RBI invites application for post of NIBM director

Mumbai : The Reserve Bank has invited application for the post of director of the National Institute of Bank Management (NIBM).  NIBM was established in 1969 by the Reserve Bank of India in consultation with the Government of India as an autonomous apex institution, with the mandate of playing a proactive role of think tank of the banking system.  The institute seeks a director who shall also be the Chief Executive Officer of the institute, RBI said in an advertisement. The director enjoys the pay scales and other facilities at par with the directors of IIMs and IITs. The appointment will be for a three to five years term or till maximum age of 65 years, it said.

RBI seeks law-backed autonomy to deal with monetary issues

Mumbai, May 9 (PTI) The Reserve Bank of India (RBI) today pitched for ''law-backed'' autonomy to be able to deal more effectively with monetary issues. While maintaining that the government has not interfered so far with the Reserve Bank''s functional autonomy, RBI Governor D Subbarao made a case for its "legally-backed formal autonomy" while addressing a meeting of the Central Bank Governance Group in Basel, Switzerland. He also made a case for setting up a Monetary Policy Committee (MPC) to advice RBI on policy issues. Such a system prevails in the UK, where MPC advices the Bank of England. "My own view is that we should be moving towards an MPC system, but in a phased manner", Subbarao said.  He added, however, that as a pre-conditions for shifting to the MPC system, "...the central bank should be given legally-backed, formal autonomy". Shifting to MPC system, Subbarao said, would become a realistic option with the deepening of financial markets and improvement in operating procedure. Although the RBI Act empowers the Government to give directions to the central bank in public interest, the centre has thus far refrained from doing so. RBI has enjoyed functional autonomy, Subbarao said, adding that there has been no instance so far of the Government exercising its reserve powers to issue a directive. On Financial Stability and Development Council (FSDC), the RBI Governor said, "It is important for the Government and the regulators in India to develop conventions and practices which will serve the goal of preserving financial stability without eroding the autonomy of the regulators". The proposed FSDC structure attempts to strike a balance between the government''s objective of ensuring financial stability to reduce the probability of a crisis and the operative arrangements involving the central bank and other regulators. While the Sub-Committee under the RBI Governor is expected to evolve as a more active, hands-on body for managing financial stability in normal times, the FSDC would have a broad oversight and will assume central role in the time of crisis.

RBI is not an inflation targeting central bank

That will give you the broad context for appreciating the specific issues that I will raise later.

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(Comments by Dr. Duvvuri Subbarao, Governor, Reserve Bank of India at the meeting of the Central Bank Governance Group in Basel on May 9, 2011.)

RBI: Need Phased Approach to Monetary Policy Committee System

MUMBAI – India's central bank should move in a phased manner to having a committee to take monetary policy decisions, Reserve Bank of India Governor Duvvuri Subbarao said Monday.  "When our financial markets deepen further, operating procedures improve and monetary transmission becomes more efficient, shifting to a monetary policy committee system becomes a realistic option," Mr. Subbarao said in a speech at a meeting of a central bank governance group in Basel. The speech was posted on the RBI's website.  The RBI governor currently has sole authority to take monetary policy decisions. He consults his four deputy governors, but there is no voting involved and the final decision rests with the central bank chief. A move towards setting up a monetary policy committee with a majority decision deciding the outcome will bring the RBI more in line with international counterparts, including the U.S. Federal Reserve and the Bank of England.  The RBI only consults with a technical advisory committee for monetary policy. The committee comprises of the governor as its chairman, the deputy governor in charge of monetary policy as its vice chairman and the three other deputy governors as members. The committee also has five external members--two of whom are experts from the central board of the RBI while the other three are drawn from a wider pool.  The RBI recently overhauled its monetary policy framework to move to a single independent monetary policy variable--the repurchase rate. The central bank's other main policy rate, the reverse repurchase rate, will now be automatically adjusted one percentage point below the repurchase rate. It has also introduced a Marginal Standing Facility, which banks can access during acute liquidity stress, at a rate of one percentage point above the repo rate.  Mr. Subbarao said some preconditions need to be met before setting up a panel for monetary policy, including giving the central bank legally-backed formal autonomy.  The central bank chief reiterated that inflation-targeting wasn't a feasible option in India.  "[The central bank] cannot escape from the difficult challenge of weighing the growth inflation trade-off in determining its monetary policy stance," he added.

