targeting unbanked, underbanked focusing on retail...

Housing

NHB - geared to accomplish

for all by 2022Sriram Kalyanaraman MD & CEO, National Housing Bank

www.bankingfrontiers.com

Vol. 14 No. 12 April 2016 `75

Pages 64

Targeting unbanked, underbanked

Focusing on retail

Bankbazaar.com

Banking in the Gulf

Mobile Payments and Cyber Security17th May, 2016, The Lalit Mumbai, India

For More Details Contact: [email protected] Event Programme Shivani Lal [email protected] +91-9582229842For Sponsorship Ayushi Sharma [email protected] +91-9654505242For Registration Lakshya Sood [email protected] +91 8447690277

Key Issues:

Mobile Payments and Future

Specific Control and Security Measures for Mobile Payments

Cyber Security-Impact on Future of Banking

Innovations- Security, Authentication and Biometrics

Fighting Fraud Online

Data Privacy in the Age of Mobile

4th SECURE BFSI CONCLAVE

Organiser: Technology Partner: Sponsor: Media Partners:

Banking Frontiers April 2016 3

Editor’s BlogManoj AgrawalMobile : 98673 66111Email : [email protected]

April 2016 - Vol. 14 No. 12

Group Publisher : Babu Nair

Group Editor : Manoj Agrawal

Editor : N. Mohan

Editorial

Mehul Dani, V. Raghuraman, Ravi Lalwani,

Surekha Galagoda, Mohammed Irshad

Research Editors

Prof Venugopal Iyengar, V. Babu,

Ratnakar Deole, W.A. Wijewardena,

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Marketing

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ATM power problems - seek out-of-box solutions

I was recently at a seminar where there was a panel discussion on ATMs. One point stressed by the panelists was that more than anything, the biggest

constraining factor for uptime of ATMs in the rural areas has nothing to do with technology but is simply the lack of power availability. There were discussions on using solar panels and windmills and the problems encountered with those technologies.

This set my thinking why there is such a narrow range of alternatives. In nature, energy is available in many forms including kinetic, potential, magnetic, electro-magnetic, chemical, nuclear, etc. Then why do we not explore a broader spectrum of alternatives for energy to run ATMs?

This set me thinking outside the box….and I could visualize one form of power that is plentiful in rural areas - animal and human muscles. A farmer owning one or more cattle would happily rent it out to a bank every day to charge the ATM UPS batteries….and surely it wouldn’t cost a bomb. Another out-of-box idea is for a bank to put up a hand pump next to the ATM for charging the batteries. Ten strokes of the hand pump should generate enough electricity to do a normal ATM transaction. Alternatively, a bank could build a hand pump for drawing underground water and part of the energy for pumping up the water can be used to charge the ATM UPS batteries.

The bottomline is that to find a workable solution, one should look outside the (technology) box.

I encourage all bankers and technologists to look for simple and practical out-of-box solutions….it is not advisable to limit the scope of innovation to hitech solutions only.

If you need a dose of inspiration to come up with really innovative solutions, I request you to see the movie 3 Idiots once again.

• Banking Frontiers congratulates Andhra Bank and all its stake holders for achieving the milestone of 1000 branches.

• Banking Frontiers congratulates Saraswat Cooperative Bank for crossing the milestone of `50,000 cr business mix.

• Banking Frontiers congratulates Apna Sahakari Bank for crossing the milestone of `5000 crore business mix.

4 Banking Frontiers April 2016

HOUSING

HIGHLIGHTS April 2016

NHB - Housing for all by 2022National Housing Bank is an apex agency for the central government’s ambitious ‘Housing for All by 2022’ program. Sriram Kalyanaraman, MD and CEO, outlines the work his organization has in hand10

Future Generali - focus retailFuture Generali India Insurance Company already has a retail focus but it wants to enhance this. It’s a challenge and the company wants to take this up, says its MD and CEO K.G. Krishnamoorthy Rao

BankBazaar.com plans international forayBankbazaar.com is expanding internationally and has engaged Aman Narain, a digital banking veteran, to lead the expansion as CEO, BankBazaar International. Narain outlines his planned initiatives24

Targeting the unbanked, underbankedProviding the benefits of digitized payments systems to one and all in the country is the mission for Naveen Surya, MD, ItzCash Card8

22

Events Diary ..........................................5

Project Pipeline ....................................6

UPI launched ......................................15

Indian banks stable ..........................20

SBI digital efforts ..............................26

Credit bureaus ..................................28

CFO survey ........................................29

Suvidha-Axis Bank tie-up ...............30

China economy ................................. 32

Mexico’s peso.................................... 34

Fraud trends ......................................35

NBFC performance analysis ..........42

MFI growth .........................................48

Banks engage space .......................49

Technoviti Conference ....................50

News MFIs ..........................................54

ITC Bank .............................................55

Kurmanchal UCB ..............................56

Ahmednagar DCCB .........................58

News Cooperatives .........................59

News Pix .............................................60

People Track .......................................61

Other interesting stories

Cover Story

Banking in the GulfHighlights of banking operations in the Gulf region16


Conference Calendar

The World Islamic Banking Conference -

Asia Summit

2-4 June 2016, Singapore

The conference, held in association with the Monetary Authority of Singapore will assess the high-growth prospects for Islamic finance across Asia

4th Annual Retail Banking Forum

2-3 June 2016, London

The conference will be focusing on what banking products and services are currently in demand, which sales channels are the most efficient, which methods of promotion of banking products are more successful

China International Banking

Convention 2016

6 June 2016, Beijing,

The Convention will discuss the most current trends in the industry, as well as challenges, new solutions and best practice case studies

12th Annual Credit Risk

Management Forum

8-9 June 2016, Vienna

Credit risk management is still a big issue, IFRS 9 is going to be implemented, stress testing is on the table and the digital era

and big data is already influencing the banking sector and credit risk management as well

Payments Innovation Summit

8-9 June 2016, San Francisco

The Summit is the premier gathering of business and thought leaders, representing the most profitable payments market leaders, innovators and disrupters in the industry

Harnessing Fintech Innovation in Retail

Banking


The only event offering an executive level platform where retail banks can determine the right path to embrace fintech rather than compete with it

Mobile Payment China 2016

15-16 June 2016, Shanghai

The convention is dedicated to driving mobile payment adoption and innovations with higher level of user friendliness, payment security & business model

Retail Banking Analytics Europe


The event will present solutions for data management and data culture development

challenges to allow banks to define an agile, automated and actionable analytics strategy that will improve profitability and enforce customer centricity in an increasingly digital and competitive landscape

Digital Banking 2016

20-22 June 2016, New Orleans

The event will cover the trends and innovations in mobile and tablet banking, cyber security, authentication, mobile wallets, mobile payments, wearable computing, account opening, onboarding, user experience, analytics and more

2016 International Congress on Banking,

Economics, Finance, and Business

24-26 June 2016, Sapporo, Japan

The congress serves as a platform for international exchange of ideas, collaborations and cooperation

Avoiding Digital Destruction

28 June 2016, London

The global banking and cyber security conference brings together several financial services sector organizations

Banking and Cyber Security


The conference will discuss digital identity, security and online fraud

The Future of Digital Banking


Join 200+ bankers from across the globe, hear key decision makers at incumbents, challengers and start-ups on the issues shaping the industry

Myanmar Banking Conference

28-29 June 2016, Yangon

The conference will cover banking trends in Myanmar


Project Pipeline

SBI wants multi-vendor ATM support servicesState Bank of India group is seeking a multi vendor ATM software and support services. The bank at present has around 50000+ ATM/CD/CDM/recycler/smart ATM/kiosk of diverse makes and models with their respective application software. In view of terminals of multi-vendors, monitoring, maintenance and support of such diverse terminals become very complex and time consuming. Any new deliverable requires proper testing in all makes and models thereby makes the deployment of the same very complex and difficult.

The bank is therefore looking for a flexible multi-vendor software platform for self service terminals, with abundant and full-scaled graphical development tools. It should allow fast and flexible adjustment of transaction flow on banking terminals. It should support fast and easy integration across multi-channel terminals to reduce cost and risk for new services; and to react to customers’ expectation in a faster time for both current and future facilities.

RBI to have a new eLearning systemReserve Bank of India is proposing to implement a state of the art eLearning system and has sought proposals for its design, development and support. The central bank wants the new system to be SCORM 2004/SCORM 1.2 compliant based on the content that would be provided by it. The developed system will then be integrated with the bank’s Learning Management System (LMS). The SCORMing will have to be done at Learning Object Level. The bank is at present in the process of implementing the learning solutions module of SAP HCM as Learning Management System and the eLearning content is to be distributed on this platform. The system will be developed in HTML 5 and / or SWF formats. The content will be delivered through mobile devices, tablets etc if required. Besides, the eLearning content will have to be developed in Hindi and other national languages.

RBI to have automated CMSThe Reserve Bank of India is automating the process of handling of complaints received by it and is planning to set up a state of the art Complaint Management System (CMS). The application software will be hosted at the RBI’s data center and DR site. It now proposes to engage a consultant to advise it on this. The selected consultant will in the first phase, do an exhaustive study of user requirements and based on the requirements, suggest whether any off-the-shelf software is available which, (with minimum modifications can be procured to meet the requirements. If an off-the-shelf system is not available the consultant would undertake the process of developing a new IT System for testing and implementation. The consultancy would involve the study of the existing compliant tracking system package and implementation and roll-out of the new CMS, which is expected to be an online platform with user interfaces with access capabilities at various locations across the country and also for the general public.

AML solution for BoI RRBsBank of India is setting up anti-money laundering solution for its four regional rural banks, which are already on CBS. The bank plans to implement the AML solution as a part of the monitoring and administration functions. The solution deployed would be in line with the government / regulatory AML requirements and would be required to be interfaced with the CBS and other 3rd party solutions to meet the business requirements. The bank has sought proposals from service providers in this regard.

PNB for intrusion prevention system

Punjab National Bank wishes to set up an intrusion prevention system for its internal network at its data center. The bank has sought proposals for the same. The bank wants a heterogeneous network system (internal network accessed by the branches and various other entities and external network accessed by customers and related entities). The selected service provider will have configure the network architecture of the proposed system taking into consideration the bank’s needs besides supplying and installing the system. The bank intends to procure one unit of the appliance.


NPCI to get certification for BBPSNational Payments Corporation of India proposes to empanel agencies for providing resources for executing certi f ication and on-boarding of Bharat Bill Payment Operating Unit (BBPOU) and / or

testing of Bharat Bill Payment System (BBPS) solutions and other products. The preferred location would be from NPCI Chennai / Hyderabad facilities. Even though it is predominantly for BBPS/BBPOU certification purpose, on a need basis the services may be extended to other NPCI product certifications as well. The BBPS will function as a tiered structure for operating the bill payment system in India with a single brand image providing convenience of ‘anytime anywhere’ bill payment to customers. The objective of the BBPS is to implement an integrated bill payment system in the country that offers interoperable and accessible bill payment services to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of receipt of payment.

UBI looking for managed services providerUnited Bank of India is looking for a managed services provider for managing and supporting its CBS and other business applications. It is also proposing to acquire new applications along with infrastructure and core networking and security solutions. The selected service provider will be providing facility management service to manage and support data center infrastructure along with CBS and surround applications. Alongside, the service provider will also meet the bank’s requirements in hardware infrastructure / equipments / solutions for CBS and surround applications including migration and AMC. The bank is using Finacle 7.0.18 and it also has asset liability management solution. It also needs maintenance support for financial inclusion, SMA alert, public financial management system, salary application for RRBs and biometric. Besides, the service provider will be required to supply, install and maintain applications like internet banking, mobile banking, HRMS, AML, LAPS, etc.

Oriental Bank to change its structureOriental Bank of Commerce is proposing to remodel its organizational and operational structure and is looking for a consultant to advise it on a course of action. The bank has ambitious and aggressive plans to grow in terms of business, profitability and outreach and wants to counter competition, address the varied customer profile and the increasingly demanding customers and take care of the vast geographic spread as well as technological advancements. Besides, it wants to concentrate the process driven activities to back office for effectively utilizing the resources for routine and mundane activities of various service outlets at central locations as well as decreasing redundancies at service outlets. The bank intends to appoint a management consultant for assisting in conceptualization, planning, strategy, fine-tuning, documentation, pilot/ roll-out, implementation, formulation and benchmarking for organizational transformation. The selected consultant will help the bank in finalizing a strategy for remodeling the current branch structure, segmentation and related reporting structure and in setting up a vertical workflow and process flow from service outlets to corporate office level for all activities including audit, compliance, services, operation etc and reporting set up.

Sidbi looking for consultant for BPRSidbi is planning to undertake a business process re-engineering for its IT services and it wishes to appoint a consultant for the purpose and for overseeing project management for its IT initiatives. The bank had engaged PriceWaterHouseCooper (PwC) to formulate an IT strategy and roadmap and the consultancy has suggested among other things BPR across the bank before taking up for implementation other recommended initiatives. The BPR exercise would also include process documentation, followed by creation of the Functional Requirement Specifications (FRS) for selection of the solutions. The bank had also engaged KPMG as consultant for redesigning IT security architecture and the firm has made recommendations. The scope of the consultant would include selection and implementation of new IT initiatives to be undertaken by the bank over the next 3 years.

Andhra Bank to have new websiteAndhra Bank is planning to have a corporate website hosted on a Windows platform. It wants to have the website hosted on dedicated servers at its own data center and DR site and is looking for related hardware, software and support services. This is an end-to-end project and includes design, commissioning, configuration, operationalization, testing, go-live services (i.e. manage and maintenance of all proposed hardware, software, utility tools etc.) managed services and support for hosting the site. However, website development is not included in the scope. As a part of the infrastructure for website hosting, a total number of 3 servers are to be deployed with 2 servers at primary location with high availability and 1 server at DR with similar configuration with auto replication facility. The server at DR will be used for testing the backup for the restorability once in every 6 month of time and for patch management also.


Digitization

An omni-channel, omni-product strategy in payment systems? That’s precisely what Naveen

Surya has adopted to service customers, who are at the bottom and middle of the pyramid. The managing director of ItzCash Card, one of the top payments solutions company in the country, strives to provide the conveniences of digitized payment transactions to as many people as possible in the mass middle segment and beyond. And in this effort, he strongly believes only an omni-channel, omni-product strategy can succeed.

What he means by this strategy is that a customer can effect a transaction through a mode of his choice - cash, cards, internet, or mobile wallet - at over 60000+ lakh touch points his company has set up across the country.

“I will describe our target audience as the ‘unbanked’ and ‘underbanked’ population in the country,” explains Surya. “We largely cater to the mid section of the pyramid - specifically the mass middle income class population, the segment that is either unbanked or underbanked. Typically, a majority of this segment would have a bank account but that would have rather remained unoperational for several reasons. So, they depend on cash. Our intention is to help them participate in digitized transactions.”

ItzCash Card has been in business for the last 10 years in the payments and settlement space and it has witnessed the system transforming from a pure off-line model to an online digitized model and the transparency, efficiency and robustness that have come in its wake in the financial

services sector as a whole. “But, what bothered us was the fact that unless the entire population is able to make use of the medium, there would not be any real benefit that would accrue to the country,” says Surya.

GROWTH IN CARDSHe explains further: “When we talk about digitization of the payments and settlements domain, we can talk about the exponential increase in the use of debit and credit cards, internet banking and now mobile banking. While credit cards we have been witnessing growth in volumes, the platform has not been able to draw an impressive number of unique

customers. Debit cards, on the other hand have seen a remarkable surge in customer base growing from a mere 10% to 40% in the last 10 years.

“However, the challenge here still lingers since a debit card which has been designed as a multi-purpose device, is still mainly used as ATMs rather than on multiple spending platforms. This clearly depicts a typical customer usage pattern wherein people are not comfortable using the services of debit cards. Thus to unlock a huge potential market, there was a need for providing them the access to these services.”

He goes on to add: “I will broadly divide the customers into three categories. The first category can be described as the ‘knowledgeable ones’, who are able to make effective use of digital banking, including mobile wallets. The second is the ‘not knowledgeable ones’, who do not have any means to make use of the advanced banking systems, including credit or debit cards because of various socio-economic and other reasons. Unfortunately this segment constitutes as much as 55% to 60% of the whole population of the country. So, when they have to book a railway ticket or pay a utility bill, they have to travel to the nearest railway station or an extension counter outlet, stand in a queue and make cash payments, involving waste of their precious time. The third segment can be called ‘the knowledgeable ones but who are not able to make use of the digitized banking systems. This category may be aware of the digitized facilities but cannot afford to have credit or debit cards and may not be adept at using mobile banking or internet banking.”

Providing the benefits of digitized payments systems to one and all in the country is the mission for Naveen Surya, MD, ItzCash Card, India’s first non-banking entity to be allowed to carry out financial transactions:

Targeting the unbanked, underbanked

Naveen Surya describes how ItzCard’s prepaid cards can virtually function as debit cards


TWO SEGMENTSItzCash Card caters to the last two segments through what Surya explained as omni-channel, omni-product strategy. Says he: “For example, a customer from the second category can book a railway ticket through our franchisees by just paying the cost of the ticket in cash and thereby avoiding spending time in travel and standing in the queue. Similarly, he can pay his utility bills too at our franchisee outlets. As regards the third category, we can offer them our prepaid cards depending on their needs and these customers can make use of these cards virtually like a debit card. Alternatively, if they have their own debit cards but do not have the confidence to make use of the internet, they can approach our franchisees with their cards and get the bookings done or the utility bills paid. In short, we serve the customer on the basis of his choice.”

ItzCash Card is India’s first non-banking entity that has been authorized by RBI under the Payment and Settlement Systems Act, 2007 to carry out financial transaction activities that help customers make use of the digitized instruments. Today, it has 60,000+ ItzCash World outlets across 3,000 tier I to IV cities; it has issued 110 million wallets (Open loop,Semi closed and closed loop), and on an average it carries out 500,000 transactions on behalf its customers every day through its channel.

“So,” says Surya, “ ItzCash World outlets can attend to payments requirements of customers in segments such as travel, utilities, shopping, mobile services, entertainment, donations, insurance and hotels. We undertake on our customers’ behalf payments towards electricity bills, water bills, mobile bills, gas bills, phone bills, tax bills, and DTH subscriptions.

PRODUCTSAs products, the company offers prepaid cards/wallets of all 3 kinds (open loop, semi closed and closed loop). It also provides money transfer services thereby helping the migrant workers to send

money back home without any hassle. The money transfer service is available at the ItzCash World Outlets, enabling walk-in customers even without bank accounts to transfer funds to any bank account anywhere in India. Under this, a person can transfer up to `10,000 a month to beneficiaries across 3000 locations in the country. ItzCash is one among the top two money transfer companies in India today.

3 UNIQUE OFFERSSurya lists out three of the company’s unique offers. “We have SaralItzCash, Octroi Silver Card and ItzCash Campus card. SaralItzCash is empanelled with UIDAI as an Authentication User Agency (AUA). The card enables disbursement of wage payments under MNREGA, cash transfer of food subsidy under Public Distribution System (PDS), social security pension disbursement, subsidies disbursements, labor welfare board disbursements and scholarships disbursements. The card is customized to Open Loop / Semi Closed Loop or Closed Loop programs. The ability to use prepaid services through POS machines/ ATMs, or on the internet and even over the phone provides the cardholder with access to many other user benefits unavailable to them previously.

Similarly, the Octroi Silver card, an exclusive close ended card was designed for the Municipal Corporation of Greater Mumbai and State Bank of India, for collection of octroi in Mumbai. It was a successful project which was undertaken to automate the collection of octroi at traffic checkpoints. The card was exclusively used by truck drivers for bringing building material into Mumbai region.

“ItzCash has a NFC based card that

provides students the convenience of fulfilling all their needs - for payments and purchases. Students and faculty at IIT, Bombay make use of such card for all their campus requirements like payments for stationery, library, mess, etc.”

CASH TRANSACTIONSDoes he think the country can cut down its cash transactions?

“I believe so,” says Surya. “I’ll give you a simple example. Take the case of MFIs. If they adopt a prepaid card system for their operations, the entire operation can be cashless. They can provide prepaid cards to the beneficiaries into which they can transfer funds. The beneficiaries can also link the cards to Aadhar by which the DBT can happen. Payments up to `10,000 into these cards can be done with minimum KYC, while higher amounts would need full KYC. The repayments of loans can be done through these cards. When the beneficiary is in need of cash, he or she can walk in to an ATM and draw cash. This can be an end-to-end solution and I am of the view that this can be replicated in other scenarios as well.”

AWARENESSSurya is, however, circumspect: “In spite of being a pioneer in creating an ecosystem where cash transactions are minimal, I would say we have to go a long way still. For example, the need to create awareness about these conveniences. While we aspire to cover the whole of the unbanked and underbanked population with our Omni-channel and multi products, we need to make sustainable efforts to create awareness about our products and services, using one on one engagement tools and other medium of communication.

[email protected]

ItzCash team in a marketing campaign at a masjid in Hyderabad


Cover Story

Housing

NHB - geared to accomplish

for all by 2022

N. Mohan: Can you outline the activities

that you propose to undertake as the

nodal agency for the implementation of

Pradhan Mantri Awas Yojana? Do you

think the target of disbursing `20,000

crore in 2015-16 is achievable?

Sriram Kalyanaraman: National Housing Bank is the central nodal agency for the implementation of the credit linked subsidy scheme under the Pradhan Mantri Awas Yojana. In the last few months, we have been able to lay down the necessary groundwork for quick and effective rollout of the scheme. We have entered into MoUs with 143 primary lending institutions, comprising a fair mix of housing finance companies, scheduled commercial banks

and RRBs, and we have already received and processed subsidy claims from more than 40 institutions so far. We have also been holding regional workshops across the country to sensitize the staff of the lending institutions about the scheme and its requirements. To date, we have held 7 regional workshops and there will be several more. As to our regular refinance we have already disbursed nearly `18,000 crore till 31 March 2016 and we are hopeful of achieving the targeted numbers by our year end, that is, June 2016.

