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Friday, September 12, 2014

Jan Dhan Yojana: Financial literacy spends of banks to qualify as CSR

Financial literacy spends made by banks under the Pradhan Mantri Jan Dhan Yojana (PMJDY) is all set to qualify as corporate social responsibility (CSR).

The Corporate Affairs Ministry has conveyed to the Finance Ministry that the financial literacy spends made by banks under PMJDY will be counted as CSR, Anurag Jain, Joint Secretary, Department of Financial Services (DFS), said at a seminar on financial inclusion, organised by Indo-American Chamber of Commerce here on Friday.

“We had already written to Corporate Affairs Ministry. They have actually given us one concession immediately that for financial literacy whatever banks are spending will be part of CSR. That explanation they have already given”, Jain said.

This spells some good news for banks, especially when the DFS efforts in getting them exempted from the mandatory 2 per cent CSR spend has proved futile.

While the DFS had written to the Corporate Affairs Ministry seeking exemption for banks from the mandatory 2 per cent CSR spend, the Corporate Affairs Ministry has reportedly rejected this request.

Aseem Chawla, Co-Chairman, Financial Services Committee, Indo-American Chamber of Commerce, said an enabling amendment has to be made in Schedule VII of the new company law and the related rules for banks to be able to claim the spend on financial literacy as CSR.

Anurag Jain said that all efforts are being taken by the banking system to ensure that the goals of PMJDY are achieved by January 26 next year.

“The main focus of the PMJDY is to ensure that villages of the country need to be benefited”

Chawla said that a great deal of improving and achieving sustainable livelihood for rural India depends on financial inclusion through the success of PMJDY.

Source : The Hindu
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ICICI Bank raises $500 mn via overseas bond sale

ICICI Bank (through its Dubai branch) has sold 5.5 year fixed rate notes aggregating $500 mn. The notes were offered at an issue price of 99.653 and carry a coupon rate of 3.5 per cent, the bank said in an exchange filing.

Source : The Hindu
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Corporation Bank opens new branch

Corporation Bank has opened a new branch at Bhiwandi in Thane district of Maharashtra. A press release by the bank said that SR Bansal, Chairman and Managing Director, inaugurated the branch. In Thane, it has 43 branches and 50 ATMs covering Chembur, Ghatkopar, Powai, Vikhroli, Bhandup and Mulund areas of Mumbai, and Raigad, Ratnagiri, Nashik and Thane (including Navi Mumbai) districts, the release added.

Source : The Hindu
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SBI attracting job-seekers by the droves

Many young people in the country seem to be coveting a job in the State Bank of India, going by the number of applications the bank received in the last round of recruitment exams conducted between June and August.

India’s largest bank received 18.83 lakh applications for the 1,837 vacancies for probationary officers (POs) or a whopping 1,025 aspirants vying for every slot. As for clerical recruitment, the bank received 23 lakh applications for 5,092 vacancies or about 452 applications for every vacancy.

Besides science, commerce and arts graduates and post-graduates, those with professional qualifications, such as engineering, chartered accountancy and law, too have applied for the posts.

The annual compensation on a cost-to-company basis for POs at Mumbai is around Rs8,40,000 or about Rs70,000 a month. The total starting pay for a clerical cadre employee in a metro like Mumbai is around Rs17,500 a month.

SBI currently has about 78,200 officers and some one lakh clerical staff on its rolls. Including subordinate and watch-and-ward staff, the total number of employees stands at about 2.19 lakh.

SBI Chairman Arundhati Bhattacharya said, “Recruitment earlier was happening in a bunch. We took in people and they would get absorbed over a period, with the numbers going up and down every year.

“From this year what we have decided is that every year, methodically, we would recruit a certain number equivalent to the number that will be retiring.”

She pointed out that this year, for instance, the bank had put out recruitment advertisements for 1,800 POs and 5,800 clerical staff, roughly equivalent to the numbers that are retiring.

In SBI, the number of employees who will retire will go up from around 6,700 or so this year to about 10,000 in each of the next four years.

“Now, beyond retirement also there is a slight fall in employee numbers because people leave and go away... That shortfall, if any, should be made up by productivity gains,” said the SBI chief, who is the only woman in Bloomberg Markets’ fourth annual “50 Most Influential” list.

