Category: Banking & Finance

Moratorium likely to raise banks’ losses from unsecured loans, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


With deteriorating financial conditions of borrowers, the performance of unsecured assets classes, including microfinance loans and unsecured business loans, is worsening.

“The performance of unsecured asset classes, such as microfinance loans, unsecured business loans and consumer loans, is worsening, given the borrower’s depleted financial cushions and the nature of these loans,” according to a report by India Ratings and Research.

The Reserve Bank of India‘s moratorium on repayment of loans has delayed the stress in these segments where delinquencies have not yet stabilised and higher loan losses are expected to materialise in FY22, it said.

Secured asset classes

For secured asset classes, the agency said, it has a stable performance outlook given the recovery in the economy in FY22.

The agency noted that vehicle loans — including loans for commercial vehicles, passenger vehicles and two-wheelers — have a stable asset performance outlook, given the pickup in economic activities witnessed in the second half of FY21.

“Secured business loans (principally loans against property) also has a stable asset performance outlook, due to the borrower’s higher propensity to repay,” the report said.

Digitisation

As per the report, digitisation initiatives are also expected to help with better portfolio monitoring and in reducing soft delinquencies. “The focus has shifted to building quality secured loan portfolios, upping process efficiency and automating customer follow-ups”.

It noted that recovery momentum and continued policy support in FY22 will be key for loan performance.

Indian securitisation transactions predominantly involve asset classes where the borrowers are either small and micro enterprises/ businesses, or belonging to low and middle-income households, it said.

Varied behaviour

Small business loans are expected to witness differentiated performances depending on the loan type, it said.

The report also said the severity of the impact of the pandemic on their income as well as the impact of the moratorium and fiscal measures on their credit behaviour is varied.

“Thus, the effectiveness and inclusiveness of government support schemes to improve the financial position of the end-borrowers is crucial and is a key monitorable,” it said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Bond yields are soaring; Will banks focus on Corporate loans?, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Corporates have been tapping the bond market and avoiding bank loans for the last few years as depressed yields kept borrowing costs lower as against the bank loan rates.

Banks were also wary to extend loans to the corporates but were happy to subscribe to highly rated corporate issuances.

Rising yields

However, after the rise in global bond yields and the government’s plan of borrowing a huge Rs 12 lakh crore, the yields on government bonds are rising for the last two months.

Since January, government bonds yields have surged by 35%. This is leading to a rise in yields of corporate bonds too with those on two-, three- and five-year bonds climbing 50-100 basis points.

With borrowing costs in the bond market rising, corporates are reducing the number of issuances. There has been an 18% month-on-month drop in issuances for February, according to Sebi data.

Banks shying away

Banks are also shying away from investing in bonds as rising yields spell mark-to-market losses as the bond prices go down as yields rise.

Banks have cut their investments in corporate bonds and debentures in the past two months by 3.5% with total investment in corporate bonds by banks down to Rs 5.64 lakh crore by February-end, according to RBI data.

Lower participation

On Tuesday, the corporate bond market saw lower participation with yields on bonds of 10-year maturity fell due to strong demand from long-term investors, mainly life insurance companies and a few pension and provident funds. However, yields on bonds maturing in three to five years remained steady as most investors were engaged in only requirement-based trade.

While it fell on year-on-year basis, the fundraising through a private placement of corporate bonds rose 12% month on month in February as some major public sector companies issued bonds to conclude their borrowings for the current fiscal. Also, some companies fearing a rise in yields stepped up their debt issuances.

Bank credit

Meanwhile, bank credit rose by 6.63 per cent to Rs 107.75 lakh crore in the fortnight ended February 26, according to RBI data.

In the fortnight ended February 28, 2020, bank credit stood at Rs 101.05 lakh crore, the recent data released by the Reserve Bank of India showed. Bank credit increased by 6.58 per cent to Rs 107.04 lakh crore in the previous fortnight ended February 12, 2021.

Thanks to RBI’s stance, banks are flush with liquidity and can offer home loans at low rates seen 15 years back.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

RBI imposes Rs 2 crore penalty on SBI, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) has imposed a penalty of Rs 2 crore on the State Bank of India.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” the central bank said in a release.

“The statutory inspection of SBI with reference to its financial position as on March 31, 2017, and March 31, 2018, and the Risk Assessment Reports pertaining thereto, and examination of the correspondence with the bank regarding payment of remuneration to its employees in the form of commission had revealed contravention of the provisions of the Act and specific directions issued by RBI.”

