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Friday, April 10, 2015

IDFC gets shareholders nod to launch bank

Infrastructure financing firm IDFC Ltd today said it has received shareholders approval to its demerger scheme to set up a wholly-owned subsidiary IDFC Bank.

The scheme was earlier approved by the Reserve Bank and board of directors of IDFC Ltd.

"The...shareholders have unanimously approved the scheme of arrangement among IDFC Ltd and IDFC Bank Ltd and their respective shareholders and creditors under Section 391 to 394 of the Companies Act, 1956", IDFC Ltd said in a BSE filing.

In April last year, IDFC Ltd bagged a licence from the RBI to set up a bank.

Last month, the Chennai-based company, as part of taking forward its plan to set up bank, sought shareholders' approval for demerging its financial undertaking into a new entity to be named IDFC Bank.

IDFC Ltd proposes to realign its businesses to comply with the corporate structure requirements of the RBI guidelines to set up new banks and demerge its financing undertaking to IDFC Bank.

The guidelines specifically mandates that all new banks are to be set up through a non-operative financial holding company.

The demerger was in accordance with RBI conditions which requires IDFC Ltd to transfer the relevant business activities to the proposed IDFC Bank.

IDFC Bank Ltd was established as a public limited company to carry out business of banking pursuant to approval granted by the Reserve Bank in April 2014.

Source : Economic Times
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HDFC cuts home loan rates by 20 bps to 9.9%

HDFC, country’s leading housing finance firm, reduced its home loan rate by 20 bps to 9.9 per cent on Friday. The rate cut will benefit its new and existing borrowers in the form of lower EMIs (equated monthly instalments).

Housing Development Finance Corporation or HDFC’s move comes two days after the RBI announced a status quo in its monetary policy review and Governor Raghuram Rajan prodded banks and lending institutions to pass on the previous two policy rate cuts effect since January this year.

The company said the reduction in the RPLR will also be applicable on loans to Non-Resident Indians (NRIs).

Source : Thehindubusinessline
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IndusInd Bank to buy RBS India's diamond, jewellery financing business

Private sector lender Indusind Bank has announced to buy RBS's Diamond & Jewellery Financing business with a loan book of Rs. 4,500 crore its and related deposit portfolio.

The deal is subject to regulatory approvals. Until ownership of the loans is transferred to te Hinduja-promoted IndusInd Bank, day to day management of the loan portfolio will remain with Royal Bank of Scotland N.V. (RBS) employees within diamond and jewellery clients in India will also move to IndusInd Bank Ltd and will ensure seamless transition of the customer base.

“IndusInd Bank enters into an agreement to acquire Royal Bank of Scotland's (RBS) Diamond & Jewellery Financing business in India; simultaneously enters into Partnership Agreement with ABN AMRO Bank N.V. for cooperation in Diamond & Jewellery Financing,” the bank said in a statement on Friday.

The statement added that this is part of ABN AMRO Bank NV’s diamond & jewellery clients [unit] that is housed in RBS NV acting through its Mumbai branch in India and the diamond and jewellery financing loan book of RBS is approximately Rs. 4,500 crore in size.

“This acquisition fits nicely into our strategy of creating scale with profitability in select business segments. We like this business and have a deep insight into the industry. We are also happy to reach a Partnership Agreement with ABN AMRO Bank NV, one of the oldest banks in Diamond and Jewellery financing,” said Romesh Sobti, MD & CEO, IndusInd Bank.

ABN AMRO was acquired by RBS in 2007. Moreover, before taking over as IndusInd CEO and MD, Ramesh Sobti was country head at ABN AMRO.

IndusInd Bank specialises in the diamond and jewellery financing business and this acquisition will enhance its position, IndusInd said. "Several members of IndusInd Bank’s senior management had been associated with this portfolio in RBS NV and prior to that in ABN AMRO Bank NV…A critical success factor in diamond financing is global client knowledge and this is being achieved through a long term Partnership Agreement with ABN AMRO Bank. This strategic relationship will facilitate deeper industry and client insight and in turn lead to improved client servicing, enhanced revenue opportunities and better risk management,” the bank statement further said.

RBS has been trying to exit its operations in India since its UK-based parent went into a government bailout after the 2008 global credit crisis.

