According to the Reserve Bank of India (RBI), Kotak Mahindra Bank is now free to continue issuing new credit cards and onboarding new clients online after restrictions were removed. This follows the RBI’s decision in April of last year to stop Kotak Mahindra Bank from accepting new clients via its mobile and online banking platforms. Additionally, it was prohibited from issuing new credit cards by the central bank. The RBI observed that the bank has submitted compliance and taken action to resolve the previously raised supervisory concerns.
The RBI further emphasised that an external audit was conducted on the bank to confirm these compliances. The central bank stated in a statement released on February 12 that in order to confirm the compliance, the bank also hired an outside auditor with RBI’s prior consent. The Reserve Bank has now chosen to remove the aforementioned restrictions imposed on Kotak Mahindra Bank Limited after being satisfied with the bank’s representations and corrective actions.
Why RBI Barred Kotak Mahindra Bank?
It is important to remember that the RBI subsequently banned the bank, stating that it had concerns after conducting an IT investigation of the bank and that the bank had “continued” to fail to adequately and promptly resolve these concerns. The RBI went on to state that significant shortcomings and non-compliances were found in the following areas: vendor risk management, business continuity, disaster recovery rigour and practice, patch and change management, user access management, IT inventory management, and data security and data leak prevention strategy.
Over the years, the RBI has been examining banks and other financial organisations more closely. The country has also witnessed the central bank crack down on Paytm last year, which resulted in the closure of Paytm Payments Bank on March 15. Persistent compliance problems and supervisory worries, including infractions of customer due diligence regulations, were among the reasons given. Similar limits were imposed on HDFC Bank by the RBI in 2020, which prevented the bank from obtaining new credit card clients and from commencing its upcoming digital business-generating initiatives. But nearly two years later, in 2022, HDFC Bank was freed from this restriction.
RBI Enhancing Security Features of India’s Banking Services
The central bank has made a number of steps to better oversee the rapidly expanding digital banking and lending industry, even as its grip on surveillance is clear. In an effort to fight financial fraud, the central bank most recently announced during its monetary policy meeting on February 7 that it would launch an exclusive domain name for Indian banks, “bank.in.”
The RBI released digital lending rules in 2023 with the goals of protecting consumers, safeguarding data, and monitoring unlicensed technology partners engaged in lending. It released a framework for fintech self-regulatory organisations (SROs) in September 2024 with the goal of advancing accountability, transparency, and consumer protection.
Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations.
The wealth management industry is forecasted to reach $128.90 trillion in global Assets Under Management (AUM) by 2024. BlackRock, the largest asset manager in the world with $10.47 trillion in AUM as of October 2024, has reached its pinnacle in the asset management field by implementing effective differentiating strategies.
It has risen to prominence by distinguishing itself from the competition, utilizing the latest technology, sustainable investing, and a client-focused approach. These strategies have positioned BlackRock as a leader in the financial industry, driving its continued success and influence across global markets.
In this article, learn more about BlackRock, the company that owns the world, its founders, its success story, how it makes money, BlackRock net worth, what makes it unique, and more.
BlackRock – Company Highlights
Company Name
BlackRock
Headquarters
New York, United States
Industry
Financial Services, Asset Management, Investment
Founders
Larry Fink, Robert S. Kapito, Susan Wagner, Barbara Novick, Ben Golub, Hugh Frater, Ralph Schlosstein, and Keith Anderson
The Company That Owns the World: Who is BlackRock?
BlackRock – About
BlackRock, Inc. is a global asset management, risk mitigation, and advising firm that works with both retail and corporate clients. Single and multi-asset type baskets that invest in stocks, fixed income, options, and money market funds are among the company’s offerings.
The firm is organized into a single corporate unit. Financial advisory and admin costs make up the majority of the company’s income. Aperio, a customized indexing company, was bought by BlackRock for $1.05 billion on Feb 1, 2021.
The fund management corporation with over$10.47 trillion in Assets Under Management, employs 16,000+ colleagues from 89 offices in 38 countries. BlackRock owns 5074 total positions as of June 2024. Among its diverse portfolio, BlackRock’s top equity holdings include major companies such as Apple, Microsoft, NVIDIA, Amazon, Facebook, Tesla, ExxonMobil, etc.
In 2024, BlackRock ranks 231in the Fortune 500 companies, highlighting its prominence in the global financial sector.
BlackRock’s Top Equity Holdings | Who Does BlackRock Own?
BlackRock – Founders
The BlackRock founders—Larry Fink, Susan Wagner, Robert S. Kapito, Barbara Novick, Ralph Schlosstein, Hugh R. Frater, Ben Golub, and Keith Anderson—played a pivotal role in establishing the company and shaping its growth in the asset management industry.
Larry Fink
Larry Fink – Chairman & CEO, BlackRock
Laurence D. Fink is the co-founder, Chairman, and CEO of BlackRock. Fink is widely recognized as one of today’s leading financial figures. His beginnings were more modest; his father owned a shoe store, and his mother was an English teacher. Fink earned a Bachelor of Arts in political science from the University of California, Los Angeles (UCLA), in 1974, and he was also a member of the Kappa Beta Phi honor society. He then obtained an MBA in real estate from the UCLA Anderson School of Management in 1976.
Fink began his career on Wall Street at the age of 24, a young man from Los Angeles with long hair and jewelry, eager to make his mark in global finance. He joined First Boston with a starting salary of $20,000, where his hard work quickly attracted the attention of management, setting him on a path to leadership roles. He dedicated long hours on the trading floor, using a Monroe calculator—the only equipment available at that time.
Three years after joining First Boston, Fink was appointed head of mortgage-backed securities, significantly increasing the firm’s revenue by $1 million. His expertise in the industry earned him immense respect on Wall Street, where he was involved in significant transactions, including a $4.6 billion securitization of GMAC auto loans. Remarkably, he became the youngest chief executive in the industry at just 27 years old.
The First Boston Blunder
In Q2 of 1986, the finance team at First Boston Corporation made a critical miscalculation. They predicted that interest rates would soar, but the opposite occurred. Larry Fink, in charge at First Boston, oversaw a loss of $100 million in client funds. In less than a day, he went from a respected leader to the target of criticism.
The error was glaring, and Fink was let go, laughing in embarrassment despite the fact that it wasn’t entirely his fault. His predictions were based on backend data, which failed due to a technical glitch. Stumped by the significant loss, Fink couldn’t shake off the gravity of the situation. The computer systems simply weren’t reliable.
Determined to learn from the failure, Fink devised a strategy that would ultimately lead him to rise from the ashes and build the world’s largest asset management firm. Friends believe he felt a strong urge to redeem himself and prove his capabilities.
Rob Kapito is the co-founder of BlackRock and currently serves as its President and Director. He oversees key operations, including Investment Strategies, Client Businesses, Technology & Operations, and Risk & Quantitative Analysis. He has played a crucial role in shaping BlackRock’s portfolio management since its founding in 1988, previously heading the Portfolio Management Group.
Beyond his corporate responsibilities, he serves on the Board of Trustees for the University of Pennsylvania and the Harvard Business School Board of Dean’s Advisors. He is also the President of the Board of Directors for the Hope & Heroes Children’s Cancer Fund. Rob holds a BS in economics from the Wharton School and an MBA from Harvard Business School.
BlackRock – Startup story
The BlackRock history dates back to 1988 when 8 peers—Larry Fink, Susan Wagner, Robert S. Kapito, Barbara Novick, Ralph Sclosstein, Hugh R. Frater, Ben Golub, and Keith Anderson—with experience in mortgage-backed assets, formed BlackRock in one room. They secured a $5 million bank loan to manage assets that were good for clients.
The Federal Deposit Insurance Corporation (FDIC) was one of their initial clients. The industry was on the brink of collapse due to certain bad decisions made by Savings and Loan (S&L) institutions until their settlement trust organization was founded. Fink’s BlackRock was recruited by the FDIC to oversee the S&L holdings after the government took control.
Meanwhile, BlackRock was developing its own tech called Aladdin. By 1991, BlackRock had $9 billion in assets under management (AUM). They reached $17 billion in 1992 and $53 billion in 1994.
In 1995, Peabody, a coal company, went bankrupt. Fink was called in by General Electric (GE), which owned Peabody, to help with the liquidation of Kindler’s $7 billion mortgage-backed securities portfolio.
PNC Financial Services Group paid $240 million for a stake in BlackRock Financial Management in 1995. Some argued that the step was pointless at that time, as BlackRock was only offering a part of its company.
Fink, however, was well aware that he was about to face a difficult climb. With this offer, BlackRock was about to redefine everything. The relationship with PNC allowed BlackRock to gain retail clients to support its institutional clientele, which still made up around 80% of its AUM in the 90s.
BlackRock – Vision and Mission
Vision: BlackRock aims to help more people experience financial well-being. The firm contributes to a more equitable and resilient world for both current and future generations.
Mission: BlackRock operates under five core principles:
Client First: BlackRock is a fiduciary, prioritizing clients’ interests with integrity and unbiased advice.
One BlackRock: Collaboration within a diverse team is essential to achieving the best outcomes for clients and communities.
Passionate Performance: Continuous innovation enhances client service and overall firm performance.
Emotional Ownership: A deep sense of responsibility is taken for clients’ futures, with a commitment to high standards of excellence.
Better Future Commitment: Long-term thinking guides sustainable practices that benefit all stakeholders.
BlackRock – Name and Logo
BlackRock was established in 1988 as a risk management and fixed-income asset manager. The name “BlackRock” reflects its foundational values, where “black” signifies strength and stability, and “rock” represents reliability and security. The logo features a simple, bold typeface that highlights transparency and professionalism, which are core values of the firm as they help clients achieve financial well-being.
BlackRock Logo
BlackRock – Aladdin
BlackRock unveiled its risk evaluation and risk management system in 1999, known as Aladdin, which operates with around 5,000 supercomputers that work 24/7, monitored by a team of engineers, mathematicians, and developers. Aladdin is capable of tracking millions of daily trades and analyzing each asset within clients’ portfolios to understand how even slight economic developments might influence them.
