Enable Covid-19 vaccination on “priority basis” for banking sector staff: Finmin

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The Department of Financial Services (DFS) in the Finance Ministry has urged the Union Home and Health Ministries to enable Covid-19 vaccination on priority basis to bank, NPCI employees – who are on the “frontline and dealing with customers and critical infrastructure for seamless banking and payment system”.

This will go a long way in assuring them about the safety of themselves and their families and will boost their morale in continuing to provide their best services to their customers, the DFS said in a communication to the Home and Health Secretaries.

‘Priority groups’

Making a case for inclusion of banking sector staff in the “priority groups” for vaccination, the DFS has highlighted that the Parliamentary Standing Committee on Home Affairs on Management of Covid-19 pandemic had in their 229th report appreciated the efforts taken by the banking sector for providing uninterrupted banking facilities during the Covid-19 outbreak and the consequent lockdown.

The Committee had, therefore, placed on record the good work done by them and recognised them as Covid-19 warriors, the DFS has said. DFS has also now pointed out that many bank officials in their efforts to provide continuous service had lost their lives.

Reliance on digital banking services

Similarity, as people’s reliance on digital modes of payment increased, it was critical to ensure that electronic and digital payments channels were available seamlessly round the clock for a safe and secure customer experience. Here the NPCI staff played a critical role, the DFS has said.

DFS has said that bank employees had played a critical role over the past one year in ensuring that bank branches remain open and functional, and providing the complete suite of banking services to their customers.

This was despite issues on mobility of bank staff to their place of work and issues in adhering to social distancing norms and other precautions. “The effort of bank staff was even more important in view of the disbursal and withdrawal of benefits transferred by the government to beneficiaries under Pradhan Mantri Garib Kalyan Yojana,” the DFS has said.

India has so far covered over 9 crore citizens in its vaccination drive and has supplied over 64 million doses to over 84 countries, including 10 million doses as grant. Already Indian Banks Association, HDFC Bank and NPCI had written to the DFS seeking inclusion of bank employees in the priority list for vaccination.

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NABARD Tamil Nadu region aims ₹40,000 crore loan disbursals in FY22

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The National Bank for Agriculture and Rural Development (NABARD) Tamil Nadu region is planning to make ₹40,000 crore of loan disbursal in FY22, according to a senior official of the development bank.

During FY21, loans disbursed by Tamil Nadu Regional Office of the NABARD reached an all-time high of ₹27,104 crore, nearly doubling from ₹14,458 crore disbursed the previous year.

“In FY21, our loan disbursal grew by 87per cent to ₹27,104 crore. If the same level of growth sustains and co-operation from all stakeholders continues, we are confident of disbursing loans worth ₹40,000 crore in FY22,” S Selvaraj, Chief General Manager, NABARD, Tamil Nadu Region said here on Thursday.

He was addressing a press conference in the city to highlight the milestone achieved by NABARD Tamil Nadu region.

Also read: Nabard staff strike on March 30, seek pension updation

Selvaraj said that the growth in loan disbursement of NABARD Tamil Nadu region is higher than the national growth rate and also assumes significance as it came during the pandemic-hit year.

“This growth (in disbursements) is really remarkable since office functioning were severely impacted during the first five months due to Covid-19,” Selvaraj said, adding, “The support from Tamil Nadu government and government institutions and from stakeholders such as commercial banks, co-operative banks, NBFC-MFIs, selfless work and dedication by NABARD officials and transparent and simplified procedures at NABARD are the major reasons that enabled this robust growth.”

At pan-India level, Loans and advances of NABARD grew by 25 per cent to to ₹6.03-lakh crore in FY21 as against ₹4.81-lakh crore in the previous year.

Of the total disbursement in Tamil Nadu during FY21, refinancing of loans to eligible financial institutions increased by 89 per cent to ₹23,062 crore while support for rural infrastructure stood at ₹4,042 crore. The development bank also extended a grant assistance of ₹31 crore to various innovative projects to Agri and allied sectors.

Also read: CAG seeks details of performance audit of public sector banks recapitalisation

Of the total refinancing, Cooperative banks accounted for a major share at ₹8,761 crore (38 per cent) followed by Commercial Banks (₹6,602 crore), Regional Rural Banks (RRBs) – ₹4,840 crore and NBFC / NBFC-MFIs at ₹2,858 crore.

