India Infoline launches financial literacy programme

Brokerage firm India Infoline (IIFL) on Friday said it has launched a financial education and awareness initiative called FLAME (Financial Literacy Agenda for Mass Empowerment), with an aim to improve financial literacy across over 1,000 cities in India. The company has a budget of Rs 25 crore for its initiative towards the corporate social responsibility, IIFL said in a statement.  “We shall leverage our network of 3,000 locations, 15,000 employees and 1 million customers across the country to reach out to small towns as well as under-privileged sections of the society. We have set aside a budget of Rs 25 crore, in addition to efforts of a crack team of 500 from the company,” IIFL Chairman Mr Nirmal Jain said. The company’s programme will comprise a mass media campaign, an online portal, a helpline, ground level financial awareness workshops, connecting with students at B-schools, books and training via expert sessions on financial literacy, the statement added. FLAME was launched by Reserve Bank of India’s Deputy Governor Mr K C Chakrabarty and HDFC Chairman Mr Deepak Parekh. Commenting on the occasion, Mr Parekh said “India cannot grow at a sustained high pace without greater financial inclusion and hence a significant investment in financial literacy is no longer a policy option, but a compulsion.” As a part of this new initiative, IIFL will setup a helpline to answer queries pertaining to financial services, which will be manned by the company’s trained professionals, the statement said.

Beyond Core Banking

Seen in the photograph is Dr. K. C. Chakrabarty, Dy. Governor, Reserve Bank of India, along with M. V. Nair, Chairman & Managing Director, Union Bank of India, S. S. Mundra, Executive Director, Union Bank and B. Sambamurthy, Director, IDRBT during the Executive Round Table on ‘ Beyond Core Banking’ organised by Union Bank and IDRBT in Mumbai. This was a unique effort for benefit of the banking community to draw a road map for better customer services and business growth by leveraging investment already made in Core Banking System.

RBI starts discussion with stakeholders on Malegam report

Reserve Bank of India (RBI) Deputy Governor Mr K C Chakrabarty on Friday said the Central bank has started discussion with all the stakeholders regarding implementation of the Malegam committee recommendations on microfinance. “This (the Malegam report) is at the discussion stage... We have not decided anything yet,” Mr Chakrabarty told reporters.  “Some part of the report like interest rate will be applicable from April 1,” he said. RBI has already invited public comments on Malegam panel report which suggested among other things capping interest rate at 24 per cent for loans extended by microfinance institutions. The committee, headed by Reserve Bank’s Central Board Director Mr Y H Malegam, suggested that small loans cannot exceed Rs 25,000 and creating of a separate category of non-banking financial companies (NBFC-MFI) for the MFI sector. RBI constituted the committee in October last year in the wake of allegations of overcharging and use coercive recovery practices by MFIs that led to a spate of suicides in Andhra Pradesh. The committee submitted its report on January 19. These recommendations, the committee said, should be implemented from April 1, 2011.

New CPI series out, retail inflation at 6 pc in January

The new consumer price index, intended to reflect the actual movement of prices at the micro-level and help policy-makers like the RBI in better framing of decisions was launched today, with initial data pointing to six per cent retail inflation in January. While Consumer Price Index (CPI), according to new series, has increased to 106 in January this year from a base of 100 in 2010, government has chosen not to mention the inflation figure saying the exact level could be arrived only next year. Analysts were also guarded as the new indices have a long way before they evolve into the country''s benchmark for inflation. The figure was arrived based on a comparison with the annual all-India CPI index average for the whole of 2010. According to new series, all-India Consumer Price Index stood at 106 (provisional figure) for January 2011 taking the base at an annualised level of 100 for the entire last year. "Since these indices are being introduced for the first time, annual inflation rates have not been compiled," the Ministry of Statistics and Programme Implementation said in a statement. Inflation, as measured by the Wholesale Price Index -- which remains the top benchmark -- stood at 8.23 per cent in January. Economists said the new series will help both the Government and Reserve Bank to frame their polices as CPI is a better reflection of actual prices than the current practice of following the wholesale price index (WPI). Crisil chief economist D K Joshi said that the country desperately needed an index which is comprehensive. "Not much should be read from the figure of 106 as released today. However, they could be used for framing policy decisions by both the Government and RBI with the passage of time," he said adding the index will move up as there is inflation in the economy. The WPI based inflation for the month under review stood at 8.23 per cent. The CPI has been released for rural, urban and all-India levels. While the rural CPI indices stood at 107, CPI urban stood at 104 during the month under review. ICRA economist Aditi Nayar too said the new series would become benchmark for policy makers, including the RBI, in the future. "Broadly speaking, India is one of the few countries in the world using the WPI as benchmark. The new unified CPI would help the RBI to frame policies in a proper manner," she said adding this reflects the micro level price situation more clearly.

Canara Bank reverses decision to charge for updating passbooks

The Bank had decided to charge Rs10 for updating passbooks of account holders from other branches, but relented after a customer insisted that such basic services should not be charged. When a customer of a nationalised bank protested against new charges to be levied, the officials reversed the decision. Banks, however, insist that it is becoming increasingly difficult to continue providing basic services free of charges and customers will have to start paying up.

How do migrant workers move money in India? - Justin Oliver & Dan Radcliffe

Imagine you’re a migrant laborer living entirely in the cash economy. How do you send money home to your wife and kids? How do you buy supplies from the next town over? How do you pay utility bills? In short, how do you move physical cash over distances? Without access to systems that permit transferring money conveniently, safely, and cheaply, hundreds of millions of domestic migrants face these dilemmas regularly. To better understand just how costly making remote payments can be for poor households, the Bill & Melinda Gates Foundation commissioned the Centre for Micro Finance at the Institute for Financial and Management Research (IFMR) and the Reserve Bank of India’s College for Agricultural Banking to survey 274 domestic Indian migrants and their families living at opposite ends of four domestic remittance corridors.

This is a guest blog by Justin Oliver & Dan Radcliffe. Justin is Executive Director of the Centre for Micro Finance in India and Dan is Program Officer with the Bill & Melinda Gates Foundation.

State Bank chief Bhatt doesn’t see big policy rate hike

State Bank of India chairman OP Bhatt on Friday has said that the interest rates are unlikely to harden in a big way. “Still, I do believe that if the situation on the inflation front continues to remain at the present level, then the Reserve Bank of India (RBI) may increase key policy rates by 25 basis points,’’ Bhatt said.

Budget will be a platform to provide directions on reforms

This year's budget is significant for two reasons. First, the recent spate of corruption scandals has dampened investor sentiment and the budget will be an important platform for the government to provide policy direction on reforms. Second, the current macro challenge facing the government is one of containing inflation and sustaining growth, unlike the last two years when a fiscal stimulus was the need of the hour. Hence, the government's resolve in tightening its fiscal belt will be closely watched.  The Reserve Bank of India has been doing a lot of heavy lifting in terms of containing inflation, but monetary policy is less effective if fiscal policy is not supportive, particularly since the food price inflation partly reflects supply constraints in agriculture. At least on paper, the budget should persist down the path of fiscal consolidation. In FY11, the central government budgeted a fiscal deficit of 5.5% of GDP, but this will likely be bettered at 5.2% due to seignorage (inflation tax) and a one-time revenue gain from 3G spectrum auctions.

U.K.Sinha assumes charge at SEBI

Upendra Kumar Sinha with his predecessor CB Bhave (right) as he arrives to assume charge at the Sebi headquarters in Mumbai on Friday. Sinha, who was the Chairman and Managing Director of UTI Mutual Fund, took over as the eighth Chairman of the market watchdog.