Reserve Bank of India has directed all leading banks to appoint internal ombudsman to improve their customer service and to ensure that customer complaints in banks get resolved fast.
All public sector banks and the leading private and foreign banks would need to engage chief customer service officer, RBI said. The CCSO should be an outsider and never worked in the bank in which he or she is appointed.
Among private lenders, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Standard Chartered Bank, Citi Bank and HSBC are asked to follow the rule. These banks have been selected on the basis of their asset size, business mix, RBI said.
The central bank introduced the banking ombudsman scheme in 1995 to provide resolve banks' customers complain at fast track. By contrast, internal ombudsman will be a forum available to bank customers for grievance redressal before they can even approach RBI's banking ombudsman.
RBI said it would issue detailed operational guidelines to the banks soon.
RBI said it would issue detailed operational guidelines to the banks soon.
PMO to review steps to check loan frauds on Thursday
NEW DELHI: Amid a rising number of frauds and loan defaults in banking system, the Prime Minister's Office has called a meeting of Finance Ministry officials on Thursday to firm up measures to tackle such menaces.
The Prime Minister's Office in a meeting with top finance ministry officials on May 14 will review steps to check loan frauds, an official source said.
The Finance Ministry has already collected a comprehensive data on willful defaulters of public sector banks last month.
The Prime Minister's Office in a meeting with top finance ministry officials on May 14 will review steps to check loan frauds, an official source said.
The Finance Ministry has already collected a comprehensive data on willful defaulters of public sector banks last month.
They further said that instances of corporate frauds were on increase in the recent past, leading to a rise in bad loans.
As per RBI data, gross NPAs of PSU banks have gone up to Rs 2,60,531 crore as on December, 2014.
The top 30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the entire non-performing assets of public sector banks as on December 2014. In terms of percentage, it amounts to 36.5 per cent.
The total number of NPA b ..
As per RBI data, gross NPAs of PSU banks have gone up to Rs 2,60,531 crore as on December, 2014.
The top 30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the entire non-performing assets of public sector banks as on December 2014. In terms of percentage, it amounts to 36.5 per cent.
The total number of NPA b ..
KV Kamath, non-executive chairman of ICICI, is now BRICS Bank head-Hindustan Times
Pioneering banker KV Kamath was appointed on Monday as the head of the New Development Bank, also called BRICS Bank, a multilateral institution set up by Brazil, Russia, India, China and South Africa.
The bank’s launch, along with the setting up of a $100 billion crisis fund to contain currency volatility, is seen as counterweights to the US and Europe dominated financial institutions such as the IMF and World Bank.
"Kamath has been appointed as the head of the BRICS Bank, the appointment will become effective when he becomes free from his current assignments," finance secretary Rajiv Mehrishi told reporters in New Delhi.
The bank will begin with a $50 billion paid up capital contributed equally by its five founding member countries, with an initial total of $10 billion in cash put over seven years and $40 billion in guarantees.
Another $50 billion is expected to come from other members who join in.
In July last year, the BRICS nations agreed to set up the bank primarily to fund unmet infrastructure projects. It would be headquartered in Shanghai.
Kamath, 67, would serve first five-year term as the bank’s head, followed by a Brazilian and then a Russian.
He currently serves as the non-executive chairman of India’s largest private sector bank ICICI Bank and software services major Infosys.
Kamath started his career in 1971 at ICICI, an Indian financial institution that founded ICICI Bank and merged with it in 2002. He has a degree in mechanical engineering and did his management studies at the Indian Institute of Management, Ahmedabad.
In 1988, he moved to the Asian Development Bank and spent several years in South-East Asia before returning to ICICI as its managing director and CEO in 1996.
Kamath, a former president of industry lobby group Confederation of Indian Industry (CII), played a major role in transforming ICICI from primarily an industrial lender into a diversified, technology-driven financial services group that has leadership positions across banking, insurance and asset management in India with an international presence.
He retired as ICICI’s managing director and CEO in April 2009, and took up his present position as non-executive chairman. Kamath also oversaw the leadership transition in Infosys after the founders stepped aside a few years ago.