This technology actively scans the markets for potential risks and formed the foundation for a new direction that would extend BlackRock’s scope beyond asset management into client advisory services.
Aladdin oversees more than $21 trillion in assets, serves over 1,000 clients—including 200+ financial services companies—and has over 130,000 users across 70 countries (2021), continuously enhancing its capabilities and influence in the financial landscape.
With a diversified portfolio, BlackRock became a publicly traded company on the New York Stock Exchange on October 1, 1999, launching its IPO at a price of $14 per share. However, people remained dubious about their latest technology, and BlackRock had the month’s worst IPO. As time passed, the market realized that, despite having the cheapest shares, BlackRock was keeping its commitments to investors. Fink opted to leverage the strength of acquisitions for 16 years of sustained growth. By the end of 1999, BlackRock had $165 billion in assets under management and operations in Sydney, Singapore, London, and Munich.
In 2008, while on a flight to Singapore, Fink learned that Lehman Brothers had gone bankrupt back home. The following morning, he traveled back to the USA as the financial industry shifted and was in peril. He called politicians and warned them, “The shit is hitting the fan; you’ve got to do something.” Fink was chosen by the Federal Reserve Board of NYC to oversee a $30 billion portfolio of Bear Stearns assets during the economic meltdown of 2008.
Fink believed the bank had failed to properly assess their investments, and Aladdin was utilized by investors, banks, and the Treasury. As the market was falling apart, Aladdin continued to thrive, expanding its clientele and becoming the go-to platform amid economic turmoil.
Fink, once seen as humiliated, emerged to help save the country from an economic disaster. Following this, BlackRock continued its buying spree, acquiring Barclays Global Investors for $13.5 billion in 2009, becoming the world’s largest asset manager. This merger integrated alpha and index strategies, enhancing client solutions. In 2019, BlackRock acquired eFront for $1.3 billion, setting a new standard for investment and risk management technology. These acquisitions solidified BlackRock’s position as the top asset manager.
BlackRock – Business Model
Customer Segments
BlackRock serves a wide community of retail and corporate investors with a mix of financial advice, portfolio management, and other solutions. The following are 3 major groups into which the Firm divides its clientele:
Official Entities, such as Federal Reserve, Treasuries, supranational, and other Govt agencies; Taxable Entities, such as health insurers, Investment firms, firms, Third-party fund backers, and Small investors;
Tax-exempt entities, such as specified gain and specified contribution retirement plans, NGOs, establishments, and inheritances.
BlackRock doesn’t quite reveal the details of its users on its portal or in its annual report due to the confidential and safe aspect of the Firm’s operations.
BlackRock caters to a worldwide clientele. America, APAC, Europe, the Middle East, and Africa are the multiple geopolitical zones in which the firm separates its users. America accounts for the majority of the BlackRock company’s revenue.
Value Propositions
Clients benefit from BlackRock in distinct manners:
It’s brand and repute, with the Firm having formed itself as one of the world’s top asset management and financial advising firms, with stellar credibility for offering great solutions and consistent profits to its clients;
Its service line includes single and multi-asset class pools that trade in equities, fixed income, options, and money market instruments.
Its global impact, with the Firm running a global network of offices helping people in over 100 nations all over America, APAC (Asia Pacific Accreditation Cooperation), Europe, the Middle East, and Africa;
Its availability, to facilitate direct guidance that is backed by multiple internet portals, such as its virtual BlackRock Solutions portal;
Its sector competence, with the Firm hiring highly-trained, skilled money managers, and other specialty finance experts, all of whom are overseen by a group of industry experts.
Channels
www.blackrock.com is the company’s website, where it offers data about its numerous investment vehicles, tools, and venues. Consumers can use a variety of tools and gain tailored services for their specific financial goals through the Firm’s site, along with the BlackRock Solutions portal and the iShares portal, which lets consumers handle their assets through ETFs.
BlackRock’s clients are generally served by an in-house group of qualified portfolio managers and other financial experts spread across the Firm’s segment operating areas. These employees serve out of the Office premises in Atlanta, London, Madrid, Tokyo, Sydney, and Hong Kong, which span America, APAC, Europe, the Middle East, and Africa.
BlackRock also serves consumers through a chain of approved middlemen, banks, thrift institutions, Health insurers, and Freelance experts serving the Firm’s retail investors. Third-party financial and perhaps other firms are included in this category over three of the Firm’s operating zones.
Customer Relationships
Customers can self-serve a multitude of choices and information through BlackRock’s virtual BlackRock Solutions and iShares portals. Clients can use these digital platforms to track their assets, and manage, and locate effective responses without having to deal with the Firm’s financial advice staff.
BlackRock’s clients are primarily served by a devoted team of financial advisors located throughout the firm’s many operational jurisdictions. These advisers meet with clients one-on-one to create a strong rapport and completely understand their unique needs, tastes, and limits. As a result, the Firm can serve customers that are personalized to each client.
Clients enjoy undying support from BlackRock, including frequent releases on the status of their investments. The Firm’s biggest clients are assigned their account managers, who can function as a vital link for questions and problems. Clients can also call the Firm’s main office directly, using the contact info provided on the portal.
Users can also track BlackRock’s operations on its many social media sites, such as Facebook, Twitter (Now X), and LinkedIn, and connect with the firm.
Key Activities
BlackRock gives retail and corporate clients a vast scope of portfolio and risk mitigation solutions in over 100 countries including the USA, Asia Pacific, Europe, the Middle East, and Africa. The firm offers single and multi-asset class baskets that buy stocks, fixed-income, options, and money market funds.
BlackRock primarily serves clients through a wide community of specialized investment managers and other finance experts, but it also works through a mix of finance middlemen, such as wealth managers, Banks, Health insurers, Trust firms, and freelance money managers.
Certain about the Company’s services, such as its BlackRock Solutions site and its iShares ETF offerings, are also accessible on the internet. BlackRock also provides risk analysis and risk mitigation advising solutions through the Green Package.
Key Partners
To offer financial advice to its global clientele proficiently, BlackRock collaborates with a range of affiliate corporations. The different sets are used to categorize these partners:
Supplier and Vendor Partners, which include vendors of multiple activities, products, and systems that enable the Firm’s core investing activities, as well as firms to whom key quasi-tasks can be outsourced;
Channel and Distribution Partners, which are the Firm’s chain of intermediaries, such as banks, wealth managers, health insurers, and trust entities, who offer an array of programs and options on the Company’s part;
Social and Community Allies, which include a series of non-profits and philanthropic NGOs with which the Firm operates on community initiatives all across the globe;
Tech Experts, which include a variety of technology, software, hardware, and integrations affiliates who help the Firm establish and manage robust IT systems and collaborate on diverse tech products; and
Tactical & Allied Members, which include market-leading firms from a multitude of sectors that collaborate with the Firm on promotional initiatives.
Several strategic alliances have been formed by BlackRock. A distribution relationship with Artivest to give wider exposure and quick access to its investible methods, a technological deal with Hazeltree LiquidityWeb to automate cash flows, and a trade alliance with Fidelity Investments are among the partnerships.
Key Resources
IP, Web portals, IT and Telecoms, A chain of sales and support centers, and A web of middlemen, Alliances, and Staff are among BlackRock’s most valuable assets.
As part of its mission, BlackRock holds or leases a variety of intangible assets. BlackRock was called a claimant or assignee in a lot of patents filed by the US Patent Office, such as applications labeled “Investment funds allowing a bond rating scale tactic,” “Framework and tactic for credit risk management for investments,” and “Structure and process for handling credit risk for investment portfolios.”
BlackRock has a range of tangible assets across the globe that are important to the operations that it holds or rents. Its global web of operations, which has sites in Seattle, Singapore, Sydney, and Taipei, spans the Americas, Asia Pacific, Europe, the Middle East, and Africa.
Cost Structure
The growth of BlackRock’s IP rights and web platforms, the upkeep of its IT and telecom networks, the sourcing of expertise, the function of its sales and support system, the application of promotional initiatives, the monitoring of its alliances, and the loyalty of its staff are all costs.
BlackRock Inc. generates revenue through the following key segments:
Investment Advisory, Administration Fees, and Securities Lending: The main revenue source is driven by fees based on assets under management. In FY 2023, this segment generated $14.4 billion.
Investment Advisory Performance Fees: This includes fees collected when investment returns surpass predetermined benchmarks. In FY 2023, this stream brought in $554 million.
Technology Services: BlackRock offers investment management and risk solutions through this segment. It contributed $1.49 billion in revenue for FY 2023.
Distribution Fees: This revenue is derived from the distribution and servicing of various investment products. In FY 2023, it amounted to $1.26 billion.
Advisory and Other Revenue: This segment focuses on advisory services provided to financial institutions and governmental entities. In FY 2023, it accounted for $159 million.
For the full fiscal year of 2023, which ran from January 1 to December 31, BlackRock’s revenue was $17.85 billion.
In the second quarter of 2024, BlackRock reported a record $10.6 trillion in assets under management. During this quarter, total revenue increased by 8% to $4.81 billion, while net income rose to $1.50 billion for the three months ended June 30, compared to $1.37 billion in the same period of 2023.
BlackRock – Investments
BlackRock’s investment portfolio includes a diverse range of companies. Some of its largest equity holdings as of September 2024 are:
Companies
Value Owned
% of Portfolio
Microsoft Corp
$247.60 Billion
5.61%
Nvidia Corporation
$227.22 Billion
5.15%
Apple Inc
$221.20 Billion
5.02%
Amazon Com Inc
$125.36 Billion
2.84%
Meta Platforms Inc
$81.23 Billion
1.84%
Alphabet Inc
$76.70 Billion
1.74%
Alphabet Inc (GOOG)
$65.17 Billion
1.48%
Eli Lilly & Co
$59.62 Billion
1.35%
Broadcom Inc
$54.91 Billion
1.24%
Berkshire Hathaway Inc Del
$43.63 Billion
0.99%
Jpmorgan Chase & Co
$40.19 Billion
0.91%
Tesla Inc
$37.61 Billion
0.85%
Unitedhealth Group Inc
$37.39 Billion
0.85%
Ishares Tr
$36.33 Billion
0.82%
Exxon Mobil Corp
$34.93 Billion
0.79%
Visa Inc
$33.48 Billion
0.76%
Mastercard Incorporated
$30.80 Billion
0.70%
Johnson & Johnson
$28.97 Billion
0.66%
Costco Whsl Corp New
$28.21 Billion
0.64%
Procter And Gamble Co
$26.24 Billion
0.59%
Merck & Co Inc
$25.66 Billion
0.58%
Home Depot Inc
$24.49 Billion
0.56%
BlackRock – Ownership
BlackRock Ownership | Who Owns BlackRock?
