Tag: Rai

RAI, BFSI News, ET BFSI

Personal Finance

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New Delhi, Consumers are more excited about the festive season shopping this year compared to the last, making retailers hopeful that the third wave of COVID-19 pandemic will not eclipse the Diwali glow, Retailers Association of India (RAI) said on Tuesday. As per the annual Festive Shopping Index conducted by RAI and LitmusWorld, capturing consumer sentiment on several aspects influencing purchase decisions during the festive season, apparel topped the shopping list followed by home appliances.

As per the survey that covered 1,000 customers across tier I, II and III cities in India, 63 per cent of the respondents had apparel on top of their shopping list, followed by home appliances and electronics with 50 per cent each and 36 per cent preferred mobile phones.

“Jewellery is back among the top things to buy this festive season for 27 per cent of respondents this year, as against a mere 9 per cent last year,” RAI said in a statement.

When it comes to spending, the survey found that about 43 per cent of respondents were willing to spend in the range of Rs 15,000 to Rs 1 lakh and 9 per cent are looking at spending above Rs 1 lakh during the ongoing festive season. Last year only 5 per cent of respondents were willing to splurge over Rs 1 lakh. RAI CEO Kumar Rajagopalan said,

“Consumers have indicated an overwhelming eagerness to shop in this year’s consumer survey as more than half of the respondents plan to shop for themselves as well as for their loved ones”.

Stating that this augurs well for retail businesses and may lead to a turnaround, he said, “Retailers are hopeful that the positive sentiment continues and are hoping that a third wave of the pandemic doesn’t eclipse the Diwali glow”.

In terms of mode of payments, non-cash continues to be the trend this year as well, with credit cards (59 per cent) being the mode of choice, followed by debit cards (51 per cent) and UPI (40 per cent), RAI said.

As many as 21 per cent of respondents indicated that they would opt for EMI or pay later schemes when shopping, indicating the emergence of a new trend, it added.



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How PSU banks are catching up in the digital world, BFSI News, ET BFSI

Banking & Finance

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– By Amol Dethe & Ishwari Chavan

The banking sector in India, in response to evolving forces of consumer behaviour shift, demographics and technology, has gone through some significant changes in the past decades.

Almost every sector in the economy reflects the massive impact technology has had on them. But the banking sector, in particular, has been aggressively adapting and transforming in the face of constantly evolving technology.

The notion holds that the Public sector banks (PSBs) have lagged their private counterparts in adapting to these changes. But the PSBs have geared up and banking experts believe the future does look good for PSBs.

PSBs adopting tech

The PSBs have already started investing heavily in technology. Artificial Intelligence, blockchain technology, and robotic process automation are the key innovations that are likely to impact the banking scenario in India in a transformative way.

The field of artificial intelligence has produced several cognitive technologies. Individual technologies are getting better at performing specific tasks that only humans could do. It is these technologies that PSBs may focus their attention on. Analytics can improve customer understanding and personalisation. PSBs are in the process of aggressively adopting these technologies that enhance bank and customer engagement.

Speaking at the ETBFSI session on Digital future of PSU Banks, Raj Kiran Rai, MD & CEO, Union Bank of India and V G Kannan, former CEO, Indian Banks’ Association shared their insights and experience on how PSBs are transforming.

Rai said, “Based on the transactions of a customer, these models can predict if he/she can be a potential housing loan customer, a potential vehicle loan customer, or a personal loan customer. So it helps to do targeted marketing. We are still in the initial phases of using it. But we are investing a lot in this.”

Developing skills

PSBs are heavily recruiting the young population while skilling and reskilling them. Rai mentioned that the average age of employees has come down to 38. He added that the “tech-savvy” young can be easily skilled and reskilled through the e-learning modules that are being introduced. Prioritising the employees who can read and analyse large data over traditional number-crunching can be increasingly seen as a pattern.

Among other skills, marketing is one of the most valuable skills for the digital future of PSBs. According to Rai, marketing skills are where public sector employees are lacking. He said things will take off very fast once the digital products are marketed, pushed to customers, and made comfortable to use.

Fast Moving Consumers & FinTechs

VG Kannan, Former Chief Executive, Indian Banks’ Association, said, “The more and more the customers can use these things, the load on the bankers will come down and they can make it more efficient, provide higher interest rate and provide better services at a lower cost. So it’s going to be a win-win for everyone.”
While a large section of the population in India will be comfortable using digital products, banks will still have to maintain a physical presence, especially in rural areas where the customers are more inclined towards it.

Financial Literacy Centres (FLCs) can play an important role in promoting financial literacy by creating awareness about banking services. Thus, integrating the informal and formal financial sectors can further make digital banking services more accessible to a large chunk of the population that otherwise prefers the physical branches.

Furthermore, to stay relevant in an ever-evolving customer pool, PSBs need to make the most out of the dynamic changes in the BFSI sector in the country. The success of these banks will largely depend on the alliances they form. Thus creating innovative partnerships will ensure the growth of PSBs.

It is no more about banks versus FinTech. Partnerships between banks and FinTech companies will allow banks early access to innovative technologies while the FinTechs would benefit from the vast experience and infrastructure of the PSBs. Both Kannan and Rai believe that a lot of such partnerships may be witnessed over the coming years.

The very technologies that drive revolutionary transformations also invite security risks with them. Technologies are getting sophisticated, and so are the cyber risks. Thus, for PSBs to ensure a secure infrastructure may be very crucial.

