Tag: Financial services

Ujjivan Small Finance bank to do portfolio quality & process audit, BFSI News, ET BFSI

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About 68 per cent of the Rs 14,000-crore loan portfolio is still in the unsecured microfinance space at Ujjivan, where chief executive Nitin Chugh unexpectedly quit last week, capping off a raft of top-level exits at the lender that went public in 2019.

“We are trying to identify a candidate internally who can manage the day to day operation till Nitin leaves. Carol Furtado is the top candidate,” Ujjivan founder Samit Ghosh told investors on Friday morning.

Ujjivan Small Finance Bank has decided to do an independent portfolio quality & process audit as it is facing stress on asset quality following the disruptions caused by the pandemic.

It will also review its provisioning policy to create an adequate buffer against credit risk.

The holding company of the bank, Ujjivan Financial Services, had earlier expressed concerns over asset classification, bad loan recognition and the ad-hoc bad loan provisioning under chief executive Nitin Chugh, who resigned last week.

The bank on Wednesday appointed Carol Furtado as office on special duty to manage day-to-day operations in the bank till Chugh’s official exit on September 30.

“The bank is undertaking an independent portfolio quality & process audit. We look towards streamlining the provisioning policy. We are confident of strengthening the organisation and emerging as a stronger Ujjivan,” founder of the bank Samit Ghosh said. Ghosh is the common director on the boards of the bank and the holding company.

“With the provision coverage ratio of 75%, the highest in the industry, we are very well positioned,” he added.

After Chugh’s exit, Furtado will be appointed as an interim CEO, subject to regulator’s approval, the company announced Wednesday after its board gave the stamp of approval on the proposal.

The bank also said that it will begin the search for the next full-time CEO and submit two names to the Reserve Bank of India seeking its approval.

In parallel, the bank has also appointed former Andhra Bank chairman BA Prabhakar as its chairman.

ET had highlighted the possibility of both the move immediately after Chugh’s resignation became public.

Furtado, part of the founding team of Ujjivan Financial Services since 2005, will be leading the charge of handling the day-to-day operations from August 26, the company said. Post September 30, she will take charge as the Interim CEO, subject to regulator’s approval.

Ujjivan Financial Services is the holding company for Ujjivan Small Finance Bank, which started its journey in February 2017.

“Carol has been our go to person during any major crisis. I am sure she will lead us out of this Covid crisis with flying colours,” said Ghosh.

Furtado has spearheaded the organisation on numerous occasions, playing critical roles in asset quality management and HR. “Her extensive experience, over a decade and a half, across business, operations, and HR, along with her expertise in leading Ujjivan, through various crises, make her an ideal candidate,” the company said.



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Key Highlights of Finance Minister’s meeting with the heads of PSU banks., BFSI News, ET BFSI

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Nirmala Sitharaman

Union Finance Minister, Nirmala Sitharaman on Wednesday met with the heads of the Public Sector Banks to review their financial performance and the progress made in supporting the pandemic hit economy.

Sitharaman took note of the situation of the PSBs and their progress around the restructuring 2.0 scheme announced by the Reserve Bank of India.

“We Reviewed the annual performance of Public Sector banks and also the implementation of announcements of various COVID-19 related packages and Aatmanirbhar Bharat package,” FM Nirmala Sitharaman said.

The minister also declared the results of Ease 3.0 (Enhanced Access and Service Excellence) Index for 2020-21 and launched the Ease 4.0.

Ease is a common reform agenda for PSBs aimed at institutionalising clean and smart banking.

This is the first meeting of the Finance Minister with the heads of PSBs since the beginning of the Covid-19 pandemic.

Following are the key highlights

From Nirmala Sitharaman, Finance Minister

  • Nature of banking is evolving rapidly, and the industry has realised the changing requirements of the sector.
  • Collectively, PSBs have done well and have shown that they are in a position to come to the market and raise funds.
  • Despite the customer requirements during COVID-19 pandemic, work of amalgamation of banks has not suffered.
  • Banks & financial services have been identified as strategic sectors. Govt will have a bare minimum presence.
  • Industries have the option of raising funds outside the banking sector.
  • There will be credit outreach in every district of the country this year.
  • Banks have been asked to come up with special plans for northeast states focusing on logistics, exports from the area.
  • Banks expressed concerns about CASA deposits piling up in eastern areas including Bihar, WB, Jharkhand. Banks should provide facilities to provide credit flow for business development in these regions.
  • Requested the public sector banks to address the needs of exporters. They have been directed to interact regularly with Federation of Exporters Organisation.
  • Banks are raising funds from different avenues. This new aspect needs to be studied to target credit where it is needed.
  • Customer Service of banks has not suffered even during the pandemic.
  • Sunrise sectors and fintech need banking support.
  • Fintech can provide technological help to banks. Fintechs and the banking sector can mutually benefit each other.

