H.R.Khan likely to succeed Gopinath as RBI deputy guv

Reserve Bank of India (RBI) Executive Director H R Khan has emerged as the front runner for the post of Deputy Governor in the central bank.

Shri Khan would replace Shyamala Gopinath who retires on June 20, after a seven-year stint as Deputy Governor.  According to sources, the finance ministry has cleared Khan's appointment for the Deputy Governor’s post. The proposal would now be referred to the Appointments Committee of the Cabinet (ACC), which is headed by the prime minister. A search committee to select a new Deputy Governor, headed by RBI Governor D Subbarao, had suggested two candidates — H R Khan and G Gopalakrishna — for the Deputy Governor's post, after interviewing seven RBI executive directors last month.  If appointed a Deputy Governor, Khan would supersede three executive directors — V K Sharma, V S Das and G Gopalakrishna. An RBI Deputy Governor can be appointed for a maximum of five years and the retirement age for a Deputy Governor is 62. To be eligible for the Deputy Governor’s post, a candidate must have at least two years of service left. As an Executive Director, Khan looks after four portfolios — the Foreign Exchange Department, External Investment and Operations, Government and Bank Accounts and Internal Debt Management. Gopinath, who looks after the Foreign Exchange Department, is also in charge of Payments and Settlement, Non-Banking Supervision, the Financial Stability Unit and External Investment and Operations. The other RBI Deputy Governors are K C Chakrabarty, Subir Gokarn and Anand Sinha. RBI is also increasing the number of Executive Directors from seven to nine.

BS

Report on Review of National Small Savings Fund

The Union Finance Minister, Shri Pranab Mukherjee receiving the Report of the Committee on Comprehensive Review of National Small Savings Fund from the Deputy Governor of Reserve Bank of India (RBI), Ms. Shyamala Gopinath, in New Delhi on June 07, 2011

CAB facilitates Aadhar……..

Kamala Rajan inaugurated the camp by registering her fingerprints

Ms. Kamala Rajan, Chief General Manager & Principal is always open to good suggestions and ideas received from the staff.  She quickly acted upon one such suggestion received from Shri Nitin Desai, Manager (Rajbhasha) for facilitating issuing of Aadhar cards to the CAB staff and their family members. Accordingly, a three days’ camp from May 23 to 25, 2011 was organized in the College of Agricultural Banking in collaboration with Bank of Maharashtra for the registration of "Aadhar Cards", a drive initiated by the Unique Identification Authority of India under the auspices of the Planning Commission of the Government of India.  Nearly 500 people, which included the staff members and their families registered their names. The cards will be sent to them by post.

Post office savings account interest be hiked, says panel

New Delhi : A committee headed by Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath has recommended that the interest rates on post office savings accounts be increased to four percent from the existing 3.5 percent in a bid to promote small savings. The committee submitted its report to Finance Minister Pranab Mukherjee Tuesday, and has recommended hiking the post office savings account interest rate from 3.5 percent to four percent, benchmarking interest rates on other small savings schemes, the finance ministry said in a statement.  The committee, set up for comprehensive review of the National Small Savings Fund, also recommended that the mandatory component of investment of net small savings collections in state government securities should be reduced from 80 percent to 50 percent.  'The balance amount could either be invested in central government securities or could be on-lent to other states on basis of requirement, or could be lent for financing infrastructure projects requiring long-term finance,' it said.

MSN News

Give higher returns on PPF, post office savings: Panel

NEW DELHI: There is some good news for millions of investors who depend on small savings instruments such as post office savings and public provident fund scheme.  A committee set up by the finance ministry has recommended that the annual PPF limit be enhanced from the present level of Rs 70,000 to Rs 1 lakh besides changing the interest rate structure. Unlike the present system where rates have not changed during the UPA regime, the panel headed by RBI deputy governor Shyamala Gopinath has suggested the return on all small saving schemes, other than post office savings account, be linked to the rate paid on government securities.  So, in a rising interest rate environment like at present, investors would benefit and would not merely have to pay higher EMIs.  The committee, which submitted its report to finance minister Pranak Mukherjee, has recommended that the rate of interest be at least 25 basis points higher than the g-sec yield. For senior citizens the spread should be at least 100 basis points higher. If the proposal is accepted, based on the present interest rate, PPF accounts would be close to 8.5%, instead of 8%. In case of senior citizens, the returns would be 9.25%. In both cases, it would be tax free.  For post office savings accounts, the interest rate is proposed to be enhanced from 3.5% to 4% to bring it in line with the returns on savings bank accounts with banks. The panel has recommended that these rates may be notified by the government at the start of the financial year based on the average yields on government securities in the previous calendar year.  Along with higher returns, the committee has also recommended the abolition of commission payment to agents on PPF and Senior Citizens' Savings Scheme. The standardized agency commission is proposed to be halved to 0.5% as part of a plan to reduce the overall cost of the small savings fund run by the government.  There is, however, bad news for those investing in Kisan Vikas Patras, as the instrument is proposed to be discontinued.  For those parking funds in National Savings Certificates there is good news as well as bad news. First the bad news, the tenure of the standard product is proposed to be cut from six years to five. The good news is there will be a new product with 10 year maturity with interest rate which is 50 basis points higher than g-sec with a similar maturity. So, the interest rate on offer would be 8.3% based on the 10-year benchmark government bond.  In addition, the committee has also suggested that states be burdened with only half the funds they raise under small savings schemes instead of 80% at present. While there have been several committees that have looked at restructuring the small savings schemes, the recommendations were rejected as they would have upset popular sentiment. But unlike the previous reports, the present one actually recommends a market-linked interest rate regime, which would be more palatable for the investors as well as the government.

