Collections will sustain at pre-Covid levels if there is no lockdown: Sanjay Agarwal, MD & CEO, AU Small Finance Bank

Banking & Finance

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Sanjay Agarwal, MD & CEO, AU Small Finance Bank

By Piyush Shukla

AU Small Finance Bank’s average collection efficiency stood at 109% for the quarter ended 30 September and will sustain at pre-pandemic levels going ahead if the country does not face severe lockdown due to rise in new Covid-19 cases, says Sanjay Agarwal, managing director and chief executive officer of the bank, in an interview to Piyush Shukla. Excerpts:

You mentioned that demand across wheels, home loans and business banking is recovering and that you see green shoots in securities-based lending business. Which sectors are the ones generating demand?
Green shoots are visible in metals and mining, pharmaceuticals and biotech, as well as agriculture processing projects, which is expected to boost demand for smaller MSME (micro, small and medium enterprises) suppliers and retailers. Businesses have also started looking for capacity expansions and a good festive season should further boost sentiments.

Government expenditure and infrastructure contracts will also boost downstream demand as local level contractors and subcontractors start looking for bank guarantees and funding facilities. Similarly, barring any severe lockdowns, we hope to have better demand visibility in the next couple of quarters.

Can you give us any outlook on credit growth?
Currently, we are providing no guidance on this as the situation remains fluid. However, we believe we are very strongly positioned in terms of balance sheet strength to capture the opportunities in the segments we operate in.

On liabilities side, which markets are you tapping for more granular deposits?
The strategy of the bank remains that we take deposits from urban markets and lend them to core markets. We will continue to focus on building a low cost, stable deposits franchise.

What is your guidance on collections in October-March (H2FY22)?
Collection outlook looks good in H2FY22 with average expected collection efficiencies to sustain at pre-covid levels if there is no severe lockdown.

You had said that the bank will assess bad loan pool and write off loans with low chances of recovery. Considering the same, what is your view on asset quality for the current fiscal?
Improvement is being seen sequentially in terms of economic activity, borrower connect, business continuity, the overall confidence in the operating environment and there’s more visibility in the cashflows of customers. While we are not guiding for any particular GNPA (gross non-performing assets) number at this point in time, three key factors should aid NPA resolution in H2FY22 for us – small ticket and secured nature of our loan book which are given mainly for income generation purposes, improved borrowers’ cashflows, and overall supportive environment for recoveries.

We will look at each of the loan accounts and wherever we feel recoverability is low or our security interest is in jeopardy, we will decide on writing off those cases on a loan-by-loan basis. We have already made buffer provisions and would like to watch out the entire credit environment for next two quarters to assess credit cost.

Are you witnessing restructuring of loans presently and what number of provisions have you built for this book?
We are not witnessing any significant restructuring currently for our book. We are carrying provision of Rs 213 crore against our standard restructured book which we think is sufficient to address any eventual losses arising from this book. In addition, we are also carrying Rs 300 crore of contingency provisions (84 bps of net advances) which further strengthens the balance sheets and makes us better prepared for any unforeseen event.

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Invest in ideas, start-ups to build nation’s wealth-sheet: PM to banks

Banking & Finance

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 Prime Minister Narendra Modi today asked public and private sector banks to support wealth and job creators especially by  investing in ideas thrown up by the start-up ecosystem.

Banks should work not just towards building up their balance-sheets but also the “wealth sheet of the country”, said the PM.

Partnership model

Addressing chief executives of the country’s  public and private sector banks, at a conference on ‘Creating synergies for seamless credit flow and economic growth’, Modi asked them to adopt a partnership model with businesses rather than looking at it as a relationship between “loan approver and a loan applicant”.

He pointed out that banks were flush with liquidity and there should be all round effort to help corporates and MSMEs scale up.

“Today, there is a need to unlock the productive potential of Indian citizens. The more you invest in citizens and their ideas, the more employment can be achieved. You have to align your efforts with the government’s goals,” Modi said.

Asserting that Indians are quick to adapt to new technologies, Modi urged bankers not to delay initiatives when it came to fintech. He also set a target for banks: By August 15, 2022 (75 years of Independence) every bank branch in the country  must have at least 100 customers who are completely digital in their functioning.

