How Nabard fast-tracked approval time to just 5 days during the pandemic

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As the Covid-19 pandemic starved State governments, cooperative banks and other agencies that depend on it for funds, the National Bank for Agriculture and Rural Development (Nabard) has re-engineered its functioning to hasten the process of sanctioning project proposals. This has helped the State governments and other agencies to roll out the projects faster during the pandemic.

“From the time a full-fledged project proposal reaches us, it should not take not more than five days at the head office to get the approval. This has helped the States to fast track the project rollouts,” GR Chintala, Chairman of Nabard, told BusinessLine.

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The bank has brought in IT applications to increase the pace of approvals. “Earlier, there used to be no fixed timelines (to approve the project proposals). Now, it should be under five days,” he said. The bank, which reported a growth rate of 24 per cent in the pandemic hit 2020-21 to reach a business of ₹6.50-lakh crore, has set a target of ₹7.5-lakh crore.

Push for better health infra

“What we noticed is a huge uptick in the demand from the State governments for developing and creating medical education and health infrastructure,” he said.

The pandemic, he said, has highlighted the need for better healthcare infrastructure to tackle the challenge much better. Besides the regular demand for RIDF funds in the areas of connectivity, irrigation and agriculture, the Nabard has seen a new demand for funds from the States for setting up hospitals and medical colleges.

“For the first time, all of the ₹30,000 crore earmarked for the fund had been exhausted during the pandemic year. Seeing the huge appetite for funds under this head, we have requested the Union government to increase the size of the fund. We got the nod to increase it to ₹40,000 crore for this year,” he said.

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As against a target of ₹40,000 crore, the Nabard has already completed sanctions worth ₹25,000 crore so far. “We are confident that we will achieve the target and seek for more funds for disbursal in the next financial year,” he said.

The bank also witnessed a spike in demand for funds under the NIDA (Nabard Infrastructure Development Assistance). “Last year, we sanctioned about ₹22,000 crore under NIDA. Many State governments tapped this fund to set up medical colleges and infrastructure,” he said.

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Amazon, Microsoft swoop in on India’s $24 billion farming data trove, BFSI News, ET BFSI

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Amazon.com, Microsoft and Cisco Systems are among technology giants lining up to harness data from India’s farmers in an ambitious government-led productivity drive aimed at transforming an outmoded agricultural industry.

Prime Minister Narendra Modi’s administration, which is seeking to ensure food security in the world’s second-most populous nation, has signed preliminary agreements with the three U.S. titans and a slew of local businesses starting April to share farm statistics it’s been gathering since coming to power in 2014. Modi is betting the private sector can help farmers boost yields with apps and tools built from information such as crop output, soil quality and land holdings.

Jio Platforms Ltd., the venture controlled by billionaire Mukesh Ambani’s Reliance Industries Ltd., and tobacco giant ITC Ltd. are among local powerhouses that have signed up for the program, the government said this week.

With the project, Modi is seeking to usher in long-due reforms to make over a farm sector that employs almost half of the nation’s 1.3 billion people and contributes about a fifth of Asia’s third-biggest economy.

The government is counting on the project’s success to boost rural incomes, cut imports, reduce some of the world’s worst food wastages with better infrastructure, and eventually compete with exporters such as Brazil, the U.S. and the European Union.

For global firms, it’s a stab at India’s agritech industry, which Ernst & Young estimates to have the potential to reach about $24 billion in revenue by 2025, with the current penetration being only 1%. It’s also a chance to deploy networks, artificial intelligence and machine learning in a developing country, while for e-commerce firms such as Amazon and Reliance, securing a steady stream of farm produce could help crack a groceries market that accounts for more than half of the $1 trillion in annual retail spending by Indians.

“This is a high impact industry and private players are sensing the opportunity and want to be a large part of it,” said Ankur Pahwa, a partner at consultancy EY India. “India has a very high amount of food wastage because of lack of technology and infrastructure. So there’s a huge upside to the program.”

The idea is simple: Seed all the information such as crop pattern, soil health, insurance, credit, and weather patterns into a single database and then analyze it through AI and data analytics. Then the goal is to develop personalized services for a sector replete with challenges such as peaking yields, water stress, degrading soil and lack of infrastructure including temperature-controlled warehouses and refrigerated trucks.