After the RBI spiked a deal to sell its retail banking business to rival HSBC in 2012, RBS had said it would wind down its business gradually.

In August 2013, RBS had sold its credit card business, mortgage and commercial banking portfolios to mid-sized private sector lender Ratnakar Bank.

At present, RBS has just 20 branches in 10 cities across the country and retains its presence in the wholesale business and offers financing, risk management, investment banking, cash, payments, trade finance and wealth management solutions to its clients.

Source : Thehindubusinessline
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Mobile banking set to get a boost

Public sector banks plan to step on the gas to get their customers to use mobile banking over the next one year. Steps such as automatic on-boarding of all new customers on mobile banking and enrolling 10 lakh merchants to accept mobile payments are in the works.

In a bid to deepen mobile banking penetration, public sector banks will download the mobile banking app for new customers alongside the account opening process.

Bank employees may be made responsible for educating customers on how to transact seamlessly on mobiles at the time of opening an account, according to the suggestion of a bankers’ working group constituted at the behest of the Finance Ministry, on leveraging technology.

This initiative can be supported through a bank-wide customer and employee awareness programme.

Update database, enrol merchants

Further, PSBs will update the mobile number of customers in their databases on a mission mode. Subsequently, banks can increase communication with their customers on mobile phones and educate them on effecting mobile payments.

The idea behind this move is to ensure that 20 per cent of the existing customers migrate to mobile banking transactions. As at March-end 2013, there were 104.5 crore deposit accounts in the country.

Banks may run a programme to enrol almost 10 lakh merchants for mobile banking. This will entail educating merchants about no interchange fees for mobile payments, ease of transactions, and designing incentive schemes for merchants.

Cash/cheque vs e-payments

PSBs will individually undertake a study to assess the cost of cash/cheque versus electronic payments such as national electronic funds transfer and real time gross settlement.

Based on this assessment of cost, banks may consider revising their charges such that beyond a minimum number of in-branch cash and cheque transactions, customers are charged more. This would encourage customers to migrate to digital payments such as mobile and Internet banking.

In 2013-14, 9.5 crore mobile banking transactions valued at around Rs6,000 crore were transacted. In FY2012-13, the corresponding figures were 5.3 crore and Rs6,000 crore, respectively, according to the RBI’s annual report. There are 27 PSBs in the country and they dominate the banking system. As at March-end 2014, their share in total deposits and total advances was 77 per cent and 76 per cent, respectively.

Pointing out that the use of technology has expanded from the days when accounts were maintained manually in ledgers and unions called for strikes at the very mention of the word computers, RBI Governor Raghuram Rajan, in a recent speech, observed: “Today, some banks allow customers to do all their banking transactions on a mobile phone, without entering a branch or touching a pen.”

Source : Thehindubusinessline
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Andhra Bank not to operate ATMs in TN at night

Andhra Bank has decided to keep its ATMs in Tamil Nadu closed during nights till normalcy returns, said a senior official of the bank.

Following protests over the police encounter near Tirupati, Andhra Pradesh, in which 20 woodcutters from Tamil Nadu were shot dead by the police on Tuesday, protests swelled across Tamil Nadu condemning the brutal incident.

Police protection has been given to all branches, but we do not want to take a chance and hence decided to close all our ATMs in Tamil Nadu after office hours, said the official.

Source : Thehindubusinessline
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Thursday, April 9, 2015

Moody's raises outlook for 15 banks inlcuding ICICI, HDFC to 'positive'

Credit rating agency Moody's today revised upwards the outlook to positive, from stable, for 12 state-owned banks and financial institutions including SBI, PNB, Canara Bank, REC and PFC.

Moody's also revised to positive the outlook on the long- term ratings of private sector lenders, ICICI Bank, HDFC Bank and Axis Bank.

"We have affirmed the long-term ratings and changed the outlook to positive from stable for 12 Indian government- owned financial institutions," the US-based agency said.

"The rating actions (on 12 public-sector entities) are in line with our affirmation of India's Baa3 rating," it said.

Earlier in the day, Moody's raised India's credit rating outlook to 'positive' and said an upgrade in its sovereign rating is also possible in the next 12-18 months.

