Category: Banking & Finance

RBI guidelines require banks, UCBs and NBFCs to appoint auditors for 3 years

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The Reserve Bank of India (RBI) on Tuesday issued guidelines for appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) in commercial banks, urban co-operative banks and non-banking finance companies from FY22 onwards, whereby they will have to appoint SCAs/SAs for a continuous period of three years.

RBI guidelines regarding appointment of SCAs/SAs will be implemented for the first time for urban co-operative banks (UCBs) and non-banking finance companies/NBFCs (including housing finance companies) from FY 2021-22.

However, UCBs and NBFCs will have the flexibility to adopt these guidelines from H2 (second half) of FY 2021-22 in order to ensure that there is no disruption.

Auditor’s job is not to become a bloodhound, says new ICAI head

Non-deposit taking NBFCs with asset size (total assets) below ₹1,000 crore have the option to continue with their extant procedure.

Commercial banks (excluding Regional Rural Banks/RRBs) and UCBs will be required to take prior approval of RBI (Department of Supervision) for appointment/reappointment of SCAs/SAs on an annual basis.

RBI tightens internal audit framework for NBFCs, UCBs

While NBFCs do not have to take prior approval of RBI for appointment of SCAs/SAs, all NBFCs need to inform RBI about the appointment for each year.

For entities (commercial banks. UCBs, and NBFCs) with asset size of ₹15,000 crore and above as at the end of previous year, the statutory audit has to be conducted under joint audit of a minimum of two audit firms [Partnership firms/Limited Liability Partnerships/LLPs].

All other entities have to appoint a minimum of one audit firm (Partnership firm/LLPs) for conducting statutory audit.

Entities need to ensure that joint auditors do not have any common partners and they are not under the same network of audit firms.

Asset size and numbers

The RBI said the entities should decide on the number of SCAs/SAs based on a board/local management committee (LMC) approved policy by taking into account factors such as the size and spread of assets, accounting and administrative units, complexity of transactions, level of computerisation, availability of other independent audit inputs, identified risks in financial reporting, etc.

The central bank prescribed that an entity with an asset size up to of ₹5 lakh crore can have a maximum of 4 SCAs/SAs; above ₹5 lakh crore and up to ₹10 lakh crore: maximum of 6 SCAs/SAs; above ₹10 lakh crore and up to ₹20 lakh crore: 8 SCAs/SAs and above ₹20 lakh crore: 12 SCAs/SAs.

In case of any concern with the management of the entities, such as non-availability of information/non-cooperation by the management, which may hamper the audit process, the SCAs/SAs are required to approach the Board/Audit Committee of the Board/Local Management Committee of the entity, under intimation to the concerned Senior Supervisory Manager (SSM)/Regional Office (RO) of RBI.

Concurrent auditors of the entity should not be considered for appointment as SCAs/SAs of the same entity.

The central bank emphasised that the audit of the entity and any entity with large exposure to the entity for the same reference year should also be explicitly factored in while assessing independence of the auditor.

Tenure and rotation

In order to protect the independence of the auditors/audit firms, the RBI said that entities will have to appoint the SCAs/SAs for a continuous period of three years, subject to the firms satisfying the eligibility norms each year.

Further, commercial banks (excluding RRBs) and UCBs can remove the audit firms during the three-year period only with the prior approval of the concerned office of RBI (Department of Supervision), as applicable for prior approval for appointment.

NBFCs removing the SCAs/SAs before completion of three years’ tenure have to inform the concerned SSM/RO at RBI about it, along with reasons/justification for the same, within a month of such a decision being taken.

An audit firm would not be eligible for reappointment in the same entity for six years (two tenures) after completion of full or part of one term of the audit tenure. However, audit firms can continue to undertake statutory audit of other entities.

The RBI said one audit firm can concurrently take up statutory audit of a maximum of four commercial banks [including not more than one PSB or one All India Financial Institution (Nabard, SIDBI, NHB, Exim Bank) or RBI], eight UCBs and eight NBFCs during a particular year.

