The Reserve Bank of India has given the green signal to the country’s payment networks — Visa, Mastercard and NPCI — to allow tap-and-go functionality on card payments for all purchases at retail stores and shopping centres.
Outstanding bank loans to NBFCs amounted to Rs 8.19 lakh crore as of end March'20, the latest dat released in RBI's monthly bulletin shows, up 28 per cent over March'19 levels. But in absolute terms it is 32 per cent of the total loans extended by banks during the month.
While the three judge bench of justices NV Ramana, Sanjay Kaul and BR Gavai, disposed the matter because the petitioners were not borrowers, it also noted that that the counsel for the petitioner had submitted that the RBI guidelines on moratorium had not been implemented.
In India, banks were under pressure even before the outbreak, due to a shadow-banking crisis and a prolonged slump in economic growth. The country also has the world’s worst bad-debt ratio at traditional lenders. That loomed large earlier this year, with the biggest-ever bank failure in the country when authorities seized Yes Bank Ltd.
Top fintech companies are, therefore, rushing to tap into this new consumer trend, with several of them offering digital solutions to small merchants. These range from instant loans to digital billing to even geotagging, as companies believe the merchant digitisation business will boom when the lockdown eases.
Banks are currently offering 10% of outstanding loans to MSMEs as additional working capital at a concessional rate to help them tide over the temporary liquidity crunch.
The move to balance ownership and control comes as some private sector banks have sought a relaxation in licensing norms, citing the regulator’s recent decision on Kotak Mahindra Bank. The RBI didn’t respond to queries.
The RBI reduced benchmark repo rate by 75 basis points to 4.40 per cent in the bi-monthly Monetary Policy Committee meeting on March 27.
In an order, the central bank said the directive issued by it on October 26, 2018 "shall continue to apply to the bank for a further period of six months from April 30, 2020 to October 31, 2020". It also added that extension and/or modification "should not per-se be construed" to imply that Reserve Bank of India is satisfied of substantive improvement in the financial position of the bank.
Commenting on the appointment Punit Sood, head of RBS India, said, “The business environment around us has substantially changed due to the coronavirus pandemic. The role of HR will be redefined in the way it addresses the human capital within the organisation and leverages it to the fullest to build value, especially during these dynamic circumstances.”
Disaster planning for business continuity and survival has emerged as the top priority for organisations as recovery from Covid-19 is expected to take longer than what was earlier envisaged.
The move will make Axis Bank, the third-largest private sector bank, a significant stakeholder in a life insurance venture and will allow it to participate in its long term capital appreciation.
The RBI has let financiers grant a moratorium to accounts in default but standard (non-payment in 30 to 90 days bucket). In such cases, the lender will have to make provision of at least 10% spread over March and June quarters, with not less than 5% in each quarter.
In a desperate cry to the finance minister, a group of about 100 small microfinance firms with less than Rs 200 crore loan portfolio each has sought conversion of their outstanding bank loans into equities as their fund dried up. Every microfinance lender including the bigger ones is facing the stress since business stalled during lockdown while the smaller ones are always more vulnerable.
The company's board took the decision based on the recommendations of Nomination & Remuneration Committee, and is further subject to the approval of the shareholders.
In addition to the Rs 1,600 crore liquidity position, the company said it has undrawn sanctions of Rs 900 crore as on March 31, 2020. The Gurugram-headquartered micro lender also said that it will offer moratorium to all the existing borrowers across India.
Mukesh Ambani-owned Reliance Industries, Paytm, capital market exchanges NSE and BSE are among top firms interested in securing licences to own and operate an entity with powers at a par with National Payments Corporation of India (NPCI), multiple sources aware of the development told.
India’s fourth-largest private sector bank will become a strategic partner of the life insurance firm, in which Max Financial will eventually hold 70% after a two-stage transaction.
India's largest and the only state-owned insurer LIC, however, posted a decline in premium income at Rs 8.32 lakh crore during 2019-20, the data from the Insurance Regulatory and Development Authority of India (Irdai) showed. LIC's premium collection stood at Rs 10.74 lakh crore during 2018-19. Its market share stood at 82.76 per cent as of March 31, 2020.
“Cloud computing is faster, better and less expensive"
Sumi Khatun, a 'business correspondent' of State Bank of India moves around several villages in West Bengal's Birbhum district to help people make modest withdrawal or deposit money during the COVID-19 induced lockdown.
Ratings agency ICRA has published a list of 328 companies that have availed or sought a payment relief from lenders or investors and where approval was received either after the due date or is pending to be received. The companies that have sought to defer repayment include triple-A-rated companies like ONGC’s subsidiaries MRPL and ONGC Petro Additions.
The lenders — some of whom are custodians to MFs — have been in touch with fund officials to estimate the expected mismatch between inflows and outflows on Monday.
Auditors and company executives told that higher provisioning may be necessary as the pandemic-induced sharp dip would have increased difficulties for these businesses already hit by the ongoing slowdown. In many cases, auditors have asked companies to provide up to 50%.
Exporters have made a pitch to the government to also allow them to rollover the forward contracts without any penalty or extra charge, the people said. The banks are open to this as well. Banks are considering giving short-term unsecured loans to exporters who had sold their anticipated dollar proceeds in the forward market, but haven’t received the revenue yet as their consignments are stuck.
