Almost all the nationalized commercial banks offer on-line transaction facilities, working on the same line, Rushikulya Gramya Bank (RGB) in Orissa will soon offer on-line transaction facilities and issue smart and biometric ATM cards to its customers.
The bank will update its technology in association with its sponsor Andhra Bank. First the bank will implement Core Banking Solution (CBS) in all its 81 branches located in southern Orissa’s Ganjam and Gajapati districts.
The bank plans to bring all its branches under CBS by March 2011 as against the last date of September 2011 set by the central government.
The Centre has also instructed all the RRBs (regional rural banks) across the country that by the end of September next year they should implement CBS facilities in all their branches with the help of their respective sponsor banks.
Chairman of the bank P V S T R Seshagiri Rao said, "We have already prepared the roadmaps for the CBS in support of our sponsoring bank Andhra Bank."
Most probably in July the first branch having CBS facility will start operations and by the end of September around 50 per cent of the branches will be covered under CBS. He said by the end of the current fiscal all branches are likely to be covered under CBS.
He said, "We will tie up with Andhra Bank to use the ATMs of the sponsoring bank by the customers of RGB after implementation of the CBS. Any customer of RGB will operate their transaction through ATMs of Andhra Bank anywhere in the country like any other commercial banks."
Wednesday, May 5, 2010
Tuesday, March 30, 2010
RBI to issue polymer notes of Rs 10 denomination in five cities
Soon you will see polymer notes of Rs 10 denomination in the market. The Reserve Bank of India will be issuing 100-crore polymer notes of Rs 10 denomination to improve their longevity and to thwart counterfeiters.
While speaking at the Foundation Stone laying function for the Bank Note Paper Mill at Mysore RBI governor D Subbarao told that in the beginning RBI will be introducing these notes in five cities. Globally, currency authorities of many advanced economies such as Canada and Australia have already introduced the polymer currencies.
The governor said polymer notes are more environment friendly. He added, “Considering the relatively long life of polymer notes and their amenability to re-cycling, the ‘carbon footprint’ of polymer notes vis-à-vis paper banknotes is likely to be on the plus side. Regardless, this is one of the issues that we will study during the pilot phase, and will embark on polymer notes on a long-term basis only if the cost-benefit calculus is decidedly positive in all dimensions.”
This year India will be printing around 17 billion pieces of paper currency. He said, “Producing our own paper is decidedly cheaper, and a check against counterfeiting.” In international terms India’s demand for banknote paper — 18000 MT per year is quite huge, and there are just 3/4 large producers. Mr Subbarao said, “This situation exposes us to vulnerabilities of a suppliers market in terms of price, quantity and timelines, something that we should avoid or minimize.” He added the major countries like the US, Japan, China, Brazil, Russia and countries in the euro area and even smaller countries like South Korea, Indonesia, Iran and Pakistan make their own bank note paper.
Expressing his views on the trend in counterfeiting he said, “By an international metric, the incidence of counterfeit notes in India is not alarming” and added that counterfeiting per se is a matter of serious concern for the government and RBI.
As per the figures, Australia detected seven pieces of counterfeit notes per million notes in circulation (2008-09), in Canada it was 76 (2008). In New Zealand, there are 0.71 counterfeits per million notes in circulation (2008-09), whereas in Switzerland it was 10. As for the euro, there was roughly about one counterfeit per 14,600 bank notes in circulation (2008).
Whereas in India, in 2008-09 fake notes detected by banks and fake notes found in remittances received by RBI amounted to eight for every one million notes in circulation. Mr Subbarao clarified this data does not include the counterfeits that were seized by the police.
While speaking at the Foundation Stone laying function for the Bank Note Paper Mill at Mysore RBI governor D Subbarao told that in the beginning RBI will be introducing these notes in five cities. Globally, currency authorities of many advanced economies such as Canada and Australia have already introduced the polymer currencies.
The governor said polymer notes are more environment friendly. He added, “Considering the relatively long life of polymer notes and their amenability to re-cycling, the ‘carbon footprint’ of polymer notes vis-à-vis paper banknotes is likely to be on the plus side. Regardless, this is one of the issues that we will study during the pilot phase, and will embark on polymer notes on a long-term basis only if the cost-benefit calculus is decidedly positive in all dimensions.”
