Category: Banking & Finance

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Private sector IDFC FIRST Bank is offering compensation equivalent to four times of the CTC as well as continuation of salary for two years to the families of the employees who lost their lives due to the coronavirus infection.

Among others, the bank is also offering loan waivers of such employees so that their families do not feel pressured due to the economic burden.

“The bank’s employees are usually young people. Their families will be taken by shock. So we put together a composite programme covering all angles. We are giving four times the annual CTC as compensation plus continuing the salary for two more years so that the family can get the time to economically recover,” V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank, told PTI.

The bank is taking initiative to contact the families of those deceased and informing them about what the bank has to offer to them, he added.

“Among others, as part of this scheme we are waiving employee loans as families will have to bear the burden otherwise. If an employee has taken a personal loan, car loan, two-wheeler loan or education loan, etc, that is 100 per cent waived by the bank. Housing loan waiver is up to Rs 25 lakh (before June 30, 2021),” Vaidyanathan said.

Suppose, if an employee had taken Rs 30 lakh loan, IDFC FIRST will waive Rs 25 lakh and residual loan will become 5 lakh, he explained.

“The family can pay the reduced EMI from the salary credits we will make to them for 2 years. We are asking employees to insure their loans going forward (after June),” he said.

Vaidyanathan said around 20 employees of the bank have lost their lives to Covid.

“We are reaching out to the families of the deceased employees and telling them that you are entitled to this. We will give employment to the spouse if they are eligible on merit, if not then we will give them Rs 2 lakh for skilling them,” he said.

The compensation is applicable retrospectively and will continue as long as the pandemic remains.

Among others under this ‘Employee Covid Care Scheme 2021’, the lender has made provision of scholarship of Rs 10,000 monthly to two children up to graduation, funeral expenses up to Rs 30,000, relocation assistance of Rs 50,000 as well as pro-rata bonus payout for the period served this year by the deceased employee.

Apart from this, Vaidyanathan said the bank employees have taken an initiative on their own to help the needy customers belonging to the low income group by generating a corpus from their salaries.

Under this employee funded Ghar Ghar Ration programme, the bank employees will supply ration kits to 50,000 low income customers whose livelihood has been impacted by the pandemic.

Employees are procuring ration kits comprising 10 kg rice/flour, 2 kg lentils, 1 kg sugar and salt, 1 kg cooking oil, 5 packets of spices, tea, biscuits and other essentials, he said, adding employees have contributed one day to one month’s salary for this.

He said as many as 16,000 benefits have reached across Rajasthan, MP, Maharashtra, Odisha, Gujarat, Karnataka, Haryana, Tamil Nadu, Andhra Pradesh and Chhattisgarh under this programme launched recently.

The lender has also identified 250 vulnerable families who have lost an earning member of their family to Covid-19 with a cash relief support of Rs 10,000 in a partnership with ‘Give India’.



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Axis Bank stake in Max Life likely to rise to 20 per cent in 12-18 months, BFSI News, ET BFSI

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In line with the proposed deal, Axis Bank is likely to raise its stake in Max Life Insurance to about 20 per cent over the next 12-18 months, said the insurance company’s CEO Prashant Tripathy said. Currently, Axis Bank and its two subsidiaries — Axis Capital Ltd and Axis Securities Ltd — collectively own 12.99 per cent in Max Life Insurance post approval of the deal in April this year.

With this, Axis entities have now become co-promoters of Max Life with three board seats.

“Axis Bank is to increase to 19.99 per cent in tranches. Thirteen per cent is already done over the next two quarters, we will seek approval for the balance seven per cent. So, it will reach about 20 per cent and that will be the ownership of Axis Bank,” Tripathy told.

When asked about the timeline for the completion of the remaining stake transfer, he said: “It should happen in the next 12 to 18 months.”

Under the deal, the Axis entities also have the right to acquire an additional stake of up to seven per cent in Max Life, in one or more tranches, subject to regulatory approvals.

Tripathy said there is no change in brand but the tagline will have the name of Axis Bank as the joint venture partner.

Talking about synergy, he said, “We are coming up with a new strategy for future growth. We are working together as a common team to ensure that Max Insurance life grows faster than the industry. We are working together to look at product mix to drive Axis channel so outcome is favourable for both customers and the company.”

Besides, he said working on analytics areas to leverage on each other’s capabilities.

He said the company launched 14 products or product variants last year and increased the margin by 3.60 per cent in 2020-21.

