ING Vysya bank expands its network

ING Vysya Bank is expanding its network across the country. Recently bank has opened 11 ATM outlets in the state including 8 in Hyderabad and one each in Warangal, Khammam and Guntur. Bank will open four more branches in the state at Pedanandipadu, Kondapur, Shamshabad and Kothagudem and 7 additional ATMs in the next six months. After the opening of these branches, the total number of branches will be 176 branches and ATMs 66, spread across the state.

Uday Sareen country head-retail banking, speaking at a press conference said, Andhra Pradesh is a key market for the banks with 33 per cent of its distribution. The bank is doing a total business in the state of around Rs 8,000 crore.

Sareen informed that bank will be implementing the 'Smart Card' project in Chittoor and East Godavari districts and till now it has opened over 40,000 'no-frills accounts'. Bank has plans to open 56 more branches and 100 ATM outlets across the country, this year. Thus, it has increased its headcount by 450.

Andhra Bank to offer Kotak Mahindra Mutual Fund products through its branches

An agreement of distribution tie-up was signed between Kotak Mahindra Asset Management Company, one of India’s leading mutual fund houses, and Andhra Bank. According to this agreement, Andhra Bank will be offering the entire bouquet of Kotak Mutual Fund products through its 1386 branches. MOU was signed by Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra AMC and Rakesh Sethi, General Manager, Marketing, Andhra Bank.

During the signing of MOU, Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management Company said, “The banking channel is one of the best platforms to reach out to retail investors. Offering advice on mutual fund investments is an extension of the value added services that are offered by banks. As experts in the field of wealth creation in India, our tie up with Andhra Bank will reinforce our commitment to expand retail participation. With this tie-up customers will gain easy access to the various schemes of Kotak Mahindra AMC at the branches where they do their banking transactions.”

Penalty can be charged on inoperative bank A/C

Do you have any inoperative bank account through which not a single transaction has been done for more than two years and you have forget then make sure either to close or activate that account. As recently banks are mandate to not to charge for reactivation of such an account but they have the right to continue charging for services such as maintenance of lockers and annual debit card fees. The Reserve Bank of India generally does not regulate service charges and penalties charged by individual banks.

In the directive issued on August 22, 2008, RBI in its definition of an inoperative accounts and unclaimed deposits has excluded “service charges levied by the bank or interest credited by the bank...''

Hence, if you do not maintain a minimum balance for a particular period in your savings account and if over the years, fees and charges reduce below the required cutoff, then you might have to even pay a penalty on the already reduced balance.

Therefore in spite of RBI instructions to banks to pay 3.5% savings bank rate of interest on inoperative accounts and matured fixed deposits, there can be chances that the balance may still end up depleting.

There is an advice for the consumers that they should keep a check on their accounts. Recently a Delhi resident, approached the National Consumer Helpline (NCH), a project supported by the ministry of consumer affairs, with an interesting complaint.

The complainant had an account in a southern bank which he left un-operated for a long time. Southern bank merged with a new-age private sector bank some years ago. At that time he had a comfortable balance of Rs 4,800 in his account, the minimum requirement being Rs 1,000. After the merger, however, the limit was raised to Rs 5,000 keeping in with the private bank's policies. "But he was not informed about the change and was slapped a penalty. Today he is left with a minus account," says NCH's Sanjeev Talwar.

The account holder adds, "First of all, they made my balance zero. But the most painful part is that when I approached the bank a year ago and requested them to close my account; they told me that my balance was negative, at Rs 3,000. Now they are asking for a penalty of Rs 10,000".

Therefore, inoperative accounts are a serious issue. As per the recent reports of the Reserve Bank, as on December 31, 2007, the unclaimed deposits stood at a huge Rs 1095.46 crore.

Taking this increase in a view as also the risk of frauds that inoperative accounts carry, RBI has also instructed banks to "play a more proactive role in finding the whereabouts of the account holders whose accounts have remained inoperative".

(Reserve Bank of India's spokesperson Alpana Killawala says that an inoperative account gets the status of a dormant account if it is not operated for more than 10 years. "The monies are then shifted to the bank's suspense account." To reactivate it, credentials of the account holder or his kin must be re-established).

Taking it in a positive sense, all banks TOI spoke to-HDFC Bank, ICICI Bank, State Bank of India, Axis Bank and Citibank-maintained that they do not charge any additional charges on an inoperative account.

