Government to infuse Rs.6990 crore to 9 PSB's

The Government will soon infuse Rs.6990 crore to following 9 Public Sector Undertaking Banks.

State Bank of India Rs.2970 crore

Bank of Baroda Rs.1260 crore

Punjab National Bank Rs.870 crore

Canara Bank Rs.570 crore

Syndicate Bank Rs.460 crore

Allahabad Bank Rs.320 crore

Indian Bank Rs.280 crore

Dena Bank Rs.140 crore

Andhra Bank Rs.120 crore

This is first time that the Government is using efficiency parameter to distribute the capital. The parameter used are 

a) Weighted Average Return on Asset for all PSB's for the last three years will be calculated and those above the average has been considered.

b) Return on equity for last financial year will be calculated and those better than average have been considered.

This year the Government has allocated Rs.11600 crore for capital infusion in PSB's

Gyan Sangam of Mr. Narendra Modi

Prime Minister Mr. Narendra Modi will have discussions with chiefs of public sector banks and financial instituitions at Pune on 2nd and 3rd of January 2015 to draw action plan for banking reforms. The programme is being called " Gyan Sangam " Apart from Mr. Modi other dignitories who are expected to attend the discussions are Mr. Arun Jaitley, finance minister, Mr. Raghuman Rajan, RBI Governer, Mr.Jayant Sinha, Minister of State for Finance, Mr. Rajiv Mehrishi, Finance Secretary etc.

Major points on which discussions will be held include;

1) Consolidation of banking sector
2) Capitalisation needs of banking sector
3) Risk management
4) Recovery management
5) Human Resources Management

Bank Strike on 10th and 11th

All Public Sector Bank employees will observe 2 days strike on 10th and 11th February 2014 as the Wage Settlement which is due from November 2012 has not been settled till now. The IBA has offered 10% hike which is duly rejected by the unions represented by UFBU.

HDFC Bank introduces Missed Call Banking

Private Sector Bank HDFC Bank has also started "missed call banking". The customer who intends to use this service has to register his mobile with the bank. Once his mobile number is linked to his account a customer can call any of the Toll Free number that the bank provides to get the services.

Karnataka court refuses to get in the way of banks for recovery of Mallya Debt

The Karnataka High Court refused to interfere with the proceedings initiated by a consortium of banks against industrialist Vijay Mallya and two of his companies — UB (Holdings) Ltd, Kingfisher Airlines Ltd — before the Debt Recovery Tribunal (DRT) in Bangalore to recover a due of Rs.6,200 Cr. Justice AS Bopanna passed the order asking UBHL, Kingfisher and Mallya to approach the Debt Recovery Appellate Tribunal (DRAT) at Chennai against the November 12, 2013, order of the DRT, which refused to reject the application filed by the banks seeking grant of recovery certificate. The banks had sought recovery certificate from the DRT under the Recovery of Debt Due to Banks and Financial Institutions Act, 1993. In his order, Justice Bopanna said it was not established that there is an inherent lack of jurisdiction to DRT or there is a statutory bar or any violation of statute… Also, proceedings or the action (before DRT) cannot be termed as arbitrary, unreasonable and unfair at this stage requiring the High Court’s interference.

Govt comes up with Rs 1,400-Cr interest subvention on loans taken by women SHGs

The government on Monday reached out to rural women by rolling out a R1,400- Cr interest subvention on loans taken by Self Help Groups working for their empowerment. Interest subvention for the loans taken by women Self Help Groups (SHGs) is a significant initiative under the Centre’s ambitious programme National Rural Livelihoods Mission (NRLM). Rural development minister Jairam Ramesh said that it is applicable for loans availed by women SHGs from April 1, 2013. According to the minister, from Monday onwards, all banks/will lend to women SHGs at upfront 7% interest (for loans upto R3 lakhs) in 150 select backward districts, most of which are affected by Naxal menace. These SHGs will get a further 3% subvention on prompt repayment, thus the effective charge on all such loans will be 4% only.

IBA issues advisory to banks on use of Win XP

The Indian Banks Association (IBA) has issued an advisory to banks to ensure business continuity after Microsoft ends support for its popular Windows XP operating system on April 8. IBA, in its advisory, drew the attention of the banks to a study by Microsoft, which estimates that over 34,000 branches of public sector banks would become vulnerable following the US-based firm’s decision to stop support to Windows XP. The fiscal impact of this could be as much as a loss of business opportunity worth Rs 1,100 Cr in a day and a loss of income worth Rs 330 Cr over a period of three days (assuming that a major incident may take three days for the systems to come up to normal functioning), the study had said.

