CSIR aims for the stratosphere with high-risk research

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A project to build high-altitude platforms (HAP) for wireless communications and broadband services that are ten times cheaper than satellites, and a wind-cum-wave current energy plant are among the Council of Scientific and Industrial Research’s (CSIR) proposed new stream of research projects — high-risk, high-impact, and self-funded.

In 2019-20, CSIR earned ₹1,000 crore from sponsored projects, consultancies and technology licensing. “This has allowed us to do risky, futuristic projects,” says Dr Shekhar Mande, Director-General of the government-owned body whose 36 units do diverse industry-related research.

HAPs are unmanned aerial vehicles which fly in the stratosphere (70,000 ft) and can be moved to wherever they are needed. CSIR sees this as the future of communications. “We are already into the design stage; you will see good progress on this in a couple of years,” Mande told Quantum.

Likewise, the integrated wind-cum-wave energy project would start “modestly” with a demo plant. It would involve the CSIR units National Institute of Ocean Technology, Structural Engineering Research Centre, and National Aerospace Laboratories.

Getting into big-bang research is one of the ways in which CSIR is trying to re-invent itself as it enters its 80th year (in September).

A key shift is the renewed focus on securing appropriate value for its research. Often there is a mismatch between the price that a CSIR lab gets for its research and the market value of the technology developed. In one instance, a private company paid a CSIR lab ₹3 lakh for a research job; with that technology the company secured a ₹10-crore contract.

“We are learning,” Mande said, stressing that the focus in future would be on income generation, so there would be less dependence on external funding — whether government or the private sector. Many different models are being considered, including a company like ISRO’s Antrix Corporation, to handle commercial aspects.

“By March or April we would have a much clearer idea of what we are rolling out,” he said.

He observed that there has been an emphasis on business since 2017 at least, when the Council developed guidelines for negotiations and technology transfer. These guidelines were revised six months ago in order to generate enough funds for “our own research”.

There is also a move to give individual units (labs) more autonomy. “We would like Delhi (headquarters) only to be an enabler and empower the labs more and more for doing their own work,” says Mande, adding that strategic decisions would be made in Delhi only to serve as co-ordination when multiple labs are involved in a single project — such as the ocean energy venture.

Lack of autonomy has been the bane of CSIR units. Dr Vijaymohanan Pillai, a former Director of the Central Electro Chemical Research Institute, a CSIR unit, once told this writer that approval delays have in the past scared away foreign sponsors of research.

He said that nine years ago, a Spanish company offered a “large amount of money” to CECRI for research into zinc-bromine redox flow batteries (used in large-scale energy storage), but the government rejected it. Similarly, another project for Boeing took a year to get the go-ahead.

Pillai had then said that only about a fifth of the scientists did all the work. The government wants global quality but “I can’t fire even an attender if he is not good”. Funds are measly — for example, the travel budget for 117 CECRI scientists in 2018 was ₹8 lakh.

There is more autonomy in the utilisation of sponsored-research money but there is a paucity of long-term funds, such as for hiring high-quality MBAs or chartered accountants for industry interface.

CSIR’s headquarters is aware of these issues — hence the emphasis on more autonomy to individual units in future.

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Ground seems ready for new options to resolve stressed assets: IBBI chief

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The ground seems to be ready to experiment new options for resolution of stress and the market is anticipating a hybrid framework between a court-supervised insolvency framework and an out-of-court restructuring schemes, IBBI Chairperson M S Sahoo has said.

In place for more than four years, the Insolvency and Bankruptcy Code (IBC) is helping in resolution of stressed assets in a market-linked and time-bound manner, and the proposal for “pre-pack” framework is also in the works.

“Since some tasks of an insolvency proceeding are completed before the formal process begins, and some elements of formal process are avoided, pre-pack saves both on costs and time,” Sahoo told PTI.

The Insolvency and Bankruptcy Board of India (IBBI), a key institution in implementing the IBC, has also taken various steps to address difficulties of stakeholders concerned.

According to him, insolvency regimes in most jurisdictions are not designed to address delinquencies arising from the COVID-19-like crisis when several viable businesses simultaneously fail to stand on their feet for force majeure conditions. Also, the availability of resolution applicants to rescue them remains a concern.

“This has highlighted the need for pre-pack which is considered fast, cost efficient and effective in resolution of stress, with the least business disruptions.

In an e-mail interview, Sahoo also pointed out that with considerable learning and maturity of the ecosystem, and a reasonably fair debtor-creditor relationship in place, the ground seems ready to experiment new options for resolution of stress.

“The market has been advocating and anticipating a resolution framework which is a hybrid between the court-supervised insolvency framework and out-of-court restructuring schemes that incorporates the virtues of both the worlds sans their demerits. The most popular form of such dispensation is pre-pack,” he noted.

