Tag: MSME

Indian Bank signs MoU with IIM-B incubation arm, to disburse exclusive loans to start-ups, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


CHENNAI: Indian Bank has signed a Memorandum of Understanding (MoU) with the incubation arm of Indian Institute of Management-Bangalore (IIM-B) for extending exclusive credits to start-ups.

The incubation arm of the IIM-B, NSRCEL, is a platform, which brings together the start-ups, industry mentors and eminent academicians and researchers from the parent institution for continuous interaction.

As per the MoU, the NSRCEL will identify start-ups and MSMEs based on their credentials and past experience and refer them to the bank for financial assistance.

The bank will extend loans of up to Rs 50 crore to these start-ups under its ‘Ind Spring Board’ scheme, which is exclusively tailored for the task.

While announcing the development, Padmaja Chunduru, Managing Director and Chief Executive Officer of Indian Bank, highlighted the start-ups’ unique needs and requirement of suitable counselling and training for tapping equity and debt funding.

The Indian Bank also has a business mentoring programme, MSME Prerana, to empower such entrepreneurs through skill development and capacity building workshops in local languages.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

‘E-pass on time helped MSMEs in lockdown’, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


Kolkata: Timely issuance of e-pass helped the MSME sector to continue its operations uninterruptedly during the Covid-19 lockdown period, said Chandranath Sinha, state minister for department of micro, small and medium enterprise (MSME) and textiles.

Speaking at a semi-virtual session organised by the Bengal National Chamber of Commerce & Industry (BNCCI), the minister added that during the first and second wave of the Covid-19 pandemic, the MSME department left no stone unturned to boost the supply of PPE Kits, masks, gloves, sanitisers and oxygen cylinders.

He highlighted a number of strategic initiatives undertaken by the state government to facilitate ease of doing business amid a challenging environment.

In an attempt to protect the health and livelihood of labourers who work day and night to ensure the continuous operations of industrial units, the MSME department has made efforts to provide free vaccination to both permanent and contractual workers and other stakeholders in the sector, said Swaroop Udayakumar, director, Directorate of MSME and textiles.

The process issuing of pollution licence for MSMEs in West Bengal has been made online and the time period for the issuance of this licence has been reduced from 14 days to 72 hours to facilitate ease of doing business.

Moreover, a quasi-judicial forum called MSME Facilitation and Arbitration Council has been formed to allow MSMEs to file complaints if they fail to get payment from a buyer within 45 days, thereby helping them clear a backlog of payments. “In a matter of two hours, we settled almost 8-10 crores of arbitration claims,” Udayakumar added.

Read more:

The government and the central bank push to support MSMEs during the pandemic through credit measures like the emergency credit line guarantee scheme (ESLGS) saw lending to them jumping to Rs 9.5 lakh crore in the pandemic-hit FY21 from Rs 6.8 lakh crore in FY20, while the asset quality deteriorated to 12.6 per cent as of March 2021 from 12 per cent in December 2020.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Shaktikanta Das, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Reserve Bank of India‘s (RBI) reduction in benchmark interest rates which started before the outbreak of the Covid 19 pandemic in March 2020 has substantially reduced bank lending rates, reducing borrowing costs for both companies as well as individuals, governor Shaktikanta Das said.

“The reduction in repo rate by 250 basis points since February 2019 has resulted in a cumulative decline by 217 basis points in the weighted average lending rate (WALR) on fresh rupee loans. Domestic borrowing costs have eased, including interest rates on market instruments like corporates bonds, debentures, CPs, CDs and T-bills,” Das said. One basis point is 0.01 percentage point.

Das said the improvement in transmission of rates has proven the “efficacy” of RBI’s monetary policy measures in the current easing cycle and has reduced the debt burden on both companies as well as households.

“In the credit market, transmission to lending rates has been stronger for MSMEs, housing and large industries. The low interest rate regime has also helped the household sector reduce the burden of loan servicing. The significant reduction in interest rates on personal housing loans and loans to commercial real estate sector augurs well for the economy, as these sectors have extensive backward and forward linkages and are employment intensive,” Das said.

