Tuesday, December 28, 2010

Shinhan Bank opens third branch in India

South Korean lender Shinhan Bank has opened their third branch in India. The third branch of the bank was inaugurated last week at Walajapet, in Vellore district in Tamil Nadu.

According to an official, the bank will offer a lot of banking products to the customers including term loan, working capital through the corporate branch recently opened.

Shinhan Bank is a flagship company of Shinhan Financial group that belongs to South Korea. The bank was established in 1897 and has more than 18.7 million client base with a total asset base of $ 211.30 billion.

Friday, December 24, 2010

Central Bank to reach every district soon

On the occasion of Centenary celebration of the Central Bank of India , the Chairman and Managing Director of the bank Mr S Sridhar announced the opening of 100 more ATM and adoption of 100 villages across the country.

The bank also announced that they have planned to have a physical presence in every district head quarter by December 2011.

Currently the bank has a physical presence in 496 districts. It has a total of 3,644 branches and 238 other offices and plans to establish presence in 131 more districts by the end of next year.

On the occasion, Mr S. Sridhar said that “We will have a physical presence in every district in the country by the end of our centenary year”.

Wednesday, December 22, 2010

NRI remittances eased by Dhanlaxmi Bank

In order to offer more facilities to customers, Dhanlaxmi Bank has inked an agreement with Doha Bank. Dhanlaxmi Bank is one the fastest medium size private bank of India. The bank has around 274 branches across India.

This facility will prove very much beneficial for the people in India whose relatives are in Qatar. A person in Qatar can now transfer money directly to any of the branches of Dhanlaxmi Bank in India by any of the branches of Doha Bank in Qatar or by using internet banking service of the bank.

Head branch banking and NRI business, Dhanlaxmi Bank Mr Salil Datar said “This association with Doha Bank is part of our NRI Banking business proposition. The arrangement will enable us to provide our customers convenient and secure services besides expanding our remittance network across GCC countries.”

On the occasion Executive Manager, International banking group, Doha Bank Mr R Ganesan said “The tie-up with Dhanlaxmi Bank provides an opportunity to extend our services to the vast NRI community in the region by meeting all their banking requirements. We are committed to serving the NRIs and provide them a seamless banking experience.”

Monday, November 1, 2010

State Bank of Patiala opens 30 branches in North India

State Bank of Patiala has opened 30 branches across the North India. T Lokeshaiah, chief general manager, the State Bank of Patiala said, for current financial year said that the bank has set a target of opening more than 100 new branches. With this bank total branch network will exceed 1,000.

Out of this, the bank will open 40 branches in Punjab, 20 in Haryana, 10 in HP, 10 in Rajasthan and remaining branches will be spread across Chandigarh, J&K, Delhi, UP, Uttrakhand, Maharashtra and four southern states.

The 20 branches will be opened by the Bank under the Brick & Mortar model of financial inclusion initiative, under which bank will cover unbanked villages with population of 2,000 and above, allocated to the bank by State Level Banker’s Committee (SLBC), to reach to the poorest of the poor.

Friday, October 29, 2010

Central Bank of India to expand branch network overseas

Central Bank of India (CBI), a Mumbai based public sector lender is in a process to expand its presence overseas by opening branches in China, Bhutan, Tanzania and Mozambique.

Bank Executive Director Rajeev Kishor Dubey said more branches are being opened in order to increase its international business and provide banking facilities to the Indians settled abroad.

However he did not reveal the total number of branches to be opened overseas.

Dubey informed the bank has launched Internet-based remittance service, called ‘Cent Fast2 India', in association with Bank of New York Mellon, for Non-Residents Indian residing in the US

He said, "The bank will achieve 100 per cent CBS (core banking solution) coverage by December 21 next year coinciding with the birthday of Sorabji Pochkhanwala, who founded India's first swadeshi bank on December 21, 1911."

The public lender is offering services in 3,000 villages, having population of less than 2,000, by 2010 as part of the Government’s financial inclusion program using mobile telephone technology.

Dubey said, "The bank will develop software in Gujarati and other local languages so that villagers do not experience difficulty in accessing banking facility."

The bank for fiscal 2010-11, has set a target to achieve business turnover of Rs 3, 00,000 crore. He said, by end of March 31, 2009 bank turnover was Rs 2,46,000 crore.

Thursday, October 28, 2010

Kotak Mahindra Bank opens first branch in Chakan on Pune-Nasik Highway

Kotak Mahindra Bank (KMBL) has opened its first branch in Chakan. The branch is located at Shubhmangal Plaza, Gate No 1286, Talegaon Chowk, Pune-Nasik Highway. However this is the 7th branch in Pune and 62nd in the state.

Virat Diwanji, executive vice president, Kotak Mahindra Bank said, “Chakan is an important industrial hub with the presence of many manufacturers and IT majors. This presents immense opportunity for Kotak Mahindra Bank to expand its reach and increase customer engagement in the region. Pune is a prominent market in the overall growth strategy of the bank and we will continue expansions across the city.”

Monday, October 25, 2010

Dhanlaxmi Bank opens a flagship branch in Mumbai

Dhanlaxmi Bank has opened a flagship branch in Prabhadevi, Mumbai for its customers. The branch is located near new passport office on Veer Savarkar Marg at Prabhadevi, Mumbai

G N Bajpai, Chairman, Dhanlaxmi Bank inaugurated the branch it is located near new passport office on Veer Savarkar Marg at Prabhadevi, Mumbai.

The branch has been designed by Fitch, a leading international brand and retail design consultancy. The branch is designed on the new retail concept.

The branch has an innovative design, pleasant and relaxing banking environment for its customers, with modern external fa├žade which is supplemented with interiors to offer customers entirely new experience.

The flagship branch has a separate meeting and greeting area, full self-service zones, aesthetically designed meeting rooms, open customer service area with individual desks for investments and NRI function, and the flagship branch has been designed to facilitate greater customer convenience and experience. This branch integrates the Bank’s rich heritage and values with designs that keep on with the future, along with products and brand wall.

At the occasion, Amitabh Chaturvedi, Managing Director, Dhanlaxmi bank said, “The opening of our flagship branch marks yet another milestone for the Bank. We have always believed that banking should be a personal experience.”

Monday, October 4, 2010

SBoP has introduced 999 days tenor deposit, hiked term deposit rates by 25 bps to 50 bps

State Bank of Patiala (SBoP) has hiked its term deposit rates by 25 bps to 50 bps also launched a new product of 999 days offering 8%p.a. interest rate for its existing and new customers. The new rates will be applicable from 4 October, 2010.

SBoP spokesperson informed that interest rate for 555days have been raised to 7.75% from 7.50%. Interest rate for 91 to 180 days is 5.50% p.a., for 181 days to 269 days rate is 6.25% p.a. and 270 days to < 1year it is 6.50% p.a., while interest rate for 1 year to 554 days & 556 days to 2 years has been set at 7.50% p.a.

For deposit of more than 2 years to less than 8 years (except for 999days) bank is offering interest rate of 7.50% p.a. and for 8 years to 10 years 7.75% p.a. Additional interest rate for senior citizens have been set at @ 0.50% for a period of one year and above. The spokesperson said, for SBP Tax Saving Scheme interest has been set at 7.50% p.a.

Thursday, September 23, 2010

Bankers against deregulation of savings accounts interest rate

The Reserve Bank of India (RBI) wants to deregulate the interest rate on saving accounts to smoothen monetary policy transmission, as it feels is being hampered by the current fixed-rate regime. But RBI’s move is facing stiff resistance from the banks.

A 3.5 per cent a year, interest on savings accounts is the only regulated rate left in the Indian banking system and is highly controversial, given its impact on the common man. The banks fear that by making this product low – cost product can bring instability in the market.

The banks told RBI that this is not the right time for such a move. The RBI held a meeting with top bankers where their views on this sensitive issue were sought.

The chief of a bank, who attended the meeting said, “The savings bank interest rate acts as an anchor for other rates. One of the fallouts of deregulation would be that when there is a squeeze on liquidity, the rates could rise to the level of fixed deposit rates.” He added, “It will be a double whammy: there will neither be fixed deposits nor low-cost deposits.”

On Tuesday country’s top bankers, including ICICI Bank MD & CEO Chanda Kochhar, State Bank of India MD S K Bhattacharyya, HDFC Bank MD Aditya Puri and Standard Chartered Bank Regional CEO for India & South Asia Neeraj Swaroop will be meeting RBI Deputy Governor Subir Gokarn regarding this issue.

Another bank chief said, “Savings deposits are seen as a bank’s core deposits. They help us in asset-liability management. Most banks are of the view that it is too premature to deregulate the savings bank rate.”

A few months ago RBI had proposed the idea of freeing the savings bank rate. Recently Deputy Governor Usha Thorat had said, a working group will be set up to look into the possibility of deregulation. Thorat had said, “We have to examine whether the deregulation can help bring more people into the formal banking system."

Monday, September 20, 2010

Banks likely to raise lending, deposit rates in Oct

The Reserve Bank of India for the fifth time has raised the repo and reverse repo rates by 25 basis points and 50 basis points. The impact of this hike will be visible on lending and deposit rates. But bankers indicate that the hike in lending and deposit rates will not come into effect before October as credit growth has yet to pick up.

Most probably banks will raise deposit rates first as there is a need to improve the sluggish deposit growth. Later lending rates will be raised.

Mr M.V. Nair, Chairman and Managing Director, Union Bank of India, said deposit rates will be raised to incentivize savers.

He added, “Deposit growth is lower than the RBI's projection. If it continues to be low, it cannot support the credit growth, which will pick up in the busy season. So, the priority at this point of time has to be deposit growth.''

Mr M.D. Mallya, CMD, Bank of Baroda, said a clear message has been received from the RBI’s move that interest rates will move upward. But the lending rates will not be raised unless credit starts picking up.

