RBI refuses deposit, Rs 93 cr left stranded

A van carrying Rs 92 crore in cash of three banks of Alwar
district of Rajasthan was tonight parked outside the Reserve Bank of
India office in Jaipur after the central bank refused to accept the
deposit which did not arrive on time.
The van carrying the wads of currency notes stacked in 90 boxes was
left stranded in front of RBI office gate and is surrounded by armed
policemen.
The RBI declined to accept the money brought from State Bank of India,
Punjab National Bank and Grameen Bank branches in Alwar as the vehicle
could not reach the RBI office by the deadline of 5 pm, police said.
RBI officers have been informed about the van being stranded in front
of the RBI office but no officer of the central bank has arrived till
late in the evening.
Meanwhile, the vehicle carrying the huge amount of cash was allowed to
park inside the RBI premises late tonight.
When contacted, GM, RBI, (Rajasthan) S N Panda told PTI that as the
matter has been referred to the RBI headquarters in Mumbai "I cannot
answer media queries now".
G N Pareek, secretary of RBI Association, said there appeared to be a
communication gap between the sender of the cash and RBI.
Meanwhile, the SP of East Ghoomariya said that in view of the
requirements of heightened security ahead of the Independence Day, the
police expressed its inability to provide protection to the van
carrying the cash at Gandhi Nagar police station.
RBI was asked to allow the van inside the premises and clear the
remittance during the night, the SP said.

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Five-year lock-in for infrastructure bonds

The Centre has cleared infrastructure bonds issued by certain
government and Reserve Bank of India (RBI)-approved entities.

They will be eligible for tax deduction under Section 80CCF up to a
maximum Rs 20,000.

The bonds will be issued by Life Insurance Corporation of India,
Industrial Finance Corporation of India, Infrastructure Development
Finance Company and non-banking finance companies classified as
infrastructure finance companies by the RBI.

This includes L&T Infrastructure Finance, which got RBI approval
earlier this week.

The proposal of creating funds to meet the long-term needs of
infrastructure development was mooted in the Budget 2011.
Finance minister Pranab Mukherjee had said in his budget speech last
February that, “To promote savings as well as to ensure their
utilisation for the thrust area of infrastructure, I propose to allow a
deduction of an additional amount of Rs 20,000 for investment in long-
term infrastructure bonds... This would be over and above the existing
limit of Rs.1 lakh on tax savings.”

The government aims to spend $500 billion on infrastructure in the five
years to end-March 2012, and is considering doubling that figure in the
five years after that.

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RBI pulls up banks on credit card transparency issue

The Reserve Bank of India has come down on banks and financial
institutions for the lack of transparency in credit card operations,
especially in charging interest rates and levying other fees on
customers.

Despite the issue of comprehensive instructions to banks, the RBI and the
Banking Ombudsmen continue to receive numerous complaints from credit
card holders regarding the credit card operations of the banks,
especially with regard to excessive finance charges, issuance of
unsolicited credit cards, unsolicited insurance policies and recovery of
premium charges, charging of annual fee in spite of being offered as
‘free’ cards, issuance of loans over phone, disputes over wrong billing,
settlement offers conveyed telephonically, non-settlement of insurance
claims after the demise of the card holder, offensive calls, difficulty
in accessing the credit card issuers and the poor response from the call
centres, the RBI said.

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Growth in PSB staff costs higher than private peers

Public sector banks' (PSBs) growth in staff cost vis-a-vis
private banks was significantly higher during 2009-10. However, the
staff cost spent declined for both private and public sector banks
during 2009-10 compared with the previous fiscal.

According to a study on 27 PSBs and 18 private banks, growth in staff
cost in the case of PSBs marginally dipped to 18.7% in 2009-10 from
21.6% a year-ago, whereas the same for private banks significantly
decreased to 10.5% from 25.8%.

Total staff cost of the PSBs increased to Rs 41,048 crore during 2009-
10 from Rs 28,432 crore in 2007-08 and Rs 34,577 crore in 2008-09.
Among the PSBs, Central Bank of India registered highest increase in
growth of staff cost, to 21.3% during the study period from 4.8%. This
can be explained from the bank's performance. While interest income of
the lender increased 15.4% during 2009-10, net profit rose 85.3% to Rs
1,058 crore.

