StartupTalky

Tag: banks in India

  • Luxury, Loans, and Lawsuits: Inside Vijay Mallya’s Empire

    Vijay Vittal Mallya, popularly known as Vijay Mallya, is an Indian businessman and an ex-Member of Parliament (Rajya Sabha). He was born in Kolkata, on 18 December 1955. He can be commonly recalled as the former owner of the IPL cricket team of Royal Challengers Bangalore and the former owner of Kingfisher Airlines.

    Furthermore, he is also the ex-chairman of the biggest spirits manufacturing company in India, United Spirits. Mallya still retains his post as the chairman of United Breweries Group.

    He is also the face of one of the biggest financial scandals in India and is a subject of extradition efforts by the Indian Government. Let’s understand the complete story of Vijay Mallya.

    Vijay Mallya – Latest News
    Vijay Mallya – Family
    Vijay Mallya – Education
    Vijay Mallya History
    Vijay Mallya – When and How Did the Bubble Burst?
    How Banks Gave the Loan to Kingfisher?

    Vijay Mallya Biography

    Name Vijay Mallya
    Born 18 December 1955
    Birthplace Bantwal, Mangalore, Karnataka, India
    Nationality Indian
    Education La Martinière Calcutta, St. Xavier’s College
    Position Founder and Former owner of Kingfisher Airlines, Ex-member of Rajya Sabha
    Father Vittal Mallya
    Mother Lalitha Ramaiah
    Spouse Samira Tyabjee Mallya (1986–1987), Rekha Mallya (m. 1993)

    Vijay Mallya – Latest News

    Vijay Mallya lost an appeal against bankruptcy in April 2025 in London’s High Court. The court had earlier declared him bankrupt because he owes more than 1 billion pounds (about $1.28 billion) to banks, including the State Bank of India.

    Mallya, who now lives in the UK, has been fighting a long legal battle with the banks and the Indian government since his airline, Kingfisher Airlines, shut down in 2012.

    Vijay Mallya – Family

    Vijay Mallya was born to an affluent business family as a son of the former chairman of the United Breweries Group, Vittal Mallya and Lalitha Ramaiah. Soon after his father’s death, Mallya succeeded his father to become the chairman of the United Breweries Group at the early age of 28.

    Vijay Mallya, now 69, married Sameera Sharma, an air hostess of Air India, in 1986, and their first son, Siddharth Mallya was born on May 7, 1987. However, his first marriage didn’t last long, and soon after they were divorced, Mallya married Rekha Mallya, who is his present wife, in June 1993. He adopted Rekha’s daughter, Leila during the time of his marriage and also has two daughters from his present wife, Leanne, and Tanya.

    Vijay Mallya – Education

    Mallya spent his school and college days in Kolkata. He was a student of La Martinière Calcutta, where he was appointed House Captain of Hastings house in the final year, following which, he went on to be admitted to St. Xavier’s College, Kolkata, where he graduated with an Honours in the Bachelor of Commerce degree in 1976.

    He interned in his family’s businesses during his college days. Post-graduation, Mallya flew to the United States and joined as an intern at the American part of Hoechst AG.

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    Vijay Mallya History

    Though Vijay Mallya was born to humble parents, he never decided to settle for a quiet life like his father. He had soaring ambitions and a desire to exceed them. His journey started with United Breweries, which was already an MNC business conglomerate, comprising over 60 companies.

    As soon as he joined the business, he worked hard to grow the business and managed to increase the overall turnover by around 64%, reaching US $ 11 billion in 1998-1999. He was already living a lifestyle of that of kings, being dubbed as the “King of Good Times” that eventually became the tagline of Kingfisher.

    In the year 2005, Mallya launched his new airline company, Kingfisher Airlines to further diversify his business, which later on became the cause of his downfall.

    Kingfisher Airlines
    Kingfisher Airlines

    Vijay Mallya – When and How Did the Bubble Burst?

    Within a relatively short span of time, Vijay Mallya got what he aimed for but continued to dream bigger. Kingfisher Airlines was launched at the peak of his career when he was already living a lifestyle that most people cannot even dream of but after a brief spell of success and with skying debts, it was finally shut down in 2012.

    Vijay Mallya’s success didn’t seem to last long not because of his ambitious dreams but due to his dishonest ways to achieve the same.

    Kingfisher Airlines was a business built on a platform of losses, and as a result of which it has echoed losses ever since it was launched. Intending to overcome the financial burdens, which started to weigh heavy by then, Mallya decided to fly overseas. However, according to the rules, an airline company needs to run its local operations successfully before it can look forward to flying internationally.

    Here, Mallya planned to rush things by acquiring another low-cost airline company, Air Deccan by paying over the odds but this viciously backfired Mallya, catalyzed by the rising loans and catapulted by the economic downturn of 2008 and 2009.

    Revenue of Kingfisher Airlines
    Revenue of Kingfisher Airlines

    At the end of 2009, Kingfisher Airlines was already due for a massive sum of Rs 7,000 crores, a major part of which was siphoned by Mallya as loans from 17 Indian banks allegedly to shell companies in Britain, Switzerland, and Ireland. Furthermore, he also left staff underpaid and even unpaid when he couldn’t meet the due amount. Kingfisher Airlines finally crashed in 2012 with the aircraft seized.

