On Wednesday the Reserve Bank of India (RBI) released the provisional data according to which, this year up till December 18 the Indian bank loans had grown to about 11.25 percent.
As on Dec. 18 the outstanding on loans was high up to 2.94 trillion rupees as against 2.64 trillion a year ago. As of Dec. 4 the bank credit had grown up to10.5 per cent. The central bank will be giving final figures for the week to Dec. 18 in its weekly statistical supplement on Friday.
Deposits had risen up 17.85 percent from a year earlier. According to supplement banks’ investments in government approved securities have increased to 24.21 percent during the year.
Thursday, December 31, 2009
Tuesday, December 29, 2009
Finance ministry floats draft paper on consolidation of PSU banks
Finally the finance ministry has prepared a discussion paper titled ‘Consolidation among public sector banks’ to sought out the issue of mergers of public sector banks. In this paper the ministry has drafted the guidelines for mergers of public sector banks. One of the major guideline mentioned in the paper is that the merger entity must get hold of 5 to 7 per cent market share across regions and should be able to establish a pan-India presence.
Other guidelines include that the merger banks must be IT compatible and have proper cultural fit.
The paper states at the time of merger one of two banks chief executive officer should be close to retirement as this will not lead to any type of clash at the top level.
In the paper out of the 19 public sector banks, besides the State Bank of India there are seven other banks have been classified as ‘strong’. These include Punjab National Bank, Bank of Baroda, Union Bank, Canara Bank and Bank of India, Corporation Bank and Vijaya Bank.
A finance ministry official pointed out, “Others have been left out of the ‘strong’ category based on various criteria, including levels of non-performing assets, capital adequacy and technology adoption.” He stated that the banks which have been included in the list do not mean they are ‘weak’ banks but they have to improve in some aspects of their functioning.
With the heads of some ‘string’ banks discussion on guidelines has already been done. Soon the discussion will be taken up with other banks also.
The paper points out it is mandatory that the IT networks of the merger banks should be compatible or one of them must have approved superior technology platform which will be adapted by the other bank in the due course of merger.
Then merging banks should do a proper assessment of the cultural fit of their staff. Giving an example the paper stated the Canara Bank staff are ‘homogenous’, whereas Mumbai-based banks such as Bank of Baroda, Union Bank and Bank of India have a more cosmopolitan staff mix.
The paper has pointed out the rigour of the dozen-odd steps that banks required to go through, at the time of merger process until the final consummation. Some of them are both the merger banks have to prepare proposals and get it approved by their boards, getting consent from the government, carrying out detailed due carefully, evaluation of agreement should be done as per Reserve Bank of India and Securities & Exchange Board of India guidelines, to advertise about merger in newspapers and get the approval of shareholders.
The ministry official clearly stated that the initiative for mergers has to come from banks. “We will act as a facilitator.” At present no merger proposal is pending with the government.
Recently Finance minister Pranab Mukherjee had told the Parliament that the government will not interfere in the working nor any directive issued to any bank for merger or consolidation.
An anonymous chairman and managing director of a large public sector bank told Financial Chronicle the discussion has been done with the government on the issues in the paper. The chairman told, “We told the government that, to begin with, the stronger banks should merge, especially those which have a better cultural fit. Our advice is that all aspects should be evaluated beforehand so that, once the merger process is initiated by two banks, it should be taken to its logical conclusion. Any mid-course failure will send wrong signals.”
Other guidelines include that the merger banks must be IT compatible and have proper cultural fit.
The paper states at the time of merger one of two banks chief executive officer should be close to retirement as this will not lead to any type of clash at the top level.
In the paper out of the 19 public sector banks, besides the State Bank of India there are seven other banks have been classified as ‘strong’. These include Punjab National Bank, Bank of Baroda, Union Bank, Canara Bank and Bank of India, Corporation Bank and Vijaya Bank.
A finance ministry official pointed out, “Others have been left out of the ‘strong’ category based on various criteria, including levels of non-performing assets, capital adequacy and technology adoption.” He stated that the banks which have been included in the list do not mean they are ‘weak’ banks but they have to improve in some aspects of their functioning.
With the heads of some ‘string’ banks discussion on guidelines has already been done. Soon the discussion will be taken up with other banks also.
The paper points out it is mandatory that the IT networks of the merger banks should be compatible or one of them must have approved superior technology platform which will be adapted by the other bank in the due course of merger.
