Infosys, a global leader in consulting, technology, outsourcing and next-generation services, has announced the launch of the Finacle SME Enable to help banks enhance support and service for their small and medium business enterprise (SME) customers. The first-of-its-kind, mobile-based financial and business management solution is exclusively designed to help SMEs not only experience banking services on the move, but also manage their business operations efficiently. SME Enable is a unified application for both banking and non-banking services aimed at helping SMEs run their businesses efficiently and will provide a bank’s SME customers real-time access to their account information and relevant financial management tools to manage their day-to-day business operations in a self-service mode.Michael Reh, Senior Vice President and Global Head, Finacle, Infosys: “SMEs today constitute a significant share of gross domestic product (GDP). Convenient banking services as well as agile and cost-efficient operations are key growth drivers for this segment. Banks have a great opportunity to gain a loyal customer base in this segment by providing relevant digital banking solutions, along with an integrated support for their business needs. Finacle SME Enable fits right into this niche and can be a game changer for banks.”The solution will enable SMEs to grow their businesses through a host of features such as enterprise setup, automated banking transactions in supply chain, credit management, social connect, integrated alerts/analytical tools for financial management, and channels to seek expert advice. Integration of the Infosys TradeEdge, a cloud-based retail trade platform, with SME Enable will help SME clients obtain complete visibility into their inventories and sales transactions, along with seamless integration of banking services.For SME customers, this solution will enable a high degree of self-service and efficiency. For a bank, this will mean a significant reduction in time and effort required to serve their SME customers, while gaining an opportunity to build deeper relationships
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China will hold over a quarter of the votes in the new Asian Infrastructure Investment Bank (AIIB), its finance ministry said on Monday, giving it a veto in some key decisions despite Beijing insisting it will not have such powers. Delegates from 57 countries gathered in Beijing to witness the signing of the articles of agreement for the Chinese-led development bank, which is expected to rival institutions such as the World Bank and the Asian Development Bank. Fifty countries signed the agreement, the ministry said in a statement on its website, amongst them Iran, Australia, Georgia and Britain. Seven - Denmark, Kuwait, Malaysia, Philippines, Holland and South Africa and Thailand - refrained from signing as they had not yet won domestic approval and are likely to do so later in the year. The ministry said China would have 26.06 percent of the voting rights in the bank. This would effectively give the country a veto on votes requiring a "super majority", which need to be approved by 75 percent of votes and two-thirds of all member countries. A super majority vote is needed to choose the president of the bank, provide funding outside the region and allocating the bank's income, among other decisions. The United States, which initially cautioned nations against joining the AIIB, has expressed concern over how much influence China will wield in the new institution. China has maintained it will not have veto powers, unlike the World Bank where Washington has a limited veto. Xinhua news agency quoted China's vice finance minister Shi Yaobin as saying that China did not seek a veto in the bank, describing its stake and voting share in the initial stage as a "natural result" of current rules. The ministry added that the initial stakes and voting rights of China and other founding members would be gradually diluted as other members joined. Foreign Policy WinThe AIIB, first proposed by President Xi Jinping less than two years ago, has become one of China's biggest foreign policy successes. Despite the opposition of Washington, almost all major U.S. allies - Australia, Britain, German, Italy, the Philippines and South Korea - have joined. The major holdouts in the bank are Japan, the United States and Canada. "This proposal was designed to meet Asia's infrastructure development and promote Asia's connectivity and also deepen regional cooperation for the sake of development," Xi told delegates at the signing ceremony. "In a relatively short period of time we have been able to reach agreement on the articles of agreement of the AIIB...This testifies to the solemn commitment of all the AIIB's countries to setting up the bank." The bank is slated to start operations by the end of the year. It will be headquartered in Beijing and English will be the working language. Like the World Bank and the Asian Development Bank, the bank's officers will get tax-free salaries. China's finance ministry said China would be the bank's biggest shareholder by subscribed capital with a 30.34 percent stake, followed by India, Russia, Germany and South Korea. The AIIB's authorized capital will be $100 billion. Countries defined as "within the region" will hold a 75 percent stake in the bank, the ministry said. Johann Schneider-Ammann, head of the federal department of economic affairs, education and research for Switzerland, called the AIIB a "necessary supplement" to other multilateral development banks and stressed the need for compliance to international standards in terms of transparency and governance. "I am thus glad to know that it is the AIIB's declared objective to position itself as a responsible player among the multilateral development banks," he said, seated next to Xi. (Reuters)
