Bank of Baroda to raise up to Rs 3,000cr via Basel III bonds, BFSI News, ET BFSI

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State-owned Bank of Baroda on Monday said it will raise up to Rs 3,000 crore by issuing Basel III compliant bonds in one or more tranches. The capital raising committee of the bank in a meeting on November 1, 2021 approved the issuance of Basel III compliant additional tier I/II bonds.

The bonds are to be issued for aggregate total issue size of Rs 3,000 crore in single or multiple tranches, the bank said in a regulatory filing.

To comply with Basel-III capital regulations, banks globally need to improve and strengthen their capital planning processes.

These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks.

Shares of Bank of Baroda were trading at Rs 99.30 apiece on BSE, up 1.85 per cent from previous close. PTI KPM DRR DRR

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CBI searches premises of ex-MP minister in connection with bank fraud case, BFSI News, ET BFSI

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The CBI conducted searches on Thursday at the premises of Surendra Patwa, a BJP MLA from Bhojpur near Bhopal, after booking him for alleged fraud of Rs 29.41 crore in the Bank of Baroda between 2014 and 2017, officials said.

Patwa was earlier a minister in the Madhya Pradesh government.

The case pertains to a loan of Rs 36 crore taken from the bank for Patwa’s car showroom in Indore — Patwa Automotive Private Limited — which was not repaid to the bank, the officials said.

The Central Bureau of Investigation (CBI) has booked Patwa, a director in the company, and another director, Monika Patwa, they added.

Patwa is the nephew of former Madhya Pradesh chief minister Sunder Lal Patwa. He was also the tourism and culture minister of the state.

“It was alleged that the borrower company had committed fraud during the period of 2014 to 2017 in conspiracy with its directors and unknown public servants and cheated the Bank of Baroda to the tune of Rs 29.41 crore (approx.),” CBI Spokesperson RC Joshi said in a statement.

Searches were conducted at the premises of the accused in Bhopal and Indore, which led to the recovery of incriminating documents, he added.

The CBI has alleged that the firm was extended the working capital loan and a term loan amounting to Rs 36 crore by the Bank of Baroda on September 13, 2014, after taking over the credit facilities extended by the IDBI Bank.

“The said loan account became an NPA on May 2, 2017 and was subsequently reported as fraud to the RBI. The outstanding loan amount was Rs 29.41 crore. It was also alleged that the forensic accounting had revealed siphoning of funds and diversion of funds by the said private company,” Joshi said.

Patwa did not respond to a request seeking his comments on the development. PTI ABS RC



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Bank of Baroda launches centralised agri-loans processing units

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Bank of Baroda (BoB) on Saturday launched centralised agri-loans processing units across 16 Zonal Offices.

Christened as the Centre for Agriculture Marketing and Processing (CAMP), the unit is a dedicated credit delivery model with a focus on financing non-traditional agricultural products and handling agri-marketing activities, the public sector bank said in a statement.

CAMP consists of trained manpower with an understanding of and exposure to high value credit accounts, it added.

The bank said it will also promote collaboration with local organisations for sourcing quality business.

Changing landscape

Sanjiv Chadha, MD & CEO, Bank of Baroda, said that the agriculture sector has been one of the very few sectors which has not only been resilient in the face of the ongoing pandemic but has also been growing. Further, a large number of agritech firms are changing the entire agri-ecosystem and landscape.

“This is resulting in newer opportunities for growth at a much reduced cost…As the country celebrates ‘Azadi ka Amrit Mahotsav’ (75 years of Independence), we are committed to invest in the sustainable growth of the agri and allied industries,” Chadha said.

Also see: ₹28,655-crore Centre’s subsidy on fertilisers for rabi season to benefit farmers, industry

Vikramaditya Singh Khichi, Executive Director, Bank of Baroda, said that in the changing market scenario, CAMP will promote adoption of new and innovative agriculture products and practices, resulting in the bank having a diversified agriculture advances portfolio.

Meanwhile, BoB on Saturday launched the 4th edition of ‘Baroda Kisan Pakhwada’, a fortnight long farmer engagement programme.

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Here’s a recap of key managerial announcements in top public sector banks so far, BFSI News, ET BFSI

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Public sector banks have been witnessing many changes in their top management, be it extension of tenure or appointment of new key managerial personnel.

The finance ministry had in July asked the Department of Personnel and Training (DoPT) to extend the tenure of a number of managing directors and executive directors to ensure stability and continuity at state-owned lenders.

