For the small customers opening bank accounts and carrying out transactions like currency exchange is still a difficult task. Even the Reserve Bank of India expressed discontentment over the issue.
In an annual general meeting of Indian Banks Association’s, RBI Deputy Governor Usha Thorat said still many of the branches are not using a simple form of Know-Your-Customer guidelines for opening accounts. Customers are still finding difficulty to go to a branch for foreign exchange transactions.
Thorat added soon RBI will be issuing further instructions for "operationalising" the farm loan waiver scheme. On rising bad debts in the farm loan sector, she said, "We have data on NPAs in all sectors."
Two – three days back SBI had rolled back ban on new farm equipment financing following pressure from the government and industry bodies. "SBI has clarified the scheme," the RBI deputy governor said at the event.
Tuesday, May 27, 2008
Friday, May 16, 2008
RBI ask coop banks to abolish cash withdrawal charges
The Reserve Bank of India on Wednesday issued a notification to the cooperative Banks in which it said the banks will not charge more than Rs 20 for withdrawal of cash by ATM card holders of any banks from their vending machines.
The notification also stated that like other banks, the cooperative banks too will be required to stop taking the cash withdrawal charges from ATMs with effect from April 1, 2009.
Besides cash withdrawal charges for balance enquiry or using any other facility also the cooperative banks have been forbidden from charging any fee with immediate effect.
Earlier the RBI in its notification has already removed all charges from using the ATMs of commercial banks, and the charges on cash withdrawal will be removed with from April 1, 2009.
Therefore this means that from April 1, next year an ATM card holder will be able to withdraw cash from ATM maintained by any bank, including cooperative banks, without payment of any fee.
However, the notification authorized the banks to decide themselves the service charges for withdrawal of cash from ATMs through credit cards and ATMs located abroad.
The notification also stated that like other banks, the cooperative banks too will be required to stop taking the cash withdrawal charges from ATMs with effect from April 1, 2009.
Besides cash withdrawal charges for balance enquiry or using any other facility also the cooperative banks have been forbidden from charging any fee with immediate effect.
Earlier the RBI in its notification has already removed all charges from using the ATMs of commercial banks, and the charges on cash withdrawal will be removed with from April 1, 2009.
Therefore this means that from April 1, next year an ATM card holder will be able to withdraw cash from ATM maintained by any bank, including cooperative banks, without payment of any fee.
However, the notification authorized the banks to decide themselves the service charges for withdrawal of cash from ATMs through credit cards and ATMs located abroad.
Wednesday, May 14, 2008
RBI working group supports no-frills accounts for farmers
The Radhakrishna experts group, in its report, had made wide-ranging recommendations to tackle the issue of agricultural indebtedness. The recommendations included immediate credit-related measures, reforms in financial and institutional architecture, risk mitigation measures, among others.
After the submission of the report the RBI’s internal working group was set up under the chairmanship of Mr V.S. Das, executive director of the RBI, to study the recommendations made by Radhakrishna experts group, has supported the committee’s suggestion to banks that they should open "no-frills" accounts in the name of small farmers to lend minor amounts as well as term loans.
The RBI internal group’s suggestion has come soon after the UPA government in the Budget announced a Rs 60,000-crore loan waiver package to debt-ridden farmers. However the experts group had included in its suggestions such a loan waiver package.
Professing for financial inclusion, the Radhakrishna experts group in its report has pragmatic that institutional credit should be extended to those excluded farmer households who do not have access to any source of credit. This should involve all institutions — scheduled commercial banks, regional rural banks and cooperatives and through them, agencies like business facilitators and business correspondents.
According to the experts group and agreed to by the RBI study, the first phase of this program, should focus on universal establishment of "no-frills" bank accounts.
In many cases, bank accounts should be accompanied by a small overdraft low-value general purpose credit card for small amount for first time entrants in banking system. Insurance policies are also part of the program in some districts.
"Routing of all payments to such households through the bank accounts, especially National Rural Employment Guarantee Scheme (NREGS), pension payments and other relief and social security payments will go further in capturing all cash flows in such bank accounts and encourage larger extension of credit to poor rural households," the RBI working group report said.
After the submission of the report the RBI’s internal working group was set up under the chairmanship of Mr V.S. Das, executive director of the RBI, to study the recommendations made by Radhakrishna experts group, has supported the committee’s suggestion to banks that they should open "no-frills" accounts in the name of small farmers to lend minor amounts as well as term loans.
