Category: Banking & Finance

MasterCard bar not to impact HDFC Bank

Banking & Finance

[ad_1]

Read More/Less


The recent ban on MasterCard on acquiring new customers will not impact HDFC Bank as it has pacts with other payment platforms including Visa and RuPay. “Mastercard is a significant franchisee partner for the bank. But we patronise on open architecture for products including cards, insurance and mutual funds where we distribute products of a lot of other companies also,” said Sashidhar Jagdishan, Managing Director and CEO, HDFC Bank.

Responding to queries of shareholders at the bank’s Annual General Meeting on Saturday, Jagdishan said the bank has multiple franchisees for cards including Visa and RuPay. “The bank is protected in having a failover mechanism,” he said, adding that until the ban on MasterCard is lifted and as and when HDFC Bank’s embargo is lifted, the new cards can be on either of the other platforms.

The RBI on July 14 took supervisory action against MasterCard and barred it from acquiring new customers (debit, credit or prepaid) from July 22 for not complying with data localisation requirements.

Jagishan said the temporary embargo on the bank by the RBI on sourcing new customers for credit cards has impacted the run rate on acquisition of customers. The bank has also made a lot of progress in terms of complying with the regulatory directive and the technology audit is also over. Jagdishan said that as and when the RBI feels comfortable in lifting the ban, HDFC Bank will bounce back.

Internet outages

On outages in the bank’s internet and mobile banking services, Jagdishan said these happen globally as well. He, however, said the recovery time from the outage for the lender is longer.

“Recovery time is not the global average, it is beyond a threshold level where customers get impatient,” he said, adding that it was a valid reason why the regulator took action against the bank. The bank is working to minimise these issues, he said. On a query on monetisation of HDB Financial Services, he said there is no immediate plan to do so.

“The pandemic has had a huge impact on HDB Financial Services…We would like to wait… we may try to discover the price initially but in the medium term, we want to watch how it recovers and at that time think about listing it on the exchanges,” he said.

Chairman Atanu Chakraborty said the Enterprise Technology Factor and the Digital Factory that have been put in place will work as the core backbone.

The bank has also set up a new business segment of commercial for micro, small and medium enterprises and rural banking that will capture the next wave of growth, he said in his address to shareholders.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

PFRDA throws FDI door wide open for Pension Funds

Banking & Finance

[ad_1]

Read More/Less


The legal decks have now been cleared for foreign companies to hold — directly or indirectly — up to 74 per cent stake in pension funds with the pension regulator PFRDA notifying the new revised limit. Foreign investment limit in pension funds was earlier capped at 49 per cent.

The Pension Fund Regulatory and Development Authority (PFRDA) has for this purpose amended the Pension Fund regulations. This latest move comes on the heels of the pension regulator opening from June 30 an “on tap” window for grant of licences for pension fund managers. Such a window allows applicants to seek licence at any time, thereby quickening the entire process on setting up business.

In India, pension funds would have to necessarily operate as corporate entities.

With the latest move, the FDI limit in pension funds are aligned with that of insurance sector. In March this year, Parliament had given its approval for raising FDI limit in insurance sector to 74 per cent from 49 per cent. Finance Minister Nirmala Sitharaman had, in her Budget speech this year, announced an increase in FDI limit in insurance sector to 74 per cent from 49 per cent earlier.

It maybe recalled that the PFRDA Act links the FDI ceiling for the pension sector to the ceiling level prescribed for the insurance sector.

Prior to the latest PFRDA move, the regulations stipulated in the eligibility criteria mentioned that an applicant, for being a sponsor of a pension fund, cannot hold more than 49 per cent stake in the pension fund.

The FDI limit hike in pension funds comes at a time when India’s pension assets under management (AUM) are growing at a frenetic pace and touched ₹6.2-lakh crore, as of July 10 this year.

PFRDA Chairman Supratim Bandyopadhyay had in May this year said that PFRDA was now looking at an AUM target of ₹7.5-lakh crore by the end of March 2022.

