Category: Banking & Finance

NPS subscribers may get better payout options to offset low annuity rates

Banking & Finance

[ad_1]

Read More/Less


You have worked hard to accumulate that sizeable corpus in the NPS in the hope of comfortable sunset years.

Then, at the time of retirement, you realise that 40 per cent of that National Pension System corpus will have to be statutorily parked in annuities, whose returns don’t even beat retail inflation. Don’t despair. Now, there is hope for retirees as pension regulator PFRDA is moving to offer NPS subscribers a wider menu of payout options to choose from on retirement and offset the low rates of annuities.

For this and given that insurance regulator IRDAI is taking time to offer inflation-linked returns products, the pension regulator is now moving to seek statutory backing for offering products with different payout options and linked to market rates. Currently, the regulatory norm requires a person on retirement to invest at least 40 per cent of the NPS funds in annuities. Given the low interest rates in the financial system, the annuity rates are quite low (lower than the official consumer price, or retail, inflation), which has left retirees high and dry.

“In the PFRDA Amendment Bill, which has now been approved by the legislative department, an explicit provision has been added to allow PFRDA regulated products. Our Pension Fund Managers will offer such products that will give regular payouts, but not in the nature of annuities. These products will try to address longevity risk and also offer returns closer to market rates,” Supratim Bandyopadhyay, Chairman, PFRDA, said.

Bandyopadhyay said the current PFRDA law stipulates that exit can be only through annuities. “No other route is legally permissible and so we need to amend this to offer other types of products,” he said.

The proposed Bill missed the recent Monsoon session, he said, and expressed confidence that the version approved by the legislative department will be soon taken up by the Cabinet for approval and then go to Parliament for enactment.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

NABFID brought under Dept of Financial Services purview

Banking & Finance

[ad_1]

Read More/Less


President Ram Nath Kovind approved placing the National Bank for Financing Infrastructure and Development (NABFID) under the purview of the Department of Financial Services (DFS) in the Finance Ministry for administration purposes.

In a notification issued by the Cabinet Secretariat, “Administration of the National Bank for Financing Infrastructure and Development Act, 2021 and related matters,” has been allocated under Business Rules of the Government to Department of Financial Services. It has been made effective immediately.

New development financial institution

The National Bank for Financing Infrastructure and Development Act was enacted by Parliament in March. With this, a new development financial institution will come into existence. It will have both developmental and financial objectives. Among other things, this would include developing a deep and liquid bond market of international standards for long-term infrastructure financing in India, including through widening of the issuer and investor base.

It will also facilitate the development of markets for interest rate derivatives, credit derivatives, currency derivatives and other such innovative financial instruments as may be necessary for infrastructure financing. The financing objectives would involve establishing a credible framework that attracts equity investments from domestic and global institutional investors as well as debt investments, including green finance, from investors, aligned to their risk appetite and asset-liability profile, in order to cater the financing needs of Indian infrastructure sector.

According to the Act, debt securities, including bonds and debentures, issued by the Institution should be considered as eligible for purposes such as approved investments, securities, etc., as per limits and conditions to be prescribed by Indian financial regulators for their regulated entities. The Institution will also be empowered to lend to, or invest in, infrastructure projects located in India, or partly in India and partly outside India, prioritising systemic risk mitigation, credit enhancement, subordinate debt, debt maturities suited to project life spans and to raise long-term finance for the same.

The act also prescribed that the Institution may be involved in project structuring, monitoring and monetisation of completed projects by itself or through its subsidiaries, etc., promoting innovation in financial products and services including by issuing long-term bonds with explicit or implicit sovereign guarantee, underwriting and dealer services. Overall, “the Institution shall provide a supporting, technology enabled ecosystem across the life cycle of infrastructure projects as a provider, enabler and catalyst for sustainable infrastructure financing in India with the backing of the Government. The Institution shall support the bond market with the aim of fostering complementarity of market raised debt with lending for infrastructure projects,” the Act said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

HDFC Bank goes abroad for risky bond sale after India clampdown

Banking & Finance

[ad_1]

Read More/Less


HDFC Bank Ltd. sold a riskier dollar bond overseas that helps bolster its balance sheet, in a move that local peers may follow after the market regulator tightened its rules in the domestic market.

