Banks told to cap cash deposit charges at Rs 5

The Reserve Bank of India(RBI) has told banks not to charge more than Rs 5 for any cash deposit made at a non-home branch (other than the one where the customer has the account).Some banks charge as much as Rs 110 for such cash deposits.
In 2008, RBI said the charges for a transaction under the National Electronic Fund Transfer (NEFT)upto Rs 1 lakh should not exceed Rs 5. Now, the regulator says cash deposit charges should be in line with NEFT charges.
The central bank generally refrains from specifying interest rates and charges. However, it has acted where it feels banks are being needlessly stubborn or unfair.Last year,RBI had mandated a fixed charge for cash withdrawal from third- party automated teller machines, beyond the five free transactions. Banks used to charge customers as much as Rs 55 for cash withdrawal from other bank ATMs.
RBI feels since banking is a highly regulated service industry, with very stiff entry norms, customer service cannot entirely be left to market forces. It is the regulator's duty to protect small customers.
To review customer service in banks, RBI recently set up a committee under former Securities and Exchange Board of India Chairman, M.Damodaran. It would look at the range of services offered to retail and small borrowers, including pensioners and suggest a mechanism to expedite grievance redressed. Its report is to come next month. (BS 13.12.2010)

Banks use 'negative list' gambit to make defaulters pay up

To recover dues, bankers are trying to put the fear of God into obstinate defaulters to pay up. And how? By making it plain that they could get reported to the Credit Information Bureau, banks have been able to achieve a modicum of success in recoveries. Some defaulting borrowers do see the writing on the wall when they are sensitised about the deleterious consequences of finding their names on the bureau's negative list, say bankers. By delivering the simple key message that the doors of the banks will be shut for the defaulters once they are on the negative list, banks are gradually making headway in recoveries. The prospect of future banking relationship getting jeopardised convince some defaulters to repay loans.
According to the Credit Information Companies (Regulation)Act 2005, every credit institution has to become member of at least one credit information company. Credit institutions, including banks and housing finance companies, have to provide credit data (positive as well as negative) to the credit information company. By tapping into a credit information bureau, credit grantors get complete picture of the payment history of a borrower.(BL 22.11.2010)

Banks forging tie-ups with brokerages

Banks are increasingly looking at online equity trading as an opportunity to boost their fee income and also increase the proportion of low cost current and savings account (CASA) deposits in total deposits. The recent spate of public issues, especially public sector units, has led to a revival of the retail interest in the equity markets. The total no. of demat accounts with CDSL and NSDL crossed the 1 crore mark and is now at 1.80 crore.
Banks are also hoping that the increase in the investment limit for retail investors in primary markets ( from Rs 1 lakh to Rs 2 lakh) will see more inflows into the equity markets. With State Bank of India, ICICI Bank and HDFC Bank have their own subsidiaries that offer online booking, others are tying up with online booking firms to offer the same, as they look for more avenues to increase fee income.( BL 19.11.2010)

SBI to open exclusive branch for youth

Trendy music, a cafeteria for chatting over a cup of coffee and catchy ambience. It's an exclusive "Youth branch" to be set up by State Bank of India in Andhra Pradesh in a first-of-its kind initiative in the country . This is a new concept and the idea is to project SBI as a bank for youth too, Mr. Shiv Kumar, Deputy Mananaging Director, SBI, told newspersons after the formal launch of e- payment system for commercial taxes in Andhra Pradesh on Thursday.
The proposed branch, to be set up in about three months, may have criteria such as age for opening accounts. "We were working on deciding an age bracket- something below 35 years of age", he said. The nature of branding/naming of the branch is also being discussed.
SBI now believes that a segmented approach to cater to different types of customers is the way to go.Further, with a view to helping its retail and corporate customers to pay commercial taxes, SBI has launched an e- payment platform.(BL 19.11.2010)

Corporation Bank on biz. development drive

Corporation Bank has launched a business development drive called "Operation Customer Outreach". A bank release said at Mangalore that the drive, which was launched on Thursday, will continue till November 28 at various centres throught the country .Under the programme, each staff member of the bank will move out in the command area of the branch and reach out to all residential areas, business establishments, govt. organisations, and corporates to connect the people to Corporation Bank. (BL 19.11.2010)

Bad loans on the rise in small scale industries

"Vernacular" drive for financial inclusion

Indian Institute of Banking and Finance (IIBF) has brought out the first vernacular edition (in Malayalam)of the book, 'Inclusive growth through business correspondent', a courseware for certification as a business facilitator/correspondent(BC/BF). The book was released by the Managing Director of State Bank of Travancore at Thiruvananthapuram. While making a presentation, Mr. R.Bhaskaran,CEO,IIBF said that candidates aspiring to be business facilitator/ business correspondents have to possess skill-sets necessary to making them effective and efficient in their assigned role. It is expected that he/she be equipped with adequate knowledge of banking and banking operations, bank-specific rules, norms and procedures related to acceptance of deposits and lending to the public. In addition, they should possess the skills for communication, interviewing, marketing and cross-selling. These are essential and necessary to enhance their effectiveness in information-gathering and customer profiling.
Keeping the above objectives in mind, the IIBF designed a certificate course for this newly emerging cadre of financial intermediaries. The objective is to expose the individual BF/BCs to current developments in the field and upgrade skill-sets to enable them to relate better with the rural people.(BL 10.11.2010)

Canara Bank bets growth on customer service

Usually when a Chairman takes charge of a bank, his first comment would be to increase the bank's deposits and advances. However, Mr. S.R.Raman,the present Chairman of Canara Bank had different views to comment. He said that his efforts would be to make all his customers only bank with the Canara Bank and which would mean better service to the customers. "Take good care of your customers and they'll take care of you", he further said.
He further stressed that his immediate focus would be first to initiate employees to know and understand all the features of the services offered by the bank. For example, employees would operate their own accounts only online, therefore, it would help them impart their knowledge to the customers easily. There is a perception problem with the customers, although public sector banks offer all the services offered by the private banks, still customers feel the latest service is given only by the latter. This is due to the fact that our own employees do not know all the features of the products and services provided by the bank.
Regarding challenges to be faced, he visualised that human resource would be a big challenge with about 5000 employees retiring in the next 3-4 years. To cope with this, the Bank would recruit about 4000 employees by next year.
For taking the Bank to the global, the Chairman said that the Bank is open to buying a small Bank in the US. Canara Bank expects to double its global business to 8% in the next 5 years.(BL 08.11.2010)

NBFCs too raise interest rates to attract depositors

With most banks increasing deposit rates, non-banking finance companies(NBFCs), including housing finance companies and non-banking non finance companies, are being forced to fork out higher interest rates on deposits to woo savers.
All major housing finance companies like HDFC,LIC housing finance, DHFL and HUDCO are now offering over 7% for a one year deposit compared with between 6-6.50% about 6 months back. For instance, Mahindra and Mahindra Finance(MMFL) rated FAA+ is paying a 8% for a one-year maturity while Shriram Transport, which commands a similar rating is offering 8.75% for a one-year deposit. While ICICI Bank offers 6.75% for a one year deposit, though it offers 7.25% for 390 days.
Meanwhile, Corporates looking for deposits too are being forced to raise interest rates. Real estate major Unitech is offering 11% for 6 months while Avon Corporation and another real estate company, Kolte Patil are paying 11.46% for a one year deposit. Not surprisingly, most savers prefer banks.(FE 27.10.2010)

Pon IIIam inaugurated in Maduri

Pon IIIam (Gold House), the exclusive set up for those who deal in Gold, was inaugurated in State Bank of India(SBI),Madurai Branch recently.Inaugurating the set up, Mr. J. Chandrasekaran, Chief General Manager, Local Head Office , SBI Chennai, said this was the second in the circle, the first one at Chennai and soon such exclusive set up would be established in Coimbatore and Tiruchi, he said.(BL 27.10.2010)

Karvy to provide online trading facility to BOI customers

Karvy Stock Broking Ltd.(KSBL) will provide its online trading services to customers of Bank of India(BOI). According to an agreement between the Hyderabad-based Karvy and BOI, customers having savings/current account with Bank of India alongwith depository participant account either with NSDL/CDSL can avail a readymade online trading account from Karvy.(BL 27.10.2010)

Banking sector in India put up a good show during global financial crisis

The performance of various bank groups as on March 2009 and March 2010 had been impressive despite constraints faced by them due to slow down in the economy of the global financial crisis and adverse real economic scenario witnessed all over the world.The performance parameters during the two-year period showed that the banking sector exhibited remarkable resilience in withstanding the impact of global economic crisis. Increase in net NPAs or fall in return on assets during the period was marginal whereas the cost of funds registered a significant decline. Analysis of bank group-wise performance was as follows:-
Cost of funds:
The cost of funds had come down considerably during 2009-10 although it continued to be high for all bank groups except for foreign banks. The cost of funds which ranged between 4.46% and 6.67% for different bank groups in March 2009 came down considerably and worked out between 2.82% and 6.13% in March 2010.
Foreign banks could bring down their cost of funds from 4.6% to 2.82% during the period, whereas the State Bank group and nationalised banks could bring down their cost only from 5.94% to 5.32% and 6.09% to 5.35% respectively. While the new private sector banks could bring down their cost of funds sharply by 1.63%, the old private sector banks could bring down their cost of funds only by 0.54% during the period.
Cost of funds for public sector banks and old private sector banks continued to remain high and is a matter of concern.
Return on advances adjusted to cost of funds:
Return on advances adjusted to cost of funds in respect of various bank group remained in the range of 3.95% and 8.14% as at the end March 2009 and 3.60% and 7.17% as at end March 2010. State Bank group had the lowest return on advances for both the years. Foreign banks outperformed the entire bank groups as their return on advances adjusted to cost of funds stood at 8.14% and 7.17% as at end March 2009 and 2010 respectively.
Return on assets:
In respect of return on assets, while the foreign bank group scored well as compared with the other bank groups, State Bank group stood lowest even compared with old private sector banks.It is noteworthy to observe that while the new private sector banks increased their return on assets from 1.12% in March 2009 to 1.38% in March 2010, all other bank groups, including foreign banks, registered a decline on their return on assets.
Net NPAs
Barring the State Bank group, nationalised banks, and foreign banks, the other bank groups could show a reduction in their net NPAs during the period 2009-10. The benefit of restructuring of assets might have come to the rescue of banks to improve their NPAs position.(BL 25.10.2010)

