Wednesday, July 30, 2008

Banks advised to escalate unresolved complaints from call centers

Being a credit card holder you must have received calls from your banks call centre executive to remind you about your due payments. But if you have any grievances and register your complaint with call centre there is no one to solve your problem. You even don’t know whether you complaint is being forwarded to the bank. As a result you have to go through frustration as you don’t know whom to approach for getting your dispute resolved.

On receiving numerous complaints from cardholders, the Reserve Bank of India has conducted a study of the credit card operations in the country based on the nature of grievances received. Through survey RBI received set of recommendations, based on which the central bank has issued fresh directives to banks on their credit card operations.

RBI has made it mandatory for banks to set up a mechanism so that unresolved complaints are transferred from a call centre to a higher authority.

One of the recommendations made is that banks should have a mechanism to automatically transfer unresolved complaints from a call centre to higher authorities, if intervention of higher authorities is required. RBI has accepted this recommendation and has instructed banks to set up such mechanism and inform the public about this through their websites.

Other suggestions include installation of closed circuit television cameras at all ATMs to establish the identity of the person withdrawing cash. Banks have also been suggested to include security features such as photo credit cards and laminated signatures on them.

RBI has instructed banks to take clear instructions from their customers before sharing their information with other agencies. Banks have to explain the intention for sharing their information sharing. Customers should also be informed that their decision will have any bearing on their credit card application

For providing the protection to the customers from liability in respect of lost cards, the central bank has suggested that banks should introduce group insurance covers that will provide protection against liabilities arising out of lost cards. But, the insurance cover cannot be forced onto cardholders and only those customers who agree to bear the cost of the premium should be provided an appropriate insurance cover in respect of lost cards.

Banks charge higher interest rates from cardholders on account of his payment/default history should be made known to the cardholder. For this purpose, banks have been asked to ensure transparency in levying such differential interest rates and banks should publicize through their website interest rates charged to various categories of customers.

Tuesday, July 29, 2008

IOB to open bank in Malaysia

During the release of first quarter performance at a press conference Indian Overseas Bank (IOB) Chairman and Managing Director S. A. Bhat informed that bank is planning to open a banking company in Malaysia in association with Bank of Baroda and Andhra Bank. In the press conference Mr. Bhat told the minimum capital for the banking venture will be $100 million (Rs. 400 crore), with IOB contributing 30 per cent and the balance by the two bankers. He informed that the banking company will be operational by the end of the current financial year, subject to necessary formalities.

Chairman informed that bank has plans to open two more overseas branches — one in Sydney (Australia) and the other in Houston (U.S.), — besides a representative office in Dubai.

By the end of June 30 bank has done a total business of Rs. 1, 48,420 crore, representing a growth of 24.9 per cent over the same period last year. Giving out the figures he said deposits have rose by 21.1 per cent to Rs. 85,000 crore, advances showed a rise of 30.5 per cent at Rs. 63,419 crore.

Mr Bhat said whereas the working profit for the first quarter has declined sharply to Rs. 241.18 crore from Rs. 409.17 crore because of loss booked on account of inter-segment category transfer of securities and loss on sale of securities and provision for wage arrears, due to the possible increase in salaries of staff.

Monday, July 28, 2008

Consumer court says banks are liable in cheque forgery cases

A Mumbai resident Jehangir Gai filed a case in the consumer court against a bank for negligence and deficiency in service. In his complaint he alleged that his cheque book was misused and fraudulently Rs 40 lakh was withdrawn from his account when someone forged his signature on the cheque leaves.

According to Gai, the bank acknowledges that it hadn’t uploaded the consumer’s signature on its system. Due to this drift from their side the signatures on the cheques could not be verified.

Consumer organizations and bankers say that now day’s cheque frauds are very common and these happen when an individual is careless with his cheque book, or forget to cross a cheque leaf. Similarly there are rising instances of drop box cheque frauds too. Banking ombudsman official said, “Many banks don’t have the practice of listing cheques dropped in boxes’’.

