Category: Banking & Finance

Indian women taking more home loans: CRIF High Mark

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Indian women are availing more credit in the form of home loans (HL) compared to personal loans (PL) and auto loans (AL), according to an analysis by credit information bureau CRIF High Mark.

Further, their average home loan and auto loan ticket size is higher vis-a-vis their male counterparts.

As of December-end 2020, of the ₹20.6-lakh crore home loan (HL) market, 29 per cent was accounted for by women vis-a-vis 16 per cent each in the case of personal loans (market size: ₹5.95-lakh crore) and auto loans (₹4.58-lakh crore), according to a CRIF study.

The average HL ticket size for women was higher at ₹16.69 lakh (₹16.38 lakh as of December-end 2019) against ₹14.71 lakh (₹14.45 lakh) for men.

The average AL ticket size for women was higher at ₹4.90 lakh (₹4.79 lakh as of December-end 2019) against ₹4.55 lakh (₹4.46 lakh) for men.

However, the average PL ticket size for women was lower at ₹1.59 lakh (₹1.68 lakh as of December-end 2019) against ₹1.61 lakh (₹1.79 lakh) for men.

Distribution of loans

In calendar year 2020, women in the age group of 26-35 accounted for 40.49 per cent of the total loans disbursed (41.10 per cent in 2019), followed by those in the 36-50 age bracket (34.75 per cent vs 34.86 per cent), 22-25 age bracket (10.47 per cent vs 10.55 per cent) and 51-60 age bracket (9.49 per cent vs 8.74 per cent).

The bureau observed that the share of loans availed by younger women borrowers has become two times to 10 per cent intwo years.

CRIF said 6.26 crore women borrowers have a retail credit footprint, accounting for 23 per cent of the overall 28.93 crore retail borrower base.

Active loans

Active personal loans to women borrowers spiked by 23 per cent year-on-year (y-o-y) as of December-end 2020 to 64.82 lakh (52.79 lakh as of December-end 2019), while that for home loans increased by 5 per cent y-o-y to 43.54 lakh (41.59 lakh).

Active auto loans to women borrowers have reduced by 4 per cent y-o-y to 18.18 lakh (19.02 lakh).

CRIF said women borrowers from southern States have higher credit book size compared to western and northern States.

While Maharashtra retains the top position when it comes to women home loan borrowers, with an outstanding portfolio of ₹1,37,845 crore (₹1,31,591 crore), the book size of home loans availed by women in Karnataka (₹65,012 crore vs ₹60,731 crore) has surpassed that of Tamil Nadu (₹65,005 crore vs ₹ 61,215 crore) in one year.

In the personal loans segment, Tamil Nadu retains the top position, with a female portfolio outstanding of ₹12,993 crore (₹10,908 crore), followed by Maharashtra (₹11,602 crore vs ₹10,259 crore) and Karnataka (₹8,869 crore vs ₹7,691 crore).

In the auto loans segment, Maharashtra retains the top position, with a female portfolio outstanding of ₹7,308 crore (₹7,681 crore), followed by Karnataka (₹6,906 crore vs ₹7,076 crore) and Tamil Nadu (₹6,407 crore vs ₹6,927 crore).

Loans during pandemic

CRIF said a total of 1.8 crore loans (to both male and female) – split into 18 lakh auto loans, 15 lakh home loans and 1.5 crore personal loans – were given out in the first three quarters of FY21.

This was nearly 40 per cent lower than the volume of loans disbursed in the first three quarters of FY20at 2.97 crore.

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IBA may seek clarity on whether banks can be part of both NPCI, NUE

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The Indian Banks’ Association (IBA) may seek regulatory clarity on whether banks already holding stake in the National Payments Corporation of India (NPCI) can be part of a consortia for setting up a New Umbrella Entity (NUE) for retail payment systems.

Though NPCI, India’s only umbrella organisation for operating retail payments and settlement systems, is a ‘not for profit’ company under Section 8 of Companies Act 2013 and NUE will in all probability, be a ‘for-profit’ company, banks want to be sure that the regulator has no objection to them holding stake in two organisations in the same line of business.

Also read: Umbrella entity for retail payments: Race for licence gathers momentum

One school of thought is against ‘for profit’ entities getting into the umbrella retail payment and settlement space due to concerns that the consumer may end up paying more than what he is currently paying for availing digital banking services.

However, another school of thought is of the view that digital banking services could improve further just like it happened after private players entered the telecom sector.

NPCI has 10 banks as shareholders with more than 5 per cent stake. Bank of Baroda is the single largest shareholder with 9.592 per cent stake (this includes the shareholding of erstwhile Dena Bank and Vijaya Bank).

State Bank of India, Union Bank of India, Bank of India, Punjab National Bank, Canara Bank, ICICI Bank, HDFC Bank, HSBC, and Citibank have 7.47 per cent stake each in NPCI.

