RBI asks India’s banks to promote digital payments

The Reserve Bank of India (RBI) has unveiled Har Payment Digital, aka Every Payment Digital, as part of Digital Payments Awareness Week (DPAW) 2023 in a campaign to make all Indian citizens users of digital payments.

Governor Shaktikanta Das appealed to all the stakeholders – from banks and non-banks to payment system operators (PSPs) and digital payment users– to adopt digital payments and promote the benefits of using digital payments.

He said the campaign reinforces RBI’s commitment to deepen digital payments in the country. “India’s payment systems are talked about globally and several countries have shown interest to replicate India’s success story.”

Reporting that payment systems in India have recorded over 10 billion monthly transactions since December, he said “This speaks volumes of the robustness of our payments ecosystem and acceptance by consumers.”

Das said National Payments Corporation of India’s (NPCI) Unified Payments Interface (UPI has emerged as the most popular and preferred payment mode in India pioneering person-to-person (P2P) as well as person to merchant (P2M) transactions in India accounting for 75% of the total digital payments. 

The volume of UPI transactions has multiplied from 4.5 million in January 2017 to 8.4 billion in January 2023. The value of UPI transactions has increased from just ₹1,700 crore to ₹12.98 lakh crore over the same period. 

Das said steps have been taken for internationalisation of India’s payment systems and the convenience of digital payments would facilitate the onboarding of new consumers.

“Various campaigns highlighting the digital payment channels available are being planned by the banks and non- bank payment system operators,” he added “This will further encourage and support the adoption of digital payments in the country.”

Customer satisfaction would lead to furthering digital payments, he said “The message is in sync with the Payments Vision 2025 of the RBI, i.e. “E- Payments for Everyone, Everywhere, Everytime”. RBI has also decided to initiate a 75 Digital Villages programme through the adoption of villages and involvement of local entrepreneurs. 

EU set to launch green subsidy scheme to meet US competition

The European Union (EU) is reported to be about announce plans that will make it easier for member states to match subsidies being offered to companies by the US, to deter key sectors from moving parts of their operations outside the region.

The subsidies will target a limited number of key green industries, two people with knowledge of the plans said.

Under state aid rules, member states must notify the commission of cash received up to certain thresholds.

Brussels’ plans include a ceiling of up to €350 million (US$370 million) for projects in poorer regions, which will also be approved faster than usual, in a matter of weeks, and up to €150 million in better-off areas, according to the sources.

“This is quick and dirty money to match the Americans,” said one individual with direct knowledge of the plans.

US President Joe Biden’s landmark Inflation Reduction Act (IRA) climate package was signed into law last year and has caused trade tensions between Washington and allies competing for cash and skilled labour to accelerate the shift away from fossil fuels and combat climate change.

On Wednesday, US Energy Secretary Jennifer Granholm said the Biden administration makes no apologies for the IRA and challenged EU allies to follow the US lead by providing more subsidies of their own.

“We don’t want to stoke trade wars or anything like that,” said Granholm. “We keep saying ‘have at it – you should do the same thing’ – a little friendly competition is all. But we are serious about bringing supply chains back into this country.”

Volkswagen Group has confirmed that it is waiting to hear the EU’s response to the US Act before progressing with plans to build further battery plants in Europe.

The Financial Times reported that German automaker is putting a proposed new battery cell factory in eastern Europe on hold and could instead opt to construct a new plant in North America, where it could be eligible for €9 billion to €10 billion (US$10.54 billion) in subsidies.

Turkey raises US$2.25 billion in first bond deal since quake

Turkey has raised US$2.25 billion in its first international bond deal since since a 7.8-magnitude earthquake struck near the Turkish city of Gaziantep on 6 February, followed by dozens of powerful aftershocks.

More than 50,000 deaths have been reported across southern Turkey and northwestern Syria. Rescue and recovery efforts have wound down, and the work of removing rubble and demolishing damaged buildings has begun.

The country sold the dollar-denominated debt, which matures in 2029, at a yield of 9.5%, according to a person familiar with the matter. Deutsche Bank, HSBC and JPMorgan were reportedly hired to manage the fundraising.

The United Nations estimates that 1.5 million people were made homeless by the quake, and local groups, charities, and government agencies are working to care for them, setting up tent cities, repurposing passenger-train cars, and opening up mosques and hotels. Turkey will need to spend tens of billions of dollars to rebuild residences, commercial buildings, hospitals, schools and infrastructure, according to engineers and international organisations.

Turkey has so far raised US$5 billion via bond sales this year, reports Bloomberg.

Credit Suisse puts 2022 annual report on hold

Credit Suisse announced that it is delaying the release of its 2022 annual report following a call from the US Securities and Exchange Commission (SEC) over revisions it made to cash flow statements for 2020 and 2019.

The bank said it had received a call from the SEC on Wednesday evening about revisions to cash flow statements it disclosed in its 2021 report. The conversation had related to SEC comments about the “technical assessment of previously disclosed revisions to the consolidated cash flow statements in the years ended December 31, 2020, and 2019, as well as related controls.”

Credit Suisse added that its management “believes it is prudent to briefly delay the publication of its accounts in order to understand more thoroughly the comments. “We confirm the 2022 financial results as previously released on February 9, 2023, are not impacted by the above,” the bank said.

The annual report had been scheduled for release today. On 9 February Credit Suisse reported a full-year net loss of Swiss francs (CHF) 7.3 billion (US$7.8 billion) for 2022 and warned that a further “substantial” loss was likely this year.

