How can I exchange old Rs 1000 and Rs 500 notes?

Modi has taken a bold and effective step to curb black money. If you don’t have a black money, it should not bother you much. Your hard earned money will always be yours. You have enough time and opportunities to exchange the old Rs 500 and Rs 1000 notes to legally valid currency notes.

1. You can deposit in your account in any bank or post starting from 10/11/2016 to 30/12/2016. There is no limit for this deposit.
2. Once you deposit your Rs 1000 and Rs 500 notes, you can withdraw in legally valid currency notes up to Rs 10000 per day and Rs 20000 per week from the bank or post offices.
3. One can exchange the notes at banks or head and sub post offices producing identification documents like PAN, EPIC, Adhar, Passport etc. This kind of exchange of notes is capped at Rs 4000 up to 24/11/2016 and Rs 20000 from 25/11/2016 to 30/12/2016.
4. Even if you can not exchange your old Rs 1000 and Rs 500 notes during the given period up to 30/12/2016, you can exchange notes at specified RBI offices with a declaration up to end of this financial year.
5. One can withdraw up to only Rs 2000 at ATMs as of now from 10/11/2016 and it will be increased to Rs 4000 soon.

Inflation and developing economy

As an economy develops the per capita income also increases. Benefits of the development start reaching the bottom of the economical structure. Their purchasing power and thus demand increases, this increases the price. Increase in the price pushes them to earn more. They become more efficient to earn more to meet their requirement. Hence contributes in the development. Inflation causes the development. According to a Times report, inflation had been used as the tool by the Latin American governments for the economical development.

When the inflation becomes higher, government starts spending more on curbing inflation than development works. Giving subsidized food to the poor usually controls food inflations, which costs more for the government. The central bank increases the lending rates, which in turn pressurizes the banks to push their products at higher interest rate. The growth slows down.

Most challenging problem in the developing economy arises when it faces the problem of wage-price-spiral. When the economy develops, the industries see prosperity the workers demand for higher wage. Higher wages increases the cost of the products. Hence the manufacturer and the service providers increase the price of the product. This in turn affects the society and again a demand for the higher wage. This cycle is called as wage-price-spiral. Presently Indian economy is facing this problem and central bank accepts it is very difficult control wage-price-spiral.

Moderate inflation is always good for the developing economy. But development should not be an excuse for the central government and central bank for its failure to curb the problematic inflation.

Inflation is the second nature of developing economy. But development should always be the first nature.

Jul 1: State Bank Day

You might have seen front page advertisements by State Bank of India in today's major news papers across the country. State Bank celebrates State Bank Day by doing remarkable community service every year on 1st Jul, this year 14000 branches of SBI donated 140000 fans to the schools. So what is this State Bank Day?

Intention of forming State Bank of India post independence was to make the formal banking and financial service reach the every corner of the country. Though SBI has grown far bigger than any private profit making banks, its basic intention was social banking. Imperial Bank of India was functioning as commercial and as well as central bank during the period of British rule in India. But our leaders felt there should be our own, state owned banking institution to make the financial services reach the every corner of the country. In the year 1955 Reserve Bank of India acquired the central bank functioning from Imperial Bank. Similarly to perform the commercial bank functioning the Imperial Bank of India was renamed as State Bank of India.

This major break through in the Indian banking industry was started with an parliament act in the year 1955. State Bank of India was given legal recognition by the provisions of the State Bank of India Act of 1955 which came into force from 1 July 1955. This parliament act enabled SBI to be considered as 'state' and the employees to be 'public servant' giving more responsibility in making the banking service reach the public. On that day SBI had 480 branches. Immediate requirement was to expand its presence to make reach banking service to every citizen. Now State Bank controls nearly quarter of the banking business in the country.

So the day on which the new era of the Banking Industry in India has started i.e. July 1st is celebrated by State Bank of India and its subsidiaries as State Bank Day.

RuPay: India’s Own Card Brand

There are 225 Million ATM cards in India, of which 90 Million are from a single Bank- State Bank of India, 0.55 Million merchants have PoS machines, Rs 3000 Crore is being dispensed every day from ATM machines. We are using American Branded Visa and Master Cards for all these. How much money they are making from giving their technology and brand name? What is the volume of personal financial data is getting transferred to US every day? So there comes an idea of India’s own card brand- RuPay.

NPCI- National Payment Corporation of India is a section 25 non profit organization formed by RBI and other Indian Banks. To bring the competition in cards, reduce the cost of card payments and card issuance and most importantly to secure the data within the nation NPCI has brought its own brand of card called RuPay. Already 12 co-operative banks and Regional Rural Banks are using the RuPay ATM cards, which can be used to withdraw cash from ATMs. By the end of March 2012, debit card will be launched using the flat form of Axis Bank and SBI as acquirer (bank to which PoS machines belongs to) and issuer of cards and Union Bank of India and Bank of India as card issuer. RuPay card holder can do shopping by April 2012. It will be ready for online transactions i.e. ecommerce by June 2012.

