All India Bank Strike On 29th July 2016

Bank Strike On 29th July 2016

ALL INDIA BANK OFFICERS’ ASSOCIATION                (Central Office : Chennai)

Circular No.11/VI/2016

May 25, 2016

 

 

To:

ALL UNITS / STATE COMMITTEES

 

Comrades,

 

FAST FORWARD MOVEMENTS ARE TO BE STONEWALLED

CIRCUMSTANCES ARE CRITICAL HENCE THE ACTIONS TOO.

 

As rightly assessed from the time of the present Government assumed office, one of the prioritised agenda consistently pursued was reforms in the Financial Sector.  Before assuming the office, the tailor made report of P.J.Nayak Committee was published thereby the directions were set to be taken forward.  It got accelerated further by holding GYAN SNAGAM I in January 2015 followed by INDRA DHANUSH in August 2015 and GYAN SANGAM II in March 2016 highlighting the ills and to remedy the situation consolidation of Banks is the only solution.  Ballooning of bad loans and its reflections on the Balance Sheets of various Banks, hope, need not be explained at present

 

The loan default from the Corporates is main the cause for the proposed move of Privatisation IDBI through dilution of equity.  The assurances given repeatedly in the floor of Parliament have been thrown to winds.  The interview in the electronic media by the responsible representatives of the Government cause serious concern to the entire workforce.

 

The nine constituents met at Hyderabad on 11^th May 2015 and unanimously decided to observe series of programmes culminating in a days strike on 29^th July 2016 by the entire workforce in the Banking Industry.  But, the sudden move made through SBI administration to step up the pressures for swallowing the five Associates by SBI to enable them to upgrade the market share from the present level, was a bolt from the blue.  The workmen in 5 Associate Banks [SSBEA] repulsed back the move by observing the Strike on 20.05.2016.

 

The fast forward movements are to be stonewalled in a quick way as the jobs and job security of the human assets are at stake.  Our organisation along with AIBEA has addressed a communication to UFBU to prepone the date of strike.  The said communication is annexed overleaf.

 

REPULSE BACK WITH UNITED STRENGTH

TO PUSH BACK THE MERGERS OF BANKS AND PRIVATISATION OF IDBI

 

SAVE THE NATIONAL ECONOMY AND SAVE THE JOBS.

 

Yours comradely,

 /S.NAGARAJAN/

GENERAL SECRETARY

---

ALL INDIA BANK EMPLOYEES' ASSOCIATION

[Centra Office: CHENNAI]

ALL INDIA BANK OFFICERS' ASSOCIATION

[Central Office: CHENNAI] 

25^th may, 2016

To

Convenor,

UFBU, Hyderabad

 

Dear Comrade,

 

After the rightful decision of the UFBU at its meeting held on 11.05.2016 at Hyderabad to give the call for strike on 29.07.2016, we find that Government is fast going ahead with their plans for consolidation and merger.  You are aware recently on 17.05.2016, in a hurriedly held board meeting, through a table agenda, decision has been taken to proceed towards closure of 5 Associate banks and to be merged with SBI.

 

It has also been decided to merge Bhartia Mahila Bank with SBI thus pulling the shutters down of this public sector bank.

 

Even on the announced decision to privatize IDBI Bank, few days ago, the Finance Minister has stated that this exercise will be expedited and completed in a few months’ time.

 

You are also aware that today it has widely appeared in the media that Mr. Vinod Rai has stated that 27 PSBs will be consolidated as 6 Banks and banks like Bank of India and IOB would be merged with some other bank.

 

Thus, we can find that the Government is moving very fast on their reforms agenda.  In this context, we strongly feel that there is a case and need for UFBU to consider suitably preponing our strike to convey our immediate protest.

 

We request you to consider this suggestion in consultation with other constituents so that we can take a formal decision in this regard.

 

With greetings,

Yours comradely,  

S.NAGARAJAN GENERAL SECRETARY-AIBOA

C.H.VENKATACHALAM GENERAL SECRETARY-AIBEA

 

                                                                                               

Copy to: All constituents of UFBU

Phone bills, eating out and banking transactions become costlier from next month

From Wednesday, eating out, internet and travel becomes costly with the newKrishi Kalyan Cess kicking in. 

Finance minister Arun Jaitley had proposed the Krishi Kalyan Cess in this Budget, which is at 0.5% on all taxable services. The new effectiveservice tax could henceforth be 15%. 

