Posts Tagged ‘rates’
The US Banks
Some of the largest and most innovative banks in the whole world are found in the US. Banks in the US are watching one another, the rest of the banks in the world always seeking what to do next.
US banks provide financial support to the most developed economy worldwide, and so their importance has grown within the global financial market. They range of products and services they offer, is wide and varied, be it personal business or corporate, institutional banking or any other type. With the use of the most advanced internet services on the market, banks in the US can easily be accessed anywhere and at anytime.
Among other, here is a list of services US banks provide:
• Personal Banking Services of Banks in USA
Personal banking services have been created to cater to daily requirements of consumers, such as checking products, plus internet banking free of charge, ATM/debit card facilities, online bill payment, monthly statement, opening deposits, etc. Loan products available in the US banks come in the form of home equity loans, car loans, or personal loans. Among the most common forms of saving money are the certificates of deposit or passbook savings.
• Mortgage Services of US Banks
US banks also offer a range of mortgage services, carefully designed to take care of the various mortgage needs of customers. Together with standard mortgage services, banks also provide mortgage calculators for clients to easily calculate the payment schedules they will have as well as monthly payments, mortgage amounts, and many more. Besides online mortgage services are also available, making the process of mortgage even easier and hassle-free.
• Business Banking Services of Banks in the USA
US banks also offer business banking support for corporate clients. Checking business accounts or seeing to all other financial needs businesses, such as commercial loans or construction loans, offered for business operation, equipment, or commercial real estate purchases are just a few operations US banks deal with.
• Other Products and Services of Banks in USA
Other banking products the US banks offer include agricultural loans or checking accounts. There loans help investors purchase machinery, livestock, and even real estate. Besides being cheap, checking accounts are also easy to operate. Among the facilities offered by online banking there is checking balance, funds transfer, or bill payment anytime and anywhere.
The largest banks in the US by deposits, are Bank of America, JP Morgan Chase Bank, Wachovia Bank, Citibank, Washington Mutual Bank, SunTrust Bank, US Bank , Regions Bank, and so on.
Microfinance: NGO vs Banking
Sadaket Malik**
The role of non-governmental organisations (NGOs) in microfinance (MF) needs reviewing from an operational perspective. Based on research of selective studies and experts’ opinion, selected literature on microfinance, and the author’s own experience over the last decade, this paper seeks to establish two main points. First, it asserts that with a few notable exceptions, the record of NGOs in mainstreaming microfinance is a modest one viewed from the context of NGOs as microfinance institutions (mFIs). When judged by the two criteria of success that much of the microfinance world has adopted – outreach to the poor and financial sustainability – the results are not encouraging [Nair 2001]. NGOs as mFIs have thus far had trouble achieving both objectives simultaneously. There is also little evidence of any aggregate impact on poverty reduction as the result of mFIs’ forays. The success of NGOs has however been laudable where facilitating and social intermediation criteria are applied. It is here that the author feels that the strategic partnership between banks and NGOs is poised to change the developmental intervention map of India. Second, the essay suggests that banks, for all their laudable work, will be making a strategic error in focusing on financial intermediation while ignoring partnership with NGOs. While microfinance is never easy for other types of institutions trying to practise it (e g, NGOs or credit unions), it is not, as will be explained, a field where a banker has natural advantages.
Why Partnership?
To the extent that banks incorporate NGOs’ activities in mainstreaming their self-help group (SHG) portfolios, they stand to gain. To the extent NGOs reorient their mission, vision and personnel towards the microfinance agenda, as a large number have done in the last decade, they risk drawing themselves away from work they are uniquely suited to do. Some of this work, moreover, would play a critical role in preparing the ground for mF among poor people. In other words, NGOs have to move away from pure financial intermediation to investing in human and social capital at the grass roots and bankers have to tap this invaluable experience of NGOs in mobilising, graduating and enabling rural communities. This will prepare the ground by enhancing credit absorption capacity of SHGs and enhancing their creditworthiness. The following account will explain how.In 1997, the World Bank’s Sustainable Banking for the Poor (SBP) project completed an ambitious survey. Until then those interested in microfinance had an intuitive sense of the movement’s growth, but no systematic attempt had yet been made to gauge its dimensions, nor look comprehensively at its results. The findings were unambiguous: NGOs acting as mFIs did not have any significant outreach vis-à-vis other financial institutions purveying microcredit.
