Banking News Notes Dec 2013

Important Banking News: 

This piece of information is must read for bank exams:

-> Paperless banking facility: Axis Bank Ltd has launched the e-KYC initiative to facilitate paperless banking to Aadhaar card holders at Mumbai. With this step, Axis Bank became the first bank to allow customers to open an account with just their Aadhaar number.

->SARFAESI Act: The most effective tool to recover bad loans; Amidst rising NPAs, the SARFAESI Act was the most potent tool in the hands of banks for recovering bad loans as the Act empowers banks to recover NPAs without the intervention of courts by providing three alternative methods — securitisation, asset reconstruction and enforcement of security — without the intervention of courts. 

According to the RBI’s Report on Trend and Progress of Banking in India, 2012-13, banks have recovered Rs 18,500 crore through the Sarfaesi route. Also, in terms of efficiency, the Act has proved to be more effective than the DRTs or mediation by Lok Adalats. 

“Under the Sarfaesi Act, notice is served and two-months’ time is given to the borrower to discharge his liabilities, but DRTs (despite clear instructions from the Supreme Court that they cannot give stay orders on Sarfaesi) are still giving stay orders and eventually, the stay order is lifted but in the process one to one-and-a-half years is lost, without any benefit to any party. 

Also, the rising levels of stress across the banking system was reflected in the fact that the number of cases under all the three mechanisms saw a massive increase of 66 per cent to 10.45 lakh cases.

-> Bharatiya Mahila Bank (BMB) will offer 4.5% on Savings Bank balances up to Rs 1 lakh and 5% on balances above Rs 1 lakh. 

Set up with a capital base of Rs 1,000 crore, is the first bank started in the public sector space by an Act of Parliament (other public sector banks were nationalised in two tranches in 1969 and 1980). It will predominantly serve women customers, it will serve men too.

-> Technology-related banking frauds in India have fallen in the last four years due to stepping up checks on on-line transactions by the banks. According to the RBI Data, during current financial year, 8765 tech-related frauds were reported, a 13% drop over the previous fiscal.

-> Liquidity support to MSME sector: The liquidity support comes in the wake of slowdown in the economy which has resulted in liquidity tightness in a large number of MSEs in the manufacturing and services sector, particularly due to delayed settlement of receivables from large corporate, public sector undertakings and government departments.

 In view of the need to ease the liquidity stress to micro and small enterprises (MSE) sector which is employment intensive and contributes significantly to exports, RBI has been to provide refinance of an amount of Rs. 5,000 crore to the Small Industries Development Bank of India (SIDBI) under the provisions RBI Act, 1934. The facility will be available up to March 31, 2014.

-> FI limit in AXIS Bank increased: The Cabinet committee on economic affairs (CCEA) has approved the proposal of Axis Bank for increase in foreign investment from 49% to 62% entailing an inflow of about Rs 7,250 crore. Following the inflow and hike in stake by foreign investors, the bank will become foreign-owned, whereby every future investment in seven subsidiaries will be governed by the foreign direct investment policy.

-> Next commonwealth summit in 2015: Malta, a Southern European country was unanimously chosen as the host of the next Commonwealth summit

-> New CMD for corporation bank: S. R. Bansal

-> New MCX-SX chairman: Former Union Home Secretary G.K. Pillai has been appointed as Chairman of MCXSX.

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