Category: Banking & Finance

Challenging year stares at microfinance sector: Ind-Ra

Banking & Finance

[ad_1]

Read More/Less


India Ratings (Ind-Ra) said a sequential challenging year stares at the microfinance sector, with the impact of the credit costs on account of the second wave expected to be higher in the annual financials for FY22 than FY21.

The credit rating agency reiterated a Stable Outlook for large MFIs and a Negative Outlook for the rest for FY22.

With the second wave penetrating rural markets, Ind-Ra estimated collections for microfinance institutions (MFIs) and small finance banks (SFBs) to have declined 3-5 per cent in April 2021 and additional 5-7 per cent in May 2021 (first fortnight of the month), both on a month-on-month basis, as states implement stricter measures to manage the second Covid wave.

The agency expects the overall microfinance sector to witness a shortfall of 10-15 per cent in collections on a consolidated basis in May 2021.

“That being said, the variation among MFIs could be wider, depending on their level of concentration in regions where lifting of restrictions could be slow,” said Amit Rane, Senior Analyst, in a note.

Ind-Ra, in its microfinance outlook had estimated credit costs for MFIs to be in the range of 3-8 per cent in FY21 on account of the first Covid first wave as collections picked up in the pre-Covid portfolio and normalised for post September 2020 originations.

Portfolio deterioration

The agency observed that the incidence of most of the relevant provision will also fall in FY22, given that the bulk of the second wave portfolio deterioration would happen at the beginning of FY22.

As a consequence, the impact of the credit costs on account of the second wave would be higher in the annual financials for FY22 than FY21 and possibly even the demonetisation crisis; where credit costs were spread over three years as the event occurred at end-3QFY17 and the regulator provided forbearance for NPA recognition, it added.

Funding access critical

Ind-Ra believes smooth access to funding and liquidity would be critical for the microfinance sector.

It assessed that for most large MFIs (assets under management (AUM) above ₹5000 crore or MFIs that are part of large groups), bank funding lines etc. could continue and hence they may not face immediate liquidity stress.

Recently, the regulatory announcement of special long-term repo operations of ₹10,000 crore for SFBs and categorisation of lending by SFBs to MFIs under priority sector lending (for loans to MFIs of AUM ₹500 crore and less) is a step to ensure flow of liquidity to small MFIs, Ind-Ra said.

However, as per Ind-Ra’s analysis the portfolio of SFBs and their lending to MFIs with AUM of less than ₹500 crore billion is marginal.

Ind-Ra expects mid and small MFIs to continue to face challenges in fund raising and / or borrowing costs.

[ad_2]

CLICK HERE TO APPLY

Leave a comment ,

PSBs may face more stress at govt focuses on Mudra loans, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The government is banking on small borrowers to help lift credit demand and has asked banks to lenders to focus on Mudra loans.

It expects small borrowers to help pick up credit demand once the lockdowns in states are eased.

The government has asked banks to prioritise this segment and ensure timely sanctions and disbursals. Lenders have also been asked to regularly monitor asset quality for small-ticket loans including PMMY loans.

Loans disbursed by banks and microfinance institutions for non-corporate small borrowers and for income-generating activities in the non-farm segment are termed as Mudra loans under the Pradhan Mantri Mudra Yojana (PMMY), which was launched in 2015,

In fiscal 2021, banks had sanctioned loans worth Rs 2.79 lakh crore under the PMMY. Of these, loans of Rs 2.64 lakh crore were disbursed.

Interest subvention

The government is also considering extending the interest subvention of 2% on prompt repayment of Shishu loans sanctioned under the Pradhan Mantri Mudra Yojana (PMMY).

Under the PMMY, loans up to Rs 50,000 are termed Shishu loans. The subvention scheme is being implemented through the Small Industries Development Bank of India.

Last year in June, the government announced the interest subvention under the Atmanirbhar Bharat Abhiyan. It had noted that the move will help support small businesses to continue functioning during these times of crisis and have a positive impact on the economy and support its revival.

