BC Patnaik has taken charge as Managing Director of Life Insurance Corporation of India on Friday. “He was appointed as Managing Director by Government of India notification dated July 5, 2021,” LIC said in a statement.
Prior to taking charge as Managing Director of LIC, Patnaik was Secretary General, Council for Insurance Ombudsmen, (CIO) Mumbai. He joined LIC of India in March 1986 as a Direct Recruit Officer.
“We hereby inform you that the bank has received a letter dated August 18, 2021 from Mr Nitin Chugh tendering his resignation from the position of Managing Director and CEO of the Bank w.e.f. close of business hours on September 30, 2021,” Ujjivan SFB stated in its BSE filing on August 19.
The resignation will come into effect from September 30, 2021,, the lender said in a regulatory filing on August 19. Chugh has confirmed, in his resignation letter, that he is resigning due to personal reasons and “there are no material reasons”, the bank said.
Chugh’s tenure as Director of the bank, which is co-terminus with his tenure as Managing Director and CEO, would also end after his resignation comes into effect. Consequently, he shall also cease to be Key Managerial Personnel of the Bank in terms of Section 203 of the Companies Act, 2013,” the lender said.
The bank said the filing that its board has taken note of Chugh’s resignation letter and has appreciated his valuable contribution to the board and the bank during his association. “The board wishes him the very best in his future endeavours”, it added.
U GRO Capital, a BSE listed, technology-enabled small business NBFC, today announced the launch of a co-lending partnership for micro, small and medium enterprises (MSME) with Bank of Baroda, one of the largest banks in India. Termed as ‘Pratham’, the loan disbursements have commenced on the occasion of Bank of Baroda’s 114th Foundation Day. The program has been launched under the Reserve Bank of India’s revised co-lending guidelines.
‘Pratham’, a ₹1000 crore co-lending program will allow the MSMEs to avail customized lending solutions at a competitive rate of interest with a significant reduction in turn-around time. The loan amount ranges from ₹ 50 lakh to ₹ 2.5 crores to be offered at an interest rate starting from 8% with a maximum tenure of 120 months.
Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital said, “It gives us immense pleasure to launch one of our most significant programs ‘Pratham’ and sign the co-lending agreement with Bank of Baroda under RBI’s revised guidelines. It is a reiteration of the value and trust that the bank places on our ability to leverage sectoral expertise and technology to solve the unsolved credit need of the MSMEs. We look forward to nurturing this essential relationship in our bid to support more MSMEs in the remotest locations, to help them revive and grow.”
Vikramaditya Singh Khichi, Executive Director, Bank of Barodasaid, “We are glad to have joined hands with U GRO Capital by way of this co-lending program, which resonates with our intent to extend support to more MSMEs. We believe that forging such partnerships is the way forward and collaborative efforts leveraging individual entities’ expertise are of utmost importance to take co-lending to the MSME segment to the next level. This is a significant advancement in the same direction.”
LIC has put on block its fully provided 15 bad loan accounts, including DHFL, RCom and IL&FS, on sale as it cleans up books ahead of its initial public offering.
The accounts that are put on sale include DHFL (Rs 2,610 crore), RCom (Rs 2,200 crore), Reliance Capital (Rs 775 crore), Amtek Auto (Rs 380 crore) and Jaiprakash Associates (Rs 313 crore) and IL&FS (Rs 300 crore).
The corporation has brought down its net non-performing assets to 0.05% as of March 2021 from 0.79% as of March 2020 and is selling its fully provided NPAs.
The corporation has fully provided for these loans and the sale would improve the quality of its portfolio. The corporation is selling its default debt in a phased manner.
IDBI Capital Markets is offering LIC’s loans to asset reconstruction companies, banks, NBFCs, and alternate
investment funds. The potential buyers must sign a non-disclosure agreement. The investment bank may resort to the Swiss challenge method of selling where the rivals will be given an option to improve on the best bid. Some of the loans were being sold because of a regulatory requirement.
Gearing up for IPO
As part of its IPO plans, the corporation plans to audit its half-yearly accounts for the period ended September 2021.
Traditionally, the corporation has been publishing only full-year accounts. The half-yearly accounts are likely to include the embedded value — a valuation method unique to insurance companies that includes the net present value of future earnings from policies. LIC has appointed Milliman as the actuary for the process and EY as the advisers.
The corporation is simultaneously engaged in the recast of its capital base that will enable the distribution of shareholding over a much wider base.
No Chairman post
LIC will now have the post of Chief Executive Officer and Managing Director instead of the Chairman position, with the government making changes to relevant rules ahead of the IPO.
