RECAPITALISATION OF BANKS:

RECAPITALISATION OF BANKS:

Finance Minister in their budget 2014-15 raised  recapitalization of the bank.Recapitalization of banks could also be high on the priority list of the government. Stressed assets of Indian banks amount to 10 per cent of total bank loans.

 According to Reserve Bank of India (RBI) estimates, the total quantum of stressed assets, that includes non-performing assets, is about Rs 10,00,000 crore.

There is a possibility that the government might set up a fund that buys out stressed assets of banks, freeing them up to lend. The UPA government had allocated Rs 11,000 crore for bank recapitalisation in the interim Budget for 2014/15, lower than the Rs 14,000 crore in 2013/14 and further allocations are unlikely in the revised 2014/15 Budget.

 State-owned banks could be encouraged to raise capital from the equity markets. Some 86 per cent of NPAs are with state-owned banks.

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CENTRALISED RETAIL BANKING BOUTIQUES:

Allahabad Bank opens seven more CRRBs at Surat ,Vadodra,Dunlop
Bridge (Kolkata)  Banglore, Vijayvada City,Mohali & Hawrah thereby
increasing the total numbers of CRRBsthroughout the centralised
 retail banking boutique is a specialised delivery channel whichdeals exclusively  with Housing Loan,Car Loan,Commercial Vechicle loan,
Education Loan and saral loan.  

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RBI tightens norms for credit card issuers on minimum dues

RBI tightens norms for credit card issuers on minimum dues

RBI SETS NORMS FOR LATE FEE ON CREDIT CARDS:

RBI has told banks that the can charge late fees only in the next billing cycle following a missed payment. At present  card issuing banks charge a late fee for any payment made after the due date.

The late fee imposed by card issuers ranges between Rs.100 and Rs.700 depending on the outstanding amount above Rs.20000 most banks charges a late fee of between Rs.600 and Rs.700 .Most utility providers like electricity and telecom companies charges  customers if they miss the due date.How ever i the case of credit card payment the issuers charges interest for the delayed payment and in addition to this they charge a late fee payment.

This had led to a lot of heartburn among customers as they ended up paying both late fee and the interest even if they made the payment before the next bill was due.

CEO of SBI confirmed that RBI has asked banks not to impose late charges if the cardholder had paid before the next billing but after the due date .It is possible that the regulator must have felt that since the card holder is not being considered a delinquent until the next bill is unpaid the penalty should not ve charged he added when asked about the rationale .

In December 2013 RBI had directed banks credit card accounts to be treated as delinquent only if the minimum amount due as mentioned in the statement is not paid fully within 90 days from the next statement date .The gap between two statement should not be more than a month.

Some banks took the due date specified in the statement of payment of minimum amount due to determine the overdue status while others used the subsequent billing date to determine the over due status.

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INTEREST RATE RBI BEST TOOL TO CONTROL INFLATION

INTEREST RATE RBI BEST TOOL TO CONTROL INFLATION :

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RBI Governor Mr.Raghu Ram Rajan said the "BEST TOOLS" available with the central bank to control price rise is interest rate.

Our best tool to control inflation is interest rate he said addding the government too has tools like increasing agricultural production and inproving suppply.
Both need to work together and will work together . we were expecting some increase in the CPI  number because of the seasonal effects from vegetable prices,but it came more than anticipated by the consensus forecast .We will study them in detail.What it suggest is that inflation is high as for as food prices go .

Mr.Rajan was talking to reporters after the RBI's Board meeting.He,however said the core inflation has been coming down but through very very gently.
Mr.Rajan said SEBI and the finance ministry have drawn up a contingency plan to deal with any excessive market volatility .

TheRBI said it has come across a spate of fictitious offers of cheap funds in recent times from the fraudsters through letters e-mails,SMS,Mobile phone.
The central bank has cautioned that any person resident in India collecting and effecting /remitting such payments directly indirectly outside India would make  himself /herself liable to be proceeded against with for contravention of the foreign exchange management act ,1999 besides being liable for violation of regulations relating to know your customer (KYC) norms /Anti Money laundering (AML) standards.

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Minors over 10 years can operate bank accounts: RBI

Minors can operate bank accounts: RBI

RBI has allowed banks to offer additional facilities as internet banking ,ATM,debit card and cheque book to a minor account holder.

Banks should not allow a minors account to be overdrawn and that these accounts should always remain  in credit.

RBI has given the leeway to banks to fix the minimum age at which they will allow minors to operate saving bank accounts independently .

In a separate notification the RBI said banks cannot slap charges on customers for not maintaining the minimum balance in inoperative saving and current accounts in which no transaction have been made for two years .The central bank had announced this change in its april 1 monetary policy and was made effective . 

