Tag: India

Jan Dhan 3.0 to focus on digital, doorstep banking, BFSI News, ET BFSI

Banking & Finance

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The government is working out a roadmap for the third round of financial inclusion, Jan Dhan 3.0, which will focus on doorstep banking, digital financial products and convergence with its flagship pension and insurance schemes.

The government also aims to ensure availability of a banking touch point from any habitat within 5 km. “We are working with banks to develop a broad structure that will improve access, simplify digital loan applications, and ensure quicker response for retail, MSME and agricultural loans,” said a government official aware of the plan.

The government wants banks to also find linkages and converge Jan Dhan accounts with schemes such as the Atal Pension Yojana, PM SVANidhi, Stand Up India scheme and the Sukanya Samriddhi Yojana. “Based on Jan Dhan accounts, Aadhaar and mobile (JAM) framework, banks can look to offer customers new analytics-based offers and expand their coverage,” the official said, adding that banks are further expected to leverage their business correspondent channels for distribution of small credit and other financial products.

Last week, Prime Minister Narendra Modi, in his address at the ‘Creating Synergies for Seamless Credit Flow and Economic Growth’ conference, said banks need to adopt a partnership model and shed the culture of being an approver and the customer being an applicant.

“Banks at branch level can decide to approach at least 10 new youths or local micro, small and medium enterprises in their vicinity to help promote their enterprises,” he said, urging every bank branch have at least 100 clients with 100% digital transactions before August 15, 2022.



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Farm laws repeal may leave gap in finance panel reform plan, BFSI News, ET BFSI

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The revoking of the three farm laws is likely to leave a serious policy gap as they were central to the reform path envisaged by the 15th Finance Commission for India‘s agriculture sector, if its own reports are an indicator.

The farm laws find strong advocacy in both the interim and final reports of the panel, prising open the question of how much their revocation will impact the reform and performance incentive framework envisaged and recommended for agriculture by the commission. It has recommended that ₹45,000 crore be set aside to grant performance incentives to states for ushering in agricultural reforms. Chairman of the 15th Finance Commission, NK Singh, however, maintained that this should not be seen as a “setback” given that Prime Minister Narendra Modi has also announced a panel to address various issues raised in the panel report.

“I don’t view it as a setback,” he told ET. “The report was submitted in a particular context when these laws were there. The performance matrix we have drawn up is a whole lot more than the farm laws and they are not contingent on the latter.”

While the commission had earlier tied grant of incentives to states to implementation of model laws on farmer produce facilitation and contract farming, once it was satisfied that its recommendations on policy gaps were addressed through the new farm laws, it went on to identify four other criteria. These are – land lease reforms, sustainable and efficient water use in agriculture, export promotion, and contribution towards Atmanirbhar Bharat.

With the assurance of the larger reform structure afforded by the farm laws now gone, the efficacy and adequacy of the performance incentives framework for states is bound to come under question.

Singh, however, said the performance matrix drawn up by the commission are not contingent on the farm laws. “They are in keeping with the idea of a new India, also in tune with the ecological sustainability concerns discussed recently at Glasgow climate conference and , in fact, a key aspect of reform,” he said.

“Sustainable water usage and agricultural practices, crop diversification are very much the centrepiece of the commission’s recommendations,” Singh said. “They were also mentioned by the PM when he talked of the farm laws and many concerns will be taken up by the committee to be set up.”

The panel reports, however, seem to underline the centrality of the farm laws to the envisaged reform framework.



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HSBC Survey, BFSI News, ET BFSI

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By Ishwari Chavan

Around 80% of global Indians surveyed are making investments of some sort in India, and the quantum is likely to increase, according to a survey by HSBC.

A majority of global Indians with investments in India have increased their investments in the past three years, with 59% planning to increase them over the next three years.

Friends, family in India was the main reason quoted by the respondents, followed by promoting positive change in India, which is being considered as an effective investment.

HSBC surveyed over 4,152 people, aged 18 and above, in nine markets. Financial contribution that ties three generations of global Indians to both India and to the countries that they were either born in, live in, or have settled in.

Nearly 71% said that it was important for them to invest in India. Global Indians, particularly in Hong Kong, Saudi Arabia, the UAE and the UK, likely value investing in India.

“There is a huge vibrancy, there are incredible opportunities in India and the youth in particular are just driving that vibrancy. There is huge untapped economic potential in India. The biggest untapped single market left in the world is India,” said Professor Jaideep Prabhu, JNU professor of business and enterprise as a collaborator of the survey.

The report highlighted that sustainability matters to global Indians, as 76% said that environmental or social initiatives are key factors in their investment decisions.

