Banking sector wrap: New Rs 10 notes in the offing, SBI reviews minimum balance

Here’s a look at the new notes that will soon be available for customers.

Rs 200 notes missing at ATMs

Moreover, the RBI has witnessed existing shortage of the new Rs 200 denomination notes with the public at large. Owing to this, it has asked banks to start dispensing these bright yellow coloured currency notes at ATMs.

However, banks and ATM operators suggest that a shortage of supply, high costs and the time taken to recalibrate ATMs have together resulted in the Rs 200 note being kept away from ATMs.

SBI cuts interest rate

SBI

In another new year’s gift, country’s biggest lender, State Bank of India (SBI), slashed base rate or minimum lending rate for existing customers who have taken loans before April 2016.

The base rate reduced from 08.95 percent to 8.65 percent p.a. effective from January 1.

SBI claims to pass on this benefit to nearly 80 lakh customers. It says about 25 percent of its customers are still on base rate.

Where are interest rates headed?

Minimum balance

In another big news, SBI also hinted at a likely reduction in the minimum average balance requirement, which currently is at Rs 3,000 for metros, Rs 2,000 for semi-urban areas and Rs 1,000 for rural areas. It also plans to change the mandate to quarterly balance from monthly requirement.

The public sector bank faced heavy criticism after it earned a whopping Rs 1,771.67 crore as penalty from customers for non-maintenance of monthly average balance in savings accounts during April to November 2017. This is much higher than its second quarter net profit of Rs 1,581.55 crore.

FinMin vs Sebi?

Coming to some regulatory news impacting the corporates and banks very critically.

The finance ministry is not in favour of the market regulator's proposal that listed companies should inform the stock exchanges as soon as they miss payment of monthly instalment on a term loan.

Clean up of Indian Overseas Bank

Indian Overseas Bank with the second highest non-performing assets (NPA) ratio among banks, has decided to clean up the losses by offsetting it through the amount from its share premium. This is one of the rarest occasions from a bank has proposed such a move.

Insolvency

In a breather to debt-laden Jaiprakash Associates, RBI has asked banks to put the filing of insolvency case towards the company, on hold.

Even as RBI’s December end deadline for referring stressed firms to the insolvency court is past, bankers are still in process of filing bankruptcy proceedings in 25 cases of the likely 28 non-performing asset (NPA) accounts.