Tag: covid

South Indian Bank posts net profit of nearly ₹7 crore in Q4

Banking & Finance

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South Indian Bank has registered a net profit of ₹6.79 crore in the fourth quarter of FY21 against a loss of ₹143.69 crore during the corresponding period of the previous year. The net profit for the entire FY21 is ₹61.91 crore as against ₹104.59 crore of the previous financial year.

Murali Ramakrishnan, Managing Director & CEO said the lower quarterly profit was mainly on account of credit cost on the fresh slippages during the fourth quarter, as a result of additional stress in the economy due to Covid-19 pandemic. “Bank has strengthened the review and monitoring system of the advance portfolio to improve the credit quality and thereby bringing drastic reduction in the slippages and improve upgrades/ recovery,” Ramakrishnan said.

Vision 2024

The bank has come up with a 3-year Medium Term Strategy (Vision 2024) wherein the focus will continue in the areas of MSME and Retail Loans with improved underwriting standards. The technology initiatives will be leveraged to improve the CASA and the technology income in the coming quarters.

The prevailing Covid-19 pandemic has impacted the growth in the business and personal loan segment. “As part of the business strategy to reduce the exposure in the corporate advances, the bank has brought down the share of corporate advances from 28 per cent as on March 31, 2020 to 25 per cent as on March 31,” he said.

The bank has also been able to meet the targeted levels of recovery/ upgrades which has helped in containing the GNPA level despite higher slippages numbers during the year on account of the pandemic. The provision coverage ratio has improved to 58.73 per cent from 54.22 per cent.

The Capital Adequacy Ratio stands comfortable at 15.42 per cent as on March 31. The bank has raised the equity capital during the quarter for an amount of ₹240 crore which strengthened the Common Equity. “The bank plans to raise further capital during FY21-22 to strengthen the capital base,” he added.

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Bank employees hard work during Covid rewarded as performance incentives roll out, BFSI News, ET BFSI

Banking & Finance

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The risk and hard work of bank employees during the Covid pandemic are being rewarded, though it is a small gain.

Employees of PSU banks which have posted profits are set to get a performance-linked component in the wage agreement signed with the Indian Banks’ Association (IBA) in November 2020.

Canara Bank this week paid out a performance-linked incentive to its employees, equivalent to 15 days’ pay. The bank has reported a net profit of Rs 2,557 crore for FY21 as compared to a Rs 5,838-crore loss in the preceding year.

Bank of Maharashtra has distributed a performance-linked incentive to its employees after posting a 187% increase in its fourth-quarter net profit to Rs 165 crore.

How much would SBI employees get

State Bank of India is also expected to announce an improvement in profits. In terms of the wage agreement, its 2.5 lakh employees would get an incentive of five days’ salary if the bank reported an increase in operating profit of between 5% and 10%, and 10 days’ if the increase is between 10% and 15%, and 15 days for any increase above 15%.

Performance-linked incentive plan

IBA had said that to inculcate a sense of competition and also to reward the performance, the concept of the performance-linked incentive (PLI) scheme has been introduced for the first time. The scheme will be effective from the current financial year.

The scheme in public sector banks is based on the operating profit or net profit of the individual bank. It is optional for private and foreign banks. As per the agreement, the PLI would be payable to all employees annually over and above the normal salary payable.

Unions opposition

The bank employees unions had opposed any move to introduce a performance-linked incentive for public sector banks proposed by Banks Board Bureau. They had said it would be a prelude to introducing differential pay as also the concept of Cost to Company at a later stage

Setting performance parameters at various levels of banking functions does not fit well into the banking environment as there are multiple functions for a few and specialist functions for another lot, they had said.

Such parameters may not work well with the functionaries in controlling offices who undertake jobs of evolving and implementing policies and guidelines at the back office. The introduction of such practices are aimed at bypassing the bipartite machinery and casting employees against their own colleagues, they had said.

Unions had also strongly opposed linking their salaries to the performance of the bank, arguing that the financial performance depends on the government policies over which they have no control. Also, most of the losses were on account of large corporate loans which are decided at the top level.

