RBI bans BOB from onboarding new customers - Business Guardian
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RBI bans BOB from onboarding new customers



The Reserve Bank of India on Tuesday barred state-owned Bank of Baroda from onboarding new customers on its mobile app ‘bob World’ following material supervisory concerns. The state-owned lender said it has already taken corrective action to address the central bank’s concerns and has started additional actions to close any holes that may still exist in response to the RBI’s directives.

“The Reserve Bank of India has, in exercise of its power, under Section 35A of the Banking Regulation Act, 1949, directed Bank of Baroda to suspend, with immediate effect, any further onboarding of their customers onto the ‘bob World’ mobile application,” the central bank said in a statement. The action, the RBI said is based on certain material supervisory concerns observed in the manner of on boarding of their customers onto this mobile application.

“Any further on boarding of customers of the bank on the ‘bob World’ application will be subject to rectification of the deficiencies observed and strengthening of the related processes by the bank to the satisfaction of RBI,” it added. Bank of Baroda has been further directed to ensure that already on boarded ‘bob World’ customers do not face any disruption on account of this suspension. In a filing to stock exchanges, the bank said, “We will work closely with the RBI to address their concerns at the earliest to their satisfaction”.

The lender also assured its customers that they will not face any disruption and continue to experience uninterrupted services on the mobile app. “Further, this order does not impact any of the bank’s other digital banking channels such as net banking, WhatsApp banking, debit cards, ATMs, etc, for servicing its existing customers as well as for on boarding of new customers,” the lender added. The bank does not expect the RBI’s action to have a material impact on its overall business and growth plans.

In December 2020, the RBI had barred HDFC Bank from issuing new cards and launching new digital initiatives after repeated instances of technical outages, which is the market leader in the credit cards segment. Following several occurrences of breakdowns in online banking, mobile banking, and payment utilities over the previous two years, the RBI took action.

In August 2021, the RBI partially restored the prohibition on card issuances after HDFC Bank took corrective action. The prohibition against starting new technological ventures persisted, though, and it was repealed in 2022.

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Banking & Finance

Grow your money safely, the beginner’s guide to fixed deposits



Venturing into the world of investments can be intimidating, especially for beginners faced with the complexities of financial instruments and market volatility. However, there is a reliable and secure option available: Fixed Deposits (FDs). FDs are savings instruments provided by banks and financial institutions, where investors deposit a lump sum for a predetermined period and earn a guaranteed interest rate upon maturity. The simplicity and predictability of FDs make them ideal for those starting their investment journey.

Choosing the Right FD

Fixed deposits serve as a cornerstone for conservative investment strategies, offering a stable avenue for individuals to grow their wealth. For novice investors, understanding the basics of fixed deposits is crucial as they navigate the intricate world of financial investments. Before investing, it is essential to compare interest rates from various institutions and select the one that best suits your needs. Consider factors such as interest rate, tenure, interest payout frequency (monthly, quarterly, half-yearly, yearly), and safety ratings.

Key Benefits

Low Risk: FDs provide unparalleled security compared to most other investments. They are considered low-risk due to their guaranteed returns, principal protection, and liquidity.

Guaranteed Returns: Unlike market-linked instruments, FDs offer a fixed interest rate throughout the tenure, facilitating clear financial planning.

Flexible Tenures: Investors can select deposit periods ranging from a few days to several years, aligning with their specific needs and goals.

Compounding Effect: Choosing a cumulative FD allows interest to be earned on both the principal and the accrued interest, enhancing overall returns over time.

Guaranteed Income: Opting for non-cumulative FDs enables investors to receive interest payouts at regular intervals, providing a steady income stream.

Disciplined Savings: FDs promote disciplined savings by locking in the invested amount for a chosen period, helping beginners build a corpus for future goals without the temptation of impulsive withdrawals.

Building a Strong Foundation

FDs can act as a stepping stone for beginners, helping them build financial confidence and discipline. They offer a safe and predictable way to grow savings while imparting essential knowledge about investing. This foundational understanding can then be leveraged to explore other investment options as financial goals evolve.

Fixed deposits provide a valuable starting point for individuals embarking on their investment journey. Their low risk, guaranteed returns, and flexible features make them an appealing choice for beginners seeking a secure and predictable path to financial growth.

