Pre-paid cards to be issued by mass transit system (MTS) operators to cover road-tolls, metros, bus stations and airportsThe Reserve Bank of India (RBI) has set the stage for the introduction of pre-paid cards to be issued by mass transit system (MTS) operators. Simply put, it covers road-tolls, metros, bus stations and airports.As on date, MTS operators have to tie-up with banks to issue pre-paid plastic which enables a customer to swipe for transit rather than queue up to buy tickets. It will not only help cut down on time, but will reduce cash in circulation. As we go along, an MTS pre-paid card issuer can customise offerings and even jointly issue them – like in a metro operator joining hands with a bus-services player; the options are many.As a sub-category of plastic, prepaid continues to grow around the world and is expected to reach $822 billion by 2017. According to MasterCard’s 2012 Global Prepaid Sizing Study (forecasts up to 2017), the popularity of prepaid is driven by its unique and practical ability to solve for almost any payment need. It democratises electronic payments for those outside the traditional banking system and provides a transparent, cost-effective alternative to cash and checks for both governments and businesses. Prepaid also serves the needs of banked consumers who find it an ideal payment tool for segmenting spend such as travel and online shopping.Main Features Of Prepaid Plastic For Mass Transit· Semi-closed PPIs will be issued by mass transit system operator (PPI-MTS)· The PPI-MTS will necessarily contain the Automated Fare Collection application related to the transit service to qualify as PPI-MTS· Apart from the mass transit system, such PPI-MTS can be used only at other merchants whose activities are allied to or are carried on within the premises of the transit system· The PPI-MTS issuer will ensure on-boarding of merchants (only those permissible as under (iii) above) following due procedure applicable to any other PPI issuer· The PPI-MTS will have minimum validity of six months from the date of issue;· The issuer may decide upon the desired level of KYC, if any, for such PPIs;· The PPI-MTS issued may be reloadable in nature and at no point of time the value / balance in PPI can exceed the limit of Rs. 2,000/- (Rupees Two Thousand Only);· No cash-out or refund will be permitted from these PPIs;· Funds transfer under the Domestic Money Transfer (DMT) guidelines will also not be applicable to these PPIs
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Yes Bank has received approval from RBI to set up IFSC Banking Units (IBUs) in Gujarat International Finance Tec (GIFT) city. Establishing the IBU will propel the bank's growth plans further by providing it access to international financial markets, as well as provide a comprehensive product suite to its corporate clients requiring foreign currency funding, Yes Bank said in a statement on Tuesday (14 July). It will also allow the bank to raise foreign currency funding through MTNs and other routes as appropriate, Yes Bank MD Rana Kapoor said. He added, it will help in further diversification and expansion of cross border asset products as well as widen the scope and depth of liabilities base.(PTI)
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Indian banks should consult each other and jointly decide on the timing to raise fresh capital from the market, Reserve Bank of India Deputy Governor R. Gandhi said on Tuesday (14 July)."What we are telling banks (is) that simultaneously all of them should not be coming together (to raise capital). There will be a problem," Gandhi said on the sidelines of an industry event.He said lenders should space out fresh capital raising from the market to avoid a liquidity crunch.Ratings agency Fitch estimates Indian lenders need more than $200 billion in fresh capital to prepare for the full implementation of the new Basel requirements in the next four years."What we are suggesting, that well in advance if banks are able to shore up ?their capital it should be good for their sound management," Gandhi added.(Reuters)
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Former ICICI Bank chairman K.V. Kamath has said the bank is in "great hands" under the leadership of its current CEO Chanda Kochhar. "ICICI Bank is in great hands. Chanda will take it to greater heights and I have no doubts about it," said Kamath, who relinquished his position as the bank's chairman earlier this month to take up the responsibility as the first president of the BRICS nations' $100-billion New Development Bank (NDB). "It (ICICI Bank) is a great bank and it will keep scaling new heights every passing day," Kamath told PTI in Ufa, Russia. He was in Ufa for the BRICS Summit, attended by the heads of state of the five leading emerging economies (Brazil, Russia, India, China and South Africa). The ratification process for setting up of NDB was also completed during the summit. On India, Kamath said he is very optimistic about the growth prospects of the country. "I have always been sure that India will realise its dreams of being a global power," he said. Kamath is the first president of NDB, which will provide infrastructure loans to emerging nations, rivalling multilateral lenders such as the World Bank and the IMF. Kamath will largely operate from