He added, “It is also possible that deposit rates may go up first, and then the lending rates, subject to credit demand. A hike in rates may not happen immediately as we have just tweaked the rates.”

Mr D. L. Rawal, CMD, Dena Bank points out, in the third quarter which will begin from October, banks will raise only deposit rates as banks might face some liquidity pressure due to credit pick-up.

He added, “Once credit picks up in the third quarter, we will have to up interest rates on term deposits.”

Mr Nair said, in the festive season, the credit demand is likely to pick up so the banks might review their base rates in October, before raising the rates.

While Mr Rawal says, the banks will raise base rate in the January quarter only.

“Given that credit growth has been lacklustre in the second quarter, banks may not revise the base rate. Status quo on the base rate will encourage credit growth during the festive season. Base rate, however, will get revised in the fourth quarter as banks will take into account the deposit rate hikes effected in the previous quarters,'' Mr Rawal said.

Mr Mohan Shenoi, Group Head, Treasury, Kotak Mahindra Bank explained it has been a long period that banks have been under tight liquidity pressure which has increased borrowing cost of banks therefore at some stage banks have to transmit it to borrowers through a review of the base rate.

Friday, September 10, 2010

Karnataka Bank offering savings bank account exclusively for women

Karnataka Bank Limited (KBL) offers a new product ‘KBL Vanita’, a savings bank account exclusively for women. The rural women have fear that they cannot manage their wealth so bank aims to develop savings habit among women so that they get relieved from all such fears.

Bank offers several unique features under this saving scheme such as females of 18 years and above can open this account, two females together can open joint account, account can be opened even with 'Zero' initial deposits, no requirement of daily minimum balance, Monthly Average Balance (MAB) of Rs.1,000. Bank offer free ‘All Risk’ insurance cover for jewellery covering loss due to snatching while on travel, theft during hotel stay, burglary while at home for Rs 50,000 exclusively to the first named woman of the SB account.

Women will get free fund transfer facility. They can transfer fund of up to Rs 50,000 per month to two savings accounts in the name of children. The other facilities include Multi Branch Banking facility, MoneyPlant VISA International Debit Cards, Internet Banking, Online Payment through Debit Cards (E-Commerce), Mobile Banking (M-Commerce) available free, free SMS alert facility for all Debit and Credit transactions of Rs.5,000/- and above and fastest way of Inter Bank fund transfers through RTGS/NEFT besides, other facilities include Fast collection of cheques, Utility Bill payment, Mobile Recharge and Free monthly E-statements.

Bank will be adding more facilities for its other customers in the near future which includes Online trading, Travel Card, Gift Card, Smart Card, POS Terminal.

Soon Bank will also open new branch in Dadar, Mumbai, at present bank has 464 branches across the country.

Thursday, September 9, 2010

RBI seriously considering on deregulation of savings bank rates

The Reserve Bank of India (RBI) is seriously working on the possibilities of deregulating savings bank (SB) interest rate- the only regulated product in the banking sector. For this RBI is considering for setting up a working group on SB deregulation to have discussion on the issues and draw conclusions.

At present savings bank interest is set at 3.5 per cent by RBI. RBI deputy governor Usha Thorat informed that deregulation of savings bank interest "an issue which is on our radar". She said, "On one hand, the low cost savings accounts provide banks with low cost funds of an enduring nature which facilitate asset-liability mismatch and help lower lending rates. On the other hand, the costs not currently recovered in handling such accounts have to be considered as well." At the FICCI-Indian Banks Association conference she said, "Given the level of interest rates on bank deposits, common persons are lured by higher interest provided by alternate channels especially in the informal markets. Totally freeing rates could, in situations where there is virtual monopoly of banking, lead to lowering rates in some areas while leading to increase in other areas - it would need to be ensured that there is no discrimination between different customers of the same bank."

She added that transparency in cost recovery can help in deregulation of SB interest rate. For this non-discriminatory across location is also important. Above all, the main consideration should be whether deregulation of savings rates will help in bringing more people into the cover of formal banking system. She said, all these issues will be taken up in detail for discussion by the working group.

The RBI is also working on issuing guidelines on banks managing large private pools of capital. Recently banks have started investing in or setting up infrastructure funds or venture capital funds or even in private equity funds.

The RBI deputy governor pointed out, where a bank is directly or indirectly involved or floats/manages large private pools of capital, in such case additional capital requirements to take care of reputation, concentration and other risks not captured in the traditional framework , is needed.

Wednesday, September 8, 2010

Indian Overseas Bank wants people to open saving accounts

The Indian Overseas Bank, a public sector bank is encouraging people for opening savings bank account and gain benefit from the Finance Inclusion Scheme.

The bank said the Reserve Bank of India has urged all banks must ensure that they provide banking facilities at the doorstep of people in all villages with a population of above 2,000 by March 2011. The aim behind all this process is to open saving account for all the households, micro-credit, micro-insurance and remittance facilities to all.

The banks have been asked to adopt measures such as opening new branches, extension counters, collection centers, or appointing business correspondents or business facilitators to achieve the objectives.

In an official circular issued by the bank it has stated that no-frills account will be opened without any pre-conditions and a minimum balance will be Rs5.

Recently the Assistant General Manager of IOB, D.P. Balasubramanian launched smart card banking facility at Arittapatti. The bank informed smart card banking facility will be provided to 27 villages in Madurai district and in 21 villages in Virudhunagar district by December-end.

Using smart card people can do minimum transaction of Rs50 and the maximum of Rs 2,000. Through, this project beneficiary of National Rural Employment Generation Program, pensioners, daily wage earners, recipients of government welfare schemes will be benefited.

Tuesday, September 7, 2010

Aadhaar might soon be the only number needed to open bank account

In the coming days Adhaar, or a unique identification number will be enough for a person to get a new mobile connection or to open a bank account.

According to Chairman Nandan Nilekani the Unique Identification Authority of India (UIDAI), the apex agency managing the UID project, and aims to give every resident of the country a unique identity, has already started the process to make this happen.

To develop realization about the importance of having a UID, the authority is having talks with the Department of Telecommunications (DoT) and Trai to make Aadhaar numbers sufficient for getting new mobile connections.

Nilekani, while addressing income tax officers on ‘Revitalization of Public Service’ said, “We are negotiating with DoT and Trai on making the Aadhaar number sufficient for getting a mobile phone connection. Presently, a person who wants a new SIM card goes to a retail outlet and he has to do some paper works, other than submitting all necessary proofs. If he has an Aadhaar number, that entire process can be done electronically.”

He informed that the authority is also having discussions with the Reserve Bank of India (RBI), the finance ministry and Indian Bankers’ Association (IBA) to allow Aadhaar numbers as sufficient proof for their know-your-customer (KYC) procedure to open no-frills bank accounts.

He said, “If Aadhaar is sufficient to open a bank account, there is one more reason why a person should get his number.” “We think the reason why it (Aadhaar) will work is that people themselves will start seeing the benefits, and they themselves will drive the adoption.”

However the first set of UIDs was to be issued on September 1, but this has been postponed indefinitely, due to unavailability of Prime Minister Manmohan Singh. The prime minister was supposed to roll out the numbers in Chittoor district of Andhra Pradesh. Nilekani told the new date is yet to be finalized. He said, “We will be launching it in the next few weeks. We will be launching in multiple locations, and hopefully in the next few months, we will ramp up to millions of enrollments.”

Friday, September 3, 2010

IDBI Bank waives host of service charges to raise CASA deposits

IDBI Bank a public sector lender has waived all charges on a host of services for its current account and savings bank account (CASA) including ATM interchange fee and charges related to average balance, cheque book, demand draft, electronic funds transfer, electronic clearing service, account statement and others.

The bank has waived the charges in order to increase its low-cost CASA deposit base to around 20 per cent of the total deposits in the next six months, from the current 13 per cent. Bank also aim to attract new customers and retain the existing customers through this waive scheme.

With the waiver of service-charge bank customers will be able to access ATMs of other banks any number of time without paying a fee.

The other waived off charges are new card fee, new card issue, cash service, pay order, stop payment, account closure, demand draft issue and cancellation and standing instruction.

Mr R.M. Malla, CMD, said the fee revenue loss due to waiver of service charges on CASA accounts will be earned through gains in business volumes.

Mr Malla said, “We would rather earn fees on the assets side of the balance sheet by syndicating a Rs 5,000-crore loan and earn Rs 50 crore fees than go after small charges on the liabilities side. Large corporates, mid-corporates and SMEs know us very well. We want to be known as a universal bank that caters to the financial needs of the common man.”

IDBI Bank is also planning to tap the equity market in 12-18 months as it has received capital injection of Rs 3,011 crore from the Government.

Friday, August 20, 2010

South Indian Bank launches ‘SIB Flash’ remittance service for NRIs

South based lender, South Indian Bank (SIB) has launched 'SIB Flash', a real-time remittance service with the UAE Exchange Centre for its NRI customers.

Through this service the NRIs will be able to remit funds instantaneously into the beneficiary accounts with SIB through the Exchange's online banking service.

SIB Managing Director V.A. Joseph said, “This is a secure way of transferring funds swiftly and easily using state of the art system which will help thousands of our valued NRI clients.”

Thursday, August 12, 2010

Police arrested college girl for encashing fake bank draft in Habra

The Central Bank of India bank manager posted in branch at Habra, instinct has helped Kolkata police to get to know about money laundering, which can be a new method. The police have arrested the first suspect a college girl for trying to encash a fake draft of over Rs5 lakh.

The girl named Khadija Khatun, a second-year student of Chaitanya College, Barasat had gone to bank branch at Habra a few days ago to deposit a draft of Rs507,350. The manager got suspicious when his bank official informed about the high value draft thus he did a quick check of her profile. He found, Khajida, who hails from Kashipur in Habra belong to a family of modest means. So, he checked the authenticity of the bank draft thoroughly. The draft was fake. He immediately informed police. On Monday when girl came to bank to withdraw cash police arrested her.