How successful is NHB in creating

resources for itself to meet the targeted

loan disbursals?

As NHB is regulated by RBI, resource raising norms applicable to financial institutions govern us in creating resources. We have been able to completely avail the limit with a good mix of all instruments. There are both short term and long term borrowings from markets as well as from other financial institutions, both within India and abroad as well. From the domestic market some of the instruments through which we raise resources include commercial papers, bonds in the nature of debentures, term loans from banks/LIC. We have also availed lines of credit from bilateral institutions like Asian Development Bank, KfW, Germany and DFID, UK and also from multilateral institutions like the World

National Housing Bank is an apex agency for the central government’s ambitious ‘Housing for All by 2022’ program. Sriram Kalyanaraman, MD and CEO, outlines the work his organization has in hand:

Cover Story


Bank. In addition, we have received funds under the Rural Housing Fund and Fund for affordable Housing to Urban Poor/EWS/LIG (UHF). We have also mobilized deposits from public under two schemes - Sunidhi Term Deposit Scheme and Suvruddhi Term Deposit Scheme (Tax Savings under section 80c of Income Tax Act, 1961). As on 31 December 2015, our total borrowing outstanding was `44,223 crore.

Can you talk about the target audience

and what have been your experiences in

meeting their needs?

As you know, NHB is the apex housing financial institution in India and is mandated to promote and develop the housing and housing finance sector in the country. Since inception, we have been working to facilitate the supply of affordable housing for the ‘bottom of the pyramid’ (BoP). We provide equity and concessional loan assistance to mortgage lenders for increased home ownership among lower income households. To supplement the flow of credit, our refinance window provides retail lending institutions with an economical and efficient source of fund for their housing finance operations.

Today, we offer a range of refinance products aimed at fulfilling the needs of the various sub-segments of the market - from rural housing to urban low income housing and housing for women amongst others. We offer several products to the primary lending institutions at concessional rates as an incentive for them to extend long term fixed rate loans to the vast segments of the population in need of such support.

Further, to address the issue of availability of finance to those affected by natural calamities like cyclone, floods, earthquake etc, we have launched several dedicated refinance schemes in the past. These were refinance assistance for lending in the 1999 cyclone hit areas of Orissa, refinance scheme for housing in the 2001 earthquake affected districts of Gujarat and special refinance scheme for flood affected areas of Jammu & Kashmir.

In the recent past, in order to assist the flood affected people in Tamil Nadu, we extended refinance at concessional rates to PLIs with an on-lending interest rate cap to beneficiaries.

We have also tied up with multilateral agencies like the World Bank and DFID for providing housing finance to low income households, especially to those deriving their income from the informal sector and to people in the low income states, thus facilitating financial inclusion across large segments of the population. Refinance scheme for urban low income housing envisages lending not only for informal income/occupation but also in informal tenure. Thus, we are breaking ground in promoting lending by PLIs to informal sector which was hitherto neglected by the formal financing institutions. World Bank, in partnership with us, decided to run a $100 million program in August 2013. This is a sort of pilot which may be scaled up worldwide. Under this program 55% of the lending would be under formal tenure and 45% under informal tenure. Till date disbursements of more than `300 crore have been made.

Under the Energy Efficient Refinance Scheme, in partnership with KfW, Germany, we made disbursements of more than `400 crore.

We have been lending under Rural Housing Fund (RHF) since 2008-09 and the total disbursements under this stood at `23720 crore with `2540 crore being disbursed in the current year. Similarly, under the Urban Housing Fund (UHF) we have made a total disbursement of `5900 crore since 2013-14 Both RHF and UHF were announced by the government of India for making available low cost – long term housing finance to economically weaker section of the population with fixed interest rates.

NHB has a role in regulating the activities

of housing finance companies in the

country. Can you list some of the major

decisions taken in this regard in the past

couple of years?

Some of the major regulatory developments in the last few years are: i. As an important step to bring in

greater commitment to the housing finance business, we increased the requirement of minimum NOF of HFC from the earlier level of 2 crore to 10 crore to be eligible to commence or carry on the business of an HFI in June 2011.

ii. The number of housing finance companies registered with us has grown from 52 as of 30 June 2011 to 71 presently.

iii. We have developed a Grievance Registration & Information Database System (GRIDS), which is a 24x7 on-line database system, which facilitates mainly the customers of HFC to lodge a complaint, and also track its status. GRIDS enables instant on-line updating of response to a complaint by HFC/NHB and also facilitates in viewing the latest status at any time by the complainant/HFC/NHB from a centralized database. This has helped not only in bringing about transparency in grievance redressal mechanism, but also in reducing

Sriram Kalyanraman believes ‘Housing for All’ is a major program of the government and it will achieve its objective


Cover Story

turnaround time on the disposal of complaints.

iv. We have issued directions to HFCs on issuance of non-convertible debentures on private placement basis, which need to be complied by HFCs while issuing NCDs.

v. With a view to promoting transparency in the operations of HFCs, we have issued guidelines on fair practices code to HFCs. Further, they have also been advised to obtain a document containing the Most Important Terms and Conditions (MITC) of housing loans extended by them as a part of the loan agreement to be executed between the HFC and the borrower and also to display the information adequately in their Branches/Offices as well as on their website.

vi. We issued the guidelines for entry of HFCs into insurance business permitting these HFCs to set up joint ventures for undertaking insurance business with risk participation and also to undertake insurance business as agent of insurance companies.

vii. As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers of banks, NBFCs and HFCs, we have advised HFCs not to charge foreclosure charges/pre-

payment penalties on all floating rate term loans sanctioned to individual borrowers.

viii. We have also made it mandatory that all HFCs need to contribute to all the credit bureaus.

ix. To provide fillip to ‘Housing for All’, especially to those falling under LIG and MIG segments, we reduced the risk weight for individual housing loans up to ̀ 75 lakh. The minimum risk weight for individual housing loans has been reduced from 50% to 35% depending on Loan to Value (LTV) ratio.

Can you elaborate on the refinancing

activities in the last two financial years? Our refinance assistance to the

primary lending institutions (PLIs) has been steadily growing over the past few years. During 2013-14, refinance disbursements aggregated to `17,856 crore. This went to `21,847 crore in 2014-15 which was an increase of 22.35% yoy. Of the total disbursement, approximately 22.52% was made towards rural housing. Further, approximately 53.62% of the total disbursements or `11,714 crore was made against loans under `15 lakh and out of this ̀ 11,714 crore, ̀ 3407 crore were made towards loans under `5 lakh.

During the last 2 years, we have launched 2 new schemes i) urban low

income housing refinance scheme and (ii) refinance scheme for construction finance for affordable housing. Also, we have earmarked assistance for flood affected people of J&K and Tamil Nadu.

The bank is also providing direct finance

under project finance? Which are the

major beneficiaries in this segment?

In terms of Section 14 (ba) of the National Housing Bank Act 1987, we extend financial assistance through our project finance window to various public agencies like state housing boards, state slum clearance boards/authorities, development authorities, municipal corporations, etc for undertaking residential housing. Our endeavour is to facilitate increase in the overall housing stock in the country through supply side intervention with special emphasis on the housing needs of the weaker sections of the society. Financial assistance is extended to commercially viable project in terms of our project finance policy and in line with the guidelines prescribed by the RBI.

Can you discuss the salient aspects of

your securitization program and the

success stories?

We have so far comple ted 14 residential mortgage backed securitization (RMBS) transactions involving 38,809 individual housing loans of six HFCs and one scheduled commercial bank amounting to `862.20 crore. The success of the issues of RMBS has significantly provided means to better understand and address the various legal, regulatory, fiscal, accounting and other capital market related issues relating to such transactions as also various policy issues for a conducive environment for such issuances. The structure of RMBS issues has been designed under the provisions of the National Housing Bank Act, 1987 which authorize the bank to carry out securitization transactions and issue mortgage backed securities as trust certificates of beneficial interest and act as Trustee for the holders of such securities.

Formalizing a tie-up


RBI has recently brought in `1000 crore

into NHB. How would you be making use

of these funds?

RBI has infused this capital in February 2016 and this will help us in leveraging to the tune of `10,000 crore for meeting additional disbursements to facilitate the HFCs and banks to lend more towards housing thereby enabling the fulfillment of housing for all goal.

Can you talk about the central government

program of Housing for All by 2022 and

the significant role that is envisaged for

NHB in this?

The Housing for All Program is a major initiative of the government and is expected to fully achieve its objective in view of its multi-pronged approach. The program has four components – (i) rehabilitation of slum dwellers with participation of private developers using land as a resource, (ii) promotion of affordable housing for weaker sections through credit linked subsidy, (iii) affordable housing in partnership with public and private sectors (a supply side initiative), and (iv) subsidy for beneficiary-led individual house construction. We have been appointed as a central nodal agency for implementing the Credit Linked Subsidy Scheme, under which interest subsidy of 6.5% p.a. for loans up to a certain amount will be provided to households belonging to the economically weaker sections and lower income groups. A notable feature of this scheme is that the property should be in the name of the female head of the household, though joint ownership with the male head of household has also been permitted. This is expected to provide a major boost to women empowerment. We have entered into MoUs with more than 140 mortgage lending institutions and started disbursing the subsidy claims.

The government has also taken a number of initiatives in the recent union budget aimed towards development of the housing sector in the country. The proposal to give 100% deduction for profits to developers from their housing projects of

up to 30 sq. mtr. in metros and 60 sq. mtr. in other places would certainly encourage the developers to look at this segment anew. Further, the proposals to exempt affordable houses of up to 60 sq. mtr. under any scheme of the central and state governments, including PPP schemes, from service tax, and the proposal to provide additional deduction of `50,000 to first time home buyers would further improve affordability in the hands of the end consumer. The recently passed Real Estate (Regulatory and Development) Bill is a groundbreaking piece of legislation which would propel the real estate industry to a new plane altogether by bringing in more transparency and disclosures through a framework for reducing conflict.

Finally, as an apex institution for housing,

what are your long terms plans to bridge

the gap between demand and supply in

the housing sector - urban as well as rural

- in the country given the fact that it is a

challenging task indeed?

According to the report of the Technical Group (TG-12) on Estimation of Urban Housing Shortage, the total urban housing shortage in the country in 2012 recorded a decline from 24.71 million at the beginning of 11th Five Year Plan as estimated by 11th Plan Technical Group to 18.78 million in the beginning of the 12th Plan as estimated by TG-12. But it is

still a staggering figure. On the rural side, as estimated by the working group on rural housing for the 12th Five-Year Plan, the estimated rural housing shortage in India is 43.13 million in 2012. There is a gap between the demand and supply of housing (both in terms of quantity and quality). A key constraint to affordable housing to the poor is the lack of adequate flow of formal credit to the segment at affordable interest rates. This has resulted in a huge shortage of housing for these segments, and a multi-pronged effort is required to address the problem in all its dimensions. Facilitating and catalyzing the credit flow in the housing sector and support the expansion in home ownership in the country is NHB’s vision.

Our long term goals are: a. We would work in tandem with the

government of India for implementation of PMAY which aims for “Housing for All” by 2022.

b. We would refinance new HFCs which are entering the housing finance sector, particularly catering to the rural and urban low income households.

c. We are in the final stages of a product development for lending to the micro finance institutions (MFIs).

d. We are also looking at the participating in the promotion of new HFCs through equity support.

[email protected]

Mass scale housing for the poor


Cover Story

National Housing Bank is the apex institution for housing finance in the country. It was set up under

the National Housing Bank Act, 1987 and commenced operations on 9 July 1988 when the housing finance market in the country was in a very nascent stage. In the 2½ decades since then, the bank has played a seminal role in the development of the market that has grown to the present size and state.

“Facilitating and catalyzing the credit flow in the housing sector, NHB’s enabling policies have supported the expansion in home ownership in the country, says Dr Sanjeev Sharma, ED.

The housing finance industry encompasses the entire banking sector, housing finance companies and cooperative institutions. From its early years, amidst rapidly changing market dynamics, attendant on liberalization and deregulation, NHB had to steer a nascent sector through the transition from a controlled economy to a competitive and market oriented system. That retail housing finance is, today, available from a diverse set of institutions at competitive terms and also that the lending community has found a good and sustainable business model in retail housing finance, can to some extent be attributed to the efforts of NHB.

The bank’s activities are divided into three broad areas - regulation and supervision, financing and promotion and development.

As the regulatory body for housing finance companies, NHB is responsible for registration and regulation of these entities. It strives to create a conducive and responsive environment for them to function. The number of HFCs in the country has grown over the years and is currently at 71. Under the regulatory role, NHB issues statutory directions to these HFCs relating to their conduct of business, acceptance of deposits,

deployment of funds, quality of assets, provisioning, accounting and income recognition directions, besides capital adequacy, asset liability management system, KYC and anti-money laundering, fair practices code, etc. Its initiatives on developing the market infrastructure are aimed at improving the robustness and stability consistent with the growing market.

Transparency and efficiency are key to the development of a sustainable demand-driven housing finance system. NHB is helping promote these aspects through a number of regulatory and promotional measures, including moral suasion and awareness building in the industry.

FINANCINGNHB undertakes a varied mix of activities involving wholesale financing to the lending institutions, developing new products, supporting the design and implementation of various schemes and programs including formulation of the housing and housing finance policies, advisory support to the central and state governments, functioning as nodal agency for various government schemes, capacity building in the sector for various stakeholders, etc. Owing to various

reasons, the housing finance market in its growth phase gravitated majorly towards the higher and middle income segments, and customers having mainly formal sector and fully documented income streams, while the lower income segments were left relatively untouched. This is one of the main reasons for the high quantum of housing shortage among the lower income and informal income segments of the society today. The bank has, over a number of years, been focusing on improving the lower income segments’ access to institutional housing finance through various initiatives and policy level interventions aimed at adapting the existing market infrastructure as well as creating new products. Several breakthrough initiatives have started having an impact on the risk mitigation ecosystem of the housing finance industry and are expected to go a long way in improving the overall risk profile of the industry.

On the technology front, NHB has taken certain crucial initiatives such as development of the online portal, Grievance Registration & Information Database System (GRIDS) wherein the complaints against the Housing Finance Companies (HFCs) can be filed online by their customers.

NHB believes that housing finance market in India is one of the important sectors of the country owing to its linkages and interconnectedness with the other segments of the economy. It feels the market today stands poised for a major paradigm change in terms of institutional depth, product range, competition and consumer choice. On the back of the growing institutional depth in the housing finance market, the coming years hold the promise of huge expansion in housing investments, leading to increased home ownership among all segments of the population.

[email protected]

Catalyst for the housing finance market

Sanjeev Sharma


Payment System

The Unified Payments Interface, a unique initiative of the National Payments Corporation of India

(NPCI) in the online payments domain, went live in Mumbai. Reserve Bank of India governor Dr Raghuram Rajan, along with Nandan Nilekani, advisor, Balachandran M, chairman, A.P. Hota, MD & CEO and Dilip Asbe, COO, NPCI, launched the facility, which will leverage the increasing smart phone adoption among Indians and the deeper penetration of mobile data to facilitate transactions in a more efficient and instantaneous manner.

UPI will help in reducing cash-based transactions and take India towards a cashless digital society, said Raghuram Rajan, adding the interface enables the participants to conduct transactions without sharing their details and credentials. With the interoperability of UPI, entities that need to participate can enter into the system seamlessly.

He felt that for the UPI platform and its objectives to be successful, there is a need for tremendous amount of work in two areas - work with all the members of the ecosystem, namely customers, merchants, banks, service providers for both the merchants and the banks and the NPCI on (a) addressing customer grievances and

(b) identifying security breaches that may happen and how they would be handled; and enhancing the usage of this platform from those who have smart phones to those who do nOt have smart phones.

“Today, a few banks have gone live with UPI out of the 29 banks that had concurred to provide UPI service to their customers. We are confident that several banks will join UPI this year and the number will multiply further,” said Hota at the launch. “Our focus is in line with RBI’s vision of migrating towards a ‘less-cash’ and more digital society and NPCI has always been at the forefront to innovate and introduce new products and services at par with global standards,” he added.

Nilekani explained a few UPI use cases and addressed the forum to showcase ‘How UPI shall change the landscape of payments in the country’.

PUSH AND PULLUPI is intended to empower users to perform instant push and pull transactions seamlessly which will transform the way people make payments today. It is the advanced version of NPCI’s highly popular Immediate Payment Service (IMPS). which is now a 24x7x365 funds transfer service.

It will function as a channel that powers multiple bank accounts into a single mobile application (of any bank) of a participating bank, merging several banking features, seamless fund routing and merchant payments into one hood. It also caters to the Peer to Peer collect request which can be scheduled and paid as per requirement and convenience. UPI will offer a facility to identify a bank customer with an email-like virtual address. It will allow a customer to have multiple virtual addresses for multiple accounts in various banks. In order to ensure privacy of customer’s data, there is no account number mapper anywhere other than the customer’s own bank. This allows the customer to freely share the financial address with others. A customer can also decide to use the mobile number as the name instead of the short name for the virtual address.

Winners of UPI Hackathon - Vsoft Nerds, CPay, Fundu, Ultra Cash, and Enablers - were felicitated at the event. The hackathon was a platform provided for start-up/developer community to accelerate innovation in payments arena in association with Indian Software Product Industry Round Table (iSPIRT).

[email protected]

RBI governor Raghuram Rajan launched NPCI’s ambitious payments platform UPI in Mumbai. A report:

UPI platform becomes reality

Dr Raghuram Rajan, senior bankers and NPCI officials at the lauch of Unified Payments Interface (UPI)

Banking in the Gulf


Recent initiatives of Basel Committee of Banking Supervision to strengthen the recovery and resolution process of

systemically important banks can benefit from history of a bank run way back in 1984. This is my conclusion after reading the recent working paper by BCBS (BIS Working Paper 554). Once again the relevance of history - we are as much trapped in history as history is trapped in us, as James A. Baldwin once famously remarked.

Indeed, the paper, by Carlson and Rose titled ‘Government Guarantees and the Run on Continental Illinois’, is important for regulators worldwide for a number of reasons. Published on 30 March 2016, it shows that even full and unconditional guarantees from the government may not be able to prevent a bank run. The worrying warning signal from this paper is that even with the best of intentions, bank runs may be impossible to prevent. Given the kind of deep wound a bank run inflicts on the financial sector and credibility of regulatory bodies, this is a deeply disturbing conclusion and in a situation of a decade of financial hardship, is of acute contemporary relevance. The case study of the run on Continental Illinois in 1984 shows that despite full backing of Federal Reserve and FDIC, and exceptional guarantees to all its creditors, initial short term credit from 16 banks of $4.5 billion, recapitalization, putting banks under administration, FDIC in the end had to absorb serious losses. The value of the study lies in its detailed analysis of the symptoms and identifying why the regulator’s game went wrong.

TOO BIG TO FAILContinental Illinois was the 8th largest bank in the US with about $38 billion worth liabilities outside its equity capital in Q3 1984 and its failure gave rise to the popular terminology ‘too big to fail’. That’s where one needs to relook and find what actually went wrong.

The strategy of the bank was to compete for wholesale deposits, rather than retail business. Special emphasis was on building up Euro-dollar liabilities. As foreign US dollar denomination deposits were beyond FDIC regulators, the deposit insurance coverage was low at 15% of deposits. The part of unguaranteed deposit withdrawal stemmed from default risk concerns, which can be seen as rational response. It was a surprise that there was considerable withdrawal from those depositors

whose money was fully guaranteed.

DEPOSIT CONCENTRATIONThrough a detailed assessment of deposition characteristics and their tendency to withdraw money in situation of distress, the study finds that deposit concentration risk played an important role in the run. Large depositors, due to size of deposits at stake, chose the exit route as they were not sure about the length of time their deposits may be stuck in regulatory and legal processes. The study thus puts forward important pointers for the potential for recovery of Banks which goes into distress. First, large wholesale depositors are not incentivized by deposit protection schemes. Their preference for liquidity is more likely to intensify a bank run, even in the presence of minimal credit risk. Banks, as well as regulators, should therefore factor in the adverse impact in the presence of a few, large, short term creditors.

Second, the inability of FDIC initiatives /guarantees to stop the run on Continental Illinois raises doubts on efficiency of these instruments. While regulatory interventions did prevent catastrophic losses and enabled to reduce systemic risks, the limitations of such instruments became clear.

REVISITING RRPSIn the context of ensuring stability of systematically important banks, G-SIBs and D-SIBs are now mandatorily required to develop recovery and resolution plans (RRPs) to ensure recovery of the bank in distress. The possibility of large drawdowns from wholesale creditors is certainly the most crucial stress scenario to be considered while formulating the RRP and in setting the liquidity based or redemption based recovery triggers.

Moreover, risk thresholds in deposit concentration can help to reduce the risk of a run and should therefore be given greater importance. It would be ideal to take such metric out of the current zone of additional monitoring tools of Basel 3 liquidity framework and also from Pillar 2 ICAAP process to more directly prescribed regulatory ratio.

Finally, detailed assessment of such wholesale deposit withdrawals should be part of recovery scenario planning of D-SIB’s RRPs.

We should not forget the ability of history and its lessons to protect our tomorrow.

Dr Sunando Roy,Advisor, Central Bank of Bahrain

(The views expressed are the

author’s own and not of the

institution he is associated with.)

Lessons from a bank run

Banking in the Gulf


Credit risks across Saudi Arabia’s financial system are rising, the US rating agency Moody’s has warned

recently even as low oil prices are continuing to impact the country’s economy rather harshly.

CNBC published an article quoting Moody’s that the agony is downgrading Saudi Arabia’s banking system from ‘stable’ to ‘negative’ stating its “revised outlook reflected the expectation that the persistently low oil prices and resultant government spending declines will ultimately weight on the Saudi banking sector”. Olivier Panis, vice president and senior credit officer at Moody’s said Moody’s expected the operating environment for Saudi banks to weaken over the next 12-18 months.

