Category: Banking & Finance

NPAs of NBFCs, HFCs may rise for 3-4 quarters due to tweak in norms

Banking & Finance

[ad_1]

Read More/Less


Non-banking finance companies (NBFCs), including housing finance companies (HFCs), may see an increase in non-performing assets (NPAs) for three-four quarters due to the tweak in norms relating to when a borrower account can be flagged as overdue and tightening of rules relating to upgradation of NPA accounts.

However, NPAs are expected to stablise a couple of quarters after the Reserve Bank of India’s modified “Prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP) pertaining to Advances” take effect, say industry experts.

The RBI has asked lending institutions to comply with the aforementioned prudential norms at the earliest, but not later than March 31, 2022.

Limited economic impact

Experts assessed that the impact of the modified norms could only be an accounting one and not so much economic as many NBFCs are not only holding more than required provisions under the expected credit loss (ECL) framework but also Covid-related provisioning buffer.

“Many NBFCs are following monthly tagging of NPAs but RBI has proposed NPA tagging as part of day-end process for the relevant date. So, due to the changed norm, assets in the special mention account/SMA-2 category (when principal or interest payment in a loan account is overdue for more than 60 days and up to 90 days) could migrate to the NPA category,” said a senior NBFC official.

Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, assessed that the RBI’s clarifications to the ‘Prudential norms on IRACP pertaining to Advances’, which now ask the NBFCs to recognise NPAs on a daily due date basis as part of their day-end process, will lead to higher gross NPAs (GNPAs).

No more flexibility

Referring to most NBFCs following month-end NPA recognition, he noted that typically, they ramp up collection activity on overdue accounts between the due date and the month end, which is why overdues reduce towards the month-ends. Now, this flexibility is no longer available.

“Bounce rates in the 60-90 days bucket are estimated at 25-35 per cent. Consequently, a significant proportion of the loans in the 60-90 days bucket may slip into the more than 90 days overdue bucket and will have to be recognised as NPA,” Sitaraman said.

On RBI stipulation that loan accounts classified as NPAs can be upgraded as ‘standard’ asset only if entire arrears of interest and principal are paid by the borrower, he opined that typically, it has been difficult for retail borrowers classified as NPAs to fully clear their three or more overdue instalments quickly.

Data shows these borrowers clear only one or two additional instalments typically, so their accounts remain overdue even when it’s for less than 90 days.

Sitaraman said:“The combination of day-end recognition and tighter upgradation criteria means such accounts are likely to remain classified as NPAs for a longer period.

“Consequently, the headline reported GNPAs will rise and stay elevated for some time. This will also increase the operational intensity for NBFCs as they align their systems for daily stamping of NPAs.”

RBI tweaked the criteria for upgradation of accounts classified as NPAs as it found some lending institutions upgrading accounts classified as NPAs to ‘standard’ asset category upon payment of only interest overdues, partial overdues, etc. To avoid any ambiguity in this regard, the central bank clarified that loan accounts classified as NPAs may be upgraded as ‘standard’ asset only if entire arrears of interest and principal are paid by borrower.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

PMJDY adds 1.3 crore beneficiaries in H1 of FY22

Banking & Finance

[ad_1]

Read More/Less


Interest in the Pradhan Mantri Jan Dhan Yojana (the world’s largest financial inclusion scheme, continues unabated with 1.30 crore new beneficiaries getting added in the first half of the financial year 2021-22.

The total number of beneficiaries has gone up to 43.50 crore at the end of September 2021 while it was at 42.20 crore on April 1, 2021. The total balance in the basic savings bank accounts opened under the scheme, however, almost remained flat at ₹1,45,272 crore (as on September 29, 2021), as per the government data.

The continued growth in the number of accounts is driven by strong efforts by the banks as well as increasing interest among the low-income groups in seeing the scheme as a ‘passport’ to government schemes, according to bankers.

“In actual terms, the number would have been much higher but the first quarter of the current fiscal had seen the massive impact of the second pandemic wave, resulting in scaling down of operations and deployment of staff on a staggered basis by the public sector banks,” said a senior official of SBI, adding that “utmost priority” is being given to the scheme.

