RBI stays mum on allowing corporate entities to own banks, allows raising of minimum holding, BFSI News, ET BFSI

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MUMBAI: The Reserve Bank of India on Friday has accepted the majority of the recommendations made by the internal working group on the review of ownership guidelines and corporate structure of private sector banks.

The central bank has accepted 21 out of the 33 recommendations made by the internal panel with certain modifications.

However, the central bank has kept under examination one of the most crucial recommendations by the internal working group pertaining to allowing corporate entities to own banks.

Among the most important recommendations accepted by the RBI is raising the long-term holding cap of promoters in private sector banks to 26 per cent from 15 per cent currently. Further, under the same recommendation, existing promoters with holdings below the 26 per cent threshold will be allowed to raise their stake.

“The promoter, if he/she so desires, can choose to bring down holding to even below 26 per cent, any time after the lock-in period of five years,” the RBI circular said.

The regulator has also modified the long-term cap on non-promoter shareholding in banks. The RBI said that long-term non-promoter shareholding will be capped at 10 per cent for natural persons and non-financial entities. However, the same for financial entities will now stand at 15 per cent of the paid-up voting equity share capital.

The RBI has also accepted the working group’s recommendations to allow banks that have a non-operative financial holding company structure to exit the same if they do not have any other group entities. However, the structure of NOFHC will continue to prevail for new licensees with other group entities.

In a setback for payments banks hoping to convert into small finance banks, the RBI said that the criteria of 5 years of experience as a payments bank to get an SFB license will continue along with other requirements mentioned in on-tap licensing for SFBs.

The regulator has also accepted the recommendation that will allow promoters to pledge their shareholding in the bank during the lock-in period. The central bank also said that a new reporting requirement will be brought for disclosures pertaining to pledging of holdings by bank promoters.

The RBI has also raised the minimum capital requirement for applicants for various types of banks. The initial capital for universal banks has been raised to Rs. 1,000 crore from Rs. 500 crore, for SFBs it has been raised from Rs. 200 crore to Rs. 300 crore and for UCBs transitioning to SFBs to Rs. 150 crore from Rs. 100 crore.

The central bank said that the circulars, amendments and instructions for the implementation of the accepted recommendations of the internal working group be notified in “due course”.



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LIC Bima Jyoti Policy: Should You Invest?

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Eligibility and sum assured under Bima Jyoti Policy

The Minimum Basic Sum Assured under the plan is Rs. 1,00,000, and there is no limit on the Maximum Basic Sum Assured, it will be in multiples of Rs. 25,000.

The Policy Term is 15 to 20 years. The Premium Paying Term is will be 5 Years less than the Policy Term. The Minimum Age of entry for the policy is 90 days, while the Maximum Age of Entry is 60 Years. On the other hand, the Minimum Age of Maturity is 18 years, whilst the Maximum Age of Maturity is 75 Years.

Calculation of Bima Jyoti Plan, considering the policy term is 15 years, hence the PPT is 10 years.

Basic sum assured Age Death sum assured Guaranteed return at maturity 1st year premium with 4.5% tax (Yearly) After 1st year premium with 2.25% tax (Yearly)
Rs. 2,00,000 30 Rs. 2,50,000 Rs. 3,50,000 Rs. 25,281 Rs. 24,736
Rs. 5,00,000 50 Rs. 6,26,000 Rs. 8,75,000 Rs. 65,044 Rs. 63,643

(Also read: LIC Jeevan Lakshya For A Promising Future Of Your Child)

Death Benefit

Death Benefit

Bima Jyoti plan has a significant Death Benefit, that will secure the policyholder’s future even after his/her death. On death during the policy term before the date of commencement of risk, return of premiums will be paid excluding taxes, and the extra premium and rider premium(s), if any.

Additionally, on death during the policy term after the date of commencement of risk, “Sum Assured on Death” and Accrued Guaranteed Additions will be paid. Here, the “Sum Assured on Death” is defined as higher of 125% of Basic Sum Assured or 7 times of annualized premium.

Bima Jyoti Maturity Benefit

Bima Jyoti Maturity Benefit

LIC officially mentioned, on Life Assured surviving the stipulated Date of Maturity provided the policy is in force, “Sum Assured on Maturity” along with Guaranteed Additions, will be paid, and the “Sum Assured on Maturity” is equal to the Basic Sum Assured.

