Category: Banking & Finance

Cops, BFSI News, ET BFSI

Banking & Finance

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Digging into the racket of procuring vehicle loan from the bank for ghost vehicles revealed that the fraudsters have duped at least three other banks apart from Yes Bank. Based on a complaint by Yes Bank officials, police have already booked 20 accused and arrested five on Saturday.

Senior police officials informed that the accused have adopted similar modus operandi to cheat ICICI Bank and an inquiry is underway. While police suspect that the gang had targeted two other private banks and their names will be declared only after investigation.

“From the preliminary investigation it was found that the accused have targeted Yes Bank, ICICI Bank and two other banks. The accused borrowed loans using forged papers and vehicle registration certificates (RC),” said police.

The accused have been booked for borrowing 53 loans amounting to a staggering Rs 8.64 crore from Yes Bank between 2016 to 2018. They initially paid instalments but after default in repayment of multiple loans the bank started an inquiry.

“With other banks the total amount of loan borrowed is less,” said an officer.

Manufacturer denied making of these vehicles
Investigation revealed that the accused got bus and trucks registered in Arunachal Pradesh (AP) using forged purchase and insurance papers. Later using these RCs, the accused borrowed loans from banks in Gujarat. Yes Bank officials contacted truck manufacturers TATA and Ashok Leyland for verification of the identification numbers, which they denied. “There could be involvement of bank officials as well when the loan was approved,” said police.

Financial frauds on cops’ radar
“We are doing a quick and in-depth investigation in financial frauds as these criminals siphon off a huge chunk of money in one attempt which is equal to the total value of thefts of loots reported in the city annually. We will immediately nail these crooks who target public money in banks or other victims,” said Ajay Tomar, city police commissioner.



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Finmin looks at BIC model after RBI raises concern over zero coupon bonds for PSBs recap, BFSI News, ET BFSI

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With the RBI raising concern over the issuance of zero coupon bonds for recapitalisation of public sector banks (PSBs), the Finance Ministry is examining other avenues for affordable capital infusion including setting up of a Bank Investment Company (BIC), sources said. Setting up a BIC as a holding company or a core investment company was suggested by the P J Nayak Committee in its report on ‘Governance of Boards of Banks in India’.

The report recommended transferring shares of the government in the banks to the BIC which would become the parent holding company of all these banks, as a result of this, all the PSBs would become ‘limited’ banks. BIC will be autonomous and it will have the power to appoint the board of directors and make other policy decisions about subsidiaries.

The idea of BIC, which will serve as a super holding company, was also discussed at the first Gyan Sangam bankers’ retreat organised in 2014, sources said, adding it was proposed that the holding company would look into the capital needs of banks and arrange funds for them without government support.

It would also look at alternative ways of raising capital such as the sale of non-voting shares in a bid to garner affordable capital.

With this in place, the dependence of PSBs on government support would also come down and ease fiscal pressure.

To save interest burden and ease the fiscal pressure, the government decided to issue zero-coupon bonds for meeting the capital needs of the banks.

The first test case of the new mechanism was a capital infusion of Rs 5,500 crore into Punjab & Sind Bank by issuing zero-coupon bonds of six different maturities last year. These special securities with tenure of 10-15 years are non-interest bearing and valued at par.

However, the Reserve Bank of India (RBI) expressed concerns over zero-coupon bonds for the recapitalisation of PSBs.

The RBI has raised some issues with regard to calculation of an effective capital infusion made in any bank through this instrument issued at par, the sources said.

Since such bonds usually are non-interest bearing but issued at a deep discount to the face value, it is difficult to ascertain net present value, they added.

As these special bonds are non-interest bearing and issued at par to a bank, it would be an investment, which would not earn any return but rather depreciate with each passing year.

Parliament had in September 2020 approved Rs 20,000 crore to be made available for the recapitalisation of PSBs. Of this, Rs 5,500 crore was issued to Punjab & Sind Bank and the Finance Ministry will take a call on the remaining Rs 14,500 crore during this quarter.

With mounting capital requirement owing to rising NPAs, the government resorted to recapitalisation bonds with a coupon rate for capital infusion into PSBs during 2017-18 and interest payment to banks for holding such bonds started from the next financial year.

This mechanism helped the government from making capital infusion from its own resources rather utilised banks’ money for the financial assistance.

