Category: Banking & Finance

Saraswat Bank to offer education loans for open and distance learning

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Saraswat Co-operative Bank said it is offering pre-approved education loans at 8.50 per cent, with 100 per cent finance of course fees and zero processing fee. Girl students will get education loan at a special interest rate of 8 per cent.

India’s largest Urban Co-operative Bank, in a statement, said its education loan scheme also covers online courses (in India and abroad). The Bank will also offer 25 per cent discount on commission on purchases of foreign currency or forex remittance.

As a new feature in its education loan scheme, Saraswat Bank has made provisions to extend finance to open and distance (online) learning courses (in India and abroad) as well, thus accepting and supporting the new avenue for education, the statement added.

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Kudva to move SAT against SEBI order

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Vivek Kudva, Head of Franklin Templeton Asia Pacific, plans to move the Securities Appellate Tribunal against the Sebi order levying a penalty of ₹7 crore on him and his wife besides ordering him to transfer ₹31 crore realised by redeeming just before the six debt schemes were suspended from trading.

Kudva has claimed that he has already set aside the proceeds from the sale of units and will not enjoy more than what other investors in the scheme get after the closure of the schemes. This apart, Sebi has also banned Kudva from accessing capital market for one year.

Also read: Franklin AMC to return ₹460-cr advisory fees

“I have the highest regard for SEBI. However, I am reviewing the order and considering appropriate next steps which may include filing an appeal before the Securities Appellate Tribunal,” said Kudva in a statement on Tuesday. “I have always acted in accordance with Sebi regulations, including in this instance. My personal transactions in the two schemes (under winding-up) have been conducted in good faith and with no intent to gain unfair benefit,” he added.

As stated in the SEBI order, he said “I had already placed myself in a similar position as investors in April 2020 and the proceeds of the redemptions were voluntarily set aside such that I and my family will ultimately receive no more than the investors remaining in the Schemes.” My interests therefore remain fully aligned with outcomes that investors in the two schemes under winding up will have, said Kudva.

Emphasis on compliance

Meanwhile, a Franklin Templeton spokesperson said the fund house has placed great emphasis on compliance and have policies in place to cover a variety of matters including personal transactions of employees and managing conflicts of interest, consistent with applicable regulations and global best practices.

The schemes under winding up continue to have significant investments from employees and management, as well as from the asset management company and other group companies of Franklin Templeton, he said.

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SVC Co-operative Bank net up 6 per cent at ₹150 cr in FY’21

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SVC Co-operative Bank’s net profit increased by 6 per cent year-on-year (yoy) to ₹150 crore in the financial year ended March 31, 2021 against ₹142 crore in the previous financial year (FY20).

The Board of directors of the Mumbai-headquartered multi-state urban co-operative bank recommended a dividend of 12 per cent for the year, subject to approval from the Members during the Annual General Meeting.

Deposits and advances

SVC Bank’s total deposits grew about 5 per cent to stand at ₹17,332 crore as at March-end 2021 against ₹16,501 crore as at March-end 2020, according to the Bank’s statement.

Within total deposits, the proportion of low-cost CASA (current account, savings account) deposits rose to 27 per cent from 24 per cent.

Total advances were up about 6 per cent to ₹12,328 crore as against ₹11,608 crore.

Within total advances, retail advances rose 14.51 per cent to Rs 2,077 crore and corporate advances were up by 4.66 per cent to Rs 10,251 crore.

Gross non-performing assets (NPA) showed a marginal uptick to 3.96 per cent of gross advances as at March 31, 2021 against 3.74 per cent as at March-end 2020, the statement said. Net NPA was unchanged at 1.81 per cent of net advances.

The Bank’s capital to risk-weighted assets ratio increased to 13.89 per cent as at March-end 2021 against 12.96 per cent as at March-end 2020.

The 115-year-old Bank has a presence across 11 states through 198 branches and 213 ATMs

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ICICI gets 2 million customers of other banks on iMobile Pay, BFSI News, ET BFSI

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‘iMobile Pay’ is ICICI Bank’s mobile banking application whose revamped version is now being used by two million customers of other banks pan India. The bank has reached this figure in a span of just five months after making ‘iMobile Pay’ open to all, including customers of other banks.

ICICI Bank opened its mobile banking platform ‘iMobile Pay’ to customers of all banks in December 2020. It was a first-in-the-industry initiative that provided the significant convenience of interoperability, as it enabled users of any bank to link their account to the app and begin transacting digitally. It also offered them access to an entire range of ICICI Bank services including savings account, home loan, credit card, personal loan among others.

