Update on Bonus Hike : Good news expected soon

As per reliable sources, Election Commission has given it's nod for issuing ordinance on "Payment of Bonus Act"
Now the matter will go to cabinet and after it's approval, necessary ordinance will be notified soon.
Earlier Govt. decided to raise the ceiling of Rs 3500/- per month to Rs 10,000/- per month.

RBI cuts repo rate by 50 bps

In a big surprise for the markets, the RBI on Tuesday cut the policy repo rate by 50 basis points to 6.75 per cent.

The equity market which was in the red till the announcement after a brief bounce back slipped into the red again.

The market was widely expecting the central bank to go only for a token 25 basis points cut in view of the deficit monsoon and expectation that the US Fed will raise interest rates by December.

The RBI said monetary policy has to be accommodative to the extent possible, given its inflation goals, while recognizing that continuing policy implementation, structural reforms and corporate actions leading to higher productivity will be the primary impetus for sustainable growth.

Furthermore, investment is likely to respond more strongly if there is more certainty about the extent of monetary stimulus in the pipeline, even if transmission is slow. Therefore, the Reserve Bank has front-loaded policy action by a reduction in the policy rate by 50 basis points.

“Given our year-ahead projections of inflation, this ensures one year expected Treasury bill real interest rates of about 1.5-2.0 per cent, which are appropriate for this stage of the recovery,” the RBI said.

The RBI reasoned that since bi-monthly policy statement of August, inflation has dropped to a nine-month low, as projected. Despite the monsoon deficiency and its uneven spatial and temporal distribution, food inflation pressures have been contained by resolute actions by the government to manage supply. The disinflation has been broad-based and inflation excluding food and fuel has also come off its recent peak in June.

The Federal Reserve, according to the RBI, has postponed policy normalisation. Markets have transmitted the Reserve Bank’s past policy actions via commercial paper and corporate bonds, but banks have done so only to a limited extent.

“Since our last review, the bulk of our conditions for further accommodation have been met. The January 2016 target of 6 per cent inflation is likely to be achieved. In the monetary policy statement of April 2015, the Reserve Bank said that it would strive to reach the mid-point of the inflation band by the end of fiscal 2017-18.

“Therefore, the focus should now shift to bringing inflation to around 5 per cent by the end of fiscal 2016-17,” the RBI said.


 As the RBI Governor Raghuram Rajan is set to announce the fourth bi-monthly monetary policy statement for 2015-16, the stock markets are down over 1 per cent.

At 10.45 am, the Sensex was trading down 304 points at 25,312.03 while the NSE Nifty was down 98 points at 7697.90.

With a mounting chorus of powerful voices demanding a deep cut in policy rates from the Reserve Bank of India, the market is betting on Governor Raghuram Rajan obliging with a small 25 basis point cut in his fourth bi-monthly monetary policy announcement on Tuesday. 

Government is open to dilute its stake in public sector banks to 52 per cent

Government is open to dilute its stake in public sector banks to 52 per cent, Finance Minister Arun Jaitley said on Monday and promised more steps to tackle bad loan problems including those involving state power providers.

“We are willing to look at all other changes including bringing down government equity to 52 per cent (in state-run banks), and therefore giving additional financial strength and teeth to the banking institutions themselves,” he said.

Addressing the 68th Annual General Meeting of Indian Banks Association here, Mr. Jaitley also said the state-run lenders need to be given independence and should be kept away from any political interference.

“Public sector banks in particular have to be given a lot of independence and an arms length distance from political decision making,” he said.

The Finance Minster said these lenders should be involved in the development agenda of state but their administration has to be guided purely by banking considerations and not for any other collateral considerations.

He said even Prime Minister Narendra Modi has said that no bank should ever receive formal or informal directives from the government and had advised the banks to operate essentially an exclusively on banking considerations.

Mr. Jaitely said the government has also professionalised the recruitments of top positions in the banks.

“It no longer depends on discretions of individuals. It is becoming more systematic,” he said.

The minister said the government is making all efforts to give a final shape to the Banking Bureau so that all other personnel-related decision with regards to the banks can also be professionalised.

Among others, the government owns over 59 per cent stake in largest public sector lender SBI, while it has 76.5 per cent stake in IDBI Bank.

In Punjab National Bank also, the government stake is in excess of 59 per cent, while it has nearly 64.5 per cent equity in Canara Bank.

In Bank of Baroda, the government holding is 57.5 per cent, in Allahabad Bank it has over 60 per cent, 61 per cent in Andhra Bank, 64.4 per cent in Bank of India and 81.5 per cent in Central Bank of India.

Jaitley further said the capacity of power generation has hugely improved.

“Our distribution networks through the national grids have improved, but the final access is by the state discoms and at the level of state discoms reforms have been carried out in very few states.

“There are four states that are in dire distress as far as their discoms are concerned and four others where the situation is reasonably challenging.

