RBI chief isolated in battle against inflation

For months, the hawkish, inflation-fighting RBI has been in a shrinking minority of its emerging market peers. Now the recently re-appointed central bank governor is facing stiff opposition to his crusade at home. As recently as last week, the RBI made clear it will stick to its anti-inflationary stance despite censure from the Congress-led government that is signalling 12 rate rises within 18 months are hurting growth and its electoral prospects. India's inflation is near 10%, one of the highest among major economies in the world. It is among a handful of countries such as Kenya and Nigeria still raising rates while the world frets over headwinds from a European debt crisis and a sputtering US economy. Neighbours in Asia have turned dovish, some such as Brazil and Turkey have already cut interest rates. Subbarao appears undeterred by the criticism. RBI sources say he is determined to keep policy tight, maybe even tighten it further. "Growth has a floor, but inflation has no ceiling," said a senior RBI official with direct knowledge of monetary policy making. "If we don't do anything, inflation expectations will rise." Until now, the government and the RBI have largely been on the same page when it comes to monetary policy, with near double digit inflation not only an economic 'worry but a political headache as prices of foods and fuel jump. But over the past few weeks, criticism and advice for the RBI chief have been more blunt than usual. "I have had hesitation on a rate hike this time which in the past I did not", Kaushik Basu, chief economic advisor to the finance ministry, said after the RBI raised the repo rate by 25 basis points on Friday. "I would personally, yes, vote for pause", he told reporters when asked what the RBI should do at its October policy review. Basu is a top adviser in the finance ministry and is known to be not only close to finance minister Pranab Mukherjee but also a key strategist on economic policy, one who often echoes Mukherjee's thinking on key issues. The top adviser, who was widely believed to be in the race for the RBI top job, has asked the central bank "to think out of the box" and consider the examples of Brazil and Turkey that cut rates to protect growth. Montek Singh Ahluwalia, the deputy chairman of Planning Commission and Prime Minister Manmohan Singh's close advisor, also questioned Subbarao's monetary action. 

The Sunday Guardian

Teller-A.T.M. Hybrid Takes Banking to Rural India

Time was, banks employed armies of human tellers. Later, they replaced many of them with automated teller machines. Now, India is using a hybrid of the two — the human A.T.M. — to expand banking to its vast rural population......

Read........ 

Central Bank Of India : 144th SLBC Meeting

State Level Bankers’ Committee, Madhya Pradesh held its 144th meeting today at the Zonal Office of Central Bank of India, Bhopal. The meeting was chaired by Shri Avani Vaish, IAS, Chief Secretary to Govt. of M.P. and attended, amongst others, by Shri R. Parasuram, IAS, Additional Chief Secretary, Shri R.K. Dubey, Executive Director, Central Bank of India, Shri P.K. Panda, Regional Director, Reserve Bank of India, Shri A. Krishna Kumar, Managing Director, State Bank of India, Shri Ashok Shah, Commissioner-Institutional Finance and Shri Pravin Rawal, Deputy Secretary, Ministry of Finance, Govt. of India. Shri B. Mondal, General Manager, Central Bank of India and Convenor, State Level Bankers’ Committee, Madhya Pradesh, conducted the meeting and welcomed the dignitaries and other participants. The meeting reviewed the performance of banks during the first quarter ended June, 2011, 

Zee News

Govt officials, bourses to discuss Jalan panel proposals

Senior government officials and top stock exchange executives will discuss tomorrow the long-pending proposals made by a Sebi-appointed panel for sweeping changes on how the bourses should be owned and run. The recommendations of the committee, headed by former RBI governor Bimal Jalan and submitted to market regulator Sebi in November last year, would be discussed at a workshop organised by the industry chamber Ficci here. Those expected to participate in the discussions include R Gopalan, Economic Affairs Secretary R Gopalan, Joint Secretary (Capital Markets) Thomas Mathew, and Jalan himself. Besides, top executives of three national stock exchanges -- NSE, BSE and MCX-SX -- as also representatives from a host of smaller bourses and other market entities are expected to be present alongside other industry experts. The implementation of the recommendations made by the Jalan committee has been pending for almost a year now. Among other proposals, it has strongly recommended capping the profitability of bourses and barring them from getting listed to safeguard their front-line regulatory role. The committee, set up in January 2010 for review of ownership and governance norms for market infrastructure institutions, submitted its report to Sebi in November last year. Sebi then invited comments on it till December 31. The proposals generated intense debate and opposition was raised to proposals like non-listing of bourses and cap on profitability, terming them as anti-investor measures. In the wake of stiff opposition to the proposals, Sebi later put the ball in the government's court. Thereafter, a committee was set up by the Ministry of Corporate Affairs (MCA) to discuss the proposed rules, which held its consultations in May. In its meeting with the representatives from the bourses, industry bodies, accounting bodies and other market entities, the MCA sought suggestions a roadmap for segregation of regulatory and commercial roles of the exchanges. It was proposed that steps need to be taken to keep the front-line regulatory role of the bourses unaffected by their profit-making and other business interests after they become publicly held companies following their listing. On its part, the Sebi board has not been even discussing the matter in its last few board meetings, as it was waiting for suggestions from the government on the contentious issues emanating from the Jalan committee proposals. It is expected that the matter could come up for the Sebi board's consideration in its next meeting, once the government takes a final view after consultations with various parties.

BS

Being sensible

“Time running out to find solutions for global crisis, warns RBI chief” (Business Line, September 24) brings up an interesting fact. India has crossed many mile stones — $1 = Rs 21 in 1991 to $1= Rs 50. This is even after the US dollar is in doldrums (by printing more dollars). Dr Subbarao, Governor, RBI, the Finance Minister and the economist Prime Minister always talk about the US and the global economy and don't seem very concerned about the state of the Indian economy. When they could reduce the interest rates for the benefit of unscrupulous real estate and crony politicians in one step, why are they taking 13 steps to come to the old level of interest rates? The RBI is intervening when the rupee is going up and watching tamasha when the rupee is going down. What happened to the shareholders of the erstwhile GTB merged into OBC? 

