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Vol. 19 No. 10 February 2021 `75
Pages 52
Shriram Housing Finance pg 5
UCO Bank pg 6
Max Life Insurance pg 15
Online AGMs pg 30
www.bankingfrontiers.com
www.bankingfrontiers.live
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o f T r a n s f o r m at i o n
LAV ANUP GOVIND JAIDEEP K PAUL RAJEEV
CHATURVEDI RAU SINGH HANSRAJ THOMAS YADAV
Presents
AWARDS 2021
World of
Virtual Summit l 6th March 2021
The World has undergone a shift in recent times. Most of the organisations
World of NEXT
have seen their plans dwindle. A World where digital is no longer a thing
that is difficult to learn, A World where Digital is the new normal. Digital
work has but the entire financial inclusion and payments space into a full
throttle. The payment industry is also exploring newer capabilities with
new payment umbrellas and newer regulations coming up to achieve
the payment targets. Security is consistently the only factor which has
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for the FIntech and Big Tech Sector will
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Editor’s Blog
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Email : mohan@bankingfrontiers.com
February 2021 - Vol. 19 No. 10
Bad bank for healthier banks
T
Group Publisher : Babu Nair he Government in the Budget 2021
has mooted the setting up of an asset
Group Editor : Manoj Agrawal management company and an asset
reconstruction company to manage the
Editor : N. Mohan
mounting NPAs in the banking system in
the country. The country’s banks together
Editorial are expected to put initial capital for the
Mehul Dani, Ravi Lalwani, V. Raghuraman framework. With this proposal comes back
the idea of setting up of a bad bank and it is
Research Editors evident that the Government is worried about
V. Babu, Ratnakar Deole, the possible spike in the already worsened
W.A. Wijewardena, Sanchit Gogia, NPAs situation as the pandemic has directly contributed to increasing number of
K.C. Shashidhar, Dr L.S. Subramanian, defaults among borrowers as well as loan write-offs and restructuring among the
Ajay Kumar measures initiated to soften the impact.
The concept of bad bank has been tried and tested with mixed results in countries
Advisor-Alliances like the US, Sweden, Finland, France and Germany. The idea came up in India
Ateeq Siddique during the tenure of Dr Raghuram Rajan as the governor of the Reserve Bank of
Marketing India. The proposal was in fact made after an asset quality review of banks revealed
that several banks had suppressed bad loans to show a healthy balance sheet.
Kailash Purohit, Dhiraj Mestry,
Many experts believe that a professionally-run bad bank, funded by the private
Dhara Thobani, Rohit Kahar, Aditya Arya
lenders and supported by the government, can be an effective mechanism to deal
Events & Operations with NPAs. The government must indeed be a stakeholder in the set-up, which only
Shirish Joshi, Stalin Saldhana, will help getting the desired result, they aver. In fact, the IBA had supported such
Pramod Jadhav, Ashish Verma, a proposal and suggested equity contribution from the government and banks.
Wilhelm Singh, Sneha Agrawal, However, the government has not responded to this proposal as it seems to be
looking at a market-led resolution process.
Samata Mestry, Ramesh Vishwakarma
There are opponents too. They feel that this will be an easier way out for banks
Design having substantial NPAs to park all their bad assets and then do nothing to resolve
Somnath Roy Choudhury them. They point out to the ineffective legislation of Insolvency and Bankruptcy
Code, which has shown very limited results.
Published By There has been an instance in 2004 of bad loans getting transferred from a
Glocal Strategies & Services bank to a special purpose vehicle, when IDBI Bank put nearly Rs 90 billion of bad
D-312, Twin Arcade, Military Road, Marol, loans into a wholly owned special purpose vehicle. It remains a fact that neither
Andheri (E), Mumbai 400059, India. did the bank recover substantial amounts via this special purpose vehicle nor could
Tel: +91-22-29250166 / 29255569 it improve its NPA situation.
Fax: +91-22-29207563 A bad bank is essentially an ARC, and India has ARCs that operate in the
private sector. In allowing their operations, the Reserve Bank of India hoped
that these ARCs would buy bad loans of commercial banks and using their own
mechanism to resolve them. Unfortunately details show that these ARCs could not
Printed & Published by Babu Nair on
even touch the peripheral layer.
behalf of Glocal Strategies & Services and
What the country needs today are comprehensive structural reforms to manage
Printed at Indigo Presss (India) Pvt Ltd., the NPAs of banks rather than experimental schemes and legislations often coming
Plot No. 1C/716, Off Dadoji Konddeo Cross in as knee-jerk reactions. The examples are the Strategic Debt Restructuring and the
Road, Between Sussex and Retiwala Indl. Scheme for Sustainable Structuring of Stressed Assets (S4A) and more recently the
Estate, Byculla (E), Mumbai 400027. IBC. For any effort to be meaningful and result-yielding, there has to be a realistic
identification of the problem and its magnitude, an understanding of the conditions
Editor: Manoj Agrawal (Responsible for that led to the problem and then evolving practical methods in resolving the problem.
selection of news under PRB Act) And of course, there must be a will on the part of the banks and the government to
resolve the issue by strictly prohibiting extraneous considerations. Otherwise, bad
bank or ARCs, unrealistic NPAs will continue to haunt our banking system.
Banking Frontiers February 2021 3
N E W S Regulator
Chinese central bank sets up JV with SWIFT
Global financial
Bahrain grants license
messaging and cross- for CoinMENA
border payments system The Central Bank of Bahrain has
SWIFT has set up a joint granted permission to Middle Eastern
venture with a unit of the digital assets exchange CoinMENA to
People’s Bank of China launch its operations in the country. The
possibly an indication certified Sharia-compliant exchange said
of how China wants it has now been awarded a Crypto Asset
to explore global use Services Company license (category 2)
of its proposed digital by the central bank. The platform will
currency. The unit that become one of relatively few fully licensed
the central bank of China and operating digital assets exchanges
that will be involved in for retail and institutional investors in
the joint venture is its the Kingdom of Bahrain, the United
digital currency research institute and clearing center. Other participants in the Arab Emirates, Saudi Arabia, Kuwait
joint venture are China’s Cross-border Interbank Payment System (CIPS) and the and Oman. Once launched, it will offer
Payment & Clearing Association of China, both supervised by the central bank. The spot trading in 5 major cryptocurrencies
joint venture is being named as Finance Gateway Information Services Co. It is - bitcoin, ether, XRP, litecoin and bitcoin
having its head office at Beijing and the purported business it will handle has been cash. It also plans an over-the-counter
described as information system integration, data processing and technological desk for larger trades.
consultancy. There are 2 other Chinese payments market participants and
infrastructure providers as partners in the venture. SWIFT said the joint venture
will be able to obtain necessary licences for local network management activities
SAMA changes
and its services will be limited in scope and entirely focused on maintaining Governor
compliance with applicable regulations in China.
