500-km chase by cops for rare 1 bundle

NEW DELHI: It's not often that a cop would travel over 500 km to chase a bundle of one-rupee notes. If you thought  Re 1 is a pittance, you are mistaken. This bundle is actually worth a bounty - Rs 32 lakh for all the 100 notes. What makes it priceless is its antique value. These rare notes bear the signature of former finance secretary S Bhootalingam and is a collector's dream. Each note can fetch a mindboggling Rs 25,500 in the antique market. And this precious booty was stolen from Delhi and smuggled to Rajasthan. And this sent alarm bells ringing. A team of Lajpat Nagar police raided three places in Rajasthan - Jodhpur, Bikaner and Jaipur - to retrieve the cash.  Rajkumar Gupta, a resident of Rajouri Garden, thought he had hit a jackpot when he stumbled upon 100 notes of rupee one signed by former finance secretary Bhootalingam. He found that he could sell these notes between Rs 28 lakh and 32 lakh. While enquiring on the procedure, he found two buyers - Ankit and Mahesh - who asked him to come to Lajpat Nagar market on March 26. And it was then that he was left duped. Additional CP (southeast) Ajay Chaudhry said, "While the deal was being hammered out, the two men tricked him and quietly stole the cash. Later, a case was lodged with the Lajpat Nagar police station. We began investigations and found that the accused had moved to Rajasthan. We found that the mobile phones used by the thieves were procured through fake IDs."   The trail took the cops to Bikaner where they tracked down an accomplice, Manoj, who had received the consignment. He was about to deliver it to one Mahender Kumar at Jaipur. "We also got a tip-off that the gang was planning to sell the notes through a local auction and the base price had been set at Rs 26 lakh," said an investigating officer. All bank notes carry the signature of the RBI Governor except the one-rupee note which has the Finance secretary's signature. The first Finance Secretary was KRK Menon and the first RBI governor was CD Deshmukh. Some of the Re 1 notes printed in 1964 bore the signature of then finance secretary S Bhootalingam. But all old currency notes don't appreciate in value. The availability of the note is a crucial factor. For example, Re 1 notes printed in December 1964 and signed by Bhoothalingam are very rare, but other notes signed by him in subsequent months maybe available, but may not fetch a high price. The Re 1 note ceased to printed from 1995. That is why the demand is very high, said a blogger and coin enthusiast, Abhay.  The police say they are investigating the role of an inter-state gang. "We believe this is a gang involved in selling antique pieces and smuggling priceless articles outside the country. We have found enough evidence that this is also an organized gang of educated men . We hope to arrest them soon ,'' said a senior police officer .

TOI

RBI's feint

The recommendations on financial holding companies might have been more credible had the panel been more representative and neutral. The RBI Working Group on Financial Holding Companies (FHC) has recommended that all large financial sector companies should adopt a holding company structure. It has recommended new legislation for this. Currently, the system in India is the bank subsidiary model, under which a bank uses subsidiaries to pursue non-banking activities. Banks have done so not just because they need growth and but also because they believe they must diversify their income sources. Thus they are now into insurance, mutual funds, investment banking, brokerages and asset recovery, among others, via the subsidiary route. But here lies the rub. Once these subsidiaries begin growing and start acquiring a disproportionate size (emerging as conglomerates), there is a fear that they will begin to pose systemic risks. With complex structures and shareholding patterns, these companies often represent examples of chaotic governance and a violation of the simple management principles of having clear-cut lines of authority and responsibility. All too soon, they become ‘too big to fail,' which makes the regulator's task of monitoring and supervision extremely difficult. The RBI experiences considerable discomfort about the reputation risk — real and perceived — that the parent bank is assuming on itself. There is also a moral hazard problem because those dealing with a bank's subsidiaries think they get the benefit of the safety net, deposit insurance, access to central bank liquidity, etc. To solve these problems the Working Group wants to limit the growth of the subsidiaries so that non-banking activities don't tend to dominate the banking operations. But who will decide this limit and who will regulate the holding companies? The Group thinks this power should lie with the RBI. But one may well ask: does this now somehow militate against the concept of free enterprise and smack of a control raj? Questions such as these are bound to result in the suspicion that there may be another agenda — of retaining control. If accepted, the change would help the RBI win the turf war that has been going on for some time among the regulators of other segments in the financial sector. The Group, however, notes, perhaps a bit too carefully, that the new regulator for FHC should not be seen as a ‘super regulator' but as a supplementary regulator. Sceptics will snigger, even though this will allow undiluted focus on systemically important companies.  It must be asked whether the recommendations resolve the core issue of multiple regulators and multiple regulations. The short answer is no. With 10 out of 13 members representing the banking sector or the RBI, its bias is obvious and its recommendations on this score lack the force of a more balanced, representative and neutral committee.

