Category: Banking & Finance

RBI develops escalation matrix for redressal of complaints of SGB investors

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The Reserve Bank of India (RBI) has drawn up an escalation matrix for redressal of customer complaints of investors of Sovereign Gold Bond (SGB).

The central bank said nodal officer/s of the Receiving Office (RO), which include public sector banks and some private sector banks, will be the first point of contact for attending to the queries/complaints of their customers.

In case the issue is unresolved, an escalation matrix at the ROs will be used to resolve customer grievance.

“The investor may approach Reserve Bank of India at sgb@rbi.org.in if no reply is received from the RO within a period of one month of lodging the complaint or the investor is not satisfied with the response of the RO,” RBI said in a statement.

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold.

Investors have to pay the issue price in cash and the bonds are redeemed in cash on maturity. The bond is issued by RBI on behalf of the Union government.

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RBI streamlines process for redressal of complaints related to Sovereign Gold Bond, BFSI News, ET BFSI

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Mumbai: The Reserve Bank on Thursday said it has streamlined the process for redressal of investors complaints related to Sovereign Gold Bond to make it more effective. The sovereign gold bond scheme was launched in November 2015 to reduce the demand for physical gold and shift a part of the domestic savings — used for the purchase of gold — into financial savings.

To streamline the customer complaint handling process and make it more effective, the RBI said the nodal officer of the Receiving Office (RO) will be the first point of contact for attending to the queries/ complaints of their customers.

Receiving Offices refer to banks, Stock Holding Corporation of India Limited (SCHIL), designated Post Offices, and recognised stock exchanges (NSE and BSE).

In case the issue is unresolved, an escalation matrix at the ROs will be used to resolve customer grievance, the Reserve Bank said.

“The investor may approach Reserve Bank of India at sgb@rbi.org.in if no reply is received from the RO within a period of one month of lodging the complaint or the investor is not satisfied with the response of the RO,” the central bank said.

The price of the bond is fixed in Indian Rupees based on a simple average closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period.

Sovereign Gold Bond is denominated in multiples of gram (s) of gold with a basic unit of 1 gram. The tenor of the bond will be for eight years with an exit option after the 5th year to be exercised on the next interest payment dates.

The minimum permissible investment is 01 gram of gold. The maximum limit of subscription is 4 KG for individuals, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March).



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Time taken to admit a case to NCLT needs to come down, says RBI Governor

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Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said there is scope for improvement in the Insolvency and Bankruptcy Code (IBC) so that the time taken to admit a case to the National Company Law Tribunal (NCLT) is reduced.

In this regard, there is perhaps need for certain legislative amendments also, Das said in an interaction with Financial Times – Indian Express.

The RBI has made some suggestions to the government on the same.

“For example, it takes a lot of time to admit a case to the NCLT. So, can we deal with this issue through some legal amendments…. So, there is scope for some improvement. And the time taken in the whole process needs to be reduced by simplifying certain procedures,” the Governor said.

Average recovery and haircut

On lenders taking almost 90 per cent haircut in some of the IBC resolutions, Das observed that while the percentage of recovery is an important factor, the primary objective of the Code is resolution of bad assets — wherever possible to resolve the business so that the company/ business continues its operations and the economic value which the business creates continues unabated.

The Governor emphasised that the intention is that if a business or a company continues, economic activity continues and jobs also remain protected.

“The average recovery under the IBC was about 45 per cent for the previous four-five years. It came down to 40 per cent, taking into account the pandemic year.

“Now, yes, in some cases the haircut has been 90 per cent but there are cases where the haircut has been much less,” Das said.

NPAs quiet manageable

The Governor underscored that according to the numbers that RBI has, currently, the non-performing asset (NPA) numbers of lenders look quiet manageable.

“For example, at the end of June 2021, for the banking sector, the Gross NPA was about 7.5 per cent (of gross advances) and for the NBFC sector, it was a little less than that.

“.…At the moment, the situation on the stressed assets front, looks well within manageable limits,” Das said.

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UCO Bank out of PCA, will RBI blink in case of IOB, Central Bank?, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) has removed UCO Bank from its Prompt Corrective Action Framework (PCAF) but the fate of Central Bank and Indian Overseas Bank hangs in balance.

