IDBI Bank announced cut in interest rates on deposits by 25 basis points to 50 basis points (quarter to half a percentage point) across different maturities. The revised rates will come into effect from August 12.
The bank has also reduced 1% point in lending rates for auto loans.
The bank for up to six months did not change rates for deposits and all changes are for duration beyond six months. In most of slabs, the reduction is only 25 basis points, or quarter of a per cent, but in case of a few slabs, the drop is 50 basis points, or half a per cent.
While the interest rate for deposit of one year to two year will be 6.75 per cent against 7.25 per cent at present.
The bank is offering the highest rate of 8% for deposits for the duration of seven to 10 years.
The bank has also revised its lending rate on auto loans and has reduced it down by one percentage point. As per revised fixed rate of interest for a three year tenor will range from 10.50 per cent-12 per cent and for five years between 10.75 per cent and 13 per cent.
Thursday, August 13, 2009
Bank unions say: ATMs are part of banking network, so can’t operate
The public sector banks are on strike for two days due to which all the banking transactions have come to stop for two days. On Wednesday when a call for strike was made the ATMs were not included in the strike so most of the banks had loaded their ATMs so that public don’t find difficulty in case of cash. But on Thursday first day of the strike the union forcefully got most of the ATMs in the city including off-sites shutdown.
Thus on the second day the few that will be opened might run out of cash. SBI spokesperson informed in Kolkata most of its 260 ATMs remained closed due to the strike. He said, "We had refilled money but could not operate the ATMs due to protest by strikers". An Axis bank official also gave the same reason however ICICI bank spokesperson stated that they had closed the ATMs due to security reasons.
Most of the banks with large ATM networks had loaded most of their ATMs on Wednesday evening but bank union people forced the security guards to shut down the ATMs shutters of majority of onsite and off-site ATMs. Bank unions justifying the shutdown of ATMs Ashok Mukherjee, secretary of SBI Staff Association said, "ATMs are part of banking network. So, they can't operate during a bank strike". He added, "We have no option as IBA and the Centre have refused to listen to our demands."
He pointed out the 29 PSU banks are having a consolidated net profit of Rs 33,000 crore, then also they are not ready to contribute Rs 4,200 crore to the pension fund of bank employees. The United Forum of Bank Unions is demanding 20% hike in salary but IBA is giving a hike of 17.5%.
Therefore today being the second day of strike people will probably find difficulty in getting cash from ATMs.
Thus on the second day the few that will be opened might run out of cash. SBI spokesperson informed in Kolkata most of its 260 ATMs remained closed due to the strike. He said, "We had refilled money but could not operate the ATMs due to protest by strikers". An Axis bank official also gave the same reason however ICICI bank spokesperson stated that they had closed the ATMs due to security reasons.
Most of the banks with large ATM networks had loaded most of their ATMs on Wednesday evening but bank union people forced the security guards to shut down the ATMs shutters of majority of onsite and off-site ATMs. Bank unions justifying the shutdown of ATMs Ashok Mukherjee, secretary of SBI Staff Association said, "ATMs are part of banking network. So, they can't operate during a bank strike". He added, "We have no option as IBA and the Centre have refused to listen to our demands."
He pointed out the 29 PSU banks are having a consolidated net profit of Rs 33,000 crore, then also they are not ready to contribute Rs 4,200 crore to the pension fund of bank employees. The United Forum of Bank Unions is demanding 20% hike in salary but IBA is giving a hike of 17.5%.
Therefore today being the second day of strike people will probably find difficulty in getting cash from ATMs.
Friday, July 31, 2009
Fixed deposit scheme to encourage girl education at primary level
In India government on its level has been making efforts to encourage parents of the girls belonging to lower strata of the society to send them to school. Working on this line BMS in order to encourage girl students complete their primary school will be providing a fixed amount of Rs 1,000 and would double the amount on completion of the education.
Till now the civic body was giving an allowance of Re 1 per girl child for attending the class every day. But now it has suggested a fixed amount scheme. In civic-run schools mostly students are from lower strata of the society or slum areas that often do not complete their primary education resulting in high dropout rate. In a hope that financial incentive will be able to lure parents and children to complete their primary education the civic administration has suggested a fixed amount scheme.