Source : The Hindu
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Banking Ombudsman: Customer complaints on the rise, but 23% of them not maintainable

Technology seems both a boon and bane in banking. While customers are able to do their banking transactions 24x7, from the comfort of their home, anytime and anywhere, people also seem to be losing money because of technology, observed U Chiranjeevi, Banking Ombudsman, RBI, Chennai.

Speaking to Business Line on the sidelines of the Coimbatore edition of Reserve Bank of India Quiz (RBIQ), he said that the number of complaints pertaining to credit and ATM cards are on the rise.

''But 23 per cent of the complaints are not maintainable. People are not aware of the scheme,'' he said and explained that the Banking Ombudsman office does not entertain complaints received through an advocate, forgery and frauds such as phishing attack or ending with other forums such as the Debt Recovery Tribunal (DRT) and commercial transactions.''

''The complaint should be between the bank and the customer. And here too, we can take up the issue only if it is within this jurisdiction. For instance, if the complaint pertains to credit card transaction and the card holder's billing address is elsewhere (some other state), then I cannot take the complaint. It has to be taken up in that geography,'' Mr Chiranjeevi explained.

'The Banking Ombudsman scheme should be strengthened; with customer protection gaining strength, there is pressure for expanding the scheme to other areas such as cooperative and regional rural banks as well,'' he said.

The Ombudsman office though is facing manpower shortage. The staff strength according to Mr Chiranjeevi, has not been adequate to take care of the increasing number of complaints.

The office received 9,500 complaints last year, which is said to be 21 per cent higher than the numbers received the earlier fiscal.

With expanding branch network, financial inclusion initiatives and entry of new banks, the number of customer complaints is expected to go up.

The Banking Ombudsman however conceded that they have an institutional mechanism to resolve issues at the earliest. ''No complaint remains unresolved for more than 30 days,'' he said.

Of the total, nearly 25 per cent are ATM-related complaints. Other issues that are causing lots of social problems pertain to loss of title deeds, auction of jewellery without notice and hidden charges, he said.

Though State Bank of India topped in the number of complaints followed by Indian Overseas Bank, Indian Bank and Standard Chartered Bank, Mr Chiranjeevi said ''just because the number of complaints is high, it is not negative. They have a huge network, customer base is large and are expanding. That these banks too are able to resolve the issues within the stipulated time should be appreciated.''

Source : The Hindu
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Thursday, September 11, 2014

Lakshmi Vilas Bank aims 20 per cent growth in 2014-15: Rakesh Sharma, MD

Private sector lender Lakshmi Vilas Bank aims to double its profits during the current financial year even as it has set a target of growing at 20 per cent year-on-year, according to a top official.

"We are hoping to register profits of about Rs 140 crore in the current (financial) year. Last year we made some provisioning. Our profits for last year was around Rs 60 crore," Lakshmi Vilas Bank Managing Director and CEO Rakesh Sharma told reporters here.

Elaborating he said, "our first quarter profits (of current financial year) was about Rs 28 crore. In the remaining three quarters we expect about Rs 35-Rs 40 crore (in each quarters). We expect our profits to be Rs 140 crore".

Lakshmi Vilas Bank Chief Financial Officer Palaniappan said the bank made an one-time provisioning of Rs 40 crore during the last financial year and during the current financial year, "such requirement was not required" which would lead to increase in profits.

On the growth plans, Sharma said, a 20 per cent growth on deposits and advances was planned in the current fiscal.

Noting that the bank was focusing on improving its exposure in the retail and Micro, small and medium enterprise portfolio, from the present 72 per cent to 80 per cent, he said, "the bank would shortly introduce a co-branded visa credit card".

"We are already in advance stage of discussion with another credit card company. We will launch a co-branded credit card shortly", he said, declining to elaborate further.

The bank has undertaken a "rebranding exercise" aimed at making it more "customer friendly" and initially 30 branches of the bank would be covered on pilot basis, he said.

"We have appointed Ernst and Young as the consultant", he said.

Source : Economic Times
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Card payment network RuPay sees boost from government banking scheme

A government drive to expand banking services in India is giving a boost to home-grown card payment network RuPay, which expects to quadruple the number of users by March and make debit cards more acceptable in a nation where cash is still king.

Started in 2012 by a company owned by 10 local and foreign banks, RuPay competes with global payment firms Visa Inc and MasterCard Inc for the few customers in Asia's third largest economy able to afford a debit or credit card.

As of July, banks issued just under 435 million payment cards in India, a nation of 1.3 billion people. Most were debit cards.

