SBH to extend financial aid to 1,102 villages

Following the Reserve Bank of India (RBI) directions, the State Bank of Hyderabad (SBH) said it would extend financial inclusion across 1,102 villages with above 2000 population spread across 36 districts in Andhra Pradesh, Maharashtra, Karnataka and Gujarat. hese districts together cover a rural population of about 42.69 lakh. Financial inclusion will provide banking products such as savings, loans and services like remittance and insurance in areas where there are no banking services. It caters to low income groups and offers services at an affordable cost. According to SBH, the proposed financial inclusion will be implemented in two phases. While the first phase will cover about 300 villages by March 2011, the remaining villages will be covered in the next fiscal. SBH said it has already commenced enrolment and opening of savings accounts in 261 villages covering AP and Karnataka. On Tuesday, the bank distributed biometric cards to customers in few villages in Mahaboobnagar district. As part of the project, the bank has launched overdraft products to meet the financial requirements of beneficiaries across all villages. Besides opening a savings account, customers can also opt for variable recurring deposit, term deposits, overdraft in recurring deposits and term deposits in loan category general purpose credit card will also be available to all villagers.

FSDC not meant to be a super regulator'

The Union finance ministry has again taken pains to emphasize that the newly formed Financial Stability and Development Council (FSDC) won’t be a ‘super regulator’. “That is out of the question,” a key ministry official told Business Standard. FSDC, he noted, was not a statutory body. The commission, to be chaired by the finance minister, is meant as a broad “regulatory collegium”. There has been renewed discussion recently, as at the time it was formed, on whether it would be grow into the role of a regulator of the existing regulators, something the Reserve Bank of India, for one, has been wary about. “The issue is whether there could be a super regulator to oversee and co-ordinate the other regulators,” Financial Sector Legislative Reforms Commission chairman B N Srikrishna had told Business Standard. The FSDC was constituted through a notification by the finance ministry, not by an act of Parliament. Its aims include inter-regulatory coordination and maintaining stability in the system, among other things. Its creation came as a turf war occurred between the regulators of the capital markets and the insurance sector on the policing of unit-linked insurance products. The RBI had said FSDC should not assume the role of a super regulator, but confine itself to financial literacy and financial inclusion, which are also the aims of the council. It had also expressed reservations over a proposed joint mechanism under the ministry to sort out a turf war between regulators. Later, the RBI governor was appointed as the vice-chairman of the joint mechanism, chaired by the finance minister. However, no such post was given to the RBI governor in FSDC, but he was made head of a sub-committee on the coordination of inter-regulators. Experts say RBI’s opposition to FSDC as a super regulator was probably because its prime role at the High Level Coordination Committee (HLCC) that had regulated the financial sector. RBI feared those would be diminished once FSDC came into being, as the latter was chaired by the finance minister. The sub-committee, chaired by RBI within FSDC had replaced HLCC.

Cheque payments to get costlier

NEW DELHI: Making payments through cheques may become a costlier affair from tomorrow, as RBI has allowed banks to levy higher service charges for their clearing, especially of high-value and outstation cheques. As per a RBI circular coming into effect from April 1, 2011, banks would be free to fix service charges on speed clearing of cheques of value above Rs 1 lakh.  At present, RBI does not allow banks to charge more than Rs 150 per cheque for speed clearing of cheques worth over Rs 1 lakh, while there are no charges for value up to Rs 1 lakh.  However, speed clearing of cheques with value up to Rs 1 lakh would continue to remain exempt of any service charges.  Speed clearing refers to processing of outstation cheques electronically and without movement of cheques from the presentation centre (city where the cheque is presented) to drawee centre (city where the cheque is payable).  For normal local clearing also, drawee bank can charge up to Rs 1.50 per cheque from tomorrow, as against Re 1 at present. For local clearing through cheque truncation system, which works electronically by processing the scanned image of the cheque, drawee bank can levy a service charge of Re 1 from tomorrow, up from 50 paise at present. Besides, RBI has also given a free hand to the banks to decide on the service charge on outstation cheques of over Rs one lakh, as against a maximum limit of Rs 150 per cheque allowed currently.  However, RBI has decided to lower the service charge for outstation cheques up to Rs 5,000, by allowing a levy of Rs 25, as against Rs 50 currently. The outstation cheques between Rs 5,000 and Rs 10,000 would continue to attract a fee of Rs 50, while those between Rs 10,000 and Rs 1 lakh would also continue to be levied a charge of Rs 100. While fixing service charges not mandated herein, banks have been told to get approval from their boards for service charge structure.  "Charges fixed should be reasonable and computed on a cost-plus-basis and not as an arbitrary percentage of the value of the instrument. The service charges-structure should not be open ended and should clearly specify the maximum charges that would be levied on customers including charges if any, payable to other banks," RBI has told the banks.  The service charges by banks should be inclusive of all charges (postal, courier, handling, etc.) other than service tax, RBI said.

