Category: Banking & Finance

Northern Arc Capital raises $50 mn via ECB

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Northern Arc Capital, a debt financing platform, today announced that it has successfully concluded a $50 million external commercial borrowing (ECB) transaction with the Japanese International Cooperation Agency (JICA).

The funds will be used to cater to the credit demands of women borrowers or towards products that disproportionately benefit women, the Chennai-based non-banking finance company (NBFC) said in a press statement.

“This transaction is proof of Northern Arc’s ability to forge partnerships with and attract funding from reputed global DFIs. We are excited to partner with JICA to further our mission of catering to the diverse credit requirements of underserved households and businesses,” Kshama Fernandes, MD & CEO of Northern Arc Capital was quoted in the statement.

JICA is Japan’s governmental agency that works towards promoting economic and social growth in developing countries.

“We expect more Indian women to have access to financial services through this partnership with Northern Arc,” Keiichiro Nakazawa, Senior Vice President of JICA said in the release.

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Tally Solutions and Cosmea Financial Holdings apply to RBI for SFB licence

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The Reserve Bank of India (RBI) on Monday said it received applications from Bengaluru-based Tally Solutions and Mumbai-based Cosmea Financial Holdings for ‘on tap’ license to operate as small finance banks.

Tally Solutions delivers business software for small and medium businesses (SMBs). Cosmea Financial Holdings is involved in activities auxiliary to financial intermediation, according to zaubacorp.com.

With these applications, the number of applicants wanting to set up small finance banks (SFB) has gone up to six.

In April 2021, the central bank had announced that four applicants — VSoft Technologies, Calicut City Service Co-operative Bank, Akhil Kumar Gupta and Dvara Kshetriya Gramin Financial Services — had applied to set up an SFB under the December 2019 Guidelines for ‘on tap’ licensing.

SFBs primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.

Guidelines

As per the guidelines for ‘on tap’ licensing of SFBs, the minimum paid-up voting equity capital/net worth requirement is ₹200 crore (₹100 crore earlier).

For urban co-operative banks (UCBs), desirous of voluntarily transiting into SFBs, the initial requirement of net worth is ₹100 crore, which will have to be increased to ₹200 crore within five years from the date of commencement of business.

Payments banks can apply for conversion into SFB after five years of operations, if they are otherwise eligible as per these guidelines.

Further, SFBs will be given scheduled bank status immediately upon commencement of operations and they will have general permission to open banking outlets from the date of commencement of operations.

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Tally Solutions and Cosmea Financial Holdings apply to RBI for SFB licence

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The Reserve Bank of India (RBI) on Monday said it received applications from Bengaluru-based Tally Solutions and Mumbai-based Cosmea Financial Holdings for ‘on tap’ license to operate as small finance banks.

Tally Solutions delivers business software for small and medium businesses (SMBs). Cosmea Financial Holdings is involved in activities auxiliary to financial intermediation, according to zaubacorp.com.

With these applications, the number of applicants wanting to set up small finance banks (SFB) has gone up to six.

In April 2021, the central bank had announced that four applicants — VSoft Technologies, Calicut City Service Co-operative Bank, Akhil Kumar Gupta and Dvara Kshetriya Gramin Financial Services — had applied to set up an SFB under the December 2019 Guidelines for ‘on tap’ licensing.

SFBs primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.

Guidelines

As per the guidelines for ‘on tap’ licensing of SFBs, the minimum paid-up voting equity capital/net worth requirement is ₹200 crore (₹100 crore earlier).

For urban co-operative banks (UCBs), desirous of voluntarily transiting into SFBs, the initial requirement of net worth is ₹100 crore, which will have to be increased to ₹200 crore within five years from the date of commencement of business.

Payments banks can apply for conversion into SFB after five years of operations, if they are otherwise eligible as per these guidelines.

Further, SFBs will be given scheduled bank status immediately upon commencement of operations and they will have general permission to open banking outlets from the date of commencement of operations.

