Recently I decided to place a short term deposit with one of the foreign banks using my online internet banking facility. I chose 30 days option and placed the deposit without finding out what the interest rate would be. To my utter surprise it turned that the bank was paying an interest rate of 2.5%. I can't believe this because effective April 1, 2010 all banks have to pay SB account interest of 3.5% on a daily balance basis. So I went by the assumption that instead of leaving the money in SB account, I moved to a Fixed deposit and ended up earning less than the SB account. So be aware of the interest rates before opening FD's online.
Now as the Fixed Deposit has been opened with automatic renewal option, the deposit has got auto renewed for the second time as well. I need to really pull up my socks and ensure that it doesn't gets renewed for the second time.
My opinions on many things this life offers changes very frequently.. some call it flexibility some call it fickle-mindedness.. but that is what I am!!
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Showing posts with label Banking. Show all posts
Showing posts with label Banking. Show all posts
Real cost savings for Banks!!
Have you noticed in the last 3 months, all banks have replaced their quarterly/monthly account statements despatch format. Previously all banks used to send envelopes which contains the account statements along with some pamphlets for new products or services. Recently, the account statements have started coming in the form of inland letters which contains nothing more than the account statement.
From my experience, I can say whatever pamphlets which came along with the account statements went to the dustbin in 99% of the cases. You hardly bother to read or follow up with the bank. Guess one of the banks would have done detailed market study on the usefulness of these brochures. One process improvement guy in some organisation would have come up with this idea of inland letter and this has become an instant hit among other banks. The pity is that all banks have started copying it without any second thoughts. Sure the banks would be saving lot of money on printing, postage and courier/postal charges, which is need of the hour.
I think it is a welcome change and it is also a green initiative, saving lot of paper wastage. Lets welcome it whole-heartedly!!
From my experience, I can say whatever pamphlets which came along with the account statements went to the dustbin in 99% of the cases. You hardly bother to read or follow up with the bank. Guess one of the banks would have done detailed market study on the usefulness of these brochures. One process improvement guy in some organisation would have come up with this idea of inland letter and this has become an instant hit among other banks. The pity is that all banks have started copying it without any second thoughts. Sure the banks would be saving lot of money on printing, postage and courier/postal charges, which is need of the hour.
I think it is a welcome change and it is also a green initiative, saving lot of paper wastage. Lets welcome it whole-heartedly!!
Advertisements in Hindi in Tamil FM Channels!!
Offlate, I have been hearing some Hindi advertisements in Tamil FM Channels in Chennai. This is truly unbelievable!! Probably the advertiser is not concerned to know if it reaches the intended receipients of the advertisements. My guess is that not more than 40% of the people know Hindi in Chennai. I may be wrong but I dont think it is not much more than that. More people know Telugu than Hindi, I would say. By now you should have guessed who can do these kind of advertisements where the language barrier itself stops it from reaching to the masses. It is none other than Oriental Bank of Commerce, a Public Sector Bank. It is one of the well run PSU Bank and a highly profit making one. It is their earnest belief that by radio advertisements they can expand their brand visibility and reach to people in South India. I think they are missing it completely by going for a language which most of the population dont understand.
As we all know, majority of my fellow Tamilians dont understand Hindi and even if they understand Hindi they find it extremely difficult to converse in Hindi. But I can be rest assured that while following a Tamil FM radio you hardly expect an all Hindi advertisement in Chennai and the moment it comes you mentally switch off and start looking for "songs" in other channels. Ordinarily the attention span of listeners for advertisements is very low in FM radio. I talk from my personal experience because as soon as the ads start coming my hand automatically goes in the process of tuning the other radio channels. Same with most of the people, I believe!!
But somebody who is authorising these advertisements within the Bank should really look for details like which cities are targeted, what should be language to be used, which radio stations are going to be used etc., They have a common Hindi advertisement which they play across all FM radio stations in India. One size fits all approach can't work here.
Head hunters are on the prowl!!
I understand that one of the top IT/BPO company is setting up a Investment Banking Operations unit in Chennai for a global bank. There are some senior level openings available and it has been notified by the company to the head hunters over the last 2 days, I guess.
