......The leitmotif of the Approach Paper is that all that needs to be done is to dismember the Reserve Bank of India (RBI), create a unified financial regulatory agency and concentrate even greater powers in an already all-powerful Ministry of Finance. While doing so, the Commission appears to be oblivious of the fact that the macroeconomic management would be greatly attenuated by its passion to hive off activity from the RBI. The endeavour should be to see how the present financial legislation should be strengthened to improve the efficiency and effectiveness of policies and to be able to enforce the regulations in a more purposeful manner. In yielding to its great passion to overhaul the system, the Commission has deviated from its central objective.......
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Friday, November 30, 2012
Banking’s new lingo
This refers to the news item titled “Subbarao warns against casino banking” (FE, November 18). One more interesting term has been added to the existing vocabulary of bankers and students of financial management. “Casino banking” has been termed as the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits. Some years ago (2009), the term “narrow banking” had been in vogue. A narrow bank, in its narrow sense, had then been defined as the system under which a bank places its funds in risk-free assets with maturity periods matching its liability maturity profile so that there is no problem relating to asset liability mismatch and the quality of assets remains intact without leading to emergence of sub-standard assets. This extreme risk averseness has been also dubbed as “lazy banking” and “zombie banking”. Other such terms often referred to are: “class banking”, “mass banking”, “inclusive banking”, “logical banking”, “safe banking”, etc. What next? “Sitting-on-the-fence banking”—neither going this way nor that? “Water-on-the-duck’s-back banking”—no policy guidelines ever affect this sector? Perhaps it’s time for RBI to come out with an A to Z primer (arm-chair banking to zombie banking) to educate the layman about such interesting definitions.
- JS Broca, New Delhi FE
MSU wakes up after RBI rap
VADODARA: After the embarrassment of a civil suit filed, M S University has decided to seek the approval of the Reserve Bank of India (RBI), to fill up the RBI Chair, left vacant by the university for a decade. The university has also decided to request the country's central bank to withdraw the civil suit it filed in an Ahmedabad court. Simultaneously, MSU will write to the RBI, saying that it will appoint the RBI Chair professor within six months, if the reserve bank provides its approval.......
Banking Ombudsman: Redressal for customer complaints against banks
....Presently RBI (Reserve Bank of India) has compelled banks to hear customer on priority basis. On direction of RBI every bank has to appoint nodal office for redressal of customer grievances. Every bank has designated higher level office at head offices and other senior level officer at controlling offices and at large branches.......
Read..........
The job market
In a speech in Mumbai earlier this month, Reserve Bank of India Governor D Subbarao made a striking point about the changing world order. There was a time in the eighties and nineties, he said, when parents across the world told their children not to waste food because there are millions who go hungry. Today, he added, with the rise of protectionism in advanced countries, parents there might well be telling their children, “If you don’t get a job, Indians will take away your job.”
BS
RIGHTS angle
....“In the last ten years, we have handled 10,000 complaints. Hundreds of cases go to court, I have gone and argued myself!” Over the years, he has fought for transparent MRP, filed class-action suits for standardisation in the size of packaged goods, and got the RBI to implement a daily rate of interest in the savings account. “It was a significant win, benefiting over 35 lakh people!”..........
Why do ministries interfere with the functioning of statutory bodies?
.....Statutory bodies like the RBI should not be made subservient to the whims and fancies of officials in ministries for exercising the powers they are expected to exercise as part of their mandated functions. The RBI has faced problems on such issues relating to banks earlier due to blurred clarity in powers and interpretation of law. Perhaps, the RBI has learnt from the recent experiences while handling new generation private sector banks which did not survive and the interests of the clientele had to be protected by the regulator with GOI support. Last ten years or so, the RBI has been loitering around North Block for permission to continue a pension updation granted by RBI in exercise of powers available under the Reserve Bank of India Pension Regulations which is being questioned by the finance ministry that has interpreted the pension regulations differently. An amendment to RBI Pension Regulations made to conform to the GOI interpretation of the regulations is pending with finance ministry for more than a year......
RBI’s inclusion and ministry’s exclusion agenda - M.S.Sriram
............All banks, including RRBs, are fully computerized, and inter-operability networked. Wage and pension payments for the poor are to be routed through bank accounts. Identification is becoming easier. Mobile networks are spreading. Staffing of the banks is going through a demographic change due to aggressive recruitment of young officers. This was an opportunity to redefine the inclusion agenda, to make a business case for inclusion and also to redefine banking. Unfortunately, MoF is not showing the same maturity as RBI and is wasting an opportunity to demonstrate how inclusion can be achieved in a changing and interconnected world.
Currency garlands: RBI in talks with Centre
........Responding to a query on whether currency notes are allowed to make garlands to felicitate public figures or grooms in marriages, the RBI said that it had appealed to the general public to refrain from using bank notes to make garlands, decorate pandals and places of worship. The RBI said, in the press release issued on March 12, 2008, that such actions deface bank notes and shorten their life. “Bank notes should be respected as they are symbols of sovereign and the public should not misuse them so that the life of bank notes is enhanced,” the statement said........
Microfinance - From utopia to dystopia
......The Microfinance Institutions (Development and Regulation) Bill, 2012, which empowers the Reserve Bank of India (RBI) to regulate microfinance and waits Parliamentary approval, is being opposed by the Andhra government. A prominent Union minister is also against the proposed legislation. This is despite the fact that RBI wants to regulate the sector quite firmly. It had appointed the Malegam Committee, which recommended, among other things, a 24 per cent cap on interest rates. MFI representatives are uncomfortable with the Malegam Committee. Yet, the Andhra government is opposed to even RBI regulating microfinance........
