Category: Banking & Finance

ICICI Lombard ties up with Vega Helmets

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ICICI Lombard General Insurance has partnered with Vega to offer personal accident insurance cover on every online purchase of Vega helmet.

“The personal accident insurance policy will provide individuals with the benefit of accidental death with sum insured of ₹1 lakh. The cover is applicable on a worldwide basis,” it said in a statement.

Sanjeev Mantri, Executive Director, ICICI Lombard said, “ICICI Lombard has always been a stout supporter of road safety and has undertaken several activities under our ‘Ride to Safety’ initiative which aims at creating awareness about safety rules. Taking the spirit ahead, this tie-up takes us one step closer to ensuring an individual’s personal security.”

Girdhari Chandak, MD, Vega Helmets said, “We are glad that through our tie-up with ICICI Lombard General Insurance, we are able to protect both the riders’ physical and financial well-being and provide them with a holistic and well-rounded bundle of protection.”

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Deutsche Bank ready to be NPS custodian for just Rs 100 per year, BFSI News, ET BFSI

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In an ultra-aggressive bid, Deutsche Bank is willing to accept a fee of just ₹100 a year for being the custodian of India’s pension fund which has total assets under custody of more than ₹6 lakh crore across various schemes.

The existing custodian, Stock Holding Corporation of India, a large depository participant owned by public financial institutions, charges close to ₹19 crore for the job.

Other institutions in the race for the custody mandate of the National Pension Scheme (NPS) include Citi, SBI-SG Global Securities Services (a joint venture between SBI and Societe Generale Securities Services), and ICICI. The fees quoted by these organisations are more than ₹1crore.

NPS, launched by the central government and involving multiple asset managers handling one of the largest fund pools in the country, is regulated by the Pension Fund Regulatory and Development Authority.

“It’s a prestigious mandate. So, Deutsche has probably taken a call to make money from a transitory float it could enjoy as a custodian,” said an official of a bank that has not put in a bid.

A Deutsche India spokesman said the bank would not comment on a client mandate.

“Beyond fees, there could be other ways to earn. Discount brokers charge little or nothing from stock traders. But, with so much liquidity available, earnings from float have come down with the fall in overnight rates. It may further shrink with T+1 (settlement in stock exchanges),” said an official of a financial intermediary.

A custodian has the opportunity to enjoy a day’s float by parking some money with the Reserve Bank of India under the reverse repo facility or in the inter-bank market.

Funds into NPS move from the employer (when salaries are paid) to the collection banks following which the money is transferred to custodians when an asset manager decides to invest in bonds and equities. Since investments happen within a day or two, custodians have a limited float.

The Deutsche bid has to pass the test laid down by the finance ministry.

According to the government’s ‘Manual for Procurement of Consultancy & Other Services’, “An abnormally Low bid is one in which the bid price, in combination with other elements of the bid, appears so low that it raises material concerns as to the capability of the bidder to perform the contract at the offered price. Procuring entity may in such cases seek written clarifications from the bidder, including detailed price analyses of its bid price in relation to scope, schedule, allocation of risks and responsibilities and any other requirements of the bid document. If, after evaluating the price analyses, (the) procuring entity determines that the bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price, the procuring entity may reject the Bid/Proposal.”

Recently, a similar bid from another MNC bank for the custody mandate of postal life insurance was rejected on this ground.

While custody is a stable and sought after business, a few institutions have recently changed tack in choosing custodians. Life Insurance Corporation of India (LIC) recently shut the doors to foreign banks in selecting the custodian for its ₹10 lakh crore holding of stocks and corporate bonds. MNC banks lost out as LIC’s condition was that if the bidder was a foreign company or MNC, any of its securities had to be listed in India.



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Here’s what you need to know, BFSI News, ET BFSI

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Barclays‘ Chief Executive Jes Staley unexpectedly left the bank on Monday due to a dispute with British financial regulators over how he described his ties with convicted sex offender Jeffrey Epstein.

He will be replaced by C.S. Venkatakrishnan, widely known as Venkat, who was previously Head of Global Markets.

Here are five facts about Venkat.

ANOTHER JPMORGAN ALUM

Venkat is one of a cadre of Barclays senior executives poached from rival JPMorgan along with Staley. They include Global Head of Investment Banking Paul Compton, who was also Staley’s right-hand man in the reorganisation and streamlining of Barclays’ various group entities in recent years.