The central bank lifted the PCA on Uco Bank following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital.

However, RBI had reservations over the capital adequacy levels of the banks under PCA.

Interestingly, Indian Overseas Bank and Central Bank were reported to be among the four banks shortlisted by the government for privatisation.

The RBI objection

In FY21, the government infused Rs 20,000 crore in ve banks through the instruments. Central Bank of India was the biggest beneficiary with Rs 4,800 crore, followed by Indian Overseas (Rs 4,100 crore), UCO Bank (Rs 2,600 crore).

However, the RBI had raised questions over the government’s bank capital infusion programme through non-interest-bearing bonds, according to a report.

The RBI reasoned that capital infusion through bonds cannot be taken at face value and, therefore, these banks may still be short of regulatory capital, they said. In such a situation, they will continue under the PCA framework. Under the PCA regime, business restraints are imposed on struggling banks until they regain health.

The government went ahead despite RBI’s initial reservations and now the regulator had expressed serious concerns. The entire fund infusion through such bonds will then not count toward regulatory capital.

RBI is not inclined to pull these lenders out of the PCA framework based on such capital infusion and may further direct lenders to recalculate their capital adequacy ratio based on the actual value of the bonds.

The PCA status

Indian Overseas Bank, Central Bank have reported net non-performing assets (NPAs) below levels that trigger PCA. However, on the proforma net NPA front, Central Bank falls short as its NNPA is 6.58% against the 6% required to be out of PCA.

Even after PCA exit, these banks may still be under RBI watch. In the case of IDBI Bank, which has committed to comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis, RBI has said the lender would be under continuous monitoring. “It has been decided that IDBI Bank be taken out of PCA framework, subject to certain conditions and continuous monitoring,” RBI had said.

Privatisation bid

Four banks on the privatisation shortlist included Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India.

Two public sector banks and one general insurance company are expected to be disinvested this year in addition to the divestment of IDBI Bank, Finance Minister Nirmala Sitharaman had announced during the Union Budget presentation.

Bringing the banks out of PCA could boost their valuations in the event of privatisation.



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Penalty for missing ITR filing deadline has been cut to half, BFSI News, ET BFSI

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For the financial year 2020-21, the deadline to file income tax return (ITR) is December 31, 2021, (it was extended twice – first from the usual deadline of July 31, 2021, to September 30, 2021, and then to December 31, 2021) due to the pandemic. Till last year, if a taxpayer missed the ITR filing deadline, the maximum penalty he/she would have had to pay was Rs 10, 000.

However, with effect from FY 2020-21, the penalty amount has been reduced by half, i.e., a person filing belated ITR will have to pay a penalty of up to Rs 5,000. Further, if your income is below the taxable limit then you won’t even have to pay the penalty amount if you file your ITR after the deadline subject to certain exceptions. Here is why the penalty this year is half that of last year.

The penalty you will have to pay
In Budget 2021, the government reduced the maximum time allowed to an individual (whose accounts are not required to be audited) for filing ITR by three months. Due to a reduction in the time limit of filing ITR, a consequential amendment was made in Section 234F of the Income-tax Act, 1961 under which the penal amount for filing belated ITR was reduced to a maximum of Rs 5,000 from Rs 10,000 earlier.

Earlier, an individual was allowed time till the end of the financial year, i.e., March 31 to file belated ITR by paying a maximum penalty of up to Rs 10,000.

From this year onwards, the deadline for filing belated ITR is December 31. Accordingly, for FY2020-21 the deadline for filing belated ITR was December 31, 2021, but has been extended twice – first to January 31, 2022, and then to March 31, 2022, due to covid-19. As mentioned above, an individual filing belated ITR by the deadline of March 31, 2022 will now have to pay maximum penalty of Rs 5,000.

Abhishek Soni, CEO, Tax2Win.in, an ITR filing website says, “The last date of filing belated return for FY 2020-21 was December 31, 2021 (originally) which was extended till January 31, 2022 and which is again extended by two months. Now the last date of filing belated ITR is March 31, 2022. This needs to be noted that the deadline for filing the belated return has been extended but late filing fees will be Rs. 5000/- only rather than Rs. 10,000 if you file belated ITR between January 1, 2022 and March 31, 2022.”

