Tag: Modi

Visa complains to US govt about India backing for local rival RuPay, BFSI News, ET BFSI

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Visa Inc has complained to the U.S. government that India’s “informal and formal” promotion of domestic payments rival RuPay hurts the U.S. giant in a key market, memos seen by Reuters show.

In public Visa has downplayed concerns about the rise of RuPay, which has been supported by public lobbying from Prime Minister Narendra Modi that has included likening the use of local cards to national service.

But U.S. government memos show Visa raised concerns about a “level playing field” in India during an Aug. 9 meeting between U.S. Trade Representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly.

Mastercard Inc has raised similar concerns privately with the USTR. Reuters reported in 2018 that the company had lodged a protest with the USTR that Modi was using nationalism to promote the local network.

“Visa remains concerned about India’s informal and formal policies that appear to favour the business of National Payments Corporation of India” (NPCI), the non-profit that runs RuPay, “over other domestic and foreign electronic payments companies,” said a USTR memo prepared for Tai ahead of the meeting.

Visa, USTR, Modi’s office and the NPCI did not respond to requests for comment.

Modi has promoted homegrown RuPay for years, posing a challenge to Visa and Mastercard in the fast-growing payments market. RuPay accounted for 63% of India’s 952 million debit and credit cards as of November 2020, according to the most recent regulatory data on the company, up from just 15% in 2017.

Publicly, Kelly said in May that for years there was “a lot of concern” that the likes of RuPay could be “potentially problematic” for Visa, but he stressed that his company remained India’s market leader.

“That’s going to be something we’re going to continually deal with and have dealt with for years. So there’s nothing new there,” he told an industry event.

‘NOT SO SUBTLE PRESSURE’Modi, in a 2018 speech, portrayed the use of RuPay as patriotic, saying that since “everyone cannot go to the border to protect the country, we can use RuPay card to serve the nation.”

When Visa raised its concerns during the USTR gathering on Aug. 9, it cited the Indian leader’s “speech where he basically called on India to use RuPay as a show of service to the country,” according to an email U.S. officials exchanged on the meeting’s readout.

Finance Minister Nirmala Sitharaman said last year that “RuPay is the only card” banks should promote. The government has also promoted a RuPay-based card for public transportation payments.

While RuPay dominates the number of cards in India, most transactions still go through Visa and Mastercard as most RuPay cards were simply issued by banks under Modi’s financial inclusion programme, industry sources say.

Visa told the U.S. government it was concerned India’s “push to use transit cards linked to RuPay” and “the not so subtle pressure on banks to issue” RuPay cards, the USTR email showed.

Mastercard and Visa count India as a key growth market, but have been jolted by a 2018 central bank directive for them to store payments data “only in India” for “unfettered supervisory access”.

Mastercard faces an indefinite ban on issuing new cards in India after the central bank said it was not complying with the 2018 rules. A USTR official privately called the Mastercard ban “draconian”, Reuters reported in September.



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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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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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Modi exhorts banks to support wealth, job creators; increase country’s balance sheet, BFSI News, ET BFSI

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Prime Minister Narendra Modi on Thursday exhorted banks to support wealth and job creators, and work proactively to improve the country’s balance sheet. Addressing bankers at the symposium to ‘Build Synergy for Seamless Credit Flow and Economic Growth’, Modi said banks have to now adopt a partnership model to help businesses thrive and move away from the idea of being a loan “approver” to a loan “applicant”.

“Banks have to support wealth creators and job creators… It is time that banks, along with their own balance sheets, help increase the balance sheet of the country,” Modi said.

He nudged bankers to offer “customised solutions” to businesses and micro, small and medium enterprises (MSMEs). “Don’t wait for customers to come to banks. You have to go to them,” he said.

Stating that banks have adequate liquidity and non-performing loans are lowest in five years, he said despite the COVID-19 pandemic, the banking sector has remained strong in the first half (April-September) in current fiscal. This has led to an upgrade in sector outlook by international agencies.

