Category: Banking & Finance

E-mandate processing: RBI gives banks 6-month breather to comply with framework

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) on Wednesday gave Banks and payment aggregators a six-month breather by extending the timeline to comply with the “framework for processing e-mandates on recurring online transactions” till September 30, 2021.

Without this breather, millions of e-mandates set up by customers could have failed from April 1, 2021 as many banks have not upgraded capacities to comply with RBI’s requirements for enabling registering, tracking, modification, and withdrawal of e-mandates.

In fact, Banks had sent out a communication to their customers asking them to make alternative arrangements for recurring transactions for utilities and bill payments, such as registering the biller on the internet or mobile banking.

On non-compliance

While extending the timeline for processing recurring online transactions, the central bank underscored that non-compliance is noted with grave concern and dealt with separately.

“The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default. To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline.

“Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action,” RBI warned.

The Internet And Mobile Association of India (IAMAI), in a recent letter to the Niti Aayog, observed that the users should bear the cost of non-adherence to the RBI’s e-mandate circulars by the issuer banks, merchants and the non-bank entities, for no fault of theirs, resulting in huge business losses and significant disruptions to services to the consumers.

In August 2019, RBI had issued the framework for processing of e-mandates on recurring online transactions. Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions.

In the interest of customer convenience and safety in the use of recurring online payments, the framework mandated use of Additional Factor of Authentication (AFA) during registration and first transaction (with relaxation for subsequent transactions up to a limit of ₹2,000, since enhanced to ₹5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc.

Customer protection

The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience.

“Based on a request from Indian Banks’ Association (IBA) for an extension of time till March 31, 2021, to enable the banks to complete the migration, Reserve Bank had advised the stakeholders in December 2020 to migrate to the framework by March 31, 2021.

“Thus, adequate time was given to the stakeholders to comply with the framework,” RBI said in a statement.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

SBI signs $1-b loan deal with JBIC

Banking & Finance

[ad_1]

Read More/Less


 

 

State Bank of India (SBI) has signed a loan agreement amounting to up to $ 1 billion with Japan Bank for International Cooperation (JBIC). SBI had signed a similar deal with JBIC in October last year.

The loan is intended to promote smooth flow of funds for the whole range of business operations of Japanese automobile manufacturers in India.

JBIC is a policy-based financial institution, wholly-owned by the Japanese government.

Dinesh Khara, Chairman, SBI, said: “The Covid-19 crisis has delivered a significant shock to global trade, disrupted production lines, and depressed global demand. At a time when people are preferring personal mode of transport, this collaboration between SBI and JBIC will help the bank in extending loan facility to entire supply chain of Japanese automobile industry, including suppliers, dealers and ultimately to the end users.”

Ayukawa, MD and CEO, Maruti Suzuki, said: “Maruti Suzuki is making efforts to balance between the environmental friendliness of our vehicles and our customer’s need. The special support for our environment friendly vehicles will accelerate Suzuki group’s initiative towards environmental care.”

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Srei Equipment Finance sets up panel to raise fresh capital

Banking & Finance

[ad_1]

Read More/Less


Srei Equipment Finance Ltd (SEFL), a wholly-owned subsidiary of Srei Infrastructure Finance Ltd, on Wednesday said that it had received interest from international investors for proposed capital infusion.

The company, which has been facing cash flows issues in the wake of the Covid-19 pandemic-driven economic stress, has constituted a Strategic Coordination Committee (SCC), comprising independent directors to coordinate, negotiate and conclude discussions with potential strategic investors.

“The board of SEFL at its meeting held on Tuesday, constituted a Strategic Coordination Committee (“SCC”), comprising of independent directors. The SCC will coordinate, negotiate and conclude discussions with potential strategic and/or private equity investors, to raise fresh capital for the business in consultation with the management,” the company said in a press statement.

The company said it had received an “expression of interest from international investors” for the proposed capital infusion.

“The proposed capital infusion is expected to strengthen SEFL’s capital base and help the company emerge out of pandemic induced stress in Indian financial services space,” the release said.

The SCC would be chaired by Malay Mukherjee, an independent director and the other committee members, including Suresh Kumar Jain, Dr. (Mrs.) Tamali Sen Gupta, Uma Shankar Paliwal and Shyamalendu Chatterjee with invitees having relevant domain knowledge.

