Second wind



Subbarao has taken RBI through exciting times and 180-degree turns in policy management in three years



Unlike the huge 50 basis point hike in key policy rates he announced in July, the two-year extension granted to Reserve Bank of India Governor Duvvuri subbarao was not entirely unexpected. The soft-spoken Subbarao, 62, had displayed a hard-nosed approach in dealing with the global financial crisis that unfolded soon after he moved into the corner office at the RBI headquarters in Mumbai on September 5, 2008. Today, when the global economy faces its worst challenge since 2008, few could have ignored his record in effectively managing liquidity during the height of the financial crisis, least of all Prime Minister Manmohan Singh.  "I am happy that the government has reposed its confidence in me at this difficult juncture in the world economy," was the brief response from the finance ministry veteran.Subbarao has taken RBI through exciting times and 180-degree turns in policy management in the past three years. In order to cut off-cycle rate revisions, monetary policy reviews began to be conducted eight times a year from the quarterly cycle earlier.  When the government first mooted the idea of a super regulator in the aftermath of the financial crisis for better coordination amongst regulators, Subbarao strongly fought for RBI's independence.  He also recently took the government head-on over the issue of managing inflation, saying monetary policy works efficiently only when the fiscal situation is under control. However, one thing that stayed ahead of this marathon runner for most part of his tenure as RBI chief was high inflation. It has persisted in high single digits despite eleven rate hikes over the past 15 months, fuelling criticism that Subbarao was always "behind the curve". He may now finally win the race against inflation given the global fall in commodity and crude prices.  The rise in both in the recent past had largely queered the pitch for him. 

The Outlook

Rupay Card commercial launch by fiscal end: NPCI head

Nearly a year after the soft launch as a limited-service debit card, the Rupay Card, which is the domestically developed equivalent of the Visas and MasterCards of the world, will offer full-service debit card services by the end of this fiscal. "We hope to commercially launch the Rupay Card before the end of this fiscal. We will be equipped to offer full service debit cards to our mainstream partner banks by February or March next," National Payments Corporation of India (NPCI) MD and Chief Executive Abhaya Prasad Hota told PTI.  "By then, we hope to integrate our software with the nearly 4.5 lakh merchant terminals across the country," he said. NPCI, set up by the Reserve Bank, has developed the Rupay Card in April. In 2009, RBI had asked the Indian Banks Association to launch a not-for-profit company and design a rival card to Visa and MasterCard. China has already developed a similar card called the Union Pay of China. Since April, the Rupay Card has been in use, mostly by rural and urban cooperative banks offering limited service. NCPI has so far roped in four banks -- two urban cooperative banks, one regional rural bank, and one mainstream commercial bank, Bank of India, which has issued this card to its financial inclusion customers. Hota said that five more banks, including mainstream banks like Corporation Bank and Syndicate Bank, are testing the card now and the former will complete the process by next week. The Rupay Card, once commercially launched as a full service debit card, would eventually replace global real-time payment processing leaders--Visa and MasterCard --from the domestic payment system, the NPCI head said. Hota further said that leading financial consultancy firm Ernst & Young India is assisting NCPI in developing and rolling out the national payment switch (NPS) software that is needed for the commercial launch.  The member banks have already invested around Rs 100 crore so far in the project. Of this, Rs 60 crore have gone into developing the Rupay Card and building the NPS network, Hota said. Hota also said he does not have immediate plan to enter the credit card space, saying that will involve tying up with external payment gateways, which would push up charges. "Hopefully we may be able to do that from the fourth year onwards. But our priority is the debit card segment now. Also, the full service debit cards will be only domestically operable as international debit cards will be costly for the banks." But he pointed out that as much as 95% of the debit card transactions are done within the country only. Another area that NPCI is evaluating is the pre-paid cards market, which include travellers cards, gift cards and salary cards. As per the latest RBI data, debit card transactions rose 45.6% in June to Rs 3,784 crore in June from Rs 2,597.5 crore y-o-y. There were over 23.95 crore debit cards in use in the country as of June 30, up 24.8% over 19.19 crore in the year-ago period. Against this, credit card transactions rose 30% in the month to Rs 7,191.11 crore, from Rs 5,538.75 crore y-o-y, despite a 6.7% drop in the number of credit cards in circulation to 1.76 crore during the month. As per the data, credit card deals during the first quarter of this fiscal stood at Rs 22,127.5 crore, as against Rs 16,948 crore y-o-y, a jump of 30.5%. In 2010-11, transactions through credit cards went up 22.15% to touch Rs 75,516 crore, while debit card transactions rose 46.46% to Rs 38,692 crore. NPCI is registered as a company with nine public sector, private sector and foreign banks owning stakes. RBI will oversee its operations in initial years, but will be regulated by RBI throughout. 