Instead of attendance allowance under the new scheme at the time of enrollment in class I, a fixed deposits of Rs 1,000 will be made in Indian Bank which will get doubled when the girl student completes her primary education till class VII. In the scheduled bank savings account will be created in the name of the student in which the money will be deposited.
This scheme will be started from financial year 2009-2010 and approximately 42,750 girls who enrolled in the first standard for this academic year will be benefited from the scheme. The proposal has been approved by the education committee and an amount of Rs 4.27 crore has been sanctioned. While in the on going scheme the BMC used to give Re 1 to girl students for a day’s attendance and by the end of each academic year a maximum of Rs 210 (for 210 working days) was credited in their account.
Till now the civic body was giving an allowance of Re 1 per girl child for attending the class every day. But now it has suggested a fixed amount scheme. In civic-run schools mostly students are from lower strata of the society or slum areas that often do not complete their primary education resulting in high dropout rate. In a hope that financial incentive will be able to lure parents and children to complete their primary education the civic administration has suggested a fixed amount scheme.
Instead of attendance allowance under the new scheme at the time of enrollment in class I, a fixed deposits of Rs 1,000 will be made in Indian Bank which will get doubled when the girl student completes her primary education till class VII. In the scheduled bank savings account will be created in the name of the student in which the money will be deposited.
This scheme will be started from financial year 2009-2010 and approximately 42,750 girls who enrolled in the first standard for this academic year will be benefited from the scheme. The proposal has been approved by the education committee and an amount of Rs 4.27 crore has been sanctioned. While in the on going scheme the BMC used to give Re 1 to girl students for a day’s attendance and by the end of each academic year a maximum of Rs 210 (for 210 working days) was credited in their account.
Thursday, July 2, 2009
Short-term FD has lower interest rate than savings a/c
Almost all the banks have slashed their fixed deposit rates. After this revision the interest banks are offering on the tenure between a month and 45 days is lower than the 3.5% minimum savings bank rate and some of the banks are not even giving any interest on short-term maturities.
Therefore at this time it is better to keep money in the savings bank account rather than investing in fixed deposits.
For instance amongst the private sector banks HDFC Bank is giving a 2.25% interest on deposits below Rs15 lakh for 15 to 29 days and only a 3% interest on deposits kept for 30 days to 45 days.
While the ICICI Bank is not giving any interest on deposits for 7 days to 14 days and offers only a 3.25% interest for deposits maturing between 15 and 45 days.
Whereas amongst the public sector banks State Bank of India (SBI) is offering only a 3% interest on deposits maturing in 15-45 days.
The savings bank account rate is fixed by the government therefore it can not be changed by the banks whereas it’s not the case with deposit rates.
Anindya Mitra, senior vice-president, retail liabilities, HDFC Bank explained, "We may think that the savings rate has to come down but we can't tinker with it and why should we pay more than 3.5% for short-term money when we can borrow one day funds from the inter-bank call market at 3%". Mitra added that companies, funds and high net worth individuals having huge amount generally invest funds in these tenures.
He stated, "For companies, it's still the better option to keeping huge chunks of money in current accounts at 0%. Some companies which do not even have a bank account open an FD".
On the minimum maturity period if you invest more money the banks give less interest. For instance ICICI Bank, offers only 1.5% interest on deposits from Rs15 lakh to Rs1 crore in the 7-45 days' tenure. While Canara Bank offers 1% for deposits of more than Rs1 crore for seven to 14 days and only 2% for deposits kept for 15 to 30 days.
Regarding offering very low interest rate on minimum tenure bankers say that there is enough liquidity in the system therefore they don't need short-term cash. According to SBI official, "These funds were used to give short-term bridge loans for companies just before their actual loans were being passed. These loans were in demand, particularly when the economic growth was brisk, but now that's not the case".
Therefore at this time it is better to keep money in the savings bank account rather than investing in fixed deposits.
For instance amongst the private sector banks HDFC Bank is giving a 2.25% interest on deposits below Rs15 lakh for 15 to 29 days and only a 3% interest on deposits kept for 30 days to 45 days.