Others include Tushar Morzaria, who was Chief Financial Officer of the U.S. lender’s investment bank before taking up the CFO role at Barclays under Staley, and Ashok Vaswani who worked at a JPMorgan-funded private equity firm and now heads Barclays’ consumer banking division.

BEHIND-THE-SCENES SUCCESSION PLAN

Although Staley’s departure is sudden, the British lender says it has had succession planning “in hand for some time”. The bank said in its stock exchange announcement on Monday that it had reviewed potential external candidates for the top role but identified Venkat as its preferred candidate over a year ago.

Barclays shook up its top ranks in September 2020, promoting Venkat from group chief risk officer to head up global markets to give him a run at leading the lender’s critical investment banking unit.

SAFE PAIR OF HANDS

Barclays will be hoping Venkat’s experience as group chief risk officer – from 2016 to 2020 – will make him a safe pair of hands after Staley’s controversial tenure.

While in a senior risk job at JPMorgan, he flagged the potential for massive losses from a derivatives trade – a scandal later known as the “London Whale” that led to a $6.2 billion loss.

A U.S. Senate investigation found some losses could have been averted if JPMorgan had listened to Venkat’s warning, Bloomberg reported this month, adding Venkat was known for his unflappability and fondness for emojis even in a crisis.

Venkat has a bachelor’s degree, a master’s and a PhD from the Massachusetts Institute of Technology.

BIG MONEY

Venkat will be on a higher base salary than his predecessor, amid a red hot recruitment market as banks largely put COVID-19 costs behind them. Venkat will receive 2.7 million pounds ($3.69 million) in fixed pay – half in cash and half in shares. Although that tops Staley’s 2.4 million pounds a year, it’s still a cut from Venkat’s – undisclosed – fixed pay as head of global markets, Barclays’ board said.

Venkat will also be eligible for a bonus up to a maximum of 93% of his fixed pay and long term incentives up to 140% of fixed pay per year, as well as a cash payment in lieu of pension of 135,000 pounds a year.

Staley’s overall pay package came to 4 million pounds last year.

PROTEGE

Venkat is likely to pursue the same strategy as Staley at least in the near term, according to an internal memo to staff seen by Reuters on Monday.

“Jes has been my manager, mentor and friend for many years,” he wrote.

“The strategy we have in place is the right one, and we will continue our existing plans to transform our organisation and build on our financial prowess.”



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Kerala Financial Corporation announces special loans for MSMEs

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Kerala Financial Corporation (KFC), a leading State-level financial institution, has launched a special loan product to the Micro, Small and Medium Enterprise (MSME) sector, aiming to assist them execute work orders and also discount pending bills.

Under the scheme, 75 per cent of the cost of work received from government departments/agencies/PSUs will be provided as a loan, a spokesman for the corporation said.

Duration of work

Repayment will depend on the duration of work and expected receipt of funds from the work-awarding authority. The rate of interest will be linked to the credit rating score of the MSME, starting at eight per cent.

Considering the Covid-19 situation, the credit rating of the MSME will be based on analysis of the balance sheet during the pre-Covid period, the spokesman said.

Once the work awarding authority accepts the bill, MSMEs can immediately get up to 90 per cent of the bill amount through discounting. For final bills, the discounting can be done without security also.

Discounting facility

MSMEs play an important role in the economic growth of the country. But they continue to face constraints in obtaining adequate finance, particularly in terms of sourcing funds required to execute work orders or convert bill receivables into liquid funds. The new scheme from Corporation will be appropriate to address such issues during this pandemic period, the spokesman said.

The applicant should be MSME Udyam registered to become eligible for the scheme. GST registration and the latest audited balance sheet are also mandatory. However, GST registration will not apply to MSMEs exempt from registration.

An audited balance sheet may not be insisted with respect to MSMEs with annual turnover of up to ₹2 crore, paying income tax on a presumptive basis.

The loan will be sanctioned as a Line of Credit (LoC) for a five-year period during when MSMEs can avail facilities such as guarantees, work execution loans, bill discounting, government promissory note discounting and equipment finance.

Maximum assistance

Maximum assistance will be ₹20 crore for companies/registered cooperative societies and ₹8 crore for others. However, the limit for guarantees and discounting of government promissory notes will be up to ₹50 crore for all entities.