Moneycontrol

Do terrorists have accounts in your bank branch?

Indore: The Reserve Bank of India (RBI) has asked all the banks to check terror groups or terrorists do not have an account in any of their branches. The step comes after the United Nations released a list of such outfits or terrorists who could be holding accounts in the banks. Similar instructions have been given by the RBI to some non-banking organisations as well. These directives have been issued in three stages starting August 1. RBI General Manager A Mangalgiri said that on the basis of the list released by United Nations Security Council, an eye would be kept on all the suspicious accounts.

Daily Bhaskar

'No collective responsibility' - Bimal Jalan, former RBI Governor, on India's institutions

Bimal Jalan, former Governor of the Reserve Bank of India, discusses India's institutions and the challenges they face with Sanjiv Shankaran. Edited excerpts from the interview:

On India's institutional framework:

There are some extremely important distinctions. One, there are the institutions of the state, which are permanent. They are Parliament, the executive and the judiciary. That is the Constitutional design.  Second, there are the government institutions. Take ministries. They are institutions from the public point of view. In the third category are institutions that are autonomous. There are rules of the game that can be decided by the government. Policy can be decided by the government. The implementation is the autonomous responsibility of government institutions. For example, the Election Commission, or EC. People [who head it] are appointed by the government. The EC is not accountable to the home ministry. Conducting of elections is the duty of the EC. When we talk about institutions, [we must] distinguish between the layers. One is institutions of the state, they differ from the government. It is open to all to enter the civil services or the judiciary. With this structural paradigm in place, we are very fortunate that our institutions of the state are responsible, accountable and are really responsive to the law and to rights. That is the greatest strength of India. On big issues, we did very well. On delivery issues, which are controlled by ministries, we have done very badly. The main institutional private-public dichotomy is where ministerial decisions [are taken] or administrative autonomy is not there. It is all in the hands of whoever happens to be the minister. If you take the Food Corporation of India, who decides who should be the chairperson? [The Food Minister]

On financial sector institutions:

What you are regulating is delivery of service by others. There are trade-offs. It is a complex issue. People go by trust. The regulator's job is to ensure public interest is protected. Fortunately for us, over a period of time conventions have developed ensuring a harmonious relationship between the different organs. Through the finance ministry, all regulatory organs are accountable to Parliament. In all democracies, the government has the responsibility. Fortunately, over a period of time, I can say from my experience, the relationship is very good. There may be differences from time to time, but they are resolved. This is a positive thing about India. Having worked with a large number of ministers, [I can say] that when there is a national issue of importance, the government rises to the occasion.

On current challenges:

The problem essentially has emerged in the last 20 years. We have passed the antidefection law. It says if you have been elected on a party ticket, you cannot defect. It was a good thing in those days. [But] see the unintended consequences. We have generated a situation where we cannot have a government without coalitions. [There are] parties with five or six members [in the government]. There is no collective responsibility. You have given an incentive for fragmentation. It is one of the worst things that could have happened. We have substituted British imperialism with the imperialism of ministers.  We have to give great importance to two priorities. One, Central ministers will [continue to] decide policy, will bring about macroeconomic growth along with stability. They will appoint executives, but there has to be a clear division of responsibility between policy makers and implementers. Every decision should be subject to the Right to Information Act.

On change:

It can only happen if you make some political reforms. You make anti-defection law applicable to all parties that join the government. If they defect, they go for elections.

