Tag: Standard Chartered Bank

Technology, collaborations, personalisation will drive customer experience, say top bankers, BFSI News, ET BFSI

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Zuzar Tinwalla and Charu Mathur were part of a fireside chat, moderated by Amol Dethe, Editor, ETBFSI.

BFSI companies have been undergoing rapid digitisation for some years now. While many organisations had already been at the forefront in digitisation, the COVID-19 pandemic further amplified this adoption of new technologies.

“Pandemic has presented us with both difficulties and opportunities,” said Zuzar Tinwalla, COO-India & South Asia, Standard Chartered Bank at a fireside chat of ETBFSI Converge, titled ‘Crafting Tailor Made Products for Customers’.

Customer centric models

“Earlier, technologies were designed by keeping the internal processes guidelines and efficiency in mind, but that’s no longer the reality. Now, to be relevant, you have to keep the customer’s needs in mind.” he said, while elaborating on digitisation and how banks are catching up with it.

Charu Mathur, CDO & Head-Business Strategy of IndusInd Bank, adding to this, explained how banks have to be customer centric and not just process centric.

Technology, collaborations, personalisation will drive customer experience, say top bankers

“It is extremely important for us now to understand our clients very deeply and keep our ears close to them,” she added.

Zuzar Tinwalla and Charu Mathur were part of a fireside chat, moderated by Amol Dethe, Editor, ETBFSI.

Adopting technology: Data science, AI & ML

Banks are rapidly adopting new technologies like data and analytics, AI & ML, bots and robots. Tinwalla said, “ Anything more than 90 days is now considered obsolete.”

“We are investing capabilities in building the basic data foundation, and that’s a very critical function as you go along. And then sitting on top of that, you need an intelligent modeling capability or a data science function as we call it. Leveraging machine learning and artificial intelligence, and connecting dots and making logical sense out of it is important. And then at the top, you need a delivery mechanism,” said Mathur.

Although AI will progress, it will never replace human intelligence, Tinwalla said. “What is going to be appropriate for the organisation is still a human decision,” Zuzar added.

What does the future look like?

The panelists agree that many collaborations with fintechs are going to be witnessed in the coming years.

“There’s a lot to learn from fintechs,” said Tinwalla, while explaining how fintechs complement and compete with banks.

Technology, collaborations, personalisation will drive customer experience, say top bankers

On the innovation front, Mathur said, “Personalisation aspect will play a major role in driving customer experience. We see brands like Amazon and Netflix doing it quite well. I think more and more banks will probably start delivering something on the personalisation aspect, and demonstrate their ability of understanding the customer much deeper than what we do today.”

Furthermore, she believes that composable systems, which are completely API native to the core, will allow the banks to create products and services completely tailor made to a client’s unique requirements.



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Credit card spends jump 60% in September, set for further festive push, BFSI News, ET BFSI

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Another option, if you are unable to make payments by the due date, is opting for a loan against your credit card. Various credit card companies offer pre-approved loans to customers, these can actually come in handy in this scenario. However, be mindful of the costs as the interest rate and other charges may be steeper. If you have multiple credit cards, compare interest rates and processing fees on each and go with the one that has least total cost for your preferred loan tenure.

Credit card spends jumped 60 per cent year-on-year (YoY) in September, helped by the onset of the festive season.

On a sequential basis, the growth slowed down to 3 per cent at Rs 80,500 crore, according to various research reports.

The festive season, opening up of the economy and rising consumer confidence is set to keep the credit card spends buoyant, experts say.

Kotak Mahindra Bank reported the highest growth (27% MoM) in September, followed by IndusInd Bank and ICICI Bank (13% each). Other major players reported growth in the +-4% range. On a two-year CAGR basis, spends for ICICI Bank grew 58%, IndusInd 33%, Kotak Mahindra Bank 29%. HDFC Bank and SBI Cards posted growth of 10–15% and Axis Bank and SCB 2–3%. While, Citi and Amex saw a decline of 8% and 26%, respectively. ICICI Bank surpassed SBI Cards to become the second-largest player in spends, with market share of 19.3% over 6MFY22.

Outstanding credit cards up 10.8%

The total number of outstanding credit cards in the system grew 10.8% YoY to 65 million in September 2021 – the highest in the past 11 months.

Among the major players, ICICI Bank reported strong growth of 26.1% YoY, followed by IndusInd Bank (15.6%), SBI Cards (14.3%). Foreign players such as American and Citi witnessed declines of 10% and 5% respectively. SBI Cards and ICICI Bank continued to perform strongly, resulting in a 59–218 bps YoY increase in market share to 19.3% and 18.0% respectively in September.