Replying to a question in the post policy press conference, Das said the transmission of policy rates has not only been for new loans but also existing borrowers. “With regards to outstanding rupee loans the transmisson is 117 basis points. In outstanding loans there is a cycle of loan reset so naturally it has to be done when the due date arises. In the pandemic period starting from March 2020 to July 2021, the transmission on fresh rupee loans has been 146 basis points whereas for outstanding loans it has been 101 basis points, so transmisson has happened on outstanding loans also,” Das said.

On Friday, the Reserve Bank of India maintained status quo on interest rates as expected and assured it would do whatever it takes to get the economy back on a firm footing despite rising inflation. Repo rate, the rate at which it lends to banks was kept unchanged at 4% even as monetary policy committee raised inflation forecasts for the fiscal year by nearly 60 basis points to 5.7% citing high retail prices of petrol and diesel, and soaring prices of industrial raw materials.

Das also reiterated the RBI’s commitment to help the central and state government ensure an orderly completion of their borrowing programmes at a reasonable cost while minimising rollover risk.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

RBI says stress in retail, MSME loans is not alarming, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) has said there is stress visibility in retail and MSME loan segments but the situation is not alarming.

“With regard to the moment of any kind of stress in the retail segment and MSME segment, we are very closely monitoring, yes there is a visibility of little bit stress from the past data, but definitely it’s not alarming and constantly we are engaged with the regulated entities, particularly the outlier banks and the outlier NBFCs,” RBI Deputy Governor M K Jain said in the post-policy press conference.

He said RBI had advised all regulated entities post Covid to improve their provisions to which they have responded and implemented the parameters tied to the capital adequacy ratio.

“There is a reduction in gross and net NPA as well as slippage ratio, there is an improvement in the provision coverage ratio, and there is also an improvement in the profitability. So the sector isin a better position today than what it was before the Covid pandemic, he said.

Rising stress

Banks and NBFCs have seen stress rising during the last April-June quarter in the retail and MSME segment.

State Bank of India has reported GNPAs rising to 5.32 per cent in April-June quarter compared with 4.98 per cent in the previous quarter. During the quarter the bank reported fresh slippages of Rs 15,666 crore compared with Rs 21,934 crore in the preceding quarter.

Kotak Mahindra Bank reported the gross NPAs at 3.56 per cent in the last quarter against 3.25 per cent in the previous one.

The gross non-performing assets (GNPAs) ratio of banks may rise to 9.8 per cent by March 2022, under a baseline scenario, from 7.48 per cent in March 2021, according to the Financial Stability Report (FSR) released by the RBI early last month.

Under a severe stress scenario, GNPA of banks may increase to 11.22 per cent, the report said.

The asset quality of non-banking finance companies will see elevated stress levels in the near term due to the second wave of the pandemic, but the stress will subside subsequently with improvement in collection efficiencies and rise in restructuring, according to rating agency Icra.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Rajasthan CM seeks Centre’s cooperation for economic, social development of states, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


Jaipur, Rajasthan Chief Minister Ashok Gehlot on Friday insisted upon increasing economic and policy cooperation from the Centre in order to strengthen the spirit of cooperative federalism. In a meeting with NITI Aayog member Ramesh Chand, senior adviser Yogesh Suri and adviser Rajnath Ram, the chief minister said in the last few years, the financial condition of all the states of the country has been adversely affected due to the coronavirus pandemic and the economic slowdown.

At the same time, he said the need to increase the scope of social security is being felt more.

“In such a situation, the central government should provide more cooperation to the states for the smooth conduct of activities related to economic and social development,” Gehlot said.

He said it is not easy for any state to bring the economy back on track without the cooperation of the central government.

“In view of the peculiar geographical conditions of the state, the Centre should provide assistance to the state in the ratio of 90:10 instead of 50:50 like the northeastern and hilly states, and Union Territories,” a statement quoting the chief minister said.

