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LIBOR TO EXTINGUISH : BANKS HAVE TO ADOPT ARR
Dated 09.07.2021 : The Financial Conduct Authority (FCA), UK has announced on March 05, 2021 that LIBOR ( London Interbank Offered Rate ) will either cease to be provided by any administrator or no longer be a representative rate as per schedule below :
(a) Immediately after December 31, 2021, in the case of all Pound sterling, Euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and
(b) Immediately after June 30, 2023, in the case of the remaining US dollar settings.
Hence Reserve Bank of India ( RBI ) has asked Indian banks to be prepared for the transition from LIBOR to any other benchmark rate and to use any widely accepted ARR, as soon as practicable and in any case by December 31, 2021. While certain US dollar LIBOR settings will continue to be published till June 30, 2023, the extension of the timeline for cessation is primarily aimed at ensuring roll-off of USD LIBOR-linked legacy contracts, and not to encourage continued reliance on LIBOR.
RBI has also asked banks cease using the Mumbai Interbank Forward Outright Rate (MIFOR), published by the Financial Benchmarks India Pvt Ltd (FBIL), which references the LIBOR as soon as practicable and in any event by December 31, 2021. FBIL has started publishing daily adjusted MIFOR rates from June 15, 2021 and modified MIFOR rates from June 30, 2021 which can be used for legacy contracts and fresh contracts respectively. Banks may trade in MIFOR after December 31, 2021 only for certain specific purposes such as transactions executed to support risk management activities such as hedging, required participation in central counterparty procedures (including transactions for hedging the consequent MIFOR exposure), market-making in support of client activities or novation of MIFOR transactions in respect of transactions executed on or before December 31, 2021.
Further RBI has asked Banks/financial institutions to incorporate robust fallback clauses, preferably well before the respective cessation dates, in all financial contracts that reference LIBOR and the maturity of which is after the announced cessation date of the respective LIBOR settings. Banks/financial institutions are encouraged to ensure that new contracts entered into before December 31, 2021 that reference LIBOR and maturity of which is after the date on which LIBOR ceases or become non-representative include fallback clauses. Banks/financial institutions may refer to the standard fallback clauses developed for this purpose by various agencies such as International Swaps and Derivatives Association, Indian Banks’ Association, Loan Markets’ Association, Asia Pacific Loan Markets Association and Bankers Association for Finance & Trade.
Now onward banks have to fallback on ARR ( Alternative Reference rate ) instead of LIBOR
To read RBI press release on the subject , CLICK HERE
Dated 09.07.2021 : The Financial Conduct Authority (FCA), UK has announced on March 05, 2021 that LIBOR ( London Interbank Offered Rate ) will either cease to be provided by any administrator or no longer be a representative rate as per schedule below :
(a) Immediately after December 31, 2021, in the case of all Pound sterling, Euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and
(b) Immediately after June 30, 2023, in the case of the remaining US dollar settings.
Hence Reserve Bank of India ( RBI ) has asked Indian banks to be prepared for the transition from LIBOR to any other benchmark rate and to use any widely accepted ARR, as soon as practicable and in any case by December 31, 2021. While certain US dollar LIBOR settings will continue to be published till June 30, 2023, the extension of the timeline for cessation is primarily aimed at ensuring roll-off of USD LIBOR-linked legacy contracts, and not to encourage continued reliance on LIBOR.
RBI has also asked banks cease using the Mumbai Interbank Forward Outright Rate (MIFOR), published by the Financial Benchmarks India Pvt Ltd (FBIL), which references the LIBOR as soon as practicable and in any event by December 31, 2021. FBIL has started publishing daily adjusted MIFOR rates from June 15, 2021 and modified MIFOR rates from June 30, 2021 which can be used for legacy contracts and fresh contracts respectively. Banks may trade in MIFOR after December 31, 2021 only for certain specific purposes such as transactions executed to support risk management activities such as hedging, required participation in central counterparty procedures (including transactions for hedging the consequent MIFOR exposure), market-making in support of client activities or novation of MIFOR transactions in respect of transactions executed on or before December 31, 2021.
Further RBI has asked Banks/financial institutions to incorporate robust fallback clauses, preferably well before the respective cessation dates, in all financial contracts that reference LIBOR and the maturity of which is after the announced cessation date of the respective LIBOR settings. Banks/financial institutions are encouraged to ensure that new contracts entered into before December 31, 2021 that reference LIBOR and maturity of which is after the date on which LIBOR ceases or become non-representative include fallback clauses. Banks/financial institutions may refer to the standard fallback clauses developed for this purpose by various agencies such as International Swaps and Derivatives Association, Indian Banks’ Association, Loan Markets’ Association, Asia Pacific Loan Markets Association and Bankers Association for Finance & Trade.
Now onward banks have to fallback on ARR ( Alternative Reference rate ) instead of LIBOR
To read RBI press release on the subject , CLICK HERE
WHAT IS ARR ( ALTERNATIVE REFERENCE RATE ) ?
As LIBOR will no longer continue to be a reference rate for financial contracts in coming days , various other alternative reference rates are being thought of to replace LIBOR in the future .
In this direction , Federal Reserve of US has formed an Alternative Reference Rate Committee ( ARRC ) with private- market participants as members to help USD contracts for transition away from LIBOR . The ARRC’s initial objectives were to identify risk-free alternative reference rates for USD LIBOR, identify best practices for contract robustness, and create an implementation plan with metrics of success and a timeline to support an orderly adoption . The ARRC accomplished its first set of objectives, and in 2017, identified Secured Overnight Financing Rate (SOFR ) as the rate that represents best practice for use in certain new USD derivatives and other financial contracts.
SOFR will be based on treasury transactions . SOFR will not based on expert judgement like LIBOR but on actual transactions. SOFR will be based on actual transaction data provided by BNYM (Bank of New York Melon). However we have yet to see how markets will adopt or accept SOFR .
In similar way as ARRC , other governments , governing bodies have identified a need for reforming major interest rate benchmarks, and committees similar to the ARRC have been formed in the other currencies for which LIBOR is quoted. Some of the suggested ARRs in other currency markets are SONIA (Sterling Overnight Interbank Average Rate, UK), TONAR (Tokyo Overnight Average Rate, Japan), SARON (Swiss Average Rate Overnight, Switzerland). However USD being the major currency wherein international financial contracts are drawn , SOFR rate appears to have a larger acceptance in the banking community.
We have to wait how ARRs develop in coming days .
In this direction , Federal Reserve of US has formed an Alternative Reference Rate Committee ( ARRC ) with private- market participants as members to help USD contracts for transition away from LIBOR . The ARRC’s initial objectives were to identify risk-free alternative reference rates for USD LIBOR, identify best practices for contract robustness, and create an implementation plan with metrics of success and a timeline to support an orderly adoption . The ARRC accomplished its first set of objectives, and in 2017, identified Secured Overnight Financing Rate (SOFR ) as the rate that represents best practice for use in certain new USD derivatives and other financial contracts.
SOFR will be based on treasury transactions . SOFR will not based on expert judgement like LIBOR but on actual transactions. SOFR will be based on actual transaction data provided by BNYM (Bank of New York Melon). However we have yet to see how markets will adopt or accept SOFR .
In similar way as ARRC , other governments , governing bodies have identified a need for reforming major interest rate benchmarks, and committees similar to the ARRC have been formed in the other currencies for which LIBOR is quoted. Some of the suggested ARRs in other currency markets are SONIA (Sterling Overnight Interbank Average Rate, UK), TONAR (Tokyo Overnight Average Rate, Japan), SARON (Swiss Average Rate Overnight, Switzerland). However USD being the major currency wherein international financial contracts are drawn , SOFR rate appears to have a larger acceptance in the banking community.
We have to wait how ARRs develop in coming days .
RBI TWEAKS RULES ON OVERDUE DEPOSITS :
Dated 03.07.2021 : Reserve Bank of India ( RBI ) has issued a notification tweaking the existing rules on payment of interest to matured term deposits for the resident Indians .
Hitherto banks were expected to pay a rate of interest as applicable to savings deposits for a Term Deposit matured and proceeds unpaid . Now as per new rules , banks have to pay savings bank rate or contracted rate for the term deposit matured , whichever is lower .
The new rule is also applicable for co-operative banks .
For RBI Notification on the subject , CLICK HERE
Dated 03.07.2021 : Reserve Bank of India ( RBI ) has issued a notification tweaking the existing rules on payment of interest to matured term deposits for the resident Indians .
Hitherto banks were expected to pay a rate of interest as applicable to savings deposits for a Term Deposit matured and proceeds unpaid . Now as per new rules , banks have to pay savings bank rate or contracted rate for the term deposit matured , whichever is lower .
The new rule is also applicable for co-operative banks .
For RBI Notification on the subject , CLICK HERE
PAY MORE FOR ATM TRANSACTIONS :
Dated 11.06.2021 : Reserve Bank of India ( RBI ) has decided to allow increase in interchange fee per ATM transaction from ₹15 to ₹17 for financial transactions and from ₹5 to ₹6 for non-financial ATM transactions in all centres effective from August 1, 2021.
Presently customers of the banks are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They are also eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, banks can now charge a maximum fee of ₹20 per transaction . Now to compensate the banks for the higher interchange fee and given the general escalation in costs, RBI has allowed the banks to increase the customer charges to ₹21 per transaction. This increase shall be effective from January 1, 2022.
Dated 11.06.2021 : Reserve Bank of India ( RBI ) has decided to allow increase in interchange fee per ATM transaction from ₹15 to ₹17 for financial transactions and from ₹5 to ₹6 for non-financial ATM transactions in all centres effective from August 1, 2021.
Presently customers of the banks are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They are also eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, banks can now charge a maximum fee of ₹20 per transaction . Now to compensate the banks for the higher interchange fee and given the general escalation in costs, RBI has allowed the banks to increase the customer charges to ₹21 per transaction. This increase shall be effective from January 1, 2022.
YOUR SALARY CAN BE CREDITED TO YOUR ACCOUNT ON ALL DAYS :
Dated 05.06.2021 :
From August 1st , 2021 , Your salary or pension can be credited to your account on any day including Sundays and holidays . Reserve bank will make available bulk payment system operated by NPCI called NACH on all days of the week through out the year . It is being used for credit of salary , dividend and such other bulk payments .
NACH payment system facilitates one-to-many credit transfers, such as payment of dividend, interest, salary, pension, as also collection of payments pertaining to electricity, gas, telephone, water, periodic instalments towards loans, investments in mutual funds, insurance premium, etc. It is a popular and prominent digital mode of direct benefit transfer (DBT) to large number of beneficiaries.
It also has helped transfer of government subsidies during the present COVID-19 in a timely and transparent manner. Presently it is available only on the days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, RBI has proposed to make available NACH on all days of the week throughout the year, effective August 1, 2021.
To read the RBI press release , CLICK HERE
Dated 05.06.2021 :
From August 1st , 2021 , Your salary or pension can be credited to your account on any day including Sundays and holidays . Reserve bank will make available bulk payment system operated by NPCI called NACH on all days of the week through out the year . It is being used for credit of salary , dividend and such other bulk payments .
NACH payment system facilitates one-to-many credit transfers, such as payment of dividend, interest, salary, pension, as also collection of payments pertaining to electricity, gas, telephone, water, periodic instalments towards loans, investments in mutual funds, insurance premium, etc. It is a popular and prominent digital mode of direct benefit transfer (DBT) to large number of beneficiaries.