Kenya’s central bank to modernize payment system
The Central Bank of Kenya has come out with a draft document outlining a 5-year
digitization plan to modernize the country’s domestic payment landscape. The
document, titled Kenya National Payments System Vision and Strategy 2021-2025
and released in December 2020, stresses the regulator’s commitment to establishing
a regulatory landscape that is conducive to innovation, as well as embracing open
banking and APIs, among other key areas of focus. The central bank said it will
work to define standards for API development and mandate data portability with
hopes that more options and innovative solutions will be made available for Kenya-
based users to choose from. The proposed standards will include API specifications
for identification, verification, and authentication; customer account information/ Saudi Arabia’s ruler has removed
data access; transaction initiation; and formats and coding languages for APIs. the central bank’s governor Ahmed
Al-Kholifey and appointed Fahad
Dubai central bank fine on BoB Al-Mubarak as the new governor. This
The Central Bank of the United Arab Emirates has imposed financial sanctions would be Al-Mubarak’s second stint
on 11 banks operating in the country for their failure to reach appropriate levels as governor of Saudi Central Bank,
of compliance on anti-money laundering and sanctions. Among the 11 banks is or SAMA. A decree by the king said
Bank of Baroda, GCC operations, Dubai. A statement said the sanctions imposed at-Kholifey, who had held the post since
amounted to a total of AED45.76 million ($12.5 million). A statement from the 2016, would become an adviser at the
central bank said the financial sanctions take into account the banks’ failures royal court. Al-Mubarak was central
to achieve appropriate levels of compliance regarding their AML & Sanctions bank governor from 2011 to 2016. He
Compliance Frameworks as at the end of 2019. All banks operating in the UAE was most recently a minister of state and
have been allowed ample time by the CBUAE to remedy any shortcomings and served as the kingdom’s Sherpa during
were instructed in the middle of 2019 to ensure compliance by the end of that year, its presidency last year of meetings of the
informing them that further shortcomings would result in penalties under the Group of 20 industrialized economies. He
Federal Decree Law No. (20) of 2018 and its executive regulation. The sanctions was also previously chairman of Morgan
imposed on Bank of Baroda were of AED 6,833,333. The bank said it been taking Stanley’s Saudi Arabia unit. Saudi Arabia
steps to ensure compliance with the Federal Decree and has been communicating now intends to more than double the size
with the Central Bank. of its sovereign wealth fund by 2025.
4 Banking Frontiers February 2021
Future Lending
App & API drive transformation at SHF
App engages customers and API engages partners:
S
hriram Housing Finance feels that we would target having an interactive
the consumer acceptance of digital kiosk at our key branches that would assist
interaction has evolved considerably the customers,” says Subramanian.
as the pandemic has forced everyone to
fasten the pace of digital engagement with MORE SERVICES VIA CLICK
the consumer. The company’s MD and Shriram Housing Finance is now working
CEO Subramanian Jambunathan says towards offering more services via click
the company was already on the path to of a button, and this is not just limited
evolve as a tech-driven mortgage company, to service. Subramanian says: “We are
where moving away from human interface looking to offer pre-approved loans to
was considered inevitable. “The pandemic our customers for home renovation or
perhaps forced us move faster as consumer purchase of new house which would be
behavior changes were brought in by in a seamless and paperless format.”
environmental factors rather than we
driving those changes. We always believed MULTIPLE DIGITAL TOOLS
that a digital journey would become the Technology is not just limited to
forefront of customer interaction over the customer engagement; it has also
next 3-5 years,” says he. become a critical part of the company’s
customer onboarding process as some
CALL, EMAIL, SMS, WA
Subramanian Jambunathan is of its processes have moved completely
A customer wanting to reach SHF can looking to offer pre-approved digital. Subramanian lists them: “We
do so via a branch visit or writing/calling loans to his customers for home have deployed multiple digital tools for
its contact centre. Branch visit was the renovation or new house doing credit checks to facilitate a quicker
most prevalent mode in pre-pandemic turnaround for our customers. We have
era and Subramanian says more than launched our mobile app amidst the facilitated an online application process
80% of the queries were raised by lockdown in July 2020, and the same for our potential customers. The same can
customers with service representatives has become our go to mode to share be done via our website or our mobile app
at the branches. While the company information with customers. Over the which can be downloaded from Google
facilitated its customers to reach it via last 6 months, we have seen almost 40% Playstore. The KYC checks supporting the
call/email/message, the dominant mode of our customers downloading our app. application and the required documents
continued to be branch visits. “We were Today we have over 7000 of our customers for financial assessment of the applicant
already having a one-way communication using our app, while 2500+ have sent are also carried out online. Add to this,
via SMS/WhatsApp, business with our us at least 1 query over this period. This the fact that a lot of our credit checks are
customers over the last few years where we percentage increases to 50%+ if we look done via API integrations across multiple
would keep them posted on the updates at our customers based in metro cities and service providers, who help us validate
about the company, as well as specific state capitals. However, the big positive authenticity of documents, carry out
updates on the industry news, which for us here is that our customers in non- address checks and property geo-tagging
could impact our customers, such as metro locations have also accepted our for better risk management. There are
interest rate movement, basic updates on mobile app as a new communication multiple other legs of the process as well
house maintenance and upkeep and news mode with us. This is a significant win for which would move digital in the course of
articles on real estate,” he says. us as it helps us build a long-term digital next few months.”
engagement journey with the customer.” All in all, Shriram Housing Finance’s
NON-METRO APP USERS Today, the company can offer similar endeavour is to move as many processes
To make the system more efficient, the services over the app what its contact center and customer interactions to a digital
company worked on launching its mobile offers. Any query raised is responded to format which is the new normal.
app and offer a customer portal on its and addressed within 2 working days. Subramanian adds: “We have made
website. The app launch was planned “This helps us reduce the wait time for significant progress on this over the last
in April 2020, but got delayed due to our customers if they reach out to our call few months, and you would definitely see
the lockdown. center for any query. Since we have also more of it in due course.”