Interestingly, the first half of the last financial year (FY2020-21) was better for the flagship financial inclusion drive of the Centre.

Despite the first wave of the pandemic and the national lockdown from the end of March 2020, there was a massive addition of 2.83 crore new beneficiaries between April 1 and September 30, 2020, with the total number of beneficiaries increasing from 38.07 crore to 40.90 crore. “The rollout of some of the benefits of Pradhan Mantri Garib Kalyan Yojana as Covid relief to Jan Dhan accounts holders had led to a greater rush in opening new accounts last year. If we exclude that impact, the surge in new numbers in the first half of current fiscal year is impressive, thanks to efforts of the public sector banks,” said an economist with a leading private bank, adding that the private sector banks are placing the scheme on the back burner.

Enabler

The expansion of the financial inclusion scheme in the country is still on. As on November 10, 2021, the total beneficiaries stood at 43.85 crore even as the total balance in the accounts edged up to ₹1,48,069 crore. Thus, the scheme has come a long way since its launch in 2014 offering a host of benefits to the beneficiaries. PMJDY has now become an effective enabler for the digitisation of financial transactions apart from being a tool to bring the unbanked into the ambit of the formal banking system.

This has been ably supported by initiatives to ensure last-mile delivery of banking services through innovative banking channels like the ‘BC model’. Thanks to technology, there has been a massive improvement in the deepening of digital financial services, more so after the demonetisation of 2016.

The Jan Dhan, Aadhaar and Mobile (JAM) ecosystem has made a significant difference in the universe of financial inclusion. PMJDY formed the bedrock of Reserve Bank’s pilot project, launched in 2019, in association with banks of making at least one district in each State/UT 100 per cent digitally enabled. This project covered 42 districts and was aimed at facilitating greater access and usage of digital payments by the common man.

The State Level Bankers’ Committees (SLBCs) have been advised by RBI to give renewed focus and emphasis to ensure sustenance of the digital progress in these identified districts. Further, to promote ‘universal access to financial services’ under the National Strategy for Financial Inclusion (NSFI), access to some form of banking outlet has been provided to 99.9 per cent of the targeted villages within a 5 km radius/ hamlets with 500 households in hilly areas. All these efforts are being supported to a larger extent by the Jan Dhan scheme. According to RBI data, as of March 2021, banks have achieved a digital coverage of 95.9 per cent of individuals while the achievement for businesses stood at 89.8 per cent.

Road ahead

The achievements of PMJDY have been duly recognised by many. While there is much to cheer over the progress made so far, it is pertinent that the scheme needs to be scaled up on a priority basis. The government in particular and banks, in general, must continue their efforts for greater financial inclusion in pursuance of the goal of a sustainable future for all. There is a need to speed up the issue of RuPay cards to Jan Dhan account holders.

Almost 28 percent of PMJDY beneficiaries are yet to be issued RuPay Cards. Out of 43.85 crore beneficiaries (as on November 10, 2021), 31.72 crore have been issued the cards.

As observed by the RBI governor Shaktikanta Das recently, there is a need for an accelerated universal reach of bank accounts along with access to financial products relating to credit, investment, insurance and pension.

It is the responsibility of all the stakeholders to ensure that the financial ecosystem (including the digital medium) is inclusive and capable of effectively addressing the risks like mis-selling, cyber security, data privacy and promoting trust in the financial system through appropriate financial education and awareness. These efforts have to be supported by a robust grievance redressal mechanism, according to Das.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Vulnerability in PNB server exposed customer data for about seven months: CyberX9

Banking & Finance

[ad_1]

Read More/Less


A vulnerability in the server of Punjab National Bank allegedly exposed the personal and financial information of its about 180 million customers for about seven months, according to cyber security firm CyberX9.

CyberX9 has claimed that the vulnerability provided access to the entire digital banking system of PNB with administrative control.

Meanwhile, the bank has confirmed the glitch but denied any exposure of critical data due to the vulnerability.