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Reserve Bank Governor Raghuram Rajan has said macroeconomic fundamentals of the country have improved over the past two years and emerging market economies like India are better placed to face any eventuality. In the same breath, he cautioned against more volatility, given conflicting action by the developed world. After the "taper tantrums" starting mid-May 2013, when the Fed hinted at reversing its easy money policy, "a combination of global factors and concerted domestic policy decisions" have helped the country, Rajan said in the foreword to the Financial Stability Report 2015 (FSR) released by RBI today. "The macro-economic fundamentals have improved and we have also been able to build buffers to fight any future uncertainty," he said, stressing that "we need to be vigilant". "With back-to-back quantitative easing by other major central banks, alongside the possible tightening by the Fed, what we have seen might be only one of a series of such 'tantrums' that the global markets are likely to witness." Rajan has repeatedly called for policy co-ordination at global forums, saying policies in the developed world driven by domestic needs can adversely impact other developing countries in an inter-connected world. Reiterating the need for a consensus here, Rajan said: "There is a need to be vigilant about the spillovers (of the Fed ending the near-zero interest rate regime)... For India, what matters is reducing inefficiencies as also improvements in non-price competitiveness." He also underscored the need for promoting "healthy innovation while ensuring financial stability". The vision for the overall regulatory framework envisages a "balanced, predictable, institution-neutral, ownership-neutral and technology-neutral" regime, he said. FSR is published by a sub-committee of the Financial Stability & Development Council headed by the RBI Governor. The sub-committee has representation from the heads of other regulators like Sebi, IRDAI, FMC and PFRDA, apart from the Chief Economic Advisor and the Finance Secretary, among others.(PTI)
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India's state social security fund, undeterred by resistance from trade unions, will start investing in equity markets next month, the labour minister said, as part of a reform drive aimed at boosting the economy.With more than $100 billion of assets from some 80-million members, the Employees' Provident Fund Organisation (EPFO) is one of the world's largest. It will begin by investing in exchange traded funds, with the goal of earning higher returns."We are starting with 1 per cent in July and by the end of this (fiscal) year it will go up to 5 per cent" of annual investments), Labour Minister Bandaru Dattatreya told Reuters in an interview late on Wednesday.India's fiscal year ends March 31.An EPFO official said the fund annually invested nearly 1 trillion rupees ($15.72 billion), out of which it could invest nearly 50 billion rupees ($785.95 million) in equities between July and March.The move is part of Prime Minister Narendra Modi's agenda to reform Asia's third largest economy, which includes changing tax, land and labour regulations.The new EPFO rules may help Modi hit an ambitious target of raising nearly $11 billion through selling shares in state-run firms and minority stakes in private companies this fiscal year, a senior government official said, because for the first time EPFO will be able to buy the government's shares.In the past, the government has nudged the state-run Life Insurance Corp of India into buying its assets when market interest is low, a model that could be replicated with EPFO, the official said.Dattatreya said that if the experiment was successful, the fund could increase its equity exposure to 15 percent of annual investments over the next few years. At current investment rates, that would be about $2.5 billion a year.Some unions have opposed EPFO investing in share markets as they worry that their life-long savings could be depleted in a market crash.Until now, EPFO's market exposure has been limited to government and corporate bonds. It earned a return of 9.22 per cent on its investments last fiscal year, and paid 8.75 per cent to its subscribers.But with yields falling on debt securities, the returns are likely to be "much, much more moderate" this year, a senior official at the EPFO said.(Reuters)
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Come to think of it. North Block wants to curb black money; it’s mooted a set of initiatives to boost plastic payments – it’s for tax breaks if you transact through debit and credit cards. And contrary to what some trade bodies will tell you, it’s all for a tax rebate for merchants if at least 50 per cent of the transactions is through electronic means; or alternatively, a 1-2 per cent reduction in value-added tax. What’s the idea behind all this? Black money has to be, and can be curbed. You get to have an audit trail of transactions; the Centre can use plastic and e-transactions to ensure welfare schemes reach the audience they are targeted at; and plug leakages. And when you mine such data over a period of time, banks, retailers and the taxman can laugh all the way to the bank – for the right reasons. What’s Sauce For The Goose…It’s almost a decade since the Reserve Bank of India (RBI) introduced its Know-Your-Customer (KYC). The essence of KYC is that a bank should know you: Who are you? What are you? Why do you do what you do? As a customer that is. Of course, in the process, it did put in a few conditions wherein it became difficult to open a bank account. That was corrected ahead of the launch of the Pradhan Mantri Jan Dhan Yojana. What you can’t get away from (even if it was not overtly stated) is that Mint Road wanted some very clever amongst us to change their way of life, and not continue to laugh all the way to the bank by doing what they were doing – that is by being clever. Look at the tamasha that’s on in New Delhi. An otherwise sensible voice describes a transaction as a commercial one between two private individuals; what’s the government got to do with all this? It’s not so simple. It does not follow that just because a transaction is conducted or settled in private or that it was routed through banking channels, it’s above board. To better flesh out this point, let’s flashback to the RBI’s mastercircular dated 1 July, 2014 (KYC/Anti-Money Laundering Standards/Combating of Financing of Terrorism/Obligation of Banks under Prevention of Money Laundering Act (2002) Read this paragraph on politically exposed persons (PEPs); it may be long, but is worth a read. It says “banks should gather sufficient information on any person, customer of this category intending to establish a relationship and check all information available on the person in public domain. Banks should verify the identity of the person and seek information about the sources of funds before accepting PEP as a customer. The decision