The Prime Minister said that reforms initiated in the banking sector in the last 6-7 years had helped the sector reach a strong position today.

Modi said that ways were found to address the problems and challenges from before 2014 one by one. “We addressed the problem of NPAs, recapitalised banks and increased their strength. We brought reforms like IBC, updated many laws and empowered debt recovery tribunal. A dedicated stressed asset management vertical was also formed during the Covid period,” he said.

Steps taken in the recent years have created a strong capital base for the banks. They  have sufficient liquidity and no backlog for provisioning of NPAs, which are  at their lowest in the last five years. This has led to the upgrading of the outlook for Indian banks by international agencies, he added.

Bad debt recovered

The Prime Minister said that over ₹5-lakh crore of bad debt had been recovered by the banking system and that the new National Asset Reconstruction Company Ltd  is expected to address ₹2-lakh-crore  stressed assets.

On the proposed web-based project funding tracker to bring together ministries and banks, Modi suggested adding the Gatishakti Portal as an interface may be better.

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Auction of three G-Secs aggregating ₹24,000 crore sails through

Banking & Finance

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The auction of three Government Securities (G-Secs) aggregating ₹ 24,000 crore sailed through on Thursday, with the cut-off on the widely-traded benchmark 10-year G-Sec coming in about 2 basis points lower vis-a-vis the previous close.

The cut-off yield on the benchmark 10-year G-Sec (maturing in 2031 and carrying coupon rate of 6.10 per cent) came in at 6.3441 percent against the previous closing yield of 6.3612 per cent.

The cut-off price on the aforementioned G-Sec was about 12 paise higher at ₹ 98.25 against the previous close of ₹ 98.1275. Bond yields and prices are inversely correlated and move in opposite directions.

The Government mopped up ₹13,000 crore through auction of this paper.

A dealer with a public sector bank said G-Sec yields trended lower on the back of thaw in the US treasury yields. Further, buoyant tax collections and expected pick up in public sector disinvestment are likely to ensure that the government may not go in for additional borrowing.

In the secondary market, yield on the 10-year benchmark G-Sec closed lower at 6.3455 per cent against the previous close of 6.3612 per cent. Price of this security ended up about 11 paise at ₹98.24 against the previous close of ₹98.1275.

Brickwork Ratings, in a recent, report opined that yields are expected to maintain a hardening trend in the short and medium term, and the 10-year gilt yield is expected to remain at around 6.25 per cent in the short run and rise to 6.5 per cent in the later part of the second half (H2) 2022 owing to the augmented government borrowings and the inflationary trend.

The Government raised ₹4,000 crore via auction of the Floating Rate Bond maturing in 2034 at a cut-off yield of 4.8827 per cent and cut-off price of ₹99.25.

Further, the Centre mopped up ₹7,000 crore via auction of a new G-Sec maturing in 2061 at a cut-off yield of 6.9500.

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RBI calls for public comments on digital lending

Banking & Finance

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The Reserve Bank of India on Thursday released the report of the Working Group on Digital Lending, which has called for a legislation against illegal digital lending activities as well as a verification process for these lenders and a self-regulatory organisation.

“The thrust of the report has been on enhancing customer protection and making the digital lending ecosystem safe and sound while encouraging innovation,” the RBI said. It has sought public comments by December 31, 2021.

“As per the findings of the Working Group, there were approximately 1,100 lending apps available for Indian Android users across over 80 application stores (from January 1 to February 28),” the report said, adding that there were over 600 illegal loan apps.

Complaints against DLAs – Sachet, a portal established by the Reserve Bank received 2,562 complaints from January 2020 to March 2021, it further noted.

The much-awaited report has suggested three-pronged measures on a near to medium term basis, which can be implemented in a period of upt o one year to over one year.

In the near-term, it has suggested subjecting the digital lending apps to a verification process by a nodal agency to be setup in consultation with stakeholders. The nodal authority will also maintain a public register of the verified apps on its website.

It has also called for setting up of a self regulatory facility covering the participants in the digital lending ecosystem. The SRO would be expected to maintain a ‘negative list’ of lending service providers.

