Finance Ministry wants banks to focus on minorities while lending to priority sector

Finance ministry has asked public sector banks to emphasize on minorities while disbursing credit to priority sector. The ministry has asked the banks to step up advancing credit in districts with heavy density of such communities.

Public sector banks like Corporation Bank, Union Bank of India, Bank of Maharashtra, State Bank of Bikaner and Jaipur and IDBI Bank have not met the stipulated target of lending 10% of the entire priority lending to minorities.

As per the government guidelines, the banks must disburse atleast 40% of their total advances to sectors like micro small and medium enterprises (MSME), agriculture sector, education loan, etc. which are together classified as priority sector.

As per Prime Minister's minority welfare plan of 2006, the banks should emphasize on credit support to weaker section of minority community for self employment. A senior banker added that lack of awareness among the weaker segment of the minorities has made it difficult for the banks to achieve their targets.

Investors prefer deposits over other investment options

High inflation, sluggish economic growth and reduced faith of industry in government policy has resulted in more investors relying on bank deposits than other investment avenues like stock markets, debentures, etc.

According to RBI's Annual Report 2011-12, the Deposits with banks grew by 13% from Rs. 451,680 crore  to Rs. 512,030 crore in FY12. Compared with stock markets which saw Rs. 6,510 crore of outflow in shares and debentures, against Rs. 1,730 crore of investment in the preceeding year.

Uncertain global and domestic economies result in fluctuation in valuation of shares, due to which the investors look for secure options of investment and banks deposits, mainly fixed deposits are the preferred option.

Savings banks account though offer a little return but form a large deposit base along with current account to make what banks call current account savings account or CASA

Bank deposits also ate away the share of savings instruments like National Savings Certificates (NSC) which also reduced by Rs. 22,030 crore against Rs. 900 crore of inflow in the previous year.

CASA loosing its sheen but smaller bank still seek CASA

Current Account Savings Account (CASA) were at one point of time apple of the eyes of every banker, where the banks amassed a large corpus of funds from the public at very low cost. But slowly the CASA component of banks' total deposits have been depleting.

Current Account which have no interest given on them are generally maintained by businesses, with added benefit of overdraft facility; Savings account on the other hand are low interest offering deposits maintained primarily by salaried class to keep their earnings.

Of late, HDFC Bank, one of the leaders in CASA strategy saw its CASA percentage reduce from 49% to 46%. Analysts predict that the CASA is bound to go down, since developing economies tend to save less. But smaller banks like Bank of Maharashtra and Vijaya Bank are seeing this as an opportunity and have launched campaigns to acquire more CASA deposits.

Axis bank takes customer care services from IBM

In the quest of being the fastest growing bank, the AXIS bank has chosen IBM to care for its customer care services with expectation of additional revenue due to cross-selling or up-selling services.

Mr. Jairam Sridharan, Senior Vice-President, Consumer Lending, Axis Bank, said: “We chose the IBM solution to consolidate our contact centre operations because of the company’s proven expertise and experience in this field and its commitment to a solution that maintains the right balance between quality of service and price.”

Fixed deposits – An evergreen mode of safeguarding money

With the introduction of so many investment options nowadays, fixed deposits are still considered one of the favourite options by people. The fact that you can withdraw the money after the short lock in period such as one year or so depending on the bank has always made the people to go along this route. Also nowadays banks have come up with attractive interest rates on the same and people can avail benefit in a shorter period of time. Interest up to 9 or 10 percent is what every bank is offering nowadays with varying time frames.

Also there is no bar on the age to open the account for fixeddeposits and this really helps the people to open the account for their young children as well.

Summary: Fixed deposits can really help people in some form or the other such as urgent money requirements like those involved to be spent on marriages.

Wise use of Credit cards is a must

The days are gone when people used to carry large amount of cash in their pockets. Today is the time of carrying cards and more importantly people have been using credit cards in abundance now without understanding the flaws or rather drawbacks hidden behind the same. Until and unless you are a very careful on how to use your credit card, you should not be going with the same.  And when the time comes pay off your bills, you have to be very informative on the terms used by the banks.

Using a credit card involves a deep understanding on its payment criteria. The minimum dues clearance will put an extra interest over your remaining bill and will put an extra pressure on your budget.

Summary: Be very wise while opting for credit cards and in case you can manage the same properly, then this is not in any case a wrong thing to go for.

Additional feature available with Interbank Mobile Payment Service

In a move aimed at giving a boost to the mobile banking facility the Reserve Bank of India has allowed National Payment Corporation of India (NPCI) to provide additional feature under the facility of Interbank Mobile Payment Service (IMPS) which would allow a bank customer to transfer money from ATM or internet to beneficiary’s mobile.

IMPS, which was launched in August last year has grown at a slower pace than anticipated despite the fact that the number of banks providing this facility have increased from 4 at its inception to 28 in October this year.

The Managing Director and CEO of NPCI, Mr. A. P. Hota said “The IMPS has so far facilitated instant inter-bank funds transfer between the sender and the receiver using the mobile. Now, following the RBI's permission, the IMPS will also facilitate funds transfer from ATM to mobile and the Internet to mobile.”

The daily limit of this service is set at Rs. 50,000 per day per customer which includes fund transfer as well as purchase of goods.