China in his new role at Shanghai-based BRICS Bank - taking him back to one of his favourite countries where he spent a good amount of time during his tenure at Asian Development Bank, between 1988 and 1996, when he returned to ICICI Bank as its CEO. The 67-year-old banker began his career in 1971 at ICICI, the erstwhile financial institution that was incidentally set up at the initiative of another multi-lateral development institution, the World Bank. ICICI Bank was later set up as a subsidiary of ICICI Ltd in 1994, while the parent later merged into it in 2002. He led the group's transformation into a diversified, technology-driven financial services group that has leadership positions across banking, insurance and asset management in India and abroad. Back in 2008, when ICICI Bank was hit by widespread rumours of 'run-on-the-bank', Kamath led from the front and brought everything back into order, even as bank customers were queueing up before its branches to withdraw funds. He retired as managing director and CEO in April 2009 and became its non-executive Chairman. He was succeeded by Kochhar as MD and CEO. Kamath, a mechanical engineer and an MBA from prestigious IIM-Ahmedabad, was also on board of several other companies, including that of IT giant Infosys where he served as a non-executive Chairman. In an earlier interview, Kamath had said if there was an 'Ivy League' of banks across the world, he expected ICICI Bank and a few more from India to join that elite club.
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British lender Barclays has ousted Chief Executive Antony Jenkins after three years in the post, saying on Wednesday (8 July) it had decided new blood would help accelerate strategic change at the bank and boost shareholder returns.Shares in the bank jumped in early trade and were up 2.6 per cent at 258.80 pence by 0735 GMT.The surprise move comes weeks after John McFarlane took over as chairman of the bank and signalled his intention to speed up its turnaround plan. McFarlane is to take over executive duties until a permanent successor is appointed.Barclays said Jenkins, who had been promoted from head of retail at Barclays following the departure of Bob Diamond as the bank sought to scale back its investment banking activities, would receive a year's salary of 1.1 million pounds ($1.7 million) plus 950,000 pounds worth of shares, a pension allowance of 363,000 pounds and other benefits.He will also remain eligible for a pro-rata performance bonus for the current year.McFarlane, appointed from insurer Aviva having overseen a radical turnaround there, faces a host of challenges as the British bank sector grapples with regulatory pressures such as a demand to separate domestic retail banking operations from riskier investment banking operations.The decision to axe the CEO follows a period of lacklustre results and uncertainty about the bank's future structure."This announcement was not something that we have expected, but given John McFarlane’s history as a ‘hands-on’ chairman, it is perhaps not a big surprise," said analysts at brokerage Shore Capital in a note which repeated a "buy" rating on the stock."If this move does indeed act as a catalyst for an accelerated improvement in Barclays’ financial performance, then this can only be a good thing," the note added.While lauding Jenkins' role in steering the bank through a period of rapid change, Deputy Chairman Michael Rake said the board had decided Jenkins did not have the blend of skills required to take the company forward."We are leaving value on the table and a new approach is required. As a group, if we aspire to bring shareholder returns forward, we need to be much more focused on what is attractive, what we are good at, and where we are good at it," he said in a statement."We therefore need to improve revenue, costs and capital performance. We also need to become more externally focused and deal with the internal bureaucracy by becoming leaner and more agile," Rake added.In a statement Jenkins said: "It is easy to forget just how bad things were three years ago both for our industry and even more so for us. I am very proud of the significant progress we have made since then."($1 = 0.6487 pounds)(Reuters)
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The Reserve Bank of India aims to drain money markets of excess liquidity to counter inflationary pressures arising from higher government spending, according to policymakers, though it could hamper chances of banks lowering lending rates. Commercial bankers say it would be easier to reduce lending rates, as the RBI has urged them to do, if surplus liquidity prevailed for some months. The liquidity surplus - now around 350 billion rupees - has dragged the average call money rate down to close to 7 percent this month. Some analysts expect it to reach 300 billion to 500 billion rupees ($4.7 billion to $7.88 billion) by August. A senior policymaker aware of central bank's thinking, who requested anonymity, said the RBI wanted to nudge the call rate up to nearer the 7.25 percent policy repo rate. "Overall the overnight rate has to be in alignment with the monetary policy stance," he told Reuters late on Friday. The policymaker said the RBI would stick with its current approach of draining excess cash largely through variable