    Vijay Mallya Timeline
    Vijay Mallya Timeline

    How Banks Gave the Loan to Kingfisher?

    Banks give loans based on the collateral of the same amount given in the loan. But these banks gave loans to Vijay Mallya on items like office stationery, boarding pass printers, folding chairs, computer screens, and wood tables as collateral. The bank’s willingness to provide loans based on current assets as capital created suspicions on the bank officials who passed their loans.

    Also, the loans given by SBI were on the trademarks and Goodwill of Kingfisher airlines kept as collateral. SBI chairman OP Bhatt was involved in providing such fraud loans to him.

    Banks lost their money because of the officials who granted and processed the loans, without checking all the collaterals and taking securities that were to be followed as per rules and regulations. They came under the pressure of their seniors who were bribed by Vijay Mallya. Also, he took the help of his political connections to process such big loans.

    The loans taken on the name of Kingfisher Airlines and UB group weren’t used for its actual cause. Banks never knew that the loans taken by Vijay Mallya were laundered overseas to various tax havens. All this was done with the help of shell companies.

    Mallya would have the bank loans moved to these shell firms, which were set up with sham directors for this reason. These companies did not have any source of income and weren’t active at all. The loans taken were only to further his agenda. The directors placed in the shell companies would act according to the command of Mallya. The money was transferred to seven different countries including the United Kingdom, the United States, Ireland, Switzerland, France, and South Africa.

    Furthermore, Vijay Mallya diverted the money he got from the loans to fund his IPL team Royal Challengers Bangalore. He bought the most expensive IPL team RCB at INR 476 Crore with the money of public sector banks. Around 77 payments were done by the SBI bank account of Kingfisher Airlines to the IPL Vendors. He had spent massive amounts lavishly over cricketers from the borrowed money of the banks.

    At first, this case seemed similar to those in businessmen getting unlucky. But a closer look reveals this is was a case of smart money laundering. As our Indian banking sector is still developing, there are many loopholes in the system. People like Vijay Mallya took the advantage of such loopholes and made their unhealthy marks on the economic system.

    Here is a list of how much loan was taken from each bank:

    Rs 1,600 crore State Bank of India
    Rs 800 crore PNB
    Rs 800 crore IDBI Bank
    Rs 650 crore Bank of India
    Rs 550 crore Bank of Baroda
    Rs 430 crore United Bank of India
    Rs 410 crore Central Bank of India
    Rs 320 crore UCO Bank
    Rs 310 crore Corporation Bank
    Rs 140 crore Indian Overseas Bank
    Rs 90 crore Federal Bank
    Rs 60 crore Punjab & Sind Bank
    Rs 50 crore Axis Bank
    Rs 600 crore 3 other Banks
    Rs 150 crore State Bank of Mysore

    The government of India despite its repeated attempts for extradition, is yet to arrest him from the UK, where he has fled post the issuance of the warrants against him.

    “The evil that men do lives after them; the good is often interred with their bones.”

    The Fugitive Economic Offenders Act was rolled out by the Indian government in 2018 and by this act, Vijay Mallya was labelled as the first fugitive economic offender of the nation. He is now remembered by the same.

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    FAQ

    How much bank money does Vijay Mallya owe?

    Vijay Mallya fled India and moved to London in March 2016 while he owed Indian banks more than Rs 9,000 crore.

    When did Mallya leave India?

    He left India in March 2016 under the pretext of personal reasons and defrauded at least 17 Indian banks.

    What is the full name of Vijay Mallya?

    The full name of Vijay Mallya is Vijay Vittal Mallya.

    What is the birthplace of Vijay Mallya ?

    Vijay Mallya was born on 18 December 1955 in Kolkata.

    How many children does Vijay Mallya have?

    Vijay Mallya has 4 children, Siddharth Mallya, Laila Mallya, Tanya Mallya, Leanna Mallya.

    Where is Vijay Mallya hometown?

    The home state of Vijay Mallya is Karnataka.

    What is Vijay Mallya education?

    Vijay Mallya studied at La Martiniere School in Kolkata and later graduated with a degree in commerce from St. Xavier’s College, Kolkata. He was known for being a bright student and also actively participated in extracurricular activities during his college years.

    Is Vijay Mallya still the owner of Kingfisher?

    No, Vijay Mallya is no longer the owner of Kingfisher Airlines. The airline, which he founded in 2005, ceased operations in 2012 due to severe financial difficulties and accumulated debts. By 2013, Kingfisher Airlines had lost its license to operate, and Mallya had exited the airline business.

    What is Kingfisher owner name?

    Vijay Mallya was the founder and former owner of both Kingfisher Airlines and Kingfisher beer, he no longer holds ownership or control over either entity.

    What is Vijay Mallya net worth?

    In 2013, Forbes estimated Vijay Mallya’s net worth at approximately $750 million. By 2022, some reports suggested his net worth had rebounded to around $1.2 billion. As of March 2025, corporate filings indicate that Mallya holds public shares in three companies, with a combined value exceeding INR 4,683 crore (approximately $560 million).

  • How Credit Scores Plays an Important Role in the Fintech Industry?

    In the last 7 to 8 years, the fintech industry has experienced immense growth all over. A countless number of fintech startups have begun their journey in the last few years and have already put their name on the list of top fintech companies.