Jaitley, in his last Budget, had increased the Service Tax rate from 12.36% to 14%. This new rate of Service Tax at 14% was applicable from 1st June 2015. Moreover from 15th November 2015, Swachh Bharat Cess at 0.5% also got applicable. Therefore the effective rate of Service Tax is currently at 14.5% with effect from 15th Nov 2015. It seems, the rate is slowly being increased to bring service tax closer to the expected goods and services tax (GST) rate of 17-18%. 

The move impacts your phone bills, dining plan, movies, healthcare, banking transactions. 

The proceeds of Krishi Kalyan Cess would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016. 

The Krishi Kalyan Cess shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force. 

Service tax collection has grown by a compounded annual rate of 25 per cent over the past four years to an estimate Rs 2.1 lakh crore collected in FY16. That's higher than the tax collected from excise and customs on items like gold, cars, mobile phones, etc. The government raised the service tax from 12.3 per cent in April 2015 to 14 per cent in May 2015. It's further set to rise to 15 per cent from June onwards. 

Also, the service tax base has gone up over the years as more services were included in service tax fold. Restaurants, petrol pumps and multiplexes are some of the common examples which have been included in the service tax fold over the past few years. 

No TDS for PF withdrawals of up to Rs 50,000 from June 1

 No tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1. 

The government has notified raising the threshold limit of PF withdrawal for deduction of tax ( TDS ) from existing Rs 30,000 to Rs 50,000, a senior official told PTI. 

"The Finance Act , 2016 has amended section 192A of Income Tax Act, 1961 to raise the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax Deducted at Source (TDS)," the notification stated. 

The provision will come into effect from June 1, 2016, providing relief to subscribers of retirement fund body EPFO . 

The government had introduced the proposal to deduct TDS on PF withdrawals in order to discourage pre-mature withdrawal and to promote long term savings.

According to existing provisions, TDS is deducted at the rate of 10 per cent provided PAN is submitted. 

TDS will be deducted at the rate of 10 per cent provided PAN is submitted. 

However, in case Form 15G or 15H is submitted by the member, then TDS is not deducted. These forms are to declare that their income would not be taxable after receiving payment of their PF accumulations from retirement fund body EPFO. 

While Form 15H is submitted by senior citizens (above 60 years of age), Form 15G is submitted by claimants below the age of 60 years. 

TDS is deducted at the maximum marginal rate of 34.608 per cent if a member fails to submit PAN or Form 15G or 15H. 

However, there are certain exceptions to deduction of TDS by EPFO. TDS shall not be deducted in case of transfer of PF from one account to another PF account. 

PSU BANKS FINANCIAL KEY FIGURES 2016 MARCH

India will have 8-10 very competitive public sector banks after merger

India will have 8-10 very competitive public sector banks once the "dust settles" and the consolidation phase ends, Union Minister Jayant Sinha said today. Currently, there are 27 state-owned banks in the country. "We are doing all the things necessary to really ensure that these banks are vibrant, are competitive and a huge sort of reform agenda we have underway for the banks right now... and of course we are now in the third phase of that," the Union Minister of State for Finance said. "We have gone through governance and management reforms, we have gone through the asset quality review...and now we are in the consolidation phase where we are really trying to ensure that at the end of this consolidation phase, we have a set of competitive banks," Sinha said, speaking at an event organised by Indian Software Product Industry Round Table 
"We have 27 public sector banks right now. When the dust settles, I think we will have may be eight or ten very competitive banks. Some of them are going to be large scale global players , some of them are going to be differentiated banks," he said. 

 What the country needs at the end of the day is to ensure financial inclusion does not suffer and at the same time we have competitive institutions, he said. 

He added that if we let our public sector institutions like banks, Air India, BSNL/MTNL languish so that they are not competitive, it is akin to a "de facto privatisation". 

In this de facto privatisation, rather than the value of those enterprises built up over decades with public money going to the public, it goes to the disruptive entrepreneurs or whoever it is who are able to take share away from these public sector enterprises...," he said. 

"There will be de facto privatisation of wealth. We may have some billionaires because of this, but ultimately it is people who will be suffering," he said. 

Recalling Prime Minister Narendra Modi's message about the role of government as a trustee of people's wealth, Sinha said, "As the trustee of people, we can't let all the value in the public sector go into the private sector because that contributes to inequality and uneven distribution of wealth." 