BlackRock’s ownership is primarily held by several large institutional investors, including:
The Vanguard Group: A major competitor of BlackRock, founded in 1975, known for its low-cost index funds and ETFs.
Fidelity Investments: Another main competitor, established in 1946 and based in Boston, Massachusetts, Fidelity operates in the investment banking and brokerage sectors.
Franklin Templeton: Founded in 1947 in San Mateo, California, Franklin Templeton is a significant player in the investment banking and asset management industry.
Carlyle Group: Founded in 1987 in Washington, D.C., Carlyle specializes in asset and fund management.
BlackRock’s future plans are centered on continuing to be a leading provider of investment products and services by focusing on key areas:
Sustainable investing: BlackRock is committed to helping its clients achieve their financial goals while also having a positive impact on the environment and society.
Private markets: BlackRock is expanding its private markets business to offer its clients a wider range of investment products and services. It is also seeking direct lending opportunities in India across different sectors, from agriculture to hospitality, as the country’s growing private credit market attracts more borrowers. This approach helps strengthen its position in the global private credit arena.
Technology: BlackRock is investing in technology to improve its investment performance and to better serve its clients.
Additionally, BlackRock is focused on expanding its global reach and presence.
In September 2024, BlackRock joined the Global AI Infrastructure Investment Partnership (GAIIP), alongside Microsoft, NVIDIA, and others, to invest $80-$100 billion in building AI infrastructure. This includes building data centers and sustainable energy plants, starting in the U.S. and expanding globally. An initial $30 billion will come from private equity. BlackRock views this as a major opportunity to drive AI innovation, create jobs, and boost economic growth.
Conclusion
BlackRock has evolved from a small startup into a global conglomerate. This market giant invests across a wide range of sectors and, as a result, holds shares and voting rights in several of Europe’s largest firms, including those in energy, oil and gas, and banking.
The firm also invests in government and central banks, issues public bonds, owns real estate, and serves as both an auditor and advisor, in addition to being a bondholder.
That’s right—BlackRock has grown so successfully and is considered so trustworthy that even governments sometimes request its assistance.
FAQs
What is BlackRock?
BlackRock, Inc. is a global asset management firm founded in 1988. It is the world’s largest asset manager, providing investment, risk management, and advisory services to both retail and corporate clients.
What does BlackRock do?
BlackRock offers a wide range of investment solutions, including single and multi-asset baskets that invest in stocks, fixed-income, options, and money market funds. It utilizes its technology platform, Aladdin, to enhance portfolio management and trading efficiency for clients across global markets.
What is BlackRock net worth?
As of October 2024, the net worth of BlackRock company is $141.03 billion.
Who is the CEO of BlackRock?
Larry Fink is one of the founders and the current CEO of BlackRock.
Who are the competitors of BlackRock?
BlackRock’s top competitors include:
Charles Schwab
Edward Jones
MSCI
Legg Mason
Vanguard
T.Rowe Price
State Street
When was BlackRock founded?
BlackRock was founded in 1988 in New York, United States.
Who are the BlackRock founders?
Larry Fink, Susan Wagner, Robert S. Kapito, Barbara Novick, Ralph Sclosstein, Hugh R. Frater, Ben Golub, and Keith Anderson are the 8 co-founders of BlackRock.
Is BlackRock the richest company in the world?
BlackRock is the world’s largest asset manager, managing over $10.47 trillion in assets under management (AUM) as of October 2024.
Has BlackRock ownership in Tesla?
BlackRock has 5.90% ownership of Tesla.
What is the largest investment of BlackRock?
The largest investments of BlackRock include Apple Inc. and Microsoft, with holdings valued at more than $221.20 billion in Apple and $247.60 billion in Microsoft.
How is BlackRock so powerful?
BlackRock is powerful because it manages a vast amount of assets and uses the Aladdin platform for advanced risk management and investment analysis. This allows it to make informed decisions and stay ahead in the financial market.
What does BlackRock own?
BlackRock’s investments span various sectors, with a prominent focus on technology. Its top holdings include major companies like Microsoft (MSFT), followed by Apple, Amazon, Nvidia, Alphabet (GOOGL), Meta, Alphabet (GOOG), and Tesla.
Who owns BlackRock?
BlackRock’s ownership is primarily held by several large institutional investors, including Vanguard Group, BlackRock Inc., State Street Corporation, Temasek Holdings, and Bank of America Corporation, among others, as of June 2024.
The UPI limit for tax payments has been suggested to be raised from INR 1 lakh to INR 5 lakh by the Reserve Bank of India (RBI). The increase in the cap will allow taxpayers to swiftly settle their increased tax obligations. In most cases, there are no extra fees associated with payments made using UPI. This does not apply when paying taxes using a debit or credit card. There has been a prior instance of the RBI raising the cap. The central bank increased the ceiling on some payments, like those to hospitals and schools, to 5 lakh rupees in December 2023.
There is a limit of up to INR 1 lakh per transaction for conventional UPI, according to NPCI. The maximum transaction limit for certain UPI categories is 2 lakh, while for IPOs and the Retail Direct Scheme, it is 5 lakh. Other categories include Capital Markets, Collections, Insurance, and Foreign Inward Remittances.
The Statement on Development and Regulatory Policies states that UPI has become the most preferred payment method because of its user-friendly characteristics. At this time, INR 1 lakh is the maximum amount that may be transferred using UPI. Periodically, the Reserve Bank reviews and enhances the restrictions for a few categories based on the various use cases. These categories include capital markets, initial public offering subscriptions, loan collections, insurance, medical and educational services, and more. It has been determined to increase the ceiling for tax payments using UPI from INR 1 lakh to INR 5 lakh per transaction since both direct and indirect tax payments are frequent, high-value, and prevalent. “
The Impact of the New Limit on People’s Ability to Pay Taxes
During a fiscal year, a person must pay their income tax, property tax, advance tax, and other related taxes. Depending on one’s income, the tax amount can be higher. It will be easier to pay both direct and indirect taxes with the increased UPI limit.
This is because a user needs an active bank account, a mobile number associated with that account, and an app that supports UPI in order to make a transaction using UPI. After creating a UPI ID, users can pay using the app by inputting a 4- or 6-digit PIN.
Additional UPI Announcements
Not only has the RBI announced the implementation of delegated payments via UPI, but they have also raised the UPI ceiling for tax payments to INR 5 lakh. Delegated UPI payments would enable one user to authorise another user to use their bank account to establish a restriction on UPI transactions, according to the release.
Essentially, this means that one person can grant access to their bank account for UPI payments to another person, for example, a family member. It is believed that this product will increase the penetration and use of digital payments nationwide. Prompt and comprehensive instructions will be sent out soon.
In India, there is hardly anyone who hasn’t heard about LIC. The line ‘Zindagi Ke Saath Bhi, Zindagi Ke Baad Bhi’ is a part of our childhood as well as adulthood. From radio to television, to newspapers, and the internet, it is anywhere and everywhere, and honestly, with its presence on every media platform, it is quite hard to not get noticed.
Life Insurance Corporation owns LIC and comes under the Ministry of Finance. It is India’s biggest life insurance company and has over 70% of the market share.
LIC was founded in the year 1956 and since then has played the role of a constant supporter for most of the people seeking life insurance in India. The importance of life insurance is growing throughout the country.
LIC can grow at a faster rate if the organizational and operational efficiency of LIC can be improved, new kinds of insurance covers are introduced, its services are extended to smaller lesser-known places and the general price level is kept stable. LIC’s assets under management (AUM) have increased by 16.48% year-on-year, reaching INR 51,21,887 crore by the end of March, up from INR 43,97,205 crore at the end of FY23.
Now LIC is not just an insurance company anymore, it has many subsidiaries that serve different sectors. In this article, we will find out about the subsidiaries of LIC. So let’s get started with it.
This subsidiary of LIC was established in the year 1989 and is said to be one of the biggest Housing Finance Companies in the country. They provide long-term financial services to their consumers so that they can purchase or construct their choice of residence. The headquarters is situated in Mumbai and it has over 2103 people working under it as of 2019.
Apart from that, the company also provides finance to the people who want to renovate and repair their residential places. LIC Housing Finance went public in the year 1994 and has over 450 centers across the country. As of 2023, LIC Housing Finance revenue is 200 billion INR.
LIC International
LIC Subsidiary
LIC International
Established
1989
Headquarters
Manama, Bahrain
Revenue
–
LIC Subsidiaries – LIC International
Established in the year 1989 on the 23rd of July in Bahrain, the main objective of this subsidiary of LIC is to provide life insurance to the Indian people living in the GCC countries. As of now, LIC International is operated in four countries, that is Bahrain, Kuwait, Oman, and UAE.
Apart from this, LIC also has a license to sell life insurance to people from any other country in some selected markets. As of 2016, LIC International is said to be a billion-dollar company that ruled the Kingdom of Bahrain for several years. Such is the impact that it has won several awards amongst them, it has won the MEIF 2012 award from the Central Bank of Bahrain.
LIC Cards Services
LIC Subsidiary
LIC Cards Services Limited
Established
2008
Headquarters
New Delhi
Revenue
INR 8.2 trillion (2023)
LIC Subsidiaries – LIC Cards
This subsidiary was established in the year 2008 on the 11th of November. LIC launched its Credit cards in the market. Four different types of credit cards are offered here with some common features and some distinct features that make them unique. It is mainly suited for those who pay a large LIC premium. The cards offer lots of unique features to its users and attract users by providing reward points and cashback.
The headquarters is situated in New Delhi, India, and the total revenue as of the company is INR 8.2 trillion (2023).