Murthy (HBL)

Operation inflation

This refers to Subir Roy’s column “Old remains gold in fighting inflation” (Value for Money, September 28). The author, while elaborating on former Reserve Bank of India governor I G Patel’s views on inflation, has underlined the importance of balancing monetary tools with fiscal instruments to control inflation. While RBI’s initiatives in controlling inflation can be commended, its approach is flawed on several counts. First, RBI’s stance of treating inflation purely as a monetary phenomenon is completely incorrect in the Indian context. Second, the Bank has been merely been raising repo and reverse repo rates at periodical intervals. What about other instruments of monetary policy? During the seventies and the eighties, RBI controlled inflation through other instruments of monetary policy — selective credit control (SCC) measures, open-market operations and moral suasion, to name a few. Of these, SCC directives to commercial banks have had the desirable effect in monetary expansion by way of bank credit. Finally, RBI should have apprised the finance ministry of the futility of a monetary policy without the back-up of a prudent fiscal policy. IG’s prescription to combine fiscal discipline with monetary policy, thus, is quite right.

K V Rao, Bangalore

Subir Roy wrote succinctly about I G Patel’s views on how to tackle inflation. IG was not dogmatic about any economic ideology but was a believer in Karl Popper’s Open Society principles. His experience as director of London School of Economics is important to analyse again in the present context of volatility in the world economy. Policy-makers need to be flexible in the allocation of resources at margin. When an economic downturn is expected because of the downturn in the global market, policy-makers should be flexible to shift resources towards the “less tradable” rural sector in which growth is likely to be more equitable. This will also help in dampening inflation.

Chandrashekhar G Ranade, Washington DC (BS)

Profiting from inflation

RBI Governor D Subbarao recently commented in New York that “inflation has been fairly stubborn”. Over the last few months, there has been growing pessimism on the efficacy of monetary policy to tame inflation. Reasons proffered range from supply-side constraints, increasing rural income and changes in dietary habits, to conspiracy theorists proffering that developed countries with unmanageable debt burdens are inflating their way out of trouble and passing the contagion to their less developed brethren. Whatever be the reason, the fact remains that the last 20 months have seen the highest inflation in the last 20 years in India. Many businesses may believe that inflation may not be a bad thing as long as they can pass on the cost increases to their customers as price increases. And these businesses are not wrong as inflation does have beneficial effects. Company revenues increase not only in nominal terms but also in real terms. This can result in a positive effect on wages and employment, which can lead to further demand and more economic growth. For governments with unsustainable debt overhang, it can lower the real burden of servicing debt. However, any benefit from persistent high inflation is an illusion, and, in fact, has serious negative impact on businesses. It retards productivity growth as managerial decisions fall prey to the so called ‘money illusion’ (for a more detailed discussion of the topic, please read the Boston Consulting Group white paper, Why Companies Should Prepare for Inflation, November 2010) or the tendency to mistake price increase for real gains. Because managers believe they are doing better than they actually are, they become complacent and do not take a hard look at their businesses. Inflation also encourages underinvestment and distorts allocation of resources as depreciation allowances, based on historical costs, prove inadequate. BCG research shows that despite initial positive economic effects of inflation, total shareholder returns (TSRs), which combine share price appreciation and dividends, are typically disappointing, particularly when measured in real terms. Also, companies that destroy more value relative to their peers during inflationary period are much less likely to catch up and compensate their shareholders when inflation falls. Thus, inflation creates losers—and winners of those who manage its risks well. Inflation can change the rules of the game by establishing new sources of competitive advantage—from advanced pricing and sourcing strategies to superior asset productivity. When hit by inflation, companies with the highest capital can end up as big losers as they are unable to generate additional ‘inflationary’ cash for their high asset-intensity businesses or to replace old assets and end up making sub-optimal capital allocation and investment decisions. The sure winners are those companies that increase price faster than rate of inflation to provide for not just cost increases, but also increased valuation of assets and thus protect gross margins from erosion by inflation. It was just a little over 24 months ago that the country was patting itself on the back, having come out strongly from the economic crisis of 2008 that had severely crippled the economies of many developed countries. Inflation was negligible and the country was looking forward to accelerating GDP growth towards double digits. Within 6 months, the economy hit the inflation bump, with the headline (WPI) inflation rate going over the 9% mark. Twenty months later, despite several rate hikes by RBI, we see no respite. No wonder Subbarao was forced to make his comment. For Indian businesses, this raises a fundamental strategic question: When will the inflation moderate, and how aggressively should they react to it? Many experts believe that we are in for a period of sustained inflation due to an unprecedented combination of global and local conditions. Clearly, India faces major supply-side issues that are driving inflation, particularly non-food manufacturing inflation, which has remained high even as food inflation has  moderated somewhat in recent weeks. This is unlikely to change in the near term, unless the slowing investment cycle reverses itself and global commodity prices fall significantly. Crude oil prices are, of course, a fly in the ointment, and can have a dramatic effect up or down on headline inflation. This only strengthens the case for Indian companies to make their business models ‘inflation proof’. To do so, they have to adopt a four-step programme. The first step is to assess the risks, and develop a detailed understanding of potential exposure to different inflation scenarios and identify the specific areas of weakness, which may vary from business to business or one product to another. The second step is to know the real costs and prices—and avoid money illusion mentioned earlier. Companies should closely track inflation-adjusted financial indicators that track the real performance of their businesses. The third step is to protect gross margins. The key to this is superior pricing strategies and processes, which could range from creative contract design to pass inflation risks to customers, eliminating price leakages, reacting quickly and frequently to raw material price increases and reducing price sensitivity of customers by unbundling products and services, etc. The fourth and final step to become an inflation winner is to safeguard investments, which is particularly relevant for high capex companies. This calls for adopting a conservative financial policy of low leverage, increase asset productivity and carefully prioritise planned investments. The last time Indian companies faced inflation rates close to current levels for a prolonged period of time was 20 years ago. Very few of the leaders who had navigated through that period remain at the helm of their companies. If inflation is going to become a ‘given’ in the medium term in India, today’s business leaders have to learn not just to live with it, but how to win in the market place. As Bruce Henderson, the founder of BCG, said in one of his essays, while the negative impact of inflation is quite clear with real profits being squeezed despite higher profitability, it also offers unique opportunity to differentiate one’s performance. The winners are those who will find the way to profit from inflation! 

