Centrum-BharatPe backed Unity SFB commences operations

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The Reserve Bank of India on Monday said Unity Small Finance Bank (Unity SFB) Ltd has commenced operations as a small finance bank (SFB) with effect from November 1.

Unity SFB, which has been jointly established by the Centrum Financial Services Ltd (CFSL) and Resilient Innovations Private Limited (BharatPe) to carry on SFB business in India, was granted banking licence by RBI on October 13.

“The bank, which will be a digital first bank, commences operations with Centrum’s MSME and micro finance businesses and teams that has a capital infusion of about ₹1,100 crore, total assets worth ₹2,400 crore, active customer base of over 2 lakh, 145 offices including a branch in Centrum House, Mumbai,” said Centrum Group and BharatPe in a joint statement.

‘Tech-first products’

Jaspal Bindra, Executive Chairman, Centrum Group, said, “We aim to make it a truly new age bank. The bank is well capitalised, significantly higher than the minimum regulatory requirement (of ₹200 crore), giving us the platform to build a robust technological infrastructure, hire the best talent and work with credible vendor partners.”

Ashneer Grover, Co-Founder and Managing Director, BharatPe, said that with the capitalisation and approvals in place, Unity SFB will now focus on building tech-first products. RBI had accorded “in-principle” approval to CFSL, a wholly owned subsidiary of Centrum Capital, on June 18 to set up a SFB.

The aforementioned approval was in specific pursuance to CFSL’s February 2021 offer in response to the scam-hit Punjab and Maharashtra Co-operative (PMC) bank’s November 2020 Expression of Interestnotification.

Amalgamation process

The grant of banking licence to Unity SFB and commencement of its operations sets the stage for RBI to place in the public domain a draft scheme of amalgamation of PMC Bank with the SFB. The last step will be the government’s sanction for the scheme.

Bindra expects the amalgamation to be complete by next month-end. This development should warm the distressed hearts of PMC bank depositors. They have been struggling to get their deposits back for more than two years amid the Covid-19 pandemic.

Once CFSL takes over PMC bank, it would get a ready-made branch network of about 100 branches in Mumbai and in a few States. CFSL provides credit to small and mid-size companies.

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Bandhan Bank gets empanelled as agency bank of RBI, BFSI News, ET BFSI

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Bandhan Bank said on Monday that it has been empanelled by the Reserve Bank of India (RBI) to act as an agency bank to facilitate transactions related to government businesses. The RBI’s decision will help Bandhan Bank in contributing to nation-building, its MD and CEO Chandra Sekhar Ghosh said.

The announcement comes months after a RBI guideline that authorised scheduled private sector banks as agency banks of the regulator for the conduct of government business.

With this, Bandhan Bank joins ranks with a few other scheduled private sector banks to be empanelled as agency banks of the RBI, the bank said in a statement.

As an agency bank, Bandhan Bank will be able to handle transactions related to collection of state taxes, and revenue receipts such as GST and VAT, collection of stamp duty, and pension payments on behalf of central and state governments, it added.

The bank’s extensive branch network will help it discharge its duties effectively by bringing governments and citizens closer to each other, it said.

“Since its launch six years ago, Bandhan Bank has been dedicated towards bringing millions of Indians into the fold of formal financial services and catalysing the creation of sustainable livelihoods,” Ghosh said. PTI dc SOM SOM



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In a first, personal loans beat credit to industry, BFSI News, ET BFSI

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MUMBAI: The share of personal loans in bank credit has for the first time overtaken overall loans to the industry sector during the second quarter of the current financial year. This has happened with loans to industry as of end-September 2021 shrinking by Rs 66,239 crore over March 2021 levels, while loans to individuals grew Rs 73,011 crore during the period.

According to data released by the Reserve Bank of India, bank credit outstanding on the last Friday of September was Rs 109.5 lakh crore. Of this, the share of loans to industry dropped to 26% (Rs 28.3 lakh crore) from 27% a year earlier. Personal loans, which were a quarter of all bank loans in September 2020, increased to 27% (Rs 29.2 lakh crore) by end-September 2021.

The drop in bank credit to the industry segment was largely due to companies in core industries deleveraging. Loans to iron and steel industries dropped by Rs 39,249 crore and loans to chemicals (which includes fertilisers, drugs and petrochemicals) shrunk by Rs 10,146 crore in the six months ended September. The few sectors which saw growth in credit were roads, ports and power. However, even this was not enough to show positive credit growth in the infrastructure segment.

