Category: Banking & Finance

Federal Bank board clears IFC’s Rs 916 crore investment, BFSI News, ET BFSI

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Mumbai: The International Finance Corporation (IFC) Group has invested Rs 916 crore in Federal Bank. In a notice to the stock exchange, the Kerala-based bank said that the board approved the decision in its meeting on July 23.

The board approved the allotment of 10.5 crore shares of face value Rs 2 to the IFC Group at an issue price of Rs 87.4. With this allotment, the paid-up capital of the bank has risen from 199.6 crore shares to 210.1 crore of Rs 2 each. The bank said in a statement that the decision by IFC to acquire 4.9% in the bank was a testimony to its belief in the brand and its operational efficiency.

As of end June 2021, mutual funds held 35.6% in the bank followed by foreign investors (24%) and insurance companies (10.8%). Individual shareholders and others held the remaining 29.3%. The investment from IFC comes at a time when the bank’s CEO Shyam Srinivasan received RBI’s approval for a three-year extension.

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Indel Money launches special gold loan scheme for vaccinated citizens

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To encourage vaccination against Covid-19, Indel Money has launched a special gold loan scheme with attractive interest rates for vaccinated citizens.

Indel Money IFC (Indel Money India Fight Against Corona) is offering a gold loan with a one year tenure, interest rate of 11.5 per cent, full loan to value and zero processing fee.

“Any existing Indel Money customer or any gold loan seeker who has received at least one vaccine dosage are eligible to avail the special gold loan scheme upon the submission of valid vaccination proof,” the South India-based NBFC said in a statement.

Umesh Mohanan, Executive Director and CEO, Indel Money said, “Vaccination is the vital step in strengthening the nationwide fight against Covid-19 pandemic and one of the ways to intensify the vaccination drive is to encourage more and more people to get vaccinated.”

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Rupee inches 7 paise higher to 74.35 against US dollar in early trade

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The Indian rupee gained 7 paise and touched 74.35 against the US dollar in early trade on Tuesday, tracking positive domestic equities.

Forex traders said the rupee is trading in a narrow range as investors are awaiting cues from the US Fed’s policy decision due on Wednesday.

At the interbank foreign exchange, the domestic unit opened at 74.36 against the dollar, then inched higher to 74.35, registering a gain of 7 paise over its previous close. On Monday, the rupee had settled at 74.42 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05 per cent down at 92.60, as traders and investors will look to cues from the Fed’s policy decision, due on Wednesday.

Asian currencies have started marginally stronger against the greenback this Tuesday morning and could lend support, Reliance Securities said in a research note.

Also read: Rupee drops by 2 paise to 74.42

On the domestic equity market front, BSE Sensex was trading 119.08 points or 0.23 per cent higher at 52,971.35, while the broader NSE Nifty advanced 49.95 points or 0.32 per cent to 15,874.40.

Meanwhile, foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth ₹2,376.79 crore, as per exchange data.

Global oil benchmark Brent crude futures advanced 0.48 per cent to USD 74.86 per barrel.

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Trifecta Capital announces first close of Trifecta Leaders Fund-I at ₹1,000 crore

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Trifecta Capital on Tuesday announced the first close of its late-stage venture capital fund — Trifecta Leaders Fund – I, with commitments of over ₹1,000 crore (about $130 million).

The fund was launched three months ago and has a target corpus of ₹1,500 crore ($200 million).

“The first close has seen strong participation from domestic investors including large corporates, insurance companies, marquee family offices, ultra-high-net-worth individuals (UHNIs), and entrepreneurs,” a statement said.

Existing investors of Trifecta Capital’s venture debt funds have also made significant investments in this fund, it added.

For the balance ₹500 crore (about $70 million), the firm is in discussions with several domestic and global institutional investors, the statement noted.

Trifecta Leaders Fund – I will invest ₹100-200 crore ($15-30 million) each in around 10-12 companies for minority stakes, through a combination of primary and secondary positions.

The fund will cater to the unmet needs of late-stage companies by providing off-cycle liquidity to early investors, angels, current and former employees including consolidation of equity cap tables, the statement said.

The fund has also set-up an advisory board comprising global tech experts who will support portfolio companies as they navigate their path to liquidity.

Portfolio companies

Trifecta Capital, across its two venture debt funds, has invested in over 75 companies and its portfolio now comprises of 20 unicorns and soonicorns including Big Basket, Pharmeasy, Cars24, Vedantu, Infra.Market, ShareChat, DailyHunt, UrbanCompany, CarDekho, Blackbuck, Ninjacart, NoBroker, Kreditbee, Dehaat, Turtlemint, Livspace, Mobikwik, Ixigo and BharatPe amongst several others.

These companies cumulatively valued at $22 billion have raised over $8 billion in equity.

Since inception, Trifecta Capital has deployed over ₹2,000 crore ($275 million).

“Through this new fund, we aim to provide investors access to the value creation opportunity in the last leg of private to public journey of tech companies.