Interestingly, commercial banks accounted for 78 per cent of the total number of outstanding microloans, and credit unions 11 per cent. NGOs accounted for only 9 per cent, and savings banks (which are not primarily in the credit business) just 2 per cent. Also, commercial banks accounted for 68 per cent of the total outstanding loan balance, savings banks 15 per cent, credit unions 13 per cent and NGOs 4 per cent. In terms of numbers of clients, commercial banks and credit unions showed significantly greater overall outreach than NGOs. While NGOs’ outreach, on average, was deeper, it was also narrow – NGOs reach some very poor people, but they do not reach many. On the other hand, credit unions and commercial banks also serve some wealthier clients so that their average outreach to the poor is not as deep. Still, the indications are that overall, credit unions and commercial banks serve more under-served poor clients than do NGOs.
This is not to rule out the role of NBFCs, NGOs with inchoate mFI activities or pure mFIs. The demand for financial services is high and as stated by the High Level Task Force on mF: “At least 25,000 bank branches, 4,000 NGOs and 2,000 federations of SHGs involving over 1,00,000 personnel of these institutions would have to be associated for scaling up and bank linkage of one million SHGs. Many of these NGOs will transform themselves into mFIs and will not only facilitate microfinancing, but will also themselves do the necessary financial intermediation. Similarly, many federations of SHGs will take on financial intermediation and act as mFIs.”
Indian TaleWe shift the focus to India.In the current context with over 4,60,000 SHGs credit-linked with banks, the SHG-bank linkage programme of microfinance has emerged as the biggest in the world. But besides banks, the major role played by NGOs in facilitating this transformation cannot be overemphasised. The National Bank for Agriculture and Rural Development (NABARD) which plays a role in promoting and facilitating bank linkages while networking and coordinating the activities of all players in the field has underscored the crucial role played by NGOs as facilitators in purveying bank credit to SHGs..
The writing is on the wall. The success story has been to a great extent co-scripted by both banks and NGOs. However, it is pertinent to draw attention here to the vast network of rural banking outlets that precludes the necessity of a new breed of mFIs which as per experts’ opinion are ‘slow and expensive to develop’ [Harper 2002]. In fact as aptly put by Harper “the SHG system uses existing marketing channels, the banks, to bring formal financial services to a new market segment, the poor and particularly women”.
Relationship Banking vs Parallel Banking
The distinct bloodline of mF in India can be traced to this genre that is indigenously developed and called ‘Relationship Banking’ as opposed to the Grameen model of ‘Parallel Banking’ [Chavan and Ramkumar 2002]. The ground truth for SHG financing on a sustainable basis in India is that bank-linkage is the bottom line with exceptions proving the rule. Inherent to this success story but understated is the fact that NGOs have played a major role in effecting SHG-bank linkages. Relationship banking is the result of NGO-bank interface to leverage funds for SHGs. NGOs have achieved significant success as promoters (helping and enabling SHGs to access bank credit) and not as providers (direct purveyors of credit). This writer would juxtapose the SBP study’s evidence against NGOs in mF with their success as facilitators in India to make a case for NGOs as social scientists or change agents rather than financial intermediaries. The latter role is arguably the banker’s domain. Moreover, there are compelling institutional and regulatory factors which counsel against any such misadventures.
First and foremost there are legal constraints to NGOs acting as mFIs as noted by the Task Force: “Many NGO-mFIs are mobilising savings from their clients/ borrowers with the sole objective of inculcating a habit of thrift and savings among the poor and for enabling the use of such resources for acquisition of assets or linkage with credit from mFIs or banks. In the context of the amended Section 45 S of the RBI Act, the appropriateness of NGO-mFIs in mobilising savings is questioned. Although NGO-mFIs provide very useful financial services to the poor, including the opportunity to keep their very small savings safe, almost at their own doorsteps, they cannot convert themselves into other modes of constitution like NBFCs, banks or cooperatives due to various intrinsic constraints. Hence, NGO-mFIs may have to be given a special dispensation in regard to Section 45 S of the RBI Act. Accordingly, it is recommended that they be allowed to mobilise savings only from their poor clientele as part of the financial services provided to them and the same may not be treated as violation of Section 45 S of the RBI Act.”
The ‘intrinsic constraints’ noted above are not difficult to guess. Moreover, some NGOs that are mobilising savings purely may also face other risks. The problem for NGOs in dealing with savings is that from a risk-bearing standpoint, savings mobilisation and microcredit are not the same. That is why the law treats them differently. From the client’s point of view, the risks of saving with an NGO are masked by their growing confidence as NGOs show that they are here to stay. But NGOs are not in most cases operating in regulatory environments that permit them to mobilise deposits; they do not benefit from deposit insurance nor can their operations be controlled by bank supervision agencies. And when covariant risk is high, as it is when group members are all from the same sector and necessarily from the same community or locality, the tenuousness of the NGO position is even more dangerous to the saver. Besides propriety and prudence, savings custodianship necessitates statutory provisioning and creation of reserves to cover liquidity and other risks.
