Discontinuing 25 paise coins is the right decision

RBI has notified discontinuing coins of 25 (and below) from June 30, 2011. It is time that RBI may plan for reducing sizes of other coins of 50-paise and one rupee to reduce minting-cost and to ease burden on pockets. However, two-rupee coins need to be discontinued because usually consumers have either to pay two-rupee coins in place of one-rupee coins, or shopkeepers gives unwanted items like candies etc in place of balance one-rupee coin to be returned. This is because of the fact that currency-chests often forces two-rupee coin-bags because of usual short supply one one-rupee coins. Most people in practice try to get rid of two-rupee coins. Design of bi-colour 10-rupee coins is not proper, and needs to be rectified. It will be better if it may also be attractively designed in a bigger size like single yellow-coloured five-rupee coins. It is time to discontinue printing of currency-notes of rupees five and 10 with more coins of these denominations put in circulation. It will not only save high printing-cost of low denomination notes with much lower life, but also will pave for further saving on currency-printing by reducing sizes of currency-notes of other denominations. It is not understood how and why RBI re-introduced five-rupee notes after they were once discontinued to be printed some decades ago! However, to practically check currency-related crimes like fake currency, black money, cash-loot etc, RBI should follow advanced countries by discontinuing printing of higher denomination currency of rupees 500 and 1000.

RBI fines Bombay Mercantile Rs 5 lakh

The Reserve Bank of India has imposed a penalty of Rs 5 lakh on Bombay Mercantile Co-operative Bank, Mumbai, for violation of instructions and guidelines of the RBI. The bank had violated the group exposure norms prescribed by the RBI by sanctioning 21 loans aggregating Rs 96.20 crore to Shah group of companies between November 17, 2008 and July 18, 2009, as against permitted ceiling of Rs 14.11 crore, the RBI said. The RBI had issued a show cause notice to the bank, in response to which the bank submitted a written reply. “After considering the facts of the case and the bank’s reply in the matter, the RBI came to the conclusion that the violations were substantiated and warranted imposition of the penalty,” the RBI said.

RBI mulls new ways for direct information flow from banks

Amid a surge in the number of bank scams, including the recent `400crore Citibank fraud, the Reserve Bank of India (RBI) is considering putting in place a system that will allow it to directly monitor all transactions at various banks. Once in place, the new system will enable complete automation for submission of transaction returns filed by banks to RBI, doing away with the need for manual intervention. RBI has begun the consultation process for implementing the new system, which could require banks to upgrade their computer hardware and software solutions, according to asenior official. Although the submission of transaction reports is already an automated process, it involves at least four steps that involve manual interventions. Currently, banks receive information from their various branches, then integrate the data and store it, followed by data conversion and then data submission to RBI. According to the proposed move, the entire data flow will be completely automated and will help banks in terms of enhanced data quality, timeliness, and reduced costs, besides a direct oversight by RBI for any possible fraud. Frauds in the banking sector had hit a record high of `2,017 crore in 2009-10. A fraud case, reportedly involving `400 crore, came to light last week. The police arrested a senior official at aCitibank branch in Gurgaon.  The new system will enable complete automation for submission of transaction returns filed by banks to RBI.

Extension for LIC chief? A test case for govt

When TS Vijayan, now the longest serving chairman of LIC, was appointed to the post in May 2006, he was given a five-year term till May 2011. At 53 then, he still had seven years to retire from the government-owned life insurer. Now very soon the government will have to take a call whether to give him another two years at LIC, make some other arrangement or let him retire two years before the prescribed age for superannuation. On Vijayan’s part, he has to overcome the taints from the recent scam that hit LIC as well as LIC Housing Finance, a subsidiary of the insurance major. For the government, Vijayan’s case will also be a test case since chiefs of two other PSU banks—MV Nair at Union Bank and KR Kamath at PNB—are also in a similar situation.