CURRENT AFFAIRS : BANKING & FINANCE
SBI Card’s Q4 Profit Surges Unexpectedly Due to Consistent Retail Spending in India
- India’s SBI Cards and Payment Services reported an unexpected 11% rise in fourth-quarter profit, driven by steady retail spending that offset an increase in bad loans.
- The company’s profit after tax reached 62 billion rupees ($79.4 million) for the January-March period, up from 5.96 billion rupees a year earlier.
- This exceeded analysts’ expectations, which were around 61 billion rupees, as per LSEG data.
Key Highlights :
- Credit Demand and Retail Spending:Credit demand, especially in unsecured categories like credit cards, remained robust, fueled by retail consumer spending.
- This growth in spending contributed to the rise in the company’s profit.
- Cardholder Spending and Interest Income: Total cardholder spending, or the aggregate transacted amount, grew by 11% year-on-year to 796.53 billion rupees during the quarter.
- This led to a 28% increase in interest income, which rose to 21.39 billion rupees.
- Gross Write-offs and Bad Loans:The company’s gross write-offs rose by 60% to 8.64 billion rupees, reflecting a higher level of bad loans and credit losses.
- Gross bad loans as a percentage of gross advances increased to76% at the end of March, compared to 2.64% at the end of December, indicating a deterioration in asset quality.
- Net Interest Margin (NIM): The net interest margin, a key measure of profitability, fell by 60 basis points year-on-year to 10.9%, suggesting increased pressure on margins due to a combination of higher write-offs and bad loans.
- Stock Performance : Shares of the company ended 1% lower ahead of the results.
Edelweiss Mutual Fund Introduces Nifty Alpha Low Volatility 30 Index Fund
- Edelweiss Mutual Fund has launched the Nifty Alpha Low Volatility 30 Index Fund, a multi-factor index fund.
- It will consist of 30 stocks selected from a pool of the top 150 listed stocks.
- These stocks have recently outperformed the broader market yet are relatively less volatile.
- The New Fund Offer (NFO) of the scheme will be from April 26 to May 10, 2024.
Key highlights of the fund ;
- Investment Strategy and Benchmark : The scheme will invest 95-100% in equity and equity-related securities representing the Nifty Alpha Low Volatility 30 Index.
- Its scheme will be benchmarked against Nifty Alpha Low Volatility 30-TRI and will be managed by Bhavesh Jain.
- Scheme Variants and Options : The scheme will offer regular and direct plans with growth and Income Distribution cum Capital Withdrawal (IDCW) options.
- Systematic Investment Plan (SIP) Details : The minimum investment amount for daily, weekly, fortnightly, monthly, and quarterly SIP will be Rs 100 and in multiples of Rs 1 thereafter.
- Index Methodology and Rebalancing : The index methodology will be factor-weighted and rebalanced semi-annually in June and December, respectively.
- Additional Allocation : The fund will allocate 0-5% to debt and money market instruments, in a bid to ensure a balanced approach to wealth accumulation.
Who should choose the fund?
- Investors looking for long-term capital appreciation and want passive investment in equity and equity-related securities replicating the composition of the Nifty Alpha Low Volatility 30 Index can go for this fund.
- The principal invested in the scheme will be at “very high” risk according to the riskometer of the scheme.
What Is a New Fund Offer (NFO)?
- NFO refers to a new mutual fund scheme for the public in the financial markets with an aim of first-time subscription.
- In other words, a new mutual fund scheme based on a new investment strategy is offered to investors for a limited period.
- Asset management companies (AMCs) offer NFOs as new mutual fund products which are not previously present as part of the product basket.
- NFOs are offered for both close-ended and open-ended mutual fund schemes.
About Edelweiss Mutual Fund :
- MD & CEO : Radhika Gupta
- Edelweiss Mutual Funds, managed by Edelweiss Asset Management Limited, is one of the country’s youngest and most dynamic mutual fund houses.
Reserve Bank of India Maintains Foreign Portfolio Investors Investment Limit in Government Securities at 6% of Outstanding Stocks for FY25
- The Reserve Bank of India (RBI) announced that the investment limits for Foreign Portfolio Investors (FPIs) in government securities, state development loans (SDLs), and corporate bonds will remain unchanged for FY25.
Key Highlights :
- Investment Limits for Various Securities:
- The limit for FPI investment in government securities (G-secs) is 6% of the outstanding stocks of securities.
- The limit for state development loans is 2%.
- The limit for corporate bonds is 15%.
- Fully Accessible Route (FAR):As of now, all investments by eligible investors in the ‘specified securities’ will be reckoned under the fully accessible route (FAR).
