Tag: Current account

Bank of Baroda launches ‘BOB Parivar Account’ for family savings and current deposits

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bank of Baroda has announced the introduction of the ‘BOB Parivar Account’ for savings and current accounts. The ‘My Family, My Bank’ segment, which has been launched as a part of the Bank’s “BOB Ke Sang Tyohaar Ki Umang” festive campaign, groups all the bank accounts belonging to members of a single family under one family.

While each account will be operated independently by the primary account holder, the maintenance of quarterly average balance (QAB) is recorded at the group/family level, eliminating the need to maintain QAB in every single account, Bank of Baroda said.

The BOB Parivar facility is open to both new and existing customers. It can comprise of a minimum of two and a maximum of six members. Eligible family members for the BOB Parivar Savings Account segment include the spouse, parents, children, parents-in-law, daughter-in-law and/or son-in-law. The BOB Parivar Current Account Segment is open to proprietorship, partnership, LLP and Pvt. Ltd. companies, which are group companies or sister concerns.

Both the BOB Parivar Savings Account and the BOB Parivar Current Account segments come in three distinct variants – Diamond, Gold and Silver – with varying Pooled Quarterly Average Balance (PQAB) requirements (For Savings Accounts – Diamond: ₹5 lakh and above; Gold: ₹2 lakh and above; Silver: ₹50,000 and above; For Current Accounts – Diamond: ₹10 lakh and above; Gold: ₹5 lakh and above; Silver: ₹2 lakh and above) and associated benefits.

Ravindra Singh Negi, Chief General Manager – Retail Liabilities & NRI Business, Bank of Baroda said, “ In the BOB Parivar Account segment, all individual family members will gain from the overall balances maintained together.”

Benefits of the BOB Parivar Account (as per the lender):

• Concessional interest rates on retail loans for saving account holders
• Waiver of Processing Charges on Retail Loans (excluding TCR/Valuation Charges)
• Concession in locker rent charges
• Concession in Demat AMC
• Concession in manual NEFT/RTGS charges (Digital is 100% free)
• Complete waiver of DD/PO Charges
• Concession in cheque book charges
• Waiver of charges on collection of Outstation Cheques (Only Postage and Out of Pocket expenses are payable for Collection of Outstation Cheques)
• Complimentary SMS/Email Alerts and Standing instructions

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Now you can get one-view of transactions across all bank accounts using ICICI Bank’s iFinance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ICICI Bank on Thursday, October 12, announced the launch of ‘iFinance’, enabling customers-retail and sole proprietors, to get a consolidated view of their savings and current accounts in one place.

Customers of other banks can also benefit from this facility, which ICICI Bank has introduced by leveraging the account aggregator ecosystem, on the bank’s digital platforms, namely the iMobile Pay app, Retail Internet Banking (RIB), Corporate Internet Banking (CIB) and InstaBIZ, the Bank’s mobile app for businesses.

Using ‘iFinance’, customers can check account balances, get insights on spending patterns, download statements and more, ICICI Bank said in a statement.

Speaking on the launch, Sidharatha Mishra, Head of Digital Channels, ICICI Bank, said, “With the launch of ‘iFinance’, we are enabling our customers as well as customers of other banks to view their account data in one place and provide them better control over their finances. This feature also provides users with the facility to manage their expenses by analysing their spending patterns in a safe and secured place.”

The key features of the ‘iFinance’ facility are:

• Linking and viewing of all accounts: Users can securely link their savings and current accounts with all banks and view account balances in one place.
• Summary of income and expenditure: The facility allows users to get a summary of their income and expenditure which helps them monitor their finances properly.
• Track spending/payments: Users can track their spending and get category-wise information on their expenses. This helps them in managing their expenses and overall financial health.
• Complete user control: The facility also provides increased convenience as the users can link and de-link accounts on a real-time basis.
• Detailed statement(s): With this facility, users can also download consolidated account statement(s) of all linked bank accounts.

