Shriram Group announces succession plan, creates management board of senior executives, BFSI News, ET BFSI

Personal Finance

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Financial services behemoth Shriram Group on Tuesday announced the creation of a board of management to drive the long-term vision of the conglomerate. The management board which included four senior group executives will oversee promoter interest and will be mentored by founder R Thyagarajan.

The Board of Management includes DV Ravi, MD, Shriram Capital, R. Duruvasan, Whole-time Director, Shriram Capital, Umesh Revankar, Non-Executive Director, Shriram Capital and Jasmit Singh Gujral, Non-executive Director, Shriram Capital. All the four senior members will be designated as trustees of the Shriram Ownership Trust.

“In my various interactions, I have reiterated that one individual cannot manage a large group like ours, it requires a set of individuals with varied skills who can collaborate to drive the group’s vision and strategy,” said R Thyagarajan, founder, Shriram group. “In line with my conviction, a leadership team that will oversee the SOT’s interest, as the promoter of the Shriram Group, has been constituted.”

As per the succession plan, the promoters stake in the Shriram Group, will be owned by its current and future leaders. The Shriram Ownership Trust, a private discretionary body was set up in 2006 to provide opportunity for the current and future leadership of the group to be beneficiaries of the Trust.

These beneficiaries will be responsible for the management of the Shriram Group. The board of the trust will constantly evaluates the performance of its leadership team and keep inducting additional members into the Trust to ensure the perpetuity of ownership and leadership.

“The Board of Management will be responsible for defining the long-term strategy of the individual entities and the group and overseeing its execution,” Thyagarajan said.

“The board members will manage essential areas that impact the group across entities and are not necessarily aligned to one particular entity. They will collaborate amongst themselves in a manner that will derive the optimum benefit to the group.”

Shriram Ownership Trust and Shriwell Trusts together own 42.9% of the unlisted Shriram Capital which is the holding company for all the businesses. The group has assets under management of more than Rs 2 lakh crore.

Sanlam Group has a 26% stake in the holding company, the Piramal Group has 20% and TPG Capital owns 9.4%.

ET had recently reported that the group is laying down plans to restructure its various financial services businesses that includes merging its two listed companies, Shriram Transport Finance and Shriram City Union Finance. Once the merger between the two listed companies takes place, Shriram Capital is likely to get reverse merged into the new combined listed entity. The insurance business will be spun out as a separate entity.

“There is a focus on doing some restructuring in the group, the exercise is going on and it could take a concrete shape in the next few months,” Thyagarajan said.



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India’s First Game-Based Investment Start-up Fello Raises 1 Million USD, BFSI News, ET BFSI

Personal Finance

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Fello, India’s first game-based investment start-up, has raised $1 million in a seed round led by global talent investor, Entrepreneur First (EF). Other investors in the seed round included Acequia Capital, Kube VC, Upsparks, JITO Angels, Dexter Angels, and independent investors Ashneer Groover, Co-founder, BharatPe, Bala Parthasarathy, CEO & Co-founder, MoneyTap, Faiz Mayalakkara, Director of Investments of Emirates Investment Authority and Charlie Songhurst.

Fello co-founders, Manish Maryada and Shourya Lala met for the first time at EF in August 2020. In a span of just three months – by October 2020 – they had built an extraordinary fintech start-up that leverages its proprietary games to turn Gen-Z gamers into financial investors. Both the founders with their different skill-sets and background – one a finance graduate from Texas A&M University with deep domain expertise in financial operations, strategy, and product, and the other a computer science engineer and award-winning app developer – made the company’s journey exciting and seamless. Since the new product launch in the first week of November, the company has attracted 100,000+ users on the Fello app just within a short span of 2 weeks, with over 80% of the users being first-time investors.

With a vision to build better financial profiles for the youth of India, Fello plans to leverage the funding to expand its young team, scale the product, and gear up for more game-based finance products to disrupt the nascent space in India. The aim is to reach a million users investing and playing on the app in the next three quarters, by penetrating deeper into tier 1 and tier 2 markets across the country.

