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

Thursday, October 9, 2014

Jan Dhan target to be met, on paper

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Enquiry about a Jan-Dhan account form at a Bank of Baroda branch in the National Capital Region (NCR) was greeted with: but don't you have an account in any bank? After 10 minutes, the form did eventually come, with a stare that had 'why burden us with another account that is going to remain idle' written all over it.

Just a few kilometres away, one of the branches of IDBI Bank had run out of forms. An executive explained that since there was a huge pile of forms yet to be processed, it had been decided to go slow in opening new accounts. A nearby United Bank of India branch is yet to issue RuPay cards to some customers who opened their accounts nearly a month ago. One such customer said: "Bank officials were clearly in no mood to open our accounts in the first place. We were asked to come some other time. When we persisted, they went through the motions. But we are yet to receive anything."

FAST TRACK INCLUSION
  • 47,630,652 - Number of new accounts opened
  • 13,303,975 - Number of RuPay cards issued
  • Rs 3,226.97 crore - Balance in accounts
  • 36,574,947 - Number of zero balance accounts
Status as on September 23 Source: Ministry of finance

As the Jan-Dhan scheme completes a month since its official launch, reports coming in from various parts of the country suggest the stated target of 75 million new accounts will be achieved much before January 26 next year. But the scheme's implementation is patchy. Agents are charging commissions for filling forms in Bihar. Reports indicate in Madhya Pradesh and Uttar Pradesh, stationery shops are selling forms as bank branches have run out. "These reports are not baseless. Some of these things are happening. But an overburdened banking system cannot be expected to do everything," said an executive with a leading public sector bank (PSBs).

In terms of numbers, the scheme has exceeded expectations. By September 23, all banks put together had opened 47 million new accounts. RuPay cards have been issued to 13 million people. Of all accounts opened in less than a month, 36 million are zero-balance ones.

Bankers this reporter spoke to complain they are flooded with inane queries. What are the benefits of this loan scheme? When will the insurance money come into the account? How much loan can be taken against this account? Can insurance money multiply with multiple accounts and can the RuPay card serve as another proof of identity? "With such a deluge of questions every day, two executives of a bank branch, on an average, are entrusted with the task of dealing with them," said another bank executive. It was bound to have some impact on core banking operations, he added.

The less-than-enthusiastic response of bankers stems from the fact that most branches have been asked to hold 12-hour camps every Saturday. At times, staff are made to come in on Sundays to ensure satisfactory completion of targets. "Even if we take the help of business correspondents, verification of documents and processing of forms have to be done by bank staff. There is a limit to how many forms can be processed in a day," said another executive with a PSB.

Bankers also say multiple accounts might prove a spoiler. "I will say 50-60 per cent of all the accounts that have been opened under the Jan-Dhan scheme are by those who already have accounts in other banks," said the executive of the leading bank. Other bankers concurred. In fact, this reporter came to know about a person who opened a new account under the scheme in the branch where she already had an account. "What is wrong in this? If there is a new scheme, why should we be denied its benefits just because we are already part of the banking network?" her husband, a resident of Ghaziabad, asked.

The one-page account opening form has a column seeking self-declaration that a person does not have any account in any bank. But bankers say the self-declaration is meaningless as there is no mechanism to stop multiple accounts. "If a person has multiple documents as proof of identity, he can open multiple accounts and our system cannot detect it. There is no inter-bank arrangement to stop duplication," said the branch manager of another PSB.

Bankers say accounts opened without valid address proof are put in the high-risk category and these are unlikely to get the overdraft facility. Such account holders will be asked to furnish proof of residence within a year, as is the case with all accounts in the high-risk category. The Bank of Baroda form mentions that eligibility for an overdraft facility of up to Rs 2,000 is "satisfactory operation" of an account for at least six months. "There is a great deal of misconception about the overdraft facility. Those who have opened accounts under this scheme are under the impression that they automatically become eligible for the overdraft facility, which is not the case," said the executive of the leading PSB.

On accident insurance of Rs 1 lakh for each account holder, bankers say it comes automatically with the RuPay card. What it means is that existing account holders who opened their accounts prior to the launch of the scheme may get RuPay cards issued against their old accounts and become eligible for accident insurance. However, bankers are awaiting further instructions on who is going to pay the premium for the life insurance cover of Rs 30,000 that has been promised with each Jan-Dhan account.

Sunday, February 9, 2014

IDBI Bank joins the credit card bandwagon

Nearly nine years after becoming a full-fledged commercial bank, IDBI Bank has decided to issue credit cards to its customers. 

The Mumbai-headquartered bank intends to issue around five lakh cards in three years — one lakh in the first year and two lakh cards each in the following two years. 

The public sector bank, which currently has a base of more than 10 million customers, will be issuing EMV (Europay, MasterCard and Visa) chip cards with magnetic stripes. 

EMV is a global security standard for microprocessor chip card technology. This ensures that the credit card is not only accepted anywhere in the world but is also better protected against fraudulent activities. 

Since many merchant establishments in the country still have credit card payment infrastructure (terminals) that accept cards with magnetic stripe, the bank has decided to issue EMV cards with magnetic stripe.
The category of credit cards that the bank plans to issue are: Platinum, Signature and Corporate. 

Service provider

For foraying into the credit cards space, IDBI Bank is planning to engage the services of a third party service (TPS) provider for providing end-to-end solutions for credit card issuance under the outsourced model. The TPS provider, among others, will undertake operational activities relating to account updation, demographic changes, payment instructions, recurrent payment instructions and balance transfer request received through physical change request form/phone banking/Net banking. 

For now, IDBI Bank will be issuing credit cards on Visa and MasterCard platforms. The main business of Visa Inc and MasterCard Worldwide is to facilitate electronic funds transfer — they process payments between the banks of merchants and the card issuing banks of the purchasers. 

Once Rupay (the home-grown rival of Visa and MasterCard) launches the credit card, the bank will issue the cards in association with Rupay too. Currently, IDBI Bank’s debit card portfolio comprises Rupay debit cards also. 

As on November-end 2013, there were 18.77 million credit cards outstanding in the country. The total value of loans outstanding against these cards stood at Rs. 12,789 crore.