer to going live with the Union Cabinet approving a crucial proposal that requires the government to guarantee the security receipts (SR) issued by NARCL, when buying NPAs from banks.
To begin with, the government may earmark ₹31,000 crore for the guarantees, sources said. This is a contingent liability as of now and unlikely to impact the fisc in the short-term, they added.
The Cabinet decision comes on the heels of NARCL getting incorporated in Mumbai last month and the Indian Banks Association (IBA) moving the Reserve Bank of India for a licence to set up ₹6,000-crore bad bank.
NARCL — sponsored primarily by Canara Bank (likely to take a 12 per cent equity stake) and have equity participation by other nationalised banks — will buy the bad loans from banks and issue SRs for up to 85 per cent and cash for the remaining, in line with standard industry practice.
Indian bankers in talks as court rulings threaten over $6 billion in loans
Already, PSBs have identified 22 stressed assets (consortium loans of over ₹500 crore) totalling ₹82,500 crore that will be transferred to the bad bank in phases. In the long run, stressed assets worth as much as ₹2-lakh crore are expected to be transferred to NARCL.
What is a bad bank?
A bad bank is basically an entity that houses the bad loans (non-performing assets) of banks and resolve or liquidate them to recover as much money as it can.
One of the big advantages of having an NARCL will be that it will avoid delays in decision making on recoveries as most lending had hitherto involved the consortium approach and required approval by multiple lenders before recovery could happen, said a former chief executive of a PSB.
Budget proposal
Finance Minister Nirmala Sitharaman had in this year’s Budget proposed the setting up of an ARC along with an Asset Management Company (to be called India Debt Management Company) to take over the stressed debt of banks. The AMC will be controlled by the private sector and would help turn around the stressed assets for eventual recovery. She had, however, not indicated that the government would guarantee the SR issued by NARCL.
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