24th Conference of State Finance Secretaries at RBI

Mumbai (ABC Live): The Governor, Reserve Bank of India, Dr. Dr. D. Subbarao that states are important stakeholders in inflation management as their contribution is important in addressing the supply side constraints.  They could, for instance, help better management of public distribution system, improve productivity in agriculture and allied activities, reform the Agriculture Produce Marketing Committee (APMC) Acts and improve the infrastructure, such as, storage facilities.  The 24th Conference of the State Finance Secretaries was held in the Reserve Bank of India at Mumbai today. Finance Secretaries of 18 States participated. Dr. D.Subbarao, Governor, Reserve Bank of India inaugurated the Conference. Smt. Sudha Pillai, Member Secretary, Planning Commission; Shri R. Gopalan, Secretary (Economic Affairs); Shri Sumit Bose, Secretary (Disinvestment) and Officer on Special Duty (Expenditure); Dr. Kaushik Basu, Chief Economic Adviser; Shri C.R.Sundaramurti, Controller General of Accounts (CGA); and Smt. Shyamala Gopinath, Dr. Subir Gokarn and Shri Anand Sinha, Deputy Governors and other senior officials of the Ministry of Finance, Comptroller and Auditor General of India (CAG) and the Reserve Bank attended the Conference. The Governor in his inaugural remarks referred to the market borrowings of the States and emphasised that there was a need to improve efficiency in terms of better planning, robust cash management and adherence to the Fiscal Responsibility Legislation (FRL). Besides improving revenue collections through tax reforms, the States should also focus on expenditure management, he said. He referred to implementation of Malegam Committee Report in the context of regulating micro finance institutions (MFIs) and said that going forward; the unincorporated MFIs would be regulated by the proposed central legislation uniformly across the states and the incorporated MFIs by the Reserve Bank. This was necessary to avoid regulatory arbitrage, he added.  The Governor also emphasized the need to improve the effectiveness of the State Level Bankers Committee (SLBC) and stated that one of the important items on its agenda should be financial inclusion and financial literacy.  Here, the attempt should be to move from a target driven approach to more meaningful financial inclusion. He urged the State Governments to play a proactive role in the field of financial literacy and financial inclusion in collaboration with the Reserve Bank, Central Government and the banks. He also underlined that the State Governments should caution the public against entities that raise funds from gullible public through dubious schemes.  Other issues discussed in today’s deliberations were management of cash balances and market borrowings of the State Governments for 2011-12, repayment / exchange rate risk in States’ borrowing and building of sinking funds to meet these obligations, risks to State finances on account of power sector utilities, issues concerning regulation of MFIs, financial inclusion through business correspondents, roadmap for regulation of State Government owned NBFCs, switch over to electronic mode of payment and receipt for Government’s banking business and proposed classification structure of Union and State Governments’ accounts.

