Cashless transactions only way to curb black money: Modi

Cashless transactions are the only way to deal with black money problems, according to Prime Minister Narendra Modi. “Banks should compete on promoting cashless transactions as this will address issues related to black money,” he said at an event organised by ICICI Bank here on Friday.

Modi also urged the banks to look at creating financing schemes to encourage entrepreneurs in the area of cleanliness.

“The banking sector should look at a new area of creating 1 lakh swachchtha entrepreneurs. There is immense scope in solid waste management and waste water treatment,” Modi said.

He said rural development is the need of the hour and villages are not ready to wait any longer.

The Prime Minister said the banking sector can drive a huge change in the Indian economy. “People in India save gold because of safety and security. If banks can take up social transformation, people will rely on banks for security instead of gold,” he said.
Financial inclusion

Speaking at the event, Finance Minister Arun Jaitley said the targets set for financial inclusion have been achieved well before their deadline.

“We had set a target of reaching 7.5 crore families under the financial inclusion plan, by January 26. We have exceeded the target in December,” Jaitley said.

“Our challenge is to spur investments. Our focus is on improving manufacturing in a big way… the time has come to enter the next phase, where we revive India. Banks in India will be the catalyst,” he added.


Source : Thehindubusinessline

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Corporation Bank to issue non-convertible bonds

Corporation Bank has proposed to issue bonds. The bank’s website posted invitations of bid for its proposal to issue unsecured non-convertible (Basel-III compliant) additional tier-1 perpetual bonds in the nature of debentures.

It said the bank proposes to mobilise Rs. 500 crore with a Green Shoe option to retain over-subscription up to Rs. 500 crore, aggregating to Rs. 1,000 crore through issue of unsecured, non-convertible (Basel-III compliant) additional tier-I perpetual bonds 2014-15 (Series I) on private placement basis.

The bank said the bond issue has been rated as ‘CRISIL AA-/Stable’ by CRISIL Ltd, and ‘IND AA-/Stable’ by India Ratings and Research Pvt Ltd.

The last date for submission of bids is January 8, it said.

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RBI directs payment firms to display company name in products

The Reserve Bank of India (RBI) has directed entities offering services such as e—wallets, smart cards and White Label ATMs (WLAs) to prominently display their company name in products to ensure transparency.

“All the information available to the public regarding the product, whether as advertisements, on website, application form, etc. should prominently carry the name of the entity/company authorised by RBI,” the Reserve Bank said in a notification.

The RBI said it came to its notice that many authorised entities using specific brand names for their products like e—wallets, smart cards, WLAs were not disclosing their own company name in the information available to the users.

“The public may thus not be able to correlate a product brand name to the name of the entity/company....To ensure transparency in the promotional material and to build an enduring relationship with the customers, all authorised entities are advised to comply,” the RBI added.

e—wallets are the latest in payment options. Firms running e—commerce business and telecom operations mostly offer wallets that facilitate consumers preloading money and use it later to pay for services/goods.

Further it said, all the authorised entities/companies should also regularly keep the RBI informed regarding the brand names employed or be employed for their products.

The RBI regulates and supervises the payments systems in the country under the Payment and Settlement System (PSS) Act, 2007.

Companies such as Oxigen Services, Citrus Payment Solutions, Paytm, M—pesa by Vodafone India offer wallet services.

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Now, over 98% households have a bank account: Adhia

The Finance Ministry on Friday said the Pradhan Mantri Jan Dhan Yojana has enabled over 98 per cent of the households in the country to have a bank account.

Addressing the media on the sidelines of banking conclave, Gyan Sangam, being held here Hasmukh Adhia, Secretary, Department of Financial Services, said, “This (figure of over 98 per cent) is based on the survey conducted by banks in different areas of the country, which were divided into service area and the wards in villages.”

According to Census 2011, there are about 25 crore households in the country. Of this, Adhia said, the banks have not been able to reach about three crore households in many of the gated townships in the country.

“They do not want to share their bank information and probably they do not also require our help,” he added.

Of the remaining 21.9 crore households, he said, banks have been able to cover over 98 per cent.

For those who are still left out, Adhia said “we are campaigning through advertisements so that they can also reach us for a bank account. The advertisement says that even if people do not have any Know Your Customer documents, they can opt to open a basic savings bank account.”

The advertisement encourages people in the know to recommend people who they know are financially excluded.

Universal financial inclusion is one of the themes of discussions at the two-day banking conclave which started on Friday.


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Union Bank home loan offer

Union Bank of India has liberalised its home loan scheme whereby it will give additional loan to customers, who wish to shift their housing loan to the bank, for further construction or renovation. Further, since customers, who have constructed/purchased a dwelling unit with a loan from the bank, may incur various miscellaneous expenses while shifting to the new house, Union Bank will make personal loan available with liberalised norms, the bank said in a statement. Further, to promote usage of renewable sources of energy, the public sector bank said it will include the cost of solar power panel in the cost of housing project. Home loan repayment will be considered up to the age of 70 years by including the pension income of the borrower.


