RBI Executive Director promotes financial inclusion

Speech by Deepak Mohanty focuses on need for more financial inclusion in rural areas; says the availability of credit is more important than the cost...... 

Deepak Mohanty, an Executive Director of the Reserve Bank of India, promoted financial inclusion throughout the country in a speech delivered at a Bhubaneswar conference on August 20. Mohanty believes achieving inclusive growth means bringing the poor and underprivileged sections of society within the banking fold "with a view to improving the well-being of our society". The number of banking outlets in villages with populations of more than 2,000 people trebled between March 2010 and March 2012 to 82,300, and Mohanty says the central bank will now tackle provision to smaller communities.  To make more credit available, banks have been given complete freedom to price their advances so that lending in the rural areas is a commercial proposition, Mohanty says. He adds that at this stage of development, the availability of credit is more important than the cost.

Click here to read the speech.

Goa to Goa – changed contours of the Indian Forex Markets – new realities and priorities - G Padmanabhan

Inaugural address by Mr G Padmanabhan, Executive Director of the Reserve Bank of India, at the 23rd Annual Forex Assembly of the Forex Association of India, Goa, 18 August 2012

....Volatility is an unavoidable feature of all financial markets and heightened volatility in the forex market that we witness today is neither unprecedented nor unexpected. All economic agents with currency risk will have to frame a conscious risk management policy to cope with the impact of the volatility on their cost, revenue and profit. Even as the Reserve Bank strives to maintain orderly conditions in the forex market, certain behavioral issues that tend to accentuate volatility have to be understood by all market participants and factored into their response and risk management strategy....

Read........

India Inc using hedging instruments to trigger instability: RBI

The Reserve Bank of India (RBI) has come down heavily on India Inc for not prudently using hedging tools available to them. Rather, the hedging instruments are often used to trigger instability in the market. Commenting on whether the corporate sector had failed to take a “well-deliberated and calculated call”, when it came to hedging, RBI’s Executive Director, G Padmanabhan, said the corporate sector had become complacent regarding the rupee’s stability, particularly during 2009-2011 when the Indian currency was range-bound between 44-46 a dollar............

Read - BS

SBI wins contest

Thiruvananthapuram : The State Bank of India (SBI) won the inter-bank ‘aththapookalam’ contest organised by the NABARD Recreation Club here on Sunday.  The State Bank of Travancore (SBT) and the Reserve Bank of India (RBI) won the second and third places respectively. Eight banks participated in the contest held at the Regional Office here. RBI Regional Director Salim Gangadharan distributed the prizes. NABARD general manager K R Rao was also present.

IBN Live

About 10 lakh bank employees to go on strike on 22-23 August

Employees from around 47 banks are planning to go on a two-day strike on 22nd-23rd August to protest the proposed reforms in the banking sector and outsourcing of jobs. Around 10 lakh bank employees and officers working in 27 public sector banks including State Bank of India (SBI) and 12 old generation private sector banks and eight foreign banks will resort to two days nationwide strike on 22nd and 23rd August, says United Forum of Bank Unions (UFBU)............

Read.........

Are Indian banks heading for a crisis?

.... all restructured assets turn bad, then gross NPAs as a percentage of loans assets jump from 2.94% to 7.61%. This will not happen. By the Reserve Bank of India’s estimate, about 20% of restructured assets generally turn bad. If indeed that happens, the gross NPA ratio rises to 3.87%, and if 30% of the restructured assets turn bad, it reaches 4.34%...........

Read - Mint

Banks game for disclosing names of those failing to pay up money raised from public

....Banking regulator Reserve Bank of India has similar information about defaulting companies categorised as bad, defaulting and non-performing assets. This information is also maintained by the credit information companies. But it is shared only among banks and is not in the public domain....... 

