RBI reconstitutes TAC on Financial Markets

......The reconstituted committee would include Reserve Bank's Deputy Governor Subir Gokarn, Economic Advisor, Department of Economic Affairs Anil Bisen, Securities & Exchange Board of India (SEBI) Whole time member Prashant Saran, and Insurance Regulatory and Development Authority (IRDA) member R K Nair among others. "The terms of reference of the Committee are to review and recommend measures for deepening the money, foreign exchange and government securities markets," RBI said in a statement.......

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Will RBI consider preferential rate of interest to disabled?

......Will the RBI take the initiative to consider this proposal of permitting the banks to offer a minimum of 1% of additional interest over and above the normal rate of interest on all types of deposit accounts to the disabled/physically and mentally challenged individuals and also to the identified charitable organizations who promote their cause, as a token of our concern to these less privileged members of our society? Apart from permitting this additional benefit to them, the RBI should come out with clear-cut guidelines to enable the banks to identify such customers to ensure that the benefit of this move goes to the right beneficiaries. As this scheme is a socially desirable, nationally important and functionally easy to operate, the RBI should persuade the banks to take up this project with a missionary zeal by giving enough publicity to attract the attention of the people at large................

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Probe role of foreign banks too'

“Since a report of Development Research Group (DRG) in Reserve Bank of India has clearly indicated foreign banks' involvement in the sale of such derivatives, the probe should be directed that way too,” .......

Read - The Hindu

Making NPS work

This refers to the interview with Yogesh Agarwal “PFRDA is addressing marketing and distribution issues” (May 6). The New Pension System (NPS) has some structural and technical flaws that are responsible for its tardy progress and equating these to “marketing and distribution” issues would be over-simplifying the real problem. There’s a need to take some timely corrective measures to make the product “user-friendly” and bring it on a par with other financial products in the market. The slapdash manner in which the scheme was introduced for central government employees and the constant rate of return at eight per cent till 2011, despite the Pension Fund Regulatory and Development Authority’s claim of earning an average annual return of 12.5 per cent, speak volumes for the ad hoc implementation of NPS. It is quite natural that there is little response from the private sector. It is unfortunate that without resolving the problems of acceptable returns on funds, adequacy of the product as a substitute for a time-tested social security instrument (a defined benefit pension scheme) and acceptance at the beneficiary level, the Centre is trying to impose NPS on states and on autonomous institutions like the Reserve Bank of India and other public sector units, including banks.

M G Warrier Thiruvananthapuram

Export policy

The suggestion to implement a sensible policy regarding export of farm produce in the editorial, “Export control Raj” (Business Line, May 5), is most appropriate. Whenever one reads about record production of wheat, basmati rice, cotton or onions, one has mixed feelings. While on the one hand we feel proud of the record output, on the other hand, we are reminded of inadequate and poor warehousing facilities. During the last 20 years, after liberalisation, we have failed to substantially augment storage capacity or revamp existing facilities. That is why we hear news of rotting wheat or rice stocks. This scenario underscores the importance of a sensible export policy, which would protect interests of all: farmers, consumers and the State. Narendra M. Apte Pune RBI clarifies With reference to the “Automated Data Flow – IOB to migrate to Oracle platform after RBI diktat” (Business Line, May 6), the RBI clarifies that it has never directed banks in the RBI's Automated Data Flow project to opt for any particular technology or vendor. The decision of technology and vendor in this regard is left to the banks.

 Alpana Killawala Chief General Manager Department of Communication, RBI (HBL)

India to incentivise foreign banks to set up subsidiaries

..............."The Reserve Bank of India (RBI) is formulating a scheme for subsidiarisation of Indian branches of foreign banks to ring fence Indian capital and Indian operations from economic shocks external to the Indian economic scenario," .....................

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Airtel in talks with banks to expand money transfer service

.....Under Reserve Bank of India (RBI) regulations, open wallets are issued by a private entity and need to be backed by a bank. In general, banks are empowered to authorize payments, and no additional approval is required. However, most banks inform RBI when launching a new service......

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RBI unveils 'safer' loan securitisation norms

The Reserve Bank of India laid out norms for safer securitisation of loans that can theoretically help banks lend more without having to resort to raising capital often. However, it remains to be seen whether the market will receive it well................

