Foreign banks seek finance ministry help to speed up decision on applications for new branches

....."Foreign banks which are still waiting for further clarity on the wholly owned subsidiary model proposed by the sectoral regulator want RBI to fast track the branch licensing process till it comes with its final guidelines," said the official who did not want to be identified. He declined to name the banks. The official, however, said that it was for the RBI to take a final call on the issue. As of now there are 41 foreign banks in the country with 323 branches.....

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Security concerns worry RBI

Bankers have expressed concern over closure of branches in agency areas on “grounds of security”. Raising this issue at the SLBC meet on Tuesday, Andhra Bank CMD and SLBC president B.A. Prabhakar said the RBI had listed the centres in East Godavari like............

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Floating currency notes claim youth in Assam

Guwahati A youth's body was on Tuesday fished out from a wetland here in which scores of people entered to collect Indian currency notes that were found floating on the water. The youth, in his early 20s, had dived into the Silsako Beel on Tuesday morning along with some other eager beavers to look for and pocket the currency notes floating on the water, the police said quoting eyewitnesses.......

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RBI asks urban co-operative banks to stop pre-payment penalty

.....It has, therefore, been decided that UCBs will not be permitted to charge foreclosure charges / pre-payment penalties on home loans on floating interest rate basis, with immediate effect” RBI said in a notification........

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Cap Won’t Fit

This refers to ‘Myopic’ (ET, Jun 26). The hike in the cap on the amount of government and corporate debt for foreign portfolio investors reflects the RBI’s concern for the falling rupee and its attempt to prop up the same. However, capital inflows on account of portfolio investment is certainly not stable like the one resulting from FDI. The FDI policy needs drastic review so as to encourage the same. The policy as regards multi-brand retail needs greater perspective. The falling rupee calls for addressing the issues affecting macroeconomic fundamentals and not just tinkering with caps on foreign portfolio investment.

- VIJAY MULLAJI (ET)

Half Measures

This refers to ‘Myopic’ (ET, Jun 26). The RBI’s move is not expected to cause much volatility in capital inflows. The cap on foreign investment in government bonds has been increased from $15 billion to $20 billion, but its effect on capital inflows will be small as it amounts to only about 2.5% of the total debt. In fact, as a short-term measure to increase dollar inflows, RBI could have increased the cap further, as there is a good demand for sovereign bonds among FIIs. Other measures, like liberalisation of terms and conditions for FII investment in infrastructure, are not expected to attract much increase in investment due to delays in project implementation.

- V SRIDHAR

‘MFIs HAVE REGULATORY GAPS IN OPS’

Do MFIs follow the code of conduct laid down by the Reserve Bank of India? Banks, which lend to them, always try to find a solution to it before lending. Their job will now be much easier as the Small Industries Development Bank of India has started assessing the MFIs and is ready to share its findings. Sidbi has engaged rating companies for the job and has evaluated 13 MFIs, so far, including big names such as Bandhan and SKS Microfinance. The reports suggest that although MFIs follow the broad contours of RBI rules, they still have regulatory gaps in their operations.

ET

SBI to Motivate Staff by Keeping them Cool

State Bank of India has decided to aircondition all its branches across India — be it semi-rural or rural branches. The aim is to provide the same working ambience to employees to motivate them to perform at optimal levels. SBI chief Pratip Chaudhuri said that the bank’s aim is to complete this project this fiscal year itself. Given the size of SBI — 14,680 branches with 67% in rural and semi-urban places — it is quite an ambitious task for the bank. The big question is whether some of the hill states would be in a position to ensure power all through the day.

ET

Tools Reserve Bank of India uses for monetary and liquidity management - Money Matters

You know that monetary policy is RBI’s primary responsibility but may not know the tools that RBI has at its disposal

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Monetary policy affects inflation, but in a muted way

.......In short, the paper makes the point RBI made in its last credit policy—that monetary policy has a limited impact and the government must do its bit.

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PM keeps finance portfolio with himself

.....A former RBI Governor, Singh was credited with bringing about economic reforms in the country when he was the finance minister in the Narasimha Rao government in 1991. .......

