‘RBI hails JK Bank for taking banking services to remotest corners’

Srinagar, Sep 23: A Khidmat centre was inaugurated at Tilwani, a remote village in Islamabad (Anantnag). The village has been ‘adopted’ for financial inclusion by the Reserve Bank of India. The centre was inaugurated on Thursday by K.K.Saraf, Regional Director, RBI in presence of Rajeshwar Rao, Banking Ombudsman and G M Sahibzada, J&K Bank Executive President.  Others present on the occasion included M S Wani, Vice President J&K Bank and D.P.Sharma, Officer-in-charge RBI’s local office, DGMs of RBI G.C.Talukdar, Ramesh and Kiran Sharma.

Saraf on the occasion hailed J&K Bank for its “support and cooperation” in taking banking services to the remotest corners of the state.  “With such an exemplary cooperation from both the J&K Bank and the people of J&K, I believe we can achieve the target of hundred per cent financial inclusion in the state,” he said. Sahibzada said, “J&K Bank is committed to take banking facilities to everyone in the state, irrespective of their economic standing, educational status and geographical location.” “Our products and technology-enabled services shall follow them wherever they are, both directly, through our network of branches and ATMs and indirectly through the innovative model of massive Khidmat Centre network.” Emphasizing on the role of Khidmat Centres towards taking financial inclusion programme further, Sahibzada said, “The centres have the potential to become centres of positive economic change. They are close to rural population and can change the state’s economic landscape”. “The latest in the basket of services of Khidmat Services is a small but wonderful Point-of-Transaction (PoT) machine. People living in remote villages like Tailwani will have to just visit the branch once – to open the account. Later, Khidmat Centres, which are easily accessible to them, being one for every six villages, will provide them all the requisite banking facilities like cash deposits, withdrawals and even loans through swiping of smart Cards through these high-tech PoT machines,” he added.

Greater Kashmir

Usha Thorat on MRPL board

Mangalore Refinery and Petrochemicals Ltd has informed the BSE that Mrs Usha Thorat, former Deputy Governor of Reserve Bank of India, has been nominated by Oil and Natural Gas Corporation, the holding company, on the board of MRPL as an independent director with immediate effect. After a service of nearly four decades with the RBI, Mrs Thorat retired in November 2010 as its Deputy Governor. She was the Deputy Governor of RBI for five years. She is serving as Director of the Centre for Advanced Financial Research and Learning.

HBL

Mazumdar-Shaw, GM Rao feature on RBI board list

Mumbai: The Reserve Bank of India (RBI) will reconstitute its board of directors soon by appointing new industrialists, two people familiar with the development said. G Mallikarjuna Rao, GMR Group chairman, Kiran Mazumdar-Shaw, chairman of India’s largest biotechnology company Biocon Ltd, Anil Kakodkar, former chairman of the Atomic Energy Commission and Sunil Mittal, chairman of Bharti Airtel, India’s largest mobile telephony company by subscribers, are some of those the central bank has zeroed in on and recommended to the finance ministry, the final authority to vet the proposal. The finance ministry has cleared the appointment of Rao, a person in the finance ministry with direct knowledge of the development said, but, surprisingly, did not confirm Mittal’s appointment. A Bharti Airtel spokesperson did not respond to an email query. Mittal, known as the poster boy of Indian mobile telephony, was on the board of Standard Chartered as a non-executive director from August 2007 to July 2009. “There is nothing confirmed yet, so it would not be possible to comment on this,” a GMR spokesperson said in an email. According to the RBI Act, 1934, the tenure of the RBI board is either for four years or till the new board is appointed. “The board has completed its four-year term,” said Alpana Kilawala, RBI’s head, corporate communications. The board has 16 members, chaired by governor D Subbarao and his four deputies along with finance ministry officials and industrialists. The board now has industrialists Kumar Mangalam Birla, chairman of aluminium to cement maker Aditya Birla Group, Azim Premji, chairman of Wipro, India’s fourth largest software company by revenues, and Sanjay Labroo, managing director and chief executive, Asahi India Glass. The finance ministry is represented by R Gopalan, secretary, department of economic affairs. The RBI, being a regulator, needs to keep its finger on the market’s pulse, said Ashwin Parekh, national leader, global financial services, Ernst & Young India Private Ltd, the Indian arm of the global consulting firm. “It invites large industrialists on its board because they are large borrowers and they have their credit experiences to share, which helps in policymaking.” “Also, corporates are the first ones to know about the liquidity issues in the market,” Parekh added. The Aditya Birla Group, with interests in financial services from mutual funds to non-banking finance, is keen to start a bank. On August 29, 2011, the RBI had announced draft guidelines for fresh bank licences, stipulating a minimum capital of Rs 500 crore. Moreover, industrialists will have to create a holding company without any interest in their operating companies to start a bank. None of the other industrialists recommended by the RBI have any interest to start a bank. The board members’ appointment process starts with the apex bank recommending names selected from diverse industries to the finance ministry for its perusal. GMR Group’s chairman Rao, who held a 5% stake in the erstwhile Vysya Bank Ltd, sold his entire stake in 2006, and has no plans to enter financial services. The group, which built India’s largest greenfield airport in Hyderabad, is now reconstructing the airport in New Delhi and has interests in power generation and roads. “It is important to have people from different fields on the RBI board,” an industrialist, whose name is under consideration, said. “Until the board has representation from the industry, it is difficult to address the sector issues.” The person cannot be identified as his name is not yet confirmed. “Inviting an industrial conglomerate on the board will help the RBI understand the regulators’ actions in foreign countries,” said Parekh of E&Y. Bharti Airtel has a wide presence not just in India but also outside India and being the largest telecom service provider in the country, understands the country’s pulse, Parekh said of Mittal being considered for the board seat. “It is said that financial inclusion in the country will be driven by mobile services,” he pointed out.

