RBI Deputy Governor visits microfinance institution Bandhan

Microfinance Focus, December 30, 2011: Deputy Governor of Reserve Bank of India (RBI), Mr. H. R. Khan visited microfinance institution Bandhan in Howrah, West Bengal. He was accompanied by two other senior officials of RBI, Kolkata. Mr. Khan in his speech appreciated the work being done by Bandhan Financial Services and was pleased to learn about the organization’s credit plus programs. He emphasized on the need of development activities like these and highly appreciated the efforts being taken by Bandhan. He further added that besides financial support, these underprivileged population need assistance in other significant fields such as education, health and the like. Bandhan also hosted a three day exposure visit for Relief Society of Tigray (REST), an Ethiopian organization this month. It hosted a similar visit for Baoshang Bank, China after receiving a request from China Microfinance Association. The two day exposure visit took place in November in New Delhi.

http://www.microfinancefocus.com/rbi-deputy-governor-visits-microfinance-institution-bandhan

Banks to Operate One-Man Branch in Rural Areas

For greater financial inclusion, finance ministry asks banks to appoint representatives who will run ultra small offices using Net-enabled laptops

The finance ministry will treat a bank representative offering basic services in villages using a Net-enabled laptop as a branch, widening the reach of the government's financial inclusion plan and doing away with the need to spend on infrastructure. The ministry directive comes at a time when banks have raised questions about the viability of setting up brick-and-mortar branches in rural areas. At present, only about 5% of India's 6 lakh villages have bank branches. There are 296 under-banked districts in states with below-par banking services. Under the financial inclusion plan, the government aims to provide banking services to 73,000 villages, each having population of 2,000 during the next three months. “The purpose is to minimise the cost of financial inclusion and see that the cost has a relationship to the growth in business,” said a finance ministry official. The representative, or “business correspondent”, will work from this “ultra small branch”, which will be of the size of a 100-200-sq-ft room. The correspondent, who will be appointed by the bank, will deal with all cash transactions and other routine work in that area. A bank officer will visit this ultra small branch once a week and connect this business correspondent to the banks' core banking solution (CBS) through a secured network enabling data access and transfer between the small branch and the bank. “This bank officer will clear applications for new account openings, loans, recovery follow-up and other business development on the spot,” the official said. The finance ministry after discussions with the department of information technology has also issued detailed guidelines on the security of IT infrastructure. “They (the department of information technology) have agreed that it is feasible and have suggested appropriate security mechanisms.” The ministry has also asked banks to revamp their plans for setting up brickand-mortar branches in rural areas. Banks will now have to come up with a business plan under which the branch would generate profits within a maximum period of two years. “Banks should also post a branch manager six months in advance so that he can do business development in the area,” the official said. But banks are sceptical about these ultra small branches. “The areas where we are talking about internet connectivity will be few. So it remains to be seen how efficiently they can function,” said an executive director of a state-run bank.  Some bankers feel that if the government is able to integrate the initiative with other financial activities such as micro-insurance, animal insurance, crop insurance and micro-pension, this ultra-small-branch concept could definitely work. 

ET

Financial inclusion: Banks made some headway in 2010-11

...........While speaking at a seminar on financial inclusion in New Delhi in October this year, Dr K.C. Chakrabarty, Deputy Governor of Reserve Bank of India, had said that 2.20 lakh un-banked villages will be covered by banking network by March 2012, and 3.52 lakh villages by March 2013. He also hoped to add more than 2100 brick-and-mortar outlets by March-end.........

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RBI unveils draft Basel III capital norms for banks

The RBI says Tier 1 capital comprising pure equity and statutory and capital reserves must be at least 7 per cent and total capital must be at least 9 per cent of risk-weighted assets (RWAs). In order to strengthen risk management mechanism, the Reserve Bank today issued draft guideline envisaging that the equity capital of a bank should not be less than 5.5 per cent of risk-weighted loans.  "Common Equity Tier 1 (CET 1) capital must be at least 5.5 per cent of risk-weighted assets (RWAs)," RBI said in the draft guideline for implementation of Basel III capital regulation in India. Besides, it also recommends, Tier 1 capital comprising of pure equity and statutory and capital reserves must be at least 7 per cent and total capital must be at least 9 per cent of RWAs. Besides, it has also suggested for setting up of the capital conservation buffer in the form of Common Equity of 2.5 per cent of RWAs. It is proposed that the implementation period of minimum capital requirements and deductions from Common Equity will begin from January 1, 2013 and be fully implemented as on March 31, 2017, it said. However, it said, the capital conservation buffer requirement is proposed to be implemented between March 31, 2014 and March 31, 2017. It also said that the instruments which no longer qualify as regulatory capital instruments will be phased-out during the period beginning from January 1, 2013 to March 31, 2022.  The central bank has invited comments and feedback on the draft guidelines, including implementation schedule by February 15, 2012. RBI Governor D Subbarao had said earlier this month that Indian banks will have to incur additional costs to build capital buffers to comply with Basel III rules. Though the Indian banking sector was comfortably placed to implement Basel III regulations, some banks might need additional capital, he had said. "On aggregate, banks are comfortably placed in terms of capital adequacy, but a few individual banks may fall short due to implementation of Basel III," he had said. Currently, RBI follows Basel II norms under which Tier I component is not only pure equity capital but Perpetual Non-cumulative Preference Shares (PNCPS), Innovative Perpetual Debt Instruments (IPDI) and capital reserves.  Banks are required to maintain a minimum Capital to Risk weighted Assets Ratio (CRAR) of 9 per cent within this Tier 1 capital should be at least 6 per cent of risk weighted assets. Under the existing capital adequacy guidelines based on Basel II framework, total regulatory capital is comprised of Tier 1 capital (core capital) and Tier 2 capital (supplementary capital). The draft norms have been adopted from the Basel Committee on Banking Supervision (BCBS) that issued a comprehensive reform package entitled 'Basel III: A global regulatory framework for more resilient banks and banking systems' in December 2010. The objective of the draft guideline is to improve the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spillover from the financial sector to the real economy. The reform package relating to capital regulation, together with the enhancements to Basel II framework and amendments to market risk framework issued by BCBS in July 2009, will amend certain provisions of the existing Basel II framework, in addition to introducing some entirely new concepts and requirements, it said. 