Overall credit outstanding to large industry shrunk by 5% in the first six months of the fiscal. This has pulled down industrial loan growth to 2.3% despite credit to small and medium businesses rising.

In the personal segment, banks added Rs 20,096 crore of home loans to their portfolio in the last six months. They also increased their auto loan and gold loan book by Rs 3,000 crore each. Other personal loans were up by Rs 45,000 crore. Overall loans outstanding in the personal loan segment grew by Rs 73,000 crore in the six months ended September 2021. This has expanded the personal loan portfolio to Rs 29.18 lakh crore.

The data appears to indicate that banks have wrested market share from finance companies in the credit market. Typically, NBFCs borrow from banks and debt markets and lend. Bank credit to NBFCs, which is the largest component in loans to services sector, shrunk by Rs 61,124 crore in the last six months. This has resulted in the share of credit to NBFCs dropping from 9% (Rs 9.4 lakh crore) on end March 2021 to 8% (Rs 8.8 lakh crore) as of end September 2021. This has resulted in outstanding bank credit to the services sector declining by 3% since March 2021.

According to bankers, the decline in bank credit to large companies could be attributed to their deleveraging coupled with shifting to the debt market where cheaper money is available through commercial paper. Some businesses are seeing better cash realisations and do not feel the need to borrow.

In the NBFC segment, the classification of a large borrower as a non-performing asset by banks could have added to the decline in the segment. The home loan portfolio displays more consistency and does not occasionally shrink like other segments because home loans are long term and fresh disbursements have a compounding impact on the size of the portfolio.



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RBI, BFSI News, ET BFSI

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Customers of stressed Punjab & Maharashtra Co-Operative Bank (PMC Bank) will not get up to Rs 5 lakh insurance cover in the first lot as the multi-state co-operative bank is under the resolution process. Deposit Insurance and Credit Guarantee Corporation (DICGC) in the first lot will pay customers of 20 stressed banks except PMC Bank. For the first lot, the mandatory 90 days period concludes on November 30.

It is to be noted that RBI had in June given in-principle approval to a consortium of Centrum Financial Services and fintech startup BharatPe to acquire the stressed PMC Bank.

Clearing decks for the takeover, the RBI earlier this month gave licence for small finance bank to the consortium.

Recently, the DICGC said there may be a need to invoke the provisions of Section 18 A (7) (a) of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021,

As per the Section 18 A (7) (a) of the Act, if a stressed bank is under the resolution process, the period for disbursement of Rs 5 lakh can be further extended by 90 days.

“The Reserve Bank finds it expedient in the interest of finalising a scheme of amalgamation of the insured bank with other banking institution or a scheme of compromise or arrangement or of reconstruction in respect of such insured bank, and communicates to the Corporation accordingly, the date on which the Corporation shall become liable to pay every depositor of such insured bank may further be extended by a period not exceeding ninety days,” it said.

In September 2019, the RBI had superseded the board of PMC Bank and placed it under various regulatory restrictions after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL.

The Reserve Bank of India (RBI) had imposed restrictions on the withdrawal of deposits from these stressed banks. Of the 20 banks, 10 are from Maharashtra, five from Karnataka, and one each from Uttar Pradesh, Kerala, Rajasthan, Madhya Pradesh, and Punjab.

Last year, the government increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020.

Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit. It was raised to 12 paise per Rs 100 in 2020. It cannot be more than 15 paise at any point in time per Rs 100 deposit.

It is to be noted that the enhanced deposit insurance cover of Rs 5 lakh is effective from February 4, 2020. The increase was done after a gap of 27 years as it has been static since 1993.



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RBI board reviews economic situation, BFSI News, ET BFSI

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The Central Board of Directors of the RBI on Friday reviewed the current domestic and global economic situation and challenges.

The board also deliberated upon possible measures for addressing the emerging challenges, the Reserve Bank of India (RBI) said in a release.

The 591st meeting of the board was held under the Chairmanship of Governor Shaktikanta Das. His tenure as the Governor has been extended by three years up to December 2024.

“The board also congratulated the Governor on his reappointment,” the central bank said.

According to the release, the board also discussed the working of sub-committees of the central board and activities of a few Central Office Departments, including the nationwide survey among bank customers regarding banks’ grievance redress system and the functioning of the Ombudsman schemes.

Deputy Governors Mahesh Kumar Jain, Michael Debabrata Patra, M Rajeshwar Rao, and T Rabi Sankar attended the meeting. Other directors on the board — N Chandrasekaran, Satish K Marathe, S Gurumurthy and Sachin Chaturvedi — were also present.

