Banks not offering loans for gold purchase

In India it is a festival time and the celebrations are on full swing new clothes to buy, new appliances, even buying a new car. At this time banks also promote gold coin purchases at bank branches. But most of the banks have not included loan offer for purchasing of gold or gold jewellery in their portfolios.

However Indian Overseas Bank and Corporation Bank are offering loans to purchase gold and platinum jewellery, some banks like Canara Bank are offering discounted loan offer for purchases.

According to industry experts these products are not consumer friendly. "Banks currently offer loan for gold purchases to only government employees or those who have a salary account with them. The loan is available only for buying gold bars, not jewellery," says Keyur Shah, associate director of the World Gold Council.

Though the World Gold Council is having talks with several banks and national gold jewellers for making available gold purchases via equated monthly installments (EMIs).

"In times of volatility and global crises, gold jewellery purchases on EMI would be beneficial. We have been talking with banks and national players to offer gold on EMI," says Shah.

He raised a question, "Affordability is a factor in gold purchases. When loans are available to purchase consumer durables, home, etc, why not for gold?"

Bankers stated that high risk is involved in the yellow metal. An anonym’s bank official stated, "The prices are volatile and, in case the person defaults, it is not as easy to recover a gold asset as it is to recover a home or vehicle."

But Shah is not convinced about this. He added, "If security and risk can be taken care of in the white goods industry, it can be taken care of in the gold industry as well".

Jewellers pointed out that they haven't seen too many purchases by takers of gold loans as the loans are not consumer friendly.

"Banks have restrictions for offering gold loans. Unlike a personal loan or a consumer durables loan, a loan for buying gold jewellery is not sustainable. Unlike a television, which sees a significant drop in value once it is purchased, in the case of gold, the value may even increase after it's bought. Gold is a liquid asset and can be moved and so structuring a product may not be possible," says V Govindraj, VP, integrated retail services at Tanishq.

To get a gold loan, for amounts beyond Rs 50,000, a security such as LIC policy, Kisan Vikas Patra, National Savings Certificate has to be kept with the bank. Therefore if you are looking for taking a loan of Rs 1 lakh, up to Rs 50,000 it will come without security and a security has to be submitted for the balance Rs 50,000.

However jewellers themselves have found an easier way, which operates like the loan facility. Rajiv Popley, director of Popley Group, says, "We have been offering the EMI facility for gold purchases for the past five years through credit cards. We have a tie-up with Citibank and ICICI Bank, under which the EMI facility can be utilized. Most people take this facility."

"There is no down payment required and the interest charged is 0% for three months," explains Popley. "Buying gold is a spontaneous decision and the EMI on credit card facility can be utilized in seconds, while the bank loan is a tedious process. No one would undergo a tedious process when the shopping is spontaneous," he elaborates.

Nevertheless, the EMI on credit card facility that many people are using for gold purchases might not be as low-cost as it appears. Banks are usually charging an interest rate of around 1.5-3% per month, as well as the processing charge for the EMI on credit card facility. Therefore, for a six month EMI option, you will end up paying around 8-9% more than the purchase price. In this world everything has price.

Banking operations paralyzed due to two day strike

Public sector bank employees went on two day strike which paralyzed the banking operations across the country. Over one million employees stayed off from work.

A two-day nationwide strike was called by the United Forum of Bank Unions. The employees are protesting against bank mergers and are demanding a wage revision. Due to two-day strike customers faced difficulty as they were unable to carry out their normal banking transactions. Several bank branches remain closed in Mumbai and other cities.

Due to strike an automated teller machines (ATMs) of most lenders, including State Bank of India, Punjab National Bank, Canara Bank, Bank of India and Corporation Bank, ran out of cash at certain locations and customers were unable to withdraw cash. The other banking transactions like clearing operations, real time gross settlement (RTGS) and forex transactions were also hit by the strike.

According to Lalit Nagda, the general secretary of the Maharshtra State Federation of Bank Unions in Mumbai alone, transactions worth more than Rs 35,000 crore were hit because of the strike. The union also participated in the strike along with the eight associations that had called the strike.

“Everyday 300,000 to 350,000 instruments are traded in Mumbai,’’ he added.

