Open letter to RBI Governor D Subbarao

Dear Dr D Subbarao,

At the outset, thanks for championing the cause of the poor and the downtrodden of our country. Your statement at Tiruvananthapuram makes a refreshing departure from the stand taken by the powers that be in the government, who are voicing their concern over the slow growth of the economy due to high interest rates, unmindful of the galloping inflation causing havoc in the life of a large majority of people of our country. You were right when you said “Inflation is a regressive tax for the silent poor.” You are perfectly right in saying “Powerful and resourceful corporates may protest high interest rates, but there also exists a vast majority of silent poor who suffer worst from high inflation.  Unlike in the former’s case, their voice is not heard in the media…” We salute you for airing your views boldly and firmly and for not relenting under pressure from the industry bigwigs coupled with the media.......

Read - Moneylife

The Moolah Queen

	The Mann Deshi business school, Udyogini, aims to create more than 1 million women entrepreneurs by 2020

What do you call a rural cooperative bank that offers a pension fund, a life insurance scheme, a business school to boot and just deals with women? Meet Chetna Gala Sinha — she calls it the Mann Deshi Mahila Sahakari Bank. Sinha, a portly woman in her fifties, is the founder of this women’s cooperative bank based out of Mahaswad village, Satara district.............

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ICICI Bank CEO Chanda D Kochhar denies bad loan risks

....."Asset quality problems for the banking industry are not as acute as perceived," Kochhar, head of India's second-largest bank, said. "Temporary cash-flow problems in projects with gestation period of as much as 15 years don't make it a bad loan." Kochhar's view differs from the Reserve Bank of India, which in a June 28 report said the condition of lenders is likely to worsen this year on an increase in soured credit. ...... 

Read - ET

Play by rules or look elsewhere, RBI's message to SBI boss

"If the SBI Chairman is not able to do business as per our regulatory environment, he has to find some other place," RBI Deputy Governor K C Chakrabarty said in a sharp reaction to Chaudhuri's recent comment that CRR does not help anybody and it was unfairly put on banks.....

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SBI chief gets taste of RBI's tongue-lashing

....Chakrabarty was responding to a question from the audience at a conference on systemic risk here. The tongue-lashing took many by surprise, as it was probably the first time that a top RBI official resorted to such a public reprimand for the chairman of the country’s largest bank.......

Read - BS

Controlling inflation will lead to interest rate cut: K C Chakrabarty

......Talking about an inclusive economy, he said said the banks should reach out to poor and should extend credit facility to those who required. Today only 10% of the people have access to bank credit, Chakrabarty noted. “Today the poor saves and rich borrow, which will increase the systemic risk,” he said.........

Read - BS

Cash Reserve Ratio: A non-performing asset for banks?

.......The RBI puts the onus squarely on the government for the rising inflation in the economy, saying that it is due to supply side constraints and the fiscal deficit caused by the rising subsidy burden but can do nothing about it.  And it does not bring down the interest rates fearing that it would fuel inflation and tinkers with the monetary policy by reducing the SLR, when the banks needed reduction in CRR to shore up their profits. RBI expects the banks to reduce their lending rates without any corresponding reduction either in repo rate or CRR. This amounts to punishing the banks for the inaction of the government......

Read - Moneylife

SBI’s chief’s call for scrapping the CRR (cash reserve ratio) is irresponsible

Had the issue been raised by anyone else, it could have been out down to ignorance. But when the question, ‘Why is CRR (cash reserve ratio ) not applied to insurance and other companies who are mobilising deposits from the public?’ is raised by Pratip Chaudhuri, the Chairman of The State Bank of India (SBI), the country’s largest commercial bank, desperation, rather than ignorance, is, perhaps, the only reason..........

Read - ET

CRR is a cost, manage it: Chakrabarty tells SBI

...The RBI Deputy Governor asked: “What is the regulatory system for? Whether to reduce it [CRR] to zero or increase it, the regulator had the right to decide.” Asked if the Reserve Bank would seek the opinion of banks on this issue, he said, “Why should I take others’ opinion. My regulatory system is not based on what the opinion of other people is.” When pointed out that many countries did not have CRR, he said, “several countries are not having. But several others are having.....

