Tag: economy

‘Focus on growth will continue’

Banking & Finance

[ad_1]

Read More/Less


The six-member monetary policy committee decided to maintain status quo on the policy repo rate to support growth, which has been laid low by the second Covid-19 wave , and to tackle inflationary pressures arising from rising global commodity prices, especially crude oil, and logistics costs.

RBI Governor Shaktikanta Das and Deputy Governors MK Jain, MD Patra, M Rajeshwar Rao, and T Rabi Sankar fielded questions from the media. Excerpts:

Why is RBI focussed only on supporting the 10-year benchmark Government Securities (G-Secs) in its market interventions?

Das: We focus on the entire yield curve, across maturities, and not just the 10-year G-Secs. Somehow there is a perception about the RBI being focussed only on 10-year G-Sec. For example, in the last G-SAP (G-Sec Acquisition Programme) auction, we had G-Secs across the maturity profile for purchase. The bond yields look inverted because there is abundant liquidity. So, naturally, the short-end (G-Secs) rates fall more than 10-year or 14-year rates. Therefore, the curve looks steep. But it is not so. If you look at the 10-year or the 14-year segments, the rates haven’t really gone up.

Whether 6 per cent yield on the 10-year G-Secs is sacrosanct, there is nothing like that. We have talked about an orderly evolution of the yield curve and we are focussed on that.

How will lower inflation print for April give you more elbow room?

Das: The inflation print for April at 4.3 per cent gives us elbow room. And elbow room means, it gives us space with regard to liquidity operations, enables us to step up liquidity infusion into the system.

With inflation being revised up, does it mean that policy normalisation will start?

Das: With regard to normalising the policy stance, there is no thinking at the moment. Our earlier CPI inflation projection was 5 per cent and now we have revised it to 5.1 per cent. This is not a significant upward revision.

What is your assessment of the impact of the second wave?

Das: Rural and urban demand was dented in the first wave. But the expectation is that the second wave has moderated (in terms of number of fresh cases)….Our assessment is that the impact of the second wave will be confined within the first quarter.…Our expectation is that from the second quarter, the overall demand position also will improve.

How long can you look through incipient inflationary pressures?

Patra: In several MPC statements, the analysis of inflation has been done. And the view of the MPC is that at this time the inflation is not persistent. It will turn persistent when it is backed by demand pull. At the current stage, we find the demand very weak and there is no demand pull in the inflation formation. It is mostly on the supply side and therefore we have chosen to look through. But we are very, very vigilant about demand pressures and we will keep on monitoring as and when demand pressures start feeding into the inflationary process.

How concerned are you about the pass through of WPI inflation into CPI?

Das: We are monitoring the the revival of growth — how growth is taking roots. We are monitoring the inflation dynamics…So, the MPC has consciously decided to focus on growth and give forward guidance in terms of the accommodative stance, spelling out what is meant by accommodative. So, the focus on growth will continue. The inflation, according to the MPC’s assessment, during the current year, is 5.1 per cent, which is well within the 2-6 per cent band.

Corporate loan book has not picked up and private capex revival has not started. What is your assessment and, based on the announcements today, is there no need for a stimulus package?

Das: We have not told banks to push credit. We discussed the credit flow in the earlier meeting…We have requested banks to implement the resolution framework. The RBI never tells banks to push credit. Credit flow depends on market demand and borrower profile and borrowing proposal. The dent on the economy is in the first quarter. From the second quarter, overall economic activity will pick up.

NPAs of banks will remain within the stress test of Financial Stability Report ?

Das: On NPAs, the projection (FSR said GNPA ratio may rise from 7.5 per cent in September 2020 to 13.5 per cent by September 2021 under the baseline scenario; the ratio may escalate to 14.8 per cent under the severe stress scenario) we gave in the last FSR will be within that. The figures are manageable. We will spell out the details in the FSR.

Do you see a risk to the general government’s debt sustainability over the medium term?

Patra: Public debt will be about 90 per cent of GDP at the end of March 2022. Our assessment is based on the Domar condition of (public debt) sustainability, which requires that the growth rate of the economy should be higher than the interest rate at which the government services the debt, that condition is fulfilled as of now. The level of debt-to-GDP is set to decline over the next six years. So public debt is sustainable.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

We are looking at a revival through retail focus, says Shivan JK, MD, Dhanlaxmi Bank

Banking & Finance

[ad_1]

Read More/Less


Thrissur-based Dhanlaxmi Bank has chalked out strategies for growth by expanding its retail book. Shivan JK, Managing Director and CEO, is optimistic of achieving a good growth rate in the current fiscal. He says that the bank would continue to focus on CASA and retail advances including gold loans. The business volumes grew 6.39 per cent to ₹18,834 crore for the last fiscal. Edited excerpts:

What are your growth plans in the current financial year?

