Articles by Bankingontips The Bankingontips Blog
From 2020, NEFT money transfer will be free: Digital payments to become cheaper with new initiatives of RBISun Nov 10 2019 / By: Jigi Yadav
The central bank of India has now made it mandatory for banks to not charge online NEFT transaction for savings bank customers. This mandate will come into effect from January 2020. In addition to this, RBI has also stated other measures to increase digital transactions such as Acceptance Development Fund being operational. This fund purposes to improve infrastructure in Tier-III- Tier-VI locations for accepting cashless payments. RBI has also created a committee for looking into the prospect of QR Code conversions, that are now created by individual payment Apps in the market.
There also lies a proposal meant to link all authorised payment systems, including non-bank PPIs (Prepaid Payment Instruments), UPI, cards and FASTags. FASTags (National Electronic Toll Collection) would also be facilitated for parking, fuel and all other similar purposes.
Furthermore, RBI asserted the volume of UPI transactions observed a year-on-year growth of 263% reached to 874 crores in the month of September. In this same period, NEFT transactions touched 252 crores that means a year-on-year growth of 20%.
As suggested by Razorpay data, Google Pay has the largest market share of 61.2% in October, tailed by PhonePe at 24.9%, PayTM at 5.8% and NPCI developed BHIM App (Bharat Interface for Money) sits at 3.66% in the market share.
9.89% of Bandhan Bank’s stake is acquired by HDFCFri Nov 01 2019 / By: Jigi Yadav
As a part of merger scheme, the mortgage firm, HDFC Ltd has acquired a stake of 9.89% in Bandhan Bank. To this effect, approximately 15.93 crore shares have been transferred to HDFC Ltd, as asserted by Bandhan Bank in a regulatory filing.
Few weeks ago, it merged with Gurh Finance, in result of which, the shareholding of the promoter fall from 82.26% to 60.96%. This merger came into force to meet the RBI’s stipulation and was a part of the bank’s stake dilution exercise.
To add to it, Reserve Bank of India also imposed a fine of Rs. 1 crore on Bandhan Bank to not being able to bring down the promoter shareholding up to 40% based on the timeline of the central bank. The aforesaid merger scheme between Bandhan Bank, an affordable housing finance company promoted by HDFC Ltd and Gruh Finance was approved by all the mandatory authorities and shareholders and creditors from both the companies.
With result of the merger scheme, 9.89% stake out of the total share capital of Bandhan Bank is allotted to HDFC Bank.
What is a merger scheme?
A merger scheme is the combination of minimum two or more companies into one company. As its result, the merged company loses its corporate existence and the other expands and survives. The survivor company gets the assets/stake of the merged company and all the power of control is vested now vested in the survivor company.
Investment and Saving
Do you feel your savings are safe in banks? If not, think about deposit insuranceSun Oct 20 2019 / By: Jigi Yadav
Bank frauds like the ongoing PMC Bank crisis has set a plethora of doubts in depositors’ minds about their money getting blocked in the bank which means their entire life’s savings have come to a toss. Many people are also fearing that situation can be worse if the bank goes for liquidation.
Are you sure your deposit is safe?
After the regulatory action taken by the RBI, depositors’ money was blocked with PMC Bank and they could only take out Rs. 40,000 till lately. How about having your money/savings/deposit insured?
Deposit Insurance is a kind of protection cover given against the losses accumulating to the bank savings on the case if your bank fails to pay money to its depositors. So, if your bank fails financially, unfortunately, and goes in for liquidation by the RBI, this insurance cover can save your savings.
In our country, Deposit Insurance and Credit Guarantee Corporation also known as DICGC is a subsidiary entity of the RBI. It was introduced under a Parliamentary Act that was meant to insure the deposits and guaranteeing the credit facilities of a bank. Deposits include all types of savings, term deposits and recurring deposits and all the three are covered by the DICGC in India. Although, government, inter-bank deposits, state land development bank deposits linked with state cooperative bank are not covered under this Act.
The body (DICGC) covers the depositors of all the commercial and foreign banks which function in India. Depositors of Central, State and urban cooperative banks and local area banks along with regional rural banks only if the bank has subscribed the deposit insurance cover from the DICGC.
