State-owned Life Insurance Corporation of India bought 86 percent of shares on offer in state-run Indian Oil Corp this week, salvaging a $1.4 billion government sale as the market took its biggest tumble in more than six years. LIC, India's biggest investor, has in the past dug into its pockets to prop up government sales, buying up state banks and government mining firms. It heavily supported the sale of Coal India shares in January and the sale of shares in Steel Authority of India (SAIL) last year. The investments have sometimes proved fruitful for LIC, with stock in the State Bank of India, which it invested in in January 2014, up more than 60 percent. However, the extent of its bailout on Monday, according to an exchange filing published after market hours on Tuesday, may revive debate in some quarters over the government's divestment plans and the extent to which sales can continue to be heavily backed by LIC and its quarter of a billion customers. Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Co said it would not be easy for the government to meet its $10.5 billion divestment target, but said the fact it has already carried out four sales would help. "The way the government has structured the sales so far they are on target, unless the market conditions really deteriorate. In that case even LIC can't save them," he said. Having announced a move on Indian Oil on Friday, hoping to capitalise on strong refining margins, the Indian government had little choice but to press ahead with the sale of a 10 percent stake in the refiner and fuel retailer on Monday. The sale was undermined by the sharpest fall in the Indian stock market since January 2009. "We have to rethink our strategy," divestment secretary Aradhana Johri said after the sale. "Basically, we have to look at which are the stocks we need to put on the market and where the appetite in the market lies." Next on the stump for the government are sales including a 10 percent slice of Coal India and stakes in NTPC, Bharat Electronics, Hindustan Copper. Officials at LIC, whose stake has risen to 11.11 percent in Indian Oil from 2.52 percent, did not immediately respond to requests for comment. Its officials have said in the past that it carries out its own due diligence and checks, but sees itself as a long-term holder and is not concerned by short-term market fluctuations. (Reuters)
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Four out of seven members in the Reserve Bank of India's technical advisory panel recommended the central bank cut the repo rate at its monetary policy review this month because of easing inflation and signs of a soft economy. Of the four members, one recommended the repo rate be cut by 50 basis points, while the rest suggested a 25 bps cut, according to a summary provided by the RBI on Tuesday. But India's central bank governor Raghuram Rajan ended up siding with the minority, keeping the policy rate on hold at 7.25 per cent on August 4, while leaving the door open to ease further depending on the inflation outlook and how swiftly banks lower their lending rates. The technical advisory committee has no voting powers on rate decisions and its recommendations are merely meant to guide the central bank governor in taking decisions.(Reuters)
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InfrasoftTech, digital solutions firm for BFSI, has launched QRys (read as Curious) to simplifies contactless payments using QR codes and NFC enabling card-less payments with high security.QRys will provide one click card-less payments for purchases at e-tailing sites or retail outlets. QRys can also be used for card-less ATM cash withdrawals and related services. S. Karuppasamy, Former ED - RBI said, “It is an important that these modern solutions are rightly priced so that the smallest banks can adopt secure and reliable payment channels for their clients who in turn can render last mile access to their customers across rural outlets.”The digital lounge will showcase various digital solutions designed by InfrasoftTech that enable their client Banks to gain a competitive edge using digital channels and advanced analytics to run an agile enterprise.Rajesh Mirjankar, Managing Director & CEO of InfrasoftTech said “It is imperative that banks will have to adopt digital solutions to grow their business with the Generation Now and Generation Y. If they fail to respond, the new banks and Fintech firms can disrupt their business to a large extent within 2-3 years”.(BW Online Bureau)
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Last year, SBI Card, credit card arm of State Bank of India, appointed Vijay Jasuja as Chief Executive Officer of the company. Jasuja is eyeing to make the credit card company as the second largest circulator by the end of 2015. Having registered a substantial growth in FY'14-15 in terms of new customer acquisitions, SBI Card has strengthened its position in the credit card market and is presently the third largest issuer in India.
