Banking & Finance – Page 272

Banks can pay less on matured bulk FDs, BFSI News, ET BFSI

July 6, 2021 root Banking & Finance

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MUMBAI: In a bid to discourage businesses from using a bank for treasury management, the Reserve Bank of India has allowed banks to offer the lower of either the savings deposit rate or fixed deposit rate on matured FDs.

Given the surplus liquidity in the system, short-term interest rates are very low, and banks offer a risk-free return on idle money. For businesses that have a cash stash running into crores, a 3-4% return (which is what most savings deposits provide), is a decent yield for the short term. The move by the RBI is expected to force businesses to make use of their resources more productively or deploy them in longer-term deposits.

The circular had triggered speculation in social media that auto-renewal of fixed deposits would be impacted. However, RBI sources said that the circular does not pertain to auto-renewals at all. Bankers also said that there was no intention to do away with auto-renewals as banks cannot disregard standing instructions given by customers.

The RBI is likely to clarify that auto-renewals and renewal of overdue deposits will continue like earlier.

In a circular revising its rules for interest on matured fixed deposits, the RBI on Friday said: “If a term deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract the rate of interest as applicable to a savings account or the contracted rate of interest on the matured TD, whichever is lower.”

Earlier banks were forced to provide savings account rates on even bulk deposits which offered returns lower than savings account rates.

In the case of overdue deposits, the RBI had left it to banks to their Board laying down a transparent policy. This allows the bank to renew a fixed deposit from the maturity date even if the customer delays approaching the bank.

The circular could also impact a very small section of retail customers who have accounts in banks that high savings account rates. Several small finance banks and some private banks offer returns ranging from 4% to 7% on savings accounts.

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Sumitomo Mitsui acquires 75 per cent stake in Fullerton India for $2 billion

July 6, 2021 root Banking & Finance

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Japan’s Sumitomo Mitsui Financial Group, Inc (SMFG). will acquire 74.9 per cent stake in Fullerton India Credit Company Ltd (FICC) for about $2 billion.

The stake is being acquired from Singapore-based Fullerton Financial Holdings Pte Ltd. and is subject to regulatory approvals. SMFG will eventually acquire 100 per cent of FICC.

The deal also includes Fullerton India Housing Finance Company Ltd., a subsidiary of FICC, with over 23,000 customers across India and operates in 70 locations with over 650 employees.

“This investment brings together SMFG’s Asian push towards consumer and MSME lending, with FICC’s expertise in serving mass-market consumers and MSME customers in India. The transaction reaffirms the strength of FICC’s platform underpinned by best-in-class corporate governance, risk management, prudent liquidity management, agile technology, and advanced analytics,” said a press statement from Fullerton

Jun Ohta, President & Group CEO of SMFG said, “India is one of our focus markets where we believe in its high growth potential and want to build a deeper presence. As a long-term investor, we believe that the FICC platform’s innate strengths of multi-product focus, pan-India distribution, and strong management will enable us to build a comprehensive financial service offering in India.”

SMFG Sumitomo Mitsui Financial Group, Inc. listed on the Tokyo and New York (via ADR) Stock Exchanges and has a market capitalization of approximately $47.4 billion (as of June 30, 2021).

Fullerton Financial Holdings Pte. Ltd.is a wholly-owned independent portfolio company of Singapore-headquartered investment company, Temasek.

Fullerton India Credit Company Ltd. is a diversified NBFC registered in India and a wholly-owned subsidiary of FFH. FICC started its India operations in 2007 and has established a pan India presence – across 600 towns and over 58,000 villages through 629 branches and 13,000 plus employees offering lending products to 2.3 million bankable yet underserved retail and small business borrowers

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Indian Bank to finance startups in Telangana

July 6, 2021 root Banking & Finance

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Indian Bank is looking forward to extend financial support to startups in Telangana and is likely to team up with T-Hub, according to its Managing Director and Chief Executive Officer, Padmaja Chunduru.

She was speaking at the formal lunch of ‘Prerana’, the flagship business mentoring programme of Indian Bank to create awareness among micro, small and medium enterprises, in Telangana on Tuesday.

