Category: Banking & Finance

Rana Kapoor’s wife, daughter get interim relief, BFSI News, ET BFSI

Banking & Finance

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A special Central Bureau of Investigation (CBI) court Saturday granted interim bail to the wife and daughter of promoter of Yes Bank Ltd (YBL), Rana Kapoor who is jailed in the alleged fraud caused to the private bank.

While the CBI is probing him on corruption charges, the Enforcement Directorate (ED) is investigating him in multiple cases of alleged money laundering.

In August, this year, CBI filed its supplementary chargesheet against Kapoor, his family members and four former junior employees of the bank in connection with the corruption case registered with the CBI pertaining to the loans given to DHFL.. The accused were summoned and the hearing in the said matter was scheduled for today.

Advocate Vijay Aggarwal and Advocate Rinku Garg, filed a bulky regular bail applications for Bindu Kapoor and Radha Kapoor, running into around 250 pages. The prosecution sought time to reply to the plea. The court has adjourned the matter to September 8.

Advocate Aggarwal argued before the court that his clients were charge-sheeted by the CBI without arrest and that in view of the latest judgment passed by the Supreme Court of India just two days back in Aman Preet Singh v/s CBI, his clients deserved to be granted bail.

He further argued that the court had already exercised the discretion of issuing summons to his clients, which clearly shows no need for the arrest of his clients. He contended that his clients were granted regular bail in December, 2020 by a special PMLA court in the said matter, “…which clearly shows that there were no chances of his clients absconding or tampering with evidence. Bindu Kapoor is a housewife and that Radha Kapoor Khanna had two young children so his clients shall be duly available to attend the trial”.

CBI’s counsel stated that the bail applications filed were bulky in nature and sought time to reply to it.

The court, after granting interim bail to Bindu Kapoor and Radha Kapoor Khanna, has kept the matter for reply by September 8.

According to the CBI’s first chargesheet filed last year, in June 2018, Kapoor, then the head of Yes Bank’s management credit committee, sanctioned a loan of Rs 750 crore on an application by the DHFL promoters in the name of Belief Realtors Pvt Ltd. for development of a Bandra Reclamation Project. This amount was advanced to RKW Developers, a company controlled by Dheeraj Wadhwan although the bank’s risk management team had pointed out multiple and serious issues in the proposal.

The agency’s probe revealed that the loan of Rs 750 crore was not utilised for the stated purpose.

Simultaneously, Kapil Wadhawan is said to have paid a kickback of Rs 600 crore to Kapoor and his family members in the garb of a builder loan from DHFL to DOIT Urban Ventures (India) Private Ltd. (DUVPL). Roshini Kapoor is one of the directors of DUVPL.

After deducting a processing fee, an amount of Rs 632 crore was transferred to RKW Developers. This amount was then routed to other entities controlled by the Wadhawans – KYTA Advisors and RIP Developers – to settle a loan obtained from DHFL for the same Bandra Reclamation Project in November 2015.



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UCO Bank partners with Fisdom to offer wealth management solutions

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This partnership aims at augmenting the bank’s customer value proposition by making high-quality wealth management services accessible, affordable and truly digital.

Public Sector lender UCO Bank has partnered with Finwizard Technology, which runs Fisdom, to offer wealth management products and services, beginning with mutual funds, through the bank’s mBanking — Plus App — to its thirty million customers. This partnership aims at augmenting the bank’s customer value proposition by making high-quality wealth management services accessible, affordable and truly digital.

The collaboration between Fisdom and Uco Bank will focus on enabling large-scale facilitation and distribution of all mutual fund schemes through the bank’s network of over 3,000 branches and all digital platforms, the Kolkata-based lender said.

On the occasion, Atul Kumar Goel, MD & CEO, Uco Bank, said, “Our aim has always been to continuously create greater values for our customers. With these new tie-ups we would now be offering a much wider range of wealth products. We intend to deliver greater value through customer beneficial offerings both in terms of ease of convenience, and their features.”