“ICICI Bank has always believed in introducing innovations that simplify banking for customers. In line with this philosophy, the ICICI Bank was the first to introduce a mobile banking app in the country in 2008, called ‘iMobile’. The Bank has transformed the app and renamed it ‘iMobile Pay’ five months ago to offer interoperability so that anyone, including customers of other banks, can experience the benefits of hassle-free payments and digital banking of ICICI Bank through this app. This was made possible by leveraging NPCI’s interoperable infrastructure.” said Bijith Bhaskar, Head- Digital Channels & Partnership, ICICI Bank in a statement.

“Many customers are entering into a new relationship with the Bank after downloading the app. They are opening savings accounts and applying for a credit card, home loan and personal loan among others.” he added.

The ‘pay to contact’ feature enables the customers to send money either to a mobile number or a UPI ID of their contacts, who are registered on any payment app or a digital wallet. In addition to this, features like ‘scan to pay’, bill payments, ‘check balance’ have seen maximum usage, as quoted by the bank. It has also added bill payment services on the app, to enable payments for DTH, utility services such as electricity, gas and water, FASTag recharge (including that of other banks), insurance and mobile postpaid among others.



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20 lakh customers of other banks log in to ICICI Bank mobile app

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Over 20 lakh customers of other banks are now using ICICI Bank’s revamped mobile banking app.

“The bank has paced to the milestone in a span of just five months after making iMobile Pay open to all, including customers of other banks,” ICICI Bank said in a statement on Tuesday.

Also read: 10 lakh customers of other banks using ICICI Bank’s mobile app

Trends reveal that customers are using features such as pay to contact, bill payments and scan to pay.

ICICI Bank had opened its mobile banking platform to customers of all banks in December last year.

“The bank has transformed the app and renamed it ‘iMobile Pay’ five months ago to offer interoperability so that anyone, including customers of other banks, can experience the benefits of hassle-free payments and digital banking of ICICI Bank through this app. This was made possible by leveraging NPCI’s interoperable infrastructure,” said Bijith Bhaskar, Head – Digital Channels and Partnership, ICICI Bank.

Also read: ICICI Bank revamps app to offer services of any bank

The app has seen an encouraging response from metro cities and leading state capitals including New Delhi, Bengaluru, Chennai, Hyderabad, Lucknow, Patna, Jaipur, Ahmedabad, among others.

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RBI imposes Rs 6 cr penalty on BoI, PNB, BFSI News, ET BFSI

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MUMBAI: The RBI on Monday imposed penalty aggregating to Rs 6 crore on Bank of India and Punjab National Bank for contravention of norms, including one related to “Frauds – Classification and Reporting”.

A penalty of Rs 4 crore has been imposed on Bank of India and Rs 2 crore on Punjab National Bank.

In a statement, the RBI said the statutory Inspection for Supervisory Evaluation (lSE) of Bank of India was conducted with reference to its financial position as on March 31, 2019.

The bank had also conducted a review and submitted a Fraud Monitoring Report (FMR) dated January 1, 2019 pertaining to detection of fraud in an account.

Examination of the risk assessment report pertaining to the ISE and the FMR revealed non-compliance with/contravention of directions, viz., breach of stipulated transaction limits; delay in transfer of unclaimed balances to DEA Fund; delay in reporting a fraud to RBI and sale of a fraudulent asset, the statement said.

In a separate statement, the Reserve Bank said the statutory ISE of Punjab National Bank was conducted with reference to its financial position as on March 31, 2018 (ISE 2018) and March 31, 2019 (ISE 2019).

The examination of the risk assessment reports pertaining to ISE 2018 and 2019 revealed non-compliance with/contravention of the aforesaid directions, viz., delay in reporting of frauds and not ensuring data accuracy and integrity while submitting data on CRILC platform/ to RBI, it said.

In both cases, notices were issued to show cause as to why penalty should not be imposed on them for such violations of the directions.

The RBI, however, added that the penalties have been imposed based on the deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into them with their customers.



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Report, BFSI News, ET BFSI

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Financial creditors may realise Rs 55,000-60,000 crore in fiscal 2021-22 through successful resolution plans from the Insolvency and Bankruptcy Code (IBC), credit rating agency Icra has said.

The realisation for financial creditors from the resolution of Corporate Insolvency Resolution Process (CIRP) under the IBC declined significantly in FY2021 with a total resolution amount of around Rs 26,000 crore, almost a quarter of the realisations in FY2020, the agency said.

“As per our estimates, the financial creditors could realise about Rs 55,000-60,000 crore in FY2022 through successful resolution plans from the IBC,” the agency’s Vice President and Group Head – Structured Finance, Abhishek Dafria, said in a report.

