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Saturday, August 20, 2011
EFCAI urges RBI to allow post offices function as banks
BHUBANESWAR: Entrepreneurs and Finance Customer Association of India (EFCAI) has urged Reserve Bank of India (RBI) to allow post offices function as Banks. In a memorandum submitted to RBI Deputy Governor, H R Khan here, the EFCAI has pointed out that India has the world's largest postal network in India with over 1.55 lakhs post offices, out of which 1.40 lakhs are in the rural areas. If the RBI allows Indian Posts to start their own banking operations it will have the potential to emerge as one of the biggest banks in the country and also ensure inclusive growth. The Indian Posts have 23.70 crore savings accounts having deposits worth of Rs. 56,369 crore. Access to both banking as well as credit facilities remains a far cry with only 10% population avail credit facilities. "Against this backdrop, in order to improve the banking system the Govt. of India has plans to seek approval from RBI to enable the Post Offices to start banking operations. Not only will this help the growth of the primary sector but will also ease the pressure on the existing commercial banks to a large extent. The recent expert committee report makes a strong case for harnessing the post office savings bank for achieving financial inclusion as the reach of post offices is twice as extensive as that of all commercial banks put together", the memorandum said. Referring to Orissa situation, the memorandum said, financial inclusion is a major challenge for the state government with over 60% of the people of the state having no access to the banking systems at all. The primary sector in the state which supports more than 70% of population has a growth rate of only 2% as against the overall state growth of 9% over last 5 years. "The situation is of poor inclusive and equitable growth. Banking programs and products should be formulated in such a way that it suits and benefits the un-banked category. Needless to say that system needs immediate revamping", it observed. Incidentally, Orissa has 8159 post offices in the rural sector and 603 in the urban area as against only 2900 commercial banks across the state. If RBI accepts the union government proposal to allow post offices function as banks, the state will immensely stand benefitted. "Post offices have infrastructure in remote places where banks just can never have a base. The rural poor will be the net gainer if post offices are allowed to carry on banking operation as it would eliminate private money lenders, MFIs and other exploitative institutions", EFCAI secretary general H K Mohanty on Friday told "The ET".
ET
Bankers meet on customer service
GUWAHATI, Aug 19: “There has been great improvement in the financial sector and the predominant part of the financial sector is the banking sector,” said Rajesh Verma, Chief General Manager, Customer Service Department, Central Office Reserve Bank of India, Mumbai in the Town Hall Meeting organized in District Library, Guwahati with a sole purpose to demystify the grievances pertaining to customer service in banks. Discussing about the arrangement for redressal of grievances, a State Bank of India official told about the progress in the customer service in dealing with their grievances. He also discussed about their plans to set up another 800 ATMs in this year which would facilitate the customer in a more promising manner. Mentioning about the introduction of the Point of Sale (POS) machines in large areas, he said: “Through this machine one can withdraw a maximum of Rs 1,000 and then people would not have to walk up to the ATMs.” Making a commitment to improve the service, the SBI official also mentioned about their plan to tie up with Doordarshan to spread financial literacy through a programme where they would take up customers’ problems and resolve them. Similarly, HDFC, ICICI bank officials also discussed about the measures they have taken up to resolve customer’s grievances. The HDFC official announced: “Apart from the 80 ATMs in the Northeast, this year we would double the number to 155 along with 21 more branches after which we will have a total of 80 branches.” Officials of the RBI, K.Chandrachoodan, CGM, Branch Office RBI, Ahmedabad, M Rajeshwar Rao, CGM BO RBI New Delhi and N Raja, Chief Executive Officer, BCSBI, Mumbai delivered their lectures on Banking Ombudsman Scheme 2006, Conciliation, Resolution, Compensation under BO scheme and Banking Codes and Standards respectively. The interaction session was facilitated by B.B.Sangma, BO RBI, Guwahati where various questions of the public were discussed.
Impossible possibility?
.... there was one internal working group of RBI which was supposed to examine the feasibility of Islamic banking business in India. The group concluded that Islamic Banking in India is not possible unless the Banking Regulation Act is amended. Even as implementation of full-fledged Islamic banking needs some amendments in the Act, an objective study would have found scope of recommending at least interest-free banking. There is no need to amend any Act to allow interest-free banking and our prevailing Acts already have provisions for interest free based transactions.......
