1/2/2015 MrunalBanking:BharatBillPaymentSystem(BBPS)explained

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[Banking]BharatBillPaymentSystem(BBPS),SBI
ShariyaEquityfund,KYCpartialfreezing,Minimum
Balanceguidelines
PostedByMrunalOn27/12/2014@7:38pmInBanking|22Comments

1. Prologue
2. [Block1]Moneytransferrelated
1. BharatBillPaymentSystem(BBPS)
2. Prepaidcards:BhaiincreasesLimit
3. ATMtransaction:Bhaisays>5=Rs.20
4. KotakFacebookmoneytransfer
5. Corporationbank:EMandate
6. ICICI:cashlesswithdrawls
3. [Block2]BankingFinanceoperations
1. KYCnoncompliantaccounts:BhaisordersPartialFreezing
2. MinimumBalancerequirements:Bhaigetsstrict
3. MadrashighcourtnudgesRajanbhai
4. [Block3]NewProductlaunch
1. P1:SBIShariyaEquityfund
2. P2:SBIStyleupcard
3. P3:SyndicateBank:2newschemes
4. P4:isc.DevelopmentsinBankingsector
5. MockQuestionsforBankexams

Prologue

Inthepreviousarticle,wesawsomeoftherecentdevelopmentsin
bankingsectoratorganizationallevele.g.RRBAmendmentbill,
Smallbankspaymentbanks,KotakINGVysyamerger,newguidelines
forNBFCetc.
Inthisarticle,wellcheckoutsomecurrentbankingdevelopmentsat
operationlevel.
Utility:IBPSBankinterviewsandMCQs.

[Block1]Moneytransferrelated

BharatBillPaymentSystem(BBPS)

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2013:RBIsG.PadmanabhanCommitteeestimated~6000billion
rupeesaretransactedthrough>30,000millionbillseveryday.
Atpresentwehavemultiplechannelstopayelectricity,telephone,gas,
cableandotherutilitybillsthroughcash,cheque,netbanking,credit
cardetc.andmanymiddlemeninvolvedsuchaspaytm,ccavenue,
billdesketc.
PAdmanabhanCommitteerecommendaintegratedbillpaymentsystem
forthewholecountry,toimproveefficiency,cutdownoperationcosts
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andprotectcustomers.
2014:RBIsetsupProf.UmeshBellurCommittee(IITBombay).
AsperBellurCommitteesuggestions,Rajanbhaireleasedguidelinesfor
BBPSin2014,November.

Salientfeatures

BBPSisanintegratedbillpaymentsystem
Topaylightbill,phonebill,pipedgasbill,DTH,schoolfees&other
utilitybills.
Willalsohearconsumercomplaintsinbillpayment.
Nodalbody:NPCI(NationalPaymentCorporationofIndia).NPCIis
alsoresponsibleforRupaycards.
OtherguidelinepointstootechnicalandunnecessaryforMCQs.

Benefits?

Customerwillhaveeaseofpayingbillsandprotectionfromfraudsand
mischief.
RBIandGovernmentcankeeptabsonallpaymentsmadeinIndiato
finetunetheirmonetarypolicyandtaxpoliciesrespectively.

Prepaidcards:BhaiincreasesLimit

Prepaidcardsallowcustomerstospendmoneywithoutcomprisingtheir
privacyandsecurity(unlikecreditcards)
Examples:SBIgiftcard,ICICImealcardetc.

Existingmoneyinindividualcard Rajanbhaiincreasedto
Rs.50,000 Rs.1Lakh

Additionalprovisions:

IfapersonhasKYCcompliantbankaccount,thebankisallowedto
issueprepaidcardstohisfamilymembersaswell.
Butonebeneficiarycanget1cardonly.
BankmustreportsuspicioustransactionstoFIU(financialintelligence
unit)
CardmustbeusedinIndiaonly.