United Forum of Bank Unions Convenor C H Venkatachalam said if the Indian Banks’ Association (IBA), the apex body of banks, did not attended to their demands in due time the agitation would be intensified further. He informed that banks can go for more than a two-day strike next time.

A bank union controlled by the Bal Thackeray-run Shiv Sena did not participated in the strike as it was not invited to participate in the initial round of discussions for the protest.

However the treasury operations of banks were not affected by the strike as officers were not a part of the stir.

A senior executive at Union Bank of India said but, volume of transactions in the money market was down due to an overall liquidity crunch.

There was around 23 per cent of attendance of total 39,000 employees of Central Bank of India. The All India Bank Officers Confederation told that no transactions took place on the second day.

A few branches, like the Nariman Point branch, of Union Bank of India employees had not participated in the strike so the banking operations were carried out partially.

South Indian Bank Launched Convenience Banking Product for salaried employees

South Indian Bank (SIB) launched a latest product for convenience banking, “Group Salary Savings Account” (GSSA). The product is a premium savings account designed to meet the needs of salaried employees and their employers.

Bank sources informed that the corporates, firms and such others who have opened accounts with any of the 511 CBS branches, the salaries of their employees will be distributed by the bank, hassle-free and free of any bank charges. The employer will be benefited in as the distribution of salary of would be easy to any employees/any single employees who are/is working even in far-off places where SIB has no presence,

The product was jointly launched by Dr V.A. Joseph Chairman & CEO of the Bank and Mr. M. P. Gopala Krishnan, President, CMS Trust. In his inaugural speech Dr. Joseph said, ''This convenience banking product, which is designed for the convenience of both employers and employees, leverages the bank's strong technology platform, which connects all the 511 branches and 26 extension counters of the Bank under Core Banking Solutions network offering anytime banking to its customers. GSSA can be opened with zero balance”.

The Chairman and CEO of the Bank also stated, “South Indian Bank, being a customer – oriented Bank is striving hard to render personalized customer service using the latest technological capabilities. The technological capability of the Bank was recognized when the Bank could bag the banking technology excellence award from IDRBT which is the technical arm of RBI. The service quality of the Bank has also been recognized when the Bank was selected in the ‘Outlook Money – C Fore’ survey as the best private sector Bank in India in the service quality segment.”

Dr. Joseph also informed about the facility recently started for online booking of offerings, free of bank charges, through South Indian Bank payment gateway. It is the first bank to start online booking by the customers of the bank who are devotees of Guruvayur Sreekrishna Temple which is described as the Dwaraka of South India. NRIs are also using this facility to affect offerings, hassle –free with greater transparency and security at the click of a button, either for themselves or their aged parents resident in India.

The Chairman while concluding his inaugural speech said, “South Indian Bank had completed on 26.03.07 the project ‘SIBertech’ by introducing a centralized Core Banking Solution in technology partnership with Infosys Technologies when many banks had not even started implementation of CBS. SIB had started this project in 2001 to render personalized customer service. The new product now launched would confirm this belief”.

Bank has launched convenience banking product after doing deep research so that banking for employers and their employees, could be made extremely easy and comfortable. The features include: -

Free International ATM-cum-Debit Card for which annual maintenance charges are not collected

Free of charges online booking of offerings for Lord Sri Guruvayurappan, free of bank charges

No charges on withdrawal of cash from the ATMs of other Banks (As charges would be borne by SIB)

Free utility payment and e-commerce services

No stipulation on minimum balance

The depositor enjoying many freebies can earn the usual SB interest

The depositor can operate his SB account –during his travel/temporary transfer /transfer- hassle-free

The account can be closed /transferred to another branch with out any charge

Free of cost cheque leaves (subject to limits in each category)

Free fund transfer facility through RTGS/NEFT/Fast Money /DD

Customers of this feature-rich Savings Bank account will also get the facility to open Depository account and also enjoy mobile banking facility.

Mr.George Davis Thottan,General Manager and Mr.P.J.Jacob,Deputy General Manager & Regional Head also gave speech on the occasion .

AP govt to provide bank loans to empower women

Andhra government is providing bank loans of Rs one lakh crore at a low interest rate of three per cent in the next five years to improve economic status of women.