PNB said, “customer data/applications are not affected due to this” and “server has been shut down as a precautionary measure.” “Punjab National Bank kept severely compromising the security of funds, personal and financial information of over 180 million (all) its customers for about the last 7 months. PNB only woke up and fixed the vulnerability when CyberX9 discovered the vulnerability and notified PNB through CERT-In and NCIIPC,” CyberX9 founder and MD Himanshu Pathak told PTI.

He said CyberX9 research team discovered a critical security issue in PNB, leading to admin access to internal servers hence exposing a massive number of banks’ systems nationwide open for cyber-attacks for the last about seven months.

Pathak said that vulnerability was found in an exchange server interconnected with other exchanges and shares all access — including access to all email addresses, which results in access to all email addresses.

“The vulnerability which we discovered was leading to the highest level of admin privilege in PNB’s exchange servers. If you gain access to Domain Controller through an exchange server, the doors are easily open to make any computer accessible in the network.

“These computers even include those that are being used in their branches and other departments,” Pathak said.

When contacted, PNB said, the server in which the vulnerability was found had no sensitive or critical data.

“The server wherein the vulnerability was reported, was being used as one of the multiple Exchange Hybrid servers used to route emails from On-prim to Office 365 Cloud. There is no sensitive/critical data in this server,” PNB said.

PNB denied CyberX9 claim on the impact of the vulnerability on customer’s data.

“The server is in a separate VLAN segment and customer data/applications are not affected due to this. Vulnerability assessments and penetration testing is done periodically by external Cert-in empanelled Information Security Auditors and the observations are complied with.

Now this server has been shut down as a precautionary measure,” PNB said.

According to CyberX9, the vulnerability was mitigated on November 19, and it reported the incident to Indian cyber security watchdog Cert-In and National Critical Information Infrastructure Protection Centre (NCIIPC).

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

CyberX9, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


A vulnerability in the server of Punjab National Bank allegedly exposed the personal and financial information of its about 180 million customers for about seven months, according to cyber security firm CyberX9. CyberX9 has claimed that the vulnerability provided access to the entire digital banking system of PNB with administrative control.

Meanwhile, the bank has confirmed about the glitch but denied any exposure of critical data due to the vulnerability.

PNB said “customer data/applications are not affected due to this” and “server has been shut down as a precautionary measure.”

“Punjab National Bank kept severely compromising the security of funds, personal and financial information of over 180 million (all) its customers for about the last 7 months. PNB only woke up and fixed the vulnerability when CyberX9 discovered the vulnerability and notified PNB through CERT-In and NCIIPC,” CyberX9 founder and MD Himanshu Pathak told PTI.

He said CyberX9 research team discovered a very critical security issue in PNB which was leading to admin access to internal servers hence exposing a massive number of banks’ systems nationwide open for cyber-attacks for the last about seven months.

Pathak said that vulnerability was found in an exchange server which is interconnected with other exchanges and shares all access — including access to all email addresses which results in access to all email addresses.

“The vulnerability which we discovered was leading to the highest level of admin privilege in PNB’s exchange servers. If you gain access to Domain Controller through an exchange server then the doors very easily open to make any computer accessible in the network.

“These computers even include those that are being used in their branches and other departments,” Pathak said.

When contacted, PNB said the server in which the vulnerability was found had no sensitive or critical data.

“The server wherein the vulnerability was reported, was being used as one of the multiple Exchange Hybrid servers used to route emails from On-prim to Office 365 Cloud. There is no sensitive/critical data in this server,” PNB said.

PNB denied CyberX9 claim on impact of the vulnerability on customer’s data.

“The server is in a separate VLAN segment and customer data/applications are not affected due to this. Vulnerability assessments and penetration testing is done periodically by external Cert-in empanelled Information Security Auditors and the observations are complied with.

Now this server has been shut down as a precautionary measure,” PNB said.

According to CyberX9, the vulnerability was mitigated on November 19, and it reported the incident to Indian cyber security watchdog Cert-In and National Critical Information Infrastructure Protection Centre (NCIIPC). PTI PRS DP DRR DRR



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Here’s how you can get PMEGP govt loan to expand your business, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The PMEGP (Prime Ministers Employment Generation Programme) is a financial scheme that provides financial support to the MSMEs to expand, or stabilize their existing business. This loan is also given to individuals to start a new business.