At the time of interrogation, she told police that she received the draft by post sent anonymously. She said she also got a call from this man a few days ago, who told her to get it encashed. But police is not relying on Khajida’s claims. She is being suspected to be a part of a racket of duping banks with fake drafts and cheques. Police is checking her cellphone records to try and trace the number from which she claimed to have received the phone call from the man. Khadija is now in police custody.
An officer of North 24-Parganas police said, "She was produced in Barasat court on Tuesday. We hope to get some useful information from her interrogation."

Friday, August 6, 2010

IBA tells banks to open branches close to police stations in remote areas

The pressure is increasing on commercial banks to open more branches in unbanked areas as part of financial inclusion but banks are worried about frauds and dacoities as there has been increase in such activities after few of the bank branches have been opened in unbanked areas.

An official of the Indian Bank Association (IBA), the apex industry body of India’s banks said,
“There is a proposal that bank branches should only be opened in government offices or near to police stations,” and added that some banks have asked that state governments should provide extra security in risky areas.

In the last 6 months because of dacoities, thefts and robberies the commercial banks have lost over Rs 1,000 crore, the amount can increase if they were further pushed to provide banking in the remote areas.

A senior finance ministry official said, “Banks will be wary of lending, opening branches in remote areas,” and, added the state governments should ensure that the security is provided to bank branches, especially, in the hinterlands.

However the government and the banking regulator, the Reserve Bank of India have show concern over the increase in cases of thefts and dacoities as around 270 cases were reported in the last six months alone.

In view of this RBI has directed its regional directors to hold state-level security committee meetings with the state police officials. Meanwhile, Andhra Pradesh and Uttar Pradesh have reported the highest number of dacoities as a result banks have lost about Rs 320 crore.

This allegedly has impact on the government’s drive to deepen financial inclusion, or make financial services available to those relying on traditional sources of credit or savings through physical assets.

On the other hand government want banks to open more branches in the rural areas and is thinking on various options. For instance, it plans to include financial inclusion as criteria for in performance evaluation of state-owned banks and could also make it one of the conditions while giving out new bank licenses.

According to government’s report out of the 129 unbanked blocks in the country 91 are in the North-East Region, and some of these parts have security issues.

“We have to open branches to pursue the government’s agenda but security issues still remains a concern,” said a senior official with an east-based public sector bank.

The public sector banks are suffers as private banks have to still enter into the hinterland in a big way.

State Bank of India, country’s largest bank, has witnessed 62 such cases and lost around Rs 150 crore. In 2009-10, SBI had lost over Rs 400 crore in 117 cases of thefts or dacoities.

There are around 86,777 branches in the country, 32,301 are in rural areas. Thus branches in rural and semi-urban areas constitute 61% of the total bank branches in the country.

Thursday, August 5, 2010

Barclays setting up 30 off-site ATMs in Mumbai and Delhi

Barclays, a foreign bank to set up more ATMs in Mumbai and Delhi in order to increase its visibility. The bank is adding 30 off-site ATMs in these cities.
The work of setting up of these new ATMs will start this month. The bank release said the addition of ATMs is a part of its strategy of focusing on the mass affluent customer segment.
At present bank is having 11 off-site ATMs set up across the country and six others at branch locations.

Wednesday, August 4, 2010

StanChart launched first mobile ATM in Mumbai

Standard Chartered Bank launched its first mobile ATM in Mumbai to offer better service to its customers.

A bank press release said, through this mobile ATM bank will offer facilities such as cash withdrawal, funds transfer, statement and cheque book requests, mobile and online banking regulation, pre-paid mobile top-up and other such services.

It will also have cheque drop box and a phone banking facility.

Standard Chartered’s Group Executive Director and CEO Asia, Jaspal Bindra, said, “The mobile ATM will give our customers greater convenience, bringing our services at a location closest to them.”

The release said, in the next 6-9 months bank will launch a second mobile ATM either in Mumbai or New Delhi.

Recently bank has also launched 50 Express Banking centers in Mumbai and Delhi, where the customers can perform a range of banking operations independently and securely. At these centers money vending machines have been installed also there are electronic cheque deposit box and a phone banking kiosk.

Tuesday, August 3, 2010

Union Bank and PNB raised BPLR rates

In order to push the existing customers to the new base rate system for loans, banks are increasing their benchmark prime lending rates.

Recently Punjab National bank and Union Bank of India have raised their BPLRs. PNB has raised its rate to 11.75 per cent from 11 per cent with effect from August, while Union Bank has raised the rate to 12.25 per cent from 11.75 per cent with effect from August 4. In the coming months more banks are likely to follow the suit.

One of the reason behind this move is, most probably banks want to account for the rising cost of deposits and to protect their margins. According to some bankers, banks might also want to push existing borrowers to the base-rate linked lending regime by increasing the costs for BPLR-linked borrowers.

However banks have requested the RBI to announce a sunset clause with June 30, 2011 as the deadline for moving all the existing bank loans to the new base rate-linked lending regime.

Another reason may be banks do not want to get involved in litigation if their clients, especially who have taken project loans, at the time of renewal of loans don’t want to move to the base rate linked lending regime from the former BPLR regime. Most of the banks have set their base rates in the range of 7.50-8.50 per cent.

Also, banks don’t want to be burden of administering two benchmark lending rates.

A senior Union Bank of India official said, “In the current scenario of rising interest rates, our deposit costs are increasing. Hence, we have no choice but to realign the BPLR to protect our margins.”

But the public sector bank official cautioned that existing borrowers should not blindly move to base rate system as banks increase BPLRs just because it looks a bit cheaper in comparison to BPLR based-lending, as there are possibilities that banks will also review their base rates as they raise their deposit rates.

Union Bank of India has raised its term deposit rates across different maturities by 25 to 100 basis points with effect from August 4.

For maturities of 1 year bank has raised rates by 25 basis points from 6.50 per cent to 6.75 per cent. While for short-term deposits of 91 days to less than 6 months and 6 months to less than 9 months, banks has raised interest rates from 3.5 per cent to 4.5 per cent and 4.5 per cent to 5 per cent respectively.

Friday, July 23, 2010

Customers of other banks to get facility of paying LIC premium via mobile phone

Life Insurance Corporation of India (LIC) policyholders having bank account in other banks apart from Corporation Bank, in which LIC owns a stake, will be able to pay their insurance premiums through mobile phones. Till now the account holders of Corporation Bank were able to pay premiums on select LIC policies through mobile phone.

In an interview with the Wall Street Journal, TS Vijayan, LIC chairman, said, “We are in discussion with two to three banks; if you have a bank account with them, through mobile you will be able to transfer (funds).” He said most probably the facility be rolled out some time this year.

With Corporation Bank, LIC tied-up for this facility two year ago and the customers who sign up for bank’s mobile payment services are able to use this facility.

The customer sends a text message to a given number and once the payment gateway verifies his or her details from LIC, the premium is deducted from the customer’s account. Payment of unit linked insurance plans cannot be made through mobile phone.

In July 1995 LIC introduced its first information communication technology (ITC) facility by offering online service to its policy holders. Through this service policyholders can receive immediate policy status reports, their payments are promptly accepted also get revival and loan quotations on demand.

Then, the company started using interactive voice response (IVR) service which enabled customers to get information on the next premium due, policy status, loan amount, maturity payment due, accumulated bonus etc. through their mobile phones in 59 centers across the country.

Thursday, July 22, 2010

Bank official of nationalized bank booked for duping customers of Rs 2.4 lakh

The bank officials of a nationalized bank were booked by Samarth police following directives of the court. The officials have been charged of cheating the two customers of the bank by transferring Rs 2.4 lakh from their account to another account without informing them.

The incident took place at the Nana Peth branch of the bank between year 2004 and 2008.

Inspector B B Ingale (crime) told TOI that the bank customers Rejesh Navlakha (41) of Lullanagar lodged a complaint in the court and the court had directed the police to file a complaint against the bank officials.

Ingale told Rajesh and his brother Sandip had deposited Rs 1.2 lakh each in a fixed deposit account for three years in 2004.

In January 2008 when their fixed deposit got matured they went to the bank to get their money, they were told that their account has been closed. Ingale added, "When they demanded the reason under the right to information (RTI), the bank informed that their Rs 2.4 lakh had been transferred to a loan account, which happened to be their relative's."

Ingale further told, "We have registered the complaint against the bank officials under sections 409 (criminal breach of trust by banker) and 418 (cheating with knowledge that wrongful loss may ensure to person whose interest offender is bound to protect) of the IPC. We have asked the officials to submit all documents regarding the case with the police."

Tuesday, July 20, 2010

BoB will open seven new branches in North

Bank of Baroda (BoB) will be opening seven new branches in Punjab, Haryana and Himachal Pradesh. SK Goel, deputy general manager, Bank of Baroda and regional head, Chandigarh region comprising Punjab, Himachal, Haryana, Jammu and Chandigarh informed that new branches of BoB will be opened at Ropar, Muktsar and Dhuri in Punjab, Saha, Karnal and Pinjore in Haryana and one in Kullu, Himachal Pradesh.

Goel said, in Chandigarh region bank already has 102 branches and with addition of seven new branches to its fleet, the number will swell to 109. He said that bank is celebrating its foundation day so, as part of the celebrations it will be opening 61 new branches all over India. BoB at present has more than, 3,100 branches in India and 81 branches abroad in 21 countries.

“All the new branches will provide core banking solutions including internet banking, housing loan, automobile loans, education loan, agriculture loans, exporters and finance to medium and small industry etc. ATM cards, credit and debit cards, lockers etc. These branches would also take care of mutual funds and life insurance requirements of customers through its subsidiaries”.

