Monks of Mint Street

The five mantras of the old monks of Mint Street are simple but sagacious

It is rare to get four exceptionally important policymakers—all being architects of post-reform monetary structure and policy in India—on the same stage. Something like this happened recently in Mumbai when three former Governors of the Reserve Bank of India (RBI) and the current head engaged in a freewheeling discussion from the same platform. As none of them was a career central banker, the group could not have been more diverse in terms of the style and substance of their trade...........

Read - Mint

Seminar on 'Future Challenges of Banking in India' held

Bhubaneswar:  The Regional College of Management (Autonomous) conducted a Seminar on ‘The Future Challenges of Banking in India’ here on Friday. The chief guest of the occasion was Harun Rashid Khan, the Deputy Governor of RBI. On this occasion, RCMA and HDFC bank, as a part of Corporate Social Responsibility and Institution Social Responsibility, organized a Blood Donation Camp in the RCMA campus......

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No harm trying a policy rate cut, says SBI’s finance chief

There will be no harm if the Reserve Bank of India cuts policy rates to support growth, said Diwakar Gupta, Managing Director and CFO, State Bank of India. Since raising interest rates 13 consecutive times did not work in controlling inflation, lowering rates may not harm either, he added............

Read - HBL

Shift+Deleted..............

Shri.P.Easwara Menon, retired Manager from Thiruvananthapuram Office, passed away in Alleppey on December 7, 2012.  He was 65 years old and succumbed to a massive heart attack. He was an expert in Computers and Software and his knowledge was fully utilised by DSIM  and DIT, Mumbai .

- As reported by P.P.Ramachandran (via e-mail)

Religious soul departed........

Shri.C.B.Meherchandani died of heart attack on November 11,2012 in Mumbai. He was 71 years old and retired as Grade B Officer from DEBC in 2001. He was a deeply religious person and a keen Television mechanic--which was his hobby.

- As reported by P.P.Ramachandran (via e-mail)

Medical treatment proved no guarantee.......

Shri.Padmanabha N Karkera died on December 3, 2012. He suffered from respiratory ailments. He died in Mangalore, where he was taking medical treatment in Manipal Hospital. He retired from as Deputy General Manager from Deposit Insurance and Credit Guarantee Corporation, Navi Mumbai. He had opted for voluntary retirement. He was 66 years old.

- As reported by P.P.Ramachandran (via e-mail)

Rangarajan cautions against sharp changes in tax policies

Uncertainties in tax policy should be minimised, at least in the short-term, and forward-looking changes be made only in the medium-term, said C Rangarajan, chairman of the Prime Minister's Economic Advisory Council. His comments came while the government is reviewing amendments to the Income Tax Act and the General Anti-Avoidance Rule ( GAAR). “The investor should be confident enough that no sharp changes are likely to be there at least during the implementation of the project,” Rangarajan said at a seminar on tax reforms and tax administration..........

Read - BS

TJSB, the first Co-op Bank in India to provide facilities for opening Aadhar Enabled bank account

VTA Demands Gradual Implementation Of CTS-2010 Cheques

...........Accordingly VTA has send memorandum to Union Finance Minister P. Chidambaram and RBI Governor Duvvuri Subbarao specifically appealing that such move should be made applicable gradually to avoid needless legal litigations and erroneously breach of trust within the parties. Implementing such a move over night shall cause unwanted multiple cheque bounce cases as many account holders still possess old cheque books and  weak awareness shall enhancement problems after 1.1.2013, hence VTA demanded withdrawal of such RBI circular dated 3.9.2012.

Read - Nagpur Today

'Realign production structure to bring in more protein’

......“There has been a change in the structure of food shortages in the country. We seem to have got into a situation where food prices are being driven by a particular segment, primarily protein prices including milk, egg, fish and meat,” he said. Higher food inflation also tends to tilt the growth-inflation balance to more on the inflation front. “So managing inflation tends to become a challenge,” he said. Lower food inflation will improve the growth-inflation balance,.........