Users can avail ‘iFinance’ facility by following these steps:

• Log in through ICICI Bank’s digital platform(s) namely iMobilePay, Retail Internet Banking, Corporate Internet Banking and InstaBIZ
• Click on the ‘iFinance’ button and verify credentials
• After the verification is completed, all bank accounts that the users are holding with ICICI Bank and other banks will be pre-populated
• The user can select the bank to link and provide consent to link accounts
  • Approved accounts will be displayed to the user

Also, customers of other banks can avail of this feature by following the below steps:

• Download the app
• Register with a mobile number
• Click on ‘iFinance’ and follow the same steps mentioned above

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Ujjivan Small Finance Bank introduces Maxima Savings Account, Business Maxima Current Account

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ujjivan Small Finance Bank (Ujjivan SFB) on Friday, September 15, announced the introduction of the Maxima Savings Account and Business Maxima Current Account for the premium customer segment. The annual interest rate on the Maxima Savings Account is up to 7.5 percent and customers can open the account with Rs 1 lakh.

Customers also have the flexibility to maintain Rs 15 lakh or more in fixed deposits to meet the balance eligibility criteria of the Maxima Savings Account. Other services offered by Maxima Savings Account include higher transaction limits, free cheque and DD Issuances, Ujjivan Small Finance Bank said in a statement.

A complimentary health prime benefit is also offered with the Maxima Savings Account to applicable customers, it said.

Business Maxima Current Account provides businesses and entrepreneurs with services designed to meet their unique needs. It features online banking, instant fund transfers, and cash management options. Notable features include the ability for businesses to define their own cash deposit limit, a higher daily ATM withdrawal limit of Rs 5 lakh per day, the provision of beyond banking services such as account services for merchants, and free installation and rental fees for POS services. In addition, business account holders will have access to specialised relationship managers to guide and serve their customised banking needs, the bank said.

Both the Maxima Savings Account and the Business Maxima Current Account offer a RuPay Select Debit Card that provides access to wellness services, exclusive merchant offers, airport lounge access, and a premium health checkup.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Savings Account Vs Current Account: Which one is for you?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A bank account is a primary and a personal financial management tool. Besides the ease and convenience bank accounts offer in terms of financial management, they are also safe places to stow away your money.  You – as an individual or an organization – will be presented with multiple options when you are ready to set up your bank account.

Bank accounts are generally divided into two categories: Current and Savings accounts. Wondering what they mean and which one to choose? Here’s a ready reckoner for you.

But before we go into the finer details, let us understand what these two accounts are.

Savings account

Savings account, as the name suggests, is to help save money and maximise/build your wealth over time while also enabling account holders to do other transactions and avail banking services.

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These are typically used by the salaried class. The primary intent of this type of bank account is to have liquid cash. Due to this, there are a limited number of withdrawals that can be made as set by the bank (usually, between 3 and 5) without attracting extra charges.

The key takeaway here is that a savings account accumulates interest over time – currently anywhere between 2.75 percent to 4 percent in public sector banks and 2.75 percent to 6.75 percent in private banks.

Some banks have also linked the savings account deposit to the repo rate, meaning the interest dynamically changes as and when Reserve Bank of India revises the repo rate.

Current account

A current account is also a type of deposit account, like the savings account, but are usually for significantly higher number of transactions regularly. They are typically used by businesses, entrepreneurs, institutions and other large entities, which have large number and high-valued transactions on a daily basis, for cash flow management.

However, unlike the savings account, a current account are zero-bearing interest accounts, but provides the account holders with an overdraft facility.

 Now, how do you choose between an interest accumulating savings account with a fixed number of withdrawals and a current account with a high monthly average balance (MAB) but unlimited transactions daily? Your purpose, needs and priorities can help you choose one.

Consider these before opting for one:

• Interest rates: Savings accounts have varying interest rates on the funds deposited in the account. There are also multiple digital savings accounts (generally for new to bank customers) that are offered by banks at higher interest rates with the assurance of security.

Current accounts don’t yield any interest on the deposited money.

