NIBM gets new Director

Established in 1969 by the Reserve Bank of India, in consultation with the Government of India, as an autonomous apex institution, with the mandate of playing a proactive role of “think-tank” of the banking system, the NIBM is part of the grand vision of giving a new direction to the banking industry in India and making the industry a more cost-effective instrument for national development. Shri Allen C A Pereira has taken over charge as Director of the National Institute of Bank Management, Pune on 1^st October 2011. 

Born on 16^th September 1950, Shri Allen C A Pereira graduated in Arts and completed his post graduation in Social Work with specialization in Labour/Personnel Admn. & Industrial Organisation from the University of Mysore, Karnataka. He started his career with Syndicate Bank as Specialist Officer in Personnel in 1973.  He served the bank in various capacities as Branch Manager, Chief Manager, Asst General Manager and General Manager. During his career, he could get exposure to Retail, International Business and Corporate Banking. He was Advisor for Personnel and Industrial Relations at the Indian Banks' Association for four years. His responsibilities included providing necessary inputs and assistance to the Negotiating Committee of IBA for Industry level negotiations with Trade Unions on salary, allowances and perks for bank employees. Besides this, he was Secretary/Chief Executive of the banks' Sports Board, policy making body in Indian Banks' Association for promoting sports in Banks. A true HR person as he can be described, Shri Pereira made concerted efforts by activating a fresh look at Human Resource Management / Development in Public Sector Banks which led to the formation of Committee of CEOs of PSBs for proposing an HRM policy and areas of autonomy for public sector banks. The Government of India accepted most of the recommendations of the Committee beginning with the successful implementation of Voluntary Retirement Scheme in 1999/2000. He was Executive Director of Oriental Bank of Commerce before being taking charge as Chairman & Managing Director of Bank of Maharashtra in 2008. During his stint in the Bank of Maharashtra, he introduced a transparent and business oriented transfer policy for officers and workmen. He restructured the bank from 4 tier to 3 tier organization for improving efficiency and decision making process. The bank could achieve 100% CBS and had accelerated expansion of branch network with focus on unbanked and underbanked areas including North East Region. 132 branches were opened within the span of two years and crossed 100,000 crores total business as a part of Platinum Jubilee of the Bank. He made sustained efforts to improve lending to agriculture sector and SMEs.

On behalf of all its readers, VITALINFO extends best wishes to Shri Pereira.

RBI detects fake Indian notes in office

New Delhi, Oct 1 (IANS) The Reserve Bank of India (RBI) has registered a police complaint here after detecting 192 fake Indian currency notes in their office in August, police said. RBI Assistant General Manager P. Kavitha complained to a central Delhi police station about the fake notes. “The printing or circulation of forged Indian currency notes is an offence under Section 489-A to 489-E of the Indian Penal Code. We request you to conduct an investigation and book the culprits,” Kavitha said in the written complaint.“We have also been provided with the name and addresses of the tenderer,” said a police officer.

Thaindian News

RBI : Online mechanism to redress complaints

HYDERABAD: Unhappy with the service rendered by your banker? You can register your complaint with the Banking Ombudsman set up under the aegis of the Reserve Bank of India (RBI) and expect a speedy settlement, thanks to RBI’s online complaint tracking system. While the Banking Ombudsman has been in existence for a while, the central bank has recently adopted the online complaint registering mechanism. As a result, complaints that typically used to take more than two to three months can now be settled with in less than a month. “Customers can file their complaints online. This is more transparent and ensures speedy processing. We are able to settle nearly 60 to 65 per cent complaints in a year,” said Andhra Pradesh RBI Chief General Manager & Banking Ombudsman M Sebastian. He added that awareness levels among customers about the Ombudsman is low and hence the RBI has been gearing up to conduct workshops in rural areas. During 2010 to 2011, the number of complaints from metropolitan areas constituted 44.03 per cent of the total complaints from Andhra Pradesh followed by urban areas at 26.12 per cent, semi-urban areas at 18.06 per cent and rural areas at 11.79 per cent. During the year 2010-11 about 5,012 complaints have been received by the Banking Ombudsman in Andhra Pradesh as against 5,622 complaints registered in 2009-10. The regional office had dealt with 5,338 complaints including 326 complaints pending in 2010. Of these, 5,021 complaints have been closed. Interestingly, the State Bank of India and associates, including SBI Cards, accounted for the largest share of complaints at 41 per cent. The other significant inflow of complaints have been observed in respect of nationalized banks at 28.23 per cent. On the other hand complaints on private sector and foreign banks accounted for 18.6 per cent and 7.26 per cent respectively. “In our assessment, major banks have made significant enhancements in their internal grievance redressal and processes in response to more resolute regulatory and supervisory interventions and proactive engagement by the Banking Ombudsman,” said Sebastian. Meanwhile, ATM and credit cards related complaints formed a significant proportion followed by those relating to loans and advances at 15.22 per cent and delay in disbursement of railways and defence services pension at 11.41 per cent.