Credit MinimalismWhile ‘savings only’ is a limited disaster story, the other side of the tale relates to NGOs who are employing ‘credit first’ or minimalist credit principles. When savings form part of the basis for credit in a financial institution, that institution does not have to take a problematic, often tortured, path to sustainability; it starts out on a more naturally sustainable path. But, NGOs have gone into microcredit with donor monies, and aim towards sustainability without, in most cases, the enormous benefit of voluntary savings mobilisation. In short, sustainability in NGO-run programmes is hobbled from the start. It looks as if the poor want its product (credit) less than they want savings, and all by itself, credit does little for productive asset creation.
The one-shot single dose attack on poverty is the sustainable development planner’s biggest nightmare. A case in point is CARE’s Credit and Savings for Household Enterprises (CASHE) project in India which is more of a lending programme than a sustainable financial institution. Unfortunately the credit and non-credit financial needs of the clientele community are expected to outlive the six year shelf-life of one of the most ambitious projects in micro-lending to hit Indian shores. The flawed-in-conception status is palpable from the fact that the CASHE budget does not include an income generating component for skill-building. The best intentions are to give a shove across the poverty line without imparting financial sustainability to households or providing for repeat finance.
The incompatibility between the tendency of NGOs to upscale (for sake of grant continuance) and financial sustainability is aptly summed up by William F Steel, World Bank consultant, according to whom, “Grant-based methodologies are poorly suited for financial intermediation, especially providing credit funds (for which recovery, not disbursement is most critical)”. The other type of NGOs turned MFIs with both credit and savings services have a limited success which as the SBP study has shown is nothing to write home about in terms of outreach or sustainability. Many are facing teething problems while a few have folded up.
These dysfunctional aspects are further highlighted by Kanta Singh (WISE Development Authority) during a CARE-sponsored case study of its CASHE programme: “Low size of loan and long cycle time for loan disbursement are reported to be the largest irritants. Many groups that have successfully managed loans in the past lose energy when they do not get subsequent (credit) linkages.” Absence of training and handholding on income generating programmes are felt to be a major gap in the CASHE design by SHGs. This need is also felt by (partner) NGOs who are trying to increase loan demand and the ability of SHGs to handle larger loans.In India the demand of the poor for safe and liquid savings instruments is very high. In fact, NGOs, with their sensitivity to the poor and intimacy with individuals, overcome the trepidation that illiterate and destitute villagers harbour about bank personnel (not known for their civility). The World Bank’s Consultative Group to Assist the Poorest (CGAP), part of whose mandate is to help microfinance institutions improve performance, has concluded “…most microfinance clients want to save all the time, while most want to borrow only some of the time.”
However, NGOs face a dilemma when savings overstrip credit demand, i e, interest paid out drastically cuts the margin from interest income. Their limited expertise and avenues for investing elsewhere compound this problem. CARE/Guatemala’s Village Banking Programme fuelled by donor monies, expanded lending outreach heavily in 1994. As a result outstanding loan balance grew at an annual rate of 78 per cent between 1993 and 1995. By contrast, voluntary savings mobilisation grew during the same period at an annual increase of 215 per cent.
Trade-Off TribulationsThe record from the SBP cases (a score of which were NGOs) suggests that as NGOs in microfinance, often encouraged by donors, come to accept the two goals of sustainability (subject to tough measurements) and outreach, (measured increasingly by loan size as a per cent of GNP per capita) the following trade-offs and adjustments are observed:(1) Concentrating portfolio growth in high population density areas (thus focusing less on rural areas).(2) Emphasising rapid initial loan volume growth, leading to poor portfolio quality.(3) Keeping field staff salaries low (or alternatively raising the number of clients per loan officer) in order to control costs, thus tending to high turnover and low morale.(4) Moving towards the retail trade and service sectors with high cash flow that enable high repayment rates, thus tending away from manufacturing and fixed asset lending.(5) Emphasising short-term loans as a strategy for high repayment and loan size growth, thus eliminating cyclical sectors like agriculture.(6) Tending to move up the poverty scale away from the very poorest in order to maintain loan demand and repayment rates (75 per cent of the SBP NGO cases showed this ‘upward creep’).Competitive Advantage of NGOsNGOs have a crucial role in group formation, nurturing SHGs in the pre-microenterprise stage, capacity building and enhancing credit absorption capacities. Group-based forms of lending (e g, solidarity groups, village banking) originated mainly for the benefit of the lender as solutions to two problems faced by microcredit organisations: (i) the problem of lack of collateral, and (ii) the problem of high transaction costs involved in loan appraisal, monitoring and enforcement. In theory, the group serves as a set of co-guarantors operating through peer pressure and the group members’ incentive to keep each other solvent so that they themselves do not lose the opportunity to receive a loan. The group serves also as a way to get around imperfect information, since members of the group know each other. Thus the transaction costs involved in loan appraisal are reduced if not eliminated.
