The inspiring story of women's empowerment in rural India

Chetna Sinha

..........In 1994, when officers at Reserve Bank of India rejected our idea of running a bank with illiterate women, I felt let down. But when I came back to my village and told the women that our idea was rejected by the RBI, they were not willing to accept failure. They said, 'We will learn to read and write'. They said, after their basic training, they will come with me and talk to the officers. I was surprised and agreed. This time, the women challenged the officers that they organise a test to calculate interest for a given principal amount. "Let's see if your officers can match our speed and accuracy of our women without the electronic calculator." The officers were impressed by the courage and confidence of women and agreed to induct them for the training process where they learnt the basics of how to run a bank, manage finances, process loans, etc. Most of the employees in my bank are not even graduates, but they know how to run the bank............................... 

 

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RBI organises literacy camps

KANPUR: Student Financial Literacy Week was celebrated by RBI during, which bank organised financial literacy camps from April 25 to April 27 at three prominent schools of the city -- Mother Teresa School, Kidwai Nagar, Saraswati Gyan Mandir, Indira Nagar and Dr Virendra Education Centre, Shyam Nagar. This was the first time when RBI instead of conducting such sessions in its premises directly reached out to the students in their schools so as to have a closer interaction with the targeted audience. Vijay Kumar Somdeve, Manager (Personnel), RBI informed that in the camp, officials from RBI Kanpur office briefed the schoolchildren on topics relating to RBI functioning, commercial banking, Indian economy as well as the monetary and fiscal policies.  

TOI

The scenario, post credit policy by RBI

Many of us went gaga over the half per cent reduction in repo rate announced by the Governor, Reserve Bank, in his exposition of Annual Credit Policy for 2012-13, on the 17th April. Not because a half per cent will make a huge difference in the borrowing cost on housing finance, but because it was after two years of consistent increase in interest rates by the RBI in the name of monetary control and taming of inflationary pressures in the economy...............

Read - The Hindu

Extend Financial Inclusion to Urban Areas, FinMin tells Banks : SANGITA MEHTA MUMBAI

Asks banks to open accounts for migrant labourers and street vendors within 500 m of a branch

The finance ministry has asked state-run banks to expand their financial inclusion drive to urban India so that migrant labourers too are able derive its benefit. In a note to bank chiefs, the ministry has urged lenders to open savings bank accounts for migrant labourers, street vendors and hawkers in urban areas. To begin with, banks are directed to open accounts for those labourers located within 500 metres of a bank’s branch. So far the financial inclusion drive — to provide formal banking service — was targeted at those residing in rural India. This is the first initiative by the finance ministry to provide inclusive banking in urban India. In a letter to banks, the finance ministry said, “A drive to open their account needs to be initiated,” in urban area also “to inculcate savings habit and extend banking facilities to them.” “Government desires to begin with accounts of all migrant labourers, street vendors and hawkers, who are working within 500 metres of banks branches... an account for them should be opened,” says a note from the ministry to bank chiefs. “Thereafter, branches should extend this process beyond 500 metres. To achieve this, marketing staff of bank also need to be involved,” the note said. 

Currently, banks are focusing mainly on rural areas to provide formal banking service. Banking service is made available in 74,000 of the six lakh Indian villages. This point was highlighted by KC Chakrabarty, Deputy Governor of RBI, at a seminar in June 2010. “Financial inclusion is sometimes erroneously treated as synonymous with rural poverty. Concerns of urban poverty also need to be factored in and the needs of various groups such as rickshaw-pullers, construction workers, migrant

workers, etc, must be factored in and products and services crafted as per their needs by the banking system to address urban financial inclusion,” he had said. In a note to banks, the ministry said, “Financial inclusion is high on the agenda for the government.” The ministry has asked banks to launch a special campaign to attract migrants to the formal banking services. The ministry has even asked banks to monitor and update them about the progress on the accounts opened. Bankers said the biggest challenge in opening bank accounts for migrant labourers is to get them fulfil the KYC, or know your customer, norms. “While active involvement of the government in the identification process by issuing unique identity number (UID) has helped in rural India, it remains a challenge in urban India as most migrants do not have necessary documents to support their identity,” a senior bank official said. “Banks will now have to a draw a strategy with the government to nudge them to open accounts for hawkers, vendors and migrants.” 

