Category: Banking & Finance

Covid claims: Kotak Life Insurance expects ₹275-cr loss in June quarter

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Private sector lender Kotak Mahindra Bank has said its life insurance subsidiary expects to incur a loss of up to ₹275 crore in the quarter ended June 30, 2021 due to increased Covid claims.

“Due to increased claims and higher mortality related provisioning arising on account of the second wave, the company expects to incur a loss for the quarter ended June 2021 in the estimated range of ₹225-275 crore,” Kotak Mahindra Bank said in a regulatory filing about Kotak Life Insurance.

“The second wave of Covid-19 has led to an unprecedented increase in fatalities in the country and consequently death claims reported to the company from May,” Kotak Life Insurance said, adding that the issue was discussed at its board meeting on June 16.

The provisioning going forward will depend on the trends in mortality, the private sector insurer said, adding that it continues to have a strong capital and solvency position.

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IndusInd Bank rolls out digital lending platform ‘IndusEasyCredit’, BFSI News, ET BFSI

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IndusInd Bank today, launched the ‘IndusEasyCredit’, a fully digital end to end platform leveraging India’s public digital infrastructure- ‘Indiastack’ to offer personal loans and credit cards in a paperless and cashless manner.

The stack leverages more than 35 interfaces to digitally verify KYC and employment information as well as analyse bank statements. It then uses advanced analytics and machine learning based models to assess eligibility in real time. Post this, the customer can conduct Video KYC and get the loan disbursed into his or her account after executing the agreement digitally.

“Over the past few months, we have been constantly working towards creating a comprehensive solution that enables customers with easy access to credit from the comfort and safety of their homes. ‘IndusEasyCredit’ is a testament to that effort which provides customers with the flexibility to avail a personal loan or a credit card on a single platform, in a completely seamless, paperless, and digital manner.” said Charu Mathur, Chief Digital Officer & Head-Business Strategy, IndusInd Bank in a statement.

Existing as well as non-IndusInd Bank customers can avail an instant personal loan by following the below mentioned steps:

  1. Complete e-KYC and provide basic details to check eligibility (only applicable for non-IndusInd Bank customers)
  2. Select the amount from the pre-approved loan offer as required. Accept the auto populated interest rate, processing fee and EMI amount.
  3. Complete Video KYC (only applicable for non-IndusInd Bank customers).
  4. Authenticate the request for enabling instant money credit into their account, after digitally signing the agreement.
  5. The money gets transferred to the customer’s account instantly on completion of this procedure.

In order to avail credit card, customers can simply follow the below steps:

  1. Complete e-KYC and provide basic details to check eligibility (only applicable for non-IndusInd Bank customers).
  2. Customers will get the pre-approved offer.
  3. They can then select the desired IndusInd Bank Credit Card product.
  4. Complete Video KYC (only applicable for non-IndusInd customers).
  5. On completion of Video KYC, the said card is dispatched to the customer.

Currently, customers can only apply for the ‘IndusEasyCredit’ facility through the Bank’s website. It will also be made available shortly on IndusMobile, the Bank’s mobile banking application, according to the statement.



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ICICI Bank leads in credit card issuances

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Private sector lender ICICI Bank seems to be turning into the market leader in terms of acquiring credit card customers.

The bank has added over 8.15 lakh new credit card customers between January and April this year.

This coincides with the temporary halt on acquisition of credit card customers on HDFC Bank by the Reserve Bank of India in December last year.

According to the latest RBI data, ICICI Bank had 1.07 crore credit card customers by April end this year, adding 1.42 lakh customers over March.

The bank has the third largest credit card base and has been making additions on a monthly basis.

HDFC Bank continues to have the largest credit card customer base with 1.49 crore outstanding credit cards as on April 30, 2021.

But it has seen a decline of 3.8 lakh credit card customers since December 2020, when it had 1.53 crore outstanding cards.

State Bank of India has the second largest credit card base with 1.19 crore outstanding cards by April end this year. It has added 1.05 lakh new customers since December 2020.

Meanwhile, Citigroup which has announced plans to exit its consumer banking operations in India, has also registered a decline in its credit card base. It has 26.21 lakh credit cards outstanding as on April 30, 2021 versus 26.94 lakh as on December 31, 2020.

Private sector Axis Bank has 72.01 lakh credit cards in force by April end this year as against 68.72 lakh in December 2020.

However, with the economic uncertainty following the second Covid wave, analysts expect banks to have become more cautious in terms of credit card issuances.

