Category: Banking & Finance

HDFC Life Q1 net down 33%

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In comparison to Q1FY21, the company, a joint venture between HDFC Ltd. and Standard Life Aberdeen, clocked higher renewal collections, with 13th month persistency improving from 87% to 90%.

Private sector life insurer HDFC Life Insurance on Monday reported a 32.97% year-on-year fall in its standalone net profit to `302.35 crore for the first quarter this fiscal, against `451.09-crore net profit for the same period last fiscal, as it has created `700 crore of excess mortality reserve. During the quarter under review, the company’s new business premium stood at `3,767 crore, up 44% y-o-y, while renewal premium rose 20% y-o-y to Rs 3,889 crore.

Vibha Padalkar, MD & CEO, said, “Against the backdrop of disruption in business on account of localised lockdowns, and surge in cases during the second wave, we recorded 22% growth and market share of 17.8% in private sector in terms of individual WRP (weighted received premium). We clocked 40% growth in terms of value of new business and we achieved a new business margin of 26.2% in Q1.” Padalkar said the insurer’s product mix continued to remain balanced and its annuity business witnessed strong growth of 61% in first quarter.

In comparison to Q1FY21, the company, a joint venture between HDFC Ltd. and Standard Life Aberdeen, clocked higher renewal collections, with 13th month persistency improving from 87% to 90%.

“”In the quarter gone by, we witnessed a steep rise in death claims, with peak claims in wave 2 at around 3-4 times the peak claim volumes in the first wave. We paid over 70,000 claims in Q1. The gross and net claims provided for amounted to Rs 1,598 crore and Rs 956 crore, respectively,” Padalkar said, adding based on its current claims experience, the company set up an additional reserve of Rs 700 crore to service the claims intimations expected to be received.

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Private life insurers operate in challenging environment, says Deepak S Parekh

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Parekh said life insurers must be held accountable only for the expense management limit by the regulator, Irdai.

HDFC Life insurance chairman Deepak S Parekh on Monday said the country’s private life insurance companies are operating in an extremely challenging and dynamic environment, and would need to invest in technology, skilling and distribution, among others, to stay ahead of the curve.

Addressing shareholders at the life insurance company’s 21st annual general meeting, Parekh said, “We ranked consistently among the top two companies in the private sector in terms of new business premium, closing the year (FY21) at Rs 20,110 crore with a market share of 21.5%.”

On impact of Covid-19, Parekh said the overall impact of the second wave on India’s economy was expected to be milder and largely restricted to the June quarter. Business was expected to pick up in the second quarter. He said increasing the market share was obviously the main objective of the company.

Parekh said life insurers must be held accountable only for the expense management limit by the regulator, Irdai. “In this context, we continue to engage with the regulator to hold life insurers accountable towards only one parameter, i.e. the expense management limit, rather than have numerous rules over what they can or cannot invest or spend on. This would be akin to the concept of a TER (total expense ratio) followed by mutual funds,” he pointed out.

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Equity investing: Paytm Money app gaining traction

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Paytm Money, a subsidiary of IPO-bound Paytm, has 2,08,000 equity trading accounts as of March 31, 2021. This has been disclosed in the draft red herring prospectus (DRHP) that the financial services major One 97 Communications (Paytm) filed with SEBI recently for its proposed ₹ 16,600 crore initial public offering (IPO).

This performance of having over two lakh equity trading accounts may be noteworthy as Paytm Money had started providing stock broking services only in 2020, capital market observers said.

Although the total number of users availing Paytm Money’s stock broking services has increased and continues to grow, it is still less than one per cent of Paytm’s monthly active customer base. On an overall basis, there are over 33 crore users in the country who are availing various payment and other financial services offered by Paytm.

Rise in demat accounts

Post the first wave of Covid-19 and pandemic induced lockdown, there has been a sharp rise in the number of new demat account sign-ups in the country. There has been an increase of 70 lakh new demat accounts in 2020-21, taking the overall number of demat accounts as of end March 2021 to 6.2 crore. The rise in new age digital-only platforms in recent years has only brought in new investors and accelerated the opening of demat accounts, reflecting growing participation in equity markets.

