your answers please
why did you choose to join banking sector after having a degree in computer science? Is this a wise decision and how??
and as a cs engineer how can you help the sbi?
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In this article, we would discuss about payments banks in
detail.
India will get its first chain of payments banks soon as the Reserve Bank of India (RBI) cleared in-principle licences for 11 applicants (out of 41 firms and individuals) on August 19. The Finance Minister Arun Jaitley said that these banks would not only change the banking of habits of people but also be a "game changer" for the economy.
PPIs to Payments Banks
The concept of payments banks (PBs) was developed by the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households that was set up in 2013 and headed by Nachiket Mor (Director, Central Board, RBI). The committee came up with the concept of vertically differentiated banking systems - specialised institutions providing services that revolve around the three built blocks of banking, namely payments, deposits and credits. Payments banks was one of the five systems enlisted.
Taking example from Kenya's M-Pesa model, the committee recommended that PBs should be formed replacing Prepaid Payment Instrument (PPI) Issuers as the latter is not wholly customer-friendly. PPIs (like Paytm, Airtel Money, Oxigen, Mobikwik, etc.) that are also know called digital/mobile wallets are like prepaid SIM cards - they can be recharged with an amount and used to carry transactions like settling utility or shopping bills, booking movie tickets, among others. You can load money in these instruments by cash/direct bank transfers or via credit cards. They're regulated by RBI under Payment and Settlements Act of 2007.
Problems with PPIs
- As per RBI guidelines, only a maximum of Rs.50000 can be stored in mobile wallets.
- Money loaded into such instruments earns you zero interest. Hence, from the financial inclusion point of view, it is not very useful for poor people and small businessmen who wish to save their money.
- Money loaded cannot be withdrawn or transferred to any bank account; user has to spend it.
- For every transaction 0.5% is levied as commission.
- Most importantly, the unused balance of money is maintained in an escrow account in a bank i.e. a separate, third-party account in any of the scheduled banks to hold money that belongs to the prepaid instrument user. Thus, when the user conducts a transaction using the digital wallet, the PPI issuer takes out money from the escrow account. This is called the nested payment model, which according to the Nachiket committee carried 'contagion or interconnected risk'. In other words, if there is a crisis in an organisation (here the bank that holds the escrow account) or even a rumour of one, then it will adversely affect other organisations in the market (here the prepaid instrument firm), thereby causing instability in the economy. Further, the money held by PPIs have no deposit insurance unlike conventional bank deposits.
Hence, the introduction of payments banks. It is a modification of the concept of a full-service bank and only provides select services. It can collect deposits and provide remittances but cannot lend credit/loans. Existing PPIs besides other entities and individuals are eligible to get payments banks licence. The target audience are small businessmen and low income groups. PBs will offer services through their own network of access points, business correspondents, among others.
Till date RBI has given in-principle licences to 11 entities, which are as follows.
1. Aditya Birla Nuvo: It is part of the Aditya Birla Group owned by Kumar Mangalam Birla. Its presence in the financial sector includes asset management, private equity, non-banking financial services, etc. The telecom division, Idea Cellular, has a mobile wallet service called Idea Money.
2. Airtel M Commerce Services: This is part of Bharti Airtel with mobile wallet service called Airtel Money. It has tied up with Kotak Mahindra Bank, which will have 19% stake in the joint venture.
3. Cholamandalam Distribution Services: It is a subsidiary of Cholamandalam Investment and Finance Company (Chola), the financial services part of Chennai-based Murugappa Group. In the financial services field, Chola already has over 534 branches and offers services across India. It manages assets worth Rs.25,000 crore.
4. Department of Posts: It is considered to be one of the world's largest postal network. Out of 1.5 lakh offices, 90% is in rural areas. This is its biggest advantage over other entities.
5. Fino PayTech: It is a business and banking technology platform employs the largest network of business correspondents, who help banks extend services to rural customers without easy access to bank branches. The firm is backed by private equity firms like Blackstone and the World Bank's IFC. ICICI Bank also owns a stake in the company.