Commenting on the company’s funding, Esha Tiwary, Partner & Head at Entrepreneur First, India said, “Manish and Shourya are young, hungry founders who have their pulse on the needs and aspirations of India’s GenZ population. In a crowded investment market, they have found a clear niche and are able to attract and retain GenZ customers and build healthy investment habits. They are a perfect example of companies formed through the EF platform – bright minds from tech and business coming together to solve large impactful problems. We are very excited to continue to be a part of their journey.,

Manish Maryada and Shourya Lala, Co-founders, Fello, said, “Two industries, which have witnessed exponential growth over the past two years are gaming and personal finance. India boasts of over 400 million mobile gamers, yet only 2% of the total population are active investors. Fello, a product built at the intersection of gaming and finance, brings an unprecedented scope for disruption. While an overwhelming majority of our early users were first-time investors, 60% have gone on to reinvest. Moreover, 94% of the user base was acquired through simple organic referrals. These figures show strong early momentum and validation that making finance fun can motivate an entirely new generation to start building healthier financial profiles.,

Commenting on the funding, Mohamad Faraz, Founding Partner, Upsparks said, “Fello’s growth in the early stages has shown the immense capabilities and potential for growth that the startup has. The Co-founders Manish and Shourya come with extensive experience in the finance and technology sector. We have witnessed and believe in the team’s unique ability to create one of the biggest achievements – merging finance with gaming. With several users already present on the platform and the high retention rate that the startup has achieved, we take pride in being a part of their journey in reaching their future goals and growth.,

Ashneer Groover, co-founder of BharatPe and one of the sharks of Shark Tank India says, “Finance is boring. Savings is even more boring. By gamifying the experience of investing using technology – there is potential to expand the investing market significantly. Fello is trying to solve this relevant problem statement.,

Fello is also among the nine companies selected for the CIIE Fintech Inclusion Programme of 2021, which will support them in their plans of rapid expansion into tier 2 and tier 3 cities.About Fello

Founded in 2021, Fello is a game-based savings and investment application to save, play and get returns more than a traditional savings bank account. It makes savings fun and easy through fun, exciting and rewarding games. Users can start saving and investing in assets like Digital Gold and receive gaming tokens for every rupee they invest. Using these tokens, they can play fun in-house games like Cricket and Tambola and win exciting prizes every week.

About Entrepreneur First

Founded in 2011, Entrepreneur First is the world’s leading technology talent investor, bringing together extraordinary people to build startups from scratch in London, Singapore, Berlin, Paris, Toronto, and Bangalore. Through their $200m fund, the company invests in individuals to find a world-class co-founder, develop an idea and fund the deep technology businesses they create.

Entrepreneur First has created 300 companies, which include Magic Pony Technology (acquired by Twitter), Represent (acquired by CustomInk), Bloomsbury AI (acquired by Facebook), Tractable, Cleo, OpenCosmos, CloudNC, Transcelestial, and many more. The global investor is backed by Reid Hoffman, Greylock Partners, Founders Fund, Mosaic Ventures, and Lakestar.



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Finance Minister, BFSI News, ET BFSI

Banking & Finance

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Finance Minister Nirmala Sitharaman on Tuesday informed Parliament that the Centre has issued no specific directions to banks asking them not to give loans to “sensitive customers” like police personnel.

Sitharaman, during Question Hour in the Rajya Sabha, said there is no “official stated policy” directing banks not to give loans to certain categories of customers. “Banks make assessments based on KYC and other ratings like civil ratings. I don”t think any specific instructions are given to banks — please be careful not to lend to these people,” she said in the Upper House while responding to a supplementary queries.

However, banks do exercise a certain level of discretion based on their available KYC (know your customer), she added. Minister of State for Finance Bhagwat Kishanrao Karad said banks do have “problems” in lending to police and politicians. Banks see track record before lending to these customers, he added.

Responding to another question on banks not lending to politically exposed persons (PEPs), the Union Finance Minister said, “…this is more from the point of view of large sums of money are transferred from one account to another complying with the global requirement where the financial action on terror funding happens.” So according to them, the minister said every account will have to be kept on a tab where huge money is transferred to a sensitive bank account, she added.



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Max Life Insurance extends ‘Buy Now, Pay at Approval’ facility to wider modes of online transactions

Banking & Finance

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Max Life Insurance Company Ltd has enhanced its ‘Buy Now – Pay at Approval’ feature available on term insurance purchases for customers to include more modes of online transactions.

Launched last year for policies purchased online, the feature allows customers to apply for a policy through a digital payment method. This helps ensure that the premium amount is not deducted until the proposal evaluation by the insurer, the company said in an official release.

Previously, the feature was only available on credit card payments last year. With the increase in digital transactions and diversification of payment options, the facility now applies to transactions made through Credit Cards, Debit Cards, and UPI platforms.

Manu Lavanya, Director and Chief Operations Officer, Max Life said, “The ‘Buy Now – Pay at Approval’ feature attempts to simplify policy buying through a digital payment instrument while avoiding the risk of money being withheld in the event of a delay in policy issuance.”

