Cricket with tennis balls? - K.Sivaraman

‘Can the Reserve Bank of India stand up to the Finance Minister,’ was the question raised recently in the media. This is a misleading question. The RBI is expected to provide expert advice to the Government, in compliance with the provisions of the RBI Act, 1934. Acceptance or rejection of such advice is the latter’s prerogative....... 

- K.Sivaraman, Retired Chief General Manager of Reserve Bank of India 

Read - HBL

Bank customers must remain cautious, says ombudsman

PUNE: Increased use of technology in banking transactions has made it imperative for users to exercise greater caution in the way they handle their operations, the country's Banking Ombudsman R Sebastian said at a press conference on Friday. Sebastian said alternate banking channels such as internet banking or mobile banking have made operations complex and the smallest negligence can cause a big loss. "Misplacing debit or credit cards, sharing passwords, losing mobile phones are all events that hold the potential of a fraud taking place and customers should immediately report the banks or mobile service operators," she said.......

Read - TOI

Banks shying away from education loans: RBI

Banks are shying away from giving education loans and the Reserve Bank of India’s Office of the Banking Ombudsman (OBO) in Chennai says more than 50 per cent of complaints regarding loans and advances pertains to banks’ denial of education loans. Addressing reporters here on Friday about OBO’s annual report, RBI Deputy General Manager Suman Nath and Banking Ombudsman S Ganesh said their office received 6,877 complaints relating to loan and advances. Of these, over 50 per cent pertained to denial of education loans. It is only after the intervention of the OBO that banks started processing the loans, said Nath.....

Read..........

Growth crisis is worse than it seems

....The RBI had frontloaded the rate reduction in April in the hope that the Government would do its bit in pushing pending reform measures and take some serious steps towards fiscal consolidation. The central bank’s decision to press the pause button on interest rates on July 31 drives home the point that the onus lies with the Government to revive momentum in the economy.........

Read - HBL

Public sector banks, including Punjab National Bank, IDBI, SBI and Bank of India set out on a talent drive

 Public sector banks (PSBs) including Punjab National Bank, IDBI, State Bank of India and Bank of India are altering their talent strategies to focus on performance and employee engagement. The banks are also lining up incentives such as paid holidays abroad, leadership and training programmes at top b-schools............

Read - ET

Jayalalithaa suspends officer for allowing Sri Lankan football team to play friendly match

....The team had come after the Royal College of Colombo evinced interest in playing friendly matches. The college contacted a Reserve Bank of India official, who made the arrangement. The team arrived on August 30 and played a match with the Customs team on August 31. Ms. Jayalalithaa said, “When I inquired into the matter, I was told that the Reserve Bank official had sought permission from the stadium officer, who had orally granted permission. The officer has no power to allow matches in the indoor stadium and only the Sports Development Authority of Tamil Nadu (SDAT) has been vested with the power to do so.”.....

Read - The Hindu

Growth v price stability

....This explanation will naturally not go down well with the several advocates of a softer interest rate regime. However, for all its unequivocal statement, the RBI is most probably not revealing its monetary policy stance. In other words, whether there will be an interest-rate cut or not, the ensuing credit policy review will continue to be a matter for debate, with both sides marshalling their facts and figures. But the RBI’s assertion that high interest rates are not the only, or even the main cause for the slowdown, gives a new twist to the traditional monetary policy debate of growth versus inflation.......

Read - The Hindu

Priority sectors and banking policy

....RBI proposal should be viewed as part of the " learning process" of RBI and as part of the macro banking policy. Public memory may be short but not the researchers'. In the first flush of enthusiasm of implementing banking reforms in the early 1990s, RBI policy- makers were intoxicated with market theology and were keen on mimicking British or American banking models. Directed credit symbolised by the priority sector credit target of 40% was a " dirty phrase". At the same time the policy- makers were not bold enough to openly do away with such credit targets. They adopted a more subtle way of de- emphasising priority sectors. Many PSBs defaulted on the 40% target and RBI winked at the default. Not only that, in a bid to boost their profits, following British or American models, PSBs got rid of a large number of small borrowal accounts. In effect, small borrowers including small farmers were disenfranchised. All this has been well documented. A more concrete evidence of RBI's policy of financial " exclusion" during this phase was that RBI ceased to discuss credit allocation to priority sectors......

Read - FPJ

Financial untouchables

.....Migrant workers with no local proof of address don’t figure anywhere in the Reserve Bank of India’s (RBI’s) ‘know-your-customer’ guidelines. There is a separate set of guidelines for NRIs, even for migrants from Nepal, but none for migrant labourers. The only privilege RBI has belatedly granted them is that of a bank account. Here is an example of how PPF treats the poor. Though it is called the Public Provident Fund, the word public, according to State Bank of India, does not include poor and migrants who don’t have their own house in the locality....... 