“And therefore, the entire advantage of increased power generations, multiple sources of power generation and a grid across the country all get defeated by this narrow last—mile where reforms have not been carried out,” the Minister said.

Andhra Bank has also reduced its base rate by 0.25 per cent effective today.

Soon after reduction in repo rate by the Reserve Bank, country’s largest lender State Bank of India (SBI) on Tuesday slashed minimum lending or base rate by 0.4 per cent to 9.3 per cent, setting the trend for benign interest rate regime.

With the reduction in the base rate, all loans, including home, auto and corporate, would become cheaper by at least 0.40 per cent.

The bank has decided to reduce the base rate by 0.40 per cent to 9.3 per cent with effect from October 5, SBI said in a statement.

“RBI has cut interest rate by 0.50 per cent, we have reduced it by 0.40 per cent,” SBI Chairperson Arundhati Bhattacharya said.

The bank will also be cutting fixed deposit rates by 0.25 per cent across various maturities from October 5, she added.

“We will definitely keep looking at ways and means of bringing down rate further. Going ahead, weakening of rate will add to growth of credit,” Ms. Bhattacharya said.

With the reduction, SBI’s base rate is the lowest in the market. The reduction by the largest lender is likely to be followed by others.

Meanwhile, Andhra Bank also reduced its base rate by 0.25 per cent to 9.75 per cent effective today.

Base rate is the minimum rate below which a bank can’t lend to consumers.

RBI cut benchmark repurchase (repo) rate from 7.25 per cent to 6.75 per cent, lowest in four-and-half-years.

DO NOT DEPRIVE BANK OFFICERS OF THEIR HOLIDAY !

ALL INDIA BANK OFFICERS’ CONFEDERATION(Registered under the Trade Unions Act 1926, Registration No.:3427/Delhi) C/o Bank of India, Parliament Street Branch PTI Building, 4, Parliament Street, New Delhi:110001
Phone:011-23730096 Tel/Fax 23719431
E-Mail: aiboc.sectt@gmail.com

CIRCULAR No 2015/ 67
Dated:26/09/2015

TO ALL AFFILIATES/STATE UNITS/MEMBERS

Dear Comrades,

AIBOC OPPOSES WORKING ON HOLIDAYSOPPOSES UNMINDFUL DISBURSEMENTS OF LOANSHOLDS DEMONSTRATION AT THE VENUE OF LOAN MELA

After prolonged negotiations and strikes the Bank Officers and employees got into a Bipartite Settlement with clinching 2 Saturday Holidays in lieu of working full day on other Saturdays. Unfortunately the Government, which issued the notification to the effect very recently, is indirectly depriving the Bankers of their holidays. This is being done despite the fact that the Jandhan, PMSBY & PMJJY schemes of the Government were grand success due to whole hearted involvement and indescribable pressure undertaken by Bank officers and employees.
This time it is MUDRA loans. Government has given a target of minimum 25 loans per branch to all the Banks to be sanctioned within few days. While no one denies that all socio economic policies and schemes need to be given utmost priorities and importance, adherence to lending norms should not be given a go by. The way in which the scheme is being implemented raises many eyebrows and motives are being attributed.

The process of MUDRA loans like any other loan involves the identification of borrowers, their KYC and due diligence, inspections, sanction, documentation and disbursement. Even at the cost of ignoring normal operations of banking, not more than one or two borrowers can be handled by one officer in a day. Any lapse in processing of loan may lead the Officer, sanctioning these loans, to trouble and disciplinary action against him apart from account becoming NPA. After having nightmarish experiences of the loan Melas organised during the period and at the behest of Mr. Janardhana Poojari the then State Minister of Finance in 1987. All our affiliates have been raising the issue with their respective Managements. The issue was deliberated in the 77th Executive Committee of our Confederation held at Ahmadabad held on 23rd September, 2015 and it was desired that officers should not be compelled to work on holidays as it disturbs work life balance.

In utter disregard to the feelings and sentiments and pressures on the officers Finance Ministry had issued instructions to the Tamil Nadu State Level Bankers Committee to organise a loan mela and it was compelled to issue sanction letters to more than 1000 borrowers on 26th September, 2015, 4th Saturday of the month declared as national holiday. Bankers were compelled sanctioning of such a large number of applications in a short time which was done overlooking many norms. Sanction letters were to be handed over by Sh. Venkaiah Naidu, Hon’ble Minister of the Govt of India at Image Auditorium, Raja Annamalaipuram, Chennai. The entire venue and the roads leading to the venue were decorated with party flags of Bharatiya Janata Party. Management of the Banks compelled the Branch Managers to sanction the loans and to attend the function with other officers. AIBOC Tamilnadu State Unit in consultation with the National Leadership organised a massive demonstration in front of the venue of the function. Hundreds of officers, including many lady comrades assembled under the leadership of Com. D.T. Franco, State President, AIBOC, Com. Vijayasenan State Secretary, Com. J.D. Sharma Senior Vice President AIBOC, Com. Rajendran General Secretary, Indian Bank Officers Federation, Com. B. Srinivasan General Secretary, IOB Officers Federation, Com. (Dr.) V. Chidambara Kumar President All India Private Sector Bank Officers Federation, Com. Gopish General Secretary Lakshmi Vilas Bank Officers Association, Com. A. Krishnan President SBI Officers Association Chennai Com. Jagadeesan Tamilnadu Co-operative Bank Officers Association and participated in the demonstration demanding implementation of the Bipartite settlement allowing 2 Saturday holidays, providing adequate time for loan processing and opposing politicisation of loan dispersals. We convey our heartiest congratulations to the Tamil Nadu State Committee of our Confederation for such a huge and successful demonstration which highlighted the high handedness and evil designs of the Government. While we reiterate our commitment to serve the society in any way including through extending loans to the poor and needy, we condemn the “Take it for granted approach” of the managements and Government, ignoring all human values and systems, which is painful and telling poorly on the governance.