Meanwhile, 85% said they invest in their countries of residence, the figure being particularly high in Hong Kong at 95% and the UK at 90%. Stocks and shares at 47% and property at 46% are the most common asset classes.



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PM Modi, BFSI News, ET BFSI

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Underlining the reforms made by the Centre to improve the financial health of banks, Prime Minister Narendra Modi on Thursday said the banking sector of India is currently in a major milestone phase that can give a great push to the country’s economy.

Addressing the concluding session of the conference on “Creating Synergies for Seamless Credit Flow and Economic Growth” Prime Minister Modi said, “The reforms made by the government in the banking sector in the last 6-7 years led the banking sector of the country towards a very strong position today. The financial health of banks is now in a much-improved condition. We brought reforms like IBC, reformed many laws, empowered Debt recovery tribunal.”

He said a dedicated Stressed Asset Management Vertical was also formed in the country during the COVID period.

“We have found ways to solve problems and challenges that were there before 2014. We addressed the problem of Non-Performing Assets (NPA). We recapitalized the banks and increased their strength. Today the capacity of the banks of India has increased so much that they can play a great role in giving new energy and a great push to the economy of the country and making it self-reliant. I consider this phase as a major milestone in the banking sector of India,” he added.

The Prime Minister further said banks should adopt the model of partnership leaving the traditional approver-applicant system.

The two-day conference is being organised by the Ministry of Finance from November 17. The conference has been attended by top officials from Ministries, Banks, Financial institutions and Industry representatives. (ANI)



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Report, BFSI News, ET BFSI

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MUMBAI: The Reserve Bank of India‘s digital currency may see its pilot launch in the first quarter of the next fiscal year, a senior central bank officer said at the State Bank of India’s Banking and Economic Conclave as reported by a local newspaper.

“I think somewhere it was said that at least by the first quarter of next year a pilot could be launched. So we are bullish on that,” the Business Standard newspaper quoted P. Vasudevan, chief general manager at the Department of Payment & Settlement of the RBI as having said.

Central bank digital currencies, or (CBDCs) are digital or virtual currencies are basically the digital version of fiat currencies, for India that would be its domestic currency rupee.

Previously, the central bank governor had said a soft launch of the CBDC could be expected by December but there has been no official timeline committed to by the RBI.

“We are on the job and we are looking into the various issues and nuances related to CBDC. It’s not a simple thing to just say that CBDC can be a habit from tomorrow on,” Vasudevan said, adding that a CBDC could have a useful role depending on how it is implemented and there should be no hurry to launch it.

Vasudevan said the RBI was examining various issues related to which segment the CBDC should target – wholesale or retail, the validation mechanism and also other issues including distribution channels.

“The central bank is also checking if intermediaries can be bypassed altogether, and most importantly, checking if the technology should be decentralized or should be semi-centralised,” the RBI CGM said.

The RBI has repeatedly raised concerns over cryptocurrencies posing macro-economic and financial stability risks.



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World Bank, BFSI News, ET BFSI

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India, the world’s largest recipient of remittances, received USD 87 billion in 2021 with the United States being the biggest source, accounting for over 20 per cent of these funds, according to the World Bank.

India is followed by China, Mexico, the Philippines, and Egypt, the Washington-based global lender said in its report released on Wednesday.

In India, remittances are projected to grow three per cent in 2022 to USD 89.6 billion, reflecting a drop in overall migrant stock, as a large proportion of returnees from the Arab countries await return, it said.

“Flows to India (the world’s largest recipient of remittances) are expected to reach USD 87 billion, a gain of 4.6 per cent – with the severity of COVID-19 caseloads and deaths during the second quarter (well above the global average) playing a prominent role in drawing altruistic flows (including for the purchase of oxygen tanks) to the country,” the World Bank report stated.

Remittances to low- and middle-income countries are projected to have grown a strong 7.3 per cent to reach USD 589 billion in 2021, the bank said.

This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 per cent despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief.

“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis.

“Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.

India had received over USD 83 billion in remittances in 2020.



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India received $87 billion in remittances in 2021; US is the top source

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India received $87 billion in remittances in 2021, and the United States was the biggest source, accounting for over 20 per cent of these funds, the World Bank said in its latest report on Wednesday.

“Flows to India (the world’s largest recipient of remittances) are expected to reach $87 billion, a gain of 4.6 per cent — with the severity of Covid-19 caseloads and deaths during the second quarter (well above the global average) playing a prominent role in drawing altruistic flows (including for the purchase of oxygen tanks) to the country,” the World Bank report stated.

Growth in reminttances

India is followed by China, Mexico, the Philippines, and Egypt, the report said. In India, remittances are projected to grow three per cent in 2022 to $89.6 billion, reflecting a drop in overall migrant stock, as a large proportion of returnees from the Arab countries await return, it said.

