Tag: Financial services

IL&FS recoveries may top 61%, lift sagging IBC average in 2021, BFSI News, ET BFSI

Banking & Finance

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Amid the near liquidation value recovery of Videocon and Siva Industries assets, IL&FS resolution may bring some cheer for the lenders.

At the group level, it is likely to recover 61% against the average 39% for IBC overall. The average IBC recoveries for the last fiscal had dropped to a quarter.

IL&FS is likely to recover Rs 61,000 crore assets from the group debt of Rs 99,000 crore as of October 2018, an increase of 5,000 crore over the earlier estimate.

“Between now and September 2021, we see this (Rs 43,000 crore of addressed debt) number going up in excess of Rs 50,000 crore. Thereafter, we are increasing our overall estimate of what we think we can resolve to Rs 61,000 crore, or close to 62 per cent, of the total debt,” Kotak said. The upgrade in potentially addressable debt by Rs 5,000 crore (to Rs 61,000 crore) has been largely on account of improved valuations, better operating performance and enhanced recoveries from non-group exposures, the Group had said in September. This includes the debt addressed through resolution, restructuring and liquidation across 347 IL&FS companies.

According to the quarterly newsletter of the Insolvency and Bankruptcy Board of India for March 2021, the recovery through resolution amounted to about 39% and through liquidation around 4%. According to bankers, recovery in the IBC process has had extreme outcomes.

The IL&FS playbook

As of end-March 2021, of the 347 entities, 186 have been resolved with Rs 43,000 crore of debt addressed.

The 347 companies in the group have been reduced to 167 and are expected to drop further to below 100 by the end of the year. This was done by shutting down or selling off a large number of foreign and local subsidiaries.

In the case of road projects, where conventional investors were spoilt for choice given the road projects on

sale, the board decided to go for the alternative option of setting up an infrastructure investment trust (InvIT).

While the new board has addressed a major chunk of the debt, the challenge is resolving IL&FS Financial Services and the remaining cases of dozens of companies where the amounts involved are relatively small. In the case of I-FIN, the board is understood to have dropped the plan to sell Rs 5,000 crore worth of loans after bids came in the range of 5%.



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Financial services turn investor darlings as m-cap jumps Rs 157 lakh crore, BFSI News, ET BFSI

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Financial services are the clear winners in the stock market with Rs 157 lakh crore increase in their market cap during the past one year IT is another major sector whose market value has increased significantly, followed by oil and gas, consumer goods, automobiles, metals and pharma, according to an SBI Ecowrap report.

The report said that the share of savings in shares and debentures to total household financial savings at 3.4 per cent in FY20 is likely to increase in FY21 to 4.8-5.0 per cent or 0.7 per cent of GDP from 0.4 per cent of GDP in FY20.

Infrastructure play

The market capitalization of Sensex has increased by 1.8 times its value one year ago. However, sector-wise 1-year return in Indian stock markets indicates that IT and Materials have performed better and IT. This clearly indicates the movement in Indian stock markets is increasingly being clearly interlinked with a supposed infrastructure power play in the coming days, the report said.

The increasing retail participation, if it becomes the norm, could also enable a larger resource pool for financing India’s infrastructural requirements, the report said.

Retail investors

The number of individual investors in the market has increased by a whopping 142 lakh in FY21, with 122.5 lakh new accounts at CDSL and 19.7 lakh in NSDL. Furthermore, another 44.7 lakh retails investor accounts have been added during the two months of this fiscal. Also, the share of individual investors in total turnover on the stock exchanges has risen to 45% from 39% in March 2020.

Within retail, the maximum allocation has been to financials, followed by consumer staples, energy and IT.

Lower rates in other saving avenues amidst the low-interest rate regime has led to greater interest by individuals in the stock market. Another reason could be the significant increase in global liquidity. Additionally, the pandemic which has resulted in people spending more time in their homes might also be another reason for individuals’ tilt towards the stock market trading, the report said. However, it is yet to be seen if this increasing retail participation is transitory or the beginning of long term behavioural change.



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Grant Thornton Bharat onboards Jaikrishnan G. as Partner, Financial Services Consulting, BFSI News, ET BFSI

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In a recent announcement, Grant Thornton Bharat declared the fresh onboarding of Jaikrishnan G. as Partner, Financial Services Consulting. He is required to amplify the firm’s global presence by working with leaders worldwide and actively pursuing international opportunities in the financial services space.