It also has helped transfer of government subsidies during the present COVID-19 in a timely and transparent manner. Presently it is available only on the days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, RBI has proposed to make available NACH on all days of the week throughout the year, effective August 1, 2021.
To read the RBI press release , CLICK HERE
BANKS TO LIMIT BUSINESS HOURS AND CURTAIL BUSINESS TO CORE BANKING :
Dated 23.04.2021 : It's reported that Indian Banks Association ( IBA ) has advised State Level bankers Committees ( SLBC ) of various statesand Union Territories ( UTs ) to offer the following mandatory services in all the branches , in view of present situation of 2nd wave of Covid 19 .
1. Cash Deposits & withdrawals
2. Clearing of cheques
3. Remittances
4. Government transactions
However SLBCs can consider offering of any other services depending up on the local conditions . Further it has advised banks to curtail business hours between 10.00 am to 2.00 pm and to follow all covid protocols in the premises of the banks . It's reported that it has advised SLBC to consider 50 % of working staff to be present at a time in the branch premises .It said banks may call employees on a rotational basis or allow them to work from home as the case may be, depending on the nature of job, staff position and size of the establishment. However SLBCs have been asked to adhere to instructions issued by the local authorities . IBA has also advised the banks to take necessary steps to protect the staff from the pandemic including arranging vaccine at bank premises and arranging help to the individual staff in case of him / her contacting the pandemic .
In view of the above advisory offered by the bankers body , it's now for individual state level bankers committees to decide up on the course of action to protect the staff within the instructions issued by the state governments . SLBCs are expected to issue guidelines to all bank branches operating in the area of the jurisdiction .
In view of the health risks bank customers may face , they are advised to avoid personal visit of bank branches as far as posible and conduct on-line transactions . Customers may utilize on-line services and Mobile APPS and save themselves from personal visits and safeguard themselves . Customers can also utilize Doorstep Banking Services offered by many banks .
Dated 23.04.2021 : It's reported that Indian Banks Association ( IBA ) has advised State Level bankers Committees ( SLBC ) of various statesand Union Territories ( UTs ) to offer the following mandatory services in all the branches , in view of present situation of 2nd wave of Covid 19 .
1. Cash Deposits & withdrawals
2. Clearing of cheques
3. Remittances
4. Government transactions
However SLBCs can consider offering of any other services depending up on the local conditions . Further it has advised banks to curtail business hours between 10.00 am to 2.00 pm and to follow all covid protocols in the premises of the banks . It's reported that it has advised SLBC to consider 50 % of working staff to be present at a time in the branch premises .It said banks may call employees on a rotational basis or allow them to work from home as the case may be, depending on the nature of job, staff position and size of the establishment. However SLBCs have been asked to adhere to instructions issued by the local authorities . IBA has also advised the banks to take necessary steps to protect the staff from the pandemic including arranging vaccine at bank premises and arranging help to the individual staff in case of him / her contacting the pandemic .
In view of the above advisory offered by the bankers body , it's now for individual state level bankers committees to decide up on the course of action to protect the staff within the instructions issued by the state governments . SLBCs are expected to issue guidelines to all bank branches operating in the area of the jurisdiction .
In view of the health risks bank customers may face , they are advised to avoid personal visit of bank branches as far as posible and conduct on-line transactions . Customers may utilize on-line services and Mobile APPS and save themselves from personal visits and safeguard themselves . Customers can also utilize Doorstep Banking Services offered by many banks .
CITI BANK TO EXIT INDIAN RETAIL BUSINESS :
Dated 15.04.2021 : Citi bank , headquartered in New York USA , is planning to exit from the retail business in India , as well as in another 12 countries , as per announcement made today in New York . The other markets that are to be shut are Australia, Bahrain, China, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. However the bank will continue to offer services to institutional clients group, which houses the private bank, cash-management arm and investment-banking and trading businesses.
The reason for exit is said to be lack of scale of operations in the retail segments in these countries .
Citibank India has a history of more than 100 years in India . It was established in 1902 in Calcutta (Kolkata ). Currently, Citigroup, the owner of Citi India, is one of the largest foreign direct investors in financial services in the country. Citi bank has taken initiatives to bring to India many new products and services such as the ATM, credit card, 24-hour phone banking, internet banking, and instant SMS alerts. Citi bank is presently has branches in more than 12 cities and prominent foreign bank serving India .
Sources : Citibank announcement of date
Dated 15.04.2021 : Citi bank , headquartered in New York USA , is planning to exit from the retail business in India , as well as in another 12 countries , as per announcement made today in New York . The other markets that are to be shut are Australia, Bahrain, China, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. However the bank will continue to offer services to institutional clients group, which houses the private bank, cash-management arm and investment-banking and trading businesses.
The reason for exit is said to be lack of scale of operations in the retail segments in these countries .
Citibank India has a history of more than 100 years in India . It was established in 1902 in Calcutta (Kolkata ). Currently, Citigroup, the owner of Citi India, is one of the largest foreign direct investors in financial services in the country. Citi bank has taken initiatives to bring to India many new products and services such as the ATM, credit card, 24-hour phone banking, internet banking, and instant SMS alerts. Citi bank is presently has branches in more than 12 cities and prominent foreign bank serving India .
Sources : Citibank announcement of date
BANKS TO REFUND INTEREST ON INTEREST : Who will bear the cost ?
Dated 08.04.2021 : Reserve Bank of India has asked all banks to immediately put in place a Board-approved policy to refund/adjust the ‘interest on interest’ charged to the borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020 .
Further RBI has asked Indian Banks Association (IBA) to suitably prepare methodology for calculation of the amount to be refunded/adjusted for different facilities in consultation with other industry participants/bodies, which shall be adopted by all lending institutions.
The instruction for refunding will be applicable to all borrowers, including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed .
The RBI instructions have come in the wake of Supreme Court's judgement in the matter of Small Scale Industrial Manufacturers Association vs UOI & Ors. and other connected matters on March 23, 2021.
Government of India has announced a Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020) . State Bank of India is designated as nodal agency for implementing the scheme . Details of the scheme are as follows :
In this regard we may remember here that the following categories of borrowers , who had limits of less than Rs 2 crores have already been reimbursed through a Government scheme announced in October 2020.
a. MSME Loans
b. Education loans
c . Housing Loans
d. Consumer durable loans
e. Credit card dues
f. Automobile loans
g. Personal loans to professionals
h. Consumption loans
The government scheme reimbursed the banks for the refunds effected earlier . However present RBI notification is silent on any relief from the government and hence banks themselves may have to bear the burden of refund .
To go through RBI Notification dated 07.04.2021 in this regard , CLICK HERE
Dated 08.04.2021 : Reserve Bank of India has asked all banks to immediately put in place a Board-approved policy to refund/adjust the ‘interest on interest’ charged to the borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020 .
Further RBI has asked Indian Banks Association (IBA) to suitably prepare methodology for calculation of the amount to be refunded/adjusted for different facilities in consultation with other industry participants/bodies, which shall be adopted by all lending institutions.
The instruction for refunding will be applicable to all borrowers, including those who had availed of working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed .
The RBI instructions have come in the wake of Supreme Court's judgement in the matter of Small Scale Industrial Manufacturers Association vs UOI & Ors. and other connected matters on March 23, 2021.
Government of India has announced a Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020) . State Bank of India is designated as nodal agency for implementing the scheme . Details of the scheme are as follows :
In this regard we may remember here that the following categories of borrowers , who had limits of less than Rs 2 crores have already been reimbursed through a Government scheme announced in October 2020.
a. MSME Loans
b. Education loans
c . Housing Loans
d. Consumer durable loans
e. Credit card dues
f. Automobile loans
g. Personal loans to professionals
h. Consumption loans
The government scheme reimbursed the banks for the refunds effected earlier . However present RBI notification is silent on any relief from the government and hence banks themselves may have to bear the burden of refund .
To go through RBI Notification dated 07.04.2021 in this regard , CLICK HERE
NOW RTGS & NEFT MEMBERSHIP IS WIDENED :
Dated 07.04.2021 : So far only banks and few financial institutions are the members of Centralised Payment System run by RBI which operates both NEFT & RTGS platforms . Now RBI has decided to extend the membership to other non-bank entities in payment space like Prepaid Payment Instrument (PPI) issuers, Card Networks, White Label ATM (WLA) operators, Trade Receivables and Discounting System (TReDS) platforms . However these institutions will not be eligible for liquidity support from the central bank .
RBI is expected to issue notification in this regard shortly .
To read RBI announcement in this regard , CLICK HERE
Dated 07.04.2021 : So far only banks and few financial institutions are the members of Centralised Payment System run by RBI which operates both NEFT & RTGS platforms . Now RBI has decided to extend the membership to other non-bank entities in payment space like Prepaid Payment Instrument (PPI) issuers, Card Networks, White Label ATM (WLA) operators, Trade Receivables and Discounting System (TReDS) platforms . However these institutions will not be eligible for liquidity support from the central bank .
RBI is expected to issue notification in this regard shortly .
To read RBI announcement in this regard , CLICK HERE
: AUTO DEBIT FACILITY REQUIRES ADDITIONAL AUTHENTICATION FROM TOMORROW
Breaking News : RBI has today extended the deadline by another six months up to 30.09.2021 .
To read the press release on this regard , CLICK HERE
Dated 31.03.2021 : If you have given auto debit authorization towards your monthly bills for utilities , phones , mobiles or TV subscription or any other service and the bill amount exceeds Rs 5,000 to your bank or credit card company or your UPI account , the concerned payers have to seek your confirmation for such payments . The concerned payer may send you an OTP to your mobile for your confirmation . Only on your authentication , the paying companies or banks will effect the payments to the billers from tomorrow . Hence your authorization will not be automatic without your additional consent .
The instruction to this effect was given by Reserve Bank of India way back in August 2019 and initial cut off amount proposed was just Rs 2,000 . Subsequently RBI raised the cut off amount to Rs 5,000 in December 2020 . The implementation of the rule has earlier been postponed many times and it is being implemented from tomorrow finally . The rule applies to all types of instruments whether credit cards , debit cards , pre-paid cards or UPI . The following procedure is to be performed for regisreing and operation of auto debit facilities :
1. A cardholder desirous of opting for e-mandate facility on card shall undertake a one-time registration process which may involve confirmation of mandate through OTP .
2. During the registration process, the cardholder shall be given an option to provide the e-mandate for either a pre-specified fixed value of recurring transaction or for a variable value of the recurring transaction; in the case of the latter, the cardholder shall clearly specify the maximum value of recurring transactions, subject to the overall cap of ₹ 5,000/- per transaction. Registration shall be completed only after all requisite information is obtained by the issuer, including the validity period of the e-mandate .
3. The card issuer will send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge / debit to the card.
On receipt of the pre-transaction notification, the cardholder will have the option to decline the transaction . For transactions above Rs 5,000 , card issuer has to get confirmation for payment through an OTP before effecting payment .
4. The issuer will send a post-transaction alert / notification to the cardholder , informing him / her full details of the transaction .
5. Card holders will get on-line facility , in case they want to withdraw the mandate given to any biller .
Breaking News : RBI has today extended the deadline by another six months up to 30.09.2021 .
