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The Reserve Bank of India has appointed Jose J. Kattoor as Executive Director (ED) with effect from May 4.
Prior to this, Kattoor was heading RBI’s Bengaluru Regional Office as Regional Director for Karnataka.
As ED, Kattoor will look after Human Resource Management Department, Corporate Strategy and Budget Department and Rajbhasha Department, the RBI said in a statement.
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HDFC Bank and Common Services Centres (CSCs) on Monday launched chatbot ‘Eva’ on CSCs Digital Seva Portal to support the Village Level Entrepreneurs (VLEs) in providing banking services for the last mile rural consumers.
Through Eva, VLEs will learn about the products and services offered by the HDFC Bank, which will improve services to the last mile customers and enhance banking services for the last mile, CSC said in a statement.
The 24×7 service will allow VLEs to access accurate information about various products, processes and resolve queries about HDFC Bank’s services. VLEs would improve their business by learning about account opening, loan lead generation and product details.
“Our partnership with HDFC will empower the VLEs through new skills and knowledge of products and services, while expanding the agenda of financial inclusion catering to rural customers. The digital platforms and innovations are allowing VLEs to constantly explore new opportunities for companies, services and citizens,” Dinesh Tyagi, Managing Director, CSC, said.
Through Eva, VLEs will also be able to access training content to become a Business Correspondent by taking a quiz before getting the certification, as per the regulatory process, he said.
Currently, 1,27,348 VLEs are providing HDFC services. Of these, 15,791 are Business Correspondents who serve customers through banking outlets across 685 districts pan India. These Business Correspondents help citizens avail home loans, car loans, two-wheeler loans, tractor loans, open current and savings accounts and save through recurring and fixed deposits, CSC said.
“This initiative will bridge the gap between India and Bharat. Urban India has been quick to learn and adapt to the digital world. Rural India has faced challenges as it has lower Internet penetration. We are trying to bring about a change by empowering VLEs to learn more banking services and improve their business by helping others,” Smita Bhagat, Group Head – Government and Institutional Business and Start-ups at HDFC Bank said.
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Federal Bank has entered into a tie-up with Mashreq Bank, a leading financial institution in the UAE, to facilitate money transfers to India. The partnership will support Mashreq’s faster payment product, QuickRemit. Mashreq is one of the oldest banks in the UAE, and has a presence in twelve countries across Europe, US, Asia and Africa.
Shalini Warrier, Executive Director, Federal Bank said, “With a market share of 17 per cent in personal inward remittances to India, we have been always at the forefront of ensuring our remittance business. Federal Bank adds one more partnership to its fold through this tie-up”.
Tooran Asif, Executive Vice-President, Head of Consumer Banking at Mashreq Bank said, “This partnership with Federal Bank comes at an important time, as the growth of the UAE remittance market improves and begins to return to pre-pandemic levels.”.
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Mahindra & Mahindra Financial Services (MMFS) has extended the date of investment of the third and final tranche for acquisition of shares of Sri Lanka-based Ideal Finance from its existing shareholders to September 30, 2021.
“Due to the Covid-19 pandemic which has disrupted the business environment in both India and Sri Lanka, the Parties have mutually agreed to extend the date of completion of the aforesaid acquisition of shares with an intention to complete the same, latest by 30th September, 2021 (from March-end 2021), subject to necessary regulatory approvals,” MMFS said in a regulatory filing. Accordingly, the Parties will shortly be executing an addendum to the Agreement in this regard, it added.
MMFS had executed a “Share Subscription, Share Purchase and Shareholders’ Agreement” on August 20, 2019 with Ideal Finance and its existing Shareholders (the Company, Ideal Finance & its shareholders together referred as “Parties”) to subscribe/ acquire up to 58.20 per cent of the Equity Share Capital of Ideal Finance, in one or more tranches, for an amount not exceeding Sri Lankan Rupee 200.30 crore by March 2021.