Existing legal provisions have scope to allow interest-free banking
Over 50 lakh expected to apply for vacancies in 19 public sector banks
Hyderabad, Aug. 19: The first-ever Common Written Exam (CWE) for clerical positions in 19 public sector banks will be conducted by the Institute of Banking Personnel Selection (IBPS) in November this year. The online registration for the exam would commence from August 25, 2011, Mr M. Balachandran, Director, IBPS, told Business Line. The interested candidates would have to register themselves with IBPS before September 25, 2011. The score achieved by a candidate (to be valid for one year) would be used by banks while filling up vacant clerical positions to be announced in due course. “The job-seekers need not attend any written test for jobs in participating banks again. They will be called for interview/personality test directly based on their score,” Mr Balachandran said. The candidates should the complete registration process early to avoid last-minute problems, he added. The pattern of the exam is almost similar to existing clerical recruitment tests with questions in reasoning and numerical aptitude, among others. Clerical recruitment in public sector banks has been significant, with vacancies ranging from 30,000 to 40,000 for the last three years as per the hiring figures of various banks. In response to the CWE for probationary officer posts notified last month, about 14.5 lakh candidates had applied. “We expected 10 lakh applicants,” the Director said. IBPS is gearing up to conduct the exam on September 18, 2011. All the participating banks would share the responsibility of conducting the exam. “Each participating bank is being entrusted with responsibility for at least one State,” he said. Except State Bank of India, almost all other major banks are part of the common exam.
HBL
RBI report on software export by September-end
Panel to come up with ‘viable solutions' for exporters
A committee set up to look into issues related to software exports is expected to come out with its recommendations by the end of September, said Reserve Bank of India (RBI) Executive Director, G. Padmanabhan. Speaking at an exhibition on ‘Foreign exchange for you' and an interface with bankers on foreign exchange here on Thursday, he said: “We will come out with viable solutions that will make things easy for software exporters.” Mr. Padmanabhan said there was a need to take another look at various rules and regulations on foreign exchange in the light of developments in the last 10 years. “We are aware that we should not make rules and regulations impossible to comply with,” he said. The RBI, on its part, has opened a helpdesk, updating FAQs, conducting awareness programmes on foreign exchange, said Mr. Padmanabhan. He urged banks to train their front-line staff adequately on matters relating to foreign exchange. Mr. Padmanabhan also emphasised the need for people to apply caution with regard to e-mails on various schemes and said that the RBI was taking adequate measures to create awareness on such activities. “No system can take care of people if they don't exercise basic care themselves,” he added. The banks also should take enough care to keep a check on accounts. “There is a concerted effort that is required to educate people,” he said. “It becomes a bigger issue when the country is looking at bringing six lakh villagers into the banking fold,” he added.
HBL
RBI may regulate jewellers’ gold saving schemes
Ahmedabad, Aug 19: The Reserve Bank of India (RBI) is likely to bring some regulation to protect those people who save money with the jewellers in monthly saving schemes for buying gold. Almost all jewellers in major cities such as Mumbai, Ahmedbad, Chennai, and Bangalore are virtually working like non-banking financial companies (NBFCs), without permission from the RBI. They have launched various gold saving schemes, encouraging the people to buy gold at the end of their saving term. In some instances, the jewellers have disappeared with the people’s savings. “Now the RBI is looking at it and we expect it to bring some regulation in this regard,” said Mr Ajay Mitra, Managing Director, India and Middle East, World Gold Council (WGC), said here on Friday.