The bank’s launch, along with the setting up of a $100 billion crisis fund to contain currency volatility, is seen as counterweights to the US and Europe dominated financial institutions such as the IMF and World Bank.
"Kamath has been appointed as the head of the BRICS Bank, the appointment will become effective when he becomes free from his current assignments," finance secretary Rajiv Mehrishi told reporters in New Delhi.
The bank will begin with a $50 billion paid up capital contributed equally by its five founding member countries, with an initial total of $10 billion in cash put over seven years and $40 billion in guarantees.
Another $50 billion is expected to come from other members who join in.
In July last year, the BRICS nations agreed to set up the bank primarily to fund unmet infrastructure projects. It would be headquartered in Shanghai.
Kamath, 67, would serve first five-year term as the bank’s head, followed by a Brazilian and then a Russian.
He currently serves as the non-executive chairman of India’s largest private sector bank ICICI Bank and software services major Infosys.
Kamath started his career in 1971 at ICICI, an Indian financial institution that founded ICICI Bank and merged with it in 2002. He has a degree in mechanical engineering and did his management studies at the Indian Institute of Management, Ahmedabad.
In 1988, he moved to the Asian Development Bank and spent several years in South-East Asia before returning to ICICI as its managing director and CEO in 1996.
Kamath, a former president of industry lobby group Confederation of Indian Industry (CII), played a major role in transforming ICICI from primarily an industrial lender into a diversified, technology-driven financial services group that has leadership positions across banking, insurance and asset management in India with an international presence.
He retired as ICICI’s managing director and CEO in April 2009, and took up his present position as non-executive chairman. Kamath also oversaw the leadership transition in Infosys after the founders stepped aside a few years ago.
Public sector banks aren’t out of the woods yet-LiveMint-10.05.2015
The capital ratios for some of these banks now appear insufficient to grow loans even if the economy bounces back later this year
Public sector banks continue to report dismal earnings. Their pile of bad debt continues to swell at a time when loan growth is subdued, dragging down overall profitability. The capital ratios for some banks now appear insufficient to grow loans even if the economy bounces back later this year.
The bigger immediate worry is, of course, asset quality. Take Punjab National Bank (PNB), for instance. Its total stressed assets—which include bad loans and recast assets—increased to 16.2% at the end of March, compared with 15.4% in the December quarter. This is likely the highest among its larger public sector bank peers. The gross bad loan ratio rose to 6.6% as slippages increased, partly from already restructured loans. Credit worth Rs.7,141 crore has slipped into bad debt, mainly from the troubled infrastructure sector—power, roads, ports, steel, mining and textile.
PNB is not alone. Allahabad Bank’s slippage ratio increased marginally to 3.8%. Its total stressed assets stand close to 11% of advances. As the chart shows, most other state-owned banks, which declared earnings over the weekend, showed a spike in bad loans. That is not surprising, given that the economy hasn’t really taken off despite rosy growth projections owing to a change in methodology.
Higher bad loans also necessitate higher provisions which erode profitability. What’s worse, despite this increase in the money set aside for bad loans, the provision coverage ratio for most of these lenders hovers around 50%, compared with the 70-80% range for top private sector banks. The bad loans problem also made these banks hesitant to lend. Advances growth was capped at 9%, except Syndicate Bank Ltd which reported 17% growth. United Bank of India actually reported a decline in advances. Weak loan growth and a surge in bad loans suppressed net interest income and margins.
With declining profitability for several quarters in a row, state-owned banks are now grappling with thin capital adequacy ratios—between 10-11%. Government equity is not forthcoming and with these numbers, it might be difficult to raise money from the market. The capital, adjusted for banks’ impairment ratio, indicates tough times ahead as it will be difficult for these banks to grow their books.
Not surprisingly, public sector banks have underperformed the banking index in the past six months and are trading at 0.3-0.6 times their estimated book value for the current fiscal. Unless bad loans decrease or loan growth improves, share prices may continue to remain under pressure.
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