Category: Banking & Finance

Fino Payments Bank shares list with nearly 6 pc discount, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Shares of Fino Payments Bank Ltd made a tepid market debut on Friday, listing with a discount of nearly 6 per cent from its issue price of Rs 577. The stock made its debut at Rs 548, a decline of 5 per cent from the issue price on the BSE. It later dipped 7.15 per cent to Rs 535.70.

At the NSE, it listed at Rs 544.35, lower by 5.65 per cent.

The Rs 1,200.3-crore IPO had a price range of Rs 560-577 per share for the offer.

Fino Payments Bank or FPBL is a scheduled commercial bank serving the emerging Indian market with its digital-based financial services.

The company is a fully-owned subsidiary of Fino Paytech, a pioneer in technology-enabled financial inclusion solutions.

Fino Paytech is backed by investors like Blackstone, ICICI Group, Bharat Petroleum and International Finance Corporation (IFC).



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PM launches scheme for retail participation in govt securities

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Prime Minister Narendra Modi on Friday launched two customer-centric initiatives of the RBI with a view to provide opportunities to retail investors to participate in the government securities market and contribute towards nation-building.

The two initiatives of RBI — retail direct scheme and integrated ombudsman scheme — will also promote financial inclusion, he said.

The Prime Minister, while launching two innovative, customer-centric initiatives, said these schemes would expand the scope for investment and improve customer grievance redressal mechanism.

The retail direct scheme, he said, would provide access to small investors to earn assured returns by investing in securities and it will also help the government to garner funds for nation-building.

Ombudsman Scheme

On the Reserve Bank-Integrated Ombudsman Scheme (RB-IOS), he said, it is aimed at further improving the grievance redress mechanism for resolving customer complaints against entities regulated by the central bank.

With the launch of the scheme, he said, “One Nation-One Ombudsman” has become a reality. The RBI Retail Direct Scheme is aimed at enhancing access to the government securities market for retail investors. It offers retail investors a new avenue for directly investing in the securities issued by the centre and the state governments.

The investors will be able to easily open and maintain their government securities accounts online with the RBI for free. Leveraging technological advancements, the scheme offers a portal avenue to invest in central government securities, treasury bills, state development loans and sovereign gold bonds.

The scheme places India in a list of select few countries offering such a facility.

This scheme (RB-IOS) will do away with the jurisdictional limitations as well as limited grounds for complaints. RBI will provide a single reference point for the customers to submit documents, track status of complaints filed and provide feedback. The complaints that are not covered under the ombudsman scheme will continued to be attended to by the Customer Education and Protection Cells (CEPCs) which are located in the 30 regional offices of RBI.

With increased awareness, digital penetration and financial inclusion there were steep rise in the number of complaints against various regulated entities. The number of complaints shot up from 1.64 lakh in 2017-18 to 3.30 lakh complaints in 2019-20, as per RBI data.

The RBI in the recent past took several steps to strengthen the customer grievance redressal system of regulated entities including issuance of guidelines for strengthening of Internal Ombudsmen, graded regulatory and supervisory actions, and launch of Complaints Management System (CMS) in 2019.

The RBI after review decided to integrate the three ombudsman schemes into one and also simplified the scheme by covering all complaints involving deficiency in service by centralising the receipt and initial processing of complaints to enhance process efficiency.

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The schemes are administered through 22 offices of RBI Ombudsman (ORBIOs). Complaints that do not fall within the ambit of the Ombudsman mechanism are handled by the Consumer Education and Protection Cells (CEPCs) functioning at 30 regional offices of RBI.

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Fino Payments Bank makes a tepid debut

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The shares of Fino Payments Bank made a tepid debut on the bourses on Friday, listing at over 5 per cent discount.

It listed at a discount of over 5 per cent at ₹544.35 apiece on the NSE as compared to its issue price.

The shares listed at ₹548 on the BSE against its issue price of ₹577.

The shares slipped further to record a low of ₹527.00 on the BSE, post listing. At 10:31 am, it was trading at a 7.51 per cent discount at ₹533.65.

On the NSE, it was trading at ₹534.80.