RuPay's share of daily card transactions, however, remains small compared with the global firms, which are more established, offer both debit and credit cards and are accepted by more retailers. RuPay currently offers only debit cards.

RuPay users account for just 1.5 percent of daily card transactions of almost one million at retailers, said A.P. Hota, chief executive of the National Payments Corp of India (NPCI), which runs RuPay.

Hota told Reuters the payments network was set to grow rapidly from the government's so-called financial inclusion scheme, which aims to ensure the majority of households has a bank account within months.

Under the scheme launched late in August, Indians who open a bank account for the first time automatically get a RuPay card.

Hota said the number of RuPay users has now almost doubled from 23 million at the end of July.

By March next year, he expects that number to rise to 160 million, with more than 60 percent of the increase coming from the government scheme.

"Jan Dhan itself would provide a big opportunity for the domestic card brand to be a formidable force," said Hota, referring to the financial inclusion scheme, Jan Dhan Yojana, which means People's Wealth Scheme.

"(RuPay Card transactions are) just a drop in the ocean at the moment. But drop by drop we are increasing our size."

NPCI is also trying to lure more customers by charging banks lower fees than Visa and MasterCard, Hota added.

Visa, the world's largest credit and debit card company, declined to give its India market share, but said the country was amongst the world's fastest-growing payments markets.

"We believe Visa is well-positioned competitively," Uttam Nayak, group country manager of India and South Asia, at Visa, said in emailed comments, adding his company welcomed competition.

MasterCard did not reply to Reuters' requests seeking comment.

NPCI's shareholders include India's biggest bank, the State Bank of India, and foreign lenders Citibank and HSBC. The central bank has a nominee on its board.

The organisation plans to launch RuPay cards that will be accepted overseas through a partnership with Discover Financial Services, Hota said, and is also in talks with Japanese card network JCB about a partnership.

RuPay had aimed to issue credit cards by March 2015, but those plans have now been delayed by the government scheme, Hota said. "Rural acceptance of the Jan Dhan cards will be our priority," he added.

Source : Economic Times
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Wage revision parleys not making headway: bank unions

It’s been almost two years since the start of the wage revision negotiations, but no significant progress has been made in arriving at a settlement, say bank union sources.

The traditional ‘roundtable negotiations’ have been replaced by ‘correspondence’ after the last meeting on June 13, said retired bank unionist S Srinivasan.

“At the last round held in June, the Indian Banks’ Association relented to a one per cent increase to 11 per cent. Thereafter, negotiations across the table have come to a standstill and replaced with exchange of three letters between the parties, causing displeasure among bank employees,” he said.

Public sector banks, he said, are the foundation of the Indian economy. With changing times, these entities would need to rejuvenate themselves like their private sector or foreign counterparts. Healthy wage structure and service conditions would inspire and motivate the workforce, he added.

Meanwhile, MA Srinivasan, General Secretary, Canara Bank Officers’ Union, told BusinessLine that the Central Committee of the All-India Bank Officers’ Association will be meeting on September 16-17 at Kolkata to discuss wage revision, the growing problem of non-performing assets and issues concerning banking reforms.

The United Forum of Bank Unions is demanding, among other things, a 25 per cent hike in the pay-slip component, five-day week and proper disciplinary guidelines.

Justifying the hike, Srinivasan said cost of living has gone up considerably and the wage rates in other industries and even of government employees have risen significantly.

On NPAs, union sources contend that they are not the creation of the workforce.

Source : The Hindu
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Court extends judicial custody of Syndicate Bank CMD Jain till Sept 24

A Delhi court today extended till September 24 the judicial custody of Syndicate Bank CMD Sudhir Kumar Jain, Bhushan Steel Ltd Vice-Chairman and MD, Neeraj Singal, and nine others who were arrested by the CBI in connection with a bribery case.

On expiry of their judicial custody, the accused were produced before special CBI judge Swarana Kanta Sharma, who extended it further till September 24 after the agency said that the probe into the case was going on.

Besides Jain and Singal, CBI had arrested CMD of Prakash Industries Ltd, Ved Prakash Agarwal, its director Vipul Agarwal, Arun Aggarwal, who is alleged to be the Chief Financial Officer of Bhushan Power and Steel Ltd, and six others in the case.

Alleged middleman Purshottam Totlani, also an accused in the case, is still absconding.

They have been booked under the provisions of the Prevention of Corruption Act and criminal conspiracy under the IPC.