    As of 2020, the global market size value of the fintech industry is $110.57 billion. Fintech or financial technology is a form of technology that is challenging the traditional method of providing financial services to people.

    Now in the fintech industry, there is a thing called credit score, and everyone is dependent on them, including consumers, business ventures, and purchasers. In this article, we will learn how credit scores play an important role in the fintech industry. So without any further, let’s get into the business.

    “The major winners will be financial services companies that embrace technology.” – Alexander Peh

    What Is a Credit Score?
    Fintech Industry in India
    Role of Credit Scores in Fintech
    How Credit Score is Calculated?
    Why Credit Score is Important?
    How to Improve Credit Score?
    Benefits of High Credit Score

    What Is a Credit Score?

    In simple terms, a credit score is a number that decides your creditworthiness. The number is between 300 to 850. The more your number is the more is your creditworthiness. This score actually depicts your chances to pay off the money that you owe to the lender.

    This helps any kind of financial institution to understand if you are dependable enough to pay the loan if they lend you. If your credit score is high, then the chance of getting a loan and credit increases for you, if you want to buy something. If the score is lower then, the chances of getting a loan decrease.

    There are different credit bureaus that check your credit scores and make a report on it and send it to you. The reports are based on many factors. There are three top and popular bureaus that count the credit scores of people.

    There are there main international credit score bureaus that assess people’s credit score and they are:

    • Equifax
    • Experian
    • Transunion

    Fintech Industry in India

    The fintech industry in India has taken a huge turn in a few years, it has changed the way we used to enjoy financial services in the past. Currently, it wouldn’t be wrong to say that India is the hotspot for fintech startups.

    As of 2021, the market size is $31 billion and it is said to be the third-largest in the world. By the next five years, we are going to see 22% growth annually. The country has 1860 startups in the fintech industry, out of those 17 have already got the Unicorn status. In the last two years, massive numbers of people have adapted to digital payments systems for any kind of transaction, and it’s only going to increase.

    Role of Credit Scores in Fintech

    The first thing the financial institution will do after getting your, request for the loan, is to check your credit history. If your credit score is good enough, then it will provide you with the loan and apart from that, loads of rewards and benefits. It is very good support for the fintech companies who are lending money to the borrowers.

    How Credit Score is Calculated?

    The way of calculating credit scores varies from bureaus to bureaus. They have their own model that they use to get the result. There are five things that are taken into consideration during the evaluation process and they are:

    • 35% of your Payment History
    • 10% Credit mix
    • 10% of new Credit
    • 30% of your Credit utilization
    • 15% of Credit history length

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    Why Credit Score is Important?

    The credit scores help you in two ways and they are:

    • Your credit score lets you know where you are lacking, the complete report gives you an idea of how you can improve in that area to increase your score. The report consists of all the transactions that you have made.
    • Through a good credit score, you are eligible to get attractive offers on loans and credit cards. A credit score of 750 and above is the best to get good offers.

    How to Improve Credit Score?

    • Pay your debt before the due date every month.
    • Don’t ignore your overdue bills pay them as soon as possible.
    • Keep in mind the credit card you use and its type.
    • Don’t spend too much on your credit card. Be aware of your spending and try to cut the unwanted ones.

    Benefits of High Credit Score

    A high Credit score has several advantages, some of which are listed below.

    • When your credit score is higher, you are eligible in front of banks to get loans and credit cards at considerably lower interest rates. Plus there is a chance of a discount on the processing fee of a high loan amount.
    • Those who have higher credit scores have a lower risk rate of not paying their debts. It basically means the chances of your loans getting approved are higher.
    • You are eligible for a credit card that offers good rewards and other offers like cashback as well.
    • Your credit limit increases, if you’re worthy, then the creditors know that you will pay your debt on time, this increases their trust which in return increases the credit limit.
    • Attractive Car insurance and home insurance rates are offered to those with good credit scores.’
    • Less number of documents is needed by lenders from you.
    • Guarantors are not needed when you are taking a loan if you have a good credit score.

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    Conclusion

    Getting loans or credits can be quite a hassle but if you have a good credit score, then lenders won’t hesitate to lend you the money. Fintechs take the help of credit scores and realize who to lend money and who do not. The credit scores assure the fintech, about your credit risk and the money that they are about to lend,

    FAQ

    Why do financial institutions look at your credit scores?

    Financial institutions take the help of credit scores to determine what kind of borrower you will be and if you are creditworthy or not.

    Who uses credit scores?

    Credit scores are used by financial service givers, especially lenders.

    What is a good credit score?

    A credit score of 700 or above is a good one as achieving the perfect 850 is quite hard.

    What are the factors that affect credit score?

    Payment history, Amount owed, Credit history length, Credit mix, and New credit are the factors that affect credit score.

  • Are Neobanks Really The Future of Banking?

    In this fast-pacing era where really nobody has the time or the interest to walk over to a bank branch to do banking or business, “Neobanks” are a change and, in a good way, but are they really a promising future? Let’s find out.

    What is Neobank?
    Difference Between Neobanks and Traditional Banks
    What Do The Neobanks Offer That Traditional Banks Don’t?
    How Does Neobanks Work?
    Are Neobanks The Future of Banking?
    Pros and Cons of Neobanks
    FAQs

    What is Neobank?