Read - HBL

Fake money menace on the rise in Vizag

......Almost all banks take adequate precautions before refilling ATMs in order to prevent such complaints besides curbing circulation of counterfeits, said State Bank of India deputy general manager (business and operations), Manoj Khattar. He said that so far as SBI's Visakhapatnam zone was concerned, no complaints had been reported so far on receipt of fake notes from the bank's branches. As per RBI guidelines, Forged Note Vigilance Cells (FNVC) have also been set up at the head office of various banks to closely monitor fake note cases, a senior bank official said..........

Read - TOI

Reaching ATMs an uphill task for disabled

........All India Bank Employees' Association of India (AIBEA) general secretary C H Venkatachalam said banks are yet to follow the RBI instructions. "It's unfortunate that most ATMs don't have facilities for the physically challenged. Many disabled people have their salary accounts in these banks and have to use ATMs," he said........

Read - TOI

No bank account for people with disabilities

....It is also learnt that pursuant to a communication from the National Trust Act (for Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities) unit, the RBI did send out a circular advising banks to rely upon guardianship certificates issued under the Mental Health Act or the above Act for opening/operating bank accounts. Besides, it also makes recommendations on improving customer service in banks to various categories of disabled people........

Read - The Hindu

KYC norms have made investments in financial instruments all but impossible

Janmejaya Sinha, chairman for Asia-Pacific at the Boston Consulting Group, described in graphic detail his travails trying to establish his identity after he’d shifted to a new address in the same city. Well, that was before the recent tightening of know-yourcustomer (KYC) norms and Sinha at least had the consolation that he’d moved to a new and, presumably, better accommodation . There is no such consolation for millions of others who will have to endure similar, if not worse, travails; thanks to flawed KYC norms..........

Read - ET

RBI may hike NPA provision ratio if needed: Chakrabarty

.......Speaking about NPAs of banks, Chakrabarty attributed a majority of them to poor administration and risk management practices of lenders and went to the extent of terming it as 'non-performing administration.' "I call NPA as non-performing administration. We have to make the administration functioning," Chakrabarty, who oversees banking supervision at RBI, said. The RBI Deputy Governor said the "change in the administration" has to come in a slew of areas which would be internal as well as external. Lending rates would have been far lower if banks had got their NPAs down, Chakrabarty said. "It is a burden on the people who are paying the money. People forget that if NPAs would have been 1%, banks' lending rates would have been 4% lower with the same inflation, and same repo rate. "That's why we should tackle NPAs -- not only for the survival of the system, but also for the survival of the customer," Chakrabarty said............

Read - BS

RBI should reconsider provisions of master circular on export of goods and services

.........RBI issues a fresh Master Circular every year incorporating the changes made during the previous year. However, it does not help to retain year after year the provisions that are illogical or too complexly worded. RBI must also review the necessity to retain outstanding or export proceeds due as the basis for determining eligibility. A better basis would be export performance or outstanding beyond the permissible period.

Red - BS

Social costs of the global economic crisis

.....ndia's export growth which had lost momentum in the second half of 2011- 12, mainly owing to slow- down in external demand has shown further deterioration in 2012- 13. Exports in April- September 2012- 13 declined by 6.8% as compared to the level during the corresponding period of 2011- 12. There was considerable decline in exports to the Euro area. A more demonstrable case of external sector affecting India's growth is the risks from the impending US " Fiscal Cliff". As the RBI puts it. " A major downside risk to global growth is now looming from the US fiscal cliff. The US Congressional Budget office forecasts that the US fiscal deficit will decline by 3.3 percentage points to 4% of GDP in 2013. Such as sharp fiscal consolidation may have a deleterious impact on global growth. There could be an adverse impact of the US fiscal cliff on India's growth. If global growth slumps there would be spilled over impact on the current account as well……." It now seems difficult for India to attain even a 5% GDP growth in 2012- 13. Thus the full impact of the global financial and economic crisis on the Indian economy is now manifesting itself........