“We have already started startup-financing in various States and are planning to enter into an understanding with T-Hub to do the same in Telangana,” the Indian Bank Chief said.

Prerana initiative

On the Prerana initiative, she said there were many ‘hindrances’ faced by MSMEs in the form of lack of awareness about various schemes of the government/banks, language barriers and lack of market knowledge and updates. The on-line program is intended to bridge this gulf, she said.

Referring to Telangana’s potential in MSMEs, Chunduru said there was huge scope for growth in areas like Pochampalli, Siricilla where there are hubs of weavers and other artisans.

After formally launching the scheme, KT Rama Rao, Minister for IT & Municipal Administration, Government of Telangana said the Telangana State Finance Corporation was ready to collaborate with Indian Bank to evolve some innovative mechanism to help small businessmen in the areas of providing collateral.

He also requested Indian Bank to increase lending to priority sectors especially to weaker sections and MSMEs apart from farmers.

Also read: LIC, SBI Life, Canara Bank pick up stakes in Indian Bank under QIP

The Minister had also requested Chunduru to join the board of We-Hub which has been set up by the State government to empower women.

Imran Amin Siddiqui, Executive Director at Indian Bank said despite contributing 30 per cent to the Gross Domestic Product (GDP) they were unable to derive many benefits of schemes due to lack of awareness and Prerana initiative will address the issue.

The Prerana initiative was first launched by the bank in October last year and has already been launched by the bank in Tamilnadu, Maharashtra, among other States. Going forward, Indian Bank plans to expand the program.

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Japan’s SMFG nears $2-billion deal for Fullerton India

July 6, 2021 root Banking & Finance

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Sumitomo Mitsui Financial Group Inc said it will buy a 74.9 per cent stake in Fullerton India Credit Co, marking the first entry into India’s retail financial business by a Japanese bank.

Japan’s second-largest lender will eventually acquire the rest of the Indian credit firm from Fullerton Financial Holdings Pte at a later stage, it said in a statement Tuesday, without providing terms of the transaction.

Citigroup to exit consumer banking operations in India, 12 other markets

ICICI Bank signs MoU with MUFG Bank

Bloomberg News earlier reported that Sumitomo Mitsui would pay about 220 billion yen ($2 billion) for the holding, according to people familiar with the matter who asked not to be identified.

Fullerton Financial is a unit of Singapore’s state investment fund Temasek Holdings Pte.

Faced with weak growth prospects at home, Sumitomo Mitsui has been allocating resources to Asia’s emerging markets in recent years. The bank took control of Indonesian lender PT Bank Tabungan Pensiunan Nasional in 2019 after acquiring a minority stake earlier. Sumitomo Mitsui is looking for targets in Vietnam, Philippines and India, Chief Executive Officer Jun Ohta said in an interview in December.

Sumitomo Mitsui in April agreed to buy a 49 per cent stake in Vietnamese consumer lender FE Credit. Last month, the bank said it will buy a 4.99 per cent stake in Rizal Commercial Banking Corp of the Philippines for 4.48 billion pesos ($91 million).

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Private banks’ deposits surge, but loans slow, BFSI News, ET BFSI

July 6, 2021 root Banking & Finance

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Private sector banks’ deposits have surged but advances remained subdued due to lockdown restrictions.

Except for HDFC Bank, which registered a strong 14.4 per cent growth in its advances to over Rs 11.47 lakh crore as of June 30 this year, most banks bucked the trend as people preferred to park money in banks and shunned loans.

IndusInd Bank

IndusInd Bank witnessed a 7 per cent growth in its net advances to more than Rs 2.11 lakh crore at the end of June this year, according to a regulatory filing.

The net advances stood at Rs 1.98 lakh crore at the end of June 30, 2020.

On a quarter-on-quarter basis, the net advances were down 1 per cent from Rs 2.13 lakh crore recorded at the end of March 2021, the bank said in the regulatory filing on Monday.