However, the mechanism had a cost of interest payment towards the recapitalisation bonds for PSBs. During 2018-19, the government paid Rs 5,800.55 crore as interest on such bonds issued to public sector banks for pumping in the capital so that they could meet the regulatory norms under the Basel-III guidelines.

In the subsequent year, according to the official document, the interest payment by the government surged three times to Rs 16,285.99 crore to PSBs as they have been holding these papers.

Under this mechanism, the government issues recapitalisation bonds to a public sector bank which needs capital. The said bank subscribes to the paper against which the government receives the money. Now, the money received goes as equity capital of the bank.

So the government doesn’t have to pay anything from its pocket. However, the money invested by banks in recapitalisation bonds is classified as an investment which earns them an interest.

In all, the government has issued about Rs 2.5 lakh crore recapitalisation in the last three financial years. In the first year, the government issued Rs 80,000 crore recapitalisation bonds, followed by Rs 1.06 lakh crore in 2018-19. During the last financial year, the capital infusion through bonds was Rs 65,443 crore.



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This is how Federal Bank is empowering its first neo retail, SME & merchant platforms, BFSI News, ET BFSI

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Jithesh PV, Digital Head, Federal Bank

Private lender Federal Bank, headquartered in Kochi, is spearheading digital initiatives across the bank. The idea with digital strategy is to lower the cost and enhance revenues. The bank expects that in the next three years the digital channels will take care of around more than 50% of investments.

Jithesh PV, Head – Digital Banking at Federal Bank in an interaction with ETBFSI, shares his thoughts on the bank’s digital strategy, collaboration with FinTechs, their approach to open banking & how the digital initiatives are supported by a robust backend. Edited Excerpts:

1. What’s the digital banking strategy at Federal Bank? A P&L thought process behind it?
We have a multi-pronged strategy for digital in Federal Bank, aligned with the business mantra, Branch Light Distribution Heavy. We have built the best in class digital platforms for our customers and migrating these customers to digital platforms to enable our branches to focus more on customer acquisition and income generation by cross-selling and upsell. We have rebuilt our Mobile Banking into an all in one app with payments, UPI, Investments, Loans, lifestyle, and many other services that allow even non-customers to download and use the app. We have also created an omnichannel platform for Corporate clients, with full-fledged features like Account Services, Supply Chain Finance, Cash Management Services, Payable Management, Receivable Management, Trade Finance, etc.

We have enabled an end to end Open Banking platform that helps the bank to grow inorganically with the help of partnerships. We are now empowering the first neo retail platform, first neo-SME platform, first neo-merchant platform and we are also building our neo-education platform.

All the initiatives are expected to bring revenue to the bank. Today around 86% of our transactions are happening through digital channels and this has helped the bank to focus more on customer acquisition and cross-sell through brick and mortar channels.

We hope that in the next three years, digital channels will take care of around more than 50% of investments, especially MF and also insurance sales. The partnerships will help the bank to garner more low-cost funds. Partnerships are also helping us to manage more sales of PL and Debit Card EMI. The whole digital strategy is focused on reducing costs and enhancing revenue.

2. What goes at the backend in creating a robust digital banking set-up?
This is a continuous journey, and how best one can re-align the business and digital strategy in a fast-paced environment, holds the key.

In Financial services, there are multiple lines of businesses and P&L units. Today, Digital is the core of all of this, which cuts across multiple business lines and products.

We have created a separate centre of excellence for Digital to focus on innovation, R & D, enhancing the customer experience, etc while a 300 member IT team is supporting the entire technology platform and infrastructure. Dedicated teams for all critical services are available as a part of the IT infrastructure.

Support systems are also critical in this digital journey and we have a dedicated vertical for customer service-related aspects, a dedicated contact centre, and a back end operations team that manages all reconciliation and settlements. We have our own sophisticated contact centre and active Disaster Recovery sites in different geographical locations.

3. How’s the API Banking/Open Banking set-up evolving at Federal Bank?
Banking is getting invisible and embedded in the lifestyle journeys of the customer. A robust API Banking platform provides us the required flexibility in being able to reach new customers and extend our products into various interfaces in a Digital-First world.

At a strategic level, it presents a potent and low-cost distribution channel, whose scale and dynamics can be efficiently managed. The suite of use cases and partnerships supported by API Banking is altering fundamental notions associated with traditional Banking and Federal Bank is leading the pack in this game.

