Sunday, February 26, 2017

RBI imposes penalty on Progressive Co-operative Bank Ltd., Mumbai

          Reserve Bank of India has informed the public at large of imposing a monetary penalty of ₹ 4.00 lakh (Rupees Four lakh only) on Progressive Co-operative Bank Ltd., Mumbai.

The monetary penalty was  for violation of instructions/guidelines issued by the Reserve Bank of India relating to lending to nominal members, financing an NBFC and KYC norms.

Nominal Members:

There are two classes of Members in Urban Co-operative Banks i.e Regular Members and Nominal Members.

Regular members subscribe to the share capital of the bank, participate in the affairs of the bank, have right to contest to the Management Committee and can avail of any type of loan facility.

 Nominal membership in Urban Cooperative Banks was introduced only to enable borrowers to occasionally borrow against pledge of tangible securities such as gold, government securities and NSCs, etc. Besides, if a person has to stand as a surety to a borrower, he has to necessarily be a nominal member under the cooperative law.

Thus, nominal members are those, who are not interested in the management of the bank but desire to avail of loan facilities at infrequent intervals, who do not subscribe to the share capital of the bank, and hence, are not eligible for dividend.

Besides, nominal members also do not have voting rights, nor can they contest elections to the Boards of the Banks. Under the existing policy of RBI, nominal membership should not exceed 20% of the regular membership.

Financing an NBFC

Financing of Leasing / Hire Purchase Companies - Enrolment of Financial Companies as Members

(i) UCBs are normally not expected to enroll non-banking financial institutions like investment and financial companies as their members since it would be in contravention of the State Co-operative Societies Act concerned and will also not be in conformity with the provisions of model bye-law No.9 recommended for adoption, by all banks.

(ii) Therefore, the UCBs are not permitted to finance non-banking financial companies (NBFCs), other than those engaged in hire purchase / leasing. Such NBFCs stand reclassified as Asset Finance Companies vide DNBS Circular dated September 15, 2008.

Saturday, February 25, 2017

RBI imposes penalty on Sahebrao Deshmukh Co-operative Bank Ltd., Mumbai

              The Reserve Bank of India has imposed a monetary penalty of ₹ 1.00 lakh (Rupees one Lakh only) on Sahebrao Deshmukh Co-operative Bank Ltd., Mumbai.

The penalty is  for violation of instructions/guidelines issued by the Reserve Bank of India relating to opening of on-site ATM.

The major achievements of Sahebrao Deshmukh Co-operative Bank Ltd., Mumbaiin the past are as under:-

·       New ATM Centres make life easier for customers  - Ironically, RBI has penalised SDC for violation of guidelines relating to opening onsite ATMs!!!
·       SDC Bank has been granted Forex Certificate
·       Core banking system implemented in SDC Bank.
·       Net Banking facility started
·       SDC Bank aquires Shahapuri Nagari Bank Ltd.Satara

 Sahebrao Deshmukh Co-operative Bank Ltd., Mumbai Bank’s 14 branches are spread across Mumbai and Satara.

SDC Bank Ltd., then Shramik Sahakari Bank Ltd., was established on 11-02-1973 by late Shri Sahebraoji Deshmukh. In adverse conditions, Sahebraoji, with his hard work, sincerity, foresight and strong desire to help financially poor people, has brought the bank to such a sound financial institution having 14 computerised branches with head office at Sakinaka.

On 06-04-2005, Sahebraoji Deshmukh left this world, giving a rude shock to family members, friends, Bank members and others.

In the annual general meeting of the Shareholders of the Bank held on 07-08-05, all the participants passed a unanimous resolution to change the name of the Bank from the Shramik Sahakari Bank Limited to The Sahebrao Deshmukh Co-operative Bank Limited (S.D.C. Bank Ltd.).

The RBI has given permission to change the name of the bank and Bank will now be known as S.D.C. Bank.

Thursday, February 23, 2017

Ujjivan Small Finance Bank @ Bharosa, aap ke bharose par

          Ujjivan Small Finance Bank opened its doors to the general public on 6th February, 2017.

          Watch Ujjivan Small Finance Bank - Branch Experiential Film on Youtube. It will make you smile.  
          To enable its account holders to transact digitally it joined NPCI’s National Financial Switch (NFS) as a 101st Direct Member. In the initial stages, Ujjivan Small Finance Bank is issuing RuPay Debit Card (Classic variant).

Ujjivan is the 5th entity to start small finance bank. The bank is not offering higher interest rate like its peers.

          Ujjivan Small Finance Bank opened with footprints in five Bangalore localities i.e Koramangala, Lingarajapuram, HAL, Jakkasandra and Whitefield. In the coming months, it will spread its wings across India, with special focus on South India. 

           Before making its presence felt all over India, USFB plans to test technical aspects, connectivity, ATM channels and effectiveness of different aspects of SFB business over the next one month and then only increase branch presence across India.

          Ujjivan Financial Services, a non-banking financial company which is the holding company of the small finance bank, was among the 10 entities that received license from RBI late last year to commence small finance banking operations.

Ujjivan Small Finance Bankwill offer full range of services with benefits of doorstep and paperless banking, besides internet and phone banking, biometric ATMs as well as Aadhaar-linked debit card.

          The tag line of Ujjivan Small Finance Bank is  “Bharosa, aap ke bharose par”.

          The Bank’s website has comprehensive FAQs on the various products on offer.

          The Banks inaugural function was graced by Nobel winner Muhammad Yunus, a pioneer in microfinance and founder of Bangladesh's Grameen Bank.



Monday, February 20, 2017

India’s first TReDS (Trade Receivables Discounting System) exchange goes Live!