Worries over govt stepping into regulatory territory

NEW DELHI: Just when the controversy over setting up of the Financial Stability & Development Council (FSDC) was settling down, there are fresh concerns over government intrusion into regulatory turf. The fresh set of complaints arise from the way the issue of new bank licences has been handled as also review of two stock market-related proposals – the Takeover Code and the new rules for stock exchanges – by the government.  In case of bank licences, the proposal was driven by North Block from the word go. It was finance minister Pranab Mukherjee who announced in his 2009 Budget speech that RBI was considering granting new licences, when just months ago governor D Subbarao had denied any such move. Since then, RBI has been engaged in consultations, which are far more intensive than what has been seen in the past, officials pointed out. In case of the two market-related proposals, the Securities & Exchange Board of India (Sebi) had set up committees to review the Takeover Code and the functioning and ownership of stock exchanges. The two committees were headed by former regulators. While former Sebi member C Achuthan headed the one on the Takeover Code, former RBI governor Bimal Jalan headed the committee on stock exchanges. But unlike the practice followed in the past when the Sebi board, which has representation from the government, decides on the future course of action, the government decided to have its own set of consultations. So, chief economic advisor Kaushik Basu in his capacity as the head of the Takeover Regulations Advisory Committee decided to hold public consultations on the Achuthan committee report. In the meanwhile, no changes can be made by the Sebi board. In case of the Bimal Jalan committee report on stock exchanges – which had come under criticism from certain quarters – the review is being undertaken not just by one government department. After the finance ministry decided to review the report, the ministry of corporate affairs also decided to set up its own committee under joint secretary Renuka Kumar to look at the recommendations. An MCA official, however, said that the recommendations were meant for internal use.  But market watchers and officials in regulatory agencies are questioning the need for multiple reviews especially when financial sector regulators decide the norms only after public comments are received. "If the government has a point of view, it can be made by its representative on the board of the regulatory agency. By doing this you are not only delaying decision making but also doing what a regulator is supposed to be doing. The financial sector is not used to this kind of intrusion," said a source.  Market players also pointed out that the government is going back to the same people from whom the committees had received feedback, which includes industry chambers and market participants. "This shows a 1980s mindset," said a stock exchange executive.

TOI

Speak Asia under scanner

Amid speculations that online survey firm is just another scam, its members are worried about their investment. Everybody is interested in making a few extra bucks, especially if they can earn it without much effort. The latest rage in the quick money making business is Speak Asia, a Singapore-based survey-driven website that offers handsome returns to its members for filling in some simple survey forms and recruiting more members for the company. Several people in the city have paid Rs 11,000 as entry fee in their bid to make some quick money. But off late, there are murmurs of discontent as people become unsure of the return on their investment.  Several investor protection groups have alleged that Speak Asia, which started operations in India about a year ago, appears to be running a Ponzi scheme where new investments are used to pay existing subscribers. It charges Rs 11,000 as an enrolment fee, with a promise that this money can be more than recouped by responding to their surveys, each response getting you money.  Several Speak Asia members in the city are anxious about being able to recover their investment, let alone making the extra money. Jenisha Patel, a 19-year-old girl who lives in Vastrapur is a member of Speak Asia. She has invested Rs 11,000 after one of her friends who is a member got handsome returns. “I have been told by the company that I’ll get the money only after two months. Also, I’ll be able to withdraw my money after the total amount in my account crosses Rs 4,000. The rules are weird,” she said.  In fact Patel, a second year student at L D Engineering, has decided not to recruit any new members till she starts getting returns on her investment. “How can I ask people to join the survey firm when I am not sure if I’ll get my money back,” said Patel. She had apparently convinced her parents to invest in the Speak Asia scheme. They invested without checking the company’s background. Manish Patel (29), a businessman living in Usamanpura is also a ‘Speak Asian’. He became part of Speak Asia after being advised by a colleague who, according to Manish, has sound knowledge about such schemes. “I became a member about three weeks ago. Several other friends of mine are part of this multi-level marketing (MLM) scheme. The company has been advertising regularly. I don’t think it is a fraud scheme. But I am being cautious and not recruiting anyone till I start getting some returns,” said Patel.  In light of the allegations, government authorities have launched an investigation into Speak Asia. The Ministry of Corporate Affairs (MCA), Economic Offences Wing, market regulator Sebi and bank regulator Reserve Bank of India will look into different aspects of the Singapore-based firm’s operations in India, following complaints from various consumer groups, reports said. RBI spokesperson, Alpana Killawala told Mirror, “MLM companies are not regulated by RBI. So they don’t need RBI’s approval for current account transactions through commercial banks. However, we are examining if remittances made are in order. The RBI has also issued advertisement alerting public against falling prey to alluring offers and has appealed to the media to help RBI in cautioning public.”  Under scrutiny, the company is trying to offer an exit option to its members who are not happy about the companies working style. Its legal adviser Ashok M Saraogi has said that main product of the company is the internet magazine. People paying money are buying the subscription of the magazine. Some people have been misguided. So we recommend the company to give these people an exit option. Talking about the genuineness of the company, Chief Executive Officer (CEO) of Speak Asia Online Limited Manoj Kumar said, “The company has a robust business model and is financially competent to meet any liability that may arise.” Commenting about the probe by various government bodies, Kumar said, “We have received no intimation from either RBI or the ministry of corporate affairs. We have received no official communication from any governmental or judicial body about any investigations. If there is a probe, we will surely co-operate.”