reverse repos. "As long as the market is able to come and give the funds back to the RBI, it should not be a problem," he said. The policymaker did not rule out the RBI selling bonds through open market operations if a longer-lasting approach was needed. The last time the RBI sold bonds on the open market was in December. Another official aware of the developments concurred with those views. Hesitant BanksThe RBI has lowered its policy rate by a total 75 basis points with three cuts this year, hoping that banks would do more to pass on the benefits to the broader economy. But banks say tight liquidity had stayed their hand earlier, and want liquidity to remain ample before making further moves. "The longer this cash surplus stays, the greater will be our confidence to bring down long-term deposit and lending rates," said a senior official at a large state-run bank. RBI Governor Raghuram Rajan said in April that hopes of a sustained surplus were "just nuts", given the inflation outlook. Consumer inflation rose to 5.01 percent in May from 4.87 percent in April. The RBI has targeted 6 percent inflation by January and 4 percent by March 2018. The RBI's priority is meeting those targets, and a seasonal surge in government spending - expected to total $45 billion in the September quarter along with the RBI's annual dividend payout to the government of around $8 billion at least - will add to inflationary pressures unless cash is drained. "If rates fall below where they are intended then that will hinder RBI's inflation target," said A. Prasanna, economist at ICICI Securities Primary Dealership, who expects cash conditions to remain broadly in surplus until September. "It will have to use instruments other than reverse repo if the surplus liquidity persists," he said. (Reuters)
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Sutanu Guru looks at how "emerging" economies are dismantling the American dominated global financial architecture In 1944, America officially replaced Britain as the global financial superpower at Bretton Woods when the formalities to launch the World Bank and the International Monetary Fund were finalized. This week, that monopoly of Western powers will get another jolt when finance ministers of the five BRICS (Brazil, Russia, India, China and South Africa) countries along with their central bank heads will complete all formalities to launch the New Development Bank. Earlier christened as the BRICS Bank, the new name is designed to expand the ambit of the bank to other nations. One of the best known Indian bankers, K.V. Kamath is the designated head of NDB. This comes just a week or so after a glittering ceremony in Beijing where 49 nations joined China to announce the launch of the Asian Infrastructure Investment Bank. China will provide 30% of the paid up capital of $100 billion and control 26.6% of the vote with a clear veto power. India will be the second largest shareholder in AIIB with a stake of 8.52%. Incidentally, both USA and Japan are not members of the AIIB. And by definition, the G-7 nations cannot be members of BRICS. For decades, there has been a clamor from "emerging" nations to end the virtual stranglehold of traditional global powers over global institutions. For example, there have been persistent calls to reform the United Nations and add more countries as permanent members of the currently five-member UN Security Council. Simultaneously, there have been demands to ease the complete dominance of financial institutions like IMF, World Bank and Asian Development Bank by the G-7 nations. For more than two decades, there has been talk without any substantive change on the ground. But the recent launch of two brand new global financial institutions in the form of AIIB and NDB indicate that emerging economies are no longer willing to wait for crumbs from the traditional powers. This has been articulated clearly in an interview given to the newspaper Mint by Malose W Mogale, the deputy High Commissioner of South Africa to India when he said, "Our argument is that the world can't remain the same after 70 years...The West has realized that if they don't change, there will be an alternative". Geopolitical considerations aside, it is the financial implications that will have resonance. Under what is now famous (or notorious) as the Washington Consensus, institutions like IMF and World Bank have been accused of trying to impose their own version of capitalism on countries while providing financial assistance. More often than not, it has led to economic mayhem and financial ruin for local populations. In unusual gestures of mea culpa, both the IMF and the World Bank have admitted in recent times that their priorities were perhaps skewed. The AIIB and the NDB promise to provide financial assistance to countries in a manner that suits their infrastructure needs and long term goals rather than imposing uniform conditions on everyone. As the latest fiasco in Greece shows, going to the IMF with a hat in hand means adopting "austerity" measures that might lead local populations to revolt. Sure, the dominance of the western powers is not going to vanish. Definitely not in the near future. But the monopoly that was established by America and the Second World War allies at Bretton Woods in 1944 is gone. That is definitely good news.
