Money remittance facility for Nepalese workers

KANPUR: Migrant Nepalese workers can now send money faster from India to relatives or family members staying in any part of Nepal through Indo-Nepal remittance facility. Rajeev Dwivedi, RBI Deputy General Manager (Banking) said that Nepalese workers can receive money in cash or in bank account in Nepal through the branches of Nepal State Bank or the approved agents. The DGM said that Nepalese workers may send upto Rs 50,000 per remittance in India while the peers or family members will receive the amount in Nepalese rupee. He said that they can send money as many as 12 times in a year through this facility. The cost of this facility is Rs 25 to Rs 100. The cost will vary depending on the value of transaction and the manner in which friends or family members of migrant worker receive the funds. "To send the money through Indo-Nepal remittance facility, they do not need a bank account. This facility is available to both customers and non-customers of the banks at around 80,000 national electronic funds transfer (NEFT) enabled bank branches. They may contact the nearest bank branch for more details," Dwivedi added.

TOI

Bank not responsible if ATM misused: Consumer forum

New Delhi: A person cannot claim damages from bank if he fails to immediately block his lost ATM and money is unauthorisedly withdrawn by using the card, a district consumer forum has said. It said the bank would have been liable if the transaction of withdrawal of money took place after blockage of the card.A bench of Central Delhi District Consumer forum passed the order while dismissing a complaint filed by a Faridabad resident Deepa Singh alleging that bank is liable for the compensation as it allowed illegal withdrawal of money from her account after she lost her ATM. “Singh was having the PIN number and without that PIN number, the ATM card could not have been used. First the money was withdrawn and only thereafter the bank was informed to block the card.The bank complied the instructions of the complainant. The bank would have been liable if transaction of withdrawal of the amount would have taken after the blockage of the card by it,” the forum said.The forum presided by its president B B Chaudhary also refused to pass any order against the bank for its failure to provide her video footage of the person who had used her ATM. “The bank cannot be held liable merely because it could not provide the CCTV footage of the relevant time of the withdrawal of money. The CCTV is a machine and it may not function at a particular time,” it said.  The forum further said that the PIN number of the ATM card was only with Singh and without it money could not have been withdrawn and the bank was told to block the card only after the amount was withdrawn. Singh had submitted that at the time of issuance of card, the bank had assured her that if somebody would withdraw money from her account without her knowledge, it would provide her video clipping but in July 2010, the bank informed her that the camera was not working at the relevant time and video clippings could not be provided. But the forum was not satisfied and dismissed her plea saying, “only card holder can be held responsible if the ATM card/Debit card is misused fraudulently.”
Sikkim Reporter

ICAI for branch-level audit of private sector banks

......... Until 2005, the RBI used to directly appoint statutory auditors in public sector banks. Since then, it has been allowing bank boards to select their preferred auditor from an RBI-approved panel of audit firms. The ICAI had criticised the practice, saying it left auditors at the mercy of bank boards and compromised their independence. The RBI is yet to change its position with respect to this autonomy to public sector banks.

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Prayers for rate cut may be answered in Jan, but 2012 will be a tightrope walk

After 13 rate hikes and a pause in its last policy review on 16 December, the general view taking hold is that the Reserve Bank of India (RBI) will likely begin cutting rates even before April 2012, given the dovish tone of its latest review. But 2012 will be be a major tightrope walk for policymakers and the RBI if a growth rate of around 7 percent is to be maintained. Contrary to earlier expectations, analysts are now betting that an easing of the monetary cycle may actually begin earlier in the January-March 2012 quarter, and not after April 2012. Citi, for instance, has predicted that the RBI will have to begin the easing cycle around the first quarter of FY13 (2012-13). “The deceleration in growth coupled with a moderation in sequential inflation will likely result in the RBI easing by 100 bps in 2012 versus 50 bps expected earlier. (Note: 100 basis points make 1 percent). Growth slippages also raise the odds of an advancement of the easing cycle to 4Q FY12 (January -March 2012) vs 1QFY13 (April-June 2013),” says Citi economist Rohini Malkani in a report, referring to the RBI’s statement that the downside risks to the central bank’s own growth projections had increased significantly. “The RBI has raised rates 13 times so far, with effective policy tightening at 525 bps (with the repo rate currently at 8.5 percent). During this time, while WPI has remained elevated at 9 percent plus, GDP growth has come off from 9 percent to (around) 7% percent,” notes Citi. Goldman Sachs, on the other hand, has said that the first repo rate cut will, in fact, be effected when RBI takes stock of its policy on 24 January. “Given the dovish tone adopted by the RBI and the rapidly deteriorating growth environment, we bring forward our forecast of the first repo rate cut to 24 January from March. Our December inflation forecast is currently 7.8 percent, materially below the 9.1 percent in November, while our FY12 GDP growth forecast of 6.9 percent (well below the RBI’s current forecast of 7.6 percent) has downside risks, says the Goldman report. “With the focus on growth slowdown that the RBI has adopted, we think there is little reason for the central bank to wait till March before a rate cut. We are forecasting an above consensus 150 bps of rate cuts in 2012,” says Goldman’s Tushar Poddar. Indranil Pan of Kotak Mahindra Bank says: “We believe that estimated GDP growth for FY2012 could be lower than 7 percent and could lead the RBI to start cutting the repo rate at its annual policy statement for FY2013.” Be that as it may, by all accounts economists and analysts reckon the coming year will be tough despite the attempts at monetary easing. A slowing economy will make life tougher, says Malkani in her analysis. There’s limited manoeuvrability on the domestic macroeconomic front. Pointing to the limited ammunition (in comparison to 2008) that Indian policy makers now have in the event of a crisis, the Citi report says this is on both the fiscal and monetary fronts, where higher deficits and stickier inflation would limit the space for conventional policy responses. On the monetary front, persistently high inflation reduces the likelihood of rate cuts coming as rapidly as they did during the previous crisis. Pointing to the fiscal side, it says : “During the previous crisis, the deficit had consolidated to 4.1 percent of GDP in FY08. This gave the government enough fiscal space to take stimulus measures.” But this time is different.