However, the IBA had insisted on the clause to reward better-performing banks and to inculcate a sense of competition among employees of public sector banks.

Improved performance

Despite the pandemic, most public sector banks are expected to improve their performance over the previous year. This is because by the time they finalised their results for FY20, the entire nation was in a lockdown and many banks made significant provisions for Covid impact. The four acquiring banks last year made significant fair value provisioning in the 10-bank mega-merger. As a result, most public sector banks are expected to report a profit during the current fiscal.



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More Covid-hit companies may need recast of loans, BFSI News, ET BFSI

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MUMBAI: Banks have told the Reserve Bank of India (RBI) that the extended restrictions due to the resurgence of the Covid pandemic have caused significant stress on businesses and a restructuring window may be required for more loans.

Although the RBI did allow lenders to restructure loans for borrowers earlier this month, the facility was restricted to loans of up to Rs 25 crore. Since the measures were announced, the second wave of Covid emerged across the country, resulting in most parts of the country observing some form of a lockdown.

On Wednesday, RBI governor Shaktikanta Das met with the CEOs of public sector banks (PSBs) through a video conference. Acknowledging the role played by PSBs in extending various banking services including credit facilities to individuals and businesses during the pandemic, the governor asked them to quickly implement the Covid relief measures already announced. He also reiterated the need for banks to raise capital to increase the resilience of their balance sheet should further shocks arise out of the pandemic.

The governor in the meeting sought feedback from banks on the state of the financial sector and credit flows to different sectors, including small borrowers and micro, small and medium enterprises. The governor also sought information on whether rate reductions by banks were in line with the RBI’s action to bring down the cost of funds.

Bankers said that, while the first quarter is traditionally a sluggish period for credit growth, this year loan pick-up was even lower because of the lockdown. They said that the extended lockdown, while necessary to contain the pandemic, is hurting a large segment of the economy. There is a clear indication of collection efficiency being hit. While earlier the banks were more concerned about the survival of small businesses, they are now worried that larger companies may also start facing liquidity related issues as economic activities in non-essentials have been significantly hit.

Non-banking finance companies (NBFCs) have already asked the RBI for a moratorium for their borrowers and their borrowings from banks. Bankers say that in 2020, NBFCs shrunk their books and reduced debt and obtained cheap finance because of targeted long-term repo operations announced by the RBI, which helped them tide last year’s lockdown. This year, no such package has been announced so far.



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Paytm empowers users in Kerala to pay their electricity bills 24×7

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Digital financial services platform Paytm has announced that users in Kerala can now pay their electricity bill 24×7 on the platform.

The company has also announced an assured reward on every bill payment. Users paying the electricity bill for the first time on the platform will get a guaranteed cash back of up to ₹50.

A company spokesman said Paytm is a pioneer in electricity bill payments and has partnered with over 70 electricity boards across the country to serve millions of users in this segment.

Paytm leads India’s digital payments with 1.2 billion monthly transactions

Reminders through SMS

To bring more convenience to its users, it has recently enhanced its UI for electricity bill payments that takes less than a minute to complete a transaction. Users need to simply choose their State and service provider, enter their bill number or customer account number and then make that payment. The payment is instant, and users get a receipt on completion of bill payment. Paytm also reminds about the due date for payments through SMS and in-app notifications.

Telangana power regulator for rapid deployment of smart meters

Paytm, which has a 20 million-strong merchant base, is seeing more businesses extensively accepting payments online. Since April 2020, it has witnessed a massive surge in digital payments for electricity bills as more people avoid venturing out, standing in queues and, most importantly, touching cash in the Covid situation.

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RBI, BFSI News, ET BFSI

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Mumbai, As the severe Covid crisis and the resultant lockdowns have shut down economic activities to a great extent, the monthly RBI Bulletin has said that demand and employment have been among the most impacted economic aspects amid the second Covid wave.

The RBI Bulletin for May 2021 noted that the real economy indicators moderated through April-May 2021.

“The biggest toll of the second wave is in terms of a demand shock – loss of mobility, discretionary spending and employment, besides inventory accumulation, while the aggregate supply is less impacted,” it said.