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Banks to remain closed for up to 12 days in various states in May 2021; check full list here

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According to the Reserve Bank of India (RBI), banks in most of the states will remain closed on May 14, 2021, on account of Eid-UI-Fitra. Image: Reuters

Banks in India will remain shut for up to 12 days in May 2021, including weekends and festivals. Only the gazetted holidays are observed by banks all over the country. According to the Reserve Bank of India (RBI), banks in most of the states will remain closed on May 14, 2021, on account of Eid-UI-Fitra. In May, banks including the public sector, private sector, foreign banks, cooperative banks and regional banks, will observe holidays on May 1, May 7, May 13, May 14 and May 26 on account of Labour Day, Jumat-ul-Vida, Id-Ul-Fitr, Akshaya Tritiya and Buddha Pournima, respectively. Banks will not be closed for all 5 days for all states as holidays vary from state to state. The list of holidays given below has been notified by RBI under the Negotiable Instruments Act.

Festivals in May 2021

1 May 2021- Maharashtra Din/May Day (Labour Day)
7 May 2021- Jumat-ul-Vida
13 May 2021- Ramzan-Id (Id-Ul-Fitr) (Shawal-1)
14 May 2021- Bhagvan Shree Parshuram Jayanti/Ramjan-Eid (Eid-UI-Fitra)/Basava Jayanti/Akshaya Tritiya
26 May 2021- Buddha Pournima

Weekend holidays in May 2021

2 May 2021- Weekly off (Sunday)
8 May 2021- Second Saturday
9 May 2021- Weekly off (Sunday)
16 May 2021- Weekly off (Sunday)
22 May 2021- Fourth Saturday
23 May 2021- Weekly off (Sunday)
30 May 2021- Weekly off (Sunday)

Banks to remain open on May 1,7,13,14 and 26 in these states

Banks across Agartala, Ahmedabad, Aizwal, Bhopal, Bhubaneshwar, Chandigarh, Dehradun, Gangtok, Jaipur, Jammu, Kanpur, Lucknow, New Delhi, Raipur, Ranchi, Shillong, Shimla, and Srinagar will remain functional on May 1. Except for banks in Jammu and Shimla, banks in all the states will remain open. On May 13, only banks in Belapur, Jammu, Kochi, Mumbai, Nagpur, Srinagar and Thiruvananthapuram will observe a holiday. While on May 14, banks in most of the states will remain closed, barring states such as Belapur, Jammu, Kochi, Mumbai, Nagpur, Srinagar and Thiruvananthapuram. Similarly, on Buddha Pournima (May 26), banks in Ahmedabad, Aizwal, Bengaluru, Bhubaneshwar, Chennai, Gangtok, Guwahati, Hyderabad, Imphal, Jaipur, Kochi, Panaji, Patna, Shillong and Thiruvananthapuram will remain functional.

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Neobank Fi partners with Federal Bank to open instant savings account

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Fi, the Bengaluru-based neobank for salaried millennials, has announced its partnership with Federal Bank to issue an instant savings account equipped with a debit card, in three minutes.

Fi was established to help people get better with money and to create an intelligent bank layer that helps millennials understand their money, save more and spend intelligently, a release issued here said.

Neo bank — the new disruptor on the block

Founded in 2019, Fi is the brainchild of ex-Googlers who pioneered Gpay. It offers an interactive, personalised, and transparent digital banking experience. Users gain access to a new-age savings account and money management tools with features that help users know their money, grow their money and organise their funds. Fi aims to assist a consumer’s financial journey beyond digital payments to other services — insurance, lending, and investment opportunities. according to the release.

Fintech and banking

Sujith Narayanan, CEO & Cofounder, Fi, said, “We are excited to introduce a proposition that reimagines the way digital-first millennials perceive and interact with their money. Fi aims to be a meaningful partner in their money aspiration journey, enabling them to simplify finances and de-mystify savings. Our platform leverages cutting-edge tech and data science for deriving actionable insights that empower users to take control and do more with their finances”.

