Tag: hdfc bank

MasterCard bar not to impact HDFC Bank

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The recent ban on MasterCard on acquiring new customers will not impact HDFC Bank as it has pacts with other payment platforms including Visa and RuPay. “Mastercard is a significant franchisee partner for the bank. But we patronise on open architecture for products including cards, insurance and mutual funds where we distribute products of a lot of other companies also,” said Sashidhar Jagdishan, Managing Director and CEO, HDFC Bank.

Responding to queries of shareholders at the bank’s Annual General Meeting on Saturday, Jagdishan said the bank has multiple franchisees for cards including Visa and RuPay. “The bank is protected in having a failover mechanism,” he said, adding that until the ban on MasterCard is lifted and as and when HDFC Bank’s embargo is lifted, the new cards can be on either of the other platforms.

The RBI on July 14 took supervisory action against MasterCard and barred it from acquiring new customers (debit, credit or prepaid) from July 22 for not complying with data localisation requirements.

Jagishan said the temporary embargo on the bank by the RBI on sourcing new customers for credit cards has impacted the run rate on acquisition of customers. The bank has also made a lot of progress in terms of complying with the regulatory directive and the technology audit is also over. Jagdishan said that as and when the RBI feels comfortable in lifting the ban, HDFC Bank will bounce back.

Internet outages

On outages in the bank’s internet and mobile banking services, Jagdishan said these happen globally as well. He, however, said the recovery time from the outage for the lender is longer.

“Recovery time is not the global average, it is beyond a threshold level where customers get impatient,” he said, adding that it was a valid reason why the regulator took action against the bank. The bank is working to minimise these issues, he said. On a query on monetisation of HDB Financial Services, he said there is no immediate plan to do so.

“The pandemic has had a huge impact on HDB Financial Services…We would like to wait… we may try to discover the price initially but in the medium term, we want to watch how it recovers and at that time think about listing it on the exchanges,” he said.

Chairman Atanu Chakraborty said the Enterprise Technology Factor and the Digital Factory that have been put in place will work as the core backbone.

The bank has also set up a new business segment of commercial for micro, small and medium enterprises and rural banking that will capture the next wave of growth, he said in his address to shareholders.

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Credit card spends limping back to normalcy, but stay lower in Q1, BFSI News, ET BFSI

Personal Finance

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If you thought that the over 20% discount offered on credit for your Swiggy offer is exceptional, you may expect more.

Credit card spends are likely to be lower in the first quarter despite a recovery in June. Analysts see credit card spends dropping 8% in the first quarter of June 2021 over the fourth quarter of the last fiscal.

At Rs 54,700 crore, credit card spends in May 2021 were still higher than the monthly spends between April and September 2020.

In April 2021, credit card spends totalled Rs 59,200 crore, higher than the monthly spends witnessed between April and September of 2020.

Going by the trend of UPI transactions in June, credit card spends are also likely to be high in June.

UPI June transactions

UPI enabled digital transactions surged 11.6 per cent month-on-month to Rs 5.47 lakh crore in June this year, according to the NPCI data.

In May 2021, the UPI (unified payments interface) transactions stood at Rs 4.91 lakh crore.

In terms of numbers, there were as many as 2.80 billion (280 crore) transactions during the month under review, as against 2.53 billion (253 crore) in May, according to the data.

NPCI’s other digital payments channels—such as Bharat Bill Payment System (BBPS), National Electronic Toll Collection (NETC), Aadhaar Enabled Payment System (AePS) and Immediate Payment Service (IMPS)—all recorded monthly growth in June.

The number of transactions on BBPS, primarily used for automated bill payments, grew nearly 16% sequentially to 45.47 million transactions in June. For Fastag, the growth was even sharper—at 35.34% to 157 million transactions—indicating an increase in mobility.

Similarly, IMPS grew to 303.7 million transactions in June from 279.8 million in May while AePS — which is used for cash withdrawals at micro ATMs, subsidy payouts and domestic remittance—grew to 87.5 million transactions from 84.2 million.

Card companies

Despite a ban on issuing new credit cards, HDFC Bank retained the largest market share at 27 per cent in spends in May while SBI Cards held 18 per cent.