He added during the financial year 2009-10 bank did more than Rs 4,00,000 crore business and in Chandigarh region it did business of more than Rs 8,500 crore. He said for 2010-11 financial year bank has set a target of doing a business of Rs 11,000 crore from this region.

Friday, July 16, 2010

Dhanalakshmi Bank will now be spelled as Dhanlaxmi Bank

Dhanalakshmi Bank, a private sector lender has rechristened the banks name as 'Dhanlaxmi Bank'. A special resolution was passed by the shareholders of the bank.

The filing said, "...Passed the special resolution for changing the name of the bank from the present 'The Dhanalakshmi Bank' to 'Dhanlaxmi Bank'."

The bank did not give any reason for going ahead with the name change.

The shareholders of the bank passed another resolution for issuing 2.10 crore equity shares to institutional buyers and investors.

They also took decision to seek a dividend of around 10 per cent, subject to approval of the Reserve bank. Earlier in a meeting held on May 11 the board of directors had recommended a 10% dividend.

Tuesday, July 13, 2010

Banks request RBI to announce sunset clause till June30, 2011

Yesterday bankers had met the Reserve Bank of India (RBI) officials and have requested to announce the sunset clause via a fiat with June 30, 2011 as the deadline. They said such a short time for switching over to base rate can get involved in litigation of clients, especially those that have taken loans for big projects, might refuse to move to new base rate system from the previous benchmark prime lending rate system at the time of annual renewal of loans.

Therefore it is expected that the RBI might soon announce a one-year sunset clause to help banks move all their existing loans to the new base rate-linked lending regime.

Mr O. P. Bhatt, Chairman, State Bank of India said RBI is scrutinizing the pros and cons of the proposed sunset clause thus the announcement is likely to be made soon. Mr Bhatt, who is also Chairman of the Indian Banks' Association, was addressing the media after bankers had given their feedback to the RBI top brass for the quarterly review of the Monetary Policy, scheduled to be released on July 27.

Dr K. Ramakrishnan, Chief Executive, IBA informed that issue on dealing with corporate debt restructuring (CDR) under the base rate regime was also taken up for discussion.

Banks offer concessions and waivers on interest rates, rescheduling repayment, and converting debt into equity to the corporate to help them in getting back to business via debt restructuring. During the discussions bankers said although, they are not allowed to lend below the base rate, but RBI should make some provision to allow them to reduce interest rate to the base rate level or lower as the recompense clause under CDR which will help in offering concessions.

Since May-end banking system has been experiencing liquidity tightness, bankers point out by end of July it is likely to improve.

“Liquidity is expected to improve by July-end and beyond,” said Mr Bhatt. Another banker pointed out unless credit demand move upwards, banks will not raise deposit rates.

Friday, July 9, 2010

Cooperative Bank to open more branches

Sri Gokarnanath Cooperative Bank Ltd is opening its 13th branch at Regal Plaza, on Mission Street. The branch will be inaugurated by former union minister B Janaradhan Poojary on Friday. The bank started operations as a cooperative society at Kudroli area in 1925, and then in 1971 it was upgraded in a town cooperative bank.

A Shivananda Karkera, president of the bank told reporters since its set up, bank has been catering to the needs of backward and economically weaker sections of the society by providing them with group financial lending. The bank as per permission granted by the Reserve Bank of India aims to open one branch each year. He said, "RBI allows a bank of our nature to add 1 per cent of its existing branches in the form of new branch."

For the last 47-years bank has been earning profit continuously and has provided dividend to its members. In 2008-09 bank had declared a dividend of 20 per cent and earned a profit of Rs 93.86 lakh during 2009-10. The bank’s capital adequacy ratio is 19.37 per cent, which is above RBI norms, and it showed losses of 0.6 per cent. The bank as per audit classification has been rates A category bank, informed Karkera.

In the near future bank will be computerizing all its branches and administrative head office in a phased manner. At present out of 12 branches 7 are computerized. Kumble Sundar Rao, president, Karnataka Yakshagana Bayalatta Academy will be inaugurating the safe lockers at the new branch. K N Vijayaprakash, commissioner, MCC will inaugurate the computerized office. B R Bhat, general manager, Corporation Bank will preside.

Thursday, July 8, 2010

Andhra Bank joint venture subsidiary in Malaysia to start operations in 3 months

Andhra Bank, a public sector lender banking subsidiary in Malaysia will start operations in the next three months.

Chairman and Managing Director RS Reddy told Business Standard informed, “In all probability, we will register the subsidiary and start operations in two-three months.”

The bank will start the subsidiary in association with Bank of Baroda (BoB) and Indian Overseas Bank. Through the subsidiary bank is expected to cater the Indian population in Malaysia. Andhra bank has a 25% stake in the venture which comes to Rs 104 crore.

The bank has obtained clearance from both the Malaysian Central Bank as well as the Reserve Bank of India for subsidiary. Reddy told, BoB already has a representative office in Malaysia therefore the formalities for subsidiary will be completed smoothly.

Reddy added, in Malaysia out of the 8% of the population, about 2.1 million people are of Indian origin and the subsidiary will be catering to their financial needs. Apart from this, the bilateral trade between India and Malaysia is also increasing and now it stands at about $10 billion

The IndiaFirst Life Insurance Company, an insurance joint venture (JV) of Andhra Bank, BoB and Legal and General Plc of the UK, has started sale of insurance policies through their branch outlets. In the venture Andhra Bank has invested Rs 60 crore for 30% stake.

A senior official of the bank told, up till now AB had 19,689 policies and has collected a premium of Rs 53.44 crore, earning a commission of Rs 2 crore.

Meanwhile bank is expecting to earn a commission of about Rs 20 crore by collecting a premium of around Rs 250 crore.

For the next five years, Andhra Bank has set a target of achieving annual growth rate of 25 per cent, regarding this Reddy said with return on equity being 29.99 per cent the bank’s internal growth alone will help in meeting the target.

He said, last year, bank had registered a net profit of Rs 1,046 crore. After payment of dividend over Rs 760 crore was added to the Tier-II capital, “which will support the 25 per cent growth strategy,” he said.

Andhra Bank had got Rs 1,000 crore from the central government for which the bank will be issuing perpetual non-cumulative preference shares to increase its capital. Reddy added, capital is not a big issue for the bank as it already has a capital adequacy ratio of 14%.

Andhra Bank is planning to open 120 more branches in 2010-11 out of which it plans to open 50 branches outside Andhra Pradesh.

The bank is also working on increasing the share of fee-based income in the total from 12% to 15% in the current year and 18 per cent in 2011-12. Last year, bank fee –based income amounted to Rs 965 crore.

Tuesday, July 6, 2010

Banks witness robust farm loan recovery after extension in debt relief scheme

The debt relief scheme has helped banks in speedy recovery of agricultural loans. As a result, in the last quarter agri non-performing assets (NPAs) of most of the banks has reduced.

Earlier in union budget 2010-11 Finance Minister Pranab Mukherjee had announced extension of debt relief scheme. Mukherjee extended the debt relief scheme of 2008 by six months to June 30, 2010, as in some states the condition of farmers was very bad due to drought and in some other parts of the country there was severe floods.

According to State Bank of India, country’s largest lender official, it is expecting its agricultural NPA to come down by in the last quarter. As on March 2010, agricultural loans accounted for nearly 10 per cent of the bank’s loan book. While it’s gross NPA ratio declined to 3.05% from 2.86% last year because of fresh loans turning bad.

Another public sector bank, Bank of India outstanding of agricultural loan stood at about Rs 388 crore under the debt relief scheme is expecting 60% recovery of the loan amount. M Narendra, executive director of Bank of India said, "We deployed special officers for farm loan recovery under the debt waiver scheme. The harvest has also been much better."

United Bank of India is also expecting more than 50 per cent recovery of farm dues in the last quarter. K R Kamath, chairman and managing director, Punjab National Bank said, "There had been significant recovery under the debt relief scheme, as the recovery mechanism was intensified."

Earlier under the debt relief scheme the farmers who have more than 2 hectares of land were given time up to December 31, 2009 to pay 75 per cent of their over dues. Also banks and lending institutions were allowed to recover less than 75% of the debt amount as one-time settlement (OTS) system, provided they bore the difference, as government announced to compensate only 25 per cent of the amount under debt relief.

At this most of the banks waived another 25% of dues, as a result borrower had to return only 50% of the dues.

However the government said it will not pay interest for the six month extension and only reimburse the 25 per cent amount to lending institutions as per the delayed reimbursement scheme.

A bank executive told, last year the farm loan recovery was very low due to factors like drought and anticipation of further relief in farm loans. The recovery dropped by 50% as compared to the previous year.

Friday, July 2, 2010

Foreign lenders too announced their base rates

As the Indian public and private sector lenders have announced their base rates, foreign lenders have also opted to set their base rates at least 50-100 basis points (bps) lower than the Indian banks.

Amongst the foreign lenders in the country Citibank and Standard Chartered Bank have set their base rate at 7.25 per cent, same as HDFC Bank. Their rate is 25 bps lower than the country’s largest lender State Bank of India (SBI). On the other hand HSBC, the third largest foreign lender in the country has set its base rate at 7.0 per cent while Deutsche Bank has set to a lower competitive rate at 6.75%.

However all the other major public sector lenders - Bank of Baroda, Bank of India, Punjab National Bank and Union Bank of India have set their base rate at 8%.

A senior executive of a foreign bank said, “Given the size of our balance sheets, there is no question of a rate war with domestic banks. Our base rates reflect the area of the market that most foreign banks operate, which is at the short end.” “Most foreign banks are not active in the term loan market or infrastructure loans.”

Some of the foreign banks in the country have much lower cost structure in comparison to their public sector counterparts. For instance, as of 31 March Standard Chartered Bank current account, savings account ratio stood at 60%.