Subramanya SV, co-founder and CEO, Fisdom, said, “We are delighted to partner with Uco Bank and enhance wealth management experience for its customers. The evolved acceptance of the wealth products has created a systemic change among the customers to adapt the service and products we have to offer.”

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NCLAT issues notice over PNB’s plea against Jet Airways resolution plan, BFSI News, ET BFSI

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NEW DELHI: Public sector lender Punjab National Bank (PNB) has moved the Insolvency appellate tribunal NCLAT against the approval of bids for defunct airline Jet Airways.

The National Company Law Appellate Tribunal (NCLAT) bench has issued a notice over the PNB’s petition along with its interim plea seeking a stay over the execution of the resolution plan.

A three-member bench has directed the Resolution Professional of Jet Airways along with other parties including the Committee of Creditors to file a reply within two weeks and rejoinder, if by PNB, within one week.

“Let the matter be fixed ‘for admission (after notice)’ on September 21, 2021,” said the NCLAT.

PNB has challenged the approval of the Resolution Plan by Kalrock-Jalan Consortium on June 22, 2021, by the Mumbai bench of the National Company Law Tribunal (NCLT).

The bank is aggrieved by the reduction in its claim amount by around Rs 202 crore by the Resolution Professional, which according to it is in complete violation of the processes as enumerated under the Insolvency & Bankruptcy Code (IBC).

Earlier, Jet Airways Cabin Crew Association along with trade union Bhartiya Kamgar Sena had moved the NCLAT against the approval of bids for the defunct airline.

In their petition, the association and the trade union had submitted that dues of all workmen of Jet Airways were not included as CIRP cost and pending dues were rejected.

Financial distress forced Jet Airways, which flew for more than two decades, to suspend operations on April 17, 2019 and a consortium of lenders, led by the State Bank of India (SBI), filed an insolvency petition in June 2019, to recover outstanding dues worth over Rs 8,000 crore.

In October 2020, the airline’s Committee of Creditors (CoC) approved the resolution plan submitted by the consortium of the UK’s Kalrock Capital and the UAE-based entrepreneur Murari Lal Jalan.

Jet Airways has been undergoing a resolution process under the Insolvency and Bankruptcy Code (IBC) for two years, and its affairs are being managed by a resolution professional.

Shares of the airline have lost more than half of their value since it suspended operations in April 2019.

The carrier started off as an air taxi operator on May 5, 1993, with a fleet of four leased Boeing 737-300 aircraft. It became a scheduled carrier in 1995, and operated its first international flight from Chennai to Colombo in March 2004.



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NCLAT issues notice over PNB’s plea against Jet Airways resolution plan, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Public sector lender Punjab National Bank (PNB) has moved the Insolvency appellate tribunal NCLAT against the approval of bids for defunct airline Jet Airways.

The National Company Law Appellate Tribunal (NCLAT) bench has issued a notice over the PNB’s petition along with its interim plea seeking a stay over the execution of the resolution plan.

A three-member bench has directed the Resolution Professional of Jet Airways along with other parties including the Committee of Creditors to file a reply within two weeks and rejoinder, if by PNB, within one week.

“Let the matter be fixed ‘for admission (after notice)’ on September 21, 2021,” said the NCLAT.

PNB has challenged the approval of the Resolution Plan by Kalrock-Jalan Consortium on June 22, 2021, by the Mumbai bench of the National Company Law Tribunal (NCLT).

The bank is aggrieved by the reduction in its claim amount by around Rs 202 crore by the Resolution Professional, which according to it is in complete violation of the processes as enumerated under the Insolvency & Bankruptcy Code (IBC).

Earlier, Jet Airways Cabin Crew Association along with trade union Bhartiya Kamgar Sena had moved the NCLAT against the approval of bids for the defunct airline.

In their petition, the association and the trade union had submitted that dues of all workmen of Jet Airways were not included as CIRP cost and pending dues were rejected.

