Category: Banking & Finance

RBI to put in place a “PRISM” to strengthen compliance by lenders

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) is putting in place a Platform for Regulated Entities for Integrated Supervision and Monitoring (PRISM), a web-based end-to-end workflow automation system, to strengthen compliance by supervised entities (SEs).

This comes in the backdrop of continuous engagement and more frequent reviews of risk profiles and supervisory assessments being envisaged for supervised entities, including banks and non-banking financial companies.

With the growing intensity and reach of the Reserve Bank’s supervisory function, the focus of its new approach to ‘continuous supervision’ is on early identification of risks and conduct of supervisory actions, according to an article in RBI’s latest monthly bulletin.

This is aimed at helping supervised entities to strengthen their internal defences and resilience and bringing focus on root cause analysis (RCA).

PRISM will have various functionalities (inspection; compliance; incident functionality for cyber security; complaints; and returns functionalities), with built-in remediation workflows, time tracking, notifications and alerts, management information system (MIS) reports and dashboards.

Strengthening supervisory framework

In its latest annual report (2020-21), RBI said it has been working towards strengthening the supervisory framework for both banking and non-banking sectors.

“The supervisory approach is now more forward-looking and root-cause oriented than before, incorporating both quantitative and qualitative elements into assessment processes.

“During the year, initiatives were taken towards (a) integration of supervisory functions meant for different supervised entities; (b) specialisation and reinforcement of supervision through both vertical and horizontal risk assessments; (c) setting up a dedicated College of Supervisors for capacity development; and (d) harnessing SupTech (supervisory technology),” the report said.

The report underscored that a special thrust is being given from the current supervisory cycle towards carrying out Root Cause Analysis (RCA) which, inter alia, includes a detailed assessment of governance, oversight and assurance function, business strategy and risk and compliance culture.

In 2021-22, the RBI’s department of supervision (DoS) plans to strengthen the on-site assessment of oversight and assurance functions including risk and compliance culture as also business strategy/model.

DoS intends to adopt innovative and scalable SupTech to enhance the efficiency and efficacy of supervisory processes by modifying its capacity and capability.

The department also plans to streamline the process of data collection from all the banks and their off-site assessment and on-site supervision of select banks based on the outcome of risk-based model developed for KYC/AML supervision.

Additionally, DoS is seeking to enhance Fraud Risk Management System, including improving efficacy of Early Warning Signal (EWS) framework, strengthening fraud governance and response system, augmenting the data analysis for monitoring of transactions, introduction of dedicated market intelligence (MI) unit for frauds and implementation of automated unique system generated number for each fraud.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

RBI lifts ban on HDFC Bank issuing credit cards, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) has lifted an eight month ban on HDFC Bank in a big relief to the private sector lender, a bank spokesperson confirmed. On December 3, in an unprecedented move the bank was barred from issuing new credit cards and launching any new digital products after multiple issues linked to digital banking, cards and payments on the bank’s platform in the last two years.

HDFC Bank, the largest issuer of credit cards in India lost market share in the last few months as restrictions on issuing new cards meant sales stopped. Outstanding credit cards dropped from 15.4 million in November 2020 to 14.9 million in May 2021.

However, in a call with the media at the end of June the bank’s senior management expressed confidence that they will make up for the lost time by cross selling to liability and other asset customers once the ban on issuing new cards is lifted.

Parag Rao, group head, payments, consumer finance, digital banking and IT at HDFC Bank said the bank is preparing to return to the market “with a bang” whenever RBI removes the ban. In the last seven months the bank has put an early warning system to manage large volumes, declogged processes and replaced old technology as part of its short and long term plan submitted to RBI, Rao said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Home loans defy Covid blues

Banking & Finance

[ad_1]

Read More/Less


If the home loan portfolios of major banks, as reflected in the first quarter numbers, is any indication, Covid-19 has not deterred home buyers.

A comparative analysis of housing loan data of banks for the first quarter shows a significant increase ranging from six per cent to about 14 per cent compared with the corresponding quarter of the previous fiscal.

For State Bank of India, the home loan portfolio increased 11 per cent to ₹5,05,473 crore in the first quarter of the current fiscal ended June 30, 2021, constituting 23 per cent of the bank’s total domestic advances compared with ₹4,55,443 crore in the year-ago period. That Covid did not impact demand for home loans is also evident from the fact that in the previous year (FY20-21), SBI posted only a 10.72 per cent growth in the segment.

