Took a loan from a PSU bank? rejoice your decision

If you have taken a loan from a public sector bank, it is certainly the time to rejoice your decision. For, you have an edge over the consumers who have taken loans from private sector banks, as you can now avail cheaper loans. While public sector banks, after recently being exhorted by finance minister P Chidambaram, have slashed their benchmark prime lending rates by 50 basis points (some banks have done it in two phases) private sector banks, except Axis Bank, have refused to budge. The public sector and private sector banks have taken different stands on reduction of lending rates. KV Kamath, managing director and chief executive officer of ICICI Bank had said he did not expect the country's central bank to ease key rates soon. "Till we have clear signals we keep rates steady,'' he said adding that the bank would wait and watch. Aditya Puri, managing director of HDFC Bank said the days of cheaper loans are over unless something changes very drastically. To check inflationary pressure, the central had kept the short term lending rates steady at 7.75% in the quarterly policy review on January 29 but Reddy had opined that commercial banks could lower rates

LVB launches ‘floating rate’ deposit scheme

Lakshmi Vilas Bank (LVB) has launched the “Lakshmi Floating Rate Deposit” scheme. The scheme is designed to suit the needs of bulk depositors, high net worth individuals and those that look to earn market-related income without the hassles and uncertainties of deposit renewal from time to time in a changing deposit interest rate scenario. The minimum tenure and amount is fixed as five years and Rs 1 lakh, and in multiples of Rs 10,000 thereafter. The interest rate would be equivalent to the prevailing five-year FD.

High value payments only thru e-transfer

All payments of Rs 1 crore and above will be done only electronically, starting April 2008. In a notification issued today, the RBI said that such high value payments would have to be done using any Real time Gross Settlement (RTGS) System or National Electronic Fund Transfer (NEFT) or System and Electronic Clearing Service (ECS). This applies to payments between banks, primary dealers, non-banking finance companies and payments in the money market, Government securities market and foreign exchange market

Free ATM usage from April 2009

Banks are free to decide on service charges to be levied for cash withdrawal using credit card in India and for withdrawal of money in ATMs abroad. The RBI had stipulated charges for using other banks’ ATMs in India. It had notified that banks should reduce service charges to Rs 20 per transaction carried out on other banks’ ATMs. Banks would not be able to charge their customers more than Rs 20 for cash withdrawal from other banks’ ATMs effective March 31, 2008 and would also have to waive off all charges effective April 2009. Transactions such as a simple balance enquiry from other banks’ ATMs have to be made free-of-cost with immediate effect.

ICICI Bank's overseas loss not to hit rating: Fitch

International rating agency Fitch on Saturday said the $264-million loss suffered by ICICI Bank on overseas investments will not affect its credit rating. "The provisioning requirements disclosed by ICICI Bank for mark-to-market (MTM) losses on its international investments portfolio is unlikely to impact the bank's capital ratios in any significant manner or affect its credit ratings," Fitch said. ICICI, earlier in the week, revealed that the bank along with its subsidiaries, accounted for a $189-million MTM loss till December 2007, which further increased by $74 million by January 31. The losses, Fitch said, reflect the widening credit spreads in the international markets, with a greater impact on ICICI's $2.2 billion credit derivatives portfolio compared to its fixed income portfolio. The overseas investments were acquired as part of ICICI's international business thrust and formed 15 per cent of the consolidated total investment portfolio at March end 2007, it added.

HDFC readies plan to lend against agri land

HDFC has put up a proposal before five or six state governments, including Punjab and Karnataka, to allow mortgage against agriculture property. It is fixing up parameters like fertility of the soil, quality of produce and financial record of farmers for providing loans. If it gets the governmental nod for the proposal, farmers having at least 7 acres of land would be eligible for this scheme. HDFC joint managing director Renu Sud Karnad says, “We have asked for their permission. We are looking at states where the land is more fertile, like in case of Punjab. Around 72% of India lives in rural areas and we see this as a huge potential. With these new initiatives, I think we should be able to fund almost 20% of the rural farmers.” On the other hand, agri experts opine that this will not be of any help to the small and micro farmers as they have very small land holdings. Indian Society of Agriculture Economics president SS Johl said. ”Still I feel, banks should be made to follow some conditions. Like - a house and at least five acre property of the farmer should not be mortgaged by any bank. Rate of interest should be the prime lending rate , in addition to maximum of 4% on it. If the repayment is double the capital borrowed, it should be considered as money paid back to the bank by the borrower. If banks agree to this, the state government should not have any problem in allowing them to mortgage the agriculture property of farmers.”

Banks step up vigil against card frauds

Even as the use of plastic money increases, the number of frauds is also on the rise. Over the past three years, the number of credit card frauds has gone up by 80 per cent. Recognising this, the Reserve Bank of India and banks are taking steps to educate customers about frauds that may happen via Internet and while using credit cards. The total number of frauds has gone up from 12,374 in 2005 to 21,687 in 2006, and 22,280 in 2007. In the case of credit card frauds, the number has gone up from 8,789 in 2005 to 17,268 in 2006, and 17,294 in 2007. One reason for this is credit card transactions are growing much faster than other transactions, said Mr Hemant Kaul, President, Retail Banking, Axis Bank. Axis Bank recently launched ‘Visa Platinum Credit Card’ based on the EMV (Europay, MasterCard, Visa) standard, with an embedded chip to store the cardholder’s information in encrypted format to provide security against possible misuse in the form of counterfeiting and skimming. The chip sends a secret message to authenticate every transaction, making it difficult for a fraudster to steal the information. ICICI Bank takes precautionary steps like sending an SMS to customers on every transaction made on their credit card.

SBI opens 10,000th branch

Puduvayal (loosely translates as ‘New Farm’) is a small town (85 km from Madurai) in the Chettinad region of Sivaganga, a southern district in Tamil Nadu. The State Bank of India opened its 10,000th branch here, on Sunday morning. Mr P. Chidambaram, Finance Minister, said “The State Bank of India becomes only the second bank in the world to have more than 10,000 branches, after China’s ICBC.” Mr O P Bhatt, Chairman of SBI, said the new branch was sanctioning Rs 4 crore worth of loans - agricultural, educational and housing loans - from the new branch. He said that the SBI group had opened 1,000 branches this year. SBI plans to open at least 2,000 branches in rural India in the next two years.