Financial support is very helpful while starting your new business or managing your existing business. It is also required during the growth phase of your business.

For MSMEs and new businesses, it can get very difficult to get a loan. To counter this problem, the Government of India started the PMEGP scheme in 2008.

PMEGP Scheme’s Loan Structure
PMEGP loan has a limit that can be sanctioned for different businesses. For example, businesses in the manufacturing sector can have a maximum project amount of Rs 25 lakhs. However, the limit is Rs 10 lakh for businesses in the service sector. The business makes a 5% to 10 % contribution of the project amount, and the bank provides the rest as a term loan.

However, in reality, you only get 60% to 75% from the bank, and the rest of 15% to 35% you will receive in the form of margin money through the PMEGP scheme. The margin money, in simple words, is a subsidy that the government provides.

How to get a loan under the PMEGP scheme
The PMEGP scheme is managed by the Khadi and Village Industries Commission (KVIC).

To get the benefits of this scheme, you have to fill up the application, where you have to provide necessary details regarding the nature of the business, the detail of the project, etc. Also, you have to submit the necessary documents.

And to get your loan successfully sanctioned, your application for your project or business must satisfy any one of the four objectives of the PMEGP scheme.

The four objectives for the PMEGP scheme are:
1. To create employment opportunities in both the rural and the urban areas by establishing new businesses, startups, self-employment projects, or through the growth of established businesses.

2. To create self-employment opportunities among the youth in rural and urban India.It can also be to promote and support the traditional craftsmanship and artisans in India.

3. To create stable employment for the youth in rural India so they don’t migrate to urban cities in search of employability.

4. To increase the income of the traditional artisans of rural and urban India by promoting and providing self-employment to them.

Documents Required to apply for PMEGP Loan
* Aadhar card
* PAN card
* Project report having details of project
* Caste certificate
or
any other Special category certificate (if needed)
* Rural Area certificate
* Letter from the authority
* Educational Qualification certificate
or
Skill Development Training certificate or EDP certificate.
* Collateral of PMEGP scheme loan

As per the RBI guidelines, any project costing up to Rs 10 lakh does not require any collateral to get a loan. But if the project cost is more than Rs 10 lakh, you may need to provide some collateral according to the needs of the lender.

Interest Rate for PMEGP Loan
The interest rate for a PMEGP loan is 11% to 12% p.a.

Eligibility for the PMEGP Scheme
* An individual should be above 18 years of age.

* The individual must have passed the 8th Standard in school for the manufacturing sector project that costs above Rs 10 lakh

Service sector project that costs above Rs 5 lakh
* Self-help groups are eligible.
* Charitable trusts
* Registered Societies
* Co-operative societies that are involved in the business of production

Businesses that are under the PMEGP Scheme are:
* Agriculture & Food Processing
* Forest-Based Products
* Hand Made Paper and Fibre
* Mineral Products
* Polymer and Chemical Products
* Rural Engineering and Bio-Tech
* Service and Textile

How businesses can apply for a PMEGP loan online
* Visit the website of the Khadi and Village Industries Commission (KVIC) — kviconline.gov.in

* Next, click on the Online Application form for Individual or Online Application form for Non-Individual (whichever is suitable for you).

* Next, fill-up the form by entering the necessary details.

* Now click on ‘save application data’

* Then upload the documents and get ready for the final submission.

* After the final submission, you will get an application ID and password, it will be sent to your registered mobile number.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

A case of too many laws and too little justice, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


When personnel from the Rajasthan Police knocked on his door early morning on November 1, former State Bank of India chairman Pratip Chaudhuri didn’t even know about the case the uniformed enforcers of the law were talking about.

The former top banker at India’s biggest mass lender was not aware of any case against him anywhere in India. And he most certainly did not recall any ‘Garh Rajwada’ Hotel project in Rajasthan financed by the bank.

