Tag: lok sabha

Cryptocurrency issue: No plan to use Bitcoin as currency: FM

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The government has no plan to recognise Bitcoin as a currency in the country, Finance Minister Nirmala Sitharaman informed the Lok Sabha on Monday.

Meanwhile, in response to another question, the Finance Ministry said that Reserve Bank of India has urged the Centre to amend RBI Act 1934 to widen the definition of bank notes to include digital currency. This will facilitate introduction of Central Bank of Digital Currency (CBDC).

Crypto Bill

When asked whether the government has any proposal to recognise Bitcoin as currency, Sitharaman said in written response ‘no sir.’ The response comes at a time when the government is planning to introduce a Bill in the ongoing session to regulate cryptos in India.

In response to another question, Minister of State in the Finance Ministry, Pankaj Chaudhury, said in a written reply: “The government has received a proposal from Reserve Bank of India (RBI) in October, 2021 for amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.”

It is believed that the RBI’s request will be incorporated in ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’, proposed to be introduced during the current session. According to Lok Sabha Bulletin, purport of the Bill is “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India”.

Cryptocurrency, CBDC and the RBI Act

Further, he mentioned that Central Bank Digital Currency (CBDC) is introduced by a cntral bank. The RBI has been examining use cases and working out a phased implementation strategy for introduction of CBDC with little or no disruption.

“Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk. Introduction of CBDC would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option,” he said while admitting that there are also associated risks that need to be carefully evaluated against the potential benefits.

The RBI has already indicated about doing a pilot of its CBDC in the first quarter of the next fiscal year. The CBDC could have a much larger impact on the financial ecosystem, according to industry experts.

While many see CBDCs as a legalised replacement of cryptocurrencies, in reality, CBDCs could just be a digital replica of the physical cash in circulation. According to a 2021 BIS survey, quoted in the RBI report, 86 per cent of the central banks surveyed are actively researching the potential for CBDCs, 60 per cent were experimenting with the technology, and 14 per cent were deploying pilot projects.

RBI may pilot digital currency in Q1 of FY23

A major use case for CBDCs will likely be in the insurance and lending space and also for managing non-performing assets. Using digital currencies will bring in more transparency and traceability across levels for the financial services sector, according to experts.

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Exchanges on tenterhooks as they await details of proposed cryptocurrencies Bill

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Cryptocurtency exchanges in India are on a wait and watch mode before they plan their next steps as a consequence of the Government’s move to introduce legislation to regulate the crypto industry. While the draft Bill proposes to ban all private cryptocurrencies, the exchanges wait for the details of the proposed law.

Cryptocurrencies prices drop in India after Centre moves bill

Nischal Shetty, Founder, WazirX, said, “While the description of the draft Bill appears to be the same as in January 2021, several noteworthy events have occurred since January. First, the Parliamentary Standing Committee invited a public consultation, and then our Prime Minister himself came forward to call for crypto regulations in India. That being said, let’s respectfully wait to find out more about the draft Bill to be tabled in Parliament.”

Crypto boom in India: Despite regulatory concerns, over 400 start-ups jump onto crypto ecosystem

Wednesday morning, Bitcoin’s price dropped 16.75 per cent on WazirX, Ethereum plunged 12.1 per cent, Shiba Inu dropped over 20 per cent, Dogecoin was down by over 16 per cent, Sandbox by 4 per cent and USDT or Tether by over 14 per cent.

This happened after the Lok Sabha’s summary of Bills to be tabled in the winter parliamentary session released the evening before mentioned that the government is seeking to prohibit private cryptocurrencies in the description of The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.

Will inputs be included?

Avinash Shekhar, Co-CEO, ZebPay, said, “We’re awaiting further details on the Bill that is going to be presented in the winter session of Parliament. There have been many positive steps taken by the government to learn and understand crypto and its impact on all stakeholders — investors, exchanges, policymakers. So, we’re looking forward to a crypto Bill that takes into consideration all the inputs from those discussions.”

“We welcome the move from the government. A well-assessed and thought-through regulation will pave the way for greater adoption of the technology and will help millions of Indians embrace this new-age asset class. We are looking forward to the next steps on this,” a CoinDCX spokesperson said.