According to LIC, “Loan can be availed under the policy provided at least 2 full years’ premiums have been paid and subject to the terms and conditions as the Corporation may specify from time to time.”



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Bank of Baroda raises ₹1,997 crore via AT-1 bonds

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Bank of Baroda (BoB) has raised ₹1,997 crore via an issue of Additional Tier 1 bonds at a coupon rate of at 7.95 per cent. Bonds of ₹1 crore are unsecured, rated, listed, subordinated, non-convertible, fully paid-up Basel III compliant perpetual bonds.

Bids of ₹5,308 crore

The public sector bank informed exchanges that it has received total bids aggregating ₹5,308 crore against issue size of ₹2,000 crore. The issuance was finalised for ₹1,997 crore.

The Bank of Baroda has allotted the bonds to 21 investors.

Also see: BoB’s arm launches credit card powered by mobile app

Recently, the Union Bank of India had mopped up ₹2,000 crore via AT-1 bonds on private placement basis at a coupon rate of 8.70 per cent.

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SBI Vs DCB Vs Axis Vs IDFC First Vs Yes Bank: Latest Interest Rates On FD Compared

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State Bank of India

With effect from 08.01.2021, the State Bank of India is promising the following interest rates on retail domestic term deposits of less than Rs. 2 crores.

Tenors Rates for Public In % (p.a.) Rates for Senior Citizens In % (p.a.)
7 days to 45 days 2.9 3.4
46 days to 179 days 3.9 4.4
180 days to 210 days 4.4 4.9
211 days to less than 1 year 4.4 4.9
1 year to less than 2 year 5 5.5
2 years to less than 3 years 5.1 5.6
3 years to less than 5 years 5.3 5.8
5 years and up to 10 years 5.4 6.2
Source: Bank Website

DCB Bank

DCB Bank

DCB Bank has recently revised its interest rates on fixed deposits and the new rates are in force from 22nd November 2021. The bank is currently providing the following interest rates on Resident Indian Fixed Deposits of less than Rs 2 crore.

Tenure Rates for Public In % (p.a.) Rates for Senior Citizens In % (p.a.)
7 days to 14 days 4.35% 4.85%
15 days to 45 days 4.35% 4.85%
46 days to 90 days 4.35% 4.85%
91 days to less than 6 months 5.05% 5.55%
6 months to less than 12 months 5.25% 5.75%
12 months 5.55% 6.05%
More than 12 months to less than 15 months 5.30% 5.80%
15 months to less than 18 months 5.50% 6.00%
18 months to less than 700 days 5.50% 6.00%
700 days 5.95% 6.45%
More than 700 days to less than 36 months 5.50% 6.00%
36 months 5.95% 6.45%
More than 36 months to 60 months 5.95% 6.45%
More than 60 months to 120 months 5.95% 6.45%
Source: Bank Website

Axis Bank

Axis Bank

In the month of November, Axis Bank has also revised its interest rates on fixed deposits. The new rates are in effect from 10th November 2021. The bank’s most recent interest rates on domestic fixed deposits applicable to both regular public and senior citizens are as follows:

Tenure Rates for Public In % (p.a.) Rates for Senior Citizens In % (p.a.)
7 days to 14 days 2.5 2.5
15 days to 29 days 2.5 2.5
30 days to 45 days 3 3
46 days to 60 days 3 3
61 days 3 3
3 months 3.5 3.5
4 months 3.5 3.5
5 months 3.5 3.5
6 months 4.4 4.65
7 months 4.4 4.65
8 months 4.4 4.65
9 months 4.4 4.65
10 months 4.4 4.65
11 months 4.4 4.65
11 months 25 days 4.4 4.65
1 year 5.1 5.75
1 year 5 days 5.15 5.8
1 year 11days 5.2 5.85
1 year 25 days 5.2 5.85
13 months 5.1 5.75
14 months 5.1 5.75
15 months 5.1 5.75
16 months 5.1 5.75
17 months 5.1 5.75
18 months 5.25 5.9
2 years 5.4 6.05
30 months 5.4 6.05
3 years 5.4 6.05
5 years to 10 years 5.75 6.5
Source: Bank Website

IDFC First Bank

IDFC First Bank

This private sector bank has also recently revised its interest rates on fixed deposits and the new applicable rates are in force from 23rd November 2021. On Domestic, NRE & NRO Deposits less than Rs. 2 Cr, IDFC First Bank is now providing the below listed interest rates to both regular and senior citizens.