“They had a warrant and told me I had to come with them and I will know about the case only after I am produced in court. I said I was not a fugitive and went along with them and was produced in court,” Chaudhuri told ET over the phone.

Chaudhuri did not expect to spend the next eight days – through the Diwali week – in judicial custody. But that is exactly what happened, his arrest overshadowing the celebrations and grabbing prime column inches nationally.

“I knew the case against me was frivolous and will not stand in the court of law. But the worrying part was this was the holiday week and the courts were on holiday and judges were on leave. On the third day, I took the advice to take medical facilities due to my blood pressure and hypertension issues,” Chaudhuri said.

The Case in Question
Chaudhuri was arrested from his Delhi residence by the Rajasthan Police and taken to Jaisalmer on November 1. His subsequent bail application was rejected by the magistrate officer. The case refers to the ‘Garh Rajwada’ hotel project in Jaisalmer, financed through a ₹25-crore loan by State Bank of India (SBI) in 2007. Since the project was not completed for three years and a key promoter passed away in April 2010, the account slipped into an NPA in June 2010.

The bank’s recovery or revival efforts failed to succeed. So, SBI sold the loans to Alchemist Asset Reconstruction Co (ARC) in March 2014. Pratip Chaudhuri, and the co-accused from the ARC, faced charges of cheating (Section 420 of the Indian Penal Code), criminal breach of trust by a public servant (Section 409), and punishment for criminal conspiracy (Section 120 B) at the local court in Rajasthan. The erstwhile promoters, Harender Singh Rathore and Lokendra Singh Rathore, had alleged that the hotel property worth ₹200 crore was sold for just ₹25 crore due to a nexus between SBI and Alchemist ARC.

Lokendra Singh Rathore, the co-promoter in the firm alleged a connivance between Alchemist officials and SBI officials and said that he will continue to fight the case in court.

“Out of the ₹23 crore disbursed by SBI we had paid back more than ₹5 crore in six equal EMIs. We had requested another ₹6 crore from the bank which it delayed between 2008 and 2010. In 2010, after the death of my father the account downgraded into a NPA even as we were still waiting for fresh funds from the bank. This whole property has been taken by Alchemist ARC at ₹25 crore in 2013 and further sold to an NBFC called GFC for ₹40 crore in 2017. Today, its value is ₹200 crore. We have full faith in the judiciary will will continue to fight in court,” Rathore said.

To be sure, Chaudhuri had retired from the bank six months before the sale of the loan account to the ARC – in September 2013.

The police action appears to have run counter to a Department of Personnel & Training (DoPT) circular published about a couple of months ago laying down standard operating procedures (SOP) for action against government officials. It specified that police officers have to seek prior approval under the newly inserted Section 17A in the Prevention of Corruption Act (2018). The amendment also details stage-wise processing of information by the police officer concerned and also a checklist that must accompany an application under Section 17 A.

Chaudhuri said as his case showed, such rules exist only on paper and there is no judicial recourse once push comes to shove.

“Like eminent jurist Palkhivala has said, ‘there are too many laws and too little justice.’ Forget DoPT, even the Reserve Bank of India (RBI) rules also say that independent directors cannot be accountable for decisions taken by the companies they are in, but nobody follows these rules,” Chaudhuri said. “Some chief judicial magistrate in small-town in India can just issue a non-bailable arrest warrant disregarding a Supreme Court order and there is no accountability for that.”

Systemic Challenges
Chaudhuri’s arrest is the latest in a list of such actions by police personnel against bankers.

More than three years ago, Bank of Maharashtra CEO Ravindra Prabhakar Marathe was dramatically arrested while on his morning walk. Also arrested were executive directors Rajendra Kumar Gupta, former managing director Sushil Muhnot and zonal manager Nityanand Deshpande in connection with a case registered in October 2017 against developer Deepak Kulkarni, his wife Hemanti Kulkarni, son Shirish and others in a ₹2,043.18-crore fraud where it was alleged that they extended fraudulent loans to Pune’s DSK Group.

However, the Pune police filed a closure report within four months citing lack of evidence and the officials concerned were reinstated.

