Charging for higher ATM use will lead to more branch visits
Till now, banks were only allowed to charge customers if they transacted at non-home bank ATMs more than five times a month. That is now being reduced to three
The decision to allow banks to charge their customers for frequently using ATMs of the home-bank might prompt customers to visit bank branches more often, which in turn will increase the cost for lenders.
This is because no charges or limit have been prescribed for transactions at branches.
The Reserve Bank of India (RBI) on Thursday permitted banks to charge customers for using home-bank ATMs more than five transactions a month. Till now, banks were only allowed to charge customers if they transacted in non-home bank ATMs more than five times in a month. That cap has also been reduced to three in the six metro centres of Mumbai, New Delhi, Chennai, Kolkata, Bangalore and Hyderabad. Non-home bank ATMs refer to ATMs of banks where the customer does not have an account.
The move, however, has made lenders hopeful of recovering a significant part of the running and maintenance cost of these machines. Bankers also expect the volume of non-financial transactions to drop sharply once charges are introduced. These transactions do not earn any revenues for banks.
"For banks, ATMs were supposed to save costs. Customers were encouraged to go to an ATM to withdraw money instead of visiting bank branches. But in the past few years, the volume of non-financial transactions has increased substantially. Banks do not earn any revenues from these transactions. Also, the ticket size of financial transactions has reduced significantly, making the entire process expensive for banks. Unless there is a control, banks are losing a whole lot of money. Hence, introduction of these charges was necessary," said a senior executive in charge of a private sector bank's retail lending and payments business.
The transactions cover both financial and non-financial dealings. Hence, services such as balance enquiry, change of PIN, mini statement and others will also be chargeable. However, the rate of charges has been retained at Rs 20 a transaction. This will come into effect from November 1. Banks have been advised to communicate the charge structure according to their board-approved policy to customers in a fair and transparent manner.
"This will not lead to substantial earnings for banks but will help us recover our cost. Banks have been incurring costs in tightening the security arrangements following the attack inside an ATM in Bangalore. I don't think customers will mind paying a fee because it is ultimately for their safety," A Surendran, head of retail and international banking business at Federal Bank, told Business Standard.
Sector analysts, however, feel the decision might encourage customers to frequently visit bank branches instead of going to ATMs. It is estimated that on an average, banks incur a cost of Rs 10 for every transaction in an ATM. But in branches, the per-transaction cost for banks is close to Rs 50. "In such a scenario, banks will suffer as their cost of operations will increase further," said a banking analyst.RBI has left it to banks to decide on the maximum number of free ATM transactions. Most bankers did not confirm if they will start charging their customers for using home-bank ATMs for more than five times a month.
"Overall, the move is good for the banking industry as it will help reduce the number of needless transactions. Also, I believe eight free transactions in a month (considering use of both home and non-home bank ATMs) is adequate. But it is too early to say if we will introduce these charges. We have a committee, which will take a decision," said Rakesh Sethi, chairman and managing director of Allahabad Bank.
A few banks may also introduce the charges selectively based on the relationship value of their customers. "Most likely, we will tweak our strategy on ATM usage. But probably, we will not charge our priority and premier customers," said a banker with a private lender that currently does not charge its customers even for using non-home bank ATMs. The bank may also waive the charge if a customer maintains a certain balance above the mandated minimum average balance in his savings account.
http://www.business-standard.com/article/markets/charging-for-higher-atm-use-will-lead-to-more-branch-visits-114081500823_1.html
Syndicate Bank CMD remanded in judicial custody till Aug 29-Times of India
NEW DELHI: A special CBI judge on Saturday warned of action against the accused in Syndicate Bank bribery case if they do not stop attempts to influence her as she remanded the bank's suspended CMD Sudhir Kumar Jain and others to judicial custody till August 29.
"Please tell your clients to stop sending love letters to me. I am already from a well off background, If you don't stop this act, I will direct CBI to take action against you," Special CBI Judge Swarana Kanta Sharma said during the hearing.
She pulled up the accused and asked their counsel to make them behave properly.
Bhushan Steel Ltd vice-chairman Neeraj Singal, chief financial officer of Bhushan Steel Ltd Arun Agarwal, Vineet Godha, Puneet Godha and Vijay Pahuja were the other accused who were sent to judicial custody.
Jain, who was suspended as chairman and managing director after his arrest early this month, and Singal were produced in court after expiry of their judicial custody while the other accused were brought from jail on court's production warrants.
The court, on August 12, had issued production warrants against them.
CBI has filed two cases against Jain — accusing him of receiving a bribe of Rs 50 lakh through conduits and abusing his official position to enhance the credit limits of some companies in violation of laid-down procedures.
Singal was arrested by CBI on August 7, hours after the court had issued a non-bailable warrant (NBW) against him and an alleged middleman, Purushotam Totlani in the case.
On August 2, CBI had arrested six accused, including Jain and Agarwal.
