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Banking News 31.01.2017

RBI Lifts Daily Cash Withdrawal limits at ATMs &

 Cash withdrawal limits from CA, CC & OD accounts

 

The Press Trust of India

Published on January 30, 2017

 

 

RBI Notification:

v         Cash withdrawal limits from Current accounts, Cash Credit and Overdraft accounts stand withdrawn with immediate effect.

v         The weekly cash withdrawal limits of Rs 24,000 in Savings Bank accounts will continue.

v         Limits of Cash Withdrawals from ATMs stand withdrawn from February 01, but banks may, at their discretion, have their own operating limits as was earlier.

 

Mumbai, January 30:  In a big relief to people and small businesses, RBI on Monday announced lifting of restrictions on daily withdrawal of money from ATMs and from current accounts but the weekly limit of Rs 24,000 on savings bank accounts will continue.

 

The Reserve Bank of India also promised to review the weekly limit in the near future depending on the pace of remonetisation.

 

"On a review of the pace of remonetisation, it has been decided to partially restore status quo ante," RBI said adding, cash withdrawal limit from ATMs stands withdrawn from February 1, 2017.

 

Banks, however, have been asked to fix their own limits, as has been the case before November 8, 2016, the day government scrapped high denomination currency notes of Rs 500 and Rs 1,000.

 

RBI has also removed all limits on cash withdrawals from current accounts/ cash credit accounts/ overdraft accounts with immediate effect.

 

"The limits on Savings Bank accounts will continue for the present and are under consideration for withdrawal in the near future," it said.

 

It further said that banks have been "urged to encourage their constituents to sustain the movement towards digitisation of payments and switching over of payments from cash mode to non-cash mode."

 

Government and RBI had imposed limits on withdrawal of money from ATMs and bank branches in view of currency shortage following demonetisation.

 

These limits, however, were gradually eased with RBI pumping in new notes of Rs 500 and Rs 2,000.

 

 

From E-Group, Banking-News

 

 

Election Commission asks Candidates to Open

Current Accounts as now RBI Lifts Restrictions

 

A Vaidyanathan

The NDTV News

Published on January 30, 2017

 

 

New Delhi, January 30: The Election Commission has asked candidates in five states -- where assembly elections are being held -- to open current accounts so they won't have to face problems in withdrawing money for poll expenditure.

 

Earlier, the Reserve Bank of India had refused to enhance the cash withdrawal limit for election candidates despite a request from the poll commission.

 

But today, the central bank removed cash withdrawal limits from current accounts, cash credit accounts and overdraft accounts with immediate effect.

 

The commission's advisory came immediately after.

 

Earlier, the Election Commission had instructed candidates to open a separate bank account for elections. A majority of candidates had opened current accounts.

 

Last week, the commission had written to the RBI, asking that the weekly cash withdrawal limit, which was Rs. 24,000, be increased to Rs. 2 lakh for candidates up for election in the five states.

 

It was pointed out that though the Election Commission allows candidates to spend above Rs. 20 lakh, given the withdrawal limits, they would be able to spend less than Rs. 1 lakh before the elections begin. The expenditure limits are capped at Rs. 28 lakh for Punjab, Uttarakhand and Uttar Pradesh and Rs. 20 lakh for Manipur and Goa.

 

The central bank, however, turned down the Election Commission, saying a special provision was not possible at the moment.

 

The Election Commission had hit back, saying the RBI apparently "has not realised the gravity of the situation".

 

"It is reiterated that it is the constitutional mandate of the commission to conduct free and fair elections and to provide level playing field to all candidates," the Commission said, insisting that its directions be complied with.

 

Assembly elections in Uttar Pradesh, Punjab, Goa, Uttarakhand and Manipur begin on February 4.

 

The results will be announced on March 11.

 

 

From E-Group, Banking-News

 

 

Now, the Currency in circulation is

45% short of pre-demonetisation levels

 

Gayathri Nayak

The Economic Times

Published on January 31, 2017

 

 

Mumbai, January 30:  Although new currency printed may have crossed Rs 10 lakh crore, the overall cap may be retained at less than 10% of GDP, say SBI analysts.  Currency in circulation may have crossed 7% of gross domestic product (GDP) after falling to less than 6% after the demonetisation announcement.

 

Although new currency printed may have crossed Rs 10 lakh crore, the overall cap may be retained at less than 10% of GDP, according to State Bank of India analysts, which would mean cash in circulation being capped at Rs 15 lakh crore.

 

RBI's latest data indicates that total currency in circulation amounted to Rs 9.8 lakh crore on January 20. That is 45% less than the pre-demonetisation peak of Rs 17.97 lakh crore on November 4. State Bank of India's research unit has estimated that 70% of the extinguished currencies will be replaced by February-end and reckons that currency levels below 10% of the GDP, or around Rs 15 lakh crore, may be the new normal.

