Meeting with I.B.A.:
In today's meeting with I.B.A. , meeting discussed non-monetary issues such as:
TRANSFER & POSTING OF FEMALE EMPLOYEES,
LEAVE FARE CONCESSION,
PATERNITY LEAVE,...
ADOPTION LEAVE,
PRIVILEGE LEAVE INCREASE,
DEFINED WORKING HOURS' OF OFFICERS',
COMPENSATION PACKAGE FOR LATE SITTING OF OFFICERS,
NO NEWS ON SATURDAY OFF FROM APRIL '15.
NEXT MEETING SHORTLY
TAHIR ALI
FLASH ON TODAY'S BIPARTITE MEETING
Talks on issues other than Salary and allowances were taken up as listed in Charter of Demands.
Talks positive & continues. IBA is reffering certain issues to their HR committee.
Next date will be informed by IBA soon.
-Havinder Singh...
General Secretary, AIBOC
Budget 2015: Senior Citizen Welfare Fund may face trade union, legal hurdles-Economic Times 15th March 2015
NEW DELHI: The Rs 9,000-crore Senior Citizen Welfare Fund, announced by finance minister Arun Jaitley in his budget speech, may face legal hurdles besides stiff opposition from trade unions who feel that government cannot confiscate the unclaimed amount and should instead fund the social sector schemes on its own.
In the budget for 2015-16, the minister had announced setting up of the fund using the unclaimed deposits of about Rs 3,000 crore in the PPF ( public provident fund) and about Rs 6,000 crore in the EPF (employees' provident fund) corpus, a detailed scheme of which will be issued in March.
The amounts to be appropriated to a corpus will be used to subsidise the premiums of vulnerable groups such as old age pensioners, BPL card-holders and small and marginal farmers.
"The government doesn't have the right to take these PPF and EPF savings away as these schemes do not impose any limitation periods on investors to withdraw their savings," said Inder Mohan Singh, partner at Amarchand Mangaldas, adding that trustees can't allow the forfeiture of these funds under the present legal framework. "This Budget announcement seems to be just a statement of intent, as it would need amendments to several laws including the Indian Trusts Act and the Employees' Provident Fund Act, before it can be implemented," Singh told ET, adding that legal provisions would need to be put in place to enable an investor to come back and recover his unclaimed savings even after the government transfers such funds out.
The issue would be taken up by trade unions when they meet the labour minister on Wednesday for the pre scheduled meeting of the Central Board of Trustees. "As a member of the central board of trustees (CBT) of the EPFO, I feel that the government should have discussed the proposal to create a senior citizen welfare fund using the unclaimed amount of EPFO.
Since EPFO is a custodian of this money, the Centre has no right to appropriate this fund even if it is unclaimed," said AK Padmanabhan, president of the Centre of Indian Trade Unions . Even the RSS-affiliated trade union is strictly against the idea.
"We are totally against the concept as we feel that though the money is unclaimed as of now, someone someday may claim it and hence the Centre cannot use it for its own schemes," Virjesh Upadhyay, general secretary of the Bhartiya Mazdoor Sangh (BMS) said, adding that the proposal will be opposed when it is taken up officially at the CBT meet.
As a mark of protest, the central trade unions will soon write a joint letter to the finance minister to express their discontent over the proposal. "We are trustees of the Employees' Provident Fund and the Centre cannot appropriate the unclaimed money that can be claimed for any time by its owners, in which case it is the responsibility of the EPFO to refund that money," said AD Nagpal, secretary of the Hind Mazdoor Sabha and a member of CBT.
In a letter written to the finance ministry, the All India Trade Union Congress has gone a step forward and recommended that the government should itself fund the senior citizen welfare fund. "The unclaimed amount in EPF cannot be taken over rather confiscated by the government legally as the individual claimant or their successors can claim anytime," DL Sachdeva, secretary of AITUC said
Raghuram Rajan can’t convince banks to cut rates as returns shrink-Live Mint-15.03.2015
Lenders aren’t passing on two rounds of monetary easing to borrowers as profitability slides and bad loans surge
India’s largest lenders aren’t passing on two rounds of monetary easing to borrowers as profitability slides and bad loans surge.
State Bank of India (SBI) and Bank of Baroda are among 43 of 47 lenders yet to lower base lending rates after the Reserve Bank of India (RBI) cut its benchmark rate by 50 basis points to 7.5% in two moves this year. The three-month interbank rate has fallen only seven basis points to 8.58% in 2015. A similar gauge of funding costs in China is at 4.9%.
