Tweak financial regulation - Y.V.Reddy

.........In revisiting the issue of regulation in conjunction with competition and ownership, it is necessary to recognise the lessons from public sector banking in the 1970s and 1980s, particularly in developing and emerging market economies. The problems in the past with public sector banking were on due to financial repression attributable to macroeconomic policies, the lack of appropriate global standards of regulation, the existence of monopoly status, and technological obsolescence, in addition to standards of governance in public systems in general, and public ownership in particular..........

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Monetary policy for villages only

India has two economies: One for the urban rich and the other for the rural poor. The RBI should encourage the wealthy to invest in rural India by reducing interest rates there.

Like Mr Kapil Sibal’s policy of ‘one nation, one examination,’ the Reserve Bank of India has a policy of ‘one nation, one interest rate’: it offers the same rate whether it is a rich city such as Mumbai or a poor village in Keonjhar, Odisha. The fact that it has not produced the desired results has made no impact on the central bank. .................

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International Conference on Risk Management and Fraud Detention

.....Mr. Vijaya Bhaskar, ED of RBI explained in detail the regulatory expectations. He said that fraud is an area of concern as it undermines the trust, which is the foundation stone of the banking business. He emphasized that the three lines of defense against Fraud – the employees, the systems and controls and the external agencies like the regulator and law enforcement agencies- should be strengthened. He insisted that for establishing a strong anti fraud culture the first two lines are to be robust. .........

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Dr.Sandip Ghose - The honour well deserved...........

 

E-payment facility for all MGNREGA beneficiaries by Oct

.....Over six million households registered in the state under MGNREGA will benefit from the facility. The RBI Deputy Governor also rolled out an improved model of electronic receipts of the state government. The new model envisages a mechanism where the agency banks will forward the particulars of electronic receipt transactions on the day following the day of transaction to RBI-Bhubaneswar instead of sending to the cyber treasury. RBI will process the e-receipt files, debit the accounts of banks and credit the account of the state government instantaneously with the amount of e-receipts. The Central bank will also generate e-scrolls and forward the same to the cyber treasury.........

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Former Bank of Maharashtra chairman Anup Sankar Bhattacharya takes over as director of IBPS

Former Bank of Maharashtra chairman Anup Sankar Bhattacharya has taken over as the director of Institute of Banking Personnel Selection or IBPS, which conducts common admission tests for bank recruitment. Bhattacharya will replace M Balachandran who is resigning today.......

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What keeps rupee under pressure

The Reserve Bank of India announced details on balance of payment. Balance of payment is typically the sum of all transactions made between nations for a specific duration.............

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‘India must cut subsidies, push reforms to defend rupee’

......The Indian rupee is likely to slide further and might soon touch 58 to the dollar as regulatory measures by the central bank are unlikely to have any significant impact on the currency, analysts say.

“The monetary policy has its limitations. The RBI intervention won’t do much as the issue is structural,” .........

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NBFCs at business concentration risk

.....share of non-banking finance companies in the gold loan business has risen sharply with total asset size increasing to Rs 44,510 crore in 2011- 2012 from just Rs 5,480 crore at the end of March 2009, increasing the concentration risk in the business as the growth is contributed by two main companies, according to the Reserve Bank of India Financial Stability report released on Thursday.........

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Price stability and financial stability – an emerging market

Deepak Mohanty

Address by Mr Deepak Mohanty, Executive Director of the Reserve Bank of India, in the 2012 Central Bank of Nigeria (CBN) Board Retreat, Cape Town, South Africa, 27 June 2012.

......Drawing from a wider mandate, monetary policy in India has evolved to have multiple objectives of price stability, financial stability and growth. These objectives are not inherently contradictory, rather mutually reinforcing. The Reserve Bank’s approach recognises that price and financial stability are important for sustaining high levels of growth which is the ultimate objective of public policy. The Reserve Bank’s approach to financial stability has been proactive and preventive rather than reactive. Its role as monetary policy authority, well integrated with macroprudential regulation and microprudential supervision, with an implicit mandate for systemic oversight has enabled the Reserve Bank to exploit the synergiesacross various dimensions..........

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Banks must behave responsibly, says Chakrabarty

.........."Market players cannot behave in an irresponsible manner and say that it is RBI's job to provide (adequate liquidity). So, every financial institution has to manage its asset and liability in a prudential manner,"..............

Read - The Asian Age

RBI to take best possible steps to check Rupee slide: Chakrabarty

New Delhi: The Reserve Bank on Friday said it will continue to take "best possible" steps to contain the slide of Indian rupee. "Whatever best possible...What Reserve Bank needs to do, Reserve Bank will continue to do that," RBI Deputy Governor K C Chakrabarty said on the sidelines of IIMA's Citi Financial Literacy Symposium here...........

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RBI says about 9% of bank branches most reluctant to lend

The reluctance of bank branches to lend to the poor is hampering effective implementation of the Manmohan Singh government's financial inclusion scheme, being promoted as an antidote to the rising income inequality. Reserve Bank of India has found that 9% of the country's 92,690 bank branches are the most reluctant in lending. Their credit-deposit, or CD, ratio is less than 25%. Loan disbursals through these offices fell by 15.4% year-on-year to December 2011 as against a 4% rise in the corresponding period in 2009-10.................

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RBI imposes Rs2 lakh penalty on Rajasthan bank for excessive service charges

The action by the apex bank should serve as a pointer to other banks—big and small—that charge excessive service charges

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs2 lakh on the Bundi Urban Co-operative Bank located at Bundi in Rajasthan. According to a press release, the bank has been penalised for "repeated violations of Reserve Bank of India (RBI) directives relating to donation and levy of service charges on customers". A show-cause notice was sent to the bank, but the central bank found the response unsatisfactory. Levying monetary penalty for violation of RBI guidelines on services charges to customers is the first of its kind by the RBI. The action by the apex bank should serve as a pointer to other banks-big and small-that charge excessive service charges.