Corporation Bank to focus on improving low-cost deposits

Corporation Bank is chanting the "you scratch my back and I'll scratch yours' mantra when it comes to extending credit to corporates. While sanctioning loans, the Bank will insist that corporates open salary accounts of at least one division or unit.
The Bank has hit upon this strategy to grow its current account savings account(CASA) deposits, which at 25 percent of total deposits is lower than the 35-40 percent prevalent among public sector banks.
For every large corporate loan that Corporation Bank sanctions- be it on a standlone basis or in consortium with other banks- the Bank will insist that salary accounts of that company's staff be opened with it. This way the bank hopes to tap CASA deposits. To improve the proportion of CASA deposits in the total deposits, the Bank plans to open 200 branches, mostly in the semi-urban and rural areas in the North, East and West, every year over the next 5 years.(BL 21.10.2010)

Canara Bank to invest in tech to attract the young

Canara Bank plans to invest significantly in technology with a view to wooing younger customers. Mr. S.Raman, CMD,Canara Bank advised that the Bank would invest as much as it requires to make the Bank the most technologycally advanced Bank. The Bank will also invest in recruiting specialities such as IT professionals and Chartered Accountants.The Bank will recruit 100 IT professionals, 100 Chartered Accountants, risk analysts and young people with technical skills, he added. There are also plans to appoint officers to exclusively work in rural branches. The Bank is also embarking on branch expansion plans, including a better ATM network. Canara Bank also plans opening branches in Africa,"possibly Nigeria, South Africa and Kenya", he added.(BL 21.10.2010)

State Bank raises base rate 10 bps to 7.60%

Striking a balance between wanting to attract more borrowers into its fold and the need to pass on the increased cost of mobilising resources, State Bank of India has nudged its base rate up by 10 basis points to 7.60 per cent. Simultaneously, India's largest lender increased its benchmark prime lending rate by 25 basis points to 12.50 per cent. Both the rate hikes are effective from October 21. By upping its base rate only marginally at a time when other banks have raised their rates by as much as 50 basis points, SBI clearly wants to attract borrowers from other banks into its fold, say analysts.Most public sector banks , including PNB, BOB, Union Bank of India and IDBI Bank have increased their rates from 8.00-8.25% to 8.50% after the RBI hiked key short term interest rates in September. Private sector banks such as ICICI Bank and Axis Bank have increased their base rate by 25 basis points to 7.75%. HDFC Bank has raised its base rate by 25 basis points to 7.50%. With interest rates on deposits of various maturities being marked up by 25-75 basis points over the last few weeks, analysts say the increased cost of mopping up liabilities will pinch banks.(BL 21.10.2010)

Microfinance rates can be cut if banks lower interest : Apex body

Microfinance institutions are ready to cut lending rates by as much as 2.50 percentage points provided banks reduce the cost of money for these institutions by a similar quantum, according to a senior official of the industry association of MFIS.
The 12-13% interest on loans taken from banks is the single biggest cost for MFIS and this presents them a challenge in bringing down lending rates, said Mr.Alok Prasad, CEO, Microfinance Institutions Network (MFIN), the apex industry body.
MFIN is a self-regulatory organisation representing the interests of MFIS that are registered as non-banking finance companies (NBFC-MFIS)with the RBI.Its members represent about 80% of total outstanding micro loans in the country.
MFIS are in the eye of the storm as negative perception has gained ground that they are creaming off profits by charging high interest rates on loans given to small borrowers and also for resorting to strong -arm tactics while making recoveries.
Recently, the Reserve Bank of India(RBI) has set up a committee to study the issues and concerns in the microfinance institutions (MFI) sector, including ways and means of making interest rates charged by them reasonable.
The RBI regulates only those MFIS that are registerted with it as non-banking finance companies.Although the registered companies cover over 80% of the microfinance business, in terms of number of companies they constitute a small percentage of the total number of MFIS in the country. The Central Bank, however, does not prescribe lending rates for these institutions. ( BL20.10.2010)

SBBJ plans rights issue

Mumbai: State Bank of Bikaner & Jaipur is planning to raise Rs.800 crore (inclusive of premium ) through a rights issue of shares.( BL 20.10.2010)

Crisil to develop index for financial inclusion

Rating agency Crisil is developing an index for financial inclusion, which will look into operational nature of "no-frills accounts". Mr.R. Gopalan, Secretary, Financial Services, MOF addressing a press conference at Chennai, after assessing the financial inclusion plans of South based- banks, said that Crisil would develop various indices, including the percentage of these accounts that are operational. The Crisil Index, a neutral index will be applied to evaluate public sector banks performance on financial inclusion. When asked about number of active "no-frills account", Mr. Gopalan said that the operational efficiency of these accounts vary from Bank to Bank. Corporation Bank has an operational efficiency close to 60% while other banks are much less but they are beefing up their technology to improve efficiency. Facilities to be provided for "no-frills account" will be deposits, withdrawals, remittances, account queries, in the next phase loan products micro insurance and micro pension will be offered.(BL 15.10.2010)

Risk rating determines our lending rate :PNB

" Technology advancements in banking operations not only make transactions cost effective but also easy and quick. Avail (yourself' of)internet facility, use technology,"urged the Field General Maneger(Chennai) of state-oriented Punjab National Bank, Mr. S. Ranganathan in a meeting with the selected customers at Tirupur.
His reminder and reiteration on use of technology was in response to a customer's request for slashing interest rates.
The bank had invited around 25 customers for a 'customer meet' on Thursday. When a customer raised the issue of rising borrowing cost, the banker said that PNB's Prime Lending Rate (PLR) was the lowest in the industry. They have since June switched to Base Rate.Due to inflationary pressures, the rate of interest on deposits has gone up and with it bank's cost of funds is also registering an increase. The Bank has a system of risk rating in place, based on which it determines the lending rate. The system is transparent .The rate would depend on the borrower's rating category and the rate difference the best and poorly rated units would be roughly around 3.5 percentage points. Low rating means higher interest, the banker said. He further stated that where the borrowing limits exceeded Rs 5 crore, the account was rated by an external rating agency as well. But the Bank does not go only by the external agency rating.(BL 09102010)

Banks' commission from Govt. business set to rise

Commission earned by banks on Government business are likely to rise with the Reserve Bank of India setting up a committee to review the existing payment structure. The structure is generally reviewed every five years. It was last reviewed in 2005. RBI has formed a committee under A M Pedgaonkar for the review.
Banks receive Rs. 60 per transaction in case of pension payments. For other payments, they get nine paise for every Rs.100. For receipts, they get Rs.45 per transaction. Bankers have made a case for increasing the commission to 15 paise per Rs.100 for payments other than pension and to Rs.100 per transaction in case of pension.
The country's largest lender, State Bank of India(SBI) has the major share in Government business. More than 7000 branches of SBI conduct Government business. As such, State Bank of India will be the biggest beneficiary.
Recently, the Central Bank asked State Governments not to engage private sector banks. The wide network of state-run banks, especially in rural and semi-urban areas, was seen as an effective means to carry out Government transactions.(BS 07.10.2010)

Southern Banks begin financial inclusion process in villages

South India- based banks such as Corporation Bank, Karnataka Bank have kickstarted the financial inclusion plan as envisaged by the Reserve Bank of India to provide financial services to the rural populations. Most of these financial institutions are also in the process of appointing business correspondents who will work as financial intermediates between banks and the rural people. The Corporation Bank has a plan to extend financial services in 212 villages by the end of this fiscal of which they have already covered around 80% of the villages as of now under financial inclusion plan, said the Executive Director, Corporation Bank. However, the Bank is yet to tie up with any "for-profit" or "not for-profit" organisation to act as business correspondents.
The Karnataka Bank plans to cover 75 villages under the financial inclusion plan in the present fiscal.
Under financial inclusion plan, banks will open no-frills accounts with service provisions like deposit, withdrawal, remittance payment, loan repayment among others excluding cheque services. Vijaya Bank has also recently started its financial inclusion plan from Mandya district of Karnataka.(BS 07.10.2010)

Banks against freeing savings account rate

Bankers, especially from the public sector, are against deregulation of savings bank (SB) deposit rates. At a pre-monetary policy review meeting with the Reserve Bank of India on 4th Oct.2010, they feared this would unleash unhealthy competition in garnering deposits .
At the meeting, called to gauge the views of select bank chiefs on credit and deposit growth, interest rates, deregulation of the SB rate, the non-performing assets situation and the transition from the Benchmark Prime Lending Rate to Base rate-linked lending regime, the bankers are believed to have told the RBI that deregulation of the SB rate could trigger volatility in the interest rate on these deposits.
Currently, the 3.50% interest rate on SB deposits serves as a floor rate for all deposits in the banking system. Once deregulated, the SB rates could fluctuate wildly, depending on the liquidity situation. If call money rates shoot up, SB rates would go up, and vice versa. So, whether the depositor will gain or lose, it will be difficult to assess. At least now there is a certainity that the depositor is earning 3.50 per cent interest daily on SB deposits, said a banker clued into the developments.
"Most banks are against the de-regulation of savings bank rate as they feel it would give rise to competition, and could hit the growth of Current Account, Savings Accounte deposits. Also, depositors have been compensated by the daily calculation of savings bank rate and the de-regulation would not serve any additional purpose", said Dr. K. Ramakrishnan, Chief Executive, Indian Banks' Association.(BL 05.10.2010)

More banks hike base rate

Bank of Baroda, ICICI Bank, HDFC Bank and Development Credit Bank on Tuesday hiked their base rates by upto 50 basis points. This comes close on the heels of PNB, IDBI Bank, Allahabad Bank and Axis Bank and a host of other banks increasing their base rates.
ICICI Bank hiked base rate by 25 basis points from 7.50 to 7.75 per cent. The Bank also hiked the interest rates on fixed deposits of various tenors by 25 to 50 basis points, it said in an announcement on the BSE.
Bank of Baroda hiked its base rate by 50 basis points to 8.50 per cent. The public sector bank said it is raising the rate in response to the Reserve Bank of India's sustained monetary tightening and to lower the impact on cost of funds.
HDFC Bank raised its base rate by 25 basis points to 7.50 per cent from 7.25 per cent. Andhra Bank increased the base rate from 8.25 to 8.50%. However, State Bank of India (SBI) is the lone exception. It has retained its base rate at 7.50 per cent.(BL 06.10.2010)