He also said that the recently set up National Asset Reconstruction Co (NARCL) would help resolve Rs 2 lakh crore of stressed assets.

“Reforms in last six-seven years have led to banking sector in a strong position today… We have addressed non-performing assets (NPAs) of banks, recapitalised banks, brought bankruptcy laws and strengthened debt recovery tribunal,” Modi added. PTI JD CS ANZ ANS ANS



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Retail investors can put money in govt securities, T-Bills, Sovereign Gold Bond

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Retail investors can invest a minimum of ₹10,000 and in multiples thereof in Central Government Securities (CG), State Government Securities (SG) and Treasury Bills (T-Bills) under the Reserve Bank of India’s ‘Retail Direct Scheme’, a web-based investment platform, which was launched on Friday.

In the case of Sovereign Gold Bond (SGB), the minimum investment unit is 1 gram.

The maximum limit per bid specified by RBI is ₹2 crore for CG/T-Bill and 1 percent for SG. The scheme to bring G-Secs within easy reach of the common man, allows one active bid per retail client in the non-competitive portion for respective Security.

Online platform

Under the Scheme, which was launched in virtual mode by Prime Minister Narendra Modi, retail individual investors can invest in G-Secs using the online portal (https://rbiretaildirect.org.in) by opening a Retail Direct Gilt (RDG) account with RBI.

Retail investors can make investments via two routes — primary issuance of G-Secs and secondary market.

Under primary issuance of G-Secs, investors can place bid as per the non-competitive scheme for participation in primary auction of G-Secs and procedural guidelines for Sovereign Gold Bond (SGB) issuance.

For secondary market investment, investors can buy and sell G-Secs on Negotiated Dealing System – Order Matching (‘Odd Lot’ and ‘Request for Quotes’ segments).

Primary dealers will be providing buy-sell quotes for investors wanting to buy or sell G-Secs. No fee will be charged for opening and maintaining RDG account with RBI. Further, no fee will be charged by the aggregator (Clearing Corporation of India Ltd) for submitting bids in the primary auctions. Fee for payment gateway etc., as applicable, will be borne by the registered investor.

Payments for transactions can be done using saving bank account through internet-banking or Unified Payments Interface (UPI).

Investor support

The RBI said investors can get help on the portal itself and also through a toll-free telephone number 1800–267-7955 (10am to 7pm) and email.

Investor services include provisions for transaction and balance statements, nomination facility, pledge or lien of securities and gift transactions. No fees will be charged for facilities provided under the scheme.

Marzban Irani, CIO-Fixed Income, LIC Mutual Fund, observed that awareness needs to be created to attract retail investors into the G-Sec market. Retail investor should be well informed how the G-Sec market works.

Nitin Shanbhag, Senior Executive Group VP, Motilal Oswal Private Wealth, observed that the Government Securities (G-Sec) market is dominated by Institutional investors such as Banks, Insurance companies, Mutual Funds, etc. with lot sizes of ₹5 crore and higher.

Hence this segment was largely inaccessible to retail participants. G-Sec market records highest volumes within the fixed income market since they offer a risk-free rate, hence no credit risk.

Shanbhag said: “Retail investors could thus far participate in G-Secs only through Debt Mutual Funds, although with limited options. Further, in Debt funds, investors have to invest with a minimum 3-year investment horizon through the Growth option to qualify for long term capital gains at the rate of 20 per cent with indexation benefit.”

The RBI Retail Direct Scheme will enable retail investors to invest in G-Secs across various tenors with flexible investment horizons and with the ability to get regular cash flows through risk-free coupons, he added.

Bal Krishna Piparaiya, Principal Director, Brickwork Ratings, noted that the Retail Direct Scheme in G-Sec for individual buyers is a much-awaited positive reform and will forge a paradigm shift in the bond market, spiking up demand for government bonds and lowering the cost of the government borrowing (which has so far been higher than banks’ deposit rates), going forward.

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Bhupender Yadav, BFSI News, ET BFSI

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Climate finance will be the focus of the upcoming United Nations 26th conference of parties (COP 26) to be held in the UK and attended by Prime Minister Narendra Modi, Union Environment Minister Bhupender Yadav said on Friday.