I think this is the only company which is recruiting in the IB operations domain across India and the head hunters are on the prowl. For this one position, I have received atleast 10 calls and 5 emails from different consultants across India in the last 24 hours. You will be really surprised to know that somebody would call from Chennai and in another 15 minutes you will get a call from Pune and after that from Delhi. On top of it, some have got calls from the company directly. Sometimes, I wonder if somebody is trying to play a trick or something.. Head hunters are desperately in need of people and even if you say that you are not interested, they insist that I should refer somebody for the position. My escape route in this regard is to ask the consultant to send me a mail with the JD and then I refer people. Most of them back out and few of them still send emails.
Why head hunters find this difficult to get candidates is because of the fact nobody wants to move at this time of the year. Increments and bonus are due in January/February, if you still expect anything of this kind to happen this year! The second reason is nobody is comfortable moving from their positions that they currently hold. Known devil is better than an unknown angel. Talks of no job guarantee in the new job. After yesterday's Satyam episode, it becomes even more prominent.
Now my biggest curiousity is to find who is that global bank intending to set up in Chennai!!
Time to lock into Fixed Deposits - Part III
After completing the first two parts on the attractive fixed deposit interest rates currently prevalent in the banking sector, I have increasingly come across advertisements from banks over the last week or so where the interest have still gone up from the 10.50 - 11.00% bracket to above 11%. This is particularly very evident in the case of private sector banks.
The rates looks very tempting for lay investors. But at the same time, it is very important to note that the time-frame of the deposit should be decided by the funds requirements of the individuals. Just because a bank offers higher interest rates, the deposits should not be contracted for a longer time-frame. It should be aligned with the individual's funds requirement before the tenure of the fixed deposit is committed.
Also one should also remember that Fixed Deposits are only a portion of your investment portfolio and higher interest rates alone should not influence you to have a very high proportion of your investments in fixed deposits. When we take into account the inflation rate of around 8%, and the deposit rate of 11%, technically it means that you are able to get a real effective interest rate of only 3% or so pre-tax. Post-tax, the return would be much lower. Therefore, in order to grow your investments and build the corpus for meeting your future financial goals or retirement, you need to ensure that investments are also channeled to other investment avenues like equity, gold etc.,
Just for information purposes, few attractive interest rate options which has come up from private sector banks are:
City Union Bank is offering 11.30% on 1000 day deposit. Karur Vysya Bank is offering 11% on a 3 year deposit.
Standard Chartered Bank is offering 11.00% on 90 days short term deposit.
In Chennai, REPCO Bank Ltd., is offering 11.50% on 40 months deposit. But please note that REPCO Bank deposits doesnt come under Deposit Insurance Guarantee scheme.
The rates looks very tempting for lay investors. But at the same time, it is very important to note that the time-frame of the deposit should be decided by the funds requirements of the individuals. Just because a bank offers higher interest rates, the deposits should not be contracted for a longer time-frame. It should be aligned with the individual's funds requirement before the tenure of the fixed deposit is committed.
Also one should also remember that Fixed Deposits are only a portion of your investment portfolio and higher interest rates alone should not influence you to have a very high proportion of your investments in fixed deposits. When we take into account the inflation rate of around 8%, and the deposit rate of 11%, technically it means that you are able to get a real effective interest rate of only 3% or so pre-tax. Post-tax, the return would be much lower. Therefore, in order to grow your investments and build the corpus for meeting your future financial goals or retirement, you need to ensure that investments are also channeled to other investment avenues like equity, gold etc.,
Just for information purposes, few attractive interest rate options which has come up from private sector banks are:
City Union Bank is offering 11.30% on 1000 day deposit. Karur Vysya Bank is offering 11% on a 3 year deposit.
Standard Chartered Bank is offering 11.00% on 90 days short term deposit.
In Chennai, REPCO Bank Ltd., is offering 11.50% on 40 months deposit. But please note that REPCO Bank deposits doesnt come under Deposit Insurance Guarantee scheme.
A joke on Iceland banking problems
Due to the global credit crisis, banks in Iceland are having a tough time. Lot of depositors in UK have lost billions of pounds as the deposits are frozen now. Today one of my friends cracked a joke which goes like this:
"As the name of the country suggests, the deposits with Iceland banks can be either frozen or there will be a meltdown, just like the case of Ice. So the depositors should have been aware of this"
"As the name of the country suggests, the deposits with Iceland banks can be either frozen or there will be a meltdown, just like the case of Ice. So the depositors should have been aware of this"
We are witnessing the worst turmoil in Financial Services world
The last couple of weeks we are all witness to the turmoil in the financial services industry in US which has global ramifications. First the news of Freddie Mac and Fannie Mae going down before they were given a lifeline by the US Federal Reserve. Then we saw Lehman Brothers going down without any assistance from the US Fed. Simultaneously, Merill Lynch was acquired by Bank of America for US$45 billion. The final episode in this series was American Insurance Group (AIG) being saved by a loan of US$85 billion by the US Fed. It doesnt seem to be the end of the show with more such bankruptcies, mergers and break-downs are expected over the next couple of months.