Brief Background:

In the Union Budget for 2015-16 the Honourable Union Finance Minister had highlighted the need for and use of TReDS for improving flow of funds to MSME sector by reducing the receivables realisation cycles.

TReDS are structured to allow SMEs to post their receivables on the system and get them financed. TReDS is not only expected to give SMEs  greater access to finance but  also put greater discipline on Corporates to pay their dues on time.     

          In December 2014, Reserve Bank of India released the “Guidelines for setting up of and operating the Trade Receivables Discounting System (TReDS)”

          The guidelines also had a ‘Illustrative Outline of Process flow under TReDS’.

          As TReDS is a Payment System, Reserve Bank of India, invited eligible entities to apply in the prescribed format to the Chief General Manager, Department of Payment and Settlement Systems, Reserve Bank of India, Mumbai – 400001.

The last date to submit the Application was till close of business - February 13, 2015.

The Reserve Bank of India on March 25, 2015 released the names of applicants who have applied for setting up Trade Receivables Discounting System (TReDS). These are:

Sr.No. Name of the entity

1.        NSE Strategic Investment Corporation Limited (NSIC) and Small Industries Development Bank of India (SIDBI), Mumbai
2.        Trade Receivables Exchange (Group of Banking Professionals), Mumbai
3.        Axis Bank Limited, Mumbai
4.        Mynd Solutions Pvt. Ltd., Gurgaon, Haryana
5.        DICIC Bank of India, Kolkata, West Bengal
6.        NSDL Database Management Limited (NDML), Mumbai
7.        Trade Receivables Exchange (T-REX), Mumbai

The above seven entities underwent a elaborate four-tiered structure of application processing.

Finally on Nov 24, 2015 Reserve Bank of India announced the grant of “in-principle” approval to three applicants for setting up Trade Receivables Discounting System (TReDS)

The three successful applicants were:

1.     NSE Strategic Investment Corporation Limited (NSICL) and Small Industries Development Bank of India (SIDBI), Mumbai
2.     Axis Bank Limited, Mumbai
3.     Mynd Solutions Pvt. Ltd., Gurgaon, Haryana

Of the above 3, the TReDS set up by ‘NSE Strategic Investment Corporation Limited (NSICL) and Small Industries Development Bank of India (SIDBI), Mumbai’, went live in late December under the Brand Name “Receivables Exchange of India Limited” (RXIL)

The primary promoters of RXIL are ‘Small Industries Development Bank of India (SIDBI)’ and ‘NSE Strategic Investment Corporation Limited (NSICL)’. Other Shareholders are :

01)  State Bank of India
02) SBI Capital Markets Ltd
03) ICICI Bank
04) ICICI Securities
05) YES Bank

Shares of YES Bank jumped 2% after it executed a share subscription and shareholders' agreement agreeing to subscribe for 20,00,000 equity shares of RXIL. This subscription is equivalent to 8 per cent of the post-issue paid-up capital of RXIL.

          The first trade of TReDS was executed by ICICI Bank with a  a digital invoice uploaded by Ashoka Drugs & Chemicals on RXIL for its supplies to Greenlam Industries Ltd which the latter accepted online as well.

          ICICI Bank was the financier in this transaction and digital invoice was discounted by ICICI online on RXIL.          


Sunday, February 12, 2017

How-to-Do a Safe BHIM Pay Transaction

Today’s  How-to-Do topic describes simple steps to do a Safe BHIM Transaction

The steps can are divided into five actions.

Step 01 – Obtain the recipient’s Virtual Payment Address (VPA)

Step 02 - Conform that the net connection is up and steady

Step 03 – Key in the recipients Virtual Payment Address (VPA)

Step 04  - Click on Verify. Once the recipient’s name is displayed, conform that the name tallies with the recipient you want to remit money

Step 05 – Input the Amount, Add ‘Remarks’, remarks are an important factor for reconciling your transactions. Input your UPI password and execute a Safe BHIM Pay Transaction

View my video on How-to-Do a Safe BHIM Transaction


Saturday, February 4, 2017

Andhra Pradesh – List of Bank Holidays in Year 2017 under Negotiable Instruments Act, 1881


All Banks in any State have to adhere to the List of Holidays declared by the respective State Government under Section 25 of the Negotiable Instruments Act, 1881

         Government of Andhra Pradesh vide its Gazette Notification No.775 dt. December 9, 2016, declared 19 Holidays under N.I Act 1881.

         Holidays falling on normal week days ---- 17
Republic Day
Annual closing of Accounts
Sri Ram Navami / Babu Jagjivan Ram’s Birthday
Good Friday / Dr. B.R. Ambedkar’s Birthday
May Day
Ramzan  (ID-UL-FITR)
Independence Day
Vinayaka Chavithi
Bakrid  (ID-UL-AZHA)
Vijaya Dasami / Dussehra
Mahatma Gandhi Jayanthi
Karthika Purnima / Gurunanak Jayanthi
Milad un Nabi

         There are few festivals which fall on Sundays or 2nd/4th Saturdays. Such festivals are as under: -
Sankranthi / Pongal
2nd Saturday

This means any Bank in Andhra Pradesh having official working days on Sundays, will have to observe the above days as holidays.

In a bold step, Government of Andhra Pradesh has declared that there shall not be more than two consecutive holidays for financial institutions located in the state under N.I.Act, 1881.
Hence, e holidays for the following two festivals have been cancelled for the year 2017.
Before 4th Saturday
After 2nd Saturday and Sunday

         Government of Andhra Pradesh is promoting CashLess payments in a big way to reduce the need for public to visit bank branches.

         The following banner on CashLess Payments welcomes visitors to the official portal