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FINANCE MINISTER ASKS PSB CHIEFS TO INCREASE USAGE OF SARFAESI LAW TO RECVOER BAD LOANS:

FINANCE MINISTER ASKS PSB CHIEFS TO INCREASE USAGE OF SARFAESI LAW TO RECVOER BAD LOANS:

The finance ministry has asked public sector banks to increase the usage of Sarfaesi Act provisions to quickly recover bad loans.

it also wants PSBs to adopt the latest sophisticated risk management tools to effectively measure risks in lending and price loans accordingly so that there is an improvement in the asset quality .These were measures suggested by the new Financial Services Secretary Mr.G.S.Sandhu to the PSB Chiefs.

This development comes in the backdrop of rising non -performing assets of PSBs and the difficulties being faced by the government in infusing more capital,owing to fiscal constraints .The ministry has been asking PSBs to strengthen their efforts to recover bad loans.

The Ministry has now said where ever possible the PSBs must exercise their rights under Section 13(4) of the Sarfaesi Act, which empowers the lenders to take possession of the secured assets of the borrower (whose accounts have turned NPA) and sell the assets before their value deteriorates.The section also empowers lenders to takeover the management of the business of the borrower and sell the assets if needed.

The Data for 2012-2013 showed that out of the three methods for NPA recovery Sarfaesi Act debt recovery tribunals and loak adalats Sarfaesi Act route was the most effective .

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MANAGEMENT AND GOVERNANCE ISSUE IN PUBLIC SECTOR BANK

MANAGEMENT AND GOVERNANCE ISSUE IN PUBLIC SECTOR BANK:

Reserve bank of India and government over bad loans at public sector banks have led to a bitter exchange of notes between the banking regulator and the finance ministry that controls state run lenders.

Bad loans at state run banks have gone up at a brisk pace ,unlike their private sector banks. The RBI says this was because of reckless lending to corporate and allegation that has not gone down well with the ministry which says the banks we only following government advice to help boost the economy.


The RBI said the sharp rise in bad loans can not be just because of the downturn in the economy and blamed  what it called sub optimal credit management among public sector banks for the problem.

In its response defending PSU banks the ministry said most private banks had stopped lending post global financial crises in 2008 while PSU banks emerged as the only providers of big ticker loans .

The Central Banks was not convinced .It responded last week maintaining its stand threat PSU banks have week credit  management skills.In response to the ministry defensive letter RBI noted that even if the PSU banks were lending at the instance of the government to boost the economy they should have followed the principles of prudent lending which implied giving loans to credit worthy borrowers against adequate security as collateral.

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TARGETTING INFLATION-Govt to allow more private banks

TARGETTING INFLATION-Govt to allow more private banks 

The Governor of Reserve Bank of India Mr.Rajan will explain to the new Government the need to keep inflation under control.

Further keeping interest rates relatively high may be un avoidable to achieve that government officials famillar with RBI .RBI which is in the process of formulatingnew guidelines for bank licence was unlikely to allow corporate houses set up new banks in the near future .
RBI will talk to the next government on the inoprtance of inflation control , the inflation targer and the need to stay the course which the central bank is following.

RBI strenghthing its supervisory capabilities before issuing the new licences to the corporates.RBI hold a dialouge with the new government on a number of areas including the need oto present a credible budget.

The economy currently skating along at bottom but growth could pick up by at least one percentage point if measures were taken to unlock projects tied up in red tape.
we could see growth between 5.5% to 6% nudging the latter in the second half of hte current fiscal year. 

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RBI AUDIT 2014- Big Loan Defaulters to Face RBI Audit

RBI AUDIT 2014- Big Loan Defaulters to Face RBI Audit

Reserve Bank of India has taken upon itself the task of investigatinf bank frauds after a series of inquiries by banks themselves i high profile cases such as those involving Deccan chronicle and Kingfisher Airlines yielded very little.

The Board of Financial Supervision chaired by RBI Governor Mr.Rajan, has in fact cleared a proposal that the central bank will conduct an independent forensic audit of corporates declared fraudulent by banks. Independents audit ,however will be restricted to corporates that have borrowed more than Rs. 1000 crore.
The Hyderabad based Decan Chronicle borrowed Rs.4000 crore from a consortium of 18 lenders ,who allege the company misused the banking system by borrowing from  one set of lenders without keeping others.

Banks officials say the central banks move reflects poorly on the banks and reaffirms the fact that banks and some promoters have developed cozy ralationship that has  led to thousands of crores of bad loans.