Read - BS

A Question Of Timing

....Chaudhuri may have raised a fair question — whether the current level of CRR is too high — but his logic (and timing) may be flawed. The statutory minimum for CRR is 3 per cent, and the RBI Act does not have any provisions for paying interest on balances, though in a December 2003 report on another policy instrument, the liquidity adjustment facility, the RBI discussed the need for a change in the statute to lower it below 3 per cent, or pay interest on balances......

Read.......

EMPEROR, LOOK AT YOUR OWN CLOTHES

....why shouldn’t be RBI subjected to Comptroller and Auditor General of India’s (CAG) audit? I am in no way suggesting the central bank is doing things that it should not do. In fact, as an institution it is known for its impeccable integrity and intellectual honesty even as it continuously fights with the finance ministry for its independence, but there is no harm in being scrutinized by CAG and the public accounts committee.

With the changing times, the emperor should look at his own clothes. Otherwise, it loses the right to point fingers at its naked subjects........

Read - Mint

Power abuse

Shyamal Majumdar’s column “Time for self-regulation?” (Human Factor, August 31) was well written. There are also a number of such CMDs and executive directors in banks who believe they deserve to be in top positions and look down on their colleagues. It isn’t unusual to hear them pass sarcastic and unacceptable remarks at functionaries at meetings. The behaviour of these top executives is only encouraged by yes-men who aim to get coveted transfers, including postings abroad. Unfortunately, the system has tolerated and supported such officials. 

-  S Mohan Ram, Mumbai (BS)

The banking system and CRR

..............Therefore, till the time necessary conditions are not created, the banking system will have to live with CRR.

Read - Mint

Banking is not a charitable business: Chakrabarty

Reserve Bank of India’s Deputy Governor K. C. Chakrabarty is someone who speaks his mind. That obviously doesn’t endear him to many. Often times he has ruffled feathers with his forthright views 

RBI is never satisfied with anything because our expectation level is much higher. More than RBI, I am concerned if the customer is satisfied. I am satisfied if the customer is satisfied. We are telling the banks to improve. 

Read - The Hindu

It is not our job to help banks achieve targets: K C Chakrabarty

Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty, in an interview with Rutam Vora, says banks should not complain about the stiff priority-sector targets.,,,,,

Edited excerpts : BS

Interest rates will come down when inflation softens: RBI

On the global economic situation
 “This is a crisis, absolutely no doubt, it comes once in a lifetime...
I can say we shall not be alive when this type of crisis comes next...”

Read - Mint 

On rate cut, St’s split down the middle

Economic growth data for the quarter ended June has left economists and analysts divided on the issue of a reduction in key policy rates by the Reserve bank of India (RBI)..........

Read - DNA

Data Rupture

....In his inaugural address at RBI’s Statistics Day Conference last year, Governor Duvvuri Subbarao went into the need for more data and better data in some detail. He highlighted the lacunae in unemployment, wages and inflation data, but drew special attention to the “analytically bewildering” volatility of IIP data. .....

Read......

What role can the banking sector play in getting India back on the path of 10% GDP growth?

..... One, let’s have the FRBM Act and delink monetary policy. Second, free the RBI board and public sector bank boards from irrelevant and unnecessary government interventions. And three, please do not undermine existing institutions. I am specifically referring to the CAG and EC.

Read.......

My View on "RBI doubles contingency reserve, surplus transfer to Centre falls"

M.G.Warrier

Transfer of RBI's surplus profit to GOI in 2011-12 was Rs 16010 crore which as percentage to gross income is lower by around 10.4 per cent as compared to 2010-11. Obviously, the transfer of ‘surplus income’ to government in a routine manner when the reserves position of the central bank shows a declining trend needs a review. Considering the size of RBI’s balance sheet recouping the reserves position to healthier levels will be a Herculean task.Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks RBI has to absorb from time to time, GOI should support the central bank’s efforts to augment its reserves at least on par with the 12 per cent norm of capital adequacy RBI expects from banks it supervises. But despite a transfer of `2348 crore in 2011-12, from income to ADR raising its level to `18214 crore as on June 30, 2012, the CR and the ADR together constituted only 9.7 per cent of the total assets of the Reserve Bank as on June 30, 2012 showing a fall of 0.6 per cent from the level of 10.3 per cent during the previous year, taking the original target of 12 per cent further away. It may be recalled that in 2009 the target was almost in sight when the level reached 11.9 per cent. To ensure that temptations of government emanating from external compulsions do not dilute the strength of RBI’s balance sheet, GOI should take measures to augment the share capital of RBI after carrying out appropriate amendments to RBI Act. Till such time RBI should be allowed to retain surplus income by transfer to reserves. Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks the Bank has to absorb from time to time, the central bank’s reserves need to be augmented on an ongoing basis.  

