Redefine priority sector lending - K Kanagasabapathy

.....The Narasimham Committee of 1991, which went into the issue of directed credit, observed after drawing attention to the problem of low and declining profitability, that there was a need for gradual phasing out of the directed credit programme, and that the proportion should be fixed at 10 per cent of the aggregate credit to cover the really needy and poor. This recommendation was not heeded by the Reserve Bank or the government. A similar approach for redefining the sub-targets was made by the recent Nair committee, stressing the need for flow of credit to small and marginal farmers and micro enterprises. This also went unheeded.......

Read - HBL

My View on "Government gets it wrong on CRR"

I have read with interest the article of Shri Seshan. It is, as always, interesting. I have two observations. First, CRR is stated to be not a repressive tax but a fee for the licence to create money and hence there is, therefore, no question of paying interest on CRR balances. Accepting this argument,  the question is what should be the limit up to which cash can be impounded by the RBI with out any obligation to pay interest? Surely, it cannot be with out any ceiling. So long as it is confined to the statutory minimum which has to be a small percentage, non-payment of interest would be all right. Secondly, I would like to inform the readers of VITALINFO that the question of audit of RBI by the CAG was indeed suggested long long ago by a Member of Parliament ( if my memory serves me right, the MP belonged to CPM) and the then Finance Minister, Shri Y.B. Chavan, made out a strong case against this proposal and defended the RBI to the hilt.

- A. Chandramouliswaran

This refers to “Govt gets it wrong on CRR” (Business Line, November 8). The author has rightly pointed out that the government shouldn’t pressurise the RBI towards interest payment on CRR. Instead, the government, the RBI and banks should work towards reducing non-performing assets (NPAs) and other administrative charges, which constitute wastage. Reducing expenditure, wastage, is one way of earning profits. If the RBI takes interest on CRR, the ultimate financial burden is borne by the ordinary customers of banks. This is not a permanent solution. The process for lending of loans should be strengthened, while also being user-friendly. Automation of processes across banks, in public and private sector, will reduce corruption. Promoting greater awareness amongst bank customers, and the public at large, will enhance efficiency.

Vedula Krishna, Visakhapatnam (HBL)

This refers to ‘Govt gets it wrong on CRR’ (Business Line, November 8). The Reserve Bank of India acts as a bankers’ bank and ensures stability of the entire monetary system. All banks enjoy the benefit of credibility due to regulation enforced by the RBI. Hence, they must pay for it. One way to measure the benefit derived can be by way of deposits mobilised by them. Hence, it is quite logical that they must forego interest on CRR, which is based on their deposit figures.

S Kalyanasundaram, Chennai (HBL)

Protect the regulators: It is in the nation’s interest

.....The attempt by the finance ministry to act as a super regulator over all regulatory bodies in the financial sector is getting more and more exposed. This will destabilize the equilibrium which was deftly built up by eminent persons who headed the finance ministry and the Reserve Bank of India (RBI) in the formative years of financial regulation in India (there were not many regulators in the financial sector, almost till the reform days) and consciously maintained by their successors till the recent past.......

Read - Moneylife

No fake notes in ATMs: Banking Ombudsman

Reserve Bank of India’s Banking Ombudsman (Andhra Pradesh) M. Sebastian has ruled out the possibility of fake currency notes sneaking into Automated Teller Machines (ATMs). “The screening process is so meticulous that the notes can be found anywhere outside, but certainly not in the banks’ ATMs,” he said replying to a query at an interactive session organised with bankers and customers,.....

.....RBI Chief General Manager (customer service) Suma Verma highlighted sorting customers’ issues on a priority basis, even by employing the services of people with prowess in regional languages.......

Read - The Hindu

RBI launches financial literacy campaign

........M.K.Singh, Regional Director, RBI Chandigarh informed that to general interest and awareness amongst the people specially the young generation, a chain of events at 33 locations across the country has been held. He said that RBIQ provides an opportunity for recognizing and encouraging bright young students at a national platform........

Read - TOI

For the record

Reserve Bank of India Deputy Governor Subir Gokarn, who is in charge of monetary policy, usually speaks at academic institutions and RBI puts out a schedule of events at which the Governor and Deputy Governors will participate in the forthcoming week. Of late, the schedule has started carrying a footnote that reads: “Dr Subir Gokarn’s speaking engagements in academic institutions are generally off-the-record.” This has raised eyebrows because earlier footnotes read: “...strictly off-the-record”. With Gokarn’s first term slated to end soon, it is worth wondering whether the difference between “generally” and “strictly” has any significance in terms of him getting an extension.

