KVG Bank launches FRUITS portal

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The Dharwad-headquartered Karnataka Vikas Grameena Bank (KVGB), in association with the Karnataka government, has launched ‘Farmer Registration and Unified Beneficiary Information System’ (FRUITS) portal.

Inaugurating the portal in Dharwad on Monday, Niraj Kumar Verma, Chief General Manager of Nabard, said the FRUITS portal is the first of its kind in the country where in the land and other details of all the farmers in the State are being captured.

In this latest initiative by the Karnataka government, all the farmers will be registered and given a FRUITS ID (FID) number. Using this number, the financial and lending institutions can access the land details of farmers as well as their borrowings and take a quick decision on lending to them depending on their requirements, he said.

Appreciating KVGB for accepting the FRUITS pilot project, he hoped that all financial institutions will be on boarded to the portal soon so as to have a single data source of farmers. He thanked the Karnataka Department of e-Governance, and Canara Bank (sponsor bank of KVGB) for spearheading this initiative.

P Gopi Krishna, Chairman of KVGB, said that this being the latest initiative by the Karnataka government each farmer will be given a FRUITS ID comprising Aadhaar, land records and mobile number. A well organised and scrutinised farmer database will avoid farmers from running pillar to post for availing benefits, he said.

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Tata Motors partners with Bank of Maharashtra for passenger vehicle retail financing scheme, BFSI News, ET BFSI

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Homegrown auto major Tata Motors on Monday said it has partnered with Bank of Maharashtra to offer retail financing scheme for its passenger vehicles.

Under the partnership, Bank of Maharashtra will provide loans to Tata Motors’ customers at an interest rate starting from as low as 7.15 per cent linked with Repo Linked Lending Rate (RLLR), subject to certain conditions, the company said in a statement.

Besides, the scheme will offer a maximum of 90 per cent financing on the total cost of the vehicle (on-road pricing) for various individuals like salaried employees, self-employed people, professionals, businessmen, and agriculturist, it added.

On the other hand, a maximum of 80 per cent financing can be availed on the cost of the vehicle by corporate clients, the company said.

Tata Motors Passenger Vehicles Business Unit Vice president, Sales, Marketing and Customer Care Rajan Amba said, “Given the ramifications of the second wave of the pandemic, we, at Tata Motors, have always tried to make our personal mobility solutions more affordable and accessible for individuals and families at beneficial rates.”

The partnership with Bank of Maharashtra is aimed at offering special finance schemes to support to the company’s customers in these tough times, it added.

“We hope that these offers will make the process of purchasing a car that much easier for customers and that this will positively impact their overall buying experience of Tata cars,” Amba said.

Bank of Maharashtra Executive Director Hemant Tamta said, “We are optimistic that we can forge a great partnership and serve our customers with the best products and services.”

Tata Motors said the partnership is also offering its customers a hassle-free option of getting their loans approved with zero processing fee till September 30, 2021 under “Monsoon Dhamaka Offer”.

Prospective buyers can also avail of a special EMI option starting with Rs 1,517 per lakh for 7 years.banking



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HDFC Bank plans to raise funds via AT-1 bonds from overseas market, BFSI News, ET BFSI

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NEW DELHI: HDFC Bank on Monday said the bank plans to raise capital by additional tier- I (AT1) bonds in the overseas market to fund its business growth.

The bank is expected to raise up to USD 1 billion from these dollar denominated bonds.

“We hereby inform you that the bank had approved the issuing of debt instruments in the form of the notes, subject to market conditions,” HDFC Bank said in a regulatory filing.

An offering memorandum (OM) has been prepared and shall be made available to the prospective investors in relation to the contemplated issue of notes, it said.

The notes will not be offered or sold in India under the applicable laws, including the Companies Act, 2013, as amended from time to time, it added.

Earlier in April, the bank had informed that it is planning to raise up Rs 50,000 crore during the next 12 months through issuing bonds.

“The bank proposes to raise funds by issuing perpetual debt instruments (part of additional tier-I capital), tier-II capital bonds and long-term bonds (financing of infrastructure and affordable housing) up to a total amount of Rs 50,000 crore over the period of the next 12 months through the private placement mode,” HDFC Bank had said.

Perpetual bonds carry no maturity date, so they may be treated as equity, not as debt.



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HDFC Bank approves issue of AT1 bonds

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HDFC Bank on Monday said it will issue debt instruments in the form of Additional Tier 1 bonds.

“We had informed the stock exchanges that the Board of Directors of HDFC Bank in its meeting held on July 17, 2021, is contemplating raising of long term funds through the issuance of $ Basel III Compliant Additional Tier 1 Bonds (Notes), in the international markets, subject to market conditions,” it said in its filing.

