New Delhi, The government has accorded the ‘Maharatna‘ status to state-owned Power Finance Corporation (PFC), a move that will pave the way for the company’s greater financial and operational efficiency, according to a company statement. “Government of India accorded the prestigious ‘Maharatna’ status to state-owned Power Finance Corporation (PFC), thus giving PFC greater operational and financial autonomy,” the company said in the statement.
Incorporated in 1986, PFC is the largest infrastructure finance company dedicated to the power sector under the administrative control of the Ministry of Power.
The grant of ‘Maharatna’ status to PFC will impart enhanced powers to PFC’s board while taking financial decisions.
The Board of a ‘Maharatna’ CPSE can make equity investments to undertake financial joint ventures and wholly-owned subsidiaries and undertake mergers and acquisitions in India and abroad, subject to a ceiling of 15 per cent of the networth of the concerned CPSE, limited to Rs 5,000 crore in one project.
The board can also structure and implement schemes relating to personnel and human resource management and training. They can also enter into technology joint ventures or other strategic alliances.
Union Power and New & Renewable Energy Minister R K Singh congratulated and remarked that the “conferment of the ‘Maharatna’ status is the reflection of the government’s confidence on PFC’s strategic role in the overall development of the power sector and an endorsement of its sterling performance.”
He added that this new recognition will enable PFC to offer competitive financing for the power sector, which will go a long way in making available affordable and reliable ‘Power For All 24×7’.
PFC Chairman and Managing Director R S Dhillon said in the statement that PFC has received the ‘Maharatna’ status because of its exceptional financial performance during the past three years. “Despite COVID-19, PFC witnessed the highest-ever annual sanctions and disbursements to the power sector to the tune of Rs 1.66 lakh crore and Rs 88,300 crore during 2020-21, and the highest ever profit of Rs 8,444 crore in FY 2020-21.”
Dhillon added that with the enhanced powers of ‘Maharatna’, PFC will diversify its operations to further accelerate its business growth going forward and leverage its position for achieving the government’s objectives for the overall development of the power sector. PTI KKS HRS hrs
Shivalik Small Finance Bank on Tuesday announced a strategic partnership with Bengaluru-based insurtech company, Go Digit General Insurance, to provide an array of instant, easy-to-understand insurance products through the bank’s network of branches across India.
This will include health insurance plans, motor insurance, and home and shop insurance. This partnership will enable over 4.5 lakh customers of Shivalik Small Finance Bank to instantly access and purchase from Digit’s list of offerings, through paperless processes, in real time.
This range of products will be available to the customers of Shivalik Small Finance Bank across all its 31 branches and its digital network across the country.
‘Committed to innovation’
Commenting on the partnership, Harsh Mittal, Chief Financial Officer, Shivalik Small Finance Bank said, “At Shivalik, we are committed to constantly innovating and adding new products and services to expand our offerings to the underbanked masses. Our collaboration with Go Digit General Insurance will aid us in making the process of buying cover, submitting and receiving claims easier for our customers leveraging the strong tech platforms that both organisations have and supported by our distribution network which reaches the far ends of Bharat.”
Vijay Kumar, CEO and Principal Officer, Go Digit General Insurance said, “Our partnership with Shivalik Small Finance Bank comes at a time when we are looking to expand our reach to newer markets with an aim to aid insurance penetration. The bank has a strong foothold in the northern states of the country and this association will help the bank’s customers in getting insured from a partner that believes in simplicity, transparency and hassle-free settlement of claims.”
Shivalik’s current customers predominantly fall into segments such as retail, manufacturing and services, housing and real estate and microfinance.
As part of its small finance bank proposition, Shivalik is actively engaged in discussions with multiple fintech partners to reach newer customer segments like entrepreneurial and underbanked women, kirana stores, millennials in need of neo banking services and individuals looking for gold loans, according to Mittal.
IDBI, on account of its foundation week, is now introducing its retail asset products this festive season.
The products would include Auto loans, Education loans, home loans with augmented features.
To fall in line with the auspicious period of time, IDBI has revealed its ‘i_zoomdrive’ loans that will allow quick processing, luring interest rates, zero penalties on part/ pre-closure and 100% financing for certain segments for its customers.
The bank has attempted to strengthen young Indians’ education by launching ‘i_learn’.
This product allows the customer to avail a plethora of education courses including specialised courses, overseas courses with higher loan amount, high tenure or flexible repayment options.
Home loans, IDBI announced, would now have additional features like nil processing fees, flexible repayment options and quick processing to aid one’s dreams of owing a house.