It, however, said that the resurgence of Covid-19 has dented, but not debilitated economic activity in the first half of Q1 2021-22. Although extremely tentative at this stage, the central tendency of available diagnosis is that the loss of momentum is not as severe as at this time a year ago, it added.

On the NBFC segment, the report said that the consolidated balance sheet of NBFCs grew at a slower pace in Q2 and Q3 2020-21. However, NBFCs were able to continue credit intermediation, albeit at a lower rate, reflecting the resilience of the sector.

The Reserve Bank and the government undertook various liquidity augmenting measures to tackle Covid-19 disruptions, which facilitated favourable market conditions as indicated by the pick-up in debenture issuances.



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‘Second wave not a big blow to economic activity in first half of Q1’

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The resurgence of Covid-19 has dented but not debilitated economic activity in the first half of Q1 (April-June) FY22, according to an article in the Reserve Bank of India’s latest monthly bulletin.

Loss of momentum

Although extremely tentative at this stage, the central tendency of available diagnosis is that the loss of momentum is not as severe as at this time a year ago, it added.

“The ferocity of the second wave has overwhelmed India and the world. War efforts have been mounted to stop the second surge in its tracks,” according to the article, ‘State of the Economy’, put together by 18 RBI officials, including Deputy Governor MD Patra.

They estimated that real economy indicators moderated through April-May 2021 as many States imposed restrictions to arrest the renewed surge in infections.

The authors observed that the biggest toll of the second wave is in terms of a demand shock – loss of mobility, discretionary spending and employment, besides inventory accumulation, while the aggregate supply is less impacted.

Impact of new infections

The authors opined that the impact of the new infections appears to be U-shaped. Each shoulder of the U represents sectors that are weathering the storm – agriculture at one end and IT on the other.

“On the slopes of the U are organised and automated manufacturing on one side and on the other, services that can be delivered remotely and do not require producers and consumers to move.

“These activities continue to function under pandemic protocols,” the article said.

According to the authors, in the well of the U are the most vulnerable – blue collar groups who have to risk exposure for a living and for rest of society to survive.

The aforementioned groups include doctors and healthcare workers; law and order; and municipal personnel; individuals eking out daily livelihood; small businesses, organised and unorganised – and they will warrant priority in policy interventions.

The authors underscored that: “It is in this direction that the Reserve Bank, re-armed and re-loaded, has stepped out. This is the beginning. There is more work to be done.”

As per the article, the data show that the wave is shifting from big cities to small towns and villages where testing is low and health infrastructure poor, and this is where the country must refocus our efforts and energies to put down the virus.

“The key lesson from the visitation of the second wave is vaccinate, vaccinate, vaccinate…The road ahead is fraught with danger, but India’s destiny lies not in the second wave, but in life beyond it,” said the authors.

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JP Morgan earmarks $3.8 mn for India staff; offers $10 mn more in phases, BFSI News, ET BFSI

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Global investment banking major JP Morgan Chase has increased its COVID-19 support to the country manifold, taking the total planned aid to close to USD 16 million, of which USD 3.8 million is for supporting its over 35,000 employees in India.

The head of the Wall Street major Jamie Dimon had on April 30 had committed an upfront USD 2 million financial aid along with an appeal to its over 2.5 lakh employees globally to chip in which would be matched by an equal amount by the company.

In an internal communication on Thursday, which PTI has seen, Filippo Gori, the chief executive of JP Morgan Asia Pacific, said the bank has set aside USD 3.8 million for the care of its over 35,000 India employees, and an additional USD 10 million is being earmarked in phases to support the needy in their pandemic recovery phase.

We’ve committed an additional USD 3.8 million to support our colleagues in India in their fight against the virus in 2021. This money will be used for medical insurance, 24×7 ambulance service, partnerships with our clinical service providers and hospitals for hotel and in-home quarantine, doctor-on-call service; and vaccination reimbursement support, Gori said in the mail.

The bank is also working towards increasing access to vaccines, subject to availability and government regulations, he added.

