The 'Talwar amendment'

Monday will mark the 37th anniversary of the imposition of “internal” Emergency, on June 25, 1975, with President Fakhruddin Ali Ahmed signing the proclamation late at night, even before it had Cabinet approval. An important vignette about those days has come out, in a booklet written by N Vaghul to honour the memory of R K Talwar, the trail-blazing chairman of State Bank of India (SBI) from 1969 until his abrupt departure in 1976, at the height of the Emergency. The vignette that deserves a wider audience relates to Talwar’s ouster....................

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Micro-finance in a remittance economy

.....Financial inclusion has become an emerging focus for policymakers around the world, and it is nowhere more relevant than in India. Analysts estimate that up to half the Indian households do not have a bank account. In fact, the Census 2011 found that more than 40 per cent of the population lives two km or more from the nearest bank branch or agent. For India to facilitate more balanced economic development, universal access to basic financial services is essential. There are no easy solutions. Strict regulation of banking and other financial services is vital to address money laundering, terrorist financing and fraud......

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Now, transfer your bank account between branches while retaining account number

....."The customer should be allowed to transfer his account from one branch to another branch without restrictions. In order to comply with KYC requirements of correct address of the person, fresh address proof may be obtained from him/her upon such transfer by the transferee branch," the RBI said in its notification. Some banks were insisting on opening of fresh accounts by customers when approached for transfer from one branch of the bank to another. "Such insistence on opening of fresh account or making the customer undergo full KYC process again causes inconvenience to them, resulting in poor customer service. It is not reasonable in view of the fact that most bank branches are now on CBS (core banking solution) and KYC records of a particular customer can be accessed by any branch of the bank," the RBI notification said.....

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Words of comfort

....“The government (is taking) action in terms of supportive measures for ensuring higher inflows of foreign exchange ... the government is conscious of the (situation) and is taking appropriate action,” he said, adding the exchange rate was market determined. Attributing the current decline in the value of the rupee to the volatile international situation, Gujral said, the RBI was intervening to check sudden short-term movements in the domestic currency. The Reserve Bank has taken a slew of measures to encourage exporters to bring back foreign exchange and give freedom to banks to pay a higher interest rate on NRI deposits........

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‘Transactions still taking place at a sustainable pace’

.........However, reduced CRR and Repo/Reverse rate cuts do not automatically translate into reduced interest rates for mortgages, which would have pushed up the sales volumes in the residential sector.

Banks have to take into account other factors before deciding on lowering their interest rates for retail customers,............

Read - The Hindu

Government likely to rescue district banks

After bailing out the Maharashta State Cooperative bank, the state government might have to dig into its treasury again to ensure survival of district cooperative banks (DCBs) in the red. Six DCBs are under RBI's scrutiny for negative net worth and below par capital to weighted risk assets (CRAR) ratio..........

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Pension relief

The report, “Pension scheme of RRBs to be on a par with other banks” (Business Line, June 22) brings out the interest evinced by the Finance Minister in solving the pension issue in respect of RRB staff, whose pension amounts were meagre. Mr Pranab Mukherjee deserves appreciation for the fact that he took out time amidst his tight schedule in clearing the pending files dealing with the problems of retirees.

A similar long pending issue is one of DA losses of those who retired from banks before 2002, on account of non-100 per cent DA-neutralisation. The affected retirees fall in the age group of 70+. An average retiree in this category incurs losses to the tune of Rs 2,000-4,500 which is a large sum in testing times of cost hikes of food items and medicines. If the Finance Minister could solve this matter before he lays down office, it would be a boon to these senior citizens.

- C P Velayudhan Nair Thiruvananthapuram (HBL)

Bank NPAs

The RBI Deputy Governor Mr K.C. Chakrabarty, feels interest rates are “not too high” to affect “corporate” growth. Seemingly, he was more concerned about rising bank bad debts. Even new private sector banks had relatively high gross NPAs at 2.18 per cent in March 2012. Nationalised banks have yet higher NPAs as percentage of gross advances. Lowering policy interest rates is only a tool for inflation targeting. Essentially, good credit appraisal helps reduce NPAs. NPAs rise when the big loans to large industries remain in arrears. The banking system suffers from its loans to the aviation, infrastructure, telecom, metals and commodity sectors.

- K.U. Mada Mumbai (HBL)

RBI's D Subbarao on difference between 2012 and 1991 crisis

.....The debate occurred when India saw foreign exchange reserves fall below a level enough to cover for only 8 months of imports. The crisis situation in 1991 was triggered by the balance of payment pressure where India’s foreign exchange reserves fell to a level where they could cover for only two months of imports. Is 2012 going to be a repeat of 1991?.......

