Tag: fiscal

HFCs’ portfolio to grow by 8-10% this fiscal: ICRA

Banking & Finance

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Housing finance companies are expected to register a growth of eight to 10 per cent in their portfolio this fiscal, ratings agency ICRA said on Monday.

Noting that the second wave of Covid-19 infections impacted business sentiments in the first quarter of the fiscal, ICRA said growth is expected to pick up in the rest of 2021-22.

“The healthy demand in the industry, increasing level of economic activity and increasing vaccination in the country are expected to result in a steady growth in disbursements and improvement in collection efficiency in 2021-22,” it said.

However, while the portfolio growth is expected to drive an improvement in revenue, the expected elevated credit costs are likely to keep the profitability subdued in the fiscal, it cautioned.

Asset quality metrics

Asset quality metrics weakened quite sharply in the first quarter of the fiscal but the headline asset quality numbers are expected to moderate slightly from current level as the trend in the collection efficiency continues to remain encouraging, the agency further said.

ICRA expects a 40to 70 basis points increase (net of recoveries and write-offs) in the gross non-performing assets (GNPAs) by March 31, 2022 from GNPAs as on March 31, 2021, assuming there are no further Covid-19 induced lockdowns.

“Overall, on-book portfolio of HFCs in India is estimated at ₹11 lakh crore as on June 30, 2021, with exposures across home loans, loan against property, construction finance, and lease rental discounting. The Covid-19-induced disruptions moderated the portfolio growth to 6 per cent in 2020-21,” noted Sachin Sachdeva, Vice-President and Sector Head, Financial Sector Ratings, ICRA.

The pre-tax return on average managed assets (PBT per cent) for the fiscal is likely to remain similar to levels of last fiscal at 1.9 to 2 per cent, he further said, adding that if the collection efficiency trends post a steady and healthy revival and if slippages remain contained, then PBT per cent may also benefit from reversals in provisions.

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Covid health claims near Rs 30,000 crore for this fiscal so far, BFSI News, ET BFSI

Personal Finance

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Even as fears of third wave mounts, Covid related health claims in the first five months of this fiscal have crossed the claims for the entire fiscal 2021.

About 23,64,957 Covid claims were reported on a cumulative basis by August 18, of Rs 29,949.9 crore. About 19,66,595 claims worth Rs 18,325.4 crore of the claims received have been settled, according to general industry data.

On a year-to-date (YTD) basis (April-July), insurers saw their premiums rise 15.49 per cent to Rs 64,607.25 crore, against Rs 55,939.85 crore in the year-ago period.

While Covid-related claims have come down recently, claims for routine surgeries and hospitalisation are rising.

Rising premiums

With rise in claims, premiums are also on the upswing.

Health insurance premiums have been main driver of non-life insurance industry since the commencement of Covid-19 pandemic as firms have recorded 19.46-per cent year-on-year (YoY) growth in premiums in July.

In July, about 33 non-life insurers garnered premiums of Rs 20,171.15 crore, against Rs 16,885 crore in the same month last year.

The health segment recorded 34.2 per cent growth during April-July this year, which is much higher than 9.9% a year ago, when there were country-wide restrictions.

A number of insurers are also looking at raising prices for health products to bridge the losses.

The YTD premium growth of standalone health insurers continued to be higher than industry average in YTD FY22, indicating that retail premiums are growing faster than group business as standalone health insurers derive most of their premiums from retail segment.

The government schemes have also been a significant factor in the growth as these premiums reached Rs 2,906 crore for the YTD July FY22 versus premiums of Rs 806 crore for a similar period last year.

Growth and losses

While general insurers grew 12.9 per cent on a year on year basis between April and July, standalone health insurers reported a 46.1 per cent growth in premium in the same period on an annual basis.
Of the three listed private life insurers-SBI Life Insurance and HDFC Life Insurance reported lower profits for the April-June quarter while ICICI Prudential Life Insurance reported a loss on account of rise in Covid claims.



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RXIL aims to process invoices worth at least ₹10,000 crore in its TReDS platform this fiscal

Banking & Finance

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Receivables Exchange of India Ltd (RXIL), a joint venture between SIDBI and National Stock Exchange (NSE), expects to process MSME and corporate invoices worth at least ₹10,000 crore at its digital TReDS platform this fiscal, Ketan Gaikwad, Managing Director & CEO has said.