In an interaction with the media ahead of the international climate conference to be held from October 31 to November 12 in Glasgow, the minister said it is yet to be determined which country will get how much financial support to combat the global climate challenge.

There are many issues which will be on the table but the most vital will be to remind the developed nations to deliver on their promise of USD 100 billion per year to the developing countries, he said.

Yadav said Modi will attend the conference, but did not confirm the date of his visit.

At the United Nations Climate Summit in Copenhagen in 2009, the developed nations had pledged to provide USD 100 billion a year to the developing nations to help mitigate climate change. It is yet to be delivered. The amount has now accumulated to over USD one trillion since 2009.

Elaborating on the issue, Environment Secretary R P Gupta said that the amount to be received by India is yet to be ascertained.

He also said that besides fulfilment of climate funding, India expects the developed nations to compensate for the loss and damage expenditure borne by the country due to climate change and global warming as the developed world is responsible for it.

“The severity and the frequency of floods and cyclones have increased and it is because of climate change. The 1.5-degree Celsius temperature rise globally has happened because of the developed nations and their historical emissions. There should be compensation for us.

“The developed nations must bear the expenditure of the damage because they are somewhere responsible for it,” Gupta said, adding that India is hopeful of a good outcome at the COP 26.

India’s per capita carbon emissions per year is 1.96 tons which is way below China and USA which account for 8.4 tons and 18.6 tons emissions respectively, Gupta said, adding that “we are suffering because of developed nations.”

The world’s average per capita emission per year is 6.64 tons.

Under the Paris Agreement, India has three quantifiable nationally determined contributions (NDCs), which include lowering the emissions intensity of its GDP by 33-35 per cent compared to 2005 levels by 2030; increase total cumulative electricity generation from fossil free energy sources to 40 per cent by 2030 and create additional carbon sink of 2.5 to 3 billion tons through additional forest and tree cover. PTI AG SMN SMN



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RRB employees to observe one-day strike on September 27 against govt’s divestment plan, BFSI News, ET BFSI

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The regional rural bank (RRB) employees are going to observe a one-day strike on September 27 opposing the government’s plan to divest its 50% share in each of the rural banks in favour of their respective sponsor banks.

The employee unions are instead demanding formation of a national rural regional bank and delinking of it with any sponsor bank. The union flag bearers are of the view that there has always been conflicts of interest between mainstream commercial banks and the RRBs they sponsor.

India has 43 RRBs with a network of around 22,000 branches mostly in the hinterlands to ensure banking facilities for farmers and artisans. These banks collectively employ one lakh people.

The central government holds 50% in each of the RRBs while their respective sponsor banks hold 35%. The balance 15% in RRBs is held by the respective state governments according to their areas of operation. For example, West Bengal has three RRBs within its boundary and the state holds 15% in each of these banks.

The All India Regional Rural Bank Employees Association, a coordinating body of National Federation of RRB Officers & National Federation of RRB Employees, said that relinquishing central government share would eventually lead to privatisation and that’s why they are opposing it.

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Raghuram Rajan, BFSI News, ET BFSI

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The onus of promoting sustainable investments should lie with governments and not central banks, which already have significant other policy commitments, said Raghuram Rajan, former Reserve Bank of India governor.

Central banks should steer clear of politically-driven unlegislated areas such as “green” investments, as their mandates of providing financial and monetary stability are already quite wide, Rajan told the Reuters Global Markets Forum on Wednesday.

“Asking the central bank to say you should buy only green bonds, not brown bonds, etc., is asking the central bank to impose its own views on something which is primarily a fiscal matter,” he said.

Rajan, who earlier served as chief economist for the International Monetary Fund, said central banks should instead turn their focus to the financial stability of these green investments and other threats such as crypto currencies and cyber security.

Crypto currencies have a “potential future,” particularly well-regulated stablecoins, Rajan said, but it wasn’t clear what fundamentals were backing their valuations other than a “heady environment,” with easy monetary policy fuelling all asset prices.

