First Digital Branch of State Bank of India inaugurated in North East 

Mukul inaugurates 1st digital branch of NE SBI

SHILLONG, March 30 - The first Digital Branch of State Bank of India in North East was inaugurated by Chief Minister Mukul Sangma here today at the premises of State Bank of India, Main Branch.

Inaugurating the branch, Sangma said the new digitized branch will cater to “smart clients with smart banking facilities and associated financial delivery systems.”

The Digital branch is driven by smart and user-friendly state-of-the-art technology with a wide range of banking facilities like Internet banking, Internet savings, mobile banking etc. with minimum human intervention. It is a self-contained and self-sufficient branch having safe features in all its features.

The Chief Minister also expressed concern over Internet Banking security and stated there is a need to adopt higher application system to make it temper proof and make Internet Banking more safer.

Sangma also said there is a need for an “aggressive sensitization and Financial Literacy programme” to be conducted by banks.

In this regard, he urged the banks to collaborate with the different government programmes so that such initiatives would open up opportunities not only for the banks but also for micro and small entrepreneurs.

Sangma said that with access to digital highway there would be better Internet connectivity in the state and the whole digital connectivity could be taken to the last village.

Source:AssamTribune

ALL INDIA BANK RETIREES FEDERATION LETTER TO IBA

RBI gives loan defaulters list, urges SC not to reveal names

The Reserve Bank of India has submitted a list of major loan defaulters in a sealed cover to the Supreme Court, although it has requested the court to not make the names public.

"Disclosing details of accounts where defaults have been found irrespective of the reasons for no-repayment may have adverse impact for business and in a way may accentuate the failure of business rather than nursing it back to health," the Reserve Bank of India said in a recent affidavit submitted along with the list of defaulters.

"Disclosure of names of defaulters may have an impact on the livelihood of scores of employees employed in such entities," the RBI said.

A bench headed by Chief Justice TS Thakur had told the central bank to submit a list of companies that still had to pay back Rs 500 crore or more as rising bad debts in public sector banks in the country set alarm bells ringing.

The Supreme Court also asked the Reserve Bank of India to give them a list of companies whose loans have been restructured under corporate debt restructuring schemes.

It had asked how state-owned banks and financial institutions were advancing large-scale loans without following rules and whether there was adequate mechanism to recover them.

The court had made RBI party to a PIL filed in 2005 by an NGO Centre for Public Interest Litigation (CPIL), in which it had raised the issue of loans advanced to some companies by state-owned Housing and Urban Development Corporation (HUDCO).

Advocate Prashant Bhushan, appearing for CPIL, had submitted that about Rs 40,000 crore of corporate debt was written off in 2015.

The RBI’s affidavit said delayed permissions from government and regulatory agencies, delayed acquisition of land, delayed sanction of loans that made the borrower unable to use it in time, poor credit appraisal, poor monitoring, lack of business management knowledge, unanticipated business cycle downturn, commodity cycle downturn and poor project execution led to bad debts.

The Supreme Court has asked the central government to explain what action it would take against major defaulters who were leading a "lavish lifestyle".

The PIL, filed in 2005 through Bhushan, had alleged that the bad loans were those given by HUDCO to "ineligible borrowers".

The Supreme Court had ordered an inquiry by the Central Vigilance Commission (CVC), whose report concluded that the loans were given to the borrowers who had already been declared willful defaulters or having very bad track record, Bhushan had said.

Although the CVC had recommended departmental proceedings and a CBI investigation, the guilty officers were exonerated, he had claimed.

Bhushan had also referred to a recent news report about writing off of a total of Rs 1.14 lakh crore as bad debt between 2013 and 2015 by the PSU banks.  — PTI

Source:The Tribune

Extended Bank hours for conducting Govt. Business on 31st March, 2016

In view of closing of the current financial year and to facilitate the tax-payers in payment of taxes, the Reserve Bank of India has issued instructions vide notification RBI/2015-16/342 dated March 17, 2016 directing all agency banks to keep the counters of their designated branches conducting government business open till 8.00 p.m. on March 31, 2016. All electronic transactions would however, continue till midnight of March 31, 2016.

Source:PIBNEWS

Bandhan and IDFC Bank's bumpy journey since getting banking licence

Most of those who scrambled for a banking licence — some to make a quick buck — should be a happy lot. For the two entities that succeeded in getting the coveted licence two years ago, the going since then has been tough. If banking is a cow then one had to transition from an ant and the other had to shrink from being an elephant, both difficult propositions.

In the US, setting up new banks was as easy as opening restaurants. The US market saw formation of more than 2,000 banks between 1990 and 2008, before strong regulations in the wake of the global financial crisis and the fall of banks like a pack of cards put the brakes on the trend. In the next five years, only seven new banks began their journey.

The scenario in the Indian market was vastly different, with just two banks — Kotak Mahindra Bank and YES Bank — forming in a decade. The country saw the entry of a mere 23 banks since the economic liberalisation in the early 1990s. This is now changing with Reserve Bank of India Governor Raghuram Rajan going for on-tap bank licences.

The free market strategy started off with the doling out of licences in April 2014 to two very different entities with contrasting backgrounds and cultures — Bandhan and IDFC. The journey since then has been nothing short of an Ayn Rand classic-like tale for them.

IDFC was essentially a lender to the infrastructure sector, while the licence to Bandhan was an experiment in which a microfinance company was preferred over large corporate houses such as Birlas and Ambanis with the regulator aiming to improve banking penetration in the hitherto untapped rural belt.

IDFC Bank, with a market cap of over Rs 16,000 crore, has navigated a host of issues in the last two years — from complex demerger of the business, setting up new technology, hiring designated senior-level management team to increasing the staff strength from a meagre 220 to over 2,350. The bank was up and running on October 1, 2015.

The structure the RBI asked IDFC Bank to set up was so complex that for assets and liabilities to move from the parent to the bank, they had to take approval from all its shareholders and creditors, including 15 lakh bond holders and over 400 institutional creditors.

"There were obviously nervous moments, but I never felt that we wouldn't be able to do it," Rajiv Lall, managing director, IDFC Bank, says. Few in the country barring Rana Kapoor of YES Bank has had the experience of creating a bank from scratch.

Yes Bank:Smart Box for Consignments Delivery through e-commerce 

Parcels are placed in smart boxes nearby from where they can be picked up at one’s conveniencee 

MUMBAI, MARCH 30:  

E-commerce players bleed money more in logistics than in the fabulous discounts they offer on various products.

Track a delivery boy who begins the day with about 30 consignments to be delivered. Given the traffic conditions and deplorable roads across most Indian metros that seems a stiff target. But wait, jams occur even while waiting for elevators to reach so many high-rise offices.

You can spend 15-20 minutes waiting for your turn to get into the right elevator. Imagine the delivery boy struggling up only to find the recipient out for lunch or some meeting. That’s another trip, more delays, more costs and lower margins — and, of course, more blood on e-commerce players.

What if, instead, there is a simple solution — where your package is delivered to a pre-designated pickup spot, close to your residence/office where you can go and pick up your package at your convenience — after swiping your card and paying the necessary amount? YES Bank is in the process of doing precisely that in tandem with some e-commerce players.

The solution they have come up with is a ‘smart box’ — a 10 feet by 3 feet box with about 52 compartments/lockers of various sizes — in which the parcels will be deposited. An SMS giving you the access code will be sent to your mobile. After swiping your card at the PoS (point-of-sale) machine kept near the smart box and making the payment, the designated compartment will open automatically and you can pick up your package.

Pilot in Delhi

This is what the bank has installed as part of a pilot project in DMRC Delhi. The bank has deployed about 12 such boxes and PoS machines there and hopes to add another 125 by June. It plans to roll these out across other metros and have about 1,000 such machines across the country within a year.

Ritesh Pai, Senior President and Country Head, Digital Banking, YES Bank, said the bank has identified many high convergence areas, highly frequented, and high-density populated areas — such as corporate business parks, buildings, or high-end residential flats with 200-300 flats in one complex — typically the locations from where people order these consignments. Smart boxes will be put up with in-built payments functionality at these places, he said.

He explained, “Whenever you order your consignment, your e-commerce marketplace (for example, a Flipkart, Snapdeal or Amazon) will prompt you by saying, ‘By the way there is a smart box located nearby (based on your pin code). Would you like to opt for delivery there?’

“Now, if you agree, then the logistics guy will deliver it there (where it will remain for three days) and you will get an SMS alert and a one-time password to access the smart box.

“You can go there at your convenience, where there is a kiosk with an unmanned PoS machine. On the basis of your order number, the price is flashed, after which you swipe your card and key in your pin. The moment the payment is authorised, the box opens up and you can carry home your consignment.”

Win-win situation

Ritesh says this is a win-win situation. Efficiency will improve, he says, counting on the fact that deliveries can now be done even at night. Importantly, e-commerce players will also get the money into their account within a day — instead of the average time of a week that it takes now. And customers need no longer experience the anxiety or guilt of missing the delivery boy.

Ritesh says the solution is being piloted with a couple of small websites and has started seeing success. Bigger e-commerce entities are expected to join in soon.

Source:Business Line

Lakshmi Vilas Bank POs & Clerks Online Exam Results out

Lakshmi Vilas Bank Limited has released the Results of it's POs (Probationary Officers) and Probationary Clerks Online Exams 2016. The organization has conducted Online Exams for Probationary Officers on 20th March 2016 and for Probationary Clerks on 19th March 2016. Now it has came out with the results of those exams.

LVB Probationary Officers Online Exam Result :  Click Here

LVB Probationary Clerks Online Exam Result :  Click Here

Overdraft taken using Mudra card is returned by evening, No Interest will be charged

There’s room for small entrepreneurs to get interest-free credit, says MUDRA chief

If overdraft taken using Mudra card is returned by evening, no interest will be charged, says Jiji Mammen, CEO

MUMBAI, MARCH 28:  

If micro-enterprise owners such as vegetable/fruit vendors and small food stall owners play their cards right, it may be possible for them to get interest-free credit from banks under the Pradhan Mantri Mudra Yojana.

Once more ATMs with cash-deposit facility and standalone cash-deposit machines are available, withdrawing and depositing money will become easier, enabling small borrowers to dip into their overdraft account in the morning and repay the outstanding by evening. The borrower in such cases will not have to pay any interest.For example, a vendor could withdraw, say, ₹1,000 from his bank’s ATM in the morning to buy vegetables from the wholesale market. After selling vegetables throughout the day, suppose the vendor earns ₹1,300. Now, if he deposits ₹1,000 into the ATM/cash-deposit machine by evening, then he saves on interest payment. But if the vendor deposits, say, ₹800, he will be charged interest on the outstanding amount (₹200).

In an interaction with BusinessLine, Jiji Mammen, CEO, MUDRA, indicated that nil interest outgo on overdrafts is possible.

MUDRA (Micro Units Development & Refinance Agency Ltd), a wholly-owned subsidiary of the Small Industries Development Bank of India, is responsible for providing refinance to banks and microfinance institutions on loans given by them to micro/small business entities engaged in manufacturing, trading and services activities.

Prudent usage

Mammen explained that if a small business entrepreneur really uses the Mudra card prudently, he can withdraw money in the morning from the ATM, use it for his business, and in the evening, if there is a mechanism to put back the money into the ATM (banks are increasingly putting ATMs with cash accepting/ recycling facility), he need not pay any interest.

“This was discussed in one of the bankers’ meetings. They themselves said that interest will be charged only if there is an outstanding (loan) overnight. If it is a day transaction, the micro-entrepreneur can enjoy credit virtually free. Now, awareness creation is very important,” said the MUDRA chief.

Given that not all ATMs accept cash and cash-deposit machines are very few, Mammen felt that business correspondents could be an alternative channel for the small entrepreneurs to deposit their cash/repay overdraft. If this happens, the entrepreneurs will be empowered and reap benefits.

Since early April 2015, when the Mudra Yojana was rolled out, banks and microfinance institutions, have sanctioned 3.22 crore loans (to new as well as existing entrepreneurs).

As per latest MUDRA data, in the last 12 months, banks and microfinance institutions have sanctioned and disbursed loans aggregating ₹1.28 lakh crore and ₹1.22 lakh crore, respectively.

Source:HinduBusinessLine 

PMJJBY :Recent claim processed by Corporation Bank 

It’s a good policy to keep kin in the loop about insurance taken

A recent claim processed by Corporation Bank under PM’s life insurance scheme underscores this

COIMBATORE, MARCH 28:  

When B Kalaivani and her (late) husband K Lakshmana Kumar opened a savings bank account (jointly) in September last and agreed for an auto debit of INR:330 towards the Pradhan Mantri Jeevan Jyoti Bima Yojana premium, Kalaivani, a mother of three, had no clue that this would come in handy some day.

And so it did before long, when Lakshmana Kumar breathed his last due to pneumonia. The widow, though a post-graduate in psychology, says she was not aware that her husband had opted for cover under the PMJJBY scheme, until someone asked her to approach the bank.

“That was my first visit to the bank. I showed my pass book, explained my position and submitted the claim form. I am now in receipt of the cheque for ₹2 lakh,” she told BusinessLine, receiving the instrument from YP Rao, AGM, Corporation Bank (Saibaba Colony branch, Coimbatore).

Stating that this was the first claim, Rao said that the branch was able to get it within a fortnight of submission of papers to the bank’s head office in Mangaluru.

He recalled the campaign launched by the branch at Ward No 14 here. “It was largely un-banked, comprising over 3,000 families. We got all the residents on board and a good number of them opted for the PMJJBY cover.”

“There is no policy document, just a passbook entry to signify that the account-holder is covered under the scheme,” he said, adding “those that have opted for the scheme should let their family members know that he/she is covered under the scheme. Else, it might go unnoticed and the beneficiaries may not be able to benefit from the cover, should an eventuality take place,” Rao said.

Share details

P Mohankumar, Managing Director, Link-k Insurance Broker Company, observed that people by and large faile to share investment details with either the spouse or other family members. “As long as the going is good, it will not matter, but if something were to go wrong, everything will get stuck,” he said and cited the case of an individual who failed to provide for his dependants.

Not wanting to name the deceased, he said “this friend of mine led a hi-fi life. He failed to take a life protection cover (term plan) during his life time. When a car accident took his life, his wife realised that his driving licence had expired and he had not renewed it.

“They were, therefore, forced to sell the damaged vehicle as salvage; she was not aware of his business commitments. Even before she came to terms with the sudden loss of her husband, she was literally on the streets,” he said, emphasising the need to opt for adequate life cover and more importantly, sharing the details with kin.

Source:The Hindu Business Line 

Centre to infuse Rs 5K cr in PSB including UCO, Syndicate Bank

The government will soon infuse additional capital of about Rs 5,050 crore in some public sector banks including UCO Bank and Syndicate Bank this week.

Parliament has already approved Rs 5,050 crore for meeting additional expenditure on recapitalisation of public sector banks earlier this month.

The capital infusion by finance ministry in the identified banks would be done soon, which could be as early as this week itself, sources said.

Syndicate Bank and UCO Bank will be issuing shares to the government on a preferential basis to raise a total Rs 1,675 crore subject to regulatory approvals.

UCO Bank said it will raise Rs 935 crore by issuing preferential shares to the government while Syndicate Bank will be raise up to Rs 740 crore through preferential allotment following board approval on March 31.

Besides UCO and Syndicate, other lenders which are contenders for the fresh round of infusion are Central Bank of India, Indian Bank, Oriental Bank of Commerce, Vijaya Bank and United Bank of India.

It will be a part of the Rs 25,000 crore capital infusion plan earmarked for the current fiscal. In the first tranche, as many as 13 public sectors banks were given fund support of Rs 19,950 crore. Of this, State Bank of India got the highest amount of Rs 5,393 crore followed by Bank of India at Rs 2,455 crore.

Besides, the government infused Rs 2,229 crore in IDBI Bank, Indian Overseas Bank Rs 2,009 crore and Punjab National Bank Rs 1,732 crore.

Source:BankingUpdates

Special Clearing operations on March 30 and 31, 2016 - Reserve Bank Of India

IDBI Bank's worker profile a factor indivestment, says union

The government is seeking to reduce its stake in IDBI Bank to less than 50 percent as a test case owing to the institution's peculiar employee profile,said a leader of the trade union that is calling for a four-day strike in the bank."The reason for central government to take up IDBI Bank first to dilute its holding to less than 50 percent could be two. Firstly, the bank has morenumber of officers than clerks unlike in other nationalised banks," AmaraVenkata Vithal Koteswara Rao, general secretary, 

All India IDBI Officers' Association (AIIDBIOA), told IANS on Sunday."The other reason is that the bank falls under the IDBI Repeal Act -- orIndustrial Development Bank (Transfer of Undertaking and Repeal) Act,2003 -- and not the law under which the private banks were nationalised in 1969," he added.Rao is the convenor for United Platform of IDBI Bank Unions (UPIDU) that has called for a four-day strike from March 28 to 31 in IDBI Bank. The UPIDU consists of AIIDBIOA and IDBI Employees Association-Eastern Zone.The four-day strike should mean that the IDBI Bank would be shut for ninedays from March 24 to April 1. March 24 was Holi, March 25 was Good Friday, March 26 being fourth aturday was a closed day, and April 1 being the beginning of the new financial year is a closed day too.Rao, however, said it would not be an unbroken nine-day off because the bank was open on March 26."There is no closure of bank for nine consecutive days. We had worked on March 26, which was the fourth Saturday of this month. Normally second and fourth Saturdays are bank holidays." Though the IDBI Bank has far more number of officers as compared to clerical and other cadres, they cannot remain silent when the survival of the bank and its employees are threatened, Rao said.

"Many people have joined IDBI Bank recently, leaving their jobs in other nationalised banks," Rao said. Earlier, All India Bank Employees Association (AIBEA) clarified that it has called for only a day's strike in IDBI Bank - i.e. on Monday. Employees of only IDBI Bank would strike work to protest the government's proposal to reduce its equity in the bank to less than 50 per cent, AIBEA said. Rao acknowledged that AIBEA -- as well as All India Bank Officers Association (AIBOA) -- has called for only a day's strike on Monday while United Platform of IDBI Bank Unions has called for a four-day strike. "There is no conflict with AIBEA and AIBOA, nor is there any split in the IDBI Bank officers association," Rao said. "We will change our agitation programme if there is positive news from the government side," Rao added. According to him, the union is reaching out to all its members to make the strike a total success.

Source:http://www.aibea.in/upload/flashnews/20160328.pdf

Indian Overseas Bank starts distribution of India Gold Coins

State-owned Indian Overseas Bank (IOB) has become the first lender to start distribution of recently launched Indian Gold Coins (IGC).

State-owned Indian Overseas Bank (IOB) has become the first lender to start distribution of recently launched Indian Gold Coins (IGC).

Available in denominations, 5, 10 and 20 grams, the coins are distributed through limited branches, IOB said in a statement.

It is the first bank to enter into agreement with MMTC for sale of IGC, the bank claimed.

Indian Gold Coins is the first-ever national gold offering by the government and was launched by Prime Minister Narendra Modi in November.

The Indian Gold Coin is of 24 carat purity, 999 fineness and has the national emblem of Ashok Chakra engraved on one side and the face of Mahatma Gandhi on the other.

As part of Make in India drive, the coin is minted by the Security Printing and Minting Corporation of India Limited (SPMCIL) and hallmarked by the Bureau of Indian Standards (BIS).

Source:Financial Express 

AIBEA urges Finance Minister to delink associate banks from SBI

The All India Bank Employees' Association (AIBEA) has sought the Union Finance Minister Arun Jaitley to delink the associate banks from the State Bank of India and make them standalone independent banks, in order to enable them to grow and progress to their optimum potential.

"Had the associate banks been given more functional autonomy and operational flexibility sans SBI's control, they would have grown further and further," said the association in a memorandum submitted to the minister. There are many nationalised banks that were smaller than the associate banks two or three decades ago. Today, however, they have overgrown the associate banks because of their independence and flexibility to do business, it added.

Around 50,0000 employees of associate banks are agitated over certain vital issues that are remaining unresolved despite there being Government of India directives, guidelines besides bilateral agreements, it added.

The association alleged that SBI has been preventing the associate banks from implementing various settlement terms reached through negotation between the employees associations and the managements. It also called for the government's intervention for implementation of the Government of India approved Compassionate Appointment Scheme in all associate banks and to ensure that housing loan limits of workmen employees of associate banks are upwardly revised.

While the unions and the banks association entered into 10th bipartite industry-level wage settlement in banks in India, in which 43 banks including all the 27 public sector banks are parties, only SBI was permited to review and settle the rates of special pay and duties at their bank level and it has not implemented it in the associate banks, they alleged.

In another memorandum, AIBEA urged the government to reconsider its decision to reduce its stake in IDBI Bank to below 50 per cent, rescind the proposal and retain the bank as a public sector bank which alone would uphold the credibility and sanctity of the solemn assurance given by Jaswant Singh, the then Finance Minister given to the Parliament.

It also requested the Government of India to fix accountability on all the officials of the bank during whose tenure these loans were sanctioned deliberately bypassing the established norms in the matter of sanction of loans and appropriate action initiated against them which alone would act as deterrent for others.

Source:Business Standard

The SBI bank hopes to bridge that gap for China Potential Investors 

The State Bank of India will on Monday for the first time launch a dedicated China desk for potential investors.

The State Bank of India (SBI) will on Monday for the first time launch a dedicated "China desk" for potential investors, underlining the growing importance of the world's second largest economy as the Narendra Modi government looks to push its "Make in India" initiative.

Bank officials told India Today this will be the first ever China dedicated desk at any Indian bank, and will follow a Japan desk that was set up in New Delhi by the bank last month.

The China desk will operate out of Shanghai, where SBI opened the first Indian bank branch on the Chinese mainland in 2006. The bank also has a branch in Tianjin in the north.

"The China desk will coordinate with SBI India and provide handholding and financial advisory services for Chinese investors," said K Swaminathan, the bank's Chief Executive Officer (Designate) in China.

The Shanghai-based desk will be handled by Chinese banking executives, Swaminathan said, and will be led by Jean Liu, a banking executive who worked earlier for several Chinese and foreign investment banks in China.

The launch of the desk comes at a time when India is courting Chinese investment to push the "Make in India" initiative and for a number of infrastructure projects, including industrial parks for automobiles, power, solar projects and real estate developments.

While there is increased interest among Chinese companies on account of both the slowdown in China and the renewed emphasis in New Delhi on seeking investment from China, officials in both countries acknowledge that translating the interest into on-the-ground investments has proved difficult.

The bank hopes to bridge that gap, SBI officials said, and will offer for Chinese investors, in Shanghai and elsewhere, hand holding services, and, through the bank's investment banking subsidiary SBI Capital Markets, assistance on company formation in India, joint ventures, funding tie-ups and debt raising.

Source:India Today

Recovery of excess payments made to pensioners

RBI/2015-16/340

DGBA.GAD.No.2960/45.01.001/2015-16

March 17, 2016

The Chairman / Chief Executive Officer

All Agency Banks

Dear Sir,

Recovery of excess payments made to pensioners

We have been receiving complaints from pensioners stating that the recovery of excess/wrong pension payments are being made in a manner that is not in keeping with the extant guidelines. In this connection, the instructions contained in circular Nos. CO.DGBA (NBS) No. 44/GA.64 (11-CVL) 90/91 dated April 18, 1991 and CO.DGBA (NBS) No. 50/GA.64 (11-CVL) 90/91 dated May 6, 1991 laying down a uniform procedure in consultation with the Controller General of Accounts and various non-civil Ministries for recovery are reiterated below:

As soon as the excess/wrong payment made to a pensioner comes to the notice of the paying branch, the branch should adjust the same against the amount standing to the credit of the pensioner’s account to the extent possible including lumpsum arrears payment.

If the entire amount of over payment cannot be adjusted from the account, the pensioner may be asked to pay forthwith the balance amount of over payment.

In case the pensioner expresses his inability to pay the amount, the same may be adjusted from the future pension payments to be made to the pensioners. For recovering the over-payment made to pensioner from his future pension payment in instalments 1/3rd of net (pension + relief) payable each month may be recovered unless the pensioner concerned gives consent in writing to pay a higher installment amount.

If the over payment cannot be recovered from the pensioner due to his death or discontinuance of pension then action has to be taken as per the letter of undertaking given by the pensioner under the scheme.

The pensioner may also be advised about the details of overpayment/wrong payment and mode of its recovery.

The above uniform procedure may be strictly adhered to while effecting recovery of excess/wrong pension payments made to pensioners.

2. As regards the issue of refund of excess/wrong payments to the government, banks may be guided by the guidelines laid down in our Circulars Nos. DGBA.GAD.H-10450/45.03.001/2008-09 dated June 1, 2009 and DGBA.GAD.H.4054/45.03.001/2014-15 dated March 13, 2015 which have been incorporated in our Master Circular on disbursement of government pension by Agency Banks dated July 1, 2015.

Yours faithfully

(Manish Parashar)

Deputy General Manager

Source:Reserve Bank Of India

Unified Payments Interface will be as transformational as Aadhaar

Unified Payments Interface (UPI), a new process in electronic funds transfer, will be inaugurated by Reserve Bank of India Governor Raghuram Rajan on April 11. Conceived and being implemented by National Payments Corporation of India (NPCI) under the guidance of former chairman of Unique Identification Authority of India (UIDAI) Nandan Nilekani, this mode of payment is likely to be as transformational as Aadhaar when it gets adopted by most banks.

Initially, 29 banks are likely to adopt it, and certification is already in progress for 12 banks. Other banks will join soon. The process will ride on the existing infrastructure of Immediate Payments Service (IMPS), which facilitates money transfer from any bank/wallet account to any other bank/wallet account as permitted by RBI “instantly” 24×7. UPI enhances the user experience of IMPS with some additional processes.

Firstly, UPI enables ‘instant collect’, which was not possible under IMPS. It addresses the current problem of about 30% decline in e-commerce payment transactions due to a complicated transaction flow. With UPI, the friction gets minimised and e-commerce market players can pull money from shoppers easily. Cash on delivery (COD) transactions can also be completed by the delivery staff by collecting money electronically while delivering the goods.

A biller can collect bills from consumers by automating the collection process on the due date, supplementing thereby the already existing ECS (debit)/NACH (debit) process. Clubs/schools can collect periodic fees. A daughter can now make a UPI request to her father’s account and the father, recognising that the request has come from a valid source, can authorise the transaction or even reject it.

The father can also “hold” the transaction for verifying the transaction before authorising it with a one-time password (OTP) or static PIN. The landlord can pull the money from the tenant. There can be multiple usage of such nature for online/face-to-face payments. Secondly, UPI has a facility to identify a bank customer with an email-like virtual address.

A customer can create a unique financial address in his/her bank linked with the bank account number at the backend. The customer will use only the virtual address while dealing with others without sharing the account details. For instance, a customer at State Bank of India (SBI) can create an address like shortname@ sbiormobilenumber@sbi.

Looking at the domain name sbi, NPCI will route the transaction to SBI and SBI will apply the credit/debit by resolving the virtual address to the account number. A customer can have multiple virtual addresses for multiple accounts in multiple banks. There is no account number mapper anywhere other than the customer’s own bank to ensure privacy of customer data.

The advantage of such an approach is the customer can freely share the financial address to others. Thirdly, UPI will operate primarily on smartphones, leveraging their ever-increasing utilities. Though the current base of smartphones in India is about 300 million (December 2015), the number is likely to touch 400 million in two years. This will help customers to do a whole range of banking operations and shopping from the mobile itself.

Smartphones will also enable banks and their certified merchants to integrate the library being supplied by NPCI so that the process of capturing the authentication information is secure and uniform across banks similar to customers providing authentication information on ATMs irrespective of bank ownership. As mobile phones get Aadhaar-ready, biometric authentication would also be possible through them.

Fourthly, UPI will enable single-click two-factor authentication with mobile itself as the first-factor using the unique hardware identification of the smartphone, and OTP/static mobile PIN as the second. Banks will compete with each other to provide simple and user-friendly solutions without compromising on the regulatory guidelines on two-factor authentication. A few banks are enhancing the security without compromising simplicity.

For instance, the application can have a facility for the user to maintain a list of virtual addresses from which pull request would be permitted or to pre-register the beneficiaries. Banks can have applications with utilities to remind when bill payments are due. Customers can also generate various reports on transactions made.

In summary, UPI promises to be truly transformational. Let us watch how it shapes the future of payment systems in the country.

Source:http://blogs.economictimes.indiatimes.com/et-commentary/unified-payments-interface-will-be-as-transformational-as-aadhaar/

EPFO earns negative return on investment in stocks

The Finance Ministry has allowed private provident funds to invest a minimum of 5 per cent and a maximum of 15 per cent in equity and equity related schemes.

Retirement fund body EPFO has earned a negative return of 9.54 per cent on its Rs 5,920 crore investment in exchange traded funds (ETFs) since August last year, prompting labour unions to demand rollback of the decision to park funds in stock markets.

The market value of investments of Rs 5,920 crore (Rs 59.20 billion) in the ETFs in the current fiscal was Rs 5,355 crore (Rs 53.55 billion) on February 29, 2016, as per an analysis of equity investment by the Employees' Provident Fund Organisation (EPFO).

The analysis of EPFO investments in equity market will be placed before apex decision making body Central Board of Trustees, headed by the Labour Minister, in its meeting on March 17.

The EPFO started investing in ETFs in August last year after the CBT in March cleared proposal to invest in equity markets.

The board specified that it will invest 5 per cent of incremental deposits in the current fiscal.

However, the Finance Ministry has allowed private provident funds to invest a minimum of 5 per cent and a maximum of 15 per cent in equity and equity related schemes.

Trade unions have been opposing the decision to invest in equities or equity-linked schemes in view of market volatility.

"We have been opposing investments in the stock market. We will also raise this issue in the next meeting of CBT on March 17. We are custodian of poor workers money and safety of their provident fund is our concern," Hind Mazdoor Sabha Secretary and and EPFO trustee A D Nagpal said.

D L Sachdev, All India Trade Union Congress Secretary and an EPFO trustee, said, "The decision to invest in equity market was wrong. We will demand for rolling back of this decision in next meeting of CBT. We cannot continue with such loss-making investment."

EPFO is expected to receive an incremental deposit of Rs 1.15 lakh crore in the current fiscal. 

It manages a corpus of over Rs 8.5 lakh crore with subscribers' base of over five crore across the country. 

Source:Rediff