The Appointments Committee of the Cabinet (ACC), headed by Prime Minister Narendra Modi, has extended the tenure for three managing directors and chief executive officers, and 10 executive directors of public sector banks.

Only one bank, Indian Bank, has appointed its new MD and CEO so far..

Here’s a quick recap of all the noteworthy movements, recommendations and tenure extensions of top PSB officials:

Indian Bank

Shanti Lal Jain was appointed the Managing Director and Chief Executive Officer of Indian Bank for a period of three years. His tenure started from September 1, 2021, and is extendable for two years or until attaining the age of retirement, whichever is earlier.

He replaced Padmaja Chunduru, whose term with the bank ended on August 31. Jain was previously working as the Executive Director of Bank of Baroda.

Meanwhile, the ACC extended the term of Shenoy Vishwanath Vittal, executive director, till the age of superannuation.

PNB

BBB last month recommended Atul Kumar Goel as the MD & CEO of Punjab National Bank, after interviewing 11 candidates.

Apart from this, BBB has kept Ajay Kumar Shrivastava on the reserve list for the post.

Currently, Goel is serving as the MD & CEO of Kolkata-based UCO Bank. He is also on the boards of Star Union Dai-ichi Life Insurance and The New India Assurance.

The government in August extended the term of S S Mallikarjuna Rao, the existing MD & CEO of PNB chief till January 31, 2022. Rao’s term was supposed to end on September 18, 2021.

Further, terms of Sanjay Kumar and Vijay Dube, executive directors, have been extended until their age of superannuation.

UCO Bank

The government may appoint Soma Sankara Prasad, currently the deputy managing director of State Bank of India, as managing director of UCO Bank.

According to PTI, since Prasad was in the reserve list for the post of managing director at Indian Bank, he has been recommended to head UCO Bank. The final decision will be taken by the ACC.

The government had extended the tenure of Atul Kumar Goel for two years. His term was scheduled to end on November 1, 2021.

Bank of Maharashtra

The government extended the tenure of AS Rajeev, MD and CEO of Bank of Maharashtra, for a two years beyond the notified term, expiring on December 1, 2021.

Bank of Baroda

The tenure of Ajay Khurana as executive director has been extended by two years. He is also on the reserve list for PNB’s MD and CEO post. Meanwhile, the tenure of Vikramaditya Singh Khichi, another ED, has been extended until his age of superannuation.

Canara Bank

The tenure of A Manimekhalai, executive director, has been extended by two years.

Bank of India

The tenure of P R Rajagopal, executive director, has been extended by two years. .

Union Bank of India

The government has extended the terms of Gopal Singh Gusain and Manas Ranjan Biswal as executive directors until their age of retirement.

Central Bank of India

The tenure of Alok Srivastava has been extended until his age of superannuation.



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Bank of Baroda reduces home loans rates to 6.5 pc, BFSI News, ET BFSI

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State-run Bank of Baroda on Thursday said it has reduced its home loan rate by 25 basis points (bps) to 6.50 per cent from 6.75 per cent. The new rate will be available for customers till December 31, 2021, the lender said in a press release.

The rate will be offered to customers applying for fresh loans, loan transfers, or looking to refinance their existing loans.

“Our customers will get benefited from this offering in this festive season. With this reduced rate of interest, Bank of Baroda home loans are now offering the most competitive rates across categories for a limited period till December 31, 2021,” the bank’s General Manager (Mortgages and Other Retail Assets) H T Solanki said.

The lender said nil processing fee on home loan was already on offer and has been extended till December 31, 2021.

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BoB pares home loan rate by 25 bps

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Bank of Baroda (BoB) has announced a 25 basis points reduction in its home loan interest rates, with the minimum rate now starting at 6.50 per cent against 6.75 per cent earlier.

This special rate, which is effective from October 7, 2021, till December 31, 2021, is available for customers applying for fresh loans and those seeking loan transfer or refinancing their existing loans.

The public sector bank, in a statement, said it has reduced the home loan interest rate with the onset of festive season and to make home buying more affordable for customers.

“Nil processing fee on home loan was already on offer and has been extended till December-end 2021,” the Bank said.

HT Solanki, GM- Mortgages & Other Retail Assets, BoB, said with this reduced rate of interest, BoB’s home loans are now available at competitive rates across categories for a limited period.

