............ “Islamic banking is not possible. There are some legal problems. We have studied the issue. We appreciate the objectives behind the request. But there are some legal problems. It can be got around not through banking, but other vehicles.” He’s partly right. But the fact is even he is partly wrong. Islamic banking is not possible even though an enabling legislation, for the whole idea is a myth and cannot be introduced in a country where normal banking exists, and which claims to be secular...........
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Saturday, November 24, 2012
Public sector banks must hasten with consolidation
Is the Finance Ministry preparing the ground for consolidation among public sector banks (PSBs)? Its recent missive to the 26 PSBs seems to suggest so. The Ministry said there is a need for continuous interaction between these banks to improve their functioning. This can be achieved by sharing experiences and lessons learnt which in turn will help fine-tune internal policies and procedures. Seven large PSBs – State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), Bank of India (BoI), Union Bank of India, Central Bank of India and Canara Bank – have been assigned the responsibility of co-ordinating the activities of 19 other PSBs in six specific areas of operation......
RBI plans to gradually replace Rs 10 bank notes with coins
....“The Reserve Bank of India has informed that in the long run, the RBI plans to gradually replace Rs 10 bank notes with Rs 10 coins in the country,” Minister of State of Finance Namo Narain Meena said in a written reply.......
Financial inclusions expanding the horizon
.....Traditionally, banking facilities in India are offered through brick-and-mortar offices. Of the nearly one lakh bank branches in the country, more than 37,000 are located in rural India. Nearly one-third of the 6,918 brick-and-mortar branches opened in the country during 2011-12 are situated in rural areas. The RBI report on ‘ Trend and Progress of Banking in India for 2011-12’ says nearly 70 per cent of these branches are situated in tier-2 to tier-6 centres. Compared to the brick-and-mortar branches, the BC model has seen rapid growth. While the branch expansion in rural areas with population of more than 2,000 registered a growth of 7.64 per cent in 2011-12, the number of business correspondents witnessed nearly 10 times that growth. The evolution of the BC model has helped the banks provide banking services to customers without having a branch of theirs. The use of mobile technology is an important part of providing banking services under the BC model. Some banks are disbursing social security schemes’ funds through the BCs.......
'Financial inclusion will benefit the poor’
........But the banks should not ignore the great business opportunity down the line. The RBI Governor said financial exclusion was more in urban areas. A sample study conducted among 107 households in Ernakulam revealed that there were people who borrowed from non-banking sources and pay higher interest. The RBI would conduct a comprehensive study to understand the dynamics of financial transactions.......
Read - The Hindu
RBI may be able to cut interest rate as inflation eases: P Chidambaram
NEW DELHI: Finance Minister P Chidambaram today expressed hope that the Reserve Bank would be able to reduce key interest rate with the further easing of inflation. "As inflation eases further, there will be an opportunity for monetary policy to take measures to mitigate growth risks," he said in a written reply to the Lok Sabha. Chidambaram said that high inflationary pressures had necessitated the adoption of tight monetary policy by the RBI.......
RBI unlikely to cut upper limit of HTM portfolios of banks
The Reserve Bank of India (RBI) is likely to keep the upper limit on held-to-maturity (HTM) portfolios of banks unchanged, at least in the near term. Though RBI had earlier said the HTM limit was high, reducing it might hit the profitability of banks. It would also lead to hurdles for the government’s borrowing programme. Asked whether the HTM limit would be reduced, RBI Deputy Governor H R Khan told Business Standard, “We are working on it, but it is very difficult to give a timeframe for that. We have to balance so many things. We cannot suddenly de-stabilise the whole thing. Banks are already under pressure and government borrowing continues to be very high.”.........
What about depositors?
It is curious that discussion on the rates that banks offer customers focuses primarily on lending rates. Almost no one looks at deposit rates, although it is obvious that if no money comes in as deposits, nothing can be lent out. The general drift of opinion today is that the Reserve Bank should be nudging lending rates down. The usual corollary to that would be lower deposit rates, or banks would not be able to maintain what is called their net interest margin . From this perspective, it is worth noting that bank deposits have been growing ever more slowly; the growth rate dropped from 18.3 per cent in 2009-10 to 16.7 per cent in 2010-11, and down further to ...........