We request the Government to view with concern the negative impact of such practices on its image and streamline its approach. We demand from the Government:

DO NOT DEPRIVE BANK OFFICERS OF THEIR HOLIDAY !

PROVIDE ADEQUATE TIME TO PROCESS LOAN APPLICATIONS !!

DO NOT POLITICISE LOAN DISBURSEMENT !!!

With Revolutionary Greetings,
Comradely yours
HARVINDER SINGH

Dearness Relief for Central Pensioners w.e.f 01.07.2015 - Order Issued

Dearness Relief for Central Pensioners w.e.f 01.07.2015 - Order Issued

"The undersigned is directed to refer to this Department's OM No. 42/10/2014- P&PW(G) dated 27th April, 2015 on the subject mentioned above and to state that the President is pleased to decide that the Dearness Relief (DR) payable to Central Government pensioners/family pensioners shall be enhanced from the existing rate of 113% to 119% w.e.f. 1st July, 2015"

Exim bank extends 200th Line of Credit to finance exports to developing countries

The Export-Import Bank of India (Exim Bank) has extended a Line of Credit (LOC) of US $24 million to the Government of the Republic of Côte d'Ivoire, for financing electricity interconnection project between Cote d'Ivoire and Mali.

The LOC was the 200th such agreement provided by Exim Bank on behalf of the Government of India to promote bilateral relations and economic partnership between countries.

According to an official statement, the current agreement was the fifth LOC with a cumulative size of $136.3 million to be extended by Exim Bank to the Republic of Cote d'Ivoire. The first LOC of $26.8 million was extended in August 2005 for financing renewal of urban transport system in Abidjan and for agricultural projects. The second LOC of $25.5 million was extended in June 2008 for financing a Mahatma Gandhi IT and Biotechnology Park, a fisheries processing plant and a coconut fibre processing plant in that country. The third LOC of $30 million was extended in December 2009 for financing transmission line project between Cote d'Ivoire and Mali. The fourth LOC of $30 million was extended in March 2010 for financing rice production programme. Republic of Cote d'Ivoire is a West African country bordered by Liberia and Guinea in the west, Mali and Burkina Faso in the north, Ghana in the east, and the Gulf of Guinea (Atlantic Ocean) in the south.

With the signing of this LOC Agreement, Exim Bank has now in place 200 Lines of Credit, covering 63 countries in Africa, Asia, Latin America, Oceania and the CIS, with credit commitments of over $12.22 billion, available for financing exports from India. Under the LOCs, Exim Bank will reimburse 100 per cent of contract value to the Indian exporters, upfront upon the shipment of goods/provision of services. Exim Bank's LOCs afford a risk-free, non-recourse export financing option to Indian exporters. Besides promoting India's exports, Exim Bank's LOCs enable demonstration of Indian expertise and project execution capabilities in emerging markets, the statement said.

DoP may seek Cabinet nod to set up payments bank

The Department of Posts (DoP) is expected to seek Cabinet nod within two months for raising Rs. 292 crore from Public Investment Board to set up payments bank, for which it has already got the RBI approval.

“The DoP is going to take approval for Rs. 292-crore fund from Public Investment Board after which it will be submitted for Cabinet approval. We expect the fund to be cleared in two months,” an official source told PTI.

Payments bank licence will allow companies to collect deposits (initially up to Rs. 1 lakh per individual), offer Internet banking, facilitate money transfers and sell insurance and mutual funds.

Besides, they can issue ATM or debit cards, but not credit cards. The Department expects revenue of over Rs. 550 crore from PBI in the first five years.

The postal department had earlier tried for Rs. 632-crore fund approval from government for full-fledged banking services but it was not cleared by PIB.

The Government has in-principle agreed to the entry of Postal Department in banking service through payments bank route.

“The DoP expects to roll out payment bank services by March 2017. There are no major infrastructure issues with the department. Only there is need to set up a data centre and disaster recovery centre which will be done soon,” the official said.