 

Merger with SBI associates will cut costs, improve efficiency, cost of the merger process at around Rs 3,000 crore.

The proposed merger of SBI with its five associate banks and Bharatiya Mahila Bank (BMB) will lead to savings, improve treasury operations and cut redundancies, its Chairman Arundhati Bhattacharya said today, pegging the cost of the merger process at around Rs 3,000 crore.

“Overall, the merger will be positive for merged entity as it will lead to savings, improve treasury operations and do away with the redundancies,” she said at a news conference here.

The five associate banks are State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.

Earlier, SBI had merged State Bank of Saurashtra and State Bank of Indore with itself.

“We have sought permission from the government to start the negotiations. We tried to assess how the merged entity will look like and there will be no impact on capital and NPAs,” Bhattacharya said.

Arundhati Bhattacharya said that BMB would bring in Rs 1,000 crore of capital while revaluation of fixed assets of the associate banks would fetch another Rs 700 crore.

To a query, she said any merger has its challenges. “We will have to take advantage of that and convert it to an opportunity,” she said, adding that the cost of the merger process would be around Rs 3,000 crore.

True / Real Health Of Indian Banks

Sri Vinod Rai and his team in Bank Board Bureau (BBB) appear to be trying for cleaning balance sheet of public sector banks in particular and banks in general. RBI Governor Mr. Raghuram Rajan has also been engaged in cleaning of finacials of PSU banks for last two years. Prior to that Mr. Suba Rao also tried a lot to clean Balance sheet of PSU banks. Mr. Arun Jaitley Finance Minister and Mr. Jayant Sinha Dy Finance Minister are also sincerely trying their best to improve health of banks. Mr. P Chidambram and Mr. Pranab Mukherjee also appeared to think of best for banks. 

Do Not Drag RBI Governor Into Unnecessary Controversies

The RBI governor should not be dragged into unnecessary controversies, a top industry organisation said here on Friday, stressing that the central bank has played a pivotal role in bringing about macroeconomic stability for India.

The Reserve Bank of India has played a pivotal role in making India the best among the emerging markets and unless some serious offence has been committed by an incumbent, he should not be targeted, the Associated Chambers of Commerce and Industry of India (Assocham) said.

"Surely, it is the prerogative of the government to appoint and re-appoint a person to the coveted position of RBI governor, but the kind of media statements being issued about Raghuram Rajan do not augur well for the country's financial system," Assocham said.

The Assocham statement comes in the wake of strong attack on RBI Governor Raghuram Rajan by BJP leader Subramanian Swamy, who in two letters to Prime Minister Narendra Modi in recent weeks has demanded that Rajan be removed from the post. On Thursday, Finance Minister Arun Jaitley slammed "personal attacks" on Dr Rajan.

The country's financial system is already reeling under challenges because of the unprecedented levels of stressed assets in the banks, the chamber said.

"Rajan enjoys an impeccable track record as a top order world economist. The current account deficit has been brought down to a record level despite a huge fall in the merchandise exports, though a sharp drop in the import bill did help. As compared to currencies of the other emerging economies, the Indian rupee has performed exceedingly well," the statement said.

"As far as monetary policy is concerned, to be fair to him, Rajan did drop the policy repo rates by about 150 basis points, which the banks have not transmitted fully," it added.

"While one can argue about the inflation staying an obsession of the RBI, the central bank has been mandated by the targets of inflation set by an agreement set by the Finance Ministry. Besides, the RBI has been talking about sustainable growth trajectory, rather than infusing a bubble into an over-leveraged economy," the chamber said.

Urging restraint on the part of senior politicians, Assocham said that the matter of re-appointment of RBI governor should be left to the good wisdom and judgement of Prime Minister Narendra Modi.

"Certain amount of dignity must be attached to the post, especially when India is on the verge of a big leap into economic growth, after two years of dealing with global upheavals and domestic issues like successive droughts," it said.

Canara Bank reports $583 million loss in fourth quarter

State-run Canara Bank reported on Friday a fourth-quarter net loss of 39.05 billion rupees ($583 million) as provisions, including those to cover sour debt, jumped six times.

That compares with a profit of 6.13 billion rupees a year earlier.