The changes have been made by the Department of Financial Services under the finance ministry by amending Life Insurance Corporation of India (Employees) Pension (Amendment) Rules. Besides, some other rules under LIC Act, 1956, have been amended.
“Chief Executive and Managing Director means the Chief Executive Officer and Managing Director appointed by the Central Government under section 4 of the Act (LIC Act 1956),” according to a gazette notification issued on July 7.
To facilitate the listing of the insurance behemoth, the government has already approved raising its authorised share capital to Rs 25,000 crore.
Companies that have a market capitalisation of more than Rs 1 lakh crore at the time of listing can now sell just five per cent of their shares, with the latest amendment in rules, a move that will be beneficial for the government during the LIC initial public offer.
Such entities will be required to increase its public shareholding to 10 per cent in two years and raise the same to at least 25 per cent within five years.
MUMBAI: In an unprecedented move to minimize the instances of technical glitches occurring at market infrastructure institutions like stock exchanges, the Securities and Exchange Board of India (Sebi) on Monday released new rules that will make such institutions and their officials liable in the event of failure to provide services.
“Considering the criticality of smooth functioning of systems of MIIs, specifying a pre-defined threshold for downtime of systems of MIIs becomes desirable. For any downtime or unavailability of services, beyond such pre-defined time, there is a need to ensure that ‘Financial Disincentive’ is paid by the MIIs as well as Managing Director and Chief Technology Officer,” Sebi said in a circular issued on Monday.
Sebi’s move comes in the backdrop of the substantial failure of NSE’s systems in February when various aspects of the stock exchange’s functions failed to perform for over four hours.
“This will encourage MIIs to constantly monitor the performance and efficiency of their systems and upgrade their systems etc. to avoid any possibility of technical glitches and restart their operations expeditiously in the event of glitch,” Sebi said.
Sebi said that the new rules are being issued in the interest of investors to promoting the development of the securities market in the country, and will come into effect from August 16, 2021.
Sebi has mandated that market infrastructure institutions report technical glitches in their services within two hours of the occurrence of the event. However, if the technical glitch is declared a disaster by the MII, its reporting should be immediate.
Further, the MII must submit a preliminary report on the technical glitch within 24 hours followed by a root cause analysis and a corrective action report within 21 days. “Such report shall be submitted to Sebi, after placing the same before the Standing Committee on Technology and the Governing Board of the MII and confirming compliance with their observations,” the regulator said.
In terms of the penalties that MIIs and their officials will be required to pay in the event of a technical glitch, the market regulator has released a slab structure.
In an event where an MII fails to declare a technical glitch that affects one or many critical systems as a disaster within 30 minutes, the MII will pay 10 per cent of its average standalone net profit for past two years or Rs 2 crore, whichever is higher. Further, the managing director and the CTO will pay 10 per cent each of their annual pay for the year in which disaster occurred.
If the MII is unable to restore operations within the recovery time objective set by Sebi within 45 minutes of a disaster, the MII must pay 10 per cent of its average standalone net profit for past two years or Rs. 2 crore, whichever is higher. And, MD and CTO must pay 10 per cent each of their annual pay for the year.
The penalty structure will also apply in the event the MII fails to restore critical operations within three hours of declaring disaster. This penalty will be over and above the two penalties stated above.
Sebi said that the penalties will be paid by the MIIs and their officials to the Investor Protection Fund of the stock exchange, the core settlement guarantee fund of the clear corporation and teh Investor Protection Fund of depositories.
Private sector lender Axis Bank on Thursday said its board has approved the re-appointment of Amitabh Chaudhry as its Managing Director and CEO for three years with effect from January 1, 2022.
“The board of directors of the bank.. considered and approved the proposal relating to re-appointment of Amitabh Chaudhry as the Managing Director and CEO of the bank, for a further period of 3 years, with effect from January 1, 2022 up to December 31, 2024,” Axis Bank said in a regulatory filing.
The appointment will be subject to the approval of the Reserve Bank of India (RBI) and shareholders of the bank, the filing added.
Chaudhry was appointed as Managing Director (MD) and CEO of Axis Bank for a period of three years, with effect from January 1, 2019 up to December 31, 2021.
In a conversation with ETBFSI on its transition from an urban co-operative bank to a small finance bank. Shivali Mercantile Co-operative Bank’s Chief Executive Officer and Managing Director, Suveer Kumar Gupta talks about the reason behind the transition, how it’s relying and investing in digital capabilities and partnerships with FinTechs and MSMEs being a key focus customer base. Journey from UCB to SFB
Shivalik Mercantile Co-operative Bank started in Saharanpur District in Uttar Pradesh is the first urban co-operative bank to transition into a small finance Bank. It acquired Bhoj Nagarik Sahakari Bank Maryadit in Dhar and became a multi-state co-operative bank and further expanded in Indore after acquiring Malwa Commercial Cooperative Bank Limited.