There were questions being asked why the US Fed helped 3 of the 4 institutions to survive and allowing only Lehman Brothers to go down. US Fed Chairman, Ben Bernanke has kept a low profile during this phase but he is scheduled to depose before the Congressional committee next week on the actions taken by the US Fed. At that hearing, probably we may get more to know from him.
Few interesting quotes attributed to the recent financial industry turmoil:
" America has become more communist than China by allowing Freddie Mac and Fannie Mae to survive" - Jim Rogers
" With the FED supporting the failed entities in financial services industry, this may open the doors for other players in other industries like Airlines, Automakers etc to come to Fed's doorstep in future" - Nouriel Roubini, a professor at New York University's Stern School of Business.
What are the implications in India?
1. Number of job losses are expected particularly in Lehman Brothers India Operations. It employs close to 2500 people in their back end operations and another 700 in its India and global operations. There is lot of uncertainity among the employees and temporary job loss for many of them.
2. Lehman, Merill Lynch, AIG have lot of investments in Indian equities and they may resort to bulk sale to generate as much cash as possible. There is an adage which says "Sell what sells", so there may be more pain in the near term on account of unwinding of long positions.
3. With lack of clarity on future course of direction for financial industry, fresh FII inflows may dry up. No FII money, more pain in the markets. This also results in Rupee depreciating against the dollar.
4. With 3 of the top 5 investment banks going away from the scene, IT companies would have really tough times ahead. BFSI domain is one of the predominant ones for all the IT companies. Now almost all the companies have come out and said that they dont have big exposure to the fallen giants. But hard to believe as I was told that each one of them have a dedicated team running into hundreds if not thousands of headcounts. With the landscape being very hazy, there is going to be slowdown in new order flows which affects new hiring and laying-off of existing staff.
5. Lease rentals for IT/ITES space is already showing signs of dropping drastically and this kind of news is not going help the cause.
What are the other things you are expecting to happen?
There were questions being asked why the US Fed helped 3 of the 4 institutions to survive and allowing only Lehman Brothers to go down. US Fed Chairman, Ben Bernanke has kept a low profile during this phase but he is scheduled to depose before the Congressional committee next week on the actions taken by the US Fed. At that hearing, probably we may get more to know from him.
Few interesting quotes attributed to the recent financial industry turmoil:
" America has become more communist than China by allowing Freddie Mac and Fannie Mae to survive" - Jim Rogers
" With the FED supporting the failed entities in financial services industry, this may open the doors for other players in other industries like Airlines, Automakers etc to come to Fed's doorstep in future" - Nouriel Roubini, a professor at New York University's Stern School of Business.
What are the implications in India?
1. Number of job losses are expected particularly in Lehman Brothers India Operations. It employs close to 2500 people in their back end operations and another 700 in its India and global operations. There is lot of uncertainity among the employees and temporary job loss for many of them.
2. Lehman, Merill Lynch, AIG have lot of investments in Indian equities and they may resort to bulk sale to generate as much cash as possible. There is an adage which says "Sell what sells", so there may be more pain in the near term on account of unwinding of long positions.
3. With lack of clarity on future course of direction for financial industry, fresh FII inflows may dry up. No FII money, more pain in the markets. This also results in Rupee depreciating against the dollar.
4. With 3 of the top 5 investment banks going away from the scene, IT companies would have really tough times ahead. BFSI domain is one of the predominant ones for all the IT companies. Now almost all the companies have come out and said that they dont have big exposure to the fallen giants. But hard to believe as I was told that each one of them have a dedicated team running into hundreds if not thousands of headcounts. With the landscape being very hazy, there is going to be slowdown in new order flows which affects new hiring and laying-off of existing staff.
5. Lease rentals for IT/ITES space is already showing signs of dropping drastically and this kind of news is not going help the cause.
What are the other things you are expecting to happen?
Problem with the Citibank credit cards and the railway reservations
The Hindu reported in its yesterday edition that Citibank credit card customers who have booked railway tickets online using the IRCTC online railway booking facility are getting their tickets cancelled by the Railways department.