“By extending the facility to wider modes of online transactions, we look forward to delivering hassle-free customer experience and mitigating any negative impact likely to occur due to cancellations/underwriting concerns. Since the introduction of this feature last year, we have seen an uplift in customer experience, with a reduction in grievance and refund-related issues, that we aim to continue with the newer augmentations,” he added.

The feature recorded a 25 per cent customer penetration last year. Introduced across varied payment modes of Credit, Debit cards and UPI for the customers, the enhanced iteration aims to increase its penetration to around 20 per cent over the next couple of months.

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FM, BFSI News, ET BFSI

Banking & Finance

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As much as Rs 26,697 crore was lying in dormant accounts of banks, including cooperative banks, as on December 31, 2020, Finance Minister Nirmala Sitharaman informed the Rajya Sabha on Tuesday. This money is lying in nearly 9 crore accounts which have not been operated for 10 years.

As per information received from the Reserve Bank of India (RBI), as on December 31, 2020, the total number of such accounts in Scheduled Commercial Banks (SCBs) was 8,13,34,849 and the amount of deposits in such accounts was Rs 24,356 crore, Sitharaman said in a reply.

Similarly, she said, the number of accounts not operated for more than 10 years and the amount in such accounts with Urban Co-operative Banks (UCBs) was 77,03,819 and Rs 2,341 crore, respectively, as on December 31, 2020.

“The number of deposit accounts (i.e. public deposits matured but remaining unclaimed for 7 years including the year in which they have matured) and the amount in such accounts with Non-Banking Financial Companies (NBFCs) was 64 and Rs 0.71 crore, respectively as on March 31, 2021,” she said.

As per the instructions issued by the RBI to banks vide their Master Circular on “Customer Service in Banks”, banks are required to make an annual review of accounts in which there are no operations for more than one year, and may approach the customers and inform them in writing that there has been no operation in their accounts and ascertain the reasons for the same.

“Banks have also been advised to consider launching a special drive for finding the whereabouts of the customers/legal heirs in respect of accounts which have become inoperative, i.e., where there are no transactions in the account over a period of two years,” she said.

Further, she said, banks are required to display the list of unclaimed deposits/ inoperative accounts which are inactive / inoperative for ten years or more on their respective websites, with the list containing the names and addresses of the account holder(s) in respect of unclaimed deposits/ inoperative accounts.

As regards action taken on deposits in such accounts, she said, pursuant to the amendment to the Banking Regulation Act, 1949 and insertion of Section 26A in the said Act, the RBI has framed the Depositor Education and Awareness Fund (DEAF) Scheme, 2014.

In terms of the Scheme, banks calculate the cumulative balances in all accounts which are not operated upon for a period of 10 years or more (or any amount remaining unclaimed for 10 years or more) along with interest accrued and transfer such amounts to the DEAF.

“The DEAF is utilised for promotion of depositors’ interests and for such other purposes which may be necessary for promotion of depositors’ interest as may be specified by the RBI. In case of demand from a customer whose deposit had been transferred to the DEAF, banks are required to repay the customer, along with interest if any, and lodge a claim for refund from the DEAF,” she said.

Replying to another question, she said, the RBI as per its master circular has authorised the board of each housing finance companies (HFCs) would adopt an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances.

The rates of interest and the approach for gradation of risks, and penal interest has to be disclosed to the borrowers in the application form, and in the sanction letter besides making available on their website or published in the newspapers.

Further, HFCs have been advised to put in place an internal mechanism to monitor the process and the operations so as to ensure adequate transparency in communications with the borrowers.



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Edelweiss Financial Services to raise up to ₹500 crore

Banking & Finance

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Edelweiss Financial Services Ltd (EFSL) has decided to raise up to ₹500 crore via public issue of secured, redeemable, non-convertible debentures of face value ₹1,000 each.

The base size of the public issue is for an amount up to ₹200 crore with an option to retain oversubscription up to ₹300 crore. The issue is within the shelf limit of ₹1,000 crore.

The minimum subscription amount is ₹10,000 (10 NCDs) across all 10 series of NCDs. Investment thereafter will be in multiples of ₹1,000 (one NCD).

Depending on the tenor, the effective yield per annum ranges from 8.75 per cent to 9.70 per cent, as per EFSL’s exchange filing.

The NCDs are proposed to be listed on BSE.

