Tag: bank

Reserve Bank initiates insolvency proceedings against Reliance Capital

Banking & Finance

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The Reserve Bank of India on Thursday filed an application for initiating insolvency proceedings against Reliance Capital at the Mumbai Bench of the National Company Law Tribunal.

“The Reserve Bank has today (December 2, 2021) filed an application for initiation of CIRP against Reliance Capital Ltd, under Section 227 read with clause (zk) of sub-section (2) of Section 239 of the Insolvency and Bankruptcy Code (IBC), 2016 read with Rules 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, 2019 (“FSP Insolvency Rules”) at the Mumbai Bench of the National Company Law Tribunal,” the RBI said.

An interim moratorium shall commence on and from the date of filing of the application till its admission or rejection, it further said.

The action comes after the RBI superseded the board of Reliance Capital on November 29 and appointed Nageswara Rao Y, ex-Executive Director, Bank of Maharashtra, as the administrator of the company.

It has also constituted a three-member Advisory Committee to assist the Administrator on November 30.

Reliance Capital scrip fell by nearly five percent to close at ₹16.35 apiece on BSE.

This in the third NBFC against which the RBI has initiated insolvency proceedings, with the first being Dewan Housing Finance Corporation Ltd and the second being Srei Ifra Finance and Srei Equipment Finance.

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RBI report shows decline in bank credit post festival season pick-up

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The outstanding credit of all scheduled banks declined by ₹5,034 crore in the fortnight ended November 19, indicating the festival season credit pick-up witnessed in the preceding fortnight has lost steam.

In the preceding fortnight ended November 5 the outstanding credit of all scheduled banks had increased by ₹1,25,262 crore, according to Reserve Bank of India’s data on “Scheduled Banks’ Statement of Position in India”.

Sluggish loan growth

“Loan growth continues to be sluggish with no sharp recovery in any specific segment barring Small and Medium Enterprise.

“A low interest rate environment continues but spreads remain elevated. With asset quality issues gradually receding, we should see spreads decline but loan demand issues remain,” Kotak Securities Analysts’ MB Mahesh, Nischint Chawathe, Abhijeet Sakhare, Ashlesh Sonje and Dipanjan Ghosh, said in a report.

Deposits during the reporting fortnight declined by ₹2,67,623 crore against an increase of ₹3,38,451 crore in the preceding fortnight.

Deposit rates flat

As per the latest data from RBI, deposit rates were flat month-on-month at about 5.1 per cent.

“Both private and PSBs have reduced their term deposit rates by about 50 basis points (bps) over the past 12 months. Wholesale deposit cost (as measured by Certificate of Deposit rates) has seen a much sharper decline. It has been broadly stable in FY2022,” the Analysts said.

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PayU’s LazyPay goes live with EMI option for merchants, BFSI News, ET BFSI

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LazyPay, a Buy Now Pay Later (BNPL) solution by PayU Finance, has gone live with ‘LazyPay EMI’ where merchants can offer instant cardless-EMI option to their consumers for ticket size upto 1 lakh, the company said in a release.

LazyPay has also integrated with PayU payment gateway to tap into 3.5 lakh merchants. It plans to directly onboard 1,000 merchants across segments such as EdTech, insurance, EVs, home furnishing and HealthTech by March 2022, it said.

“Covid has globally changed consumer preferences for credit, with millions of consumers opting for interest-free credit at checkout points on online platforms, and facilitator. In the next two years we expect our BNPL EMI product to be the largest contributor to the overall credit disbursals by LazyPay,” said Anup Agrawal, business head of LazyPay.

LazyPay EMI plans to meet the credit gap in India’s market, which has 150 million users transacting digitally but only 30 million consumers having credit cards.

EMIs range from three-12 months with zero to minimal interest. The process of lending credit is independent of a person’s credit score and is therefore more inclusive of new-to-credit consumers.



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UP police files FIR against SREI promoters, directors

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The Uttar Pradesh police has registered a first information report (FIR) against crisis-ridden SREI Group’s promoters and directors of its certain companies for an alleged bank fraud. The FIR was registered at a police station at Kautwali Jaunpur, Uttar Pradesh on the basis of a complaint filed by one Bhupendra Nath.

The Jaunpur police station has now forwarded the matter to the Economic Offences Wing (EOW).

The Jaunpur Police has, in the FIR, named 22 directors and promoters of SREI Group under U/S-420/ 467/ 468/ 471/ 474/ 476/ 323/ 504/ 506/ 511 R/w-120-B of Indian Penal Code.

When contacted, brothers Hemant Kanoria and Sunil Kanoria, former promoters of SREI Infrastructure Finance, said they were not aware of any such FIR.

It maybe recalled that the Reserve Bank of India had, on October 4, superseded the board of SREI Infrastructure Finance Ltd (SIFL) and SREI Equipment Finance Limited, owing to governance concerns and defaults by the the two companies in meeting their various payment obligations. Rajneesh Sharma, Ex- Chief General Manager of Bank of Baroda, was appointed as Administrator of these companies.