Deposits registered a jump of 26 per cent to Rs 2.68 lakh crore at the end of the June quarter this fiscal. In the year-ago period, the same stood at Rs 2.12 lakh crore.

Out of the total amount, retail deposits and deposits from small business customers amounted to Rs 1.06 lakh crore in the latest June quarter compared to Rs 95,811 crore in the year-ago period.

Bank’s CASA (Current Account Savings Account) ratio stood at 42.1 per cent as of June 2021, up from 40.1 per cent in the same period a year ago.

Yes Bank

Yes Bank’s loans and advances fell by a marginal 0.4 per cent to Rs 1.63 lakh crore by the end of June 30, 2021, data from the bank showed on Monday.

The loans and advances stood at Rs 1,63,914 crore as of June 30, 2021, as compared with Rs 1,64,510 crore in the year-ago period, registering a marginal decline of 0.4 per cent on a year-on-year basis, Yes Bank said in a regulatory filing.

However, the bank said that the figures by June end of this year are provisional and subject to the approval of the audit committee, board of directors, and statutory auditors.

Compared sequentially, it was down by 1.8 per cent from Rs 1,66,893 crore by March 31, 2021.

The gross retail disbursements during the June-ended quarter stood at Rs 5,099 crore as against Rs 424 crore during the previous year and Rs 7,828 crore in the March quarter.

Bank’s liquidity coverage ratio by June 2021-22 stood at 118.4 per cent, higher than 114.1 per cent from a year ago.

The deposits jumped by 39.1 per cent to Rs 1,63,295 crore by the end of June from Rs 1,17,360 crore in the year-ago period. It rose by a marginal 0.2 per cent from Rs 162,947 crore worth of deposits as of March 2021.

Federal Bank

Federal Bank Ltd reported a 9% on-year rise in total deposits, and a 19% increase in current account and savings account as of Jun 30. Total deposits stood at Rs 1.69 lakh crore, while current account and savings account stood at Rs 58,959 crore. Gross Advances rose 8% on the year and fell 2% sequentially to Rs 1.3 lakh crore. CASA ratio rose to 34.81% from 32.02% a year ago and 33.81% a quarter ago.

HDFC Bank

Except for HDFC Bank, which registered a strong 14.4 per cent growth in its advances to over Rs 11.47 lakh crore as of June 30 this year, most banks bucked the trend.

HDFC Bank’s advances aggregated to approximately Rs 11.4 lakh crore as of June 30, 2021, a growth of around 14.4 per cent over Rs 10 lakh crore as of June 30, 2020, and a growth of around 1.3 per cent over Rs 11.3 lakh crore as of March 31, 2021,” HDFC Bank said in a regulatory filing.

The private sector lender said its domestic retail loans by the end of the first quarter of the current fiscal moved up by 10.5 per cent year-on-year, while the domestic wholesale loans grew by around 17 per cent.

Among loan categories, retail loans grew by around 9 per cent over June 30, 2020, and were lower by around 1 per cent as compared to March 31, 2021.

Commercial and rural banking loans grew by around 25 per cent over June 30, 2020, and around 4 per cent over March this year. Other wholesale loans grew by around 10.5 per cent over June last year and around 1.5 per cent over March 2021.

Retail disbursements during Q1 FY22 stood at about Rs 43,600 crore, 202 per cent up from the year-ago period. However, it was down by 30 per cent from Rs 62,500 crore during the quarter ended March 2021.

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SAT hearing on PNB Housing-Carlyle deal put off a week

July 6, 2021 root Banking & Finance

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The Securities Appellate Tribunal (SAT) will hear the case related to the PNB Housing Finance-Carlyle deal next Monday.

The order in the matter was expected on July 5, however, it was adjourned for July 12.

PNB Housing had filed an appeal before the SAT against the letter issued by the Securities and Exchange Board of India last month, requesting it not to go ahead with the proposal until due diligence was done.

“As sought by the company, the Securities Appellate Tribunal, in its hearing on July 5, 2021, adjourned the case for Monday, July 12, 2021,” PNB Housing Finance said in a regulatory filing on Tuesday.