Besides, Debasish Panda, Secretary, Department of Financial Services and Ajay Seth, Secretary, Department of Economic Affairs, attended the meeting.

Das was appointed the RBI’s 25th Governor on December 11, 2018 for a period of three years after the abrupt resignation of his predecessor Urjit Patel.

He is the first RBI Governor to get extension after the BJP-led government came to power in 2014.



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Bank Holidays November 2021: Banks to remain shut for up to 17 days; check full list here

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There is also going to be one long weekend in states where banks are closed for Guru Nanak birthday on 19 November 2021.

2021 Bank Holidays in November: Banks will be closed for up to 17 days across the country in November 2021. The banks remain open on the first and third Saturdays every month and close on the second and fourth. There is also going to be one long weekend in states where banks are closed for Guru Nanak’s birthday on 19 November 2021. Except for Bengaluru, all the banks will observe a holiday on Diwali Amavasya (Laxmi Pujan). It may be noted that apart from the weekly offs, banks will not be closed for all 17 days for all states as these are state-specific holidays for different occasions.

Bank holidays in November 2021

1 November 2021: Kannada Rajyostsava/Kut
3 November 2021: Naraka Chaturdashi
4 November 2021: Diwali Amavasaya (Laxmi Pujan)/Deepavali/Kali Puja
5 November 2021: Diwali (Bali Pratipada)/Vikram Samvant New Year Day/Govardhan Pooja
6 November 2021: Bhai Duj/Chitragupt Jayanti/Laxmi Puja/Deepawali/Ningol Chakkouba
10 November 2021: Chhath Puja//Surya Pashti Dala Chhath (Sayan ardhya)
11 November 2021: Chhath Puja
12 November 2021: Wangala Festival
19 November 2021: Guru Nanak Jayanti/Karthika Purnima
22 November 2021: Kanakadasa Jayanthi
23 November 2021: Seng Kutsnem

On 1 November, banks in Karnataka and Manipur Kannada will be closed. Banks in Karnataka will be closed on 3 November. On Deepawali Pujan day, banks will be closed in all states except Karnataka. On Bali Pratipada, banks will be closed in Gujarat, Karnataka, Uttar Pradesh, Uttarakhand, Sikkim and Himachal Pradesh. While on Bhai Duj, banks in Sikkim, Manipur, and Uttar Pradesh will be closed.

Banks in Bihar will observe a holiday on account of Chhath Puja on 10 November and 11 November 2021. While banks in Meghalaya will remain on 12 November 2021. On Guru Nanak Jayanti, banks will be closed in states such as Maharashtra, Delhi, Uttar Pradesh, Jharkhand, Jammu and Kashmir, among others. Bank in Karnataka will remain closed on 22 November and those in Meghalaya will remain closed on 23 November.

Weekend Bank Holidays in November 2021

07 November 2021: Sunday
13 November 2021: Second Saturday
14 November 2021: Sunday
21 November 2021: Sunday
27 November 2021: Fourth Saturday
28 November 2021: Sunday

Even as banks will remain shut on the above-mentioned days, customers can avail online services. Moreover, mobile and internet banking will remain operational. The Reserve Bank of India (RBI) has categorised holidays under three categories — Holiday under Negotiable Instruments Act; Holiday under Negotiable Instruments Act and Real-Time Gross Settlement Holiday; and Banks’ Closing of Accounts. The list of holidays given below has been notified by RBI.

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Uco Bank posts 7-fold jump in Q2 net, BFSI News, ET BFSI

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Public sector lender Uco Bank has reported a seven-fold jump in its net profit to Rs 205.3 crore for the second quarter this fiscal from Rs 30.1 crore for the same period last fiscal.

The city-based lender, which recently came out of the Prompt Corrective Action (PCA) measure of Reserve Bank of India, has witnessed a significant improvement in its asset quality during the second quarter despite the fact that it recognized its exposure of around Rs 1,000 crore in Srei Infrastructure Finance and Srei Equipment Finance as non-performing assets (NPAs).

The Kolkata bench of the National Company Law Tribunal (NCLT) earlier this month gave its approval to start insolvency proceedings against Srei Infrastructure Finance and its wholly-owned subsidiary Srei Equipment Finance after the Reserve Bank of India had filed insolvency applications against the two non-banking financial companies (NBFCs).

Uco Bank MD & CEO AK Goel, without mentioning the name of Srei, said, “It will be very premature to talk about the bad loan recovery from these two NBFCs. But we will remain optimistic that a good recovery should come (through insolvency resolution process).”

