Tag: IDFC Bank

Is clearing your electricity bills with a credit card, a smart move?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Managing finances effectively is critical for financial well-being, and using a credit card to pay your electricity bills is a wise approach in this direction. Integrating this handy payment solution into your financial strategy allows you to make timely bill payments, take advantage of reward programs, and improve your overall money management. Explore the key benefits of using a credit card to pay electricity bills..

Advantages of utilizing a credit card for electricity bill payments

1. Convenience

Using a credit card to pay your electricity bill unlocks comfort and convenience as you can do so in just a few clicks, without stepping out of your house. This saves considerable time as well as effort, allowing you to focus on more pressing tasks. Moreover, most credit card providers offer the service of mobile apps and online portals, which makes it simpler and easier to manage and trace your credit card payments.

2. Reward points

The main advantage of paying electricity bills with a credit card is that you earn reward points. Many credit cards offer reward points for every rupee you spend on utility bills, including electricity bills. These points can be used for a variety of rewards, including gift cards, cashback, booking flights, and more, ultimately saving you money. For instance, the IDFC FIRST Millennia Credit Card earns 1X reward points on utility bill payments, such as electricity bills. You can accumulate reward points on this credit card over time and redeem them on in-store or online purchases, for substantial savings.

3. Enhanced savings

In certain situations or for certain expenditure categories, credit cards may offer additional reward points or payback, resulting in higher savings. For example, some cards provide more rewards for online purchases or when total monthly spending surpasses a threshold. By smartly utilising your credit card, you can optimise your savings not only on electricity bills but also on other expenditures. This allows you to maximise the benefits of your credit card’s rewards program while also saving money.

4. Better cash flow management

When you pay your electricity bills with a credit card, you have the option of repaying your dues up to 48 days later without incurring interest charges. This allows you to manage your cash flow better as you get more time to make your payments. This flexibility is particularly advantageous for those with fluctuating earnings or unanticipated needs, as it can act as a cushion to help you manage your funds more effectively.

5. Additional incentives

Certain spending categories are eligible for additional benefits on credit cards, which increases their use. With the FIRST Millennia Credit Card, for instance, you can earn 3X reward points on online purchases up to ₹20,000 per month. In addition, you earn 10X reward points on incremental spends above ₹20,000. The premiums of your insurance policy may also earn you 1X reward points. In this way, you can maximize the use of your credit card and save money by selecting one that meets your needs and lifestyle.

6. Savings on bill payments

Using a credit card to pay your electricity bills is a wise move as it simplifies the payment process while also providing a variety of financial benefits. You can manage your electricity bill payments, save money, and earn rewards if you carefully pick and use a credit card that suits your spending habits.

Note: This is a partnered post.

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Utility bill payments via these credit cards to get expensive from May 1

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Effective May 1, utility bill payments via YES Bank and IDFC First Bank credit cards will come at an added cost. Both of these lenders are set to impose surcharges on some of the transactions.

IDFC First Bank has announced a 1% surcharge along with Goods and Service Tax (GST) on bill payments exceeding ₹20,000 in a single statement cycle through its credit cards.

This adjustment, affecting a wide array of utilities including telecommunications, electricity, gas, water, internet services, and cable services, aims to rationalise costs associated with high-value transactions.

However, exceptions are made for specific cards like the First Private Credit Card, LIC Classic Credit Card, and LIC Select Credit Card.

Airport lounge access benefits will also undergo modifications, with a reduction in free domestic lounge visits for select credit cards.

The number of free domestic airport lounge visits on IDFC First Select Credit Cards will be reduced from four each quarter to two, while First Wealth Credit Cards will now allow access to both domestic and international airport lounges twice per quarter, down from four visits.

Similarly, Yes Bank is set to implement a 1% surcharge along with GST on bill payments exceeding ₹15,000 in a single statement cycle through its credit cards.

However, exemptions are granted for transactions made via the Yes Bank Private Credit Card.

These changes reflect a broader industry trend of addressing the low-margin nature of utility transactions and curtailing perceived misuse.