“With the prospect of lower oil prices for longer and a 14% reduction in public spending in 2016, we believe that the credit risks across the system are rising,” he added.

The price of benchmark Brent crude has fallen from $114 per barrel in June 2014 to $38 per barrel in March 2016. Saudi Arabia is among the world’s largest oil exporters and its economy is very much dependent on oil revenues. One can just assume the impact this has on the country.

GDP GROWTHMoody’s said it expects the real GDP growth in the country to slow to 1.5% for 2016 and 2% for 2017 – against the 3.4% growth of 2015. It also predicted that the average oil prices would remain at $33 a barrel in 2016 and $38 in 2017.

This would result in a slowdown in loan growth to between 3% and 5% for 2016, (against 8% in 2015 and 12% in 2014), said Moody’s highlighting that asset risk would rise as a result of the deteriorating operating environment.

Panis said the agency expected non-performing loans to increase to around 2.5% of total loans over the outlook horizon, from a very low average 1.4% in September 2015 - still lower than for most other Gulf countries. “Banks will

also continue to remain exposed to event risks stemming from persistently high single-party exposures - although we estimate that around 10-25% of banks’ top 20 loans are either to the government or wider public sector,” he added.

PROFITABILITYIn spite of this scenario, Moody’s was of the view that profitability among the country’s banking sector was likely to ‘remain strong’ due to the low cost of funding and the banks’ ‘lean cost structure and zero corporate tax rate’.

The agency felt the government support for the country’s banking system would remain high, but “there are signs that authorities’ policy stance may evolve in line with global practices”.

“... government support assumptions could be further challenged on the basis of fiscal pressure for the Saudi government, signaling a potential reduction of government capacity to support banks in case of need,” the agency said.

Meanwhile, Standard & Poor’s too has lowered its long term counter-party credit ratings on several Saudi banks, including Al Rajhi Bank, National Commercial Bank and Riyad Bank because of the heightened risks these banks faced in the wake of the oil crisis. S& P in October 2015 downgraded Saudi Arabia’s long-term rating from AA minus to A plus with a negative outlook, and again by two levels to A minus in February. The rating agency in defense of its latest downgrade, said more than a year and a half of lower oil prices will start to take its toll on the earnings of banks.

There are reports that the country’s forex reserves dropped for the 13th consecutive month in February. The reserves stood at $593 billion in February, a month-on-month drop of $9.4 billion. While this decline was modest, it takes the total outflow of central bank foreign assets since oil prices began to decline in late 2014, to $150 billion. Saudi Arabia’s foreign reserves now sit at their lowest level since mid-2012.

[email protected]

Rating agency Moody’s has downgraded Saudi Arabia’s banking system from ‘stable’ to ‘negative’ stating it feared the falling oil prices would adversely impact the country’s banking system:

Falling oil prices may impact Saudi banking sector

Banking in the Gulf


Indian origin Gopi Krishnan, chief information officer/chief digital officer at Qatar Islamic Bank, has won the CIO of the year award at

the MEFTECH Innovation Awards 2016 held in Abu Dhabi to recognize the innovations by MENA-based financial institutions during the last two years.

Gopi Krishnan, a seasoned banking & technology professional with successful track record of spearheading technology and business transformations for the past 19+ years, has won the award for his leadership role (40%) for efficiency and innovation (30%) and for improvement and growth (30%).

In deciding on Gopi Krishnan for the award, the jury considered that in 2015, under his guidance, the bank’s ‘IT 2.0’ has brought about sweeping changes in the Group IT structure from People, Process and Technology perspectives aimed at group synergy, solid enterprise architecture, cost rationalization, control improvements and customer satisfaction. “Envisioning in providing the best in class technology services to its internal and external customers, Krish has successfully spurred IT in multiple technology initiatives to keep pace with the rapid technology advancements in the banking and financial services space,” the bank’s explanation said.

REVAMPWith him at the helm, the bank has successfully undergone a transformation program (iCAN) which included a complete revamp of its IT infrastructure landscape, migrating into a new core banking platform and consolidating various legacy systems, and the program which went live in February 2016 has enabled the bank to improve time to market of innovative products; uplift the quality of customer service; enhance and largely automate operational processes. Spanning across more than 30 vendors engaged

INTEGRATED STRATEGYHe has also put in place an integrated IT strategy for group entities; post-merger consolidation of Asian Finance House (AFH) and managed Group IT on a shared services model moving towards IT as a profit-center. He is also leading the 3-year digital transformation journey within the group using mobility, social media, data analytics and

cloud technologies to catapult the ‘QIB Banking Experience’ to the next level and to become the ‘Most Technologically Advanced Bank’ in Qatar.

In recognizing his efficiency and innovation, it was pointed out that QIB ‘IT 2.0’ has been a culmination of multitude of technology deliverables and these initiatives have also served to bring about new capabilities to the bank’s IT infrastructure in terms of agility, resiliency, scalability and supportability. Continued investment in the digital space and implementing new / upgrading existing satellite systems has further enhanced the ‘QIB Banking Customer Experience’, the filing said. The bank said the iCAN program helped develop the bank’s employees’ capabilities, performance and knowledge and broaden their banking expertise and acquire new skills.

PROJECTS DONEOther IT and business projects under the ambit of QIB ‘IT 2.0’ included the implementation of IP telephony, anti-skimming on ATMs, a second SMS gateway with Vodafone for high availability / improved performance, redundant internet link for high availability and a mailer system to automate the cards packaging process

The bank claimed his contribution towards improvement and growth resulted in the creation of a number of IT processes based on ITIL Best Practices Framework. Eighteen existing IT Policies have been revisited and updated, while 25 new policies have been developed in 2015. In the Risk Management space, a comprehensive Current State Assessment (CSA) exercise was conducted by the IT team internally.

MANUAL EFFORTSThe bank also said ‘IT2.0’ under the guidance of Krish has eliminated significant manual efforts imbibing principles of ‘doing better, faster and cheaper’. These technology initiatives have also resulted in enhanced and pro-active levels of deliverables and substantially eliminated the inherent ‘fire-fighting’ and reactive approach. He has also contributed to revenue increase by implementing many technology led initiatives in alternative channels, personal, wholesale, SME, treasury and wealth management divisions.

[email protected]

An Indian origin technocrat working in Qatar Islamic Bank, has won the CIO of the year award at the MEFTECH Innovation Awards 2016. Details of Gopi Krishnan’s achievements:

MEFTECH award for Indian origin banker


N E W S Banking in the Gulf

Dubai haven for bank salariesA study by salary benchmarking site Emolument.com has found that Dubai ranks among the highest paying cities for banking directors worldwide. The study compared average salaries and bonuses earned by banking directors and analysts worldwide and found that while Dubai ranked second in terms of the highest salaries paid to directors, it was positioned fifth overall when bonuses were also considered. The emirate was not

ranked among the top paying cities for banking analysts. Globally, analysts make an average of $78,000 per year while directors take annual wages of roughly $360,000. While New York pays the highest salaries to analysts at around $115,000 per year, Hong Kong tops the list for directors, with a yearly average of $539,000 (salaries and bonuses). The high bonuses are a key incentive for senior directors and retain revenue-generating staff, the report said.

Decline in Sukuk issuanceThe global Sukuk issuance has seen a decline in volume in 2015 compared to 2014, according to the latest Sukuk report, which was released by the International Islamic Financial Market (IIFM) at a special session held today at the Islamic Banking & Investment Asia/Middle East Congress in Singapore. The report said $61 billion was the global Sukuk issuance in 2015, which marks a decline in issuance volume from 2014 due to the strategic move by Malaysia to stop issuing short-term investment Sukuk. The report found that currently 84% of the $321 billion outstanding Sukuk belong to just 3 key markets - Malaysia, Saudi Arabia and the UAE. The report notes that this is likely to change gradually as markets such as Indonesia, Turkey, Pakistan and others become more active. A positive trend which has emerged from the research is the steady growth in sovereign, quasi-sovereign and corporate Sukuk issuances and given the continued interest in Islamic finance from new jurisdictions; the outlook for Sukuk in the medium to long term is positive.

Bank Muscat may open office in IranBank Muscat said that it has got all regulatory approvals to proceed with a representative office (non-transactional) of the bank in Iran. A statement by the bank said it is in the process of registering the representative office and expects it to open later in 2016. The bank has retained sufficient level of profits to further strengthen the capital base and be better positioned for possible future challenging market

conditions. The bank posted a net profit of OMR175.45 million in 2015 compared to OMR163.23 million reported in 2014, an increase of 7.5%. The bank is among the first foreign entities to establish a presence in Iran since the international sanctions were lifted in January.

Three Qatar banks in merger talksQatari lenders Al Khalij Commercial Bank, Ahli Bank and International Bank of Qatar are in talks on a merger that could pool assets worth more than $30 billion. If the deal goes through, it would a rare consolidation among banks in the Gulf region, where powerful local shareholders are usually reluctant to cede control due to the prestige of owning their own lender. Around 18 local and international banks currently service Qatar’s population of 2.4 million. The combined entity would have assets worth upwards of 120 billion riyals ($33 billion), putting it on a par with Commercial Bank of Qatar, the country’s third-largest lender by assets. The last time a bank merger was attempted in Qatar - between Al Khalij Commercial Bank, known as Al Khaliji, and IBQ - it did not take off after more than a year of talks. The discussions are at an early stage.

HSBC, Citi get QFI status in Saudi ArabiaHSBC and Citigroup are among 9 qualified foreign institutions licensed to invest in Saudi Arabian stocks directly, according to the Capital Market Authority. Two BlackRock entities and two Ashmore Group units are also among those registered with the Riyadh-based market regulator. The disclosure is part of the CMA’s plan to raise governance and transparency standards and increase the level of communication with investors. Almost a year after Saudi Arabia allowed foreigners to invest in stocks directly, QFIs own less than 1% of the market against their 10% limit. The kingdom’s equities, the region’s worst performers so far this year, have fallen with oil prices as sinking crude revenue forced the government to halt projects. The nation has announced plans to further diversify its economy and deepen its financial markets.


Performance Scenario

Indian banks appear to be ‘stable yet fragile’ and capital support is crucial for the sector, says credit rating agency

Fitch Ratings in its 2016 Outlook: Asia-Pacific Banks. The agency says that the issuer default rating (IDR) of most Indian banks, aside from private banks, are support driven and are likely to stay stable. The viability ratings (VR) for certain state-run banks (like IDBI Bank and Canara Bank) continue to face pressure due to asset quality deterioration, says the agency but feels the expected capital injection is likely to support VRs.

Fitch is of the view that private banks will continue to perform superior than public sector banks. “Private banks’ superior performance should remain due to stronger capitalization, high internal capital generation, and lower asset quality issues,” says the study compiled by analysts Mark Young, head, Asia-Pacific Banks, Ambreesh Srivastava, Jonathan Cornish and Tim Roche of the agency. This feature adds stability to VRs and IDRs.

CREDIT GROWTHThe credit growth rate will be moderately higher than the 9.7% in the financial year 2015, states the agency and this is based on the expectation that an improving real GDP growth outlook (FY16: 7.5%, FY17: 8%) coupled with government reforms will be able to rejuvenate investment confidence and stimulate demand. “However, risk-aversion and high corporate leverage are issues, while state banks are also constrained due to weak capital buffers and balance sheet stress,” it cautions.

CAPITAL SUPPORTThe agency believes that capital will emerge as main theme, as banks look to pursue sustainable growth rates while achieving Basel lll requirements and cushioning

balance sheet stress at the same time. The banks will require around $140 million in total capital to ensure full Basel lll implementation by FY19, which will not be easy unless banks, particularly state owned banks, tap available channels and conduct much more capital raising than that achieved so far. “State support has been a rich source of the core equity for state banks; this dependence is likely to be high due to low internal capital generation, poor equity valuation and weak additional tier 1 capital activity. The challenges for domestic additional tier 1 issuance (shallow market depth, weak investor appetite) will be difficult to surmount. This makes us uncertain if the local markets will be able to fulfill the capital needs, ultimately requiring some banks to tap market overseas,” say the analysts.

STRESSED ASSETSFitch expects Indian banks’ stressed assets ratio to improve marginally to 10.9% in FY16 from 11.1% in FY15, although there is still time before absolute NPLs witness a reversal. “New NPL growth has started down across many banks, and we expect greater traction with cyclical recovery. However, corporate leverage is still an issue, while challenges in weak sectors (like infrastructure) are likely to contribute to both new restructuring as well as higher NPL mortality from the current restructuring pool.”

PROFITABILITYAccording to the agency, Indian banks’ ROA to remain depressed at least for one more year before any inflection. The drag is mainly due to state banks where profitability is likely to remain pressured due to both balance sheet issues as well as modest credit growth. In particular, the cost of funding NPLs and restructured

assets will be hard to offset through non-interest income – given economic activity which is still quite weak while high credit costs will continue to challenge any potential gains that funding costs may witness from lower interest rates. Internal capital generation will, therefore, remain weak unless dividend payouts come down significantly, the report said.

ASIA-PAC OUTLOOKFitch is of the view that APAC banks are on pressure with china slowdown, rising US rates, but it gives stable rating for all Asia-Pacific countries except Mongolia and Philippines. “This reflects a combination of factors: first there is some tolerance in the ratings to slowing economic growth; and second, the rating outlooks reflect sovereign support in the cases where VRs are lower than issuer default ratings. Support still matters in APAC, but credible resolution regimes may see sovereign support ultimately eroded for more banks in more advanced financial systems,” it says.

It also believes that asset quality pressures are likely to build for more countries, but the weakening is off a low base - and so expected to be manageable in light of the earnings and capital buffers. This is likely to hold back profit growth, when taken together with moderating credit growth and margin pressures. Lower credit growth is likely – a positive development from a financial sector stability perspective – but high private sector debt is a key source of risk, it states in the report.

[email protected]

Indian banks stable, yet fragile - FitchFitch Ratings feels Indian banks face several challenges, including capital, but the scenario appears to be stable, but fragile:


Payment Systems

NPCI has launched the Unified Payments

Interface initiative. As a key player in the

payments space, can you outline how it will

simplify the payment system in the country?

Hemal Kotecha: UPI would be a significant

system in the way payment transactions would

happen. Currently, the systems are concentrated

on P2P payments like IMPS, NEFT and RTGS

but with UPI it would bring all the players in

the payment system under one platform and

transactions would be P2P, P2B, B2P and B2B.

So, small shop owners, large organizations

and e-commerce companies would be able to

participate in this process along with financial

institutions and consumers. Significantly the

platform also allows financial inclusion and

Aadhar based payment system. Basically we

are moving towards cashless transactions with

simplicity of operation.

UPI is essentially a unified layer. Can you

explain the system in terms of convenience, in

terms of universal application?

The UPI platform has the following features:

a) Mobile first platform and interoperable – UPI

would allow use of mobile banking on all

mobile platforms and bank independent. So,

it works on Android, iOS and Windows and

with mobile banking application you can add

any bank accounts, assign a virtual address

to it and perform transactions. Let’s say with

one mobile banking application you can map

HDFC Bank account and ICICI Bank account.

Account map to HDFC would assign a virtual

address like ram.hdfc@PSPname (HDFC

account) and ram.icici@PSPname (ICICI

account) and perform transactions, where

PSP is a bank entity like Bank of Maharashtra,

so the account would be ram.icici@MAHB.

b) With this system, money can be sent and

requested. Sending money is prevalent

but more important is request for money

transactions (B2P). This is particularly useful

for business entities like e-commerce sites

or the retail industry where businesses

can request money from consumer and

the consumer has to authorize transaction

on mobile. Let’s say a telco company has

generated a bill and requested the consumer

ram.icici@PSPname to make a payment. Ram

would open his mobile application, see the

details and then make the payment.

c) Security is a vital part as people are bit

skeptical about the security of transactions

in mobile banking. First security feature UPI

offers is that it hides accounts details under

virtual address. So, if I assign ram.bank@

PSPname, I can map to ICICI Bank or HDFC

Bank or other XYZ banks so the details are

hidden. The second security feature is device

authentication as one form of additional

authentication apart from mobile PIN and

OTP. Transaction can be performed on the

registered device only.

How easy or how convenient it is for a user?

Similarly, what advantages does it offer

to banks and financial service institutions

compared to existing systems? How will the

layman stand to benefit?

First and foremost it is a mobile platform,

which is the most convenient form of payment for

users. Secondly, it allows creating virtual address

so it becomes easy for the user to remember a

virtual address rather than a bank account, IFSC

code etc. Also in future user could assign virtual

payment address to his credit card number which

currently is 16 digits and hard to remember.

For banks and financial institutions, it is

a significant advantage as the platform has

offered set of standard API which allows easier

adoption. So, a business organization can tie

up with banks/FI to offer different customer

services. For eg a college can tie up with State

Bank of India and collect fees from its students

using this platform. The college would have

an application which requests for recurring

payment to the students and students can

authorize transactions and make payment on

mobile applications.

InfrasoftTech is offering a PSP application and

switch that can enable UPI functionality on

three mobile platforms. Can you explain the

significance of such a facility?

We are targeting various applications around

UPI. In the first phase InfrasoftTech is offering a

PSP and UPI switch to banks, so bank customers

can use the application for making e-commerce

payment, face to face payment using QR Code

and NFC. Also, we are offering the banks,

applications and services, which would allow

them to onboard business users to perform P2B,

B2P or B2B transactions on this system.

What according to you will be the logical next

stage of development?

The next step would be to add new features like:

a) Bringing wallet users and credit card under

UPI system

b) USSD based UPI for financial inclusion

c) Integration of POS terminals with UPI

d) Multiple recurring payments like utility bill

payments, school fees, subscriptions etc

with a one-time secure authentication and

rule based access. For example: this could

be useful for organizations while paying

salaries, dividends etc.

e) Offering different Application using UPI

interfaces like Personal Finance Management,

PSP Applications for various business users,

proximity payment & remittance application.

UPI to usher in major conveniencesThe National Payments Corporation has just launched its Unified Payments Interface initiative. Hemal Kotecha, head-RD, InfrasoftTech, outlines some of the major conveniences this platform would offer:

Hemal Kotecha


Insurance

Future Generali India Insurance Company has a pronounced focus on the retail segment unlike many

other private insurance companies. “Today, as much as 65% of our business is in the retail segment now and we wish to increase this to 70% in 2016-17. We want to focus more on this segment as I feel there are several areas in this segment that had remained unattended in the past. I believe with product innovation and better channel management, we can penetrate the hitherto unattended segments of population,” says K.G. Krishnamoorthy Rao, MD and CEO.

The joint venture between Italy’s Generali and the Future group of India, which started operations in 2008, today offers health insurance, motor insurance, crop insurance, travel insurance, home insurance and micro insurance products with gross written premium of around `1500 crore, which is growing at 10% every year.

Rao says in the last 15 years, the insurance sector in India has indeed made a big difference. He recounts how in earlier days, LIC and the four government-owned general insurance companies had a virtual monopoly both in life insurance and general insurance and how this has changed now. “While LIC continues to have its spell on the life insurance segment, as much as 50% of the total general insurance business is now being handled by private insurers in the country. The general insurance business in India is currently an `86,000 crore premium (April 2015 to February 2016) industry and is growing at a healthy rate of 13%,” he says.

BUSINESS OPPORTUNITYHe talks about the huge business opportunity that is insurance business and points out to statistics:

• Thecountrycurrentlyaccountsforlessthan 1.5% of the world’s total insurance premiums and about 2% of the world’s life insurance premiums despite being the second most populous nation.

• It is considered as the 15th largestinsurance market in the world in terms of premium volume, and has the potential to grow exponentially in the coming years.

• Theinsurablepopulationinthecountrywill touch 750 million in 2020.

MOTOR INSURANCEHe reveals that Future Generali’s major products are in the motor insurance sector, which accounts for as much as 50% of its total business. This is followed by health

insurance. “We have a definite focus on motor insurance,” says Rao, adding: “And that is why as much as 50% of our business is from this segment. We have unique products here. For example our zero depreciation policies. These policies offer full claim without any depreciation on the value of parts replaced with an admissible claim under the comprehensive package policy. It also covers theft or loss of keys, loss of personal belongings, tyre damage, no claim bonus protection, engine protector and when the car is declared as a total loss by us in the event of a claim under the policy, we will pay the financial shortfall between the amount you will receive from the insurance policy and the purchase price of the car, as confirmed in the invoice of sale. Besides, there is a special provision for roadside assistance like towing the car, assisted services in cases you lock or lose your keys, arrange alternative transportation in case of breakdowns, and arranging for an automobile technician to conduct onsite repairs in case your car breaks down due to electrical, mechanical failure or due to an accident. We also offer cashless claim processing.”

The company ensures that in the case of an accident or other eventuality, the surveyor visits the spot instantaneously and carries out inspection. The report is uploaded on to the central server, when the processing of the claim starts immediately. Usually the settlement is done within 15 days. In the case of cashless claims the TAT is just two to three days for approval of claim, however the delivery of the vehicle would depend upon the time taken for repair by the workshop.

“The idea is that with some minor add-on payments and little tweaking of the products, our customers get the benefit of convenience and they are not put to face

Future Generali India Insurance Company already has a retail focus but it wants to enhance this. It’s a challenge and the company wants to take this up, says its MD and CEO K.G. Krishnamoorthy Rao:

Future Generali - focus retail

KG Krishnamoorthy Rao mentions his company has a definite focus on motor insurance and 50% of business is from this sector


difficulties in the settlement. The customer can reach us online and track the progress of the claim settlement too,” says Rao.

NO TPAIn the health insurance segment too, the company has been able to bring about perceptible changes. For example, it has eliminated the layer of TPAs, which has been somewhat an irritant for the customers who take medical insurance. “What we have done instead is that we have created a team comprising medical professionals and insurance specialists which goes through requests for hospital admissions, claims and other related issues and offers instant approvals. I can say a cashless claims approval is given in just one hour. We have received excellent feedback from customers about this,” says Rao.

