Spice Money: Industry Monitoring 15 January 2019
- Priyanka Kanodia
- Jan 15, 2019
- 7 min read
Spice Money
Industry News
Bandhan working on many strategies to bring down promoter shareholding: Chandra Shekhar Ghosh
Publication- The Economic Times
Edition- Online
Date- 15 January, 2019
Bank managing director Chandra Shekhar Ghosh is looking at “all options”, including mergers and acquisitions, and diversification into other lines of financial service, to dilute promoter shareholding. In an interview with Shilpy Sinha, Ghosh talks about the Bandhan Bank-Gruh Finance merger deal, opportunities in affordable housing, and the MSME segment. Edited excerpts: There’s a view that Bandhan doesn’t derive much in terms of business gains from acquiring Gruh, but it just helps in reducing the promoter stake. Do you agree? When I decided to apply for a bank licence, nobody believed me. I saw the potential, saw huge opportunity in affordable housing and in MSMEs. There is need for 20 million houses, when only around 8 lakh have been built. There is need for ₹2 lakh crore for affordable housing till 2022. Our customers are with us for 7-8 years. We can introduce affordable housing products to them.
We can also look at offering MSME loans to Gruh customers. There are good opportunities. We have stable deposit growth, and last quarter our deposit growth was 37%. Was there a kind of compromise on business reasons to meet the regulatory needs? This merger has helped us dilute 21% promoter shareholding. We first discussed Gruh three years ago. It was a choice between acquiring a listed entity and getting automatic listing, or listing the bank first and then looking for an acquisition. We were focusing on stabilising deposits. How do you plan to further reduce Shilpy Sinha 1 Comments Save Company Summary NSE BSE GRUH Finan promoter shareholding to 40%? We have a good strategic plan, and we will be working on it. We do not know how long the regulators will take. Any merger process takes anything between 9 and 12 months. There could be three strategies -- first, mergers or acquisitions; second, form a subsidiary under NOHFC -- use money for other businesses; and third, raise more equity. Until it is finalised, we cannot give a specific strategy.
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EbixCash acquires Essel Forex, Weizmann Forex
Publication- Business Standard
Edition- Online
Date- 15 January, 2019
EbixCash World Money, the Indian subsidiary of US-based software company Ebix Inc, on Monday said it has acquired two India-based companies Essel Forex and Weizmann Forex. "EbixCash World Money Ltd, Indian subsidiary of Ebix Inc, has entered into an agreement to acquire 100 per cent assets of India-based Essel Forex Ltd, for approximately $8 million," the company said in a statement. Ebix would fund the entire transaction in cash, using its internal cash reserves, it said. "The purchase values 100 per cent of Weizmann Forex at $65.94 million, net of $17.51 million of cash remaining in the business."
Said the statement: "With the two acquisitions, EbixCash as a group stands as the largest distribution house in terms of network in financial services space covering more than 3,700 cities and more than 6,000 districts." Commenting on the acquisition, EbixCash World Money MD T.C. Guruprasad said: "Ebix expects the acquisition to be immediately accretive to its earnings. Together, they will clock a business of Rs 25,000 crore turnover in forex business."
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Why investors are fretting over GRUH Finance's merger with Bandhan Bank
Publication- CNBC TV 18
Edition- Online
Date- 15 January, 2019
The prospective merger of GRUH Finance with Bandhan Bank has not gone down well with the investors. While Bandhan Bank has lost 12.5 percent in stock price, wealth destruction for GRUH Fin shareholders has been nearly double at 23.1 percent post the announcement.
There are multiple reasons for this correction: GRUH Fin was always an expensive HFC mainly on account of the HDFC group tag. It was also one of the few NBFCs who have remained a AAA rated entity for the longest time, high dividend payout ratio and the management which has been with the co. for a long long time With the merger, HDFC parentage is removed & Bandhan is the owner From being a AAA rated entity, its getting merged with a AA rated entity.
So cost of funds under Bandhan will be higher Deal happened 7 percent below previous day's close GRUH has announced slowdown in loan growth to 15 percent from 20 percent post the deal announcement Further selling pressure will be seen in Bandhan Bank Mathematically, shareholders of GRUH Fin worth Rs 3, 05,500 would have received shares worth Rs 2,85,392 in Bandhan Bank. Given the declared share swap ratio, at today’s market price, shares worth Rs 2,34,800 in GRUH Finance will fetch shares worth Rs 2,49,835 in Bandhan Bank. Given this difference in value, it is expected that arbitrage trades will help in closing the value gap.
