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WHAT IS BANKING
A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities
WHAT IS AMENDMENT
A change or addition to a legal document which, when properly signed, has a same legal power as the original document.
WHY AMENDMENTS?
Increased operational efficiency, profitability and productivity Superior customer services Better cross-selling ability Improved management/accountability Risk management Minimal transaction cost
CONTD
Balance sheet is to be got audited from qualified auditors Banks not to pay any commission, brokerage, discount etc. more than 2.5% of paid up value of one share
E BANKING DEVELOPMENTS
ALPMs and back office computerization Need to improve customer service Advent of pc in 1980s Competition and reforms
Introduction of computerization Clearing houses ATMs Electronic fund transfer Bank-net SWIFT (society for worldwide interbank finicial telecom) Electronic mail Credit cards Tele banking Online banking
BENEFITS TO CUSTOMERS
More convenience and flexi timings Better awareness of products and services Up-to-date information on accounts Low cost of accessing accounts
CONTD
RBI can conduct special audits of cooperative banks. Bank will have to pay penalty interest rate, if it doesnt maintain CRR on daily basis. Cooperative societies cannot carryout banking activities without license from RBI. A Depositor Education and Awareness Fund to receive money from deposit accounts not operated for more than 10 years.
LATEST RATES
Bank Rate 8.75 CRR 4 SLR 23 Repo Rate 7.75 Reverse Repo Rate 6.75
By passing the Banking Amendment Bill 2012 that RBI would issue only a handful of licenses and given that there are a large number of hopefuls, the competition for new banking licenses would be very intense.
LICENSE
A minimum capital of Rs. 500 crore, 49% cap on foreign shareholding. listing within two years of receiving the banking license Mandatory 25% branches into rural areas Groups that have significant (10 per cent or more) income or assets or both from real estate construction and broking activities in the last three years shall not be eligible to promote banks.
CONTD
The bank shall be required to maintain a minimum capital adequacy ratio of 12 per cent for a minimum period of three years after the commencement of its operations. Private groups with diversified Indian ownership, sound credentials and integrity that have a successful track record for at least 10 years.
Ref=http://www.moneymantra.co.in/detailsPage.php?id=2730&title=Special%20Story&wrt=MM%20Bure au
SHRIRAM GROUP
Strengths: Shriram Group's whole business model mainly caters to financially secluded bottom of the pyramid consumer segment. It has over 1,200 branches in rural areas through its companies. Weakness: Shriram Group comprises multiple entities of which, only two are listed (STFC & SCUF), hence the structure is complicated and it could be difficult to club all the business in non-operating holding company (NOHC) as per RBI requirement.
L&T FINANCE
Strengths: L&T Finance is professionally managed group with diversified holdings and no promoters. Its holding structure is closely aligned with the current RBI's proposal of non-operating holding company structure. Weakness: It has a very small branch network (around 110 branches) compared to other contenders who have a network of over 500 branches. Less than one-third of its book is rural-focused, and hence does not score very high on financial inclusion.
BAJAJ FINSERV
Strengths: Bajaj Finserv has a well-diversified range of financial services. At the group level, it has an existing customer base of 15 million+ and presence in over 1,000+ locations through its subsidiaries. Weakness: Bajaj has been focusing on the affluent customers segment, and scores low on financial inclusion. It has has almost 25% of its book focused toward financing purchase of products of other group companies.
TATA CAPITAL
Strengths: Tata Capital is a household name and is the most trusted brand in the country. The group through its various companies has presence in several industries with consumer base of over 150 million.
Weakness: Tata Capital is a 100% subsidiary of Tata Sons. It has multiple entities in the financial services business, which makes the NOHC structure complicated.
Ref= http://www.moneycontrol.com/news/business/6-contenders-for-bank-licensestrengthsweaknesses_793669-5606.html