India's sovereign rating currently stands at 'Baa3', the lowest investment grade, just a notch above 'junk' status.

The 12 state-owned financial institutions include State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Canara Bank, Oriental Bank of Commerce, Power Finance Corp, and Rural Electrification Corp.

The rating agency said an improvement in the government's own creditworthiness, as measured by its sovereign rating, has the potential to lift the supported ratings for the financial institutions.

"The assignment of a positive outlook on the sovereign's and the financial institutions' ratings signals a higher probability of the sovereign providing support to the financial institutions in times of stress," it said.

Source : Thehindubusinessline
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Wednesday, April 8, 2015

Axis Bank cuts base rate by 20 bps to 9.95%

Axis Bank followed other top banks to cut its base rate by 20 basis points to 9.95 per cent from 10.15 per cent on Wednesday. The revision comes into effect on April 13, 2015.

"Accordingly, the effective rate applicable to various fund-based credit limits which are linked to the bank's base rate will reduce by 20 basis points," Axis Bank said in a statement.

On Tuesday, State Bank of India and HDFC Bank cut their base rates by 15 bps to 9.85 per cent, while ICICI Bank reduced its base rate by 25 bps to 9.75 per cent post-monetary policy.

ICICI Bank's lending rate is among the lowest in the banking sector.

This comes after the RBI Governor Raghuram Rajan explicitly expressed his concerns on banks not transmitting the two policy rate cuts of 50 bps done by the RBI since January this year.

Source : Thehindubusinessline
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SBI delists shares from non-operating Madras Stock Exchange

Country’s largest bank State Bank of India (SBI) today said it has voluntarily delisted its equity shares from the now non—functional Madras Stock Exchange (MSEL).

State Bank of India has submitted a copy of the letter issued by the Madras Stock Exchange informing the removal of the name of the bank from Listed Securities of the bourse, according to a BSE filing by the bank.

“We (Madras Stock Exchange) write to inform you that the admission granted to dealings on the Exchange for the equity shares of your company has been withdrawn and the name of your company will be removed from the list of listed securities of the Exchange with effect from March 27, 2015,” said the letter from Madras Stock Exchange.

SBI has voluntarily delisted equity shares from the Madras Stock Exchange.

The Madras Stock Exchange became non—operational last year following directions from SEBI to exit business on failing to garner required revenue.

As per SEBI directives, regional stock exchanges should generate annual turnover of Rs 1,000 crore and have a net-worth of Rs 100 crore.

If the exchanges failed to generate such amount of turnover and net-worth, they would consider exiting from trading options.

One of the oldest stock exchanges in the country, Madras Stock Exchange was set up as the first bourse in South India in 1937.

Source : Thehindubusinessline
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MUDRA to help 5.7 crore very small businesses access cheaper finance

Babita, 37, from Hapur, and Pushpa, 43, from Muradnagar, are happy. So are Rajesh Jindal (Hapur), Samiruddin (Trans Hindon, Ghaziabad) and Mahesh Chaudhry (Dadri).

All of them run very small businesses such as tailoring shops, barber shops and cosmetic shops. So far they were forced to take loans from the unorganised sector at an exorbitant annual rate of interest, sometimes even 100 per cent. But now they have got loans of up to Rs 50,000 from banks at much lower rates.

They are the first set of five very small or micro entrepreneurs to have got credit facility under the Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana or PMMY, launched here by Prime Minister Narendra Modi on Wednesday.

Set up with the intention to ‘fund the unfunded,’ the new institution aims to provide financial assistance to “unfunded” small entrepreneurs who provide employment to a large number of people. As announced in the Budget, the new institution has been initially set up as an NBFC (Non Banking Financial Company) and as a subsidiary of SIDBI (Small Industries Development Bank of India). Later, it will take the shape of a full-fledged institution to be set up under legislation. It will work as a refinance and credit guarantee organisation and also as a regulator of micro financial institutions.

Modi said one often experiences that things revolve around mere perceptions, while the details often paint a different picture. Giving the example of the perception that large industries create more employment, he said a look at the details reveals the reality that only 1.25 crore people find employment in large industries, whereas small enterprises employ 12 crore people in the country.