We are financially sound: CEO

The Speak Asia Online Limited started its operation in India in January 2010. So far the company has made Rs 360 crore in revenues. The company with its base in Singapore was set up in 2006 but was dormant till April 2009. Currently, Speak Asia has 19 lakh members in India. Speak Asia’s CEO Manoj Kumar spoke to Mirror about its operation.

What is the payment model?

The money is remitted directly from Singapore Branch to the members’ bank account in India. Only the RBI transaction fee as applicable is deducted [3.5 per cent of the total earned money or $7 (Rs 315 approx), whichever is higher] from each transaction. Income tax compliance is the responsibility of the customer.

The customers are unable to withdraw the money from their account the day it is deposited. Why is it so?

As per the rules & regulations of the company, there is a cooling period of one month. So the members are able to redeem their reward points only after a month.

How many members you added in Month of May?
We have enrolled approximately 15,000 members in May.

Is the company listed with any of the stock exchanges?
No the company is not listed.

Ahmedabad Mirror

UCO Bank opens SME hub in Chennai

UCO Bank opened its third loan SME (small and medium enterprise) hub in Chennai recently. The hub will cater to the credit requirements of SME entrepreneurs as categorised by the RBI on the basis of investment in plant and machinery. The hub will be a single window delivery point for the redefined SME category (Rs 25 lakh to Rs 25 crore).

Business Line

MFI autonomy

This refers to “RBI bats for big MFI autonomy”. The RBI should mandate and put in place procedures and processes for the functioning of operational issues of MFIs, such as lending, recovery, loan tenure, interest rates, and parameters for classification and identification of people for providing assistance. As MFIs raison d'etre is to lend to the poor, the interest rates should be far less than the prevailing ones. The government needs to support the MFIs in the mobilisation of funds. The RBI should conduct regular audits towards the scrutiny of loans lending application as most of the poor, uneducated people, involve. The charges schedule and functioning of MFIs should be well disclosed so that transparency and accountability will prevail.

Vedula Krishna,Visakhapatnam    

RBI Penalizes Jamnagar Commercial Co-operative Bank for KYC Violations

The Reserve Bank of India has imposed a monetary penalty of Rupees two lakh only) on The Commercial Co-operative Bank Ltd , Jamnagar for not displaying its name properly in all stationery and advertisements, for making donation beyond prescribed limit and for not implementing Know Your Costumer (KYC) norms. The Reserve Bank of India 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, bank's reply and personal submissions in the matter, the Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of the penalty. Information to this effect was made by Ajit Prasad ,Assistant General Manager through Press Release : 2010-2011/1710

abclive.in

Wealth advisory services must be regulated better

At present, the wealth management space does not have a specific regulator and its activities fall under the gaze of multiple watchdogs such SEBI, IRDA and the RBI.........