The postal department has computerised about 25,000 of its departmental post offices but rural post offices will be provided handheld devices for digitalising records.

The department is in final stages of appointing a consultant that will guide it in setting up payment banks.

According to another official source, the department may go for a hybrid model under which about 600 branches will be directly operated by payment bank staff in post office premises and transactions in other parts of the country will be supported by India post staff.

The payments bank entity is proposed to have its own employees and IT infrastructure.

RBI seen cutting repo rate by 25 bps on September 29

The Reserve Bank of India (RBI) is likely to cut interest rates for the fourth time this year at a policy review next week, as falling energy prices have cooled inflation and the economy has slowed, a Reuters poll showed.

Several government policymakers and business leaders have advocated a cut in interest rates to boost economic growth, but the central bank's priority is to ensure a sustainable reduction in inflation.

Forty-five of 51 economists polled this week predicted the repo rate will be cut by 25 basis points to 7.0 per cent, a four-year low, at the policy review on September 29.

A month back, economists gave only a 60 per cent chance of it happening.

Since then, consumer inflation sank to a record low of 3.66 per cent in August, over two percentage points lower than the central bank's Jan 2016 target, while annual economic growth slowed to 7.0 per cent in the quarter ending June.

Abhishek Upadhyay, economist at ICICI Securities predicted a cut as recent data suggested inflation would comfortably undershoot a target of 6 per cent in January.

"But, given the long lags in monetary policy transmission, further accommodation will be contingent on achieving the medium-term inflation target of 5 per cent for January 2017," Upadhyay said.

Inflation in India has typically stayed stubbornly high, but a steep fall in global commodity and oil prices has brought it under control, even though there are abiding concerns that weak monsoon rains could lead to a spike food prices.

Twenty-seven out of 37 of the analysts surveyed said the inflation outlook would determine the RBI's stance.

Only seven economists said it would depend on how well commercial banks pass on the benefits of lower rates to their borrowers. Two economists said the likely timing of an expected rise in US interest rates would be crucial to the RBI's decision-making.

Slackening global demand and concerns over economic growth abroad, particularly in China, were key reasons the Federal Reserve stood pat this month, but the US central bank is expected to raise rates for the first time in nearly a decade in December.

The poll also showed that while the RBI could cut rates on Tuesday, its tone in the policy statement was unlikely to change from the cautious note struck in August, when it spoke of the risk of latent food inflation and a need to anchor medium-term inflation.

If the RBI does cut interest rates this month, economists expect another reduction of 25 basis points by the end of the poll horizon in 2016, taking the repo rate to 6.75 per cent.

The cash reserve ratio, currently at 4.0 per cent, is not expected to be changed any time over the next year.

Economists were divided on whether the central bank will shift its focus to the medium-term inflation target of 4 per cent by March 2018, or stick with the short-term goal of 6 per cent by early next year at the coming meeting.

Small businesses to be aided through MUDRA Bank, says Finance Minister Arun Jaitley

Finance Minister Arun Jaitley on Friday said the government will help small entrepreneurs through the MUDRA Bank scheme.

"Following the MUDRA scheme, we will start a scheme so thatsmall entrepreneurs can get help and, in turn, contribute to the development and improvement of the financial condition of the nation," Jaitley said at the 99th birth anniversary celebration function of Pandit Deen Dayal Upadhyay.

Jaitley will hand over loan-sanction letters here to beneficiaries at a mega campaign organised by the Punjab National Bank (PNB).

The distribution of loan sanctions to borrowers by Jaitley is part of the mega credit campaign to be conducted by public sector banks across the country between September 25 and October 2.

The campaign is aimed at generating credit to micro enterprises and also to create an eco-system of bank credit to aspiring small and micro entrepreneurs under the Pradhan Mantri Mudra Yojana (PMMY).

"Micro entrepreneurs, very small traders, fruit sellers and mechanics etc. would be actively participating in the said campaign," a finance ministry statement said.

All public sector banks, regional rural banks and private sector banks have a target of Rs.1,22,000 crore during the current financial year for disbursement to small and micro enterprises.

The newly set up MUDRA (Micro Units Development and Refinance Agency) Bank is a public sector financial institution aimed at providing loans at low rates to microfinance institutions and non-banking financial institutions which then provide credit to MSMEs.

The MUDRA bank is going to provide succour to more than 5.77 crore small business units which can look forward to easy financial assistance from it, union Law Minister D.V. Sadananda Gowda said on Thursday.

MUDRA Ltd has been established as a subsidiary of SIDBI with an initial corpus of Rs.5,000 crore to provide capital to all banks seeking refinancing of small business loans under PMMY.

During the current fiscal up to September 22, a total of 35.60 lakh borrowers have availed credit totalling Rs.24,123 crore from MUDRA. Of these, 52 percent beneficiaries are women and around 50 percent are new enterprises.

PMMY loans do not need to be supported by collateral security.