Bank notes issued prior to 2005 will be withdrawn from 31st March 2014

The Reserve Bank of India has today (22nd January 2014) advised that after March 31, 2014, it will completely withdraw from circulation all banknotes issued prior to 2005. From April 1, 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication. The Reserve Bank further stated that public can easily identify the notes to be withdrawn as the notes issued before 2005 do not have on them the year of printing on the reverse side.

The Reserve Bank has also clarified that the notes issued before 2005 will continue to be legal tender. This would mean that banks are required to exchange the notes for their customers as well as for non-customers. From July 01, 2014, however, to exchange more than 10 pieces of `500 and `1000 notes, non-customers will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes.

The Reserve Bank has appealed to the public not to panic. They are requested to actively co-operate in the withdrawal process.

9000% dividend !!!!!!!!!!!!!!!!!!!

Tamilnad Mercantile Bank (TMB) has declared an interim dividend of 9,000%. That’s actually Rs 900 per share of Rs 10 each, for the fiscal ending March 2014. The board of this Tuticorin-headquartered bank took a decision to this effect at a meeting held on January 18. Bank sources said this would translate into an outgo of Rs 25.6 Cr (unchanged from last year). The 9,000% interim dividend is said to be the highest in the banking industry and this is the second year in a row that the bank has declared such a high dividend. It may be recalled that the bank’s board had approved a dividend of Rs 750 per share for 2008-09 and Rs 1,000 per share the following year, but could not make the payment as the annual general meetings for 2009-10 and 2010-11 were not held due to legal issues. The AGMs for the subsequent years have also not been held till date. As a result of the legal tangles, the bank has been compelled to hold back some major decisions, including the plan to go for an initial public offering. Bank sources said TMB’s shares continue to trade at between Rs 60,000 and Rs 65,000 a share in the informal market.

Bank accounts for all in two years — a pipe dream?

The recommendation of the Nachiket Mor committee to provide bank account to every Indian over 18 years of age by January 1, 2016, seems a little stretched. It hinges on banks opening accounts based on KYC authentication done by the UIDAI for providing the 12-digit Aadhaar number to resident Indians. Till date, the UIDAI has provided Aadhaar numbers to about 56 Cr Indians. It plans to provide Aadhaars to three Cr Indians every month and complete the coverage by December 2015. But the UIDAI has, by design or default, left out most people working as migrant labourers and domestic helps as they do not possess valid identification and address proof. So, before banks can ride on the UIDAI-enabled KYC verification, the Authority must seek out such people and issue them Aadhaar numbers. According to the Mor committee report, only 36% adult Indians — 45% in urban centres and 32% in rural areas — have bank accounts. It is, however, not clear how many of these accounts are unique, as banks still lack the unique customer identification code where dual accounts of the same person across banks can be identified.

ATM will not suck your cash anymore

Many a times you may have noticed that when using ATM for cash withdrawal, when ATM dispenses cash if you do not take it out within 10-15 seconds it goes back to machine. This is a safety measure adopted by the banks so that if anyone forgets to take the cash it should not go to wrong hands.

But this has created many problems for the banks as well as customers. Customers are in dilema as they will think that the money is already debited to account but cash not received, then from where to claim it. (ATM normally automatically redeposits the amount to the account of customer but requires some time) Some times as the money is already deducted they may not have sufficient balance in account to make next withdrawal. The banks are flooded with request for claims for the amount.

The RBI has also noticed some fraud. The modus operandi is as follows; The customer withdraws cash. When cash has come out take some cash only. Then after sometime the remaining cash goes in. As the machine does not have mechanism to recount the cash it sucked, it reimburses full amount to the account of customer.

As the operation and usage of the ATM has been stabilized. The RBI has asked the banks to stop the mechanism of Cash Sucking by ATMs if not taken within time. Now the customers has to be alert not to forget to take cash or else it may hand in wrong hands.

Who draws highest pay in India Inc.

