Tag: aum

Pension funds: PFRDA revises sponsor’s capital requirement criteria

Banking & Finance

[ad_1]

Read More/Less


Pension fund regulator PFRDA is keen that sponsors and pension funds set up by them are strong enough to ride the current growth wave in the pension sector. Towards this end, it has tweaked the capital requirement norms for sponsors of Pension Funds, stipulating higher paid-up capital and networth for those looking to set up such funds.

A sponsor – individually or jointly– of a pension fund should have atleast ₹25 crore in paid-up capital on the date of making application as a sponsor and positive tangible networth of at least ₹ 50 crore on the last date of each of the preceding five financial years, the PFRDA has now ruled.

“The way we see growth in pension sector in last few years, we believe that in days to come it will grow even further. We felt the sponsors should be adequately capitalised and then only the pension funds they set up can perform well. This has prompted us to bring this change as earlier they could apply with networth of ₹25 crore,” Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), told BusinessLine.

He also said that all existing pension fund managers – eight of them – will be given six months time to conform to the new dispensation of having networth of at least ₹50 crore. Hitherto, the minimum networth requirement for them was placed at ₹25 crore, and some of them were already at levels above the ₹25 crore threshold.

Pension AUM

India’s pension assets under management (AUM), which recently crossed the ₹6-lakh crore mark, has been growing at frenetic pace of over 30 per cent. The PFRDA sees the overall AUM at this growth rate touch ₹30 lakh crore by 2030. ByMarch-end 2021, PFRDA expects pension AUM to touch ₹7.5-lakh crore.

Pension AUM cross ₹6-lakh crore: PFRDA Chief

This latest PFRDA move to enhance the capital requirement of sponsors comes at a time when the pension regulator is expected to soon open an ‘on tap’ window of 30-40 days for those looking for pension fund manager’s licences.

The on-tap window could also prompt some of the existing mutual fund players to take a serious look at the pension sector and enter this space, say market observers.

Another important reason why sponsors and pension funds need to be capitalised better is the PFRDA plan to allow pension funds offer minimum assured return scheme (MARS) products to customers. As such assured return scheme would entail risk, it is better to be well capitalised to take care of eventualities, said experts.

ThePFRDA had recently come up with a Request for Proposal for appointment of a consultant to help the regulator design the MARS.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Pension AUM cross ₹6-lakh crore: PFRDA Chief

Banking & Finance

[ad_1]

Read More/Less


The pension Assets Under Management (AUM) have reached a new milestone and crossed the ₹6-lakh crore mark two days back, Pension Fund Regulatory and Development Authority (PFRDA) Chairman, Supratim Bandyopadhyay, has said. It has just taken seven months for addition of ₹1-lakh crore in AUM, which crossed the ₹5-lakh crore mark in October 2020.

“We had initially thought this ₹6-lakh crore AUM would be achieved by end March 2021. But we had missed it out due to market conditions. However, within one-and-half months we have now reached the ₹6-lakh crore level,” Bandyopadhyay told BusinessLine.

It maybe recalled that the pension AUM, as of end March 2021, stood at ₹5.78-lakh crore (₹4.17-lakh crore as of end March 2020).

Bandyopadhyay said that the PFRDA was now looking at an AUM target of ₹7.5-lakh crore by the end March 2022. “I am happy that whatever projections we had made two years back.. we are on track. At this rate, I believe we are on path to reach the projected level of ₹30-lakh crore by the year 2030,” he added.

Variable annuities

Bandyopadhyay said that work is on towards amendments to the PFRDA Act and once this gets Parliament nod, then pension fund managers and even the PFRDA will be in a position to roll out other payout products (such as systematic withdrawal plan) that will be distinct from annuities.

He highlighted that annuity rates in the market have fallen and many retirees are unhappy about the current level of returns.

The need for variable annuities – where the returns vary according to the market related benchmark – has all the more increased, given that annuity rates have fallen in line with sharp fall in interest rates in the system.

Meanwhile, the PFRDA Board has given approval for National Pension System (NPS) subscribers with corpus up to ₹5 lakh to withdraw their accumulations on retirement funds without mandating their investment in annuities. “This decision is expected to be shortly notified. We are also alerted our CRAs to be ready with the changes,” Bandyopadhyay said.

The pension regulator’s Board has also approved extension to the maximum entry age for availing the NPS benefits to 70 years from the current 65 years. Simultaneously, the exit age limit is also being extended from 70 years to 75 years. “This decision will be notified soon and will get implemented this year,” he added.

MARS

The PFRDA has floated a request for proposal (RFP) to appoint a consultant to design Minimum Assured Return Scheme (MARS) under the NPS.

The whole idea behind having MARS is to have a separate scheme that can offer a guaranteed minimum rate of return to NPS subscribers, especially those who are risk averse. Currently, the NPS gives returns annually, based on prevailing market conditions.