In the last two years, PFRDA has been taking several steps to enhance the number of players in the pension sector. It had revamped the fee structure for pension fund managers and revised the capital requirement criteria for sponsors so that both of them are strong enough to ride the current growth wave in the pension sector.

A sponsor — individually or jointly — should now have atleast ₹25 crore in paid-up capital on the date of making application as a sponsor and positive tangible net worth of atleast ₹50 crore on the last date of each of the preceding five financial years.

There are now eight Pension Fund managers for the National Pension System in the country — SBI Pension Fund, LIC Pension Fund, UTI Retirement Solutions, HDFC Pension Management, ICICI Prudential Pension Fund, Kotak Mahindra Pension Fund Aditya Birla Sun Life Pension Management and Axis asset management (the most recent entrant and whose pension fund is yet to be operationalised).

PFRDA expects India’s pension sector assets to grow to ₹30 lakh crore by 2030 and this could be a good reason why more foreign pension fund management players could look “more seriously” at entering India in next few years, say pension industry observers. Also the fact that foreign companies can now have controlling interest in the pension funds in India will encourage them to enter this market, they added.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Authum Investment to buy Reliance Commercial Fin in ₹1,629-cr deal

Banking & Finance

[ad_1]

Read More/Less


Authum Investment and Infrastructure is set to acquire Anil Ambani-led Reliance Commercial Finance (RCFL) on completion of the resolution process under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019.

Lenders have approved the ₹1,629 crore bid placed by Authum in the meeting held on Thursday and letter of intent was issued in favour of the company’s bid.

The resolution will result in overall debt reduction of Reliance Capital by over Rs 9,000 crore.

Authum’s RP chosen for Reliance Commercial Finance

RCFL offers a wide range of products including loan against property, MSME/SME loans, infrastructure financing, education loans and micro financing.

Authum Investment and Infrastructure, a Non-Banking Finance Company has over 15 years of presence and net worth of about ₹2,360 crore as of June-end.

Authum is currently managed by a team of professionals with significant investment experience in domestic, public and private equity. Authum’s investment strategy is long term value creation through investments in listed companies, providing growth capital to unlisted companies, acquisition of financial assets, real estate investments and debt investments.

Further, the proposed acquisition of Reliance Commercial Finance strengthens business portfolio and enables to develop a single platform across multiple financial products and services in the NBFC sector, it said.

The acquisitions offer a growth opportunity with a blend of commercial finance, MSME/SME, affordable housing, loan against properties, retail and consumer finance along with strong digital and technology play to generate higher yields.

Voting on Reliance Commercial Finance’s debt resolution underway

These segments are major drivers of the economy with significant unfulfilled demand, it said.

Authum is geared up to meet its financial commitment to the lenders of RCFL under the LoI.

The company will leverage on RCFL customer base, employees, processes, licenses, branch network and digital platform with an aim to create a niche lending platform, it said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

HDFC Bank Q1 net profit up 16.1%

Banking & Finance

[ad_1]

Read More/Less


Private sector lender HDFC Bank reported a 16.1 per cent increase in its standalone net profit for the quarter ended June 30, 2021 at ₹7,729.6 crore.

Its net profit was ₹6,658.62 crore in the first quarter of last fiscal.

For the quarter ended June 30, 2021, HDFC Bank’s net revenue increased by 18 per cent to ₹23,297.5 crore from ₹19,740.7 crore a year ago.

Net interest income for the first quarter of the fiscal grew by 8.6 per cent to ₹17,009 crore from ₹15,665.4 crore a year ago.

“This was driven by advanced growth of 14.4 per cent, and a core net interest margin of 4.1 per cent,” the lender said in a statement on Saturday.

Other income surged by 54.3 per cent to ₹6,288.5 crore in the April to June 2021 quarter from ₹4,075.3 crore in the corresponding quarter of the previous year.

Noting that the country was hit by a second Covid wave in the first quarter of the fiscal, the bank said business activities remained curtailed for almost two-thirds of the quarter.