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Ahead of festive season, banks slash interest rate on home loans. Get the details here, BFSI News, ET BFSI

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Festive season has commenced and banks as well as non-banking financial institutions have already rolled out a plethora of festival offers like lower interest rates on loans and waiver of processing fees.

Ahead of the festive season, many top banks have announced offers and discounts on home loans.

State Bank of India (SBI), ICICI Bank, Punjab National Bank (PNB), Kotak Mahindra, Bank of Baroda (BoB) and Yes Bank are among the banks offering home loans at attractive rates.

The offer is for a limited time period.

Bank Women Others Effective Rate of Interest Offer valid upto
SBI 6.70% onwards
ICICI Bank 6.70% onwards
Yes Bank 6.65% onwards (salaried) 6.70% onwards 1-Oct to 31 Dec 2021
Kotak Mahindra Bank 6.50% onwards 10-Sep to 8-Nov-21
Punjab National Bank 6.60% onwards

Source: Official Websites

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Ahead of festive season, banks slash interest rate on home loans. Get the details here, BFSI News, ET BFSI

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Festive season has commenced and banks as well as non-banking financial institutions have already rolled out a plethora of festival offers like lower interest rates on loans and waiver of processing fees.

Ahead of the festive season, many top banks have announced offers and discounts on home loans.

State Bank of India (SBI), ICICI Bank, Punjab National Bank (PNB), Kotak Mahindra, Bank of Baroda (BoB) and Yes Bank are among the banks offering home loans at attractive rates.

The offer is for a limited time period.

Bank Women Others Effective Rate of Interest
SBI 6.70% onwards
ICICI Bank 6.70% onwards
Yes Bank 6.65% onwards (salaried) 6.70% onwards
Kotak Mahindra Bank 6.50% onwards
Punjab National Bank 6.60% onwards

Source: Official Websites

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BoB step up on super app play, faces a tough competition, BFSI News, ET BFSI

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The race for financial super apps in India is getting hotter.

Bank of Baroda will position its new digital platform bob World as the main bank and all banking channels will be an adjunct to the primary platform. The public sector lender is adopting a strategy similar to SBI, which is working to integrate all services on its Yono platform.

Bank of Baroda MD & CEO Sanjiv Chadha has said that post-pandemic, the bank has seen a surge in digital transactions and twice the number of branch visits are happening on the app. “So rather than being an adjunct to the bank, it will be the bank and the other parts of the lender will become an adjunct. The thought was to enable everything that can be done in the branch within the app,” said Chadha.

Here are other few banks and companies that are building up the super app.

Tata Group

BoB step up on super app play, faces a tough competition

Tata Group is planning to come up with its own super app and bring its various consumer businesses under one digital umbrella and offer a seamless omnichannel experience. It is also making acquisitions such as Bigbasket and 1mg to bolster its digital presence.

“It will be a super app, a lot of apps in apps and so on … We have a very big opportunity … How do we give a simple online experience connecting all of this, and at the same time a beautiful omnichannel experience? That is the vision,” N Chandrasekaran, chairman, Tata Sons had said.

The company is looking to leverage its huge consumer base which is spread across various categories and build a “world-class platform out of India to serve the Indian consumer”.

Tata Group has a host of consumer-facing brands that include grocery items, fashion brands, and electronics brands.

In terms of financial services, Tata Group has an insurance company as well as a consumer finance arm, which can be easily integrated into its super app.

Paytm

BoB step up on super app play, faces a tough competition

Paytm, which lacks services such as ride hailing, food delivery, and online groceries, is the leader in the race at present. The app had 85.49 million monthly active users in March 2020. The company has launched a mini-apps store and partnered with companies like Ola, Domino’s, and Decathlon.

It plans to have a million such apps on its store by 2021. Mini apps are custom-built web apps that give users an app-like experience without needing to download one. The listing and distribution of these mini apps within the Paytm app is free of charge, and users can use the Paytm wallet, Paytm Payments Bank, UPI, or net banking for payments at no charges, and credit cards at a 2% fee. These apps are low-cost and quick to build, using HTML and JavaScript.

The company claims it has 325 million registered wallets, which is higher than the 200 million active UPI handles that have been created in the country.

Now the company has set its sights on using the platform to sell multiple financial services such as digital gold, mutual funds, insurance, and consumer and business loans.

