Category: Banking & Finance

PB Fintech plans to set up offline physical centres to complement online channel

Banking & Finance

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IPO-bound PB Fintech, an online financial services marketplace focussed on insurance, plans to open small management offices as part of its efforts to improve its market share and make its online model even more successful, Yashish Dahiya, Chairman and CEO, has said.

“The objective will be to raise conversion rates on online customers. Our business model is not that of setting up a branch. We are not setting up branches in high footfall areas. We are not setting up retail stores. They are going to be small service offices and management offices that will handhold customers at their drawing rooms or their office canteens,” Dahiya told BusinessLine.

Strategic move

He also made it clear that this should not be seen as a strategic shift for the digital company. “We will continue to acquire customers through website and app. But these are customers that need some hand holding. So far we provided that from call centre. Now, we will have our people on the ground do it from the physical centres. If we do not do this, in five years time our premium will be lot lower than if we were to do this. From overall profitability perspective, it will be margin accretive,” he said.

Alok Bansal

 

Alok Bansal, Wholetime Director & CFO, said that having a local person would give online customer added comfort that one is talking to a local agent in their own lingo. “They would feel that I have gone to the website and I also get local support enhancing what I got online,” he noted.

In financial year 2020-21, Policybazaar, which is India’s largest digital insurance marketplace, clocked insurance premium of ₹4,700 crore (new and renewals) out of its platform.

₹5,710-cr IPO on November 1

PB Fintech, which owns Policybazaar and digital consumer credit marketplace Paisabazaar, is launching its ₹5,710-crore initial public offering (IPO) on November 1.

Meanwhile, asked as to which of the two— Policybazaar or Paisabazaar— will be the main growth driver for PB Fintech in the coming years, Dahiya said that he would not like to compare the two and added that both will have their spaces.

Scaling up

Dahiya said that company’s efforts in focussing on corporates (including SMEs), points of sales Presence and physical presence is expected to help it scale up business in the coming days.

On international expansion, he said that the company has now got a presence in Dubai and sees lot of potential to grow in UAE. Going forward, one may even look at entering other geographies including Europe and South East Asia, he added.

Dahiya also said that PB Fintech may in the coming days even look at setting up investment platform for mutual funds, but quickly noted that no specific decision has been taken by its Board on this front.

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STFC reports 13% y-o-y increase in Q2 standalone net

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Shriram Transport Finance Company (STFC) reported a 13 per cent year-on-year increase in second quarter standalone net profit at ₹771.24 crores against ₹684.56 crores in the year-ago period.

The Board declared an interim dividend of ₹8 (80 per cent) per share of face value of ₹10 each fully paid up for FY22.

Net interest income was up about 8 per cent y-o-y at ₹2,193 crore (against ₹2,025 crore).

Also see: Govt approves rules for automated testing stations for vehicles

Assets under management of STFC, a leading player in the pre-owned commercial vehicle financing segment, increased by about 7 per cent to ₹1,21,647 crore by September-end, mainly on the back of growth in used vehicles financing portfolio.

However, there was a de-growth in the new vehicles, business loans and working capital loans portfolio.

Also see: Is the economic recovery V, K or W shaped?

Gross stage 3 (credit impaired) assets position improved to 7.82 per cent of gross advances by September-end against 8.18 per cent at June-end 2021. However, gross stage 3 assets in the reporting quarter were higher vis-a-vis 6.50 per cent a year ago.

Net stage 3 assets position too improved to 4.18 per cent of net advances by the end of Q2FY22 against 4.74 per cent in the previous quarter but up from 3.69 per cent a year ago.

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Embassy REIT Q2 net operating income sees 30% rise

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Embassy Office Parks Real Estate Investment Trust (REIT), India’s first listed REIT which claims to be the largest office REIT in Asia by area, reported results today for the quarter and said that its net operating income rose by 30 per cent to ₹624 crore.

In regulatory filings to the exchanges, Embassy REIT said, of its net income it would distribute ₹537 crores or ₹5.66 per unit for Q2FY22t. The company also said that it had raised ₹4,600 crore debt at 6.5 per cent.

Investor base triples

Michael Holland, Chief Executive Officer of Embassy REIT, said in a release, “We are delighted to announce yet another strong quarter of continued robust business performance. We delivered our strongest leasing activity since the start of the pandemic; we successfully completed a significant ₹4,600 crore debt raise at 6.5 per cent interest rate. We have reconfirmed our full-year guidance as we see multiple tailwinds for our business — India’s stabilizing Covid situation; a reviving office leasing market, especially in our core Bangalore market; and occupiers’ business expansion driven by global tech mega-trends. These positive trends are clear to our expanding investor base which has tripled in the last twelve months.”