For those looking to start their investment journey or diversify their portfolio, Shriram Unnati Fixed Deposit offers an attractive option with returns of up to 9.40%* per annum. This option combines stability, security, and high returns, making it a compelling choice.

*This rate includes an additional interest of 0.50% per annum for senior citizens and 0.10% per annum for women depositors. For more information on fixed deposits and other investment solutions offered by Shriram Finance, please visit Shriram Finance or contact 18001034959 for assistance.

About Shriram Finance

Shriram Finance Limited is a leading diversified financial services company in India, offering a wide range of financial products and services across consumer, wholesale, and business finance segments. With a robust presence across India through over 2,900 branches and a dedicated workforce of over 70,000 employees, Shriram Finance focuses on financial inclusion and customer-centricity. The company continues to empower individuals and businesses to achieve their financial goals.

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Paytm added to small-cap index by MSCI, attracting potential inflows



One97 Communications, the parent company of the popular fintech brand Paytm, has achieved a significant milestone by being included in the MSCI Emerging Markets Small Cap Index. This inclusion is indicative of growing confidence among both domestic and international investors in Paytm, evidenced by substantial stake increases from foreign portfolio investors (FPIs), domestic investors, and prominent Mutual Funds such as Mirae and Nippon India Mutual Fund.

With Paytm being one of the 29 stocks included in the MSCI Small Cap Index, the move is expected to drive USD 273 million in inflows, which is crucial for benchmarking Indian companies on the international stage. The inclusion comes as part of MSCI’s routine review, aligning with evolving market conditions, scheduled for May 31, 2024. MSCI, a global leader in equity, fixed-income, and hedge fund indices, plays a pivotal role in shaping global investment trends.

During the March quarter of 2023-24, Indian mutual funds notably increased their holdings in Paytm. Mirae Mutual Funds elevated their shareholding to 2.39 crore shares (3.76 per cent), while Nippon Mutual Funds raised their stake to 1.66 per cent from 1.05 per cent over the same period. Consequently, domestic institutional investors (DIIs) witnessed an increase in stake to 6.86 per cent from 6.06 per cent.

The shareholding pattern available with the stock exchanges indicates that domestic mutual funds boosted their stake in Paytm by 1.77 per cent, reaching 6.15 per cent from 4.99 per cent at the end of the December quarter of the fiscal year. Retail investors also saw an uptick in shareholding, rising from 12.85 per cent to 14.53 per cent sequentially, while Non-Resident Indians (NRIs) witnessed an increase from 0.67 per cent to 0.85 per cent.

Simultaneously, FPI shareholding in Paytm surged by 2.49 per cent to 20.19 per cent in Q4-2023-24, with new investors including Tiger Pacific Capital, Societe Generale, and Norway’s Government Pension Fund Global investing in the stock. Notably, in February this year, Morgan Stanley Asia (Singapore) Pte. – ODI acquired 50 lakh shares of Paytm worth Rs 243.6 crore in a bulk deal, as confirmed by the company.

Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research, expressed bullish sentiments on India’s equity markets, attributing it to active participation from mutual funds and High Net Worth Individuals (HNIs)/retailers. Paytm currently boasts 60.4 per cent holdings by FIIs as of the March quarter of 2023-24.

Following NPCI’s approval on March 14, 2024, to onboard OCL as a Third-Party Application Provider (TPAP) on the Multi Payment Service Provider API Model, Paytm has expedited integration with Axis Bank, HDFC Bank, State Bank of India (SBI), and YES Bank. All four banks are now operational on the TPAP, facilitating a streamlined process for Paytm to transition user accounts to these Payment Service Provider (PSP) banks.

Moreover, Paytm is directing its focus towards UPI Lite wallet, targeting users preferring wallets for low-value everyday payments. Paytm UPI Lite serves as an on-device wallet, allowing users to store funds and make hassle-free payments without requiring a PIN. It promises lightning-fast transactions that never fail, offering convenience and efficiency to users on the go.

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Banking & Finance

India set to join bond index, JPMorgan confirms progress



JPMorgan Chase & Co. is poised to include India in its emerging market debt index starting from June, according to Gloria Kim, the firm’s global head of index research. Kim highlighted the positive feedback received from most of the firm’s index clients, indicating readiness to trade in the Indian Government Bond (IGB) market. She acknowledged that while there are operational challenges when entering a new market, they primarily relate to counterparties’ operational readiness and flexibility rather than barriers to entry, noting the reforms made by the Indian government.

