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  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...

  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024

  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm...

  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the countr...

The retail loan growth declined to 16.6 per cent year-on-year (YoY) in June 2024 from 21.3 per cent a year ago, largely due to sharp moderation in credit in the personal loan segment.Reserve Bank of India (RBI) data showed that growth in the other personal loan category, which consists mainly of unsecured credit, fell sharply to 13.2 per cent YoY in June 2024 from 28.4 per cent in June 2023.However, credit growth to ‘housing,’ the largest constituent of the segment, accelerated to 18.2 per cent YoY from 14.8 per cent YoY. The credit growth numbers exclude the impact of the merger of HDFC with HDFC Bank.The RBI in its statement said non-food credit grew by 13.9 per cent in June 2024, down from 16.3 per cent in June 2023. Credit to industry inched up to 7.7 per cent YoY in June 2024 compared with 7.4 per cent a year ago. There was a slight improvement in credit to large industries at 6.9 per cent in June 2024 from 5.4 per cent a year ago.   Among major industries, while YoY growth in...

  Axis Bank may have cleaned up its bad loans and reoriented the business, but it has a long way to go in terms of market share and dominance in various segments, says chief executive Amitabh Chaudhry. The Reserve Bank of India would only tighten and not loosen regulations given the threats from technology and weak lending practices, Chaudhry tells ET. Edited excerpts:   Interest rates are debated widely and even two members of the Monetary Policy Committee are voting for a cut. How do you see this? I think the pause will continue for some time. The RBI has actually floated a balloon looking at an 8% GDP growth rate. They believe that if 8% GDP growth can be delivered, they would like to attack inflation and get it down to 4%. And if that is the case, then why will they cut rates? So, I don't see any reason why cutting rates would happen in a hurry. And once you're down the path of cutting rates, you don't want to kind of go back up. So, you have to be sure that when you st...

  “Why should we say that once you are listed you can never leave. This isn’t Hotel California. This is a rich, vibrant market. We welcome people, but if for some reason they need to exit, they must be able to” Sebi chairperson Madhabi Puri Buch said this week. And why shouldn't we all agree with this very welcome statement. Over the years, our capital markets have undergone a substantial evolution and transformation. This evolution encompasses technological advancements, regulatory changes, as well as the expansion of market depth and engagement. The maturity of a market is exemplified by the smooth entry and exit experience it provides to investors and issuers alike. This week not only did we overcome a 17 year wait to get into the World Cup final, but we also overcame a waiting period of 19 years to gain freedom from RBB mechanism for delisting of a company. In our views of January 2020 titled ‘Our expectations from Budget 2020’, we had advocated for the removal of RBB process f...

Individuals, companies and other taxpayers have to file income tax returns (ITRs) every financial year to inform the government of the income earned by them and the tax they have paid on this income.While taxpayers have to file their tax returns within a deadline to avoid paying a penalty and to avoid losing certain income tax benefits, the last date or the due date for filing ITR varies depending on the category of the taxpayer. For instance, salaried individuals and other taxpayers whose accounts are not required to be audited must file ITRs by July 31. Similarly, taxpayers whose books of accounts are required to be audited (but transfer pricing not applicable) must file their ITR by October 31. Source: RSM India. *Report under section 92E is required to be submitted when a taxpayer has undertaken international transactions during the relevant financial year. The biggest consequence of missing the deadline to file an income tax return is the levy of penalty. Apart from paying a late ...

  The Reserve Bank of India on Tuesday updated its "guidance note" on operational risk management for the financial sector, and also extended it to the NBFCs, including housing finance companies. The 2005 'Guidance Note on Management of Operational Risk' covered only commercial banks.The Reserve Bank of India (RBI) said an operational disruption can threaten the viability of a regulated entity (RE), impact its customers and other market participants, and ultimately have an impact on financial stability. It can result from man-made causes, Information Technology (IT) threats, geopolitical conflicts, business disruptions, internal/external frauds, execution/delivery errors, third-party dependencies, or natural causes. The latest 'Guidance Note on Operational Risk Management and Operational Resilience' aligns with the RBI's regulatory guidance with the Basel Committee on Banking Supervision (BCBS) Principles, the central bank said. The guidance note intends t...

Sebi board on Tuesday decided to amend norms governing mutual funds, whereby asset management companies (AMCs) need to put in place an "institutional mechanism" for identification and deterrence of potential market abuse, including front-running and fraudulent transactions in securities. The mechanism should consist of enhanced surveillance systems, internal control procedures, and escalation processes to identify, monitor and address specific types of misconduct, including front running, insider trading, and misuse of sensitive information, Sebi said in a statement issued after the conclusion of the board meeting. With a view to address the issues faced by venture capital funds (VCFs) registered under the erstwhile VCF norms with respect to their inability to fully liquidate the investments of their schemes within the tenure of the scheme, the Sebi's board has approved a proposal to provide an option to such VCFs to migrate into AIF (Alternative Investment Fund) rules an...

The Reserve Bank of India (RBI) has cautioned banks about gold loan disbursals being made through fintech startups, according to people familiar with the matter. The central bank has flagged “concerns with the evaluation process” by these banks and fintechs, especially in cases where the gold is sourced through field agents of companies, one of the persons said. “The regulator has verbally expressed its concerns to a set of banks regarding this and asked them to take corrective actions immediately,” said another person. Rupeek, IndiaGold and Oro Money are a few of the major players that source gold loans for banks. Cautioned banks are in conversations with fintech firms for fixing these issues and could explore pausing business temporarily to ensure complete compliance, the people said. ‘Possible Overvaluation’ Sumit Maniyar, cofounder of Rupeek, which is backed by Peak XV Partners and Accel, said he has not received any communication from his company’s banking partners on this. “RBI h...