TOI

What are chip-based and magnetic strip cards?

Chip-based cards have a small chip which stores the account information in an encrypted format and provides an additional level of security by asking for a personal......

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Ramdev effect: Trader converts Rs. 24 lakh into 100-rupee notes

Mumbai:  Besides throwing the ruling Congress party into a political quagmire, Baba Ramdev's abruptly-terminated fast-unto-death seems to have had a series of unintended consequences as well. One of the more bizarre ones relates to a metal trader in Pydhonie, who was so afraid of currency notes of 500 and 1,000-rupee deno-minations going out of circulation that he onverted his savings amounting to Rs. 24 lakh to notes of Rs. 100. He even paid an agent Rs. 24,000 to help him do so. It may be recalled that one of the yogi's demands was the withdrawal of Rs. 500 and Rs. 1,000 notes from circulation to make bribery more difficult.  The incident took place on Saturday evening, when, according to sources from Pydhonie, the metal trader panicked on hearing the list of Baba Ramdev's threats and demands. "He thought the government would accede to this demand immediately and he would lose Rs. 24 lakh out of the money he kept stashed away in cash as savings, because it was in denominations of Rs. 500 and Rs. 1,000.  Ramdev effect: Trader converts Rs. 24 lakh into 100-rupee notes. Besides throwing the ruling Congress party into a political quagmire, Baba Ramdev's abruptly-terminated fast-unto-death seems to have had a series of unintended consequences as well. One of the more bizarre ones relates to a metal trader in Pydhonie, who was so afraid of currency notes of 500 and 1,000-rupee deno-minations going out of circulation that he converted his savings amounting to Rs. 24 lakh to notes of Rs.100. He even paid an agent Rs. 24,000 to help him do so. It may be recalled that one of the yogi's demands was the withdrawal of Rs. 500 and Rs. 1,000 notes from circulation to make bribery more difficult.  The incident took place on Saturday evening, when, according to sources from Pydhonie, the metal trader panicked on hearing the list of Baba Ramdev's threats and demands. "He thought the government would accede to this demand immediately and he would lose Rs. 24 lakh out of the money he kept stashed away in cash as savings, because it was in denominations of Rs. 500 and Rs. 1,000.  He approached an agent to get it converted to notes of Rs. 100 and smaller, who charged Rs. 1,000 for every lakh," said a person close to the trader. Alpana Killawala, spokesperson for the Reserve Bank of India, said these kinds of transactions aren't illegal and even banks offer the facility of exchanging notes of higher denominations for those of smaller ones. "There is no irregularity till the time only currency notes are being exchanged. There are many banks that offer this facility as well.  But, for higher amounts, the banks are supposed to note down PAN card numbers and also deposit the money," she said. A source said many people prefer to get this done via agents instead of banks, to avoid the Income Tax glare. Mahindra Angara, president, Metal Traders' Association, said, "I haven't heard of anything of this sort. This must be a one-off case."  Baba Ramdev had called for the abolition of currency notes of higher denominations, claiming that the move would reduce corruption. He had stated that when the notes are of higher denominations, the bundles made out of them are thinner and easier to hide.  He had contended that the exchange of bigger bundles and in greater numbers would attract attention and dissuade people from giving and accepting bribes. Ramdev had, however, stated at the beginning of the strike that he was putting this particular demand on the backburner. 