“With strong institutional investor interest in India internet, we expect listings of several large well known startups, and creation of liquidity for existing investors as these companies tap the public markets for their longer term financing needs,” Trifecta Capital Managing Partner Rahul Khanna said.

He added that Trifecta Leaders Fund-I is an attractive opportunity for investors who have so far been unable to access these great companies since they are predominantly funded by offshore VC and PE funds.

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UK digital bank Starling buys lender Fleet Mortgages, BFSI News, ET BFSI

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British digital bank Starling said on Monday it has acquired specialist buy-to-let mortgage lender Fleet Mortgages in a 50 million pound ($68.93 million) cash and share deal.

Starling said the deal was part of a wider plan to expand lending, including through further mergers and acquisitions.

Fleet Mortgages – which has around 1.75 billion pounds of mortgages under management – will retain its brand and management team.

“The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class,” Starling CEO Anne Boden said.

The takeover comes days after Starling said it was on track for full-year profitability after narrowing its losses, and confirmed it could float on the stock market as soon as next year.

Launched in 2017, Starling is one of Britain’s most prominent financial technology companies and has fared better than some of its peers by expanding its business lending through state-backed pandemic schemes.

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Franklin Templeton MF: SC says SAT direction of ₹250-crore deposit is ‘fair’

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The Supreme Court has allowed Franklin Templeton Mutual Fund (FTMF) to deposit ₹250 crore into an escrow account instead of ₹512 crore as earlier directed by SEBI.

In June, the market regulator had asked FTMF to return nearly ₹512 crore it had collected as management and advisory fees since June 2018 on its six debt schemes that were shut down last year. Further, SEBI had banned the fund from launching any new debt schemes for two years.

Debt MFs: SEBI moots swing pricing

But the Securities Appellate Tribunal (SAT) stayed the SEBI penalty after Franklin Templeton challenged the market regulator’s order. SAT also found the SEBI penalty ‘excessive’ and directed FTMF to deposit ₹250 crore in an escrow account till the case is disposed of. SEBI had challenged this in the top court.

SEBI argued that reducing the penalty amount will set a precedent because its decision to ask the company to return ₹512 crore was based on facts and statistics.

However, the Bench of Justices Abdul Nazeer and Krishna Murari said that the court will not interfere with the SAT order. “Four weeks further time is given to SEBI before SAT, Mumbai. We direct SAT to dispose of the matter expeditiously as possible,” the Supreme Court said.

FTMF submitted that it would not launch any new debt schemes till the matter is disposed of by SAT.

Franklin Templeton: Suspended debt schemes to pay Rs 3,303 crore

‘A drop in the ocean’

“The SC feels that ₹250 crore is enough. But the real question is how will this help the investors. The amount is just a drop in the ocean against what FTMF owes its investors. Also, ₹250 crore is peanuts versus the adjustments that FTMF has done in its books,” said Anil Jain, a chartered accountant and investor litigating the case in the Supreme Court.

Jain says that ₹512 crore that SEBI had asked FTMF to deposit was based on the NAV adjustments done by the fund house and it was the clawback amount that would have come to the unitholders. “There is a huge difference in the NAV of the six debt schemes that FTMF had given in April 2020, when the schemes were shut, versus the NAV they gave out recently. Of the ₹512 crore, ₹452 crore was clawback amount and ₹60 crore the interest on it. After a scheme is shut, rules do not provide for daily NAV adjustments. Investors say FTMF on its own resorted to declaring NAV adjustments even after the schemes were shut and brought down the valuation and thereby influenced the clawback amount,” Jain says.

Franklin Templeton declined to comment on the Supreme Court order.

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PSBs vacating branches open doors for other lenders

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The move by five public sector banks to reduce their branch numbers is proving godsend for lenders looking to expand their network.

The branches being vacated by Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank, Union Bank of India (UBI) and Indian Bank have opened the doors to ready-made premises for other lenders. For the latter set, network expansion happens faster, at reasonable costs (as owners of these premises are desperate to rent them out) and without the hassle of re-doing interiors.

To cut down on operating expenses, the five PSBs have been merging or rationalising branches after the amalgamation of banks with them.

AS Rajeev, MD & CEO, Bank of Maharashtra, observed, 25-30 per cent of the branches opened by BoM last year were in the premises vacated by the PSBs. “The rent is comparatively less. That is why our rent outgo is not increasing despite the rise in the number of branches,” he said. BoM, which opened 82 branches last year, plans to open about 100 in FY22.

BK Divakara, CFO, CSB Bank, noted that 30-40 branches opened in 2020 and so far this year have been at premises vacated by a PSB. Divakara said the bank opened 101 branches last year and plans to open 200 this year.

CSB Bank actively scouts for ready-to-move premises being vacated by PSBs to avoid overlap of branches. These premises usually come with a strong-room (constructed to central bank specifications), counters and furnishings.

