Geithner, Bernanke discuss global economy with RBI, India Inc

US Treasury Secretary Timothy Geithner and Fed Reserve Chairman Ben S Bernanke Wednesday discussed global economic situation, monetary policies and some banking issues of mutual interest with RBI Governor D Subbarao and other top officials.........

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SUBBARAO V/S BERNANKE - THE SAME DIFFERENCE

........Both are different but there is a line of similarity running between the two, especially the trying circumstances. Given below, in a nutshell are the nuances of both the men. We cannot compare apples and oranges but certainly the characteristics of two fruits............

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Banking on RBI

.......Though the government is trying to fast-track the process of handing out new bank licenses to convince the world that India is once again on the reforms path, the process is proving to be a bit tricky since RBI continues to insist it needs the Banking Regulation Act to be changed to allow it to remove the board—sure, it has dealt with crisis situations like Global Trust Bank which was bailed out by Oriental Bank, but it would be quicker with the Banking Regulation Act changed..........

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स्वच्छ लखनऊ के लिए दौड़े बैंकर्स........

........हाफ मैराथन की शुरुआत सुबह 7.30 बजे भारतीय रिजर्व बैंक के गोमती नगर स्थिति क्षेत्रीय कार्यालय से की गई। सभी प्रमुख बैंकों से 10-10 धावकों ने इसमें शिरकत की। आरबीआई के डिप्टी गवर्नर हारुन आर. खान ने हरी झंडी दिखाकर मैराथन का आगाज किया। पांच किमी लंबी हाफ मैराथन एसबीआई के प्रधान कार्यालय पर समाप्त हुई। इसके बाद क्लब द्वारा हजरतगंज चौराहे से लेकर एसबीआई प्रधान कार्यालय तक मानव श्रृंखला का निर्माण किया गया। इसमें 2,000 से ज्यादा बैंकर्स ने शिरकत की। कार्यक्रम के अंतिम चरण में आईसीआईसीआई बैंक की हजरतगंज शाखा परिसर में लखनऊ मैराथन और स्वच्छता एवं स्वास्थ्य पर आधारित स्लोगन लेखन प्रतियोगिताओं के विजेताओं को पुरस्कृत किया गया। समापन पर आरबीआई के डिप्टी गवर्नर ने बैंकर्स को सामाजिक दायित्वों को पूरा करने के लिए आगे आने की नसीहत दी। इस अवसर पर आरबीआई के क्षेत्रीय निदेशक रबी एन मिश्रा, आईसीआईसीआई बैंक के जोनल प्रमुख निपुन जैन के साथ ज्यादा बैंक के वरिष्ठ अधिकारी मौजूद रहे।........

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Independence daze

...........it was a “fine tradition” that no member of the US Treasury or executive commented at all on monetary policy decisions or their effects, and that it was an essential part of ensuring the independence of the central bank. In India, the Reserve Bank of India is also technically independent, but New Delhi apparently has a very different view on whether commenting on monetary policy affects the independence of Mint Road.

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RBI will issue bank licences, but who will decide?

...........The question that many in RBI’s Department of Banking Operations and Development (DBOD)  – which has  formulated many important norms in the past be it real estate exposure or gold loan – are asking is that RBI may issue licences but will it be able to take decisions independently without the interference of the government?  DBOD will issue the final guidelines on banking licences and also vet the applications of the prospective entrants. In mid-2009, a note was prepared in RBI to debate whether to have more banks in the country. No decision was taken at that point in time. It had surprised many in the central bank that a finance minister in his Budget speech was announcing that RBI would consider issuing fresh licence – something unprecedented. This perhaps explains that pace at which the central bank approached the entire issue. 

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RBI: Battle vs. Inflation Far From Over

The Reserve Bank of India's battle against high inflation is "far from over" and it intends to focus on reining in price pressures for some more time, said RBI Deputy Governor H.R. Khan. "Monetary policy would for some more time need to focus on inflation while using available space to support growth to the degree it can," Mr. Khan said, according to the speech made on Saturday and available on the central bank's website.......

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Tweak those Basel III norms

......Thus, what is economically more important at this juncture is to give more importance to growth rather than to increasing capital requirements in the banking sector, which is more or less stable. In this context, RBI guidelines on Basel III norms, which are much more stringent—minimum common equity 5.5% versus 4.5%; implementation on March 31, 2018 versus January 1, 2019—than BCBS guidelines, need some modification .......

