Saturday, August 29, 2015

The Final Verdict – 2nd and 4th Saturdays Holidays for Indian Banks

          As a beginning towards ‘LessCash’ transactions in India, 2nd and 4th Saturdays have been declared as holidays in India.

          On the remaining Saturdays, Banks will work for full day i.e like any other week days.
          These additional working hours are to compensate for closure on 2nd and 4th Saturdays.

It may be noted that All scheduled and non-scheduled banks – public, private, foreign, cooperative, regional rural and local area banks – will observe public holiday on second and fourth Saturdays from September 01, 2015; and will observe full working days on Saturdays other than second and fourth Saturdays (referred to as working Saturdays in the Press Release).

Scheduled banks in India have some special facilities. A scheduled bank is eligible for loans from the Reserve Bank of India at bank rate. They are also given membership to clearing houses.

A scheduled bank, in India, refers to a bank which is listed in the 2nd Schedule of the Reserve Bank of India Act, 1934. Banks not under this Schedule are called non-scheduled banks.

Scheduled banks are usually private, foreign and nationalised banks operating in India. However, cooperative banks are allowed to seek scheduled bank status if they satisfy certain criteria.

It may be noted that Payment systems will not be operated on second and fourth Saturdays but would operate for full day on working Saturdays.

Payment systems in India typically includes Real Time Gross Settlement (RTGS), National Electronic Fund Transfer (NEFT), Cheque Clearing operated by various Bankers' Clearing Houses in the country including the grid based Cheque Truncation System (CTS) and ECS suite [Electronic Clearing Service (ECS), Regional Electronic Clearing Service (RECS) and National Electronic Clearing Service (NECS)].

          This being a new service initiative, the bankers and customers would face initial disruptions. Over the next couple of months, issues are expected to be resolved.
          As it is, majority of day to day banking activities can be conducted through alternate channels.  The only banking operation which cannot be conducted through alternate channels is ‘Locker Operations’.