Violation of KYC norms: RBI slaps Rs 50 lakh penalty on ICICI Bank, Rs 25 lakh on Bank of Baroda

The Reserve Bank of India (RBI) on December 17 imposed penalties on ICICI Bank and Bank of Baroda for violating 'Know Your Customer' (KYC) as well as anti money-laundering norms (ALM). The central bank fined ICICI Bank Rs 50 lakh, BoB Rs 25 lakh, and cautioned State Bank of India, Axis Bank and State Bank of Patiala that they should review and comply with KYC norms.

In a statement, RBI said, "Failure on the part of these banks (ICICI Bank and BoB) to take timely remedial measures had aggravated the seriousness of the contraventions and their impact."

RBI reviewed the KYC and ALM processes of these banks after it received a complaint from a reputed statutory organisation in August 2013. This complaint included details of a fraud perpetrated in the five banks censured, with the connivance of certain officials of the statutory organisation.

"The fraudsters had managed to open fictitious accounts in the name of the statutory organisation in the above five banks and operated the accounts, mainly for encashing cheques/ demand drafts/ postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks," the RBI statement read, without naming the organisation. The central bank conducted a scrutiny of these five banks in January 2014.

The scrutiny revealed "non-adherence to certain aspects of Know Your Customer or KYC norms and non-adherence to instructions on monitoring of transactions in customer accounts", RBI said. The central bank decided to impose a monetary penalty on ICICI Bank and BoB after issuing a show-cause notice and reviewing their response. State Bank of India, Axis Bank and State Bank of Patiala were not fined "as the banks' explanations regarding the circumstances which led to the fictitious accounts getting opened and operated without detection, were judged to be reasonable".

This is not the first time private sector banks like ICICI Bank and Axis Bank have been pulled up by the central bank for violation of KYC norms. In 2013, RBI had imposed a penalty of Rs 1 crore and Rs 5 crore on ICICI Bank and Axis Bank, respectively, after an expose by the website, CobraPost, in which undercover reporters sought bank staff 's assistance in legitimising black money. Those fines were also for non-adherence to KYC, antimoney laundering and filing of Cash Transaction Reports (CRTs).

Most recently, in July 2014, the central bank had imposed a combined fine of Rs 1.5 crore on 12 banks, for not conducting adequate due diligence on loans granted to Deccan Chronicle Holdings, which led to a loss of Rs 4,000 crore to the banking sector.

Source : Economic Times

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Vijaya Bank event at Pollachi

Vijaya Bank organised the Pradhan Mantri Jan Dhan Yojana programme at Pollachi. KR Shenoy, Executive Director of Vijaya Bank, distributed Rupay Cards and Pass Books to the beneficiaries. The programme was attended by over 200 beneficiaries and large number of people from nearby villages, said a Vijaya Bank statement. Shenoy explained various important features of the scheme to beneficiaries. A short film on Pradhan Mantri Jan Dhan Yojana Scheme in the local language was screened to create awareness.


Source : Thehindubusinessline

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Diluting government stake is credit positive for banks: Moody’s

The Cabinet decision to allow private capital by diluting government stake in public sector banks is credit positive for undercapitalised banks, according to Moody’s Investor Service.

“The ability to raise private capital that dilutes the government’s stake is credit positive for the undercapitalised public sector banks because government resources to recapitalise banks are limited,” Moody’s said in a statement.

On December 10, the Cabinet said that it would allow government ownership in public sector banks to fall to 52 per cent as banks raise capital to meet Basel-III requirements, which will steadily rise until 2019.

“In the 11 public sector banks we rate, the Indian Government’s stakes range from 56 per cent to 84 per cent. Public sector banks account for about 70 per cent of the Indian banking system in terms of loans, deposits and branches.

The Cabinet stopped short of allowing public sector banks to reduce their government stakes below 51 per cent, a level that would jeopardize government control of the banks,” Moody’s said.

Phased reduction

The Cabinet said a phased reduction in the government’s stakes in public sector banks to 52 per cent would help raise up to ₹1.61 lakh crore from the market.


Source : Thehindubusinessline

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IRDA slaps Rs. 31 lakh penalty on Canara HSBC Oriental Life Insurance

The Insurance Regulatory and Development Authority (IRDA) has imposed Rs. 31 lakh penalty on Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd for setting policies in favour of master policy holders under non-employee/employer groups.

``The practice of issuing claim payments in favour of Master Policy Holders (Self Help Groups in this case) but not in favour of the beneficiary of the group insurance policy has a potential of jeopardising the financial interests of the dependents of the deceased policyholder,’’ the regulator said in a circular issued here on Thursday.