Read - BS

Capital emerges as hub of fake notes racket

NEW DELHI: The capital seems to have become the favorite haunt for counterfeiters. In the first six months of 2012, the security agencies have recovered fake currency with a face value of over Rs 4.15 crore against last year's Rs 4.08 crore. In 2009 and 2010, the recoveries amounted to Rs 3.27 crore and Rs 3.01 crore, states Reserve Bank of India ( RBI) while replying to an RTI application filed by activist S C Aggarwal. The data shows that since last year, Delhi has been emerging as the main hub of fake currency circulation, replacing earlier key areas like Maharashtra, Uttar Pradesh, Andhra Pradesh and West Bengal............

Read - TOI

'10 agents control coins flow in city'

........The Jaipur office of RBI claims that they have taken steps to monitor and meet the demand for coins in different parts of Rajasthan. "Entry of general public is regulated after verification of their identities. Monitoring of the exchange hall operations is also scrupulously undertaken to ensure that services are not utilized by frequent visitors," an RBI official said. To deal with the dearth of coins, RBI also organized coin mela recently apart from distributing it from the counters. "Currency chest holding banks have been advised to issue coins to public keeping in view their genuine requirements. These currency chests, at our instance, are functioning on Sundays as well to exchange notes and coins," the official added.

Read - TOI

Banks to be affected by RBI move on group exposure: Moody's

....."If the RBI adopts them, the new guidelines would be credit positive for India's banks, but credit negative for group companies that rely on parent banks for capital and brand support," Moody's Investors Service said in a report. It said the "affected banks" include ICICI Bank, State Bank of India, Bank of India, Bank of Baroda and Kotak Mahindra Bank.......  

Read - BS

Do PSU banks favour big firms?

RBI Deputy Governor’s assertion is borne out by the data, suggesting big gaps in RBI’s regulatory capacity

K.C.Chakrabarty, Deputy Governor of the Reserve Bank of India (RBI), has, in a recent lecture, more than hinted that all may not be well with the manner in which loans are being restructured. In fact, the deputy governor has gone so far as to say that neither is restructuring happening ‘in a transparent and objective manner’ nor is it ‘non-discriminatory’. These are serious charges that are being levelled at banks but the data on the ground suggests they might not be totally unjustified...

Read......

Restructuring loans driven by banks, not borrowers

....In a recent speech, deputy governor K.C. Chakrabarty said, “When it comes to restructuring, our banks have a substantial bias towards more privileged borrowers vis-à-vis small borrowers.” The second takeaway from this data is that recasting loans is being driven by banks themselves rather than borrowers. As Chakrabarty said, “It (the data) seems to suggest that restructuring of accounts is being resorted to avoid classification of accounts as NPA (non-performing assets).” That’s also borne out by his assertion that, “many unviable accounts were restructured by establishing viability only with some kind of financial engineering”........

Read - Mint

आरबीआइ गवर्नर बनना है रघुराम राजन को

......उन्होंने रिजर्व बैंक का डिप्टी गवर्नर बनाने की सरकार की पेशकश ठुकरा दी थी. वे रिजर्व बैंक के गवर्नर बनना चाहते थे. वे तब तक इस पद को नहीं पा सकते जब तक वे या तो रिजर्व बैंक के डिप्टी गवर्नर या वित्त मंत्रालय में किसी पद पर काम नहीं कर लेते..........

Read - आज तक

Men at work

Improve ratings

Projecting a realistic picture of the economy is a crucial step towards avoiding further rating downgrades. Though many of Chidambaram's predecessors have held the Reserve Bank's ruthless interest rate hikes in the past two years responsible for negative ratings, RBI Governor D. Subbarao has been unrelenting. The central bank is unlikely to ease the rates anytime soon. Sovereign rating methodologies put a lot of weight on the fiscal condition, which makes addressing the fiscal situation a priority. But with the inflation raging and investments dropping, the fiscal situation is on shaky knees. “The inflation in August is likely to remain high. Given the situation, the RBI, too, is not expected to offer much relief by cutting interest rates in its next evaluation,” said Dharmakirti Joshi, economist at CRISIL. Consumer inflation, which affects the lives of individuals more directly, has been in double digits for the past four months. So, the RBI wants the government to address reasons for a slowdown other than the rate cut. “We have come to a rough conclusion that about a third of the slowdown is due to interest rate hikes and the rest due to a combination of other domestic and some global factors,” said Subir Gokarn, RBI deputy governor, in a television interview.

