Page 10 - Banking Finance October 2015
P. 10
RBI CORNER
Banks can now borrow Banks get extended timeline for issuance of Chip - PIN-
from global institutions:
RBI based cards Representations had been received
from various banks expressing
The RBI has given the green signal The Reserve Bank of India has given an difficulties in meeting this timeline on
to the banks, which are authorized extension to banks for issuance of EMV
to deal in foreign exchange, to bor- chip and PIN cards. The regulator had account of existing stock of
row from international / multilateral earlier said that from magnetic stripe only cards
financial institutions without ap- September 1, all new cards with their branches.
proaching it for case-by-case ap- issued - debit and credit, Further, banks also
proval with a view to enhance flex- domestic and international - indicated that more time
ibility in seeking access to overseas by banks should have EMV was required for
funds. chip and PIN for enhanced completion of certification
These international / multilateral fi- security. process for the issuance of EMV chip
nancial bodies will include institu- and PIN cards.
tions of which the Government of The regulator has given time till
India is a share-holding member, in- September 30, 2016, for cards issued However, the regulator has said that
under the Pradhan Mantri Jan Dhan during the extended period, in case of
stitutions that have been established Yojana (PMJDY), Basic Savings Bank specific requests from customers for
by more than one government, or Deposit Account (BSBDA) and other issuance of EMV chip and PIN cards,
those that have shareholding by government schemes. For the banks should promptly comply with the
more than one government and remaining cards, the extension is up request.
other international organisations. to January 31, 2016.
Such borrowings, according to a RBI
notification, should be for the pur- RBI deters banks to use govt capital to clean books
pose of general banking business
and not for capital augmentation. RBI Executive Director N. S. consumed by risk capital, then I think
In accordance with the extant regu- Vishwanathan said that state run it is a real challenge," he said.
lations, Authorised Dealer (AD) cat-
egory of international banks can lenders should use He added that nearly half of the
borrow funds from their Head Of- the capital received earnings are spent on loan loss
fice, overseas branches, correspon- from the government provisioning by SBI and the situation is
dents outside India, or any other to grow their credit same for its peers.
entity as permitted by the RBI, up books rather than
to a limit of 100 per cent of their un- clear their large pile The government increased the
impaired. Tier-I capital as at the of bad assets. recapitalisation commitment for this
close of the previous quarter or $10 year to Rs.25,000 crore from the
million (or its equivalent) whichever State Bank of India's Managing budgeted Rs.7,900 crore, and has also
is higher. Director (Compliance and Risks) Rajnish affirmed its commitment to allocate
Kumar, agreed that the fresh capital Rs.70,000 crore over the next three
should be ploughed in for credit years to 27 state-run banks.
growth which helps the economy.
Stating that there is a need for banks
"If it is growth capital, then no to look at other sources of capital too,
problem. Then you are able to make a Vishwanathan said there is only a
contribution to the economy by funding limited time to improve the overall risk
higher credit growth. But if the capital management processes.
given by the government is all
RBI panels large Co-ops to be banks
An RBI panel headed by deputy governor R. Gandhi recently recommended converting
Urban Cooperative Banks (UCBs) with business size of Rs.20,000 crore or more into
regular banks to allow them to grow and proliferate further for financial inclusion.
10 | 2015 | OCTOBER | BANKING FINANCE
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