RBI hints at another CRR cut as liquidity remains tight

..... Gokarn has been maintaining that a CRR reduction is a much broader decision which is addressed in the policy rather than the bond buybacks (open market operations) that the central bank has been announcing and carrying out almost on a weekly basis to inject liquidity in the system. The midquarter review of the monetary policy is scheduled for March 15 and it is widely expected that one more CRR cut can be on the anvil.........

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'Cash deficit may make RBI cut CRR'

.....Currently, the central bank has only two options to channel primary liquidity into the system -- putting more cash with banks by purchasing some of their government bond holdings through open market operations (OMO), or cutting the CRR........

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RBI’s flip-flop on CRR – Renu Kohli

The central bank’s confusing statements on cash reserve requirements and its role show it in poor light

Confusing statements by the Reserve Bank of India (RBI) on cash reserve requirements (CRR) and its role show it in poor light. Before the January monetary policy review, the central bank drew a neat distinction between open market operations for liquidity management and the CRR, which, it maintained, was a monetary policy signal. But the surprise CRR cut on January 24 was explicitly directed at infusing permanent liquidity into the cash-starved interbank market.............

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Pioneering change

.......... Not just that, the bank has been given the permission by the Reserve Bank of India to offer its software to other banks. “Our technological infrastructure is at par with the top banks in the public and private sectors. We offer software support to other banks on cloud, where this technology has had a big impact,” says Mankikar, on being asked if cloud has a role to play in the bank’s IT backbone................

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Foreign banks must raise targets: Panel

M V Nair Committee moots sub-targets for foreign lenders - 15% for exports and 15% for small and micro-enterprises

................... The panel appointed by the regulator said the demarcation between lending to agriculture and lending to allied sectors should be done away with. “As there is a seamless interconnectedness of the entire agriculture value chain, its impact on output, income and employment in the rural economy is highly positive. Therefore, ‘agriculture and allied activities’ may be a composite sector within the priority sector by doing away with distinction between direct and indirect agriculture lending,” the report said. The targets for agriculture and allied activities were kept at 18 per cent of ANBC..................

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RBI panel for retaining priority sector target at 40%

A Reserve Bank panel on priority sector lending today recommended retaining the existing 40% ceiling for the segment while creating a sub-head of micro enterprises within the micro and small enterprise (MSE) sector. Besides, the panel headed by Union Bank of India Chairman and Managing Director MV Nair, also suggested raising education loan ceiling by Rs 5 lakh for students, under priority sector......................

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Banks wanted to do away with 40% priority sector target

During its interactions with banks, the M V Nair Committee, set up to review priority sector norms, found most wanted to do away with the 40 per cent priority sector lending obligation. "Most banks, including public sector banks, wanted the removal of the overall target of 40 per cent," said a banker, requesting anonymity. "Instead, these suggested imposing sector-wise targets, which would be easier to achieve." However, keeping the government’s financial inclusion programme in mind, no such change was included in the report, the official added. A number of reports submitted earlier had made similar suggestions, but these, too, never saw the light of day. The report submitted on Tuesday has retained the overall priority sector target at 40 per cent adjusted net bank credit (ANBC). In fact, the target has been extended to foreign lenders, with suggestions on securitisation, on-lending and priority sector lending certificates. "Also, multiplicity of targets and sub-targets was creating a lot of confusion," the official said. The committee also recommended withdrawing the distinction between direct and indirect agricultural lending. Instead, it suggested half the loans in the category should be given to small and marginal farmers. Currently, such loans stand at six per cent of ANBC, which needs to be increased to nine per cent in stages till 2015-16. 

BS

Positive signal for MFIs

..............The NBFC-MFIs, which are still facing funds-crunch owing to the adverse impact of the Andhra Pradesh microfinance crisis, stand to gain significantly if the recommendations are implemented, say experts.“We are very happy with the recommendations. This is one more signal of the RBI's and banking sector's support to MFIs,” .........

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Restore priority sector tag for indirect loans to farm, allied activities

A Reserve Bank of India committee has recommended restoration of the priority sector tag to the loans give by banks to non-bank intermediaries for on-lending to identified segments such as agriculture, micro and small enterprises, micro credit and weaker sections, subject to a cap...........

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'Counterfeit notes possession not crime'

The mere possession of counterfeit currency notes does not amount to an offence, Thane District and Sessions court has ruled while acquitting a city-based businessman who was found to be possessing such notes.................

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Union Bank hints at slashing retail lending rates

.... UBI also inaugurated its 3,000th ATM and launched a host of facilities like cash transfers to other account holders using the NEFT system, transfer to any mobile via the interbank mobile platform and a facility to remit money to anyone by keying-in just the mobile phone number on the ATM. These services were launched by RBI Deputy Governor Anand Sinha......

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RBI to issue Rs 5 coins in Bhagat Singh's memory

RBI will soon bring out Rs 5 coin to commemorate freedom fighter and martyr Shahid Bhagat Singh. One face of the coin will be divided into three portions with two horizontal lines and bear the Lion Capitol of Ashoka Pillar as well as the denominational value of Rs 5, RBI said. The other side will have the portrait of Bhagat Singh, with the words "Shahid Bhagat Singh Birth Centenary" in English. The figures 1907-2007 shall be shown below the portrait in International Numerals. The iron and chromium coins will have a diametre of 23 mm, the Reserve Bank of India said in a statement. The existing Rs 5 coins will continue to be legal tender, RBI added.