The country’s biggest lender by market capitalization priced Additional Tier 1 notes in the offshore market at a yield of 3.7 per cent. Those are unsecured securities with voluntary call options but no set maturity. It’s only the second such deal abroad from an Indian lender after the State Bank of India sold such securities in 2016.

Regulatory changes

The overseas debt market may beckon other Indian banks, after the country’s seizure of Yes Bank last year caused losses for individuals on those securities and prompted regulators to introduce stricter investment rules at home. Sales will be constrained though by regulatory limits on how much foreign-currency AT1 debt that Indian banks can issue.

“We expect further issuance from Indian banks given that the domestic market for AT1 issuance has shrunk following regulatory changes,” CreditSights analysts, Yustina Quek and Pramod Shenoi, said in a note.

While Indian banks have largely met their capital requirements, selling more AT1 notes will help them create cash buffers that will let them absorb any more loan losses in a country with world’s worst bad debt ratio. It could also free up funds to extend more loans and make acquisitions.

The Securities & Exchange Board of India ordered in March that local mutual funds, some of the biggest holders of AT1 debt in the country, treat those notes as 10-year debt from April, 20-year bonds a year later and eventually as 100-year notes from April 2023, forcing them to cut their exposure to these issuances. Valuing these bank bonds as longer-maturity bonds would lead net assets to drop at mutual funds.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

HDFC Bank shares shed early gains to close marginally lower on bourses, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


After giving up morning gains, shares of the country’s leading private sector lender HDFC Bank closed marginally lower on the bourses on Wednesday.

The shares jumped nearly two per cent in early trade after the Reserve Bank‘s decision to allow the lender to issue new credit cards but the momentum could not be sustained, with the scrip ending marginally lower compared to Tuesday’s closing level on the BSE and NSE.

It ended the day at Rs 1,512.90 apiece on the BSE. After opening at Rs 1,550, the scrip touched an intra-day high of Rs 1,564.75 and an intra-day low of Rs 1,508.45.

On the NSE too, shares of the lender shed early gains to close slightly down at Rs 1,511.50 apiece.

It had touched an intra-day high of Rs 1,565.35 after opening at Rs 1,556.70. The intra-day low level was Rs 1,508.35.

In a regulatory filing on Wednesday, HDFC Bank said the Reserve Bank of India (RBI), through its letter dated August 17, has relaxed the restriction placed on sourcing of new credit cards.

The central bank had issued orders in December and February to HDFC Bank on certain incidents of outages in the internet banking /mobile banking/ payment utilities of the bank over the past two years.

HDFC Bank also said the restrictions on all new launches of the digital business generating activities planned under Digital 2.0 will continue till further review by the RBI.

Snapping its four-session record-setting spree, the 30-share benchmark BSE Sensex on Wednesday closed 162.78 points or 0.29 per cent lower at 55,629.49. It touched its all-time peak of 56,118.57 during the session.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Indian Bank launches ‘MSME Prerana’ programme in Odisha, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


State-run Indian Bank has launched ‘MSME Prerana’, an online business- mentoring programme for MSME’s in Odisha. Developed in collaboration with Knowledge Partner, Poornatha & Co, the programme to be delivered in the local language, is aimed at empowering MSME entrepreneurs by improving their managerial and financial skills through web-based training spread over 12 sessions, the bank said in a release on Wednesday.

The initiative was launched by Union Finance Minister Nirmala Sitharaman at the bank’s corporate sector centre in Chennai in October last year.

As an effort to bridge the current skill gap among the entrepreneurs, this programme will be delivered in the local language with a focus on developing the MSMEs’ business, communication, HR and financial skillset that is necessary to conduct business professionally today.

“Our MSME department will extend all possible support to this tailor-made mentoring program and I call upon entrepreneurs to avail of all other financial benefits being extended by Indian Bank to support them in such challenging times,” Satyabrata Sahu, Principal Secretary, MSME Department, Odisha, said on Tuesday.

Odisha figures among the top states in terms of MSME units and such programmes will ensure further up-skilling of entrepreneurs, thereby empowering them to achieve greater success in their businesses, Sahu said.