“Given the challenges posed by Covid 2.0, we expect the spends, new sourcing, and business volumes to remain impacted in the near term. However, we believe that with Citi Bank’s exit from the credit cards business and domestic corporate loan cycle yet to pick up, credit cards will remain a growth avenue, especially for the major players such as SBI Cards, ICICI Bank further strengthening the position of such domestic players in this space,” said a report by Axis Securities last month.

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HDFC Bank awaiting guidance from RBI on bar on new credit card customers, digital launches

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Private sector lender HDFC Bank, which has had multiple outages in its mobile and net banking services, said it is awaiting guidance from the Reserve Bank of India on the temporary halt on sourcing of new credit card customers and digital launches.

“All the elements around the technology audit have been completed. We are awaiting further direction from the regulator. We don’t have any timelines as of now but we hope we will see some feedback from the regulator quite soon,” said Ramesh Lakshminarayanan, Chief Information Officer, HDFC Bank.

Also read: HDFC Bank to refund GPS device commission to auto loan customers

The bank’s mobile banking app saw intermittent outage on June 15 but the issue was resolved by afternoon. Previously, there were also problems in March this year and December last year in the mobile and net banking facilities of the lender.

Hardware failure

Speaking to reporters, Lakshminarayanan said the outages were not related to capacity issues but were largely due to hardware or process failure.

The private sector lender has also been working on its IT infrastructure and to ensure that technology challenges are settled in a faster time span.

Also read: HDFC Bank resolves issues after mobile banking app faces glitches

Lakshminarayanan said the lender had started working on these issues about 18 months ago, even before the directive from the RBI, which has made it more focussed on addressing these problems.

Digital products in the offing

HDFC Bank also plans to roll out multiple digital products in the next 15 to 24 months, once the RBI lifts the halt. It is looking to address customer facing areas and will focus on payments and cards with some of these changes towards the year-end.

Significantly, the bank is also working on two key initiatives – digital factory and an enterprise factory, Lakshminarayanan said.

While the digital factory would be focussed on rolling out digital products, the enterprise factory would focus on renewing the bank’s IT infrastructure. The bank has also hired new talent as part of the digital factory initiative.

He also stressed that the investments in IT will lead to better customer experience, which is a key focus area of the bank.

“Customer feedback is paramount. It has not been great, the outages have been a problem but the focus is to move forward based on the suggestions,” he said.

The bank has also changed its strategy and is communicating with customers and taking their feedback.

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HDFC Bank to refund GPS device commission to auto loan customers

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Private sector lender HDFC Bank has said it will be refunding the GPS device commission to auto loan customers who availed of such device as a part of the auto loan funding during fiscal years 2013-14 to fiscal year 2019-20.

“The refund will be credited to the customer’s repayment bank account registered with the bank,” HDFC Bank said in a public notice in a newspaper on Thursday.

The bank has been in the midst of a controversy over alleged mis-selling of GPS devices to its auto loan customers.

Reserve Bank of India had on May 28 imposed a monetary penalty of ₹10 crore on HDFC Bank. This came after the central bank found irregularities based on a whistleblower complaint in the bank’s auto loan portfolio.

An examination of documents in the matter of marketing and sale of third-party non-financial products to the bank’s customers, arising from a whistleblower complaint to RBI regarding irregularities in the auto loan portfolio of the bank, revealed contravention of the provisions of the Act and the regulatory directions, the RBI had said.

HDFC Bank had last year conducted an internal investigation into allegations that customers of its car loans were being given GPS devices without their knowledge. The allegations had initially come up on social media.

The lender’s former Managing Director and CEO Aditya Puri at the annual general meeting on July 18 last year had confirmed that the bank conducted an inquiry into vehicle loans and appropriate action has been taken against employees involved in the misconduct.

The incident had also led to the exit of a number of executives from the bank. The cost of the device is understood to be about ₹18,000.

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IndusInd Bank launches digital lending platform

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Private sector lender IndusInd Bank on Thursday announced a comprehensive digital lending platform where its existing customers as well as customers of other banks can avail personal loans or credit cards.

“IndusEasyCredit offers a fully digital end to end process that leverages the power of India’s public digital infrastructure – Indiastack to offer personal loans and credit cards in a paperless, presence less and cashless manner,” the bank said in a statement.

Also read:Google Pay expands cards tokenisation with SBI, IndusInd, HSBC and Federal Bank

The stack leverages more than 35 interfaces to digitally verify KYC and employment information as well as analyse bank statements, it further said, adding that it then leverages advanced analytics and machine learning based models to assess eligibility in real time.