Business Today

New policy on cards to boost foreign flights

Stung by what it calls an ‘unfair charge’ of favouring foreign airlines, the ministry of civil aviation is working on a comprehensive aviation policy that would attempt to increase international traffic from India. The ministry would examine India’s air traffic growth projections, the number of countries which remain unserviced by domestic carriers and how to increase connectivity to these countries for both foreign and domestic carriers. A senior civil aviation ministry official said former Reserve Bank of India Deputy Governor Rakesh Mohan is drafting a mega transport policy, where civil aviation will figure prominently.

DNA

New banks may need Rs 1,000 crore

The Reserve Bank of India (RBI) is set to release the draft licencing norms for new private banks in the next few days, with wide-ranging conditions that would include a minimum net worth of Rs 1,000 crore for companies to be eligible to set up banks in India. The central bank, however, is unlikely to push through with issuing final licences to new banks until such time as the Parliament approves the Banking Laws (Amendment) Bill 2011. A parliamentary standing committee is examining the bill which was introduced in Lok Sabha in March. Sources, who did not wish to be identified, said the Bill may come up in parliament only in the winter session. IFCI Ltd, Srei Infrastructure Finance Ltd, Religare Enterprises Ltd, Shriram Transport Finance Co Ltd, L&T Finance Ltd, Bajaj Finserv Ltd, Indiabulls Financial Services Ltd, and Reliance Capital Ltd are among those who are keen to set up banks. The bill, when legislated, will empower RBI to dismiss a bank’s board and force its reconstruction to protect the interests of depositors, shareholders and employees. It will allow RBI to seek details of associate enterprises of banking companies. “Passing the bill is necessary before guidelines for new bank licences are finalised,” said a finance ministry official, who did not wish to be identified.

HT

RBI won't open licence floodgates

MUMBAI: Several corporates aspiring for banking licences may end up being disappointed with the Reserve Bank of India's licencing policy. As against the hopefuls who run into several dozens, the central bank is likely to grant licences to only a handful that it feels may make the mark.  "It is likely that RBI will set out the filters in addition to the capital requirement to identify which are the banks that will qualify," said Ashvin Parekh, partner, National Industry Leader for Global Financial Services, Ernst & Young. He adds that RBI is likely to consider the "systemic risk point of view". "From a systemic risk perspective, those in diversified businesses pose a lesser risk," he adds, giving the example of the steel industry where even very large players lost value and had to go for some form of restructuring. The other factor would be the ability of the corporate to provide capital in a difficult situation like during the financial crisis in 2008.  A host of corporates are preparing the ground to apply for a bank licence. Hopefuls include the Tatas, Aditya Birla Group, and Reliance Capital. Bajaj Financial Services, too, has evinced interest in obtaining a bank licence. In the financial sector, LIC Housing Finance and Shriram Transport Finance are among those keen on setting up banks. Besides, there are a host of other corporates that are keen on obtaining a banking licence. Last week, RBI deputy governor Anand Sinha said that the central bank would come out with draft guidelines for new bank licences "very soon".  According to Monish Shah, director, Deloitte in India, RBI is unlikely to have a limited period window. "If they accept applications for only a limited period, they would end up choosing those who have prepared their applications early rather than choosing the best of breed."  The other issue to watch out for in the draft guidelines would be how RBI defines the fit and proper guidelines. In its discussion paper, the central bank had said that a corporate aspiring for a licence should get a clean chit from all enforcement authorities. But in the wake of scandals in the telecom sector where most of the big business houses have come under the scanner, it is not clear how RBI will address the governance issue. The finance minister had first said in his Budget speech last year that the central bank would come out with new bank guidelines. This was reiterated in his budget speech in February this year. The central bank responded to this call from the government by coming out with a discussion paper where it expressed a host of concerns on granting licences to corporates. RBI had also ruled out giving licences to builders or groups which have a large real estate business.  Post liberalization, when RBI opened its banking licence window in 1992, the central bank received as many as 154 applications. Although RBI did not immediately reject them, it granted licences to only nine and rejected pending proposals in a phased manner over a decade.