Bejon Misra of Delhi’s Consumer Voice quoted another case where a cheque for Rs 10,000 bearing forged signatures was cleared by the bank staff without verification. The bank in a statement given in favor of its action said the complainant was negligent with his cheque book, and thus, it should not be held liable. But, says Misra, “the district forum held that the bank’s act constituted deficiency in service under the Consumer Protection Act.

The state commission concurred with the district forum’s views and dismissed the bank’s appeal with costs’’. Kirti Bhatt of Ahmedabad’s Consumer Education and Research Centre said if a signature is found to be fraudulent; it is banks liability to recoup the losses to the account holder. “There are a number of judgments (in such cases). Banks have argued that since a consumer has left the cheque book carelessly around, 50% of the losses should be borne by him. But courts have ruled that this doesn’t absolve the bank from the liability of verifying signatures.’’ In such cases consumers do not know whom to approach for redressal. Usually a criminal case is filed and requests the particular bank’s nodal officers and senior officials to investigate the case.

A senior banker explained that such cheques are sent for signature verification to the government examiner of questioned documents (GEQD). If the bank fails to provide redressal, the case is referred to the banking ombudsman. Ombudsman official clarified that consumers may note that cases where fraud is established are passed on the RBI’s department of banking supervision. They no longer come under the ombudsman’s purview.

“Otherwise, if there has been negligence on the part of the collecting bank, it is asked to do the needful, and the amount has to be made good.’’ Bankers and consumer organizations said, however, once a case has been filed in the criminal or consumer court, the ombudsman or RBI cannot intervene.

The ombudsman official explained cases of fraud can be minimized if a certain cheque truncation project, which is being tried out in Delhi, is extended elsewhere.

However the RBI website carries the explanation of this process it states that in this process, the physical instrument is truncated and an electronic image of the cheque is sent to the drawee branch along with the relevant information. Therefore extension of the physical instruments across branches would not be required, except in exceptional circumstances.

“Cheque truncation speeds up collection of cheques and therefore enhances customer service, reduces the scope for clearing related frauds, minimises cost of collection of cheques, reduces reconciliation problems, eliminates logistics problems etc.’’

Wednesday, July 23, 2008

Corporation Bank extends branchless banking facility to dairy farmers

Corporation Bank is stepping up its initiative of branchless banking units so that it can reach out the people living in unbanked areas. Working on this segment bank is gradually increasing the number of such units in rural areas. Besides this bank is extending the facility to dairy farmers and for making payments under the NREG (national employment guarantee) scheme.

Mr B. Sambamurthy, Chairman and Managing Director, in an interview to Business Line told that the number of branchless banking units have crossed 105 by the end of June. At the end of March this number was at 33. “We are planning to set up another 100 branchless banking units by the end of August,” he said.

Under this model the bank will be appointing a business correspondent in an un-banked area. The business correspondent will be given modern biometric smart cards and voice-guided systems to provide secure banking facilities to the rural populace without any barrier on timings.

In the first phase of the implementation of these units, the bank focused on some rural areas in Karnataka. In the future expansion, there is a plan to focus on rural areas in Chittoor and Coimbatore belts in Andhra Pradesh and Tamil Nadu, respectively. A majority of the proposed units will be set up in these areas.

Other than serving the individual villager through these units, the bank is also concentrating on other segments such as dairy farmers and NREG schemes.

Some parts of Andhra Pradesh dairy farmers and NREG beneficiaries are getting payments through Corporation Bank’s branchless banking units.

Mr Sambamurthy informed that the bank is carrying out branchless banking project with the National Dairy Development Board at Chittoor in Andhra Pradesh. Earlier, the dairy farmers, supplying milk to the dairies, were getting payments in cash. But under this project, the payment will directly get credited to the farmer’s account. The farmer can transact his/her account through branchless banking units.

He informed that due to this project there has been increasing demand for recurring deposits among the dairy farmers in Chittoor area. The payments of NREG scheme are also been given through these units.

Earlier, the payments to the beneficiaries, in both the cases, were made in cash.

