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Saturday, August 4, 2012
Subbarao bats for a 'less-cash' country
Need to shift from cash to electronic payment: Subbarao
Hyderabad, Aug 3 (IANS) Reserve Bank of India Governor D. Subbarao Friday stressed the need for transforming India into a less cash-handling society like other emerging economies through innovation in payment systems. "We have largely remained a cash society when compared with other emerging markets like Brazil, Mexico and Russia. The value of bank notes and coins in circulation in India is 12 per cent of GDP which is high," Subbarao said while speaking at the Institute for Development and Research in Banking Technology (IDRBT) here.........
Penetration of ATMs, card usage very low: RBI
Penetration of ATMs in the country is still very low compared to other emerging markets even as the number of automated teller machines is increasing by nearly 25 per cent every year, the Reserve Bank said today. "Although there has been a steady year-on-year 25 per cent growth in the number of ATMs in the country, their penetration as measured by the number of ATMs per million population is still very low when compared to other emerging markets," RBI Governor D Subbarao said in his keynote address at at the IDRBT Banking Technology Awards Function..........
Choice is between EMV and Aadhaar: RBI Governor
Reserve Bank of India Governor D. Subba Rao has underlined the need for taking a decision on the choice between migrating to EMV (Europay-MasterCard-Visa) with chip and pin and an Aadhaar-based biometric authentication. The chip and pin is an established and tested technology, but is relatively expensive. The Aadhaar based option is cheaper, but the robustness of the technology is as yet unproven. “If indeed we are finally able to marry Aadhaar into the cards, we will be achieving same level of security available in chip and pin model at a much lower cost,” he said............
Subbarao wants cash economy to go binary
......Tracing the historic transition of paper-based payment and settlement systems to electronic modes like RTGS, NECS and NEFT, the Governor said the central bank will continue to ensure that all such systems are not only safe, efficient, interoperable, authorised and accessible, but also further financial inclusion and compliance with international standards.
RBI Governor to inaugurate risk managers’ meet
Reserve Bank Governor D. Subbarao will set the tone for the conference of the Professional Risk Managers International Association, Hyderabad (PRMIA). Several top honchos of banks including M. Narendra of Indian Overseas Bank; B. Prabhakar, Andhra Bank; Ajai Kumar, Corporation Bank; K. Venkatraman, Karur Vysya Bank; and V. Joseph, South Indian Bank, will participate in the proceedings........
Knowledge helpline for SBI staff launched
Hyderabad, Aug. 3.: Reserve Bank Governor D. Subbarao launched a ‘knowledge helpline’ for the staff of State Bank of India. The Web-based service, will be useful to the employees to get their doubts clarified about banking and in turn be more helpful to the customer in their service. The RBI Governor, who also inaugurated the “Swarn Udyan” and the renovated hostel blocks was the chief guest at the golden jubilee celebrations of the State Bank Staff College here on Friday........
15 मिनट में नहीं करेंगे SMS, तो भूल जाएं चेक से पैसा आप
....आरबीआई के अधिकारियों का कहना है कि चेक क्लियर करने वाले पक्ष को चेक जारी करने वाले व्यक्ति या कंपनी से फोन पर बात कर उस चेके के बारे में पूरी जानकारी लेने की सलाह भी दी गई है। बैंक इस प्रक्रिया में लगने वाले समय को बचाने के लिए जल्द ही एसएमएस अलर्ट की सुविधा भी शुरू करने जा रहा है। एसएमएस सुविधा के तहत, चेक जारी करने वाले पक्ष को उनके चेक को भुनाए जाने से पहले बैंक की ओर से एसएमएस से सारी जानकारी भेजी जाएगी। एसएमएस मिलने के 15 मिनट के अंदर सामने वाले से जवाब न आने पर चेक का भुगतान नहीं किया जाएगा ।......
RBI union leader arrested, some workers to strike on Monday
MUMBAI: The MRA Marg police on Friday arrested the Bharatiya Kamgar Sena (BKS) chief Suryakant Mahadik and 25 members, allegedly for staging a protest at the Reserve Bank of India headquarters 's main premises on Mint Road on Friday. They were arrested and later released on bail surety and personal bond. As a mark of protest, a section of the RBI employees will go on strike on Monday, the a statement from All India Bank Employees Association (AIBEA) said in a statement ..........