To read the press release on this regard , CLICK HERE
Dated 31.03.2021 : If you have given auto debit authorization towards your monthly bills for utilities , phones , mobiles or TV subscription or any other service and the bill amount exceeds Rs 5,000 to your bank or credit card company or your UPI account , the concerned payers have to seek your confirmation for such payments . The concerned payer may send you an OTP to your mobile for your confirmation . Only on your authentication , the paying companies or banks will effect the payments to the billers from tomorrow . Hence your authorization will not be automatic without your additional consent .
The instruction to this effect was given by Reserve Bank of India way back in August 2019 and initial cut off amount proposed was just Rs 2,000 . Subsequently RBI raised the cut off amount to Rs 5,000 in December 2020 . The implementation of the rule has earlier been postponed many times and it is being implemented from tomorrow finally . The rule applies to all types of instruments whether credit cards , debit cards , pre-paid cards or UPI . The following procedure is to be performed for regisreing and operation of auto debit facilities :
1. A cardholder desirous of opting for e-mandate facility on card shall undertake a one-time registration process which may involve confirmation of mandate through OTP .
2. During the registration process, the cardholder shall be given an option to provide the e-mandate for either a pre-specified fixed value of recurring transaction or for a variable value of the recurring transaction; in the case of the latter, the cardholder shall clearly specify the maximum value of recurring transactions, subject to the overall cap of ₹ 5,000/- per transaction. Registration shall be completed only after all requisite information is obtained by the issuer, including the validity period of the e-mandate .
3. The card issuer will send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge / debit to the card.
On receipt of the pre-transaction notification, the cardholder will have the option to decline the transaction . For transactions above Rs 5,000 , card issuer has to get confirmation for payment through an OTP before effecting payment .
4. The issuer will send a post-transaction alert / notification to the cardholder , informing him / her full details of the transaction .
5. Card holders will get on-line facility , in case they want to withdraw the mandate given to any biller .
CTS WILL BE AVAILABLE IN ALL BANK BRANCHES IN INDIA : RBI
Dated 16.03.2021 : Cheque Truncation System ( CTS) for the purpose of clearing , is in use since 2010 . Now around 1,50,000 bank branches are using the system . However, there are branches of banks that are outside formal clearing arrangement of CTS and their customers face hardships due to longer time taken and cost involved in collection of cheques presented by them. Most of such branches are said to be in remote rural India and the RBI move now will help the customers of such branches .
To leverage the availability of CTS and provide uniform customer experience irrespective of location of her/his bank branch, Reserve Bank of India ( RBI ) has decided to extend CTS across all bank branches in the country. To facilitate this, banks will have to ensure , as per RBI Notification dated 15.03.2021 , that all their branches participate in image-based CTS under respective grids by September 30, 2021. They are free to adopt a model of their choice, like deploying suitable infrastructure in every branch or following a hub & spoke model, etc. and concerned banks are asked to coordinate with the respective Regional Offices of RBI to operationalise the system .
What is Cheque Truncation System ( CTS ) ? : Cheque Transaction System (CTS) in India, is a cheque clearing system promoted by RBI, for faster clearing of cheques . In CTS system , cheque images and magnetic ink character recognition (MICR) data are captured at the collecting bank branch and transmitted electronically to the bank on which cheque is drawn . The physical cheques issued by a drawer to the drawee branch is processed at the collecting branch , the physical instrument is truncated and an electronic image of the cheque is sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc. This would eliminate the need to move the physical instruments across branches, except in exceptional circumstances, resulting in an effective reduction in the time required for payment of cheques, the associated cost of transit and delays in processing, etc. . This system thus speeds up the process of collection or realization of cheques.
To read the RBI notification dated 15.03.2021 in this regard , CLICK HERE
Dated 16.03.2021 : Cheque Truncation System ( CTS) for the purpose of clearing , is in use since 2010 . Now around 1,50,000 bank branches are using the system . However, there are branches of banks that are outside formal clearing arrangement of CTS and their customers face hardships due to longer time taken and cost involved in collection of cheques presented by them. Most of such branches are said to be in remote rural India and the RBI move now will help the customers of such branches .
To leverage the availability of CTS and provide uniform customer experience irrespective of location of her/his bank branch, Reserve Bank of India ( RBI ) has decided to extend CTS across all bank branches in the country. To facilitate this, banks will have to ensure , as per RBI Notification dated 15.03.2021 , that all their branches participate in image-based CTS under respective grids by September 30, 2021. They are free to adopt a model of their choice, like deploying suitable infrastructure in every branch or following a hub & spoke model, etc. and concerned banks are asked to coordinate with the respective Regional Offices of RBI to operationalise the system .
What is Cheque Truncation System ( CTS ) ? : Cheque Transaction System (CTS) in India, is a cheque clearing system promoted by RBI, for faster clearing of cheques . In CTS system , cheque images and magnetic ink character recognition (MICR) data are captured at the collecting bank branch and transmitted electronically to the bank on which cheque is drawn . The physical cheques issued by a drawer to the drawee branch is processed at the collecting branch , the physical instrument is truncated and an electronic image of the cheque is sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc. This would eliminate the need to move the physical instruments across branches, except in exceptional circumstances, resulting in an effective reduction in the time required for payment of cheques, the associated cost of transit and delays in processing, etc. . This system thus speeds up the process of collection or realization of cheques.
To read the RBI notification dated 15.03.2021 in this regard , CLICK HERE
BANKING SERVICES IN BANKS COME TO A HALT TODAY
15.03.2021 : United Forum of Bank Unions ( UFBU ) had announced, in February 2021 , of their agitation plan including strike call to their members against the privatization of public sector banks and other measures taken by the Central government . UFBU is an umbrella body of 9 Bank unions AIBEA, AIBOC, NCBE, AIBOA, BEFI, INBEF, INBOC, NOBW and NOBO . The unions had announced that bank staff would go ahead with their earlier announced strike call on 15th & 16th , March 2021 , as they do not see any positive response from the government .
Today the bank employees and officers of all public sector banks totaling around 10 lakh went on strike as per the call of their unions . Banking services such as cash withdrawals, deposits, cheque clearing and business transactions were impacted across the country today , the first day of the PSU bank union's strike, against the proposed privatisation of two of their banks . However private sector banks like ICICI Bank , Kotak bank & Axis bank offered their usual services today .
The strike will continue tomorrow also as per the schedule announced . The strike call of bank unions and their agitation programme against privatization has got wider support from other trade unions like Samyukta Kisan Morcha (SKM) and Central trade Unions (CTU) . They have extended their support and Will Observe Anti - Privatisation Day on 15th March.
After the bank employees strike today and tomorrow , employees of public sector general insurance companies will go on strike on 17th, March 2021 & Life Insurance corporation of India's employees on 18th, March 2021 .
We may recall here that Finance Minister Ms Nirmala Sitharaman had announced , in her budget speech , about various measures that would be taken with regard to government owned financial institutions including privatisation of two public sector banks , IDBI and one General insurance company . She had also announced taking up of shares sales of Life Insurance Corporation of India , another public sector undertaking . She had also announced setting up of a bad loan bank to take over NPAs of the public sector bank . However these moves have not gone well with the bank employees and their unions .
15.03.2021 : United Forum of Bank Unions ( UFBU ) had announced, in February 2021 , of their agitation plan including strike call to their members against the privatization of public sector banks and other measures taken by the Central government . UFBU is an umbrella body of 9 Bank unions AIBEA, AIBOC, NCBE, AIBOA, BEFI, INBEF, INBOC, NOBW and NOBO . The unions had announced that bank staff would go ahead with their earlier announced strike call on 15th & 16th , March 2021 , as they do not see any positive response from the government .
Today the bank employees and officers of all public sector banks totaling around 10 lakh went on strike as per the call of their unions . Banking services such as cash withdrawals, deposits, cheque clearing and business transactions were impacted across the country today , the first day of the PSU bank union's strike, against the proposed privatisation of two of their banks . However private sector banks like ICICI Bank , Kotak bank & Axis bank offered their usual services today .
The strike will continue tomorrow also as per the schedule announced . The strike call of bank unions and their agitation programme against privatization has got wider support from other trade unions like Samyukta Kisan Morcha (SKM) and Central trade Unions (CTU) . They have extended their support and Will Observe Anti - Privatisation Day on 15th March.
After the bank employees strike today and tomorrow , employees of public sector general insurance companies will go on strike on 17th, March 2021 & Life Insurance corporation of India's employees on 18th, March 2021 .
We may recall here that Finance Minister Ms Nirmala Sitharaman had announced , in her budget speech , about various measures that would be taken with regard to government owned financial institutions including privatisation of two public sector banks , IDBI and one General insurance company . She had also announced taking up of shares sales of Life Insurance Corporation of India , another public sector undertaking . She had also announced setting up of a bad loan bank to take over NPAs of the public sector bank . However these moves have not gone well with the bank employees and their unions .
TO KNOW BEST YIELDING FIXED DEPOSITS , CLICK HERE
IDBI BANK IS OUT OF PCA FRAMEWORK
Dated 10.03.2021 : Reserve Bank of India ( RBI ) toady announced through a press release , that it has been decided to take out IDBI Bank Limited be taken out of the PCA framework ( Prompt Corrective Action Framework ) , subject to certain conditions and continuous monitoring.
Matter was reviewed by the Board for Financial Supervision (BFS) in its meeting held on February 18, 2021 and it was noted that as per published results for the quarter ending December 31, 2020 the bank is not in breach of the PCA parameters on regulatory capital, Net NPA and Leverage ratio. The bank has also provided a written commitment to RBI that it would comply with the norms of minimum regulatory capital, Net NPA and Leverage ratio on an ongoing basis . IDBI Bank has also apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.
Presently along with IDBI Bank , Indian Overseas Bank , Central Bank of India and UCO Bank are under PCA Framework .
To read the press release of RBI , CLICK HERE
What is PCA Framework ?
The Reserve Bank has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e. capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points. The PCA framework is applicable only to commercial banks and not extended to co-operative banks, non-banking financial companies (NBFCs) and FMIs .
Trigger Points :
1. CRAR : CRAR less than 9%, but equal or more than 6% - bank to submit capital restoration plan; restrictions on RWA expansion, entering into new lines of business, accessing/renewing costly deposits and CDs, and making dividend payments; order recapitalisation; restrictions on borrowing from inter-bank market, reduction of stake in subsidiaries, reducing its exposure to sensitive sectors like capital market, real
estate or investment in non-SLR securities, etc.
(ii) CRAR less than 6%, but equal or more than 3% - in addition to actions in hitting the first trigger point, RBI could take steps to bring in new Management/ Board, appoint consultants for business/ organizational restructuring, take steps to change ownership, and also take steps to merge the bank if it fails to submit recapitalization plan.
(iii) CRAR less than 3% - in addition to actions in hitting the first and second trigger points, more close monitoring; steps to merge/amalgamate/liquidate the bank or impose moratorium on the bank if its CRAR does not improve beyond 3% within one
year or within such extended period as agreed to
2. NET NPA : (i) Net NPAs over 10% but less than 15% - special drive to reduce NPAs and contain generation of fresh NPAs; review loan policy and take steps to strengthen credit appraisal skills, follow-up of advances and suit-filed/decreed debts, put in place proper credit-risk management policies; reduce loan concentration; restrictions in entering new lines of business, making dividend payments and
increasing its stake in subsidiaries.