The customer can then conduct Video KYC and get the loan disbursed into his or her account after executing the agreement digitally; without having to visit a branch or do any lengthy documentation. The stack will also be leveraged by various partners of the bank.

Also read: Why digital payment is a public good

“IndusEasyCredit provides customers with the flexibility to avail a personal loan or a credit card on a single platform, in a completely seamless, paperless, and digital manner. We believe that this proposition will offer customers a differentiated banking experience,” said Charu Mathur, Chief Digital Officer and Head-Business Strategy, IndusInd Bank.

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After retail, ICICI eyes digital opportunities in corporate sector, BFSI News, ET BFSI

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As retail loans, the mainstay of banks reeling under bad loans, for many years shows pandemic stress, lenders are turning back to corporates.

ICIC Bank, which has been cautious on bulky corporate lending, is looking to increase exposure to companies as it sees them benefiting from the Covid pandemic recovery. Corporate loans constitute 45% of the bank’s Rs 7.33 lakh crore loan book.

ICICI STACK

To tap the corporate loan pie, the company has launched a digital solution, aimed at profiting by offering a wider set of services to high-value clients.

The second-largest private sector lender also said that the corporates are slower in adopting digital solutions as compared to the retail segment, and added that the solution focuses on tech-based new age offerings.

A corporate needs a trusted partner, who will handhold and help manage business holistically.

Its newly launched ‘ICICI STACK will provide digital banking solutions to corporates, their channel partners, employees and other stakeholders.

The bank expects corporate demand also to pick up in the next economic cycle. The bank has doubled the number of current accounts in the last year, The bank has launched a new digital banking product that will provide transaction services, credit facilities, advisory and M&A services for companies and their vendors. It will also offer savings bank accounts to the company employees which will help it build its deposits.

Comprehensive product

The new comprehensive digital offering will help the bank connect with companies their vendors and also employees providing it with valuable information to assess the financial health of their clients besides multiplying opportunities for business.

The bank will offer this new product to 15 industries initially, like information technology, pharmaceuticals, steel and financial services. It has opened eight dedicated branches, five in Mumbai and three around Delhi to serve these customers. Another four branches focussed on these services will be launched later this fiscal.

The lender is not looking at it from a line-by-line perspective and expects the initiative to play into the overall profits.

About 90 per cent of the bank’s retail transactions have moved away from paper-based systems like cheques and termed the adoption of digital alternatives among corporates as “low”. Corporates have doubled up on digital transactions, but have a long way to go on it.

Corporate loan growth

The bank feels India will grow after the ravages of the pandemic and the same will come from both investment and consumption.

In such a scenario the corporate loan demand will also fire up, and added that its corporate loan book is a function of the opportunities in the market.

The bank had witnessed a 13 per cent growth in corporate advances in the March quarter as against 20 per cent on the retail front, and overall domestic loan growth of 18 per cent.

It can be noted that even before the pandemic, corporate loan growth was trailing for banks, which shifted focus to the more resilient retail segment amid asset quality reverses on the large value loans. Some experts say with demand affected, corporates are unlikely to up their investment activities, which typically result in loan growth.



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To power FY22 advances growth, Bank of Maharashtra eyes ₹2,000 cr fund raise

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Bank of Maharashtra (BoM) has embarked on an exercise to mop up ₹2,000 crore via qualified institutions placement (QIP) of equity shares in a bid to support its FY22 advances growth target of 16-18 per cent.

The Pune-headquartered public sector bank expects to tap the QIP route, comprising core issue size of ₹1,000 crore and a green shoe option of ₹1,000 crore, by July-end.

AS Rajeev, MD & CEO, observed that the Bank’s target is to increase the advances portfolio to at least ₹1.25 lakh-crore by March-end 2022 against ₹1,07,654-crore as at March-end 2021.

“The envisaged increase in advances of ₹20,000-25,000 crore will absorb around ₹1,500 crore of capital. We will raise another ₹1,000 crore either via Additional Tier-I or Tier-II bonds by March-end 2022,” he said in an interaction with BusinessLine.

The resources raised via QIP and bond routes is expected to take care of the advances growth for the next one to one-and-a-half years. “We posted ₹550 crore net profit in FY21. We are envisaging 25-30 per cent growth in net profit (in FY22). This will also further increase our capital. So, for another two years, we will not require any capital. This is the plan,” Rajeev said.

After the fund raising and plough back of profit, BoM’s capital to risk-weighted assets ratio is likely to go up to 15 per cent by March-end 2022 from 14.49 per cent as at March-end 2021.

