Tag: Covid-19

Shriram Life Insurance eyes 15-20% growth

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Private sector Shriram Life Insurance, which has been focussing on rural markets, is hoping to grow by 15-20 per cent on an annual basis.

“The expectation is that the life insurance industry will grow by about 15 per cent or so for the next number of years. So we hope to grow slightly faster than that — maybe between 15 per cent and 20 per cent per year,” said Casparus Kromhout, Managing Director and CEO, Shriram Life Insurance.

While the second wave of the Covid-19 pandemic has raised further uncertainties on the economic outlook, Kromhout said the life insurer has been putting a lot of things in place for supporting its existing channels. It has also been working on innovation and creating new business models.

Net profit

The life insurer registered a threefold increase in its net profit to ₹106 crore in 2020-21.

“The first quarter of last fiscal was very difficult for everyone. But we ended the year with new business premium growth of 25 per cent,” he told BusinessLine in an interaction, pointing out that a large part of the company’s customer base is from rural areas and was impacted by the pandemic.

“When the first lockdown came last year, we were very worried because our customer base was impacted by both the medical emergency and loss of income. We thought that the business would really suffer and customers wouldn’t be able to pay their premiums or buy insurance. Fortunately, we were able to come back in the second half of the year,” he said.

In 2020-21, about 47 per cent of its new business and 54 per cent of claims came from the rural segment.

Its average premium size is about ₹17,400 while the average industry premium size is around ₹50,000.

The rural areas have been quite severely impacted in the second wave of the pandemic, he said adding there has been an uptick in Covid related claims in April and May this year. He, however, said the company is well prepared to meet the rising claims.

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Amazon to arrange free Covid-19 health cover for its sellers in India

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As a follow-up to the Covid-19 health insurance policy arranged for its marketplace sellers in 2020, Amazon.in announced today that it is arranging Covid-19 health insurance cover, completely free of cost for registered sellers on the Amazon.in marketplace, through Acko General Insurance Limited (Acko).

Amazon.in will fully fund the premium cost for this group insurance policy that will be valid for one year after activation. Thus, sellers with an active listing on Amazon.in between January 1, 2020 and May 1, 2021 can enrol themselves under the group policy to get coverage for Covid-19 hospitalisation and medical expenses up to ₹50,000. In addition, the insurance policy will also cover domiciliary treatment expenses, as prescribed, up to the sum insured.

“We remain committed to serve the nation in its fight against Covid-19. As part of our efforts to support marketplace sellers during these challenging times, we are funding and enabling sellers to opt for this Covid-19 health insurance policy for their benefit. We are working tirelessly with sellers to serve customers across India safely and want to ensure that medical expenses are the least of their worries at this time. While we sincerely hope that none of the marketplace sellers need to use this, the policy ensures that if they need it, their medical expenses are taken care of through the insurance” said Manish Tiwary, Vice President, Amazon India, in a statement.

Amazon.in will open a 30-day enrolment window wherein eligible sellers can enrol themselves by providing basic personal particulars and KYC documents. No medical tests will be required for registration and opt-in. For each seller account, only one person may be covered under the insurance policy. Once the requisite details are processed, a Unique Health Identification (UHID) number will be issued post- registration to the marketplace sellers by Acko, which they can use to file their claims and reimbursements. To claim reimbursement for Covid-19 related hospitalization and treatment expenses, we will set up a mechanism to enable eligible sellers to apply directly to Acko. The claim under the policy will be payable for a seller who is enrolled under the policy and who tests positive for Covid-19 for the first time, after 15 days from the date of issuance of cover. In addition, expenses incurred on co-morbidity in case of Covid-19 hospitalization will be covered under the policy.

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Covid-19 pandemic fuelled digital payments modes: RBI Annual Report

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The Covid-19 pandemic fuelled the proliferation of digital modes of payments, the Reserve Bank of India noted in its Annual Report 2020-21. The prospects for FinTech in India’s financial system in 2021-22 will depend upon the degree of entrenchment of digital usage, it further said.

