Page 46 - BANKING FINANCE November 2015 ONLINE

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for providing the Mobile Phone, DTH or Landline Service. implementation, usage and adaptation of Technology.
Hence, these providers can open an account to all their The Overall Risk Profile for Payment Banks is very less
existing customers by default. Those who wish to use the when compared to the Conventional Banking System in
account can begin operations without the hassle of India. Hence, the CRAR or CAR for Payment Banks is less
documentation, photograph, address proof and identity and they need not bother about the implementation of
proof. Basel III accord in full before 31st March, 2019.

The Last Mile Bridge Treasury Borrowings

From time to time the Government of India, and State In most of Commercial Banks, CASA Deposits Share in the
Governments offer various subsidies and benefits to the Total Liabilities (Deposits) is in the range of 40% to 50%,
people, particularly the social security schemes. These where the Cost of CASA Deposits Ranges from 0% to 4%.
benefits will directly be credited to the beneficiaries Once Payment Banks start operations, CASA Deposits will
through Payment Banks. shift from Commercial Banks and this will lead to an
increase in the Commercial Banks Treasury Borrowing to
Implementation of Basel III Bridge ALM Mismatches.

Three main risks in the Banking Industry are Credit Risk, As a result Spreads will thin further. To overcome this
Market Risk, and Operational Risk-Banks have to provide problem, Commercial Banks need to provide Excellent
Capital Adequacy Norms i.e., a minimum of 9% to cover Customer Service and develop Technology Oriented
these risks. As Payment Banks will not sanction any Credit Products to retain existing customers in not only Metro
or Loans to the Public, Credit Risk for these banks is zero. and Urban areas but also in Semi-urban and Rural areas.
As for Market Risk, most of its investments will be either
Treasury Bills or Government Securities and hence this risk Also due to the limited Services offered by the Payment
is also minimal. And as the regulator will monitor their Banks, Innovation and Strategic Thinking in increasing the
performance closely in the initial stages, Compliance Risk Market Share of Low Cost Deposits is possible and it will
is also less. create further challenges to Commercial Banks in the
coming days. Ë
However, there is some Operational Risk related to the

Only Rs. 3K-cr disclosures in govt's compliance window

The Centre's efforts to unearth unaccounted money stashed abroad seems to have got a tepid response, with the
declarations made under the three-month compliance window, it turned out to be much lower than expected. The
government ruled out an extension of the one-time relief window, saying it was not a measure to raise revenues but
an opportunity for people with undeclared money to avoid prosecution under the unaccounted money legislation.

According to official sources, declarations of only about Rs 3,000 crore had been made during the three-month
window. But if made online more disclosures might have arrived. A stream of people, including those from Rajasthan
and Karnataka, walked into the only designated office before the closure of the one-time compliance window. "A
huge number of declarations are expected to be made through the official e-filing website of the I-T department,"
an official said.

"We are not concerned about the response. The government did not stake its reputation on the compliance window
at any stage. We made it clear it was not a revenue-raising measure like the voluntary disclosure scheme of 1997.
It was an opportunity for people. From now we will start acting and prosecuting; they should not say a retrospective
act has come in," said a government official in the know.

In fact, the government had collected far more money - close to Rs 10,000 crore - under its Voluntary Disclosure
Scheme of 1997 to declare source of income.

46 | 2015 | NOVEMBER | BANKING FINANCE

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