“Fino payment debuted in secondary market on a tepid note as per our expectations and I think it may continue to remain under pressure post listing because of valuations concerns, competition, and regulatory challenges,” said Parth Nyati, Founder, Tradingo.

“However Fino Payment is a fast-growing fintech company and it is one of its kind company to list on the stock exchanges where its unique DTP network and new edge business model provide it an edge,” added Nyati.

Also read:Fino Payments Bank IPO to open on October 29

The ₹1,200 initial public offering of Fino Payments Bank comprised a fresh issue of ₹300 crore and an offer for sale (OFS) of 1.56 crore equity shares by promoter Fino Paytech.

The IPO was subscribed 2.03 times on the third and the final day with strong interest from retail investors.

According to data available on the BSE, bids were received for 2.32 crore shares as against 1.14 crore shares offered in the IPO.

The portion set aside for non-institutional investors (widely known as HNIs) saw a subscription of 0.21 times, and that of QIB witnessed a subscription of 1.65 times. The portion for retail investors was oversubscribed 5.92 times and the employee quota by 0.93 times.

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Mobikwik launches MobiKwik RuPay Card

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Mobikwik has collaborated with National Payments Corporation of India (NPCI) and Axis Bank to launch MobiKwik RuPay Card.

“The card will be free of charge to customers and purely digital keeping in line with the growing demand for digital payments across online and brick and mortar stores,” it said in a statement on Friday, adding that customers can now get up to ₹2 lakh of their MobiKwik wallet balance mirrored on the MobiKwik RuPay Prepaid Card.

“The integration of the card with MobiKwik wallet will allow MobiKwik customers to use the card and wallet balance at over 41 million merchants across 190 countries, in addition to the MobiKwik merchant network,” it further said.

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RBI data, BFSI News, ET BFSI

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MUMBAI: The Reserve Bank of India’s ‘One Nation, One Ombudsman’ scheme is part of its strategy to address customer complaints, which have doubled in the wake of a surge in banking transactions due to increased digital adoption. According to RBI data, with increased awareness, digital penetration and financial inclusion, the number of complaints against various regulated entities more than doubled from 1.6 lakh in FY18 to 3.3 lakh FY20.

The integrated ombudsman scheme will be launched by the Prime Minister on Friday along with the scheme for retail participation in the primary auction of government securities. Under the retail G-Secs scheme, individual investors can access the online portal to open a securities account with the RBI, bid in primary auctions and buy & sell securities in the market. No fee will be charged for any of the services provided under the scheme.

The integrated scheme allows customers to file their complaints from anywhere at any time through portal/ email, or through physical mode at one point of receipt, without the need to identify any specific ombudsman or scheme. It will do away with the jurisdictional limitations as well as limited grounds for complaints. The RBI will provide a single reference point for the customers to submit documents, track the status of complaints filed and provide feedback. The complaints that are not covered under the ombudsman scheme will continue to be attended to by the regional offices of the RBI.

The integrated ombudsman scheme is based on a review of internal grievance redressal of banks and other regulated entities.



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Suryoday Small Finance Bank reports net loss of Rs 1.9 crore for quarter ended September, BFSI News, ET BFSI

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Suryoday Small Finance Bank made a net loss of Rs 1.9 crore for the quarter ending September 30, as compared with Rs 27.2 crore net profit in the year ago period, owing higher credit cost following the pandemic-led stress on its borrowers.

This is the bank’s second consecutive quarterly loss after Rs 47.7 crore loss in the June quarter.

Its operating profit rose 62% at Rs 82.8 crore against Rs 51.1 crore over the same period. Its net interest income at 147 crore reflects a 34% rise, primarily on account of rise in gross advances over the period and lower cost of funds, the bank said in a regulatory filing to stock exchanges.

But a 6.6-fold higher provisions to cover bad loans and others led to the loss.

Its asset quality deteriorated with gross non-performing assets ratio rising to 10.2% at the end of September compared with 9.5% at the end of June. Net NPA remained flat 4.5%. Provision coverage ratio stood a tad higher at 71.2%.

The bank restructured loans to the tune of Rs 794 crore, which was 17.7% of gross loans, which grew 21% year-on-year to Rs 4470 crore.