Moneylife

Current account deficit swells

.....“The stress witnessed in India’s Balance of Payments (BoP) in the third quarter continued during the fourth quarter of 2011-12 as well due to large increase in imports,” .........

Read - The Hindu

RBI warning as BoP deeper in red

..........Reflecting India’s growing vulnerability on the external sector, all the key parameters of the balance of payments (BoP) are flashing amber.................

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Banking on Pranab

........At the moment, it’s a problem of plenty. Omarpur, a small town on the way to Mukherjee’s home in Jangipur, has seen 20 banks spring up in the last couple of years. From private banks like ICICI Bank and Axis Bank to Bangiya Gramin Vikash Bank (a regional rural bank) and state-owned United Bank of India, the people of Omarpur are clearly spoilt for choice. There are too many banks chasing too few customers. Customers are therefore treated like royalty here. So intense is the competition among banks in Omarpur that in the last one year, around four branch managers have sought transfers because they found it impossible to meet the business targets assigned them................... 

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Gold loan business model worries RBI

RBI on Thursday expressed concerns that the business model of gold loan companies is driven by borrowings, of which, bank finance forms the major component and is increasing at a fast rate. Any adverse development in recovery by these NBFCs or an adverse movement in gold prices may have a spill-over impact on the asset quality of the banks, the central bank said in its financial stability report.

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So much of glitter

The spirited advice by a Reserve Bank of India official that Indians — especially the poor — must keep away from investing in gold because such investments are speculative, is unlikely to be heeded by many. This recent suggestion has been made by Reserve Bank of India Deputy Governor KC Chakrabarty obviously because huge amounts of gold imports are adding to the country’s current account deficit and dragging the value of the rupee down. Mr Chakrabarty’s concern is understandable..............

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KYC: An effective tool to fight money laundering

Money laundering poses a serious threat to the health of India’s financial sector. It is the process by which criminals conceal the origin and ownership of the proceeds of crime by legitimising illegally obtained money, channelising surreptitiously through legitimate business channels and integrating those to the financial system through ways like bank deposits, investments or transfer. Financial institutions like banks, insurance companies and stock markets are most vulnerable to such intrusion and therefore, the need to protect these institutions from the debilitating effect of laundered money. This is intended to be achieved by implementation of Know Your Customers (KYC) policy and Customer Due Diligence (CDD) guidelines across the financial sector...........

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“Expedite smart cards scheme”

.... A.J. George, Assistant General Manager of Reserve Bank of India (RBI), reviewed the banking indicators of the district. While expressing broad satisfaction, he pointed out with concern that advances to minorities was only 2 per cent instead of the mandated 10 per cent. He urged bankers to focus on this section and also improved their reporting.......

Read - The Hindu

SEBI’s ED Usha Narayanan demits office

......She also served in IOSCO’s inspection committee, RBI’s conflict of interest committee and the Government of India committee on ADR/GDR/FCCB policy......

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RBI's diktat capping debit card charges could spur usage

Come July 1, and you could see retailers across the country urging you to use your debit cards instead of credit cards. The reason? The recent directive from RBI asking banks to charge a maximum of 0.75-1% (of amount swiped) on debit card transactions at point-of-sale (POS) terminals. The objective is to make it cheaper for retailers to operate the POS infrastructure and thereby encourage use of debit cards over credit cards.............

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With fees halved, kirana shops may accept debit cards

......However, there is some confusion on who will reduce charges as the MDR is shared by the card issuing bank, Visa and MasterCard and the bank that has installed the point of sales terminal (acquiring bank). At present, the onus of recovering MDR is on the accquiring bank although most of it goes to the issuing bank. Card companies are seeking clarity from RBI on the extent of reduction by each player.......

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D Subbarao dampens fiscal stimulus hopes

......"On the domestic front, slowing growth, elevated inflation and large fiscal and current account deficits are serious concerns. The already high fiscal deficit leaves little room for the government to stimulate the economy. The current account deficit is being increasingly financed by debt flows, threatening long-term sustainability," ........ 

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....and he is now Dr.Sandip Ghose.........

VITALINFO extends Heartiest Congratulations to Ghose as he will now be known as Dr. Sandip Ghose........ Watch this space to read more tomorrow...........................  

RBI is right, critics be damned : S S Tarapore

......In an unusually hard-hitting speech, at the Indian Merchants’ Chamber on June 19, 2012, Governor Dr D. Subbarao stressed that there was nothing inevitable about the India growth story and that achieving growth was a shared responsibility of the government, the RBI and economy managers. He emphasised that the blame game cannot go on; it was not good for anyone, particularly the majority of the population. The poor are vulnerable to inflation as it is a regressive tax which hurts the poor the most; their voice, silent as it is, must be heard. Governor Subbarao comes out fighting from his corner, and this speech will go down in the annals of RBI history as one of the most powerful and frank speeches by an RBI Governor. The matter will not end here, and the RBI should be ready for a battle of attrition. The RBI can take solace in the fact that it is doing the right thing, if it comes in for bitter attack; and conversely, doing the wrong thing, if praise is heaped on it........

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RBI sounds a cautious note on algo trading

.......This is the first time a financial market regulator has revealed figures regarding the use of HFT or algo trading technology, which have been under a cloud globally. RBI has stressed the need to balance technological advancements with a pragmatic approach. “This assumes even more significance for India, as efforts are being made to increase retail participation in Indian securities markets to change the markets’ largely institutional character,” RBI said...............

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RBI caps merchant discount rates for debit card transactions

.....The RBI said the cap on MDR would encourage all merchants to deploy card acceptance infrastructure and also facilitate acceptance of small value transactions. A lower MDR, with the expected increase in transaction volume on account of network effects, would result in a reasonable ROI for acquiring banks. Till now, the MDR for debit and credit cards was the same in India. Given the different nature of the two products, there is no rationale for having a similar MDR for debit and credit cards, the RBI release said.