Up until last year, there was two-tier penalty structure for missing the ITR filing deadline. If the belated ITR was filed after the expiry of the deadline and on or before December 31, then the individual was required to pay a late filing fee of Rs 5,000. If the ITR was filed between January 1 and March 31, then a late filing fee of Rs 10,000 was levied.

Kapil Rana, Founder & Chairman, HostBook, a fintech startup offering ITR filing services, says, “As per section 234F, till FY 2019-20, if the taxpayer failed to file ITR on or before the due date, then he/she was liable to pay a fee of Rs 5,000 if the tax return was furnished on or before 31st December of the relevant assessment year, otherwise, it will be Rs 10,000 if tax return is furnished after 31st December but from FY 2020-21, the law has been changed. The maximum late filing fees of Rs. 5000 shall be payable if, return is submitted after the expiry of the due date.”

However, there is no change in the penal amount levied on small taxpayers who miss the ITR filing deadline. If you are a small taxpayer whose total income does not exceed Rs 5 lakh during an FY, then the maximum fees you are liable to pay is Rs 1,000 if the ITR is filed any time after the expiry of the deadline (i.e., December 31, 2021) but before March 31, 2022.



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Freezing bank accounts could affect right to life, says Karnataka high court, BFSI News, ET BFSI

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BENGALURU: Freezing of bank accounts will affect the right to life under Article 21 of the Constitution, the high court has said.

Justice Mohammed Nawaz made this observation while allowing a petition filed by Narayana Yadav, a New Delhi-based businessman, and directed CEN police station at Yadgir to intimate banks to defreeze his accounts. The defreezing is subject to the businessman abiding by his commitment to give a bank guarantee for a sum of Rs 3.7 lakh, the court said. Yadav had challenged the June 22, 2020 notice issued by police, directing the manager of Axis Bank to freeze his account and linked account numbers, four in all.

The action was based on a complaint from Ludra Mary, a resident of Shahpur in Yadgir, who alleged that she received an email on May 27, 2020 stating that she had won Rs 48.5 lakh lottery. To get hold of the same, she had to log in to a website. She entered the password and the user name provided and filled up the information requested. In response, she was asked to deposit an amount to the account numbers provided. Until June 10, 2020, a total of Rs 3.7 lakh was deposited in those accounts, but Ludra did not get the money. Ludra approached police, who ordered the freezing of Yadav’s account on the ground that his Axis Bank account had received Rs 99,999 from her.

Yadav claimed he is not involved in the alleged crime and was surprised by the intimation about freezing of his accounts. He said he’s running electronics stores in Delhi and proceeds of his business were transferred to the company account that was maintained at Axis Bank, Dwarka Branch, Delhi, and all transactions are legitimate.

Police defended the action, saying it was necessary to freeze the accounts for probe and also to avoid the petitioner transacting further.



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CLSA, BFSI News, ET BFSI

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Mumbai: The sale of Citibank’s India retail business is a good opportunity for existing banks to strengthen their affluent customer bases, said CLSA.

IndusInd Bank has the size and valuation constraints to acquire such an asset, while for HDFC Bank it is not a game-changer in terms of size but it is still a good asset, the brokerage said.

Citibank’s India retail business is up for sale as part of a global restructuring. On the block is the $3.5 billion retail asset book with a 4-6% market share of card or spending, sizeable home loan book and an affluent deposit base.

Reports suggest five banks including HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank and DBS Bank have been shortlisted.

The brokerage said the size of Citi’s business is too large for IndusInd Bank and its valuation does not favour deal-making.

Valuations would be a constraint for Axis Bank as well although it would be a favourable acquisition.

Citi’s affluent retail business fits well with DBS Bank India’s premium offerings and banking relationships, said CLSA.

For HDFC Bank, the retail book size of Citibank is not a game-changer but for Kotak Mahindra Bank, the business adds 20% to its current retail book and increases its card segment by three times, said CLSA. It is also complementary to its affluent customer base and Kotak’s premium valuation will aid it in a purchase, said CLSA.



