Technology firm Mphasis, teamed up with The Royal Bank of Scotland plc (RBS), to provide application management services.Mphasis will manage the performance and quality of critical applications at the corporate and institutional banking divisions of RBS.Gopinathan Padmanabhan, President of Global Delivery at Mphasis, said, “This encourages us to further raise the benchmark and help RBS transform their business by leveraging emerging technologies, tools and solutions. We are appreciative of RBS for giving us this opportunity and very excited to start yet another chapter with them.”Mphasis has partnered with multiple large and mid-size, commercial and universal banks globally. The company brings an in-depth understanding of processes and technologies relevant to banks. This, coupled with Mphasis’ impeccable global track record for consistent service delivery, resulted in RBS selecting Mphasis for this mandate.(BW Online Bureau)
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Analysts estimate large amounts of homes across cities lying unsold as property buyers are short of funds and many of them are waiting for interest rates to fall. Sumit Sharma reportsReserve Bank of India governor, Raghuram Rajan, on Thursday (20 August) said real estate developers should consider cutting prices on their unsold inventory property to help clear up the stock as also help boost new demand. "I do believe that real estate developers, who are sitting on unsold stocks, should reduce prices on unsold stocks,’’ said Rajan during an interaction with Arundhati Bhattacharya, chairman of State Bank of India in Mumbai. "We need the market to clear up . . . we don’t need a situation where prices are high and demand doesn’t pick up. " Analysts estimate large amounts of homes across cities lying unsold as property buyers are short of funds and many of them are waiting for interest rates to fall. Developers on their side are holding prices in the hope of selling for profit. "It will be a big help to the sector because once there is a sense that price itself has stabilized then more people will be willing to buy,’’ said Rajan. Rajan said there could be a pick-up in the economy if monsoon improves and rural demand too would pick up. Referring to home loans, SBI’s Bhattacharya said the NPAs from this segment are minimal. In a situation similar to 2008, SBI could offer home loans at a rate lower than its base rate for an initial period and raise it in the subsequent years. Schemes on similar lines had helped lift demand after the global financial crisis in 2008. The same could happen now. Bhattacharya emphasized that due diligence on these loans would be the same as for all other regular loans. Rajan on his part said "I never say no your ideas. We will examine it.’’
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Sumit Sharma says all credit to RBI and government in their determination to serve those without banking access By granting 11 licenses for payment banks, the Reserve Bank of India put in yet another building block in its effort to reach banking services to unbanked and to the remotest parts of the country, and potentially increase use of digital technology and mobile services. The payment banks will be an add-on to the banks rather than competitors, said RBI Governor Raghuram Rajan hitting the nail on the head in an interaction with SBI chairman Arundhati Bhattacharya at a banking conference this morning. Payments banks will act as feeders to universal banks. The payments banks have been permitted to do only a few limited functions that are much fewer than universal banks. The main purpose for setting up payment banks is to further efforts of financial inclusion by opening small savings accounts, offer payment and remittance services to migrant labor workforce as also to low income households small businesses and others unorganized entities. The 11 payment banks, which have to start functioning within 18 months, will also help reduce the need to hold physical cash and the risks associated with keeping cash under the pillows for safety. In a country that has less than half of its population with access to basic banking services, and less than 100,000 bank branches in a country with 630,000 villages, towns and cities, the government has been making a variety of efforts to reach banking services to as many as possible. Following lukewarm success of business correspondents and a less than sanguine performance of micro finance institutions, the authorities seem to be banking on payments banks and use of mobile phones to further the use of banking services especially with almost 17 crore new accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY). Universal commercial banks are already taking rapid strides in using technology to provide banking services to even non-customers through e-wallets at lightning speed and little risk. The day is not too far when physical cash will no longer be necessary for making payments. The payments banks will rope in those missing out accessing banking services. The companies and partnerships selected from among 41 applicants, include Aditya Birla Nuvo Ltd, Airtel M Commerce Services, Cholamandalam Distribution Services Ltd, Department of Posts, Fino PayTech Ltd, National Securities Depository Ltd, Reliance Industries Ltd, Dilip Shantilal Shanghavi, Vijay Shekhar Sharma, Tech Mahindra Ltd and Vodafone m-pesa Ltd. They all have sound experience and credibility in conducting the businesses. Yet, some apprehensions have been expressed on profitability potential of payments banks. A typical payments bank can accept deposits, and hold balance of maximum of Rs 100,000 per individual customer, and help in making payments and remittance services. They are not permitted to issue debit or ATM cards to facilitate banking services beyond banking hours. While they are not permitted to issue credit cards to keep any risk to the minimum, they can still offer basic mutual fund and insurance products to depositors. So, the basic purpose of payment banks is to help small depositor in an area with low penetration of banking services, as also migrant labour with limited KYC documents. It will be some time before one will be able to pass judgment on its success. Yet, all credit to RBI and government in its determination to reach the unbanked population.