Embassy REIT said that it had achieved stable portfolio occupancy of 89 per cent with 15 per cent rent increases on 1.4 million square feet (msf) across 22 leases. It said that construction was on in full swing on 5.7 msf projects.

Also see: Embassy REIT raises ₹4,600 crore fresh debt to repay existing borrowings

The ₹4,600 crore debt raised at 6.5 per cent was to refinance the existing zero-coupon bond, delivering significant interest savings. The company also said that it had collected over 99 per cent of office rents on the 32.3 msf operating portfolio

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Cholamandalam Investment Q2 net up 40%

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The standalone net profit of Cholamandalam Investment & Finance Company in the second quarter of the current fiscal went up by 40.43 per cent to ₹606.54 crore.

The Murugappa Group NBFC posted a net profit of ₹431.91 crore in the year-ago quarter.

Total income marginally increased to ₹2,470.69 crore (₹. 2,439.78 crore) during the July-September quarter. Disbursements, on a year-on-year basis, went up by 35 per cent to ₹8,706 crore (₹6,457 crore) during Q2FY22.

In arelease, the company said that last quarter had several positives including waning of second wave of Covid-19, India outpacing other countries in terms of increased vaccination drive and a good monsoon.

“These events have led to expectations of a swift revival of the Indian economy supported by uptrend in economic indicators like tax collections, power consumption, vehicle registrations, highway toll collection and e-way bills. This economic revival has led to a sharp recovery in Chola’s disbursements and collections during Q2 FY22,” the company added.

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RBI Central Board reviews bank grievance redress systems

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The Central Board of the Reserve Bank of India on Friday took stock of a nationwide survey among bank customers regarding banks’ grievance redress system and the functioning of ombudsman schemes.

To improve the efficacy of the internal grievance redress mechanism of banks and to provide better customer service, a comprehensive framework has been put in place comprising certain measures, according to RBI.

The measures include enhanced disclosures on customer complaints by the banks and the Reserve Bank, recovering the cost of complaints’ redress from banks when maintainable complaints are higher than their peer-group averages. intensive review of grievance redress mechanism, and supervisory/regulatory actions against banks that fail to improve their redress mechanism in a time bound manner.

Integrated ombudsman

The Banking Ombudsman Scheme (BOS), launched in 1995, has served as a flagship alternate grievance redress mechanism for the redress of customer complaints against banks received by the Reserve Bank.

Subsequently, the ombudsman scheme for NBFCs and the ombudsman scheme for digital transactions were launched in 2018 and 2019, respectively.

An in-house committee, set up to review the ombudsman framework and suggest measures to improve its efficacy, recommended convergence of the three ombudsman schemes into an integrated “Reserve Bank of India Ombudsman Scheme”, expanding the ambit of this scheme to all regulated entities presently not covered under the existing schemes to provide a single window for grievance redress.

Centralised processing

The committee also recommended setting up of a centralised receipt and processing centre for receipt and initial processing of complaints under the ‘One Nation – One Jurisdiction’ approach, reducing the turnaround time (TAT) for the redress of complaints, and introducing delegation by appointing a deputy ombudsman.

The Board, in its meeting, reviewed the current domestic and global economic situation and challenges. It deliberated on possible measures for addressing the emerging challenges.

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RBI imposes Rs 56 lakh penalty on The Nainital Bank, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 56 lakh on The Nainital Bank, Uttarakhand, for non-compliance with certain norms related to classification of non-performing assets and frauds. The apex bank had conducted a Statutory Inspection for Supervisory Evaluation (ISE) of the lender with reference to its financial position as on March 31, 2019 and found non-compliance with certain directions.

There was a divergence between bank’s reported NPAs and NPAs assessed during the inspection on account of failure to classify certain borrower accounts as NPA. There was also a failure to disclose material divergences relating to asset classification and provisioning identified by the RBI, despite exceeding the defined threshold, in the Notes to Accounts, the RBI said in a statement.

There was also a failure on the part of the bank to report frauds as per the RBI directions.