Twelve tasks for 2012

Rohini Malkani of Citi says in her report that 2012 will need to see 12 tasks undertaken to keep growth even around 7 percent:

1. Incentivising investments – Resolving power, mining, land issues

2. Foreign capital – Measures to attract flows

3. Inflation – Addressing structural issues

4. Fiscal – Some efforts towards consolidation

5. Politics – Current model of governance needs a revamp

6. Battling corruption and electoral reform

7. Improving data quality and dissemination

8. Labour reforms – Key to avoiding a demographic nightmare

9. Employment – The National Manufacturing Policy could help

10. NREGA – More productive work; putting funding to better use

11. Urban infrastructure – Key for balanced growth

12. Vigil on non-performing loans (NPLs) – To prevent negative feedback loop

Firstpost

Inflation indexed bonds, please

......The RBI probably fears that the auction-based sale may set higher yield expectations from buyers, making this costly in comparison to a nominal bond sale. Moreover, such bonds are focused on the retail customer, but in India, majority of bond investors are institutions..............

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2011 — When macro events ruled markets

..............The RBI, in its Macro Economic and Monetary Development quarterly report, holds a positive view on agriculture prospects for 2011-2012, with above normal southwest monsoon and equitable spatial distribution. This said, with a high base effect, this sector may find it difficult to outdo the bumper numbers of last year. The Survey of Professional Forecasters conducted by the RBI has, in fact, revised its agricultural growth expectations lower to 3.2 per cent for 2011-12.

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Spoilers for MFIs’ fund-raising plans despite RBI move

Mumbai: The microfinance industry is unlikely to get much respite from the recent RBI decision to increase external commercial borrowing (ECB) limit for them, as the rupee fall and the bad financial health will act as spoilers to their fund raising efforts, say industry experts. “Though increasing the ECB limit is a step in the right direction taken up by the regulator, it is difficult to raise money from overseas now due to the sharp volatility in the rupee,” a top MFI officia said. Without proper hedging, it will be difficult to take such kind of exposures which will impact the balance sheet of MFIs, he added. The official also pointed out that it is difficult to convince foreign investors to put in money at a time, when the domestic business is not doing good. “The health of MFIs is not good after the Andhra Pradesh Ordinance last October. Unless the issues relating to the sector are sorted out, it will be difficult to raise money overseas,” he said. The Reserve Bank last week increased the ECB limit for MFIs to $10 million in a financial year from $5 million earlier and also allowed ECB credit by international banks, foreign equity holders and overseas organisations into the domestic MFIs. Another industry official said the raising the ECB cap is a good step in the medium-term. “Increasing the credit limit through ECB window is definitely a good step by the RBI. However, one can’t see it in isolation. Without the sophistication of dealing with a volatile currency, MFIs will not able to raise money at now,” Bangalore-based Janalakshmi MFI chairman Ramesh Ramanathan pointed out. He also said without domestic credit flow to the sector, these solutions would not be very effective to solve liquidity issue. Ramanathan, however, noted that this step will be beneficial to the industry in the medium-term. Following a spate of suicides by harried MFI borrowers after being allegedly harassed by collection agents of MFIs, Andhra Pradesh, the largest MFI market with over a quarter of the Rs 20,000 crore micro advances, issued an Ordinance, which strictly regulated the collection and lending practices of microlenders. Later on, AP passed a legislation to effect the Ordinance into an Act.These regulations had a very debilitating impact on the industry as borrowers refused to pay up, leading to a credit crisis in the industry. Their woes escalated when banks refused fresh loans as these micro lenders were forced to default on their debt servicing.

Firstpost

RBI to introduce plastic currency

VIJAYAWADA, DEC 23: The Reserve Bank of India ( RBI) will soon bring into circulation ‘ plastic currency’ on an experimental basis. Disclosing this here last night, while addressing a programme, RBI Governor D Subba Rao said the environmental clearance was obtained for the experiment. He said the proposal of plastic currency had been there for 15 years and would be conceptlised on experimental basis soon. He said he had got opinion from people that preserving of plastic currency might be difficult for the rural people. He said the RBI was advising banks not to circulate mutilated and torn notes as it got complaints from the general public. Subba Rao said it was utmost responsibility of the RBI to ensure that all banks functioned well. If a bank incurred became bankcrupt, it would affect other banks too, he added. He informed that in Andhra Pradesh, out of 6,600 villages 5,800 villages had bank branches or bank correspondent under the programme of 100 per cent financial inclusion. “Opening bank account alone is not sufficient. They should be operated which is the objective of the scheme,” he said and asked the bankers to ensure the villagers operate their account. 

Meghalaya Guardian

Pastures turn greener for NRIs

.....However, non-resident Indians should also take into account that the weakening of the rupee, if it continues, has the potential to eat into their returns on maturity................

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Banks hike interest rates steeply to lure NRE deposits

.........The Reserve Bank of India's move to deregulate interest rates on non-resident external (NRE) rupee deposits and ordinary non-resident accounts has encouraged banks to attract dollars. Many banks have announced a steep increase in interest rates on fixed deposits held by non-resident Indians ..............

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