Financial distress forced Jet Airways, which flew for more than two decades, to suspend operations on April 17, 2019 and a consortium of lenders, led by the State Bank of India (SBI), filed an insolvency petition in June 2019, to recover outstanding dues worth over Rs 8,000 crore.

In October 2020, the airline’s Committee of Creditors (CoC) approved the resolution plan submitted by the consortium of the UK’s Kalrock Capital and the UAE-based entrepreneur Murari Lal Jalan.

Jet Airways has been undergoing a resolution process under the Insolvency and Bankruptcy Code (IBC) for two years, and its affairs are being managed by a resolution professional.

Shares of the airline have lost more than half of their value since it suspended operations in April 2019.

The carrier started off as an air taxi operator on May 5, 1993, with a fleet of four leased Boeing 737-300 aircraft. It became a scheduled carrier in 1995, and operated its first international flight from Chennai to Colombo in March 2004.



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Still a long way to become a Super App: PhonePe co-founder

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As the race to become a super app heats up in the India, PhonePe co-founder and CTO Rahul Chari said that the company still has a long way ahead in building such as platform.

Given the multiple offerings and partnerships, PhonePe is often counted as a potential super app for Indian consumers. Super app is defined as an app that has at least two high frequency use-cases or functions.

“I think send (sending money) and spend (merchant transactions) is where we believe that we have made our mark, and we still have a long way to go when it comes to financial services, so we are still a way off,” Chari told BusinessLine.

Build trust

Adding to that, Karthik Raghupathy, Head of Strategy and Investor Relations at PhonePe, noted that the company is feeling good about their journey as consumers are trusting them with send and spend related services.

“We need to build trust to enter financial services. Banks have historically had that trust because people have placed their earnings with them. We are gaining that trust on the back of payments. Now as we move into the financial services space, we are seeing good proof points that we can get there but like Rahul (Chari) said, there’s still a long journey ahead of us,” he said.

Consolidated service

PhonePe has expanded into a majority of verticals encompassing all things money. Users can today send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold, insurance and make investments. PhonePe also launched its Switch platform in 2018, enabling users to place orders on 600 apps directly from within the PhonePe mobile app. PhonePe claims to be accessible at 20 million merchant outlets across 12,000 towns and 4,000 taluks nationally.

The most frequent use-cases on the app are digital money transfers, bill payments or recharge, and offline transactions at stores. The executives claim that once a new user has done two or more of these three use-cases, they tend to stay with PhonePe and repeat transactions happen in almost 100 per cent cases.

Also see: Proposed e-commerce rules could dampen super app plans of many Indian players

Chari added that PhonePe is focused on building a service where everything about money is easily available to the users on a single platform that they trust and engage with. And the experiences around daily and high frequency use cases are about transactions that are completed in the fastest possible manner.

PhonePe recently got its insurance broking license and an in-principle approval to operate as an account aggregator. Going forward, PhonePe will be focusing more on the financial services space and collaborating more with the BFSI sector across insurance, investments, and lending.

While the company did not comment on the profitability and IPO timelines. Chari noted that the company is quite efficient in growing its user base and has stopped doing cash backs to inspire repeat customer behaviours.

Interactive website

Further, PhonePe has launched an interactive website showing data, insights, and trends on digital payments done through its app — called PhonePe Pulse. PhonePe claims to have a 45 per cent market share in digital payments, and a 300 million user base.

The company sees this as a way to give back to the ecosystem and hopes that government, policy makers, regulatory bodies, media, industry analysts, merchant partners, start-ups, academic institutions and students will benefit with this data.

“It’s not all necessarily just noble and altruistic. If any of these collaborations happen, I’m sure there will be people who would want to strike a partnership with PhonePe. There will be new companies that emerge, they can actually then collaborate much more deeply with us, so we will actually benefit both as a business and a product, along with the larger goal of saying we are enabling multiple businesses,” said Chari.

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Half the payroll in Q1 was new jobs: SBI’s Ecowrap

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The ratio of first jobs/new payroll to total payroll in the first quarter of FY22 indicates that one out of two jobs was a new addition, according to State Bank of India’s economic research report Ecowrap.