Gross bad loans as a percentage of total loans had jumped to 9.4 percent as of March 31, from 5.84 percent in December, and 3.89 percent a year earlier.

Provisions, including for loan losses, surged to 63.32 billion rupees in the three months ending March 31, from 10.1 billion rupees a year earlier, Canara Bank said in a regulatory filing.

SBI's Q4 net profit slumps 66% on Rs 13,174 crore bad loan provisions

 State Bank of India (SBI), the largest public sector lender in India, on Friday reported a 66.32 per cent year-on-year (YoY) fall in net profit at Rs 1,260 crore for the March quarter on account of higher-than-expected provisioning for bad assets. 

The lender had reported a net profit of Rs 3,742 crore in the corresponding quarter a year ago. In an ET Now poll, analysts had estimated the bank to report a net profit of Rs 1,840 crore. 

This is the national lender's sharpest fall in net profit since March 2011, when it fell 99%. 

Provisions for the quarter stood at Rs 13,174 crore, of which Rs 12,138 crore was kept aside for non-performing assets ( this includes Rs 543 crore provision on loans given against vanishing food grains in Punjab). 

Slippages for the quarter stood at Rs 30,313 crore compared with Rs 20,692 crore in the December quarter. Gross NPAs jumped to 6.5 per cent of the gross advances from 5.1 per cent in the December quarter and 4.25 per cent in the year-ago quarter.​

NII, the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, stood at Rs 15,291 crore, up 3.9 per cent for the March quarter. 

This was higher that the estimate of Rs 13,960 crore made in an ET Now poll. 

The total deposits of SBI rose to 9.7 per cent to Rs 17,30,722 crore, while advances rose 12.5 per cent to Rs 14,63,700 crore. 

The bank has declared a dividend of Rs 2.60 per share for the full year. 

 

Govt likely to table the 7th pay commission report before Cabinet next month

Central government employees can expect to get some good news trickling in from government sources towards the end of June.

As per reports, the Finance Ministry is likely to table the 7th Pay Commission report to the Cabinet for approval in the last week of June.

The 7th pay panel headed by AK Mathur had recommended the minimum salary for central government employees at Rs 18,000 and maximum salary at Rs 2,50,000. As employees protested against the wage hike calling it the "lowest ever" raise, the government set up the Empowered Committee of Secretaries group to review the AK Mathur-panel's recommendations.

The Empowered Committee of Secretaries on the Seventh Central Pay Commission is expected to soon wrap up its report on the remuneration of government employees.

Sources added that even the Prime Minister's Office is keen on a favourable pay hike for the central government employees, so the panel is likely to recommend a minimum salary at Rs 24,000 and the highest salary at Rs 2,70,000.

Sources added that the government is exploring options for meeting the additional payout over and above what was recommended by the 7th pay panel. The payout could be substantial with salary hike and arrears adding up to a Rs 1.02 lakh crore burden on government finances.

Report add that once the report moves from the table of the empowered group of committee to the cabinet, there is no reason why the cabinet would inordinately delay it.

The Finance Ministry is keen that higher salaries reach government employees just before the festive season starting mid-August, as spurt in consumption during the festive period will have a domino effect on the economy.

source  zee news

Filing your ITR? Don’t forget to claim tax relief on arrears

It is bonanza year for government employees. Around 16 lakh ex-servicemen have received the first installment of the one-rank-one-pension payouts along with another fifty-two lakh retired pensioners from central government service who would benefit from the 7th Pay Commission recommendations. Although, technically, they have earned the money years back, the pension and pay hikes will be credited as lump sum to their bank accounts only now. This could mean a huge tax bill. There is, however, There is, however, an escape route which most are not aware of. As per tax rules, if you have received any portion of your salary or pension in arrears or in advance, you are allowed tax relief under section 89(1) . 

The intention of the relief is to save you from any additional tax burden due to delay in receiving your earnings . "The relief protects the taxpayer from paying a higher tax. In many cases, the individual might have moved up in the tax slab and should .definitely not be penalised with higher taxes because he received his income late," says Archit Gupta, founder and CEO, ClearTax.in. Not many people understand how arrears should be taxed as the calculations are a bit complicated (see box). 

