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Piramal Capital and Housing Finance on Tuesday announced the appointment of Saurabh Mittal as Chief Technology Officer of its retail finance business.
“Mittal will lead technology strategy towards building a world-class tech and artificial intelligence (AI)-led lending business, creating a cloud-native cutting-edge tech-stack,” the company said in a statement.
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India Ratings and Research (Ind-Ra) has maintained an overall negative outlook on the microfinance sector for FY22.
While the credit rating agency has maintained a ‘stable’ outlook on large non-bank microfinance institutions/MFIs (with assets under management/AUM of more that ₹5,000 crore), the outlook on small to mid-sized non-bank MFIs (including those with over 50 per cent of AUM in microfinance) continues to be ‘negative’ for FY22.
Ind-Ra reasoned that the negative outlook for small to mid non-bank MFIs is in view of the challenges being faced by them in raising funds and capital and managing credit costs that could emerge from urban regions post Covid-19 and Assam/West Bengal-focussed MFIs.
Furthermore, nine States, including West Bengal and Assam, are expected to go into State elections in FY22, and the resultant political risk could be a large overhang on the sector.
While collections have picked-up, especially in rural areas, they continue to lag in urban regions, the agency said in a statement.
Large MFIs have been able to raise funding, especially since Q2 FY21, aided by easing liquidity and policy measures, while fund raising has been slow for mid-smaller ones (AUM less than ₹2,000 crore), said Jindal Haria, Director, Ind-Ra.
The agency assessed that the largest MFIs have a substantial rural exposure where the worst-case eventual credit cost expectations of 4 per cent to 8 per cent (on March 2020 portfolio) are lower than the expected pre-provision operating profit (PPOP) of 6 per cent to 9 per cent for FY21; for others, the range of credit costs could be higher.
While the outlook had already turned negative for MFIs in the beginning of April 2020 due to the lockdown, Ind-Ra also considered that 60 per cent to 70 per cent of the borrowers of most MFIs are in the essential goods and services segments and, hence, the initial recovery could be fairly quick.
Overall, Ind-Ra had estimated that at least 10 per cent to 15 per cent of the portfolio would be difficult to recover. As expected, the pace of collections has picked-up speedily since Q2 FY21 across the country.
The agency observed that for entities where there is significant exposure to urban regions and / or to West Bengal and Assam (where the easing of lockdowns has been slow), collections are lower at 80 per cent to 90 per cent of pre-Covid levels, while the rates have rebounded to 90 per cent to 95 per cent for others.
Two to six per cent of the clients are such that they are in overdue, but paying delayed equated monthly installments (EMIs) in partial or full and could have limited loss given defaults. Reported collection figures seem optically higher on account of the lower delinquencies in post Q1 FY21 disbursements and denominator effect, the agency said.
Ind-Ra said it is witnessing lower leverage ratios, higher capital levels, moderate growth than in the past (where large MFIs have grown over 50 per cent), emphasis on rural penetration, higher proportion of cash on-balance sheet and / liquid securities, and surplus asset and liabilities especially for large MFIs.
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PhonePe said it continues to maintain its market leadership with 97 crore UPI transactions processed in February. In all, it processed 107 crore transactions across UPI, cards and wallets last month.
“PhonePe processed more than a billion transactions for the third consecutive month in February and continues to lead the digital payments market across UPI, credit and debit card and wallets in India,” the company said in a statement.
It attributed its growth to the rapid expansion in offline payments across Tier 2, Tier 3 cities, having already digitised over 17.5 million kiranas.
“The company had previously announced its plans to digitise 25 million kiranas by the end of 2021,” it said.
As many as 229 crore transactions worth ₹4.25 lakh crore were processed through the Unified Payments Interface in February this year, according to data released by the National Payments Corporation of India on March 1.
“I am very proud to report that PhonePe is leading across all core industry metrics – active users, active merchant, total transactions and TPV,” said Sameer Nigam, Founder and CEO, PhonePe.
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UPI transactions had exited 2020 with the Rs 4-lakh-crore value mark in December.
Unified Payments Interface (UPI) transaction volume and value have witnessed a contraction in February 2021 — the first time since April last year. From 2302.73 million transactions involving Rs 4,31,181.89 crore processed in January 2021, the number of transactions declined to 2,292.90 million worth Rs 4,25,062.76 crore in February 2021, according to the data from the National Payments Corporation of India (NPCI). UPI transactions in April last year had declined to 999.57 million amounting to Rs 1,51,140.66 crore from 1,246.84 million transactions worth Rs 2,06,462.31 crore in the preceding month.