Federal Bank to launch credit cards in next few months

Shalini Warrier, Executive Director, Chief Operating Officer and Business Head – Retail, Federal Bank, said the partnership brings together the best of what both entities have to offer. Smooth customer experience via the app is complemented by the stability, safety and technological prowess of Federal Bank. “We are confident that the salaried millennial will welcome this unique digital experience. The best of both worlds – fintech and banking – will be served on a platter to the customers”.

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RBI’s new rule on tenure will promote younger lot at bank, BFSI News, ET BFSI

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The Reserve Bank of India has put a cap on the maximum age of a bank CEO, paving the way for a younger lot to helm banks transitioning into digitalisation.

The Reserve Bank of India has fixed the tenure of MD, CEO and whole-time director (WTD) in a private sector bank at 15 years and prescribed the maximum age of 70 years for such functionaries.

This will lead to a change in succession planning at the banks.

The impact

Uday Kotak, the promoter MD and CEO, got reappointed on January 1, 2021, for three years. His tenure will end on January 1, 2024, and is not eligible for reappointment as he has already completed 15 years as the MD and CEO.

HDFC Bank, ICICI Bank, Axis Bank CEOs have had plenty of time and can be the CEO for more than a decade as they were appointed on the post recently.

IndusInd Bank CEO Sumant Kathpalia took charge last year and can continue at the helm of affairs for more than a decade

Kamakodi, CEO of City Union Bank, will complete his 15-year tenure in May 2026, which will be two years before his retirement.

In the case of Bandhan Bank, if the RBI considers the date of conversion to bank, which is five years ago, then C S Ghosh has a long time ahead.

The upper limit of 15 years for MD and CEOs may increase the scope for a few more years at the helm for banks like DCB, Federal and RBL.

The road ahead

The provision that individual will be eligible for re­appointment as MD and CEO or whole-time director in the same bank after a minimum gap of three years, leaves an opportunity for the promoter-CEO to take the bank helm after a gap of three years

Experts say while the tenure cap benefits new age banks, which need a younger lot to steer them, the bank-promoter CEO enterprise would have an impact.

The new norms will also lead to bigger involvement of independent director and non-executive directors in the bank affairs and help in good governance and vigil. 0

The RBI directives

These directives form part of the instructions issued by the RBI with regard to the chair and meetings of the board, the composition of certain committees of the board, age, tenure and remuneration of directors, and appointment of the WTDs on Monday.

The RBI said it would come out with a Master Direction on Corporate Governance in banks in due course.

“Subject to the statutory approvals required from time to time, the post of the MD & CEO or WTD cannot be held by the same incumbent for more than 15 years.

“Thereafter, the individual will be eligible for re-appointment as MD & CEO or WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions,” the RBI said.

It added that during this three-year cooling period, the individual shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly.

With regard to the upper age limit for MD & CEO and WTDs in the private sector banks, the RBI said that no person can continue on such positions beyond the age of 70 years. The banks” boards, however, will be free to prescribe a lower retirement age for the WTDs, including the MD & CEO.

The maximum age limit for chairman and non-executive directors has been fixed at 75 years.



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RBI article calls for monitoring movement of funds between banks and ARCs

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It may be necessary to monitor if there is a circuitous movement of funds between banks and Asset Reconstruction Companies (ARCs), according to an article in the Reserve Bank of India’s latest monthly bulletin.

This observation comes in the backdrop of banks being not just major shareholders of and lenders to ARCs but also sellers of non-performing assets (NPAs) to them, it added.

Attracting ‘new money’ will be a challenge for the ARC

A movement of this kind can have implications for the genuine sale of NPAs and the overall growth of the ARC industry, said RBI officials Amarnath Yadav and Pallavi Chavan from the Department of Supervision, in the article.