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After granting approval to 11 entities for payments banks, the Reserve Bank of India (RBI) on Thursday said it will announce small finance bank licences next month and allayed concerns that these new entities can pose any threat to existing banks. RBI Governor Raghuram Rajan said that new payments banks would not pose any competitive threat to the existing banks and these new entities would rather serve as 'feeder' for the universal banks. The RBI had received 72 applications for small finance bank licences and 41 applications for payment bank licences. Out of these, the RBI on Wednesday granted 'in principle' approval for payments bank to 11 entities, including big names like Reliance Industries, Aditya Birla Nuvo and Tech Mahindra, as also Airtel and Vodafone. Those having applied for small finance banks include DHFL, IIFL Holdings, Lulu Forex, SKS Microfinance, UAE Exchange and Ujjivan Financial. Rajan said that RBI would announce small finance bank licences next month. The small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities. The payments banks would be allowed to provide payments and remittance services, but can not issue credit cards or accept deposits beyond Rs 1 lakh. They can issue ATM and debit cards and also distribute mutual fund and insurance products. Rajan said introduction of Payments Banks will revolutionise banking, make it very exciting for customers and existing lenders will have to improve service to retain depositors. "I've no doubt banking will become very competitive and universal banks have to provide full service to retain customers," Rajan said during a chat with SBI Chairman Arundhati Bhattacharya at the conference organised by the country's largest lender. 'Exciting For Customers'The introduction of Payments Banks will make banking "exciting" for the customers, Rajan said. Bhattacharya had asked whether payments banks could lead to a "worry" and eat into the low-cost deposit base for banks as the new banks have the option to accept deposits. Rajan said there is no threat to the banking system and the PBs will serve as a feeder for the existing banks. The bank branch can become a centre of activity, helping with cash handling or do some completely new work. "There is a lot of scope for everyone, not everybody will succeed but this is a revolution which can happen," he said. He also thanked Nachiket Mor for the work he has done on the PBs and quipped that the new banks can also be called "Mor Banks". Amongst those selected by the Reserve Bank include Reliance Industries, Airtel, Aditya Birla Group among others, to start a Payments Bank. They have an 18-month window in which they can submit their plans and get the final license. Dilip Shanghvi, the second-richest Indian, was also among those who won a permit. His company Dilip Shanghvi Family and Associates will partner Norway's Telenor and Indian financial firm IDFC Ltd for the planned payments bank. IDFC previously won a full-service banking permit and plans to start the bank from October. Rajan further said there is a pick up in the economy and the rural economy may also see an uptrend if monsoon improves and sowing is good. He also raised questions on the true strength of Chinese economy and said India shouldn't be concerned if yuan depreciation holds at current levels. On the banking sector's bad debt problems, Rajan said the NPAs covered under credit guarantee trust for medium and small enterprises were high. Besides, small companies were facing liquidity problem due to non-payment of bills, including those by the government. (Agencies)
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India's leading mobile carriers Bharti Airtel Ltd and Vodafone India were among 11 companies selected by the Reserve Bank of India (RBI) to help set up "payments banks" aimed at granting millions of citizens access to basic banking. Energy-to-telecoms conglomerate Reliance Industries Ltd, controlled by India's richest man Mukesh Ambani, which plans to set up a payments bank in a partnership with top lender State Bank of India, was among the winners. Payments banks will be able to take deposits and remittances but will not be allowed to lend. They are part of India's financial inclusion push, meant to bring banking services to a country where less half the adult population has a bank account. The aim is for payments banks to piggy-back on existing retail or other networks. Dilip Shanghvi, the second-richest Indian, was also among those who won a permit. The country's postal office, and a joint venture of Aditya Birla Nuvo Ltd and third largest Indian cellphone carrier Idea Cellular were among others selected by the central bank. Fino PayTech Ltd and Cholamandalam Distribution Services Ltd, which already work with banks as agents or distribute financial products were also given provisional approval. The companies selected will be given "in-principle" approval for 18 months, after which they will be given licences if they fulfil all conditions stipulated by the RBI, the central bank said on Wednesday. A total of 41 companies had applied for the permit, the RBI said, adding "some of the entities who did not qualify in this round, could well be successful in future rounds." Vijay Shekhar Sharma, founder of mobile wallet services provider PayTM that is partly owned by Alibaba's Ant Financial, was also selected. India's fifth-biggest software exporter Tech Mahindra was also named among the winners. (Reuters)
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To improve ease of doing business, government will soon finalise three new important laws - the litigation policy, the bankruptcy code and an arbitration law, Indian Finance Minister Arun Jaitley said on Tuesday. Replying to queries from top industrialists at the State Bank of India (SBI) Conclave in Mumbai on Tuesday evening, Jaitley said, "The litigation policy is more or less ready. We have a small informal group of ministers that has cleared it." "The bankruptcy code was to be ready by the end of July and I think it's going to be ready any of these days. The arbitration law is already cleared by Cabinet and it will be introduced in Parliament. So, all the three are ready," he said. With top industrialists like Anand Mahindra, Anil Ambani, Shashi Ruia, Anil Agarwal, Sajjan Jindal and Kumar Mangalam Birla in the audience, Jaitley said when legal reforms are involved, it's not merely between the litigant or the industry at one hand and the government on the other. "There is a third agency which is the courts. Therefore, courts not being a part of the legislative process, are only interpreters of the legislative decisions," he said. India is ranked very low at 140th position in terms of ease of doing business, as per a list of the World Bank, and the areas of prime concern that have been often cited for such low ranking include lengthy litigation processes, difficult arbitration procedures and lack of a bankruptcy law. The Modi government has said it wants to improve India's ranking to top-50. The World Bank is expected to release its latest annual ranking in a month or two. (PTI)