“Jaikrishnan comes with two decades of experience in the financial services space, advising large NBFCs, banks and fintech companies. Having worked across large transformation engagements, Jaikrishnan brings global consulting exposure and Indian market experience to our firm. His extensive experience in this space will enable us to deliver more comprehensive and holistic service solutions to our clients.” said Vishesh Chandiok, CEO, Grant Thornton Bharat.

Jaikrishnan has led engagements for setting up several banking and non-banking organisations from inception to being operational. He has also worked with large family-run businesses, advising them on investment and diversification strategies. He is an advisor to the board of directors of several start-ups in the fintech, edutech and social development space.

“I am excited to take on this new responsibility and will focus on the strategic growth and transformation projects for clients in the banking and financial services sector.” added Jaikrishnan.



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IPO pie set to grow bigger as over a dozen financial services players line up Rs 55,000 crore issues, BFSI News, ET BFSI

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MUMBAI: With payments major Paytm‘s board reportedly approving a bumper share sale plan running north of Rs 22,000 crore, the IPO market is set for a big days as over a dozen financial services players, including fintechs, are set to mop up over Rs 55,000 crore this fiscal from the market, according to investment bankers.

With more than a dozen insurance, asset management, commercial banking, non-banks, microfinance, housing finance and payment bank players already filing draft documents with the market regulator Sebi for public offerings, the financial services sector is set to dominate the primary issues or initial public offerings (IPOs) over the coming months.

Some of those who have already filed the draft red herring prospectus (DRHPs) with the Sebi include Aadhar Housing Finance (Rs 7,500 crore), Policy Bazaar (Rs 4,000 crore), Aptus Housing Finance (Rs 3,000 crore), Star Health Insurance (Rs 2,000 crore), Aditya Birla Sun Life AMC (Rs 1,500-2,000 crore) Arohan Financial Services (Rs 1,800 crore), Fusion Microfinance (Rs 1,700 crore), Fincare Small Finance Bank (Rs 1,330 crore), Tamilnad Mercantile Bank (Rs 1,000-1,300 crore), Medi Assist (Rs 840 crore) and Jana Small Finance Bank (Rs 700 crore), among others.

And the board of the biggest payments bank Paytm has reportedly cleared an over Rs 22,000 crore IPO. Together, these financial services companies are set to garner around Rs 55,000 crore from the public.

If materialised, the Paytm issue will be the largest IPO ever in the country, eclipsing the hitherto largest issue — the Rs 15,000-crore share sale by the government in national miner Coal India in October 2010, says investment bankers seeking not to be quoted.

Investment bankers and analysts consider the IPO boom to be reflective of the ongoing bull run and thus advice retail investors to be cautious while parking money in new companies.

V K Vijayakumar, chief investment strategist at Geojit Financial Services in Kochi, said the performance of the IPO market usually has a strong correlation to the performance of the secondary market.

“If the stock market is bullish, it attracts a large number of investors into IPOs. Particularly, new investors lured by high potential profits, get attracted to new offers and the IPO market has always done well during market booms, Vijayakumar told .

Rupen Rajguru, head of equity investments and strategy at global wealth management firm Julius Baer in Mumbai, concurs and cautions retail investors to study the valuations very carefully before investing as the market is a but over-heated now.

“The current IPO market buoyancy is expected to continue into the next few quarters. IPOs are in fact playing on the financialisation of savings theme, which is a big structural shift in the country,” Rajguru told .

He said Julius Baer at the global level is “bullish on India as it considers it to be one of the preferred emerging markets after China”.

Though stating that the present bull market provides a favourable setting for IPOs, Vijayakumar also cautioned retail investors to be careful while applying for IPOs as some of the recent IPOs got listed at a huge discount to the tune of 30-40 per cent below the issue price. Kalyan Jewellers and Suryoday Small Finance Bank are even now quoting at a discount to the issue price, he said.

“Promoters and merchant bakers have a responsibility to price the issue reasonably to leave something on the table for retail investors. Aggressive pricing will be damaging to all,” Vijayakumar warned.

Pointing out that even good issues will be impacted by an adverse market, he said since markets are overvalued now, there is a possibility of a sharp correction. If IPOs are to sail through even under difficult market conditions, the pricing has to be right, he said.

Apart from traditional financial services players, several digital payment and fintech players are also planning to tap the IPO market.