Under the agreement, the big tech companies help the government in developing proof of concepts to offer tech solutions for farm-to-fork services, which farmers will be able to access at their doorstep. If beneficial, firms would be able to sell the final product to the government and also directly to growers and the solutions would be scaled up at the national level.

So far, the government has seeded publicly available data for more than 50 million farmers of the 120 million identified land-holding growers. Some of the local companies that have signed up include Star Agribazaar Technology, ESRI India Technologies, yoga guru Baba Ramdev’s Patanjali Organic Research Institute and Ninjacart.

But success is far from guaranteed. The plan to rope in big corporations is already drawing fire from critics, who say the move is yet another attempt by the government to give the private sector a greater sway, a development that could hurt small and vulnerable farmers.

The program may even add fuel to the protracted protests Modi’s government has been struggling to tackle for more than nine months after controversial new agricultural laws riled up some farmers. With crucial state elections due in 2022, it may get tougher to sell the technology-to-help-agriculture plan to a farming community already suspicious of the government’s intentions.

“With this data they will know where the produce wasn’t good, and will buy cheap from farmers there and sell it at exorbitant prices elsewhere,” said Sukhwinder Singh Sabhra, a farmer from the northern state of Punjab, who has been protesting since November against the new farm laws. “More than the farmers it is the consumers who will suffer.”

Technology adoption is still at a nascent stage in India, said Apeksha Kaushik, principal analyst at Gartner. “Limited availability of technology infrastructure and recurring natural phenomena like floods, droughts have also worked against the deployment of digital solutions,” she said.

Anxiety over data privacy could be another challenge. Abhimanyu Kohar, a 27-year-old farmers’ leader, who has been supporting the protesting farmers, said it’s a “serious issue.” “We all know the record of the government in keeping the data safe,” he said.

Despite the hurdles, a few one-year pro bono pilot programs are already underway.

Microsoft has selected 100 villages to deploy AI and machine learning and build a platform. Amazon, which has already started offering real-time advice and information to farmers through a mobile app, is offering cloud services to solution providers. Representatives at the India offices of Microsoft and Amazon didn’t respond to emails seeking comment.

Star Agribazaar, whose co-founder Amit Mundawala calls the project a “game changer,” will collect data on agri land profiling, crop estimation, soil degradation and weather patterns. ESRI India is using geographic information system to generate data and create applications, according to Managing Director Agendra Kumar.

“Once you have the data, you can correlate with on-ground reality and improve your projections, take informed decisions and see which regions need policy intervention,” said P.K. Joshi, former director for South Asia at Washington-based International Food Policy Research Institute.

A similar data-driven system implemented in the southern state of Karnataka last year helped increase efficiency in delivery of government benefits, said Rajeev Chawla, the state’s additional chief secretary. Some bank loans have even been made to farmers using the centralized data, and all government programs, verification for insurance and loans and minimum support price are being routed through the mechanism, plugging leakages and eliminating frauds, he said.

Besides the tech giants, many smaller companies and startups are likely to join the program. When completed the project will form the core of a national digital agriculture ecosystem to help farmers realize better profitability with access to right information at the right time, and to facilitate better planning and execution of policies, according to the government’s consultation paper on digital agriculture.

“How this exercise will translate into action or lead to higher production and farm income, that remains to be seen,” said Madan Sabnavis, chief economist at Care Ratings Ltd.



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Sundaram Finance presents favourable near-term outlook amid caution

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The adverse economic impact of the Covid second wave is expected to be limited to the first quarter of this fiscal, said S Viji, Chairman, Sundaram Finance.

“The tapering of the second wave coupled with aggressive vaccination drive has brightened the near-term prospects for the economy, with the adverse economic impact expected to be limited to the first quarter of FY22,” Viji said while addressing the 68th annual general meeting of the company virtually on Monday.

“The agricultural sector has turned buoyant with a near-normal monsoon, robust procurement by the government and improved Kharif sowing,” he added.

The re-establishment of GST collections to ₹1 lakh+ crore levels, increase in fertiliser sales, improved e-way bill activity, increase in power and fuel consumption, and growth in eight core industries all point to a sequential improvement in economic activity from the disruptions induced by the Covid second wave.

Also read: Sundaram Finance posts 16 per cent rise in Q1 net profit at ₹192 crore

However, the country’s ability to mobilise vaccines at scale, maintain the pace of vaccinations, and containment of the virus spread, especially as new variants emerge, will all be determinants of consumer confidence sustaining and consequently of economic recovery,” he said.

