Spice Money: Industry Monitoring 08 January 2019
- Priyanka Kanodia
- Jan 9, 2019
- 5 min read
Spice Money
Industry News
Consolidation time: Gruh finance to merge with Bandhan Bank
Publication- The Financial Express
Edition- Online
Date- 08 January, 2019
Bandhan Bank said on Monday Gruh Finance would merge with it in an all-share deal valued at approximately Rs 81,800 crore based on the closing prices of shares of the two players. Shareholders of Gruh will get 568 shares of Bandhan for every1,000 shares held. The transaction helps lower the promoter stake in Bandhan Bank to 61% from 82%. This means the outstanding number of shares of Bandhan Bank will go up to close to 161 crore shares post the merger. The transaction valued Gruh at 8% lower than its closing of Rs 306.2 per share on Monday, down nearly 4% over Friday’s close. Bandhan Bank closed Monday’s session at Rs 501.1 per share, down 5.21%.
Moreover, the merger will see HDFC Limited owning close to 15% in Bandhan Bank via its holding in Gruh Finance. Deepak Parekh, chairman, HDFC, explained that HDFC would need to apply to Reserve Bank of India (RBI) and await its response. “A non-bank can hold up to 9.9%, but the merger gives us little less than 15%. Even for 9.9%, we need RBI approval because only a 5% stake is automatic,” Parekh explained. As of now, HDFC owns 57.83% in Gruh Finance. CS Ghosh, founder and CEO of Bandhan Bank, said there was much to be gained from the merger since Gruh Finance promotes affordable housing and Bandhan Bank can provide the loans.
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RBI KYC deadline may punch a hole in wallet companies plans
Publication- The Economic Times
Edition- Online
Date- 08 January, 2019
Most of India’s mobile wallets may become non-operational by March, say payments industry executives, as they fear companies will be unable to meet the central bank’s deadline to complete verification of all customers by the end of February 2019. Prepaid payment instruments (PPIs) or mobile wallets were mandated by the Reserve Bank of India in October 2017 to capture all information required under the know your-customer (KYC) guidelines. So far, companies have been able to verify just a fraction of their total user base, and are yet to complete biometric or physical verification of the majority of users, industry executives told ET. “More than 95% of the mobile wallets in the country could stop being operational by March,” said a senior executive with a New Delhi-based payments company. The payments industry has been scrambling to conform to RBI guidelines issued after the Supreme Court’s judgment on Aadhaar that barred private companies from using the database for paperless verification of customers.
“There is no eKYC, the RBI has not told us anything clearly about the alternative KYC mechanisms that they plan to approve,” a senior payment executive told ET. “The deadline is just a few weeks away and we cannot adhere to (it) with this rate of progress,” he added. There have been discussions around alternative KYC mechanism like using video-based verification or XML-based KYC, but neither has been formally approved by the banking regulator. RBI did not respond to ET queries till the time of going to press. Pratik Bhakta 3 Comments Save “We are waiting till January 8, that is the last day of the winter session of Parliament; let us see what happens to the Aadhaar Bill,” said another payment industry executive. “We will reach out to RBI and ask for the next course of action.” Mobile wallets kickstarted the Indian digital payment revolution about four years ago but now only a few such companies remain in the fray. Most of the PPI licence holders such as MobiKwik, PhonePe and Amazon Pay are either focusing on Unified Payments Interface business or have diverged into other fintech activities.
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TCS recognised as Leader for Blockchain Services
Publication- Business Standard
Edition- Online
Date- 08 January, 2019
Tata Consultancy Services has been recognised as a Leader in the Everest Group PEAK Matrix for Blockchain Services. The strengths highlighted in the report include TCS' account-level thought leadership and reactiveness to take ecosystem-centric and business outcome-aligned blockchain services to customers.
The report mentions that the company's apps, infrastructure, and operations-focused message for blockchain is grounded in reality and closer to execution of projects; TCS has built work-arounds for technology limitations by launching proprietary solutions.
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Mobile wallet transactions decline in November: RBI
Publication- Livemint
Edition- Online
Date- 08 January, 2019
After clocking a record high in October, transactions through mobile wallets declined marginally in November, both in terms of value and volume. According to Reserve Bank of India (RBI) data released on Monday, around 347.32 million transactions worth ₹16,108 crore took place in November, against 368.45 million transactions amounting to ₹18,786 crore in October. While the transaction volume is 5.7% lower month-on-month, the transaction value is 14% lower. The decline comes in the backdrop of mobile wallet companies remaining shut out of Aadhaar-based identification to sign up new customers in the past 2-3 months.
The government is working to let private entities use Aadhaar for electronic know your customer (e-KYC) after the Supreme Court ruled in September that the unique number can only be used for welfare schemes and delivering state subsidies. Last week, the Lok Sabha passed a bill to amend three laws to provide legal backing to the government’s decision to allow voluntary linkage of Aadhaar with mobile phone numbers and bank accounts. The bill seeks to amend the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, the Indian Telegraph Act, 1885, and the Prevention of Money-laundering Act, 2002.The draft Aadhaar amendment bill puts the onus on offline verification of Aadhaar number holders where the individual will be verified through QR codes without submission of biometric or demographic information to data servers of the Unique Identification Authority of India.
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After payments, PayU India to focus on consumer credit
Publication- Tech Circle
Edition- Online
Date- 08 January, 2019
When an interim report last month by South African internet and media conglomerate Naspers indicated that more than $14 billion of payments transactions for PayU came from India, it was an indication of the growing opportunity the country presented. The company, which has been focused on providing payment processing services, is now looking at consumer credit to grow its footprint in India. After its subsidiary PayU Credit was granted a licence by the Reserve Bank of India to operate as a non-banking financial company in September, PayU’s 18 month-old credit platform LazyPay has come full circle, as the go-to app for micro credit, personal loans and equated monthly instalment options for the customer.
The idea is to grow the number of transactions from a million per month to three million per month by the end of 2018-19, said Pallav Jain, head of consumer business at PayU India. According to him, in the coming year, PayU India will focus on growing its consumer credit business through its three product verticals—pay later, personal loans and EMI at checkout. In a previous interview, PayU had told TechCircle that it expected the consumer credit piece to comprise 40-50% of its business revenues in the next three to four years.
The ‘Buy Now, Pay Later’ product started by LazyPay is the perfect hook to this, said Jain, replacing other means of payments like card and netbanking which require multiple steps to complete a transaction. “If you look at our customer base, 70-75% are between 22 to 35 years old and order food online, use online ticket booking and other services. People do not want to go through card or netbanking for everyday orders and LazyPay becomes a convenient payment option. We were also surprised by this behaviour when we launched utility bill payments as it is a once-in-amonth transaction,” Jain explained.
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