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Subbarao Copying Bernanke Excites Demand for Bonds

.....Subbarao is acting two days after Bernanke extended buying of longer-dated debt to lower the cost of business investment and home buying. Investors in Asia’s third-biggest economy are seeking the safest assets as the BSE India Sensitive Index of shares is headed for a quarterly drop after gross domestic product increased the least in nine years in the three months through March. “The RBI is killing a lot of birds with one stone by buying bonds,” .......

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Hopeful of a 25bps rate cut by RBI in July: JP Morgan

.....Looking at the fairly tight liquidity situation, Gupta feels the RBI will prefer OMOs over CRR for infusing liquidity. Although, the RBI has disappointed with an unchanged repo rate, Gupta anticipates a rate cut of at least 25 basis points in the July policy.........

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Kerala assembly censures banks for denying education loans

....Moving a motion, treasury bench legislator Thomas Unniyadan called for the attention of the house that banks in the state, despite Reserve Bank of India (RBI) guidelines and three different rulings by the Kerala High Court, were saying no to students who approach them for educational loans......

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Buy 50% of forex needs from a PSU bank: RBI to oil cos

.....“Importers are clearly rushing to cover and exporters are simply holding back. There is no supply in the market. If you analyse the quantum of exports and imports month-wise, there is no spike. In fact, imports have only gone down sharply. So, the rupee movement and the behaviour of the exporters or importers should be seen in that context. Today’s decision by RBI on oil imports should be seen as a sentiment .....

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Rupee fall offsets low crude effect on inflation: RBI Dy Guv

....Reserve Bank of India ( RBI) Deputy Governor K C Chakrabarty said it is unlikely that the continuing fall of crude will drive down inflation in the country as the decline is not substantial in rupee terms. When asked if falling crude will help ease inflation, Chakrabarty answered in the negative saying, " The fall in crude prices has been partly offset by depreciation of rupee. In rupee terms, oil prices have not gone down much"..........

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Slowdown leads to greater CDR, rise in banks’ stressed assets

.....As reported earlier in Firstpost, Reserve Bank of India Deputy Governors KC Chakrabarty and Anand Sinha had met the CEOs of a dozen major banks in February to discuss their asset quality. The banks had told RBI at the time that while asset quality continued to be a concern for banks, some had been trying to focus on smaller accounts to improve quality of assets. RBI Governor Duvvuri Subbarao had said even in April that RBI had told banks to improve the risk management practices in order to detect bad loans before they went bad. The Monetary Policy unveiled by RBI in April proposed that banks put in place a robust mechanism for early detection of signs of distress and measures, including prompt restructuring in case of viable accounts wherever required, with a view to preserving the economic value of such accounts. .........

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RBI understands need for weaker rupee - HSBC

......"RBI understands the need for a weaker INR" to help address the wide current account deficit and because onshore liquidity remains tight, HSBC argues..............

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ATM trick: Bank cheated of of Rs 1 cr

.....The withdrawals were not normal. Explaining the modus operandi, Pradeep Kumar, SSP, Cyber Crime Investigation, Mohali, said the gang members used to demand a withdrawal of Rs 10,000 from ATM of Federal Bank. But they used to take only Rs 9,900 and leave the last Rs 100 note inside the ATM. As a matter of policy, the ATM machine would retrieve the note, which would flash a message of “failed transaction” in the software system of the private bank whose ATM card was used for withdrawal. Interestingly, cashing in on this message (failed transaction), the miscreants used to call up the helpdesk of private banks demanding refund of Rs 10,000. Apprehending legal action and poor customer response, the private banks used to immediately debit the said amounts in the accounts of the accused........

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Department of Posts to introduce ATMs

........This is part of the department’s plan to gradually convert the post offices across the country to full fledged banks, including in rural areas, with modern banking facilities. According to him, it is also part of an initiative from the department to reinvent itself with the changing requirements of the time.

“The department is in the advanced stages of getting a banking licence from the Reserve Bank of India (RBI),”.......

Read - The Hindu

Axis Bank to raise funds via pvt placement basis

....The board of directors on Friday approved borrowing/raising funds by issuing debt instruments on private placements basis within the limits prescribed by the RBI and other regulatory authorities from eligible investors, in one or more tranches.......

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United Bank to set up office in Myanmar

Kolkata, June 22: United Bank of India has received approval from Central Bank of Myanmar for setting up of a representative office in Yangon. It is the first Indian bank to have presence in the country, said a press statement issued by the bank. The bank has already received RBI’s approval for opening its representative office in Myanmar, the bank’s Executive Director, Mr Deepak Narang, had said recently. “…Though we will not be able to carry out financial transactions through our representative office, we will get leads which can then be routed into our branches,” he said.

HBL