The committee will take forward the expression of interest received from international investors and initiate discussions with other potential suitors who have been in touch with the company over the last year in consultation with the management. The committee will be assisted by advisors and investment bankers who will be working closely with the members.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

Northern Arc Capital partners CDC Group to create first pooled bond issuance

Banking & Finance

[ad_1]

Read More/Less


The CDC Group, an UK-based development finance institution (DFI) and impact investor, has partnered with Chennai-based NBFC Northern Arc Capital to create its first-ever pooled bond issuance (PBI) transaction in India. The PBI worth ₹320 crore will provide systemic liquidity to six Indian microfinance institutions (MFIs).

In a press release, the debt financing platform Northern Arc Capital said, the investment is expected to support MFIs in providing over 630,000 new micro-loans to low-income households, primarily female and rural borrowers, increasing their access to finance and enabling them to manage cash flow and maintain or grow their businesses.

“Northern Arc’s forte has been to introduce impact sectors to investors through its innovative products and structures. CDC’s first investment in a Pooled Bond Issuance in the microfinance sector in India is testament to this,” Kshama Fernandes, CEO, Northern Arc Capital, was quoted in the statement.

Annapurna Finance, Arohan Financial Services, ASA International, Asirvad Microfinance Limited, Chaitanya India and Fusion Microfinance are the six MFIs which will get liquidity under the PBI structure.

“This exciting partnership with Northern Arc marks CDC’s first Pooled Bond Issuance in India and comes at a time when systemic liquidity is critically needed to mitigate the impact of Covid-19 on vulnerable population in India,” Srini Nagarajan, MD and Head of Asia at CDC, said in the statement.

“We are pleased that our investment will facilitate access for small businesses and will especially ensure that more women in India have improved access to finance, helping to uplift their livelihoods, households and communities,” he added.

The PBI product, developed by Northern Arc, pools together for one investor a set of debentures issued by diverse entities. These debentures are partially guaranteed by the Northern Arc.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

MPC meet dates announced – The Hindu BusinessLine

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) on Wednesday announced the bi-monthly meeting schedule of the six-member rate-setting monetary policy committee (MPC) for FY2022.

Also read: Jarring signals on economy as inflation is rising, factory output shrinking

Unlike last year, when the first MPC meeting (originally scheduled for March 31, April 1 and 3, 2020) was advanced to March 24, 26 and 27, 2020, and the Governor issued a statement on April 17, 2020 in view of the Covid-19 pandemic, the meeting schedule for FY2022 is spread out evenly.

According to RBI, MPC’s first meeting is scheduled from April 5 to 7, 2021. The subsequent meetings will be held from June 2 to 4, August 4 to 6, October 6 to 8, December 6 to 8, and February 7 to 9, 2022.

Last year, the repo rate (the interest rate at which banks borrow funds from RBI to overcome short-term liquidity mismatches) was cumulatively cut by 115 basis points in two tranches (to 4.40 per cent from 5.15 per cent on March 27, 2020 and to 4 per cent from 4.40 per cent on May 22, 2020), with the accommodative policy stance continuing throughout.

The reverse repo rate (the interest rate banks earn for parking surplus liquidity with RBI) was also cumulatively cut by 65 basis points in two tranches (to 3.75 per cent from 4 per cent on April 17, 2020 and to 3.35 per cent from 3.75 per cent on May 22, 2020).

According to a Barclays report, RBI may maintain its monetary accommodation for a while longer in order to enable the recovery to become entrenched.

Also read: Ten questions for the MPC to consider

The report, ‘Monetary policy: Talking the walk’, observed that recovering output lost to the pandemic could take longer than anticipated, and policy makers will be best served by letting the economy run ‘hot’ for a few quarters.

“The RBI will also need to balance nurturing the recovery and financial stability risks.

“Estimates show that the output gap will be negative well into 2022, and we believe monetary accommodation will be required to support growth recovery,” Rahul Bajoria, Chief India Economist, Barclays Securities (India) Pvt Ltd, and Shreya Sodhani, Research Analyst, Barclays Investment Bank, Singapore.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

RBI extends timeline for processing of recurring online transactions till Sept 2021, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India had issued a framework for processing of e-mandates on recurring online transaction with additional factor of authentication.

First issued in August 2021, the framework was extended in January 2020 and 31st March, 2021 was the last deadline, however noting that the framework has not been fully implemented across the industry the RBI is looking at it as a serious concern.

