Caught between a weak rupee and a system starved of cash

On 15 August 1997, then Reserve Bank of India (RBI) Deputy Governor Yaga Venugopal Reddy, at a foreign exchange dealers’ conference in Goa, had said: “As per the real effective exchange rate, it would certainly appear that the rupee is overvalued...” Reddy’s apparently innocuous statement pulled the local currency sharply down against the dollar. From 35.7 to a dollar, the rupee slipped to 40.7—more than 12%—in the next five months. Clearly, through Reddy the Indian central bank wanted to convey a message to the market. This was the first instance of RBI talking the rupee down. Many believe current RBI Deputy Governor Subir Gokarn was emulating Reddy when, on 17 November, he told a business channel that “…the use of reserves to defend an exchange rate, which may not be defensible beyond a point, means we end up with the same pressures and with a lower set of defence against it. So, you have to be very careful about how we use the reserves…”
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HDFC Bank, Vodafone India launch mobile banking product for rural coverage

...In the afternoon, Dr Chakrabarty launched HDFC Bank and Vodafone India's national initiative for financial inclusion through mobile banking from Chomu, a couple of km away.
He said, “It's the upper echelons of society who are using mobile banking now. We want the poor also to benefit, especially those in remote villages.” .....

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HDFC Bank-Vodafone venture: Who is to supervise?

Who will supervise the HDFC Bank Vodafone joint venture, asked a reporter? Mr Aditya Puri quipped that the RBI would supervise HDFC Bank and HDFC Bank would in turn supervise Vodafone. Dr Chakrabarty clarified that the RBI as the bank's supervisor would hold it responsible for Vodafone adhering to all the relevant guidelines of the RBI.

Sharing the cake!

What is the sharing of revenue/fees between Vodafone and HDFC Bank? Mr Puri's response: “We can't share the cake unless it is broken. So first, let us break-even and then we'll think of how to share the revenue.”

Alert to the threat from competition

When a reporter asked Mr Sood of Vodafone whether they had entered into a similar tie-up with another leading private sector bank, Mr Puri was quick to seize the opportunity. To everyone's amusement, he encouraged the reporter, “Ask him again. We also want to know!”

Location

The product for financial inclusion was launched at the historic Chomu Palace Hotel at Chomu, 45 km from Jaipur. Chomu Palace is a 300-year-old fort. But its claim to recent fame is as the main location for the shooting of the 2007 Bollywood hit Bhool Bhulaiya, described succinctly on Wikipedia as a ‘psychological thriller comedy horror film'! Apparently the actors in the film who shot in this place for a couple of weeks did see some apparitions. Newspersons were spared the spookiness since the press conference wound up before nightfall! Thankfully.

HBL

RBI cautioned on invest account fraud, banker jailed for 3 yrs

The Reserve Bank of India has been asked by a Delhi court to evolve a proper mechanism to ensure that bank employees do not siphon public money by manipulating customers'' stock investment accounts and other financial instruments. Special judge Anoop Kumar Mendiratta gave this direction while sentencing suspended Syndicate Bank clerk Praveen Kumar Gupta to three years in jail for diverting over Rs 37 lakh to his accounts by fudging various stock investment accounts and other security instruments with the bank over 12 years ago. The court issued directions to the RBI, terming the fact of the case, unearthed by investigative agency during its probe, as "tip of the iceberg". "The mode adopted by the accused for fraudulent multiple encashing of the same instrument despite maintenance of balancing book in the bank calls for deeper analysis as the same could not have been possible but for want of complete lack of supervision or abdication of duties by senior officials," said the court. "Appropriate guidelines need to be formulated by RBI Governor to be followed by all the banks which may work as benchmark to check the commission of frauds in similar schemes. It is necessary to ensure proper conciliation and accountability of banking transactions by the employees in such schemes," it added. The court also ordered for sending a copy of its judgement to the RBI Governor "for compliance". The court direction came in a case involving falsification, manipulation and tampering of stock investment accounts, ledgers and stock invest instruments by Gupta between 1992 and 1997 to siphon off over Rs 37 lakh.

MSN News

Indian Bank sets up self-employment training institute

.....Mr Bhasin said that the financial inclusion movement in the country was initiated by Indian Bank in Puducherry in December 2005, as the National Pilot Project on Financial Inclusion. (Incidentally, the then Chairman and Managing Director of the bank was Dr K.C. Chakraborty, who is today a Deputy Governor in the Reserve Bank of India.)......

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VITALINFO turns one...........

Click to read a brief write up on VITALINFO 

Hats off to VITALINFO ...........

VITALINFO rated AAA

Banks see decline in complaints

....Mumbai: The number of customers who have registered complaints of unsatisfactory service with the Reserve Bank of India (RBI) has fallen in the year that ended 31 March after a sharp rise in the preceding fiscal............

