Category: Banking & Finance

Central Bank of Bahrain, Bank ABC, and J.P. Morgan to partner on digital currency settlement solution, BFSI News, ET BFSI

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CBB is partnering with J P Morgan and Bank ABC in a pilot scheme to introduce instantaneous cross border payment solution leveraging state of the art technology and digital currency.

For payments from buyers to suppliers, Bank ABC and J.P. Morgan will pilot the transfer of funds in US dollars from and to the Kingdom of Bahrain. As a result, suppliers will be paid faster, and buyers will be able to make payments in shorter periods of time holding funds in advance. The Central Bank of Bahrain will act as a close partner in the pilot between Bank ABC and J.P. Morgan and going forward would look to extend the collaboration to Central Bank Digital Currencies (CBDCs).

Ali Moosa, Vice Chairman of Wholesale Payments at J.P Morgan, said, “JP Morgan ONYX has been setup with the mandate to lead the buildout of next generation clearing and settlement infrastructures, and we are excited to collaborate with a leading central bank and regulator like the CBB, as well as an innovation-focused partner like Bank ABC, to do so.”

Bank ABC’s Deputy Group CEO, Mr. Sael Al Waary commented, “We’re excited to work with the CBB and JP Morgan on this groundbreaking pilot to build a more efficient payments infrastructure that addresses current cross-border payment limitations. We anticipate significant changes around the world as a result of digital currencies, which will be critical in enabling future digital economies.”

H.E. Rasheed Al-Maraj, Governor of the Central Bank of Bahrain, said, “The Central Bank of Bahrain is delighted to announce this partnership, which is in line with our vision and strategy of continuously developing and enriching the capabilities extended to stakeholders in the Kingdom’s financial services sector through emerging technologies. Through this pilot with J.P Morgan and Bank ABC, we aspire to address the inefficiencies and pain-points which exist today in the traditional cross-border payments arena.”



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Fed’s Rosengren says important to understand trade-offs of digital currencies, BFSI News, ET BFSI

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The Federal Reserve is exploring the technology that would be required to establish a central bank digital currency, but more research needs to be done before it would move forward with a currency, Boston Fed Bank President Eric Rosengren said on Wednesday.

“It is important to highlight that this is exploratory work, and any decision to move forward with such a currency would depend on a variety of factors beyond the technological feasibility and implementation,” Rosengren said in remarks prepared for a virtual event organized by Harvard Law School.

A central bank digital currency could improve financial inclusion, reduce the cost of cross-border financial transactions and provide more flexibility for implementing monetary policy, he said.

But Fed officials would need to fully consider the policy implications and trade-offs that come with using a digital currency, including possible threats to financial stability, Rosengren said.

“It is important to highlight that this is exploratory work, and any decision to move forward with such a currency would depend on a variety of factors beyond the technological feasibility and implementation,” Rosengren said

They plan to release a white paper and open source code early in the third quarter of this year, and later phases of the research project will focus on privacy, anti-money laundering and other issues.

“It is important to understand what problems a central bank digital currency is being designed to solve, and whether other technologies could more cheaply or efficiently address those problems,” Rosengren said.



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RBI, BFSI News, ET BFSI

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MUMBAI: The country’s foreign exchange reserves surged to $576.98 billion as on March 31, 2021 from $544.69 billion at September-end last year, an RBI report said.

Foreign currency assets (FCA), a major component of the overall reserves, increased to $536.693 billion as at March-end 2021 from $502.162 billion, the report noted.

On balance of payments basis (excluding valuation changes), foreign exchange reserves increased by $83.9 billion during April-December 2020 as compared with $40.7 billion in the year-ago period, it said.

Foreign exchange reserves in nominal terms (including valuation changes) increased by $108 billion during April-December 2020 as against $47 billion in the corresponding period of 2019-20.

At the end of December 2020, the foreign exchange reserves cover of imports increased to 18.6 months from 17.1 months at September-end 2020, RBI said in its report on management of foreign exchange reserves — October 2020-March 2021, released on Wednesday.

The net forward asset (receivable) of the Reserve Bank in the domestic foreign exchange market stood at $68.2 billion as at March-end 2021.

As on March 31, 2021, the Reserve Bank held 695.31 metric tonnes of gold.

“While 403.01 metric tonnes of gold is held overseas in safe custody with the Bank of England and the Bank of International Settlements (BIS), 292.30 tonnes of gold is held domestically,” the report said.

In value terms (USD), the share of gold in the total foreign exchange reserves decreased from about 6.69 per cent as at September-end 2020 to about 5.87 per cent as on March 31, 2021. Gold reserves stood at $33.88 billion at end-March 2021 as against $36.429 billion by September 2020, the report said.



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SBI invites bids for selling NPAs worth Rs 217 crore

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Therefore, some of the accounts below Rs 500-crore exposure are being identified by the bank to be sold to existing ARCs.