FE

RBI pulls up Islamic bank

The Reserve Bank of India has asked the country’s first and only Shariat-based NBFC, the Kozhikode-based Alternative Investments and Credit Limited (AICL), to commit sacrilege. The NBFC, for which charging interest is ‘haraam’ or forbidden, has now been asked to publish an interest rate structure just like any other conventional banks. The charge is that the AICL, which has been operational for over a decade, has flouted RBI’s fair practices code under which a financier has to specify the interest structure. The AICL has been given two weeks to respond to the RBI’s directive. “We have met RBI officials in Mumbai last week and put our points across,” said the AICL managing director, Mr K.M. Abdul Salam. “Shariat teaches us to abide by the law of the land. But we also have our spiritual commitments,” Mr Abdul added. The AICL’s immediate challenge is to find a middle-path between Shariat principles and existing banking regulations, which does not recognise interest-free transactions as a banking activity. Instead of interest, an Islamic bank like AICL takes funding charges, which is the share of profits the borrower has to pay to the lender. Banks based on Shariat principles function on the basis of a participative finance model. The borrower needs to pay only if he had earned a profit. In case there are unavoidable losses any year, the borrower need not pay any funding charges. 

DC

The Economic Experts Who Advise our PM



Duvvuri Subbarao, Governor, Reserve Bank of India



Subbarao is a 1972 batch Indian Administrative Service (IAS) officer of Andhra Pradesh cadre. He is the 22nd and current Governor of Reserve Bank of India, serving under Prime Minister Manmohan Singh. He did his schooling from the Sainik School in Korukonda, Andhra Pradesh. He graduated in Physics B.Sc Hons. from Indian Institute of Technology Kharagpur (class of 1969) where he was the recipient of Director's Gold Medal. He received a M.Sc degree also in Physics from Indian Institute of Technology Kanpur. Subbarao topped the IAS examination in 1972 and was assigned the Andhra Pradesh cadre. He later did a Masters degree (MS) in economics from Ohio State University, United States and was a Humphrey Fellow at Massachusetts Institute of Technology. Although the RBI governor works autonomously, his role in shaping the country's economic policies cannot be overstated. Subbarao has earned more critics in recent months for supposedly killing growth, but a few admirers too for his conviction. "Subbarao is a pragmatic and astute central banker who has taken independent decisions based on his well-researched conviction," says Madan Sabnavis, chief economist at rating company Care. "He has recognised inflation as being the single most important malaise afflicting the economy and pursued the goal of increasing rates, notwithstanding the pressures being exercised from different quarters, displaying a lot of character."

C. Rangarajan, Chairman, Prime Minister's Economic Advisory Council

He is an Indian economist and a distinguished former Member of Parliament and Governor of the Reserve Bank of India. Currently, he is the Chairman of the Prime Minister's Economic Advisory Council. He is also the Chairman of the Madras School of Economics, and the Founding Chairman of the CR Rao Advanced Institute of Mathematics, Statistics and Computer Science. Rangarajan graduated from the prestigious Loyola College of the University of Madras in the commerce stream (where he was a contemporary of the Yale University economics professor T N Srinivasan). He later took Ph.D. in economics from the University of Pennsylvania in 1964. Rangarajan taught at several institutions including the University of Pennsylvania and the IIM-A where he also served as the Director. Commenting on the rate hike, Dr. C. Rangarajan, said, "This is the right decision... in the background of rising inflation...Inflation has been above 9 percent since January this year and taming inflation is the most important concern of the central bank." 

http://www.siliconindia.com/shownews/The_10_Economic_Experts_Who_Advise_our_PM-nid-93260.html

'Aadhaar valid to open bank a/c'

NEW DELHI: Contrary to the Reserve Bank of India's notification, an  Aadhaar card is a valid residence proof for opening a bank account. "Aadhaar is a valid "Know Your Customer" (KYC) document for opening a bank account," Unique Identification Development Authority of India (UIDAI) chairman Nandan Nilekani said. "The Aadhaar letter has two parts - identity and address. If the address that a person shows to the bank is the same as on the (Aadhaar) letter, it is also a proof of residence," he said. The Reserve Bank of India's (RBI) notification issued on Wednesday stated that Aadhaar is not a valid residence proof. However, the central bank reportedly accepted its validity as identity of a person. Nilekani said, "In a few days, we will be starting online authentication of address and identity. If the address matches through online authentication, it will be treated as current address (of the person applied for a bank account or a service)." He clarified, "As of now, the banking system has declared Aadhaar as a valid KYC norm for all bank accounts as per the RBI notification issued on Wednesday." The telecom and petroleum ministry also consider Aadhaar as a valid KYC norm for issue of SIM cards and cooking gas connections. He said about 37 million people across the country have been given unique identity cards and another 1.2 million people will get it daily by October. "New people are getting enrolled across the country at the rate of 6 lakh a day, by October the figure will be one million people per day," he said. Nilekani pointed out that there is little possibility of duplicates arising out of the system because only one ID is issued to a person taking his biometric signature. Asked whether the UIDAI was on a collision course with the Planning Commission, the UIDAI boss asserted that the Authority - set up for issuing national identity cards - was working under the powers delegated by the Prime Minister. "My powers have been delegated by the PM," Nilekani said, adding that UIDAI is an attached office of the Planning Commission. The issue came up after the Plan panel reportedly expressed concerns that the UIDAI is departing from set government procedures and suggested a re-look into its structures.

TOI

'Wage hike creates new challenges'

MUMBAI: The RBI has said that India's per capita income is likely to double between 2006 and 2017-18. While the increase is a positive development, it creates new challenges to the central bank in managing demand.  Speaking at the Harvard Business School, Boston, on Tuesday, Deepak Mohanty, Executive Director, RBI, said that India's per capita income, which had taken four decades to double by 1991, doubled thereafter in 15 years. "If India could maintain the current pace of growth, it will lift millions out of poverty and enrich the global economy. While India has come a long way, maintaining the current pace would itself be challenging and require continued reform efforts," he said.  Mohanty said that India will have to raise agricultural productivity. "Demand for protein-based products like meat, egg, milk and fish as well as fruits and vegetables have increased substantially with rise in income. The demand-supply mismatches in the case of these items have resulted in rise in their prices There is, therefore, a need for another technological breakthrough to give fresh impetus to agriculture," he said.  He said that increase in farm productivity will require a substantial part of labour force to be `ejected from agriculture' not only to improve the productivity in agriculture but also in the overall economy. "It is unconceivable that they can all be absorbed gainfully in the services sector. Hence, industrial employment will have to expand so also the relative contribution of industry" he said.  To support industrialization, he said it was necessary to to step up investment in infrastructure. "The Planning Commission suggests an investment of Rs 45 trillion (US $ 1 trillion) over the Twelfth Plan (2012-17). Given the large requirement of long-term funds, financing infrastructure would be a big challenge. Besides budgetary support, the bulk of the funds has emanated from banks" said Mohanty.