to open an account for PEP should be taken at a senior level which should be clearly spelt out in Customer Acceptance Policy. Banks should also subject such accounts to enhanced monitoring on an ongoing basis. The above norms may also be applied to the accounts of family members or close relatives of PEPs and accounts where the PEP is the ultimate beneficial owner. In the event of an existing customer or the beneficial owner of an existing account, subsequently becoming PEP, banks should obtain senior management approval to continue the business relationship and subject the account to the Customer Due Diligence measures as applicable to the customers of PEP category including enhanced monitoring on an ongoing basis”. Now let’s go back to the latest set of plastic initiatives. Just about every other payment is sought to be audited now – with the enhanced use of plastic and e-transactions (please see below) What’s On The Cards?At present, there is a Merchant Discount Rate (MDR) of 0.75% on debit-card transactions up to Rs 2,000 and 1% on all transactions above Rs 2000. The possibility of reduction in the MDR and the rationalisation of the distribution of the MDR across different stakeholders will be examined.The existing inter-change fee on debit and credit-card transactions are not uniform and need to be standardised and or rationalised to encourage both issuing and acquiring banks to establish and utilise acceptance infrastructureTax benefits could be provided to merchants for accepting electronic payments. Example: an appropriate tax rebate can be extended to a merchant if at least say 50% value of the transactions is through electronic means. Alternatively, 1-2% reduction in value added tax could be considered on all electronic transactions by the merchants Tax benefits in terms of income-tax rebates to be considered to consumers for paying a certain proportion of their expenditure through electronic means The authentication requirements for different classes of transactions could be re-examined based on the risk profile and safety requirements Consider a levy of a nominal cash-handling charge on transactions greater than a specified level Mandating settling of high value transactions of, say, more than Rs 1 lakh, only by electronic means At present, banks have to report the aggregate of all payments made by a credit cardholder as one transaction, if such an amount is Rs 2 lakh in a year. To facilitate high value transactions, the ceiling of Rs 2 lakh could be increased to say Rs 5 lakh or more All this is well and good. But what about funding of political parties?! Just look at the transparency guidelines issued by the Election Commission of India (1 October, 2014). It noted that “Concerns have been expressed in various quarters that money power is disturbing the level playing field and vitiating the purity of elections”. Okay, “we all know that” you may say. Read this too. If the expenditure incurred by political parties exceeds Rs 20,000, then payment should be made by cheque, draft and not by cash unless there is a lack of banking facility or towards payment of party functionaries. And that while providing lumpsum amounts to candidates for campaigning during elections, political parties shall not exceed the ceiling prescribed for expenditure by the candidate and that the payment should be made only through crossed cheque, draft or bank transfer. If the ECI is for transparency, why is North Block mum on the matter in the new payments’ architecture it has imagined for you and I? Tailpiece: Read the RBI circular on 15 January, 2015 on ‘Foreign Donor Agencies placed in Prior Permission Category’. (It’s on RBI.org.in). Of course, it’s another story!
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Not a fortnight passes by without a snippet -- at least -- on how a bank was left red-faced as cash was fed into its automated teller machine (ATM). That is some Danny Ocean walked away rich. It can only get worse. It’s well over two years since cash logistics firms (CLF) – the ones who load cash into ATMs, take it from toll-posts to banks or in general, move cash about town – raised red-flags over the security aspect of the game. That gun licenses are hard to come by. The matter was taken up with the Reserve Bank of India which said that gun licences came under the purview of the Home Ministry. The deadlock continues. "Its nobody's concern, but our's! The media goes to town with a robbery story. But do you know what we go through everyday", asks the CEO of a CLF. Trouble started when three states -- Maharashtra, Andhra Pradesh and Karnataka – clamped down on gun licenses. That too in an industry where they were hard to come by in the first instance. Now roughly 4,000 weapons are needed to run daily operations of CLFs. Under the terms of contract terms, CLFs have to provide armed guards or they will not be able to get insurance cover for the cash and valuables they move about. It’s not good news as the boom in retail (banking and sundry retailing) means you have much more cash to sort, replenish and carry around. It is estimated to be an Rs 1,500-crore industry: about 10,000 cash vans ply on roads; employs close to 50,000 and expected to grow at 50 per cent annually. It’s an industry where numbers are hard to come by; it’s also secretive by nature. The big four in the business — CMS, Brinks, SIS-Prosegur and Writers — share 80 per cent of the market between them and, on an average, cart over Rs 20,000 crore in cash daily. Which means, in a year, it is a whopping Rs 73 lakh crore. Add all CLFs and it is Rs 91.25 lakh crore. This was the math two years ago; insiders say that amount would now top closer to Rs 100 lakh crore. That’s because the installed ATM base is now at 1,93,000; it is lower than what the London-based Retail Banking Research’s (RBR) projection of 2,25,000 for 2014. RBR — a strategic research and consulting firm in retail banking, automation and payment systems — reports are the gold standard in this line of business. The ATM rollout may have slowed down, but you can’t get away from the fact that about 50,000 new units are deployed every year (this includes replacements of old machines and installations at new sites as well). And that means more cash on the road needs to be guarded. With the curb on guns, that can prove to big headache for CLFs. But if you are in the Danny Ocean mould, it’s a great chance to move in and make a killing!