Foreign banks balance sheet is much smaller in comparison to their domestic counterparts and they depend more on fee income for profits. Unlike Indian banks, they have restrictions regarding the number of branches they are allowed to open.

As of March 31, 2009, Citi, the largest foreign lender, domestic loan book accounted to Rs 39,919.94 crore as compared to ICICI Bank’s 2,18,310.85 crore at the end of the same period.

Wednesday, June 30, 2010

Senior citizen files complaint against State Bank of Patiala

Bandra-based businessman Sirish Kirtikar (63), a senior citizen filed a case against the State Bank of Patiala with the Maharashtra Consumer Disputes Redressal Commission. In his petition senior citizen has alleged that the bank has with drawn Rs 70 lakh from his bank account.

Kirtikar had nine accounts (savings and current) and 10 fixed deposit accounts at the bank’s Bandra branch. He told, “When I was going through a bank statement issued on April 23, 2009, it showed that amounts had been withdrawn from my accounts and deposited in accounts not known to me.”

Kirtikar in his complaint said he did not issue any instructions for withdrawal of the amount from his account. He added that when he asked the bank to furnish the original receipts of his 10 fixed deposit accounts- the value of which was more than Rs 1.12 crore—the bank gave him seven photocopies of the receipts.

He said, “When I got the receipts I was shocked to see that somebody had forged my signature and withdrawn money from the account.”

Officials of the State Bank of Patiala refused to comment. In a reply to an email sent by the Hindustan Times, M.K. Mohindroo, assistant general manager, Regional Office I (Mumbai) said, “Since the matter is subjudice, we are unable to give our comments.”

Kirtikar said that he has faced a loss of Rs 70 lakh due to “fraudulent acts on the part of bank”.

He also alleged that in spite of his several request bank is not providing the details of the day-to-day transactions of his accounts.

Kirtikar in a complaint said the bank told that the Reserve Bank of India (RBI) had permitted it to open accounts without consulting him.

He told, “When I filed an application under the Right to Information Act, the Reserve Bank of India told me it has not authorized any bank to open unauthorized accounts”.

Kirtikar has also filed a case with the Economic Offences Wing of the Mumbai police for a compensation of Rs 5 lakh, for the mental agony he has suffered.

Thursday, June 24, 2010

Corporation Bank implements new security system for online banking

Corporation Bank has made internet banking more secured by implementing eMudhra PKI (public key infrastructure) solutions of 3i Infotech Consumer Services Ltd (CSL). It is the first bank in India to provide world class authentication security solution to the corporate online banking customers of the bank.

The most important feature of online transactions is impersonation thus there is no face-to-face encounter of parties. At present, in most of the cases the authentication factor is only the user id, login password and authorization password. But digital certificates provide watertight security measure to promote electronic exchange of document/information with outmost authenticity. Digital certificates can be issued only through a valid certification authority like eMudhra from 3i Infotech Consumer Services Limited, a fully owned subsidiary of 3i Infotech Ltd.

B R Bhat, general manager of the bank said in a release, "With growth of Internet and online transactions, security is always a concern to netizens for doing financial transactions. The launching of this world-class online banking security solution to our corporate customers adds an additional security to all online banking transactions and one can be rest assured that their online transactions are more secure."



However there are number of authentication methods used by banks such as one time passwords, virtual key board, and dual passwords being implemented and in vogue, while PKI based authentication of transaction using one's digital signature certificate is the only one that provides legal sanctity to transaction besides providing additional security. These measures have been done on the recommendation of RBI in its Internet Banking guideline and IT Act, 2000.

Tuesday, June 22, 2010

Importance of nomination in bank accounts

According to the Reserve Bank of India (RBI) report, around Rs 1,100 crore of unclaimed money is lying with Indian banks.

The report further stated that a major portion of this unclaimed money belongs to Hindu Undivided Family and individual accounts because the accountholders have died.

In such cases the main reason for unclaimed money lying with bank is that the accountholders have not nominated anyone in their accounts. This way not only legal heirs are deprived of the money also banks are facing problem in managing these unclaimed funds.

To solve this double edged problem, in 1983 the government of India had amended the banking laws to include nomination facilities in respect of all bank accounts. But, still many of us either are not aware of this facility especially people who are uneducated or living in rural areas, or do not want to face the fact that unforeseen events can happen to us.

Filing nomination is not difficult. While opening a new account, there is a column for nomination in the same form and you should fill it. You can nominate two persons with first and second option. If you have not done nomination in your accounts you can file a request for nomination for both – a single account or a joint account in Form No DA-1. In case of your death or the death of any of the joint accountholders the nominated person can received the amount lying in the account.

The form can be taken from bank and is applicable for all types of deposit accounts - savings account, recurring deposit account, fixed deposit account or even a current account.

In case you want to cancel the nomination or change the nominee at any point in the future, you can do so by simply submitting Form No DA-2.

In case of change in nomination or cancellation you must obtain a written acknowledgement of any request made to the bank. The banks normally give acknowledgement in a tear-off of the form being submitted.

If changes and variations in nomination are made frequently then you must keep photocopies of the forms to avoid any dispute in future and also for a ready reference. However banks make note of such submission of nomination forms or variations/ cancellations thereof in their records. At the time of deletion or addition to the original bank account, always ensure that the nomination form is also submitted with the bank covering all the account holders at the relevant times.

Nomination facility is available for individuals and other entities like partnership firms, limited companies and trusts, etc. This facility is also available to accounts operated by proprietors in respect of their business concerns, including current accounts.

In case of minor account holders, a nomination can be made by a person who is lawfully entitled to act on behalf of the minor.

Whereas, if the nominee is a minor, in such case the accountholder will have to appoint a person to receive the money during the time the nominee stays a minor. When nominee turns a major, he/she can claim the money from the bank directly.


Joint accounts


In case of joint accounts if the joint account holder dies without making any nomination, in such case the remaining accountholder/s can still make a valid nomination in respect of the bank account.

In case of one account holder, the bank will remove the name of the deceased from the account and the remaining accountholder/s remains the account holder/s. In case of only one account holder surviving, he becomes the sole accountholder of the account.

Fixed deposits
In fixed deposits also there is nomination facility. But in this if fixed deposit is held jointly, all the joint accountholders have to give nomination. A nomination request not signed by all accountholders will not be a valid request.

The nomination will remain active and alive as long as the deposit account is renewed also it automatically gets renewed on renewal of the deposit from time to time.

For nominees
As nominee becomes authorized accountholder after the death of accountholder therefore he is entitled to give a valid discharge for payment of the money due to the bank. The banks only consider registered nominees and not the legal heirs.

The nominees have to provide valid proof of death of the accountholder together with the claim in the prescribed form. The bank is also supposed to send a letter to the nominee in case no claim is filed within three months of the notice of death of accountholder being given to the branch.

The bank allows the nominee to foreclose the fixed deposit if he/she submit relevant document like death certificate/ claim form etc. But banks cannot grant any loan against such fixed deposit held by the deceased.

In case the nominee is other than legal heirs, then they can lodge their claim for the money of the deceased against the nominee and not against the bank, once the bank has paid the money to the nominee as per the terms of the nomination filed with it.

Legal heirs who obtain any order from the court then they can restrain bank from paying the money to the nominee.

Friday, June 18, 2010

Lakshmi Vilas Bank sign deal with LIC for bancassurance

A strategic partnership deal was signed between Lakshmi Vilas Bank and Life Insurance Corporation of India (LIC), India’s largest life insurance player, for bancassurance.

Under this deal the bank’s customers across India will be able to access the wide range of products of LIC. Lakshmi Vilas bank as the corporate agent for LIC has been providing holistic offering of banking services, will now be offering LIC’s best products to its customers through its 274 branches.

K.S.R. Anjaneyulu, managing director & CEO, Lakshmi Vilas Bank said, “With this strategic tie-up, we are now well on our way to offer an assortment of retail banking products to our customers. Given the fast changing market dynamics and its volatility, customers today are seeking avenues for financial security. Through this tie-up we can address this very need of the customers through our products and services and build a universal banking franchise.”

After signing the deal A.K. Dasgupta, MD of LIC India said, “We are keenly looking forward to the partnership with LVB, which is one of the leading schedule commercial banks in India with a strong clientele base, excellence in banking technology and delivery of high quality service, to give new and lasting value proposition to the esteemed customers of LVB through life insurance services.”

To provide all the financial services through one window, the bank has also signed a deal for a bancassurance with Bajaj Allianz General Insurance Co. for general insurance distribution business and arrangements for distributing the mutual fund products of various reputed AMCs

Thursday, June 17, 2010

95 percent of Meghalaya population still without bank accounts

The Reserve Bank of India is trying to cover all the villages under financial inclusion program by providing banking services to the people living in villages. It has also instructed banks take various measures for the implementation of financial inclusion in the villages in which they have to set up branches or through business correspondents they have to provide banking facility to the villages having population of 20,000 people.

Still over 95 percent of households in Meghalaya State do not have a bank account. The Chief Minister Mukul Sangma, who also holds the finance portfolio, told that it is becoming difficult to implement several of the central government’s flagship welfare programs as most of the households do not have a bank account.

He told as most of the population in the state, especially the rural poor does not have access to banking transactions, so it is not possible to implement centrally-sponsored flagship schemes such as Mahatma Gandhi National Rural Employment Guarantee scheme and others which are credit linked.

Sangma said, “A total of 95.9 percent households do not indulge in banking transactions. Moreover, the credit-deposit (CD) ratio in the state is very low.”

He informed that he has taken up these issues with union Finance Minister Pranab Mukherjee.

He added, “I have highlighted Meghalaya's constraints relating to poor implementation of the UPA (United Progressive Alliance) government's flagship programs before the finance minister and the central government will look into our problems.”