He adds: “In health insurance too, we offer specialized products. For example, we have Future HospiCash, which is a plan that provides cash benefit in case of hospitalization to avoid drain on one’s savings. In the event of hospitalization even if one has a standard Mediclaim policy, he may have to make some ‘out of pocket’ expenditure like food, conveyance etc. HospiCash will pay a fixed benefit amount for each day of hospitalization to take care of such incidental expenses and thus reduce out of pocket expenditure.”

The retail focus is helping the company because Rao says this segment has been showing a yearly growth of 10% to 11% in the last 3 years whereas group schemes have seen average growth and the premiums are often underquoted.

RURAL INSURANCEThe company has recently introduced crop insurance, as part of its rural insurance program, in states like Bihar, UP, Rajasthan and Haryana, where crop loss on account of natural calamities like drought and floods are high. “We have tie-ups with MFIs for covering their customers under different rural insurance products depending on the customer segment,” says Rao, adding, “and we have received encouraging response. In addition, we offer cattle livestock insurance, Pradhan Mantri Suraksha Bima Yojana, Sampoorna Suraksha and Janata Personal Accident policies for the rural population.”

Sampoorna Suraksha is a micro insurance product providing protection to the insured and their business for eventualities like hospitalization, cart protection and liability, robbery, farm produce loss or damage, loss or damage of pump sets and damage or loss of cycles. The product is offered in association with NGOs.

“I believe the scope for rural insurance is huge and it is a market that has remained almost untouched for years. Even now, there are very few insurance companies that have really made a rural foray. One of the inhibiting factors is the lack of awareness. While opening a bank account is among the priorities, insurance is still not,” says Rao.

Offering protection to one’s most important asset - Home - is another priority for the company. It is preparing to have tie-ups with large housing complexes to offer this policy on a long term - say 15 to 20 years. Individual apartment owners can obtain this policy and protect themselves against losses

sustained in fire/flood or allied perils. It intends to offer package deals for residents of housing colonies in this regard.

Future Generali has substantial online capabilities. Its travel, health and auto policies can be obtained online. “We understand the needs of the new generation and we are ready to offer products of any nature online. Of course, renewals of any policy can now be done online,” says Rao.

CARING CUSTOMERSHe speaks about caring for the company’s customers: “You may realize that we do not believe in excessive advertising and publicity through various media. If we are able to offer good service to our customers at the right time and in the right manner that gives us the right exposure. We believe the customer is our brand ambassador. We ensure that each of our customers will have a unique experience while dealing with us. We encourage our customer service executives to directly interact with the customers and solve their issues. In fact, handling customers effectively and to their delight is part of our training program for all. We also assess the level of service offered at various touchpoints. For example, we carry out what is described as ‘mysterious audits’ where our teams inconspicuously visit branches and other touchpoints and not only interact with customers but the staff at these branches to understand firsthand how the customer is treated.”

Agents constitute the company’s major channel. It is also into bancassurance but because of its late entry, it was at a disadvantage as by the time it started our operations most of the banks have already finalized their arrangements. “So, we could get only few private banks and some leading cooperative banks to be our partners. Now that IRDA as part of its new guidelines is permitting banks to tie up with a maximum of nine insurers from the three segments, we are in talks with major banks for alliances. As of now 6% of our business comes from this channel,” says Rao.

[email protected]


Interaction

N. Mohan: BankBazaar.com has

announced an ambitious expansion plan,

especially targeting customers outside

India. Can you share details of this plan?

A m a n Na r a i n : B a n k B a z a a r.com recently opened an office in Singapore as the headquarters for our international expansion plans. My team and I are focussed on launching our first international market in Singapore as well as expanding across South East Asia, including Indonesia, Malaysia, Vietnam and the Philippines, in the next two years. We are also looking at launching services in the Middle East - the UAE.

How is BankBazaar.com equipped to

operate in these countries as these

countries have different regulatory norms,

marketing practices and risk profiles?

We have built deep experience in India having integrated with 85 financial institutions and insurance companies, many of them international firms operating in India. We adhere to regulatory and compliance standards of all these partner organizations as well as the regulatory bodies. With the experience of solving complex distribution challenges in India, we believe we are uniquely positioned to create value as a financial services marketplace in other markets across Asia. We have a highly qualified and experienced team of industry experts to ensure that we not just meet the varying needs for regulatory and marketing practices regionally but also help in setting the standard for them in time as member of the financial services community, as we have done in India.

What sort of products do you intend to offer

in these counties? All our products and services in

the India marketplace are built on a standardized model with the intention of scaling internationally. In time, we intend to offer a full suite of retail banking products from an exhaustive range of banks and non-banking financial institutions (NBFIs) like we do today in India. However, given the fact that we need to phase our growth and get the model right before driving expansion, we will be focused on the unsecured lending space (credit cards and personal loans) and then expand to other asset and liabilities products. We are very keen to offer insurance and wealth management capabilities like we do in India, and are studying the regulatory requirements for us to be able to do this in an efficient way that creates transparency

and access for customers visiting our marketplace and efficiency for the financial institutions we serve.

What are the plans for offering products

relating to the insurance sector? We believe we are well placed to create

significant value for both customers who need help finding the right product for them and insurance providers looking to expand their digital distribution and access points. Like India, many of the markets we operate in have very clear guidelines on how we can operate.We are currently studying these to understand how we can provide this service to customers from an end-to-end marketplace perspective.

Will the target audience be majorly

people of Indian origin?

No. BankBazaar.com as company is proudly Indian but also fiercely international in the way we operate. We have always been speaking about enabling and simplifying choices when it comes to personal finance, and that is not constrained by nationality or ethnic origin. We intend to become a part of the fabric of the communities we operate in.

How will technology help in this endeavor?

As a fintech company, technology is at the coreof everything we do. Our technology has enabled us to develop systems and processes that provide high levels of security and data confidentiality. We have developed an adaptable modular platform that can scale up quickly, making integration with partner platforms simple, quick, and hassle-free. This ensures a

Bankbazaar.com is expanding internationally and has engaged Aman Narain, a digital banking veteran, to lead the expansion as CEO, BankBazaar International. Narain outlines his planned initiatives...

BankBazaar.com plans international foray

Aman Narain


smooth transition between our platform and that of the partner institution, making the process seamless for our end customers. This ease of shopping for financial products online just like any other consumer product, coupled with excellent security, is what makes the difference.

How do you view competition in these

target markets?

In many of our planned markets, there are a lot of small and few regional comparison shopping sites offering customers basic capabilities. We welcome these sites as they create awareness about accessing financial services products online. However, we intend to build an end-to-end financial services marketplace with an online platform that integrates more deeply with the financial companies’ platform to go a few steps further and provide customers a picture of their eligibility for products as well as help them

complete the purchase of these products on our marketplace. This is no doubt a harder path to take but we think it is the right one as it creates long-term value, as we have seen in India, for both customers and financial services companies that partner with us. And in doing so we intend to be Asia’s first and largest financial services marketplace.

While you foray into foreign markets, how

do you consider the domestic market?

The Indian market is nowhere near saturation. The Indian market, especially in tier2 and tier3 cities and the rural areas are still very much underserved. However, the proliferation of the mobile and the internet has the potential to rewrite this situation. Currently, the number of internet users in India is estimated at 400 million. This number is growing at a rate of 31% per year with the number of mobile internet users growing at more than 50%

yoy. Right now, we see 50 lakh visitors to our site every month on an average. This has grown from 30 lakhs at the beginning of the year. Essentially, we have tapped only a very small percentage of the market and there is so much more to do in India. So there is a lot of space for not just growth but double-digit growth.

Finally, will you be recommending

products? What is the role of technology

in this?

BankBazaar.com’s biggest USP is that it is a neutral financial marketplace. The offers presented to the customers are based on only the customers’ profiles and repayment capabilities. Also the financial products are the purview of the individual financial institutions. BankBazaar.com facilitates and automates the processes and hand-holds the customers throughout the lifecycle of the purchase.

[email protected]


Digital Savvy

From ‘the Banker to every Indian’ to ‘the Banker to digital India’. That is the journey State Bank of India

has undertaken. Today, the bank has been responding very fast to the needs of the digitally savvy customers with offerings covering various banking services across all customer segments.

The bank’s mobile wallet ‘State Bank Buddy’ was launched in August 2015. Available in 13 languages including English and Hindi, the wallet can be used by customers of any bank for merchant transactions such as bill payment, mobile top-up, DTH recharge, flight and hotel booking, movie ticket booking, ordering gifts etc.

Says Manju Agarwal, DMD (CS & NB) of the bank: “We do not levy any charge on customers for any financial transaction by State Bank Buddy. The app is the first financial app available in 13 languages. There are some 2,523,000 registrations done till 17 March 2016, the total amount deposited is approximately `99 crore and the total amount transacted is approximately `213 crore.”

SBI is catering to all types of customers through its mobile banking solutions. From SMS banking to smart-mobile based banking, from just inquiry and non-financial transactions to full-

fledged high value funds transfer, from retail customer to MSMEs, corporates and government entities, the bank has the right mobile-based solution. To the existing solutions of State Bank Anywhere-Retail, State Bank Freedom and SBI Quick, the bank has added State Bank Anywhere-Saral this year for single user MSMEs and State Bank Anywhere-Corporate for multi-user corporates and government departments.

Says Agarwal: “We continue to be the market leader with a share of over 35% in the number of mobile banking transactions. Up to 16 February 2016, some 12.69 crore transactions worth `75,760 crore were facilitated through the mobile banking platform. Between April 2015 and February 2016, 34 lakh new registrations have happened on the mobile banking platform. SBI Quick provides enquiry related interface on mobile to around 70 lakh customers.”

She maintains that there has been 100% growth in mobile banking transactions in the last one year. “The total number of transactions through such accounts till

Manju Agarwal, DMD, (CS&NB), State Bank of India, outlines the growth indicators for the bank during 2015-16 in respect of the mobile wallet and the mobile banking initiatives:

SBI targets 10 mn user base for Buddy

Manju Agarwal avers SBI continues to be the market leader with a share of over 35% in the number of mobile banking transactions

Enormous Reach

POS Transactions(in Lacs)

Internet BankingTransactions (in Crores)

Mobile BankingTransactions (in Lacs)

192

Dec 13 Dec 14 Dec 15 Dec 13 Dec 14 Dec 15 Dec 13 Dec 14 Dec 15

410

622

380537

958

4563

89


February 2016 is approximately 12.69 crore, which was only 6.9 crore a year ago. The total amount deposited through such accounts till February 2016 is approximately `75,760 crore, which was only `10,001 crore a year ago.”

AGE GROUP The bank has not done any demographic analysis for State Bank Buddy and mobile banking transactions, but Agarwal says this will be done shortly. A State Bank Buddy user can send money to another State Bank Buddy using his/her phone book or Facebook contacts. “As observed during the road-shows conducted at educational institutions, our mobile wallet is gaining huge popularity with students who mostly like to use it for their mobile top-up and person to person (P2P) payments.”

PROMOTIONSThe bank promotes the digital schemes and mobile banking through its internal channels like corporate website, net banking site, ATM screens, social media channels, e-mail, SMS, push notifications, etc. Hoardings, print media, radio, digital media, road-shows/events are also put to use for promoting digital initiatives.

Says Agarwal: “Activations are done at branch level and promotions are done through banners, posters, danglers and standees. Promotional activities include staff incentivization campaigns, quiz on Face Book, referral schemes

etc. Incentivization campaign ‘Mobile Kranti’ has been launched to encourage the efforts of employees in promoting new registrations and transactions in mobile banking.”

SECURITYState Bank Buddy is backed by strong cyber security features. All transactions are authenticated by PIN. Velocity checks are in place to check any suspicious transactions. “We have put in 128-bit encryption. There are some hiccups like non-availability of efficient mobile data connectivity. Then there are communication errors due to sudden break in service leading to customer failed transactions. We are addressing these issues on a daily basis,” says Agarwal.

The bank has also introduced strong cyber security features for all mobile banking transactions. In the application based service, all messages originating from the user’s mobile phone are encrypted and travel to the mobile banking server in a secure mode. All the transactions are authenticated by 2-factor verification – USER ID and MPIN.

TARGETS The bank has fixed a target of 2.75 million users for State Bank Buddy by end of 2015-16. This is to be enhanced to 10 million by 2016-17. “Our target is to retain the No 1 position in mobile banking,” says Agarwal.

[email protected]

During the Month

No of Registrations

No of Calls (lacs)

No of Transactions (lacs)

57996

92.02 92.25113.54

Oct 15 Nov 15 Dec 15



64135

88100

1.65

2.80

2.16

State Bank Samadhaan(A Self Service Mobile App)

� Launched on 22nd December 2015� The App provides information about deposits, advances, Internet Banking, Mobile Banking, EMI calculation, etc. and also give access to various other Apps of SBI� Number of downloads: 46,844

No queue app from SBIState Bank of India launched a mobile

queuing app to help its customers

save on time. The ‘State Bank of India

NO Queue’ mobile app is a mobile-

based virtual queuing application for

customers to book an instant queue

ticket for select services at select

branches. Based on the services

selected, the list of branches with

addresses providing those services

within a configured radius of 15 kms

will be populated in the application.

Customers can view details such

as expected waiting time at a given

branch, the number of customers

waiting and distance to the branch

from the point of booking. Once the

customer reaches the branch, he has

to activate his Q-ticket and will be

serviced immediately, thus avoiding

waiting time at the branch. Arundhati

Bhattacharya, chairman of the bank,

launched the app.

SBI INTouch in ShillongState Bank of India opened its

INTouch branch in the north east in

Shillong. Meghalaya chief minister

Mukul M Sangma inaugurated the

branch. He said the new digital

branch will bring in more efficiency

in banking and financial delivery

mechanism. The In Touch Bank is the

bank’s 101st branch in Meghalaya.

The bank had launched digital

branches across India in six cities

which offer innovative technology

and banking services to people of

India. These branches are more

interactive, easier to navigate

through and the services are a tad

quicker. Internet banking, internet

savings, mobile banking and other

services can be availed at these

branches with minimum help from

the bank tellers or management.

Customers can just walk-in, use the

displays and interactive computers

at the facility to avail these features.


Conference Report

Credit information is vital for banks in order to understand and assess customer behavior and credit

information agencies have a major role in shaping the banking industry in the country, says Arundhati Bhattacharya, chairman, State Bank of India. Speaking at the 8th annual CIBIL-TransUnion Credit Information Conference, she said unavailability of credit history of customers is proving to be a hindrance for banks in expanding to unbanked areas. “For example, the country has launched the MUDRA scheme, which is intended to help small businesses, especially in the rural and remote areas, but MUDRA Bank faces a big challenge as most of the prospective borrowers do not have a credit history. I am sure credit information tools provided by agencies like CIBIL can be of great help in this regard,” she said.

NATIVE SOLUTIONSBhattacharya maintains that India financial services institutions should find native solutions for the emerging needs of the customers. “India is a very varied country. We can’t put solutions of the West here. We have to find solutions here. People’s ability levels, requirement levels, education levels and understanding of banks are different. Both banks and credit information agencies can tap the social media trends to understand customer behavior better,” she added.

She also felt that with the banking becoming more and more technology dependent, security and safety should be focus areas. “We have become more and more dependent on technology. Putting security barriers on technology has become paranoiac. But, this doesn’t mean we don’t have to put more safety layers,” she said.Bhattacharya emphasized that formal banking facility is not available in many villages of the country. Around 50% of the

population resides in the areas where there is no presence of banks. This challenge is humongous, she said.

M.V. Nair, chairman, CIBIL, said credit information solutions have significantly contributed to the growth of retail loans. “The retail loan segment is growing at CAGR of 25%, largely on account of property loans (58% growth), personal loans (31% growth) and auto loans (30% growth). Forward looking policies along with availability of credit information solutions have largely contributed to this propulsion in growth,” he said.

INFO SOLUTIONSSathish Pillai, MD and CEO, CIBIL said CIBIL continue to create information solutions that help drive growth for businesses while fuelling faster and cheaper access to credit and other services for consumers. “We have accelerated our investments in content, insights, products and solutions across all sectors. We are working on developmental initiatives to partner in the national momentum of helping drive financial literacy, inclusion and protection,” he said.

Manish Jain, GM - India, TransUnion, said defining a norm for a set of people and understanding the deviation in the defined norms will help to understand the customer better. But the definition changes day by day. “People with credit history, people from similar profile, people having link with agencies such as self-help groups, and social media can be easily assessed,” he said.

BETTER USESpeaking at a panel discussion, Aparna Kuppuswamy, CRO, SBI Cards and Payment Services, felt data should be used in more useful ways. “Regarding the data, we are still scratching on the ground. We are only looking on data for providing

credits. We need to get insights to provide a new service to a customer,” she said.

According to her many customers firstly fail to repay the amount in time. In many cases, this is driven by lack of understanding and knowledge about the product. This may not be willful default.Anup Saha, GM, ICICI Bank said ‘new to credit’ is an emerging customer group in India. People mostly onboard credit services for buying a home, as huge amount of investment is needed. Banks need to know their customers well, especially in terms of their credit history, he added.

Saha also said banks need to undertake extensive studies while entering a new market. “Blind entry doesn’t make sense nowadays. This is an area credit information agencies can play a key role. We want to understand whether a person has capacity to repay loans,” he added. He was also of the view that the image of data is changing. It can be an image, a sound clip or a thump print. There must be ways to capture and make use of this data.

Suresh Menon, member, Executive Management, HDFC Bank, said the new credit customer may not show much discipline. Banks have to deal with them carefully. Banks need to follow up in order to ensure there is no anomaly.

[email protected]

Crucial role of credit information agencies stressed


Survey Results

Indian CFOs expect moderate growth during the year, driven largely by investments in expanding the domestic

markets and exports, says a study by American Express in partnership with CFO Research.

The study, the 2016 American Express/CFO Research Global Business and Spending Monitor, says India continues to lead the world in economic confidence. It said Indian executives are most confident on growth plans when compared with their international peers. The study found that 86% of Indian respondents are expecting the economy to grow next year. Additionally, 90% of Indian executives polled say company’s growth will depend more on exports over the next year as compared to the previous year. As much as 80% of the Indian respondents also cited that they may increase their focus on domestic market given the economic and political uncertainty in other countries. This may be the reason that, 77% of the Indian leaders are looking to expand business activities locally including sourcing, distribution, production and/or outsourcing.

LEADING THE WAYExplaining the findings of the study,

Saru Kaushal, country business head, Global Corporate Payments, American Express India, said “India is leading the way in terms of both business confidence and investments. As expected, owing to the prevailing uncertain economic environment globally, most companies are cautious about spending and investments. The focus is on optimizing cash flow and using it judiciously to grow and protect the business. Broadly, the game plan seems to be focused on reducing the risk exposure by focusing more on domestic markets, along with increased investment in sales and marketing activities, risk management and security, and adding capacity for production or service delivery. Corporations worldwide see technology as an important aspect for their businesses, thereby spending on information security is among their top priorities.”

The study said all of the Indian executives polled look at increasing their spending and investment to drive their top line and bottom line. Nearly 80% of the Indian respondents are looking at increasing their spends and investments by 10% more. Interestingly, half of the respondents, or 50%, are expecting spending and investment to go up by 15% or

more. However, there is a decline in the number of executives as compared to last year who are planning for aggressive spending. Some of them have subdued their investment ambitions and have opted to be moderate in their outlook.

TECHNOLOGYIn a global business environment that is now knit together with technology, executives are more keenly aware of the business risks that come from

inadequate information security, and they are particularly reluctant to skimp on technology spending, says the study. Safeguarding against data breaches, increasing business intelligence/data analysis capabilities and investing in mobile technology are the top three reasons for executives across the globe to increase their IT spending in 2016. Spending on infrastructure - both on premises (enterprise IT, hardware) and in the cloud -receives nearly as much attention.

The study says in India, more than half of the respondents (52%) feel that a data breach has led to business disruption or loss in the past. In line, 43% of executives in India plan to increase their IT spending in order to build on their company’s business intelligence and data analysis capabilities, 37% towards adhering financial reporting and compliance, and 30% in enhancing mobile technology. Additionally, protection against data breaches, as well as cloud computing, in-house IT staffing and hardware and infrastructure receive nearly as much attention.

MOBILE MINDSETA mobile-first mindset among Indian finance leaders was also evident as 43% of them said that the use of mobile technologies could significantly enhance customer service. 40% of the Indian executives feel it helps in allowing employees to work remotely, while 37% said that such an investment could have a positive impact on sales.

Kaushal feels that CFO’s key focus is in improving their cash flows through optimization of account receivables, improve visibility over cash conversion cycles through investment in technology for e.g., - electronic invoicing, inventory management systems.

[email protected]

A recent study by American Express and CFO Research found that CFOs in India are more driven by the domestic market rather that opportunities abroad. A report:

Indian CFOs rely on domestic market

Note: Respondents were asked to choose up to three responses.

0%

7%

10%

77%

10%

7%

20%

33%

23%

0% 20% 40% 60% 80% 100%

Other region

Middle East and Africa

Australia and New Zealand

Indian Subcontinent

Eastern Europe (including Russia)

Latin America(Mexico, South America, Central America)

Western Europe

Asia (other than Indian Subcontinent)

North America (United States, Canada)

Respondents from India (%)

Compared to the past year, in which geographic regions do youexpect your company’s sales to increase the most during the next year?


Interaction

Mehul Dani: Why did you partner with

Axis Bank?

Paresh Rajde: Suvidhaa as a philosophy believes that any partnership, if it were to succeed, has to be premised on the partners understanding and acknowledging each other ’s complimenting strengths which at the core enhances and consolidates the mutual trust as well as respect factors even if the engagement is of no-exclusive in nature. The synergies and what value as well as strengths that each partner brings on to the table forms the basis besides how much each partner is in sync with the other partner’s visioning. Importantly, as a bank to be able to offer that extra space for Suvidhaa as a partner to innovate, co-create and bring about disruptive processes/products/services by itself transcends beyond mere commitment.