Digital payments major Paytm’s board has approved a proposal to raise over Rs 22,000 crore from IPO, while online insurance platform Policy Bazaar is also looking to float a Rs 4,000-crore offering, industry sources said.

Two small finance banks — Jana SFB and Fincare SFB — have also filed their draft papers with the markets watchdog. While Fincare is planning to mop up Rs 1,330 crore through public offering, Jana is looking to raise around Rs 700 crore.

Aditya Birla Sun Life AMC, the largest non-bank sponsored AMC, is looking to go public with Rs 1,500-2,000 crore offering. With an AUM of Rs 2.7 lakh crore, this is among the top five asset managers and will become the fourth AMC to get traded on the domestic bourses.

From the insurance sector, there are two IPOs – Westbridge Capital and billionaire investor Rakesh Jhunjhunwala-backed Star Health & Allied Insurance, and the largest health benefits administrator Bengaluru-based Medi Assist TPA.

Medi Assist filed IPO papers last month to raise around Rs 840 crore and it will be the first IPO by an insurance TPA (third-party administrator), while Star Health is firming up a Rs 2,000 crore issue.

Private equity firm Blackstone-backed Aadhar Housing Finance and Chennai-based Aptus Housing Finance are also looking to raise Rs 7,500 crore and Rs 3,000 crore respectively through IPOs.

Microfinance players like Arohan Financial Services, Fusion Microfinance and digital debt platform Northern Arc are also looking to hit the IPO market.

The southern Tamil Nadu-based old generation private sector lender Tamilnad Mercantile Bank is also planning a Rs 1,000-crore issue before the end of the calendar year, according to sources.



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Financial Services continue to get bombarded with credential stuffing and web application attacks, BFSI News, ET BFSI

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Financial services industry is continues to get bombarded with credential stuffing and web application attacks, reveals a report by Akamai & WMC researchers

In its report Phishing for Finance it states that there has been a significant increase across the attack surfaces year over year from 2019 to 2020.

Two specific phishing kits are tracked: ‘Kr3pto’ and ‘Ex-Robotos’. Kr3pto has targeted customers of 11 UK banking brands, and Ex-Robotoshas aimed its scams at corporate employees.

In 2020, Akamai saw 193 billion credential stuffing attacks globally, with 3.4 billion hitting financial services organizations specifically — an increase of more than 45% year-over-year in the sector.

It also observed that there were nearly 6.3 billion web application attacks in 2020, with more than 736 million targeting financial services — which represents an increase of 62% from 2019. SQL Injection (SQLi) attacks remained in the top spot across all business types globally, making up 68% of all web application attacks in 2020, with Local File Inclusion (LFI) attacks coming in second at 22%.

However, in the financial services industry, LFI attacks were the number one web application attack type in 2020 at 52%, with SQLi at 33% and Cross-Site Scripting at 9%.

Over the past three years (2018-2020), DDoS attacks against the financial services sector grew by 93%, indicating that systemic disruption remains an objective for criminals, who target services and applications required for daily business.

“The ongoing, significant growth in credential stuffing attacks has a direct relationship to the state of phishing in the financial services industry,” said Steve Ragan, Akamai security researcher and author of the State of the Internet / Security report. “Criminals use a variety of methods to augment their credential collections, and phishing is one of the key tools in their arsenal. By targeting banking customers and employees in the sector, criminals increase their pool of potential victims exponentially.”

The Kr3pto phishing kit, which targets financial institutions and their customers via SMS, has been observed spoofing 11 brands in the UK, across more than 8,000 domains since May 2020. WMC Global tracked more than 4,000 campaigns linked to Kr3pto targeting victims via SMS messaging over 31 days in Q1 2021.

Ex-Robotos is a phishing kit that essentially sets a benchmark when it comes to corporate credential phishing. According to data from the Akamai Intelligent Edge Platform, there were more than 220,000 hits to the API IP address used for Ex-Robotos over a span for 43 days. In fact, traffic to that address reached a peak of tens of thousands of hits per day on average between January 31 and February 5, 2021.

“Kits like Kr3pto and Ex-Robotos are just two of the many kits targeting corporations and consumers today,” said Jake Sloane, Senior Threat Hunter at WMC Global. “It’s important to remember that employees are consumers too, and with the prevalence of work from home, as well as mobile device usage in corporate environments, criminals are not shy about attacking people no matter where they are, which explains the recent growth in SMS-based phishing attacks.”