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My View on "Finmin tries to allay RBI fears on new bankc licences"

One of the reasons for licensing new private sector banks (this is not openly admitted!) is that they would provide competition to public secor banks leading to improved functioning of the latter. It is a moot point whether this has happened at all. The reasons seem to be the continued prevalence of restrictive practices amongst employees, aided and abetted by the Unions, leading to poor productivity and weak managements. The  lack of improved performance of public sector banks has not affected them and their employees since Goverment recapitalise banks( out of tax payers' money) and ensure an industry-wise wage agreement for the employees. The day Government stop recapitalising banks (because of lack of addition to 'reserves' of banks from internal accruals) and stop industry-wise wage agreement, we could expect progress. Employees would have to realise that the performance of their banks would determine their wage structure and other perquisites. Of course, Government, even as a majority shareholder, should not be allowed to intervene in the matter when banks have their own wage structure and various perquisites. This could help banks to improve their functioning. Incidentally, the " autonomous" RBI would also be benfitted if Government does not interfere in the wage agreement of banks as they would not then have any handle to interfere in the RBI wage structure too!! 

 - A. Chandramouliswaran (via e-mail)

Should government capitalise public sector banks?

...........In the long run, therefore, it makes no sense for the government to commit itself to the capitalisation of PS banks. Precious government resources can be better deployed in critical areas (such as power transmission and distribution) where private capital on large scale is hard to come by. In the medium term, it can use tactical measures such as merging banks where it has significantly high ownership with those where the ownership is already down to 51%...........

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FinMin, RBI all set to open ECB window for affordable housing

The affordable housing segment is all set to get boost as the Finance Ministry and the Reserve Bank of India are to announce final guidelines for external commercial borrowing (ECB) very soon..........

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Shankar Acharya: Reforms resurgent?

.....The insurance- and pension-amending Bills will depend crucially on support from the Bharatiya Janata Party when they are placed in Parliament in the winter session. So nothing is guaranteed. As for the proposed amendments to the Competition Act, the extension of the Competition Commission’s jurisdiction to mergers and acquisition of banks seems ill-advised, when these are already scrutinised by the specialist regulator, the RBI............ 

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Want financial inclusion? Look at the telecom sector

............Financial inclusion is something like that. The government thinks it is driving financial inclusion and takes credit. Ditto with the Reserve Bank of India (RBI) and the banks themselves. And even though I am a non-believer, I am tempted to say the Almighty smiles...............

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Irda gives options for bancassurance tie-ups

......Insurance industry experts say that the Reserve Bank of India (RBI) may not be in favour of banks playing broker to insurance companies. Reason: “A broker represents the customer unlike a corporate agent. In that case, all customer and related issues will have to go to the broker. In case of corporate agency the customers will be owned by the insurance company,” explained a senior life insurance executive...........

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Corporation Bank probes into overdraft to Vadra's firm

......Bankers said while the Reserve Bank of India (RBI) did not have specific guidelines on overdraft facility, the central bank’s customer acceptance rules say banks need to closely monitor transactions with 'politically exposed persons' (PEP). The rules also mandate “intensive due diligence for high-risk accounts including those involving close relatives of PEPs and where PEPs are the ultimate beneficiary”...............

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Push banks as brokers, not agents

.........so far the banks have been unwilling to rise to the occasion mainly for two reasons: one, as the report notes, banks’ unwillingness to assume a greater responsibility in the sales process and two, the Reserve Bank of India’s (RBI) reservation in allowing banks to become brokers. Satwalekar notes that RBI is wary of the banks taking on the role of a “broker” as it would mean that they assume the role of a “principal” in the sale process with the consequential responsibility and potential risk..............

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The Indian ATM Industry

......In the report, The Indian ATM Industry: Gearing Up for the Next Phase of Growth, Celent studies the latest forces shaping the Indian ATM landscape and how the industry is meeting those challenges. The ATM industry has been a focus of recent discussion in India. Several forces are driving the heightened importance of ATMs. The biggest push has come from India's central bank and banking regulator, the Reserve Bank of India (RBI).......

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