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No cheques: Govt, RBI want to checkmate paper money

.....Well, the good news is that the finance ministry wants to end our love affair with paper money. It has decreed that at least state-run banks must completely stop using cheques for the following purposes: payments to customers, staff, and vendors and suppliers. Moreover, “disbursement of loans and payments towards investments should be made only through the electronic mode,” reports The Economic Times. Simultaneously, the Reserve Bank of India (RBI) has put out a vision document whose goal is to reduce the use of paper money. Its vision is not to move to a cash-less society, but a “less-cash society”. (If you have trouble falling asleep, you can read the whole bally document here.) So, don’t fret too much of your bank suddenly raises charges on issuing cheque-books. They will justify it in the name of the RBI’s less-cash vision. Any excuse to charge you more. But it’s in a good cause.

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‘I do not go to an ATM’

Mumbai, June 28: The RBI Deputy Governor, Dr K.C. Chakrabarty, brought the house down saying that he never used ATMs after hearing the number of complaints made by customers. While the ATM machine was one of the greatest innovations in the last 50 years in terms of technology products, it did have drawbacks. “It facilitates faster dispensation of cash provided the transaction is successful. Though there have been 98 per cent successful ATM transactions, there have been no failed transactions at a branch. So where is the evolution?” he exclaimed. “The problem faced by the aam aadmi today is ‘terrorisation of ATMs’. Some (ATM machines) will swallow your cards, some require only swiping; some require keys and some do not, some provide cash on the tray while some do not, and some do not return money…,” he quipped.

HBL

Banks must ensure better IT solutions for customers: RBI

The Reserve Bank of India Deputy Governor K C Chakrabarty told banks on Thursday that their “Focus of all innovation should be on the customer” and it should never be driven only by internal processes, systems or employees but customer satisfaction..........

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RBI Deputy Governor K C Chakrabarty differs with FinMin, opposes free e-fund transfer

MUMBAI: Within a fortnight of the Finance Ministry asking banks to make electronic fund transfers free of cost, RBI Deputy Governor K C Chakrabarty today said the banking regulator is firmly of the view that the plan should not be implemented as it is commercially unviable. "We firmly believe that anything that is free of charges can never be scaled up, it cannot be made robust unless there is commercial viability...I don't think anybody will be able to provide this service free of cost; this is just not possible," ................... 

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Banks misguiding investors on NPAs, says Chakrabarty

Mumbai, Jun 28: Mr K C Chakrabarty, Deputy Governor, Reserve Bank of India, on Thursday lambasted lenders for attributing their sudden fall in profits to migration to system recognised NPA generation saying this is tantamount to misguiding investors. “You have misguided your investors for the past five years by not giving your proper NPA (non—performing assets) figures,” he told a banking technology summit organised by the industry body CII here..............

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Measuring sentiment

Like love, “sentiment” is an intangible and can’t really be measured. Its impact, however, is profound; when aroused, sentiment can completely overturn your life or, more prosaically, financial markets. While measuring sentiment accurately is, by definition, impossible, I like to put on my Don Quixote hat from time to time and tilt at such lovely curiosities. I’ve been doing that with the sentiment for the rupee and my ramblings may, perhaps, throw some light (or more confusion) on the subject.........

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Looking Ahead: Staff crunch ahead, NIBM readies PG course via video-conferencing

.....The move is aimed at countering the likely shortfall of staff in the banking industry in the next few years as several officers holding top management positions in banks are retiring. Major private and government-run banks will be connected to training sessions that NIBM will run during a year long e-post graduate programme in banking and finance (PGPBF). The decision on launching the video-conferencing facility will be taken at the board meeting of NIBM likely to be held in July in Mumbai under the chairmanship of Reserve Bank of India (RBI) Governor D Subbarao. .......

Read - Indian Express

To check speculation, RBI seeks curbs on currency futures

.....RBI is learnt to have raised the issue during a meeting of the sub-committee which is chaired by the central bank governor. In recent weeks, RBI has sought to clamp down on activities that could impact currency fluctuations and the proposal is also in that direction. The rupee has depreciated over 20% over the past 12 months and closed at 56.80 against the dollar, compared to Wednesday's close of 57.16......

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RBI Executive Director weighs financial stability objective

.....Deepak Mohanty, an Executive Director at the Reserve Bank of India, delivered a speech on June 27 in which he discussed the importance of financial stability as an element of central bank mandates, but argued that price stability should remain the first priority. Speaking at a Central Bank of Nigeria board retreat in Cape Town, Mohanty said that the recent crisis has underlined the importance of central banks' financial stability role. However, "the challenge for a central bank is to achieve multiple objectives without losing credibility as a monetary authority solely responsible for price stability," he said..................

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Concerns over asset quality of banks remain elevated: RBI

.... “Insurance companies and mutual funds are the major lenders in the Indian financial system with banks, especially public sector banks, being the major borrowers.” Banks, on the other hand, were considerably reliant on borrowings from these entities. As borrowings from mutual funds were largely short-term, the RBI said, “they could engender greater liquidity risks for the banking system.”...............

Read - The Hindu

Reserve Bank Says India Is Facing Inflation, Growth Risk

............“Threats to stability are posed by the global sovereign debt problem and risk aversion, domestic fiscal position, widening current-account deficit and structural aspects of food inflation,”................

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Bank deposit and lending patterns continue to favour big cities

......Recent Reserve Bank of India data on deposits show that wealth is getting concentrated in the bigger cities and towns. At the end of December 2011, the top 100 Indian cities accounted for 69.4% of aggregate bank deposits............

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'Need to educate public about perils of investing in gold'

Reserve Bank Deputy Governor KC Chakrabarty today said educating the common man about the speculative nature of gold investments is the key to bring down the high import of the precious metal which is straining current account and pulling down the rupee. "What will bring down gold imports is creating awareness in the society that gold is not a proper investment for the poor. It is a speculative investment. We need to change our culture," .....

