The Reserve Bank of India has finally released its final operative guidelines for mobile banking. Soon the small-ticket payments and remittances by using mobile phones will become a reality.
In its guidelines the central bank has taken a decision to keep the limit on the ticket-size for mobile banking at Rs 2,500 per transaction, and Rs 5,000 per day. The apex bank has allowed the banks to put in place a monthly transaction limit, depending on the bank’s risk perception of the customer
As per guidelines the lenders such as State Bank of India and Axis Bank will be able to launch mobile banking services but the central bank has decided the services will be restricted only to holders of debit and credit cards. In India the card user base is around 80 million, with 55 million debit card users and 25 million credit card users.
But this decision of RBI has come as a blow to players who had planned to use mobile banking to reach out to the under banked in rural India. A number of microfinance institutions and mobile payment operators such as mChek, PayMate and Obopay have tied up with banks to offer mobile-based financial inclusion products in the surroundings. The banks have been allowed to use the services of banking correspondents for extending this facility to consumers.
Through mobile-payment platform only Indian rupee-based domestic services can be carried out and the use of mobile-banking for cross-border transactions has been strictly forbidden. Only the Banks which have opened branches, have license and supervised in India have been allowed to offer such services. Further, only banks which have implemented the core banking platform will be allowed to offer mobile banking.
Simultaneously, the RBI has recommended that all mobile banking transactions will be validated through a two-factor authentication system, thereby conforming to the latest security and encryption standards. The RBI has also added that the long-term goal of the mobile-payment framework in India will help in the transfer of funds from and account in one bank to any other account in any bank on a real-time basis, irrespective of the mobile network the customer has subscribed to.
The guidelines also propose that banks should not compromise on their know-your-customer and anti-money laundering guidelines. It will be essential for the banks to file suspicious transaction reports (STRs) to the Financial Intelligence Unit for all mobile banking transactions, as in the case of regular banking transactions.
It has also been proposed that banks should clearly mention the risks to the customer and also get them to sign a contract before the service is adopted. Banks have also been suggested to make their mobile-banking services available across all phone networks.
As per the records of telecom regulator Trai the number of mobile phone connections in the country was at about 296 million at the end of July this year and it is growing at about 8-9 million per month. Banks are looking at more possibilities of using mobile phones as an alternative channel of delivery of banking services. Some banks have even started offering information-based services like balance enquiry, stop payment instruction of cheques, transaction enquiry, location of the nearest ATM or branch, etc. RBI told that in few banks services like acceptance of transfer of funds, instruction for credit to beneficiaries of same or another bank in favor of pre-registered beneficiaries have started.
Monday, September 22, 2008
Monday, September 15, 2008
RBI extended deadline by 3 months for banks to meet norms
The Reserve Bank of India for the second time has extended the deadline for banks to include loans to mutual funds and the Irrevocable Payment Commitments (IPCs) to stock exchanges (BSE & NSE) on behalf of MFs or FIIs under the capital market exposure. The RBI has given three months time to the banks — from September 13 to December 13 to meet the norms.
Earlier RBI had extended the deadline in June by three months to September 13.
Banks give large loan to mutual funds and also issue IPCs to the stock exchanges on behalf of MFs or FIIs, but they have not included these under their capital market exposure for calculation. In a notice issued by RBI it was stated that as a result, RBI, upon review, has decided to extend the deadline for banks to meet the terms of the guideline.
According to RBI norms, banks can extend loans and advances to MFs only for fulfilling their temporary liquidity needs for the purpose of repurchase or redemption of units within the ceiling of 20 per cent of the net asset of the scheme and for a period not exceeding six months. And such finance, in case granted to equity-oriented mutual funds, it will form part of banks’ capital market exposure.
Earlier RBI had extended the deadline in June by three months to September 13.
Banks give large loan to mutual funds and also issue IPCs to the stock exchanges on behalf of MFs or FIIs, but they have not included these under their capital market exposure for calculation. In a notice issued by RBI it was stated that as a result, RBI, upon review, has decided to extend the deadline for banks to meet the terms of the guideline.
According to RBI norms, banks can extend loans and advances to MFs only for fulfilling their temporary liquidity needs for the purpose of repurchase or redemption of units within the ceiling of 20 per cent of the net asset of the scheme and for a period not exceeding six months. And such finance, in case granted to equity-oriented mutual funds, it will form part of banks’ capital market exposure.