Loan losses

However, public sector banks (PSBs) have seen a sharp surge in the amount of Mudra loans turning into non-performing assets (NPAs) over the last three years. NPAs in Mudra loans had jumped to Rs 18,835 crore in 2019-20, from Rs 11,483 crore in 2018-19 and Rs 7,277 in 2017-18, according to the Finance Ministry data.

Mudra loan disbursements by state-owned banks rose to Rs 3.82 lakh crore in 2019-20, from Rs 3.05 lakh crore in 2018-19 and Rs 2.12 lakh crore in 2017-18. The Mudra loan NPAs as a percentage of total loans rose to 4.92 per cent in 2019-20 from 3.42 per cent in 2017-18.

Banks and financial institutions have sanctioned Rs 14.96 lakh crore to over 28.68 crore beneficiaries in the last six years. The average ticket size of the loans is about Rs 52,000, it said.

Under PMMY collateral-free loans of up to ₹10 Lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc.

The loans are given for income generating activities in manufacturing, trading and services sectors and for activities allied to agriculture.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Average ticket size for life insurance increasing: Exide Life CEO

Banking & Finance

[ad_1]

Read More/Less


Not only are more people buying life insurance but the average premium and cover size has also increased, said Kshitij Jain, Managing Director and CEO, Exide Life Insurance, adding that despite the second wave of the Covid-19 pandemic, he expects the life insurance sector to do well this fiscal. “We are selling more policies than last year and we are selling bigger premiums. More people are taking bigger covers. Overall in premium term, industry will see growth this year,” Jain told BusinessLine in an interaction.

On an industry-wide basis, the average premium size has increased every year for the last three years, he said, attributing it to the attractive guarantee products that life insurers are offering. “Over the last three years at Exide Life Insurance, we have increased the average ticket size by as much as 40 per cent. My expectation is that this year, we will grow it by another 20 per cent,” Jain further said.

Upbeat about prospects

Jain is also upbeat about prospects for the life insurance industry this fiscal. “The growth will be a combination of two things. We see a clear trend of customers wanting to buy more protection that they used to. Also, over the last few months, a number of players including our company, are offering attractive long-term guarantees to customers,” he said, adding that the first five to six months of the fiscal will also benefit from the low base of 2020-21.

“Given the Covid-19 pandemic, we have recorded a rise in our protection business. Protection currently makes for close to 18 per cent of our customer acquisition. With increasing awareness about term insurance, we expect this number to go up further,” he further said.

Also read: Exide Life Insurance drops ambition of ‘breakneck’ growth in FY21: CEO

The company expects new business premiums to rise by about 30 per cent this fiscal. The life insurance industry is also well prepared to meet the rising claims due to Covid-19, he further said.

Till March 31, 2021, the company received close to 750 Covid-19 claims and has settled all of them. “Approximately 11.5 per cent of our total claims are on account of Covid-19 and we may witness further increase through the next few months if the pandemic intensifies across the country,” he said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

IPPB ties-up with Mahindra Rural Housing Finance for cash management solution, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Mahindra Rural Housing Finance Limited (MRHFL), a subsidiary of Mahindra and Mahindra Financial Ltd, and India Post Payments Bank (IPPB) have tied-up for a strategic partnership for cash management solution. As part of the tie-up, IPPB will be offering cash management and collection services to MRHFL through its access points and postal service providers. With the cash management service, MRHFL customers will be able to repay their monthly or quarterly loan instalments at over 136,000 post offices.

The tie-up for cash management solution is aimed at customer inclusivity by both the partners. IPPB’s large national network combined with its simple, scalable and replicable technology framework has facilitated the deployment of cash management solution to meet the requirements of MRHFL.

J Venkatramu, MD & CEO, India Post Payments Bank, “As technology continues to evolve and creates new ways of doing business, it has been our constant endeavour to offer our customers and partners accessible & affordable banking solutions. Cash management being the lifeline of business operations, IPPB with its robust network and technology platform can help corporates to manage their receivables safely, securely and seamlessly.”