Summons by the police are not just to public sector bankers. On Thursday, the EOW of the Mumbai police began a probe into charges of wrongdoing by former ICICI Bank officials in a case where hotelier Vishal Sharma has alleged he was duped of ₹120 crore by the officials and an ARC. The loan itself dates back to 2011. Bankers say limited understanding of the bad loan business is itself a challenge.

“A loan gone bad and sold for half the price does not mean that the bank has sold it for a song. It means that at that point in time, recovery from that asset is limited. It is always likely that an ARC which buys it finds a better price. It does not mean that the sale should not have happened in the first place,” said a senior banker.

SBI has said that all due processes were followed by the bank after a key promoter of the hotel project passed away in April 2010 and the account slipped into an NPA in June 2010. In a statement, SBI said the sale to Alchemist ARC was done through a laid down process. Further, the account was taken to the bankruptcy court and was acquired by an NBFC in December 2017.

“In all these kinds of cases, promoters allege different things at different times to prevent the asset from being sold. Nobody will ask what shape the hotel was in when it was auctioned. The promoters did their best to halt proceedings even going up to the SC which had dismissed their petition. This arrest on the orders of a chief judicial magistrate after the highest court has okayed the transaction is a complete eyewash,” said a person closely involved in the case.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

UBS picks ex-Morgan Stanley chief as next chairman, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Geneva, Nov 20, 2021 -Swiss banking giant UBS on Saturday said its board had nominated former Morgan Stanley president Colm Kelleher as its next chairman, replacing Axel Weber after a decade in the role.

“The board of directors of UBS Group AG will nominate Colm Kelleher as new chairman … for election to the board at the annual general meeting on 6 April 2022,” the bank said in a statement.

If elected, Kelleher, a 64-year-old Irishman, will succeed Axel Weber, a former Bundesbank chief who took over the chairmanship at Switzerland’s largest bank in 2012.

Weber “will have reached the maximum term limit after 10 yeas in office and will thus not stand for re-election,” UBS said.

Weber said Kelleher, who retired from his post as Morgan Stanley president in June 2019 after three decades at the US investment bank, was the right man for the job.

“With Colm Kelleher’s nomination, UBS is pleased to propose a board member and future chairman who has a deep understanding of the global banking landscape,” Weber said in the statement.

“His more than 30 years of leadership experience in banking and excellent relationships around the world make Colm an ideal fit for UBS.”

Ralph Hamers, who took over as UBS chief executive a year ago, also said Kelleher would bring “valuable expertise in banking to the board, and I’m looking forward to working with him to further shaping the future of UBS.”

Kelleher himself said he was looking forward to working with the UBS team, and that “being able to help shape the bank’s future is a great privilege.”

Also on Saturday, the UBS board nominated Lukas Gahwiler, chairman for its Switzerland division, to the position of global vice chairman.

nl/pbr

UBS GROUP AG

MORGAN STANLEY



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Banks need a tight framework, say experts

Banking & Finance

[ad_1]

Read More/Less


Prime Minister Narendra Modi’s vision for banks to support start-ups by investing in ideas needs to be backed by a comprehensive framework from the Reserve Bank of India (RBI), say banking and finance industry experts.

In the absence of such a framework that would, among other things, cover aspects such as NPA recognition and treatment of start-up failures, public sector banks — which are into mostly asset-based lending — would not venture into supporting start-ups, experts feel.

The framework should be tight and well-thought-out to encompass all aspects of venture funding so as not compromise and expose the bankers if such investee ventures were to fail due to market forces. No banker would want to risk depositors’ money in new start-ups without safeguards. PM Modi had, earlier this week, told bankers to invest in ideas thrown up by the start-ups and support their growth.

Funding start-ups

“Start-up finance is nothing but venture capital finance. Venture capital has never been part of banking. In VC, the person who takes the risk profits if the venture succeeds and suffers losses if it does not. The present regulatory framework does not allow banks the same privilege. They do not profit if the investee venture profits but if it makes losses, the bank loses money. There is a big difference and PSBs definitely are not looking at funding start-ups”, a former chief executive of a PSB told BusinessLine. In PSBs, the monies are that of the depositors and not that of the banker, this expert pointed out.

