Indian financial institutions embracing data analytics, AI

Apr 21, 2017 0

Mumbai– Focusing on data analytics, mobile and AI technologies, FinTech companies are changing the market dynamics and 95 per cent of Indian financial institutions are expected to partner with FinTechs in 2017-18 to boost innovation, global consulting firm PricewaterhouseCoopers (PwC) said on Friday.

According to the PwC FinTech report ‘Redrawing the lines: FinTech’s growing influence on Financial Services’, 84 per cent of the respondents said they are driving internal efforts to innovate through FinTech.

“Eighty seven per cent of financial institutions consider startups to be source of disruption and a majority of the players say they are embracing FinTech and seek to utilise it to grow and transform their businesses,” said Vivek Belgavi, Partner and Leader, Fintech, PwC India, in a statement.

“However, other entities like social media platforms and e-tailers have also been cited as the source,” Belgavi added.

Sixty seven per cent of Indian financial institutions consider non-traditional FinTech companies a threat to their business.

This number is slightly lower than the global average of 80 per cent, perhaps an indication that the market in India is not yet as matured as it is globally, particularly in the non-payments segments, the report added.

Most incumbents in the industry are focused on data analytics, Mobile and AI technologies because so far, many of them have found it difficult to manage their data and offer customer-centric and insights driven digital services.

“But developments around emergent technologies like chatbots, natural language searches and digital KYC can enable them to enhance and expand their portfolio of services,” the report said. (IANS)

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India to infuse Rs 8,586 crore capital in 10 weak banks

Mar 19, 2017 0

Chennai– Contrary to its earlier stand of infusing fresh capital in strong banks, the central government has decided to infuse fresh capital totalling Rs 8,586 crore into 10 weak banks subject to commitment to quarterly milestones by bank boards, management, employees and unions, said a top leader of All India Bank Employees’ Union (AIBEA).

He also said SBI Caps will draw a bank wise action plan based on which a tripartite agreement between the government, bank management and employee unions will be signed committing themselves towards certain milestones.

“The central government has written to the heads of 10 banks indicating the amount of fresh capital it would infuse during FY2017. But the infusion is subject to a tripartite agreement between the central government, banks and the unions for a time bound turn around programme,” C.H. Venkatachalam, General Secretary of AIBEA, told IANS on Sunday.

He said the government has said that the tripartite Memorandum of Understanding (MoU) is to commit all the three parties to specified and quantifiable milestones to be measured on quarterly basis.

Venkatachalam said the reason for signing the MoU is understandable and AIBEA is ready for it.

He said the central government has listed out five parameters under which the milestones would be fixed.

These are: (a) active management of non-performing assets (NPA), strengthening of lending and monitoring processes; (b) arranging capital from the market; (c) plan for disposal of non-core assets; (d) divesting stakes in subsidiaries, closure of loss-making domestic and international branches; (e) reduction in operational expenses including employee benefits to would be reversed once the banks turns around.

According to Venkatachalam, the unions may be agreeable with all the conditions barring the raising of equity capital from the market as it would result in disinvestment.

“All the government-owned banks are making good operational profits. The net profit is low owing to provisions for bad loans. If only the bank management focus their energies on recoveries than all the government owned banks will be very much profitable,” Venkatachalam said.

He said the capital adequacy norms or the Basel norms are for private banks and need not apply for government owned banks.

“All the bank unions will be meeting in Kolkata on March 24 to discuss the government’s proposal,” Venkatachalam said.

He added the government has asked the heads of the 10 banks to give their consent on its new proposals.

Venkatachalam said the name of the banks and the amount of capital to be infused by the government are:

Allahabad Bank (Rs 418 cr), Andhra Bank (Rs 1,100 cr), Bank of India (Rs 1,500 cr), Bank of Maharashtra (Rs 300 cr), Central Bank of India (Rs 100 cr), Dena Bank (Rs 600 cr), IDBI Bank (Rs 1,900 cr), Indian Overseas Bank (Rs 1,100 cr), UCO Bank (Rs 1,150 cr), and United Bank of India (Rs 418 cr).

Venkatachalam said the Kolkata-based UCO Bank management is likely to meet the bank unions and brief them about the government’s proposal.

“No other bank management has called the unions for a discussion. Perhaps this would happen soon,” Venkatachalam added. (IANS)

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Devang Mody to head Reliance Commercial Finance

Mar 14, 2017 0

Chennai– Forty-four year old Devang Mody has been appointed CEO of Reliance Commercial Finance Ltd (RCFL), the company said in a statement on Tuesday.

