Tides of 15.07.2015

1.  Foreign exchange reserves in the country are at reasonable levels to deal with the current market situation surrounding the Greece crisis, according to RBI Deputy Governor SS Mundra. For the week ended July 3, India’s foreign exchange reserves declined by $704 million to $354.52 billion in the week on account of a fall in foreign currency assets, as per the RBI’s weekly data report.In the previous reporting week, the reserves had declined by $237.5 million to $355.22 billion after rising for four consecutive weeks, earlier touching a lifetime high of $355.46 billion in the week ended June 19.

2.  The banking regulator has hit out at the Maharashtra Government for initiating criminal proceedings against bank officials for allegedly failing to meet farm loan targets. Questioning the State Government’s action, RBI Deputy Governor SS Mundra said that the RBI is a competent regulator to deal with the banks. He added that banks were doing good work in giving credit to farmers in the last two years. “Moreover, even if some direction is to be given to the banks, these directions should be done through a proper channel and I think regulators are better equipped to do that. “If each administrative authority decides to give direction then the sanity of the direction itself would be compromised,” Mundra said on the sidelines of an event organised by the Banking Codes and Standard Board of India (BCSBI).

3.  Are you in the habit of swiping your debit card whenever you make a purchase? If yes, how often have you ensured that the merchant establishment has not levied a fee on your debit card transactions? Most people, it is learnt, are quite unaware of the banking regulator’s circular on this levy. While some establishments tell the customer they would be charging a 2 per cent fee on the transaction value if the settlement is made through card, others quietly collect the fee without informing the customer at the time of billing.

4.  With mobile banking gaining traction and consumers showing increasing propensity to shop online, the National Payments Corporation of India (NPCI) wants banks to ensure that their ATMs become ‘future-proof’. What this means is that banks had better be ready with new types of usage for ATM machines as cash withdrawals could decline over the next few years.NPCI, the umbrella institution for all retail payments, now wants its member banks to expand the scope of ATM services to include funds transfer, bill registration, statement request, and mobile number registration on an inter operable basis.

5.  DCB Bank (formerly Development Credit Bank) posted a marginal rise of Rs. 2 crore in net profit for the first quarter ended June 2015, to Rs. 47 crore. The profit was driven by one-time pre-tax treasury gains of Rs. 22 crore.Higher operating expenses ( Rs. 114 crore in Q1FY16 compared to Rs. 92 crore in Q1FY15), higher interest expenses ( Rs. 264 crore from Rs. 213 crore), and increase in bad loans limited the bank’s profits. Mr.Murali Natarajan, MD & CEO, said, “We are making cost investments for building growth momentum. It is not easy to grow profitably in a challenging environment. Also, there is keen competition amongst banks/ NBFCs. We continue to be watchful of corporate and SME portfolios

6.  Micro, small and medium enterprises (MSMEs) in the manufacturing sector can get soft loans and term loans at concessional interest rates from a new fund that the Small Industries Development Bank of India (SIDBI) has set up, said a top official.

7.  Further, the financial institution is planning to raise resources by floating ‘Mudra Bonds’ via its wholly-owned subsidiary Mudra Bank to help refinance lenders giving loans to micro units. Kshatrapati Shivaji, Chairman and Managing Director, SIDBI, said the SMILES Fund (Small and Medium Enterprise Soft Loans Scheme) has been carved out of the Rs. 10,000 crore allocated by the RBI to SIDBI from banks’ priority sector lending (PSL) shortfall for a period of three years. While about Rs. 2,000 crore of this will go into investment in funds started by State Governments and financial institutions for investment in start-up companies, the balance will go to support SMILES, he added. He pointed out that there will be no upper ceiling on the amount of funds that can be raised under SMILES. Top-rated MSMEs could get soft as well as term loans at 10%.