Banks have called for an all-India strike on October 22Sun Oct 20 2019 / By: Jigi Yadav
Two of the large bank unions have called for an all-India bank strike on 22nd October resulting in disruption of banking services on that day. Although, SBI consumers can be at peace as the bank has cleared that the strike will have very less impact as most of their officials and employees are not the members of any of these unions calling strikes.
Other major banks like Bank of Maharashtra and Syndicate Bank have shown their reservations in offering services to the customers. The latter has written to the stock exchange that it is undertaking essential steps to ensure the smooth functioning of the bank offices/ branches on the proposed day of the strike. It has also asserted that if the strike takes place, bank’s functioning might get affected.
All India Bank Employees Association, also known as AIBEA which is also the largest bank union has called this strike along with the other union called Bank Employees Federation of India (BEFI). This strike is against the latest bank mergers and the reduction in the deposit rates by the RBI. In addition to this, they are also against the outsourcing of regular and continuing nature of jobs in banking sector, privatization of banks. The unions are also demanding sufficient recruitment of the clerical staff, sub-staff and strict actions for the recovery of mounting negative/bad loans.
SBI has made it clear that the number of its employees participating in this proposed strike is very less and it will not hamper the regular operation of the bank on that day. The bank has also written a notice ensuring the same to the stock exchange.
Mumbai man dies in protest over PMC Bank caseWed Oct 16 2019 / By: Jigi Yadav
Amidst tensions circulating PMC Bank and the savings of thousands of investors and customers, a 51-year-old man Sanjay Gulati died of cardiac arrest after protesting for PMC Bank withdrawal restriction case. He lost his Jet Airways job and had approximately Rs. 90 lakh as savings in the aforesaid bank.
He returned home after a protest happened regarding the continuing Punjab & Maharashtra Cooperative Bank tensions, where he reserved his life-long savings. In the late afternoon, after he returned home from the protest, he suffered a critical cardiac arrest and was rushed to Kokilaben Dhirubhai Ambani Hospital, where he was declared dead.
As per the sources, his specially-abled son was undergoing treatment for which he needed money frequently. After the RBI imposed strict restrictions on the depositors of PMC Bank, where he used to keep his savings, he was facing difficulties in having liquid money in his hand when needed.
He has his account in Oshiwara Branch of PMC Bank which is undertaken in a stringent action by the Reserve Bank of India. Although, RBI has augmented the withdrawal limits for the depositors of PMC Bank to Rs. 40,000. With this advance, as more as 70% of PMC Bank customers will be able to draw all their bank account balance in one go. It has eased many but still many of the depositors are facing ambiguity and protesting for the banks and the government.
Bank Fraud Case: Bhushan Steel’s assets worth Rs. 4000 crore attached by EDSat Oct 12 2019 / By: Jigi Yadav
The ED, Enforcement Directorate has attached assets of one of the steel giants known to country, Bhushan power & Steel Limited. The reported assets worth Rs. 4025 crore are held in relation to the money laundering investigation of an alleged bank fraud. The ED has so far attached land, building, plant, machinery of the firm which is set up in Odisha. The assets are attached under Prevention of Money Laundering Act provision. It is estimated that this is the first attachment in the case so far and authorities are expecting more into it.
The ED stated that BPSL allegedly used different modes to draw off funds which it acquired as loans from various banks.
The then CMD of the company Mr. Sanjay Singhal and his family introduced an amount of Rs. 695.14 crore as capital in BPSL by diverting bank loans funds of the company into artificially generated long term capital gains, LTCG, as asserted by the ED. And during the relevant times, these long term capital gains were exempted from Income Tax.
The ED files this case of money laundering after thoroughly going through the FIR of CBI that was registered against BPSL, its former CEO and his family etc. on the charges of corruption. The ED also added that the company has transferred payments through RTGS for “fictitious purchases” of asset goods.
The rest amount of Rs. 3330 crores was invested by the company as share capital and premium by few promoter companies. This was routed out of the funds which were obtained as loans and further sidetracked from BPSL accounts in the name of advances. These advance payments were shown to different shell companies operated by a range of entry operators.