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Utility payment company, FreeCharge, has partnered with UCO Bank as “alliance partners” to enable efficient recharge and bill payments for their consumers.This first public sector bank tied up with FreeCharge to empower PSUs to adapt digital innovation of online transactions serving all the mundane tasks.Arun Kaul, Chairman and Managing Director of UCO BANK said, “We are dedicated to serve young and modern India and this is going to be another step in this direction.”Besides the reward coupons, now FreeCharge with the support of UCO bank brought additional benefits such as cashbacks to consumers, upto 10 per cent instant cashback on every recharge and bill payment.Kunal Shah, CEO and co-founder, Freecharge said “This partnership will offer our consumers exciting benefits like cashbacks and easier accessibility from e-payments.” The partnership will further enhance both FreeCharge and UCO banks solemn contribution to government’s vision of promoting online payments.(BW Online Bureau)
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Get to know the impact through a consolidated statement. But wait, there’s nothing to panic, says Sunil Dhawan The more than a 1000-points crash in the Sensex has come in as a big jolt to most investors. Although a downturn was seen coming, but the magnitude of the fall has certainly made investors alarmed. As a mutual fund investor, both who are recent entrant into markets or an existing investor, the primary concern would be to find the impact of market crash on the NAV of mutual funds schemes in which they had invested. Impact on NAV’s: If your investments are spread out among various fund houses and different schemes, keeping track of all of them might be difficult. Also, visiting each fund house and submitting request for statement of each folio could be time consuming too. The solution lies in getting the Consolidated Account Statement (CAS) which is a single account statement that reflects all transactions of a unit holder in all folios across all schemes of all mutual funds. Where to get consolidated statement: It is generated by any of the three registrars- CAMS, Karvy and Franklin Templeton Asset Management (FTAMIL). It doesn’t matter who the registrar of your specific scheme is and as because there is an arrangement between all these three registrars, the CAS gets delivered to your email once requested. In addition to the mandatory receive of the CAS, one may ask for it anytime. You just to ensure that your email is registered in your folios across funds serviced by CAMS, Karvy and FTAMIL. You may then obtain a consolidated PDF Account Statement at your registered email address. The request for this can be put in the website of any of these three registrars. The links are www.karvymfs.com/platformservicehttp://www.camsonline.com/InvestorServices/COL_ISAccountStatementCKF.aspx Mandatorily, CAS needs to be sent once a month for folios wherever there is a transaction. Else, even if there is no transaction, it is to be sent every six months. The CAS would contain details relating to all the transactions (including transaction charges paid to the distributor) across all schemes of all mutual funds during the month and holding at the end of the month. Transaction would include purchase, redemption, switch, dividend payout, dividend reinvestment, systematic investment plan, systematic withdrawal plan, systematic transfer plan and even the bonus transactions. What to do: There could be funds that have fallen more than index while few could have been in-line or maybe weathered the storm. Study the ones that have fallen most and look for reasons. Get help from experts to find reasons attributed for such performance before you act. What not to do: At a point like this when the market falls more than 3 percent with specific stocks falling by even 6 percent or more, the impact on one’s portfolio is warranted. But having linked your MF investments to long term goals, such events would soon be a passé. Keep your SIP’s running and let the lower levels in markets buy more units for you to average out the cost of purchase. It all started with Chinese government not willing to intervene in markets that led to crash in worldwide indices. At some level, it’s going to be stabilized and considering the strong fundamental of Indian economy, the long term growth prospects looks bright. Remember, corrections are part and parcel of markets. If you have linked your investments to your goals, such events are immaterial.