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Now, depositors can withdraw up to ₹5 lakh if bank placed under moratorium

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Parliament has given its approval to a Bill to amend the Deposit Insurance and Credit Guarantee Corporation Act, 1961.

The amendment to the Act will enable depositors to access their deposit up to sum prescribed under deposit insurance, which is ₹5 lakh, in case the bank is placed under moratorium, and that too within 90 days. The Rajya Sabha gave its nod to this Bill last week and on Monday, Lok Sabha cleared it. Now, the Bill will be sent to the President for his assent post which it will become law.

New DICGC Bill will take care of PMC depositors’ woe: FM

Depositors of PMC Bank are likely to be covered under the new mechanism.

As of now, depositors have to wait for liquidation or passage of resolution to get the benefit of deposit insurance. This takes 8-10 years. Now, this will not be the situation. Finance Minister Nirmala Sitharaman has already said that payment is to be made within 90 days. “First 45 days will be taken by the banks for collecting the information and next 45 days for checking. Then on 91st or 92nd day or around that, payment will be made,” Sitharaman had said while announcing the Cabinet decision on July 28.

PMC Bank receives 1,229 applications for deposit withdrawal

Last year, the Government raised the deposit insurance to ₹5 lakh from ₹1 lakh. Sitharaman said that with this, 98.3 per cent in terms of number of deposit accounts and 50.9 per cent in terms of deposit value will be covered. Globally, these numbers are 80 and 20-30 per cent respectively.

Time-bound access

This Bill is a follow-up to the Budget announcement. Finance Minister had said that amendments to the DICGC Act would aim to streamline the provisions, so that if a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover.

According to the legislative agenda prepared for the Monsoon session, the purpose of this Bill is to instil confidence in depositors about the safety of their money. The objective is to enable depositors access to their savings through deposit insurance in a time-bound manner in case there is suspension of banking business of the insured bank under various provisions of the Banking Regulation Act, 1949.

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LS okays amendment in General Insurance Business (Nationalisation) Act

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The Lok Sabha on Monday approved amendments to General Insurance Business (Nationalisation) Act, 1972. This will help the government shed its shareholding in public sector general insurance companies.

Meanwhile, Finance Minister Nirmala Sitharaman has assured that the amended Bill will not take away the rights of anybody. This remark is in response to the allegation that the government is privatising insurance companies that will be against the interest of employees and policyholders.

Also read: Govt moves to shed stake in a general insurance co

“All these allegations are baseless. The government is not taking away rights of anyone. Private sector insurance companies are raising money from public and with the help of that, providing insurance products at lower premium,” she said while responding to allegations on the Bill from the opposition bench. Later the Bill got passed with voice vote.

Earlier on July 30, while introducing the Bill, Sitharaman had categorically said that apprehensions mentioned by the members are not well-founded at all. “What we are trying to in this is not to privatise. We are bringing some enabling provision so that the government can bring in public participation, Indian citizens, the common people’s participation in the general insurance companies,” she had said.

The amendment is a follow-up to the Budget announcement in which Sitharaman proposed ‘privatisation’ of one general Insurance company in the current financial year. On July 30, she said a public-private participation in general insurance industry will help get more resources which will bring in better technology infusion and also enable faster growth of such companies.

Three amendments

The Bill proposes three amendments. First one aims “to omit the proviso to section 10B of the Act so as to remove the requirement that the Central Government holds not less than 51 per cent. of the equity capital in a specified insurer”. The second one will insert a new section 24B “providing for cessation of application of the Act to such specified insurer on and from the date on which the Central Government ceases to have control over it.”

And the third one will insert “a new section 31A providing for liability of a director of specified insurer, who is not a whole-time director, in respect of such acts of omission or commission of the specified insurer which has been committed with his knowledge and with his consent.”

“With a view to providing for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policy holders and contribute to faster growth of the economy, it has become necessary to amend certain provisions of the Act,” statement of objects and reasons of the Bill said.

As on date, there are four general insurance companies in the public sector – National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. Now, Besides these, there is one re-insurer, General Insurance Corporation and one specialised one for agriculture insurance.