He said while a number of facilities have been provided to large industries in India, there is a need to focus on the 5.75 crore self-employed people who use funds of Rs 11 lakh crore with an average per unit debt of merely Rs 17,000 to employ 12 crore Indians. He said these facts, when brought to light, led to the vision for MUDRA Bank.

Generating employment and promoting self-employment is the priority of the Government, the PM said, adding, “Providing loans to small entrepreneurs will provide a big push to the GDP.” Small borrowers repay loans promptly, he said, stressing that “saving is a habit in India and there is a need to (give a) push to this traditional strength.”

Exuding confidence over the success of the new initiative, Modi said, “Write down my words. After one year bankers will queue up in front of MUDRA Bank and ask it to give 50 lakh clients.” Speaking at the event, Finance Minister Arun Jaitley regretted that although 20 per cent of the country’s population is dependent on 5.7 crore micro and small entrepreneurs, they do not have access to institutional credit.

Referring to the Land Bill, Jaitley said about 300 million landless people would get employment in industrial corridors to be set up in rural areas. “This land reform bill that we have brought envisages industrial corridors. When these corridors are set up across the country ... they will create employment opportunities for 300 million landless people,” he added.

Source : Thehindubusinessline
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Tuesday, April 7, 2015

Why getting the account number right is very necessary while transferring funds online

When was the last time you went to a bank to transfer money?

Though the option is still open, banks say 80-85% of their NEFT and RTGS transactions are happening through net-banking or mobile apps. Online transfer is the preferred choice not only because it is convenient but because it is faster and there are no additional charges. All you have to do is register a person as a 'beneficiary' by giving his/her account number and bank IFSC code and you can transfer money real-time. But what if you accidentally send money to a wrong bank account? The account number length varies from 9 to 18 digits. IFSC is an other 11-digit code. The probability of error is extremely high especially when it means putting one digit wrong in a series of 29 digits.

To reduce the chances of mistake, as per RBI guidelines, banks are required to take certain measures. First, the customer is required to put the beneficiary account number twice. This is to double-check that the digits do not go wrong. Also, if there is a mismatch between the account number and IFSC code, the system will not accept the entry . Moreover, post adding a beneficiary , there is also a cooling period of 30 minutes during which you cannot transact.

"A third level of check happens during the cooling period as the customers are sent text notifications on their registered mobile number confirming the account number of the beneficiary they have added to their account Customers can reconfirm the number again at this stage," says a spokesperson from HDFC Bank. Some banks also give you the option of adding the beneficiary's mobile number when you register him/her so that the person can also be intimidated via SMS.

Why getting the account number right is very necessary while transferring funds online However, the chances of error still exist. While it is compulsory to mention the name of the beneficiary and the IFSC code, the reliance for transferring money is only on the account number. The notification on electronic transfer from the central bank says, "Credit will be effected based solely on the beneficiary account number information and the beneficiary name particulars will not be used." "It is generally the account number where the customers go wrong," says Jairam Sridharan, president, retail lending and payments, Axis Bank. So, if you accidentally put one digit wrong and it doesn't correspond to the account holder's name, the transaction can still go through and the money can be transferred. It is also possible that you had the wrong account number to begin with. The case will be the same if you transferred '30,000 where you had to pay only '3,000, that is, one extra zero.

The RBI guidelines say, "Responsibility to provide correct inputs in the payment instructions, particularly the beneficiary account number information, rests with the remitter or originator." So, the onus of the mistake will solely be on you. In case it happens, you can only seek help from the bank (see graphic). Inform the bank immediately . "The later you alert, the murkier the case becomes as banks become more suspicious," says Sridharan. The turnaround time also depends on how quickly the customer alerts his bank, the banks involved and the stage at which the transaction is at."If the remitter and beneficiary accounts are with the same bank, the process is usually quicker. Also, if you alert the bank within an hour, most probably the money wouldn't have been credited yet and can be reversed immediately ," says Sridharan.

The beneficiary has to be intimidated as well. Without the permission from the beneficiary , the bank cannot reverse the transaction. If the beneficiary says no, then you'll have to take the legal recourse and approach a court.