ATMtransaction:Bhaisays>5=Rs.20

RBIhaspermittedbankerstoimposefollowingATMtransactionchargeson
customer.

6Metrocities Nonmetro
remaining
Delhi,Mumbai,Chennai,Kolkata,HyderabadandBangalore
areas
Only5freetransactionsamonthinhomebank unlimited
only3freetransactionsinotherbanks 5times
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Afterwards,Rs.20chargedpertransaction,evenforprinting same
thatstupidministatement. charge

Obviously,Metrocustomersdontlikeit.Notonebit.Especiallyhostel
studentsbecausetheirlukkhatyperoommatesstealmoney,sothey
prefertotakeoutrequiredmoneyfromATMonly,insteadofhiding
underthepilloworwallet.
AlthoughRajanbhaisoriginalmotiveistoencouragepeopletouse
virtualmoney(netbanking,creditcardetc)insteadofpapercurrency.
Soinlongterm,itllhelpdecreasingthemenaceoffakecurrencyas
well.

Wellallow10freeATMtransactionstocertainhighvalue
customers
SBI
Wellallowunlimitedfreetransctionsforcustomerswithabove
Rs.1lakhbalanceinsavingsaccount.

WellcontinuegivingfreeATMservicetoourcustomers.Nomonthly
PNB
fivetransactionlimit.

KotakFacebookmoneytransfer

Youcansendmoneytoyourfacebookfriendsinrealtime.
ButyouvetofirstregistertoaseparatesitecalledKayPay.
Limits:Rs.2500pertransactionandmonthlymaximumRs.25,000
ICICItooallowssuchthingbutamongitsownaccountholdersonly.

Corporationbank:EMandate

Itprovidesanonlineplatformforrepetitivepaymentsasanalternative
topostdatedchequesandECS(electronicclearingservice).
Applications:Lightbill,Phonebill,Utilitybills,Loaninstallements,school
feesetc.nstalmentpayments,schoolfeepayments,premiumpayment
andtheline,
CorporationbankwillrunthisEMandateusingNationalPayments
CorporationofIndias(NPCI)NationalAutomatedClearingHouse
(NACH)services.

ICICI:cashlesswithdrawls

ICICIBanklaunchedCardlessCashWithdrawalatATMs.
ICICIaccountholdercantransfermoneytoamobilephoneuserinthe
country.
Noneedeventohaveanaccountwithanybanktoreceivemoney.
Beneficiarywillgetasixdigitcodeinhismobile.
CanusethatcodetowithdrawmoneyfromICICIsbankATMS(Evenif
hehasnoaccount)
Codevalidfor2years.
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[Block2]BankingFinanceoperations

KYCnoncompliant:BhaisordersPartialFreezing

RajanbhaisneworderonlukkhatypecustomerswhodontsubmitKYC
documentsdespiterepeatedreminders

3 Bankshouldsendfirstremindertoclienttosubmitdocumentsfor
months KYC(Knowyourcustomernorms).
Another Sendanotherreminder.IFcustomerstilldoesntgivedocuments
3 thenpartiallyfreezehisaccounti.e.hecandepositmoneybut
months cannottakeitout.

Another Ifacustomersaccountispartiallyfrozenfor6monthsand
6 stillhedoesntgivedocumentsthencompletelyfreezehis
months accountcantdepositmoney,canttakeoutmoney.

MinimumBankBalance:Bhaigetsstrict

From1stApril2015,BankswillhavetoimplementfollowingRBIguidelines
aboutminimumbalanceforcustomers.