The report emphasised that this indicates that labour market disruptions were much lower during the second wave of the Covid-19 pandemic.

This addition in jobs comes in the backdrop of the GDP growth print coming in at 20.3 per cent in the April-June quarter against a contraction of 24.4 per cent in the year-ago period. The latest data released by the Employees’ Provident Fund Organisation (EPFO) indicates that net new EPF subscribers during April-June 2021 were 28.9 lakh, which was quite encouraging given that this period was marred by the devastating second wave, it added.

Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said: “As per our calculation, the total payroll was 28.9 lakhs for Q1FY22, of which 14.5 lakhs were first job /new payroll.

“If the payrolls increase at this rate then the new payroll may cross the 50-lakh mark in FY22 as against 44 lakhs in FY21.”

Ghosh expects the labour market activity to remain robust this fiscal as companies will continue with hiring plans.

NPS & EPFO data

Ecowrap said the National Pension System (NPS) data indicates an addition of 1.85 lakh new subscribers in April-June 2021, of which State Government payrolls added 1.27 lakh, followed by non-government (37,587) and Central government (20,353).

The second job number (that is, exiting members re-joining and re-subscribing) was also encouraging at 11.8 lakh in April-June 2021 (in FY21, it was 41.2 lakh). The formalisation was 26 lakh in Q1FY22.

Cumulatively, total new payroll/first job generation of EPFO and NPS was almost 16.3 lakh in April-June 2021.

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HDFC Life buys Exide arm for ₹6,687 crore in cash, equity deal

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HDFC Life Insurance Company (HLIC) on Friday announced the acquisition of 100 per cent share capital of Exide Life Insurance Company for a total consideration of ₹6,687 crore.

This move comes about four years after the proposed merger of Max Life with HDFC Life was called off as it did not pass muster with the insurance regulator.

Of the total consideration, ₹725.97 crore will be payable in cash and the balance by way of issue of about 8.7 crore equity shares of HDFC life, with a face value of ₹10, issued at ₹ 685 a piece to Exide Industries Ltd (the holding company of Exide Life), HDFC Life said in a regulatory filing.

The issue of shares to Exide Industries will be on a preferential allotment basis for non-consideration. The completion of the proposed issue is subject to shareholder approval and subject to receipt of all regulatory approvals.

HDFC Life is acquiring Exide Life at about 2.47 times the latter’s embedded value (EV) of ₹2,711 crore (as at June-end 2021). EV is the value of business currently on an insurer’s books. Upon completion of the transaction, Exide Industries will hold 4.1 per cent in HDFC Life.

Vibha Padalkar, MD & CEO, HDFC Life, said the transaction will be a two-step process, with Exide Life first becoming a subsidiary of HDFC Life by December/January. Thereafter, depending on NCLT approval, which could take up to nine months, Exide Life will be merged with HDFC Life. She emphasised the subsidiarisation of Exide Life will help HDFC Life gain control of its business, making value preservation easier.

Use of Exide brand

Padalkar said that as part of the deal, HDFC Life is allowed to use the Exide brand for two years until it is transitioned out. The Assets Under Management (AUM) of HDFC Life is expected to increase by approximately 10 per cent, taking it beyond ₹2-lakh crore, she added.

Exide Life posted a turnover (total premium for FY 2020-21) of ₹3,325 crore (₹3,220 crore for FY2019-20). Its AUM as on June 30, 2021, totalled ₹18,780 crore, per the filing.

In a joint statement, the two companies said: “Exide Life complements HDFC Life’s geographical presence and has a strong foothold in South India, especially in Tier 2 and 3 towns, thus providing access to a wider market. Further, a good quality, predominantly traditional and protection focussed business, will augment the existing embedded value of HDFC Life by approximately 10 per cent.”

‘Landmark transaction’

Deepak S Parekh, Chairman, HDFC Life, said, “This is a landmark transaction, first of its kind, in the Indian life insurance space. It would enhance insurance penetration and further our purpose of providing financial protection to a wider customer base.”