Largest lender State Bank of India (SBI) on Wednesday invited bids for selling two non-performing assets (NPAs) worth Rs 217 crore on a 100% cash basis. The NPA sale assumes significance at a time when National Asset Reconstruction Company (ARC) or the bad bank is getting a final shape. SBI has set a reserve price of Rs 42.5 crore for two accounts, implying a haircut of 80%. The two accounts are – Khare and Tarkunde Infrastructure and Heavy Metal and Tubes.

According to sources, SBI is likely to put more NPAs accounts on sale this month, which will not be sent to National ARC. The proposed National ARC is expected to take over legacy stressed assets larger than Rs 500 crore in total exposure from banks. Therefore, some of the accounts below Rs 500-crore exposure are being identified by the bank to be sold to existing ARCs.

In the sale notice put up by SBI on Wednesday, the bank said bidders can submit expressions of interest till May 17, 2021. The process of e-bidding for two NPA accounts will be conducted on June 6, 2021. SBI has also specified to use the Swiss challenge method for auctioning. “The auction for above accounts is under Swiss challenge method, based on an existing offer in hand, who will have the right to match the highest bid,” SBI said in its sale notice.

Banks had put up NPAs worth Rs 5,140 crore for the sale to ARCs during the March quarter. Out of that, SBI had put bad loans worth Rs 1,337 crore up for sale to ARCs.

In a first step to set up the bad bank, Padmakumar M Nair, chief general manager at SBI, was appointed CEO of National ARC on Tuesday. Finance minister Nirmala Sitharaman in the Budget for 2021-22 had announced that an asset reconstruction company would be set up to consolidate and take over existing stressed assets of lenders and undertake their resolution.

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India added 42.3 tonnes gold to its reserves in FY21

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India’s gold reserves went up by 42.3 tonnes in the one-year period ended March 31, 2021, against 40.45 tonnes in the year-ago period.

As at end-March 2021, the Reserve Bank held 695.31 tonnes of gold as part of its foreign exchange reserves management against 653.01 tonnes as at March-end 2020, as per the central bank’s “Half Yearly Report on Management of Foreign Exchange (Fx) Reserves.”

During the half year period (October 2020 – March 2021) under review, India’s Fx reserves increased from $544.69 billion as at end-September 2020 to $576.98 billion as at end-March 2021.

In value terms (US Dollar), the share of gold in the total Fx reserves decreased from about 6.69 per cent as at end-September 2020 to about 5.87 per cent as at end-March 2021, the report said.

As at March-end 2021, while 403.01 tonnes of gold (360.71 tonnes as at March-end 2020) was held overseas in safe custody with the Bank of England and the Bank of International Settlements (BIS), 292.30 tonnes of gold (unchanged from March-end 2020) was held domestically, RBI said.

At the end of December 2020, the foreign exchange reserves cover of imports increased to 18.6 months from 17.1 months at end-September 2020, the report said.

As per the report, the ratio of short-term debt (original maturity) to reserves, which was 18.9 per cent at end-September 2020, declined to 17.7 per cent at end-December 2020.

Further, the ratio of volatile capital flows (including cumulative portfolio inflows and outstanding short-term debt) to reserves declined from 68.0 per cent at end-September 2020 to 67.0 per cent at end-December 2020.

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Google Pay users in US can transfer money to India, Singapore

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Google Pay users in the US will now be able to send money to Google Pay users in India and Singapore.

This is due to a new integration with Western Union and Wise, Google Pay had announced in a blog post on May 11.

“By the end of the year, we expect that US Google Pay users will be able to send money to people in more than 200 countries and territories through Western Union and to more than 80 countries through Wise,” it further said.

The announcement comes at a time when the Covid-19 pandemic has created more uncertainties with job losses and salary cuts.

“Every year, people around the world send nearly $ 700 billion to friends and relatives in their home countries, which pay for essential expenditures like healthcare, education, bills and more,” Google Pay said.

It also referred to a recent survey by Mastercard that had revealed that 73 per cent of people regularly send money abroad. However, in the last year, 38 per cent of people surveyed reported greater involvement in international payments, it said.

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RBI to purchase seven G-Secs under G-SAP 2nd tranche

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The Reserve Bank of India (RBI) on Wednesday said it will purchase seven government securities (G-Secs), maturing between 2024 and 2035, aggregating ₹35,000 crore under the second tranche of its G-Sec Acquisition Programme (G-SAP 1.0) on May 20.

The central bank’s purchase of G-Secs under the second tranche will be ₹10,000 crore more vis-a-vis the first tranche of purchase auction, which was conducted on April 15.

Under G-SAP 1.0, RBI has committed upfront to a specific amount (₹1-lakh crore in the first quarter of FY22) of open market purchases of G-Secs to enable a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions.

