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 He told, “When I was going through a bank statement issued on April 23, 2009, it showed that amounts had been withdrawn from my accounts and deposited in accounts not known to me.”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He said, “When I got the receipts I was shocked to see that somebody had forged my signature and withdrawn money from the account.”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.