FIR COMPLAINT

The FIR has been registered upon the complaint of one Bhupendra Nath who went to Srei-run Jan Suvidha Kendra for some work, and there he was allegedly duped by the employees of Srei. Bhupendra Nath found that many alleged criminal activities were being carried out at the Jan Suvidha Kendra, including bank fraud of more than ₹16,000 crore. He also reported the fact that at the Jan Suvidha Kendras, money was charged at the whims and fancies of the employees and the amount varied from ₹1,000 to ₹2,5000 for the works which are either free or for which a very nominal fee of not more than ₹100 is charged.

Initially, he filed the police complaint and seeing no effective action he approached the court with 4,000-5,000 pages documentary evidence; upon which the Chief Judicial Magistrate ordered the registration of FIR against the accused persons. The 29-pages of the FIR covers detailed methodology as to how the Jan Suvidha Kendras are run and also how the alleged bank fraud to the tune of ₹16,000 crore was perpetrated through such Kendras.

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Yes Bank partners Amazon Pay for UPI, chooses AWS for payment processing, BFSI News, ET BFSI

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Mumbai: Yes Bank has partnered with Amazon Pay and AWS to offer UPI payment to users. In FY21, Yes Bank recorded a market share of around 40% by volume in the UPI ecosystem and around 30% by volume in the UPI merchant acquiring business thanks to the integration with PhonePe.

The integration with Amazon Pay will enable the US e-commerce giant, which is a late entrant into the payment space, to issue UPI IDs with the @yapl handle. The tie-up will further expand Yes Bank’s presence in UPI with its payment processing platform hosted on AWS.

Based on a multi-bank model, this collaboration allows Yes Bank to acquire merchants through the Amazon Pay platform, adding to its existing merchant network.

The private lender said it has developed a cloud-native UPI processing platform to optimally handle the high traffic of transactions observed during surge periods like festivals or annual sales.

“With this collaboration, we will be able to offer our customers more control, flexibility and choice for a vast range of purchases and peer-to-peer transactions — through UPI-based payments,” said Prashant Kumar, MD & CEO, Yes Bank.

According to Mahendra Nerurkar, CEO and VP, Amazon Pay, the company plans to expand its digital payment network by making it more rewarding for customers. “UPI is one of the most convenient and popular ways to pay in India. With a cloud-native architecture we hope to keep raising the bar on availability, speed and customer experience using UPI through the Amazon app,” said Nerurkar.



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78.6% of women have bank accounts, up from 53% in NFHS-4, BFSI News, ET BFSI

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NEW DELHI: Nearly 81% women in urban India and 77.4% in the country’s rural area own a bank account that they operate themselves, as per the National Family Health Survey-5 (2019-21), the findings of which were released on Wednesday. Overall, there has been a big jump in numbers, with 78.6% women across India owning bank accounts as compared to 53% recorded in NFHS-4 (2015-16)

The survey also brought out data on how much of a “voice” women have in key household decisions. NFHS-5 assesses this by taking into account how many married women usually participate in three household decisions – healthcare for herself, making major household purchases, and visits to her family or relatives. NFHS-5 data shows that most women participate in these decisions and the percentage is quite high at 91% in urban India and 87.7% in rural parts.

The all-India percentage is 88.7% and is an increase over 84% in 2015-16. In terms of property ownership, there is still a long way to go even though there is an overall increase from 38.4% in 2015-16 to 43.3% in NFHS-5. Clearly the percentage of women owning a house and or land alone or jointly with others remains low. A notable fact here is that a much higher percentage of women in the country’s rural part (45.7%) have a property in their name compared to women in urban India (38.3%).

Women having a mobile phone that they themselves use has also gone up with 69.4% women in urban and 46.6% in rural India using a phone of their own. Overall, there has been an increase of 8% over the two NFHS periods from 45.9% to 54%.

It also showed how many women aged 15-24 years use hygienic methods of protection during their menstrual period – it is 89.4% in urban India and 72.3% in rural parts. Overall, compared to 57.6% women using hygienic methods of protection during menstruation in 2015-16 as per NFHS-4, 77.3% women use locally-made napkins, sanitary napkins, tampons and menstrual cups.



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Govt of India, Asian Development Bank sign $300 million loan to improve primary health care in the country, BFSI News, ET BFSI

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NEW DELHI: The government of India (GOI) and Asian Development Bank (ADB) has signed a 300 million dollar loan to improve primary health care in urban areas of 13 states that will benefit over 256 million urban dwellers including 51 million from slum areas.

As per an official release by the Ministry of Finance, “Rajat Kumar Mishra, Additional Secretary, Department of Economic Affairs in the Ministry of Finance, signed for the GOI the agreement for Strengthening Comprehensive Primary Health Care and pandemic preparedness in Urban Areas Program while Takeo Konishi, Country Director of ADB’s India Resident Mission, signed for ADB.”

