RBI for overhaul of banks' HR practices

The Reserve Bank of India (RBI) has called for a complete overhaul of human resource practices at banks, especially public sector ones where several staffers are due to retire in seven to eight years. Dr. K C Chakrabarty, one of the central bank’s Deputy Governors, says this sort of increasing intervention in the affairs of public sector banks was needed due to lack of management capacities at the latter........

......Indicating there was no proper mechanism of performance management in PSBs, Chakrabarty said the results of not having one could be disastrous. “We are all having to deal with the problem of people who are ‘promotable’ but not ‘postable’ and people who are ‘postable’ but not getting promoted. This is because we have failed to discriminate between performers and non-performers,” Chakrabarty said........

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RBI committed to encouraging exports: RBI Executive Director G Padmanabhan

VARANASI: The Reserve Bank is committed to encouraging the country's exports and is organising seminars to address the concerns of exporters, a senior official today said.  In order to boost India's exports, seminars have been organised in different cities, RBI Executive Director G Padmanabhan today told reporters on the sidelines of a function here.......

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BANKS CAN BE FINANCIALLY ILLITERATE’

“Even banks can be financially illiterate”. The speaker was none other than RBI Deputy Governor K.C. Chakrabarty, thundering in his customary style. When a member of a women’s NGO asked why banks were hesitant to lend to women from her NGO, he said: “Opening a bank account will not give you money. Giving them a smart card will not give you money. Appointing a BC will not give you money. Even if they deposit money, it will not give you money, since you will pay interest on that. What they don’t understand is that they will make money only when they lend. If they don’t, they are financially illiterate.” 

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'Andhra microfin firms failed to assess loan need'

Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty on Tuesday blamed the failure of microfinance institutions in Andhra Pradesh to their inability to provide loans in sync with customers’ capacity to repay. Microfinance institutions in Andhra Pradesh failed because they had not assessed the credit needs of the people properly, Chakrabarty said in a speech at the Visa-Financial Times conference on financial literacy on Tuesday. Chakrabarty said financial institutions that did not assess clients’ credit requirements, and also their ability to repay loans within the required time frame, were only working to digging your own grave. The deputy governor’s comments added another dimension to the role played by microfinance institutions in the failure of their business in Andhra Pradesh,along with the pressure of laws enacted by the state............

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PSBs unamortised pension bill pegged at Rs 14,000 cr

....To avoid a dent in ROE, most banks would seek approval from the Reserve Bank of India to directly write off from the reserves account. RBI had permitted State Bank of India to write-off pension liability worth Rs 7,900 crore from reserves in financial year 2011. If RBI refuses to allow banks to directly adjust the unamortised amount with the balance sheet (reserves), then ROEs of public sector lenders may be hit severely in the current fiscal......

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State-run banks’ average salary overtakes that of private peers

The average cost per employee for public sector banks has overtaken that of their private sector peers since FY11—a development that has emerged from data released by RBI on Tuesday. This has prompted RBI to raise issues of productivity. The central bank has warned that public sector banks are losing their cost advantages with per-employee expense of public sector banks today being 150% of their peers in the private sector. The central bank has said that an HR transformation is required to address the issue of lower productivity as there is competition for talented manpower. "The per-employee expenses of public sector banks have gone above that of private sector banks and today, is more than 150% than that of private sector banks. This is despite the fact that pension expenses of PSU banks are not fully reflected in their staff expenses," said K C Chakrabarty, RBI Deputy Governor, while addressing public sector bank chiefs at an HR conference last week. The Deputy Governor came up with numbers which showed that the staff strength of public sector banks had gone down between 1998-99 and 2010-11 due to retirements and voluntary retirement schemes, but that of private sector banks has gone up significantly. Also, PSU banks expanded their employee base to grow operations pan-India in the '80s and a big chunk of their employees are in their 50s and set to retire in the present decade. As against this, private banks have expanded in the last four years and their lower-end staff are in their 20s and middle managers are in mid-30s.........

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Stop home loan prepayment penalty: RBI

......."It has...been decided that banks will not be permitted to charge foreclosure chargesprepayment penalties on home loans on floating interest rate basis, with immediate effect," the Reserve Bank said in a communication to banks. The RBI noted that the Damodaran Committee had observed that foreclosure charges levied by banks on prepayment of home loans were resented by home loan borrowers........

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Has RBI move sunk Madhavpura Mercantile Co-operative Bank revival plan?

....We had already sent proposals to various foreign banks who had in principle agreed to extend support to our plan. As we were given time we were preparing all the documents but suddenly RBI decides to shut the bank," said Mehta. RBI in its order cancelling the licence mentions that 'MMCB was neither aware of the antecedents of the NRI investor nor genuineness of the sources of funds'. The order says that co-operative bank couldn't furnish any evidence suggesting in-principle approval from any foreign bank or Indian government for such a scheme........

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MMCB: Govt bodies to get dues first

The future of the deposits of about 10,000 account-holders of scam-tainted Madhavpura Mercantile Cooperative Bank (MMCB) looks bleak. Institutional stakeholders like Deposit Insurance & Credit Guarantee Corporation and Bank of India may get priority for dues recovery. The RBI yesterday cancelled the banking licence of the bank, on the Rs 1,200-crore scam that had surfaced in March 2001, involving sharebroker Ketan Parekh and his associates. According to senior officials of MMCB, the bank has a total liability of Rs 1,459 crore — Rs 792 crore deposit liabilities and Rs 667 crore other liabilities.

