SBI eyes Point of Sales Market

After installing maximum number of ATMs across the country the government owned State Bank of India (SBI) is aiming to become the market leader in the POS (Point of Sales) segment with a target of installing five lakh swipe machines across the merchant establishments in the country. Currently in the POS market ICICI bank has over 1.5 lakh swipe machines, followed by AXIS bank with over 1 lakh machines and HDFC Bank having 75,000 machines.

Once installed POSs help banks to generate revenue, as with each swipe the bank gets its share from the small fee paid by the merchant establishments where the machine is installed. Moreover with RBI’s new proposal that cash can be dispensed through POS terminals at merchant establishments for a fee, SBI’s initiative is surely going to help them in getting a bigger share of the pie from this segment.

SBI is planning to tie-up with VISA, Royal Bank of Scotland and Global Payments to install the POS machines. The Royal Bank of Scotland has POS presence in Europe and Global Payments which is a US based company has tie up with HSBC in India. With this tie up SBI will take a giant leap forward in the payment business. Post installation SBI will become the biggest automated cash dispenser of the country with its combined strength of ATMs and POSs.

Contributed By:
Mr. KRS Mani
SWIFT Consultant

ASBA

‘Application Supported By Blocked Amount’ or ASBA is used during the Share Application process by Individuals while applying for new shares coming in the market in forms of Initial Public Offer (IPO) or Follow on Public Offer (FPO).

The current practice that is followed so far is that the applicant submits a filled up application form along with a cheque for the amount of shares, to the registrar. Then the amount is debited from the account of the Individual and kept in an ESCROW Account. Once the allotment process is over the amount is adjusted against the shares allotted and the balance is refunded by way of a banker’s cheque/demand draft through courier.

With the computerization of the banking sector the scenario has changed over a period of time and core banking is the norm for all banks including private, public, and co-operative banks. This helps a user to access any account from any branch of the bank anywhere in the country.

This technology revolution in banks has helped SEBI (Stock Exchange Board of India) to come out with new innovations to facilitate people who invest in stock markets by introducing ASBA facility. In this process the payment for the shares applied for is not done immediately, but the amount is held blocked in the applicator’s account and as and when the shares are allotted the required amount is debited from it and the blockage is removed. This facility saves time and energy and also saves on Printing, Stationary and labor costs. This contributes in reducing the carbon emission.

With this kind of an arrangement the public is getting benefitted as the amount is debited only when the shares are allotted and the interest loss during the process which generally takes a month can be saved. The possibility of the cheque being lost in transit can also be avoided. The banks are also benefitted from this process as the deposit remains with the bank till the time the shares are finally allotted and thus helping it in CRR and SLR maintenance.

Despite having so many advantages it is yet to become popular among the common people and the primary reason of it is ‘lack of awareness’.

I have myself faced a situation when I wanted to apply for some shares of a company using ASBA and went to Worli North branch of State Bank of India (SBI). When I requested for ASBA form there, I found people were not aware of the new system despite the bank’s website showing the branch among the designated 1061 branches which can issue and accept ASBA form.

After explaining the system to them I was advised to visit their Capital Services branch where I found the situation was no different. This time I was also carrying the newspaper advertisement of ASBA but still the officials there could not help me and instead directed me to go to the Main branch of SBI at Mumbai Samachar Marg. After these two incidents I lost interest in using the new ASBA system and applied in the old system.

My above experience gives food for thought to SEBI who has introduced the system but the stakeholders of the system are not fully aware of it right in the city of Mumbai forget the rural areas. It is also a responsibility of the banks to educate its officials about any new service that it has started so that the common people do not suffer due to lack of proper knowledge of the bank officials.

Contributed By:

Mr. KRS Mani

SWIFT Consultant

Corporate Access to SWIFT

The issue of ‘Corporate Access to SWIFT’ was put on vote at the 2007 Annual General Meeting of SWIFT. Before that the issue was discussed in different committees of the board and was included in numerous papers to share it with wider community.