On August 2, CBI had arrested six accused in connection with the case and had claimed to have recovered Rs. 21 lakh in cash from Jain’s residence, besides gold worth Rs. 1.68 crore and documents of fixed deposits of up to Rs. 63 lakh.

The agency has filed two separate cases against Jain, accusing him of receiving a bribe of Rs. 50 lakh through conduits and abusing his official position to enhance the credit limits of some companies in violation of laid-down procedures.

Singal was arrested by CBI on August 7, hours after the court had issued a non-bailable warrant against him.

CBI had earlier filed an application in the court seeking directions to Jain, Singal, Ved Prakash Agarwal and co-accused Vineet Godha and Puneet Godha for recording their voice sample for its ongoing probe.

The agency, in its plea, had said the case was based on intercepted telephonic conversations and specimen voice samples of these accused was required for their probe.

The court would hear the remaining arguments on the CBI’s plea on September 19.

Source : The Hindu
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SBI plans to roll out stock options for employees

In a move that is the first of its kind in the public sector banking space, State Bank of India plans to roll out an employee stock option scheme (ESOS) for its 2.19 lakh employees.

Even as the scheme is in the works, India’s largest bank has dropped its earlier plan to come out with an employee stock purchase scheme.

The move to offer ESOS is aimed at motivating employees to perform better as also to attract and retain talent.

Competition to attract experienced bankers has intensified with the Reserve Bank of India (RBI) granting “in-principle” approval in April to IDFC and Bandhan Financial Services to set up banks in the private sector. The central bank is also expected to issue universal bank licences on tap.

On the status of stock purchase scheme, SBI Chairman Arundhati Bhattacharya, in an interview with BusinessLine, said: “Actually, then (in March 2014) I had talked about ESPS. At that point, our shares were at a very low price and it would have made sense. But since then the price has improved and it is difficult for employees to purchase now.”

Therefore, SBI is now considering an ESOS, that will give an employee the right to purchase or subscribe to the securities offered by the bank at a future date, and at a predetermined price.

The SBI chief said her intention is to make ESOS available to all employees and quickly. “We have to find out performance parameters for every job. So, that is a big job. We are looking at how that can be done,” she said.

The Finance Ministry is agreeable “in-principle”. “We have to take permissions from others, including the RBI. The way it will be done will have to be advised to the ministry and final approval got,” she said.

The SBI chief said that if an employee performs in line with the target given to him/her then he/she will get a certain number of options, which will be locked in for a period of time, say one year. “If it hasn’t gone up by then that means you (employee) have not worked hard enough for the company. So, to make it go up, you have to work hard,” Bhattacharya said in a lighter vein.
Stock split

On the possibility of SBI going in for a stock split, she said: “How do you know we are not doing it? These are things that we will do when we think the time is right.”

Source : The Hindu
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Subhash Chandra Garg appointed as World Bank ED

Senior IAS officer Subhash Chandra Garg was today appointed as Executive Director (ED) in World Bank.

Garg, a 1983-batch IAS officer of Rajasthan cadre, will have a tenure of three years from the date of assuming charge of the post, said an order issued by the Appointments Committee of Cabinet (ACC).

The Executive Directors are responsible for the conduct of the general operations of the World Bank and exercise all the powers delegated to them by the Boards of Governors. They also select a President who serves as Chairman of the Boards.

They are responsible for International Bank for Reconstruction and Development’s loans, guarantees and policies that impact the World Bank’s general operations among others.

Garg is presently serving in Rajasthan.

The ACC had last month approved the proposal for extension of tenure of M N Prasad, a 1972 batch IAS officer of Bihar cadre (retired), as Executive Director, World Bank till October 31.

The order for Prasad’s appointment was issued on July 26, 2011 for three years. Prasad was then working as Secretary to former Prime Minister Manmohan Singh.

Source : The Hindu
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ICICI Bank offers Cardless Cash Withdrawal at ATMs

Now, withdraw without a debit card at an ICICI Bank ATM, as the bank facilitates cardless cash withdrawal service with the help of a mobile number.

, India’s largest private sector bank, announced its ‘Cardless Cash Withdrawal’ service that allows its customers to transfer money from their account to anyone in India with a mobile number, the bank said in a statement.

The recipient can withdraw money round the clock without using a debit card from over 10,000 ATMs of ICICI Bank across the country. One can do this even without having a bank account of any bank, the bank further said.

However, the sender needs to be an ICICI Bank savings account holder.