You are all hypocrites
Whenever RBI Deputy Governor K.C.Chakrabarty gets a chance to blast banks for their inefficiencies, he goes full throttle. Sometimes he can be heard shouting at bankers even through closed doors, so there is no question of his being restrained at public functions. ..........
Read - FE
More 2G victims
Yesterday, RBI Deputy Governor KC Chakrabarty was at his entertaining best before a packed audience at a Assocham banking conference. Once gagged for his ‘loose canon’ comment ridiculing RBI’s resistance to cutting rates, Chakrabarty now relies on puns to make his points. While highlighting the need to prop up growth, he also outlined the need to improve governance in government, corporates as well as RBI. “We are all victims of 2G,” he said. He added he was talking about just growth and governance. Believe it if you will.
FE
My View on "Easy option for RBI"
In view of the development,referred to above,RBI will be ill-advised to give in and withdraw its nominees on the board of public sector banks. Needless to add that RBI nominees will have to go by RBI guidelines and ensure compliance by banks, regardless what the government nominees may say. Ultimately decisions have to be taken by the Board by majority and it is expected that in such a scenario other independent directors would assert and go by what is good for the health of the bank and not for the ego satisfaction either of the government or RBI. RBI nominees on the board of commercial banks have an onerous task and they have to do a lot of homework, study the agenda to make their contribution effective. Top management of banks find lot of comfort with the presence of RBI nominee on their board and most of them in the past had advocated for their continuation when RBI planned their withdrawal. Apart from the banks which get benefited by the advice/experience of RBI nominees, the directorship also affords an excellent opportunity to RBI Officers for their all-round development in making them true banking professional. Therefore, RBI need not get unduly disturbed by this act of the MOF, and continue to pursue its policies through their nominees on the board of commercial banks including public sector banks.
M.L.Mahajan
‘Speed is key’ to raising funds abroad
.....we have a well regulated banking sector. Reserve Bank of India does not permit structured products, exotic products or leveraged products. So, we have a good, old-fashioned banking model. Hence, there is unlikely to be a situation in India when you get up one day to realise that a bank lost $2 billion due to a rogue trader.........
Non CTS-2010 cheques won’t work in 2013
.....The new advertisement published in all the national dailies read that a new series of cheque leaves, as mandated by RBI, will come into effect from 1 January 2013. The present series of cheques is required to be discontinued thereafter........
Bankers to discuss strategies for next decade
.....There will also be sessions on 'Profitably capturing rural financial services opportunity', 'Leveraging capital as source of competitive advantage', 'Defining the next frontier in wholesale banking', and a special address by Reserve Bank of India deputy governor Subir Gokarn on 'India's gold import problem: Finding solutions through financial products'......
New private banks: Look well before you leap
....What is really required now is reemphasis on the social objectives of public sector banks and retuning their activities co-terminus with the national planning process. There must be a comprehensive National Banking Policy and National Credit Plan which should outline the role and responsibilities of public sector banks in the overall economic development of the nation.......
Innovation key to banking success: Experts
Innovation will be the mantra for banks, if they have to make their presence felt in a highly competitive environment. This was the message on the inauguration day of the two-day annual bankers conference held in the city on Friday. The Indian Banks’ Association’s conference ‘BANCON’ will highlight how business model innovation in financial services will spur industry’s growth momentum in the coming decade.......
Read - Indian Express
Banks' holding company plan on hold
....The finance ministry had sent the guidelines for setting up the holding company to the Reserve Bank of India (RBI) sometime ago but the central bank has not given its comments yet. It is learnt that RBI differs with the finance ministry on some points and wants changes in some norms.......
HDFC Bank ‘ lifts’ motorcycle, told to pay Rs 55,000 compensation
....." In the absence of the terms and conditions of the loan agreement and service of recall notice, the lifting of the bike from outside the residence of the complainant cannot be said to be voluntary. " The bank committed deficiency in service by lifting the vehicle without a notice to the complainant and consent of the complainant," a bench headed by its President B B Chaudhary said while directing the bank to pay Rs 50,000 as compensation and Rs 5,000 as litigation cost to the complainant........
Credit rating agencies under fire! It’s time for SEBI & RBI to act
.....In India, credit rating agencies (CRA) are approved by two regulators, Securities and Exchange Board of India (SEBI) for capital market operations and by Reserve Bank of India (RBI) for rating of borrowers of banks. And as it is said dual control is no control. .....
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