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FM introduces bill in Lok Sabha to privatise general insurance firm

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Finance Minister Nirmala Sitharaman on Friday introduced a bill in the Lok Sabha to offload part of government’s stake in public sector general insurance companies. The bill will amend the General Insurance Business (Nationalisation) Act, 1972. Although the bill has a provision to enable the government to bring down its shareholding below 51 per cent, Sitharaman clarified that this bill is not for privatisation.

“The apprehensions mentioned by the members is not well-founded at all. What we are trying to in this is not to privatise. We are bringing some enabling provision so that the government can bring in public, participation, Indian citizens, the common people’s participation in the general insurance companies,” she said while introducing the bill amid dins.

The amendment was a follow-up to the budget announcement when Sitharaman had said: “We propose to take up the privatisation of two Public Sector Banks and one General Insurance company in the year 2021-22. This would require legislative amendments, and I propose to introduce the amendments in this Session itself.” However, the bill could not be tabled during the budget session as it was curtailed on account of pandemic.

On Friday, Sitharaman said public-private participation in the general insurance industry would help get more resources. “Why do we need to raise the resources from the market? Our market can give the money from the retail participants who are Indian citizens. Through that, we can have greater money, bring in better technology infusion, and enable faster growth of such general insurance companies. We need money to run them,” she said.

The Minister said general insurance companies in the private sector have greater penetration. They raise more money from the market and give a better premium for insuring the public and have innovative packages. “Whereas public general insurance companies are not able to perform because they are always short of resources,” Sitharaman said.

Three amendments

The bill proposes three amendments.  The first one aims to omit the proviso to section 10B of the Act to remove the Central Government’s requirement to hold not less than 51 per cent of the equity capital in a specified insurer. The second one is to insert a new section 24B providing for cessation of application of the Act to such specified insurer on and from the date on which the Central Government ceases to have control over it. And the third is to insert a new section 31A providing for liability of a director of specified insurer, who is not a whole-time director, in respect of such acts of omission or commission of the specified insurer which has been committed with his knowledge and with his consent..

“With a view to provide for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policy holders and contribute to faster growth of the economy, it has become necessary to amend certain provisions of the Act,” statement of objects and reasons of the bill said.

As of date, there are four general insurance companies in the public sector – National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. Now, it is not yet known which one of them, the government will lower its shareholding.

 

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Minister, BFSI News, ET BFSI

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Non-performing assets (NPAs) or bad loans of banks have declined by Rs 61,180 crore to Rs 8.34 lakh crore at the end of March 31, 2021, as result of various steps taken by the government, Minister of State for Finance Bhagwat K Karad said on Monday.

Scheduled commercial banks (SCBs) were carrying NPAs worth Rs 8.96 lakh crore on their balance sheet at the end of March 2020.

“Primarily as a result of transparent recognition of stressed assets as NPAs, gross NPAs of SCBs, as per RBI data on global operations, rose from Rs 3,23,464 crore as on 31.3.2015, to Rs 10,36,187 crore on 31.3.2018, and as a result of Government’s strategy of recognition, resolution, recapitalisation and reforms, have since declined to Rs 9,33,779 crore on 31.3.2019, Rs. 8,96,082 crore as on 31.3.2020, and further to Rs 8,34,902 crore (provisional data) as on 31.3.2021,” he said.

Karad in a written reply to the Lok Sabha said COVID-19 Regulatory Package announced by RBI permitted lending institutions to grant a moratorium of six months on payment of all instalments falling due between March 1 and August 31, 2020, in respect of all term loans and to defer the recovery of interest for the same period in respect of working capital facilities.

Replying to another question, Karad said, gross NPAs of public sector banks (PSBs) peaked at Rs 8,95,601 crore on March 31, 2018.

As a result of Government’s strategy of recognition, resolution, recapitalisation and reforms, NPAs have since declined to Rs 7,39,541 crore on March 31, 2019, Rs 6,78,317 crore on March 31, 2020 and further to Rs 6,16,616 crore as on March 31, 2021 (provisional data).