Apart from the main stream card business RuPay is also concentrating on financial inclusion. Adhar enabled biometric cards are being issued in Jarkhand by Axis Bank, Bank of India and SBI. RBI has given permission to 18 prepaid card service provider to issue prepaid cards with easy KYC to non bank customers and migrant labours.

RuPay will not be just an domestic card. RuPay has tie up with Discover Cards which is a neutral player for Indian market and 3rd largest card issuer (Visa and Master occupy first two positions and Amex occupy the position next to Discover. RuPay cost is 50% lesser than the Visa and Master cards which are dominating Indian market.

Also read A cashless life to come soon! about the mobile payment system developed by NCPI.

A cashless life to come soon!

The information given here is derived from the address by Managing Director of NCPI Mr A P Hota to SBI POs at State Bank Institute of Information and Communication Management on 4 Feb 2012

"Make a pan (Beetle Leaves and nuts) with extra Gulkun"
Panwala prepares the pan
"Take it sir"
"How much?"
"Rs 8"
You pay Rs 100 note.
"Sorry sir, I dont have change. Can you please credit to Mob No 9876543210, MMID 123456?"

Be prepared to face it. India is going to change, rural India is adopting cost effective convenient technologies. Get your mobile banking service soon, be registered for mobile payments and be sure you are not a financially illiterate in front of your Panwala or a Vegetable Seller. Now let us see how you can pay that Panwala. It is possible immediately within 30 seconds through Inter bank Mobile Payment Service (IMPS), a unique concept of mobile based account to account funds transfer, which is the brain child of National Payment Corporation of India- NCPI. Inter bank Mobile Payment Service enables one to send money to another bank account using the mobile number and MMID of the receiver. MMID is a unique number called Mobile Money Identifier given to every account holder having IMPS. So what you need to do is just open your mobile banking application, select fund transfer, then IMPS, enter the amount to be transferred, the payee's mobile number and his MMID. Confirm the payment using your PIN, within 30 seconds payee gets and SMS telling stating that he has got the credit in the account from you. The payments completed and you can walk away without arguing for changes of soiled noted.

The PoS payments in the rural areas could not penetrate much due to the cost involved in it. There are 225 million ATM cards are issued, where 90 million cards are issued by SBI alone. But the availability of PoS merchants is as less as 0.55 million. Merchant need to install a machine, and then he has to pay commission for every payment which ranges between Rs 1.20 to Rs 2.50. But the mobile payment system is absolutely free of charge. It can be even used for usual fund transfers. Advantages of IMPS are availability at 24x7x365 days irrespective of a bank holiday, no need to share your bank accounts with the person who sends the money, confirmation of the transaction to both the parties, hence fool proof. Many bank accounts can be linked to single mobile number using different MMIDs. MMID helps the error free transfer of money by matching with the mobile number. You can do a lot with IMPS viz mobile to mobile money transfer (don't get confused, both the parties should have a bank account), ATM to mobile money transfer, Merchant payments etc. This is the fastest inter bank fund transfer service available at present.

Visit National Payments Corporation of India (NPCI)to know more. To register to mobile banking and MMID contact your bank.

Private Banks, Money Laundering and Frauds

Sri K. Kashivishwanath did not know that he owned a mining company. He was unaware of the continuous transactions of crore of Rupees taking place in his bank accounts. Lokayukta reports read "it has been observed that crores of rupees have been deposited in banks and also withdrawn in cash from these accounts. Such illegal money transactions have been further trailed/proceed to accounts in bank of various persons/companies/firms and others."

The same banks which creates an image that they follow a strict KYC norms by asking tens of documents for changing correspondence address legally supports illegal money laundering. One of such bank, without which this article goes incomplete is Axis Bank. Is it possible to do such transactions without the support from the bank? Definitely impossible. The banks named by the Lokayukta report are Hospet and Bellary branches of Axis Bank and

Lakshmi Vilas Bank. Times of India repor

ted "Trail of the company's Axis Bank (Bellary) accounts points to large number of suspicious cash withdrawals in denomination of Rs 9 lakh in the names of persons suspected to be benami"

Couple of years back the same leading private bank had a client Shree Om Sai Nath Car On Rent Pvt ltd. This was a chain market company, which collected a huge amount from the public. Initially cheques were duly paid by the bank. Within a year the account was freezed by the court. The bank could have shown social responsibility and could have saved hard earned money of poor people.

The similar cases also been reported by Belgaum. Sri Sai Multi Service (SMS) was another fraud company involved in the chain marketing with a full banking support from the Axis Bank, collected a huge amount from the public through its account DDs and wannabe fraudster company was raided.