The regulatory had also warned the company citing many other lapses in adhering to the norms in many cases.


Source : Thehindubusinessline

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Syndicate Bank launches new scheme for women entrepreneurs

Syndicate Bank is targeting to reach out to over 20,000 women entrpreneurs across the country through a new scheme 'SyndMahilaShakti', an initiative for women empowerment.

The bank is observing 'SyndMahilaShakthi' week currently till December 20 across the country and aims to extend loans to over 20,000 women entrepreneurs to take up various self-employment activities under micro, small and medium enterprises, a press release said.

Since December 15, the bank has sanctioned loans worth Rs. 68 crore to about 5,415 women entrepreneurs till Wednesday, officials said.

Concessional interest rates

Under the scheme, the bank is extending finance up to Rs. 5 crore per woman beneficiaries at concessional interest rates.

The rate of interest for loans up to Rs. 10 lakh is at the base rate of 10.25 per cent, while for loans exceeding Rs. 10 lakh, a concession of 0.25 per cent is being provided on applicable interest rate.

The borrower has to contribute 15 per cent margin on the loan, while the processing and documentation charges are fully waived on these loans. No collateral security and no guarantee is insisted for loans up to Rs. 10 lakh.

Available facilities
The beneficiaries can avail themselves of credit card facility without any admission fee and they can also avail themselves of various facilities such as instant global debit cards/ATM cards, SMS banking, mobile banking, Internet banking, any branch banking, SyndSuraksha insurance policy and SyndArogya health insurance cover, the statement said.

All micro enterprises will get a rebate of 0.5 per cent in rate of interest for prompt repayment to be reimbursed at the time of closing the loan account. The loans can be repaid in a maximum period of 7 to 10 years, including repayment holiday.

The bank shall be covering all eligible borrowers under Credit Guarantee Fund Trust for Micro and Small Enterprises scheme.

Eligible borrowers can also be sponsored by district industries centre, NGOs, women and child development department and self help groups, among others. The beneficiaries will be given free skill development training across the country, it said.


Source : Thehindubusinessline

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Dhanlaxmi Bank push to recover bad loans showing results: MD

Dhanlaxmi Bank, named in the Rajya Sabha as having the highest NPA (non-performing assets) ratio among private sector banks (at 7.27 per cent), has taken strong measures to tackle the problem.

These include identifying wilful defaulters, enforcing the SARFAESI Act (which allows banks to auction properties of loan defaulters), one-time settlements, sale of assets to Asset Reconstruction Companies and filing cases with the Police and Services Fraud and Investigation Department of India.

Seeking help

PG Jayakumar, Managing Director and CEO, told BusinessLine over phone from Chennai that the bank also plans to seek help from Indian embassies overseas where the money is stashed away  and is approaching the central banks of those countries for recovery of the money. In the next couple of years, he said the [loan] advance book would get better as accretion to NPAs get arrested, lending is done carefully with strong underwriting standards and credit monitoring is stepped up.

According to Jayakumar, Delhi Police recently helped the bank recover Rs33 crore from fraudsters.

He expected the gross NPA ratio to come down to 4-5 per cent and net NPA ratio to 2.5 per cent in the next few years. This would be further reduced by enhanced credit sanctions in the retail and SME (small and medium enterprises) segments.

The gross NPA of the bank now stands at Rs550 crore and the net NPA at ₹360 crore, he added.

Reasons for default

Speaking on the reasons that led to the surge in loan defaults, Jayakumar said the management from 2009 to 2012 oversaw loan advances growing to Rs10,200 crore from Rs3,200 crore. The huge increase, particularly in 2011-12, was made ignoring basic protocols in credit approval. As a result, NPAs went up to Rs1,214 crore.

Rationalisation

In 2012, the present CEO took charge and NPA recovery of Rs652 crore took effect. The high NPA ratio is also a reflection of the reduction in advances, a conscious decision taken to rationalise the advances book and free it from low-yielding corporate advances, huge retail advances, loans for construction equipment and commercial vehicles, among others, he said.


Source : Thehindubusinessline

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HDFC Bank launches mobile branch in Varanasi

In Prime Minister Narendra Modi's Lok Sabha constituency, country's second-largest private lender, HDFC Bank today launched mobile banking initiative to offer round-the-clock banking facility.

"Part of the bank's digital banking offering... 'Bank Aap Ki Muththi Mein' is technology agnostic and runs on all mobile devices popular technology platforms support," said Nitin Chugh, Head-Digital Banking, HDFC Bank.