The RBI clearly states that "in cases where it is found that credit has been afforded to a wrong account, banks need to establish a robust, transparent and quick grievance redressal mechanism to reverse such credits and set right the mistake." However, this is not a regular procedure for banks and is clearly complicated. "Since the occurrences are pretty low, say two to three cases a quarter, most of the banks do not have a formal redressal process in place," says Sridharan. "It has to be an accident and the customer must have solid reasons for us to initiate the process," adds the HDFC Bank spokesperson.

Therefore, it is important that you take precautions on your end. Simple checks like sending a smaller amount, say '10 before transferring a bigger amount, copy-pasting it rather than typing the account numbers will save you from a lot of trouble later.

Source : Economic Times
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ICICI Bank to roll out voice authentication

When a customer calls up ICICI Bank in coming weeks, in the 10 seconds that he introduces himself the bank's servers will identify his account details and authenticate his identity by picking a voice sample and matching it with the database. Not just that, in future voice data would be analyzed to identify whether the caller is agitated, irate or in a hurry to avoid cross-sell pitches.

ICICI Bank has become the first in the country and among the few in the world to deploy voice-recognition technology for biometric authentication. The new facility will enable customers to call up and ask for funds to be transferred to registered beneficiaries or bills to be paid without having to enter 16-digit numbers or keying in their PIN.

The cutting-edge technology comes from Nuance Communications, a Massachusetts-based firm that created the technology behind Siri - Apple's voice-recognition software. According to Rajiv Sabharwal, executive director, ICICI Bank, the technology will provide a big leg-up for financial inclusion as the process of authentication can be done seamlessly without requiring the caller to speak specific words on in any particular language.

"The software uses 100 parameters for matching sound samples. To collect the sample, the servers need to record only 35 seconds of voice during any conversation. Besides authentication, the software will help the bank in analytics as it will immediately inform the operator about the state of mind of the caller," said Sabharwal.

"If we were to use other biometrics like fingerprint or iris, we would need to deploy scanners. In the case of voice recognition, any call from a basic phone to the call centre is good enough. Since the voice samples and servers are in the call centre, there is no requirement for data connectivity," said Sabharwal.

Unlike speech recognition used in phones, voice recognition is a different technology altogether and has nothing to do with the language or contents of the speech. The voice print which helps identification is a hashed string of numbers and characters that represent how specific an individual's voice rates on a host of characteristics being measured.

According to Sabharwal, voice recognition would be the second factor authentication, the first being the mobile number itself. "To ensure safety, we are enabling this feature only on calls made from the customers' registered phone," he said.

He said that besides phone banking, there is potential to use voice recognition as a second factor in online. Instead of an OTP, the servers could call up the customer on his registered number and authenticate him with a voice sample.

Source : Economic Times
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Dena Bank, LIC tie up for insurance on Aadhar-linked savings A/Cs

Public sector lender Dena Bank has partnered with government-owned LIC (Life Insurance Corporation) of India to provide insurance cover to all Aadhaar-linked savings account holders.

"Under the Prime Minister's Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJBY) scheme, a risk of Rs 2 lakh will be covered in case of death of any reason and a premium sum of Rs 330 per annum will be auto debited to the account holder's account," Dena Bank said in a statement.

The premiums will be reviewed every year.

As per the terms of rush coverage, a person has to opt for the scheme every year. Account holder can also prefer to give a long term option of continuing, in which case his or her account will be auto debited every year by the bank, the statement added.

The scheme provides insurance cover to all Aadhar linked savings account holders in the age group of 18-50 years . After enrollment, coverage will be available up to 55 years of age for existing members.

The scheme will come into effect from June 1, 2015.

Source : Thehindubusinessline
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RuPay card holders can now shop online

RuPay card holders of all public sector banks are now e-Commerce enabled. They can now conveniently purchase rail, road and air tickets by logging into the websites (IRCTC, Cleartrip, Make My Trip, KSRTC etc.) of travel companies or buy goods and services from retail chains like Amazon, Flipkart, Snapdeal, Jabong etc.

“For the first time user, registration happens as the transaction gets done. The only additional step for first time user is to choose a picture password which the customer has to identify in subsequent transaction. This gives an additional layer of security. Since One Time Password (OTP) is a part of the security process, it is necessary that a RuPay e-Commerce customer is also registered as a Mobile banking user of the bank,” RuPay said in a statement.