Thursday, September 11, 2008
Loan agents harass single women , disregard RBI guidelines
In a recent case Priya Kulkarni, who is a teacher at a school for mentally challenged children in the island city of Mumbai has been harassed by the recovery agents of the bank. Few years ago she had taken a personal loan of Rs1 lakh from a leading foreign bank to pay for the treatment of her ailing mother. But due to various reasons, she had been unable to keep up with the repayments. In turn the bank sent recovery agents to lose on her.
Priya is the only bread earner for the family but has to stop teaching as the agents were creating nuisance at the school as well. She told the recovery agents said, “Agar paisa nahin hai to dhanda karke do (if you do not have money, then resort to prostitution to pay us),’in front of my principal and other colleagues.
She said, “I am not in a mindset to take care of my students because of this harassment”. The agents keep calling up even at home.
While the Reserve Bank of India’s guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks, issued in November 2006, say: “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.”
Even the Banking Codes and Standards Board of India’s ‘Code of Bank’s Commitment to Customers’ (CBCC) also clearly states, “During visits to your place for dues collection, decency and decorum would be maintained.”
But then also the recovery agents are not following this. Despite of the stringent RBI guidelines, the recovery agent nuisance is far from controlled.
Kulkarni had already paid the bank Rs1.94 lakh on a loan of Rs 1 lakh. As the interest rate being charged is so high that her repayment is still not over. She had approached the bank for rescheduling the loan but bank rejected her request.
“One day, the agents came in the evening and stayed put for 2.5 hours and said, ‘We will stay here. You can cook and make arrangements for us.’ When I told them that I have spoken to the nodal officer of the RBI, they retorted, ‘Did RBI give you the money?” Kulkarni told DNA.
There is one more case of harassment by the recovery agents. Dombivli resident Surekha Sathe lost her husband last Diwali. Since his death recovery agents have been troubling even late in the night. Sathe told, “They come and sit in my house for more than two hours after 8pm. I live alone after my husband’s death”.
It is clearly mentioned in the CBCC that the bank’s representatives will contact the customer between 7 am and 7 pm “unless special circumstances of your business require otherwise”.
The recovery agents are of a leading new generation private sector bank and they want her to repay outstanding debt on her husband’s credit card. The bank cannot recover the amount from Sathe, who has submitted her husband’s death certificate to the bank. “I have even written to the banking ombudsman stating that it is not my liability,” she adds.
But then also the recovery agents still keep troubling Sathe and threaten to even disturb her neighbors. “After my husband passed away, I have taken up teaching pre-school students and the agents keep calling during the school hours. It is quite disturbing,” she says. After this she registered a complaint with the police and since then the phone calls have stopped.
It shows that new generation private sector banks and foreign banks have a clear disregard for RBI guidelines. Parag Shah, chief executive officer of recovery agent firm Adikrut Japti Avam Vasuli, says, “As a matter of policy we work for public sector banks only and we have no pressures. We do not work for private sector banks as our mindset does not go in tandem with theirs,” he says.
However bankers told that they comply by the guidelines of the CBCC. “We already have a code of conduct. Like public sector banks, we also have to follow it strictly. If we come across any instance of harassment by recovery agents, we talk to them and, if needed, terminate their services,” says AP Bundellu, deputy managing director, retail, at IDBI bank.
Priya is the only bread earner for the family but has to stop teaching as the agents were creating nuisance at the school as well. She told the recovery agents said, “Agar paisa nahin hai to dhanda karke do (if you do not have money, then resort to prostitution to pay us),’in front of my principal and other colleagues.
She said, “I am not in a mindset to take care of my students because of this harassment”. The agents keep calling up even at home.
While the Reserve Bank of India’s guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks, issued in November 2006, say: “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.”
Even the Banking Codes and Standards Board of India’s ‘Code of Bank’s Commitment to Customers’ (CBCC) also clearly states, “During visits to your place for dues collection, decency and decorum would be maintained.”
But then also the recovery agents are not following this. Despite of the stringent RBI guidelines, the recovery agent nuisance is far from controlled.
Kulkarni had already paid the bank Rs1.94 lakh on a loan of Rs 1 lakh. As the interest rate being charged is so high that her repayment is still not over. She had approached the bank for rescheduling the loan but bank rejected her request.
“One day, the agents came in the evening and stayed put for 2.5 hours and said, ‘We will stay here. You can cook and make arrangements for us.’ When I told them that I have spoken to the nodal officer of the RBI, they retorted, ‘Did RBI give you the money?” Kulkarni told DNA.