TheyllhavetoinformclientinadvanceIFhisminimumbalancefalls
belowtheprescribedlimit.e.g.forICICISalariedsavingsaccount,
minimummonthlybalancerequirementisRs.10,000formetroareas.
OtherwisepenaltyofRs.250/atpresent.
IFclientdoesntmaintainminimumbalance,thenpenaltymustbeonly
intheproportionofshortfall.Sobankswillhavetoshiftfromthe
absolutefigurelikeRs.250penalty,toapercentagefigurelike1%ofthe
shortfall.
Clientmustbegiven1monthsgraceperiodtofixtheproblem,only
afterthatlevypenalty.
Penaltychargesshouldbereasonable.ORsimplyconvertsuch
accountstoNofrillsaccountinsteadoflevyingpenalty.(Nofrills=basic
savingsbankdepositaccountsmeantforPoors.)
Bankshouldnottakeundueadvantageofclientsdifficultyor
inattention.e.g.Terminallyillperson,personwholosteverythingina
naturalormanmadedisasterandthereforeunabletomaintain
minimumbalance.

MadrashighcourtnudgesBhai

Background

GoldloancompaniessuchasMuthootFinanceandManappuram,are
accusedofchargingveryhighinterestratefromborrowers.(~2430%)
RBIsaidwedontregulatetheinterestschargedbysuchNBFCs.
Consequently,PILfilledinMadrashighcourt.

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Madrashighcourtorder(Nov.2014)

MostlyuneducatedpeopleborrowfromsuchGoldloancompaniesfor
personalneeds.
Theylacktheacumentoreadfineprintsinloanagreementanditsfuture
consequences.
SinceColonialtimes,Moneylendershaveexploitedpoormasses.
Therefore,ItistheresponsibilityforRBItoensureNonBanking
financialcompaniesdontturnintoexploitativemoneylenders.
RBIcannotwashoffitshandsfromthisresponsibility.
RBImustforceNBFCstoadoptFairpracticescode(FPC).

[Block3]NewProductslaunch

P1:SBIShariyaEquityfund

Longterminvestment.EachunitcostsRs.10
ThenSBImutualfundmanagerswillinvestthatmoneyontheshares
(equities)ofIslamicShairyacompliantcompaniesi.e.companiesnot
involvedinalcohol,tobacco,gambling,moneylendingetc.
OutsideIslamicnations,only2countriesofferingShariyacompliant
investmentoptions:(1)UK(2)India.
Benefit?FinancialinclusionamongMuslims.BecauseShariyalaw
forbidsthemfromearninginterestonmoney,hencemanyofthem
aversetoinvestinginsharemarket.
WithinIndia,3mutualfundmanagersalreadyofferingsuchschemes
viz.GoldmanSachs,TaurusandTata.
Challenges:
InIndianstockmarkets,hardly600700companieshaveShariya
compliantshares.
Somecritiquesargueapublicsectorbankmustnotcatertoaparticular
religion,becauseitgoesagainsttheprinciplesofsecularism.

2014,
SBIgetspermissionfromSEBItolaunchthisscheme.
November
2014, SBIdelaysthelaunchofthisscheme,withoutcitingany
December reasons.

P2:SBIStyleupcard

SBIandFashionatBigBazaar(KishoreBiyanisFuturegroup
company)
Type:Cobrandedcreditcard.
Benefit:lifetime10%discountonfashion,accessoriesandfootwear,at
allbigbazaarstores.
Additionalrewardpointsforbuyingevennonfashionitemsfrombig
bazaarmalls.

P3:SyndicateBank:2newschemes
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Forwomenentrepreneurs
SyndMahila
Loansupto5crore,Withoutcollateral
Shakthi
Interestrate~10.25%

HomeloanforpoorpeoplewithAnnualincome
below2lakhperyear.
SyndKuteer
Upto10lakhrupeeswitheasyEMIsfor30years.
Noprocessingfees,legalcharges.

Misc.DevelopmentsinBankingsector

Vijaya Vijayabanksspecialtermdepositscheme
444 Interestrate9.05%

Best
RajanbhaigotthisawardfromEuromoneymagazine.
Governor

Before:HDFCwouldsentPINviaposttothedebitcard
HDFC holder.
Green After:viaSMS
PIN Benefit:papercostdown+environmentsaved.
NotavailableinJ&Kbecausebulksmsrestrictions.