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• Purpose: You can choose to make a regular savings account, a salary savings account, a zero balance savings account, a kids’ savings account, a family savings account or a senior-citizen savings account depending upon your priorities and goals.

They are offered by banks as customized solutions to the needs of customers. Oftentimes, people choose to make multiple savings accounts for different purposes. However, independent financial advisors suggest having no more than three savings accounts.

Like savings accounts, current accounts offer multiple options from standard current accounts to packaged current accounts and single column cash books. There are also premium accounts and foreign currency accounts.

The choice is entirely dependent on your requirements. Some private banks also offer customized current account options based on the type of businesses.

• Minimum balance and extra charges: On both savings and current accounts there will be charges associated with maintenance and withdrawals. They may be high or low depending upon the bank.

However, it is necessary that you know the minimum balance that needs to be maintained, and the penalty that is levied if you fail to maintain the same.

While savings accounts have lower minimum balance requirements, current accounts have relatively higher minimum balance requirements.

With current accounts, you may have overdraft charges to take into consideration as well.

• The number of transactions: Savings accounts have limited number of free transactions following which charges may be applicable, while current accounts don’t have any cap on the number of transactions that can be made.

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• Saving tools: Customers can avail of savings tools/products such as recurring deposit, fixed deposit and others using both savings and current accounts.

Both savings account and current account come with their own set of provisions. It is up to you to weigh your options, goals and requirements to make the correct decision. You could also choose to have both. Several banks do offer multiple benefits when you open both accounts under the same bank.

This article is authored by Lizzie Chapman, CEO and Co-Founder at Zest Money

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Banks get 3 more months to implement RBI’s current account rules

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In some respite for lakhs of affected borrowers, the Reserve Bank of India (RBI) on Wednesday allowed banks three more months’ time to implement its new current account rules.

CNBC-TV18 had earlier reported that lakhs of borrowers, large and small, were facing disruptions after banks closed down or froze their current accounts to comply with RBI’s July-end deadline.

RBI, via a notification issued today, said that it had received requests from banks to allow some more time to resolve the operational issues while implementing the circular in letter and spirit. Therefore, to ensure the instructions were implemented in a non-disruptive manner, it has now allowed time till October 31, 2021, to implement the provisions of the circular.

“This extended timeline shall be utilised by banks to engage with their borrowers to arrive at mutually satisfactory resolutions within the ambit of the circular. Such issues which banks are unable to resolve themselves shall be escalated to Indian Banks’ Association (IBA) for appropriate guidance. Residual issues, if any, requiring regulatory consideration shall be flagged by IBA to the Reserve Bank for examination by September 30, 2021,” RBI said.

The regulator further said that all banks must put in place a monitoring mechanism, both at head office and regional/zonal office levels to ensure non-disruptive implementation of the circular. This is to ensure that customers are not put to undue inconvenience during the implementation process, RBI said.

“Banks shall ensure that the contents of the circular are implemented in letter and spirit without causing undue inconvenience to their borrowers. All other instructions contained in the circulars ibid remain unchanged,” the apex bank reiterated in its notification.

What the new rules say

Under the new guidelines, no bank can open current accounts for customers who have availed credit facilities from the banking system.

In the case of borrowers who have not availed of cash credit or overdraft (CC/OD) facility from any bank, there is no restriction on opening of current accounts by any bank if exposure of the banking system to such borrowers is less than Rs 5 crore.

In the case of borrowers who have not availed of CC/OD facility from any bank and the exposure of the banking system is Rs 5 crore or more but less than Rs 50 crore, there is no restriction on lending banks to such borrowers from opening a current account. Even non-lending banks can open current accounts for such borrowers though only for collection purposes.

The restriction applies to borrowers in case they avail of CC/OD facility since all operations that can be carried out from a current account can also be carried out from a CC/OD account as banks in a CBS environment follow a one-bank-one-customer model as against a one-branch-one-customer model.

In the case of borrowers where exposure of the banking system is Rs 50 crore or more, banks are required to put in place an escrow mechanism. Accordingly, current accounts of such borrowers can only be opened/maintained by the escrow managing bank.

