:::::SRI S.B. RODE, OUR BELOVED PRESIDENT, AICBOF AND OFFICER DIRECTOR ON THE BOARD OF CENTRAL BANK OF INDIA HAS BEEN COOPTED AS GENERAL SECRETARY, AICBOF IN E.C. MTG. HELD AT MUMBAI ON 24.02.2014:::::MR. S.C. GUPTA, GEN. SECRETARY OF OUR AHMEDABAD UNIT HAS BEEN COOPTED AS PRESIDENT, AICBOF::::::WE CONGRATULATE THEM AND WISH THAT THE OFFICERS' MOVEMENT IN CENTRAL BANK OF INDIA WILL BE TAKEN TO NEW HEIGHTS:::::LONG LIVE CBOA:::::LONG LIVE AICBOF::::::LONG LIVE AIBOC:::::

RBI WARNING ON ONLINE PHISHING


The Reserve Bank of India has cautioned members of the public not to respond to mails being sent in its name “inviting bank customers to update their bank account details against online phishing.”

The RBI, in a statement, said that it has not sent any such email. Pointing out that the Reserve Bank or banks never issue communication asking for bank account details for any purpose, the RBI cautioned members of public against sharing their bank account details with anyone for any purpose.

PRE-POLICY MEET: INDUSTRY BODIES MAY URGE RBI TO LOWER INTEREST RATES


Industry associations including FICCI and FIEO will meet top RBI officials in Mumbai tomorrow to discuss various issues like the flow of easy and affordable credit to small and medium exporters ahead of the announcement of the annual credit policy for 2011-12.

The Reserve Bank of India is scheduled to announce the annual credit policy for 2011-12 on May 3.

Industry representatives are expected to press RBI to lower the interest rates so that credit becomes cheaper for them in the customary pre-policy meeting. At the same time, exporters will pitch for higher credit flow to the Micro, Small and Medium Enterprise (MSME) sector.

Banks should follow the RBI stipulation of 12 per cent of total credit for exports, the Federation of Indian Export Organisations (FIEO) President, Mr Ramu S. Deora, said.

“However, export credit fell to as low as 4.1 per cent of the net bank credit in December 2010 against 9.8 per cent in March, 2000,” he said.

The RBI may consider setting up an expert group to make an assessment of the reasons for the decline and how it can be stemmed to ensure the export sector remains on a high growth trajectory, he said.

Mr Deora also said that banks are insisting on credit rating to MSME export sector as banks can lend money to exporters only when their credit rating is high.

“Credit rating has a high cost component, involves tedious paperwork, filling up of forms besides processing charges by the banks,” he said, adding that there are no separate guidelines for SMEs, including proprietor and partnership companies.

MONETARY RESPONSE, MUST TO STOP INFLATION FROM SPIRALLING AWAY: GOKARN


In yet another indication that the Reserve Bank of India will press ahead with its calibrated rate hikes, the RBI Deputy Governor, Dr Subir Gokarn, on Tuesday said the central bank cannot afford to be slack on inflation merely because it is coming from a certain set of factors.

Monetary policy, according to the top RBI official, cannot stay idle on the assumption that inflation is not from the demand side.

In its mid-quarter monetary policy review last month, the RBI said that based on the current and evolving growth and inflation scenario it is likely to persist with the anti-inflationary stance.

Inflation vs growth
Allaying fears that hike in interest rates by the RBI could lead to a slowdown in investments, Dr Gokarn said it is better to have some constraint or restraint now with prospects of stabilisation later on, as against no restraint now and collapse later on.

“We don't want to be in a situation where the only way to deal with inflation is to squeeze out growth completely. Sustainability of growth in future requires lower inflation now,” the Deputy Governor said in his address to the members of industry body, FICCI.

The issue is not so much that of higher inflation posing a challenge to faster growth in the present. It is about the risks that higher inflation now poses for faster growth in the future. In other words, sustainability of growth over the long term does require controlling inflation, he explained.