One of the reasons foreign investors have been hesitant about India’s entry into global indexes is the complexity of the documentation process required for trading. However, JPMorgan announced last September its decision to include India in its emerging market bond index, where it will carry a maximum weight of 10 percent.

Kim estimates that foreign inflows into India could range between $20 billion and $25 billion, assuming an index-neutral position. Currently, the firm’s emerging-market bond gauge manages assets worth $216 billion. Kim emphasized the stickiness of assets tracking the index, noting their consistent nature over time. Since JPMorgan’s announcement, Indian sovereign bonds have witnessed approximately $8 billion in inflows into the Fully Accessible Route securities, although there were some outflows in April amidst a global debt sell-off. Notably, a Bloomberg gauge of Indian bonds has outperformed major peers this year. The long-awaited index inclusion is leaving a significant impact on various Indian assets, with corporate bonds also outperforming peers and foreign exchange reaching record highs. This influx of funds has contributed to the resilience of the Indian rupee against the backdrop of a strengthening US dollar.

Furthermore, Bloomberg Index Services Ltd. will commence including India in its emerging markets index from January, further solidifying India’s position in global financial markets. Kim acknowledged the substantial market reforms implemented by Indian government authorities to attract investors, including extending the trade-matching window for foreign portfolio investors and streamlining the onboarding process through the introduction of a single application form.

Additionally, the registration process was simplified by accepting digital signatures and scanned copies for account registration. Kim also highlighted the availability of India-dedicated bond exchange-traded funds and UCITS funds, offering intraday liquidity to investors, which have contributed to improving market accessibility and tradability for foreign portfolio investors.

Overall, India’s inclusion in global bond indexes represents a significant milestone for the country’s financial markets. The reforms undertaken by Indian authorities, coupled with increased investor confidence, are expected to enhance India’s attractiveness as an investment destination and further integrate it into the global financial system.

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Banking & Finance

ICICI Bank makes UPI payments easier for NRIs with international numbers



ICICI Bank, a leading private sector bank in India, has unveiled a groundbreaking initiative aimed at enhancing the convenience and accessibility of digital payments for its Non-Resident Indian (NRI) customers. In collaboration with the National Payments Corporation of India (NPCI), ICICI Bank now enables its NRI clientele to make Unified Payments Interface (UPI) transactions using their international mobile numbers, eliminating the need for an Indian mobile number registration.

This innovative service, introduced through ICICI Bank’s mobile banking app, iMobile Pay, represents a significant leap forward in facilitating seamless cross-border transactions for NRI customers. With this feature, NRI account holders can effortlessly conduct a variety of transactions, including utility bill payments, merchant transactions, and e-commerce purchases, using their international mobile numbers linked to their NRE/NRO accounts held with ICICI Bank in India.

The service is currently available to NRI customers residing in ten countries, including the USA, UK, UAE, Canada, Singapore, Australia, Hong Kong, Oman, Qatar, and Saudi Arabia. This expansive reach reflects ICICI Bank’s commitment to catering to the diverse needs of its global clientele and providing them with convenient access to cutting-edge banking services.

The process of activating the UPI facility on an international mobile number using the iMobile Pay app is simple and user-friendly. Customers can follow a few straightforward steps, including logging into the app, verifying their mobile number, and creating a new UPI ID linked to their account. This streamlined process empowers NRI customers to seamlessly integrate UPI payments into their banking routine, without the hassle of switching to an Indian mobile number.

Sidharatha Mishra, Head of Digital Channels and Partnerships at ICICI Bank, expressed enthusiasm for this initiative, highlighting its potential to revolutionize the digital payments landscape globally.

By leveraging NPCI’s UPI infrastructure, ICICI Bank aims to not only meet the evolving needs of its NRI customer base but also contribute to the broader transformation of the digital payments ecosystem.

The introduction of this service underscores ICICI Bank’s commitment to innovation and customer-centricity, as it continues to harness technology to deliver unparalleled banking experiences to customers worldwide.

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Banking & Finance

Bank of England’s rate cut plan set to differ from Federal Reserve’s



Bank of England might be cutting interest rates ahead of the US Federal Reserve. Tune into this detailed analysis to understand the key.