The validity of the LoC is for five years. Once the customers execute the loan agreement, they can avail all facilities throughout the five-year period with minimum formalities. The scheme will be reviewed on the basis of feedback from the MSMEs.

Kerala Financial Corporation targets to disburse at least ₹500 crore under this scheme during the current financial year itself, the spokesman added.

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Ex-SBI chairman Chaudhury’s bail plea rejected in loan scam case, BFSI News, ET BFSI

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The Chief Judicial Magistrate of Jaisalmer Court on Monday rejected the bail application of former SBI chairman Pratip Chaudhury, arrested in the Jaisalmer hotel loan fraud case, and sent him to judicial custody till November 15.

The former SBI chairman will now have to spend his Diwali behind bars, said sources.

He will be in judicial custody for 15 days till November 15, they added.

Pratip Chaudhury was arrested from Delhi on Sunday and brought to Jaisalmer on Monday.

After that he was produced in the court of Chief Judicial Magistrate, his lawyer moved the bail application, but CJM Hanuman Sahai Jat after hearing rejected the bail application of Pratip Chaudhury and ordered to send him to judicial custody till November 15, following which he was was taken to jail.

The case relates to a hotel group in Jaisalmer which took a loan of Rs 24 crore from SBI in 2008. When the hotel group did not pay full instalments of the loan, the bank allegedly went against the RBI rules and declared it NPA after confiscating the property. It is alleged that later the property was also sold in a wrong manner. At present, the value of this property is being said to be around Rs 200 crore.

The SBI in a statement said that all the facts of the case were not presented before the court properly and SBI was not made a party to the case.

“‘Garh Rajwada’ was a hotel project in Jaisalmer, financed by the Bank in 2007. The project remained incomplete for over 3 years and the key promoter passed away in April 2010. The account slipped into NPA in June 2010. Various steps taken by the Bank for completion of the project as well as recovery of dues didn’t yield desired results. Hence as part of Bank’s recovery efforts, the dues were assigned to an ARC for recovery in March 2014. This sale to ARC by the Bank was done through a laid down process as per the policy of the Bank. “We further understand that the borrower was subjected to IBC process by the said ARC and the asset has been acquired by an NBFC in December 2017, again through due process under the orders of NCLT, Delhi,” the statement said.

“As recovery efforts failed, approvals for sale to ARC were taken in Jan 2014, the assignment to ARC was completed in March 2014. It transpires now that the borrower had initially filed an FIR with the State Police against the sale of asset to ARC. Aggrieved against the negative closure report filed by Police authorities, the borrower had filed a ‘Protest petition’ before the Hon’ble CJM Court. Incidentally SBI was not made a party to this case. All the directors of that ARC including Chaudhuri, who joined their Board in October 2014, have been named in the said case. Incidentally, Chaudhuri retired from Bank’s service in September 2013.

“It appears from the copies of the proceedings now accessed by us that the Hon’ble Court does not appear to have been briefed correctly on the sequence of events. In as much as SBI was not a party to this case, there was no occasion for the views of SBI being heard as part of this proceedings. SBI would like to reiterate that all due process were followed while making the said sale to ARC. The Bank has already offered its cooperation to the Law Enforcement and Judicial authorities and will provide further information, if any that may be called for from their side,” the SBI statement added further.



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Banks with 95% cards implement RBI order on recurring payments, BFSI News, ET BFSI

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A month after the RBI’s fresh rules on mandates for recurring card payments kicked in, banks accounting for over 95% of credit cards in the market are compliant with the new system. Over 20 lakh e-mandates have been registered by cardholders with a host of merchants.

According to payment industry sources, the banks whose credit cards are eligible for new standing payment mandate include SBI, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank. Several banks have enabled the mandate for both debit cards as well as credit cards.

Automatic recurring payments also require the merchant to be on-boarded to the new e-mandate framework. The compliant businesses include most of the OTT (over-the-top) streaming platforms, private life & general insurance companies, global IT giants like Google, Facebook, Microsoft and McAfee, as well as some edtech companies.

Interestingly, Indian cardholders who have registered with overseas service providers, having payment gateways abroad, are not subject to the new rules. This is because the RBI has no jurisdiction to impose second-factor authentication in those markets. It is up to the customer to disable international transactions on their cards.

What has facilitated the fast on-boarding of merchants is IT solutions like SI Hub developed by BillDesk and Mandate HQ developed by Razorpay. However, some domestic banks like Canara Bank & Punjab National Bank and Standard Chartered Bank were until last week in the process of making the necessary system changes.