Generally, under a pre-pack (pre-packaged) process, main stakeholders like creditors, shareholders and the existing management/ promoter can come together to identify a prospective buyer. Then, they can negotiate a resolution plan before submitting the same to the National Company Law Tribunal (NCLT) for formal approval.

Corporate Insolvency Resolution Processes

From December 1, 2016 till the end of September last year, total 4,008 CIRPs (Corporate Insolvency Resolution Processes) have commenced under the IBC.

Out of the total, 473 CIRPs have been closed on appeal or review or settled, 291 have been withdrawn, 1,025 have ended in orders for liquidation and 277 have ended in approval of resolution plans, as per data compiled by the IBBI.

The provisions relating to CIRP came into effect from December 1, 2016.

In the wake of the Covid-19 pandemic, the government has suspended fresh proceedings under the IBC since March 25 last year. Last month, the suspension period was extended till March, which means that fresh cases cannot be filed under the IBC for almost the whole of the current fiscal — April 2020 to March 2021 period.

On whether there is a possibility of a flurry of insolvency cases coming up once the suspension is done away with, Sahoo said the number of applications for initiating insolvency is likely to increase but the increase may not be significant.

He noted that stakeholders are continuing to resolve stress through various modes such as scheme of compromise or arrangement under the Companies Act, 2013, and the RBI”s prudential framework. Entities are also going for corporate insolvency resolution process in respect of stress other than related to Covid-19.

According to him, stakeholders are exploring innovative options for resolution of stress while taking several cost cutting measures to avoid stress.

Also, Sahoo said viable companies would have normal business operations after the pandemic subsides, higher threshold of default for initiation insolvency proceedings keeps most MSMEs out of insolvency proceedings and Covid-19 period defaults remain outside insolvency proceedings forever.

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Lendingkart to launch ‘credit intelligence services’ for banks

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Lendingkart, a digital lending fintech start-up in working capital space, plans to launch ‘credit intelligence services’ for banks from April, helping them evaluate credit worthiness of self-employed small- and micro-enterprises based on their cash flows, said its co-founder and Managing Director, Harshvardhan Lunia.

Lendingkart will assign a probability of default score, give out a risk premium and suggest the amount that banks could lend to such small and micro enterprises, especially those in Tier-2 and Tier-3 cities, Lunia told BusinessLine.

 

Banks could always go with their own underwriting model and use the score provided by Lendingkart as an additional tool to evaluate the borrower, he said.

Lendingkart is the only fintech in the country that has built an algorithm-based and cash flow based decision engine, he said.

The use of the cash flow based decision engine would obviate the need for institutions and banks to rely on financial statements and income tax returns (ITRs) to evaluate a borrower.

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Edelweiss Financial Services closes ₹100-crore NCD issue early

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Edelweiss Financial Services Ltd (EFSL) has decided to close its public issue of secured redeemable non-convertible debentures (NCDs) on January 4, 2021 against the scheduled close of January 15, 2021.

EFSL’s NCD issue, amounting to ₹100 crore (base issue), with an option to retain oversubscription up to ₹100 crore aggregating to a total of ₹200 crore, opened for subscription on December 23, 2020.

The debenture fund raising committee has decided to exercise the option of early closure and to close the issue on January 4, 2021, the company said in a regulatory filing.

Also read: Mixed reactions to RBI panel proposal for conversion of large NBFCs to banks

EFSL, in a statement issued on December 21, 2020, said its NCDs offer an effective yield (cumulative) of 9.95 per cent per annum for 120 months tenure, 9.35 per cent per annum for 36 months tenure and up to 9.80 per cent per annum for 60 months tenure.

Seventy five per cent of the funds raised through this issue will be used for the purpose of repayment /prepayment of interest and principal of existing borrowings of the company.

The balance is proposed to be utilised for general corporate purposes, subject to such utilisation not exceeding 25 per cent of the amount raised in the issue, EFSL added.

Also read: Edelweiss Asset Management raises ₹6,600 crore in ESOF III

EFSL is principally engaged in providing investment banking services and holding company activities comprising development, managerial and financial support to the business of Edelweiss group entities.

It has seven lines of businesses ― corporate credit, retail credit, wealth management, asset management, asset reconstruction company, life insurance and general insurance.

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RBI comes up with Digital Payments Index, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) on Friday said it has constructed a composite Digital Payments Index (DPI) with March 2018 as the base period to capture the extent of digitisation of payments across the country.

“The DPI for March 2019 and March 2020 work out to 153.47 and 207.84, respectively, indicating (an) appreciable growth,” it said in a statement.

Going forward, RBI-DPI will be published on the central bank’s website on a semi-annual basis from March 2021 onwards with a lag of four months.

The RBI-DPI comprises of five broad parameters that enable measurement of deepening and penetration of digital payments in the country over different time periods.