'Bank Aap Ki Muththi Mein' works on both smartphones as well as the basic phones that support Internet browsing.

It is another offering from the bank's platform to provide further convenience to customers, eliminating need for accessing branch or ATM, he added.

It would also help in financial inclusion as the mobile app would help rural population connect to bank with the basic handset as villagers don't have smartphones, he said.

"For phones that do not support Internet browsing, there's sms-banking and missed-call banking... a customer needs to send a text or call a toll free number to know his account balance, get a mini statement, request a check book or detailed account statement," he added.

As of September 2014, India had over 90 crore mobile users in the country but only 4 crore mobile banking customers.

Besides fixed and recurring deposits, bill and tax payments, buying insurance and mutual funds transactions, the offering will also allow customers to buy all kinds of loans instantly.

It also offers customers location-specific promotions, offers/deals on shopping, dining, movies and entertainment.

About 55 per cent of all transactions at HDFC Bank are conducted through digital channels.

Source : Economic Times

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Axis bank opens all women branch, focuses digital

Axis Bank, India’s third largest private sector Bank, has opened its first All Women Branch in Patna, Bihar.

“Women play an important role in managing household savings and we believe that this all Women Branch will help increase the participation of this segment in the banking industry,” said Rajiv Anand, Group Executive – Retail Banking, Axis Bank.

Axis Bank also offers its mobile app ‘Axis Mobile 2.0’ with high level of personalisation, allowing users to customise their mobile banking experience, depending on the user segment (Youth, Premium& Prime segments).

“To increase customer security, the bank has recently introduced ‘e-surveillance’ facility, a service that allows a 24x7, 365 days Centrally Monitored Automated Security of ATMs. This initiative underscores the bank’s objective of providing advanced security and simplified service to its customers, the bank said.

“The innovative, personalized multi-channel banking experience like Self Service ATMs, Internet banking, Mobile app and social media interface would henceforth be the driving force in our Bank’s Digital strategy,” Anand added.

The bank highlighted there is growth in ownership of mobile and other electronic devices, driving digital banking and over 80 per cent of the transactions to happen through digital channels in FY15.

Axis Bank’s overall market share in mobile transactions stands at 13%, as on September, 2014, the bank statement said.


Source : Thehindubusinessline

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DCB Bank plans doubling business in three years

The private sector lender, DCB Bank is planning to double its business in the next three years by focusing on retail advances. The bank aims to increase its lending to the self-employed persons at tier-2 to tier-6 towns (having population less than 5000).

"Retail is our main focus area. Our balancesheet size is Rs. 13,000 crore at present and we are aiming to double the same in the next 3-3.5 years. We will open about 250 branches in the next three years and 50 per cent of that will come in tier-2 to 6 towns," said Murali M. Natrajan, Managing Director and Chief Executive Officer, DCB Bank in a media interaction here.

In its balancesheet, the bank has about Rs. 9,000 crore worth of advances and 40 per cent of that is mortgage loans. The company makes advances mostly to the self-employed persons in smaller towns. These include small traders, grocers, fast-food joints among others.

In the bank's total loan portfolio, Gujarat has 10-11 per cent share with Rs. 900 crore worth of loans.

Natrajan maintained that recently, the bank had raised Rs. 250 crore, thereby strengthening its capital adequacy. However, the bank may raise further funds after three years when need arises.


Source : Thehindubusinessline

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HDFC Bank launches branch banking on mobile

HDFC Bank launched its mobile banking facility that offers to turn a mobile phone into a bank branch.

“With over 75 transactions -- all a touch away - ‘Bank Aap Ki Muththi Mein’ offers the customer the widest range of transactions conceivable. These are both financial and non-financial transactions that he needs in his daily life for which he would have to visit a branch, or an ATM,” HDFC Bank said in a statement.

Besides essential transactions such as booking fixed- and recurring deposits, bill and tax payments, buying insurance and mutual funds, the offering will also allow customers-- for the first time in the country-- to buy instantly all kind of loans. It also offers them fully customized, location-specific promotions, offers/deals on shopping, dining, movies and entertainment.

SMS and missed-call banking

The offering is technology agnostic and runs on both smart phone and basic phone that supports internet browsing. For phones that do not support internet browsing, there's sms-banking and missed-call banking. All that a customer needs to do is send a text to or call a toll free number to know his account balance, get a mini statement, request a check book or detailed account statement, the bank said.