“The Covid-19 pandemic has fast-tracked digital transformation of the payments ecosystem in India. Besides augmenting the broad-based use of technology, the pandemic has fuelled the proliferation of digital modes of payment, propelling the country towards ‘less-cash’ alternatives,” the report said.

Overall, the total digital transaction volume in 2020-21 stood at 4,371 crore, as against 3,412 crore in 2019-20, attesting to the resilience of the digital payment system in the face of the pandemic.

Future of fintech

The report noted that the prospects for FinTech in India’s financial system in 2021-22 will depend upon the degree of entrenchment of digital usage, which is, in turn, contingent upon the resilience of the underlying acceptance infrastructure, financial literacy and awareness of the users and strengthening of the customer protection and cyber security protocols in place.

Also read: Demand for cash surged in 2020-21 due to Covid-19 pandemic: RBI Annual Report

“All these factors will help in cementing the trust of users in digital modes,” it said.

The RBI’s initiative to set up a pan-India new Umbrella Entity will intensify competition in the digital space and bring out the best for end users and other participants in terms of efficiency gains and convenience, the report further said.

“Collaborations between card issuing banks, FinTech players and other stakeholders of the payments ecosystem are likely to give rise to a new hybrid model of finance that will help address credit gaps and ramp up last mile outreach by leveraging on the geographical footprint of banks and technological know-how of FinTech companies,” it noted.

In the area of digital payments, various initiatives such as an innovation hub, a regulatory sandbox and offline payment solutions are underway to ensure that in the digital ecosystem, India maintains its position as a leader.

The RBI is also in the process of extending the geo-tagging framework put in place to capture location of bank branches, ATMs and BCs to cover payment system touch points, enabling accurate capture of their location across the country. Further, the possibility of leveraging India’s domestic payment systems to facilitate cross-border transactions is being explored, and corridors and charges for inward remittances will be reviewed.

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Demand for cash surged in 2020-21 due to Covid-19 pandemic: RBI Annual Report

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The precautionary demand for cash surged in the economy in 2020-21 due to the Covid-19 pandemic, the Reserve Bank of India said in its Annual Report 2020-21.

“The year witnessed a higher than average increase in banknotes in circulation primarily due to precautionary holding of cash by the public induced by the Covid-19 pandemic, and its prolonged continuance,” said the report, which was released on Thursday.

The value and volume of banknotes in circulation increased by 16.8 per cent and 7.2 per cent, respectively, during 2020-21 as against an increase of 14.7 per cent and 6.6 per cent, respectively, witnessed during 2019-20.

“Concerted efforts were made to ensure that Currency Chests remain adequately stocked with all denominations of banknotes in order to maintain timely supply of fresh banknotes across the country,” it further said.

Currency in circulation has been increasing along with the rise in digital payments. The volume of banknotes in circulation has been rising and stood at 12,436.7 crore pieces as on March 31, 2021 versus 11,597.7 crore pieces in 2019-20.

Significantly, the volume and value of ₹2,000 notes in the currency in circulation declined while that of ₹500 notes increased.

In 2020-21, the share of ₹2,000 currency notes of the overall currency in circulation in terms of volume fell to 2 per cent from 2.4 per cent in 2019-20 and 3 per cent in 2018-19. In value terms, it fell to 17.3 per cent in 2020-21 from 22.6 per cent in 2019-20.

In contrast, the share of ₹500 currency notes in terms of volume in the overall currency in circulation rose to 31.1 per cent in 2020-21 from 25.4 per cent in 2019-20. In value terms it increased to 68.4 per cent in 2020-21 from 60.8 per cent in 2019-20.

“In value terms, the share of ₹500 and ₹2,000 banknotes together accounted for 85.7 per cent of the total value of banknotes in circulation as on March 31, 2021, as against 83.4 per cent as on March 31, 2020,” the report said.

In volume terms, ₹500 denomination constituted the highest share at 31.1 per cent followed by ₹10 denomination banknotes, which constituted 23.6 per cent of the total banknotes in circulation as on March 31, 2021, it further said.

The report said the RBI is in the process of introducing varnished banknotes in ₹100 denomination on a field trial basis with a view to elongate the life of the banknote.