TOI

RBI needs to rethink banking licences process in wake of 2G scandal

With banking licences set to be issued in a few weeks (according to media reports), should the government and RBI re-think their basic contours in light of the current 2G scandal engulfing our country? In essence, the 2G scam involves the awarding of valuable licence & spectrum to companies without first discovering the true market price of the licence/spectrum through a competitive auction.  The government's defence that an auction would have increased the cost of doing business and not be in line with the larger social objective of reducing telecom costs through increased competition has not been accepted by anyone.  To calculate the loss to the exchequer of this government decision, one of the methods that the CAG used was to base it on the valuation at which subsequent equity infusion by new investors took place. Therefore, Etisalat's investment in Swan Telecom & Telenor's investment in Unitech was used to benchmark the size of the loss to the government in not awarding these licences at the underlying true market price.  In the current market context, banking licences are as valuable today as perhaps telecom licences were a few years ago. Winners of these licences would be able to instantly raise hundreds of millions of dollars from capital markets/private equity investors, etc. The Reserve Bank of India should worry as to why that will not invite CAG scrutiny! Why should banking licences not be auctioned the same way as telecom licences were supposed to be auctioned?  The Reserve Bank of India can first evaluate all the bidders on all the parameters that they would anyway otherwise use to award licences under the current plan. After that, instead of giving licences to all the eligible parties, there should be an auction among the eligible bidders. In the initial round, the number of bank licences should be limited (say 3 or 4) with complete transparency that no further bank licences will be issued for (say) another 2-3 years.  It is possible that the Reserve Bank of India believes that more banks are really needed to broaden financial inclusion and increase the penetration of banking services in India, but try explaining that to the CAG if something goes wrong.  One of the biggest outperformers in our stock markets this year has been Jubilant Foodworks. One reason for this outperformance is that Jubilant has been able to continuously pass on price increases in the face of rising inflation and maintain its margins.  How is that the Indian government is always so nervous about increasing oil prices and fertiliser prices but the private sector is able to pass on price increases so smoothly?  I believe that the government can easily adopt private sector strategy to increase prices of subsidised goods. For example, Jubilant says it normally increases prices twice a year by about 2.5% each time, which separately is too small for consumers to notice but adds up over time. 

ET

Why not Auction Banking Licences? - MIR ARORA

With banking licences set to be issued in a few weeks (according to media reports), should the government and RBI re-think their basic contours in light of the current 2G scandal engulfing our country? In essence, the 2G scam involves the awarding of valuable licence & spectrum to companies without first discovering the true market price of the licence/spectrum through a competitive auction. The government’s defence that an auction would have increased the cost of doing business and not be in line with the larger social objective of reducing telecom costs through increased competition has not been accepted by anyone.  To calculate the loss to the exchequer due to this government decision, one of the methods that CAG used was to base it on the valuation at which subsequent equity infusion by new investors took place. Therefore, Etisalat’s investment in Swan Telecom & Telenor’s investment in Unitech was used to benchmark the size of the loss to the government in not awarding these licences at the underlying true market price.  In the current market context, banking licences are as valuable today as perhaps telecom licences were a few years ago. Winners of these licences would be able to instantly raise hundreds of millions of dollars from capital markets/ private equity investors, etc. The Reserve Bank of India should worry as to why that will not invite CAG scrutiny! Why should banking licences not be auctioned the same way as telecom licences were supposed to be auctioned? The Reserve Bank of India can first evaluate all the bidders on all parameters that they would anyway otherwise use to award licences under the current plan. After that, instead of giving licences to all the eligible parties, there should be an auction among the eligible bidders. In the initial round, the number of bank licences should be limited (say 3 or 4) with complete transparency that no further bank licences will be issued for (say) another 2-3 years.