Capital infusion by Carlyle

Under the deal announced on May 31, the US-based Carlyle, alongside other investors, is slated to infuse ₹4,000 crore capital into PNB Housing through the issuance of preference shares and warrants.

However, the deal has come under the scanner of the regulator. The company was directed to carry out the valuation process of shares as per the relevant legal provisions.

PNB Housing contended that it has followed SEBI norms in deciding the issue price at ₹390 apiece.

The scrip of the company traded at ₹695.35 apiece on BSE, down 1 per cent from its last close.

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Amazon Pay ICICI Bank credit card surpasses two million customers, BFSI News, ET BFSI

July 6, 2021 root Banking & Finance

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ICICI Bank and Amazon Pay have announced that the Bank has crossed the milestone of issuing two million ‘Amazon Pay ICICI Bank‘ credit cards. In the process. Having been introduced in 2018, the card has emerged as the fastest co-branded credit card to cross this milestone in the country.

The card also holds the record of being the fastest co-branded credit card in India to cross the milestone of one million issuances in October last year. Thereafter, the card has onboarded another one million customers in the last nine months, with over 80% of new customers availing the card completely digitally, without any physical interaction.

Any registered customer of Amazon.in, including those who are not customers of ICICI Bank, can apply for the card digitally, from anywhere in the country. This is among the first credit cards in India which introduced ‘Video KYC’ for customers in June 2020.

“The Amazon Pay ICICI Bank credit card has received an exciting response from customers across the country. The best-in-industry rewards, seamless access to credit and the easy onboarding process are the key contributors of this excitement.” said Sudipta Roy, Head – Unsecured Assets, ICICI Bank.

“At Amazon Pay, we are transforming the way customers make digital payments. The Amazon Pay ICICI Bank credit card is one of the most rewarding, convenient and trusted payment experiences in the country. Over 2 million customers have shown their trust in us and how they value the experience.” said Vikas Bansal, Director – Amazon Pay India.

The reward earnings are credited monthly, after the billing cycle date of the card to the customer’s Amazon Pay balance. They can redeem these earnings to purchase from more than 16 crore items available on Amazon.in across. The reward earnings can also be used with Amazon Pay partner merchants for transactions like flight tickets, booking hotels, food delivery, movie tickets and much more.

“We’re delighted that the Amazon Pay ICICI Bank credit card powered by Visa has crossed two million cards, with the last one million cards issued in less than a year, despite the ongoing pandemic. This reinforces the belief that consumers prefer cards that give them great rewards and ease of payment.” said Shailesh Paul, Head of Merchant Sales & Acquiring and CyberSource, India and South Asia, Visa.

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Can FDI investor also be an FPI, Zomato IPO will answer, BFSI News, ET BFSI

July 6, 2021 root Banking & Finance

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Investors in Zomato want more of it as the company heads for an IPO.

Several foreign investors who have pumped in money in Zomato are keen to subscribe to the company’s upcoming Rs Rs 8,250 crore initial public offering.

However, they may not be able to invest according to a 2019 rule which debars investment in a company through both FDI and FPI routes.

“A person resident outside India may hold foreign investment either as FDI or as FPI in any particular Indian company,” according to Foreign Exchange Management (Non-debt Instruments) Rules of October 2019.

Investors have now approached Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) to figure out whether existing foreign investors in the company can participate in the maiden equity offering.

FDI

Foreign direct investment or FDI pertains to international investment in which the investor buys a lasting interest in an enterprise in another country. It may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants, or equipment. FDI is a cross-border investment, by a resident or a company domiciled in a country, to a company based in another country, with an objective of establishing a lasting interest in the economy.

FPI

Foreign Portfolio Investment or FPI refers to the investment made in the financial assets of an enterprise, based in one country, by foreign investors. FPI involves the purchase of securities that can be easily bought or sold. The intent with FPI is generally to invest money into another country’s stock market with the hope of generating a quick return. Such an investment is made with the aim of making short-term financial gain and not for obtaining significant control over the managerial operations of the enterprise.

