Page 5 - Banking Finance October 2022

BANK UPDATE

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Pralay Mondal named as ity mismatch" that could explode any- This takes the 15-month tenure bucket
time, renowned economist Pronab Sen interest rate to 7.75 per cent p.a.
new MD & CEO of CSB
said, adding that there is a need to These FDs can be booked easily
Bank reassess laws governing the industry. through RBL Bank's website, internet
banking, RBL MoBank app, branches
Kerala-based CSB Bank announced the Sen said "that explosion" has not yet
and contact centre. Additionally, the
appointment of Pralay Mondal as new happened as most of the banks are in
bank offers free doorstep banking for
Managing Director and CEO of the the public sector.
all senior citizens.
bank.
Explaining the situation, he said the
Pursuant to the approval received from Indian banks had adopted the British
Small finance banks may
Reserve Bank of India (RBI) on Septem- model, and the laws don't allow lend-
be allowed to co-lend with
ber 15, 2022, the Board of Directors ers to borrow from the capital market,
of the Bank in its meeting held on the which essentially makes deposits the NBFCs soon
same day, has approved the appoint- only source of funds.
After making Small Finance Banks
ment Mondal as the MD & CEO of the
"The average tenure of bank lending is (SFBs) eligible for Authorised Dealer
Bank, it said in a press release.
about nine years, and deposits' tenure (AD) Category-I license, the Reserve
Mondal's appointment is for a period is close to two-and-a-half years. So, you Bank of India (RBI) may take the next
of three years from September 15, have nine years on the asset side, and step in liberalising their scope of activi-
2022 up to September 14, 2025 in line 2.5 years on the liability side... which ties. It could allow these banks to co-
with the approval of RBI, the bank means there is a massive asset-liability lend with non-banking finance compa-
said. mismatch which can explode anytime," nies (NBFCs).
the former chairman of the statistical
Mondal joined the bank as President Currently, SFBs are not permitted to
commission said.
(Retail, SME, Operations and IT) on co-lend with another lender. Only
September 23, 2020 and was ap- scheduled commercial banks and
Super senior citizen FD
pointed as the Deputy Managing Direc- NBFCs are allowed to co-lend to the
tor of the Bank with effect from Feb- launched priority sectors like agriculture; micro,
ruary 17, 2022. BL Bank has launched a super senior small and medium enterprises
(MSMEs), education, housing, among
citizen fixed deposits product on the
Asset-liability mismatch occasion of International Senior Citi- others.
zens Day. Under the newly launched Though RBI has so far mandated that
looms on banking sector:
product, the bank will offer an addi- SFBs do only direct lending, it is be-
Pronab Sen tional 0.75 per cent p.a. on FDs to su- lieved to be weighing industry requests
India's banking sector is faced with the per senior citizens - age-group of 80 to allow co-lending in areas where
predicament of a "massive asset-liabil- years and above, a statement said. these Banks don't have expertise.

BANKING FINANCE | OCTOBER | 2022 | 5