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Friday, August 21, 2015

SBI to open 500 customer service points in West Bengal

State Bank of India will open 500 customer service points in West Bengal to bridge the last mile gap between itself and customers at the state's hinterland.

SBI chairman Arundhati Bhattacharya announced it Friday in Kolkata, barely within two days of Reserve Bank of India's in-principle approval to grant license to 11 entities to set up payments banks, which aims to bring more people within the institutional finance network.

Many believe that payments banks would compete with universal banks in some aspects, especially in terms of mobilising savings deposits from villages. But the new entities are not allowed to lend or raise money beyond Rs 1 lakh per savers

"The only advantage payments banks will have over us is if they get better access to remote villages," Bhattacharya said at an event hosted by Ficci in Kolkata.

The country's largest bank already has 56,000 customer service points across states as a low-cost intermediaries for taking banking to grassroot level.

West Bengal Finance and Industry Minister Amit Mitra was present at the event and urged banks in the state to open at least 511 brick-and-mortar branches in unbanked gram panchayats (village councils) to improve penetration.

The state has 716 gram panchayats without bank branches at present.

Source : Economic Times
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Employee union opposes entry of payment banks

A leading bank employee union today opposed setting up of payment banks and said their entry will hurt the interest of public sector lenders.

RBI has granted in-principle approval to 11 entities to set up Payment Banks, who will be able to collect deposits (initially up to Rs 1 lakh per individual), provide Internet banking, facilitate money transfers and sell insurance and mutual funds. They can issue ATM/debit cards, but not credit cards.

"This is nothing but a direct attempt to boost private sector banking and minimise the role of public sector banks and also to reduce their market share," C H Venkatchalam, All India Bank Employees Association (AIBEA) General Secretary, told PTI.

The entities which have been allowed to set up payment banks include Reliance Industries, Aditya Birla Nuvo, Vodafone, Airtel, Department of Posts, Sun Pharma's Dilip Shanghvi, Tech Mahindra, National Securities Depository and Cholamandalam Distribution Services.

A total of 41 entities had applied for payment banks licence.

It may be noted that SBI chief Arundhati Bhattacharya had also raised concerned over such banks, saying they are going to eat into the market share of government lenders.

RBI Governor Raghuram Rajan tried to allay the fear of competition from payment banks and said these will serve as feeder into the universal banks.

"I don't think these 11 new banks are a threat to the existing banks. These new banks will complement the existing system by traversing the last mile," Rajan had said.

Venkatchalam said giving licence to private companies to set up payment banks will adversely affect the public sector banks.

"If these banks are allowed to collect deposits, which are of low cost in nature, public sector banks will be deprived of the same and their cost of banking will increase," he added.

Source : Economic Times
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Bank of Maharashtra, Siddhi Vinayak Logistics under CBI lens

The Central Bureau of Investigation has started search operation against Bank of Maharashtra and a private firm Siddhi Vinayak Logistics in an alleged fraud matter involving an amount of around Rs. 800 crore.

Late on Thursday evening, a senior CBI official informed that the agency is conducting searches on two entities. "Searches are being conducted at 7 offices and 3 residences. 4 of the places are in Surat, 3 in Pune, 2 in Mumbai and one place is in Silvassa. The amount involved is Rs. 800 crore. This amount was defrauded in the 'Chalak se Malak' scheme where the company got sanctioned loans for its drivers without their knowledge and siphoned the money" he said.

Further, searches are against the company Siddhi Vinayak Logistics Ltd, its directors, its associate companies and other companies who aided in the diversion of funds, and unknown public servants. The agency has initiated proceedings under section 420, 468 and 471 of IPC and 13(2) r/w 13(1)(d) of Prevention of Corruption Act, the official mentioned.

This is the second incidence after Syndicate Bank in which public sector bank is allegedly involved.

Source : Thehindubusinessline
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IRDA proposes cap on insurance cos' expenses

The Chairman of Insurance Regulatory and Development Authority (IRDA) T S Vijayan on Friday announced that in view of rising expenses incurred by all insurance companies, a cap could be placed on their expenditure.

