Developments in Banking sector
SURYANARAYAN MOHAPATRA
Hope all of you are doing well.
There are certain new developments in the banking and insurance sector in India and I thought I should share with you.
1) RBI redefines Sick Micro and Small
Enterprises
RBI had constituted a working group under the chairmanship of KC Chakrabarty, then
chairman & managing director of Punjab National Bank, to recognize
potentially viable sick units.
Accordind to new guidelines of RBI a Micro / Small
Enterprises
unit will be
considered sick if any of the borrowal accounts of the enterprise remains an NPA
for three months or more and the net worth gets eroded due to accumulated
losses to the extent of 50%. It has
removed the stipulation that the unit should have been in commercial production
for at least two years.
(Please note that Mr. KC Chakraborty is currently one of the Dy. Governors of RBI)
Pls go through the following link for more details:
http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7664&Mode=0
2)
HSBC Suspends MF,Insurance Sales in India due to MIS-SELLING ALLEGATIONS
HSBC, with head quarters in London, is one of the leading banks in the world. It has recently stopped selling of
insurance and mutual fund products in India.
Reasons:
1) (a) There are mounting allegations of mis-selling and using of sharp practices, The foreign bank, which has been doing business in India for close to 150 years, reported a 30% spurt in commissions on mutual fund sales last fiscal which was one of the toughest years for fund houses, life insurers and financial services brokerages. The parent organization has given HSBC India two months to fix the system in order to ensure that customer complaints come down.
2) (b) Besides mis-selling of insurance policies, these complaints related to frequent churning of mutual fund portfolios of many well-heeled investors.
In many markets, large financial services groups insist that all telephonic conversations between customers and personal bankers or wealth managers should take place on recorded lines. But this may be difficult in markets like India where bank or distributor officials use their mobiles to call clients after office hourWith best wishes.
Prof. Surya Mohapatra