During the second quarter, the bank’s NPAs in absolute terms fell 3.6% quarter-on-quarter to Rs 10,909.7 crore from Rs 11,321.7 crore in the first quarter this fiscal. The Gross NPA ratio during the quarter under review declined 39 basis points sequentially at 8.9%.



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Wipro bags tech transformation engagement from Kerala State Co-op Bank, BFSI News, ET BFSI

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New Delhi, Oct 27 (PTI) IT firm Wipro on Wednesday said it has secured a multi-year contract from Kerala State Co-operative Bank (also known as Kerala Bank). Kerala Bank currently runs 15 different core banking environments with five core banking solutions.

“As part of this multi-million-dollar strategic engagement, Wipro will implement a consolidated, common core banking system for the bank, provide over 20 allied solutions, aimed at streamlining technology adoption and enabling a superior customer experience,” a statement said.

Wipro will also set up a Data Centre, Disaster Recovery Centre, Near DR (Disaster Recovery) and command centre, implement the latest Reserve Bank of India cybersecurity frameworks, and provide facility management services for five years, it added.

“We see IT modernisation as the key driver for achieving business transformation and growth. An integrated IT landscape comprising of best-in-class Core Banking and allied solutions will not only enable seamless information flow but will also help achieve high performance and scalability in our operations,” Rajesh AR, GM (IT and Digital Banking) at Kerala Bank, said.

Wipro is currently engaged with over 100 DCCBs across 12 states in India. Wipro has consolidated its position across all Banking segments in India, including Schedule Commercial Banks, Regional Rural Banks, Co-operative Banks and the latest Small Finance and Payment Banks.

“Wipro has been engaged with Kerala Bank and is providing core banking services to multiple District Co-operative Central Banks (DCCB) for many years. This extensive experience uniquely positions us to deliver this complex programme, which redefines customer experience while ensuring security for clients of Kerala Bank,” Wipro Head – BFSI India (SRE) Sanjay Jaireth said.

In a separate statement, Wipro said it is partnering with Micro Focus to launch the Legacy Migration and Modernisation Lab, collaborating with Amazon Web Services (AWS).

This lab, hosted at Wipro’s AWS Launchpad in Parramatta, Australia, will allow companies in Australia and New Zealand to experience a hands-on demonstration of tools and accelerators that can help optimise mainframe application capabilities for the cloud, it added.

The lab combines the strengths and technical expertise of Wipro, Micro Focus, and AWS to help customers become agile, reduce operational costs and mitigate application-modernisation risks to enable a cloud-ready IT ecosystem, the statement said.

These advanced capabilities will also help companies innovate faster and drive better business results, it added.

In addition, the lab will serve as a training ground for testing mainframe app-modernisation scenarios, allowing businesses to conduct training, and demonstrate proof of concepts in real-time. PTI SR BAL BAL



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Bank, card firms receive 2 million auto-debit mandates after RBI order, BFSI News, ET BFSI

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Banks and card networks have received nearly two million auto-debit mandates after the Reserve Bank of India (RBI) made it mandatory from October 1 to take prior consent of a customer before debiting their accounts.

Most of the recurring payments are linked to credit cards, while such a facility is not available in most places for debit cards.

In August, total credit card transactions stood at 19 million, and debit card transactions at 358.5 million. In value terms, credit cards were at Rs 77,732.94 crore and debit cards at Rs 64,351.52 crore.

The readiness

State Bank of India, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank have implemented the recurring payment framework for their customers.

Canara Bank, Punjab National Bank and Standard Chartered Bank are making necessary system changes to allow e-mandates based transactions.

Service providers such as Razorpay, Billdesk, PayU have come up with solutions to help card issuers, customers, and merchants to register their mandates on their customised platforms. BillDesk has set up SI Hub, PayU has created Zion while Razorpay has set up MandateHQ.

RBI’s auto-debit rule

Under the new auto-debit rules that kicked in on October 1, there are no automatic recurring payments for services like recharge, utility bill as the additional factor of authentication (AFA) has now become mandatory.

To ensure safety and security of card transactions, the central bank had, in December last year, directed all banks that processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021.

However, non-readiness of some of the players had forced the RBI to extend the deadline on recurring payment till September 30. The rule is applicable to all types of recurring payments like utility bills, phone recharge, DTH and OTT, among others.

As per the guidelines, banks will send a one-time password (OTP) to customers for payments above Rs 5,000.



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