 

“As we move towards a more cashless economy, these levels (of currency) should be ideal for economic activity to get back to normal level,“ said Soumya Kanti Ghosh, group chief economist at SBI.

 

“Globally, the median is at around 10% of GDP.” Nomura expects the currency levels to touch 9% of the GDP by March end.

 

According to SBI's research unit, just moving transactions at fuel stations to the digital payment would obviate cash requirements to the tune of Rs 4.5 lakh crore. “Besides, fiscal incentives in the budget for digital transactions would further bring down cash dependence,“ Ghosh said.

 

On January 18, RBI governor Urjit Patel told the parliamentary committee that Rs 9.2 lakh crore of new currency ` had been issued but it was too early to say how much of the invalidated notes had been deposited.

 

 

From E-Group, Banking-News

 

 

Situation will improve by the end of

next month: Arundhati Bhattacharya

 

The Business Standard

Published on January 31, 2017

 

 

Chennai, January 30 (PTI): State Bank of India Chairman Arundhati Bhattacharya today claimed that 85-90 per cent of cash crunch has eased post demonetisation, adding that the situation will improve by the end of next month.

 

"We have been monitoring the average amount withdrawn by a person... The average ticket size withdrawn from an ATM is Rs 3,000. However, during demonetisation (when withdrawal of old notes were announced by the Centre in November), there was lot of fear among people. They felt that if I do not take enough cash, I will not get it anymore," she told reporters at the sidelines of a function here.

 

People were withdrawing larger and larger amounts "due to fear," she said. "But, when people know that they can take money whenever they can go to an ATM and get it, situation will revert back to normal. I have said in many interactions that based on our estimates, by end of February, these things will almost revert back to normal. Please stand by," she said.

 

On the effects of demonetisation in the banking sector, she said, "during the first four to six weeks, when it was announced, banks were working towards exchanging money and did not do much of regular works."

 

"As a result, much of regular works like giving loans (to customers) went down. That will obviously have an impact on industry. I think this situation will improve in two or three months," she said.

 

On her expectations from the budget, she said, "given the type of fall in demand which we have seen in the recent past, this budget has to be more consumption and investment oriented."

 

"In the last few years, we have been asking for investment oriented because we were not seeing so much of private investment coming in. And a lot of private balance sheets are also stressed. Today people are not buying because of some uncertainty. So in order to bring back confidence into the economy it is important for the government to give signal that consumption is fine and it is okay to do it. And therefore, budget has to look at both sides-- both consumption and investment," she said.

 

Bhattacharya was here to unveil a series of initiatives taken up by SBI Chennai Circle which include wealth management initiative -- SBI Exclusif, Chennai Metro Transit Combo Card, an e-Hundi facility for pilgrims at Srirangam Temple and a tab kiosk.

 

 

From E-Group, Banking-News

 

 

Interview with former RBI governor Bimal Jalan

‘Glad I am not Governor now, it’s a tough job’

 

Oineetom Ojah

The V C Circle Online

Published on January 30, 2017

 

 

New Delhi, January 30: The Narendra Modi government’s shock decision in November to ban high-value banknotes not only hurt the economy but also dented the image of the Reserve Bank of India and governor Urjit Patel as an independent banking regulator. In an interview, former RBI governor Bimal Jalan shares his opinions on demonetisation, RBI-government relations and how the upcoming budget for 2017-18 could fix the economy, Edited excerpts:

 

What are your expectations from the budget?

 

Bimal Jalan: Inflation in India is on the lower side, growth is among the highest in the world, we have the technology, and we have the manpower. There has been some criticism of the demonetisation policy but if you look at the totality of the picture, India’s situation is very positive.  This positive situation in the present context facilitates the making of the budget.

 

If you look at the whole fiscal picture, it’s very positive… whether it (fiscal deficit target) is 3.1% or 3.2% is not fundamentally relevant right now. If you look at the normal increase in tax collections, low oil prices mean more revenue for the government, and I think the budget will reflect all this. To build on this positivity, I think the government will follow it up with an increase in investments.

 

Public investment is of considerable importance and we are in a position to accelerate it. The main issue for the government will be implementation as this involves several ministries and departments. What we need to do is try and device a governance mechanism whereby priority areas are identified, responsibilities are fixed and each knows what is to be done and by when. We need some administrative changes for better implementation.

 

The government has done very well in keeping the fiscal issue under control. I hope to see an increase in public expenditure and investment. How it is formulated is for the finance minister to decide. Capital expenditure is also important from the subsidy point. It has two sides of the coin — one is investment and the other is subsidies for the poor.

 

Would you expect incentives in the budget to boost production and consumer spending?