As of September 2014, India had over 900 million mobile users in the country but only 40 million mobile banking customers. Today, 55 per cent of all transactions at HDFC Bank are conducted through digital channels.


Source : Thehindubusinessline

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Harihar Mishra appointed as additional director of Dhanlaxmi Bank

The Reserve Bank of India (RBI) has appointed Harihar Mishra, General Manager, RBI, Bengaluru, as Additional Director of Dhanlaxmi Bank Ltd.

In a notice to the BSE, the South-based old generation private sector bank said Mishra comes in the place of Raja Selvaraj, General Manager, Reserve Bank of India, Chennai.

Mishra's appointment is for a period of two years with effect from December 9, 2014 to December 8, 2016 or till further orders, whichever is earlier.


Source : Thehindubusinessline

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Axis Bank, Tigerair offer on Singapore flights

Axis Bank, India’s third largest private sector bank in association with Singapore’s no-frill airline Tigerair, announced a special offer ‘Fly out to Singapore for free on round trip’ for Axis Bank’s esteemed Credit and Debit cardholders.

“From 17 December 2014 till 04 January 2015, Axis Bank customers who book a round trip to visit Singapore will only have to pay for their return ticket. Their flight to Singapore will be complimentary (airport taxes and add-on charges will still apply),” Axis Bank said in a statement.

The ‘Fly to Singapore for free on round trip’ promotion will be applicable for travel periods from 19 January 2015 to 31 March 2015 and from 6 July 2015 to 24 October 2015. All-in return fares to Singapore from Bangalore, Chennai, Hyderabad, Kochi and Tiruchirappalli start from Rs. 6,999 during the promotional period.

Tigerair operates total 36 weekly flights to Singapore from six Indian destinations. The airline also connects to Bali, Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila, Perth, Taipei via Singapore, the gateway to amazing destinations in Asia Pacific. Connect to Sydney, Gold Coast and 11 more destinations with 50 weekly flights via Singapore in collaboration with Scoot.

Jairam Sridharan, President – Retail Lending & Payments, Axis Bank said: “…This is yet another step, by providing an exciting product to customers in the travel space. This unique offer will further enhance customer experience and will make air travel more rewarding.”


Source : Thehindubusinessline

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SBI to increase branch network in Karnataka

State Bank of India (SBI) is planning to close the financial year of 2014-15 with a branch network of 750 in Karnataka.

In an informal chat with presspersons on the sidelines of the inauguration of an e-corner of the bank at Mangaluru main branch on Tuesday, Rajni Mishra, Chief General Manager of SBI, Bengaluru circle, said that the bank has a dominant presence in the State with 690 branches.

The bank is planning to add another 60 branches in Karnataka by the end of the current financial year.

“We are planning to open more branches in the remotest part of Karnataka and planning to reach smallest of farmers,” Mishra said.

e-corners

The bank has around 30 e-corners in most of the major centres in the State. In e-corners, customers can use ATMs, cash deposit machines, cheque deposit machines, and self-service kiosks for passbook printing, among others. With this, customers do not have to wait in a queue at the branch.

Tie-up with KMF

Mishra said that the bank has entered into a tie-up with the Karnataka Milk Federation (KMF). Under this, the bank has financed more than 1,000 dairy farmers in various parts of the State.

In usual scenario, KMF makes payments to farmers at the end of the month for the milk they supply to the federation. Under this tie-up, farmers get cash instantly from the bank. It is to facilitate farmers to have ready cash without having to wait for KMF to settle their bills, she said.

In Karnataka, the bank has achieved a deposit of Rs59,000 crore and advances of Rs34,000 crore, she added.


Source : Thehindubusinessline

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IDBI Bank launches electronic insurance account

IDBI Bank in association with NSDL Database Management Ltd (NDML) has launched 'Electronic-Insurance Account (e-IA)’.

e-IA is the portfolio of insurance policies of a policy holder held in electronic form with an insurance repository.

Under this facility, customers can buy and keep insurance policies in electronic form, rather than as a paper document.

Existing policies in physical mode too can be dematerialised and held in e-IA.

This facility will not only provide policy holders a facility to keep insurance policies in electronic form but also enable them to undertake changes, modifications and revisions in the insurance policies.

"This would also be useful as the client would not have to undergo for fresh KYC verification in order to purchase new policies," the bank said in a statement.


Source : Thehindubusinessline

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RBI advances timing for RTGS business hours

Now, get more time to make your online fund transfer through RTGS as in another boost to online banking, the Reserve Bank of India has decided to advance the working hours starting from 8 am to 8 pm.

