NEFTs get faster because banks will process them every 30 minutes now

RBI has reduced the settlement time for

clearance of NEFT from 1 hour to 30 minutes

Mumbai, April 10: On 6 April, the Reserve Bank of India in its monetary policy announcement said that it has decided to reduce the settlement time for clearance of National Electronic Funds Transfer (NEFT), from 1 hour to 30 minutes. Here is what it means for you:

NEFT is one of the electronic payment systems in the country. It allows you to send money from one bank to another. You can send the money only during a certain hours. The fund transfer happens in batches. So far, NEFT payment settlement happened in hourly batches. Now this has been changed to every half an hour. Hence, in a weekday (Monday to Friday) the batch between 8 am to 7 pm will have 23 batches. So far there were only 12 batches.

On Saturdays, NEFT settlements happen between 8 am and 1 pm. Now, instead of six batches, it will be settled in 11. There is no NEFT on Sundays.

The cost of sending money using NEFT depends on the bank that you are transacting with. However, the RBI has issued guidelines on the costs too. For receiving money over NEFT, you don’t have to pay any charges. For sending, you will be charged a fee.

For an amount up to Rs10,000, the banks can’t charge you more than Rs2.50, excluding service tax. If you send between Rs10,001 and Rs1 lakh, you will be charged Rs 5 plus service tax, and for transactions between Rs1 lakh and Rs2 lakh, charges would be Rs15 plus service tax. For transactions above Rs2 lakh, the charge would be Rs25 plus service tax.

Banks are also supposed to pay 25 paise per transaction to the clearing house as well as destination bank, as service charge. However, it cannot be passed on to the customers.

To send money using NEFT, you need to have an account with a bank that allows you to do fund transfer using NEFT. You need to have your beneficiary’s bank account details such as account number, name of the receiver, and IFSC code. Once you add the beneficiary, you will have to wait for half an hour for the beneficiary to get registered. Once registered, you can start sending the money.

According to RBI, In case of non-credit or delay in credit to the beneficiary account, you can contact the NEFT customer facilitation centre of your bank; details of which is available on bank websites.

Shut down SBI branches till the supply of cash gets normalised: Union

Chennai, January 14 (IANS): State Bank of India (SBI) can shut down its branches till the supply of cash gets normalised and staff are not put to risk to face the ire of banking public, a top union leader said.

“We have suggested to the SBI management to down the branch shutters till the supply of cash gets normalised. It is better to close down the branches for some time than the staff face the ire of the public for no fault of theirs,” D. Thomas Franco Rajendra Dev, Senior Vice President of the All India Bank Officers Confederation (AIBOC), told IANS.

Dev wondered how his comrades in Maharashtra, Madhya Pradesh and Chhattisgarh are saying that cash supplies there are better but such views are not heard from his comrades in other states.

“It is strange that Reserve Bank of India (RBI) is not divulging as to the amount of cash supplied state­wise and bank­wise. What is the big secrecy to be safeguarded after the cash has been distributed to states and banks?”

According to Dev, in many SBI branches cash is being rationed amongst the account holders. The RBI has been issuing empty statements about currency supplies being comfortable and currency being sent to rural areas whereas in reality it is not so, Dev charged.

He said people in Tamil Nadu will not be able to celebrate Pongal festival properly due to cash crunch.

- IANS

RBI asks banks to upload KYC with central registry from January 1

Mumbai, December 8 (PTI): Reserve Bank today directed all banks to upload the Know Your Customer (KYC) data pertaining to new individual accounts opened after January 1, with Central KYC Records Registry. Besides, it has been decided to allow One Time Pin (OTP) based e-KYC subject to certain restrictions.

"All Scheduled Commercial Banks (SCBs) are required to invariably upload the KYC data pertaining to all new individual accounts opened on or after January 1, 2017, with Central KYC Records Registry," RBI said in a notification. All banks are, however, allowed time upto February 1 for uploading date in respect of accounts opened during January 2017, it said.

Regulated entities other than banks are to upload the KYC data pertaining to all new individual accounts opened on or after from April 1, with Central KYC Registry.

