New Delhi: In line with the Reserve Bank of India‘s (RBI) guidelines, Airtel Payments Bank on Sunday announced that it has become the first payments bank in the country to enable Rs 2 lakh day-end balance account limit.
The bank has increased the day-end balance limit to Rs 2 lakh from Rs 1 lakh.
“The RBI’s decision to increase the balance limit is an endorsement of the role Payments Banks have in furthering financial and digital inclusion in India. We are glad to enable this increased day-end balance limit for our customers,” Anubrata Biswas, MD and CEO, Airtel Payments Bank, said in a statement.
“At Airtel Payments Bank, we have always believed that higher balance limits would enhance consumer usage of payments banks, as well as enable large sections of informal India, such as small merchants and traders, to access formal banking easily,” Biswas added.
Airtel Payments Bank has 55 million engaged users and serves them through technology and a retail-based distribution network.
The bank has built a strong network of over 500,000 neighborhood banking points, which is bigger than the total number of bank branches and ATMs in India.
These neighbourhood banking points take services closer to the customer and have even reached deep rural pockets that never had access to banking services.
It has also been aided by the fact that the credit flow into the segment continues to be healthy; there has been no denial or freeze of credit. We are seeing a momentum which is positive.
While the collection efficiency in the microfinance segment is still 82%, repayments are improving and stress seems to have peaked out, R Baskar Babu, MD & CEO, Suryoday Small Finance Bank, told Shritama Bose. Disbursements are back to pre-Covid levels, he said. Excerpts:
You have mentioned in your RHP that there are concerns on asset quality. Your pro forma gross and net non-performing assets (NPAs) were at 9.28% and 5.38%. How do you see it panning out?
Of the 9.28%, really 8.5% is on account of the Covid impact. In the microfinance segment, slowly but steadily, customers are coming back to the paying pattern. What we have seen till December is that month-on-month there is a growth in the number of customers who have not been paying coming back to the fold. The number of customers who have paid at least one full instalment in microfinance in November and December happens to be 89% of our total customer base, and 82% of them have paid one full EMI in December. Given that, as of now, low-income households are coming out of economic stress, it looks like the percentage has been moving forward month-on-month. It has also been aided by the fact that the credit flow into the segment continues to be healthy; there has been no denial or freeze of credit. We are seeing a momentum which is positive.
So you have seen the financial conditions of your core customer base improve in the last few months?
Yes, we have to go by their repayments and their ability to pay. We have set the credit limit for 300,000 customers in the OD (overdraft) product. We haven’t seen the utilisation being drawn out completely. Till December, only 33-34% of the credit limit was utilised. If we combine these two, it is an indication that the stress per se has peaked out at the household level and slowly but steadily, the progress will also be mirroring in their repayments, which is what we have seen as of December.
Since you have said that stress may have peaked, by the end of 2021 where do you expect NPA ratios to be?
We will not go ahead on sharing any future guidance, but you have to look at the number as of December from a lack of visibility during June-July to reasonable visibility in September to a substantial visibility in terms of the financial health of the customer reflected in the repayment. Based on that, we have done our provisioning for the nine-month period. The gross proforma of 9.2% has been provided and the net proforma NPA is above 5%. We have extended ECLGS (emergency credit line guarantee scheme) facility for the customers to give them the comfort to restart their business … As the business grows and disbursement shows normalcy coming back as of December, and were the momentum to continue, we expect no credit losses within a meaningful range. Statistically, it is reasonably clear as of December that it is well within control.
To what extent has growth returned closer to pre-Covid levels?
If you go by the disbursements that are happening, it is very close to — and in some products even higher than — the pre-Covid levels … What really needs to come back is the repayment of a percentage of customers who are continuing to be delinquent. The business requirement has come back as things have started opening up … We are also catering to pent-up demand in some of the segments.
Is the stress mostly visible in the microfinance segment or do you see it in other products also?
In other products, the collection efficiencies have come back to 90% and more. In the microfinance segment, it was around 82% as of December. We have seen that there has been an improvement on that as well. So while the small ticket-size transactions usually come back into the paying habit, they won’t really be able to cover up the past dues of two-three months. So as long as they are paying, it indicates that the customers will end up being good customers, except that for a two-year loan they’ll end up paying in two years and three months or four months. The way ahead for lenders, specifically in this segment, is to handhold the customers and help them navigate the problem rather than treating the whole relationship as a lender-borrower relationship. We certainly do that.
Mumbai: Reliance has partnered Google and Facebook to set up a New Umbrella Entity (NUE) that will allow them to create a payment network similar to the Unified Payments Interface (UPI) to gain a share of India’s burgeoning digital payments market. The NUE will be jointly promoted by an RIL unit and Infibeam Avenue subsidiary So Hum Bharat. Facebook and Google will hold smaller stakes. The companies are in advanced stages of submitting their proposal to the RBI, three people with knowledge of the matter told ET.