Then merging banks should do a proper assessment of the cultural fit of their staff. Giving an example the paper stated the Canara Bank staff are ‘homogenous’, whereas Mumbai-based banks such as Bank of Baroda, Union Bank and Bank of India have a more cosmopolitan staff mix.
The paper has pointed out the rigour of the dozen-odd steps that banks required to go through, at the time of merger process until the final consummation. Some of them are both the merger banks have to prepare proposals and get it approved by their boards, getting consent from the government, carrying out detailed due carefully, evaluation of agreement should be done as per Reserve Bank of India and Securities & Exchange Board of India guidelines, to advertise about merger in newspapers and get the approval of shareholders.
The ministry official clearly stated that the initiative for mergers has to come from banks. “We will act as a facilitator.” At present no merger proposal is pending with the government.
Recently Finance minister Pranab Mukherjee had told the Parliament that the government will not interfere in the working nor any directive issued to any bank for merger or consolidation.
An anonymous chairman and managing director of a large public sector bank told Financial Chronicle the discussion has been done with the government on the issues in the paper. The chairman told, “We told the government that, to begin with, the stronger banks should merge, especially those which have a better cultural fit. Our advice is that all aspects should be evaluated beforehand so that, once the merger process is initiated by two banks, it should be taken to its logical conclusion. Any mid-course failure will send wrong signals.”
Monday, December 28, 2009
RBI amended mobile banking guidelines increased transaction limit
The Reserve Bank of India has relaxed mobile banking guidelines in order to boost it.
Some of the leading telecom companies like Bharti Airtel are active in taking up pilot project for mobile banking.
The mobile number of users is four and a half times the total number of bank accounts in this country, therefore mobile banking is being largely looked at as a good option for providing transfer facility across the length and breadth.
Some of the operative parts of these guidelines which were introduced after the October 2008 circular and have been amended to a large extent are:
Now RBI has increased the daily transaction limit to Rs 50,000 per customer for both funds transfer as well as transactions which involve purchases of goods and services. At present the transactions are limited to Rs 5,000 and 10,000 respectively.
Secondly, RBI has also relaxed the technology and security standards and banks have been permitted to undertake transactions up to Rs 1,000 without end to end encryption. This way in some of the cost of transaction will be reduced.
The remittance of funds for disbursements in cash is the other major feature of the circular. This feature is directly related to facilitating the use of mobile for cash. In India around 90% of the user base has prepaid mobile phones thus the cash transaction is preferred where user puts in money, gets the credit and uses it.
However mobile phone companies are having discussions for extending this facility for direct transfer in case the individual is staying in Delhi and adds Rs 1,000 the money can be delivered somewhere in the hinterland of Bihar or UP
For this RBI has stated that there are separate guidelines for disbursal of these funds. The maximum amount of these transactions will be Rs 5,000 per transaction to which banks are permitted to put a cap on the rapidity of such transactions subject to a maximum of Rs 25,000 per month per customer. The funds can be transferred through both, an agent or an ATM.
As it is not possible to go to ATM easily and the number of ATMs is also less in some of parts of the country, large parts of the country particularly rural and suburban areas do not have access to ATMs. Thus banks can appoint agents for such transfers.
Then some of the agents can be mobile operators, the service providers and the handset resellers in the hinterland.
According to bankers this can help in financial inclusion in a big way. Also, this will take over from retail payment from cash and cheque based transaction to mobile based transaction which will be convenient and will also reduce the cost.
The bankers said these guidelines are mainly focused on metros. If they were able to get hold of this market, it will increase in transactions. Currently in India, transactions through mobiles are of not importance. Therefore these guidelines can boost the overall transactions.
Thus these guidelines are being looked as most important factor and companies like Bharti Airtel among others will be benefited from this proposal giving them reason to cheer.
Some of the leading telecom companies like Bharti Airtel are active in taking up pilot project for mobile banking.
The mobile number of users is four and a half times the total number of bank accounts in this country, therefore mobile banking is being largely looked at as a good option for providing transfer facility across the length and breadth.
Some of the operative parts of these guidelines which were introduced after the October 2008 circular and have been amended to a large extent are:
Now RBI has increased the daily transaction limit to Rs 50,000 per customer for both funds transfer as well as transactions which involve purchases of goods and services. At present the transactions are limited to Rs 5,000 and 10,000 respectively.
Secondly, RBI has also relaxed the technology and security standards and banks have been permitted to undertake transactions up to Rs 1,000 without end to end encryption. This way in some of the cost of transaction will be reduced.