Period Rates for Public Rates for Senior Citizens
7 – 14 days 2.50% 3.00%
15 – 29 days 2.50% 3.00%
30 – 45 days 2.75% 3.25%
46 – 90 days 2.75% 3.25%
91 – 180 days 3.25% 3.75%
181 days – less than 1 year 4.75% 5.25%
1 year – 2 years 5.25% 5.75%
2 years 1 day – 3 years 5.75% 6.25%
3 years 1 day – 5 years 6.00% 6.50%
5 years Tax Saver Deposit 6.00% 6.50%
5 years 1 day – 10 years 6.00% 6.50%
Source: Bank Website

Yes Bank

Yes Bank

On deposits of less than Rs. 2 Cr maturing in 7 days to 10 years, Yes Bank is now promising the following interest rates w.e.f. 3rd November 2021.

Period Regular Senior Citizen
7 to 14 days 3.25% 3.75%
15 to 45 days 3.50% 4.00%
46 to 90 days 4.00% 4.50%
3 months to 4.50% 5.00%
6 months to 5.00% 5.50%
9 months to 5.25% 5.75%
1 Year to 6.00% 6.50%
3 Years to 6.25% 7.00%
Source: Bank Website



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Private bank ownership: RBI accepts recommendations of internal working group

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The Reserve Bank of India has accepted 21, some with partial modifications, out of the 33 recommendations of the Internal Working Group set up to review the extant guidelines on ownership and corporate structure for Indian private sector banks.

The key recommendations accepted include that the cap on promoters’ stake in long run of 15 years may be raised from the current levels of 15 per cent to 26 per cent of the paid-up voting equity share capital of the bank.

“This stipulation should be uniform for all types of promoters and would not mean that promoters, who have already diluted their holdings to below 26 per cent, will not be permitted to raise it to 26 per cent of the paid-up voting equity share capital of the bank,” the RBI said.

Listing in future

Small finance banks set up in future would be expected to list within eight years of commencement of operations, while universal banks would list within six years of operations.

Significantly, the criteria to assess the ‘fit and proper’ status of promoters or major shareholders as prescribed in the ‘Guidelines for on tap Licensing of Universal Banks in the Private Sector – 2016’ are appropriate and may be continued.

“Going forward, a harmonised approach may be adopted in various guidelines,” the RBI has said.

The RBI said, the consequential amendments in instructions, circulars, master directions, and licensing guidelines following the acceptance of the recommendations (with or without modifications) are being carried out and will be notified in due course.

However, during the interregnum, all stakeholders may be guided by these decisions, it further said.

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Reserve Bank of India – Tenders

Tenders

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Reserve Bank of India, Thiruvananthapuram invites e-tender for the captioned work from Bank’s empanelled vendors/contractors under the said category of the work costing between ₹ 10 lakh and ₹ 25 Lakh. The tendering would be done through the e-Tendering portal of MSTC Ltd (https://www.mstcecommerce.com/eprochome/rbi). All interested empanelled vendors /contractors must register themselves with MSTC Ltd through the above mentioned website to participate in the tendering process. The Schedule of e-Tender is as follows:

a. Name of Work Replacement of Flooring of First floor Corridor, Main Office Building, Reserve Bank of India, Thiruvananthapuram
b. Estimated Cost of the Work ₹ 11.55 lakh inclusive of all taxes
c. e-Tender no RBI/Thiruvananthapuram/Estate/210/21-22/ET/280
d. Mode Of Tender e-Procurement System
(Online: Part I – Techno-Commercial Bid and Part II – Price Bid through (www.mstcecommerce.com/eprochome/rbi))
e. Date of NIT available to parties to download 2:00 PM on November 26, 2021
f. Date of Pre-Bid Meeting 11:00 AM on December 02, 2021
g. Date of Starting of e-Tender for submission of on line Techno-Commercial Bid and price Bid in MSTC Portal 3:00 PM on December 03, 2021
h. Date of closing of online e-Tender for submission of Techno-Commercial Bid & Price Bid in MSTC Portal 2:00 PM on December 10, 2021
i. Last date of submission of EMD 1:00 PM on December 10, 2021
j. Date & time of opening of tender 3:00 PM on December 10, 2021
k. Earnest Money Deposit ₹ 23,100/- (Rupees Twenty-three thousand and one hundred only) in the form of DD or BG, in favour of Reserve Bank of India, Thiruvananthapuram to be delivered in physical form at Estate Department., Reserve Bank of India, Bakery Junction, Thiruvananthapuram – 695033

OR

₹ 23,100/- (Rupees Twenty-three thousand and one hundred only) in the form of NEFT towards

Beneficiary Name: ESTATE
Beneficiary Ac No: 8614038
IFSC Code: RBIS0THPA01
l. Transaction Fee As charged by MSTC Ltd.