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Andhra Bank’s individual identity will be protected: Officers’ Union

Andhra Bank Officers’ Union has on Thursday said any proposal to merge Andhra Bank with other banks will be contested in all possible ways.

Responding to news on the threat to bank in view of high Non-Performing Assets (NPAs), its General Secretary I. Haranath said when similar situation emerged in 1995-96, bank came back to profits within a span of 30 months.

``Like wise we definitely cross the hurdle. If we get back the debt waiver promises made by the respective State Governments in full, NPAs is not a problem for the bank,’’ he said.

Major NPAs were due to high net worth borrowers from the infrastructure which went bust on account of government policies not because of employees,’’ he added. Andhra Bank was growing fast with a pan India presence of 2,200 branches as on now and planning to open another 200 branches by March end.

``Hence, any hasty decision of GoI/MoF for mergers will be fought and the identity of the bank will be preserved by taking the support of top management, politicians, stakeholders, strong and dedicated 22,000 staff of the bank,’’ he added.

The employees would stand by the decision of the top management for any action programme formulated for recovery of stressed assets in coming months, he added.


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Allahabad Bank revises interest rates

Kolkata-based Allahabad Bank has revised the interest rates on domestic term deposits below Rs. one crore; and for a period of one year to less then five year.

The interest rate now stands at 8.75 per cent, a downward revision by15 basis point, from the previous 8.90 per cent.

The new interest rates come into effect from January 1, 2015.


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P Srinivas new MD & CEO of United Bank of India

P Srinivas will be the new Managing Director (MD) & Chief Executive Officer (CEO) of United Bank of India (UBI). He will take over charge from today, December 31.

Prior to assuming charge at the Kolkata-headquartered bank, he was the Executive Director of Bank of Baroda. As the ED, Srinivas had handled major portfolios such as priority sector lending, MSME advances, credit monitoring, risk management and recoveries and investor relations.

His appointment comes nearly 11 months after the then Chairman and Managing Director, Archana Bhargava, stepped down. Bhargava had stepped down in February this year citing health reasons. However, sources maintained that it was the controversy of the bank’s spiralling non-performing assets that led to her resignation.


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Andhra Bank recovers Rs200-cr bad loans

Andhra Bank has recovered about Rs200 crore non-performing assets (NPAs) in the last three months.

“Both recovery and upgradation of stressed assets have been high during the current quarter,” CVR Rajendran, Chairman and Managing Director of Andhra Bank, told BusinessLine here.

With this, the total recoveries for the bank stood at Rs2,200 crore. At the end of September 2014, the recovered amount was Rs2,000 crore.

Slippages also high

However, things are not entirely rosy. “Slippages have also been high,” Rajendran said. This is mainly on account of non-performance of previously restructured loans and increased stress in infrastructure segment. “We are likely to have some more restructuring,” the CMD said.

The crop loan waiver scheme in Andhra Pradesh and Telangana also hit the primary sector performance.

“The recovery has not happened on expected lines. In Andhra Pradesh it is almost nil while in Telangana it is better at 70 per cent,” he added.

Though Andhra Bank continues to focus on retail lending, which grew robustly in the second quarter, there is a general slowdown in the home loan segment. On the corporate credit front, there has been no improvement.

“There has not been a single project in the manufacturing and small and medium enterprises,” Rajendran said.

ATM charges

From December 1, Andhra Bank has started imposing charges on ATM transactions, in line with the RBI’s recent permission in this regard.

This is expected to give some relief as Andhra Bank is paying Rs3 crore to other banks by way of ATM user charges.

Last week, Andhra Bank completed raising Rs500-crore in tier I capital by way perpetual bonds.

It has plans to mobilise another tranche of Rs500 crore in February after the RBI’s monetary policy review as interest rates are expected to come down, according to Rajendran.


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RBI expresses concern over restructured assets in banking sector

The extent of restructured assets in the banking sector, especially public sector banks (PSBs), is a cause of serious concern and an end to regulatory forbearance maybe the right step, according to the central bank.

“An early end to regulatory forbearance may be the right step. In addition, governance reforms along the lines suggested by the P.J. Nayak Committee will build in inherent checks and balances on the risks and returns of the credit portfolio thereby leading to more informed risk taking,” RBI said in the Financial Stability report released on Monday.

Many state-owned bank chiefs and indebted companies are lobbying to extend the window of regulatory forbearance that allows them to maintain low provisions against impaired or stressed assets.

In September 2014, PSBs continued to record the highest level of stressed advances at 12.9 per cent of their total advances, while for private sector banks the stressed advances stood at 4.4 per cent.

