Page 9 - Banking Finance November 2020

BANK UPDATE

No agreement signed for started levying the charge earlier this morning before opening their shop or
year, ICICI Bank, too, plans to levy it business. It is a way of securing their
RBI's debt recast scheme from November. money for them but for the bank it is
for high value loans "Effective November 1, 2020, a conve- like floating cash. Banks have to deploy
Even after two months after RBI issued nience fee of Rs. 50 per transaction, will resources for each such transaction,"
said a bank executive.
guidelines for a one-time debt recast be levied on cash deposited in the cash
scheme for corporate borrowers, fol- acceptor or recycler machines on bank
lowing the KV Kamath committee rec- holidays and between 6:00 pm and Banks turn to AI to con-
ommendations, not a single 8:00 am on working days," ICICI Bank tain loan frauds
intercreditor agreement (ICA) has said in a recent communication. Punjab National Bank isexploring the
been signed by any lender for high Further, the convenience fee would be options to deploy an artificial intelli-
value loans as few companies came applicable if the cash deposit in the cash gence-enabled early warning signal
forward for restructuring. acceptor/recycler machines exceeds system that crawls the web for infor-

The ICA is signed by a consortium of Rs. 10,000 per month either as a single mation on borrower's activities, includ-
lenders, by which they agree on the transaction or multiple transactions. ing news articles and social media.
Punjab National Bank has decided to
contours of the debt recast. The fee will not be applicable to senior outsource its early warning signal (EWS)
citizens, basic savings bank account,
According to RBI norms, the ICA can be system. So far, the bank has been using
invoked if lenders representing 75 per Jan Dhan accounts, accounts held by an in-house system but wants an exter-
cent by value of total outstanding credit incapacitated and visually impaired nal agency to revamp it.
persons, student accounts or any other
facilities (fund based as well non-fund- Some of the capabilities sought by the
based) and 60 per cent by number agree accounts identified by ICICI Bank. bank are artificial intelligence, web
to the plan. Bankers say not a single ICA Axis Bank also charges a similar conve- crawling, optical character recognition
has been signed so far for debt recast. nience fee on cash deposit transaction (OCR) for triggering the early warning
done at the rate of Rs. 50 per transac-
The Shapoorji Pallonji Group, which signal. The bank has put out a public
has decided to exit the Tata Group, tion after banking hours (or between notice seeking bids from interested par-
has requested banks to restructure Rs 5:00 pm to 9:30 am) and on national ties According to the notice, the bank
10,900 crore of its debt under the and State bank holidays. The fee was wants a solution capable of giving early
scheme, though banks are yet to sign effective from August 1. warning signals on a dynamic basis,
the agreement. The move is being seen as an inconve- based on information collected from
nience to small traders and shopkeep- various internal and external sources.
Axis Bank, the third largest private sec- This, the bank said, will aid timely cor-
tor lender of the country that an- ers who often go to a cash deposit rective action in such loan accounts.
nounced its quarterly earnings Wednes- machine to deposit their day's earnings
day, said there was zero or negligible after shutting shop late in the evening. Indian banks have not been very quick
request for debt restructuring as on 30 To avoid the convenience fee, the busi- in detection of frauds and instances
September. Under the RBI norms issued nessmen may either store the money include the Rs. 11,000-crore Nirav
Modi case which went undetected for
on 7 September, loans of Rs 1,500 crore in the shop or carry it home, and de- several years.
will require Kamath panel's approval. posit it later during business hours.
Anxious about the rising instances of
Bankers said banks often have to de-
Banks introduce conve- ploy additional staff on holidays to col- frauds in banks and the delay in these
being reported, the Reserve Bank of
nience fee for cash depos- lect such cash. Moreover, this fee India (RBI) in 2015 took steps to ad-
comes in the backdrop of "less cash and
its in machines more digital" push by both the govern- dress the problem. Based on the rec-
ommendations of an internal working
Banks in private sector have started ment and the central bank. group, the central bank introduced the
charging a convenience fee for cash "Many traders find it easy to deposit practice of red-flagging a loan account
deposits by customers in cash recyclers cash (in the bank's cash deposit/ recy- as part of a mechanism of early warn-
during non-business hours and bank cler machine) at night before going ing system aimed at helping banks
holidays. While Axis Bank had already home and then withdraw it early in the identify suspicious accounts. T

BANKING FINANCE | NOVEMBER | 2020 | 9