Indian Bank has an extensive network of 207 branches in Odisha and aims to provide more assistance to MSME entrepreneurs from various industries like textiles, automobiles, food processing, chemical, and others, the release said.

Odisha accounts for nearly 5 per cent of the total MSME credit exposure of Indian Bank, and has witnessed a 39 per cent growth in FY 2020-21.

“We are excited to expand the ambit of the ‘MSME Prerana’ programme to our customers and budding entrepreneurs in Odisha. In addition to being addressed in the native Odia language, the programme is spread out over 12 sessions and can be easily accessed through online meeting-based applications,” said V V Shenoy, Executive Director, Indian Bank.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

RBI standardises bank locker rules, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Reserve Bank of India (RBI) has standardised the rules for opening and maintaining bank lockers across banks, in response to directions by a two judge bench of the Supreme Court in February. RBI has asked all bank boards to frame a agreement for safe deposit lockers based on a model locker agreement to be framed by Indian Banks Association (IBA).

Banks have time to comply with the new norms till January 1 2022 and have to renew their locker agreements with existing locker customers by January 2023, RBI said. Banks have been allowed to obtain a term deposit from the locker holder at the time of allotment covering three years’ rent and the charges for breaking open the locker in case of such eventuality to ensure lockers are used and rent paid on time. “Banks, however, shall not insist on such term deposits from the existing locker holders or those who have satisfactory operative account.

The packaging of allotment of locker facility with placement of term deposits beyond what is specifically permitted above will be considered as a restrictive practice,” RBI said. In case the locker rent is collected in advance, the remaining amount from the advance should be refunded to the customers during the surrender of the locker. In case of a merger or closure or shifting of branch warranting physical relocation of the lockers, the bank shall give public notice in two newspapers (including one local daily in vernacular language) and the customers will have to be intimated at least two months in advance along with options for them to change or close the facility.

Banks have also been asked to formulate a policy for nomination and release of contents to nominees. The contents have to be released within 15 days of the death of the depositor. “In order to ensure that the articles left in safe custody and contents of lockers are returned to the genuine nominee, as also to verify the proof of death, banks shall devise their own claim formats, in terms of applicable laws and regulatory guidelines,” RBI said.

Banks have also been directed to maintain a branch-wise list of vacant lockers as well as a wait-list for the purpose of allotment of lockers and ensure transparency in allotment of lockers. Customers who do have any banking relationship with the bank may also be given the facilities of safe deposit locker/safe custody article, RBI said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

RBI deadline to stop storage of card details worries start-ups

Banking & Finance

[ad_1]

Read More/Less


With the deadline to implement an RBI norm that prohibits payment gateways and payment aggregators from storing customer card details closing in, consumer tech start-ups are a worried lot.

Accepting the diktat could reduce the ease of payments for half a billion Internet users in India.

This could even increase barriers of entry for the next billion Internet users who are just getting hold of technology services like food delivery, online retail, and on-demand video streaming.

The RBI had suggested tokenisation as a measure for non-bank payment aggregators to replace actual card details of customers with an alternative code termed as ‘token’. The token has to be unique for a combination of card, token requestor (an entity that accepts tokenisation request from the customer and sends it to the card network to issue a token), and device.

The safety provided by tokenisation is that if a company is hacked, the hacker cannot use that data for another platform.

One device, one card

But in tokenisation, the consumers will only be able to use one card to make transactions on one device. Each platform will generate a unique token corresponding to the user’s card and device.

On the challenges attached to tokenisation, Rameesh Kailasam, CEO of Indiatech, told BusinessLine, “The ecosystem may not be ready for such measures, because companies will be expected to create a token with each payment aggregator/payment gateway which will override the intent of recurring payments. Essentially, customers will not have the feasibility of placing repeat orders, making EMI payments, and standing transactions against their card.”

The RBI rule on stopping card storage was initially given an implementation deadline of July but was later extended to January 2022 following industry demand.

