Banking Current Affairs on 24th & 25th July 2015

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IDFC to start operation on October 1 with 23 branches: Rajiv Lall

  • Infrastructure financing firm IDFC Ltd said RBI has granted banking licence to IDFC Bank for undertaking banking business in the country.
  • The RBI on July 23, 2015 has granted Banking Licence to IDFC Bank Limited for undertaking banking business in India under Section 22(1) of the Banking Regulation Act, 1949.
  • IDFC and Bandhan Financial Services Pvt Ltd emerged successful out of 25 contenders for new bank licences issued by the Reserve Bank of India (RBI) in April last year. Bandhan Financial got RBI approval last month.
  • IDFC Bank plans to start operation from October 1 with an initial loan book of around Rs 55,000 crore. The bank proposes to start operations with 23 branches.
  • It has almost completed the process of demerger of financial undertaking into IDFC Bank.
  • The demerger was in accordance with RBI conditions which require IDFC to transfer the relevant business activities to the proposed IDFC Bank.
  • All new banks are to be set up through a non-operative financial holding company, according to the guidelines.
  • IDFC Bank was established as a public limited company to carry out business of banking pursuant to approval granted by the Reserve Bank in April 2014.
  • IDFC was founded in 1997 following an announcement made in union budget wherein former finance minister P Chidambaram said that IDFC would "act as a direct lender, as a refinancing institution and as a provider of financial guarantees," and "to make available long-term funds at the lowest possible market rates."
Public sector banks can raise funds from market: Jayant Sinha
  • With capital needs for public sector banks pegged at Rs 2.39 lakh crore over the next four years, the Finance Ministry today said they have been allowed to raise funds from market to meet capital requirements.  
  • The government is making an assessment of capital needs of PSBs, however earlier assessment of capital requirement of PSBs was Rs 2,39,720 crore during 2015-19. 
  • The government has taken a decision to allow PSBs to raise capital from market through follow-on public offer or qualified institutional placement and in the process bringing down the government's shareholding up to 52 per cent, as to decrease bank's reliance on government infusion & to meet Basel III capital adequacy norms. 
  • Present level of government's shareholding in these banks which ranges from 57 to 85 per cent.
Fullerton India to foray into housing finance biz by November
  • Fullerton India, a non-banking finance company, plans to enter mortgage business as it has received license to set up a housing finance subsidiary.
  • National Housing Bank has accorded permission to Fullerton India to set up fully-owned subsidiary as Fullerton India Home Finance Company Limited (FIHFC).
  • The housing finance company would start its business by November with an initial paid-up capital of Rs 100 crore.
HDFC Bank to roll out ‘micro-ATMs’ across India
  • HDFC Bank is rolling out handheld machines across India that could work just like ATMs through which customers in rural areas, where setting up full-fledged ATM kiosks is proving to be commercially unviable, can carry out most banking transactions. 
  • Launched less than a year ago, currently through about 1,550 such 'micro ATMs' the bank sees transactions aggregating about Rs 1 crore a month in rural areas. Going forward, these machines could be used in the rural areas for payment to pensioners and direct benefit transfers under MGNREGA, and in the urban areas to ease pressure on bank officers in branches that are crowded with customers.
  • Similar to swipe machines used for debit and credit cards payment at malls, shops, restaurants and other merchant establishments, micro-ATMs are capable of even biometric verifications using Aadhaar, including instant e-KYC for customers. "After an Aadhaar number is fed into the machine and biometric (verification) is done for the same Aadhaar number, it's connected to the UIDAI server which almost instantaneously verifies and gives out the results for KYC.
  • The e-KYC is in addition to cash withdrawal and deposit, account statement, disbursement of preapproved loans and several other banking transactions that these micro-ATMs are capable of carrying out. For example, in some villages in Punjab, bank's customers are informed of a prefixed time and location (usually the gurdwara in the locality) where they could carry out banking transactions on micro-ATMs, bank officials said. Now the bank is in the process of integrating pension payments for the Tamil Nadu government, which will use biometric verification for added security.
  • The bank sees transactions worth about Rs 1 crore a month in rural areas through about 1,550 such 'micro ATMs'.