ICICI Bank added close to 2 million new cards in the past 10 months, taking its credit card base to 11.6 million as of September.

Despite a 247 bps year on year decline, HDFC Bank remained the largest player with a market share of 23.0%.

10.91 lakh card adds

Around 10.91 lakh new cards were added to the system in September with HDFC Bank being the largest acquirer at 2.44 lakh cards. ICICI Bank added 2.34 lakh, Axis Bank added 2.03 lakh, while SBI Cards added 1.75 lakh cards in September, while, Standard Chartered Bank, AMEX and Citi posted a decline of 13,000, 11,000 and 4,500, respectively, in the card base. IDFCF Bank also posted a strong performance with 39,000 new credit card additions in September.

Higher spends per card

Monthly spends per card for the industry increased to Rs 12400, from an average of Rs 10,700 over the past six months (higher v/s pre-Covid levels). This was attributable to an increase in the ticket size to Rs 4,300, the highest in the past several years.

Conversely, the number of transactions per card declined to 2.8 v/s 3.0 in August (3.1 in March). IndusInd and Kotak Mahindra Bank saw a higher increase of Rs 2,400 and Rs 2,200, respectively, followed by ICICI Bank with Rs 1,400.

IndusInd (Rs 9,700) and Amex (Rs 5,900) had the highest ticket sizes, followed by Kotak Mahindra Bank (Rs 5,100) and ICICI Bank (Rs4,900). All other players were in the range of Rs 3,900–Rs 4,300 – barring Citi and SCB, which were lower at Rs 3,000–3,200.



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Banks with 95% cards implement RBI order on recurring payments, BFSI News, ET BFSI

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A month after the RBI’s fresh rules on mandates for recurring card payments kicked in, banks accounting for over 95% of credit cards in the market are compliant with the new system. Over 20 lakh e-mandates have been registered by cardholders with a host of merchants.

According to payment industry sources, the banks whose credit cards are eligible for new standing payment mandate include SBI, 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. Several banks have enabled the mandate for both debit cards as well as credit cards.

Automatic recurring payments also require the merchant to be on-boarded to the new e-mandate framework. The compliant businesses include most of the OTT (over-the-top) streaming platforms, private life & general insurance companies, global IT giants like Google, Facebook, Microsoft and McAfee, as well as some edtech companies.

Interestingly, Indian cardholders who have registered with overseas service providers, having payment gateways abroad, are not subject to the new rules. This is because the RBI has no jurisdiction to impose second-factor authentication in those markets. It is up to the customer to disable international transactions on their cards.

What has facilitated the fast on-boarding of merchants is IT solutions like SI Hub developed by BillDesk and Mandate HQ developed by Razorpay. However, some domestic banks like Canara Bank & Punjab National Bank and Standard Chartered Bank were until last week in the process of making the necessary system changes.

According to the sources, card-based recurring transactions are 2.5% in terms of the number of transactions and 1.5% in terms of the value of the total card payments done in the country. On average, approximately 75% of domestic recurring transactions are of values of up to Rs 5,000. The corresponding figure for cross-border recurring transactions is approximately 85%.



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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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RBI slaps Rs 1.95-cr fine on StanChart for lapses in compliance

Personal Finance

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The examination of the risk assessment report, inspection report and all related correspondence revealed non-compliance with directions issued by the regulator

The Reserve Bank of India (RBI) on Monday imposed a fine of Rs 1.95 crore on the Indian operations of Standard Chartered Bank for non-compliance with multiple regulatory directions. The foreign bank was found to be non-compliant with directions pertaining to reversal of the amount involved in unauthorised electronic transactions and reporting of cyber security incidents, among others.

The statutory inspection for supervisory evaluation of the bank was conducted by the RBI with reference to its financial position as on March 31, 2020. The examination of the risk assessment report, inspection report and all related correspondence revealed non-compliance with directions issued by the regulator.

The non-compliance pertained to failure to credit (shadow reversal) the amount involved in unauthorised electronic transactions, not reporting cyber security incident within the prescribed time period, authorising direct sales agents to conduct KYC verification, and failure to ensure integrity and quality of data submitted in the central repository of information on large credits.

“In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of / non-compliance with the aforesaid directions, as stated therein. After considering the bank’s replies to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, the RBI came to the conclusion that the charge of contravention of / non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions,” the RBI said on its website.

