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RBI warns against combination of high public debt, low interest rates, BFSI News, ET BFSI

July 3, 2021 root Banking & Finance

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New Delhi: As economies around the world witness ultra-low interest rates and rising public debt amid the pandemic, the Reserve Bank of India (RBI) has said that the combination would pose challenges.

The pandemic response saw a tight interaction of monetary and fiscal policy. As monetary policy has sought to control a larger segment of the yield curve, the overlap with public debt management has grown, noted RBI’s Financial Stability Report for July.

It noted that with monetary policy committed to an easy stance for some time in many countries, the fiscal stance becomes important.

Too loose a fiscal stance could cause inflation surprises and financial conditions could tighten, it said, adding that a more constrained fiscal policy would add pressure on monetary policy.

“It would test the efficacy of further monetary expansion and could heighten intertemporal tradeoffs,” it said.

The extraordinary combination of high debt-to-GDP ratios and ultra-low interest rates raises three challenges, said the central bank’s report, with the first being the risk of fiscal dominance.

Further, it may also lead to a situation where fiscal positions may ultimately prove unsustainable and the complications of the possible joint “normalisation” of fiscal and monetary policies would also crop.

Growth-friendly fiscal policy, the RBI suggested, can help by effectively targeting public infrastructure and productivity.

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Leave a comment fiscal policy, interest rates, monetary, monetary policy, New Delhi, pandemic, public debt, RBI, RBI Financial Stability Report, reserve bank of india

Credit guarantee scheme for facilitating MFIs loans announced, BFSI News, ET BFSI

June 28, 2021 root Banking & Finance

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New Delhi, The government on Monday announced a new credit guarantee scheme that will facilitate loans to 25 lakh people through micro finance institutions (MFIs).

The announcement was made by Finance Minister Nirmala Sitharaman as part of economic relief package provided to spur investment climate in the country affected by the Covid pandemic.

As per the new scheme, guarantee will be provided to Scheduled Commercial Banks for loans to new or existing NBFC-MFIs or MFIs for on lending up to Rs 1.25 lakh to approximately 25 lakh small borrowers.

Interest Rate on Loans from banks will be capped at MCLR plus 2 per cent.

Maximum loan tenure 3 years, 80 per cent of assistance to be used by MFI for incremental lending, interest at least 2 per cent below maximum rate prescribed by RBI.

The focus of the scheme will that lending would be for new activities and not repayment of old loans. Loans to borrowers to be in line with extant RBI guidelines such as number of lenders, borrower to be member of JLG, ceiling on household income and debt.

All borrowers (including defaulters upto 89 days) will be eligible for guarantee cover for funding provided by MLIs to MFIs/NBFC-MFIs till March 31, 2022 or till guarantees for an amount of Rs 7,500 crore are issued, whichever is earlier.

Guarantee upto 75 per cent of default amount for up to 3 years through National Credit Guarantee Trustee Company (NCGTC) which will also not charge any guarantee fee.

–IANS

sn/kr

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Leave a comment credit guarantee scheme, finance, Guarantee, mclr, nbfc, New Delhi, Nirmala Sitharaman, RBI, scheduled commercial banks

Indian Bank opens Rs 4,000-cr QIP issue; sets floor price at Rs 142.15/share, BFSI News, ET BFSI

June 22, 2021 root Banking & Finance

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State-owned Indian Bank on Monday launched its qualified institutional placement (QIP) of shares to raise around Rs 4,000 crore, setting the floor price at Rs 142.15 per share. The committee of directors on capital raising in its meeting held on Monday approved and authorised the opening of the QIP on June 21, Indian Bank said in a regulatory filing.

The committee approved the floor price for the QIP at Rs 142.15 per equity share. Floor price is the minimum price set for an issue, below which an offer cannot be made.

“The bank may, in accordance with the special resolution of the shareholders, at its discretion offer a discount of up to 5 per cent on the floor price in the QIP,” it added.

Further, a meeting of the committee is scheduled to be held on June 24, 2021 to consider and approve the issue price, including a discount for the equity share to be allotted to eligible qualified institutional buyers (QIBs), pursuant to the QIP, it said.

In March this year, the committee of directors had accorded approval for raising equity capital aggregating up to Rs 4,000 crore through QIP in one or more tranches.

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Leave a comment floor price, indian bank, Indian Bank qip, New Delhi, QIP

SBI to sell two NPA accounts next month to recover dues of Rs 60 cr, BFSI News, ET BFSI

June 17, 2021 root Banking & Finance

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SBI has invited bids for two NPA accounts with outstanding dues of nearly Rs 60 crore. “In terms of the bank’s policy on sale of financial assets, in line with the regulatory guidelines, we place these accounts for sale to ARCs/ banks/ NBFCs/ FIs, on the terms and conditions indicated there against,” SBI said in a sale notice.

The bank has put up for sale the accounts of N S Engineering Projects, with loan outstanding of Rs 36.98 crore, and Chinteshwar Steels Pvt Ltd, which owes Rs 22.72 crore to SBI.

The reserve price for these non-performing assets (NPAs) for the purpose of sale has been fixed at Rs 17.19 crore and Rs 10.50 crore, respectively.

The e-auction for these two accounts will take place on July 7, 2021.

The interested asset reconstruction companies (ARCs)/ banks/ non-banking financial companies (NBFCs) / financial institutions (FIs) can conduct due diligence of these assets with immediate effect, after submitting expression of interest and executing a non-disclosure agreement (NDA) with the bank, SBI said.