With these offerings, IDBI believes that its products would resonate with the festive and auspicious vibe in each household.
The government is working on a new set of amendments to strengthen the Insolvency and Bankruptcy Code, which has come under criticism after over 90 per cent haircuts suffered by lenders in some hi-profile resolutions.
The amendments are being worked on by the finance ministry and IBBI officials to plug any loopholes in the system, according to a report.
finance and corporate affairs minister Nirmala Sitharaman had given directions to officials at the Financial Stability and Development Council meeting last month to finalise changes that would be required to strengthen the IBC.
A meeting of officials was held on September 21 and 28 over the issue, according to a report.
The Reserve Bank of India and Securities and Investment Board of India wants issues over IBC settled.
Rising haircuts
Almost half of the closed cases by lenders under IBC in FY21 ended in liquidation, according to IBBI, while only 13 per cent were resolved. In most of the cases under IBC, by the time they are resolved, their asset value depreciates leading to 90% haircuts, according to IBBI
In August, the parliamentary standing committee on finance cautioned that the IBC may have strayed from its original objectives, highlighting inordinate delays and large haircuts for lenders.
“Liquidation should not be a benchmark. And that is why we have to think carefully about what should be the benchmarks and a resolution process particularly for secured financial creditors,” Jayant Sinha, chairman of the parliamentary standing committee on Finance had said.
Panel suggestions
Sinha had suggested three steps to reduce litigation.
Firstly, fill the vacancies at NCLT as quickly as possible because then there is more time to adjudicate a case well and come up with a good resolution.
If judges don’t have enough time and rush through cases, they won’t give good judgments, and then things will end up in litigation. Therefore, adding capacity as soon as possible is one way in which we can deal with these endless litigation type issues.
Secondly, improve the quality of NCLT members. The parliamentary committee has recommended that the NCLT should at least have high court judges so that we can benefit from their experience and their wisdom. That’s another way to prevent litigation.
The third way of preventing litigation is to ensure when people submit the resolution plan as per the deadline, they do not have an opportunity to come in with another resolution plan after that. Because not doing so, will again rest in litigation, and a lot of contentions back and forth.
“So these are three very concrete steps that we have suggested to reduce litigation as it is one of the reasons a lot of these timelines are being extended,” he said.
IL&FS Financial Services, an arm of IL&FS, has put on the block Rs 4,297 crore of loans that have been classified as non-performing assets. The financecompany has said that the 62 loans will be sold all together for an upfront cash payment. Interested parties have been given until October 19 to submit a binding bid.
Last week, the RBI allowed lenders to sell even those loan accounts that have been classified as fraudulent. The loans that IL&FS is trying to sell are those advanced to third-parties that are not part of the group. The financial services arm has also advanced loans to group companies which are non-performing.
According to sources, the scope of recovery in these loans is limited. In July the board had said that it expects to recover Rs 58,000 crore or 95% of the recovery target by March 2022. The group’s overall debt stood at Rs 99,000 crore as of October 2018, of which it expects to recover Rs 61,000 crore.
A presentation on the recovery update filed by IL&FS said the corporation plans to recover Rs 2,250 crore after September 2021. This included the recovery from sale of IFIN NPAs, recoveries from non-group investments, and release of non-fund-based limits.
Banks have classified loans to IFIN as fraud. The Serious Fraud Investigation Office (SFIO) had observed shortcomings in the operations, risk management and compliance of the company for years.
Kotak Mahindra Group has acquired the vehicle financing loan portfolio of Volkswagen Finance, the two said in a statement on Thursday.
Volkswagen Finance Private Ltd (VWFPL) is the Indian captive financing arm of Volkswagen Group.
Kotak Mahindra Prime (Kotak Prime) will acquire the passenger cars and two-wheelers portfolio, and Kotak Mahindra Bank will acquire the commercial vehicles portfolio of Volkswagen Finance.
“With this acquisition, Kotak will gain access to over 30,000 high-quality customers with a total loan outstanding with VWFPL of around ₹1,340 crore,” the statement said, adding that all the acquired loans are classified as ‘Standard Loans’ as per the Reserve Bank of India guidelines.
Kotak has also acquired the non-performing assets portfolio of VWFPL.
D Kannan, Group President – Commercial Banking, Kotak Mahindra Bank and Director of Kotak Mahindra Prime, said, “The strategic intent behind this acquisition is to further strengthen Kotak’s vehicle financing loan portfolio and expand our market share. The long-term growth prospects of the Indian vehicle market are very attractive, and this acquisition reinforces Kotak’s standing as one of the leading vehicle financing players.”
