RBI set up Working Group to review Banking Ombudsman Scheme

The Reserve Bank of India in the month of January 2013 had set up a working group to evaluate and make improvements in the grievance redressal mechanism for bank customers. 

The working group constituted in the Reserve Bank of India is going to review, update, and revise the Banking Ombudsman Scheme, 2006. 

As per the RBI annual report of the Banking Ombudsman Scheme 2011-12, In Financial Year 2011-12, the banking ombudsman’s office of the RBI received around 72889 complaints. It disposed off 94 per cent of the customer complaints, About one-fourth of the total customer complaints were about banks’ failure to meet commitments and non-observance of fair practices code. 

Also, it was seen that the Banking Ombudsman received 14492 card-related complaints in the reporting year. Unsolicited cards and charging of annual fee in spite of being offered ‘free’ card formed the basis of some of the complaints against the banks. 

Presently, we have 15 Banking Ombudsmen with unambiguous jurisdiction covering the 29 States and seven Union Territories in India.

Allahabad Bank Signed MoU with Chamber of Indian Micro, Small and Medium Enterprises

Allahabad bank signed a Memorandum of Understanding (MoU) with Chamber of Indian Micro, Small and Medium Enterprises (CIMSME) in Kolkata on 4 January 2013. The MoU was signed to support the priority sector lending. 

CIMSME is basically a body that represents interest of the companies in the Micro, Small and Medium Enterprises (MSME) sector, with the financial institutions, banks, concerned ministries as well as other organisations. 

According to the agreement, CIMSME would help in activating the proposals from the members for the due consideration of the bank. Once the bank sanctions the loan, CIMSME would help the bank in following-up as well as recovering the dues. CIMSME would also help in providing the early signs of warning, if they exist. 

MoU signed between the two will basically help in accelerating the process of faster clearance of loan proposals which lie under MSME. It would additionally, also enable the bank in acquiring quality proposals as well as boosting up the credit flow to this sector. 

MoU signed between CIMSME and Allahabad Bank was executed by General Manager (SME & Retail Credit) as well as the President of CIMSME in the presence of CMD of Allahabad Bank.

R.K. Dubey is Canara Bank CMD

R.K. Dubey, 59, has been appointed the Chairman and Managing Director of Canara Bank. Dubey’s was areas of expertise include planning and budgeting, resource mobilisation, credit, risk management, human resources (HR), IT and marketing. A post-graduate in English, Dubey also has a degree in law and management in HR practices. He is also a certified associate of the Indian Institute of Bankers. Dubey joined Punjab National Bank in 1977 as a management trainee and moved up the ranks to become a general manager in 2008 and was appointed as executive director of Central Bank of India in 2010.

Cabinet approves capital infusion in PSU banks

The Union Cabinet has approved a capital infusion package of Rs 12,517 crore for about 10 public sector banks. According to the Cabinet Committee on Economic Affairs (CCEA), the move will enable the banks to maintain a minimum tier-1 CRAR (capital to risk weighted assets ratio) at comfortable level under international bank capital adequacy standard norm BASEL-III. This will ensure compliance to the regulatory norms on capital adequacy and will cater to the credit needs of productive sectors of the economy, as well as, to withstand the impact of stress in the economy. This additional availability of credit will cater to the credit needs of our economy and will also benefit employment oriented sectors, especially agriculture, micro and small enterprises, export, entrepreneurs." Earlier the government has infused about Rs 20,117 crore in public sector banks during 2010-11, and Rs 12,000 crore in 2011-12. According to the Economic Survey for 2011-12, the capital infusion had enabled PSBs to "maintain a minimum tier 1 CRAR at eight percent on 31st March, 2012, and also increased shareholding of the government in PSBs to 58 percent".

Fiscal cliff

Fiscal cliff is a newly coined term in USA, referring to the effect of a number of laws which, if unchanged, could result in tax increases, spending cuts, and a corresponding reduction in the budget deficit beginning in 2013. These laws include tax increases due to the expiration of the so-called Bush tax cuts and across-the-board spending cuts under the Budget Control Act of 2011. The year-over-year changes for fiscal years 2012–13 include a 19.63% increase in tax revenue and 0.25% reduction in spending. The US Congressional Budget Office estimates that allowing certain laws on the books during 2012 to expire or take effect in 2013 (the baseline scenario) would cut the 2013 deficit approximately in half and significantly reduce the trajectory of future deficits and debt increases for the next decade and beyond. However, the 2013 deficit reduction would adversely impact the economy in the short-run. On the other hand, if Congress acts to extend current policies (the alternative scenario), deficits and debt will rise rapidly over the next decade and beyond, slowing the economy over the long run and dramatically increasing interest costs. Many experts have argued that the U.S. should avoid the fiscal cliff while taking steps to bring the long-term deficit and debt trajectory under control. For example, economist Paul Krugman recommended that the US focus on employment in the short-run, rather than the deficit. Federal Reserve Chair Ben Bernanke emphasized the importance of balancing long-term deficit reduction with actions that would not slow the economy in the short-run. Charles Konigsburg, who directed the bi-partisan Domenici-Rivlin deficit reduction panel, advocated avoiding the fiscal cliff while taking steps to reduce the budget deficit over time. He recommended the adoption of ideas from deficit panels such as Domenici-Rivlin and Bowles-Simpson that accomplish these two goals.