Supply-side pressures
In his address, the Deputy Governor said that despite significant actions on both policy rates and liquidity by the Reserve Bank, inflation remains high. While supply-side pressures have clearly impacted headline inflation, the relatively brief and shallow slowdown did not fully eliminate demand-side pressures from the system and these too have contributed to the recent behaviour of inflation.

Dr Gokarn said that the country appears to be in a situation where supply-side pressures, arising from capacity constraints, are spilling over into generalised inflation. If, in fact, the contribution of investment spending to growth is declining, the constraints will further aggravate inflationary pressures if the growth momentum is kept going by other components of demand.

If there are signs of a spill-over from supply side to the core, then a monetary response is warranted to prevent the process from spiralling out of control, said the deputy governor.
“The challenge is to keep growth as high as possible without the risk of inflation spiralling out of control,” Dr Gokarn said.

Food prices
For much of the past several months, the dominant contributors to food inflation have been pulses, milk, eggs, fish and meat and fruits. The increase in prices indicates that supply is just not keeping pace with demand. The only way to keep food prices in check is to produce more of what people want to consume.

The configuration India needs to sustain growth is low inflation, high investment and fiscal consolidation, particularly on the revenue account. Both monetary and fiscal policies have a role in achieving this configuration.

The challenge for monetary policy is to prevent supply-side inflationary pressures from spilling over into more generalised inflation, both by managing expectations and by reigning in demand. This needs to be done with minimal disruption to growth, particularly investment activity. The challenge for fiscal policy is to bring down the fiscal deficit, particularly on the revenue account, Dr Gokarn said.

ALL YOU NEED TO KNOW ABOUT ADHAAR-ENABLED PAYMENT SYSTEMS


What will be the role of Adhaar-enabled payment systems?

The Adhaar-enabled payment systems (AEPS) developed by NPCL is a bank-led model that facilitates financial inclusion by allowing transactions at Point of Sale or PoS (the micro ATM) through the business correspondent (BC) using the Aadhaar authentication number. The AEPS will now allow costumers to avail of banking facilities through banking correspondents across banks.

What types of banking transactions are facilitated through AEPS?

The four Aadhaar-enabled basic types of banking transactions are balance enquiry, cash withdrawal, cash deposit and Aadhaar to Aadhaar funds transfer Now all that a customer needs for availing of the AEPS services are an individual identification number (identifying the bank to which the customer is associated), an Aadhaar number and fingerprints captured during his/her enrolment.

What objectives does AEPS serve?

The objective is to empower a bank customer to use Aadhaar to access his/her Aadhaar-enabled bank account and perform basic banking transactions that are intra-bank or interbank in nature through a business correspondent. It serves another important goal of RBI in electronification of retail payments. It would enable banks to route the Aadhaar-initiated interbank transactions through a central switching and clearing agency. It would facilitate disbursements of government entitlements like NREGA, social security pension, handicapped old age pension, etc, of any central or state government bodies, using Aadhaar and authentication thereof as supported by UIDAI. Another important goal AEPS serves is to facilitate inter-operability across banks in a safe and secured manner.

What is the status of the implementation of AEPS?

The pilot project is being run in districts of Jharkhand (where the first unique identity, or UID, numbers have been issued) in association with three banks, ICICI Bank , Union Bank of India and Bank of India. The UID Authority is also planning to rope in Nabard to include rural account holders in the core banking fold. Successful implementation of AEPS is likely to reduce the dependence on cash and will lower costs for transactions. Once the general purpose of Aadhaar-enabled micropayments system is in place, a variety of other financial instruments such as microcredit , micro-insurance , micro-pensions and micro-mutual funds can also be implemented on top of this payments system.