CBI claimed to have recovered Rs 21 lakh in cash from Jain's residence besides gold worth Rs 1.68 crore and documents of fixed deposits of up to Rs 63 lakh.
In the two FIRs, CBI has named Singal, Ved Prakash Agarwal, chairman-cum-managing director of Prakash Industries, Pawan Bansal, chartered accountant, Vineet and Puneet Godha (relatives of Jain), Vijay Pahuja, Totlani and Pankaj Bansal.
They have been booked under various provisions of the Prevention of Corruption Act and criminal conspiracy under the IPC.
http://timesofindia.indiatimes.com/business/india-business/Syndicate-Bank-CMD-remanded-in-judicial-custody-till-Aug-29/articleshow/40316639.cms
PSU bank staff must be given more support and motivation: Former RBI Dy Governor
Kochi, Aug 16:
Former Reserve Bank Deputy Governor V. Leeladhar has said that India’s public sector banking sector has the best talents but the system needs to give them more support and motivation.
Leeladhar, who was honoured yesterday with a lifetime achievement award of the State Bankers’ Club for his commitment to banking, noted: “We have the best of the people in public sector banks, but we need to give a little more motivation to them.”
Subprime crisis
He recalled that that the RBI succeeded in insulating Indian banking system from the subprime crisis that devastated US financial institutions five years ago by directing the banks well in advance to increase the risk rate of home loans.
RBI Regional Director Nirmal Chand, who felicitated Leeladhar, pointed out that along with the then RBI Governor Y.V. Reddy, Leeladhar had played a pivotal role in insulating Indian banks from the global financial crisis.
Kerala Finance Minister K.M. Mani, who presented the award to Leeladhar, said that comprehensive financial inclusion could be achieved through a joint effort of the government and the banks.
SBI chief: Jan Dhan scheme will bring down use of cash-Hindu Business Line
Mumbai, Aug 15:
Rapid financial inclusion envisaged by the Government under the ‘Jan Dhan Yojana’ will lead to a decline in the usage of cash in India in line with developed countries, according to State Bank of India Chairman Arundhati Bhattacharya.
Referring to the magnitude of the challenge under financial inclusion, whereby only 58.7 per cent of households in India avail of banking services, the SBI chief said against this background, the launch of the Jan Dhan scheme by the Government is a welcome step.
In his Independence Day speech Prime Minister Narendra Modi announced a major new scheme — Jan Dhan Yojana — to universalise banking access and financial inclusion.
This scheme will provide for a bank account, a debit card and an insurance amount of Rs. 1 lakh to poor families.
Bhattacharya, in a statement, said with such rapid financial inclusion, the use of cash in India will decline in line with developed countries such as the UK (2 per cent), Australia (3 per cent), and Japan (6 per cent) going forward.
According to an RBI empirical study, alternative payment channels such as cheques, credit/ debit cards and Internet banking are not only more efficient than paper currency, but also leave paper/ electronic trails, facilitating tax audit. Usually, such payment mechanisms act as partial substitutes for high-value currency.
The SBI chief said the positive spillover from this structural transformation (via financial inclusion) in the long-run would be enormous. This apart, the move towards digital India would make good use of cost-effective cellular technology in future banking growth.
Further, the launch of the Sansad Adarsh Gram Yojana will encourage the development of smart villages that can effectively co-exist with smart cities as underlined in the Budget, she added
CBI raids 56 places in Odisha-Statesman
Director of chit fund company held
BHUBAneswar, 16 Aug: The CBI today carried out raids at 56 locations, including the residences of BJD legislator Prabhat Tripathy, Odisha Cricket Association secretary Ashirvad Behera, and several others in connection with a multi crore chit fund scam.
The agency also arrested Mr Sambit Khuntia, a local youth Congress leader and director of the Artha Tatwa group, which has duped thousands of depositors.
A few weeks ago the CBI had raided the residence of BJD MP Ramachandra Hansda, former BJD MLA Subarna Nayak and former BJP MLA Hitesh Bargati.
The raids sent jitters down the ruling BJD circuit here as it blows the lid off the links between politicians, builders, media houses and chit fund company owners.
Chief Minister Naveen Patnaik had stonewalled vociferous demands for a CBI probe over the last two years. He persistent argument had been that the state police was competent enough to carry out the investigations.
The state police had , however, never bothered to even question any political leader. The brazen manner in which the police acted had raised eyebrows last year when AT Group head Pradip Sethy told reporters about his political links when he had been arrested last year. Yet the police did not go after the politicians.
With the CBI conducting raids on a few politicians, the cover has been blown apart, remarked Opposition political circles here.
Reliable sources said a minister belonging to the ‘youth brigade’ and a BJD legislator, both from coastal Odisha are also on the radar of the CBI and ED.
BJD legislator Prabhat Tripathy said he was not at home when the search was conducted at his residence in Cuttack and Banki. "I have no links whatsoever with AT Group," he asserted.