Venture funding

There has to be a mechanism where the PSBs’ commercial banking activities are ring-fenced from their venture funding efforts, say experts. One way is to encourage banks to float their venture funding entities.

PSBs are presently not allowed to do direct equity investments in start-ups. At the most, they can set up vehicles that will do debt funding. Even here, except for large banks like State Bank of India, there has been very little activity by other PSBs. However, private banks have in the recent years been taking equity exposure in fintechs and other start-ups that they would like to partner with.

“Typically, a venture capital fund spreads its bet among a portfolio of start-ups and if one or two among, say ten, becomes a successful enterprise, it is able to recoup the losses made in other investee companies in the portfolio. That is how the world of venture capital works and it will not be easy for banks to replicate this given their less-than-optimal skillsets in evaluating enterprises even if regulations permit them to take equity bets in start-ups,” said a banking industry observer.

Srinath Sridharan, Corporate Advisor and independent markets commentator, said “This would need the banking sector under RBI’s leadership to come up with requisite framework which encourages entrepreneurship, ideas and reaps benefit for all the stakeholders and also offers solutions to any hesitancy factors”, he said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Crypto transactions should be recognised as asset class, regulated centrally: RSS body

Banking & Finance

[ad_1]

Read More/Less


The RSS-affiliated Swadeshi Jagaran Manch has said that the government should bring a law to recognise cryptocurrency transactions as an “asset class” and regulate it.

Domestic servers

Swadeshi Jagaran Manch (SJM) co-convenor Ashwani Mahajan suggested that the government should also ensure that the data and hardware used in mining, processing, and transacting of the cryptocurrencies stay at domestic servers.

It will help the government unearth illicit transactions and take action against them, he added.

Also see: Barcelona, Manchester City drop club crypto sponsors amid concerns

“At present, anybody from anywhere in the world can invest in it through private exchanges run by private entities. And the worst is, cryptocurrencies are not controlled by any central authority,” he said when asked for his views on cryptocurrencies.

Encrypted transactions

There is no mechanism in place to see how the encrypted transactions are being made through private exchanges, who are the ones investing in it and what the investors are doing with them, he added.

“Legislation is needed to regulate cryptocurrencies and to recognise transactions done with it as asset class. This will help develop a better understanding of the transactions for purposes of taxation and national security,” Mahajan said.

‘No intrinsic value’

He rejected the comparison of crypto assets with commodities like gold, calling it “unfounded”, saying cryptos have no “intrinsic value”.

Private virtual currencies are at “substantial odds” with the concept of money, he said, emphasising that “no sovereign” should allow private agencies to issue legal tenders or anything equivalent to it.

Also see: Democracies need to work together for safe cryptocurrency operations: PM

“Most of the bitcoins are mined in the dark web and we don’t know who is the issuer. The monies do not represent any person’s debt or liabilities. This crypto is not money. Certainly, it cannot be a currency,” he said.

Globally, there are instances where bitcoins were used on the dark web to pay for guns, drugs and other illicit purposes, he added.

Need for larger discussions

Amid concerns over cryptocurrency, Prime Minister Narendra Modi had chaired a meeting on November 13 to deliberate on the way forward.

On November 15, a parliamentary panel, chaired by BJP leader Jayant Sinha, also discussed the pros and cons of crypto-finance with various stakeholders.

Mahajan appreciated the move but said there is a need to hold “a larger discussion” on the issue, involving all stakeholders.

“The government is talking to some key stakeholders, yet a larger discussion is needed. There is a need for a national debate and larger discussion on the subject of cryptocurrencies,” he said.

Stratospheric rise

Originally started with Bitcoin in 2008, there are currently hundreds of cryptocurrencies being traded on private exchanges internationally, including India.

Also see: All that is dubious about crypto currencies

Due to its stratospheric rise, Bitcoin is considered the best investment of the last decade. Originally priced at around 10 cent, the coin was being traded at over $60,000 till last week.

Solana and Ethereum are two other leading coins in the market with multiple use cases.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,
1 … 26 27 28 29 30 … 540