Rai and Kannan concurred that growth through innovation is where the PSBs are headed.



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Crisil fears large companies will benefit from RBI sops for contact-intensive sectors, BFSI News, ET BFSI

Banking & Finance

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Leading domestic ratings agency Crisil on Friday said feared risk aversion among banks may lead to only the large companies benefitting under the Rs 15,000-crore on-tap liquidity window for contact-intensive sectors announced earlier in the day. The Reserve Bank of India‘s (RBI) aggregate debt-eligibility thresholds for small enterprises to avail loan recasts takes the total number of entities able to access the facility to two-thirds of the rated mid-size portfolio, it said.

Earlier in the day, the RBI relaxed the eligibility criteria for the restructuring window offered under the Resolution Framework 2.0 to Rs 50 crore. Earlier, only half of the rated companies were eligible for the package when the loan eligibility threshold was set at Rs 25 crore. It also launched the Rs 15,000-crore liquidity facility.

The on-tap liquidity window for contact-intensive sectors such as hospitality, travel and tourism, and aviation ancillary services, which have borne the brunt of the second wave of the pandemic, is timely also, the agency said.

“There is a possibility that only large existing borrowers in contact-intensive sectors actually benefit from this on-tap liquidity window as banks may have greater comfort with them,” the agency said.

In the current environment, it is possible that a number of banks could be risk-averse and the benefit of on-tap liquidity facility may not, therefore, reach the smaller and lower-rated companies in these sectors fully, it said.

A clarity will emerge once the banks come out with their updated policies after the RBI announcement. Crisil will monitor the impact of the development on its rated credits on a case-to-case basis, it said.

Crisil said it rates 6,800 mid-size companies, excluding those engaged in the financial sector, and 4,700 of those are small and medium enterprises (SMEs), having bank loan exposure of up to Rs 50 crore and were standard accounts as of March 2021.

“The RBI’s relaxation in overall bank exposure threshold is timely, as it now increases the coverage of stressed companies that typically have weaker credit profiles,” its Chief Rating Officer Subodh Rai said.

Rai added that three out of four companies eligible for restructuring have sub-investment category ratings, indicating their relatively weak ability to manage liquidity shocks, he added.

Rescheduling of loan repayments under the restructuring 2.0 window will provide interim relief to these companies against such liquidity shocks, he said.



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IBA CEO, BFSI News, ET BFSI

Banking & Finance

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As the government enhanced the scope of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), banks on Sunday said they have sanctioned Rs 2.54 lakh crore and have room to disburse another Rs 45,000 crore under the plan.

To support the businesses affected by the second wave of COVID-19, the Finance Ministry on Sunday enhanced the scope of ECLGS, including providing concessional loans to hospitals/nursing homes for setting up on-site oxygen generation plants.

The validity of the scheme is extended by a further three months to September 30 or till guarantees for an amount of Rs 3 lakh crore are issued, the ministry said in a statement.

“Of the total kitty (for ECLGS) available, Rs 2.54 lakh crore of loans have already been covered and there is a window available for roughly Rs 45,000 crore. Of the Rs 2.54 lakh crore, Rs 2.40 lakh crore has already been disbursed,” Indian Banks’ Association Chief Executive Officer (CEO) Sunil Mehta told reporters after the ministry’s announcement.

The ministry said, under the ECLGS 4.0, a 100 per cent guarantee cover to loans up to Rs 2 crore will be provided to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.

The interest rate on these loans has been capped at 7.5 per cent.

“Borrowers who are eligible for restructuring as per the RBI guidelines of May 5, 2021, and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter,” the ministry said.

Also, the new scheme has made a provision of additional ECLGS assistance of up to 10 per cent of the outstanding as of February 29, 2020, to borrowers covered under ECLGS 1.0, in tandem with restructuring as per the RBI guidelines of May 5, 2021.

The government has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.

Loans to the civil aviation sector were also made eligible under ECLGS 3.0, the ministry said.

“We all are aware of the scenario which emerged post resurgence of COVID 2.0. It has actually led to a lot of disruption of economic activity.

“The most vulnerable among them, MSMEs, are in need of support, which has been extended in various forms, more so in the May 5 circular of Reserve Bank of India. Now, the government today announced the modification to the ECGL scheme,” State Bank of India Chairman Dinesh Khara said.

On ECLGS 4.0, Khara said his bank will be in a position to build a book size of about Rs 2,000 crore.

He said for the resolution framework 2.0, announced by the RBI on May 5, all public sector banks have come out with a formulated templated approach for restructuring of loans to individuals, small businesses, MSMEs up to Rs 25 crore.

“The idea behind this is that those who are involved in the implementation of the resolution framework, they should not have any hardship in terms of any implementation,” Khara added.

When asked about the size of the restructuring pool banks are expecting this time, IBA Chairman and Union Bank of India‘s Managing Director and Chief Executive Officer Rajkiran Rai G said it was too early to put a number for potential recasts, as banks are only sending messages to eligible borrowers.

“Last time also we saw that the number of customers opting for this (restructuring) was not that high. So, we need to get some feedback and it is difficult to crystallise a number at this point in time,” Rai said.

Khara said during the previous restructuring scheme, SBI had about 8.5 lakh SME customers who were eligible for restructuring but only 60,000 borrowers availed it.



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