SBI is not alone. Canara Bank’s home loan portfolio, too, increased 13.15 per cent during the period at ₹65,136 crore. In the previous year, the growth in portfolio was only 10.6 per cent. Punjab National Bank is also in the same league as it registered a 6.1 per cent growth.

 

Key drivers

On what drove the surge in home loans, a senior SBI official said: “Bank employees braved the pandemic and processing of loan applications and disbursal were not adversely impacted. In the absence of corporate loan growth, there has also been greater focus on retail loans, of which home loans constitute a major chunk.’’

Sanjiv Chadha, Managing Director & CEO, Bank of Baroda, said: “Home loans are growing pretty much as per market.’’ During the pandemic times, home loans, along with gold and car loans, are seen as ‘very safe’ for business, say bankers.

The growth in home loans will be sustained in the current year too, say analysts. Banks are also stepping up efforts to sustain the growth.

SBI has sharpened its focus on housing loans. As part of its ‘Monsoon Dhamaka’ offer, it announced a 100 per cent waiver on processing fees till August 31. Before the offer, the processing fee was 0.40 per cent.

Other banks are also gearing up to woo customers with special offers for the coming festival season.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

New credit cards: RBI partially lifts curbs on HDFC Bank

Banking & Finance

[ad_1]

Read More/Less


In a major relief for HDFC Bank, the Reserve Bank of India has partially lifted the ban on the private sector lender and has allowed it to issue new credit cards.

“The bank has received a letter from the RBI lifting the restriction on sourcing of new cards,” said a person briefed on the development.

The bank will have to submit a board-approved letter of commitment to continued compliance with IT requirements, the person said, adding that it is expected the lender will submit it shortly. The restriction on digital launches will continue as of now.

The Reserve Bank of India had in December last year directed HDFC Bank to temporarily halt sourcing of new credit card customers as well as launches of digital business generating activities planned under its proposed programme Digital 2.0.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

MPC voted to give growth a chance to claw back into the sunlight: RBI Bulletin

Banking & Finance

[ad_1]

Read More/Less


The Monetary Policy Committee (MPC) voted to give growth a chance to claw its way back into the sunlight, according to an article in the Reserve Bank of India’s latest monthly bulletin.

The MPC’s decision — to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4 per cent and continue with the accommodative stance — is backed by all available evidence – mobility-, activity- and survey-based, according to the article ‘State of the Economy’.

 

“Yet it is, in the ultimate analysis, a judgement call because at the heart of the association between growth and inflation, a sacrifice is embedded,” according to the article put together by 23 RBI officials, including Deputy Governor MD Patra.

The authors observed that a reduction in the rate of inflation can only be achieved by a reduction in growth; an increase in growth is only possible by paying the price of an increase in inflation, always and everywhere.

 

“Called the sacrifice ratio in economics, the latest estimates for India suggest that for a one percentage point reduction in the rate of inflation, 1.5-2 percentage points of GDP growth have to be foregone,” assessed the authors.

The authors posed the question: “But what if the MPC doggedly attacks the supply shock induced price pressures in spite of the current state of the pandemic-ravaged economy and as a consequence, economic activity wilts into depression?”

The authors emphasised that no amount of humility will wipe away the tears then.

“Also, our MPC is India-focused; it has to be. It must choose what is right for India, emulating none, not emerging nor advanced peer,” they added.

The article noted that so far, inflation is on track to staying within the trajectory envisaged (average 5.7 per cent in FY22) and it is likely to stabilise during the rest of the year.

“In our view, this is a credible forward-looking mission statement for the path of inflation,” the authors said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Insurers look to IRDAI to hike premium

Banking & Finance

[ad_1]

Read More/Less


Amid mounting losses facing general insurers, the insurance regulator is understood to be examining the proposal to increase the premium for Covid-specific cover, but a decision is yet to be taken.

According to sources close to the development, the Insurance Regulatory and Development Authority of India (IRDAI) is set to call a meeting of the actuaries to further discuss the issue of re-pricing of Corona Rakshak and Corona Kavach policies.