Max Life Insurance recorded a 22 per cent rise in its total new business premium (individual and group) to Rs 6,826 crore in the financial year ended March 2021.

The renewal premium income of the insurer rose 15 per cent to Rs 12,192 crore, taking the gross premium to Rs 19,018 crore, up by 18 per cent from a year ago.

In terms of individual APE (adjusted premium equivalent), the company witnessed a growth of 19 per cent to Rs 4,907 crore.

Max Life’s post-tax shareholders’ profit fell six per cent to Rs 523 crore in 2020-21 as compared to Rs 539 crore in the previous year.



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Exim Bank sees India’s Q1 merchandise exports at $87.2bn, BFSI News, ET BFSI

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New Delhi, Export-Import Bank of India (Exim Bank) has projected India‘s total merchandise exports for the first quarter of FY22 to reach $87.2 billion.

It would be around 70 per cent higher than $51.3 billion during the same quarter last fiscal, Exim Bank said in a statement.

Non-oil exports are likely to grow over 68 per cent on a year-on-year basis to $78.26 billion, compared to $46.4 billion during April-June, FY21.

“The sharp rise in India’s exports could be attributed largely to the low base effect, pick up in global oil prices, and strong growth in advanced economies,” it said.

While the peak of the second wave of infections of the Covid-19 pandemic witnessed in India during end April-May 2021, could have subdued exports during the quarter to some extent, exports from India have nevertheless been relatively resilient.

The forecasts are based on India Exim Bank’s Export Leading Index (ELI) Model, which has shown an upward movement during the same quarter.



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PhonePe files plaint with SEBI against Ventureast

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Our Bureau

PhonePe has filed a complaint against Ventureast Proactive Fund-II (VPF), an AIF operating out of India, with SEBI over its planned acquisition of OSLabs.

“The complaint relates to multiple violations of SEBI’s code of conduct in relation to VPF’s recent side dealings with Affle which are a deliberate bad faith attempt to scuttle OSLabs majority acquisition by PhonePe,” it said in a statement.

“VPF has not only broken SEBI’s code of conduct, but it has also acted in complete negligence of its fiduciary duties as a large shareholder of IndusOS,” said Sameer Nigam, CEO and Founder, PhonePe.

“By deliberately derailing PhonePe’s acquisition of IndusOS, a deal which all three OSLabs founders continue to also believe is in their company’s best long-term interests, VPF has also hurt OSLabs’ long term interests,” he further said, adding that it is important to expose such unethical conduct by VPF for the sake of the larger start-up ecosystem.

“We have a very strong case and are confident that we will prevail on both fronts, and hopefully in the process also create a strong deterrent against bad actors trying to bully young startups,” Nigam said in the statement.

The SEBI complaint in India is in addition to a lawsuit that PhonePe has already filed against Ventureast and Affle in the Singapore High Court.

The lawsuit claims that VPF deliberately deceived PhonePe, by continuing to engage PhonePe and OSLabs on the sale of its shares in OSLabs in favour of PhonePe even though it had sold those same shares to Affle in a side deal without OSLabs and PhonePe’s knowledge on a prior date during a legally binding no-shop period, the statement said.

While the legal matters will be settled in court, PhonePe has now approached SEBI to look into these gross ethical violations and dereliction of VPF’s fiduciary duties to protect the interests of OSLabs, its investee company, it added.

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Axis Bank stake in Max Life likely to rise to 20 per cent in 12-18 months

Banking & Finance

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Axis Bank is likely to raise its stake in Max Life Insurance to about 20 per cent over the next 12-18 months, said the insurance company’s CEO Prashant Tripathy said.

Currently, Axis Bank and its two subsidiaries — Axis Capital Ltd and Axis Securities Ltd — collectively own 12.99 per cent in Max Life Insurance post approval of the deal in April this year.

With this, Axis entities have now become co-promoters of Max Life with three board seats.

“Axis Bank is to increase to 19.99 per cent in tranches. Thirteen per cent is already done over the next two quarters, we will seek approval for the balance seven per cent. So, it will reach about 20 per cent and that will be the ownership of Axis Bank,” Tripathy told PTI.

When asked about the timeline for the completion of the remaining stake transfer, he said: “It should happen in the next 12 to 18 months.” Under the deal, the Axis entities also have the right to acquire an additional stake of up to seven per cent in Max Life, in one or more tranches, subject to regulatory approvals.

Tripathy said there is no change in brand but the tagline will have the name of Axis Bank as the joint venture partner.