“The net NPAs have displayed a similar trend, increasing initially from Rs 1,24,095 crore on 31.3.2014 to Rs 2,14,549 crore on 31.3.2015, Rs 3,24,372 crore on 31.3.2016, Rs 3,82,087 crore on 31.3.2017 and peaking at Rs 4,54,221 on 31.3.2018, and declining thereafter to Rs 2,84,689 crore on 31.3.2019, Rs 2,31,551 crore on 31.3.2020 and further to Rs 1,97,360 crore as on 31.3.2021 (provisional data),” he said.

Throughout this period, he said, PSBs continued to post aggregate operating profits of Rs 1,37,151 crore, Rs 1,58,994 crore, Rs 1,55,603 crore, Rs 1,49,819 crore, Rs 1,74,640 crore in the financial year 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 respectively.

“However, primarily due to continuing ageing provision for NPAs, they made aggregate provision for NPAs and other contingencies of Rs 1,55,226 crore, Rs 1,70,371 crore, Rs 2,40,956 crore, Rs 2,17,481 crore and Rs 2,00,404 crore respectively in the said years, resulting in aggregate net losses of Rs 17,993 crore, Rs 11,389 crore, Rs 85,370 crore, Rs 66,636 crore and Rs 25,941 crore respectively and returning to profitability thereafterwith aggregate net profit of Rs 31,820crore in FY2020-21,” he said.

At the same time comprehensive steps were taken to control and to effect recovery in NPAs, which enabled PSBs to recover Rs 5,01,479 crore over the last six financial years, he added.

In a reply to another question, Karad said overall credit growth of Scheduled Commercial Banks (SCBs) has remained positive for 2020-21 despite contraction in GDP (-7.3 per cent) due to the COVID-19 pandemic.

‘Gross Loans and Advances – Outstanding’ of SCBs increased from Rs 109.19 lakh crore as of March 31, 2020 to Rs 113.99 lakh crore as of March 31, 2021, he said.

Further, he said, as per RBI data of loans to agriculture and allied activities, micro, small & medium enterprises, housing and vehicle have witnessed a year-on-year growth of 12.3 per cent, 8.5 per cent, 9.1 per cent and 9.5 per cent respectively during the year.

Ability of PSBs to further increase lending is evident through Capital to Risk Weighted Assets Ratio which stood at 14.04 per cent as of March 31, 2021, as against regulatory requirement of 10.875 per cent, he added.



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Rane, BFSI News, ET BFSI

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NEW DELHI: As many as 13.06 lakh MSME loan accounts with an aggregate amount of Rs 55,333 crore have been restructured by public sector banks till June 25 this year, Parliament was informed on Thursday. MSME minister Narayan Rane also said that till July 2, Rs 2.73 lakh crore have been sanctioned under the Emergency Credit Line Guarantee Scheme.

The scheme was launched for an emergency credit line of up to Rs 4.5 lakh crore to businesses including micro, small and medium enterprises (MSMEs) and the same is backed by 100 per cent central government guarantee.

Till June 25 this year, “13.06 lakh MSME loan accounts with an aggregate amount of Rs 55,333 crore have been restructured by public sector banks,” he said in a written reply to the Lok Sabha.

In a separate reply, he said since the inception of the Prime Minister’s Employment Generation Programme, till July 9, 6,97,612 units have been set up (including those by farmers) with MM (margin money) subsidy of Rs 16,688.17 crore.



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Lok Sabha passes Developmental Financial Institution Bill

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Lok Sabha, on Monday, passed the National Bank for Financing Infrastructure and Development Bill 2021, that among other things, seeks to establish a statutory institution to support the development of long term infrastructure financing in India and to carry on the business of financing infrastructure.

The statutory institution called National Bank for Financing Infrastructure and Development (NABFID) would have developmental and financial objectives.

The lower house passed this Bill through a voice vote after Finance Minister Nirmala Sitharaman replied to the Bill’s discussion.

To begin with, NABFID will be entirely owned by the central government. The centre also proposes to provide this institution with grants and contributions, guarantees at concessional rates for foreign borrowings and any other concessions. The Bill also paves the way for private sector promoted DFIs to come to the market after obtaining approval from the RBI.