TOI

Infrastructure loans: Banks ‘averse’ to RBI counsel on ‘risk’ from nature

During these edgy times when ‘risk aversion’ is the marauding theme across the financial world, banks in India have only accreted risk, though of a different ‘nature.’..............

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RBI's PTC ruling to impact NBFCs' capital adequacy

MUMBAI: The capital adequacy and net interest margins (NIMs) of non-banking finance companies (NBFCs) could be under pressure following the Reserve Bank of India issuing fresh guidelines on securitisation, according to the latest report of Standard Chartered Bank. The RBI on Tuesday disallowed credit enhancements in transactions where banks buy loans from NBFCs. The regulator has proposed that banks follow the pass-through certificate (PTC) route instead. Currently, most priority sector portfolio sales by NBFCs to banks are done through the credit enhancement route. "For NBFCs, if the buyouts happen through PTCs rather than assignments, capital requirements will rise. For Shriram, tier-I capital adequacy will fall from 18% to 14.3%," said the Stanchart report. "This will have some mark-to-market implications for banks and will also impact their loan growth as PTCs are treated as investments while portfolios bought out by loan assignments are treated as loans," added the report. Unlike a credit enhancement transaction, there is an underlying asset to fall back upon in a PTC transaction.

ET

Police Commissioner release book titled “Reaching Out to the Unreached: the Corp Bank Way”

Read......

Mangalore, Sep 29: City police commissioner, Seemanth Kumar Singh released a book titled “Reaching Out to the Unreached: the Corp Bank Way” based on Corporation Bank’s financial inclusion model and written by Dr. N. K. Thingalaya, Dr. M. S. Moodithaya and Dr. N. S. Shetty in the conference hall of Corporation Bank’s Corporate Office on September 29, Thursday. Dr. K. C. Chakrabarty, the deputy governor of Reserve Bank of India, wrote the foreword for this book, which also carries a message by Mr. D. K. Mittal, the secretary for the department of financial services, Ministry of Finance, Government of India.

Banks see huge fall in requests for demand drafts

The Demand Draft (DD), a popular financial instrument for transfer of funds or payment till recently, is losing its sheen. Banks are seeing a significant dip in the requests for issue of DDs, thanks to use of electronic mode of transfer and net-banking facilities. “The issue of DDs in banks is showing a 50 per cent decrease of late. I think, it is going the legendary Indian postcard way in terms of decreasing patronage from customers,'' Mr Anil Girotra, Executive Director, Andhra Bank, told Business Line. The use of DDs were inevitable till three-four years ago for payment of fees for recruitment tests, academic exams and Government transactions. “On an average, a bank branch used to issue 300-500 DDs a day earlier. But now we don't find the number of DDs crossing even a hundred in some branches,'' said a senior official of Punjab National Bank. Almost all major recruiters such as Public Service Commissions, banks and some academic institutions have now switched over to online payments making the DDs almost obsolete. The expanded use of National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) also made DDs less popular. “Many businessmen are using the electronic mode now as it is faster. There is no blocking of funds. Clearance of DDs may take up to 10 days in some cases,'' Mr K.T. Ajit, a senior executive of State Bank of India, said.  Then, there is also a cost factor. The RBI had advised banks to reduce commission on DDs as early as 2007 though commission/service charges continue to be on the ‘higher' side, according to experts. As of now, commission for issue of DD up to Rs 10,000 is around Rs 50. For Rs 1 lakh it is upwards of Rs 400.  Banks are not forthcoming to share exact numbers on the dip in overall revenue due to decreased demand for DDs. 

HBL

Banks make U-turn on prepayment

The Indian Banks’ Association (IBA) lobby group has written to the Reserve Bank of India (RBI) arguing against the move, fearing mismatches in liquidity owing to early payment.....

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RBI penalises MNSBL for violating anti-money laundering rules

Ahmedabad : The Reserve Bank of India has penalised Gujarat-based cooperative lender Mansa Nagarik Sahakari Bank Ltd (MNSBL) for violation of Anti-Money Laundering (AML) guidelines. A penalty of Rs 1 lakh was imposed on Gandhinagar- headquartered MNSBL for violating the RBI''s instructions for submission of reports on cash transactions above Rs 10 lakh to the Financial Intelligence Unit-India (FIU-IND) under the AML guidelines. The RBI had issued a show-cause notice to the bank, in response to which the bank had submitted a written reply. "After considering the facts of case and the bank''s reply, as also personal submissions in the matter, the Reserve Bank of India came to the conclusion that the violation was substantiated and warranted imposition of the penalty," an official statement said. Over a dozen cooperative banks from Gujarat have been fined by the RBI in the recent past for violation of AML and KYC norms.

MSN News 

RBI stall at exhibition to create awareness on use of currency

RBI, Chennai, has put up a stall at the on-going Government Exhibition at Bose Maidan here to create awareness among the public on proper use of currency, identification of counterfeit notes etc. Indian Bank has been entrusted with the work in the stall at present. The stall, according to a press release, can be used for the purpose of exchange of cut and soiled notes, issue of fresh currency of Rs. 5, 10, 20, 50 and 100 denominations, issue of new coins of Rs. 1, 2, 5, & 10 denominations and issue of Rs. 5 commemorative coins (marking 1000^th  year of Thanjavur Brigadeeswarar Temple). On the first day of inauguration on Saturday, coins to the tune of Rs. 5 lakh were distributed to the public. Indian Overseas Bank and Axis Bank will join the stall management after September 25. The stall was inaugurated by G.P. Borah, General Manager, Issue Department, RBI, Chennai.