More UK manufacturers opt for re-shoring

UK manufacturers are increasingly turning away from overseas suppliers in response to increasing energy and transport costs and European Union (EU) firms are also worried about doing business across the English Channel post-Brexit, a survey suggests.

Industry group Make UK claims that 40% of British manufacturers “re-shored” suppliers in 2022 and a similar proportion planned to do so in the next 12 months with rising costs the main factor.

The survey also shows that almost half of respondent companies said EU suppliers are now more cautious about the UK, citing trade tensions and red tape after Brexit and broader geopolitical frictions between economic superpowers including the EU.

Stephen Phipson, Make UK’s chief executive, said it was time to address the damage done to the country’s reputation by the chaos in British politics since the 2016 vote to leave the EU.

“The political mismanagement of our economy and damage to the reputation of the UK as a partner on such a grand scale, together with the disregard of the rule of law in our political system, cannot continue,” Phipson said in a keynote speech at Make UK’s annual conference.

In late February, Britain and the EU agreed on changes to post-Brexit trading rules for Northern Ireland, a contrast to the approach taken by former prime minister Boris Johnson who had threatened to take unilateral action.

“Hopefully the agreement reached last week will be the beginning of a new chapter,” Phipson said.

He urged the government to develop an industrial strategy to support Britain's automotive industry by enabling more electric battery capacity, end delays on its plans for small nuclear power generators and boost skills training.

China pledges support for Sri Lanka’s debt reorganisation

China has pledged to support Sri Lanka’s debt reorganisation, a major boost for the island nation that it is talks to secure a financial lifeline from the International Monetary Fund, but reports suggest that it offers little clarity on how negotiations will unfold or whether this could herald progress for other heavily indebted nations.

Sri Lanka expects final approval from the IMF for a US$2.9 billion loan in the third or fourth week of this month, President Ranil Wickremesinghe said on Tuesday, adding that new support from China means all funding requirements had been met.

The country of 22 million people is struggling with its worst economic crisis since independence from Britain in 1948.

Wickremesinghe told parliament there were signs the economy was improving but there was still insufficient foreign currency for all imports, making the IMF deal crucial so other creditors could also start releasing funds.

“Sri Lanka has completed all prior actions that were required by the IMF,” Wickremesinghe said.

He added the Export-Import Bank of China had sent “a new letter” on Monday, and he and the central bank governor had sent a letter of intent to the IMF.

“As a result of this step and financing assurances from India and the Paris Club, we expect approval for the program either in the third or fourth week of March,” he said.

Japan’s economic growth slows to a crawl in Q4

Japan was much closer to recession than previously realised at the end of last year as the economy expanded much less than earlier forecast in the fourth quarter of 2022, according to revised gross domestic product (GDP) figures released by the Cabinet Office.

The new data showed real annualised growth of 0.1% for Q4, a sharp reduction from the estimated 0.6% released in preliminary figures.

Private consumption rose less than previously expected, which accounts for roughly half of Japan's GDP, slowed from 0.5% in the government’s preliminary report, to 0.3%.

Household sentiment was dented by rising inflation, which rose to a multi-decade high of 4% in December. Rising prices in shops and supermarkets, and higher energy bills, were exacerbated by the yen’s weakness.

Capital spending, also a key driver of the economy, remained unchanged from its initial reading, dropping 0.5% in the October to December 2022 period, as rising import costs persuaded companies rein in their investment outlays.

Public investment, however, edged higher than a preliminary drop of -0.5%, with the figure revised to 0.3% in the recording period, the Cabinet Office said.

In terms of nominal GDP, the government said it grew 1.2%, revised down from 1.3%, and stood at 4.7% on an annualised basis, down from a preliminary 5.2%.

US consumers struggling with credit card bills, says Citi CFO

Citigroup’s chief financial officer (CFO) has revealed that the bank is beginning to see signs of weakness in American consumer debt servicing.

Speaking at a Wall Street investor conference on Wednesday, Mark Mason said that Citi, one of North America’s largest issuers of credit cards, was seeing an increase in US consumers slowing or being unable to repay their growing credit card debts.

He said average balances on the company’s credit cards were rising and that the bank has had an uptick in credit losses, particularly to borrowers with lower credit scores. Customers with lower credit scores are beginning to make more late payments, which will likely result in losses for the bank.

Mason also told investors that he expects the US Federal Reserve to remain “resolute” in its fight against inflation, paving the way for America to experience higher interest rates and a mild recession in the second half of this year.

Bank BTPN selects Surecomp to streamline trade finance process

Trade finance software specialist Surecomp announced that PT. Bank BTPN Tbk (BTPN), a leading privately-owned bank in Indonesia and part of the SMBC Group, is live with its DOKA solution to drive streamlined back-office trade finance processing automation.

The solution, which has replaced the bank’s previous trade finance application, is hosted in Jakarta and has been fully deployed and supported by Surecomp’s local teams in Asia.

Through seamless integration with the bank’s other trade-related systems for limits and position management, sanction screening, SWIFT connection, collateral management and core banking, BTPN will now be able to deliver a more efficient customer service supported by expedited internal processing of its growing trade finance transactions in the form of Letters of Credit (LCs), documentary collections as well as trade loans.

Intan Wijaya, head of transaction banking and supply chain at Bank BTPN said, “Following a very comprehensive selection process involving arequest for proposal (RFP), workshops, multiple virtual meetings during the pandemic, I am delighted to be in production with DOKA and to be embarking on this partnership with Surecomp.”