To give an example, we took the Cash2Bank model of domestic remittance to Axis Bank, set up the whole process and gave them the visibility. They evaluated, acknowledged and agreed to partner. Today, the Axis Bank-Suvidhaa engagement has gained dominant position in the country’s domestic remittance landscape as a single bank-single BC combination both in terms of the volume and in terms of the BC-agents’ network as over 30,000 dedicated BC-agents offer these services. Importantly, together we have a larger bouquet of bank’s assets and liabilities products offered through Suvidhaa’s BC-agent network as a co-branded offering.

How did you run the pilot project in

Mumbai? What are its findings about

loans and repayments?

We are new to credit but we are very clear that we will not compromise on ‘creating a quality book’, despite the fact that it is, at the end of the day, a bank’s product though we conceptualized it and co-created the program construct with Axis Bank. Currently, a very small set of customers from out of our 35 million customerbase has been identified through an algorithm-based analytical process within Suvidhaa system which then gets scrutinized by Axis Bank to arrive at the set of pre-approved customers. These customers get to avail the credit from our BC-agent network in Mumbai area during pilot, which is still on.

The response has been very positive. The first 2 months has seen 100% EMI repayment and what is more encouraging is that over 95% of the customers have paid their EMIs by themselves without even being called by us. The observations so far from the ground vindicate our understanding of the target segment, which makes our partner, Axis Bank all the more reassured.

What is your roll out calendar? When rural

areas will be added for loans disbursal?

Neither Suvidhaa nor Axis Bank is in a hurry. We are here for the long haul. We will be rolling out this in phases during the first 2 quarters of FY 2016-17, with Delhi and Surat following soon. We plan to reach 100,000 beneficiaries in the 1st phase and want to understand their behavior and then ramp it up across India. Also, we have always believed that there is a lot of need among the urban poor with the large migrant population.

Having said these, rural India is certainly in our radar and we will appropriately bridge the need-gap over there. Axis Bank has immense experience in micro-credit and has been lending to Self Help Groups in rural areas for a long time and this is the first time that they are venturing into this segment. Understandably they are cautious in their approach and their insights and directions are not just limited to expansion.

What is the revenue sharing formula with

Axis Bank?

The commercial arrangement with

Axis Bank and Suvidhaa Infoserve have joined hands to lend to the people having no formal credit score and no bank guarantee to offer. Paresh Rajde, MD, Suvidhaa Infoserve, provides interesting insights on various aspects of their innovative partnership:

Expanding financial inclusion footprint

Paresh Rajde


Axis Bank is premised on the customer charges and focuses on channel viability and feasibility to either partner, which has been the premise all through our engagement with Axis Bank.

What is the tenure of agreement with

Axis Bank? Is it exclusive for a period or

Suvidha can have parallel tie-up with

other banks also?

We launched our first service partnering with Axis Bank on 1 March 2012 and the engagement is on a non-exclusive basis. However, over the years, the spirit of engagement has been such that neither of us have inked with any other partner. In fact, more than us, Axis Bank already has a set of BCs even before we came on board and they have not initiated any of our services with any of their other BCs. This demonstrates not just commitment but their trust in Suvidhaa and the potential of their engagement with Suvidhaa.

As for us, we can engage with other banks and we transparently discuss with Axis Bank in advance and give it the right of first refusal. For instance, years back, when we wanted to launch an open loop prepaid card program, truly for the B2B segment, we proposed to Axis Bank and only after the bank confirming that it will not be able to take it up, we approached one of the finest PSU banks in India - Central Bank of India - and successfully launched the Channel Card Program for Suvidhaa retailers in association with MasterCard. However, when it came to a similar open loop prepaid card for the general public, we launched it with Axis Bank co-branding.

What is the extent of your liability if the

party defaults and loan turns NPA?

Any business has its share of loss which translates into liability in case of a partnership. Like it is said, if you want to fight darkness, you have to do something with the light. Though we cannot fully mitigate, our strength is where we try and build processes, focus continuously on educating the eco-system stakeholders

and hand-holding them so that customers by themselves find it difficult to default. Having said this, Suvidhaa per se does not have any financial liability with regards to the credit program.

What are your new products and services

introduced recently?

In the payments space, we launched an open loop prepaid card program last year for the general public co-branding with Axis Bank at the hands of H.R. Khan, deputy governor of RBI. This is a first-of-its kind program in the country and a revolution in the banking industry. The Axis Bank-Suvidhaa Prepaid Card is 100% paperless, issued and activated instantly, riding on Aadhaar eKYC. Cardholders can send money, withdraw cash at any bank’s ATM or use it online/any PoS terminal besides at our large BC-agents network across India. This is one more humble initiative from Axis Bank and Suvidhaa in making government’s/RBI’s vision of less-cash-society, a reality.

More recently, in December 2015, we launched the Nano Credit Program for those segments of the population that have no formal credit score and no collateral to offer. The typical segments like vegetable and fruit vendors, rickshaw and taxi drivers, carpenters, welders, tea-stall vendors, hawkers and many

migrants who have set up their shops and/or engaged in small businesses and individuals too. Importantly, they do not have any digital footprint and may even be new to credit. Interestingly it is these segments that comprise an overwhelming majority of Suvidhaa’s 35 million plus unique customer base and who have continued to avail various services that we offer through our network viz., recharges, railway ticketing, bill payments, etc. Over the years, Suvidhaa has captured their transaction behaviour digitally which provides for a compelling proposition and enables us to bring about disruption across market/product/process.

In the months to come, we will not just be consolidating on these programs but will launch disruptive/innovative assets and liabilities products/services woven around these programs. We are also in the process of launching customized niche products for our B2B retailer segment.

What are the targets for 2016-17?

The key target for FY 2015-16 was to maintain the number one position in the domestic remittance business. As regards, FY 2016-17 our targets are (a) to excel in execution of first of its kind lending products in India and (b) to manage a Rs5000 cr loan book (AUM) on behalf of our esteemed partner bank/institutions.

[email protected]

The launch of Axis Bank - Suvidhaa prepaid card


Opinions

China’s economy continues its decline, as reports earlier this week revealed that exports had their

biggest monthly drop since May 2009. That fall underscores the Chinese government’s announcement lowering its economic growth target for 2016 to between 6.5% and 7%, compared with 6.9% last year. Against that backdrop, China is preparing for millions of layoffs in the steel and coal sectors, while a potential real estate bubble looms. What Beijing could do to manage the fallout and help entrepreneurial activity pick up some of the slack in the economy are open questions, according to experts.

In February, China’s exports fell 25.4% compared to those of a year ago, while imports fell 13.8% over the same period. “[That is] just another sign that the downward forces are substantial in the Chinese economy,” said Barry Naughton, chair of Chinese International Affairs at the School of Global Policy & Strategy at the University of California, San Diego. “Over the next 6 months to a year, things will get worse,” he said pointing to 2 factors driving that scenario.

One is a set of ‘structural elements’ that are pushing down the Chinese economy’s growth rate. The other is the government’s new approach with supply-side reforms with the downsizing of production capacities that will see the first round of massive layoffs in the steel and coal industries.

LAYOFFS3-5 million people will be laid off over the next 2-3 years in China. In the short run, 1.3 million people in the coal industry and half a million people in the steel industry will lose their jobs. “The problem is that the layoffs are combined with uncertainty,” said Wharton management professor

Minyuan Zhao. “That will reduce a lot of the incentives people may have to take themselves out (of economic decline).” She recalled that the automobile capital of Detroit in Michigan went through several rounds of massive job losses, but eventually rebounded.

ENTREPRENEURSHIPZhao believes in the entrepreneurship of the Chinese people, and feels there are ways they can get themselves out. “Yes, the layoffs are painful, but it is a short-term pain for better efficiency in the market.” She noted that the Chinese government has for long encouraged entrepreneurial activity - “partly because that is a bright spot [in the economy] and partly because it eases the burden on employment.”

According to Naughton, the outlook for entrepreneurship in China is mixed. He said that several sectors have strong growth potential, including online finance, where China is already ahead of the U.S. He acknowledged that the Chinese people are ‘tremendously entrepreneurial’, and many sectors in the country hold significant growth potential.

“(However,) the last year hasn’t been great in terms of seeing those people putting their shoulder to the wheel to start up new businesses and shift the structure of the economy,” Naughton noted, blaming politics for some of that underwhelming entrepreneurial activity.

Zhao is of the view that in order to contain any negative fallout of the job layoffs, Beijing “will in the short-term prop up some of the economic activity that may not make sense in the long run just because they want to avoid any social unrest that may occur”. “That may make things worse, if these short-term policies come in the way of long-term transition.”

REAL ESTATE BUBBLENaughton fears another big long-term worry for China stems from its overhang of real estate that is built out but unoccupied. It helps that of late, real estate prices have stabilized and risen a bit in the big cities including Beijing and Shanghai, he added.

But Zhao points out that those higher prices are a result of people financing their home purchases with more borrowings. There are “increasing signs of a bubble,” she said. “(People) are using higher leverage. The down payment requirement is lower, (and) scrutiny is lower. If you look at the policies rolled out to boost the market, they have every sign of what we saw in the US between 2003 and 2006 (that eventually fed the subprime housing crisis that followed). It is controversial whether that upward movement of housing prices - given the glut we see - is a healthy sign.”

TECH GIANTNaughton noted that China’s large investments in high technology industries may produce some successes over the next two decades. “But the question is: Are those successes going to be commensurate with the amount of money they are pouring into those sectors? Enormous amounts of money have gone into electric vehicles with relatively meager returns.”

The Chinese government has similarly made large investments in other sectors as well, but kept much of that activity secret, he added. In his view, those large investments to make China a technology powerhouse could turn out to be “a gigantic waste.”

An edited version of a discussion on the Chinese economy by Minyuan Zhao, Wharton management professor, and Barry Naughton, chair of Chinese International Affairs at the School of Global Policy & Strategy at the University of California, San Diego initiated by Knowledge@Wharton:

Trouble ahead: what’s next for the Chinese economy?


Financial Inclusion

1. Financial inclusion needs convenient

customer access to accounts:

The World Bank has an ambitious goal

for Universal Financial Access by 2020.

According to reports published by them,

the unbanked population in the world

shrunk by 20% between 2012 and 2014

to 2 billion. During the same period the

unbanked population in India shrank by

25% (around 180 million) thanks to the

aggressive PMJDY (Pradhan Mantri Jan

Dhan Yojana) scheme which pushed

banks in India to open zero balance

accounts of the hitherto unbanked and

issue debit cards against these accounts.

Till June 2015, though the accounts had

garnered deposits worth `187 billion,

more than 50% of these remained zero

balance accounts. The Government of

India is pushing the funding of these

accounts by introducing Direct Benefit

Transfers (DBT) wherein the subsidies

given to the citizens for gas, kerosene

etc., will get directly credited to the

accounts so opened.

While more and more accounts of

the hitherto unbanked population are

being opened, the challenge remains

that of enabling convenient access to

these accounts by the account holders,

who are predominantly located in

remote areas which lack adequate

infrastructure. Banks have been

following a multi-pronged strategy of

deploying branches, ATMs, Business

Correspondents (BCs) and micro-ATMs

(through BCs) to reach these account

holders. But this is not enough, given

the vastness of the country. According

to a report published by NABARD

(National Bank for Agriculture and Rural

Development), it would take at least two

decades to cover the entire 1.2 billion

population with branches.

2. Cash continues to be dominant:

In a recent paper released on the need

for proliferation of card acceptance

infrastructure, especially in tier III to VI

ci t ies, the

Reserve Bank

of India has

acknowledged

that cash

continues to

be a dominant

channel of

transactions

and to cater to

this, the ATM

infrastructure

m a y b e

necessary in the short and medium term.

Another paper released by NABARD

states that while e-commerce transaction

numbers are increasing exponentially, 60%

of these transactions are paid via ‘Cash on

Delivery’ method of payment. Also, there

are approximately 16 million retail outlets

in the country out of which only 0.6 million

outlets have POS terminals. Though efforts

are on to reduce the dependence on cash,

the interplay of various socio-economic

issues in the country will tend to make

cash a predominant means of exchange

even in the foreseeable future. And the

cheapest channel to deliver cash and that

too on a self-service mode, are the ATMs.

3. ATMs can enable financial inclusion:

Cash being a dominant means of

transacting in India, ATMs installed in

remote locations can ensure that the

holders of the PMJDY accounts can

withdraw the subsidies credited into

their accounts, through the ATMs. Banks

can also enable video-teller services

on the ATMs for financial education or

solving customer queries. From the

banks’ perspective, in the short and

middle term, though the ATM channel

is an effective channel to service the

customers coming under financial

inclusion, setting up and running ATMs

doesn’t come cheap and is not hassle

free. Power deficiency, bad roads, poor

network connectivity, lack of adequate

supply of ATM fit currency notes, law and

order problems etc. makes it very difficult

for banks to run their ATM channel

optimally. Outsourcing of these activities

by banks to ATM Managed Service

Providers (MSPs), such as FIS, who are

now managing a large number of ATMs

in India, has reduced the operational

hassles and cost for banks and helped

in the expansion of ATMs in the remote

corners of the country. However, the

infrastructure and operational issues

enumerated above, continue to be a

cause of concern for the MSPs.

4. In conclusion:

While transactions through the mobile

and internet have the potential and have

already started making small contributions

to the ‘less cash economy‘ objectives of the

Government and the RBI, the importance

of ATMs cannot be de-emphasized, even

in the medium term. ATMs can in fact,

make available the fuel for accelerating

the financial inclusion process. This

needs encouragement from the policy

makers in the Government and RBI in

terms of additional funding being made

available for ATM deployments, clear

regulations on interoperability of deposits

and cash processing, improvement in the

power, road and network infrastructure

etc. The Committee on Medium Term

Path for Financial Inclusion set up by

RBI has recommended the use of the

`2000 crore Financial Inclusion Fund

managed by NABARD, for deploying

ATMs in the semi-urban and rural areas.

If implemented, it would surely give a

major boost to financial inclusion. The

Government should also steadily move all

payments of subsidies and grants directly

to the accounts of the beneficiaries. This

will incentivize banks to deploy more

ATMs. But if the above does not happen

in the near short term, complete financial

inclusion by 2020 may be a distant dream.

- Radha Rama Dorai

Business Head ATM and Allied Services,

FIS India

ATMs as access enablers to financial inclusion

Radha Rama Dorai


Opinions

On 17 February Mexico’s central bank El Banco de Mexico made the surprising move of raising the

country’s interest rates by 50 basis points to 3.75%. At the same time, it announced that it would begin to sell American dollars directly to buyers in the marketplace. The goal of these measures is to stop the strong devaluation that the Mexican peso is suffering versus the dollar.

At the moment, it seems that this decision is having an impact. Before anyone became aware of it, the value of the peso recovered a great deal of the ground it had lost in recent weeks. Last year, the peso fell by 17% relative to the dollar. So far this year, before the intervention of the central bank, the peso had fallen by 10%, marking a historic low point of 19.44 pesos to the dollar during early February. (By March 2, the Mexican currency had recovered somewhat to 17.81 pesos to the dollar.)

PECULIAR SITUATIONUntil the intervention by the central bank, the Mexican peso was one of the hardest-hit currencies in the emerging markets. This was especially notable because the economy of Mexico does not demonstrate any real signs of weakness, growing at a rate of 2.5% last year – compared with the 1% rate of Latin America as a whole. “In reality, the devaluation of the peso does not reflect any … special concerns about the Mexican economy,” notes Eugenio Gomez, professor of economics at the IPADE Business School in Mexico City. What’s taking place is an appreciation of the dollar versus many other currencies, due to the recovery of the U.S. economy following the financial crisis and the resulting changes in monetary policy, says he.

Einar Moreno Quezada, academic director of the department of finance and accounting at the University of

the Americas in Puebla, Mexico, agrees: “More than a deprec iat ion of the peso, we find that we are dealing with an appreciation of the dollar…. The conditions that the economy of the United States offers, starting with the increase in its interest rates, are more attractive for investors. And as a result, the demand for dollars is growing, and [the dollar] is appreciating.”

Moreno Quezada points out that because the peso is now in demand 24 hours a day, it is more exposed to the ups and downs of markets during times of increased volatility than other emerging market currencies.

EFFECTS ON ECONOMYFor Gomez, the devaluation of the peso can have consequences that are as positive as they are negative. “On the negative side, it can generate inflationary pressures because of the increased prices for imported goods — although these pressures have proved to be particularly weak lately, due in part to some other factors such as the worldwide decline in commodity prices, which has meant very low inflation rates in many countries. With regard to its positive effects, a cheap peso can favor tourism and [certain] exports,” he adds.

Moreno Quezada believes that even if there are no visibly significant effects on inflation, “clearly, there are positive and negative impacts.” On the one hand, he notes, there can be an economic impact because of remittances. On the other hand, he worries about the financial strangulation of those companies that

have debt denominated in dollars but did not foresee that the dollar would rise to the levels that are now being observed.

In this situation, when there are both positive and negative effects, the Bank of Mexico finds itself at a crossroads. Recently, it has opted to intervene by raising interest rates. Some economists believe that current macroeconomic data does not support that move, and that it could damage growth. However, inflation is not showing any signs of accelerating. Consumer prices in Mexico rose by 0.38% in January, reaching an annual rate of 2.61%, which is very close to an historic low point, and close to the central bank’s target of 3%.

STRENGTH OF PESOThe most commonly held opinion is that the peso will gain strength over the course of the year, supported by the strong fundamentals of the Mexican economy. Gómez avers that the peso has been devalued more than we would usually expect, given the fundamentals of the Mexican economy. He believes that this is a typical process of overshooting, which is common during periods of devaluation.

Moreno Quezada is somewhat more pessimistic about the evolution of the Mexican peso. He argues that it will be quite a while before investors reassess their views regarding the advantage of investing in Mexican peso.

Mexico’s peso is one currency that has been baffling economists. Two academicians discuss in Knowledge@Wharton the recent steps of the central bank to make the currency stable and the results:

What’s behind the volatility of Mexico’s peso?


Fraud Scenario

Identity thefts accounted for 77% of fraud cases in Q12015 in India, finds a study by credit information

company Experian India. The study, ‘Fraud Report 2016’, which was released recently lists fraud trends in the banking and financial services industry and covers incidents arising from fraudulent contact information, fraudulent organization, identity theft or fictitious identity and repeated attempts from already identified individuals.

The study says that among various financial products, auto loans, mortgage loans and credit cards have seen the largest number of fraud cases from identity theft represented by 85% of the total detected frauds in Q12015. Frauds due to applicants submitting fraudulent contact information has risen by 3% contributing to 18% of all detected frauds. Among all financial products, consumer loans continue to record the highest fraud incidence rates followed by credit cards. The mortgage portfolio has observed a 50% increase in the fraud incidence rate.

ADDRESS PROOFFalsification of address proof is the most popular behavior seen among fraudsters, according to the study and hiding of adverse credit is the most common behavior especially in the automotive loan category followed by mortgage fraud. In case of mortgage loans, it has been seen that fraudsters also have used false employment status to avail the loan.

AUTO LOANSThe number of cases detected as fraudulent for auto loans has increased annually from 39 cases detected per 10,000 in Q12014, to 46 cases per 10,000 in Q12015. The total number of detected frauds in this segment also increased from 82% in Q12014, to

85% in Q1 2015. The number of cases detected as

fraudulent personal loans has increased annually, from 51 frauds detected per 10,000 cases to 58 cases. As a proportion of total detected personal loan fraud, it increased from 74% to 81%. In the credit cards category the number of credit card applications detected as fraudulent increased annually from 65 frauds per 10,000 frauds to 75 cases per 10,000. The number of identity thefts too increased from 81% to 85% of all detected card frauds. In the consumer loan sector, cases detected as fraudulent increased from 219 frauds per 10,000 to 265 cases per 10,000. The two wheeler loan segment remained relatively flat with 63 per 10,000 frauds against 62 per 10,000.

REPEATED ATTEMPTS The study points that while the period saw an increase in the fraudulent contact information and identity theft case, the category of fraud arising from repeated attempts among already identified individuals saw a decline from 9.26% to 4.38%, a relative change of 47%. The decrease can be attributed to institutions putting in more processes to check

against historical fraud profiles and also highlights improved detection techniques by the financial sector, says the study. In the gold loan segment, identity fraud cases and fraudulent contact information cases accounts for around 90% of total detected frauds in Q12015 as compared to 96% in Q12014. Repeated attempts in the segment contribute to around 9% in Q12015 as compared to 4% in Q12014. The number of cases increased annually from 2 frauds per 10,000 cases to 11 cases per 10,000 in the given period.

RISE OF SOCIAL MEDIALaunching the report, Experian Credit Information Company of India MD Mohan Jayaram said with the rise of social media and information shared in the public, identity fraud continues to be a threat to the industry. “Individuals need to be alert on the information they share publicly as well as be alert to phishing emails and calls soliciting personal details. Fraudsters are well-connected, highly skilled and endlessly resourced individuals. There are several components of fraud ... hence, it is important for us to think of fraud as an industry”, says he..

[email protected]

Credit information company Experian India has brought out a report the fraud scenario in India revealing interesting aspects:

Identity thefts stand out


Research Notes

NBFC retail credit pie likely to expand in FY 2017

Delinquency reversal expected in FY 2017

Retail credit growth has picked up since FY2015, particularly in the microfinance, gold loan and mortgage segments. Credit from NBFCs to the

new commercial vehicles (CV) segment has witnessed some easing of downward pressures. Retail credit of NBFCs as on 31 December 2015 stood at Rs4.7 trillion, reporting a yoy growth of 18.8% as against growth rates of 14.5% in FY2015 and 9.5% in FY2014, according to the ‘ICRA report on Indian Retail Non-Banking Finance Market’.

ICRA expects NBFCs to gather momentum in the CV segment and grow by 18-20% in FY2016 and further by 19-22% in FY2017. The segments that could see muted growth include tractors as lenders remain cautious in view of the weak rainfall over the past 3 crop cycles. Credit off-take in the construction equipment segment is also expected to pick up only gradually in FY2017 when the steps initiated by the government of India to boost infrastructure activity start bearing results.