4. How’s the Federal Bank collaborating with FinTechs?
While we augment internal capabilities, we are also working very closely with the Fintech community in finding synergies that align with our business goals.

Technologically we have built a very flexible Open Banking Framework and processes that get continually fine-tuned.

This gives us the required agility to interface with partners, based on use-cases that are a strategic fit for us.

We are the preferred partner for Fintechs, which underlines our commitment to co-create and yet provide superior-tech capabilities and process abilities. We have co-created and scaled the largest Gold loan fintech in the country. We clock million+ daily merchant transactions via key partners that serve that segment. We are also working on some interesting NeoBank models, which are expected to take the market by storm.



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LVB-DBS merger: Plea in Delhi HC on LVB share capital write-off

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A shareholder in Lakshmi Vilas Bank has filed a Writ Petition in the Delhi High Court challenging its amalgamation with DBS Bank India.

A clause in the scheme seeks to write off the entire share capital of the troubled lender

The petition, filed by one Sudhir Kathpalia, naming also the Union of India, Reserve Bank of India and DBS as respondents, contended that the merger would leave investors and the Centre and the RBI have failed to protect investors’ rights.

Accordingly, it has sought quashing of clause 7(i) in the merger scheme, which provides for the write off of LVB’s share capital states.

The petition which was listed for January 13 before a bench of Chief Justice DN Patel and Justice Jyoti Singh has been adjourned to February 19 after the Bench was informed that the RBI has moved a plea in the Supreme Court for transfer of all pleas against the amalgamation scheme to the Bombay High Court.

Kathpalia, a lawyer, holds 20,000 shares of LVB.

The petition contended that the scheme of amalgamation was “irregular, arbitrary, irrational, unreasonable, illegal and thus, void”, and the respondent could have demanded protection for shareholders money by asking DBS Bank India to give the shares equivalent to the value of shares last traded on stock exchange post amalgamation.

“The Petitioner wants to categorically state that it is not against the scheme of amalgamation per se but the manner in which investors’ money is being written off.” The amalgamation of the banks was approved by the RBI on November 25, 2020 and the merger took place on November 27.

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Road ahead for co-operative banks

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Distressed depositors of several Urban Co-operative Banks (UCBs), including Punjab and Maharashtra Co-operative (PMC) Bank, Sri Guru Raghavendra Sahakara Bank, Rupee Co-operative Bank and Kapol Co-operative Bank, have been at their wits end.

With their hard-earned money stuck in these banks, which got into trouble for various reasons – deterioration in financial position, irregularities and deficiency in governance – the depositors have been desperately looking to the banking regulator for succour.

But the wait to get their money back is becoming excruciatingly long and arduous as the Reserve Bank of India (RBI) keeps extending its directions to these banks (ironically seeking to protect depositors’ interest) by three to six months. Depositors of Mumbai-based PMC Bank and Bengaluru-based Sri Guru Raghavendra Sahakara Bank have taken to the streets in the last one year or so amid the raging pandemic to draw the attention of the authorities to get their money back.

They have moved courts, written to the RBI Governor, Finance Minister, and Prime Minister’s Office. However, the uncertainty regarding the fate of their deposits, persists.

 

Faster resolution agenda

In its 2019-20 Annual Report, released on August 25, 2020, the RBI set for itself an agenda for “faster resolution of weak UCBs which are under All-Inclusive Directions” in 2020-21.

Also read: Tax query: What’s the taxability of interest on FD credited by a co-operative bank?

So, in a way, the clock is ticking for the regulator as it has to disclose the ‘implementation status’ with respect to the aforementioned agenda in its 2020-21 Annual Report, which is likely to be released in May-June 2021.

With the Banking Regulation (Amendment) Act 2020 handing the RBI powers to regulate and supervise UCBs on par with commercial banks, aggrieved depositors are hoping that the central bank will exercise the newly conferred powers to tackle some of the ills afflicting UCBs. Under the Act, the RBI now has powers relating to voluntary/compulsory amalgamation and preparation of scheme of reconstruction .

Once a UCB is placed under direction, deposit withdrawals are severely curtailed, acceptance of fresh deposits is prohibited, and grant or renewal any loans and advances are disallowed, among others.

‘No remedial measures’

Jyotindra Mehta, President, National Federation of UCBs and Credit Societies, alleged that while the government and the RBI take swift and timely action when public sector and private sector banks get into trouble, no remedial measures are initiated when UCBs find themselves in a similar predicament.