The remittance of funds for disbursements in cash is the other major feature of the circular. This feature is directly related to facilitating the use of mobile for cash. In India around 90% of the user base has prepaid mobile phones thus the cash transaction is preferred where user puts in money, gets the credit and uses it.
However mobile phone companies are having discussions for extending this facility for direct transfer in case the individual is staying in Delhi and adds Rs 1,000 the money can be delivered somewhere in the hinterland of Bihar or UP
For this RBI has stated that there are separate guidelines for disbursal of these funds. The maximum amount of these transactions will be Rs 5,000 per transaction to which banks are permitted to put a cap on the rapidity of such transactions subject to a maximum of Rs 25,000 per month per customer. The funds can be transferred through both, an agent or an ATM.
As it is not possible to go to ATM easily and the number of ATMs is also less in some of parts of the country, large parts of the country particularly rural and suburban areas do not have access to ATMs. Thus banks can appoint agents for such transfers.
Then some of the agents can be mobile operators, the service providers and the handset resellers in the hinterland.
According to bankers this can help in financial inclusion in a big way. Also, this will take over from retail payment from cash and cheque based transaction to mobile based transaction which will be convenient and will also reduce the cost.
The bankers said these guidelines are mainly focused on metros. If they were able to get hold of this market, it will increase in transactions. Currently in India, transactions through mobiles are of not importance. Therefore these guidelines can boost the overall transactions.
Thus these guidelines are being looked as most important factor and companies like Bharti Airtel among others will be benefited from this proposal giving them reason to cheer.
Monday, December 7, 2009
SBI launched SBI Freedom, a telephone banking facility in Chandigarh
In India public sector banks (PSBs) have steady customer base. The Reserve Bank of India the regulatory body of the banking system has given permission to one of the PSB to introduce telephone banking facility so that banks can offer latest facility to their customers.
On Friday State Bank of India launched a service called SBI Freedom, and the facility is fully functional in its Chandigarh circle.
Currently PSBs are offering internet banking facility to their customers and many of them have linked their branches through the internet.
The bank’s chief general manager for the circle, SK Sehgal, said, “With this launch, our customers will be able to use facilities like balance enquiry, mini statement, fund transfer, cheque book issuance, mobile recharge and bill payment at any time and place through the use of their cell phones. We are also working at adding rail and air ticket booking and shopping to this service.” In the beginning this facility will be available only on Java-enabled mobile phones with GPRS connections. Sources said services for other phones are under process.
The bank has set a limit of Rs 5,000 for daily fund transfers and Rs 10,000 for bill payments.
To enable the services the customers can get the software installed at any of the bank’s branches for free through Bluetooth technology.
An SBI official told, “A customer is registered when he or she sends an SMS to 567676 prefixed with the area code. The service is activated either after the password is verified at an ATM or by the bank branch when the customer appears in person. This makes the system foolproof”.
The official pointed out that people living in remote areas will be benefited the most from this service. “We also expect students to avail of the facility,” he added.
Out of the 30 lakh customers in Chandigarh circle, 7 lakh are expected to get subscribed to the new system.
Punjab National Bank’s Chandigarh circle head, AK Loomba, stated, “We are also working on developing this kind of a service. But first, we will try to understand its limitations.”
On Friday State Bank of India launched a service called SBI Freedom, and the facility is fully functional in its Chandigarh circle.
Currently PSBs are offering internet banking facility to their customers and many of them have linked their branches through the internet.
The bank’s chief general manager for the circle, SK Sehgal, said, “With this launch, our customers will be able to use facilities like balance enquiry, mini statement, fund transfer, cheque book issuance, mobile recharge and bill payment at any time and place through the use of their cell phones. We are also working at adding rail and air ticket booking and shopping to this service.” In the beginning this facility will be available only on Java-enabled mobile phones with GPRS connections. Sources said services for other phones are under process.
The bank has set a limit of Rs 5,000 for daily fund transfers and Rs 10,000 for bill payments.
To enable the services the customers can get the software installed at any of the bank’s branches for free through Bluetooth technology.
An SBI official told, “A customer is registered when he or she sends an SMS to 567676 prefixed with the area code. The service is activated either after the password is verified at an ATM or by the bank branch when the customer appears in person. This makes the system foolproof”.
The official pointed out that people living in remote areas will be benefited the most from this service. “We also expect students to avail of the facility,” he added.
Out of the 30 lakh customers in Chandigarh circle, 7 lakh are expected to get subscribed to the new system.
Punjab National Bank’s Chandigarh circle head, AK Loomba, stated, “We are also working on developing this kind of a service. But first, we will try to understand its limitations.”
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