The authors emphasised that given the private character of ARCs, they have tended to rely heavily on borrowings, particularly from banks, as a major source of their funds.

The article underscored that the capital base of ARCs is made up largely by domestic sources, particularly banks and financial institutions, with foreign sources remaining weak.

Being private sector entities, the key shareholders of ARCs are banks (29 per cent) and other financial institutions (37 per cent).

RBI set up 6-member panel to review working of ARCs

In order to boost their capital base, ARCs were allowed to accept 100 per cent of foreign direct investment (FDI) through the automatic route in 2016.

Notwithstanding the liberalisation relating to FDI, foreign entities account for a small portion (10 per cent) of the total capital of ARCs, the authors said.

Highly concentrated business

Although the number of ARCs has increased over time, their business has remained highly concentrated.

The authors assessed that of the total assets under management (AUM), about 62 per cent and 76 per cent was held by the top three and top five ARCs in March 2020, respectively.

Furthermore, in terms of the capital base of the industry, 62 per cent was held by the top three ARCs; the corresponding share was 67 per cent for the top five ARCs.

When it comes to acquisition of assets by ARCs, over time, although the average acquisition ratio (acquisition cost to book value of assets) has gradually risen, it remains in the range of 30-35 per cent, the article said.

There is a wide variation in the acquisition ratio also across sectors, it added.

Iron and steel, and power sectors are the two sectors having a relatively high concentration in acquired assets, as they are also ridden with NPAs. The acquisition ratio in these two sectors has been much lower (roughly about 45 per cent).

By contrast, hospitality (acquisition ratio: about 85 per cent) and real estate (about 70 per cent) account for a smaller share in total assets acquired, but their acquisition ratio has been relatively high.

Limited trading of SRs

Going by the resolution methods, ARCs prefer the method of rescheduling of the payment obligations (32 per cent as of March 2020) over other methods — enforcement of security interest (26.6 per cent); settlement of dues of borrower (26 per cent); by sale of business (13.9 per cent); and taking possession of assets (1.5 per cent).

The authors said banks continue to hold close to 70 per cent of the total Security Receipts (SRs) despite a change in the regulation disincentivising them from holding SRs above a specific threshold.

The authors observed that dominance of selling banks in holding SRs has often been described as a reason for limited secondary trading of SRs, despite the regulatory push to incentivise listing and trading of these instruments.

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ICICI Bank pushes on retail as other lenders slow down, BFSI News, ET BFSI

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– By Shashank Singhal

ICICI Bank Ltd. reported strong fourth-quarter earnings, with revenues and core income increasing and asset quality remaining stable driven by loan growth and higher profitability.

Credit Growth:

The Total advances of the bank increased by 14% year-on-year to 733,729 crores on March 31, 2021 from ` 645,290 crore on March 31, 2020. Bank’s credit growth was mainly driven by retail segment. On March 31, 2021, the retail loan portfolio had grown by 20% year on year and 7% sequentially which has been double the system retail loan growth. Retail accounted for 67% of the overall portfolio. Retail mortgages grew by 22% year on year being the largest incremental contributor to growth. Banks continue to push for higher retail loan growth. Disbursements to higher rated corporates and public sector undertakings (PSUs) across various sectors drove growth in the performing domestic corporate portfolio by about 13% year on year.

Among other retail segments, business loans increased by 40% year over year, while rural loans (which include 50% Jewel loans) increased by 27% year over year. The book in the CV, two-wheeler, and credit card segments increased Quarter on quarter, but the book in the CV, two-wheeler, and credit card segments remained flat.

Bank’s retail growth can be attributed to digitization. Digital initiative such as ‘EMI @ Internet Banking’ which allows preapproved customers to convert their high value transactions into instant EMIs at the time of purchase on their retail internet banking platform and graining traction in the cards business through digital platform boosted the retail growth. The growth was also aided by the bank’s expansion of footprint in tier 2, 3 and 4 cities and low interest rates.

