Showing posts with label federal bank. Show all posts
Showing posts with label federal bank. Show all posts

Wednesday, July 23, 2014

PM Modi set to revamp financial inclusion; new scheme to be unveiled on August 15

PM Modi set to revamp financial inclusion; new scheme to be unveiled on August 15

Prime Minister Narendra Modi is set to give a big boost to the ongoing financial inclusion drive by unveiling a comprehensive programme at the Red Fort in his address to the nation on the Independence Day.

The proposed comprehensive financial inclusion programme envisaging insurance and pension cover, apart from a default cover for lenders, is likely to envisage opening 15 crore more bank accounts, 12 crore of which will be in rural areas over next four years, according to a note sent to the Indian Banks Association (IBA) by Financial Services Secretary G S Sandhu.

According to the note, Mr Modi’s new comprehensive financial inclusion programme has three major shifts from the one pursued by the previous government.

First, the earlier efforts at financial inclusion had villages as the unit for coverage while the current plan focuses on coverage of households.

Secondly, only rural areas have been the focus so far while both rural and urban areas have been included now, says the ministry note.

Thirdly, the current plan is proposed to be implemented as a ‘mission mode’ project. It envisages a comprehensive coverage of all excluded households by a six-pillar approach in two phases, according to the note.

The first phase of the programme, which begins from August 15 this year and ends on August 14, 2015, will provide basic banking accounts with overdraft facility of Rs. 5,000 and RuPay debit card with inbuilt accident insurance cover of Rs. 1 lakh and creation of credit guarantee fund for coverage of defaults in overdraft accounts, according to the ministry.

The second phase, which will begin on August 13, 2015 and conclude by August 14, 2018, will cover micro-insurance and unorganised sector pension schemes like Swavlamban.

When contacted, IBA said already state-owned banks, insurers and regulators are working overtime to ensure a smooth kick-start.

“We are currently busy chalking out the modalities of implementation of the project, which will be implemented in the entire country after it is declared by the Prime Minister on August 15,” IBA chairman K R Kamath, who is also the chairman of Punjab National Bank, told PTI.

It is a good scheme as it envisages going beyond the geographical boundaries and promises of connecting each and every household, he said, adding that more than being commercially viable, it is important to link every household with the banking system.

“Through this programme, we are looking at providing two savings bank account facility-one each for the husband and the wife-to all those households which not served by the banking system so far,” MR Kamath said.

“Of course, these basic banking accounts will come with some in-built overdraft facility and RuPay debit cards with an inbuilt accident cover of Rs. 1 lakh. We are awaiting the final announcement of the scheme by the Prime Minister.”

Inclusive pension is also one of the pillars of the proposed comprehensive financial inclusion programme.

“Pension under ‘the mission mode’ will lay emphasis on this facility for the lower income segment and the unorganized workers,” said R V Verma, acting chairman of the Pension Fund Regulatory and Development Authority (PFRDA).

“We will seek to achieve and expand the scope of the National Pension Scheme (NPS) to serve the disadvantaged sections of the population through active involvement and participation of all categories of intermediary institutions like banks, NBFCs, MFIs, NGOs, corporates and annuity service providers,” Mr Verma added.

Though micro-insurance will come in the second phase of the programme, insurers have already started working on it.

“While the already existing 4,000 micro offices of the four PSU general insurers would be strengthened, over 2 lakh existing business correspondents will be asked to sell micro insurance products to ensure the last mile connectivity,” New India Assurance chairman and managing director G Srinivasan said.

“Though micro-insurance will come in the second phase only, we have already started working on it,” he added.

The premium for the low-cost insurance products, which is to be paid by the beneficiaries or from subsidy under the Rashtriya Swasthya Bima Yojana scheme, will range between Rs. 100 and Rs. 300 per annum, New India Assurance general manager K Sanath Kumar said.

Nabard will provide the initial Rs. 1,000 crore to create a credit guarantee fund to cover possible defaults on overdraft accounts under the scheme, a Nabard official said.