“Utility transactions represent a low-margin business category for banks, prompting the introduction of surcharges to offset operational costs and deter potential misuse,” Sumanta Mandal, founder of TechnoFino was quoted as saying in News18 report.

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IDFC FIRST Bank’s ED Madhivanan Balakrishnan steps down

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IDFC FIRST Bank on Wednesday, December 6, said its Executive Director Madhivanan Balakrishnan has tendered his resignation.

In his resignation letter, Madhivanan cited an opportunity in the healthcare sector aligning with his family’s long-term plans. He explained that his daughter, who recently became a qualified doctor, intends to pursue entrepreneurship in healthcare.

Madhivanan Balakrishnan joined IDFC FIRST Bank in 2019.

“The Nomination & Remuneration Committee and the Board of Directors of the Bank at their respective meetings held today have accepted the said resignation (tendered on December 6, 2023) and shall relieve him from his duties in the capacity of Executive Director with immediate effect from the close of business hours on December 6, 2023. He continues to serve the bank for necessary handovers until December 15, 2023,” the bank said in a regulatory filing on December 6.

Following the vacancy, the bank intends to assess internal candidates for the whole-time director (Executive Director) position.

Additionally, there are plans for a stake sale by US private equity firm Warburg Pincus in IDFC First Bank.

The firm wants to sell a 1.3% stake through its affiliate, Cloverdell Investment, via a block deal valued at $100 million at ₹85.7 per share. Cloverdell Investment currently holds a 2.74% stake in IDFC First Bank, and after the planned 1.3% stake sale, it will retain a 1.44% holding.

In a previous transaction on September 4, Warburg Pincus sold a 4.2% stake in IDFC First Bank for ₹2,480 crore, while GQG Partners, backed by Rajiv Jain, acquired a 2.6% stake for ₹1,527 crore.

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IDFC Ltd to invest Rs 2200 crore in IDFC First Bank

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IDFC Ltd on Wednesday announced that it will invest Rs 2,200 crore in the IDFC First Bank to increase its stake in the bank to 40 percent. Currently, it has a total share of 36.38 percent in IDFC Bank.

This will provide growth capital to the bank, the company said in a statement.

The shares of IDFC Ltd and IDFC First Bank, opened higher on Thursday. At the last hour, the shares were trading 4.9 and 4.3 percent higher, respectively.

The board also declared a special interim dividend of Rs 11 per share to the stakeholders, due to which the Government of India, the largest shareholder in IDFC, would receive a payout of Rs 287 crore.

This is the largest dividend per share ever declared by IDFC, the company said.

It added that the Board of IDFC, IDFC Financial Holding Company Limited (IDFC HFCL) and IDFC First Bank had decided to merge IDFC and IDFC HFCL with IDFC First Bank in December 2021.

“The merger involves finalising the swap ratio, filing of the scheme and obtaining approvals from the stock exchanges, the Reserve Bank of India, and the Competition Commission of India, apart from approvals by shareholders, creditors and NCLT,” the statement added.

IDFC has a share of 36.38 percent in IDFC First Bank. The share of foreign institutional investors in the bank has raised to 19.76 percent from 14.77 percent while stake of the domestic institutional investors (DII) has declined to 13.84 percent from 14.58 percent in the last 5 quarters.

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IDFC gets SEBI approval for change in control of IDFC Mutual Fund

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”IDFC” isinid=”INE043D01016″ bseid=”532659″ nseid=”IDFC” sector=”Finance – Term Lending Institutions” exchange=”nse”]

Infrastructure finance company IDFC Ltd. has received the market regulator Securities and Exchange Board of India’s (SEBI) approval for the sale of IDFC Mutual Fund to a consortium comprising Bandhan Financial Holding and other entities.

IDFC on Tuesday said that SEBI in its letter dated November 29 approved the change in control of IDFC Mutual Fund, which manages around 49 mutual fund schemes across equity, debt, and hybrid segments.

While SEBI has approved the change of control in IDFC AMC Ltd., it has asked the AMC to seek approval separately for a change in directors of the Trustee Company.