Suveer Kumar Gupta, Managing Director & Chief Executive Officer, Shivalik Bank
The bank has 31 branches and business size around Rs 2050 crore with a deposit base of Rs 1225 crore and advance of Rs 825 crore as of March 31, 2021.
Suveer Kumar Gupta, MD & CEO, Shivalik Mercantile Co-operative Bank Ltd on the transition towards the small finance bank said, “Right from the very start we wanted to be a strong and well managed one of the larger co-operative banks in the country and had aspirations to grow and be professional. For the past few years we’ve been improving our systems, controlling measures, risk management practices and most of all working towards building a strong technology infrastructure. At the same time our focus was on financial inclusion and MSMEs.”
When the Reserve Bank of India in 2015 put forward the small finance bank vision the bank realised they’re in sync with the vision they had set for Shivalik Bank. Gupta said, “The synergies were significant towards a transition to SFB and then RBI came up with voluntary transition guidelines and we jumped to the opportunity and applied for the transition and got an in-principle approval in January 2020 and the final license was in January 2021 and are in the last leg of the journey and hope to go live very soon.”
While the SFB transition will bring in more regulatory oversight and compliance norms, the bank sees numerous benefits with the transition to SFB as existing SFB proven the business model of lending to priority sector with small ticket sizes is successful and as a co-operative bank they have been following for some time.
Gupta said, “We are clear and no two thoughts on how the business will progress. Becoming an SFB will allow us to raise capital for growth and becoming a commercial bank will make it easier to approach investors and infuse a greater trust among the customer base. Further as co-operative banks miss out on government and institutional business, becoming a scheduled commercial bank will help them to reach out for institutional business.”
The bank is eyeing MSMEs as the key are of the focus and 90% of its book is fully secured and about 10% of their portfolio is microfinance. Going forward they tend to retain the philosophy of secured lending and are not shy of unsecured lending as well and will be looking forward to introducing some products in the unsecured side but major focus will be on the secured part.
We are clear and no two thoughts on how the business will progress. Becoming an SFB will allow us to raise capital for growth and becoming a commercial bank will make it easier to approach investors and infuse a greater trust among the customer base. Further as co-operative banks miss out on government and institutional business, becoming a scheduled commercial bank will help them to reach out for institutional business.Suveer Kumar Gupta, MD & CEO, Shivalik Mercantile Co-operative Bank
Ecosystem Partnerships
Gupta says as a bank they realised that the thought process of ownership mindset will not work for them because they are not experts in everything. He said, “ and have partnered with India Gold providing gold loan to customers at doorstep, Airtel Payments Bank for digital sourcing of loans, we’ve tied up Atyati, a microfinance banking correspondent partner and we are in discussion with other few fintechs as well some on customer onboarding side and some on digital sourcing side and invoice financing side where they’re using blockchain.”
They are very much open to digital partnerships and believe having a pan India license the best way to is by not being asset heavy with physical branches but can be done digitally too. “Any customer sitting anywhere can open and operate a Shivalik bank account just using a mobile phone and that is the way we want to go forward.”
We are bankers and will stick to banking. As for technology and other services, let’s seek experts and partner with them. We’ve been looking forward to partner with FinTechsSuveer Kumar Gupta, MD & CEO, Shivalik Mercantile Co-operative Bank
Physical Expansion
On Physical expansion, they want to be a global local bank. He adds, we would do it in the northern region and by physical I would not only consider bank branches but also digital assisted channels like banking correspondents moving around with micro-ATMs. We also have micro-ATMs which are being used by banking correspondents and are connected to the core-banking system in real time.
He explained, customers can withdraw by swiping card or Aadhar and deposit money too among other banking services like bank-in-a-box kind of thing. This would eventually help us in expansion.
Digital Savvy
As the bank is heavily relying on digital partnership and capabilities they’re adequately focusing on cyber-security. He said, “We are focused on the safety aspects of digital exposure. From a customer point of view, we’ve put in all safeguards like two factor authentication, info-sec testing before release, customer education programmes, vulnerability testing, applications have biometric logins. From an organisation perspective, there’s an information-security (info-sec) team in place and internal policy on info-sec has been designed by one of the Big 4 and are one of the first co-operative banks to get cyber-insurance much ahead of the RBI mandate. “
Gupta also said, The bank has hosted its data in a tier-4 data center which is considered to be the best in Asia and its core banking system provided by Infosys is on a hosted model making Shivalik Bank as the first bank to do it.
