SBI ATM failed to dispense cash, paid compensation to a customer

The State Bank of India was directed by the District Consumers’s Forum to pay Rs 3,000 as compensation to a customer as an automated teller machine (ATM) of the bank could not provide him cash.

Forum President Iqbal Ahmad said, "The compensation must be provided to Mr Rajesh Kapale in a month".

Kapale resident of Noniya Kardal has an account at the local SBI branch. On February 10, 2009 tried to withdraw Rs 15,000 from the ATM but machine dispensed a slip mentioning that the transaction could not be processed. Kapale had adequate funds in his account.

He wrote a letter to SBI officials but did not obtain any response.

The Bank agreed that on February 10 the ATM was non-functional for some hours and Mumbai was alerted about this.

SBI, LIC proposes to introduce Islamic products

Senior officials of the State Bank of India (SBI), country’s largest lender and Life Insurance Corporation (LIC), the largest insurance company, informed that the two firms are planning to introduce Islamic products to tap the investment habits of Muslims in the country.

Following this the SBI officials over the past few days have been meeting top experts in the field while a team of LIC officials has been set up to study these products. The Reserve Bank of India recently conducted a study and reached to a conclusion that it might not be possible to include Islamic banking in the current regulatory structure in the country.

However LIC chairman TS Vijayan told ET the corporation has set up a team to study Takaful, the insurance equivalent of Shariah-compliant Islamic banking. Through insurer’s representative office in Singapore the product will be offered to cater the Malaysian and Indonesian market.

Mr Vijayan informed, “We have put a team to study Takaful products. We are looking at this product for our Saudi operations where Takaful is coming up”.

At SBI the process is in the preliminary stage. SBI deputy general manager, overseas expansion and planning, Naresh Malhotra told, “We have been studying the feasibility of launching Islamic banking in terms of the products that can be offered and the systems that need to be put in place”. He along with a team of officials at the International Business Group, have been meeting several experts to study the legal and regulatory obstructing from launching Shariah-compliant products.

SBI is the latest entry in the growing list of firms which are trying to get hold on the investment habits of around 142 million Muslims in the country. However, over the past few months, two mutual fund schemes have been launched which are operating on a Shariah-compliant basis. Two more insurance companies have launched special pension fund schemes. Recently the Kerala government has also announced that it is thinking of setting up a Shariah-compliant NBFC, capitalized at Rs 1,000 crore.

Mohammed Hussain Khatkhatay, noted expert on Islamic banking pointed out, “Islamic banking could be introduced by effecting changes through notifications of RBI and without a change in law”. He added that for this strong political will is required from the government side which might be difficult to bring about.

Regarding this recently RBI constituted a working group under the chairmanship of Anand Sinha, an executive director. The group in its report stated that it is not possible to introduce Shariah-compliant instruments in the current regulatory structure.