It is here that NGOs play the crucial role in transforming the atypical destitute village woman with two children to fend for into a responsible individual with group commitments and group resources. This is a fact repeated in village after village. Whether NGOs empower women in thrift and credit groups is a moot question but it is an empirical fact that such groups provide effective ‘coping mechanisms’. Peer pressure is the best collateral. The banker in India needs to recognise that high repayment rates of SHGs is not an inherent structural feature of SHGs but a commitment to group values. The role of NGOs in investing groups with values through human capital is an undeniable specialisation. In the words of economist Jagdish Bhagwati: “Those values (of civil society and of democracy) are better advanced…by the political and financial support of the numerous and growing NGOs, both here and abroad, that work ceaselessly to nudge the world in the right direction.” The banker must accept that this is a role which the NGO, as a committed social engineer, is better suited to execute. This is not to deny qualities of empathy, humanism, social engineering to bankers. But the stark truth is that there is a need for a sensible division of labour. If bankers want to reach the poorest with financial services, they need to face certain realities. First, what they are doing is poverty lending and not economic development or enterprise development. Second, they should realise what the likely impacts may be. Changes in people’s lives will be immediate in terms of lightening the burdens of poverty, but small loans to the poorest will not bring them permanently out of poverty.Arguably, banking is more of a system than an art. Unarguably, working to facilitate the productivity of small businesses is really an art. And again, because of their grass roots orientation, because of their commitment, because they are less bureaucratic and encumbered than large development assistance organisations, NGOs are capable of overcoming a subtle but important barrier to successful facilitation – the ‘packaging of knowledge and skills’.
Once again, this is no case for discouraging NGOs from mF but to emphasise the role of emotional capital which will bring in an element of quality. The more NGOs, who are in microfinance, face the challenge of helping to bring about an increased articulation of the parts and the players in a local economy, the more they may need to get involved in such non-financial services. The effects of such services are difficult to measure in the short run. But NGOs can take on such tasks, many already do so.Thus, NGOs will fill up an important void in quality at the grass roots level which will help the poor not only to borrow but also to become good investments for banks. This will help boost business at rural branch level and cover up inadequacies and constraints that might hamper a banker with the conflicting demands of his workload. Many banks and FIs have recognised the role of NGOs and have effected suitable policy initiatives. A larger recognition of this need is reflected in the statistical evidence on linkage patterns, which we have cited earlier (see the table), which establishes NGO-bank partnership over the Indian mF spectrum. A truer recognition at individual banker level might lead to business sense replacing customary scepticism for NGOs. This will be the strategic turning point in making India’s relationship banking a showpiece and paradigm for the world’s NGOs and bankers.
The author is a freelance columnist based in Jammu and Kashmir***and can be contacted at sadaketmalik@rediffmail.com
Private banking is derived from Swiss, specialized in the fortune management business of providing special financial services, promoting the cooperative value between commercial banks and customers and prolonging customer relationship value chains. The concept of private banking came out in China after 2005. In September, 2005, Swiss Friends Bank Co Ltd started its business in Shanghai and brought the concept of private banking to Chinese market. Since 2007, the profits of private banking were ten fold of other retail business. Therefore, more and more domestic banks began to involve in the private banking.
In recent years, many banks announced to set up their private banking centers. It is without doubt for these banks to occupy some rich men gathering places as their focuses, such as Beijing, Shanghai and Shenzhen etc. The customers of private banks from China Merchants Bank Co., Ltd grew by 35% than that in 2008. Compared with less than 0.02% private banking customers in the whole customers of China Merchants Bank Co., Ltd, the total assets of private banks accounted for more than 10%, the highest level in all commercial banks. The private banking of China CITIC Bank also rose fast in 2008. Now its customers of private banking are two thousand. The condition of private bank in China Merchants Bank Co., Ltd is 10 million Yuan (1.46 million USD), but China CITIC Bank is 8 million Yuan (1.16 million USD).
In 2007, Chinese private banking rose. Chinese funded banks mainly concluded Bank of China, China Merchants Bank Co., Ltd, Industrial and Commercial Bank of China Ltd, China CITIC Bank, Bank of Communications, Construction Bank of China and China Minsheng Bank etc. The foreign funded banks concluded Hong Kong and Shanghai Banking Corporation Limited
, Citi Bank, Bank of East Asia, Deutsche Bank Group, Swiss Friends Bank Co Ltd, BNP Paribas, Standard Chartered Bank and Edmond de Rothschild.
Chinese private banks are mainly located in the economically developed areas, such as Shanghai, Beijing and Shenzhen etc. foreign funded banks are in Shanghai and Beijing. Some Chinese funded banks, because of its local advantages, also set their private banks in big cities with huge customer potential, their business spreading a wide area.