    Neobank
    Neobank

    Neobanks are financial institutions or digital banks that exclusively operate online and do not have any physical branches. Neobanks provide services and products that are not found in traditional banking systems and are also, very efficient. They work either directly with service providers or with already established banks as they don’t have regulatory licenses, in the Indian context. Neobanks are a wide umbrella of financial services such as faster deposits, transfer of payments, credit cards, etc.

    Neobanks had a customer base of around 7.7 million in 2018 and nearly tripled it to 20 million in 2020. In 2019, in India alone, Neobanks raised a big amount of 90 million dollars. And are expected to raise an amount of 394 billion dollars globally by 2026, according to reports of lead squared. Globally there are more than 200 Neobanks and more than 10 in India and the numbers are rapidly increasing.

    In India, the growth of Neobanks are not that fast compared to the growth around the globe, but looking at how vast the Indian Market it can take over by a storm.

    Difference Between Neobanks and Traditional Banks

    • Neobanks mostly press on solving banking issues faced by customers but lack in better overall customer experience.
    • The onboarding process of Neobanks is very simple, paperless, and less time consuming compared to traditional banks.
    • Neobanks are beneficial for small businesses whereas traditional banks prove to be very useful to millennials.

    What Do The Neobanks Offer That Traditional Banks Don’t?

    In the past few years, there’s a lot of change in the finance industry and with the introduction of UPI in India, which recorded over 4 billion transactions in October 2021, and the mobile wallets in the US and Europe we have seen tremendous amounts of transactions digitally.

    Neobanks use innovative new technologies such as AI, Cloud analytics and for their audiences, they are merely an app, unlike the traditional banks which rely on financial products and expand their large network of branches for the customer base.

    Neobanks mostly come in handy to the people who do not have much time to handle the hassles of visiting physical branches and have a busy living. They are way different than other financial institutions in certain ways such as,

    • Reduced timeline of acquiring customers and provide seamless customer services and paperless operations
    • Removing the challenges that are faced in the traditional banking system and thus, providing a brilliant user experience.
    • They have fewer regulations and are easy for customers to set up their accounts and also ensure advanced security and privacy.
    • They provide accounts and money transfers, seamless international payments. They also provide better interest rates than traditional banks because of their fewer costs and easy processes.

    How Does Neobanks Work?

    Neobanks work on the “Banking as a service” module and fix the gap between traditional banks and customer expectations. Banking as a service is an end-to-end process of operation of financial services on the internet and allows digital banks or third parties to connect with banks for better financial and banking services.

    They are completely digital and online as there are no physical branches. Neobanks have modernized platforms that help them collect data of their target audience and based on the data collected they customize their marketing strategies accordingly as a result successfully creating a cohort of customers.

    Are Neobanks The Future of Banking?

    They are changing the face of the Fintech community and one day maybe replace traditional banks but it’s not easy and one can never be sure. Neobanks are mostly like digital banks but remember “mostly”. They are much recognized as companies than banks.

    In India, the RBI still doesn’t allow banks to be 100% digital and have some physical presence. The defining and most important reason for this is and the difference between Neobanks and traditional banks is funding and not forgetting customers’ trust. Traditional banks may find it hard to compete in this tech-savvy world still the legacy can’t be weighed down so easily.

    Pros and Cons of Neobanks

    Pros of Neobanks

    • Adapting technology and no presence of credit base makes them low cost and convenient for the low-salaried customer base.
    • Neobanks are convenient as allow operations through an app from basic banking to investing and other finances.
    • Better services and benefits. Quick processing for loans and speeding other requests by ditching paperwork.

    Cons of Neobanks

    • Limited services compared to traditional banks and less regulated. No physical presence may hinder customers’ trust.
    • Keeping up with technology and advancements in trends.
    • No physical bank branches and In-person assistance access.

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    Conclusion

    Neobanks have emerged as a buzz wave in the fintech community and have been doing great in maintaining their spotlight on a global level and every day more and more businesses and banks are signing up with them. We see a new player everybody whose intention is to simplify financial services and provide additional benefits with them.

    Though it’s going to be hard to revolutionize the whole industry of banking and finance it’s gonna take time and real hard work for tech geeks. As the saying goes, “it’s the little changes that make the most important changes”.

    FAQs

    Are Neobanks banks?

    Neobanks are not banks and do not have a bank charter. Instead, these institutions generally partner with a bank to ensure their products. Before signing up with a neobank, make sure it’s FDIC insured by a partner bank.

    What is Neobank?

    Neobanks are digital banks that do not have any physical branches and provide all financial services to their consumers through apps that can be accessed through a smartphone.

    Is Neobanks secure?

    Money deposited in a neo-banking account is as secure as it would be in a regular bank account in India.

    When did Neobanks start?

    The term neobank has been in use since at least 2016 to describe fintech-based financial providers that were challenging traditional banks.

    Talking about the neobanks in the Indian context, neobanks are not directly regulated by the banking regulator. This is mainly due to the fact that RBI does not grant licenses for operating virtual banks in India.

  • The Intriguing Psychology Behind the Business Model of Banks

    Nowadays we all have a bank account. This might sound a bit awkward but there are people out there who don’t have one. Try to remember how long did it took to open a bank account? Probably a couple of hours or weeks in some cases.