Also read: Paytm files for biggest Indian IPO

Several investors in Tier-2 and Tier-3 cities and beyond are now able to access the equity markets directly on the back of technology leap and digital offerings by online broking companies. Also the fact that millennials have taken to equity trading in a big way out of their apps has also helped push this trend, say capital market observers.

As of end March 2020, India had 5.5 crore demat accounts, more than double the level of 2.5 crore accounts in end March 2016.

Paytm Money’s equity investing and trading platform is helping make direct equity investing accessible across India, including the under penetrated segments.

Paytm Money has achieved a combined assets under management (AUM) of ₹ 5,200 crore in mutual funds, gold and stock trading as on March 31,2021, the IPO prospectus showed.

Digital gold

Users have taken to purchasing digital gold from Paytm Gold in a big way going by the number of investors who had used this service. Since the launch of the digital gold service in 2017, as many as 7.4 crore investors have used the Paytm Gold’s digital gold services, according to the IPO prospectus filed with regulator. Many investors had also opted for the systematic gold withdrawal savings plan.

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Capital India to invest $25 million in Credenc for education finance

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Capital India has added another business to its portfolio by investing $25 million in mixed equity and debt in Credenc, an education lending fin-tech platform. The aim is to ensure Capital India’s vision to enable digital financial products and services to Indian customers.

“The annual spend on college fees in India is around $50 billion or ₹3.5+ lakh crore, of which only 5 per cent is financed by organised lenders. With Credenc, Capital India Finance Limited (CIFL) intends to change the segment perception and reduce underwriting risk basis Credenc’s future employability score, which will help this percentage go up to at least 15 per cent aiming to lend 3000 crores by 2025. Also, the founders will continue to run operations for Credenc as we would not want to disrupt the working of the organisation and believe they know the business best,” said SK Narvar, Promoter, Capital India

Evaluation process

The Credenc undertakes a rigorous evaluation process using a proprietary artificial intelligence (AI) model, which tracks 15 million data points to predict students’ future income applying for loans. They provide financial assistance based on student potential and future income instead of the family’s existing financial capability, which is typically the primary factor considered by traditional education lenders.

“Our partnership with Capital India is very strategic, it will give us both balance sheet and cost of capital advantage which will help in disrupting the education lending segment by providing loans to students who were until now ignored, helping lakhs of Indian students achieve their potential,” said Avinash Kumar, Co-founder, Credenc.

Credenc offers education loans covering K-12 school fees, online upskilling courses, higher education as well as study abroad courses at the click of a button and will soon launch India’s first student-focused neo bank. It is currently developing the entire student education ecosystem helping students and parents with, Credit, Accommodation, Employability, Savings, Forex, and Investments on a mobile app.

“We are keeping the students at the core of our business and building a digital ecosystem that will serve them like never before. We are making finance and banking simple for Indian students and enabling them to be financially literate and responsible,” said Mayank Batheja, Co-founder, Credenc.

With this investment, Credenc is looking to build a book of ₹3,000 crore by 2025. It is a Delhi-based fintech founded by Avinash Kumar and Mayank Batheja in 2017 and is a technology-led education loans platform, working as the digital finance desk of 1,000+ colleges across 17 cities in India.

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HDFC Life Insurance Q1 net profit down 33%

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HDFC Life Insurance reported a 33 per cent drop in its net profit to ₹302.25 crore for the quarter ended June 30, 2021 as against ₹451.09 crore in the same period a year ago.

The drop in profit was on the back of higher claims reserving towards heightened claims intimation expected in the second and third quarter of the fiscal.

The private sector life insurer witnessed a steep rise in death claims, with peak claims in the second wave at around three to four times of the peak claim volumes in the first wave.

It paid over 70,000 claims in the first quarter. The gross and net claims provided for amounted to ₹1,598 crore and ₹956 crore respectively.

Based on its current claims experience, it has set up an additional reserve of ₹700 crore to service the claims intimations expected to be received.

HDFC Life Insurance reported a 31 per cent growth in total premium to ₹7,656 crore in the first quarter of the fiscal from ₹5,863 crore a year ago.

Total APE surged by 30 per cent to ₹1,561 crore in the first quarter of the fiscal as against ₹1,198 crore a year ago.