The types of LIC cards are:
LIC Gold Credit Cards (for regular users)
LIC Platinum Credit Cards (for shopping and rewards)
LIC Titanium Credit Cards ( for travel and hotel booking)
LIC Signature Credit Card (for premium services)
Fee/Charge
Amount/rate
Finance Charges on Revolving Credit and Cash Advance
3.25% p.m. (46.78% annual)
Free Credit Period
Free Credit Period Up to 50 days
Cash Withdrawal Fee
2.5% of the amount withdrawn (min. Rs. 500)
Cash Payment Fee
Rs. 100
Over Limit Fee
3% of the amount (min. Rs. 500)
Foreign Currency Mark-up Fee
3.5% of the transaction amount
There are certain criteria that the financial institution looks into before accepting your credit card application. Your credit score, age, monthly income, location, etc. are some of the parameters that you should keep in mind before you apply for a credit card. To apply for an LIC credit card, you should be over 18 years old and should either be an LIC agent or an LIC policyholder. The documents required to apply for an LIC credit card are:
Proof of Identity: PAN Card, Aadhaar card, Driver’s License, Passport, Voter’s ID, Overseas Citizen of India Card, Person of Indian Origin Card, Job card issued by NREGA, Letters issued by the UIDAI.
Proof of Address: Aadhaar card, Driver’s License, Passport, Utility Bill not more than 3 months old, Ration Card, Property Registration Document, Person of Indian Origin Card, Bank Account Statement.
Proof of Income: Latest one or 2 salary slips (not more than 3 months old), Latest Form 16, Last 3 months’ bank statement.
LIC Mutual Fund
LIC Subsidiary
LIC Mutual Fund
Established
1989
Headquarters
Mumbai
Revenue
INR 59.88 crore (2022)
LIC Subsidiaries – LIC Mutual Fund
LIC Mutual Fund Ltd. started its journey in April 1989; it is a direct subsidiary of LIC and is one of the premium brands that provide financial security services to its customers. It is said to be managed over INR 15002.38 crore worth of assets. It offers a total 25 numbers of schemes. The Headquarters is situated in Mumbai, India and the company’s revenue was INR 59.88 crore (2022). Dinesh Pangtey is the CEO of LIC Mutual Fund Ltd.
LIC Pension Fund
LIC Subsidiary
LIC Pension Fund
Established
2007
Headquarters
Mumbai
Revenue
–
LIC Subsidiaries – LIC Pension Fund
LIC Pension Fund Limited is India’s first pension fund. Established in the year 2007 on November LIC Pension Fund is the Subsidiary of LIC and is considered India’s first pension fund. This fund is to secure the future related to the finances of the people after their retirement. LIC is one of India’s three public sector pension fund managers and has a one-third share in all investments made through Central and State Government NPS. It is also open to the private sector as a fund manager. LIC Pension Fund is the first Pension Fund Company in India to be incorporated and to receive a commencement of business certificate.
These four schemes are provided by the LIC Pension Fund. There is Jeevan Shanti, LIC Jeevan Akshay-VII, Pradhan Mantri Vaya Vandana Yojana, and Saral pension. Its headquarters is situated in Mumbai, India. Smt. Priti Panwar is the current CEO of LIC Pension Fund Ltd.
The government of India introduced the New Pension System (NPS), with effect from 2004. Pension Fund Regulatory And Development Authority (PFRDA) through a process of competitive bidding, has appointed Life Insurance Corporation (LIC), State Bank of India (SBI), UTI Asset Management Company (UTI –AMC), and as The Pension Fund under the NPS. “NPS-Lite Model” is designed to ensure ultra-low administrative and transactional costs, to make such small investments viable.
National Pension System NPS Lite makes pensions possible for small investors. It is an initiative of the Pension Fund Regulatory and Development Authority (PFRDA), the apex body established by the Government of India to regulate and develop the pension sector in India. NPS extends help to the weaker and economically disadvantaged sections of society with their limited investment potential. This is why PFRDA has launched NPS Lite to specifically target marginal investors and promote small savings during their productive lives. It also aims at building up a corpus sufficient enough to buy an annuity for their old age.
IDBI Bank was established in the year 1964 and has been providing banking and financial services since then. Apart from that, they are constantly offering digital services to their customers and have a wide range of ATM networks all across the country. In 2019, RBI has categorized it as a private bank.
As of September 2023, IDBI Bank has over 18,283 employees working for it and the bank has 2005 branches and 3353 ATMs all across the country as on 26th April 2024. Apart from that, it also has one overseas branch in Dubai. Since 2018, Rakesh Sharma has been the CEO of IDBI Bank.
IDBI Bank Ltd., as a full-service universal bank provides a wide amount of financial products and services encompassing deposits, loan payment services, and investment solutions. The Bank also has an established presence in associated financial sector businesses including capital market, investment banking, and mutual fund business. IDBI’s very business philosophy is to provide relevant financial solutions and ensure maximum customer convenience through easy access to branches and ATMs as well as digital offerings and excellence in customer service.
The vision is to be the most preferred and trusted bank enhancing value for all stakeholders defining and shaping our day-to-day business, helping us to build long-lasting relationships. IDBI Bank Limited has been categorized as a ‘Private Sector Bank’ for regulatory purposes by the Reserve Bank Of India with effect from January 21, 2019, consequent upon Life Insurance Corporation Of India acquiring 49.24% of the total paid-up equity share capital of the bank. To cater to its ever-expanding needs, IDBI Bank has formed subsidiaries and joint ventures across diverse areas of the Banking and Financial System.
Some of its subsidiaries are:
IDBI Subsidiaries
IDBI Capital Markets and Securities Limited (ICMS)
Its businesses include Merchant Banking, Stock Broking, Distribution of Financial Products, Corporate Advisory Services, Debt Arranging and undertaking, Portfolio management of pension, and Research Services.
IDBI Intech Limited (IIL)
The major business activities of the company are Information technology services, information security practices, a national contact center, and an outbound sales team.
IDBI Asset Management Limited (IAML)
IAML is the investment manager of schemes launched by IDBI Mutual Fund. The Fund offers a bouquet of product inequity and risk profiles of investors.
IDBI Trusteeship Services Ltd (ITSL)
The company operations are acting as trustees to securitization transactions, acting as Bond/Debenture trustees, Security trusteeship assignments, Share pledge Trustee, Venture Capital Fund, Safe Keeping, and other trusteeship services.
IDBI Federal Life Insurance Company Limited (IDBI Federal)
The Company’s life insurance business comprises individual life and pension and group life, including non-participating, health, and linked segments.
LIC has established itself as a brand in India, with so many subsidiaries; it has been trying to keep up with its name of being one of the biggest companies in India. It is doing everything, from providing mutual fund services to banking services to pensions as well. LIC is taking every chance to serve its customers in the biggest and best way possible and take the company to the top.
FAQ
When was LIC established?
LIC was established in the year 1956.
Is LIC government or private?
LIC is a government organization and the government of India owns a 100% stake in the insurance company.
What is the subsidiary of LIC?
IDBI Bank, LIC Mutual Fund, LIC Pension Fund, LIC Housing Finance, LIC Cards Services, and LIC International are some of the subsidiaries of LIC.
How many types of Cards does LIC provide?
LIC provides 4 types of cards as below:
LIC Gold Credit Cards (for regular users)
LIC Platinum Credit Cards (for shopping and rewards)
LIC Titanium Credit Cards ( for travel and hotel booking)
Australia ranks among the leading countries for startups worldwide. With a score of 22.45, Australia ranks the 8th best country for startups in 2022. Its physical infrastructure, internal market dynamics, and commercial and legal infrastructure are favorable to the startup environment.
Australia is known for its diversified and technologically advanced economy. Australia continues to encourage the development of several local startups nationally with an international launch. It is also considered one of the quickest countries in the world to start a business. Thus the startup ecosystem in Australia is now one of the fastest-growing globally, with the startup rate being one of the highest in the world.
Venture Capital Fundraising in Australia from 2010 to 2022
As of August 2022, the value of Australian-based venture capital funds was over $539.34 million and around $331.73 million in 2021. With an innovative approach, the startups have gained global market reach taking pride in their “Unicorn” status which is worth more than a billion US dollars. For a more elaborate view, let’s take a look at our favorite startups, piling up more information on each company and its counterparts.
Alex Twigg, Chris Bayliss, David Hornery, Jacqui Colwell, Joseph Healy, Kate Keenan, Mal Hiscock, and Tim Alexander
Founded in
2016
Headquarters
Melbourne, Australia
Industry
Financial services
Total Funding
1.8 billion over 9 funding rounds
Valuation
$970.1 Mn (2022)
Judo Bank Co-founders | Joseph Healy and David Hornery
Judo Bank is an online business bank backed by the SME Guarantee Scheme. With a team of dedicated officials, Judo Bank develops a trustworthy relationship with the proprietors and their SMEs. It provides financial assistance and business loans imperative for each SME. As business is all about striking while the iron is hot, Judo Bank helps SMEs to back their ideas with the funding they need.
Canva
Founders
Melanie Perkins, Cliff Obrecht, and Cameron Adams
Founded in
2013
Headquarters
Sydney, Australia
Industry
Graphic design Software
Total Funding
$572.6 million over 14 funding rounds
Valuation
$26 billion (2022)
Canva Founders | Cliff Obrecht, Melanie Perkins, and Cameron Adams
Canva is the world’s most inclusive graphic design tool that can be used to design and work more seamlessly. Be in logos, web pages, brochures, presentations, social media graphics, business cards, etc. Canva is the most productive digital creator. Available in over 130 languages and on any device, the users can start with one of Canva’s 250,000+ free templates and see where their creativity takes them.
Spaceship
Founder
Kaushik Sen
Founded in
2016
Headquarters
Sydney, Australia
Industry
Fund-investing platform
Total Funding
$54.58 million over 3 funding rounds
Valuation
$360.82 Mn (Jun 2022)
Spaceship Founder Kaushik Sen with Paul Bennetts, Andrew Sellen, and Dave Kuhn
Spaceship is a fund-investing platform designed to help the younger generations to invest in their future. Spaceship offers two portfolios to its customers-Origin and Universe.