Slippages

According to CLSA, ICICI Bank’s slippage at Rs 5,500 crore (0.75 per cent of loans) was a positive surprise. Retail slippage increased by less than 2x to 2.4 per cent in FY21 vs 1.4 per cent in FY20 which, the brokerage believes, is manageable given the pandemic which indicates that Bank has been cautious rather aggressive in lending retail loans.

Asset Quality

ICICI Bank’s gross non-performing asset ratio stood at 4.96% compared with 5.42% in the October-December quarter while the net NPA ratio declined to 1.14% on March 31, 2021 from 1.26% (on a proforma basis on December 31, 2020) and 1.41% on March 31, 2020.Bank maintains healthy specific provision coverage ratio of 78% of NPAs and contingent buffer at 1% of loans.

HDFC slows down on Retail

HDFC Bank reported 14% year-on-year growth in domestic advances on 31st March 2020 mainly driven by growth in wholesale loans which grew by 21.7% from last year while as per regulatory [Basel 2] segment classification, domestic retail loans grew only by 6.7%. Wholesale loans now form 53% of the total loan book. Retail loans accounted for 47% compared to 67% of ICICI Bank showing different target segments of the Banks.

For the first time in many years, ICICI Bank’s loan growth exceeded that of HDFC Bank. The Overall domestic loan growth of 18% year-on-year (6% quarter-on-quarter) of ICICI has been 3x that of system loan growth and 400 basis points above HDFC Bank.

Banks cautious on Retail loans

Amid the uncertainty provided by the pandemic other lenders such as Kotak has also cut down on the retail front. Banks are taking cautious stance on extending credit to avoid a spike in asset quality issues. Banks are falling back on the secure options.

ICICI Securities in a note recently said, “Kotak Mahindra Bank’s management had highlighted that unsecured retail and CV (bus operator segment) portfolios were reflecting disproportionate stress. Beside this, MTM gain on investment portfolio, cost agility and low cost deposit based will cushion earnings impact.”



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HSBC bets on digital growth in India as Citi, FirstRand wind up, BFSI News, ET BFSI

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Amid Citibank and FirstRand Bank shutting down India operations, HSBC, one of the biggest foreign bank in India stays bullish.

The bank which posted $1 billion in profits in 12019 and 2020, has retained its growth forecasts for India despite the second wave of Covid.

While the bank rationalised its branch operations in India a few years earlier it grew business through digital channels. It sees a substantial part of its banking activities eventually moving towards digital, self-serve models.

HSBC’s number of customers has increased 37% since December 2017 to 10.5 lakh in December 2020. The bank’s pre-tax profits from India have been over $1 billion for 2019 and 2020.

Local linkage

HSBC has the advantage of having a strong presence in countries where the Indian diaspora is predominant. This includes the Middle East, Southeast Asia, Australia, Canada and the US. As a result, it has been able to target persons of Indian origin as well as Indians looking to invest in these markets or move there for studies.

It sees government measures like reduction in the corporate tax rate, production-linked incentives and the disinvestment plan pushing inward investment in India. Transaction banking, covering cash management, custody, trade and foreign exchange is the focus area for the bank. It also sees a tremendous opportunity for banks to partner with fintech in specific segments.

Despite the second wave, HSBC research has retained its growth forecast of 11.2% for FY22.

Focus on digitalisation

Recently the bank has partnered with Google Pay for tokenisation on its credit card portfolio.

The move is in line with the bank’s ongoing endeavour towards enhanced security and convenience for its card holders.

HSBC India on Thursday announced that it has collaborated with Google Pay (GPay) and VISA to enable secured tokenisation on its credit cards.

“This new feature will enable HSBC Credit Card customers to link their card to GPay and use it as a payment option to securely and digitally transact using their mobile phones – online and at merchant stores,” it said in a statement, adding that the feature is free but optional for its credit card users.