    Do we know what happens with our money? Nobody knows. Because once you deposit, it’s not yours anymore it becomes the bank’s money. Banks just aggregates all that capital and invests or loans it out. Your account balance is just a number in the bank’s ledger. Whenever you make a transaction, banks instruct the ledger to move to the second person.

    Before I go into detail, let us first look at the brief history of the banking system:

    The dawn of the banking system
    Business model of Banks
    How do Banks earn Revenue?
    How do Banks generate revenue now?
    Current scenario of Banks
    FAQ

    The dawn of the banking system

    Banking may appear complex now, yet it was created to make life easier. Italy was the epicenter of European trade in the 11th century. Merchants from across the continent intended to trade their goods, but there was one concern: there were too many currencies in circulation.

    Merchants in Pisa had to cope with seven distinct types of coins and often exchange their money. The word bank comes from the Italian word “banco,” which means “bench.” This exchange transaction often was conducted outside on benches.

    People were concerned about the perils of going with counterfeit money and the difficulty of getting alone. It was time for a change: home brokers began extending loans to entrepreneurs, and Genovese shoes pioneered cashless transactions. Bank networks were strewn across Europe, extending credit to the church and European rulers.

    Business model of Banks

    When it comes to building a value proposition, banks face a unique challenge since they must encourage clients to trust them with their money while also making them feel like they are getting the best value for their money. Once consumers have invested with a bank, the bank must endeavor to retain them and persuade them to purchase more products.

    Their business model is customer-centric meaning being consistently striven for and develop an excellent reputation for transparency, trust, integrity, and being responsive to customer needs. They offer financial products and advice that is aligned with your financial goals. Their emphasis on corporate governance and CSR initiatives is something to look forward to as their entire business model is based on the services they offer.

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    How do Banks earn Revenue?

    Interest from loans:

    Let’s imagine ten people each put $100 million into a bank. The Reserve Bank of India (RBI) has now imposed two restrictions, namely, SLR and CRR. In essence, the CRR (cash reserve ratio) is a modest percentage (4%) of the entire deposit under RBI’s jurisdiction. The statutory liquidity ratio (SLR) is the proportion (19.5%) of the amount deposited that you keep or invest in liquid assets such as cash, gold, or government securities, among other things.

    The RBI imposes certain restrictions to protect your funds. The remaining 76.5 percent of the entire sum is offered to you as loans. In summary, banks make loans at a rate of 12 percent interest from the 76.5 percent, and those who deposit $100 million will receive a 4 percent return, leaving the bank with an 8 percent profit. This circulation of money is also known as a fractional reserve requirement.

    Interchange fees:

    When you pay for things, let’s take an example of a supermarket like D-mart with a debit or credit card, D-mart receives the money first. A tiny percentage of the proceeds is subsequently distributed to merchant banks, from which D-mart purchased their card swipe machine. The merchant banks keep a portion of the money and then transfer the balance to your account. These are known as interchange fees.

    Service fees:

    It is the fees imposed by banks for services such as locker (for holding gold), NEFT/RTGS, debit/credit card, internet banking, and Demat account.

    Charging fees:

    Low bank balances, lost debit/credit cards reissued, cheque bounces, overdrafts, and transaction fees (if you withdraw 4 or 5 times a month from an ATM) all result in banks charging fees.

    Insurance & Mutual funds:

    Typically, banks sell insurance plans on behalf of firms, such as life insurance, health insurance, and automobile insurance, for a commission. They also distribute mutual funds and are compensated by fund houses.

    Trading in the financial market:

    Most banks, particularly investment banks, are listed on the stock exchange, which provides them with an additional source of revenue. They also profit from foreign currency exchange, which means they buy a currency when the rate falls and sell it when the rate rises. They invest in the bond and commodity markets and profit from them as well.

    Investment advice:

    Investment banks charge high fees for the advice they give to corporations or public institutions when it comes to issuing bonds or shares.

    How do Banks generate revenue now?

    Banks are involved in risk management. People deposit their money in banks and get a nominal interest. This money is taken by the bank and lent out at substantially higher interest rates. It is a calculated risk as some people might default on repayment. This process is critical to our economy because it offers resources for people to purchase items like houses and for businesses to expand and grow. As a result, banks take money that savers aren’t using and turn it into money that society can use.

    The main issue with banks today is that many of them have abandoned their original position as long-term financial product suppliers in favor of short-term rewards that come with far larger risks.

    During the financial boom, most big banks created complex financial structures and conducted their trading to make quick money and reward their executives and traders millions in bonuses.

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    Current scenario of Banks

    Other forms of funding are rapidly gaining traction today. They are:

    New investment banks

    New investment banks charge a yearly fee and do not receive commissions on sales, giving them an incentive to operate in their clients’ best interests.

    Credit union systems

    To avoid credit sharks, credit unions were founded in the nineteenth century as cooperative efforts. In short, they prioritize shared value over profitability. The mission is to assist members in establishing small enterprises, expanding farms, and building family homes while also investing in the community. Their members are in charge, and the board of directors is democratically elected.

    Worldwide Credit unions range in size from a few hundred members to multibillion-dollar corporations with tens of thousands of members. Credit unions’ emphasis on member benefits influences the level of risk they are willing to take, which explains why, despite their difficulties, credit unions fared better than traditional banks during the recent financial crisis.