BANKS TO REDEEM CDS WORTH RS 2 LAKH CR IN FIRST QUARTER


Redemptions worth Rs 2 lakh crore in certificates of deposit (CDs) are lined up in the first quarter of the current financial year. Bankers said the decision to roll over the CDs would depend on credit pick, as loan growth was usually slack during the beginning of the financial year. In case these deposits are renewed, that will happen at a much lower rate.

Most of the CDs were issued in January-March by banks to shore up their balance sheet, as they had to meet yearly targets. Bankers estimate around Rs 50,000 crore of CDs to mature in April, Rs 47,000 crore in May and Rs 1.31 lakh crore in June. This is substantially higher than the redemptions in the same quarter last year, say bankers.

“Around 60 per cent of these CDs belong to three-month maturity and the redemptions in the first quarter this year are around 1.2 times higher than the same period last year, clearly indicating the growth in issuances,” said a treasury official with a public sector bank.

According to the latest data provided by the Reserve Bank of India (RBI), the outstanding amount in CDs went up to Rs 4,18,524 crore as on the fortnight ended February 25, with issuances of around Rs 40,000 crore worth of CDs in the same period. Also, the rates on CDs had rallied above 10 per cent across all tenors in the same period.

“Banks were issuing three-month CDs at high rates to tide over the temporary asset-liability mismatch and expected that liquidity conditions will improve after April thereby bringing down the short-term rates,” said a bond dealer with a domestic brokerage. The CDs, if needed, would be rolled over after three months at a much lower rate, the dealer added.

Analysts expect that roll-overs may happen, as banks may not want to contract their balance sheet growth. But bankers are of the view that most of this money will not be required. “This is definitely excess money which is not required. Only if credit growth is good, then there may be some need to roll over,” said the treasury official.

CD rates have already begun their downward journey. On March 31, one-year CDs were issued at 9.5 per cent, much lower than the rate of 10.2 per cent that prevailed just two weeks ago.

Following a slack in deposit growth in the first three quarters, banks had turned to raising funds from the CD market in the last quarter of the financial year 2010-11 to meet their yearly targets. The widening gap between credit growth and deposit growth led to concerns on the pace of deposit growth.

As on March 11, credit growth was at 23.2 per cent while deposit growth lagged behind at 16.6 per cent. The RBI had projected the growth rate of 20 per cent in credit and 18 per cent in deposits for the financial year 2010-11.

CASH WITHDRAWALS HAPPEN MAINLY THROUGH ATMS


“Where ever you go in India, there is an SBI ATM waiting to serve you.” This is the tagline of a State Bank of India advertisement. ATMs, as an alternative channel for branch-based banking, have come a long way.

“At present, about 60-80 per cent of individual transactions for withdrawals are being handled by ATMs on an average in the industry,” a top functionary of Indian Banks Association (IBA) told Business Line.

The information from individual banks also confirms the trend. “Retail customers now rarely come to branch for withdrawals. In our banks, 87-90 per cent withdrawals are through ATMs,” Ms Renu Challu, Managing Director, State Bank of Hyderabad (SBH), said.

“Definitely, a major chunk of transactions are happening through ATMs now. In urban/metro and semi-urban regions this is very high while in rural areas this may still have to pick up,” said Mr Anil Girotra, Executive Director, Andhra Bank.

In the remote rural areas, there is scope for further expansion of ATM network and usage, he added.

For large transactions, electronic fund transfer or branch-banking is being preferred, he pointed out.

HITS PER DAY
Interestingly, the hits per day in ATMs have also been on the rise. For instance, SBI had recorded a substantial growth in average hits per day in a single ATM, from 554 in March 2010 to 684 in December 2010.

“This has actually resulted in a substantial increase in percentage of total transactions on alternative channels to 27.20 as on December 2010,” a senior SBI official said.

The RBI has also recognised the growing importance of ATMs to general public. “Growth in ATMs, which has been generally on a steady rise in recent years, was 37.8 per cent in 2009-10,” it said in its Report on Trend and Progress of Banking in India 2009-10

HOW TO SECURE YOUR ONLINE MONEY TRANSACTIONS


Credit and debit cards are commonly used to conduct online transactions. While making an online payment, details like name, card number, CVV (card verification value) code, and expiry date are usually asked. All these could be misused by persons other than the cardholder.

