09.02.2024 : Today’s Banking / Financial News at a Glance
? SBI denies reports on Yes Bank stake sale : The State Bank of India (SBI) on February 8 issued a clarification, denying reports of a stake sale in private lender Yes Bank. In a communication to exchanges, the country’s largest lender said that reports are factually incorrect. Earlier, media reports said that SBI is likely to sell its entire stake in Yes Bank, with a block deal being the preferred mode of sale. The bank may look to sell Yes Bank shares worth Rs 5,000-Rs 7,000 crore via the block deal, with no taxes applicable on the sale, according to the media reports. “The bank would like to clarify that the news appears to be speculative. The bank is not involved in any negotiations concerning the subject of the news. Hence, the bank is unable to comment on the said article and its impact,” Yes Bank said in a separate exchange filing. – moneycontrol.
? Central Bank, JC Flowers ARC join race to bid for Future Enterprises : Central Bank of India and JC Flowers have joined the race to bid for the assets of bankrupt Future Enterprises, which has a stake in two insurance joint ventures. Capri Global and Authum Investments are among the eight companies that have expressed interest in making a bid for the company, according to an announcement by Future Enterprises. Globe Capital Market, Brescon Realty, Uniworth Finlease, and Orissa Metaliks are the other prospective bidders. Future Enterprises owns 25 per cent stake in Future Generali India Insurance Company and a 33 per cent stake in Future Generali Life Insurance.Bankers said the Central Bank of India wants to expand its presence in the insurance sector and hold a minority stake currently owned by Future Enterprises. Generali, which owns a majority stake in both the joint ventures, will be comfortable with a public sector bank partner, a banker said. – Business Standard
? RBI MPC Meeting February 2024 Highlights: Repo rate unchanged at 6.5%; action on Paytm is in the best interest of customers, says Shaktikanta Das : RBI Monetary Policy Meeting Highlights, RBI MPC Meeting February 2024 News & Key Highlights: The Reserve Bank of India’s Monetary Policy Committee has decided to keep the policy repo rate unchanged at 6.5%. The six-member committee voted by 5:1 majority to keep the repo rate unchanged in its last meeting of FY24 as retail inflation continues to be above its target of 4%. This is the sixth meeting on the trot that the MPC has maintained a status quo on the repo rate (the interest rate at which banks draw funds from RBI to overcome short-term liquidity mismatches). CPI for FY24 is projected at 5.4%, while its likely to be at 4.5% in FY25. RBI has pegged real GDP growth for FY25 at 7%. On Paytm issue, RBI Governor Shaktikanta Das said the central bank has been engaged with Paytm for quiet some time and all the regulatory actions are in the best interest of systemic stability and customers. – Business Line.
? RBI asks banks, NBFCs to share key facts to loans with all retail, MSME borrowers : Reserve Bank of India (RBI) has asked banks and NBFCs to provide all borrowers from retail and micro and small enterprises (MSMEs) a key fact statement (KFS) containing all the information about the loan agreement, including all-in-cost of the loan, in simple and easy to understand format. In its post policy statement, the central bank said that the new measure will foster greater transparency and disclosure by the regulated entities (REs) in pricing of loans and other charges levied on the customers. Currently KFS is specifically mandated in respect of loans by banks to individual borrowers, digital lending by banks and NBFCs and microfinance loans. KFS provides critical – economic times
? RBI to introduce programmability and offline functionality in CBDC pilot : The Reserve Bank of India plans to introduce additional additional functionalities of programmability in CBDC retail payments to facilitate transactions for specific/targeted purposes, and allow offline capability to enable these transactions in areas with poor or limited Internet connectivity. Currently, the CBDC Retail (CBDC-R) pilot also allows Person to Person (P2P) and Person to Merchant (P2M) transactions using Digital Rupee wallets provided by pilot banks.“Imagine a situation later on, when CBDC is fully implemented. If the government wants to give some cash support to certain individuals for a specific purpose, programmability will be useful so that the money can be used for specified purposes,” said Governor Shaktikanta Das. – Business Line.