As the Bank of England gears up for its upcoming decision, speculation mounts on potential interest rate cuts this summer, contrasting with investors’ expectations of a postponed easing outlook. Governor Andrew Bailey has emphasized the UK’s divergence from escalating consumer price pressures in the US, highlighting “strong evidence” of receding inflation domestically. While economists anticipate the central bank to maintain rates at a 16-year high of 5.25 per cent, attention will be on hints regarding whether policymakers view June or August as opportune moments to initiate reductions in borrowing costs.

However, a dovish shift in tone by Bailey and Deputy Governor Dave Ramsden in April caused some economists to reckon that the timing of BOE cuts may be closer to the European Central Bank — which is widely expected to act in June — than to the Federal Reserve, whose chief, Jerome Powell, has avoided offering a timeline for US easing.

Bailey expects UK inflation to fall close to his 2 per cent target in upcoming data for April, though some on the nine-member Monetary Policy Committee are still concerned over underlying price pressures. “The BOE has sounded increasingly dovish at each of its meetings this year. We think there could be a similar theme in May with policymakers having lately signaled little concern about recent upside data surprises.”

The central bank decision will be followed on Friday by gross domestic product data predicted to show the UK economy exited a shallow recession in the first quarter. Economists expect the figures to show output growing 0.4 per cent after two consecutive quarterly drops last year.

Elsewhere, a cliffhanger decision in Sweden, a likely hawkish hold in Australia and rate cuts in Brazil and Peru are among the central bank announcements due.

The US economic data calendar is light. On Friday, the University of Michigan will issue its preliminary survey of consumer sentiment for May. Confidence is expected to be little changed as Americans assess elevated prices, high interest rates and a moderating job market.

A day earlier, the government will issue weekly jobless claims figures. Applications for unemployment benefits remain near historically low levels.

In the week after the Fed held rates unchanged, several central bank officials are scheduled to speak. They include New York Fed President John Williams and the Richmond Fed’s Thomas Barkin on Monday, followed by Neel Kashkari of Minneapolis on Tuesday. Later in the week, investors will also hear from Chicago Fed President Austan Goolsbee and Fed Governor Michelle Bowman.

The Bank of Canada on Thursday will publish its annual financial system review, assessing stability risks to the country’s banking sector. Officials previously flagged concerns about homeowners’ ability to manage debt in a high-rate environment.

On Friday, economists expect Canada’s April labour force survey to show job gains remain well below the pace of population growth, bolstering an argument for policymakers to pivot to rate cuts as early as June.

Asia The Reserve Bank of Australia may amplify its hawkish tone when it meets on Tuesday in the wake of hotter-than-expected inflation gauges for the first quarter, as well as robust jobs stats. The board will consider revised growth, inflation and labour-market projections, with any revisions probably signaling no policy pivot any time soon. Overnight Index Swaps are now pricing more chance of an Aussie rate hike than a cut this year.

On Thursday, Malaysia’s central bank sets its benchmark rate and the Bank of Japan releases a summary of opinions from last month’s meeting, when Governor Kazuo Ueda’s seemingly sanguine stance on the yen helped usher in more losses for the beleaguered currency.

In data, Indonesia first-quarter economic growth is seen staying around 5 per cent year on year, while it may contract a tad versus the prior quarter. The Philippines also releases GDP data. Consumer inflation figures are due in the Philippines, Thailand and Taiwan, while China, the Philippines and Taiwan all get trade data.

Japan’s wage stats on Thursday will probably look a little glum as the outsized pay increases pledged by companies after negotiations with unions won’t fully kick in for a few more months.

Europe, Middle East, Africa On Wednesday, Sweden’s Riksbank could become the second major developed-world central bank – after the Swiss National Bank – to lower rates in what looks likely to be a cliffhanger decision.

After their meeting in March, Governor Erik Thedeen said he and colleagues expect to make their first easing move in May or June. Domestically, there are now very few obstacles to them acting sooner rather than later. Inflation has slowed and looks set to fall below the central bank’s 2 per cent target, the economy remains sluggish, and companies appear to have concluded that they won’t be able to raise prices to the extent they have in the past couple of years.

However, the krona still concerns policymakers, who’ve watched the currency weaken almost 5 per cent against the euro this year. If they decide they can’t risk further deterioration, that could be a reason to delay a first cut, much as Norway did on Friday.

