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Tag: Indian bank

  • Indian Bank empanelled as a Clearing and Settlement Bank with ICCL

    Indian Bank empanelled as a Clearing and Settlement Bank with ICCL

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    Indian Bank on Friday said it has been empanelled as a Clearing and Settlement Bank with the Indian Clearing Corporation Ltd (ICCL).

    The public sector bank can now facilitate banking services to members of BSE for clearing and settlement operations.

    “Now, the clearing members can open settlement accounts with the Bank for funds settlement under equity derivatives segment,” the bank said in a statement.

    “The proposal to extend this facility to the members of NSE is under active consideration,” it added.

    The bank also launched the e-TDR product for online transmission of FDR and margin with ICCL on behalf of the clearing members with its dedicated branch – Fort, Mumbai.

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  • AT-1 Bonds: Market has become polarised towards larger/ quality banks, says Jefferies

    AT-1 Bonds: Market has become polarised towards larger/ quality banks, says Jefferies

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    The Additional Tier (AT)-1 bond market has polarised towards large/quality banks post the writedown of these bonds aggregating ₹8,415 crore by Yes Bank in the fourth quarter of FY20, according to Jefferies.

    This observation comes in the backdrop of UBS’ acquisition of the troubled Credit Suisse entailing a write-down of the latter’s AT-1 bonds aggregating $17.2 billion.

    Explained: How will the Credit Suisse crisis impact India?
         Explained: How will the Credit Suisse crisis impact India?
     

    “India had a Credit Suisse-like AT-1 bond issue right around Covid when Yes Bank wrote-down AT-1 bonds and still there was some franchise value assigned to equity through capital infusion by leading banks/ NBFC.

    “Since then, the issuances have been lower and market has become polarised towards larger/ quality banks,” Brokerage firm Jefferies said in a report.

    Top contributors

    Among banks, the top three issuers are the State Bank of India (SBI), HDFC Bank, and Canara Bank with public sector banks (PSBs) having higher contribution from this.

    PSBs have a higher share of AT-1 bonds in capital structure compared to private sector peers, Jefferies said.

    Among PSBs, SBI had AT-1 capital of ₹41,500 crore, followed by Canara Bank (₹12,400 crore), Punjab National Bank (₹8,700 crore), Bank of India (₹2,900 crore), and Indian Bank (₹2,000 crore), the firm said.

    Among private sector banks, HDFC Bank had AT-1 capital of ₹12,300 crore, followed by ICICI Bank (₹5,100 crore), Axis Bank (₹4,800 crore), IndusInd Bank (₹1,500 crore), and Kotak Bank (₹500 crore)

    “Interestingly, smaller banks have a lower contribution from AT-1 bonds. Local bond market investors aren’t really seeing risks here for Indian stocks,” Jefferies said.

    ‘Better-placed’

    The report observed that Indian financials (banks and NBFCs) have also borne the rub-off effect of global dislocations. But, they are better placed with a higher share of retail deposits, limited ALM (asset-liability mismatch) gap & MTM (mark-to-market), limited dependence on AT-1 bonds, and lower exposure to riskier segments like promoter/acquisition finance.

    While equities and global bonds saw pressure off late, the local bond market is stable. Post correction, valuations of some are near/below Covid lows, the firm said.

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  • India, Singapore link systems for real-time money transfers

    India, Singapore link systems for real-time money transfers

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    India and Singapore linked their systems that enable real-time money transfers between the two nations, as countries in the region seek to bring down barriers to the quick movement of funds.  

    Reserve Bank of India’s Governor Shaktikanta Das initiated the first transaction with his counterpart Managing Director Ravi Menon, according to a statement Tuesday by the Monetary Authority of Singapore.

    The India-Singapore payment connection is part of the trend in Asia where instantaneous, cross-border fund transfers via mobile phones are happening, bypassing bank branches and doing away with high transfer fees. Singapore rolled out a similar connection with Thailand in 2021, and said it’s working with Malaysia for such project.

    Also read: EbixCash becomes first entity to enable UPI for foreign nationals

    Singapore is among the top countries sending remittances to India, after the US, United Arab Emirates, and the UK, according to RBI. The Southeast Asian city-state accounted for almost 6 per cent of India’s total inward flows of $89 billion from individuals in the fiscal year ended March 2022.

    Fund transfer

    DBS Group Holdings Ltd. is the first participating bank from Singapore in this tie-up. Apart from DBS, non-bank financial institution, Liquid Group, will also offer the cross-border fund transfers.

    The banks in India participating in this linkage are Axis Bank Ltd., DBS India, ICICI Bank Ltd., Indian Bank, Indian Overseas Bank and State Bank of India, the MAS statement said. 

    For a start, selected customers of Singapore’s largest bank will be able to use the so-called PayNow-UPI linkage to transfer funds of as much as S$200 ($150) per transaction, capped at S$500 a day, according to a DBS statement. The service will be extended to all customers by March 31, and they will be able to transfer funds of as much as S$1,000 a day. 

    Also read: BL Explainer-UPI for NRIs: Here’s how it works

    Among banks in the city-state, DBS has been the most aggressive in expanding in India. It bailed out a struggling local lender more than two years ago, and has been looking to invest more in its India unit to accelerate growth. 

     

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  • Use of technology in banking, its obstacles explained by top Indian bank CEOs

    Use of technology in banking, its obstacles explained by top Indian bank CEOs

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    Sanjiv Chadha, MD & CEO of Bank of Baroda, says the usual link between growing the business and growing the physical footprint has broken for all times to come. “The mobile channel is pretty much the bank for sourcing, distribution, and servicing,” says Chadha.

    Chadha gave the example that the public sector bank has grown its business by 35-40 per cent in the last three years, but the number of branches has come down by 15 per cent and staff has not grown at all. “That means enormous operating leverage can be created through technology if you get your act together,” he adds.

    V Vaidyanathan, CEO of IDFC First Bank, says growing credit is easy, but the role of technology is to enable a seamless experience, reach out to underserved people, and help build a quality portfolio.

    Dinesh Khara, Chairman of SBI, says, ”what we see on the face is the customer’s convenience, but there are other elements like the risk and payback period.” Khara was amongst the panellist in an IBA seminar on banking technology here today.

    AK Goel, MD & CEO of Punjab National Bank, touched upon the issue of technology creating ’affordability’ for the masses. IDFC First’s Vaidyanathan pointed out that one of the biggest paradoxes of banking is that the poorer you are, the higher the interest rate you end up paying. “The big role technology should and can play is by reducing the cost of operations at the bottom of the pyramid,” says Vaidyanathan.

    PD Singh, CEO of JP Morgan Chase Bank, says that the foreign bank spent over US $12 billion last year, which is more than the size of many tech companies. “That’s how important it (technology) has become,” says Singh.

    In terms of IT skills and talent, the largest bank has created a new cadre within the bank.

    “We are also hiring IT talent from the market,” says Khara. In fact, the SBI made a senior lateral hire in Nitin Chugh, the deputy MD and Head of Digital Banking. Chugh previously served as the CEO of Ujjivan Small Finance Bank and as the digital head of the private-sector HDFC Bank.

    Chadha says that the technology partner could help you bring a change to the organisation, but embedding the change doesn’t come easily. “That’s where bringing in lateral talent and allowing it to grow is fundamental to that change,” believes Chadha.

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