(ii) Net NPAs 15% and above – In addition to actions on hitting the above trigger point, bank’s Board is called for discussion on corrective plan of action
3. ROA less than 0.25% - restrictions on accessing/renewing costly deposits and CDs, entering into new lines of business, bank’s borrowings from inter-bank market, making dividend payments and expanding its staff; steps to increase fee-based income; contain administrative expenses; special drive to reduce NPAs and contain generation of fresh NPAs; and restrictions on incurring any capital expenditure other
than for technological upgradation and for some emergency situations.
RESTRICTIONS UNDER PCA :
On bank reaching the levels of undercapitalized, or significantly undercapitalized, or critically undercapitalized, automatic restrictions, as per provisions of Section 38 of FDI Act, are placed on the concerned bank in respect of (i) payment of capital distributions and
management fees, (ii) the growth of assets, (iii) requiring prior approval of certain expansion proposals, (iv) requiring that the FDIC monitor the condition of the bank, and (v) requiring submission of a capital restoration plan .
In addition to the above restrictions and close monitoring, the significantly undercapitalized and critically undercapitalized banks are restricted to pay compensation to senior executive officers of the institution. The critically undercapitalized bank is, in addition to above, required to take prior approval from FDIC in respect of – entering into any material transaction other than in the usual course of business, such as any investment, expansion, acquisition, sale of assets, or other similar action; extending credit for any highly leveraged transaction; amending the institution’s charter or bylaws; making any material change in accounting methods; paying excessive compensation or bonuses; paying significantly high interest on new or renewed liabilities; making any principal or interest payment on subordinated debt beginning 60 days after becoming critically undercapitalized; and engaging in any covered transaction. In addition, FDIC may further restrict the activities of the critically undercapitalized bank.
Which Banks are undercapitalized ?
Undercapitalized Banks - (a) Fails to maintain the pledge of assets as per FDIC Rules and Regulations; OR (b) Fails to maintain eligible assets at 108% or more of the preceding quarter’s average book value of the branch’s third party liabilities. (iv) Significantly undercapitalized - (a) Fails to maintain eligible assets at 104% or more of the preceding quarter’s average book value of the branch’s third party liabilities. (v) Critically undercapitalized - (a) Fails to maintain eligible assets at 102% or more of the preceding quarter’s average book value of the branch’s third party liabilities.
For RBI Document on PCA Framework , click here
Dated 10.03.2021 : Reserve Bank of India ( RBI ) toady announced through a press release , that it has been decided to take out IDBI Bank Limited be taken out of the PCA framework ( Prompt Corrective Action Framework ) , subject to certain conditions and continuous monitoring.
Matter was reviewed by the Board for Financial Supervision (BFS) in its meeting held on February 18, 2021 and it was noted that as per published results for the quarter ending December 31, 2020 the bank is not in breach of the PCA parameters on regulatory capital, Net NPA and Leverage ratio. The bank has also provided a written commitment to RBI that it would comply with the norms of minimum regulatory capital, Net NPA and Leverage ratio on an ongoing basis . IDBI Bank has also apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.
Presently along with IDBI Bank , Indian Overseas Bank , Central Bank of India and UCO Bank are under PCA Framework .
To read the press release of RBI , CLICK HERE
What is PCA Framework ?
The Reserve Bank has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e. capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points. The PCA framework is applicable only to commercial banks and not extended to co-operative banks, non-banking financial companies (NBFCs) and FMIs .
Trigger Points :
1. CRAR : CRAR less than 9%, but equal or more than 6% - bank to submit capital restoration plan; restrictions on RWA expansion, entering into new lines of business, accessing/renewing costly deposits and CDs, and making dividend payments; order recapitalisation; restrictions on borrowing from inter-bank market, reduction of stake in subsidiaries, reducing its exposure to sensitive sectors like capital market, real
estate or investment in non-SLR securities, etc.
(ii) CRAR less than 6%, but equal or more than 3% - in addition to actions in hitting the first trigger point, RBI could take steps to bring in new Management/ Board, appoint consultants for business/ organizational restructuring, take steps to change ownership, and also take steps to merge the bank if it fails to submit recapitalization plan.
(iii) CRAR less than 3% - in addition to actions in hitting the first and second trigger points, more close monitoring; steps to merge/amalgamate/liquidate the bank or impose moratorium on the bank if its CRAR does not improve beyond 3% within one
year or within such extended period as agreed to
2. NET NPA : (i) Net NPAs over 10% but less than 15% - special drive to reduce NPAs and contain generation of fresh NPAs; review loan policy and take steps to strengthen credit appraisal skills, follow-up of advances and suit-filed/decreed debts, put in place proper credit-risk management policies; reduce loan concentration; restrictions in entering new lines of business, making dividend payments and
increasing its stake in subsidiaries.
(ii) Net NPAs 15% and above – In addition to actions on hitting the above trigger point, bank’s Board is called for discussion on corrective plan of action
3. ROA less than 0.25% - restrictions on accessing/renewing costly deposits and CDs, entering into new lines of business, bank’s borrowings from inter-bank market, making dividend payments and expanding its staff; steps to increase fee-based income; contain administrative expenses; special drive to reduce NPAs and contain generation of fresh NPAs; and restrictions on incurring any capital expenditure other
than for technological upgradation and for some emergency situations.
RESTRICTIONS UNDER PCA :
On bank reaching the levels of undercapitalized, or significantly undercapitalized, or critically undercapitalized, automatic restrictions, as per provisions of Section 38 of FDI Act, are placed on the concerned bank in respect of (i) payment of capital distributions and
management fees, (ii) the growth of assets, (iii) requiring prior approval of certain expansion proposals, (iv) requiring that the FDIC monitor the condition of the bank, and (v) requiring submission of a capital restoration plan .
In addition to the above restrictions and close monitoring, the significantly undercapitalized and critically undercapitalized banks are restricted to pay compensation to senior executive officers of the institution. The critically undercapitalized bank is, in addition to above, required to take prior approval from FDIC in respect of – entering into any material transaction other than in the usual course of business, such as any investment, expansion, acquisition, sale of assets, or other similar action; extending credit for any highly leveraged transaction; amending the institution’s charter or bylaws; making any material change in accounting methods; paying excessive compensation or bonuses; paying significantly high interest on new or renewed liabilities; making any principal or interest payment on subordinated debt beginning 60 days after becoming critically undercapitalized; and engaging in any covered transaction. In addition, FDIC may further restrict the activities of the critically undercapitalized bank.
Which Banks are undercapitalized ?
Undercapitalized Banks - (a) Fails to maintain the pledge of assets as per FDIC Rules and Regulations; OR (b) Fails to maintain eligible assets at 108% or more of the preceding quarter’s average book value of the branch’s third party liabilities. (iv) Significantly undercapitalized - (a) Fails to maintain eligible assets at 104% or more of the preceding quarter’s average book value of the branch’s third party liabilities. (v) Critically undercapitalized - (a) Fails to maintain eligible assets at 102% or more of the preceding quarter’s average book value of the branch’s third party liabilities.
For RBI Document on PCA Framework , click here
PRIVATE BANKS CAN DO GOVERNMENT BANKING TRANSACTIONS NOW :
Dated 25.02.2021 : Government of India has removed embargo on private sectors banks in doing government related banking services like pension disbursement , tax collection or other government agency business . They can also conduct small savings business on behalf of the government .
Now Reserve Bank of India can authorize Private sector banks along with their public sector counterparts to do any government related business on equal footing .
Source : Twitter account of Ministry of Finance
Dated 25.02.2021 : Government of India has removed embargo on private sectors banks in doing government related banking services like pension disbursement , tax collection or other government agency business . They can also conduct small savings business on behalf of the government .
Now Reserve Bank of India can authorize Private sector banks along with their public sector counterparts to do any government related business on equal footing .
Source : Twitter account of Ministry of Finance
Positive Pay System for Cheque Truncation System
AVOID PAYMENT OF ALTERED CHEQUES
02.01.2021 : Positive Pay system has been introduced by banks in India from from January 01, 2021 as per RBI instructions . As per the system , if you issue a cheque for Rs 50,000 or more , you have to provide details of the cheque issued to the drawee bank in advance .
To participate in the system , customer is expected to provide his option to participate or not in the system . If you give your option , you are required to provide the cheque details issued by you (viz. cheque date, 6-digit cheque number, amount, beneficiary name) by visiting your nearest bank branch on the same day as issued by you or before it is handed over to the beneficiary.
If you participate in the system and provide the details of the Cheques which are compliant with the process, such cheques will be accepted under dispute resolution mechanism at the CTS grids . In case the cheque issuance details are not shared with drawee (issuing) bank, the right to raise a complaint under Dispute Redressal Mechanism where an altered cheque is paid from the account will be forfeited . Hence it is prudent to participate in the system to avoid payment of altered cheques and resultant financial consequences .
Banks are yet to make available the facility in their websites and internet banking applications .
What is Positive Pay System for Cheque Truncation System ?
02.01.2021 : Positive Pay system has been introduced by banks in India from from January 01, 2021 as per RBI instructions . As per the system , if you issue a cheque for Rs 50,000 or more , you have to provide details of the cheque issued to the drawee bank in advance .
To participate in the system , customer is expected to provide his option to participate or not in the system . If you give your option , you are required to provide the cheque details issued by you (viz. cheque date, 6-digit cheque number, amount, beneficiary name) by visiting your nearest bank branch on the same day as issued by you or before it is handed over to the beneficiary.
If you participate in the system and provide the details of the Cheques which are compliant with the process, such cheques will be accepted under dispute resolution mechanism at the CTS grids . In case the cheque issuance details are not shared with drawee (issuing) bank, the right to raise a complaint under Dispute Redressal Mechanism where an altered cheque is paid from the account will be forfeited . Hence it is prudent to participate in the system to avoid payment of altered cheques and resultant financial consequences .
Banks are yet to make available the facility in their websites and internet banking applications .
What is Positive Pay System for Cheque Truncation System ?
Positive Pay System for Cheque Truncation System
27.09.2020 : Reserve Bank of India ( RBI ) is going to implement Positive Pay system from from January 01, 2021.
As per the system , if you issue a cheque for Rs 50,000 or more , you have to provide details of the cheque issued to the drawee bank in advance .
What is Positive Pay System for Cheque Truncation System ?
The concept of Positive Pay involves a process of reconfirming key details of large value cheques. Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque (like date, name of the beneficiary / payee, amount, etc.) to the drawee bank, details of which are cross checked with the presented cheque by CTS. Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
3. National Payments Corporation of India (NPCI) shall develop the facility of Positive Pay in CTS and make it available to participant banks. Banks, in turn, shall enable it for all account holders issuing cheques for amounts of ₹50,000 and above. While availing of this facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of ₹5,00,000 and above.
4. Only those cheques which are compliant with above instructions will be accepted under dispute resolution mechanism at the CTS grids. Member banks may implement similar arrangements for cheques cleared / collected outside CTS as well.
5. Banks are advised to create adequate awareness among their customers on features of Positive Pay System through SMS alerts, display in branches, ATMs as well as through their web-site and internet banking.
To go through the RBI Notification , CLICK HERE
IPPB LAUNCHES DIGITAL PAYMENT APP - DAK PAY
Dated 17.12.2020 : Department of posts & India Posts Payment Bank unveiled a new mobile App DAK PAY . The App is launched as part of its ongoing efforts to provide Digital Financial inclusion at the last mile across India.
