Workshop on foreign exchange held

Interactive sessions dispel myths surrounding overseas transactions

RBI uses the workshop to familiarise the public on its niche products

Event targeted mainly at students, small-scale industries aiming at opportunities abroad

To dispel the myths and unfounded fears on foreign exchange and for motivating the public to make use of the overseas banking services, Reserve Bank of India is conducting an interactive session for all the stakeholders in Tirupati. The two-day event began at Shilparamam (Urban Haat) on Saturday morning with an exhibition by the RBI along with various lead banks in the State such as Indian Bank, State Bank of Hyderabad, State Bank of India, Andhra Bank and Syndicate Bank. As part of its financial inclusion plan, RBI is holding the event to familiarise the niche products as well as to caution the public on the pitfalls ahead. After Hyderabad, Nizamabad, Visakhapatnam and Guntur, this one at Tirupati is the fifth in the series of meetings.

Exhibition

The exhibition titled ‘Foreign exchange and you' aimed at spreading awareness on FE showcased the options available for residents and non-residents, the rules for foreign direct investment in India, overseas direct investment, external commercial borrowings etc. The event is targeted mainly at students aiming at higher education or employment abroad and small-scale industrialists with an export-oriented venture. While information will be disseminated to students on foreign university remittances, account operation procedures, NRI accounts etc., the industrialists will be explained the features of export finance, formalities for import, Letter of Credit, FEMA regulations among other things. T. Prasad, Commissioner, Municipal Corporation of Tirupati (MCT) inaugurated the event, while A.S. Rao, Regional Director of RBI, Hyderabad, interacted with the visitors and clarified their doubts on various issues. The expo will be open till 6.30 p.m. on Sunday. 

HBL

Failure of governance reason for Eurozone debt crisis: RBI

MUMBAI: The ongoing sovereign debt crisis in countries of eurozone owes its origins to governance failures, according to a senior Reserve Bank official. Speaking at a conference of Kerala Management Association at Kochi yesterday, RBI Executive Director G Padmanabhan said the 2008 global crisis and the current debt problem in eurozone suggests that merely having a strong regulatory and supervisory framework is not enough, without proper enforcement of the rules and regulations. "If we take a careful look at the present sovereign debt crisis roiling the eurozone, it should not take us too long to realise that this crisis also owes its origins to governance failures. "The only point of difference between this and the 2008 crisis is that the entities which are at the root of the present crisis are sovereign governments and not the usual suspects which are 'profit-seeking' corporations," Padmanabhan said. The text of his speech was uploaded in the central bank's website. According to Padmanabhan, there was a clear element of acquiescence on the part of core euro members to enlarge the circle of Euro zone at the cost of non-compliance with the tenets of Maastricht Treaty. "How did the crisis surface? By admission of the Greek Government that the fiscal statistics it had earlier presented may not be true and the true position could be significantly worse," he said. Padmanabhan said the European debt crisis has prompted a discussion on governance and sovereign debt. "There seems to be interplay between governance performance and the debt level. Better governed countries can afford higher levels of debt. Conversely, badly governed countries can tolerate only lower levels of debt," he said. According to him, mere financial and economic measures, in absence of reform in governance, may not be sufficient to address the problems countries like Greece face. "This is also why even after the Greek parliament passed the austerity measures as a precondition for further assistance, the market is reluctant to accept it as a watershed and displays a great deal of skepticism," he said. 

ET

Subbu sab jaanta hai: RBI chief is right to remain a hawk

…..If we take the RBI’s main role as an apolitical risk manager, Subbarao is clearly right to take a more cautious view compared to his political bosses. He has to keep the powder dry against future fiscal relapses. Subbarao did the right thing by holding off on a more chirpy policy statement. As the Kotak Mahindra ad goes: “Subbu sab jaanta hai…”

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Dr.Bimal Jalan - Emerging India - Book Review by P.P.Ramachandran

India is ruled by an ex- RBI Governor and ex- Finance Minister.The PM’s Economic Advisory Board is headed by another ex- RBI Governor. Yet the nation is teetering on the precipice of economic decline with a reduction in annual growth and burgeoning inflation. Why, with such a fund of expertise? The book under review is an attempt to solve this riddle.