“These disruptions led to a decrease in retail loan originations, sale of third party products, card spends and efficiency in collection efforts. The lower business volumes, coupled with higher slippages, resulted in lower revenues, as well as an enhanced level of provisioning,” it further said.

Provisions and contingencies for the quarter jumped up by 24.1 per cent to ₹4,830.84 crore from ₹3,891.52 crore a year ago.

Total provisions for the current quarter included contingent provisions of approximately ₹600 crore.

Asset quality saw some stress. Gross non performing assets rose to ₹17,098.51 crore or 1.47 per cent of gross advances as on June 30, 2021 from 1.36 per cent a year ago.

Net NPAs was 0.48 per cent of net advances at the end of the first quarter from 0.33 per cent a year ago.

There were 33 borrower accounts having an aggregate exposure of ₹10.64 crore to the bank, where resolution plans had been implemented and now modified under RBI’s Resolution Framework 2.0 dated May 5, 2021.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Ethereum Co-Founder says safety concern has him quitting crypto

Banking & Finance

[ad_1]

Read More/Less


Anthony Di Iorio, a Co-Founder of the Ethereum network, says he’s done with the cryptocurrency world, partially because of personal safety concerns.

Di Iorio, 48, has had a security team since 2017, with someone traveling with or meeting him wherever he goes. In coming weeks, he plans to sell Decentral Inc., and refocus on philanthropy and other ventures not related to crypto. The Canadian expects to sever ties in time with other startups he is involved with, and doesn’t plan on funding any more blockchain projects.

“It’s got a risk profile that I am not too enthused about,” said Di Iorio, who declined to disclose his cryptocurrency holdings or net worth. “I don’t feel necessarily safe in this space. If I was focused on larger problems, I think I’d be safer.”

Background

Back in 2013, Di Iorio co-founded Ethereum, which has become the home of many of the hottest crypto projects, particularly in decentralized finance — which lets people borrow, lend and trade with each other without intermediaries like banks. Ether, the native token of the network, has a market value of about $225 billion.

He made a splash in 2018 when buying the largest and one of the most expensive condos in Canada, paying for it partly with digital money. Di Iorio purchased the three-story penthouse for C$28 million ($22 million) at the St. Regis Residences Toronto, the former Trump International Hotel & Tower in the downtown business district.

In recent years, Di Iorio jumped into venture-capital investing and start-up advising. He was also for a time chief digital officer of the Toronto Stock Exchange. In February 2018, Forbes estimated his net worth was as high as $1 billion. Ether’s price has more than doubled since then.

Decentral is a Toronto-based innovation hub and software development company focused on decentralised technologies, and the maker of Jaxx, a digital asset wallet that garnered about 1 million customers this year.

Di Iorio said he has talked with a couple of potential investors, and believes the startup will be valued at “hundreds of millions.” He expects to sell the company for fiat, or equity in another company — not crypto.

“I want to diversify to not being a crypto guy, but being a guy tackling complex problems,” Di Iorio said. He is involved in Project Arrow, run by a high-school friend that’s building a zero-emission vehicle. He is also consulting a senator from Paraguay.

“I will incorporate crypto when needed, but a lot of times, it’s not,” he said. “It’s really a small percentage of what the world needs.”

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Chairman, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The country’s largest lender State Bank of India is working towards launching the next version of its digital lending platform – Yono (You Only Need One App), chairman Dinesh Khara said. Speaking at a banking event organised by industry body IMC, Khara said when the bank initially started Yono, it was thought of as a distribution platform for the retail segment products.

“During the course of the journey, SBI could realise Yono’s potential for international operations, particularly where we have the retail operations. We could visualise its relevance for Yono business also, and now we have started leveraging it for our agriculture segment,” he said.

“Now what we are thinking of is as to how to integrate all these fragmented pieces of Yono and think in terms of something like Yono 2, which is the next version of it. It is something which we are working on and will come out with it and products soon,” Khara said.

As of March 31, 2021, Yono has over 7.96 crore downloads and about 3.71 crore registrations, according to the bank’s annual report for 2020-2021.