For OTP, it said, restriction would include specific consent from the customer for authentication and the aggregate balance of all the deposit accounts of the customer should not exceed Rs 1 lakh.

Besides, the aggregate of all credits in a financial year, in all the deposit taken together, should not exceed Rs two lakh.

"Banks should invariably upload the KYC data pertaining to all new individual accounts opened on or after January 1, 2017 with CERSAI in terms of the provisions of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005," it said.

Under Foreign Account Tax Compliance Act (FATCA) and Common Standard on Reporting (CRS), regulated entities should adhere to the provisions of Income Tax Rules and determine whether they are a reporting financial institution as defined in Income Tax Rule.

SBI initiates three-pronged strategy to boost its home loan business

Mumbai, December 29: The State Bank of India has initiated a three-pronged strategy to push its home loan business. The country's largest lender will sell its home loan products through the entire group network instead of limiting it to the bank, develop a mechanism to identify right customers for home loans, and implement a uniform delivery system across its branches, a top official said.

"We are looking to grow home loans at 15%-17% in FY16 and how to leverage our group resources," said B Sriram, managing director and group executive (national banking) at SBI.

The state-run bank, which owns more than one fourth of the housing loan market in the country, grew its home loan business 14% year-on-year for the quarter ended September at around Rs 1.49 lakh crore.

With the Reserve Bank of India issuing guidelines for licensing small banks and entry of players such as Bandhan and IDFC, the home loan market is expected to get more competitive in the coming years.

Sriram said SBI plans to connect about 40,000-50,000 counsellors working for its non-bank group subsidiaries such as SBI Mutual Fund and SBI Life Insurance to source home loans, to boost its customer reach. For example, an outsourced counsellor working for SBI Mutual Fund would also approach his clientele for SBI home loans, for which she would earn commissions.

"Alternative channels could be the main channel next 10 years in the banking industry as they attract young customers," Sriram told ET in an interaction. SBI is also working on a mechanism to identify the right customer to offer home loans or any other cross-selling product like mutual fund or insurance. For example, if a customer enters a SBI branch and does a transaction, immediately a screen will prop up on the branch official's computer showing the customer's profile and product suitability.

After 20 years, Rs.1 paper notes to make a comeback

New Delhi, December 25: One rupee may not buy you much today, yet the Government is keen to start printing ₹1 notes after a gap of almost two decades.

The Government has notified ‘Printing of One Rupee Currency Notes Rules, 2015’, which will come into effect from January 1, 2015. Due to higher cost and for freeing capacity to print higher denomination notes, printing ₹1 note was discontinued in November 1994, followed by ₹2 in February 1995, and ₹5 in November 1995. Since then, only coins have been issued for these denominations. However, old notes are still in circulation and remain legal tender.

As before, the new one rupee note will have the signature of the Finance Secretary. Apart from the one rupee note, all other paper currency (₹2, ₹5, ₹10, ₹20, ₹50, ₹100, ₹500 and ₹1,000) have the signature of the RBI Governor, as these are issued by the Reserve Bank of India, whereas ₹1 is issued by the Government of India.

The new ₹1 note will be different in terms of colour, too. It will be predominantly pink and green. Earlier, the ₹1 currency note had a predominantly indigo colour. Also, the new note will have ‘Bharat Sarkar’ on its masthead, with ‘Government of India’ printed below that. All other currencies have ‘Bhartiya Reserve Bank’ and ‘Reserve Bank of India’ printed on them. While the notification does not give any reason for resuming the printing of ₹1 notes, it is believed that reports of coin shortage and the rising incidence of melting coins might have prompted the move. The notification does not mention how many notes will be printed and issued.

In the last year of its printing, 44 million pieces of ₹1 notes were issued. Despite the RBI’s appeal to change these notes for coins, these are still in circulation. However, there is no current estimate of such notes in circulation.

According to the last official number in RBI’s Annual Report for the year ended June 2002, a total of 3,076 million pieces of ₹1 notes (value ₹308 crore) were in circulation at the end of March 2002.

RBI staff to join banking sector strike on January 7

Thiruvananthapuram, December 22: Reserve Bank employees have decided to observe a strike on January 7, 2015, in solidarity with the cause of the United Forum of Bank Unions in the commercial banking sector.