Peter breathed his last.............
P.D. Netto ( Peter Damian Netto) retired Assistant. Chief Accountant (now AGM) D.G.B.A breathed his last at the age of 87 in Mumbai yesterday after an illness bravely borne for over four months. Peter, as he was known to his friends and colleagues, joined Bombay office in 1947. He then worked in the Inspection Department for a major part of his long innings with the RBI and came to be known as its Encyclopaedia with stints in ECD and Nagpur office. Peter took keen interest in table tennis that he played after office hours in the banking hall in the swinging sixties. Peter will be remembered by colleagues of his vintage as a gentleman to the core ever ready to help any person/s in office or outside endearing himself excellently with young and old alike. He was a strict vegetarian and a devout Christian. He lost his wife a little over a year ago. He is survived by four children, three sons and adaughter, all well settled in Australia and USA respectively.
We pray His noble soul may rest in peace in Heaven.
- K.D.Savkur (via e-mail)
‘RBI framework may hit urban cooperative banks’
..........H.K. Patil, president, National Federation of Urban Cooperative Banks, on Friday termed the circular issued by Reserve Bank of India (RBI) on “New Supervisory Action Framework” to urban cooperative banks as “a threat to cooperative movement”. Delivering the keynote address at a seminar organised by the Karnataka State Cooperative Urban Banks, he said that the circular would weaken the cooperative movement instead of strengthening that. Clauses such as fixing the credit deposit ratio at 70 per cent, restricting the number of big depositors to 20 and asking them against investing not more than the total deposits and forcing the cooperative banks to invest in government securities were being viewed as hurdles in the growth of the cooperative banks, he said............
RBI to simplify rating parameter for UCBs: Karupusamy
Bangalore, Aug 3: Reserve Bank of India (RBI) is proposing to simplify rating parameter for Urban Cooperative Banks, RBI Executive Director S Karuppasamy said today. 'However, it will not be made public' he said while speaking after inaugurating a Seminar on 'New Supervisory Action Framework & CAMELS for UCB's' organised jointly by RBI, National Federation of Urban Cooperative Banks and Credit Societies Ltd.,, New Delhi and Karnataka State Cooperative Urban Banks Federation Ltd.......
Teaching the basics of finance
........ Financial education will have a positive, multiplier effect as ordinary citizens get to know the nuances of savings and investment. In turn, there will be a welcome deepening of the financial markets. While the RBI’s draft paper is comprehensive, what is missing is a recognition of the existing skills shortage in the financial sector and the steps to be taken to overcome this basic problem. For the financial sector, the biggest challenge is to train and retain manpower for not only its more traditional functions but also to further highly desirable social goals such as financial education.
RBI IN A BIND
Reserve Bank of India has been in a fix for quite some time now. Big question before the bank is—How to encourage growth without reducing interest rates. Inflation, a technical word used for hike in prices of commodities remains a challenge totally uncared of by the government. Fiscal packages going to ‘cooperating states’ affect the whole budgeting process. Economists have now begun to debate—whether the formality of annual budget is at all necessary. Outgoing Chief Economic Advisor K Basu while praising the RBI efforts, doesn’t hide the fact that corruption is the biggest impediment in track of the country’s growth..........
A policy rate Catch 22
.......... Duvvuri Subbarao, the Governor of the Reserve Bank of India (RBI) is facing a Catch 22 situation currently and some catch it is. He needs to decide whether to encourage economic growth or to control inflation. Theoretically Subbarao can encourage economic growth by cutting the interest rates. But that is likely to fuel inflation as people and companies will borrow and spend more, leading to a rise in prices. He can control inflation by keeping the interest rates high. But that kills economic growth as businesses don’t borrow money to expand and people go slow on taking loans for purchasing cars, motorcycles, homes and consumer durables. This hurts businesses and slows down economic growth............
Flush with funds, banks set to rain frills on loans
Banks may not be in a hurry to slash your loan rates yet, as the Reserve Bank of India is yet unyielding on policy rates, but they are set to launch new schemes that will offer discounts on retails products such as home and auto loans.......