FE

Nerkar no more...........

Shri Arvind Nerkar passed away on 17th September, 2011 in Mumbai. He was 71 years old at the time of his death. He was in a train bound for Goa. Shri.Nerkar had worked in DBOD and was also Faculty member in B T C. He was for a number of years Adviser to the Central Bank of Oman--to which he was initially sent by R B I on deputation. He was Dean Academic Excellence, M E T, Mumbai. He is survived by his wife and three children. We pray that his soul rests in peace.

As reported by - P.P.Ramachandran (via e-mail)

Banks in Dharwad told to set up financial literacy centres

The Reserve Bank of India (RBI) has suggested to banks in Dharwad district to have a Financial Literacy and Credit Counselling Centres (FLCC) at each Blocks. Mr R. Ramachandran, Manager, RBI- Bangalore, while reviewing the performance of banks in the district under Financial Inclusion Plan (FIP), advised the banks that just designating business correspondents (BCs) does not serve the purpose of FIP. “There should be full-fledged implementation of FIP by operation of biometric cards,” Mr Ramachandran said.

HBL

Subbarao: India is ready to help IMF to fight global crisis

Reserve Bank of India (RBI) Governor Duvvuri Subbarao said on Thursday that India is ready to extend support to the International Monetary Fund ( IMF) to overcome the global economic crisis. In his statement during the meeting of finance ministers and central bank chiefs of the BRICS ( Brazil, Russia, India, China and South Africa) nations that met at Washington, Subbarao said that all the nations of the group are ready help IMF. " BRICS countries are prepared to support the IMF in augmenting its resources, of course subject to their individual country circumstances," he said. The BRICS countries have unanimously considered providing money to the International Monetary Fund or other global financial bodies to increase their firepower for fighting financial crisis. " It is natural that when rich countries get into problems, the demand for IMF support, in terms of quantum of support, is bound to be higher, than when poorer countries or emerging economy get into problems. So, it is possible that IMF resources are starched and they might need additional support," said Subbarao. The leaders on Thursday also called the G20 nations to act swiftly and decisively to ease the euro zone debt crisis, the same way they fought the global financial crisis in 2008.

FPJ

Should for-profit companies be permitted to act as business correspondents for banks?

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.....Within the past one year, the Reserve Bank of India (RBI) has brought forth many initiatives with regard to financial inclusion and one of the most important changes is "permitting for-profit companies (corporates) to act as business correspondents for banks" with a view to enhance the cause of financial inclusioni . There are several lessons for the RBI and other stakeholders from the 2010 Indian microfinance crisis on this aspect. It is hoped that the RBI would look at these lessons and revise its decisions accordingly. .....

Wrong approach to inflation

...In accordance with widely accepted economic theory, the Reserve Bank of India has been trying to cure inflation by raising interest rates. It has done so virtually every month; unfortunately, even after nearly a dozen such exercises, inflation still persists. As Sir Francis Bacon pointed out over four hundred years ago, a theory is merely a theory; it cannot be taken as fact unless it is confirmed by experiment. In the present case, the theory that inflation can be cured by making money costlier has not worked. It is not a fact.....