This year India will be printing around 17 billion pieces of paper currency. He said, “Producing our own paper is decidedly cheaper, and a check against counterfeiting.” In international terms India’s demand for banknote paper — 18000 MT per year is quite huge, and there are just 3/4 large producers. Mr Subbarao said, “This situation exposes us to vulnerabilities of a suppliers market in terms of price, quantity and timelines, something that we should avoid or minimize.” He added the major countries like the US, Japan, China, Brazil, Russia and countries in the euro area and even smaller countries like South Korea, Indonesia, Iran and Pakistan make their own bank note paper.
Expressing his views on the trend in counterfeiting he said, “By an international metric, the incidence of counterfeit notes in India is not alarming” and added that counterfeiting per se is a matter of serious concern for the government and RBI.
As per the figures, Australia detected seven pieces of counterfeit notes per million notes in circulation (2008-09), in Canada it was 76 (2008). In New Zealand, there are 0.71 counterfeits per million notes in circulation (2008-09), whereas in Switzerland it was 10. As for the euro, there was roughly about one counterfeit per 14,600 bank notes in circulation (2008).
Whereas in India, in 2008-09 fake notes detected by banks and fake notes found in remittances received by RBI amounted to eight for every one million notes in circulation. Mr Subbarao clarified this data does not include the counterfeits that were seized by the police.
Wednesday, March 10, 2010
RBI panel proposes double the guarantee provided under a govt scheme
The Reserve Bank of India panel has put forward a proposal to double the guarantee provided under a government scheme. This will enable the small businessmen to get collateral-free loans for up to Rs 10 lakh from banks.
On Saturday finance Minister Pranab Mukherjee released RBI report in which it has proposed that banks should not insist for collateral or guarantees from small businesses for loans up to Rs 10 lakh. Report stated for such loans the security will be provided under a guarantee by Credit Guarantee Fund Trust for medium and small enterprises (CGTSME).
The report also suggested for reducing guarantee fees for women entrepreneurs and for enterprises in the North-East. In April’09 RBI in its monetary policy had set up a working group to review the Credit Guarantee Scheme of the Credit Guarantee Fund Trust. While launching the report the finance minister said, “This constitutes an important initiative by government for MSMEs to avail bank credit without the hassle of collateral or third-party guarantee.”
RBI report has been launched seven months after RBI had instructed banks that they cannot ask for collateral security for loans up to Rs 5 lakh given to micro and small enterprises in manufacturing and service sector.
After the meeting with Sebi, on Saturday, the finance minister held discussion with the members of the board of RBI. Mr Mukherjee said, “Various aspects of budget proposal were analysed and board members gave their comments and inputs about budgetary proposals”.
Later on the finance minister said the government will be taking up the consolidation among the public sector banks in consultation with RBI if the banks themselves contacted with the proposals.
The finance minister said, “So far the regional rural banks have come forth and consolidation among RRBs have taken place. I have also made proposal that there should be licenses for new banks and of course they should meet the criteria fixed by the RBI”.
Regarding the food inflation the finance minister said there has been a trade off between the increase in the prices of cereals and food security. Indicating towards the current inflation the finance minister said it is not because of monetary expansion, the price rise in wholesale basket is largely due to food items.
He added, “Cereals are not un-available but cereal prices increased because procurement price have been benchmarked at a high level. If you procure one quintal of wheat at Rs 1,100 and your total procurement is 34% of total production, naturally the retail benchmark cannot be less than Rs 13-14 per kg. Similarly, if you procure one quintal of paddy at Rs 1,050 after conversion charges, mandi charges, and other taxes rice at retail level cannot be more than Rs 19.45”.
The minister said, “There is a cost push ingredient in the high prices of these cereals. But it was inevitable if farmers do not get remunerative prices they will not produce enough. because of these prices farmers are producing enough there is no shortage of food stock”.
Giving a reply of a question on the pace of fiscal consolidation the finance minister said, “Fiscal consolidation does not contradict growth. Without fiscal consolidation growth will not be sustainable. One of the reasons we could with stand the pressure of the international financial crisis was because of our fiscal consolidation and adherence to FRBM which also achieved for three years high growth performance at the rate of 9%”.
On Saturday finance Minister Pranab Mukherjee released RBI report in which it has proposed that banks should not insist for collateral or guarantees from small businesses for loans up to Rs 10 lakh. Report stated for such loans the security will be provided under a guarantee by Credit Guarantee Fund Trust for medium and small enterprises (CGTSME).
The report also suggested for reducing guarantee fees for women entrepreneurs and for enterprises in the North-East. In April’09 RBI in its monetary policy had set up a working group to review the Credit Guarantee Scheme of the Credit Guarantee Fund Trust. While launching the report the finance minister said, “This constitutes an important initiative by government for MSMEs to avail bank credit without the hassle of collateral or third-party guarantee.”
