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Banking sector declared public utility service till October 21

Newz On Tips
Sun Apr 26 2020 / By: Rashmi

The central government has declared the Indian banking industry as a Public Utility Service (PUS) for the next six months. The rule is applied under the selected provisions of the Industrial Disputes Act and will be in effect from 21 April to next six months, i.e. until October 21.


The Department of Financial Services released a circular on April 20 saying that the Labour and Employment Ministry has now declared India's banking industry as PUS for the upcoming six months.


What does it change?


According to some banking industry pundits, now that the banking sector has become a PUS, the employees of any designation cannot go on a strike until the banking industry comes to the same position as it was before April 21.


Indian Banking Sector is a highly unionised sector with educated employees. So, there are more than a dozen unions in the sectors comprising of employees and officers. Before revising the salaries of employees every third year, the Indian Banks Association negotiate with these unions. Now that the sector has become a public utility service; these unions' powers will be reduced.


The circular published by the Department of Financial Services has been sent to every key position holder in the industry: the governor of Reserve Bank of India, the Chairman of States Bank of India, all the managing directors and CEOs of nationalised banks and the Indian Banks' Association.


Is every bank included in this?


With a few exceptions, most of the banks are members of Indian Banks Association and hence come under the new rule. All the public sector banks, very old private sector banks (Like ICICI Bank, Federal Bank, Axis Bank, HDFC Bank), a few foreign banks like HSBC and Citibank will come under this rule. Any salary issues or other employment-related issues of these banks are settled by the IBA.


Few banks that would not come under the new rule are - Kotak Bank, IndusInd Bank and Yes Bank. Any wage or employment issues of these banks don't come under the purview of the Indian Banks Association.


For more news on the banking industry, keep reading BankingOnTips.

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Fri Aug 07 2020 / By: Rashmi

The spread of coronavirus across the globe has created a big dent on the financial conditions of everyone. With pay cuts, salary delays and even lay-offs, there is hardly any money coming in people’s bank account. In this situation, people who forget to maintain a minimum balance in their accounts get charged with hefty fines.


Amidst all this, top banks such as Axis Bank, Kotak Mahindra Bank and Bank of Maharashtra have announced a revision in the penalty charges of non-maintenance of minimum balance. The penalty has increased and so has the troubles of common people.


The Best Way Out: Open A Zero Balance Savings Account


One of the best ways is to open a zero balance savings account. If you are a salaried employee, chances are high that you already have it. Otherwise, you can also open one online.


Be it SBI, HDFC or ICICI or Kotak Mahindra, almost all the leading banks offer this zero balance savings account that offers various features and benefits. Some of the best ones include:


·     No Need to Maintain Minimum Balance: As the name suggests, you do not need to maintain a minimum balance, unlike a normal savings account. You will not be charged with any penalty even if you have no balance in the account.

·     Easy Transactions: Zero balance accounts offer net banking, allowing you to make easy cash transactions. You can use this option to pay your bills and make payments online.

·     Free Debit Card and ATM access: A zero balance account also offers you ATM access with Debit card across all the outlets.

·     Mobile Banking: Banks also offer mobile banking services with zero balance account which you can easily access from your smartphone. From checking your bank balance to making transactions and paying utility bills, you can use all these services easily through your mobile.

·     Interest Rates: In some banks, the interest rate on a zero balance saving account is the same as that on a regular saving bank account.


Apart from the features listed above, you can also avail various other benefits such as banking on Whatsapp, Virtual Debit Card, Personalized account number and so on.


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In his speech of making India 'Atmanirbhar' (self-dependant), Prime Minister announced a boost of Rs. 20 Lakh Crore to the Indian Economy. Out of this Rs. 20 Lakh Crore, around Rs 1.37 lakh crore was sanctioned to MSMEs, under Emergency Credit Line Guarantee Scheme (ECLGS). But, to give relief to a broader set of people, Govt. of India has now announced that this ECLGS scheme will now also cover individual entrepreneurs.


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A number of MSME organizations and market chambers suggested to the finance ministry that they should broaden their eligibility criteria to include individual entrepreneurs under this scheme. A great chunk of loan borrowers (around 80-90 percent) who had taken loans from NBFCs for their business tools or vehicles were ineligible for the Emergency Credit Line Guarantee Scheme yet.


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Talking about the scope of this new development, Debasish Panda, Secretary of Department of Financial Services said to the media, "A total of around Rs 1.37 lakh crore has been sanctioned under the scheme by member lending institutions to around 40 lakh accounts, of which around Rs 87,000 crore has been disbursed. The changes in the ECLGS scheme are likely to make an additional Rs 1 lakh crore eligible."


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With jobs laid off and factories locked down, COVID-19 has taken up people's livelihood if not lives. With no income source, a large number of people are thinking of violating lockdown rules, just to earn pennies.


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The maximum amount of loan is Rs 5 lakh, and the loan type is - Personal loan. An account holder of SBI savings account can apply for this loan through the YONO app of SBI.


How To Check Your Eligibility Of Loan

 

Of course, the SBI is not lending money to every account holder. A background history check-up will be done of your account before lending you a loan. To check if you are eligible for the loan or not, you can choose any of the following two methods:


Through YONO App


●      Download the YONO App on your mobile phone. It is available in both- Google Play Store for Android users and the App Store for iOS users.

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Through SMS


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Compared to the interest rates of personal loans given by other banks, the interest rate on the SBI Emergency Loan is pretty fair. And the best thing about the loan is that the EMIs will start after six months of the loan approval.


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Fri May 01 2020 / By: Rashmi

In October last year, the Reserve Bank of India changed some rules that made the lending procedure more transparent, but banks were not ready to share that transparency with their customers. Banks nodded to RBI but didn't inform their customers about what is the repo-linked lending rate as it would have saved customers’ money.


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There are three kinds of benchmarks a bank can set up on your loan's interest. If you have taken a loan between the period of April 2016 to September 2019, then your loan interest comes under something called the marginal cost of funds-based lending rate (MCLR). This MCLR is the banks' internal benchmark.


If you have taken a loan prior to April 2016, then your loan is linked to something called the Base Rate. This base rate is also a kind of internal benchmark set by the bank.


However, the problem with these internal benchmarks was that banks used to increase the interest rates when RBI increased its rates. But, when RBI used to lower its rates, banks never moved parallel to that.


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How to move to RLLR?


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One more thing to notice: this regime change service is only mandatory for banks, not for housing finance companies (HFCs). They are not abided by this new external benchmark rule of RBI.


But one thing you can do to compel your housing finance company to lower your interest rate is to ask them to reduce your rate or to transfer your loan to some other lending company (essentially, a bank). No good housing finance company would want to lose a good customer. The company will have to reduce your rate to somewhat closer to RLLR.


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