Aashish Deshpande, MD and CEO, Volkswagen Finance, said, “The sale of our retail portfolio aligns to our new strategic focus towards a refined digital strategy through our subsidiary, the digital platform KUWY.”
The planned National Asset Reconstruction Company Ltd (NARCL) will issue securities receipts to banks as it takes on non-performing assets from their books. These securities receipts will be valid for five years.
“The idea behind it is to ensure value locked within assets is used making banking system robust. So limit provides an incentive for banks. If process delayed beyond 5 years, guarantee can’t be invoked,” Sitharaman said.
The NARCL will pay up to 15% of the agreed value for the loans in cash and the remaining 85% would be government-guaranteed security receipts, the finance minister announced. State-owned banks will hold 51% stake, while FIs or debt management companies will hold 49%.
Financial Services Secretary Debasish Panda said the government will not face any fiscal outgo for the guarantees it provides to banks. NPAs worth Rs 2 lakh crore will be sent to the NARCL, and of this Rs 90,000 crore will be transferred in the first phase.
Along with NARCL, the government will also set up an India Debt Resolution company. The service company will manage assets and loop in market professionals and turnaround experts. Public sector banks and public FIs will hold a maximum of 49% stake and the remaining will be held by private banks.
The banks’ asset quality review had happened in 2015, which had revealed very high incidence of NPAs. After recognition, quantification of NPAs started in a planned manner and state owned banks, in the last six years, recovered Rs 5,01,479 crore, she said.
In 2018, just two out of 21 public sector banks were profitable. But in 2021, only two banks reported losses, Sitharaman added.
During the Union Budget 2021-22, Sitharaman had announced the creation of NARCL or bad bank to resolve large cases of stress. The bad bank will manage and dispose the assets to alternate investment funds and other potential investors for eventual value realisation, she had said.
In August, the Indian Banks’ Association (IBA) moved an application to the Reserve Bank of India (RBI) seeking licence to set up a the Rs 6,000-crore bad bank. The NARCL was incorporated last month in Mumbai, following the registration with Registrar of Companies.
Chennai, Sep 12 (PTI) Tamilnad Mercantile Bank on Sunday rolled out a host of initiatives to mark its centennial, including doorstep banking services for the convenience of customers besides an awareness campaign on Covid-19 vaccination. Earlier in the day, Finance Minister Nirmala Sitharaman kicked off the centenary celebrations of the bank in Tuticorin, by launching a postal stamp and a specialised ‘postal card’. The bank’s managing director and CEO, K V Rama Moorthy said the bank has stood the test of time and witnessed various historical events like the country’s independence, emergency situation and liberalization of the economy. “To help borrowers overcome the impact of Covid-19, the bank has covered 13,753 beneficiaries by disbursing Rs 1,567.62 crore. We were the first bank to introduce Robotics in currency chest to sort and bundle currencies in order to provide quality service to customers”, Moorthy said in a press release.
“As part of our Centenary celebrations, we are kick-starting multiple initiatives, starting with special postage stamp and postal cards. We are also launching the TMB Mobile DigiLobby and a Mobile Vaccination Drive to support our communities. “, he said.
The disbursement of loans to pharmaceuticals and health care facilities would be at the heart of year-long series of events and initiatives, he added.
Tamil Nadu based TMB has 509 branches across the country. In FY 2020-21, the bank’s net profit stood at Rs 603 crore as against Rs 408 crore in FY 2019-20.
Total advances were Rs 31,541 crore during the period as compared to Rs 28,236 crore recorded in same period last year, while total deposits grew to Rs 40,970 crore during the period under review from Rs 36,825 crore registered previous year. the release added. PTI VIJ ROH ROH
Despite two waves of the Coronavirus pandemic that unleashed devastation across most areas, India has an 87% Fintech adoption rate that is substantially more than the world’s average adoption rate of 64%.
By Kapil Rana
Fintech organizations have a wide scope of business in India, particularly around payment lending, personal finance management, and regulation technologies. Needless to say, that nations’ immense population, expanding the number of web users, and the government’s endeavours to make the nation digital are bringing numerous new opportunities for Fintech and new companies. Financial organizations, new businesses, investors, and controllers are accepting Fintech and utilizing those opportunities to stand in the competition and grow fast. In recent years, India has seen the development of various new start-ups, regulators, the public and private financial institutions that have made the Indian Fintech market the fastest developing business sector in the world.