HBL  

Fiscal consolidation crucial for 9% growth: RBI

The Reserve Bank of India (RBI) has said the growth target of nine per cent envisaged for the 12th Five-Year Plan can be achieved only if inflation is brought down, and supply-side issues in agriculture are resolved. "Without bringing inflation down from the current level, it would be difficult to sustain a high level of growth. This would require greater monetary-fiscal coordination and the alleviation of supply constraints, particularly in agriculture," said RBI Executive Director Deepak Mohanty. Mohanty said achieving nine per cent growth between 2012 and 2017 would be a challenging task, since local factors would also play a key role in deciding GDP (gross domestic product) growth. "Hence, growth would have to be raised by an additional percentage point per annum, which is challenging because it would require a conducive global environment and policy reforms at home," he said. Aiming to bring inflation down, the central bank has raised the repo rate by 350 basis points in the last one and a half years, and this has led to moderation in growth. Inflation has remained much above the central bank’s comfort zone. The wholesale price index rose 9.7 per cent in August on an annual basis, compared with 9.22 per cent in July. "Empirical evidence suggests the threshold level of inflation is in the range of 4-6 per cent," Mohanty said in Boston. Emphasising on increasing agricultural productivity, Mohanty said there was a need to beef up rural infrastructure to remove bottlenecks in the supply chain. "There is, therefore, a need for another technological breakthrough to give fresh impetus to agriculture. At the same time, greater emphasis would have to be placed on the management of the supply chain, with investment in rural infrastructure," he said. The central bank also called for an increase in agricultural growth to four per cent, compared with the current three per cent right. The regulator also said workforce needed to be removed from agriculture, and absorbed by the manufacturing sector. "A substantial part of this labour force would have to be ejected from agriculture not only to improve productivity in agriculture, but also in the overall economy," Mohanty said. It is inconceivable that they can all be absorbed in the services sector. Hence, industrial employment would have to expand, as also the relative contribution of industry, Mohanty said.

BS

States holding up plan to recapitalize regional rural banks

An RBI panel had recommended all RRBs be moved into the CBS network by September. RBI’s annual report released on 25 August said out of 82 RRBs, CBS has been fully implemented in 45, and it is in progress in the rest of them. All this pushes up RRB capital needs in the long run and a viable alternative is needed to recapitalize them, bankers said....

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Redesigning Regulations : Lessons from Crisis

''Maintaining growth without controlling inflation touch task''

Boston : The Reserve Bank has said sustaining high level of economic growth is difficult without controlling inflation. Speaking on the ''Indian Economy- Progress and Prospects'' here, RBI Executive Director Deepak Mohanty said, "Without bringing down inflation from the current level it will be difficult to sustain a high level of growth. This will require greater monetary-fiscal coordination and alleviation of supply constraints." He said the demand-supply mismatches in case of protein- based items as well as fruits and vegetables have resulted in price rise of these items. "There is a need for another technological breakthrough to give fresh impetus to agriculture," Mohanty added. Food inflation, which account for 15 per cent in the overall inflation, was at 8.84 per cent for the week ended September 10. Inflation remained over 9 per cent since December, 2010. It touched a 13-month high of 9.78 per cent in August. The Reserve Bank of India has raised key interest rates 12 times since March 2010 to contain inflation. Corporate India has said that frequent rate hikes, which have led to an increase in the cost of borrowings, are hindering fresh investments and affecting economic growth. The country''s economic growth was 7.7 per cent in the April-June period, the slowest in six quarters. Growth in industrial production also fell to 21-month low of 3.3 per cent in July. Mohanty said in the current fiscal economic growth is expected to be around 8 per cent. "In 2011-12 growth is expected to be about 8 per cent," he said. He emphasised on the need for the government to revert to its pre-crisis fiscal consolidation path without compromising on the quality of fiscal correction.

MSN News

India can sacrifice some growth to tame inflation: Central Bank

ISTANBUL: India’s monetary policymakers are prepared to sacrifice some economic growth in order to control inflation and inflation expectations, H. R. Khan, a Deputy Governor at the Reserve Bank of India, said. The RBI raised interest rates by 25 basis points on Sept 16, the twelfth increase since March 2010, and the tone of the central bank’s review was perceived as hawkish with economists expecting another rate rise before the year end, despite plenty of signs that the economy is slowing. “Most of the time India’s growth hasn’t fallen below 6 and 6.7 percent, but there is a huge upside to inflation,” Khan said on the sidelines of a financial conference in Istanbul.  “In the short term there could be a trade off. But in the medium and long term, low and sustainable inflation is necessary for sustaining the growth.” “So if there is a bit of sacrifice on the growth side we don’t mind? but inflation and inflation expectations have to be controlled,” Khan said.  Khan said an upside to the current global problems lay in the possibility that commodity prices could ease, which could give the RBI cause to reassess its stance. “Hopefully commodity prices do soften,” he said adding, “That would give us some input to think of our stance.”  Gross domestic product growth in Asia’s third-largest economy slipped to 7.7 percent in the three months through June.  RBI Governor Duvvuri Subbarao defended the 18-month monetary tightening campaign on Monday, calling the country’s inflation rate of about 9 percent “inimical to growth.”

Arab News

RBI says monetary tools can do little to tame inflation

Reserve Bank of India (RBI) finally admitted that inflation was now going beyond its control and there was little it could do about it with monetary tools. Speaking at a conference on Climate Change impact on Wednesday, RBI Deputy Governor Subir Gokarn said, “Continuing high energy prices have reduced the space that monetary policy has in terms of responding to inflation.” Gokarn’s comments have come close on heels of Governor D Subbarao indicating at Stern School of Economics that containing inflation to less than 6 per cent remained its primary objective. Subbarao said, “With WPI inflation ruling above 9 per cent, we are way past the threshold. At this high level, inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium term growth prospects. RBI’s monetary tightening is accordingly geared towards safeguarding medium term growth even if it means some sacrifice in near term growth.” But Gokarn’s fear of inflation persistence stemmed from the fact that energy prices remained at over $100 dollars a barrel. Besides, Gokarn pointed out that energy, particularly fossil fuel energy consumption has been on the ascent in the country. Energy consumption per person in 1995 was just 1295 units. Quoting data for 2010, he said, consumption averaged 4647 units. He said, “life style changes have led to increased demand for energy and economic structures leading to inflation.”  He also said that there were also other worrying impacts of climate change on inflation. He said that agriculture yields in the country was no longer rising since rainfall was reducing. Quoting 50-year data from the Met department, Gokarn said there was a sharp reduction in rainfall particularly during July and August months. Rainfall in this period was critical for farm out put and if this pattern continued, he said there could be a loss of 15 per cent and 10 per cent in rice and wheat yields by 2020.