- Allocation between General and Long-term Sub-categories:The distribution of incremental changes in the G-secs limit, in absolute terms, will remain at 50:50 between the two sub-categories ‘General’ and ‘Long-term’ for 2024-25.
- State Development Loans (SDLs) Allocation:The entire increase in limits for SDLs, in absolute terms, has been allocated to the general sub-category of state development loans.
- Credit Default Swaps (CDS) Limit:The aggregate limit of the notional amount of CDS sold by FPIs will be 5% of the outstanding stock of corporate bonds.
- An additional limit of Rs 2,54,500 crore has been set for CDS in 2024-25, reflecting the increasing scope for FPIs to engage in credit risk management through swaps.
About RBI :
- Established : 1 April 1935
- Headquarters : Mumbai, Maharashtra, India
- Governor : Shaktikanta Das
- Deputy Governors : M.D.Patra; M Rajeshwar Rao; J Swaminathan and T Rabi Sankar
Government Partners with SBI Cards and Telcos to Tackle One-Time Password Frauds
- India’s Ministry of Home Affairs, SBI Cards and Payment Services Limited (SBI Card), and telecom operators have joined forces to develop an innovative solution to combat OTP (One-Time Password) frauds, cybercrime, and phishing attacks targeting the banking ecosystem.
- The government is testing a solution that allows banks to track the registered address and geolocation of a customer to monitor where an OTP is delivered, providing a way to detect potential fraud.
Key Highlights :
- RBI’s Additional Factor of Authentication: The Reserve Bank of India (RBI) has mandated an additional factor of authentication for digital payment transactions to combat fraud, with the two-factor authentication system being a key security measure.
- Cybercrime’s Impact:According to the Indian Cyber Crime Coordination Centre (i4C), cybercriminals siphoned off Rs 10,319 crore between April 2021 and December 2023.
- Most crimes originated from China, Cambodia, and Myanmar, involving non-state actors.
- Citizen Financial Cyber Fraud Reporting and Management System:Under the i4C framework, the government established the ‘Citizen Financial Cyber Fraud Reporting and Management System,‘ which successfully prevented around Rs 1,200 crore in fraudulent transfers from over 470,000 citizen complaints received by February 2024.
- Statistics on Cyber Fraud in 2023:In the calendar year 2023, the registry received12 million complaints, with fraudulent transfers totaling Rs 7,488 crore, indicating the scale of the issue.
Recent News :
- In April 2024, SBI Card introduced its first travel-centric core credit card, named ‘SBI Card MILES’, offering a range of comprehensive travel benefits.
About Ministry of Home Affairs :
- Union Minister : Amit Shah
- Minister of State : Nityanand Rai, Nisith Pramanik, Ajay Kumar Mishra
About SBI Card :
- Founded : May 1998
- Headquarters : Gurugram, Haryana
- MD and CEO : Abhijit Chakravorty
- SBI Cards & Payment Services Limited, previously known as SBI Cards & Payment Services Private Limited, is a credit card company and payment provider in India.
- SBI Card was launched by the State Bank of India and GE Capital.
Reserve Bank of India Makes Record Net Purchase of $8.5 Billion in the Forex Market in February 2024, the Highest in 32 Months
- The Reserve Bank of India (RBI) bought $8.5 billion on a net basis in the foreign exchange market in February,2024 marking the highest net purchase by the central bank in 32 months.
- In January, the RBI made a smaller net purchase of $1.9 billion in the spot market.
- This indicates a significant increase in buying activity in February.
Key Highlights :
- No Dollar Sales in February: According to the central bank’s April 2023 Bulletin, the RBI did not sell US dollars in the currency market during February.
- This contributed to the high net purchase figure.
- Comparison with Previous Records: The net purchase of $8.5 billion in February is the highest since June 2021, when the RBI had net bought $18.6 billion in the foreign exchange market.
- All-Time High Foreign Exchange Reserves: The RBI’s headline foreign exchange reserves reached a record high of $648.56 billion as of April 5, demonstrating the central bank’s growing reserve position.
- The RBI’s net outstanding forward purchase stood at $9.69 billion as of end-February, compared with a net purchase of $9.97 billion at the end of the previous month, the data showed.
Securities and Exchange Board of India Approves Groww Mutual Fund’s Launch of Nifty Non-Cyclical Consumer Index Fund via New Fund Offering
- Groww Mutual Fund has received the Securities and Exchange Board of India’s (SEBI’s) approval to launch the Nifty Non-Cyclical Consumer Index Fund through a new fund offering (NFO).
- The NFO is expected to go live in the first week of May.
- The fund will be India’s first non-cyclical index fund.
- In this instance, the fund is benchmarked against the Nifty Non-Cyclical Consumer Index (Total Return Index).