The parameters are payment enablers (weight 25 per cent), payment infrastructure–demand-side factors (10 per cent), payment infrastructure – supply-side factors (15 per cent), payment performance (45 per cent) and consumer centricity (5 per cent).

Each of these parameters have sub-parameters which, in turn, consist of various measurable indicators, RBI said.

The RBI-DPI has been constructed with March 2018 as the base period, meaning DPI score for March 2018 is set at 100.

Digital payments in India have been growing rapidly.

Earlier in February, RBI had announced it will construct and periodically publish a composite DPI to capture the extent of digitisation of payments effectively.

The objective of DPI is to reflect accurately the penetration and deepening of various digital payment modes.



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CCPA seeks RBI intervention on banks delaying refund in case of failed transactions, BFSI News, ET BFSI

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Amid rising consumer complaints regarding delay in reverse or refund of money deducted on account of failed or cancelled banking transactions, newly set up consumer protection regulator CCPA has flagged this issue to the RBI seeking its intervention to ensure banks reverse such money on time.

In a letter to Reserve Bank of India (RBI) Deputy Governor M K Jain, the Central Consumer Protection Authority (CCPA) Chief Commissioner Nidhi Khare stated that 2,850 complaints pertaining to “transactions failed/cancelled but money not refunded” forming 20 per cent of grievances registered in the banking sector have been received through the government-run National Consumer Helpline (NCH).

She said although banks are crediting the amount into the consumer or beneficiary’s account, it is not being done in the prescribed timeline as directed by the RBI guidelines.

In view of this, there is a need for banks to adhere to the timelines for settlement of claims as per the guidelines issued by the RBI, she added.

In this backdrop, Khare said: “RBI, being the banking regulator, is requested to look into the matter and take up the issue with the banks urging them to adhere to the timelines stipulated in guidelines issued by RBI in this regard.”

The CCPA can extend cooperation to the RBI in ensuring speedy redressal to the consumers, she said in the letter.

Further, Khare informed that the analysis of the consumer grievances received through NCH showed that a number of grievances have been received pertaining to failed or cancelled banking transactions and money not refunded.

There were also grievances related to inter-banking services like IMPS and UPI, wherein transactions have failed but money not reversed/transferred although money deducted from the bank or wallet account of the consumers, she added.

The letter also said the CCPA was established on July 24, 2020 to regulate matters related to violation of rights of consumers, unfair trade practices, and false or misleading advertisements which are prejudicial to the interest of public and consumers and to protect, promote and enforce the rights of consumers as a class.

The CCPA is empowered to conduct investigations into violation of consumer rights, order recall of unsafe goods and services as well take sue-motto complaints where a class of consumers is impacted due to a defective product or deficient services and also impose penalties.

While conducting an investigation after preliminary inquiry, CCPA will have the same powers given under the provisions of the Code of Criminal Procedure, 1973 for carrying out search and seizure, the letter added.



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High spreads still shows reluctance to lend by banks

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While the overall lending rates have declined when we look at the headline rates, the transmission is probably slower when we look at various products or risk segments.

Pace of change slowing down. As per RBI’s latest release, the rate of decline in fresh lending and deposit rates has started to slow down. However, the spread between average lending rate on outstanding and fresh loans stayed around ~110 bps. The headline yield movement suggests spreads are holding up but further expansion looks unlikely. High spreads do not augur well as it still shows reluctance to lend, in our view.

As per the latest data from RBI, TD rates were flat m-o-m at ~5.6% (down ~100 bps y-o-y). Weighted average TD rates were flat m-o-m for both private and PSU banks. Private and PSU banks have reduced their TD rates by ~110 bps and ~90 bps respectively over the past twelve months.

TD rates had been on an upward trend from December 2017 to February 2019, increasing ~40 bps to 6.9%, post which TD rates had been flattish for a few months and started to decline (down ~120 bps since June 2019). Wholesale deposit cost (as measured by CD rates) has seen a much sharper decline of ~320 bps in FY2020 followed by a further decline of ~180 bps in YTD FY2021.

The weighted average TD rate is broadly similar to the TD rate (1-2 year tenor) offered by most banks today; slightly lower than rates offered by SFBs. We have started to see banks, especially private banks, cutting headline TD rates in the past few quarters. The gap between repo and 1-year TD rate for SBI has been flat ~90 bps after declining from peak levels of ~130 bps.

Lending rates on fresh loans were down ~5 bps m-o-m to ~8.3% in November 2020. Fresh lending rates have been range-bound over the past few months after declining from the peak level of ~10% seen in January 2019. Private sector banks saw a decline of ~10 bps m-o-m to ~8.9%, while PSU banks showed a ~10 bps decline. The gap between fresh lending rates of private and PSU banks now stands around the ~100 bps average level seen over the past twelve months.