Subramanian updates: “We finally enabled a customer portal on our website, mehul@bankingfrontiers.com
Banking Frontiers February 2021 5
Towards Customer Convenience
Technology helps UCO Bank
regain & retain its brand
Saroj Nayak, GM - IT, speaks about the direction and velocity of digital
initiatives at the Kolkata headquartered PSU bank:
Mehul Dani: How has the digital strategy (DFS), Government of India.
of the bank been implemented in the Percentage of digital (home & mobile
current FY? channel) transactions to total transactions
Saroj Nayak: During the has increased to 69% as of third quarter
unprecedented era of the pandemic, which from 47% as of the first quarter of the
took almost the entire 2020 from us, we current FY. Adoption percentage of mobile
have been able to experience the strength and internet banking among operative non-
of technology. It is established now, BSBD SB account customers in the bank
undoubtedly, that technology is the tool has increased to 20% from 15% during the
which can bridge the gap between demand same duration. Adoption percentage of
and supply or to say between business and mobile / internet banking among operative
consumer. This is more pertinent in the non-BSBD SB account customers in
case of service industry like banks. transaction intensive branches the
We have strengthened our call center bank customers in transaction intensive
so that customers can reach us for any branches of the bank is up from 12% in the
clarification/ enquiry. ‘UCO Sampark’ is first 3 months to 16% in the first 9 months
the IVR based phone banking solution of the current FY.
which provides automated banking facility
to the customers. For walk-in customers, How much business has been garnered
we have introduced lead generation facility Saroj Nayak reveals that UCO online by the bank in the current
through miss call/ SMS / website during Bank aims to provide channel- FY? How have you brought business
pandemic so that customers can submit platform-device agnostic correspondents and agents into the fold
their requests. Our call center executives banking experience to its of your digital strategy?
in turn contact them and help them in customers Digital banking has both tangible and
onboarding. intangible benefits in terms of reduction
We are proud to anchor the ‘PSB cardless withdrawal facility using mobile of cost of delivery of service, improvement
Alliance – Door Step Banking Project’, banking U-Cash. Payments using QR code in customer satisfaction, improvised
which was launched by the Finance scan are also introduced for contactless compliance, etc. We have deployed more
Minister on 9 September. Through this shopping experience. Customers can than 3000 ATMs, cash recyclers and
we are providing array of banking services generate virtual cards using same mobile self-service banking kiosks in addition to
right at the doorstep of the customers, who banking app and use that for e-commerce 10,000 PoS devices and 3500 business
can book it using mobile app/ DSB portal transactions. correspondents with micro-ATM devices
or call centre. In a nutshell, using a single app, a for providing real time transaction facility
retail customer can manage his entire in the remotest villages of the country. With
How have been usage patterns of banking needs right from payment/ fund an active card base of around 10 million
apps, mobile & internet banking, digital transfer to investment, loans, UPI, etc. and 3.2 million m-banking customers,
payments at the bank? Non-customers can use our UCO Pay our customer induced digital transaction
We have taken a number of initiatives Plus app to their saving accounts in real share is approximately 70%. There is a
to offer banking facility to the customers time and also do video KYC. During the visible shift of customers from using the
without requiring them to come to the pandemic, we have introduced ‘Video Life digital platform for business transaction
branch. We have strengthened our mobile Certificate’ facility for pensioners through to gradually shifting towards non-financial
banking application (UCO m-Banking which they were able to submit their life banking services like opening of account,
Plus) by providing additional features certificate online from the convenience of investment in fixed deposit, recurring
like facility to open PPF account, Sukanya their homes. This was a big relief for all of deposit, PPF account, application for
Samridhi account, to apply for loans – them and it was appreciated by all corners advances, etc, through online mode.
home, car, etc. We have already introduced including department of financial services In the payment acquiring ecosystem,
6 Banking Frontiers February 2021
we have more than 150 merchants live UPI & Wallet USERS
600,000 552,346
on our fee collection module. The bank is 535,678
501,279
not only garnering business in the form 500,000
of interchange income and commission 415,333 406,339 415,385
but also through expanding its float in 389,099
400,000
334,476
the business accounts. Online and digital
initiatives have also helped us to retain 300,000
our existing customers who were in
requirement of different digital solutions 200,000
for their business to survive during the
100,000
covid situation and also acquired new
customers on basis of the merchant 0
on-boarding digital products. Mar-20 Sep-20 Nov-20 Dec-20
Who are your main tech vendors and what link to have redundancy of network link at IIM, etc. At the same time our e-learning
are their services? Give details about data every level, covering all the branches and platform is providing on-the-go training to
centre, networking hardware, size of your offices (more than 3300) on pan India basis. our staff members.
IT team and training provided to upgrade The core network is built with devices from
the skill set of staff members. What is the all leading network and security hardware How strong is the bank’s presence on social
capex and opex for digital initiatives by OEMs - Cisco, HP, Checkpoint, Imperva, media? What online marketing efforts have
your bank? Fire-eye, Cyber Ark, etc. been undertaken for the current FY?