Reliance Commercial Finance, a subsidiary of Reliance Capital Ltd, focusses on lending to small and medium enterprises (SMEs) with assets under management (including securitised portfolio) of Rs 16,191 crore ($2.4 billion) as of December 31, 2016.

“I am delighted to welcome Devang Mody as the new CEO of our Commercial Finance business, a high priority growth area for Reliance Capital in the future,” Anil D. Ambani, Chairman, Reliance Capital, was quoted as saying in the statement.

“Devang is a visionary pioneer, and comes with an excellent track record of creating and rapidly growing highly profitable lending businesses in different segments. We expect Reliance Commercial Finance to significantly accelerate its growth momentum under his leadership,” Ambani added.

“India has embarked upon a major growth trajectory that will offer exponential growth opportunities for lending businesses. I thank Reliance Capital for giving me this opportunity to lead and grow this already established and high potential business,” Mody was quoted as saying in the statement.

A chartered accountant by qualification, Mody joins Reliance Commercial Finance from Bajaj Finance, where he served as President – Consumer Business, managing a group of B2B and B2C lending businesses.

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Note ban hit microfinance loans in Q3 by 26 percent

Feb 16, 2017 0

New Delhi–The Indian microfinance industry recorded a drop of 26 per cent in the number of loans disbursed and a 16 per cent decline in loan amounts disbursed during the third quarter ended December, as compared to the corresponding quarter of the last fiscal, the Microfinance Institutions Network (MFIN) said on Thursday.

“The pulling out of the High-Value Currency Notes (HCVNs) from circulation significantly impacted the microfinance sector, which is 99 per cent cash-driven,” MFIN — the self-regulatory body of the Reserve Bank-regulated non-banking finance companies (NBFCs) and microfinance institutions (MFIs) — said in a release here.

“The decrease on both disbursement and collection is due to the impact on industry post discontinuance of Rs 500 and Rs 1,000 notes,” it said.

“Post the discontinuation of HCVNs with effect from midnight of 8th November, the industry was thrown out of gear initially,” said MFIN Chief Executive Ratna Vishwanathan.

“During the whole two months post discontinuing of High-Value Currency Notes, MFIN has had to engage with state governments, at both the ministerial level as well as the bureaucracy, the RBI and extensively with the press, to quell the surge of disinformation with reference to microfinance practices,” she added.

According to the body, loans disbursed during the third quarter ended December amounted to Rs 12,424 crore, as compared to Rs 14,707 crore disbursed during the same quarter last year.

However, the microfinance industry grew by 53 per cent year-on-year during the quarter in consideration, the statement said.

The aggregate gross loan portfolio of microfinance institutions stood at Rs 56,634 crore in the quarter ended December 2016, as compared to Rs 36,912 crore in the same quarter of the previous year.

The MFIN also said that 56 per cent of total disbursements during the quarter came from five states — Karnataka, Tamil Nadu, Maharashtra, Odisha and Bihar. (IANS)

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RBI chief asks centre to drastically cut borrowings

Jan 11, 2017 0

Gandhinagar– Reserve Bank of India Governor Urjit Patel on Wednesday warned that the government’s debt to GDP ratio was constraining the country’s sovereign ratings and called upon the central government to work towards reducing high central and state borrowings.

Urjit Patel

In his address at the biennial Vibrant Gujarat Global Investors Summit here, Patel said the country’s cumulative fiscal deficit of the states and the centre was among the highest in G20 countries, at 6.4 per cent of the GDP for financial year 2016-17.

Citing data from the International Monetary Fund (IMF), he said: “We have to take cognisance of these comparisons and facts as we go forward to make progress. Specifically, this will help us to better manage risks for ourselves and thereby mitigate financial volatility.”

The RBI chief said that low and stable inflation was indeed important but at the same time, India must ensure its medium-term consumer-prices based inflation target of four per cent is “secured on a durable basis.”

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Indian mutual fund industry may touch Rs 20 lakh crore sooner than expected

Jan 4, 2017 0

Chennai– With lower bank interest rates and demonetisation, the assets under management (AUM) of the Indian mutual fund industry are expected to touch Rs 20 lakh crore sooner than expected, said industry experts.

The AUM of the mutual fund industry touched Rs 16.93 lakh crore at the end of quarter October-December 2016, up from Rs 16.10 lakh crore at the end of the previous quarter July-September 2016.

The industry added Rs 82,610 crore to its kitty during the third quarter of the current fiscal, as per industry numbers.

However the next two months would be crucial as the central government would present its annual budget.

