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Sunday, December 30, 2012

RBI Now Feel Necessity of Price Control in Banks

RBI cautions banks charging high prices on products
Times of India

CHENNAI: Cautioning banks charging high prices on products offered to customers, Reserve Bank deputy governor K C Chakrabarty today said a new set of guidelines would be announced during the coming Ombudsman Conference in Mumbai. 

"I am telling you that if you believe that the pricing has become exploratory then we will intervene. We have intervened in the case of micro-finance institutions. What I am saying is, discriminatory pricing (on products offered to customers) should not be there. Pricing should be non-discriminatory," Chakrabarty told reporters here. 

During the Ombudsman Conference, to be chaired by RBI Governor D Subbarao, on January 4, new guidelines would be announced. "Some new guidelines will come on how it (RBI) can be more stringent in pricing the products to customers of banks", he said. 
"You (banks) have to understand the customer needs and be reasonable to customers," he said, adding, "do not do lip service" . 

Observing that banks charge high interest rates for offering educational loans compared to home loans, he said "I am only raising a question why it cannot be reduced." 

Earlier, after releasing a book 'Indian Banking Reforms and After', written by banker Dharmalingam Venugopal, also Indian Overseas Bank employee, Chakrabarty said banks need to ensure that they maintain high level of productivity and efficiency in their operations. 

"While profit margins are important for sustaining banking operations, the cost of operational inefficiencies of banks should not be passed on to customers by way of higher service charges and fees," he warned. 

On restructuring of loans by banks offered to individuals and enterprises, he said an element of discrimination was practiced by the banks in restructuring of loans. 

"Analysis of available data indicates that the larger borrowers have invariably received benefit of restructuring of their loans, while the restructuring in case of SMEs has remained low. I believe with a timely intervention and support from the banks, this sector would have definitely shown much lower levels of impaired assets than it does", he said. 

Stating that business operations of banks should be "customer-centric" in nature, Chakrabarty said, "this should be reflected in all aspects of banking operations including creation of customised products and services". 

To a query on the Union Government's proposal to roll out cash-transfer scheme from January one, 2013, he said, "we were asking (banks) to do it for more than two years. Now, it has encouraged the government to come out with this particular scheme". 

"Now everybody has a bank account and if the money is credited into the account, it can stop the leakages. It will also make the financial inclusion more effective. I am telling them (banks) for the last three years as part of their normal business, but now they (banks) are forced to do." he said.
http://timesofindia.indiatimes.com/business/india-business/RBI-cautions-banks-charging-high-prices-on-products/articleshow/17820694.cms

Sooner or the later, GOI will have to frame uniform interest rate structure conducive for growth in savings and growth in capacity of banks to lend more and more in agriculture and manufacturing sector. Efforts of Government to distribute cash subsidy to poor may enrich their vote bank for a short period but in the long run this dirty policy will turn the poor as beggar and they will develop a habit of not working but depending on alms they will receive freely from politicians.

To Read further you may click on following link

http://dkjain497091112006.blogspot.in/2012/12/liquidity-crisis-in-banks-is-creation.html

SATURDAY, OCTOBER 20, 2012


Bad Assets Rising Despite Recovery Claimed BY Bankers


Most of Public Sector Banks have booked less profit and more Non Performing Assets this year barring some exceptions who could get success in manipulating data of the bank. Bank has still huge volume of bad assets but hidden in the system. 

Clever and so called best bankers are those who can conceal bad assets by methods of restructuring and rephasing.
To Read further you may click on following link

SATURDAY, OCTOBER 29, 2011


Interest Rate in Banks

The war continues among banks on interest rate. After nationalization of banks in 1969, RBI used to decide rate structure for deposits and for lending uniformly applicable for all banks. But after adoption of reformation policy in the year 1991, RBI freed lending rates excepting loans upto Rs.2.00 lacs. In the name of competition, banks started rate war to attract high profile customers into their fold. Social banking concept and mass banking approach initiated through nationalization of banks have now become the history.
To Read further you may click on following link

http://dkjain497091112006.blogspot.in/2011/10/interest-rate-in-banks.html

WEDNESDAY, APRIL 18, 2012


Government Dictates Rates to PSU Banks


Centre turning dictator? Government orders PSU banks to cut rates immediately

To Read further you may click on following link


SATURDAY, APRIL 28, 2012


Should RBI Decide Unioform Interest Rate Structure



The war continues among banks on interest rate. After nationalization of banks in 1969, RBI used to decide rate structure for deposits and for lending uniformly applicable for all banks. But after adoption of reformation policy in the year 1991, RBI freed lending rates excepting loans upto Rs.2.00 lacs. In the name of competition, banks started rate war to attract high profile customers into their fold. Social banking concept and mass banking approach initiated through nationalization of banks have now become the history.
To Read further you may click on following link




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