“On the contrary, penalties and directions are heaped on such banks in the name of safeguarding depositors’ interest,” he said, adding that this only hastens the deterioration of these banks’ health, paving the way for cancellation of licence, and resulting in a section of the depositors losing their deposits.

Mehta emphasised the need for a time-bound resolution of UCBs that can help restore depositors’ trust in these banks. Financial soundness of the UCB sector has been a matter of concern for the RBI over the last few years. According to the RBI’s latest Report on Trend and Progress of Banking, since April 1, 2015, 52 UCBs (till December-end 2020) have been placed under Directions.

As of March-end 2020, there were 1,539 UCBs operating in the country, with total business (deposits₹5,01,208 crore, plus advances ₹3,05,453 crore) aggregating ₹8,06,661 crore. Of the total claims settled by the Deposit Insurance and Credit Guarantee Corporation (DICGC) since inception, around 94.3 per cent of claims pertained to co-operative banks that were liquidated, amalgamatedor restructured, the report said.

UCBs’ deposit and loan growth

The RBI observed that as UCBs faced competition from small finance banks (SFBs) and non-banking financial companies (NBFCs) in recent years, and also had to reaffirm their credibility to depositors, their balance sheet growth has moderated.

It underscored that the recent collapse of a large UCB (PMC Bank) due to fraud and deficient corporate governance has dented public confidence in UCBs. Since 2017-18, the deposit deceleration in UCBs was starker than in scheduled commercial banks (SCBs), pointing to the difficulties faced by the former in raising resources, according to the RBI. In FY20, UCBs’ deposit growth was at 3.50 per cent year-on-year (y-o-y) (6.1 per cent in FY19). SCBs recorded a 8.44 per cent growth in deposits in FY20 vis-a-vis 9.26 per cent in the preceding year. Supervisory data available with the RBI suggest continuation of deceleration well into 2020-21, the report said.

Regulator tightening the screws

The central bank has tightened the screws on UCBs. However, it has also dangled sort of a carrot in front of them – conversion into a small finance bank (SFB) with lower capital requirement to begin with. UCBs have to comply with priority sector lending (PSL) target on par with SFBs –75 per cent of adjusted net bank credit or credit equivalent amount of off-balance sheet exposure, whichever is higher–by March 31, 2024.

Further, these banks have to ensure that 50 per cent of loans comprise loans of up to ₹25 lakh or 0.2 per cent of Tier I capital, whichever is higher, subject to a maximum of ₹1 crore per borrower or party by March 31, 2024.

Also read: Govt to soon initiate Bank Investment Company

UCBs with deposits of ₹100 crore and above have been asked to constitute Board of Management (BoM), in addition to the Board of Directors (BoD). Following the amendment to the BR Act, Mehta said the requirement of constituting a BoM becomes redundant as BoD is now under complete RBI control.

Referring to the RBI dropping enough hints about its preference for the larger UCBs to get converted into SFBs/commercial banks, the NAFCUB President wants the central bank to abandon its push for UCBs to become private banks in view of the full regulatory control it now has over co-operative banks.

In this regard, the NAFCUB is of the view that changes in regulations should be made taking the UCB sector into confidence and without diluting their co-operative character and democratic functioning.

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Three point-agenda for the upcoming Budget

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The Union Budget 2021-22 will be one of the most anticipated events in recent history. As the dust is settling after the torrid health catastrophe that affected millions and which has threatened to leave a permanent emotional scar, we are finally seeing the light at the end of the tunnel. India has had a faster than expected economic recovery and a low fatality rate from Covid-19. The distribution of the vaccines has also commenced.

The policies that will be introduced in the upcoming Budget are expected to set the tone for what steps the government takes next, and how quickly India is able to shrug off the crisis. The priority of the government will likely be measures on policies which will lead to sustained growth, boost consumption and encourage private investments. The Budget emphasis will probably lay on healthcare and livelihood creating sectors such as infrastructure and housing.

Job creation

Focus on jobs could be one of the main agendas of the Budget. The pandemic and the resultant job losses in some sectors is expected to have far-reaching implications on the Indian economy. For that reforms in sectors that create large-scale employment, such as housing and real estate, infrastructure, construction and manufacturing, will be required.