HBL
UCBs make efforts to revive Madhavpura Mercantile Bank in Ahmedabad
Depositors and Urban Cooperative Banks (UCBs) have taken the initiative to sacrifice some portion of their deposits with the Madhavpura Mercantile Cooperative Bank (MMCB) in an attempt to revive the bank which is on its death throes. On the other hand, no major decision was taken at the meeting convened by the Central government's department of agriculture and cooperative at New Delhi on Thursday. The fate of the MMCB is likely to be decided at another meeting of the board of nominees to take place next week. Meanwhile, the depositors and UCBs have taken the initiative to sacrifice their dues up to 50% so that the bank's negative network can turn positive and it can fulfil Reserve Bank of India's criteria for revival. The bank currently owes around Rs617 crore to 268 UCBs in the state. "We have decided to sacrifice 50% of our dues," said Jyotindra Mehta, chairman of Gujarat Urban Cooperative Banks Federation. Similarly, Gujarat Investors Protection Council has also written a letter to the board of nominees of the MMCB expressing their willingness to let go not more than 40% of their dues in line with the Urban Cooperative Banks' proposal. "If the bank goes into liquidation, the investors are not likely to get anything. Moreover, the revival of MMCB will boost people's confidence in the cooperative sector," said Jitu Shah, president of Investors Protection Council. The depositors have received 50% amount of their deposits in two instalments. However, they have not received any repayment or any interest for five years. The bank is yet to pay more than Rs100 crore plus interest to around 13,000 depositors. If sources are to be believed, MMCB needs nearly Rs500 crore for revival. The central registrar had also asked the state government whether it was willing to lend the bank to come out of crisis. However, the state government refused to bail out the bank. Interestingly, neither the chairperson of the board of nominees of the MMCB Radha Singh nor the representatives of RBI were present in the meeting held at New Delhi on Thursday, said sources. Now, the central registrar will decide the future course of action.
DNA
New system to track NPAs to put pressure on profitability
Banks are getting ready to put in place a new system to track the non-performing assets (NPAs) which may affect their profitability in the short term. The new system will keep a watch on bank’s NPAs and it wouldn’t be possible for banks to have any manual intervention while reporting their sticky assets. While the finance ministry has asked all the government-owned banks to migrate to the new regime by the end of September, the Reserve Bank of India (RBI) has asked banks to shift to the new system by October 31. Some big banks, including State Bank of India (SBI) and Bank of Baroda (BoB), have already shifted to the new regime. But a large number of other banks are yet to make the shift. Though the banks have already migrated to the new system, when it comes to the smaller accounts, now they have been asked to shift their retail loans, which are huge in numbers. Moreover, banks are devising various ways to strengthen their NPA monitoring systems to minimise impact of the new system on their profitability.
FE
Mukherjee reviews economic situation with RBI Governor, PMEAC Chairman
New Delhi, Aug 19 (ANI): Finance Minister Pranab Mukherjee today reviewed the global economic situation with Reserve Bank of India (RBI) Governor Dr. Subba Rao, and Prime Minister’s Economic Advisory Council (PMEAC) Chairman Dr. C Rangarajan. The discussions focused on the slow economic growth in the US and debt worries in the Euro zone. Europe’s debt problem and worries about the world economy had resulted in sharp fall in the US and European markets. Stocks that were particularly affected in the US were those of companies that have global presence. In comparison to the sharp fall in the indices in US and Europe yesterday, the Indian indices have weathered any contagion effect. Today, Indian markets contracted by 1.9 percent, which is only around 1/3rd of the fall seen in the US and European markets. In comparison to Asian markets also, our performance has been better. Some of the major Asian markets saw four to six percent losses. The effect of the market sentiments in the US and Europe has a bearing on our markets as well in the short-term. As the advanced economies grapple with their problems, India is better positioned than most other nations to meet its problems. India has already been upgraded to market weight by some global investment banks from underweight and this is a testimony to the strength of the Indian economy. The present crisis can, however, be expected to encourage increase in the equity exposure by foreign pension funds and other long-term institutional investors. India is well positioned to capture this flow. Mukherjee expressed the view that India’s economy is robust and its growth story intact. Its fundamentals are strong and they look more attractive in a world confronting problems. Mukherjee also expressed confidence in India’s ability to emerge stronger from the present situation.
http://truthdive.com/2011/08/19/Mukherjee-reviews-economic-situation-with-RBI-Governor-PMEAC-Chairman.htmlRBI grants state’s request for cheap home loans for BPL applicants
Gandhinagar : The Reserve Bank of India (RBI) has agreed to a request proposal by the state government to instruct various banks working in the state to provide housing loan under the differential rate of interest scheme (DRI) to home loan applicants below the Below Poverty Line (BPL). The apex bank has instructed the State Level Banking Committee (SLBC) to ask all banks under its jurisdiction to extend benefits of DRI scheme to BPL home loan applicants in the state. Early this year, the state’s Rural Development department had requested the RBI for the same, saying many BPL families did not have money for even paying the minimum amount for the central/state housing schemes. “The SLBC, in a meeting attended by the chief secretary on Thursday, informed the state government that the BPL families will start getting housing loan under DRI schemes soon,” sources said.