IBN Live

RBI cautions against fictitious offers of cheap fund

Shimla : The Reserve Bank of India (RBI) today cautioned the general public against fictitious offers of cheap funds from abroad, often in form of lottery prizes money, through letters, e-mails and SMS. While addressing a press conference here, Officer-in-charge of the RBI, Shimla branch R Gurumurthi said that the apex Bank was creating awareness campaign about the crime in the country. He informed that many complaints were pouring from different quarters with RBI that fraudulent communications offers form individual and trusts were being made with people alluring them for lottery winnings or remittance of funds in foreign currency from abroad or employment or scholarships which are perpetrated by certain residents and non residents. He said factious offers are generally made through letters, e-mail, and mobile phones and SMS. Apart from the typical modalities adopted in the past, the fraudsters are now resorting to issue of certificates, letters and circulars which are sent through e-mail on letterheads that look like that of Reserve Bank and purportedly signed by its top executives or seniors officials to make them appear as genuine. The fraudsters also convince the victims by impersonating as senior officials of the RBI with telephones numbers and factious e-mail Ids. Many residents fell prey to such teasing offers and lost large sums money in the process. Advising people not become pray of any such call, Mr Gurumurit informed that a case has come before RBI from Himachal Pradesh belong to Rampur area of this district as a person complaint that after depositing Rs 30 lakh in similar allurement for getting Rs 4 crore, he lost his deposit after becoming prey of crime. He cautioned the people that getting any offers from foreign and accepting it is crime under FEMA and people should not fall in any such trap while such fictitious offers are coming in rampant leaving victims hapless. Replying to a question he said after becoming victim of such offer people normally did not report or complaints to RBI and other government agencies as under law they themselves become part of crime after accepting the offer to such call and their indulgence and implications in the crime keep complaint mum.  The crime is flourishing due to lack of whistleblower as victim themselves get trap in the web of crime and threat of law forced the victim to bear the consequence on their own.

http://www.newkerala.com/news/2011/worldnews-73841.html 

Minted In A Sepia Tone



Money talks

Then finance secretary Manmohan Singh with RBI Governor I.G. Patel



Who isn’t fascinated by money? When a new ten-rupee coin is released, we keep turning it in our fingers to see if it feels right, there is heated debate about its design, size and look. Or when a much-loved denomination like the 25 paise is phased out, there is a perceptible collective sigh, and in some rural pockets, sheer dismay. Why won’t shopkeepers in the cities accept the 50-paise coin though it’s still official currency, people wonder. The rupee, of course, touches us all and the Mint Road Milestones—marking the creator of the rupee, the Reserve Bank of India’s, 75th anniversary—is an exhibition that captures the currency’s fascinating journey. In 1935, under the Paper Currency Act of 1861, the Raj was granted the monopoly of issuing notes, ending the practice of private and presidency banks. But these currencies continued to be in use till the RBI issued its own coins and notes. Interestingly, till about 50 years ago, other currencies besides the RBI’s existed in, for instance, Portuguese Goa and Hyderabad. The central bank’s first currency, issued in 1938, was a five-rupee note bearing the portrait of King George VI. This was followed by notes of 10, 100, 1,000 and, yes, 10,000 rupees. In the subsequent years, global developments, security concerns and the high cost of minting money led to many changes in the motif and the material of the currency. In 1940, the one-rupee note was reintroduced as a wartime measure. The watermark was made more difficult to copy and the security thread was introduced in 1944 to counter high-quality forgeries of rupees by the Japanese during their assault on Burma in WW II. There is no uniformity or regularity in the change of colour, security features or pattern. “It isn’t wise to change the design and features frequently as it inconveniences people. At the same time, to prevent forgeries, we can’t keep it constant,” says Alpana Killawala, the RBI’s chief general manager. The George VI series continued till 1947. After Independence, a new design one-rupee coin was released in 1949. After careful consideration, King George VI’s portrait was replaced by Asoka’s Lion Capital, though a portrait of Mahatma Gandhi was initially considered but rejected. In 1960, the Hirakud dam, a symbol of India’s industrialisation, replaced the elephant motif on the Rs 100 note. During the first decade of Independence, the rupee was divided into 16 annas. Each anna was subdivided into either four pices or 12 pies. The Anna Series, introduced on January 26, 1950, was the first coinage of the Republic of India. It was continued for seven years, and then replaced with the decimal system, which divided the rupee into 100 naya paise. High inflation led to change in the metal for coins—from silver to nickel to aluminium to steel. Similarly, the paper currency has undergone a sea change—the economic crisis of the late 1960s led to a reduction in the size of notes and fears of black money in circulation led to the cancellation of high denomination notes like the Rs 1,000, the Rs 5,000 and the Rs 10,000 in 1978. But in 2000, the Rs 1,000 series were reintroduced with optically variable ink that changes colour on tilting. Given that the lifespan of a currency note is generally only two years, many of the paper currencies, such as the Rs 1 and Rs 2 notes, have now been phased out. The five-rupee note is due to be phased out too. The coins and notes of today are all part of the Mahatma Gandhi series that came into use in 1996. The currency notes have complex watermarks, windowed security thread, a latent image of Gandhi and intaglio features for the visually handicapped. Further enhancements in 2005-06 raised intaglio printing and widened the security thread. As Mint Road Milestones continues its southward journey from Delhi to Mumbai and further down, one thing’s for certain. The lure of this must-see history of the rupee will be difficult to resist.