Also Read: “Baseless and Misleading”: IDFC refutes report on delay in merger over fair value

Earlier in April, IDFC Ltd. and the consortium of Bandhan Financial Holding Ltd., GIC-affiliate Lathe Investment Pte Ltd., Tangerine Investments Ltd., and ChrysCapital-affiliate Infinity Partners had entered into a definitive agreement for the acquisition of IDFC AMC and IDFC AMC Trustee Company for around Rs 4,500 crore.

The consortium is buying a 99.96 percent stake in IDFC Asset Management Company and a 100 percent stake in IDFC AMC Trustee Company Limited.

The Bandhan consortium was selected through a divestment process, which witnessed strong participation from strategic players and financial investors.

The agreement envisages the continuity of the current management team and investment processes at IDFC AMC. IDFC has received approval from the RBI and the Competition Commission of India for the sale.

Shares of IDFC are trading at Rs 81.60, up nearly 1 percent.

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IDFC First Bank Q3 Results: Net profit grows 117% YoY to Rs 281 crore; NII up 36% to Rs 2,580 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IDFC First Bank today reported a significant 117 percent year-on-year jump in its net profit to Rs 281 crore for the quarter ended December 31, 2021. The bank also reported a 36 percent YoY increase in its Net Interest Income (NII) to Rs 2,580 crore, in its quarterly earnings report.

As per the report, the bank’s core operating profit, excluding trading gains, grew 54 percent YoY to reach Rs 745 crore, while its Current Account Savings Account (CASA) balance increased 18 percent YoY to Rs 47,859 crore. The bank’s CASA ratio stood at 51.59 percent as against 48.31 percent a year-ago.

The bank reported that its Customer Deposits grew by 11 percent YoY to Rs 85,818 crore, while its Funded Assets increased by a similar margin to touch Rs 1,22,219 crore.

The bank said its gross non-performing assets (NPAs) and net NPAs reduced sequentially by 31 bps and 35 bps to reach 3.96 percent and 1.74 percent,  respectively. Gross and net NPAs of Retail and Commercial Finance reduced by 53 bps and 38 bps on a sequential basis, the bank added.

Also read: IndusInd Bank Q3 Results: NII rises 11.4% YoY to Rs 3,793 crore; net profit up nearly 50% to Rs 1,241 crore

“The business conditions are normalising. We are seeing strong growth in credit once again; our home loan business has grown by 44 percent year-on-year. For the last three years, we have been laying a strong foundation by building a strong deposit base, increasing CASA margin, dealing with legacy loans, and scaling up core operating profits. Our net interest margin is strong at 5.9 percent. We have now begun to see the benefit of this work in terms of profitability,” said V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank.

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Vanguard, Nippon India, Axis Bank in race for IDFC mutual fund business: Report 

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The race for the mutual fund business of IDFC Ltd is heating up as frontrunners have started emerging from the 15 entities vying to purchase the business. On the top is the legendary asset management company Vanguard Group while Nippon Life India Asset Management and Axis Asset Management are also in the running, reported Mint. The potential deal for IDFC’s mutual fund business could be worth between Rs 7,000 crore and Rs 10,000 crore.

“Vanguard is a top contender. About 15 entities, including foreign asset management companies, financial services firms, and private equity funds, have shown interest in buying IDFC Mutual Fund. But the bidding process is still on. Once the bids are opened, IDFC will examine and shortlist the buyer,” one of the people aware of the discussions told Mint.

Vanguard, which was founded by John Bogle, pioneered low-cost investment through its S&P 500-based index funds. The company held over $8.5 trillion in assets at the end of 2021.

IDFC is planning to shed its asset management companies (AMCs) to consolidate its businesses under the IDFC First Bank banner and to focus on banking operations.

The exact value of the sale will be determined by the break-up of assets under IDFC Mutual Funds, profitability, network, distribution strength, and financial capability of its parent financial institution. Generally, AMCs carry bigger valuation when their share of equity to debt is high, as that directly affects profitability.

