RBI makes Public the Engagement Schedule of its Top Executives

From January 3, 2011, the Reserve Bank of India will place on its website, the public engagement schedule of the Governor and the Deputy Governors. The engagement schedule will include public speeches and outreach activities undertaken by the executives. The initiative is one more step towards demystifying the central bank and the offices of the Governor and the Deputy Governors.

Reserve Bank of India appoints M Sarkar Deb as director of State Bank of Mysore

State Bank of Mysore has announced that Reserve Bank of India has appointed M Sarkar Deb, Chief General Manager, Reserve Bank of India, Department of External Investments and Operations, Central Office, Mumbai as a director on the board of State Bank of Mysore in place of Ratna K Makhija with effect from 03 January 2011 until further orders.

Moneylenders should be out of the system: Dr K.C. Charabarty, Deputy Governor, RBI

The Reserve Bank of India's broad goal for financial inclusion is to ensure that there are only two players in the money-lending spectrum – banks and non-banking financial companies (NBFCs) – in the long term, Dr K.C. Chakrabarty, Deputy Governor, RBI, told Business Line, indicating that moneylenders should be out of the system. “Our broad goal is that NBFCs must capture the moneylenders' customers, and banks should capture NBFCs' customers,” he said. Banks must look at financial inclusion as a viable business, and should cover the six lakh villages that are still un-banked. Though banks have not made a spectacular progress, “there is a definite progress; every day something is happening,” he pointed out. The RBI is working out the eco-system, and “there is still a long way to go,” he added. According to him, 72,000 villages will be covered in the first phase of the financial inclusion, and the rest in the next phase. This will be done through brick and mortar branches and business correspondents (BCs) with the help of technology. “Through BCs, banks should provide four services — savings bank, pure deposit product, immediate/emergency credit and entrepreneurship credit. Each household must be given a kisan credit card or a general credit card. For those who do not deserve credit, start a financial educational programme, involve the society and the State governments and make them creditworthy so that everybody links with the bank,” said Dr Chakrabarty. Explaining the role of microfinance institutions (MFIs), he said though they were intermediaries, their role was important as they bring in people going to the moneylenders to the banks, he said. “Our focus is to bring in real competition. MFIs should reduce their interest rate, and commercial banks and RRBs must enter this field. That is the purpose of financial inclusion. On the present crisis in the MFI sector, Dr Chakrabarty said that there are some MFIs with good practices. “We have to identify good MFIs and encourage them, and also those who are not good and penalise them.” The Malegam Committee is already examining the grey areas, and “we will come out with the recommendations,” he said.

HC orders notice to RBI, bank on donations

The Karnataka High Court on Monday ordered emergent notice to the Reserve Bank of India (RBI) and Karnataka Bank in connection with a petition challenging the collection of donations by Karnataka Banks Employees’ Association (KBEA) from bank customers. The petitioners, the share holders of Karnataka Bank had moved the High Court over the collection of donation illegally by KBEA. They claimed that about Rs six crore was illegally collected.  The petitioners also submitted that the KBEA also owns a building worth Rs two crore in Mangalore. Mentioning that the KBEA also possess movable assets worth lakhs of rupees, they said the collection of donation is a violation of RBI directive and Apex Court order dated August 6, 1985.  The petitioners further submitted that despite the complaint no action has been taken by RBI or Karnataka Bank and sought directions to freeze the funds and prosecute the officers involved. The Division Bench comprising Chief Justice J S Khehar and Justice A S Bopanna ordered emergent notice.

Credit, debit card services hit in UP

LUCKNOW: Credit and debit card users had a tough time here on Monday as swiping machines at a number of outlets refused transactions. Apparently, the reason for the day-long snag was the ongoing upgradation work for meeting the deadline to implement the Reserve Bank of India (RBI) guidelines on card transactions. According to sources, the services remained affected throughout the state. As per the guidelines, banks should have a system for providing an additional authentication and validation of transactions made online or through interactive voice response (IVR) service. The step was taken in 2009 to enhance security of the online card transaction. The deadline to implement such a system was January 1, 2011 which the banks failed to meet. ''January 31, 2011 has been fixed as the new deadline for this,'' said Amarendra Sahoo, Regional Director, RBI.

The other side of the coin

Given inflationary conditions in India, withdrawing smalldenomination coins will only aggravate inflation in the economy. Consider this. If each one of the 1 billion Indians carries out an average of five transactions involving small change, it is rounded off to the nearest rupee. Assuming a minimum change of 20 paise per person for each transaction, this would amount to a loss of `1per person on five transactions every day. Add to this a loss of `500 crore owing to the rounding-off of amounts issued by bank cheques. So `1,000 crore is in hidden circulation, which will push up inflation by at least 5 percentage points. This can be avoided by reintroducing small-denomination coins irrespective of the cost, which is far lower than the inflation effect.  - Abhay Ekbote, Hyderabad

UID to replace PF account number

The Employees’ Provident Fund Organisation (EPFO) plans to replace the provident fund (PF) account number with a unique identification (UID) number, a move that would enable speedy transfer of subscribers’ funds in case of a job change and allow them to track their accounts online.  At present, if a subscriber changes his job, it takes months to transfer PF money from one account to another, as a transfer of records from one office to the other is required. Under these circumstances, alarge number of subscribers often withdraw the entire money in their account and go for a fresh account with the new employer. The replacement of PF account number with the UID number will be done after interconnecting all regional and suboffices of EPFO by March 2012.

BONGIRWAR NEW MD AND CEO OF IDBI CAPITAL

Abhay L Bongirwar, chief general manager, IDBI Bank, has been appointed as the managing director & CEO of IDBI Capital Market Services. He has taken over the charge from Nagendra Bhatnagar, with effect from December 31. A distinguished banker, Bongirwar has an experience of around three decades with IDBI Bank. He has been associated with project appraisals, investment banking and corporate banking, and has particular experience in infrastructure, retail banking, corporate debt restructuring and HRD/Training.