Lenders to IL&FS Tamil Nadu Power Company (ITPCL), which is undergoing insolvency proceedings, are likely to meet this week to finalise a restructuring plan, a source said.
Bank of Baroda said to ensure maintenance of hygiene and safety, it is also providing additional support in tranches to keep the BC points sanitised and clean through sanitisers, disinfectants, use of masks and other measures.
The lockdown has set off a banking revolution. Irrespective of which bank you have an account with - in a city or a village without a branch - you can call the local post office and ask it to deliver cash.
Financiers across the spectrum are struggling to trace low-ticket borrowers, about a fifth of their customers, through virtual means. Unless they can get hold of them, repayments stand automatically deferred.
Since the outbreak of the crisis, which has seen the country being put under a 40-day lockdown, watchers have been warning about a heavy toll on the economy, with some analysts also expecting the GDP to contract in 2020-21.
Outstanding loans fell 315.62 billion rupees ($4.14 billion) to 103.39 trillion rupees in the fortnight. Non-food credit fell 338.72 billion rupees to 102.85 trillion rupees, while food credit climbed 23.10 billion rupees to 540.73 billion rupees.
Small non-banking finance companies continued to be shunned by banks, which availed only half of the Rs 25,000-crore refinance offered by the RBI for lending to NBFCs.
In the wake of the Covid-19 pandemic, the RBI provided a special facility of Rs 15,000 crore to Sidbi to provide liquidity support to the MSME sector through banks, NBFCs and MFIs. Tightening of financial conditions in the wake of the pandemic has made it difficult for these institutions to raise resources from the market.
DMI Finance has raised $123 million from South Korea-based NXC Corporation, valuing the Delhi-based non-bank finance company founded by two former Wall Street bankers at over $1 billion, according to a source. Total equity funding raised by DMI since inception is $800 milion.
"Given the lack of risk appetite in banks, a structure with partial credit guarantee by the government maybe the only viable option to ease liquidity challenges of NBFCs," said Vydianathan Ramaswamy, Director, Ratings, Brickwork Ratings.
The finance ministry, in a letter dated April 17, asked banks to furnish detailed data on new loans, including particulars on what sectors were getting them.The push comes after a recent 75 basis point rate cut by the RBI, and at a time when the banking system is flush with liquidity pumped in by the RBI to spur new lending and revive flagging growth.
All necessary precautions in terms of maintaining social distancing and sanitisation are being taken to ensure health safety of staff and customers at these facilities.
Unused approved credit lines, which were not disbursed in the last financial year by the banks due the lockdown, are expected to be extended to MFIs, P Satish, executive director of Sa-Dhan, a self-regulatory organisation of the industry, said.
The company had the highest credit rating during the previous fiscal year ended March 2020 with AAA/ Stable rating by Crisil and ICRA, it said in a regulatory filing on Wednesday. The credit card company, promoted by the country's largest lender SBI, said the borrowings at the end of the previous fiscal were provisional and subject to audit.
Until now, practices relating to critical areas such as classification and recognition of non-performing loans (NPLs), accounting for securitisation transactions, investment classification and valuation, were primarily driven by RBI regulations.
In a letter, the shipping ministry has asked the ports to provide relief in the form of exemptions/ remission of charges to the shipping liners, exporters, importers, logistics providers and other stakeholders hit by the coronavirus outbreak. The relief measures are aimed at boosting EXIM cargo by supporting and rebuilding the logistics chain.
The bad loan mess is getting in the way of monetary policy too, as banks hold back from passing on the bulk of the 210 basis points of interest rate cuts that the central bank undertook from February last year.
The IBA plan is to give the companies more time to pay back loans by extending the moratorium and in some cases extending the tenure of term loans. For working capital loans that are short term, the interest payment period could be extended to three years.
"We confirm that the Bank, in the normal course of its business, has exposure to the borrower group in question, is taking due steps to protect its interests, and will appropriately reflect the same in its financial statements, as it would do in respect of all its banking exposures," ICICI said in a stock exchange filing.
The loan moratorium extended by banking regulators in countries like India and China to deal with the liquidity crunch amid COVID-19 crisis will provide temporary relief to borrowers, but will constrain banks from taking proactive recovery actions.
It said Kamakodi's reappointment is for a further period of three years with effect from May 1, 2020.
Unified Payments Interface (UPI) is an instant payment system developed by the National Payments Corporation of India. UPI is built over the IMPS infrastructure and allows one to instantly transfer money to any bank account. According to the data, the volume of UPI transactions in March slipped to 124.68 crore from 132.57 crore in February.
Some banks are reducing credit card and personal loan limits, tightening loans to small businesses. RBI data shows credit card outstanding amount reached an all-time high of Rs 1.1 lakh crore at end of February, up nearly 26% over last year.
From tightening collection schedules to lowering credit limits, narrowing customer base to only include “super-prime” borrowers and hot-listing companies that may retrench employees, small online lenders are taking all possible precautions to stay afloat in the coming months.
They are seeking the unused sanctioned limits even though they have not fully disbursed the funds lying with them. This is because the halt in repayment collection has dried up their cash flows, even as they haven’t received any moratorium from most banks.