RuPay is an Indian domestic card scheme conceived and launched by the National Payments Corporation of India (NPCI), umbrella body for all retail payments system, set up under RBI.

"NPCI aims at making every Indian with a RuPay card and a mobile phone e-Commerce enabled. The goal is make railway and bus ticket booking also as much electronic as air ticket booking…Payments system in India is maturing faster than in rest of the world," said AP Hota, MD and CEO, NPCI.

Over 30,000 online merchants in the country now accept RuPay cards as on date including Flipkart, IRCTC, Jet Airways, Snapdeal, LIC, bookmyshow, Homeshop18 and others. Some of the major issuing PSBs are - SBI, BoI, BoB, UBI, PNB, Andhra, Dena, Indian, Allahabad, Syndicate, Canara, Oriental Bank of Commerce among others live on RuPay e-com.

Source : Thehindubusinessline
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IDBI Bank may raise capital in FY16, says CMD Raghavan

IDBI Bank may look to raise further capital this fiscal and is not averse to tapping the market with a follow-on-public offering (FPO), its Chairman & Managing Director M.S. Raghavan has said.

"We definitely need capital. I am not ruling out tapping the market with FPO for this purpose this fiscal", Raghavan told Business Line when asked about capital raising plans for 2015-16.

Raghavan said that he would look to tap the market the day the Bank’s share price equalled its book value.

"Current price-to-book (P/B) of the bank is around 50 per cent. The day my price comes close to the book value that is the day I will go to market"

At the same time, he made it clear that the bank was not in any "dire need" of capital and could manage the current fiscal with existing capital.

The credit growth in the financial year just gone by was muted at about 6 per cent, Raghavan noted.

He was however confident about the prospects for the current fiscal (2015-16) and expects the overall business to grow 12-15 per cent this fiscal.

IDBI Bank has aggressive plans to increase its branch network to 2,000 by end June from the current level of 1,711.

Plans are afoot to add another 750 ATMs this fiscal, taking the overall count of ATMs to 3,750.

Raghavan was in New Delhi for launch of the 3,000th ATM of the bank.

Source : Thehindubusinessline
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P.G. Jayakumar lays down office as MD and CEO of Dhanlaxmi Bank

P.G. Jayakumar has laid down office as Managing Director and CEO of the Kerala-based Dhanlaxmi Bank on Monday. He took charge as MD & CEO three years ago.

G. Sreeram, who was Chief General Manager, Canara Bank, Mumbai Circle, is succeeding him.

Jayakumar rose from the cadre to the highest office and served the bank for more than 37 years in various capacities including Branch Head, Zonal Head, and General Manager in charge of HR, Administration, Credit, Risk Management, and Treasury.

He assumed charge as MD & CEO at a crucial juncture after the exit of Amitabh Chaturvedi.

The bank, during Jayakumar’s period, raised capital funds of Rs521crore. This helped it comply with the regulatory capital adequacy requirements. The bank underwent total reorganisation as a customer-focused branch-centric model and a series of customer-friendly products and technology services were introduced, a press release said.

He has worked towards developing a microfinance model to uplift the poor by working closely with the major NGOs and churches, particularly in Kerala.

The bank has recorded positive growth in all key areas. In the first three quarters of financial year 2014-15, it posted a net profit of Rs25.14 crore on cumulative basis.

Source : Thehindubusinessline
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Sunday, April 5, 2015

Government mulls steps to encourage use of Jan Dhan accounts

Having opened over 12 crore Jan Dhan bank accounts under its flagship financial inclusion programme, the government is now mulling over ways to step up the utilisation of these accounts, including through POS transactions and the Business Correspondents.

A meeting has been called by the Finance Ministry on Tuesday, April 7, of representatives from public sector banks and the business correspondents (BCs) of the banks, who can help in last-mile implementation of the inclusion efforts.

Among other matters, the meeting would deliberate on issued faced by the BCs and banks in their operations, including with regard to remuneration, technical support and the required incentives.

Earlier last week, Prime Minister Narendra Modi had said at a function to mark RBI's 80 years that as much as Rs 14,000 crore has been deposited in Jan Dhan accounts and the challenge now will be to increase the transactions.