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Individuals-promoted banks ‘not successful' – Usha Thorat

Mangalore, Feb. 18: Former Deputy Governor of Reserve Bank of India Ms Usha Thorat has observed that the experience of the RBI over the past 17 years has been that banks promoted by individuals, though banking professionals, either failed or merged with other banks or had muted growth. She said only those banks that had adequate experience in broad financial sector, financial resources, and trustworthy people, and strong and competent managerial support, could withstand the rigorous demands of promoting and managing a bank. Drawing the attention to the RBI's August 2010 discussion paper on licensing of new banks, Ms Thorat, who is also Director of Centre for Advanced Financial Research and Learning, said when financial sector reforms were initiated in India in the early nineties, guidelines for licensing of new banks in the private sector were issued in January 1993 and subsequently revised in January 2001. The objective was to instil greater competition in the banking system to increase productivity and efficiency. She said the revised 2001 guidelines, by and large, were still cautious in nature. Large industrial houses were not permitted to promote new banks. Under the policy, 10 new banks were set up in the private sector after the 1993 guidelines and two new banks after the 2001 revised guidelines. Out of these, seven banks have survived, of which, four have been promoted by financial institutions, she said.

HBL

Old private banks asked to step up coverage in areas of operation

 

Mangalore, Feb.18:  Old generation private sector banks, while focusing on their territories and niche business, should enhance their coverage in their areas of operations to source more customers without increasing cost and risk, according to Ms Usha Thorat, former Deputy Governor of the Reserve Bank of India and Director of the Centre for Advanced Financial Research and Learning. Speaking on the theme ‘Old private sector banks in India: Challenges and opportunities' at the 88th Founders' Day celebration of Karnataka Bank Ltd here on Saturday, she said there has been a fairly steady growth in deposits and advances for old private sector banks but their market share has gone down, especially after 2005. “This is most probably due to the aggressive actions by the new private banks to source more customers and offer a whole slew of services to them thereby increasing their value to the bank,” she said. Their strategy should be to capitalise on their strength of knowledge of the region and business to increase the outreach and coverage in their areas which have witnessed very high economic growth in the recent past. More inclusive banking will be good business while keeping concentration risk low, she said. Ms Thorat suggested that there should be a conscious efforts not to get tempted into sensitive sectors that may give higher returns - exotic products that are not very well understood and those that pose higher risk. Equally there should be conscious efforts to see that the liability base is well diversified and on a large retail deposit base, she said. An attempt should be made to move carefully into regions that show good potential for growth and where banking services are not so well developed. Being present largely in areas which have had very high growth has created an enabling environment for the old private sector banks to grow reasonably, but with falling market share. Focus on small ticket loan accounts and increasing outreach will prove to be a good strategy. “Small business can be good business” should perhaps be the slogan going forward, she added.

HBL

RBI Guv favours more rural banks

Reserve Bank of India (RBI) Governor D Subbarao, who chaired a meeting of the Central Board of Directors of the RBI here on Thursday, emphasised on opening of additional branches by the commercial banks in the rural areas; credit support to agriculture and allied sectors by the commercial banks; financing of micro, small and medium enterprises (MSMEs); licensing of District Cooperative Credit Banks (DCCBs); and SHG-Bank linkage programmes. Subbarao also reviewed the recovery climate, the progress made in the financial inclusion plan and delivery of assistance under the beneficiaries-oriented programmes through electronic benefit transfer (EBT) mechanism; the organisational aspects of Rural Self Employment Training Institutes (RSETIs) and Financial Literacy and Credit Counselling Centres (FLCCs). The meeting was attended by eight Directors Anil Kakodkar, MV Rajeev Gowda, YH Malegam, Dipankar Gupta, GM Rao, Ela Bhatt, Indira Rajaraman and Najeeb Jung. RBI Deputy Governors KC Chakrabarty, Subir Gokarn, Anand Sinha and Harun R Khan were also present. Subbarao, along with Chief Minister Naveen Patnaik, also graced the RBI Bhubaneswar region’s golden jubilee function held at the RBI Colony here. Speaking on the occasion, Subbarao said the industrialisation drive going on in Odisha is quite encouraging. He, however, stressed the need for development of the backward districts of the State. The Chief Minister urged the bankers to keep extending credits to bail out the people during this crisis time The function came under the shadow of the model code of conduct enforced in the State because of the ongoing Panchayat elections. State Election Commissioner Ajit Kumar Tripathy directed the RBI Governor over phone not to announce anything in view of the model code of conduct being in force. The RBI authorities were also asked to remove the cutouts of Prime Minister Manmohan Singh.