While you are claiming relief under Section 89(1) do not forget to fill Form 10E. It is is mandatory to file to be eligible to make the claim. "Taxpayers who have claimed relief under section 89(1) in the previous years but had not filed Form 10E. It is is mandatory to file to be eligible to make the claim. "Taxpayers who have claimed relief under section 89(1) in the previous years but had not filed Form 10E have received letters from the department stating the relief was not allowed as Form 10E was not furnished," says Gupta. Good thing is that Form 10E can be easily filed and submitted online under e-file, other than ITR section. 
ELEMENT: Calculating tax relief on arrears correctly. 

Step 1: Calculate tax payable on the total income, including arrears for the year in which it is received 

Step 2: Calculate tax payable on the total income, excluding arrears for the year in which it is received 

Step 3: Calculate difference between tax liability in Step 1 and Step 2 

Step 4: Calculate tax payable on the total income, including arrears for the year o which the arrears relate 

Step 5: Calculate tax payable on the total income, excluding arrears for the year o which the arrears relate 

Step 6: Calculate difference between tax liability in Step 4 and Step 5 

Step 7: Subtract the tax difference you arrived at at Step 6 from Step 3. The excess amount is the tax relief you can claim. 



SOURCE: ClearTax.in 
 

Merger talk lifts shares of SBI and other state-owned banks

Despite the equity markets trading range bound at lower levels, state-owned bank stocks soared on possible merger talks in Wednesday's trading. The boards of SBI and the associate banks had met individually on Tuesday to take a call on the proposed merger and begin talks. On Wednesday, State Bank of India shares were up 1.78 per cent to close the day's trade at Rs 180.2. Two of the banks associates also rallied with State Bank of Mysore gaining 9.44 per cent to Rs 467.

NPA clean-up to reflect on banks’ earnings

Banks' March-quarter earnings may be their worst in years as Reserve Bank of India's (RBI) forced bad loans recognition eroded earnings despite a boost from treasury gains. Investors, however, will keenly watch for guidance on whether the industry is done with the clean-up.

State-run banks will bear the brunt of these provisions, barring Bank of Baroda which went for a sweeping provisioning in the December quarter. But the picture is not pretty at private lenders such as ICICI Bank and Axis Bankwhich went overboard with infrastructure lending. HDFC Bank may yet again stand above the rest, and probably show in contrast that its corporate loans book grew to record when others are reining in

While it may be a sometime before HDFC Bank gets back to its habitual 30% earnings growth, analysts are expecting it to accelerate its focus on corporate lending which is estimated to get to Rs 1 lakh crore.

The industry as a whole may see its profits collapse with state-run banks' net profit crashing 87% in the March quarter, while private banks report 5% growth, forecasts Kotak Institutional Equities. Revenue for private banks may advance 15%, and for state banks it may fall 3%, it said.

"I would still keep an eye on asset quality, provisions and the management's guidance on credit costs,'' says Manish Ostwal, analyst at Nirmal Bang Securities said. "But more important will be guidance for next fiscal, particularly growth. Some state-owned banks like SBI, Canara Bank and BoB have taken the pain and could be re-rated." RBI allowed banks to make half the provisions arising due to Asset Quality Review in Q3 while the remaining provisions are likely in Q4.

Many public sector banks reported record losses in the December quarter. Losses at Bank of India, Indian Overseas Bank, UCO Bank, Syndicate Bank, Central Bank of India, Dena Bank, Allahabad Bank, State Bank of Patiala, IDBI Bank and Bank of Baroda together added up to a huge Rs 12,756 crore in the quarter.

Bank credit growth has fallen below 10% in2015-16, thelowestin18years. But onesavinggracecouldbetheirtreasury income where a surge in bond prices could help them buffer the losses from infra loans. "The 26-bps fall in 10-year G-Sec yields during the quarter should result in healthy treasury income. Marginswillremainunderpressure for PSU banks with significant back ended growth in Q4,'' says Spark Capital.

UCO Bank , Bank of India and Indian Overseas Bank will be merged with stronger entitiy Jetly

After nudging State Bank of India, the country's largest lender, to consider a merger with its five associate banks, the government may now look at combining three other state-run lenders — UCO Bank , Bank of India and Indian Overseas Bank — with stronger entities. "There have been some discussions on the merger of these three weak banks with more financially sound lenders.Various options have been discussed," said a finmin official, who did not wish to be identified. The official clarified that the discussions are in an exploratory stage, reiterating the stand that any consolidation proposal has to come from the banks and that the government will act only as a facilitator. Earlier this month, ET had reported that the government would prod SBI to kick-start the merger process with associate banks. SBI announced on Tuesday its intent to amalgamate them and Bharatiya Mahila Bank.