The All-India Reserve Bank Employees Association and the All-India Reserve Bank Workers’ Federation have urged the RBI Governor to intervene to bring peace in the banking sector, stating that the RBI cannot remain a mute spectator.

The Association and Federation advised units to observe peaceful and organised action in all RBI offices and liaise with units of the United Forum in the run-up to the strike.

“We have got an important stake in bank employees’ success and achievements. Their settlement has provided us the basis of our wage negotiations, which are pending,” said Samir Ghosh and SV Mahadik, RBI employee union leaders.

“Indian Banks’ Association has created a desperate situation for bank employees whose patience has run out. The Government is silent, unconcerned about the turmoil in this sensitive sector and the plight of millions of customers.”

Bankers have made huge profits in 2012, 2013 and 2014 from the toil and sweat of employees. But they refuse to give them a modest wage increase forcing them to strike work off and on, the leaders noted.

RBI should roll back steps after rupee stabilises: SBI

New Delhi, July 16: Bankers today said that the liquidity tightening measures announced by RBI are temporary and hoped that they will be rolled back once the rupee stabilises. “These measures are temporary, to calm down volatility. We are not taking that these measures will be long-term. I think once the rupee stabilises, these steps should be largely rolled back,” SBI Chairman Pratip Chaudhuri said.

The Reserve Bank of India had last night announced a slew of measures like raising the cost of borrowing by banks by 2 per cent to 10.25 per cent and announcing sale of bonds worth Rs 12,000 crore through open market operations to suck liquidity to check the rupee slide. The rupee had earlier this month touched a life-time low of 61.21 to a dollar. On the impact of RBI measures on interest rates, Chaudhuri said: “Impact on loan growth depends on how long these measures stay. Deposit rates do not have such a close correlation with the money market.’’ RBI’s measures strengthened the rupee to 59.20 against the dollar in noon trade against the previous close of 59.89.

“RBI action is towards the forex side of market and to contain volatility in rupee,” Bank of Baroda Chairman S.S. Mundra said, adding that it would be too early for RBI to change the policy stance. RBI is scheduled to announce its first quarter monetary policy review on July 30. UCO Bank Chairman Arun Kaul said RBI’s step is a temporary measure and the bank has to wait for some more time to decide on the impact of this move. “The objective of RBI action is to compress liquidity. The implications are same as repo rate hike. RBI has opted for that time which is slack in terms of credit demand,” Kaul said.

PSU banks decide not to hike rates

Jaipur/ New Delhi/ Mumbai, July 16: You need not worry about an increase in your equated monthly instalments after RBI’s late night action on Monday. The finance ministry has leaned on public sector banks that control around 70% of the business against raising rates to keep a large constituency of middle class and corporate borrowers pacified ahead of key elections. After all, for over a year now, the finance ministry has been prodding RBI to cut rates, while the central bank has refused to toe the government line. Instead, on Monday it signalled a reversal in policy to offset the impact of the weakening rupee by announcing several measures that will push up the cost of funds for banks.

While there were expectations of banks responding with hikes in the coming days, the finance ministry swung into action and impressed upon banks to maintain status quo.

By evening the impact was visible as banks started issuing statements, saying rates will not go up. “The measures taken by RBI are designed to curb speculation in the market and are not seen by SBI as indicative of any systemic problem or deeper malaise. It is, therefore, expected that the position in the market will stabilize shortly. Hence neither the management nor the board of SBI that met on Tuesday in Mumbai felt that this requires any adjustment of lending,” State Bank of India said in a statement. Taking a cue from the largest lender, others including Punjab National Bank, Bank of Baroda and IDBI Bank followed suit.

Earlier on Tuesday, finance minister P Chidambaram seemed to lay down the ground rule. While kicking off a pre-election campaign on government schemes, Chidambaram said he did not expect banks to raise interest rates. “These measures are intended to quell excessive speculation in the forex market, reduce volatility and stabilize rupee. They should not be read as a prelude to any policy rate changes,” he said. Admitting that the high current account deficit has made the rupee weaker, the finance minister said, “Given the current account deficit and the inflation, some depreciation of the rupee is expected. But sometimes there is excessive speculation in the foreign exchange market and the role of RBI is to ensure that volatility is cut.