Zomato IPO

Zomato has filed preliminary papers with Sebi to raise Rs 8,250 crore through an initial share sale.

The IPO comprises fresh issue of equity shares worth Rs 7,500 crore and offer for sale to the tune of Rs 750 crore by Info Edge (India) Ltd, draft red herring prospectus filed with Sebi showed on Wednesday.

Proceeds from the fresh issue would be used towards funding organic and inorganic growth initiatives; and general corporate purposes.

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Pine Labs announces $600 million in funding

July 6, 2021 root Banking & Finance

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Pine Labs has raised $600 million from a clutch of new investors including Fidelity Management & Research Company, funds managed by BlackRock, Ishana, Tree Line, a fund advised by Neuberger Berman Investment Advisers LLC. IIFL AMC via its ‘Late-Stage Tech Fund’ and Kotak are also participating in this investment round.

“Pine Labs continues to be well-financed and has been EBITDA-profitable for several years,” said a statement.

The company is backed by Sequoia Capital, Temasek Holdings, Actis, PayPal and Mastercard amongst other leading global investors.

Also read: Furlenco raises ₹1,000 crore in funding round led by Zinnia Global

“Over the last year, Pine Labs has made significant progress in its offline to online strategy in India and the direct-to-consumer play in Southeast Asia. Our full-stack approach to payments and merchant commerce has allowed us to grow in-month merchant partnerships by nearly 100 per cent over the last year,” said Amrish Rau, CEO, Pine Labs.

What Pine Labs does

Pine Labs is a merchant commerce platform and offers products for in-store and doorstep payments, Pay Later at the point of sale, prepaid issuance and online payments to large, mid-market and small retailers.

“Through its acquisitions of QwikCilver and Fave, Pine Labs now has the market leading pre-paid platform in this region as well as the top consumer loyalty product in this market. With leadership across multiple categories, the company is very well positioned to help drive immense value to its merchant partners in India and across other SEA markets,” said Shailendra Singh, MD, Sequoia Capital.

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Neo bank funding more than halves in pandemic even as FinTechs race ahead, BFSI News, ET BFSI

July 6, 2021 root Banking & Finance

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It’s time to slow down a bit for neo banks which have seen phenomenal growth in the last few years.

Funding activity to the sector has dropped around two-thirds in 2020 over the sharp jump in 2019.

Total funding to the sector stood at $32.2 million over seven deals against $109.4 million raised through 13 deals in 2019, according to a report. In 2018, $31.9 million was raised across nine deals.

This year, there have been seven deals so far raising $22.2 million.

Around 16 new neo banks or digital banks were launched in 2019, 10 in 2020.

The Open deal

However, several large deals are in the pipeline. Amazon, Google and card network major Visa are separately eyeing a stake in neo-banking startup Open, which is looking to raise a new round of funding of about $100-$120 million, two people aware of the matter said. If successful, Open’s valuation is likely to jump three times to around $600-700 million post the funding round. Even as negotiations with the global technology majors like Amazon and Google are underway, Open is also in talks with a leading sovereign wealth fund as well as private equity firm TPG as they look to participate in the funding round that could be oversubscribed.

What is a neo bank?

Neo banks are 100% digital in nature. They operate entirely online without any physical branch. Neo Banks offer multiple financial services from money transfer to opening a bank account. Neo banks partner with the traditional banks and help them acquire customers in the most seamless manner.

ICICI Bank, India’s largest private bank has taken a lead in the Neo Banks segment and has partnered with three Neo Banks, Open, Instant Pay and Yelo.

Neo banks in India

In India lack of regulations have somewhat hindered the growth of this sector as banking regulator RBI does not recognise these companies as a separate class of banking intermediaries yet. Hence, neo-banks in India are loosely defined and don’t follow any standard regulatory code. Rather, the regulations follow the nature of partnerships they form with licensed lenders. However, a fully functional neo-bank may need approvals to be a business correspondent, a payment aggregator and require a formal agreement with a regulated bank detailing ethical lending practices.

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