The increase in the resolution amount in FY2022 would depend on the expected resolution of a large housing finance company which is awaiting the NCLT‘s approval but is also under litigation in the higher courts, he said.

In the current financial year, the realisation by the financial creditors would depend on the successful resolution of 8-9 big-ticket accounts, as more than 20 per cent of the agency’s estimated realisation for the year could be from these alone, he added.

Dafria, however, said if the second wave of the pandemic does not subside soon, it could have a bearing on the agency’s estimates as the difficult operating environment may result in a slowdown in the resolution process, especially for smaller-sized entities, and would also result in an increase in the haircuts for the lenders.

The agency said the pandemic has increased operational challenges for the various parties involved in a CIRP, which resulted in limited cases yielding a resolution plan. The suspension of new proceedings under the IBC for the entire FY21 resulted in a sharp slow-down in the resolution process.

From its commencement in December 2016, 4,376 CIRPs have been admitted, of which 2,653 were closed till March 2021, the report said.

The agency believes that there have been some positive outcomes from the presence of the IBC despite the delays that are becoming common.

“About 40 per cent of the cases admitted by the NCLT were closed on appeal/ review or settled or withdrawn under Section 12A which highlights that at least some promoters have been more willing to pay their dues to keep the IBC proceedings at bay,” it said.

For CIRPs that have yielded a successful resolution, the financial creditors have realised/are expected to realise an average 39 per cent of their claims while the realisation value, in comparison to their liquidation value, stands at 180 per cent, the report said.

“Nonetheless, the extent of cases being referred to liquidation remains high at about 40 per cent and only a quarter of such cases have seen the liquidation process come to a conclusion.

The average realisation through liquidation has been a mere around three per cent of the claim amount,” the agency’s Assistant Vice President and Sector Head, Sankha Subhra Banerjee, said.

Improving the turnaround time for successful resolution and finding enough interest in defaulting assets from external parties in the current environment will remain the key challenges for a while, he added.



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Raghuram Rajan moots global credit incentive fund to reduce carbon emissions, BFSI News, ET BFSI

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Former RBI governor Raghuram Rajan has mooted a global carbon incentive to balance national-level priorities with global needs of protecting the environment.

Mooting a gl0boal credit incentive fund, Rajan said every country that emits more than the global average of around five tons per capita would pay annually into the fund, with the amount calculated by multiplying the excess emissions per capita by the population and the GCI. If the GCI started at $10 per ton, the US would pay around $36 billion, and Saudi Arabia would pay $4.6 billion.

Meanwhile, countries below the global per capita average would receive a commensurate payout (Uganda, for example, would receive around $2.1 billion), he wrote. “This way, every country would face an effective loss of $10 per capita for every additional ton that it emits per capita, regardless of whether it started at a high, low, or average level, he said.

Fairness problem

The GCI also would address the fairness problem as the low emitters, which are often the poorest countries and the ones most vulnerable to climatic changes they did not cause, would receive a payment with which they could help their people adapt. “If the GCI is raised over time, the collective sums paid out would approach the $100 billion per year that rich countries promised to poor countries at COP15 in 2009. That would far exceed the meagre sums that have been made available thus far. Better still, the GCI would assign responsibility for payments in a feasible way, because big emitters typically are in the best position to pay,” Rajan wrote in a column.

Moreover, the GCI would not snuff out domestic experimentation. “Instead of levying a politically unpopular carbon tax, one country might impose prohibitive regulations on coal, another might tax energy inputs, and a third might incentivize renewables. Each one charts its own course, while the GCI supplements whatever moral incentives are already driving action at the country level,” Rajan wrote.

The problem

The least costly way to reduce global emissions would be to give every country similar incentives. While India should not keep building more dirty coal plants as it grows, Europe should be closing down the plants it already has. But each country will want to reduce emissions in its own way – some through taxation, others through regulation. The question, then, is how to balance national-level priorities with global needs so that we can save the one world we have.



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Green’ to be soon the colour of money for European banks, BFSI News, ET BFSI

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The European Union is working on new rules where banks will have to state the “greenness” of their activities, or what share of their business is financing climate-friendly activities — a move that would impact profitability in an increasingly environmentally conscious world.

The so-called green asset ratio (GAR) measure is meant to help inform stakeholders — including investors, employees and depositors — of a bank’s commitment to disinvesting from fossil fuels by revealing what proportion of its assets are environmentally sound.