Vibha Padalkar, Managing Director and CEO said, “The strength of our balance sheet and back book surplus has enabled us to absorb the shock of heightened claims, whilst continuing to deliver growth.”

Its solvency ratio was 203 per cent as on June 30, 2021 from 190 per cent a year ago. Its 13th month persistency had also improved to 90 per cent at the end of the first quarter this fiscal, versus 87 per cent a year ago.

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Light Microfinance secures $10 million from three European impact investors

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Micro lender Light Microfinance Monday said it has secured $10 million (₹72.86 crore) in series A funding from European impact investors Incofin (Belgian), Nordic Microfinance Initiative (Norwegian) and Triple Jump BV (Dutch).

The three funds follow an investment strategy aimed at creating social or environmental impacts in addition to financial gains, a release said.

Light Microfinance’s Chief Executive Officer Rakesh Kumar said the investment will boost the lender’s expansion plans in Haryana, Rajasthan and Madhya Pradesh.

“We are also investing in multiple technology interventions like an AI-driven analytics platform and mobile applications to enhance sourcing, credit underwriting and collection capabilities through individualised mobile training modules and performance trackers,” he said.

Portfolio growth

In FY21, the Ahmedabad-based MFI reported a portfolio growth of 30 per cent to ₹623 crore.

Its Chief Financial Officer Aviral Saini said the investment will strengthen the lender’s balance sheet and will enable further expansion of loan book to over ₹1,000 crore.

The lender started its operations in 2009 and was catering to 2.17 lakh borrowers by March 2021, the release said.

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Spinny raises $108 million in Series D round led by Tiger Global

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Spinny, a used-car retailing platform in India, has raised $108 million in its Series D funding round from new and existing investors, led by Tiger Global. Another new investor in the round is New York-based Avenir Growth. I

In addition to these, the round saw participation from existing investor General Catalyst and others. The latest round includes a primary capital infusion of $105 million and a secondary sale of $3 million by select angels and early-stage investors. Tiger Global and Avenir Growth invested $75 million and $20 million, respectively in the round. The overall funds raised by Spinny to date amount to $230 million.

Fund deployment

“The newly raised capital will be deployed towards further stepping up the customer experience, strengthening technology and product capabilities, deepening market penetration in existing markets, and building teams across functions. The company also aims to increase its geographic footprint in the country,” said a press release.

Commenting on this development, Niraj Singh, Founder and CEO, Spinny said, “We are on a mission to build the most trusted and customer loving brand in a highly fragmented and unorganised market, known for its notoriety. Having a customer-first approach has been our differentiator, and we will continue to focus on improving our quality and experience control capabilities.”

Tiger Global’s investment in Spinny is being seen as a strong validation for the startup, as it also has a significant investment in US market leader Carvana which operates with a similar model. Spinny’s previous round of $65 million was led by General Catalyst just two months ago in April 2021. General Catalyst is also an investor in similar businesses Vroom and Cazoo in the US and UK, respectively.

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Goldman Sachs sets up centre in Hyderabad

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Banking and financial services major Goldman Sachs has opened a new facility in Hyderabad as part of its commitment to expand its global centre for engineering and business innovation in India.

The new office is expected to have about 800 people by year-end and grow to over 2,500 people by 2023. The new office will host functions across engineering, finance, human capital management, and support for consumer banking, and specialise in digital banking, artificial intelligence and machine learning areas.

After inaugurating the facility, KT Rama Rao, Telangana IT and Industries Minister, said “Hyderabad is emerging as a key investment destination for the banking and financial services industry in India, on account of Telangana State’s success in establishing a vibrant ecosystem of global capability centres that attracts the very best talent.”

“Goldman Sachs is among the few global investment banks that have opened a new office in Hyderabad amid a global pandemic. We have asked the Goldman Sachs team to work with WE Hub in their effort to empower women,” Rao said.

David M. Solomon, Chairman and CEO, Goldman Sachs, in a statement said: “Our new office in Hyderabad will serve as a crucial innovation hub for a wide range of our businesses and enhance our reputation as a global firm.”

Goldman Sachs to set up 250 beds across 4 hospitals in Bengaluru

To complement each other

The Bengaluru and Hyderabad offices are expected to complement each other in both the execution and support offered to global businesses, and collectively form the Goldman Sachs Services Private Limited entity in India.

