Bandhan Bank Q4 profit jumps manifold, asset quality improves

Private sector lender Bandhan Bank on Friday reported a whopping 18-fold jump in its net profit to Rs 1,902.34 crore for the fourth quarter of the previous fiscal, compared with Rs 103.03 crore in the year-ago period, because of the rise in both interest and non-interest income and a fall in provisions.

The asset quality improved as non-performing assets (NPAs) fell 9.75% year-on-year to Rs 5,757.76 crore in absolute terms, against Rs 6,380 crore in the same quarter a year ago. On a quarter-on-quarter basis, NPAs declined 39.02% from Rs 9,441.57 crore, according to a stock exchange filing. On a year-on-year basis, the gross NPA ratio decreased 35 basis points to 6.46% from 6.81%.

Provisions (other than tax) for the quarter were trimmed massively to Rs 4.7 crore, as against Rs 1,507.70 crore in March 2021 quarter, the bank said.

Commenting on the Q4 performance, MD and CEO Chandra Shekhar Ghosh said recovery from NPA accounts improved significantly, NIM increased, operating profit soared and credit cost came down to around zero. “Credit cost became zero as no fresh slippages happened and collections improved,” Ghosh told FE, adding there was no NPA provision write-back during the quarter.

Other than NPA accounts, collection efficiency has returned to the pre-Covid level. Around 90% of our NPA customers are paying,” he said. At the end of the March quarter, for the EEB segment (erstwhile microbanking segment), collection efficiency, excluding NPA, stood at 99%, compared with 97% at the end of the December quarter.

The lender’s total advances (on book + off book + TLTRO + PTC) grew 14.1% to Rs 99,338.1 crore as on March 31, 2022, against Rs 87,042.9 crore as on March 31, 2021. Total deposits increased 23.5% to Rs 96,330.6 crore, compared with Rs 77,972.2 crore as on March 31, 2021.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/hDgFQli

Read more »

SBI’s Q4 profit rises 41% as provisions fall, core income grows

State Bank of India (SBI) on Friday reported a 41% year-on-year (y-o-y) rise in its fourth quarter net profit to Rs 9,113.53 crore, as improving asset quality helped the lender cut down on provisions. Growth in core income also supported the bank’s quarterly performance.

Net interest income (NII), or the difference between interest earned and expended, rose 15% y-o-y to Rs 31,198 crore. The net interest margin (NIM) improved marginally to 3.12% from 3.11% in Q3FY22.

The bank’s gross advances grew 11% y-o-y to Rs 28.19 trillion as on March 31, 2022. Retail loans grew 15% y-o-y, while the domestic corporate loan book grew 6.35%. SBI chairman Dinesh Khara said that the bank has started seeing traction in the corporate loan segment from the third quarter onwards. “Going forward, we are seeing much better capacity utilisation in terms of the working capital. The working capital utilisation has improved almost to 56%, which was 50% earlier,” Khara said.

According to Khara, the turn in the interest rate cycle is unlikely to affect demand for credit. “So long as there is demand in the economy, there is bound to be a situation where investments would happen,” he said, adding, “The way things are evolving this year, I think it is going to be a scenario where there will be demand for all infrastructure requirements.”

SBI still has an unutilised portion of around Rs 4.6 trillion as working capital and term loans. In the term loan segment, the unutilised portion stands at 19-20%. Taken together with the unutilised working capital limits and term loans, loan proposals in the pipeline are to the tune of Rs 4.6 trillion, Khara said.

Deposits grew slower than loans at 10% y-o-y to Rs 40.52 trillion as on March 31, with the current account savings account (CASA) ratio falling 85 bps y-o-y to 45.28%.

Provisions fell 34.5% y-o-y to Rs 7,237 crore in the March quarter, while slippages rose to Rs 2,845 crore from Rs 2,334 crore in the December quarter. SBI’s gross non-performing asset (NPA) ratio fell 53 bps sequentially to 3.97% and the net NPA ratio declined 32 bps to 1.02%.

The bank reported an NPA ratio of13.33% in its agri loan book and 6.55% in its small and medium enterprises (SME) book. The management ascribed the high NPA ratio in the agri book to macroeconomic factors, specifically rural distress.