Read - FPJ

More action in Parliament

.....While the original Banking Laws (Amendment) Bill had specific provisions to take banking mergers out of the competition watchdog’s ambit, there has been talk also of the Government wanting to drop that exemption clause. The RBI, in turn, has fiercely opposed such a move. Whether it is the RBI or CCI that will have the ultimate say on bank mergers and acquisitions would be clear from the final version of the Bill that gets tabled on Monday.......

Read - HBL

India is suffering from inertial inflation A.Seshan

“It’s a systemic crisis that India is going through.” — Bimal Jalan

As the markets eagerly await the Reserve Bank of India (RBI’s) mid-quarter review of its policy, the controversy over price stability and growth needs to be understood in the proper context. Economists are fond of using terms from physics to make their discipline look scientific. The concepts of “equilibrium”, “velocity”, “acceleration”, among others, were thus conceived long ago. A more recent entry is “inertia”. It would mean that the economic system gets stuck at particular levels of economic variables, owing to the absence of forces to disturb the state of equilibrium. “Inertial inflation” is one such concept. It refers to a situation when the rate of price increase attains a stable equilibrium, where it remains until a shock is administered to move it to a new position........

Read - BS

Mixed signals from RBI on rate cut, inflation

Reserve Bank of India (RBI) is keeping the nation guessing on prospects of an interest rate cut in the mid-quarter review of monetary policy scheduled for December 18 by giving mixed signals on inflation, which determines the central bank's stance. Deputy Governor Subir Gokarn on Saturday said inflation continued to be primary concern for the central bank. But only two days earlier, Governor D Subbarao said he expected inflation to come down from January and will consider the growth-inflation trajectory in framing monetary policy - which suggested a benign expectation....

Read - Hindustan Times

India’s battle with inflation: Just a phase I was going through

.....Critics argue that the RBI has already been cutting by stealth, using liquidity-management tools and verbal guidance to make sure market interest rates have dropped even as the policy rate has stayed unchanged since March. Ditching the inflation target would, by this account, just be an admission that it never had the stomach to enforce it in the first place. The RBI would put things differently. Although its empirical work has previously suggested that 5.5% is the maximum healthy level of inflation, lately something has changed. Despite a sharp economic slowdown prices have kept on rising. A big chunk of demand seems to be insensitive to what the RBI does. The government borrows regardless. Rural consumers, who are doing well and are often outside the formal financial system, are shifting to richer diets, pushing up food prices. That leaves the RBI with a lousy option,......

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Rising wages offsetting inflation, says Gokarn

.......“Why is high inflation not generating same kind of unrest or outrage that it used to historically?” Gokarn said, adding that “an important answer to this could be that rural wages have actually been rising by about 20 per cent annually for the last five years.”......

Read - IE

Inflation is key worry for RBI, says Gokarn

MUMBAI, DEC 8: 

The Reserve Bank of India’s monetary policy signal is to control inflation as it will support growth in the long term, said Subir Gokarn, Deputy Governor. “It is very important for people — consumers, investors and stakeholders — to have some confidence in the system’s commitment to lower inflation,” Gokarn said at the Bombay Management Association’s 15th Finance Convention............

Read - HBL

Consolidation needed in banking sector: Central Bank CMD

..... Indian banks were nowhere in the global list of big banks and therefore it was preferrable that mergers should take place to achieve size and compete in the global market. “Our Finance Minister has expressed the wish that consolidation should take place in the banking sector, but it is not happening. When two banks come together, there should be compatibility in organisational cultures and there should be technological convergence — objectives which are difficult to achieve, but by no means impossible,”........

Read - HBL

States should amend cooperative laws: Pranab

...“By this amendment the right to form cooperative society has now become a fundamental right.  The act has paved the way for development of a stronger cooperative movement. To take this initiative further to the grassroot level respective state governments also need to create enabling environment by amending state laws etc as and when it is necessary,” Mukherjee said after giving away the National Cooperative Development Corporation (NCDC) Awards for Cooperative Excellence 2012 at Rashtrapati Bhavan on Saturday...........