Companies offer more fixed income options for retail investors

Tight liquidity conditions are prompting more companies to raise public deposits from retail investors. Mutual fund houses, seeing an opportunity in the current regime of rising interest rates, are rolling out a slew of fixed maturity plans (FMPS). And topping this off, financial institutions such as IDFC, REC and Life Insurance Corporation are preparing to make public offers of 10-year "infrastructure" bonds which offer tax benefits. With their expansion plans taking off again, more Indian companies are tapping the fixed deposit market to raise funds from retail investors. Companies from the realty and infrastructure space with huge fund requirements such as Jaypee infratech, Jaiprakash Associates, Ansal Properties and Unitech have been inviting retail deposits at high interest rates starting from 10-10.50% for one year and go upto 11.50-12.50% for a three year term.(BL 04.10.2010)

SBT hikes rates on domestic, NRO deposits

State Bank of Travancore( SBT ) has revised interest rates on domestic and non-resident (ordinary) deposits with effect from 4th Oct.2010. Resident senior citizens will get an additional 0.50 per cent margin on deposits of Rs 5,000 and above for periods of one year and more, Chief Manager, Personal Banking Business Department,SBT said. (BL 04.10.2010)

Govt. may compensate banks on no-frills accounts expenses

The Finance Ministry is considering a proposal to compensate around " 50-60 per cent" of the expenses that banks incur on opening and maintaining each " no-frills account", sources in the banking industry said. Such an incentive may encourage banks to expedite the financial inclusion process,they said.
All banks were asked by the Reserve Bank of India in 2005 to offer no-frills accounts at their branches. These are accounts with nil or low minimum balances, limited facilities and nominal charges that encourage people from economically- weak background to open such accounts.
On an average, each bank incurs a total cost of about Rs. 250 for opening and maintaining such accounts in the opening year and lesser in the subsequent years or if the minimum balance in the account is substantial, the sources said. It is estimated that banks have opened over 50 million " no frills accounts" and these have an outstanding balance of over Rs.5400 crore.(BL 04.10.2010)

Honda Siel ties up with SBI

Honda Siel Cars India announced on Friday that it has entered into a finance programme with the country's largest lender, State Bank of India(SBI).Under the agreement, SBI has approved a line of credit for financing HSCI dealers under the Electronic Dealer Finance Scheme(e-DFS). HSCI and SBI already have a retail finance agreement, under which SBI provides automobile loans to Honda customers at competitive rates. According to Mr. Manas Kumar Nag, Chief General Manager, SME BU, Corporate Centre, Mumbai," This agreement will further give us the opportunity to provide our customers more value-added services at competitive rates, and expose them to our various offerings."(BL 02.10.2010)

SBI to pay more for deposits: holds base rate

From 1st Oct 2010, bank depositors will earn 15 to 75 basis points more interest on term deposits across various maturities, while borrowers will have to pay more as a host of banks have marked up interest rates.
State Bank of India has hiked interest rates on domestic term deposits by 25 to 75 basis points across various maturity buckets. While SBI has decided to hold its base rate at 7.50% "for the present",Punjab National Bank(PNB),IDBI Bank and Allahabad Bank have increased their base rates from 8% to 8.50%. Axis Bank too upped its base rate by 25 basis points to 7.75%.
With effect from July 1, banks moved to the transparent base rate- linked lending regime. Banks determine their actual lending rates on loans and advances with reference to the base rate (which is the minimum rate below which banks can not lend ) and by including other such customer-specific charges.
PNB and IDBI Bank have upped term deposit rates by 25-50 basis points and 15-50 basis points respectively across various maturities. Over the next few days, other banks are also expected to increase interest rates on term deposits and the base rate.(BL 1.10.2010)

Festive Cheer:some banks to cut home, auto rates

Banks are getting into a festive mood. A few public sector banks have decided to reduce home and automobile loans till Dec 31.
State Bank of India(SBI), the country's largest lender, has decided to extend its fixed-cum-floating rate home loan scheme for 3 months. The hugely popular scheme, launched in Feb.2009 was scheduled to expire on September 30. Under the scheme, for the first year, home loans carry an 8% interest rate, which rises to 9% in second & third years. Mangalore- based Corporation Bank has gone up. It has bettered SBI's offering, at least for thr first year, by charging 7.75% on home loans. Corporation Bank, charging 8.25% for home loans less than Rs30 lakh, has now launched a fixed-cum-floating home loan product which charges 7.75% interest for the 1st year and 8.25% for the next 2 years.The Mangalore-based bank has also reduced auto loan rates. Another lender, Bank of Baroda is also planning to give 'better rates" on home and auto loan products.(BS 29092010)

RBI allows 'for profit' Cos to act as bank business correspondents

In a bid to give a fillip to financial inclusion, the Reserve Bank of India on Tuesday allowed banks to engage the services of ' for profit' companies as business correspondents (BCs). This move will enable banks to engage the services of companies ( registered under the Indian Companies Act, 1956) with wide distribution network to offer limited range of banking services at low cost at places where setting up a brick and mortar branch may not be viable.
When the BCs model of banking outreach was introduced in Jan. 2006, only entities such as non-government organisations or micro finance institutions set up under Societies/Trust Acts, Societies registered under Mutually Aided Cooperative Societies Acts or the Cooperative Societies Acts of States, Section 25 (not-for-profit) companies and post officies were eligible to act as BCs.
The list of persons who can be engaged as BCs was later expanded to include individuals like retired Bank employees, retired teachers, retired Government employees and ex-servicemen, individual owners of kirana, medical, fair price shops,individual public call office operaters, agents of small savings schemes of Government of India, insurance companies, individuals who own petrol pumps, etc.
BCs are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM. They are permitted to perform a variety of activities including collection of small value deposit, disbursal of small value credit, recovery of principal, collection of interest, sale of micro insurance, mutual fund products, pension products, other third party products and receipt and delivery of small value remittances/other payment instruments. Corporate as BC would be more suitable for rendering banking services in accordance with the bank's internal policies and standards than individuals and other small entities.(BL 29092010)

SBI may raise rates to grab bonus money

In an effort to grab a share of the hefty Diwali bonus to employees in government and corporate sector, country's largest lender State Bank of India may raise the interest rate on term deposit rates in next few days.
"Bank may revise hike interest rate on term deposits only during festive season to get funds from people who will get bonus money. This is also will time build liquidity to manage rise in credit uptake from the third quarter" senior SBI official said. The asset liability committee would take a decision this week, official said but did not elaborate further. At present, bank has adequate liquidity to manage any immediate rise in demand for resources.The Statutory Liquidity Ratio( SLR) is about three-four per cent over minimum level 25 per cent of deposits prescribed by Reserve Bank of India, he added.(BS 29092010)

Corporation Bank starts branchless banking in W. Bengal

Mr. Pranab Mukherjee, Finance Minister, inaugurated five branchless banking units (Grameen Vikas Kendras), a biometric ATM of Corporation Bank and its 1170th branch at Sagardighi in Murshidabad district of West Bengal on Monday,the bank said in a press release .
Mr. Mukherjee said that the Government, in consultation with the Reserve Bank of India, has decided to provide appropriate banking facilities to habitations having population in excess of 2000 by March 2012.The benefits of welfare programmes such as those provided by the Mahatma Gandhi National Rural Employment Guarantee Act or payment of wages in lieu of work, pension etc. will be routed through the banks directly to the beneficiaries, so that there will be no pilferage through middlemen. Banking services will be provided to everyone within their reach through branch, mobile, internet, business correspondents, he said.( BL 28092010)

Central Bank plans Rs2500 crore rights issue this fiscal

Public Sector Central Bank of India said on Monday that it will come out with a rights issue to raise around Rs 2500 crore in this financial year. The funds will be issued for normal operations said the bank's CMD, Mr.S.Sridhar while attending a conference on " Finance and Investment" organised by CII. He further said that the bank is assessing the market and is taking all the necessary steps. The bank is yet to approach the SEBI. It will be filing its Red Herring Prospectus shortly. The bank has already appointed the merchant bankers for the rights issue.(BL 28092010)

Corporation Bank to expand branchless banking network

Corporation Bank, which uses the branchless banking model for financial inclusion, plans to bring more people under its branchless banking network. Mr. Ramnath Pradeep,CMD,said that the bank has around six lakh no-frills accounts, with an average balance of Rs 475 a customer. The Bank plans to increase the number of no-frills accounts to nine lakh,by the end of the fiscal year, under its financial inclusion plan. He said that opening of no-frills accounts is a stepping stone to enable customers to avail other banking products. The Corporation Bank has 1385 branchless banking units in Karnataka,AndhraPradesh, Goa, TamilNadu, Kerala, Gujarat, Maharashtra, Haryana & Punjab.(BL 24092010)

Toyota, UCO Bank seal car loan deal

Toyota Kirloskar Motor (TKM) Ltd. said on Thursday that it has signed an agreement with UCO Bank earlier this month to extend finance to its prospective customers. The Bank will be one of the preferred financiers for the entire range of vehicles sold by Toyota. The CMD, UCO Bank said that the tie-up will enable the Bank to increase its car loan portfolio substantially.The ED, UCO Bank said that inorder to increase the competitiveness of the Bank's Car Loan Scheme, the product has been modified and interest rate is lowered to make it more attractive in the market place.(BL 24092010)

Syndicate Bank, Vijaya Bank sign MOU for financial literacy

Syndicate Bank and Vijaya Bank have executed a memorandum of understanding (MOU) to form a trust exclusively to establish and run financial literacy and credit counselling centres across various lead districts in Karnataka.These will later be extended to other States in the country. The trust, Jnana Jyothi Financial Literacy and Credit Counselling Trust (JJFLCCT), formed jointly by both the banks according to the Reserve Bank of India guidelines, will oversee the establishing and management of these centres in 10 lead districts in Karnataka, to begin with. Mr.D.T.Pai,former CMD,Syndicate Bank will be the Chairman and Managing Trustee of the trust, and will be assisted by two other trustees. The setting up of these centres in rural, semi-urban,urban and even in metropolitan areas according to the RBI's model scheme is aimed at financial literacy and counselling for farming communities and those engaged in allied activities. In urban areas, the focus will be on activities such as individual debt counselling. The centres will educate the farming community on various banking habits and in agriculture and allied activities.(BL 24092010)

