Tides of 30.08.2015

1.  Four public sector banks have slipped in their compliance levels to ‘average’ from ‘above average’ owing to a missing boss. Without naming the banks, AC Mahajan, Chairman, Banking Codes and Standards Board of India (BCSBI), said: “Four banks have dropped in their extent of compliance…All are public sector banks. It shows also because there was no top boss. Although marginal, the banks have dropped on compliance on transparency & information dissemination.” BCSBI is an independent body tasked with monitoring and ensuring that banks adhere to the banking codes and standards adopted by them in the true spirit while delivering their services. According to a survey done in February, Mahajan said, “The compliance levels have improved from 50% in 2009 to 78.3% in 2015. It has been the lowest in transparency (76.7 %) and the highest in customer feedback (88%).” The survey will be in public domain after it is submitted to the RBI and banks. Last year, the RBI had received 85,000 customer complaints through the banking ombudsman. The single largest category of complaints, at 29%, has been on banks’ compliance levels, followed by grievances pertaining to ATMs and credit cards.The problems need to be corrected in public sector banks. The foreign banks are strong with their online mechanism and are performing the best. Some private and public banks are also doing well. Besides periodic revision of the Codes, the BCSBI undertakes thematic customer-centric studies, such as pertaining to retail loans, and banking services, among others, based on which it rates the banks. In the survey conducted by 100 retired RBI and bank officials, BCSBI sought feedback from about 4,100 customers from over 2,100 branches of 47 banks. It rates banks on five parameters — information dissemination, transparency, customer centricity, grievance redressal and customer feedback. Bank customers suffer from mis-selling of financial products, hidden charges, failure of customer service, no grievance redressal on fraudulent transactions or loss of ATM cards, among others.

2.  United Bank of India plans to bring down its gross non-performing assets to below Rs. 6,000 crs by the end of this fiscal. Gross NPAs for the quarter ending June 30, stood at Rs. 6,533 crs. The plan is to bring down gross NPAs to around 7.5-8 %. The bank’s current gross NPAs (as percentage of total advances) stands at 9.57%. The bank is also open to sale of sticky assets to asset reconstruction companies.

3.  Corporation Bank is striving to wean farmers away from money lenders by extending credit at affordable rates. Crop loans of up to Rs. 1 lakh are being extended to farmers, not necessarily for the crop but to pay off dues to money lenders.“Farmer suicides have been on the rise and we perceived that the best way to help the community is to free them from the clutches of money lenders. .It is across the country and not specific to any State or geography.

4.  The Reserve Bank of India said payment systems will not be operated on second and fourth Saturdays but would operate for the full day on working Saturdays. This move follows the Finance Ministry issuing a notification declaring that all scheduled and non-scheduled banks — public, private, foreign, cooperative, regional, rural and local area banks — will observe public holiday on second and fourth Saturdays from September 1 and will observe full working days on Saturdays other than second and fourth Saturdays. Payment systems typically include Real Time Gross Settlement (RTGS), National Electronic Fund Transfer (NEFT), Cheque Clearing operated by various Bankers' Clearing Houses in the country, including the grid-based Cheque Truncation System (CTS) and Electronic Clearing Service (ECS) suite, Regional Electronic Clearing Service (RECS) and National Electronic Clearing Service (NECS). Processing of future value dated transactions with value date falling on the second and fourth Saturdays will not be undertaken under RTGS and ECS suite. The financial market segments which are currently open for transactions on Saturdays will continue to remain open on all working Saturdays.