Cheque Truncation System (CTS)

Cheque Truncation System (CTS) is a process that will give banks the freedom to avoid transporting a physical cheque from the presenting bank (where the cheque is deposited) to the drawee bank (where it is issued). As per the CTS, instead of a physical cheque, an electronic image of the cheque will be sent to the drawee bank. Of course, this image will have all the necessary information needed to process the cheque. Right from the nine-digit MICR code, the date of the cheque and the details of the presenting bank, like branch, etc.

Banks get 3 more months to implement Basel III norms

 The Reserve Bank of India has extended the date for implementation of Basel III, the global capital norms for banks, by three months to April 1.

“The Reserve Bank of India has rescheduled the start date for implementation of Basel III to April 1, 2013 from January 1, 2013,” the central bank said.

The RBI, however, did not provide reasons behind the rescheduling.

The move, experts said, will provide additional time to some banks that need to enhance their capital base in line with the new norms for strengthening the resilience of the global banking system.

The RBI further said that India will closely monitor the progress on Basel III implementation in other countries, particularly the major ones, who are members of the Basel Committee.

The RBI had issued guidelines on the implementation of Basel III capital regulation in India in May this year. These guidelines were to be implemented from January 1, 2013 in a phased manner and were to be fully implemented by March 2018.

As per the new global norms, banks will have to hold core capital of at least 7 per cent of risk weighted assets by 2018.

In September, the RBI Governor, D. Subbarao, had said that Indian banks will require an additional capital of Rs 5 lakh crore to meet the new global banking norms.

Of the total Rs 5 lakh crore, equity capital will be Rs 1.75 lakh crore, while Rs 3.25 lakh crore will have to come as the non-equity portion.

The government, which owns 70 per cent of the banking system, alone will have to pump in Rs 90,000 crore equity to retain its shareholding in the public sector banks at the current level to meet the norms.

The Basel Committee recently said that the 11 member jurisdictions including India, Australia, Canada, China and Japan, have published the final set of Basel III regulations effective from the start date of January 1, 2013.

Seven other jurisdictions including the European Union and the US have issued draft regulations, and have indicated that they are working towards issuing final versions as quickly as possible. 

First Indian Bank to launch the e-Gift card facility

Axis Bank, India’s third largest private sector Bank announced the launch of ‘Axis Bank e- Gift Card’, thereby becoming India’s first bank to offer to all bank’s domestic customers an option to buy an e- Gift Card. The Axis Bank e- Gift Card offers customers an alternate channel through which they can buy a gift card for their dear ones. The facility of e- Gift Card can be availed at www.gogiftacard.com where a
customer can buy and send a card of his choice by either e-mailing it or sending it via SMS to their loved ones. Domestic customers can purchase these online e- Gift Cards using their credit / debit card issued by their respective bank. All purchase transactions shall be limited to sites that support verified by Visa and MasterCard Secure Code for two factor authentication.

Zero Balance Account for Beneficiaries of Government Programmes

The Reserve Bank of India (RBI) has advised all Scheduled Commercial Banks (SCBs) on 10.8.2012 to offer a ‘Basic Savings Bank Deposit Account’ and also convert existing basic banking ‘no-frills’ accounts’ to ‘Basic Savings Bank Deposit Account’. Such accounts do not have the requirement of any minimum balance and comes with the facility of ATM Card or ATM-cum-Debit Card. However, the holders of such accounts are not eligible to open any other savings bank deposit account in that bank. Under Financial Inclusion, banks have already opened 3.16 crore accounts by March 31, 2012.

Chandrashekhar panel to frame rules for foreign investors

Market regulator SEBI on December 12 said it has appointed a committee under ex-Cabinet secretary K M Chandrashekhar to frame a single set of guidelines for all types of foreign investors.

The committee will suggest ways to simplify the investment process for all overseas entities like foreign institutional investors, foreign venture capital investors (FVCIs), qualified financial/institutional investors (QFIs), and NRIs, among others, and also to strengthen surveillance over them.