Page 10 - Banking Finance August 2021

BANK UPDATE

KakaoBank, something that might also "Every idea has to wait for its time, May when the foremost thing was
be relevant to Paytm. The tempo is and the time for CBDC [central bank how to save lives. This and the
being set by customers in their 20s and digital currency] is near. We have care- lockdowns have definitely impacted
30s who don't care much about banks fully evaluated the risks," he told an the earning capacity," said Prashant
as brick-and-mortar institutions but audience at a conference held by think- Kumar, chief executive of Yes Bank.
want to consume banking online like tank Vidhi Centre for Legal Policy. However, Kumar said an improvement
any other service, customized to their
Sankar said the central bank's "en- in the economic environment has led
spending patterns and investment pri-
deavor is that as we move forward to an improvement in the lender's col-
orities.
[with the plan]," so that India's digital lection efficiency.
When younger tenants approach the currency "can reiterate its leadership "We are expecting that these accounts
internet-only KakaoBank for loans to position in payment systems of the would not turn into NPAs as collection
lease apartments - known in Korea as world." efficiencies are improving. This is a
"jeonse" - they don't have to show up
The top executive's remarks follows one-off thing," said Kumar.
at a branch, which doesn't exist any- European Central Bank saying that it
way. Face-to-face contact offers little will begin a 24-month "investigation
additional information to the lender, phase" that, if successful, could lead to PSBs reducing branches
given that 90% of the population is on the creation of a digital euro by 2025. godsend for other lenders
KakaoTalk. From within the popular,
11-year-old messaging service - parent Retail stress builds up due The move by five public sector banks
Kakao Corp.'s first big success - users to reduce their branch numbers is prov-
can access the Kakao Pay wallet for to second wave ing godsend for lenders looking to ex-
cashless person-to-person and in-store Like its peers, private sector lender Yes pand their network.
payments. Bank also suffered a deterioration in The branches being vacated by Bank of
the asset quality of its retail loans in the Baroda (BoB), Punjab National Bank
India considering to June quarter, reflecting the shock im- (PNB), Canara Bank, Union Bank of
launch digital currency pact of the second covid-19 wave on India (UBI) and Indian Bank have
income streams of small borrowers. opened the doors to ready-made pre-
India's central bank is considering mises for other lenders. For the latter
launching a digital currency, according As compared to the previous quarter set, network expansion happens faster,
to a top executive, giving a clear indi- (January-March), the bank's retail at reasonable costs (as owners of these
gross non-performing assets (NPA) ra-
cation of its intentions for the first time
tio rose 40 basis points (bps) to 3.3% premises are desperate to rent them
after previously stating that it was out) and without the hassle of re-do-
studying the idea. of retail assets. That apart, retail loans
that were overdue between 61-90 ing interiors.
T Rabi Sankar, the deputy governor of days rose to Rs. 790 crore in the June To cut down on operating expenses,
Reserve Bank of India, said at a con- quarter, from Rs. 234 crore in the the five PSBs have been merging or
ference today that the central bank is March quarter and Rs. 513 crore a rationalising branches after the amal-
considering introducing the nation's year ago. Loans turn non-performing if
digital currency in a "phased" manner repayments are not made within 90 gamation of banks with them.
while legal changes are made to the days of the due date. AS Rajeev, MD & CEO, Bank of
South Asian nation's foreign-exchange Maharashtra, observed, 25-30 per
rules and IT laws. The bank added Rs. 760 crore of bad cent of the branches opened by BoM
loans in the retail segment, recovered last year were in the premises vacated
The digital currency, which will be
backed by sovereign, will lower the and upgraded Rs. 224 crore, and by the PSBs. "The rent is comparatively
economy's reliance on cash, enable wrote off Rs. 344 crore of individual less. That is why our rent outgo is not
cheaper and smoother international loans in Q1 FY22. increasing despite the rise in the num-
settlements, and protect people from "This is quite understandable because ber of branches," he said. BoM, which
the volatility of privacy crypto curren- of the kind of impact the pandemic had opened 82 branches last year, plans to
cies, he said. on the entire nation during April and open about 100 in FY22. T

10 | 2021 | AUGUST | BANKING FINANCE