It is possible that the Reserve Bank of India believes that more banks are really needed to broaden financial inclusion and increase the penetration of banking services in India, but try explaining that to the CAG if something goes wrong. One of the biggest outperformers in our stock markets this year has been Jubilant Foodworks. One reason for this outperformance is that Jubilant has been able to continuously pass on price increases in the face of rising inflation and maintain its margins.  How is that the Indian government is always so nervous about increasing oil prices and fertiliser prices but the private sector is able to pass on price increases so smoothly? I believe that the government can easily adopt private sector strategy to increase prices of subsidised goods. For example, Jubilant says it normally increases prices twice a year by about 2.5% each time, which separately is too small for consumers to notice but adds up over time.  Should the Indian government look at creeping price rises rather than onetime increases announced with much scrutiny and visibility? What if the government announces that the price of LPG cylinder will be raised by . 2 each month for the next x number of months and the price of kerosene will be increased by 25 paise each month for the next many months. How will various groups react to this when this is announced? Economists will not know how to immediately build this into their inflation forecasts, opposition parties will not know how to protest about 25 paise price hikes in kerosene, TV channels will not be able to call a . 2 LPG price hike as “Breaking News” and consumers will be too busy eating pizzas to realise what has happened.  

ET - The author is fund manager at Helios Capital

RBI May Resort To Another Rate Increase In Sept: Experts

Experts believe that the Reserve Bank of India or RBI may continue with its tight monetary policy stance to check inflation and announce another increase in key interest rates in September, though the global economic environment is on a downslide. However, while the RBI is likely to go for another interest rate hike at its next mid-quarterly policy review on September 16, it will not be very aggressive, they said. Global research firm Macquarie economist Tanvee Gupta Jain said though the RBI would continue on its anti-inflationary attitude, adverse global environment suggests that it might become less aggressive. On the other hand, Morgan Stanley also reckons, "The RBI will continue with its anti-inflationary stance with one more 25 basis points hike to anchor inflation expectations decisively, barring a further deterioration in the growth outlook." The RBI has increased the repo (borrowing) rate by 50 basis points to eight percent and the reverse repo (lending) rate by 50 basis points to seven percent at its latest monitory policy review in July. The apex bank has increased the key policy rates 11 times since March last year, to rein in inflation, which has been hovering above the 9 percent mark since December last year. Headline inflation stood at an eight-month low of 9.22 percent in July. However, this was much above the RBI's comfort zone of around five percent. Economic Advisory Council to the Prime Minister of India (PMEAC) in its Economic Outlook for 2011-12, had projected inflation to remain high at around nine percent till October, before moderating to 6.5 percent by March next year. Notwithstanding the adverse global economic scenario, better-than-expected June factory output data is likely to prompt the apex bank to go for another round of rate hikes. In June this year, the Index of Industrial Production grew by 8.8 percent, compared to 7.4 percent in the corresponding period last year. However, the recent negative global developments, such as, the sovereign debt crisis in Europe and increasing concerns that the US economy may slip into recession after its long-term debt rating was lowered a notch to AA+ by Standard & Poor's are expected to eventually affect the Indian economy to some extent, the experts added. 

http://www.rttnews.com/Content/IndianNews.aspx?Id=1697235&SM=1

BRBNMPL man siphons off Rs 4 lakh from employee's PF

Deputy Manager of BRBNMPL is in the dock for pocketing Rs 4 lakh, which was actually the Provident Fund (PF) of the employees.  Senior manager of Bharatiya Reserve Bank Mudrank S Satanarayana, has filed a complaint against Niranjan Tippa for misappropriation. According to him, Tippa was in charge of the PF section, apart from handling other sectors. The scam came to light during the bank's annual audit and officials found that Rs 2.94 lakh and Rs 1.3 lakh went missing in August and November 2010 respectively. When they enquired with Tippa, he failed to give them any details about the missing amounts."He was kept under suspension and a criminal case was filed against him," Satyanarayana informed. The Tilak Nagar Police has filed a case of criminal breach of trust and is not investigating the matter. PI Kalyan Shetty said, "A case has been booked and we have initiated investigations. We are yet to ascertain where the money has gone from the bank account."