Credit card spends limping back to normalcy, but stay lower in Q1

In December 2020, the Reserve Bank of India (RBI) barred HDFC Bank from making new digital launches and issuing new credit cards following repeated outages on the bank’s digital channels.

HIt by the ban on HDFC Bank issuing credit cards and economic slowdown, the number of credit cards outstanding grew just 1.9 per cent 622.6 lakh, as against a growth of 2.2 per cent during April-June 2020 to 5.74 lakh, according to RBI data. The number of new cards issued has been falling every month since January 2021 and was down to 21 lakh in April from 70 lakh in January, with most card issuers seeing slow growth. Monthly spends per card for the industry declined to Rs 9,500 in April from an average of Rs 10,500 over the past six months, according to analysts.



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Top banks eye overseas AT1 bond sale as domestic investors turn wary, BFSI News, ET BFSI

Banking & Finance

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As mutual funds turn wary of AT1 bonds, banks are looking overseas to raise capital through the instrument.

Five top lenders, including HDFC Bank, Axis Bank and State Bank of India, are looking to raise up to $2 billion overseas in the next few months through Additional Tier I (AT1) as they anticipate an increase in credit demand.

State Bank of India, plans to raise upto Rs 14,000 crore through additional tier-I bonds (AT1 bonds) in the current financial year (FY22) to enhance capital adequacy profile.

The Central Board approved the capital raise by way of issuance of Basel lll-compliant debt instruments in rupee and/or US dollar in FY22, the bank said last month.

Canara Bank is planning to raise up to Rs 3,400 crore in capital by issuing fresh AT1 bonds.

These bonds are expected to offer yields between 4 per cent and 5 per cent. Covering currency risks, the total cost may go up to 9 per cent.

AT1 bonds

AT1 bonds, also known as perpetual bonds, add to a bank’s capital base and allow a lender to meet fund adequacy thresholds set by regulators. Such securities do not have any fixed maturity but generally have a five-year call option, giving defined exit routes to investors. These papers are always rated one or two notches below the same issuer’s

general corporate rating. Domestic investors, including mutual funds, are wary of AT1 bonds after Yes Bank wrote off over Rs 8,000 crore of such bonds during its bailout in 2020.

State Bank of India was the only bank from the country to raise AT1 bonds overseas in 2016. Five-year call options on that series of AT1 bonds could be exercised this year.

Between FY18 and FY21, perpetual bond sales by banks have nearly halved to Rs 18,772 crore from Rs 34,860 crore three years ago. In FY22, AT1 bond sales have so far been negligible.

Sebi directive

Capital market regulator Sebi has eased the valuation rule pertaining to perpetual bonds in March last year.

The move came after the finance ministry asked the Securities and Exchange Board of India (Sebi) to withdraw its directive to mutual fund houses to treat additional tier-I (AT-1) bonds as having maturity of 100 years as it could disrupt the market and impact capital-raising by banks.

Sebi said the deemed residual maturity of Basel III AT-1 bonds will be 10 years until 31 March, 2022, and would be increased to 20 and 30 years over the subsequent six-month period.

From April 1, 2023, onwards, the residual maturity of AT-1 bonds will become 100 years from the date of issuance of the bonds.

In addition, Sebi said that deemed residual maturity of Basel III Tier 2 bonds would be considered 10 years or contractual maturity, whichever is earlier, until March 2022. After that, it will be in accordance with the contractual maturity.

AT-1 bonds are considered perpetual in nature, similar to equity shares as per the Basel III guidelines. They form part of the tier-I capital of banks.



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CDSL becomes the first depository to open 4- crore active Demat accounts, BFSI News, ET BFSI

Personal Finance

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Central Depository Services (India) Limited (CDSL), India’s leading and only listed depository, has announced the first depository to open Four crores plus (40 million) active Demat accounts.

CDSL is currently the largest depository in the country in terms of active Demat accounts.

CDSL facilitates holding and transacting in securities in the electronic form and facilitates settlement of trades on stock exchanges.

CDSL has an objective of delivering quality services and innovative products. Since the financial services industry has become increasingly IT-reliant, CDSL is adopting technology as a part of its strategic vision. Major shareholders of CDSL include BSE, Canara Bank, HDFC Bank, LIC and Standard Chartered Bank.