Reason: Non-receipt of funds from Citibank for the tickets issued.
It is really unbelievable that a bank of such a size and stature is not able to make periodic payments to IRCTC for the tickets booked. Southern Railway sources have also confirmed that they are also facing issues with payments from Citibank for tickets issued across the counter using Citibank credit cards.
I am not sure if this is due to the difficulties faced by Citibank globally on account of huge write-offs and poor liquidity. Citibank has confirmed that they have issues with their payment systems across the country which has resulted in the non-payment of dues to IRCTC. Lots of customers for no fault of them have got their railway ticket cancelled.
If you have used your Citibank credit card to book tickets for prospective dates, it is worthwhile to check if the tickets are still valid or you may be in for a rude shock on the date of your travel.
Reason: Non-receipt of funds from Citibank for the tickets issued.
It is really unbelievable that a bank of such a size and stature is not able to make periodic payments to IRCTC for the tickets booked. Southern Railway sources have also confirmed that they are also facing issues with payments from Citibank for tickets issued across the counter using Citibank credit cards.
I am not sure if this is due to the difficulties faced by Citibank globally on account of huge write-offs and poor liquidity. Citibank has confirmed that they have issues with their payment systems across the country which has resulted in the non-payment of dues to IRCTC. Lots of customers for no fault of them have got their railway ticket cancelled.
If you have used your Citibank credit card to book tickets for prospective dates, it is worthwhile to check if the tickets are still valid or you may be in for a rude shock on the date of your travel.
RBI puts temporary block on mobile payments
Well-made advertisements from Airtel featuring Madhavan and Vidya Balan, promoting mobile payments will not be seen for sometime. The reason being that RBI has temporarily stopped mobile payments. The below text was received by me as a forwarded mail. Please check with your bank and service providers.
Quote
India's central bank has ordered the country's financial institutions to cease mobile payment services until it has issued procedural guidelines. The Reserve Bank of India reportedly sent a notification to the institutions to inform them that it was compiling and evaluating comments on the payments following its posting of draft guidelines on its web site last month.
Some banks, however, have already started to offer these services to customers. ICICI bank launched iMobile in January, which enabled clients to use their mobile phones to transfer funds and pay bills. Yes Bank in March collaborated with Obopay, a Canadian start-up company, to launch a person-to-person money transfer service.
The RBI is still allowing banks to offer basic account information to customers — such as credit and debit alerts and balance enquiries — through their mobile phones. The RBI's published draft guidelines reportedly required mobile payment services to comply with standard money laundering and "know your customer" rules. They also required the services to adopt the message formats that the Mobile Payments Forum of India was developing to ensure interoperability.
Unquote
Quote
India's central bank has ordered the country's financial institutions to cease mobile payment services until it has issued procedural guidelines. The Reserve Bank of India reportedly sent a notification to the institutions to inform them that it was compiling and evaluating comments on the payments following its posting of draft guidelines on its web site last month.
Some banks, however, have already started to offer these services to customers. ICICI bank launched iMobile in January, which enabled clients to use their mobile phones to transfer funds and pay bills. Yes Bank in March collaborated with Obopay, a Canadian start-up company, to launch a person-to-person money transfer service.
The RBI is still allowing banks to offer basic account information to customers — such as credit and debit alerts and balance enquiries — through their mobile phones. The RBI's published draft guidelines reportedly required mobile payment services to comply with standard money laundering and "know your customer" rules. They also required the services to adopt the message formats that the Mobile Payments Forum of India was developing to ensure interoperability.
Unquote
Can you guess the salary of the CMD of IDBI Bank?
I was reading through the balance sheet of IDBI Ltd., One interesting thing which caught my attention was the salary levels of the Chairman and Managing Director, Yogesh Agrawal. This poor guy, I literally mean that, is being paid a basic salary of Rs26,000/- pm and Dearness allowance of Rs13500/- pm. What is this measly salary figure for a person who is supposed to manage one of India's largest bank. I was totally confused to know what kind of motivation or committment levels these kind of salaries can inspire.
The bank has two major divisions, Retail Banking Division and Corporate Banking Division. Each one of them is managed by a Deputy Managing Directors and they are also paid salary of similar nature.