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Rupee decline fails to cheer many NRKs

KOCHI: Even as the depreciation of rupee is good news for Kerala, which is largely dependent on remittances and exports, not many of the migrants from the state are able to make use of the windfall. With two major festivals, Onam and Eid, just over, most of them had already sent their savings to their relatives back home before the current slide of the rupee began. Remittances to Kerala are estimated to be equivalent of one-fifth of the state's GDP, and its migrant population is said to be around 2.1 million. The Indian currency hit a fresh two-year low of Rs 50 against the dollar on Friday, and it gained marginally after reports of RBI intervention. Nearly 80 per cent of the remittances to Kerala are described as distress remittances, which the migrants send home every month to support their families. Only those who had the capacity to hold back their savings are able to leverage on the rupee slide, and they constitute the remaining 20 per cent. Migrants from Kerala in other countries are also expected to reap harvest of the current hike in dollar value.

TOI

Rupee posts biggest weekly fall in 15 years

"Right now, the market is hungry for dollars and till the time there is significant dilution in the demand, intervention from the central bank will only cushion the rupee's fall, not reverse the trend,"...

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Volatility in financial markets likely to remain; pressures on euro seem inevitable: Barclays Capital

... But RBI Deputy Governor Subir Gokarn told a news channel that if the RBI intervenes, it would be with a "very narrow objective of smoothening what might be a very volatile market situation, nothing beyond that"......

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India warns world of 'currency war'

Indian Finance Minister Pranab Mukherjee on Thursday warned the international community that there is danger of a currency war if the ongoing economic crisis deepens........

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Will intervene in forex market only to smoothen volatility: Gokarn

The Reserve Bank of India (RBI) will maintain its stance of intervening in the foreign exchange market only to smoothen volatility, Deputy Governor Subir Gokarn told CNBC TV-18 on Friday, after the rupee touched its weakest level in more than 28 months. “We at this point do not see any intervention from a rate targeting view point. That is something that would reflect a change in policy stance, which we are not doing at this point,” Gokarn told the television channel in an interview from New York. “If we do intervene at all, it will be with a very narrow objective of smoothening what might be a very volatile market situation, nothing beyond that,” he said. Several analysts have called for the RBI to intervene in the forex market in order to prevent the recent sharp depreciation in the rupee from fuelling imported inflation, which could add to already high domestic price pressures. The RBI has always maintained that it does not use the rupee as a tool for inflation management. However, in its latest policy, it said a falling rupee may have adverse effects on inflation. “One should not look at our exchange rate policy within the narrow boundaries of inflation management,” Gokarn said. “There is larger logic and context to our exchange rate policy and we have over the last few years allowed the rupee to float within the broader structural boundaries of debt limitations or debt restrictions, so that policy remains,” he added. His comments come on a day when the rupee hit 49.90, its lowest since 14 May, 2009, and a day after it shed 2.5 percent to post its biggest single-day loss in nearly three years. The local unit has declined nearly 12 percent from its 2011 high of 43.8550 against the dollar reached in late July. “It is important for people to recognise that volatility in the exchange rate is a part of the game now and your investment or return calculations have to take that into account and you have to decide how you are going to hedge that risk,” Gokarn said. The RBI has refrained from intervening in the foreign exchange market for eight straight months until July, latest central bank data showed earlier this month. However, there has been speculation in the forex market over the last few days that the RBI may have stepped in to support the local unit. Several traders had said the RBI likely sold dollars on Thursday. However, this can only be confirmed when the central bank releases the intervention data for this month in November.

Firstpost

Rupee depreciation expected: Rangarajan

The depreciation in the value of rupee was expected to an extend and could be temporary, said Prime Minister’s Economic Advisory Council Chairman C Rangarajan. He added the entities, which have a foreign exchange commitment must always hedge themselves from against the trends in the value of rupee. Speaking to reporters on the sidelines of the Annual Day celebrations of the Madras School of Economics, where he serves as chairman, Rangarajan said, “There is some panic regarding the direction in which the advanced economies will move and all of this is contributing to a situation in which the currencies are taking some beating.” The rupee has fallen at a time when currencies in many other emerging economies also took a beating. This is a reflection of what is happening not in India, but in the rest of the world, he said. But it must also be noted the rupee had stayed very strong for quite a number of years and therefore some decline in its value was also expected, he said. We would have to wait and see for some more time before coming to a conclusion where the rupee would settle, he added. Any entity, which has a foreign exchange commitment must always hedge itself and I do hope most of them would have hedged themselves against the trends in rupee value, he said. Commenting on the possible global economic slowdown, Rangarajan said the United States is taking efforts towards reviving the economy and the European debt crisis might also be resolved in some way. He said things might be more clear in a month’s time. Allaying possibilities for recession, he said the negative growth might not happen while the growth rate of developed economies would be slowed down and if it continued to remain so, would have some impact on India both in terms of trade flows and capital flows.