Code of conduct

A standardised code of conduct for recovery would be framed by the proposed SRO in consultation with RBI. Use of unsolicited commercial communications for digital loans would also be governed by the Code of Conduct.

The report has also recommended that balance sheet lending through DLAs should be restricted to entities regulated and authorised by RBI or entities registered under any other law for specifically undertaking lending business.

Further loan servicing, repayments should be executed directly in a bank account of the balancesheet lender and disbursements should be made into the bank account of the borrower.

In the medium term, “Central Government may consider bringing in a legislation to prevent illegal lending activities by introducing the ‘Banning of Unregulated Lending Activities Act’,” the working group report said.

Data collection

The RBI should develop a separate framework styled as Agency Financial Service Regulation (AFSR) for all customer-facing or fully outsourced activities of regulated entities including lending service providers, it has suggested. The working group has said data collection should be with prior and explicit consent of borrowers with verifiable audit trails. All data should be stored in servers located in India and algorithmic features should be used in digital lending to be documented to ensure necessary transparency.

The Working Group chaired by Jayant Kumar Dash, Executive Director, RBI was set up on January 13, 2021 in the backdrop of business conduct and customer protection concerns arising out of the spurt in digital lending activities.

 

“We welcome the report of the working group, which aims to safeguard consumers from unregulated digital lenders. It’s important to differentiate between lenders who already follow the law of the land and those who exploit consumers with unfair practices. DLAI has already set up a code of conduct for all members. DLAI will submit its suggestions on the report,” said Anuj Kacker, Vice President, Digital Lender’s Association of India and Co-founder, FREO.

 

 

 

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This Stock Will Turn Ex-Bonus Soon: Check If You Wish To Own It

Personal Finance

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What is ex-bonus date?

To be eligible for bonus shares, record date and ex-bonus date matter. Record date is the cut-off date announced by the company and it is precisely on this day that the company decides the eligibility of shareholders for the bonus shares. To be eligible for bonus shares, shareholders should be owing the stock before this date. Ex-date on the other hand is a day preceding the record date set by the company and to qualify for receiving bonus shares, shares of the company must be bought before the ex-date.

So, as you might have figured out now why ex-bonus date holds relevance, we will straight away move to the stock:

Indo US Bio-Tech

Indo US Bio-Tech

Headquartered in Ahmedabad, Gujarat, Indo US Bio-Tech is a specialized agriculture seed company. The company is into the manufacturing of vegetables, pulses, oils, and spices, as well as cereals.

In an exchange filing on November 3, 2021, the company informed that the proposal of Issue of 12,13,598 Equity Shares (‘the Bonus Shares’) of the Company of Re.10/- each (Rupee Ten only) at par, to be allotted, distributed and credited as fully paid-up to and amongst the members in the proportion of 1 new equity shares for every 5 existing fully paid equity shares has been approved by the company’s shareholders.

For the purpose of determining the eligibility of shareholders for the bonus shares, the record rate is set at November 30, 2021, while the stock shall turn ex-bonus on November 29, 2021.

Decent financials and key technical parameters make the stock attractive

Decent financials and key technical parameters make the stock attractive

Talking about its financials, over the past 5 years, the company’s revenue surged 63.3 percent from Rs 24.6 crore in FY2017 to Rs. 40.13 crore in Fy21. PAT climbed 12.75 times during the similar period to Rs. 5.1 crore in the FY 2021 as against Rs. 0.4 crore in FY17. On a YTD basis, the stock has generated 131%, while 1 year return is 98 percent. Promoters have been increasing their stake in the company over the last 2 years.

The scrip looks promising considering decent financials and key technical parameters such as RSI, momentum, and 10-day/20-day/30-day/50-day/100-day/200-day EMA, barring MACD.

Disclaimer:

Disclaimer:

Stock market investments are risky, here we have just summarised a stock that will be issuing bonus shares, readers should not construe it to be an investment advice in the scrip.

GoodReturns.in



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Reserve Bank of India – Press Releases

Press Releases

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The following State Governments have offered to sell securities by way of auction, for an aggregate amount of ₹8,725 Cr. (Face Value).