Tuesday, July 22, 2008

StanChart launched Smart Credit Gold OD in six metros

Standard Chartered Bank foreign lender launched 'Smart Credit Gold Overdraft', to enable its customers to overdraw on their current accounts using a card attached to the account.

According to bank release customers will be able to access funds at an ATM machine using the card. The card can also be used like a credit card at any merchant establishment.

The release stated the overdraft amount can be repaid over a period of month as per the convenience of the customer.

StanChart's General Manger, Credit Card & Personal Loans, R L Prasad, said, "We have designed the overdraft with the aim of giving our customers the unique experience of using many products rolled into one. It's handy if you need cash and can repay it in the short term".

The key-features of the card are- card has higher credit limits, reward points and convenient to access to an open credit line, higher credit limits and reward points on spends and fuel surcharge waiver benefits among others.

According to bank release bank will be charging an annual fee of Rs 1,499 for the service. In the beginning the card has been in the six metros Mumbai, Delhi, Kolkata, Chennai, Bangalore and Ahmedabad.

At present StanChart is having network of 90 branches and nearly 2.1 million customers in the country.

Monday, July 21, 2008

OBC revises its PLR by 50 basis points

After the leading lenders like the State bank of India and PNB, another public sector lender Oriental Bank of Commerce (OBC) has revised its prime lending rates (PLR) by 50 basis points from 13.25 per cent to 13.75 per cent, to maintain its margin.

With the revision in lending rate PLR-related lending like floating home loan, corporate loan, car loan etc. will increase. Moreover, bank has also revised its deposits rates up to 50 basis points for some maturities. The new rates will come into effect from July 15.

Besides this OBC also launched special deposit scheme for senior citizens, under which bank offers to pay 9.55 per cent and 10.05 per cent. The scheme called Oriental Bank Akshay Kiran Deposit Scheme is for 500 days.

Bank has taken this decision following a RBI move to raise short-term lending rate (repo rates) and mandatory bank deposits with the central bank (CRR) by 50 basis points each to check rising inflation.

India will be joining anti-money laundering task force

Later in this year India is ready to join anti- money laundering task force Financial Action Task Force (FATF) which will help domestic banks access developed markets.

Till now the Indian banks - ICICI bank, Bank of Baroda and State Bank of India have been denied branch licenses by United States on the grounds that India was not a member of the FATF. Though these banks have been able to get temporary reprieve after the government and the Reserve Bank of India (RBI) withheld fresh branch permission to the likes of Citibank.

But as per sources who have been involved in the negotiations with FATF India has completed all the formalities except one - to amend the Prevention of Money Launder Act (PMLA) – to include a host of offenses, such as insider trading and human trafficking, in the schedule of offences. An official said, "This was an oversight that will soon be taken care of." The Bill to amend the PMLA is expected to be brought in Parliament next month for discussion and the government will be able to share the provisions of the proposed law and win a membership.

The sources informed that the other six major fundamentals for a membership have already been identified. For instance, the FATF – that has 35 members, with India being an observer – wanted the government to establish a track of all foreign exchange transactions, including hawala.

While the RBI has put in place a trail by asking agents, including those for wire transfer, to keep records for a specified period of time, it has managed to convince FATF that it is not possible to track hawala deals as such transactions were illegal.

While the other five commandments have already been complied with as the government last year had notified changes to the rules related to the PMLA, specifying that suspected cases of terror financing would be part of the suspicious transaction reporting system.

The other four specifications are in position as soon as the PMLA come into effect. They included naming of enforcement agencies to deal with the notified laws and mandating ‘know your client (KYC)' norms that would be legally binding.

In fact the setting up of the Financial Intelligence Unit (FIU-Ind) two years ago was also part of the exercise to gain a membership of the elite group.

Friday, July 18, 2008

Traveller’s cheques put NRI into trouble

When people go abroad they prefer travellers’ cheques rather than carrying cash with them as travellers’ cheques are considered to be things of convenience. But recently there has been a case where a non-resident Indian (NRI) who had cme to Nagpur on a long vacation had to face difficulty.