Outlining its agenda for 2021-22, the report said it will focus on procurement of new shredding and briquetting systems, augmentation of disposal of soiled notes; and establishment of a state-of-the-art facility for conducting cutting edge research to test robustness of security features of currency notes and introduction of new security features.

“Going ahead, the Reserve Bank’s endeavour would be to enhance the lifespan of banknotes, automate the handling and processing of notes, and rationalise the available infrastructure for maximum utilisation,” it said.

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With no cushion like last time, second Covid wave poses challenges for auto lenders

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The second Covid-19 wave will have a material impact on automobile lenders’ asset quality as borrowers are grappling with reduced capacity utilisation and increased operating costs due to rising fuel cost, which would reduce their ability to service debt, says a report of India Ratings.

The impact of the first covid wave was cushioned with multiple measures that boosted optimism and recovery. However, the outcome may be different during the second wave, due to the widescale impact, including rural areas and pent-up demand being absorbed already.

Collections hit

April 2021 collections for most of the lenders remained at a decent level since the first 15 days were broadly normal across the nation. Top public sector bank State Bank of India had 95-96 per cent collection efficiency in April 2021. However, increase in localised and regional lockdowns has impacted collections of the lenders for the month of May 2021, according to industry representatives.

India Ratings estimates that the collection efficiency for the first fortnight of May could be lower by 5-7 per cent on the top of a similar decline in April over March 2021.

With reduced cash flows and rising operating cost due to fuel inflation, the excess capacity had its offsetting impact on freight contract renewals or market freight rates, all impacting borrowers’ cash flows.

Early demand indicators such as the E-way bill, diesel consumption are showing signs of moderation and asset inflation (rising prices of raw materials such as steel and cement) would impact demand offtake and thus load availability. Thus, both demand and rising operating cost would moderate borrowers’ cash flows in FY22.

Restricted mobility

Lenders’ collection efficiency would also be affected by restricted mobility as the second wave has spread across all geographies. Thus, the rating agency has a negative outlook on commercial vehicle finance as an asset class.

There are emerging trends of rising loan tenures across vehicle lenders to reduce servicing burden for borrowers. Incrementally, all vehicle segments would be impacted by the pandemic as it gets widespread, hindering business activity and thus affecting borrowers’ cash flows.

Capacity utilisation levels have been significantly affected across the heavy commercial vehicle segment. The earlier estimate of replacement demand driving lenders’ growth would take a backseat, as normalisation would be a long-drawn process with borrowers looking at increasing utilisation on existing fleet rather than purchasing new vehicles.

Lenders would be impacted in the medium term due to restricted mobility and moderating borrowers’ cash flows. Collections have become difficult due to the surge in infected cases and would impact asset quality during the first half of this fiscal, said India Ratings.

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Challenging year stares at microfinance sector: Ind-Ra

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India Ratings (Ind-Ra) said a sequential challenging year stares at the microfinance sector, with the impact of the credit costs on account of the second wave expected to be higher in the annual financials for FY22 than FY21.

The credit rating agency reiterated a Stable Outlook for large MFIs and a Negative Outlook for the rest for FY22.

With the second wave penetrating rural markets, Ind-Ra estimated collections for microfinance institutions (MFIs) and small finance banks (SFBs) to have declined 3-5 per cent in April 2021 and additional 5-7 per cent in May 2021 (first fortnight of the month), both on a month-on-month basis, as states implement stricter measures to manage the second Covid wave.

The agency expects the overall microfinance sector to witness a shortfall of 10-15 per cent in collections on a consolidated basis in May 2021.

“That being said, the variation among MFIs could be wider, depending on their level of concentration in regions where lifting of restrictions could be slow,” said Amit Rane, Senior Analyst, in a note.

Ind-Ra, in its microfinance outlook had estimated credit costs for MFIs to be in the range of 3-8 per cent in FY21 on account of the first Covid first wave as collections picked up in the pre-Covid portfolio and normalised for post September 2020 originations.

Portfolio deterioration

The agency observed that the incidence of most of the relevant provision will also fall in FY22, given that the bulk of the second wave portfolio deterioration would happen at the beginning of FY22.