RBI: Inflation targeting neither feasible nor advisable

MUMBAI: The Reserve Bank of India chief said inflation targeting was neither feasible nor advisable in India and the bank cannot escape the difficult challenge of weighing the growth-inflation trade off. "...In an emerging economy like ours, it is not practical for the central bank to focus exclusively on inflation oblivious of the larger development context," Duvvuri Subbarao said in a speech posted on the Reserve Bank of India's website. "The Reserve Bank cannot escape from the difficult challenge of weighing the growth-inflation trade off in determining its monetary policy stance."  He also said monetary policy transmission in India has been improving but it is still a fair bit away from best practice.

RBI unveils MSF norms for liquidity to banks

In line with the annual credit policy announcement last week, the Reserve Bank of India has unveiled the guidelines for the Marginal Standing Facility (MSF) to help banks tide over short-term liquidity problems. The central bank said in a notification that this facility will be effective today. As per the guidelines, a bank can borrow up to 1 per cent of their total deposits from the RBI under the MSF at a rate which is 100 basis points higher than the short-term lending (repo) rate. The repo rate, which was increased last week by 50 basis points, stands at 7.25 per cent. As such, the rate charged under the MSF would be 8.25 per cent. The facility is expected to contain volatility in the overnight inter-bank market. The call money rate was about 6.75 per cent during the afternoon trading session. “Under the facility, eligible entities can avail overnight up to 1 per cent of their respective Net Demand and Time Liabilities (NDTL) outstanding at the end of the second preceding fortnight,” it said. The notification further said that requests will be received for a minimum amount of Rs 1 crore and in multiples of Rs 1 crore thereafter. In the event the banks’ SLR (Statutory Liquidity Ratio) holdings fall below the statutory requirement on account of the use of this facility, banks will not have the obligation to seek a specific waiver for any default in SLR compliance, subject to a ceiling of 1 per cent of their NDTL. SLR is the percentage of total deposits kept in government securities and other specified instruments. Currently, the SLR requirement is 24 per cent.

RBI against setting up of separate debt management office

The Reserve Bank today opined against setting up a separate entity -- Debt Management Office (DMO) -- to manage the sovereign debt of the government, saying only the central bank has the requisite expertise to manage market volatility. "Only central banks have the requisite market pulse and instruments to aid in making contextual judgements which an independent debt agency, driven by narrow objectives, will not be able to do," RBI Governor D Subbarao said at a meeting of the Central Bank Governance Group in Basel.  The government is in the process of setting up of an independent Debt Management Office, aimed at separating RBI's role as the decider of interest rate in the market, and at the same time being the banker to the government.  At present, both the government's debt and fresh borrowings are managed by the central bank. The Governor further said that in order to achieve monetary and financial stability, separation of debt management from central bank seems to be a "sub-optimal choice". Finance minister Pranab Mukherjee in his 2011-12 budget speech had said that he proposed to introduce the Public Debt Management Agency of India Bill in the next financial year. "The case for shifting debt management function out of the central bank is made on several arguments such as resolving conflict of interest, reducing the cost of debt, facilitating debt consolidation and increasing transparency. These advantages are overstated," Subbarao said. He said market borrowings are the major source of deficit financing at state level and such borrowings are exceeding the absorptive capacity of the market. "That makes it imperative to harmonise the market borrowing programmes of the Centre and the states. Separation of the Centre's debt management from the central bank will make such harmonisation difficult," Subbarao added. He said even internationally, there is closer association between the central bank with sovereign debt management for proper monetary policy and financial stability.

Bank employees cry foul over drafts given to Trinamool

Kolkata: A bank employees’ group Monday alleged that officials of two public sector banks were spreading ‘misinformation’ to justify their decision of illegally issuing drafts to the Trinamool Congress. The group alleged that while issuing the drafts last month the banks violated the Reserve Bank of India (RBI) guidelines because of political pressure. ‘The United Bank of India (UBI) and the Allahabad Bank chiefs have stated deliberate misinformation to confuse and mislead the public regarding issuance of bank drafts to Trinamool Congress,’ Bank Employees Federation of India (BEFI) general secretary Pradip Biswas told reporters here. ‘As a responsible organisation of bank employees, we are clarifying the position,’ he said. He said a city branch of the UBI issued 20 bank drafts, each of Rs.49,500, to the Trinamool Congress April 12 and the sole beneficiary of these drafts was M Power Global Access India Private Limited. One branch of the Allahabad Bank in Kolkata issued a total of 11 drafts, 10 drafts each of Rs.49,000 and one of Rs.10,000, to the Trinamool Congress April 13,’ he said. ‘It is understood that the banks had intentionally structured the transactions. This is gross violation of RBI’s Master Circulars issued July 1, 2010. We have come to know that initially the concerned employees of the banks refused to do so, but because of pressure from the higher authorities they allowed the transactions,’ Biswas said. Allahabad Bank chairman and managing director J.P. Dua in a press conference in Kolkata May 2 said no irregularities had taken place in issuing the demand drafts to the Trinamool Congress. ‘No irregularity has taken place. We have followed the rules and regulations,’ he said.