While the ICICI Bank is not giving any interest on deposits for 7 days to 14 days and offers only a 3.25% interest for deposits maturing between 15 and 45 days.
Whereas amongst the public sector banks State Bank of India (SBI) is offering only a 3% interest on deposits maturing in 15-45 days.
The savings bank account rate is fixed by the government therefore it can not be changed by the banks whereas it’s not the case with deposit rates.
Anindya Mitra, senior vice-president, retail liabilities, HDFC Bank explained, "We may think that the savings rate has to come down but we can't tinker with it and why should we pay more than 3.5% for short-term money when we can borrow one day funds from the inter-bank call market at 3%". Mitra added that companies, funds and high net worth individuals having huge amount generally invest funds in these tenures.
He stated, "For companies, it's still the better option to keeping huge chunks of money in current accounts at 0%. Some companies which do not even have a bank account open an FD".
On the minimum maturity period if you invest more money the banks give less interest. For instance ICICI Bank, offers only 1.5% interest on deposits from Rs15 lakh to Rs1 crore in the 7-45 days' tenure. While Canara Bank offers 1% for deposits of more than Rs1 crore for seven to 14 days and only 2% for deposits kept for 15 to 30 days.
Regarding offering very low interest rate on minimum tenure bankers say that there is enough liquidity in the system therefore they don't need short-term cash. According to SBI official, "These funds were used to give short-term bridge loans for companies just before their actual loans were being passed. These loans were in demand, particularly when the economic growth was brisk, but now that's not the case".
Wednesday, July 1, 2009
Govt. in favor of new tax-saving scheme to tap ‘idle money’
The government is thinking over of introducing a new tax-saving scheme to collect 'idle money' kept with households and elsewhere in the system mainly for building funds for infrastructure.
According to sources the tax benefits offered may be on investments up to Rs 5lakh and be involved in somewhat meeting the country's infrastructure funding needs, which have been gauged at as high as $750 billion.
The scheme can provide multiple purposes including giving additional tax benefits to the public, channelizing the huge amount of money lying idle in saving accounts or with households for productive means, and this will also not add to the fiscal deficit, the sources said.
The sources added the government has already made an announcement of borrowing program of over Rs 3,00,000 crore for the current fiscal and if further there is any increase the liquidity will be made available to the drying up private sector and also add to the expansion of fiscal deficit.
Various sectors have been demanding for tax benefits for citizens and also garnering alternative resources for meeting the government's spending needs.
At present, collective tax benefits are being offered on an investment of Rs one lakh in insurance, pension schemes, bonds, mutual funds, children's education and housing loans, etc. An additional benefit of up to Rs 1.5 lakh is given only for housing loan interest payments.
As per Planning Commission approximation, the country would require around $500 billion for the building up of infrastructure during the remaining period of the 11th Plan (2007-12).
According to country top private sector bank ICICI Bank's Chairman K.V. Kamath the capital need for the infrastructure sector will be even higher, at $750 billion, over the next three years.
Meanwhile the policymakers have supported spending most of the money set for infrastructure as quickly as possible in the remaining years of the current five-year plan.
Financial services major Reliance Money's CEO Sudip Bandyopadhyay points out any such initiative will be welcomed from the government in case it launches some sort of infrastructure bonds that can offer tax benefits of up to Rs five lakh in the Union Budget.
According to sources the tax benefits offered may be on investments up to Rs 5lakh and be involved in somewhat meeting the country's infrastructure funding needs, which have been gauged at as high as $750 billion.
The scheme can provide multiple purposes including giving additional tax benefits to the public, channelizing the huge amount of money lying idle in saving accounts or with households for productive means, and this will also not add to the fiscal deficit, the sources said.
The sources added the government has already made an announcement of borrowing program of over Rs 3,00,000 crore for the current fiscal and if further there is any increase the liquidity will be made available to the drying up private sector and also add to the expansion of fiscal deficit.
Various sectors have been demanding for tax benefits for citizens and also garnering alternative resources for meeting the government's spending needs.
At present, collective tax benefits are being offered on an investment of Rs one lakh in insurance, pension schemes, bonds, mutual funds, children's education and housing loans, etc. An additional benefit of up to Rs 1.5 lakh is given only for housing loan interest payments.
