RBI slaps penalty on SBI, StanChart

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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.95 crore on Standard Chartered Bank (StanChart)-India and ₹1 crore on State Bank of India (SBI).

In the case of StanChart, RBI has imposed the monetary penalty for non-compliance with its directions on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, ‘Cyber Security Framework in Banks’, ‘Credit Card Operations of banks’ and ‘Creation of a Central Repository of Large Common Exposures – Across Banks’ .

Non-compliance

In the case of SBI, the central bank has imposed the monetary penalty for non-compliance with its directions contained in ‘Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016’.

RBI had conducted a Statutory Inspection for Supervisory Evaluation (ISE) of StanChart with reference to its financial position as on March 31, 2020. The central bank, in a statement, observed that examination of the Risk Assessment Report, Inspection Report and all related correspondence pertaining to the same, revealed, inter-alia, non-compliance with the above-mentioned directions to the extent of: failure to credit (shadow reversal) the amount involved in the unauthorised electronic transactions; and not reporting cyber security incident within the prescribed time period.

Further, RBI found non-compliance with directions relating to authorising the direct sales agents (outsourced third party) to conduct KYC (know your customer) verification; and failure to ensure integrity and quality of data submitted in Central Repository of Information on Large Credits (CRILC).

RBI said, 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, 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,” per the central bank.

In the case of SBI, RBI had carried out a scrutiny in a customer account maintained with SBI and the examination of the scrutiny report and all related correspondence pertaining to the same, revealed, inter alia, non-compliance with the aforesaid directions to the extent of delay in reporting of fraud in the said account to RBI.

In furtherance to the same, a notice was issued to the bank advising it to show cause why penalty should not be imposed on it for such non-compliance with the said directions.

“After considering the bank’s reply to the notice and oral submissions made by the bank in the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with the aforesaid directions,” the statement said.

In the case of both the banks, RBI said its action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by them with their customers.

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Edelweiss gets nod, divests stake in insurance broking business

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Edelweiss Group on Monday announced the divestment of its majority stake in Edelweiss Gallagher Insurance Brokers Ltd (EGIBL) after approval from the Insurance Regulatory and Development Authority of India (IRDAI).

On receipt of the necessary approvals, the company, has in the first tranche, transferred 61 per cent of the stake held by the company in EGIBL to Arthur J Gallagher and Company (AJG) on October 18, 2021, Edelweiss Group said in a stock exchange filing.

“Consequently, AJG now owns 91 per cent of EGIBL, as a result of which EGIBL has ceased to be the subsidiary of the company,” it further said.

Gallagher and Edelweiss had announced the transaction in July 2021 under which Gallagher, which previously held 30 per cent stake in the business, bought out the 70 per cent stake of Edelweiss Group in the company.

“The business will transition to the Gallagher brand in the coming months,” Edelweiss Group said in a statement, adding that it will will focus on growing its life and non-life insurance businesses, which have been among the fastest-growing in the industry.

Rashesh Shah, Chairman, Edelweiss Group said, “This move brings to us the flexibility to reallocate capital, which post this transaction and the strategic partnership in our Wealth Business, is ample. We now have adequate capital and a stronger balance sheet and look forward to scaling up our fast-growing life and non-life insurance businesses, as India turns a corner post the Covid pandemic.”

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PhonePe reports 85% jump in revenue at ₹690 cr in FY21

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Digital payments company PhonePe has reported a revenue of ₹690 crore in FY 21, which is about an 85.5 per cent jump from ₹372 crore revenue reported in FY20, according to the company’s recent regulatory filings.

Majority of the company’s revenue has come from payments and allied services. PhonePe claims to have a 45 per cent market share in digital payments, and a 300 million user base.

Further, the company’s net loss during the period stood at ₹1,727 crore as compared to ₹1,771 crore in FY20. A major part of the company’s cost this year was on employee benefits.

Excluding the ESOPs allocated by the company in FY21, PhonePe’s costs during this period stood at ₹884.4 crore, which is about 44 per cent less than costs incurred last year.

Reduced expenses

The company reduced various costs during this period, including the marketing and promotional expenses which stood at ₹535 crore in FY 21, as compared to ₹1,016 crore in FY 20, about 47 per cent drop in these costs. Further, costs like payment processing fee and customer support also were brought down by 28 per cent and about 34 percent respectively.

