RBI holds district-level quarterly meet

The Reserve Bank of India General Manager Vikram S Bajwa presided over the quarterly meeting of the District level review committee. The District advisory committee was held in the Punjab National Bank zonal training centre in Dehradun on Friday. Addressing senior bank officials,  Bajwa said that banks should work to further improve customer services and ensure their full contribution towards facilitating financial inclusion. He said that banking services should be provided through POS machine/BC module in villages with a population of more than 2,000 and Atal Adarsh villages.  The PNB circle head V.K.Srivastav, officials of various banks in the District, heads and representatives of different departments concerned were also among those present.  

India’s ATM market is set to grow more than three-fold by 2015

In 1987, HSBC set up the country’s first automated teller machine (ATM) in Mumbai’s Andheri East. Soon, almost all banks followed suit. By end March 2010, India had 59,737 ATMs. And the number is set to grow manifold in the future, too. There will be about 175,000 ATMs by 2015, according to the latest forecast by Retail Banking Research (RBR), a strategic research and consulting company based in the UK. That is an expected growth rate of 193 per cent in ATMs. And it is this lucrative prospect that makes the big two ATM vendors in the world — Diebold and NCR — drool. “We are pretty overwhelmed with the prospects for 2015. The installed ATM base is growing at more than 20 per cent year-on-year,” says Naresh Hosangady, South Asia vice-president and managing director of Diebold. “There are only 51 ATMs out here for a million heads,” points out Jaivinder Gill, who runs the show at NCR India. The comparative ATM numbers per million for Brazil, Russia and China are higher — 704, 536 and 155, respectively.  According to RBR, ATM growth in the first half of this decade was driven by private banks. State-run banks have since taken charge, with the State Bank of India and its eight associate banks leading the pack. The SBI Group set up 18,000 ATMs in the past seven years. Its share of installed ATM terminals went up from 32 per cent to 36 per cent during this period. The group created a world record in ATM shipments when it set up 10,000 terminals in 2009-10. It was the key reason why the share of state-run banks in ATMs now stands at 70 per cent, up from 50 per cent in 2003. Six others — private players such as ICICI Bank, HDFC Bank and Axis Bank, and the state-run Punjab National Bank, Union Bank of India and Canara Bank — have together set up more than 2,000 ATMs. They account for a combined market share of 34 per cent. ATM numbers will move up sharply.  “The places where you have ATMs are also going up. Take malls, for instance,” says Gill, referring to the retail boom — you have many more places to swipe when you shop, eat and play. Then you have debit cards, which are to reach 450 million by 2015, double the current base. Of course, it remains to be seen if point-of-sale swipes will mean that many less number of people will flock to ATMs. If so, it can technically act as a brake on ATM installations. But the counter point is that with cheque-truncation, ATMs are now more than just cash dispensers. The shared-ATM networks of banks have dramatically changed the story. Currently, there are five of them — the National Financial Switch (NFS), Cashnet, Cashtree, Mitr and BANCS. NFS is the leader. In March 2010, NFS had 56,711  ATMs of 38 banks — 95 per cent of the country’s ATMs were on it. And ATM usage got a huge boost when the Reserve Bank of India (RBI) asked banks not to charge cardholders of their rivals. Users can now make five free transactions a month on an ATM of other banks. You pay for more of such usage.         

MBGB branches placed under CBS

All the branches of Madhya Bihar Gramin Bank (MBGB) have been put under the central banking system ( CBS) and, therefore, all the customers of a particular branch of the bank have been linked to its all other branches.  MBGB chairman P N Singh said this on Thursday at a function held here to celebrate the foundation of the bank.  RBI Regional Director G Mahalingam inaugurated the cultural function. Singh also received a trophy and award for the best Gramin Bank from NABARD General Manager V Mohan Doss. He was also given a personal award for being the best chairman among all the chairmen of the various gramin banks in the state. Among others, Punjab National Bank General Manager V Sriniwasan also praised the performance of MBGB.

95% households in NE do not have access to banking – Shyamala Gopinath, Deputy Governor, RBI

Altogether 95 per cent households in North East do not have access to banking services against the national average of 43 per cent, RBI Deputy Governor Shyamala Gopinath said. "Despite efforts by RBI during the last 75 years, there are as many as 145 million households in the country not having access to banking", she said while speaking at the RBI's Financial Outreach camp at Karsingsa near. She said RBI has been launching such programmes in all the states of the region to extend banking services to every unbanked village. "Our institution has taken a conscious decision to bring the households into the banking fold which will not only result in making available the affordable banking services to everyone but will inculcate savings and investment habits among the people", she said.  "The challenge is enormous, but necessary, because financial inclusion is what will give people an opportunity to build better lives for themselves and their children", she added. Karsingsa, a village within the vicinity of the state's capital, having a population of over 2000 does not have banking facilities. The camp has served as a boon for the denizens as 203 No Frill Account (Zero Balance Account) with zero deposits were opened with SBI branches at Nirjuli and Naharlagun.