The appointed consultant, with requisite actuarial skills, is expected to help formulate/design a MARS that can be offered to the existing and prospective subscribers by pension funds.

The chosen consultant is also expected to set up a procedure to evaluate and approve basic scheme design modifications by pension funds and supervise MARS. The consultant would be required to prescribe fees, solvency requirements, risk management and reporting mechanisms for pension funds in respect of MARS, according to the RFP document.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Shriram Housing Finance to get capital infusion of Rs 500 crore from parent, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Shriram City Union Finance has invested Rs 200 crore in its housing finance subsidiary Shriram Housing Finance Limited.
An Additional of Rs 300 crore could be invested over the next two years. The mortgage lender said, “The current infusion of Rs. 200 Cr will increase SCUF’s holding in SHFL to 81.16% from existing 77.25%. The funds will be used to provide growth capital to the fast growing HFC and enable it to expand its distribution network and customer base. The networth of Shriram Housing Finance which was at Rs. 576 Cr as of March 31st 2021, goes up to Rs. 776 Cr with this investment.”

In FY 21, Shriram Housing Finance has reported a growth in its AUM of 70% YoY, with the highest ever quarterly and yearly disbursements of Rs. 1005 crore and Rs. 2195 Cr respectively. The company ended FY 21 with PAT of Rs. 62.4 Cr, a strong 34% growth for the year. The ROA stands at a healthy 2.5%.

Ravi Subramanian, Managing Director & CEO, Shriram Housing Finance said, “We are happy to get incremental growth capital of Rs. 200 Cr from our parent. This capital infusion will help us expand our business and support our growth plans for the next 12-15 months. We have had a great FY21 and with this capital at our disposal, we expect to ride out the second wave of the pandemic and come out stronger in FY 2022. We have always focused on growing our business without compromising on quality and we look forward to continue doing the same. SHFL has forever stayed loyal to its mission of helping people own their dream home.”

Y S Chakravarti, Managing Director of SCUF added, “We are delighted to continue our support to SHFL. It is a dynamic, young and fast growing organisation and the Affordable housing space continues to impress and interest us. SHFL is an integral part of the group growth story and this investment is a testimony to that. The company is now well capitalised and poised for growth.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Bandhan Bank collections drop in April,asset quality pressure worsens, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The end of Assam and West Bengal polls was expected to end Bandhan Bank worries, but a rise in Covid infections and hike in bad loan provisionings has cast a shadow.

The lender derives a major chunk of its business from the two states.

Collection trends improved to 98% in Mar’21, but declined 3–4% in Apr’21 due to the advent of the second Covid wave, though the drop in collections in West Bengal was less than 3%. Nearly 78% of customers were able to pay some instalments in March 2021 among the NPAs in the MFI portfolio.

The results

The bank missed the fourth-quarter profit estimates by a wide shot due to a jump in bad loans and high provisioning.

It reported an 80% dip in its March quarter net profit at Rs 103 crore, as it wrote off a huge portfolio of loans worth Rs 1,929 crore in the flagship microlending business by recognising stress upfront.

As a result of the accelerated write-off, the bank’s overall provisions shot up to Rs 1,594 crore in the reporting quarter from the year-ago period’s Rs 827 crore. It also made an additional provision of Rs 388 crore on standard advances in the microfinance segment.

Bandhan Bank reported a weak quarter, with net earnings sharply trailing estimates, affected by higher interest reversals of Rs 540 crore. Thus, net interest margins declined 150 bp quarter on quarter while elevated provisions of Rs 1,590 crore further impacted earnings. Total Covid-led provisions for FY21 comprise Rs 1930 crore toward write-offs and another Rs 2,900 crore toward loan loss provisions.

Bad loans

The GNPA ratio improved despite elevated slippages, primarily on account of higher write-offs during the quarter. However, Provision Coverage Ratio fell sharply to 50% (v/s 67% proforma in 3QFY21).

Total loans restructured stood at Rs 620 crore, predominantly in the Housing Finance portfolio, while ‘Nil’ restructuring was seen in the MFI portfolio.

On the business front, AUM grew 8% QoQ, led by strong disbursements in the MFI portfolio. Liability traction was robust at 37% YoY, with the CASA ratio improving 50 bps QoQ.

Management hopeful

Bandhan Bank MD & CEO Chandra Shekhar Ghosh is hopeful that the economy will rebound by the third and fourth quarters of the current fiscal, enabling the lender to meet its targets.

He said the bank had exercised caution amid the COVID-19 pandemic and made additional provisioning in the last quarter of 2020-21.

“We remain cautiously optimistic for the current fiscal as we have made additional provisioning as safeguard. The second wave of Covid pain is expected to subside in the next two-three months, and this time people are better geared than the first wave that took everyone by surprise.

