Anand Sinha set to get another year as RBI dy governor

Sinha, the architect of new bank licence norms, will be a key member of the central bank

Reserve Bank of India (RBI) Deputy Governor Anand Sinha, who was to retire at the end of this month, is set to get a year’s extension, a government official told Business Standard. “Orders to this effect (Anand Sinha’s extension) would be issued shortly,” a key official told Business Standard..............

Read | Business Standard

The Guv keeps the bar high

......It took nearly three years for the Reserve Bank of India (RBI) to give a final shape to the government’s decision to let more players in the private sector banking field. That by itself offers a clue to the divide in thinking between the fiscal and monetary managers of the Indian economy. When it did come out with guidelines for “Licensing of New Banks in the Private Sector”, the central bank has let it known to aspirants at large in unambiguous terms that banking is a no-nonsense, serious business, and that there cannot be any trust deficit...........

Read - The Hindu

New banking guidelines in two minutes

Everyone is welcome, but with caveats:.................

Read | Business Standard

Interesting banking times ahead

..........RBI should be commended for opening the doors and adding caveats to ensure that there is no misuse of the licence and that they operate on a firm footing, which is in line with the objectives of banking in the country. There are really two questions that can be put up for debate. The first is whether this is good enough for private capital to flow in. The second is whether this will change the architecture of banking in the country........

Read - FE

RBI moves boost loan recovery, says FM

Steps taken by the government and RBI have led to improvement in recovery of bad loans of public sector banks which rose to Rs 1,84,193 crore at the end of December 2012, Finance Minister P Chidambaram said on Friday..................

Read - Deccan Herald

The road to new banks

Read - The Hindu

Plastic notes now at a market near you, one billion in circulation in select cities

........."It was decided by the government and the Reserve Bank to introduce 1 billion pieces of Rs 10 notes in polymer, plastic on a field trial basis in the cities of Kochi, Mysore, Jaipur, Bhubaneshwar and Shimla.... The process of field trial has been initiated by RBI. "A decision to issue polymer/plastic banknotes for long term circulation will be taken on the basis of the outcome of the field trial," ............

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Financial inclusion must for new banks

......"Applicants for new bank licences will be required to furnish their business plans for the banks along with their applications," the guidelines issued by the Reserve Bank of India said. "The business plan will have to address how the bank proposes to achieve financial inclusion.".......

Read - ET

RBI welcomes new banks, with caution

 Read - ET

High asset price volatility clause may be a hindrance

.....Although RBI did not exclude any sector in the guidelines, the wordings in the circular have raised concerns on whether real estate and broking firms would qualify. Both these business are considered volatile, as stock markets and real estate are known to have a speculative element in them.......

Read | Business Standard

Experts' cheer mixed on RBI’s bank-licence guidelines

..........."As a regulator, the RBI will have to study the merits of every application and check if it meets the stipulated requirements before issuing a licence. That's a very fair way of moving forward," he says. "The banking entity also will be able to lend to companies in the group but will not be able to invest in them."...........

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More clarity required on RBI's new norms: M&M

.......The clarity on transition provisions for existing NBFC was very nice. The guidelines and the sentence, that existing NBFCs would be permitted to convert themselves to or alternately promote a bank. That is the option given. However, one would need more clarity on the transition provisions and how they would apply..........

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Stiff banking conditions

..............some of the conditions appear stiff—asking new entrants to ensure that 25% of their branches are located in unbanked rural centres seems unfair since it would pressure the banks’ profitability in the initial years. Since banks need to list on the exchanges within three years of starting operations, they could have been given some time to expand their presence in the hinterland. In any case, forcing rural obligations has not worked in the past for any sector.............

Read - FE Editorial

India Post to enter banking space

.....The Reserve Bank of India on Friday issued the much awaited guidelines for new banking licences. Among other terms, new banks should open at least 25 per cent of branches in unbanked rural centres. Of the 1.55 lakh post offices, around 24,000 district offices may be ready to offer banking services in next two years. Post offices are being enabled by core banking solution's connecting nationwide branches as part of an transformative IT project......

Read - FPJ

Corporates keen to enter banking space, welcome RBI norms on new licences

M&M, Reliance Capital and players in the financial services space today welcomed Reserve Bank's guidelines for issuing licences for new banks and showed keenness to enter the business. Yielding to government's stance, RBI today allowed corporates and PSUs with sound credentials and Rs 500 crore to invest as paid-up capital to set up commercial banks...........

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Religare optimistic on RBI's guidelines on banking licence

..........Any financial services company, even at Religare today, our board is largely independent. One is governance and the other one is shareholding. RBI clearly indicates that if any bank is not largely directed in any way controlled by a promoter group and is governed in a very dependent manner then it is a welcome and de-risking attitude that the RBI has taken. So, I don't think it is very positive from that context.

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Assam Police launch operation against fake non-banking financial companies

GUWAHATI: The Assam Police with the help of the Reserve Bank of India (RBI) has decided to launch an extensive operation against dubious non-banking financial companies (NBFCs) in the state. To ensure that the initiative is effective, the state police have decided to impart technicalknowhow about NBFCs among investigating officers (IOs).......