RBI report has been launched seven months after RBI had instructed banks that they cannot ask for collateral security for loans up to Rs 5 lakh given to micro and small enterprises in manufacturing and service sector.
After the meeting with Sebi, on Saturday, the finance minister held discussion with the members of the board of RBI. Mr Mukherjee said, “Various aspects of budget proposal were analysed and board members gave their comments and inputs about budgetary proposals”.
Later on the finance minister said the government will be taking up the consolidation among the public sector banks in consultation with RBI if the banks themselves contacted with the proposals.
The finance minister said, “So far the regional rural banks have come forth and consolidation among RRBs have taken place. I have also made proposal that there should be licenses for new banks and of course they should meet the criteria fixed by the RBI”.
Regarding the food inflation the finance minister said there has been a trade off between the increase in the prices of cereals and food security. Indicating towards the current inflation the finance minister said it is not because of monetary expansion, the price rise in wholesale basket is largely due to food items.
He added, “Cereals are not un-available but cereal prices increased because procurement price have been benchmarked at a high level. If you procure one quintal of wheat at Rs 1,100 and your total procurement is 34% of total production, naturally the retail benchmark cannot be less than Rs 13-14 per kg. Similarly, if you procure one quintal of paddy at Rs 1,050 after conversion charges, mandi charges, and other taxes rice at retail level cannot be more than Rs 19.45”.
The minister said, “There is a cost push ingredient in the high prices of these cereals. But it was inevitable if farmers do not get remunerative prices they will not produce enough. because of these prices farmers are producing enough there is no shortage of food stock”.
Giving a reply of a question on the pace of fiscal consolidation the finance minister said, “Fiscal consolidation does not contradict growth. Without fiscal consolidation growth will not be sustainable. One of the reasons we could with stand the pressure of the international financial crisis was because of our fiscal consolidation and adherence to FRBM which also achieved for three years high growth performance at the rate of 9%”.
RBI to issue new Rs 20 note with change in inset letter
In few months if you get a new Rs 20 note do not get worried thinking it as forged note. The Reserve Bank of India (RBI) will shortly issue Rs 20 denomination banknotes with a change in inset letter. In new Rs 20 notes RBI is making changes in inset letter in both numbering panels in Mahatma Gandhi Series – 2005 bearing the signature of Dr D Subbarao, Governor.
The rest of the design of these notes to be issued now will be same in all respects to the banknotes in Mahatma Gandhi Series – 2005, with additional/new security features issued on August 16, 2006. RBI sources said, all the old Rs 20 banknotes issued by the RBI will continue to be legal tender.
The rest of the design of these notes to be issued now will be same in all respects to the banknotes in Mahatma Gandhi Series – 2005, with additional/new security features issued on August 16, 2006. RBI sources said, all the old Rs 20 banknotes issued by the RBI will continue to be legal tender.
Friday, February 26, 2010
RBI issued guidelines enhanced security features & standardized fields for cheques
The Reserve Bank of India (RBI) has issued guidelines enhancing security features and standardized fields for bank cheques in order to help straight-through-processing using optical technology.
The central bank informed that soon it will be rolling out timetable for revised benchmark prescriptions, or Cheque Truncation System (CTS)-2010 standard. The Indian Bank’s Association (IBA) and National Payments Corporation of India (NPCI) will organize and advice banks on these additional security features.
The new guidelines include use of quality paper, watermark and printing of bank logos in invisible ink, standard size, clutter-free background, and use of ultra violet images. RBI said, “Homogeneity of security features is expected to act as a deterrent against cheque frauds.”
The central bank maintaining status quo on existing paper specification, said paper quality should be image-friendly and have protection against alterations by having chemical sensitivity to acids, alkalis, bleaches and solvents, giving a visible result after a fraudulent attack. When put under ultraviolet (UV) light the paper should not glow so that the feel of cheques is uniform across banks.
Regarding the use of watermark, it said that at the time of manufacturing, cheques must have a standardized watermark with the words “CTS-INDIA” which should be visible when held against any light source. Due to this photocopy or printing of cheque will become difficult, as the paper will be available only to printers. The watermark must be oval in shape and the diameter can be 2.6-3 cm. Each cheque must have at least one full watermark.
Bank’s logos on cheques must be printed in UV ink. The logos will be captured by and visible under UV-enabled scanners and lamps.