K Ramakrishnan, the new chief executive at the Indian Banks' Association, also assures: "To my knowledge, there is no penalty". A senior banker admitted that charging of a nominal penalty, though, was common in the past.

Bank of Rajasthan introduced NEFT facility in all branches

Bank of Rajasthan, a private sector bank is growing fast by adapting latest technology to make banking customer friendly. Following this bank has introduced the NEFT (National Electronic Funds Transfer) facility in all branches.

Bank of Rajasthan is considered to be one of the oldest and a tech savvy private sector bank, by introducing NEFT facility it has moved one step ahead in its technology driven program.

At present Bank of Rajasthan have more than 2 million customers who can now effortlessly transfer money electronically.

National Electronic Fund Transfer is the fastest, secure, efficient, economical, reliable and most speedy system for transferring funds from specific account of one bank to account of another bank available throughout India.

With the launch of this facility bank has proved its customer friendly services associated to technical developments and ease the process.

Drop in consumer loans slows durables sales

With the increase in inflation the budget of every household has come under burden and it has become difficult to take out any extra money for other purposes. Fearing a sharp rise in defaults banks and finance companies have reduced their lending. In turn this has slowdown the sales of finance-linked products.

According to K.R. Kim, Chief Executive officer and Vice-Chairman, Videocon the company in the past 6 months has registered a 10 per cent drop in sales its products linked with consumer financing, especially in the rural and semi-urban areas. He said, however company has recovered the drop in sales through their dealer finance scheme.

Even the consumer goods dealers have also confirmed a drop in sales. Some dealers, refused to be identified, claimed of about 20 per cent decline in sales while others maintained that demand had halved in the past one year.

According to V.Ramchandran, Director, Sales and Marketing LG India has registered a 4-5 per cent fall in the contribution of consumer finance sales. There has been decrease in the number of players who provide consumer financing, this in turn has resulted in the weakening of the durable category.

Steep jump in inflation is one of the reasons for banks to cut down consumer financing, and a consequent rise in interest rate, has generated fears of repayment capabilities according to OV Bundellu, Deputy managing director, IDBI bank the rising interest rates are responsible for the slowdown in consumer financing.

Ramchandran said about 10-20 per cent of the consumer durable industry's sales is directly related to the financing options. ''With the growth of organized retail, need for consumer financing becomes greater,'' he said.

Samsung India, had a growth of 30 per cent in the overall consumer durable sales in the first six months, has also seen a drop by 15 per cent in the sales of products linked with financing. According to company spokesperson some of the banks such as ICICI, Citifinance have withdrawn from consumer financing which has led to rapid fall in sales.

In the past year sales of higher-end products such as LCD televisions, was quite high has been worst hit. The segment has seen drop of 150 per cent in the past six months. According to Kamal Nandi, vice-president, sales and marketing Godrej Appliances the growth of frost-free refrigerators sales, have almost stagnated this year previously it was growing at 20 per cent having a similar impact on sales on entry-level goods.

To overcome the constriction, consumer durable companies are now coming up with their own financing schemes or helping dealers to tie up with banks.

Videocon has started dealer financing/channel financing scheme to boost up sales of their product range through this scheme company aims to make up for a decline in sales. Kim said manufacturers should come up with different schemes to refinance in order to boost sales.

Videocon is working out tie-up with select lenders including ICICI Bank and Standard Chartered Bank to provide financing to the dealers to push up sales.

According to Amit Gupta, Vice-President (sales), Videocon their tie-up with Standard Chartered and ICICI Bank is at the finalization stage, therefore it is expected to enable dealers and distributors to get funds easily at reasonable credit to purchase Videocon's products.

In the meantime, banks are refreshing consumer lending by imposing stricter norms. According to Nandan Shrivastav,General Manager, Retail Banking, Bank of Baroda bank has plans to give consumer loans to customers who have salaried accounts in their banks and have the necessary repayment power.

Deutsche Bank AG, India offers personal loans has also confirmed that there had been a slowdown in the market for these loans even though there are no specific schemes that caters to provision of loans for purchase of consumer durables.

However the banks are expecting lesser demand for purchase of consumer durable goods compared to the previous years in view of rising inflation and rising interest rates.