NDTV Profit  

Coins in memory of Bhagat Singh remain a distant dream

It was in September 2006 that the Union Government decided to issue commemorative coins in memory of Shaheed Bhagat Singh to honour the sacrifices made by him to help the country attain freedom. Even after four and half years of the same, the coins have still not become a reality. An RTI query by social activist PP Kapoor has revealed that the Union Government was unaware of the number of coins produced thus far to be put into circulation. In reply to the query which was put up to the PMO, the Security Printing and Minting Corporation of India (SPAMCI) stated that commemorative coins of Rs 5 and Rs 100 denomination were produced by the India Government Mint (IGM), Kolkata only for the release function held at the martyr’s native village Khatkar Kalan in Bhagat Singh Nagar district in Punjab in September, 2008. After which, the general public did not get to see the coins in circulation. Though the SPAMCI stated that birth centenary coins of Rs 5 denomination were to be produced in ferritic stainless steel having a quality of 25 million pieces, it had no information about the number of coins produced till date. In the reply dated May 13, 2011, the corporation said that the dies for the same were being provided by IGM, Kolkata to IMG Hyderabad, which was assigned the task of producing these coins and work was under progress. The corporation also mentioned that dies and punches were being arranged by IGM and blanks were being done by IGM Hyderabad. It stated that after minting the coins, these would be handed over to the RBI for distribution. However, there was no mention of the coin of Rs 100 denomination in the reply. Social organisations led by the All-India Shaheed Bhagat Singh Brigade have already appealed to the Centre to introduce the commemorative coins of Rs 100 and Rs 5 denominations announced by it on the birth centenary of Bhagat Singh. Chairman of the brigade Yadavinder Singh Sandhu wrote a letter to the PM last year, urging him to bring the coins into daily.

The Tribune

Top urban co-op banks set to expand area of operations

India's top three urban co-operative banks — Saraswat Co-operative Bank, Cosmos Co-operative Bank and Shamrao Vithal Co-operative Bank — may soon spread their wings across the country and give private sector banks tough competition.  Following the Reserve Bank of India's nod for expanding its area of operations, the Mumbai-headquartered Saraswat Bank is drawing up plans for an all-India footprint.  Currently, the area of operation of India's largest UCB is restricted to six States — Maharashtra, Goa, Karnataka, Gujarat, Madhya Pradesh and Delhi. It has a network of 217 branches. “We have already applied to the RBI for issuing licences at 96 locations. Our target is to reach a business (deposits plus advances) level of Rs 50,000 crore by March-end 2016 from Rs 27,313 crore as on March-end 2011,” said Mr Eknath Thakur, Chairman, Saraswat Bank. The RBI is amenable to granting permission to well-managed and financially sound UCBs to expand their area of operation. Hitherto, UCBs could not expand their operations beyond a few States. Cosmos Bank (as on March-end 2011, total business, Rs 15,521 crore; and branches, 119) and Shamrao Vithal Bank (total business, Rs 10,512 crore; and branches,105) have sought the regulator's permission to expand their area of operations.

The conditions

The RBI will allow an urban co-operative bank to become a pan-India bank provided it has, among others, a minimum capital-to-risk-weighted assets ratio of 9 per cent, a minimum Grade II classification, net worth of Rs 500 crore or more, according to Mr Shashikant Bugde, Chairman, Cosmos Bank. “We have applied to the RBI to have a pan-India presence. Currently, we have branches in Maharashtra, Gujarat, Madhya Pradesh, Karnataka and Andhra Pradesh.  “Once the regulator gives us permission, we will expand our operations to Delhi, Goa, Tamil Nadu, Rajasthan and Tripura,” he said. Shamrao Vithal Bank plans to open branches in all States once the central bank's permission comes through, said Ms Himangee Nadkarni, Chief Financial Officer.

Business Line

Co-operative sector banks sinking, says HC

Raising concerns over the deteriorating state of co-operative sector banks in Maharashtra, the Bombay High Court on Tuesday said the General Manager of the Rural Co-operative Banking Cell of the Reserve Bank of India (RBI) be made a party to a litigation seeking action against the pathetic condition of the Kolhapur District Central Co-operative (KDCC) Bank.  The court felt the scope of the litigation could be widened to all co-operative sector banks instead of restricting it to the KDCC Bank.  “Many co-operative sector banks are virtually sinking, this is very serious and we cannot keep our eyes closed in such a situation,” the court remarked. “Tell us if there is any co-operative sector bank which is earning profit because of its operations,” Justice BH Marlapalle asked the state government.  Kolhapur-based activist Sunil Modi had filed the petition through his lawyer Uday Warunjikar stating that despite several inspections and audits indicating rampant malpractices in KDCC Bank, no criminal action had been initiated so far. Justice Marlapalle and Justice UD Salvi have asked the Registrar to file an affidavit stating measures taken by him against erring directors and officers of KDCC Bank.  Warunjikar told the court that many directors of KDCC Bank happen to be influential politicians, either sitting or former ministers.  “Probably, that is the reason why no action has been taken,” the court said.  According to Modi’s petition, the liabilities of the bank had exceeded the value of its assets. The net worth of the bank was minus Rs 22.08 crore as on March 31, 2007. In 2008, the net worth of the bank had plummeted to minus Rs 157.79 crore. The case will be heard further on June 22.