“We reserve the right not to go ahead with the proposed sale at any stage, without assigning any reason. The decision of the bank in this regard shall be final and binding,” it added.

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HDFC Bank’s mobile app down, bank says ‘looking on priority’, BFSI News, ET BFSI

June 15, 2021 root Banking & Finance

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New Delhi: Customers of HDFC Bank have been facing issues with the bank’s mobile banking application.

In a tweet, the bank has said that it is looking into the matter on priority and urged the customers to used net banking to complete their transactions.

“We are experiencing some issues on the MobileBanking App. We are looking into this on priority and will update shortly. Customers are requested to please use NetBanking to complete their transaction. Regret the inconvenience caused. Thank you.” the bank said in a tweet.

Several users took to social media to complain regarding the issues faced on the app.

According to ‘Downdetector’, the issues surged around 10.45 a.m. and people are still facing problems.

This is yet another glitch after customers faced issues in net banking and mobile app in March.

In November last year, a major outage occurred in the bank’s internet banking and payment system on due to a power failure in the primary data centre, following which the Reserve Bank of India (RBI) in December asked the bank to temporarily stop all launches of the digital business generating activities and sourcing of new credit card customers.

In February, the RBI appointed an external professional IT firm to carry out a special audit of the entire IT infrastructure of HDFC Bank following the outage.

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SBI hikes home loan rate to 6.95 pc, BFSI News, ET BFSI

April 5, 2021 root Banking & Finance

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New Delhi, Apr 5 () Country’s largest lender State Bank of India (SBI) has revised its home loan rate to 6.95 per cent effective April 1. With the revision, the lowest rate of 6.70 per cent regime for limited period ended in March 31.

During the limited period, the bank offered home loan starting from 6.70 per cent for loans up to Rs 75 lakh and 6.75 per cent for loans in the range of Rs 75 lakh-Rs 5 crore.

As per information posted on its website, the new rate effective April 1 is 6.95 per cent.

Compared to teaser rate for the limited period, the new rate is 25 basis points higher at 6.95 per cent.

The hike in minimum home loan rate by SBI is likely to prompt other lenders to follow suit.

The bank will also levy a consolidated processing fee on home loans. This will be 0.40 per cent of the loan amount and goods and services tax (GST) subject to a minimum of Rs 10,000 and maximum of Rs 30,000 plus GST.

Last month, SBI had in waived off home loan processing fees till March 31 to cash in on festive fervour. DP ANS ANS

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Banks sanctions Rs 25,586 cr to 1.14 lakh Stand-Up India accounts in 5 years, BFSI News, ET BFSI

April 5, 2021 root Banking & Finance

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The Finance Ministry on Sunday said banks have sanctioned Rs 25,586 crore to about 1,14,322 beneficiaries under the Stand Up India Scheme in the last five years for promoting entrepreneurship among women and SC & STs. The objective of Stand-Up India is to promote entrepreneurship amongst women, Scheduled Castes (SC) & Scheduled Tribes (ST) categories, to help them in starting a greenfield enterprise in trading, manufacturing and services sector, by both ready and trainee borrowers, the Finance Ministry said in a statement.

Under the scheme, bank loans between Rs 10 lakh and Rs 1 crore are provided to at least one Scheduled Caste/ Scheduled Tribe borrower and at least one woman borrower per bank branch of Scheduled Commercial Banks.

Started in April 5, 2016, the scheme has benefited 93,094 women entrepreneurs with outstanding loan of Rs 21,200 crore as of March 23.

This scheme, which has been extended up to 2025, covers SC/ST and/or women entrepreneurs, above 18 years of age, it said.

In case of non-individual enterprises, 51 per cent of the shareholding and controlling stake should be held by either SC/ST and/or Women Entrepreneur and borrowers should not be in default to any bank/financial institution, it said.

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Paytm Payments Bank helps 2.6 lakh FASTag users get back wrongly deducted toll charges, BFSI News, ET BFSI

February 24, 2021 root Banking & Finance

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Paytm Payments Bank on Tuesday said it has won 82 per cent of dispute cases on behalf of FASTag users with toll plazas in 2020 and facilitated refund of wrongly deducted toll charges to 2.6 lakh customers. The payments bank said it has set up an automated dispute management process which identifies incorrect deductions and immediately raises claims to reverse the extra charges.

Paytm Payments Bank MD and CEO Satish Gupta said in a statement, “It has been our endeavour to empower our users with seamless and hassle-free travel on road. In this quest, we support our users in every possible way, including fast redressal of any grievance they face with toll plazas.”

The company continuously strives to ensure that customers are always charged the correct toll amount, he added.

Paytm Payments Bank claims to be the top issuer and the largest acquiring bank under the National Electronic Toll Collection programme.

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Indian Bank integrates core banking software of erstwhile Allahabad Bank, BFSI News, ET BFSI

February 16, 2021 root Banking & Finance

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NEW DELHI: State-owned Indian Bank on Monday said it has successfully integrated the software system with the erstwhile Allahabad Bank post the amalgamation. The bank has successfully completed process of technical migration of CBS/ITMS software of erstwhile Allahabad Bank with CBS/ITMS software of Indian Bank, it said in a regulatory filing.

The scheme of amalgamation of Allahabad Bank into Indian Bank came into force from April 1, 2020.

Indian Bank carried out the migration process on 13-14 February, and had informed that customers may face some disruption in services.