The RBI internal group’s suggestion has come soon after the UPA government in the Budget announced a Rs 60,000-crore loan waiver package to debt-ridden farmers. However the experts group had included in its suggestions such a loan waiver package.
Professing for financial inclusion, the Radhakrishna experts group in its report has pragmatic that institutional credit should be extended to those excluded farmer households who do not have access to any source of credit. This should involve all institutions — scheduled commercial banks, regional rural banks and cooperatives and through them, agencies like business facilitators and business correspondents.
According to the experts group and agreed to by the RBI study, the first phase of this program, should focus on universal establishment of "no-frills" bank accounts.
In many cases, bank accounts should be accompanied by a small overdraft low-value general purpose credit card for small amount for first time entrants in banking system. Insurance policies are also part of the program in some districts.
"Routing of all payments to such households through the bank accounts, especially National Rural Employment Guarantee Scheme (NREGS), pension payments and other relief and social security payments will go further in capturing all cash flows in such bank accounts and encourage larger extension of credit to poor rural households," the RBI working group report said.
Friday, May 9, 2008
RBI directive against using garlands of currency fall on deaf ears
The Reserve Bank of India (RBI) has been making efforts to keep currency notes clean. In view of this the apex bank has issued directives to the banks not to staple notes.
Alpana Killawala, chief general manager of the public relations division of RBI said, "Whatever we do, we do through the banks. One of the challenges that we had was to do away with stapled notes, a habit that often results in the note getting torn. After issuing a directive to banks, they have done away with the stapling of bundles of currency notes."
Earlier RBI had issued directive that people should discourage using garlands made of currency notes- a common feature in north Indian weddings which seems to be falling on deaf ears.
Alpana Killawala told IANS on phone from Mumbai, "We issued a directive last year that currency notes should not be used in making garlands, which defaces the notes and shortens their life."
She said, "It's part of our continuing efforts of clean notes policy. But no one seems to be paying heed as most weddings, especially in north India, keep using such garlands. We can't take any action against the public. We can only sensitize them".
According to Alok Aggarwal, a sales executive in Delhi for people this directive does not mean anything. He said, "The tradition of making the bridegroom wear the garland of currency notes is a symbol of shagun (good luck).
"In most cases, this garland is then carefully stacked away. So where is the question of misusing the notes?" he asked.
Due to increasing demand for such garlands they are not only used in weddings but also during religious festivities, graduation ceremonies and anniversaries, they are easily available in the market.
"Currency note garlands are always in demand, especially during the wedding season. Some want garlands made of two-rupee notes, some want of 100-rupee notes," says Mohan Lal, a shopkeeper in central Delhi.
Meanwhile RBI is making efforts to inculcate "good habits" among the people - so as to encourage good quality notes.
Killawala said, "We have also asked them to tell people not to give stapled notes when they deposit such notes to the bank. Further, we made a movie in 2006 on the same subject which was telecast on Doordarshan."
The RBI even organized camps to educate people on how to handle currency notes.
"Our latest initiative is making a short film on the dos and don'ts of handling bank notes. People have to be discouraged from scribbling on notes and folding them. The movie will be ready for telecasting in another couple of months," she said.
"The trend of note garlands is mainly north India centric. Therefore, we will have to devise a program specifically for that area," she added.
Alpana Killawala, chief general manager of the public relations division of RBI said, "Whatever we do, we do through the banks. One of the challenges that we had was to do away with stapled notes, a habit that often results in the note getting torn. After issuing a directive to banks, they have done away with the stapling of bundles of currency notes."
Earlier RBI had issued directive that people should discourage using garlands made of currency notes- a common feature in north Indian weddings which seems to be falling on deaf ears.
Alpana Killawala told IANS on phone from Mumbai, "We issued a directive last year that currency notes should not be used in making garlands, which defaces the notes and shortens their life."
She said, "It's part of our continuing efforts of clean notes policy. But no one seems to be paying heed as most weddings, especially in north India, keep using such garlands. We can't take any action against the public. We can only sensitize them".
According to Alok Aggarwal, a sales executive in Delhi for people this directive does not mean anything. He said, "The tradition of making the bridegroom wear the garland of currency notes is a symbol of shagun (good luck).
"In most cases, this garland is then carefully stacked away. So where is the question of misusing the notes?" he asked.
Due to increasing demand for such garlands they are not only used in weddings but also during religious festivities, graduation ceremonies and anniversaries, they are easily available in the market.