The Outlook

Obituary

1. Shri,V.Sreenivasan, who retired as DGM from DBOD, Mumbai in 1995 passed away due to cardiac arrest on September 27, 2011. He was 76 years old and had worked in RBI for 42 years and in different departments. He was a very popular officer and had a wide circle of friends and admirers. His wife had pre-deceased him. He is survived by his three sons and grandchildren.

2. Shri.P.B.Arole passed away on September 17,2011. He retired from DBOD and was 72 years old. He had worked in RBI for over 35 years and had a long stint in the Secretary's Department. He was ever-smiling and helpful. He leaves behind his wife and three children.

We pray that the souls of these two good persons rest in peace.

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

May we help you? - Why the RBI is sticking to repo rate hikes

Have you, like some of our readers, been baffled at why the Reserve Bank of India seems to be using only the repo rate to combat inflation? The RBI has been trying to counter inflation by raising interest rates, increasing interest costs for borrowers and providing savers an incentive. A lower demand for loans with lower consumption due to higher savings would moderate demand, and prices. The RBI has historically used Cash Reserve Ratio (CRR), Market Stabilisation Scheme (MSS) and the repo rate to keep tabs on inflation. However, from first half of 2010, RBI has only used the repo rate. It is only 0.75 percentage points from the peak rate witnessed in 2008. But the CRR, is still three percentage points from the September 2008 peaks. Why isn't the RBI tapping this? Let's first understand what CRR and MSS bonds are. The CRR is a reserve banks have to keep with the RBI. The CRR ratio is now 6 per cent, i.e., for every Rs 100 of deposits a bank gets, it has to maintain Rs 6 with the RBI. This CRR doesn't earn any interest. The main aim of the ratio is to reduce liquidity in the system. Given that majority of the financial savings of households and corporates go into deposits, by increasing or decreasing the reserve RBI would be able to attain its monetary policy objective. The MSS was introduced in 2004 to manage liquidity after there was an excessive capital flow from abroad. The capital flows were impacting rupee liquidity , which would have fuelled inflation, reducing the effectiveness of CRR hikes and other monetary tools. Under the MSS mechanism, RBI sells Government bonds. Until October 2008, MSS mopped up Rs 1.7 lakh crore from the system. The scheme wasn't compulsory but achieved RBI's objective.

But how is the current monetary tightening different from that which ended in September 2008?

Then and now

Until 2008, India's current account deficit was low and capital account excesses had to be kept under check. This time around, even as capital flows were coming in, the current account deficit was high which was compensating the for excess capital flow. These two factors neutralised exchange rate. Therefore, RBI didn't use MSS bonds this time. Coming to CRR, it is not that RBI hasn't used it in the current monetary tightening. Till April 2010, RBI had increased the CRR requirement to 6 per cent from 4 per cent. It didn't aggressively pursue this tool as the liquidity situation had deteriorated significantly. Banks, which were sitting on excess deposits, didn't raise rates for a long time, leading to households diverting these funds to other sources. Additionally, Government and private borrowing shot up resulting in a liquidity deficit scenario. Even though the CRR wasn't hiked to previous peaks, the liquidity deficit was more than RBI's target. A liquidity deficit situation arises when deposits aren't sufficient to fund various banking operations, prompting banks to resort to borrowing from RBI and the market to fund these operations. 