The RBI, however, said the action against The Nainital Bank is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. PTI NKD RAM



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RBI slaps ₹56-lakh penalty on Nainital Bank

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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹56 lakh on The Nainital Bank Ltd (NBL), Uttarakhand, for non-compliance with its directions relating to divergence in non-performing asset (NPA) accounts as well as asset classification and provisioning, and classification and reporting of frauds.

Bank of Baroda holds 98.57 per cent stake in the nearly century old bank.

“This penalty has been imposed in exercise of powers vested in RBI under the provisions of…the Banking Regulation Act, 1949,” the central bank said in a statement.

Regulatory non-compliance

It emphasised that this action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

RBI had conducted the statutory Inspection for Supervisory Evaluation (ISE) of the bank with reference to its financial position as on March 31, 2019.

Also see: RBI imposed a monetary penalty of ₹1 crore on Paytm Payments

The examination of the risk assessment report, inspection report and all related correspondence pertaining to the inspection, revealed, inter alia, non-compliance with the above-mentioned directions to the extent of (i) divergence between bank’s reported NPAs and NPAs assessed by the inspection on account of failure to classify certain borrower accounts as NPA, and (ii) failure to disclose material divergences relating to asset classification and provisioning identified by RBI, despite exceeding the defined threshold, in the notes to accounts, the central bank said.

Further, the report found failure to report frauds as per RBI directions.

Also see: RBI slaps penalty on SBI, StanChart

In furtherance to the same, RBI said a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with its directions, as stated therein.

“After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by the bank, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions,” per the statement.

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Deft handling of financial system laid foundation for Das’ 2nd term at RBI

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The three-year term extension given to Reserve Bank of India (RBI) Shaktikanta Das is an acknowledgement by the government of his deft handling of the financial system at a time when the chips were down in the economy in the face of the Covid pandemic.

The underlying message is that the government does not want to rock the boat, preferring leadership continuity, as RBI embarks on unwinding of the extraordinary Covid-related measures.

In his recent statement at the monetary policy committee meeting, Das, who has been at the helm of the central bank since December 12, 2018, emphasised that: “At this critical juncture, our actions have to be gradual, calibrated, well-timed and well-telegraphed to avoid any undue surprises.

“We are reaching the shore after sailing through a very turbulent journey, and we cannot afford to rock the boat at this crucial stage. We must ensure that we reach safely to begin the journey beyond the shore…”

Covid woes

Not changing horses in mid-stream is the best course of action, feel experts, as the threat from the pandemic to life, livelihood and economy continues.

Since the outbreak of the pandemic in March 2020, the affable Das has committed the Reserve Bank to ‘battle readiness’ throughout the year (do whatever it takes to stabilise the financial system), to go unconventional as and when needed, and to be on guard against future waves.

Slashed repo rate

So, to lower borrowing costs and revive growth prospects, the central bank slashed the policy repo rate in two stages – from 5.15 per cent to 4.40 per cent on March 27, 2020, and to 4 per cent on May 22, 2020).

The reverse repo rate was also cut in three stages – from 4.90 per to 4 per cent on March 27, 2020, to 3.75 per cent on April 17, 2020, and to 3.35 per cent on May 22, 2020 – to absorb surplus liquidity from the banking system.

As part of liquidity measures, the RBI introduced targeted long-term repo operations (TLTRO) so that banks could draw these funds and use them to support liquidity starved NBFCs.

To minimise economic fallout, banks were allowed, among others, to offer a moratorium of six months on payment of instalments with respect to term loans with relaxation in asset classification norms, defer interest on working capital facilities, and ease working capital financing.

Das has believes in taking all stakeholders into confidence and, hence, seeks their feedback before announcing regulatory measures, said an RBI insider.

During his tenure as Governor so far, there have been no frictions between the central bank and North Block. Even if there were, Das (former Secretary, Department of Revenue and Department of Economic Affairs, Ministry of Finance, Government of India) did not allow them to bubble up.

Government-RBI relations

“The reappointment of Governor Shaktikanta Das for a three-year term signals continuity of monetary policy and gives greater stability to government-RBI relations.

“Under Governor Das, the central bank has done the heavy lifting to support the economy through the Covid crisis, with fiscal policy playing a supportive role. We also view the Governor’s reappointment as a vote of confidence in the RBI’s policy stance,” said Rahul Bajoria, Chief India Economist, Barclays Securities (India) Pvt Ltd, and Shreya Sodhani, Research Analyst, Barclays Investment Bank, Singapore.

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