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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