FinMin looking at further consolidation of RRBs to 55

The Finance Ministry is considering a proposal to further consolidate the number of Regional Rural Banks (RRBs) to 55 for improving their efficiency and to better serve the rural economy. There are 82 RRBs sponsored by various public sector banks across the country..........

Read......

Speaking At Cornell, India’s Central Bank Governor Endorses Austerity for Growth

.......Subbarao traced the story of India’s growth from the early decades after independence when the country experienced what he called the “Hindu rate of growth”. The phrase suggests that the Hindu philosophy of fatalism is detrimental to economic development. However, it would have been much more appropriate to term India’s modest growth rate under Prime Minister Nehru as the “Communist rate of growth” as India’s early policy makers were enamored by the socialist model of the Soviet Union. But due to a series of economic reforms after the Balance of Payments crisis of 1991, India experienced rapid economic growth driven by a high savings rate, increased productive capacity, and an unprecedented demographic dividend............. 

Read.....

Bank credit to consumer durables down

Bank credit to such categories as professional services, consumer durables, and advances to individuals against shares and bonds declined more sharply between March-end and July 27, 2012, compared with the year-ago period....

Read - HBL

CM mulls stringent action against unauthorized NBFCs

GUWAHATI, Sep 1: Chief Minister Tarun Gogoi said stringent action would be taken against the non-banking financial companies (NBFCs) and other such institutions which are raising money from the market without following the Reserve Bank of India (RBI) guidelines.  The Chief Minister has also instructed the Finance Department to take action against such unauthorized NBFCs functioning in the State and make a list of such unauthorized NBFCs in the State.   It may be mentioned that several NBFCs are functioning in Assam without the RBI’s nod and the Bureau of Investigation of Economic Offences (BIEO) had already started its investigation in this regard.

The Sentinel Assam 

SC issues notices to Centre, RBI on PACL’s petition, No Ex parte stay

The Supreme Court has issued notices to the central government, Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI) and others on a petition filed by PACL India Ltd. seeking stay of an order of the Madhya Pradesh High Court. The High Court had on the basis of a preliminary CBI enquiry report noted in its order that the allegations made are “prima facie found to be true” and directed its order to be circulated to different government agencies by way of information.......

Read..........

Bolder Measures for a Cashless Economy

.....By swiping a debit card, a customer can pay for purchases at a shop directly from her bank account. Consumer convenience is obvious. Merchants do not have to manage cash (for those not evading taxes). But banks benefit in three different ways. Had the customer withdrawn cash a few days earlier from an ATM to spend at the shop, the bank would have incurred cost of ATM withdrawal, lost out on float in the bank account for the few days, and lost out on the fee it earns every time purchase is made on debit card. Government is pleased with debit card-based spending because electronic transactions are traceable for tax purposes. The regulator is happy because the efficiency of banking system goes up. So why is debit card penetration so low?.......

Read - ET

How technology is changing banking

New media and the use of the Internet will make banking easier, cheaper and create new opportunities to tap the already saturated urban market, panellists at Mint’s “IT in Banking Conclave” said. Despite security issues and user reluctance to adopt new media, this form of banking is here to stay..........

Read - Mint

Hit by dubious claims, RBI junks ATM cash retraction

CHENNAI: The banks have done away with the cash retraction system in ATMs. The system, which enabled the machine to take back the currency if it is not removed within a certain time, was withdrawn last week after the Reserve Bank of India (RBI) agreed to National Payments Corporation of India's proposal for removing the feature from all ATMs to deal with the increasing number of fraudulent claims about non-receipt of cash....... 

Read - TOI

Staff Federation slams Dhanlaxmi Bank Management

......Alleging manipulations in the balance sheet, the Bank Employees Federation of India (BEFI) has sent a letter to the Reserve Bank of India on August 26 seeking its intervention in the bank’s activities......... 

Read.......

Inclusion, Sahara style

......The Finance Ministry has offered tax breaks on equities and discounted prized public sector stock. The Reserve Bank of India (RBI) has pushed banks to serve up no-frills bank accounts. The Securities and Exchange Board of India (SEBI) tried everything from minimum public shareholding to electronic IPOs to woo small investors. But they have ignored all this and poured money into gold and property instead. ......

Read..............

Is your bank locker secure?

.......The Reserve Bank of India says, ‘Banks should exercise due care and necessary precaution for the protection of the lockers provided to the customer.’ Banks may claim to have this in place, but this isn’t true in many cases. For instance, after a robbery at an Indian Overseas Bank branch in Chennai this year, police discovered that most bank branches in the city were yet to install basic safety devices such as security alarms and closed-circuit television (CCTV) cameras.......... 

Read.....