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Sensex and Nifty ends flat amidst high volitality, financials underperform, BFSI News, ET BFSI

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Domestic equity market benchmarks BSE Sensex and Nifty 50 traded flat on Friday. Benchmark indices erased most of the intraday gains and ended on flat note on April 16 amid high volatility. At close, the Sensex was up 0.06% at 48,832.03, and the Nifty was up 0.25% at 14,617.90.

Except financials all other sectoral indices ended in the green. ICICI Bank, SBI Bank, Bajaj Finance were among top index laggards.BSE Midcap and Smallcap indices outperformed broader indices today as recent fall in the space made investors to do bargain trading in quality midcap and small cap space.

The Nifty Bank Index ended flat at 31,977 down by 0.42%. Amongst the biggest losers were- ICICI Bank at Rs 566 (-1.43%) followed by Bandhan Bank at Rs 322 (-1.09%), RBL Bank at Rs 187 (-1.03%), SBI at Rs 339 (-0.82%), Kotak Mahindra at Rs 1,764 (-0.54%). Amongst biggest gainers were IDFC First Bank at Rs 54 (2.29%) followed by AU Small Finance Bank at Rs 1,077 (2.05%), Induslnd Bank at Rs 862 (0.54%).

Nifty Financial Services ended also flat at 15,362 losing 0.16%. Amongst the biggest losers were – Bajaj Finance at Rs 4,616 (-0.94%) followed by REC at Rs 127 (-0.78%), Power finance at Rs 109 (-0.32%). List of gainers included- Muthoot Finance at Rs 1,168 (1.31%) followed by HDFC at Rs 2,574 ( 1.06%), Chola Invest at Rs 540 (0.99%), Bajaj Finserv at Rs 9,824 (0.87%).

Other key takeaways

Gold prices recover in India, back above Rs 47,000
Gold prices recovered in Indian markets on Friday, after closing above Rs 47,000 per 10 gram for the first time since February 23, 2021, in the previous session. Although MCX gold June futures were trading weak, down Rs 85 or 0.18 per cent at Rs 47,090 per 10 grams, against the previous close of Rs 47,175.

MCX silver was trading at Rs 68,407 per kg, down Rs 169 or 0.25 per cent, as compared to a previous close of Rs 68,540 per kg. On April 13, MCX gold hit Rs 47,000 mark in intraday after nearly two months. Last year in August, MCX gold touched a record high of Rs 56,191 per 10 grams.

Rupee Close
Indian rupee extended the early gains and ended near the day’s high at 74.35 per dollar, amid buying saw in the domestic equity market. It opened higher by 13 paise at 74.79 per dollar against Thursday’s close of 74.92 and traded in the range of 74.28-74.79.

Rising domestic cases above 2-lac per day, widening India’s trade deficit, and the recent rebound in the crude oil could be a headwind for the Rupee. Overall, the short-term range for the USDINR is likely to be from 74.20-75.50.

Dow closes above 34,000 for first time
The Dow industrials closed above 34,000 for the first time on Thursday as the blue-chip benchmark and S&P 500 posted fresh record highs on a tech stock rally fueled by falling bond yields and strong March US retail sales, according to Reuters. The Dow Jones Industrial Average 0.9 per cent, the S&P 500 gained 1.11 per cent, and the Nasdaq Composite added 1.31 per cent.



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Ettutharayil Group acquires Delhi-based NBFC BKP Commercial India

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Ettutharayil group, the Kayakulam-based financial services firm providing business loans for the past two decades, has acquired New Delhi-based non-banking financial company BKP Commercial India.

With the acquisition, the group which currently operates in savings, insurance and investment sectors, will branch out into vehicle loans and various other secured loans, including loans against property and gold loans.

Priya Anu, Managing Director, BKP Commercial, said in a statement that the company would open new branches within and outside Kerala. At present, Ettutharayil has 14 branches in Kerala, while BKP will open 15 more branches in 2021. Of these, five branches are expected to be functional within three months.

The company’s first branch in Kerala was inaugurated by Kochi Mayor M Anilkumar. BKP Commercial targets to disburse loans worth around ₹60-70 crore in 2021-22.

Anu said that BKP would focus on technology-based loan instruments catering to customer requirements. Given the sluggish market conditions prevailing in the Covid-19 pandemic situation, BKP has launched doorstep gold loans for senior citizens and working women. Another product launched is online gold loan that provides customers the safety of keeping their unused gold ornaments in BKP’s lockers with insurance cover and avail loans as and when required for up to 75 per cent LTV.