The shares of HDFC Life were down 3.21 per cent to close at ₹734 a piece on Friday on the BSE. Exide Industries shares were up 6.3 per cent at close on Friday on BSE. “One of the major sticking points with investors in relation to Exide Industries was its investment in non-related life insurance business. This issue seems to be now resolved and should lead to significant re-rating of the stock,” said analysts at Investec Securities

Exide Industries had recently announced its intention to foray into lithium-ion cell manufacturing over and above its existing battery pack manufacturing plant at Gujarat in partnership with Leclanche of Switzerland. The proceeds from the sale of Exide Life should help fund the capital requirement

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Federal Bank partners Visa after Mastercard embargo, BFSI News, ET BFSI

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Mumbai: Federal Bank on Friday announced its association with Visa to launch new credit cards following the RBI’s embargo for fresh cards on the Mastercard network until the company complies with data-localisation norms.

The private lender said that it will offer credit cards with interest rates as low as 5.9% per annum. According to the bank’s website, the dynamic annual percentage rate, or APR, ranges from 5.9% to 41.9% per annum with the lowest for those who maintain an average minimum balance of over Rs 10 lakh. The interest rate would rise with the reduction in the average minimum balance maintained by the customer in his account. For instance, customers maintaining balances above Rs 3 lakh are entitled to interest rates of 18% per annum and those maintaining an average balance over Rs 50,000 will be billed at 30% per annum.

Under its partnership with Visa, the bank offers three cards — Celesta, Imperio and Signet, each of which is designed to cater to the needs of different segments of customers. Celesta card is targeted at HNIs, Imperio is for family-oriented customers, and Signet is targeted at young, early professionals.



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RBI imposes Rs 50 lakh penalty on Bombay Mercantile Co-operative Bank, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 50 lakh on Bombay Mercantile Co-operative Bank, Mumbai for deficiency in regulatory compliance. The RBI has also imposed a penalty Rs 2 lakh on Akola District Central Co-operative Bank Limited, Akola (Maharashtra) for non-compliance with certain provisions of Know Your Customer (KYC) norms.

The penalty on Bombay Mercantile Co-operative Bank Ltd was imposed for non-compliance with directions contained in the Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016 and specific directions under the Supervisory Action Framework (SAF), RBI said in a statement.

The statutory inspection of the bank conducted by RBI with reference to the bank’s financial position as on March 31, 2019, the inspection report pertaining thereto, and examination of all related correspondence revealed that it had offered interest rates on NRE deposits higher than those offered by it on comparable domestic rupee term deposits.

The bank had also sanctioned unsecured advances.

In another statement, the RBI said the inspection report of the Akola District Central Co-operative Bank based on its financial position as on March 31, 2019 and the inspection report pertaining thereto revealed that it had failed to put in place a robust system for alerts as part of effective identification and monitoring of suspicious transactions.

In both cases, the RBI said the penalties are based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.



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CEO M S Mahabaleshwara at AGM, BFSI News, ET BFSI

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The Mangaluru-based leading private sector lender Karnataka Bank is poised to emerge as the ‘digital bank of future‘ with end-to-end digital solutions for all its banking activities, bank CEO and managing director M S Mahabaleshwara said on Thursday. Addressing the 97th annual general meeting at its head office in Mangaluru through video conferencing, he said powered by its IT-driven wholistic transformation ‘KBL Vikaas,’ the bank is now preparing for the second phase under ‘KBL NxT’ concept to have end-to-end digital solutions for all banking activities, according to a bank press release here.

The bank is celebrating its centenary year during 2023-24 and a lot of IT-driven innovative and far-reaching initiatives to mark the celebration are already lined up to lay a strong foundation for the second century of the bank, he said.

The bank has declared a dividend of 18 per cent at the meeting.

The 97th AGM was presided over by bank chairman P Jayarama Bhat. All the directors of the bank, executives and shareholders participated through the virtual forum, the release said.



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