The instructions were issued in order to enforce credit discipline among the borrowers as well as to facilitate better monitoring by the lenders. For this purpose, the regulator said a graded approach had been prescribed on opening and operating current accounts and CC/OD facilities. Banks were required to implement these instructions in a non-disruptive manner while keeping the bonafide business requirements of the borrowers in mind.

Disruption caused by sudden closing of current accounts

Due to a flurry of current account closures by banks to meet the RBI deadline, these customers, largely businessmen/traders and entrepreneurs, were unable to make and receive payments. Many expressed their angst over social media, even seeking government intervention to prevent the disruption they were facing.

What are current accounts used for?

Current accounts work best for traders and entrepreneurs who need to access their accounts frequently. Unlike savings accounts, current accounts earn no interest on the deposits made. A current account also offers the account holder the facility of overdraft. When you withdraw more money from the account, than is actually there, then your account is said to be overdrawn. In the case of a savings account, banks neither offer nor allow overdraft facilities, whereas, this facility is provided with a Current Account. The minimum balance requirement for such accounts is also high.

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Businesses face temporary disruption as banks freeze current accounts to meet RBI deadline

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Several businesses, large and small, are staring at temporary disruptions as banks freeze their current accounts to comply with the banking regulator’s directive.

In a bid to enforce credit discipline and check diversion of funds, the Reserve Bank of India (RBI) had put in place certain safeguards for the opening of current accounts by banks in August last year. Broadly, these rules say banks cannot open current accounts for borrowers where their exposure is less than 10 percent of the borrower’s total exposure to the banking system.

RBI had first asked banks to comply within three months of issuing the circular, but with banks dragging their feet on compliance, the regulator had extended the deadline to July end.

Now, as the deadline ends, several such accounts have been closed or frozen by banks to adhere to RBI rules, which has caused huge disruption for these account holders- mostly businesses/traders and entrepreneurs.

“The number of current accounts that would have had to be closed to comply with RBI rules would run into lakhs,” said a senior banker on the condition of anonymity. “Banks have a list of these accounts which need to be closed by them using CRILC database. So we are going through that and closing accounts one by one. Last we checked we had about 40,000 such accounts, maybe more,” said the head of a large public sector bank who did not wish to be named.

Several such borrowers took to social media to express their angst, and seek government intervention to prevent these disruptions. One such borrower, Kanthanathan, tweeted that ICICI Bank had blocked their current account, and their funds were locked. As a result, this person tweeted, his supplier payments were stuck and business was at a  standstill.

Another person by the name of Sunil Sachin tweeted that his father’s firm was under difficulty after his current account was frozen by Andhra Bank “citing hefty fines from RBI if an account is running with OD.” Another Rajesh Naik tweeted that the CA freezing “has impacted our business for the past six days. We are told that this is being done to comply with RBI  guidelines.”

Some other complaints:

@RBI @RBIsays @nsitharamanoffc @nsitharaman Closing Current account those has OD / CC account in bank is Bad Decision as a MSME facing bigger problems in Customs, Income Tax, and many more please consider our suggestions prior making Rules

— Vikram Talsania (@srlamproducts) July 29, 2021

Poor management & conduct of @AxisBank
I being a reputed Current account holder bank put a freeze on my account stating the norms of central Govt that a company can operate only one account either current or limit account,for which I have shared all the docs @RBI @minmsme #UE

— Praveen Malik (@Praveenmalik86) July 29, 2021

#icicibank my main banker email on July 7, advice house loan transfer from Federal Bank to #icicibank, documents submitted on July 23, account frozen on July 24. Till then assurance that they are seeking clarification from RBI whether benign accounts affected

— Krishna Sarma (@krishnasarma68) July 30, 2021

There are many similar issues raised on social media. To be fair, banks have said that customers were given months of advance notice since the RBI circular first came out in August of 2020, and some did move their accounts to avoid inconvenience later.