According to India’s Economic Survey 2017-18, nearly 90 per cent of the workforce employed in the real estate sector are engaged in the construction of buildings. Further, the sector is expected to require over 66 million people by 2022.

Housing is one of the largest employment generators in the economy with linkages to nearly 300 industries – both in terms of direct jobs and the jobs it creates in ancillary industries such as cement, steel, power etc.

It has been rightly said: “Don’t worry too much about GDP growth, worry about jobs. If we focus on jobs, GDP will take care of itself.”

Focus on housing

The government and the regulators have recognised the critical role housing and real estate plays in the Indian economy. In recent years, affordable housing has been at the forefront. For a rapidly growing country like India with a large young population that needs more homes at affordable price points, the following incentives could be considered:

1) Interest deduction on housing loans could be raised from ₹2 lakh to ₹5 lakh. The deduction could be reviewed on a periodic basis and linked to inflation.

2) The real estate sector has been facing challenges since 2017, and the demand for under-construction properties has slowed down significantly. Whilst SWAMIH (Special Window for Affordable & Mid-Income Housing Fund) is an excellent initiative, it is not practical for a single fund to resolve all the last mile funding issues.

Historically, some part of the funding for a project used to come from sale of under-construction properties. However, due to GST and other factors, the demand for under-construction properties has come down, resulting in projects that are 60-80 per cent complete, unable to receive last-mile funding.

Lenders are reluctant to lend to stressed projects as any fresh funding will be classified as a NPL on day one in the books of the new lender. The regulators may want to consider changing the regulations such that any secured fresh funding should be ring-fenced.

3) An additional option is to allow External Commercial Borrowings (ECBs) for real estate projects. Further, investment by foreign owned/controlled SEBI regulated investment vehicles up to 100 per cent under automatic route should be permitted in entities that acquire completed and under-construction residential projects.

4) The Credit Linked Subsidy Scheme (a component of PMAY) has been a major success. There is a need to extend PMAY benefits to more locations and extend the deadline for the Middle Income Group till March 2022.

5) There is a need to promote the rental market. Currently, the setoff and carry forward of losses from house property is restricted to ₹2 lakh. The earlier law which did not have such restrictions could be restored. Alternately, the limit should be increased to ₹5 lakh.

Personal tax reforms

Personal tax rates need to be further reduced. Surcharge on high taxpayers also needs to be rationalised as these are the people who have the capacity to spend the most and spur demand. Global data show that lower tax rates result in higher tax collections as compliance improves.

In fact, we just witnessed this example in Maharashtra when the State government lowered that stamp duty to 2 per cent for properties registered before December 31. Mumbai recorded historic registrations of house sale deeds in November and December.

As a result, the State government’s treasury collection from registrations increased, inferring that strong home sales have more than compensated for the lower stamp duty.

The Budget could also consider removing the long-term capital gains tax for investments in equity shares or by raising the period from one to two years. Additionally, doing away with taxing dividend income could be considered. Such steps will put more disposable income into the hands of the individual.

Continual reforms have been a priority for the current government. It is often said that India performs best in a crisis. The pandemic may just become a catalyst to bring in further reforms in ease of doing business, development, jobs, growth and a stable tax regime to ensure India’s sustained long term growth.

The writer is VC & CEO at HDFC Ltd

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DHFL win likely to sharpen Piramal’s retail focus

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Emerging as the preferred bidder for Dewan Housing Finance Corporation Ltd (DHFL) is likely to help the Piramal Groups expand in the real estate and lending segment, particularly the retail space.

In a regulatory filing on Sunday, DHFL said the resolution plan submitted by Piramal Capital and Housing Finance Limited has been approved by the Committee of Creditors by majority voting.

 

According to the resolution plan, Piramal will merge its existing financial services business with DHFL.

The merged entity is expected to focus mainly on the retail real estate and lending space.

Analysts point out that Piramal Enterprises Ltd has been cutting down its large corporate exposures and also expects it to grow the consumer lending business.

 

“Over the past one to two years, the management focused on running down large corporate exposures, infusing capital, and increasing share of long-term borrowings in the NBFC segment,” said a recent note on Piramal Enterprises by Motilal Oswal, adding that over the next one to two years, the key priority is to grow its recently launched consumer lending business.

In addition to home loans, it looks to undertake LAP and small business loans, it further noted.