Nehal Vora, CEO of CDSL said “I will firstly congratulate SEBI – the capital market regulator for being the visionary leader that guided us to this digital growth and safe ecosystem. It is their foresight that transited the long Demat account opening procedure into an easy digital experience without compromising on the necessary controls. Our milestones are a result of the hard work and coordination of all the market infrastructure institutions and the market intermediaries. I wish to thank the investors for choosing CDSL to be their depository. I would like to thank all the participants of the capital market for their contribution in accelerating the digital and financial growth of India.”

This journey of financial inclusion has to enhance to engage with a higher number of persons to foray into the securities market to achieve the objective to make India a capital market hub that is highly focused on corporate governance, technology, investor protection, transparency, and sustainability.

Further, CDSL will continue to provide services for the progress of the securities markets, for the valued investors in line with our vision of “Empowering the Atma-nirbhar Niveshak” through our digital services.”



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Indian bond yields spike to near 4-month highs; crude surge hurts, BFSI News, ET BFSI

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MUMBAI – Indian bond yields jumped on Tuesday as a rally in global crude oil prices raised worries about higher imported inflation, while a selection of papers for this week’s bond buyback by the central bank also disappointed investors.

The most-traded 6.64% 2035 bond was up 6 basis points at 6.79%, while the second-highest traded 5.63% 2026 paper rose 7 bps to 5.83%. Both bonds were trading at levels last seen in mid-March.

The 10-year bond, which is likely to be soon replaced as the benchmark paper, was up 6 bps at 6.15%, its highest since April 16.

HDFC Bank said rising oil prices and lack of liquid papers in this week’s government securities acquisition programme (GSAP) or a form of quantitative easing programme of the Reserve Bank of India, is weighing on bond prices.

“The market was hoping for the inclusion of the 5-year paper in the upcoming debt purchase given the recent devolvement of the paper by the RBI.” HDFC economists wrote.

Underwriters to the auction or the primary dealers had to buy 104.95 billion rupees ($1.41 billion) worth of the 5.63% 2026 bonds at the debt sale last week.

The central bank is scheduled to sell 260 billion rupees worth of bonds on Friday, including 140 billion rupees worth of a new 10-year paper.

RBI announced a buyback of bonds worth 200 billion rupees on Thursday under the GSAP but traders said most securities it has proposed to buy are illiquid and would not necessarily help tame yields and offset the impact of high global crude oil prices.

Oil prices hit some of their highest levels since 2018 after OPEC+ discussions were called off, heightening expectations that supplies will tighten further just as global fuel demand recovers from a COVID-19-induced slump.

India imports more than two-thirds of its oil requirements and higher prices usually translate to higher inflation.

The central bank has voiced to keep rates low to support the economic recovery but rising inflation could force its hand, traders fear.

“Another added pressure for the short end of the curve is the additional borrowing for GST (goods and services tax) compensation shortfall that is likely to be done starting July by selling bonds at shorter tenures (less than 7 years).”

In late May, the government said it will borrow an additional 1.58 trillion rupees to compensate states for their shortfall in revenues.



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HDFC Bank loans rise over 14 % to Rs 11.47 lakh crore in June, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: HDFC Bank on Monday said it has registered 14.4 per cent growth in its advances to over Rs 11.47 lakh crore as of June 30 this year.

“The bank’s advances aggregated to approximately Rs 11,475 billion as of June 30, 2021, a growth of around 14.4 per cent over Rs 10,033 billion as of June 30, 2020, and a growth of around 1.3 per cent over Rs 11,328 billion as of March 31, 2021,” HDFC Bank said in a regulatory filing.

The private sector lender said it’s domestic retail loans by the end of the first quarter of the current fiscal moved up by 10.5 per cent year-on-year, while the domestic wholesale loans grew by around 17 per cent.

Among loan categories, retail loans grew by around 9 per cent over June 30, 2020, and were lower by around 1 per cent as compared to March 31, 2021.

Commercial and rural banking loans grew by around 25 per cent over June 30, 2020, and around 4 per cent over March this year. Other wholesale loans grew by around 10.5 per cent over June last year and around 1.5 per cent over March 2021.