BS

Financial inclusion – not by banks alone

Financial inclusion is a key path to poverty alleviation. In defining financial inclusion, it is important to see it as a progression and a hierarchy of financial needs which begins with the most basic needs, such as a secure account for holding payment transaction funds and bill payment, and moves to more complex ones such as borrowing and insurance.........

Read - HBL

Changes In The Indian Banking Sector Pre And Post Reform Period

.....Since there is operational risk due to increasing globalisation, use of technology and growing complexity of operations, an explicit capital charge for the same is to be applied. To comply with the third pillar, RBI proposes frequent disclosure on information which enables market participants to take informed decisions. But even this should be done only after proper demarcation between core and supplementary disclosures. The three year transitional agreement is not sufficient for all banks.

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

Banks to usher in cheque standardisation

....The RBI had issued a plan to ensure a time-bound migration to CTS-2010 standard cheque formats by all banks. As per the plan, banks had to arrange to issue only multi-city/payable at par CTS-2010 standard cheques not later than September 30, 2012, and also to make arrangements to withdraw the non-CTS-2010 standard cheques in circulation before December 31, 2012, by creating awareness among customers......

Read - The Hindu

Govt to push NIB, new banking licences

The Finance Ministry hopes that the National Investment Board and new banking licences will soon see the light. At the same time, it has reassured to keep the fiscal deficit within the revised target of 5.3 per cent. Economic Affairs Secretary, Arvind Mayaram, said that the proposal for setting up NIB is likely to be placed before the Cabinet within next 2-3 weeks..........

Read - HBL

New bank licences only after RBI Act amendment

The banking regulator has made it clear that it needs more power before it could invite new entrants

.....“As indicated in the draft guidelines, certain amendments to the Banking Regulation Act, 1949 are under consideration by the Government of India, including a few that are vital for finalisation and implementation of the policy for licensing new banks in the private sector. The final guidelines will be issued and the process of inviting applications for setting up new banks in the private sector will be initiated only after the Banking Regulation Act is amended,” ....

Read - BS

Fiscal consolidation - how real?

.....Before turning to evaluate the realism of the new road map, it is pertinent to highlight one little-remarked perspective on the trajectory of fiscal deficits in India. At least for the last decade, we have two different official series, one published by the Reserve Bank of India (RBI) in its various publications and the other by the Prime Minister’s Economic Advisory Council (PMEAC). The numbers are pretty much the same except for the four years 2005/06 to 2008/09. In each of those four years, and especially in 2008/09, the fiscal deficit of the Centre, as well as the combined one (Centre and states), cited by the PMEAC is significantly higher than that shown by the RBI........

Read - BS

Living with volatility

..... Even more to the point, the RBI has found that many corporates run a serious exchange rate risk by not hedging their foreign exchange positions on the repayment of these loans. The reasons vary from unfamiliarity with hedging techniques — in which case banks need to strengthen their customer education programmes — to a dangerous tendency to speculate on foreign exchange rate movements. The RBI has tried to counter such practices by tightening the rules and directing banks to monitor uncovered foreign exchange exposures more closely.

Read - The Hindu

Non-banking financial sector seeing consolidation

The Non-banking financial sector was seeing consolidation, with companies placed comfortably on the capital front, said a Reserve Bank of India (RBI) report on banking in India, 2011-12. Currently, the sector comprises a heterogeneous group of institutions, which caters to a wide range of financial requirements. Major intermediaries include financial institutions, non-banking financial companies (NBFCs) and primary dealers.........

Read - BS

Playing the base rate game

Two years back when the Reserve Bank of India introduced the base rate as the benchmark for banks to calculate all lending rates, it was projected as the panacea for all ills. When compared to the Benchmark Prime Lending, the base rate promised transparency, faster transmission of any rate action by the central bank and uniformity for customers. But has the base rate served its purpose?...........

Read - BS

Wait for a cue from RBI to take a call on realty

.....We would wait for some clarity on the extent and pace of reduction in the interest rates from the RBI to take a stance on interest sensitive sectors like real estate. From the RBI's commentary, it is very clear that unless they see some real action in terms of curtailing subsidies by the government, they are not going to be goaded into cutting interest rates as aggressively as the government would want them to.......