Our core banking solution is Finacle The deployment of solutions is both on We have been active on social media
from Infosys. We have engaged leading capex and opex models subject to criticality platforms through our official handles in
technology service providers to deploy of the solution and business model. Recently, Facebook, Instagram, Twitter & LinkedIn.
state of the art, safe and secure technology we have changed our CTS solution from We are engaging social media users with
solutions. It would not be prudent to discuss capex to opex. Thus, it is a constant process different types of awareness posts like
details of our data center, networking and which depends on various factors. We are interest rate updation, digital product
hardware sizing, but at the same time I now even going for a cloud-based solution initiatives for merchants & retail customers,
can tell you that bank has 4 data centers, 2 deployment for non-critical projects. asset & liability product features and cyber
at Bangalore in hosted model for primary We have been managing our CBS and security measures, covid protocol/ best
and near site and 2 at Kolkata in our own DC maintenance through an in-house practices, etc on a regular basis. We are
building working as primary and DR site. team. Our internal software development interacting with more than 50 social media
Our hardware sizing and networking team is continuously developing new users on daily basis on queries, feedbacks or
solution is scalable enough to take care of our software solutions and modules. As part grievances. As of now, we have a Facebook
expansion plan in the next decade. We have of capacity building, we are imparting customer review rating of 4.2/5.
a robust wide area network setup on MPLS training to our staff through premier We have a lead management system
platform with multiple service providers’ institutes like IDRBT, NIBM, BIRD, in place. In the current FY, we have
mainly focused on organic posts and lead
generation from social media. The link for
garnering leads is posted in social media
for interested or prospective customers.
The bank reaches the customers who fill
up the details and converts the leads into
prospects.
Banking has seen a major shift from
manual to digital channels in the last few
years. Now people are more aware of the
uses and advantages of using debit cards
and mobile banking. These initiatives have
also helped our economy to march towards
a less cash mode.
What kind of promotional initiatives are
planned for the next FY? To what extent
Banking Frontiers February 2021 7
Towards Customer Convenience
technology will be an enabler in the Mobile Banking MPASSBOOK USERS
foreseeable future for your bank?
3,500,000 3,205,992
We are also going to enter the virtual 3,048,707
market with our products and offer 2,800,602
3,000,000
better convenience and experience to our 2,322,608
2,500,000 2,165,330 2,257,036
prospective customers. In the next FY, we 2,084,959
will extensively work towards brand and 2,000,000 1,673,266
performance campaigns. Covid and post
covid situation has also added up towards 1,500,000
digital banking like introduction of video 1,000,000
KYC, applying of virtual debit cards through
mobile banking. We have always been a 500,000
pioneer in digital banking initiatives in the 0
banking industry with our award-winning Mar-20 Sep-20 Nov-20 Dec-20
mobile applications. Hence, technology has
enabled us to regain and retain our brand as predictive analytics to identify the products Finacle 10.x. This will help us to strengthen
a digital friendly bank and with the further or services that customers are most likely our core capabilities and technical platform.
advancement and adoption of technology, to be interested in for their next purchase) Finacle 10.x is built around API support
we will definitely work towards more and locational intelligence already provide system which opens up the door to limitless
digitization. the said data. API based integration. At the same time,
we are upgrading our e-banking solution
How have you gained by deploying How is your bank involved in partnering, platform, which shall be our step towards
analytics to increase business? How investing and supporting fintechs and creating a digital hub. We target to provide
is technology put to use for customer startups? channel agnostic, platform agnostic and
relationship management (CRM)? What We have tie-ups with some of the device agnostic banking experience to our
are you doing to enhance customer leading fintechs for introducing best of customers. In seriatim, our endeavour is
experience? technology solutions, innovative business to introduce new loan originating system,
Data analytics is a very important tool reengineering ideas and last mile delivery which will ultimately provide an end-to-
in banking industry, with vast structured products; with an overall target of enhanced end solution to the customers to apply,
and unstructured data generated by many customer convenience, improving business track and avail credit within defined
devices in various platforms can provide processes, proper compliance and of course turn around time as per their needs from
stupendous insight. With banking products optimization of cost of delivery. Services being anywhere, anytime. We understand that
becoming increasingly commoditized, availed through these fintechs are primarily in the current era of generation Y, where
analytics can help banks differentiate related to fetching outside world reports millennials are the largest customer
themselves and gain a competitive edge. on topics like GST, financial statements, base, banking anywhere and anytime
Banks in the past have been reluctant analysis of balance sheets, analysis of bank is the key towards successful customer
to employ analytical tools due to legacy statements, CIBIL report, PAN verification, engagement. In this direction, we are
data and its accuracy. In line with other business correspondent services etc. going to bring ‘banking on the go’ through
public sector banks, we use analytics In order to manage this journey of our innovative kiosk solution. Recently,
at a very limited level. But with regular onboarding fintech companies and to we have launched ‘Green Channel Kiosk
data cleaning and advanced tools in data choose the worthy projects out of number Banking Solution’, wherein customers can
analytics, we may employ analytical tools of startups, we have adopted a board avail self-service within the branch premise
in full use in the near future. approved fintech policy, which covers the as well. Further, we have to integrate with
Analytics can provide banks like ours entire gamut. We are quite optimistic that social media platforms and increase our
with more marketing muscle. Functional our tie-ups with suitable partners will help footprint on these growing channels to tap
areas like risk, compliance, fraud, NPA us to achieve both economy of scale and the customers and also to provide banking
monitoring, and calculating value at risk economy of scope at the same time. wherever they want. Artificial Intelligence
can benefit greatly from analytics to ensure and Machine Learning are the technologies
optimal performance, and in order to take In the post covid- scenario, what are your which are going to be the driving force for
crucial decisions where timing is very targets and plans for IT, digital initiatives change of face of banking in coming years.
important. The use of analytics can help in the current FY and what is planned for While the list is endless, our vision is
banks like ours differentiate themselves the next FY? clear. To offer convenient, cost effective,
and remain competitive in the future. We are in the process of upgrading our consumer friendly technology solutions.
Solutions like ‘Next Best Offer’ (the use of core banking solution from Finacle 7.x to mehul@bankingfrontiers.com
8 Banking Frontiers February 2021
Cartoon
Engaging Regulators & The Dependable App Shielding Strategy
Enhancing Possibilities
Joseph Cleetus
Head of Business
Transformation Mathan Babu
Lulu International
Exchange Pinakin Dave Kashilingam
Country Manager, India CISO & Data Privacy
Summary: Joseph Cleetus & SAARC, Onespan Inc Officer, NPCI
cites the strong support
from regulators and their
Summary: App-based payments have
changing outlook in being
revolutionised digital payments but at the same
more supportive, business
time frauds too have equally shown a high growth
savvy and based on an in-depth
trajectory.
understanding of technology.