SBI’s shares ended 3.76% lower than their previous close on the BSE at Rs 445.05 on Friday.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/I5LTWeA

Read more »

Union Bank net rises 8% on strong NII growth

Public-sector lender Union Bank of India on Friday reported an 8.3% year-on-year rise in its net profit for the March quarter to Rs 1,440 crore on the back of a strong growth in net interest income (NII).

The lender’s NII – the difference between interest earned and interest expended – stood at Rs 6,769 crore, up 25% YoY. The net interest margin (NIM) fell 25 basis points (bps) sequentially to 2.75%. The operating profit rose 11% YoY to Rs 5,520 crore.

Gross advances grew 9.6% to Rs 7.16 trillion at the end of March 2022, with gold loans, which grew over 18%, being a major driver. The lender’s current and savings account (CASA) ratio rose to 36.54% in the quarter under review from 36.33% in the same quarter last year. Its total deposits rose 11.75% to Rs 10.32 trillion.

Provisions fell 2% YoY to Rs 3,618 crore. The bank showed an improvement in terms of asset quality. Gross non-performing assets (NPAs) as a percentage of total advances fell 51 bps on a sequential basis to 11.11% and the net NPA ratio declined 41 bps to 3.68%.

The value of slippages during the March quarter stood at Rs 5,672 crore, higher than Rs 3,411 crore in the quarter ended December. Recoveries improved to Rs 1,896 crore in Q4 from Rs 1,343 crore in Q3.

Shares of Union Bank on Friday closed at Rs 36.2 on the BSE, up 7.42% from the previous close.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/y0qGhk9

Read more »

Bandhan Bank Q4 profit jumps manifold, asset quality improves

Private sector lender Bandhan Bank on Friday reported a whopping 18-fold jump in its net profit to Rs 1,902.34 crore for the fourth quarter of the previous fiscal, compared with Rs 103.03 crore in the year-ago period, because of the rise in both interest and non-interest income and a fall in provisions.

The asset quality improved as non-performing assets (NPAs) fell 9.75% year-on-year to Rs 5,757.76 crore in absolute terms, against Rs 6,380 crore in the same quarter a year ago. On a quarter-on-quarter basis, NPAs declined 39.02% from Rs 9,441.57 crore, according to a stock exchange filing. On a year-on-year basis, the gross NPA ratio decreased 35 basis points to 6.46% from 6.81%.

Provisions (other than tax) for the quarter were trimmed massively to Rs 4.7 crore, as against Rs 1,507.70 crore in March 2021 quarter, the bank said.

Commenting on the Q4 performance, MD and CEO Chandra Shekhar Ghosh said recovery from NPA accounts improved significantly, NIM increased, operating profit soared and credit cost came down to around zero. “Credit cost became zero as no fresh slippages happened and collections improved,” Ghosh told FE, adding there was no NPA provision write-back during the quarter.

Other than NPA accounts, collection efficiency has returned to the pre-Covid level. Around 90% of our NPA customers are paying,” he said. At the end of the March quarter, for the EEB segment (erstwhile microbanking segment), collection efficiency, excluding NPA, stood at 99%, compared with 97% at the end of the December quarter.

The lender’s total advances (on book + off book + TLTRO + PTC) grew 14.1% to Rs 99,338.1 crore as on March 31, 2022, against Rs 87,042.9 crore as on March 31, 2021. Total deposits increased 23.5% to Rs 96,330.6 crore, compared with Rs 77,972.2 crore as on March 31, 2021.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/hDgFQli

Read more »

SBI’s Q4 profit rises 41% as provisions fall, core income grows

State Bank of India (SBI) on Friday reported a 41% year-on-year (y-o-y) rise in its fourth quarter net profit to Rs 9,113.53 crore, as improving asset quality helped the lender cut down on provisions. Growth in core income also supported the bank’s quarterly performance.

Net interest income (NII), or the difference between interest earned and expended, rose 15% y-o-y to Rs 31,198 crore. The net interest margin (NIM) improved marginally to 3.12% from 3.11% in Q3FY22.