Tweaking loan composition

Rajeev underscored that the retail, MSME and agriculture (RAM), and corporate (government guaranteed advances) advances could increase by about ₹15,000 crore and ₹10,000 crore, respectively, so that the retail to wholesale advances ratio in overall portfolio moves to 65:35 as at March-end 2022, against 67:33 as at March-end 2021.

Within emergency healthcare services, BoM’s pharma sector exposure could go up from about 2 per cent of total advances to 4-4.5 per cent. “Funding support is needed by the sector to manufacture Covid-19 related vaccines and medicines,” Rajeev said.

Higher recovery target

BoM is eyeing a higher recovery target of ₹3,000 crore in FY22 against ₹1,644 crore in FY21. “Our target is to bring down Net Non-Performing Assets (NPAs) below 2 per cent by March-end 2022 (from 2.48 per cent as at March-end 2021) and Gross NPAs below 6 per cent (from now 7.23 per cent),” Rajeev added.

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Kerala Financial Corp declares moratorium on MSME loans

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Kerala Financial Corporation, a leading State Finance Corporation, has announced a one-year moratorium on principal to MSME enterprises and a proposal to restructure their loans as per Reserve Bank of India (RBI) guidelines to prevent such accounts from being categorised as non-performing assets.

The scheme is available to loans in the Standard Category till March 31, 2021, on the basis of applications from promoters received until September 30, 2021. No charges or additional interest will be charged for this facility, a spokesman for the financial institution said.

Also read: RBI allows lenders to revamp MSME accounts under Covid-19 related stress

Last year, the Corporation had sanctioned 20 per cent additional loan to customers whose repayments were prompt until March 31, 2020. The second wave of Covid-19 has once again affected the tourism sector and small industries. This has prompted it to offer another scheme for entrepreneurs in these sectors.

Additional loans, top-ups announced

They will be allowed an additional 20 per-cent top-up to their loan in addition to the 20 per cent provided last year, taking the lot cumulatively to 40 per cent, the spokesman said. The scheme has been formulated in line with the Emergency Credit Line Guarantee Scheme (ECLGS) offered by the Centre.

Loans by banks under the ECLGS are guaranteed by the National Credit Guarantee Trust Company. But this is not available to KFC, which has therefore formulated a scheme with more benefits for customers. So, while banks lend only 20 per cent of the outstanding balance in the customer’s account, the State financial corporation lends up to 20 per cent of the disbursed amount, thereby offering a higher amount.

Furthermore, while the Central scheme provides loans only to the tourism sector, Kerala Financial Corporation also includes small enterprises and the healthcare sector under the scheme. It also allows a 24-month moratorium on principal repayment. Since interest is payable during this period as well, customers will have the option of adjusting it against the loan.

The State Finance Minister had announced in the Budget 2021-22 that assistance would be provided to entities manufacturing products helping prevent the spread of Covid-19. Kerala Financial Corporation has come up with a new plan for such ventures, the spokesman said.

Assistance to fight Covid-19 spread

The scheme will be available to all sectors involved in Covid-19 prevention in the field of healthcare ranging from hospitals, laboratories, units involved in oxygen storage and distribution, manufacturing of ventilators, oxymeters, and other life-saving equipment.

Loans up to ₹50 lakh will be covered under the Chief Minister’s Entrepreneurship Scheme at seven per cent with a tenure of five years. For loans above ₹50 lakh, the interest rate will be seven per cent up to ₹50 lakh and interest for the remaining portion will be fixed as per the rating of the entity. Repayment period available is up to 10 years. Up to 90 per cent of the total project cost will be financed under the scheme.

Interest rates slashed

Kerala Financial Corporation has slashed interest rates for loans to healthcare, tourism and MSME sectors with the minimum rate being reduced from 9.5 per cent to eight per cent. The higher-interest rate slab has been reduced to 10.5 per cent from 12 per cent. Interest rates are determined on the basis of the rating of the entity.

The lower interest rate is usually applied from the loan reset date (month of borrowing) of the respective enterprise. But it has been decided that on this occasion, the benefit of lower interest rate will be available to all eligible customers from July 1, 2021.

The Finance minister had also announced that the loan assets of the company would be increased from ₹4,700 crore to ₹10,000 crore in five years and that ₹4,500 crore will be sanctioned during this financial year.

The value of secured assets will be determined as per market value fixed by external valuers in line with the practice of most banks. The sanctioning power of district managers has been enhanced from ₹50 lakh to ₹2 crore. A special cell will be set up at the head office to expedite the approval and disbursement of loans to small entrepreneurs and startups.

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