Talking about synergy, he said, “We are coming up with a new strategy for future growth. We are working together as a common team to ensure that Max Insurance life grows faster than the industry. We are working together to look at product mix to drive Axis channel so outcome is favourable for both customers and the company.” Besides, he said working on analytics areas to leverage on each other’s capabilities.

He said the company launched 14 products or product variants last year and increased the margin by 3.60 per cent in 2020-21.

Max Life Insurance recorded a 22 per cent rise in its total new business premium (individual and group) to Rs 6,826 crore in the financial year ended March 2021.

The renewal premium income of the insurer rose 15 per cent to Rs 12,192 crore, taking the gross premium to Rs 19,018 crore, up by 18 per cent from a year ago.

In terms of individual APE (adjusted premium equivalent), the company witnessed a growth of 19 per cent to Rs 4,907 crore.

Max Life’s post-tax shareholders’ profit fell six per cent to Rs 523 crore in 2020-21 as compared to Rs 539 crore in the previous year.

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Edelweiss Financial Services posts net profit of Rs 637 crore in Q4

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Edelweiss Financial Services posted a consolidated net profit of Rs 636.7 crore in the fourth quarter of 2020-21 as against a net loss of Rs 2,281.55 crore in the corresponding quarter a year ago.

It registered a net profit of Rs 253.91 crore for the full fiscal 2020-21 versus a loss of Rs 2,043.77 crore in 2019-20.

Total consolidated income for the quarter ended March 31, 2021 jumped to Rs 4,480.95 crore as against Rs 1,965.87 crore in the same period in the previous fiscal, Edelweiss said in a regulatory filing.

“During the year, we will continue to focus on strengthening balance sheet and liquidity; Invest in our retail credit, asset management and Insurance businesses and progress on the EWM demerger, in preparation for listing by the third quarter of 2022-23, thereby unlocking value for our shareholders. Robust equity, comfortable liquidity and agile operating platforms will give us a solid foundation as we look towards economic revival and growth in the years ahead,” said Rashesh Shah, Chairman and CEO, Edelweiss Financial Services.

The board has recommended a final dividend of Rs. 0.55 per share on the equity shares of the face value of Rs 1 each, subject to the declaration by the members at the forthcoming Annual General Meeting.

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IDFC FIRST Bank compensates families of employees affected by Covid

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IDFC FIRST Bank is offering compensation equivalent to four times of the CTC as well as continuation of salary for two years to the families of the employees who lost their lives due to the coronavirus infection.

Among others, the bank is also offering loan waivers of such employees so that their families do not feel pressured due to the economic burden.

“The bank’s employees are usually young people. Their families will be taken by shock. So we put together a composite programme covering all angles. We are giving four times the annual CTC as compensation plus continuing the salary for two more years so that the family can get the time to economically recover,” V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank, told PTI.

The bank is taking initiative to contact the families of those deceased and informing them about what the bank has to offer to them, he added.

“Among others, as part of this scheme we are waiving employee loans as families will have to bear the burden otherwise. If an employee has taken a personal loan, car loan, two-wheeler loan or education loan, etc, that is 100 per cent waived by the bank. Housing loan waiver is up to Rs 25 lakh (before June 30, 2021),” Vaidyanathan said.

Suppose, if an employee had taken Rs 30 lakh loan, IDFC FIRST will waive Rs 25 lakh and residual loan will become 5 lakh, he explained.

“The family can pay the reduced EMI from the salary credits we will make to them for 2 years. We are asking employees to insure their loans going forward (after June),” he said.

Vaidyanathan said around 20 employees of the bank have lost their lives to Covid.

“We are reaching out to the families of the deceased employees and telling them that you are entitled to this. We will give employment to the spouse if they are eligible on merit, if not then we will give them Rs 2 lakh for skilling them,” he said.

The compensation is applicable retrospectively and will continue as long as the pandemic remains.

Among others under this ‘Employee Covid Care Scheme 2021’, the lender has made provision of scholarship of Rs 10,000 monthly to two children up to graduation, funeral expenses up to Rs 30,000, relocation assistance of Rs 50,000 as well as pro-rata bonus payout for the period served this year by the deceased employee.

Apart from this, Vaidyanathan said the bank employees have taken an initiative on their own to help the needy customers belonging to the low income group by generating a corpus from their salaries.

Under this employee funded Ghar Ghar Ration programme, the bank employees will supply ration kits to 50,000 low income customers whose livelihood has been impacted by the pandemic.