In furtherance to the same, notice was issued to SBI to explain why penalty should not be imposed on it for contravention of the provisions of the Act and directions issued by RBI.

“After considering the bank’s replies to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the aforesaid charges were substantiated and warranted imposition of monetary penalty,” the release said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

PhonePe captures over 42% of overall UPI P2M market share

Banking & Finance

[ad_1]

Read More/Less


With over 42 per cent of the UPI merchant (P2M) transactions, PhonePe said it has emerged as the largest player in the segment.

“PhonePe recently also emerged as the largest digital payments platform processing over 1.07 billion transactions across UPI, wallet, credit and debit cards,” it said in a statement, adding that this is due to the massive adoption it is seeing in Tier-4,5,6 towns and talukas and a deep focus on driving merchant acceptance in these geographies.

PhonePe to tap new revenue streams in financial services, consumer engagement

PhonePe is today accepted across 18 million kiranas in the country, it further said.

“Our leadership in the P2M space is due to an expansion of the market with more merchants using our platform in smaller towns,” said Vivek Lohcheb, Vice-President – Offline Business Development, PhonePe.

PhonePe maintains market leadership in digital payments

[ad_2]

CLICK HERE TO APPLY

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

Bank of Baroda bets on new digital platform to expand retail lending, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


State-owned Bank of Baroda (BoB) is making a bold move to expand its retail lending through a self made digital lending platform which assesses credit risk through varied public and private data points like bank account statement, tax statements and consumption trends.

Akhil Handa, head fintech and digital lending said the bank has already disbursed Rs 1000 crore through this new platform since it was launched at the end of November and expects half of the bank’s retail loans to be originated through this platform by the end of the fiscal ended March 2022.

BoB has offered 1.25 lakh loans so far, roughly 80% od which are personal loans. The personal loans are capped at Rs 50,000 and are currently offered to only the bank’s customers. Handa said BoB plans to increase the maximum ticket size to Rs 2 lakh and also offer the loans to non customers of the bank before the end of the month.

“The programme was targeted to a very narrow base when it was launched. We have 14 crore liability customers which we could look at by using their vintages like screens, balances and churns. We have now seen repayments in it for three to four months and it gives the confidence that its working fine. Of course we still have to season it but we are at a level that can be scaled up further,” Handa said.

The bank will use over 1200 data points and a 100 digital documents like income proofs, income tax returns and a bank statement which is mandatory.

“There are 50 external integrations like utility bills, mapping addresses and 50 internal integrations including fraud reports that we have done to built a data profile around the customer….It is a risk based dynamic approach…not everyone will be requested for everything…bank account statement will give us a purchase history, income profile, ability to repay…if I am unable to built some of those I will ask for more,” Handa said claiming that BoB is the first to use a completely digital lending for new to bank customers.

BoB’s push into retail comes even as the job and salary cuts caused by the Covid-19 pandemic has increased fears of loan defaults especially in the uncollateralised personal loans.

BoB CEO Sanjiv Chadha himself had warned about rising stress in retail and micro, small and medium enterprises (MSMEs) in a conference call following the bank’s third quarter results.

However, Handa the bank’s experience in the last three months makes him confident of these loans.
To be sure at just Rs 1000 crore the current loan book build through this platform is just above 1% of its Rs 1.16 lakh retail loan book.

However BoB also plans to launch new digital lending products for MSMEs over the next one month including loans up to Rs 10 lakh under the Mudra scheme and also gradually move all yearly MSME renewals online.

“We expect 50% of our retail origination and 25% to 30% of SME loans by amount to happen digitally by FY22,” Handa said. Currently about 18% of retail loans are done through this platform.

BoB’s move comes even as RBI has clampdown on non bank digital lending platforms cautioning the public against the use of “unauthorized” lending apps and reiterating that only RBI licensed banks and NBFCs can participate in lending activities.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

RBI imposes ₹2 crore penalty on SBI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2 crore on State Bank of India (SBI) for contravention of certain provisions of Section 10 of the Banking Regulation (BR) Act, 1949 and the central bank’s specific directions issued to the bank on payment of remuneration to employees in the form of commission.

Specifically, RBI has referred to contravention of section 10 (1) (b) (ii) of the BR Act, whereby no banking company shall employ or continue the employment of any person whose remuneration or part of the remuneration takes the form of commission or of a share in the profits of the company.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” per a central bank statement.

This penalty has been imposed in exercise of powers vested with RBI under the provisions of BR Act, it added.