DakPay is a digital payment app and the which has features of digital financial services and also assisted banking services provided by India Post & IPPB through the trusted Postal network across the nation to cater to the financial needs of its customers for sending money (Domestic Money Transfers – DMT), Scan QR code and make merchant payment (Virtual debit card & with UPI), enabling cashless ecosystem through biometrics, providing interoperable banking services to the customers of ANY BANK (AePS) and Utility Bill Payment services.
The launch event Minister was attended by Ravi Shankar Prasad , who appreciated India Post Payments Bank’s efforts during fight against Covid-19 by providing doorstep financial assistance through AePS leading to financial empowerment of the unbanked and the underbanked .
DAKPAY for Android can be downloaded at Google Play Stores OR WITH LINK However many users have complained about the quality of the App .
Dated 17.12.2020 : Department of posts & India Posts Payment Bank unveiled a new mobile App DAK PAY . The App is launched as part of its ongoing efforts to provide Digital Financial inclusion at the last mile across India.
DakPay is a digital payment app and the which has features of digital financial services and also assisted banking services provided by India Post & IPPB through the trusted Postal network across the nation to cater to the financial needs of its customers for sending money (Domestic Money Transfers – DMT), Scan QR code and make merchant payment (Virtual debit card & with UPI), enabling cashless ecosystem through biometrics, providing interoperable banking services to the customers of ANY BANK (AePS) and Utility Bill Payment services.
The launch event Minister was attended by Ravi Shankar Prasad , who appreciated India Post Payments Bank’s efforts during fight against Covid-19 by providing doorstep financial assistance through AePS leading to financial empowerment of the unbanked and the underbanked .
DAKPAY for Android can be downloaded at Google Play Stores OR WITH LINK However many users have complained about the quality of the App .
RTGS WILL BE AVAILABLE 24 X 7 FROM MONDAY
Dated 12.12.2020 : National Electronic Fund Transfer ( NEFT ) was made available round the clock , 7 days a week from 15th , December 2019 . Real Time Gross Settlement ( RTGS ) will also be available round the clock from early morning 3.30 am of the Monday 14th, December 2020 . The large-value RTGS system is currently available for customers from 7.00 am to 6.00 pm on all working days of a week (except 2nd and 4th Saturdays of the month). Funds transfers above Rs 2,00,000 can be made using RTGS facility .
RTGS thus will be available every day from early morning 00.30 hrs ( Start of the Day ) to 11.50 pm in the night ( End of the Day ) . However RTGS will not be available for customer and inter-bank transactions during the interval between ‘end-of-day’ and ‘start-of-day’ processes, whose timings would be duly broadcasted through the RTGS system.
RBI is undertaking the above facility to support the ongoing efforts aimed at global integration of Indian financial markets, facilitate India’s efforts to develop international financial centers and to provide wider payment flexibility to domestic corporates and institutions .
To read complete regulation of RTGS as amended now , CLICK HERE
Dated 12.12.2020 : National Electronic Fund Transfer ( NEFT ) was made available round the clock , 7 days a week from 15th , December 2019 . Real Time Gross Settlement ( RTGS ) will also be available round the clock from early morning 3.30 am of the Monday 14th, December 2020 . The large-value RTGS system is currently available for customers from 7.00 am to 6.00 pm on all working days of a week (except 2nd and 4th Saturdays of the month). Funds transfers above Rs 2,00,000 can be made using RTGS facility .
RTGS thus will be available every day from early morning 00.30 hrs ( Start of the Day ) to 11.50 pm in the night ( End of the Day ) . However RTGS will not be available for customer and inter-bank transactions during the interval between ‘end-of-day’ and ‘start-of-day’ processes, whose timings would be duly broadcasted through the RTGS system.
RBI is undertaking the above facility to support the ongoing efforts aimed at global integration of Indian financial markets, facilitate India’s efforts to develop international financial centers and to provide wider payment flexibility to domestic corporates and institutions .
To read complete regulation of RTGS as amended now , CLICK HERE
LIMIT FOR CONTACTLESS PAYMENT ON CARDS TO BE ENHANCED
Dated 04.12.2020 : Presently you can make payment up to Rs 2,000 in contactless mode on the cards ( Debit / Credit cards ) . Now Reserve Bank of India is proposing to increase the limit to Rs 5,000 from 01st, January 2021 . In the contactless mode , you can make payment without swiping your card , but by just waving at the POS machine . You need not enter the PIN also and hence you need not touch the POS machine which makes transaction safer in the times of spread of pandemic corona .
However the discretion to use the enhanced limit lies with you and you may not avail the facility also . Further you have to be careful not to take your card to nearby POS machine when you have not done any transaction , especially if the merchant has mobile POS machine .
To read the policy statement dated 04.12.2020 of RBI , CLICK HERE
Dated 04.12.2020 : Presently you can make payment up to Rs 2,000 in contactless mode on the cards ( Debit / Credit cards ) . Now Reserve Bank of India is proposing to increase the limit to Rs 5,000 from 01st, January 2021 . In the contactless mode , you can make payment without swiping your card , but by just waving at the POS machine . You need not enter the PIN also and hence you need not touch the POS machine which makes transaction safer in the times of spread of pandemic corona .
However the discretion to use the enhanced limit lies with you and you may not avail the facility also . Further you have to be careful not to take your card to nearby POS machine when you have not done any transaction , especially if the merchant has mobile POS machine .
To read the policy statement dated 04.12.2020 of RBI , CLICK HERE
LVB CUSTOMERS CAN CONTINUE TO BANK WITH THE SAME BENEFITS AS EARLIER :
Dated 01.12.2020 : After taking over the assets , liabilities and management of Lakshmi Vilas Bank , DBS has announced that the customers of LVB can continue to avail banking services as earlier and can resume banking through the Lakshmi Vilas branches and ATM network as usual . The announcement further says
"
1. Existing fixed deposit/s with erstwhile LVB will continue at the interest rates, at which they were originally booked, till the next maturity date
2. The interest rates on savings bank accounts will be governed by the rates offered by erstwhile LVB till further notice .
3. Any new deposits being booked now, will be at rates which were earlier published by erstwhile LVB, till new rate cards are announced. "
DBS Bank will be now working to integrate LVB’s systems and network into DBS over the coming months. During this period, customers of LVB will be able to access all the banking services of erstwhile LVB. Once this is completed, Customers will be able to access a wider range of products and services, including access to the full suite of DBS digital banking services .
To read announcement of LVB / DBS Bank , CLICK HERE
Dated 01.12.2020 : After taking over the assets , liabilities and management of Lakshmi Vilas Bank , DBS has announced that the customers of LVB can continue to avail banking services as earlier and can resume banking through the Lakshmi Vilas branches and ATM network as usual . The announcement further says
"
1. Existing fixed deposit/s with erstwhile LVB will continue at the interest rates, at which they were originally booked, till the next maturity date
2. The interest rates on savings bank accounts will be governed by the rates offered by erstwhile LVB till further notice .
3. Any new deposits being booked now, will be at rates which were earlier published by erstwhile LVB, till new rate cards are announced. "
DBS Bank will be now working to integrate LVB’s systems and network into DBS over the coming months. During this period, customers of LVB will be able to access all the banking services of erstwhile LVB. Once this is completed, Customers will be able to access a wider range of products and services, including access to the full suite of DBS digital banking services .
To read announcement of LVB / DBS Bank , CLICK HERE
PSBS NOT TO REVISE CHARGES IN NEAR FUTURE : FINANCE MINISTRY
Dated 04.11.2020 : Leading Public sector bank Bank of Baroda had revised their services charges recently , especially in cash handling services and there was a public outcry against it . Further News paper reports had suggested that other public sector banks might follow suit . However Finance Ministry has clarified that no public sector bank is going to revise service charges in near future .
Bank of Baroda , the only PSB that had revised the charges , has since taken back the revision that was effective from 01st, November 2020 .
Finance Ministry has also clarified that No service charge is applicable on the 60.04 crore BSBD accounts, including 41.13 crore Jan Dhan accounts opened by the poor and unbanked segments of society, for the free services prescribed by RBI.
To read Finance Ministry's Press Release , CLICK HERE
Dated 04.11.2020 : Leading Public sector bank Bank of Baroda had revised their services charges recently , especially in cash handling services and there was a public outcry against it . Further News paper reports had suggested that other public sector banks might follow suit . However Finance Ministry has clarified that no public sector bank is going to revise service charges in near future .
Bank of Baroda , the only PSB that had revised the charges , has since taken back the revision that was effective from 01st, November 2020 .
Finance Ministry has also clarified that No service charge is applicable on the 60.04 crore BSBD accounts, including 41.13 crore Jan Dhan accounts opened by the poor and unbanked segments of society, for the free services prescribed by RBI.
To read Finance Ministry's Press Release , CLICK HERE
SBI INTRODUCES OTP BASED CASH WITHDRAWALS
Attn SBI customers :
Dated 17.09.2020 : Tomorrow onward you have to carry your mobile to State Bank of India's ATM machine if you want to draw cash of Rs 10,000 or above through your SBI Debit card .
Hence you should have registered your Mobile number with State Bank of India for the particular SB account for which debit card has been issued . You will receive OTP as soon as you attempt to draw cash of Rs 10,000 or above from any SBI ATM machine . Only after successful entry of OTP , cash will be dispensed from the machine .
It is first time in India any bank has introduced such a system .
Attn SBI customers :
Dated 17.09.2020 : Tomorrow onward you have to carry your mobile to State Bank of India's ATM machine if you want to draw cash of Rs 10,000 or above through your SBI Debit card .
Hence you should have registered your Mobile number with State Bank of India for the particular SB account for which debit card has been issued . You will receive OTP as soon as you attempt to draw cash of Rs 10,000 or above from any SBI ATM machine . Only after successful entry of OTP , cash will be dispensed from the machine .
It is first time in India any bank has introduced such a system .
BANKS CAN ACCESS YOUR IT RETURNS FILING STATUS NOW
Dated 04.09.2020 : If you have not submitted your IT returns for the last three years and if you withdraw cash from a bank , post office or co-operative society , following TDS ( Tax deducted at source ) will be collected from you under section 194N of Income Tax Act :
1. If you withdraw more than Rs 2 lakhs and up to Rs 1 crore in a year , 2 % of cash drawn will be collected as TDS
2. If the cash drawn exceeds Rs 1 crore in a year , 5 % of cash drawn will be collected as TDS
If IT Returns have been submitted , a lower rate of 2 % will be collected only if the cash withdrawal amount exceeds Rs 1 crore in the year .
The amount so collected can be claimed by you as Advance tax paid while submitting the returns .
BANKERS CAN CHECK ITR FILING STATUS NOW :
In order to help banks with the information of the customers with regard to status of filing of IT Returns , The Income Tax Department has now released a new functionality “ITR Filing Compliance Check” which will be available to Scheduled Commercial Banks (SCBs) to check the IT Return filing status of PANs in bulk mode. The Principal Director General of Income-tax (Systems) has notified the procedure and format for providing notified information to the Scheduled Commercial Banks.
For detailed guidelines to bankers how to access the information , CLICK HERE
1. If you withdraw more than Rs 2 lakhs and up to Rs 1 crore in a year , 2 % of cash drawn will be collected as TDS
2. If the cash drawn exceeds Rs 1 crore in a year , 5 % of cash drawn will be collected as TDS
If IT Returns have been submitted , a lower rate of 2 % will be collected only if the cash withdrawal amount exceeds Rs 1 crore in the year .
