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Home » Retail Banking 2020 Insights » Morning Briefing: Payments banks herald banking revolution in India

Morning Briefing: Payments banks herald banking revolution in India

Morning News

"Banking, as we have known it, appears headed for an upheaval," the Times of India said this morning in its report on the Reserve Bank of India's granting in principle of payments banks licences to 11 companies.

As reported by Lafferty News yesterday, banking in India will experience a major shake-up when companies including the country's department of posts, telecom giants (Vodafone and Airtel), conglomerates (Reliance Industries and the Aditya Birla Group) and a number of tech and finance companies begin their payments banks operations, largely via mobile phones.

The 'payments banks' initiative is intended to boost financial inclusion. The banks can issue debit cards but not credit cards and will be able to take deposits up to a limit of 100,000 rupees ($1,532). They will not be able to offer loans.

Co-op Bank reports first-half loss

In the UK, the FT reports that the Co-operative Bank's losses nearly trebled in the first half of 2015 against a backdrop of significant restructuring and ongoing legacy issues that will continue to weigh on performance.

The bank reported a pre-tax loss of £204.2 million, compared to a loss of £77 million for the first half of 2014.

BofA directors hike their salaries

A majority of Bank of America's board members received about $36,000 in restricted stock in June despite the fact that the board was criticised for naming its chief executive, Brian Moynihan, as chairman last year, a decision that went against a 2009 shareholders' vote that the positions should be held by separate people. Regulatory filings in June gave details of the salary hikes but went largely unnoticed, and the matter was only reported today by the Wall Street Journal.

Private banks emerge as big winners in Kremlin's drive to keep Russia's economy functioning

Four private banks considered to be on friendly terms with the Kremlin have emerged as big winners from Russia's economic crisis, having found themselves able to help dollar-starved companies at a time when state lenders have been restricted by Western sanctions, Reuters reports.

Small players in the market only a few years ago, FC Otkritie, Promsvyazbank, Credit Bank of Moscow and B&N Bank have benefited from a bank recapitalisation plan, using central bank foreign currency refinancing to offer lending to companies struggling with foreign debt repayments. State banks in Russia, by contrast, have been locked out of international capital markets as a result of sanctions and are restricted from using the central bank's foreign currency refinancing tools for more than 30 days — due to the associated risks for Western clearing banks.

Deutsche Bank considers Hua Xia sale

Deutsche Bank could sell its stake in Chinese group Hua Xia Bank and divest its retail banking activities in India, according to Germany's business newspaper, Handelsblatt.

The newspaper said Deutsche spent €1.3 billion amassing a stake of almost 20 percent in Hua Xia Bank between 2006 and 2010. The stake is considered to be worth in the regions of €3.3 billion at current prices. Handelsblatt also said that Deutsche could sell its retail division, consisting of 17 branches, in India.

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