Public sector banks set up financial inclusion drive

Public Sector Banks are planning to go the extra mile with their financial inclusion efforts. While the Government has asked them to provide basic banking services to all unbanked villages with a population of over 2000 by March 2012, the Banks are gearing up to cover even villages with population of between 1000 to 2000. This was indicated by top public sector banks at a meeting held to review the progress made by banks in achieving the financial inclusion plan for 2010-2012 at the Indian Banks' Association on Thursday. Over 73,000 unbanked villages in the country have been allotted to different commercial banks for coverage through the bank's financial inclusion plans. (BL 24092010)

RBI asks banks to beef up deposits

Worried over bank's reluctance to increase deposit rates despite its signal, the Reserve Bank of India(RBI) has prodded banks to beef up efforts to mobilise deposits. At a recent meeting with the country's top bankers, RBI officials , led by Dy.Governor Subir Gokarn, expressed concern over the tardy growth of term deposits. Deposit growth has been just 14.44% for the year to August 27, far below RBI's projection of 18%. This is mainly due to unattractive rates. With inflation close to double digits, the real returns are negative. Though RBI raised repo and reverse repo rates by 25 and 50 basis points (bps), respectively, on September 16, most banks are yet to take its cue. A day after, the country's largest lender, SBI, said it was not likely to raise rates before 3-6 months. According to bankers, the regulator wants that availability of money should not be a constraint to corporate India's growth. Banks,on the other hand, do not see an immediate need to raise rates as demand for loans has not picked up significantly. Banks credit growth till now has been in line with RBI's projection of 20% for 2010-11.Rather than raising term deposit rates, which are more stable, banks are rushing to raise short-term funds. (BS 23092010)

Bankers say no to RBI on savings rate deregulation

Bankers are putting up stiff resistance to Reserve Bank of India's (RBI's)move to deregulate the interest rate on savings bank accounts-the last bastion of administered rates. Banks benefit from low-cost savings deposits.The Central Bank wants to free the savings deposit rate to smoothen monetary policy transmission, which it feels is hampered by the current fixed-rate regime.
At 3.50% a year, interest on savings bank accounts is the only remaining regulated rate in the banking system- and a highly contentious one, given its impact on the common man. However, banks fear that making this low-cost product market-driven will only create instability. As a result, banks have told RBI that the time is not ripe for such a move. The Central Bank had called a meeting of top bankers where their views on this sensitive issue had been sought.
"The Savings Bank interest rate acts as an anchor for other rates. One of the fallouts of deregulation would be that when there is a squeeze on liquidity, the rates could rise to the level of fixed deposit-rates",said the chief of a bank, who attended the meeting.
The country's top bankers, including MD & CEO of ICICI Bank, MD,SBI,MD,HDFC Bank, Regional CEO for India & South Asia of Standard Chartered Bank will meet with RBI Dy.Governor,Subir Gokarn on Tuesday.(BS 23092010)

India Inc. looks beyond banks for funding

India Inc's dependence on banks for funding appears to be showing a modicum of decline. With the Reserve Bank of India blocking the sub-benchmark prime lending rate route for raising cheap resources from banks from July 1, Corporates have found an effective non-bank alternative by resorting to commercial papers and non-convertible debentures. Ever since banks shifted to the base rate linked lending regime, outstanding credit in the banking system has come down. According to RBI data, since the begining of the second quarter and upto September 10, outstanding credit in the banking system has shrunk by Rs 19,463 crore. However, in the corresponding period last year, bank credit was up by Rs 26,632 crore."Top-rated Corporates have aggressively tapped the debt capital market for mopping up low-cost funds since the begining of this quarter. Besides, they are also dipping into robust internal accruals to finance their inventories",said DMD, CARE Ratings. However, during a liquidity crisis, funding could dry up from debt markets but a bank is unlikely to jeopardise its long-standing relationship with a corporate by choking off funds.(BL 23092010)

Banks turning to chip-based smart cards

In what could be the next big revolution in the banking space, banks in India, which now issue credit and debit cards with magnetic stripes, are trying to move towards clip-based payment cards.
A smart card would not only accentuate greater security, but could also become a multifunctional card. In fact, banks have started pilots already, and "mass roll-out would happen in 2011-2012," said a source in Venture Infotek, a transaction management company recently acquired by French IT services company ATOS ORIGIN. The company has a card bureau in Bangalore with an initial capacity to manufacture 12 million chip cards a year. Banks will look at a smart card as an opportunity to make it a multifunctional card including an ID card, said Ms Shubhalakshmi Panse, Executive Director, Vijaya Bank. Features such a e-purse and loyalty programmes too could be loaded on to this card. Once the smart card gets introduced, it might become both debit and credit cards, she said. In fact, HDFC Bank is already issuing chip-based credit and debit cards alongwith the magnetic stripes. Mr. Parag Rao, Head- Credit Card Marketing, HDFC Bank, said that the magnetic stripe will carry lesser sensitive data and more data will be installed on the chip.(BL 23092010)

Banker to wealthy Indians, too

Customers can meet in the Sapphire conference room, keep their valuables in the Topaz locker room and freshen up in the Opal dressing room. This is State Bank of India's(SBI) 'by invitation" 4000 sq.ft. branch called "Kohinoor Banjara", which will cater to Hyderabad's swish set.Minimum opening balance :Rs 1 crore. The country's largest lender is carrying out a curious experiment on the assorted group of people that make up wealthy India. This crorepati branch in the tony Hyderabad neighbourhood of Banjara Hills will offer frills that include personalised relationship managers, a round-the-clock locker facility, doorstep pick-up and drops. However, wealth management, advisory and related services-considered derigueur for private banking-will be provided only at the branch. The Bank has set itself an ambitious target as far as clientele is concerned, from prosperous Hyderabad businessmen to Tollywood film stars. It acquired 25-30 clients within four days of operations,a SBI executive said. Predictably, SBI's crorepati branch has created a buzz within banking circles.(BS 21092010)

Indian Bank to disburse Rs 100 crore through SHGs

Indian Bank plans to sharpen its focus on financing through self-help groups(SHGs) targeting disbursement of Rs 100 crore this fiscal. The Bank has since disbursed Rs 335 crore to about 33000 SHGs across the country, with focus on the Southern States in the last 3 years as advised by Mr.V.Ramagopal, the Executive Director. The Bank, which has a network of 27 special branches handling this category of financing, plans to open 7 more such branches this year. SHG members are utilising the loan amount for various income generating activities such as tailoring, pickle making and small scale textile business. The members also organise exhibition-cum-sale as part of their marketing initiative.(BL 21092010)

Core-Banking software developed for small banks

Perfect Software Solutions Pvt. Ltd., a venture by a group of IT technicians based in Kozhikode, has developed a core-banking software that can be used even by small banking institutions such as cooperative banks at a minimal cost. The software, styled"Score" can be operated on windows and linux platforms, according to Mr. K.C.Biju,Managing Director of Perfect Software Solutions. He said that small co-operative banks could not adopt core-banking software solutions developed by companies outside the state and avilable in the market because of the exorbitant expenses involved. The software developed by the company will make avilable all the details of the customers of every branch of the bank on a single platform. This will enable customers carry out transactions from any of the branches and the details of the transactions would reach their mobile phones through SMS.(BL 20092010)

PM reviews financial inclusion efforts

The Prime Minister,Dr. Manmohan Singh, on Friday reviewed the progress made on the financial inclusion front by the Bankers in the country.
He was briefed on the efforts being taken to reach banking services to the 73,000 rural habitations, having population of over 2,000 people (according to the 2001 census) by March, 2012. The efforts include use of technology- based models,as well as banking intermediaries such as business correspondents. Besides the Reserve Bank of India Governor, Dr.D. Subbaro,the others present on the occasion include,Mr. R.Gopalan, Secretary(Financial Services),Ms.Usha Thorat,RBI Deputy Governor and Dr. K. C. Chakrabarty,RBI Deputy Governor.(BL 18092010)

Deposit, lending rates set to rise, but not before Oct.

Lending and deposit rates are set to rise following the hike in repo and reverse repo rates by 25 basis points and 50 basis points respectively by the Reserve Bank of India.But the hikes may not be effected before October as credit growth is yet to pick-up, say bankers. It is also likely that deposit rates may go up before lending rates as there is a need to improve the sluggish deposit growth. According to the CMD of Union Bank of India, deposit rates will have to go up in order to incentivise savers. "Deposit growth is lower than the RBI's projection. If it continues to be low, it cannot support the credit growth, which will pick up in the busy season. So the priority at this point of time has to be deposit growth",he said. The same view has also been shared by some other bankers.(BL 17092010)

Finance Ministry gets SBI's formal proposal for raising capital

The Finance Ministry has received a formal proposal from State Bank of India for its capital raising plans during 2010-11, a senior official has said. Mr. R.Gopalan, Secretary(Financial Services) told that they had formally received a proposal. The actual instrument has not yet been decided. There will be discussions between the Finance Ministry and SBI. After that only the capital raising route will be finalised. The SBI Chairman,Mr. O.P. Bhatt had earlier said that the Bank was looking to raise capital to the tune of about Rs 20,000 crore through a right issues before the end of the current fiscal.(BL 20092010)

Oriental Bank raises Rs 500 crore capital

Oriental Bank of Commerce (OBC) has raised capital of Rs 500 crore to fund business growth and strengthen its capital adequacy.This is the first time in the current fiscal that the Bank has mobilised capital.Of the Rs 500 crore capital raised, the Tier-I capital component stood at Rs 300 crore and the Tier-II capital was Rs 200 crore.For Tier-I capital raising, perpetual debt instruments with annual coupon of 9.05% was issued. For Tier-II capital raising, bonds with annual coupon of 8.68% was issued,a bank official said.(BL 20092010)

Banks press pause button on power loans

The power sector could run into a funding crunch as banks are going slow on lending.Many lenders have hit the sectoral credit exposure limit and concerns have emerged over environmental and coal mining clearances.As a precautionary measure, banks are laying down conditions such as tying up coal linkages.Some are even insisting that the coal supply should be only from within India and not from countries such as Indonesia and Australia, from where a lot of companies are now trying to source coal. But, domestic coal production is beset with its own set of problems like obtaining clearances from the Ministry of Environment,which can take ages or may not come at all. A senior official from a public sector bank said that currently, disbursements are only for power distribution and transmission projects.(BL 20092010)

Banks see gains from inclusion.