“As more and more money enters the banking system, we see a clear surge in investments within capital markets, especially MF (mutual funds) and debt instruments. We are quite confident of the MF industry touching Rs 20 lakh crore sooner than expected,” said Sundeep Sikka, Executive Director and CEO, Reliance Nippon Life Asset Management Ltd (Reliance Mutual Fund).

Agreeing with him, Parag Parikh Financial Advisory Services Pvt Ltd-sponsored Mutual Funds’ CEO Neil Parag Parikh told IANS: “We are seeing people excited in putting money into mutual fund. The uptrend will happen next year as people generally invest in mutual funds when the markets come down.”

“While it is difficult to hazard a guess as to when the industry would touch the milestone of Rs.20 lakh crore, it may happen sooner than expected. May be in two or three year’s time,” he added.

According to Parikh, the next two months would be crucial as the full impact of the demonetisation would be experienced since till December 2016, the old high value currencies were allowed to be used.

“One has to wait and see as to how the demonetisation would affect the economy and its different sectors. One should also wait to see the US policies under Trump,” he added.

Meanwhile, last quarter ICICI Prudential Mutual Fund continued to be at the top spot with an AUM of Rs 227,989 crore and is followed by HDFC Mutual Fund with Rs 221,825 crore and Reliance Mutual Fund with Rs 195,845 crore.

Going by the industry numbers, Reliance Mutual Fund logged the highest sum in terms of accretion to its AUM during the third quarter at Rs.12,717 crore followed by ICICI Prudential with Rs 12,003 crore.

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India’s wholesale inflation eases to 3.15% in November

Dec 14, 2016 0

New Delhi– India’s annual rate of inflation based on wholesale prices eased to 3.15 per cent for November from 3.39 per cent in the previous month, official data showed on Wednesday.

According to data on the wholesale price index (WPI) released by the Commerce and Industry Ministry, the annual inflation rate was (-)2.04 per cent in November last year.

A day earlier, the Central Statistics Office (CSO) reported that India’s annual retail inflation eased last month to 3.63 per cent from 4.20 per cent in October.

The decline in WPI was mainly due to a drop in the food articles prices to 1.54 per cent in November from 4.34 per cent in October.

The annual wholesale inflation rate for onion on a year-on-year (YoY) basis was lower by (-)51.51 per cent. Overall, vegetable prices came down by (-)24.10 per cent.

In contrast, the inflation rate for potatoes on November-on-November basis stood at a 36.97 per cent, while that for pulses stood at 21.73 per cent.

Meanwhile, wheat became expensive by 10.71 per cent, and protein-based food items such as eggs, meat and fish became dearer by 5.82 per cent.

The expenses on primary articles, which constitute 20.12 per cent of the WPI’s total weight, rose by 1.25 per cent during November.

Prices of manufactured products, which comprise nearly 65 per cent of the index, continued to rise for the eighth straight month, rising by 3.20 per cent last month. The prices in this category had risen by 2.67 per cent in October.

The sub-category of manufactured food products, which includes sugar and edible oils, registered a rise of 10.73 per cent.

This was mainly caused by a spurt in sugar prices, which rose by 31.76 per cent as a result of production shortages. Edible oils rose by 3.98 per cent.

Similarly, fuel and power price inflation accelerated in November. It edged up by 7.07 per cent, as compared to a 6.18 per cent rise in October and 5.64 per cent in September.

Segment-wise, price of high-speed diesel rose by 19.26 per cent last month, while that for gasoline or petrol climbed by 5.54 per cent and LPG inched up by 1.80 per cent. (IANS)

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Apollo Health receives Rs 450 crore investment from IFC

Dec 1, 2016 0

Hyderabad– Apollo Health and Lifestyle Ltd (AHLL), a wholly-owned subsidiary of Apollo Hospitals, Thursday announced receiving investments of Rs 450 crore from International Finance Corporation (IFC) and IFC Asset Management Company.

This investment will fuel AHLL’s expansion plans and fulfill its vision of bringing healthcare of international standards within the reach of 20 million patients each year by 2020, the company said.

Sangita Reddy, Joint Managing Director, Apollo Hospitals said AHLL will use IFC’s equity investment to expand its network of clinics, cradle and diagnostics centres across India. The investment will create multiple job opportunities across India for healthcare professionals, including doctors, nurses, and technicians.

“Given the immense potential and the need for quality healthcare delivery at affordable prices, AHLL will continue to expand through both organic and in-organic means and is committed to enhancing the patient experience and medical care offered by the current network,” she said.