Pursuant to the aforesaid Agreement, the Company, as on date, has acquired 38.20 per cent of the Equity Share Capital of Ideal Finance and the third and final tranche for acquisition of shares from existing investors was due by March 31, 2021. MMFS said it has received the requisite approval from the Reserve Bank of India, for the proposed investment in Ideal Finance.
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Indian Institute of Technology Madras researchers will collaborate with members of the Mobile Payment Forum of India (MPFI) to develop voice-based solutions, especially in multiple vernacular languages, for digital money transactions. This will provide a platform not only for the increased adoption of digital payments in India but for research opportunities as well, says a release from IIT Madras.
At present, there are more than 100 million active UPI users every month in India, as per the Government of India’s statistics. These initiatives are being taken up by MPFI towards bringing 500 million active users on to the UPI payment platforms by 2025.
In the last Budget, the Centre had allocated Rs 1,500 Crore to help drive the adoption of digital payments in the country. The MPFI is working to identify innovation across three levels; Human behaviour and adoption, Technology (design and safeguards), and policy (a data-centric view) to propel India over the next decade.
Gaurav Raina, Faculty, Department of Electrical Engineering, IIT Madras, is the Chairman of MPFI, a joint initiative of the Institute for Development and Research in Banking Technology, Hyderabad and Rural Technology Business Incubator, IIT Madras. Taken up in 2006, the MPFI’s mission is to enable mobile payments and mobile financial services by everyone.
IIT Madras will provide thought leadership in driving digital payments in India to the next level. Among the key technical areas in which IIT Madras researchers will be working will be machine learning and artificial intelligence, as applied to the digital payments space.
As more people use digital payments, it will create a useful digital data history and footprint. Then using machine learning and artificial intelligence, one can aim to provide customised financial solutions and other value-added services, which will make it more attractive for more people to adopt digital modes of payments, the release said.
Raina is conducting discussions with startups, researchers and companies to set up working groups to attract top researchers to this field.
The Unified Payments Interface (UPI) apps are already available in multiple languages. The UPI is an instant real-time payment system developed by the National Payments Corporation of India (NPCI) to facilitate inter-bank transactions in the country, the release said.
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India’s leading merchant payment company, BharatPe, has raised ₹50 crore ($ 7 million) in debt from digital debt finance platform Northern Arc Capital. This is the sixth round of debt financing for BharatPe in 2021.
In January this year, BharatPe raised ₹200 crore (~US$ 26 million) from three top debt companies in the country – Alteria Capital, InnoVen Capital and Trifecta Capital, which was followed by additional fund raising from ICICI Bank and Axis Bank.
In a press release, the Chennai-based NBFC Northern Arc said it has directly disbursed over ₹3,500 crore over the last financial year to MSMEs, households, financial institutions and mid market corporates. It has also enabled a flow of financing of over ₹1,000 crore from reputed Development Financial Institutions from across the world to underbanked small businesses and households. “Northern Arc has continually worked towards extending credit to like-minded organisations such as BharatPe that enable financial access to small businesses and merchants across the country,” Bama Balakrishnan, COO, Northern Arc said in the statement.
Also read: BharatPe raises $108 million in Series D equity round
Throughout the pandemic in 2020 and 2021, BharatPe has continued to support the credit requirements of its merchant partners and has emerged as one of the largest B2B fintech lenders in the country. Having already facilitated disbursals of over ₹1,600 crore (~US$ 230 million) to more than 2 lakh merchants since the launch of the lending vertical, BharatPe aims to disburse ₹14,000 crore (~US$ 2 billion) in business loans by March 2023, the release stated.
“At BharatPe, we are committed to bridge the credit gap for SMEs and small merchants in the country. We have considerably ramped up our lending business in the last year and have set an ambitious target of facilitating disbursals to the tune of US$ 1 billion to over 10 lakh merchants by the end of current fiscal (FY22),” the release quoted BharatPe Group President Suhail Sameer as saying.
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The large supply of dollars will ensure that rupee will appreciate from the current levels, and this could potentially play to the advantage of the Reserve Bank of India (RBI) in inflation management, according to State Bank of India’s economic research report Ecowrap.