The bank has onboarded 40,000 overseas customers on the Yono platform as of end-March 2021, it said. The lender is on course to launch Yono in Singapore, Bahrain, South Africa, and the USA by the end of the financial year 2021-22.

Khara further said that SBI looks at technology from the point of view of having oversight on its operations.

The bank has started leveraging analytics for profiling the customers and to reach out to customers. It is also leveraging analytics for management and mitigation of risks.

Speaking at the event, Yes Bank‘s Managing Director and Chief Executive Officer Prashant Kumar said this is a time where banks need alliances and relationships with technology. It is a time to ride on the core competence of partners to create solutions and collaborations, he said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Understanding future of revamped ARCs in India’s future trillion dollar economy, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Asset Reconstruction Companies were established with the role of providing specialized expertise in management and recovery of non-performing assets (NPA). Ideally, this would allow financial institutions to focus more on optimizing lending instead of difficult recoveries. The high number of NPAs on the balance sheet of Indian banks in the last three years is not fresh news. ARCs are important interventionists and crisis managers who can play a major role in the insolvency and turnaround framework of India. But they are presently like the unetched character of a Bollywood potboiler without the proper chance to shine because the script fails them.

A committee has been set up by RBI to undertake a comprehensive review of and recommend the working of ARCs to meet the growing requirements of the financial sector on April 19, 2021, under the chairmanship of Shri Sudarshan Sen, former Executive Director, RBI. The role of ARCs in relation to NPAs needs to be re-thought allowing legroom for a disruptive role. Just like the Insolvency and Bankruptcy Code led to behavioural change in loan repayments, it is necessary that the market behaviour of banks and ARCs is compulsorily modified for them to think out of the box and allow risk diversification. Some of our recommendations are discussed below.

Objective Valuation of Financial Assets: The price bid by ARCs for NPAs does not reflect the true recoverable value of financial assets generally. Acquisition of assets is known to happen at acutely discounted rates which may not be aligned with the bank’s recoverable value let alone the market value of the financial asset had it not been distressed. There is a need for objective guidelines for the valuation of financial assets and prohibition on acquisitions and sales at overtly discounted values.

Concentration limit on retention of security receipts by banks: After acquiring an NPA, the ARC issues security receipts (SR) redeemable on the resolution of NPA. This mechanism is supposed to create risk spread, allow a diverse class of investors and make NPA a tradeable asset. But 80-90% of the SR are held again by financial institutions. Effectually, NPAs never leave the balance sheet of financial institutions but just re-enter through the backdoor. Financial institutions continue to heavily invest in SR despite substantial disincentives in holding SRs above 50%. It is important to create concentration limits on SR holding of financial institutions creating a compulsion to market SR to a more diverse category of investors.

Separate Regulatory Department and Class of Professionals: Some of the least supervised and audited (regulatory) classes of regulated entities in India include ARCs and credit rating agencies. Although the function of ARCs is distinctly different from banks and NBFCs, they presently come under the same regulatory and supervisory department of RBI which is already understaffed and overworked. It is important to acknowledge ARCs and even NBFC-Factors as a separate class of regulated entities from banks, cooperative banks and NBFCs. The ARC sector also needs specialized professionals to provide thought leadership and out of box thinking on NPA management, asset turnaround, investment banking, and valuation just like insolvency professionals.

Third-party funding of dispute resolution and securitization process: Most of the times banks have to take up litigation or arbitration for enforcement of security interest. Such dispute resolution is part of the NPA resolution process and maybe a high cost for the bank. To allow banks to increase their liquidity when required, ARCs should be allowed to act as third-party funders of the cost of litigation or arbitration in lieu of part or whole of a financial asset as a success fee. This form of funding is already well established in other financially mature jurisdictions like United Kingdom, Singapore, Hong Kong, and the USA.