These 10 banks collectively held 76.822 per cent stake in NPCI as at March-end 2020.

Proposals in the works

Significantly, several of these banks are working out proposals and plan to apply to the RBI for an NUE license.

State Bank of India is a key player that is planning to apply for a license. Sources said the idea is to take forward its mobile banking YONO app to the next level of payments. This could possibly be in a consortium with Bank of Baroda.

Meanwhile, HDFC Bank and Kotak Mahindra Bank are set to work in a consortium with Tata Sons and Mastercard to apply for a NUE license. ICICI Bank and Axis Bank are also working with Amazon and readying plans.

Also read: New umbrella entity for retail payments: RBI extends timeline to make application up to March 31

Another consortium led by Jio Platforms, a majority-owned subsidiary of Reliance Industries, is also in the race to set up a NUE.

According to industry watchers, at least half a dozen consortia are expected to apply and about three licenses may be given out.

“But applications are still in the process of being finalised. It is unlikely that any license will be issued until the end of the year or early 2022,” noted a person following the developments.

Many players believe that setting up more such entities will help further leverage digital payments and increase their penetration and it would not be fair to compare them with NPCI, which has spearheaded the payments transformation.

The deadline for filing applications with the RBI is March 31.

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Symbo Platform raises $9.4 million in Series A funding

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Insurtech start-up Symbo Platform on Thursday announced the completion of a $9.4-million funding round.

This was led by CreditEase Fintech Investment Fund and San Francisco-based investment firm Think Investments, with participation from existing investors Integra Partners, Insignia Ventures and AJ Capital, it said in a statement.

“With the proceeds of this round, Symbo intends to continue investing in its core technology and leadership team to bring its offerings to scale,” it said, adding that the key areas of investment will be recruitment across technology and product functions along with senior business development hires in Singapore, Malaysia and Indonesia.

A large part of the funds has also been earmarked for investment into Symbo’s Indian affiliate.

“The funding will be used to strengthen our technology and expand our agent and partner footprint so we can continue to drive insurance penetration in the country,” said Anik Jain, Co-founder and CEO, Symbo India Insurance Broking.

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PSB mergers increase auditor workload, seek more hands, BFSI News, ET BFSI

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Auditors at several state-owned banks have asked the Reserve Bank of India (RBI) to increase the number of agencies empanelled to conduct audits citing unprecedented increase in workload and number of certificates to be issued by statutory central and branch auditors in light of the merger of several state-run banks last year, according to an ET report.

Auditors have argued that increasing the manpower for inspecting bank books is important to maintain the quality of the exercise.
“The huge work allocated to statutory central auditors and statutory branch auditors in respect of various state-run banks requires huge manpower deployment of partners and paid chartered accountants. This itself justifies appointing a minimum of six such auditors,” said Prakash Sharma, vice chairman, Institute of Chartered Accountants of India (ICAI), according to the report.

Quality aspect

Sharma said the rise in services of banks and their branch count, especially for merged banks, requires enhancing the number of auditors to ensure good quality inspections.

As per the present rules, the ICAI prepares a list of eligible auditors and audit firms, subject to the regulator’s scrutiny. RBI forwards the final list of all eligible auditors to PSBs for selection.

The merger

Under the government’s mega consolidation plan, Oriental Bank of Commerce and United Bank of India merged into Punjab National Bank; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.

Officers have also requested the RBI to consider specifying the minimum number of auditors to be appointed rather than leaving the choice to banks.

They have also sought a revision of audit fees given the rise in the scope of the audit, enhanced compliance requirements, security risks, new legislations, and the ever-changing policy landscape.

Intensive and time-consuming

Abhinav Sharma, partner, AVG & Associates, said that increasing regulatory oversight has already made branch-level audits intensive and time-consuming.

“Hence, post-merger of PSBs, audit completion of a higher number of branches will pose a challenge. For instance, PNB is working with five statutory auditors despite having the approval of six prior to the merger,” Sharma said.
Auditors have also sought proportionate increase in number of auditors.



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Razorpay announces 3rd largest ESOP sale of $10 million for 750 current, former employees

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Fintech unicorn Razorpay, on Thursday, announced its third ESOP (Employee Stock Ownership Plan) buyback program worth $10 million (₹73 crore) for its 750 employees.

All existing and former employees of Razorpay who hold vested stocks will be eligible to sell up to 33 per cent of their vested ESOP shares. Sequoia Capital India and GIC, two of Razorpay’s key investors will be the buyers involved in this development.

ESOP buybacks in the start-up industry have been a source of significant wealth creation for employees but it is not something that companies usually offer as an annual event. Razorpay is one of India’s youngest start-ups to have facilitated the ESOP buyback program consequently for the last three years.