From Tarun Bajaj, Revenue Secretary

  • Direct listing of companies on the overseas platforms is under consideration.

Debashish Panda, DFS Secretary

  • PSBs’ contribution for employee pensions under NPS hiked to 14 pc from 10 pc earlier.
  • Pension payouts to bank employees could increase to ₹30,000- ₹35,000 from the earlier cap of ₹9284.

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Xiaomi to offer full spectrum of financial services in India via partners, BFSI News, ET BFSI

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Chinese handset maker Xiaomi is doubling down on its financial services business. It is diversifying into the full spectrum of lending platforms, with a clear focus on the payments, lending and insurance verticals.

“Financial services are no longer a subset as it is large enough in Hong Kong, India and China to be an independent business,” Manu Jain, managing director of Xiaomi India, told ET.

Xiaomi’s financial services vertical is now operating as an independent business due to the market size and the company’s renewed focus.

Under its lending services bouquet, Xiaomi has started offering business loans, gold loans and credit line card services.

Its financial services business returned to growth mode with a 95% jump in revenue in the March quarter over the October-December period in 2020.

“We’ve seen 35% on-year growth in Q1 of (calendar) 2021 despite a dip after the Covid-19 second wave… we are again growing at a significant pace despite the market downturn in the last two quarters,” Jain said.

The financial services business is running as a marketplace for various partners who offer services on Xiaomi’s platform, said Ashish Khanderwal, Head, financial services of Xiaomi India.

Xiaomi is working with Axis Bank, IDFC Bank, Aditya Birla Finance, Money View, Early Salary and Credit Vidya for lending services.

For the line credit card offering, it has partnered with Stashfin, while the health and cyber insurance service is being offered in partnership with ICICI Lombard.

Jain said the company has disbursed over 100,000 loans with credit of up to Rs 25 lakh and is operating across 22,000 pin codes. Mi Pay, he said, is growing rapidly with a 50 million pan-India user base.

On whether Xiaomi would venture into the growing cryptocurrency segment, Jain said, “We await clarity on the regulatory front…crypto is an interesting area, and is the biggest buzzword and doing exceptionally well.”

Two years ago, Xiaomi had invested in Bengaluru-based startup KrazyBee for the Mi Credit service. On startup investments, Jain said the new regulations require certain approvals before it can make an investment.

“…we would want to be 100% compliant with all local laws at every level, so no immediate investment plans,” Jain said.



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Govt appoints Lalit K Chandel on Bank of Maharashtra board, BFSI News, ET BFSI

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The government has appointed Lalit Kumar Chandel, Economic Adviser, Department of Financial Services, on the board of Bank of Maharashtra. He is appointed as Government of India nominee director on the board with effect from August 18, Bank of Maharashtra said in a statement on Thursday.

Chandel replaced Hrisheekesh Arvind Modak.

Chandel has served at various levels in different departments of Government of India, including banking, insurance, capital markets, external assistance, rural development, power, irrigation and health, it said.

He has held key positions of Director (Insurance), Department of Financial Services, Ministry of Finance; Executive Director, CVO and Financial Adviser, Insurance Regulatory and Development Authority of India, and Whole Time Director Finance, Telangana State Power Generation Corporation. PTI DP



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RBI imposes Rs 1 cr penalty on Cooperatieve Rabobank U.A., BFSI News, ET BFSI

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Reserve Bank of India (RBI) on Thursday said it has imposed a penalty of Rs 1 crore on Cooperatieve Rabobank U.A. for deficiencies in regulatory compliances.

The penalty has been imposed for contravention of certain provisions of the Banking Regulation Act, 1949 and directions related to ‘transfer to reserve funds’.