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India Mortgage Guarantee Corporation partners Clix Housing Finance

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India Mortgage Guarantee Corporation (IMGC), the country’s first and only mortgage guarantee company, has entered into a partnership with Clix Housing Finance Limited (Clix HFL) to offer mortgage guarantee backed home loan products for salaried and non-salaried customers in the affordable housing segment.

Speaking on the partnership, Mahesh Misra, CEO, IMGC said in a statement “We are very pleased to partner and work with Clix in strategically identified segments and are confident that this will be a hugely successful partnership in the months to come. Over the years we have worked with our lender partners to create customer-centric products. We have a defined execution roadmap with emphasis on driving financial inclusion through this partnership with Clix”.

Gaurav Pawra, CEO, Clix Housing Finance, said, “With the rising demand in the affordable housing segment, this strategic partnership would support to fulfil ‘early home ownership’ dreams of the first-time homebuyers and enable Clix to enhance its penetration in the low & mid-market segment besides mitigating the credit risk in case of default”.

Affordable housing

Affordable housing is one of the most promising segments in the retail finance space and IMGC has been playing a crucial role in helping lender partners foray into this space with minimal risk and helping home buyers fulfil their dreams of owning a home through higher eligibility and lower EMIs.

Mortgage guarantee backed home loans will broaden Clix HFL’s coverage of home loan products and customer segments enabling more business while also supporting the flagship mission of Government of India of “Housing for All by 2022”

Also read: Tailwinds far outweigh turbulence in housing finance industry

Pawra said that Clix has been consistently working on making the loan process simpler and accessible for all since the company’s very inception. “With this partnership, we shall be able to tap a wider range of customers, improve conversion rates and offer higher loan amounts to customers. We are truly pleased to have IMGC on board with us on this journey towards building a more inclusive society, which has easy access to affordable housing loans,” he added.

IMGC is providing various surrogate products for self-employed customers like Banking Product, Low LTV Product, Assessed Income Product to cater to the needs of varied customers. IMGC has currently tie-ups with more than 18 lenders comprising of banks, housing finance companies and NBFCs and it has guaranteed home loans worth ₹12,000 crore to more than 60,000 home loan borrowers.

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Facebook, Xiaomi target India’s $1 trillion digital loan market

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India’s digital loan market is becoming a battleground for companies from Facebook Inc. to Xiaomi Corp., as they seek a foothold in what’s set to be a $1 trillion industry.

Facebook this month said India would be the first country where it rolls out its small business loan programme offering loans via a partner to firms that advertise on its platform. The loans will range from ₹500,000($6,720) to ₹5 million with interest rates of 17%-20%, potentially without collateral.

The social media giant’s foray into India coincides with Xiaomi’s, the Chinese maker of everything from rice cookers to gaming monitors, plans to offer loans, credit cards and insurance products in partnership with some of the nation’s biggest banks and start-up digital lenders, the Press Trust of India reported, citing local head Manu Jain.

Amazon.com also made its maiden investment in the country’s wealth management sector this month, participating in a $40 million round by fintech start-up Smallcase Technologies Pvt.

Also read: FB ties-up with Indifi for small business loans initiative

Alphabet Inc.’s Google is also upping its game. After offering wealth management products such as digital gold, mutual funds on its popular Google Pay platform, it’s now tied up with small Indian lenders for opening time deposits for its customers.

Digital lending growing

India’s digital payments market is drawing the attention of some of techs biggest names after online transactions surged during the pandemic and traditional lenders turned cautious following a rise in bad debt. Digital lending is expected to treble to $350 billion by 2023 and reach a total of $1 trillion in the five years since 2019, according to estimates from the Boston Consulting Group.

“The payment business hardly makes any money, but lending makes a lot of money,” said Saurabh Tripathi, Managing Director and senior partner at BCG’s financial institutions practice. “Indian consumers are waiting for more appropriately designed digital experiences and many players are jumping at this opportunity.”