The IDBI Balance sheet is bi-lingual. That is, it has a Hindi version and an English version side by side. It also proudly talks about the steps taken by the Bank to propogate Hindi in their administrative activities. I was immediately reminded of Central Government offices, Central Excise, Income Tax and Customs. There you can find a new Hindi word written on a slate (similar to one what is used by school going children) and hung at the centre of the hall with the meaning in vernacular language.
The other noteworthy thing which caught my attention in IDBI Balance sheet is the amount of investments held in its books. It is more than Rs33,000/- crores. Most of it would be Government securities for SLR and other purposes but surely there are hidden gems of investments in companies and corporations which would translate it into a goldmine, if at all, IDBI decides to monetise it someday. At the peak stock market valuations, the per share value of investments was stated to be somewhere close to Rs75/- per share.
The bank has two major divisions, Retail Banking Division and Corporate Banking Division. Each one of them is managed by a Deputy Managing Directors and they are also paid salary of similar nature.
The IDBI Balance sheet is bi-lingual. That is, it has a Hindi version and an English version side by side. It also proudly talks about the steps taken by the Bank to propogate Hindi in their administrative activities. I was immediately reminded of Central Government offices, Central Excise, Income Tax and Customs. There you can find a new Hindi word written on a slate (similar to one what is used by school going children) and hung at the centre of the hall with the meaning in vernacular language.
The other noteworthy thing which caught my attention in IDBI Balance sheet is the amount of investments held in its books. It is more than Rs33,000/- crores. Most of it would be Government securities for SLR and other purposes but surely there are hidden gems of investments in companies and corporations which would translate it into a goldmine, if at all, IDBI decides to monetise it someday. At the peak stock market valuations, the per share value of investments was stated to be somewhere close to Rs75/- per share.
Citibank is on a selling spree
We all know how desperate is Citibank to shore up its capital and owned funds on account of the significant write-offs on their sub-prime portfolio. Vikram Pandit, CEO of Citibank is working on revitalising the company by selling off non-core assets in this hour of need. During this crisis period, Citibank may also let go, few of its prized assets which has taken years for it to build.
Citi Financial, the NBFC arm of Citibank is rumoured to be on the block. Economic Times carried a front page article a week ago in this regard. Citi Financial has also fired more than 400 staff in the last couple of months. It was also looking at selling many of its US assets to raise capital.
The latest sale by Citibank is the sale of prime real estate. Today's edition of The Hindu carried an advertisement by CB Richard Ellis, property management consultant advertising about the sale of prime (really prime!!) commercial and residential properties in Chennai. Citibank is selling 5 flats ranging from 1700 to 2200 sq.ft each in posh areas of Chamiers Road, Alwarpet and Bishop Wallers Avenue, Mylapore. It is also selling more than 48,000 sq. ft of commerical space in Spencer Plaza, Phase III where the Citi's back office processing entity, e-Serve operates.
Bad times for Citi.
Citi Financial, the NBFC arm of Citibank is rumoured to be on the block. Economic Times carried a front page article a week ago in this regard. Citi Financial has also fired more than 400 staff in the last couple of months. It was also looking at selling many of its US assets to raise capital.
The latest sale by Citibank is the sale of prime real estate. Today's edition of The Hindu carried an advertisement by CB Richard Ellis, property management consultant advertising about the sale of prime (really prime!!) commercial and residential properties in Chennai. Citibank is selling 5 flats ranging from 1700 to 2200 sq.ft each in posh areas of Chamiers Road, Alwarpet and Bishop Wallers Avenue, Mylapore. It is also selling more than 48,000 sq. ft of commerical space in Spencer Plaza, Phase III where the Citi's back office processing entity, e-Serve operates.
Bad times for Citi.
New entrant in the consumer finance business!
Reliance Capital has entered the consumer finance business in a big way. They have set up a company called Reliance Consumer Finance and you can acess the website here.
I came to know about the new venture of Reliance Capital through FM Radio advertisements. They are making high decibel advertisements in FM Radio in Chennai. They offer all kinds of loans from personal loans, car loans, home finance, loan against property and commerical property loans. One thing which immediately caught my attention when I visited their website is that they have clearly mentioned about the eligibility criteria, fees and charges in a very user friendly manner. Ofcourse, the charges mentioned are on the higher side compared to other players like PSU Banks and private banks, I guess the charges would be negotiable.
I personally believe there is lot scope for building the consumer finance business in India. Just like Reliance Money which expanded in a frentic pace in non-urban and non-metro cities, I guess Reliance Consumer finance would also concentrate outside metros to build business in the first place. Considering the pace at which Reliance grows its business, I think it would be a big name in this business in a couple of year's time.
