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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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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