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Call rates alone don’t determine liquidity: RBI

....The impact of monetary policy actions on inflation has been "modest" and with a lag effect, another working paper published by Reserve Bank of India said. The subdued impact of the monetary policy has been largely due to structural factors that guided the increase in food prices, along with the increase in global commodity prices, it said. "The impact of monetary policy actions on inflation is modest and subject to lags," the report, authored by Muneesh Kapur and Harendra Behera, said. Inflation remained in double digits for close to two years till 2011......

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RBI steps positive, but inflow won't be immediate: Experts

.... while RBI’s steps are positive, inflow may take some time. “It’s definitely a positive measure. The bottleneck on refinancing of loans having been removed. I think it will serve two purposes. One the limit can be quickly used up, because project loans and capex loans typically take a long time in getting drawn. So even if an ECB was placed for a new project, it will take long time to be drawn. Therefore, the dollar inflows into the country will take a long time,” .........

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............ Neither the currency nor equity markets cheered the new RBI policy measures announced on Monday , but only hoped for more. To arrest the falling rupee, the central bank hiked the limit of external commercial borrowing (ECB) to USD 10 billion. Moreover, the regulator also increased the limit of overseas investment in government bonds by USD 5 billion to USD 20 billion. However, Sajjid Z Chinoy, Asia Economics, JP Morgan explains that the measures are no game changers but only tactical in nature....... 

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......To a market primed for more spectacular policy announcements such as foreign direct investment in retail, the actual measures announced by the Reserve Bank of India (RBI) on Monday, which focused primarily on the rupee, came as a disappointment. But given its constraints, the RBI has, in fact, done a good job of putting together a package that can support the flagging rupee. Of the various measures announced, the one that may prove most effective in bringing in dollar inflows immediately is the enhanced limit for foreign institutional investments in government securities.......

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The Reserve Bank of India's much hyped booster dose for a mauled rupee comes with a cost. The central bank's latest move to liberalise external commercial borrowings (ECB) is actually a continuation of its reliance on debt inflows to check the rupee slide. In the last six months, RBI has been increasingly attracting debt inflows through foreign debt, NRE and FCNR (B) deposits......

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Interest rates and the rupee

....The RBI has indeed opted to use its reserves in recent months, resulting in a significant decline in the volume of foreign currency assets it holds. But this has at most prevented a sharper depreciation of the rupee than has actually occurred. It has not helped correct the depreciating tendency. Continued reliance on this means of enhancing the supply of foreign exchange in the market could shrink reserves to a degree that risks triggering a speculative run on the rupee. Not surprisingly, the RBI is seeking ways of enhancing capital flows into the economy.......

Read - The Hindu

RBI steps only short-term measures, India needs more investment: SBI

te Bank of India (SBI) Chairman Pratip Chaudhuri, while terming measures taken the Reserve Bank of India (RBI) as only short-term, said there is need to enhance equity and foreign investment for the country's long-term growth............

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M Karunanidhi seeks Prime Minister Manmohan Singh's intervention over textile debt restructuring

DMK chief M Karunanidhi today urged Prime Minister Manmohan Singh to direct RBI to issue necessary notification for the Rs 35,000 crore debt restructuring package for textile industry announced by the Centre last month, saying any further delay would lead to a large number of textile units and SMEs becoming non-performing assets (NPAs) by June 30. ............

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Let it happen... Rupee fall is only natural

You hear it almost every day now: The rupee is at an all-time low! Not just that, it's also the weakest one among its Asian peers. We need this to stop!

India is going through a pubescent stage that all emerging economies inevitably go through. It took its success for granted, started spending wildly and deciding badly. But, eventually all parties end and the music stops. When that happens, you have to be prepared to slug it out through the hard times...........

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RBI mulls ban on gold-coin sales at banks to clamp import

.....Akshaya Tritiya may not be auspicious for banks in the future. The Reserve Bank is considering a ban on sale of gold coins by banks to partly curb rising gold imports and because the central bank believes it is not relevant to core banking operations. .......

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TUG OF WAR FOR ATMs

Syndicate Bank has plans to open 500 ATMs and 300 branches this fiscal. But not all new branches will have ATMs. Even among the existing branches, many do not have ATMs. This is because the bank has 2,710 branches and 1,210 ATMs. The new CMD of the bank, MG Sanghvi, has decided that only those branch managers who provide a confirmation that they will issue at least 3,000 ATM cards will be eligible for ATMs at their branches. This will not only inspire competition among branches, but eventually improve business volumes of the bank.

ET