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Suryoday Small Finance Bank reports net loss of Rs 1.9 crore for quarter ended September, BFSI News, ET BFSI

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Suryoday Small Finance Bank made a net loss of Rs 1.9 crore for the quarter ending September 30, as compared with Rs 27.2 crore net profit in the year ago period, owing higher credit cost following the pandemic-led stress on its borrowers.

This is the bank’s second consecutive quarterly loss after Rs 47.7 crore loss in the June quarter.

Its operating profit rose 62% at Rs 82.8 crore against Rs 51.1 crore over the same period. Its net interest income at 147 crore reflects a 34% rise, primarily on account of rise in gross advances over the period and lower cost of funds, the bank said in a regulatory filing to stock exchanges.

But a 6.6-fold higher provisions to cover bad loans and others led to the loss.

Its asset quality deteriorated with gross non-performing assets ratio rising to 10.2% at the end of September compared with 9.5% at the end of June. Net NPA remained flat 4.5%. Provision coverage ratio stood a tad higher at 71.2%.

The bank restructured loans to the tune of Rs 794 crore, which was 17.7% of gross loans, which grew 21% year-on-year to Rs 4470 crore.



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Banks want more provisions included as statutory capital, BFSI News, ET BFSI

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Banks have urged the sector regulator, Reserve Bank of India, to relax norms and allow more of the provision made towards unidentified losses to be reckoned as statutory capital.

At present, because of the regulatory cap, only provisions to the extent of 1.25% of the credit risk weighted assets are considered as tier II capital. If rules are relaxed, more funds can be freed up and made available for banks at a time when recovery is firming up and credit is expected to pick up.

On Wednesday, in its monthly economic report, the finance ministry said India is on its way to becoming the fastest growing major economy in the world and forecast a strong possibility of faster credit growth.
“There is a uniform view among banks that due to increased provision burden, the regulatory cap of 1.25% can be removed. We have also approached RBI to either remove the cap or increase eligible percentage so banks will benefit from the additional provisions made by them,” said an executive aware of developments.

As per RBI’s July 2015 circular on Basel III Capital Regulations -Elements of Tier II Capital for Indian Banks, under “General Provisions and Loss Reserves”, provisions held for currently unidentified losses, which are freely available to meet losses that subsequently materialise, will qualify for inclusion under tier
II capital. Accordingly, the general provisions on standard assets qualify for inclusion in tier II capital.

“With expected increase in standard assets provision on account of restructuring of stressed accounts under Covid-19 dispensations, ranging from 5% to 15%, substantial amount of provisions made will not be qualifying as tier II capital because of the cap,” said another bank executive, explaining the demand for removal of the cap on amount of provision reckoned as tier II capital.

Last month in a report, rating agency Crisil had said that gross non-performing assets (NPAs) of banks are expected to rise to 8-9% this fiscal from 7.5% as on March 31, but below the peak of 11.2% seen at the end of fiscal 2018.

“With 2% of bank credit expected under restructuring by the end of this fiscal, stressed assets – comprising gross NPAs and loan book under restructuring – should touch 10-11%,” it had noted in its report.



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JP Morgan, BFSI News, ET BFSI

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A full-scale, multiple central bank digital currency (mCBDC) network could potentially save global corporations up to $100 billion in transaction costs annually, according to a joint research report from Oliver Wyman and JPMorgan.

The report estimates that of the nearly $24 trillion in wholesale payments that moved across borders via the correspondent banking network each year, global companies incur more than $120 billion in total transaction costs. This excludes potential hidden costs in trapped liquidity and delayed settlements. “The case for CBDCs to address pain points in cross-border payments is very compelling. The bulk of today’s wholesale cross-border payments process remains suboptimal due to multiple intermediaries between the sending and receiving banks, often resulting in high transaction costs, long settlement times, and lack of transparency on the status of the payments,” said Jason Ekberg, partner, corporate and institutional banking at Oliver Wyman.