Banking Frontiers February 2021 9
Agriculture
`1.76 tn sanctioned to farmers via 18.7mn KCCs
1 8.70 million Kisan Credit Cards (KCCs)
with credit limit of `1.76 trillion have
been sanctioned to farmers across the
documentation, built-in cost escalation
in the limit, any number of withdrawals
within the limit, etc. In order to ensure
country up to 29 January 2021 during that all eligible farmers are provided
the special drive going on since February with hassle-free and timely credit
2020, as per information furnished by for their agricultural operations, the
public sector banks and NABARD. Government runs the KCC Scheme,
Anurag Singh Thakur, Minister of which specifically enables the farmers
State for Finance & Corporate Affairs, to purchase agricultural inputs such as
states that the KCC Scheme has been seeds, fertilizers, pesticides, etc. The total
simplified further, which has the coverage numbers of KCCs issued in the
provision of ATM enabled debit card country are 18.08 million with credit limit
with, inter alia, facilities of one-time of `1.68 trillion as of 8 January 2021.
One District, One Product cluster for better processing, export
T he concept of ‘ ‘One District
One Product’ cluster is aimed at
promoting specialization and better
Corporation Limited (NERAMAC), Tamil
Nadu-Small Farmers Agri-Business
Consortium (TN-SFAC), Small Farmers
current year for formation in 115
aspirational districts in the country.
NAFED will provide market and
processing, marketing, branding and Agri-Business Consortium Haryana value chain linkages to the FPOs formed
export of agri products. Agriculture value (SFACH), Watershed Development by other implementing agencies. NAFED
chain organizations are forming FPOs Department (WDD)- Karnataka & has formed and registered 5 honey FPOs
and facilitating 60% of market linkages Foundation for Development of Rural during the current year in Uttar Pradesh,
for members’ produce. Value Chains (FDRVC)- Ministry of Madhya Pradesh, Rajasthan, Bihar and
Under this central sector scheme Rural Development. West Bengal.
with funding from Government of India, The implementing agencies will engage FPOs will be provided financial
9 implementing agencies have been Cluster Based Business Organizations assistance up to `1.8 million per FPO for
finalized for formation and promotion (CBBOs) to aggregate, register and a period of 3 years. In addition to this,
of FPOs - Small Farmers Agri-Business provide professional handholding support provision has been made for matching
Consortium (SFAC), National Cooperative to each FPO for a period of 5 years. equity grant up to `2,000 per farmer
Development Corporation (NCDC), During 2020-21, a total of 2200 FPO member of FPO with a limit of `1.5
National Bank for Agriculture and Rural produce clusters have been allocated, million per FPO and a credit guarantee
Development (NABARD), National which also include specialized FPO facility up to `20 million of project loan
Agricultural Cooperative Marketing produce clusters such as100 FPOs for per FPO from eligible lending institutions
Federation of India (NAFED), North organic, 100 FPOs for oil seeds etc. Of to ensure institutional credit accessibility
Eastern Regional Agricultural Marketing these, 369 FPOs are targeted during to FPOs.
World Bank’s SMART Project to transform 10,000 villages
M aharashtra Government has
launched the World Bank assisted
State of Maharashtra’s Agribusiness and
access to new and organized markets for
producers and enhance private sector
participation in the agribusiness. The
to channelize farm produce.
The project is a giant step towards
transformation of rural economy and
Rural Transformation (SMART) Project to project will be implemented in 10,000 empowerment of farmers and also
transform rural Maharashtra. This project villages in the state with an objective sustainable agriculture through public-
aims to revamp agricultural value chains to achieve sustainable farming within private partnership. It seeks to ensure
in post-harvest segments of agriculture, next 3 years. It will cover almost one- higher production of crops and create
facilitate agribusiness investment and fourth of Maharashtra. Its focus is on robust market mechanism to enable
stimulate SMEs within the value chain. villages which are reeling under worst farmers to reap higher remuneration for
It will also support resilient agriculture crisis compounded by lack of the yield.
agriculture production systems, expand infrastructure and assured value chains mehul@bankingfrontiers.com
10 Banking Frontiers February 2021Future Banking
2021: Cloud Trends for the BFSI Sector
Cloud is going to be a crucial factor in BFSI operations of the future:
A
s we graduate to a world shaped placate regulators. In India, there are
by physical distancing, banks and ways that the cloud can resolve regulatory
financial institutions are adapting compliance. For example, in 2020, NPCI
and innovating too. For firms looking to rolled out more than 20 circulars relating to
recover in the short-term and accelerate UPI, requiring bank compliance. Keeping
their growth trajectory in the longer term, up to these circulars is a significant task for
technology-fuelled experiences can help all the banks and the cloud can help keep
them compete, ramping up services and up with the regulatory mandates.
profitability while reshaping customer While it will be a gradual shift over the
experiences. In this scenario, banks must next 5 years, I would hope banks can reduce
focus on internal IT operations and systems overheads, which restricts their ability to
to ensure operational integrity. innovate, by working with cloud providers
This is where the power of the cloud and regulators to automate and simplify
will come in. Core legacy systems can pose activity through increased transparency.
challenges to Indian banks due to lack of
flexibility, agility and ease of integrating Long live the marketplace
with external systems. Coupled with the Ciaran Chu platform
plethora of changes in the UPI space, banks One of the greatest drivers of cloud within
are constantly looking at new partnerships became the norm. As a result, in 2021 we India’s BFSI sector will be the need for banks
with emerging fintechs. In doing this, banks will see banks increase expenditure on to diversify their revenue models from fee-
today incur heavy operational overheads process simplification and improvements – based transactions (where it is a race to zero)
to continue to run and maintain legacy something that the cloud can deliver. to new client-based services. India’s banks
systems. Future-proofing of core systems is face eroding revenue as Merchant Discount
definitely the need of the hour. Changing relationship Rate (MDR), Merchant Service Fee (MSF)
In 2021, cloud will command vital between data regulation and other charges such as interchange are
infrastructure for India’s banking and and innovation highly regulated – highlighting the need
payments sector, enabling agility, improved With changing geopolitical dynamics, to diversify. For example, with Google
remote collaboration and faster application we will see increased focus around Pay or WhatsApp Pay, banks acquire new
development and deployment. data sovereignty and consumer safety, customers on channels outside of their own
Outlined below are the 3 big cloud as consumers seek to understand how at a much lower cost to what they would
trends that ACI Worldwide sees having precisely their data is being used and have incurred the traditional way. Once
the biggest impact on India’s BFSI sector governed. Big cloud providers will continue they have these new customers, it opens
in 2021: to canvas and work with regulators to find up new cross-sell and up-sell opportunities
common ground on the best way to run for the bank; they could sell a loan product
Revaluation of operational their infrastructure long term. WhatsApp or a credit card. In fact, Indian banks are
control processes is a good example on how not only banks partnering with fintechs to provide instant
One of the big challenges of cloud adoption but fintechs and bigtechs are also striving credit, so it does open up new avenues of
pre-covid was the amount of operational hard to comply with regulatory norms in income for the banks, and it is instrumental
overhead and risk acceptance knowledge India. WhatsApp had to put its UPI launch to their overall payment strategy.
