Banking - NewNerve

Declining CASA Ratios: A Deep Dive into Banking Trends, in Q4

9May

By AnkitNo Comments

Banking, BFSI

Declining CASA Ratios: A Deep Dive into Banking Trends, in Q4

The CASA ratio, which measures the share of low-cost CASA deposits, experienced a decline year-on-year by 40-730 basis points (bps) for banks reporting their Q4 FY24 earnings. This decline occurred despite sustained high deposit rates due to tight liquidity conditions and robust demand for credit, particularly in retail and unsecured loans. Here are some key points: Private Banks vs. PSU Banks: As of December 2023, private banks saw a year-on-year decline of 393 bps to 38.7% in CASA ratios, while PSU banks declined by 187 bps to 38.5%. This decline impacted lenders’ margins. Sequential CASA ratios remained stable or slightly improved in the final quarter due to increased deposit accumulation and proactive efforts by banks to attract granular deposits. Kotak Mahindra Bank...

Small Finance Banks to Universal Banking : Redefining Roles

6May

By AnkitNo Comments

Banking, BFSI

Small Finance Banks to Universal Banking : Redefining Roles

In a recent move by the Reserve Bank of India (RBI), guidelines have been issued to enable Small Finance Banks (SFBs) to transition into universal banks. This development is set to open new avenues for SFBs, allowing them to expand their operations and cater to a broader spectrum of banking services and products. Key Points: Eligibility Criteria: To qualify for this transition, SFBs must meet specific eligibility criteria set by the RBI, including: Maintaining a minimum net worth of Rs 1,000 crore. Demonstrating a satisfactory track record of at least five years. Ensuring profitability over the last two financial years. These stringent requirements aim to ensure the stability and viability of SFBs in their new role as universal banks. Expanded Services: ...

RBI Announces Withdrawal of ₹2000 Denomination Banknotes

3May

By Ankit1 Comment

Banking, Economics, Finance, Goverment Notice/Circulars

RBI Announces Withdrawal of ₹2000 Denomination Banknotes

The Reserve Bank of India (RBI) has recently released a press release announcing the withdrawal of ₹2000 denomination banknotes from circulation. This significant move aims to streamline the currency system and ensure the smooth functioning of the Indian economy. The RBI's decision comes into effect based on the guidelines provided in Press Release 2023-2024/257, dated May 19, 2023. Let's delve into the details of this crucial development. Withdrawal Status and Process: According to the press release, the ₹2000 banknotes' withdrawal status is regularly updated by the RBI. The most recent update was published on April 01, 2024. As part of the withdrawal process, individuals and entities were initially given the opportunity to deposit or exchange their ₹2000 banknotes at any bank branch un...

Punjab National Bank (PNB) Revises FD Rates, Implements Rate Cuts of up to 15bps

2May

By AnkitNo Comments

BFSI, Banking, Finance

Punjab National Bank (PNB) Revises FD Rates, Implements Rate Cuts of up to 15bps

Punjab National Bank (PNB), one of India's leading public sector banks, has recently announced a revision in its fixed deposit (FD rates) interest rates. The bank has implemented rate cuts of up to 15 basis points (bps) across various tenures. This move comes as a response to the evolving market conditions and aims to align the bank's offerings with the prevailing interest rate environment. Let's delve deeper into the revised FD rates offered by PNB. Revised FD Rates: Effective from April 12, 2024, PNB has adjusted its FD interest rates for different categories of depositors. The revised rates are as follows: Regular Citizens: For regular citizens, PNB now offers FD interest rates ranging from 3.50% to 7.25%. The rates vary based on the tenure of the fixed deposit. Senior Citize...

Combat Cybercrime and Financial Frauds: Workshop was conducted by DFS

30Apr

By AnkitNo Comments

Banking, BFSI, Digital Lending, Fintech, Insurtech, Lending, NBFC, Payments, Startups, Wealthtech

Combat Cybercrime and Financial Frauds: Workshop was conducted by DFS

Workshop on Collaboration Between Fintechs, and Law Enforcement Agencies The Department of Financial Services (DFS), Ministry of Finance, and the Indian CyberCrime Coordination Centre (I4C), Ministry of Home Affairs, recently organized a half-day workshop in Vigyan Bhawan, New Delhi to promote collaboration between Law Enforcement Agencies (LEAs), Start-ups, and Fintech ecosystem partners. The workshop aimed to foster innovation, compliance with regulations, and address challenges such as cybersecurity and digital financial frauds. With the participation of key stakeholders, the event emphasized the need for greater collaboration to harness the full potential of the Start-up and Fintech sector in India. Collaborative Efforts for a Thriving Sector: During the workshop, the DFS Secretary,...