RBI misses deadline to issue banking licence guideline

The Reserve Bank has missed the deadline to issue the much-awaited guidelines for giving new banking licences. "I am sure we are not issuing it (licence) today," RBI Deputy Governor K C Chakrabarty said. In the Budget 2011-12, Finance Minister Pranab Mukherjee had said the RBI plans to issue guidelines for the grant of new banking licences before the close of this financial year. Recently, Department of Economic Affairs Secretary R Gopalan had said that RBI will come up with the guidelines by the end of this month. In the last Budget, it was announced that the Reserve Bank of India would consider giving traditional banking licences to private sector players, he had said. Following the announcement made by the Finance Minister, the Reserve Bank had brought out a discussion paper in August, 2010, on giving out new banking licences to business houses and non-banking finance companies, besides regulations for the same to foster greater competition. The RBI also sought to know "whether industrial and business houses could be allowed to promote banks." Furthermore, it sought stakeholders' views on whether NBFCs should be allowed to convert into or promote banks. The RBI has received comments on its discussion paper from all stakeholders. Various entities like Reliance Capital, IndiaBulls, Religare, IL&FS, IDFC, IFCI and Aditya Birla Financial Services are reported to be mulling an entry into the banking space. At present, India has 26 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, 4 local area banks, 1,721 urban cooperative banks, 31 state cooperative banks and 371 district central cooperative banks.

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SBI opens 25,000th ATM and 9,000th semi-urban branch

Mumbai, Mar 31 (PTI) The State Bank today opened its 25,000th ATM and the 9,000th semi-urban branch, and said it will add 10,000 ATMs annually for the next three years.  The outgoing Chairman Om Prakash Bhatt said SBI had plans to deploy 10,000 ATMs every year over the next three years. He inaugurated both these facilities at the SBI board room here through video conferencing, which was attended by the entire board of the bank, including RBI Deputy Governor Shyamala Gopinath. While the 25,000th ATM is located at south Mumbai''s Girgaon, the 9,000th rural, semi-urban (Rusu) branch is at Sundargarh in Orissa''s Bhubaneswar Circle. Speaking at the occasion, Gopinath said though ATM was the most innovative product in the banking space, there was a need for an optimal ratio of technology and physical branches as rural customers still preferred physical branches. Of the 13,500 plus branches, as much as 67 per cent are located in rural and semi-urban areas, Bhatt said, adding the State Bank Group has 25,000 ATMs, out of which SBI alone has 20,087. In the last two years alone, the SBI Group has put up as many as 13,596 ATMs. SBI''s ATM network processes over 7.5 million transactions a day, disbursing nearly Rs 1,500 crore in cash. The State Bank has issued over 90 million debit cards and enjoys a market share of over 38 percent.  From June 2006 to March 2011, more than 3,400 branches were opened by SBI alone, Bhatt said. The State Bank Group now has 18,181 branches. In FY11, SBI opened 1,040 branches, including the merged branches of State Bank of Indore.