Several rounds of meetings have already been held by the Department of Financial Services with all the stakeholders of the programme, including state-owned banks, insurance companies and pension regulator PFRDA.

The banking sector would be expanding itself to hire an additional 50,000 business correspondents (BCs), launch over 7,000 branches and more than 20,000 new ATMs in the first phase, Sandhu told the IBA, adding that around 50,000 BCs are likely to be appointed in rural areas for the programme alone.

Sunday, June 8, 2014

Except one, no pvt banks have issued RuPay cards: A P Hota

A P HotaRupay the country’s first online payment gateway, was launched by National Payments Corporation of India to compete with American multinationals Visa and Mastercard. It has not found takers in the private banking space. A P Hota, managing director and chief executive officer, says plans to take the card abroad have also been hit by cost considerations. Edited excerpts of a talk with Nupur Anand:

The offtake for RuPay cards in certain channels is still low. Why?

The RuPay gateway has just started and the card base is only 15 million. Plus, for the card to pick up in various channels, all banks will have to start making changes in the system such as in e-commerce, etc. Also, banks will have to start issuing the cards. Of the only 15 million cards now, most have been issued by public sector banks (PSBs). Not a single PSB has, except Federal Bank.

By when do you see private banks getting in and issuing cards?

Nor for the next year or so. They are catering to one particular segment, of international cards. We are in the domestic space. Many private banks are tied in a long-duration contract with Visa and Mastercard. Until that expires, they will not be able to come out of it. They have taken money from them in advance. If they have a third card base, they will not be able to issue the committed number. Many of the PSBs have not taken such a long-term contract and it was easy for them to come on board, such as Punjab National Bank, Union Bank, Canara Bank, etc. Some banks also have technological challenges.

Private and foreign banks don’t really have any technological challenges.

True but some only see the short-term interest.

Have the bigger PSBs such as SBI also started issuing RuPay cards?

SBI started about two months earlier. They'd also taken money for a long-duration contract; they're now taking a bit of a risk. They are saying it is worth paying back the money to Mastercard and Visa, as they will also be saving a lot of money with RuPay — the cost of these cards is a third compared to the multinational counterparts. See, all the fees that banks in India pay are in dollar terms. SBI has a 180-mn card base, so they are paying a lot in fees. Even if no other bank comes in but SBI fully does, the scheme is a success.

You had also tied up with Discover Financial Services to take RuPay international. What is the progress there?

Technically, we are ready. But the commercial rates are yet to be decided. The idea is to make it more attractive than MasterCard or Visa. In the domestic market, the cost is a third but in the international market, we are finding it difficult to price it accordingly.

Our volume is low as we are not in the credit card market. We're only in the debit card market and the bulk of transactions internationally happen in credit cards. So, other players can leverage it, while we can’t. It is also difficult to determine the rates of the two international players, as they have different rates for different banks.

Friday, April 19, 2013

Federal Bank launches Rupay brand debit card

Private sector Federal Bank today launched Rupay brand debit card.

The debit card would be accepted in over one lakh ATM's of National Financial Switch member banks in the country and would be accepted on point of sale and Internet soon.

"Federal Bank is the first private sector bank and the 10th bank in the country to launch Rupay Card," a bank press release said here today.

Rupay is the card scheme launched by the National Payment Corporation of India to offer a domestic, open loop, multilateral system which will allow all Indian banks and financial institutions in India to participate in the electronic payments market.

Rupay's strategic objective includes providing assistance in making cash payments electronic, creating a common platform for all banks and payment forms channels, becoming a "top of the wallet" card for all Indian consumers across segments, providing available domestic option to Indian market and acting as a nodal body for the electronics payments industry.

Since the Rupay Transaction processing will happen domestically, it would lead to lower transaction cost for Federal Bank, compared to international schemes, the release said.

Rupay will also build an environment whereby payment information of the country remains within the country which would be beneficial for both the bank and customers by means of reduced settlement cost.

The bank has 1,103 branches and 1,180 ATMs across India. Its total business (deposits and advances) crossed milestone of Rs One lakh crore as on March 31, 2013 (unaudited figures), the release said.