- This tracks the performance of the top 30 stocks under sectors such as consumer goods and services, telecom and more.
- Aim of the fund : To generate long-term capital growth by investing in securities of the Nifty Non-Cyclical Consumer Index (TRI) in the same proportion to offer returns.
- It is structured to allocate between 95-100% of its assets in equities and equity-related securities of companies directly involved in or anticipated to gain from consumption and consumption-related endeavours.
- Additionally, it may invest 0-5% in debt and money market instruments, as well as units of debt schemes or debt ETFs.
Key Highlights :
- Groww Nifty Non-Cyclical Consumer Index Fund will be an open‐ended scheme tracking Nifty Non-Cyclical Consumer Index – TRI.
- The scheme will be managed by Abhishek Jain.
- The minimum investment amount will be Rs 500 and in multiples of Re 1 for purchases and of Re 0.01 for switches.
- For SIP, the minimum amount is Rs 1,200 (subject to a minimum of 12 SIP instalments of Rs 100 each for monthly instalments and Rs 300 for quarterly instalments).
- The minimum redemption amount for all plans will be Rs 500 and in multiples of Re 1.
- The principal amount invested in the scheme carries a “very high” risk classification according to the scheme’s riskometer.
About Groww MF :
- Established : 2017
- Headquarters : Bangalore, Karnataka
- CEO : Lalit Keshre
KRAs Release Guidelines to Simplify the KYC Process
- In a bid to ease the Know Your Customer (KYC) process for investors due to new guidelines that came into effect on April 1, 2024 the 5 KYC registration agencies (KRAs) – CDSL Ventures (CVL), NSDL Database Management (NDML), CAMS, Karvy, and Dotex have come with guidelines to simplify the process.
Key Highlights :
- Scope of KYC Records:The KRAs collectively hold the KYC records of 3 million investors, playing a pivotal role in maintaining these records.
- Status of KYC Records:Out of the total KYC records:
- 73% are in the ‘KYC Validated’ status, indicating no further action is required for transacting in the securities market.
- 15% are in the ‘KYC Registered’ status, allowing existing systematic investment plans (SIPs) with mutual funds to continue.
- 12% are in the ‘KYC On-Hold’ status, requiring additional steps for compliance.
- Implications of ‘KYC Validated’ Status:For investors whose status is ‘KYC Validated’, no action is required and they can transact in the securities market without resubmission of KYC documents.
- Guidance for ‘KYC Registered’ Status : Investors whose status is ‘KYC Registered’ can continue with their existing systematic investment plans (SIPs) already registered with mutual funds.
- If such investors wish to open a new account or a new folio with a new fund house or Sebi-registered intermediary, a fresh set of KYC documents needs to be collected afresh to onboard the investor.
- Requirements for ‘KYC On-Hold’ Status : If the KYC status is ‘On Hold’ then the investor has to compete ‘PAN-Aadhaar Seeding’ in income tax records to make the PAN operational.
What is the KYC Registration Agency (KRA)?
- KRA is an agency registered with SEBI under the Securities and Exchange Board of India [KYC (Know Your Client) Registration Agency] Regulations, 2011.
- The KRA will maintain KYC records of the investors centrally, on behalf of capital market intermediaries registered with SEBI.
AU Small Finance Bank Launches New Rupay Credit Card and ATM Insurance Products
- AU Small Finance Bank (AU SFB) has introduced a range of new products, aiming to enhance fee income through innovative credit cards and ATM insurance.
Key Highlights :
- New Credit Cards:Two new credit cards are among the latest offerings: the AU SPONT Rupay Credit Card and the Secured Credit Card – NOMO (No Missing Out).
- The AU SPONT Rupay Credit Card is developed in collaboration with NPCI, while the Secured Credit Card – NOMO is developed with
- Introduction of Secured Credit Cards:The NOMO (No Missing Out) Credit Card is AU SFB’s first secured credit card, which is backed by a Fixed Deposit (FD).
- This marks the bank’s entry into the realm of secured credit cards.
- Enhanced Digital Solutions for Businesses and Customers:AU SFB has launched the AU 0101 Business App, designed to offer customized solutions for proprietorships and Micro, Small, and Medium Enterprises (MSMEs).
- The AU 0101 Version 2.0 is the bank’s upgraded mobile banking app, offering customers an enhanced user experience and additional features.
- ATM Insurance: Industry-First Innovation : First time in the Indian banking industry, AU SFB has launched ATM Insurance, for the convenience of customers to buy insurance through AU SFB’s ATMs with their debit card.
- Insurance journey on ATM is the industry-first innovation, hence, AU SFB have gone ahead and patented this process before launching its first ATM insurance in March 2024.
