A Pocketful of Data - Review by P.P.Ramachandran

.........Kanagasabhapathy, the Director of the Research Foundation, is a highly respected ex- official of RBI and the IMF and ...............

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'Interest rates to be raised, if we get uncomfortable' - Arun Kaul, CMD, UCO Bank

After the Reserve Bank of India (RBI) upped the repo rate by 25 basis points, which also means a 25 bps rise in reverse repo rate, most banks are yet to decide whether to pass on the increased interest rates to the consumers. UCO Bank Chief Managing Director Arun Kaul tells Malvika Joshi and Shaikh Zoaib they will do so only if the RBI's action results in making his bank uncomfortable. Edited excerpts:

The RBI revised the policy rates on June 16, will you increase the interest rates? If yes, when?

We have not decided anything yet, but in case the rise goes beyond our comfort level, we will have no other choice but to pass it on to the customers.

Non-performing assets have been a cause of concern in the quarterly results announced by the banks. Keeping in mind the moderated growth, how do you plan to manage the asset quality?

We are addressing the issue and trying to recover. Now on, we will be careful about our customer and product selections. We are confident of being able to do a good job this year. Just wait for the results.

There have been talks that non-banking financial companies (NBFCs) will be given banking licences in the near future. Do you think that will make competition tougher for the existing core banking industry?

India is a fairly large market. In a country of 1.12 billion, more than 50 per cent people do not have bank accounts. A large part of the market still remains untapped with several villages and towns not having even a single bank branch. In such a situation, I feel if NBFCs are given banking licences that wouldn't be a problem at all.

How is UCO bank planning to achieve financial inclusion and literacy?

Many people do not utilise the banking facilities as they are not aware of the products offered. Hence, for the purpose of financial literacy, we have set up some financial learning and counselling centres and are looking to set up more. We are supposed to identify the villages for setting up rural branches according to the Planning Commission. We have a target of covering 1,800 to 2,000 villages and have already covered between 1,000 and 1,200. Hopefully, we will meet our target by next March.

BS

Bank employees to strike work on July 7

About 10 lakh bank employees across the country will go on strike on July 7 to protest against the government's policies on public sector banks, the United Forum of Bank Unions has today. "The Centre is following a policy that will destroy public sector banks in the country," AK Ramesh, National President of Bank Employees Federation of India (BEFI) told reporters here. The striking employees are demanding no privatisation of public sector banks, non merger of banks and ban on outsourcing, he said.

BS

Small change, big memories

As yet another coin makes its exit from the Indian currency scene, the 25 paise or the char anna evoked nostalgia among old timers and even the not-so-old.

From June 30, the 25 paise coin will no longer be legal tender. It is being phased out because it is unviable to produce the coin, because of the rising metal costs. As yet another coin makes its exit from the Indian currency scene, the chavanni, the char-anna or the naal-anna evoked nostalgia among old timers and even the not-so-old. Tiruchi-based businessman, 50-year-old Mr Gopinath Aiyar recalls how four decades ago, he and his brother would earn 25 paise — a sum they considered princely — by fetching water for their mother.  “My father was a station master at Kodambakkam in Chennai. In those days there used to be acute shortage of drinking water in summer. We would walk some 2 km to fetch drinking water either in the thick of night or as early as 4 a.m. The incentive was the 25 paise,” he said.  With this 25 paise, the young Gopinath would hire a cycle for three hours and ride around. He also describes how 10 years later, in his first job at Lucas TVS in Chennai's suburban Padi, the coin would fetch him a sumptuous breakfast of idlis and vadas. For 49-year-old Mr Dony Kuriakose, the Delhi-based Director of Edge Executive Search, the chavanni brings back memories of a horrific accident, when he was just eight years old.  “In those days, 25 paise used to fetch an orange lolly and I had just bought one and was happily eating it and walking when I was hit by a motor-bike. I was laid up for 25 days and still have the scars,” he says.  Several 60-year-olds in the Capital described the cholley bhaturey they would get for 25 paise “in the good old days”. For image management guru Mr Dilip Cherian, the 25 paise instantly brings back memories of Coca-Cola, a rare treat those days. “I studied in Calcutta, and the big treat after Church on Sundays used to be money to buy a Coke. That used to cost 25 paise,” he says. He also remembers buying postal envelopes with 25 paise stamps — as opposed to inland letters — “to send letters to special friends”.  Eighty-year-old retired schoolteacher Mrs Yeshodhara Balakrishnan remembers visiting the beach in her home town Tellicherry in Kerala in the 1960s, just as fishermen would be returning with their catch.  “For four annas, we got about 50 sardines fresh from the sea,” she says. “And, we got a mackerel for one rupee,” she says, wistfully.  For the political movers and shakers in the Capital, chavanni takes them back to the days when for 25 paise, they could join the Congress party.  And, for avid film-goers, the chavanni immediately brings to mind sitting on the front row and passing colourful comments on the movie.  Now, the chavanni era has ended — yet another coin will soon become a collector's item.