The bank is ready for the transition and is waiting for the final go-ahead from the regulator, concluded Gupta.
UAE based lender Mashreq announced the appointment of Mohua Sengupta as the Managing Director of its remote working campuses spread across India, Egypt and Pakistan. Sengupta, who will be based out of Bangalore, will collaborate with all group functions to enable and develop them into market leading talent and services platforms, Mashreq said.
Mohua was earlier the Executive Vice President and Global Head of Services for 3i Infotech, prior to which she was associated with iGATE, MPHASIS, and Accenture.
Mark Edwards, Group Head of Operations, Mashreq Bank, said We are very pleased that Mohua has joined Mashreq to lead our remote working campuses in India, Egypt and Pakistan. The recent widespread changes in working practices has presented an opportunity for us to create the best digital remote working experience for our employees, ensuring that we can continue to provide the very best digital banking experience for our customers.
“We are confident that Mohua, with her rich and diverse experience, together with Mashreq’s proven agile way of thinking and acting, will be able to successfully lead our efforts in building a world class work from anywhere platform for Mashreq globally,” added Edwards.
Mohua Sengupta further echoed “I am delighted to be part of the Mashreq family. For over 50 years, Mashreq has been powering the future of banking using the latest technologies in data, software, intelligence, robotics. Today, the global financial and technology landscape is extremely dynamic and exciting.”
Private sector lender RBL Bank said its Managing Director and CEO, Vishwavir Ahuja, has sold 14.4 lakh shares of the lender between February 19 and 25 for about ₹35.07 crore..
In a regulatory filing, the bank said this transaction was “as per the pre-clearance taken” by Ahuja.
According to the extract of intimation by Ahuja to the bank’s Compliance Officer, the sale of shares was to finance the purchase of a family house.
“The sale proceeds shall be utilised primarily to purchase and build a family home and take care of other family commitments. This is a very essential and much delayed imperative for the family’s well-being,” Ahuja said in the intimation, which was included in the bank’s regulatory filing.
“The sale represents approximately 17 per cent of my and my family’s total holdings and we will continue to retain approximately 70 lakh shares of RBL Bank, almost 70 per cent of my peak holdings since joining the Bank in 2010,” Ahuja further said, adding that the sale of shares is purely for personal and family reasons.
Strong growth prospects
The completion of the property transaction may require him to sell another three per cent to four per cent of his holdings over the next few months, he said.
Ahuja reiterated his commitment to RBL Bank and said the lender has strong growth prospects over the next several years, “especially in areas in which we have significant market share and have chosen to scale up.”
Sundaram Finance on Friday indicated that the new management team would ensure business continuity and stay focussed on growing in the existing business segments while preserving the values and ethics of the organisation.
From April 1, the company will have a new top deck as the present Managing Director, TT Srinivasaraghavan, completes his term on March 31, 2021 after serving the company for 38 years (the last 18 years as MD). He will continue as a mentor.
While discussing the December 2020 quarter performance, the new team vowed to maintain delivery of ‘superior Sundaram experience’ in its line of business.
Srinivasaraghavan said there would be immense opportunities for Sundaram Finance to grow in its existing diversified business instead of chasing anything new. “Our market share in areas like car (financing) is very small. Even 1 or 2 per cent increase means a lot. Similarly, we are just 8–10-year-old in tractors and construction equipment lending business. There is a huge headroom for growth in these areas,” he added.
He also pointed out that running an NBFC business would be more challenging in the present scenario than it was a couple of decades ago though new growth opportunities have opened up.
Sundaram Finance reported a 45 per cent rise in its net profit for the quarter ended December 31, 2020 at ₹242 crore compared to ₹167 crore registered in year-ago period.
Disbursements for Q3 went up 8.5 per cent to ₹4,307 crore (₹3,968 crore). Net income was higher by 7 per cent at ₹1,045 crore (₹976 crore). Assets under Management grew to ₹31,226 crore as on December 31, 2020 (₹30,502 crore as on December 31, 2019). Net NPA (Stage III) as on December 31, 2020 stood at 1.59 per cent (2.79 per cent).
The deposit base stood at ₹4,112 crore December 31, 2020 (₹3,722 crore a year ago).
“Compared to the scenario in the first two quarters of the year, Q3 saw a revival. We expect the growth momentum to pick up in the next few quarters,” said Srinivasaraghavan.