In view of the rise in the number of cheque related fraud cases, the Reserve Bank of India has asked banks to put in place preventive measures including sending an SMS alert to payer/drawer when cheques are received in clearing.
Further, to prevent cases of suspicious or large value cheques (in relation to an account’s normal level of operations), the central bank has advised banks to alert customers by a phone call and get the confirmation from the payer/drawer.
The RBI has told banks to ensure the use of 100 per cent CTS (cheque truncation system) - 2010 compliant cheques.
Under the CTS environment, electronic image of the cheque is transmitted to the drawee branch through the clearing house, along with relevant information such as data on the MICR (magnetic ink character recognition) band, date of presentation, and presenting bank. Cheque truncation obviates the need to move the physical instruments across branches
According to a RBI notification on preventive measures for cheque related fraud cases, banks are required to strengthen the infrastructure at the cheque handling Service Branches and bestow special attention on the quality of equipment and personnel posted for CTS based clearing, so that it is not merely a mechanical process.
Banks have to ensure that the beneficiary is KYC (know-your-customer) compliant so that the bank has recourse to him/her as long as he/she remains a customer of the bank.
The RBI said banks should put in place a mechanism whereby all cheques beyond a threshold of say, Rs. 2 lakh are examined under UV lamp. Checking should be done at multiple levels, of cheques above a threshold of say, Rs. 5 lakh.
The threshold limits mentioned above can be reduced or increased at a later stage with the approval of the Board depending on the volume of cheques handled by the bank or its risk appetite.
Banks are required to closely monitor credits and debits in newly opened transaction accounts based on risk categorization.
In its notification, the RBI said “the rise in the number of cheque related fraud cases is a matter of serious concern. It is evident that many of such frauds could have been avoided had due diligence been observed at the time of handling and/or processing the cheques and monitoring newly opened accounts.”
Therefore, banks have been advised to review and strengthen the controls in the cheque presenting/passing and account monitoring processes and to ensure that all procedural guidelines including preventive measures are followed meticulously by the dealing staff/officials.
Referring to some cases where even though the original cheques were in the custody of the customer, cheques with the same series had been presented and encashed by fraudsters, the RBI said banks should take appropriate precautionary measures.
The precautionary measures have to ensure that the confidential information -- customer name/account number/signature, cheque serial numbers and other related information are neither compromised nor misused either from the bank or from the vendors’ (printers, couriers etc.) side.
The RBI also said due care and secure handling is also to be exercised in the movement of cheques from the time they are tendered over the counters or dropped in the collection boxes by customers.
Asset quality remains a niggling worry for Indian banks Maintaining its cautious view, global rating agency Moody's recently said that it remains negative on Indian banks on the back of high leverage in the corporate sector.-Economic Times
Fears of worsening asset quality continue to haunt Indian banks. While poor asset quality is usually synonymous with public-sector lenders, private banks don’t seem to be out of the clutches of bad loans either. The list ranges from banks like State Bank of Bikaner and Jaipur and State Bank of Travancore to bluechip like ICICI Bank .
To begin with, Indian Overseas Bank reported loss in the second quarter of the current fiscal year due to higher tax expenses and provisions for bad assets. The public sector lender made provisioning for bad loans to the tune of Rs 892.38 crore versus Rs 619.90 crore in the same quarter a year ago. Its asset quality worsened as gross non-performing assets (NPAs) jumped to 7.35 percent from 4.65 percent a year ago. Net NPAs also almost doubled to 5.17 percent from 2.83 percent a year ago. The stock is likely to face heat as global rating agency Standard & Poor's has lowered the credit rating of IOB to BB+. The rating indicates speculative grade following IOB's asset quality deterioration. It expects the bank's asset quality to remain remain weak over the next 12 months.