The tight liquidity situation due to the recent measures raised concerns of growth being impacted. But the finance minister allayed such fears. “These measures will in no way affect our commitment to growth. We must increase credit delivery and stimulate growth.” He reeled off a number of reforms and initiatives taken by the government in the last four months to revive growth and reverse the policy paralysis that has stalled projects approvals.

SBI tops ATM expansion in non-metros: Assocham

Mumbai, September 19: Country's largest lender State Bank of India (SBI) is more aggressive in expanding its ATM (automated teller machine) network in the non-metro and semi-urban centres as compared to its peers, according to a study by Assocham. "Unlike other banks, the State Bank of India (SBI) is expanding its ATM network in non-metro and semi-urban centres, faster than expansion in the metros," the study based on the recent Reserve Bank data said. As compared to the 5,783 ATMs in metro cities, SBI has 7,511 and 6,419 ATMs in non-metro urban areas and semi-urban areas, respectively, the Assocham statement said.
SBI's peer in the state-run banks space, Punjab National Bank is the only other bank which has more ATMs in non-metro cities than the metros, it said. The objective of financial inclusion can be better achieved by the usage of technological interventions, including ATMs, and public sector banks have an important role to play in the objective, Assocham Secretary General D S Rawat was quoted as saying.
Overall, the private sector banks, led by Axis Bank have gone about expanding their network through ATMs in a much more aggressive way than their public sector peers.  Be it, ICICI Bank, Axis Bank or HDFC their bias and preference for ATMs is for the metro cities, followed by tier two cities.Among the private sector banks, Axis Bank has the largest (10337) ATM network, followed by HDFC Bank with 9709 such machines and ICICI Bank - 9366 ATMs.
Excepting the SBI, the other banks have to go a long way before achieving the financial inclusion in the semi-urban and rural areas.
“The Finance Ministry is rightly very keen of achieving the financial inclusion of a large number of people in rural areas.  This can best be achieved by leveraging of technology and use mobile telephony and ATMs. Somehow, the public sector banks will have to take a lead in these areas. Even their brick and mortar branch network is wider in the rural and semi-urban areas than the private sector banks,” ASSOCHAM Secretary General D S Rawat said.
He said while a good beginning has been made, pooling of technology resources like the ATMs should be encouraged so that optimum use can be made to the advantage of the people. The ASSOCHAM quoted honourable Finance Minister Mr P Chidamabaram who recently noted how even the trade has not been fully brought into the banking network.
“As was pointed out by the Finance Minister, today traders are not able to deposit their cash of sales proceeds at night in any bank. In the process, they have to keep it either in the shop premises or at home taking the risks of theft and other insecurity issues. We must have technology-driven day and night banking so that a wider section of the informal economy is brought into the banking network,” Mr Rawat said. While the RBI has been expressing concerns over regulatory issues over the mobile banking, sooner or later different technology platforms have to converge and the regulators need to equip themselves to deal with new challenges and opportunities.
The ASSOCHAM said a large number of Indians still remain outside the banking network.  It is because of lack of the organized banking that the gullible people in semi urban and rural areas fall prey to unscrupulous money-lenders. “The institutions of micro-finance did make a good beginning. However, because of certain corporate governance issues, the entire experiment has become rather overshadowed by controversies. The use of technology to reach out to the bottom of the pyramid promises a lot of scope,” the ASSOCHAM Secretary General said.

ICICI, HDFC Bank follow SBI; revise FD rates by up to 0.5 pc

Mumbai, September 12: Private sector banks like ICICI Bank and HDFC Bank on Wednesday reduced interest rates on fixed deposits by atleast 50 basis point. The reduction in deposit rates comes at a time when the economy is slowing down and credit pick up is slack. One basis point is equal to one hundredth of a percentage. Last week, State Bank of India had reduced interest rate on deposits by as much as 100 basis points across maturities to maintain profitability after lowering lending rates.