Origin is somewhat similar to an index ETF, however, it is not market cap weighted. It invests in 100 Australian and 100 International companies. The minimum fee is 5$. On the contrary, The Universe is more of an active fund. The investment philosophy is based on WWG’s “Where the World is going” principle.
Companies are screened on factors like market cap, future growth potential, management, and even liquidity among other things. The minimum fee is 1$ P/A. With companies such as Amazon, Google, Facebook, and more. Spaceship guides the users to invest in a curated global portfolio.
Uno
Founder
Vincent Turner
Founded in
2016
Headquarters
Surry Hills, New South Wales, Australia
Industry
Financial Services
Total Funding
$36.86 million over 7 funding rounds
Valuation
–
Uno Founder | Vincent Turner
Uno is one of the world’s most authentic platforms that facilitates users with better financial decisions. The best part is that Uno offers online tools to compare loans so that the interest rate does not affect the cost of loans. Whether it is to buy real estate property or to avail of a new loan, Uno can assist with better guidance.
99Designs
Founder
Mark Harbottle
Founded in
2008
Headquarters
Melbourne, Australia
Industry
Design Services
Total Funding
$45 million over 4 funding rounds
Valuation
Acquired by Vista Prints for an undisclosed amount
99designs Founder | Mark Harbottle
99designs is an online platform where you can find designers for clothing and merchandise, art and illustration, packing and labels, magazines, flat-out logos, etc. A bunch of logo designers will throw their hats on their rings and develop various designs based on the specifications you outlined.
However, the whole idea is to have a plethora of options to choose from. The minimum price is $299. Besides collecting briefs from customers online, 99designs offers the services of its community of professional designers to deliver the client’s requirements at the earliest.
Go1
Founder & CEO
Andrew Barnes
Founded in
2015
Headquarters
Brisbane, Queensland, Australia
Industry
E-Learning Providers
Total Funding
$373.25 million over 10 funding rounds
Valuation
$2 Bn+ (2022)
Go1 Founder & CEO | Andrew Barnes
Go1 is one of the most dedicated platforms wherein companies get curated training courses from the world’s skilled training institutions for their employees. It is easily accessible and is one of the ruling eLearning library learning and education that has been famed across countries such as Australia, the United States, South Africa, Vietnam, the United Kingdom, and Malaysia.
Lendi
Founder
Martin Lam
Founded in
2016
Headquarters
Sydney, New South Wales, Australia
Industry
Financial Services
Total Funding
$57.38 million over 4 funding rounds
Valuation
–
Lendi Founder | Martin Lam
Lendi is one of the most reliable online platforms for home loans. Here, users are allowed to choose home loans freely from more than 25 major lenders. Facilitating the acquisition of houses and refinance loans, Lendi thereby negotiates better loans for its users and also empowers them through its online tools and a team of experts.
Power Ledger
Founders
Dr. Jemma Green and John Bulich
Founded in
2016
Headquarters
Perth, Western Australia, Australia
Industry
Software Development
Total Funding
$35 million over 2 funding rounds
Valuation
$57 Mn (2022)
Power Ledger Founder | Dr. Jemma Green
Power Ledger is a tech company that has developed a blockchain-enabled renewable energy trading platform. With market abilities, the company has built a series of products to enable energy trading, renewable asset financing, and moving efficient carbon and renewable carbon credits transactions.
Assembly Payments
Founder and CTO
Simon Jones
Founded in
2013
Headquarters
Victoria, Australia
Industry
Technology, Information, and the Internet
Total Funding
$12.25 million over 8 funding rounds
Valuation
–
Assembly Payments Key People
Assembly Payments is a complete payment gateway that helps businesses manage payment workflows and move funds without any delay. Perhaps it is the perfect way to capture credit cards without a lot of coding on the user’s side. However, Assembly is committed to going beyond excellence to deliver a highly secure system, that meets regulatory standards.
Employment Hero
Founder and CEO
Ben Thompson
Founded in
2014
Headquarters
Sydney, New South Wales, Australia
Industry
Human Resources Services
Total Funding
$290.93 million over 7 funding rounds
Valuation
$837.45 Mn(2022)
Employment Hero Founder & CEO | Ben Thompson
Employment Hero is the best HR software that Australia has to offer. With Employment Hero, SMEs can easily manage HR payroll, employee engagement, and benefits. Along with a team of experts, it has a wide range of products and services lining up for hassle-free compliance with minimum paper works and delivers better employee allowances.
Conclusion
The economy of Australia is growing by leaps and bounds with the technological advancements of its rising startups. While some are fast-moving for completion, others are balls against walls, however, predominantly focused to become the next market leaders.
The series of startups focusing on and winning economic dynamism implies several industries and businesses, but the importance of tech startups is limpid, as enormous companies are either cloud-based platforms or software-based. From professional forums to Financial Technology and from e-commerce to Artificial Intelligence (AI), Australia is no easy feat.
FAQs
What industries are booming in Australia?
Manufacturing Industry, Healthcare Industry, Energy Industry, Food Industry, and Technology Industry.
How many startups fail in Australia?
20% of businesses fail in their first year in Australia.
What is the biggest industry in Australia?
Consumer Goods Retailing in Australia is one of the biggest industries in Australia.
Which country has the most startups?
The United States has the most startups, i.e. more than 70,000 active startups. With a total score of 195.37, the US was by far the best country for startups in 2022.
Archaeological evidence from the era of 2000 BCE shows the beginning of the banking system with the first prototype that engaged in giving grain loans to farmers and traders. It also proves that money-lending was also an activity carried out in India and China as well. The historical roots of modern banking can be traced to medieval and renaissance Italy.
“Banking is defined as the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to conduct economic activities such as making a profit or simply covering operating expenses.”
The primary role of a bank is to take in money, called deposits, pool them, and lend them to those who need funds. In essence, banks are intermediaries between depositors and borrowers.
A Short History
At the time, India won independence, and the major banks of the country were privately run. This created a potential problem as people from rural areas were dependent on money lenders for financial assistance.
With an aim to resolve this issue, the government decided to nationalize these banks. Between 1969 and 1991, twenty banks, whose national deposits were more than Rs. 50 crores, were nationalized. The banks that were nationalized include the Bank of Baroda, Bank of India, Central Bank of India, Punjab National Bank, Oriental Bank of Commerce, UCO Bank, Union Bank of India, and many others. Also, the State Bank of India was formed in 1955.
The Impact of Nationalization
There were many other reasons and considerations behind the government’s decision to nationalize banks.
It led to an increase in funds and helped raise the economy of the country.
It increased the efficiency of the banks.
It helped boost the rural and agricultural sectors of the country.
It helped boost employment.
The profit of the banks was used by the government for the betterment of the citizens.
Competition decreased leading to increased efficiency.
Liberalization – 1991 Till Date
This was one of the biggest developments in the Banking sector. RBI gave licenses to 10 private sector banks to establish themselves in the country. These include ICICI Bank, HDFC Bank, Axis Bank, and IDBI Bank.
This introduced a new era of the Banking model. As technology advanced so did the banking model evolve.
Evolution of the Banking Model – A comparison
Indian Banking Growth
Until the 1990s, the banking sector in India had adopted the traditional means of banking and maintaining records manually. However, with the financial reforms since 1993, the Indian banking sector had to accept computerization in order to cope with the increasing overload and incompatibility of the manual system to sustain further growth.
In 1993, the employees’ association of the Indian banks (IBA) contracted an agreement with the bank manager about the introduction of computerized applications in banks. This agreement was the major breakthrough in the introduction of computerized applications and the development of communication networks in banks.
Once the technology was introduced into the banking sector, it saw unprecedented growth and advancement. Traditional means of banking were rapidly replaced by e-banking options –
ATMs (Automated Teller Machines)
Automated Teller Machines (ATMs) or 24-hour Tellers are electronic terminals that allow banking activities almost anytime. To withdraw cash, make deposits, or transfer funds between accounts, an ATM card / Debit card is utilized. It offers a host of functions –
Cash Withdrawals
Balance inquiry
Mini Statements for accounts
Cheque or Cash Deposit facility
Funds Transfer
Payments
Telephone Banking
Telephone banking is a service provided by a bank or a financial institution, enabling customers to perform various financial transactions without the need to visit a bank branch or ATM. These transactions do not involve cash or financial instruments such as cheques. Banks have upgraded their phone banking services enabling customers to avail of a whole host of services with the help of a Voice Response System (VRS)
Check account balance and statement information.
Transfer funds between accounts.
Payment of bills like utility, credit cards, mobile, etc.
Request cheque book or account statements.
Demand Draft request.
Mobile Banking
Mobile Banking refers to the provision and availability of banking and financial services with the help of mobile telecommunication devices. Mobile banking facility is offered by most major banks in India. This has made banking transactions easy and hassle-free. Customers can use mobile banking to view their account balance, make instant fund transfers and pay bills, etc. There are various types of mobile banking services i.e., SMS, USSD, and mobile apps. Some of the banks have incorporated services like loan approval and linking of insurance policy in their mobile banking apps.
Access to Account Information.
e-statement of account.
Loan statements.
Card statements.
Third-Party Money Transfers.
Payments via NEFT/IMPS/RETG/UPI/MMID.
Investments in various financial tools.
Opening fixed deposit/recurring deposits.
Portfolio management services.
Online Banking
Also known as Internet banking or web banking allows a user to conduct financial transactions via the Internet. It offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments. The most prominent advantages of online banking are:
24/7 access and account service.
Speed and efficiency.
Online bill payments.
Cost-effective for banks.
Other services
The nature of banking services has evolved in the last 5 decades. Banks have also expanded their services to include various other peripheral services apart from traditional banking services.
– Investment Options:
Banks offer their own investment plans with a SIP option or one-time investment options which are, typically, stock market-related options.
– Insurance Options:
Banks have added a whole host of insurance options that they offer. Some options they offer are car insurance, house insurance, travel insurance, unit-linked life insurance policies, etc.