While revitalizing the ARC industry it is important that enough thought is given to creating mechanisms and processes that allow proper shifting and allocation of risks and responsibilities. Unless the risk of NPA actually does not move out of the balance sheet of banks and there is enough regulatory freedom for ARCs for resolution of stressed assets through innovative and out of box structures, the mechanism for NPA resolution is fraught to be dependent on government rescue which is not feasible in the long run for the economy and the industry.

The blog has been authored by Ajaya Kumar Sahoo, COO, Find friends & Independent Director at PC Financial
Services and Kritika Krishnamurthy, Partner BFSI at AK and Partners

DISCLAIMER: The views expressed are solely of the author and ETBFSI.com does not necessarily subscribe to it. ETBFSI.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Central Bank of India to seek shareholders’ nod to set off accumulated loss of Rs 18,724 cr, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


State-owned Central Bank of India will seek shareholders‘ approval in its ensuing annual general meeting (AGM) next month to set off accumulated loss of over Rs 18,724 crore from the share premium account of the bank. The next AGM is scheduled for August 10, 2021 through audio/video means.

The bank said it will seek shareholders’ consent to set off the accumulated losses of Rs 18,724.22 crore as on March 31, 2021 by utilising the balance standing to the credit of share premium account of the bank as on date to set off and take the same into account during the current financial year 2021-22.

“The bank is of the view that this it the most practical and economically efficient option available to the bank in the present scenario so as to present a true and fair view of the financial position of the bank,” it said in a regulatory filing.

Central Bank of India said the setting off of accumulated loss would benefit the shareholders of the bank as their holding will yield better value. It will also enable the bank to explore opportunities to the benefit of the shareholders of the bank.

It will also put the bank in a better position to achieve its turnaround plans in time-bound manner, the lender said.

Share premium balance is a reserve that can only be used for the defined purposes.

A share premium account reflects the difference between the face value of shares and the subscription price of the shares.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Trying to grow retail lending; keen on shifting to more longer-term borrowing: Jairam Sridharan, CEO, Piramal Retail Finance

Banking & Finance

[ad_1]

Read More/Less


Jairam Sridharan, CEO, Piramal Retail Finance

By Ankur Mishra

Piramal Capital and Housing Finance (PCHFL) wants to have adequate buffers in terms of long-term financing. The company, which has come up with NCD issue of Rs 1,000 crore on July 12, 2021, is a step towards the direction of switching to longer-term borrowing, says Jairam Sridharan, CEO, Piramal Retail Finance to Ankur Mishra in an interview. He also says merger with DHFL is likely to be completed in the next two months, subject to legal outcome of the pending appeals at the court. Edited excerpts:

What is the purpose of the NCD issue?
We have been trying to grow our retail lending business for a while. As we start growing and start pressing our accelerators, we want to make sure we have adequate buffers in terms of long-term financing. We will want to change our profile towards more and more longer-term borrowing. So, that is the direction as far as this issue is concerned.

What is the overall capital raising plan for FY22
We have not sought approval of any kind from the board for annual fund raising. What we will continue to do is that we will watch the market. If we find the time is appropriate, there is a need to improve the amount of long-term borrowing we have, we may come into the market. So, it will be more opportunistic. However, as such there is no need to tap the market. Right now, we have not chosen anything particular for a full-year plan.

Has there been a change in business strategy after the second wave of Covid-19?
The second wave of Covid-19 had much larger impact in terms of health, but I would say in terms of wealth its impact has been significantly small, compared to the last year. Although, quarterly numbers are still to be out, but unlike the first wave, the situation is a lot different right now. If you look at your local kirana store, local grocery guy, they were all making zero revenue during the first wave, but right now none of them are making zero revenue.

As everyone is open for a little while or they have figured out a delivery-based mechanism or UPI mechanism, so that they are able to keep their business running. All lenders have taken a strong stance suspecting possible losses due to Covid-19, and have made big provisions. What you have seen over past one year is that not much provisions have been used.

The actual losses have been lesser than what people had anticipated. So, we are not changing any business strategy. We will continue to be a secured-focussed lender. Due to the second wave, we are seeing what type of customers are vulnerable, and for someone like us this learning is important. This learning will help us in underwriting.