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Lowering capital controls can sometimes be a bad idea

.....Indian industry is operating near full capacity, going by capacity utilization and inventory data published by the Reserve Bank of India, but the situation described by the World Bank is closer to what we saw in 2008, when the Reserve Bank of India led by Y.V. Reddy went against the prevailing global consensus and argued for a policy to control capital inflows that threatened to worsen overheated in the Indian economy.......

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India downgrade could hit banks' overseas funding: RBI

....The ability of Indian banks and corporates to borrow overseas could be hit if the country's sovereign rating is downgraded, the Reserve Bank of India said on Thursday, after recent cuts to the country's outlook by Fitch and Standard & Poor's. "A change in the current external rating of the country could have 'cliff effects', impacting both, the availability and the cost of foreign currency borrowing for Indian banks and firms," the RBI said in a report on financial stability...........

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RBI vs the govt: who will blink first?

......We seem to be moving towards stagflation, with growth at 5.3 percent and inflation (WPI) at more than 7 percent. In fact, CPI inflation for May came in at 10.36 percent, justifying the RBI’s latest stance. Even if the RBI had cut rates, there is doubt as to what extent banks would have followed it. Expectations of money printing abroad may have given the RBI some room to continue its crusade against inflation and resist pressure to cut rates immediately to ease liquidity. Also, as rightly mentioned by it, there is a risk of commodity prices rising and thus adding to inflationary pressures, if developed markets start printing money once again. The point is, how long would it wait for Quantitative Easing (QE) abroad, before finally succumbing to the pressure and cut rates? A game of brinksmanship seems to be going on in between the RBI and the government. Let’s see who blinks first. 

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Despite risks, India's financial system robust: RBI

.............."The financial system of the country remains robust despite increase in risks to stability primarily due to global risks and domestic macroeconomic conditions,"..............

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No direct risk to Indian banks from Eurozone: RBI

....The RBI felt the muted economic activity and difficulties abroad may lead to further deterioration in asset quality for banks but the situation is not alarming. The Basel-III capital adequacy norms to be implemented in phases by FY18, which aim at fortifying the capital bases of banks, may not hurt so much given our banks' strong capital adequacies but will throw up challenges,

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PM takes charge of Finance — and how!

What a stunning difference taking over Finance Ministry has made to the persona of Dr Manmohan Singh! Seemingly clueless, listless and rudderless as Prime Minister, he has suddenly begun exhibiting verve and vigour, and morphed, in a manner of speaking, into a mouse that roars! He thumps the table and orders the mandarins of the Ministry, and the presiding deities of the Reserve Bank of India, Dr D. Subbarao; the Planning Commission, Dr Montek Singh Ahluwalia; and the Prime Minister’s Economic Advisory Council, Dr C. Rangarajan; to get cracking with the task of pulling the country out of the economic morass into which it has fallen.................

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IndusInd Bank gets its first currency chest

.....Earlier, banks had to report the balances in the chest to the RBI at the close of each day. However, today typically the chests are linked up to the RBI that all transactions could be monitored by RBI real time...............

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ATM operators struggle to pass on higher capital costs

............The operators of automated teller machines (ATMs) in India are unsuccessfully trying to convince ATM makers to charge per transaction as an increasing number of banks are outsourcing the entire process from purchasing to managing the machines...............

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More inter-bank links warrant greater monitoring

....The Reserve Bank of India (RBI) on Thursday said “interconnectedness” among banks had risen in the last financial year and needed rigorous monitoring. “An analysis of the network of the Indian banking system reveals that the systemic importance of the ‘most connected’ banks has increased, warranting a closer monitoring of the banks,” said RBI in its fifth Financial Stability Report, released on Thursday......

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Banks' gold coin imports a concern

...at a banking seminar on Thursday, RBI Deputy Governor K C Chakrabarty said investments in gold should be discouraged in the current scenario, and people should consider the change in their income levels before buying gold.....................

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Elevated inflation, fiscal, current account deficits are serious concerns: RBI Governor

The Reserve Bank of India on Thursday expressed concern over the rapid rise in gold loan companies and that such firms, which are highly dependent on banks, could pose a risk to banks. In its Financial Stability Report released Thursday, the central bank also said it was worried about the placement of non-convertible debentures by gold loan companies. It also raised concers over high inflation and large fiscal and current account deficits..................

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Foreign banks face Bharat challenges

......................And then, RBI released a ‘Discussion paper on the presence of foreign banks in India’ in early 2011. Apart from a more assured point of view regarding local incorporation for systemically important foreign banks, the Discussion paper does little to shake up the game for existing foreign banks. It does, however, change the rules of entry for new entrants by defining categories of banks that may not be eligible for the branch mode of presence.................

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AP banks gearing up to complete rural coverage

.....The committee is now gearing up to open brick-and-mortar branches in all villages with population of over 5,000, as part of the nation-wide initiative unrolled by the Reserve Bank of India. The State requires 208 branches to cover all villages under this category..................

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RBI Q1 review on July 31

“D. Subbarao, Governor, will announce the first quarter review of Monetary Policy 2012-13 on July 31, 2012,” RBI said in a release. He will meet chief executives of major scheduled commercial banks on that day to discuss monetary policy issues.

The Hindu

Are cooperatives financially included?

It is both strength and opportunity for cooperative banks to further financial inclusion in the country. In one of the recent speeches, Mr Anand Sinha, Deputy Governor of Reserve Bank of India (RBI), said that many artisans, migrant labours, small businessmen, retailers etc in semi-urban and rural areas of a number of un-banked and under-banked districts in the country find it difficult to join the formal financial sector and make use of various opportunities. He had suggested that urban cooperative banks (UCBs) take a lead in bringing them to banking network on social and economic grounds...............

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Urban cooperative banks hit by new RBI rules

....."The new parameters are harsh indeed, and likely to hamper smooth functioning of the cooperative sector. The matter has been taken up with the RBI. There are some banks in the region who may not be able to meet the new parameters. What is worse is that the rule has been made applicable in retrospect, from March 2011,".....