The relatively higher possibility of slippages in restructured standard advances is required to be factored in by banks from the capital adequacy perspective.

According to RBI, “While it may be somewhat legitimate to justify regulatory forbearance in times of major crises, forbearance for extended periods and as a cover to compensate for lenders/borrowers’ inadequacies engenders moral hazard.

“Furthermore, going forward, with the initiation of risk based supervision as well as implementation of Basel II advanced norms for credit, accounting discretions such as restructuring will have no impact on capital requirements since such processes incorporate capital provisioning based on expected losses and would largely align regulatory capital with economic capital rendering discretionary accounting forbearance of little consequence.”

Even under no-stress condition, any restructured advance (generally categorised as sub investment grade by a rating agency) is more likely to turn into a non-performing asset (NPA).

Also, since banks, traditionally have been short term working capital providers, their appreciation of particular risks in infrastructure projects seems to have been inadequate.

Hence, it is necessary that the banks strive for a more detailed understanding of the risk-return profile of the underlying projects before committing funds, whenever project appraisal is outsourced, RBI said.


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PMJDY may be replicated in insurance, pension sector

Prime Minister’s Jan Dhan Yojna (PMJDY) is likely to be replicated in the insurance and pension sector to extend the financial services to the hinterland.

“Given the low levels of penetration of insurance and pension, there is a case for subsequently extending or replicating a project on the lines of PMJDY, to include the provision of insurance and pension services for the common man,” RBI said in the Financial Stability Report released on Monday.

At present, penetration of the insurance and pension in India is very low. Insurance penetration (premiums measured as percentage of GDP) is just about 4 per cent.

Under the Financial Inclusion Plan, banks will have to revise their targets so as to match with the targets allocated to them by the government under PMJDY, the central bank said.

With revised targets for opening of basic bank accounts in place, banks will have to ensure opening of at least one bank account in each household by January 26, 2015. As on December 24 2014, banks have achieved the 10 crore account opening mark under Pradhan Mantri Jan Dhan Yojana (PMJDY) and have issued 7.75 crore RuPay Cards.

RBI also said, “The timeline for providing banking services in villages with populations below 2,000 under the roadmap may be advanced from March 2016 to August 2015.”


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More transparency needed in audit of big ticket CDR cases: RBI

There is a need for greater transparency to find out the economic impact and audit of big ticket CDR (corporate debt restructuring) cases, according to RBI.

“With increased regulatory focus on segregating cases of wilful defaults and ensuring adequate equity participation of promoter(s) in the losses leading to defaults, there is a need for greater transparency in carrying out a net economic value impact assessment and audit of big ticket CDR cases,” RBI said in the Financial Stability Report released on Monday.

There is also a need to review and strengthen the accountability mechanism in the entire process of reference, approval and implementation or exit under CDR. Adequate disclosures on the eventual cost-benefit profile of approved CDR cases (for successful as well as failed cases) will help in forming policy and aid proper use of scarce resources.

CDR is a process when banks provide support through restructuring of genuine cases of corporates in financial difficulties because of factors beyond their control. The CDR mechanism is meant to revive such cases as well as for the safety of the money lent by the banks and financial institutions.

Out of the total number of cases referred to/ approved under CDR, 49 per cent have been successfully implemented till date, according to RBI.

As per data by the CDR cell, 75 cases were exited successfully amounting to an aggregate debt of Rs. 58,205 crore as on September end.

The cell received over 638 cases with a total debt of Rs. 4,46,156 crore since inception. Of this, 121 cases have been rejected before admission or approval amounting to Rs. 65,581 crore, while 505 cases worth Rs. 3,67,607 crore have been approved.

However, RBI observed that the number of cases referred to the CDR cell has come down in the recent past.

One of the reasons for this reduction could be the Reserve Bank’s move to allow banks to restructure their large credits with aggregate exposure of Rs. 100 crore and above outside CDR under the Joint Lenders’ Forum (JLF) constituted under the provisions of the ‘Framework to Revitalise the Distressed Assets in the Economy’ which became effective from April 1, 2014.


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Jan Dhan life cover: Banks, LIC told to make claim forms available on website

The Finance Ministry has asked banks and Life Insurance Corporation to make available claim forms on their websites for the Rs. 30,000 life cover promised under the Pradhan Mantri Jan Dhan Yojana (PMJDY).

LIC has been asked to settle the claim within 15 days of the receipt of the claim form.

This was conveyed to the banks at a video conference meeting held by Joint Secretary Anurag Jain with executive directors of public and private sector banks to review the progress of PMJDY.

Till December 22, banks have opened 9.83 crore bank accounts under the PMJDY and issued 7.28 crore RuPay cards.

At this meeting, banks were asked to issue passbooks to all accountholders and activate RuPay cards.

