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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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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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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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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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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