Counter-cyclicality and income smoothing in Indian banks
......Consistency in earnings growth may not necessarily be an outcome of smoothing. Unfortunately, the term income smoothing has an unduly negative connotation. Perhaps this feeling was bolstered by the only and fleeting reference to it that the Reserve Bank of India (RBI) made when they effectively banned the use of floating (”unallocated”) provisions in 2005, suggesting that banks were using them to manage earnings. But it need not be that way.........
'India faces crisis of values, institutions and policies'
.......Former Governor of Reserve Bank of India (RBI) and emeritus professor at the Univesity of Hyderabad Dr Y Venugopal Reddy, who as chief guest delivered a talk on "Indian Economy: Strengths and Challenges", opined that growth with inequality is of no use.Talking about the book which he has edited along with Deena Khatkhate, Reddy said that Dr I G Patel had a unique distinction. "Academically, he was well recognized. He was part of the highest policy making body and after retirement, for 20 long years, he was able to say things that he felt. It is time now that the country knows this," he said.
Hoping for positive effects
.....The argument for-and-against reduction of interest, especially to pushing up the housing sector growth, continues even now. What are the requirements of a possible reduction in interest rates? What stops the RBI from cutting down the benchmark rates? What will be the essentials of a positive growth of the housing sector? These and related issues need some in depth examination........
In defence of RBI
........In recent years, the RBI has done just the opposite of what both theory and empirical evidence would suggest. It has consistently devalued from a position of weakness rather than from a position of strength. Former RBI deputy governor, Rakesh Mohan, has forcefully made the same point in a recent interview. So don’t believe me, but at least believe a distinguished former RBI official. Though former governors Bimal Jalan and Y.V. Reddy have not yet opined on the issue, my guess is that they would agree with Mohan. And if you don’t believe all of these distinguished economists and policymakers, just look at what China has done for the last 30 years..........
Inflation ignored
In the recent quarterly review of the monetary policy, the reasons cited by the RBI for the one per cent reduction in the SLR are not convincing. So far, nothing has been done by the policy-makers to tackle the widening supply-demand balance. In fact, most of the banks are comfortable as far as liquidity is concerned. The reasons for decrease in credit growth vis-a-vis investment growth are entirely different. It is not true that banks are holding back on credit expansion; rather, prospective borrowers are not interested in availing of credit at the present high interest rates. Though the interest rates on deposits are high now, it is felt that investment in gold and real estate is far more profitable than depositing in banks. One is unable to understand why the Government is playing a subdued role in containing inflation by not releasing the supply-side bottlenecks.
- T .S. N. Rao (HBL)
RBI sets new norms for non-banking financial companies
The Reserve Bank of India said on Friday registered non-banking financial companies (NBFCs) intending to convert to non-banking financial company-micro finance institutions (NBFC-MFI) will have to maintain net owned funds at 30 million rupees ($537,200)by March 31, 2013 and 50 million rupees by end-March 2014........
Norms for AP microlenders eased
....“...the provisioning made towards AP portfolio shall be notionally reckoned as part of NOF (net owned funds) and there shall be progressive reduction in such recognition of the provisions for AP portfolio equally over a period of five years,”.......
Pak welcomes India's decision on FDI
....."It would be a landmark development if the Reserve Bank of India removes Pakistan-specific clauses and allows Indian businessmen to invest in Pakistan,"................
Pak central bank allows 2 lenders to open branches in India
Following India's move to allow investments from the neighbouring country, Pakistan's central bank has allowed two banks to open branches in India as part of efforts to normalise economic and trade relations between the two countries. State Bank of Pakistan (SBP) Governor Yasin Anwar told the media that the National Bank of Pakistan and the United Bank Ltd had been given the "green signal" to operate in India....
‘RBI will act if growth slips rapidly’
....“We will look at both inflation and growth. Certainly, if the growth slips as rapidly... we would take that into account but I do not think we want to lock ourselves into specific numbers or specific corridors in which we will act,” ..............
RBI can’t be expected to take up the govt’s slack
Expecting the Reserve Bank of India (RBI) to pick up the slack created by the government’s policy paralysis, on the one hand, and fiscal profligacy, on the other, is quite naïve. To understand this argument, consider the following scenario. A boat is being rowed on a river by a team of two rowers—one on each side. The boat moves ahead smoothly at a brisk pace when the two rowers act in tandem ..........
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