According to the sources, card-based recurring transactions are 2.5% in terms of the number of transactions and 1.5% in terms of the value of the total card payments done in the country. On average, approximately 75% of domestic recurring transactions are of values of up to Rs 5,000. The corresponding figure for cross-border recurring transactions is approximately 85%.



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Banks face pressure on NIM as they lower rates to outsmart rivals, BFSI News, ET BFSI

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An intense price war in retail loans ahead of the festive season has led to a pronounced fall in interest income for banks, putting pressure on their key profitability parameter: Net interest margins (NIM).

Five of the seven state-owned banks that have announced their quarterly earnings so far have reported lower NIM for the September quarter. These banks, however, managed to report a rise in net profit largely on account of bad loan recovery and write-back of provision made in earlier quarters.

Captains in the banking industry said that they would rely on credit growth to boost NIM in the next two quarters since lending rates would likely remain soft until the monetary policy authority continues its accommodative stance to support economic recovery.

The banking sector’s weighted average lending rates dropped 31 basis points in September to 7.20%, the biggest monthly fall since November 2016. Public-sector banks led the race in slashing loan costs. Lending rates were already low as banks followed regulatory signal on softer interest rate regime over the past two years.

Room for further deposit rate cuts is not available for lenders as real interest rate is already negative, keeping the NIM sticky below 3% for most of them.

Punjab National Bank reported the steepest 25% drop in net interest income among state-owned lenders that have announced their quarterly earnings so far. Canara Bank and Indian Bank have lower NII and NIM for the quarter under review.

The market became too competitive with all large banks lowering interest rates, leading to a fall in NIM, said Indian Overseas Bank chief executive Partha Pratim Sengupta last week. IOB, however, clocked 4.6% higher net interest income even as its NIM fell to 2.51% for the quarter ending September 30 from 2.57% in the year-ago period.

Punjab & Sind Bank has had a marginal rise in NII while its NIM dropped. Bank of Maharashtra and Uco Bank, on the other hand, reported a rise in both NII and NIM.

Indian Bank chief executive Shanti Lal Jain expects interest income to rise in the next two quarters with higher credit off-take, in line with expected economic recovery. Uco Bank’s AK Goel shared a similar view.

Public sector banks, however, would likely face a challenge in terms of credit growth from their private sector peers, which are typically more aggressive in retail lending.

Over the last five years, public sector banks’ market share has dropped by around 10% in both deposits and advances. “Clearly, asset quality and the resultant profitability, as well as capital challenges, have been the key factor in the slowdown of the public sector banks,” Acuite Ratings & Research said in a note.



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Here’s what top banks are offering this festive season, BFSI News, ET BFSI

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While the COVID-19 and the resultant lockdown affected the celebrations last year, the festive season finally seems to be getting back on track.

The country is celebrating Diwali this week, giving an opportunity to companies and banks to incentivise their business by offering discounts on a range of items from jewellery to smartphones.

The lockdown was heavy on most, and affected the finances of several families. However, to ensure that these temporary setbacks do not come in the way of Diwali shopping and celebrations, a number of festive offers are up for grabs this year.

State Bank of India- #KhushiyonKaSwagat

This Diwali, if a customer of State Bank of India (SBI) applies for a car loan through YONO app, then they can get an interest rate concession of up to 0.5%, with zero processing fees, the bank said in a tweet.

Customers can get cash back offers up to Rs 2,500 on every purchase on e-commerce sites such as Flipkart and Amazon. Besides, one can get instant loan approval now.

The bank is offering car loans from 7.25%, gold loans from 7.50%, personal loans from 9.60%.

Additionally, the home loan offer which was started in September is still there. SBI currently offers home loans at only 6.7% for any amount and any tenure without any processing fees.

ICICI Bank- #FestiveBonanza

ICICI Bank launched ‘Festive Bonanza’ with a complete range of offers, heavy discounts and cash back available on a range of products, including luxury items from premium brands and leading e-commerce platforms.

As part of the ‘Festive Bonanza’, the bank is offering up to 20% cash back and discount on every purchase on Amazon, Myntra, Flipkart, Jiomart, Reliance Digital, among other platforms.

Besides, benefits are there for retail and business customers on various banking products and services such as home loan, car loan, overdraft facility and others.