These are the highest pay takers in Indian listed companies during 2011-12

1. Mr. Naveen Jindal,Jindal Steel and Power, Rs.73.42 crore
2. Mr. Kalanithi Maran, Sun TV network, Rs.57.01 crore
3. Mrs. Kaveri Maran, Sun TV network, Rs.57.01 crore
4. Mr. Pawan Munjal, Hero Motocorp, Rs. 34.47 crore
5. Mr. BrijMohan Lal Munjal, Hero Motocorp, Rs.34.44 crore
6. Mr. P.R.R.Rahja, Madras Cements, Rs.29.34 crore
7. Mr. Shinzo Nakanishi, Maruti Suzuki, Rs.28.14 crore
8. Mr. B.G. Raghupati, BGR Energy, Rs.25.98 crore
9. Mr. Karl Peter Forster, Tata Motors, Rs.23.97 crore
10. Mr. Murali K.Divi, Divi's Lab, Rs.23.15 crore

Interest Subvention on housing loan upto Rs.15 lakhs

The Government of India is extending Interest Subvention of Rs.1% on below conditions;

1. The loan availed to be maximum Rs.15 lakhs.

2. The cost of project to be maximum Rs.25 lakhs.

3. The loan to be availed by Scheduled Commercial Banks, Regional Rural Banks or Housing Finance Companies.

The Government has made Budgetary allocation of Rs.400 crore for 2012-13 for implementing the scheme.

The National Housing Bank is the authority to implement the scheme.

The banks normally extend the benefit to housing loan customer within one month of release of loan and inturn claim the amount from National Housing Bank on monthly basis. The subvention amount will be credited to housing loan of borrower which will effect in reducing the principle amount of loan.

If you are planning to raise loan from bank, ensure that you get the benefit mentioned above.

Bank Strike on 28th Feb.2012

All the Central Trade Unions ( BMS- INTUC- AITUC- HMS- CITU- AIUTUC – AICCTU – TUCC – UTUC – LPF – SEWA ) have jointly given a call for General Strike on 28th February, 2012 against the anti-labour and anti-worker policies of the Government with the following issues and demands: 1) Concrete measures to contain price rise 2) Concrete measures for linkage of employment protection with the concession / incentive package offered to the entrepreneurs 3) Strict enforcement of all basic labour laws 4) Universal security cover for the unorganized sector workers without any restriction and creation of a National Social Security Fund with adequate resources in line with the recommendation of NCEUS and Parliamentary Standing Committing on Labour 5) Stoppage of disinvestment in Central and State Public Sector undertakings. 6) No contractorisation of work of permanent / perennial nature and till then payment of wages and benefits to the contract workers at the same rate as available to the regular workers of the industry / establishment. 7) Amendment of minimum Wages Act to ensure universal coverage irrespective of the Schedules and fixation of statutory minimum wage at not less than Rs. 10,000 per month with indexation. 8) Removal of all ceilings on payment and eligibility of Bonus, Provident Fund; Increase in the quantum of Gratuity. 9) Assured Pension for all 10) Compulsory registration of trade unions within a period of 45 days and immediate ratification of ILO Conventions No. 87 and 98. Bank Strike: Five lacs of bank employees under the banner of AIBEA support these demands and has decided to join the strike call. AIBEA will also focus its following demands on the occasion of the strike: Oppose implementation of Khandelwal Committee recommendations Oppose Banking Law ( Amendment ) Bill and other reform measures Oppose outsourcing of regular bank jobs Demanding stringent measures to recover bad loans in banks Oppose undue delay in settlement of pending demands We oppose Khandelwal Committee recommendations The Government appointed the Khandelwal Committee on staff related matters and this Committee has given various anti-employee recommendations like: Abolition of industry-wise common Wage Revision Settlement existing since 1966 and introduce bankwise wage revision Abolition of existing uniform wage pattern for bank employees/officers and introduce differential incentive based salary Free hand to managements to outsource all regular banking jobs and give them on contract basis. No recruitment of clerks in Metro/Urban areas. Compulsory rural service of 3 years for clerical staff in Banks Minimum qualification for recruitment of clerks to be Graduation Minimum qualification for recruitment of subordinate employees to be 10th Std Reduction in promotional opportunities for clerical staff All these are anti-employee measures and hence UFBU opposes the same We oppose Banking sector reforms: Banks represent the hard earned savings of the people of this country. The total Deposits in the Banks today have crossed Rs. 55 lacs crores. Hence the Banks have to be strengthened so that the problems that the Banks faced in USA and other countries faced are not faced by our Banks. But unfortunately, the Government is bent upon liberalizing our banking sector. Some of the measures are: Amending Banking Regulations Act and Bank Nationalisation Act Reduce Government’s Equity Capital in Government/nationalised Banks. Availing Loan from World Bank to contribute to the capital of Banks. Merger of Public Sector Banks Allowing more Foreign Capital in our Banks Allowing more voting rights in Banks for foreign capital Encouraging private capital in nationalised Banks Allowing corporate houses to start their own Banks Write off of huge bad loans of corporate sector Converting Bad Loans of defaulting companies as capital investments of Banks in the same defaulting company. All these measures are against the interest of our banking sector and hence UFBU opposes the same. We oppose outsourcing of regular bank jobs: The Bank managements, in violation of the existing bilateral settlement, are attempting to outsource all regular bank jobs to private contract agencies. This will affect the job security of the employees and job opportunities for the young educated youth. This will also endanger the interests of the bank customers as many banks have bitter experience with the contract employees in various countries. We demands stringent measures to recover bad loans: Bad Loans/NPAs in the Banks are increasing. In the last one year, Rs. 70,000 crores of bad loans have been added. Pepople’s money is being looted by the corporates. Government must take stringent measures to recover these bad loans. We demand immediate settlement of our Demands: Many important issues like implementation of mutually agreed scheme on compassionate ground appointments/financial compensation to family of deceased employees, regulated working hours for officers, adherence to stipulated working hours for clerks, introduction of 5-Day banking, improvements in pension scheme for retired employees, improvement in Staff Welfare Schemes, etc. are pending for a long time without any solution.