SBI Yono

BoB step up on super app play, faces a tough competition

State Bank of India (SBI) is looking to build its super app Yono into a wider platform that can be used by rival lenders. The bank’s plans to create a platform for Yono that will be integrated with regional rural banks or cooperative banks. The plan is to turn the app into a platform where all banks, including SBI, can offer their products and services. The bank feels that the product will be more valuable to investors once the app is fully built out as a platform.

Yono user base has nearly doubled to 32 million at the end of December 2020 from 17 million a year ago.

SBI disbursed personal loans worth Rs 15,996 crore through more than 1 million Yono loan accounts between April and December 2020. It is now looking to extend it to home loan customers and make the entire process online. It is also planning to go big with its multi-lingual Yono Krishi platform that offers services such as Yono Khata, Yono Bachat, Yono Mitra and Yono Mandi to its farm customers. It wants to expand Yono Business through which it has made it easier for corporate customers to apply for letters of credit and bank guarantees.

Reliance Retail

BoB step up on super app play, faces a tough competition

Reliance Retail Ventures Ltd’s acquisition of a controlling stake in business-to-business (B2B) search engine Just Dial (JD) will provide it with access to a large merchant base for its new commerce platform JioMart. It will also allow it to harness JD’s evolution into a super app that will help book flights, train and bus tickets, cabs and hotel rooms and pay bills, as well as provide other services.

Reliance Retail plans to onboard 10 million merchant partners for its new commerce initiative over the next three years. The acquisition will allow RRVL to leverage JD’s database of 30.4 million business listings and its consumer traffic of 129 million quarterly unique users as on March 31, 2021.

JD’s B2B platform, JD Mart, matches wholesalers and manufacturers with retailers and industrial buyers, according to Credit Suisse.

Also, Facebook and telecom giant Reliance Jio are coming together to figure out the possibility of a super app, similar to the multipurpose Chinese platform WeChat. They are reportedly hoping to develop the app using the WhatsApp platform as well as its huge user base.

The platform would be a place for users to chat, while also letting them shop for groceries from Reliance Retail stores, for clothes and apparel and make digital payments using JioMoney.

WhatsApp

BoB step up on super app play, faces a tough competition

WhatsApp has a vast user base in India, but it has too few services to offer and must build and maintain its fintech muscle. The variety of its product portfolio and the speed of implementation will determine whether it can topple the incumbents in India. It may also have to face regulatory hurdles in India.

Bajaj Finance

BoB step up on super app play, faces a tough competition

Bajaj Finance has recently stepped up its wallet business. Its cross-sell franchise has about 27 million customers with around 70% of all no-cost EMI loans given for offline consumer durable purchases being through it.

Bajaj has recently launched a payments app and looks to be on the way to build a super app. The launch of the digital wallet is part of a broader strategy by the consumer NBFC to expand its digital finance offerings. The company has been rolling out ‘Bajaj Pay’ in phases to expand into the payments segment.



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Top banks face up to Rs 800 crore hit on GST on FD insurance premiums, BFSI News, ET BFSI

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Major banks face increased costs of Rs 250 to Rs 800 crore on input tax credit on insurance paid to Deposit Insurance and Credit Guarantee Corporation (DICGC) by them on fixed deposits after the hike in insurance of deposits to Rs 5 lakh from Rs 1 lakh

The indirect tax department is questioning banks on the status of input tax credit (ITC) on the insurance paid to the DICGC.

All banks are required to insure this amount with the DICGC and pay a premium on that sum, for which an 18% GST rate is applicable.

Most banks consider GST as a cost and add it towards the available input tax credit.

Input tax credit

Input tax credit is GST paid on input services or raw materials that can be set off against a certain kind of future tax liability.

The indirect tax department is contesting the availability of input tax credit on insurance premiums.

Banks may have to shell out not only higher premiums and also incur higher tax costs due to credit disputes.

The indirect tax department claims the insurance premium paid by banks is not towards taxable output services and so they cannot input tax credit. As per the GST framework, banks can only avail half of the input tax credit available to them. The tax department claims the insurance premium is not towards the “core” function of banks.

Services free

Since most services provided by banks to fixed deposit holders are free, the tax credit cannot be used against any outgoing GST as well, it says.

SBI, Bank of Baroda, Punjab National Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and IndusInd Bank are the major banks that may be affected.

Under the existing tax laws, there is an ongoing debate as to whether any cost that a company or a financial institution incurs due to a regulatory requirement should be considered crucial, and whether input tax credit hould be available on that.



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