Tag Archives: Unbanked

Section 23 of Banking Regulation Act, 1949 – Mobile ATM’s

Section 23 of Banking Regulation Act, 1949 –
Mobile ATM’s

Yesterday, Reserve Bank of India, DBOD, Vide Notification No.RBI/2010-11/132
DBOD.No. BL.BC.27/22.01.001/2010-11,dt.July 23, 2010, addressed to All Scheduled Commercial Banks (excluding RRBs), has liberalized the rules for Opening of Mobile Branches and Mobile ATM’s.

The Highlights are:

a) Notification pertains to Section 23 of Banking Regulation Act, 1949 –
Mobile ATMs

b)    Decided to grant general permission to Scheduled commercial banks (other than RRBs) to operationalise Mobile ATMs at centres / places identified by them, without prior permission from the Reserve Bank, subject to reporting.

c)     Other conditions stipulated in RBI circular DBOD.No.BL.BC.137/22.01.001/2008-09 dated June 12, 2009 remain unchanged.

d)    The details of the mobile branches and mobile ATMs should be reported to Reserve Bank of India.

The following are the facilities which can be provided through Mobile  ATMs

1.            Deposits/Withdrawals;

2.            Personal Identification Number (PIN) changes

3.            Requisition for cheque books

4.            Statement of accounts

5.            Balance enquiry

6.            Inter account transfer within the bank between accounts of same customer or different customers of the bank at the same center or different centers within the country

7.            Inter Bank Funds Transfer – Transfer of Funds between the bank’s customers and customers of other banks.

8.            Mail facility for sending written communication to the bank

9.            Utility payments like Electricity bill, Telephone bill etc.;

10.          Issue of railway tickets

11.          Product Information

The above list is exhaustive, and if all the above Services are provided at the Mobile ATM’s, it will be a boon for the unbanked population. At the same time, this will help banks to shore up CASA Deposits. Yes, do not underestimate the power of rural Indians to save.

For Mobile ATM’s, to function smoothly a seamless interaction between the Banks IT Centre, and On-Site Staff, is essential.

Advertisements

Section 23 of Banking Regulation Act, 1949 – Mobile Branches

Section 23 of Banking Regulation Act, 1949 –
Mobile Branches

Today Reserve Bank of India, DBOD, Vide Notification No.RBI/2010-11/132
DBOD.No. BL.BC.27/22.01.001/2010-11,dt.July 23, 2010, addressed to All Scheduled Commercial Banks (excluding RRBs), has liberalized the rules for Opening of Mobile Branches and Mobile ATM’s.

The Highlights are:

01) Notification pertains to Section 23 of Banking Regulation Act, 1949 –
Mobile Branches and Mobile ATMs

02) Mobile Branches

a) Grant general permission to domestic scheduled commercial banks (other than RRBs) to operationalise Mobile branches in Tier 3 to Tier 6 centres  (with population upto 49,999 as per Census 2001) and in rural, semi urban and urban centres in the North Eastern States and Sikkim, subject to reporting to RBI.

b) The scheme of mobile branch envisages the extension of banking facilities through a well protected van with arrangements for two or three officials of the bank sitting in it with books, safe containing cash etc.

c) The mobile unit would visit the places proposed to be served by it on specific days / hours.

d) The mobile branch should not visit villages / centres which are served by co-operative banks and places served by regular branch of commercial banks.

e) The mobile branch should be stationed in each village/ location for a reasonable time on specified days and specified hours, so that its services could be utilized properly by customers.

f) The business transacted at the mobile branch shall be recorded in the books of the base branch/data centre.

g) The bank may give wide publicity about the mobile branch in the village, including details of “specified days and working hours” at various locations so as to avoid any confusion to local customers; and any change in this regard should also be publicized.

h) In order to inform public/customers, arrangement should be made to display these details in the areas serviced by the mobile branch.

The above liberalization should banks to be innovative while servicing the needs of the customers in Unbanked areas.

There can be more than 1 Mobile branch of different scheduled banks, visiting the same place at the same time. Such competition is better, as competition is the path to customer delight.

For eg: At a weekly shanty(local market day), as the villagers gather in large numbers, multiple banks might decide to operate the Mobile Branches.   

De-Regulation of SB Interest Rates in India

De-Regulation of SB Interest Rates in India

For the past one week or so, there have plenty of news articles, stating that Reserve Bank of India, intends to de-regulate the SB Interest rates in our country.

http://www.moneylife.in/article/4/6355.html

http://www.dnaindia.com/money/report_freed-savings-a-c-rate-can-move-both-ways_1399105

The present SB Interest rate i.e 3.5% is regulated by RBI. And over the years, there has been a general demand to free SB interest rates from RBI.

RBI now feels that it is time for the SB interest rates to be freed.

And going by the mood, this Notification might be released in the near future.

Is this a good move?

Yes, every action has good and bad associated with it.

The Good:

n  Increased competition for the Customer’s accounts might lead to an increase in the SB interest rate.

n  Banks will spend more on Advertisements (TV and Print), to attract new customers. This is good news to the Print and TV Industry.

The Bad:

n  Banks might offer high SB interest rate, but also hike the Service Fees of Services attached to the respective SB Product.

n  Mis-selling might increase which will result in higher complaints to the Bank’s customer’s care department as well as RBI and BSCBI.  This will prompt RBI to intervene and regulate the Service Fees attached to SB accounts.

n  At present, transactions through the Electronic Payments channel are on increase. And, a SB Account number is updated at many locations to receive funds. Frequent closure and opening of SB accounts will impact the ePayments channel.

n  The ALM Desk of the Banks will be very busy. Any change in the SB interest rate, means fine-tuning the FD Interest rate too. The SB Interest rate cannot be changed in isolation.

Hm, I should say exciting times ahead, if RBI decides to free the SB Interest rates.

Yes, I am in favor of it, for this will lead to lots of action in the Banking Industry.

Definition of Financial Education – Part 2

Definition of Financial Education – Part  2

QUOTE

Organization for Economic Co-operation and Development (OECD) has defined

financial education as “the process by which financial consumers/investors improve their understanding of financial products, concepts and risks, and through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks

and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being”.

UNQUOTE

What are the financial products?

Financial products refer to those instruments that: –

  • help you save, (Saving Bank Account, Term Deposits, Mutual Funds, Post Office Term Deposits, Unit-Linked Insurance Policies)
  • invest, (Saving Bank Account, Term Deposits, Mutual Funds, Post Office Term Deposits, Unit-Linked Insurance Policies)
  • get insurance or (Term Policy, Life Policy, Pension Policy)
  • get a mortgage.

Of course, the financial products cannot be strictly categorized under Saving Plan or Investment Plan. Normally, they are a combination of two or three concepts.

These are issued by:-

  • various banks,
  • financial institutions,
  • stock brokerages,
  • insurance providers,
  • credit card agencies
  • and government sponsored entities.

Financial products are categorized in terms: –

  • of their type
  • or underlying asset class,
  • or volatility, (shares etc )
  • or risk (shares, ULIP’s etc )
  • and return (Low return-no risk, Medium return-medium return etc)