Drabu resigned, was not sacked, says Omar

Srinagar: Chief Minister Omar Abdullah Monday said the government didn’t sack former Jammu and Kashmir Bank (J&K Bank) chairman Haseeb Drabu and also rejected his claims that J&K Bank-RBI agreement was a “sell-out”. Replying to a query about Drabu’s claims that the J&K Bank was going to lose its identity in the next two to three years due to the pact with RBI, Abdullah termed the JKB-RBI pact as “a win-win situation for the state government, the Jammu and Kashmir Bank and people of the state.” He added, “Drabu was not sacked by the government but resigned on his own.” RBI has not bought over J&K Bank. It continues to be the property of Jammu and Kashmir’s people, and the state’s banker but rather than implementing overdraft facility of Jammu and Kashmir Bank we are implementing the ways and mean position of RBI,” he said. Abdullah said the Union Finance Commission had recommended an award of Rs 1,000 crore to the state government and the provision of borrowing another Rs 1,000 crore at low interest rates from the market. "This will save the state government the interest it had to pay to the Jammu & Kashmir bank, while the bank will have Rs 2,000 crore to pump into the market. The only thing is that the J&K Bank(employees) will have to work harder now, " he said.

Subdued growth may trigger MFI mergers

Chennai: Growth prospects for microfinance institutions (MFIs) will remain subdued over the medium-term. Operating challenges arising from RBI’s recent guidelines for MFIs, coupled with expected difficulty in raising capital, are likely to trigger consolidation in the sector. However, RBI’s guidelines should ease pressure on MFIs’ profitability, as it has relaxed some recommendations of the Malegam committee, a Crisil research said. Furthermore, the continuation of priority sector status and steps to enhance transparency and governance should improve stakeholder confidence and enable resumption of bank funding. It is believed that clarity on regulatory jurisdiction for MFIs is a critical next step for long-term sustainability of the sector, the research said. Rupali Shanker, head, Crisil Ratings, said, “The MFI sector’s growth is likely to remain subdued over the medium-term, especially in regions with high microfinance penetration, because of proposed regulatory restrictions on multiple lending, loan size, and end-usage of loans. This will provide an impetus for consolidation in the sector.”  To comply with the new regulations, MFIs will have to enhance their internal systems and processes, strengthen their monitoring mechanisms, and invest in training their employees, she added. “Crisil also expects RBI’s guidelines to provide cushion to MFIs’ profitability and enable resumption of bank funding to MFIs. RBI’s guidelines are largely based on the Malegam committee recommendations, with some modifications: RBI has allowed a higher cap on interest rates and margin (of 26% and 12%, respectively) and has clearly defined the manner of computation for these caps,” she said. Pawan Agrawal, director, Crisil Ratings, said, “The regulatory jurisdiction for MFIs, however, remains unclear. While RBI has created a new category of non-banking financial companies to regulate the MFI sector, multiple regulators continue to oversee the sector. A clearer regulatory framework will remain critical to instill greater confidence in the sector.”

Suman Bery: Monetary policy - where next?

