SBI blinks,withdraws teaser loans

State Bank of India (SBI) has decided to withdraw one of the most controversial ,yet popular, products in the Indian banking sector in recent times.
Introduced by the former Chairman of SBI,Shri O.P.Bhatt,in early 2009, the teaser loan scheme will be withdrawn from May 1. The scheme charges a lower rate in the initial years. Teaser loans account for a third of SBI's home loan portfolio.
The Reserve Bank of India( RBI ) has been against such schemes as it fears higher defaults after the rates go up in later years. The new management said even if a bank thinks a product is good, the regulator has the final word."One cannot be in a state of perpetual conflict with the regulator", said Pratip Chaudhuri, the present Chairman of SBI.
In the new home loan scheme,the interest rate on loans upto Rs 30 lacs will be 9.5%, while for loans between Rs 30 lacs and Rs 70 lacs the rate will be 9.75%. The rate for home loans above Rs 70 lacs will be 10.25%. For auto loans, the rate will be 10.75%. The maximum tenure has been kept at seven years.Both housing and auto loan rates have been linked with the Bank's base rate, making them floating.
Though the effective rate will rise , SBI has offered a sweetener by waving the pre- payment penalty. SBI has disbursed Rs 36,788 crore under the scheme to 400,000-500,000 borrowers. (BS 21042011)

Cibil makes credit scores available to individuals

Credit informaton Bureau(India)ltd. (Cibil), the agency gathering data on credit histories of individuals, has now made credit scores available to individuals for a fee of Rs 450 per request.An individual's credit score would be a three-digit-numeric summary of his credit history for the last three years, and this would be rated on a scale of 300-900.
The higher an individual's score, the better would be his chances of securing a loan. Banks have, for the last two years, used this data as an important factor in deciding on whether to approve or reject a loan.
Through Cibil's website, individuals can request for their credit scores online. They can also make the payments online,after which , they would have to send proofs of their identity to cibil. The score, alongwith the report, would be delivered to them in 7-10 days. The Cibil is working towards an online authentication system. Once this is done, it would help in delivering scores and reports online. (BS 21042011)

SBI's self service banking centre

State Bank of India(SBI) has opened a self-service banking centre in Hyderabad to increase customer convenience and provide 24/7 access to banking. The centre, a branch-less and staff-less technology-based banking outfit, has a multifunction kiosk for internet banking and to print statements. It also ptovides multiple banking facilities such as ATM,internet and mobile banking, cheque book request,mobile top-up, train ticketing and income tax payments using debit or credit cards. It has three ATMs,including one for the visually challenged with braille keypad.One BNA (bunch note acceptor) would be whereinstalled shortly customer can deposit money through the machine, a release said (BS 28032011)

Union Bank opens financial literacy centre

Union Bank of India,lead bank of Ernakulam District,has set up its first financial literacy and credit counselling centre(FLCCC) at Perumbavoor. FLCCCs, recommended by the High Power Committee headed by Ms Usha Thorat on Lead Bank Scheme, are being set up in every district with the intention of providing financial counselling service through face-to-face interaction as well as through other available media like email, fax, mobile etc,educating people in rural and urban areas with regard to various financial products and services. In the first phase of financial inclusion, all villages having population in excess of 2,000 are being targeted to set up banking facilities. (BS 28032011)

Now, ICICI customers can withdraw cash at shops

ICICI Bank, the country's largest private sector lender, today launched cash withdrawal facility for customers at point of sales(POS) terminals or merchant outlets.
Customers with debit cards will have the option to withdraw cash upto Rs 1000 whether they buy or not buy at merchant outlets.
"The facility will be available to all ICICI Bank debit card holders who can withdraw Rs 1000 a day. Cash can be withdrawn with or without associate purchase transaction at an approved and enabled merchant estasblishment with POS terminals", the Bank said.
In July 2009, RBI issued guidelines in which cash withdrawals of upto Rs 1000 a day from POS terminals were permitted through all debit cards issued in India.RBI, however, had left it to the bank's discretion to decide on the fee.
Union Bank of India, the first bank to start this facility a year back, albeit only in rural areas, said the experience was not encouraging.(BS 20.01.2011)

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)