FC

RBI delegation to visit Pakistan in October

KARACHI: A delegation of Reserve Bank of India (RBI) will visit Pakistan in the first half of October to discuss the modalities for opening of bank branches in India and Pakistan on reciprocal basis. This was stated by Deputy Governor, RBI, Dr Subir Vithal Gokaran, during his meeting with Commerce Minister Makdoom Amin Fahim in Mumbai. The Minister is leading 60-member delegation of top exporters on the invitation of his Indian counterpart Anand Sharma. According to the information reaching here Trade Development Authority of Pakistan (TDAP) on Wednesday, Federal Minister for Commerce has stressed that both the countries should fast track the process of opening of branches to facilitate the business community and to increase the trade volume between the two countries. Gokaran expressed his optimism and agreed for increased cooperation between the two regulators. Secretary Commerce Zafar Mehmood, CE TDAP, Pakistan High Commissioner to India and a representative of State Bank of Pakistan were also present in the meeting.

http://www.brecorder.com/pakistan/business-a-economy/29755-rbi-delegation-to-visit-pakistan-in-october.html

UID valid KYC for all bank accounts

The Reserve Bank of India (RBI) has allowed banks to accept letters issued by the Unique Identification Authority of India (UIDAI) for Aadhaar numbers to open savings accounts with no credit limits. The regulator had in January asked banks to treat all savings accounts opened using Aadhaar letters as so-called no-frills accounts, in which the aggregate credit is limited to Rs.1 lakh in a financial year. Withdrawals and transfers are limited to Rs.10,000 per month and account holders cannot have more than Rs.50,000 in balance at any point of time. The January notification came a month after the finance ministry amended the Prevention of Money Laundering Rules, 2005, to notify Aadhaar as adequate to meet know-your-customer (KYC) norms for opening bank accounts, putting it alongside the passport, driving licence, permanent account number (PAN) card, and the voter’s identity card. Mint reported on Tuesday that RBI’s January notification had created confusion among banks over opening accounts using the Aadhaar numbers. The new notification, published on RBI website on Wednesday, “will streamline the entire process of opening Aadhaar-based bank accounts and provide impetus to Aadhaar-based transactions in the financial sector,” said a government official involved in talks with RBI. “The notification will also clear the confusion that banks had about using Aadhaar as KYC,” the official said, asking not to be identified. The UIDAI aims to provide unique identification numbers to all residents of India under the Aadhaar project. Some 37 million people have been enrolled so far; the Unique Identification Authority targets issuing 600 million numbers by 2014.

Mint

Reliance Bank will challenge Public Sector Banks

The announcement by the Reliance group to enter banking sector has made ripples among the staff and officers of the Public sector Banks. They believe that their entry will make a change in Indian Banking industry to move the people away from Public Sector Banks ultimately resulting in losses and closure of PSBs. This amounts to the reversal of Nationalisation Policy. In 1969 the banks in India were nationalised. The state control over the banking sector has helped the government to run the economy. More social upliftment programme were implemented through public sector Banks. A decade back Reserve bank of India granted new licenses for banking. Under liberalisation and globalisation more private players and international banks have jumped in the huge Indian market. There is resentment among public that the public sector banks are not providing efficient services. It is alleged that the Banks discriminate between low value and high value banking customers. They provide loan facilities only to asset holders ignoring the meritorious entrepreneurs. Even the educational loans are not provided to eligible persons. But the bank officers feel that they are indeed doing a good service considering the work load imposed on them. With the introduction of private banking there should be stiff competition to improve service. But it has not happened in the past. The private banks have become elite banks by charging more with the affordable sections of the people. This has resulted in hijacking the high value customers to Private banks. But public sector banks were not much affected since there is still more space for them in the huge market. They enjoy a near monopoly among the middle class people. Now India is having 27 PSBs 22 Private Banks and 31 Foreign banks. This number may be misleading. At present most of the customers are with PSBs. A news is spread that the RBI plans for greater competition in banking sector to widen the availability of banking services to rural India which has little or no access to formal loans and saving facilities. This is to prepare grounds for allowing more private banks. There is always a lobby in the government to encourage Private sector and discourage Public sector enterprises. Some ministers tried to sell profit making PSUs. Now if rural services are to be enhanced it can be done by expanding financial services through Post offices which have a wider network and establishment in India. Some initiatives in this direction were introduced by former telecom minister A,Raja. But such moves are not continued. The big news now is that Anil Ambani’s financial services group Reliance Capital is to start a New Bank. This NBFC worth of n Rs. 8,000 crore is involved in mutual funds, pension funds, insurance, corporate finance, broking and portfolio management. They have already built an empire of 2 crore customers and 8,000 offices with a staff strength of over 18,000 people. Therefore their entry in Banking is already half completed. Whatever may be arguments for and against the Private Banks, the entry of Reliance in Banking is a welcome step. The Government should take necessary measures to protect the interests of PSBs by preventing unfair means by private players in promoting business in this sector . The people trust is with PSBs. At the same time Reliance have also developed a trust among investors. The real competition is set to unfold. 

TruthDive

Dismal track record of education loans in MP irks govt

The figures tell it all. Banks in Madhya Pradesh take education loan very lightly: the 47 of them operating in the central Indian state have so far disbursed merely Rs 40 crore in aid of those aspiring to study. This, when their network is a solid total of 5,613 branches (including private, regional, rural and cooperative banks) and their deposit base is an impressive Rs 156642.15 crore. Against the 2011-12 annual credit plan to fund 60,000 students, bankers have so far sanctioned Rs 40.07 crore to 1,559 students. Of them, Rs 12.90 crore has been disbursed to girl students. Clearly, it is not just the rural housing and no-frill accounts for poor that remain utterly neglected banking areas in the state. Together, these prompted the state government on Wednesday to lambast the bankers. The figures on education loans read so minuscule that the administration cautioned the banks of reporting the matter to the Reserve Bank of India. Among the banks, the private ones stand worst when it comes to sanctioning education loan. In fact, many of them don’t have even a single case during the year. The case is better with regional rural banks and state-owned cooperative banks. The state government is perturbed. “We fail to understand why the banks are not interested in education loans despite the RBI having exhorted them to improve on the matter,” says Chief Secretary Avani Vaish. “We want RBI should take up the matter seriously. We are ready to offer guarantee in the case of NPAs,” he told Business Standard after a meeting here with state-level bankers committee. Bankers, on their part, cite reasons for the situation. One, they note, is rising instances of non-performing assets in education loans.