While Andhra Bank's staff cost rose to 32.1% from 22.5%, the same for
Bank Of India went up to Rs 2,296 crore from Rs 1,657 crore in 2007-08.
In 2009-10, SBI had the highest staff cost of Rs 12,754 crore, followed
by PNB (Rs 3,121 crore) and Bank Of Baroda (Rs 2,350 crore).

The staff cost to interest income ratio of PSBs dropped from 13.44% in
2007-08 to 12.66% in 2008-09 and increased thereafter to 13.39% last
fiscal. A steady decline in the ratio was registered by nine PSBs,
including Bank Of Baroda, PNB,Uco Bank and United Bank of India.

In 2009-10, the increase in staff cost of private banks was lower
compared to the PSBs. Among the 18 private sector banks, six, namely
Axis Bank, Bank Of Rajasthan, Dhanlaxmi Bank, IndusInd Bank, J&K Bank
and Karur Vysya Bank showed more than 25% increase in staff costs.

At an aggregate level, the staff cost of the private banks rose from Rs
6,617 crore in 2007-08 to Rs 8,324 crore in 2008-09 and further to Rs
9,200 crore last fiscal. The staff cost of all the private sector
banks' increased in 2009-10, except for ICICI Bank and Kotak Mahindra
Bank, DCB and Catholic Bank.

The staff cost of ICICI Bank steadily decreased from Rs 2,079 crore in
2007-08 to Rs 1,972 crore in 2008-09 and further to Rs 1,926 crore in
2009-10.This can be explained from its performance. The interest income
of ICICI Bank decreased by 17.3% to Rs 25,707...

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Do Not fall Prey to Fictitious Offers of Funds Transfer: RBI Advisory

The Reserve Bank advised banks on May 26, 2010, to exercise due caution
and to be extra vigilant concerning the fictitious offers whereby bank
accounts are opened and/or transactions made in the accounts for
receiving payments styled as transaction charges, etc, towards the so-
called transfer of prize money/award money, etc. The Reserve Bank has
clarified that any person resident in India collecting and
effecting/remitting such payments directly /indirectly outside India is
liable to be proceeded against with, for contravention of the Foreign
Exchange Management Act, 1999 besides being liable for violation of
regulations relating to Know Your Customer (KYC) norms/Anti Money
Laundering (AML) standards.

The Reserve Bank has also re-iterated that the Foreign Exchange
Management Act, 1999 prohibits remittance in any form towards
participation in lottery schemes. These restrictions are also
applicable to remittances for participation in lottery like schemes
existing under different names, such as, money circulation scheme or
remittances for the purpose of securing prize money/awards, etc.

In its circular issued to banks, the Reserve Bank has stated that there
has been a spate of fictitious offers of cheap funds in recent times
from fraudsters. These came through letters, e-mails, mobile phones,
SMS, etc. Detailing the modalities of the fraudsters, the Reserve Bank
stated that communication was being sent on fake letterheads of the
Reserve Bank and purportedly signed by its top executives/senior
officials to targetted people. Many residents have been victims of such
teasing offers and have lost huge sums of money in the process. It was
further brought to the Reserve Bank’s notice that fraudsters sought
money from gullible people, under different heads, such as, processing
fees/ transaction fees/ tax clearance charges/ conversion charges,
clearing fees, etc. The fraudsters open multiple accounts in banks in
the name of individuals or proprietary concerns in different bank
branches for collecting transaction charges, etc. The fraudsters
persuade the victims to deposit certain amount in these accounts. The
amounts are withdrawn immediately leaving the victims in a quandary.

The Reserve Bank has alerted the public on several occasions in the
past about such fictitious schemes/offers through the print and the
electronic media. More such public education campaigns are also being
planned. The Reserve Bank has asked banks to bring the contents of the
circular to the notice of their constituents and customers concerned
and to give it wide publicity.

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