The central bank informed that soon it will be rolling out timetable for revised benchmark prescriptions, or Cheque Truncation System (CTS)-2010 standard. The Indian Bank’s Association (IBA) and National Payments Corporation of India (NPCI) will organize and advice banks on these additional security features.
The new guidelines include use of quality paper, watermark and printing of bank logos in invisible ink, standard size, clutter-free background, and use of ultra violet images. RBI said, “Homogeneity of security features is expected to act as a deterrent against cheque frauds.”
The central bank maintaining status quo on existing paper specification, said paper quality should be image-friendly and have protection against alterations by having chemical sensitivity to acids, alkalis, bleaches and solvents, giving a visible result after a fraudulent attack. When put under ultraviolet (UV) light the paper should not glow so that the feel of cheques is uniform across banks.
Regarding the use of watermark, it said that at the time of manufacturing, cheques must have a standardized watermark with the words “CTS-INDIA” which should be visible when held against any light source. Due to this photocopy or printing of cheque will become difficult, as the paper will be available only to printers. The watermark must be oval in shape and the diameter can be 2.6-3 cm. Each cheque must have at least one full watermark.
Bank’s logos on cheques must be printed in UV ink. The logos will be captured by and visible under UV-enabled scanners and lamps.
RBI takes class action against foreign banks & PSU for faulty rate calculation
The Reserve Bank of India (RBI) in 2008-09 banking ombudsman annual report said it has started taking class action against the banks whose decisions are not favorable to the interests of their customers.
Some of the foreign bank and public sector bank method of calculating interest rate on deposits and housing loans have not been in their customers’ interest therefore RBI is taking class action against such banks.
As per the report, one more PSU bank was asked to re-credit insurance premium that was debited on savings account holders without their consensus under a group insurance scheme.
Under a class action general direction is issued in cases that can benefit not only the applicant but also all customers who have been affected.
The RBI has appointed banking ombudsmen for different regions in the country to deal with customer complaints against banks after the lenders are not able to provide suitable solutions to the customers. Thus banking ombudsmen has received the complaints and based on these complaints RBI had filed class action suits against three banks – one foreign and two public sector banks.
Although in the report banks name were not mentioned stated, “The lawsuit against the foreign bank is regarding the mode of calculation of interest rates on deposit accounts. A PSU bank was advised to recalculate interest rate on all housing loans as per terms of the agreements entered into with all the borrowers without their application for relief.”
According to report, in 2008-09 the number of complaints against foreign banks has risen by 91% from a year ago which shows that Indian customers are most dissatisfied with the foreign banks carrying out operations in India. The total number of complaints registered by 18 ombudsmen across the country stands to 11,700, out of which 2,838 complaints were against HSBC. Next to it stands the Citibank with 2,563 complaints, followed by Standard Chartered, Barclays and ABN AMRO having large number of customer complaints.
Some of the foreign bank and public sector bank method of calculating interest rate on deposits and housing loans have not been in their customers’ interest therefore RBI is taking class action against such banks.
As per the report, one more PSU bank was asked to re-credit insurance premium that was debited on savings account holders without their consensus under a group insurance scheme.
Under a class action general direction is issued in cases that can benefit not only the applicant but also all customers who have been affected.
The RBI has appointed banking ombudsmen for different regions in the country to deal with customer complaints against banks after the lenders are not able to provide suitable solutions to the customers. Thus banking ombudsmen has received the complaints and based on these complaints RBI had filed class action suits against three banks – one foreign and two public sector banks.
Although in the report banks name were not mentioned stated, “The lawsuit against the foreign bank is regarding the mode of calculation of interest rates on deposit accounts. A PSU bank was advised to recalculate interest rate on all housing loans as per terms of the agreements entered into with all the borrowers without their application for relief.”
According to report, in 2008-09 the number of complaints against foreign banks has risen by 91% from a year ago which shows that Indian customers are most dissatisfied with the foreign banks carrying out operations in India. The total number of complaints registered by 18 ombudsmen across the country stands to 11,700, out of which 2,838 complaints were against HSBC. Next to it stands the Citibank with 2,563 complaints, followed by Standard Chartered, Barclays and ABN AMRO having large number of customer complaints.
Friday, February 19, 2010
RBI raises issue over no transparency in loan pricing and not passing benefits to old borrowers
The Reserve Bank of India (RBI) has raised serious concern over banks discriminatory retail loan pricing and has asked them why they are not passing the benefit of lower interest rates to the existing borrowers.