RBI said it conducted a statutory Inspection for Supervisory Evaluation (ISE) of the bank with reference to the bank’s financial position as on March 31, 2020.

Examination of the risk assessment report pertaining to the same, revealed contravention of the provisions of the Banking Regulation Act and the directions issued by RBI.

A show cause notice was issued to the bank.

“After considering the bank’s reply to the notice, oral submission made during the personal hearing and examination of additional submissions made by the bank, RBI came to the conclusion that the charge of contravention of… provisions of the Act and RBI directions was substantiated and warranted imposition of monetary penalty on the bank,” RBI said in a statement.

In another statement, RBI said a penalty of Rs 5 lakh has been imposed on Village Financial Services Ltd, Kolkata, for non-compliance with certain provisions of the Know Your Customer Directions, 2016.

The central bank, however, said the penalties are based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.

On Wednesday, RBI imposed penalties on two co-operative banks for deficiencies in regulatory compliances.

It imposed penalty of Rs 13 lakh on Ahmednagar Merchant’s Cooperative Bank, Ahmednagar, Maharashtra, and Rs 2 lakh on The Mahila Vikas Co-operative Bank, Ahmedabad, Gujarat.



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Sidbi launches various MSME cluster development focused initiatives, BFSI News, ET BFSI

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NEW DELHI: Small Industries Development Bank of India (SIDBI) on Monday said it has launched various micro, small and medium enterprises (MSMEs) cluster development focussed initiatives.

SIDBI has been supporting MSMEs through its focused cluster development initiatives such as support for technology upgradation/modernisation, skilling/re-skilling/up-skilling and market linkages.

The cluster development strategy of SIDBI has gradually evolved over a period of time and it now caters to over 600 MSME clusters through its offices and supports the entire value chain (Micro Finance, Missing Middle and Small and Medium Enterprises), the financial institution said in a statement.

Some of the unique engagements in clusters include EU Switch Asia in 18 clusters of 9 states, cluster outreach programmes followed by setting up of Project Management Unit (PMU) in 11 states with thrust on clusters and state cooperation, State Rural Livelihood Missions (SRLM), Artisanal Cluster and Engagement in One District One Product (ODOP) districts of Uttar Pradesh, it said.

The principal financial institution engaged in the promotion, financing and development of MSMEs has been regularly bringing publication, policy papers etc on MSME development.

Financial Services Secretary Debasish Panda launched the first information series titled as ‘Diagnostic Mapping of Cluster- Charting the Path ahead through Intervention’. Additional Secretary in Department of Financial Services (DFS) Pankaj Jain and Joint Secretary in DFS Madnesh Kumar Mishra were also present on the occasion.

The book marks the commencement of focussed attention of SIDBI on clustering strategy aimed towards building and supporting sustainable growth of MSMEs. “It compiles the findings that emerged out of diagnostic studies in 30 clusters. It contains recommendations and action plan for financial and non-financial issues, interventions suggested at the policy, cluster and unit level,” it said.

SIDBI is geared up to undertake diagnostics of 100 clusters and plan engagement in 15 clusters. On this occasion, SIDBI Chairman and Managing Director S Ramann said, the financial institution has identified a multi-pronged strategy to impact local, regional, national and global value chain through MSE clusters.

“We are giving a thrust to hard infrastructure support to state governments. DFS and Reserve Bank of India have supported us in setting up the SIDBI Cluster Development Fund,” Ramann said.

The soft infrastructure engagement shall complement the hard infrastructure, he said. “In line with cluster experts we have initiated the mapping exercise of 100 clusters such that the implementation by SIDBI and other institutions can lead to sustainable growth of clusters,” he said.

Since the typology of cluster development generally involves hard and soft infrastructure aspects, to address the soft infrastructure aspects, SIDBI has launched the Business Development Services intervention programme in 5 Clusters (Tourism Cluster – Jammu & Kashmir; Delhi-NCR Innovation Cluster; Jodhpur Wood Furniture Cluster, Sambalpur Textile Cluster, Chennai Leather Cluster).

The holistic aim of the intervention is to strengthen Clusters to evolve as model Clusters and also to increase MSMEs’ access to services thus rising up the value chain.