The merger decision is exploratory at this stage and there is no certainty about the completion of the acquisitions, SBI said in a filing to the stock exchanges. With the merger, SBI will get Rs 5,000 crore of fixed capital from the associate banks and BMB, Chairman Arundhati Bhattacharya told ET. According to reports, SBI will have deposits of over Rs 21 lakh crore and advances of Rs 17.5 lakh crore if the mergers are completed.

"All this will also improve our ranking among global banks. Our ranking will go up to 55 from 59 in terms of balance sheet size," Bhattacharya said.

For the merger of UCO Bank, Bank of India and Indian Overseas bank, the government may take the help of the recently constituted Banks Board Bureau (BBB) to overcome concerns over technology platform and human resource issues. "If required, the BBB can interact with the boards of these banks to work out a plan which takes care of all areas of concern," the ministry official said. UCO Bank, based in Kolkata, reported a net loss of Rs 1,715.16 crore in the three months ended March, its second straight lossmaking quarter.

The level of its gross NPAs widened to 15.43% from 6.76% a year earlier. Bank of India reported a loss of Rs 1,506 crore in the quarter ended December, while IOB posted a loss of Rs 1,425 crore in the period, the latest quarter for which they have declared results.

MCLR- MARGINAL COST OF FUNDS BASED LENDING RATE

After so many request received from my readers  re post this article

MCLR Kicks in Bye Bye Base Rate ( MCLR is going to create havoc for Bankers)

RBI has instructed all the Banks to Introduce Marginal Cost of Funds Based Lending Rate  popularly known as MCLR w.e.f  01 April 2016.

What is MCLR? 

Majority of the bankers are aware of Base Rate and its applicability.  Whenever there is a change in Base Rate it is applicable for all loans and advances.  ( Except for those customers  who have opted for fixed  ROI ).

MCLR is something like combo of Fixed and floating rate of interest.

The following are the important components for calculating the MCLR

1. Marginal Cost of funds.
2. Tenor Premium.
3. Operating Expenses.
4. Cost of Maintaining CRR.

Marginal Cost of funds takes into account ROI on Savings and Term Deposit accounts and also cost of Borrowings  from RBI with Repo Rate.   In Base Rate regime Repo Rate is not considered.  Now onwards any change in Repo Rate will have significant impact on MCLR.   Reduction and increase of Repo Rate by RBI will be immediately factored in MCLR.

Further due to inclusion of Tenor Premium i.e premium paid to raise long term funds MCLR will change along with the tenor of the Loan.  Majority of the banks have introduced the following tenors

1. Overnight
2. One Month
3. Three Month
4. Six month
5. One Year .

Important feature of MCLR is just like Fixed Deposits, the MCLR is fixed till the next reset date, irrespective of the changes in the MCLR  during the interim period. ( RBI has give freedom to banks with regard to the reset dates linked wither to date of first disbursement of loan or to the date of review of MCLR )

MCLR  has to be announced by respective banks on a pre announced date every month.  However for banks which do not have adequate technological infrastructure may announce MCLR once in a quarter on a pre announced date.  ( This relaxation is provided for only one year )

The following are some of the key points

1. Consent from existing borrowers should be obtained for switch over to MCLR.
2. Existing loans which are renewed on or after 01 04 2015 shall invariably priced under MCLR.
3. Base rate depends on Cost of funds and Margin where as MCLR depends on Marginal cost of Funds and Tenor Premium.
4. Advances to banks own and ex employees are exempted from MCLR.

Bankers have to put in extra time in explaining the new concept to the borrowers.  As we all know the interest rates are heading south, it should be made very clear to the customers that any reduction in ROI will be effective for new loans only and the reduction for him will be passed on to him in future only. Branches have to face the wrath of the existing customers.   We all know even for a failure of credit of gas subsidy bankers are being blamed.  Now with these new regulations customers will feel that they are being robbed.

With the implementation of the MCLR, any reduction in interest rates by RBI will be passed on to the customer immediately and effectively.

All you need to know about No Claim Bonus on car insurance

While prices generally tend to rise, car insurance offers a unique proposition whereby premiums can actually go down every year, thanks to No-Claim Bonus (NCB).