Independent forensic audit is one of the many steps taken by the RBI to check the rise in stressed assets in the banking system for instance RBI decided to incentivise lenders who take quick action to resolve such cases and penalise those who sit on them. Banker say the findings from forensic audit will enable RBI to devise policies that will help it keep a close watch on the creditor borrower relationship and quickly step in when there is misuse. 

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RBI customer norms 2014- RBI issues fresh norms to curb customer discrimination

RBI customer norms 2014- RESERVE BANK OF INDIA ISSUED FRESH PRESCRIPTION FOR BETTER CUSTOMER SERVICE:

1. For calculating base rate ,the marginal cost of funds be factored if average maturity of deposit is lower.
2. Floating rate loan covenant to have interest rate reset periodicity and resets allowed on those dates only.
3. Sunset clause for benchmark prime lending rate,no extra spread/fees when customer shifts to base rate.
4. IBA to develop new benchmark for floating loans.
5. Publish interest rates,fees and charges on websites.
6. Provide annual percentage rate (APR) representing the total cost of credit on an annualized basis.
7. Uniform terminology to be used by all banks.
8. Standardized loan format for retail customers covering terms and conditions.
9. Benifit of interest reduction while pre-payments to be given on the day the money is received by bank
    and not wait for the next EMI cycle dates.
10. Spread can only be increased if credit risk profile of customer deteriorates.

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Bharatiya Mahila Bank news in India- Mahila Bank to offer services via mobile Van

Mahila Bank To Offer Services Via Mobile Vans-

Bhartiya Mahila Bank Limited ,India first women s bank is considering to have mobile banking 
vans fitted with automatic teller machines (ATM) to cater to customers living in areas where there are no bank network.

We can not expect women to visit our Hyderabad branch for far off places around the city.Also ,we cannot have a wider branch network to be present in every neighborhood like the established public sector banks. Therefore we are thinking of launching mobile banking vans that visit different locations at the fixed time schedules .

BMB Chairperson and Managing Director Usha Ananthasubramanian toil reporters after inaugurating a branch on March 22.

According to Ananthasubramanian , the bank has nineteen branches so far and by the end of this month another four five branches would come up . There are plans to open 55-60 more branches in he next financial year .Each branch will be manned by five six staff,out of this senior positions ate being filled by people brought from other banks on three year deputation. Staff manning form offices will be recruited by BMB.

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RBI ALLOWS 5 PRIVATE BANKS TO IMPORT GOLD

TOP 5 BANKS ALLOW TO IMPORT GOLD

The Reserve Bank of India has allowed five domestic private banks to import gold.Sector officials said this could be a significant step towards easing of tough  curbs o the metal imposed last year to cut the country trade deficit.

The central bank allowed imports by  HDFC Bank,Axis Bank, Kotak Mahindra Bank,IndusInd Bank,YES Bank ,officials at the respective banks told Reuters.Two sector sources confirmed the names of the banks.

The Government had enforced an 80/20 rule in July, making it mandatory to export a fifth of all gold imports.Under that ,only six banks and three state run trading agencies that had facilitated export of gold or jewelry in three years were allowed to import. 

The six banks were mostly state run lenders . The central bank has permitted banks though they had not facilitated any exports of metal or jewelry in three years.

RBI ALLOWS 5 PRIVATE BANKS TO IMPORT GOLD List-

1. HDFC Bank

2.Axis Bank

3.Kotak Mahindra Bank

4.IndusInd Bank

5.YES Bank 

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Live Currency Exchange Rates Free currency converter

Live Currency Exchange Rates Free currency converter

Live Currency Exchange Rates Free currency converter

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RBI Prepayment charges for floating rate home loans

RBI GOING TO SCRAP  PRE - PAYMENT CHARGES:

The Reserve Bank of India is going to order to the Banks to scrap the pre -payment charges on all the small and corporate loans.

RBI observed that there is no justification for banks to charge pre-payment charges on any loan since the entire system has moved to floating rates .
Banks are seen to be discriminatory between retain and big corporate clients who often arm twist lenders to charge them lower because of their sheer size and have no penalty clause.The tenure is extended when big corporate default and they restructure their loan portfolio and pay lower rates of interest.
Central Bank told that all the prepayment be abolished who did not wish to be named when all the loans are based on floating rates where is the question of penalty.

Bank loan are retail loans while the share of small and medium enterprise loan is about 15% .In the monetary policy review last week ,RBI Governor Mr.Rajan had advise bank to stop charging prepayment charges on floating rate loans and non maintenance of minimum balance.Bank may argue that there is a cost involved in offering services such as cheque book charges ATM charges( transaction ) and Account Statement necessitating a minimum balance of Rs.20000/-.Charges for non maintenance of minimum balance vary between Rs.500 to 2000 .this is not the first time bank and the sector regulator may be on collision course .