Rajiv Sabharwal, Executive Director, ICICI Bank said: “We foresee tremendous growth potential in the usage of electronic payments in our country. ‘Cardless Cash Withdrawal’ provides an added facility in an array of electronic payment options that ICICI Bank offers to its customers.”

How it works

The facility can be initiated by any ICICI Bank savings account customer (sender) by logging into internet banking of ICICI Bank website.

The sender first needs to register the recipient’s name, mobile number and address. The sender will get a four digit verification code while the recipient a 6-digit reference code, over SMS.

The recipient can withdraw cash from almost all ICICI Bank ATMs by entering mobile number, cash amount along with the verification and reference code, within two days of the transaction.

This service can also be used by the Bank’s account holders to withdraw cash from their own accounts without using a debit card, the bank added.

Source : The Hindu
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Wednesday, September 10, 2014

Reserve Bank to pick talent via UPSC-like test

The Reserve Bank of India will adopt a common recruitment system from next year to tap talent for its core functions. The larger objective is to strengthen itself in the changing economic scenario.

“Starting from 2015, there shall be common recruitment for all core functions of the bank,” the RBI said in an internal report on HR initiatives.

At present, it recruits officers and support staff for core and non-core functions through different examinations, such as the Grade ‘B’ officers level exam. The RBI now has about 17,000 employees.

The proposed common recruitment will not only cover traditional areas such as economics and statistics but also include niche skills, such as risk management, financial markets trading, accounting, legal, human resources management and counselling.

The officers that are recruited will have a common seniority. In effect, it will be like the common cadre under the All India Services of the Union Public Service Commission.

The Reserve Bank Services Board hopes to complete the entire recruitment cycle within three to four months.

Assessment centre

By December, an assessment centre will be in place to evaluate the actual/potential performance of an officer. “We do need to engage external consultants,” the RBI said.

The apex bank may disassociate itself from functions such as debt management and micro management of sector lending, among others.

The focus on forensic audits, on-tap bank licensing, differentiated bank licensing, enforcement, IT systems and risk modelling will increase.

As part of the restructuring initiatives, an amendment to the existing RBI Act is on the anvil to create additional positions in top management.

New units such as a market intelligence division and departments for corporate services and corporate strategy are also in the offing.

Source : The Hindu
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Guarantor of a ‘wilful defaulter’ is liable too: RBI

In case a guarantor of a wilful defaulting borrower refuses to comply with the bank’s demand, the guarantor would also be treated as a wilful defaulter, RBI said.

“Where a banker has made a claim on the guarantor on account of the default made by the principal debtor, the liability of the guarantor is immediate. In case the said guarantor refuses to comply with the demand made by the creditor/banker, despite having sufficient means to make payment of the dues, such guarantor would also be treated as a wilful defaulter,” RBI said in a clarification on Tuesday.

Amid rising concerns of wilful defaults among corporates, banks raised queries regarding inclusion of names of guarantors who are either individuals (not being directors of the company) or non-group corporates in the list of wilful defaulters.

Recently, United Bank of India declared Vijay Mallya, promoter of the now grounded Kingfisher Airlines, as a wilful defaulter.

“It is advised that the liability of the surety (guarantor) is co-extensive with that of the principal debtor unless it is otherwise provided by the contract,” the RBI said. Therefore, when a repayment default is made by the debtor, the banker will be able to proceed against the guarantor even without exhausting the remedies against the principal debtor.

Source : The Hindu
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ICICI Bank approves 1:5 shares split

The Board of Directors of ICICI Bank Ltd has considered and approved the sub-division (split) of one equity share of the Bank having a face value of Rs 10 into 5 equity shares of face value of Rs 2 each.

According to the bank's statement, "Each American Depositary Share (ADS) of ICICI Bank will continue to represent two underlying equity shares as at present.

"The number of ADSs held by an American Depositary Receipt holder would consequently increase in proportion to the increase in number of equity shares," it said.

The sub-division of shares will be subject to approval by the shareholders, which will be sought by postal ballot, and any other applicable statutory and regulatory approvals.

Accordingly, the record date for sub-division of shares will be announced in due course, the statement added.

Source : The Hindu
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Tuesday, September 9, 2014

SBI's operations disrupted in Kashmir valley due to floods

Banking operations in as many as 66 branches of State Bank of India in Kashmir valley were severely affected following heavy floods in Jammu and Kashmir where massive rescue operations are underway to help out trapped people.

With no communication link functioning with the branches in the valley, SBI is hoping to restore banking operations once the water level recedes.