Anuj Mehra, Managing Director, Mahindra Rural Housing Finance said, “At Mahindra, we keep on looking at innovative solutions to enhance the customer support for our customers. The tie up with IPPB is a step in that direction which we believe will provide our customers access to efficient banking services and enable them to become financially secure and empowered. I am grateful to IPPB for agreeing to partner with us on this unique solution which will enable our customers to Rise”.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Slice raises ₹165 crore in debt in FY 21

Banking & Finance

[ad_1]

Read More/Less


slice, a new-age credit and payment start-up, has raised a cumulative debt of ₹165 crore in pandemic-struck FY21 from 18 leading financial institutions. This includes Northern Arc Capital Limited, Vivriti Capital Private Limited, AU Small Finance Bank, Incred Financial Services Limited, Pace Fincap Private Limited, Western Capital Advisors Pvt Ltd, and Innoven Capital India Pvt Ltd among others. Out of this, the company raised ₹126 crores in the last five months of FY21.

Catering to India’s youth, slice has over 3,00,000 members and 9,00,000 on waitlist today, 70 per cent of them being young working professionals. The company has processed a transaction volume of over $250 million and plans to achieve a GTV (Gross Transaction Value) run rate of $1 billion FY22. With this, slice also plans to grow its member base by more than 3X to 1 million in 12 months.

Also read: 3 rules to remember as you battle a cash crunch

“Last year was volatile, which makes it even more empowering for us to have such strong financial institutions show solidarity with our vision. The number of institutions investing in us has grown significantly in FY21 alone, a validation of our strategy of keeping the lowest NPAs in the industry,” said Rajan Bajaj, founder and CEO, slice, in a statement.

“Our priority right now is to support the country in every way possible as we all collectively fight the second wave. We have all learnt several lessons from the pandemic last year which will help us put our best foot forward. Customer centricity and business agility is more important in today’s times than ever before,” added Bajaj.

Also read: Covid has exposed holes in handling of personal finances, says a BL Portfolio survey

Despite the pandemic, the company grew by 125 per cent in 2020 and has recorded a 40-50 per cent increase in average customer spend. The company also plans to double its employee strength in 2021 with a major focus on tech, product and design. Founded in 2016, slice’s flagship products is the slice card, a challenger credit card issued in partnership with Visa.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Small finance banks less prepared than private banks, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Small finance banks (SFBs), which depended heavily on loan moratorium last year, are likely to be hit by delinquencies as Covid crimps the incomes of their mainstay borrowers.

However, they are inadequately prepared to face the barrage of asset quality issues that may hit them. In contrast, the top private sector banks are adequately prepared to face the crisis.

The provision coverage ratio, or amount set aside for bad loans, is less than 60% of total bad loans. for three listed banks—Equitas Small Finance Bank Ltd, Ujjivan Small Finance Bank Ltd and AU Small Finance Bank.

AU Small Finance Bank’s PCR fell to 50% in Q4 from 53% earlier, while Equitas Small Finance Bank, the most conservative among the SFBs, saw a 25% decline in the overall provision, compared with last year. Ut made additional provision to Rs 153 crore at the end of the fourth quarter.

Ujjivan Small Finance Bank’s PCR fell to 60% in the fourth quarter, from 80% in the year-ago period. The bank made a provision of Rs 170 crore as of March-end.

Private banks’ PCR

For HDFC Bank total provisions (comprising specific, floating, contingent and general provisions) were 153% of the gross non-performing loans as on 31 March 2021.

ICICI Bank had substantially increased its provision coverage ratio (PCR) to 86 per cent with pro forma PCR of 78 per cent, the highest in the industry.

Axis Bank’s provision coverage ratio, including write-offs, stood at 88% in the fourth quarter.

SLTRO boost

While the small finance banks did not get moratorium relief, the Reserve Bank of India (RBI) has announced a special long-term repo operation (SLTRO) for small finance banks. The central bank conducted the special operation of Rs 10,000 crore at repo rate, Das said.