Cryptos won’t be “your last resort” in a doomsday scenario, he said. “I would be much more confident about the value of these cryptos once they find proper use cases,” such as an effective means of payment, especially in cross-border transactions.

ON TRACK
Rajan, who is professor of finance at the University of Chicago Booth School of Business, did not expect markets to react in a 2013-style “taper tantrum” as the U.S. Federal Reserve unveils its plan to withdraw stimulus, which he said was unlikely to happen at Jackson Hole on Friday.

“Ideally, the Fed would like to observe as long as possible, (and) … make sure that the economy is well on track towards growth, he said. “Of course, the problem is the Delta variant, plus whatever variants are lurking in the background.”

He expected inflationary pressures in the United States to be transitory, but said prices may remain elevated for longer than expected due to strong wages, unavailability of workers, and additional fiscal stimulus measures.

“Firms are feeling confident enough to pass through price increase … they don’t do that until they think that these higher prices are to stay,” Rajan said.

Referring to India, Rajan said inflation there could rise in the short term as pent-up demand takes hold, resulting in supply-side bottlenecks, but demand will fall over the medium-term due to stressed households and economic scarring from the pandemic.

Central banks in many emerging countries are being proactive and raising interest rates, Rajan said.

“Now, obviously, the RBI (Reserve Bank of India) is watching the data and it will make the decision when it when it has to make it.”



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Subhash Garg, former Finance secretary, BFSI News, ET BFSI

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Subhash Chandra Garg, Former Finance Secretary, gives his view on the govt’s new monetisation pipeline. Edited excerpts from his interview with ET Now’s Tamanna Inamdar:

Tamanna Inamdar: How do you view the govt’s new asset monetisation plan in light of past experiences?
Subhash Chandra Garg: Monetisation has two clearly stated objectives which are very worthwhile.

One, you have invested some money in road or airport or rail or whatever, and now you need more money to invest. Therefore, the asset which has been created is passed on to private entrepreneurs to operate it, and then take that capital back to invest into something new.

Two, better operation of an asset. A toll road operated by NHAI or an airport operated by AAI or an electricity distribution company run by a state entity gets better operated if it is operated by private entity.

There is immense sense in monetising operating assets. There is lot of confusion and unnecessary misinformation that monetisation is sale of assets, which it is not. And sale of asset is not a bad thing. I do not think the government should be defensive about it.

There is no need to be defensive about selling banks, insurance companies, BPCL etc. That is a different route which should be taken to its logical course. What can get appropriately sold should be sold and monetised. There is nothing wrong about it. It is a perfectly justifiable thing to do.

One concern is over who gets these assets. Can it create monopolies with these going into the hands of a few, like people fear?
In India, operating of important assets is too much decentralised. There are actually too many operators. There is a necessity for large efficient players to run road assets or airport assets.

For example, buses and trucks in many states have single owners. They cannot invest, they cannot maintain those assets. Same is the case with the government. The Airport Authority of India has over 130 airports, but it cannot maintain them well.

There are 5 to 10 good operators in the country and three or four very good airport operators. Only about 20 airports are at best going to or have gone into private hands. So I think this concern over monopolies is completely misplaced.

India is a very large country with a huge number of entrepreneurs. We should only actually consolidate. Take example of telecom. There are three operators. Does it serve the country’s interest badly? Should there be 20-25 telecom operators?

The same thing applies to roads or rail. If we have 5, 10 or 20 strong players, I think we will be better off. This concern is overblown. I do not think it is in national interest to be worried about potential monopolies.

Similar plans in the past haven’t had roaring success. What is your take on this particular plan?
That is where the main challenges lie. The government did very well in monetisation of six airports in 2019, but thereafter there hasn’t even been a single transaction.

In roads also, we have struggled. There have been only five packages so far of ToT. Two of them did not take off at all in last five years; we have only done three. There is not much success anywhere else.