 

ICICI Bank has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75 per cent interest on retail term deposits compared to 9.25 per cent earlier. In the shorter tenure ranging between seven days to 45 days, however, the bank has increased rate by 50-75 basis points. A reduction in statutory reserve ratio, the amount of funds to be held in government bonds, by a percentage point is also help the banks lend Rs 15,000 crore more to corporate or retail customers. Deposits grew 14.1% year on year against RBI's projection of 16%.

 

Pratip Chaudari, chairman State Bank of India had said, “As of now, we are surplus in deposit for SBI. The challenge is more on pushing credit.” Also, the cut in SLR is providing some comfort. This is helping banks in meeting the credit demand, which is climbing marginally. Recent RBI data shows that credit has grown 16.7% year on year.

 

‘We could see the private players now reduce lending rates to get competitive as many public sector banks like State Bank of India and Andhra Bank have cut rates on select retail products,’ said a banking analyst with a domestic brokerage. ICICI Bank is also doing this to maintain a healthy margin of over 3%, he added.

LIC's 11% SBI stake makes RBI see red

The banking regulator is unhappy with the Life Insurance Corporation (LIC) of India holding more than 10 per cent stake in State Bank of India, the country’s largest lender. LIC stake in SBI was 11.05 per cent, as on June 30.
The Reserve Bank of India (RBI) has conveyed its discomfort to the bank’s management, according to a top SBI official. “These are two big institutions. RBI is not comfortable with two large institutions having a cosy relationship,” the official said.
A top RBI official also confirmed the development. “Any institution that wants to have more than five per cent stake in a bank needs to have our prior approval, even if the stake is acquired from the secondary market,” the RBI official said. “We don’t want the banking sector to have too much capital from volatile sources,” he added.
The move comes at a time when LIC has increased stake in public sector banks by purchasing shares both from the secondary market and through direct equity infusion via preferential allotment. The cash-strapped government had asked LIC to infuse equity into public sector banks so that these lenders could have eight per cent tier-I capital. LIC had infused close to Rs 8,000 crore in several public sector banks such as Punjab National Bank, Bank of Baroda, Union Bank of India, Dena Bank, and Central Bank of India, among others, in the last financial year. LIC’s stake in SBI, however, has been acquired from the secondary market.
Interestingly, the insurance regulator is also unhappy with LIC for its more than 10 per cent stake in several public sector banks, as such a move breaches the single company cap norm. Concerned over the concentration risk, the Insurance Regulatory and Development Authority (Irda) has sought details of LIC’s investment in banks. Nearly 26 per cent of LIC’s equity investment is in banks, while nearly 39 per cent of its equity exposure is in stocks of public sector units.
According to the Insurance Act, equity exposure in a single entity is capped at 10 per cent. Thus, LIC can invest up to 10 per cent of the capital employed by the investee company, or 10 per cent of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.
As on March 31, 2011, LIC’s investment corpus stood at nearly Rs 11 lakh crore, of which 20 per cent, or Rs 2.2 lakh crore, was equity. Of that, investments in state-run stocks stood at Rs 85,031 crore, while exposure in banks stood at nearly Rs 59,586 crore.

One-third of new ATMs should be visually-challenged friendly

Chandigarh, September 7: The Reserve Bank of India has asked all banks to make efforts to provide banking services available to all. In a circular issued to all state-run commercial banks, the central bank has advised them to ensure all banking facilities such as chequebooks, ATMs, internet banking, lockers, retail loans, credit cards, etc, are invariably offered to visually challenged persons, without any discrimination as they are legally competent to contract.
The RBI has also directed the banks to take necessary steps to provide all existing or proposed ATMs with ramps and to provide at least a third of new ones installed, with as talking features and Braille keypads.
The move follows a complaint filed by the office of the chief commissioner for persons with disabilities, alleging visually challenged persons face problems in using banking facilities. "Banks are therefore advised to strictly extend all banking facilities to persons with visual impairment and other disabilities, reads the circular.
Most banks allow the visually impaired to open joint bank accounts only. Since ATMs are not voice enabled they cannot be accessed.

