Financial inclusion should be a bank-led model: RBI

…………“Our experience shows that the goal of financial inclusion is better served through mainstream banking institutions as only they have the ability to offer the suite of products required to bring in the effective or meaningful financial inclusion,” said RBI Deputy Governor K C Chakrabarty in a speech delivered in Washington, DC on Sunday. The speech was released on the central bank’s website on Tuesday………….

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'Explain insufficient funds while dishonouring cheque'

.....Merely saying 'insufficient funds' cannot be a valid reason for banks to dishonour a cheque, unless it is explained what amount would have been sufficient to honour it, a consumer forum has held. The Central Delhi District Consumer Forum ruled it while ordering ICICI Bank to pay Rs 25,000 as compensation to a customer for dishonouring her cheque of Rs one lakh on grounds of insufficient funds in her account, despite the same having more than Rs one lakh in it.....

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Basel norms: Surely not just an exercise in compliance?

In the recent past a lot has been written about India's move to Basel III, the new global rules for ensuring that our banks have enough capital and do not face the vagaries that are being currently faced by their Western counterparts. Much of the focus of the discussion to date has been on the 'how' behind such a move. However, in our rush towards adoption and our obsession with the 'how', we seem to have missed the 'why'………..

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Allahabad Bk seeks RBI nod to open four new branches overseas

On the occasion of the 148th Foundation Day celebrations of the bank, the bank's Chairman and Managing Director J P Dua said the lender has sought RBI's permission to open branch in Dhaka, Shanghai, Singapore and Hong Kong…………….

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India, Pakistan to allow each other's banks to set up branches across the border

…….The troubled neighbours are set to allow banks from both sides to open branches in each other's territory amid a renewed attempt at reviving relations. The two central banks - Reserve Bank of India and State Bank of Pakistan - are readying to invite applications from interested commercial banks, following a meeting of their officials earlier this month when they sorted out most prickly issues…………..

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RBI's lifeline: Aviation sector can borrow abroad for working capital

.......The ECB will be allowed to the airline companies based on the cash flow, foreign exchange earnings and their capability to service the debt, according to a RBI notification. The RBI has given aviation companies time up to May 2014 to raise funds through the ECB route.....

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PSU banks loan restructuring faulty? NPAs decline

The Reserve Bank of India (RBI) has observed certain deficiencies in compliance of its guidelines on restructuring of loans by state-owned banks during annual inspection, the government today said. Some of the deficiencies observed during the Annual Financial Inspection (AFI) by RBI of the public sector banks (PSU banks) include repeated restructuring and non-classification as per record of recovery,..........

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More buses, heritage tram on cards

…….Mitra said that on the CM's instruction, the transport department wants to create links between all district headquarters and blocks. "Also, we are losing about Rs 25 lakh a day for not being able to return change to passengers. We will talk to the RBI on this matter," he said……………

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RBI clears Axis-Enam deal, integration likely in 3rd qtr

……….The deal has now been cleared by the RBI without any more riders. We need to get approval from the Securities and Exchange Board of India (Sebi), the high court, and also from our shareholders and creditors. We expect this process to be complete and the integration to happen by the end of the third quarter,”……………

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Firms allowed to buy back foreign bonds at discount

.......The inter-ministerial panel with half-a-dozen secretaries and officials from RBI and Sebi also approved the creation of compulsory redemption reserves for companies with such FCCBs following a proposal mooted by RBI Deputy Governor H R Khan. Accordingly, companies will have to compulsorily park up to 25 per cent of the value of FCCBs at maturity into the redemption fund. The corporate affairs ministry is formulating its view on this.......

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A growth-oriented policy

A cut in the policy repo rate by a straight 50 bps at one go is a surprise move but came after a long waiting. It is an indication that the apex bank would start moving towards a softer interest regime to take the growth process forward that has witnessed consistent moderation to contain the menace of inflation. In a nutshell, the policy document is a reflection of growth concerns and, with inflation level showing signs of cooling, the GDP growth projection for the current fiscal at 7.3% is reasonable to start with. Industry circles should be happy with the move and bankers should think of having a re-look at the lending rates.

- Srinivasan Umashankar, Nagpur (FE)

How close is the next crisis?

......A week after Reserve Bank of India governor D. Subbarao took almost everyone by surprise by cutting the key monetary policy rate by 50 basis points (bps), the bond market has hardly budged. On Tuesday afternoon, the benchmark 10-year bond was trading at around 15 basis points higher than its level the day before the policy announcement. The emerging consensus is that the Indian central bank does not have much firepower left in its armoury, perhaps another couple of 25 bps cuts at best. Bond prices recognize this stark truth....................

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What was RBI thinking?

Was the 50 basis point rate cut by RBI prompted by RBI’s judgement that the risk of inflation is lower, or was it a case of succumbing to political pressure? A careful reading of the credit policy, and even more so, of the report on Macroeconomic and Monetary Developments (MMD) released with the credit policy statement points to a serious discrepancy between RBI’s action and its views on output and prices.................

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RBI policy: What should determine interest rates

….So, they do not have to worry if, in following the RBI's 'diktat', they end up making losses. But as we have pointed out in the past, the repercussions of banks blindly following the RBI's diktat go well beyond the banking sector. The sharp increase in the bad loans of public sector banks and, hence, in taxpayerfunded capital infusions, for instance, is the direct consequence of PSBs lending aggressively at the RBI's behest during the downturn when commercial considerations called for a cutback in lending. It is unfortunate that instead of learning from past mistakes, we seem determined to repeat them.

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RBI rate cut: Will the joy be short-lived

.... Even the Confederation of Indian Industry (CII) did not celebrate much the summer gift from the Reserve Bank of India Governor Duvvuri Subbarao - a half percentage point cut in the benchmark interest rate. Because the joy may be short-lived.  "CII appreciates RBI's concern on future growth being constrained due to supply-side bottlenecks in infrastructure, energy, minerals and labour. CII has been strongly advocating de-bottlenecking supply-side constraints," was the measured reaction from the lobby group……

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An empty purse does not increase global power - Renu Kohli

The thorny negotiations in Washington that finally doubled the International Monetary Fund’s lending power offer some lessons for India, which has been an active member of the G20 and BRICS, the newly influential and prestigious sub-groups of the IMF’s 188-country strong membership. Some might even say India played, or at least aspired to play, a lead international role ever since the crisis broke out. But an empty purse is now tying its hands in taking a lead..................

Renu Kohli is a New Delhi-based macroeconomist; she is a former staff member of the International Monetary Fund and Reserve Bank of India

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