He made the announcement in view of the mounting expenses and its implications for the policy holders.

Vijayan said that the type of expenses to be curtailed would be left to the discretion of the companies. IRDA will not dictate to the companies that its marketing, operational or actuarial expenses need to be cut down, he said.

Source : Thehindubusinessline
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Vijaya Bank’s new non-exec chairman

Gopalakrishnan Narayanan has joined Vijaya Bank as part-time non-official director and non-executive Chairman. Narayanan, who served last as the Executive Director of Indian Overseas Bank and superannuated in 2009, has vast experience spanning over 38 years in the Indian banking sector, Vijaya Bank said in a statement. Narayanan also served as Managing Director of Centrum Capital and Managing Director of Securities Trading Corporation of India previously.

Source : Thehindubusinessline
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Govt launches education loan portals

The government has launched ‘Vidya Lakshmi’, a web-based portal for students seeking educational loans.

“The portal provides a single window for students to access information and make applications for loans provided by banks as well as government scholarships,” a statement from the Finance Ministry said on Thursday. So far, 13 banks have registered 22 educational loan schemes on the portal and five banks — SBI, IDBI Bank, Bank of India, Canara Bank and Union Bank of India — have integrated their systems with the portal for providing loan processing status to students, it added.

The portal has been developed and is being maintained by NSDL e-Governance Infrastructure.

Source : Thehindubusinessline

Website address is

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Thursday, August 20, 2015

SBI chief pitches for re-introduction of 'teaser' home loans

State Bank of India Chairman Arundhati Bhattacharya on Thursday made a strong pitch for re-introduction of the so-called ‘teaser’ home loans so that demand, especially in urban India, kicks in and the economy can be set on the recovery path.

In 2008, when the economy started faltering in the wake of the global financial crisis, India’s largest bank had introduced home loans whereby the interest rate in the first two years was low (at 8 per cent) and the rate from the third year onwards would be at the prevailing market rates.

Teaser home loans

Rivals tagged SBI's 'Happy Home Loan and Easy and Advantage Home Loan' loan as ‘teaser’ and criticised SBI. Both these loans held the interest rates fixed and below the market rate in the initial years. Thereafter, the rates turn floating.

However, fearing loss in market share, SBI's rivals quickly introduced it. Then the scheme was also criticised as existing home loan customers did not get the benefit of soft interest rates.

“In 2008, when the economy started faltering, one of the things that really made the demand work was the 8 per cent housing loan that SBI gave. Of course, at that point of time it was tagged as ‘teaser’ loan.

“We, in SBI, refute that because the due diligence that went into giving those loans was the same as would have been for a regular loan. Even the eligibility was like the regular loan,” said Bhattacharya in a Tete-a-Tete session with RBI Governor at the bank’s conclave.

Pick-up in demand

She underscored that demand really kicked in with the introduction of the home loan and three years later Kausik Basu, who was the Chief Economic Adviser to the Government, acknowledged this in the Economic Survey saying that this was one of the tipping points.

“Now today the base rate is at 9.70 per cent… I was just thinking is it possible that for a little while something of this kind can be allowed given the fact that this is one of the loan portfolios where the NPA (non-performing assets) is the lowest,” said Bhattacharya.

The NPA in bank’s home loan portfolio in the Rs. 30 lakh and above bracket is only 0.29 per cent.

Realty market

“So, there has been no bubble built up over here. And, maybe, we could also ask the realty players to bring down their rates also equally. This is something that can be used as a kicker for getting the retail demand started,” said the SBI chief.

In response to Bhattacharya’s request, Raghuram Rajan, RBI Governor, said: “Well, I never say no to your ideas. We will examine them.”

“I do also believe that if real estate developers, who are sitting on unsold stock, started bringing down prices that would be a very big help to the sector because once there is a sense that the price itself has stabilised then more people will be willing to buy….,” said Rajan.

The Governor said: The real estate market needs to clear and with growing unsold stock we need to figure out ways to do it. Some of it may be by making loans easier. But the RBI also don’t want to create a situation where prices stay high and the demand does not pick up.''