The scheme offers free zero-balance bank account with a debit card, a Rs one lakh accident insurance policy and Rs 30,000 free medical insurance cover for the poor. In his Budget speech, Finance Minister Arun Jaitley had said that over 12.5 crore bank accounts had been opened under the scheme in just nine months.

However, concerns have been raised in some quarters that a large number of people are not transacting through these accounts, although the government has been passing on subsidy and other benefits to them.

Anand Shrivastav, Chairman, Regulatory Affairs Committee, Business Correspondents Federation of India (BCFI), which will be attending the meeting, said that the underutilisation of the Jan Dhan cards is a result of several factors.

"The solution that we will be discussing revolves around the fact that the BC Networks or Bank Mitras under the BCFI need to be formally recognised as a self-regulating- organisation and their remuneration fixed that is economically viable.

"At present a single ATM withdrawal would cost a bank Rs 15-20 per transaction whereas Bank Mitras/BCs receive inadequate remuneration for their services. Due to the relatively poor ATM network in rural areas, there is virtually no place to withdraw or swipe the cards by the financially excluded strata who are issued Jan Dhan cards.

"Unless the government fixes these problems and addresses the structural limitations faced by BC Network Managers we will be away from achieving efficiency under the PMJDY scheme," he added.

Among others, it is being proposed to increase the cash withdrawal limit at Point of sale (POS) from Rs 1,000 to Rs 5,000 per transaction.

It has also been suggested that all banks should enable cash at POS which is allowed only by few banks and that too only for the debit cards issued by the respective banks.

Source : Economic Times
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Dena Bank plans lower price to sell around Rs 500 cr NPAs

State-run lender Dena Bank, which did not receive good response for its non-performing assets (NPA) sale last fiscal, is now planning to auction again but at a lower price.

The bank, which is still fighting high bad loans, had put on auction Rs 400-500 crore of stressed assets in the last quarter for asset reconstruction companies (ARCs).

"We had put on auction our NPAs but were able to sell very minimal amount of bad loans as the prices offered to us were much lower than our reserve price," a senior bank official told PTI.

Out of the Rs 400-500 crore of NPAs, the bank could sell around Rs 30 crore of loans in the auction, he said, adding the bank is looking at remaining assets put on block for sale.

The official said the bank will now again try to sell those bad loans by revising the price.

"We would again put on auction the balance NPAs and will also lower the reserve price," he said.

It could be noted that last August the Reserve Bank had made norms tighter for asset reconstruction companies by asking them to pay upfront 15 per cent of the bid value of non-performing loans, against 5 per cent earlier.

Following this, ARCs were going slow in distressed asset purchases.

Analysts say the RBI regulation has resulted in sharp fall in sale of bad loans by banks to ARCs as they are demanding lower price.

As of December 2014, the mid-sized lender's gross non-performing assets stood at 5.61 per cent, while net NPA was at 3.97 per cent.

Source : Economic Times
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Central Bank of India tops list with highest bad loans among PSU banks

Central Bank of India has topped the list of public sector banks with maximum bad loans including restructured assets as a percentage of total advances.

According to the data provided by the RBI to the Finance Ministry, Central Bank of India’s 21.5 per cent assets are either bad or have been restructured to save them turning non-performing assets (NPAs).

The other banks which have significant amount of gross NPAs and restructured loans include, United Bank of India (19.04 per cent), Punjab & Sind Bank (18.25 per cent) and Punjab National Bank with 17.85 per cent as on December 2014.

Indian Overseas Bank, State Bank of Patiala, Allahabad Bank and Oriental Bank of Commerce all have bad and restructured loans in excess of 15 per cent.

The rising bad loans have become a major concern for the Reserve Bank as well as the government.

Most of the restructured loans are from the corporate sector. The top-30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the gross non-performing assets of PSU banks at Rs 2,60,531 crore as on December 2014.

There are four kinds of restructuring. The first and foremost is restructuring of advances extended to industrial units, restructuring under Corporate Debt Restructuring and restructuring of loans extended to MSME as per RBI guidelines.

However, banks have their own operational rule for restructuring of small loans.

RBI has not prescribed any board or bank level position at which these loans need to be approved.

Source : Thehindubusinessline
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