6. National Securities Depository Ltd.: It is India's first and major depository, which handles most of the securities owned and settled electronically in the nation's capital market. It is promoted by IDBI Bank, the Unit Trust of India and the National Stock Exchange. Eleven public and private banks own stakes in NSDL including State Bank of India, Deutsche Bank AG, HDFC Bank and Citibank.
7. Reliance Industries (RIL): Not only does it have India's richest businessman Mukesh Ambani at the helm, but has also tied up with the country's largest public sector lender SBI to set up a PB.
8. Dilip Shantilal Shanghvi: He owns Sun Pharmaceuticals and has a personal investment firm Dilip Shanghvi Family and Associates (DSA). He has tied up with IDFC (an NBFC) and Telenor, a Norwegian telecom company.
9. Vijay Shekhar Sharma: Founder of India's largest mobile payments company, Paytm, he has investors including the Chinese e-commerce giant Alibaba. Recently it reached the 100-million user mark and has around 75 million transactions every month. The PB license will enable it to provide a wide scope of financial services to Paytm users.
10. Tech Mahindra: Part of the $16.5 billion Mahindra group, this IT firm has operations in automobiles, financial services, retail and real estate, among others. Its mobile wallet service is called MoboMoney, which operates a "tap and pay" system.
11. Vodafone M-Pesa: Two years ago Vodafone launched M-Pesa, its money transfer service. It has over 90,000 agents, it is providing rural people with convenient ways of transferring money and make payments in a safe set up.
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General Knowledge and Current Affairs are an important component of many competitive exams, such as the UPSC Civil Services Examination, SSC CGL Exam, Bank PO & other PSU entrance tests, etc. Therefore, understanding the concepts/terms/events that are significant in our daily lives is critical for aspirants. To make your preparation easier and to help you score better in your exams, we at PaGaLGuY bring you brief articles on important phenomena, concepts and events. Spend just 15 minutes every day on pagalguy.com and score at least 10 more marks in your General Studies paper!
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In this article, we would discuss about the nnecessary conditions that need to be fulfilled by payments banks, their features and arguments against them.
Pre-requisites for PBs set by the RBI
-Minimum capital requirement is Rs.100 crore
-A promoter/promoter group can have a joint venture with an existing scheduled commercial bank to set up a PB.
-The promoter (the main entity) should have a minimum stake of 40% for the first five years, 30% for 10 years and 26% for 12 years from the date of commencement of business. For instance, RIL has tied up with State Bank of India and the former will hold 70% stake in the joint venture.
-The foreign shareholding in the payments bank would be as per the Foreign Direct Investment (FDI) policy. It is set at 74% similar to private sector banks.
Features of PBs
-PBs can accept demand deposits like current and savings bank accounts with a ceiling limit of Rs.1 lakh per customer.
-These deposits would be covered under the deposit insurance scheme of the Deposit Insurance and Credit Guarantee Corp. of India (DICGC), a wholly-owned subsidiary of the RBI.
-Interest on the deposits will be as per the rate set by the RBI.
-They cannot extend loans and hence there is no fear of NPAs.
-They can issue debit cards but not credit cards.
-They will also have to maintain CRR (cash reserve ratio) similar to other scheduled commercial banks.
-Besides, they will have to invest atleast 75% of their demand deposits in statutory liquidity ratio (SLR), eligible government securities or treasury bills having maturity up to one year. This prevents any credit risk.
-Their only earning would be fees charged as commission.
-Distribution of non-risk sharing simple financial products like mutual fund units and insurance products, etc.
Arguments not in favour of PBs
- Many financial experts argue that this 'borrowed model' is already being provided by big banks under their mobile/digital banking platform. Thus, it would have been prudent to let these banks provide a combination of banking, investments and insurance services through their network.