HBL

RBI to charge repo rate for loans to state cooperative bank

KOLKATA: The Reserve Bank of India has decided to link the interest rate on loans and advances given to state coopoerative banks for general banking facilities like clearing adjustments or liquidity with the repo rate from October 1. Till date, state cooperative banks used to get this facility at bank rate, which was at one point considered as the benchmark rate. But the banking regulator has over a period of time made repo rate acceptable as the benchmark short term policy rate and this latest decision is a stap to this endeavour. At present, the repo rate stands at 8.25% while the bank rate has been at 6% for quite some time. In effect, state cooperative banks have to pay 225 basis points more interest for availing themselves of the facility.

ET

Rupees run dry

Bhutan : With rupee borrowings to pay for imports from India having reached a staggering INR 10B, and its demand by the Bhutanese economy showing no signs of slowing down, the central bank is doing what it can to address the problem – borrowing more rupees. Central bank officials are negotiating with India’s central bank, the Reserve Bank of India, to borrow from them. The interest rates would be relatively cheaper than the State Bank of India line of credit. According to an official, it is expected to be around 6.2 percent. SBI charges an interest of 10 percent. It is five percent from a credit facility extended by the government of India (GoI), which has a limit of INR 3B. “The initial plan was that RBI will lend in dollars but, due to the rising demand for rupee, we requested them to lend us in rupee, which they’ve agreed to,” the official said.  This will be the third line of credit for Bhutan to borrow rupee. Other option to meet the demand for rupee is to enhance the limit from the SBI line of credit by INR 2 to 3B.  The official from RMA said the limit has already been exhausted at INR 7B. While no more can be borrowed, there is a rising demand for rupee within the economy. Domestic banks have not been able to meet the demand with its reserve exhausted.  RMA will be sending a letter to the State Bank of India today, requesting them to enhance the limit. All the local banks have been requesting the central bank for rupees, which RMA has not been able to provide. The Bhutan National Bank’s chief executive officer, Kipchu Tshering, said their accounts in India have exhausted and reached almost negative now. “We have to send back most of our customers, who come to the bank looking to exchange ngultrums with rupees,” he said. While there is a 400,000 limit an individual on exchanging ngultrum with rupee, there is no restriction on drafts and letters of credit.  The rupee, which the banks get from RMA, is maintained with Indian banks by the local banks.“The situation is getting worse and there seems to be no solution,” he said. The situation is similar with the rest of the banks. T-bank’s balance in their accounts in Indian Axis bank has reached only INR 10M, while Druk PNB’s balance has reached around INR 2 to 3M.  Bank of Bhutan’s chief executive officer, Passang Tshering, said that they were in a slightly better position but, in recent times, it has received complaints of rupee shortages from its customers.  While there has been increasing rupee deficit, the economy’s foreign exchange reserve has been growing. Although figures were not available, central bank officials said, forex reserve (dollar) has been increasing as of now.  In the 2009-10 fiscal year, convertible currency reserves increased to 838M from 759M in the previous fiscal, according to the RMA annual report.  Against the backdrop of rupee crisis and increasing foreign exchange reserve, Bhutanese economists suggests selling dollars in the Indian market for rupee. An economist said since rupee is more important than dollar, given the volume of trade with India, selling USD in the Indian market could address the issue for some time. “Moreover, the dollar has gone up to INR 49 to 50 a dollar, which would mean higher returns,” he said. For example selling USD 200M in the Indian market could fetch Nu 9.8B, which is almost equivalent to the rupee deficit of INR 10B. But then the constitution mandates 12 months of import expenditure from the foreign exchange reserves, and RMA officials said selling dollars in the Indian market would provide only temporary relief.  In most developing economies, the constitution mandates only five to six months of import expenditure from foreign exchange reserves, according to another economists. 

http://www.kuenselonline.com/2010/modules.php?name=News&file=article&sid=20973

What drove, and who wins from, rupee's fall

...Yes, it is the season where the rupee has developed slippery feet and has ‘depreciated' against the dollar. In other words, while the exchange rate of the dollar vis-à-vis the rupee was at 44-45 levels just a little while back, it is now at over 49 levels. This has caught many investors off-guard....

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Patients' charter of rights in the offing

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The NHRDA will be linked to the ministry of health and family welfare. It will be an autonomous body - similar to the office of RBI Governor - and will have statutory powers to regulate the healthcare sector.....

Poor Muslims can’t bank on APSMFC

Moreover, the banks have been reluctant to step up sanction and disbursement of loans to the minorities, virtually ignoring the RBI's repeated directives to them to ensure 15 percent credit flow of all the priority sector lending (PSL) to these sections......

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Doctor shoots down burglar

....Residents of the colony caught Murali’s associate, Shiva, after a chase. Investigation revealed that the two had struck at the residence of former RBI Governor, Y.V. Reddy, four days ago, in Jubilee Hills.....

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