Despite two waves of the Coronavirus pandemic that unleashed devastation across most areas, India has an 87% Fintech adoption rate that is substantially more than the world’s average adoption rate of 64%. India has witnessed 2.7 billion dollars of Fintech investment last year. This was the second largest investment close to 3.5 billion dollars in 2019 as confirmed by Professional Service Firm KPMG. Likewise, the report of Florida-headquartered ACI worldwide uncovered that 25.5 Billion constant exchanges were made in India in 2020 that is the highest in the world.
It goes without saying that the increased adoption of Fintech technologies powered by artificial intelligence (AI), machine learning (ML), data analytics, process automation, and Blockchain has transformed the financial world. These advancements empower Fintech to run colossal measures of information through calculations designed to distinguish patterns and risk, fake practices, spam information, and make or suggest the right moves.
FinTech organizations utilizing these innovations to assist organizations to manage and control activities like managing and controlling their finance, fulfilling tax compliance, paying and accepting bills, and utilizing other financial administrations according to the requirements. They additionally empower customers, organizations, and entrepreneurs to have a superior comprehension of investment and purchasing risk. Till today, countless new businesses and financial institutions are accepting Fintech to control and manage their financial operation and decrease their functional expense. However, still there are many difficulties and bottlenecks in the adoption of financial technologies, which are making it hard for organizations to use its benefits entirely.
Key Challenges for Fintech Start-ups Companies
Cyber security is the biggest challenge for Fintech businesses. The risk of information leakage, malware, security break, cloud-based security risk, phishing, and identity threat is making the Fintech businesses helpless at some point or others. Such dangers are unwarranted by clients, therefore, Fintech associations need to advance their technologies, teach customers, and make powerful policies to eliminate such dangers.
Fintech organizations work in a joint effort with traditional financial institutions in different manners like association, incubation, and acquisition, and so on. This joint effort poses many obstacles like the two players have their own arrangement of rules relating to size, productivity, and acknowledgments. Likewise, Fintech organizations are essentially intended to work with a modern working model. So, it is a bit hard for them to keep a smooth relationship with traditional banks and other financial institutions. Also, Banks fear working with Fintech as they risk losing their reliability.
Further, banking and other monetary foundations are strictly regulated. Similarly, Fintech organizations in India should be intensely managed with policies that will assist them with moderating the possible dangers of network safety. However, many existing monetary laws and government strategies are not completely favorable for Fintech start-ups in the Indian financial sectors.
Most of the Indian clients are still utilizing cash rather than tech-driven options like UPI transactions. Fintech is attempting to assemble a credit-only economy and this will be a significant snag for them to handle, particularly to push conventional Indian buyers to embrace digital payments. Dependency on cash, cybercrime, and poor internet services are a couple of obstacles among others that are making it hard for Fintech organizations to do business in India.
Summarizing
Post demonetization, the number of Fintech businesses in India has been substantially increased. These businesses are vivaciously working on different sub-areas like mobile POS (point of sale), internet banking solutions through neo banking, managing compliance-related issues on a solitary platform, credit management, and so on. Thanks to the innovative Fintech plan of action that is bringing great advancements in the fields of finance and technology to help organizations and small businesses in their processes.
The fintech business model is working with a remarkable and consistent framework that permits entrepreneurs, business owners, and proprietors to go through huge information and make better choices in their businesses. There is no denying that Fintech is forming the future of next-generation financial solutions, and despite the way that there are a few obstacles that Fintech companies are coming across in the current business landscape, they have certainly a thriving future in India.
(The author is founder and chairman Hostbooks. Views are personal and not necessarily that of Financial Express Online.)
Fintech start-up Castler has partnered with Mumbai Angels (MA) to provide digital escrow solutions.
Castler, an escrow-as-a-service provider, will help enable a convenient and safer financial transaction platform for the portfolio companies of Mumbai Angels. These companies can use Castler’s platform for several use-cases, including buyer and seller trust gap, lending, profit sharing, pooling of monies from investors, cash flow collection, mergers and acquisitions, marketplaces, gaming, real-estate, charities, and fund raisings.
Commenting on the partnership, Castler’s Co-Founder and CEO Vineet Singh (ex-CBO at Mobikwik, 99acres, and Naukri.com) said, “The current transaction environment in India is extremely uncertain and riddled with frauds, and this has led to a substantial trust gap between parties. A robust, secure, and convenient transaction ecosystem is the need of the hour for both consumers and enterprises. Teaming up with Mumbai Angels to extend secure digital escrow to their portfolio companies will act as a great catalyst for improving accessibility to the solution we offer.”
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