How much impact do you see in the June quarter (Q1) due to the second wave of Covid-19?
I cannot comment on Q1 because we are in the silent period, but I generally say that the second wave has been much shorter. So, for the financial services sector as a whole, the bounce back has been much sharper and quicker than the first Covid wave.

By when do you expect DHFL merger to be closed?
The important approvals are already done. The most important approval was from NCLT, which was received in June. We get three months to close the transaction after NCLT approval and one month is already gone. So, over the next two months, hopefully, everything will be done. However, it is hard to be definitive subject to legal outcome due to various appeals at the court.

Of the total loan book of Rs 44,668 crore, wholesale lending remained at Rs 39,365 crore till March 2021. After DHFL merger, what is your target of retail and wholesale mix?
In the medium-term, we want to be two-third retail out of the total loan book. Our belief is that with the acquisition of DHFL, as and when it gets consummated, our retail portion is likely to be 40% and may touch around 50% by the end of this year.

In the long run, do you want to convert DHFL merged entity into a bank?
I think, the combined lending entity is likely to be in the range of Rs 60,000 crore in terms of the size of balance sheet. It will be a very large entity. However, there is still a headroom for the entity to grow in the NBFC format.

But, in general, it is right that to reach to a certain scale, the ability in the liability side is important. So, to that extent we will be keenly awaiting the results of the recommendations of the internal working group of RBI, and see what are the chances that the regulator later comes up with, in terms of granting bank licences. We are watching it very closely and will take appropriate action at the right time.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

With no chief, decisions hang fire at IRDAI

Banking & Finance

[ad_1]

Read More/Less


The delay in the appointment of a new chief has affected key policy decisions at the Insurance Regulatory and Development Authority of India.

The post of IRDAI chairman has been vacant since May first week after Subhash C Khuntia demitted office on completion of his term.

Though the Centre had issued a notification inviting applications for the new chairman on April 30, no one has been named to the post so far.

“It has been nearly two- and-half months since the regulator’s office fell vacant. This is first time that the top post of the insurance sector regulator has been kept vacant for such a long time,” said the MD & CEO of a private life insurance company.

As of now, out of the five Members of IRDAI, only four have incumbents — Distribution (SN Rajeshwari), Actuary (Pramod Kumar Arora), Life (K Ganesh) and Non-Life (TL Alamelu). The post of Member, Finance and Investment, is also vacant.

The absence of a chairman is a matter of “concern” in the present situation due to the Covid-19 pandemic and the churn the life and general insurance industry has been witnessing.

”There are key developments and decisions to be taken which will need a chairman,’’ said the Head of Underwriting of a private general insurer.

important decisions such as on the continuation of Covid-specific standard policies, and revision of premium and pricing of general and health insurance as being sought by the industry and management of Covid claims, need to ne taken, he said.

Further, the Initial Public Offer of Life Insurance Corporation of India, expected to be the largest ever IPO in India, will involve coordination with SEBI and the absence of a chairman at IRDAI can cause hiccups, feel industry experts.

Why the delay

A senior official said the notification for the new regulator got delayed this time. “On previous occasions, the process began about two months before the superannuation of the incumbent chairman. But, this year, the notification was issued only a couple of weeks before the retirement of the chairman,’’ said an IRDAI official.

About 30 candidates, including a dozen bureaucrats, two serving Members of the Authority and a couple of CEOs of private insurance companies, had apparently applied for the IRDAI chief’s post.

The short-listing of applicants has been completed, but the interviews are yet to be scheduled, it is learnt.

Interestingly, many economy watchers point out that no delay or laxity when it came to the appointment of heads of other regulators such as the RBI or SEBI and the selection process went like clock work.

Even for IBBI, the youngest regulatory body, the process of selection of a new chairman has started well before the incumbent is to demit office.

[ad_2]

CLICK HERE TO APPLY

Leave a comment ,
1 … 252 253 254 255 256 … 540