The Pioneer

RBI liberalises payment system for exporters

……………..With a view to liberalising the procedure, it has been decided to permit AD Category-I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship...," the Reserve Bank said in a notification………..

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Set up credit risk guarantee scheme for small, marginal farmers

To address the risk in lending to the agriculture sector, an RBI committee has recommended the establishment of Agriculture Credit Risk Guarantee Scheme for small and marginal farmers................

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Bihar's global summit sees emotion, action and fights

..... The thrust and parry between the centre and the state was the subtext of the entire conference. Referring to the declining credit-deposit (CD) ratio in Bihar (around 33 per cent), Member of Parliament from the Rajya Sabha N K Singh asked RBI Governor D Subbarao why commercial banks were reluctant to give loans to Bihar. Rao was obviously not expecting a frontal attack, but he said the RBI would do its bit in chivvying banks to provide credit.......

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RBI releases draft guidelines for Basel III norms

The central bank says some of the guidelines, related to Liquidity Coverage Ratio and Net Stable Funding Ratio for funding liquidity will become binding for banks from 1 January 2015 and 1 January 2018, respectively.

Mumbai: The Reserve Bank of India (RBI) on Tuesday released draft guidelines related to the Basel III norms, an international accounting standard for banks. While the guidelines are essentially compilation of different guidelines on the standard that RBI put out time to time, the central bank said some of the guidelines, related to Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) for funding liquidity will become binding for banks from 1 January 2015 and 1 January 2018, respectively. The LCR is related to the “short-term resilience of banks to potential liquidity disruptions by ensuring that they have sufficient high quality liquid assets to survive an acute stress scenario lasting for 30 days,” and the “NSFR promotes resilience over longer-term time horizons by creating additional incentives for banks to fund their activities with more stable sources of funding on an ongoing structural basis,” the draft guidelines put on the website said. Banks are to give their feedback on the draft by 21, March. 

Mint

RBI wants banks to hold more liquid assets

The Reserve Bank of India said on Tuesday that banks need to maintain additional liquid assets as part of Basel III guidelines, over and above previously mandated levels.  Banks will need to adhere to these norms from the month or quarter ending June 2012, the RBI said in its draft guidelines on "Liquidity Risk Management and Basel III Framework on Liquidity Standards.".............

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Home buying: China shows the way to RBI

 ......... In 2010, when State Bank of India was offering its so-called teaser rates, former deputy governor Usha Thorat criticised it with ... 'lower interest rate in the beginning actually lures borrowers. This, itself, has the making of leveraging and putting pressure on housing prices to move up.' While SBI withdrew its teaser loans in the coming months, the banking regulator's tough guidelines have made it more difficult for genuine buyers to purchase a home. Meanwhile, property prices have continued to skyrocket. Whose loss is it?

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RBI allows 926 bank branches to receive advanced income tax

MUMBAI: For hassle free income tax collection, the Reserve Bank of India today designated a total of 926 compurterised branches of public and private sector banks to receive advance income tax for people residing in Mumbai and Navi Mumbai. "These arrangemnents have been made for the convenience of the income tax assesses," RBI said. Of the total 926 bank branches, 862 are that of public sector lendors, while the rest would be of private sector banks, including HDFC, ICICI and Axis. "Long queues and inconveniences can be avoided at the RBI counters if the assesses in Mumbai and Navi Mumbai utilize the services being made available at various designated branches of the banks and deposit their income tax dues well in advance of the last date," the RBI statement said.

ET

Front-loaders get front-loaded

.........Though the broking model, where a bank becomes an insurance broker and can sell products of all companies, was open, neither banks nor their regulator wanted accountability of insurance sales that would have come with a broking licence. Instead of standing firm against the Reserve Bank of India, the insurance regulator caved and set up a committee to look into the matter...............

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Banks hit by bad loans may get tax breaks

.....The gross NPA of public sector banks had already touched Rs 71,047 crore in March 2011. The amount has further risen drastically in the last one year. The State Bank of India, the country largest lender is saddled with over 32% of the total gross NPA level of of all state-owned banks, according to official data.......

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Commissioner meets bankers

..... a meeting held on Tuesday evening in the wake of Monday's bank robbery in Keelkattalai. Commissioner of Police J.K.Tripathy met representatives of the Reserve Bank of India headed by the Deputy General Manager. As many as 60 representatives from 39 banks in the city, both private and nationalised banks, attended the meeting......

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What the EC can learn from Indian Banks

........... Obviously, this series of safety measures has been found by the Reserve Bank of India adequate to guard against fraud. The bank, as part of the Know Your Customer norms, has the consumer’s photograph, address, e-mail id in some cases, phone and mobile numbers as may be applicable..........

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Any Time Money the all time threat to safety?

...................... Experts are now contemplating about whether ATM skimming has returned to the city with a vengeance. Acting on the basis of a report submitted to the Cyber Crime Department by the National Payments Corporation of India (a wing of the RBI which manages ATMs across the country), the cyber crime police are now investigating the five ATMs that seem to have been compromised in Bangalore...............

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