While Label ATMs – A new Initiative

Off late following successful functioning in Canada, RBI came out finally with draft guidelines to set up White Label ATMs (WLA). Now non-banking entities will be granted license to set up ATMs with approval from RBI. It is called while label ATM because it will not cover name of any bank though it will be definitely sponsored by banks only. Under the scheme a company registered under Companies Act 1956 and having minimum Net worth of Rs. 100.00 crores as per last audited financial are eligible to apply for license for WLA.

How will it function?

As per the guidelines issued by RBI a White Label ATM operator (WLAO) will enter into a tripartite Service Level Agreement between WLAO, the sponsor bank and ATM Network operator / Card Payment Network operator. It will sole responsibility of sponsor to provide adequate and good quality cash to WLAO. Servicing and maintenance of ATM will be responsibility of WLAO. Grievance redressal will be responsibility of card issuing bank. However, sponsor bank will extend all out support for speedy redressal of grievances.

How customer will be benefitted?

RBI has adequately taken care of the fact that all areas are covered under the said scheme and it is mandatory to install ATM in different locations in certain proportion so that it should not be taken purely as a profit making venture. Customers will get ATMs on different places nearby home or office place or shopping areas. ATMs will work more efficiently than it is presently performing specially ATMS of PSBs. Most of the time, in many ATMs, we find a placard hanging with contents either out of cash or out of order etc resulting in walking from one place to another defeating the very purpose of ATM.

It has been witnessed that since RBI making it mandatory for all bank to make free use of ATMs of all banks even by card holders of other banks, though subsequently with certain reservations, banks have been going slow in installation of ATMs. Maintenance and service of existing TAMs, specially of PSBs, are also not to that level of satisfaction. With WLA installation customers will be more benefitted with wide presence of it and better service condition. Banks also will reap the benefit as use of alternative delivery channel will be higher and thus burden in branches will be reduced. Though cash deposit facility will not be permitted in WLAs, it will improve percentage use of alternative delivery channel.

Let’s wait for a new era of banking with revolutionary call by RBI.

Base Rate, How different from BPLR

Come July 1 and all the bank loans will be linked to base Rate as proposed by banking regulator RBI. It is yet to get clarified the very purpose as how it is different from the existing BPLR concept. The introduction of BPLR concept was also to link all the bank loans rate with it and the same had been left to be decided by bank itself based on cost of fund, statutory requirements, market competition and profit margin. The very concept of Base Rate is more or less the similar as the rate to be  decided by banks themselves and the criterion has been as of BPLR concept. The exemption from the Base rate is also more or less same like staff loan, loan against bank’s own deposit and DRI loan.

The concept that works to some extent in this concept is to ascertain that no rate will be offered to the borrower below the rate fixed as base rate. The concept drawn with a view to restrict banks from parting fund to corporates at a comparatively lower rate of interest with a twin objectives of parking excess liquidity and to show business volumes growth.

So far as parking of fund with corporates is concerned, it is a last resort for the banks as sluggish credit growth has left all the banks with excess liquidity for which they have to pay interest to the depositors. After all by parking excess liquidity with corporates makes sure the retun of assets with full interest and there is zero default risk.

Hello Bankers, Congrats

Dear Bankers of today’s era, congrats for so called success of 30 months long struggle of our Union Leaders. You ultimately landed with a wage revision of 17.50%. Good enough considering the work load in today’s banking. Pay your sincere thanks to all the leaders, Managements and govt and last but not the least our representatives IBA.