 “It has hence been decided to advance RTGS business hours to 8:00 hours from 9.00 hours and extend closing time of RTGS to 20.00 hours on week days. RTGS business window will be open from 8.00 hours to 15.30 hours on Saturdays,” RBI said in a notification.

The new working hours will be with effect from December 29, 2014.

Currently, the RTGS service window for customer's transactions is available to banks from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 14:00 hours on Saturdays for settlement at the RBI end.

RTGS (Real Time Gross Settlement) is an electronic real-time fund transfer settlement individually, primarily meant for large value transactions. The minimum amount to be remitted through RTGS is Rs. 2 lakh with no upper limit.

The launch of the new RTGS system in October 2013 was one of the steps taken by the Bank for catering to the growing volume and to provide liquidity saving and other features of the new system to the members, RBI said.

It added, “Of late there has been a market demand for extending business hours of the RTGS system to facilitate customer and inter-bank transactions as also to facilitate other market obligations to settle in the RTGS system. Accordingly, the RTGS business hours are being revised to meet the market expectation.”


Source : Thehindubusinessline

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Lack of ATMs could derail Jan Dhan Yojana

Despite the rising need for more ATM machines across the country, the government’s financial inclusion scheme Pradhan Mantri Jan Dhan Yojana (PMJDY) is yet to see an uptake in ATM deployments.

Banks and ATM operators say that low interchange fee and cap on the number of free ATM transactions are making it an unviable proposition.

Slack deployment

CATMi (Confederation of ATM Industry), an association of companies that deploy ATMs for banks, has warned that accounts being opened under the PMJDY would end up being dormant if there are not enough ATMs to service them.

According to the latest data, under PMJDY, banks have opened 8.83 crore accounts and issued 5.85 crore RuPay cards. Logically, an increased number of cards should also result in an increase in ATMs. However, ATM deployment has been running out of steam. New machines are seeing daily transactions of less than 100 — way below the 120 transactions that are required for break-even.

ATM operators and banks are worried that the existing interchange fee is too low for them to sustain the business model making it difficult to deploy more ATMs. Annual growth in the banks’ ATM network slowed down to a meagre 1 per cent in April to June quarter compared to the corresponding quarter in 2013. As of June 2014, the total number of ATMs in the country stood at 1.67 lakh and Point-of-Sale terminals at 1.08 crore.

Cap on transactions

“Lot of good work has been done in terms of opening accounts and issuing cards. However, not much is done to make use of those cards and accounts. In a way, we are issuing a lot of cards but there is no place to use it as a lot of players have slowed down ATM deployment,” said Sanjeev Patel, CEO, Tata Communications Payment Solutions, an ATM service provider.

According to recently-released report by Deloitte and CII, more than 20,000 new ATMs would be required in the first phase of the Yojana (from August 15, 2014 to August 14, 2015).

Banks such as State Bank of India, ICICI Bank, HDFC Bank and Axis Bank have limited the number of free transactions on ATMs. SBI and a few other banks have waived off fees to customers with a decent balance while those with less balance will be charged.

Additional costs

According to Patel, “Aren’t those with less or no balance, the ones who need financial inclusion more than anyone? Also, these people will anyways need less money to withdraw and these include urban poor.”

Experts fear that additional costs to customers while accessing their small value amounts can drive them away from the formal banking routes.

Vibha Batra, Co-Head Financial Sector Ratings, ICRA, said, “The ATM expansion is dense in the urban areas so the number of transactions per ATM may be less. In the rural areas, the per account deposits average around ₹3,000-5,000 and also the number of transactions per ATM is less along with low value transactions.”

Things could, however, change with two new banks – IDFC and Bandhan Financial Services – due to be set up next year. The upcoming payment and small banks will also require adequate cash transfer and payment infrastructure in place in the next 2-3 years. This will also create the need for more alternative channel of banking services.


Source : Thehindubusinessline

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Vijaya Bank’s equity capital mop-up plan on track: CMD

Vijaya Bank is confident of raising core equity capital of Rs600 crore before the end of the current fiscal, its Chairman and Managing Director V Kannan said.

There is no plan to enhance this capital mop-up during this fiscal although the Centre was open to bring down its stake in public sector banks to 52 per cent.

“As planned earlier, we will only go in for a qualified institutional placement issue so as to mop up about Rs600 crore before end March,” Kannan told BusinessLine. This could bring down the Centre’s stake to 68 per cent from the current level of 74 per cent.


Source : Thehindubusinessline

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