Non-life insurers, which had earlier also made a representation to increase the premium for these policies, have now pointed to their Q1, saying it is difficult to survive without a hike in the rates of these policies. “Non-life insurers are bleeding on the back of huge claims on health covers due to Covid. The combined ratios of many private sector general insurers are as high as 125 per cent.

“A review of the rates of these policies is much needed, especiallysince their premium is so low,” noted the head of a general insurance company.

Another insurance executive said companies are awaiting further word from the IRDAI to come out with revised rates. “There has been some discussion, but we are still waiting for further directions,” he said.

The Corona Kavach and Corona Rakshak policies were launched last year by all insurers to provide Covid-specific cover to customers.

Corona Kavach is a family health insurance policy for Covid-19, while Corona Rakshak is a defined benefit policy. Premiums for these policies are as low as ₹150 in some cases.

The third wave

The second wave of the pandemic led to a rise in claims by at least two to three times for health insurance compared to the first wave last year, and insurers are now preparing for a third wave as well.

Some companies have also indicated that they may increase premiums for health cover across the board this year.

Insurance companies have paid Covid-related health claims of over ₹15,000 crore since the start of the pandemic.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Bounce rates for auto-debit transactions fall in July

Banking & Finance

[ad_1]

Read More/Less


In an indication of easing financial stress amongst borrowers, the number of unsuccessful auto-debit requests declined in July, reversing a three-month trend that started with the second wave of the pandemic and localised lockdowns.

Data with the National Payments Corporation of India from the National Automated Clearing House (NACH) reveals that the number of unsuccessful auto-debit requests in July was at its lowest level this fiscal year.

Of the total auto-debit transactions of 8.64 crore in July 2021, 2.87 crore were unsuccessful or returned while 5.77 crore were successful. This translated into a bounce rate of 33.23 per cent in July.

Elevated bounce rates

Auto debit bounce rates have remained elevated since the start of this fiscal year at 34.05 per cent in April and then increasing to 35.9 per cent in May and 36.5 per cent in June. It was at a low of 32.8 per cent in March.

Auto debit transactions are typically done by customers for recurring payments such as EMIs and insurance premiums. The data does not capture intra-bank transactions.

With the second wave of the pandemic affecting normal life and economic activities, many banks and NBFCs had reported rising stress and a drop in payments by their borrowers in the first quarter of the fiscal as a large part of the economy was impacted. Some had also attributed the drop to widespread infections and difficulties in collections.

Recovery by June-end

However, by the end of June, collection efficiency had begun to improve and it further recovered in July.

“Non-banks reported a steep deterioration in asset quality (stressed loans up 75-1,150 basis points quarter on quarter) during the quarter, owing to lower collections in April and May 2021. Collections picked up in June 2021 and further increased in July 2021,” said a report by Kotak Institutional Equities, adding that early trends in the second quarter are encouraging, though there may be wide variations in the pace of recovery.

The report further noted that banks also reported a higher level of upgradations as banks were able to resume collections and recoveries towards the last few weeks of the first quarter.

Equitas Small Finance Bank recently said that collection efficiency in July improved to 104.62 per cent from 83.49 per cent in June.

Nitin Chugh, MD and CEO, Ujjivan SFB, said that collection efficiency recovered to 78 per cent in June 2021 against 94 per cent in March, and further recovered to 93 per cent in July.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Spice Money sets up 1 lakh micro-ATMs in rural India

Banking & Finance

[ad_1]

Read More/Less


Spice Money on Tuesday said it has established a network of one lakh micro-ATMs (mATM) operating across rural India.

“During the pandemic induced lockdown, micro-ATMs emerged as the key driver to assist people with cash withdrawal and other essential services. Spice Money’s mATM network grew multifold from just over 18,000 in February 2020 to over 1,00,000 as on today,” it said in a statement.

The company covers 95 per cent of the rural pincodes in India with more than 7 lakh Adhikaris on its network, maximising the reach of the micro-ATMs to the financially underserved and cash-driven parts of the nation, it further said.

Spice Money witnesses over ₹1,000 crore worth of transaction on a monthly basis on its mATM network.

“While establishing a lakh – strong ATM network is a milestone for us, we will continue growing our reach and supporting more rural customers in their financial needs,” said Sanjeev Kumar, Chief Executive Officer, Spice Money.