Banks have agreed to complete this task by January 15 next year.

srivats.kr@thehindu.co.in


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ING Vysya staff demand job safety post merger, to strike on Jan 7

Employee unions of ING Vysya Bank demanded safeguarding of their interests post-merger with Kotak Bank and threatened to go on strike on January 7 —— the day on which the Bengaluru—headquartered lender will seek shareholders’ nod to approve the Rs. 15,000-crore merger deal.

To ensure that interests of all the stakeholders are ’protected’, S A Sridhar from the ING Vysya Bank officers’ association said a “tripartite agreement” between Kotak Mahindra Bank (KMB), ING Vysya Bank, and employees and officers, be signed which will lay out all points in detail.

The All India ING Vysya Bank Employees Union and All India ING Vysya Bank Officers Association, which together represent 35 per cent of the Bangalore-headquartered lender’s over 10,000 employees as members, however, said they are not opposing the merger but want their interests to be protected.

“We have an apprehension as the new management at KMB does not have an Union and believes in outsourcing its work. What will be the fate of our employees after the merger?” Ramkrishna Reddy, general secretary of the employees union told reporters here.

He added that recently KMB wrote to all the ING Vysya Bank employees to allay the concerns but ‘bypassed’ the unions.

Reddy emphasised that the Uday Kotak-led bank should go through the union if it is “sincere” about its efforts.

ING Vysya Bank spokesperson could not be immediately reached for comment. However, a representative for ING Vysya Bank referred to legal opinion of advisors to the deal, which said such a tripartite agreement is “infructuous”.

There is no precedent of such an agreement in previous bank mergers, the legal opinion said, alleging that such a demand “seems to be red herring i.e. something that misleads or distracts from relevant issues“.

ING employees and officers want internal MoUs to continue post-merger, and also stressed that perks and benefits decided by industry body IBA be continued, Sridhar said.

Kotak Mahindra Bank spokesperson Rohit Rao said: “The merger process entails as per the Banking Regulation Act, approval of the shareholders and thereafter approval from the RBI in addition to CCI’s approval.

“All protection related to employees have already been captured in the scheme of amalgamation which upon approval by RBI, Kotak Mahindra Bank shall fully standby and are obligated to comply with including sections relation to employees job security, wages, pension, gratuity etc.”

As is evident we would like to start with good faith constructive approach that secures all employees and creates growth for all stakeholders including employees after the RBI order, Rao added.

In a letter, KMB’s Joint Managing Director Dipak Gupta has written to ING Vysya Bank’s Chief Executive designate Uday Sareen saying that KMB will be honouring all IBA settlements and bi-partite agreements.

In one of the biggest deals of 2014, KMB had announced an all-stock deal to acquire ING Vysya Bank late last month.


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Clearly mention conditions, benefits of insurance products: IRDA

To help consumers guard against bogus claims being made by insurers, sector regulator IRDA has said the companies will have to clearly define conditions along with benefits and riders of products to customers.

Insurance Regulatory and Development Authority (IRDA), in its revised draft regulations on consumer protection, has also said that insurance companies must place all the product information in public domain. The regulator has also sought comments from the public and all stakeholders on the draft regulations on or before January 19, 2015.

“A prospectus of any insurance product shall clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurance cover.

“Every insurer shall place in public domain complete details of product particulars of each and every product that was offered for sale by the insurer as it was filed and approved by IRDA,” said the draft regulations.

In case of life insurance products, they should clearly mention if it comes with profit or without profits and the riders on products shall be clearly spelt out with regard to scope of benefits, as per the draft norms.

Among others, it said the insurers should formulate an insurance awareness policy to educate customers, constitute a policyholder protection committee ensuring its proper functioning as well as formulate a grievance redressal policy for speedy resolution of grievances.

The draft has also suggested comprehensive, dispassionate and true information about products by the companies.

“The insurers shall ensure that the benefit/returns of the policy are not mis-stated/mis-represented or the prospect is not forced to buy a policy.

“Insurers shall disclose restrictions/conditions of all aspects of benefits that are material,” it added.

The draft norms further said that the products should suit policyholders with respect to income, personal and family circumstances, life stage, financial goals and risk appetite as the customer has the right to service of the proper kind.

It said that name and address of agent/insurance intermediary should also be mentioned in the policy document and premium receipts or any such communication.

The insurers, agents and intermediaries shall strictly adhere to IRDA advertisement regulations and shall not issue any misleading or unfair advertisement,” it added.

“Violations of any provisions of Advertisement Regulations and guidelines...shall be dealt with as per provisions of the relevant regulations/provisions of the Act,” it added.

IRDA said the revised regulations may be known as IRDA (Protection of Policyholder’s Interests) Regulations 2014 as and when they come to force.


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