The ratio between loan refinancing and rural infrastructure support stood 85-15 per cent in FY21. Selvaraj said in FY22, the share of rural infrastructure may go up to 25 per cent as per the demand.

To aid the economic revival, the Reserve Bank of India (RBI) on Monday extended a fresh support of ₹50,000 crore to the All-India Financial Institutions for new lending in FY22. Out of which, NABARD will be provided a special liquidity facility (SLF) of ₹25,000 crore for one year to support agriculture and allied activities, the rural non-farm sector and non-banking financial companies-microfinance institutions.

“RBI has announced a SLF window to address liquidity problems faced by banks due to the pandemic. Last year, we released ₹1,500 crore to banks in Tamil Nadu under this facility. This year also we expect to extend around ₹2,000 crore to Cooperative Banks and RRBs to meet liquidity challenges, if any,” Selvaraj said.

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U GRO Capital, SBM Bank India partner to launch credit card for MSMEs

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U GRO Capital on Thursday announced its partnership with SBM Bank India for the launch of GRO Smart Business credit card.

Powered by RuPay, along with EnKash, these are a range of secured credit cards specially designed for under-banked micro, small and medium enterprises, it said in a statement.

Also read: U GRO Capital launches GRO Micro, adds 25 branches

These can be availed by U GRO Capital borrowers against a fixed deposit (FD) with SBM Bank India.

MSMEs eligible for the business loans from U GRO Capital would be extended incremental funds to open an FD account with SBM Bank and the credit card would be offered against the security of an FD maintained by the applicant in his name, it further said.

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IndiaFirst Life Insurance registers 5% growth in individual new business

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IndiaFirst Life Insurance recorded a growth of five per cent or ₹894 crore in individual new business annual premium equivalent in 2020-21.

“This was the highest ever since its inception. This translates to a year on year growth of five per cent which, on the back of an industry leading 25 per cent year on year growth in 2019-20, is satisfying,” said Rushabh Gandhi, Deputy CEO, IndiaFirst Life Insurance.

Also read: How to save for children’s studies without sacrificing on retirement plans

The private sector life insurer also crossed ₹4,000 crore of gross premium in 2020-21 and registered a growth of six per cent in total new business APE of ₹995 crore last fiscal, it said in a statement on Thursday.

Renewal premium income crossed ₹2,000 crore in 2020-21. Individual 13th month persistency also improved to 78.7 per cent last fiscal from 75.8 per cent in 2019-20.

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NeoGrowth to disburse business loans within 24 hours to retailers with instant approval

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SME lender NeoGrowth Credit on Thursday announced the launch of NeoCash Insta Loan to meet immediate fund requirements of retailers and small businesses.

“The NeoCash Insta Loan for retailers is a ₹1 lakh collateral free loan product, with just KYC documents without any financial or bank documents, instant online approval, and daily repayment amount of ₹250,” it said in a statement.

Small business owners can visit the NeoGrowth website and get immediate approval for the loan by filling in only basic details, it further said, adding that exhaustive digital checks for underwriting and usage of digitally verified alternate sources of data will be used to ensure risk mitigation and governance.

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RBI asks banks to refund interest on interest, but who will pick the tab?, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) has asked all lenders to compensate borrowers with interest on interest charged between March 1, 2020, and August 31, 2020.

This will apply to all borrowers irrespective of whether the moratorium had been fully or partially availed, or not availed.

An RBI notification said that all lending institutions must immediately put in place a board-approved policy to refund or adjust the ‘interest on interest’ charged to the borrowers during the moratorium period as per the Supreme Court judgement.

In order to ensure that the above judgement is implemented uniformly in letter and spirit by all lending institutions, methodology for calculation of the amount to be refunded or adjusted for different facilities shall be finalised by the Indian Banks Association (IBA) in consultation with other industry participants and bodies, which shall be adopted by all lending institutions.The Reserve Bank of India (RBI)

“Borrowers who availed working capital facilities during the moratorium, whether they availed moratorium or not, should also receive refunds or adjustment. Lenders must disclose the aggregate amount of interest-on-interest refunded or adjusted by them in their financial statements for FY21,” the notification said.Earlier, the Indian Banks Association (IBA) had asked banks to refund interest on interest to those who have been charged.