On the other hand, there’s scope to argue that whatever the Swedish central bank does, the currency’s destiny is determined by other factors, including risk aversion and US bond yields. If that view wins the day, the Riksbank could well cut.

Three other monetary decisions are expected around the wider region: On Tuesday, sticky inflation may persuade Madagascar’s central bank to keep its rate at 11 per cent for a third time in a row.

Two days later, Poland’s central bank will likely also leave borrowing costs unchanged, even after April inflation stayed within its target range. Governor Adam Glapinski, who holds his briefing the following day, has repeatedly quashed expectations for rate cuts this year.

And the National Bank of Serbia on Friday is likely to keep its rate at 6.5 per cent for a 10th month, cautious to avoid premature easing while watching to see how long peers in bigger economies wait before cutting.

In the upcoming week, alongside other central bank events, a Bank for International Settlements conference in Basel will host monetary leaders from Germany to Singapore. The European Central Bank (ECB) agenda includes appearances by Belgian governor Pierre Wunsch and Executive Board members Luis de Guindos and Piero Cipollone. Additionally, a report detailing the central bank’s April 11 decision will be released on Friday. Due to public holidays occurring on various days across economies such as the UK and France, the frequency of data releases will be restricted.

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Banking & Finance

Lenders seek RBI nod to transfer Jaiprakash associates loan to NARCL



SBI-led lenders seek RBI approval to transfer JAL’s Rs 18,000 crore debt to NARCL for a Rs 10,000 crore acquisition.

State Bank of India (SBI) and other lenders have sought RBI approval to transfer Jaiprakash Associates’ (JAL) Rs 18,000 crore debt to the National Asset Reconstruction Company Limited (NARCL). This would mark NARCL’s biggest debt acquisition from a single company, with an offer of Rs 10,000 crore to lenders pending RBI’s approval. NARCL has made RBI’s approval a prerequisite for acquiring JAL’s loans, as per reports.

JAL is the flagship firm of the Jaypee Group, led by Manoj Gaur, and operates in cement, hospitality, real estate, fertilizers, and construction. In Financial Year 2022-23, NARCL acquired 62% of Jaypee Infratech’s debt amounting to Rs 9,234 crore, resulting in a 39% recovery for lenders through an uncontested Swiss challenge auction.

Lenders are pursuing approval because in 2017, shortly after the enactment of the Insolvency and Bankruptcy Code (IBC), the RBI instructed banks to refer 28 companies, including JAL, for debt resolution under IBC. JAL was part of the second batch of 28 accounts referred by the RBI for resolution under the IBC.

Although banks initiated the debt resolution process for JAL by filing an application with the National Company Law Tribunal (NCLT) around the same time, the company has not yet been admitted due to ongoing litigation.

For some of the 28 companies referred by the RBI, lenders sold debt to private asset reconstruction companies without RBI approval. For JAL’s debt resolution, they are seeking proper channels.

In November last year, Jaiprakash Associates entered into an agreement with ICICI Bank to transfer 18.9 crore shares to the bank, which were pledged as collateral. It was anticipated to result in a recovery of approximately Rs 366 crore for the bank, based on the last closing price of the shares.

However, lenders assert that JAL’s complex structure, comprising multiple large businesses under one entity, necessitates RBI clearance for NARCL’s acquisition to avoid potential regulatory issues.

If lenders proceed with the debt transfer to NARCL, the asset reconstruction company will gain control over JAL’s cement division, prime land housing the Buddh International Race Circuit, several luxury hotel properties, and a construction business.

Separately, SBI and ICICI Bank have filed petitions with the Allahabad NCLT to admit JAL for debt resolution. Meanwhile, Dalmia Cement (Bharat) has made a binding offer to acquire JAL’s clinker, cement, and power units at an enterprise value of Rs 5,666 crore. The funds from this offer are intended to partially settle the lenders’ debt.

Although the cement unit has a capacity of 9.4 million tonnes, the clinker plant boasts 6.7 million tonnes, and the power plant generates 280 MW, the deal remains pending as lenders have not issued a no-objection certificate.

NARCL’s proposed offer includes a 15% cash component and the remainder in securities receipts, comprising a cash portion of Rs 1,500 crore and the remaining Rs 8,500 crore as securities receipts redeemable upon NARCL’s recovery of the dues.

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