Category: Banking & Finance

Our Bureau

To protect Airtel customers from the growing incidents of online payment frauds, Airtel Payments Bank has launched ‘Airtel Safe Pay’, a safe way to pay digitally.

With ‘Airtel Safe Pay’, Airtel customers making UPI or net banking-based payments through Airtel Payments Bank, no longer have to worry about money flowing out of their accounts without their explicit consent.

An India-First innovation, ‘Airtel Safe Pay’ leverages Airtel’s ‘telco exclusive’ strength of network intelligence to provide an additional layer of payment validation, compared to the industry norm of two-factor authentication.

This offers the highest level of protection from potential frauds such as phishing, stolen credentials or passwords, and even phone cloning that catches customers unaware.

Anubrata Biswas, MD and CEO, Airtel Payments Bank, said in a statement: “As digital payments become the norm, especially in the post-pandemic world, we also have to solve for the challenge of frauds that are growing rapidly. We are happy to leverage Airtel’s core telco strengths to bring to market this unique capability that ensures that our customers have full control over their transactions. This sets a new benchmark in the Indian digital payments space by making security paramount.”

Adarsh Nair, Chief Product Officer, Bharti Airtel, said: “Airtel Safe Pay is yet another innovation where our network and digital platforms combine to solve a unique market problem. At Airtel, we are taking the lead in offering the most secure digital payments platforms to our users and making sure that the customer is always in control without a worry about rogue transactions.”

Using ‘Airtel Safe Pay’, Airtel Payments Bank customers can make secure digital payments across millions of merchants, online retailers and utilities, and even send money.

Customers can open an Airtel Payments Bank account within few minutes with just a video call from the Airtel Thanks app and enjoy a range of benefits while they make fully secure digital payments.

Mutual fund exposure to the debt instruments of non-banking finance companies (NBFCs), which was on a declining trend, has witnessed a slight uptick at the end of the third quarter of the current fiscal.

Amid underlying asset quality concerns and risk aversion due to a spate of high-profile defaults, mutual funds have been cutting down their exposure to the debt instruments of non-banking lenders over the last two years.

From a combined exposure of ₹2.65-lakh crore to corporate debt (bonds and NCDs) and Commercial Papers (CPs) of NBFCs in July 2018, mutual funds’ exposure to these instruments fell to ₹1.33-lakh crore as of April 2020.

High-profile defaults

A series of high-profile defaults starting with IL&FS, followed by DHFL, Altico Capital, Reliance Home & Commercial Finance and Reliance Capital, have heightened the risk aversion among debt mutual funds and asset management companies (AMCs) towards NBFC debt instruments.

In its latest ‘Report on Trend and Progress of Banking in India 2019-20’, the Reserve Bank of India said: “NBFCs mobilise resources largely via debentures and bank borrowings. With the IL&FS default and the related downgrade cascade, market access shrank and NBFCs’ reliance on banks for funds continued to rise.”

According to the report, bank borrowings of NBFCs on a year-on-year basis grew by 13 per cent to ₹7.08-lakh crore as on March 2020 from ₹6.26-lakh crore a year ago. On the other hand, NBFC fundraising through commercial papers fell by 56 per cent to ₹89,065 crore (₹1.59-lakh crore) during the same period.

“In 2020-21 (up to September), market confidence revived and NBFCs’ borrowings from banks and FIs accelerated, buoyed by the various policy measures taken by the Reserve Bank and the government to combat Covid-19 impact,” the RBI added.

As per latest data, mutual fund exposure to NBFC debt instruments increased to ₹1.47-lakh crore as of December 2020 against ₹1.33-lakh crore as of April. Within this, exposure to bonds marginally dipped to ₹89,410 crore as of December 2020 (from ₹89,678 crore in April), while exposure to commercial paper increased to ₹58,079 crore (₹44,096 crore) during the same period.

However, the combined exposure of ₹1.47-lakh crore as of December 2020 is still lower than the ₹1.64-lakh crore recorded in December 2019 and ₹2.30-lakh crore in December 2018.

According to CARE Ratings’ debt market update, the overall commercial paper issuances (as per the RBI) in December 2020 rose to ₹1.89-lakh crore, which is 5 per cent higher than the corresponding month last year. Financial services / investment sector alone accounts for 23 per cent.

“The cost of borrowing via commercial paper fell to 3.35 per cent in December by 11 bps lower than the previous month and 2.15 per cent than the corresponding period last year. There has been a broad-base decline in the cost of borrowings across NBFCs, HFCs, AIFs and non-NBFC categories on a month-on-month basis,” the report added.

Federal Bank reported an 8 per cent decline in third quarter standalone net profit at ₹404 crore against ₹441 crore in the year-ago quarter.

The bottomline was weighed down by a 161 per cent year-on-year (y-o-y) jump in provisions, including towards loan loss and standard accounts, at ₹421 crore (₹161 crore in the year-ago period).

Net interest income/ NII (difference between interest earned and interest expended) was up 24 per cent y-o-y to ₹1,437 crore (₹1,155 crore).

Other income, including fee income and profit on sale of securities, increased by 18 per cent to ₹482 crore (₹408 crore).

Credit growth

Shyam Srinivasan, MD and CEO, said the 24 per cent growth in NII came on the back of a 6 per cent credit growth, indicating that interest income streams are well-structured.

Gross non-performing assets (NPAs) declined to 2.71 per cent of gross advances against 2.84 per cent in the preceding quarter.

Net NPA position improved to 0.60 per cent of net advances against 0.99 per cent in the preceding quarter.

Including the proforma slippages (whereby the Supreme Court directed banks that the accounts that were not declared NPA till August 31, 2020, shall not be declared NPA till further orders), GNPA and NNPA would have been 3.38 per cent and 1.14 per cent, respectively, in the reporting quarter.

Ashutosh Khajuria, ED and CFO, said the bank has made 15 per cent provision for the proforma slippages as per IRAC (Income Recognition, Asset Classification) norms.

Srinivasan observed that against the initial expectation of accounts aggregating about ₹3,500 crore getting restructured in FY21, the bank now expects only about half this amount to get restructured.

Total advances grew 6 per cent y-o-y to ₹1,28,180 crore. This came on the back of 16 per cent growth in retail advances (with gold loans jumping 67 per cent); business banking (13 per cent); agriculture (24 per cent); and commercial banking (8 per cent). Corporate advances, however, de-grew 7 per cent.

Total deposits increased by 12 per cent y-o-y to ₹1,61,670 crore. The proportion of low-cost CASA (current account, savings account) deposits increased to 34 per cent of total deposits from 31 per cent a year ago.