Indiatech.org, an industry association of Indian start-ups including Ola, hike, Makemytrip, and Nykaa among others, has recommended that companies that are able to afford industry certifications like Payment Card Industry Data Security Standard (PCI DSS) Level 1 be allowed to save customer’s card details with necessary reporting and audit mechanisms built to inform the RBI. Further, it suggested that beyond-device tokenisation should be allowed.

The central bank’s motive to bring these rules was to guard customer data against frequent data breach cases in tech companies. Cybercrime cases in India have grown exponentially since the pandemic. Per data shared by the Union Minister of State for Home Affairs, G Kishan Reddy, in the Lok Sabha in March, between August 30, 2019, and February 28, 2021, as many as 3.17 lakh cybercrime incidents were registered on the National Cyber Crime Reporting Portal.

Data security

Commenting on the relation of data security issues with companies’ storing customer card details, independent security researcher, Rajashekhar Rajaharia said, “Storing customer data is not what leads to data breaches. It is weak and, in some cases, outdated encryptions used by the Internet companies that expose them to data leaks and hackers.

“In addition to this, the Indian government also needs to conduct data audits of companies as done in countries like the US and Europe,” he added.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Crisil Ratings revises India Inc’s credit quality outlook to ‘positive’

Banking & Finance

[ad_1]

Read More/Less


Crisil Ratings has revised the credit quality outlook of India Inc for fiscal year 2022 to ‘positive’ from ‘cautiously optimistic’ earlier.

Subodh Rai, Chief Ratings Officer, Crisil Ratings said, “Our outlook factors-in strong economic growth, both domestic and global, and containment measures that are localised and less stringent compared with the first wave, which should keep domestic demand buoyant even if a third wave materialises. We believe India Inc is on higher and stronger footing.”

The credit ratio (upgrades to downgrades) in the first four months of this fiscal improved to more than 2.5 times. It had touched a decadal low of 0.54 time amid the first wave in the first half of fiscal 2021, before recovering to 1.33 times in the second half, buoyed by a rebound in demand.

Broad-based recovery

A Crisil Ratings study of 43 sectors (accounting for 75 per cent of the ₹36 lakh crore outstanding rated debt, excluding the financial sector) shows the current recovery is broad-based. As many as 28 sectors (85 per cent of outstanding corporate debt understudy) are on course to see a 100 per cent rebound in demand to pre-pandemic levels by the end of this fiscal, while six sectors will see upwards of 85 per cent.

Among sectors with the most rating upgrades, construction and engineering, and renewable energy benefited from the government’s thrust on infrastructure spending, while steel and other metals gained from higher price realisations and profitability. Pharmaceuticals and specialty chemicals continued to see buoyancy backed by both, domestic and export growth.

But contact-intensive sectors such as hospitality and education services continue to bear the brunt of the pandemic and have had more downgrades than upgrades.

To be sure, targeted relief measures by the Reserve Bank of India (RBI) and the government amid the second wave have cushioned credit profiles in some sectors.

Somasekhar Vemuri, Senior Director, Crisil Ratings said, “Besides regulatory relief measures, a secular deleveraging trend has provided India Inc the balance sheet strength to cushion impact on their credit profiles. The median gearing for the CRISIL Ratings portfolio (excluding the financial sector) declined to ~0.8 time at the end of fiscal 2020 and then to an estimated ~0.7 time in fiscal 2021, from ~1.1 times in fiscal 2016.”

That said, unsecured retail and micro, small and medium enterprise loan segments are likely to witness higher stress over the near term. “The key monitorables from here would be a fat tail in the second wave or an intense third wave. Other risks to the positive credit outlook include regional and temporal distribution of rainfall and its implications for sustained demand recovery. Small businesses, in particular, will be more vulnerable to any slack in demand,’ the ratings agency said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

HDFC Bank ready with strategy ‘to come back with a bang’

Banking & Finance

[ad_1]

Read More/Less


Private sector lender HDFC Bank, on Wednesday, said it is ready with strategies to ‘come back with a bang’ in the credit card space.

“As stated earlier, all preparations and strategies that we have put in place to ‘come back with a bang’ on credit cards will be rolled out in the coming time. We are happy that we will be able to serve our customers again with the same dedication and humility,” it said in a statement.