No-frills accounts are proving to be a growing business opportunity.SBI's business correspondent outlet in the middle of Mumbai's Dharavi's grime run by ageing LaduLal Jain which started around four months ago has brought a silent revolution for 2000 account holders there. Mr. Jain's outlet remits around Rs 1,00,000 a day.Account holders can send a maximum of Rs 10,000 on which they pay just Rs 25 as commission, he says. It earns 60% of that and the Bank keeps the rest. Jain expects to exhaust the limit of 2500 accounts very shortly and may seek permission to open more accounts. His expense is a modest Rs 20,000 on mobile phones and a printer to confirm transactions, he says. Many of his account holders are migrant workers who are permitted to furnish a limited KYC disclosure, which may even be a village identity card to open an account for deposits, withdrawals and remittances.It is a revolutionary concept said a senior SBI official closely associated with the project.Costs for banks are limited to spending on a few days training and paying the business correspondents, use of hand-held instruments and other related technological investments. SBI which has enrolled 1000 BCs in the past 3 months, plans to increase the number to 50,000 in 2 years. It aims to open up to 7.5 million no-frills accounts and extend its direct and indirect coverage to 1,00,000 villages. The Bank expects to generate Rs 2,000 crore in business by the 3rd year, and is working on various models with varying commission structures.(BS 16092010)

SBI ties up with Oxigen for kiosk banking in Mumbai

State Bank of India has tied up with technology company Oxigen Services to offer kiosk banking in Mumbai and Maharashtra. To begin with , the bank is launching 50 kiosk banking outlets in Mumbai,with the first one being launched in Dharavi on Wednesday. Last month, SBI had launched kiosk banking with Oxigen in Delhi, with 30 outlets. Under the arrangement, Oxigen will provide the technology support , while Sahyog Microfinance Foundation, an Oxigen-sponsored Company which is registered as a banking correspondent(BC) with SBI, will deal with the commercial aspects of the transactions.Mr. Riten Ghose, General Manager,SBI,Mumbai, said the Bank has about four-five national level BCs and many more at the local level. For instance, there are about 500 BCs in Maharashtra. The Bank is also looking to enrol its active self-help groups as BCs.
Customers will have to open a no-frills SBI account through Oxigen Web Retailers. These are retailers who already offer services such as online bill payment and ticketing.The kiosks would be linked to SBI's Core Banking System to offer banking services such as account opening, cash deposit and withdrawals and products such as remittance, mortgages, loans, insurance and mutual funds. The accounts will be opened with minimum Know Your Customer rules and using fingerprints for identification. The limit for daily cash deposit is Rs 10,000. The Bank will pay a fee to the retailer for every account opened and every transaction - withdrawal and deposit.(BL 16092010)

Tata Motors in pact with 14 Banks

Tata Motors has tied up with 14 banks to offer customers in Kerala with loans for purchasing the Tata Nano at attractive rates of interest. More such arrangements are in process.Loans for the Tata Nano will be available at all the branches of SBI, Central Bank of India, HDFC Bank, ICICI Bank, UCO Bank, Bank of Baroda, Tata Finance etc.(BL 16092010)

Allahabad Bank expects 25-26% credit growth

On the back of robust demand for credit, Allahabad Bank expects to post 27% growth in advances during the second quarter(july-september) of fiscal 2010-11.The Bank is hopeful of achieving a credit growth of about 25-26% for the financial year 2010-11, according to its Executive Director, Mr. M.R.Nayak. Mr. Nayak further said that the Bank might raise about Rs 1000 crore during the current fiscal. Although the Bank is quite comfortable with the capital position and might not need to raise funds immediately, however, if credit offtake picks up, then it may consider raising about Rs 1000 crore, he said.(BL 16092010)

Banks urged to launch awareness drive on financial inclusion

Banks should undertake joint publicity campaign in order to create awareness among people about financial inclusion and various products being offered, according to Mr. Rakesh Singh, Additional Secretary(Financial Services), Ministry of Finance.Mr. Singh was addressing a special review meeting to analyse the progress of implementation of financial inclusion plan and the initiatives taken by three Kolkata- based banks on financial inclusion.The banks were United Bank of India,Allahabad Bank and UCO Bank. The meeting took note of the progress in enrolling business correspondents to roll out financial inclusion plan, status of banking service in the villages having population above 2000 and position of training of rural branch managers and BCs among others.(BL 19092010)

ATM transactions cross 10-crore a month mark

ATMs in India appear to be humming with activity, what with the cumulative monthly transaction volumes recorded by the National Payments Corporation of India's (NPCI), National Financial Switch (NFS), to which 61,702 ATMs are linked, crossing the 10-crore mark for the first time in August 2010. The Switch recorded 7.32 crore ATM transactions in July 2010. Between Jan,2010 when 53,906 ATMs of 37 Banks were connected to the NFS, and August 2010, when 61,702 ATMs of 44 Banks were linked to the Switch, monthly transaction volumes on the NFS shot up by 79% to 10.18 crore (5.68 crore in Jan,2010). The spurt in transaction volumes is on 2 counts. For one, bilateral transaction volumes between banks have migrated to the multilateral NFS platform. Two, due to the festival season, said Mr.K.S.Nerurkar, Head-NFS and Business Development,NPCI. NPCI promoted by State Bank of India,Punjab National Bank,Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citi Bank and HSBC, was established in December, 2008. It is the umbrella organisation for all retail payment systems in the country owned and operated by banks.(BL 15092010)

Inform clients about derivatives,RBI tells Banks

The Reserve Bank of India (RBI) has advised Banks to be transparent while marketing derivative products and to educate the customers about the risks involved, according to Mr. K.R.Ananda, Regional Director, RBI, Chennai. He said the RBI will examine the issue of approaching Internet Service Providers (ISPS) to install filters to check spam emails so that gullible investors do not fall for the trap of scamsters tempting them with announcements about winning prizes/lotteries. On the credit flow to the MSME sector, Mr. Ananda said the RBI conducted review meetings every quarter about it and analysed whether the targets were met. RBI has also made it mandatory for Banks to extend loans to MSMEs upto Rs 10 lakh without any collateral.(BL 15092010)

Mobile Bank to cover every village by 2015: RBI

Reserve Bank of India's( RBI's)Deputy Governor, K.C.Chakrabarty said there was a plan to cover all villages through mobile banks by 2015. Every village would be financially included in the next 5 years, he said. A mobile bank is a facility under which an authorised vehicle, with officials of a particular bank, reaches a particular village at a specified time.It provides limited services like deposit or withdrawal to villagers. RBI had prepared a road map to open a bank branch in villages with appropiate space, he said. It has been decided that all the areas having a population of 2000 should get access to banking facility, he added. About circulation of fake currency, Chakrabarty said it was a security issue and police was being trained to deal with this. Allthe banks had been informed about the security features of Rs 500 notes,he said.(BS 14092010)

Banks tightening norms for education loans

With non-performing assets (NPAs) in the educational loan portfolio rising, banks are putting in place mechanism to check delinquencies and also keep track of students. The Executive Director of Canara Bank, Mr.H.S. Upendra Kamath stressed the need to assess the repayment capacity of the borrower, which comprises two components- of the parent and of the student himself after he gets employed, which depends upon the course he has selected, the employment potential of the course and the track record of the institution as far as placement is concerned.(BL13092010)

Federal Bank ATMs linked to NFS

Federal Bank has announced that its ATM network has been linked to the India Pay National Financial Switch( NFS) managed by National Payments Corporation of India's (NPCI). This is India's largest network of shared ATMs, which connects around 61200 ATMs across 44 banks.This would enable Federal Bank's customers access to all these 61200 ATMs across the country and all the cardholders of the 44 member banks can also access 759 Federal Bank ATMs.(BL 11092010)

Axis Bank's remittance service

Axis Bank has launched a remittance service called Instant Money Transfer, in partnership with Empays Payment Systems. IMT will be avilable to Axis Bank customers in Mumbai,Bangalore, Ahmedabad, and Hyderabad to conduct transactions.The pan-India roll-out is expected to take place in the next 4-6 weeks, said a press release. IMT enables customers of the Bank to make instant cash payments to a receiver anywhere in India at low cost.The receiver need not be an account holder of Axis Bank, or for that matter any Bank. Once the receiver gets the notification of the remittance, he or she can go to the nearest Axis Bank ATM and withdraws the money. Remitters can conduct the remittance using mobile, net banking and ATMs.(BL 11092010)

Axis Bank in urban financial inclusion drive

Axis Bank has tied up with Bangalore- based Janalakshmi Social Services(JSS) to launch its urban financial inclusion initiative in India, the pilot of which will be done in Bangalore. It would be a branchless banking facility, and would follow the business correspondent model. JSS would be the business correspondent, while all accounts will be opened, maintained and serviced by Axis Bank. The Bank has enrolled 5,000 customers through this initiative, Ms Shikha Sharma, Managing Director and CEO, Axis Bank, said.(BS 10092010)

RBI panel to study freeing of savings bank rate

The Reserve Bank of India will soon set up a working group to look into the issue of deregulation of savings bank interest rate, said Ms Usha Thorat, Dy. Governor, RBI. Ms Thorat said ,'The deregulation of savings bank interest rate that is currently set at 3.50% by the RBI is an issue which is on our radar. A working group is being set up to debate the issues and draw conclusions." Totally freeing rates could lead to lowering rates in some areas while leading to increase in other areas. It would need to be ensured that there is no discrimination between different customers of the same bank, she said addressing the FICCI-IBI banking seminar in Mumbai on Wednesday. Another important consideration is whether deregulation of savings rate would draw more people into the fold of the formal banking system. The RBI has been taking measures to safeguard the interest of saving bank customers. From April 1, banks have been calculating the interest on balance in the savings bank account on a daily basis, against the earlier practice of calculating it on the minimum balance between the 10th and the last day of each month.(BL 09092010)