"Banking operations in Srinagar are completely disrupted due to floods. We have 66 branches in the valley. Out of total branches, minimum of 60 are supposed to be closed, while there is no connectivity with rest of branches which are located on the outskirts, so we are not sure whether they are functioning," a senior official of SBI told PTI today.

SBI, which has 66 branches in the valley spread across 10 districts, generates total business of more than Rs 3,000 crore in Kashmir valley, he said.

The official said the banking operations could only be restored when water level recedes, adding that communication link could not be established with the affected branches.

"Unless flood water level drops, banking operations cannot be restarted. But we have a back up team in place there which will start working towards restoring operations as and when water level comes down," the official added.

As far as banking operations in Jammu is concerned, SBI official said banking operations were normal.

"One branch was affected in Udhampur area but that has also started functioning from today," he informed.

SBI has a network of 177 branches in Jammu and Kashmir.

Source : Economic Times
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State Bank of India launches multi-currency travel card

State Bank of India and MasterCard announced launch of a multi- currency foreign travel card that will be available through identified State Bank branches. The card is available in both retail and corporate variants will allow the consumers to pay conveniently in multiple currencies. It will initially be available in four currencies—USD, GBP, Euro and SGD and eventually be made available in all major currencies.

It's a prepaid and reloadable card with 24/7 access to balance and transaction history online or via the dedicated customer service centre. The card also gives free access to exclusive benefits and offers around the world, which are unique to MasterCard members.

Speaking on the launch, S K Mishra, Deputy Managing Director (Corporate Strategy and New Business) State Bank of India said, "Outbound travel from India is growing at a rapid pace, with 35 million people travelling outside India. This is expected to grow to 50 million in 2020. Consumers expect smart payment products to address their travel needs and Multi-currency Foreign Travel Card provides customers both ease and choice."

Presently, the card can be issued, reloaded and refunded at 100 selected branches of Mumbai, Delhi, Chennai and Bangalore Circles and can be loaded in any or all of the four currencies. "The number of branches and currencies will be increased going forward," added Mishra.

MasterCard's Multi Currency Card is one of the most advanced multi-currency programs in India. While the opportunity and need was apparent, our next step was to find the right partnership for this project. SBI was a natural choice, keeping in mind their strength and capabilities to provide this initiative with the required back-end support and infrastructure," said Ari Sarker, Divisional President, MasterCard Worldwide, South Asia.

The card is Chip and Pin based and provides global emergency assistance services like complimentary card replacement, cash delivery, medical and lawyer assistance services, besides providing online account management services and 24 hours call centre support.

"The product is backed by MasterCard's powerful acceptance network of over 35.9 million merchant establishments and 1.9 million ATMs worldwide," added Sarker.

Source : Economic Times

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Arun Thiagarajan resigns from ING Vysya Bank

Arun Thiagarajan has relinquished his office as part-time Chairman and as a Director of ING Vysya Bank, effective September 6, 2014.

In a notice to the BSE, the Bangalore-headquartered private sector bank said it is taking necessary steps to appoint a successor in due course.

Thiagarajan had joined the bank, which has 547 branches and about 10,000 employees, in 2010.

The main stakeholders in ING Vysya Bank are: Dutch financial institution, ING Group (42.86 per cent stake); foreign institutional investors (28.16 per cent); and domestic institutional investors (15 per cent).

The bank had reported 18 per cent decline in net profit at Rs 143.4 crore in the first quarter ended June 30, 2014 as against Rs 175.1 crore in the year ago period.

Source : The Hindu
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RBI norms on Basel III instruments are credit positive: Moody's

The new norms by RBI for the instruments compliant under Basel III to raise Tier-I capital are credit positive for Indian banks, in particular public sector banks, according to Moody’s credit rating agency.

“They will make the instruments more attractive to investors, broaden the investor base for additional Tier 1 (AT1) securities to include retail investors and allow banks to have a higher proportion of AT1 capital in their Tier 1 capital,” Moody’s said in its credit outlook report.

New guidelines

On September 1, the Reserve Bank of India (RBI) had revised some of its rules governing instruments that qualify as bank capital under Basel III.

RBI has cut the minimum maturity for Tier 2 capital that banks can issue to five years from 10 years. It has also allowed retail investors to buy Tier 1 capital.

Basel III capital norms

Indian banks have to comply with Basel III capital norms by March 2019, including maintaining a minimum capital adequacy ratio of 11.5 per cent.