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With Bandhan from West Bengal becoming India's newest full-service bank to begin operations, Finance Minister Arun Jaitley on Sunday (23 August) said a 'blue-painted' city has given birth to a new institution which was not the case when it was 'painted red' -- referring to the past Left rule. "When the city was painted red, new institutions were not born, but the existing ones shifted. Now painted blue a new institution is born today, indicating the birth of a Bangla entrepreneur," Jaitley said as he inaugurated operations of Bandhan Bank. Bandhan Bank today launched its operations with 501 branches, 2022 service centres and 50 ATMs across 24 Indian states. It plans to have 632 branches and 250 ATMs in 27 states by the end of fiscal year 2016. It starts with 1.43 crore accounts and around Rs 10,500 crore loan book. It has 19,500 employees. The company, which started operations as a micro finance institution, got final approval from RBI in June to launch commercial banking operations. Over 71 per cent of the branches will be in rural India and at least 35 per cent in unbanked rural pockets. State-wise, West Bengal has the maximum number of branches 220, followed by Bihar 67, Assam 60, Maharashtra 21, Uttar Pradesh and Tripura 20 each, and Jharkhand 15. The Kolkata-headquartered bank has two divisions -- micro banking and general banking – and will offer complete retail financial solutions, including a variety of savings and loan products. The savings bank account interest rate has been fixed at 4.25 per cent for balance up to Rs.1 lakh and 5 per cent for balance above Rs.1 lakh. For term deposits, the maximum interest rate has been fixed at 8.5 per cent for one to three years, with an additional 0.5 per cent for senior citizens. The Reserve Bank of India’s licensing norms stipulate that a new bank must have at least Rs 500 crore capital. Against this, Bandhan starts with Rs 2570 crore capital which will soon be ramped up close to Rs 3052 crore. This translates into 44.54 per cent capital to risk weighted assets ratio or CRAR for the new bank, signifying its robustness. Referring to the shift in regime in West Bengal from a long-running Left rule to Mamata Banerjee-led Trinamool Congress government, Jaitley said there has been a change of colour of the city from red to blue. "In my younger years, I saw the city painted red. Now the whole city has been painted blue", he said. Jaitley added that some of the policies of the past should be done away with and realisation of the potential was important. Stating that the state would get all financial benefits as announced earlier as well as the proceeds of coal auctions, he promised that political differences would not come in the way of development of West Bengal. "Political differences will continue. But that will not matter for the development of West Bengal." Reiterating Prime Minister Narendra Modi's statement that growth of India would not happen unless the eastern part of the country also grew, Jaitley said, "Growth of eastern states is important for the growth of India. There has to be more economic activity in eastern UP, Bihar, Odisha and West Bengal." "Cooperation between the Centre and state will work towards that", he said. Chandra Shekhar Ghosh, Founder, Managing Director and Chief Executive Officer, Bandhan Bank said, “Our business philosophy is `customer first’. We are a universal bank and we will have equal respect all our customers – big and small. Today, all of us in the Bandhan family are rededicating ourselves to fulfil the demand of every Indian – banking as a fundamental right. We are committed to usher in a new era in Indian banking.” Amit Mitra, Finance Minister of West Bengal said, “Bandhan started with the twin objective of women empowerment and poverty eradication. With a repayment record of 99 per cent, the organization has been successful in its objectives. Now, the challenge for Bandhan Bank is to push Bengal’s credit deposit rate from around 68 per cent to the national average of over 76 per cent.” HR Khan, Deputy Governor, Reserve Bank of India said, “Bandhan Bank has been born at a challenging time of the Indian economy. With 11 payment banks and two universal banks being added to this sector, banking space in India is getting crowded. The need of the hour is to focus on cost minimization and customer convenience, digital literacy, partnership to cooperate and compete with other banks, and provide protection to customers by having a holistic approach towards banking.” From Micro-finance Entity To Universal Bank Bandhan Bank is the first instance in India of a microfinance entity transforming into a universal bank. It received an in-principle approval from the RBI in April 2014 and the banking regulator’s final nod on June 17, 2015. Its investors include IFC, SIDBI and Caladium Investment Pte. Ltd, a company managed by GIC Special Investments Pvt Ltd. Bandhan made a humble beginning in 2001 as a not-for-profit microfinance enterprise with the idea of making a significant contribution towards alleviation of poverty by empowering women. It transformed itself into a non-banking finance company in 2006. Bandhan is actively engaged in the development space in the areas of education, health, livelihood promotion, enterprise development, market linkage, employment generation, renewable energy and others. Every year a portion of the surplus generated by the company is utilized in fostering these activities.
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Country’s largest commercial banking entity State Bank of India (SBI) is now developing a low-cost model to compete with payments banks. “We are working out on a low-cost structure to compete with the payments banks for getting access to people living in the remote areas”, SBI chairman Arundhati Bhattacharya said on Friday (21 August). Bhattacharya said that the only advantage which the payments banks would have over other banks is that they would be able to get access to remote parts of the country. “There will be payments banks associate sitting in every second home in a village as their operational costs are lower compared to normal banks”, she said at a FICCI meet in Kolkata. To counter that, SBI would be opening customer service points (CSPs) in unbanked panchayats and also train youth with minimum education so that they are able to operate a mobile phone, printer and a scanner. Bhattacharya said that the mobile wallet which SBI had recently launched, Buddy, would also work within the realm of a payments bank. The biggest disadvantage which the payments banks would have is that they would not be able to give loans as they do not have any history of the credit profile of their customers. “These payments banks are only for small remittances and cannot give any loans”, she said. “History of credit is very important”, she added. (PTI)
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