Mishra said, “the programme supports the Government of India’s key health initiatives – Ayushman Bharat Health and Wellness Centres (AB-HWC) and Pradhan Mantri Atmanirbhar Swasth Bharat Yojana (PM-ASBY) – which has been renamed as Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) – by expanding availability and access to quality primary health care services particularly for vulnerable populations in urban areas.”

Ayushman Bharat programme, launched in 2018, aims to improve access to comprehensive primary health care as a key strategy to achieve universal health coverage in India. With the spread of the coronavirus disease (Covid-19) pandemic that put additional pressure on the country’s health system, the government launched PM-ASBY later renamed as PM-ABHIM in October 2021 to adopt a long-term approach to system strengthening to prepare for future pandemics and other emergencies.

“Ensuring equitable access to non-COVID-19 primary health care is critical amid challenges posed by the coronavirus pandemic to India’s health system,” said Konishi.

The programme will be implemented in urban areas across 13 states: Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, Telangana, and West Bengal.

Besides the pandemic response, interventions through the program promote increased utilization of urban HWCs with the provision of comprehensive primary health care packages including non-communicable diseases and community outreach services such as awareness-raising activities on health care options, particularly for women.

Delivery and health information systems for primary health care will be upgraded through digital tools, quality assurance mechanisms, and engagement and partnership with the private sector.

The programme is supported by a 2 million dollar technical assistance grant from ADB’s Japan Fund for Poverty Reduction to provide support for programme implementation and coordination, capacity building, innovation, knowledge sharing and application of scalable best practices across the healthcare system.



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PMC Bank’s retail depositors face long wait to get full money, BFSI News, ET BFSI

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MUMBAI: Retail depositors with over Rs 15 lakh in Punjab and Maharashtra Cooperative (PMC) Bank will have to wait for 10 years to get all their money back. The timeline is in terms of a resolution plan drawn up by the RBI, which involves the defunct cooperative lender’s amalgamation with the newly formed Unity Small Finance Bank (SFB).

The resolution of PMC Bank through private investment using the SFB licence route is the first time such an exit option has been adopted for stakeholders in a failed bank.

Institutional depositors, including cooperative housing societies and cooperative credit societies which have deposits in the bank, will end up taking a haircut. The resolution plan envisages 80% of their funds being converted into perpetual non-cumulative preference shares with a dividend of only 1% per annum. After 10 years, the bank can decide if it wants to increase the dividend or repay investors. The remaining 20% of institutional funds will be converted into equity warrants of Unity SFB at Re 1 per warrant. These warrants will be converted into shares whenever Unity SFB floats a public issue. For retail investors, interest at the rate of 2.75% will be paid on deposits that are outstanding after five years from the date of notification of the scheme.

The draft proposals will be finalised and implemented through a government notification after taking into account suggestions and objections up to December 10, 2021. Going by experience, major changes are unlikely under the scheme as there is a huge gap between the assets and liabilities of the bank due to large-scale fraud and there are no other bidders to take over the business.

“Given the financial condition of the PMC Bank, and in the absence of proposals for capital infusion, the bank was not viable on its own. In that event, the only course of action could have been the cancellation of its licence and taking it for liquidation, wherein depositors would have received payment up to the insurance ceiling of Rs 5 lakh,” the RBI said.

Unity SFB, which has been promoted by Centrum and Bharat Pe, said that 96% of all depositors will get immediate access to their deposits and 99% will get paid in full by the 5th year. It added that the scheme saves the bank from liquidation and protects the interest of stakeholders.

“The draft scheme provides much-needed relief and clarity to over 1,100 PMC Bank employees, who will remain employed and continue uninterrupted service to clients,” the statement said. It added that the bank was operationalised in record time after RBI’s approval on October 12, 2021. “Our shareholders have committed capital of over Rs 3,000 crore through cash and warrants which will be used to build a strong foundation for the bank,” the SFB said.



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Punjab & Sind Bank adjusts net loss for FY21 at Rs 2,750 cr after divergence in asset classification, BFSI News, ET BFSI

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Public sector Punjab & Sind Bank (P&SB) on Wednesday said it has adjusted the net loss for fiscal ended March 2021 slightly higher at Rs 2,750 crore due to divergence in asset classification. The bank had reported a net loss of Rs 2,733 crore in 2020-21.

Whereas the bank reported gross non-performing assets (NPAs) at Rs 9,334 crore, the Reserve Bank assessed it at Rs 9,363 crore, thus leading to a divergence of Rs 29 crore.

Similarly, the net NPAs too had a divergence of Rs 29 crore.

Based on the difference of the provisions for NPAs reported by the bank and that assessed by the RBI, the divergence in provisioning for the financial year 2020-21 stood at Rs 17 crore.

The adjusted (notional) net profit after tax (PAT) for the year ended March 31, 2021, after taking into account the divergence in provisioning stood at Rs 2,750 crore, the bank said in a regulatory filing.

The bank published the divergence in asset classification and provisioning in accordance with RBI’s Risk Assessment Report as on March 31, 2021.

P&SB stock closed at Rs 17.25 apiece on BSE, down 1.43 per cent from previous close. PTI KPM SHW SHW



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