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)

BANKS IN NEWS

South Indian bank has launched ‘SIB Mahila’, a savings bank product for women. The product which is linked with recurring deposit provides 10 technological products/services for free including house to house transit insurance for Rs 50,000/- and an accident insurance cover for Rs 1 lakh. The product is available in two variations. The Mahila savings account can be opened with a minimum balance of Rs1,000/- and a recurring deposit account for minimum amount of Rs 100/- for minimum period of 12 months. Under the Mahila Plus savings account the minimum balance specified is Rs 25,000/- and the minimum RD amount is fixed at Rs1,000/-. There are other benefits as well. (BL200609)

Banks should be prepared for serious competition from the Postal department. The department plans to provide the convenience of on site ATMs to its SB account holders at select head Pos across various states. As of March 2009 Pos had 22.89 crore SB accounts and the aggregate amount in these accounts was Rs22,217 crores. The minimum balance to be maintained in a SB account is Rs50/- for non cheque book account and Rs 500/- for cheque book accounts. The maximum balance in individual account is Rs 1 lakh and Rs 2 lakh for joint accounts. Interest earned on savings accounts with post offices is tax free.(BL210609)

SBI has signed MOU with Credit Guarantee Trust for Micro and Small Enterprises CGTMSE to cover micro and small enterprises under portfolio guarantee scheme. Under this agreement the bank can consolidate all eligible loans on a quarterly basis and obtain guarantee cover from the Trust. (BL240609)

Bank of India is cutting interest rates on domestic term deposits by 25 to 75 basis points across various maturities effective from the 27TH June 2009. (BL240609)

Union Bank announced a 25 basis points reduction in its prime lending rates to 11.75 percent wef 1st July 2009. IDBI Bank cut its deposit rates by 25 to 50 basis points in different maturity baskets.(230609)

Indian Bank has opened specialized branches to promote micro finance. The bank has obtained licences for opening 25 specialised branches of which 22 has already been set up. The bank has lent Rs1,500 crores to 2,40,000 self help groups. (BL230609)

SBI reduces its BPLR by 50 basis points to 11.75 percent effective 29-06-09. All loans including home loans which are linked to BPLR will benefit from the latest rate cut. Other public sector banks are also likely to pare their lending rates. (BL250609)

Banks would observe a country wide strike in the subsidiary banks of SBI on 6th July 2009. The strike is to oppose the merger plans of the subsidiary banks with the parent SBI. (BS250609)

BANKS IN NEWS

Leading banks alongwith NABARD and Uttarakhand government are setting up training institutes in all 13 districts of the state to enhance entrepreneur skills and employment opportunities among the youth. A decision to this effect was taken at a meeting of the sub committee of the SLBC on agriculture and rural development. SBI would be setting up training centres in nine districts and the remaining four would be covered by PNB, Bank of Baroda and Uttaranchal Gramin Bank. Unemployed youth would undergo training in dairy development farming, repairs and other traditional skills. (BS200609)

Yes Bank said it would recruit 900 people including 500 specialists in nine months to drive expansion in six key segments. (BS200609)

Bank of Rajasthan has entered into an alliance with Karvy Stock Broking to provide customers access to the online investment platform (l-zone) of Karvy. With this tie up the bank’s customers can open a trading account with Karvy. l-zone would provide a single window interface for investing in secondary markets, IPOs and mutual funds. (BS200609)

UCO Bank is likely to reduce its BPLR by 50 basis points to 12 percent effective from 27th June 2009 subject to ratification by its board. The bank has also planned to cut its deposit rates by 25-50 basis points. (BS200609)

BANKS IN NEWS

SBI will double the number of branches for retail sale of gold coins to 1,100 in the current fiscal to reach out to all important centres of the country. SBI also undertakes supply of customized gold coins to corporates. It is also in the process of setting up a dedicated bullion branch in Mumbai to undertake bullion business in a focused manner. (BS090609)

PNB aims to reach out to the customers in rural areas of the country through banking correspondents and also on the back of technology enabled services like biometric smart cards. PNB has opened its first technology enabled branch on a pilot basis at Daringibadi in Orissa’s Kandhamal district. The customers are issued biometric smart cards with the help of which they can make transactions at their doorsteps without going to the bank’s branch. PNB’s business correspondents are provided with a point of transaction machine. (BS110609)

Bank Unions oppose merger of public sector banks. They are protesting the move of the government. (BL120609)

SBI has announced an across the board 25 basis points cut in deposit rates effective 15th June 2009. This is the third cut in deposit rates this fiscal; rates were cut by 25 basis points and 50 basis points each in April and May. (BL140609)

PERSONAL CREDIT SCORE

With CIBIL and three other credit bureaus maintaining a repository of credit information on individual accounts, banks henceforth would be in a better position to take informed decisions on their lending. Banks would be able to access information about the credit worthiness of a borrower from these credit bureaus and decide about the disposal of a loan application. In fact differential pricing would also be introduced in case of credit cards specially. Each individual having borrowing arrangements including credit cards from banks would be rated with a credit score. This credit score would be in the range of 300-900 points, with a high credit score implying the characteristics of a better borrower as per available track record.( In case of wrong reporting by banks to the credit bureaus the concerned individual has recourse to get the defect amended by intimating the credit bureau the correct facts.) The score would determine the possibility of further loans being available from the banking sector and the cost of such funds, if sanctioned. Essentially it would mean a credit profile of an individual which would impact the availability of other services as well. Obviously individuals with high credit scores would be the focus of preferred attention.

To manage and continuously ensure a good credit score it would be necessary to have credit discipline. How does one achieve it?

Well the fundamental principle is to stay within one’s means. If this is possible then there would be no default in payments, payment of instalments on personal loans and credit cards would be on time, balances in credit card accounts would have to be kept low, building a decent credit history of managing credit cards satisfactorily and trying to manage with fewer personal loans and credit cards. Weightages are given for each of these features in a personal loan or credit card, with scores being given according to the prescribed benchmark best practices. Any negative feature in an account would adversely affect the credit score which is an aggregation of the scores for each of the above parameters. From December 2009 it is proposed to make available the personal credit score to individuals also.

It is therefore essential to judiciously manage the personal loans and credit cards by an individual to have access to bank funds in times of need.

EDUCATIONAL LOANS

With emphasis on improving the education prospects of students, educational loans are extremely handy for enabling the students to achieve their aspirations. Banks in India are providing the necessary funding for pursuing quality higher education in India and abroad. Public sector banks are particularly active in promoting educational loans on customer friendly terms.

Graduation, post graduation and professional courses offered by educational institutes approved by the state and central government are eligible for educational loans from these banks. Courses pursued abroad in Universities recognized by the local governments are also considered for funding facility. Generally for study in India, the amount of educational loan available is Rs 7.50 lakhs while for studies abroad it could be upto a maximum of Rs 20 lakhs. Collateral security is not insisted upon for loans upto Rs 4 lakhs but third party guarantee is required for loans between Rs 4 lakhs and Rs 7.50 lakhs. In case of loan amount being higher than Rs 7.50 lakhs then collateral security becomes essential. The applicable interest rate is linked to the loan amount sanctioned and repayment starts after six months to one year from completion of the course study for which loan was granted. The repayment period is usually between 5 to 7 years. Girl students get benefit in interest rate between 0.5 to 1 percent.

The eligibility is a good academic track record with proof of admission obtained from the recognized University for the approved course. One of the parents who can provide stable income proof with Income tax returns has to be the co applicant with the eligible student. Expenses allowed for loan are tuition fees, books and study material, stay etc. Certain banks fund travel cost in case of study abroad.