“Even though IDFC Mutual Fund’s debt portfolio is bigger than its equity assets, the exposure is entirely in AAA-rated papers, which is why inflows to its debt schemes steadily increased after the IL&FS crisis. In the equity portfolio, even though the mix of equity schemes is low in the overall portfolio, the 1-3 year returns from the equity schemes are about 100 percent. That’s why IDFC is expecting 7-10 percent of the assets under management as a fair valuation for the asset management company business,” the person close to the discussions added.

IDFC Mutual Fund’s average AUM for the previous quarter stood at a total of Rs 1.25 lakh crore. Of this about Rs 90,891 crore is in debt-oriented schemes and Rs 30,257 crore in equity schemes. The remainder are in exchange-traded funds, according to data from the Association of Mutual Funds in India (AMFI).

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IDFC First Bank Q2 result: Net profit up nearly 50% at Rs 152 crore, income jumps to Rs 4,880 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IDFC First Bank on Saturday reported a nearly 50 percent jump in its standalone net profit at Rs 151.74 crore in the quarter ended September 2021.

The bank had posted a net profit of Rs 101.41 crore in the same quarter a year ago. Sequentially, there was a net loss of Rs 630 crore in the quarter ended June 2021.

IDFC First Bank‘s total income during July-September of FY22 rose to Rs 4,880.29 crore, as against Rs 4,090.87 crore in the same quarter of FY21, it said in a regulatory filing.

The interest income stood at Rs 4,100.58 crore, up from Rs 3,924.86 crore. Bank’s provisioning for bad loans and contingencies were raised substantially for the September 2021 quarter at Rs 474.95 crore as bad loans moved up.

The bank had parked aside Rs 213.40 crore towards the same in the year-ago period. There was impairment on the asset quality with the gross non-performing assets (NPAs or bad loans) spiking to 4.27 percent of the gross advances by end of Q2 FY22, as against 1.62 percent by the end of the same period in FY’21. Value-wise, it stood at Rs 4,485.53 crore, as against Rs 1,486.11 crore.

Net NPAs too rose to 2.09 per cent (Rs 2,150.34 crore) from 0.43 per cent (Rs 390.95 crore).

However, the bank said that gross and net NPAs for the quarter ended September 30, 2020 are not comparable as an interim Supreme Court order had directed banks that accounts that were not declared as NPA till August 31, 2020, shall not be declared as NPA. The order relates to the pandemic-driven stress to customers last year.

On consolidated basis, the bank posted a net profit of Rs 110.95 crore, slightly up from Rs 109.03 crore. Total income rose to Rs 4,830.14 crore from Rs 4,090.91 crore.

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IDFC Ltd can exit as promoter of IDFC First Bank, RBI clarifies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India has clarified that IDFC Limited can exit as the promoter of IDFC First Bank Limited, the bank said in a statement to exchanges on Wednesday. This could pave the way for a potential reverse merger between IDFC Limited and IDFC First Bank Limited, according to two directly people in the know.

“We would like to inform you that the Reserve Bank of India (“RBI”) has, vide its letter dated July 20, 2021, clarified that after the expiry of lock‐in period of 5 years, IDFC Limited can exit as the promoter of IDFC FIRST Bank Limited,” IDFC First Bank said in an exchange notification. This five-year lock-in period ended on September 30th, 2020.

“The RBI clarification is along the lines of what was already allowed for small finance banks like Equitas and Ujjivan who were allowed to amalgamate the promoter entities with the respective SFBs. So it was expected to happen for IDFC as well. The board will now consider a reverse merger between IDFC and the bank and to collapse the holding company structure, after a few things fall into place,” said a person directly involved in the matter on the condition of anonymity.

This person added that an official application would have to be submitted to RBI for its explicit nod for a reverse merger between the two entities. Besides, IDFC may also have to sell its mutual fund business, IDFC AMC.

“If you see the interpretation of RBI rules, a holdco is needed when there are other non-banking financial businesses in a company. Even the internal working group (IWG) recommendations on private banks say that banks currently under NOFHC structure can be allowed to exit from this structure if they don’t have other entities in their fold.. So the natural assumption is we will have to sell the AMC business to collapse the holdco structure,” said another official at the bank who did not wish to be quoted. The process may take a while, both people quoted earlier clarified.

