Bank rate

What is Bank rate? 

  Bank Rate is the rate at which central bank of the country  ( Bank Rate in India is decided by RBI)  allows finance to commercial banks. Bank Rate is a tool, which central bank  uses for short-term purposes. Any upward revision in Bank Rate by central bank is an indication that banks should also increase deposit rates as well as Base Rate / Benchmark Prime Lending Rate.  Thus any revision in the Bank rate indicates that it is likely that interest rates on your deposits are likely to either go up or go down,  and it can also indicate  an increase or decrease in your EMI.

 What is CRR? or What is CRR Ratio or What is CRR Rate :   

The Reserve Bank of India (Amendment) Bill, 2006 has been enacted and has come into force with its gazette notification. Consequent upon amendment to sub-Section 42(1), the Reserve Bank, having regard to the needs of securing the monetary stability in the country, RBI can prescribe Cash Reserve Ratio (CRR) for scheduled banks without any floor rate or ceiling rate (  [Before the enactment of this amendment, in terms of Section 42(1) of the RBI Act, the Reserve Bank could prescribe CRR for scheduled banks between 3 per cent and 20 per cent of total of their demand and time liabilities].

RBI uses CRR either to drain excess liquidity or to release funds needed for the growth of the economy from time to time. Increase in CRR means that banks have less funds available and money is sucked out of circulation. Thus we can say that this serves duel purposes i.e.(a)  ensures that a portion of bank deposits is kept with RBI and is totally risk-free, (b) enables RBI to  control liquidity in the system, and thereby, inflation by tying the  hands of the banks in lending money.

  

What is SLR? :

 Every bank is required to maintain at the close of business every day, a minimum proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR).  RBI is empowered to increase this ratio up to 40%.  An increase in SLR  also restrict the bank’s leverage position to pump more money into the economy.

 What are Repo rate and Reverse Repo rate?

 Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks against securities. When the repo rate increases borrowing from RBI becomes more expensive.  Therefore, we can say that in case,  RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.

 Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI.  The banks use this tool when they feel that they are stuck with excess funds and are not able to invest anywhere for reasonable returns.     An increase in the reverse repo rate  means that the RBI is ready to borrow money from the banks at a higher rate  of interest. As a result, banks would prefer to keep more and more surplus funds with RBI.

Bank Rate	9.00%
Cash Reserve Ratio (CRR)		4.00%
Statutory Liquidity Ratio (SLR)		23.00%
Repo Rate under LAF		7.75%
Reverse Repo Rate under LAF *		6.75%

                                                                                                                        as on 30/01/2013

Definition and Meaning of White Label  ATM -  India ?  or What is White Label ATM ? or What is WLA ? 

 

White Label ATM or White Label Automated Teller Machines or WLAs in India will be owned and operated by Non Bank entities.  From such White Label ATM customer from any bank will be able to withdraw money, but will need to pay a fee for the services.    These white label automated teller machines (ATMs) will not display logo of any particular bank and are likely to be located in non traditional places.

 

 

What is the purpose for introduction of White Label ATMs in India

 

In India only Banks are allowed to set up ATMs.  Although between 2008 - 2011, there has been 30% growth in number of ATMs and by the beginning of 2012, we have about 87,000 ATMs in India, yet the penetration of ATMs in Tier III and Tier IV cities has been low and downtime of such ATMs has been high.  Thus, RBI is feeling that there is a need to expand ATM network, which can be done by only with the help of  private operators.

 

Who will benefit from White Label ATMs :

The white label automated teller machines are likely to benefit customers as well as banks.   With the expansion of ATM network, customers will be able to withdraw funds at more locations which will be convenient and located near to their home or place of work.   Banks too support introduction of white label ATMs as such machines are likely to reduce pre-transaction cost for them and will be free from the problems relating to maintaining and running such a payment channel

 

What Problems are Likely to be Faced by Bankers and Customers :

Bankers are already sounding caution about the pitfalls of white label ATMs.  The first and foremost concern for customers will be the inconvenience they may feel in case of failed transactions on WLAs.  In such cases the dispute resolution mechanism will involve three entities — the WLA operator, the sponsor bank of the operator, and the customer's bank.  The WLA operators being non bank entities and running purely on profit basis may take longer time or avoid payments on account of failed transactions.   The second concern for customers will be the high cost they are likely to pay for use of such ATMs.

Welcome to MCash or Mobicash?

State Bank MobiCash is a pre-paid wallet on Mobile phone. It is usable anytime, anywhere!!! It offers facilities like money transfer, cash payments, mobile top ups, etc. The services are available at your finger tips, beyond regular banking hours.

State Bank launches State Bank MobiCash in partnership with M/s Oxigen Services (India) Private Ltd. (launched in Mumbai, Delhi, Surat, Pune and Jaipur).

Features:

Ø  Cash Deposit

Ø  Cash Withdrawal

Ø  Fund Transfer from Wallet to Wallet

Ø  Fund Transfer from Wallet to SBI account

Ø  Fund Transfer from Wallet to another Bank account

Ø  Mobile / Utility Bill Payments

Ø  Recharge of prepaid Mobile / DTH / Broadband

 Please visit State Bank MobiCash – CSPs (Customer Service Points of Oxigen for opening a State Bank MobiCash mobile wallet.