While the potential of India’s loan market is significant, so too are its risks. The nation’s bad loan ratio is expected to rise to 11.3% by March making it the worst performer among major countries for a second consecutive year.

As well as addressing loan collections by digital firms, the Reserve Bank of India is also planning to regulate online lenders, which include more than 300 start-ups.

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Rupee inches 4 paise higher to 73.25 against dollar in early trade

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The Indian rupee appreciated 4 paise to 73.25 against the US dollar in opening trade on Tuesday, tracking a positive trend in domestic equities.

At the interbank foreign exchange, the rupee opened at 73.26 against the dollar, then inched higher to 73.25, up 4 paise over its previous close.

The Fed is fighting the last war on inflation

On Monday, the rupee had settled at 73.29 against the US dollar.

Nifty to top 16,600 on US Fed member’s conciliatory tone

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.12 per cent at 92.54.

A strong rally in the domestic equity markets and a weak American currency in the overseas markets also supported the rupee sentiment.

According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, the rupee, which has appreciated nearly 100 paise since Friday, has been gaining on bountiful corporate inflows.

“RBI has been present intermittently and equity inflows have also been aiding the rupee after Fed rhetoric on Friday,” he added.

The US Fed chief Jerome Powell’s speech at Jackson Hole Symposium was ‘dovish’ and expressed hope that the Fed will keep supporting the market with low interest rates, traders said.

Global oil benchmark Brent crude futures fell 0.48 per cent to $73.06 per barrel.

On the domestic equity market front, BSE Sensex was trading 87.09 points, or 0.15 per cent higher at 56,976.85, while the broader NSE Nifty advanced 21.55 points, or 0.13 per cent, to 16,952.60.

Foreign institutional investors were net buyers in the capital market on Monday as they purchased shares worth ₹1,202.81 crore, as per exchange data.

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Depositors of stressed 23 cooperative banks including PMC to get up to Rs 5 lakh back, BFSI News, ET BFSI

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Depositors of stressed banks like Punjab & Maharashtra Cooperative (PMC) Bank are now set to get up to Rs 5 lakh back from November 30 as the government has notified the amendment to the DICGC Act.

Parliament earlier this month 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 moratorium on the banks.
The amount of Rs 5 lakh would be provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The government has notified September 1, 2021 as the date on which the provisions of the Act shall come into force, according to a gazette notification dated August 27, 2021.

“In exercise of the powers conferred by sub-section (2) of section 1 of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021 (30 of 2021), the Central Government hereby appoints the 1st day of September, 2021, as the date on which the provisions of the said Act shall come into force,” it said.

Effective date

Consequently, 90 days from the effective date is November 30, 2021 for depositors to get their funds back.

The first 45 days are meant for the bank, which has come under stress, to collect all the details of the accounts where the claims will have to be made. This will then be forwarded to the insurance company, which in real-time will check it all up, and nearer the 90th day, depositors will get the money, Finance Minister Nirmala Sitharaman had said.
The benefit will also accrue to the depositors of 23 cooperative banks which are in financial stress and on which the Reserve Bank of India (RBI) has imposed certain restrictions.

DICGC, a wholly-owned subsidiary of the RBI, provides insurance cover on bank deposits. At present, it takes 8-10 years for the depositors of a stressed bank to get their insured money and other claims.

Cooperative bank failures

Though the RBI and the Centre keep monitoring the health of all banks, there have been numerous recent cases of lenders, especially cooperative banks, being unable to fulfil their obligations towards the depositors due to the imposition of a moratorium by the RBI.

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.



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Former Reliance Capital CEO Sam Ghosh plans to set up a small finance bank, BFSI News, ET BFSI

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Former Reliance Capital CEO Soumen (Sam) Ghosh has applied for a small finance bank license through a recently set up firm called Cosmea Financial Holdings.

The Maharashtra-based firm was incorporated in November last year.