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Union Bank to CBI, BFSI News, ET BFSI

Banking & Finance

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The Union Bank of India has written to the Central Bureau of Investigation (CBI) to probe the promoters and erstwhile management of Dewan Housing Finance Corporation Ltd (DHFL) for allegedly causing a loss of Rs 40,623.36 crores (as on July 30, 2020) crores to the consortium of banks led by Union Bank of India.

In its complaint, the lead bank has affixed the findings of audit firm, KPMG engaged by the consortium which has prima facie found, “deviation of laid down norms and procedures, manipulation of accounts, concealments, undisclosed bank accounts and misrepresentation”.

While the CBI is probing the promoters: Kapil and Dheeraj Wadhawan in the Yes Bank scam, sources said even while prima facie there is a case of fraud of loss of public money, the federal agency cannot register a fresh FIR for the want of general consent which needs to be accord by the Maharashtra government. In August last year in the aftermath of the probe into the manipulation of television rating points (TRP), the state government withdrew consent to the agency accorded to the CBI under Section 6 of the Delhi Special Police Establishment Act. A general consent is a must for the CBI to register an offence in the state, in its
absence, the federal agency has to approach the state government on a case to case basis seeking permission to conduct investigation.

Maharashtra is not the only state to withdraw consent, claiming vendetta by the centre, even other non-NDA states mainly West Bengal, Chhattisgarh, Kerala, Rajasthan and Punjab in the last one year have withdrawn general consent.

“Communication and representation has been made to the state government but consent hasn’t been accorded. The loss caused to public money is over Rs 40,000 crores and prima facie there is fraud committed by the promoter and the erstwhile management which requires to be investigated thoroughly,” said a senior official privy to the development.

Union Bank of India was not immediately available for comment.

The special audit report prepared by KPMG against the erstwhile management has found DHFL disbursed loans and advances totalling to Rs19,754 crores to 35 entities with commonalities to DHFL promoter. “…of these 25 entities had reported minimal operations and were disbursed loans and issued ICDs amounting to Rs14.632”. This number reached to 66 in the subsequent report submitted by KPMG. “Various emails evidencing that DHFL promoters were in control of multiple entities to the extent of appointment of directors and auditors, having income tax notices, maintenance of secretarial records of various companies”.

It also found that loans and advances to the tune of Rs 25,595 crores were disbursed to 65 entities having various deficiencies such as borrowers had minimal operations, inadequate loan documentation, mortgage security valuation and others, states the report accessed by ET reads. The audit also observed that repayments of 169 entities of Rs 5,476 crores could not be traced in DHFL’s bank account statements.

It also found a “Bandra Book entity”, that maintained the details of non-existing retail loans using dummy names which were maintained in a separate accounting system and then transferred to main accounting software of DHFL called Synergy. Rs 14,095.08 crores stated as project finance was prima facie falsely stated as retail loans and 1.81,664 fictions retail loan accounts were created for the same, the report states.



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Extension of Last Date of Submission – Annual Maintenance Contract for day-to-day operation and maintenance of Substation & various electrical installations at Main Office Building, Reserve Bank of India, Guwahati

Tenders

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E-tender no. RBI/Guwahati/Estate/175/21-22/ET/238

The captioned tender was published on October 29, 2021 through RBI website (www.rbi.org.in). Last date for online submission of the tender through MSTC website (www.mstcecommerce.com) was specified on or before 14:00 hours on November 29, 2021. It is informed that the last date for submission has been extended to December 13, 2021 till 14:00 hours. All the terms and conditions mentioned in the tender remain unchanged.

Regional Director, North Eastern States

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Three things banks need to keep in mind before leading a digital transformation, BFSI News, ET BFSI

Banking & Finance

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The fintech revolution is here and banks need to build innovative digital-first products to survive it, Sudipta Kumar Ghosh who is a thought leader in the fintech space tells us why

In financial services, fintechs are promoting a vision of a world without banks. Blockchains and cryptocurrencies have taken over paper money or credit cards. Portfolio management is conducted in an AI setting without managers. Mobile and online payments are turning into debit and credit cards. In short, fintechs are facilitating a fast, seamless, immersive, cross-channel digital experience that customers have always wanted. It is satisfying their needs and bringing to them so much more that they can anticipate. For millennials, this is incredibly good news. As a dominant demographic, millennials’ expectations of brands are increasingly changing and they have fundamentally different banking and investing habits, making it clear that banks must adapt.

To understand how traditional banks can compete with fintechs, we caught up with Sudipta Kumar Ghosh. He has over a decade of experience in the fintech space and is one of the few leaders to lead technology transformation for large banks. He holds an MBA from Kellogg School of Management at Northwestern University.