Amendments / Corrigendum to the tender, if any, issued in future will only be notified on the RBI Website and MSTC portal and will not be published in the newspaper.

Regional Director
(Kerala and Lakshadweep)

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Exim Bank commits $100 million loan for Covid vaccines in FY 22

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Export-Import Bank of India (Exim Bank) has committed loans worth $100 million for domestic manufacturers of Covid-19 vaccines or related products.

“These loans are being extended to about half a dozen drug makers in the country during the present financial year,” N Ramesh, Deputy Managing Director, Exim Bank told newspersons here on Friday.

The loans for vaccines are also being extended to other countries. “Our vaccine portfolio in Africa is a significant one with a size of $250 million,” Ramesh said.

This will be an advantage for Indian firms as the financing mandates Africa to source vaccines and related products only from India.

Borrowings

The national export credit agency has already borrowed $2.25 billion through International bonds in 144A – Reg S format.

When asked on the possible size of borrowings for FY22, Ramesh said: “We will be calibrating our borrowings with international economic factors and domestic developments.”

The bank had earlier indicated borrowings to the tune of $3 billion in the current fiscal.

Also read: Exim Bank lists billion-dollar 10-year bond on AFRINEX

Exim Bank is targeting to achieve financing of $7 billion of project exports over next five years through funds received from Government of India, he said.

Earlier in September this year, the Centre had approved a corpus infusion of ₹1,650 crore National Export Insurance Account.

Credit growth

The bank expects a credit growth of 10 per cent this year, according to Ramesh. This will be driven by ‘good’ demand from EPC, textiles, pharma and petroleum sectors, among others, he added.

Its loan portfolio increased 4.43 per cent year-on-year to ₹1,03,851 crore as on March-end 2021.

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Crypto prices stable in India as investors await details of new Bill

Banking & Finance

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Cryptocurrency prices continued to be stable on Indian exchanges 48-hours after major crash of 15-20 per cent across tokens; though with the exception of Sandbox token. It was the highest gainer yesterday but today it is trading below at 12.29 per cent of its peak price from yesterday.

At 10:57 am on WazirX, Bitcoin’s price had slightly gone up by 0.21 per cent, Shiba Inu’s price increased by 4.2 per cent, Tether was up by 2.45 per cent, Ethereum was up by 6.1 per cent and Basic Attention Token (BAT) jumped by 32.6 per cent.

Also read: Only a handful of cryptocurrencies that exist today likely to survive: Raghuram Rajan

Clearing some of the air around uncertainty and confusion on the draft Crypto bill, Finance Secretary TV Somanathan on Thursday in an interview with CNBC-TV18 said that people had just overreacted to the development of the crypto bill which will be tabled in the parliament’s winter session.

“However, one thing I can say very clearly is that crypto will not be legal tender by any means. Gold is not a legal tender, silver is not a legal tender and alcohol is also not a legal tender, beyond that I will not be in a position to say anything more,” he said.

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50,000 jobs at stake as govt brings laws to regulate cryptocurrencies

Banking & Finance

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Employees of cryptocurrency companies in India are a worried lot as the fate of the industry hangs in the balance.

Vinshu Gupta, Founder and Director, Nonceblox Blockchain Studio said “It is easy to use privacy coins to launder money or use a crypto mixer to hide drug or blood money but crypto also employs over 50,000 people in India and has immense potential to push India as a true 21st century super power.”

“The crypto industry needs regulation but it should be inclusive. A taxation process like TDS where profits are taxed at withdrawal sources in India like exchanges is a good strategy to start. The more it becomes an open-ended ecosystem, the more value it will bring to the Indian economy,” he added.