I hope you have not forgotten fraud happened in City Bank in Gurgaon. The main accused of the City Bank Fixed deposit scam Sanjay Gupta of Hero Corporate Services owned two firms G2S and BG finance company. These companies were registered as consulting firms but did not have any offices. Even then these companies had accounts with Axis Bank. Police seized Rs 20 Crores from their Axis Bank account. A company no needs to have an office to open an account with Axis Bank! Finally the state run SBI officials helped the police to find the kingpin of the scam

The fraudster’s relationship with the Axis Bank does not end here. A single google search will though a lot of news of fraud companies having accounts with the Axis Bank. Kadri Police of Mangalore arrested Pravin Shetty who is said to be partner of Global Index Investment Company and seized the account with the Axis Bank. The bank which opened the account of the fraudster company was mentioned and forgotten

These banks are target driven. The top executive put immense pressure on the sales executive. Sales personals bring such customers and accounts of the fraud companies get open in the bank based on the documents submitted by them. They even satisfy the KYC norms according to the present regulation. The will power of the banker to show some social responsibility and serve the society against such frauds can only prevent such fraud accounts. In don’t think you can expect it from private banks that are running behind the numbers.

Note: This article is supported by the various news reports and the author is not influenced to write against the institutions mentioned.

3G spectrum bid creates liquidity problem

You may find it interesting Avoid Telecom Shares for Short Time

In the 3G spectrum auction, which closed on Wednesday, the government will receive Rs 67,719 crore. According to market sources, the government is likely to garner an additional Rs 12,000 crore from BWA auction. So, total revenue from the spectrum action will be Rs 80,000 crore which is Rs 40,000 crore more than the budget. This has become an aid for the development work for the government of India.
Where will this fund come from? As we know, Telecom companies has to pay this amount to the government. No telecom company has that much fund in hand to pay. They have to move to their financiers, the major banks in India. It will be a challenging task for them to arrange this huge fund. This may create liquidity problem among the banks and the telecom firms. In June 2010 as close to Rs 100,000 crore goes out of the banking system.Once the very huge fund has been gone by the banks the banks have to wait until the government spends the money which will take a few months.
No firm has made a call in all 22 circles is an evidence that they are not able to meet fund requirements. When they look at the bankers this became head ache of the bankers to arrange he fund. The short term interest rates may also go up due to the huge demand. It might change the current situation for few months. The ordinary customer is less likely to be affected by this move.

ICICI and HDFC banks are not Indian Banks

According to the Department of Industrial Policy and Promotion (DIPP), the two major banks in India ICICI Bank and HDFC Banks are not Indian owned but are Indian controlled. Their major part of the holding is of foreign origin rather than Indian. But the board is controlled by Indians. But when the ownership is concerned, they no more stand as Indian Banks! They are not more than any other foreign banks like RBS or HSBC when it comes to nationality of the ownership.

Both ICICI Bank and HDFC Bank have over 74 per cent foreign holding, including that of foreign banks and overseas institutional investors. The direct and indirect foreign holdings in ICICI Bank and HDFC are around 67% and 73% respectively. This makes their holding in other institution also of foreign investments. Hence they want to be recognized as Indian banks as the restriction for other investments in India. ICICI and HDFC both have other subsidiaries like life insurance and mutual fund wings where the foreign investments has some restriction and limitation. If they are recognized as foreign banks they can not hot majority stake in their subsidiaries.

If a company to be an Indian owned it has to be held more than 50% by the Indian residents or institutions. But these banks are not! Government may amend the rules to make them enjoy the foreign holdings and also to continue enjoying the benefits given to Indian Banks. But we Indians should understand that they are no more owned by us.

Ownership as on Mar 10	HDFC Bank	ICICI Bank
Promoter & Promoter Grp	10,86,43,220	-
Indian	10,86,43,220	-
Foreign	--	--
Public	26,79,97,650	79,95,50,106
Institution	17,68,10,372	69,57,64,941
FII	12,16,92,561	41,29,12,791
DII	5,51,17,811	28,28,52,150
Non Institution	9,11,87,278	10,37,85,165
Bodies Corporate	4,15,03,470	2,91,01,511

Data from BSE India Ltd, BSEIndia.com

Money lost in the mid way of data transfer

Money!! If you imagine hard notes when some body tells the word money, consider you are still in the age of you grand father’s. Today money is in the form of electronic data. It is there in Banks computers, in your credit card, in your internet banking account. If you loose these data, you will loose your money.

With this brief idea, let me tell an incident. I usually recharge my prepaid mobile and pay bill through my internet banking account. I was recharging my mobile and I was redirected to my bank’s website from the mobile recharging portal. I clicked on pay button and confirmed the payment with my passwords. The information flow from the bank’s site to the payee site not happened and the recharge was not done. That means the mobile company did not get the amount. But the bank has already paid the amount. It was deducted from my account. Then, where is the money? It was lost with the data! That money was useless for that particular time until the communication error I corrected and refunded bank to the account!

Now consider the implication. Let the amount be little low, say a ten thousand rupees. Let the time taken to refund the amount be 5 day. When the bank calculates the interest for his account for the month this amount will not be considered and will not be paid. So he will loose three rupees. If it is just in the case of SB account which has lowest interest, what will be the implication of such money lost in the mid way through out the country?

I can easily say if the total amount lost in the data transfer for a day is pooled into BSE to purchase some share it BSE will gain at least a hundred points