Branch rationalisation

After the amalgamation of Dena Bank and Vijaya Bank with BoB on April 1, 2019, the latter merged or rationalised 1,310 branches.

PNB rationalised about 430 branches after Oriental Bank of Commerce and United Bank of India were merged with it from April 1, 2020.

Canara Bank merged or closed 105 branches after taking over Syndicate Bank on April 1, 2020.

Union Bank of India merged or closed 275 branches after the amalgamation of Andhra Bank and Corporation Bank with it from April 1, 2020.

Indian Bank rationalised 203 branches after absorbing Allahabad Bank from April 1, 2020.

 

 

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PSBs vacating branches open doors for other lenders

Banking & Finance

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The move by five public sector banks to reduce their branch numbers is proving godsend for lenders looking to expand their network.

The branches being vacated by Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank, Union Bank of India (UBI) and Indian Bank have opened the doors to ready-made premises for other lenders. For the latter set, network expansion happens faster, at reasonable costs (as owners of these premises are desperate to rent them out) and without the hassle of re-doing interiors.

To cut down on operating expenses, the five PSBs have been merging or rationalising branches after the amalgamation of banks with them.

AS Rajeev, MD & CEO, Bank of Maharashtra, observed, 25-30 per cent of the branches opened by BoM last year were in the premises vacated by the PSBs. “The rent is comparatively less. That is why our rent outgo is not increasing despite the rise in the number of branches,” he said. BoM, which opened 82 branches last year, plans to open about 100 in FY22.

BK Divakara, CFO, CSB Bank, noted that 30-40 branches opened in 2020 and so far this year have been at premises vacated by a PSB. Divakara said the bank opened 101 branches last year and plans to open 200 this year.

CSB Bank actively scouts for ready-to-move premises being vacated by PSBs to avoid overlap of branches. These premises usually come with a strong-room (constructed to central bank specifications), counters and furnishings.

Branch rationalisation

After the amalgamation of Dena Bank and Vijaya Bank with BoB on April 1, 2019, the latter merged or rationalised 1,310 branches.

PNB rationalised about 430 branches after Oriental Bank of Commerce and United Bank of India were merged with it from April 1, 2020.

Canara Bank merged or closed 105 branches after taking over Syndicate Bank on April 1, 2020.

Union Bank of India merged or closed 275 branches after the amalgamation of Andhra Bank and Corporation Bank with it from April 1, 2020.

Indian Bank rationalised 203 branches after absorbing Allahabad Bank from April 1, 2020.

 

 

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UK Court declares Vijay Mallya bankrupt, BFSI News, ET BFSI

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MCX data breach: No charges against former MD

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Mrugank Paranjape, the former MD and CEO of Multi Commodity Exchange (MCX), will not face any further charges for the alleged data breach scandal that rocked the exchange during his tenure in 2016. The MCX board, which met last Saturday, has decided to hold back Paranjape’s variable pay for the year.. There will be no further inquiry or charges levelled against Paranjape or anybody else into the matter, sources told BusinessLine.

The alleged theft of market data at MCX and its use by unauthorised persons was the second major incident of breach at any exchange in India after the National Stock Exchange (NSE) algo trading scandal came to light.

Also read: MCX holds back former MD’s salary in data breach case

In both the cases, the involvement of key people and a Mumbai-based research institution Indira Gandhi Institute of Development Research (IGIDR) had come to light. A forensic audit report by New Delhi-based firm TR Chaddha and Co had mentioned in its report that data shared by the MCX with Susan Thomas, a professor with IGIDR, could have gone into algorithmic trading and even accessed by unauthorised persons.

Professor Thomas is the wife of Ajay Shah, one of the accused in the NSE Co-location scam. However, MCX board is of the view that it could not find enough evidence to take the matter forward, the sources said.

‘Censure order’

“It is likely that MCX could pass a censure order in the data breach matter,” the source said. Censure is a formal and public act intended to convey that the persons concerned have been guilty of some blameworthy act or omission.

Also read: MCX probing ‘abuse’of pact with IGIDR

BusinessLine first broke the story in 2018 about the forensic audit that revealed how the MCX shared data via ‘private undertaking’ with Thomas and Chirag Anand, a Delhi-based algo software designer. The case was in a limbo since the forensic audit was submitted. The exchange had also sought explanation from some of the other employees in the exchange.

MCX has also conducted an internal inquiry regarding the purchase of land by it at the Gujarat International Finance-Tech (GIFT) City in Gandhinagar when Paranjape was at the helm. Sources told BusinessLine that more land was purchased than was formally approved by MCX board or its committee.

Another incident where the role of Paranjape and a senior board member was under the scanner was the award of a multi-crore software development contract to a London-based firm for a spot exchange platform. “In all these matters, MCX has decided not to hold anybody responsible for the lack of evidence,” the sources said.

When contacted, Paranjape said, “I have not received any communication from MCX and hence I’m not aware of anything. I’m not saying anything more.” MCX did not respond to an email query from BusinessLine

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