The RBI said, “This non-compliance is noted with serious concern and will be dealt with separately. The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default. To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till September 30, 2021. Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action.”

The requirement of additional factor of authentication made digital payments in India safe and secure. Initially the framework mandated use of AFA for transactions above Rs 2,000 which was later enhanced to Rs 5,000.

The primary objective with AFA by RBI was to protect customers from fraudulent transactions and enhance customer convenience. A request from Indian Banks’ Association led to RBI extending the deadline till March 31, 2021 to enable banks to complete the migration and RBI had advised the stakeholders in December 2020 to mitigate to the framework by March 31, 2021.

However the payments industry wasn’t ready for the transition and could have led to customer inconvenience along with a loss of Rs 2,000 crore estimated by the Payments Council of India.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Financial institutions should keep capital buffers to absorb losses: RBI Dy Governor

Banking & Finance

[ad_1]

Read More/Less


M Rajeshwar Rao, Deputy Governor, Reserve Bank of India, has called upon financial institutions to have strong capital buffers to absorb potential losses and sustain the credit flows.

Financial institutions should be aware of the rising cyber risks; strive for good governance and practice ethical behaviour as these are the core for a strong financial services industry.

Rao was speaking at the virtual session of the 29th edition of the ‘Mind to Minds’, a motivational lecture series organised by Muthoot Pappachan Group for their employees.

Green finance

He stressed upon the need for strategies that allow capital, labour, skills, and innovation to shift to new purposes so as to build a greener, stronger and resilient post-Covid economic environment. The impact of climate change and the need for green finance and environmental friendly activities have to be factored while planning for growth, he said.

Rao suggested that the businesses should seize the current opportunity to lay the foundations for a durable, equitable, and sustainable global economy. He is also highly optimistic that the negative effect of the pandemic on the economy is showing a reversing trend. Various high frequency indicators also suggest a higher future growth. At the same time, he cautioned that the recent surge in Covid cases pose a downside risk to recovery.

Thomas John Muthoot, Chairman, Muthoot Pappachan Group and Managing Director, Muthoot Fincorp, pointed out that the various initiatives of the government and the RBI has helped banks and NBFCs with adequate liquidity. The higher purpose of Muthoot Pappachan Group and Muthoot FinCorp is to “transform the lives of the common man through their financial well-being”.

The Group would follow the highest degree of ethical standards and corporate governance to ensure fair treatment to its customers, who primarily belong to the low-income group, he said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

HDFC Bank Vs ICICI Bank…who is speeding up?, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


HDFC Bank suffered at least the fourth outage on Tuesday in the last three years as customers experienced downtime on their internet and mobile banking with services not accessible to them for several hours.

This led to an almost 4% drop in the bank’s shares in afternoon trade on Wednesday in a market, which saw across the board sell-off due to Covid worries. At the same time, the drop in ICICI Bank was just 2%.

While it has a lot of catching up to do, ICICI Bank is fast narrowing the gap with HDFC Bank and larger peers.

Why is ICICI Bank surging

Experts said the worst is behind ICICI Bank. It has gone through a period of tremendous amounts of credit cost related issues and write-offs taking place. Secondly, it is focusing more to be a retail bank which is contributing to growth. On top of it, ICICI was trading at a substantial discount in terms of its valuation to its larger peers. The discount is also narrowing down and has contributed to this outperformance.

ICICI Bank’s performance has now become comparable with HDFC Bank’s (industry best) and as comfort on asset quality/ credit-cost improves, this should translate into stable growth in net profits as well, experts said.

It has improved the velocity (pace and direction) of operating profit over the past two years reflecting improved topline and cost efficiencies. An improvement in velocity of ICICI Bank’s operating profit growth & steady credit cost will bring down volatility in earnings, which has been a key reason for a 55% discount in valuation versus HDFC Bank. Lower volatility can reduce Beta, which can bridge the valuation gap by half. The rest reflects the gap in growth & ROE – this can be partly bridged with improved growth in clients/ CASA. Brokerage Jefferies has raised its price target to Rs 780 and hold it among its top picks in the sector.

ICICI Bank versus HDFC Bank

ICICI Bank trades at 55% discount to HDFC Bank in terms of valuations – ICICI Bank at 1.9x FY22 adjusted PB and HDFC Bank at 3.4x. This reflects a combination of HDFC Bank’s better growth, ROE and lower Beta. With a lower volatility in earnings, HDFC Bank’s Beta is at 1 whereas ICICI’s is around 1.2-1.3. Brokerage Jefferies said that consistency in earnings growth/ asset quality will help ICICI Bank bring down Beta closer to 1. This can lift-up the theoretical PB from 1.9x now to 2.5x – closing the gap with HDFC Bank by 30%.