Employees are procuring ration kits comprising 10 kg rice/flour, 2 kg lentils, 1 kg sugar and salt, 1 kg cooking oil, 5 packets of spices, tea, biscuits and other essentials, he said, adding employees have contributed one day to one month’s salary for this.

He said as many as 16,000 benefits have reached across Rajasthan, MP, Maharashtra, Odisha, Gujarat, Karnataka, Haryana, Tamil Nadu, Andhra Pradesh and Chhattisgarh under this programme launched recently.

The lender has also identified 250 vulnerable families who have lost an earning member of their family to Covid-19 with a cash relief support of Rs 10,000 in a partnership with ‘Give India’.

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Bank of Maharashtra plans to raise up to Rs 2,000 crore through QIP

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State-run Bank of Maharashtra is looking to raise up to Rs 2,000 crore through qualified institutional placement (QIP) route before July-end, its Managing Director and CEO A S Rajeev said.

In April this year, the Pune-based lender had received board approval to raise Rs 5,000 crore by way of QIP/rights issue/ preferential issue or by issuing Basel III bonds.

“We are planning to raise around Rs 2,000 crore equity through QIP immediately. The process has already started and we will raise it before July-end,” Rajeev told PTI in an interaction.

The base size of the issue is Rs 1,000 crore and it has a greenshoe option of another Rs 1,000 crore, he said.

Following this equity raise, the Government’s holding in the bank will reduce to below 85 per cent from 94 per cent currently, and the capital adequacy ratio will improve to 17-18 per cent from around 14.49 per cent as of March 31, 2021, Rajeev said.

This fund will be deployed for expansion of the loan book, which the bank is looking to grow by 16-18 per cent to around Rs 1.25 lakh crore in this fiscal from Rs 1.08 lakh crore as of March 31, 2021, he said.

Of the total loan book of the bank at present, the share of corporate loans is 37 per cent and of retail, agriculture and MSME (RAM) segment is 63 per cent, he said adding, “We want the ratio of RAM to the corporate segment to be 65:35 during the current fiscal.” The bank is envisaging a 20-25 per cent growth in the retail, agriculture and MSME (RAM) segment this year. The lender’s corporate loan size is close to Rs 40,000 crore and it is targeting to grow it by another Rs 10,000 crore in this financial year. It has a sanction pipeline of Rs 25,000 crore in the corporate and MSME segments for the current fiscal, he said.

“We have churned our portfolio with improvement in the share of lending to better-rated corporates. This will minimise the delinquencies and attract lower capital requirement,” Rajeev added.

In the corporate segment, the bank will continue lending to better-rated corporates, including sunrise sectors such as infrastructure, pharmaceuticals and FMCG, he said.

Under the government’s Emergency Credit Line Guarantee Scheme (ECLGS), the bank’s total disbursement, so far, is around Rs 2,100 crore, and it plans to lend another Rs 500 crore this year.

Rajeev said the bank’s exposure to the healthcare sector is Rs 2,000-2,400 crore, which is 2 per cent of the total advances portfolio. In April and May, it had already disbursed over Rs 225 crore to the sector.

“We intend to double our portfolio under the healthcare sector and make it 4 per cent of our total advances portfolio during the current fiscal. We have also come out with two to three products in tune with the RBI policy,” he said.

Last month, the RBI had announced an on-tap term liquidity facility of Rs 50,000 crore under which banks can provide fresh lending support to a wide range of entities from the healthcare segment. The government has also announced ECLGS 4.0, under which a 100 per cent guarantee cover to loans up to Rs 2 crore will be provided to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.

Rajeev further said since the exit from the RBI’s prompt corrective action (PCA) framework in January 2019, the lender has taken several steps to strengthen its balance sheet, which has resulted in a significant improvement in all its financial parameters.

“We have been successful in registering profits quarter on quarter since March 2019. Our net profit rose 41.39 per cent to Rs 550 crore during FY21 from Rs 389 crore in FY20. Operating profit also rose 39 per cent to Rs 3,958 crore in FY21 from Rs 2,847 crore last year,” he said.

The bank’s CASA (Current Account and Savings Account) improved to 54 per cent as of March 31, 2021, which according to Rajeev is one of the best in the banking industry.

The bank has also managed to bring its gross non-performing assets to 7.23 per cent as of March 31, 2021, from 18.64 per cent in September 2018, when it was under PCA. Net NPAs stood at 2.48 per cent as of March 31, 2021.