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India's private sector banks have seen their loan books deteriorate at a faster pace than state-owned peers over the past three quarters, raising concerns that a slower economic recovery could mean writedowns estimated at around $1.5 billion. The spike at private sector lenders like ICICI Bank and Axis Bank follows a push to grab market share from India's dominant state banks. They account for some 70 per cent of all outstanding loans but have pulled back on new credit for much of the past year, to keep a lid on bad debt. Investors, who have long favoured private banks for their comparative nimbleness and cleaner balance sheets, say the higher exposure to heavily indebted companies is becoming a cause for concern in an economy that has been slow to take off. "What has happened is that there are a few large accounts in the infrastructure and metals space that have stressed balance sheets in the private banks," said Mahesh Patil, co-chief investment officer at fund managers Birla Sun Life Asset Management, which holds shares in Indian banks. "That is something we are concerned about and we are watching the sector very carefully." According to numbers reported by the banks, state banks hold $44 billion of nearly $50 billion gross loans classified as bad. But Reuters calculations based on publicly available data show the problem is growing at a faster pace at private banks. Combined gross bad loans at 15 publicly traded private sector lenders, excluding restructured loans, grew quarter-on-quarter at 7.5 per cent, 6.9 per cent and 10.4 per cent over the past three quarters to the end of June, the calcuations show. That compares to state banks, where sour debt grew at 6.2 per cent, 3.2 per cent and 8.8 per cent, respectively. The Indian arm of ratings agency Fitch estimates private sector banks — or those with a heavy corporate exposure — could be forced to take a hit of around Rs 10,000 crore ($1.5 billion). OCEAN OF DEBTIndia's corporate sector has one of the highest debt levels among emerging markets and one of the lowest interest coverage ratios, a measure of the ability to repay — a problem given a substantial economic recovery could come only in 2016-17. Against this background, analysts have raised concerns over the growing exposure of private sector banks to sectors including steel, infrastructure and power, questioning loans provided or refinanced even after these sectors started to show signs of strain. A financial stability report published by the central bank in June said that under its worst case scenario, private sector banks' gross bad loan ratio could almost double. In a note based on public records but disputed by several of the banks quoted, investment bank UBS wrote last month that loan approvals to stressed companies by banks it covers rose 85 per cent in the past three years. Axis Bank, for example, has lent to some of the most troubled Indian infrastructure and steel heavyweights, including Jaiprakash Associates and Essar Steel. It said in July that Jaiprakash was meeting its obligations with "some delay". "We are very conscious of the state of these groups and continue to monitor these exposures," Axis Bank Executive Director V. Srinivasan said. "If we take any additional exposure it is against very high quality collateral and cashflows." Other banks such as ICICI, which saw bad loans in the quarter to June rise 40 per cent year-on-year, are rapidly expanding into retail banking to vary their loan book. "Finally all banks are in the same ocean of water," said Uday Kotak, managing director at Kotak Mahindra Bank. India's fourth-largest private sector lender, it saw bad loans surge after the $2.4 billion acquisition of ING Vysya Bank.(Reuters)
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With inflation under control, lending rates will gradually come down as India is moving towards softer interest rate environment, largest private sector lender ICICI Bank CEO Chanda Kochhar said on Tuesday (18 August). ICICI Bank was the first lender to start cutting base lending rates, she said adding "a lot of transmission" of monetary easing to borrowers has already happened. "... directionally we can say that a lot of factors and parameters have come under control, whether it is in current account (deficit) or fiscal side. Inflation is coming under control. So overall we are moving towards a softening interest rate environment," she said. Kochhar added "clearly a lot of transmission has happened because if you see when the monetary policy rates gets cut then the deposit rates fall and the deposit form a only part of cost of funds for the banks." She said 30 basis points (0.30 per cent) rate cut has already happened "which is quite in line with the reduction in the cost of funds." The Reserve Bank of India has cut its benchmark rate by 75 basis points to 7.5 per cent in three tranches so far this year. At the bi-monthly monetary policy earlier this month, RBI Governor Raghuram Rajan wanted banks to transmit more interest rate cuts to borrowers before he further eases monetary stance. "Not only we were the first ones to cut rates we had actually cut them by a much larger amount than any other bank," Kochhar said. She said "gradually as cost of funds keep going down you would see interest rates coming down. Directionally, definitely we are in a softening environment but when and how much that is not something we can say.
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