Sr. No. State/UT Amount to be raised
(₹ Cr)		 Additional Borrowing (Greenshoe) Option (₹ Cr) Tenure (Yrs) Type of Auction
1 Assam 600 – 10 Yield
2 Bihar 2000 – 9 Yield
3 Himachal Pradesh 500 – 9 Yield
500 – 10 Yield
500 – 11 Yield
500 – 12 Yield
4 Karnataka 1000 – 2 Yield
1000 – 10 Yield
5 Puducherry 125 – 7 Yield
6 Tamil Nadu 1000 – Re-issue of 6.99% Tamil Nadu SDL 2041 Issued on May 25, 2021 Price
7 West Bengal 1000 – 10 Yield
  TOTAL 8725      

The auction will be conducted on the Reserve Bank of India Core Banking Solution (E-Kuber) system on November 23, 2021 (Tuesday). The Government Stock up to 10% of the notified amount of the sale of each stock will be allotted to eligible individuals and institutions subject to a maximum limit of 1% of its notified amount for a single bid per stock as per the Scheme for Non-competitive Bidding Facility.

Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on November 23, 2021 (Tuesday). The non-competitive bids should be submitted between 10.30 A.M. and 11.00 A.M. and the competitive bids should be submitted between 10.30 A.M. and 11.30 A.M.

In case of technical difficulties, Core Banking Operations Team (email; Phone no: 022-27595666, 022-27595415, 022-27523516) may be contacted.

For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).

Only in the event of system failure, physical bids would be accepted. Such physical bids should be submitted to the Public Debt Office (email; Phone no: 022-22632527, 022-22701299) in the prescribed form obtainable from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx) before the auction timing ends.

The yield percent per annum expected by the bidder should be expressed up to two decimal points. An investor can submit more than one competitive bid at same/different rates of yield or prices in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. However, the aggregate amount of bids submitted by a bidder should not exceed the notified amount for each State.

The Reserve Bank of India will determine the maximum yield /minimum price at which bids will be accepted. Securities will be issued for a minimum nominal amount of ₹10,000.00 and multiples of ₹10,000.00 thereafter.

The results of the auction will be announced on November 23, 2021 (Tuesday) and payment by successful bidders will be made during banking hours on November 24, 2021 (Wednesday) at Mumbai and at respective Regional Offices of RBI.

The State Government Stocks will bear interest at the rates determined by RBI at the auctions. For the new securities, interest will be paid half yearly on May 24 and November 24 of each year till maturity. The Stocks will be governed by the provisions of the Government Securities Act, 2006 and Government Securities Regulations, 2007.

The investment in State Government Stocks will be reckoned as an eligible investment in Government Securities by banks for the purpose of Statutory Liquidity Ratio (SLR) under Section 24 of the Banking Regulation Act, 1949. The stocks will qualify for the ready forward facility.

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1225

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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India had constituted a Working Group (WG) on digital lending including lending through online platforms and mobile apps on January 13, 2021, with Shri Jayant Kumar Dash, Executive Director, RBI as the Chairman. The WG was set up in the backdrop of business conduct and customer protection concerns arising out of the spurt in digital lending activities. The WG has since submitted its report. The thrust of the report has been on enhancing customer protection and making the digital lending ecosystem safe and sound while encouraging innovation. The following are a gist of the key recommendations:

  1. Subjecting the Digital Lending Apps to a verification process by a nodal agency to be setup in consultation with stakeholders.

  2. Setting up of a Self-Regulatory Organisation (SRO) covering the participants in the digital lending ecosystem.

  3. A separate legislation to prevent illegal digital lending activities.

  4. Development of certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.

  5. Disbursement of loans directly into the bank accounts of borrowers; disbursement and servicing of loans only through bank accounts of the digital lenders.

  6. Data collection with prior and explicit consent of borrowers with verifiable audit trails.

  7. All data to be stored in servers located in India.

  8. Algorithmic features used in digital lending to be documented to ensure necessary transparency.

  9. Each digital lender to provide a key fact statement in a standardised format including the Annual Percentage Rate.

  10. Use of unsolicited commercial communications for digital loans to be governed by a Code of Conduct to be put in place by the proposed SRO.