CASA deposits

ICICI Bank has seen steady growth in CASA deposits. During Q3, ICICI Banks saw average CASA growth of 19% YoY whereas HDFC Bank saw 30% YoY growth.

Jefferies sees an improvement in earnings and profitability from FY22 as credit costs stabilise alongside steady growth in topline. It has raised its price target on the bank to Rs 780 (from Rs 700) and target multiple to 2.4x Mar-23E adjusted PB.

At a valuation of Rs 1.7-1.8 lakh crore, ICICI Bank has a big branch network and stability and clean up that has been brought about in the business in the last three years under the new leadership, while HDFC has a market cap of close to about Rs 8 lakh crore.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

SBI raises USD 1 billion untied loan with JBIC, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


State Bank of India, Country’s largest commercial bank, has signed a loan agreement amounting to up to USD 1 billion with Japan Bank for International Cooperation(JBIC).

SBI has signed a similar deal with JBIC in October 2020. The financing will assist in Government of India’s ‘Make in India’ initiative

The loan is intended to promote smooth flow of funds for the whole range of business operations of Japanese automobile manufacturers in India.

Dinesh Khara, Chairman, SBI said “Covid 19 crisis has delivered a significant shock to global trade, disrupted production lines and depressed global demand. At a time when people are preferring personal mode of transport, this collaboration between SBI and JBIC will help the bank in extending loan facility to the entire supply chain of Japanese automobile industry including suppliers, dealers and ultimately to the end users.”

Ayukawa, MD & CEO, Maruti Suzuki said, “Maruti Suzuki is making efforts to balance between the environmental friendliness of our vehicles and our customer’s need. The special support for our environment friendly vehicles will accelerate Suzuki group’s initiative towards environmental care”.

JBIC is a policy-based financial institution, wholly owned by the Japanese government, with the objective of contributing to the sound development of Japan, the international economy and society.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Make new arrangements for recurring credit, debit card transactions as new norms kick in from April 1

Banking & Finance

[ad_1]

Read More/Less


Starting April 1, customers will have to make alternative arrangements for recurring transactions for utilities and bill payments such as registering the biller on internet or mobile banking.

This is because most banks and payment companies have been unable to meet RBI norms to process e-mandate on cards for recurring transactions.

However, UPI and Rupay AutoPay facilities are unlikely to be disrupted. Sources said that most banks are live on it but it is unclear as to how many merchants are live on it.

Most large banks and payment players have already been informing customers that they would have to make alternative arrangements for auto debit through debit and credit cards.

Apart from payments for utilities like phone and electricity bills, even recurring payments to service providers such as Amazon Prime and Netflix will have to be made directly.

According to bankers, while they have made arrangements to comply with RBI norms, many merchants are yet to adhere to them.

“We are currently building a solution in adherence to the regulatory requirements. Therefore, effective April 1, 2021 any standing instruction for recurring transactions on your Card account will not be approved by American Express,” American Express said in a communication to customers, adding that to avoid any disruption in delivery of goods and services, starting April 1, 2021 customers should make payments directly to the service providers for bills as and when they become due.

Visa declined to comment on the issue when approached by BusinessLine.

“..as per regulatory guidelines, recurring merchant transactions based on Standing Instructions on your ICICI Bank Cards will be disabled effective April 1, 2021. To continue making payments against your regular utility bills, kindly register your biller through iMobile Pay or Internet Banking. For other standing instruction transactions, you may re-register or initiate transactions at regular intervals,” ICICI Bank said in a similar message to customers.

Recently, the Internet And Mobile Association of India (IAMAI) had also warned that millions of e-mandates set up by customers could fail from April 1, 2021.

The RBI had issued two circulars (August 2019 and December 2021) to banks, ‘non-bank prepaid payment instrument issuers’, and ‘authorised card payment networks’ for processing of e-mandates. The deadline to comply with it is March 31, 2021.

Under the new norms, banks will be required to inform customers in advance about recurring payment due and it would be carried following nod from the customer. For recurring payments above ₹5,000, banks are required to send a one-time password to the customer as per the new guidelines.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,
1 … 412 413 414 415 416 … 540