Critical elements

The research specifically outlines four critical elements required for mCBDC implementation, which include (i) the building blocks, from minting and redeeming of CBDCs to FX conversion and settlement; (ii) the roles and responsibilities of central banks, commercial banks, and service providers; (iii) the key design considerations covering data, technology, privacy, and credit extension; and (iv) the governance framework.

Naveen Mallela, global head of coin systems at Onyx, said: “Central banks around the world who are at various stages of CBDC development are considering how to build an infrastructure where systems operate and work together with the necessary controls in place. In this report, we put forward robust design considerations for a successful mCBDC network and demonstrate how it can be practically implemented, using ASEAN corridors as an example.”

Opportunities for participants

Acknowledging that a mCBDC network challenges traditional correspondent banking systems, the report cites opportunities for participants – commercial banks, payment operators, market makers and liquidity providers – to add new capabilities, and welcomes new stakeholders like technology providers and other third-party service providers.

“The development of CBDCs brings new tangible opportunities such as subscription-based mCBDC corridor access or smart contract-enabled cash management services. The ability to pivot effectively and quickly is key, and ultimately we aspire for a cross-border payments system that is transparent, inclusive and efficient for all parties across central banks, corporates, and commercial banks,” Mallela said.



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Healthy collections, focus on reducing stressed asset flow will aid asset quality in H2FY22: Carol Furtado, COO, Ujjivan Small Finance Bank

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Also, the aspiring middle class [is] an area we will be focusing on, and we have various segments like senior citizens, small traders, and manufacturers, so we will be introducing value-added products for these segments.

By Piyush Shukla

Ujjivan Small Finance Bank is likely to witness an improvement in the asset quality in the second half of the current fiscal on the back of overall healthy collections and higher focus on reducing flow of stressed loans towards NPA category, Carol Furtado, chief operating officer, Ujjivan Small Finance Bank, tells Piyush Shukla. Excerpts:

Your disbursements in July-September rose sharply, but overall gross advances grew 5% to Rs 14,514 crore. What is your credit growth outlook?

The economy has opened, and all our business verticals are doing well. We had given a growth guidance of 15-20% or so sometime in August; we are keeping up to it. Since the economy has opened, we are aiming to get all our business lines to contribute well, and September and October have been good months for us. We hope to see even double the growth in November. [We are doing quite well in our] 100 days’ plan, where rebuilding our business momentum was one of our key focus areas … and disbursements in the second quarter (Q2FY22) have improved to Rs 3,000-plus crore, which is around 114% growth year-on-year and around 138% quarter-on-quarter. So improvement is across all business verticals.

Are there any new loan products in the pipeline?

Yes, this year … we will also be launching products like the ECLGS (Emergency Credit Line Guarantee Scheme), CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), the MSE (micro and small enterprises) segment and GST-based working capital finance and some products in the healthcare segment. On the personal loan side, we will be expanding it to balance transfer, pre-approved loans and pre-approved digital products. So those will be the kind of new products that we will be launching. But our focus is on core, and some of the other products that we are incubating we will continue to do so and maybe in the next financial year we will take it up for review.

Your retail deposits account for 52% of the overall book. Where do you think its share will be at the end of the current financial year?

We will go more granular in our retail liabilities strategy and that should serve two purposes: stickiness and low cost. We are more focused on delivering value to the customers in the form of customer service and products that will be the need for each segment, and we want to gain customer loyalty in this segment so that is where our focus is. Also, the aspiring middle class [is] an area we will be focusing on, and we have various segments like senior citizens, small traders, and manufacturers, so we will be introducing value-added products for these segments.

As you move gradually towards non-micro finance loans, till when will you be able to maintain net interest margin (NIM) at 8.1%?

NIMs are currently subdued as GNPA are high. Actual yields in businesses are intact. Over the next few years, with change in business mix, there will be some reduction in overall yield. However, current NIMs are not comparable due to derecognition of interest income on GNPA pool of 11.8%.

You spoke about higher bad loans. Do you think that GNPAs have peaked at 11.8% and what is your view on asset quality in FY22?

Collections have picked up well. We are focused on reducing PAR (portfolio at risk) flow to higher buckets, collections from restructured and NPA pool, further increasing overall collections. With this context, we believe things in H2 (Oct-March) would be better on the credit quality front.

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