Banking Current Affairs 2015

RBI releases final guidelines for the Bharat Bill Payment System (BBPS)

Reserve Bank of India issued the final guidelines for the Bharat Bill Payment System (BBPS). It is an integrated bill payment system offering inter-operable and accessible bill payment service to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment.

Key Facts

  • It will help consumers pay multiple bills like electricity, telephone and school fees at a single point of transaction.
  • The National Payment Corporation of India (NPCI) has been appointed as the nodal body which will set the standards, and also take care of clearing and settlement as the Bharat Bill Payment Central Unit (BBPCU).
  • In the two tiered BBPS set-up, there will be authorised operational units called Bharat Bill Payment Operating Units (BBPOUs) with an agent network under the BBPCU.
  • RBI has set a Rs 100-crore networth and domestic registration as qualifying conditions for those seeking to be authorised collection agents.
  • Participants in the BBPS will include authorised entities such as BPCU, BBPOUs as well as their authorised agents, payment gateways, banks, billers and service providers, and other entities, including authorised prepaid payment instrument issuers.

Thus, BBPS will help track all the payments being made in economy, including cash payments to utilities, schools, and telcos among others.

Kotak mahindra Bank to acquire ING Vaisya Bank

Kotak Mahindra Bank has announced that it would acquire Bengalaru-headquartered ING Vysya Bank in an all-stock deal. The deal will be final after regulatory approvals, including those from the Reserve Bank of India (RBI) and Competition Commission of India (CCI). The management of the banks expects that the new merged entity will be operational by April 1, 2015.

The acquisition will help Kotak Mahindra Bank to widen its reach in South Indian market and also help in acquiring SME customers as ING Vysya Bank was having stronghold in SME customers. After merger the combined banking entity will have a widespread network of 1,214 branches across pan India.

The deal will make Kotak the fourth-largest private bank in the country in terms of total business. The biggest three private banks are ICICI Bank, HDFC Bank and Axis Bank.

Government re-launches Kisan Vikas Patra

On 18th November 2014, Union Government re-launched Kisan Vikas Patra scheme (KVP) in New Delhi to encourage the habit of small savings among the citizens. The scheme will soon be made available through designated branches of nationalized banks across the country.

The previous KVP was discontinued in 2011. The scheme was very popular among the investors and the percentage share of gross collections secured in KVP after its launch in 1988 was in the range of 9-29 per cent against the total collections received under all National Savings Schemes in the country.

Key facts of the relaunced Kisan Vikas Patra scheme (KVP)

  • Investment: The KVP will be available to the investors in the denomination of 1000, 5000, 10000 and 50000 rupees with no upper ceiling on investment. The scheme will provide facility of unlimited investment by way of purchase of certificate from post office in various denominations.
  • Liquidity feature: Kisan Vikas Patra scheme has unique liquidity feature, where an investor can encash his certificates after the lock-in period of 2 years and 6 months and thereafter in any block of six months on pre-determined maturity value.
  • KVP certificates: The certificates can also be issued in single or joint names and can be transferred from one person to any other person. The investment made in the certificate will double in 100 months. The facility of transfer from one post office to another anywhere in India and of nomination will also be available under the scheme.
  • Maturity period: With a maturity period of 8 years 4 months, the collections under the scheme will be available with the Union Government for a fairly long period to be utilized in financing developmental plans of the Centre and State Governments.

Earlier Kisan Vikas Patra (KVP) Scheme

Earlier Kisan Vikas Patra (KVP)- a certificate savings scheme was launched by the Union Government on 1st April 1988. This scheme provided facility of unlimited investment by way of purchase of certificates from post offices in various denominations.

The maturity period of the earlier scheme when it was launched, was 5 years and six months and the money invested doubled on maturity.

The gross collections under the scheme in the year 2010-11 were 21631.16 crore rupees which was 9 per cent of the total gross collections during the year.

In the year of its closure, the scheme secured gross collections of 7575.95 crores rupees (April 2011 to November 2011).

Implications of new KVP

  • KVP would serve two purposes: Firstly, it would help poor gullible investors to channelise their savings towards trusted government scheme instead of some ponzi schemes. Secondly, it would help to meet the urgent need to raise savings in the country. These savings then would be used for nation building. Thus such saving instrument will not only earn interest but also help in development of the country.
  • Encourage people to save more: In the last 2-3 years, savings rate in country has declined from a record high of 36.8 per cent to below 30 per cent due to slowdown in the economy. So it will encourage people to save more.