Most policyholders are familiar with the broad concept of NCB but often they do not understand the nuances, leading to disappointment at policy renewal.

Here are seven aspects of NCB you need to be aware of:

NCB is a discount only available on renewal of policy

In motor insurance, No Claim Bonus, as the name suggests, is the insurer's reward to the policyholder for not making a claim in the preceding years. That is, NCB - which is a discount ranging from 20-50% on premium payable cannot be claimed as a right but has to be earned by maintaining a claim-free record. When you buy your first comprehensive motor insurance policy, you are normally (except in the rare case of NCB  transfer)not eligible for any NCB discount on the premium paid because you have no claim-free record as such. You can claim a starting NCB of 20% on the first renewal of the policy provided there has been no claim during the past year. This discount increases steadily with every claim free year up to a maximum of 50% at the end of five claim free years.

NCB belongs to you, not your car

This is the key feature of NCB - it is associated with the policyholder and not the vehicle. Therefore, you get to retain your NCB if you replace your existing car with a new one or if you switch to another insurer at the time of renewal of the policy. NCB transfer is a fairly simple process: Assume you had purchased a car in 2008, which was then sold in 2013 on or after the 5th policy anniversary. If you never made a claim during the period, you would have earned an NCB discount of 50%. Now, suppose you buy a new car in 2015 and the premium for this car's policy is Rs 18,000 (excluding service tax), out of which Rs 15,000 is the premium for the own damage component. You can transfer the NCB earned on the previous car policy to the new car policy and claim the NCB discount on the first premium payable for the new policy. "Here, the applicable discount on the policy premium for you is 50% of Rs 15,000 which is Rs 7,500, so you end up paying only Rs 10,500 instead of Rs 18,000 .says Varun Dua, CEO and founder of web aggregator coverfox.com.

What is not allowed is a person-to-person transfer, except to the legal heir in case he/she inherits the car on the policyholder's death. "Since the car ownership of the deceased will be transferred to the legal heir, so will the policy along with its applicable NCB for that particular car. At time of renewal, the heir is free to the heir is free to choose any insurance company he/she wishes to go with," says Dua.



Transferring NCB 

You have to follow a simple procedure to effect this transfer when you are selling your old car and buying a new one. "One, you have to submit .29, 30 (buyer-seller agreement form) along with the letter requesting for transfer of NCB to your existing insurer," says Yashish Dahiya, CEO, policybazaar.com, an online insurance aggregator portal. Next, the insurer has to issue an NCB certificate, which is valid for three years and you need to submit the same to your new insurer.
If you are switching to a new insurer at the time of policy renewal for your existing car, you only need your last year's policy document or renewal notice that mentions the NCB you are eligible for.

If you are buying the policy online, however, it is likely that you will not have to submit the certificate - your NCB will be transferred based on your declaration. However, this does not mean that you can suppress any claims made earlier, in order to get NCB as your new insurer can cross- verify such information with your previous insurance company. "If there has been a claim, it (the new insurer) sends you a notice for recovery of the discount you may have claimed in the premium wrongfully," adds Dua.

No NCB for third party cover

Remember, the NCB discount is applicable only to the own damage premium component and not the third party liability premium, which constitutes 15-20% of the total premium. For instance, in the example earlier, the NCB discount is Rs 7,500 and not Rs 9,000 (50% of total premium of Rs 18,000).

This means that NCB is not available on third party insurance for cars. For example, if you have only third party car insurance no NCB is earned irrespective of the number of years the policy has been renewed and whether any claims have been made or not.

Small claims can cause bigger loss

While it is tempting to make a claim every time your car suffers minor damages, it is prudent to carry out a cost-benefit analysis before doing so. "This is because NCB reverts to zero even in case of a small claim. By forgoing smaller claims, you could end up saving a lot more in the form of direct discount on subsequent year's premium due to NCB," says Dua. For example, say your claim-free record for a Honda City car bought in 2011 2011 can save around Rs 6,000 (applicable discount of 45%) in the year 2015. Now, if your claim amount in the preceding year is lower than this amount, you would end up making a loss by filing a claim. In addition, circumstances should also be factored in. "If you own an old car - with accumulated NCB of 50% - that you intend to sell, you can forgo small claims, if any, so that your NCB will translate into substantial discount on your new car's premium," says Dahiya.