The amount so collected can be claimed by you as Advance tax paid while submitting the returns .
BANKERS CAN CHECK ITR FILING STATUS NOW :
In order to help banks with the information of the customers with regard to status of filing of IT Returns , The Income Tax Department has now released a new functionality “ITR Filing Compliance Check” which will be available to Scheduled Commercial Banks (SCBs) to check the IT Return filing status of PANs in bulk mode. The Principal Director General of Income-tax (Systems) has notified the procedure and format for providing notified information to the Scheduled Commercial Banks.
For detailed guidelines to bankers how to access the information , CLICK HERE
NOW ELECTRONIC CARDS FOR OVERDRAFT / CASH CREDIT ACCOUNTS
Dated 24.04.2020 : Reserve Bank of India ( RBI ) has now permitted all banks to issue Electronic Cards for individuals having overdraft / cash credit facilities . The cards can be issued to persons having overdraft facilities in the nature of personal loans and without any end use restrictions . The cards are to be co-terminated with lapse of the limit . The cards can be used only for on-line / non-cash transactions . . The cards cannot be used for international transactions .
The restriction on cash transaction will not apply to overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
For RBI Notification dated 23.04.2020 , CLICK HERE
Dated 24.04.2020 : Reserve Bank of India ( RBI ) has now permitted all banks to issue Electronic Cards for individuals having overdraft / cash credit facilities . The cards can be issued to persons having overdraft facilities in the nature of personal loans and without any end use restrictions . The cards are to be co-terminated with lapse of the limit . The cards can be used only for on-line / non-cash transactions . . The cards cannot be used for international transactions .
The restriction on cash transaction will not apply to overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
For RBI Notification dated 23.04.2020 , CLICK HERE
BANKING DURING THE LOCK -DOWN PERIOD
Dated 25.03.2020 : Prime Minister Shri Narendra Modi announced yesterday night total lock down of India for next 21 days . He requested all Indians to follow the government orders issued time to time from concerned authorities to save India from spread of the pandemic Covid -19 . As per subsequent guidelines issued by Ministry of Home Affairs ( MHA ) , the banking services are allowed to operate during the lock down period of 21 days staring from today :.
However inn light of World health Organization ( WHO ) declaring Coronavirus disease ( COVID-19 ) as pandemic ,banks have been asked by RBI to encourage their customers to use digital banking facilities as far as possible . Further Indian Banks' Association has announced the availability of following services only in the bank branches
1. Cash Deposits & withdrawals
2. Clearing of cheques
3. Remittances
4. Government transactions
In order to protect their staff and customers , many banks have taken various steps like providing masks and sanitizers , reducing the number of staff working simultaneously at the branch level and work from home for the administrative staff etc and also curtailed the banking hours . In view of non-availability of public transport and requirement of social distancing , it will be difficult for the customers also to visit the branch and complete the trasactiuons . As banks and RBI have also appealed to the customers to utilse Digital banking facilities available , it will be better for customers to avoid visit of bank branches as far as possible . Customers may uitilize on-line services and Mobile APPS and save themselves from personal visits and safeguard themselves .
We have therefore a page exclusively listing all the major banks in India with links to their websites . Our readers may utilize the facility by CLICKING HERE . They can go to the websites of the banks where they maintain account , register for internet banking if they have not already done . Most of the transactions they can do on-line now and save themselves and others from spreading the virus
Dated 25.03.2020 : Prime Minister Shri Narendra Modi announced yesterday night total lock down of India for next 21 days . He requested all Indians to follow the government orders issued time to time from concerned authorities to save India from spread of the pandemic Covid -19 . As per subsequent guidelines issued by Ministry of Home Affairs ( MHA ) , the banking services are allowed to operate during the lock down period of 21 days staring from today :.
However inn light of World health Organization ( WHO ) declaring Coronavirus disease ( COVID-19 ) as pandemic ,banks have been asked by RBI to encourage their customers to use digital banking facilities as far as possible . Further Indian Banks' Association has announced the availability of following services only in the bank branches
1. Cash Deposits & withdrawals
2. Clearing of cheques
3. Remittances
4. Government transactions
In order to protect their staff and customers , many banks have taken various steps like providing masks and sanitizers , reducing the number of staff working simultaneously at the branch level and work from home for the administrative staff etc and also curtailed the banking hours . In view of non-availability of public transport and requirement of social distancing , it will be difficult for the customers also to visit the branch and complete the trasactiuons . As banks and RBI have also appealed to the customers to utilse Digital banking facilities available , it will be better for customers to avoid visit of bank branches as far as possible . Customers may uitilize on-line services and Mobile APPS and save themselves from personal visits and safeguard themselves .
We have therefore a page exclusively listing all the major banks in India with links to their websites . Our readers may utilize the facility by CLICKING HERE . They can go to the websites of the banks where they maintain account , register for internet banking if they have not already done . Most of the transactions they can do on-line now and save themselves and others from spreading the virus
New Updated Article
TAX PLANNING FOR FY 2020-21 ( AY 2021-22 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
CLICK HERE TO READ
TAX PLANNING FOR FY 2020-21 ( AY 2021-22 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
CLICK HERE TO READ
COVID 19 AND DIGITAL BANKING
Dated 20.03.2020 : In light of World health Organization ( WHO ) declaring Coronavirus disease ( COVID-19 ) as pandemic ,banks have been asked by RBI to encourage their customers to use digital banking facilities as far as possible . In order to protect their staff and customers , many banks have taken various steps like providing masks and sanitizers , reducing the number of staff working simultaneously at the branch level and work from home for the administrative staff etc . They have also appealed to the customers to utilse Digital banking facilities available and to avoid visit of bank branches as far as possible . Social distancing has become one of the important tools to fight the spread of virus . .
We have a page exclusively listing all the major banks in India with links to their websites . Our readers may utilize the facility by
CLICKING HERE . They can go to the websites of the banks where they maintain account , register for internet banking if they have not already done . Most of the transactions they can do on-line now and save themselves and others from spreading the virus .
Dated 20.03.2020 : In light of World health Organization ( WHO ) declaring Coronavirus disease ( COVID-19 ) as pandemic ,banks have been asked by RBI to encourage their customers to use digital banking facilities as far as possible . In order to protect their staff and customers , many banks have taken various steps like providing masks and sanitizers , reducing the number of staff working simultaneously at the branch level and work from home for the administrative staff etc . They have also appealed to the customers to utilse Digital banking facilities available and to avoid visit of bank branches as far as possible . Social distancing has become one of the important tools to fight the spread of virus . .
We have a page exclusively listing all the major banks in India with links to their websites . Our readers may utilize the facility by
CLICKING HERE . They can go to the websites of the banks where they maintain account , register for internet banking if they have not already done . Most of the transactions they can do on-line now and save themselves and others from spreading the virus .
NO MINIMUM BALANCE CHARGES FOR SB ACCOUNTS : SBI
Dated 12.03.2020 : Leading Public sector bank State Bank of India ( SBI ) announced waiver of Minimum Balance Charges for all savings bank accounts held with them effective from January 1, 2020 . All customers of SBI will now enjoy zero balance facility .
Currently Savings Bank customers of SBI need to maintain Average Monthly Balance of Rs 3000, Rs 2000 and Rs 1000 in Metro, Semi Urban and Rural areas respectively. Bank used to levy a penalty of Rs 5 to Rs 15 + taxes on non-maintenance of AMB.
Further the bank has also waived SMS charges being levied by them for communicating account transactions on the mobiles of the customers .
Dated 12.03.2020 : Leading Public sector bank State Bank of India ( SBI ) announced waiver of Minimum Balance Charges for all savings bank accounts held with them effective from January 1, 2020 . All customers of SBI will now enjoy zero balance facility .
Currently Savings Bank customers of SBI need to maintain Average Monthly Balance of Rs 3000, Rs 2000 and Rs 1000 in Metro, Semi Urban and Rural areas respectively. Bank used to levy a penalty of Rs 5 to Rs 15 + taxes on non-maintenance of AMB.
Further the bank has also waived SMS charges being levied by them for communicating account transactions on the mobiles of the customers .
YOUR CARDS WILL BE DISABLED IF YOU HAVE NOT USED THEM ON-LINE SO FAR
Dated 16.01.2020 : Reserve Bank of India ( RBI ) has asked all banks and card issuers to disable all the cards issued by them which are never used for on-line transactions by March 16,2020 . However the facility to use the cards in ATMs and Point of Sales ( POS ) Devices will continue . The card issuers are also asked to review all other existing cards issued and decide whether to continue the facilities in the cards based on risk perception .
RBI has asked all card issuers to issue the new cards ( Fresh / RRe-issue ) enabling only ATM transactions and
POS transactions . However the cards issuers should give a facility to the customers to enable on-line transactions if they desire .
Additionally, the issuers shall provide to all cardholders the facilities to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions – domestic and international, at PoS / ATMs / online transactions / contactless transactions, etc. The facility should be available on a 24x7 basis through multiple channels - mobile application / internet banking / ATMs / Interactive Voice Response (IVR) . Banks
should maje the facility available at all branches / offices . Banks should send alerts / information / status, etc., through SMS / e-mail, as and when there is any change in status of the card.
For RBI Notification , CLICK HERE
Dated 16.01.2020 : Reserve Bank of India ( RBI ) has asked all banks and card issuers to disable all the cards issued by them which are never used for on-line transactions by March 16,2020 . However the facility to use the cards in ATMs and Point of Sales ( POS ) Devices will continue . The card issuers are also asked to review all other existing cards issued and decide whether to continue the facilities in the cards based on risk perception .
RBI has asked all card issuers to issue the new cards ( Fresh / RRe-issue ) enabling only ATM transactions and
POS transactions . However the cards issuers should give a facility to the customers to enable on-line transactions if they desire .
Additionally, the issuers shall provide to all cardholders the facilities to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions – domestic and international, at PoS / ATMs / online transactions / contactless transactions, etc. The facility should be available on a 24x7 basis through multiple channels - mobile application / internet banking / ATMs / Interactive Voice Response (IVR) . Banks
should maje the facility available at all branches / offices . Banks should send alerts / information / status, etc., through SMS / e-mail, as and when there is any change in status of the card.
For RBI Notification , CLICK HERE
BANKERS TO DO VIDEO IDENTIFICATION AND TAKE LIVE PICTURE OF CUSTOMER FOR E-KYC PURPOSE : RBI
DATED 10.01.2020 : Reserve Bank of India has amended Master Direction for KYC , vide their notification dated 09.01.2020 and advised bankers to obtain live pictures of customers for completing the E-KYC process . The notification has identified Digital KYC process as " capturing live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the bank "
Further bankers can do video based customer identification process ( V-CIP ) for KYC verification . However all accounts opened through V-CIP shall be made operational only after being subject to concurrent audit, to ensure the integrity of process.
Bankers have to ensure that the process is a seamless, real-time, secured, end-to-end encrypted audiovisual interaction with the customer and the quality of the communication is adequate to allow identification of the customer beyond doubt. Bankers shall carry out the liveliness check in order to guard against spoofing and such other fraudulent manipulations. Banks can use either OTP based Aadhaar e-KYC authentication or Offline Verification of Aadhaar for identification. Further, services of Business Correspondents (BCs) may be used by banks for aiding the V-CIP.