Sameer Varma, a research scientist who lives in Albuquerque, New Mexico, had converted $ 3,000 (over Rs 1, 30,000) to travellers' cheques in the United States. On Saturday (July 12) on reaching Nagpur, he went to the Nagpur branch of Standard Chartered Bank for depositing them in his account.

Bank staff told Varma that as the bank's foreign cell was closed on Saturday, he should come on Monday. Varma deposited the travellers' cheques with the bank and returned home.

But on Monday when he went to the bank to withdraw money from his account, a big shocked awaited him. He was told by the bank staffer Ambarish Saraf that the cheques had been sent to Chennai from where they would be sent to United States for physical verification.” I was told I would get my money in a month," Varma recalls. Therefore he met some senior officials but in vain.

After some time, Amrut Bhalerao, Manager (Customer Relations) of Standard Chartered, rang up Varma and told him that the bank staff did not explained the issue to him properly. Bhalerao assured Varma that the encashment process will not take a month but will be done between three to nine days. He accredited the delay to strict norms in India about encashment of travellers' cheques.

Unhappy Varma then contacted The Times of India and narrated his story to them. Varma in an interview to TOI said that he had used travellers' cheques many times and they have been encashed within minutes.

Verma said, "Thankfully, my father had some ready cash at hand otherwise I would have been totally cash strapped. However, the banks' inexplicable mishandling of the case has spoilt my holiday mood".

Verma added, "If the bank encashes the cheques in a month's time, it will be of no use because I will be back in US by then. What I fail to understand is that last time when I had come to Nagpur, I had opened an account with Standard Chartered using travellers' cheques. At that time there was no problem".

When contacted, the correspondent contacted the bank official Amrut Bhalerao about the issue he said that he will explain the issue to the customer. He refused to elaborate as this correspondent does not have an account with his bank.

Wednesday, July 16, 2008

Union Bank offers cash withdrawals from ATMs free

Public sector Union Bank of India has become the leading bank in making cash withdrawals by its deposit holders from ATMs of other banks free. The bank has set an example for its private sector peers.

Earlier on March 10 this year, the Reserve Bank of India (RBI) had issued a notification that all scheduled commercial banks should not charge any service fee for withdrawals from other bank ATMs with effect from April 1, 2009.

Before this notification till March this year, banks were charging customers between Rs 10 and Rs 50 per transaction, including balance enquiry, if they used the ATMs of other banks.

From April 2008, the RBI through notification made balance enquiry from other bank ATMs free and the charge for cash withdrawal was capped at Rs 20 per transaction.

M.V. Nair, chairman and managing director of Union Bank of India explained, “Banks charge a fee on cash withdrawal from other bank ATMs because the second bank bears the cost of replenishing the cash withdrawn by the first bank’s account holders. The second bank charges this cost to the first bank, which in turn, passes it on to its ATM cardholders as service charge.”

He added, “But we have decided that the bank will shoulder this cost and our customers won’t have to pay any fee for cash withdrawal from other bank ATMs.”

Nair was addressing a banking seminar organized by the eastern regional council of the Federation of Chambers of Commerce and Industry.

The Union Bank of India, has brought all its 2,513 branches under the core banking solution platform which has made fund transfers through electronic modes such as RTGS (real time gross settlement) and NEFT (national electronic fund transfer network) free of cost.

The public sector bank will soon be launching a home search facility for its home loan borrowers. “We have tied up with more than 100 reputed builders across the country and are preparing a database inventory for their properties in different cities,” Nair said.

Monday, July 14, 2008

Canara Bank fourth Indian bank to open branch in China

Canara Bank has been granted license by the China Banking Regulatory Commission. Last week the commission has granted license to Bank of Baroda. Canara Bank will be converting its representative office in Shanghai, China’s commercial capital into a regular branch.

Canara bank is the fourth Indian bank to get the license from China Banking Regulatory Commission. Previously State Bank of India, Bank of India and Bank of Baroda had obtained license to open branches in China.

According to bank sources it will start its operations in China over the next two or three weeks after obtaining certain other licenses from local authorities for doing business.

Bank sources said it took nearly three years to get a license after it opened a representative office in Shanghai in 2005.