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It’s a subject that’s infrequently highlighted: the quality of manpower and ‘capacity building’ – be it in banking or other parts of India Inc. It’s of a particular import to banks, but given the state-run nature of the industry, the issue gets conflated: unions, pay and lateral recruitment. Reserve Bank of India’s deputy governor R. Gandhi correctly observes that “finance is primarily a knowledge-oriented activity. The chief capital and inputs required for this sector all relate to ‘information’ and knowledge’… the paradigm changes (in the sector) has very wide ramifications; the sector is highly interconnected; happenings in this sector has high visibility”. With 72 per cent of assets under them, state-run banks have witnessed a number of younger officers at top levels over a short period of time. “While this can bring fresh perspectives, it is also a fact that given the strategic importance of leadership at the top, it is important to understand the training requirements and fulfil the same,” notes Gandhi. Cynics may say the realisation has been late in coming, but then, it’s better late than never.— Raghu MohanA Move In The Right DirectionIt is well known that there is no consistency in the structure, power and functioning of the regulatory bodies in key infrastructure sectors. While the port sector regulator’s only job is to set tariffs, his counterparts in the electricity sector have much wider powers of rule-making, licensing, power market development, imposing penalties, etc. The telecom sector regulator is tasked with promoting competition. The tenure of regulators varies from 3 to 5 years; there are different terms and conditions for reappointment of members of regulatory commissions and appellate tribunals. Some sectors like electricity and telecom have appellate tribunals, whereas others like port do not have such tribunals. Even the degree of independence of regulators varies from sector to sector. Some level of parity or uniformity is required across all such regulators. Hence, the government move to revive the Regulatory Reforms Bill, 2013, to look at these aspects, should be welcomed. An overarching law to bring uniformity to India’s regulatory architecture is the need of the hour.— Joe C. MathewNot So Wise DecisionThe market regulator’s decision to ease the listing norms for startups is tilted heavily in favour of such companies. Not only will a lot of home-grown startups be tempted to raise money from the Indian market over the next year, the move is also likely to stop their flight to foreign markets. But SEBI’s decision to allow startups to disclose less in their draft red herring prospectus puts investors at a great deal of risk. Here’s why: Through 2008, 2009 and 2010, of the IPOs that listed, 81 per cent, 50 per cent and 82 per cent of them, respectively, gave negative returns within a year. In 2014, things improved slightly due to the stricter disclosure norms brought in by SEBI. However, with the latest relaxation of disclosure norms, the percentage of IPOs giving negative returns may begin to soar once again.— Neeraj ThakurCan't Blame Banks AnymoreThe Reserve Bank of India’s Financial Stability Report says that stress tests at end-March 2015 suggests that the current deterioration in banks’ asset quality may continue for a few quarters. That state-run banks, in particular, may have to provide more for bad-loans to meet the ‘expected losses’ if the macroeconomic environment deteriorates. Stress tests have revealed that shocks to the infrastructure sector, mainly power and transport sub-sectors, would significantly impact the system. Before you blame banks over poor credit appraisal, the truth is that policy paralysis is the biggest driver of the bad-loan mess. Next is the political patronage extended to the bigger defaulters. Think about it: why is that the bulk of bad-loans are in the bellies of state-run banks? It’s because they are forced to be all things to all companies; it’s due to factors outside!— Raghu MohanTo An Inordinate DegreeWere college degrees to be any guarantee of the effective handling of a ministerial portfolio, life would have been much easier. The fuss over ministers misrepresenting their educational backgrounds is valid up to a point. But the inordinate attention being given to the degrees of Jitender Singh Tomar and Smriti Irani is outlandish because there is so much else politicians falsify. It is strange that we give less importance to the fact that politicians have uncountable police sentences and prison time on their records compared to their degrees. Certainly, they have no ‘moral right’ to falsify those, but the more serious issue is that of having no moral right to be corrupt or criminal. Surely, the time to have minutely examined educational qualifications is before not after individuals take up portfolios and positions of power.