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Shareholders of Yes Bank, India’s fifth largest private sector bank, have wholeheartedly backed the reappointment of Rana Kapoor as the MD & CEO for a period of three years. At the bank’s eleventh annual general body meeting (AGM) on 6 June, the shareholders voted overwhelmingly in favour of the resolution reappointing Kapoor as the bank’s top executive.The shareholders also approved the resolution fixing the remuneration of Kapoor. “This is a reflection of the faith reposed by the shareholders in Rana Kapoor’s vision & leadership,” the bank said in a release. The AGM saw shareholders approving the reappointment of M.R. Srinivasan as chairman of the bank as well as the appointment of Diwan Arun Nanda and Ajay Vohra as independent directors. A clutch of special resolutions on capital raising by the bank including Rs 10,000 crore through non convertible debentures and bonds as well as $1 billion in fresh equity received the stamp of shareholder approval as did the one on raising the combined Foreign Portfolio Investors (FPIs) and Foreign Institutional Investors (FIIs) investment limit to 74 per cent of the bank’s paid-up capital. Among other resolutions that the shareholders approved included a dividend of 90 per cent (Rs 9 per share), which the bank claims is the highest among private banks; balance sheet for the financial year 2014-15 as well as profit and loss account for 2014-15; and appointment of M/s S R Batliboi & Co. as the bank’s auditors. Radha Singh, non executive chairperson, Yes Bank, thanked the shareholders saying, “We are extremely satisfied with the trust and faith shown by the institutional and retail shareholders to the Board of Directors, in the bank’s performance, its growth plans and decisions to maintain the highest professional standards of management.” Singh added that with the enabling approvals in place, Yes Bank would now look to capitalise on the renewed economic momentum and achieve its vision of emerging as the finest large Indian bank by 2020. The AGM was attended by 9 of the bank’s 10 directors including Kapoor (Diwan Arun Nanda was travelling) The attendees included Radha Singh, Non-Executive Chairperson; independent directors Ajay Vohra, Brahm Dutt, Mukesh Sabharwal, Ravish Chopra and Vasant V. Gujarathi; and M.R. Srinivasan, Non-executive, non-independent director.
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The government plans to inject about $3 billion into state-owned banks this fiscal year and could double that amount next year in a push to boost capital and help lenders meet the global Basel III regulatory requirements, Finance Secretary Rajiv Mehrishi said. The planned capital infusion into the state lenders, which account for more than 70 per cent of all outstanding bank loans, is more than double an earlier estimate of Rs 7,940 crore ($1.25 billion) made in the government's budget for this fiscal year. It was unclear, however, what impact the increased funding would have on the fiscal deficit, which the government has targeted at 3.9 per cent of GDP. "What we are aiming at is an infusion of about $3 billion in the current year and perhaps twice as much in the next year," Mehrishi told news local news channel CNBC-TV18, during a visit to the United States with Finance Minister Arun Jaitley. Shares of most state-run banks rose on the news, with Punjab National Bank gaining as much as 4.9 per cent. A slowing economy and stretched corporate balance sheets have led to a surge in bad loans at Indian banks. State-owned lenders have amassed bad loans at a faster pace than their privately owned peers, raising doubts about their ability to meet tougher global regulatory capital requirements. Rating agency ICRA estimates non-performing loans at state banks this fiscal year to rise to between 5.3 per cent and 5.9 per cent of total loans from 4.4 per cent in the year that ended March. Morgan Stanley estimated this month the government would need to inject $15 billion across all state banks "urgently" to achieve a common equity tier 1 ratio of around 10 per cent. Mehrishi said the government could finance the increased funding through off-budget means, but gave no further details. It was also not immediately clear if the government would require banks to fulfil certain conditions to be eligible for grants. When it announced its previous plans for the $1.25 billion capital injection, the government had said the top most profitable banks would be eligible. Mehrishi and finance minister Jaitley are in the United States to promote investment in India. (Reuters)
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