Read - The Hindu

Swipe for more than cash at White Label ATMs

.....According to RBI norms, WLA operators are permitted to display advertisements and offer value added services. “While running advertisements on the WLA screen would be permitted, such advertisements should disappear once the customer commences a transaction in order to ensure that the customer is not distracted in any way during the process,” RBI said in the guidelines......

Read - BS

India offers vast scope for Islamic banking

....Selective attempts to introduce Islamic finance-modelled products by private sector finance companies in the past have all failed due to regulatory issues as well as opposition from political parties. But a new initiative by the National Commission for Minorities, a constitutional body charged with the welfare of minority groups, in support of the idea has prompted the federal finance ministry to refer the issue to the Reserve Bank of India, the Indian central bank, for a fresh look.......

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Government considering to set up an agriculture credit risk fund

......A finance ministry official said the government is looking into this proposal along with many more suggestions but no final decision has been taken yet. "We have received various propositions from banks, banking association IBA and even the Reserve Bank. We are looking at all options," the official said. An RBI committee headed by MV Nair had also recommended a Credit Guarantee Scheme for small and marginal farmers. ......

Read - ET

Include financial sector in proposal to make regulators accountable

....Regulatory agencies in the financial sector should also be merged. There can be two regulators: a macroprudential regulator and another regulator to cover market transactions. The RBI fits the bill as a macro-prudential regulator. The other unified regulator can oversee the entire gamut of products including stocks, bonds, insurance, pensions, commodities, derivatives, etc.......

Read - ET

Economy is in need of rescue: Adi Godrej

......."We have suggested to the RBI that steps should be taken to reduce the repo rate, reverse repo rate and the CRR. If these measure are taken then I think investments will gather momentum and growth will be restored,".........

Read - TOI

India's 'boring' banking system remains robust: Parekh

...."To my mind, the winning strategy for banks in India is 'Basic Banking Model' - what is otherwise known as 'boring banking'. There is enough of retail business potential for all existing banks, new banks (as and when fresh licences are given), NBFCs and microfinance companies and other players," ...... 

Read - BS

Desperado

Less than a month into his new job as India’s finance minister, P Chidambaram is in a hurry to rev up the economy’s sputtering engines. But with inflation still high – the rate just dipped below seven per cent for the first time in 32 months — the central bank in Mumbai is reluctant to help by cutting policy interest rates. So Chidambaram wants to rely on the magnanimity of the US Federal Reserve, the European Central Bank and the Bank of England. He is nudging local companies to take more loans denominated in foreign...........

Read - BS

Defreeze investments

.......The Reserve Bank of India’s (RBI) prescription of ‘expenditure switching’ – cutting subsidies and other revenue spending, and redirecting the resources so released into public capital outlays – is a timely reminder on the state of capital formation in the economy. What the Indian economy is now experiencing is no ordinary slowdown, but something far more serious: A near-collapse of its investment cycle.........

Read - HBL

Sebi proposes no-frills demat account for small investors

....The move follows a facility of no-frills savings account already in place at various banks as per directions of the banking sector regulator RBI......... 

Read - ET

Lakshmi Vilas Bank's practices are flawed and has failed to monitor accounts diligently: RBI

The Reserve Bank of India has picked holes in the business practices and corporate governance standards at Lakshmi Vilas Bank. The private sector lender says it is plugging the gaps pointed out by the regulator. The RBI has said the staff had been negligent in monitoring accounts and that the promoter group had been raising stake in contrast to its direction to lower the holding, an inspection report shows............

Read - ET

Politics can no longer be allowed to override economic sense

........RBI rightly says the way to stimulate economic activity without pushing up inflation is to adopt a strategy that promotes reforms-based resource mobilisation involving cuts in government spending on subsidies in order to reallocate funds for investments......... 

Read - TOI

Dhanalaxmi CEO PG Jayakumar under fire for not disclosing RBI rap

PG Jayakumar, the MD and CEO of Dhanlaxmi Bank, has incurred the wrath of some of his board members for failing disclose the Reserve Bank of India's strictures against the bank's promoters, and for defending their alleged breach of regulations with the central bank............

Read - ET

ED notice to cricket board, officials

..... With BCCI’s registration as a society, it should have sought permission from the Reserve Bank of India (RBI) before accepting the deposits from the overseas bidders, said sources. “However, the BCCI failed to take RBI’s permission,” said an ED official........

Read - Hindustan Times