As a consequence, the impact of the credit costs on account of the second wave would be higher in the annual financials for FY22 than FY21 and possibly even the demonetisation crisis; where credit costs were spread over three years as the event occurred at end-3QFY17 and the regulator provided forbearance for NPA recognition, it added.

Funding access critical

Ind-Ra believes smooth access to funding and liquidity would be critical for the microfinance sector.

It assessed that for most large MFIs (assets under management (AUM) above ₹5000 crore or MFIs that are part of large groups), bank funding lines etc. could continue and hence they may not face immediate liquidity stress.

Recently, the regulatory announcement of special long-term repo operations of ₹10,000 crore for SFBs and categorisation of lending by SFBs to MFIs under priority sector lending (for loans to MFIs of AUM ₹500 crore and less) is a step to ensure flow of liquidity to small MFIs, Ind-Ra said.

However, as per Ind-Ra’s analysis the portfolio of SFBs and their lending to MFIs with AUM of less than ₹500 crore billion is marginal.

Ind-Ra expects mid and small MFIs to continue to face challenges in fund raising and / or borrowing costs.

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Covid-19: UK-based banks announce financial and medical support for employees in India

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Barclays and Standard Chartered Bank have announced a slew of measures, including salary advance, enhanced insurance limits and doctors on call, for their employees in India to help them deal with the Covid-19 pandemic.

Barclays has introduced a new set of measures, including facilitating vaccinations, enhanced insurance limits, uncapped paid leave, financial aid and support channels, for its over 20,000 employees in India to deal with the Covid-19 pandemic.

Some of the aforementioned measures will also be available to the families of the London-headquartered Barclays, whose India operations include banking, securities, technology and shared services.

Also read: India inc attract customers with ‘pandemic’ focussed products

The Bank, in a statement, said hospitalisation insurance limits have been raised and certain costs not covered by insurance, such as PPE equipment charges, will be covered.

“All employees can take uncapped paid leave to give sufficient time to recuperate from Covid-19, get vaccinated, and for taking care of a family member.

“Junior colleagues will receive one month’s salary in advance to help manage unforeseen expenses,” it added.

Also read: Several businesses suspend operations in India, help staff as coronavirus ravages

The Bank said employees have access to a 24/7 Covid care helpline, online doctor consultations, a peer-to-peer support network, and a 24/7 confidential helpline that provides free counselling services.

Standard Chartered said its comprehensive benefit programme for its over 25,000 employees in India will include financial reimbursement of expenses incurred towards Covid-19 related medical treatment for parents and parent-in laws up to ₹2.50 lakh per patient with ICU admission and up to ₹1.25 lakh per patient with any other hospitalisation for Covid-19 treatment.

Also: As staff call in sick, India Inc turns a care-giver with well-being interventions

The London-headquartered Bank said it will provide interest free salary advance of up to six months gross pay to meet the expenses incurred on account of Covid-19 related medical emergencies. The repayment will commence following a six-month moratorium period.

In the unfortunate case of an employee passing away, their family will receive financial protection in the form of four times of the annual gross compensation, Standard Chartered said in statement. This increased insurance cover is applicable to all employees, it added.

On medical support, the Bank has constituted a team to assist employees in the hospitalisation process.

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RBI board approves transfer of higher surplus to government

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The Reserve Bank of India’s Central Board on Friday approved the transfer of ₹99,122 crore as surplus to the Central Government for the accounting period of nine months ended March 31, 2021 (July 2020-March 2021). This is 73.50 per cent higher vis-a-vis the ₹57,128 crore transfer approved in the accounting year 2019-20.

This transfer of higher surplus in the nine months ended March 31, 2021 comes in the backdrop of the government stepping up spending for healthcare and social sector schemes in the wake of the Covid-19 pandemic.

Also read: Released liquidity may help banks to subscribe to G-Secs

The Board, at its 589th meeting on Friday, decided to maintain the Contingency Risk Buffer at 5.50 per cent.

The Board reviewed the current economic situation, global and domestic challenges and recent policy measures taken by the RBI to mitigate the adverse impact of the second wave of Covid-19 on the economy, RBI said in a statement.