To prevent this, the RBI directed in August 2009 that an additional level of security be provided for online payments.

Visa and MasterCard offer facilities termed Verified by Visa (VBV) and SecureCode, respectively, which allow a cardholder to register their cards before making an online transaction. This is done whenever the card is used for online payment at any of the registered merchant establishments. The list of member establishments is available at visa-asia.com/verified or mastercard.com/securecode

Registration
Card holders can register online with their banks. They can also do so when prompted during an online transaction on the registered establishment's website.

Information
To register, the cardholder must provide the card number, its expiry date, the ATM PIN, date of birth, e-mail address and mobile number as present in the bank records.

Confirmation
Once the information is verified, the card holder has to create a login ID and password for registration. The bank will confirm the registration and card protection is activated.

Password check
When a registered card is used for an online transaction, the card is recognised as being protected by SecureCode/ VBV. The transaction is processed only after password verification.

Points to note
Participating establishments: The additional protection for online payments is available only when the cardholder conducts a transaction with one of the member establishments.

Multiple registrations:
If multiple cards are held by an individual with a bank, they have to be registered separately.

Password requirements:
Different banks may have different specifications, such as numerical, alpha numerical, for the password that is created.

SUSHIL MUNHOT IS NEW SIDBI CHIEF


Mr Sushil Munhot, Executive Director, IDBI Bank, has been appointed as Chairman and Managing Director of the Small Industries Development Bank of India (SIDBI). The No. 1 position in SIDBI has been vacant since early July 2010, as Mr R. M. Malla was appointed CMD of IDBI Bank.

A textile engineer-cum-business-school graduate, Mr Munhot has been with IDBI Bank for 28 years. He has handled diverse portfolios, including project finance, treasury, retail banking, capital markets, agriculture, and risk management

GOVT STAKE IN IOB INCREASED FROM 61.23% TO 65.87%


The government’s stake in Indian Overseas Bank has increased from 61.23 per cent to 65.87 per cent as a result of capital infusion of Rs 1,054 crore into the Bank.

At a recent meeting, IOB allotted 7,39,49,343 equity shares of Rs 10 each at an issue price of Rs 142.53 per equity share totalling Rs 1,054 crore to Government of India on preferential basis.

With this development, the Government’s holding in IOB has increased from 61.23 per cent to 65.87 per cent.

On March 22, 2011, bank shareholders at their Extraordinary General Meeting, had given their approval for allotment of equity shares to Government of India.

BANKS WON'T HAVE TO PAY SERVICE TAX ON FOREX DEALS


Banks will now be exempted from paying service tax on foreign exchange transactions entered into with other lenders. The transactions with customers will be charged a nominal sum of 0.1-0.5% of the transaction amount or a maximum of Rs 5,000 on foreign exchange transactions.

In a notification issued by the finance ministry on March 31, the ministry indicated the amount to be collected by banks as service tax on foreign exchange transactions, the eligibility and the amount to be collected by banks. These issues were taken up by the Foreign Exchange Derivatives' Association of India or FEDAI with the finance ministry about three days ago.

Banks, as service providers, have been given a choice between levying charges based on RBI's reference rate, which is based on the market spot rates, though may differ marginally from the real market rates at a given point of time, or calculating it on an ad-valorem basis, where in the customer would be charged 0.1% on a transaction up to Rs 1 lakh, 0.5% for a transaction between Rs 1 lakh to Rs 10 lakh and a maximum of Rs 5,000 for transactions above Rs 10 lakh.

Earlier, only scheduled banks were exempted from service tax on forex transactions, but the tax was levied on cross currency transactions between scheduled banks and overseas banks. In the amended notification, all banks, local or overseas, have been exempted from the service tax on inter-bank foreign exchange transactions. But bankers say that it is more of an execution issue now.