The Risks Attached
With advancements also come risks. The digitization of banks carries the same risks associated with the online internet world. There are security threats, privacy invasions, virus attacks, phishing scams, technological issues, money laundering risks, and many others.
Of course, there are actions that can be taken by both the customer and the bank itself to minimize the threats but they can never be completely eliminated. Banks, in particular, must adopt a robust security plan and keep it upgraded at all times to protect the confidentiality of data.
What Does The Future Hold
The mobile and the wireless market has been one of the fastest-growing markets in the world. The arrival of technology and the escalating use of mobile and smartphone devices have given the banking industry a new platform. Connecting a customer anytime and anywhere to their money and needs is a must-have service that has become an unstoppable necessity. This worldwide communication is leading a new generation of solid banking relationships.
At the pace at which technology is evolving, there is no way to know how the banking system will further evolve. The only certainty is that it will become more accessible and friendlier. It will grow to encompass other options and services for the benefit of its customers.
FAQs
What are the recent changes in the banking system?
A recent change in the banking sector is the emergence of e-banking, which is crucial in offering better services to clients.
What is the difference between traditional and modern banking?
Traditional banking requires you to go to a physical bank branch in order to access your account. However modern banking, allows you to conduct transactions from anywhere with an internet connection.
What was the aim behind the nationalization of banks?
The aim was to encourage businesses in order to serve better the needs of the country’s economy.
Which was the first nationalized bank?
The first bank in India to be nationalized was the Reserve Bank of India.
Covid-19 shook the economies of the whole world. Not just the countries that are developed suffer but also the countries that are developing and are already poor. This shock was instant and the world market crashed as soon as the pandemic hit the world.
Businesses all over the world that did not have stability got dissolved in the storm and the remaining were absorbed by big businesses. From that time to the current time, all efforts have been to revive the market. There was a lack of funds all over the world, which the government and businesses tried to fill.
As the Covid-19 pandemic curve flattened, and the markets got to their normal workings, the world saw a sign of relief. Then, Russia attacked Ukraine and we all witnessed another unstable time.
All of that happened in the past two years and all that was balanced by the efforts of some entrepreneurs all over the world. Money was an important asset in these times. Banks worked overtime to get money into the hands of people. Many banks’ growth staggered due to the implementation of no work in the sector. Since then every bank has been trying to cope with all the unemployment and money problems in the market.
In recent news one of the most popular banks in India decided to merge itself with another entity to gain more power. The bank was none other than HDFC bank, which is among the biggest banks in the economy. This article tries to cover everything about the news on the HDFC merger with another HDFC entity. Let us see in close detail what the news meant in this case.
HDFC bank limited is an Indian private banking company that deals in all sorts of financial services. It is headquartered in Mumbai. HDFC Bank is India’s largest private bank in terms of assets. HDFC bank is also the tenth largest bank in the world in terms of market capitalization as of April 2021.
It is also the fifteenth largest employer in a country as big as India which nearly employs 120,000 employees. It is also the third-largest company by market capitalization ($122.50) billion on the Indian stock exchanges. All and all, HDFC is a big deal in the Indian economy market.
HDFC Merger with HDFC Bank
The HDFC-HDFC merge was announced on 04-Apr-2022.
The news that shook the market for two days in a row now is about HDFC bank. The HDFC bank has announced a merger with the HDFC. This merger of two big organizations will be the biggest in Indian corporate history.
After the amalgamation, the parent company (Housing finance company) will merge with the banking arm of the company, which is HDFC Bank.
The rumors of this merger happening have been recorded for a long time now. The merger has been speculated to happen in the year 2014. Thus, we can see that the deal that turned into the news yesterday has been in working progress for many years.
The agreement on the merger has moreover mentioned that the parent company of HDFC, that is HDFC will sell some proportion of its loans to the bank every quarter. For the HDFC bank, this was previously the only touchpoint to home loans.
The parent company works in the complementary business of the home loan business and the bank arm works as a lending bank for the public. Both entities will now work together to make more sense of the business that they are into.
What Took HDFC So Long to Merge With HDFC Bank?
For the most notable past, national housing banks were regulated by HDFC. HDFC or the housing finance companies were the regulating bodies for all these sorts of banks and they had easier Norms and rules and regulations to follow, which made managing these corporate entities easier to handle and manage.
As time went by and bad loans accumulated and several other events debunked the housing finance sector, things changed. With the collapse of the DHFL and the fall of other lenders and mortgage providers like Reliance housing finance, the Reserve Bank of India came to the rescue. The RBI took over control and started to impose strict guidelines for the whole housing finance sector.
It was easy for a company like HDFC to manage itself but now, as the norms changed, it was becoming heavier to manage such a big organization. Thus, they thought to merge the HDFC limited and the private lending arm. The merger has its benefits like,
Statutory liquidity ratio
The adequate cash reserve ratio
Compliance with priority sector lending norms
The reason for the time that it took to merge both these organizations was the size of their books. HDFC limited and the bank’s book was huge and it was difficult to plan the merger which took time.
There was also some speculation about the person who will guide the merging body. It was long in the works and it finally is seen to have settled a little. There will be many benefits from the merger like the cost of capital is going to be lower due to the synergy with which the company will operate.
Another good aspect is that interest rates will be low they will be the lowest as compared to some past decades. As the companies, HDFC and HDFC bank have a large stock of liquid assets in their inventory, they will provide a good financial backbone to both entities.
Benefits of the HDFC and HDFC Bank Merger
The news was not enough to set up the theme of reason. Here we will be listing the benefits that the bank will be seeing in the future and the reason why they are looking positively for a merger in the home loan and the bank of the same parent organization. Let us see how the merger is going to be beneficial and the normal benefits of a merger first.
Safety and Profitability
A merger can be very beneficial and it can secure the resulting organization to a great extent which ensures safety and profitability. A merger lets the existing shareholders reorganize the shares of the entity and make a better arrangement for the resulting entity.
Stronger Entity
Another reason for a merger can be that the resources of both the companies and entities add on and they become stronger as an entity. Many companies also enter into a merger or amalgamation to enter new markets to diversify their portfolio of products which will enhance the profitability and profit-making capability of the company.
Other ways companies want a merger is to get some assets from other companies which would have taken much time to buy or set up in their organization.
Taxes
Merging with another company also helps many times, saving tax by lowering the tax liability that is generated for every company. A merger can also be used to eliminate competition between two entities that work in the same sector of products and are fierce in their quality controls department.
By the way, companies like these can work towards the same goal of profitability with more strong arms and assets. This merger will also help in better planning and utilization of all the financial resources that both the companies entail.
The HDFC amalgamation has a lot to do with these above-listed benefits. Apart from the benefits listed above, this merger will have more unsaid benefits like,
Benefit to Investors
The amalgamation between the parent organization and the banking division or arm is going to persuade more investors to stay invested in this joint venture. This move of merging will provide synergy to both the individual entities and will help foreign investors give more abundance to invest into.
High EPS
The merger or the amalgamation will also help in increasing the EPS of the bank. EPS here refers to earnings per share and is a financial metric to judge a company. In normal circumstances, a company with a high earning per share is considered more investing worthy than a company with a low earning per share (EPS).
Stock Price
Another small-term benefit for both entities was that the stock of both companies rocked on the stock market. The stock of HDFC bank closed at a 10 percent higher rate, which valued the private commercial bank at a valuation of 9.2 lakh crore. On the other hand, the stock of HDFC which is a housing finance company rose about 9.2 percent and landed the company at a valuation of almost 5 lakh crores.
HDFC Bank and HDFC Limited Share Price
These were some of the most noticeable benefits that Both the merging companies will get if they work in synergy. After the IL&FS crisis, that happened in 2018, the apex bank of India, that is the Reserve Bank of India has been forcing NBFCs or Non-Banking financial institutions to be more of a bank.
According to the rules of the Reserve bank of India, they are mandated to set aside a good chunk of money as reserves to ensure precaution against thefts and frauds. This made managing NBFCs a little harder and more challenging.
HDFC Chairman Deepak Parekh admitted that the bank-like regulations for NBFCs were the final nudge for the merger and it was the core point that triggered this big sort of a merger between the parent organization of HDFC and the private lending arm of HDFC.
HDFC chairman Deepak Parekh said shareholders of HDFC will get 42 shares of HDFC Bank for every 25 shares held. HDFC’s 26% stake in HDFC Bank will be extinguished as per the terms of the merger. HDFC Bank will be 100% owned by public shareholders, with existing shareholders of HDFC Ltd owning 41%.
“Change is inevitable, but is welcome when it is beneficial to all the stakeholders. The merger not only makes the combined entity strong enough to counter competition but makes the mortgage offering more competitive,” said Parekh.
All these reasons enlist the core set of reasons which led HDFC to merge with its private lending arm HDFC bank and is set to become the biggest merger in the history of Indian corporate history.
The current status of HDFC is worth a watch. The private lender department or the HDFC bank’s loan book now stands at about 12 lakh crore. One of the current goals of the banking arm is to naturally jump to 18 lakh crore and this is not an easy task.
The merger will help in adding resources, both financial and synergic. This task will involve some tight arrangements between profitability, asset quality, and the growth of the organization.
This is another benefit that is often unlisted in this famous merger. Roping in the parent organization of HDFC will help the banking arm get some relief from the tight arrangements of its books. It will be an easier and more economical option for the entity.
Another aspect of the merger can be seen in the private loan lender participant in the amalgamation. The bank, whose total value of home loans stands up at about 11 percent, will jump and magnify to 33 percent.
The other effect of the merger will be that it will make HDFC bank the second largest bank in India. It is a great feat for a private lender like HDFC and is further expected to increase the value of the lender. While the space between the HDFC Bank and State Bank of India would be around 6 to 7 lakh crore.
ICICI Bank on the other hand would be a distant third in the order, that too with a gap of over ₹10 lakh crore. Thus, the position of the HDFC Bank is quite sure to get better.
“Change is inevitable but is welcome when it is beneficial to all the stakeholders. The merger not only makes the combined entity strong enough to counter competition but makes the mortgage offering more competitive,” said Deepak Parekh who is the current HDFC Chairman.