He reiterated his demand to give national status to the Eastern Canal Project of Rajasthan, which is aimed at providing drinking and irrigation water in 13 districts in eastern Rajasthan.

Gehlot also raised several demands pertaining to the state.

In the meeting, the Niti Ayog praised the performance of Rajasthan in the areas of ease of doing business, export sector, school education, MGNREGA, agriculture and animal husbandry, health, renewable energy, women empowerment, MSME sector, etc.

Energy Minister BD Kalla, Education Minister Govind Singh Dotasra, Industries Minister Parsadi Lal Meena, Chief Secretary Nirajan Arya, CM‘s economic advisor Arvind Mayaram, advisor Govind Sharma and other senior officers attended the meeting.

Selja is supposed to enjoy the confidence of Congress president Sonia Gandhi and is also considered close to Ashok Gehlot (in pic)



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Small businesses hit as banks freeze current a/cs

Banking & Finance

[ad_1]

Read More/Less


 

Operations of thousands of small businesses across the country were disrupted after their current accounts were closed on Monday, as banks rushed to comply with the Reserve Bank of India’s directive on the opening of such accounts by borrowers aimed at preventing diversion of funds.

As per the RBI’s directive issued in August 2020, no bank can open current accounts for customers who have availed of credit facilities in the form of cash credit (CC)/overdraft (OD) from the banking system. While the central bank had given banks time until end-July to implement the new rules, many account holders were caught unaware.

Accounts frozen

Rajiv Podar, President of IMC Chamber of Commerce & Industry, said borrowers across corporate as well as non-corporate structures did not receive any intimation from the banks and were surprised to find all the current accounts frozen, leading to complete operational disruption.

“For example, project accounts are frozen, plant-wise current accounts are frozen, banks have withdrawn current account products without any intimation, which is against the spirit of banking. How will the companies pay salaries in August and even all other statutory dues?,” Podar asked.

Besides maintaining a cash credit/overdraft account with the lead bank in the consortium of banks, businesses with pan-India operations also have relationships with other banks with either a strong presence in specific geographical locations or offering superior product and service capabilities or both. But concerned about the diversion of funds by borrowers via accounts outside the consortium, the RBI had imposed restrictions on the opening of CC/OD accounts by borrowers.

Banks are now forcing companies to route all their transactions only through the bank which had extended cash credit and overdraft facilities. While MSMEs are allowed to open as many current accounts as possible for receiving credits, all debits have to happen only through the bank which has an exposure of over 10 per cent of the borrower.

Chandrakant Salunkhe, President, SME Chamber of India, said many small units are struggling to meet their payment commitments even after having the required money in the bank as their accounts are frozen and attempt to release the funds would take 15 days to one month.

Compliance status

Meanwhile, the RBI, on Monday, took stock of the compliance status of banks with its directive. Banks are believed to have largely complied with the RBI’s directive.

To alleviate the suffering of borrowers, Podar sought a breather of six months for implementing the guidelines in a modified manner, with proper guidelines to banks and clients.

“Lead banks should be allowed to hold multiple shadow current accounts to meet borrower requirements such as salary, contract-specific, location-specific, purpose-specific, etc. Each shadow account shall have a unique number and a standalone bank statement,” the IMC President said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Kotak Mahindra Bank inks MoU with National Small Industries Corporation to offer loans to MSMEs, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


Kotak Mahindra Bank announced that it has entered into a Memorandum of Understanding (MoU) with the National Small Industries Corporation (NSIC), a Government of India enterprise, to facilitate credit to Micro, Small and Medium Enterprises (MSMEs). Under the tie-up, MSME units registered with NSIC can now avail business loans and working capital finance tailored to suit the specific needs of each business at attractive interest rates.

This further would initiate digital submission of loan-related documents, quick loan sanctions, and access to KMBL’s full range of cash management services that will help MSMEs in the efficient utilisation of cash. Providing a wide range of business loans and working capital solutions at attractive interest rates with a Seamless documentation journey and quick loan sanction process. This collaboration will further facilities such as online/mobile banking, cash management services, e-tax, and KMBL’s Forex Live platform to book foreign currency.

Sunil Daga, President & Head – Business Loans and Working Capital Solutions, Kotak Mahindra Bank said, “The MSME sector is critical for the revival and growth of the Indian economy. Through this tie-up with NSIC, we want to partner small businesses across the country by providing a range of attractive financing options, customised to meet the requirements of small business owners and backed by digital-first solutions. This will help them tide over the current crisis and contribute to their growth going forward.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Banks disburse over Rs 2 lakh cr under ECLGS till mid-July, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Nearly 17 months after the launch of the Emergency Credit Line Guarantee Scheme (ECLGS), banks have sanctioned Rs 2.76 lakh crore, with disbursals adding up to Rs 2.14 lakh crore till mid-July.

Similarly, the PM SVANidhi scheme, providing loans of up to Rs 10,000 to street vendors, has seen flows of a little over Rs 2,500 crore to 25 lakh vendors, although the internal target was more ambitious, with banks nudged to give loans.

Although the government has announced an increase in the ECLGS limit from Rs 3 lakh crore to Rs 4.5 lakh crore, officials do not expect a major surge, amid demands that eligibility norms be eased to enable more small businesses to use the window. When the scheme was announced last year, it was meant for micro, small and medium enterprises (MSMEs), but the scope was enlarged later as the demand was not sufficient.

Up to July 2, a little less than 1.1 crore MSME borrowers have been provided guarantee-based support amounting to Rs 1.65 lakh crore, which translates into an average ticket size of Rs 1.5 lakh. Under the originally announced scheme, MSMEs that had loans of up to Rs 50 crore at the end of February 2020 were eligible even with past dues of up to 60 days.

MSME industry groups say that the conditions are such that it is difficult for businesses to get a loan. “The requirements were such that only a certain set of entities with existing loans were eligible. Now banks are reluctant to lend. The government should have dropped the condition of prior credit because we are seeing cash flows being disrupted for a lot of MSME units,” said Animesh Saxena, president of Federation of Indian Micro and Small & Medium Enterprises (FISME).

Recently, the parliamentary standing committee on industry noted that there is a huge gap between sanctions and disbursals as banks feared defaults in the wake of the second wave, and also said that only half the amount has gone to small businesses.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Introduction and evolution of Neo-banks in India, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The rise of e-commerce led to trusting digital-first options in various segments such as payments, insurance, investments. It was inevitable that this transition would be witnessed by the banking sector as well. Millennial audiences unfamiliar with brick-and-mortar services are open to digital-first banks where the need to visit a branch diminishes.

Globally, India has the 2nd largest base of internet subscribers, smartphones, and social media user base. With ~600mn digitally active customers, India offers a large market for digital banking services. This growth has been enabled by India’s public digital infrastructure and other regulations and policies.

Additionally, the COVID-19 pandemic has also accelerated the transformation of banking. It created an opportunity to innovate, and almost all traditional banks supplemented their brick-and-mortar branches with sophisticated digital versions of their services. Banks expanded their digital footprint and are using their digital channels to offer a range of services.

Taking this a step further, we now have neo-banks, which are fully operational digital-only banks with advanced features. The state of the art technology is what gave rise to neo-banks in the last few years with startups like Jupiter, Fi, and Finin, launching their services in 2019-20. Revolut, which was last valued at $33B, has recently announced its plan to roll out neo-banking services in India.

What is making Neo-banking the winner?

In the US, neo-banks like Chime allowed consumers to transfer money faster than the usual 3-4 days taken by conventional banks. On the other hand, in the UK, in addition to money transfer, neo-banks also provided borderless banking across Europe, which is a borderless economy. However, such problems do not exist in India, and the winning reasons will be different.