required to migrate workloads from on hold for over a year to comply with RBI’s While some Indian banks are still ‘on
on-premises to the cloud. Alongside was the data localization requirements. Banks on the fence’ when it comes to shifting to the
fact that many banks had in place arduous the other hand invested in upgrading their cloud – whether in a pure cloud, hybrid
control processes that were difficult to systems to support the massive transaction or multi-cloud model – the benefits are
overcome. Due to the pandemic, banks have volumes that WhatsApp was expected to making it increasingly attractive. It is only
realized that many offshore resources that bring in. a matter of time before the cloud will be
were maintaining systems could not log in Regulators in the past have stood in viewed less as an option and more as a
from home, causing a risk issue. Banks were the way of innovation, in part due to a business imperative by the banking and
forced to re-evaluate these processes to lack of understanding of the competitive payments industry.
ensure they were fit for purpose in this new landscape. Banks would end up spending Ciaran Chu, Practice Leader - Public Cloud,
world, where physical distancing quickly more on maintaining the status quo to ACI Worldwide
Banking Frontiers February 2021 11Digital Transformation
Powered by E.T.C.
StashFin has adopted Engineering, Technology and Culture practices
from bigtechs to fuel its digital acceleration:
S
tashFin, being a digital lending incorporating into its products or for
venture, has since 2016 been enhancing the work environment at the
dedicated to transforming the organization. Parikshit says a perfect
traditional lending system by providing example of this approach was seen during
customers with a flexible credit line card, the lockdown period where the company
using a fully digital journey. Parikshit successfully deployed a state-of-the-art
Chitalkar, Co-founder, says this has work from home (WFH) infrastructure
been made possible by the company’s based on a cutting-edge technology like
relentless drive towards digitization DNS/Layer 7 VPNs and achieved 100%
of traditionally manual processes and work efficiency for all employees in record
employing advanced technology-based time. “We are elated with what our team
strategies to offer an unmatched level of of passionate Stashers has achieved and
convenience as well as financial freedom we are completely focused and invested
to the customers.” in our human capital for the long run.”
CASH ON CARD BY APP ANALYTICS SOLUTIONS
When covid struck, StashFin accelerated StashFin has deployed analytics to
the pace of adoption of digital technologies either increase revenues or improve the
in its internal processes. When faced with Parikshit Chitalkar intends to customer experience. Parikshit explains:
the constraints of the lockdown, its teams make lot of capital investment “Given our size, the fact that we have
were forced to look at each process, find in Artificial Intelligence built, deployed and now manage over
fully digital alternatives and develop a 70 applications in production is pretty
solutions
completely online WFH suite for every commendable. People are often taken
employee. Parikshit pats his team for is part of our engineering, technology by surprise by the extent of our builds,
having risen to the challenges of a post- infrastructure and data science teams, especially coming from such a small
pandemic world and posting growth who in turn work on AI, machine learning team. We are big proponents of adopting
in all aspects of the business. “Today, and cloud technologies dedicatedly.” not only the latest technology trends but
our systems handle disbursal volumes Early on, StashFin made the decision also nuggets of engineering culture from
of 100+ loans an hour. Our credit line to keep all its technology buildouts the likes of Facebook and Amazon, which
card customers can load cash on their in-house and that has paid dividends we have been able to learn through our
cards in a matter of 90 seconds from the over time. “This provides us with a key investor network.”
StashFin app, with the freedom to use it competitive advantage in terms of agility StashFin starts with the 3 aspects of
24x7 whenever and wherever they please and the ability to innovate. ‘Stashers’ analytics it builds on - credit risk, process
to,” says he. (as we call ourselves internally) love optimization and data visualization.
it because they get to work on novel “Underlying is a strong data pipeline, and
OUTPACING THE VENDOR technologies, in sync with the business, we try to drive a full data democracy where
StashFin has managed to embed various and witnessing tangible results almost people and models alike can get all the
technologies into its app and website. It instantly. It has helped us build a culture data they want, real time,” says Parikshit,
has preferred to have a dedicated team, that is unheard-of in traditional software adding: “We are now working on building
rather than outsourced vendors. Reveals development teams,” he says. self-reinforcing models. We are in the
Parikshit: “We have a 100% in-house business of ingressing large volumes of
technology and data science team DEEP TECH PARTNERSHIPS data and use it to make decisions, which
that gives us the flexibility to integrate StashFin does have deep technical results in value for our customers and
solutions into our products and services partnerships with the likes of AWS, teams alike. To facilitate this paradigm,
within a fraction of the time it would Google, Cloudflare and NewRelic we look at data in 4 distinct categories -
take a vendor to do so. In fact, of the wherein it uses their resources to data infrastructure, credit risk analytics,
200+ employees we have today, 40% develop proprietary solutions either for process analytics and data visualization.