IE
Corruption and Inflation
It takes the likes of Anna to point out that inflation may not be simply a fiscal or monetary policy problem
India has been struggling with high inflation for almost three years. In our entire post independent history, we have not witnessed such sustained prevalence of broad based inflation which has been so persistent. It seemed initially confined to food products, especially pulses, eggs and poultry (the so called “protein inflation”), but very soon it spread to everything from industrial commodities, to fuel, sugar, and even to services like tuition fees, doctor’s bills or taxi fares. The RBI has been trying vainly to contain inflationaryn expectations by tightening money supply, in the hope that less money in circulation will cause prices to dampen. But no such luck, as yet. The global recession, the downgrade of U.S. bonds, continuing unemployment in Europe and America, doesn’t seem to be reducing inflation in India. It took Anna Hazare to point out something obvious. If bribery is rampant, then the cash economy is not only flourishing, but expanding. It cannot be completely hidden or inscrutable, because the notes are printed by the RBI. The RBI’s own data shows that cash in circulation grew at an alarming rate which was 300 percent more than in previous years. This is called “cash leakage” by monetary economists. Cash leakage peaks whenever elections take place. The EC now insists that separate bank accounts be opened, to track candidate expenses. More than 8000 candidates stood for elections in 2009, for the fifteenth Lok Sabha. If you believe their filed expense statements, except for just four of them, nobody breached the expense ceiling of Rupees 40 lakhs. Most of them did not spend even half the permitted limit. But anecdotally, we know that a lot of illegal cash was flowing, nay overflowing, in the system.
Pune Mirror
Peerless seeks RBI nod to continue financial products distribution biz
Kolkata, Aug. 19: To offset the slowdown in its financial products distribution business, Peerless General Finance and Investment Company Ltd has sought for a special dispensation of the Reserve Bank of India to allow it to continue its Residuary Non-Banking Company (RNBC) business for some more time. Mr S. K. Roy, Managing Director, Peerless, said that the financial products distribution business had suffered a set back due to recent changes in regulations announced by the IRDA (Insurance Regulatory and Development Authority). “The change has necessitated evolving a new model of distribution and this requires reworking of workflows, IT systems and training. “As a result, there has been a considerable slowdown in the growth of the business in the second half of last fiscal. “In view of this setback in distribution business we have sought RBI's special dispensation to allow us to continue RNBC deposit taking business,” he said during his speech at the company's 78th annual general meeting here on Friday. During 2010-11, the company's first year premium declined by about eight per cent to Rs 133 crore. The renewal business, however, grew by 52 per cent to Rs 302 crore.
HBL
Reserve Bank invests 51.8% forex assets in US treasuries
Mumbai: The RBI in its latest report on its investment pattern and earnings of the foreign currency assets has said that out of the total foreign currency assets of $274.3 billion it had invested $142.1 billion in securities and $126.9 billion was deposited with the other central banks, BIS and IMF, in March. $5.3 billion was placed with the External Asset Managers with an objective of gaining access to and deriving benefits from their expertise and market research, RBI said. Total foreign currency assets grew 3.43 per cent over September 2010, the last reporting date. RBI held a total of 557.75 tonnes of gold which is about 7.5 per cent of total foreign exchange reserves in the term of its value as of March, 2011. The RBI added that there was no pre-payment of any debt during the half year October 2010 to March, 2011. It further added, the ratio of short-term debt to the foreign exchange reserves was 18.8per cent at end-March 2010 and it increased to 21.3 per cent at end-March, 2011. The High Level Committee on Balance of Payments, which was chaired by C Rangarajan, erstwhile governor of the Reserve Bank of India, had suggested that, while determining the adequacy of reserves, due attention should be paid to payment obligations in addition to the traditional measure of import cover of 3 to 4 months.
FE
Shadow of global recession may fall on India
....Unfortunately, the RBI has been fighting a lone battle against inflation for more than a year without any help from the government, either by way of reining in the burgeoning fiscal and revenue deficits or by improving the supply management. .....
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