With the change in the RBI’s accounting year to April-March (earlier July-June), the Board discussed the working of the RBI during the transition period of nine months (July 2020-March 2021) and approved the Annual Report and accounts of the Reserve Bank for the transition period.

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Bounce rates of auto debit transactions rise in April

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In a worrying repetition of last year’s Covid-19 led economic distress, bounce rates for recurring transactions were elevated in April.

Data captured by the National Payments Corporation of India from its National Automated Clearing House (NACH) platform, too reveal that the number of unsuccessful auto debit requests in the month of April had once again begun to climb up after remaining low in March.

According to NPCI’s data, of the total of 8.54 crore auto debit transactions on the NACH platform in April, 5.63 crore were successful while 2.9 crore were returned. This reflects a return or bounce rate of 34.05 per cent in April compared to 32.76 per cent in March.

The rate of unsuccessful transactions in April is however, still lower than previous months like February and January when it was at a little over 36 per cent and the peak of 45.4 per cent in June 2020.

Banks watchful

The issue was also flagged by HDFC Bank in its fourth quarter analyst call when the management noted that bounce rates had begun to rise in April, which could be an indication of rising systemic stress.

Other banks too are remaining watchful about repayments and the Reserve Bank of India’s Restructuring 2.0 framework is expected to help small borrowers tide over the current uncertainty.

“Collection efficiency in April has been lower and the impact has been felt in SME and MSME segment and not so much in the salaried segment. Chances are the month of May would see a similar trend. However, this time around, there have not been any salary cuts or job losses so far in the organised sector,” noted Gaurav Gupta, CEO, MyLoanCare.in.

Analysts are hopeful that with limited lockdowns, the economic distress will not be as much as last year

“We estimate that the severely affected States account for about 48 per cent of retail credit and about 56 per cent of overall credit. Again, self-employed categories will bear the biggest brunt of localised lockdowns,” said a report by Emkay Global Financial Services.

Self-employed category

It expects that within retail assets, which constitutes about 31 per cent of overall credit, the self-employed category accounts for nearly a third – though the impact will largely be restricted to business loan, loan against property and MFI portfolio.

A recent SBI Ecowrap report also noted that NPCI-NACH debit return per cent reached a peak in June 2020 and has been on a declining trend since then. The per cent return (value terms) has declined to 27.5 per cent in March 2021 from the peak of 38.1 per cent in June 2020. Even the volume percentage declined to 32.8 per cent from 45.4 per cent during the same period.

“With various restrictions at State and district level imposed during April, it is yet to be seen whether it affects the recurring payments going forward,” it however said.

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Standard Chartered bank to offer upto Rs. 250000 for the employees who are covid positive, BFSI News, ET BFSI

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Standard Chartered Bank and its Global Business Services (GBS) unit in India have announced a slew of initiatives aimed at providing financial and medical assistance to employees.

These new interventions are mostly targeted at junior and mid-level workers, and they are in addition to the benefits that already exist for those employees and their immediate family members.

Additional benefits such as Financial reimbursement of expenses incurred towards COVID-19 related medical treatment for parents and parent-in laws up to Rs 250,000 per patient with ICU admission and up to Rs 125,000 per patient with any other hospitalisation for COVID-19 treatment, Interest free salary advance of up to 6 months gross pay to meet the expenses incurred on account of COVID-19 related medical emergencies can be availed with immediate effect.

Vaccination drives are being organised in multiple office premises for employees and their family members. Additionally, ambulance services, medical oxygen and ventilators are being sourced for helping those in critical health conditions and facilities like doctors on call, counselling sessions including that for emotional well-being, Emergency Support, access to testing labs and Medical Consultancy are being provided.

Zarin Daruwala, Cluster CEO, India and South Asia, Standard Chartered Bank, said, “We are doing everything possible to support our colleagues in these difficult times and we hope that our new initiatives, including timely financial support, will support our colleagues through what is a really challenging period”

Matthew Norris, Global Head, GBS, Standard Chartered, said, “We’re taking these measures swiftly after identifying particular needs that have come up and hope that this will help in mitigating some of the issues navigating through the pandemic.”



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