By the end of 2008, Chinese millenaries were about 0.5 to 1 million. The reason for uncertain numbers is that Chinese millionaires were accustomed to investment in real estate, such as living houses and shops etc. they expected to benefit from revaluation in real estate, so the numbers fluctuated sharply. The definition of millionaire is that individual floating assets are more than one million USD Except housing.
The global financial crisis, stemmed from the sharp decline of American real estate market, seriously stroke the large European and American banks. Although most private banks escaped from direct hit, they were influenced by the financial fluctuation. The crisis made some investors to transfer their investment to more conservative products, leading to the profit reduction in some private banks.
Taking consideration of the infancy of local financial market, many riches are preferential to manage their fortunes offshore in previous Chinese emerging market. The foreign funded banks occupy the most part of market share. The occurrence of financial crisis makes Asia especially China become the minimal negative influential country and the safest market. In the future, Chinese rich families are even preferential to invest at home, which brings huge development opportunities for Chinese private banking.
In the developed countries, the success of private banking is inseparable with politics, society, economy and law, such as steady currency value, natural advantages of tax rate, long financial history, prosperity in financial market, steady bank systems, sound legal and confidential systems and massive rich experienced financial talents.
By contrast, Chinese private banking market, with huge market potential, needs perfection of supporting infrastructure in its infancy. Chinese private banking market mainly faces the following problems: strictly supervision of finance and the adoption of separate supervises models is unfavorable to the promotion of various businesses; Underdevelopment of financial market (regardless of business tools or means); lack of strong investment bank supports; shortage of necessary systems and organizational structures of private banks.
From the part of Chinese private banking, international financial crisis is not only strikes but also opportunities, on the one hand, the slowdown risk existence in the private banking market, on the other hand, the development opportunities of organizations and talents transferring to Chinese market.
As a whole, Chinese private banking market is still in its infancy and hugely demanded for customers. In two to three years, Chinese private banking market will rise explosively.
The author of this report made a profound investigation and investigation of Chinese private banking, and then wrote this report. Readers can obtain more following information:
- Present situations of Chinese private banking
- Analysis on the market demands of Chinese private banking
- Analysis on the foreign funded banks with private banking in China
- Analysis on the local banks with private banking in China
- Analysis on the factors affecting the development of Chinese private banking
- Analysis on the development trends of Chinese private banking
- Analysis on the influences of international financial crisis on Chinese private banking
To get more details, please visit Research Report on Chinese Private Banking Market, 2009
Deposit insured in India, if bank fails
- S. C. Ojha
The depositors are secured in India if a bank fails. In India norms of banking is very strict and monitoring system is in direct control of country’s central bank Reserve Bank Of India.
In the beginning in 1961 an act came into existence the Deposit Insurance Act, 1961 and made effective on January1, 1962. Up to 1977 two organizations the DIC & CGCI were looking after the function of deposit insurance and credit monitoring. The present Deposit Insurance and Credit Guarantee Corporation (DICGC) came into existence with merger of DIC & CGCI on July15, 1978.
Covered Banks
In 1968 co-operative banks have got protection under deposit insurance with some eligibility norms. Initially only commercial banks inclusive of State Bank Of India & its group and foreign banks operating in India were covered.
Presently all commercial banks, foreign banks working in India, local area banks, regional rural banks, all eligible urban co-operative banks( central, state & primary co-operative banks ) are covered under the Deposit Insurance Scheme.
The insurance coverage scheme is compulsory in India and no bank can withdraw from it.
Types of Deposit Covered
All types of bank deposit are covered under this scheme like savings, current account, fixed deposits, recurring deposits etc.
Deposit not covered
Any amount due on account of and deposit received outside India, any amount, which has been particularly exempted by DICGC with the prior approval of RBI are not covered under this scheme. Govt deposits Central or State, Foreign Govt deposits, inter-bank deposits, deposits of State Land Development Banks with State Co-Operative Bank are also not covered.
Limit of Amount Covered
Each depositor is insured upto a maximum of Rs. 1, 00,000(Rs one lac) per bank. Insurance cover is available customer wise not scheme wise. The deposit kept in different branches of same are aggregated and total cover provided will be a maximum of Rs. one lac. All funds held in the same capacity in the same bank will be clubbed together for the purpose of insurance cover. Joint account will be treated as separate account and will get cover. Each joint account with different combination treated as different entity and get insurance benefit separately. All joint accounts with same person’s combination will be treated as one customer account and the combined total will be insured upto Rs, one lac.