RBI asks banks to post bulk deposit rates on website

Mumbai, August 30: The Reserve Bank of India (RBI) has asked banks to put up bulk deposit rate on their websites, to stop banks from offering exorbitant rates to corporate depositors. According to RBI norms, no bank can offer varying rates on the same day at different locations.
According to bankers, some of the banks are offering as much as 200 basis points higher than the card rate to their corporate clients. Bulk deposits are corporate deposits that are generally Rs 1 crore and above with maturity of up to one year.
The central bank’s directive comes following the finance ministry’s effort to discourage banks’ rush for bulk and certificates of deposit, which are of high cost and adversely impact margins. The ministry had asked banks to cut down their proportion of high cost deposits (bulk deposit and certificates of deposit) to 15 per cent, with a cap of 10 per cent on bulk deposits.
About 25-30 per cent of the deposits of public sector banks are bulk in nature. The central bank and the finance ministry’s concern over exorbitant bulk deposit rate comes on the back of banks scrambling for funds during the end of the previous financial year. In March, bulk deposit rate crossed 12 per cent, higher by 100 basis points in a month. As a result, deposit growth in March swelled by Rs 3 lakh crore — one third of the deposits garnered in 2011-12.
The finance ministry and RBI had also asked the public sector banks not to bid for bulk deposits. Earlier this week, Mumbai-based public sector lender Bank of India reduced the rate on interests on bulk deposits in some tenors by 25-50 basis points.

SBI to cut processing and conversion fees on home loans

With the advent of festival season India’s largest lender – SBI has embarked upon a special campaign to ramp up its home loan book. It is going to reduce the processing fee for home loans to Rs.1,000 per loan irrespective of the size. The offer would be made available from September 1 onwards, a senior bank official told.
With the advent of festival season India's largest lender - the State Bank of India (SBI) has embarked upon a special campaign to ramp up its home loan book. It is going to reduce the processing fee for home loans to Rs.1000 per loan irrespective of the size. The offer would be made available from September 01 onwards, a senior bank official told.
Currently, loan processing is at 0.25% of the loan amount subject to a cap of Rs 6,500 for loans upto Rs.75 lakhs. For any higher loan amount, the maximum fee ceiling is Rs.10,000.  For example, if you apply for a loan of Rs. 20 lakhs, you need to pay a processing charge of Rs.1000/- With the new offer, it will be uniform at Rs.1,000 for a home loan. However, the offer would end on 30th November, 2012.
At the same time, the banking behemoth is actively mulling reduction in conversion fee which is presently at 1%. For all banks, conversion fees are in the range of 0.50-2%. This move, if implemented, will help the existing (SBI) home loan customers, who are not entitled to get the benefit of reduced interest rates to avail of the lowered interest rates. Let’s assume the loan size is Rs.30 lakhs and a customer has already repaid Rs.10 lakhs. Therefore, he has to pay Rs.20,000/-(i.e. 1% of 30-10 lakhs) one-time upfront for the conversion.
Earlier, SBI cut the interest rates on home and auto loans by over 50 basis points, effective from August 07. However, it did not change the base rate (remains at 10% p.a), the benchmark rate below which the Reserve Bank of India does not allow any bank to lend. Now, a home loan borrower can avail of a home loan with interest at 10.25% as against 10.75% prior to the rate cut, for a ticket size of Rs 30 lakhs. The interest rate will be 10.40% for loans above Rs. 30 lakhs. The EMI on Home Loan tenor of 30 years is Rs.897 per lakh which is the lowest in the market.
However, the new rates are available only to the new customers. So, a customer who had taken a loan at a higher floating rate viz. 11.25% will be keen to avail the benefit of the current lower rate. So, he can convert his loan to the new rate by paying the conversion fee. "Those proposed moves by RBI will certainly benefit customers, who should tap opportunities right in time. However, the bank cannot just keep on doing this beyond a point as it may hurt their margins," said Anil Rego, CEO and founder, Rights Horizons, a Bangalore based advisory firm.
With 26% market share, SBI continues to be the leader in home loan market followed by the privately held housing finance company- HDFC.  "We have got some surplus funds after RBI cut statutory liquidity ratio by 1% to 23%. We have decided to utilize it in expanding our retail business. The Bank is aiming at 20-25% growth in its home loan portfolio. As the country's largest bank, we have a vital role to play in supporting the economy", said the official.
As of July, SBI's home loan portfolio stood at around Rs 1.06 lakh plus crores. Total retail loans stood at Rs 1.86 lakh crores in the April-June quarter. To facilitate home loan borrowers, it is planning to upload the list of housing projects, approved by the bank shortly.  The bank has tied up with 1,046 such projects across India till July in 2012-13. In order to enlist its projects, a builder has to meet certain norms prescribed by SBI. For listed projects, the bank sanctions home loans in 4-5 days while it takes around 14 days to approve a home loan for other housing constructions. The lender offers a loan to value (LTV) of 90% for home loans upto Rs 20 lakhs and upto 80% for loans above Rs 20 lakhs.

