Tides of 22.08.2015
1. The
new payments banks are likely to impact commercial banks, say bankers. They
echoed the fears expressed by Arundhati Bhattacharya, SBI Chairman, who felt
that these new banks will pose a threat to the existing players with their
ability to move money as well as compete for low-cost savings accounts. Terming
it as a tricky game, N Kamakodi, CEO of City Union Bank, said that on the one
side there are telecom companies that can virtually move currencies. On the
other, some banks still have limitations in adopting technology.“While every
customer of the bank has a mobile phone, not every individual has a bank
account as yet. The last mile connect is still missing, but the mobile phone
penetration is phenomenal,” he said.SR Bansal, CMD of Corporation Bank, said
that the competition for savings bank portfolio, especially in the case of
smaller-value accounts, will increase as far as public sector banks are
concerned.
2. The
country’s largest lender SBI is “working on” its low-cost consumer touch points
to take on payments banks.According to Arundhati Bhattacharya, Chairman, SBI,
the bank intends to do this by strengthening the business correspondent (BC)
model.The bank already has 56,000 business correspondents, and another 500 will
be added to the unbanked gram panchayats in West Bengal soon.“The advantage
which payments banks will have is lower cost of operations. So, we are also
working on a low-cost model to increase our reach and compete with them,” she
said on the sidelines of a Banking Conclave organised by FICCI.The RBI has
granted 11 in-principle licences for payments banks, led by payment
intermediaries, technology companies, mobile service providers and corporate
entities.SBI has a 30% investment in the proposed payments bank to be launched
by Reliance Industries.
3. The
All-India Bank Employees Association has criticised the RBI granting licence to
private companies to open payments banks as a move to boost private sector
banks at the cost of their public sector counterparts.AIBEA General Secretary
Ch Venkatachalam said in a statement that the move would minimise the role of
public sector banks and shrink their market share. In the name of banking
reforms, he said, the government was trying to diminish the status of PSBs and
boost private banks.“Because of the colossal private corporate delinquency,
PSBs are saddled with huge bad loans of nearly Rs. 6
lakh crs,” Venkatachalam said. “All these are private corporate companies who
had defaulted and it is strange that the RBI and the government want to
encourage the very same private sector to start banks.”He pointed out that at
the end of the last financial year there were 7,035 cases of wilful default
involving bad loans of Rs. 58,792 crs. The top 30
borrowings from PSBs amounted to Rs. 1.21 lakh crs.
4. The
Institute for Development and Research in Banking Technology (IDRBT), an arm of
the RBI, is conducting the first of its kind national competition to develop
‘apps’ for the banking and financial sector.Christened IDRBT Banking
Application Contest (IBAC), the contest will be held in March 2016 at the
IDRBT's premises here.“The competition is designed to enable development of
application software to facilitate banking operations in the three broad areas
of customers, managing business and managing technology,” the institute said in
a release. Those intending to participate will have to register as a team of
maximum three members. All members must be less than 25 years of age or
affiliated to any recognised educational institution as a student. Any bank
employee within the prescribed age limit can also try his/her luck. The last
date for registration for IBAC is August 31, 2015.
