Banks to introduce new CTS-2010 by December 31, 2012

Banks all over India are in the process of issuing fresh-imagelook cheques with more security and standardized features to all its customers by December 31, 2012.

From January 1, 2013, cheques which do not conform to CTS-2010 standards would not be entertained by banks.

What is Cheque Truncation?

  • We go to a bank and sign a Cheque … now, “Truncation” is the process of stopping the need for movement of the physical cheque (paper cheque leaves) from one bank’s branch to other bank’s branch.
  • In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.

What is Cheque Standardization and what does CTS 2010 Standard mean ? What are the benefits of adopting CTS-2010 ? How would be the uniqueness of a physical cheque be captured and imparted to the cheque image ? How are the images of cheques taken ? What are the modes in which banks can participate in CTS ?


PSBs’ profits would have been wiped out were they asked to maintain 70% PCR

Thanks to RBI, which had withdrawn the requirement for 70% loan loss cover from September 2011. Else, Public sector banks, which have decreased their PCR (Provision Coverage Ratio) in the last one year, would have seen their quarterly profits wiped out, were they asked to maintain PCR of 70%.

  • It is interesting to note that although, RBI had withdrawn the requirement for 70% loan loss cover from September 2011, private sector banks, whose asset quality is better than their public sector counterparts’, have maintained provision covers of more than 70%.
  • Except a few exceptions, majority of PSBs (Public Sector Banks) have reported a sequential decrease in their PCR, while private sector banks have performed better.


Source: Business Standard

Clearly from the table, we can see that SBI’s quarterly Net Profit was 3,658.14 Crores and its PCR was 62.80% and in case it was to maintain PCR of 70%, SBI would have almost wiped out its quarterly profit.

Now, if we analyze the case of Indian Overseas Bank, it has a quarterly net profit of Rs 158.43 Crores. Were it asked to maintain PCR of 70%, then Indian Overseas Bank would have needed 680 Crores i.e. 4.3 times more than its net profit.

The country’s top private sector banks ICICI Bank and HDFC Bank had a PCR of 78.7% and 82%, respectively, at the end of the September quarter.

What is Provision Coverage Ratio (PCR) ?


PSBs see a record rise in Gross NPAs.

The Gross NPAs (Non Performing Assets) to advances ratio for PSBs (Public Sector Banks) rose to a record high at the end of September 2012.

  • As of September 2012 the ratio of gross NPA to advances was the highest for SBI at 5.15 i.e. SBI had Rs 5.15 in stressed assets for every Rs 100 it lent.
  • Priority sector contributed to largest share of NPAs for SBI & its associates and nationalized banks.

As per RBI the sudden rise in NPAs was mainly attributed to:

  • deterioration in asset quality of the banks
  • slowdown prevailing in the domestic economy as well as the external front
  • inadequate appraisal and monitoring of credit proposals during the boom period of 2003-07

Why is asset quality of a bank important ?


Flipora: Social Surfing service


  • A Social Surfing service
  • imageA Personalized Search (webpage recommendation) and Discovery engine
  • Made by Infoaxe Inc.
  • Formerly called InfoAxe, Flipora grew from a service that helped users simply find sites they’ve already visited.
  • Flipora helps user remember the great websites (s)he visits (with web history search) and recommends great websites based on what user liked in the past.
  • It aims at helping internet users find interesting web-pages on the topics that they like.
  • It provides significant social surfing recommendations to help users discover and enjoy new web content and sites.
  • Flipora currently has 8 million users.

Flipora’s Indian Connection:

  • Founded by two Indian graduates from Stanford University.
  • Jonathan Siddharth and Vijay Krishnan

How does Flipora work? … Negative side of Flipora…


Rajiv Gandhi Equity Savings Scheme (RGESS) set for launch

RGESS (Rajiv Gandhi Equity Savings Scheme)

The finance ministry is set to notify the Rajiv Gandhi Equity Savings Scheme (RGESS).

  • Finance Minister P Chidambaram had approved the RGESS on September 21, 2012.
  • Implementation delayed due to the deliberations on inclusion of Mutual Funds (MF) in it. Thus, further consultations with the RBI, SEBI and the law ministry on the coverage of RGESS.


What is e-tailing ?

e-tailing = electronic retailing

  • selling of retail goods on the Internet.
  • e-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes gathered into a "virtual mall"
  • Online shopping or online retailing is a form of electronic commerce
  • Consumers directly buy goods or services from a seller over the Internet without an intermediary service.
  • The largest online retailing corporations are E-Bay and, both of which are US-based.


  • e-tailing has resulted in the development of software tools for creating online catalogs and managing the business connected with doing e-tailing. These are known as e-tailware.

e-commerce (electronic commerce or EC)