For the quarter ended September 30, 2020, Piramal Enterprise Ltd’s revenue from the financial services business was down five per cent year-on-year (y-o-y) at ₹ 1,861 crore.

Challenges remain

However, the resolution process could take some time to be completed with a possible legal challenge by Oaktree Capital, which had contended that its bid had the highest net present value.

The global alternative investment management firm had previously indicated that it could explore such an option if its bid was not taken seriously by the Committee of Creditors.

Oaktree declined to comment on an email query sent by BusinessLine on the issue.

Meanwhile, several cases are also pending in the National Company Law Tribunal.

The National Housing Board has moved the NCLT seeking a higher share in the resolution proceeds.

The Committee of Creditors have voted in favour of setting aside Rs 2,436.67 crore for the interim arrangement with NHB.

Another case filed by 63 Moons Technologies is also pending with NCLT while another filed by DHFL’s fixed deposit holders will also be taken up for hearing by the NCLT on January 20.

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DHFL: Creditors’ panel approves Piramal’s resolution plan

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Dewan Housing Finance Corporation Ltd on Sunday said the resolution plan submitted by Piramal Capital and Housing Finance Limited has been approved by the Committee of Creditors by majority voting.

 

“….this is to inform you that the e-voting on resolutions pursuant to the 18th meeting of the Committee of Creditors of the Company (CoC) concluded on January 15, 2021 at 8 pm IST and the resolution plan submitted by Piramal Capital and Housing Finance Limited (under Option I in terms of the RFRP dated September 16, 2020) was duly approved by CoC by majority voting under section 30(4) of the Insolvency & Bankruptcy Code read with Reg. 39(3) of CIRP Regulations, as the successful resolution plan,” DHFL said in a regulatory filing.

According to sources, Piramal garnered 94 per cent of the votes while Oaktree Capital received 45 per cent of votes.

 

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BharatPe raises Rs 139 crore debt from Alteria Capital, ICICI Bank

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Fintech company BharatPe on Sunday said it has raised Rs 139 crore (about USD 20 million) in debt from venture debt firm Alteria Capital and ICICI Bank that will be used to strengthen its lending business and provide credit to merchants.

Founded by Ashneer Grover and Shashvat Nakrani in 2018, BharatPe offers merchants a single interface for all UPI apps like Paytm, PhonePe, Google Pay, BHIM, Mobikwik, Freecharge and others. It also facilitates loan facility for its merchant partners.

Speaking to PTI, BharatPe co-founder and CEO Ashneer Grover said Rs 90 crore in debt came from Alteria Capital, while the remaining Rs 49 crore was from ICICI Bank.

 

“We have raised funds from ICICI Bank at a competitive interest rate of less than 9 per cent. We are aggressively building our lending vertical and our loan book is currently at Rs 400 crore.

“With this infusion, we can double down on our efforts and we expect the loan book to grow to Rs 700-750 crore by the end of March 2021,” he added.

Grover said BharatPe had set a target of disbursing Rs 1,000 crore of loans in 2020-21, of which Rs 800 crore has already been disbursed.

“The latest tranche of debt raised will help further build the lending business and enable credit for millions of businesses, across the length and breadth of India,” Grover said.

Last week, BharatPe raised Rs 60 crore in debt from Innoven Capital. With this, BharatPe has raised a total of Rs 199 crore (USD 28 million) in debt till date. It had said it plans to raise over Rs 5,000 crore in debt funding in the next two years to build its lending business.

“We have committed ourselves to provide USD 700 million of loans to small merchants and kirana store owners by March 2023 and are hoping to onboard more institutional debt partners in the near future,” he said.

Grover added that the company aims to become a digital bank that is the one-stop destination for merchants for all kinds of financial services and this tranche of funds will get things rolling.

Merchants are the top priority for the company and it is committed to solving the credit problem for them, he said.

“The institutional debt raised will help catapult our lending business. We intend to raise close to USD 700 million of debt capital over the next two years… By March 2023, our aim is to be present in 300 cities and have the lending product available in 200 cities,” he added.

Grover said the company has already disbursed loans to more than one lakh merchants and aims to scale this up by 8-10 times and enable credit for a million kirana store owners in 2021.

Currently, serving over 50 lakh merchants across 65 cities, the company has grown business 30 times in 2019 and processed over six crore UPI transactions a month (annualised transaction processed value of over USD 7 billion).