PhonePe is digital payments platform with over 300 million registered users. Using PhonePe, users can send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold and make investments.

PhonePe forayed into financial services in 2017 with the launch of gold category, providing users with an option to buy 24-karat gold securely on its platform. PhonePe has since launched several mutual funds and insurance products like tax-saving funds, liquid funds, international travel insurance, life insurance, and insurance for the Covid-19 pandemic among others. PhonePe is also accepted at 20+ million merchant outlets across India.

Also read: PhonePe and NBBL partner to launch ClickPay

The most frequent use-cases on the PhonePe app are said to be digital money transfers, bill payments or recharge, and offline transactions at stores through PhonePe. In an earlier conversation with BusinessLine, PhonePe co-founder and CTO Rahul Chari said going forward, PhonePe will be focusing more on the financial services space and collaborating more with the BFSI sector across insurance, investments, and lending. In the past few months, PhonePe has got its insurance broking license and an in-principle approval to operate as an account aggregator.

It had also launched ClickPay for its customers in association with NPCI Bharat BillPay Ltd.(NBBL), which is a payment link that enables customers to make recurring online bill payments(electricity, water, gas, loan, etc) and removes the need to remember tedious account details associated with each biller/service.

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SBI General Insurance expects 20% growth in FY22

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SBI General Insurance is expecting close to 20 per cent growth in business in FY22 backed by a steady demand for health insurance products and an improvement in motor insurance starting third quarter of this fiscal.

In the first half (April-September), the non-life insurer had witnessed 14 per cent growth in gross direct premium underwritten to ₹4,129 crore, as compared with ₹3,620 crore in the same period last year, as per data available on the IRDAI website.

According to Prakash Chandra Kandpal, MD & CEO, SBI General, the non-life industry has come back to the pre-Covid level and has clocked a growth of around 13 per cent in the first half of this fiscal. “The industry is estimated to grow by around 15 per cent during the current fiscal driven mainly by health and motor. Though there may be some challenge for motor due to chip issue, Q3 should be good for motor insurance. We (at SBI General) expect to grow by around 20 per cent. The key areas of focus for us will be health, motor, SME and rural,” Kandpal told BusinessLine.

The second half of the fiscal is usually considered to be busy season and with the economy opening and with vaccination gaining pace, the insurer is hopeful of clocking a good growth.

Motor insurance accounts for nearly 25 per cent of SBI General’s total business; crop around 25-30 per cent; health close to 20 per cent; fire 15 per cent and others account for remaining 10-12 per cent.

Growing demand

Health insurance, which had been witnessing traction on the back of government initiatives such as Ayushman Bharat, came to the fore due to Covid related hospitalisation and the rise in medical cost. With the kind of effort given by the government in creating medical infrastructure in the country, the total health insurance industry is expected to double in the next three-to-four years.

“After the second wave we saw an increased interest in both retail as well as group health cover. Companies doubled the coverage for their employees. We are seeing a 40-50 per cent growth in health insurance industry portfolio and this trend is expected to continue moving forward as the uninsured population in India is still high,” he said.

This apart, a majority of the people who have health insurance, are not “adequately covered”. Most consumers in India have an average health cover of ₹ 3-5 lakh. However, the recent spike in hospitalisation and the increased medical cost is pushing more and more people to go in for a higher cover.

‘Claims spike’

On the claims side, the non-life insurers had witnessed a sudden spike in claims in Q1 of this fiscal due to the second wave. However, with the increase in vaccination and with people becoming more aware and paying more attention to health and fitness, the claims could be more manageable for insurers.

“The spike in claims was mainly because of the non-standardised protocol being followed by the medical industry. Moving forward we may see that the number of claims may increase but the average claims might be lower,” he said.

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More than 2 lakh crypto accounts blocked in India over 6 months

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The past year or so has seen decentralised cryptocurrency slowly becoming part of the mainstream narrative. On the seamy side, the digital currency has also provided an avenue for online criminal activities involving tax evasion and other kinds of serious frauds.

In the past six months, between April-September 2021, the top three cryptocurrency exchanges – WazirX, CoinSwitch Kuber and CoinDCX – have blocked over two lakh accounts citing malicious activities.

Malicious activities

CoinSwitch Kuber alone has suspended 180,000 accounts in the past six months, while it is currently monitoring the daily activities of around 200,000 accounts that can possibly be malicious, Sharan Nair, CBO, CoinSwitch Kuber, told BusinessLine.