Asset classification

The central bank also clarified that asset classification of borrower accounts by all lending institutions following the judgment by the Supreme Court should continue to be governed by the extant instructions: For borrowers who did not avail the moratorium, banks must follow extant income recognition and asset classification norms, for accounts which availed moratorium, lenders must remove the period between 1st March to 31 August 2020 for asset classification and for the period commencing 1 September 2020, lenders must follow asset classification as per extant norms.

The SC order

Last month, the Supreme Court had barred banks from charging penal interest on any borrower during the loan moratorium period.

“There should be no interest on interest or penal interest on the instalments which were due during the loan moratorium period from 1st March to 31 August 2020 on any borrower, irrespective of the loan amount. If such interest has already been collected, it should either refunded to the borrower or adjusted towards the next instalments,” the order had said

The calculations

As per rating firm ICRA, compound interest for six months of moratorium across all lenders is estimated at Rs 13,500-14,000 crore.

With the SC order, borrowers excluded earlier may get additional relief of Rs 7,000-7,500 crore in the form of compound interest benefit.
Even before the SC order, the government had said that it would compensate lenders for refunding interest on interest on small loans below Rs 2 crore, which has already been done.

Who will pick the tab?

It is not clear who will bear the additional burden of refunding compound interest or penal interest to borrowers with loans above Rs 2 crore, though the banks have been asked to refund it.

The banks, accounting for 70 per cent of the loan market, have operating profits of over Rs 3 lakh crore.

So, Rs 7,000 crore on Rs 3 lakh crore will be like 2 per cent of their operating profits, according to the rating firm.

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China asks banks to stamp down on loan growth, BFSI News, ET BFSI

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China’s central bank has asked major lenders, including the foreign ones, to curtail loan growth for the rest of this year after a surge in the first two months stoked bubble risks.

At a meeting with the People’s Bank of China, banks were told to keep new advances in 2021 at roughly the same level as last year. Some foreign banks were also urged to rein in additional lending through so-called window guidance recently after ramping up their balance sheets in 2020.

China, which keeps tight control over money flows in and out of the country, may be worried that a surge of funds into the country could lead to nasty surprises like inflation.

“On the one hand, there will be a slowdown in loan growth, and on the other hand, the slowdown is quite moderate,” said Lu Ting, chief China economist at Nomura Holdings Inc., adding that the pace is in line with the PBOC’s stance of making no sharp policy turns.

With the coronavirus largely contained and the economy rebounding, Chinese policymakers have renewed a campaign to curb risks, especially in the financial and real estate sectors. Even if credit growth eases, the prospect of higher interest rates and fewer soured assets may boost the profitability of banks, which saw earnings slump after they were enlisted to help borrowers obtain cheap financing during the pandemic.

Foreign banks

Chinese rules have sharply limited the ability of foreign banks to do business in the country, making them less competitive against local rivals. Rules enacted in December and January restricts how much money foreign banks can transfer into China from overseas. Those enacted last month required many foreign banks to make fewer loans and sell off bonds and other investments.

The new rules have caused a stir among the global bank executives and foreign companies in China that depend on those lenders for money. They worry that the rules could make foreign-owned businesses more dependent on China’s state-run banking system for the money they need to grow. That dependence could give Beijing another potential pressure point to use as it squares off against the US and others over trade, human rights, geopolitics and other sticky issues.

Record credit, inflows

In 2020, banks doled out a record 19.6 trillion yuan ($3 trillion) of credit. Lending the same amount this year would bring the outstanding balance to about 192 trillion yuan.

Foreign investors last year increased their holdings of Chinese bonds by about $150 billion. China also surpassed the US last year by taking in $163 billion worth of direct investments in factories, office buildings, companies and other assets.

China’s currency, the renminbi, rose sharply in value against the U.S. dollar in the second half of last year. In May, $1 was worth about 7.15 renminbi. By year’s end, $1 bought about 6.5 renminbi.



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IDFC First Bank raises Rs 3,000 cr equity capital through QIP, BFSI News, ET BFSI

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NEW DELHI: IDFC First Bank has raised Rs 3,000 crore through QIP in which global marquee investors like BNP Paribas and Baillie Gifford participated alongside domestic players such as Bajaj Allianz Life and HDFC Life.

The qualified institutional placement (QIP) closed on Tuesday and the lender issued 52.31 crore fresh equity shares at Rs 57.35 per share.