  11. Maintenance of a ‘negative list’ of Lending Service Providers by the proposed SRO.

  12. Standardised code of conduct for recovery to be framed by the proposed SRO in consultation with RBI.

The Report is being placed on the RBI website today for comments of stakeholders and members of the public. Comments may be submitted by December 31, 2021 through email. The comments will be examined before a final view is taken on the recommendations and suggestions made by the WG.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/1224

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Network International, NPCI International sign MoU

Banking & Finance

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NPCI International Payments has signed a Memorandum of Understanding with Network International to discuss their collaboration on acceptance of the Unified Payments Interface (UPI) in the United Arab Emirates.

“With travel restrictions between India and the UAE recently relaxed, the proposed collaboration will benefit Indian travellers visiting the UAE by allowing them to make payments through UPI-based mobile applications leveraging Network’s trusted payment infrastructure and network strength as the UAE’s largest merchant acquirer,” they said in a statement on Thursday.

Rollout slated for 2022

The proposed rollout of UPI mobile payment solutions on Network International’s merchant network in the UAE is expected to start in the first quarter of 2022 across the company’s key retail merchant partner outlets, including those in sectors such as jewellery, supermarkets, and duty free retailers, the statement added.

Also see: PM Modi exhorts banks to support startups, invest in ideas

Network International is a leading enabler of digital commerce across the Middle East and Africa while NPCI International Payments Ltd (NIPL) is the international arm of the National Payments Corporation of India.

“We are confident that our proven product capabilities, combined with the vast merchant network of Network International, will enable UPI QR-based payment acceptance and scale-up in the UAE. We look forward to working with Network International to empower Indian travellers and the large Indian community in the UAE,” said Ritesh Shukla, CEO, NIPL.

RuPay acceptance

Earlier this year, Network International also announced its acceptance of India’s payment scheme – RuPay – to enhance the range of payment schemes acceptance and business for UAE merchants.

Nandan Mer, Group Chief Executive Officer, Network International, said, “The UAE is among the most favoured destinations for Indian visitors and the availability of a trusted and familiar mobile payment option such as UPI will enable visitors to pay for their purchases in the UAE safely and with ease.”

Also see: India received $87 billion in remittances in 2021; US is the top source

India has been working on popularising the use of UPI in other countries as well.

In September this year, the Reserve Bank of India and the Monetary Authority of Singapore had announced a project to link their respective fast payment systems — UPI and PayNow.

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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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Pre-bid Meeting – Supply, Installation, Testing & Commissioning of 12V, 120Ah & 200Ah SMF batteries having FR/FL casing for 2 sets of 2×120 KVA UPS system at Central Office Building, RBI Mumbai

Tenders

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A pre-bid meet for the captioned tender was conducted at 11:30 hrs on November 10, 2021 at Premises Department as per the schedule of tender in order to clarify the doubts in respect of terms and conditions of the tender.

The following were present at the meeting along with the undersigned:

1. Shri. Ashutosh Singh (AGM)

2.  Shri. Sunil Sahare (AGM)

3.  Rashmi Gehani (Manager, COBM)

4.  Santosh Katarnavare (AM)

5.  Subhash Pawar (AM)

6.  Arundhati Shinde (Asst)

7.  Bhavna Yadav, M/s Weartech Engineers Pvt. Ltd.

8. Chintan Patel, M/s Activolt Tech Solutions Pvt. Ltd.

9.  Rahul Kulkarni, M/s Activolt Tech Solutions Pvt. Ltd.

Shri Ashutosh Singh, AGM explained in detail the scope of work to all the participants. The participants were informed that the eligibility criteria is minimum 5 years of experience in this field. They were also explained in detail that there would be no relaxation in the EMD amount to be paid by the vendors. The requirement that the batteries supplied should have FR/FL casing was also discussed.

Few queries regarding the mode of payment of EMD, submission time limit were answered satisfactorily by the team COBM cell.

The bidders were also advised to contact us in case of any doubts regarding the filing of quotation.

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