WazirX has blocked 14,469 accounts after receiving requests from Indian and foreign law enforcement agencies. Foreign law enforcement agencies raised 38 requests. These came from countries including the US, UK, France, Austria, Switzerland and Germany. But over 90 per cent of the accounts were blocked after complaints from other users and the company’s internal tracking mechanism.

Nischal Shetty, Founder, WazirX, told BusinessLine, “WazirX is part of Blockchain and Crypto assets Council (BACC) along with other crypto exchanges. Our exchange is able to trace all users on the platform with official identity information. We already have a robust KYC and AML enabled policy that we follow to self-regulate in the absence of regulatory guidelines. All the necessary information to track malicious activities that are “facilitated” by blockchains are publicly available.”

He added, “Additionally, WazirX has collaborated with TRM Labs, a cryptocurrency compliance platform, for transaction monitoring and investigation, wallet screening and risk management. It has helped bolster the security of the platform and scale compliance initiatives.”

Notice to WazirX

WazirX was recently issued a show-cause notice by Enforcement Directorate for alleged violation of the Foreign Exchange Management Act on transactions involving crypto-currencies worth ₹2,790 crore. The ED then said it has initiated a probe on the basis of its ongoing money-laundering investigation into Chinese-owned illegal betting applications.

According to Nair, the pandora’s box opens when one is able to send cryptocurrency outside the exchange. “The biggest problem the regulators have is with people buying bitcoins on one platform and sending it to unknown addresses. Nobody is able to track who these addresses belong to and what is the intent of these addresses. Even the crypto exchanges won’t be able to track it,” Nair said.

To curb this issue, CoinSwitch Kuber doesn’t let its users withdraw or move their funds in cryptocurrency. To withdraw their money, they have to first sell the crypto asset on the exchange and get their money deposited directly into their bank accounts in INR.

Lack of regulation

Policy experts said that though the exchanges are themselves blocking suspicious accounts, the real issue is the lack of regulation.

“The crypto world is largely unregulated. While the Reserve Bank of India has already expressed its reservation in allowing cryptocurrency, the government is yet to announce its stance on the issue,” said an industry expert.

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Reserve Bank of India – Press Releases

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The Reserve Bank of India (RBI) has, by an order dated October 18, 2021, imposed a monetary penalty of ₹1.95 crore (Rupees One Crore and Ninety-five Lakh only) on Standard Chartered Bank – India (the bank) for non-compliance with the directions issued by RBI on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, ‘Cyber Security Framework in Banks’, ‘Credit Card Operations of banks’ read with ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Creation of a Central Repository of Large Common Exposures – Across Banks’ read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act, 1949.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The Statutory Inspection for Supervisory Evaluation (ISE) of the bank was conducted by RBI with reference to its financial position as on March 31, 2020, and the examination of the Risk Assessment Report, Inspection Report and all related correspondence pertaining to the same, revealed, inter-alia, non-compliance with the above-mentioned directions to the extent of (i) failure to credit (shadow reversal) the amount involved in the unauthorised electronic transactions, (ii) not reporting cyber security incident within the prescribed time period, (iii) authorising the direct sales agents (outsourced third party) to conduct KYC verification, and (iv) failure to ensure integrity and quality of data submitted in CRILC. 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 afore-said 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, 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.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/1059

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4 Big Ipos Lined Up To Open For Public Subscription Soon

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Investment

oi-Roshni Agarwal

|

There is a complete IPO process involved and necessary approval until before which the companies’ cannot float their offers. Amid strong market momentum, as start up IPOs are said to hit the street, there is an observation being obtained by some 6 companies’ as per the SEBI update which came up today. Likewise, the observation in a sense is a go-ahead for companies to float their public issues for public subscription:
So, here are the 4 IPOs in the pipeline:

4 Big Ipos Lined Up To Open For Public Subscription Soon

4 Big Ipos Lined Up To Open For Public Subscription Soon

1. Adani Wilmar:

The parent company is Adani Enterprises and for the offer there shall exist a shareholders’ quota. This company’s IPO shall include fresh equity issuance. The company’s IPO approval already got delayed because of scrutiny against the company’s group companies’. The total IPO size shall be Rs.4500 crore.

Adani Wilmar is an equal joint venture between Adani Enterprises Ltd and Wilmar International Ltd and the owner of the Fortune brand of edible oils.