"Currency note garlands are always in demand, especially during the wedding season. Some want garlands made of two-rupee notes, some want of 100-rupee notes," says Mohan Lal, a shopkeeper in central Delhi.
Meanwhile RBI is making efforts to inculcate "good habits" among the people - so as to encourage good quality notes.
Killawala said, "We have also asked them to tell people not to give stapled notes when they deposit such notes to the bank. Further, we made a movie in 2006 on the same subject which was telecast on Doordarshan."
The RBI even organized camps to educate people on how to handle currency notes.
"Our latest initiative is making a short film on the dos and don'ts of handling bank notes. People have to be discouraged from scribbling on notes and folding them. The movie will be ready for telecasting in another couple of months," she said.
"The trend of note garlands is mainly north India centric. Therefore, we will have to devise a program specifically for that area," she added.
Wednesday, April 30, 2008
Mobile banking norms on RBI website by June 15
Soon RBI will be issuing regulatory guidelines for mobile payment systems. According to the RBI annual Credit Policy statement the drafted guidelines will be placed on RBI Web site by June 15. After these guidelines the customers will be able to use mobile phone easily and safely to carry out entire banking transactions.
Senior bank officials said the guidelines have been formulated mainly to provide safety and for interoperability issues in using mobile phones for conducting normal banking services.
According to the central bank sources discussion is going on with banks, service providers and industry bodies for the purpose of framing the guidelines. “The focus of the guideline would be on devising an inter-operable system. It is important that banks and various service providers talk to each other so that transactions flow seamlessly between different payment solutions,” said Mr Nitin Chittal, Assistant Vice-President, Alternate Banking Channels, Axis Bank. Inter-operability would require a standardized messaging format between the various service providers and banks, Mr Chittal said.
Senior bank officials are of view that the guidelines will help in ensuring software-related safety and proper risk management in order to encourage more customers to use the mobile platform.
Stressing on the need to use mobile phones for conducting various transactions, the RBI said, “The mobile channel facilitates small value payments to merchants, utility service providers and the like and money transfers at a low cost.”
As per the data available as on December 2007 there were about 231 million mobile phone connections in the country. The rapid expansion of this mode of communication has brought up a new payment delivery channel for banks. Many countries have already adopted this mode of delivery to expand the reach of the banking facility to cover remote parts, the RBI said.
Several banks have tied up with mobile phone operators and service providers to carry out transactions on mobile phones and more banks are to follow. While some banks are offering simple account-related queries on mobile phones and some have gone a step further and stored the debit and credit cards on mobile phone to enable various transactions.
ICICI Bank has already tied up with Airtel and mChek to load a virtual credit card on a mobile phone to carry on complete banking transactions as well as for making payments. “We conducted a pilot in Delhi and received close to a thousand responses. Mobile phones can be safer as compared to physical cards as they are pin protected, thereby minimizing the risk of misuse,” said Mr Sachin Khandelwal, General Manager, Head-Cards Product Group, ICICI Bank.
Axis Bank is also carrying out a similar pilot project with Atom Technologies to store a debit card on the mobile phone.
Senior bank officials said the guidelines have been formulated mainly to provide safety and for interoperability issues in using mobile phones for conducting normal banking services.
According to the central bank sources discussion is going on with banks, service providers and industry bodies for the purpose of framing the guidelines. “The focus of the guideline would be on devising an inter-operable system. It is important that banks and various service providers talk to each other so that transactions flow seamlessly between different payment solutions,” said Mr Nitin Chittal, Assistant Vice-President, Alternate Banking Channels, Axis Bank. Inter-operability would require a standardized messaging format between the various service providers and banks, Mr Chittal said.
Senior bank officials are of view that the guidelines will help in ensuring software-related safety and proper risk management in order to encourage more customers to use the mobile platform.
Stressing on the need to use mobile phones for conducting various transactions, the RBI said, “The mobile channel facilitates small value payments to merchants, utility service providers and the like and money transfers at a low cost.”
As per the data available as on December 2007 there were about 231 million mobile phone connections in the country. The rapid expansion of this mode of communication has brought up a new payment delivery channel for banks. Many countries have already adopted this mode of delivery to expand the reach of the banking facility to cover remote parts, the RBI said.
Several banks have tied up with mobile phone operators and service providers to carry out transactions on mobile phones and more banks are to follow. While some banks are offering simple account-related queries on mobile phones and some have gone a step further and stored the debit and credit cards on mobile phone to enable various transactions.