This is excluding the already-committed USD 2 million in immediate India-wide coronavirus relief efforts such as providing support to the public health system to improve the capacity of small hospitals, enabling them to provide treatment for greater numbers of affected patients and also providing food and essential items to low-income communities.

Besides this, the bank has also committed an additional USD10 million to help the larger already-disadvantaged communities tide over the long-term consequences of the pandemic often those.

This is part of JP Morgan’s annual USD 32 million philanthropic commitment to building economic resiliencies for these communities, Gori said.

This community support and outreach will include support to microbusinesses, particularly those owned by women; helping youth pursue promising careers; and help support inclusive fintech solutions for the post-crisis environment ensuring access to financial tools that will help them weather any future crisis, he said.

JP Morgan is also a member of the recently-announced global taskforce on the pandemic response, a public-private partnership providing 1,000 ventilators and a further 25,000 oxygen concentrators to India.

Gori said so far, their employees have contributed USD 1.5 lakh towards India aid, and the company will equally match that number.

In an email to all the employees on April 30, Dimon committed USD 2 million to Indian non-profits which are in the forefront of the pandemic fight, along with an appeal to its employees to donate with an additional commitment to match their contributions with an equal amount by the company.

The total aid, including medical supplies and medical equipments, from the US is reportedly nearing USD 500 million.



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Company posts highest-ever quarterly net profit of Rs 375 cr, BFSI News, ET BFSI

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Aditya Birla Capital on Friday said it has reported the highest-ever quarterly net profit of Rs 375 crore for the fourth quarter ended March 2021.

It had posted a net profit of Rs 144 crore in the year-ago period.

The non-banking financial company said it posted strong growth across businesses leading to delivery of the highest ever consolidated profit, despite a COVID-hit year.

The highest ever quarterly net profit at Rs 375 crore grew by 2.6 times year-on-year.

Revenue during the fourth quarter of the financial year 2020-21 rose by 16 per cent to Rs 5,917 crore as against Rs 5,085 crore in the year-ago period.

For the full year 2020-21, the company’s net profit grew by 22 per cent to Rs 1,127 crore as against Rs 920 crore in the previous financial year.

Revenue during the year rose by 14 per cent to Rs 20,447 crore from Rs 17,927 crore, ABCL said.

The active customer base grew by 22 per cent to 2.4 crore aided by the focus on granular retail growth across businesses.

The company’s AUM (assets under management) across asset management, life insurance, and health insurance businesses rose 10 per cent year on year, to over Rs 3,35,000 crore.

Overall lending book (NBFC and housing finance) grew by 2 per cent, nearly at Rs 60,000 crore.

Gross premium (life and health) grew by 25 per cent to Rs 11,076 crore, with the retail mix at 72 per cent, reflecting the scale in insurance, ABCL said.

The stock of the company closed at Rs 121.35 apiece on BSE, up 1.68 per cent from the previous close.



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PayPal introduces digital Foreign Inward Remittance Advice

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PayPal, a global digital payments company, has introduced an automated process for receiving Foreign Inward Remittance Advice (FIRA) — a key document for Indian MSME exporters and freelancers that establishes proof of receipt of export proceeds in foreign currency from outside the country.

At zero-cost, merchants will now be able to download their monthly digital FIRA issued by the bank, by simply logging into their PayPal account. This FIRA was otherwise coming at a cost close to ₹2,000 for every 20 international transactions. This initiative is aimed at empowering Indian MSME exporters to seamlessly grow their business internationally.

New exporters

“When we help the exporters, we help ourselves. Through this FIRA automation, our merchants get a better experience. We are hoping this will be one of things that will help us attract new exporters. It helps our existing base and in acquiring new exporters as well,” Nath Parameshwaran, Director, Corporate Affairs, PayPal India told BusinessLine.

He highlighted that the pandemic has significantly accelerated digital adoption especially amongst small sellers and freelancers. At zero-cost, digital FIRA process not only reduces time, saves money and removes friction but also eliminates the need to visit branches and thereby reducing the chances of the Covid-19 infection, he added.