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Bangalore police get tough on slipshod bank security

Police in the R.T. Nagar district of Bangalor have instructed insurance companies not to pay out claims to banks unless the bank presents a certificate from the police. The action is in response to an ongoing problem in which robberies are carried out against banks and armoured cars, and are later found to have been the result of the bank's failure to follow RBI guidelines for security while transporting cash, said an article at DNA India................

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Banks continue to treat customers shabbily!

.....I then got a call from loan department saying that I will have to pay 3% pre-payment charges on the amount that I wished to pre-pay. I protested saying RBI had asked banks to do away with these charges. I was told, "We have no such information and your request for waiver has been forwarded to higher authorities." A couple of days back I got a mail saying that for making the pre-payment I would have to travel to their "loan branch" and I couldn't make the payment at the branch where my account was! .....

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Now, lounge banking for the rich

Lounge or private waiting area has so far been a forte of airports and luxury hotels. But this is changing with most private sector banks now introducing lounges in select branches to service private banking and wealth management clients.  Earlier, banks had set up dedicated branches for high networth customers. With the number of affluent individuals in India on the rise, several private banks are now setting up lounges in many branches across cities.................

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Ensure premature termination of term deposits in case of demise of a joint holder

......Economist SS Tarapore, a distinguished economist and a former deputy governor of the Reserve Bank of India (RBI), in his column Maverick View in the Hindu Business Line – When death visits a bank deposit raises certain vital concerns that call for immediate action on the parts of RBI/DBOD, BCSBI and IBA..................

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Ins and outs of a growth slump

....Why is the manufacturing sector slowing down?

The sector’s contraction during January-March quarter confirms what most analysts had feared: The Reserve Bank of India’s (RBI’s) bitter medicine to raise interest rates to cure inflation has not tamed prices, but cast side effects on growth. Moreover, firms are also holding back planned capacity expansions, leading to slow growth.

Read - Hindustan Times

CII moots 10-point agenda for reviving Indian economy

......The CII expressed concern that low economic growth will affect job creation, inclusive growth and social uplift of people. Addressing a news conference after the council meeting, CII President Adi B. Godrej called for a monetary stimulus by the Reserve Bank of India (RBI) over the next six to nine months to help revive growth. "Fortunately, inflationary expectations are coming down. Global commodity prices particularly of crude oil have started falling. This is the right time to create the monetary stimulus that can help revive the economy," he said......

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Moily calls for strengthening economic, financial institutions

........The main objective of this meeting was to formulate capacity building programmes for senior management functionaries of the banking sector and related regulators. The meeting focused on imperative issues and developments in the field of CSR, IFRS, Corporate Governance and BASEL III

A Memorandum of Understanding (MoU) between the Indian Institute of Corporate Affairs (IICA) and Institute of Chartered Accountants of India (ICAI) was also signed on this occasion. This will mean that the IICA will be used as the hub for the training programmes conducted by the ICAI in their 14-acre state of the art campus in Manesar and will ensure a close working partnership on several fronts between the two institutes.The participants in the meeting included Manoj Kumar, Joint Secretary, Ministry of Corporate Affairs, J N Shah, President, The Institute of Chartered Accountants of India, Dr. Bhaskar Chatterjee, DG and CEO, IICA and CMDs or top management from 29 banks such as the Reserve Bank of India, State Bank of India, Punjab National Bank, Overseas Bank of India, etc.

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Stability matters, not just inflation

...Let me get to the point. It is about time the Reserve Bank of India (RBI) started giving financial stability top priority yet again and building levees against the bore tide of another global financial crisis. While it certainly cannot be complacent about inflation at this stage, it has to get concerns about the health of the financial system ....................

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Gold is not a wasteful investment

....There is only one way for the runaway inflation to come down — by reducing the credit growth in the economy. This can be achieved without compromising growth if the government is able to reduce its penchant to spend taxpayers' money without any improvement on the fiscal side. On the monetary front, this can be achieved by the Central bank pushing the interest rates even higher. There is a third way by which the credit in the system can be reduced; as the forex reserves move out of the country, the corresponding liabilities against them, i.e. the rupee liquidity, has to reduce sans any RBI intervention through OMOs or CRR cuts, and this is exactly what is happening through the gold imports.......

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Views turn dovish, RBI seen cutting rates: Reuters Poll

Most economists polled now expect the Reserve Bank of India (RBI) to cut interest rates at its policy review later this month, driven by dismal economic data, falling oil prices and recent comments by a central bank official.......................

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Rate cuts not the solution in India: JPMorgan

....The bank added that easing monetary policy would not necessarily lead to faster growth, saying the "elevated" macro-economic and regulatory uncertainty, as well as supply constraints, are "far more" responsible for the investment slowdown.  "Policymakers may be well served to focus on these areas rather than undertake substantial monetary easing in light of the events of the last 3 months,"................

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Sharma urges RBI to cut interest rates to boost economy

......“I would urge them (RBI) to look at the present depressed investment climate and the disturbing numbers of fall in manufacturing core sectors and IIP (Index of Industrial Production) numbers............

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When RBI revises rates, and what it means at the bank

......Normally, a rate cut is a signal to banks to lower interest rates. However, several factors at play complicate decision-making by the RBI, especially in trying to balance the twin objectives of keeping inflation anchored and boosting economic growth. Rate hikes increase the cost of capital; reductions have the opposite effect. It therefore becomes very easy for everyone to associate a tight monetary policy stance with growth suffocation...........

Read - Indian Express