Gunjan Samtani, who heads the entity, said: “Our Hyderabad office will be a centre of excellence for consumer banking services, business analytics and platform engineering, including application of emerging technologies such as Artificial Intelligence and Machine Learning to augment our businesses.”

Telangana, Gujarat sign MoU to support women entrepreneurs

The Hyderabad operations commenced remotely in March 2021 and have about 250 employees. By the end of 2021, the Hyderabad office is expected to grow to 800 employees of which about 70 per cent employees will be new hires. By 2023, Hyderabad office could reach 2,500 employees, company officials said. The office has 1,59,000 sq ft space and has capacity to host 1,300 seats.

Founded in 1869, the New York-headquartered Goldman Sachs has been serving Indian clients since the early 1990s. Goldman Sachs is also an active investor in India, deploying more than $3.6 billion in capital since 2006.

Goldman Sachs’ Bengaluru unit has about 7,000 professionals, making it the firm’s second largest office in the world.

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Razorpay acquires TERA Finlabs – The Hindu BusinessLine

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Razorpay on Monday announced its acquisition of TERA Finlabs, an AI-based risk tech SaaS Platform, for an undisclosed amount. 

“TERA Finlabs is a Bengaluru-based startup that provides technology, risk and capital solutions to enable innovative embedded financing solutions for businesses,” it said in a statement. 

TERA Finlabs is an Indian subsidiary of UK-based digital lender GAIN Credit.

Harshil Mathur, CEO and co-founder, Razorpay said, “The team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk managementand we see immense value in TERA Finlabs core lending infrastructure capabilities. Together, we are looking forward to addressing newer working capital issues faced by MSMEs.”

TERA will bring its entire technology stack, risk management capabilities, and onboarding solutions to create and enable a credit line for Razorpay’s merchantnetwork. Razorpay Capital along with TERA Finlab expects to service the credit needs of over 10,000 businesses in India by the next year.

This marks Razorpay’s third acquisition and comes following its foray into the B2B SME lending space with the launch of Razorpay Capital in 2019, the statement further said.

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SBM Bank ties up with 30 FinTechs to grow deposits, BFSI News, ET BFSI

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Mumbai: SBM Bank, a wholly-owned subsidiary of State Bank of Mauritius, has partnered with 30 fintech firms as a part of its strategy to acquire customers using the ‘banking as a service’ model.

Under this, the FinTechs provide an interface for customers, and the bank delivers the network effect by providing not just the banking platform but also access to other fintech services that it has partnered with.

SBM earlier operated as an Indian branch of its parent doing wholesale banking and did not have any electronic interface like internet or mobile banking. In end-2018, the bank got a full-fledged bank licence. “This enabled us to leapfrog in terms of IT and provide a new technology stack to the customer,” said MD & CEO Sidharth Rath. According to him, the bank took a call to build a liability (deposit) franchise first. “Building a branch network is expensive and it costs as much as Rs 1-1.5 crore to set up a branch. For us, the lockdown was a blessing as it hastened the move to digital,” he added.

The FinTechs the bank has partnered with include Paisabazaar, through which it issues innovative products like a secured credit card. Young people and others who are otherwise ineligible for credit cards can instantly open a fixed deposit online and get a secured credit card. Once they build a track record of paying bills in time, they are eligible for a regular card.

Similarly, through a partnership with PayNearby, the bank can get small recurring deposits through the ‘Bachat Khata’ offered by the FinTech, which offers business correspondent services on the digital platform. The bank can offer customers immediate cross-border payments through its partnership with Nium. Other partners include RedCarpet, EnKash, Karbon, Finin, Open and Kodo.

“While we are present in only eight cities with physical branches, we have opened accounts in 500 cities with these digital accounts. This will continue to grow because the relationships have just about started,” said Neeraj Sinha, head (consumer & retail banking). Another advantage that SBM is exploiting is that of its offshore parent, which enables the bank to facilitate remittances under the RBI’s Liberalised Remittance Scheme for purchasing shares or other assets through a foreign currency account. Additionally, SBM’s model gains from the fact that it is not capital-intensive. The bank, which started out with Rs 500 crore, has added another Rs 100 crore to its capital base and has managed to generate profits from its first year of business.



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