“Small finance banks (SFBs) have been playing a prominent role by acting as a conduit for the last-mile supply of credit to individuals and small businesses,” Das said earlier this month announcing the relief measures.

“To provide further support to small business units, micro and small industries, and other unorganised sector entities adversely affected during the current wave of the pandemic, it has been decided to conduct special three-year long-term repo operations of Rs 10,000 crore at repo rate for the SFBs, to be deployed for fresh lending of up to Rs 10 lakh per borrower,” Das said, adding that the facility will remain open till October 31, 2021.

Priority loans

The RBI also has decided to allow the classification of priority sector lending for loans given by small finance banks (SFB) to micro-finance institutions (MFI) for on-lending to individuals.

The decision has been taken to address the liquidity issues of MFIs amid the severe Covid crisis.

RBI Governor Shaktikanta Das said: “In view of the fresh challenges brought on by the pandemic and to address the emergent liquidity position of smaller MFIs, SFBs are now being permitted to reckon fresh lending to smaller MFIs (with asset size of up to Rs 500 crore) for on-lending to individual borrowers as priority sector lending.” This facility will be available up to March 31, 2022.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Mahindra Rural Housing Finance, IPPB tie up for cash management solution

Banking & Finance

[ad_1]

Read More/Less


Mahindra Rural Housing Finance and India Post Payments Bank on Monday announced a strategic partnership for cash management solution.

“As part of the tie-up, IPPB will be offering cash management and collection services to MRHFL through its access points and postal service providers,” Mahindra Rural Housing Finance said in a statement, adding that with the cash management service, its customers will be able to repay their monthly or quarterly loan instalments at over 1.36 lakh post offices.

J Venkatramu, MD and CEO, India Post Payments Bank (IIPB), said: “Cash management being the lifeline of business operations, IPPB with its robust network and technology platform can help corporates to manage their receivables safely, securely and seamlessly.”

Anuj Mehra, Managing Director, Mahindra Rural Housing Finance said, “The tie up with IPPB is a step in that direction which we believe will provide our customers access to efficient banking services and enable them to become financially secure and empowered.”

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Covid-related health insurance claims top ₹23,000 crore

Banking & Finance

[ad_1]

Read More/Less


Reflecting the surge in cases, Covid-related health insurance claims have crossed ₹23,000 crore for non-life insurers.

However, the average duration of hospitalisation and claim amount has come down in the second wave of the pandemic as against the first wave last year.

Data with General Insurance Council (GIC) reveals that insurers had received 15.32 lakh Covid-related claims by May 20 amounting to ₹23,715 crore.

Of this, 12.59 crore claims worth ₹12,133 crore have been settled.

About 1.13 lakh patients who had filed claims were still under treatment, while 22,461 had died, the data revealed. The remaining 13.96 lakh have been discharged.

Speedy clearance

Insurers said the average claim size is now lower at about ₹95,000 against the earlier ₹1,15,000 for patients hospitalised for Covid-19. The duration of stay has also come down to about six days from the previous nine-day period.

“The average claim size has slightly come down mainly because the duration of hospitalisation has come down to about six days now from the earlier average of nine days. Treatment protocols are standardised now. Hospitals are also flooded with patients and so are sending them for home quarantine once they are not critical,” said Bhaskar Nerurkar, Head, Health Claims, Bajaj Allianz General Insurance.

Another insurer said that despite the huge number of cases, both hospitals and insurers are better prepared to deal with claims this year and said timely clearance of claims is the main focus at present.

“Since the order by the IRDAI, all efforts are on to ensure that Covid-related hospitalisation claims are cleared within one hour,” noted the insurer who did not wish to be named.

The GIC data further revealed that amongst States, Maharashtra had the largest number of Covid claims at 5.51 lakh, followed by Gujarat with 1.72 lakh and Karnataka with 1.28 lakh claims.