BS

Govt to tighten noose around MLM cos after probe

Multi-level Marketing (MLM) companies may soon find it difficult to survive. The government will finalise exclusive regulations for MLM companies after its probe, reports CNBC-TV18.  According to government probe there are lacunae in the existing regulations while there are serious fraud investigation offices probing many MLM companies.  Meanwhile, both the Ministry of Corporate Affairs (MCA) and Reserve Bank of India (RBI) are framing rules to supervise MLM firms. SFIO has already submitted initial analysis on MLM companies to MCA.

Moneycontrol

The rupee under pressure

....On Monday, the rupee traded around Rs.49.60 to the dollar, perilously close to the psychologically important Rs.50 mark. In the current phase of rupee depreciation, the RBI does not appear to have intervened aggressively, possibly because it wants to conserve its firepower for a future contingency....

Read...........

Subbarao hints at further rate hike



Central Bank Cannot Support Growth Without Fiscal Consolidation



Mumbai: In an indication that it has not yet finished with interest rate hikes, the Reserve Bank of India has said that it will continue to remain aggressive in its monetary policy in so far as the government continues to push for growth in its fiscal policy. “The Reserve Bank has been battling inflation for the last 20 months. Monetary tightening, as is well known, works by restraining demand. Inasmuch as the fiscal stance is supportive of demand, the monetary stance has had to be more aggressive than otherwise,” said RBI governor D Subbarao. The governor was speaking at the Stern School of Business, New York, on Monday. He added that for RBI to support growth (through lower interest rates) it will be necessary for fiscal consolidation to take root more firmly. Bond prices fell upon the governor’s comments as many perceived it as a signal that the central bank would continue to hike rates.  On September 17, RBI had announced its 12th rate hike in 18 months, a period in which it raised rates by 350 basis points. It is now expected to increase rates again in its monetary policy review on October 25. The governor pointed out that while it was the intent of the government to curb fiscal deficit by enacting the Fiscal Responsibility and Budget Management Act, meeting even the postcrisis revised roadmap would be a “challenge” for the centre. “The largest component of discretionary expenditure is on subsidies—on food, fertilizer and petroleum products. In reducing these subsidies, there is inevitably a tension between democratic compulsions and economic virtue,” he added. In his speech, Subbarao hit back at critics that RBI was hurting growth by raising rates. While admitting that there was a trade-off between growth and low-level inflation, he said that above a certain threshold level of inflation, this relationship reverses. “The trade-off disappears, and high inflation actually starts taking a toll on growth. Estimates by the Reserve Bank using different methodologies put the threshold level of inflation in the range of 4-6%,” he said. “With WPI inflation ruling above 9%, we are way past the threshold. At this high level, inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium term growth prospects. The Reserve Bank’s monetary tightening is accordingly geared towards safeguarding medium term growth even if it means some sacrifice in near term growth,” he said.  The governor also rebutted the argument that inflation was largely a supply-side issue. He pointed out that crude oil prices recorded an annual average increase of around 17% during the 2000s as against only a modest increase of 2% during the 1990s and a decline of 3% during the 1980s. “This obviously is the outcome of structural changes in supply and demand for oil. Monetary policy has to recognize these underlying trends and respond to them,” he said.

TOI

High inflation will hurt growth, says Subbarao

Subbarao said the monetary policy stance of the central bank is aimed at restraining demand and anchoring inflation expectations

Mumbai: Reserve Bank of India (RBI) Governor D. Subbarao has justified the central bank’s hawkish monetary stance, arguing that India’s high inflation is not only driven by supply bottlenecks but also domestic demand pressures and that the current rate of price rise is “unambiguously inimical” to growth. Subbarao, who was talking on monetary policy dilemmas at the Stern School of Business, New York University, on Monday, negated the views of the critics who say monetary policy has no role to play in a situation where inflation is driven by supply side factors. “The argument...of our critics that monetary policy has no role because inflation is a result of imported commodity prices would have been valid if the increase in commodity prices was a pure and transient supply shock or if there were no demand pressures. That clearly was not the case in India,” Subbarao said, according to a text of the speech posted on the central bank’s website.  He also reiterated that RBI is willing to sacrifice some of the short-term growth to protect medium-term growth.  Subbarao argued that if inflation is above 4-6% level in India, growth inevitably gets sacrificed. At the present level of 9%, India is way past that threshold level. “At this high level, inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium- term growth prospects,” Subbarao said, adding that RBI’s stance is “geared towards safeguarding medium-term growth even if it means some sacrifice in near-term growth.”

RBI on 16 September extended its record interest rate increases to tame the fastest inflation among the so-called Bric (Brazil, Russia, India and China) economies. India’s benchmark wholesale price inflation accelerated to a 13-month high of 9.78% in August, and higher food and fuel costs and weakness in the rupee may further boost prices. The central bank has raised its key policy rate 12 times starting mid-March 2010, from 3.25% to 8.25%, the fastest round of increases since RBI was established in 1935, Bloomberg data show. It has done mostly through baby steps or a quarter percentage point hike at a time. Subbarao said the baby steps were necessary to allow time for the banks and the private sector to adjust to a higher interest rate environment.  “Our baby-step approach during 2010 was accordingly a delicate balancing act between supporting recovery at home amidst growing global uncertainty and containing inflation pressures,” Subbarao said, countering any argument that RBI should have been more aggressive in its rate hikes initially, instead of hiking rates sharply—like the half a percentage point hike in the first quarter policy—and miss the bus on inflation management.  India’s stance contrasts with other Asian nations from South Korea to Malaysia, which kept borrowing costs unchanged this month as Europe’s debt crisis and a faltering US recovery cloud the outlook for expansion. India’s benchmark wholesale price inflation of 9.78% in August compares with consumer price gains of 7.2% in Brazil, 8.2% in Russia, 6.2% in China and 5.3% in South Africa last month from a year earlier. Subbarao said the monetary policy stance of the central bank is aimed at restraining demand and anchoring inflation expectations.  “Given the nature of the inflation drivers and their combined impact, clearly there is a significant role for monetary policy in combating inflation,” Subbarao said, indicating that the central bank still sticks to its stated objective of reversing its stance of rate hikes only when inflation comes under control. Analysts tracking RBI are divided on what will the central bank do when it announces its monetary policy for the second quarter on 25 October. While most of them expect that there can be one more quarter of a percentage point hike in policy rates before RBI pauses, some expect that it has already reached the peak and RBI may opt for a pause.  RBI had made it clear previously that it will not change its stance unless inflation is under control as that would be “premature” to do. Most expect inflation to continue to remain high at least till November, and, even after that, it may not come down sharply.

Mint 

RBI defends policy action to check inflation

Amid criticism that frequent interest rate hikes are hurting economic expansion, RBI Governor D Subbarao said policy tightening was necessary to contain inflation and preserve medium-term growth prospects. "At this high level, inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium-term growth prospects. The RBI's monetary tightening is accordingly geared towards safeguarding medium-term growth even if it means some sacrifice in near term growth," he said while speaking at the New York University. The central bank's decision to increase interest rate for the 12th time since March 2010 to check high inflation has evoked sharp reaction from industry. Even Chief Economic Adviser Kaushik Basu recently said that RBI should do some "out of box" thinking to deal with elevated inflation level in the country. Despite the short-term borrowing (repo) rate going up by 3.5% since March 2010, inflation has remained stubbornly high at near 10%, much above the Reserve Bank's comfort level of 4-5%. However, the tight monetary policy is affecting the economy. The data shows that GDP growth during the April-June quarter of 2011-12 moderated to a 18-month low of 7.7% from 8.8% in the corresponding period a year ago. Industrial output growth during July was at 3.3%, the lowest in 21 months. On the impact of monetary policy on growth, Subbarao said, "a much more nuanced evaluation of our policy stance is necessary. Evidence from empirical research suggests that the relationship between growth and inflation is non-linear... high inflation actually starts taking toll on growth." While pointing out that RBI's anti-inflationary stance was being criticised as hawkish by some and soft by others, Subbarao said, "both the critiques cannot obviously be right at the same time." Given the nature of inflation drivers, which includes rising wages in rural areas, he said that the monetary policy stance has been "aimed at restraining demand and anchoring inflation expectations." Defending the "baby step" approach to deal with inflation, the RBI chief said it was necessary "to allow time for the banks and the private sector to adjust to a higher interest rate environment." He further said, "our baby step approach during 2010 was... a delicate balancing act between supporting recovery at home amidst growing global uncertainty and containing inflation pressures." Baby steps refer to the calibrated approach followed by the RBI to combat inflation; it then hiked interest rates by 0.25% at a time. 

Moneycontrol

Maximum customer complaints against SBI, ICICI: Ombudsman

NEW DELHI: Maximum customer complaints were received against State Bank of India, ICICI Bank and HDFC Bank during 2010-11, said Banking Ombudsman of New Delhi region. Of the total 10,508 complaints received in 2010-11, about 4,500 cases were against SBI, ICICI Bank and HDFC Bank, RBI Chief General Manager and Banking Ombudsman (New Delhi) M Rajeshwar Rao said here today. "The reason for these many complaints against these banks is due to their large number of transactions because of their size," he said.  Pointing out the maximum customer complaints (32 per cent) are card related, Rao said 41 per cent are against the public sector banks in the New Delhi region, which includes Jammu and Kashmir, Haryana (excluding Panchkula, Ambala city and Yamunanagar) and Ghaziabad and Noida in Uttar Pradesh.  As much as 36 per cent of the complaints were against private sector lenders, followed by foreign banks at 15 per cent, he added. The number of complaints received during 2010-11 have come down by 13 per cent from 12,613 in the previous fiscal. Most complaints are received from Delhi, followed by Haryana. Banking Ombudsman Scheme, an alternate disputes resolution mechanism appointed by the RBI, deals with deficiency in the services by the bank and 27 services are part of the scheme. 

ET

Burden to combat double-dip recession on central banks : RBI

NEW YORK: Reserve Bank Governor D Subbarao has said that fears of double-dip recession have resurfaced and monetary authorities will have to deal with the global economic problems. The burden of combating recession through monetary stimulus will fall on central banks, Subbarao said while addressing the Stern School of Business, New York University here. "Over the last few months, fears of double-dip recession have resurfaced, and governments in advanced countries are locked in a policy logjam over the balance between short-term fiscal stimulus and long-term fiscal consolidation." "This has willy-nilly pushed central banks to the fore once again as monetary stimulus is having to bear the burden of being the first, and in some cases, possibly the only line of defence against recession," he said. Pointing out that the crisis has been an intellectual challenge in many ways, Subbarao said, "My own experience has been the real world problems are too complex to fit template solution of text books."  Earlier speaking at the IMF meeting, Subbarao had said that "we are rapidly running out of time, and may therefore be running out of solutions".  Fears of renewed economic crisis has been haunting the US, while in the eurozone the sovereign debt seems to be deepening, sending shock waves across the world economy.  He said that both were a big risk by themselves. If both the crises developed simultaneously, it could have a considerable impact through trade, finance and confidence channels. Subbarao is in the US to attend meetings World Bank and International Monetary Fund (IMF) meetings. 

ET

IBA likely to submit comments on pre-payment by Sep-end: RBI

The Reserve Bank (RBI) today said the Indian Banks' Association (IBA) is expected to submit comments by the end of this month on the proposal to do away with pre-payment charges on home loans. "IBA is expected to submit comments on pre-payment by the end of this month," RBI Chief General Manager and Banking Ombudsman (New Delhi) M Rajeshwar Rao said here. After receiving the comments, the RBI will go through it and take a final call on the pre-payment charges on loans taken under floating rates by customers, he said. Earlier this month, the Banking Ombudsmen Conference suggested banks should not impose pre-payment charges on loans with floating rate of interest. It had said banks may also offer long-term fixed rate housing loans to customers. The conference said lenders may address their asset liability mismatch (ALM) issues by taking recourse to the Interest Rate Swaps (IRS) market. "Floating rate loans pass on the interest rate risk from banks, which are much better placed to manage it, to borrowers and, thus, banks only substitute interest rate risk with potential credit risk," the Ombudsmen had noted. The banks will, however, be free to recover or charge appropriate pre-payment penalties in the case of fixed rate loans, it had suggested. Meanwhile, Rao pointed out that the maximum complaints received from customers were card related. He said as much as 41 per cent of total complaints by customers are against the public sector banks in the New Delhi region which includes Jammu and Kashmir besides Haryana. In the region, he said the Ombudsman received maximum complaints against State Bank of India followed by ICICI Bank and HDFC Bank. The total complaints received during 2010-11 stood at 10,508 which is 13 per cent less than in the previous fiscal (12,613). Most complaints are received from Delhi followed by Haryana. Banking Ombudsman Scheme of the RBI deals with any deficiency in the services by the bank and as many as 27 services are part of the scheme.

DH