The RBI is becoming more accountable.  What is the Reserve Bank of India’s (RBI’s) view of the Indian economy’s prospects over the next 18 months? Does this view justify the RBI’s move to more aggressive monetary policy actions announced on May 3? These are questions T N Ninan rightly raised in his column titled “The wrong war?” on May 7. These are also questions that are directly, if not wholly, addressed convincingly in the monetary policy statement issued in the name of the RBI governor that day. The early summer statement of monetary policy is by convention the most authoritative articulation of the RBI’s goals and stance. It is based on data for the previous fiscal year, and takes into account the Union government’s fiscal stance indicated in the Budget. The primacy of this statement dates back to a more sedate era when domestic influences were paramount, and it was still possible to speak of a policy for the “busy” and the “lean” season. I am not aware that any of the other major central banks follows an equivalent ritual in the more globalised and fast-paced environment for monetary management today. Nonetheless, I think this practice is worth preserving to provide an accountability benchmark for the year as a whole.  The governor’s case is most compactly enunciated in the introduction. He admits that the resurgence of inflation in the last quarter of 2010-11 came as an unpleasant shock. While asserting that the initial trigger came from abroad, in the form of a surge in commodity prices, he argues that “the fact that these were quickly passing through into the entire range of domestic manufactured goods indicated that domestic pricing power is significant. In other words, demand has been strong enough to allow significant pass-through of input price increases. Significantly, this is happening even as there are visible signs of moderating growth, particularly in capital goods production and investment spending, suggesting that cumulative monetary actions are beginning to have an impact on demand”.  What is one to make of this remarkable formulation? Taken at face value, it seems to assert that pricing power in domestic non-food manufacturing has increased rather than decreased in a slowing economy. A more charitable interpretation would disassociate the recent commodity price spike (mainly in fuels and metals) from pricing power in manufacturing, but this would then raise the uncomfortable question of why this pricing power has surfaced now when it was largely dormant in the golden growth years up to 2008.  In making the case for monetary tightening, the statement cites three proximate factors. These are the outlook for global commodity prices, the overshooting of inflation in recent months, and the fiscal outlook on a business-as-usual, no-reform scenario. These “momentum” factors are only partially offset by the already perceptible slowing of the economy.  The summary judgement is: “Current elevated rates of inflation pose significant risks to future growth. Bringing them down, therefore, even at the cost of some growth in the short-run [sic], should take precedence.” Press reports about reactions from the finance minister, the deputy chairman of the Planning Commission, the chairman of the Economic Advisory Council to the Prime Minister and the chief economic advisor suggest that the decision to sacrifice growth at the altar of inflation control enjoys at least a modicum of support throughout the government, no matter how slender the analytic basis.  To its credit, the RBI has this time committed itself to a more specific view on the outlook for growth and inflation, with a confidence margin associated with each. In the case of growth, the range of outcomes is projected as lying between 7.4 and 8.5 per cent, with a central level of 8 per cent and the balance of risks on the downside. In the case of inflation, the statement frankly acknowledges the RBI’s poor performance in predicting year-end inflation in 2010-11, at substantial cost to its credibility. The baseline projection for March 2012 is placed at 6 per cent with an upward bias. In addition, in an effort to manage expectations, the RBI warns that “inflation is expected to remain at an elevated level in the first half of the year due to expected pass-through of increase in international petroleum prices to domestic prices, and continued pass-through of high input prices into manufactured products”.  It is instructive to link this discussion to controversies on the appropriate framework for monetary management raging elsewhere in the world. Neither of these is particularly novel, but both are relevant to the situation facing India at this time. The first is the familiar debate on rules versus discretion in the conduct of monetary policy; the second is the suitability of a formal inflation target in the Indian environment, something that the RBI has consistently and repeatedly rejected.  It should be stressed that these are quite distinct debates, in that the implementation of an inflation-targeting regime actually requires entrusting the central bank with almost total discretion in the tools it deploys to hit its target. As against this, the rules versus discretion debate essentially revolves around the near impossibility of timing monetary policy actions correctly so that they act as a force for stability rather than instability.  It would be irresponsible to ask the RBI to commit itself to a formal inflation-targeting regime under the fiscal and debt circumstances that currently prevail in India. However, this does not prevent it from giving primacy to what the Raghuram Rajan report called a “low inflation objective”. Indeed, the record of non-intervention in the foreign exchanges under the present team in the RBI, coupled with the finance ministry’s continued maturity on the issue of capital flows, suggests the RBI is now focused on delivering low and stable inflation. It has now publicised the indicator, namely the wholesale price index for non-food manufacturing, which it intends to monitor as an indicator of demand pressure in the economy. And finally we have “fan charts” for growth and inflation, as well as a clean-up of the system of policy rates.  So at the end of the day, despite my initial concerns, I come away with the feeling that the RBI is moving in the right direction in terms of how it should be held accountable. It is now up to the rest of the research community to give it the tools it requires to do its job.

Deregulation may bring added costs on savings a/c holders

With Reserve Bank of India in all favors for deregulating savings bank account rates, customers are expected to be in a win win situation. But the scenario may not completely be a win win for customers in reality with lenders planning to levy charges for the services associated with this account.  The RBI has recently raised the savings bank account rate to 4% during the annual monetary policy of this fiscal.  The transaction charges will go up for the consumers if the rates on savings bank accounts keep on going up...the banks also have to survive," HDFC Bank Managing Director Aditya Puri said.  "The pressure on net interest margins is likely to further increase if the RBI deregulates savings account deposit rates," said credit rating agency Crisil.  Central Bank of India Chairman and Managing Director S Sridhar said, "Levying of transaction charges is a trade-off."  "If you go to any foreign country, banking is so costly...banking is expensive. Try getting a cheque book in a foreign bank," he said.

Corporation Bank opens microfinance branch

Mangalore-headquartered public sector lender, Corporation Bank has opened a new micro-finance branch in Hyderabad in its bid to increase financial inclusion initiative of the bank.  “The basic objective of opening a micro finance branch is to help the weaker sections of the society especially women through financial inclusion, micro credit and financial literacy,” a bank release said.  The other major areas of functioning of this branch will be direct lending to self help groups, NGOs, MFIs among others with provision for micro insurance products like Janashree Bima Yojna, Jeevan Madhur, Jeevan Mangal of LIC through group approach and micro pension.  “The special focus of this micro finance branch in Hyderabad will be to address the banking needs of the urban poor,” the release added. The public sector lender has already opened three micro finance branches across the country and this newly opened branch at Kothapet in Hyderabad is the fourth one by the bank. Earlier, Reserve Bank of India has classified all bank loans to micro finance institutions after April 1 as priority sector lending. Corporation Bank has posted a 10.6 per cent rise in its net profit to Rs 345.3 crore in the fourth quarter of last financial year. “The net profits were low on account of higher provisioning for pension liability,” Ramnath Pradeep, chairman and managing director of Corporation Bank said. The bank had to provide Rs 184 crore towards pension liability in the fourth quarter. Total income of the bank grew by 39.5 per cent to Rs 3046.78 crore in this period as compared with Rs 2184 crore reported last year. Operating profit increased by 37 per cent to Rs 746.57 crore during this period. Meantime, while interest spread rose by 29 per cent to Rs 761.76 crore in this period, net interest margin was at 2.48 per cent, up by 18 basis points from the previous quarter.

Is the task of RBI done?

Said simply in plain English, real interest rates have been too low to foster real savings and investment
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Let committee, not governor, take monetary decisions: Subbarao

RBI Governor D Subbarao on Monday proposed that all monetary policy decisions be taken by a committee of the central bank — as is the practice in the US and UK.  The Federal Open Market Committee of the US Fed and the Monetary Policy Committee (MPC) of the Bank of England decide on actions by a majority vote.  In India, the final call is the RBI governor’s. The governor does hold structured consultations with the four deputy governors with whom he constitutes an informal monetary policy committee, but there is no voting, and the final decision is the governor’s.  “My own view is that we should be moving towards an MPC (monetary policy committee) system, but in a phased manner. There are some preconditions to be met,” Subbarao said at the meeting of the Central Bank Governance Group in Basel today.  “We do have a Technical Advisory Committee (TAC) on Monetary Policy that acts as a proxy policy committee, but it is advisory in nature. It comprises the governor as chairman, the deputy governor in charge of monetary policy as vice chairman and other three DGs as members,” Subbarao said. The committee also has five external members — two experts from the Central Board of the Bank, and three drawn from a wider pool — nominated by the governor. “They give specific recommendations on policy options and these are minuted,” Subbarao said. Listing conditions for the MPC system, he said the central bank should be given legally-backed formal autonomy. “Second, in a situation where inflation dynamics are more often dictated by supply side elements, the central bank’s ability to control inflation is restricted. An MPC mechanism in such a situation can weaken the coordination between the government and the Reserve Bank. However, when our financial markets deepen further, operating procedures improve and monetary transmission becomes more efficient, shifting to an MPC system becomes a realistic option,” he said.  Close to the policy decision, an established practice for the governor is to meet the prime minister and finance minister informally, give them an assessment of the macroeconomic situation, and indicate to them the proposed policy stance. “This is only a matter of courtesy, and the process has not impinged on the autonomy of the Reserve Bank in monetary policy making,” Subbarao said. The consultation with the finance minister, in particular, should be seen as an avenue for fiscal-monetary coordination, since on a reciprocal basis, the finance minister too takes the governor into confidence on the fiscal stance ahead of presenting the budget to Parliament, he said. “The RBI in effect functions with a functionally autonomous mandate and there has been no instance so far of the government exercising its reserve powers to issue a directive. This is all the more remarkable since the interaction between the government and the Reserve Bank is closer and more frequent than is typical in other countries, and this draws from the key role of the RBI in financial sector reforms and economic development...” Systems of accountability are tight, he said. “Since we are not an inflation targeting central bank, there is no formal memorandum of understanding or a ‘results agreement’ between the government and the Reserve Bank. Nevertheless, we render accountability for our performance on inflation. We explain the rationale for our monetary policy stance quite extensively,” Subbarao said.