ICRA, however, notes that banks (56% of industry retail credit) are also sharpening their focus on the retail segments, given the pressures on corporate credit, and have expanded

their retail book by 16.1% in December 2015, as against 15.3% in March 2015 and 14.6% in March 2014. ICRA therefore expects competitive pressures on retail-focused NBFCs to intensify over the next few years.

With benign operating environment and a positive asset quality, delinquency reversal is expected for NBFCs in FY2017, says ICRA. Over the next 12-18 months the

asset quality is expected to benefit from the stronger economic outlook. Their 90+ day delinquencies have stabilized at around 5.5% in nine months of FY2016, although these remain higher than the 5% level of March 2015. Overall in FY2016, with delinquency forward flows stabilizing and economic prospects in general improving, ICRA expects the delinquency indicators of retail-focused NBFCs to see some reversal in FY2017. While the tractor segment delinquencies tend to taper off during the latter half of the year, ICRA expects delinquencies to remain elevated, as the rabi crop yields could be affected by the unfavorable weather patterns in north India between December 2015 and March 2016.

Delinquencies in the commercial vehicles/construction equipment segment (30% of NBFC credit) appear to have stabilized with CV fleet operators’ cash flows improving on the back of rising freight margins (as diesel prices have dropped 21% between September 2014 and January 2016) and increased freight demand from some industries. Further improvement in delinquencies could be expected in FY2017 once the pick-up

in economic and industrial activity is more broad-based, with infrastructure activity beginning to show some signs of picking up.

ICRA believes there could be high level of competitive intensity in the high-growth mortgage segment, which has brought down product profitability and led to some weakening in underwriting standards. The share of loans with high ‘income to installment’ ratios and that of loans based on ‘surrogate’ methods for assessment of borrower income have increased over the past 1-2 years. Such loans expose NBFCs to higher credit risks, given the uncertainty associated with incorrect assessment of borrower income and also because self-employed borrowers tend to have volatile cash flows. The reported asset quality in the segment has been partly supported by the refinancing available to borrowers through balance transfers and top-up loans.

ICRA expects the lifetime losses of retail-focused NBFCs to remain at manageable levels, considering the secured nature of most of the asset classes. Further, NBFCs’ ability to make recoveries from lending done backed by security of immovable assets, would improve in the wake of budget. Such financing accounts for 18% of NBFCs’ retail credit portfolio (largely in the mortgage segment).

[email protected]

NBFCs Credit Growth Across Segments90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

-10%

Microfin

ance

Mortgag

e

Tracto

rs

Used C

V

Auto

Gold Loan

New CV

CEO

yoy growth (Mar-14)

yoy growth (Dec-15)

Aggregate 12m growth Dec-15

yoy growth (Mar-15)

Aggregate 12m growth Mar-15


Research Notes

NBFCs need to mobilize `2.2-2.4 tn in 2017

Profitability to remain under pressure

The banking system remains the primary source of funds for retail-focused NBFCs, accounting for close to 41% of their total resource profile as on 31 December 2015,

according to credit rating agency ICRA. The share, however, has come down from 45% as on 31 March 2014 as NBFCs have increased the proportion of incremental funding through debt market instruments (non-convertible debentures, or NCDs, and commercial papers, or CPs), given the softening of debt market rates, says ICRA in a report. The cost of funds has moderated steadily in the recent past for NBFCs and declined by about 10 bps during Q3 FY2016 to about 10%; however, their incremental cost of funds could harden as a result of the changes in the prudential limits on investment by mutual funds.

ICRA’s channel check suggests that the market rates have increased by 50-75 bps for CPs and NCDs since January 2016. While from a liquidity point of view NBFCs continue to have access to funds from the banking system, the overall incremental cost of funds for NBFCs is expected to increase. The introduction of the marginal cost of funds-based lending rate (MCLR) by banks from 1 April 2016 along with the systemic softening of interest

rates could lower the cost of bank borrowing for NBFCs. As for the incremental fund requirement, factoring in an

estimated credit growth of 19-22% in FY2017 and the re-financing requirements, ICRA estimates that NBFCs will need to mobilize `2.2-2.4 trillion in FY2017, of which bond mobilization could be to the extent of `600-700 billion.

The net income from operations (NIO) based on the trailing 4 quarters improved by 25 bps in December 2015 versus the March 2015 levels to 6.9% with NBFCs being able to

retain the benefit of lower cost of funds. Going forward, however, the incremental cost of funds for NBFCs could see some increase in Q4 FY2016 following the hardening of interest rates in the debt capital markets after the tightening of prudential exposure investments limits of mutual funds, says the ICRA report. Overall, ICRA expects the lending spreads of NBFCs to remain adequate in FY2017. NBFCs’ operating expenses in relation to average

managed assets increased to 3.2% in December 2015 from 3.1% in March 2015. Improvement in the operating environment could translate into higher business volumes and improvement in credit quality, which could help NBFCs improve their operating efficiencies. This impact however is expected only towards the latter part of the current year or in FY2017.

While the operating environment is showing signs of improvement, credit costs for NBFCs increased to 1.7% in December 2015 from 1.4% in March 2015 on account of the increase in NPAs partly because of the migration of some NBFCS to the 150+ day NPA recognition norm in that quarter. NBFCs reported a 20 bp dip in return on assets to 1.7% in December 2015 from 1.9% in March 2015. The ROE, consequently, came down to 10.7% in December 2015 from 11% in March 2015.

Despite the possible drop in provisioning cover, ICRA expects NBFCs’ incremental credit cost to remain elevated because of higher gross NPAs following migration to tighter NPA recognition norms. In FY2017, ICRA expects an additional 15-20 bp hit following migration from the 150+ day norm to the 120+ day norm. Overall, ICRA expects the ROA of NBFCs to remain in the range of 1.6-1.7%, which would translate into an ROE of 10-11% in FY2017.

[email protected]


Pinnacle

Pinnacle is a section on SMART MOVES in Banking Frontiers. Please contact Saaniya Naik on 77380 88612 ([email protected]) or Wilhelm Singh on 77383 87634 ([email protected]) or phone us on +91-22-29250166 or fax: +91-22-29207563. To apply, please email in your resumes to [email protected]

Select Openings

NPCIPosition: Senior Vice President - Product Development Place of posting: MumbaiEducational Qualification: UG -B.Tech/B.E. - Computers, Electronics/Telecommunication PG - MBA/PGDM - Any Specialization Job Code: SVP/PD/NPCI/010416Job Description: Manage Key Stakeholders - Enable high-quality, enterprise-level decisions by providing payments expertise; constantly identify and communicate the value payments can provide to the organization and the future vision of payments. Drive executive-level presentations and drive organizational changes towards a strong payments business.Knowledge/Skills: Demonstrate multi-disciplinary knowledge, i.e. Technology, Acceptance, Acquiring, Operations, Risk, Brand, Electronic payments and emerging technologies. Including Consulting or project management experience. Ability to think from the perspective of the member banks. Sharp business acumen with excellent presentation skills. Understanding of competitive offerings and industry trends. Ability to interpret trends and translate into strategy and functions that can support business growth opportunities

NPCIPosition: Senior Vice President - Business Development Place of posting: MumbaiEducational Qualification: UG -B.Tech/B.E. - Computers, Electronics/Telecommunication PG - MBA/PGDM - Marketing, Advertising/Mass Communication

Doctorate - Doctorate Not Required Job Code: SVP/BD/NPCI/010416Job Description: Analyse member banks

business through profitability modelling, financial forecasting and competitive analysis. Responsible for P&L management and results. Serve as the expert and advocate for the payments landscape to identify and understand the opportunities, challenges and potential priorities to establish mutually beneficial partnerships/commercial relationships. Provide continual and timely education to the broader team.Knowledge/Skills: Demonstrate multi-

disciplinary knowledge, i.e. Marketing, Acceptance, Technology, Operations, Risk, Brand, Electronic payments and emerging technologies. Consulting or project management experience. Strong influencing and negotiation skills. Deal structuring, negotiation, documentation and execution. Sharp business acumen with excellent presentation skills. Understanding of competitive offerings and industry trends. Ability to interpret trends and translate into strategy and functions that can support business growth opportunities

DBS BankPosition: VP & Senior Relationship Manager - IBG 1&2 - (160000HN)

Place of posting: MumbaiEducational Qualification: PG - MBA/PGDM - Any Specialization Job Code: VP/CIB/DBS/010416Job Experience: Primary contact at CEO, Finance Director, and Treasurer level in the Corporates controlling offices, discussing inter alia customer needs, service reviews, and credit risk issues. Grow the team’s portfolio profitability by identifying new and existing customer potential including sales

opportunities and new product promotion initiatives. Formulate business development strategies and objectives to meet changing market needs. Develop prioritized target list & structured client calling plans in place and formulate client action plans. Keep customers advised on the expected ‘delivery date’ for product/credit applications. Monitors and ensures adherence to risk service standards. Manages performance of the team against key financial (risk-adjusted contribution) sales, service and operational targets.

Manage segmentation of the portfolio. Develop Customer Relationship Plans for customers in portfolio.

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functionasaBankingProcessExcellenceandBPOCentretoservicetheirexistingclientbaseandfurtherexpandtonewcustomersintheMiddleEastregion.ItwillprovideitscustomersinUAE,Qatar,OmanandBahrainwithprofessionalmanagedservices,trainingandproject,andtechnologysupport.WithexistingheadofficeinBusinessBay,Dubai;thecentreintheCBDareawillmarkFinesse’ssecondregionaloperatingofficeinUAE.Finessecurrentlysupportsover150enterpriseclientsaroundtheglobe,which includemajorbanks, financial institutions,energyandcommodityfirms,corporationsandgovernmententitiesaroundtheworld.Finessehastheiroperationsandofficesinover10globallocationsincludingvariouscitiesinIndia,SingaporeandCanada.Amongst awhole rangeofmanagedoutsourcing services,

FinessemostlyprovidesitsservicesforChequeClearing,Verification&Reconciliation,FinancialDocumentManagement,PostDatedChequeManagement,InvoiceFactoring,Remittances,SettlementandPayments,PayrollManagementServices,CashManagementandCreditAnalysisaswellasforCreditProcessAutomation.

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toskillupinotherareasofthebusinessthusprovidingincreasedbusinessvalue.Resourcescanbedeployedandre-provisionedinreal-timeinlinewithappropriateworkloadsthusaidingproperresourcing.CloudCRMsolutionssyncinrealtimeprovidingforbusinessesintelligence

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FINESSE TO PARTICIPATE IN MAJOR FINANCIAL TECHNOLOGY EVENTS ACROSS THE GLOBE IN THE COMING MONTHS

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Middle Eastern Retail Banking Forum and Expo, Dubai, 18-19 April 2016. Finessetoshowcaseitsolutionsandservicesforbanksatthe11thMiddleEasternRetailBankingForum and Expo 2016.MERBEXPO offersFinesseanunrivalledopportunitytoshowcaseanarrayofnewsolutionsandtechnologiesacrosscoreRetailBanking,MobileBankingandDigitalID&Security,includingmanyfeaturestohelptheBFSIverticalmeetchallenges.

Smart Tech BFSI 2016, Goa, 21-22 April 2016.FinessewillbeparticipatingintheSmartTechBFSI to unveil its innovative solutions andservices for the latestdevelopments inITtokeydecisionmakersintheBSFISector.Theteamwillbenetworkingwithindustryexpertsand share their knowledge about themostrecent innovationwhich isdriving theBFSIbusinesstoday.

The Asian Banking Forum, Singapore, 15-16 June 2016.FinessewillbeapartofTheAsianBankingForum,which is tailored for thebanking industry todiscusseffectivecustomerengagementstrategies,networkwithinnovativebigandsmallbanks,andshowcasenoveltechnologiesandservicesthatcanenhanceengagementwithconsumers.TheForumwillusherthebestpracticesanditsimplicationsthatdrivesinnovationandgrowthintheindustry.

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SMART MOVES is the HR section that will be of immense help to Banks, IT Companies, Financial Institutions and Insurance Companies which require resources with domain knowledge. To advertise please contact Saaniya Naik on 77380 88612 ([email protected]) or Wilhelm Singh on 77383 87634 ([email protected])

Banking Frontiers is pleased to present SMART MOVES, which is its HR section. This section will be of immense help to Banks, IT Compa-nies, Financial Institutions and Insurance Companies which require resources with domain knowledge. They can advertise for people and products in this section. This section is beginning with a listing of key openings in the industry. To advertise in this section and take advan-tage of this opportunity, please contact Shirish Joshi on 7738383850 ([email protected]) or Malaika Monteiro on 9004446030 ([email protected]) or phone us on +91-22-29250166 and fax: +9122-29207563.

Sonali HR ServicesManager Retail Banking- Yes bankLocation: DelhiJob ID: 18445119Description: To introduce & acquire new YFB Product/program CA customer in the identi�ed segment and reference generation from the speci�ed catchment.

Wize Careers ConsultantsAnti Money Laundering AM / ManagerLocation: GurgaonJob ID: 18433637Description: Extensive knowledge of AML monitoring tooling (MANTAS, FIRCOSOFT, CLIFF), can draft Management Information analyses and are skilled to use applicable tools. Minimum 5 years of AML experience within Financial Sector.

Krehsst Recruitment SolutionsRetail Banking Relationship ManagerLocation: ChennaiJob ID: 18459549Description: He/ she is responsible for increasing liabilities size of relationship via balances in accounts of existing customers and enhancing customer pro�tability by capturing larger share of wallet.

Rinalytics Advisors Pvt. LtdSenior Manager- Insurance AnalyticsLocation: Bengaluru / BangaloreJob ID: 18390226Description: Consulting on new strategies in areas including analytics, statistics, predictive modelling and actuarial science, Providing expertise in Predictive Analytics Modeling and Analytics in the Insurance industry (Life, P&C Insurance, Actuaries).- Experience in developing Proof of concept (POC) models in insurance domain.

Windows Consultants Private LimitedManager/Senior Manager, Financial AdvisorLocation: Delhi, GurgaonJob ID: 18454437Description: Managing the banking and investments relationship of clients and responsible for overall growth of Liabilities & Investment business from HNI segment.

Black TurtleVP - Treasury Management/Liquidity Reporting/Treasury ReportingLocation: DelhiJob ID: 18143939Description: Implementing the Finance strategy for the team, Accountable for the integrity and completeness of �nancial records, Provide insightful commentary and analysis.

Hector & Streak Consulting Private LimitedHead TreasuryLocation: PuneJob ID: 18009411Description: Knowledge of Project Funding - knowledge of equities, debt, borrowing, Working Capital Funding, Cash �ow, budgets, Forex Risk Management, hedging, Treasury Management.

Disha HR Services Private LimitedAssistant Manager - Corporate TreasuryLocation: MumbaiJob ID: 18086779Description: Responsible for driving credit risk administration, collection, credit risk mitigation, global FX and investment activities (trade con�rmation, trade compliance, settlement), global bank accounts management etc.

Golden Opportunities Private LimitedManager - Credit ServicesLocation: Hyderabad / SecunderabadJob ID: 18372376Description: Should have good experience in handling credit operations like credit collations, application preparation, credit analysis, limit loading, account information maintenance, etc.

Impact HR Services Private LimitedHead - Treasury Operations Location: PuneJob ID: 18027734Description: Will be spearheading from the role from Pune. Will lead a team of over 40# to support Transactional Cash management activities for global operations from a large number of countries.

People First Consultants Private LimitedSenior Management Trade FinanceLocation: Bengaluru / BangaloreJob ID: 18017744Description: Candidate should have 10 years of experience in trade �nance risk management.Global exposure, Good communication, Currently designated as senior manager or AVP.

EXECUTIVE TRACKS ASSOCIATESHead Corporate FinanceLocation: DelhiJob ID: 18287805Description: Collaborate and support the organization in developing and executing the IR strategy, operating plans, budget, and global IR program, Lead QIP funding, Manage Private Equity deals etc.

VNK Consulting ServicesManager/Assistant Manager - Treasury AdvisoryLocation: MumbaiJob ID: 18390344Description: Candidate will be advising small , medium and large corporate on their treasury activities, Improving their FX e�ectiveness , hedge ratios , banking negotiations etc.

Spectrum Talent ManagementSenior Manager-Finance StrategyLocation: Chennai, NoidaJob ID: 18236292Description: Provide update on Business Intelligence and competitor analysis on developments in Power Industry, Interact with Equity analysts in order to gather market information.

RiverForest Connections Private LimitedProduct Manager/ Analytics- SME BankingLocation: MumbaiJob ID: 18442295Description: Acts as the solutions manager for commercial lending solutions by designing and executing on ideas and go-to-market plans as well as working closely with the sales team and customers to ensure adoption of solutions by customers.

Jobseeker - To apply for above jobs1. Logon to www.monster.com2. Type the Job ID in the "Search Job" box3. Click the "Go" button

Employers - To buy Monster products and servicesCall us at 1800-419-6666

oremail us at [email protected]


Banking Frontiers is pleased to present SMART MOVES, which is its HR section. This section will be of immense help to Banks, IT Compa-nies, Financial Institutions and Insurance Companies which require resources with domain knowledge. They can advertise for people and products in this section. This section is beginning with a listing of key openings in the industry. To advertise in this section and take advan-tage of this opportunity, please contact Shirish Joshi on 7738383850 ([email protected]) or Malaika Monteiro on 9004446030 ([email protected]) or phone us on +91-22-29250166 and fax: +9122-29207563.

Indegene Lifesystems Private LimitedTreasury ManagerLocation: Bengaluru / BangaloreJob ID: 18364404Description: Working Capital Management & Reporting – near term, mid term and long term, Supervision of Payment process and team, Maintaining and managing Forex risk through hedging policy & mechanism.

VFS Global Services Private LimitedDeputy Manager- Compensation and Bene�tsLocation: Mumbai Job ID: 18355233Description: Research, strategize and benchmark global compensation structure, Design comp/bene�t structures in line with local practices, handling compensation surveys and benchmarking on a global scale.

People Tree ConsultantsTrade Finance OperationsLocation: Delhi, NoidaJob ID: 18395529Description: Looking for Trade Finance professional with a leading private sector bank at a senior level. Responsible for handling entire trade �nance operations, with 15+ years of experience in banking.

Talent Corner Hr Services Private LimitedWealth ManagerLocation: Chennai, MumbaiJob ID: 18350861Description: The core task is to strategize, drive and increase wealth business, both top line and revenue, Pro�ling Customers and provide investment products to meet customer needs, Formulating the strategies to increase the client base.

JMR Infotech IndiaFinance ManagerLocation: Bengaluru / BangaloreJob ID: 18404621Description: Statutory Compliance, International Accounting, Project Accounting, Budgeting and Taxation, Subsidiary Accounting, Forex Management Reporting, Charge Back, STPI, Interacting with Banking institutions.

Unidus Services Manpower Private LimitedWealth ManagerLocation: Hyderabad / Secunderabad, Bengaluru / BangaloreJob ID: 18444932Description: Senior Priority RM will be responsible to generate revenue in the range of 5 to 8 lacs / Month, Pure Advisory - Existing Portfolio of 50 to 80 Cr will be provided.

Switchover SolutionsTrade Finance- Document checkingLocation: ChennaiJob ID: 18332791Description: Trade Finance - Document checker/checking, LC Payments, LC Issuance, LC Advising, LC Con�rmation, Bank Guarantees, Negotiation, Collections, Candidate with CDCS certi�cation will be an added advantage.

CareerNet Technologies Private LimitedBusiness Analyst -AVP-Trade FinanceLocation: PuneJob ID: 18393244Description: Engage with business to understand MRD and the high level business requirements validate requirements, Reviews business requirements in partnership and collaboration with the business obtaining sign-o�.

Misys Software Solutions India Private LimitedSenior Business Analyst – Corporate Banking Digital ChannelsLocation: Bengaluru / BangaloreJob ID: 18361830Description: Research, document and prioritise user requirements in the area of corporate banking and trade services, working with other clients and Misys business analysts across the organisation in the design and con�guration of new solutions..Roljobs Technology Services Private LimitedJunior Credit ManagerLocation: Bengaluru / BangaloreJob ID: 17424531Description: The responsibilities of the position include the following: Develop and maintain credit policies, procedures and underwriting practices to assess and manage risks etc.

New Era India Consultancy Private LtdCredit Manager- LAPLocation: Bengaluru / BangaloreJob ID: 18262522Description: Underwrite and approve LAP Cases for respective geography and mapped relationship teams as per the delegation, Monitor and manage the portfolio credit quality, compliance scorecard and EWS.

Vitasta Consulting Private LimitedDeputy Manager- Treasury OperationsLocation: MumbaiJob ID: 18315458Description: Adhering to Internal controls, Approval authorities and being compliant as per the regulatory authorities and Board Resolution’s.

Skills HrWealth Manager - Banking IndustryLocation: ChennaiJob ID: 18370338Description: Good networking skills – ability to start relationships and guild rapport, Sound knowledge of Wealth Management Products, Good analytical skills, ability to understand client needs and sell range of pdts.

Busisol Sourcing India Private LimitedDeputy Manager Taxation & AccountsLocation: MumbaiJob ID: 18447182Description: Reply to all notices from Income tax within time. Submit all details in response to any queries / notices, assessments or appeals.

DiverseFinance ControllerLocation: MumbaiJob ID: 18340743Description: Preparation of annual business plan for the company which includes projected P&L, Balance sheet, cash �ow, capital expenditure approvals and overall budget presentation.lines of business.

