In the name of the Governor

This article is not about the cut in the cash reserve ratio. It is not about the several thousands of crores of rupees unleashed in the system. This is about a much smaller sum. In fact, it is minuscule, relatively speaking — Rs 12,500 to be precise. On Friday, a mail from the ‘Reserve Bank of India’ asked me to remit this sum. It said, “The Reserve Bank of India (RBI) New Governor, (Dr D Subbarao), met with the Senate Tax Committee …and at the end of the meeting RBI Governor, (Dr D Subbarao) mandate the unclaimed funds to be release back to the beneficiary stating that it’s an unfair practice to withhold funds for government basket for one reason or the other for tax accumulations.” The mail went on to say: “Therefore, we are writing to inform you that your award (85 LAKHS INR) will be released to you as it was committed. (RBI) Governor said that Beneficiary will have to pay crediting fees only. So you are therefore required to pay 12,500 INR ONLY.” The shaky language, the reference to the Senate Tax committee, which does not exist in India, and a request for bank account details, will make it obvious for many of us that the mail is what the geeks have christened ‘phishing’ and is more popularly known as ‘the Nigerian scam’ after the country it originated from. Without going into the mechanics of the scam, it is best to press the delete button. The Reserve Bank of India will not send you any mail. Period. But, it may not be that obvious for the real targets of this email. And, the brands — RBI and Subbarao — are too powerful to create a doubt in the minds of even the level headed. That short, weak moment is what crooks bet their life on. A couple of years before, media reports had talked about how a senior central bank official herself was fooled by an imposter, who posed like the then governor. My friends say this mail is doing the round for months now and I got it again on Sunday morning. The persistence means either they believe I am a fool whose money needs to be parted or are confident from success elsewhere. Also, there is a site called www.rbi.org (The official RBI site is www.rbi.org.in), which says “Welcome to RBI Financial Services. Find sponsored goods and services on Option Trading, Financial Planning, Banks, Rates and more.” God knows what this site is up to. Are the Mint Road mandarins being possessive enough about their governor and their brand? It is easy to put up warning scrolls on the website and pass the buck to the police. Arup Patnaik, the Mumbai Police commissioner, had this to say at his annual press conference when asked about increasing banking-related frauds in Mumbai: “Bade bade bank... RBI, SBI... sab idhar (Mumbai) hi hai na. Phir fraud kya Chhattisgarh mein hoga?” His philosophy seems to be that as long as there are banks, there will be bank frauds, too. Does Mr Subbarao agree?

BS

RBI provides more leeway to banks for rupee vostro accounts

...... "With a view to give more operational leeway to the AD Category-I banks, it has been decided to dispense with the requirement of prior approval of the RBI for opening and maintaining each Rupee Vostro account in India of non-resident Exchange Houses in connection with the Rupee Drawing Arrangements (RDAs) that banks enter into with them,".......

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Housing finance may come under priority lending: RBI

New Delhi: The Reserve Bank Monday said it is considering categorising housing finance for weaker sections as priority sector lending by early next month to ensure adequate flow of credit. "We are trying to put housing finance for weaker section as a part of priority sector. There is a committee which is looking into it. Hopefully, by the first week of February this report will come," RBI Deputy Governor H R Khan told reporters here. The committee is headed by Union Bank of India Chairman and Managing Director M V Nair, was constituted by the RBI to look into various issues related to priority sector lending, including review of loan limits under the segment. The committee has sought to address issues like desirability of simplifying the approach to direct lending, inconsistencies or ambiguities in the existing guidelines, nature of activities presently classified as priority sector that need relook and new areas which should be incorporated. The terms of reference of the Nair committee is to revisit the current eligibility criteria for classification of bank loans as priority sector with reference to nature of activities and types of borrowers (individuals versus institutions, corporate and partnership firms) of loans. It will review nature of activities and types of borrowers (individuals versus institutions, corporate and partnership firms) of loans which can be brought under priority sector segment. The terms of reference of the panel include review of limits on loan amounts. It will also review appropriate documentation and due diligence thresholds to ensure that loans extended by banks are for the eligible categories of purposes and borrowers, which need special attention and treatment, the terms of the report state. Besides, the panel will consider the desirability, or otherwise, of capping interest rate on priority loans. The panel will also review the current allocation mechanism for Rural Infrastructure Development Fund (RIDF) and other funds. The RBI Deputy Governor further said the apex bank is also trying to coordinate with the government and market regulator SEBI for developing and broadening the corporate bond market. As much as 40 percent of the total bank lendings is for priority sector including agriculture and small sector industry.