Diwali 2021: Here's what top banks are offering this festive season

HDFC Bank- #FestiveTreats

HDFC bank has partnered with over 10,000 merchants across more than 100 locations to offer special deals specifically created for their personal and business needs in this Diwali time.

Benefits offered to customers include cash backs and no-cost EMIs on premium mobile phones, up to 22.5% cash back and no-cost EMI on electronics and consumer goods such as washing machines and refrigerators on shopping platform Amazon by using HDFC Bank’s credit and debit cards.

Personal loans starting at 10.25% interest with instant disbursal in account are also there. Customers can avail car loans starting at 7.50% with zero foreclosure charges and funding of up to 100% on two-wheeler loans and 4% less on interest rates, the bank said

BOI- #BOIUtsav

Bank of India has announced a 35 basis-point cut in its home loan interest rates and 50 basis-point reduction in vehicle loan interest rates. The minimum rate now starts at 6.50% against 6.85% on home loans and 6.85% against 7.35% earlier on vehicle loans.

This special rate, which was effective from October 18 till December 31, is available for customers applying for fresh loans, and for those seeking transfer of loans. Processing charges have also been waived for both the loans till 2022.

Axis Bank- #DilSeOpenCelebrations

Axis Bank is offering waivers of 12 EMIs on select home loan products in this festive season and providing on-road finance without any processing fees for two-wheelers customers.

To boost local retailers during this season, Axis Bank has roped in more than 2,500 local stores across 50 cities. The bank customers will get discounts up to 20% on shopping from these stores. Besides, one can get 10% or more cash back when purchasing on popular e-commerce platforms such as Flipkart and Amazon.

BOB- #KhushiyonKaTyohaar

Bank of Baroda also extended Diwali offers. This bank has slashed interest rates on both home car loans that start from 6.5% and 7% respectively. Processing charges are also waived for both the loans.



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Yes Bank appoints Sharad Sharma non-executive director, BFSI News, ET BFSI

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New Delhi, Yes Bank on Monday said it has appointed Sharad Sharma as a non-executive director with effect from November 1, 2021. “Sharad Sharma has been co-opted as non-executive director of the board of the bank with effect from November 1, 2021, to broad base the board,” Yes Bank said in a release.

The decision comes vide a notification from the Finance Ministry under the ‘Yes Bank Ltd Reconstruction Scheme 2020‘.

Sharma will continue to hold his office until an “alternate board” is constituted by the bank in accordance with the procedure laid down in its Memorandum and Articles of Association, Yes Bank said in a regulatory filing.

He will be eligible to be appointed on the “alternate board” to be constituted under the Scheme with the approval from shareholders in due course, it said.

Sharma is a career banker with 40 years of experience in the banking industry.

He was Managing Director of State Bank of Mysore during the period from August, 2012 to April 2016, where he was seconded from State Bank of India (SBI). He joined Union Bank of India as a probationary officer in 1975 before joining SBI as PO in September, 1977.

Sharma held various assignments across all fields of a banking organisation, including exposure to international banking, when he was posted in SBI’s 100 per cent owned Canadian banking subsidiary.

His major interest has been primarily in the corporate and SME banking segment. PTI KPM MR MR



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RBI, BFSI News, ET BFSI

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Unity Small Finance Bank Limited, a joint venture between Centrum Group and Bharatpe, has commenced operations as a small finance bank with effect from Monday, according to an RBI release.

On October 12, the Reserve Bank gave the final licence to Unity Small Finance Bank, a consortium floated by Centrum Financial Services and Resilient Innovations, an arm of the digital lending platform Bharatpe, four months after giving it an in-principle nod to establish a small finance bank and then takeover the scam-ridden Punjab and Maharashtra Cooperative (PMC) Bank, which was under direct RBI control since mid 2019.

In June, the Reserve Bank had given the in-principle approval for the 12th small finance bank licence to the consortium provided its takes over PMC, the city-based cooperative lender under restrictions for more than two years after a massive over Rs 7,000-crore fraud.

The Centrum group owns 51 per cent in Unity Small Finance Bank and the remaining equity is held by the Gurugram-based Bharatpe.

While giving the in-principle, the RBI said it has been accorded in specific pursuance to the Centrum Financial Services Limited’s offer in February in response to the Expression of Interest published by the Punjab & Maharashtra Co-operative Bank Ltd, Mumbai. PTI NKD MR MR



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