Also read: Crypto prices stable in India as investors await details of new Bill

Cryptocurrencies have gained prominence ever since the RBI ban was lifted in March 2020. India now has 15 home-grown crypto currency exchange platforms, consisting of more than 10 crore investors. According to broker discovery and comparison platform BrokerChooser, the total number of crypto owners in India now stands at 10.07 crore, which puts it ahead of every other country in the world. US stands at second position with the number of crypto owners at 2.7 crore, followed by Russia (1.7 crore) and Nigeria (1.3 crore). In comparison, the number of stock investors registered with the BSE/NSE in India has risen to 7.4 crore at present while for mutual funds it stands at 11.4 crore. In terms of share of crypto investors as a percentage of the population, India stands at fifth position at 7.3 per cent trailing Ukraine (12.7 per cent), Russia (11.9 per cent), Kenya (8.5 per cent) and US (8.3 per cent).

Indian crypto investments cross $10 billion

According to crypto research and intelligence business CREBACO, Indian crypto investments have increased to over $10 billion from $0.9 billion in April 2020, as crypto markets touched all-time highs.

“Currently, the government is set to introduce ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ in the winter session of Parliament beginning 29 November for consideration and passing. The bill aims to create a facilitative framework for the creation of the official digital currency to be issued by the RBI. It also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses. Currently, there is a lot of uncertainty but the government is making efforts to soon put out proper regulation with regards to crypto investment as it is quickly getting widespread across India,” said Hemang Jani, Head – Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services.

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7 Smart Ways to Reduce Your Debt

Personal Finance

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1. Stop Accumulating Debt

Prevention is better than cure, you must have heard this many times. This goes the same here. Take a break from your credit cards or even freeze your card to reduce the temptation to take on extra debt. Prepare a budget to get an overview of all your expenses. A budget is surely a tool that could smartly tackle the debt. Knowing your expenses reduces your unwanted spending.

2. Increase your income

2. Increase your income

Increasing your income is the first and one of the smartest ways to reduce your debt temptation. The more revenue you put toward your debt, the sooner you’ll be able to eliminate it completely. Get yourself involved in putting some extra income which could help reduce your debt burden in the meantime.

3. Build an Emergency Fund

3. Build an Emergency Fund

Building an emergency fund is another smart way of reducing the debt temptation. It sounds counter-intuitive but it is effective in reducing any potential debt. It allows your use in reducing the debt instead of touching your saving account. These savings offer you a safety net that you can utilize for unexpected needs, it also prevents you from going for your credit card.

4. Inquire with your Creditor for a lower interest rate

4. Inquire with your Creditor for a lower interest rate

A higher interest rate does nothing but increases your debt hole because the interest amount goes towards the monthly interest charge making your actual balance higher. It is always to inquire your creditor (credit card issuers) for a lower interest rate. Interest rates are negotiable and asking for a lower interest rate could help you to reduce your debt. If you have a good payment history it is more likely to could get a power interest rate on your credit card.

5. Withdraw from your Retirement fund

5. Withdraw from your Retirement fund

Withdrawing from your retirement fund is another smart way to reduce your debt, but it should be your last option in the extreme case. It is highly recommended only in cases when you have no other option or you have other sources of income besides your monthly income. It is important to understand that Retirement fund withdraw could impact your saving post-retirement along with your interest, capital, and dividends, you could have earned from that money.

6. Debt Settlement

6. Debt Settlement

If you owe more than what you can repay in the set time period or your accounts are past the due date, debt settlement may be a good option to consider. In debt settlement, you ask your creditor to consider a one-time or lump-sum payment that is less than the whole total in order to settle down the bill completely. Creditors usually accept settlement proposals only on accounts that are in default or are about to default.

Debt settlement can have a negative impact on your credit score and should be utilized only as a last resort. Debt settlement could be also done by negotiating directly with the creditor. It’s a good option to negotiate directly or take the help of a reputable debt relief company.

7. Credit Counselling Agencies

7. Credit Counselling Agencies

It’s always good to take advice and suggestions when you lack ideas. Credit Counselling is one of the smartest ways to bring your debt in control. There are a number of credit counseling agencies that could help you in managing your finance and settling down your budget issues. These agencies are organizations or companies with a deep understanding of finance and credit issues.

All you need to do is send a lump-sum payment amount to the agency every month, and they will break it up and deliver it to your creditors on your behalf. Credit counseling differs from debt settlement in that it does not need you to be in default, and the aim is to pay off your debts in full.



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