An offering memorandum has been prepared and shall be made available to the prospective investors in relation to the contemplated issue of Notes, it further said.

The bank, however, did not specify the amount to be raised.

10 top banks create secondary market for corporate loans

Meanwhile, Moody’s Investors Service in a statement said it has assigned a Ba3 (hyb) rating to HDFC Bank’s proposed USD-denominated, undated, non-cumulative and subordinated AT 1 capital securities.

“The Ba3 (hyb) rating is three notches below HDFC Bank’s baa3 Baseline Credit Assessment (BCA) and Adjusted BCA, reflecting the probability of impairment associated with non-cumulative coupon suspension, as well as the likelihood of high loss severity when the bank reaches the point of non-viability,” it said.

In its meeting on July 17, the bank’s board had approved the issue of standalone foreign currency denominated Perpetual Debt Instruments as Basel III compliant AT 1 bonds to foreign (global) investors outside India, on an unsecured basis, on a public or a private placement basis, along with a proposed listing of the AT1 Bonds and other related activities in the course of the financial year 2021- 22, subject to market conditions and applicable approvals.

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SBI announces various special offers for retail customers

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The country’s largest lender State Bank of India on Monday announced a slew of offers for its retail customers ahead of the festive season.

The bank has announced a 100 per cent waiver on processing fees for its car loan customers across all channels, a release said, adding that customers can get the facility of up to 90 per cent on-road financing for their car loans.

The lender is also offering a special interest concession of 25 basis points (bps) to a customer applying for a car loan through YONO.

YONO (You Only Need One App) is the mobile banking app of the lender.

YONO users can avail car loans at an interest rate starting at 7.5 per cent per annum, the release said.

The bank is offering a reduction of 75 bps in the interest rates for customers availing gold loans. They can avail gold loans from across all channels of the bank at 7.5 per cent per annum.

Moreover, it has waived off the processing fee for all the customers applying for gold loans via YONO, the release said.

For personal and pension loan customers, the lender has announced a 100 per cent waiver in processing fees across all channels.

For Covid warriors i.e, frontline healthcare workers applying for personal loans, a special interest concession of 50 bps has been announced. This offer will soon be available for application under car and gold loans as well, it said.

The lender said it is introducing a ‘Platinum Term Deposits’ offer for its retail depositors, to mark 75 years of independence. Under the offer, customers can get additional interest benefits of up to 15 bps on term deposits for 75 days, 75 weeks, and 75 months tenors starting August 15, 2021 to September 14, 2021.

“We believe that these offerings will help customers to save more on their loans and at the same time add value to their festive celebrations,” the bank’s managing director CS Setty said in the release.

Last month, the bank had announced a 100 per cent waiver on processing fees on home loans till August 31, 2021. Its home loan interest rate starts at 6.70 per cent.

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Card issuing banks may be hit if Mastercard ban continues for long, BFSI News, ET BFSI

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A month after predicting a hit to five private sector banks due to the ban on Mastercard by the Reserve Bank of India, the global brokerage has said that there would be no material impact on the card issuers.

Nomura Global Markets Research says it does not foresee any material impact on card issuers in the near term, especially credit card issuers, but there could be a medium-term impact if this situation persists, according to a report.

What Nomura said

As many as five private sector banks, including Axis Bank, Yes Bank, and IndusInd Bank, are to be impacted by the Reserve Bank of India’s decision to ban Mastercard from issuing new cards for not complying with local data storage guidelines, Nomura had said last month.

HDFC Bank would also have been affected by this decision but the lender is already facing restrictions by the RBI on issuance of new cards (debit, credit or prepaid).

Besides these five banks, Bajaj Finserve and SBI Card may face problems as they were also issuing cards of this payment gateway.

So, in all, as per the report of global brokerage firm Nomura, seven financial institutions would not be able to issue new card as they sourced significant number from Marstercard.

The issuance of new cards through another payment gateway would take 2-3 months because it involves technology integration and other modalities, it had said.

“Among credit card issuers including co-brand partners, RBL Bank, Yes Bank and Bajaj Finserv lending are most impacted, in our view, as their entire card schemes are allied with Mastercard,” the report said.

As per the report, RBL Bank, Yes Bank and Bajaj Finserv were fully dependent on Mastercard for card issuance while dependence of IndusInd Bank, ICICI Bank and Axis Bank varied from 35 per cent to 40 per cent.

Card-issuing arm of State Bank of India, SBI Card, has only 10 per cent of their card tied up to the banned Mastercard. On the other hand, Kotak Mahindra Bank”s card portfolio is entirely allied to Visa and hence won”t face any issues.

