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Wednesday, November 30, 2011
Catholic Syrian Bank adopts 91 Eco Clubs
Karnataka Chief Secretary wants banks' panel to be more effective
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Satisfactory performance : (From left) Mr S.V. Ranganath, Chief Secretary, Government of Karnataka, Mr Basanth Seth, Chairman, SLBC and CMD, Syndicate Bank; and Ms Uma Shankar, Regional Director, RBI, at the State Level Bankers’ Committee meeting at Vidhanasoudha in Bangalore on Tuesday |
Bangalore, Nov. 29: The Karnataka Chief Secretary, Mr S.V. Ranganath, has called for strengthening the State-Level Bankers' Committee (SLBC) to be more effective in delivering services to both the Government and the public. Addressing the SLBC meet, Mr Ranganath said, “SLBC should regularly monitor various sub-committees and report the out comes to the Chief Secretary or Development Commissioner.” “When this reporting is done to the Chief Secretary or Development Commissioner on a regular basis, automatically attendance in all sub-committees will improve and the outcome is better,” he added. The SLBC should be more active and it is the duty of the convenor to report non-performance of sub-committees for effective monitoring before the quarter meetings. The main reason for strengthening SLBC is due to steep fall in vital parameters such as CD ratio, lending to agriculture sector and to Scheduled Castes/Scheduled Tribes in the State. “When States like Tamil Nadu and Andhra Pradesh have achieved 100 per cent in CD ratio, then why the State lagging behind is and the main reason is lack of monitoring by respective sub-committee,” he pointed out. Mr Basant Seth, Chairman and Managing Director, Syndicate Bank and Chairman- SLBC, in his address said the progress made under FI is in tune with the SLBC for the current fiscal, ie, FI and credit flow to agriculture, a focused attention needs to be given to these two areas and the set goal need to be achieved positively. As of October, banking services have been provided to 2,639 villages out of 3,395 unbanked villages identified, in the population group of over 2,000, thereby, accounting for 78 per cent achievement. “The performance by and large has been satisfactory. However, there is a need to hasten the pace so that the remaining 756 villages are covered by March 2012,” he added. He also said that five regional rural banks (RRBs) are yet to cover 330 villages out of uncovered villages and reiterated the sponsor banks to handhold them to accomplish the task. While reviewing the performance of banks in the State as on September 2011, Mr Seth informed that the aggregate deposits stood at Rs 3,58,474 crore while aggregate advances was Rs 2,66,315 crore with a credit deposit Ratio of 74.29 per cent. The advances to priority sector stood at Rs 1,12,346 crore, constituting 42.19 per cent of credit, surpassing the RBI stipulation of 40 per cent. Similarly, the advance to agriculture sector was Rs 49,233 crore comprising 18.49 per cent of the total credit, which is above the stipulated level of 18 per cent. Advances to the MSME sector stood at Rs 43,945 crore. More than five lakh new farmers have been assisted by lending to the tune of Rs 3,781 crore. Under secondary and tertiary sectors, disbursement was to the tune of Rs 5,283 crore and Rs 6,619 crore respectively.
HBL
Maharashtra tops fake note haul with 85% of total seizure
... Government on Tuesday informed the Lok Sabha that the Reserve Bank of India (RBI) and state police had recovered fake Indian currency notes (FICN) worth over Rs 81 crore in Maharashtra out of total Rs 96 crore till October.....
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For 6 yrs, govt dragging its feet on law to protect depositors
. Not only gold, but dubious schemes including investments in sheep and land had also been rolled out by companies. To curb such activities, the Reserve Bank of India Act was amended and DNBS was created. The department was entrusted with the responsibility of conducting meetings with state governments and authorities and urging them to bring an act in their respective states.....
Customer service at banks—a step forward -
..there is a need to standardise certain critical systems and procedures to ensure a paradigm shift in the way in which banks function today by harnessing technology to the maximum extent and the BCSBI can play a pivotal role in achieving this objective...........
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HC stays CIC's order asking RBI to give information about bank
New Delhi: The Delhi High Court on Tuesday stayed an order of Central Information Commission (CIC) asking RBI to provide copies of its inspection reports about a bank to an information seeker under the transparency law. Justice Vipin Sanghi also issued a notice to information seeker Jayantilal Mistry and stayed the operation of CIC's order asking Reserve Bank of India to reveal inspection reports of Makarpura Industrial Estate Cooperative Bank Ltd under the Right to Information Act. The court's order came on a plea of RBI filed against the direction of CIC saying a single bench of the transparency panel cannot disregard the order passed by its full bench. Senior advocate T R Andhyarujina, appearing for RBI, said the CIC order was passed "erroneously" since it was against the decision of its own full bench which had held that RBI was entitled to seek exemption from disclosure of inspection reports under the RTI if it was satisfied that such revelation would adversely affect the economic interests of the nation. He said, "If the wisdom of (Information) Commissioner finds the finding of the full bench was wrong, he should have referred the matter to the full bench." Seeking setting aside of the order, he said the CIC's order has widespread ramifications for the banking system and that it was also against the interests of cooperative bank concerned. He submitted the disclosure of inspection reports of RBI as part of its statutory duty would lessen faith of public in the banks and the banking system. Mistry had sought copies of inspection reports of last 20 years of the co-operative bank. The information seeker had also sought the names of persons who had inspected the records and details of action, if any, taken against it. Justice Sanghi, however, questioned RBI's counsel asto "why should the citizen not know that whether a bank they are banking with was in a healthy or unhealthy (state)." Andhyarujina responded by saying it was considered by the full bench of CIC while holding that RBI could claim exemption from disclosure of inspection reports. The information sought by Mistry was denied by the CPIO. However, a single bench of the commission had directed RBI to provide the information sought by the applicant by November 30. The Indian Banks Association had also sought to be heard in the matter, but was asked by the court to file its response. The court listed the matter for further hearing on February 13.