India is different. With an experiential layer added on top of traditional banking, neo-banking will help solve access to several financial products that are not readily available to the 600M Indians and the 65M MSMEs. Riding on the success of the India FinTech stack – Digi locker, Aadhar, UPI 2.0, Account aggregator model, neo-banks will be able to improve digital distribution channels and onboarding for customers. Through the account aggregator model, neo-banks will be able to have access to the financial health of consumers, thus being able to offer personalized financial products. It will also allow them to correctly measure the default risk of these consumers, reducing NPAs and improving ROE margins.

The global scenario for neo-banks is quite different from that in India. In India, digital banking licenses are yet to be issued. Hence the current framework does not allow them to launch full-stack banking services. Obtaining a universal banking license will allow neo-banks to operate as a bank, in addition to the tech angle for better customer experience and ability to offer a myriad of products.

Today, some banks including Kotak Mahindra Bank, Yes Bank, and Federal Bank, are willing to partner with neo-banks for offering underlying banking accounts. It is a lucrative proposition for banks since they share RoE without bearing the additional cost to acquire these customers.

Way forward for neo-banks in India?

Since Indian neo-banks are just being launched, it will be interesting to see how they will monetise as the traditional sources of revenue for a bank would be unavailable to them, i.e., taking deposits and lending those deposits. Other revenue streams like MDR fees on card transactions is decreasing with the acceleration of UPI payments (and UPI payments are not revenue-generating). This leaves the neo-banks with cross-selling of financial products (wealth management, insurance, community-led discounts, stock market investments, etc.) and account opening commissions from banks as the primary source of income.

Currently, Neo-banking in India is at a nascent stage where some positive developments have happened in the last few quarters. The business models around neo-banks in India will have to evolve beyond the MDR on card transactions in the next few years. The key to their success will depend on how innovative they will be, in creating new revenue streams and acquire users with high lifetime value. Neo-banks who eventually will acquire a large user base with sustainable revenue streams will stand a chance to get a digital or a universal bank license and they are the ones who will emerge as winners in this space.

The blog has been authored by Kiran Vasireddy, Partner at Kalaari Capital.

DISCLAIMER: The views expressed are solely of the author and ETBFSI.com does not necessarily subscribe to it. ETBFSI.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

Banks disburse over Rs 2 lakh crore under ECLGS till mid-July, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


NEW DELHI: Nearly 17 months after the launch of the Emergency Credit Line Guarantee Scheme (ECLGS), banks have sanctioned Rs 2.76 lakh crore, with disbursals adding up to Rs 2.14 lakh crore till mid-July. Similarly, the PM SVANidhi scheme, providing loans of up to Rs 10,000 to street vendors, has seen flows of a little over Rs 2,500 crore to 25 lakh vendors, although the internal target was more ambitious, with banks nudged to give loans.

Although the government has announced an increase in the ECLGS limit from Rs 3 lakh crore to Rs 4.5 lakh crore, officials do not expect a major surge, amid demands that eligibility norms be eased to enable more small businesses to use the window. When the scheme was announced last year, it was meant for micro, small and medium enterprises (MSMEs), but the scope was enlarged later as the demand was not sufficient.

Up to July 2, a little less than 1.1 crore MSME borrowers have been provided guarantee-based support amounting to Rs 1.65 lakh crore, which translates into an average ticket size of Rs 1.5 lakh. Under the originally announced scheme, MSMEs that had loans of up to Rs 50 crore at the end of February 2020 were eligible even with past dues of up to 60 days. MSME industry groups say that the conditions are such that it is difficult for businesses to get a loan. “The requirements were such that only a certain set of entities with existing loans were eligible. Now banks are reluctant to lend. The government should have dropped the condition of prior credit because we are seeing cash flows being disrupted for a lot of MSME units,” said Animesh Saxena, president of Federation of Indian Micro and Small & Medium Enterprises (FISME).

Recently, the parliamentary standing committee on industry noted that there is a huge gap between sanctions and disbursals as banks feared defaults in the wake of the second wave.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,
1 … 3 4 5 6 7 … 12