Retail disbursements during Q1 FY22 stood at about Rs 43,600 crore (Rs 436 billion), 202 per cent up from the year-ago period. However, it was down by 30 per cent from Rs 62,500 crore (Rs 625 billion) during the quarter ended March 2021.

These retail disbursements included the home loans sourced from parent company HDFC Ltd.

On the deposit front, the bank witnessed 13.2 per cent growth at Rs 13.46 lakh crore (Rs 13,460 billion) as of June 30, 2021. It was up by 0.8 per cent from Rs 13.35 lakh crore (Rs 13,351 billion) in March 2021.

Retail deposits grew by around 16.5 per cent year-on-year and around 3.5 per cent over March, and wholesale deposits remained stable as compared to June last year, but were lower by around 10 per cent from March this year, the bank said.

“During the quarter ended June 30, 2021, the bank purchased loans aggregating Rs 5,489 crore (Rs 54.89 billion) through the direct assignment route under the home loan arrangement with Housing Development Finance Corporation Limited,” it added.

Shares of HDFC Bank were trading at Rs 1500.95 apiece on BSE, up 1.35 per cent from its previous close.



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SC seeks response of Centre, RBI on plea of PNB against disclosure of info under RTI, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: The Supreme Court has refused to grant interim stay on the RBI‘s notice asking Punjab National Bank to disclose information such as defaulters list and its inspection reports under the RTI Act, and sought responses from the Centre, federal bank and its central public information officer.

The apex court tagged the plea of the Punjab National Bank (PNB), which is a public sector unit bank, with a similar pending case filed by HDFC Bank against the RBI’s direction.

“Issue notice. Tag with writ petition (Civil) No.1159 of 2019 (HDFC plea),” a bench comprising justices S Abdul Nazeer and Krishna Murari said, and fixed the plea for hearing on July 19.

Banks are aggrieved by the notices issued by the RBI to them under Section 11(1) of the Right to Information (RTI) Act asking them to part with information pertaining to their inspection reports and risk assessment.

The RTI Act empowers the RBI’s central public information officer (CPIO) to seek information from banks for information seekers.

Earlier on April 28, the top court, on legal grounds, had refused to recall its famous 2015 judgment in the Jayantilal N Mistry case, which had held that the RBI will have to provide information about banks and financial institutions (FIs) regulated by it under the transparency law.

Several FIs and banks, including Canara Bank, Bank of Baroda, UCO Bank and Kotak Mahindra Bank had filed applications in the top court seeking a recall of the 2015 judgment in the Jayantilal N Mistry case, saying the verdict had far-reaching consequences and moreover, they were directly and substantially affected by it.

The banks had contended that the pleas for a recall of the judgment, instead of a review, is “maintainable” as there was a violation of the principles of natural justice in view of the fact that they were neither parties to the matter nor heard.

“A close scrutiny of the applications for a recall makes it clear that in substance, the applicants are seeking a review of the judgment in Jayantilal N Mistry. Therefore, we are of the considered opinion that these applications are not maintainable,” the apex court had held.

While dismissing the pleas, the bench, however, had made it clear that it was not dealing with any of the submissions made by the banks on the correctness of the 2015 judgment.

Now, the apex court is seized of several pleas of banks like HDFC and Punjab National Bank against the RBI’s direction to disclose information under RTI.



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ICICI Bank launches comprehensive banking solutions for medical doctors

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ICICI Bank on Thursday announced the launch of comprehensive banking solutions for medical doctors.

“Called Salute Doctors, it provides customised banking and value-added services to all doctors, beginning with medical students to senior medical consultants to an owner of a hospital or a clinic,” ICICI Bank said in a statement.

It includes a number of services such as a range of premium savings and current accounts for personal and business banking. It also offers a specially curated suite of loans for home, auto, personal, education, medical equipment, setting up a clinic, hospital or business.

It also offers value-added services offered in association with partners, to help doctors fulfil their lifestyle needs, manage clinics or hospitals better and digitally, get updates on the latest medical developments, take care of accounting needs, expand and procure medical supplies.

Meanwhile, HDFC Bank has launched the #SalaamDilSey initiative, a national platform for the general public to show gratitude to doctors for their tireless service during the pandemic and to pay tribute to doctors across the country.

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