Zee News
Through thick and thin
The report on Annual Financial Inspection (AFI) – the karwa sach (bitter truth) note on banks prepared by the Reserve Bank of India – is slimmer by 70 to 75 pages from the previous 100-odd. Here are some reasons, according to a central banker:
* If an AFI report is 100 pages, the bank concerned should not survive.
* In any case, no bank chief takes it seriously and rarely reads it fully, so it is better to save costs by printing fewer pages.
The buzz is that bankers are no longer taking the slimmed-down 25 to 30 page report as casually as they did its thicker predecessor.
BS
Is RBI to blame for microfinance industry’s woes?
...A lack of regulation has only exacerbated the other problems of the $5.3 billion industry, which was once touted as a savior of the “poorest of the poor”.....
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RBI often takes recourse to open mouth operations
.... Central bankers across the globe are renowned for their gobbledegook. So is the RBI. But what made Gokarn tell the world in clear terms that India is on a weak wicket? Was that a deliberate attempt to push down the overvalued Indian rupee, in terms of the real effective exchange rates? Or is it a way to curb demand, where the depreciating rupee makes imports expensive. This is the flip side of the argument.
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Sporadic measures
This refers to the report “Finmin diktat sets stiff targets for PSU banks” (November 28). As an owner, the government’s anxiety to ensure that public sector banks (PSBs) meet its expectations with regard to performance is understandable. But setting up almost uniform levels for achievement under several parameters in which different banks have varying competencies may not bring the desired result. Forcing memorandums of understanding (MoUs) will add pressure on the top management. It may also encourage unethical practices, if one would agree that financial products are different from other consumer products and marketing in the financial sector cannot be compared with buying and selling consumer articles. The finance ministry, at this late stage, should think in terms of (a) encouraging individual banks to do business in areas in which they are better equipped and have a competitive advantage in terms of outreach; (b) redefining the role of various categories of banks considering their background, skills and capabilities; (c) and involving the regulator, the Reserve Bank of India, for conveying the government’s expectations, so that multiplicity of guidance is avoided. Sporadic efforts like the present one will only destabilise the financial sector.
M G Warrier, Mumbai (BS)
Finance Ministry wants to cut banks' IT spend
........With regards to standardisation of IT requirements, bankers said this could make it easier for the banking regulator Reserve Bank of India to supervise banks since they will be able to pull the data from banks' server and also receive it in a common format......
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A crisis is a time to take stock
Moving beyond desperate liberalization, authorities could engage in somber introspection at this inflexion point.....
- Renu Kohli (New Delhi based macroeconomist and former staff member of the International Monetary Fund and the Reserve Bank of India)
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Banks can now open branches in Tier 2 cities without RBI nod
Mumbai: Reserve Bank Tuesday relaxed branch authorisation policy, allowing banks to open administrative office or service branch in cities with population of over 50,000 but less than 1 lakh without its approval. "Now that general permission to banks has been extended for opening of branches in Tier 2 centres, domestic scheduled commercial banks (other than RRBs) will be allowed to open administrative offices and central processing centres (CPCs) or service branches in Tier 2 centre (with population 50,000 to 99,999 as per Census 2001)," the RBI said in a notification. Thus, a bank can open such offices in the Tier II cities without permission from the central bank. The decision was taken as it was observed that branch expansion in Tier 2 centres has not taken place at the desired pace, it said. As per the existing regulation, such relaxation is already available to banks in case they want to expand their presence in Tier 3-6 cities.
Zee News
Cooperative banks in the city safe, now
NAGPUR: Depositors in urban cooperative banks (UCBs) in city may rest assured of the safety of their money - at least for now. After prolonged financial crisis resulted in three cooperative banks in city being shut down causing huge loss to depositors, Reserve Bank of India (RBI) has declared finally there is no cooperative in the city having a negative networth. This means no bank faces a fate similar to Nagpur Mahila, Samata Sahakari and Parmatma Ek Sevak, which have been de-licensed and facing RBI embargo on withdrawals for more than three years. Moreover, this situation is not because the weak banks have been wiped out. It is because banks have over time shown consistent improvement in financial parameters, said a source in apex bank. Negative networth means the banks' losses are more than its owned funds that include share capital and profit reserves. The situation has improved in banks within Nagpur RBI office jurisdiction that covers Vidarbha and Marathwada. There were 22 banks with negative networth in March 2009. The number was halved by March 2011. It came down to eight in October 2011. A couple more are likely to come out of the red soon, said a source. None of the eight banks still in the red is from Nagpur.
TOI
Saraswat Co-op ups savings bank rate to 6%
Urban co-operative banks could be spurred into action as the country's largest co-operative bank, the Saraswat Co-operative Bank, has taken the lead in announcing a hike in savings bank deposit rate from 4 per cent to 6 per cent. The effective annualised interest rate for Saraswat Bank's SB depositors will work out to 6.14 per cent as interest will be credited at quarterly intervals. Irrespective of the deposit amount, the UCB will pay 6 per cent interest on all SB deposits with effect from December 1. The bank may revise the interest rate on SB deposits once in six months. The increase in interest rate on SB deposits by the co-operative bank comes in the wake of Reserve Bank of India's notification (on November 25) allowing UCBs the freedom to set the interest rate on SB deposits. On October 25, the central bank had deregulated savings bank deposit interest rate for all commercial banks. “In the current rising inflation rate environment, bank depositors are getting a raw deal. Hence, we decided to increase the interest rate on SB deposits. Our intention is not to wean away customers from other banks but to give a better deal to our existing customers,” said Mr Eknath K. Thakur, Chairman, Saraswat Co-operative Bank. According to Dr Vinayak Y. Tarale, Secretary, Maharashtra State Co-operative Banks' Association, following the increase in SB deposit rate by Saraswat Bank, other urban co-operative banks may not have much choice but to follow suit.