ICICI Bank has already tied up with Airtel and mChek to load a virtual credit card on a mobile phone to carry on complete banking transactions as well as for making payments. “We conducted a pilot in Delhi and received close to a thousand responses. Mobile phones can be safer as compared to physical cards as they are pin protected, thereby minimizing the risk of misuse,” said Mr Sachin Khandelwal, General Manager, Head-Cards Product Group, ICICI Bank.
Axis Bank is also carrying out a similar pilot project with Atom Technologies to store a debit card on the mobile phone.
Monday, April 28, 2008
RBI norms on Cibil will allow tracking of credit record
Many people use credit cards and large group of people take loans from the banks but how many of them are aware that their repayment track record is maintained by an agency-centralized credit information bureau India (Cibil). Not many. Generally the agency gets the information from the banks. The banks pass on the repayment track record of the borrowers and the credit card holders to the agency. From here the banks can get the complete credit history of the individual before lending money.
The data stored with Cibil positive or negative, plays a major role in determining whether a borrower’s future loan application gets accepted or rejected. But it is very unfortunate, unlike US or UK, Indian borrowers cannot access this information to verify its authenticity. The existing state of affairs may hopefully change soon. A senior banker suggested that Cibil should provide written intimation about a borrower's credit history, or publish it on a website, which an individual could access by paying a token fee.
Now Cibil has come forward and in a written communiqué to TOI, the credit bureau said, "We are expecting guidelines from the RBI in this regard. Once the guidelines are made available, we expect to be in a position to share credit information reports with individuals." However, till such a system is in place, "if there is some mistake (in my credit profile), I cannot get it rectified", says Bejon Misra of Delhi's Consumer Voice.
The senior banker said not many borrowers are aware that disputes over an insignificant amount can lead to negative credit history. He gave one instance in relation to this: "Suppose a person owes Rs 10,300 to a credit card company and has a dispute over the Rs 300 in charges, and refuses to pay this balance. Interest will rise on this amount and a small problem will become a big one... Certain systems are triggered off. For such a small dispute, your housing loan of Rs 10 lakh may get rejected." The banker has advised the borrowers, that they must pay up the entire amount and dispute the charges only after doing so.
Even in the recently released 2006-07 annual report on the banking ombudsman's scheme disputes that have reached the redressal body over "wrong reporting of status of (credit) card-holder's dues to credit information companies" has been mentioned.
An official of the ombudsman’s office mentioned such complaints might be over payment disputes which have been resolved but credit bureau might not have been informed about the development. On this subject, the credit bureau clarified, "Cibil is a neutral service provider, which maintains information on borrowers on basis of data reported to it by credit granting institutions. In cases of disputed data, Cibil will consider information provided by credit granting institution and update it in its database. Again, in cases where dispute is resolved, and any modification is made to borrower's details, credit granting institution needs to report rectified data to Cibil and Cibil database is updated immediately."
Relating to credit cards, Sachin Khandelwal, head (cards) at ICICI Bank, said sometimes negative history is created if a consumer stops using the card without informing the card-issuing bank. "My suggestion to customers is to make sure when you exit a card relationship, make the card outstanding zero, and get the bank's written confirmation on this."
The data stored with Cibil positive or negative, plays a major role in determining whether a borrower’s future loan application gets accepted or rejected. But it is very unfortunate, unlike US or UK, Indian borrowers cannot access this information to verify its authenticity. The existing state of affairs may hopefully change soon. A senior banker suggested that Cibil should provide written intimation about a borrower's credit history, or publish it on a website, which an individual could access by paying a token fee.
Now Cibil has come forward and in a written communiqué to TOI, the credit bureau said, "We are expecting guidelines from the RBI in this regard. Once the guidelines are made available, we expect to be in a position to share credit information reports with individuals." However, till such a system is in place, "if there is some mistake (in my credit profile), I cannot get it rectified", says Bejon Misra of Delhi's Consumer Voice.
The senior banker said not many borrowers are aware that disputes over an insignificant amount can lead to negative credit history. He gave one instance in relation to this: "Suppose a person owes Rs 10,300 to a credit card company and has a dispute over the Rs 300 in charges, and refuses to pay this balance. Interest will rise on this amount and a small problem will become a big one... Certain systems are triggered off. For such a small dispute, your housing loan of Rs 10 lakh may get rejected." The banker has advised the borrowers, that they must pay up the entire amount and dispute the charges only after doing so.
Even in the recently released 2006-07 annual report on the banking ombudsman's scheme disputes that have reached the redressal body over "wrong reporting of status of (credit) card-holder's dues to credit information companies" has been mentioned.