    Crowdfunding

    Not to mention the recent boom of crowdfunding. Aside from making fantastic video games feasible, platforms evolved that allow people to obtain loans from large groups of smaller investors without having to go into a bank. But it also works in the business world.

    On Kickstarter or Indiegogo, a lot of innovative technology startups emerged. The funding individual gains the joy of being a part of something bigger, and they may invest tonight as they believe in while spreading the risk so evenly that the damage is minimal if the project fails.

    Microcredits

    Last but not least, there are microcredits. In developing countries, many extremely small loans that help people transcend poverty were met with skepticism. People who previously couldn’t receive the funds they needed to establish a business because they weren’t thought to be worth the time. Microcredit lending has grown into a multibillion-dollar industry.

    Final Thoughts

    While banking may not be your cup of tea, the role of banks in providing funds to individuals and businesses is critical to our society and must be carried out.

    That’s all for today, folks.

    FAQ

    What is the main business model of a commercial bank?

    Commercial banks make money by providing and earning interest from loans such as auto loans, business loans, and personal loans.

    How do banks make their money?

    Banks make money from service charges and they also earn money from interest they earn by lending out money to other clients.

    What is the largest source of revenue for banks?

    One of the largest sources of revenue for banks is interest received from customers who take loans.

  • Will the Central Bank of India become a Private bank? | Why is the Government Privatizing banks?

    The Government of India had made a number of announcements and plans in the Union Budget of 2021-22 and one of the major plans was in regards to disinvestment of privatization. In this article let’s look at the plans of the Government in regards to privatizing the banks and whether the Central Bank of India would become a Private banking organization.

    Privatization of Public Banks – Latest News
    Reason Why Government is Privatizing the Public Banks
    Banks Officers’ Confederation on Privatization of the Banks
    FAQ

    Privatization of Public Banks – Latest News

    The Government of India had shortlisted 4 Public sector banks in order to privatize them in the fiscal year 2021-22. The four banks on the list are Bank of Maharashtra, Bank of India, Indian Overseas Bank and Central Bank of India.

    The Government of India has decided to privatize just two of these banks for now and according to certain reports NITI Aayog has decided to privatize the Central Bank of India and Indian Overseas Bank and their names were shortlisted by the organization.

    The report also added that the Bank of India will also be a candidate that is potential enough for privatization. In regards to disinvestment, NITI Aayog has submitted the names of two state-run banks and one general insurer to the secretaries of the committee.

    Reason Why Government is Privatizing the Banks

    The Modi Government has been pushing to sell all the assets that are owned by the Government in order to cover up the expenses for the Coronavirus Pandemic and to increase the revenue of the Government as it has spent a massive amount for the recovery from the pandemic.

    The announcement regarding the privatization of the banks was made during the Union Budget announcement of 2021-22. The Central Government has a target to gain around INR 1.75 lakh crore from the sale of stakes in the current fiscal.

    The Central bank of India and other public sector banks will probably become a private bank as the Government has already implemented it in many other sectors and to some banks as well. The country has only 12 public sector banks as compared to 27 in the year 2017.

    GDP of India
    GDP of India

    Banks Officers’ Confederation on Privatization of the Banks

    The Confederation of Bank officers does not seem to be much happy with the decision made by the Central Government. The officers had even called for protests and strikes regarding the case. The strike notice had conveyed the message that the decision of the Government in order to privatize the public sector bank is totally unwarranted and added that the requirement right now is to strengthen the public sector banks.

    It is found that the State Bank of India will be the only bank that would remain a public sector bank and the Government had justified this statement by saying that the bank is a strategic bank and it is responsible for the implementation of the public sector initiatives like expanding the rural credit.

    The Banking unions have conveyed that the same can be done to other public sector banks. They added that certain schemes such as MUDRA and Jan Dhan Yojana have been successful due to the vigorous implementation of the public sector banks.

    The unions also believed that during the pandemic they were an important part in implementing the measure in order to support the plans of the Government to provide liquidity and fiscal stimulus. Privatizing the public sector banks is like providing the money of the people to private hands with a different interest towards them.

    Conclusion

    The Government is also privatizing Air India, BPCL, and shipping corporations, and the process for it has already been started in the current fiscal year. The proposal regarding privatization is handled by DIPAM and the Department of Financial Services.

    FAQ

    Why do Governments Privatize?

    Privatization generally helps governments to save money and increase efficiency, where private companies can move goods quicker and more efficiently.

    What are some examples of privatization?

    Public sale of shares, Public auction, Public tender and Direct negotiations are some of the example of privatization.

    Which are the 2 banks that are going to be Privatized?

    The Government of India had shortlisted 4 Public sector banks in order to privatize them but has decided to privatize just two of these banks for now, which are the Central Bank of India and Indian Overseas Bank and their names were shortlisted by the organization.

  • Why is Citibank leaving Indian Consumer Banking market

    Citi Bank had recently announced that it will exit retail banking operations in India and 12 other countries. The other countries include Australia, Indonesia, Korea, Bahrain, Malaysia, Philippines, Poland, Taiwan, Russia, Thailand and Vietnam. Citi bank is one of the largest foreign banks in India. Let’s look at the below article to understand why Citi bank is leaving the Indian Consumer banking market.