Chief Minister Y S Rajasekhara Reddy while communicating with people’s representatives at his camp office said that government is firm with its decision to change the economic status of at least one crore women through this effort.

UPA Chairperson Sonia Gandhi is visiting the state where she will address a conference on Women Empowerment at Triputi, Reddy reviewed the arrangements.

He said 'Pavala Vaddi' scheme, was launched to make women self-reliant, and this scheme has made women financially disciplined.

HSBC bank to pay compensation for ‘defaming’ defaulter

Some of the banks have made practice of making a defaulting customer's name online. The state consumer commission terming this practice as highly offensive and uncivilized, has directed banks not to use this method.

Commission president Justice JD Kapoor has directed the RBI governor to issue instructions to all banks to stop this unfair trade practice. He said that the banks should not post the customer's name on website and to other banks.

The commission president passed this judgment during the hearing of a case, filed against the Hong Kong & Shanghai Banking Corporation (HSBC) Ltd. The commission president has directed the HSBC bank to pay a compensation of Rs 12,000 to one Atul Kumar for blacklisting him and posted his name on Satyam website even when he had paid the amount outstanding against his credit card. "Every bank is supposed to assess the credibility of a person independently as and when he applies for a credit card or loan and not on the basis of record of any other bank," said Justice Kapoor.

He added: "Undue demands are raised by banks against credit card holders or disputes crop up over the outstanding amount. In that case, it is unfair to taint the image of the person by circulating his name online or among other banks. The bank has no business telling the world at large that a person has defaulted or gone bankrupt."

Complainant Atul Kumar had filed a petition before the commission after his card was deactivated and his name was blacklisted on Satyam's website by the bank. After returning from abroad after trip in 2005, he found that the bank had deactivated his card. The bank gave the reason for its action that Rs 46,000 was outstanding against his credit card. By May 2005 he made a payment of Rs 40,000, in spite of which the bank did not activate his card and in its place blacklisted him.

CSB offers festive offer launched gift card

The Catholic Syrian Bank (CSB) to mark the starting of festival season has launched a unique user friendly Gift card ‘CSB Uaphaar’. The card was launched at a function by Malayalam filmstar, Innocent.

Speaking at the occasion, the Bank’s Chairman and CEO, Mr R Venkataraman, said the card, will have a 3 year validity period, and will be available in denominations starting from Rs 500 (in multiples of Rs 100 thereafter) to Rs 20,000.

The card can be used at all VISA accepting merchant outlets; will also allow multiple usages till the entire amount is completed. He said bank is 87-years old and has been carrying out operations through 363 branches out of which 60 have been networked. Another 100 branches will soon be covered under this.

Last year bank earned Rs 36 crore profit and intend to distribute 30 per cent dividend. He added this year bank’s business is expected to cross Rs 11,500 crore this year.

Till now CSB has launched mobile ATMs in seven cities. The Chief General Manager of CSB, Mr V P Iswardas, also spoke on the occasion.

On the occasion of launch of card Mr Dominic Savio K L, Principal of St Alberts Higher Secondary School, Ernakulam, was presented the first card by Mr Venkataraman.

Union Bank to extend its branches overseas

In next year more foreign banks will be setting up their branch network in India. The nationalized banks are updating themselves technically in order to be able to compete with the foreign banks. Moving on the same line the Union Bank of India has declared its major plan to transform itself into a global bank and to place itself in the top league by 2012.

Following this the banks main aim is to achieve the business of Rs two lakh crore in the financial year 2008-09. The bank has also taken the permission from RBI to open 500 branches across India.

Mr M. Nair, chairman and managing director of Union Bank, said that, "We are initializing the process of transformation, as a first step we have changed the logo. The new logo represents the commitment of good service and the passion to work. It symbolizes our desire to strive for achieving the growth. We will be spending Rs 85 crore on brand value in this financial year."

He added, "We are also planning to boost the business in the sectors of insurance and mutual fund products. In the next six months the bank is expected to launch the insurance and mutual fund products".

In relation to this the Union Bank has upgraded on technological level and has provided the core banking solution service at all 2,400 branches. The bank has plans to open branches overseas in Australia, Indonesia, UK and Canada.

Already, bank has set up a branch in Hong Kong and representative offices at Shanghai and Abudhabi.