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RBI draws up plan to usher in less-cash deals

The Reserve Bank of India (RBI), on Wednesday, said that it planned to enhance the availability and acceptability of alternative payment instruments in lieu of cash to move towards less-cash economy and promote ‘mobile wallets’ as a single instrument for carrying out financial transactions. “The level of customer protection available in paper transactions and electronic transactions in India varies. In paper transactions in the case of fraudulent or unauthorised transactions, the responsibility to prove ‘good-faith’ lies with the banks, whereas in electronic transactions, the onus mostly lies with the customers,” said RBI in its ‘Payment System Vision Document 2012-15’, which was released on Wednesday for public discussion. Comments can be sent to the RBI by July 31.............

Read - The Hindu

e-Payment must for public sector banks from July 1

....."The cost of handling a cheque during its life cycle, from printing till storage and destruction, is Rs 25 to Rs 40," said a finance ministry official. "Banks have significantly invested in technology as well as in developing various applications for electronic payment. That should be put to use." The circular said concerted efforts should be made by the banks and their sponsored regional rural banks to popularize e-payments and to bring down the number of transactions through cheques........

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In lighter vein................. RBI introduces 1, 50, 100 Crore Rupees currency notes to keep up with inflation in corruption

With persistent double digit inflation, the price of high level corruption has also sky-rocketed, so much so that it has become increasingly cumbersome to conduction high value transactions using wads of Rs.500 and Rs.1000 notes. In order to reduce such dead-weight transaction costs and improve liquidity in the corruption sector, the RBI has decided to introduce currency notes in denominations of 1, 50 and 100 crores into the economy. The FICCE (Federation of Indian Chambers of Corruption in Everything), an apex body that caters to the interests of big players in the black economy has lauded the move.............

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Coriander s/o Pulao, Aadhaar No 499118665246

Coriander and an apple, as per the Unique Identification Authority of India (UIDAI), are residents of India as they have been given an Aadhaar number. And this, perhaps, has been the last straw. Expressing shock at this, not to mention there having been several complaints of impersonation, the Union home ministry has asked UIDAI to get an internal as well as external security audit done by a third party to fix the lacunae in the enrolment system and avoid any more goof-ups.......

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RBI asks primary dealers to stop short-term debt issues

The Reserve Bank of India (RBI) said standalone primary dealers will not be allowed to raise capital through short-term bonds from July 1, and should instead issue long-tenure debt to strengthen their capital base and align with Basel III norms for banks..............

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Banks to hire vendors to run ATMs

To do away with regular complaints about non-delivery of cash from ATMs (automated teller machines), India’s central bank, the Reserve Bank of India, has reportedly asked all bankers to discontinue setting up their own ATMs. By next month bankers will hire vendors to set up ATMs and run them on fee basis. “From next month onwards we will not set up our own ATMs. At present, vendors only maintain ATMs and they take time to respond to bank calls. It creates trouble to customers. Now, the vendors will not only run and maintain the machines but also install and maintain them. They will receive payments against per successful transaction,” a senior banker told Business Standard.

BS

Why getting Raghuram Rajan as PM’s adviser makes no sense

......The wisdom of appointing a man of Rajan’s stature to enhance and influence the government’s economic policymaking is, however, open to question. Not because he doesn’t have ideas to contribute – he does – but because the government is not exactly lacking in ideas to fix the economy. The government’s all-star economic team – from Manmohan Singh himself to Montek Singh Ahluwalia to C Rangarajan to Kaushik Basu to RBI Governor Duvvuri Subbarao – have between themselves analysed the economy threadbare, and can comfortably agree on the broad contours of policy action needed.......

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PM wants revival of economy with 'animal spirit'

Signalling his keenness to boost the economy a day after taking charge of the Finance Ministry, Prime Minister Manmohan Singh on Wednesday directed urgent steps for revival of investor spirit and reversal of the climate of pessimism with regeneration of "animal spirit".  Taking stock of the country's economy in a series of high level meetings here, he identified tax issues, sluggishness in insurance sector and aspects related to mutual funds as problem areas and pressed for quick corrective steps. The meetings were attended by Planning Commission Deputy Chairman Montek Singh Ahluwalia, PMEAC Chairman C Rangarajan and top Finance Ministry officials. He will meet RBI Governor D Subbarao and Planning Commission members tomorrow as part of his review of affairs concerning the economy.............

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AP annoyed at closure of bank branches in tribal areas

......Earlier, SLBC president and Andhra Bank CMD B. A. Prabhakar disclosed that many branches had been closed in East Godavari district’s tribal areas like Maredumilli, Y. Ramavaram, Addateegala, Devipatnam, Rayapalli and Gangavaram. After learning about their closure RBI had ordered reopening of these branches at once, he said.

Read - The Hindu

Banks' business growth little changed in June: RBI

India banks' growth in deposits and loans was sluggish in the month to June 15, the Reserve Bank of India said on Wednesday.........

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Will the new RBI guideline bring in more QFI money?

Industry opinion is that this measure is likely to do very little as most investors overseas have better options

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RBI directs Uday Kotak to lower stake in the bank

The Reserve Bank of India has directed Uday Kotak, promoter of Kotak Mahindra Bank to lower his equity stake in the bank from 45.2 per cent to 10 per cent in phased manner. Uday Kotak has been given time till 2018 to bring down his stake to 20 per cent and lower it to 10 per cent in subsequent two years.............

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Short measures

The Reserve Bank of India (RBI) has announced certain liberalising measures relating to the capital account. The central bank’s press release does not mention the objective, but one can guess it. If the idea is to improve capital inflows to relieve the downward pressure on the rupee, it is not likely to be realised by raising the ceiling on foreign subscriptions to government securities. They will go into the forex reserves of the RBI, which will give an equivalent credit to the government account in rupees. Thus, the funds will augment the bank’s reserves and not the forex supply in the market. There may not be any addition to net RBI credit to the government. RBI should clarify the accounting procedure for the benefit of analysts. It will, however, mean the monetisation of current fiscal deficit that will have an expansionary effect on money supply. This is worse than what is done now through the buybacks of gilts under open market operations, which imply retrospective monetisation of the past fiscal deficit. The response is not likely to be large since foreign subscribers have to bear heavy hedging costs against the possible depreciation of the rupee at the time of redemption of the securities.