ET

DNA investigation: Nabard’s lies on restructuring process

...... Dr KG Karmakar, former MD of Nabard, said the chairman and other top management officials are afraid of being exposed. “It has restructured the organisation violating Parliament’s mandate and paid close to Rs 21 crore (Rs13 crore at the time of contract and Rs8 crore later) to BCG. They desperately want to hide this fact,” he said.Karmakar, who retired recently, told DNA that he was opposed to involving BCG and had recommended Nabard to hire the services of the Indian Institute of Management, Ahmedabad, instead. “IIM-A was responsible for creating Nabard and their model has evolved in 28 years and worked brilliantly for the country, so they should have been approached,” he said ......

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DNA investigation: Rules violated in Nabard chairman’s appointment

......“While Sarangi is part of the strong IAS lobby and has good friends in political parties, Bakshi was made chairman because he was Sarangi’s man,” said a top official of Nabard who was close to both. The RBI did not object to the appointments. According to its eligibility criteria, the chairman of Nabard, “should have 25 years of executive experience… of which at least 3 years should be at board/apex/top management level”. When Bakshi applied for the post chairman in December 2010, he had just over two years experience in top management............. 

Read - DNA

Agricultural Credit: Why are the government funds to boost agriculture not reaching small farmers

....."For every unit of nominal GDP growth, there is 1.3-1.5 units of credit growth," says former RBI Deputy Governor Usha Thorat. By that principle, a three-fold rise in agri credit should double output. But we are not seeing anything like that..................

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RBI raises interest rates on NRI deposits in foreign currencies by up to 3%

.............With regard to foreign currency deposits, the RBI said, "interest rate ceiling on Foreign Currency Non-Resident FCNR (B) deposits of banks has been raised from 125 basis points (bps) (1.25 per cent) above the corresponding LIBOR or Swap rates to 200 bps for maturity period of 1 year to less than 3 years, and to 300 bps for maturity period of 3 to 5 years." .............

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RBI to issue fresh guidelines for UCBs in June

.....YH Malegam Committee constituted for bringing UCBs under the ambit of RBI has submitted its report to the central bank. When asked about any recommendation made by the Committee and the follow-up action taken by the government thereon, Meena said that there should be entry point norms for UCBs with adequate capital and geographical spreads............

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New scheme to mobilise forex deposits from NRIs on cards

After a gap of more than a decade, the government may turn to India’s diaspora to boost foreign exchange reserves. The government and the Reserve Bank of India (RBI) have started discussing the possibility of unveiling a scheme to mobilise deposits from non-resident Indians, similar to the hugely successful India Millennium Deposit (IMD) launched by the State Bank of India (SBI) in 2000...........

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Govt banks may have to sacrifice growth due to Basel III norms

Public sector banks (PSBs) risk sacrificing growth and return on equity as they brace for higher capital requirements under the new Basel III guidelines issued by the Reserve Bank of India (RBI) that will require a big increase in equity capital that the government will be hard pressed to come up with, analysts said a day after the more stringent norms were unveiled.............

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New Rs. 5 coin

The Reserve Bank of India will shortly put into circulation a new Rs. 5 coin to commemorate “Shahid Bhagat Singh Birth Centenary”. According to a RBI release, the nickel brass coin will bear the portrait of Shahid Bhagat Singh with words “Shahid Bhagat Singh Birth Centenary” in English.

The Hindu

Islamic NBFC to Move Court against RBI

Kerala-based AICL, which was stripped of its NBFC status, to also take up its case with finance ministry

The cold tussle between advocates of Islamic finance, which forbids the use of interest rate, and the Indian banking regulator, which is adamant that local laws prohibit such funding, is headed for a climax. Alternative Investments and Credits (AICL), the Kerala-based firm that has been stripped of its licence to carry out non-banking finance activities by the Reserve Bank of India, is planning to move court against the central bank. AICL, which is among the very few Islamic finance entities in the country, will also take up its case with the finance ministry. A director of the company told ET that the board is weighing legal options to obtain a stay on the regulator’s decision to cancel the certificate of registration.