    About Citibank
    Reasons Why Citibank is leaving Indian consumer banking market
    Other Reasons for the exit from Indian banking market
    Future Plans of Citibank
    FAQ

    About Citibank

    Citibank had entered Indian retail banking in the year 1902. The business of Citi Bank in India consists of Credit Card business, retail banking, wealth management and home loans. The company has around 35 branches across India and around 29 lakh retail customers.

    As of March 2020, Citi bank has around 12 lakh bank accounts and about 22 lakh credit card accounts. The bank has around 5.9% market share in the digital payments and around 6 % market share in credit card spends.

    According to FY2020 Citi bank has a 15.4 % share in the market share of loans among the foreign banks in India. As of 31 March 2020, the total deposits in the bank were around INR 1.57 trillion which includes the deposits from other banks as well as customers.

    It is estimated that around 26% of the foreign portfolio investments are through Citi bank India.

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    Reasons Why Citibank is leaving Indian consumer banking market

    American based banking major Citi bank is reducing its consumer operations as part of a broader strategic review. The new Chief Executive Officer, Jane Fraser is slimming down the operations in order to focus on the wealth management business since Citibank lacks the scale to compete in the retail banking operations.

    Jane Fraser while announcing Citi bank’s quarterly results said that they have decided that they are going to double down on wealth as a result of the ongoing refresh of their strategy. He said that, while all the 13 markets including India have excellent business, Citi Bank doesn’t have the scale they require to compete.

    Jane Fraser added on saying they believe that their capital, investment dollars and other resources are deployed better against the higher returning opportunities which include the wealth management and the institutional businesses in India.

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    Other Reasons for the exit from Indian banking market

    One of the other reasons for the exit from the retail market in India syncs with the trend of full or part exit of foreign banks in India from the year 2009. This is mainly because of the high capital and various other regulatory requirements in India.

    These factors have pushed various foreign banks to retreat into their domestic markets in order to protect their profitability. Certain foreign banks such as Barclays, HSBC, Standard Chartered bank, etc. have curbed their operations in India and other banks such as J.P Morgan, Goldman Sachs, etc. have surrendered their banking licenses.

    In addition to it, foreign banks do not find the small number of profits received from retail banks in India commercially attractive. This is one of the major reasons to exit the retail market when the domestic banks are in the process of finding more retail customers.

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    Future Plans of Citibank

    Citigroup has said that it will now focus on operating its global consumer banking business solely from four markets such as Singapore, Hong Kong, London and the UAE. The company said that it would continue its corporate and institutional banking business in the markets where it is ending planning to end the consumer operations.

    In India, Citigroup will focus on offshoring or global business support rendering its services from major centers in Mumbai, Pune, Bengaluru, Chennai and Gurugram.

    Ashu Khullar who is the CEO of Citi India said that India is a strategic talent hub for Citi and he added on saying that they will continue to tap into the rich talent pool which is available in the country to grow Citi’s five solution centers which are a support for their global footprint.

    He also added that, there was no immediate change to their operations and there wouldn’t be any immediate impact to the colleagues as a result of this announcement.

    Citi is not closing down its business in India but it is changing hands after it gets a requisite regulatory approval and a proper buyer. The bank said that till the time of the sale there will be no impact for their customer as well as their 21,000 employees.

    FAQ

    Does Citibank have branches in India?

    Citibank currently has 35 branches in India with 19,235 employees.

    Is Citi and Citigroup the same?

    Citigroup Inc. or Citi (stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries.

    Who is the CEO of Citibank India?

    Ashu Khullar is the current CEO of Citibank India.

    Conclusion

    Citi had become one of the largest foreign banks in India over the years and its decision to close down the consumer business in the country marks the end of an era.

  • Things You Should Know About Top 10 Banks In India

    The banking sector is the most leading industry in the Indian economy. India’s banking sector is sufficiently capitalized and well regulated as per the Reserve Bank of India. Over the centuries, banks evolved to become a financial institution where one could deposit and withdraw money from. A bank’s job is to provide customers with financial services that help people manage their lives. As technology advances and competition increases, banks are offering services to stay current and attract customers. Here’s a list of top 10 banks in India 2020. So, let us see the complete insights on the topic- Things You Should Know About Top 10 Banks In India.

    State Bank of India
    HDFC bank
    ICICI Bank
    Punjab National Bank (PNB)
    Axis Bank
    Canara Bank
    Bank of Baroda
    Union Bank of India
    Central Bank of India
    Bank of India ( BOI)

    1. State Bank of India

    Top 10 Banks in India 2020
    Top 10 Banks in India 2020

    The oldest of the Indian Banking sector, SBI is also one of the largest banks in India and now a fortune 500 company. The Corporate Centre is in Mumbai and 14 Local head offices and 57 zonal offices are located at important cities spread throughout the country. It is having more than 26, 340 branches, and over 60,000 ATM facilities. It is headquartered in Mumbai, Maharashtra.

    Its assets are more than 390 billion USD. This bank offers a wide range of services, including corporate banking, consumer banking, investment banking, finance and insurance, credit cards, home loans, car loans, mortgage loans, private banking, savings, securities, private equity, wealth management, and asset management. SBI serves a worldwide audience, with a strong presence both in India and internationally.