Seek more time to repay corporate loans: SBI

Kolkata, August 29: “The other day, we received a (loan) proposal for setting up a hotel, with a repayment period of eight to nine years. I told my officers ask this gentleman to take the loan for 12-13 years...Our advice is in the future, whenever you are applying for a loan, try to negotiate for a longer repayment tenure,” said Chairman Pratip Chaudhuri.

Such advice is aimed at capping a further rise in the bank’s restructured loan portfolio. In 2011-12, SBI’s restructured loan portfolio nearly doubled to Rs 8,093 crore from Rs 4,979 crore a year earlier. In the quarter ended June, the bank restructured loans worth Rs 564 crore. At the end of June, SBI’s total restructured loan portfolio stood at Rs 36,904 crore. Of these, loans worth Rs 7,373 crore were classified as non-performing assets. The Reserve Bank of India (RBI) has proposed tough norms for loan restructuring, and if the new rules are implemented, the provision burden on the bank would rise, eroding its profitability further.

Chaudhuri added SBI would not penalise its borrowers if they wanted to pre-pay loans ahead of the repayment schedule. “In the current scenario, with the rules RBI has proposed, it is difficult to increase the tenure after the loan is sanctioned. It would increase the burden on the bank. So, we are telling our customers to negotiate for more time. If one is able to repay ahead of the schedule, it is fine — there would be no penalty for pre-payment,” he said.

However, most banks were reluctant to agree. “The repayment period is based on the projected cash flow. The schedule is fixed after making a conservative assessment of the earnings, and taking into consideration the risk factor. We have no immediate plans to deviate from this practice,” said the chairman and managing director of a Mumbai-based public sector bank, requesting anonymity.

SBI officers protest against 7-day schedule

Lucknow, August 28: Officers of the State Bank of India held a demonstration in front of the bank's local head office on Tuesday to oppose the reported move of the bank's management for introducing seven-day banking in SBI.
Addressing the meeting, BK Awasthi, general secretary of State Bank of India Officers' Association said that in the present times when services of alternate channels like ATM, internet banking and mobile banking etc are available to customers, introduction of seven-day banking is not feasible. The move will not only adversely affect the staff of the bank but also drain out the valuable energy resource of the country.
He said that central government offices, secretariat and apex banks like RBI, Nabard etc are having 5-day week, where no difficulty is being experienced at their end. Besides employees' organisations in the banking industry are pleading for a 5-day week in the banking industry and the proposal is pending with the Indian Banks' Association, he added.

RBI to launch Rs 1,000 notes with Re symbol, more security

Mumbai, August 28: RBI today said it will soon launch Rs 1,000 denomination banknotes with rupee symbol, and improved security features. "The Reserve Bank of India will shortly issue Rs 1,000 denomination banknotes incorporating rupee symbol, with inset letter 'L', in both the numbering panels, in the Mahatma Gandhi Series-2005 with improved security features," RBI said in a notification.

 

These banknotes will bear the signature of RBI governor D Subbarao and the year of printing 2012 will be on the reverse of the banknote, it added. The design of these notes to be issued will be similar in all respects to the Rs 1,000 banknotes in Mahatma Gandhi Series-2005.

 

All the banknotes in the denomination of Rs 1,000 issued by the Bank (RBI) in the past will continue to be legal tender," RBI said.