Bankers shall ensure that photograph of the customer in the Aadhaar/PAN details matches with the customer undertaking the V-CIP and the identification details in Aadhaar/PAN shall match with the details provided by the customer.
As per the notification , customers have to furnish copy of any of the OVD document containing address and identity proofs along with recent photograph .
“Officially Valid Document” (OVD) will mean
a. the Aadhaar number where he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016); or he decides to submit his Aadhaar number voluntarily to a banking company or any reporting entity notified under first proviso to sub-section (1) of section 11A of the PML Act; or
b. the proof of possession of Aadhaar number where offline verification can be carried out; or
c. the proof of possession of Aadhaar number where offline verification cannot be carried out or
d. any Officially Valid Document (OVD) or the equivalent e-document thereof containing the details of his identity and address; and
such other documents including in respect of the nature of business and financial status of the client, or the equivalent e-documents thereof as may be required by the banker.
1. Passport,
2. Driving licence
3.Proof of possession of Aadhaar number
4. Voter's Identity Card issued by the Election Commission of India
5. Job card issued by NREGA duly signed by an officer of the State Government and letter issued by the
National Population Register containing details of name and address.
Provided that,
a. where the customer submits his proof of possession of Aadhaar number as an OVD, he may submit it in such form as are issued by the Unique Identification Authority of India.
b. where the OVD furnished by the customer does not have updated address, the following documents shall be deemed to be OVDs for the limited purpose of proof of address:-
i. utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
ii. property or Municipal tax receipt;
iii. pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector
Undertakings, if they contain the address;
iv. letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation;
f. the Permanent Account Number or the equivalent e-document thereof or Form No. 60 as defined in Income-tax Rules, 1962
.Where a customer has provided his Aadhaar number as above for identification and wants to provide a current address, different from the address as per the identity information available in the Central Identities Data Repository, he may give a self-declaration to that effect to the Banker .
Where customer has provided PAN card , Banker shall capture a clear image of PAN card to be displayed by the customer during the process, except in cases where e-PAN is provided by the customer. The PAN details shall be verified from the database of the issuing authority
As the notification contains various amendments to the KYC process , one may know all the amendments carried out by RBI through Notification dated 09.01.2020 , by CLICKNIG HERE
DATED 10.01.2020 : Reserve Bank of India has amended Master Direction for KYC , vide their notification dated 09.01.2020 and advised bankers to obtain live pictures of customers for completing the E-KYC process . The notification has identified Digital KYC process as " capturing live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the bank "
Further bankers can do video based customer identification process ( V-CIP ) for KYC verification . However all accounts opened through V-CIP shall be made operational only after being subject to concurrent audit, to ensure the integrity of process.
Bankers have to ensure that the process is a seamless, real-time, secured, end-to-end encrypted audiovisual interaction with the customer and the quality of the communication is adequate to allow identification of the customer beyond doubt. Bankers shall carry out the liveliness check in order to guard against spoofing and such other fraudulent manipulations. Banks can use either OTP based Aadhaar e-KYC authentication or Offline Verification of Aadhaar for identification. Further, services of Business Correspondents (BCs) may be used by banks for aiding the V-CIP.
Bankers shall ensure that photograph of the customer in the Aadhaar/PAN details matches with the customer undertaking the V-CIP and the identification details in Aadhaar/PAN shall match with the details provided by the customer.
As per the notification , customers have to furnish copy of any of the OVD document containing address and identity proofs along with recent photograph .
“Officially Valid Document” (OVD) will mean
a. the Aadhaar number where he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016); or he decides to submit his Aadhaar number voluntarily to a banking company or any reporting entity notified under first proviso to sub-section (1) of section 11A of the PML Act; or
b. the proof of possession of Aadhaar number where offline verification can be carried out; or
c. the proof of possession of Aadhaar number where offline verification cannot be carried out or
d. any Officially Valid Document (OVD) or the equivalent e-document thereof containing the details of his identity and address; and
such other documents including in respect of the nature of business and financial status of the client, or the equivalent e-documents thereof as may be required by the banker.
1. Passport,
2. Driving licence
3.Proof of possession of Aadhaar number
4. Voter's Identity Card issued by the Election Commission of India
5. Job card issued by NREGA duly signed by an officer of the State Government and letter issued by the
National Population Register containing details of name and address.
Provided that,
a. where the customer submits his proof of possession of Aadhaar number as an OVD, he may submit it in such form as are issued by the Unique Identification Authority of India.
b. where the OVD furnished by the customer does not have updated address, the following documents shall be deemed to be OVDs for the limited purpose of proof of address:-
i. utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
ii. property or Municipal tax receipt;
iii. pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector
Undertakings, if they contain the address;
iv. letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation;
f. the Permanent Account Number or the equivalent e-document thereof or Form No. 60 as defined in Income-tax Rules, 1962
.Where a customer has provided his Aadhaar number as above for identification and wants to provide a current address, different from the address as per the identity information available in the Central Identities Data Repository, he may give a self-declaration to that effect to the Banker .
Where customer has provided PAN card , Banker shall capture a clear image of PAN card to be displayed by the customer during the process, except in cases where e-PAN is provided by the customer. The PAN details shall be verified from the database of the issuing authority
As the notification contains various amendments to the KYC process , one may know all the amendments carried out by RBI through Notification dated 09.01.2020 , by CLICKNIG HERE
- BANKS CAN NOW ACCEPT CURRENT ADDRESS OTHER THAN IN AADHAAR
- Dated 14.11.2019 : As per Gazette notification dated 13.11.2019 , new current address , other than recorded in the Aadhaar card may be provided to authorities by way of self declaration .
- People who migrate to new places on taking up jobs were finding it difficult to open banking accounts as their address in Aadhaar card would be of their permanent residence in their native place and the current address will not match that in Aadhaar card . The rule change will help such persons to open bank accounts in their new places of work by providing current address by self declaration and banks can record current address and communication can be done to the current address .
The changes in rules have been made by amending the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 .
For Gazette Notification dated 13.11.2019 , CLICK HERE
NEW RULES FOR BASIC SAVINGS BANK DEPOSIT ACCOUNTS ( BSBD )
DATED 11.06 .2019 : Reserve Bank of India has issued new guidelines to banks on 10.06.2019 with regard to opening of Basic Savings Bank Deposit Accounts ( BSBD ) . As per the new notification , banks have to offer following free services without requirement of any minimum balances for their BSBD account holders .
1. The deposit of cash at bank branch as well as ATMs/CDMs
2.Receipt/ credit of money through any electronic channel or by means of deposit /collection of cheques drawn by Central/State Government agencies and departments
3. No limit on number and value of deposits that can be made in a month
4.Minimum of four withdrawals in a month, including ATM withdrawals
5. ATM Card or ATM-cum-Debit Card
Further banks have to make the BSBD account service available to all . However banks may charge service fee if any additional service , like issue of cheque book , is provided to the BSBD a/c holders at their request .
The holders of BSBD Account will not be eligible for opening any other savings bank deposit account in that bank. If a customer has any other existing savings bank deposit account in that bank, he/she will be required to close it within 30 days from the date of opening a BSBD Account. Further, before opening a BSBD account, a bank should take a declaration from the customer that he/she is not having a BSBD account in any other bank.
For RBI Notification dated 10.06.2019 , CLICK HERE
DATED 11.06 .2019 : Reserve Bank of India has issued new guidelines to banks on 10.06.2019 with regard to opening of Basic Savings Bank Deposit Accounts ( BSBD ) . As per the new notification , banks have to offer following free services without requirement of any minimum balances for their BSBD account holders .
1. The deposit of cash at bank branch as well as ATMs/CDMs
2.Receipt/ credit of money through any electronic channel or by means of deposit /collection of cheques drawn by Central/State Government agencies and departments
3. No limit on number and value of deposits that can be made in a month
4.Minimum of four withdrawals in a month, including ATM withdrawals
5. ATM Card or ATM-cum-Debit Card
Further banks have to make the BSBD account service available to all . However banks may charge service fee if any additional service , like issue of cheque book , is provided to the BSBD a/c holders at their request .
The holders of BSBD Account will not be eligible for opening any other savings bank deposit account in that bank. If a customer has any other existing savings bank deposit account in that bank, he/she will be required to close it within 30 days from the date of opening a BSBD Account. Further, before opening a BSBD account, a bank should take a declaration from the customer that he/she is not having a BSBD account in any other bank.
For RBI Notification dated 10.06.2019 , CLICK HERE
AADHAAR IS NO LONGER MANDATORY FOR OPENING BANK ACCOUNTS AS PER SUPREME COURT VERDICT : REPERCUSSIONS
DATED 27.09.2018 : Reserve Bank of India had Aadhaar mandatory for opening accounts with banks and also conducting any transactions with banks for more than Rs 50,000. as per the amended master direction issued by them on 20.04.2018 . The direction issued was subject to final outcome of the pending cases in the supreme court with regard to validity of Aadhaar and instructions issued by Central Government / Reserve Bank of India . ( For RBI Master Direction on KYC updated on 20.04.2018 , CLICK HERE ) .
Now Supreme Court has given the verdict that it is not mandatory to obtain Aadhaar card for opening bank accounts , as the instructions given by the government are not backed by any law . Hence master circular will need amendment now . As a result of court decision , linking of Aadhaar to bank accounts will also not be compulsory . However customers may furnish Aadhaar as an identity proof / address proof like any other OVD ( Official Valid Document ) . OVD includes Passport , Driving licence , Voter's ID , Job card issued by NREGA and letter issued by National Population Registry .
Some of the questions that arise after the verdict are
1. What will be the fate of the accounts that are already linked ?
2. Whether customers , who are not DBT beneficiaries can demand un-linking ?
3. As supreme court says linking was not mandated by law as a reason for striking it down , whether government will enact another law making aadhaar linking mandatory ?
So far , we are yet to hear the government plans in response to court verdict .
We hope Reserve Bank of India will issue fresh guidelines / master guidelines clarifying various issues involved as a result of supreme court verdict and it will be made clear for both banker sand customers for easy transactions.
DATED 27.09.2018 : Reserve Bank of India had Aadhaar mandatory for opening accounts with banks and also conducting any transactions with banks for more than Rs 50,000. as per the amended master direction issued by them on 20.04.2018 . The direction issued was subject to final outcome of the pending cases in the supreme court with regard to validity of Aadhaar and instructions issued by Central Government / Reserve Bank of India . ( For RBI Master Direction on KYC updated on 20.04.2018 , CLICK HERE ) .
Now Supreme Court has given the verdict that it is not mandatory to obtain Aadhaar card for opening bank accounts , as the instructions given by the government are not backed by any law . Hence master circular will need amendment now . As a result of court decision , linking of Aadhaar to bank accounts will also not be compulsory . However customers may furnish Aadhaar as an identity proof / address proof like any other OVD ( Official Valid Document ) . OVD includes Passport , Driving licence , Voter's ID , Job card issued by NREGA and letter issued by National Population Registry .
Some of the questions that arise after the verdict are
1. What will be the fate of the accounts that are already linked ?
2. Whether customers , who are not DBT beneficiaries can demand un-linking ?
3. As supreme court says linking was not mandated by law as a reason for striking it down , whether government will enact another law making aadhaar linking mandatory ?