Jobseeker - To apply for above jobs1. Logon to www.monster.com2. Type the Job ID in the "Search Job" box3. Click the "Go" button

Employers - To buy Monster products and servicesCall us at 1800-419-6666

oremail us at [email protected]


Impact Analysis

Microfinance institutions provided credit to over 2.88 crore clients as of 31 December 2015, an increase

of 33% over the corresponding quarter in the previous year, says The 16th issue of the Micrometer, Micro Finance Institutions Network’s (MFIN) quarterly publication. The publication has analyzed data from 56 NBFC–MFIs. The aggregate gross loan portfolio (GLP) of the MFIs stood at `42, 331 crore (excluding non-performing portfolio i.e. PAR>180 days in Andhra Pradesh). This represents 84% yoy growth and 16% qoq growth. The total number of loans disbursed by MFIs grew by 48% in Q3 FY15-16 compared with Q3 FY14-15. PAR figures remained under 1% for Q3 FY15-16.

REGIONAL DISTRIBUTIONMFIs now operate in 30 states/union territories. In terms of regional distribution, south is 35%, east 15%, north 25% and west 25%. Tamil Nadu, Karnataka, Maharashtra, Uttar Pradesh and Madhya Pradesh account for 59% of

GLP. Growth in GLP has been broadly spread across various states. States with highest growth in portfolio are Mizoram, Andhra Pradesh, Haryana, Sikkim and Tripura. Productivity ratios for MFIs continued to move upward. Average GLP per branch is now at `4.5 crore, up by 47% over Q3 FY14-15 and average GLP per loan officer is now `84 lakh, 33% more from the last year. Insurance (credit life) to over 2.81 crore clients with sum insured of `42, 681 crore was extended through the MFI network. Pension accounts were extended to over 16 lakh clients.

Ten largest MFIs in terms of GLP account for 72% of the total industry GLP. As of 31 December 2015, rural portfolio (GLP) is 45% of the industry portfolio. In terms of purpose, agriculture accounts for 33% of the GLP. Non-agriculture (trade/services and manufacturing) accounts for 42% and household finance for 25% of the GLP. Currently, average loan outstanding per client is at `14, 685 which is y/y 39% more.

MFIs on aggregated basis have a branch network of 9503 and employee base of 79,207, of which 64% are loan officers. Compared with Q3 FY14-15, this quarter saw growth of 37% in employee base, 38% in the loan officers and 25% in the branches. DISBURSEMENTSDuring Q3 FY15-16, MFIs disbursed 86 lakh loans worth `14,395 crore. Number of loans disbursed grew by 48% over Q1 FY15-16 and loan amount disbursed grew by 84%. Top 10 MFIs (in terms of amount disbursed) account for 83% of the aggregated industry disbursements.

FUNDINGDuring Q3 FY15-16, MFIs received a total of `9121 crore debt funding (from

banks and other financial institutions), representing yoy increase of 12%. The share of non-bank funding has been increasing and now accounts for 40% of the total debt funding. Securitization of MFIs’ portfolio got increased by 41% yoy.

At an industry level, the average cost of funds is close to 15%. Average cost of funds for large MFIs is 14.5% with minimum of 12.8% and maximum of 16.0%. Medium MFIs have average costs of funds of 15.5% with minimum of 14.2% and maximum of 17.3%. Similarly, small MFIs have average costs of funds of 15.2% with minimum of 13.8% and maximum of 17.3%.

On aggregated basis, a typical loan officer in the industry on an average caters to 571 clients with a portfolio of `84 lakh. Similarly, a typical branch in the industry on an average caters to 3033 clients with a portfolio of `4.45 crore. Productivity ratios are directly related to the size of MFIs. A typical loan officer from a group of large MFIs have 60% more clients and 99% more GLP compared with a typical loan officer from a group of small MFIs. In terms of rating, out of 53 MFIs, 29 MFIs have rating under safe category.

MFIs indirectly facilitate 16.20 lakh pension accounts and indirectly provided life insurance to over 2.81 crore clients with total sum insured of `38, 970 crore.

[email protected]

Micrometer gives interesting insights into the growth in gross loan portfolio, employee base, regional distribution and the branches of MFIs:

MFIs record 84% loan growth

Top MFIs, glp (` cr)

Janalakshmi

SKS

Ujjivan

Satin

Equitas

Grameen Koota

L&T Finance

ESAF

Spandana

Grama Vidiyal

�174%

�87%

�42%

�82%

�18%

�61%

�154%

�90%

�5%

�43%

8,096

6,177

4,088

2,538

2,320

1,811

1,700

1,495

1,221

1,147

Q3 fy 14-15 Q2 fy 15-16 Q3 fy 15-16

Regional distribution of glp(31st Dec 2015)

State wise distribution of glp(31st Dec 2015)

North25%

South35%

KA14%

TN16%

MH12%UP

11%MP8%

WB6%

5%

4%4%

14%

Odisha 6%

East15%West

25%

GujaratKLBihar Others


Real Estate

The banking & financial sectors continue to undergo significant rearrangement as they re-position

themselves for growth, says a report by Cushman & Wakefield authored by Simon Ward, CIS Transaction Management, of the company. The global financial centers cited in the report are London, New York, Singapore, Tokyo and Hong Kong. Positive actions now being taken include upgrading outdated workplaces, embracing innovation and challenging the operational costs and locations of key business functions, the report recalls. New initiatives reduce the cost of workplace are being introduced, all of which continue to suggest a rearrangement in the geography of global banking, says the study.

CBD STILL KING?The workplace continues to carry substantial costs to banks, second only to talent. The vast majority of banks are set to increase density andutilization dramatically in the coming years, according to the study and it also mentions that the clustering of banking occupiers and the growth of real estate markets to support

these businesses and their staff is a critical factor for this sector and it comes as no surprise that the existing major financial markets are also those cities which have sizable pools of modern office stock.

Says the study: “Certain banks are beginning to move certain, if not all, back and middle office functions out of CBDs (central business districts) in primary cities, if they are able to, while also increasing their use of primary locations in secondary cities to balance attracting talent with cost reduction strategies.”To ensure primary city CBDs maintain their leading position, they need to commit to developing spaces that will attract talent while ensuring the stock is flexible for occupiers to adapt to these cost challenges, scope to adjust space usage especially where occupiers have little, says the report, adding the majority of the major global banking markets continue to be subject to rising rents, restricting the opportunities on offer to occupiers.

OFFICE STOCKThe report says London, New York and Tokyo have office stock in excess of 20 million sq mtr and the ability to meet the demands of the international banks with individual building requirements, specifically large modern floor plates. Key cities have also been subject to rental growth and higher total occupational costs, placing added pressure on occupiers. Certain occupants have adapted within these markets, and many now choose to locate in less expensive‘villages’ such as the city or docklands in London, where costs are more than 40% lower than themost expensive West End locations. When comparing global markets, even in New York, occupancy costs on a per workstation basis are more than 50% less

than London’sWest End.The study mentions that London, New

York, Hong Kong, Singapore and Tokyo remain the top global markets, according to the GFCI, (which provides profiles, ratings and rankings for global financial centers) and while there could be other locations challenging for the next tier of banking locations, property portfolios are typically highly inflexible with leases of 15 years or more not uncommon. “We are therefore seeing greater emphasis placed on lease events which offer a trigger for banks to reconsider their location strategy, head count numbers, different off-shoring models (moving work to a distant, geographically disparate company or location with a view to reducing operation or production costs), near-shoring (transferring business processes or technology to companies or locations in geographical proximity) and centers of excellence, as well as studying their work styles,” says the study.

OUTLOOKThe study does not foresee any significant net expansion in floor space needs in the short to medium term in London. However, the fact that more traditional banks continue to post large requirements within the capital does illustrate their commitment to London. The absence of any further new construction in the short-term in New York city is expected to result in steadily declining vacancy rates and rising rents through 2016. No new supply is anticipated to be delivered during 2016 in Hong Kong and this will likely support rental growth in Greater Central. Further rental declines are to be expected in 2016 in Singapore. Also there could be a further rise in rental values in the near term while supply remains restricted in Tokyo.

[email protected]

Cushman & Wakefield’s global occupier services publication on ‘banking & finance sector’, addresses the current and future trends reshaping the banking & finance world and their impact on the top 5 global financial centers...

Shifting landscape in 5 global banking markets


Conference

Banking Frontiers organized the second Technoviti 2016 conference and awards in Mumbai on 5 February. Over 300 delegates from banks, financial services institutions and technology companies attended the conference: Highlights of the deliberations at the conference:

(Ravi Eppaturi, former chairman, the Computer Society of India, compeered the conference)

Vinit Goenka, member, IT Task Force, ministry of shipping and roadways, who was the guest of honour at the

conference, felt transformation of banks, especially in the area of cash and payments, is crucial to drive the country towards the goal of a ‘Great India’. “Problem, concept, thought, solution and satisfaction can lead to ultimate happiness,” he maintained.

He said there is a vital need to increase the use element of digital in transactions to ensure that there is a ‘Digital Bharat’. “Are we happy with a single digit GDP? Probably, we are not using technology to the optimum. Change is the only

constant thing in IT. We have stopped sending emails, the powerpoint travelled to the organizers in mail and came back after modifications on WhatsApp. My research team no longer calls, they send WhatsApp messages. Very rarely we see people without devices,” he said.

Speaking on the issue of technology enabled payments not being able to take up in India, he said: “IoT is coming, and there is big data and analysis, but what really matters is that we and the bank are working on trust. If we trust our bank and our bank trusts the internet, there are further problems ahead. Cash is a disease and results in a parallel economy.”

BANKING FRONTIERS’

CONFERENCE AND AWARDS 2016

Futurecrafting Business with Technoruptions

Vinit Goenka addressing the participants of Technoviti 2016 conference


Welcoming the delegates, Babu Nair, publisher, Banking Frontiers, outlined how the journey of recognizing innovations began, especially for the financial sector in 2012 with Finnoviti, which is an awards program for the sector. “It was here that we discovered that as much as 75% of the innovations are happening in the area of technology and their innovations have relevance to the financial services sector. That is when we decided to bring the innovators in this domain to the front.”

He said in this year, there has been a 50% increase in nomination and this is indicative of the awareness created among the technology community. “With Technoviti, we have seen CIOs in our jury discussions grilling the technology companies and I could realize the nominees making a serious presentation. There was uniqueness in every presentation and the evaluations were a noble and serious understanding of the task of a CIO, as well as that of an IT company,” he added.

Panel Discussion 1: CIO UnSummit: Managing Technology in a disrupted world ticket

Participants:

Eric Anklesaria, Partner, KMPG

Mrutyunjay Mahapatra, DMD & CIO,

State Bank of India

Venkat Krishnan V, Chief Technology

Officer, Edelweiss Tokio Life Insurance

Suresh Shanmugam, Head-Innovation

& BITS, Mahindra & Mahindra Financial

Services

Ajay Vernekar, CTO and Head -

Enterprise Service, IT Infrastructure,

Application Management,

HDFC Life Insurance

KRC Murty, Vice President and Head of

Production Services & CTO,

Deutsche Bank

Eric Anklesaria: In the past 24 months, there has been talk, anxiety and action in the area of Fintech and digital where there are companies that have

disrupted markets in the way businesses function, the way operations are taking place, and today everything is getting digital. Every business unit or financial services company today talks about fintech and innovation. There has been a heavy focus on this mainly in the last 2-3 years, with players trying to differentiate themselves, with using digital, technology and disruption.

We at KPMG did a survey, interviewing 700 CIOs and business heads. We found there were 3-4 common themes that came out in the area of digital world. The first one was disruption. Today technology has become a strategic advantage rather than being an enabler. Digital has become the way to do business. The second one was to move to analytics, cloud, internet of things and the block chain technology. Cyber security is another factor. The more we become digitally savvy, the more we open ourselves and hence cyber security. The last aspect is innovation. Each respondent was asked how he or she could be different. This difference should make a difference in the minds of the customer.

Mrutyunjay Mahapatra: We are observing the speed at which things must be implemented. Earlier, there used to be a design stage, a conceptualization stage,

then a testing phase, etc. From concept to production it used to take a big time. The speed with which IT and business must work has considerably increased. Second trend is the aspect of collaboration. People across verticals and industries are collaborating. The third thing is that some of the industries are observing boundaries collapsing. For example, today a telecom company can do payments, which a bank can also do. An IT company can do what banks can offer. A retail store can offer services which banks could. A bank can definitely do things which retailers and technologists can offer. The challenge is not only from competitors in the same industry, but it is coming from different parts of the value chain.

Venkat Krishnan V: The trend is people talk about SMAC and I have had doubts on this. The recent series of cloud busts with a major messaging platform, only vindicates my point. It also results in the loss of business. If you do not change, the world will change you. For example, the first social media platform, Orkut. It could not sustain in spite of starting as a big platform. Over a period of time, it died as it could not control social emotions per se. It could not handle many of the demographies,

Panel Dicussion 1 in progress


Conference

age profiling, and sentiments related to social media. It got replaced by Facebook. We are in the second era of social media. The generation that we are servicing will be more demanding and that will give the push to experiment on social media as a platform, and go digital end-to-end. We are talking about customer experience, how can technology go to that extent that we give people comfort across a specific geography?

Ajay Vernekar: In the last 5-10 years, customer demands and competition have changed. These influencers have compelled organizations to look out for more options. I would say that the demands from customers have skyrocketed. All of us talk about customer being aware and demanding. Adopting technology therefore has been an aspect that most organizations have adopted. And competition is pushing the envelope to search for better ways - be ahead of the curve and address customer queries better. There are cost-compelling reasons. There are tools like BI, mobility and cloud. The important point is how these can make a difference to the organization and thereby address customer demands.

Suresh Shanmugam: As part of Mahindra Rise, we started focusing on moving IT towards innovation and future technologies. IT is focusing more on startups and identifying and facilitating disruptions. IT is more focused on empowering startups and identifying talent from schools and colleges and bringing out value solutions to partners. So, instead of more data centers today, at least Mahindra Finance is more into incubation centers, finding out best solutions that we can deploy in terms of relevance of customers and regulators. The focus is also on medical, education and finance, which we are trying to collaborate, club and bring out through the financial system.

KRC Murthy: There is more regulatory pressure nowadays. They make

your life difficult if not impossible. It puts organizational business on challenge. Many banks are shedding their non-profitable businesses. It doesn’t make sense taking baggage. There are newer kids on the bloc, whom RBI has allowed to conduct banking business. There are many people who have learnt on how to operate smartphones from their kids. They teach us how to use technology. On the other side, the customer just wants everything on a single click. Everyone talks about giving loans in a minute, or in 45 seconds. But, the time is running out, and therefore the time to market has also gone down.

Panel Discussion 2: How can BFSI Sector leverage FinTech startups for innovations – Is it an opportunity or threat?

Participants:

Vishal Salvi, Partner, PwC

Bharat Panchal, CISO, NPCI

Nabankur Sen, CISO, Bandhan Bank

Sunder Krishnan, Chief Risk Officer,

Reliance Life Insurance

Chandru Badrinarayanan, Executive

Director & Head of Client Coverage,

South Asia, MSCI

Vimal Kumar, Founder & Director, Juspay

Shekhar Todla, Board Member, Finesse

Shekhar Todla: I look at the topic in a slightly different way and context. What worries a banker? He is worried about his credit quality, shrinking revenues, and competition coming from players outside the banking field. We should not be concerned about banks disappearing any time soon. I would like to recognize the threats posed on the revenue streams by startups just because they are known for quick, consistent and quality service and ease of doing transactions. There is a global study by McKinsey on threats posed by fintech startups to the banking industry and it suggests that retail profits could disappear upto 60% from the banking sector, if banks do not recognize technology investments quickly. However, in the Indian context, trust plays a very crucial role than technology advancements and hence the survey does not seem alarming.

Chandru Badrinarayanan: From a global and customer-centric perspective, customer drives needs and these have to be met by either fintech companies or banks or by a combination of both. Trust is important in transactions and the other things include convenience, speed, cost and security. How and who would do it is the relevant question in the transaction space. Banks’ core ability is in the area

Deliberations at Panel Discussion 2


of lending while fintech companies have shown considerable expertise in areas such as P2P lending and crowd-sourced funding. There are newer ways of credit analysis, and credit risks are bypassing traditional arenas. People are able to analyze credit risk of a customer in seconds and minutes, and not days to get it. The winner is one, who can think proactively and think 2-3 more steps forward and grab that opportunity.

Vimal Kumar: To work with a bank is not a step by step process, but a large step that we have to take. Because of this challenge, the typical advice that we get from investors is that if you are working with a bank, the output would be binary. Do you really want to do that? I think there has to be a mind-shift. How to change the mindset is to work together in harmony and create benefits for everybody. There are 900 million mobile phones in the country and how do we work together in harmony. Be it the banks or the existing large vendors and this bunch of small startups. Is there a way in which we startups can know the pain points of the banks. We experienced challenges, as consumers of the banks’ mobile app. Is there a platform that we can make together, where we can share learning, where banks can share their challenges. We startups are willing to work with existing large vendors - so much so that they don’t consider us as threats.

Sunder Krishnan: Disruption is the biggest threat to innovation. Last year, about 400 startups sprung up from just one college and 375 plus in one city. That is the kind of startups that are coming up. They way they work, the kind of salaries they are offering, it all looks like a bubble. In government policies, there has been provision for mentorship - board of advisors, who can advise the startups. I feel that looking at the kind of decision making it is all functioning on adrenaline and the gut feel.

From a regulatory perspective, in the past 8-10 years, it is important that there

is a dialogue and any startup should have a process review committee and processes in place. The regulator has views and these are often presented formally. But I believe one should get their informal views as well like views on creating processes. There is also need for documenting the processes. And that is how regulation gets evolved. They do not occur over-night. The fundamental regulatory concern is on compliance, and in meeting standards. At the end of the day, if it is going to be disruptive, the regulator would be worried - worried on the basis of the existent regulations that can get violated.

Bharat Panchal: As far as technology is concerned, it is time that the Western World gets inspired from the innovations created at NPCI. We should not look at the Western World. Our vision is to have a largely cashless society by 2020, and we are moving towards it. The kind of challenges that are coming are huge, but in spite of these challenges, the Indian financial system manages to surprise everyone. Today, there are regulations and the regulator always speaks what to do but how to do it is not mentioned. Today tere are four regulators- IRDA, RBI, SEBI and the TRAI - and I can clearly see that in

the coming years, the common challenge for them will be security. There will be a common standard for all. The security challenges are increasing, and we need to have a solution in a way that security is embedded. You cant put it at a later stage.

Nabankur Sen: At Bandhan, most of our customers are in the villages. Forget internet banking, they don’t understand technology at all. We actually handhold them. We are using hand-held devices for our officials to facilitate doorstep banking. That means we are taking technology up to the doorsteps. Taking technology to the customer furthermore is a challenge. We don’t know how much more technology has to be used.

Security is central. We have to protect data centers, applications etc. I think those who come out with innovations or those who are engaged in fintech, security is extremely important. Application security flaw can expose a huge damage. Secondly it also limits the process security. Somebody has to test the products and the functionality perspective. If the security of the product has not been carefully checked, then it sets challenges at a later stage.

[email protected]

A section of the audience


N E W S MFI

Equitas raises `653 cr from anchor investorsEquitas Holdings, the mutual fund company that is becoming a bank and is about to launch an IPO, has raised `653 crore from 16 anchor investors ahead of the IPO. T he company said it has allotted

5.93 crore shares at `110 each to anchor investors including Wipro chairman Azim Premji’s private investment arm PremjiInvest besides a host of mutual funds and insurance firms, including Franklin Templeton MF, Birla Sun Life Trustee Co, SBI MF, UTI MF, ICICI Prudential MF, Kotak Mahindra MF, HDFC Standard Life Insurance, Sun Life Insurance, Sundaram MF, Tata AIA Life Insurance, Reliance Life Insurance and Ambit Alpha Fund.

Anchor allotment represents sale of shares to institutional investors on the eve of opening an IPO. The issue size gets reduced to the extent of the anchor allotment. The firm is looking to raise as much as `720 crore through a fresh issue of shares besides an offer for sale by a bunch of its private investors and founder P.N. Vasudevan. The firm counts around a dozen venture capital, private equity and development financial institutions as private investors. Around 93% stake of the firm is held by foreign investors, including overseas incorporated bodies.

Utkarsh to raise `350 crUtkarsh Micro Finance, which received in-principle approval to start a small finance bank, will raise `350 crore from domestic investors. This will be part of the firm’s efforts to bring the foreign holding in the company to below 50% as required by the RBI guidelines while launching banking operations. Govind Singh, MD of Utkarsh Micro Finance, said talks to raise fresh equity are almost complete and the documentation will begin too. There will be structural changes too as the company will form a holding company which in turn will have a holding in the bank. In the primary transaction all the current shareholders will continue to stay, but in the secondary transaction some on the existing investors will off load stake, he added.

Existing investors in the company include Aavishkar Goodwell, Lok Capital, Commonwealth Development Corporation, International Finance Corporation and Norwegian Microfinance Institution. The company plans to launch the banking operations in October. To begin with it would open 125 new branches in addition to the 325 microfinance branches it already has.

CreditAccess Asia raises $30 mnCreditAccess Asia, multi-country the Netherlands-based multi-country MFI, has raised $30 million from Hong Kong-based private equity firm Olympus Capital Asia, which it proposes to use for Asia-based operations and their expansion in line with its future plan to enter two more countries. The firm already operates from India through Bangalore-based Grameen Koota. The firm operates a portfolio of €240 million ($258 million) serving over 1.3 million clients. In Southeast Asia, it operates in the Philippines and Indonesia. The company plans to enter Sri Lanka and Indonesia soon and more than double its client base to over three million customers in two years time.

SKS raises funds through securitizationSKS Microfinance has raised `538.11 crore through a securitization deal. It has completed 7th securitization transaction during 2015-16 for a pool value of `538.11 crore. With this transaction, the total sum of securitization completed during the current fiscal (year-to-date) is `2319.93 crore. The entire pool qualifies for priority treatment as per the Reserve Bank of India’s priority sector lending guidelines. The company also said it has assigned a pool of loan receivables of an aggregate value of ̀ 506.55 crore to one of the largest public sector banks on direct assignment basis as per guidelines prescribed by RBI.