The Pioneer

Sacrifice growth to scale down inflation, says Governor Subbarao

Patna : Reserve Bank of India (RBI) Governor D. Subbarao has said that a bit of growth needs to be sacrificed temporarily in order to bring inflation down. "What I want to give is a message and that is that there is no way we can bring inflation down without sacrificing some growth. People talk about it in textbook economics. You have to sacrifice a bit of growth in order to bring inflation down but that scarifies needs to be short term," Subbarao told the media here on Friday. "We scarifice in the short term, so that our medium cum growth becomes more sustainable. If there is high inflation, there will uncertainty for investments, there will uncertainty for consumers and high inflation scenario in not a use of growth," he added. Subbarao further said inflation is anemic for growth. "It is true that in economic literature, there is a concept of trading of between growth onsultations but that happens below a threshold level of inflation. At below a certain level of inflation, you can trade a bit of inflation to get a high level of growth but above a threshold level of inflation, inflation is anemic at growth," said Subbarao.  "For much of 2010, for all of 2011, we had inflation in the range of 9 to 10 percent, which is way above the threshold level and we had to act very aggressively and decisively on the monetary policy side to bring inflation down," he added.  Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. 

http://news.webindia123.com/news/Articles/Business/20120218/1930064.html

Hold DLRC meetings as per convenience of MPs/MLAs: RBI

.... Citing instances of lead banks not arranging District Level Review Committee (DLRC) meetings in consultation with Members of Parliament, the RBI has directed all such lenders to fix programmes taking into convenience of local representatives and to involve them in major activities.......

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J&K Bank organizes ‘Awareness Camps’ in rajouri and Pulwama

n an effort to bring the unbanked into the fold of banking, J&K Bank yesterday organized ‘Awareness Camps’ at Village Badhoon in Rajouri and Kakapora, Pulwama.. The camps, conducted to educate people of far-off places about the importance of Financial Inclusion, were attended by a large number of people belonging to different walks of life. Speaking on the occasion, Lead District Manager (LDM) Rajouri, Arvind Kapoor briefed the gathering about the programme of Financial Inclusion initiated by Reserve Bank of India (RBI) to bring the unbanked villages under the ambit of formal banking services. He urged the people to open bank accounts and avail all the banking services and facilities available at the Bank’s Business Units or Khidmat Centers established in their vicinity to provide benefits of economic growth to everyone. He also asked people to use smart cards and urged upon them to open their accounts through the VLEs. Those present on the occasion lauded the role of Bank in empowerment of the poor. Earlier, Chaman Lal Sharma Head Business Unit Jawahar Nagar (Rajouri) welcomed the Lead District Manager Rajouri, Panchs, Sarpanches and other locals to the camp and thanked them for sparing their valuable time for the occasion. Meanwhile, the awareness camp at Kakapora was organized by the Financial Literacy and Credit Counseling Centre, Lead Bank Pulwama in collaboration with NABARD. A large number of village elders, government officials, representatives of financial institutions and VLEs participated in the programme. The workshop specially focused on RBI‘s Financial Inclusion programme. LDM Pulwama G. R Kumar briefed the audience about the benefits of banking and stressed upon the participants to be part of greater success story by opening their accounts with J&K Bank. Present on the occasion, AGM NABARD spoke at length about the Financial Inclusion programme and its importance for the general public. He asked the audience to come forward and get banking benefits through financial inclusion programme.  He made it clear that all the facilities would be made available at the door steps of the common masses with the active participation of the business correspondents and Khidmat centers in the near future. The BDO Kakapora Fayaz Ahmad also spoke on the occasion and assured financial institutions of every help in the block for their services through Panchayat Raj system. The representatives of J&K Bank, Agriculture, Animal Husbandry, KVIB, Handicrafts and other departments also participated along with Khidmat Center owners. 

http://www.jkbank.net/pressreleasetemplate.php?id=494

JK Bank disburses Rs 2100 cr to priority sector in 9 months

.... The meeting was presided over by Madhav Lal, Chief Secretary and among others attended by Commissioner/Secretary, Industries & Commerce, Umang Narula, Commissioner/Secretary Labour and Employment, Yadullah, Commissioner/Secretary, Agriculture Production Department, Navin Chowdhary, Director, Department of Financial Services, Government of India, Ministry of Finance, Sanjeev Jindal, Regional Director (for J&K) RBI K. K. Saraf, Chief General Manager, NABARD, S. C. Rabra.....