HBL
Savings account freedom fails to excite most banks
In a month since the Reserve Bank of India (RBI) freed the interest rates on savings bank account, only a few small banks have been able to take advantage of the policy change. Most of the big banks have remained uneffected..........
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Govt launches 10-year NSC; to give 8.7 pc interest
...The decision to raise the maturity period of NSC has been taken on the basis of the recommendations of the Committee for Comprehensive Review of National Small Savings Fund (NSSF), headed by Shyamala Gopinath, the then Deputy Governor of Reserve Bank of India....
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Now, electronic transfer of grants and subsidies
........The implementation of the project was discussed by the Collector at a meeting on Thursday in which Reserve Bank of India (RBI) Assistant General Manager A.J. George, Lead District Manager KN. Subramanian and other senior officials took part.
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Experts see reversal of RBI rate-hike spree
...“If we do see inflation rates coming off as we expect, we could be looking at the peaking of the cycle,” said RBI deputy governor Subir Gokarn last fortnight, referring to the monetary authority’s policy outlook. “Let me emphasise it’s a guidance, not a commitment. There are many risks to that scenario.”.....
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RBI helped rein in inflation: FM
The Centre, on Tuesday, said it has pursued prudent fiscal measures to boost slowing Indian economy, but strongly defended Reserve Bank of India’s monetary stance to tame inflation, saying price rise would have been much higher if the rate hikes were not resorted to. The unfolding euro zone crisis and slowdown in US could be one of the reasons for India’s growth slowing, but economic fundamentals are strong…The government is keeping a close watch on the situation,” Finance Minister Pranab Mukherjee told the Rajya Sabha in a written reply.India’s overall economic growth slowed to 7.7 per cent in the April-June quarter against 8.8 per cent in the same quarter last year. Economic experts have blamed persistent inflation, repeated monetary tightening, together with deceleration in of industrial production as the factors responsible for slower growth in the first quarter. They said the global economic environment, particularly the lingering euro zone crisis, has added uncertainties.The government, however, said that it was the monetary action by the RBI, which has have helped contain inflation and anchor inflationary expectations, although both remain at an elevated level. “In the absence of increase in Repo Rate by RBI, inflation would have been much higher and credit growth would have expanded much faster, thereby fuelling inflation,” Minister of State for Finance Namo Narain Meena said. The government’s defence for RBI has come at a time when the Central bank has almost been isolated in its fight against inflation, which hovered precariously close to 10 per cent, one of the highest among major economies in the world. The RBI, which has raised key short term rates as many as 13 times in the past two years, has been facing stiff opposition from many quarters for its hawkish stance. The India Inc. has criticized the rate hike saying it is unlikely to tame rising inflation and could instead lead to further slowdown in investments and industrial growth. Some of the policymakers too have expressed their reservation towards further tightening of rates when the economy is facing global headwinds.
DH
Tight liquidity limits RBI role in forex market
Market talk suggests that the Reserve Bank of India stepped into the foreign currency market on Monday to check a steep fall of the Indian currency, but it could not prevent it from closing at an all-time low. Executives manning some of the largest treasury operations in India said RBI has been intervening in the currency markets for the last few weeks, something it had refrained from doing for nearly a year when the rupee hovered in the 44-45 range to the greenback. Just like during the height of the global financial crisis in September-October 2008, RBI Governor D.Subbarao has limited ability to dictate how the rupee moves this time too. Whenever RBI asks banks to step in on its behalf, the public sector players supply more dollars into the market, hoping that they would stem a decline. During this exercise, they also buy rupees from the market and end up reducing the supply of the Indian currency. So, with less cash available in the system, there is every possibility that interest rates, even if it is in the short-run, rise. Given that liquidity is tight with banks borrowing over Rs 1.27 lakh crore through RBI's overnight lending window, the central bank would not like to drain more cash from the system. While RBI remained silent on Monday, the government acknowledged that the authorities had limited ability to intervene and stem the rupee's slide. "The rupee cannot slide beyond a point. Ability to intervene (in the forex market) is also limited," economic affairs secretary R Gopalan told reporters.
TOI
RBI to conduct another OMO of R10,000 cr to ease liquidity
...The OMO announcement came after the market trading hours. “Consistent with the stance of the monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank of India has decided to conduct open market operations, ” the central bank said in a statement on Tuesday.....