Recently, HSBC along with Tata Steel successfully execute a blockchain-enabled, paperless trade transaction – a global first for the steel industry. The live trade finance transaction involved the export of steel by Tata Steel, India to Universal Tube & Plastic Industries, UAE.

The end-to-end paperless trade transaction, executed over the Contour platform was made possible by a unique collaboration pivoted by Tata Steel across the spectrum over the Contour and essDOCS platforms. The Letter of Credit (LC) was issued by HSBC UAE for Universal Tube & Plastic Industries, UAE (importer) with HSBC India as the advising and negotiating bank for Tata Steel, India (exporter).



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RBI paper, BFSI News, ET BFSI

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Introduction of a bad bank may help “shape the operations” of the existing asset reconstruction companies (ARCs), an RBI paper said on Monday, noting that a sizable bulk of assets bought by such entities have not been resolved for a long time. The paper, published in the central bank’s monthly bulletin for April, also flagged risks of an excessive reliance on banks by the ARC industry.

It said banks supply non performing assets (NPAs) to the ARCs, hold shareholding in these entities and also lend to them, which makes it necessary to monitor if there is a “circuitous movement of funds between banks and these institutions (ARCs)”.

In her Budget speech for FY22, Finance Minister Nirmala Sitharaman had declared that a new ARC will be created to hold the sour assets of the state-run lenders and resolve such assets professionally.

“About 42 per cent of the outstanding SRs (security receipts) as on March 2020 were more than five years of age and would have to be redeemed over the next four years to avoid write-offs,” the paper said, pointing out at the difficulties being faced by the current set of ARCs in resolving the stress.

While resolving a case, ARCs pay a minor portion in cash to the selling bank while the rest is SRs to be paid over a time.

“Going forward, the introduction of a new asset reconstruction company for addressing the NPAs of public sector banks may also shape the operations of the existing ARCs,” the RBI paper said.

It added that there is a definite scope for the entry of a “well-capitalised and well-designed entity” in the Indian ARC industry and such a body will strengthen the asset resolution mechanism further.

It cited global experiences to lay down the necessary features of the new ARC announced by the government.

It advocated that the new ARC or the bad bank should have a narrow mandate such as resolving NPAs with clearly defined goals, a sunset clause defining their lifespan, supportive legal infrastructure involving bankruptcy and private property laws, backing of a strong political will to recognise problem loans, and a commercial focus including in governance, transparency, and disclosure requirements.

The paper said while proactive asset recognition is important for a correct assessment of the health of the banking system, it needs to be followed by effective asset resolution and recovery by banks.

The absence of an effective resolution and recovery mechanism can discourage recognition of NPAs by banks in the first place. The lack of recourse to timely recovery can also deteriorate the economic value of assets adding to the losses incurred by banks over time, it said.

The regulatory changes by the Reserve Bank have been broadly geared towards strengthening the ARC industry, ensuring genuine sale of NPAs by banks, enhancing the involvement of ARCs in the process of resolution and deepening the market for SRs, it said.

However, it noted that there has been a concentration in the industry in terms of AUM and SRs issued, and net owned funds.

Secondly, despite the regulatory push to broaden, and thereby enhance, the capital base of these companies, they have remained reliant primarily on domestic sources of capital, particularly banks.



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RBI to conduct customer satisfaction survey on bank mergers, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) has decided to conduct a customer satisfaction survey to find out the impact of the recent mergers of state-owned banks on banking services being availed by individuals.

Among other things, the respondents will be asked whether the merger was positive from the point of customer services. The choice before the customer will be to tick one of the following options — strongly agree; agree; neutral; disagree; or strongly disagree.

The proposed survey will cover a total of 20,000 respondents from 21 states, including Uttar Pradesh, Maharashtra, West Bengal, Tamil Nadu, Bihar, Karnataka, Madhya Pradesh, and Gujarat. In all, there will be 22 questions.