12 Banking Frontiers February 2021Each has a separate team with a clear in India, it is still in uncharted waters,
mandate.” as a country that is far ahead in many
Considering that all its products are dimensions. For example, the payments
exclusively digital, analytics has played revolution brought by UPI. There
a key role in rapid growth and success. is nothing similar in terms of user
The company has developed custom experience, technological complexity
analytics solutions, data pipelines, model and scale exists anywhere in the world,
pipelines and data visualization systems he says.
to understand its customer base and the It is imperative that StashFin remains
credit requirements and utilize those on the cutting edge of technology and data
insights to drive business volume growth sciences while employing best business
vide a superlative customer experience, practices. It stays committed to its goal
all the while minimizing credit and of introducing India to a new paradigm
default risk. The teams depend on hard of financial services, rapidly progressing
data to make day to day decisions, thus towards digitization of services with
equipping them with real insights into financial inclusion as the ultimate goal.
customers’ concerns and the ability to “This makes it imperative that a bulk
offer them practical solutions to resolve of our learnings must come from within
these concerns. All in all, it looks at both - via experimentation and continuous
internal and external customers in the customer feedback,” says Parikshit,
same light and hopes to add value to their explaining further: “A lot of our capital
lives at every step of the way. investment will primarily be in Artificial
Intelligence (AI) this year, especially on
LOW ATTRITION, WANT TALENT developing solutions using computer
It’s a very satisfying experience for a young vision technologies and building neural
engineer to build a feature in a couple networks for advanced fraud detection.
of days, deploy it in production, watch We have been fine-tuning our Machine
how customers interact with the feature want to participate in our growth journey Learning (ML) models for credit risk
live sitting with the sales and customer by living the values and ideals that are the assessment over the last year and will
support teams. Parikshit elaborates: bedrock of our organization’s success over now deploy these on a larger scale to serve
“This kind of exposure unearths their the past 5 years,” he adds. a broader segment of customers. We will
true potential transforming them from also be expanding our mobile footprint
just being coders to technologists who TECH-LED GROWTH to provide a larger bouquet of services to
can solve real business problems with StashFin offers loans in the range from our customers.”
code, one of the many reasons why we `500 to `500,000 with repayment mehul@bankingfrontiers.com
have very low attrition. We are open to periods ranging from 3 months to 36
new talent who share a similar zeal, thirst months. Its interest rates are from
for learning and want to participate in 11.99% APR (Annual Percentage Rate).
In Pursuit of
our growth journey.” But the rates may vary from case to case. Business Niche
StashFin likes to celebrate wins and All loans are repaid through EMIs via
pay credit where it is due, and high electronic payment system. Parikshit
performing individuals are rewarded adds: Over the last financial year, we had
and recognized. “Every Stasher or recorded rapid growth. This growth has
potential employee is egged on to find been brought about by the unrelenting
their fit in our lithe organization - be it focus on technological innovation, Ashutosh Singh
sales, tech, operations, customer service unmatched customer experience and CEO,
NSDL Payments Bank
or field executions and collections,” risk management. It required us to scale
says Parikshit. “We realize that tacit our systems and we are now looking to Summary: Ashutosh
knowledge and the right attitude is scale our teams in sync with the growth Singh mentions that
critical to a Stasher’s success, hence we opportunities ahead.” despite the constraints of
a payments bank, NSDL
promote a lot of lateral movement within
Payments Bank uses the
the organization. However, we are always IT, DIGITAL PLANS opportunities that it has and the USPs
open to new talent who share a similar Parikshit is of the view that when it of its offerings.
zeal, thirst for learning and who would comes to financial technology revolution
Banking Frontiers February 2021 13Efficient Controls
Minimizing Risks with Gig Workers
Sonal Patni, CTO at SMEcorner, a new age fintech lender, discusses the
security risks when working with gig workers:
Mehul Dani: What kind of risks can have access to those areas, and no more.
originate from gig workers? Assign only those roles to gig workers.
S o n a l Pat n i : C o m p a n i e s a r e
increasingly hiring gig workers to address What should be the correlation between
the evolving needs of their business. Gig regular employees and gig workers?
economy workers often need extensive Educate regular employees of the
access to the company’s systems and as a need to protect sensitive data. Your
result, can open up a number of cyberattack regular employees will provide guidance
vectors. This needs to be handled carefully. and mentorship to gig workers. Let your
Unlike a controlled network and in-house employees know about the restrictions on
employees, gig economy workers can’t be systems and data access. Inform them how
subjected to strict security oversight and the they can help out gig workers and the type of
security needs to adapt to the new threats data that is appropriate to share with them.
posed by the gig economy workers. Internal Put regular employees in place who
threats are a rising security concern among can guide, train and mentor gig workers.
enterprises, malicious insiders are viewed In addition to answering questions
as one of the top cyber threats across the Sonal Patni
and assisting with workplace tasks and
enterprise today. practices, they can also keep an eye on
how gig workers access and use data. Get
How can one mitigate the elevated risk measured to ensure there are no untoward them to gently guide gig workers in best
that gig economy workers bring in? incidents which can compromise security. practice for accessing and using business
Organizations need to have strict Your data needs to be properly segmented, and customer information.
security protocols in place to properly so that gig workers do not have access to
mitigate the elevated risk that this entails. your entire dataset but only to what they How can one restrict access to gig workers
Managing sensitive business data when need to carry out necessary tasks. Also, it to sensitive locations in the business?
you’re using gig workers can be a delicate is necessary to audit the data your business Make sure that you have proper access
balance. While you need to protect holds and assign it a sensitivity. controls in place for various parts of your
confidential business and customer business. For example, restrict access
information, workers need access to the What can an enterprise do to protect into server rooms or data centers. Use
right data and systems so they can do their customer, user and business information biometrics and other access devices to limit
job properly. Even with a strong security while making gig workers a useful and gig workers to where they need to be, and
framework in place to help safeguard data flexible part of its workforce? nowhere else.
from external hackers and threats, an influx When you onboard gig workers, make
of gig workers can open the door to new sure you educate them and share policies What should be done to know how gig
vulnerabilities right within the walls of an around data management and data workers are accessing data and systems?