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Be aware of new cheque norms lest it proves costly

The decision of the Reserve Bank of India (RBI) to restrict the time period for the validity of issued cheques and demand drafts will have a major impact on the manner in which people use these instruments. There are a lot of times when the life of the cheque comes to an end..........

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I don’t believe in policy paralysis business, it’s being overdone: Puri

CHOMU (RAJASTHAN): HDFC Bank managing director Aditya Puri is known to speak his mind. Unlike several of his colleagues in the corporate sector, who are bearish on the economy and are blaming government's inaction for moderation in growth, HDFC Bank chief says the fears are overdone. "I don't believe in this policy paralysis business in the sense you can't have 7.5% growth with policy paralysis. It is being overdone. Some industries which have had problems may have had some paralysis but that also if you are not in line with the laws and regulations," he told TOI in an interview on the outskirts of Jaipur. But he does agree with demands that the government needs to boost overall sentiments and suggests that tax policy can be used to contain inflation. "We need decisions on fiscal policy to control inflation, which the RBI has been saying for a while, because if you control only through monetary you are quite likely to bring growth below acceptable parameters. That has ramifications on tax collections, fiscal deficit, on the rupee and on business sentiments. And, it may not, as we have seen, in the full control of inflation."

TOI

India Post launches overseas money transfer

HYDERABAD: Transferring money to India from 190 countries across the world will now become easier through the MoneyGram service launched by India Post. The service will be available at 99 Head Post Offices and Mukhya Dak Ghar across Andhra Pradesh, according to a press release from the department. In India money can only be received from abroad through the service. For transferring the amount, the sender will have to fill up the ‘Send Form’ at the overseas MoneyGram counter and pay the principal amount apart from charges. A special 8-digit reference number will be given to the sender which will be conveyed by him to the payee. For receiving the money, the payee in India has to approach a post office offering the service and fill up the ‘Receive Form’ along with the reference number. To ensure that the amount reaches the right hands, the payee will have to carry a valid photo identification such as PAN card, driving licence, passport, voter ID, ration or Aadhaar card. For a foreign national to receive money in India, the original passport with valid Visa has to be presented at the time of collecting money. The limit on the amount sent through the transaction is US $ 2,500 and the payment will be made in Indian rupees at the prevailing exchange rates. Further, the transaction can be used only for personal remittances and towards remittances favouring foreign tourists visiting India. Trade-related transactions such as purchase of property, investments, donations or contributions to charitable organisations and credit to NRE accounts are not allowed under the scheme.The service operates as per the guidelines of RBI and all KYC/AML/CFT rules of RBI will be applicable. Also, not more than 12 remittances are allowed to be received by a single individual in one calendar year.

IBN Live

FinMin diktat sets stiff targets for PSU banks

.. Bankers say such a diktat is unprecedented and a departure from the practice of allowing banks to decide their own growth path.....

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Opportunities beckon for banks

...Extensive studies conducted by the RBI, using sophisticated techniques, reveal a high degree of interconnectedness among Indian banks. This can make the system vulnerable in the event of failure of one or more banks depending on the degree of interaction.........

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Small savings agents upset

...The government's decision to raise the interest rates and slash agents' commission on a range of popular post-office saving schemes beginning Thursday will make small savings more rewarding for millions, but it has also triggered howls of protest from lakhs of agents whose income depends on selling these products............

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Kerala govt's Shariah finance firm nears start

...The Kerala government-promoted Shariah-compliant Al Barakah Financial Services Ltd hopes to start operations from next fiscal, pending RBI licence for non-banking finance company (NBFC).....

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India urged to buy more gold as reserve value soars

... A working paper by the central bank had advised the Indian government to go in for more purchase of the precious metal……

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Islamic Banking Is the Need of the Hour: Experts

...Even as RBI and government aren't keen on allowing Islamic banking, experts from the world of Islamic finances today said it is a question of "how soon and not whether it will be allowed", as this mode of banking can greatly help a fund-starved country get long-term finances......

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RBI communicates dollar/rupee shift

...It is interesting that the RBI's communications about a somewhat hands-off approach or policy with respect to the dollar /rupee market has not been assimilated well. Be it as it may, it may well pay for the corporate sector to “listen” to RBI communications on this subject more closely in the future. Indeed, the RBI has been quite consistent in stating that it does not target any particular rate level or range for the rupee. This message has been particularly drilled through in the past couple of years at every available opportunity.....

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What ails my rupee

..The Reserve Bank of India’s (RBI) statements that it would not support any particular level of the rupee and will only intervene to stem the volatility in the market has significantly contributed to the depreciation of rupee........

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