The country’s largest bank- State Bank of India- alone had to close over 80,000 accounts to comply with RBI rules, said a person in the know. Other large banks had to close tens of thousands of accounts as well, CNBC-TV18 has learnt.

“This is going to cause a lot of pain. The customer impact is large,” said another senior executive from a large private sector bank. “There is resistance also, event the government is involved, but RBI has stuck to the deadline,” he added.

What The New Rules Say

Under the new guidelines, no bank can open current accounts for customers who have availed of credit facilities from the banking system. All transactions should be routed through the CC/OD account.

Secondly, if a bank has less than 10 per cent of the borrower’s credit exposure, then debits to the CC/OD account can only be for credit to the CC/OD account with a bank that has 10 per cent or more of the credit exposure. By placing restrictions on debits from smaller accounts (by the value of exposure), the RBI intends to check the diversion of funds and keep the banking activity within the key consortium lenders to the borrowers

Thirdly, in the case of customers who have not availed CC/OD facility from any bank, banks may open current accounts, but with certain conditions in case of borrowers with more than ₹50 crore exposure to the banking system. Here, current accounts of borrowers can only be opened/maintained by the escrow managing bank.

Disruption, but for the short term.

“The intent behind the rule is good, but it has inconvenienced a lot of customers. They are not happy about it,” said the head of a public sector bank. “But give it a month or so and things will settle down. It is a short term inconvenience for customers. For banks, of course, it will lead to more hits as we lose this cheap source of funds etc,” the banker added.

“We are not able to completely finish the process so we may need some more time. Unlikely RBI will extend this deadline though,” said another executive from a bank. “Borrowers may have several accounts because one bank may give them the facility another bank does not have, maybe some banks have better technology or better cash management services, so there can be multiple reasons to have many current accounts. If someone had a loan account with XYZ bank and a current account with my bank, I have to close it down, there is no choice,” added this person.

While those with multiple current accounts may face closure, bankers CNBC-TV18 spoke to explained that it would not impact their cash and that the account would be transferred to the current account with the lead bank with the largest exposure.

“Many MSMEs, other borrowers often open parallel accounts because they don’t want to do all transactions in a CA (current account) with a bank where they have the loan account since the bank can easily claim that money for loan recovery also,” quipped another public sector banker, adding, ““Diversion of funds is one of the biggest reasons for NPAs and frauds, so new rules are aimed to give us better visibility of cash flows of borrowers. The system also needed fixing because I had the loan account and another bank had cash flows, so this will help.”

“Today every bank has the same technology, so it is not that borrowers will lose out If their current account is shifted, but yes there will be temporary disruptions as there are often standing instructions for GST payments etc from one account so all that will have to be managed,” said one of the bankers quoted earlier.

Banks are also offering customers a credit line so that they have loan exposure to them and continue to keep their current accounts. While some customers have opted for this route, others have not.

Impact on Banks

With this new mandate, many profitable current accounts could migrate from MNC banks to public sector lenders and some of the large private sector Indian banks where they have loan accounts.

These accounts are lucrative to banks since they get access to cheap funds, and also make a fee for cash management business.

According to a report by Macquarie, foreign banks have a 4 percent share in total loans in the system but a disproportionately larger 14 percent share of current accounts, so they may be the most impacted. Private banks had a 42 percent share of the total current accounts compared to a 35 percent share of the loans. Public sector banks on the other hand have a large 61 percent share of the loans in the market but a relatively lesser 44 percent share in current accounts. Hence, RBI’s new rules may lead to the migration of current accounts from some of these banks into others who have a larger share of loan accounts.

What are current accounts used for?

Current Accounts work best for traders and entrepreneurs who need to access their accounts frequently. Unlike savings accounts, current accounts earn no interest on the deposits made. A current account also offers the account holder the facility of overdraft. When you withdraw more money from the account, than is actually there, then your account is said to be overdrawn. In the case of a savings account, banks neither offer nor allow overdraft facilities, whereas, this facility is provided with a Current Account. The minimum balance requirement for such accounts is also high.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow