Two more no more...............

I regret to advise you of the sad demise of Shri.K.N.Bhargava on Friday 24th, February 2012 in Ghatkopar, Mumbai. He was 79 years old and retired as F Grade officer from the then Exchange Control Department. May his soul rest in peace.

As reported by P.P.Ramachandran (via e-mail)

Regret to inform the sad demise of Shri B.G.Savanal, Ex Joint Controller ECD at PUNE on 26th February 2012. He was 87 years old. May his soul rest in peace.

As reported by M.M.S.Rekhrao (via e-mail)

Indian corporates struggle with FCCB redemptions

……….In a recent speech touching on the topic, V.K. Sharma, Executive Director at the Reserve Bank of India, criticised corporates for relying on FCCBs to convert to equity. “So I would urge business and industry to fully provide domestic rupee/foreign currency resources to meet potential liabilities under FCCBs, rather than hope that FCCBs will be converted.”......... 

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Help borrowers take informed decision, RBI tells banks

Mumbai: Concerned over reluctance of banks to provide loans on interest rates favourable to borrowers, the Reserve Bank has asked the lenders to share adequate information with them so that they can take informed decision. "How many banks are willing to go an extra mile and interpret the guidelines in favour of customers? The discriminatory practices that banks adopt while sanctioning loans on a floating interest rate basis to new borrowers is possibly the best example in this regard," RBI Deputy Governor K C Chakrabarty said here recently. He was speaking at the annual conference of Principal Code Compliance Officers on 'Banking Codes and Standards Board of India -- Customer Service and Consumer Protection-Issues and Challenges'..............................

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Banks achieve 100% financial inclusion in state

...... The Governor of the RBI, during the review meeting with the CMDs / top management of banks at Bangalore on January 30, 2012, had advised that a minimum of 15 per cent unbanked villages should be covered by brick and mortar branches and credit linkage should be raised from the present level of around 45 per cent to 50 per cent by July 31, 2012.

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Bank staff justified in their overhaul call

……These figures are calculated on the basis of banking sector analysts up to March 31, 2011 provided by research agency, ICRA, and the Reserve Bank of India (RBI), taking an error margin of 3 per cent into account. All the Central Trade Unions have jointly given a call for general strike tomorrow on February 28, 2012. Apart from wages, employment security, opposing Khandelwal Committee appointed to review the staff issues in the proposed Banking Law (amendment) Bill, and outsourcing of work, there are a few pertinent issues that are actually plaguing the banking sector among the demands raised by the staff unions……………..

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More coordination between central banks

.....In India, RBI had little to do except to make sure that the deficit financing needs of the government were met in an orderly way by a captive banking sector. Fighting inflation was not thought to be a task of monetary policy but tackled by rationing and price controls. The received wisdom used to be that physical planning had priority over merely financial accounting. RBI was a good research centre, but little else..........

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RBI mulls ‘annualised effective rate’ by banks

Reserve Bank of India Deputy Governor KC Chakrabarty has proposed the formation of an ‘Annualised Effective Rate’ to tackle the confusion arising from different services, incentives and charges by different banks. .............

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India thrives not by growth alone

...............There are academics who write about them without having the benefit of experience in government or the Reserve Bank of India. Then there are the ‘insiders' — those associated with policymaking or crisis management putting down their views after retirement. Finally, there is the ‘privileged' class of economists who have shared “revolving door” relations with the Washington-based Twins and the government. They are the blessed ones who carry sacerdotal authority and write for the pink papers. Shankar Acharya belongs to this class...........

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Why banks will ignore FinMin’s request to cut lending rates

.............. In other words, an inflation-wary RBI is unlikely to jump the gun on interest rates. Even if by some miracle the RBI does cut the repo rate, the benchmark policy rate that is currently at its highest since March 2008 at 8.5 percent, the truth is most banks will be unable to follow suit.........

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The dilemma ahead of midterm review of monetary policy

.............. RBI would continue to stay concerned both on inflation and growth going into FY13 and as of now bias seems to be on inflation. The external factors are not expected to turn growth supportive in the near future. While RBI’s priority would be to guide inflation into its tolerance level of 4.0-6.0%, it is also important to support the Government in its efforts to address fiscal issues through growth supportive monetary policy.............

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Responsible lending key to microfinance

Microfinance is a very emotional word and small credit plays an important role in taking small farmers and entrepreneurs out of poverty. But microfinance cannot bring the financial inclusion because in our system we don’t allow microfinance firms to accept deposits.............

I think it is important for any financial system that the credit culture is not eroded. What is worrying me is that the whole debt restructuring process is dependent on 50% recovery. The excesses happened in lending should also be kept in mind when we talk about such kind of reaction. There is a clear case of overlending and there is a clear case of forgiving that borrowing as well. So the message should be there has to be some kind of responsibility..............

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Microfinance industry may get a lifeline

….“The new guidelines, if implemented, are going to hugely help MFIs as banks will have to lend in large amounts to them to meet their lending targets. Since most of the NBFCs cater to priority sector related segments like agriculture, women and other weaker sections, NBFC-MFIs can expect a fair share of bank credit,”.....

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Fitch gives cautious outlook for NBFC sector

….Last year, the Reserve Bank of India (RBI) excluded bank loans to NBFCs from the priority sector category, thereby reducing banks' incentives for direct lending to NBFCs.  Presently, about 65 per cent of the NBFC funding comes from banks. The RBI's move "will increase funding costs for NBFCs in 2012 and beyond," Fitch said, adding that the outlook for 2012 is stable……

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Consolidation seen in NBFC space: Fitch

..... If the Usha Thorat Committee's recommendations, stipulating a minimum net worth of Rs 5 crore and asset size of Rs 50 crore for registration of NBFCs, are implemented, then the small NBFCs segment could undergo major consolidation, the agency said in a report. A majority of the non-deposit taking NBFCs are small in size and regulatory supervision becomes heavier only when their asset size exceeds Rs 100 crore.......

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On microfinance

The report “Small loans add up to lethal debts” (Feb. 26) on debtor suicides linked to microfinance companies was heart-rending. That the poor, who believe that small loans can improve their living, become victims of the companies run by so-called financial wizards, is unfortunate. It appears that the companies are no better than the mahajans of pre-independence days.

Aditya Anirudh, Bangalore

Micro-finance institutions, established to provide small loans to the disadvantaged sections, have been lured into the path of becoming for-profit organisations. Manmohanomics and Monteknology have played a crucial role in making India a global market in which retailers and middlemen become millionaires while food producers are left to kill themselves. The patrons of liberalisation have a lot to explain to the bereaved families of those who have committed suicide in the past two decades because of their inability to repay debts.

Krishnaprasad Balan, Chennai

The report is excellent but the readers should know the brighter side of microfinance too. Because of the Andhra Pradesh fiasco, institutional resources to MFIs virtually stopped for almost a year. The industry has just come out of the crisis, with the RBI intervening to soothe the market and funders realising that it is safe to lend to MFIs which operate in credit-ready markets initially developed by them. The borrowers, in repeat cycles of borrowing, see this transparent mechanism as a far cheaper and desirable option. Many MFIs graduated from the initial mission of empowerment and social development to become lenders. The RBI has now virtually capped the market by indirect regulation. Why did Rajyam, mentioned in the article, borrow Rs.1.18 lakh? If she needed the money to invest in her livelihood activity, it points to the failure of the banking system. It is precisely this unfilled space in the rural credit market that the MFIs have occupied. Borrowing from eight different MFIs indicates a sad feature of an unhealthy microfinance market. Rajyam borrowed beyond her capacity — a situation akin to the state of the urban credit card industry three years ago. In the case of Rajyam and many others, the over-enthusiastic “profit-only” MFIs were responsible for dumping money in unprepared markets.  The article should teach the nation what should not be done. But, let us not conclude that all microfinance is bad.

Ananda Mukherji, Chennai (HBL)

It's the Economy, Stupid!

It was as if someone flipped a switch at midnight, December 31, 2011. The flipping of that switch magically turned around all that was terrible about India’s economy into the zone of happy faces and markets headed north………………

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iCreate Software sponsors IBA Risk & Compliance 6th Annual Summit, 01 Mar 2012, Mumbai

Organized jointly by Indian Banks' Association and SP Media, publisher of India Banking Review, this is the country's flagship conference for policy level debate on issues related to risk management and regulatory compliance in banking……………..

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Governance and Financial Regulation to be the focus of Oxford India Business Forum 2012

....The panel will include Sir Thomas Harris, Special Advisor, Standard Chartered Bank; Usha Thorat, Director of the Centre for Advanced Financial Research and Learning (CAFRAL), Reserve Bank of India; Ms Chitra Ramkrishna, Joint Managing Director, National Stock Exchange........

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Indian Railways defies reform

.......A decade ago, Rakesh Mohan, an eminent economist and former Deputy Governor, RBI, in an exhaustive report on Indian Railways, observed that the contours of policy, regulatory and management functions of the railways are fuzzy. He also said that Indian Railways is perhaps the most studied institution in this planet. Perhaps, now, it is time to ask some eminent political economists why Railways remains static, despite so many study reports.

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Nehruvian rate of growth

..... The Reserve Bank of India (RBI) is unlikely to set monetary policy based on this new inflation measure in the near future, given that the data series is yet to be tested for consistency, etc. Nonetheless, the inflation rate is high enough to warrant tempering of rate cut expectations.....

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High security chamber mooted to keep temple treasures

.......... M V Nair, eminent conservationist and co-ordinator of the Supreme Court appointed committee, said the blueprint of the proposed chamber would be prepared by experts from the RBI...................

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RBI takes a leaf out of Chinese model to curb speculation

The recent steps taken by Reserve Bank of India (RBI), similar to the China model to curb property speculation don’t seem to have worked too well. Instead, genuine buyers have been feeling the brunt even if it’s for now……

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RBI ups tenure of gold loans by 30 days to 270 days

The Reserve Bank of India said it has extended the maximum tenor for loans to import gold to 270 days from 240 days, effective immediately.  The new maximum includes 90 days for manufacture and export of gold products, instead of 60 days previously, and 180 days to fix the price and for repayment, the RBI said.

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eMudhra, Watchdata team up to offer data validation tech for banks

...........eMudhra has set up an R&D team to develop online authentication techniques for Indian consumers, and has developed SWYS Key authentication techniques in conformation with standards prescribed by the Reserve Bank of India. According to a press release, eMudhra's system allows the user to validate the key data and further digitally sign the transaction to ensure that “what you see is what you sign” and have a safe transaction..........

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