Ludhiana: NPAs have grown, banks need to levy service charges, says RBI regional director Nirmal Chand
Ludhiana being the commercial hub of the region has tremendous export and import potential but often lack of awareness about various schemes and non-compliance of Foreign Exchange Management Act (FEMA) guidelines acts as a hindrance in facilitating external trade and payment, subsequently taking toll on the export figures, said Reserve Bank of India (RBI), regional director Nirmal Chand.punjab Updated: Mar 25, 2017 13:45 IST
Ludhiana being the commercial hub of the region has tremendous export and import potential but often lack of awareness about various schemes and non-compliance of Foreign Exchange Management Act (FEMA) guidelines acts as a hindrance in facilitating external trade and payment, subsequently taking toll on the export figures, said Reserve Bank of India (RBI), regional director Nirmal Chand.
Talking to HT on the sidelines of a workshop aimed at sensitisation on export, which was attended by exporters and prominent bankers of the state at a city hotel, Chand also shared that as the nation is heading towards cashless economy, the number of banks will see an upsurge in the coming one year while penetration in the rural belt with regard to incentivisation of digital payments will be a top priority.
Excerpts of the interview:
Export has seen a major decline in the last one year and dwindled further post demonetisation. Has RBI taken any remedial measures to stabilise it? Undoubtedly, export nosedived post demonetisation. But the impact was not as sharp as was expected initially. Moreover, the subsequent remonetisation process has assisted in stabilising the export figures to a large extent.
On one hand union government is exhorting for a cashless economy while on the other it has started charging for digital transactions few weeks after demonetisation? The non-performing assets (NPAs) of banks have grown manifold over the years. If the banks continue to offer services for free, then resources would be drained in the longer run. Moreover, the digital transactional charges are miniscule, hence manageable. Cash is a burden on the taxpayer as well, as a lot of expenditure is incurred by the union government for the printing, transportation and security of currency.
It is nearly four and a half months since old currency (Rs 500 and Rs 1,000 notes) was scrapped but deposit receipts in the banks still feature Rs 1,000 denomination in particular columns? The old stationery quota printed for the quarter is not exhausted yet. It may take some more time before these receipts could be replaced with ₹2,000 denomination. Moreover, the introduction of updated lot of bank stationery right after demonetisation would have reduced the impact.
More than 70% of the total ₹12 lakh workers in Ludhiana are unskilled and not verse with digital modes of transaction. What concrete steps RBI has taken to ensure maximum adoption of digital payments? The digital transactions in the country have grown four times from what they were prior to November 8. Our target now is to reach every nook and cranny in the rural belt of the country and as the workload of banks will increase, the number of branches will also be increased correspondingly.
Around 70% of the ATMs in the city are still running dry? There is sufficient cash available in the bank branches. But in a recent feedback by the banks in the region, it has come to the fore that customers prefer withdrawing cash at ATMs than at the counters, thereby emptying the ATMs in short time.
What recent measures are being taken by the central bank to enhance export competitiveness? There are several misconceptions and lack of awareness among small and medium scale traders. There is a plethora of trade opportunities waiting to be exploited and Ludhiana has the potential to do so. There have been demands from the fraternity with regard to foreign direct investments (FDIs), overseas investments and right information on FEMA guidelines and its compliance.
There have been several complaints received against bankers post demonetisation, what is the current status? There had been few unfortunate incidents where bankers were involved but on the large scale, bank staff has stretched beyond their regular schedule to deliver the services. Regarding the status, the investigation is on and those found guilty will be penalised as per the law.