Over the years, HDFC Bank has outgrown its parent both in terms of valuation as well as asset size. “The proposed merger will benefit the economy in many ways. A larger balance sheet and a larger capital base will allow a greater flow of credit into the economy,” said Parekh.
If we look at the Definitive data, it will mark the largest banking sector M&A globally since April 2007. S&P Global Ratings said the deal would create an entity twice the size of ICICI Bank.
Impact on HDFC Mutual Funds
Before the merger, HDFC limited and the HDFC bank had about 5.66 percent and 8.43 percent share in the Nifty 50 which was a big anchor for both organizations. Now, after the merger, their combined efforts of merging the organizations into one single entity have resulted in a share of 14 percent in Nifty 50.
However, a rule states that exposure for a single stock cannot exceed the 10 percent cap in a mutual fund scheme portfolio, and this merger as we can see breaks the limit.
As a result, mutual funds may have to remain underweight on the stock and that will lead to its repercussions. One of the repercussions is that the fund managers will not be able to benefit from the outperformance of the merger, which can turn out to be a dealbreaker for many managers.
Unless the weight of the stock lies under the cap of 10 percent, according to the rule, these mutual funds are expected to underperform the market.
Swap Ratio of HDFC
What is the swap ratio? The meaning is hidden in the words given above. Swap means to take part in the exchange for something. More formally, a swap ratio is a ratio, which is the exchange rate of the shares of the company that goes and forms a merger. This ratio is calculated by the valuation of various assets and liabilities of the merging companies.
In the case of the HDFC parent organization and the HDFC Bank, the swap ratio will be somewhat tricky. The merger has a lot of complexity and it was speculated to be in process for about a decade now.
First, the regulatory body will have to give a nod to the HDFC group to set the merger in a running state. After that, the process could take about 14 to 18 months and with this data, the merger process is expected to be complete by the end of the financial year 2021.
The swap ratio will look like this, 1:1.68. That can be interpreted as, for every twenty-five shares held in the HDFC limited (the parent organization), Forty-two shares of the bank will be allotted.
Cost Optimisation of HDFC
One of the major benefits of a merger is cost optimization. In this scene, it is expected that the cost will be optimized, but in the long run. As two big organizations join hands to operate in synergy or harmony, costs are mostly expected to go down.
This is also expected in the HDFC case too. However, as the organizations are big and strong, cost optimizations will happen in the long term. It will take some time for the cost optimization to show and reflect.
Some experts are also speculating that if the merger worked in a short span and got established, it will be a drag on the HDFC bank. It means that if the merger is established and started working together by the end of the financial year 2025, then it will drag the costs of HDFC Bank.
The cost of statutory reserves is increasing and the home loan segment is not too strong in the short period. As both are getting merged, they are expected to generate a net interest margin of four percent. HDFCs bank books might not look good in the initial years of operations, as the merger turns out fresh but it is expected to benefit in the long term.
So what will be the result of the merger? The answer is hard to say, as we should try to look long term but we can see what the results will be in the short term of time. The stakeholders or the investors of HDFC limited will get shares of the HDFC bank.
This is good news for all the investors of HDFC Limited as they will get shares of HDFC bank, and it is a good deal overall. All these are the result of mergers happening in two big entities in India, HDFC limited and the private banking arm of the same organization, HDFC Bank.
This merger is said to be the biggest merger in the history of corporate mergers in India. It will be a benefit to both the participating organizations, HDFC limited and the HDFC bank. In these times of uncertainty, mergers like these can be a big relief to the economy.
FAQs
Which bank is merging with HDFC Bank?
HDFC Ltd is merging with HDFC Bank.
When did the HDFC merger start?
The HDFC merger was started officially on April 04 2022 by the announcement made public by the officials.
Who is the founder of HDFC bank?
HDFC Bank was founded back in 1977 by entrepreneur Hasmukhbhai Parekh.
What happens after the HDFC merger?
There will be many changes noted after the merger of HDFC-HDFC bank. Changes like investors of HDFC Limited will get 41 percent shares in the merged bank. On the other hand, the shareholders of HDFC Bank will get access to the loan department of the company.
In the past few years, cases of many banking frauds have been gripping attention. Take the cases of these billionaire entrepreneurs like Vijay Mallya, Nirav Modi, and Lalit Modi, to name a few.
When most of the investors thought that the economy would be retained and business will run like usual, the Indian economy seems to have been hit again by another corporate bandit. We are talking about what is known to be the biggest scam in Indian History – the DHFL scam after the ABG Shipyard fraud case of Rs 20,000 crore.
Headquartered in Mumbai in the year 1984, the multinational housing corporation DHFL was founded with the idea to allow economical housing loans to lower and middle-income families in semi-urban and rural areas of India.
The DHFL stands for Dewan Housing Financial Limited, a well-known non-banking financial service provider in India and also the biggest in the sector it operates.
The Reveal of the DHFL Scam
All the tension started to begin for DHFL when the Central Bureau of Investigation (CBI) charged them and others for duping a sum of Rs 34,615 crores. There are about 17 banks that have been tricked by home loan provider DHFL. Former CMD Kapil Wadhawan and director Dheeraj Wadhawan are among 13 others who have been booked in connection with the case.
Kapil Wadhawan
Let us go through the following points to know the story behind the biggest case probed by the CBI.
The not-so-famous media house, ‘Cobrapost’ were the first one to reveal such shocking evidence against the DHFL company. They published an article citing the fraudulent activities carried out by the renowned housing finance company.
They revealed that DHFL has been using the loan money for its benefit by buying personal assets like properties and lands. However, to gain confidence in the eyes of the public, DHFL filed a response with the Bombay Stock Exchange stating there is no proper weightage to the allegations raised by the journalist group and that it was an act of causing damage to the reputation of the company.
To make the most out of these ‘false claims’ DHFL hosted conferences by inviting several investors/analysts to clarify that the Rs 31,000 crore loan is taken for an upcoming project.
The matters got off-hand when recently the CBI booked former promoters of the DHFL group for defrauding 17 banks in an amount of Rs 34,615 crore.
DHFL has borrowed a total of Rs 42,000 crore loans from banks like State Bank of India, and Bank of Baroda and the highest being borrowed from Union Bank of India (UBI), out of which DHFL has not paid a sum of Rs 36,000 crore. The UBI (Union Bank of India) has asked one of the leading providers of risk, financial, and corporate governance, KPMG to look into this matter.
They have been accused of syphoning off the money to their other companies or Shell companies to buy assets at a cost of public sector lenders.
The rating agencies downgraded the rating score on commercial paper after the company defaulted on debt payments. It was during this time when rating agencies involving ICRA and Crisil demoted DHFL’s worth of Rs 850 crore on commercial paper to ‘default’ from ‘A4’ because it had a mortgage lender’s deteriorating liquidity condition.
Breakdown of the DHFL Scam
The Resolution Plan
DHFL tried to make an impression in front of the investors that they would be repaying them the full amount. They devised a resolution plan that transformed its debt into equity and moved to the court in the hopes that it would influence their plan.
Raid by ED
Following the court case, DHFL couldn’t remain safe as they were raided by none other than the Enforcement Directorate itself. The ED made claims that they found several linkages to money laundering. This money has been used for their advantage, which was intimately associated with the company’s promoters, especially Dheeraj Wadhawan. They also found that this loan money was also linked to the criminal organisation, Dawood Ibrahim.
Removal of Board of Directors
By this time, DHFL had no longer had power and control and was bankrupted due to which the Central Bank of India decided to remove its board of supervisors and managers. The decision took place under Section 45-IE (I) of the Reserve Bank of India Act, 1934.
First Arrest of Kapil Wadhawan
This created sensational news when the promoter of the DHFL, Kapil Wadhawan was arrested under the Prevention of Money Laundering Act (PMLA). The ED had found out that his firm was allegedly involved in providing loans to the criminal association of Dawood Ibrahim.
Charge Against DHFL
Recently, the CBI finally booked DHFL and 13 others related to this case for swindling 17 banks of Rs 34,615 crore. They are undergoing investigation by both the CBI and the ED. The ED has stated that Yes Bank is also involved in this scam.
Scams like this can prove to cause huge damage to Indian investors. What can we learn from this is just that we need to have strong and stringent banking laws and policies. The country can only hope to see strict business and financial advisory groups without corrupted intentions.
It is quite evident from the above-mentioned facts the DHFL scam remains the biggest scam to date. The case is still undergoing, and we can only wait for the judgment to come out.
FAQs
Is the DHFL scam true?
Yes the DHFL financial scam is termed one of the biggest scams in the banking industry.
What is the DHFL scam?
DHFL has been charged for defrauding a total of 17 banks of over Rs 34,000 crore.
After the liberalization, banks are forced to adopt various banking services and change their approach toward customers in the competitive world. As we are in a modern era, where e-banking is a prevalent method of accessing your finance.
We know the level of security, as well as scams in banking, is tantamount. Especially, in this pandemic, many people have encountered a large number of complaints regarding fraudulent acts through online transactions.
Even in the case of Blockchain having a strong security base, it faces a lot of hackers, for instance taking the biggest hack of $600 million in 2021, which impacted a bad phrase for many investors.
Bank frauds are not similar to online malware, we could see many surveillance videos of robbers entering the premises and stealing money in the open air. So, fraudulent acts via banking are a common issue we face, even after imposing tight security. Here, in this article, you could see the top bank frauds we are facing in 2022.
Phishing is illicit conduct in which an attacker attempts to get access to a user’s website by sending spam messages in the hopes of tricking the victim into divulging sensitive information. Phishing can be carried out by sending fraudulent messages or installing harmful software on the user’s computer, such as Ransomware.
Phishing scam example
Furthermore, link manipulation is a Phishing tactic that involves creating misspelt links and URLs. As you see, you will receive plenty of emails saying ‘click the below link to download the software that ultimately leads you to a fraud platform.
2. Pharming Scams
Pharming is currently one of the most common cybercrime attacks in the world. Pharming, on the other hand, is the act of sending users to a malicious website or damaging the computer’s DNS server software. To put it another way, pharming is similar to phishing but does not involve tricking consumers into participating in the scheme.