- Also, it would have been easy to direct PPIs to pay interest on the amounts stored in digital wallets.
- Scheduled commercial banks can open a PB as their subsidiary, which negates the meaning of PBs being differentiated banking systems. This will also prove detrimental for independent entities. Big banks with their expansive reach, experience and human resources can trample the business of a smaller entity's PB.
**However, it can also be vice-versa (hence in favour of PBs). Private banks like ICICI and HDFC have hitherto only had public sector banks (PSBs) as competitors. Experts assert that PBs will offer lower transaction costs, improved service standards, technological innovation and an even wider network. For instance, Department of Post has a network of 1, 54,882 post offices (as of 2014) across India, of which over 90% is in rural areas. On the other hand, SBI, India's largest public sector lender has 15,869 branches, 43,515 ATMs and tie up with 54,487 business correspondents.
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Groundbreaking revelations!
According to him, Cloud Seeding = Cloud Computing 😂
Main to thappad maar deta ise. 😛
How many many bank accounts were started by SBI till now under PM jan dhan Yojana till now approximately
friends somebody is sayng..we can use both hindi and english while speaking in group discussion..is it wise???
ppl who r attending mahindra's gd/pi session,plz ask and inform if we should wear format shirt and trousers with a tie,or suits?
friends anybody here..attending SBI GD/PI on 9th sep.in hyd??
It's the things you cannot predict that matter..
Loving this quote!! ♥
Finallyyyyyy Got the NOC from Bank.......what a piece f mind......! ! ! ! ! ! Now character certificates
watch this:
main Atmaram tukaram bhide gokuldham society ka ekmev secretary ye ailan karta hun ki.....
Aaaj ki party meriii taraff see...chand ko bolo utre falakse....dam dam dukudu dukudu :P :P 😛
When r the interviews ending..?? Last interview is on 18th??
What is contingent liability? What is contingent liability of a bank?
is identity certificate mandatory for all or only for those who dont have valid identity proof?
Finally, I understood the Chinese stock market crash or "Black Monday" as it has been called.
How it all started?
Chinese people started showing too much interest in stocks in late 2014 and early 2015 as it was seen as gainful business. Plus, housing prices were on a decline and saving rate in china is about 50%. Therefore, they were left with stock markets to invest ( high returns are found in real estate and stocks ) Most of this was margin trading. Margin trading ka matlab paise borrow karke stocks kharidna. Margin trading was also the cause of Great Depression of 1929 ( But, don't expect that situation here )
So, why sudden crash?
Crashes are not sudden, the bubble was inflating and was waiting to be pricked. There is an authority in China called CSFC which injected funds into Chinese stock market to make the market bullish. They thought its not required now and they withdrew support. Result : Crash!!
What Chinese govt. did?
China devalued (or rather let the currency depreciate) to spur growth sentiments, but useless.
Any other factor?
Yes, the US Fed is about to increase interest rates, so there may be capital outflow into US anytime soon. This sentiment is also there in emerging markets.
Indian angle:
Yes, effects will be there in this globalised world. But ours is a domestic consumption driven economy. Other emerging economies which are more linked to Chinese growth will face problems. So, as I read somewhere, the boat will be rocked, but it won't overturn.
I've tried to keep it short and simple. Hope it helps 😃
on the interview day they asked to bring one set of attested photocopies of the original certificates.
Those are self-attested or attested by gazetted officer??
point 6 in the call letterpls reply
Silly question #2:
The "place" in CC and Identity Certificate has to be the place of the person (gazetted officer) signing, or the place of your interview? :(
can i say
"as i have less than 60% in my 10+2 i couldn't attain my campus interviews and the company which i could attain was asking a security deposit of rs 2 lakhs.....so my father advised me to appear bank exam and as i did clear the exam In the 1st attempt... It gave me confidence and boost my interest.. "
being a mechanical engineer...how can u be beneficial for the bank..???plz tell me a short and simple answer for this...