BharatPe has raised close to USD 171 million in equity and debt till date. The company’s investors include Beenext, Sequoia, SteadView Capital, Ribbit Capital, Coatue Management LLC, Insight Partners, and Amplo.

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HDFC Bank Q3 net rises 18% y-o-y

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The bank’s pro forma net NPA ratio would have been 0.4%. Its reported gross NPA ratio in Q3 was 0.81% and net NPA ratio was 0.09%.

HDFC Bank on Saturday reported an 18% year-on-year (y-o-y) growth in net profit for the quarter ended December to Rs 8,578 crore on the back of a 15% y-o-y rise in net interest income (NII) to Rs 16,317.6 crore, with non-interest income growing 11.6% y-o-y. The bank’s non-bank subsidiary posted a loss during the quarter.

The bank’s provisions rose 12% y-o-y to Rs 3,414 crore. In a statement, HDFC Bank said total provisions for the current quarter includes contingent provisions of approximately Rs 2,400 crore for proforma non-performing assets (NPA).

It said if it had recognised as bad the accounts which were not declared NPA till August 31, 2020, under the Supreme Court’s orders, the pro forma gross NPA ratio would have been 1.38% as on December 31, 2020.

It would have been 1.37% as on September 30, 2020 and 1.42% as on December 31, 2019.

The bank’s pro forma net NPA ratio would have been 0.4%. Its reported gross NPA ratio in Q3 was 0.81% and net NPA ratio was 0.09%. The restructuring under the Reserve Bank of India’s (RBI) resolution framework for Covid-19 was approximately 0.5% of advances.

“Pending disposal of the case, the bank, as a matter of prudence, has made a contingent provision in respect of these accounts,” the lender said. It also continues to hold provisions as on December 31, 2020 against the potential impact of Covid-19 based on the information available at this point in time and in excess of prescribed norms. The bank held floating provisions of Rs 1,451 crore and contingent provisions of `8,656 crore as on December 31, 2020. Total provisions (comprising specific, floating, contingent and general provisions) were 260% of the reported gross NPAs or 148% of pro forma gross NPAs as on December 31, 2020.

Core net interest margin (NIM) in Q3 rose to 4.2% from 4.1% at the end of September.

Total advances as on December 31, 2020 were Rs 10.82 lakh crore, up 15.6% over December 31, 2019. Domestic advances grew by 14.9% y-o-y. Domestic retail loans grew by 5.2% and domestic wholesale loans grew by 25.5%. The domestic loan mix as per Basel 2 classification between retail:wholesale was 48:52.

Total deposits as on December 31 were Rs 12.71 lakh crore, an increase of 19% over December 31, 2019. Current account savings account (CASA) deposits grew 29.6% y-o-y, with SA deposits at Rs 3.75 lakh crore and CA deposits at Rs 1.72 lakh crore. Time deposits stood at Rs 7.24 lakh crore, an increase of 12.2% over the previous year. The CASA ratio stood at 43%, up from 42.2% a quarter ago.

The Bank’s total capital adequacy ratio (CAR) as per Basel III guidelines was at 18.9% as on December 31, 2020 (18.5% as on December 31, 2019) as against a regulatory requirement of 11.075% which includes capital conservation buffer of 1.875%, and an additional requirement of 0.20% on account of the bank being identified as a domestic systemically important bank (D-SIB). Tier 1 CAR was at 17.6% as of December 31, 2020 compared to 17.1% as of December 31, 2019. Common equity tier 1 capital ratio was at 16.8% as of December 31, 2020. Risk weighted assets were at Rs 10.92 lakh crore, as against Rs 9.51 lakh crore as on December 31, 2019.

The bank’s NBFC subsidiary HDB Financial Services posted a net loss of Rs 44.3 crore in Q3. The company’s total provisions for the quarter at Rs 818.8 crore exceeded its operating profit of Rs 748.7 crore The total loan book grew by 1.7% y-o-y to `57,710 crore as on December 31, 2020. The gross and net NPA were 2.7% of gross advances and 1.7% of net advances respectively. “However, if the Company had classified borrower accounts as NPA after August 31, 2020 along with the NBFC recognition methodology for NPAs (proforma approach), the proforma Gross NPA ratio would have been 5.9% as on December 31, 2020, as against 5.1% as on September 30, 2020 and 2.9% as on December 31, 2019,” HDFC Bank said.

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