“On April 6, 2021, the bank has raised Rs 3,000 crore through Qualified Institutional Placement to marquee international and domestic investors by issuing 52.31 crore fresh equity shares having face value of Rs 10 each, at a price of Rs 57.35 per share,” IDFC First Bank said in a regulatory filing on Wednesday.

Out of this, 68.33 per cent of the allotment was made to foreign investors and 31.67 per cent to domestic investors.

Pursuant to the allotment of equity shares in the issue, the paid-up equity share capital of the bank stands increased from Rs 5,675.85 crore to Rs 6,198.95 crore, it said.

As many as eight investors subscribed to more than 5 per cent of the shares offered in the QIP.

These are: Bajaj Allianz Life Insurance 11.98 per cent, Baillie Gifford Emerging Markets Equities Fund 11.39 per cent, Baillie Gifford Pacific Fund (a sub fund of Baillie Gifford Overseas Growth Fund) 8.95 per cent, and BNP Paribas Arbitrage-ODI received 8.62 per cent of the shares in the issue.

City of New York Group Trust was allotted 8.53 per cent shares under the QIP, Baillie Gifford Emerging Markets Growth Fund 6.79 per cent, HDFC Life Insurance 6.67 per cent and Tata AIA Life Insurance 5.83 per cent.

The private sector bank also released some provisional data, witnessing over 10 per cent yearly growth in its total funded assets at Rs 1,17,803 crore as of March 31, 2021 from Rs 1,07,004 crore a year ago.

Total consumer deposits grew by 43.15 per cent year-on-year to Rs 82,628 crore from Rs 57,719 crore for the period.

Bank’s CASA deposits (current account and savings account) jumped by 122.74 per cent to Rs 46,022 crore from Rs 20,661 crore by March 2020. The CASA ratio stood at 51.95 per cent by end of March 2021, up from 31.87 per cent by year ago same period.

However, the top 20 depositors’ concentration witnessed a decline at 7.76 per cent against 20.26 per cent.

IDFC First Bank said these figures are being released under Sebi norms on disclosure requirements. The figures mentioned as on March 31, 2021 are provisional and subject to audit undertaken by the statutory auditors of the bank, it added.



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Put in place policy to refund ‘interest on interest’ charged during moratorium, BFSI News, ET BFSI

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MUMBAI: The RBI on Wednesday asked banks and NBFCs to immediately put in place a board-approved policy to refund/adjust the ‘interest on interest’ charged to the borrowers during the six-month moratorium, in conformity with the Supreme Court judgement last month.

As part of the Covid-19 regulatory package, the RBI had allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1 and May 31 of last year. The moratorium was extended by three months till August 31.

Referring to the judgement of Supreme Court dated March 23, 2021, the RBI in a circular on Wednesday said: “All lending institutions shall immediately put in place a Board-approved policy to refund/adjust the ‘interest on interest’ charged to the borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020…”

The apex court had directed that no compound or penal interest will be charged for the six-month moratorium announced last year amid the Covid-19 pandemic and the amount already recovered is to be refunded or adjusted in the next instalment of the loan account.

The RBI further said in order to ensure that the judgement is implemented uniformly in letter and spirit, methodology for calculation of the amount to be refunded/adjusted for different facilities should be finalised by the Indian Banks Association (IBA) in consultation with other industry participants/bodies, which “shall be adopted by all lending institutions”.

The “reliefs shall be applicable to all borrowers, including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed” said the circular on ‘Asset Classification and Income Recognition following the expiry of Covid-19 regulatory package’.

The central bank also said lending institutions should disclose the aggregate amount to be refunded/ adjusted in respect of their borrowers based on the reliefs in their financial statements for the year ending March 31, 2021.



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S Ramann appointed as chairman & managing director of SIDBI, BFSI News, ET BFSI

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New Delhi: The government has appointed S Ramann as Chairman and Managing Director of Small Industries Development Bank of India (SIDBI). The appointment is for a period of three years from the date of his assuming the charge or until further orders, a government statement said.

In December, Banks Board Bureau, the headhunter for state-owned banks and financial institutions, had recommended his name for the post.

Ramann, a 1991-batch Indian Audit & Accounts Service officer, is currently the CEO of National E-Governance Services Ltd, India’s first Information Utility.

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