Canara Bank launches retail loan festival

Canara Bank has launched a 5 month long retail loan festival for home loans and vehicle loans from Sept.1 to Jan 31,2011.The Bank has come up with special interest rates for home loans & vehicle loans. According to a press release from the bank, housing loans upto Rs 30 lakh would be available at an interest rate of about 8.50% an annum, and there would be an interest concession of 0.5% an annum for all slabs upto Rs 1 crore.The Bank also announced a waiver of processing charges upto 75%. Home improvement loans would also be offered at home loan interest rates during the offer period. Vehicle loans are offered at 10% an annum, with nominal processing charges.(BL 08092010)

"Allow UK banks to open branches here"

The Indian Government should allow UK banks the freedom to open branches in India, similar to the UK Govt. which allows Indian banks to expand in the UK, said Lord James Sassoon,Commercial Secretary to the Treasury ,UK while speaking at the recently held FICCI-IBA banking seminar at Mumbai. He expressed his desire to see Indian banks establish themselves even more prominently across the UK- and basing international businesses out of the UK. Lord Sassoon further said that London has the advantage of being a financial capital as well as a gateway to other European markets. He cited the example of ICICI Bank which has used its UK subsidiary to open branches in Belgium and Germany and State Bank of India that has decided to make London its European headquarter.(BL 08092010)

HDFC extends dual rate home loan offer

HDFC Ltd. has announced it is offering its dual rate home loan scheme which had ended on August 30 to till the end of September. But the housing finance company has increased the interest rates following the hike in its benchmark retail prime lending rate (RPLR),with effect from September 01. Under the revised scheme, the interest rate on home loans will be available fixed rate at 8.50% upto March 31,2011, 9.50% for the period between April,2011 and March 31,2012 and the applicable floating rate for the balance term.These rates are applicable for all the new home loans, irrespective of the loan amount, said a press release issued by the company.(BL 08092010)

SBT-Kudumbasree drive for financial inclusion

State Bank of Travancore(SBT) is now in the process of tying up with the Kudumbasree poverty eradication project of the Govt. of Kerala to roll out the banking correspondent/ facilitator model in 27 under-banked villages allocated to the Bank in the state. Earlier this year, SBT had formulated and approved a full-fledged financial inclusion plan according to the directives,Managing Director-in-charge said.The plan, inter alia,involves extending banking services to 41 currently under-banked villages with a population of over 2000. Of these, 27 are in Kerala and 14 in Tamil Nadu.(BL 08092010)

SBI to raise Rs 500 crore via retail bonds

State Bank of India plans to tap retail investors via a bond issue . The executive committee of the bank's board accorded approval for raising Tier II capital by way of public issue of lower Tier II bonds for Rs 500 crore with an option to retain 100% oversubscription. Although other banks like IDBI and ICICI regularly tapped retail investors through the 1990s and early 2000 via deep-discount bonds, SBI have not tapped retail investors as deposits were easy to come, say analysts.SBI may make the bond issue in October which could be of 10-15 years tenure.(BL 08092010)

IDBI Bank likely to raise equity capital

IDBI Bank may consider raising equity capital, thereby diluting the Govt's stake, over the next 12-15 months. The Bank will explore the options of going in for a right issue, follow-on public offer , qualified institutional payment or preferential placements for raising funds,according to its Chairman and Managing Director,Mr.R.M.Malla. The Union Govt. currently holds a 65% stake in the bank. The bank will also focus on garnering more CASA( current account and savings account) deposits,which currently stands at close to 15% of the Bank's overall deposits. IDBI Bank has done away with the concept of minimum balance on CASA accounts and has waived off most service charges, other than those pertaining to bounced cheques.(BL 06092010)

Shift to card payments to save on cash printing cost: Study

It cost the Govt. nearly Rs 2800 crore to print currency notes in 2009-10.Cash/ currency notes are the preferred mode of payment for most customers,but with printing cost on the rise, it makes sense for the Govt. to reduce usage of these notes and shift cash transactions to a card-based system of payment. Right now, a mere 5% of retail sales or about 90000 crore worth of transactions in India are done through cards(credit & debit).In other words, card transactions reduced cash transactions in the retail sector by about 5% .Given the cost of printing notes,card usage leads to savings of about Rs 140 crore(i.e,5%of Rs 2800 crore), in currency management, says a study conducted by Prof. Ashis Das, Professor of Maths,IIT Bombay.(BL 06092010)

New Banks must be strong for financial inclusion

New entrants in the banking sector should be strong , well capitalised to promote financial inclusion in a cost-effective way, said a top official at the Reserve Bank of India(RBI),which views increased access to financial services as a driver of sustainable economic growth. RBI initiated its process of increasing banking participants with a discussion paper on issues including capital requirements for aspiring banks, for which it has sought public feedback. The Govt. aims to increase access to banking services across geographics , through the new players, with a stated intention of ensuring every village with a population of over 2000 has access to such services by March 2012.(BS 01092010)

Vijaya Bank to focus more on branch expansion

With the Govt. directive to drive up CASA levels ,Vijaya Bank wants to place more emphasis on opening new branches.In 2010, the Bank plans to open about 100 branches,which it believes would give a boost to its CASA (current account savings account) ratio.According to the Executive Director,Vijaya Bank,with more technology driven products such as RTGS,NEFT and speed clearing in the payment and settlement arena, the float funds historically available to banks will continue to get reduced. However, with the daily interest regime ,customers are now comfortable keeping funds in savings account,which also meant easy liquidity and help Bank maintain its CASA level. The Bank's current CASA stands at 24.24%, and it targets a 25% CASA level this year.(BL 30082010)

PNB's online remittance facility

Punjab National Bank has launched PNB NRI Remit- India, an online remittance facility and PNB World Travel Card. The remittance facility is an online cross-border remittance solution to send money from the US to India and has been launched in association with the Bank of New York Mellon, said a release issued by the Bank. The World Travel Card is designed as a prepaid wallet for persons travelling abroad that can be used outside India. It is in association with Master Card and is available in dollar,euro and pound.(BL 30082010)

IDBI Federal Life Insurance

IDBI Fortis Life Insurance Co.Ltd. a joint venture company floated by IDBI Bank, Federal Bank and Fortis Insurance International , has changed its name to IDBI Federal Life Insurance Company Ltd. w.e.f.August 24. The company has obtained the approval of the Registrar of Companies and Insurance Regulatory and Development Authority after completing all legal formalities.There is no change in the shareholding pattern of the company.(BL 28082010)

PSU Banks to woo customers with cheaper loans this festive season

Due to intense competition in the consumer banking, banks are planning to woo individuals with cheaper loans even as interest rates are on the rise. Consumer loans,car loans could be now available at lower rate, even some bank may relax the margin requirements for the customers,it is learnt.Mr. Kamath,CMD, PNB says the bank is planning to lend at lower rates to small borrowers.Car loans, home loans at a fixed rate would be cheaper. However, private banks are not in a mood to bring down the loan rates.(ET 28082010)

KMB launches non-resident credit card

Kotak Mahindra Bank has launched a credit card specially designed for the bank's non-resident Indian customers. The NRI credit card is available against term deposit of Rs 1 lakh and above and the credit limit is upto 80% of the deposit.The card carried features such as four times reward points on international spends, fuel surcharge waiver, choice on redemption of reward points and no-charge equated monthly instalments for 3 months.The card also provides the customers the freedom to purchase and pay in rupee while travelling in India.(BL 28082010)

StanChart Bank to focus on unsecured loans again

Encouraged by the fall in loan losses, Standard Chartered Bank once again plans to focus on unsecured consumer loans. Bank's regional head, consumer banking, stated that Bank has nearly 2.50 million customers and as such may start pushing unsecured loans business. The Bank is looking at its credit card and personal loan business but will not lend at the lower end. Unsecured loans currently account for less than a third of the Bank's Indian consumer assets.(FE 28082010)

Moody's assigns 'C' to SBI

Moody's has assigned a bank financial strength rating (BFSR) of 'C' - to State Bank of India (SBI). This rating reflects the bank's dominant franchise as the largest commercial bank in India,and SBI's sound financial position. SBI is present in all financial sectors through its non-banking subsidiary companies, which we believe provides huge potential for the group to cross-sell it's products,the global credit rating agency said in a report.(BL 28082010)

New India Assurance seeks to use banking correspondents

The RBI with a view to giving a leg-up to financial inclusion,recently permitted banks to appoint banking correspondents (BCs) in areas -typically villages- where opening a branch may not be viable. The BCs could be small businesses, such as kirana shop owners,or even influential individuals. These people provide basic banking services to the local populace on behalf of the bank that has appointed them.New India Assurance has now suggested to the Insurance Regulatory and Development Authority(IRDA) that the company - and all insurance companies- be allowed to use banking correspondents to service the insurance sector also.At present, according to IRDA's regulations, micro insurance can be sold only directly by the insurance company or through non-governmental organisations or self help groups.The IRDA is considering the idea as said by Mr. Ramadoss,CMD,New India Assurance.(BL 27082010)

ICICI allots shares to BOR shareholders

ICICI Bank on thursday said it had allotted its shares to the shareholders of Bank of Rajasthan (BOR) following the amalgation of the two private lenders.As much as 25 shares of ICICI Bank were allotted for 118 shares of BOR, ICICI informed the Bombay Stock Exchange. ICICI's shares have been allotted to those shareholders of the erstwhile BOR whose names appeared in the register of depositories as on the record date of Aug 25,it said.(BS 27082010)

Open no-frills a/cs for minorities but adhere to KYC norms

The Reserve Bank of India (RBI) has asked banks that while they should ensure opening of no-frill accounts by members of the minority communities,know-your-customer (KYC) norms should also be properly followed.The RBI has advised the banks to ensure opening of no-frills accounts or other accounts for students from minority communities or other disadvantaged groups.However, while opening such accounts, KYC norms, as appropriate may be followed,RBI said.(BS27082010)

Stan Chart's facility

Standard Chartered Bank has launched 'Preferred Banking' facility for the emerging affluent segment.The facility offers a combination of savings, borrowing protection and investments with a rewards programme.(BL27082010)

SBI to discuss merger of 5 associate banks with govt.,says Bhatt

After completing the amalgamation of State Bank of Saurashtra and State Bank of Indore with itself, State Bank of India (SBI) plans to discuss the issue of merging the remaining 5 associate banks with the government .SBI Chairman O.P.Bhatt said the Bank would discuss with the govt. whether it should go ahead with the consolidation of some more associates. There would be consultation with the 5 associate banks as well to make the process relatively faster and easier.(BS 26082010)

SBI not to hike rates for now

State Bank of India is not planning to raise lending or deposit rates before the end of the current quarter, said Mr. O.P.Bhatt,its Chairman. The Bank raised deposit rates by 25-50 basis points and its benchmark prime lending rate by 50 basis points last week. But it is not looking to raise its Base Rate for now, Mr. Bhatt said.He further said although liquidity is not as much as it used to be,funds are avilable. But after September,there could be pressure on liquidity due to advance tax payments.(BL 26082010)

Govt tells 4 banks to increase Casa Deposits

IDBI,UCO Bank,OBC & VIJAYA Bank get the directive from the Govt. to increase their low-cost deposits,commonly known as the current account savings account , or Casa.The directive is to lift their Casa to more than 30% of the total deposits as it has a direct bearing on their profitability and net interest margins.The share of low cost deposits of these banks was below 25% as at the end of March 2010.IDBI Bank with 14.59%, OBC with 24.97%, UCO Bank with 23.56% & VIJAYA Bank with 24.6% were below the government's comfort level.(BS 25082010)

Dena Bank to foray into syndication

State-run Dena Bank plans to enter the syndication business.For this ,the bank has set up a team in Mumbai and fixed a revenue target of Rs 25 crore for 2010-2011.Besides,the bank has appointed an agency to identify the potential countries and business model for its overseas foray. The Bank is expected to start its operations from Mumbai by December 2010 and will expand it to other parts of the country in a phased manner.(BS 25082010)

State Bank of Indore branches to operate as SBI's

All branches of State Bank of Indore will function as branches of State Bank of India from friday,said the Reserve Bank of India,in a press release issued on Tuesday.Customers ,including depositors of State Bank of Indore will be able to operate their accounts as customers of State Bank of India with effect from the said date.(BL25082010)

Credit bureaus rush in sensing growing opportunity

Banks will soon have greater choice in selecting their source of information as more credit bureaus seek a share of the growing number of financial product users in India, the world's second -fastest growing major economy,after China.While new bureaus would get an opportunity to tap the large economy,some analysts say the competition could force some of the bureaus to focus on niche,besides constantly improving products and operating on thinner margins.The first and currently the most dominant ,Credit Information Bureau(India)Ltd. or Cibil,may soon be jostled by at least three others entering the Indian market,including ExperianPic.,Equifax Inc.and High Mark Credit Information Services.(BS23082010)

Banks alarmed at rising defaults in study loans

With a rising proportion of non-performing assets (NPAs) in educational loans ,banks have approached the government seeking protection in the form of a credit guarantee fund of at least Rs 2500 crore.According to estimates given by bankers to the Union Finance Ministry,NPAs had risen above 2%of the educational loan portfolio as on March 31 from an insignificant figure before 2004-05 when a set of more liberal rules gave such loans a boost.In the educational loan scheme ,it is possible to borrow up to Rs 10 lakh for domestic education and Rs 20 lakh for studying in foreign colleges.Borrowers need not pay during the tenure of the course plus one year after.The repayment period is 5-7 years.In addition ,for loans upto Rs 4 lakh, banks cannot ask for any collateral security which is thought by bankers to have made loans more prone to turn sour.(BS 23082010)

Allahabad Bank, Ashok Leyland tie up

With a view to boost its commercial vehicle finance portfolio,Allahabad Bank has entered into a tie-up with Ashok Leyland Ltd. The Bank signed a memorandum of understanding with the company recently according to a press statement issued by the Bank. Under the tie-up , the Bank will become an accredited financier of the vehicles manufactured by Ashok Leyland and will offer quick and hastle-free financing facilities to its customers on easy terms, the release said.(BL20082010)

Banks working on customised portals for easy access on mobiles

Soon banks will start offering customised portals for customers which will make accessing the site through mobile phones easier. When a customer visits a bank's Web site using mobiles, it gets disproportionately aligned in the mobile screen. Icons that customers would normally like to see on the screen are often hidden and have to be searched for.To encourage more customers to use the mobile banking medium ,leading private and public sector banks are in talks with software providers to offer customised portals for mobile Web users.The mobile must have a GPRS connection for this.(BL19082010)

SBI LIFE tops global ranking for 2010

SBI LIFE INSURANCE has been ranked No. 1 life insurer across the globe for the year 2010,by the Million Dollar Round Table (MRDT) members.MRDT is an association of the world's best life insurance sales professionals.This is the second consecutive year in which the Bank has topped MRDT.In 2010 ,SBI Life has 2904 MRDT members ,up from 2677 in 2009.SBI Life is followed by the US New York Life and Korea's Samsung Life Insurance in the rankings.The Life Insurance Corporation of India is ranked 4th with 1218 members (BL19 08 2010)

SBI to launch floating rate term deposit product

SBI has decided to launch a floating rate term deposit product with returns linked to base rate.The floating rate term deposit is being launched to correct interest rate mismatches arising from floating rate assets being financed with fixed rate liabilities, said Mr.S.S.Ranjan,DMD,SBI.
The scheme will be introduced from September 6, a 1 year floating rate deposit will earn interest which is 50 basis points below the base rate(7.50%)ie, 7%.A 3 year deposit will fetch a return of 7.25% and a 5 year deposit will carry interest of 7.50% (BL17082010)

Banks meet on cards for base rate consensus

To put a lid on the guessing game by the banks on each other's base rate , the country's top bankers will meet soon -at the behest of SBI- to discuss the new loan pricing mechanism. The meeting would precede SBI's base rate announcement on June 15,a fortnight before its roll out ,the SBI Chairman said. Most banks are yet to decide about their base rate and the parameters to be taken into account for calculating the new benchmark. A key parameter is the cost of funds, which can cause a huge variance across banks. For example, if a bank takes overnight cost of funds ,which is very low,its base rate will also be significantly lower from a bank,which, for example, takes one-year average cost of funds into account.
Last year,a committee constituted by RBI, reviewed the present system of benchmark prime lending rate and decided to replace it with a base rate.The base rate will be computed after taking into account all costs,including the cost of deposits, the negative carry on CRR and SLR,overheads and employee expenses.Banks cannot lend to any category of borrowers below the base rate.(BS 27052010)

Edelweiss keen on banking foray,awaits RBI norms

Mumbai-based financial services firm Edelweiss is eyeing a banking foray,according to investment bankers. It will be joining the growing list of corporates,including Anil Ambani-promoted Reliance group, Aditya Birla group, Shriram Capital and Religare, which have already made known their intentions to seek a banking licence. Most of the players are waiting for the Reserve Bank of India (RBI) to come out with a fresh set of guidelines that would allow new private players in the banking sector after which they are expected to approach RBI for a banking licence.(ET 27052010)

PNB ties up with OICL

Punjab National Bank has tied up with Oriental Insurance Company Limited to offer a floater Health Insurance Policy covering the proposer and family under one sum insured.The product was launched by the Circle Head,PNB,Ernakulam at Kochi.The scheme is applicable to all PNB customers and employees.Under this,the beneficiary and family members(comprising the spouse and two children)will be covered in one policy and one sum assured.The sum insured floats for all the beneficiaries under the policy.The policy covers beneficiaries between the ages of 3 months and 80 years. (BL 26052010)

SBI to lend Rs20,000 Cr for 3G funding

State Bank of India (SBI) will be lending Rs 20,000 crore for telecom companies to pay for licences for the Third Generation(3G) mobile services. The rate of interest will be decided in one-to-one talks with the operators to whom SBI will be lending, said bank's chairman .The 3G funding would impact the liquidity of the bank in a big way. The SBI chairman said that as on March 31,2010,the bank had Rs40,000 crore liquidity,about 50% of which would go for 3G funding.On the business focus ,the chairman further said that the first focus of the bank would be in retail- home loans and auto loans in particular-followed by the corporate sector. The bank is expecting a 20% credit growth in 2010. (BL 23052010)

For banks,green is the new black

India's leading banks are seizing opportunities in an emerging low-carbon economy.Last December IndusInd Bank inaugurated Mumbai's first solar-powered ATM as part of its 'Green Office Project' campaign titled 'Hum aur Hariyali'. State Bank of India,as part of its green banking policy ,plans to set up captive windmills to generate 15 Mw of power in Tamil Nadu, Maharashtra and Gujarat.A new study by PricewaterhouseCoopers(PwC) commissioned by the Indian Bank's Association(IBA) and The Climate Group confirms that India's leading banks are recognising and seizing opportunities in an emerging low-carbon economy. For instance, in coal technologies, ICICI Bank introduced innovative concepts like deep benefication of coal(coal washeries) and coal bed methane. It is seen that public sector banks are less involved in voluntary initiatives and appear to be postponing action until regulation is in place. However, as an exception, The new Green Home Loan Scheme from SBI will support environmentally -friendly residential projects and offer various concessions.These loans will be sanctioned for projects rated by the Indian Green Building Council (IGBC) and offer several financial benefits-- a 5% concession in margin,0.25%concession in interest rate and processing fee waiver.(BS 22052010)

NHB bullish on reverse mortgage loans

With its new reverse mortgage loan-enabled annuity scheme(RMLeA)offering senior citizens assured lifetime payments instead of the earlier cap of 20 years,National Housing Bank(NHB) is expecting more takers for the product.It is in talks with banks and insurance companies to expand its pool of RML facilitators. While the concept of RMLeA itself has been a slow starter in India,NHB feels the new offering is more attractive to borrowers in terms of higher payments and better risk mitigation.NHB,which is the principal agency to promote housing finance institutions,launched the scheme in India in 2007. Reverse mortgage seeks to monetise the owner's equity in the house. This involves senior citizen borrowers mortgaging their house to a lender ,who then makes periodic payments to the borrower during the latter's lifetime. The borrower need not repay the principal and interest to the lender during their lifetime. On the borrower's death or on borrower leaving the house permanently,the loan along with accumulated interest is settled through sale of the house.The borrower's heir can also repay or pre-pay the loan with interest and release the mortgage without sale of property.Around 23 banks took up the RML scheme which include State Bank of India,Punjab National Bank, Bank of India and Indian Bank.According to NHB, as of March 31,2010,around 7000RMLs of Rs 1400 crore have been sanctioned. (BS 22052010)