Remittances to low and middle income countries are projected to have grown a strong 7.3 per cent to reach $589 billion in 2021, the bank said.

This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 per cent despite a severe global recession due to Covid-19, according to estimates from the World Bank’s Migration and Development Brief.

“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the Covid-19 crisis. Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.

India had received over $83 billion in remittances in 2020.

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Shares of PB Fintech likely to see limited upside in near term, says JM Financial, BFSI News, ET BFSI

Personal Finance

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PB Fintech, the parent company of PolicyBazaar, made a positive stock market debut with a 17.35% gain on Monday. The listing pop came as a positive surprise to many experts and analysts, however, JM Financial Services expects limited scope for further gains in the stock.

The brokerage has set a price target of Rs 1,270, which implies a near 5 per cent downside from the current market price. “We initiate coverage with a ‘hold’ rating, solely due to premium valuations with significant upside risks in our ‘bull’ scenario that can drive share price to over Rs 2,200 by December 2024,” it said.

Though the brokerage firm sees limited near-term upside against CMP post the strong listing, they reckon there is a likely path for PB Fintech to grow to a valuation of $13.5 billion over the next couple of years against $7.3 billion currently. This is only if few incremental levers fall into place, which are unlikely in the very near-term, the brokerage said.

These levers consist of digital penetration reaching 5.5 per cent against 4.5 per cent.

Shares of PB Fintech likely to see limited upside in near term, says JM Financial

“Policybazaar is the dominant market leader in a large and growing industry with strong tailwinds such as increasing digital penetration, rising disposable income and insurance awareness. We do believe Policybazaar will be in the driving seat in enhancing insurance penetration in India,” JM Financial said

The brokerage firm is of the strong opinion that the company should continue deepening scale moats in light of new-found competition emerging from insurers’ direct channels and cross-sell by fin-tech players like PhonePe and Paytm.

JM Financial expects PB Fintech, PolicyBazaar’s parent, to grow revenues by 31 per cent annually over the next 10 years.

“While we expect slight market share loss in online distribution due to insurers’ investment in direct channel and newer competition, this loss will be aptly compensated by the company’s growth in physical distribution” it added.



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RBI, BFSI News, ET BFSI

Banking & Finance

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In the fortnight ended November 6, 2020, bank loans stood at Rs 104.19 lakh crore and deposits at Rs 144.03 lakh crore, according to the RBI‘s Scheduled Banks’ Statement of Position in India as on November 5, 2021, data released on Wednesday.

In the previous fortnight ended October 22, 2021, bank credit had grown by 6.84 per cent and deposits by 9.94 per cent. In FY2020-21, bank credit had risen by 5.56 per cent and deposits by 11.4 per cent.

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Private banks lead, overall NPA provisioning falls in Q2, BFSI News, ET BFSI

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The worst seems to be over for banks in the pandemic, going by the drop in bad loan provisioning numbers. The bad loan provisioning by banks fell sequentially for the second consecutive quarter in the three months ended September 2021, led by a significant drop in some of the private sector banks. The trend is likely to continue on account of improved collections and lower slippages.

The aggregate provisioning towards non-performing assets (NPA) or loan loss provision for a sample of 29 banks fell by 20.5 per cent sequentially and 10.9 per cent year-on-year to Rs 30,400 crore. It has softened over the past two quarters after peaking at Rs 65,986.9 crore in the March 2021 quarter when banks resumed accounting for slippages.

Private banks at the forefront

The fall in the September quarter was driven by a sharp 43.9 per cent drop in loan loss provisioning by the private sector banks at the aggregate level. Top banks including HDFC Bank, Axis Bank, Kotak Bank, and IndusInd Bank recorded a double-digit sequential drop in the NPA provisioning.

The public sector banks on the other hand reported a modest 1.6 per cent fall in the NPA provisioning. Their share in the sample’s NPA provisioning increased to 68.5 per cent from 55.3 per cent in the previous quarter.

Analysts expect the asset quality of banks to improve gradually in the coming quarters following a pick up in economic activity and recovery in collections.

“Banks slippage ratios reduced substantially by 100 basis points QoQ on an average in the September quarter. The asset quality situation is likely to improve further driven by a reduction in retail as well as SME nonperforming loans in the coming quarters,” a Macquarie Capital Securities (India) note said.

The banks’ net interest income increased by 3.7 per cent sequentially and 2.4 per cent year-on-year to Rs 1.3 lakh crore. The sequential growth was faster for PSU banks at 5 per cent compared with 2.1 per cent for the private sector banks.



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