  • Tell us why the adaptation to fintech is the need of the hour for banks?
    The traditional banking system will not survive if it doesn’t adapt to the fintech revolution quickly. After the Covid-19 pandemic set in, it forced the entire industry to provide consumers digital options where they did not exist previously. The consumer’s daily life was suddenly digitized and their expectations for digital experiences hit the ceiling. It also became clear that simply going digital capabilities was not enough as consumers also required the technologies they were using to be as swift and easy as the leading big tech and fintech companies. This makes it very important for banks to build innovative products that can provide a superior customer experience. Unlike before, having digital functionality is not an option anymore – it’s a must.
  • Do you think banks are working on any transformational strategy?
    Yes, of course. Banks are aware of this need to rejig themselves and they are already working on actionable strategies. In a recent study conducted by Microsoft on the financial sector, 73% of the survey respondents said at least 50% of their customers’ financial activities switched from in-person services to digital services in 2020. Most of the respondents to this survey also said their organizations not only used several CX technologies during the COVID-19 pandemic but also plan to continue using them. Smartphone apps and mobile responsive websites (81%), customer onboarding and feedback automation (62%), and AI-powered predictive analytics (51%) are some of these technologies.
  • So, from your experience leading digital transformation for banks, what are the things banks should think about when building digital-first products?
    Three things should be kept in mind here.

The first is making banking personal and seamless. Customers will use various channels such as mobile, web, touch-free to interact with the bank. That means there has to be fluid, streamlined, integrated, seamless, and personalized consistency for the customer at all touchpoints. Also, cross-channel consistency is critical for meeting (or surpassing) customer expectations and cultivating loyalty. Secondly, banks need to make use of the cutting edge technologies available. They should use cloud delivery platforms to ensure that websites and apps are always available and that every customer will enjoy optimal performance, regardless of location or device type. Using the latest tools and techniques to gather data from cross-channel and multi-device interactions for analysis, recognizing recent activity and delivering personalized services, and also offering promotions in every session is the need of the hour.

The third is to mitigate cybersecurity threats. Today’s online threats continue to grow in size, frequency, and sophistication, putting banks at tremendous risk of reputational damage, diminished IT productivity, and revenue loss. Think about encrypting and tokenizing sensitive data, proper governance model for data on the cloud.



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Unwise to place a ban on private crypto assets: Report

Banking & Finance

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Cryptocurrencies have witnessed exponential growth over the last five years with more than 15 million Indian investors and as a result, like any other financial asset, the asset class needs to be regulated to protect consumer welfare as well as promote innovation, said a report jointly published by Esya Centre and Observer Research Foundation.

The report highlights that crypto assets are likely to form the basis for future forms of the internet and that India is well placed to capitalise on this due to its burgeoning private crypto market. Given this, it would be unwise to place a ban on private crypto assets as these can result in significant revenue loss to the government and force nascent industries to operate illegally.

Instead, the report advocates a balanced regulatory approach that addresses concerns of fiscal stability, money laundering, investor protection and regulatory certainty while preserving innovation.

According to one of the authors, Meghna Bal, “Most regulatory formulae necessary to address the policy concerns related to crypto-assets, such as investor protection, foreign exchange management, money-laundering and tax evasion, already exist in financial legislation. They just have to be adapted to accommodate an emerging technological paradigm. The recommendations in our report show how this can be done. ”

In India, classifying crypto as a security, good or capital asset could lead to unintended restrictions on investment or leave regulatory gaps in key policy areas. A sui generis crypto framework that adopts the nuances of the crypto industry would be more appropriate and in keeping with emerging global trends.

Suggestions for lawmakers

The report also lays out suggestions for lawmakers on what a crypto regulatory framework should include: it must be technology neutral, innovation friendly and consistent to fully harness India’s potential in this domain. Among other things, the framework must lay down clear definitions, identify the relevant regulatory bodies and create KYC/anti-money laundering obligations, the report says. It should also provide crypto asset service providers with safe harbor – protection from liability for the actions of investors on their platform. This will help asset service providers innovate and scale new crypto-based products and offerings.

The report also recommends the government adopt a co-regulatory approach where industry associations and authorities such as SEBI, the RBI, and the Ministry of Finance share responsibility for oversight. Such an approach takes a leaf out of Japan’s book, where authorities have tasked industry associations to enforce regulations. The report also recommends incentivising industry whistleblowing so that players within the crypto-market work to keep a check on each other’s activities.

Such a facilitative regulatory framework will boost the growth of India’s crypto ecosystem while addressing any possible harms to consumers and society at large, the report says.

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