Mid Day

Microfinance experts meet in Bangalore

Prof. Satchindananda Sogala noted that the regulation attempted by the Reserve Bank of India (RBI) has failed due to its wrong focus on uniformity and micromanagement. While the RBI had the right intentions, its one-size-fits-all solution to regulation cannot work. There should be self-regulation instead.....

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Indian banking sector to be 3rd largest by 2025: BCG

The Indian banking sector is poised to become the world's third largest in asset size over the next 14 years, a report released here today said. "The domestic banking industry is set for an exponential growth in the coming years with its assets size poised to touch USD 28,500 billion by the turn of the 2025 from the current asset size of USD 1,350 billion (2010)" says an IBA-FICCI-BCG report, titled "Being five-star in productivity--Roadmap for excellence in Indian banking, prepared for the Indian Banks Association. The report was released on the eve of the three-day IBA-FICCI-BCG (Indian Banks Association, FICCI and Boston Consultancy Group) bank summit beginning tomorrow here. The summit will be launched by Reserve Bank Governor D Subbarao and will be attended by heads of banks and the four RBI deputy governors among others. The report further says China will overtake the US as the world's largest banking industry by 2015, when it is expected that the asset size of Chinese banks will be nearly USD 30,000 billion, while that of the US will be around USD 28,000 billion. By 2025, the Chinese banks will have an asset size of over USD 1,15,000 billion, while that of the US it will be around USD 1,00,000 billion. Releasing the report, Bank of Baroda chairman and IBA chief M D Mallya said, "the global banking crisis has highlighted the perils of irresponsible banking and through this theme of productivity excellence, we wanted to focus on the tremendous scope for our banks to improve their productivity and consequently, their profitability." The report sets out an action agenda for banks, based on insights from an extensive productivity benchmarking exercise conducted across 40 banks which highlights that banks have to strive for excellence on five dimensions: branch sales and service, new channels, lean operations, organisational design and bad debt management.  Commenting on this, BCG India partner and director Saurabh Tripathi said, "within each of the five dimensions, the industry looks sound at an overall level but disaggregation of performance into components and comparisons with various players exposes significant scope for improvement,". The report notes that domestic banks can improve sales if they increase their branch presence. "Domestic banks deploy 62% of staff in customer-facing roles as against the benchmark of 82% observed by BCG globally," Tripathi said. Among the new channels, mobile phones, propelled by 3G and smart phones, will emerge as an undisputed winner by 2020, potentially accounting for 20-30% of total transactions, says the report. On efficiency, the report notes that the domestic banks are doing well overall with industry cost-income ratio below 50%. However, the survey says there is room for improvement. "On an average, our banks have about 20% of staff deployed in back office processing (for some banks, as high as 40%) as against a global best of 10 percent," says the report. "Should our banks embrace the above given ideas, they can break the compromise between profitability and serving low ticket-high risk business at reasonable margins. At the same time, the government and RBI have enabling and catalysing roles to play", concludes the report.

Moneycontrol

Indian banking poised to become 3rd largest by 2025

Banks need to focus on branch sales and service, new channels, lean operations, organisation design and debt management

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No double-dip recession, US to see modest growth: Macklem

... Well, Canada and India have been working together at the G20 table. We have been asked to co-chair two working groups within the G20. The first one, the working group that I co-chaired with Rakesh Mohan had made a number of recommendations to strengthen the financial regulatory framework. The other group co-chaired by Canada and India focused on sustainable and balanced growth.....

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Inflation worries likely to cause RBI interest rate hike