OCA secretary Ashirvad Behera confirmed the raids but said he had nothing to hide as the AT Group had provided Rs 1 crore towards sponsorship of the Ranji Trophy Team. The payment was made by cheque and that is the only link, said Behera. The CBI wanted to know the date of the cheque, the bank in which it was deposited, said Mr Behera.
A Odia newspaper's office and its owner’s residence was also raided today. The CBI also searched the residences of Manoj Das, mine owner, Satyabrata Dhir, Prasanna Sethy, brother of Pradip Sethy, the owner of AT Group, a Charted Accountant’s office and several other places.
Mr Sambit Khuntia is said to have been arrested after a CBI team found him holed up inside a well at his residence in Bhubaneswar. When the team reached his residence this morning, his wife and mother claimed that he was not at home. However, the sleuths found him hiding in the well in the backyard of his house.
It may be recalled that the CBI was entrusted with the case following an order of the Supreme Court. There are as many as 44 chit fund companies of Odisha which are on the list of the CBI investigations.
http://www.thestatesman.net/news/71841-cbi-raids-56-places-in-odisha.html
They take baby steps in banking
Swati Bhan , Aug 17, 2014 :
Children are encouraged to save money
Reserve Bank of India recently said that 10-year-olds can open and operate accounts in banks. But much before the announcement, a bank for the children, by the children and of the children is being run in Ahmedabad.
Only difference is it is not a registered bank with the authorities concerned. Also, children manage it, withdraw and deposit money in their accounts. The only they know the total assets of this bank. The initiative by NGO Sarjan was taken to ensure that children get into the habit of savings. Children are encouraged to deposit the money in their savings account, even if it is a small amount. Working from a small building in the bylanes of Juhapura in the old city area of Ahmedabad, the bank has been operating for many years now.Now, more children are learning how to operate an account in a bank. Many more are getting interested in saving money to meet their needs and if need be even the requirements of their parents.
Every member of the Children Bank have a pass book and it is updated frequently. Children can withdraw money from their account only after giving reasons and what they intend to do with it. As account holders are children, they need to bring in at least one of their parents to withdraw more than Rs 100. “It is only after parents agree, the account holders are allowed to withdraw more than Rs 100 from their account,’’ says 10-year-old Ayesha, who is also the manager of the bank.
She says that children withdraw money for buying pencils, erasers and at times notebooks. “It is probably when they want to buy text books or other necessary items that they need more than Rs 50,” says Ayesha. Children can deposit even Rs two in their account. “Children, who come from economically poor background, many a time also have to avail loans to meet their requirement,” says Madina Solanki of Sarjan.She says at the time of opening account, the children take a pledge that the bank will be of some help to them in their difficult days. “The amount deposited by children is generally pocket money. Or sometimes, children save from the money given by parents for buying foodstuff. So, they should know that if they have to withdraw they have to do that too very cautiously,’’ says Solanki.
She says many account holders are children of daily workers and those who do odd jobs to eke out a living. She explains that if these children are able to deposit even Rs 10 or Rs 50 it is encouraged by the members.
At present, there are several account holders in the bank and the total deposit now is Rs 19,000. Children say that they do feel proud that they have their own pass book which is updated at the end of every month. “When you see Rs 500 against your name at the end of the month, it encourages you to deposit more by saving more,” said 11-year-old Runaz.
She opened her account in this bank when she was a seven-year-old. Ten-year-old Moin Allarakha says that it feels great when he realises that for purchasing a pencil or pencil box he does not have to ask money from his parents. All he needs to do is withdraw from the bank and buy the necessary items.
Another account holder, 12-year-old Sangamat Amreen, says that she had heard about the bank from her friend, who has an account in the bank. “It encouraged me. I would see her go to the bank and draw money to buy notebooks,” says Amreen.She says that children would deposit even Re one or Rs 2 given at home. “If you leave it in the piggy bank at home, you still have the option of pulling it out but by depositing it in the bank, there is an advantage that the money earns interest,’’ said Amreen.
The bank, whose account holders are from the school for dropouts run by the NGO, works on democratic lines. The manager and the cashier are elected through voting held once in two years.
Account holders cast ballots in the elections and the child getting the maximum number of votes is named the manager and the second placed will end up as the cashier. However, those leaving the school cannot continue as members. It is a strict no for those above 16 years.
Children earn a little interest on money exceeding Rs 500.As there are no commercial transactions, the NGO gives the interest amount from its own funds. “This is basically done to motivate the children to save more,” Solanki says.
Solanki, who guides children on how to manage the bank, says they are given training on how the bank functions. Awareness programmes are also held every Saturday. “Through the awareness programmes, children get an idea on how to open an account, manage an account and the advantages of keeping money in the bank and helping parents in their time of need,” says Solanki.
She says that similar awareness programmes are also held for the parents so that they keep giving small amounts to children and encourage them to save for a rainy day.