Core issues in monetary policy

Inflation targeting is neither feasible nor advisable in India. The RBI cannot escape from the challenge of weighing the growth-inflation trade off. Even if we settle on inflation targeting, we have a problem about which index to target.
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‘No quick fix solution for lowering inflation

Reserve Bank of India Governor D. Subbarao on Monday said it was unrealistic to expect the central bank to deliver on an inflation target in the short-term. “In an emerging economy like ours it is not practical for the central bank to focus exclusively on inflation oblivious of the larger development context. The RBI cannot escape from the difficult challenge of weighing the growth-inflation trade off in determining its monetary policy stance,” said Dr. Subbarao while addressing the meeting of Central bank governance group in Basel. The drivers of inflation in India often emanate from the supply side, which are normally beyond the pale of monetary policy. In particular, given the low income levels, food items have a relatively larger weight in the consumption basket in India compared to advanced economies and even many emerging market economies. India has three consumer price indices each covering different segments of the population with the weight for food ranging between 46 and 70 per cent. “Monetary policy, as is well known, is an ineffective instrument for reining in inflation emanating from supply pressures.” “An alternative that is put forward is that we could target core inflation rather than headline inflation. That is not a feasible solution either.” An inflation index, with half the basket excluded from it, hardly reflects reality. Moreover, the exclusion of food from the core index can be justified if average food inflation is the same as the average non-food inflation. “If food inflation is higher, as is typically the case in many low income countries including India, then we would be underestimating inflationary pressures on a systemic basis. That would mislead policy prescriptions,” he added.  Further Dr. Subbarao said India had a problem about which inflation index to target. The headline inflation index was the Wholesale Price Index (WPI), and that did not, by definition, reflect the consumer price situation. However, getting a single representative inflation rate for a large economy with 1.2 billion people, fragmented markets and diverse geography was a formidable challenge.  “The recent introduction of CPI-Urban and CPI-Rural is welcome, but it still does not solve the problem of heterogeneity.” “A necessary condition for inflation targeting to work is efficient monetary transmission. In India, monetary transmission has been improving but is still a fair bit away from best practice,” Dr. Subbarao pointed out. There are several factors inhibiting the transmission process such as an asymmetric relationship between depositors and banks, administered interest rates on postal savings that are not adjusted in line with prevailing interest rate trends and rigidities in the financial markets. All these factors dampen the efficacy of monetary signals and complicate the adoption of an inflation targeting regime in India. Given the compulsions of democracy and the large population of poor, any government in India had always to be, and indeed had been, sensitive to price stability even if it means sacrificing output in the short-term, said Dr. Subbarao, adding, both the government and the RBI had to factor in the short-term growth-inflation trade off in their policy calculations.

RBI team studies mobile banking scheme

PALAKKAD: The Reserve Bank of India (RBI) has deputed a team to study the mobile banking scheme of the Palakkad District Cooperative Bank, introduced last year, to take banking to the remote tribal villages of Attappady. The scheme is part of financial-inclusion programmes of the bank. In the Agali-Attappady area, banking facility is available only at the Agali town now. The mobile bank visits each village once in a week. The people living in the 187 tribal hamlets had no option but walk 20-30 km to reach Agali. Those employed under the MGNREGS in Attappady have benefitted (from the scheme) as the payment is made only through bank, District Cooperative Bank president K.V. Ramakrishnan said.

Wake up Call for Dormant Accounts

RBI asks banks to track down inactive account holders. If you are not operating your bank account due to any reason, you can get a call or an email from your banker very soon for clarifications. Recently, the Reserve Bank of India (RBI) has instructed banks to track dormant accountholders or the person who introduced them to the bank. According to the reports, the central bank has decided to take this step as commercial banks have around 10 million inoperative accounts with unclaimed deposit of around Rs 1,700 crore. The RBI has decided either to revive the dormant account or the balance can be transferred to a new account or legal heirs. An account, whether savings and current, is treated as dormant if there are no transactions in them for over two years. If you give suitable reasons for not operating your account, bank should continue classifying the account as an operative account for one more year.