RBI granted IDFC a banking licence in April of 2014 pursuant to the February 2013 universal bank licensing guidelines. These guidelines mandated IDFC create a non-operative financial holding company (NOFHC) structure to house the bank and other financial services units of the parent company to ensure the banking business was completely ring-fenced from other activities of the firm. The parent company IDFC was also mandated to hold a minimum of 40 percent stake in the ban, locked in for the first five years, and thereafter reduce it to 15 percent over ten years. The RBI’s latest IWG recommendations propose that the cap on promoters’ stake, in the long run, may be raised from 15 percent to 26 percent of the paid-up voting equity share capital of private banks.

The IWG recommendations, if and when finalised, will play a critical role in how banks like IDFC exit the holdco structure, and whether other banks with multiple financial services businesses in their fold would have to create one, one of the people quoted earlier added.

While such a reverse merger could take a while to fructify, shareholders of IDFC Limited stand to benefit if it does go through. A merger could help unlock shareholder value, remove the holding company discount for IDFC Limited shareholders, according to analysts.

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RBI Monetary Policy: Economists decode the actions and its impact on economy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A day after the Modi government unveiled its Rs 1.7 lakh crore relief package, the Reserve Bank of India (RBI) has fired its big bazooka to mitigate the impact the COVID-19 outbreak is having on the economy.

The RBI Monetary Policy Committee (MPC) cut repo rate by 75 basis points to 4.40 percent. It was the first time the MPC met outside its bi-monthly meeting calendar. It also cut cash reserve ratio (CRR) by 100 basis points to 3 percent. Further, the RBI announced a three month-moratorium on all instalments due on term loans.

This includes credit card dues as well. This means people paying EMIs for home loans, auto loans, etc. could get some relief. On working capital loans, there’s now a 3-month deferment on the interest component. This means that on the fourth month, the interest accrued over these 3 months will have to be paid.

Experts decode RBI actions and way ahead for the economy

V Srinivasan a veteran banker and an independent market expert

“This liquidity infusion, the moratorium, the targeted LTRO — all these were necessary steps to buy us some time during this lock down period. Clearly, there is lot of pain which everyone is going through and this is the much needed palliative. But again this is not going to sort of solve the problem once we get out of lockdown. More needs to be done probably on fiscal side to try and make sure that whatever we have lost during the lockdown somehow will sort of gain momentum and get back on its feet without any hiccup and that is going to be the challenge here.”

Neeraj Gambhir, President of Axis Bank

“In a lot of sectors where the cash flows problems were building up or were likely to build up, there was this expectation that if the corporate don’t end up paying in time and the cash flows were under challenge, there could be potentially defaults and those defaults will lead to banks becoming risk-averse. Now to the extent that this allows banks to sort of give a relief to these corporates, it addresses to some extent the risk-aversion issue.”

Indranil Pan, chief economist at IDFC Bank

“The first attempt of the RBI more than the rate cut was to free up the logjam that was getting created in the financial system. Going forward as you say that — if after three months as the things become more or less business as usual and the overall risk of spread of the COVID-19 reduces significantly. specially in India. then the bazooka has to be actually brought out from the fiscal side of the picture and the fiscal has to work its way towards reviving the demand and then only you can get business as usual at least what we were seeing around the January and the February period.”

“Even if the risk of the COVID-19 ends this is not the end of the story. The turnaround will be quite adverse and at that point in time it has to be the fiscal, which has to push significantly forward because the scope in terms of further reduction in monetary policy given that the fiscal is loose is getting a little easy at this point in time.”

Pranjul Bhandari, Chief India Economist at HSBC

“What we heard on the fiscal front yesterday was perhaps just the start, even in humanitarian way we may eventually need much more and then perhaps come to other parts of the economy like small businesses and so on. This is just the start at this point.”

“What I liked about today’s monetary policy’s decision was that everything came together in one fell swoop. This gives a lot of chance for the financial system to actually evaluate all the possibilities and make their plans. On the other hand fiscal is coming in a most staggered way, so that is sort of one difference between the policy reaction between the government and the central bank that we are seeing right now.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow