2011: Lords Of Finance - D SUBBARAO GOVERNOR, RBI

People in the financial services sector make or break an economy. These are the most secretive of the people who make it impossible for anyone to forecast as to what they would do. Now into the penultimate phase of his three-year tenure as the Governor of the Reserve Bank of India, Duvvuri Subbarao has surprised a lot of people not just in Mint Street but also in New Delhi. Once seen as the finance ministry’s man in India’s central bank, Mr Subbarao appears to have come into his own, pitching for greater autonomy. This year, it is not only his inflation management that will be watched but also whether the government would be comfortable, approving a second term for him.

RBI asks banks to fix staff accountability to prevent frauds

The Rs 300 crore Citibank fraud has woken up the central bank to the reality of insiders' role in banking frauds. A concerned Reserve Bank of India (RBI) has asked banks to fix staff accountability to prevent such frauds from happening. The RBI has asked banks to ensure that the reporting system was suitably streamlined so that frauds were reported without any delay. Following the RBI guidelines, banks have already begun setting up a robust real-time system of checks and balances that will include monitoring all transactions over Rs 10 lakh on a daily basis. Now, all transactions of more than Rs 1 crore are being monitored by the banks' top management.  In response to a Right to Information Act (RTI) application, most public sector banks admitted that their employees have been found to be involved in encashment of fake cheques. What concerns the RBI is not just the recent fraud of Citibank, but many others in the past. Employees of many banks have been found involved in a wide range of frauds from counterfeiting to forging documents for loan approvals.

Integra bags contract from Allahabad Bank

Integra Micro Systems (P) Ltd, the Bangalore-based information technology (IT) services provider, has bagged a financial inclusion contract from Kolkata-based public sector lender Allahabad Bank. The five-year contract is estimated to be around Rs 100 crore, according to industry experts. Allahabad Bank has identified 1,850 villages to be covered under the financial inclusion programme by March 2012. These villages are spread across 147 districts in 12 states. All villages have been clubbed into three clusters, namely cluster I, II and III, which will be covered by the bank in phases. Recently, the Reserve Bank of India asked commercial banks to provide basic banking services in villages with a population of 2,000 and above, by 2012. Banks have also been asked to plan to cover villages with a population of less than 2,000 in an integrated manner over the next three to five years. Similarly, TCS, Bartronics and Little World are also in fray to bag a five-year financial inclusion contract from Bank of Maharashtra. The value of this deal is around Rs 120 crore, according to industry experts.

Bank of Maharashtra opens FLCCs in Pune

As a gift to the nation, on the eve of New Year on 31st December, 2010, Bank of Maharashtra has opened three Financial Literacy and Credit Counselling Centres (FLCCs) in Pune, Nasik and Aurangabad through its Mahabank Agricultural Research & Rural Development Foundation (MARDEF), a Trust sponsored by the Bank. These three FLCCs have been opened following a decision taken by the Chairman & Managing Director of the Bank, Shri.A.S.Bhattacharya in the State Level Bankers Committee (SLBC) meeting held on 23rd December 2010 in Mumbai. Bank of Maharashtra is convener of SLBC in the State of Maharashtra and holds the responsibility of six lead districts. The FLCCs will make General Public, farmers, inhabitants of rural & semi urban areas and poor people financially literate and will guide them in credit-related matters. The FLCCs will provide free financial literacy, education and credit counselling.

RADICAL CHANGE - Panel proposes makeover for sugar economy

A high-level government panel has recommended a radical overhaul of the sugar market, including partial indexing of cane prices to the retail price of the sweetener and relaxing restrictions on setting up of sugar factories. If implemented, the measures will reduce government intervention, usher in competition and make at least a section of the farmers happy with the ruling United Progressive Alliance. The panel, headed by former Reserve Bank of India governor C. Rangarajan, was constituted in September and is expected to submit its report to the Prime Minister next month. It was set up to provide a road map for addressing structural problems underlying volatility in sugar prices, a politically sensitive issue. At present, the sugar market is controlled, with the government deciding several factors from the price of cane to the quantum of offtake of sugar from the mills. To be sure, cane prices vary across the country as individual states fix the procurement price. The committee is now proposing that to begin with, the government should move to a uniform pricing regime that will prevent state governments from determining the sugar cane price. This has often been a politically contentious issue with the strong farmer lobby in states such as Uttar Pradesh, which is due to go to polls in 2012.

Bankers, RBI to discuss liquidity on January 11

Bankers are meeting Subir Gokarn, Deputy Governor of Reserve Bank of India (RBI) on January 11 to discuss the liquidity situation and interest rates ahead of the monetary policy on January 25.