Thursday, June 10, 2010

An innovative Cheque Truncation System launched to increase efficiency of banks

Newgen Software Technologies Limited is a leading company in Business Process Management (BPM) and Enterprise Content Management (ECM). The company has launched its next generation Cheque Truncation System (CTS) adapted to RBI “CTS – 2010 standard”. The main aim behind launching this system is to fully automate data extraction, verification and fraud detection in the CTS environment.

In this new specification the layout format of the cheques has been standardized to a much greater degree in comparison to the earlier one, also it includes various cheque security features. These security features not only ensure uniformity across all cheque forms issued by banks in the country, but will also help in scrutinizing cheques of drawee banks in an image-based processing scenario.

Speaking on the merits of ‘CTS-2010 standard’, Mr. Virender Jeet, Senior Vice President, Technologies said, “CTS-2010 standard is the right step towards achieving the true benefits of Cheque Truncation. Newgen’s research and development team has been working on the different aspects of cheque security and automatic data extraction for quite some time and now we can derive immense returns from these innovations”.

This standard also have another innovative security features - pantograph and ultra-violet logos. On all cheques bank logos will be printed with UV ink and these logos will be visible only under ultra-violet light. Moreover any corrections on the cheques will not be allowed.

More than 50 banks across Asia Pacific, India, Middle East, Africa and Europe including ING Vysya, Kotak Mahindra Bank, Bank of Baroda, Andhra Bank, Indian Bank, United Bank of India, Karnataka Bank, Abu Dhabi Commercial Bank, RAK Bank, Mashreq Bank are already gaining business benefits from Newgen’s CTS solution.

Newgen’s innovative solution will completely computerize Cheque Truncation and automate data extraction of all cheque fields which will be a great help for the banking industry as a whole and will improve the functioning of banks.

Wednesday, June 9, 2010

Know about Banking Ombudsman

Banking Ombudsman is a forum for bank customers for resolving their complaints related to certain services offered by banks. The Banking Ombudsman Scheme was introduced under Section 35 A of the Banking Regulation Act, 1949, by RBI in 1995. The Banking Ombudsman official is appointed by RBI who is responsible to address customer complaints against deficiency in certain banking services.

The customers can lodge their complaints at the office of the Banking Ombudsman, under whose jurisdiction, the bank branch is situated against which the complaint is being lodged. The complaints relating to credit cards and other types of services with centralized operations, complaints may be filed before the Banking Ombudsman within whose territorial jurisdiction, the billing address of the customer is located.

In case of complaints related to credit card operations the Banking Ombudsman can award compensation not exceeding Rs 1 lakh to the complainant, for mental agony and harassment. But in this the Banking Ombudsman will not take into consideration the loss of the complainant’s time, expenses incurred by the complainant, harassment and mental anguish suffered by the complainant while passing such award.

The first attempt of the Banking Ombudsman is to settle the issue by an agreement between the complainant and the bank named in the complaint. In such case the terms of settlement offered by the bank are acceptable to one in full and final settlement of one’s complaint the Banking Ombudsman passes an order as per the terms of settlement which becomes binding on the bank and the complainant.

In case one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsman’s decision. Deputy Governor of RBI has an Appellate Authority.

The complainant can also move to the consumer court. The bank can also file an appeal before the appellate authority under the scheme.

Monday, June 7, 2010

SBI in collaboration with Eko enable saving account accessible through mobile phones

The state government of Bihar has launched ‘Mobile Money Transfer System’ in Patna. The service has been launched in collaboration with United Nations Office for Project Services (UNOPS) and Norway-India Partnership Initiative (NIPI), an aid agency funded by Norway government. And, this service will be implemented by Eko Indian Financial Services Limited, a New-Delhi based company, in partnership with the State Bank of India (SBI). Through this service the Social Health Activists (ASHA) workers will receive their salary in a mobile bank account which would be linked to their cellphones.

In the beginning the projects has been as a pilot project in Sheikhpura district and by the year end it will be extended across the state.

Executive director, State Health Society, Sanjay Kumar while launching the project said, "Under the said scheme, ASHA workers would receive their pay in their SBI `no frills' Savings account which would be accessible from their mobile phones."

Kumar added that Eko will help Customer Service Points (CSP) to open an SBI mini savings bank accounts on their mobile phones for all financial transactions with zero capital expenditure. He informed that as the mobile number of a person is globally unique, therefore number will be used as an alias of the customer’s SBI bank account number and added that all transactions can be done by dialing the said number. He said all the transactions will get completed in real time the customers will be sent instant confirmations through SMS. Also, he said, when the health care workers have registered their mobile enabled bank accounts with local retailers, they will be able to deposit or withdraw funds by using a unique pin number.

Kumar said, this is the first time such type of system has been introduced in the country, the program aims is to empower women by promoting their financial inclusion with simple and secure access. He further added, that to provide payment to ASHA workers on time is a tough job therefore this project will enable to make payment to them on time.

On the other hand state co-coordinator, UNOPS-NIPI, Bihar, S P Sinha said with the implementation of this initiative gives an opportunity to effectively make use of available resources to accelerate the process of economic and social development.

CGM, rural business, SBI, J K Sinha said, "As SBI has always been at the forefront of providing banking outreach to rural areas, the project is an innovative use of technology in women empowerment."

Eko CEO Abhishek Sinha said, Eko main objective is to build a low cost financial services infrastructure with the mobile phone as its primary transaction interface, thus, this will help in reaching the financially excluded population where up till now no bank has been able to reach.

He told up till now Eko has over 470 outlets across Delhi, Bihar and Jharkhand with 70,000 customers making transaction of Rs 15 lakh per day.

Friday, June 4, 2010

Govt. committee recommends measures to bring professionalism in India’s banking industry

The employees of public sector banks (PSBs) are earning good salary in comparison to their private sector counterparts but there is lack of professionalism in India’s banking industry.

After the Sixth Pay Commission award for central government employees, as per a deal settled between IBA and employees’ unions, bank employees were given a 17.5% salary hike last year. But the service range of PSBs is becoming bigger and more complex, thus, there is a need for employees with specific skills as over 58% of middle-level managers in PSBs will be retiring in a couple of years.

Although, India’s 27 PSBs combined manpower strength is around 7 lakh. But the industry — which accounts for 70% of the banking business in the country — is experiencing a shortage of talent in high-end areas like risk management and treasury operations. To make the PSBs more competitive and infuse a greater degree of professionalism, a government committee has recommended 15-20% variable component in the salaries of PSBs employees, also has recommended the removal of the existing upper limit for their remuneration. It has also proposed for a hike in the retirement age to 62 years from the current 60, as told by sources in the committee. The committee has been set up by the finance ministry, is likely to submit its report next week.

If committee’s recommendations are accepted then each bank will get free hand to fix its salary structure based on its financial strength and also can reward the highly-skilled with out-of-turn promotions which will help in creating competitiveness amongst the employees resulting into constant up gradation of knowledge and skills.

The panel, headed by Bank of Baroda’s former chairman AK Khandelwal, has also recommended that each public sector banks should be allowed to settle salaries for its employees in line with their specific skill sets and the bank’s overall performance.

The panel of members of committee set up last year include MV Nair, CMD of Union Bank of India, Deepak B Phatak of IIT-Mumbai and TV Rao of IIM-Ahmedabad . Nair, who is also chairman of Indian Banks’ Association (IBA), told FE that “the report to be presented next week would have measures needed to revamp recruitment processes, career and succession planning and training.”

Currently PSBs follow an industry-wide wage settlement brokered by IBA once in five years, if the recommendations of the committee are accepted then this old system will be scrapped. However IDBI Bank tried to fix the wage structure of its own employees had to withdraw the policy due to opposition from employee unions.

An anonymous member of the panel said, “Many PSBs are not able to recruit and retain skilled people in key functional areas like risk management and treasury operations.” According to committee the promotions in highly specialized areas should be done on the basis of expertise and not on seniority basis.

Wednesday, June 2, 2010

StanChart to set up 100 express banking centers

Standard Chartered Bank is planning to open 100 express banking centers during this fiscal. Recently bank has raised around Rs 2,490 crore through Indian Depository Receipts (IDRs).

Express banking centers are mainly the ATM sites having additional facility like an electronic cheque deposit box, transfer funds facility and self-service counter for other services.

According to a statement by StanChart, with these express centers, latest in banking technology, the customers will be able to easily access their banking requirements in a pleasing environment.

It added these centers will be set up in the areas close to customer’s homes and offices which will increase Standard Chartered's reach and this will also include a mobile version.

The first 27 express centers are already in operation and by end June, setting up of over 50 centers will be completed and made operational, it added.

It said the centers have been intentionally set up in areas which are near to places where customers mainly live and work thus making the bank more accessible and visible to its customers.

Friday, May 28, 2010

PMO not in favor of FinMin proposal on bank chief appointments

Finance Ministry has put forward a proposal that the bankers whose remaining service is less than two years should be taken into consideration for the appointment as public sector bank chiefs, but the Prime Minister’s Office (PMO) has rejected this proposal. It said, with such move several candidates who are in the list for top posts of banks will be affected.

According to sources closely related to the development, PMO is happy with the intensity of appointment norms which have worked well for several years and have helped in the re-emergence of public sector banks as strong players in the banking industry.

The sources added that individuals left with less than two years of service will not get enough time to implement their decisions properly.

Meanwhile the finance ministry on the basis of feedback received from South Block, prepared a fresh set of names and sent to the Appointments Committee of Cabinet (ACC).

However PMO’s objections has come at a time when some lawmakers have written to Finance Minister Pranab Mukherjee in which they have expressed concern over the proposal to allow executive directors left with 18 months of service to be considered for appointment as bank chiefs. The members of Parliament said the decision is being taken unilaterally by the finance ministry and ACC’s approval is not taken.

