Union Bank of India launches “UNION TRADE-GST”

         Indian Banks as predicted have started to launch credit products around GST Returns.

        A few weeks back, Union Bank of India which has its Head Office in Mumbai unveiled “UNION TRADE-GST”

        In layman terms, “UNION TRADE-GST” is a working capital finance scheme aimed at SME entrepreneurs, both traders as well as manufacturers.

        Union Bank of India is the first Bank in India to launch a Credit Scheme based on GST Returns.

       

        Under “UNION TRADE-GST”,  working capital limit upto 30% of the turnover as per GST returns will be provided without insisting on assessment on other financial returns.

        Isn’t it simple n short? SMEs need not submit any other financial returns. Just file the GST Returns and be eligible for Bank Finance of upto  30%  under “UNION TRADE-GST”.

        This also reduces the manual intervention both at customer end as well as bank end.

The launch of this scheme will help the Bank to have synergy with the GST regime.

The large numbers of SME entrepreneurs have been included under the ambit of formal trade with implementation of GST. These SMEs are facing working capital crunch as in absence of proper past financials returns, they are unable to access the Bank’s credit.

The working capital assessment is based on the sales turnover, as indicated in balance sheet. Beside this, existing entrepreneurs under banking ambit are also facing credit crunch, as in GST regime the SMEs are entitled for input credit claim which is stretching their operating cycle.

Generally Banks are providing 20% of the sales turnover as working capital limit to a business entity, but to have ease in GST regime, under this scheme Union Bank of India is providing hassle free regular working capital limit upto 30% of the turnover as per GST returns without insisting on assessment on other financial returns.

The scheme will provide regular working capital limit above Rs 10.00 lacs upto Rs 200.00 lacs. The assessment of turnover & quantum of working capital is tailor-made to benefit especially the SME sector.

In furtherance to the Government of India initiatives in tax reform, compliance and digitalization, the Bank is offering POS machine with no Installation charges and waiver of annual maintenance charges for first year under the scheme.

Union Bank of India excepts this scheme to be a great enabler for an honest tax payer and incentivize the filing of GST return.

At the same time adequate financial support to such entrepreneurs through this unique scheme with inbuilt hassle free assessment based only on GST return will be easier for businesses to adopt.

Union Bank of India services its customers with through 4,295 branches spread over India and Hong Kong, DIFC (Dubai), Antwerp (Belgium) and Sydney (Australia).

To strengthen its Credit Department, Union Bank of India has kicked off a recruitment project for adding 200 Credit Officers to its HR Portfolio.

In the near future, trust Union Bank of SME Customers can avail the “UNION TRADE-GST” facilities through its Net Banking Portal.

State Bank of India signs up Reliance Money Infra as business correspondent

            In a big boost to Indian unbanked prospective customers, State Bank of India has signed up Reliance Money Infrastructure Ltd (RMIL) as one of its Business Correspondent.

            RMIL is party of Anil Ambani Group.  The deal was signed on 25/02/2014, but is effective from a back-date i.e 05/10/2013.

            As part of the deal RMIL on the Assets side can:

• can identify borrowers;
• collect, process, and submit loan applications;
• promote credit groups;
• take up post-sanction monitoring, follow-up,
• and recovery.

Apart from the above, RMIL as SBI’s service provider  

• collect small-value deposits;
• sell micro-insurance, mutual fund and pension products; and
• Receive and deliver small-value remittances.

At present, the agreement covers the following products:

• no-frill savings bank accounts through kiosk banking model;
• home loans/loans against property;
• auto loans; gold loans;
• SME loans;
• general purpose credit card;
• kisan credit card;
• current account;
• savings bank account (other than no-frill account);
• term deposit;
• recurring deposit;

The above products will be on a referral mode.  Additional products may be added by mutual consent. Products may be also amended from time to time.

The agreement binds RMIL to the Fair Practices Code for lending as also its own code for collection of dues.  In the absence of such a code, it should abide by the Indian Banks’ Association code for collection of dues and repossession of security.

The agreement clearly specifies that it is essential that the service provider refrains from action that could damage the integrity and reputation of the bank.

            RMIL or its employees should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in debt collection efforts, including making threatening or anonymous calls or making false and misleading representations.

            As on date there are no specific certifications to be obtained by Business Correspondents employees. The employees engaged in Recovery Process should have undergone 100 hours mandatory training for the certificate course for DSA/DMA/Recovery Agents conducted by IIBF accredited institutions.

            As on date the details of this tie-up are yet to be mentioned on SBI website or Reliance Money website.

            As per the RBI guidelines, the following entities are eligible for appointment of  Business Correspondents (BCs) for banks:

• NGOs/ MFIs set up under Societies/ Trust Acts,
• societies registered under Mutually Aided Cooperative Societies Acts or the
• Cooperative Societies Acts of States,
• Section 25 companies that are stand alone entities or in which NBFCs, banks, telecom companies and other corporate entities or their holding companies did not have equity holdings in excess of 10 per cent,
• post offices ,
• retired bank employees,
• ex-servicemen ,
• retired government employees.
• Individual kirana/medical/fair price shop owners
• Individual Public Call Office (PCO) operators
• Agents of Small Savings Schemes of Government of India/Insurance Companies
• Individuals who own petrol pumps
• Retired teachers
• Authorised functionaries of well run Self Help Groups (SHGs) linked to banks
• Non deposit taking NBFCs (non-banking finance companies) in the nature of loan companies whose micro finance portfolio is not less than 80 per cent of their loan outstanding in the financially excluded districts as identified by the Committee on Financial Inclusion

Scope of Activities to be undertaken by BCs

The scope of activities undertaken by BCs are as under :

• Creating awareness about savings and other products and education and advice on managing money and debt counseling.
• Identification of potential customers
• Collection and preliminary processing of various forms for deposits including verification of primary information / data
• Filling of applications / account opening forms including nomination clause and submission to the Bank.
• KYC will also be completed by the BCs.
• Opening of no frill deposit accounts and other products as permitted from time to time by leveraging technology.
• Collection and payment of small value deposits and withdrawals; Min : nil; Max : as decided from time to time, per transaction.
• Receipt and delivery of small value remittances / other payment instruments.
• In respect of all such transactions, the BC/his agent will be authorized to accept / deliver cash either at his place of work or at any convenient location subject to the ceilings per customer  as decided from time to time.
• Furnishing of mini account statements and other account information, for a period of 3 months.
• Any other service on behalf of the Bank, duly authorized by the appropriate authority.
• In respect of all such transactions, the BC/his/her agent will be authorized to accept / deliver cash either at his place of work or at any convenient location subject to the ceilings per day / per customer as laid down.
• The Business Correspondents will be linked to a nearby branch (base Branch).
• Cross-selling of other financial products like insurance / mutual fund products / pension products / any other third party product, as and when they are assigned to do so.
• In case duly appointed sub-agents of BCs, BCs to take care of reputational risks involved in such appointments.