Axis Bank inks largest ATM outsourcing deal

In what is the largest ATM outsourcing deal in the country,Axis Bank has entered into an agreement with two third-party service providers to increase its ATM count to more than 9000 within the next 18 months. The country's third largest private sector lender has signed contracts with Prizm Payment Services and AGS Infotech to set up and manage 5000 ATMs on a purely variable model according to someone with knowledge of the development. Axis Bank had 4293 ATMs as on 31st March, 2010.Prizm will set up 3500 ATMs while AGS Infotech will set up 1500 ATMs. Since it is a fully outsourced deal, the bank will not incur capital expenditure.The ATMs will be owned and managed by the two service providers.Axis Bank will only be responsible for cash settlement and will pay the service providers a fee per transaction.(BS 16052010)

Bank of Rajasthan to merge with ICICI Bank

Bank of Rajasthan is to be merged with ICICI Bank.The boards of both banks which met separately granted in-principle approval for the merger.In a statement, ICICI Bank said it has entered into an agreement with certain shareholders of the BOR for amalgamation of the bank with itself with a share swap ratio of 25:118.The merger is not likely to have any material impact on ICICI Bank's capital and the only advantage is a readymade branch network. Post merger ,ICICI Bank's branch network would go up to 2463. This is the third merger for the bank after it took over Bank of Madura and Sangli Bank.(BL 19052010)

YES Bank plans retail banking products

YES Bank plans to introduce customised retail banking products in order to cater to specific segments of customers in the country. The bank plans to introduce products such as home loan, personal loan,education loan and credit cards to offer a complete bouquet of services to its customers ,according to Mr Somak Ghosh,Group President ,Corporate Finance and Development Banking, YES Bank.The bank would focus on professionals such as doctors,lawyers and accountants, among others to bring out customised home loan products typically for loans above Rs25 lakhs,he said. The bank plans to set up about750 branches and 3000 offsite ATMs over the next five years in order to scale up its retail business,Mr Ghosh said. (BL 13052010)

6 million credit cards cancelled in 2009-10

Banks cut down sharply on issuing credit cards and also closed a number of cards in 2009-10.Six million credit cards or about a quarter of the total number of cards a year ago went out during the last fiscal.The number of cards in circulation as of March 2010 was 18.3million ,a level last seen about five years ago,data from the Reserve Bank of India show. Rising defaults in the credit card industry as well as unsecured personal loans portfolio by customers as a consequence of the slow down in the economy a year ago forced a number of banks to rethink their growth strategy .Besides ,regulatory warnings and court structures about aggresive recovery practices of many banks also forced them to go slow in the business. Apart from cutting down new issuances ,banks also began to cut credit limits for existing customers as part of a de-risking exercise.(BL 13052010)

Exim Bank to look at new markets

Export-Import Bank of India(Exim Bank)is planning to conduct in- depth research on countries in Africa and Latin America to help Indian businesses explore trade and investment opportunities there.This move comes in the wake of slowdown in the country's exports to the recession-hit Western economies.
The Development Financial Institution (DFI)says its proposed country studies will go a long way in helping Indian companies venture into non-traditional markets for exports and investments.'While information on Western economies is easily available ,the same is hard to come by in the case of Africa and Latin America.The DFI is planning to conduct detailed research on these two countries so that indian companies can use it to make informed decisions on tapping these markets for exports or for making investments',said Mr TCA Ranganathan,Chairman and Managing Director,EXIM Bank,at a press meet (BL 08052010)

Banks will extend insurance to 'all' villages in Karnataka

Commercial banks in Karnataka are planning to extend insurance and other banking services to targeted beneficiaries to all villages with a population of over 2000.The banks have prepared financial inclusion plans(FIPs)to provide banking facilities to all villages by way of a regular brick and mortar branch or using information and communication technology through banking correspondent(BC)model.These services will be provided using appropiate technology back up.In this regard ,all banks have submitted their board approved FIPs as directed by RBI.The banks will meet the target of March 2012 set by the government of india for providing banking facilities to all villages with 2000 and above population,Basant Seth, chairman and managing director,Syndicate Bank and convenor,SLBC,said.(BS 08052010)

SBI picks 2 US firms for point-of-sale terminals deal

State Bank of India has zeroed-in on two US-based companies -Visa international and Elavon Inc as joint venture partners for setting up a network of point-of-sales(POS)terminals across the country.The two foreign partners will help India's biggest lender with payments technology solutions for its ambitious plan to roll out six lakh POS terminals at merchant establishments over the next five years.POS terminals are devices seen in retail and hospitality establishments for processing credit cards ,debit cards,smart cards and other electronically submitted transactions in a traditional retail environment.A retail POS system includes a computer ,monitor,cash drawer,receipt printer,customer display,barcode scanner, integrated card processing system,a signature capture device and a customer pin-pad device. The merchant swipes the customer's card at the terminal or keys-in payment information and the terminal does the rest.In the future ,the bank is also envisaging use of POS for mobile top-ups,utility bill payments,booking of railway and movie tickets.(BL06052010)

Bajaj Finserv awaits RBI nod for banking foray

Bajaj Finserv ,financial services wing of the Bajaj Group is keen to foray into banking sector. Bajaj Finserv MD Sanjiv Bajaj said that they are a zero-debt company having an idle cash of Rs800 crore and would like utilise the resources to venture into banking.The final guidelines from the Reserve Bank of India on awarding new banking licences are awaited before the proposed plan in banking foray is taken forward.The two new segments that the firm is likely to venture in near future include mutual fund and wealth management.(FE 06052010)

Financial inclusion

The government is open to the idea of providing financial support to banks for implementing financial inclusion as the lenders fear that the move may be unviable in initial years.The government in a recent meeting with banks expressed it was open to the idea of subvention in initial years. The government met representatives of 32 banks to identify the challenges facing them for implementing financial inclusion.The government has embarked on an ambitious plan to cover all villages having a population of more than 2000 to have banking facilities by March 31,2012.There are about 64000 villages in the country with a population over 2000 lacking a formal banking channel.The central bank is currently reviewing the plans on financial inclusion submitted by banks.RBI had asked banks to submit their board-approved p;ans of financial inclusion for 2010-11 (BS 06052010)

Forex limit for overseas travellers hiked

Travellers going abroad can now carry more foreign currency.The RBI has increased the permissible limits for authorised dealers and money dealers selling foreign exchange to people travelling abroad from $2000 to $3000.In a circular issued,the RBI said authorised dealers and full-fledged money changers can sell foreign exchange in the form of foreign currency notes and coins upto $3000 to travellers proceeding to countries other than Iraq,Libya,Islamic Republic of Iran,Russian Federation and other Republics of Commonwealth of Independent States.(BL 05-05-2010)

Online banking frauds

Minister of State for Finance Shri N.N.Meena informed the Parliament that Online banking frauds are on the rise with the number of cases more than doubling over the past three years.The number of internet frauds rose from 102 in 2007 to 113 in 2008and 269 in 2009 involving an amount of Rs2.51crore,Rs5.53 crore and Rs5.90 crore respectively.The minister further said that the RBI has cited compromises on password and other safety measures as the main reason for the occurance of such frauds.RBI has already taken measures to check such frauds such as making it mandatory for banks to put in place a system for providing additional authentication and validation,an online alert system for card holders in case of transactions of a value of over Rs5000,redressal of grievances for wrongful billing and reporting of cases to police and ensuring follow-up action.(BS 05-05-2010)

New models of SBI ATMs

State Bank of India is shortly coming out with varied models of ATMs such as Solar ATM,Rural ATM with bio-metric functionality,multi purpose kiosks and Talking ATMs,which will help visually challenged customers operate the ATM with ease.All the ATMs of SBI Chennai circle are enabled with image capturing facility and the average cash dispensed a day is Rs 100 crore.(BL 05-05-2010)

SBI teaser home loan scheme

Despite the increase in policy rates -repo&reverse repo-and cash reserve ratio by 25 basis points,fund-flushed State Bank of India(SBI)has extended its teaser home loan scheme though with a marginal modification and for the second time till June30.The existing scheme was expected to be over by 30th April.In the modified scheme,the interest rate to be charged by the bank will be 8%for the first year and 9% for the second and third years.However,differential floating interest rates would be charged from fourth year onwards,a senior official of the bank told on condition of anonymity.While the bank would charge an interest rate of 9.25%(2.5%less than the State Bank advanced rate)on the loan amount upto Rs50 lakh,interest rate for the loan amount beyond Rs 50 lakh would be 9.75%(or 2%less than the SBAR)from the fourth year, said the official.(FE 03-05-2010)

Mobile money transfer

With the pilot project in Pune doing extremly well, Nokia expects mobile money transfers to take root and grow.At a strategy sharing session recently Nokia described its vision for mobile money services roll-out in India,a business with enormous revenue potential.
The RBI has permitted YES Bank to provide mobile money services in association with Nokia.(Obopay,a Californa-based compay in which Nokia has a stake offers the technology back-up for YES Bank).The pilot in Pune will end in a couple of months,the result of which will presumably be inputs for the RBI to regulate the roll-out of the services in India(BL 30-04-2010)

Banks can now appoint any individual as BC

With the objective of ensuring greater financial inclusion and increasing outreach of the banking sector, RBI had earlier allowed banks to engage NGOs,micro finance agencies and self-help groups for identification of borrowers,processing of loan applications,helping recovery and such other support services.In 2006 the RBI
had allowed banks to use intermediaries as BCs for providing financial and banking services.Banks can now engage any individual including those operating common service centres to work as business correspondents(BCs).BCs conduct banking business as agents of banks at places other than the bank premises.The central bank will issue operational guidelines seperately.The business correspondents are paid commission fees as per RBIguidelines while banks follow KYC norms while undertaking banking activities through them. (BS 030510)