Maruti Suzuki workers to get Rs 16,800 per month average salary hike

Maruti Suzuki India, the country's largest carmaker , has reached a wage settlement agreement with workers at its Gurgaon and Manesar plants, under which employees will get an average salary hike of around Rs 16,800 per month spread over three years.

Under the three-year agreement, to be implemented with retrospective effect from April this year, the workers will receive 50 per cent of the increased salary in the first year and the 25 per cent each in the remaining two years.

"For the first time, the unions of both Gurgaon and Manesar plants, including those of Maruti Suzuki Powertrain, reached an amicable agreement with the management late last evening," said Maruti Udyog Kamgar Union General Secretary Kuldeep Janghu.

Under the pact, he said: "On an average, the salary hike per worker is around Rs 16,800 per month, of which Rs 8,430 will be given in the first year and Rs 4,200 each in the second and third years."

Talks between the workers and the management had been on since April this year.

The agreement is valid from April 2015 to March 31, 2018, he said, adding that the management has also agreed to pay Rs 2,000 per month as transport allowance to those workers who use their own vehicles for seven years.

"As the settlement was reached peacefully without any hostility, Managing Director and CEO Kenichi Ayukawa has also promised to pay Rs 3,000 each to the workers as a one-time incentive," Janghu said.

Company sources said the average hike in the salary of workers will be 38 per cent over three years compared with their remuneration in 2014-15.

In September 2012, the company had signed the wage settlement pact with its Gurgaon workers under which workers were given an average salary hike of Rs 18,000 per month spread over three years.

Prior to that in July that year, the company's plant in Manesar was hit by worker violence in which an HR executive was killed

Govt started making privatization of PSU banks

Govt started making privatization of PSU 

banks, starting with IDBI today, tomorrow 

your bank, so please support IDBI for 

against privatization

The government has firmed up plans to bring down its holding in IDBI Bank to 49 per cent, marking a big bang start to its commitment to reform state-run banks.
NEW DELHI: The government has firmed up plans to bring down its holding in IDBI Bank to 49 per cent, marking a big bang start to its commitment to reform state-run banks. The department of financial services in the finance ministry is working on the details of the proposal that could be considered shortly.

"The government has made up its mind to bring down stake in the IDBI Bank. Department of financial services is working on the details," a top finance ministry official told ET. The central government currently holds 76.5 per cent stake in the bank.

The official said the government would follow the model of Axis Bank, India's third-largest by market capitalisation, where the state owns a large stake indirectly but has no role in day-to-day operations.

In a notification to the stock exchanges on September 22, IDBI Bank said it had not received any communication from the government on the issue.

The notification was in response to remarks by finance minister Arun Jaitley on a TV channel that the government could consider an Axis Bank-like model for IDBI.

Unlike other state-run banks, IDBI Bank is governed by a separate law, the IDBI Act. While in the case of other state-run banks, the government has said it will not bring its stake to below 52 per cent, in the case of IDBI Bank there is no such restriction. Thus the government can bring down its stake to 49 per cent without having to approach Parliament. The government indirectly controls 29.19 per cent stake in Axis Bank through 100 per cent owned Specified Undertaking of UTI and state owned insurance company LIC.

Despite the large holding, the government has allowed Axis Bank to be run as a private sector bank, which is reflected in its valuations. The finance ministry is of the view that IDBI Bank can also be run similarly if the government's stake is brought down to below 50 per cent.

Like most other state-run banks, IDBI Bank, too, is saddled with non-performing assets, or NPAs. At a gross level, the bank's NPAs stood at 5.9 per cent of advances at the end of June 2015. IDBI Bank was created in 2003 through the IDBI Repeal Act that allowed the conversion of IDBI, a development finance institution (DFI), into a banking company.

Federal Bank bets big on network expansion, localised services

Federal Bank’s growing physical presence, away from its homeground in Kerala, has translated into more business from branches outside the State.

The bank expanded its presence outside Kerala to 52 per cent of branches opened currently, from 42 per cent in 2012. At present, 41 per cent of the total business comes from outside Kerala and the aim is to double the market share in these geographies, said KA Babu, Head – Retail Business.

Rising figures

In the last four years, more than 500 branches were opened, mostly in the western, northern and north-western parts of the country. Besides, higher penetration into Tamil Nadu and Karnataka has also helped increase the share, he told BusinessLine.

The resident savings bank account portfolio, an indicator of the bank’s reach in a market, has shown a growth of 23 per cent since 2012, to reach around Rs.4,000 crore. He attributed this to strategies, such as ‘Go-to-market’ that has helped expand the customer base.

CASA share

The total CASA share has also improved to 26 per cent from 22 per cent, he said.

This has been achieved by the introduction of a new in-house sales vertical, the lead taken by senior executives in network expansion, and shifting of the national sales office from Kochi to Mumbai to reach out to a large cross-section of select geographies, he said.

According to Babu, “The thrust given on local recruitments has paid rich dividends on brand enhancement on a macro level, and addition of local flavour to customer service has done the same at the micro level.”