While NABFID will get a ten-year income tax holiday, those DFIs promoted by the private sector and coming through the RBI approval route will get five year tax holiday to begin with and extendable by another five years.

All the hedging costs incurred by both NABFID and other DFIs (private ones) for raising foreign currency resources are proposed to be reimbursed by the government, adding to the attractiveness of this structure.

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HDFC Bank’s MSME book grows 30% to cross Rs 2 trillion-mark, BFSI News, ET BFSI

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MUMBAI: HDFC Bank‘s MSME book grew 30 per cent year-on-year to cross the Rs 2-lakh-crore-mark as of December-end, mainly boosted by the pandemic-induced ECLG scheme under which it disbursed over Rs 23,000 crore. The growth is also driven by a renewed push towards customers in semi-urban and rural areas, the bank has said.

In December 2019, the bank’s MSME book stood at Rs 1.4 lakh crore, which has grown by over 60,000 crore or 30 per cent to Rs 2,01,758 crore by the December 2020 quarter, giving it a 10.6 per cent share system-wide MSME lending, becoming the second-largest lender in this segment after the State Bank of India, the bank added.

“Our MSME lending is back to pre-pandemic levels, with loan book growing at 30 per cent year-on to Rs 2,01,758 crore as of the December 2020 quarter,” Sumant Rampal, senior executive vice-president, business banking and healthcare finance, at the bank told on Friday.

“While the ECLG scheme was the biggest driver boosting the loan book by Rs 23,000 crore disbursed to around 1,10,000 MSME customers, our own renewed push towards customers in semi-urban and rural areas has also helped us during the pandemic, leading to an incremental loan growth of over Rs 60,000 crore,” he said, adding most of the ECLGS disbursals took place only in the past three-four months.

At 30 per cent loan growth, the MSME book is the fastest-growing vertical for the bank. “This is a testimony to our commitment to strengthen the MSME sector that accounts for about 30 per cent of GDP and the largest employer,” Rampal said.

The government launched the third version of the Rs 3-lakh crore emergency credit line guarantee scheme (ECLGS) last November for MSMEs, following the KV Kamath committee report.

On Thursday, Union MSME minister Nitin Gadkari told the Lok Sabha that banks and other financial institutions have cumulatively sanctioned Rs 2.46 lakh crore of the Rs 3 lakh crore scheme, while disbursal stood at low Rs 1.81 lakh crore, as of February 28, according to the data from the National Credit Guarantee Trustee Company, which is the implementing agency of the ECLGS.

The scheme comes with a 2 per cent interest subvention and is a five-year tenor of which the first year gets a payment moratorium.

“Our MSME portfolio is geographically balanced spread across all metropolitan cities, urban, semi-urban and rural regions. And we reached out to them with a suite of customised products which they could access conveniently either through physical or electronic channels,” said Rampal.

The bank offers a range of services to MSMEs, ranging from conventional working capital/term loans, structured cash flow management and financing solutions, trade financing solutions, forex services, individual banking needs of promoters and family, salary accounts plus advisory on investment banking.

Its MSME portfolio is spread across sectors like textiles, fabrication, agri-processing, chemicals, consumer goods, hotels & restaurants, auto components, pharma and the paper industry, and also include the entire selling chain ranging from wholesalers, retailers, distributors, stockists and supermarkets, he said.

On Q4, Rampal refused to share numbers citing the Nasdaq silent period, just saying my team is busy at work and pointed to the large market of 6 crore registered MSMEs, but only 1.2 crore of them borrowing even after all the push by the government and the Reserve Bank.

He said of their 5,500 branches, 1,800 of them have more than 25 per cent of their loans to MSMEs and 4,800 units service this segment of customers. Geographically speaking, the bank is present in 630 districts, of these, 560 districts have MSMEs.

There is no concern on the asset quality front for the bank, which has a history of having the lowest NPAs in the system. In December 2019, the MSME bad loans for the bank were just 0.48 per cent and Rampal said, anyway currently the entire ECLGS book is under mandatory moratorium.

He said, the services industry is still facing challenges and expressed apprehension about the second wave of the pandemic.



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