Bank Managers have no time for No Frill Customers : RBI Governor

http://www.financialexpress.com/news/rbi-guv-hits-out-at-poor-service-to-no-frills-account-holders/970412/0

Reserve Bank of India Governor D Subbarao on Wednesday gave vent to his annoyance against the shoddy treatment meted out by fontline branch managers to ‘no frills’ account holders and low-income households that too when the banking sector is witnessing “a disappointingly large number of cases of bank branches with low customer footfalls and ‘no frills accounts’ which remain largely inoperative”.

“The general impression I got is that frontline branch managers treat ‘no frills’ accounts as a ‘nuisance’ and low income households as an intrusion into their time and their business. This is disappointing to say the least,” Subbarao said at a function organised by Indian Overseas Bank.

“Bank managers have no time for them; the documentation required is not indicated all at once; the paper work is exacting; the attitude of the bank staff is unsympathetic if also uncivil,” Subbarao said.

Subbarao said banks should look upon financial inclusion as an opportunity to build ‘fortune at the bottom of the pyramid’. “We need to reach out to people left behind, inspiring their trust and confidence in the banking system and supporting them in improving the quality of their lives.”

source: www.financialexpress.com

Reduction in Discount Rate on debit card payments deferred to Sep 1

http://www.financialexpress.com/section/banking-&-finance/349/

The Reserve Bank today said reduction in merchant discount rate (MDR) for purchases made by debit card payment to 0.75-1 per cent, which was to be effective from July 1, will now be applicable from September 1 due to some operational issues.

MDR is the fees charged by banks (or the issuer of debit card) from a businessman for accepting payment through debit or credit cards from their customers. It stands at 2-3 per cent at present.

"We have received several representations from banks and system providers that implementation of the directive needs to be preceded by modifications in the computer systems and agreements with merchants," RBI said in a notification.

Accordingly, the scheme will become operational from September 1, 2012, the RBI notification said.

On June 28, RBI had slashed the merchant discount rates to not more than 0.75 per cent for debit card purchases up to Rs 2,000. For purchases over Rs 2,000, the MDR was limited to not more than one per cent.

These rates were applicable from July 1, 2012.

The RBI directive had come to encourage usage of debit cards, especially by small merchants or service providers and location.

Until now, the MDR on debit and credit cards has been similar in the country. Where debit card is mostly used as per availability of funds, credit card usage is linked to the credit limit sanctioned by the issuer (or the bank) and carries and element of credit risk. Since the nature of two products is different there was no rationale of charging similar MDR for debit and credit cards, RBI said last week.

Source:www.financialexpress.com

Service Tax on NRI Remittances

http://www.financialexpress.com/news/service-tax-on-nris-remittances-chandy-clears-air/969869/0

Prime Minister Manmohan Singh has dismissed reports of any plan to bring under the service tax ambit foreign remittances by overseas Indians, Kerala Chief Minister Oommen Chandy said today.

Singh has also sought details from the Finance Ministry on the issue, said Chandy who raised objections before the Prime Minister over the reported move by the Government to levy the tax on the money of Indians working abroad.

"Prime Minister has dismissed reports that the Government is planning to charge 12.36 per cent on all foreign remittances to India," Chandy told reporters after meeting the Prime Minister here.

The Chief Minister took up the matter with the Prime Minister as the annual remittances from NRI population in Kerala is nearly Rs 50,000 crore and such a move by the Centre would hit the economy of the southern state.

source: www.financialexpress.com

SBI removes minimum balance stipulations for SB accounts

http://www.financialexpress.com/news/savings-bank-acct-sbi-axes-balance-rule/969858/0

In order to attract new customers, State Bank of India (SBI) has done away with minimum balance criteria for saving banks account.

The bank will not levy any charge for breaching minimum balance criteria.

The facility is available to existing customers also, SBI said in an advertisement.

For the normal SBI savings account with cheque book facility, a customer had to maintain a minimum balance of Rs 1,000 in his or her account failing which it attracted penalty. There are certain saving account products of the bank where the minimum monthly balance is as low as Rs 50.

Depending on features and facility, the minimum average monthly balance varies.

On the other hand, the minimum balance requirement for savings bank account of private sector bank like ICICI Bank, and HDFC Bank is Rs 10,000. This is for an individual having account in any branch in a metro centre.

Failing to maintain minimum average monthly balance in ICICI Bank attracts a fine of Rs 250 per month for the metro region. In case of savings bank account with foreign banks like Citibank, the minimum average monthly balance criteria Rs 25,000 for metro centres.

source: financial express

Benefits to Senior Citizens

http://www.moneycontrol.com/news/retirement/find-out-various-benefits-senior-citizen-can-avail_723753-1.html


From Income-tax to saving schemes to bank deposits, senior citizens have several benefits they can avail of.


According to the data available with the Ministry of Social Justice and Empowerment in India, the number of senior citizens, which was 70.69 million in 2001, is expected to go up to 173.18 million in 2026. The Ministry of Social Justice classifies anyone above 60 as a senior citizen.


However, the simple definition of senior citizens is interpreted differently by different organizations. 
An insurance company considers a person who is 55 as a senior citizen. However, the income-tax department defines a senior citizen as someone who is 65. This creates problems for senior citizens dependent on deposit interest or pension income. Though most of them retire when they are 58 or 60, they have to wait for five to seven years before they can enjoy the benefits of higher tax concession.


Being a senior citizen, the first thing that one needs to address is finances. The following is a chronicle of how being a senior citizen can make an impact on your personal finances.

Income-tax: Income-tax is one area where the benefits provided to senior citizens start at Rs 2.25 lakh (the highest bracket). But the qualifying age for this is 65 years. Here, the government not only allows more money for them, but also makes leeway for bigger deductions. Medical insurance is one such example.

Senior citizen’s policies are more expensive and the government does consider this. As a result, the deductible amount for senior citizen’s insurance policy is Rs 20,000. This is Rs 5,000 higher than what a younger person would pay. As a senior citizen if you fall in the highest tax bracket, this would still amount to a tax saving of Rs 1,500.

The income-tax department has also kept the basic exemption high. For men, there is no tax on the income of Rs 150,000. But senior citizens are exempted from tax if their income is less than Rs 225,000. This translates into savings of Rs 7,500 in taxes.

Even if you compare the exemption limit of women senior citizens with a younger one, the tax benefit works out to Rs 4,500. The basic exemption limit for women is Rs 1, 80,000.

Bank Deposits: 

This is an area where the elderly get to earn more on their investments. Banks offer a higher rate of interest on fixed deposits to senior citizens. The offering is 0.5-0.75% more than the prevalent interest rates. The minimum age to get a premium on your deposit is 60.

A younger age group person can also enjoy this benefit if he opens a joint account with a senior citizen. But the deposit needs to be in the name of the elder one.

Senior Citizen Savings Scheme: 

The annualized interest rate in the Senior Citizens Savings Scheme (SCSS) is 9%. The entry age for this scheme is the same as the one required for Fixed Deposit, that is, 60. But the government has given some leeway for retirees. A person who is retiring and has crossed 55 years of age is allowed to invest in this scheme, if the money is invested within a month of receiving the amount from the employer. The tenure of this deposit is five years.

Insurance: When it comes to insurance, especially health, it gets difficult for senior citizens to get an adequate cover. Most insurance companies do not provide insurance for a person above 55 years of age. Some companies who provide cover, charge an exorbitant amount.

Others:

The Ministry for Social Justice and Empowerment, the nodal Ministry responsible for the welfare of senior citizens offers various schemes for their benefit. These schemes encourage non-governmental organizations to construct more old age homes and multi-care centers and mobile medicare units.

The Ministry of Road Transport and Highways mandates the reservation of two seats for senior citizens in front row of the buses of the State Road Transport Undertakings. 

The Ministry of Railways provides 30% fare concession in all Mail/Express (trains) including Rajdhani, Shatabadi, Jan Shatabadi for senior citizens aged 60 years and above. 

Under the diktat of the ministry of civil aviation, Indian Airlines provides 50% senior citizen discount on normal Economy Class fare for all domestic flights to Indian senior citizens who have completed the age of 65 years in the case of male senior citizens and 63 years in the case of female senior citizens, subject to certain conditions.

Air India also offers discount to senior citizens above 60 years on flights to the US, UK and Europe. Some private airlines such as Jet Airways also offer 50% discount on basic fare for travel on its domestic flights only to senior citizens who have attained the age of 62 years. Discount is applicable in economy class only.

The Department of Telecommunications also mandates that faults and complaints of senior citizens are given priority by registering them under the senior citizens category with VIP flag, which is a priority category. Further senior citizens are allowed to register a telephone connection under N-OYT Special Category, which is a priority category. Apart from the various ministries, it is mandated that courts in the country accord priority to cases involving older persons and ensure their expeditious disposal.

Banks misguide investors on NPA

http://www.financialexpress.com/news/banks-misguide-investors-on-loans-sbi/967922/0

Reserve Bank deputy governor K C Chakrabarty today flayed banks for attributing their sudden fall in profits to the computerised system of recognising bad loans and said this is tantamount to misguiding investors.

"You have misguided your investors for the past five years by not giving your proper NPA (non-performing assets) figures," he told a banking technology summit organised by the industry body CII here.

The senior-most deputy governor who oversees the banking services at the monetary authority, also wondered as to how an inanimate object like the "system" can generate NPAs and said the markets regulator Sebi should look into this issue.

"Should not the (markets) regulator (Sebi), who is dealing with listing, take action against banks?" he asked.

Wondering how even after computerisation, banks are unable to identify NPAs, Chakrabarty said, "so long as system-generated NPAs were not there, was the computer giving wrong figures?"

The deputy governor's comments come in light of a slew of banks, especially the state-run ones like Central Bank of India and Union Bank of India, among others, reporting massive dent in their profits and attributing the same to migration to the system-generated approach of identifying bad loans, over the last fiscal.

SBI raises deposit interest rates by 0.25%

http://www.financialexpress.com/news/sbi-raises-deposit-interest-rate-by-0.25/968729/0


In a surprise move, country's largest bank SBI today increased interest rates on select fixed deposits by 0.25 per cent.

Deposits under Rs 15 lakh for a period of three years but than five years will fetch an interest rate of 9 per, up from 8.75 percent, State Bank of India (SBI) said in a statement issued here.

The revised interest rate will be applicable from July 1, it said.

The move, which is likely to trim SBI's profits, comes as a surprise because the bank had earlier this month cut deposit rates by 0.25 per cent in select maturities. This followed the Bank's cut in lending rates by 0.5 per cent in April a cumulative cut in cash reserve requirements to the tune of 1.25 per cent this year.

A hike in interest rate by SBI is surprising also because it followed a cut of 0.20 per cent in base rate by private lender HDFC Bank yesterday.