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RBI may signal policy normalisation on Oct. 8, StanChart says, BFSI News, ET BFSI

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The Reserve Bank of India is likely to signal the start of an unwinding of its accommodative monetary policy, introduced to cushion the economic impact of the pandemic, at a meeting next week, economists at Standard Chartered Bank wrote in a research note on Friday.

The consensus view is that the RBI will leave interest rates unchanged at its Oct. 8 MPC meeting and only start to unwind its accommodative monetary policy by reducing the gap between the repo and reverse repo rates early next year.

Some economists, including those at StanChart, however have brought forward their policy normalisation expectations amid concerns of rising domestic inflation from high oil and global commodity prices and a sharp increase in the pace of vaccination.

“We now expect India‘s Monetary Policy Committee (MPC) to hike the reverse repo rate by 40 basis points to 3.75% at the December 2021 and February 2022 policy meetings; we had earlier expected the hikes in February and April 2022,” the Standard Chartered economists said.

They expect the MPC to raise the key repo rate only in August 2022 but said the risk of an earlier hike has increased. They also acknowledged the risk of a nominal increase in the reverse repo rate on Oct. 8, on account of the higher cut-offs at recent variable rate reverse repo auctions.

“Unlike VRRR cut-offs/sizes and tenor, a reverse repo rate hike is a firmer signal of policy normalisation, in our view,” the economists said.

“We think a firmer signal is warranted when the risk of another surge in infections is largely ruled out. Additionally, with India entering the festival season, supportive monetary policy is likely to help sentiment and demand,” they added.

Nomura also expects a 40 bps reserve repo rate hike in December and a total of 75 bps repo and reverse repo rate hikes throughout 2022.

“We still believe that RBI’s normalisation strategy will hinge upon the growth outlook, and not inflation,” Rahul Bajoria, economist at Barclays said in a research note.

“Macro indicators show that India’s activity levels have begun to normalise, and with the economy recovering faster than anticipated, the RBI has more options to calibrate an exit, both through communication and actions, in our view,” he added. (Reporting by Swati Bhat. Editing by Jane Merriman)



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IIFL Home Finance signs pact with PNB for co-lending, BFSI News, ET BFSI

Personal Finance

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IIFL Home Finance on Friday signed an agreement with Punjab National Bank (PNB), the country’s second largest public sector bank, for co-lending.

IIFL Home Finance expects to grow their loan books by 25 per cent with this association. The loan sourcing and servicing will be managed by IIFL Home Finance and 80 per cent of the loan will be provided by PNB.

IIFL Home Finance will service customers through the entire loan cycle — from sourcing, documentation and collection to loan servicing.

This is the fourth agreement signed by IIFL Home Finance with banks. Earlier this year, it signed agreements with ICICI Bank, Central Bank of India and Standard Chartered Bank.

IIFL Home Finance has disbursed loans totalling Rs 170 crore under these arrangements so far.

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Secondary loan market may help banks exit stressed loans, BFSI News, ET BFSI

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Ten lenders, including the State Bank of India and ICICI Bank, have set up a secondary loan market association to promote the growth of the secondary market for loans in India.

The Secondary Loan Market Association (SLMA) is a self-regulatory body that has been set up with the help of the Reserve Bank of India.

Such a body was recommended by the RBI’s task force on the development of the secondary market for corporate loans headed by Canara Bank chairman T N Manoharan.

The other members of SLMA are Canara Bank, Standard Chartered Bank, Kotak Mahindra Bank, Deutsche Bank, Bank of Baroda, Punjab National Bank, Axis Bank and HDFC Bank.

The SLMA role

The SLMA will facilitate, promote and set up an online system for the standardisation and simplification of primary loan documentation, and standardisation of documentation for the purchase and sale/assignment documentation and other trading mechanisms for the secondary loan market and its documentation.

Banks can sell specific loans which could open up more lending opportunities, manage asset-liability mismatches, reduce concentration risk and comply with the RBI’s large exposure framework. The market can provide lenders to exit stressed loans even before a default.

The RBI task force recommendations

The task force recommended that loan documentation be standardised, plus the setting up of a Central Loan Contract Registry (CLCR), an ecosystem for enabling virtual information-sharing with various repositories, and the development of an appropriate menu of benchmark rates to be commissioned by the SRB.

It proposed that, for each corporate account, the SRB stipulate a minimum ticket size for trading as a percentage of the loan outstanding.

The task force has flagged roadblocks and these need to be speedily removed. One is the glaring absence of a systemic loan sales platform, another is the lack of an ‘effective, reliable and diligent’ price discovery mechanism, and, not least, the reality of insufficient participants.