CORP BANK REVISES NRE DEPOSIT RATES


Corporation Bank has revised the rate of interest on NRE term deposits with effect from April 1.

For tenure of one year to less than two years the revised rate is 2.53 per cent (2.54 per cent), for tenure of two years to less than three years it is 2.71 per cent (2.66 per cent), and for three years to 10 years the revised rate is 3.25 per cent (3.19 per cent). 

ALLAHABAD BANK ALLOTS SHARES TO CENTRE


Allahabad Bank has completed the allotment of 2,95,15418 equity shares to the Centre as a part of its capital infusion process.

The Centre, which previously held 55.23 per cent of the shares in the bank, will now hold a stake of 58 per cent following a capital infusion of Rs 670 crore. The bank allotted the equity shares of Rs 10 each at a premium of Rs 217 a share.

UNION BANK REVISES INTEREST RATES FOR NRIS DEPOSITS


Union Bank of India revised interest rates for deposits by non-resident Indians (NRIs) across maturities and currencies.

Under the revised rate structure, NRIs will get up to 26 basis points more for deposits in foreign currencies, while the rates for deposits in Indian rupee have gone down marginally.

A deposit in Euros for a maturity above four years but less than five years will earn an NRI 3.90 per cent per annum as against the earlier 3.64 per cent. In some categories, the rates have been revised downwards as well.

Rupee deposits by NRIs till five years have also been rejigged either upward or downward depending on the maturities. A deposit for three years and above will fetch an NRI an interest of 3.25 per cent per annum, up by six basis points.

UNION BANK CMD GETS 3 MONTHS EXTENSION


Union Bank of India said the government approved re-appointment of its Chairman and Managing Director MV Nair for a period of three months.

Appointment Committee of the Cabinet of Government of India has approved re-appointment of Chairman and Managing Director MV Nair, for an initial tenure of three months wef April 1, 2011, or until further orders, whichever is earlier.

Nair completed his five-year tenure in the bank on March 31, 2011. He was appointed Chairman and Managing Director of the bank in April, 2006.

As per the existing government rule, Chairman and Managing Director or Director are appointed in the public sector entity for a period of five years or up to age of 60, whichever is earlier.

Appointment Committee of the Cabinet (ACC) headed by the Prime Minister Manmohan Singh.

SBI REVISES INTEREST RATES FOR NRIS


State Bank of India (SBI) revised interest rates for deposits by non-resident Indians (NRIs) across maturities and currencies.

Under the revised rate structure, NRIs will get up to 26 basis points more for deposits in foreign currencies, while the rates for deposits in Indian rupee have gone down marginally.

A deposit in Euros for a maturity above four years but less than five years will earn an NRI 3.9% a year as against the earlier 3.64%, the release said, adding, in some categories, the rates have been revised downward as well.

Rupee deposits by NRIs till five years have also seen marginal declines in the interest rate by up to 3 basis points.

BANK OF BARODA GETS RS 2,461 CR GOVT FUND


Bank of Baroda (BoB) said it has allotted 2.7 crore shares to the government of India on a preferential basis, resulting in capital infusion of Rs 2,460.9 crore.

As a result, the government of India's holding has increased to 57.03% from 53.81%, BoB said.

Earlier, shareholders of the bank approved a Special Resolution at an Extraordinary General Meeting for the issue and allotment of 2,72,79,579 equity shares of Rs 10 each to the government at a premium of Rs 892.14 per share.

Finance Minister Pranab Mukherjee had announced a capital infusion of Rs 20,157 crore into public sector banks during the current fiscal to ensure that these entities were able to attain a minimum of 8% Tier-I capital by March 31, 2011.

The proposed capital infusion is to enhance the lending capacity of the state-owned banks to meet the credit needs of the economy in order to maintain and accelerate the economic growth momentum.