“So far the drop in cost of funds isn’t enough to allow us to cut lending rates,” Ranjan Dhawan, Bank of Baroda’s Mumbai-based chief executive officer, said in a 12 March phone interview. “We’re walking a thin line,” he added. “We have limited scope to cut deposit rates because competition from other savings instruments and rising equity markets is strong.”
Central bank governor Raghuram Rajan said in his 4 March policy statement that further monetary easing will need prerequisites including “the pass-through of past rate cuts into lending rates.” Union Bank of India said returns in the banking system have worsened from a seven-year low, and four of the five largest lenders reported higher soured loans in 2014.
“Banks are pressed on the profitability front more than ever before,” Arun Tiwari, Union Bank chairman and managing director, said in a 11 March phone interview. “Lending-rate cuts alone won’t spur credit growth.”
Stressed assets
Profitability, measured by the return on assets in the banking system, fell to 0.81% in the year ended March 2014, the lowest since at least 2007, RBI data show. Stressed assets, which include bad loans and restructured assets, are set to rise to 13% in the next 12 months, further eroding profitability, according to India Ratings and Research Pvt. Ltd, the local unit of Fitch Ratings.
Loans in the system grew 10.4% in the 12 months through 20 February, near the 9.7% pace in September that was the least since October 2009.
RBI has lowered the proportion of deposits banks must invest in safer assets three times since June, leaving more funds for lending to support growth in Asia’s third-largest economy. The statutory liquidity ratio (SLR) stands at 21.5%.
Banks have limited room to cut deposit rates as competing instruments such as savings plans and post office accounts are offering higher rates, according to Vibha Batra, the New Delhi-based head of financial industry ratings at Icra Ltd, the local unit of Moody’s Investors Service.
Deposit rate
SBI, the country’s largest by assets, pays 8.25% interest on five-year deposits compared with 8.5% offered by India Post and National Savings Certificates and a 31% surge in the S&P BSE Sensex Index of stocks in the past 12 months. The bank’s base lending rate, below which it can’t give loans, has been at 10% since November 2013.
The International Monetary Fund (IMF) estimates it takes 13 months for 80% of the change in the RBI’s benchmark rate to pass-through to interbank funding costs, according to an 11 March report by the Washington-based lender. Transmission to banks’ deposit and lending rates takes another 9.5 months and 18.8 months, respectively, IMF said.
“Most banks may cut lending rates in the September quarter,” Hatim Broachwala, a banking analyst at Nirmal Bang Institutional Equities Ltd in Mumbai, said by phone on 13 March. “Credit demand is also expected to improve by then.”
Capital adequacy
The average capital-adequacy ratio for Indian lenders fell 20 basis points, or 0.2 percentage point, to 12.8% in the six months ended 30 September, central bank figures show.
The cost of insuring SBI’s bonds against non-payment for five years using credit-default swaps has climbed to 146 basis points from 143 on 5 March, the lowest since April 2010, according to data provider CMA. Similar contracts for ICICI Bank Ltd have risen 1 basis point to 158 in that period.
The yield on India’s 8.4% sovereign notes due July 2024 rose 9 basis point to 7.8% last week according to prices from the RBI’s trading system. The rupee fell 1.25% to 62.9650 a dollar.
“Rising bad loans and lower demand for credit are putting many lenders under phenomenal pressure to improve retained earnings and bolster capital ratios,” Batra from Icra said by phone on 13 March. “So they may be forced to defer a cut in lending rates till the credit environment improves and the pressure on earnings ease.”
No safety net for bulk of banks deposits
Radhika Merwin-Hindu Business Line
Date: 15.03.2015 Do bank deposits come with adequate cover? Perhaps not, as less than a third of bank deposits in value terms is currently covered by insurance.
Deposit Insurance and Credit Guarantee Corporation of India (DICGC), a wholly-owned subsidiary of the Reserve Bank of India, provides cover to deposits of all commercial banks, local area banks, regional rural banks and co-operative banks. Each deposit account is insured up to ₹1 lakh, including principal and interest. This limit applies separately to deposits in each bank. If a bank goes belly up, the DICGC pays the customer the deposit amount up to a maximum of ₹1 lakh.
About a decade back, 95 per cent of the accounts and 66 per cent of the value of deposits had the DICGC cover. But this had dropped to 92 per cent of the accounts by 2013-14, and only 31 per cent of value of deposits.
This could be due to a sharp jump in the amount held in each deposit account. In 2004-05, the average amount in each account was ₹37,000. Over the last decade this has almost doubled to ₹67,000.
Deposit insurance cover has clearly failed to keep up with increasing sums in bank accounts. The DICGC cover was last raised in 1993 from ₹30,000 to ₹1 lakh. This was done after a long gap of 13 years.