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Tuesday, November 29, 2011
Use mobile telephony to expand banking in rural areas: Rangarajan
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Dr C. Rangarajan, Chairman, Prime Minister’s Economic Advisory Council, flanked by Mr Anand Sinha (right), Deputy Governor, RBI, and Mr S. Sambamurthy, Director, Institute for Development and Research in Banking Technology, at the IDRBT Foundation Day in Hyderabad on Monday |
Hyderabad, Nov. 28: Banks should piggyback on the mobile telephony platform to provide banking services to rural households, said Dr C. Rangarajan, Chairman, Prime Minister's Economic Advisory Council. Delivering the Foundation Day lecture on role of technology in development of banking at the Institute for Development and Research in Banking Technology (IDRBT) here on Monday, he said over 700 million mobile connections could be used for authentication and conducting banking transactions. Mobile banking has huge potential and the stakeholders need to collaborate much more proactively for common benefit. Saying that technology provides the scope for affordable financial inclusion, Dr Rangarajan said: “The best way offered for inclusive banking would be through the twin-routes of mobile banking and the banking correspondent model.” The technology should also be harnessed to increase electronic transactions as against paper-based clearing. Banks should develop in-house IT skills and broaden the IT management to achieve consolidation and minimise costs, he said. To ensure continuity of services and safety of data in times of unexpected crises, banks should put an adequate business continuity plan for technology-related matters, Dr Rangarajan said. Mr Anand Sinha, Deputy Governor, Reserve Bank of India, and Chairman of IDRBT, said the institute was focussing on applied research and use of analytics and customer-relationship management in banking. “IDRBT can function as a centre of excellence in developing cost-effective technology for banking and look for collaborative research projects,” Mr. Sinha said. The emerging technology such as cloud computing could be used by a group of smaller banks to reduce costs, he said. Mr B. Sambamurthy, Director of the Institute, said collaborative research with reputed institutes such as University of Hyderabad was one of the focus areas. IDRBT, which is celebrating its 15th anniversary, had developed many technology- based applications for banks, including the national financial switch, structured financial messaging system for communication between banks.
HBL
Swaps Signal Subbarao Reversal as Slowdown Deepens: India Credit
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Check antecedents of business correspondents before hiring, RBI tells banks
Hubli, Nov. 28: Banks should ensure that business correspondents (BCs) be appointed after exercising due diligence regarding their antecedents and necessary training given to them, said Ms Uma Shankar, Regional Director, Reserve Bank of India. Addressing the regional heads of banks and bankers operating in north Karnataka, State Government officials and NGOs, Ms Shankar said the banks should monitor activities of BCs by conducting frequent visits and analysing audit trail. Banks should also work on setting up some form of low-cost brick and mortar branches i.e., intermediary branches, between the base branch and BC locations. She complemented the SLBC for setting up of the Karnataka State Farmers’ Resource Centre (KSFRC) with active co-operation and participation of 10 banks and other stakeholders, which include the State Government. Ms Shankar, later attending horticultural mela, organised by the Horticulture University, Bagalkot, told the audience on various initiatives taken by the RBI on financial inclusion front such as ‘Project financial literacy’ and release of comic book series such as ‘Raju and Money Kumar series’ to create awareness on financial literacy amongst the students and common people. She also attended a workshop of SHG members and small entrepreneurs, organised by Karnataka Vikas Gramin Bank (KVG Bank).
HBL
Govt banks' top deck reshuffles on the cards
Large public sector lenders like Bank of Baroda, Bank of India and Canara Bank and mid-sized lenders like Allahabad Bank and United Bank of India would see their chairmen and managing directors (CMDs) hanging up their boots in the next financial year. Along with the CMDs, five-six executive directors would also retire or be promoted as CMDs in the next financial year. The government has already initiated the process of filling up the top posts. The government has asked banks to furnish the details of general managers who would be eligible for promotions. A general manager who has held the post for three years and has two years of residual service would eligible for promotion. The government follows the process of lateral transfer for CMD appointments in large government banks, though there were exceptions in the past. This would mean current CMDs of smaller banks would be given charge of Bank of Baroda, Bank of India and Canara Bank. In the case of Allahabad Bank and United Bank of India's top jobs, executive directors would be promoted. Candidates who completed one year in a bank as an executive director, with two years of residual service, are eligible for promotion. Among current CMDs of smaller banks, Arun Kaul of UCO Bank, T M Bhasin of Indian Bank and M Narendra of Indian Overseas Bank would be eligible to take charge of a large bank. A candidate of a smaller bank needs to be a CMD for at least a year to be eligible for the CMD’s post of a large bank. The government would also conduct interviews for selecting a managing director for State Bank of India, which has a provision for four managing directors. It currently has three. Three deputy managing directors, Shyamal Acharya (associates and subsidiaries), Arundhati Bhattacharya (corporate development) and Santosh Nayar (corporate banking), would appear for interviews for the post of managing director, along with S Vishvanathan, managing director and chief executive officer of SBI Capital Markets. SBI sources said the selection of the fourth managing director was important, as the candidate would be a contender for the chairman's post once the term of current chairman P Chaudhuri ended in September 2013. The other three managing directors would not be eligible, since they would not have two years of residual service.
BS
PSU banks: Should govt set profit targets for them?
...The finance ministry wants banks to lift their return on assets (RoA) to 1.5 percent by 2015 from 0.96 at end of 2010-11. One way of improving the RoA is to reduce bad loans. However, the RBI wants banks to pass on the benefit of reduced bad loans in the form of lower interest rates for borrowers....