Zee News

RBI Exploring Iran Payment Options

NEW DELHI – India is considering several options to settle its oil import bills with Iran, including paying in rupees, a top central bank official said Monday, as the South Asian nation maintained its stance of continuing oil trade with Tehran. "There are different [payment] options which are being evaluated," Reserve Bank of India Deputy Governor H.R. Khan told reporters in New Delhi, without disclosing the other possible options.  "Oil imports are continuing," he added. The Indian central bank in December 2010 disbanded a payment mechanism that the U.S. had said could be used by Tehran to finance its alleged nuclear weapons program. Since July last year, refiners such as Mangalore Refinery & Petrochemicals Ltd. and Indian Oil Corp. have been routing their payments through Turkey's Halkbank for supplies from Iran, which is the second-largest supplier of crude oil to India. The payments through Turkey could also now get disrupted as the U.S. and Europe have imposed sanctions on Iran to block its oil trade and deprive it of a key revenue source. New Delhi however says it will continue with oil imports from Iran as the terms of trade are favorable. India's oil minister said this month that the country will only abide by United Nations sanctions and not those imposed by any individual country.

WSJ

Cyber Society wants RBI to empanel info security auditors

In what is termed a significant suggestion, Cyber Society of India has asked the Reserve Bank of India (RBI) to raise a pool of ‘empanelled information security auditors' across the country. They could then be deployed or allotted to different banks like the RBI allots statutory auditors. “All the banks do not have a proper information security policy and audit system. They have their own internal audit. Or, they get audited through their own known auditors,” according K. Srinivasan, President of the Cyber Society of India. Mr. Srinivasan said the Cyber Society had asked the apex bank to empanel information security auditors based on specified minimum qualification and experience. “After auditing the banks, they could submit the report to the RBI and banks. This will improve the quality of information security audit,” he felt. From this year onwards, that is, March 2012, all banks are required to declare their information security status (IS) in their annual reports as per the Gopalakrishna Committee report. This is for the first time that the banking industry is going to declare such IS status. “Hence, an audit by competent RBI-nominated IS auditors may improve the quality of information security in banks,” he said. The Cyber Society of India also wanted RBI to issue a fiat to all banks, making it mandatory for them to send out mobile alerts to their clients on withdrawals. At present, mobile alerts are given by banks only on request. “Even educated customers are not aware of this facility. Many cyber crime police cases could have been avoided, if the customers had a mobile alert,” Mr. Srinivasan said. Customers should get mobile alerts by default. “Only if they do not want, they have to request the bank, like ‘do not disturb' model,” he pointed out. “We are in the initial stage. Customer awareness is very low. Even a remote rural person is having credit and debit cards. All these justify the importance of information security to protect the interest of the customers," he added.

HBL

“RBI looking at alternative methods to assess inflation”

The Reserve Bank of India is looking at alternative methodologies for a better assessment of inflation and inflation expectations that are the cornerstones of monetary policy formulation for the economy, RBI Deputy Governor Subir Gokarn said on Monday.................

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The RBI’s self-serving bid?

.....While there is a strong case for a unified regulator, the task of financial regulation should be separated from the job of conducting monetary policy. This would give an independent central bank doing monetary policy (and nothing else), and a unified second agency doing all financial regulation and supervision.......

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Inflation persistence: NREGA not the culprit, says Gokarn

The National Rural Employment Guarantee scheme is not quite the cause of inflation 

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Reserve Bank of India says open to more debt buybacks through OMOs

CHENNAI: India's central bank is open to more debt buybacks through open market operations to address the strain on liquidity, Reserve Bank of India Deputy Governor Subir Gokarn said on Monday. The RBI has bought back about 719 billion rupees ($14.44 billion) of government bonds from the secondary market since late November to reduce pressure on yields and ease a cash crunch after New Delhi's increased its borrowing plan for 2011/12. Bond yields fell on Monday, as traders picked up bonds on hopes of more debt buybacks from the RBI to infuse liquidity, as the cut in banks' cash reserve ratio had only a marginal impact at easing the cash shortage. The RBI had cut CRR, or the share of deposits banks hold with the central bank, by 50 basis points to 5.5 percent to infuse liquidity. The CRR cut is expected to have released about 320 billion rupees ($6.43 billion) into the banking system on Saturday.

ET

Rate cut by RBI is a matter of when, not if

.... Ambiguity still prevails on the timing and amount of repo rate cuts, but RBI is in no hurry and has conditioned a reversal to achieving a sustainable fall in inflation and fiscal consolidation......

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How microfinance creates poverty

....The beauty of microfinance is that it sucks out the income of the poor without causing much pain. Rather the poor thanks the lender for impoverishing him. Just as the drunkard thanks one who lends him money for buying a bottle of liquor or just as the bonded labour thanks the moneylender for giving him a loan, similarly the members of Self- Help Groups thank the microfinance institutions for providing loans. They forget that the same institution is also taking away their incomes......



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A push for women in backward districts

....“The NGOs will encourage women to form SHGsand start banking operations by opening a savings account. The financial transaction would also meet the objective of Reserve Bank of India (RBI) to have financial inclusion of every citizen,”.....

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Budget to focus on fiscal consolidation: Montek

....The job of reserve banks around the world is to be striking notes of caution. So what the RBI has done in the last policy is giving a clear signal that the period of monetary tightening is over and that is a genuine reflection on their part that the warning signals on inflation are certainly no longer red; they may even be changing from amber to green. "But obviously the RBI wants to hold back until it's absolutely sure,"....

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