“Several changes will make AT1 instruments more attractive to investors. Write-downs of principal when a bank’s common equity Tier 1 (CET1) capital breaches the trigger level can now be temporary, giving investors the possibility of recouping their losses if the health of the bank improves,” said Srikanth Vadlamani, Vice President - Senior Analyst, Financial Institutions Group, Moody's Investors.

Broader investor base

Further, lack of broader investor base discourages banks from issuing Tier 2 instruments. RBI has tried to address this by widening the investor base to include retail investors.

The other key change in the new rules is the removal of certain limit on the amount of AT1 that a bank can use for calculating its Tier 1 capital, which effectively limited AT1 issuance to 1.5 per cent of risk-weighted assets.

At a time, when public-sector banks are finding it difficult to raise equity capital from the public markets, this provides a way for banks to bolster their Tier 1 ratio by raising a higher amount of AT1 capital.

Low capital levels are a key credit weakness for many Indian banks, particularly public sector banks.

Source : The Hindu
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Kotak Bank appoints woman director on board

Kotak Mahindra Bank has appointed Farida Khambata as additional director on its board with immediate effect. The decision was taken at a board meeting on Sunday, September 7, Kotak Bank said in an exchange filing.

Currently, Khambata is global strategist at Cartica Management LLC and a member of its investment committee.

At present, the Kotak Bank board comprises Shankar Acharya, Uday Kotak, C Jayaram, Dipak Gupta, Asim Ghosh, Prakash Apte, Amit Desai, Narendra P Sarda and Mahendra Dev.

Starting October 1, 2014, SEBI has mandated that "The board of directors of the company shall have an optimum combination of executive and non-executive directors with at least one woman director and not less than fifty per cent of the board of directors comprising non-executive directors."

Source : The Hindu
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Origo Commodities partners with PNB to finance farmers, MSMEs

Origo Commodities, which is into post-harvest management services, today said it has signed an agreement with the Punjab National Bank for providing finances to farmers and MSMEs against warehouse receipts.

Punjab National Bank
has entered into a Memorandum of Understanding (MoU) with Origo Commodities India Pvt Ltd for warehouse receipt financing and is targeting to disburse Rs. 500 crore this fiscal.

“Under this MoU, PNB, through warehouse receipts issued by Origo, will cater to the needs of MSMEs and farmers by providing financing against a pledge of agricultural commodities,” Origo Commodities said in a statement.

“Both MSMEs and farmers are expected to benefit greatly from this association as Origo and PNB target a disbursement of over Rs. 500 crore in the current financial year under this tie up,” it added.

The MoU has been signed on a pan-India basis, but there would be a significant focus in southern India.

Origo Commodities is a post-harvest solutions and warehouse management services company in India. It currently operates 300+ warehouses and has over 3.5 million tonnes of commodities with value of $1.5 billion under management.

Its services include commodity handling, collateral management and procurement services to farmers, producers, processors and corporate houses.

“This initiative would help change the dynamics of commodity supply chains at the farmer level by creating the opportunity for farmers to fetch a higher price for their produce and protect them from the hassles of distress selling,” said, SS Bhatia, GM, MSME, PNB.

MSME financing would help create agriculture and allied infrastructure at rural level and would support farmers and MSME entrepreneurs, he added.

Commenting on the tie-up, Origo Commodities Director Mayank Dhanuka said the association with PNB would help the company reach wider and diversified markets and play a significant role in transforming the rural supply chains.

Source : The Hindu
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Jan Dhan Yojana opens a new door for RuPay gateway

As Pradhan Mantri Jan-Dhan Yojana (PMJDY), the financial inclusion scheme launched by Prime Minister Narendra Modi late last month notches up impressive numbers and expects to meet its 7.5 crore accounts target well within 100 days, payment gateway RuPay is experiencing a boost in fortunes.

Payment gateways are platforms that help banks facilitate electronic money transfers. India is only the fourth country in the world after the US, Japan and China to have its own national payment gateway, in RuPay.

With the PMJDY getting nearly 2.5 crore new bank accounts within seven days of launch, each account holder gets a RuPay debit card along with his/her account.

As a result, RuPay is notching up numbers.

Fast-growing base

According to the National Payments Corporation of India (NPCI), which developed the platform, the RuPay card has a current base of 2.5 crore users and is seeing about seven lakh inter-bank transactions a day.