In a statement on May 5, RBI Governor Shaktikanta Das observed that the first auction under G-SAP 1.0 conducted on April 15, 2021 for a notified amount of ₹25,000 crore elicited an enthusiastic response as reflected in the bid-cover ratio of 4.1.

“G-SAP has engendered a softening bias in G-Sec yields which has continued since then. Given this positive response from the market, it has been decided that the second purchase of government securities for an aggregate amount of ₹35,000 crore under G-SAP 1.0 will be conducted on May 20, 2021,” Das then said.

With system liquidity assured, the RBI is now focusing on increasingly channelising its liquidity operations to support growth impulses, especially at the grassroot level, he added.

Meanwhile, the Government has announced the conversion/switch of 10 G-Secs for an aggregate amount of ₹20,000 crore (face value) on May 17, 2021.

Under the conversion/ switch, 10 G-Secs (carrying different coupon rates and maturity dates) maturing in 2022, 2023 and 2024, will be converted into as many destination Securities, maturing in 2033, 2035 and 2061.

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South Indian Bank launches video KYC account opening

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South Indian Bank has rolled out Video KYC Accounting Opening. This digital initiative helps the customer open an account through a video call just with the help of PAN and Aadhaar number of the customer.

Video KYC is a hassle-free mode of account opening which allows the customer to open an account fully online, completing all KYC procedures instantly. KYC documents are verified, and the signature and photograph are captured in the process. Customers can initiate Video KYC Account Opening by visiting https://videokyc.southindianbank.com . The link will be available in the pre-login page of SIB Mirror+ (Bank’s mobile App) and also in the bank’s website.

Video KYC Account Opening is an Artificial Intelligence and Facial Recognition Technology based account opening process. Customers need to enter their Aadhaar number and PAN in the website. Once the Aadhaar authentication is complete, they will have to input personal details and schedule a video call to complete the KYC process. On successful completion of Video KYC, the account will be automatically opened.

“Video KYC Account Opening eases the account opening process in the pandemic situation and will enhance the digital drive of South Indian Bank,” said Murali Ramakrishnan, Managing Director and CEO.

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BANKIT to help rural population register for Covid-19 vaccine

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Fintech start-up BANKIT through its DigiMitra outlets is helping people in rural areas register for the Covid-19 vaccine.

“People who are not digitally equipped or informed can go to the nearest BANKIT outlet and have them registered through the BANKIT app and portal,” it said in a statement on Wednesday, adding that it aims to assist over 22 lakh citizens across the country for Covid-19 vaccine registration from their outlets.

“BANKIT will be including the vaccination link in its app and portal where our correspondents can help those in the country’s hinterlands register them for booking appointments for getting inoculated,” said Amit Nigam, COO and Executive Director, BANKIT.

The company has over 60,000 agent outlets spread across 8,800 pin codes in the country.

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NARCL to further Govt’s agenda of disinvestment of IDBI Bank, privatisation of PSBs

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The National Asset Reconstruction Company Ltd (NARCL), currently being put together by banks and other lenders, may structurally alter the balance-sheets of banks in such a way that it will further the Government’s agenda of divesting its stake in IDBI Bank and privatising two public sector banks (PSBs).

Once chunky stressed assets are out of the books, the valuation of these banks will improve, making them more saleable, opine market experts.

This can help the government realise more value from the proposed sale of its 45.48 per cent stake in IDBI Bank to a strategic buyer as well as privatisation of two PSBs.

Ramnath Krishnan, President-Ratings & Chief Rating Officer, ICRA, observed that NARCL might structurally help with disinvestment in state-owned banks should the Government consider this in the future. “It might structurally alter the balance-sheets of certain banks, which could make them more saleable should disinvestment be an opportunity seriously considered by the Government,” Krishnan said.

Referring to IDBI Bank’s healthy provision coverage ratio (PCR), Mangesh Kulkarni, Research Analyst, Almondz Global Securities, assessed that with most of its legacy assets being provided for 100 per cent, it can straight away transfer them to NARCL. So, the path to divestment of Government’s stake in IDBI Bank and privatisation of two PSBs will be streamlined once NARCL starts operations, he added.

IBA sets the ball rolling

The Indian Banks’ Association (IBA) has set the ball rolling on NARCL with the appointment of State Bank of India’s Padmakumar M Nair as its new Chief. Nair is currently Chief General Manager with SBI’s Stressed Assets Resolution Group.

NARCL is being set up following Finance Minister Nirmala Sitharaman’s FY2022 Budget announcement that the high level of provisioning by public sector banks on their stressed assets calls for measures to clean up the bank books.

Stressed assets with principal outstanding of ₹500 crore and above, aggregating about ₹1.50- lakh crore, are expected to be transferred to NARCL.

At a recent press meet, Rakesh Sharma, MD & CEO, IDBI Bank, said large public sector and private sector banks will be investing in NARCL, with each bank taking less than 10 per cent stake. IDBI Bank will also consider investing in the company.

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