Sonu Sood, Brand Ambassador and Advisory Board Member, Spice Money noted that micro-ATMs can play a crucial role in bridging the gap in financial services by bringing the convenience of banking transactions right to the next door kirana stores in rural India.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

SBI Life launches new age protection plan

Banking & Finance

[ad_1]

Read More/Less


SBI Life Insurance announced the launch of a unique new age protection solution called ‘SBI Life eShield Next’, which ‘levels up’ the protection coverage as the insured achieves life’s major milestones.

It is an individual, non-linked, non-participating, life insurance pure risk premium product and works by ‘levelling up’ the required insurance protection, through an increase in sum assured linked to the significant ‘level-up’ milestones in one’s life, like getting married, becoming a parent or buying a new house, the insurer said in a statement.

“As we progress in life, our term insurance should be able to intelligently take care of our needs as we progress through life’s important milestones. SBI Life eShield Next, with its three plan options, offers a distinctive customization feature that caters to the evolving needs of the consumer,” said Ravi Krishnamurthy, President, SBI Life Insurance.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

Top global banks crash crypto party, invest heavily in blockchain, currency firms, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Despite being very vocal about how bad Bitcoin supposedly is, top global can’t ignore the potential revenue streams and importance of having a strong strategic position in the crypto economy.

Most major banks including Standard Chartered, Barclays, Citigroup, Goldman Sachs are investing in crypto and blockchain-related companies in 2021.

Out of the top 100 banks by assets under management, 55 have invested in cryptocurrency and/or blockchain-related companies. Either directly, or through subsidiaries, according to Block Data.

The most active investors based on the number of investments in blockchain companies are Barclays (19), Citigroup (9), Goldman Sachs (8), J.P. Morgan Chase (7) and BNP Paribas (6).

The investors active in the biggest funding rounds are Standard Chartered ($380 million in 6 rounds), BNY Mellon ($320.69 million in 5 rounds), Citigroup ($279.49 million in 9 rounds), UBS Group ($266.2 million in five rounds) and BNP Paribas ($236.05 million in 9 rounds).

Where are they investing?

About 23 of the top 100 banks by assets under management are building custody solutions, or investing in the companies that provide them.

Custodians offer financial services to look after their clients’ funds, for a fee. They either build their own technology to offer this service, or use a technology provider whose solutions they can integrate into their own systems.

Why are banks investing in cryptos

Seeing cryptocurrency exchanges with a fraction of their staff become substantially more profitable or valuable than many banks. This started as early as 2018, when Binance, the leading exchange at the time, recorded $54 million more profit than Deutsche Bank, with just 200 vs 100,000 employees. More recently, Coinbase’s valuation was higher than Goldman Sachs, with just 4% of their employees.

Countless requests from their clients to provide Bitcoin solutions along with a change in regulations in 2020 that allows banks to offer crypto custody solutions is also among the reasons for banks to turn to cryptos.

The investments

Standard Chartered has invested $380 million via 6 rounds in firms including blockchain network Ripple, whose XRP token has a capitalisation of around $48 billion. It’s also an investor in Cobalt, a trading technology provider based in the UK. BNY has put money in Fireblocks, whose platform allows financial institutions to issue, move and store cryptocurrencies.

Citibank has invested $279 million in 9 rounds. It has put money in SETL, whose ledger technology is used to move cash and other assets.

UBS, with $266 million and 2 rounds, is an investor in Axoni, whose technology is used to modernize infrastructure in capital markets.

BNP Paribas has invested $236 million in 9 rounds and was developing real-time trade and settlement applications using smart contracts based on the DAML programming language with Digital Asset.

Morgan Stanley with $234 million with 3 investments has invested in NYDIG, a crypto custody firm and the bitcoin subsidiary of Stone Ridge, a $10 billion alternative asset manager.

JP Morgan Chase has bet $206 million via seven rounds and has investments in ConsenSys, an ethereum software company.

Goldman Sachs has put $204 million through eight investments, and its investee firms include Coin Metrics, a provider of blockchain data to institutional clients.

MUFG has put $185 million in six investment rounds in firms including Coinbase, the US cryptocurrency exchange that went public in April, and in Bitflyer, a Tokyo-based cryptocurrency exchange.

ING has bet $170 million spread across 6 investments and has backed HQLAx, a blockchain liquidity management platform.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,
1 … 195 196 197 198 199 … 540