However, the year-on-year growth in UPI transactions stood at 73 per cent in February 2021 even as the value nearly doubled by 91 per cent. February 2020 volume stood at 1,325.69 million transactions worth Rs 2,22,516.95 crore. The number of banks going live on UPI also increased from 146 in February 2020 to 213 in February 2020. UPI transactions had ended 2020 on a high note with the total value storming past the Rs 4-lakh-crore mark in December to Rs 4.16 lakh crore across 2,234.16 million transactions.
While the NPCI is yet to release bank and app-wise data for their February UPI transactions, Walmart-owned PhonePe had remained the leading UPI-app in terms of volume and value in January 2021. The company had processed 968.72 million transactions involving nearly Rs 1.92 lakh crore. In fact, PhonePe’s volume was over 100 million transactions higher than Google Pay’s 853.53 million transactions worth Rs 1.77 lakh crore. On the other hand, Paytm Payments Bank had remained the distant third player with a volume of 332.69 million worth Rs 37,845.76 crore. The combined transaction volume of the three leading UPI apps stood at 93.5 per cent share of the total January volume of 2,302.73 million while the value share stood at 94.5 per cent of Rs 4.31 lakh crore.
Importantly, among India’s top 30 UPI remitter banks witnessing UPI transaction failures due to technical reasons, public sector lender Union Bank of India had the highest failure in January. From 10.75 per cent technical decline (TD) in December, the failure rate jumped to 12.89 per cent in January for Union Bank of India. Andhra Bank and Indian Bank recorded the second and third highest TD rate of 10.40 per cent and 9.83 per cent respectively in January.
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However, the ballooning of bad loans by big corporates and the opening up of other lending avenues have turned tables on India Inc.
Credit to industry contracted by 1.3 per cent in January 2021 as compared to 2.5 per cent growth in January 2020 mainly due to contraction in credit to large industries by 2.5 per cent (2.8 per cent growth in January 2020). The outstanding bank credit to large industries declined by Rs 59,610 crore on a year-on-year basis to Rs 22.78 lakh crore as on January 29, 2021, according to the latest RBI data.
So what makes banks shun large corporates?
1. The binding constraint for lending has not been liquidity or interest rates, but risk aversion by bankers, who have been burnt in episodes like DHFL, HDIL, where thousands of crores went kaput.
2. Indian banks are already saddled with one of the world’s worst bad-loan ratios, and are naturally reluctant to add to those risks.
3. Economic activity is still in the doldrums, though it is showing signs of improvement of late, which makes risk assessment difficult.
4. Fresh slippages in the December quarter have risen sequentially, with the top ten lenders by the size of their loan book, adding close to Rs 80,000 crore in slippages during the December quarter.
5. Banks have other avenues to lend. Disbursements under the emergency credit line guarantee scheme was at Rs 1.6 lakh crore, and banks deployed around at Rs 1.4 lakh crore through the targeted long-term repo operation and partial credit guarantee scheme, which served as credit substitutes. These credit is guaranteed by the government and less risky.
6. Fear of prosecution of bank officials if the credit decision goes wrong has also kept banks away from lending huge amounts to corporates.
7. Long gestation periods, the uncertainty of returns and cost overruns that saw fortunes of many top corporate houses dwindle is also keeping banks away.
8. Having burnt their fingers by lending astronomical amounts to large business groups, lenders such as YES Bank intend to stay away from large corporate businesses and rebuild loan book in the mid- and small-corporate segment.
9. Also, there are not enough opportunities as the corporate sector, which account for 49% of the overall bank credit, has put their capital expenditure plans on the back burner.
10. Success of the likes of HDFC Bank in building retail loans has drawn other banks to it. Retail loans are typically secured and risk is evenly spread.
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The non-food bank credit grew at 5.7% in January 2021 as against an increase of 8.5 per cent in the same month last year, according to RBI data.
As on February 12, outstanding bank loans stood at over Rs 107 lakh crore, which was up 6.6% on year. However, on a fortnightly basis, outstanding loans fell by Rs 1,040 crore between January 29 and February 12.
The contraction
Loans to industry contracted by 1.3% in the reporting month as compared to 2.5%growth in the same period last year, mainly due to contraction in credit to large industries, the data showed.
Credit growth to the services sector decelerated year-on-year moderately to 8.4% in January 2021 from 8.9%.
However, credit to transport operators and trade continued to perform well during the month, registering accelerated growth.
Personal loans growth decelerated by 9.1% in January 2021 compared to 16.9% a year ago, the data showed.
Deposits
However, deposits are going strong as people tend to save money during uncertain times.
As on February 12, bank deposits stood at nearly Rs 148 lakh crore, up 11.8% on year, while investment by banks was 17.9% higher at close to Rs 45 lakh crore.