RBI said the statutory inspection of the bank with reference to its financial position as on March 31, 2017 and March 31, 2018 and the Risk Assessment Reports (RARs) pertaining thereto, and examination of the correspondence with the bank regarding payment of remuneration to its employees in the form of commission, revealed, inter alia, contravention of the provisions of the Act and aforesaid specific directions issued by RBI.

In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for contravention of the provisions of the Act/ specific directions issued by RBI.

After considering the bank’s replies to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the aforesaid charges were substantiated and warranted imposition of monetary penalty, the statement said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Bank union strike severely disrupts banking services across the country, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The two-day strike by some 10 lakh bank employees, mostly from the public sector space, has severely disrupted banking services across the country, bank union leaders said. About 85 lakh cheques and other bank instruments were not cleared by bank branches in Mumbai alone on the first day of the strike as half a lakh bank employees joined the protest against the government move to privatise banks.

Almost all of the 8300 bank branches in West Bengal barring a few exceptions remained closed for the two days while about 90% of nearly 11,000 ATMs did not open their shutters, said Rajen Nagar, president of All India Bank Employees Association. United Forum of Bank Unions (UFBU), the umbrella organisation of nine bank unions, had called the strike.

UFBU said that instead of strengthening public sector banking, the present policies are aimed to weaken them, by starving them of the required capital, human resources, through disinvestment and proposed privatization.

“We demand strengthening of public sector banks, by adequate infusion of capital, human resources and strengthened statutory framework to recover the stressed assets,” UFBU’s West Bengal unit convenor Goutam Neogy said. Operating profit of all public sector banks grew 16.4% at Rs 174336 crore in fiscal 2019-20 despite an economic downturn showing the strength of these lenders. Their net profit however dwindled as the lenders had been required to provide aggressively against high non-performing assets.

The government had injected Rs 80,000 crore in 2017-18, Rs 1.06 lakh crore in 2018-19 and Rs 65,443 crore in 2019-20 in the banks it owns. The government has also budgeted to infuse another Rs 20,000 crore in weaker public sector banks, despite strains on government’s own finances.

“It’s not possible for the government to infuse capital every year while the capital is largely being used to cover bad loans. Therefore, new ways of raising capital is being looked at,” a senior banker said. The overall capital adequacy ratio for scheduled commercial banks stood at 14.8% as of March 2020, compared with 14.3% in March 2019. Capital adequacy for PSBs had improved 13% from 12.2% over the same period.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Banks put up Rs 5,140 crore of NPAs for sale in Q4FY21

Banking & Finance

[ad_1]

Read More/Less


In reply to a question raised by a member of the Lok Sabha, minister of state for finance Anurag Singh Thakur on Monday released data on retail stressed assets in the banking system.

Banks have put up non-performing assets (NPAs) worth at least Rs 5,140 crore for the sale to asset reconstruction companies (ARCs) during the current quarter as resolutions for some large assets failed and stress spilled into the retail segment throughout FY21.

Lenders typically ramp up bad loan sales during the last quarter of the year to clean up their balance sheets.

The list of assets being offered by banks is almost a ready reckoner of all that went wrong in the year of the Covid-19 outbreak. There are loan accounts where buyers pulled out of the resolution process due to their inability to carry out due diligence. This year has also been a unique one in that large pools of retail assets are being offered by banks, symptomatic of the broad-basing of stress as a result of falling incomes.

For instance, Bank of Baroda (BoB) and Karnataka Bank have put on the block their exposures to Coastal Energen and GVK Power (Goindwal Sahib), respectively. Both of these power assets are understood to have received bids last year from a foreign bank active in the Indian distressed assets space. The bank eventually withdrew its bids because it was unable to carry out due diligence of the assets. Quite a few road assets are also on sale, such as Srinagar Banihal Expressway, Thrissur Expressway and Madurai Tuticorin Expressways.

While banks have historically sold large NPAs to ARCs, this year they are looking for buyers for even smaller loans, including housing and education loans. IDBI Bank intends to sell 401 accounts on a portfolio basis, consisting of housing loans, loans against property (LAP), and mortgage loans with an aggregate gross principal outstanding of Rs 96.51 crore at a reserve price of Rs 39.46 crore.

Chennai-based Indian Overseas Bank (IOB) is offering a portfolio of education loans with an outstanding of Rs 304 crore. These are unsecured loans where the original sanctioned limit per borrower was up to Rs 7.50 lakh. Unlike other assets which are being offered on an all-cash basis, the education loan portfolio will be available on a 20% cash and 80% security receipt (SR) basis.