Till now there was a widely shared perception that while commercial banks planning to offer Islamic banking products will run into legal hurdles, non-banking finance companies will face no restrictions. That has now changed, with RBI directing AICL to stop financing business almost a decade after it was founded. Earlier, the central bank had pointed out that the NBFC was not complying with the fair practices code under which the financier has to lay down the terms and conditions of funding, including the interest charged. “Basically, the Indian banking and finance system runs on the interest concept and Islamic finance is based on profitsharing,” said an RBI spokesperson on Thursday, a day after the regulator revoked AICL’s registration. As a genre of financial services, Islamic finance abhors the idea of making money out of money and upholds the belief that wealth is generated through actual trade and investment. Across markets, funding structures of Islamic finance institutions have to be compliant with Sharia’h, the sacred law of Islam. While RBI’s directions will have to be complied with by all NBFCs — irrespective of whether or not it’s operating as per Sharia’h — the question is what constitutes “interest” for the purpose of RBI guidelines especially in the present context of RBI guidelines on NBFC Fair Practice Code. “In our view, there are no stipulations under the regulations issued by the RBI which prevents a non-deposit accepting NBFC from carrying out interest-free or participative financing,” said Suprio Bose of the law firm JurisCorp, which has advised AICL in the past. In the conventional sense, “interest” means a fixed rate of return on the principal loan amount or a floating rate linked to a pre-specified benchmark. But commercially, various financing structures operate on the model of expected or internal rate of return, which would qualify as “interest” for the purpose of the RBI guidelines. Bose and his colleagues at JurisCorp think it should be possible for NBFCs looking at Sharia’h-based financing to take a middle path. NBFCs, they feel, can consider utilising the concept of net return and disclose the same to ensure compliance with the RBI directions on Fair Practice Code and the Sharia’h principles. But it now appears that the regulator is unwilling to accept this. 

If the matter reaches the court, the outcome would decide the fate of Islamic finance in India. The AICL director said in the meanwhile the company may pursue other Sharia’h-compliant businesses that are outside the purview of the central bank. RBI’s recent reaction could be partly driven by the turn of events following a petition moved by Janata Party president Subramanian Swamy a year and a half ago, challenging the Kerala government’s decision to support another state-based group carrying out Islamic finance. In the course of the hearing, it was mentioned that RBI had permitted registration of a few NBFCs carrying out Islamic finance. This, some feel, could have driven RBI to cancel AICL’s registration. With a paid-up capital of . 7.5 crore, AICL’s liability comprises shareholder funds, while the assets are various non-loan funding in the form of participative finance. As per this, the ‘borrower’ shares the profits of the business with AICL in proportion to the equity capital of the borrower and the amount provided by AICL; and the profits are shared only if the borrower has earned them. In case of losses in any year, no outstanding is fixed for future recovery. In the past, RBI has been reticent in spelling out its stand on Islamic finance. Some years ago, it had constituted a committee to look into the possibilities of Islamic finance in India. The report, which surprisingly was not put on the official website, had said that neither banks in India nor offshore offices of Indian banks can practice Islamic banking. “It’s unfortunate that RBI has taken such a stand with regard to AICL. We have to plan the next course of action,” said Abdur Raqeeb, general secretary, Indian Centre for Islamic Finance. According to him, Islamic finance has taken off in many markets and Sukuk bonds have emerged as an option in infrastructure finance. “Even financial centres like Hong Kong have tied up with authorities of other countries to initiate Islamic finance. RBI, I feel, should take a more liberal view,” said Raqeeb.

ET

RBI gets HC notice to explain gold deposits with Bank of England

According to Raghunath Kelkar, the Reserve Bank of India is bound to keep excess gold in its reserves, not deposit outside the country; despite summons, RBI rep fails to appear in court

A technocrat-turned-public interest litigant Raghunath Shankar Kelkar has challenged the Reserve Bank of India’s (RBI) move to deposit 265.49 tonnes of gold out of its total stock of 557.75 tonnes abroad by filing a public interest litigation (PIL) in the Bombay High Court and demanded that the precious metal be brought back into the country, according to the provisions of the law................

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Rupee rebounds; RBI intervention debated

............"It seems that RBI came in to supply the market at around 53.65 levels. But the rupee's recovery was largely due to squaring off of positions by foreign banks ahead of U.S. non-farm payrolls and selling by a large corporate,"...................

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A corrupt elite is slowing India - P.V.Indiresan

..........The Reserve Bank of India bears much of the responsibility for India's slowdown. Using the classic cure against inflation, it made the price of money high and hence, made it costly to acquire capital. It has barely cured inflation and instead penalised heavily honest savers in the country. The RBI failed to see that the culprits were mainly property developers and politicians; it has punished everyone, the good ones and the bad ones alike and, thereby, has indirectly promoted corruption......

 

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Private banks turn focus on gold-related biz for growth

........As on date, there are over 35 banks that have been given permission by the Reserve Bank of India (RBI) to import gold for trading in bullion at the wholesale and retail level. “There is clearly retail interest in buying gold, and banks may not want to miss out on this opportunity. The opportunities of cross-selling is also higher by offering such diverse products and services. So, it is clearly a demand driven effort,” ...............

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