NBFC Leaders Advocate Responsible Lending and Equitable Co-Lending with Banks

29Apr

By AnkitNo Comments

Banking, BFSI, Digital Lending, Lending, Microfinance, NBFC

NBFC Leaders Advocate Responsible Lending and Equitable Co-Lending with Banks

Non-banking finance companies (NBFCs) are at the forefront of financial inclusion, bridging gaps in credit access for underserved segments. In recent discussions at the ETBFSI NBFC Connect’24 Summit in Chennai, industry leaders underscored the importance of responsible lending practices and equitable partnerships in co-lending arrangements with banks. Responsible Lending Practices Ashish Mehrotra, MD & CEO of Northern Arc Capital, emphasized the significance of reaching the last mile through partnerships. He stated, “As long as we are able to reach the last mile in partnership/co-lending, we bring more value to the ecosystem.” This approach ensures that credit reaches even the most remote borrowers. NBFCs adopt a calibrated and responsible underwriting process. T...

Decoding the RBI Circular: Opens Doors for SFBs to Become Universal Banks

29Apr

By Ankit1 Comment

Banking, BFSI, Finance, Goverment Notice/Circulars

Decoding the RBI Circular: Opens Doors for SFBs to Become Universal Banks

In a recent circular issued by the Reserve Bank of India (RBI), significant changes have been introduced that pave the way for Small Finance Banks (SFBs) to apply for Universal Bank status. This move aims to enhance financial inclusion and broaden the banking landscape in India. The circular outlines the eligibility criteria and requirements for SFBs aspiring to become Universal Banks. This article provides a summary of the circular and its key provisions. Eligibility Criteria: To be eligible for consideration, SFBs must meet the following requirements: Operational Experience: The SFB should have successfully operated for at least five years, demonstrating their ability to function effectively in the banking sector. Listing on Stock Exchange: The SFB must be listed ...

SFBs and the Road to Universal banking: Challenges, Considerations, and Future Outlook

29Apr

By AnkitNo Comments

BFSI, Banking, Goverment Notice/Circulars

SFBs and the Road to Universal banking: Challenges, Considerations, and Future Outlook

The Reserve Bank of India's (RBI) recent guidelines for small finance banks (SFBs) to convert into universal banks have brought clarity to the process, but the path to universal banking remains challenging for these institutions. While the new rules offer a roadmap, it is unlikely that any SFB will apply for a license in the immediate future. Current Scenario: Eligibility: Only AU Small Finance Bank currently meets all the criteria for conversion. However, its ongoing merger with Fincare SFB will take 9-12 months to complete. Other SFBs: The remaining SFBs face hurdles in meeting the RBI's asset-quality criteria and will need at least a year or two to qualify. Diversification: Diversifying loan portfolios remains a major challenge, particularly for SFBs with high exposure to mi...

AU Small Finance Bank for Universal Bank License? : RBI Circular Sparks Discussions

28Apr

By Ankit2 Comments

Banking, BFSI, Goverment Notice/Circulars, NBFC, Payments

AU Small Finance Bank for Universal Bank License? : RBI Circular Sparks Discussions

In a recent development, the Reserve Bank of India (RBI) issued a circular that has set the stage for AU Small Finance Bank (AU SFB) to deliberate on its potential eligibility and feasibility for a universal bank license. This move has generated significant interest and speculation within the banking industry. The circular has caught the attention of stakeholders, investors, and market participants, as it holds the potential to reshape the landscape of banking in India. In this article, we will explore the implications of the RBI circular and its potential impact on AU SFB. Let’s understand AU Small Finance Bank AU Small Finance Bank, a Jaipur-based financial institution, began operations as an NBFC-MFI (Non-Banking Financial Company - Microfinance Institution) in 1996. Over ...

27Apr

By AnkitNo Comments

BFSI, Banking, Blog, Digital Lending, Lending

How BNPL Companies make Money?

BNPL companies (Buy Now Pay Later) employ various strategies to generate revenue. Let’s explore how BNPL Companies make money: Merchant Fees: BNPL providers charge e-commerce platforms and retailers a fee for integrating their BNPL services. This fee ensures that the BNPL option is available during checkout on these platforms. Interest and Fees on Late Payments: If consumers fail to repay within the stipulated period, BNPL companies charge interest or late fees. These penalties contribute to their revenue. Credit Risk Management: BNPL firms assess credit risk and set credit limits for users. They earn by managing this risk effectively and ensuring timely repayments. Partnerships with Financial Institutions: Some BNPL providers collaborate with banks or financial institution...