“The worst seems to be over, and the economy will rebound by the time major lending business happens in Q3 and Q4, to meet our targets,” Ghosh said.

Overall, we expect asset quality trends to remain under pressure; thus, we estimate credit cost at 4.0% of loans for FY22, Motilal Oswal Securities said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Small finance banks see loan collections drop as Covid rages, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


With the Covid pandemic spreading fast into the hinterland, small finance banks are feeling the heat.

The second Covid wave is resulting in a delay in collections this month, though banks are much prepared than last time when they were caught unawares by the pandemic.

The impact is more in smaller towns rather than the rural areas which have seen good monsoon. Also, several bank employees are down with Covid, hampering collection efforts.

As per a report by Emkay Global, the first fortnight of April 2021 has been weak in terms of business activity which is down by 20% across various segments due to lower working days and onset of an aggressive second wave of Covid-19 infections. This is expected to fall further with far stricter enforcement of localised lockdowns.

Cautious lenders

According to experts, credit appetite is likely to remain intact but lenders may turn cautious, which could hurt growth in the near term.

The collection efficiencies were improving from August-September onwards on a month-on-month basis across asset classes. However, a year back, the restrictions announced so far are lower in trajectory or intensity. So while there will be an impact on collections and delinquencies, the impact should be lower than what we saw in Q1 of last year.

But if there was a rise in the intensity of cases accompanied by containment measures and restrictions, it could further impact collections.

The spread intensity and duration of the pandemic, how long the lockdown and curbs last and vaccine trajectory will decide the severity of hit to the SFBs.

Microfinance hit

The mainstay of small finance banks, the microfinance loans are likely to face asset quality pressures in the near term due to the recent surge in Covid infections.

However, a majority of microfinance institutions (MFIs) will be able to withstand any stress due to their improving collection efficiency and good on-balance sheet liquidity, Icra Ratings said.

“We estimate asset quality pressures for the MFI industry to continue in the near term and the same may get accentuated with the recent increase in Covid-19 infections and localised restrictions/lockdowns,” the agency’s Vice President and Sector Head (financial sector ratings) Sachin Sachdeva said.

The agency noted that even though the near-term outlook for MFIs is clouded given the Covid induced disruptions, the overall long-term growth outlook for the domestic microfinance industry, including MFIs and micro finance-focused small finance banks (SFBs), remains robust.

The collection efficiency (total collections/scheduled demand) of the sector improved to around 102 per cent in December 2020.

The disbursements also started picking up from Q2 FY2021 onwards, which is expected to help the MFI industry achieve growth of 9-11 per cent in its assets under management (AUM) in FY2021, it said.

Collection efficiency

Sachdeva said the improvement in collection efficiency and pickup in growth in AUM in H2 FY2021 has helped the industry witness marginal improvement in the overdue portfolio (0+ days past due (dpd)) to 16.7 per cent as on December 31, 2020, which had earlier increased to 18.1 per cent as on September 30, 2020 after the lifting of the moratorium.

There has been further improvement in Q4 FY2021 as well. However, overdues remain significantly higher than pre-Covid levels, he said.

“We estimate the credit costs to rise significantly to 6-7 per cent (spread over two years: FY2021-FY2022) from 1.5 per cent in FY2020, he said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Coinshares data, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


NEW YORK: Inflows into cryptocurrency funds and products hit $4.9 billion as of April 16, with the pace of increase slowing a bit in the first two weeks of the month after hitting record levels in the first quarter, data from digital currency manager Coinshares showed on Tuesday.

Inflows in the first two weeks of April hit about $400 million to $4.9 billion, or about 9% higher than an all-time high of $4.5 billion in the first three months of the year.

The pace of inflows had already moderated in the first quarter, after a 240% surge in the fourth.

That said, inflows in the second week of April totaled $233 million, the largest since early March, Coinshares said.

Bitcoin’s rise also slowed in the first two weeks of the month, growing just 5.7%, although it hit a record just under $65,000 during that period. After touching that all-time peak last week, bitcoin has plunged nearly 18% in six days. Bitcoin last traded up 0.8% at $56,161.

“There were … signs of excessive exuberance in the market, and a correction looked imminent,” said Pankaj Balani, chief executive officer of Delta Exchange, a crypto derivatives trading platform.

Inflows last week were more spread out to include other digital assets outside of bitcoin and ethereum.

Bitcoin still saw the largest inflows of $108 million, with ethereum snagging $65 million. But investors poured money into other digital tokens, including bitcoin cash, Polkadot, Binance, and Tezos, Coinshares data showed.

Crypto assets under management (AUM) have also surged to a peak of $64.2 billion, the data showed. In the first quarter, the sector’s AUM was $59 billion. Last year, assets under management for the sector hit $37.6 billion.