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RBI restraint on forex mkt was credit-positive
In the absence of interim dividend receipts, government has to look at alternatives to achieve 4.6% fiscal deficit. The Union finance ministry is banking on dividends from cash-rich central public sector units (PSUs), financial institutions and even the Reserve Bank of India (RBI) to prevent its finances from going awry. It is asking all these bodies to pay a higher dividend to tide over its lack of money. The move is in contrast to a trend in the private sector, as companies are likely to pay less dividend this financial year to shareholders than in 2010-11. The Budget estimate for revenue in 2011-12 from PSU dividends and financial institutions is Rs 42,623 crore, lower than the revised estimate of Rs 48,727 crore for 2010-11. However, the ministry is expecting a higher payout, especially from RBI. Of Rs 42,623 crore, Rs 23,494 is budgeted from PSUs and Rs 19,129 crore from RBI, nationalised banks and financial institutions. “We are talking to them to pay dividends on higher side. Ultimately, the decision will be taken by the boards of these institutions,” said a ministry official. As the government is a majority shareholder, it benefits when government institutions declare higher dividend. In June, the finance ministry had asked all these bodies to remit their dues correctly. It started monitoring the payouts well in advance, unlike earlier years, and asked them to strictly adhere to the prescribed guidelines on payment of dividends. These rules say all profit-making PSUs should declare a minimum dividend of 20 per cent of net profit or equity, whichever is higher. The minimum dividend payout for companies in oil, petroleum, chemical and other infrastructure sectors is 30 per cent. Many PSUs, however, deviate from the guidelines and pay less dividend. In the absence of interim dividend receipts, the government has to look at alternatives to augment tax revenue, other non-tax revenue and non-debt capital receipts, to achieve the fiscal deficit target. The government’s revenue under the ‘dividend and profits’ head was Rs 21,230 crore in 2002-03. It was Rs 38,607 crore in 2008-09 and Rs 50,248 crore in 2009-10, when the economy was slowing. The government had pinned hopes on dividend income, as it was facing a cash crunch due to the measures taken to come out of the slowdown. On the other hand, the aggregate dividend payout by corporate India may be lower in 2011-12 than in 2010-11. Only 75 companies had declared an interim dividend in the first half of the current financial year, as compared to 107 in 2010-11. Dividend payouts by PSUs and financial institutions could be a substantial source of non-tax revenue for the government, at a time when it is trying to restrict its fiscal deficit to 4.6 per cent of the GDP.
BS
Bad loans have seen a sharp rise over the last three years
... Studies have shown that NPA growth lags bank credit growth by two years as it takes time for the excesses during a credit boom to turn into bad loans. According to the Reserve Bank of India (RBI), if 25% of restructured advances turn into NPAs, the gross NPA ratio would be 3% and if 100% turn into NPAs, then the ratio would be 5%.....
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ED issues show-cause notices to BCCI, SBT
... ED found that BCCI did not receive RBI approval to transfer money to the account in South Africa though SBT. SBT did not follow the required due diligence process before executing the transfer when the lender was supposed to verify RBI clearance and the end use of funds, said the ED official cited earlier.....
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‘Bank on Wheels’ launched in Meghalaya
Shillong : The State Bank of India on Monday introduced “Bank on Wheels” in Meghalaya to provide banking facilities to its customers and especially to 4,500 unbanked villages in the State. The programme, as part of financial inclusion plans of the Central government and Reserve Bank of India, was launched by SBI managing director A Krishna Kumar at a function at SBI main branch premises here on Monday morning. Meghalaya Rural Development Society (MRDS) will operate the “Bank on Wheels” for SBI in implementing the project and motivate people in unbanked villages to open bank accounts. Established to oversee mobilization of Social capital, MRDS is implementing livelihoods programme in five districts of the state - Ri-Bhoi, East Khasi Hills, Jaiñtia Hills, East Garo Hills and South Garo Hills. “The bank on wheels will go to interiors with the help of MRDS to motivate people to open bank accounts. There’s no specific target, but will try to cover at least five villages in a week and try to contact as many people as possible,” SBI managing director A Krishna Kumar said. Kumar said a total number of 662 unbanked villages were allotted to SBI to be covered with March 31 next year and already 496 villages were covered. “Opening of bank accounts will be very simple for the customers (villagers) and they would only need to produce a certificate from the headman along with photographs,” he said MRDS Chief Executive Officer Robert Garnet Lyngdoh said the banks on wheels will initially cover villages under Saipung block in Jaiñtia Hills and later the services will be replicated in other districts. “We will motivate villagers to open bank accounts with SBI at zero balance or no frills account. Kisan Credit Card will be provided to farmers who opened their account in order to avail small loan from the bank,” Lyngdoh said. The ‘Bank on Wheels’ will tour villages in the area and the main target to motivate villagers to open ‘no frills accounts’ is on market day, he added.
Nagaland Post
HC quashes case against retired judge
Chennai : The Madras High Court has quashed a case against a retired high court judge relating to alleged flouting of RBI guidelines by a finance firm in which he was a director after his retirement from judicial service. Allowing the petition by G Ramanujam seeking quashing of the case, Justice A Arumughaswamy said from a perusal of the records it was clear that the petitioner had resigned before the alleged violation of the RBI rules and the resignation had also been accepted by the Registrar of Companies. The judge was of the view that the petitioner was in no way concerned with the complaint and quashed the proceedings against the retired judge pending before the Additional Chief Metropolitan Magistrate, Economic Offences I. In his petition, Ramanujam submitted that he had a distinguished tenure as a judge of the court for 16 years from 1969 and after retirement in 1985 he was appointed a director of Viswapriya Financial Services and Securities Limited. Due to his failing health, he resigned from the company on December 25, 2008 which was accepted by the board. Charging five of the company's Directors, including the retired Judge, with offences under the RBI Act, the RBI in a complaint said the firm on February 5, 2009 had published an advertisement offering 'generous returns' on investments. The former judge contended he had submitted his resignation which had been accepted by the Registrar of Companies on January 30, 2009 itself before the advertisements were published.
HBL
Don't mess around with rupee: RBI tells banks
MUMBAI: Stop messing around with the rupee"- a message from the Reserve Bank of India (RBI) that's slowly but surely beginning to reach banks. At a weekend meeting in Kochi, senior RBI officials told leading banks to refrain from unbridled currency speculation and misusing open positions which can add more volatility in a choppy market. Bankers fear that the RBI may tighten rules to curb speculation if banks don't fall in line. The regulator hinted that it was aware which banks were building what kind of trading positions and if necessary the RBI may take a relook at the net open positions that each bank is allowed to run. Trimming the net open position (NOP), or the net dollar position that a bank can hold overnight after obtaining RBI's approval, can severely curb a bank's trading bets. "It's one thing for a bank to buy dollars today for a customer who needs it tomorrow morning. It's another thing to run long dollar simply to trade," said a banker present at the meeting. The rupee has fallen by more than 17% against the dollar since Standard & Poor's downgraded US credit rating in August. But on Monday, the domestic currency gained from its Friday closing of 52.23 against the dollar to close the day at 51.96 -an exchange rate movement that can be partly attributed to the weekend meeting. Bankers admit that the rupee's fall against the dollar in the past few months has tempted quite a few treasuries to short the local currency. Besides buying dollars under the NOP limits, some of the MNC banks have carried out arbitrage deals between the onshore market and the offshore dollar-rupee market, better known as the non-deliverable forward (NDF) market. In such trades, a bank may sell a month forward in the local market and buy onemonth forward in the NDF market to lock in the gain. The RBI team, led by Deputy Governor H.R.Khan, indicated that the central bank may tweak its policy for arriving at the daily dollar-rupee reference rate. The proposed move may make it difficult for currency traders to make a killing in NDF trades which are settled against the reference rate.
ET
Rise of rupee unlikely to sustain, says Moody’s
...The inflation risk notwithstanding, the report appreciated the Reserve Bank of India's (RBI) restraint in its intervention in the foreign exchange markets. The analysts said, “The monetary authority’s decision not to spend large quantities of international reserves to support a higher rupee over the past three months is credit positive.”...
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Thank god the cool-headed RBI isn’t propping up the rupee
The rupee’s sharp fall of recent weeks against the US dollar has been arrested – and even marginally reversed — this morning by an improvement in risk sentiment. News of a likely loan lifeline from the IMF to Italy, and of a larger rescue mechanism, have buoyed up investor sentiment and the rupee, which had been battered by the avalanche of bad news out of Europe in recent days. The turnaround in sentiment has come not a day too soon, since the chorus of voices demanding an intervention by the RBI to prop up the rupee was becoming a little too loud and a little too shrill. In UBS economist Jonathan Anderson’s theatrical characterisation, the rupee is a “drama queen”, given to hysterical excesses and dramatic flailing of limbs. The RBI had indicated that while it would step in during periods of excessive currency volatility to smoothen things out, it wasn’t about to prop up the rupee. That principled position, based on pragmatic considerations of the market situation, wasn’t always appreciated. The rupee’s slide of recent days was, as Firstpost argued here, largely a function of the heightened risk aversion (and a flight to the relative safety the US dollar) although some elements of India’s deteriorating macro economy were also to blame. We had said then that once the hysteria over Europe abated, the rupee would turn around, even if it doesn’t quite leap back to its earlier values. That view, and the RBI mandarins’ cool head when all around them were losing theirs, has been borne out by today’s trend reversal. Rating agency Moody’s too has commended the RBI’s “restraint” – that is, its unwillingness to intervene in the currency market – as “credit-positive” for India. The agency’s chief India sovereign rating analyst Atsi Sheth notes that that the RBI had, rather than aggressively selling dollars to reverse the rupee’s depreciation, limited its intervention to periods of extreme volatility. For sure, a falling rupee brings bad news. “The immediate effect of a falling rupee is clearly negative for unhedged importers and borrowers in foreign currency,” points out Sheth. “Moreover, it raises the government’s petroleum products related subsidy burden, widening an already high fiscal deficit.” And the currency depreciation was also further adding to inflation, which was already above 9 percent. Yet, the RBI authorities’ decision “not to spend large quantities of international reserves to support a higher rupee over the past three months is credit positive for two reasons,” reckons Sheth. First, an intervention would have used up foreign exchange reserves — without meaningfully reversing the depreciation, since global risk aversion and India’s widening current account deficit would have forced the rupee to fall further against the dollar despite the intervention. Second, notes Sheth, effective globalisation requires market participants to adjust their investment, consumption and borrowing plans according to the availability of foreign capital and import costs. Over the past few years, external borrowing by Indian firms has risen significantly in response to the differential between higher domestic and lower foreign interest rates. Foreign borrowing has also funded rising imports. The recent currency depreciation highlights that exchange rate risk, along with interest rate differentials, ought to be incorporated into private sector decisions about external leverage. If the RBI had authorised the use of official foreign exchange reserves to maintain the exchange rate at a level higher than dictated by market forces, they would have assisted importers and foreign borrowers — at the expense of exporters and domestic producers competing with imports, reasons Sheth. This would have delayed or distorted private sector adjustment to global market signals. In her estimation, currency depreciation would ultimately force an adjustment by making imports more expensive and exports cheaper – and thus help narrow the current account deficit over the next few quarters. Of course, if inflation in India remains higher than in its trading partners, it would limit the extent to which a rupee depreciation would enhance Indian export competitiveness. In any case, the anaemic growth projections to the global economy paint a rather tepid outlook for export growth. The RBI’s other actions intended to arrest the steep decline in the rupee – such as the relaxation of capital controls, and the raising of caps on interest rates on non-resident Indian depots, on commercial borrowings and on foreign participation in domestic bond markets – would help support the rupee, or at any rate check its precipitous decline of recent days. Yet, it’s hard to see a sustained appreciation of the rupee so long as the current account deficit widens and global risk aversion remains high. There’s nothing to say that the rupee won’t slide back if eurozone panic is accentuated again in the event the the rescue plans don’t materialise in the manner that they’ve been announced. But today’s trend reversal in the rupee’s value, however minuscule, validates the RBI’s stand on the underlying reasons for the rupee’s slide, and the fact that panicky intervention — of the sorts that some commentators had sought -would have only compounded the problem. Perhaps it’s time for the back-seat drivers to mute their commentary — and allow RBI honchos to get on with what is decidedly a challenging task in a volatile environment…
Firstpost
'World prices, not rupee to hit inflation'
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The rupee, a mirror for india
....The weakness of the rupee is justified, unfortunately. In general, people hold a currency for its purchasing power. Inflation erodes that purchasing power. Persistently high inflation gives rise to expectations of depreciation of a currency that becomes self-fulfilling. The process by which this happens is beyond the scope of this 800-word column and can be found in elementary international economics textbook.....
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RBI rupee stance bags Moody's thumbs up
Read......."Had authorities used official reserves to maintain the exchange rate at a level higher than dictated by market forces, they would have assisted importers and foreign borrowers at the expense of exporters and import-competing domestic producers," Moody's noted.....
Preventing volatility
RBI should adopt a more proactive stance in the currency market
... Should the RBI use the policy tools it commands, and revert to the dirty float by targeting a more predictable band around REER once again? As things stand, the advantages could outweigh the disadvantages.....
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Wanted: An interventionist RBI
...Going by the decades-long policy, RBI should have tacitly intervened at least through June and July to pull down the rupee, since in real terms the rupee wasn’t at 44 by July end but probably 42. The big September trade deficit in this ....
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Monday, November 28, 2011
Caught between a weak rupee and a system starved of cash
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HDFC Bank, Vodafone India launch mobile banking product for rural coverage
He said, “It's the upper echelons of society who are using mobile banking now. We want the poor also to benefit, especially those in remote villages.” .....
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HDFC Bank-Vodafone venture: Who is to supervise?
Who will supervise the HDFC Bank Vodafone joint venture, asked a reporter? Mr Aditya Puri quipped that the RBI would supervise HDFC Bank and HDFC Bank would in turn supervise Vodafone. Dr Chakrabarty clarified that the RBI as the bank's supervisor would hold it responsible for Vodafone adhering to all the relevant guidelines of the RBI.
Sharing the cake!
What is the sharing of revenue/fees between Vodafone and HDFC Bank? Mr Puri's response: “We can't share the cake unless it is broken. So first, let us break-even and then we'll think of how to share the revenue.”
Alert to the threat from competition
When a reporter asked Mr Sood of Vodafone whether they had entered into a similar tie-up with another leading private sector bank, Mr Puri was quick to seize the opportunity. To everyone's amusement, he encouraged the reporter, “Ask him again. We also want to know!”
Location
The product for financial inclusion was launched at the historic Chomu Palace Hotel at Chomu, 45 km from Jaipur. Chomu Palace is a 300-year-old fort. But its claim to recent fame is as the main location for the shooting of the 2007 Bollywood hit Bhool Bhulaiya, described succinctly on Wikipedia as a ‘psychological thriller comedy horror film'! Apparently the actors in the film who shot in this place for a couple of weeks did see some apparitions. Newspersons were spared the spookiness since the press conference wound up before nightfall! Thankfully.
HBL
RBI cautioned on invest account fraud, banker jailed for 3 yrs
The Reserve Bank of India has been asked by a Delhi court to evolve a proper mechanism to ensure that bank employees do not siphon public money by manipulating customers'' stock investment accounts and other financial instruments. Special judge Anoop Kumar Mendiratta gave this direction while sentencing suspended Syndicate Bank clerk Praveen Kumar Gupta to three years in jail for diverting over Rs 37 lakh to his accounts by fudging various stock investment accounts and other security instruments with the bank over 12 years ago. The court issued directions to the RBI, terming the fact of the case, unearthed by investigative agency during its probe, as "tip of the iceberg". "The mode adopted by the accused for fraudulent multiple encashing of the same instrument despite maintenance of balancing book in the bank calls for deeper analysis as the same could not have been possible but for want of complete lack of supervision or abdication of duties by senior officials," said the court. "Appropriate guidelines need to be formulated by RBI Governor to be followed by all the banks which may work as benchmark to check the commission of frauds in similar schemes. It is necessary to ensure proper conciliation and accountability of banking transactions by the employees in such schemes," it added. The court also ordered for sending a copy of its judgement to the RBI Governor "for compliance". The court direction came in a case involving falsification, manipulation and tampering of stock investment accounts, ledgers and stock invest instruments by Gupta between 1992 and 1997 to siphon off over Rs 37 lakh.
MSN News
Indian Bank sets up self-employment training institute
.....Mr Bhasin said that the financial inclusion movement in the country was initiated by Indian Bank in Puducherry in December 2005, as the National Pilot Project on Financial Inclusion. (Incidentally, the then Chairman and Managing Director of the bank was Dr K.C. Chakraborty, who is today a Deputy Governor in the Reserve Bank of India.)......
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Banks see decline in complaints
....Mumbai: The number of customers who have registered complaints of unsatisfactory service with the Reserve Bank of India (RBI) has fallen in the year that ended 31 March after a sharp rise in the preceding fiscal............
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Be aware of new cheque norms lest it proves costly
The decision of the Reserve Bank of India (RBI) to restrict the time period for the validity of issued cheques and demand drafts will have a major impact on the manner in which people use these instruments. There are a lot of times when the life of the cheque comes to an end..........
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I don’t believe in policy paralysis business, it’s being overdone: Puri
CHOMU (RAJASTHAN): HDFC Bank managing director Aditya Puri is known to speak his mind. Unlike several of his colleagues in the corporate sector, who are bearish on the economy and are blaming government's inaction for moderation in growth, HDFC Bank chief says the fears are overdone. "I don't believe in this policy paralysis business in the sense you can't have 7.5% growth with policy paralysis. It is being overdone. Some industries which have had problems may have had some paralysis but that also if you are not in line with the laws and regulations," he told TOI in an interview on the outskirts of Jaipur. But he does agree with demands that the government needs to boost overall sentiments and suggests that tax policy can be used to contain inflation. "We need decisions on fiscal policy to control inflation, which the RBI has been saying for a while, because if you control only through monetary you are quite likely to bring growth below acceptable parameters. That has ramifications on tax collections, fiscal deficit, on the rupee and on business sentiments. And, it may not, as we have seen, in the full control of inflation."