Meanwhile, 1.23 lakh claims have been filed from Tamil Nadu and over 85,000 claims have come from Delhi.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Lenders likely to move NCLAT over DHFL

Banking & Finance

[ad_1]

Read More/Less


Lenders to troubled Dewan Housing Finance Corporation Ltd (DHFL) are looking at various options and are expected to file an appeal with the National Company Law Appellate Tribunal (NCLAT) on Monday.

The move comes after the National Company Law Tribunal asked DHFL’s Committee of Creditors to consider the offer made by its former promoter Kapil Wadhawan within the next 10 days. In his second settlement offer, Wadhawan had offered ₹91,158 crore, which is over ₹50,000 crore more than the ₹34,250 crore is being offered by Piramal Enterprises.

Also read: Allowing Wadhawan to present settlement offer could derail DHFL resolution process: RBI

The Reserve Bank of India in its affidavit to the NCLT had said that permitting Wadhawan to make an offer for DHFL could derail the company’s resolution process. Bankers too are not in favour of such a move and have been left worried by the NCLT decision.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Investors lost a whopping $830 billion in crypto crash last week, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


NEW DELHI: Last week was very volatile for cryptocurrencies with Bitcoins plunging to $30,000 level before recovering slightly. In the process, it lost nearly half of its total value, bankrupting many of those who invested in it.

Other coins also followed suit, crashing as much as 63 per cent in the last seven days. In essence, crypto investors lost a whopping $830 billion in the blowout last week. The total market cap of all cryptocurrencies stands at $1.49 trillion as of now.

Many exchanges across the world faced problems due to heightened volumes and sell orders. These included Binance, WazirX (owned by Binance), Voyager and Coinbase, among others.

There were two major reasons behind the crash. The first was the vehicle maker Tesla’s sudden decision to stop car purchases using Bitcoins, a measure they announced a couple of months back.

The company cited environmental concerns over the computational ‘mining’ process behind its move. Mining basically refers to the process in which computers solve complex mathematical puzzles to enable transactions using Bitcoins and in return generate more Bitcoins. This is a high energy intensive process, requiring electricity often produced by burning coal.

Bitcoin enthusiasts had hoped for its wider adoption as a currency after Tesla’s decision in March. But, the recent U-turn dashed those hopes. Besides, Tesla has also trimmed its Bitcoin investments, as per its latest quarterly report.

Another reason behind the sell-off has been China’s crackdown on mining rigs across the country. China reiterated a warning last week that it intends to crack down on cryptocurrency mining as part of an effort to control financial risks.

According to some estimates, China is home to the largest concentration of world’s crypto miners. This results in high electricity consumption for a country which has been dealing with severe pollution.

Earlier in the week, Chinese authorities warned that financial institutions weren’t allowed to accept it for payment, curtailing hopes further.

Musk effect

Many investors and analysts have also blamed mercurial technocrat Elon Musk for the massive volatility in crypto assets. His tweets, sometimes in support and other times criticising the assets, are seen to have an immediate bearing on price movements.

Musk has been a fervent supporter of Bitcoin and Dogecoin (which actually started as an internet meme and has no fundamental basis like Bitcoin), but have also termed the mania around cryptocurrencies a “hustle”.

Many of Musk’s followers last week blamed him for their losses. In fact, some Twitter users claimed they became homeless after Dogecoin prices crashed following Musk’s advice.

As per the latest data, Bitcoin traded at $35,665, down 27 per cent in the last seven days. Ethereum was at $2,124 (down 45 per cent), Cardano $1.35 (down 43 per cent), Binance Coin at $269 (down 55 per cent), Dogecoin at $0.32 (down 40 per cent) and XRP at $0.84 (down 46 per cent).

Prices have recovered slightly in the last 24 hours but no one can comment on how they will behave next week. Volatility has been a characteristic property of the crypto assets and it will likely move in a wide range in the future as well, many commentators believe.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,
1 … 334 335 336 337 338 … 540