 

Bimal Jalan: Demonetisation is past. We need to look at the future. The impact of demonetisation has to be taken into account while preparing the budget. But that per se does not create a problem from the budgetary point of view. If the fiscal deficit is low and capital expenditure can be expanded and if revenues increase, then the most important thing will be to see how can we achieve what we want to achieve. In terms of sops and subsidies, there is a fundamental case for making sure that nutrition, health and literacy are given maximum push.

 

What is your assessment of demonetisation? The RBI’s role has been criticised.

 

Bimal Jalan: I do not want to make any comment right now. A lot of discussion has already happened. Let’s wait and watch. I want to look ahead rather than look back.

 

Do you think it could have been implemented better?

 

Bimal Jalan: In terms of policy, whatever you did on the ground, yes. But this was a new experience. But if you talk about better ways and if you are looking ahead, then after this drive some lessons would have been learnt. How to implement, how to go ahead and what is to be done to ease the discomfort that was caused to a very large segment of the population and all that is part of the learning process.

 

You have to take everything into account and hopefully this will help us in framing policies, particularly regarding handling black money, because the fundamental (goal) was to handle black money. It had a substantial impact on black money and let us concentrate on the fundamentals.

 

Are there too many restrictions on an RBI governor?

 

Bimal Jalan: Obviously, every job has its issues. So far as the Reserve Bank of India is concerned, it has a responsibility and a task to perform in the monetary policy area and monetary policy is fundamentally linked with inflation. This is also linked to ensuring that what we do in controlling and managing inflation is consistent with a higher growth rate. So, it’s not an easy job. And these are all done in consultation with the government because the government is, after all, in charge of the whole economic scene and fiscal policies.

 

The RBI has a role in the monetary area and in the areas of interest rates and debt management, and all these should be consistent with what the overall policies are. Now supposing you have a large government deficit, then government must secure that money from the market in terms of bonds or in terms of taxes and then the role of the RBI would be to facilitate that process. So, all of it is combined… the government, the RBI and the economy.

 

So, do the RBI and the government work together, in agreement?

 

Bimal Jalan: Just concentrate on one point. And the point is that ultimately the government is responsible and answerable to Parliament in all matters of the economy. All the organs of the government must work in consonance. I am sorry for evading your question. We can talk about autonomy, which is extremely important. You are given a task and you are performing but the performance must be consistent with other aspects of the economy and that’s where the consultation process between the government and the RBI is of utmost importance.

 

If you were the RBI governor, how would you have handled demonetisation?

 

Bimal Jalan: I am glad I am not the governor now. It’s a tough job, and it’s a tough one under present circumstances.

 

Do you think it’s time policies were reviewed and RBI revisited the lending norms to boost investment?

 

Bimal Jalan: Of course, everything has to be reviewed. Any policy you develop is for a long term. All of us want growth, low inflation, employment and jobs, and you have policies to promote all these. What you can do at a particular point of time depends on the circumstances that you have. So, depending on the circumstances and the performance, reviews and changes in policies should happen.

 

What’s your assessment of growth and what should be the way forward?

 

Bimal Jalan: All the estimates suggest growth (for this fiscal year) will be lower by 0.5% to 1%. Expectations are that growth will be lower than expected. In that case, the government will surely take steps and increase capital expenditure as we have the means to do that. The government will have to tackle not just economic issues but political ones, too. Policies will have to be acceptable to Parliament and the policies will have to be such that they work in every part of the country. We know that given the vastness and diversity of the country, there is no one formula that fits all. 

 

 

From E-Group, Banking-News

 

 

Financial conditions to deteriorate in

fourth quarter, finds CII-IBA survey

 

The Business Line

Published on January 31, 2017

 

 

Demonetisation likely to take a toll on

growth and output in the current fiscal

 

Mumbai, January 30:  The CII-IBA Financial Conditions Index for the fourth quarter of this fiscal (FY17) fell below the 50 mark owing to banks and financial institutions expecting the overall financial conditions in the economy to deteriorate on account of worsening of external financial linkages and domestic economic activity.

 

The reading of the Confederation of Indian Industry (CII)-Indian Banks’ Association (IBA) Financial Conditions Index for Q4 of FY17, at 48, signals that majority of the 43 respondents — including public sector banks, private sector banks, foreign banks and non-banking finance companies — have indicated slowdown in the overall economic conditions of the country.

 

According to a joint CII-IBA statement, considering the significant shift in outlook of financial conditions in the current macro-economic scenario, the impact of the contractionary demand shock triggered by the note ban will eventually radiate from cash-intensive activities to virtually every sector of the economy.

 

“Since our economy is heavily dependent on cash, demonetisation has hit trade and consumption hard and the move is likely to take a toll on the country’s growth and output during the current fiscal.

 

“The transition to a cashless economy will eventually improve savings in financial assets which will benefit intermediaries such as banks, NBFCs, micro-finance and digital money operators,” the statement said.

