Thursday, August 20, 2015

Excellent Article on payment Banking

An Outstanding article. Read each line carefully to realize the impact.

Key Points:

1. 11 private partied have been given licenses to set up "payment banks".

2.  The only thing they can't do is lend to common public. Payment banks can only lend to the government. So Payment banks will have zero loan defaults because Governments do not default.

3. Any one with 100 cores in his / her kitty can set up such a bank. There are few other norms (not being a crook / not flouting regulatory norms previously etc.)

4. So the number of such banks is likely to increase.

5. Who all have got licenses:  Aditya Birla Group, Reliance Industries, Airtel, Vodafone, the National Securities Depository (which holds almost all of India’s stocks in demat form, and provides the backbone for a tax information network), PayTM, Tech Mahindra, and Sun Pharma’s Dilip Shanghvi

6. Why is this a big deal for customers??

a) Payment banks will have greater penetration and can reach upto remotest customer. These banks will rely on technology to reach payment services to all customers, using mobiles as the vehicle of banking. The mobile phone will become the virtual ATM and small-payments cheque-book.

b) Competition will increase. banks will vie for deposits. Above-limit ATM transactions, additional cheque-books, big money transfers, maintenance of minimum balances, or draft issuance fees: all these will either wither away or get reduced.

c) Payment banks may offer higher savings bank rates of 5-7 percent (to get more deposits).

d) Social welfare and subsidy schemes will have a much better reach through these banks.  The difference between State Bank and Airtel is simply this: both have over 200 million customers, but Airtel can go where State Bank cannot with a branch.

e) Increased mobile banking will create conditions for cash-less banking. This means, over time, the mobile will perform the same role as credit and debit cards, obviating the need for too many cash payments. Black Money will be reduced.

Friday, August 14, 2015

Wholesale Inflation lowest in decade

Wholesale inflation fell at a faster-than-expected annual rate of 4.05 per cent in July, their ninth straight decline and their lowest in at least a decade, mainly driven by weak food and fuel prices.

The wholesale food prices fell 1.16 per cent year-on-year, while fuel prices fell 12.81 per cent from a year ago.

Wednesday, August 12, 2015

Retail inflation hits 2-yr low

The fall in retail inflation to 3.78 % in July, a two-year low, has come in the backdrop of substantial decline in food inflation, which fell to 2.89 percent from 5.7 percent in the preceding month. Even more surprising is the negative growth shown in vegetable prices.

Tuesday, August 11, 2015

Monday, August 3, 2015

RBI Keeps Rates Unchanged

The Reserve Bank of India (RBI) held its policy rate (Repo Rate) unchanged at 7.25 percent. 
The central bank has reduced the policy rate by a total 75 basis points since January, when it embarked on an easing cycle.