Watch out Reliance Capital stock!
I came to know about the new venture of Reliance Capital through FM Radio advertisements. They are making high decibel advertisements in FM Radio in Chennai. They offer all kinds of loans from personal loans, car loans, home finance, loan against property and commerical property loans. One thing which immediately caught my attention when I visited their website is that they have clearly mentioned about the eligibility criteria, fees and charges in a very user friendly manner. Ofcourse, the charges mentioned are on the higher side compared to other players like PSU Banks and private banks, I guess the charges would be negotiable.
I personally believe there is lot scope for building the consumer finance business in India. Just like Reliance Money which expanded in a frentic pace in non-urban and non-metro cities, I guess Reliance Consumer finance would also concentrate outside metros to build business in the first place. Considering the pace at which Reliance grows its business, I think it would be a big name in this business in a couple of year's time.
Watch out Reliance Capital stock!
Latest Bank Merger - CBoP to merge with HDFC Bank!
The merger of Centurion Bank of Punjab with HDFC Bank has been announced couple of days back. I guess this a prelude to many other mergers which would happen in the next couple of years to come. The merger share swap ratio has been announced today. That is 1 share of HDFC Bank for every 29 shares of CBoP. (1:29) CBoP itself is an amalgamated organisation of Centurion Bank, Bank of Punjab and Lord Krishna Bank. HDFC Bank has also seen merger earlier when it acquired Time Bank.
What HDFC Bank gets out of this merger?
1. HDFC Bank gets licenses for 400 odd branches through this acquisition. Today morning, Mr BD Narang, former Chairman and Managing Director of Oriental Bank of Commerce who handled ther merger of Global Trust Bank with OBC, was saying that for HDFC Bank in the normal course would have taken 10 years to get these branch licenses. Then it is a good thing for HDFC Bank.
2. Centurion Bank has relationship with lot of two-wheeler borrowers who are typically in the lower middle income group. With the system driven approach and better product profile of HDFC Bank, it would be able to leverage the existing client relationships.
3. HDFC Bank gets access to branches in southern and northern India. CBoP is strong in Kerala due to the merger of Lord Krishna Bank and it is good break for HDFC Bank, I guess.
As of now, the merger seems to be in favour of HDFC Bank than with CBoP.
There are many other banks waiting to be acquired by a bigger bank like Lakshmi Vilas Bank, City Union Bank, Dhanalakshmi Bank, Catholic Syrian Bank, though none of them dont have any publicly demonstrated intention of selling it out.
What HDFC Bank gets out of this merger?
1. HDFC Bank gets licenses for 400 odd branches through this acquisition. Today morning, Mr BD Narang, former Chairman and Managing Director of Oriental Bank of Commerce who handled ther merger of Global Trust Bank with OBC, was saying that for HDFC Bank in the normal course would have taken 10 years to get these branch licenses. Then it is a good thing for HDFC Bank.
2. Centurion Bank has relationship with lot of two-wheeler borrowers who are typically in the lower middle income group. With the system driven approach and better product profile of HDFC Bank, it would be able to leverage the existing client relationships.
3. HDFC Bank gets access to branches in southern and northern India. CBoP is strong in Kerala due to the merger of Lord Krishna Bank and it is good break for HDFC Bank, I guess.
As of now, the merger seems to be in favour of HDFC Bank than with CBoP.
There are many other banks waiting to be acquired by a bigger bank like Lakshmi Vilas Bank, City Union Bank, Dhanalakshmi Bank, Catholic Syrian Bank, though none of them dont have any publicly demonstrated intention of selling it out.
Credit card upgrades and direct debit authorisations!
We frequently come across offers for Credit Card upgrades from Silver to Gold and now more recently, Platinum cards based on the transaction history. Though going for a platinum card is useful from reward points and other benefits perspective, the point we need to be careful about is the migration of direct debit authorisations given to various utility bill payments like telephone bills, electricity bills etc.,
Recently I was offered a Platinum card by State Bank of India replacing my Gold card. I gleefully accepted the new card but failed to notify my mobile telephone company of the change in the credit card number. The mobile telephone company could not execute the direct debit authorisation and they started sending me SMS's and made calls asking me to make the payment. I was very angry with the person who called from their call centre asking for payment since I had already given direct debit authorisation on my credit card, but I didnt realise that the credit card to which I have provided the direct debit authorisation was no longer valid. It stuck me suddenly couple of days after the call that I have upgraded my credit card and the credit card number would have got changed.
I have to now submit a new direct debit authorisation to the mobile telephone company with the new credit card details.
Is it not possible for the credit card issuing companies to provide the upgraded cards with the same credit card number to ensure continuity of direct debit payments?
Recently I was offered a Platinum card by State Bank of India replacing my Gold card. I gleefully accepted the new card but failed to notify my mobile telephone company of the change in the credit card number. The mobile telephone company could not execute the direct debit authorisation and they started sending me SMS's and made calls asking me to make the payment. I was very angry with the person who called from their call centre asking for payment since I had already given direct debit authorisation on my credit card, but I didnt realise that the credit card to which I have provided the direct debit authorisation was no longer valid. It stuck me suddenly couple of days after the call that I have upgraded my credit card and the credit card number would have got changed.
I have to now submit a new direct debit authorisation to the mobile telephone company with the new credit card details.
Is it not possible for the credit card issuing companies to provide the upgraded cards with the same credit card number to ensure continuity of direct debit payments?
Fraud in Societe Generale Equity linked Index futures!
Societe Generale (SG) has reported yesterday one of the biggest dealer frauds in the history of Banking. The fraud, as reported, is committed by a trader in European Equity Index Futures based out of Paris. The amount of loss estimated is USD7.2 billions. When compared to other reported frauds by traders, this stands apart on account of losses reported by SG. SG has reported that the trader has been suspended and his managers' have also been sacked. You can read the press report here.
This fraud exposes the need and importance of risk management and control in the banking industry. Over the last 3 years all banks and FI's are reported record profits and probably it has induced the banks to be lethargic on their risk management. One wonders how such a big loss has been allowed to happen in an established global bank and how the trader has managed to hide losses for quite sometime.
It is also been reported that the trader has moved from the Middle Office to the trading floor and he is aware of the various checks and controls in the middle office and the back office and has devised ingenious ways to circumvent them and not get noticed. I expect that the worst thing to happen is to have some banking regulation which prohibits people moving from back/middle office to the trading desk. This would be a significant thing considering the fact that many aspiring youngsters take up roles within the operations and support group as they try to enter the lucrative trading world. Under normal circumstances, persons with experience in the operations or support role are considered favourably but with the present situation, it may become difficult.
In addition to the loss of USD7.2 billions on account of fraud, SG has also reported a write off of Euro2.1 billion on account of derivative transacations on Collateralised Debt Obligations.
The sub-prime meltdown has so far resulted in a write off of USD133 billion dollars by various banks and financial institutions and on its way it has dethroned four Chief Executive Officers of various banks and Financial Institutions. We still need to wait and watch for more write-offs in the coming quarters.
This fraud exposes the need and importance of risk management and control in the banking industry. Over the last 3 years all banks and FI's are reported record profits and probably it has induced the banks to be lethargic on their risk management. One wonders how such a big loss has been allowed to happen in an established global bank and how the trader has managed to hide losses for quite sometime.
It is also been reported that the trader has moved from the Middle Office to the trading floor and he is aware of the various checks and controls in the middle office and the back office and has devised ingenious ways to circumvent them and not get noticed. I expect that the worst thing to happen is to have some banking regulation which prohibits people moving from back/middle office to the trading desk. This would be a significant thing considering the fact that many aspiring youngsters take up roles within the operations and support group as they try to enter the lucrative trading world. Under normal circumstances, persons with experience in the operations or support role are considered favourably but with the present situation, it may become difficult.
In addition to the loss of USD7.2 billions on account of fraud, SG has also reported a write off of Euro2.1 billion on account of derivative transacations on Collateralised Debt Obligations.
The sub-prime meltdown has so far resulted in a write off of USD133 billion dollars by various banks and financial institutions and on its way it has dethroned four Chief Executive Officers of various banks and Financial Institutions. We still need to wait and watch for more write-offs in the coming quarters.
Bank of India Internet banking site hacked by Russian criminal gang!!!
I am pasting below an email I got in this regard:
Quote
The Bank of India has been forced to shut down its Internet banking site after discovering it had been hi-jacked by fraudsters to download malware to customers' PCs.
US security provider Sunbelt Software said last week that it had discovered a malicious IFRAME had been planted on the bank's site which re-directed PCs to a hacker's server. Malware was then downloaded to un-patched Windows machines.