— Mala BhargavaMonsoon MantraThe Indian Meteorological Department (IMD) has forecast a deficient rainfall during July-August and advised the agriculture ministry to keep a contingency plan ready. In contrast, India’s lone private weather forecasting company Skymet Weather Services has predicted a normal rainfall. Incidentally, IMD’s projection of insufficient rainfall in June was proved wrong; in fact, the rainfall was 20 per cent above the forecast. Skymet claims that it has fared better than IMD in predicting rainfall ever since it began operations three years ago. We will soon know which is better. But right now, the smart thing for the farmers and the government to do is to be prepared for the worse. As for IMD, if there is something it can learn from Skymet, it should be open enough to do that.— Joe C. MathewModi Shows The Way Once AgainThat Prime Minister Modi is eminently fond of selfies has been evident from the start, but recently he put the hobby to good use by creating a hashtag for a Twitter campaign in support of safety and education for young girls, represented by the government’s Beti Bachao, Beti Padao slogan. The SelfieWithDaughter was quite a hit and led to a surge of photographs of parents with their daughters including from the sarpanch of a village in Haryana. Although many grumbled that the PM should become a social media manager, it is for the first time that the country has actually seen a top leader take steps to communicate with citizens in their style. Sadly, the Twitter campaign was marred, partly by the PM’s own supporters, called Modi Bhakts on the network. A defiant remark by CPM member Kavita Krishnan and abusive reaction by actor Alok Nath unleashed a flood of unsavoury tweets that completely detracted from the original aim of the campaign. The PM also received much flak for staying silent on other matters, but left to itself, the SelfieWithDaughter was a warm campaign, even if just a drop in the ocean.— Mala Bhargava(This story was published in BW | Businessworld Issue Dated 27-07-2015)
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The science of customer relationships is simple - the value you get is proportionate to the value you give, says Sanjay GuptaCustomer loyalty within the banking industry is dipping the world over. And with cutthroat competition, banks are finding it even more difficult to retain clientele. Banks need to rethink their service strategy as this will not only help ensure quality customer experience, but also positively affect its bottom line. By anticipating and addressing customer needs before they can become inbound contact center expenses, banks will be able to increase customer retention and loyalty as well as boosts agent retention and job satisfaction.Proactive customer care enables banking players to delight customers with convenient, useful information at their moment of greatest need and meet the challenge of striking the right balance between containing costs and delivering value through a highly differentiated customer experience. Here are four reasons why this strategy makes good business sense.1. Customers Repay Proactive Service with Greater Loyalty and Long-Term ValueThe science of customer relationships is simple - the value you get is proportionate to the value you give. To achieve and maintain this harmony, banks today must establish a dialogue with customers that demonstrate awareness of their needs and respect for their communication preferences. The more contact made with a customer, the "stickier" they become. When customers are consistently given valuable information, this stickiness can form a durable bond of loyalty.A few banking players are already looking at new ways to measure their customers' long-term value or profitability. Lifetime value is based on the profit earned from a customer over the total lifespan of an active account. Exceeding customers' support demands maximizes their longevity and, as a result, helps increase value. For example, it may take 30 seconds to reach out to a customer to satisfy a need with differentiated service. If that time costs $1 million a year, it can yield twice that amount in new or continued business, as well as word-of-mouth referrals to new customers.2. Winning New Customers Cost More than Retaining Existing CustomersHere's where proactive customer care can put a real dent in customer churn. What if banking contact center representatives proactively