Other issues include stamp duty during due diligence and transfer, and regulatory restrictions too.

The bottom line is that an efficient secondary market for corporate loans would have clear-cut benefits for both borrowers and lenders and lead to an active corporate bond market as well.



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ICICI, HSBC, Standard Chartered strike India’s first swaption deals, BFSI News, ET BFSI

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Two years after RBI allowed them, ICICI Bank, HSBC and Standard Chartered Bank have cut the first swaption deals, giving new risk management tools to borrowers in rapidly changing interest rate scenarios.

The ‘swaption’ interest-rate derivative product helps both local borrowers and investors to rein in funding costs in a rising rate scenario and retain investment returns in a falling rate scenario. In June, 2019, the Reserve Bank of Indiaissued guidelines for ‘swaption’ deals.

What is swaption?

A swaption contract gives the buyer the right, but not the obligation, to enter into an interest-rate swap deal.

If a borrower raises local bonds with a ‘put’ option, investors could well surrender those papers in a rising rate scenario, forcing a borrower to issue new bonds at higher rates. This is where the utility of the instrument is evident for the borrower.

If the borrower buys a swaption contract, the instrument will protect the borrower against any losses from rate movements in the event of investors exercising their put options.

Similarly, if a borrower raises bonds with call options, and exercises them in a falling interest market, the investor has to invest at lower rates. If s/he buys a swaption contract, it will shield for any rate losses.

The transaction

ICICI Bank and the two overseas lenders transacted ‘swaptions’ on Overnight Index Swap (OIS) for a total notional sum, which formed a significant majority of the total worth of transactions reported on day one. Trading in the instrument began Tuesday on a Clearing Corporation of India (CCIL) platform, which showed six separate deals for a total notional sum of Rs 700 crore.

The demand for interest rate swaptions from domestic clients to increase in the short to medium term as the proportion of external benchmark linked lending by banks continues to rise.



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ICICI Bank, StanChart, HSBC cut deals in ‘Swaption’ in a first, BFSI News, ET BFSI

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MUMBAI: Private sector lender ICICI Bank Tuesday cut India’s first set of ‘swaption’ deals with HSBC and Standard Chartered Bank, heralding a new era of risk management in the country’s interest-rate derivatives market that needs to introduce world-class solutions to draw more overseas funds into local debt assets.

The ‘swaption’ interest-rate derivative product should help both local borrowers and investors to rein in funding costs in a rising rate scenario and retain investment returns in a falling rate scenario. In June, 2019, the Reserve Bank of India (RBI) issued guidelines for ‘swaption’ deals.

A swaption contract gives the buyer the right, but not the obligation, to enter into an interest-rate swap deal.

Three people familiar with the matter told ET that ICICI Bank and the two overseas lenders transacted ‘swaptions’ on Overnight Index Swap (OIS) for a total notional sum, which formed a significant majority of the total worth of transactions reported on day one. Trading in the instrument began Tuesday on a Clearing Corporation of India (CCIL) platform, which showed six separate deals for a total notional sum of Rs 700 crore.

“These transactions are a welcome step toward managing interest rate risks more effectively,” said B Prasanna, Group Head, Global Markets, Sales, Trading and Research, ICICI Bank. “Issuers who have issued bonds with Put options which get exercised in rising interest rate markets now have a tool that can protect them. These products will help make our debt markets reach global standards, and attract more international debt investors.”

If a borrower raises local bonds with a ‘put’ option, investors could well surrender those papers in a rising rate scenario, forcing a borrower to issue new bonds at higher rates. This is where the utility of the instrument is evident for the borrower.

If the borrower buys a swaption contract, the instrument will protect the borrower against any losses from rate movements in the event of investors exercising their put options.

Similarly, if a borrower raises bonds with call options, and exercises them in a falling interest market, the investor has to invest at lower rates. If s/he buys a swaption contract, it will shield for any rate losses.

“We expect the demand for interest rate swaptions from domestic clients to increase in the short to medium term as the proportion of external benchmark linked lending by banks continues to rise,” said Parul Mittal Sinha, Head – Financial Markets, India Standard Chartered Bank.

HSBC declined to comment on the matter.

The transactions took place at the lenders’ Mumbai offices, sources told ET.

To be sure, ICICI Bank and State Bank of India are the only two banks in India that are traded in the global Credit Default Swap (CDS) market, which has significantly gained traction after the Lehman Brothers collapse in 2008.



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