So far , we are yet to hear the government plans in response to court verdict .
We hope Reserve Bank of India will issue fresh guidelines / master guidelines clarifying various issues involved as a result of supreme court verdict and it will be made clear for both banker sand customers for easy transactions.
NEW BLOG ARTICLE ON
HEALTH INSURANCE OPTIONS FOR RETIRED BANKERS
The article explores the alternative avenues for existing health insurance group policy for Retired Bankers
TO READ THE ARTICLE CLICK HERE
HEALTH INSURANCE OPTIONS FOR RETIRED BANKERS
The article explores the alternative avenues for existing health insurance group policy for Retired Bankers
TO READ THE ARTICLE CLICK HERE
BIO-METRIC VERIFICATION RELAXED FOR OLD AGED AND INJURED FOR OPENING BANK ACCOUNTS
21.05.2018 : Finance Ministry , Government of India , through a gazette notification on 16.05.2018 , relaxed rules for bio-metric verification of the identity for opening bank accounts in case the persons are unable to offer bio metric verification due to injury , illness or infirmity due to old age or otherwise . In such cases banks will not be able to verify the identity on the basis of aadhaar card they hold . Such persons can now provide alternate proofs of identity to open bank accounts and to continue banking operations without difficulty .
For Gazette Notification , CLICK HERE
AADHAR IS MANDATORY FOR OPENING BANK ACCOUNTS AS PER NEW KYC GUIDELINES OF RBI
DATED 22.04.2018 : Reserve Bank of India made Aadhar mandatory for opening accounts with banks and also conducting any transactions with banks for more than Rs 50,000. as per the amended master direction issued on 20.04.2018 .
The requirement will not apply to Non- Residents , Residents of Assam , Meghalaya and Jammu & Kashmir . Along with Aadhaar number , one has to furnish PAN number or Form 60 . They have to submit çertified copy of Official Valid Document ( OVD ) containing details of identity and address along with their recent photograph . OVD includes Passport , Driving licence , Voter's ID , Job card issued by NREGA and letter issued by National Population Registry .
Banks to accept any of the following documents in cases where valid documents do not contain updated addresses for the limited purpose of address proof :
(a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
(b) property or Municipal tax receipt;
(c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;
(d) letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation; Provided further that the client shall submit updated officially valid document with current address within a period of three months of submitting the above documents.”.
At the time of receipt of Aadhaar card , banks will complete e-KYC authentication either using biometrics or OTP . If you do not hold Aadhar card , you have to at least submit proof of enrollment of Aadhar for opening the bank accounts and submit the Aadhar number within six months .
Small accounts can be opened without Aadhar / PAN with bank branches having core banking only and such small account holders have to furnish their Aadhar numbers within 24 months . However such accounts will be monitored very closely by the authorities against any suspicious overseas money transfers . Small accounts are the Savings Bank accounts with less than a turn over of Rs 1.00 lakh in a year , less than withdrawals and transfers Rs 10,000 per month and balance not exceeding Rs 50,000 at any time . For corporate accounts , authorised signatories of the accounts have to produce their Aadhar numbers .
The instructions issued by RBI are subject to final decision to be given by supreme court on the matter of Aadhaar
For RBI Master Direction on KYC updated on 20.04.2018 , CLICK HERE
DATED 22.04.2018 : Reserve Bank of India made Aadhar mandatory for opening accounts with banks and also conducting any transactions with banks for more than Rs 50,000. as per the amended master direction issued on 20.04.2018 .
The requirement will not apply to Non- Residents , Residents of Assam , Meghalaya and Jammu & Kashmir . Along with Aadhaar number , one has to furnish PAN number or Form 60 . They have to submit çertified copy of Official Valid Document ( OVD ) containing details of identity and address along with their recent photograph . OVD includes Passport , Driving licence , Voter's ID , Job card issued by NREGA and letter issued by National Population Registry .
Banks to accept any of the following documents in cases where valid documents do not contain updated addresses for the limited purpose of address proof :
(a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
(b) property or Municipal tax receipt;
(c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;
(d) letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation; Provided further that the client shall submit updated officially valid document with current address within a period of three months of submitting the above documents.”.
At the time of receipt of Aadhaar card , banks will complete e-KYC authentication either using biometrics or OTP . If you do not hold Aadhar card , you have to at least submit proof of enrollment of Aadhar for opening the bank accounts and submit the Aadhar number within six months .
Small accounts can be opened without Aadhar / PAN with bank branches having core banking only and such small account holders have to furnish their Aadhar numbers within 24 months . However such accounts will be monitored very closely by the authorities against any suspicious overseas money transfers . Small accounts are the Savings Bank accounts with less than a turn over of Rs 1.00 lakh in a year , less than withdrawals and transfers Rs 10,000 per month and balance not exceeding Rs 50,000 at any time . For corporate accounts , authorised signatories of the accounts have to produce their Aadhar numbers .
The instructions issued by RBI are subject to final decision to be given by supreme court on the matter of Aadhaar
For RBI Master Direction on KYC updated on 20.04.2018 , CLICK HERE
BANKS TO VERIFY COPIES OF DOCUMENTS PRESENTED WITH ORIGINALS
Dated 23.10.2017 : Government has instructed banks and other financial institutions , through a Gazette notification , to verify copies of documents produced with originals and to record the same on the copy by the authorised officers . Hence customers , for the purpose of identity proof and address proof , have to produce original documents to the bankers and financial institutions along with copies of the documents . Bankers may return the originals after making note on the copies of the verification done .
Further Gazette notification permits banks to accept any of the following documents in cases where valid documents do not contain updated addresses for the limited purpose of address proof :
(a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
(b) property or Municipal tax receipt;
(c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;
(d) letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation; Provided further that the client shall submit updated officially valid document with current address within a period of three months of submitting the above documents.”.
For the relevant gazette notification . CLICK HERE
.
Dated 23.10.2017 : Government has instructed banks and other financial institutions , through a Gazette notification , to verify copies of documents produced with originals and to record the same on the copy by the authorised officers . Hence customers , for the purpose of identity proof and address proof , have to produce original documents to the bankers and financial institutions along with copies of the documents . Bankers may return the originals after making note on the copies of the verification done .
Further Gazette notification permits banks to accept any of the following documents in cases where valid documents do not contain updated addresses for the limited purpose of address proof :
(a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
(b) property or Municipal tax receipt;
(c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;
(d) letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation; Provided further that the client shall submit updated officially valid document with current address within a period of three months of submitting the above documents.”.
For the relevant gazette notification . CLICK HERE
.
AADHAR IS MANDATORY FOR OPENING BANK ACCOUNTS AND TRANSACTIONS ABOVE RS 50,000
DATED 17.06.2017 : Government of India made Aadhar mandatory for opening accounts with banks and also conducting any transactions with banks for more than Rs 50,000. Those who have already bank accounts have to link them with their Aadhar numbers before 31st , Dec , 2017 , failing which accounts will become invalid .
If you do not hold Aadhar card , you have to at least submit proof of enrollment of Aadhar for opening the bank accounts and submit the Aadhar number within six months . Small accounts can be opened without Aadhar with bank branches having core banking only and such small account holders have to furnish their Aadhar numbers within 24 months . However such accounts will be monitored very closely by the authorities against any suspicious overseas money transfers . Small accounts are the Savings Bank accounts with less than a turn over of Rs 1.00 lakh in a year , less than withdrawals and transfers Rs 10,000 per month and balance not exceeding Rs 50,000 at any time . For corporate accounts , authorised signatories of the accounts have to produce their Aadhar numbers .
These rules are made effective through an amendment to The Prevention of Money Laundering ( Maintenance of Records ) Rules of 2005 .
NOTE :
1. Reports do not indicate effects of these amendments to opening and operation of Non Resident accounts in Banks
2. While PAN Number or Form 60 was necessary for conducting transactions above Rs 50, 000 earlier , now Aadhar is required in lieu .
3. With linking of Aadhar , PAN and Bank accounts , it will be easy to monitor high value financial transactions for the government .
DATED 17.06.2017 : Government of India made Aadhar mandatory for opening accounts with banks and also conducting any transactions with banks for more than Rs 50,000. Those who have already bank accounts have to link them with their Aadhar numbers before 31st , Dec , 2017 , failing which accounts will become invalid .
If you do not hold Aadhar card , you have to at least submit proof of enrollment of Aadhar for opening the bank accounts and submit the Aadhar number within six months . Small accounts can be opened without Aadhar with bank branches having core banking only and such small account holders have to furnish their Aadhar numbers within 24 months . However such accounts will be monitored very closely by the authorities against any suspicious overseas money transfers . Small accounts are the Savings Bank accounts with less than a turn over of Rs 1.00 lakh in a year , less than withdrawals and transfers Rs 10,000 per month and balance not exceeding Rs 50,000 at any time . For corporate accounts , authorised signatories of the accounts have to produce their Aadhar numbers .
These rules are made effective through an amendment to The Prevention of Money Laundering ( Maintenance of Records ) Rules of 2005 .
NOTE :
1. Reports do not indicate effects of these amendments to opening and operation of Non Resident accounts in Banks
2. While PAN Number or Form 60 was necessary for conducting transactions above Rs 50, 000 earlier , now Aadhar is required in lieu .
3. With linking of Aadhar , PAN and Bank accounts , it will be easy to monitor high value financial transactions for the government .
Savings Bank account for an individual is the basic account one needs to have for opening relationship with a bank . All scheduled banks offer the facility of a savings bank . If you approach any branch of a bank near to you , they will be happy to open n Savings Bank account for you . There are separate types of account for Residents and Non residents of India . For residents of India , Following types of account would be offered by most of the banks .
1. Simple Savings Bank a/c with complete KYC formalities.
2. Basic Savings Bank a/c with limited KYC formalities .
3. Premier Savings Bank a/c carrying additional features which also involve additional charges / specified minimum balances .
1. Simple Savings Bank a/c with complete KYC formalities.
2. Basic Savings Bank a/c with limited KYC formalities .
3. Premier Savings Bank a/c carrying additional features which also involve additional charges / specified minimum balances .
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BENEFITS FOR ALL ACCOUNTS
1. Depositing of cash and other financial Instruments , withdrawal by way of cash , cheque.
2. Credit and debit through electronic modes.
3. Statement of Account / Passbook indicating the credits and debits to the account
4. ATM / Debit Card allowing specified free debits per month .
5. Interest on the balance maintained - rate of interest at the discretion of the bank
ADDITIONAL BENEFITS TO PREMIER ACCOUNTS OR TO ANY TYPE OF SAVINGS BANK ACCOUNT
These benefits are offered by individual banks either free or for a charge and bank may insist a minimum relationship
value either for savings bank account or for any other account maintained . Benefits vary from Bank to Bank
1. Depositing of cash and other financial Instruments , withdrawal by way of cash , cheque.
2. Credit and debit through electronic modes.
3. Statement of Account / Passbook indicating the credits and debits to the account
4. ATM / Debit Card allowing specified free debits per month .
5. Interest on the balance maintained - rate of interest at the discretion of the bank
ADDITIONAL BENEFITS TO PREMIER ACCOUNTS OR TO ANY TYPE OF SAVINGS BANK ACCOUNT
These benefits are offered by individual banks either free or for a charge and bank may insist a minimum relationship
value either for savings bank account or for any other account maintained . Benefits vary from Bank to Bank
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