Bankers, on Tuesday, said that the monetary policy announcement of the Reserve Bank of India was on expected lines.
“The policy has been on expected lines. …….It is too early for a rate action. Going forward, there are possibilities of things improving and thereby some rate cut later. It is a welcome sign that things are stable. But the rates are going to be as it is, and we will have to wait and watch for some time,” said K. R. Kamath, Chairman, Indian Banks’ Association, and Chairman and Managing Director of Punjab National Bank.
“The postponement of the Basel III implementation by a year is also a welcome move by the RBI, which will give lot of leeway to the banks as it was putting a lot of pressure on the profitability,” Mr. Kamath added.
On the liquidity front, change in focus from overnight to term repo, State Bank of India (SBI) Chairperson Arundhati Bhattacharya said that it would not transfer into higher lending costs quickly. “But yes, over a period of time.”
On the RBI proposal to end penalty for not keeping the minimum balance in accounts and start charging for special services, Ms. Bhattacharya said SBI never had any such charges. With this move, the bank could start charging for special services now, she added. But she did not say by how much or which services will attract charges.
Aditya Puri, chief of HDFC Bank, which has a minimum balance requirement of Rs.10,000 per account, and penalises those who don’t maintain that, sought to defend his bank’s practice saying that if Rs.10,000 is locked, the account holder will earn Rs.400. Mr. Puri warned that if the charges were removed and any account became free of charge, he would be forced to charge for almost all the services. He also claimed that to make a bank account self-sustaining at least Rs.20,000 should be locked in minimum balance. Mr. Kamath said there was no RBI diktat on this and that this was only a proposal. On the issue of charging ATM users, Mr. Kamath said they wanted ATM usages in cities to be capped and charged after a certain limit and allow rural customers to use free.
Shyam Srinivasan of Federal Bank said removal of prepayment penalty on floating rate term loans, service charges on non—maintenance of minimum balance in savings bank accounts and in inoperative accounts and limiting the liability of customers in electronic banking transactions where customer negligence cannot be proved, would go a long way in increasing the level of trust in the banking system.