The bank’s gross advances grew 11% y-o-y to Rs 28.19 trillion as on March 31, 2022. Retail loans grew 15% y-o-y, while the domestic corporate loan book grew 6.35%. SBI chairman Dinesh Khara said that the bank has started seeing traction in the corporate loan segment from the third quarter onwards. “Going forward, we are seeing much better capacity utilisation in terms of the working capital. The working capital utilisation has improved almost to 56%, which was 50% earlier,” Khara said.

According to Khara, the turn in the interest rate cycle is unlikely to affect demand for credit. “So long as there is demand in the economy, there is bound to be a situation where investments would happen,” he said, adding, “The way things are evolving this year, I think it is going to be a scenario where there will be demand for all infrastructure requirements.”

SBI still has an unutilised portion of around Rs 4.6 trillion as working capital and term loans. In the term loan segment, the unutilised portion stands at 19-20%. Taken together with the unutilised working capital limits and term loans, loan proposals in the pipeline are to the tune of Rs 4.6 trillion, Khara said.

Deposits grew slower than loans at 10% y-o-y to Rs 40.52 trillion as on March 31, with the current account savings account (CASA) ratio falling 85 bps y-o-y to 45.28%.

Provisions fell 34.5% y-o-y to Rs 7,237 crore in the March quarter, while slippages rose to Rs 2,845 crore from Rs 2,334 crore in the December quarter. SBI’s gross non-performing asset (NPA) ratio fell 53 bps sequentially to 3.97% and the net NPA ratio declined 32 bps to 1.02%.

The bank reported an NPA ratio of13.33% in its agri loan book and 6.55% in its small and medium enterprises (SME) book. The management ascribed the high NPA ratio in the agri book to macroeconomic factors, specifically rural distress.

SBI’s shares ended 3.76% lower than their previous close on the BSE at Rs 445.05 on Friday.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/I5LTWeA

Read more »

Indian Banks' Association upbeat on July rollout of Digital Banking Units

All public sector banks, 10 private sector banks and one small finance bank have already initiated the work to have these units operational by July 2022.

from Banking/Finance-Industry-Economic Times https://ift.tt/tfHCB9z

Read more »

RBL Bank close to tying up $100-million tier-II funding

RBL Bank on Thursday said it is close to tying up tier-II funding worth $100 million in the next few days. The fund-raise will improve the bank’s capital ratio by approximately 1%.

The lender’s capital to risk-weighted assets ratio (CRAR) stood at 16.8% as on March 31, 2022, down from 17.5% a year ago. The common equity tier-1 (CET-1) ratio stood at 16.2% at the end of FY22. The average liquidity coverage ratio for Q4FY22 was 138%.

With this new tier-2, we’ll be close to 18%, and do not envisage any need for further capital in this financial year,” said Rajeev Ahuja, interim MD & CEO. The fund-raising will be in the form of a private placement with an international fund, the management said.

The bank’s advances growth was muted at 2% year-on-year (y-o-y) and the loan book stood at Rs 60,022 crore, with the retail book shrinking 9%.

On advances, our retail engines are now coming back to normalcy after the second wave of Covid. We expect growth in retail to be in the mid-to-high twenties this fiscal,” Ahuja said. The growth will come not just from cards and microfinance, but also from housing, rural and vehicle finance, beginning with used-car financing, he added.

RBL Bank is expecting long-term balance sheet growth to range between the high teens and 20%, which will also help build better-quality assets.

After former chief executive Vishwavir Ahuja’s sudden exit in December 2021 and the appointment of a Reserve Bank of India nominee director on its board, RBL Bank had suffered a flight of deposits. Most of those problems have stabilised, the bank said. “We started stabilising our deposits by end-January. Since then, we have not only added to the aggregate deposits, but also kept improving the retail composition,” Ahuja said.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/A6G3BIy

Read more »

India seeks to restore block on $725 million of Xiaomi's bank assets

The enforcement directorate asked a court on Thursday to re-instate a freeze on $725 million in the Indian bank accounts of Xiaomi Corp as it investigates fund transfers by the Chinese smartphone giant.

from Business News: Latest News on Business, Stock Markets, Financial News, India Business & World Business News https://ift.tt/iVWGMhm

Read more »

Exim Bank to set up factoring business

Will undertake export factoring activity for MSMEs by offering transaction-specific partial or full guarantees to cover payment risks on banks in least developed/developing countries

from The HinduBusinessLine - Money & Banking https://ift.tt/wLzKo2b

Read more »