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HSBC settles FX deals worth $250 billion on blockchain in last year
Publication- Business Standard
Edition- Online
Date- 15 January, 2019
HSBC has settled $250 billion worth of forex trades using blockchain in the last year, it said on Monday, suggesting the heavily hyped technology is gaining traction in a sector until now hesitant to embrace it. The bank has settled over three million forex trades and made over 150,000 payments since February using blockchain, it said in a statement. HSBC would not give data on forex trades settled by traditional processes, saying only that those settled by blockchain represented a "small" proportion. Still, the data marks a significant milestone in the use of blockchain by mainstream finance, which has until now been reluctant to start using the technology at any scale.
Blockchain is a shared database that can process and settle transactions in minutes. Originally conceived to underpin the cryptocurrency bitcoin, the technology does not require third-parties for checks and its entries cannot be changed, making it highly secure. Banks and other financial firms have invested hundreds of millions of dollars in the technology, hoping it will simplify and slash costs in processes from settlements to payments. But few banks moved from testing to implementation of blockchain in large-scale projects. Many are worried about high costs, uncertainty over regulation and the risk of disruption to existing systems. HSBC said its blockchain technology has automated manual processes and reduced its reliance on external technology.
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Payments regulator: Issue to be left for next govt to resolve
Publication- The Financial Express
Edition- Online
Date- 15 January, 2019
The Narendra Modi government has developed cold feet on its reported plan to set up an independent payments regulator outside the Reserve Bank of India (RBI) and is reconciled to leaving the contentious issue for the post-election government to resolve. The finance ministry hasn’t yet moved any draft Bill on the Payments Regulatory Board (PRB) — based on the recommendations of the panel under economic affairs secretary Subhash Chandra Garg — for Cabinet approval, an official source told FE. “The Cabinet has to approve this draft Bill first and then Parliament has to ratify it. It’s unlikely to happen in the next session of Parliament, which, in any case, is a very short one due to upcoming polls,” he said.
A delay will save both the government and the central bank under new governor Shaktikanta Das any acrimony before the general election this year. The ministry’s preference for separate payments regulator had triggered a tussle between it and the RBI under then governor Urjit Patel.
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Growth rates will continue to be 25-30% in digital payments space for a long time
Publication- Livemint
Edition- Online
Date- 15 January, 2019
With PayU foraying into the lending space with LazyPay, what kind of reception and competition do you anticipate?
The demand for lending is enormous in India. In my view, this opportunity is worth more than $1 trillion and existing companies cannot meet this demand. LazyPay is addressing the segment that hasn’t been issued credit cards by banks due to inherent risk assessment and cost of delivery. LazyPay has innovated the space by providing credit as low as $1 to $2,000 at virtually zero cost of delivery and within a few minutes. We now deliver more than 1 million loans per month.
How much has the digital payments space evolved over the past decade?
The digital payments industry has come a long way in the past eight years. There is greater awareness among consumers, and the penetration of internet connected devices has increased. More businesses are now accepting digital payments and the government has been pushing it to the last mile. In my view, every possible positive thing which one can think of in favour of digital payments is happening. This is the best time to be in this space as growth rates will continue to be around 25-30% in this sector for a long time.
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Credit card dues payment: How to get rid of credit card debt fast?
Publication- Zee Business
Edition- Online
Date- 15 January, 2019
Credit cards have become a very useful tool especially when there is a need for financial aid in an emergency. They were tough to secure once, but times have changed, and now getting one has become very easy. Earlier, there was a list of factors like how much you earn, or how much is your capacity to repay, your details with other loans, etc. would be taken into consideration. But now, almost every bank is offering you a credit card even with a salary of Rs 15,000 - Rs 20,000. Many times, the moment you open your salary bank account, you are given the option to even avail a credit card.
However, considering the demand for credit card and usage rising further, it also brings the question of how to repay that debt you owe your bank using this tool. If credit card payments not done in time, there are a host of charges you will be eligible for, which makes your repayment even more burdensome. Ranjit Punja CEO and Co-Founder, CreditMantri said, "With the increasing push on digital transactions, credit card usage in India is increasing day by day. While credit cards are extremely convenient and their importance is evident, credit card debt is something that is taken for granted." In Punja's view, unpaid credit card outstanding amounts carry the highest rate of interest which can range anywhere between 24-48% per annum. Paying such exorbitant rates of interest on any debt will undoubtedly take a toll on the financial health of an individual.
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