They added however, since 2007 the government has been following ad-hocism in appointment of bank chiefs instead of following a uniform set of rules. Also, the government has been frequently changing norms for the candidates who were interviewed in February. The changes were done so frequently that some candidates from State Bank of India, who were called for the meeting, were dropped at the last moment.

Now, the intervention by PMO will break a long tradition of appointment of chairmen of government banks. Generally appointments in big banks are done through lateral process, i.e. the chairman of a smaller bank is appointed chief of big bank. But, for Canara Bank’s top job, the government has decided to appoint the existing executive director because present chairmen of smaller banks do not meet the two criterions, first, two years of residual service and second is, one-year experience as chairman of a smaller bank.

However Union Bank’s S Raman is listed to take charge of Canara Bank when the present chief, A C Mahajan, will be retiring in July. On the other hand, for six large banks, Punjab National, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and Central Bank of India, the top positions will be filled through lateral process.

According to sources, for meantime, the finance ministry has taken consent for eight candidates to be appointed in as many number of banks where top positions will be vacant till February next year.

Besides, Canara Bank, the government wants consent for the candidates for the appointment as chiefs of Corporation Bank, Andhra Bank, Indian Overseas Bank, UCO Bank, Oriental Bank of Commerce, Bank of Maharashtra and Vijaya Bank. The position in Vijaya Bank will be vacant in February, but the top posts in seven other banks will be vacated in 2010.

The government also wants consent from 11 general managers for the appointment of executive directors in nine banks.

Thursday, May 27, 2010

Dena Bank opens first only women staff branch in Raipur

Dena Bank has opened its first branch having only women staff, in Raipur, the capital of Chhattisgarh. Bank sources said opening of this branch is a part of its program to empower women, and this will be the first all-women branch in Chhattisgarh and Madhya Pradesh.

Shyam Lal (name changed) who stands outside the bank branch with his double-barrelled gun is the only male staff in this branch. In this tiny branch of five people in Raipur’s Sunder Nagar all are women right from the peon to the branch manager.

At present the branch has less than 100 account holders and soon the number is expected to increase as more and more women will be interested in opening a bank account in this branch. Manju Agrawal, who has opened an account in this branch said, “A woman customer can express her views more liberally and seek information more easily from women staffers.”

According to her women employees can understand the sentiments of women customers more accurately, which will help in addressing their grievances effectively.

However there are male customers also but women think they can make this unique branch their own.

Since its opening, the branch has become the centre of attention; many people are visiting curiously to see how women can run an operation all by themselves. Due to this reason Shyam Lal, who refused to reveal his real name, makes sure to provide maximum security to the staff. He always frisks men from entering the branch and menacingly bars the way if anyone approaches the branch manager’s office.

Although Dena Bank has handed over the complete operational command in the hands of women in the branch, but women staff does not have permission to speak to the media. “Sorry, I do not have permission to speak and give information about the branch,” says manager Manju Dheewar.

Even senior executives are avoiding talking about it. “Yes, it is an innovative step, but the details will be given only by my superiors in the corporate office,” says Rohit Yadav, the bank’s regional manager.

Such silence is odd as sources in the bank’s corporate office in Mumbai say the idea of an all-women branch was given by the local officials and was given practical shape from the fact that the region had large number of women employees.

A senior executive pointed out at present the concept of an all-women branch has been started on an experimental basis, and if it succeeds, the management might introduce it in other branches too.

The women staff in the new Raipur branch is happy about the fact that the management is thinking on such lines. There are also plans of hiring a “gun-woman” instead of a “gun-man” to guard the branch

Wednesday, May 26, 2010

PSU banks to re-introduce common entrance exam for officers and employees

The system of common entrance tests for officers and employees is likely to be re-introduced. State-owned banks are thinking on this move as it will help lenders in standardizing recruitment process and fill up vacancies faster.

"We are working together with the Indian Banks' Association (IBA) to have a common exam for the entry level officers and clerks," Institute of Banking Personnel Selection (IBPS) Director M Balachandran told PTI.

The institute is promoted by PSU banks and the Reserve Bank, provides assistance to the financial sector in activities of employee selection, promotion and placement.

Previously region-wise selection of entry level bank officers was done through Banking Services Recruitment Board (BSRB), but few years ago after computerization requirements of banks came down, thus it was discontinued.

Earlier in 1978, BSRBs were established which had a uniform standard and eligibility criterion for recruitment of personnel’s including clerks.

According to Indian Bank Chairman and Managing Director T M Bhasin, "IBA and IBPS are working on some half yearly exam system to create a talent pool for the sector."

This will enable in standardization of educational qualification and examination system and they will form a panel. He said, for the recruitment of officers there will be an all India panel and for workmen a state level panel.

Bhasin said IBA has circulated the scheme to the banks and asked for their suggestions and added, individual banks can recruit senior or specialized officers.

A senior bank official pointed out due to branch expansion by various lenders, business growth and aggressive marketing, large number of employment opportunities have come up.

Currently there are 27 public sector banks including six associate banks of State Bank of India (SBI).

But the State Bank of India and its associates conduct their own exam and have different service conditions and benefits from other public sector banks.

SBI is planning to hire about 27,000 people this year to fill vacancies across different divisions.

"This year we have plans to recruit 20,000-22,000 people in the clerical posts and 5,500 people at the probationary officer level," SBI Deputy Managing Director and Group Executive Anup Banerji had said a few months ago.

Banerji told SBI is planning to enhance its n rural operations for this it will be deploying 2,000 probationary officers in rural areas.

Tuesday, May 25, 2010

Kudumbashree collective farming units to get zero-percent interest loans

Banks will give zero-percent interest Joint Liability Group (JLG) loans to collective farming units under the Neighborhood Groups (NHGs) of the Kudumbashree. This new scheme will made available shortly to the units. The work on new scheme at Kudumbashree units has already started.

To get the unique benefit of the zero-percent interest loan scheme, the collective farming units have to qualify as Joint Liability Groups (JLGs) and NHGs, under the linkage loan scheme.

Under this scheme the collective farming units will be given loan at 9 percent interest. The banks which have joined the scheme include Canara Bank, Union Bank of India, State Bank of Travancore, Federal Bank, Dhanalakshmi Bank, South Malabar Gramin Bank, North Malabar Gramin Bank, Indian Overseas Bank and Central Bank of India.

Also the 5 percent state subsidy will bring down the interest rate to 4% and the special deduction for agricultural loans will further bring down to 2%. And the remaining interest rate will be waived by way of Kudumbashree’s mission subsidies and bank deductions.

Under this scheme there is a loan limit of Rs 1 lakh and in the present situation when it is not easy for the collective farming units to get loan from banks, this will prove beneficial for them.

However in the financial year 2008-09, the collective farming units under the NHGs had cultivated 27,270 hectares of land.

In current year’s budget finance Minister T M Thomas Isaac had announced that the State Government will provide 5 percent subsidy on the interest for the Kudumbashree loans taken from commercial and co-operative banks thus the present loan scheme is the outcome of the announcement.

Monday, May 24, 2010

Mobile banking still not accepted flourishingly in India

Although the number of mobile users in India has reached 600 million, the percentage of mobile banking users is very low. Over the past two years, only 5% users have registered for mobile banking and only .05 % of the total, are active users, according to global consultancy Deloitte. Even in the urban cities the customers still prefer to engage in informational and not transactional activities through their mobile.

The reason for low rate of mobile banking is lack of integration between telecom operators and banks, along with an unattractive and in-scalable revenue model for banks. According to Sanjeev Patel, head and executive vice-president, “The transactions in mobile banking are relatively miniscule as compared to other established channels such as internet and ATM. Thus standalone costs for the mobile banking transactions are fairly high.”

Sachin Sondhi, senior director, Deloitte says, “Acquisition of customers remains a major issue for banks so that they can scale up their model and make money out of mobile banking.”

It is believed, the modified business correspondent model and UID enabled bank accounts will be a game changer for mobile banking. Business correspondents are persons who, besides helping rural people to open bank accounts, would facilitate in banking transactions. Their main role is to accept deposits and remit money. The outsourcing guidelines are formed by the regulator which ensures that there is no conflict of interest when certain banking activities are outsourced.

Sondhi from Deloitte explained that banks are providing mobile banking services for free and have restricted to no frill services and accounts. “Its time they provided attractive loan services at some cost, at least in the tier I cities and get more customers into mobile banking. Only when customers engage in transfer funds and loan payments through mobiles, banks would be in a position to scale up their services and profit from mobile banking”. Therefore a different model is needed for tier I cities and rural cities.

Besides reducing high transaction cost, India also need to resolve another issue in mobile banking. The system requires collaboration from different constituencies - banking institutions, mobile operators and regulators. Patel from HDFC says that the permission given by the central bank to the banks and operators to leverage the available infrastructure is going to help in long run and it will ensure success of using mobile banking services for inclusive growth of financial services.

Regarding the bank-telco integration, Rajesh Dongre, COO, mobile commerce, Vodafone Essar says that telecom service points are quite large in number and are easily accessible when compared to bank branches. He added, “In mobile banking, partners should be allowed to play to their strengths. That is, the bank performs the banking activities and the telco takes on the other related activities. The best way to popularize mobile banking is for the banks and regulators to bank on the mobile operator.”

Although the business correspondent model is in a growing stage in India and still most of the banks are waiting for guidance from the regulator. But the question arises whether banks and operators can come together? And if this does not, happen then most of the banks will depend wholly on the business correspondent model, said Sondhi from Delloite.

Friday, May 21, 2010

Banks in final process of switching to base rate system

The banks are in the final process of switching to the base rate system. The banking industry average for the base rate is between 8-9%. Major banks like State Bank of India, HDFC Bank and Kotak Mahindra Bank are working out to offer more aggressive rate of below 8%.