? RBI gives a must-do-list for financial institutions amid Paytm crisis : The Reserve Bank of India’s Governor Shaktikanta Das while announcing the Monetary Policy Committee’s decision today listed what is key for financial institutions to adhere to for safety of the country’s financial system as well as individual institutions. “Good governance, robust risk management, sound compliance culture and protection of customers’ interest are of paramount importance for the safety and stability of the financial system and individual institutions,” Das said. The Reserve Bank of India lays great emphasis on these aspects, the RBI governor said, adding that the central bank expects all regulated entities to accord the highest priority to these functions. – economic times.
? RBI to bring framework for authentication of digital payment transactions : While SMS-based One Time Password has been the primary way for authenticating digital transactions, the Reserve Bank of India is looking at other mechanisms in line with technological advancements. Over the years, the Reserve Bank has prioritised the security of digital payments, in particularly the requirement of an Additional Factor of Authentication (AFA). Though RBI has not prescribed any particular AFA, the payments ecosystem has largely adopted SMS-based One Time Password (OTP). “With innovations in technology, alternative authentication mechanisms have emerged in recent years. To facilitate the use of such mechanisms for digital security, it is proposed to adopt a principle-based ‘Framework for authentication of digital payment transactions’. Instructions in this regard will be issued separately,” RBI said in a statement – Business Line.
? To streamline, strengthen AePS onboarding, risk management : The Reserve Bank of India has proposed streamlining the process for on-boarding of Aadhar-enabled Payment System (AePS) service providers and introducing additional fraud risk management measures, in order to strengthen the security and enhance the robustness of AePS. The proposed streamlining will include mandatory due diligence, and will initially be intrdocued for AePS touchpoint operators, followed by banks. The central bank will issue instructions on the same shortly. – Business Line.
? Banks seek incentives for sustainability-linked loans from RBI and Centre : Banks have sought incentives from the Reserve Bank of India (RBI) and the Centre on sustainability-linked loans, a category of financing that plays an important role in the country’s push toward meeting climate challenges but has commercial risks due to unproven application history. “Banks have requested relaxed norms on RWA (risk-weighted assets) for sustainability-linked loans as well as some dispensation on maintenance of CRR (cash reserve ratio) for sums disbursed as such loans,” a source aware of the developments said to ET. “There is an ongoing discussion on green financing models and how best banks can adapt to these models,” the source said. – Economic times
? FinMin signals big ticket insurance reforms ahead : The Finance Ministry has not shelved its earlier planned set of Big Bang insurance reforms including introduction of “composite insurance licence”, captive insurers and differential minimum capital requirements, a top official said. These insurance reforms including composite licence are very much on the table and may be introduced at an appropriate time this year, Vivek Joshi, Secretary, Department of Financial Services in Finance Ministry, told businessline in an interview. Joshi, however, noted no exact timeline can be given on this front. He was responding to a query on status of the big reforms on the insurance sector that the Finance Ministry had contemplated in the year 2022. – Business Line.
? Will ensure Paytm-related customer inconvenience is minimised: RBI’s Swaminathan : The Reserve Bank of India has received feedback from various stakeholders regarding the curbs imposed on Paytm Payments Bank, and will take steps to ensure that any inconvenience is minimised, said Deputy Governor Swaminathan J. “There’s still time that is provided for customers to continue to access the services. So, during this period, we will see what else needs to be done, and we keep the customer in the centre of what needs to be done; so, we will take appropriate steps,” he said at the post-policy meet. – Business Line.
? LIC Q3 results: Profit rises 49% to Rs 9,444 cr, total income at Rs 2 trn : State-owned insurer LIC on Thursday reported a 49 per cent jump in net profit at Rs 9,444 crore for the third quarter ended December 2023 (Q3FY24). The country’s biggest insurer had a net profit of Rs 6,334 crore in the year-ago period, according to a regulatory filing. Its net premium income rose to Rs 1,17,017 crore in the third quarter of the current fiscal from Rs 1,11,788 crore in the same period a year ago. LIC’s total income increased to Rs 2,12,447 crore in the latest December quarter compared to Rs 1,96,891 crore in the year-ago period. – Business Line.
? GIC Re Q3 standalone net profit rises 27% Y-o-Y to ₹1,518 Crore : GIC Re, the largest reinsurer in the domestic reinsurance market, has reported a 26.6 per cent increas