While Union Bank of India ’s (UBI) net profit rose 78 percent in the quarter gone by, the picture on asset quality front didn’t seem too bright. Its gross non-performing assets (NPA) jumped 42 basis points quarter-on-quarter and 105 bps year-on-year to 4.69 percent. Net NPA climbed 25 bps Q-o-Q and 56 bps Y-o-Y to 2.71 percent in July-September quarter.
The subsidiaries of India’s largest public sector bank State Bank of India (SBI) – State Bank of Bikaner and Jaipur (SBBJ) and State Bank of Travancore (SBT) also saw marginal rise in bad loans. SBBJ’s gross NPA rose to 4.24 percent versus 3.6 percent and net NPAs was at 2.49 percent versus 2.1 percent, Q-o-Q. SBT was stung by higher NPA provisions. Its gross NPA increased to 5.11 percent from over 3.5 percent of the total advances, on a year-on-year basis. Net NPA also rose to 3.2 percent from 2.07 percent a year ago.
Their parent SBI is yet to announce it Q2FY15 earnings. In Q1FY15, the bank’s overall asset quality continued to be stable. Gross non-performing assets (NPA) slipped 5 basis points sequentially and 66 bps on yearly basis to 4.90 percent while net NPA fell 17 bps year-on-year (up 9 bps quarter-on-quarter) to 2.66 percent in Q1FY15.
Maintaining its cautious view, global rating agency Moody's recently said that it remains negative on Indian banks on the back of high leverage in the corporate sector. " Our outlook for the country's banking system remains negative , as it has been since November 2011. The negative outlook reflects our view that high leverage in the corporate sector could prevent any meaningful recovery in asset quality, notwithstanding a moderate rebound in economic growth," the agency said in a note.
It further added that the negative outlook pertains mainly to the state-owned lenders which represent more than 70 percent of total banking system assets. But largest private sector lender ICICI Bank is also not spared. The bank met expectations on profit and net interest income front (NIM) but asset quality weakened. Its gross NPA rose 4 basis points on a Y-o-Y basis and 7 bps sequentially to 3.12 percent and net NPA increased 11 bps on yearly basis and 9 bps quarter-on-quarter to 0.96 percent.
Read more at: http://www.moneycontrol.com/news/result-analysis/asset-quality-remainsniggling-worry-for-indian-banks_1216229.html?utm_source=ref_article
Soon, ISB will teach you how to be happy, for free-Hindu Business Line
Hyderabad, November 3:
If you’re fed up chasing business targets round the clock, here is a way to find happiness. Indian School of Business (ISB) will soon be offering an online course in ‘happiness and fulfilment’ free of cost to one and all.
On Monday, the B-school inked a memorandum of understanding with Coursera Inc., an online content provider, to launch the course by the middle of next year.
“Our objective is to make our teaching available to all in most relevant areas,” Arun Pereira, Executive Director, Centre for Teaching, Learning and Case Studies, ISB, told BusinessLine here.
This is the first step for ISB in launching mass open online courses and it hopes to offer about three courses by the end of next year.
The courses will be informal and ad hoc, with a duration of four-six weeks. Though there is no fee, a learner will have to pay for the certificate after completion of the course if she wants it.
According to Pereira, the course will be titled ‘A Life of Happiness and Fulfilment’ as people have been searching for the secret to happiness for centuries. “The exciting news is that the scientific community has recently started exploring this question, and we now have a pretty good idea of what it takes to lead a happy and fulfilling life,” he said.
Those who take this course will get a good idea of the major themes in psychology and behavioural economics on what make people happy, added Pereira.
“You will also learn about the common mistakes that people make in the pursuit of happiness,” he claims.
ISB is still keeping the full details of the course to itself and says it will unveil them at an appropriate time.
Globally, Coursera charges $49 for a certificate. It is now working on fixing a price for certificates for the ISB courses that will be launched.
According to Vivek Goel, Chief Academic Strategist, Coursera Inc., the demand for online courses in various streams is on the rise.
“We have 10 million registered users for 800 different courses from over 115 countries, and India is the second-largest in the world for online courses,” he said.
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