BKP has also launched Salary Bridge Loan in association with employers having 10 or more employees. The Digi Passbook Business Loan targets small and medium traders offering short-term loans for business purposes based on the volume of their digital transactions.

She added that the company has recently concluded a rights issue and is currently raising part of their fund requirements through an NCD issue.

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Rewire, a neobank for expats, raises $20 million to extend financial services

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Rewire, a fintech start-up that develops cross border online banking services tailored for the needs of expatriate workers worldwide, on Thursday announced a Series B funding round of $20 million and a significant line of credit from a leading bank.

The round, led by OurCrowd, included new key investors Renegade Partners, Glilot Capital Partners (through its early growth fund Glilot+), and Jerry Yang, former Yahoo! CEO and director at Alibaba, through AME Cloud Ventures. They were joined by current investors including Viola Fintech, BNP Paribas through their venture capital fund Opera Tech Ventures, Moneta Capital, and private angel investors.

The funding round further builds on the firm’s growth in South-East Asia. Since launching its services in the region in 2016, Rewire has seen users remit hundreds of millions per year to Asia, and has acquired over 230,000 users originally from China, the Philippines, India and Thailand. The firm’s userbase continues to grow rapidly, with users from the Philippines and Thailand growing at 300 per cent year-on-year. Similarly, the number of users originally from India is growing at 350 per cent while the pool of users originally from China is growing at 1000 per cent year-on-year, the company said in a statement.

Rewire was founded with the vision to empower every migrant to fulfil their financial potential for a better future, for themselves and their families. The current round of funding will enable the fintech startup to continue enhancing its product portfolio and services, as well as its strategic partnerships in the migrant’s country of origin and the country in which they currently reside.

Rewire has recently secured its EU Electronic Money Institution licence (EMI), granted by the Dutch Central Bank, which allows the fintech start-up to issue electronic money, provide payment services, and engage in money remittance. Rewire was also granted an expanded Israeli Financial Asset Service Provider. Acquiring these licences is another major step for the fintech start-up in its mission to provide secure and accessible financial services for migrant workers worldwide.

Rewire CEO Guy Kashtan said: “At our core, we aim to create financial inclusion. Everything that we do at Rewire is aimed to help migrants to build a more financially secure future for themselves and their families. To do so, we aim to provide services that go beyond traditional banking services such as insurance payments in the migrant’s home country and savings accounts. This investment and licences are major steps towards fulfilling our company’s vision and will be used for additional expansion of geographies and products.”

To boost its cross border solution, Rewire plans to enrich its platform with new value-added services such as bill payments and insurance, in addition to credit and loan services, investments, and savings. Adding these to its existing remittance services, payment account, and debit card, Rewire is able to make its first-rate financial services more accessible to migrants and, thus, include them in the financial systems.

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Dave Revell to join iGTB’s Growth Advisory Board

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Intellect Global Transaction Banking (iGTB), the transaction banking specialist from the Chennai-based Intellect Design Arena Ltd, on Thursday announced that Dave Revell is joining its Growth Advisory Board as Senior Strategic Advisor. Revell is a senior executive with 35 years of experience in the financial services, telecommunications and IT sectors.

Most recently, Revell was EVP and Global Chief Information Officer for CIBC. Prior to joining CIBC, he was SVP at BMO Financial Group and at Rogers Communications before that. He started his career at IBM Canada where he held various technical, corporate sales and consulting positions, says a company release to the Bombay Stock Exchange.

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Debasish Panda, BFSI News, ET BFSI

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State-run India Infrastructure Finance Company Limited (IIFCL) may be merged with the proposed new development finance institution (DFI) that the government is planning to set up to push the projects under the National Infrastructure pipeline, a top official said on Tuesday.

“IIFCL maybe considered for a quick start if it could be subsumed in this new financial institution because they already have some domain expertise and they have some manpower who are already trained and experienced in this field. So that could be a way of looking at it,” financial services secretary Debasish Panda told reporters at a post-Budget interaction. He said the planned National Bank for Financing Infrastructure and Development (NaBFID) will play the anchor for the national infrastructure pipeline.

In her Budget speech on Monday, finance minister Nirmala Sitharaman said she will introduce a bill to set up a DFI. “I have provided a sum of Rs 20,000 crore to capitalise this institution. The ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years time,” the FM said in her speech.

Panda said the proposed DFI will play a key developmental role apart from financing the projects.

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