Revision needed
For over two decades the cover has remained at ₹1 lakh. Experts feel that a revision is long overdue. Even assuming an inflation of 6.5-7 over the past two decades, the insurance cover should go up to ₹5 lakh. “The purpose of the deposit insurance was to give an additional cover to small deposit holders and provide them a safety net and confidence in the banking system. Given India’s growth in the last two decades as well as inflation, an increased cover may be considered,” says Monish Shah, Senior Director, Deloitte India.
Better insured?
Is the situation the same across the banking industry? No. Deposits with public sector banks are better covered than those of private or foreign banks. While public sector banks have about a third of their deposit value under the DICGC cover, it is 23 per cent in private banks and just 6 per cent in foreign banks.
But this is only because a larger portion of deposits of both private and foreign banks exceed ₹1 lakh. For instance, while state-owned banks, including the State Bank of India, hold an average of ₹66,000 in each deposit account, private banks have over ₹1 lakh. Foreign banks, on the other hand, average ₹7 lakh in each deposit account.
The total deposits held by private sector banks rose from ₹1.17 lakh crore in 2000-01 to ₹15.9 lakh crore in 2013-14, implying almost a 14-fold rise. Their public sector counterparts saw a nine-fold rise in deposits from ₹7.4 lakh crore to ₹65.9 lakh crore over the same period. Foreign banks held fixed deposits worth ₹3.5 lakh crore in 2013-14, seven times more than in 2000-01.
Higher premium
An increase in insurance cover means an additional outflow for banks. Currently, the premium is paid by banks and not passed on to the customer. The DICGC charges a maximum premium of 15 paise per ₹100 per annum.
So far in India, this cover has come in handy to protect only the customers of urban co-operative banks, many of which fail every year. During 2013-14, DICGC settled claims for ₹103 crore to depositors of 51 co-operative banks
Fixed deposits still rule investor’s mind- By Adhil Shetty-Asian Age 15.03.2015
Its risk free and hassle free nature and flexibility of tenure make the fixed deposit the best bet among the variety of investment options.
India is a land of diverse cultures, religions and languages. In a country where language, dialect and food habits change every hundred kilometres, some things rem-ain constant. No, we are not talking about Indians crying war when it comes to an India-Pakistan cricket match, or our blind faith in Aamir Khan’s histrionic abilities, but about our ingrained financial habits.
Despite the deluge of many attractive and high yielding investment plans, the common man across India still prefers bank fixed deposit as a preferred investment vehicle. Despite the economy rising exponentially in the last decade and investors from all over the globe showing interest in the Indian equity market, traditional fixed deposits ha-ve managed to maintain their allure.
Different surveys conducted by many investment companies have revealed that while interest in equity market is high, bank fixed deposits continue to rule the hearts of the Indian investor. Let’s see why.
Low investment limit
Fixed deposits do not require any high minimum amount to start investing. Some public sector banks allow people to start a fixed deposit account from as low as `1,000. This ease of investing with a low minimum amount accompanied by very less paperwork has been one of the reasons why FDs have been the preferred investment by majority of Indians. Even the most well informed investor would have some funds parked in a bank fixed deposit.
Assured returns
Indian investors are traditionally low-risk takers and tend to invest in instruments offering secured returns than in high-risk-high-reward investments.
Since bank fixed deposits are assured-return products, investors are more at ease investing in them as compared to a mutual fund or equity investment. A little information is a dangerous thing and most people presume that all their FDs are guaranteed by the Reserve Bank of India; while the fact is that bank fixed deposits up to a value of `1 lakh are insured by the government through Deposit Insurance and Credit Guarantee Corporation.
Better returns
Since bank fixed deposits offer higher interest rates than saving bank account, people are tempted to switch their extra funds conveniently in a fixed deposit scheme. This means that people who are not essentially investors are also parking their money in bank fixed deposits. Just like how interest earned on savings bank account is taxable, people do not mind paying tax on interest earned on a bank fixed deposit as it offers decent, and more importantly, safe returns.
Loan facility option
The facility to avail loans against FDs with ease is another reason why FDs rank high in many investors’ list of preferred investment channels. Seeking a loan in case of a financial emergency can be a tough proposition especially if you have a low credit rating. If you have a fixed deposit, banks are happy to lend money to you against that and that too at a far lower interest rate as compared to a personal loan.
Flexible tenure
Bank FDs have flexible tenure options catering to the need of investors with different investment horizons. People can choose to invest from as low as a seven-day period to a five-year period depending on their preference. What’s more, banks these days have the facility of auto-renewal, which means the fixed deposit is renewed after its tenure ends even if the investor fails to visit the bank.
http://www.asianage.com/category/author/adhil-shetty-0