As per Planning Commission approximation, the country would require around $500 billion for the building up of infrastructure during the remaining period of the 11th Plan (2007-12).
According to country top private sector bank ICICI Bank's Chairman K.V. Kamath the capital need for the infrastructure sector will be even higher, at $750 billion, over the next three years.
Meanwhile the policymakers have supported spending most of the money set for infrastructure as quickly as possible in the remaining years of the current five-year plan.
Financial services major Reliance Money's CEO Sudip Bandyopadhyay points out any such initiative will be welcomed from the government in case it launches some sort of infrastructure bonds that can offer tax benefits of up to Rs five lakh in the Union Budget.
Monday, June 22, 2009
Rates on small saving schemes to be reduced by 50-75 basis points: Govt
It is very rare you get to see an advertisement of small saving schemes but then also more people invest in these schemes in comparison to bank deposits the reason being the interest given on these schemes and savings plans are tax free. But now these schemes won’t be as attractive as government is planning to reduce the rates on small savings scheme by 50-75 basis points to increase the bank deposits. Earlier in 2003 the rate was reduced by 100 basis points to the current eight percent. Government is thinking of setting up a committee headed by the former governor of RBI which will study the issues and recommend appropriate steps.
Analysts point out that in case the banks slash the deposit rates beyond a certain limit, then investors can get diverted towards small saving scheme. Therefore banks are abstaining from cut in the deposit rates. The industry experts say the reduction in deposit rates might not help in cut down of the lending rates also.
Some of the major small saving schemes are National Saving Certificates, Post Office Savings Account, Public Provident Fund, Kisan Vikas Patra, and Senior Citizen Savings Scheme. These saving schemes are in competition with the bank deposits as they have tax benefits under Section 80 C of the Income Tax Act.
Analysts point out that in case the banks slash the deposit rates beyond a certain limit, then investors can get diverted towards small saving scheme. Therefore banks are abstaining from cut in the deposit rates. The industry experts say the reduction in deposit rates might not help in cut down of the lending rates also.
Some of the major small saving schemes are National Saving Certificates, Post Office Savings Account, Public Provident Fund, Kisan Vikas Patra, and Senior Citizen Savings Scheme. These saving schemes are in competition with the bank deposits as they have tax benefits under Section 80 C of the Income Tax Act.
Wednesday, June 17, 2009
Forum directed ABN AMRO bank to compensate for wrongly billing
The ABN AMRO bank has been directed by the district consumer forum bench comprising president TN Vaidya and member Rajesh Kumar to pay compensation and litigation costs worth Rs 6,000 for wrongly billing a resident, thus causing an undue harassment to the complainant.
The complainant Kanwal Khurana in his complaint alleged that he had opened a current account and got a credit card from ABN AMRO Bank by paying Rs 22,412 for using the credit card vide demand draft dated May 30, 2006. On 16.6.2006 the amount was credited to the account of ABN AMRO Bank.
But in spite of this the bank continued charging late payment charges and interest regularly in his statement. He stated in order to settle the matter in cordially manner he made a complaint to the bank on 28-11-2006 then also bank did not take any corrective measures.
The complainant appealed before the forum that the bank should be proceeded under the
the Consumer Protection Act for causing harassment. Bank did not defend its case in the forum therefore it was proceeded ex parte and the forum after hearing the arguments of the counsel for the complainant and scrutinizing the evidence presented by him, apprehended the bank guilty.
The complainant Kanwal Khurana in his complaint alleged that he had opened a current account and got a credit card from ABN AMRO Bank by paying Rs 22,412 for using the credit card vide demand draft dated May 30, 2006. On 16.6.2006 the amount was credited to the account of ABN AMRO Bank.
But in spite of this the bank continued charging late payment charges and interest regularly in his statement. He stated in order to settle the matter in cordially manner he made a complaint to the bank on 28-11-2006 then also bank did not take any corrective measures.
The complainant appealed before the forum that the bank should be proceeded under the
the Consumer Protection Act for causing harassment. Bank did not defend its case in the forum therefore it was proceeded ex parte and the forum after hearing the arguments of the counsel for the complainant and scrutinizing the evidence presented by him, apprehended the bank guilty.
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