Noting that the restrictions on all new launches of the digital business-generating activities planned under Digital 2.0 will continue till further review by the RBI, the bank said it will continue to engage with the regulator and ensure compliance on all parameters.

In a letter to employees, HDFC Bank MD and CEO, Sashidhar Jagdishan, said the lender will now be able to demonstrate its technology transformation.

He also underlined that in the coming months the bank will aggressively go to the market with not just an existing suite of credit cards, but also new offerings in the form of co-brands and partnerships.

“This transformation agenda will help drive our ambitious future growth plans, and also help us enhance customer experience. We will not just ‘run the bank’, but also ‘build the bank’ as we go ahead, riding on digital and enterprise factory with infrastructure scalability, disaster recovery resilience, enhanced monitoring capabilities, and security enhancements as the key pillars,” he further said.

The RBI has partially relaxed curbs on the private sector lender on sourcing new credit cards.

The RBI had, in December last year, directed HDFC Bank to temporarily halt the sourcing of new credit card customers as well as launches of digital business-generating activities.

The largest player

HDFC Bank is the largest credit card issuer with 1.48 crore outstanding cards as of June 2021. The temporary halt on sourcing of cards had, to some extent, impacted its business, enabling competitors such as ICICI Bank and SBI increase their market share.

Analysts said the RBI decision before the beginning of the festival season is a positive development.

“…lifting of RBI restrictions before the beginning of the festival season is a positive development as HDFC Bank has usually been aggressive during the festival season and offers various discounts on consumer products,” said Motilal Oswal in a research note.

It pointed out that HDFC Bank had nearly lost about 6 lakh cards since the date of embargo. On the other hand, ICICI Bank, SBI Cards and Axis Bank almost added 13 lakh, 7.5 lakh and 3 lakh cards, respectively, over the same period.

“Other players such as ICICI Bank and SBI Cards have sharply ramped up their incremental market share at about 49 per cent and 28 per cent during this period,” it said.

During recent quarters HDFC Bank has reported moderation in fee income and net interest income due to the RBI restriction on credit cards sourcing, as this segment contributes about 25 per cent to 33 per cent of the total fee income for the bank.

Digital 2.0

The bank has also been working on strategies for digital expansion. In June, it had announced plans to roll out multiple digital products in the next 15 to 24 months once the RBI lifts the halt. It is also working on two key initiatives – digital factory and enterprise factory – under this initiative.

It is also understood to be working with banking tech firm Zeta on building a digital bank.

“Plutus is a strategic partnership between Zeta and HDFC Bank with the mission to build a digital bank completely from scratch. Plutus will serve the bank’s 25 million-plus consumers and drive growth to double the base to 50 million-plus in the next 5 years,” Zeta had said in a job posting on its website.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Kotak Mahindra Bank partners with Creditas Solutions for DIY Digital Repayment platform

Banking & Finance

[ad_1]

Read More/Less


Kotak Mahindra Bank has deployed a secure, Do It Yourself Digital Repayment Platform for missed loan repayments, in a tie-up with Creditas Solutions.

“Powered by artificial intelligence and machine learning, the ‘Neo Collections’ platform delivers a personalised and non-intrusive experience thereby enabling customers to manage their dues seamlessly on their own through an intuitive repayment platform,” it said in a statement on Wednesday.

Using data analytics to target the right customer segments, the ‘Neo Collections’ platform creates hyper-personalised scenarios to connect with each customer, it further said. By clicking on the link received, customers will be directed to the platform that provides them with a consolidated view of their entire relationship with the bank and enables repayment of outstanding dues through a variety of payment modes, it added.

Also read: Kotak Mahindra Bank launches emergency personal loans for Covid treatment

“The main purpose behind deploying a DIY digital repayment platform was to make repayments for outstanding loans more convenient for our customers,” said Ambuj Chandna, President, Consumer Assets, Kotak Mahindra Bank.

Anshuman Panwar, Co-founder of Creditas Solutions said the platform is intuitive, using contextualised and optimised customer interactions, allowing Kotak to drive intelligent customer engagement for superior collections success at lower cost.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,
1 … 192 193 194 195 196 … 540