New Delhi: The Reserve Bank of India is likely to continue with its tight monetary policy stance to fight inflation and effect another hike in key interest rates in September, even though the global economic environment is on a downslide, believe experts. However, while the Reserve Bank of India is likely to go for another interest rate hike at its next mid-quarterly policy review on 16 September, it will not be very aggressive, the experts said. According to global research firm Macquarie economist Tanvee Gupta Jain, “While the RBI will continue on its anti-inflationary stance, adverse global environment suggests that it might become less aggressive…” Global investment banking major Morgan Stanley also thinks, “The RBI will continue with its anti-inflationary stance with one more 25 basis points hike in order to anchor inflation expectations decisively, barring a further deterioration in the growth outlook.” The RBI, at its last review meet in July, raised the repo (borrowing) rate by 50 basis points to 8 percent and the reverse repo (lending) rate by 50 basis points to 7 percent. The apex bank has hiked the key policy rates 11 times since March, 2010, to curb inflation, which has been hovering above the 9 percent mark since December last year. Headline inflation stood at an eight-month low of 9.22 percent in July. However, this was much above the Reserve Bank’s “comfort zone” of around 5 percent. Despite several interest rate increases, the rising discretionary income of the middle class is likely to exert upward pressure on inflation, say experts. In its Economic Outlook for 2011-12, the PMEAC had projected inflation to remain high at around 9 percent till October, before moderating to around 6.5 per cent by March, 2012. Notwithstanding the adverse global economic scenario, better-than-expected June factory output data is likely to prompt the Central Bank to go for another round of rate hikes. The Index of Industrial Production grew by 8.8 percent in June, 2011, compared to 7.4 per cent in the corresponding period last year. However, recent negative global developments like the sovereign debt crisis in Europe and increasing concerns that the US economy may slip into recession after its long-term debt rating was lowered a notch to AA+ by Standard & Poor’s are expected to eventually affect the Indian economy to some extent, the experts believe.

Firstpost

Wary RBI alert on capital flows

With the level of capital inflows into the country from foreign institutional investors (FIIs) expected to swell significantly as the financial crisis deepens in the US and Eurozone, the Reserve Bank of India (RBI) is taking no chances and keeping a close watch on the developments. While a surge in overseas portfolio would mean an increased confidence in the Indian growth story, it would fan inflation, which is already a cause for concern. “The central bank is not very comfortable with the idea of a surge in capital inflows at this stage as it is already battling high inflation,” a government source told HT on the condition of anonymity. “However, an increase in the inflows is imminent and the situation is being closely monitored.”  “Hot money” or FII investment is considered volatile as it be could be pulled out anytime. However, in India, a large chunk of the FII investment is also used to finance the current account deficit. FIIs invested a net $39 billion or Rs 75,500 crore in 2010 against Rs 83,423 crore in 2009. Finance minister Pranab Mukherjee had said that the financial crisis in the West would result in increased capital inflows, which would keep the growth story intact.

HT

India Inc’s global liabilities exceed forex reserves

....According to latest RBI data, corporates have a net liability of $437 billion on adjusted IIP at December-end 2010, as against a forex cover of $279 billion during the same period. This means corporate India’s financial liabilities far exceed the comfort provided by the forex cover...........

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Common test to select bank officers on Sept 18

New Delhi Over 14 lakh candidates have applied for the first common examination, introduced from this year, for selection of officers in 19 nationalised banks other than the State Bank of India group. "As many as 14.5 lakh applications have been received for the first Common Written Examination (CWE) which is quite substantial," Institute of Banking Personnel Selection (IBPS) Director M Balachandran said. The CWE will be held on September 18, he said. Explaining the process, he said successful candidates in the CWE who will be issued scorecards are required to apply, quoting their CWE scores, to any of the participating banks they wish as and when individual banks call for applications, quoting their person. The scorecard will be valid for one year. Each bank will then individually shortlist candidates and carry out their own selection processes such as interviews for final selection, he said. Each participating public sector bank will independently issue a separate recruitment notification, specifying their vacancies and stipulating the eligibility criteria in terms of age and educational qualification, experience, minimum required level of IBPS score in each test etc, he said, It is to be noted that during 2010-11, IBPS conducted 17 written examinations for recruitment of Officers and Management Trainees in 19 PSBs in which about 20 lakh candidates appeared.

The institute, promoted by PSU banks and the Reserve Bank, has been rendering assistance to the financial sector in activities of employee selection, promotion and placement.  Similarly, the institute will be inviting application for selection of clerks of various banks during this week.

Expressindia

Coin Scrap

....Shafi feels that a coin never falls in value after it is minted, when its value ends as legal tender, it always givesgood returns as scrap, and once this phase ends itsantique value begins to grow........

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