Deadline extended to March 31
Former Itzcash founder and payment industry veteran Navin Surya has been appointed MD and chief executive, said the people cited above. Reliance, Google and Facebook didn’t respond to queries. “We are bound by the confidentiality of the process and cannot comment,” an Infibeam Avenues spokesperson said. “A proposal will be presented to the Reserve Bank of India on detailing the consortium’s plan to strengthen India’s digital economy,” said one of the people with knowledge of the matter. “Representatives of these companies have been in talks with the central bank over the past few months to ensure compliance ahead of the formal presentation of the bid.”
The RBI is expected to take another six months to study the proposal along with other bids. RBI said Friday that the deadline to submit applications had been extended to March 31, following a plea by the Indian Banks’ Association. ET had reported on February 19 that the regulator may consider extending the deadline, keeping in mind Covid-related disruptions.
Until now, such transactions were mostly a preserve of the public sector banks (PSBs), and only a few private players (HDFC Bank, Axis Bank and J&K Bank) were allowed to conduct them, a source told FE.
In a move that can potentially make the bank privatisation plan more attractive for investors, the Centre has lifted an embargo that had barred most private players from undertaking lucrative government-related banking transactions. These transactions include taxes and other revenue payment facilities, pension payments and small savings schemes.
Until now, such transactions were mostly a preserve of the public sector banks (PSBs), and only a few private players (HDFC Bank, Axis Bank and J&K Bank) were allowed to conduct them, a source told FE.
The government has conveyed its decision to the Reserve Bank of India (RBI). Since the embargo is lifted, there is no bar now on the RBI to authorise private banks (in addition to the PSBs) for conducting government businesses, including government agency business, the finance ministry said on Wednesday.
“This step is expected to further enhance customer convenience, spur competition and higher efficiency in the standards of customer services,” the ministry said in a release.
However, some public sector bankers fear a loss of businesses to private competitors and sought a level-playing field. “If certain privileges are shared with private banks, so should be the social responsibilities that have proved to be costly for us,” said a senior public sector banker on condition of anonymity.
“Will we be allowed to pursue profits alone, forgetting socio-economic goals? If yes, this is a welcome move,” said another public sector banker. The Centre should free state-run banks from their implied obligation of having to push through various government schemes for financial inclusions, including the opening of no-frills Jan Dhan accounts and setting up of branches or ATM networks in remote areas, as these have bled the PSBs for years, he said.
For instance, of the 41.84 crore Jan Dhan accounts opened so far, private banks accounted for just 1.25 crore, he pointed out. These accounts don’t require the holders to ensure a minimum balance, so they remain an unattractive proposition for private banks.
However, some analysts say the move will force the PSBs, especially those with poor track records of dealing with customers, to mend their ways and shed complacency.
For its part, the finance ministry said: “Private sector banks, which are at the forefront of imbibing and implementing latest technology and innovation in banking, will now be equal partners in development of the Indian economy and in furthering the social sector initiatives of the government.” In the Budget for FY22, the government has proposed to privatise two state-run banks.
The bank board moved a resolution on December 26, as asked by the RBI, for shareholders’ approval via electronic voting for the appointment of Shivan as the MD and CEO.
Dhanlaxmi Bank said on Thursday it has appointed JK Shivan as managing director and CEO with the approval of the Reserve Bank of India (RBI). The bank in a regulatory filing said its proposal for appointment of Shivan as MD and CEO for a period of three years from the date of taking charge has been approved by the RBI, following which the board of directors formally appointed him.
The bank board moved a resolution on December 26, as asked by the RBI, for shareholders’ approval via electronic voting for the appointment of Shivan as the MD and CEO. The resolution was passed with an overwhelming majority of 99.81% and consequently the RBI gave its approval on Thursday for the formal appointment.
Dhanlaxmi is currently managed by a committee of directors (COD) and the tenure of which expires on January 31,2021. Sivan is expected to take charge by February 1.
SoftBank‘s Vision Fund is preparing to raise between $500 million and $600 million via an initial public offering of its first special purpose acquisition company (SPAC), U.S. news portal Axios reported on Sunday, citing multiple sources.
SoftBank is said to be preparing for at least two additional SPACs, the report added. A SoftBank spokesman declined to comment.
Reuters reported in October that the Vision Fund was targeting external funding for a blank-cheque company.
Such a move would see Masayoshi Son‘s SoftBank joining the rush for SPACs, shell vehicles that raise money in an initial public offering (IPO) before merging with a privately held company. The vehicles are being using to take a record number of companies public, bypassing the traditional IPO route.
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