MFIN to bring in more checksThe Microfinance Institutions Network (MFIN) is planning to put more checks and balances to ward off any possible danger of the sector facing issues similar to those it faced in 2010, especially in Andhra Pradesh. According to initial estimates by MFIN, the sector has seen about 60% growth this fiscal, almost similar to the previous fiscal. The self-regulator has now decided to make Aadhaar number compulsory for customer identification to restrict the cases of frauds and impersonation. This will also stop over-lending to same borrowers beyond the permissible limit of `1 lakh at any point of time. It is planning to implement this rule from July and therefore, lenders will be barred from fresh lending to people without Aadhaar card 3 months from now.


Cooperative

V. Raghuraman: You already have 14

branches. What are your branch expansion

plans for this fiscal year?

T.K. Dileep Kumar: While ITC Bank, which is Kerala’s biggest urban cooperative bank, is now almost a century old (97 years to be precise), it functioned as a primary cooperative bank until 1996. Under the stewardship of M.P. Jackson, the chairman, we got listed as an urban cooperative bank with the RBI and then our activities began to expand in a significant manner. ITC Bank is a powerful brand in Kerala with a USP, ‘better banking better life’. We have all our 14 branches in Mukundapuram taluka linked under CBS. We have plans to open 5 more branches in nearby Thalappilly taluka in a short period of time.

What is your ATM expansion plan?

As of now, we have only on-site ATMs at all the branches. In the next fiscal year, we plan to add 10 more - 5 on-site and 5 off-site - ATMs. Interestingly, we have been getting more hits from other banks’ ATM card holders and this helps earn more income by way of commission. While a coin vending machine has been installed at out head office, we do have plans to have a cash deposit machine by the end of next fiscal.

In fact, we were the first among cooperative banks in Kerala to install ATMs in branches and issue RuPay debit cards.

What is your CASA status and what are the

plans for the next 12 months?

We have found wider acceptance and usage of our RuPay debit cards in several shops and merchant establishments. In view of this, we propose to issue 20,000 chip-based RuPay debit cards in the next fiscal year, providing greater safety/security to customers. With the increased issuance of these debit cards, we intend to double our CASA ratio to 20%. These cards are,

incidentally, issued at a nominal cost of `100 for the customers.

What percentage of your credit is the gold

loan business? Will it go up or down?

Till a couple of years ago, gold loan business was doing very well. Of late, however, there has been a declining trend. Intense competition, mainly from the NBFCs, is responsible for this. With their vast network of branches, the NBFCs are able to resort to massive advertising campaigns through hoardings and the print/electronic media. At present, gold loans constitute only 6.17%, or `39 crore, of the total loan portfolio. We have plans to gradually raise it to 15% or ̀ 100 cr in the next few years. We have taken to advertising through FM channels. We hope very soon gold loans would start picking up.

What is the share of home/property loan

business? Is the percentage expected to

go up or down in the next fiscal?

We provide home loans up to `50 lakh for individuals from the middle income group for both new houses and repairs. However, we do not grant loans to the realty industry and builders. Our NPAs are under control and on the lower side. Home loans are just 9% of the total credit or `57 crore. However, our plan is to increase it to `100

crore or 15% in the next few years.

What is the share of vehicle loans?

We have not ventured into vehicle loan business yet. However, we plan to enter the business next fiscal. Loans are now being advanced for purchase of vehicles against mortgage of land and other property.

What are the main technology projects

being done this fiscal? What are the plans

for the next fiscal?

We have several technology-based products like ATMs, RuPay debit cards, NEFT/RTGS facility, IMPS, POS, eCommerce, DBT, Aadhaar Bridge Payment System, cheque truncation system, ECS, SMS alerts and coin vending machine. We propose to introduce both mobile and internet banking services in the next fiscal.

In addition, as part of providing better and more efficient service to the customers, we have centrally air-conditioned all our branches. At the main branch, we are providing 12-hour banking service, from 8 am to 8 pm on week days and up to 1.30 pm on Saturdays. On Sundays, the main branch works till 1.30 pm. We also have a staff training center to train to our employees.

We hope to achieve a deposit base of `1250 crore in this fiscal as against the current deposit base of `1112 crore. Our advances stand at `640 crore but we will take this to `800 crore. As you know, the minimum requirement for a cooperative bank to become a scheduled UCB is a deposit level of `750 crore and thus we are qualified. We will apply for listing with RBI in its Second Schedule during 2016-17.

Over the last few years, we have been able to create a niche market of clients of our own and hence we are not unduly worried about increasing competition from the newer smaller banks and NBFCs.

[email protected]

ITC Bank aspires to be a scheduled UCB

T. K. Dileep Kumar


Cooperative

The Kurmanchal Nagar Sahakari Bank in Nainital in Uttarakhand started banking operations from

1 January 1983. Over the years, the bank has acquired the status of a leading urban cooperative bank in the whole of northern India as a result of its customer friendly approach, product innovation, efficient delivery system and technology upgradation of its retail-banking network. Madan Lal Sah was the founder and former chairman of the bank.BRANCHES, ATMS

At present, the bank has 41 branch offices in Uttrakhand. In recent years, it opened 3 new branches. It also has 24 ATMs. Aloke Sah, the current chairman of the bank says while the bank did not open any new branches during 2015-16, it added 5 ATMs.

STAFFT he b ank fo l lows need-based recruitment policy and appointments are made in proportion to the volume of business. Recruitment is done through open competition to get qualified staff. All officers and clerical staff are either graduates or postgraduates in various disciplines. With the changing demand of the banking industry, the bank has started appointing people with MBA, MCA and BCA qualifications. All the staff members are provided training either at CAB Pune or RBSC Chennai, while the bank conducts in-house training with assistance from Indira Gandhi Institute of Cooperative Management, Lucknow and Institute of Cooperative Management, Dehradun. It is also seeking the help of NAFCUB in this regard. The bank had

the services of a professional consultancy company to streamline its hierarchy and recommend suitable guidelines to achieve better efficiency. It now has a full time HR manager.

CUSTOMERSSah says the bank had 2 lakh customers at the end of the third quarter of FY2015-16. “In our estimation, the total customer base should aggregate to 210,000 by the end of this financial year,” he adds.

Sah also mentions that the bank always endeavours to provide new and competitive financial products and

services to its customers and it has tied up with various insurance companies as well. For life insurance products, the bank has entered into a tie-up with IndiaFirst Life Insurance. It offers LIC’s policies for life cover to its depositors aged between 18 years to 54 years. The insurance cover is of `100,000 at an unbelievably low premium of `384 per annum under its Nanda Kavach Yojana. Under this scheme the bank has been providing free insurance coverage of `25,000 to all its savings bank account holders who opt for this scheme and maintain a minimum balance of `5000 throughout the year. For non-life insurance, the bank has a tie-up with United India General Insurance.

LENDINGThe bank has continued to deliver a steady growth in both business and earnings. The deposit base of the bank at end of December 2015 stood at `1313.69 crore, whereas the loans and advances stood at `661.1 crore. The total deposits stood at `1240 crore, which was `1119 crore a year ago. The net profit was `13.49 crore.

Says Sah: “The top sectors we focus are housing (home loans to the tune of `75.54 crore at the end of Q3), transport (`22.73 crore) and real estate (`29.48 crore). The prospects of rise in loans in these sectors are bright and the bank is ready to provide finance to insatiable needs of potential customers. The figures have registered impressive upward trend since Q3.”

The bank follows extant RBI guidelines in this regard whereby it is clearly defined that loans granted to individuals for construction of houses will be treated as housing loans, whereas

Aloke Sah, chairman, Kurmanchal Nagar Sahakari Bank, provides detailed account of the progress made by the bank on various banking parameters during 2015-16:

Kurmanchal Bank aims at `2700 cr biz for 2016-17

Aloke Sah stresses the top focus areas of the bank are housing, transport and real estate and the prospects of rise in loans in these sectors are bright


loans for construction of buildings intended for commercial use are treated as real estate loans.

ATM TRANSACTIONSThe bank has been using ATMs of NCR, Diebold and Wincor. Sah says nearly 166 transactions are recorded per ATM per day. The bank has adequate safety arrangements in all ATMs. Armed guards maintain constant vigil at all ATMs. CCTV cameras as well as other safety gadgets have also been installed in all the ATMs.

NPAS The gross NPAs of the bank in Q2 stood approximately at `3116.55 lakh, constituting 4.67% of total loans and advances. Yoy reduction in gross NPAs is approximately `2 crore. In addition to the statutory audit and inspection by RBI, the bank has its own inspection system. All the branches are inspected once in a year and reports and compliance thereof are put up

to the audit committee. The bank has also prescribed adequate number of control returns for watching the performance of the branches.

The bank has engaged Tech Mech International as its authorized recovery agents under the SARFAESI Act. The position of over dues/growth in deposits and advances are reviewed by the board in every meeting resulting in minimum NPAs. Sah explains: “Implementing a more conservative approach than the regulatory requirement for quick and swift addressal of delinquencies has helped us to manage the NPAs effectively as per the strategy for 2015-16.”

TARGETSThe bank prepares annual business plan and budget and communicates the same to the all concerned well in advance. The branch functionaries are given adequate administrative and financial powers to achieve the targets fixed. It has targeted

achievement of an overall business of more than `2000 crore for FY 2015-16. Sah says: “The bank’s target of overall business is ̀ 2700 crore for FY 2016-17. We prepare pragmatic, achievable and consistent business plans and there is always an element of challenge, as it is essential for motivation and growth with consistency.”

The bank has always been a pioneer in technology among all cooperative banks operating in this region, first in automation then in implementation of CBS and again in providing alternate delivery channels to its customers. The bank is now aiming even higher. Says Sah: “Soon, we will provide our customers with mobile and transactional internet banking. Soon, our customers will also benefit from a credit card service which is in the offing.”

Sah feels that the future of cooperative banking is bright despite stiff competition from public sector and private sector commercial banks.

[email protected]

IT infrastructure & team

Besides upgrading its CBS, Kurmanchal Nagar Sahakari

Bank has implemented an HR software which functions in an offline mode. The bank has also switched to IP version 6 as per RBI guidelines. It has created a new IT controlling center which oversees and regulates RTGS and NEFT transactions. Says Aloke Sah, chairman: “In the coming 12 months, the bank is preparing to install new powerful servers to accommodate new mobile based banking applications as well as upgradation of its existing hardware.”

The bank has been using OmniEnterprise from InfrasoftTech. Earlier, it was using a different version. Sah adds: “Our IT infra team has 4 dedicated officials and there are 6 officials in the IT applications team. The ratio of our capex to opex for IT budgets is approximately 2:1.”


Cooperative

Ahmednagar District Central Cooperative Bank has a network of 286 branches and 10 extension

counters spread across the district. The bank does not have any ATM right now. However, Sitaram Gaikar, chairman, says about 100 ATMs will be in operation very soon. “We will open all these ATMs phase-wise in 2016-17,” says he.

The bank has about 15 lakh customers. It offers facilities like any-where banking, SMS banking, etc for the customers. According to Gaikar by introducing new schemes like RuPay card and ATMs, the customer base will increase significantly. In addition, the bank is also providing RTGS/NEFT service in collaboration of ICICI Bank.

DEPOSITS, LOANSThe bank’s total deposits as on 26 February 2016 stood at `50.13 billion against `48.2 billion as on 23 December 2015. This growth is satisfactory, says Gaikar, mentioning that the focus of the bank is in disbursement of loans mainly to marginal farmers. “Short term, medium term and long term thrust is on crop loans as our bank is basically agriculture based. Then comes the turn of sugar factories, to which finance is given on a big scale. Salary earners’ societies are also financed by bank. The total credit is ̀ 43.65 billion as on February 2016,” he adds.

INFORMATION TECHNOLOGY The bank has connected all its branches and extension counters through CBS way back in 2014. Routine work done at the branches like interest calculation, posting and ledger keeping has come to an end. After implementing CBS, the bank’s HO gets MIS reports automatically. “Statutory reports for RBI/NABARD/

state government are now more accurate and are generated in real time. Prior to the induction of CBS, we were using Accent Software, a TBA system since 1998,” says Gaikar.

The bank has customized CBS software to suit its needs. It is using IBM’s power servers in the data center and in branches, Dell brand desk tops. For connectivity it is using networking equipment from Cisco and Fortinet. The service provider is Sify Technologies.

COMPUTER LITERACY All the staff members of the bank are

computer literate. Says Gaikar: “Our service provider has been giving training to the staff from time to time. We also conduct training at the taluka level as also online training is offered reaching out directly to the staff from the data center of the bank.”

An external consultant has been engaged by the bank to help in areas like vendor selection, data center design, hardware and software selection, etc. Pune based MITCON Services has been entrusted with this task.

NPA The bank had NPAs worth `1.74 billion as on 31 March 2014, which came down to `1.67 billion as at the end of March 2015. Gaikar says the bank has been trying to further reduce NPA level in 2015-16.

Despite no contribution coming from the government in terms of share capital, the bank has been implementing various government schemes for rural people of the district. Gaikar is of the view that the government should help DCCBs too in handling their NPA issues like it has been helping the nationalized banks. “It is necessary to frame a separate policy for those district central cooperative banks which have good financial health. There must be a different policy for banks, which are earning profit,” says he.

FUTURE PLANSApart from implementing ATMs and microATMs, Gaikar says the bank will be distributing 5 lakh RuPay debit/kisan credit cards to farmers in a phased manner. Some 200 PoS machines will also be made operational at commercial establishments, he adds.

[email protected]

Ahmednagar District Central Cooperative Bank, led by chairman Sitaram Gaikar, has ambitious IT plans to facilitate speedy growth of the bank:

Ahmednagar DCCB to set up 100 ATMs

Sitaram Gaikar revealsthe bank will be distributing 5 lakh RuPay debit/kisan credit cards to farmers in a phased manner and 200 PoS machines will be made operational at commercial establishments


Cooperative

You only need to recall the famous saying by the All India Rural Credit Survey of 1951: ‘Cooperation has failed. But, cooperation must succeed’. That

showed that cooperation had a chequered history in India, with several ebbs and flows,”said R. Gandhi, deputy governor, RBI at the recent ‘National Conference of Cooperative Banks – Regaining Leadership in Agricultural Finance’ held at BIRD, Lucknow. Today, short term cooperative credit structure has 32 state cooperative banks and 371 district central cooperative banks operating through 14907 branches. There were 92,996 PACS as on 31 March 2014 at the grass root level catering to the credit requirements of the members but also providing several non-financial services like input supply, storage and marketing of produce, supply of consumer goods, etc.

Gandhi pointed out that as on 31 March 2015, 30 state cooperative banks and 301 central cooperative banks had CRAR of 7% or above. The position of CRAR in respect of state and central cooperative banks as on 31 March 2013 revealed that 23 out of 31 state cooperative banks and 278 out of 371 central cooperative banks had CRAR above 7%. Six state cooperative banks and 48 central cooperative banks had CRAR between 4% and 7%. “We felt that the time was appropriate to introduce Basel I capital adequacy framework for these banks. Hence, the banks were placed under phased implementation of Basel I norms with a target of 7% CRAR by 31 March 2015 and 9% CRAR by 31 March 2017. The banks were allowed to raise the additional capital resources through Long Term (Subordinated) Deposits and Innovative Perpetual Debt Instruments,” he added.

Gandhi also mentioned that the journey has not been smooth for the cooperative banking structure. There were legal, structural and organizational rigidities which created conflicts and challenges in the functioning of cooperatives. Several committees, from the All India Rural Credit Survey Committee to the Vaidyanathan Committee have stressed the relevance and importance of cooperative credit societies to the development of agriculture and rural economy, he added.

FINANCIAL PERFORMANCEState cooperative banks and central cooperative banks display a reasonable financial strength, according to Gandhi. Their combined capital and reserves stood at `20,100 crore for the state cooperative banks and `51,040 crore for the DCCBs as on 31 March 2015. The combined balance sheet of all state cooperative banks stood at ̀ 1.98 lakh crore and that of the district central cooperative banks at ̀ 4.06 lakh crore. Their Gross NPA stood at 4.8% and 9.1% respectively and combined net profits at `1005 crore and `793 crore respectively, added Gandhi.

The asset quality of state cooperative banks and DCCBs has improved over the last 3 years as may be seen from the fall in the percentage of NPAs between 2013 and 2015. However, the percentage

of recovery to demand is a concern since it is showing a declining trend. There are wide variations region-wise too. In 2014, NPAs of state cooperatives varied between 1.93% in northern region and 17.12% in north-eastern region. In respect of DCCBs, it was 5.27% in northern region and 10.98% in eastern region. During the same year, percentage of recovery to demand was 97.9 in northern region and 49.10 in north-eastern region for state cooperative banks. Recovery to demand was 83.16% in northern region and 67.23% in eastern

region in respect of CCBs.Gandhi said another area of persistent and serious concern for

RBI and NABARD is that cooperative banks are unable to prevent frauds. Most of the times, the frauds have been perpetrated by or in collusion with the banks’ own staff. State and central cooperative banks have 2589 cases of frauds with outstanding amount of `877.7 crore as on 31 March 2015, he said, adding if the banks are unsuccessful in recovering the amount, the losses have to be absorbed by them. Technology adoption is an imperative in today’s banking. Implementation of CBS in StCBs and DCCBs which was started in 2012 has been completed in all 32 StCBs and 347 licensed DCCBs.

[email protected]

Rural cooperatives: current status

R Gandhi


N E W S Pix

Bobcards, a wholly owned subsidiary of Bank of Baroda, donated `7.5 lakh to the Maharashtra Chief Minister’s Relief Fund as part of its CSR program. A.R. Chowfin, MD, Bobcards, handing over a cheque to Devendra Fadnavis, chief minister of Maharashtra

State Bank of India has tied up with Uber, the on-demand transport aggregation company, to provide vehicle finance for driver-partners on the bank’s platform. Arundhati Bhattacharya, chairman, SBI, presenting the first key to Eric Alexander, president, Business, Asia-Pacific, Uber

A.P. Mahesh Cooperative Urban Bank held a workshop on ‘Guidelines for Internal Bank Inspection and Auditing’ for its auditors and inspecting officials. Dr S. Subbaiah, GM, Department of Cooperative Bank Supervision, RBI, Hyderabad, inaugurated the workshop. Purshotamdas Mandhana, chairman of the bank, Rampal Attal, vice chairman, Umesh Chand Asawa, MD & CEO, and other senior officials were present at the event

IndusInd Bank launched its non-banking sports vertical, ‘IndusInd For Sports’, to make sports an integral, intrinsic and strategic element for both internal and external stakeholders. The vertical will entail year-long engagement activities for customers, employees and the community through well thought-out programmes. It has started IndusInd Umang, a first-of-its-kind platform exclusively designed for differently-abled sportspersons. Romesh Sobti, MD and CEO, Paul Abraham, COO, and Sanjeev Anand, country head - Commercial Banking, of the bank at the launch

People Track

PB Banking Frontiers April 2016 Banking Frontiers April 2016 61

HSBC promotes Hitendra Dave

Nandita Bakshi to head Bank of the WestIndian-American Nandita Bakshi has been appointed president and CEO of Bank of the West, a unit of BNP Paribas. Bakshi, 57, will replace Michael Shepherd. She is joining the bank as a CEO-in-training and will take the helm officially on June 1. Bakshi, a bachelor’s degree in history at the University of Calcutta and a masters in International Relations and Affairs at Jadavpur University, had held several leadership roles at TD Bank, the most recent being executive vice president and head of North American direct channels. A New England News ‘Woman of the Year’ award

recipient in 2002, she also serves on the board of the Consumer Bankers Association.

HSBC has appointed Hitendra Dave as the head of Global Banking and Markets for India. He will report to Stuart P Milne, group general manager & CEO, India and Gordon French, group general manager & head of Global Banking & Markets, Asia-Pacific. With this appointment, Dave’s responsibilities have been widened and will now include corporate banking, capital financing, and financial institutions. Till now, he was the head of Global Markets for HSBC India. Sridhar Narayan takes over from Dave as the head of Global Markets in India. HSBC has also appointed Sunil Sanghai as vice chairman and head of Investment Banking. He will continue to report to Stuart P Milne.

Jaspal Bindra may head Centrum

Jaspal Bindra, who headed

Standard Chartered Bank Asia before he left the job in 2015, is buying into financial services firm Centrum Group. He is looking at acquiring a significant minority stake in the company. He may also become chairman of the board of the company. According to news reports, the talks between Bindra and the founders of Centrum Group are in the final stages and an announcement could happen shortly. He may own 20% to 26% stake in the group’s holding company. He is likely to being in some of his former colleagues at Standard Chartered into Centrum at senior positions. Set up in 1995 by Chandir Gidwani and Khushrooh Byramjee, Centrum is an integrated financial services firm, with presence in corporate finance, foreign exchange, wealth management, equity capital markets, debt execution, institutional broking and investment banking services. It has over 100 outlets spread across the country and more than one million retail customers with strong relationships in the mid-market corporate space.

Alibaba executive to be president at PaytmFormer Alibaba executive Bhushan Patil has been appointed president at Paytm. His mandate at Paytm would include building the company’s cross-border commerce. Patil headed Alibaba Group Holding’s wholesale business and was instrumental in leading new initiatives for global markets, business development across SME linked associations, banks etc. Alibaba is an investor in Paytm, which is planning to launch its payments bank soon.

New governor for Bangladesh Bank Bangladesh Bank has a new governor. Former finance secretary Fazle Kabir has been appointed to the position immediately after governor Atiur Rahman resigned in the wake of a major hacking of the country’s account with the US Federal Reserve and a sum of $101 million was stolen. Rahman has been criticized for keeping the Bangladesh government in the dark for more than a month about the stealing.

Ramesh Iyer promoted vice chairmanRamesh Iyer, MD, Mahindra & Mahindra Financial Services has been promoted vice chairman of the board of directors of the company. He will continue to hold the position of MD as well. The company also appointed Dhananjay Mungale, an independent director as chairman. Iyer has been associated with the company

since 1995 and was promoted to the position of CEO in May 1999. He was then elevated as MD with effect from 30 April 2001.

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