Participation in various customer engagements, focussing on housing complexes, companies, etc and the offering of e-fee collection facility in educational institutions helped grow CASA and salary accounts.

Fedfina – the 100 per cent subsidiary and distribution arm – has also extended exclusive support for the reach and business.

Reward programmes

The starting of loyalty rewards on its debit card has supported increased inflow into CASA.

The bank started giving more attention to corporate salary accounts, where offers like co-branded credit card, overdraft facility and personal loans, added value and gave a shot in the arm to marketing efforts.

Besides giving attention to increasing the reach and customer acquisition, the bank strives to enhance convenience and positive experience. 

Pay Commission to submit report soon. Fake news of D.A. merger becomes viral

As per recent media reports, Seventh Pay Commission is ready with its recommendations on revising emoluments for nearly 48 lakh central government employees and 55 lakh pensioners, and will soon submit report to the Finance Ministry.

Earlier in August, the government had extended Commission's term by another four months till December 31 to give recommendations.

"The Commission is ready with recommendations and the report will be submitted soon," according to sources.

Source : NDTV

Fake news of D.A. merger

A fake news of D.A. merger has become viral in social media in the last couple of days. It is being cleared for our viewers that these news (of fake orders) have no authenticity at all and as the commission is at it's final stage and report is awaited at any time, it will be most unlikely that Govt. will adopt any interim measure at this point of time.

No PAN requirement for investment in Kisan Vikas Patra

The Finance Ministry has said that there will not be requirement of Permanent Account Number or PAN in puttig money in relaunched Kisan Vikas Patra. There will also not be any upper limit on investment.

 The scheme aims to boost saving and use them for long term capital requirement. "This will be a bearer instrument just like currency and easy to encash," he said.

In view of the popular demand and to revitalize Small Savings, the Finance Minister in his Budget Speech announced that KVP a very popular instrument among small savers will be reintroduced. The instrument will encourage people, who may have banked and unbanked savings to invest”. KYC norms regarding all National Savings Schemes (NSS) are now applicable in post offices and banks w.e.f. January, 2012.

It is  available to the investors in the denomination of Rs. 1000, Rs. 5,000, Rs. 10,000 and Rs. 50,000, with no upper ceiling on investment. The certificates can be issued in single or joint names and can be transferred from one person to any other person / persons, multiple times. The facility of transfer from one post office to another anywhere in India and of nomination will be available. The certificate can also be pledged as security to avail loans from the banks and in other case where security is required to be deposited.

Initially the certificates is  availabe through post offices, but the same will soon be made available to the investing public through designated branches of nationalised banks. An investor can encash his certificates after the lock-in period of 2 years and 6 months and thereafter in any block of six months on pre-determined maturity value. The investmentmade in the certificate will double in 100 months.

The scheme will also safeguard small investors from fraudulent schemes. With a maturity period of 8 years 4 months, the collections under the scheme will be available with the Government for a fairly long period to be utilized in financing developmental plans of the Centre and State Governments and will also help in enhancing domestic household financial savings.

Earlier, it was launched by the Government on April 1, 1988. The scheme provided facility of unlimited investment by way of purchase of certificates from post offices in various denominations. The maturity period of the scheme when launched was 5 ½ years and the moneyinvested doubled on maturity.

The scheme was very popular among the investors and the percentage share of gross collections secured in KVP was in the range of 9 per cent to 29 per cent against the total collections received under all National Savings Schemes in the country.

Gross collections under the scheme in the year 2010-11 were Rs. 21,631.16 crore which was 9 per cent of the total gross collections during the year. In the year of its closure, the scheme secured gross collections of Rs. 7,575.95 crore (April 2011 to November 2011). 

A old post from my collection

RBI Governor Raghuram Rajan talks of strong institutions, slams 'jugaad' -

 Coming down hard on quick fixes like 'jugaad' way of working, Reserve Bank Governor Raghuram Rajan today did some plainspeak, saying the key to sustainable growth is strong institutional mechanisms that allow businesses to flourish.

"Jugaad, or working around difficulties by hook or by crook, is a thoroughly Indian way of coping, but it is predicated on a difficult or impossible business environment. And it encourages an attitude of shortcuts and evasions, none of which help the quality of final products or sustainable economic growth," Rajan said while delivering the fourth CK Prahalad memorial lecture here.

"We must have the discipline to stick to the strategy of building necessary institutions and creating a new path of sustainable growth where jugaad is no longer needed," he said.

Emphasising on the need to salute businesses for operating in tough environment, he said "we need to change the system for the better, and while doing so, the business community will have to cooperate," Rajan, the former IMF chief economist, said.

"We need the understanding and cooperation of the business community, not impatience and pressure for quick impossible fixes. Only then, I believe would we realise the true potential as a nation," the academic-turned-central banker said.

What Type Of Competition It Is ?

What Type Of Competition It Is ?

