Submit KYC details to avoid account freeze: SBI

Country’s largest lender State Bank of India on Thursday asked its customers to immediately comply with the Know-Your-Customer guidelines, failing which their accounts would be freezed.

“All account holders of the bank who have not yet complied with the KYC guidelines are hereby requested to make their accounts KYC compliant by contacting their home branches and completing the required documentation latest by October 31,” SBI said in a notice.

As per provisions of the Prevention of Money Laundering Act 2002 and the direction given by RBI, all customers are required to comply with KYC guidelines.

Banks were advised to follow certain customer identification procedures for opening of accounts and monitoring of transactions of suspicious nature by the RBI in context of the recommendations made by the Financial Action Task Force on Anti-Money Laundering standards and on Combating Financing of Terrorism.

Failing to comply with the guidelines would result in freezing of account operations, it said.

“Several account holders have still not submitted local address and identity proofs, thereby violating the KYC guidelines issued by the apex bank on account opening,” a senior SBI official said.

Despite repeated reminders sent by the bank through registered and regular posts to such customers, there has not been any response yet and it seems they are not interested in operating the accounts, he said.

It is a final notice after which the accounts would be freezed, the official added.

The largest bank having a branch network of about 10,400 has over 13 crore customers.

RBI asks banks to reform the credit card industry

The reckless and irresponsible way in which the banks and credit card issuers in India have been behaving has prompted the Reserve Bank of India (RBI) to introduce some remedial measures as listed below.

(1) Issuing unsolicited cards: As a rule no body who does not seek one should be given a card. In case such cards are issued, activated and billed without the customer’s consent, banks should not only reverse the entries but pay a fine amounting to twice the value of such outstanding.

(2) There have been instances of new cards being intercepted and misused by unscrupulous elements before they reach customers. The issuing banks will be responsible for such monetary loss. As a rule there should be safeguards against misuse. The RBI suggests one or other of fraud-minimising devices such as photo identity cards, embossing a PIN and signature lamination.

(3) Wherever cards have been packaged with an insurance element — commonly accident insurance — details such as the nature and extent of insurance, other conditions if any, should be explicitly stated. Also, the person in the insurance company who can be contacted by the customer should be mentioned.

(4) Reasons for rejecting a card application should be communicated to the applicants.

(5) Banks should get explicit permission from customers for sharing information about them.

(6) Customer education should receive top priority and cover the entire gamut of credit card operations. Illustrative examples should be used. Call centre employees should be suitably trained.

(7) Closure and blocking of lost cards should be given top priority.

Finance minister constitutes a group to assess liquidity requirements

The Finance Minister, P Chidambram on receiving a large number of representations from banks, other financial entities/intermediaries, corporates and small businesses has expressed that the issue of liquidity must be addressed in a comprehensive manner. These institutions have constantly pressing that intermediation of credit must take place smoothly and efficiently.

The Finance Minster has therefore decided to constitute a group to make a quick assessment of the requirements of liquidity and advise the Government. The group will be headed by Shri Arun Ramanathan, Finance Secretary and Secretary (Financial Services). It will consist of:

(i) Representative of RBI

(ii) Shri T.S. Narayanaswamy, Chairman, IBA & CMD, Bank of India

(iii) Shri U.K. Sinha, CMD, UTI

(iv) Shri Y. M. Deosthalee, CFO, L&T & Director-in-charge, L&T Finance Limited

(v) Shri R.M. Malla, CMD, SIDBI

The group has been authorized to co-opt any more members, if necessary.

The group has been requested to begin work immediately, also visit Mumbai, and submit an interim report within a week.

CRR rate further slashed by 100 bps

Adressing an urgent need for more liqudity, the Reserve Bank of India (RBI) has slashed the cash reserve ratio (CRR) by another 100 basis points. This will inject about Rs 60,000 crore into the cash-strapped system, the Reserve Bank on Friday announced additional one per cent cut in mandatory requirements for banks to keep cash with the central bank over and above 0.50 per cent reduction announced earlier.

With this, a total 1.50 per cent cut in Cash Reserve Ratio (CRR) to 7.50 per cent will come into effect from tomorrow.

“Accordingly, on a review of the evolving liquidity situation in the context of global and domestic developments it has been decided to reduce CRR by 150 basis points to 7.50 per cent with effect from the fortnight beginning October 11, 2008 instead of 50 basis points reduction announced on October 6, 2008,” RBI said in a statement here.