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RBI allows transfer funds from NRO to NRE a/c

The Reserve Bank on Monday allowed non-resident Indians (NRIs) to transfer funds from non-resident ordinary (NRO) account to Non-Resident External (NRE) account subject to a ceiling of $1 million in a financial year. "On a review, it has been decided that henceforth NRI...shall be eligible to transfer funds from NRO account to NRE account from within the overall ceiling of $1 million per financial year subject to payment of tax," RBI said in a notification.  The decision came after K J Udeshi committee recommendation to facilitate persons under Foreign Exchange Management Act (FEMA), 1999, it said. As per the existing regulation, fund transfer from NRE account to NRO was allowed, but not the other way round......

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Rise in 'non-traded' commodities led to high inflation:Gokarn

Reserve Bank Deputy Governor Subir Gokarn today said an increase in prices of "non-traded" commodities, particularly on the food side, has led to a spike in inflation in the last few years even as global commodity prices have softened. Gokarn conceded that there has been a "divergence" from the trend wherein the headline inflation number is not moving in sync with global commodity prices in the last few years. "One very critical source (for it) is non-traded commodities (which are not traded on commodity exchanges), particularly on food where a lot of headline inflation is received here (in India)," .................

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7% growth possible even without reforms: IMF

.....India’s export performance should recover while a high growth in import is a reflection that India is a supply-constrained economy,” Singh said in an event organized by Gateway House, a think tank. Reserve Bank of India (RBI) deputy governor Subir Gokarn, at the same event, acknowledged that domestic supply-side constraints are fuelling inflation and hindering growth. “High food inflation is locally driven, products that are driving it are not traded products. Even though it may not be linked to global commodity prices, there is a significant element of commodity shock there,” said Gokarn..................

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Lack of coordination hits ‘financial inclusion'

....RBI Governor Duvvuri Subba Rao, in his visit to the district in December last, wanted East Godavari to be the model district to the entire country. The district administration, on the other hand, has launched ‘Aadhaar' seeding project to disburse help from the government departments to the beneficiaries directly to their accounts, so that delay in distribution and corruption at various levels can be curtailed.......

Read - The Hindu

Secretariat visit throws traffic out of gear

.....Chief secretary Samar Ghosh had, in fact, issued a note asking all additional chief secretaries, principal secretaries and secretaries, to use Gate No. 6 towards Reserve Bank of India (RBI) on Monday to enter the state secretariat. Ministers were also asked to follow suit. had also been asked to do the same........

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Are Banks and Microfinance Institutions Natural Partners in Financial Inclusion?

Since 2006, when the Reserve Bank of India permitted to use services of third parties as business correspondents (BCs), banks have been trying to create a sufficiently large retail footprint to offer banking services to the last mile customer in a seamless and cost efficient manner. In order to achieve this objective banks have been following several approaches including partnering with existing retail franchises and prepaid airtime channels as well as with organisations with an established client base and service channels. Microfinance institutions (MFIs) have extensive outreach and experience .........

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India’s Microfinance Industry: An Anatomy of Risk ©April 2012

.....In December 2011, M-CRIL released a report on the industry , the findings of which were amongst the topics discussed on 4 April 2012 at a Seminar on Risk in Indian Microfinance at the College of Agricultural Banking, in Pune, India. The college is a training and research unit of the Reserve Bank of India (RBI), the country’s central bank. The seminar took stock of the condition of MFIs in India since the AP intervention and the actual and potential future impact on the industry of the regulatory measures announced by the RBI over the past few months. A number of issues emerged............

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Search on for helmsman at TMB

For Tamilnad Mercantile Bank, the immediate priority is to get a new helmsman. The current Managing Director has resigned and is functioning more as a caretaker. The TMB board, it is learnt, has proposed three names to the Reserve Bank of India...........

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Islamic NBFC Alternative Investments and Credits to move court against Reserve Bank of India

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..............

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Ponzi schemes

.....“The feature was an eye-opener for the gullible public who get lured by high returns offered by certain finance companies and institutions that were not regulated by the regulatory bodies like the Reserve Bank of India. General public should invest their hard-earned money only on financial institutions like Scheduled and Nationalised Banks, Public Provident Fund, mutual funds, insurance policies and so on, which were all regulated by authorities such as the RBI, the AMFI (Association of Mutual Funds of India), and IRDA (Insurance Regulatory Development Authority) where investments were safe and returns assured.............

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