De-registration of a bank & Liability of DICGC
If bank is prohibited from receiving deposit, or it’s licence is cancelled by RBI or it is wound up compulsorily or voluntarily or it is ceases to be a banking company or on amalgamation or merger or reconstruction where acceptance of deposit not permitted, the registration of an insured bank stands cancelled. In such situation liability of DICGC is limited to extent of deposits as on the date of cancellation.
In another situation DICGC cover is limited upto date of cancellation where a bank fails to deposit the premium amount for three consecutive periods.
Payment of Insurance Premium
Depositors have no liability to pay insurance premium. Deposit insurance premium is fully paid & born by the insured bank. Now DICGC increased the premium rate from 5 paise per Rs. 100 per annum to 10 paise per Rs.100 per annum since April 2005. The premium is payable half yearly in advance in April & October. The premium payment is compulsory to pay latest by 31st may & 31st October.
Payment of Insured amount
If a bank fails or goes into liquidation, the DICGC is liable to pay to each depositor up to Rs. one lac. The payment will be made through liquidator within two months from the date of receipt of claim from the liquidator.
In case of amalgamation or reconstruction or merger with another bank, the claim will be paid to concerned existing bank by the DICGC. The claim will be payable to transferee bank within two months from the date of claim list submission. In such case, the difference amount between the full amount of deposit or the limit of insurance, which ever is less and the amount received under amalgamation/reconstruction scheme will be paid.
The above deposit insurance scheme came into force keeping the view to protect the interest of small depositors of the country. Now feel free to enjoy opening your account in different banks and get your deposit secured more & more.
Historical data related to bank failure in India
At present upto march ’08 there are 2356 banks including public sector, private & co-operative banks in India are protected under scheme of DICGC. In previous three years no instance of failure of any major bank in India.
A number of co-operative banks have failed due to various reasons in previous years. From 01.04.06 to 30.09.08 there are 63 co-operative banks are failed and all qualified customers get payment from DICGC. In these failure banks Gujarat is on number one with 25 banks and Maharashtra is on 2nd position with 10 banks. The size of failure banks are a little bit and not in percent. It is magic of Indian economy and strategic control of the system that Indian banks are protected well.
More insurance cover expected
In USA in a temporary phenomenon all deposit accounts are insured up to at least $250,000 per depositor until December 31, 2009 at the place of regular insurance coverage $ 1,00,000 . Unlimited insurance coverage also provided for entire amount to all non-interest bearing transaction deposit account on temporary basis up to 31.12.09 for strengthen banking system and making confidence in depositors in USA.
Likewise USA, in India govt may think. In present context of global economic scenario for more protection of public deposit in the country, limit of insurance coverage is required to be increased to Rs. 2.5 lac from present Rs. 1 lac .
It will more beneficial for depositors in India if RBI can liberalize banks to get additional deposit insurance cover on higher premium for their depositors for attracting more deposits and strengthening the economy.
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Banks Related articles :banks-banking.blogspot.com
The word ‘bank’ is derived from the Italian word ‘banca’, which is derived from the German word for ‘bench’. Moneylenders in Northern Italy originally did business in open areas or open rooms where each lender worked from his own bench or table. The very first banks were probably in religious temples of the ancient world. Greek temples as well as private and civic entities conducted financial transactions such as loans, deposits, currency exchange, and the validation of coinage. Charging interest on loans and paying interest on deposits developed in ancient Rome at http://finance-info.synthasite.com
A bank is a financial institution that provides banking services such as accepting deposits and making loans. There are also financial institutions that provide certain banking services without meeting the legal definition of a bank that are called non-banks.
The main functions of a bank include raising funds by attracting deposits, borrowing money in the inter-bank market, and issuing financial instruments in the money market or a securities market and then lending out most of these funds to borrowers including companies, individuals or government. Other services rendered by banks are facilitating international payments, issuing credit cards, provisioning safe locker facilities for valuables, project financing, merchant banking facility, online banking, personal banking, and investment banking. Typically, a bank generates profits from transaction fees on financial services and the interest charges on its loans.
There are several different types of banks including central banks, investment banks, merchant banks, private banks, savings banks, offshore banks, commercial banks, retail banks, and universal banks.
Present day banks need highly qualified, dedicated, and reliable staff because of intense competition from other financial institutions like insurance companies that provide some banking services to the public.
Banking provides detailed information about banking, banking jobs, banking services, and more. Banking is affiliated with Swiss Bank Accounts.
The word ‘bank’ is derived from the Italian word ‘banca’, which is derived from the German word for ‘bench’. Moneylenders in Northern Italy originally did business in open areas or open rooms where each lender worked from his own bench or table. The very first banks were probably in religious temples of the ancient world. Greek temples as well as private and civic entities conducted financial transactions such as loans, deposits, currency exchange, and the validation of coinage. Charging interest on loans and paying interest on deposits developed in ancient Rome.
