23-Dec-2018: RBI shortlists TCS, Wipro, IBM, 3 others for setting up Public Credit Registry
The Reserve Bank of India has shortlisted six major IT companies, including TCS, Wipro and IBM India, to set up a wide-based digital Public Credit Registry (PCR) for capturing details of all borrowers and wilful defaulters.
The proposed PCR will also include data from entities like market regulator Sebi, the corporate affairs ministry, Goods and Service Tax Network (GSTN) and the Insolvency and Bankruptcy Board of India (IBBI) to enable banks and financial institutions to get a 360-degree profile of the existing as well as prospective borrowers on a real-time basis.
Consequent to the publication of expression of interest (EOI) on October 27, 2018, the Reserve Bank had received responses from several vendors for implementation of end-end solution for PCR. After evaluating the responses of the interested vendors, the RBI said it has been decided to shortlist the six firms.
The other three shortlisted vendors are: Capgemini Technology Services India, Dun & Bradstreet Information Services India, and Mindtree Ltd.
The RBI would soon seek request for proposal from the six vendors.
In June this year, the RBI had announced to set up a PCR for India to address information asymmetry, foster access to credit and strengthen the credit culture in the economy.
Earlier, a high-level task force was constituted by the RBI to review the current availability of information on credit, the adequacy of the existing information utilities, and to identify gaps that could be filled by a PCR.
In essence, PCR will be a digital registry of authenticated granular credit information and will work as a financial information infrastructure providing access to various stakeholders and enrich the existing credit information ecosystem.
The PCR would be the single point of mandatory reporting for all material events for each loan, notwithstanding any threshold in the loan amount or type of borrower.
Currently, there are multiple granular credit information repositories in India, with each having somewhat distinct objectives and coverage.
Within the RBI, CRILC is a borrower-level supervisory dataset that keeps record of loans of Rs 5 crore and above.
Also, there are four privately owned credit information companies (CICs) operating in India. The RBI has mandated all its regulated entities to submit credit information individually to all four CICs.
According to the EOI, the proposed solution should allow easy integration with ancillary information sources, such as the Ministry of Corporate Affairs, Sebi, GSTN, CERSAI, utility billers, Central Fraud Registry and Wilful Defaulter/Caution/Suit Filed Lists.
Besides, borrowers would also be able to access their own credit information and seek corrections to the credit information reported on them.
Setting up of the PCR assumes significance amid rising bad loans in the financial system. The non-performing assets in the banking system stand at about Rs 10 lakh crore.
4-Nov-2018: RBI starts process to set up digital Public Credit Registry for capturing all details of borrowers
The Reserve Bank has initiated steps to set up a wide-based digital Public Credit Registry (PCR) to capture details of all borrowers, including wilful defaulters and also the pending legal suits in order to check financial delinquencies. The PCR will also include data from entities like market regulator Sebi, the corporate affairs ministry, Goods and Service Tax Network (GSTN) and the Insolvency and Bankruptcy Board of India (IBBI) to enable the banks and financial institutions to get 360 degree profile of existing and prospective borrowers on a real-time basis. The Reserve Bank has invited expression of interest (EOI) for developing the registry from companies with a turnover of over Rs 100 crore in the last three years.
In June this year, the RBI had announced to set up a PCR for India with a view to address information asymmetry, foster access to credit and strengthen the credit culture in the economy.
Earlier, a high-level task force (HTF) was constituted by the RBI to review the current availability of information on credit, the adequacy of the existing information utilities, and identify gaps that could be filled by a PCR.
In essence, PCR will be a digital registry of authenticated granular credit information and will work as a financial information infrastructure providing access to various stakeholders and enrich the existing credit information ecosystem. The PCR would be the single point of mandatory reporting for all material events for each loan, notwithstanding any threshold in the loan amount or type of borrower.
Currently, there are multiple granular credit information repositories in India, with each having somewhat distinct objectives and coverage. Within the RBI, CRILC is a borrower level supervisory dataset with a threshold in aggregate exposure of Rs 5 crore. Also there are four privately owned credit information companies (CICs) operating in India. The RBI has mandated all its regulated entities to submit credit information individually to all four CICs.
As per the EOI, the proposed solution should allow easy integration with ancillary information sources, like the Ministry of Corporate Affairs, Sebi, GSTN, CERSAI, utility billers, Central Fraud Registry and Wilful Defaulter/Caution/Suit Filed Lists.
Besides, borrowers would also be able to access their own credit information and seek corrections to the credit information reported on them.
Setting up of the PCR assumes significance amidst rising bad loans in the financial system. The non-performing assets in the banking system is about Rs 10 lakh crore.
2-Nov-2018: Partial Credit Enhancement to Bonds Issued by Non-Banking Financial Companies and Housing Finance Companies
It has now been decided to allow banks to provide partial credit enhancement (PCE) to bonds issued by the systemically important non-deposit taking non-banking financial companies (NBFC-ND-SIs) registered with the Reserve Bank of India and Housing Finance Companies (HFCs) registered with National Housing Bank, subject to the following conditions:
- The tenor of the bonds issued by NBFC-ND-SIs/HFCs for which PCEs are provided shall not be less than three years;
- With reference to paragraph 27 of circular ibid, the proceeds from the bonds backed by PCE from banks shall only be utilized for refinancing the existing debt of the NBFC-ND-SIs/HFCs. Banks shall introduce appropriate mechanisms to monitor and ensure that the end-use condition is met;
- The exposure of a bank by way of PCEs to bonds issued by each such NBFC-ND-SI/HFC shall be restricted to one percent of capital funds of the bank within the extant single/group borrower exposure limits; and
- The exposure of banks to NBFC-ND-SIs/HFCs by way of PCEs shall be within the aggregate PCE exposure limit of 20 percent as provided in paragraph 24(b) of the circular ibid.
18-Sep-2018: Bank of Baroda, Vijaya Bank and Dena Bank to be merged
The government proposed the merger of three banks — Bank of Baroda, Vijaya Bank and Dena Bank —aimed at creating the country’s third-biggest lender. That’s seen as preparing the ground for consolidation among the remaining 17 state-owned lenders that have been a drain on the exchequer and marking the next big move in banking reforms. The boards of the three banks will now consider the proposal.
The combined entity will have a strong presence across the nation with more than 34% of low-cost deposits, a capital buffer of nearly 12% and a business book of Rs 14.82 lakh crore. Bank of Baroda is the biggest of the three with Rs 10.29 lakh crore of total business, followed by Vijaya Bank at Rs 2.79 lakh crore and Dena Bank at Rs 1.72 lakh crore. The government has suggested this to the banks to consider these proposals, and hopefully shortly the boards will meet and after adequate consultation will take a decision.
The government is seeking to ensure that there is no merger of relatively weak banks and that it has held talks with the Reserve Bank of India. You can have two well-performing banks absorbing a third one, and hopefully creating a mega bank which will be sustainable, whose lending ability will be far higher. Nobody should have a worry because this amalgamated entity will increase banking operations. Merged entity's ability to increase and expand will be inevitable.
Previously, the government had pushed through consolidation of the State Bank of India group, with SBI absorbing five associate banks and Bharatiya Mahila Bank. That process was completed last year.
The finance ministry stated that the provision coverage ratio (PCR) of the proposed amalgamated entity will be 67.5%, well above the average of public sector banks (PSBs) at 63.7%. The capital adequacy ratio of the combined entity would be at 12.25%, significantly above the regulatory norm of 10.875% and it would be better positioned to tap capital markets.