The share sale is expected to benefit employees across roles – from team leaders to support executives to administrative staff. Razorpay’s 1,350 people team raised their $100 million Series D funding in October last year and the ESOP buyback plan is a reflection of the faith that the company and its employees have instilled in each other.

Also read: India attracted $2.7 billion in fintech investment in 2020: KPMG

“We’ve always said and believed that our employees are the reason for every success that we have had. They turned an unprecedented year into one of the strongest years for Razorpay. And this ESOP Buyback is our little way of giving back to the employees for their contribution and a form of wealth creation for all, as it is important for us to ensure that our employees also grow along with the company. Our current and former employees, even as young as 23, will be eligible for this incentive, irrespective of rank. The compensation will be rolled out to all our employees, be it software engineers, product managers, customer experience agents, or administrative staff. I believe there’s no better time than now to recognise the team for all their efforts and having trusted us in this journey,” said Harshil Mathur, CEO and co-founder, Razorpay.

Razorpay’s first liquidity event through ESOP encashment occurred in November 2018 for its 140 employees then. The transaction was done at a 50 per cent premium to the valuation. The second ESOP sale event occurred in November 2019, during which approximately 400 employees were eligible. To date, the company has awarded ESOPs to 1,000 employees, with current employees holding a majority share.

Also read: Mastercard and Razorpay partner to make digital payments more accessible for MSMEs and startups

Currently powering online payments for more than 5 million small and large businesses such as Facebook, IRCTC, CRED, Zerodha, Indigo among others, Razorpay has clocked in a healthy growth rate of 40-45 per cent month-on-month and is geared to increase its merchant count to 10 million by next year.

Razorpay registered 3X growth in payment volume through SMBs that went online for the first time during Covid in 2020.

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10 lakh customers of other banks using ICICI Bank’s mobile app

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As many as 10 lakh customers of other banks are using ICICI Bank’s revamped mobile banking app – ‘iMobile Pay’ and the private sector lender expects the number to double over the next two months.

“The bank has achieved the feat in a shade over three months after it made ‘iMobile Pay’ open for all to use, including those who are not its customers. Going by the encouraging response received by this unique initiative that offers interoperability to bank customers, ICICI Bank anticipates that the number is likely to double in two months,” it said in a statement on Thursday.

While the app has registered a good response in large metro cities like Mumbai, Delhi, Bengaluru and Chennai, other like Pune, Hyderabad, Ahmedabad, Jaipur, Lucknow, Patna, Indore, Ludhiana, Bhubaneswar, Guwahati, Agra, Kochi and Chandigarh have also contributed significantly to the growth of the number of users, ICICI Bank further said.

Also read: Private banks gear up to undertake govt business

“The objective of this endeavor was to offer customers of any bank the benefits of seamless payments and digital banking services through our app. We made it possible by leveraging NPCI’s interoperable infrastructure,” said Bijith Bhaskar, Head- Digital Channels & Partnership, ICICI Bank.

Users have especially liked the functionality of Pay to Contacts, which enables users to send money either to a mobile number or a UPI ID of their friends and contacts, to any payment app or a digital wallet.

Other services such a ‘Scan to Pay’, ‘Check Balance’ and ‘Bill Payments’ have also seen the maximum usage.

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Canara Bank, BFSI News, ET BFSI

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Public sector lender Canara Bank on Thursday said that banking services may get affected later this month due to the proposed strike by several bank unions.

“We have been informed by the Indian Banks’ Association (IBA) that the United Forum of Bank Unions (UFBU) has given a call for strike in the banking industry on March 15 and March 16, for issues relating to industry level and not for any bank-level issues,” Canara Bank said in a regulatory filing.

Canara Bank said it is taking necessary steps for smooth functioning of bank branches and offices on the days of the proposed strike.

“However, in the event of strike materialising, the functioning of the branches/offices may be impacted,” said the lender.

A host of bank unions have given a call for strike on March 15-16.

AIBEA, AIBOC, NCBE, AIBOA, BEFI, INBEF, IBOC, NOBW, NOBO and AINBOF are the bank unions that have given a call for strike against the proposed privatization of two state-owned lenders by the government.



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Bitcoin jumps above $50,000 in recovery from latest rout

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Bitcoin held gains above $50,000 in Asia trading on Thursday, putting the largest cryptocurrency back on track after steep losses last week with bullish momentum returning once again on more mainstream interest.

The digital token rose as much as 1.7 per cent and was trading at about $50,976 as of 11:14 am in Hong Kong on Thursday, according to data compiled by Bloomberg. The coin had surged as much as 11 per cent during the US trading Wednesday.

The cryptocurrency has been volatile with prices plunging 21 per cent last week before recovering with the earlier broad bounce back in global equities. On a technical basis, the GTI Global Strength Indicator, which detects trend fluctuations, has begun to curl upward, suggesting a bullish move for Bitcoin. The coin is up 13 per cent this week.