At present, market capitalisation of the bank stands at Rs 17,500 crore against Rs 3,948 crore as of March 2019, he said. In FY22, the bank is targeting to bring down gross NPA to below 6 per cent and net NPA to below 2 per cent. Net interest margins (NIM) will remain above 3 per cent in this fiscal, he said.

It has set a recovery and upgradation target of Rs 2,500-2,600 crore during the current year. The lender is also expecting Rs 500 crore recovery from written-off accounts in this fiscal, Rajeev said. The lender is looking at opening 200 banking outlets with a hub and spoke model in this fiscal, he added.

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Bank of Maharashtra plans to raise Rs 2,000 crore via QIP, BFSI News, ET BFSI

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MUMBAI: Bank of Maharashtra has decided to float a Rs 2,000-crore qualified institutional placement (QIP) of equity shares next month. The public sector lender has received approval from its shareholders for the capital raise last year.

Speaking to TOI, A S Rajeev, MD & CEO BoM, said that the bank had capital adequacy of 14.5%. Of which, 10.9% is the tier I and capital adequacy is good. “For growth purpose, we require capital as we are envisaging a credit growth of 16-18%. This means that advances will grow by around Rs 25,000 crore for which we require Rs 1,400-1,500-crore capital” he said.

The bank is looking at an issue of Rs 1,000 crore with a greenshoe option to retain an oversubscription of Rs 1,000 crore. “In addition to this we will be raising Rs 1,000 crore through additional tier I and tier II bonds,” said Rajeev. The bank’s stock, which was trading below Rs 11 a year ago, closed at Rs 27 on Friday.



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Centre may front load capital provisioning for PSBs this year, BFSI News, ET BFSI

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New Delhi, As the Central government draws a plan to privatise at least two public sector banks (PSB) this fiscal, it has also decided to front load capitalisation of state-owned banks so that the balance sheets of some of these entities are strengthened ahead of possible sale.

Sources said that PSBs may be provided this year just after their first quarter results before October. This would be a departure from the practice of previous year when bank capitalisation was undertaken late in the year and towards the end of fiscal.

Even in FY21, a substantial portion of capital was released right at end of the fiscal year in March.

“Front loading of capital will help PSBs to strengthen their financials that may again get impacted this year with weak lending and stress coming back on a lot of their credit assets with Covid pandemic continuing to disrupt businesses. This could also help in taking out weak banks out of the PCA (prompt corrective action) framework that would be helpful in their possible privatisation this year,” said an official source on the condition of anonymity.

The Budget 2021-22 has allocated Rs 20,000 crore towards recapitalisation of PSBs to help them consolidate their financial capacity.

Source said that more than two-third of this capital may be provided by the second quarter.

The government had earlier indicated that banks under prompt corrective action (PCA) framework or weaker banks would be kept out of privatisation as it would be difficult to find buyers for them. This would have left three PSBs, Indian Overseas Bank, Central Bank and UCO Bank, out of the government’s disinvestment plan.

But now the thinking is that they could be brought out of PCA as there are visible signs of improvement in some of the key parameters such as profitability and asset quality (in net NPA terms as they have stepped up provisioning) in the last 3-4 quarters. This could allow them to be considered for privatisation.

Provision of capital earlier in the year will give the necessary boost to them.

Finance Minister Nirmala Sitharaman had announced in her Budget speech this year that two state-run banks along with IDBI Bank would be privatised in FY22.

She also said that one general insurance company would be sold off in the current fiscal.

The recapitalisation roadmap is being redrawn for the PSBs in the current fiscal as the institutions are expected to face stress from the pandemic disruptions with fears that asset quality may further weaken like last year.

Also, the changes in valuation norms AT1 bonds has made the instrument less attractive for banks to raise their capital.

SEBI, though has amended the valuation rule of perpetual bonds in line with objections raised by the finance ministry, it still has said that from April 2023 onwards, the residual maturity of AT-1 bonds will become 100 years from the date of issuance of the bond. This will make the most used route of raising capital by banks less attractive.

Sources said that the Finance Ministry has already started a preliminary exercise to determine the capital requirement of banks in wake of limitations on fund raising norms and expected rise in bad assets during the time of the pandemic. Based on the inputs received by banks, additional capital may be provided to them from budgetary resources at the earliest.

On its part, government is strengthening the banking segment by merger and amalgamation of PSBs.

Since 2017, this exercise has resulted in seven large and five smaller PSBs.

The measures (based on bad loans and regional factors) were intended to help manage capital more efficiently. But emerging regulatory needs and pandemic affected businesses continue to pose challenges for banking segment.



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