PNB to hike repo-linked lending rate from next month

Repo rate is the rate at which banks borrow short term money from RBI. With effect from May 7, the city-headquartered lender had raised interest rates on term deposits in select buckets up to 0.60 per cent. A number of banks have already raise the repo-linked lending rates for their customers after the RBI rate hike. Some have also increased their deposit rates.

from Banking/Finance-Industry-Economic Times https://ift.tt/jkhcXTR

Read more »

Insolvency plea: NCLT grants FRL time till June 6 to file reply

The National Company Law Tribunal (NCLT) on Thursday granted additional time till June 6 to Future Retail Ltd (FRL) to file its reply on the insolvency plea filed by Bank of India.

from Business News: Latest News on Business, Stock Markets, Financial News, India Business & World Business News https://ift.tt/sL9VAz6

Read more »

AssetPlus raises $3.6 million in a funding led by Incred, Rainmatter

Aims to utilise the funding to expand its business, add more financial products

from The HinduBusinessLine - Money & Banking https://ift.tt/V2BURtE

Read more »

IPO plan okayed, TVS Supply Chain Solutions may go in for acquisitions

According to media reports, the company will use Rs 1,300 cr (out of the Rs 2,000 cr) to repay loans and invest in its overseas operations. The rest of the funds will likely be used for the purpose of strategic acquisitions.

from Banking/Finance-Industry-Economic Times https://ift.tt/4ev9urb

Read more »

Coinbase blames RBI for UPI cutoff

Brian Armstrong, co-founder and CEO of US-based Coinbase, which operates a cryptocurrency exchange, said that pressure from the Reserve Bank of India (RBI) forced his company to discontinue integration with the Unified Payments Interface (UPI).

from Business News: Latest News on Business, Stock Markets, Financial News, India Business & World Business News https://ift.tt/v4tFfia

Read more »

Indian Bank posts Rs 984-crore net profit in Q4

Indian Bank on Wednesday reported a net profit of Rs 984 crore for the fourth quarter of the previous fiscal, compared with Rs 1,709 crore in the year-ago period. The bank said there was a change in deferred tax assets (DTA ) calculations in FY22 from the annual to the quarterly basis. In Q4FY21, the net profit stood at Rs 1,709 crore factoring DTA of Rs 913 crore as against DTA of Rs 161 core in Q4FY22. Total income of the bank stood at Rs 11,405 crore, compared with Rs 10,485 crore, an increase of 8.8%.

Shanti Lal Jain, MD & CEO, told reporters that the asset quality improved in the fourth quarter. During FY22, the lender had recovered around Rs 7,100 crore and it expects a similar recovery in FY23 as well.

The bank’s gross NPA (GNPA) came down to 8.47% as on March 2022, against 9.13% in December 2021, a fall of 66 bps on a Q-o-Q basis. On a yearly basis, GNPA reduced by 138 bps, from 9.85% as of March 2021. Similarly, the net NPA came down to 2.27% in March 2022, compared with 2.72% in December 2021. On a yearly basis, net NPA reduced by 110 bps.

The provision coverage ratio improved to 87.38% as on March 2022 as against 85.49%, a  reduction of 189 bps on a Q-o-Q basis. On a yearly basis, PCR improved by 526 bps from 82.12% as of March 2021. “We had a fresh slippage of around Rs 3,300 crore in Q4, out of which one big account of Rs 800 crore belongs to a retail group,” he said. Net interest income stood at Rs 4, 255 crore in Q4, against Rs 3, 334 crore, recording a growth of 28%.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/SLceY8z

Read more »

India-Russia payments have stabilised, greater due diligence causing delays: Ashwini Kumar Tewari, SBI managing director for international banking, technology and subsidiaries

Transactions between India and non-sanctioned Russian entities have now stabilised and are being settled in dollars or euros through a few Western correspondent banks, State Bank of India (SBI) managing director for international banking, technology and subsidiaries Ashwini Kumar Tewari tells Shritama Bose. SBI’s international book has of late been growing faster than its total loan book and the pandemic has given the lender a chance to spread its geographical risk, he said. Edited excerpts:

How is the trade and payments situation now between India, Russia and Ukraine?

Trade between India and those two countries is anyway quite small. In terms of imports, apart from defence, sunflower oil is the commodity that has been affected badly and we are seeing the impact on edible oil prices. Thirteen percent of India’s tea exports are to Russia, which might be impacted, but problems in the neighbourhood offer an opportunity to balance it. Although crude imports from Russia are only about 1-2%, there has been a price impact globally. India has been affected by that as also on the fertiliser imports front. Payment transactions with non-sanctioned Russian entities have now stabilised and are being settled in dollars or euros through a few Western correspondent banks. There is now a layer of extra security involved, what we call enhanced due diligence (EDD), which is done.

So there must be an impact on volumes and costs?

Of course. The increased due diligence is causing delays as is the need to route transactions through multiple banks. It was much easier to deal with SberBank because it has presence in Delhi. Volumes have certainly been affected. One of the reasons is that diamond miner Alrosa has been sanctioned. It accounted for a sizeable portion of rough diamonds import to India. Some ports are also under sanctions, because of which shipping companies are reluctant to accept shipments. Obviously, all of these are leading to cost escalations. The EDD for each transaction and additional documentation for each leg of the transaction are also adding to the cost.

You have just raised a $500-million loan. What’s the strategy behind that and could we see more such transactions this year?

The loan is linked exclusively to the international book. We want to be diversified not just in terms of the instruments we use, but also in terms of the geographies where we are present. Swap rates were favourable last year and we raised money in the dollar/rupee market, but that isn’t the case any more. Also, as rates rise, spreads also rise, so it is good to raise early. The money we have raised is mostly for refinancing. Our international book size is rising, even as rates are also rising. We have a $69-billion balance sheet and a major part of the book is term loans and trade finance. The good thing is that it is easier to pass on rate increases in the international market than in the domestic market because of competition.

With Covid and now the geopolitical challenge, have you seen any issues in the international business?

When the pandemic broke out, there was an initial challenge on logistics. We had to comply with local rules in different markets. For instance, Shanghai did not allow any offices to be open. The US, on the other hand, classified banking as an essential service, and allowed banks to remain open. We introduced a VPN system and distributed our teams. We looked at setting up disaster recovery arrangements in alternative locations. After the first two-three months, things reopened in the US and Europe. Business picked up well, with pent-up demand and the government stimulus helping in those markets. Barring aviation and entertainment, most sectors did well. In FY21 (Q3) and FY22 (Q3), the international book (advances portfolio) posted a greater growth than the bank – about 15% or so. For us, the pandemic emerged as a chance to achieve a good geographical distribution of risk.

Any asset quality issues?

Not really. Our net NPA (non-performing assets) in the international book is lower than 1%. There was one account in the West Asia where we saw some stress. However, in international markets, even if we see stress, there is the flexibility to sell down the loans in the secondary market.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/hNefFwZ

Read more »

SBI firms up ESG policy, but won’t deny loans to poor scorers right away

State Bank of India (SBI) has formulated a policy on environmental, social & governance (ESG)-compliant lending to companies. However, the policy, which was put in place by the country’s largest lender, is not yet being used as grounds to deny loans.

In an interview with FE, Ashwini Kumar Tewari, SBI managing director for international banking, technology and subsidiaries, said the bank is applying the parameters of the Securities and Exchange Board of India’s (Sebi’s) business responsibility and sustainability reporting (BRSR) framework to proposals from its clients. “In terms of policy, we have implemented an ESG model in September 2021 based on the BRSR framework, but we are not yet denying loans in case of a low score,” he said.

SBI is among a growing crop of Indian banks who are framing ESG policies amid a heightened worldwide focus on sustainability principles. For instance, HDFC Bank’s ESG policy from 2020 states that the bank will not extend finance for setting up of new units which produce or consume ozone depleting substances, responsible for the depletion of stratospheric ozone that keeps out harmful ultraviolet (UV) radiation from the sun. Axis Bank’s exclusion list names, among others, industries which deal in banned wildlife- related products or are engaged in production or trade in radioactive materials or unbonded asbestos fibres.

The capital market regulator’s BRSR framework, which applies to the top 1,000 listed entities by market capitalisation, lays down disclosure requirements in the areas of business responsibility and sustainability. According to Tewari, SBI is committed to sustainability as a principle, as evidenced by its green bond programme, through which it has raised $800 million globally so far.

Additionally, the bank is re-looking its approach to funding thermal power projects from the perspective of asset quality, too. Tewari said the life cycles of coal projects range anywhere between 20 and 30 years. That means banks must consider the question of whether these assets could face challenges as India tries to meet its sustainability roadmap.

In the United Nations Climate Change Conference (COP26) held in Glasgow in November last year, India had committed to reducing its total projected carbon emissions by 1 billion tonne and the carbon intensity of its economy by less than 45% by 2030.

However, it is still early days for coal-based models to be junked, Tewari said. “We have still not reached a stage where renewables can become the base source of power as battery storage is still not adequate. Thus coal could remain the base power for some time,” he said.

Historically, much of the investment in renewable power in India has been in solar energy, but SBI now sees some models emerging in the hydro-power segment. “We are also trying to fund technologies that can help reduce emissions, and an example of that is flue gas treatment in thermal power plants,” Tewari said. In the area of electric vehicles (EVs), SBI is in talks with players who have been identified under the central government’s production-linked incentive (PLI) scheme. Axis Clean Mobility and Ola Electric Technologies are among the companies identified under the auto PLI scheme.

Of late, the Reserve Bank of India (RBI) has also begun to emphasise the importance of addressing climate risk in the financial sector. In a September 2021 speech, RBI deputy governor M Rajeshwar Rao said the central bank has set up a sustainable finance group (SFG) within its department of regulation. Some of the initiatives which the RBI is contemplating are integrating climate-related risks into financial stability monitoring and advising regulated entities to have a strategy to address climate change risks.

“The challenge before us is to mainstream green finance and think of ways to incorporate the environmental impact into commercial lending decisions while simultaneously balancing the needs of credit expansion, economic growth and social development,” Rao said. 

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/5DICNR2

Read more »

Informal pressure from RBI led Coinbase to roll back UPI payments: CEO Brian Armstrong

Says the company’s preference is currently to work with the authorities and focus on relaunching

from The HinduBusinessLine - Money & Banking https://ift.tt/hwVDSHT

Read more »

Sri Guru Raghavendra Bank: RBI extends validity period of Directions by 6 months

The Bank has been under directions since January 10, 2020, in the interest of depositor protection

from The HinduBusinessLine - Money & Banking https://ift.tt/5isaQUK

Read more »

ICICI Bank signs MoU with Santander UK Plc

Under the partnership, both the players are to support corporate customers’ banking requirements

from The HinduBusinessLine - Money & Banking https://ift.tt/gXqt3J0

Read more »

Karnataka Bank terms loans to Srei group co as fraud

Karnataka Bank has said in an exchange filing that it has classified its loans to Srei Equipment Finance as fraud. It has also reported to the RBI as a fraud the Rs 10-crore investment made by the bank in Srei Infrastructure Finance, which has been an NPA since September 2021.

from Business News: Latest News on Business, Stock Markets, Financial News, India Business & World Business News https://ift.tt/U8Rvy1J

Read more »

Supreme Court upholds RBI remit over NBFCs, says state laws won’t apply

Non-banking financial companies (NBFCs) will be regulated by the Reserve Bank of India (RBI), and state money-lending laws will have no applicability on them, the Supreme Court (SC) said on Tuesday.

The question before the SC was whether NBFCs regulated by the RBI, in terms of the provisions of Chapter IIIB of the Reserve Bank of India Act, 1934, could also be regulated by state enactments like the Kerala Money Lenders Act, 1958 and the Gujarat Money Lenders Act, 2011, with the Kerala and Gujarat High Courts taking opposite views. While the Gujarat HC had in 2011 held NBFCs would not fall under the purview of the Bombay Money Lenders Act, as applicable in the state, the Kerala High Court had given contrary findings, holding that the money-lending laws of the state were applicable.

Clarifying the contrary findings in a batch of cases led by Nedumpilli Finance Company vs Kerala, an apex bench comprising Justices Hemant Gupta and V Ramasubramanian held that “we are of the considered opinion that the Kerala Act and the Gujarat Act will have no application to NBFCs registered under the RBI Act and regulated by RBI. Therefore, all the appeals filed by NBFCs against the judgment of the Kerala High Court are allowed. Likewise, the appeals filed by the State of Gujarat against its high court judgment are dismissed.” Though the SC did not examine the provisions of the Tamil Nadu Pawn Brokers Act and the Tamil Nadu Money Lenders Act, it clarified that the principles of law laid down in the NBFCs’ case “would apply equally to these state enactments also”.

Welcoming the judgment, former Finance Industry Development Council chairman, Raman Aggarwal, said “this settles a long-lasting issue being faced by NBFCs that were faced with dual regulation by the RBI and the state governments, which was totally imprudent”. He said, “Chapter III B of RBI Act is a complete code in itself and there is a clear conflict between RBI Act and Money Lenders Act which cannot be reconciled. Sec. 45Q of RBI Act has an overriding effect over the state money-lenders laws. The state has no power to regulate the money-lending business of NBFCs.”

The SC said that while the state enactments regulating the business of money-lending has a one-eyed focus only to protect borrowers, the RBI Act takes a holistic approach to the business of banking, money-lending and operation of the currency & credit system of India.

The judges said no NBFC can start or carry on business without obtaining a certificate of registration under the RBI Act; their continuation in business would depend upon compliance with the RBI Act and circulars/directions issued by the RBI.

“The RBI has the power to supersede the Board of Directors of a NBFC and has power even to wind up a NBFC. Thus the supervision and regulation of NBFCs, by the RBI, is from the time of birth till the time of death. If a statutory enactment which provides for such a type of control and supervision is not a complete code in itself, we do not know what else could be a complete code,” the judgment stated, adding that to say that the RBI has no say in such a matter of vital interest will strike at the very root of the statutory control vested in RBI.

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/nWr0Rio

Read more »

Cashe forays into wealth management

With the acquisition, Cashe will provide mutual funds, fixed deposits and other investment options to its customers. Sqrrl will retain its identity and operate as an independent platform.

from Banking/Finance-Industry-Economic Times https://ift.tt/GXk6i7H

Read more »

Rupee breaches 77 mark, touches record low

Recent rate hike by the US Fed has further intensified FII selling in the domestic market: Analyst

from The HinduBusinessLine - Money & Banking https://ift.tt/urAfCjz

Read more »

Yield Farming vs Staking - The Best Way to Invest in Cryptocurrencies

from Banking/Finance-Industry-Economic Times https://ift.tt/vTbQ8wd

Read more »

Time for the RBI to try out something NUE

The central bank is fine-tuning regulations around payments, but can it keep the umbrella entity on the back burner for long?

from The HinduBusinessLine - Money & Banking https://ift.tt/kqw9V3p

Read more »

Golden opportunity: Demand for gold loans shines in trying times

Going forward, there is huge opportunity that is waiting to be tapped in this area

from The HinduBusinessLine - Money & Banking https://ift.tt/9rIZ8at

Read more »

Data Drive: Rate-cloud on retail credit

The retail segment, led by housing and personal loans, has been driving bank credit growth. The share of retail loans for scheduled commercial banks has grown to 30.5% in FY22 from 19% in FY10. In contrast, the share of loans to industry dropped to 28.7% from 43% during the same period. The share has remained constant for both services and agriculture. In retail, the share of housing loans grew to 14.4% from 9.8%. That may slow down now with the reversal in the interest rate cycle. 

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/koYC5g7

Read more »

Kinara Capital: Firm bridges credit gap for have-nots of the Indian economy

The idea of Kinara Capital germinated when Hardika Shah, the fintech’s founder and CEO, became aware of the credit gap that afflicts the Indian micro-small-medium-enterprise (MSME) sector. “In part, I was also inspired by something that I had experienced early on in life, and which had stayed with me. My mother had entrepreneurial leanings and ran a small business when I was growing up. I saw how difficult it was for her to build her venture due to lack of financing,” says Shah.

Prior to starting Kinara Capital, Shah spent 20+ years as a management consultant with Accenture, leading large teams and executing complex projects for global companies in the US, EU and Asia-Pacific. “Despite the economic reforms that India has undergone over the past two decades, small business owners continue to face many of the same challenges they always have, particularly lack of access to financing. There are over 60 million MSMEs in India that provide jobs to over 120 million people, yet most formal lending institutions do not lend to them, especially without property collateral. I wanted to do something to change that,” she says.