Credit growth outpaces deposit growth
........“People have withdrawn more cash this festival season [making liquidity situation tight] contrary to what we were expecting,” RBI Deputy Governor HR Khan told reporters couple of days ago at the sidelines of an event here. He also admitted that there is a slight reduction in deposits and increase in advances creating the liquidity pressure.......
'Any decision on common finance regulator only after FSLRC report'
.......Under the existing architecture, the financial sector is regulated by eight agencies including Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA) and Forward Markets Commission (FMC). As per the proposal, there would be five new agencies besides Reserve Bank and FSDC. The new ones would be UFA, Financial Sector Appellate Tribunal (FSAT), Financial Redressal Agency (FRA), Debt Management Office (DMO) and Resolution Corporation........
Banks report fraud cases involving Rs 6,457 crore in 2012
....On measures taken to prevent/reduce incidences of frauds, Chidambaram said, "RBI is sensitising banks from time to time about common fraud prone areas through issuance of modus operandi circulars on various types of frauds." He further said RBI has advised banks to introduce a system of concurrence audit and constitute a Special Committee of the Board to exclusively monitor frauds of Rs 1 crore and above.....
Realty: RBI, FM reading the same but from different pages
.....Clearly, the RBI has done its bit by asking banks to take a hit on loan recast. The bigger question is can Finance Minister P Chidambram can do his bit by breaking this builder-investor-politician cartel to clean up the real estate market and ensure affordable housing in India?......
RBI announces OMO after four months to infuse cash
With cash tightening, the Reserve Bank of India (RBI) has announced open market operations on Friday, to support banks and primary dealers. Open market operation is a cash infusion measure and implies outright purchase of government securities by the RBI from banks and primary dealers. RBI’s open market operation for Rs 12,000 crore will happen after a gap of more than four months. The last such operation was held on June 22, when cash had tightened due to RBI’s interventions in the foreign currency markets to support the rupee against the dollar.........
NPAs of public sector banks on the rise
The non-performing assets (NPAs) of public sector banks rose close to one percentage point from 3.17 per cent to 4.01 per cent in six months to September 2012, the government informed Parliament on Thursday. To improve the health of financial sector, reduce NPAs and improve asset quality of banks and to prevent slippages, the Reserve Bank of India has issued instructions that each bank is required to have a loan recovery policy, Minister of State for Finance, Namo Narain Meena, informed the Rajya Sabha......
Educate public about economy: Rangarajan
The strides made by business journalism in the country since 1990 was a reflection of the growing importance of the economy and journalists must strive to create economic literacy among the people, said C Rangarajan chairman of the Economic Advisory Council to the Prime Minister. The former RBI governor made this remark while distributing the 14th annual Polestar awards for ‘Excellence in IT and Business Journalism’ ......
Right time to lock into recurring deposits
With the Reserve Bank of India (RBI) indicating policy easing on interest rates as soon as January 2013, you may well use the window to lock into high deposit rates if you are looking for assured returns. If you have a lump sum, fixed deposits would be the right instrument for you, but if you prefer regular savings, recurring deposits (RDs) would work for you........
Superior service
.......The fears expressed by the author with regard to use of financial resources by private banks can be tackled by proper supervision and control by the RBI. In fact, the central bank has done a good job in insulating the banking system from external shocks arising out of the international financial crisis in 2008. The RBI has also made timely interventions in regulating the functioning of private banks and protected the interests of the depositors in the past.
RBI wants involvement of private banks in government's joint lending plan
The Reserve Bank of India has suggested that private banks be involved in the government's proposed joint lending mechanism for corporate debt, and demanded deliberations on the issue before the policy becomes operational, according to an official............
Central Government to launch account number portability service soon
............The Finance Ministry has asked Reserve Bank of India and Indian Bank Association to issue necessary guidelines in this regard. The Finance Ministry recommended that ANP be implemented in the nation before cash subsidy scheme. The RBI recently has formed a high-level committee to prepare a roadmap of ANP. The Finance Ministry told the ANP facility can be provided to those customers whose accounts are being opened through AADHAR cards. .......
ICICI Bank Website has the Best User Experience for Online Customers
.......According to a release, user experience (UX) is a specialized field dedicated to 'ease of use' of online products and services. In the recently concluded 6th Economic Times Banking Technology Conclave, RBI's Executive Director G. Padmanabhan, during the keynote address, highlighted the importance of user experience in online banking, "Banks need to examine how they can make electronic transactions safe and secure while providing customers equal or more ease, comfort and convenience compared to branch banking.".......
Rights issue on cards for govt banks
Ahead of the implementation of Basel-III norms in the banking sector, public sector banks are looking to raise capital, with a rights issue being the preferred mode of capitalisation. Several public sector banks are of the view that allowing banks to raise capital through a rights issue, instead of a preferential allotment of shares being subscribed by the government. It would give all shareholders an equal investment opportunity...........
Bulk note acceptor at Federal Bank
THIRUVANANTHAPURAM, NOV. 29:
Federal Bank has installed a bulk note acceptor at its new branch at Thiruvananthapuram Chalai, a trading hub. The machine will work round the clock and accept bulk amounts of deposits, sort, count, and instantly credit the amount to the account of the deposit cardholder.......
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