Chakrabarty had same views on CRR as a banker: SBI chief

Mumbai, August 28: State Bank of India Chairman Pratip Chaudhuri on Tuesday took a gentle dig at the Reserve Bank of India Deputy Governor K C Chakrabarty, who had advised him yesterday to “find out some other place” if he didn’t agree with the current regulatory environment insofar as cash reserve ratio was concerned.
Speaking on the sidelines of an investor conference on Tuesday, Chaudhuri said he hadn’t read the complete media reports, but what he remembered was that Chakrabarty had the same views when he was a banker.
“What I want to say is that it’s just a view. When he (Chakrabarty) was a bank chairman, he was also of the same view (reducing the CRR),” Chaudhuri said. He made the remarks with a big smile, but the message was loud and clear.
Before joining the central bank, Chakrabarty was the chairman and managing director of Punjab National Bank and before that, of Indian Bank.
However, while speaking to NewsWire 18, Chaudhuri clarified his intention was not a complete abolition of cash reserve ratio (CRR) overnight, but to ignite a public debate on the merits of CRR. “My comments are in sync with the views of most of the bankers today,” he said.
Chaudhuri had earlier suggested that CRR should be phased out in a time bound manner or at least RBI should consider a paying an interest on it equivalent to the savings bank account rate if not the repo or the reverse repo rate.
CRR is the proportion of deposits that banks need to park with the regulator. While RBI used to pay interest on CRR funds, but that system was withdrawn a few years back. As a result, banks do not earn anything for keeping CRR with RBI but the negative carry for CRR and also SLR (statutory liquidity ratio) is considered while calculating the benchmark lending rate — the Base rate.
At present, CRR is 4.75 per cent. The central bank had reduced CRR by 125 bps to improve liquidity situation during January-February. CRR is not only used a liquidity tool but also indicates the monetary policy stance of the central bank.

Capital infusion
Regarding fund raising, Chaudhuri said SBI was in talks with the government for capital infusion and he expected the government to infuse about Rs 4,000 crore this financial year in the bank.
The government is committed to infuse capital in the PSBs and retain its stake, financial services secretary D K Mittal had told reporters on a sidelines of an event last year in Mumbai. However the Rs 8,000 crore capital infusion for SBI came only at the end of the last financial year after from the government after dilly-dallying on the issue for the whole year.
Capital adequacy ratio for the SBI at the end of the first quarter stood at 13.17 per cent.
On associate banks’ merger, Chaudhuri said that it was currently not on the priority list of the bank and he could not say if any associate bank would be merged this financial year. The SBI board has already cleared the merger of one associate bank this year.

SBI chairman presses for abolition of CRR

Mumbai, August 27 (PTI) Making a strong case for abolition of cash reserve ratio, country's largest lender, the State Bank of India (SBI) chairman today said the banks were unable to use the resources more productively, which is lying with the central bank without any interest earning. Though CRR, the amount of capital that banks park with the RBI, doesn't pay any interest to banks, RBI views it as a cushion against any liquidity crisis in the system.
Earlier in the day, the deputy governor of RBI K C Chakrabarty had said that banks had to work in the regulatory environment of the country. "If the SBI chairman is not able to do business as per our regulatory environment, he has to find some other place," RBI Deputy Governor K C Chakrabarty said in a sharp reaction to Chaudhuri's recent comment that CRR does not help anybody and it was unfairly put on banks.
However, Pratip Chaudhari, chirman of SBI also defended his views on CRR saying that when the deputy governor was a bank chairman, he was asking for the same. Chaudhari also said that when the CRR rate was high and GDP was low, there was a strong inverse co- relationship. He also said if CRR is a inflation tool, then other sectors like insurance and NBFC should also have such norm.

RBI Dy. Governor's remarks on SBI chairman are in bad taste

The RBI deputy governor's reported remarks on the SBI chairman are in bad taste. The issue here is not whether the SBI chief has a point when he says that cash-reserve requirements on banks are an unfair imposition considering there is no such demand from insurance firms, non-banking financial companies and mutual funds.
The RBI deputy governor would have been well within his rights in disagreeing. Where he has gone overboard is in suggesting that the SBI chairman can work somewhere else if he does not like the RBI's regulatory framework.
A regulator, especially one like the RBI that prides itself on its independence, should have the tolerance to hear its decisions being questioned by stakeholders. Flying off the handle at any dissent is unwarranted.