AHLL operates a range of formats that fill the space between home care and tertiary care hospitals. It currently operates multi-specialty clinics (Apollo Clinics), Diabetes Clinics (Apollo Sugar), Diagnostics (Apollo Diagnostics), Dental centres (Apollo White), Dialysis, Women & Children hospitals (Apollo Cradle), Fertility centres (Apollo Fertility) and Surgical Centres (Apollo Spectra) across India, with a presence in 17 states and having over 400 customer touch points.

“AHLL operates across 7 verticals and we have multiplied our network and revenues over the past 3 years. In the next five years, we are looking at growing our revenues significantly and expanding our network,” said CEO Neeraj Garg.

“This investment is probably the largest-ever private equity growth capital investment in the primary healthcare segment in India. It reflects the strength of the team that AHLL has built and the leadership position of its formats.

“We currently serve over 10,000 customers daily, and with this next round of expansion, we shall be able to extend the Apollo brand of clinical expertise and ‘tender loving care’ to many more people in the cities we serve and also extend to new cities,” he added. (IANS)

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Bad loans, not interest rates impeded lending to industries

Oct 26, 2016 0

Chennai–It is the non-performing loans built by government banks that has impeded lending to industries and not the high interest rates charged by the bankers, marketing research and analysis consultancy Frost & Sullivan said on Wednesday.

In a statement, Frost & Sullivan said the steady fall in non-food credit from 20.7 per cent in fiscal year (FY) 11 to 9.1 per cent in FY16 and a still-lower 8.3 per cent till July of FY17 is indicative of a disparity in lending to different sectors.

“The credit to agriculture bottomed out to 7.9 per cent in FY13 but recovered to 15.3 per cent in FY16, which is the same level as in FY11. Similarly, the non-food credit to services bottomed out in FY15 at 5.7 per cent and rebounded to 9.1 per cent in FY16 and has already touched 10.8 per cent for this fiscal,” the statement said.

“In contrast, non-food credit to industry, which started at an impressive 22.4 per cent in FY11, progressively declined to 2.7 per cent in FY16 and a negligible 0.6 per cent so far in FY17, dampening the overall credit growth score.

“A closer analysis of the non-food credit landscape reveals that high interest rates have often been wrongly blamed for the slowdown in bank lending, putting the real issue in the shade,” remarked Innovation and Knowledge Center Economic Research Manager Aparajita Basak.

“Frost & Sullivan’s analysis reveals that the accumulation of stressed assets within the banking sector, especially with the public sector banks, is a much more plausible explanation for the weakening credit growth in the country,” she added.

The interest rate theory is easily debunked by the rising lending to industry by the private sector banks, despite the borrowing rates of these banks being greater than their public sector counterparts.

Similarly, personal loans from the public sector are increasing even as those from the private sector banks are plateauing or falling.

Evidently, the public sector banks are limiting their exposure to industry due to the past performance of high credit exposure areas, Frost & Sullivan said.

A slew of measures rolled out by India’s central bank since 2014 aimed at revitalising stressed assets have finally begun to bear fruit. In FY16 alone, six companies with an aggregate debt of Rs 2,613 crore succeeded in exiting corporate debt restructurings, which rose to eight firms exiting with Rs 6,000 crore debt in June 2016, the statement said.

“There need to be more such initiatives with clear short-term and long-term objectives,” noted Basak.

“Additionally, engaging private equity firms and enabling distressed debt funds will help speed up the cleaning of the banking sector and aid credit growth in the country,” she added.

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Bankers voice concern about financing large infra projects

Aug 27, 2016 0

Kolkata–There could be some concern about financing large infrastructure projects as the Reserve Bank of India’s new framework related to ‘large exposures’ proposes to reduce bank exposure to large corporate entities.

“There could be some concern for financing large infrastructure projects particularly greenfield projects. New framework from RBI suggests that from April 2019, for any entities with borrowing of Rs 10, 000 crore from banking industry, banks can only finance 50 per cent of the additional financing requirements. The rest (of requirements) has to be raised from either equity or market borrowing,” said State Bank of India’s Managing Director (Compliance & Risk) P.K. Gupta.

In a discussion with RBI on Friday, bankers suggested that India’s apex bank should look at it, he said on the sidelines of a Banking Summit organised by Indian Chamber of Commerce and Industry.

“As per the new regulations, for large exposures of above Rs 25,000 crore, banks will only finance 50 per cent of the additional financing requirements in 2017-18,” Gupta said. The rest may be raised from the capital market or equity. The new regulations also suggest, to bring down the limit to Rs 15,000 crore in 2018-19.

The objective of the RBI is that banking sector’s exposure to large borrowers should come down and corporate entities should go to markets to raise more funds so that there will be better price discovery in the market, he added.

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