How would it work

Depending on its relative shade of green, a lender’s funding costs could be at stake, as well as its ability to retain talent and its attractiveness to customers. Unlike banks’ other complex financial metrics, a green label may resonate with a much broader public that’s increasingly conscious of companies’ role in society.

However, there is a lot of uncertainty around what will be included in the GAR. If too many banking activities are included it may unnecessarily hit some lenders, and if only a few are included there is danger of “greenwashing.” Also, the banks may shift dirty business to where it isn’t captured in the GAR.

While the European Union proposed measuring green assets against banks’ entire activities, including derivatives, the European Banking Authority has a different view. It favours excluding derivatives entirely from the calculation and reporting so-called “capital markets indicators” separately.

The EBA’s proposal could let banks off the hook on climate change by possibly flattering their green asset ratios. Derivatives are a significant and somewhat risky part of investment banking so their inclusion in the GAR would make a difference. Worse, some lenders might take on greater risk by structuring non-green deals as derivatives to keep them out of the GAR calculations.

Where do European banks stand?

French banks are known for dominating their home market, but they’re considered also-rans on the global stage when compared with US lenders. That’s not the case in the world of green banking. Credit Agricole is the leading underwriter of green bonds, three places ahead of the much larger JPMorgan since the end of 2015, according to an analysis on activity from almost 140 banks around the world by Bloomberg. Two other Paris-based banks, BNP Paribas and Societe Generale, rank in the top 10 in the league table.

French banks were early in identifying green lending as a way to differentiate themselves from their rivals, said Maia Godemer, a London-based researcher at BloombergNEF, a clean-energy think tank. Green debt offerings have been steadily increasing for the past five years, and 2021 is shaping up to be the biggest yet. Issuers have sold more than $187 billion of green bonds so far in 2021, almost triple the pace from the year-earlier period.

A renewable energy market

The underwriting market for renewable-energy companies is minuscule when compared with the funds that fossil-fuel companies are raking in. Since the start of 2016, renewable-energy producers have raised less than $160 billion in the debt markets, compared with the $3.6 trillion for non-renewable energy producers, according to Bloomberg data. This year, when one would expect the spread to be narrowing, green energy providers have received less than $10 billion from bond sales and loans, while fossil-fuel companies got almost $190 billion. The leading lenders to renewable-energy companies since 2016 include Japan’s Mitsubishi UFJ Financial Group, BNP Paribas and Australia & New Zealand Banking Group. Bank of America was the top U.S. bank, placing 11th in the league table.



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RBI buys 70% of 10-year G-Sec to keep yields in check

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The Reserve Bank of India has mopped up about 70 per cent of the benchmark 10-year Government Security (coupon rate: 5.85 per cent) the government has issued since December 1, 2020, thereby keeping G-Sec yields under check and ensuring that banks have enough liquidity to subscribe at the weekly bond auctions.

The current outstanding in the 10-year benchmark G-Sec is ₹1.05-lakh crore. Of this, around 70 per cent is with the RBI. The central bank has accumulated all this via open market operation (purchases), the G-Sec Acquisition Programme and via the secondary market. What this means is the RBI is providing liquidity to banks to encourage them to buy G-Secs at the weekly auctions.

Marzban Irani, CIO-Fixed Income, LIC Mutual Fund, said: “Due to the Covid-19 related uncertainty, central banks all over the world have intervened in the financial markets. Similarly, the RBI is supporting the huge domestic borrowing. However, once the new 10-year benchmark is issued, the current one will become illiquid due to lower float in the market.”

Irani opined that if the RBI had not intervened, the yield on the current 10-year G-Sec, which closed at 6.0227 per cent on Monday, would have been much higher.

He estimated the coupon rate of the new 10-year benchmark G-Sec, which is likely to be issued by the government either this week or next, to be in the 5.95 to 6.05 per cent band. Ever since the 5.85 per cent G-Sec 2030 was issued in December 2020, it is among the top three traded G-Secs.

Bond market expert K Boovendran observed that at the appropriate time, the RBI will offload the 10-year G-Sec to the banks. “The RBI will not hold them permanently. It is only because of the peculiar situation (triggered by the pandemic) that it Is holding so much of this paper.

“… The RBI is very actively operating in the G-Sec market. That is why the G-Sec yield has been kept under check,” he said.

Boovendran, however, noted that since the paper is not available in the market, there could be more demand for it from market participants. More demand will translate into higher price and lower yield for the paper. Bond yield and price are inversely related and move in opposite directions.

He said that whenever the RBI feels that banks have enough money to subscribe to G-Sec auctions on their own, it will sell the 10-year G-Sec from its portfolio.

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