NDTV Profit

Kerala mulls new bank and university for NRKs

......... "With regard to setting up a bank, the most important clearance has to come from the Reserve Bank of India and for that we will first look into all the legal issues in this regard. Then comes the technical aspect,"......

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Need for transparency

.....Here are some thoughts on the need for more transparency in borrower-lender relationships. While the Banking Regulation Act covers the control exercised by the Reserve Bank of India, the consumer protection issue and the related Act does not integrate itself with RBI's control over the banks.......................

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Reserve Bank of India announces 8.87 per cent interest on Floating Rate Bonds 2017

Mumbai : The Reserve Bank of India (RBI) today announced 8.87 per cent per annum interest on Floating Rate Bonds (FRB), 2017, applicable for half-year from January 2, 2012 to July 1, 2012). It may be recalled that the rate of interest on the FRB, 2017 was set at a mark-up (as decided in the auction held on July 1, 2002) over and above the variable base rate, a RBI release said The variable base rate for payment of interest shall be the average rate (rounded off up to two decimal places) of the implicit yields at cut-off prices of the last six auctions of Government of India 364-day Treasury Bills held up to the commencement of the respective half yearly coupon period, which works out to be 8.53 per cent.

Central Chronicle

Re fortune not good in New Year

......... Also, this time RBI is looking at alternate ways to increase the dollar supply, instead of depleting reserves. Though reserves stand at $302 billion, compared with $297 billion in 2009, the capacity to firefight is much less this time, as FII inflows are not likely to rise till concerns in the euro zone are addressed, experts said.

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RBI asks StCBs/DCCBs to follow KYC norms diligently

The Reserve Bank of India (RBI) has asked all the State and Central Co-operative Banks (StCBs/DCCBs) to adhere to 'know your customer' norms diligently to prevent their use by criminal elements for money laundering or terror financing activities. In a notification released today, the RBI asked the StCBs/DCCBs to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers. According to the regulator, assessment of risk of Money Laundering/Financing of Terrorism helps both the competent authorities and the regulated entities in taking necessary steps for combating ML/FT adopting a risk-based approach. “This helps in judicious and efficient allocation of resources and makes the AML/CFT regime more robust,” RBI said in its notification. StCBs/DCCBs have been further advised to take steps to identify and assess their ML/TF risk for customers, countries and geographical areas as also for products/ services/ transactions/delivery channels. “StCBs/DCCBs should have policies, controls and procedures, duly approved by their boards, in place to effectively manage and mitigate their risk adopting a risk-based approach. As a corollary, StCBs/DCCBs would be required to adopt enhanced measures for products, services and customers with a medium or high risk rating,” RBI said.

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RBI directs NBFCs to adhere to NCD norms

Mumbai: Taking exception to NBFCs issuing short-term non-convertible debentures (NCDs), the Reserve Bank on Friday directed such entities to adhere to guidelines on issue of these instruments. "It has come to the notice of the RBI that some NBFCs have raised funds under private placement by issuing NCDs of maturity less than 90 days," the apex bank said in a notification. It said that such actions are in clear violation of the RBI's directions on issuance of NCDs. "All NBFCs may note that the issue of NCDs of original or initial maturity up to one year are governed under the (Issuance of Non-Convertible Debentures Reserve Bank Directions, 2010)... and these directions may be followed for meticulous compliance," it said.

Zee News

Banks 2011: rates spike, people moan

........ "I cannot really speculate on when we might start cutting rates, but that is an event, that an action that is on the way forward."......................

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RBI amends fiat on IRFs on G-Secs

The Reserve Bank of India (RBI) on Friday amended its directions on Interest Rate Futures (IRFs) on Government Securities (G-Secs) permitting two-year and five-year IRFs, with immediate effect. “The two-year and five-year IRF contracts would be on two-year and five-year notional coupon bearing Government of India security, respectively. These would be cash-settled at expiry by the stock exchanges offering the contracts,” said the RBI. The final settlement price of the two-year and five-year IRF contracts would be based on the yields of the basket of securities (as specified by respective stock exchanges) and disseminated by Fixed Income Money Market and Derivatives Association of India (FIMMDA) for the limited purpose of settlement of IRF contracts, as per the guidelines issued by the Reserve Bank from time to time.

HBL

External sector outlook turns amber

Data released by the Reserve Bank of India (RBI) has revealed the extent of deterioration in the country’s external sector outlook. India’s current account deficit (CAD), an aggregation of the trade deficit and net invisibles, increased in the quarter ended September to 3.7% of gross domestic product (GDP) from 3.1% in the first quarter............

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Bank on the rate cycle to get better deal on loans, savings

....Most bankers said interest rates would soften by the end of the fourth quarter as food inflation is coming down, the Reserve Bank of India (RBI) may revise rates to support growth. On their part, banks have to bring down cost of deposit before they bring down lending rates.......

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