Due to lower credit demand, banks were forced to park their surplus deposits in investments such as government bonds and corporate debt papers.
Why the drop?
Experts say credit growth has been supported for the last few months by retail loans, especially home loans, along with disbursements to micro, small and medium enterprises under the government’s Emergency Credit Line Guarantee Scheme.
However, companies have restricted their borrowing from banks and some are tapping the bond market for their credit requirements.
Also, the availability of low-cost funds under the RBI’s targeted long-term operations has hit credit growth.
According to CRISIL Ratings, corporate credit growth is likely to contract this financial year as the companies have put capital expenditure on the back burner.
The silver lining
Bank credit is expected to grow at a higher pace during the next fiscal by at least 9% to 10%. This is in contrast to the bank credit growth which was seen rising at around 4% to 5%, despite the Covid-induced contraction.
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Kotak Mahindra Bank has announced a further reduction in its home loan interest rates by 10 basis points to 6.65 per cent per annum. This came into effect from March 1.
“This is a special rate that is applicable till March 31, 2021 and is the lowest rate in the home loan market,” the bank said in a statement, adding that the rate is applicable across all loan amounts.
Ambuj Chandna, President, Consumer Assets, Kotak Mahindra Bank said, “Kotak continues to set the pace as the price leader in the home loan market and we are delighted to offer consumers a special year-end bonus in the form of even lower home loan interest rates. This is indeed the best time to buy a home.”
Earlier on Monday, State Bank of India had cut rates by up to 70 basis points with interest rates starting from 6.70 per cent onwards till March 31, 2021.
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Hyderabad, March 2
Telangana Grameena Bank (TGB) and Andhra Pradesh Grameena Vikas Bank (APGVB) have launched digital savings account opening facility through Video-Know Your Customer (KYC).
Formally launching the feature virtually, Dinesh Kumar Khara, Chairman, State Bank Group, said regional rural banks (RRBs) have the skill set and ability to adopt new technologies.
The adoption of new technologies such as video-KYC is a reflection of the ‘progressive’ thinking of RRBs, he added.
Both banks, sponsored by SBI, will change the complexion of rural economy and make the parent bank ‘proud’, the SBI Chairman said.
With this, TGB and APGVB have become the first among RRBs in the country to adopt state-of-the-art technologies having full security features for zero contact onboarding of customers, which are at par with commercial banks.
According to V Arvind, Chairman, TGB, with this new facility, RRBs will be able to further increase their CASA portfolio.
TGB now operates in 18 districts in Telangana while APGVB has presence in 19 districts in Telangana and five districts in Andhra Pradesh.
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The link associated with the text messages redirects the user to a fake website and on the landing page, the user is asked to submit personal information along with sensitive financial details like card number, expiry date, CVV and Mpin in a ‘State Bank of India Fill Your Details’ form.
According to the investigation by New Delhi-based think tank CyberPeace Foundation along with Autobot Infosec Private Ltd, the website collects data directly without any verification and is registered by a third party instead of having the registrant organisation name of State Bank of India, making it all the more suspicious.
“Moreover, according to SBI, they never communicate with their customers via SMS or emails containing links with regard to the user’s account. Any reputed banking entity also does not use WordPress like CMS technologies on their official website for security reasons,” the foundation said.
The personal information sought on the malicious website is name, registered mobile number, email, email password and date of birth.
After the form is submitted, the user is directed to a “thank you” page.
“The domain name of the website can be traced to India, and the registrant state was found to be Tamil Nadu,” the report mentioned.
According to the report, it was observed that the form takes user inputs without performing basic validation of data type.
For example, the registered mobile number field, which should only accept numerical values also accepts text input. This can also be confirmed from the source code, where the input type for the field is mentioned as ‘text’ instead of ‘number’ or ‘tel’.
“The email password field shows the entered password in clear text instead of keeping the characters hidden. A similar source code observation is noted,” it added.
“The card number field accepts an infinite number of digits instead of only 16 digits, which SBI cards usually have. All these instances of negligence clearly indicate bad coding practice,” the foundation said.
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Rao’s appointment in the Central Bank of India will be effective from the date of assumption of office on or after March 1, 2021, or until further orders, whichever is earlier, said the lender.
“He ceases to be the Executive Director of Canara Bank with effect from March 1, 2021,” Canara Bank said.
In May last year, the Banks Board Bureau had recommended Rao to be the new MD & CEO of Central Bank of India.
Rao’s appointment is in lieu of M D Pallav Mohapatra, who retired as the MD & CEO of Central Bank of India on February 28, 2021.
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