Read - TOI

My View on "Wage Revision Remains in Cold Storage...."

The observations are correct. However, IBA has called AIBOC and AIBOA on Feb 22,2013 for wage revision talks. As usual, the minutes of negotiations would not be maintained, the talks are exploratory in nature and Assns are not interested in early settlement.The prime reason is levy and importance garnered by the leaders. Pl remember that PAY COMMISSIONS composed of 3 to 5 members give much hefty rise than what you get in bi partite collective bargaining.

- Sitendra Kumar

Centre should perhaps consider a quick review by such an expert group which should go into the adequacy of wages, minimum and maximum remuneration across sectors, their relationship to lifestyle needs of employees and paying capacity of employers and the need to factor in social security needs like healthcare and old age care in wages. The findings of such a study will help government in providing some broad policy guidelines to be followed by industries across public and private sectors, while negotiating wage structure. Transparency in policy will go a long way in reducing sporadic eruptions emanating from suppression of genuine human aspiration for a reasonably comfortable life, safe and secure in all respects. 

- M.G.Warrier

Unclaimed deposits of over Rs. 2,481 crore in banks till December 2011

........in the Banking Laws (Amendment) Act, 2012, a new section has been inserted in the Banking Regulation Act empowering the RBI to establish the 'Depositor Education and Awareness Fund' for the unclaimed deposits lying with any bank for more than 10 years. "This fund will be utilised for promotion of depositors' interest and for such other purposes which may be necessary for the promotion of depositors' interest as may be specified by the RBI from time to time,"...........

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Banking fraud total jumped 43% to Rs 52.66 cr in 2012: Govt

..........He said the RBI has asked banks to take preventive measures to combat frauds relating to skimming or duplication of credit cards. RBI has also advised banks to set up internal control systems to combat frauds and to take pro-active fraud control and enforcement measures to ensure that credit card operations are run on sound, prudent and profitable lines. Moreover, it has also cautioned banks on phishing attacks containing details of the modus-operandi on such attacks and minimum set of preventive measures to tackle phishing attacks.......

Read - IE

AP High Court ruling has sent MFIs back to square one

......"The directions issued by the Reserve Bank of India coupled with the provisions of Chapter IIIB of the RBI Act will protect the interests of the self help groups from usurious interest rates and coercive means of recovery.... Apart from this, the Micro Finance Institutions (Development and Regulation) Bill, 2012, introduced by the Central Government in the Lok Sabha is a complete code in itself as regards the micro finance institutions. Once that Bill takes the shape of an enactment, we are of the opinion that it will govern every aspect of the micro finance institutions at all levels and in all respects and all the issues raised by the petitioners herein. In such circumstances, it would be a futile exercise for this Court to examine the legislative competence or otherwise of the State to legislate the impugned enactment, therefore, we have not gone into the same."......

Read - Business Today

Empower the Fiscal, Don't Weaken It - Y.V.Reddy

.....The term I use is fiscal empowerment. In countries like India, you should not look at just reducing the fiscal deficit. In fact, you should have more expenditure. In the future, there will be a greater demand for water, sanitation and public health. Can the private sector provide that? Ultimately, it is the fiscal that gives you the capacity to mitigate risks, handle the financial sector instability etc. So in my book, I argue: Empower the fiscal, don’t weaken it.........

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Govt mulls new deposit scheme to bring down physical gold demand

.....The scheme to be operated by post offices in rural areas besides select Public sector banks as authorised by the Reserve Bank of India (RBI), involves primarily a fixed deposit account with varying periodicity as offered by banks today but with one exception. The balance will be maintained in terms of gold units (in grams) and not in cash by converting the amount deposited in the account into gold units based on bank’s gold selling rate of the bank. This rate will be fixed by the..........

Read | Business Standard

From bridal baubles to bullion bars, India's gold culture defies curbs

......Gold has been deeply entwined in Indian culture for thousands of years. Nowadays, India is by far the world's biggest buyer of gold and those imports are an increasing drain on an economy that is growing too slowly to reduce widespread poverty. Last year Indians imported 864 tonnes of gold, about one fifth of world sales......... 

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Corruption cloud over budget session

..........While the Finance Ministry and corporate captains have blamed the Reserve Bank of India for not lowering interest rates until recently, the RBI has stuck to its guns that one of the primary goals of monetary policy is to lower inflationary expectations. As RBI Governor D. Subba Rao succinctly put it: “People who are worried about economic growth are typically quite articulate, that they have a platform to express their concerns…I have sympathy with that view (that high interest rates had slowed down growth). I am not saying that’s an invalid criticism. But I just want to say that their voice is heard, but people who are hurt by inflation -- the large majority of the poor -- their voice is not heard.” The RBI Governor’s statement could not have been a sharper indictment of the government’s economic priorities. Many believe the government is courting political disaster. 

Read - The Goan