EasyNRIaccountschemeformiddleeastNonresident
Indians.Minimumbalancerequirementjust2000rupees.
ICICISmartstaraccountforminorsof10yearsandabove
ICICI
age.Theycanoperateitindependently.Canissuecheque,
paybills,rechargemobiles,openFDRD,ATM,Mobileand
netbanking.

CMDRanaKapoorgot$300millionloanfromADB(Asian
Yesbank developmentbank)
ForsmallfarmersandwomenSHGs.

GenNextbankaccountsforchildrenin1014agegroup.
Canoperateaccountindividually
Andhra
Willgetaspecialsavingspassbook.
bank
CangetATMdebitcard,mobilebanking,netbanking
facilities

Adanigroupissettingupacoalminingprojectin
Queensland,Australia.
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SBI SBIandAdanisignedanMoUtoget$1billionloan.
Adani AAPandoppositionpartiesdontlikeit,allegingcrony
capitalismandVijayMallyawilfuldefaultertypefiasco.

RBIpermittedbankstogiveloanstopeopleagainstthe
Bond
longtermbondsissuedbythesamebank.
loans
Condition:MaximumRs.10lakhperborrower.

IndiasEXIMbankissuedthesebondsinJapan.
Samurai Totalvalue20billionyen,maturity10years.
Bonds Themoneythuscollected,willbeusedtofinanceIndian
projectsinSriLanka.

MockQuestionsforBankexams
Q.TheNodalAgencyforimplementingBharatBillPaymentSystem
(BBPS)is____.

A. Financeministry
B. PostOfficenetwork
C. RBI
D. NPCI

Q.BharatBillPaymentsystemisdesignedontherecommendationsof
____Committee?

A. UrjitPatel
B. NachiketMor
C. BimalJalan
D. UmeshBellur

Q.PurposeofBharatBillPaymentSystem(BBPS)isto___?

A. Facilitategovernmenttoissuetreasurybills.
B. FacilitateRBItoselltreasurybills.
C. Facilitatecustomerstopayutilitybills.
D. None.

Q.WhatisthemaximumlimitforPrepaidcardsinIndia?

A. Rs.10,000
B. Rs.50,000
C. Rs.1,00,000
D. Noneofabove

Q.Findcorrectstatement()s)

A. SBIisthefirstentityinIndiatolaunchShariyacompliantequityscheme.

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B. TolaunchShariyacompliantmutualfundproducts,SEBIpermissionis
notrequired.
C. BothAandB
D. NeitherAnorB

Q.Recently,SBIintroducedStyleupcreditcardinassociationwith
___.

A. ChromaRetailstores
B. Raymondgarments
C. MyntraFashion
D. BigBazaar

Q.Considerfollowingpairsofbankvsminoraccountproduct.Whichof
themarecorrectlymatched?

1. KotakMahindra:Smartstar
2. AndhraBank:GenNext
3. SBI:NayiManzil

answerchoices

A. Only1and2
B. Only2and3
C. Only1and3
D. Allofthem

Q.In201415,_____bankintroducedSamuraibondsinJapanese
market.

A. AxisBank
B. StateBankofIndia
C. SIDBI
D. EximBank

BankInterviewQuestions

1. WhatdoyouknowaboutBharatBillPaymentsystem?Howwillithelp
Indianeconomy?
2. Recently,SBIannouncedShariyacompliantequityfunds.Whatareits
features?Howisitdifferentthanregularmutualfundproducts?Whatis
theneedtointroducesuchproductsinIndia?
3. WhatareyourviewsabouttheATMtransactionlimitimposedby
ReservebankofIndia?
4. TellussomethingaboutKYCnormsandFairpracticescodeinIndia.
5. Ifacustomerhasnotmaintainedminimumbalanceinhisaccount,then
whatwillyoudo?
6. IfacustomerisnotsubmittingtheKYCdocuments,thenwhatwillyou
do?

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