In reply to a question raised by a member of the Lok Sabha, minister of state for finance Anurag Singh Thakur on Monday released data on retail stressed assets in the banking system. The data suggest that some banks have seen a substantial increase in retail stress levels.

For instance, DCB Bank’s stressed retail advances as a share of all retail advances rose to 3.7% at the end of December 2020 from 1.9% at the end of March 2020. Over the same period, the ratio at HDFC Bank rose to 1.4% from 0.7%, at IDBI Bank to 2.5% from 1.3%, at IDFC First Bank to 2.3% from 1.8%, at IndusInd Bank to 4.2% from 2.5%, at Karur Vysya Bank to 5% from 2.2%, and at Punjab & Sind Bank to 9.7% from 5.9%.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Dynamic QR codes: Making payments simple and error-free

Banking & Finance

[ad_1]

Read More/Less


And essentially that helps a merchant in closing a transaction much easier and in a simplified manner, rather than relying on an SMS to be delivered.

Paytm, the Noida-based e-commerce payment system and financial technology company, has been the pioneer of driving static QR codes in the past five years. Today, it supports over 17 million merchants and is used by millions of individuals daily to pay for utilities, groceries, movie tickets, and more.

These static QR codes can be seen in even the smallest of shops. today. While that’s still a way for merchants to accept digital payments and at absolutely no cost, Paytm has been working on migrating to Dynamic QR codes along with IoT devices. Based on the feedback from merchants who upgraded from a Static QR code to a Dynamic QR code, Paytm started with the pilot three to four months back and rolled out 1,000 devices. It is looking to roll out another 5,000 devices in the market to gain more consumer insights.

“Choosing contactless payment options has all the more accentuated during the pandemic. The most common form being, paying through mobile phones,” says Sachin Ranglani, vice-president, Paytm. “So, while that’s happening, the merchants are looking at seamless ways to accept digital payment. They are looking for solutions which not only enrich their experience but also are affordable to accept and offer mechanisms to consumers to pay through digital ways. So, this is where IoT devices come into play when there’s a strong market need that we can build on.”

Basically, it’s an elementary device—enter the amount, and it shows the dynamic QR code and has the sound notification. It’s a very simple and easy-to-use device. There is a calculator-like keypad on the top of the device that lets the merchant enter any particular number for accepting a payment. Once you have done that, a simple button-press generates the QR code, and that QR code can be used for accepting the payment, and for payment both sound and visual confirmation is there.

And essentially that helps a merchant in closing a transaction much easier and in a simplified manner, rather than relying on an SMS to be delivered.

“The reason we did this is because we got feedback from the market with respect to static QR codes wherein consumers, either while entering the amount would make mistakes or some would mimic a transaction and not actually pay or pay the wrong amount.

In this case, the merchant enters the amount and is in control of the amount,” explains Ranglani. The second reason is that once the payment transaction is done, the device emits a sound-based notification, which basically states how much amount has been paid by a consumer, which helps in building confidence about the payment particulars.

Paytm has worked closely with technology provider AWS for building these IoT devices. Given the fact that AWS database offers a very scalable and simple IoT SDK, Paytm chose to use it on the devices. AWS IoT Core is the core system that connects with these devices already present in the market. AWS tools such as Amazon CloudWatch and AWS CloudSearch help monitor any occurence on any of these devices when these are out in the market and a merchant is using it.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

RBI fines SBI for not following directions on employee pay

Banking & Finance

[ad_1]

Read More/Less


The regulator also carried out an examination of the correspondence with the bank regarding payment of remuneration to its employees in the form of commission to arrive at its decision.

The Reserve Bank of India on Tuesday said that it has imposed a monetary penalty of Rs 2 crore on State Bank of India (SBI) for contravention of some provisions of the Banking Regulation Act, 1949, and specific directions of the RBI issued to the bank on payment of remuneration to employees in the form of commission.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” the central bank said, without offering details of specific transactions.

The RBI said that the statutory inspection of the bank with reference to its financial position as on March 31, 2017, and March 31, 2018, and the risk assessment reports (RARs) pertaining to the same resulted in a discovery of the contravention. The regulator also carried out an examination of the correspondence with the bank regarding payment of remuneration to its employees in the form of commission to arrive at its decision.

After this, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for contravention of the provisions of the Act and specific directions issued by RBI. After considering the bank’s replies to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it, the RBI came to the conclusion that the charges were substantiated and warranted imposition of monetary penalty.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,
1 … 432 433 434 435 436 … 540