IE

The End May Be Nigh for Microfinance in India

The likes of the Andhra Pradesh law–and the inability of the RBI to counter it by asserting that it is the ultimate regulator of non-bank financial companies– creates “regulatory uncertainty that has a negative impact on the investment climate......


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Better planning for longevity risk is essential

The third component concerns commercial type organisations, whether in the private or in the public sector. The PFRDA should be given the powers to require these organisations to project organization-specific longevity risks, to subject them to stress tests, and to prepare plans for meeting such risks. They should include public sector financial institutions, including the Reserve Bank of India; private corporations with DB plans; public organisations such as the Indian Railways, Indian Post, public sector banks and others.

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Bank borrowings from RBI signal rate hike

Banks' rising borrowings from the Reserve Bank of India indicate that lenders foresee a spike in interest rates next week as the advance tax....

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Government of India appoints P K Panda as director of Bank of India

Bank of India has announced that Government of India, Ministry of Finance, Department of Financial Services, vide their notification dated 30 May 2011 has nominated P K Panda, Regional Director, Reserve Bank of India, Bhopal as director of the bank in place of G Mahalingam with immediate effect and until further orders. 

Face Value - A Whole Heap More to do for the Nabard Man

Unlike his three immediate predecessors, the new chairman of National Bank for Agriculture & Rural Development (Nabard) has an advantage. Prakash Bakshi, who assumed the reins last week is out and out a Nabard man. This gives him an edge at a time when the bank is facing challenges in channeling loans to boost capital formation in agriculture, strengthening the rural cooperative credit structure and empowering regional rural banks for successful execution of the government’s financial inclusion agenda by 2012. The past three chairpersons — Ranjana Kumar (2003-2005), YSP Thorat (2006-2008) and UC Sarangi (2008-2010) — all very distinguished professionals, joined the bank from outside and had to spent months to understand the functioning of Nabard. Before assuming charge at Nabard, Mr Kumar was the chairperson of Indian Bank and Mr Sarangi was the principal secretary to the Maharashtra chief minister. Mr Thorat was executive director with RBI and joined Nabard as MD before elevated to the chairman’s position.  In contrast, Mr Bakshi, a doctorate in Economics, has risen through the ranks and having spearheaded key departments like cooperative revival, farm sector, micro credit and financial inclusion, is readily abreast with the emerging demands of these verticals. Before being picked as the head of the institution, Mr Bakshi was at the vanguard of the 29-year-old entity’s first-ever organisational and business restructuring drive and many expects his elevation will add momentum to this initiative. He started his career as a lecturer at Ravishankar University, Raipur, before joining the Reserve Bank of India in 1979. He was part of Nabard since its inception on July 12, 1982. It’s now widely accepted that the country needs to look beyond traditional areas of farming and focus more on allied activities such as dairy, poultry or fisheries to clock a 4% agricultural growth, which is reckoned as a must for a sustained GDP growth of 9% or above. In this light, Nabard needed an overhaul so that it can adjust to the changing scene and make worthy contribution to boost the more or less-stagnated capital formation in agriculture. Another significant agenda before Nabard now is to create an enabling environment for the country's financial inclusion effort. For this, rural cooperative banks and regional rural banks (RRBs) need to be revamped fast and being the regulator, Nabard has to find ways to put them on modern banking technology platform. Under Mr Bakshi’s direction, it has already taken steps to this direction and as the chairman, he has to ensure proper execution of the efforts taken.  “He is very focused and will not mince words,” said a senior Nabard official. His colleagues find him accessible and business oriented. Earlier in his career, he was associated with the Vaidyanathan Committee for cooperative revival, member-secretary for the committee to examine the capital structure of RRBs. Such experience will certainly guide him in strengthening these two key agencies. Mr Bakshi will also have to take efforts to graduate the self help group-bank linkage programme to the next level. The scheme, immensely successful in empowering the rural women in a country where women do not get rights so easily, has reached saturation in several pockets and there are signs that many groups are disintegrating. He was part of the team that designed the world’s largest micro-credit programme, and now he needs to devise ways to hold the groups together and increase the extent of bank loans to them. His skills will also be put to test as Nabard is now busy drafting the revised microfinance bill, which is expected to give a direction to the country’s fledgling MFI sector.

ET

Inflation over the decades

The Reserve Bank's repeated rate hikes point to its concern over inflation. Consumer price inflation has been in double digits for the two consecutive years......


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Impersonal Numbers

Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty does not mince his words. He has taken issue with what has been an age-old practice among banks: of freshly-minted..............

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