After the development, RBL Bank had entered into an agreement with Visa Worldwide to start issuance of credit cards on the Visa platform. The bank will be able to issue the new cards after technology integration which is expected to take 8-10 weeks.

The RBI action

The RBI barred Mastercard Asia/Pacific Pte Ltd from on-boarding new customers across all its card products (debit, credit and prepaid) from July 22, 2021, as it failed to comply with data storage norms.

Taking action against Mastercard, the RBI said, “Notwithstanding lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data.”

However, the RBI’s directions will not impact existing customers of Mastercard.

Mastercard became the third major Payment System Operator on which restrictions have been imposed for non-compliance with RBI”s direction on Storage of Payment System Data.

Earlier, the RBI had restricted American Express Banking Corp and Diners Club International Ltd from onboarding new domestic customers on to their card networks from May 1 for violating data storage norms.

Mastercard is a payment system operator authorised to operate a card network in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).

In terms of the RBI’s circular on Storage of Payment System Data on April 6, 2018, all system providers were directed to ensure that within a period of six months the entire data relating to payment systems is stored only in India.

They were also required to report compliance to the RBI and submit a board-approved system audit report conducted by a CERT-In-empanelled auditor within specified timelines.



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CMS Info Systems files draft papers with Sebi to garner Rs 2,000-cr via IPO, BFSI News, ET BFSI

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New Delhi, Cash management company CMS Info Systems has filed preliminary papers with markets regulator Sebi to mop up Rs 2,000 crore through its initial share sale offering. The company’s initial public offer (IPO) is a pure offer for sale by promoter Sion Investment Holdings Pte Limited, an affiliate of Baring Private Equity Asia, as per the draft red herring prospectus (DRHP).

Sion Investment, which acquired CMS in 2015, holds 100 per cent stake in the company at present.

CMS provides cash management services, which include ATM services, and cash delivery and pick-up.

The company’s integrated business platform is supported by customised technology and process controls, which enables it to offer customers a wide range of tailored cash management and managed services solutions.

It caters to broad set of outsourcing requirements for banks, financial institutions, organized retail and e-commerce companies in India. It operates business in three segments — cash management services, managed services and others.

This will be the company’s second attempt to go public. Earlier in 2017, it had filed draft papers with Sebi and had obtained the regulator’s clearance to launch the IPO. However, the company did not launch the public issue.

Axis Capital, DAM Capital Advisors, Jefferies India, and JM Financial are appointed as the book running lead managers to the issue.



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RBI gives Ind Bank Housing time till December to complete revival process, BFSI News, ET BFSI

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The Reserve Bank has asked Ind Bank Housing Ltd to complete its revival process by the end of December and submit a board-approved plan.

State-owned Indian Bank is the promoter of Ind Bank Housing with 51 per cent stake in the company.

“On our request, RBI has given us time up to December 31, 2021 for completing the revival process of the company and to submit board approved plan for revival,” Ind Bank Housing said in a regulatory filing on Friday.

The company had reported a net loss of Rs 6.36 lakh in the quarter ended June 2021, which widened from Rs 4.38 lakh loss in the same period a year ago.

The company’s total revenues were Rs 6.39 lakh during the period, down from Rs 8.33 lakh.

In its annual report 2019-20, Ind Bank Housing said it has put in place an aggressive recovery mechanism for realisation of existing home loans.

As of March 31, 2020, it had only one employee on direct rolls, while others were engaged on contractual basis or deputed from the parent organisation, it said in the report.

In 2020-21, the company had a net loss of Rs 18.87 lakh. During FY20, the company had a profit of Rs 2.74 crore. After appropriating the profit, the accumulated losses of the company stood at Rs 134.83 crore as at March 31, 2020 as against Rs 137.58 crore a year ago, it said in its annual report.

Ind Bank Housing said it is making efforts for revival of its operations and has prepared a road map for restructuring of capital and restarting of lending operations. However, the efforts have been delayed due to the COVID-19 situation, it said.



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After reverse merger, promoter holding in Equitas, Ujjivan SFBs to fall to zero, BFSI News, ET BFSI

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Taking a cue from IDBFC First Bank, Equitas Small Finance Bank and Ujjivan SFB plan to reverse merge the holding companies into the SFB, thereby bringing down the promoter shareholding to zero.

In case of Ujjivan SFB, promoter shareholding, or the shareholding by the non-operating holding comapbny was 83.32 per cent as in June 2021 while in the case of Equitas, the NOFHC held 81.98 per cent of the bank in March this year.

RBI rules stipulate that the SFB promoters must bring down their shareholding to 40 per cent in five years.
The reverse merger, in this case, brings down the promoter shareholding to zero as post merger, the holding companies would cease to exist.