Buttressing the stand of the country's biggest lender on teaser home loans, the Economic Survey of 2010-11 said the fact that the scheme enabled many new home buyers to enter the market speaks well of the inclusiveness of the scheme even as the sub-prime segment was deliberately left out.

The Survey said the ‘teaser loans' terminology is sufficiently tainted for a neutral term to be of some value. It referred to such loans as ‘terraced loans' i.e. loans in which the monthly repayment of instalment rises over time.

Source : Thehindubusinessline
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Payments bank segment: ICICI Bank to adopt wait and watch approach

ICICI Bank, country's largest private bank, will watch the progress before venturing into the payments bank segment. The bank already has a tie-up with payments bank licence winners Fino Paytech and Vodafone m-pesa.

"We'll watch the progress in both and will continue to move forward, we've with Fino and Vodafone.

"The entry of new players will only enhance the financial eco-system and make the existing banks more tech-savvy," said Chanda Kochhar, MD and CEO of ICICI Bank, on the sidelines of an SBI event.

Echoing the RBI Governor's views, Kochhar said payments banks will only be complementary to whatever else the rest of the banking system is doing.

On stalled projects, the ICICI Bank chief said, "We need to clear existing projects....FDI investors look at sectoral solutions. We're looking at plug and play solutions. Those make projects very bankable."

She said the bank's digital product ‘Pockets’, (its mobile app) was already its digital bank and had 1 million downloads already.

Talking about interest rates, Kochhar said as monetary policy rates come down, FD (fixed deposit) rates get reduced.

"But FDs are only 60 per cent of the deposit base. A 75 bps cut translates into 40-45 bps cut in cost of funds for banks. You have already seen a 30 bps cut," she said.

Transmission will never have a one-is-to-one correlation with monetary policy rates. Deposit rates will depend on other products such as small savings, where interest rates are high; deposit rates will have to be in line with those, Kochhar explained.

Source : Thehindubusinessline
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RBI to announce small finance bank licences next month

After granting approval to 11 entities for payments banks on Wednesday, RBI Governor Raghuram Rajan today said that the central bank will announce small finance bank licences next month.

Rajan said such banks could be a path of migration to universal banks.

In February this year, about 72 entities and individuals had applied for small finance banks.

Those which have applied for small finance banks include housing finance firm DHFL, IIFL Holdings, Lulu Forex, SKS Microfinance, UAE Exchange and Ujjivan Financial.

Small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities.

On payments banks, Rajan said that they would not pose any competitive threat to the existing banks and these new entities would rather serve as 'feeder' for the universal banks.

Source : Thehindubusinessline
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All major bank unions to join September 2 strike

All the leading unions across the banking sector will join in the pan-India bank strike on September 2, said CH Venkatachalam, General Secretary, All-India Bank Employees’ Association.

The strike is to protest against the ‘anti-labour and anti-people policies’ of the Centre and in support of the call given by the Central trade unions.

“There are open attempts to amend the various labour laws in favour of the employers and to the detriment of the workers,” he said in a statement. “The neo-liberal economic policies are aggravating the problems of the workers and common masses.”

The labour-law changes were to empower the employers with unfettered ‘hire and fire’ rights and to strip the employees and their unions of their rights.

Venkatachalam alleged that there were continuous attempts at privatisation of banks as well as for consolidation and merger of banks. More and more private capital and FDI were being encouraged. Regional rural banks are sought to be privatised, and urban co-operative banks are under threat of de-licensing.

Several government schemes were being passed on to public sector banks without giving them proper infrastructure and manpower, causing harassment to the bank staff.

Venkatachalam said members of the All-India Bank Officers’ Association, Bank Employees Federation of India, Indian National Bank Officers’ Congress, National Organisation of Bank Workers, Indian National Bank Employees’ Federation, National Organisation of Bank Officers, All-India Co-Operative Bank Employees’ Federation, All-India Gramin Bank Employees’ Association, All-India Gramin Bank Officers’ Association, All-India RRB Employees Association, All-India Reserve Bank Employees’ Association and All-India Reserve Bank Workers’ Federation would go on strike on September 2.

Source : Thehindubusinessline
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