We will continue our focus on expanding our retail book through gold loan and other retail products. We have launched limited period MSME campaign. Our gold loan book is showing steady growth and with the launch of special 1/3-month product this book is gaining traction.

Also read: Dhanlaxmi Bank posts ₹5.28 crore net profit in Q4

We are looking at an overall 12-15 percent growth with thrust on retail/ agri including microfinance and select MSME and corporate growth. Our liability franchise is robust, and we estimate steady growth in CASA and retail term deposits.

What is the position of NPAs of the bank? How has it progressed last year?

The GNPA position as on March 31, 2021, was 9.23 per cent. We are maintaining a provision coverage of 74.20 per cent.

The position has deteriorated from the previous year due to a low advance base and recognition of NPAs, which were under moratorium following the Supreme Court order on March 23. If we include the ‘proforma’ NPAs, we were at 10.82 per cent as at the end of Q3.

Most of these are small ticket NPAs with good security coverage. Due to lockdown, our recovery efforts are constrained. We are hopeful of bringing this level below 9 per cent by end of this quarter. And there are no major fresh slippages expected.

What is the impact of Covid on the bank’s business? What plans are in place?

The growth has been muted whereas asset deterioration has steadily increased. The moratorium and its sudden lifting added to the woes.

We have instructed our operating offices to maintain all Covid protocols and safety precautions. We are tying up with two private hospitals to ensure that all staff take at least the first dose of vaccine.

When do you see the economy recovering? Also do you see interest rates going up soon?

Our hope is that things return to almost normal from the second quarter of this fnancial year and then the economy will bounce back with a growth in GDP of 8-9 per cent for the FY as per revised predictions. As for your question regarding the interest rates going up, we have reached the bottom. But with the liquidity overhang and the time lag in corporate demand picking up, the rates would be stable in the short term but will firm up by Q3.

Also read:Banks decide to extend unsecured personal loans for Covid treatment

How about NRI investments in your business? And are there any plans for merger with bigger banks?

We are not a big player in the NRI segment compared to other peer banks. In this current financial year, it will be one of our focus areas. And, no, we don’t have any plans for merger with other bigger banks.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Central authority needed to vet write-off, compromise proposals: AIBEA

Banking & Finance

[ad_1]

Read More/Less


The All India Bank Employees’ Association (AIBEA) has called for the setting up of a Central authority, comprising retired bankers with credit knowledge and integrity, under the auspices of the Central Vigilance Commission (CVC) to vet the proposals for write-off and compromise.

The authorities or the Committees that have sanctioned loans must not have the powers to write-off the same, according to CH Venkatachalam, General Secretary, AIBEA. “The (public sector) banks are bleeding because of the problem of bad loans and huge write-offs and provisioning are being made year after year from out of the operating profits,” he said.

Also read: Delay in insolvency resolution continues to be cause for concern

As per the Association, in 2019, bad loan write-offs by banks amounted to ₹1,83,391 crore and the amount transferred from operating profits as provisions for bad loans/ NPAs (Non-Performing Assets) was at ₹2,29,852 crore.

‘Compromise’ proposals

Venkatachalam emphasised that all write-off proposals beyond a particular limit should be disposed off by the Central Authority constituted specifically for the purpose. Further, “compromise” proposals should be screened at the highest levels. He alleged that going by present day experience, these so-called “compromise proposals” are nothing but camouflage and cover-up of collusive acts.

“Willful bank loan default should be treated as a criminal offence… personal guarantees/ assets of the borrowers including directors of the corporate sector should be attachable for recovery of bank loan dues as has been held by the Supreme Court of India,” Venkatachalam said.

In a representation to the RBI’s committee on the functioning of Asset Reconstruction Companies (ARCs), AIBEA said, “Looking to ARCs’ track record, recovery performance, and the loss borne by the banks on bad debts handled by ARCs, we are very clear that ARCs are not required but stringent laws should be enacted to recover all willful defaults at a relatively quick-time.”

Also read: Private sector banks increased share in deposits, credit at the cost of PSBs in FY21:

The Association suggested that banks should be banned from lending to a company or group of companies, which defaulted and whose account has become a NPA in a particular bank. “The loans of such groups in other banks should also be treated as NPA and should be recalled by the banks. This, we feel, would enable speedy recovery of willfully defaulted corporate loans,” Venkatachalam said.