Of the 22, a set of four questions has been drafted separately for assessing customer service and grievance redress issues of customers of branches of banks that have been merged with other banks in the year 2019 and 2020.

Among public sector banks, Dena Bank and Vijaya Bank were merged with Bank of Baroda; Oriental Bank of Commerce and United Bank of India with Punjab National Bank; Syndicate Bank with Canara Bank; Allahabad Bank with Indian Bank; Andhra Bank and Corporation Bank with Union Bank of India.

Also, Lakshmi Vilas Bank was merged with DBS Bank.

The questions related to mergers are: ‘I did not face any problem in availing services after the merger’; ‘I faced problems in the following product(s)/service(s)/area(s)’; and ‘The nature of problem I faced in the product(s)/service(s)/area(s)’.

The participants will also be asked: “overall, the merger has been positive from customer service perspective”; and options against this are ‘strongly agree’; ‘agree’; ‘neutral’; ‘disagree’; and ‘strongly disagree’.

While inviting quotations for conducting the ‘Bank Customers’ Satisfaction Survey’ from survey agencies, the central bank said the approved vendor will be required to conduct interview over phone with recording of customers of bank branches falling in identified states.

The RBI will provide the contact number of the customers of bank branches selected from the 21 states. The selected agency will have to complete the survey work and submit the report to the RBI by June 22, 2021.

Request for quotations (RFQ) document said the questions have been framed to capture the customer’s experience and perception of the grievance redress mechanism of his/her bank. It is also for awareness about the grievance redressal mechanism of the bank and the banking ombudsman.



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After Morgan Stanley, JPMorgan prepares to offer rich clients access to bitcoin fund

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With the latest move, JPMorgan would be the latest and biggest US megabank to adopt crypto as an asset class.

Investment bank JPMorgan’s crypto and blockchain efforts are on a roll. The bank is now looking to offer an actively managed bitcoin fund for clients in its private wealth division. With the latest move, JPMorgan would be the latest and biggest US megabank to adopt crypto as an asset class. The development, which was reported by CoinDesk on Monday, may see the bitcoin fund launched as soon as this summer. The move would also signal a shift in the company’s outlook towards cryptocurrencies as its CEO Jamie Dimon had reportedly called bitcoin a dangerous fraud in 2017 and had also threatened to fire employees who traded bitcoin. Last month, according to a CNBC report, Morgan Stanley had become the first big US bank to offer its wealthy clients access to bitcoin funds after they demand exposure to the cryptocurrency.

Comments from JPMorgan regarding the development were not immediately available.

Even as the bitcoin fund is the latest step by JPMorgan, its investment, commercial banking, and wealth management divisions have gradually evolved in their treatment of crypto and blockchain. As per CoinDesk, the bank’s research analysts regularly issue market insight on bitcoin’s price and prospects in reports available to clients. In February, it had tested blockchain’s decentralised network in space to see if two machines could transact autonomously. The experiment involved carrying out blockchain-based payments between satellites in space “which validated the approach towards a decentralized network where communication with the earth is not necessary,” according to a statement by the Nasdaq-listed manufacturer and supplier of nanosatellites for customers in the academic, government, and commercial markets – GomSpace.

Also read: Coinbase India plan: Acquire startups, hire ‘hundreds’ of employees in 2 yrs, says incoming country head

Earlier this month, JPMorgan had launched a new solution called Confirm using blockchain technology to improve funds transfers between banking institutions globally and to help bring down the number of “rejected or returned transactions caused by mismatched payment details,” according to the investment bank. As a result, the solution will lead to lowering costs for both the sending and receiving banks. “JPMorgan getting into blockchain is going to help a lot on the institutional side of fund transfers. It is looking to resolve the clearing and settlement problem which happens in the bank-to-bank transfers and takes multiple days to settle. With blockchain, JPMorgan and banks will be able to settle it in near real-time,” Ashish Agarwal, a blockchain expert and Founder of PayO — neo banking platform for SMEs – had told Financial Express Online.

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