 - A Seshan Mumbai (BS)

Right move

This refers to the editorial ‘Balancing act’ (Business Line, June 27). Just after its mid-quarter review, the RBI has sought to upgrade the falling rupee by attracting foreign investments. The introduction of government bonds is a welcome move. Enhancing the limit for foreign institutional investments is a right step to attract dollar inflows. It is also expected that this will attract foreign investments in view of relaxation in rules. It will be easier for new classes of investors to invest in gilts as the RBI’s move also ends entry barriers. It will also be a good chance for Corporate India to go in for ECBs.

- Jayant Mukherjee, Kolkata (HBL)

Stop gold coin sales

This refers to the report “Central Bank likely to impose curbs on gold coin sale” (June 27). The Reserve Bank of India should take serious steps to curtail gold coin sales by not only banks, but other channels also like MMTC, post offices and so on. By doing this, the government will achieve two targets: one, it will be able to gradually wean investors away from such non-productive assets; and, two, it will save considerable amount of foreign exchange that is spent on gold imports.

 - V Sridhar Kolkata (BS)

Curb gold; raise duties; borrow more – Are these solutions?

.....the Reserve Bank wants to impose curbs on banks selling gold coins to customers. A report in Business Standard quoted an RBI official as saying: “Banks were allowed to sell gold by importing it to fight the excess dollar flows. By the same logic, the measure should be reversed now as we are at the opposite end of the spectrum. It was a temporary measure, which unfortunately was made permanent by banks.” Temporary measure? Is liberalisation a temporary measure?.......

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TJSB Sahakari – 40 and going strong

......The bank has also received permission from the Reserve Bank of India for starting mobile banking services and the bank has completed all the testing to start inter-bank mobile payment system (IMPS). The bank has received approval from the Reserve Bank of India for opening branches in Maharashtra, Goa, Gujarat and Karnataka. During the current financial year, 20 branches would be opened. The business target is the Rs 10,000-crore milestone.

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Apna Bank makes big strides

......In recognition of its excellent customer services and overall progress, for the first time in the history of banking, the RBI and the Maharashtra Government have consented merging of Care Co-op. Bank Ltd. In a Non Scheduled Co-operative Bank – Apna Sahakari Bank Ltd. After that another co-operative bank from Western Maharashtra region, The Ashta Urban Co-op. Bank having nine branches, has merged into Apna Bank. Recently, one of the oldest co-op bank from Kolhapur region known as Shree Balbhim Co-op Bank Ltd having 10 branches is also merged into Apna Bank. Apart from this the bank has opened seven more branches during this financial year. Apna Bank having 46 branches and ATM centres at all over Maharashtra as on March 31, has received multi-State permission from the Reserve Bank of India to open the branches at Gujarat, Goa and Karnataka. The bank has been allowed to provide direct RTGS/ NEFT Services by Reserve Bank of India...........

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Foreign banks seek finance ministry help to speed up decision on applications for new branches

....."Foreign banks which are still waiting for further clarity on the wholly owned subsidiary model proposed by the sectoral regulator want RBI to fast track the branch licensing process till it comes with its final guidelines," said the official who did not want to be identified. He declined to name the banks. The official, however, said that it was for the RBI to take a final call on the issue. As of now there are 41 foreign banks in the country with 323 branches.....

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Security concerns worry RBI

Bankers have expressed concern over closure of branches in agency areas on “grounds of security”. Raising this issue at the SLBC meet on Tuesday, Andhra Bank CMD and SLBC president B.A. Prabhakar said the RBI had listed the centres in East Godavari like............

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Floating currency notes claim youth in Assam

Guwahati A youth's body was on Tuesday fished out from a wetland here in which scores of people entered to collect Indian currency notes that were found floating on the water. The youth, in his early 20s, had dived into the Silsako Beel on Tuesday morning along with some other eager beavers to look for and pocket the currency notes floating on the water, the police said quoting eyewitnesses.......

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RBI asks urban co-operative banks to stop pre-payment penalty

.....It has, therefore, been decided that UCBs will not be permitted to charge foreclosure charges / pre-payment penalties on home loans on floating interest rate basis, with immediate effect” RBI said in a notification........

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Cap Won’t Fit

This refers to ‘Myopic’ (ET, Jun 26). The hike in the cap on the amount of government and corporate debt for foreign portfolio investors reflects the RBI’s concern for the falling rupee and its attempt to prop up the same. However, capital inflows on account of portfolio investment is certainly not stable like the one resulting from FDI. The FDI policy needs drastic review so as to encourage the same. The policy as regards multi-brand retail needs greater perspective. The falling rupee calls for addressing the issues affecting macroeconomic fundamentals and not just tinkering with caps on foreign portfolio investment.

- VIJAY MULLAJI (ET)

Half Measures

This refers to ‘Myopic’ (ET, Jun 26). The RBI’s move is not expected to cause much volatility in capital inflows. The cap on foreign investment in government bonds has been increased from $15 billion to $20 billion, but its effect on capital inflows will be small as it amounts to only about 2.5% of the total debt. In fact, as a short-term measure to increase dollar inflows, RBI could have increased the cap further, as there is a good demand for sovereign bonds among FIIs. Other measures, like liberalisation of terms and conditions for FII investment in infrastructure, are not expected to attract much increase in investment due to delays in project implementation.

- V SRIDHAR

‘MFIs HAVE REGULATORY GAPS IN OPS’

Do MFIs follow the code of conduct laid down by the Reserve Bank of India? Banks, which lend to them, always try to find a solution to it before lending. Their job will now be much easier as the Small Industries Development Bank of India has started assessing the MFIs and is ready to share its findings. Sidbi has engaged rating companies for the job and has evaluated 13 MFIs, so far, including big names such as Bandhan and SKS Microfinance. The reports suggest that although MFIs follow the broad contours of RBI rules, they still have regulatory gaps in their operations.