‘No participation’

The company or group of companies should not also be allowed to participate in the auction for purchase of assets of other defaulting company or group of companies that are brought through SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) or ARCs.

The Association said in case of ARCs, as far as the Public Sector Banks are concerned, the amount of discount with which a bad loan is sold, the discounted amount should be replenished by the government of India as they are the primary owners of these banks.

Also read: Bank credit growth declines to 5.6 per cent in March

“The present system of sharing recovery on water-fall structure has to change. At present, ARC recovers first its legal and resolution expenses and then management fees and thereafter the recovery is shared in the agreed ratios. This needs to be changed to proportionate sharing of all the items so as to keep the ARC driving recovery,” Venkatachalam said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Investors cheer after RBI clarifies crypto trading isn’t banned

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India’s clarification that cryptocurrency trading isn’t banned in the country is a welcome relief for a community facing push-back from traditional lenders needed to help settle these deals.

The regulator late on Monday told banks not to cite a 2018 central bank circular as a reason to hinder crypto trades, given the Supreme Court has since squashed the order. “Banks must continue with other routine due diligence measures on the deals,” the RBI said.

Also read: A glimmer of hope for cryptos in India

The RBI order follows local media reports that financial firms, including SBI Cards & Payment Services Ltd., one of India’s biggest credit card issuers, and the nation’s largest private-sector bank HDFC Bank Ltd. had cautioned customers against dealing in virtual currencies. Indian authorities have repeatedly expressed concern that crypto assets could be used for criminal activity such as money laundering and funding terrorism.

“Investing in crypto has always been 100 per cent legal in India and the new RBI circular clearly confirms the right to do business with crypto firms,” said Avinash Shekhar, co-Chief Executive Officer at ZebPay, India’s oldest crypto exchange. He added that the clarification will attract more investors to the virtual currencies.

Also read: What’s next in the world of cryptos and blockchain?

“The RBI’s broader concerns and banks’ worries around money laundering should help to spur regulations and make the industry safer and stronger,” said Sumit Gupta, CEO and co-founder of crypto exchange CoinDCX.

Bitcoin, the largest cryptocurrency, was little changed as of 12:15 pm in Hong Kong on Tuesday, after having gained in the two previous sessions.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Exim bank eyes to raise $3 billion in FY22

Banking & Finance

[ad_1]

Read More/Less


Export-Import Bank of India may raise about $3 billion in FY22, as against $2 billion in FY21, to support Indian exports, as the global trade is gradually opening up.

David Rasquinha, MD & CEO of the bank, said that he sees demand for pharmaceuticals, chemicals, home textiles, among others, gaining traction as advanced economies are gradually coming out of the Covid-19 pandemic. “This opens up an opportunity for Indian exporters,” said Rasquinha.

Exim Bank expects credit growth in the 7-12 per cent range in FY22 (against 7 per cent in FY21), depending on how quickly the economy revives and how the exchange rate moves.

Harsha Bangari, Deputy Managing Director, observed that the borrowings by Exim Bank will be cautiously calibrated to match credit growth in FY22. In January 2021, the bank had raised $1 billion for a 10-year tenor at a coupon rate of 2.25 per cent in the 144A/Reg-S format.

Meanwhile, Exim Bank, which is a wholly owned government of India subsidiary, reported a 105 per cent jump in net profit at ₹254 crore in FY21 as against ₹124 crore in the year ago period.

Loan portfolio edged up 4.43 per cent year-on-year to ₹1,03,851 crore as at March-end 2021 against ₹99,447 crore in FY20. Non-fund portfolio declined about 10 per cent year-on-year to ₹14,229 crore (₹15,869 crore).

Rasquinha emphasised that Exim Bank gives almost 80 per cent of its loans in foreign currency. So, when rupee appreciates against dollar, the loan portfolio in rupee terms comes down. However, in dollar terms, the loan growth was 7 per cent in FY21.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Shriram Life Insurance FY21 net profit at ₹106 crore

Banking & Finance

[ad_1]

Read More/Less


Private insurer Shriram Life Insurance reported a three fold increase in its net profit to ₹106 crore in 2020-21.

Gross premium increased by 23 per cent to ₹2,019 crore last fiscal while the number of policies increased by eight per cent to 2,95,838.

“This growth was supported by a 25 per cent growth on total new business premium and 24 per cent growth on retail renewals,” it said in a statement on Friday, adding that approximately 47 per cent of its new business came from the rural segment.

As much as 54 per cent of the insurer’s claims came in from the rural segment. Income from investments more than doubled to ₹541 crore in 2020-21.