In companies that host e-commerce and online banking services, it’s practically universal. The phrase “pharming” refers to the process of cultivating and obtaining confidential information from users.
It is a computer slang term for “farming.” Pharming is the use of DNS (Domain Name Server) software on a computer to alter the IP address of a legitimate website to one that is malicious. Finally, the user is redirected to a possibly dangerous website.
3. Technical Support Scam
Those who are accessing online banking consider the Technical support team as their last resort. where the victim customer shares their problems regarding technical to the technical team with the hope of solving it, thinking that you are conversing with the right staff, But You are not!.
This type of fraud occurs through social engineering, where the fraudster enables your personal computer and can gain confidential information.
4. Spoofing
Spoofing is a cunning form of fraud in which the fraudster convinces you that they are coming from reliable sources. For example, you may receive a call, email, or SMS from a trustworthy source stating that “Antivirus ware will remove the virus from your device by downloading an anti-malware link given below,” prompting you to click on the link, which will take you to another illegal website, potentially exposing your personal and financial information to the suspect.
5. SIM Swap Frauds
This scam is vulnerable to those who access anything on the internet with their phone numbers. As a result, scammers will easily activate a fake SIM card under the authentic users for fraudulent activities. On the whole, your phone number is the scammer’s as well.
One of the important elements of this scam is ‘two-factor authentication, where the OTPs (One-Time Password) that are sent to your phone number will be received by the scammers.
With enough data being collected from the users, the scammers will claim the users’ SIM cards from the mobile service under the excuse of being lost or broken. Consequently, the users’ SIM or phone number will be under the scammers’ control.
6. Skimming
Skimming is a common scam and crime in several parts of the world. This is an increasingly often happening scam especially in public places, like ATMs, Point-of-Sale, and fuel pumps.
Skimming Scam
This scam occurs when devices are illegally installed in public places. The result of this scam includes using the users’ data to create debit and credit cards under their name and then stealing the victims’ money.
The most common scam under Skimming is Fuel Pump, where the scamming prop is hidden inside the wiring. Meanwhile, unbeknownst to the users, the data will be transferred to the scammers’ storage within seconds.
7. Vishing
Vishing is also known as voice phishing. It is nothing but scam centers calling potential users to deceive money smartly. Telephone fraud involves tricking people into giving money or disclosing personal information when they answer the call.
The perpetrator of a vishing scam often pretends to be a member of a trusted company, institution, or government agency. Believing the credibility, the unwary victims are sometimes tricked into taking the impression that their computers are being infected and needed to install anti-virus software.
As a consequence, scammers will get into their software and extract data for their swindling endeavours.
8. Mobile Scams
As the name speaks, mobile scams are a range of scams that involve smartphones. Moreover, in this era of digitalization, everything from start to end is digitalized. Similarly, the scam is also digitalized. The above-listed scams- Mobile phone virus scams, SMS phishing, Voice mail scams, and One-ring scam are all part of mobile scams.
This type of scam is not rare or uncommon, it can take place anytime and anywhere, unless and until the user doesn’t hold a phone. Furthermore, this digital age has made this scam even more happening, since all our data including bank details, emails, and other credentials are associated with our phones.
In this way, the scammers will be capable of accessing the victims’ data through their smartphones effortlessly.
Conclusion
Scamming has become a day-to-day crime in this technological age. According to the reports, half of the bank scams are done through smartphones. However, it can be avoided by taking proper precautions and not unnecessarily accessing sensitive information with the mobile phone.
As we all know, our bank accounts are linked to our mobile numbers followed by a ‘two-factor authentication’ feature, so it is quite uncertain to find the real scammer behind all the bank scams.
On the other hand, the only solution to dodge bank scams is to always contact the administrator of the respective bank irrespective of the caller, who has asked for your information via phone.
FAQs
What are some of the common bank frauds in India?
Phishing, Pharming Scams, Technical Support Scams, Spoofing, SIM Swap Frauds, Skimming, Vishing, and Mobile Scams are some of the common bank frauds in India.
What is bank fraud in India?
Bank fraud is when a person illegally obtains money from the depositors possessing as the bank
The world we live in is called digital for a reason, from Artificial Intelligence to social media; everything is possible because of Technological Advancement. These technologies have created such a way that there is hardly anyone who is not connected to them.
With new technologies getting invented every day, digital means of payment have become the new normal in this decade. Now, banking is a very significant part of our life. Thanks to banking we are enabled to have our money saved in a bank account and it provides safety to that amount. Plus we get our salary credited there. Not only that, banks also lent money to individuals and businesses.
A couple of years ago, using a virtual bank seemed like a scene from a sci-fi movie but now, it’s a reality. The definition of payment has changed; with the help of technology transferring money from one account to another is possible through the internet itself. Thus, the way of banking has also changed; we can get the facility of a bank without a requirement of one. In India, Fintech platforms are now setting their eyes on a certain industry and that is called the Neobanks.
“Banking is Necessary, Banks are Not.”
― Bill Gates
In this article we will find out about the Neobank industry in India and its future, So let’s dive in.
Neobank is a bank that is digital and doesn’t have any branches physically. It is completely online and they entirely focus on providing every facility of a bank like money transfers, financial solutions, and money lending through mobile phones.
In India, Neobanks doesn’t own bank licenses and hence rely on bank partners for providing banking services to its customers.
With the increase in the process of online banking and the acceptance of digital payments, Neobank is becoming a new trend in the country. These new-age banks provide good customer service and are very much customer-centric. Neobanks strive to offer a personalized banking experience to their customers based on analysis of customer data and behavior.
Being fully digital, Neobanks saves the costs of maintaining physical branches which lets them invest more in enhancing customer experience, and helps them maintain better margins.
Not just retail customers, Neobanks also has a lot on offer for small and medium businesses. From payment gateways to billing software, Neo Banks helps businesses manage their finances better.
Advantages Of Neobanking
People prefer Neobanking for various reasons. Some significant advantages of neo bank are –
Creating an account in neobank is much easier than creating a physical bank account. Just following some simple steps one can create their account from anywhere and anytime through their mobile.
International payments are possible through neobank card, while a traditional bank debit card doesn’t provide that service initially, we have to request an international debit card for global transactions.
Neobanks are user-friendly and are designed to fulfill the demands of the customers. Neobank apps are very easy to use for customers
Every transaction made through Neobanks is updated immediately on the app.
Covid-19 played a huge role in intensifying the digital banking methods amongst the customers. As per Statista, the number of users in the Indian Neobanking segment is expected to grow to 17.11 million by 2026. The increasing popularity has caused an increased number of neobanks in the country. Currently, there are around 27 neobanks in India. We have listed below the top 5 Neobanks of India.
It is considered one of the largest neo banking platforms. From small to big businesses and individuals enjoy Instantpay’s neobank service. Founded by Shailendra Agarwal, this neobank process millions of transaction per day. It is easy to use and can be operated from mobile and the web. Instantpay’s partners are ICICI Bank, Axis Bank, IndusInd Bank, and Yes Bank.
FamPay
FamPay Website
This neo banking app is specially made for teenagers. Of course, supervision from their guardians is to be done. Their main aim is to make teenagers empowered and independent by encouraging them to make decisions regarding their spending. Fampay offers a numberless prepaid card that lets teenagers and minors make payments both online and offline.
This app is founded by Kush Taneja and Sambhav Jain in the year 2019 and is used for basic payment for Zomato, Netflix, Swiggy Amazon, and many more. Its banking partner is IDFC Bank.
Jupiter
Jupiter Website
This neobank service was founded in the year 2019 by Jitendra Gupta and Vishnu Jerome. This neobank provides the customer with an option to monitor their money spending pattern and doesn’t have any hidden fees. It does have a calculator that lets the customers watch on their financial health. Plus it gives out lots of rewards as well. Jupiter’s banking partner is Federal Bank.
Open
Open Website
This neobank helps businesses say goodbye to all those hassles while opening a bank account. This was founded by Ajeesh Axhuthan, Anish Achuthan, Deena Jacon, and Mabel Chacko in the year 2017. Open helps startups and businesses with banking, payments, and accounting. It also gives out a business credit card.
Razorpay
Razorpay Website
Razorpay is the first neobank to enter the club of Unicorn. Razorpay is designed for businesses. It was founded in 2014 by Harshil Mathur and Shashank Kumar and has served over 10 thousand businesses.
Razorpay’s product suite makes accepting, processing, and disbursing payments easy for businesses. Razorpay offers RazorpayX, a service through which registered businesses can not only easily open current accounts, but can also automate bank transfers, get quick access to capital, do payroll automation, share invoices with customers, and pay taxes and also view financial reports from a single dashboard. Razorpay’s current account gives out features like chequebooks, debit cards, and account statements. Razorpay’s banking partner is RBL Bank.
However, one can take the Razorpay advantage even if his business is unregistered. Razorpay lets its users access all the payment modes like credit and debit cards, net banking, UPI, and Mobile Wallet. Freelancers, small businesses, and individual service providers can easily collect payment via Razorpay by integrating Razorpay into their website or app. They can also create payment pages, payment links, payment buttons, QR codes, collect recurring payments, make vendor payments, generate invoices and do much more with Razorpay.
In 2019 Neobanks raised $90 million in India. People are getting more familiar with digital financial services and with all those facilities prefer them over others as well. Although RBI doesn’t provide licenses to virtual banks, they collaborate with physical banks and let the customers use their services. In the last three years, India witnessed a steep rise of neobanks and with the trend, it is only going to rise in the coming years.
Conclusion
The world is witnessing a change that is revolutionary, everything is turning digitalized. It wouldn’t be wrong to say that the entire world is being ruled by the devices that we carry in our pockets.
With almost every service available digitally, the tech-savvy generation is indulging themselves in it enthusiastically plus the older generation is being a part of this change.
Banking, which is one of the most important parts of our lives, is now available without physical branches, thus this boon of technological advancement is making life a lot easier.
FAQ
What is neobank?
A neobank is a virtual bank that operates entirely online from customer onboarding, to availing the simplest banking services.
Which is the best neobank in India?
RazorpayX, Fampay, Jupiter and Instantpay are some of the top neobanks in India.
Nitin Konde
