Banking
Differential interest only on term deposits of Rs1 crore or more

From 1st April, banks would offer differential interest rates for only on term deposits of Rs1 crore and more and may refuse premature withdrawal of the deposit

Mumbai: The Reserve Bank of India (RBI) has tightened norms for differential interest rates asking banks to offer them only on term deposits of Rs1 crore or more, and permitted them to refuse premature withdrawal of such deposits, reports PTI.

 

“The permission to offer varying rates of interest for deposits of the same maturity shall apply to single rupee term deposits of Rs1 crore and above.

 

“Banks may therefore offer same rate of interest or differential rates of interest for deposits of Rs1 crore and above of the same maturity,” the RBI said in a notification.

 

The changes will be applicable from 1 April 2013

 

For deposits below Rs1 crore of the same maturity, the RBI said, the same rate will apply.

 

On premature withdrawal of large size term deposit, it said: “The bank at its discretion, may disallow premature withdrawal of large rupee term deposits of Rs1 crore and above” of all depositors, including deposits by individuals and Hindu Undivided Families (HUFs).

 

The bank shall have the freedom to determine its own penal interest rate of premature withdrawal of term deposits, it added.

 

The RBI also said that henceforth the expression “bulk deposit” would be used for single rupee term deposits of Rs1 crore and above.

 

As of now, the term “bulk deposit”, though not specifically defined, has been interchangeably used with “wholesale deposits”—deposits of Rs15 lakh or above.

 

The country’s monetary authority said that banks should disclose in advance the schedule of interest rates on deposits including those on which differential interest will be paid.

 

“Interest paid by banks should be as per the schedule and not be subject to negotiation between the depositor and the bank,” the RBI added.

 

Earlier also, banks were permitted to disallow premature withdrawal of large deposits held by entities except for those held by individuals and HUFs.

 

The RBI also modified the memorandum of instructions for opening and maintenance of Rupee/foreign currency Vostro accounts of non-resident exchange houses.

 

Through the amendment, payments to medical institutions and hospitals in India, for medical treatment of NRIs/their dependents and nationals of Hong Kong, Singapore and Malaysia, have been included in the list of “Permitted Transactions”.

 

Also, payments to hotels by nationals of Hong Kong, Singapore and Malaysia and NRIs for their stay has been included in the list.

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Consumers should be offered lowest mobile call rates: Sibal

According to sources the Centre is likely to approach TRAI regarding the steep hike in call rates by some operators

New Delhi: A day after mobile charges were hiked by leading operators, telecom minister Kapil Sibal has said consumers should be offered the lowest call rates. “We want consumers to be offered calls at lowest rates,” Sibal told PTI.

 

Bharti Airtel, India’s largest mobile phone operator, and Idea Cellular have raised call charges mostly by way of a reduction in free minutes or air-time available on most plans. Others like Vodafone are likely to follow suit soon.

 

Another mobile services provider Uninor, however, said it has no plans as of now to increase call rates.

 

“As a young operator focused on the mass market through basic services on a pre-paid only platform, Uninor has made a commitment to remaining “Sabse Sasta” for its customers. This has been our position so far and will continue to be so in all the circles we operate in,” Uninor said in a statement.

 

Meanwhile, government sources said the Centre is likely to approach the Telecom Regulatory Authority of India (TRAI) regarding yesterday’s hike in call rates.

 

“We will nudge TRAI to do something,” a source said.

 

Meanwhile, TRAI chairman Rahul Khullar said, “Forbearance does not mean that we have closed our eyes. Forbearance reposes faith on operators and we realise there is competition in the market.”

 

TRAI had decided to continue with forbearance in tariff regime that gives freedom to decide on call and other services rates.

 

The Indian mobile phone industry, known for the lowest telecom services rates, is witnessing a hike in call rates now.

 

The hike in call charges come as companies face thousands of crore in one-time surcharge on airwaves they hold beyond a threshold.

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RBI committee asks co-op banks to give 70% loan to agriculture

The panel expressed concerns that primary agricultural credit cooperative societies and central cooperative banks were not performing their role and giving almost 40% of their loans for non-agricultural needs

Mumbai: The central cooperative banks should strive to have at least 70% of their loan portfolio for agriculture, reports PTI quoting a panel appointed by the Reserve Bank of India (RBI).

 

“The Committee... recommends that central cooperative banks (CCBs) should strive to provide at least 70% of their loan portfolio for agriculture. ...if a CCB or state cooperative bank (StCB) consistently under performs and provides less than 15% share of agricultural credit in the operational area, then that bank should be declared and treated as an urban co-operative bank,” the Expert Committee on Streamlining Short Term Co-operative Credit Structure said.

 

The panel expressed concerns that primary agricultural credit cooperative societies (PACS) and CCBs were not performing their role and giving almost 40% of their loans for non-agricultural needs.

 

It also said that “30 September 2013 be set as deadline for all StCBs and CCBs to be fully operational on CBS and providing RTGS, NEFT, ATM and POS device based services.”

 

Moreover, it recommended 31 March 2013 as a deadline for CCBs and StCBs to mobilise funds internally or externally to achieve 4% capital to risk (weighted) assets ratio (CRAR).

 

“...a large number of CCBs and some StCBs do not have adequate capital to meet even the relaxed licensing norm of 4% CRAR. The Committee recommends that 31 March 2013 may be set as the deadline for these banks to mobilise the required capital either internally or from any other external source so as to achieve 4% CRAR,” it said.

 

To mobilise funds it recommended that coopreative banks be allowed to issue fixed interest bearing deposits of 10 years or more with a lock-in period of five years and to treat such deposits as tier I capital.

 

The panel also said the Banking Regulation Act may be amended to give direct and overriding authority to the RBI for superseding the board or removing any director on the board of StCB or CCB.

 

It also said the government may consider giving income tax exemption to these entities up to 2016-17 for incentivising to achieve 9% CRAR. There should be graded CRAR norms for different business sizes, it added.

 

It estimated that about 58 CCBs would not be able to mobilise the required capital, or their business sizes are so small that they would not be sustainable in the long run and would have to be therefore consolidated with other CCBs.

 

The RBI had formed the committee in July 2012 under NABARD chairman Prakash Bakshi.

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COMMENTS

s kumar

4 years ago

The Panel and and it's report is farce. NABARD has been conducting Statutory Inspection of SCBs and DCCBs since 1982. They never recommend Supersession of Board of these banks even they know well that these structures are down upto neck in corruption / mismanagement. It was only in 4 or 5 cases out of more than 10000 inspections conducted till now that Supersession of Board has been recommended by NABARD. It is a glaring example of Institutional Hypocracy. Further NABARD has been all the time sermoning rural Short Term Cooperative Structure to diversify and lend to NFS activities despite the fact that they have been unable to meet agri credits. Still NABARD should tell how many Banks/ PACS have not lent more than 70% or 80% to agriculture. The fact is that all of them have lend more than 90% of their portfolio to agri only. More than Rs 25000 crore has gone down the drain in the name of Revitalising STCCS or Vaidyanathan Reforms. NABARD was a strong advocate of the recommendations of Vadyanathan. NABARD has basically interested in increasing its own Profit / Balancesheet at any cost. Diectors of nabard like those of other public sector institutions never bothered to look into the functioning on this Leviathan Institution. RBI is equally a culprit in this all dirty game of promoting so called rural development through credit.

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