Anyone associated with the BFSI industry are aware that SWIFT does not sell directly to corporates rather it offers connectivity and creates awareness. The applications and services are offered by banks and third parties and it is important that this distinction be understood.

As far as corporate customers are concerned direct connectivity to SWIFT means cost effectiveness. Once connected, the Corporate Customers are able to choose one of the following existing and Board /AGM approved governance models in consultation with their Bank counterparts:

1. SWIFT Standardized CORporate Environment (SCORE)
2. Member -Administered Closed User Group (MA-CUG) or
3. Treasury Counterpart

Once this system is operational each corporate will be registered with a SWIFT id called Business Entity Identifier (BEI) and they will have to look to their Banks and vendors to provide the required business functionality. With the use of Swift Message Standards, corporates are allowed to exchange messages only with Banks. Currently corporates are permitted only to use payment related messages. Post the proposed changes it will be a matter of choice for the corporate to design their relay system independent of the connectivity option.

Contributed By:
Mr. KRS Mani
SWIFT Consultant

ATM Shops

One of the payment gateways which has revolutionized the Banking scene is the introduction of ATM Machines - called Automatic Teller Machines or Any Time Money.

The western concept of automatic money dispensing machines without human intervention was slow to catch up as people in India were not computer savvy and a less literate populace was suspicious to use gadgets and machines for an important function like withdrawing cash from their accounts.

With the opening up of the economy Indian Banks faced tough competition from foreign banks. One of the popular services provided by the foreign banks was the ATM service. Once this competition heated up, Indian Banks started installing ATMs all over and there was almost a race to set up the ATMs by the public sector banks and ATMs were installed both ‘on site’ and on ‘off site’ locations. In Railway stations and public places ATMs of various banks started cropping up and banks like UTI bank (now called AXIS bank) installed two ATMs in one railway station. The penetration of ATMs in the urban areas was fast and slowly all the district places were covered. Every bank’s ‘Department of Information Technology’ had huge targets to complete and huge money was invested on hardware. ATM cards were given to all account holders free of cost and thus machines replaced the ‘Human Teller’. People started getting better quality currency notes from ATM as they would not function otherwise.

Currently ATMs are managed and serviced by the respective bank’s branch to which it is attached. With the Introduction of Core banking solution in all the banks the ATMs got connected by a SWITCH and one could access their account from any bank's ATM and get their payment. For this a fee was prescribed and all banks participated in the same because their customers benefited with access to a large network of ATMs.

RBI reviewed the policy of charging customers while using other bank’s ATMs and they abolished the fee and made it free from 01-04-2009. After few months banks complained that their cost of operations were not getting covered due to increase in small withdrawals.

To solve this RBI came with modified instructions of ATM usage. Now customers would be allowed five withdrawals each month from other bank’s ATMs free of charge and from the 6th withdrawal onwards they would be charged for withdrawing from other banks ATMs and the upper limit of withdrawal was fixed at Rs. 10,000 per transaction.

This became effective from 15th October, 2009 and is applicable only to Savings Account Holders. The move was to help customers get access to the payment gateway which is nearest to him without burdening him with high cost of service charges. The charges incurred for the first 5 withdrawals from other bank's ATMs if any, are borne by the bank.

Recently RBI has come out with a new outlet for payments and that is both novel and innovative. They have authorized all the merchant establishments and card acceptors to make payments of cash up to one thousand for a small fee. This is a bold step as so far nobody was allowed to dispense cash on swiping the card except banks and their ATMs.

This new facility is a boon as you can get cash from anywhere where a card is accepted and use the card for drawing emergency cash or regular withdrawals from your nearest outlet.

Now you can visualize many shops opening up, having a swiping machine, with the sole purpose of dispensing cash. It will be like the telecom boom when STD and Phone booths opened all over India and you could see a phone booth round the corner with phones and a printer printing out the charges incurred. The indirect ATM outlets could connect the whole of India faster and bring the technology to the doorstep of the common man and the banks closer to their customers.

Contributed By:
Mr. KRS Mani
Swift Consultant

Sibos 2009

Yawar Shah, Chairman, SWIFT


Lázaro Campos, CEO, SWIFT

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