Central banks must respond in real time, says Subbarao

When Duvvuri Subbarao took charge as the twenty-second governor of the Reserve Bank of India (RBI) in September, 2008, he had to act swiftly to counter the impact of the global economic slowdown on the Indian economy.  Subbarao’s first eight months in office saw RBI reducing its repo rate six times and reverse repo rate four times, to support a slowing domestic economy. Repo rate was reduced 475 basis points and reverse repo rate 275 basis points during this period.  “When asked what he thought of the French Revolution, Mao Zedong had famously replied: It is too early to tell. People who take a long view of history, like Mao, take the position that it is just too soon to draw the lessons of the crisis,” Subbarao said on Friday in his welcome remarks at the start of the third PR Brahmananda Memorial Lecture by Stanley Fischer, governor of the Bank of Israel.  “Policy practitioners do not have the luxury of historians; they have to respond to unfolding developments in real time,” Subbarao added.  It appears that RBI’s efforts to pull the domestic economy out of slumber have succeeded, as India’s gross domestic product (GDP) growth is seen accelerating to 8.6 per cent in the current financial year. The country’s economy had expanded 8 per cent in 2009-10 and 6.8 per cent in 2008-09.  However, inflation appears to be playing the spoilsport, with the headline number climbing to 8.4 per cent in December, driven by high food prices. The central bank has also revised its inflation forecast for March to 7 per cent from 5.5 per cent earlier.  Rising prices have prompted RBI to raise its key policy rates seven times since March 2010. The repo rate has been raised 175 basis points to 6.5 per cent, while the reverse repo rate was raised 225 basis points to 5.5 per cent during this period. Things have become complicated, as the growth in India’s industrial output in December slid to a 20-month low of 1.6 per cent. Earlier this week, in Bhopal, Subbarao had admitted that balancing growth and inflation was a tough act.  “We want to set interest rates in a way that inflation can be contained without hampering the growth rate. But, this is not going to be an easy balancing act to resort to,” he had told reporters.  Most analysts reckon slow growth in industrial production is unlikely to convince RBI to keep rates unchanged in its next policy met, due on March 17, as inflation continues to remain a major concern.  “While there is a deceleration in growth, inflation is a bigger problem... we thus maintain our view of the RBI raising (rates) by an additional 50 basis points in 2011 and 2012,” Rohini Malkani and Anushka Shah, analysts with Citigroup Global Markets, said in a note.  Goldman Sachs expects RBI to increase rates 25 basis points in March and another 50 basis points in this calendar year. Some analysts, who did not wish to be named, however, said it was too early to take a long-term view on the direction of interest rates, with food inflation cooling to a seven-week low of 13 per cent for the week ended January 29 and growth in industrial production faltering.  A further slowdown in investment activities, coupled with easing food prices, might encourage RBI to take a pause before raising rates again, they said.  Subbarao, himself, believes that the central bank’s policy should take into consideration the present macroeconomic challenges.  “The central bankers were a triumphant lot in the years before the crisis.... The crisis then came as a serious blow to the credibility of central banks... the challenge for central banks, as indeed for all policy makers, is to learn the lessons of the crisis and reflect them in their policies,” Subbarao said. 

Cap likely on home loan pre-payment penalty

Home loan borrowers may get a piece of good news soon. Pre-payment penalties, which are 2 per cent or above of the outstanding loan for most banks at present, may be brought down to 0.5-1 per cent.  The Reserve Bank of India (RBI) is in talks with banks to bring down pre-payment penalty charges and has sought their views on how much the cap should be. People in the banking industry say a consensus has emerged among lenders that a penalty within 1 per cent of the outstanding loan will be feasible.  “There are two reasons why banks charge pre-payment penalty. First, from the asset-liability management perspective, when a bank lends for a longer tenure, it also needs to raise funds accordingly. So, there are liabilities to be paid off over a period of time. This becomes difficult when loans are paid before time. Second, in view of the administration and processing costs, banks may tend to charge less in the initial years in the hope that charging more in future would make up for it,” IDBI Bank Executive Director R K Bansal said.  The regulator’s objection to high charges is with respect to fair treatment to customers.

Lifting FDI curbs will help India trigger fund inflows: Locke

Reducing tariff and non-tariff barriers and lifting restrictions on foreign direct investment ( FDI )) could help India trigger fund inflows, crucial to help fix the country's creaking infrastructure, US Commerce Secretary Gary Locke said here Friday.  Earlier Friday, Locke met with the famed Dabbawalas of Mumbai and appreciated their management skills and strategising abilities.  Locke also met the Reserve Bank of India Governor D.Subbarao.