Month: April 2021

The United Forum of Bank Unions (UFBU) has requested the finance ministry to reduce the business hours of banks, bring in five-day week, and allow hub banking in a bid to break the Covid-19 transmission chain and protect bank employees and their families.

Sanjeev K Bandlish, Convenor, UFBU, in a letter to the Debasish Panda, Secretary, Department of Financial Services, Ministry of Finance, said: “As was implemented last year, there is a necessity to restrict physical banking for next 4-6 months. Banks may be advised to reduce working hours (say from 10am to 2pm).

“Similarly, banking should be restricted to 5 days in a week, to break the chain. This would cut the exposure of bankmen and the customers to a great extent without impairing services.”

Pitching for hub banking, UFBU suggested that instead of opening all branches at multi-centres, numbers may be restricted in such a manner that banking facilities can be extended at a few select branches, obviating the necessity to open all and expose bankmen and customers to the risk of infection.

UFBU is the umbrella body of nine trade unions in the banking sector.

“We call upon you to instruct all the banks to deploy minimum possible staff/officers at branches/offices. Measures like working with 1/3rd of staff strength, work from home, should be implemented for next 4-6 months. Staff/Officers to be called on rotation so that exposure is reduced,” said Bandlish.

UFBU sought exemption from duty to employees with existing comorbidities, pregnant employees/officials, persons with disabilities (Divyangjan).

“Considering the nature of work, coming in contact with hundreds of customers every day, bankmen carry higher risk. Having considered as Frontline Covid Warriors by the Parliamentary Standing Committee, we call upon you to initiate measures to provide vaccination to all bankmen,” said the UDBU Convenor.

UFBU sought fine-tuning of insurance policy in Banks. In this regard, Bandlish said several bank employees and officers have succumbed to COVID and over a lakh have contracted infection.

“There are many instances where the bankmen have not only suffered physically, but they have been harmed financially as entire expenditure charged at hospitals had not been reimbursed.

“We urge upon you to issue suitable instructions to insurance companies to fine tune their policies to ensure that bankmen are not out of pocket for getting treatment at hospitals,” said the UFBU Convenor.

UFBU wants Covid-related expenditure to be brought under exemption clause of Income Tax and compensation to family of diseased bankmen.

As bank employees come in contact with hundreds of customers every day, they carry higher risk.

“Having considered as Frontline Covid Warriors by the Parliamentary Standing Committee, we call upon you to initiate measures to provide vaccination to all bankmen,” said UFBU.

Government Securities (G-Sec) prices tumbled on Thursday as the Reserve Bank of India (RBI) purchased some of the securities under its G-Sec Acquisition Programme (G-SAP) at lower than the previous closing price.

Yield up 11 basis points

The price of the 10-year benchmark (carrying 5.85 per cent coupon), which was part of the open market purchase of G-Secs under G-SAP, plummeted about 82 paise to close at ₹98.01 (previous close ₹98.825), with its yield shooting up about 11 basis points to close at 6.1256 per cent (6.0114 per cent).

Bond price and yield are inversely related, moving in opposite directions.

Of the five G-Secs that the RBI purchased under G-SAP, the purchase price of the 10-year benchmark was lower at ₹98.68 (yield: 6.0317 per cent) against the previous close of ₹98.825 (6.0114 per cent).

RBI purchased the 2027 G-Sec, carrying 6.79 per cent coupon rate, at ₹103.30 (6.1303 per cent) against the previous close of ₹103.50 (6.0915 per cent).

However, the central bank purchased the other G-Secs at a price that was higher than the previous close – 4.48 per cent G-Sec 2023 (3 paise higher); 5.15 per cent G-Sec 2025 (11 paise higher); and 6.22 per cent G-Sec 2035 (6 paise higher).

Though the RBI infused ₹25,000 crore liquidity via G-SAP, the spike in G-Sec yields in the secondary market reflects the disappointment of the market, with the purchase price/ yields set at the open market purchase.

Under G-SAP, the RBI commits upfront to a specific amount of open market purchases of G-Secs, with a view to enabling a stable and orderly evolution of the yield curve amid comfortable liquidity conditions.

The central bank’s endeavour is to ensure congenial financial conditions for the recovery to gain traction. For Q1 (April-June) of 2021-22, the RBI has decided on a G-SAP of ₹1 lakh crore.

The price of the 2035 G-Sec (carrying 6.22 per cent coupon), which was also part of the open market purchase of G-Secs under G-SAP, plunged about 93 paise to close at ₹95.47 (previous close ₹96.40), with its yield shooting up about 11 basis points to close at 6.7255 per cent (6.6190 per cent).

The Reserve Bank of India (RBI), on Thursday, said four applicants each have applied for on-tap licences to start Universal Banks and Small Finance Banks in the private sector so far.

The applicants under the guidelines for ‘on-tap’ licensing of Universal Banks are UAE Exchange and Financial Services Ltd, The Repatriates Cooperative Finance and Development Bank Limited (REPCO Bank), Chaitanya India Fin Credit Private Ltd and Pankaj Vaish and others, the RBI said in a statement.

The applicants under guidelines for ‘on-tap’ licensing of Small Finance Banks (SFBs) are VSoft Technologies Private Ltd, Calicut City Service Co-operative Bank Ltd, Akhil Kumar Gupta, and Dvara Kshetriya Gramin Financial Services Private Ltd, it added.

The guidelines for ‘on-tap’ licensing of Universal Banks and SFBs in the private sector, were issued on August 1, 2016, and December 5, 2019, respectively.

The constitution and composition of Standing External Advisory Committee for evaluating the applications received under the aforementioned guidelines was announced on March 22, 2021.

For a Universal Bank, the initial minimum paid-up voting equity capital/ net worth has been set at ₹500 crore. Thereafter, the bank have to maintain a minimum net worth of ₹500 crore at all times.