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FSDC sub-committee to strengthen regulatory framework

The Reserve Bank of India (RBI) said the sub-committee of the Financial Stability Development Council (FSDC) has agreed to strengthen regulatory framework for wealth management activities in its second meeting held on Tuesday. The sub-committee has also agreed to formalise an institutional mechanism for supervision of financial conglomerates and to put in place a robust reporting platform for over-the-counter derivatives market, the RBI said in a statement. The sub-committee was also briefed about the implementation status regarding the budget announcements on investment in mutual funds by non-resident investors and setting up of infrastructure debt funds.

http://in.reuters.com/ 

FSDC panel discusses regulatory gaps in NBFC sector

A Financial Stability Development Councils (FSDC) sub committee, in its meeting today, discussed the regulatory gaps in the non-banking financial sector and ways to plug them. The meeting, which was chaired by the governor of the Reserve Bank of India, was the second meeting the sub-committee. “The sub-committee reviewed recent macroeconomic and financial sector developments and focused on issues related to systemic risks. It also deliberated upon regulatory gaps in the non-banking finance companies (NBFC) sector and the regulation of government-sponsored NBFCs,” RBI said in a release. Regulations for NBFCs are not as stringent as those for banks, since they are not subject to any restriction on capital market exposure unlike banks. There are also no restrictions on NBFCs for setting up subsidiaries.  RBI had earlier said multiple regulators for non-banking financial companies and an entity-based approach to regulation led to possible regulatory gaps. “Functional activities remain unregulated, gaps in regulation permit surrogate raising of public funds, leveraged activities by merchant banks, portfolio managers and brokerages are not subject to prudential regulation. These need to be urgently addressed,” RBI had said in its second financial stability report released in December 2010. The sub-committee agreed to strengthen the regulatory framework for wealth management activities to formalise a mechanism to supervise financial conglomerates, RBI said. Apart from the RBI governor and four deputy governors, the meeting was attended by R Gopalan, economic affairs secretary, and Kaushik Basu, chief economic advisor. Regulators of financial markets, insurance and pension sectors were also present. Officials who attended the meeting said attracting foreign investment in infrastructure debt funds was also discussed. “This (discussion on infrastructure debt funds) is to invite foreign funding and what structure would satisfy foreign investors,” said Yogesh Agrawal, chairman, Provident Fund Regulatory and Development Authority. When asked whether the provident fund regulator would allow funds to invest in infrastructure debt funds, Agrawal said the guidelines were already liberal.

Business Standard

RBI eases CDS norms, gives banks 5 months to comply

The Reserve Bank of India (RBI) has relaxed the eligibility norms for using credit default swaps (CDS) on corporate bonds. The move is aimed at ensuring wider participation from banks. The capital adequacy requirement for banks has been reduced from 12 per cent to 11 per cent and the requirement of core capital has been brought down from 8 per cent to 7 per cent. CDS acts as an insurance for lenders in case a borrower defaults on a loan. The buyer of the cover against the loan makes regular premium payments to a counterparty, which assumes the risk in case of a default.  RBI on Tuesday released the final guidelines after accommodating various suggestions and recommendations from market players. The eligibility norms would be applicable from October 24, it said. Other than reducing the capital adequacy requirement, RBI also allowed restructuring under credit events for CDS, which were not included in the draft. The grace period was doubled to 10 business days from the sale of underlying bond to unwind the CDS position.  Even after these relaxation, market players feel these instruments will take a couple of years before they are actively used. “This is a good step towards developing the debt market in India, but with such strict conditions, the market will start off with small volume and a few players,” said Gopal Bhattacharya, MD & head global markets-India, Societe Generale. The regulator said ‘users’ could not exit the CDS by selling it off. They can exit either by unwinding the contract with the original counterparty or, in the event of selling the underlying bond, by assigning the CDS protection, to the purchaser of the underlying bond. Non-banking finance companies (NBFCs) and primary dealers will require a minimum capital adequacy of 15 per cent. Banks and NBFCs that desire to use CDS should not have net non-performing assets above three per cent. Foreign institutional investors have been allowed only to buy credit protection to hedge their credit risk as users. The CDS has been allowed only on listed corporate bonds and unlisted but rated bonds of infrastructure companies. The corporate bond market in India is not fully developed as only top-rated bonds dominate the market at present. “CDS will encourage lower rated entities to enter the bond market as lenders will be able to hedge their risks,” said a treasury official with a public sector bank.