A bank is a financial institution that provides banking services such as accepting deposits and making loans. There are also financial institutions that provide certain banking services without meeting the legal definition of a bank that are called non-banks.
The main functions of a bank include raising funds by attracting deposits, borrowing money in the inter-bank market, and issuing financial instruments in the money market or a securities market and then lending out most of these funds to borrowers including companies, individuals or government. Other services rendered by banks are facilitating international payments, issuing credit cards, provisioning safe locker facilities for valuables, project financing, merchant banking facility, online banking, personal banking, and investment banking. Typically, a bank generates profits from transaction fees on financial services and the interest charges on its loans.
There are several different types of banks including central banks, investment banks, merchant banks, private banks, savings banks, offshore banks, commercial banks, retail banks, and universal banks.http://finance-info.synthasite.com
Present day banks need highly qualified, dedicated, and reliable staff because of intense competition from other financial institutions like insurance companies that provide some banking services to the public.Banking provides detailed information about banking, banking jobs, banking services, and more. Banking is affiliated with Swiss Bank Accounts.
Banking has evolved with time. The entire infrastructure and concept of traditional piled files and documents has given away to a much more sophisticated and sleek outlook. Moreover with technology growing with a rapid pace the time consuming factor has been replaced with doorstep banking methods which permits you to carry on with your banking 24/7 without having to pay the bank any visit. Money orders and transfers have taken a backseat for Online Money transfers, Card and mobile banking.
When Banking started of for Independent India, you had Nationalized and regional banks handling the country’s finances. As the years progressed you had more branches opening up. The 80s and 90s saw a whole lot of Global Banks like Standard Chartered, Barclays, Grindlays opening their banks up in India. Still banking didn’t seem to be convenient. The modus of transaction was pretty gloomy and boring with people having to wait their turns to visit the teller’s counter to complete their transactions. With technology coupled with the internet coming into play banking solutions have become more custom made for the average consumer. Online Banking ensures that a person is tuned completely with his finances at any given point from any part of the world. Ditto for mobile banking. The last couple of decades also saw numerous Indians migrate abroad on a bid to pursue their lives and carrier. Getting monetary transactions wasn’t easy then. Postal services and courier faux passes weren’t that convincing. Now with banks offering many solutions NRI Banking has also been made easier.
Various facilities for NRI Banking consist of NRI Savings account, NRI Term Deposits and provision to remit money to India. Mobile Banking and Online Banking also offer Mobile bill payment and online bill payments respectively. Typical business banking ensures commercial as well as retail banking services. In Commercial Banking, various corporate entities and major industrial houses are liable to be offered loans to proceed with their business and financial commitments. This kind of banking is generally profitable as it includes a large amount of money. Incase of retail banking services which is basically mass marketing business transactions, direct transaction with individuals which includes loans, various accounts and deposits, and locker facilities banks look to improve their consumer base. Establishing good customer relationship strengthens your financial base as with every major deal that you incorporate via your customers adds to your treasury. As of now the Retail section is undergoing a strain courtesy the recession. The failure to repay debts has seen the fall of global financial houses. So it is very important that a thorough examination is done to ensure know your customer (KYC) norms prior to issuing major loans.
Banks also provide special facilities to their HNI (High net individual) worth customers. These people generally have a huge amount invested with the financial house and indulge in hefty transactions. They are provided with world class banking facilities termed as Priority Banking and Premier Banking, both words justifying their meaning. Savings account for the average investor has also been made easier where you no longer need a referral to open an account or minimum balance to save in your account (* condition applies in both cases). Currently the major Global players in the Indian Finance Sector include Standard and Chartered, HSBC and Barclays. Banks of Indian origin that have gradually made waves include ICICI, HDFC, SBI and Axis Bank. All in all modern day banking has every element that ensures Wealth Management Services for the longer run.
The strength of Australia’s banks, especially the big four, is better than first seems, judging by comments in the International Monetary Fund’s latest report on the Australian economy.
Buried in the Fund’s latest report is a big vote of confidence in the health and stability of the Australian banking system.
The IMF also reckons Australia’s big four banks are so well capitalised that they could withstand a surge in home loans going bad and still maintain their capital levels at the minimum required by regulators.
That’s a big difference to the US, UK, Ireland and several other countries where plunging home prices, mortgage sales and falling property values have wreaked havoc on capital levels and forced big capital raisings
The information in this report from the IMF is likely to underpin the analysis and commentary in the RBA’s semi-annual Financial Stability Report to be released later this morning.
Australian banks and their health have been questioned by investors and commentators since the credit crunch erupted over a year ago, with nerves getting very frayed last week as the US financial system shook under rising pressures and soaring short term rates for cash.