In a blog on the firm's Web site, Sunbelt CEO Alex Eckelberry says the server was primed to dish out over 22 pieces of malware, including a pinch Trojan variant which siphons personal data from a user's PC. Eckelberry says fully-patched systems would not have been affected by this hack. Eckelberry claims that the attack emanated from the Russian Business Network (RBN) criminal gang.
IT staff at the bank have now cleaned the server, says Eckelberry, but online services are still unavailable to customers.
Unquote
When I logged into the site now, I saw a pop-up message saying the system has been cleaned and it is safe to transact now.
Quote
The Bank of India has been forced to shut down its Internet banking site after discovering it had been hi-jacked by fraudsters to download malware to customers' PCs.
US security provider Sunbelt Software said last week that it had discovered a malicious IFRAME had been planted on the bank's site which re-directed PCs to a hacker's server. Malware was then downloaded to un-patched Windows machines.
In a blog on the firm's Web site, Sunbelt CEO Alex Eckelberry says the server was primed to dish out over 22 pieces of malware, including a pinch Trojan variant which siphons personal data from a user's PC. Eckelberry says fully-patched systems would not have been affected by this hack. Eckelberry claims that the attack emanated from the Russian Business Network (RBN) criminal gang.
IT staff at the bank have now cleaned the server, says Eckelberry, but online services are still unavailable to customers.
Unquote
When I logged into the site now, I saw a pop-up message saying the system has been cleaned and it is safe to transact now.
Reserve Bank of India losses Rs.65,000/- crores in Foreign Currency Fluctuations!!
Last Sunday, Business Line carried an interesting article on the recent foreign currency losses suffered by RBI. This came to light when the annual report of RBI was made available. What staggers me is the amount of loss suffered by RBI in its Currency and Gold Revaluation Account - Rs65,000/- crores. Hold your breath!! I am not joking, this is the figure reported by RBI.
Ofcourse, this is not a cash loss, per se, but a notional loss in its books. The Revaluation account which had a balance of Rs86,000/- crores odd amount as of June 30, 2006 has come down to Rs21,724/- crores. You can read the entire Business Line article here.
As a layman, I have the following questions:
1. Does RBI follow any prudent hedging mechanism to cover/reduce the foreign exchange losses? If not, why we are not following a hedging strategy to safeguard our assets.
2. Who is to be held accountable for the staggering loss of close to Rs65000/- crores? Would it be RBI or the Government?
Anybody who has an idea/explanation/understanding of this subject can provide me with further inputs.
Ofcourse, this is not a cash loss, per se, but a notional loss in its books. The Revaluation account which had a balance of Rs86,000/- crores odd amount as of June 30, 2006 has come down to Rs21,724/- crores. You can read the entire Business Line article here.
As a layman, I have the following questions:
1. Does RBI follow any prudent hedging mechanism to cover/reduce the foreign exchange losses? If not, why we are not following a hedging strategy to safeguard our assets.
2. Who is to be held accountable for the staggering loss of close to Rs65000/- crores? Would it be RBI or the Government?
Anybody who has an idea/explanation/understanding of this subject can provide me with further inputs.
Fee income charged by Public Sector Banks - Indian Bank!
Recently I heard that even public sector banks have started charging fees for some services which hitherto came free, atleast with public sector banks. In this case, it was for attestation of address proof which is the Bank Passbook.
My father went to the Indian Bank branch in which holds an Saving account and asked for the attestation of the photo address proof. The Manager obliged to attest subject to a charge of Rs35/- for this purpose. The amount got debited and my father got the attestation.
Even Public sector banks have started finding out ways to increase their fee based income. Good for the bank and their shareholders and bad luck customers!!
PS: I was informed that for the same service ICICI Bank charges Rs.100/-. So PSU Banks are keeping the interest of the customers at heart and charging a lesser fee for that!!!
My father went to the Indian Bank branch in which holds an Saving account and asked for the attestation of the photo address proof. The Manager obliged to attest subject to a charge of Rs35/- for this purpose. The amount got debited and my father got the attestation.
Even Public sector banks have started finding out ways to increase their fee based income. Good for the bank and their shareholders and bad luck customers!!
PS: I was informed that for the same service ICICI Bank charges Rs.100/-. So PSU Banks are keeping the interest of the customers at heart and charging a lesser fee for that!!!
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