Read - DH

Basel bonds flop in India

........“The transition to Basel III is not coming at a good time for Indian banks, as they are facing asset-quality issues and the overall business outlook looks grim,” said another banker. There are several hurdles to these new bonds in India, not least being the lack of understanding on the buy side. The loss-absorption features required for sub bonds to count towards Basel III capital may put the paper beyond the reach of investors like pension funds and insurance companies, if their funds are not allowed to invest in equities. To qualify as additional Tier-I or Tier-II capital, bonds will need to write down to zero if the Reserve Bank of India (RBI) deems a bank to be non-viable, forcing sub bondholders to wear losses before any public funds are used in a bail-out........

Read - BS

At 3 crore rural accounts, banks set global record

The banking sector has opened over three crore accounts in rural India as part of their financial inclusion drive. Compared to the number of rural households in the country of over 22 crore this is about 13 per cent. The government data upto March 31, 2012 also shows the extent to which the banking sector has to stretch to make the Aadhaar programme a success.........

Read - IE

When will HDFC merge with its bank? Well, er....

.....In short, even the father tacitly agrees that the only thing holding back a merger is the regulatory requirement. The Reserve Bank of India (RBI) mandates that banks have to keep aside a certain percentage of their liabilities (a.k.a. deposits) as cash reserve ratio (CRR, 4.25 percent now) and another 23 percent as SLR (statutory liquidity ratio) – something  that housing finance companies don’t have to bottle up needlessly.........

Read - Firstpost

How Saraswat Bank beat the odds?

.......In 2005, the Reserve Bank of India (RBI) proposed that weak UCBs be merged with stronger ones. Some UCBs shut shop, and others were merged. According to its 2011/12 annual report, the central bank has received 168 merger proposals since 2005/06, and cleared 125 of them. As of June 2012 there were 1,615 UCBs in the country, of which one-fourth were in Mumbai. Saraswat Bank leads the pack. Between 2006 and 2009, it acquired seven UCBs, which had a total of 87 branches. "We invested Rs 270 crore from our reserves to make their net worth positive," says Thakur. Their business has quadrupled since the acquisition. Most large UCBs have expanded through acquisitions in recent years. Indeed, they had no alternative. "After the Madhavpura scam, RBI did not issue licences for new branches till 2009, so inorganic growth was our only option," says Thakur.

Read - Business Today

As farmers suffer, NABARD offers soft loans to corporates

.....NABARD’s response to a RTI query reveals that it released Rs 13.3 crore BCG for a ‘repositioning’ report that it admits has never been submitted. Sources in NABARD allege that an additional payment of Rs. 9 crore has also been released to “rollout the recommendations”. NABARD Chairman Prakash Bakshi, under whose leadership these transactions were sanctioned, did not respond to detailed questions that were emailed to him on December 3, including on the fresh release of Rs 9 crore to BCG or what hit NABARD’s balance sheet was likely to take after the repayment to RBI of the unauthorised fund transfers to corporates.......

Read - The Hindu

Rs. 37 crore handed out for publicity

Prakash Bakshi was made the Chairman of NABARD despite serious vigilance cases pending against him during his tenure as the Executive Director, NABARD. One case pertained to the release of Rs. 100 crore on 31.12.2008 to Andhra Pradesh Cooperative Bank (APCOB) as a clean advance, which is not allowed as per NABARD’s policy and therefore illegal...........

Read - The Hindu

SBI will continue to grow ahead of the industry

.....I would not comment on others. But for us savings bank growth is phenomenal. We have not been dented by increase in savings bank rate by some of the smaller private sector banks. We have a huge distribution network. Even if these banks offered higher savings bank rate, how many people they have reached out to? Secondly, if return is the issue we offer a 6.5 per cent return on a seven-day deposit. So we think that saving bank is not an instrument for return maximisation. Savings bank is an instrument of convenience for payments. We have done a number of things outside the deposit rates. We have made multi-city cheques available to all customers at no extra cost........

Read - The Hindu