2. Nykaa:

The beauty and fashion start up profitable entity led by a woman shall be another IPO that may indeed to watch out for. As per the Ipo tracking portals, the stock is already commanding a grey market premium of Rs. 650 and is likely to be priced between 1050-1150.

The brokerage Motillal Oswal sees the company to offer an unique opportunity and conducted an online survey among the target demographics and presented its findings. According to the same, the Indian Beauty and Personal Care (BPC/Fashion market is expected to reach Rs 2t/Rs 8.7t by CY25 – posting a CAGR of 12.7%/18% from CY20. The online BPC and Fashion markets are growing at an even faster pace.

Nykaa through the issue aims to raise Rs 525 crore through a fresh issue of shares and an offer for sale of up to 43.1 million shares by existing shareholders and promoters.

3. Star Health and Allied Insurance:

This is an IPO backed by ace investor Rakesh Jhunjhunwala and comprises s fresh issue of equity shares worth Rs. 2,000 crore and an offer for sale of up to 60,104,677 equity shares by promoters and existing shareholders. The promoters and promoter group that shall engage in the stake sale are Safecrop Investments India LLP, Konark Trust, MMPL Trust; and existing investors Apis Growth 6 Ltd, Mio IV Star, University of Notre Dame Du Lac, Mio Star, ROC Capital Pty Ltd, Venkatasamy Jagannathan, Sai Satish and Berjis Minoo Desai.

4. Penna Cement Industries:

This is a Hyderabad based cement company looking to mop up Rs. 1550 crore from the primary market issuance. The issue shall include fresh issue of Rs. 1,300 crore and an offer for sale of up to Rs. 250 crore by its promoter PR Cement Holdings. Currently, P R Cement Holdings holds a 33.41 pc stake in the company.
Partly the proceeds shall be used in repaying existing debt and partly for meeting capital expenditure needs to the tune of Rs. 105 crore for the company’s KP Line II Project.
GoodReturns.in

Story first published: Monday, October 18, 2021, 20:28 [IST]



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APSEZ raises ₹1,000 crore via NCDs

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Adani Ports and Special Economic Zone (APSEZ) on Monday said the company has raised ₹ 1,000 crore by allotment of secured, redeemable, and non-convertible debentures (NCD) on the private placement basis.

APSEZ in a BSE filing said that NCDs will be listed on the Wholesale Debt Market segment of BSE Limited.

“With reference to above, we would like to inform that the company has raised ₹ 1,000 crore (Rupees One Thousand Crore only) today by allotment of 10,000 rated, listed, secured, redeemable, Non-Convertible Debentures (NCDs) of the face value of ₹ 10,00,000/- each on private placement basis,” it said.

Adani Ports and Special Economic Zone, the flagship transportation arm of the diversified Adani Group, is India’s largest private ports and logistics company.

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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India will conduct a Variable Rate Reverse Repo auction on October 20, 2021, Wednesday, as under:

Sl. No. Notified Amount
(₹ crore)		 Tenor
(day)		 Window Timing Date of Reversal
1 2,00,000 6 10:30 AM to 11:00 AM October 26, 2021
(Tuesday)

2. The operational guidelines for the auction as given in the Reserve Bank’s Press Release 2019-2020/1947 dated February 13, 2020 will remain the same.

Ajit Prasad
Director   

Press Release: 2021-2022/1058

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RBI imposes penalty of Rs 1.95 crore on Standard Chartered Bank, BFSI News, ET BFSI

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The Reserve Bank of India has imposed a penalty of Rs 1.95 crore on Standard Chartered Bank – India, for non-compliance with the directions on customer protection, cyber security, credit card operations, among others, the central bank said in a circular.

Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions, Cyber Security Framework in Banks, Credit Card Operations of banks and Creation of a Central Repository of Large Common Exposures – Across Banks – were the norms the bank failed to comply with, according to the RBI.

A Statutory Inspection for Supervisory Evaluation of the bank had been conducted with reference to its financial position as on March 31, 2020, and the examination of the risk assessment report, inspection report and all related correspondence pertaining to the same revealed the non-compliance with the above-mentioned directions to the extent of failure to credit the amount involved in the 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.

Based on this, the RBI had issued an notice to the bank advising it to show cause as to why penalty should not be imposed on it.

After receiving the bank’s replies to the notice, the RBI came to the conclusion that it would charge a fee for the non-compliance.



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