An official of the ombudsman’s office mentioned such complaints might be over payment disputes which have been resolved but credit bureau might not have been informed about the development. On this subject, the credit bureau clarified, "Cibil is a neutral service provider, which maintains information on borrowers on basis of data reported to it by credit granting institutions. In cases of disputed data, Cibil will consider information provided by credit granting institution and update it in its database. Again, in cases where dispute is resolved, and any modification is made to borrower's details, credit granting institution needs to report rectified data to Cibil and Cibil database is updated immediately."
Relating to credit cards, Sachin Khandelwal, head (cards) at ICICI Bank, said sometimes negative history is created if a consumer stops using the card without informing the card-issuing bank. "My suggestion to customers is to make sure when you exit a card relationship, make the card outstanding zero, and get the bank's written confirmation on this."
Rural bank shows good results after merger
To bring the small banks onto a fast track RBI had permitted the merger of the small banks going in loss, with the big banks. In Muzaffarpur seven rural banks had merged into North Bihar Regional Rural Bank (NBRRB) and have given good result making a big profit during a period of the last one year. The RRB not only has paid a debt of overall loss of Rs 17.82 crore but also has succeeded in making a profit of Rs 11.51 crore during the period.
In a press meet on Wednesday the chairman of NBRRB Avinash Yog told the media person that the bank has made this achievement, mainly due to enhancing its loans, deposits, recovery and productive investments.
He informed that the bank's deposited amount has increased from Rs 3,062 crore to Rs 3,842 crore in 685 branches, making a hike of more than 25 per cent. He claimed the bank made an advance of Rs 1,471 crore as against only Rs 1,149 crore last year, registering a hike of 28 per cent. It did a business of Rs 5,313 crore in comparison to only Rs 4,212 crore. The average increase in business per branch was Rs 7.76 crore.
The NBRRB came into existence in 2006 after the merger of Vaishali, Siwan, Saran, West Champaran, Gopalgamj, Madhubani and Darbhanga rural banks.
The chairman of the bank, as well as the chief manager, S K Singh and the senior manager, R N Paswan, said whole credit of this profit goes to officers and employees of all branches spread in north Bihar region who put in all their efforts of the bank.
Recently there is a proposal to merge Kosi rural bank also in this bank during the current year. With this it will cover 18 districts of north Bihar under the jurisdiction of NBRRB.
All these banks are being sponsored by Central Bank of India. While giving the clarification on the merger of the banks the chairman said as the rest of three districts rural banks including those of Samastipur, Begusarai and Khagaria are being sponsored by other commercial banks, so they will not to be merged with it.
He said the NBRRB has distributed kisan credit cards to 73,409 farmers with a fund of Rs 243 crore at the rate of 109 cards each branch. The bank also opened 309 new kisan clubs in 272 branches during last one year.
In a press meet on Wednesday the chairman of NBRRB Avinash Yog told the media person that the bank has made this achievement, mainly due to enhancing its loans, deposits, recovery and productive investments.
He informed that the bank's deposited amount has increased from Rs 3,062 crore to Rs 3,842 crore in 685 branches, making a hike of more than 25 per cent. He claimed the bank made an advance of Rs 1,471 crore as against only Rs 1,149 crore last year, registering a hike of 28 per cent. It did a business of Rs 5,313 crore in comparison to only Rs 4,212 crore. The average increase in business per branch was Rs 7.76 crore.
The NBRRB came into existence in 2006 after the merger of Vaishali, Siwan, Saran, West Champaran, Gopalgamj, Madhubani and Darbhanga rural banks.
The chairman of the bank, as well as the chief manager, S K Singh and the senior manager, R N Paswan, said whole credit of this profit goes to officers and employees of all branches spread in north Bihar region who put in all their efforts of the bank.
Recently there is a proposal to merge Kosi rural bank also in this bank during the current year. With this it will cover 18 districts of north Bihar under the jurisdiction of NBRRB.
All these banks are being sponsored by Central Bank of India. While giving the clarification on the merger of the banks the chairman said as the rest of three districts rural banks including those of Samastipur, Begusarai and Khagaria are being sponsored by other commercial banks, so they will not to be merged with it.
He said the NBRRB has distributed kisan credit cards to 73,409 farmers with a fund of Rs 243 crore at the rate of 109 cards each branch. The bank also opened 309 new kisan clubs in 272 branches during last one year.
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