Three years ago Reserve Bank of India had directed banks not to charge any penalty on prepayment of home loans ,after a similar nudge did not work.However banks continue to charge prepayment penalty on other floating  rate loans products sch as education,personal and car loan.

Mr.Mahajan said that if a customer is unable to maintain minimum account, banks should migrate such accounts to basic banking accounts,where they phase out value added services.

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DIFFERENTIATED BANKING LICENCE- RaghuramRajan pitches for differentiated bank licences

RaghuramRajan differentiated bank licences - RaghuramRajan supports for differentiated bank licences

The differentiated banking licence are more appropriate for some private entities aspiring to setup banks in India before granting in principle approvals for banking licence to two companies , Bndhan Financial  Services and IDFC. The banking regulator RBI has assessed various  applications.

RBI felt comfortable  with the Bimal Jalan committee .RBI opened up the possibility that will allow applicants to apply again ,  once they start giving licence on tap , as well as create differentiated banking licence.some of the applicants will be better off applying for differentiated licences rather than full licence as per version of Mr Rajan Governor  RBI.

Reserve Bank of India is going to offer only two New licences after a gap of a decade , due to public governess it considered this the most appropriate stance.

Several large industrial houses  Aditya Birla Group ,Reliance and bajaj Group and finance companies Shri Ram Capital ,L&T finance holding,Muthoot Finance had applied for a banking Licence.

Some of the entities that did not qualify for a full fledged banking licence in this round could re apply in the future.  In a discussion paper on India's Banking structure (released in Aug 2013) the banking regulator has said banks had shown significant progress in financial inclusion and in improving the  quality of risk management but added a lot more needs to be done.Mr Rajan added that RBI opened  up the possibility that will allow applicants to apply again, once they start giving the licence.  

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Axis Bank new loan plan 2014- Axis Bank new plan 30-year home loan for lower income Group

30 YEAR LOAN FOR  THE LOWER INCOME: 

Axis Bank has launched "ASHA " Home Loan a 30 year loan product for first time in the lower income segment.The risk factor is higher in this segment so that the rate of interest will be 10.75% in variable rates and 11.75%at fixed rate for the entire 30 years.

ASHA home loan will offer loans to customers even with family income from Rs.8000-10,000 per month and above.Customer can pool their family income instead of depending upon their individual income.

The product offers loans as small as Rs.1.0 lakh and up to RS.15 lakh in small town and up to Rs. 25 lakh in big town .

ASHA Home loan can be enjoyed by both salaried and self employed resident Indians.The product offer loan up to 90% of the property value.The product enables customers to purchase properties an area measuring 325 sq.ft. and above.

Loan can be taken under this scheme for new house ,resale ,ready ,under construction property .If you have a plot and you want to construct your house thereon , it also apply on that. 

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2014-15 HOME BUYERS Loan- IN 2014-15 HOME BUYERS MAY GET SOON 90% LOAN:

IN 2014-15 HOME BUYERS MAY GET SOON 90% LOAN

At present lenders offer maximum loan up to 80% of the property value. The National Housing 
Bank is considering proposal that seeks to allow lenders to give loan up to 90% of the property
value as home loan. 

The proposal is for above Rs.20 lakh loans that carry mortgage guarantee cover.Housing finance companies enter into a contract with mortgage guarantee companies at the time of loan origination.

Recently Dewan Housing Finance concluded the first ever mortgage guarantee backed securitisation deal for a pool of Rs.37.83 crore home loan coming from 288 loan accounts a person familiar with the matter .Each loan is below Rs.25 lakh falling in the category of Priority Sector Lending.

According to the Mr. Verma , Managing Director of National Housing Bank ,mortgage backed guarantee provides protection from possible defaults long term lending for housing loan up to 20-25 years.  

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RBI keeps repo rate unchanged ahead of polls 2014-15

RBI repo rate 2014-15,  RBI keeps repo rate remains same at 8 per cent .

LENDING RATES UNCHANGED

RBI Governer Mr. Rajan today focused on banking policy where they had indicated that lending rates will remain the same and no further hikes are expected in this year and if inflation remains comfortably low.Further the EMIs will not rise immediately.

GROWTH PROSPECT 2014-2015

RBI forecast for India's GDP growth in the year 2014-15 about 5.5% from the projected 4.9%in 2013-14, ADB  forecast India's GDP growth during the year 2014-15 is 5.5%.

BIG RELIEF TO THE CUSTOMER OF THE BANKS:-

RBI has asked banks not to charge penalty for future for maintaining minimum balance in inoperative accounts from their customers.

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