As well a shortage of US dollars (hard to believe) caused short term interest rates to spike in the UK and Europe and forced the Fed into over a quarter of a trillion dollars US in currency swaps with central banks around the world (including Australia).
Some commentators fret about the level of debt in Australia and the house borrowing boom and the still high levels of prices and have warned of a debt binge driven slump.
But not so the chaps from the IMF.
They did admit that “Australia’s banking system is sound, but some vulnerabilities remain.” The banks were on the rollover risk in wholesale funding markets overseas with banks being forced to pay a lot more for new funds as existing loans rollover and have to be renewed.
But the IMF said “The authorities’ response to the credit market turmoil has been timely and fitting, with the RBA providing liquidity support and APRA intensifying its monitor of banks.
“The four large banks remain profitable and well capitalized, but the turmoil highlighted their vulnerability to rollover risks arising from short-term wholesale funding.
“The planned introduction of liquidity guidelines will be helpful to reduce the risk of disruptions arising from loss of access to offshore funding.
“Requiring the publication of more detail on the maturity structure of banks’ funding, especially from offshore markets, would also encourage banks to reduce their exposure to rollover risk.”
“APRA plans to introduce liquidity guidelines with a focus on improved disclosure and stress testing.
“The aim should be to encourage banks to reduce the risk of disruptions from restricted access to wholesale markets by diversifying their funding sources, lengthening the maturity of their funding, and holding sufficient liquidity.
“The staff advised that requiring banks to publish more detail on the maturity structure of their funding, especially from offshore markets, would impose additional discipline.”
(That’s a good news story on moves by the key regulators to force the banks to upgrade their disclosure on liquidity and funding.)The IMF said that “Banks are exposed to households, but appear resilient to an increase in default rates on mortgages. Households have become increasingly indebted, with debt reaching almost 160 percent of disposable income and debt-servicing costs at about 14 percent of disposable income.
“As more than half of banks’ loans are mortgages, banks’ asset quality would likely deteriorate with a large increase in interest rates, rise in unemployment, or fall in house prices.
“Staff analysis show that a very large increase in default rates (to 10 percent of all housing loans) would be required to reduce capital ratios of the four major banks below 8 percent.
“Moreover, staff estimates suggest that house prices are only moderately overvalued (5-15 percent) and that continued strong immigration and household income growth could increase equilibrium house prices.”
The IMF points out that to get a 10% default rate on all housing loans would require “a default on about half of mortgages with loan to value ratios of over 80 percent”.
House loans with an LVR of 80% or more are among the most stretched, but at the moment Australian banks have an arrears rate of 0.2% for impaired assets (including housing) and small banks a rate of 0.50%.
But in the most interesting stress test, the IMF says that its staff “using extreme stress test scenarios applied to the large banks suggests that they could suffer a significant fall in profits from an increase in funding costs associated with loss of access to offshore markets for 90 days, but that their capital would remain adequate.”
“This scenario is more severe than anything that Australian banks have had to face to date. As a result of the loss of access to offshore markets, banks have to refinance their offshore liabilities due in less than 90 days domestically.
“In the most severe case where all wholesale funds (domestic and offshore) due in less than 90 days have to be refinanced at an interest rate that is 500 basis points higher than before the shock, the aggregate capital ratio for the system only falls to 8½ percent.
“The worst affected among the four large banks has the capital ratio drop to 7½ percent.
“Banks’ profitability suffers a more serious hit, which is not surprising, given their heavy reliance on short-term wholesale funding. Nevertheless, it takes a 500 basis points increase in interest rates on liabilities to generate losses for banks.”
In other words, if that was to happen now, wholesale interest rates would have to rise to well above 12% (indicating mortgage rates above 15%) for three months for there be any significant damage to bank capital levels and the amount of capital in the financial system as a whole.
“That assumes the banks can’t get any money from offshore in that period, which hasn’t happened so far.
Even when the stress tests were applied at even more intense levels, the IMF team said the results showed the resilience of the system
“Even in a more extreme case where the interest rates on all deposits (including checking) also rise by 500 basis points, the aggregate capital ratio drops to 5¾ percent for the system, and to 5 percent for large banks.
“While this is a significant reduction in capital, the fact that the banks are able to maintain their capitalization ratios above 5 percent under a shock of that magnitude (and under a number of conservative assumptions that were made) underlines the resilience of the system.
“All four large banks were analyzed individually, and were shown to be sufficiently sound to handle a large interest rate shock. Small banks, however, were only looked at as a group.
“Some of these banks have smaller deposit bases, rely more heavily on securitization, and could be more vulnerable to certain shocks. Nevertheless, given their small size and the strong aggregate results, they are also not likely to present a threat to systemic stability.”
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