Kinara Capital is a fast-growing MSME fintech driving vast financial inclusion of small business entrepreneurs. “We offer both an end-to-end digital option with our vernacular myKinara app and doorstep customer service in 90+ cities across six states in India. Our efforts have also supported over 250,000 jobs in local economies and led to over Rs 700 crore of incremental income for small business entrepreneurs,” she says.

With its myKinara app, the fintech allows an MSME entrepreneur to go from a loan eligibility check to loan disbursement within 24 hours. Shah says, “With our own proprietary risk-assessment methodologies, we make AI/ML data-driven credit decisions and have introduced digitisation at all steps of the process, including digital KYC, e-stamping, and e-signing of loan sanctioning documents. We also offer 400+ tech-based digital wallet payment options for customers to make their EMI payments.”

Kinara Capital has disbursed Rs 3,000 crore across 75,000 collateral-free business loans to date. With a current AUM of Rs 1,200 crore, it plans to grow 5x by 2025 and achieve an AUM of Rs 6,000 crore. “In the new fiscal year, we have committed Rs 200 crore to HerVikas discounted business loans for women entrepreneurs,” reveals Shah, adding, “we are expanding our presence in our existing geographies with a special focus on reaching MSMEs in tier-II & III cities.”

QUOTE
Our efforts have supported over 250,000 jobs in local economies and led to over Rs 700 crore of incremental income for small business entrepreneurs”
Hardika Shah,
founder and CEO, Kinara Capital

SPREADING ITS WINGS

* To date, Kinara has disbursed over Rs 3,000 crore across 75,000+ loans in 90+ urban, peri-urban and rural locations in India.

* The social impact of the company’s financial inclusion solutions has led to incremental income generation of `700 crore for small business entrepreneurs, and supported more than 250,000 jobs.

* Kinara is also empowering women entrepreneurs through HerVikas scheme. It has committed to disbursing `200 crore to women-led MSMEs in FY22-23.

* It is driving financial literacy by spreading awareness to first-time loan applicants in vernacular languages. Its myKinara app uses the vernacular medium to disburse loans

from "Banking & Finance News: Banking & Finance News Today, Indian Banking & Finance News, World Banking & Finance News Today - The Financial Express " | The Financial Express https://ift.tt/TVkeSOA

Read more »

Yatra hopeful of India IPO by end of this fiscal

Business recovery has been very strong, says CEO and Co-Founder, Dhruv Shringi

from The HinduBusinessLine - Money & Banking https://ift.tt/Ee07yYG

Read more »

Public sector general insurers may get capital infusion of Rs 3,000-5,000 crore

In the last financial year, the government made capital infusion of Rs 5,000 crore in these three insurance companies.

from Banking/Finance-Industry-Economic Times https://ift.tt/Q3KbRP0

Read more »

Public sector general insurers may get capital infusion of ₹3,000-5,000 cr

They are short of solvency margin and to improve operational efficiencies an external consultant will be appointed soo

from The HinduBusinessLine - Money & Banking https://ift.tt/2w7p1Cr

Read more »

Hospitality & tourism: Gross bank credit rises 8.2% in March FY22

Industry experts say it depicts the stress suffered by the sector post-pandemic

from The HinduBusinessLine - Money & Banking https://ift.tt/3eyaruL

Read more »

Central Bank of India says not yet decided on branch closures

On Thursday, Reuters cited sources and a document saying the bank was looking to reduce the number of branches by 600, or 13% of the total, by either shutting or merging loss-making branches by the end of March 2023.

from Banking/Finance-Industry-Economic Times https://ift.tt/OyDSwGb

Read more »

RBI rate hike not a surprise, but its timing was, says FM

The Reserve Bank of India’s (RBI) decision to raise interest rates will not impact the government’s planned infrastructure investments and the hike was part of a synchronised action by major central banks across the globe to deal with the twin challenges of taming inflation and supporting economic revival, finance minister Nirmala Sitharaman said on Saturday.

from Business News: Latest News on Business, Stock Markets, Financial News, India Business & World Business News https://ift.tt/gEQquwk

Read more »