With the financial inclusion scheme coming into play, the total number of RuPay card holders is likely to surge. NPCI will declare official numbers at the end of this quarter.

AP Hota, Managing Director and CEO of National Payments Corporation of India Ltd (NPCI), told BusinessLine that the target for the year-end was six crore cards. By March 2015, RuPay may be able to add an additional 10 crore accounts. If the Centre’s financial inclusion scheme lives up to its hype, the sheer number of RuPay cards in the country will create a critical mass that will help create a huge network of retailers who accept RuPay cards. According to Reserve Bank of India statistics, the total number of credit cards in India is currently at around 1.9 crore while the number of debit cards issued is at 40 crore. Currently, global organisations such as Visa and MasterCard dominate this space. But Hota says competing with MasterCard and Visa is not a priority. “The perceived competition with MasterCard and Visa is not relevant at this stage. They are global companies with trillion-dollar revenues and deep pockets. We are a small company with ₹100-crore capital,” he said.

Main challenges

The main challenges for RuPay are to get acceptance among the high-income bracket and to increase the number of transactions among those in the lower income bracket. Partner banks have an incentive to push RuPay to customers as transaction costs through this gateway are expected to be at least 40 per cent lower than through Visa and MasterCard.

Source : The Hindu
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Karnataka Bank appoints new additional director

Karnataka Bank Ltd has appointed BA Prabhakar, former Chairman and Managing Director (CMD) of Andhra Bank, as an Additional Director of the bank.

The bank informed the BSE on Monday that the board, which met on September 6, has appointed Prabhakar as an Additional Director of the bank.

Prabhakar, a chartered accountant, retired as CMD of Andhra Bank in August 2013. Prior to that, he had served as the Executive Director of Bank of India from October 2008 to December 2011. Before that, Prabhakar had served Bank of Baroda from October 1977 to October 2008, the statement said.

Source : The Hindu
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Sunday, September 7, 2014

Jan Dhan Yojana: KPMG to validate number of accounts opened by banks

The Finance Ministry has roped in professional services firm KPMG to undertake a validation exercise of the number of basic bank accounts opened by the banks under the Pradhan Mantri Jan Dhan Yojana (PMJDY).

KPMG’s confirmation of the number of accounts opened will help the Centre pitch for an entry into the Guinness Book of World Records for the maximum number of bank accounts opened in a day, banking industry sources said.

It would also provide some comfort to the Finance Ministry that the numbers submitted by the banks were accurate and reflected the true picture.

On August 28, the launch date of the PMJDY, the banking system had opened between 1.8 crore to 2 crore bank accounts, say bankers.

If one were to count the efforts of the next few days as well, then estimates put the number of accounts that may have been opened under the PMJDY at close to 3 crore accounts.

KPMG has already commenced work for this purpose and have approached banks to share information on the number of accounts opened under the PMJDY, sources close to the developments said.

Under the PMJDY, the Government is looking to open at least 7.5 crore basic bank accounts for 7.5 crore unbanked families in the country.

A basic bank account is not the same as a normal savings account and the simplest know-your-customer norms are being adopted for PMJDY so that the unbanked could have access to banking account and its facilities.

If high value transactions have to be entered into by the account holder, then the bank concerned can always upgrade the basic bank account to a regular savings account, a banker said.

The Jan Dhan accounts will be governed by the RBI guidelines for small accounts and therefore certain stipulations like maximum amount of ₹ 1 lakh to be deposited in a financial year in such accounts and maximum balance of Rs50,000 at any time in an account would have to be followed.

Source : The Hindu
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SBI launches new products for children

State Bank of India on Friday launched two new Savings Bank products — Pehla Kadam and Pehli Udaan — for children.

Pehla Kadam is a Savings Bank account for minor of any age operated jointly with his/her parent/guardian, while Pehli Udaan is a singly operated Savings Bank Account for a minor aged 10 years and above and who can sign uniformly.

Specially branded passbook and cheque book have been designed for these products. All the account holders will be given an exclusively designed personalised photo ATM-cum-Debit Card, the bank said in a statement.

Other features bundled along with the two products include Internet banking with limited transaction facilities like bill payment, opening of fixed deposits, recurring deposits, etc. with per day transaction limit of Rs. 5,000, and mobile banking with limited transaction facilities like bill payment, and top-ups with per day transaction limit of Rs. 2,000.

While launching the products on Teachers day, students of the school were handed over account kits containing their personalised debit cards, pass books, cheque books, etc.

Source : The Hindu
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