engaged customers to advise them in advance when their loan's EMIs are due? Or inform them about more appropriate savings schemes based on their earnings? Although customers might switch to other schemes, the value of up-selling or cross-selling to already existing customers is easy to measure.3. Contact Center Efficiency Improves with Reduced Call Volume and Automated OutreachBy evaluating current business processes for customer service patterns, banks can preempt interactions and reduce inbound contact volume by proactively reaching out to customers to report on progress. The convenience delivered through this process creates more positive customer experience that helps build loyalty, and with fully automated transactions can also help save costs.4. Agent Job Satisfaction and Retention Increase, Reducing Turnover CostsIt is common knowledge that the customer service representative's job is traditionally marked by rapid burnout and high turnover. According to recruitment firm Spherion, the turnover of one job costs a company an average of 1.5 times the employee's annual salary when separation costs, overtime payments to temporary workers, loss of productivity and replacement costs are factored.The though behind personalised, live interactions with proactive care agents is to humanize the customer experience as well as the agent's interaction experience. By providing useful information to preempt or resolve issues, agents develop more meaningful relationships with customers. This exchange leads to a win-win situation that provides a more satisfying work experience for agents and influences job satisfaction. This in turn leads to lower employee turnover for the bank while strengthening customer relationships.The Difference is Relevant ValueThe real value of proactive customer care is in building and maintaining a healthy bottom line over a longer time frame through ongoing and elevated focus on the experience. Proactively delivered, customer care allows a bank to provide differentiated, high-touch services that reinforce the brand's identity and customer value proposition. Even if these services cost more, it is a known fact that customers are willing to pay more for higher perceived value in any economy and appreciate being consistently treated like valued clients. In a nutshell, it is the differentiated service that can pay real dividends.The author is Managing Director, South Asia and Middle East, Aspect Software
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BankBazaar.com, a financial marketplace, raised Rs 375 crore in Series C round of funding led by Amazon with participation from Fidelity Growth Partners and Mousse Partners. Existing investors Sequoia Capital and Walden International also participated in the Series C funding round. "With the rapidly evolving online consumer segment across categories, we have seen great demand for this platform. We are currently looking to expand the category as we reinvest all earnings in growing the business intelligently," said Adhil Shetty, Chief Executive Officer, BankBazaar.com The funds will be primarily deployed towards technology integration, hiring and strengthening partner relationships and to creating a truly phenomenal end-to-end customer experience in order to grow in the online financial services category as a market leader. The company will also invest to upscale its marketing and branding effort to reach out to a larger number of consumers and create a house-hold financial services brand in India. BankBazaar is also investing in mobile App. The App delivers a more customized, stable and seamless experience to the consumer. The BankBazaar App, available on both the Android & iOS platforms, not only helps consumers get financial products with ease, but also educates them and helps them manage their finances better. "With this fund raise, BankBazaar plans to innovate even more to provide the best and fastest experience for consumers", said Gautam Mago, Managing Director, Sequoia Capital. Since the last round of funding, BankBazaar's business model has evolved. The number of transactions on the platform have grown five times since then. The company is actively expanding its product portfolio and depth of its partnerships in each product line. The company is also focusing on made-for-mobile web service and mobile platforms in order to enable larger connect with the audience. Presently, 40 per cent of the users connect to BankBazaar through smartphones. Additionally, online loan applications across home, personal and auto loans are growing by 90 per cent, compared to 15 per cent growth in offline.
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