Microfinance institutions under stress, not threat: RBI

Microfinance institutions (MFI) are an integral part of financial inclusion in India but are currently under some stress, Reserve Bank of India Deputy Governor Subir Gokarn said on Tuesday. "The MFI industry might be under little stress as the banks are finding it difficult to lend to them at this moment. But the system as a whole is not under threat," Gokarn told reporters on the sidelines of an outreach programme on the outskirts of Kolkata.

Govt tightens grip on RBI

Board meet to give govt final say on central bank’s staff-related matters.

The government is likely to have a final say on issues such as salary, service conditions, promotions and incentives of the Reserve Bank of India’s employees. These are, till now, under RBI’s own purview.  The government has been pressing RBI for three years to make its staff regulations statutory under Section 58 of the RBI Act, 1934, and bring it under the subordinate legislation of Parliament. According to sources, a resolution to this effect is expected to be approved at the board meeting scheduled this Thursday in Kolkata. RBI had so far been resisting the move. Recently, the government asked RBI to take its approval before finalising pay raises for the central bank’s employees. The regulator resisted and a compromise was agreed, under which RBI would ‘brief’ finance ministry officials about pay revisions before implementing these. However, the central bank insisted it would not seek government approval. “RBI is an autonomous body. If it gives in to the government demand to make staff regulation statutory, then all decisions on central bank employees, like service conditions and benefits, which are now taken by RBI will need government’s approval,” said Samir Ghosh, general secretary, All India Reserve Bank Employees’ Association. Ghosh has written letters to RBI Governor D Subbarao and other central board members, requesting they not sacrifice independence on staff matters. “The central government is very much insistent in this regard and desires to get it approved in the board meeting of the bank at the earliest. This, we apprehend, will further dilute the independent functioning of RBI and make it a subservient institution to the finance ministry,” Ghosh wrote to one of the board members. During the year, there were at least two instances when certain actions of the government had prompted Subbarao to highlight the importance of RBI’s autonomy. The first was over the ministry’s decision to refer all regulatory disputes on hybrid financial products to a committee headed by the finance minister. RBI also expressed its concern about the proposed Financial Stability and Development Council, on the reasoning that financial stability should be the exclusive mandate of the central bank.

RBI ASKS BANKS TO OPEN RESOURCE CENTRES FOR FINANCIAL INCLUSION

The Reserve Bank of India (RBI) has urged commercial banks to open financial inclusion resource centres throughout the country. These would work as a store-house of all relevant information pertaining to financial inclusion. “Though RBI is doing its bit by opening financial inclusion resource centres, it’s not enough. So, commercial banks should also open such centres as this is a good development and commercial proposition,” RBI Governor D Subbarao said on the sidelines of the launch of a financial inclusion resource centre here today.  The central bank, which has opened such centres in Pune and Chandigarh, was planning to open two more, one each in Kolkata and Mumbai, he added. RBI is pushing banks to provide basic banking services in villages with a population of 2,000 and above by 2012 and those with a population of less than 2,000 over the next three to five years.

“Both banks and state governments are majority stakeholders in the financial inclusion process. While this will ensure better governance in states due to better transparency, banks will get low-cost deposits to protect themselves from asset-liability mismatches,” he said.  He, however, added the financial inclusion process was slow in many regions and should be expedited.  Earlier, banks had submitted their financial inclusion plans to the regulator, according to which around 200,000 business correspondents and customer service points would start work over next two-and a-half years. Also, 4,000 branches in unbanked villages and 100 million no-frills accounts would be opened. Recently, RBI made a policy change by allowing for profit organisations to act as business correspondents to speed up financial inclusion. “Commercial banks should see financial inclusion as an opportunity rather than an obligation,” Subbarao said. He said technology should be used to meet financial inclusion targets.

RBI conducts fiscal outreach programme

NORTH GUWAHATI, Dec 6 – As a part of the second phase of the financial outreach programmes, the Reserve Bank of India, Guwahati conducted a financial outreach camp at Sesawng village of Aizawl district in Mizoram recently. The objective of the camp was to create awareness about financial products, schemes and services offered by the financial institutions, banks and government departments. Various financial institutions, including Mizoram Rural Bank, Mizoram Cooperative Apex Bank Ltd., KVIC, DRDA, DIC, NEDFi, NABARD, SIDBI, etc., participated in the camp and put up their respective stalls to disseminate information on their financial products. The Executive Director of RBI, VS Das graced the occasion as the chief guest while other guests included Surekha Marandi, Regional Director of North Eastern States, Vanlalnghaka, Additional Secretary Finance, Banking Ombudsman of North Eastern States and other senior officials. The audience included residents of the village and children from various schools.  Later, a meeting was held where among others, V.S.Das, executive director of the RBI, explained the role of the bank in containing inflation to ensure price stability in the country by promoting sound banking system. The speeches delivered by the appointed bank officials were followed by a question-answer session wherein various queries raised by the audience were answered by the chief guest and other senior bank officials.  A quiz programme on topics relating to RBI and banking was also conducted for school children and prizes were distributed to the winners. Mementos were distributed to the winners. Mementos were distributed to all the participants. The Executive Director, V.S.Das also announced the gift of computers to the Govt. High School and Middle Schools.

Bhave may get 2 year extension as SEBI Chief

Move In Line With Tenure Of Regulator Bosses -

In a surprise move, incumbent Sebi chief C B Bhave is being considered for extension in service by a high-level search panel that was set up to find his successor at the market regulator.