Business Standard

MSC Bank to get refinance from Nabard

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RBI sets stiff rules ahead of Credit default swaps debut

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Credit default swaps set for kickoff in October

The Reserve Bank of India (RBI) has set October 24 as the date for commencing transactions in credit derivatives.  Credit derivatives are to be introduced in the form of credit default swaps, or CDS. A CDS transfers the risk of default on a bond — or the so-called credit risk — from the owner of the bond to the seller of CDS. Since it’s a protection or insurance bought against default, the transaction is between the ‘protection buyer’ and ‘protection seller’. The seller receives annual premiums from the buyer for taking on the credit risk. The buyer, in turn, receives full payment from the seller in the event of default. The RBI has defined two types of players in the markets:those who buy protection to hedge their underlying cash exposure in a corporate bond, and market makers who can sell and buy protection without having an underlying exposure and quote bid-ask (or buy-sell) spreads. The protection seller will have to earmark the exposure against prescribed limits set by the regulator. The users necessarily needto have underlying positions to buy protection and they are not allowed to sell protection. Users will have to unwind CDS positions when the underlying is sold. Users include banks, primary dealers (PD), mutual funds, insurance companies, FIIs, NBFCs, housing finance companies, listed corporates and provident funds. Market makers include PDs, NBFCs and banks, while mutual funds and insurance companies can be market makers with relevant regulatory approval. The RBI has set out eligibility norms for market makers in order to make sure that strong entities take credit derivative risk. The reference obligations for the underlying CDS are listed corporate bonds, while unlisted but rated corporate bonds can be a reference obligation if they belong to the category of infrastructure bonds. Unlisted and unrated bonds floated by special purpose vehicles (SPVs) also qualify for reference obligation with caveats. The CDS contract will be standardised in terms of coupon rate, coupon payment dates and maturity. The settlement methods can be physical, cash or auction for market makers while users will necessarily have to settle physically. Credit events will be clearly defined in the contract document and will include bankruptcy, failure to pay, repudiation/moratorium, obligation acceleration, obligation default, restructuring approved under Board for Industrial and Financial Reconstruction (BIFR) and corporate debt restructuring (CDR) mechanism and corporate bond restructuring. Participants will have to work with strict risk limits that do not place too much stress on an entity’s balance sheet in case of violent market movements. The CDS positions will have to be marked to market on a daily basis based on a CDS curve. The guidelines also cover aspects of accounting, counter-party risk, trade reporting and margining. The corporate bond market will now have to set up the necessary infrastructure by October 24, to get ready to trade in CDS. The market will have to find its footing slowly and if it does take off, India will be on the global map of credit derivative markets.

DNA

RBI’s microfinance directive: Should the onus be on bankers and chartered accountants?