Festival season for auto

“While the automotive sector has been facing production constraints due to the global shortage of semiconductors, the recent pandemic-driven lockdowns in East Asia are compounding the challenge. This, coupled with higher input prices on fuel and commodities, presents the risk of a dampener to the upcoming festival season”, said Viji.

Focus areas

Given the level of uncertainty and volatility, Sundaram Finance to focus on striking a judicious balance between growth, quality and profitability (GQP), the time-tested trinity that has served the company well.

“Key priorities will be to support loyal customers tide over the aftermath of the Covid crisis by deploying all measures made available by the regulator and the government, drive collections and recovery efforts with a view to maintaining the traditional asset quality levels and preserving capital, and prudently pursuing growth opportunities that emerge as economic activity resumes post second wave across the well-understood and diversified asset class base that Sundaram Finance has established.” he stated.

Emerging growth areas

As the economic activity revives, the company expects the commercial vehicle segment to bounce back strongly. “In the CV space, in addition to growth in the M & HCV space, we believe that the SCV and ICV segments will continue to offer growth opportunities. In the passenger vehicle segment, we see a long run way as the consumer market matures and grows in India,” said Rajiv Lochan, Managing Director, Sundaram Finance.

The company also sees favourable growth opportunities in construction equipment and tractor segments due to heightened activities across infrastructure and the rural and agricultural sectors on the back of government push.

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Bank of Maharashtra plans to raise up to Rs 2,000 crore through QIP

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State-run Bank of Maharashtra is looking to raise up to Rs 2,000 crore through qualified institutional placement (QIP) route before July-end, its Managing Director and CEO A S Rajeev said.

In April this year, the Pune-based lender had received board approval to raise Rs 5,000 crore by way of QIP/rights issue/ preferential issue or by issuing Basel III bonds.

“We are planning to raise around Rs 2,000 crore equity through QIP immediately. The process has already started and we will raise it before July-end,” Rajeev told PTI in an interaction.

The base size of the issue is Rs 1,000 crore and it has a greenshoe option of another Rs 1,000 crore, he said.

Following this equity raise, the Government’s holding in the bank will reduce to below 85 per cent from 94 per cent currently, and the capital adequacy ratio will improve to 17-18 per cent from around 14.49 per cent as of March 31, 2021, Rajeev said.

This fund will be deployed for expansion of the loan book, which the bank is looking to grow by 16-18 per cent to around Rs 1.25 lakh crore in this fiscal from Rs 1.08 lakh crore as of March 31, 2021, he said.

Of the total loan book of the bank at present, the share of corporate loans is 37 per cent and of retail, agriculture and MSME (RAM) segment is 63 per cent, he said adding, “We want the ratio of RAM to the corporate segment to be 65:35 during the current fiscal.” The bank is envisaging a 20-25 per cent growth in the retail, agriculture and MSME (RAM) segment this year. The lender’s corporate loan size is close to Rs 40,000 crore and it is targeting to grow it by another Rs 10,000 crore in this financial year. It has a sanction pipeline of Rs 25,000 crore in the corporate and MSME segments for the current fiscal, he said.

“We have churned our portfolio with improvement in the share of lending to better-rated corporates. This will minimise the delinquencies and attract lower capital requirement,” Rajeev added.

In the corporate segment, the bank will continue lending to better-rated corporates, including sunrise sectors such as infrastructure, pharmaceuticals and FMCG, he said.

Under the government’s Emergency Credit Line Guarantee Scheme (ECLGS), the bank’s total disbursement, so far, is around Rs 2,100 crore, and it plans to lend another Rs 500 crore this year.

Rajeev said the bank’s exposure to the healthcare sector is Rs 2,000-2,400 crore, which is 2 per cent of the total advances portfolio. In April and May, it had already disbursed over Rs 225 crore to the sector.

“We intend to double our portfolio under the healthcare sector and make it 4 per cent of our total advances portfolio during the current fiscal. We have also come out with two to three products in tune with the RBI policy,” he said.

Last month, the RBI had announced an on-tap term liquidity facility of Rs 50,000 crore under which banks can provide fresh lending support to a wide range of entities from the healthcare segment. The government has also announced ECLGS 4.0, under which a 100 per cent guarantee cover to loans up to Rs 2 crore will be provided to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.