Lending rates on outstanding loans were marginally down m-o-m to ~9.4% in November 2020, having declined ~80 bps since November 2019. Banks have been cutting their MCLR rates over the past few months. Private banks and PSU banks have cut their MCLR by an average of ~90-100 bps in the past 12 months.

The gap between outstanding and fresh lending rates has been in the range of 110-140 bps for the past nine months. The gap had been increasing before that led by a steady decline in fresh lending rates. Steep decline in bond market rates till July 2020 led to a narrowing of the spread between bank funding and bond rates.
While the overall lending rates have declined when we look at the headline rates, the transmission is probably slower when we look at various products or risk segments.

In a relatively low growth and heightened risk environment, especially after Covid, we note that the spreads have continued to remain high. The spread over G-Sec with deposits and loan rates has widened implying banks are seeing lower spreads on investments and better spreads on loan yields. While we are witnessing some positive trends on recovery in loan enquiries, we still believe that there is still some time before it reflects in loan growth.

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Digital payments surge past ₹4-lakh cr in Dec

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Digital payments continued its upward trajectory in December with transactions on the Unified Payments Interface (UPI) breaching the ₹4-lakh crore mark in terms of value.

The rise in digital payments comes at a time of improving economic activity and sentiment as well as the continued festive season spends at the year-end.

Data released by the National Payments Corporation of India on Friday revealed that transactions on the UPI platform amounted to ₹4,16,176.21 crore in December with a total of 223.41 crore payments processed. There were 207 banks live on the UPI platform.

In contrast, 221.02 crore transactions worth ₹3.9-lakh crore were processed on UPI in November 2020.

Also read: RBI Report on Trends: Payments banks yet to turn profitable

Meanwhile, transactions on the Immediate Payment Service (IMPS) rose to 35.56 crore amounting to ₹2.92-lakh crore in December. This was higher than the 33.91 crore payments worth ₹2.76-lakh crore processed on IMPS in November.

“Ten years of providing instant settlements has helped IMPS assure you of a safer and more convenient new year,” NPCI said in a tweet.

Bharat BillPay processed 2.62 crore transactions amounting to ₹3,962.76 crore in December compared to 2.39 crore payments of ₹3,713.21 crore in November.

Similarly, FASTag also registered record high payments with 13.84 crore transactions worth ₹2,303.79 crore in December. Transactions on NETC FASTag had amounted to 12.48 crore worth ₹2,102.02 crore in November.

With mandatory implementation of FASTag from this month, it is likely to see further growth in transactions.

Also read: Customers can now purchase ICICI Bank FASTag on Google Pay

Significantly, the number of transactions on the Aadhaar-enabled Payment System (AePS), which plays a key role in direct benefit transfers, stood at 7.25 crore in December from 6.95 crore in November. The value of transactions also rose to ₹19,919.21 crore last month from ₹19,055.09 crore in November.

The Reserve Bank of India, in its Report on Trend and Progress of Banking in India 2019-20, noted that social distancing requirements during the pandemic led to the digital mode of transactions being preferred over cash, although the value and volume of the former were somewhat depressed on account of the slowdown in economic activity ahead of the outbreak.

“The trajectory of growth in UPI-based transactions as well as overall retail digital transactions has been impressive, both in value and volume terms,”it further noted.

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RBI comes up with Digital Payments Index

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The RBI on Friday said it has constructed a composite Digital Payments Index (DPI) with March 2018 as the base period to capture the extent of digitisation of payments across the country.

“The DPI for March 2019 and March 2020 work out to 153.47 and 207.84, respectively, indicating (an) appreciable growth,” it said in a statement.

Going forward, RBI-DPI will be published on the central bank’s website on a semi-annual basis from March 2021 onwards with a lag of four months.

The RBI-DPI comprises of five broad parameters that enable measurement of deepening and penetration of digital payments in the country over different time periods.

The parameters are payment enablers (weight 25 per cent), payment infrastructure–demand-side factors (10 per cent), payment infrastructure – supply-side factors (15 per cent), payment performance (45 per cent) and consumer centricity (5 per cent).

Each of these parameters have sub-parameters which, in turn, consist of various measurable indicators, RBI said.

The RBI-DPI has been constructed with March 2018 as the base period, meaning DPI score for March 2018 is set at 100.

Digital payments in India have been growing rapidly.

Earlier in February, RBI had announced it will construct and periodically publish a composite DPI to capture the extent of digitisation of payments effectively.

The objective of DPI is to reflect accurately the penetration and deepening of various digital payment modes.

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No charge on UPI transactions: NPCI

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The National Payments Corporation of India on Friday said there is no transaction charge being levied on payments through UPI from January 1.

“NPCI has urged all the customers to not believe in such stories and continue to perform uninterrupted and convenient UPI transactions,” it said in a statement.

Published on


January 01, 2021

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