This has eliminated a huge number of steps for the MSME exporter and freelancers who are using PayPal. In 2020, despite the pandemic headwinds, PayPal enabled exports worth ₹10,000 crore for 3.6 lakh small exporters with a majority driven by tribal, artisan and women led enterprises, according to Parameswaran.

What is FIRA?

Foreign Inward Remittance Advice (FIRA) is a document that acts as a proof for all inward remittances and payments received from abroad. This is issued by banks in India and is required by exporters of all sizes individual or a business, such as a limited company, partnership firm, sole proprietorship firm etc.

Previously, Indian sellers and freelancers had to send a manual request to PayPal’s partner bank and also pay a fee for the service. The bank would then issue FIRA as a physical statement which could take up to 10 days and required the seller to visit the bank to collect the same.

This latest PayPal initiative comes on the heels of its partnership last month with FlexiLoans.com, a digital lending platform, to provide freelancers, women entrepreneurs, sole proprietors in MSMEs with collateral free business loans.

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What has led to Indian millennials storming the stock market

Personal Finance

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A surge is visible in the equity markets, both in pre- and post-Covid India. Besides, most of the newcomers are between the age of 20 and 30 years. This young generation, or the so-called millennials, are more adaptive to new technology, apart from being keen on finding new ways to achieve their goals. There are other catalysts to this influx of first time participants. For instance, the entire stock markets ecosystem has evolved over the last five years and is conducive to new young participants.

Also, the surge of learning platforms and more genuine resources to conduct research has further helped spur the participation. Unlike their previous generations, the term stock market doesn’t bring a sense of fear among millennials as they are well read and well informed. They take their own decisions and take calculated risks in the markets.

Reduced dependency on brokers

Previously, the brokerage firms were dominating the industry in terms of providing a platform to trade, stock suggestions and managing money on the client’s behalf. However, with the entry of new-age tech brokers the industry has seen a drastic change as now there are separate companies offering different specialised solutions to each of the above services — a trading platform, specific recommendations and holistic financial planning.

The new entrants have given special attention to ease of use and focus towards providing a hassle-free experience through the use of technological advancements. It’s a win-win for all. From KYC updation to new account opening, everything can be done digitally. Almost everything is just a click away.

Besides, the broking industry has also become highly competitive in terms of the charges, which have given a further fillip to millennial participation. Zerodha, which is a discount broker, for instance, saw higher influx of younger investors during the pandemic. Investors in the age group of 20-30 years now make up 69 per cent of the company’s investors compared to 50-55 per cent pre-Covid.

Growth in learning platforms

Millennials prefer to make their own decisions. They focus on learning about stock markets and stock market education platforms have provided a lot of support. There is a plethora of knowledge available on the internet, — including blogs, YouTube, and online courses –at optimal cost to help people start their own stock market journey.

Some popular stock market education portals cover topics from basics to expert level. Examples of such platforms include Udemy and Elearnmarkets. These platforms offer courses suiting all needs–offline, online, self-paced, or live.

This has helped young participants to first develop a proper knowledge base and then venture into the markets so that they are more apt to handle the volatile nature of the market.

Ease of doing research

Earlier, the brokers and media houses used to do all the research and give trading calls to their clients through news, calls and reports. The scenario has now changed with the millennials barely relying on such news and preferring to do their own research. In this regard, research sites have gained popularity, which has simplified the process of doing fundamental and technical analysis.

Offering a host of information such as market news, charts, financial data of companies, everything at a click, online tools and platforms have made stock research quite accessible. Stockedge is one such platform that hosts such information. These platforms have helped participants take well-informed decisions. Access to information and readymade analytics is no more a barrier for them. Other platforms such as TradingView, Chartink, have made intraday trading easy for active traders in the market by providing them solutions that help them make quick decisions during market hours.

We see how the entire ecosystem has become very inclusive and supportive for anyone to join in, learn and grow.

The stock market has recently been in an upward trend and has raised optimism among newbies. But the market is unpredictable and may become volatile soon. Experienced participants manage through such volatile phases and only time will tell if the millennials shy away or continue with their journey.

The author is a co-founder and CEO of StockEdge & Elearnmarkets.com

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