It seems ridiculous to me when RBI or Government of India or any other economist or writer or any banker talk of competition in banking industry. What type of competition after all it is? In the recent past ,Reserve Bank of India and Government of India have given license to many business men for opening of new banks, differentiated banks or payment banks, or opened Mahila Bank or Mudra Bank and claiming that these banks will create competition among banks.

About 100 year old public sector banks or you may say that four decades old nationalised banks are said to be competing with new generation private banks , banks which took birth about two decades ago. Giant PS banks with old infrastructure, with mind set of secured government job and with responsibility of shouldering the task of social welfare agenda of government are competing with private banks run by perfectly new generation technology, by youth crazy of jobs and afraid of loosing jobs and run with absolutely profit motto without taking care of any social objective. What type of competition it is, God knows.

There are 28 public banks and they are competing with each other. One PSB is taking over business of other PSB giving interest concession or by giving relaxation in service charges. One PSB sacrifices interest or processing charge to snatch credit business from other PSB and offer higher interest rate on deposits to snatch deposit business from other bank. Is it called competition?

One PSB losses and another PSB gains. Such types of competition is like hand of a person is competing with other hand, one leg is competing with other leg , ears of the same persons are competing eyes of the same person. You may imagine .the fate of a body when different parts of the body competes with each other, act against each other and work in conflict with each other. Or you may say that there is no harmony among different parts of the same body. Perhaps government is forcing such competition on various public sector banks and causing loss ultimately to people of India, to taxpayers and to investors in different PS banks. Number of weak banks has been increasing year after year and talk of merger and consolidation to hide weakness of banks is going on for last three decades and more. Government has to infuse thousands of crores of rupees to these banks to survive and to compete with private banks . Not only this, PSBs have already sacrificed lacs of crores of rupees in writing off of bad loans or in compromising with bad borrowers. This is the cost of competition for PSBs have to bear and still their shares are not choice of investors. In other words, one may that Private banks are allowed to spoil the future of PSBs in the name of so called competition..

Secondly, Different PSBs are competing with private banks like Axis Bank, HDBC bank or ICICI bank as if normal trains are competing with Metro rail. Normal and old chain of trains are to carry an number of passenger running from village to village causing discomfort to all whereas Metros are meant and designed to serve passengers of big towns and confined to big cities only. Fare of normal trains cannot be increased  keeping in view  the pain of poor people even though quality of service get eroded and deteriorate day by day.

Further Private banks are set up purely to earn profit whereas PSBs are made to serve social agenda and national agenda of the country. Competition imposed on PSBs  is like competition between government hospitals and private nursing homes. Private nursing homes charges are extraordinarily higher  and theyvhsve option to choose patients and charge as per their whims whereas charges of government hospitals cannot go up and cannot be discriminatory keeping in view the possible protest from common men and from politicians of opposition group. Competition is like that between private schools and private colleges for higher educations on the one hand who charges lacs of rupees as tuition fee per year from student with government run schools and colleges on the other hand which cannot increase tuition fee to that extent. Similar is the quality of teachers in government schools and that of Doctors appointed in government hospitals. On the other hand Doctors appointed in private nursing homes or teachers in private colleges are of high quality and have scope to earn much higher income compared to their counterparts in public hospitals and public schools. Appointment , promotions and transfer in public banks takes place based on flattery and bribery whereas that in private banks based purely on merit and quality of performance and potential of  the worker.

Obviously if PSBs with different supporting hands and infrastructure are forced to compete with entirely a different set of supporting staff and infrastructure , it will cause much damage to former only . Private banks will not take any such step or undertake any project for lending which may cause loss to them in future whereas officials working in PSBs can cause all losses to their bank only to achieve the target or to please their bosses or to please their political masters. There is heaven and hell difference between the two sets of bank and between two set of workers. As such the idea of competition is totally unjustified, deceptive and suicidal .

During last few months , RBI has given license for opening of new private banks like Bundhan Bank or IDFC bank , given license for opening of payment bank or for opening of banks to deal in small and micro finance . RBI says that these new banks will further increase competition among banks. Such competition is like a Adult or matured person is said to compete with a newly born baby. Or more clearly you may say that a passenger train is forced to compete with Rajdhani train and inviting accidents and losses to passengers. To make it crystal clear, such type of competition is likev asking a boy admitted in extremely poorly maintained village level school to compete with a boy admitted in high standard costly private school.

I am unable to understand what type of competition these newly born banks will create or generate for old generation public banks. But one thing is certain  to me that these newly born private banks, payment banks or small finance banks will grab quality business of old PSBs and cause erosion in business volume and cause loss to existing banks. PSBs will have to pay a lot and face huge damage in competing with these new generation banks and obviously such losses  accumulated together will lastly come on the shoulder of Government of India and that on people of India only.