Read - ET

It is very important for the RBI to focus on inflation: Gita Gopinath

........It is very important for the RBI to focus on inflation. It has had some success in bringing down inflation to 7.81 per cent. Without help from the fiscal side, inflation control should remain a priority of the RBI. Besides, a large part of the slowdown in growth in India is due to an uncertain policy environment and lack of implementation of reforms. To blame slowing growth predominantly on high interest rates would be wrong........

Read - BS

  

Public sector banks account for bulk of customer complaints

State-run banks accounted for nearly two-third of the customer complaints received during last financial year, the Reserve Bank of India (RBI) today said in its report on trend and progress of banking in the country. "Public sector banks accounted for bulk of the complaints (70%) received during 2011-12. Within public sector banks, the State Bank group alone accounted for almost 38% of total complaints received," RBI said...........

Read.......

Banks need to reduce cost, pass benefit to customers, says RBI

Indian Banks will have to reduce costs by increasing their efficiency and pass on the benefits to lenders and depositors, the Reserve Bank of India (RBI) on Thursday said in the Trends and Progress report for 2011-12. “The challenge before banks is to make the best use of technology and innovation to bring down intermediation costs while protecting their bottom lines. The challenge for Indian banks is to reduce costs and pass on the benefits to both depositors and lenders,” RBI said...........

Read - BS

Rising NPAs: Banks turn risk averse

Concerned with rising non-performing assets (NPAs), banks have turned risk averse, the Reserve Bank of India (RBI) observed in its report “Trend and Progress of Banking in India in 2011-12”. The RBI report added the increasing risk aversion has resulted in banks looking for safer investment instruments, such as government securities, to park their funds......

Read - BS

Chakrabarty expresses concerns about shrinking credit to MSMEs

Reserve Bank Deputy Governor K C Chakrabarty today said MSMEs (micro, small and medium enterprises) play a major role in employment generation and economic growth and expressed concerns over declining credit to the sector in Madhya Pradesh. "The MSMEs play important role in employment generation and contribution to economic growth," he said addressing a seminar on 'Issues and Challenges in Micro Small and Medium Enterprises Financing' here..........

Read.......

Higher cap needs, fin inclusion challenge for banks: RBI

....The Reserve Bank committee headed by Deputy Governor K.C.Chakrabarty recommends setting up of supervisory colleges for banks especially like SBI and ICICI who have large foreign assets. That is currently under consideration with the Reserve Bank of India.........

Read......

RBI asks banks to strenghten bad loan monitoring

I

ndian banks need to strengthen monitoring of bad loans and also raise capital for the implementation of Basel III guidelines, the RBI said in a report released on Thursday.......

Read.......

MobMe partners with Gemalto & Valimo for digital signatures

Trivandrum: Ushering in a new era in the digital revolution, MobME Wireless Solutions has bagged the technology rights to roll out mobile digital signatures that RBI has, in its guidelines, recommended as the preferred mode for secure logins and transactions. Over 900 million mobile phone subscribers in India can now use their handsets to put digital signatures, giving a stamp of legal sanctity to their transactions which are now done using only computers...........

Read........

Finance Minister P Chidambaram to meet heads of PSU banks on November 15

NEW DELHI: Finance Minister P Chidambaram will meet heads of public sector banks on November 15 and review a host of issues, including their financial performance and credit flow to productive sector in the light of subdued economic activity. The broad agenda of the meeting include review of first half numbers, deteriorating asset quality, credit growth, official sources said. .........

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RBI slaps Rs 5 lakh penalty on Solapur District Central Co-op Bank

The Reserve Bank of India has imposed Rs 5 lakh penalty on the Solapur District Central Co-operative Bank. The penalty has been imposed on the bank for violating the provisions of the Banking Regulation Act (As Applicable to Co-operative Societies), as it had granted unsecured loans to companies in which the directors of the board had interest and not reporting the transactions in the relevant monthly statement after sanctioning the loans, the RBI said in a statement........

Read - HBL

IOB to recruit credit officers from campuses in State

....The process of recruiting 387 specialist officers, including 337 agricultural field officers, has already been launched. The bank has already recruited 1,500 probationary officers during the course of the year, Narendra said. On foreign operations, he said that IOB is awaiting RBI permission to upgrade its office in Dubai to a full-fledged branch.....

Read - HBL