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The future of hacks

In the past few weeks, Bangalore has reportedly seen over 150 instances of money being fraudulently withdrawn from automated teller machines or ATMs. The fraudulent transactions have been carefully timed at the cusp of midnight, to bypass daily withdrawal limits. The modus operandi is otherwise unclear; footage from surveillance cameras has not been helpful. The criminals may have cloned cards by copying data off magnetic strips. They may have hacked the software that validates transactions. Or perhaps, the chips in specific ATMs have been compromised. Bangalore has a large population possessing the requisite skills. The Reserve Bank of India and the banking/financial services industry will now have to brainstorm to identify and plug the specific hole, or holes…………

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Monetary policy before Union Budget

This year will see an unprecedented inversion in the sequence of Budget and annual Credit Policy

.......However the date for RBI’s annual monetary policy is March 15 (as of this writing). Hence apart from clever economic models and analysis, the RBI will also have to exercise clairvoyance and mind-reading to be able to come up with a policy that is consistent with the fiscal stance, which will be revealed only 24 hours later. (Who knows, there may be several roll-backs of budget proposals too!)  Hence there are three possibilities: (a) monetary policy date will be postponed; (b) RBI will have secret advance insight of the Budget (dangerous! and possibly illegal); or (c) RBI will fly blind. Interesting times ahead for monetary and fiscal policy tango......

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RBI to wait for Budget proposals before rate-cut

The Reserve Bank of India has said interest rates have peaked and indicated that it would reduce them after taking into account the Budget proposals and global commodity prices….

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Slowing investment may impact GDP growth in FY12-13: RBI panel

.........“Given the fragility of the global situation and slowdown in capital flows, there was a need to remain extremely watchful insofar as the external sector was concerned,” ............

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RBI to issue Rs 10 notes with inset letter 'P'

MUMBAI: The Reserve Bank will shortly issue banknotes of Rs 10 denomination with inset letter 'P' in the Mahatma Gandhi series. "The RBI will shortly issue Rs 10 denomination banknotes with inset letter 'P', in the Mahatma Gandhi Series bearing the signature of D Subbarao, Governor, RBI, and the year of printing on the reverse of the banknote," the central bank said in a statement.  The design of these notes to be issued now would be similar in all respects to the banknotes in Mahatma Gandhi Series 2005 issued earlier.  All the banknotes of Rs 10 denomination issued by RBI earlier will continue to be legal tender, it added. 

ET

Let's bet on the economy

....No wonder, analysts Sujan Hajra and Gautam Singh at brokerage Anand Rathi expect the Reserve Bank of India (RBI), which had hiked interest rates through the last 18 months to rein in inflation, to cut rates in another six months. That will drive down borrowing costs for mortgage holders and businesses , lower the effective cost of car loans and allow banks to lend more freely. It can boost growth, which has sagged from 9% levels to below 7% now.......

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Government distorts reality on inflation

.... it is strange that the policy literature of the RBI and the Finance Ministry is silent about inflation in services, even as services accounts for nearly three-fifths of the GDP. That services sector inflation numbers are available only on a quarterly basis, does not justify their exclusion from the public documents of the RBI and Finance Ministry.......

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Pranab Mukherjee holds parleys with regulators on budget

In possibly the last in the series of pre-budget consultations ahead of the Union Budget on March 16, Finance Minister Pranab Mukherjee on Saturday had a meeting with the financial sector regulators to discuss ways and means of improving the investment climate and boosting a sagging economy.The meeting attended, among others, by Reserve Bank of India Governor D. Subbarao and SEBI (Securities and Exchange Board of India) Chairman U. K. Sinha.........

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FM holds pre-Budget talks with regulators

.."This is a pre-budget FSDC meeting. Finance Minister heard all the regulators. Of course the RBI has responsibility both for macro-economic management and for banking regulation. The outcome of today's meeting will be reflected in the Budget," Subbarao told reporters ...........

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Majority of Indian MFIs might have to close shop

.... At slightest 80% of microfinance institutions (MFIs) might have to close down in a subsequent two-three years since of tough new regulatory mandate laid down by a Reserve Bank of India (RBI) and a necessity of funds, attention executives warn……

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Outward remittances: Who gets what

According to RBI data, money sent abroad by resident Indians crossed the $1 billion mark for the first time in 2010-11. Between April and November of the current fiscal, such outward remittances stood at $628 million or around Rs 3,000 crore, down 15 per cent over a similar period in 2010-11. The dip was mainly on account of a drop in money sent for maintenance of close relatives living abroad.............

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