Cash Costly, allow Banks to Charge for Cash Transactions

Mumbai, December 26: The country’s largest bank, State Bank of India, wants the government to allow banks to charge customers for cash transactions, said a senior executive. “We must be allowed to charge bank account holders to charge for cash transactions. Handling cash is a huge cost to banks,” said Manju Agarwal, deputy managing director at SBI. “Given that this is an opportune time, there needs to be incentives to use cards or internet to make electronic payments and discourage cash.”

The Reserve Bank of India and commercial banks face a total of Rs.21,000 crore ($3.5 billion) in currency operations costs annually. Speaking about the digital push after demonetisation, Agarwal said they have seen multifold rise in debit card and mobile banking usage to make payments. Banks, including SBI, have been promoting cashless transactions through cards and their mobile applications. SBI is aggressively promoting its SBI Buddy. Moreover, in collaboration with telecom firm BSNL, it has launched its new app – ‘mobicash’ which features three-way access to transfer fund from the mobile phone.

Agarwal said there were easy and secure ways to make cashless transactions even on basic phones which facilitate transactions through SMS or USSD code. Last week, SBI chairman also spoke about finding ways to disincentivise cash transactions, such as imposing a charge or levy above a specified limit or threshold, after normalcy is restored in banking operations.

With about 90% of our transactions done in cash, India has a cash-to-GDP ratio of about 12.2%, believed to be relatively high compared to many of its peer countries like Brazil, Russia and Mexico. Though the withdrawal of high-value currency notes has taken the number to 7.3% of the GDP, which is lower than US at 7.8% (as per RBI data), it is estimated to settle at 10% after the entire demonetised value is back in the system.

Bhattacharya said if India wanted to de-emphasise cash, not only should there be an incentive for people to move towards a cashless economy, but also a disincentive for transacting excessively in cash, leaving out small-ticket transactions. “Cash imposes a huge burden. We don’t understand it as it is not immediately visible. It is a huge burden on society,” she added.

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.

Chakrabarty frowns at SBI chief’s views on CRR phase-out

Chennai, Aug. 27: The Reserve Bank of India Deputy Governor, K. C. Chakrabarty, came down heavily on State Bank of India Chairman Pratip Chaudhuri’s views seeking the phase out of the cash reserve ratio (CRR), saying either comply or do business elsewhere.
Responding to a question, on the sidelines of a financial conference on systemic risk organised here on Monday by the Great Lakes Institute of Management, Chakrabarty said banks must work within the framework prescribed by the regulator. “If the SBI Chairman is not able to do the business in this regulatory environment, he has to find out some other place,” he said.
CRR is the percentage of deposits commercial banks keep with the central bank.
Pratip Chaudhuri recently said that CRR does not help anybody. “When CRR is not applicable to insurance companies, non-banking finance companies and mutual funds that also mobilise funds from the public, it is an unfair imposition on banks,” he said to make a point that the CRR adds to the cost of doing business for banks.