It is true that as number of new banks increases, customers will get new option of banks and they may get better option of services in some towns and cities Rich customers who can afford paying higher service charges may shift to best serving private banks or new generation banks. But there is no doubt that old set of PSBs will gradually grow in weakness and turn from bad to worst , become non-performer or less performer and will slowly be thrown in waste box by new generation youth .WE have seen how Regional Rural Banks during last two three decades have been growing weakness and gradually they are merged with parent bank. We have seen how various cooperative banks are sitting on bomb of bad debts and facing chances of closure. Similarly few PSBs have become too weak to survive and government is contemplating to merge them with stronger PSBs. Government is unable to change the wine , but they are changing bottle frequently . But it is sure that Government cannot increase the sale of wine by changing bottles only. One stock of old bottles will go in the back racks and new set of new bottle may be keep in front rack . Ultimately it is the quality and cohesive policy which work for long period.

Until contents changes, sale of bottle cannot increase. New generation banks which have fresh and quality materials to serve in their banks will grow and old banks which are constrained to stick to old contents and old tools cannot dream of increasing their sale.

To conclude , I may say that entire talk of competition in bank is farce, ridiculous, deceptive and harmful too. And last but not the least, I am unable to understand what purpose is going to be served by such mismatching and ill-conceived competition. It is absolutely unimaginable that PSBs will be getting good outcome and better results in competing with private banks. As a matter of fact , even various branches of the same Public bank cannot dream of competing with other branch of the same bank. This is because each branch has got some locational advantages and disadvantages. A branch situated in remote village cannot dream of competing with a branch situated in a town or in metro city. Not to speak of branches at various location, even branches situated in same town cannot dream of competing with other branches of the same bank in the same town because each mohalla or ward has some merits and some demerits.

A branch situated in the premises of a good school, or a good college or good PSU or a reputed institution can capture business in hundreds of crores of rupees in a year without making any special effort. On the contrary a branch situated in remote village, or in a critical area, or in a naxal affected area or even in dry industrial area cannot dream of capturing good business or earning considerably good profit at par with that in a town or in a city. There are some places in Industrial areas, where credit expansion in hundreds of crores of rupees is possible every year whereas in some other places , it is difficult to increase credit even by a crore or two in a year.

Potential of business for any branch or for any bank in any area depend on many locational factors such as local area, local politicians, local inhabitants, business potential , administrative support ,infrastructural support in the area, local climate ,availability of natural resources ,quality and quantity human resources etc . As such the very thought of competition among various branches or various banks is faulty and misleading.

I want to ask a question to all  , are such competition meant for giving better service to customers or for earning higher profits?

Are such competition to fulfil task of the social objective and completing social welfare plans mooted by GOI with available resources , building better infrastructure , growing more and more crop, manufacturing best product, increasing exports and increasing comfort of common men or ..........for giving an opportunity to private banks to earn greater profit at the cost of that of Public sector banks?

People of India, politicians ,great economists and planners of the country have to ponder over it and assess what type of competition is going on in banking industry and what type of it is necessary to save sinking banks. Banks in public sector are meant to distribute charity or to earn profit only.

Is Government forcing competition among looters of banks to loot maximum in the name of business or in the name of competition? 

Bankers are freely giving credit ,freely writing off loan and then again giving fresh loan and again writing off and so on . Sometimes they hide bad loans by restructure and sometimes by selling to ARCs and sometimes by writing off them. This is an open secret that public sector banks are competing with each other in increasing stressed assets , in increasing Gross Non Performing assets, in writing off loans , in causing loss due to frauds and in boosting the size of balance sheet by manipulation and by fraudulent methods. 

Is it the purpose of competition suggested by RBI and GOI?

by danendra

Citi launches integrated banking product for younger customers

 American lender Citi today announced a new product offering in the country targeted at people below 40 years of age, seeking to address multiple banking needs of the growing segment through a single relationship.

The bank commissioned an in-house study which showed there is an emerging class of wealth builders globally and India is witnessing the fastest growth in this class, Citi's country business manager in the global consumer bank, Kartik Kaushik, told reporters here.

He said this segment has peculiar banking needs for saving, wealth management, international travel and lifestyle, and Citi launched its new offering 'Citi Priority' seeking to address the same.

It involves giving a bouquet of offerings to the customer, he said, adding that for the first time a bank is combining a credit and debit card as part of the offering.

The service comes free for the consumers if they maintain a 'relationship value', which includes savings, credit cards, mortgages, travel bookings, etc of Rs 15 lakh per year, he said, adding that fees set in if the value falls below the level.

India is the fifth market globally where 'Priority' has been launched and there are six more geographies where it will be launched soon, he said.

Kaushik said the larger focus of the bank is to expand Citi's 'share of wallet' and not on acquiring customers. He said he expects ten per cent of the individual account holders to sign up for the new offering, but declined to give the overall base.

For Citi India, the youth segment constitutes a fifth of the overall revenues and it has been outgrowing other segments by up to three times, he said.

He exuded confidence that shifting from a current perspective of selling multiple products to a single customer, to giving a single offering to a customer for free, will not hurt its revenues in the long term as the volume of transactions grows.