There is one more case of harassment by the recovery agents. Dombivli resident Surekha Sathe lost her husband last Diwali. Since his death recovery agents have been troubling even late in the night. Sathe told, “They come and sit in my house for more than two hours after 8pm. I live alone after my husband’s death”.
It is clearly mentioned in the CBCC that the bank’s representatives will contact the customer between 7 am and 7 pm “unless special circumstances of your business require otherwise”.
The recovery agents are of a leading new generation private sector bank and they want her to repay outstanding debt on her husband’s credit card. The bank cannot recover the amount from Sathe, who has submitted her husband’s death certificate to the bank. “I have even written to the banking ombudsman stating that it is not my liability,” she adds.
But then also the recovery agents still keep troubling Sathe and threaten to even disturb her neighbors. “After my husband passed away, I have taken up teaching pre-school students and the agents keep calling during the school hours. It is quite disturbing,” she says. After this she registered a complaint with the police and since then the phone calls have stopped.
It shows that new generation private sector banks and foreign banks have a clear disregard for RBI guidelines. Parag Shah, chief executive officer of recovery agent firm Adikrut Japti Avam Vasuli, says, “As a matter of policy we work for public sector banks only and we have no pressures. We do not work for private sector banks as our mindset does not go in tandem with theirs,” he says.
However bankers told that they comply by the guidelines of the CBCC. “We already have a code of conduct. Like public sector banks, we also have to follow it strictly. If we come across any instance of harassment by recovery agents, we talk to them and, if needed, terminate their services,” says AP Bundellu, deputy managing director, retail, at IDBI bank.
Wednesday, September 10, 2008
RBI gives nod to ING Vysya Bank for branch, ATM expansion
The Reserve Bank of India (RBI) has granted the permission to private sector bank ING Vysya bank for opening 56 new branches and 100 ATMs across the country during the current fiscal.
ING Vysya Bank MD and CEO Vaughn Rictor informed that the bank will be expanding its network by opening more branches. Currently bank is having a network of 457 branches and 224 ATMs.
He said that the bank’s main focus will remain on the SME and retail segments.
In the last financial year, the bank had attained a growth of 24 per cent in deposits and 22 per cent in advances.
ING Vysya Bank MD and CEO Vaughn Rictor informed that the bank will be expanding its network by opening more branches. Currently bank is having a network of 457 branches and 224 ATMs.
He said that the bank’s main focus will remain on the SME and retail segments.
In the last financial year, the bank had attained a growth of 24 per cent in deposits and 22 per cent in advances.
Sunday, September 7, 2008
RBI issued notice banks can’t deny over-the-counter cash deposits
There have been reports that banks are denying over-the-counter cash deposit. The issue has been brought into notice of the Reserve Bank of India (RBI). Looking into the matter the RBI has issued a notice to all the scheduled commercial banks can’t restrict deposit of cash over the counters.
In a note the RBI said that it has been brought into its notice that some banks have introduced certain products, therefore the customers are not being allowed to deposit cash over the counters. “Further, it is also understood that these banks have also incorporated a clause in the terms and conditions that cash deposits, if any, are required to be done through ATMs,” it said.
Since banking is defined as acceptance of deposits of money from the public for the purpose of lending and investment, thus banks cannot introduce any product which is not in tune with the basic doctrine of banking, the RBI said. Adding to this RBI said that including such clauses in terms and conditions which restricts deposit of cash over the counters also amounts to an unfair practice.
The RBI has suggested the banks to make sure that their branches perpetually accept cash over the counters from all their customers who want to deposit cash at the counters. It further added, “they are also advised to refrain from incorporating clauses in the terms and conditions which restricts deposit of cash over the counters.”
In a note the RBI said that it has been brought into its notice that some banks have introduced certain products, therefore the customers are not being allowed to deposit cash over the counters. “Further, it is also understood that these banks have also incorporated a clause in the terms and conditions that cash deposits, if any, are required to be done through ATMs,” it said.
Since banking is defined as acceptance of deposits of money from the public for the purpose of lending and investment, thus banks cannot introduce any product which is not in tune with the basic doctrine of banking, the RBI said. Adding to this RBI said that including such clauses in terms and conditions which restricts deposit of cash over the counters also amounts to an unfair practice.
The RBI has suggested the banks to make sure that their branches perpetually accept cash over the counters from all their customers who want to deposit cash at the counters. It further added, “they are also advised to refrain from incorporating clauses in the terms and conditions which restricts deposit of cash over the counters.”
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