    2. HDFC bank

    The Housing Development Finance Corporation ( HDFC) is a well known private bank in India. Established in 1994, it is headquartered in Mumbai. This bank has nearly 4800 branches and more than 1200 ATM’s spread across major parts of the country. HDFC offers personal loans, credit cards, car loans, consumer financial services, and forex cards. Its assets are around 66.7 billion USD.

    3. ICICI Bank

    ICICI Bank is one of the most reputed and top Indian banks in India. Here, it has around 4867 branches and 14367 ATMs across India. It has spread across 17 countries including India. It has a registered office in Vadodara (Gujarat) and has headquarters in Mumbai.

    It has some of the most prominent subsidiaries in the United Kingdom, Canada including branches in the United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar, Oman. It provides services regarding withdrawals and deposits, loans, privilege banking, insurance policies, credit cards, and other services. Its total assets are around $13.5 billion US.

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    4. Punjab National Bank (PNB)

    Top Indian Banks
    Top Indian Banks

    Punjab National Bank was established on April 12, 1985, in Lahore under the leadership of Lala Lajpat Rai as a part of the Swadeshi movement. PNB has its headquarters in New Delhi. There are over 10, 681 ATM centers and 7000 branches of this bank, which includes 62% of the branches set up in semi-urban and rural areas.

    It is a state-owned corporation, this bank has a market capitalization of Rs. 37,411.52 crores. It provides all services relating to banking and finance. Its total assets are around Rs. 789,265.79 crore.

    5. Axis Bank

    Axis bank was founded in 1993 in Ahmedabad as a part of the Unit Trust of India (UTI). It is one of the top trusted banks in India and offers consumer banking, corporate banking, credit cards, finance, and insurance, investment banking, private equity, mortgage loans, wealth management, and more.

    The bank has more than 13,000 ATMs and over 3000 branches in India and 9 international offices. Axis Bank has 30.81% of its market shares that are owned by promoters group while the remaining 69.19% shares are owned by mutual funds, Falls, banks, insurance companies, and other forms of individual investors.

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    6. Canara Bank

    Canara Bank is a state owned commercial bank providing  financial services. Established in 1906, it has its headquarters in Bangalore. The bank has about 3200 branches with over 4000 ATM’s. It has a global presence with branches in Hong Kong, Shanghai, London, New York, Manama, Johannesburg, and Dubai. Its total assets are around Rs. 711,782.81 crores.

    7. Bank of Baroda

    Established in 1908, Bank of Baroda has its headquarters in Vadodara in Gujarat and corporate office in Mumbai. Currently, it has 9,500 branches functioning all over the world including 104 overseas branches and more than 13,400 ATM facility centers across India. Its services include debit and credit card facilities, loans, and wealth management.

    On July 19, 1969, the Bank of Baroda was nationalized by the Indian government, after which the bank came under the category of PSU (profit marketing public sector undertaking). Its total assets are around $100 billion US which’s why it’s considered to be in the top 10 government banks in India.

    8. Union Bank of India

    Established on November 11, 1919 in Mumbai, the Union Bank of India was initially started as a limited company. After nationalization in 1969, the bank turned into a commercial bank. It has more than 4500 branches all over India, including four overseas branches- Dubai, Sydney, and Hong Kong.

    It has more than 4500 branches and 7000 ATM facility centers all over India, including four overseas branches – Dubai, Sydney, Antwerp, and Hong Kong. Its total assets are around Rs. 498,580.54 crore.

    9. Central Bank of India

    Central Bank of India is one of the oldest and top banks in India. The Bank has its headquarters in Mumbai. It has spread across 29 states and 6 Union Territories of India. At present, the Bank has 4,886 branches, one extension counter, and ten satellite offices operating at different centers all over the India. This bank has its presence in Hong Kong and Nairobi.

    The Bank of Baroda, Bank of India, and Zambian Government enjoy 20%, 20%, and 40% stake respectively in the Central Bank of India as a result of a joint venture entered between them. Its total assets are around Rs. 331,884.64 crore.

    10. Bank of India (BOI)

    Bank of India was established on September 7, 1906, as a result of a partnership between noted businessmen hailing from Mumbai. Initially, the bank was privately owned and controlled but turned into a public sector bank in 1969 after the nationalization of banks. It has more than 5,500 branches operating in 22 countries abroad. The important overseas of this bank are Singapore, Paris, Tokyo, Hong Kong, New York, New Jersey, and London.

    It is from the list of top 10 Indian banks 2020 and has a market capitalization of about Rs. 28,464.06 crores. It is known to be making a profit of 400 million USD. It is also a founding member of SWIFT that uses and assigns each financial organization a unique code and is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes. Its total assets are around $96 billion US.

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    Frequently Asked Questions

    Which is biggest bank in India?

    SBI is the biggest bank from the list of India’s top 10 banks 2020 in terms of market capitalisation, branches (22,414), ATMs, offices, revenue generation, and employees (264,041).

    Which bank is safe for FD?

    To get the benefit of high rates, both SBI Bank and ICICI bank have a new FD scheme exclusively for senior citizens. The bank fixed deposits are becoming the first choice of depositors to keep their savings safe.

    Which is best RD or FD?

    The attraction for a fixed deposit and a recurring deposit is the fixed returns with the safety of money invested. But when you compare the two, a fixed deposit scores higher than a recurring deposit. Both FD and RD are fixed income products available from banks.