“The good thing is that given the prospects of higher domestic inflation, as supply disruptions mount, it is not doing any harm for the RBI to lean with the wind and let rupee appreciate as it is reducing imported inflation when metal prices are rising, and clearing the liquidity overhang to some extent,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
Referring to the rupee gaining 154 paise between April 12 (75.0550 to the dollar) to May 7(73.5175 to the dollar), SBI’s economic research department believes that this is perhaps the result of exchange rate anchored inflation targeting that the RBI has assiduously shifted to recently.
This is also evident from the recent changes in the RBI Quarterly Projection Model (QPM) model that has been calibrated to include balance of payments and exchange rate interactions as well, it added.
“So, what has changed? In the merchant market (in both spot and forward segment) there was an excess supply of $86 billion during April 2020 to February 2021.
“However, in the interbank market there has been excess demand of $72 billion. Overall, merchant dollar supply is far higher than demand as they anticipate a stronger rupee and hence may be holding to short position in dollars, without even adequate hedging,” said Ghosh.
Busting the myth of rupee over-valuation
This is being balanced by excess dollar demand in interbank market, but the net effect is a large supply of dollars at $14.4 billion, that has however reduced to $348 million in the last five months ended February 2021, he added.
Ghosh assessed that the supply of dollars in the spot market during April 2020 to February 2021 by the merchant segment was as much $101 billion, while in the forward merchant segment, there is an excess demand of $14.7 billion.
The interbank market, however, shows an excess demand in both the segments at $14.7 billion.
To neutralise any additional liquidity, the RBI is also intervening in the forward markets through swaps. The RBI is doing what is called a sell/buy swap, where it is selling the dollars now to buy it back at a future date and paying a premium.
“Intervention in forward market is an important aspect of maintaining financial stability, although the move has been gradual.
“Going by John Sparos (Economic Journal, 1959), the best way to fight currency speculation is to deliberately let the forward premia rise to unreasonable levels and thereby penalise the currency speculators as their exchange rate expectations about a depreciating domestic currency are belied,” said Ghosh.
The report underscored that rising forward premia makes the carry trade lucrative and inflows keep pouring, which again leads to further currency appreciation and hence more liquidity overhang.
“In the end, there could be limits to sterilised intervention and rise in forward premia beyond a threshold level. It may be noted that a high premia also deters importers from hedging their dollar positions,” opined Ghosh.
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Shalini Warrier, Executive Director, Federal Bank said, “We are excited about the partnership with Mashreq bank PSC, UAE, to provide a cost effective instant money transfer service from UAE to India. With a market share of 17% in personal inward remittances to India, we have been always at the forefront of ensuring our remittance business is testimony to our mantra.”
She adds, “Digital at the fore, human at the core”. A fully end to end automated solution will ensure that customers get the benefit of instant transfers in a safe & secure manner and the Indian diaspora in the UAE will surely benefit from this.”
Federal Bank is one of the leading players in the inward remittance space with around 90 remittance arrangements across the globe.
Tooran Asif, Executive Vice President, Head of Consumer Banking at Mashreq Bank said, “This partnership with Federal Bank comes at an important time, as the growth of the UAE remittance market improves and begins to return to pre-pandemic levels. In particular, this tie-up will help to support our popular QuickRemit service to strengthen our India corridor which has grown significantly over the years – and providing our customers with fast, on-the-go solutions to transfer funds instantly and conveniently to their home-country – an imperative in today’s highly digitalized environment.”
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Over the past one year, the Indian health insurance industry has seen several changes in consumer behaviour and attitude towards insurance. Covid-19 has brought to light the fact that a significant part of India’s population depends on their savings to meet the rising medical costs.
The Indian Economic Survey recently pointed that 65 per cent of Indians support their medical costs through ‘out of pocket’ expenses. The pandemic has certainly emphasised the need to buy health insurance because of the growing financial burden, which is because of high healthcare costs versus a reduced income or loss of livelihood due to Covid.