Equitas SFB

As per the SFB licensing guidelines of RBI, a promoter of SFB can exit or to cease to be a promoter after the mandatory initial lock-in period of five years (initial promoter lock-in) depending on RBI’s regulatory and supervisory comfort and SEBI regulations at that time.

In case of Equitas Small Finance Bank (the bank), the initial promoter lock-in for the company expires on September 4, 2021.

Hence, the bank had requested RBI if a scheme of amalgamation of the company with the bank, resulting in exit of the promoter, can be submitted to RBI for approval, prior to the expiry of the said five years, to take effect after the initial promoter lock-in expires.

RBI vide its communication dated July 9, 2021, to the bank has permitted the bank to apply to RBI seeking approval for scheme of amalgamation.

RBI has also conveyed that any ‘no objection’, if and when given on the scheme of amalgamation, would be without prejudice to the powers of RBI to initiate action, if any, for violation of any licensing guidelines or any terms and conditions of license, or any other applicable instruction, it added.

The share exchange ratio would result into each shareholder of the transferor company, Equitas Holdings, getting 226 equity shares of the transferee company, Equitas SFB, for every 100 shares held by them in the holding company.

Holding company

The RBI had mandated a holding company structure to ring-fence the bank from other financial services businesses of the group. A reverse merger is beneficial to the shareholders of IDFC as it would remove the holding company discount. While the 2013 RBI rules mandated it, in the 2016 guidelines for “on-tap” bank licensing, the RBI had not sought requirement of holding company for promoter if there are no other group entities.



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US banks walk tightrope of encouraging, but not mandating vaccines

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Big Wall Street banks have started enforcing stricter mask and vaccine requirements for staff, sometimes communicating them behind the scenes, in an effort to combat Covid-19 infections in their offices while avoiding a fierce national debate about individual rights, sources at the banks and consultants who work with them told Reuters.

Specifics differ, but many big banks have tightened up policies or pushed back return-to-office dates from just a month ago.

Now, Citigroup Inc and Morgan Stanley have the toughest rules at their New York headquarters, where staff entering must be vaccinated.

JPMorgan Chase & Co and Goldman Sachs Group Inc have not mandated vaccines the same way, but both require unvaccinated workers to wear masks and get tested at least weekly.

Bank of America Corp will only allow vaccinated staff to return to its offices in early September, while encouraging other employees to get inoculated.

Drop in infections

The widespread availability of Covid-19 vaccines in the United States caused infections to drop dramatically from January to June, but driven largely by the Delta variant, the current seven-day moving average of daily new cases is up 35 percent, according to Reuters tracking data.

Wells Fargo & Co pushed back its return-to-office start date to October because of an increased risk from the Delta variant.

Behind the scenes, executive committees have been debating policies and how to express them for weeks. Although sources inside the banks say the majority of Wall Street’s workforce has been vaccinated, there remains a vocal group of employees who do not want to get shots for health or religious reasons, as well as some who feel that any mandate infringes on their personal rights.

“It’s, like, on a wing and a prayer that people are saying they are going to require this,” said a senior executive at one of the large banks who requested anonymity to discuss high-level internal discussions.

Sending mandates through company-wide memos can stir outrage not only from employees who oppose them, but from politicians and right-wing groups that sometimes use big banks as political targets, the executive said. When new requirements have been reported in the press, some of the banks have experienced backlash, leading them to communicate changes more quietly, sources said.

Vaccination policies

Citigroup announced its vaccination mandate through a LinkedIn post. Morgan Stanley has stopped sending Covid-19 policy updates through e-mail and instead has managers communicate directives to staff in small groups or individually.

Morgan Stanley’s policies vary by region.

There is also some risk of employees suing banks, either because they got sick at the office due to a Covid-19 outbreak, or because they oppose mask and vaccination requirements, sources said.

Outside the financial sector, there have been some attempts to sue, but judges have been siding with employers, said Jacqueline Voronov, a labor and employment attorney at HallBooth Smith.

“The courtroom doors are always open,” she said. “Can you bring a claim? Yes. Will it be successful? Most likely, no.”

The banks are walking a fine line as they try to encourage staff to get vaccinated and return to offices, while avoiding backlash from them, as well as legal, political and headline risk, said Adam Galinsky, a Columbia Business School professor who specialises in leadership, decision-making and ethics.

Companies generally need employees to be engaged with their responsibilities, rather than worried about getting sick or caught up in fierce social debates.

As a result, it makes sense that the banks are quietly urging staff to get vaccinated and enforcing tougher mask and testing policies for now, but, eventually, Galinsky expects them to move toward hard line mandates for all staff.

“They are trying to find that right pathway,” he said.

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