Spice Money: Industry Monitoring 19 to 21 January 2019

Spice Money

Industry News

Not allowed to issue FDs and give loans, how payments banks function and offer higher interests on deposits?

Publication- The Financial Express

Edition- Online

Date- 19 January, 2019

Payments banks have been set up to address the key issues of banking services accessibility in under-banked and un-banked areas through their widespread network of branches, banking outlets and merchant points. However, they are not allowed to accept time deposits fixed deposits (FDs) and sanction loans, and may accept only demand deposits through savings bank accounts and current accounts. Despite the bars on these key banking activities, some payments banks started their operations by offering higher interest rates than most scheduled commercial banks on savings account deposits, as well as other incentives like cash backs on payments made through them.

Although the rate of interests on deposits were lowered subsequently, but one may wonder, how payments banks may offer greater benefits despite unavailability of cheaper funds through acceptance of FDs and generating returns by sanctioning loans at a higher rate! Payments banks are allowed to generate income by investing 75 per cent of the customer deposits in government securities and the rest in other instruments allowed by the RBI. Given the limitations on their product offerings, payments banks enter into partnerships with commercial banks, NBFCs, fintechs and other financial service providers. As payments banks have greater reach in the areas of the country, where other financial institutions don’t have their reach, such partnerships are mutually beneficial.

Please click on the link below:

https://www.financialexpress.com/money/not-allowed-to-issue-fds-and-give-loans-how-payments-banks-function-and-offer-higher-interests-on-deposits/1448937/

The RuPay card PM Modi used to buy jackets; Know all about this India MasterCard, Visa rival

Publication- The Financial Express

Edition- Online

Date- 19 January, 2019

Prime Minister Narendra Modi was recently spotted shopping at the Ahmedabad Shopping Festival through his RuPay card. He also tweeted, saying, “At the Ahmedabad Shopping Festival I too could not resist from shopping! Purchased some Khadi products using the RuPay card.” Payment networks and gateways, such as MasterCard, Visa card, Diner’s Club and American Express, are the most popular and widely-used gateways in over 200 countries. India too has its own RuPay card scheme created by the National Payments Corporation of India (NPCI), the umbrella organization for all retail payments in India. Under the Pradhan Mantri Jan Dhan Yojana, the RuPay card was introduced as a kind of debit card that comes when you open a bank account. The card is issued by NPCI and is accepted at all ATMs across the country. It was brought in to promote financial inclusion in India. Starting from withdrawing cash to making cashless payments, you can use this card in PoS machines for making cashless payments at any place. Along with these, there are a lot of benefits that you can avail if you are using a RuPay card.

Benefits of using a RuPay Card

These cards come with a lower processing fee as compared to other modes of payments as it is a domestic card, and banks charge nominal processing fees on it. This benefits both the banks and the cardholder. As this card comes at a lower cost, it is easily affordable and accessible to people. Almost 1/3rd of transaction fees are cut down, as compared to those foreign cards.

Please click on the link below:

https://www.financialexpress.com/money/the-rupay-card-pm-modi-used-to-buy-jackets-know-all-about-this-india-mastercard-visa-rival/1448744/

SBI to sell 26% stake in payment services arm

Publication- Money Control

Edition- Online

Date- 19 January, 2019

State Bank of India (SBI) on January 19 said Hitachi Payment Services (HPY) has agreed to pick up 26 per cent stake in SBI Payment Services Private Limited (SPSPL), a card acceptance and digital payment platform. After allotment of the shares, SBI shareholding in SPSPL will become 74 percent from existing 100 per cent, the bank said in a statement. However, it did not disclose the financial details of the deal.

The JV will provide various payment options to customers and merchants focusing on areas such as rollout of a nationwide card acceptance infrastructure, quick response (QR) code acceptance, Unified Payment Interface (UPI), mass transit sector and e-commerce businesses.

Please click on the link below:

https://www.moneycontrol.com/news/business/sbi-to-sell-26-stake-in-payment-services-arm-3411891.html

MSME and Mudra NPAs are rising, but a slew of fintechs promise safe lending by using data

Publication- The Financial Express

Edition- Online

Date- 21 January, 2019

A month ago, the panel discussion at the Express IT Awards was on how, over the next 2-3 years, UPI payments—they rose from Rs 13,144 crore in December 2017 to `102,595 crore in December 2018—offered by various fintechs would overtake those made by debit and credit cards; no mean feat given UPI has been around for less than two-and-a-half years. A week ago, at the FE Best Banks Awards, the discussion was on how banks would need to rework their business models to deal with the challenge from young fintech firms that offered not just UPI, but a host of other services as well.

To take an example, if UPI payments continue to grow by leaps and bounds, and primarily through apps like Google Pay, WhatsApp and PhonePe, they would have a big influence in how banking evolves even though the consumer’s bank account remains the same, say, with an SBI or an HDFC Bank. The apps decide, for instance, which bank they will use as the back end for the transactions and, over time, can even start offering other services that traditional banks offer as users get hooked onto the app and start using it as the ‘bank’ for all practical purposes. Scripbox, for instance, one of the winners of the FE Best Banks Award, is a fintech that helps make investments in mutual funds less intimidating and, combined with, say, a WhatsApp or a Paytm can, over time, replace traditional banks selling mutual funds.

Please click on the link below:

https://www.financialexpress.com/opinion/rationalexpectations-lending-nirvana-via-the-fintechs/1449875/