ET

SBI to Motivate Staff by Keeping them Cool

State Bank of India has decided to aircondition all its branches across India — be it semi-rural or rural branches. The aim is to provide the same working ambience to employees to motivate them to perform at optimal levels. SBI chief Pratip Chaudhuri said that the bank’s aim is to complete this project this fiscal year itself. Given the size of SBI — 14,680 branches with 67% in rural and semi-urban places — it is quite an ambitious task for the bank. The big question is whether some of the hill states would be in a position to ensure power all through the day.

ET

Tools Reserve Bank of India uses for monetary and liquidity management - Money Matters

You know that monetary policy is RBI’s primary responsibility but may not know the tools that RBI has at its disposal

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Monetary policy affects inflation, but in a muted way

.......In short, the paper makes the point RBI made in its last credit policy—that monetary policy has a limited impact and the government must do its bit.

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PM keeps finance portfolio with himself

.....A former RBI Governor, Singh was credited with bringing about economic reforms in the country when he was the finance minister in the Narasimha Rao government in 1991. .......

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Call rates alone don’t determine liquidity: RBI

....The impact of monetary policy actions on inflation has been "modest" and with a lag effect, another working paper published by Reserve Bank of India said. The subdued impact of the monetary policy has been largely due to structural factors that guided the increase in food prices, along with the increase in global commodity prices, it said. "The impact of monetary policy actions on inflation is modest and subject to lags," the report, authored by Muneesh Kapur and Harendra Behera, said. Inflation remained in double digits for close to two years till 2011......

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RBI steps positive, but inflow won't be immediate: Experts

.... while RBI’s steps are positive, inflow may take some time. “It’s definitely a positive measure. The bottleneck on refinancing of loans having been removed. I think it will serve two purposes. One the limit can be quickly used up, because project loans and capex loans typically take a long time in getting drawn. So even if an ECB was placed for a new project, it will take long time to be drawn. Therefore, the dollar inflows into the country will take a long time,” .........

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............ Neither the currency nor equity markets cheered the new RBI policy measures announced on Monday , but only hoped for more. To arrest the falling rupee, the central bank hiked the limit of external commercial borrowing (ECB) to USD 10 billion. Moreover, the regulator also increased the limit of overseas investment in government bonds by USD 5 billion to USD 20 billion. However, Sajjid Z Chinoy, Asia Economics, JP Morgan explains that the measures are no game changers but only tactical in nature....... 

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......To a market primed for more spectacular policy announcements such as foreign direct investment in retail, the actual measures announced by the Reserve Bank of India (RBI) on Monday, which focused primarily on the rupee, came as a disappointment. But given its constraints, the RBI has, in fact, done a good job of putting together a package that can support the flagging rupee. Of the various measures announced, the one that may prove most effective in bringing in dollar inflows immediately is the enhanced limit for foreign institutional investments in government securities.......

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The Reserve Bank of India's much hyped booster dose for a mauled rupee comes with a cost. The central bank's latest move to liberalise external commercial borrowings (ECB) is actually a continuation of its reliance on debt inflows to check the rupee slide. In the last six months, RBI has been increasingly attracting debt inflows through foreign debt, NRE and FCNR (B) deposits......

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Interest rates and the rupee

....The RBI has indeed opted to use its reserves in recent months, resulting in a significant decline in the volume of foreign currency assets it holds. But this has at most prevented a sharper depreciation of the rupee than has actually occurred. It has not helped correct the depreciating tendency. Continued reliance on this means of enhancing the supply of foreign exchange in the market could shrink reserves to a degree that risks triggering a speculative run on the rupee. Not surprisingly, the RBI is seeking ways of enhancing capital flows into the economy.......

Read - The Hindu

RBI steps only short-term measures, India needs more investment: SBI

te Bank of India (SBI) Chairman Pratip Chaudhuri, while terming measures taken the Reserve Bank of India (RBI) as only short-term, said there is need to enhance equity and foreign investment for the country's long-term growth............

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M Karunanidhi seeks Prime Minister Manmohan Singh's intervention over textile debt restructuring

DMK chief M Karunanidhi today urged Prime Minister Manmohan Singh to direct RBI to issue necessary notification for the Rs 35,000 crore debt restructuring package for textile industry announced by the Centre last month, saying any further delay would lead to a large number of textile units and SMEs becoming non-performing assets (NPAs) by June 30. ............

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Let it happen... Rupee fall is only natural

You hear it almost every day now: The rupee is at an all-time low! Not just that, it's also the weakest one among its Asian peers. We need this to stop!

India is going through a pubescent stage that all emerging economies inevitably go through. It took its success for granted, started spending wildly and deciding badly. But, eventually all parties end and the music stops. When that happens, you have to be prepared to slug it out through the hard times...........

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RBI mulls ban on gold-coin sales at banks to clamp import

.....Akshaya Tritiya may not be auspicious for banks in the future. The Reserve Bank is considering a ban on sale of gold coins by banks to partly curb rising gold imports and because the central bank believes it is not relevant to core banking operations. .......

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TUG OF WAR FOR ATMs

Syndicate Bank has plans to open 500 ATMs and 300 branches this fiscal. But not all new branches will have ATMs. Even among the existing branches, many do not have ATMs. This is because the bank has 2,710 branches and 1,210 ATMs. The new CMD of the bank, MG Sanghvi, has decided that only those branch managers who provide a confirmation that they will issue at least 3,000 ATM cards will be eligible for ATMs at their branches. This will not only inspire competition among branches, but eventually improve business volumes of the bank.

ET

Some banking giants more powerful than central banks: ex-RBI guv

At a time when the financial sector is being blamed for much of the global economic crisis, former RBI Governor Y V Reddy has said that some financial conglomerates are more powerful than even the central banks. At the same time, Reddy has also flagged the issue of leading rating agencies and accounting firms enjoying an oligopolistic power over the markets, and said that some large international banks enjoy significant influence over political economy in several countries..........

