In the background of the Rs 2.11 trillion recapitalisation and the merger of state banks under the SBI, the government is proceeding with the next policy step on PSBs – consolidation. Finance Minister Arun Jaitely is going to head a Ministerial committee to oversee the merger of the 21 Public Sector Banks. At present, the category of PSBs comprises of 21 banks. SBI is the leader with the nationalised banks and IDBI completing the rest. According to the PTI report, besides Jaitely, members of the Committee include Railway and coal Minister Piyush Goyal, and Defence Minister Nirmala Sitharaman. In August this year, the Union Cabinet decided to go for alternative mechanism f
The Reserve Bank of India has warned banks to address big NPAs or face procedures under the new Insolvency and Bankruptcy Code on these accounts. In a communique to banks, the RBI urged settlement of 55 high value NPA accounts within six months. Earlier, the RBI’s Internal Advisory Committee (IAC) has identified 12 big NPA accounts that need immediate action. These NPAs accounts for nearly 25% of total NPAs of the banking system. The warning by the RBI comes after the government gave it the power to direct lenders to initiate the insolvency and resolution process in the event of default. According to experts, the RBI got power to initiate actions on NPA front as per the new
The merger of five state bank associates with the SBI has made the latter as the only state bank. A passionate nationalist may read the development as India is going to have one of the top 50 banks in the world. Big and now grow sophistticated The merger’s impact on the SBI’s status as a global entity will be just arithmetic and may not be quality wise. To be a global bank, the asset size and national networks are not enough. Rather, sophisticated corporate financial intermediation, products and services are essential. None of the Indian banks have even a good merchant banking division. When the ONGC made its IPO in early 2004, most of its merchant bankers who promo
The ace digital payment app- Bharat Interface for Money has seen a record 17 million installations so far according to NITI Ayog. This is a world record as it was launched just at the end of December last year. The NITI Ayog’s CEO- Amitabh Kant described that what matters is to keep the momentum for the BHIM drive. The BHIM App as a digital payment interface is getting increasingly accepted among people especially in the context of the demonetisation driven digital payment campaign according to the NITI CEO. One updation in the form a new payment option ‘Pay to Aaadhar was made since its launch. Now the app is available in seven vernacular languages besides Hindi and
Financial sector disruptor, Vijay Shekhar Sharma’s Paytm has got the approval to launch its payment bank business. The digital payment leader is expected to start payment bank operations by next month. “Today, RBI gave permission to formally launch Paytim Payments Bank. We cant wait to bring it in front of you” Vijay Shekhar Sharma remarked in blog. Payment bank operation will enable the company to launch the high graded open system payment instruments or the multipurpose cards. Payment bank license allows the holder to accept deposits without extending credit. The business is especially good for digital transaction firms as it will help them to deal with public
Government and the RBI are working hard to promote cashless transactions in the economy. Several incentives are declared to maximize the cash constraint situation to promote cashless transactions. Despite some difficulties like lack of digital and tech knowledge among bulk of the people, inadequate digital payment infrastructure and prevailing bias towards cash oriented transactions, these measures may bring up the volume of cashless transactions. The support measures launched by the government covers incentives in the form of tax (service tax) concessions, bonus (petrol, railways, insurance), promotion of digital infrastructure (PoS machines, cards etc.) and reduction of charges (
Post demonetization, the country’s Jan Dhan Yojana account’s deposits have gone up from Rs 45636 crore to Rs 66366 crores. JDY as the basic bank account facility provided to the so far unbanked people registered a growth rate in deposits by nearly 50% from November 9 onwards. Government fears that the account has been rented out for money laundering purposes to keep black money. There are nearly 25 crore Pradhan Mantri Jan Dhan Yojana accounts in the country which were launched as a pet project of the PM. The accounts have only low KYC norm requirements especially for those who have a deposit limit of Rs 50000 or less. Finance Minister Arun Jaitely earlier warne
The banking industry in the country’s tiny shock from the debit card data breach may initiate bank initiated data protection measures according to the industry experts. Reserve Bank of India already held a meeting of major bankers and payment industry experts to avoid such incidents in future. In the meeting held on Monday, the RBI asked all lenders to report cyber security issues on a real-time basis. This increases the administrative burden of banks to ensure data security as every case of breach has to be immediately reported. Similarly, banks may have to centralize their cyber security operations instead of outsourcing it. Earlier in an instruction to banks, the RBI po
Executive Board of the nation’s largest banker –State Bank of India has approved the merger of its five associates bank with it. The merger proposal is already an ongoing process and the Board has given nod to merge the remaining associate banks –State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Hyderabad and State Bank of Patiala. Bharatiya Mahila Bank which was formed few years back will also merged with the banking biggie. Post-merger, the SBI will be much bigger than the second largest bank in the country – ICICI. And the biggest impact on the banking system is that SBI’s asset will reach around
Financial sector super regulator -Financial Stability and Development Council (FSDC) in its just concluded meeting has discussed forming of a platform to enlarge the number of too big to fail institutions. After the meeting of the FSDC, the Finance Ministry statement noted that efforts are undergoing to map out the big financial sector institutions that shows the symptoms of too big to fail, including insurance companies. FSDC is the coordination body of the financial sector regulators; Finance Minister is the Chairman of the Council. Too big to fail entities are generally big financial institutions especially banks that resist regulator’s instructions and takes too much ris
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