Grayscale is still the largest digital currency manager, with $49.5 billion in assets as of the second week of April, while CoinShares, the second biggest and the largest European digital asset manager, oversees about $5.7 billion in assets.

XRP has been the most popular digital asset in recent weeks with weekly inflows of $33 million, nearly doubling its assets under management to $83 million.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

ICRA: Uncertainties with rising Covid cases could compound NBFCs woes

Banking & Finance

[ad_1]

Read More/Less


The resurgence of the Covid-19 pandemic is likely to impact the performance of assets under management of retail NBFCs in 2021-22, rating agency ICRA said on Wednesday.

“Domestic Retail-NBFC AUM are facing asset quality headwinds which will moderate growth in 2020-21 and is also likely to affect their performance in 2021-22, following resurgence of the Covid-19 pandemic,” it said in a statement.

Higher loan losses seen

Asset quality pressures would play out fully in this fiscal as the level of economic activities are yet to substantially pick up over the pre-Covid levels, with risks further compounded by recent rise in infection rate, it further said.

While NBFCs can proceed with the overdue recoveries post lifting of the Supreme Court order on the NPA classification in March 2021, ICRA notes that performance of most of the key target asset and borrower segments continues to be sub-optimal, which would impact realisations leading to higher loan losses.

“Entities have augmented their provisions steadily since the fourth quarter of 2019-20 and are currently carrying provisions of more than 50 per cent of the pre-Covid levels, the same is expected to be maintained at least for a few more quarters in view of the current uncertainties,” it said.

AM Karthik, Vice President, Sector-Head Financial Sector Ratings, ICRA, said, “Restructuring expectation averages around 2.6 per cent (ICRA sample of large NBFCs) presently and we expect reported Gross Stage 3 to increase steadily by about 50-100 basis points (over December 2020 levels) by March 2022, as a base case; and could inch-up further if the impact of the pandemic continues for longer period leading to lockdowns or other tighter restrictions.”

Revival in growth

ICRA expects the Retail-NBFC AUM, which is estimated to be about ₹10-lakh crore as of December 2020, to have grown by three to five per cent in 2020-21 as pent-up demand, post the lockdown, led to some revival in segments such as namely gold, microfinance, two-wheelers, and tractors.

In 2021-22, growth is expected to revive to about eight per cent to 10 per cent driven by improvement in demand from all key target segments compared to last fiscal.

Growth, however, would be contingent upon access to adequate funding lines, it further said, adding that the capital structure is expected to remain adequate.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

IIFL Finance expects 15% AUM loan growth in FY22

Banking & Finance

[ad_1]

Read More/Less


The partial lockdowns imposed by few states due to Covid-19 may have some impact on the business, but Rajak claimed that nothing was visible on-ground yet. Representational Image

By Ankur Mishra

IIFL Finance expects loan assets under management (AUM) to grow by 15% in the financial year 2022 (FY22), CFO Rajesh Rajak told FE. The lender is finding comfort from loan growth due to improved collections in the recent months. Without specifying details, Rajak said collection efficiency had sustained the trend after good show till December 2020. The collection efficiency had improved to 98-100% in home loans, 85-90% in business loans, more than 100% in gold loans and the micro-finance segment till December 2020.

The partial lockdowns imposed by few states due to Covid-19 may have some impact on the business, but Rajak claimed that nothing was visible on-ground yet. “If there is an extreme situation, we will get affected like everyone else but the whole idea will be to get impacted lesser than the industry,” Rajak said.

Last week, rating agencies Crisil had revised its rating on company’s arm IIFL Home Finance to ‘stable’ from ‘negative’. “The current outlook back to ‘stable’ revision factors in the continuous improvement in collection efficiency (excluding foreclosures) resulting in the uptick in asset quality metrics being lower than previous expectations despite weak macroeconomic environment,” Crisil said. The outlook revision also factors in the improvement in fund raising of the company, the rating agency said. IIFL Finance had raised `670 crore from non-convertible debentures (NCDs) in March 2020. Earlier in March, another rating firm Fitch had affirmed IIFL Finance’s long-term issuer default rating (IDR) at ‘B+’ and removed it from rating watch negative (RWN). This reflects Fitch’s view of easing downside risk to the company’s credit profile due to less adverse economic and funding conditions, which we expect to be broadly sustained in the coming year, the rating firm said.

Analysts at Kotak Institutional Equities said the fourth quarter (Q4FY21) was a strong quarter for non-banking financial companies (NBFCs), with disbursements picking up sequentially across the board, driven by moratorium exit, pent-up and seasonally strong demand.

“While disbursements were strong, loan growth may be muted. Weak new business momentum in the first half of FY21 will likely drag loan growth for the next few quarters and bottom out sometime in FY22,” the Kotak Institutional Equities report said on Tuesday.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,
1 2 3