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Survey, BFSI News, ET BFSI

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Overall recruitment activity witnessed an 11 per cent growth during April-June, as the job market began showing signs of recovery from the COVID-19 second wave, says a survey. According to the Indeed India Hiring Tracker, which maps quarterly job market activity to June 2021, hiring increased by 11 per cent over the previous quarter, with standout growth in Information Technology (61 per cent), financial services (48 per cent), and BPO/ITeS (47 per cent).

This survey was conducted by Valuvox on behalf of Indeed among 1,500 employees and 1,200 businesses across nine cities in the month of June 2021.

“As businesses continue to find a rhythm of working through multiple pandemic challenges, the tracker reflects the resilience of India’s labour market,” Sashi Kumar, head of sales, Indeed India said.

Kumar further noted that “with hiring activity seeing a month-on-month increase, it was interesting to see businesses pivot their hiring priorities from operation roles to sales roles. It’s also clear that paying attention to employee expectations will enable them to thrive, so ongoing conversations around wellbeing and hybrid work are vital.”

According to the survey, receding COVID cases and partial lockdowns in the first quarter of the financial year 2021-22 allowed businesses to operate, focussing employers on roles driving sales and revenue — a shift from the focus on operational roles to stabilise business operations in the fourth quarter of the financial year 2020-21.

The widespread impacts of the second wave resulted in understaffed teams and increased employee burnout.

As many as 76 per cent of the job seekers surveyed did not receive COVID-related benefits/compensation packages or mental health support.

Appraisal plans were also impacted. 70 per cent of employees said they did not receive any promotion or pay increase this quarter, with only 11 per cent of employers promoting or offering salary increases, the survey said.

Employers and employees aren’t on the same page when it comes to future work models. Employers preferred a hybrid work model (42 per cent) to remote work (35 per cent), while jobseekers favoured remote working (46 per cent) over a hybrid approach (29 per cent).

Moreover, 51 per cent of women compared to 29 per cent of men said they wanted to continue working from home, while 52 per cent of senior management preferred working from home, compared to 36 per cent of middle level and 31 per cent of junior level employees.

Jobseeker priorities also shifted, with 25 per cent saying salary was their primary focus, followed by career growth (19 per cent), learning opportunities/challenges/responsibilities (16 per cent), and company reputation (14 per cent), the survey said.



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RBI imposes Rs 5 crore penalty on Axis Bank, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) on Tuesday said it has imposed a penalty of Rs 5 crore on Axis Bank for contravention of certain provisions of directions issued by the RBI, including on cybersecurity framework. The penalty has been imposed for “contravention of/non-compliance” with certain provisions of directions issued by the RBI. They include ‘Strengthening the Controls of Payment Ecosystem between Sponsor Banks and SCBs/UCBs as a Corporate Customer’; ‘Cyber Security Framework in Banks’; and ‘Reserve Bank of India (Financial Services provided by Banks) Directions, 2016′.

They also include ‘Financial Inclusion-Access to Banking Services-Basic Savings Bank Deposit Account’; and ‘Frauds-Classification and Reporting’.

The RBI said the statutory inspections for supervisory evaluation (ISE) of the bank were conducted with reference to its financial position as on March 31, 2017, (ISE 2017), March 31, 2018, (ISE 2018), and March 31, 2019 (ISE 2019).

The contravention of/ non-compliance with the directions has been revealed by – the examination of the Risk Assessment Reports pertaining to ISE 2017, ISE 2018 and ISE 2019; the report of scrutiny carried out by RBI in the backdrop of the incident relating to a fraud and related correspondence thereto; and the incident report submitted by the bank in June 2020 related to a few suspected transactions and related correspondence.

Notices were issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the directions.

After considering the bank’s replies, oral submissions, and examination of additional submissions made by the bank, the RBI came to the conclusion that the charges of non-compliance with/contravention of the directions were substantiated and warranted imposition of monetary penalty, the central bank said.

The RBI, however, added the imposition of penalty is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Meanwhile, the RBI has also imposed a penalty of Rs 5 lakh on Alibag Co-operative Urban Bank Limited, Raigad, and Rs 1 lakh on The Mahabaleshwar Urban Cooperative Bank Limited, Mahabaleshwar, for deficiencies of regulatory compliance.