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RBI Guv, BFSI News, ET BFSI

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MUMBAI: The Reserve Bank of India’s Governor Shaktikanta Das today said that the central bank would like to see credible answers on what would be the contribution of private cryptocurrencies to the Indian economy.

Das, who was speaking at the Indian Express-Financial Times event, reiterated that the central bank has “serious” and “major” concerns about cryptocurrencies and their impact on the financial stability in the country.

The Indian government is currently in the process of formulating a cryptocurrency bill that may seek to outlaw all private cryptocurrency, while laying down the path for the introduction of central bank digital currency in India.

India has emerged as one of the biggest hubs for cryptocurrency adoption in the world with some pegging the total value of cryptocurrency owned by Indians at over $6.5 billion as of May 2021. The ownership of crypto assets in India has ballooned 400 per cent over the past 17 months.

According to a survey by Finder, almost 30 per cent of the respondents in India said that they owned private cryptocurrencies in their investment portfolio making it the third-highest among Asian countries.

The surge in demand for cryptocurrencies has led to an explosion in cryptocurrency exchanges in the country backed by investments from marquee global private equity and crypto investors such as Tiger Global, Binance and others.

Recent media reports have suggested that the government may look at designating cryptocurrency as a commodity, which will allow them to function as an asset class like equity, bonds and gold. However, the government has yet to finalise the bill, which is awaiting the approval of the Cabinet and the Parliament.

In the past, Finance Minister Nirmala Sitharaman has suggested that the government is open to taking a calibrated approach towards cryptocurrencies after facing backlash from the crypto industry, which has since gone on a massive public relations drive to spread awareness on the asset.



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Kotak Mahindra Bank to offer home loans at 6.5% through festive season

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While the special rate will be available across all loan amounts, a borrower will need to have a minimum credit score of 800 to be offered a loan at 6.5%.

Kotak Mahindra Bank on Thursday announced that it has reduced its lowest home loan interest rate by 15 basis points (bps) to 6.5% per annum. The special rate will be available under a limited-period festive offer beginning September 10 and ending on November 8.

While the special rate will be available across all loan amounts, a borrower will need to have a minimum credit score of 800 to be offered a loan at 6.5%. State Bank of India’s (SBI) home loans start at 6.7%, while both Housing Development Finance Corporation (HDFC) and ICICI Bank price their cheapest home loans at 6.75%.

Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank, said that at 6.5%, the lender’s pricing will be significantly more attractive than that of some of its competitors. “This is a long-term play for us and while the 6.5% rate is specifically applicable to the festive period, let me assure all consumers that we will continue to be extremely competitive on pricing, when it comes to home loans even after this period,” he said.

Kotak Mahindra Bank has been growing in the home loans segment quite aggressively and it has been a high-growth segment for the lender over the last one year, Chandna added. “We believe there is an opportunity to grow. The strategy is aided by the fact that there is liquidity, interest rates are down and gives us a cushion,” he said.

The lender has 25-26% of its lending book in mortgages. The home loan book has been one of the best-performing books for the bank and apart from some minor shifts resulting from the pandemic, on a relative basis the book has done well, according to Chandna. Kotak Mahindra Bank’s rates have helped it to attract better-quality customers as home loan borrowers are very price-sensitive, he said.

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ICICI Lombard ceases to be a subsidiary of ICICI Bank

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ICICI Lombard General Insurance has ceased to be a subsidiary of ICICI Bank.

“With the bank’s shareholding reducing from 51.86-48.08 per cent, ICICI Lombard has ceased to be a subsidiary of the bank,” ICICI Bank said in a stock exchange filing on Thursday.

This follows the allotment of equity shares of ICICI Lombard to the eligible shareholders of Bharti AXA General Insurance after the scheme of arrangement amongst Bharti AXA and ICICI Lombard and their respective shareholders and creditors.

ICICI Lombard had on September 8 informed the stock exchanges that its board has allotted 3.57 crore equity shares to shareholders of Bharti AXA.

The IRDAI Insurance Regulatory and Development Authority of India had on September 3 given its final approval for the acquisition of the non-life insurance business of Bharti AXA General Insurance by ICICI Lombard General Insurance. The transaction had been originally announced on August 21, 2020.

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