Business Line

With 45% of deposits maturing within a year, banks may have to up rates

Nearly 45 per cent of bank deposits mature within one year — spread over different tenors from as short a period as one day to one year. This is visible from the deposit maturity pattern of a couple of top banks across both public and private sectors. The implication for all banks in the current scenario is that their cost of deposits is going to go up as they start re-pricing them at higher levels. Deposit growth has been moving up to about 18 per cent recently. Although a significant portion of deposits in the system is short-term, bank depositors seem to prefer putting their money in the 1-3 year deposits.

Tenure pattern

Five top public sector banks whose deposits account for a little over Rs 20 lakh crore (or about 40 per cent of the total banking deposits), had about 26 per cent of their deposits in the 1-3 year category. For four top private banks, the corresponding figure was nearly 40 per cent. The depositor preference for medium-term deposit has remained more or less similar during the last decade. As for long-term deposits, public sector banks seemed to enjoy a higher share with about 29 per cent of their deposits coming in the above-3-year category. For private banks that was relatively lower at 17 per cent. One explanation for this phenomenon is that private banks have generally steered clear of long-term exposures and, therefore, don't feel the need to raise long-term money. A slightly harsher view could be that the depositing public still hasn't developed the confidence to put their money in long-term deposits of private banks. The residual maturity pattern of deposits given by banks also throws up some more interesting nuggets. For instance, Bank of India had 5.4 per cent of its deposits maturing within a day of the balance-sheet date of March 31, 2011. This was significantly above the average for the sector. This could possibly be explained as a consequence of raising very short-term deposits from corporates, public sector undertakings and government departments.

Business Line

India's answer to Visa from today

Rupay, dubbed as India’s answer to MasterCard and Visa, is set to make its debut tomorrow. Bank of India will give the first batch of automated teller machines (ATM)-cum-debit cards to Unique Identification (UID) number holders in Pagdha village of Maharashtra’s Thane district. The card, which will be given to ‘no frills’ account holders, can be used to withdraw cash from ATMs as well as from micro-ATMs, the hand-held devices with the bank’s business correspondents. However, for swapping the card in point-of-sale terminals at merchant establishments, customers will have to wait till the year-end. RuPay card will have two identification features. The cardholder will have to provide the UID number for biometric identification for using micro-ATMs, while the PIN will be required for transactions via ATMs. “Since these cards are Aadhar-based, we will issue these cards to around 90-95 people in the village who have already been allotted the UID numbers,” said A P Ghugal, general manager, Bank of India. The bank plans to roll out these cards through each of its five sponsored regional rural banks by next month. Corporation Bank and Union Bank of India are next in line to issue the ATM-cum-debit RuPay cards. To start with, banks are targeting semi-urban areas. “To make these cards functional, one needs data connectivity which is not available in rural areas, so banks are starting out with semi-urban areas for now,” said A P Hota, managing director and chief executive officer, National Payments Corporation of India (NPCI). Backed by NPCI, RuPay card is a payment gateway and an alternative to the global real-time payment processing firms like Visa and MasterCard. “Premium payment service providers may not be interested in penetrating to the ground level. This is the value proposition that only RuPay offers. Initially, it will be helpful in filling up the gap and later on, it can be issued to matured customers in urban areas as well,” said Hota. Since these cards are being issued to 'no frills' account holders for now, the limits for withdrawal and transactions will be in line with terms and conditions laid down by the banks on their respective 'no frills' accounts. These cards cannot be used at point-of-sale terminals for now. "NPCI is working towards setting up the acceptance infrastructure for RuPay cards, which will be completed within six months. This will enable bank customers to use these cards at merchant establishments as well," said Hota. Debit card usage in India has grown rapidly. According to the Reserve Bank of India, the outstanding number of debit cards rose 25 per cent, while the volumes transacted jumped 46 per cent in 2010-11 compared to the previous year.