Now, this particular plan which talks of Rs 6 lakh crore over four years — that is Rs 1,50,000 crore a year — is simply too ambitious. I do not think there is any likelihood of it getting done. The institutional mechanisms which we have created are also not at all conducive for this to happen.

I honestly think that the government will not be able to deliver on it. If it does even 20% of what it is saying, I would be very happy.

When the government comes up with these mega pipelines — infrastructure pipeline earlier, monetisation pipeline now — the numbers are staggering, very big. There is absolutely no capacity, no clarity of structure. The sheer inability and the record of the government in carrying out such transactions makes me very suspicious.

As I said, I do not see more than 20% of it being met. My estimate is that the government, in four years, will end up with only 10% of this pipeline being achieved.

That would be 60,000 crore. Not more than that.



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PM Narendra Modi, BFSI News, ET BFSI

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The latest addition to India’s growing catalogue of digital payments solutions, voucher-based digital payment mode e-RUPI, will create a transparent and efficient welfare delivery mechanism, Prime Minister Narendra Modi said in the launch address of e-RUPI on Monday.

The purpose specific digital payment solution, developed by the National Payments Corporation of India in partnership with several government agencies, over its interoperable Unified Payments Interface (UPI) architecture will first be launched for covid vaccine dispensation at private hospitals, PM Modi said.

He added that the use cases for e-RUPI in subsequent years can be expanded from the delivery of various welfare subsidies linked to education, ration, healthcare, and fertilisers as well to relief efforts during natural calamities by different government, non-profit and corporate entities. It can also help in donations and scholarship programs for underprivileged sections of the society, Modi added.

“The launch of e-RUPI for digital transactions and Direct Benefit Transfers is a big step towards ensuring a more effective, transparent and leakage free welfare delivery system in India,” said PM Modi. “With this system, any government or non-government agency can avoid the use of cash to create a purpose specific voucher to intended beneficiaries. This will ensure that the funds will be utilised for its original purpose,” he added.

The payment system has been created by NPCI in association with the Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority. In essence e-RUPI is a digital payments mode which will be in the form of SMS strings or a Quick Response (QR) code delivered directly to beneficiaries of the intended welfare scheme without any intermediary network.

The pilot for e-RUPI will test its applications for free vaccine delivery, with broad scope also set to soon cover NHA’s PMJAY payouts as well as other digitised stamps based use cases for food delivery, fertilisers, healthcare benefits as well as scholarships and ration payments.

“Technology is a tool for social empowerment and transparency,” PM Modi said in the address. “During the pandemic, India has set an example with its Direct Benefit Transfer (DBT) architecture on effective delivery of benefits to the poor, when many countries struggled to find a solution.”

PM Modi also hailed India’s fintech and startup sectors for creating positive solutions towards social upliftment. Citing the UPI’s record volume in July where the channel reported an all-time high 324 crore transactions worth Rs 6.06 lakh crore, Modi said that indigenous payment solutions such as UPI, RuPay and Fastag have helped India lead digital payments innovations.

Now, the launch of e-RUPI marks the first issuance of a digital voucher in India that can be a purpose-specific substitute for bank notes, debit cards or biometric modes of payments. e-RUPI addresses main challenges with bank account based direct transactions such as lack of transparency on end-use, high authentication failure rates, inactive bank accounts as well as lack of cash out points in rural India, according to experts.

Earlier this month, the Reserve Bank of India deputy governor T Rabi Sankar in a speech also hinted that the central bank is working towards first of its kind Indian Central Bank Digital Currency (CBDC) – an Indian sovereign cryptocurrency.

However, e-RUPI would be different from a CBDC in that it won’t be interchangeable with cash or currency and can be redeemed only for the specific use case it has been created. NPCI and select banks – both public and private sector – onboarded as issuing entities will take payment orders from corporate or government agencies which will include the details of persons and the purpose for which payments will be booked. The authentication of the person can happen through the registered mobile number of intended beneficiaries.

The prepaid digital stamp is set to be accepted at enabled centres – first for vaccinations – without a mobile app or internet banking or any other physical interface.



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