In the last fiscal, the total value of invoices processed by the company under its TReDS platform stood at ₹ 6,500 crore. The optimism that the company will be able to discount invoices worth at least ₹10,000 crore this fiscal comes from the economic rebound seen in the country in recent months, Gaikwad told BusinessLine. “We feel ₹10,000 crore is doable this fiscal as economy is on a rebound. We feel that there will be a V-shaped recovery. Despite challenges we face there is a growing demand. The recent factoring law passage will also bring more NBFCs who will add value,” he said.

Over the next two years, Gaikwad expects the number of MSMEs registered with the company’s TReDS platform to grow to at least 30,000 from the current 8,500 enterprises. “If push were to come from the Centre, this 30,000 can even become one lakh also,” he said.

TReDS platform

TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of micro, small and medium enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including government departments and public sector enterprises.

Also read: Needed, a firm TreD

There are three main Trade Receivable Discounting Systems (TReDS) platforms operating in the country. One of the big benefits of TReDS is that MSMEs are not required to give collateral and there will be no recourse to them in case of defaults. In last three years, invoices worth ₹43,000 crore have been processed in these three TReDS platforms, where about 25,000 MSMEs are registered. State Bank of India, YES Bank also hold small equity in RXIL, which commenced operations in 2017.

Gaikwad highlighted that the volumes done by the public sector enterprises out of the ₹43,000 crore in the last three years was only modest amount of ₹3,000 crore. He said that the Central Public Sector Enterprises (CPSEs) are not enthused about using TReDS despite big push from the MSME Ministry on this front. There are 256 CPSEs all across India out of which 176 has been registered with the three TReDS platforms. Only 4 CPSEs have done volumes in excess of ₹50 crore and the rest have all done less than 10 crore, he said. He however expressed confidence that recent Factoring Act amendments would spur liquidity and activity in the TReDS platforms.

Factoring Act

The Factoring Act also allows registration of charges on the CERSAI platform through the TReDS platform. This can be a big procedural relief, he noted. “The ecosystem is changing and becoming friendly to MSMEs. It would be even better if government were to mandate that all payments for items procured from MSMEs are also routed through TReDS. There has to be a compulsion of routing payments through TReDS platforms. That will reduce the working capital requirements of MSMEs”, he suggested.

It maybe recalled that government has already mandated that CPSEs have to source 25 per cent of their requirements from MSMEs.

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RBL Bank to focus on branch expansion in next few years

Banking & Finance

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Private sector RBL Bank is eyeing aggressive branch expansion over the next few years and plans to open at least 75 new branches annually.

“We have always, at the maximum, done 30 to 40 branches, except for a year or two when we did 55 to 60 branches. But now, we have agreed to do upwards of 75 branches a year for the next two-three-four years,” said Surinder Chawla, Head, Branch Banking, RBL Bank.

RBL Bank completes fund raise of ₹1,556 crore

As on December 31, 2020, the lender had about 403 branches and hopes to end this fiscal with about 425 branches.

In an interaction with BusinessLine, Chawla noted that with branches come multiple new customers and also the opportunity, therefore, to cross sell.

Explaining the strategy for the branch expansion, he said, “As a bank, we are very small right now in terms of our network, which is not even present in some capital cities of the country. So, we have a bit of a catch-up to do.”

Digital push

With the Covid-19 pandemic and lockdown, the lender has also invested significantly in digital technologies.

RBL Bank launches contactless banking initiatives

“What digital does is, first, it increases the catchment area for the branch, second, it can give a significant fillip in terms of cost save for operations, and three, in terms of acquisition, it can get a much higher number of scale of customers than what one would get only from the branches,” Chawla said.

“Adding a branch actually serves multiple purposes for our customers, it gives us liability granular, it gives us stability, it gives a fee,” he said.

RBL Bank has also been working on increasing granularity of retail deposits and retiring high-cost chunky money, he further noted.

“Our retail has been growing very well. On the retail side, we are going to end the year at about 60 per cent growth on the CASA,” he said, adding that the bank has also tided over issues emanating after the YES Bank crisis last year when there was a flight of deposits from many private banks.

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