“With the return of the stimulus fueling activities in the US and elsewhere – this is very good for scarce assets such as Bitcoin,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lender.

Meanwhile, more big-name investors are backing crypto. Bloomberg reported late Tuesday that billionaire hedge-fund manager Marc Lasry and former US Commodity Futures Trading Commission Chairman Christopher Giancarlo have invested in crypto-asset and blockchain investment firm BlockTower Capital.

Bitcoin and other cryptocurrencies are also driving growing interest from mainstream investors in Canada, as the introduction of Bitcoin exchange-traded funds helped drive $5.2 billion in inflows in February, the second-highest month of such flows on record.

“Bitcoin is now, for the most part, steadily getting constant endorsements,” said Ed Moya, senior market analyst for OANDA. “You’re still in the early stages of this institutional interest and that’s why I think you’re probably going to have people become a lot more open minded to cryptos.”

The investments underscore a growing trend of institutional money flowing into the digital space, which is simultaneously gaining attention from regulators as the nascent industry seeks to carve out a place in mainstream finance. The outlook for the cryptocurrency industry is still under fierce debate. Proponents point to growing institutional adoption while critics say Bitcoin is a giant bubble destined to burst like its 2017 boom and bust cycle.

Regulators

On Tuesday, Gary Gensler, nominee for chairman of the US Securities and Exchange Commission, said that making sure crypto markets are free of fraud and manipulation is a challenge for the agency.

Gensler, who served as a CFTC chairman during the Obama administration, has been viewed as a strong advocate for digital assets. He serves as a senior adviser to the MIT Media Lab Digital Currency Initiative and teaches about blockchain technology and digital currencies.

“While the Bitcoin market reacted quickly to his comments, Gensler was largely positive about Bitcoin and cryptocurrencies,” said John Wu, president of blockchain technology firm Ava Labs. “I’m hopeful the new administration will help foster innovation in blockchains, cryptocurrencies and digital assets, instead of stifling it.”

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CARE appoints Sachin Gupta as Chief Rating Officer

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Our Bureau

CARE Ratings, on Wednesday, announced the appointment of Sachin Gupta as its Chief Rating Officer.

“Gupta will lead the rating analytics team and will endeavour to take forward CARE Ratings’ mission of continuously improving the analytical rigour driven also through advanced technological interventions,” it said in a statement.

He was earlier at Crisil where he was a Senior Director and managed the Corporate and Infra Ratings.

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Marine insurance: IRDAI in talks with INSA to set up P&I club

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The Insurance Regulatory and Development Authority of India (IRDAI) is in talks with Indian National Shipowners Association (INSA) to develop a protection and indemnity insurance club (P&I club) in India, a move that will support the development of a marine insurance market in India, said insurance sector players at a Maritime India Summit.

Marine premium formed about 2 per cent of the gross domestic premium in FY20. India has been looking to put in place a P&I club for a few years now.

A P&I club is a mutual insurance association that enables risk pooling among members and provides information and representation for its members. A P& I club provides cover for open-ended risks (such as war risk, environmental damage such as oil spills and pollution) that traditional insurers are reluctant to insure. P&I clubs are structures where shipowners, operators and seafarers pool in money that can be used to help shipowners or seafarers in challenging times. These days even freight forwarders and warehouse operators are able to join P&I clubs in overseas jurisdictions.

Digital push

Meanwhile, the General Insurance Council is set to automate the re-insurance payment system, a first such initiative globally, making India the first country to digitise reinsurance, said Kuhu Mohapatra, DGM-Marine Underwriter, New India Assurance Company. Most of the re-insurance work and processes are paper-based globally, she pointed out, adding that Singapore is making an effort in the same direction.

While India accounts for a low share of marine insurance globally, its software prowess could be used to give India the necessary leg-up in the area, pointed out IRDAI.

Subhash Chandra Khuntia, Chairman, IRDAI, said that primary insurance (for marine sector) can grow if there is presence of reinsurance and called for starting a protection and indemnity club in India. He also sought support from shipowners for information sharing regarding Indian and foreign vessels and insurance pooling initiatives such as salvage association and P&I clubs. Salvage is the process of recovering cargo after a ship wreck.

Growth of this area depends on the availability of ecosystem, pointed out Arti Mathur, GM, Oriental Insurance Company. Marine insurance business in India is in the range of 1.5-2 per cent, which further shrunk during the pandemic, Mathur added.

Gujarat International Finance Tec-City IFSC (International Financial Services Centre) can be a platform for such activities, pointed out experts.

As India looks to develop a robust marine insurance sector, challenges that need to be addressed include lack of P&I clubs (for covering risks like loss of lives) and lack of claims assessment expertise, said Mohapatra.

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