organization. handling with them and have them sign up You can put auditing in place to check
to receiving this information. Make your what gig workers are doing on company
To what extent should access to company’s policies available to all your gig workers at systems. Your policies should state that you
systems be granted to gig workers? all times. Access to policies and guidelines may audit computer and data usage. Each
A gig economy worker should be around data handling is a must. access to the system should be logged and
provided with controlled access to only what every asset accessed must be measured to
he needs as opposed to a sweeping access How should one create roles for gig ensure there are no untoward incidents
to everything. Companies should employ workers with limited access rights? which can compromise the security of the
biometrics, multi factor authentication Every gig worker you take on will be organization. You can incorporate these
and just-in-time provisioning to reliably performing a specific role. Look at the suggestions one by one into your cyber
authenticate gig economy worker and responsibilities and tasks that role will security policies to gainfully employ gig
provide controlled access to the corporate carry out and decide what data, systems and workers and secure your business against
network. Each access to the system should software they need to access. Create only unwanted data issues.
be logged and every asset accessed must be those specific ‘roles’ in the network that mehul@bankingfrontiers.com
14 Banking Frontiers February 2021Cyber Insurance coverage. This is also known as “unintended” or “non-affirmative” cyber cove
Cyber exposure is a concern for all underwriters. Cyber affirmative and silent co
Detailed regulations in cyber insurance mooted are scattered in many different products beyond Standalone ones. Cyber
permeates all classes of insurance without boundaries of industries. A cyber even
trigger losses across various lines of insurance – property damage and bus
interruption resulting from computer systems failure / virus under property insura
siphoning money through phishing under crime insurance, product liability / recalls
The Working Group constituted by IRDAI suggest several steps to security vulnerabilities under product liability / recall insurance, breach of cont
enhance coverage under cyber insurance: negligence claims under E&O insurance and for managerial negligence under
insurance (FedEx case).
T
he Working Group set up by and every year new cyber incidents are
the Insurance Regulatory and carried out on specific targeted industries.
Development Authority of India During NotPetya and WannaCr y,
(IRDAI) to study cyber liability insurance healthcare, logistics, and manufacturing
has suggested that with unknown cyber risks establishments were targeted; during
on the rise, there must be detailed regulations covid, pharma companies and schools were
to address the issue. It says in its report: targeted. Coverages are evolving, more and
“Insurers may place this matter (silent cyber more demands would evolve in medium
issue) high on the agenda and address this term based on new discoveries about these
problem sooner than later. Silent cyber refers incidents. All these demand that cyber
to the unknown exposure in an insurer’s insurance underwriting teams invest more
portfolio created by a cyber peril, which has in cyber knowledge to build expertise The report specifically states that since
not been explicitly excluded or included.” to properly develop and manage their Affirmativeis
the attack usually targeted at multiple web
cover:
Covered through cyber specific policies for the coverage as mentioned ab
The report further elaborates: “Cyber portfolio,” observes the report. users/content users and the said condition
exposure is a concern for all underwriters. Non-affirmative cover:in the coverage, insurers
again leaves a gap
Policy explicitly does not exclude or include coverage. This is also know
Cyber affirmative and silent covers are SOME RECOMMENDATIONS may remove reference to targeted intrusion
“unintended” or “non-affirmative” cyber coverage.
scattered in many different products beyond The report states that cyber risks are not and extend cover as long as it is unauthorized.
When cyber insurance was introduced in the 1990s, the focus was on covering
standalone ones. Cyber risk permeates all static and therefore cyber insurance covers Besides, cyber insurance policies exclude
breach exposures in response to regulations framed by authorities in USA and Eu
classes of insurance without boundaries cannot be static. It is necessary therefore anybusiness
Later, with actualoperations
or alleged bodily
getting injury,
more digital and sickness,
owing to spread of all-perv
influence of information technology, insurers started offering wider coverage. But
of industries,” it says, adding: “With that as the market evolves in response to disease or death of any person howsoever
Report of the Working Group to study Cyber Liability Insurance
technology improving and digital business the emerging needs, the scope of the cyber caused Property Damage and any damage
expanding, silent cyber risks, especially in policy needs to be enhanced. The working to or destruction of any tangible property,
the banking sector, have also increased.” group therefore recommends several steps including loss of use thereof. “With absolute
and covers to facilitate the development cyber exclusions under other policies
GAPS NEED TO BE BRIDGED of a resilient and robust cyber space, becoming increasingly common, there is a
The working group feels that while the both in the short and medium term. Key need to cover cyber incident triggered bodily
current offerings are addressing the recommendations among these are: injury and property losses, so that they do
requirements of individuals reasonably Insurers may place the topic of Silent not fall in a no man’s land,” it says.
well, there are a few gaps, some of them Cyber high on the agenda and address this
relating to product features and the others sooner than later. In simple words, it is QUESTION OF STANDARDIZATION
to processes involved. It says while it may when the policy explicitly does not exclude The working group believes it is neither
not be possible to address all these gaps, or include coverage. desirable nor possible to standardize the
attempts can be made, in respect of some Insurance cover may respond either cover at this juncture. “Nevertheless, insurers
gaps, either to respond fully or partially. by affirmative cover, which means covered can build in certain minimum covers as a part
The report says coverage for losses through cyber specific policies for the coverage of individual cyber insurance. The attached
due to cyber incidents can be categorized or through non-affirmative cover where the model policy wording can be considered by
by differentiating between losses borne as policy explicitly does not exclude or include the insurance industry as a reference point
a direct result of the incident (First party coverage. This is also known as ‘unintended’ to provide minimum basic coverage,” it said.
coverage), and losses incurred as a result of or ‘non-affirmative’ cyber coverage. Cyber insurance product is in a
litigation by alleged injured parties (Third development phase, and standardization of
party coverage). It also provides coverage COMPREHENSIVE COVER the cyber policy wordings for individuals may
for other services. The working group emphasizes that insurers hamper the developments of this product
must work towards offering comprehensive in Indian market. It is important now to
UNCERTAINTY ON COVERS solutions rather than mere loss mitigation focus on popularising the cyber insurance
The working group finds that there is products, not only as a customer friendly product, make it easier for insurer to adapt
significant uncertainty in the market on initiative but also as a good risk mitigation the product as per the customer requirements
covers to be bought, appropriate limit measure. Insurers should strive to bring and continue to enrich customer’s experience
purchase, and taking right deductible. clarity to coverage on fines and penalties and protection, the working group said.
“Attacks on establishments are increasing which remains unclear at this moment. mohan@bankingfrontiers.com
Banking Frontiers February 2021 15You can also read