TOI
India Post launches overseas money transfer
HYDERABAD: Transferring money to India from 190 countries across the world will now become easier through the MoneyGram service launched by India Post. The service will be available at 99 Head Post Offices and Mukhya Dak Ghar across Andhra Pradesh, according to a press release from the department. In India money can only be received from abroad through the service. For transferring the amount, the sender will have to fill up the ‘Send Form’ at the overseas MoneyGram counter and pay the principal amount apart from charges. A special 8-digit reference number will be given to the sender which will be conveyed by him to the payee. For receiving the money, the payee in India has to approach a post office offering the service and fill up the ‘Receive Form’ along with the reference number. To ensure that the amount reaches the right hands, the payee will have to carry a valid photo identification such as PAN card, driving licence, passport, voter ID, ration or Aadhaar card. For a foreign national to receive money in India, the original passport with valid Visa has to be presented at the time of collecting money. The limit on the amount sent through the transaction is US $ 2,500 and the payment will be made in Indian rupees at the prevailing exchange rates. Further, the transaction can be used only for personal remittances and towards remittances favouring foreign tourists visiting India. Trade-related transactions such as purchase of property, investments, donations or contributions to charitable organisations and credit to NRE accounts are not allowed under the scheme.The service operates as per the guidelines of RBI and all KYC/AML/CFT rules of RBI will be applicable. Also, not more than 12 remittances are allowed to be received by a single individual in one calendar year.
IBN Live
FinMin diktat sets stiff targets for PSU banks
.. Bankers say such a diktat is unprecedented and a departure from the practice of allowing banks to decide their own growth path.....
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Opportunities beckon for banks
...Extensive studies conducted by the RBI, using sophisticated techniques, reveal a high degree of interconnectedness among Indian banks. This can make the system vulnerable in the event of failure of one or more banks depending on the degree of interaction.........
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Small savings agents upset
...The government's decision to raise the interest rates and slash agents' commission on a range of popular post-office saving schemes beginning Thursday will make small savings more rewarding for millions, but it has also triggered howls of protest from lakhs of agents whose income depends on selling these products............
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Kerala govt's Shariah finance firm nears start
...The Kerala government-promoted Shariah-compliant Al Barakah Financial Services Ltd hopes to start operations from next fiscal, pending RBI licence for non-banking finance company (NBFC).....
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India urged to buy more gold as reserve value soars
... A working paper by the central bank had advised the Indian government to go in for more purchase of the precious metal……
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Islamic Banking Is the Need of the Hour: Experts
...Even as RBI and government aren't keen on allowing Islamic banking, experts from the world of Islamic finances today said it is a question of "how soon and not whether it will be allowed", as this mode of banking can greatly help a fund-starved country get long-term finances......
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RBI communicates dollar/rupee shift
...It is interesting that the RBI's communications about a somewhat hands-off approach or policy with respect to the dollar /rupee market has not been assimilated well. Be it as it may, it may well pay for the corporate sector to “listen” to RBI communications on this subject more closely in the future. Indeed, the RBI has been quite consistent in stating that it does not target any particular rate level or range for the rupee. This message has been particularly drilled through in the past couple of years at every available opportunity.....
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What ails my rupee
..The Reserve Bank of India’s (RBI) statements that it would not support any particular level of the rupee and will only intervene to stem the volatility in the market has significantly contributed to the depreciation of rupee........
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Sunday, November 27, 2011
23 per cent increase in credit needs expected
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Collector U. Sagayam (left) releases the Potentially Linked Credit Plan at a bankers' meeting at the Madurai Collectorate on Thursday |
The National Bank for Agriculture and Rural Development (NABARD) has projected the credit requirements of priority sectors in Madurai district to touch Rs. 3,489 crore in 2012-13, an increase of 23 per cent compared to the current fiscal in which Rs. 2,847-crore outlay has been prepared in the annual credit plan. The NABARD's potential-linked credit plan (PLCP) for the next fiscal was launched by Collector U. Sagayam at the District Level Review Committee meeting for bankers held at the Collectorate here on Thursday with A.J. George, Assistant General Manager of Reserve Bank of India (RBI), receiving the first copy. According to R. Shankar Narayan, NABARD's Assistant General Manager, the PLCP had taken into account the potential available for development in all sectors and also the infrastructure available for exploiting the potential. It projected that crop loans would increase from Rs. 1,232 crore in the preceding fiscal to Rs. 1,508 crore in 2012-13, which was in tune with the thrust of the Central government. Investment to the tune of Rs. 205 crore was expected to flow into the agro-processing sector. Allocation for non-farm sector has increased to Rs. 448 crore from Rs. 362 crore. Other Priority Sectors, which include transport, retail trade, self employment, housing and caution loan, were expected to require Rs. 1,408 crore against Rs. 852 crore in 2011-12. As per RBI guidelines, the PLCP would be the base document for preparing the Annual Credit Plan of the next fiscal. Addressing the bankers and officers, Mr. Sagayam said that all departments and banks must cooperate to ensure the targets laid out were achieved, and ensure that the credit potential identified in the PLCP was fulfilled. Emphasising on importance of credit to achieving integrated development of rural areas, the Collector also highlighted the need for timely purveying of agricultural credit to small and marginal farmers.
HBL
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