Read - The Week

A push for pulse

The Reserve Bank of India Deputy Governor, Subir Gokarn, is worried about the spurt in prices of pulses that could be the precursor to a fresh ‘protein shock’. He has reasons to be so.......

Read.........

Centre plans new window for home loans

Home loan borrowers may no longer have to wait for the Reserve Bank of India to ease interest rates as government is planning to furnish cheap housing credit through another window.......... 

Read - Deccan Herald

The Chidambaram solution

...... To quote the Reserve Bank of India: ”Housing loans constitute around half of the total personal loans in India and as a result a boom and bust in the housing market can affect quality of assets. The build-up of systemic risk in this area in India was avoided mainly due to implementation of macroprudential policy by the Reserve Bank like changing the risk weights for loans to real estate. “.......

......it is a bit cynical to try and achieve the latter objective by making the banks take on excessive credit risk. He should stick by the view that bank managements, including those in public sector banks, must be given their autonomy when deciding on their lending practices and the task of regulating them and influencing their behaviour must be left to the central bank.

Read - The Hindu

Save a Thought for the Savers

........with the part that seems to suggest your concern for borrowers might, once again, outweigh your concern for savers and induce you to ‘direct’ the Reserve Bank of India (RBI) to lower interest rates. Yet, savers hugely outnumber borrowers ; any democraticallyelected government should be more concerned about savers rather than borrowers. Indeed , there can be no borrowers if we did not have savers willing to provide funds. But time and time again, policymakers have taken savers for granted.............

Read - ET

Retail-focused NBFCs face speed breakers

....Despite the stricter norms imposed by the Reserve Bank of India in April, curtailing the LTV of gold lenders, both Muthoot Finance and Shriram City Union Finance (gold loans form 40 per cent of its total assets) continued to post robust loan growth of 41 per cent and 23 per cent, respectively. Analysts though remain sceptical on the sustainability of Muthoot's loan growth for this fiscal in the wake of the new LTV norms and are factoring in an increase of just 1.9 per cent.......

Read - BS

Progress toward Improved Client Protection in the Indian Microfinance Sector

.....While acknowledging that numerous obstacles remain for the sector as a whole, Ms. Bansal praised specific improvements in the client protection environment: the Reserve Bank of India provision of a framework for regulating client protection; the development by industry associations of an industry Code of Conduct; and the influence of social investment funds.......... 

Read.......

AP crisis an eye opener for all stakeholders: SKS Microfin

....With regard to questionable recovery practices, the RBI had stipulated that all customer connectivity should happen at a public place. The representatives of the MFIs have the right to visit the work place or the house of the borrower only if she defaulted on payment of two consecutive instalments....... 

Read - BS

Practical tips to use RBI's Liberalised Remittance Scheme

....While the scheme looks attractive on paper, it is ridden with several practical roadblocks. Confusion exists on what is allowed under the scheme, what documents are needed to be submitted and so on. Let us try to throw light on these practical aspects........

Read - ET

Exporters bring back dollars as Re begins to rise

......RBI has now asked oil companies to source half of their dollar requirements from State Bank of India, so that there is a single bank raising dollars rather than getting quotes from many banks and creating a shortage in the market.

Read.........

MSME sector seeks panel to monitor credit flow

.....“There is an apprehension that since banks now operate in an environment of de-regulation, advisories such as the RBI’s often succumb to the pressures of profit and bottom lines. Hence in order to obviate such a situation, a monitoring committee must be put in place by the ministry of finance, to enable all MSMEs to benefit from the RBI’s directives,” said Ahmed...........

Read - BS

Karnataka among five States selected for issuing Aadhaar-enabled Kisan Credit Card

.............The Aadhar-enabled cards would help farmers in under-banked districts. Bidar, Chamarajanagar, Gulbarga, Bangalore Rural, Koppal and Raichur have been identified as under-banked districts in the State by the Reserve Bank of India (RBI). The RBI has directed State-level Bankers’ Committee to take steps to open bank branches in these districts.

Read - The Hindu