Read - Indian Express

RBI least predictable among major Asian central banks

The Reserve Bank of India (RBI) has emerged as the least predictable central bank in Asia, ahead of Bank Negara Malaysia, the central bank of the South Asian nation. Data on central banks' policy actions compared with what was a consensus view of the market, Credit Suisse analysts have found that RBI has surprised the market in nearly 27% of the cases. The Philippine central bank, BSP, is at the other end of the spectrum, surprising the market in just about 14% of the cases...........

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Hunt for money in Assam wetland



People search for currency notes in a water body at Chachal in Guwahati on Monday

GUWAHATI: Known as a storehouse of various species of fish, the Silsako beel (wetland) near here has never disappointed fishermen who depend on it to eke out a living. The beel has always provided a steady source of income to them. But on Monday morning, it had something more to offer when some fishermen went there to net their day's catch - currency notes. As the news spread, thousands from the city's Chanchal area went to the spot and got engaged in a treasure hunt hoping to change their lives overnight. The area witnessed a festival-like ambience as hundreds of people started jumping into the water hoping to find money. Many even found Rs 500 and Rs 1,000 notes floating on the water mysteriously. "I saw some fishermen making a hue and cry in the water. I thought they found a big fish but later came to know that they have found some currency notes..........   

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Helping hand

The Reserve Bank of India wears two hats. It is the regulator of all banks; it is also the chief manager of government banks. If they continue to dominate the banking system without being the most efficient or customer-friendly, the credit must go, at least partly, to the RBI. When it sees an opportunity to send some profits the way of government banks, it is happy to oblige them. The latest instance of helpful market manipulation comes from the foreign exchange market...............

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RBI rules out equal treatment for NBFCs with banks

.....“NBFCs as a class of financial institutions are concentrated niche players, hence the CRAR (capital to risk weighted assets ratio) has been fixed at 15%, well above 9% for banks,” RBI said in a clarification. “NBFCs which describe themselves as ‘gold NBFCS’ are further exposed to the risk of having to deal in a specific commodity. Hence the risk is higher in them vis-a-vis all other NBFCs.” They can’t be compared with banks, even those that extend jewellery loans, as this may be a “minuscule portion of the balance sheet and all banks are diversified entities”, it said.......

 

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My View on "Bold economist"

This article takes me back to my own comments in Business Standard (August 11, 2011)as under:

"Vote for stability"

In these turbulent times, the timely decision by Centre to give a two-year extension to RBI Governor Dr Subbarao stands apart as a decisive vote for stability at the Central Bank. This will strengthen the RBI to pursue the right course it has been following in different areas of its responsibility. A change of guard at this juncture would have resulted in slowing down of the processes of change in areas like fighting inflation, forex reserves management, financial inclusion and outreach and transparency in policy prescriptions where Dr Subbarao has made perceptible progress. On his part, the Governor should take this opportunity to hasten the initiatives he has taken to make RBI a change agent in the economic development of the country. Beyond the mandated responsibilities, one expects RBI to do much more in the areas of financial inclusion, gold and wealth management (as part of its forex reserve management), revival of grass-root rural financial institutions like cooperatives and balanced economic development across regions by ensuring an appropriate realignment of the outreach of institutional infrastructure using financial sector reforms as a tool". One wishes tenures of positions where skills get sharpened on-job were longer and incumbents knew about it while joining.

 

- M.G.Warrier

My View on "Opening FD account"

On the basis of my experience,  I find that banks invariably find it easier to justify their procedures with their customers by passing on the buck to RBI. I am sure RBI would not have issued any such instructions. I would suggest that Seshan ask the bank to show him the relevant RBI instructions as I used to do.If in the unlikely event of any such instructions  having been issued by RBI, he should dissect them with his usual analytical ability and extraordinary clarity and take up with the RBI Customer Service Department.

- A.Chandramouliswaran.

ASSOCHAM welcomes the bold steps taken by RBI to shore up the falling rupee

ASSOCHAM welcomes the bold steps taken by RBI to shore up the falling rupee both in the long term as well as in the short term by raising ECB limit to US $ to 10 billion and investment by FIIs to US $ to 20 billion in G-Securities.............

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Camson Biotech, HDFC Bank in pact to take banking services to farmers

Camson Biotech has tied up with HDFC Bank to take banking services to over three lakh marginal farmers all over the country. By an agreement with the bank, its 3,000 dealers will be eligible to become business correspondent (BC) or business facilitators for the bank. BCs appointed in rural areas will execute all transactions that a customer avails of at bank branches. Currently, HDFC Bank has 460 BCs. The RBI has drawn detail guidelines for appointing BCs in a bid to reach banking services to remote rural areas..........

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Business correspondents: Bank boards must be made responsible for outsourcing

.....First, on its part, the Reserve Bank of India (RBI) must ensure that bank boards have a clear policy framework—with regard to outsourcing through BCs—that can be implemented in real time. And it is not a “cut and paste” policy document that I am talking about. I am referring to an outsourcing policy, with regard to BCs (and their sub-agents), where respective bank boards have thoroughly debated the pros and cons of various activities (to be outsourced) after understanding the attendant risks and benefits.........

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Costs of policy convolution

.....So, let us see what is happening. RBI holds interest rates steady. Private sector cost of borrowing does not come down. Public sector borrowing costs are held down by its bond purchases. Further, the public sector garners most of the savings and liquidity with its disdain for restraining spending and spending meaningfully. The government announces a hike in the minimum support price for agricultural produce, while consumer price inflation reigns above 10%. So, what we have is a central bank that cites inflation concerns and holds rates steady, but monetizes the budget deficit in record sums; a government that is supposedly pro-poor, but ensures double-digit inflation with its fiscal irresponsibility; investors (who are they?) who bid up stocks and sell the currency. Even a good criminal novel-writer could not have created such a convoluted set of circumstances, goals and actions......

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