Overall, the health insurance industry observed some new trends and shift in consumer perceptions after the pandemic.
Prior to the pandemic, consumers viewed health insurance covers as a sickness expense mitigation tool. Although this perception still exists, there has been an increased awareness about the need to buy health insurance. This is due to the high hospitalisation costs incurred by several individuals and families. This factor majorly influenced many to reconsider and buy health insurance. People also realised that their dependency on an employer-provided insurance policy was not sufficient. Therefore, buying Corona Kavach and Corona Rakshak policy seemed pertinent.
Some consumers also realised that buying a comprehensive cover is a better choice because it extends a holistic healthcare approach with wider coverage against diseases, pre-existing conditions or even future lifestyle conditions. Thus, many consumers have started viewing health insurance as an essential investment that brings in a wholesome health cover.
We have also seen a category of evolved customers, who are getting more health-conscious, and their motivation to stay fit has increased. Despite lockdowns and general stifling conditions, some customers have adopted digital forms of wellness such as following app-based fitness regimes, practising yoga over video, and even building a high-tech gym inside their home. As per E&Y’s recent study of ‘Life in a Pandemic’, more Indians are becoming health conscious – 80 per cent of the respondents are improving their eating habits and 33 per cent are doing some form of workouts at their home.
A lot of customers want to move from a basic health protection plan (such as traditional indemnity products or hospitalisation covers) to a comprehensive health cover with wellness benefits for self and family –this also gives financial incentives/rewards for leading a healthy lifestyle.
They want to see insurance companies play a more proactive role and actually help them maintain a healthy lifestyle. We see this trend as a win-win situation for both customers and insurers. If customers are healthy, the claims will inevitably go down over a period of time and large pay-outs by insurers will become less frequent. This will also enable insurance companies to offer more product add-ons to customers such as chronic care management programmes for customer with lifestyle conditions, wellness coach for customers with pre-existing conditions, and counsel based on digital health data of those who have just started their health journey. Prior to March 2020, millennials typically used to be quite reluctant to buy health insurance. Their averseness stemmed from the fact that they did not view themselves as sick or in need of protection from medical expenses. The pandemic shattered the perception of the youth being immune to sickness and related health risks. The ongoing second wave has underlined this further; Niti Ayog has estimated that 32 per cent of patients during the second wave have been below 30 years of age.
This ‘age no bar’ factor has pushed millennials to view insurance as a fundamental tool to protect from likely medical expenses. In recent weeks, we have already received and continue to get many queries from millennials. We also saw a surge in purchases of products that offer comprehensive benefits and health returns. If health insurers have transitioned to remote sales and service teams, customers, too, have become quite adept in availing digital services in every step of the typical health insurance process: from comparing policies, buying and consultations to filing for claims. Customers have now started extensively using their health insurers’ apps and website for accessing information and processing requests. We expect this rise in use of digital services to be a permanent fixture in the domestic insurance industry.
Due to the increase in digitalisation, the industry can now bring in several benefits such as telemedicine, accelerated use of technology and data exchange. Insurers can now create specific products for different categories of customers and also different categories of expenditure. So, we now see the increase in launch and sales of byte-sized contextual health insurance products on digital platforms for first time buyers so that they experience insurance without large commitment. The present scenario can be used as a great opportunity to expand the health insurance offering by making it more promotive and preventive.
But we have many more miles to go. We, as a country, still suffer from a huge lag in health insurance penetration. The Sigma report by Swiss Re indicated that the insurance penetration in India for FY20 stood at 3.78 per cent, which is significantly low compared to the global average of 7.23 per cent. Moreover, the non-life segment only constituted 0.97 per cent of the total Indian penetration.
(The writer is CEO, Aditya Birla Health Insurance Company Limited)
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The second wave and lockdowns have brought new challenges but given the digitalisation of the lender’s operations as well as learnings of the past year, the company is well equipped to face the year ahead. The share of individual loans rises to 77%, the highest ever, in Q1. About 73% of restructured loans are from the non-individual segment.
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