Base Rate

Base Rate is introduced in Indian banking system wef 01.07.2010. The base rate relates to interest charged by the banks on their advances. Before introduction of base rates Indian Banks used to give loans to corporates at very low rates. The amounts involved were also huge. Hence RBI felt the need to floor the rate charged by banks hence base rates were introduced. The base rates relates to the minimum rate that the bank can charge on any loan to anyone. They cannot lend below that rate. The banks were given freedom to fix their base rate based on their cost of funds, liquidity position etc.

Defaulters Photos to be published in newspaper

Are you aware that while signing loan documents banks take a undertaking from you which allows them to publish your photo in whichever mode they like if you default your loan payments. This also allows them to share data with CIBIL and RBI. They can also share your information with any one. Hence Beware. Now, banks are thinking to publish the photos of defaulters in the newspaper.

Auto Classification of Assets

Have you taken any loan from the bank and not so prompt in making repayment, then be cautious as the banks have introduced Auto Classification of its advances as per RBI's Directives. Auto classification means the system automatically downgrades/upgrades your account based on your repayment and the repayment terms of the bank. Till now banks were doing it manually and there were chances that the branch did not make your account as Non-Performing Asset even if your loan is overdue for more than 90 days as stipulated by RBI. Now the system automaticlly does the things and hence more transperancy in NPA declaration by the banks. All banks are mandatorily switched to Auto Classification from December 2011.

RBI defers foreign bank liberalization

The Reserve Bank of India (RBI) has decided to put on hold a proposal to allow foreign banks to operate in the domestic market and buy private banks in the wake of the global financial turmoil that fell some banking giants. The central bank is expected to announce this when the annual monetary policy review is to be unveiled. The RBI was expected to allow foreign banks to acquire stakes in Indian banks from April 2009 as part of the second phase of the banking sector’s opening up plan, termed ‘Roadmap for presence of foreign banks in India.'

RBI widens scope of unsecured loans

The RBI tightened the prudential norms for unsecured loans and asked banks to treat the value of all rights, licences and authorisations as unsecured advances and not as tangible securities. Starting April 2009, the RBI has asked banks to disclose the amount of such advances for which intangible securities such as charge over the rights, licences, and authorisations have been taken along with the estimated value of the collateral. Separate disclosures also need to be made in the notes to accounts, the RBI said. The move would result in higher risk weight and increase the provisioning requirement for banks.

Debar loan defaulters from contesting elections: AIBEA

Should wilful defaulters of bank loans be barred from contesting Parliamentary elections? All India Bank Employees Association (AIBEA) has moved the Election Commission of India (ECI) to debar such candidates from contesting the general elections. It underscored the fact that the raw material for making loans to borrowers comes from depositors (public money) and it is important that recalcitrant borrowers who are in the fray be reined-in. Pointing out that banks and notified financial institutions report the details of wilful defaulters with outstandings of Rs 25 lakh and above to the Reserve Bank of India on a quarterly basis, Mr Vishwas Utagi, Secretary, AIBEA, said the Election Commission can easily filter out candidates who have been declared wilful defaulters by banks, by referring to the RBI’s list.