Cosmea aims to involve in activities auxiliary to financial intermediation, except insurance and pension funding. Directors of the company are Soumen Ghosh, Suresh Thiruvananthapuram Viswanathan and Amit Agrawal.

Former Reliance Capital CEO Soumen (Sam) Ghosh along with his wife Caroline Ghosh bought this company from Amit Agarwal and Luv Chaturvedi who had incorporated the company as a part of management buy-out from Reliance Securities.

This company has no linkage with ADAG group at present and is owned by the Ghoshes in individual capacity, Sam Ghosh confirmed the matter.

Cosmea and fintech firm Tally Solutions have applied for a small finance bank licence, the Reserve Bank of India (RBI) announced on Monday.

Cosmea and Tally thus joined VSoft Technologies, Calicut City Service Co-operative Bank, Dvara Kshetriya Gramin Financial Services and Akhil Kumar Gupta in the race to set up small finance banks under the central bank’s on-tap licensing policy.

Gupta, the vice chairman at Bharti Enterprises, applied for the licence in his personal capacity.

In March, the banking regulator formed a five-member standing external advisory committee under former deputy governor Shyamala Gopinath for evaluating the applications.

RBI’s central board director Revathy Iyer, former executive director B Mahapatra, former Canara Bank chairman TN Manoharan, and former State Bank of India managing director Hemant G Contractor are members of the committee.



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BOB mobile app has a 95% bank branch in it, BFSI News, ET BFSI

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Bank of Baroda through its BOB World application is offering a host of benefits and services such as Times Prime subscription to people who are stuck at home due to the pandemic.

“Our customers spending more time at home. So we don’t really want to be offering them mixers and grinders. So we thought about what it is that they would like to spend their time on and I would like the time on probably 42 platforms,” Akhil Handa, CDO, Bank of Baroda, said at the ETBFSI Summit.

“So we gave them a range of odd benefits. Without the food tech benefits, in fact, we are offering the Times Prime subscription to customers,” he said.

Under one platform
Bank of Baroda has brought 95% of services that the customer can do in a bank branch under its BOB world application. “This application really brings the world of banking and beyond to the customer. And of course, goes without saying Bank of Baroda satisfies us there is always a Bank of Baroda branch that is working at any given point in time across the board, Handa said.

He said platform banking is the one thing that the bank putting a lot of energy into. “This is what we’ve been working on for the last couple of years of work is one that you see now. And we are rolling out a lot of new propositions across the different product segments, he said.

Platform vertical
Handa said in the organisation, the bank now has three verticals, and one of them is dedicated to platforms. “So when they were talking about globally, some of the banks have designated a chief platform officer, I think we are on the same track as well as ahead of platforms. On the asset side, we also have platforms of deposits and payments, we are no different,” he added.

Stating that the emergence of platform banking is rooted in the whole shift of commerce from physical to electronic and the rise of e-commerce, he said the pandemic has really pushed the e-commerce shift in terms of channel metrics by about 10-15 years in some geographies.



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Government extends the tenure of Canara Bank, Bank of India executive directors by two years, BFSI News, ET BFSI

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The government has extended the tenure of two executive directors of Canara Bank and Bank of India for two years, the state-run lenders said on Monday. Canara Bank in a regulatory filing said that the central government has extended the term of office of A Manimekhalai, Executive Director, for a period of two years beyond her currently notified terms that expires on 10 February 2022, or until further orders, whichever is earlier.

Bank of India in a separate filing said that the term of office of P R Rajagopal, Executive Director, has been extended for a period of two years, beyond his currently notified term or until further orders, whichever is earlier. His current term was to expire on February 28, 2022, the bank said.

The banks said the government informed them about the extension given to these executive directors through notifications on August 26, 2021.

The government last week extended the term of executive directors of various public sector banks. It also extended the terms of MD & CEOs of Punjab National Bank and Bank of Maharashtra.



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