Casparus Kromhout, MD and CEO, Shriram Life Insurance said, “Shriram Life has been focused on serving the protection needs of the rural segment and lower income segments. These segments are most affected by the crisis due to the dual impact of the health emergency and loss of income. We remain committed in reaching our customer segment during this difficult time to ensure that financial protection is extended to more customers and that life cover continues for existing customers.”

[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 , , , , , , , ,

PayPal introduces digital Foreign Inward Remittance Advice

Banking & Finance

[ad_1]

Read More/Less


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.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

IDBI Bank: Divestment, transfer of management control approved

Banking & Finance

[ad_1]

Read More/Less


The Cabinet Committee on Economic Affairs (CCEA) on Wednesday gave its in-principle approval for strategic disinvestment along with the transfer of the management control in the IDBI Bank Ltd.

“The extent of respective shareholding to be divested by the Central government and the LIC would be decided at the time of structuring of transaction in consultation with the RBI,” an official release said.

‘Perfect timing’

The Central government and Life Insurance Corporation (LIC) together own more than 94 per cent of equity of the IDBI bank. While the Central government owns 45.48 per cent stake, the shareholding of LIC in the IDBI Bank is 49.24 per cent. LIC is currently the promoter of the IDBI bank with management control, while the Central government is the co-promoter.

Capital market observers noted that the timing of the CCEA decision was quite perfect with the IDBI bank now coming into black after a gap of five years. For the financial year ended March 31, 2021, IDBI Bank has reported a full year standalone net profit of ₹1,359 crore against net loss of ₹12,887 crore in the previous year. The bank had also come out of the RBI’s Prompt Corrective Action (PCA) framework on March 10. “This could boost the valuation of the lender when the government goes in for the strategic disinvestment,” they said.

Speaking to BusinessLine soon after the announcement of the CCEA decision, Rakesh Sharma, Managing Director & CEO, IDBI Bank said, “The bank has seen a turnaround and balance sheet has improved. It is for the owners – the government and the LIC – to decide on the quantum of stake sale, timing and price etc. Now that bank has turned around, it may help them in attracting investors at right valuation.”

It is still not clear whether the management control and majority equity holding will pass on to a foreign bank or any domestic acquirer. One thing is for sure is that the LIC would tag along with the Central government, which is looking to exit, when the transaction is put through – so that the valuation is maximised for both the selling shareholders.

“It is expected that the strategic buyer will infuse funds, new technology and best management practices for optimal development of business potential and growth of the IDBI bank,” the release added.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

HDFC Bank unveils organisational changes to power future growth

Banking & Finance

[ad_1]

Read More/Less


The country’s largest private sector lender HDFC Bank on Friday unveiled organisational changes under ‘Project Future – Ready’ for its next wave of growth.

“The bank is reorganising itself into three clear areas of Business Verticals, Delivery Channels and Technology/ Digital to further build its execution muscle and be ready for the future,” it said in a statement, adding that the creation of focused business verticals and delivery channels will enable it to capitalise on the opportunities across customer segments in the time to come.

HDFC Bank will re-double its efforts on its business verticals that include corporate banking, retail banking, private banking, government and institutional banking, retail assets and payments as well as commercial banking or the MSME vertical, it further said.

‘Engines of growth’

“We are creating engines of growth with top tier talent backed by technology and digital transformation to capitalise on opportunities that will accrue in the coming time,” said Mr Sashi Jagdishan, MD, HDFC Bank

Kaizad Bharucha, Executive Director, will continue to drive the wholesale bank including corporate banking group, capital and commodities markets group and financial institutions, HDFC Bank said.

Rahul Shukla, Group Head, will now be responsible for commercial banking (MSME) and rural vertical while Rakesh Singh, Group Head – Investment Banking and Private Banking will also be responsible for marketing, retail liability products and managed programmes.

Parag Rao, Group Head – Payments Business, will now drive the technology transformation and digital agenda, the bank said, adding that he will continue to be responsible for the payments vertical. Ramesh Lakshminarayanan, Chief Information Officer and Mr Anjani Rathor, Chief Digital Officer will report to Rao, the bank said.

Ravi Santhanam, CMO, will now be also responsible for driving digital marketing as a stand-alone delivery channel. He will also be additionally responsible for the retail liability products and managed programmes.

Sampath Kumar, Group Head – NRI will now be in charge of all tele-service relationships, including VRM delivery channel of the Bank.

“The role of Credit, Risk, Control and enabling functions continue to be critical as we scale up further in size and reach,” HDFC Bank said, adding that the current leadership would continue in these roles and support in the transformation journey to realise the vision of ‘Project Future Ready’.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,
1 … 3 4 5 6 7