BS

RBI STAFFERS PROTEST WITHDRAWAL OF PENSION REVISION

Employees of the Reserve Bank of India (RBI) held a demonstration in front of the central office building on various pension-related issues including withdrawal of revision of pension. The pension updation scheme of 2002 for pre-1997 retirees was opposed by the government in 2008. As a result, RBI had to withdraw the updated pension scheme. “Despite promising that the matter will be sorted out by top RBI management, nothing was done. Now, they are not even responding to our request for discussions. As a protest we had the demonstration,” said a representative of the United Forum of Reserve Bank Officer and Employees. The central bank staffers have also protested the government’s proposal to make staff regulations statutory.

BS

The real picture on inflation

...With a single CPI, an investor may find it easier to benchmark his returns to inflation. Now all we need is an inflation indexed bond product that ....

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COSIA calls for ceiling on interest rates for SMEs

Chamber of Small Industry Associations (COSIA) has asked the Reserve Bank to put a ceiling on interest rates charged by banks on the small and medium enterprises. In a statement the COSIA said that RBI’s repeated rate hikes have failed to curb inflation even as the domestic investors are feeling the pinch. The Chamber President M.R. Khambete said that the base rate of banks between July 2010 and May 2011 has gone up by 150-300 basis points affecting the credit growth. The repeated hikes of the key policy rates has not brought out the desired results and hence the RBI must now look for some innovative measures to contain inflation, it added. The Chamber said the SMEs have suffered due to rise in interest rates and RBI could think of putting a ceiling on the rate of interest charged to SMEs, he said. Inflation, as measured by the Wholesale Price Index (WPI), was over 9 per cent in May. To check inflation RBI has raised its key policy rates 10 times in a year-and-a-half. The latest hike was of 25 basis points hike in short-term lending and borrowing rates which was announced on June 16.

The Hindu

Sectors with positive outlook in current market conditions

The rate hike was anticipated by the markets as the inflation rate is still ruling quite high. The interest rates have gone up quite significantly over.....

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Meeting of stakeholders soon on Bimal Jalan report

...The Centre is yet to firm up its views on the Bimal Jalan committee recommendations, which has created strong divergent views among stakeholders. This committee had gone into the ownership ........

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Symbiosis univ launches R K Laxman Chair

Pune: Symbiosis International University (SIU) on Saturday inaugurated a chair to honour renowned cartoonist R K Laxman. Called the R K Laxman Chair for research and studies in media and communication, it would focus on thought leadership, guiding research and policy formation in media and communication. Senior journalist Dileep Padgaonkar will be the Chair professor. “Eminent cartoonist R K Laxman has the rare gift and ability to please the entire country with a single stroke of his cartoon that brings out the common man’s problem in a polite and subtle way,” said Union agriculture minister Sharad Pawar, chief guest at a function to announce the chair. Laxman could not attend the ceremony. His wife and author Kamala Laxman read out a message on his behalf. “The Chair provides a deep sense of fulfilment to us,” she said. Photographer Gautam Rajadhyaksha, who attended the function, said, “Laxman brought in reality and social comment through his cartoons. They reflect a tongue-in-cheek, mature sense of humour devoid of any malice. Going through his cartoons, the reader at once gets a bird’s eye view of the happenings around.” Minister for higher and technical education Rajesh Tope, former union minister Mohan Dharia, SIU founder chief S B Mujumdar, principal director Vidya Yeravdekar, SIU vice chancellor Bhushan Patwardhan and media and communication faculty member Chandan Chatterjee were also present.  

TOI

Retail investor interest shifts to bank deposits from small-savings

...Data available on financial savings of the household sector (gross) in the RBI annual report also point to the waning interest in small-savings schemes. From about 19.6 per cent of total household financial savings in ...

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Training for journalists ends

NEW DELHI: Fifteen Nepali business and economic journalists returned today to Kathmandu after a two-week training in New Delhi and Mumbai. The journalists representing major print media took part in the training in Indian Institute of Public Administration, one of the leading education and training institutions of India. Securities Board of Nepal (Sebon) and Indian Embassy in Kathmandu has coordinated the training for the journalists. The journalists apart from interacting with prominent Indian economic journalists visited Bombay Stock Exchange too. In Mumbai, they interacted with RBI Governor.

The Himalayan Times, Nepal

Easy banking: above no-frills, below savings accounts - Hindustan Times

Life may became a bit easier for your domestic staff. According to a recent notification by the Reserve Bank of India, job cards issued by the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) duly signed by a state government officer and letters issued by the Unique Identification..........

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Check out the factors that forced RBI to hike rates again

According to the RBI, based on the current and evolving growth and inflation scenario, it will need to persist..........

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