Last month, relating to this matter RBI issued a letter to the customer service department of the Indian Banks’ Association. In the letter the central bank has raised issues such as discriminatory pricing by banks for old and new customers and also raised concerns over teaser rates. The IBA has not sent a reply. An executive informed the matter will be discussed in the next management committee meeting.
A senior RBI official asked, “When the floating rate goes up, banks send notices to borrowers regarding the increase of equated monthly installment. If interest rate falls, then why do they not reduce?”
RBI said such discriminatory practices are totally against the principle of basic banking as a utility.
In recent weeks, RBI deputy governors Usha Thorat and K C Chakrabarty have publicly issued the statements showing concern over teaser rates, where the interest rate is fixed for the initial period of a loan and then moves to a floating rate structure and, on extending the benefits of a lower rate to all borrowers.
The banks while putting down the letter, said it was written before the third quarter monetary policy review, currently it is not possible for them to reduce rates for existing borrowers, because when the loans were sanctioned the cost of funds was higher.
Earlier also banks have informed that they cannot cut floating rates for existing customers because their liabilities are short term, with tenure of three to five years. But the regulator had refused to accept the argument put forward by the banks.
“That argument is not valid for the simple reason that all the deposits are not going out after three years. Around 70 per cent of bank deposits get renewed. So, that is permanent in nature. If that is not the case, then what is the meaning of core deposits?… We are asking why you cannot pass on the benefits of reduced rates to existing customers,” the RBI official said.
Regarding the teaser rates, the source said borrowers are being informed about the installment for the initial two or three years, when interest rates would remain fixed, before the loan process.
The official said, “For the remaining 18 years, nobody knows what the EMI (equated monthly installment) will be because it is floating. If it is floating, then it is fixed to what? Is the floating rate is fixed to bank rate, is it fixed to average deposit rate? They have to make it very clear”. RBI also wants to know whether banks worked out the cash flow levels when interest rates were increased.
Last year, State Bank of India was the first one to launch the teaser rates scheme offering a home loan product which had both a fixed and floating rate character. The product got good response from borrowers following which other banks also launched the similar schemes.
An SBI executive told that bank has not lowered the eligibility criteria and is clearly informing about the EMI and other terms to borrowers.
Last month, relating to this matter RBI issued a letter to the customer service department of the Indian Banks’ Association. In the letter the central bank has raised issues such as discriminatory pricing by banks for old and new customers and also raised concerns over teaser rates. The IBA has not sent a reply. An executive informed the matter will be discussed in the next management committee meeting.
A senior RBI official asked, “When the floating rate goes up, banks send notices to borrowers regarding the increase of equated monthly installment. If interest rate falls, then why do they not reduce?”
RBI said such discriminatory practices are totally against the principle of basic banking as a utility.
In recent weeks, RBI deputy governors Usha Thorat and K C Chakrabarty have publicly issued the statements showing concern over teaser rates, where the interest rate is fixed for the initial period of a loan and then moves to a floating rate structure and, on extending the benefits of a lower rate to all borrowers.
The banks while putting down the letter, said it was written before the third quarter monetary policy review, currently it is not possible for them to reduce rates for existing borrowers, because when the loans were sanctioned the cost of funds was higher.
Earlier also banks have informed that they cannot cut floating rates for existing customers because their liabilities are short term, with tenure of three to five years. But the regulator had refused to accept the argument put forward by the banks.
“That argument is not valid for the simple reason that all the deposits are not going out after three years. Around 70 per cent of bank deposits get renewed. So, that is permanent in nature. If that is not the case, then what is the meaning of core deposits?… We are asking why you cannot pass on the benefits of reduced rates to existing customers,” the RBI official said.
Regarding the teaser rates, the source said borrowers are being informed about the installment for the initial two or three years, when interest rates would remain fixed, before the loan process.
The official said, “For the remaining 18 years, nobody knows what the EMI (equated monthly installment) will be because it is floating. If it is floating, then it is fixed to what? Is the floating rate is fixed to bank rate, is it fixed to average deposit rate? They have to make it very clear”. RBI also wants to know whether banks worked out the cash flow levels when interest rates were increased.
Last year, State Bank of India was the first one to launch the teaser rates scheme offering a home loan product which had both a fixed and floating rate character. The product got good response from borrowers following which other banks also launched the similar schemes.
An SBI executive told that bank has not lowered the eligibility criteria and is clearly informing about the EMI and other terms to borrowers.
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