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Dvara KGFS acquires digital financial services platform TransactNow

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Dvara KGFS, a non-deposit taking NBFC, announced that it has acquired ‘TransactNow’, a digital platform from early phase tech start-up Transact Nexus Tech Private Limited, for an undisclosed sum.

TransactNow offers digital financial services to the unbanked and underserved population. The current transaction will help the rural-focussed Dvara KGFS to strengthen its digital platform and take its financial services offerings closer to the rural customers.

“With this, Dvara KGFS is starting a new Channel – KGFS Digital — which will foray into the agent driven business model providing an array of financial services to rural customers through Agent Touch Points located in close proximity to the villages in line with the Omni-Channel Strategy envisaged by Dvara KGFS,” the company said in a press release.

“We are excited about the acquisition of TransactNow. The team and technology will help us to scale up our Digital channel – a network of agents offering all our products with a great amount of transaction convenience to customers in the close proximity of their village. We are hoping that this initiative would help customers avoid travel during the pandemic and avail all financial services in their village,” Joby CO, CEO, Dvara KGFS said in the release.

According to the company website, TransactNow empowers retailers and Farmers Producers Organisations (FPOs) with CRM-based – Super point-of-sale (POS) that works on cloud computing to carry out the banking digital services and commerce. Its service offerings also include domestic money transfer, Aadhar Banking, mobile recharge services, micro-ATMs among others.

“There is a huge potential for financial services in rural India which remains untapped. We decided to help Dvara KGFS to tap that by developing a software which will help the rural population carry out all their financial transactions on digital mode through the agent network,” Sathiskumar, CEO of Transact Nexus Tech Pvt Ltd was quoted in the release.

Sathiskumar will lead the KGFS Digital channel and will foresee the scaling up of the agency network.

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Over $10 billion of IPO fund-raise expected this fiscal, says Kotak honcho V Jayasankar

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It’s raining IPOs in the market and pipeline for the remainder of the year is only robust. By all counts, this fiscal should see IPO fund-raise of at least $10 billion (without including mega LIC IPO) if the current trend is anything to go by, says V Jayasankar, Senior Executive Director and Head-ECM, Kotak Mahindra Capital Company (KMCC). He would know better with KMCC having managed the top three (₹10,200 crore) of the total six IPOs (₹12,423 crore) that hit market in April-June 2021. July itself is going to see IPOs worth ₹24,000 crore. Edited excerpts:

What explains this IPO rush? Is there a good pipeline and will this momentum continue?

Last fiscal was a record year for Equity Capital Market (ECM) business. Overall, ₹2.45-lakh crore was raised and about ₹25,000-30,000 crore was initial public offering (IPO) business in the country. IPO was about 15 per cent of ECM activity which was very robust.

I expect this year to be a record one for IPO market and my estimate is that in excess of $10 billion (without including the mega LIC IPO) will be raised. Even if the overall ECM activity remains similar to last year, there would be better proportion of IPOs in the equity raise.

So what is creating this shift?

There are five sectoral themes playing out in the market though the investor appetite stretched beyond them. These are the new age or consumer tech start-ups, financial services, speciality chemicals, consumer and healthcare sectors. The Indian start-up system has matured and become very robust. We see good number of listings in the coming years.

Can you elaborate on the other four trends?

We expect to see large number of well-managed companies in the financial services space to tap the market for listing across the spectrum of lending, insurance and others. A number of speciality chemical companies will continue going public as they have the scale and become more export-oriented. Also, benefiting from China plus one strategy. Similarly, there are numerous consumer and healthcare companies that we expect to go public as the addressable market has been growing.

Do you think Internet-based tech companies can garner better valuation by listing in overseas market like the US?

Indian equity markets have matured over the years and have depth of institutional investors’ participation. Investor universe is similar for well-run and well-managed tech companies, whether you list in India or abroad. You have the added advantage of Indian MFs and insurance companies participating in India listing.

The valuation peers, benchmark and methodology are similar irrespective of listing destination. Often we see institutional investors pay better value for Indian companies factoring in higher growth prospects that India may provide. You are likely to see several Indian digital and new age companies list here in the coming years reflecting the strong appetite.

Importantly, consumer brands benefit from retail participation. A successful listing can enhance the power and visibility of a brand.

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