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Managing a debt mountain

If the government wants to set a DMO, it should first divest its majority stake in banks so as to make these truly independent. Unless that is done, the government will end up creating a far bigger hazard. In recent years, the money borrowing programme of the Union government has been formidable. It is usual for fiscal deficit to cross the 5% mark when accounted properly. Given the stage of evolution of financial markets in the country, the task has been accomplished quite smoothly. And this has been, in no small measure, due to careful management by the Reserve Bank of India (RBI): the central bank has ensured that bond and equity markets don’t get roiled due to the massive amounts being raked in by the Behemoth in New Delhi. All this may change, for the worse, if the government’s plans to set up an “independent” debt management office (DMO) come to fruition. The plan to establish DMO is old. It was announced first in the 2007-08 budget. It has been reiterated this year. Since then, RBI has voiced its concern at this hiving off of a vital function. This has been met by a chorus of arguments, mostly specious, from the government’s side. The latest being by economic affairs secretary R. Gopalan in a recent interview. These can be summed up easily: there is a conflict of interest between the debt and inflation management functions of RBI. As the government’s debt manager, RBI would like to issue bonds at a low interest rate to ensure cheap money for it. As an inflation manager in an economy with built-in inflationary pressures, it has to set higher interest rates to cool prices. Creating an independent DMO will, it is said, end this dilemma. This is, at best, an excuse. In reality, the central bank’s independence to set policy rates is constrained by a host of factors, among which government “persuasion” is certainly one, if unsaid, factor. So this contradiction is quite muted in practice. If anything, a DMO under the finance ministry is bound to create a far more serious conflict of interest. Most government debt is purchased by banks and big insurance companies. The government is the owner of these entities. Once it gets the power to set the interest rate on the debt it issues, the temptation to borrow large sums at arbitrarily low rates will be too strong to resist. It will, so to speak, become a market maker for its debt, a scary prospect for financial markets. Given the history of fiscal recklessness of governments in India, this will be a bad move from a market perspective. If the government wants to set a DMO, it should first divest its majority stake in banks so as to make these truly independent. Unless that is done, the government will end up creating a far bigger hazard.

Mint

India uncommitted over new IMF chief, declines back calls for a non-European head

NEW DELHI: Finance minister said on Tuesday he was in touch with his counterparts on choosing a new IMF head, but declined to back calls from other emerging countries for a non-European to be put in charge.  Senior Indian economic advisor Montek Singh Ahluwalia , a key force in India's economic liberalisation drive, has been mentioned as a potential candidate for the International Monetary Fund top job.  When asked about a new managing director for the 60-year-old lender coming from a developing country, Pranab Mukherjee told reporters: "There are set procedures."  "We shall have to keep in mind that it is a financial institution. Shareholding and voting power are relevant factors," Mukherjee said, adding "normally, we decide through the process of consensus building."  India has not put forward a candidate for the managing director's position.  But the Indian government's top economic adviser Kaushik Basu has said he views Ahluwalia, deputy head of the nation's planning commission, as "the best name... not only from India's point of view but from the world's".  European nations are keen to keep their longstanding hold over the leadership of the global lender but some emerging market nations such as Mexico have said it is time for an IMF chief from outside the continent.  Mexico on Monday put forward its central bank governor Agustin Carstens against French favourite Christine Lagarde , saying developing nations needed a larger role in implementing IMF policies.  European nations hold close to one-third of the IMF's voting power while the United States has nearly 17 percent; Asian nations hold around 20 percent with the rest held by other countries.  Lagarde has emerged as the leading candidate, receiving the support of many European nations, including Britain.  China has also said it would back Lagarde as the next IMF chief, the French government said on Tuesday, although Beijing has refused to comment.  Dominique Strauss-Kahn quit last week as head of the IMF to defend himself against charges in New York of attempted rape of a hotel employee.  "Our executive directors (at the IMF) are meeting and exchanging views (on a new head) and I am regularly being informed what is happening," Mukherjee said.  Last week, the IMF board pledged "an open, merit-based, and transparent" selection process based on consensus, though it could come to a board vote.

ET