From July banks will replacing the benchmark prime lending rate system with base rate system under which the banks will be calculating their actual lending rate with reference to this base rate.

However most of the banks are working out an average base rate between 8-9%, it is believed that SBI, HDFC Bank and Kotak Mahindra Bank are planning to work out more aggressive competitive pricing.

According to sources SBI is expected to keep its average base rate in a range between 7-8.5%. HDFC Bank is planning at about 6.5% and Kotak Mahindra Bank is looking in the region of 6.5-7%. This is the range these banks are planning and focusing on at present.

On the other hand if we compare these rates to their peers, it is much higher. Axis Bank is planning to price its base rate between 8-9% whereas Punjab National Bank is looking at base rate above 8%. Dena Bank and Bank of India are looking at pricing range above 8%.

But everyone is looking at SBI as how the PSU major will price its base rate as rest of the banks will set their respective base rates accordingly.

Thursday, May 20, 2010

Bank recovery agents informing HR dept about their defaulting employees

After restriction from RBI and the court on banks regarding recovery of loan and appointment of recovery agents, recovery agents of banks and financial institutions have adopted a new method of arm-twisting credit card holders and loan defaulters into paying up their dues. They are calling up the human resources department of their companies to complain about the defaulting employees.

While giving confirmation about this measure, recovery agents said, in many cases they have found that visiting to homes and offices of the employees is not creating much pressure on people to pay up. Abdul Wahab, a recovery agent attached to a nationalized bank told, "It has worked in many cases as the employees feels the HR department will take stern action against them."

CV Gidappa, general secretary of the Credit Card Holders' Association of India, also said the banks are now approaching the HR departments to create fear among defaulters.

Gidappa said, "It is a matter of dispute between the borrower and the lender and one can't understand why banks are approaching the employer. It creates bad blood." He informed as a result in many cases the employers had promptly sacked the defaulting staff as they feared the company's image was at stake.

"We know that banks are doing this on a large scale because I have received many complaints from professionals who have been sacked in this manner of late," he said.

Gidappa told in one of the case one woman was called by her manager in the mid of the project and was asked to resin as she had defaulted on installments on a personal loan she had taken from a bank. On the other hand when employee was contacted she said, "I was not allowed to give my version. It was not a secured loan and the company had no stake in it. But since it was I who handed the resignation letter, I am not in a position to take them on legally."

Giddappa said there is increase in instances where companies have sacked employees for defaulting. One IT company had sacked eight employees in this regard.

Total income of banks rose to Rs 11,457 crore as compared to Rs 9,927 crore in 2008-09 while its operating profit increased to Rs 2,421.5 crore, up 43.71 per cent.

Tuesday, May 18, 2010

How to check difference between fake and genuine note

Over the past few years the crime branch of India has seized fake notes of crores of rupees from various parts of the country including Calcutta and its suburbs. In this connection several people have also been arrested. The increase in the number of arrests and seized of fake notes show that large international gangs have network through which they are circulating fake notes in the city.

According to police records there are more than Rs 100 crores fake notes in circulation in and around the city and recently, fake notes of Rs 1.8 crore have been seized, which the police feel is the tip of the iceberg.

Over the past two years police has arrested around 44 people in this connection with the fake currency racket.

Fake notes of Rs 1 lakh are sold for Rs 60,000 in genuine notes. The terror operatives keep a part of the income while the rest swells the ISI coffers.

If someone accepts a fake note or gets one in circulation, he suffers a financial loss and also he has to give explanation to the police from where he got them.

If anyone gets fake notes he should deposit fake notes at a bank or a police station. If one gets a fake note from an ATM, then one should take it to the nearest branch of the bank and provide officials the time of the transaction, amount involved and the denominations of the notes handed out. Also one should keep the withdrawal receipt of the ATM as proof.

Let us see how to check features on the note like watermark

Find the empty portion on the left side of the note. Hold the note against light. One should be able to see a portrait of Mahatma Gandhi in this space, along with multi-directional lines and an electrolyte mark showing the denominational numeral (i.e. 100, 500...).

Visually disabled people can identify the denomination because of the watermark

What is micro-lettering?

Hold the note at eye level. Look at the gap between the vertical band on the right and the portrait of Mahatma Gandhi. In case of genuine notes, you should be able to see the word RBI and the denominational numeral in this space. Hold the note horizontally, with the right vertical band facing you. One should be able to see a latent image of the denomination.

If you hold the note against light, to the left of the portrait and half down the vertical band on the side, one should see a floral design, which appears hollow on the front side and filled up on the opposite side. The complete denominational numeral can be seen in this floral design, though half of the numeral is printed on one side and the other half on the opposite side.

Other identification marks

Below the floral design, one can see a dark patch in intaglio print (raised print). The shape of the intaglio print varies according to the denomination of the note. There are different shapes for different denominations (Rs 20 - vertical rectangle, Rs 50 - square, Rs 100 - triangle, Rs 500 - circle and Rs 1,000 - diamond).

On genuine notes you see security thread

It is 1.4mm wide. It is a broken band on the front of the note. However, from the back, it looks like a complete band. The words RBI and Bharat (in the Devanagari script) are inscribed on it. The security thread appears yellow in ultra-violet (UV) light. This thread will not glow if the note is fake.

What does UV light show?

Optical fibers on real notes make themselves visible when held under UV light. In case of a fake note, optical fibers are fewer in number. The year of printing of the original note should also be visible in the middle and the reverse side, near the bottom.

A genuine note is made of a fiber, which has a “unique feel” and makes “a crackling sound”. These features are common in notes that were released after 2005.

Also check color changes. Move Rs 500 or Rs 1,000 note. The color of the numeral will change from green (when you hold the note flat) to blue (when it is held at an angle).

Monday, May 17, 2010

BoM Pimpri branch suffered loss of Rs 31,600 due to fake notes

The Pimpri branch of Bank of Maharasthtra (BoM) has received fake currency notes of Rs 1,000, Rs 500 and Rs 50 denominations in the last ten months due to which it has suffered a loss of Rs 31,600. The senior manager of the bank, Bhalchandra Bhivaji Avhad has lodged a case under Section 489B of Indian Penal Code with the Pimpri police station. The police has started investigation.

Senior manager-in-charge of the bank, Avhad while describing the whole incidence said, “We have been given special powers by the Reserve Bank of India, Belapur branch in Mumbai, to accept remittance from all branches of the Bank of Maharshtra in Pimpri-Chinchwad and other rural areas. A total of 45 branches fall under our jurisdiction.

We counted all the cash that was deposited from December 16, 2009 till May 5. During this process, we also segregate the soiled, torn notes and also check for the counterfeits.

It was during this counting that we noticed the fake notes. We have found 12 notes of Rs 1000, 39 notes of Rs 500 and two notes of Rs 50, the total amounts to Rs 31,600.

All the notes had come from different branches and so it was difficult to point out from where the notes came. So we approached the police and lodged the complaint. We have also provided the police with the fake notes.”

Police sub inspector K D Kate of Pimpri police station said, “The complaint has been lodged on Tuesday. We have confiscated the notes which will be now sent for analysis.

We are also using our informer’s network to get some clue. We are probing the possibility of the involvement of gangs which had been arrested in similar cases earlier. The investigation is on.”

IPC Section 489B deals with “using as genuine, forged or counterfeit currency-notes or bank-notes.” It states that “whoever sells to, or buys or receives from, any other person, or otherwise traffics in or uses as genuine, any forged or counterfeit currency-note or bank-note, knowing or having reason to believe the same to be forged or counterfeit, shall be punished with [imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”

Friday, May 14, 2010

No transaction done for one year bank classifies such accounts ‘inactive’

If you have a bank account whether for share dividends or investment purpose, it is necessary to carry out transaction once a in a while on such unused bank accounts. If you don’t then you have to get it reactivated and might have to pay charges (if any). You should withdraw cash at a branch or an ATM, make a cheque payment, and transfer funds through either of the banking channels at least once a year. However most of the big banks like SBI, HDFC Bank or ICICI Bank does not charge any penalty, but Barclays Bank charges a penalty of Rs 250, excluding service tax. If the bank account is inactive/dormant account then you can’t use the account or any banking service linked to it.

If for more than a year you don’t carry out any transaction or with draw money from your account through ATM, branch or internet then bank terms such account as inactive. If the account is kept unused for almost two years, such bank accounts are termed as ‘dormant’. Once the account is classified as ‘inactive’ you cannot operate it through the ATM/phone or internet banking as bank systems do not identify inactive accounts. To get the account reactivate these accounts the customer has to go the bank branch for this.

However there is no standard norms among the banks regarding the time period after which bank classify the account dormant or inactive. HDFC Bank classifies an account as inactive if it’s not operated for a year. On the other hand ICICI Bank has set 15 months whereas foreign banks like Citibank, HSBC and Standard Chartered Bank classifies an account inoperative if no transaction is done for a period of two years. System-generated debits (default charges or debit interest) as withdrawal don’t qualify as a transaction.

As per the IBA model policy on bank deposits, banks have the right to transfer such unused accounts to a separate dormant/inoperative account status. But before freezing the accounts bank has to inform the customer and also bank have to inform about all the relevant charges applicable on such dormant/inoperative accounts. Also, the Banking Codes has clarified that bank has to give the relevant information at the time of opening the account. The bank also has to inform the customer three months in advance before it freezes the account.


The account can be reactivated by going to the branch for a withdrawal transaction using cheque book. Account can also be reactivated through internet banking you can instruct the bank to pass Re 1 debit and credit entries into your account. If your account have been ‘inactive’ for more than a year, you have to give an application for activation of the account signed by each of the account holders. The other documents required are photo identity like passport or driving license for each account holder. All account holders (including joint account holders) have to go to branch and take along the documents and the cheque book with them to get the account activated.