BS

Don’t defend the rupee, RBI

... If RBI were to successfully defend the rupee, many more firms would find dollar borrowing more attractive. Indeed, firms and households, anyone who can have access to low-cost foreign borrowing, would borrow in dollars (even if they did not need the money themselves) and lend in rupees, keeping the margin as profit. Since few would expect the central bank to be able to defend its currency in the long term, this is likely to be short-term borrowing. The consequence of a successful defence by RBI is thus likely to be an increase in short-term dollar-denominated foreign debt. This would make the Indian economy even more vulnerable to a currency crisis.

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RBI wary of selling dollars on market volatility, deficit

The Reserve Bank of India has not intervened in a big way in the currency markets, unlike most of its emerging Asian peers, because it can ill-afford to expend a limited and fragile holding of foreign exchange reserves, RBI sources say......

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Interest rate vs buyer interest

Let us have a critical analysis of this interest rate tool vested with the RBI as a part of various monetary control measures and the effect of such action on the economy at the macro level, as it is the man in the street who faces the music ultimately.............

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Subbarao kept PC in loop



Several consultations with then FM on 2G, former Finance Secretary told PAC



The UPA Government and the Congress may be defending Home Minister P Chidambaram against charges of complicity in the 2G scam, but former Finance Secretary D Subbarao’s deposition before the Public Accounts Committee (PAC) on February 3, 2011, clearly shows that he had “fairly and regularly” appraised the then Finance Minister about former Telecom Minister A Raja’s move to allot spectrum at seven-year-old price without auction. Details available with The Pioneer show that on being grilled by the MPs on his communication and meeting with Chidambaram during the scam period, Subbarao told the PAC: “There were several consultations with the Finance Minister (Chidambaram) at several stages. So, I cannot recall exactly whether this particular letter (November 29, 2007 from DoT) was discussed on a stand-alone basis or together with other developments in the telecom sector, but I do recall that in that period (October 2007 onwards), I was discussing with the Finance Minister, fairly regularly on telecom sector issues.” Meanwhile, Finance Minister Pranab Mukherjee is expected to meet Prime Minister Manmohan Singh on Sunday to thrash out the issues related to Ministry note on Chidambaram’s role in 2G spectrum allocation. In order to accommodate his unscheduled meeting with the PM, Mukherjee’s departure from Washington has been advanced by a few hours. Now he is expected to leave Washington early Sunday morning instead of afternoon.  Subbarao was responding to the volley of questions from several members of the PAC, on how his directive of November 22, 2007 — to stay the allotment of spectrum and GSM licences to Reliance Communication and Tata Teleservices at 2001 price — was not adhered to. The directive had also sought to find new market-based price for spectrum, and suggested auction. But on November 29, 2007, DoT wrote to Subbarao that they were going by the 2003 Cabinet approval for the spectrum allotment policy. After the DoT reply, the Finance Ministry kept quiet. To the questions, whether he had consulted Chidambaram, the former Finance Secretary, who is currently the Reserve Bank Governor, reiterated: “On this letter of November 29 from the Telecom Secretary, I cannot specifically say that I had taken this particular letter to the FM, but I certainly was discussing with him on a regular basis.” The recent note by the Finance Ministry to the PMO, and minutes of Raja and Chidambaram’s meeting, clearly show how Subbarao was overruled by Chidambaram to favour Raja’s controversial 2G spectrum allotment. These documents also substantiate Subbarao’s deposition before the PAC that Chidambaram was in the loop. When Subbarao was pressed by MPs, to provide evidence about his communication and meeting with Chidambaram, he told the members and PAC Chairman Murli Manohar Joshi, “Sir, there may not be a paper trail, but there was certainly discussion going on. Sir, as you know — you have been a Minister yourself in the Government — not everything is on paper or reduced to writing. Maybe there were some file endorsements, but I cannot recall them because the note file is not here.” To a question, whether he brought the violations and difference of opinion to the notice of the Cabinet Secretary or Chidambaram, Subbarao deposed, “I do not recall having said specifically that we should go back to the Cabinet. That I cannot really say without seeing the file. But I should have briefed the Finance Minister about the ongoing discussions.” Indicating pressure from Chidambaram and Raja, why no auction of spectrum took place, even after he specifically suggested auction, Subbarao said: “…We (Government) were always arguing on the basis of level playing field rather than on the basis of any growth dimensions that might have subsidised. And if they (Ministers) have chosen so, then as a civil servant, I could not contest that.” 

The Pioneer

Six Sigma can give customers value for money

...By adopting global best practices like Six Sigma, financial institutions can reduce their operating costs and bring in the much-needed customer satisfaction to grow their business.

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RBI allows banks, NBFCs to set up infra debt funds

...The Reserve Bank of India (RBI) will allow banks and non banking financial companies (NBFCs) to set up Infrastructure Debt Funds (IDFs) to accelerate and broaden the funding sources for the country’s huge infrastructure spend plans.....

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