Rajeev further said since the exit from the RBI’s prompt corrective action (PCA) framework in January 2019, the lender has taken several steps to strengthen its balance sheet, which has resulted in a significant improvement in all its financial parameters.

“We have been successful in registering profits quarter on quarter since March 2019. Our net profit rose 41.39 per cent to Rs 550 crore during FY21 from Rs 389 crore in FY20. Operating profit also rose 39 per cent to Rs 3,958 crore in FY21 from Rs 2,847 crore last year,” he said.

The bank’s CASA (Current Account and Savings Account) improved to 54 per cent as of March 31, 2021, which according to Rajeev is one of the best in the banking industry.

The bank has also managed to bring its gross non-performing assets to 7.23 per cent as of March 31, 2021, from 18.64 per cent in September 2018, when it was under PCA. Net NPAs stood at 2.48 per cent as of March 31, 2021.

At present, market capitalisation of the bank stands at Rs 17,500 crore against Rs 3,948 crore as of March 2019, he said. In FY22, the bank is targeting to bring down gross NPA to below 6 per cent and net NPA to below 2 per cent. Net interest margins (NIM) will remain above 3 per cent in this fiscal, he said.

It has set a recovery and upgradation target of Rs 2,500-2,600 crore during the current year. The lender is also expecting Rs 500 crore recovery from written-off accounts in this fiscal, Rajeev said. The lender is looking at opening 200 banking outlets with a hub and spoke model in this fiscal, he added.

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RBI data, BFSI News, ET BFSI

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Non-food bank credit grew at 5.7 per cent in April 2021 as against 6.7 per cent in the year-ago month, RBI data showed.

The growth in advances to agriculture and allied activities accelerated to 11.3 per cent in April 2021 as compared to a 4.7 per cent growth in April 2020, the data on Sectoral Deployment of Bank Credit – April 2021, released by the Reserve Bank of India on Monday, showed.

Credit growth to industry decelerated to 0.4 per cent in April 2021 from 1.7 per cent in April 2020.

However, credit to medium industries registered a robust growth of 43.8 per cent in April 2021 as compared to a contraction of 6.4 per cent a year ago, the data showed.

Growth in loans to micro and small industries accelerated to 3.8 per cent in April this year as compared to a contraction of 2.2 per cent a year ago, while credit to large industries contracted by 1.9 per cent as compared to a growth of 2.7 per cent a year ago.

Within industry, credit to food processing; textiles; gems and jewellery; paper and paper products; glass and glassware; infrastructure; leather and leather products; and wood and wood products registered an accelerated growth in April 2021 as compared to the corresponding month of the previous year, RBI data showed.

However, credit growth to mining and quarrying; beverages and tobacco; petroleum, coal products and nuclear fuels; rubber, plastic and their products; vehicles; vehicle parts and transport equipment; basic metal and metal products; cement and cement products; all engineering, chemicals and chemical products; and construction decelerated.

Growth in loans to the services sector decelerated to 1.2 per cent in April 2021 from 10.6 per cent in April 2020, mainly due to deceleration in credit growth to NBFCs and marginal contraction in credit to transport operators, the data showed.

However, credit to trade segment continued to perform well, registering accelerated growth of 10.5 per cent in April 2021 as compared to 8.7 per cent a year ago.

The data showed that the personal loans registered an accelerated growth of 12.6 per cent in April 2021 as compared to 12.3 per cent a year ago, primarily due to accelerated growth in vehicle loans, loans against gold jewellery and credit card outstanding.



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IDBI Bank launches fully automated loan processing system

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IDBI Bank has launched a fully digitised, end-to-end Loan Processing System (LPS) for its MSME (micro, small and medium enterprise) and agriculture customers.

The bank, in a statement, said the new system seamlessly integrates with data fintechs, bureau validations, document storage/ retrieval, account opening/ management, customer notifications, and portfolio management capabilities, along with embodied credit policy/ knock off parameters.

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Suresh Khatanhar, Deputy Managing Director, IDBI Bank, said more than 50 product lines will be on LPS, which will offer seamless credit lifecycle.

“LPS integrates with the existing core database, human resource management system, and various other applications of the bank.

“This utility would considerably enhance the customer experience with improved turn-around time,” said Khatanhar.

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