 

Overall, as per the CII-IBA Round 6 survey, there was a relative decline across all the sub-indices leading to deterioration in the Financial Conditions Index. The sub-indices include Cost of Funds Index, Funding Liquidity Index, External Financial Linkages Index, and Economic Activity Index.

 

Among the sub-indices, the Economic Activity Index has recorded the lowest level and witnessed maximum decline with expectation of significant deterioration.

 

However, the Cost of Funds Index and Funding Liquidity Index indicate improvement, reflecting divergence in performance vis-à-vis other sub-indices.

 

The Economic Activity Index stands at 31.4 in Q4 FY 2016-17. The statement elaborated that “Demonetisation has drastically reduced money supply. As people hold back consumption and hoard cash, the velocity of circulation will fall.

 

“While some initial data has already started signalling a slowdown, this slowdown in the next two quarters would be temporary and would be followed by a quick and strong period of rebound.”

 

Majority of the respondents expected deterioration in the real GDP growth for the current quarter and deterioration in non-food bank credit.

 

 

From E-Group, Banking-News

 

 

SBI to make Global Training

Institute operational at Kolkata

 

Namrata Acharya

The Business Standard

Published on January 31, 2017

 

 

Kolkata, January 30: State Bank of India (SBI) is looking to establish a global training institute for banking and financial services at the information technology hub of Rajarhat, a suburb here, at an investment of around Rs 600 crore.

 

The bank is aiming to attract bankers from emerging economies and from neighbouring countries for training purposes in the institute.

 

SBI already has five Apex Training Institutes (ATIs) but for its own staff. “We want to position this institute as a totally different institute. It should be operational by the second quarter of the next financial year. We are expecting the institute will attract foreign bankers as well,” said a top official.

 

To be positioned as a 'centre of excellence', it will be a leading institute in banking and financial services in emerging economies, according to an advertisement posted by SBI for the position of dean at the proposed institute.

 

Around 2012, SBI had bought about 10 acres from the West Bengal Housing Infrastructure Development Corporation for about Rs 58 crore for setting up the institute. It will have a capacity for around 180 people, with four wings for training senior officials of SBI and two wings for external participants.

 

According to the latest annual report of SBI, the present training apparatus consists of five ATIs and close to 45 State Bank Learning Centres. The bank has also created a virtual knowledge university within the institution, with a capacity of classroom training for 3,350 employees a day in the areas of banking, economy, leadership, ethics, marketing, administration and soft skills, in addition to a robust digital leaning system. Additionally, the bank offers a little over 300 e-lessons, including 30 created by Harvard Business School.

 

 

From E-Group, Banking-News

 

 

IT Kharagpur & State Bank of India develop

a customised portal for intellectual property

 

Prachi Verma

The Economic Times

Published on January 31, 2017

 

 

The IPDaas will facilitate streamlining patent applications for solutions developed internally and thereby making them available for external use through licensing.

 

Kharagpur (West Bengal), January 30: IIT Kharagpur and State Bank of India (SBI) are collaborating to develop a customised portal for launching ‘Intellectual Property Development as a service’ (IPDaas) for Intellectual Property Rights generation.

 

Mrutyunjay Mahapatra, Deputy Managing Director of SBI launched this project on Monday at IIT Kharagpur.

 

According to a release, a memorandum of understanding has been signed by the two. The IPDaas will facilitate streamlining patent applications for solutions developed internally and thereby making them available for external use through licensing.

 

"It is trend-setting for an organisation like SBI to move towards holistic IP creation. This would create an ecosystem for organizations in India especially in the financial sector to promote their technical expertise," said Prof. PP Chakrabarti, Director, IIT Kharagpur.

 

IIT Kharagpur will work with SBI Collaborative Innovation Centre (CIC) team. Going forward, this IIT will assist in review and associated activities for a full-fledged offer of IP as a service.

 

 

From E-Group, Banking-News

 

 

Payments Banks to have ‘Multiplier

Impact’ on Banking: Finance Minister

 

The Times of India

Published on January 31, 2017

 

 

New Delhi, January 30 (PTI): Finance Minister Arun Jaitley on Monday said payments bank will have a "multiplier impact" by providing doorstep banking to people in remote areas at lower cost and compete with traditional banks in future.

 

Launching the pilot services of India Post Payments Bank (IPPB) at Raipur and Ranchi, Jaitley said IPPB will expand operations to 650 districts by September and have a "multiplier impact" on the country's banking system and financial inclusion.

 

India Post, which got RBI nod to launch banking operations on January 20, is only the third entity to have got permit to start operations after Airtel Payments Bank and PayTm.

 

"The pattern in which the payments bank is being formed, the overhead cost is very less because the existing structure is being used. Going forward, a time will come when for small depositors this payments bank will give competition to normal banking," Jaitley said.

 

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