The RBI clutches at straws

By extending priority sector target to foreign banks, RBI has displayed a lack of understanding

.........After nearly five decades of regulation over 50 banks with nearly 100,000 bank branches enforced with penalty and policy coercion (banks that don’t meet targets are not given new branch licences) the status of the priority sector is pathetic. A case in point being the 26 million small enterprises. These contribute 17% of the gross domestic product, 45% of manufactured output and employ 60 million people. Yet, credit availability to these enterprises is meagre. In fact, it is less than 10% of aggregate net bank credit..........

Read - Mint

New banking could use some old time culture - DR. N. A. MUJUMDAR

.....What is required today is the same " small borrower friendly" banking culture, unlike profit- making micro finance institutions ( MFIs). Public sector bankers should go beyond profit- making and try to upgrade the enterprises to which they lend - may be for farm or non- farm enterprises - and catapult the borrower into a higher income trajectory. Mere tokenism of making banking services physically accessible will not do. Profitability and social banking need to be blended. Financial inclusion in a meaningful sense thus warrants the same commitment on the part of the bankers, particularly public sectors bankers, that they displayed during the Lead Bank Programme.......

Read - FPJ

Over 100 aspirants line up for banking licence, seek clarity

RBI has been flooded with requests for interpretation of its rules for grant of new banking licences and for clarifications on the 'ambiguity' in various areas, as more than 100 entities have evinced initial interest in seeking permission to set up banks. RBI released its guidelines for licensing of new banks in February this year, asking the aspirants to submit their applications by July 1, 2013. Later, the central bank asked all the interested parties to seek any clarifications they might have on the issue by April 10, a deadline that ended last week. Sources close to the development said that more than 100 entities appear to be interested in applying for the licence, going by the quantum of clarifications sought from RBI in this regard...........

Read | Business Standard

An unfair appraisal system

..... Employees cannot be subject to any change in the policy guidelines with retrospective effect; it's against the rules of natural justice......

Read | Business Standard

Birla, Tata review use of parent branding for bank

...........A senior Birla official said they were looking at the option of not using the parent brand, following the interpretation by their lawyers of RBI's guidelines. Hence, they had sought the regulator's clarifications on using the brand name before April 10, when the deadline for seeking clarifications from the regulator on bank applications expired............

Read | Business Standard

Spreading banking

...The combination of a much lower transaction cost and the opportunity to greatly enhance banking reach has resulted in an increasing number of banks offering mobile banking services. This, in turn, coupled with the growing ubiquity of mobile phones has resulted in a very rapid growth in the number and value of mobile banking transactions taking place. According to RBI data released last week, the number of banking transactions doubled to 5.6 million between January 2012 and January 2013, while the value of these transactions more than trebled to R625 crore in January 2013 from R191 crore in January 2012. Now, the advantage of mobile banking for the banks is clear.............

Read - FE

Waiting at the bottom of a pyramid

.........More than seven years after the term was popularised by CK Prahalad, ‘bottom of the pyramid’ remains an exciting challenge and much like El Dorado continues to attract gold diggers, many of whom will vouch that it is more a myth than a reality. The industry, however, continues to view this opportunity with some suspicion but the government, perhaps out of political compulsions, continues to roll out schemes pushing money into rural India for the benefit of more than 700 million Indians. Under immense pressure from the Reserve Bank of India, banks have allocated significant resources and introduced the business correspondent model, which met with limited success......

Read - Hindustan Times

SBH opens regional office

The State Bank of Hyderabad (SBH), which became the first associate bank to cross Rs two lakh crore business in the last fiscal, unveiled its Regional Office (RO) here on Friday stressing its commitment to the eastern region States, particularly Odisha.......

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“RBI may go for two rate cuts by September”

......Core inflation is down and headline WPI (Wholesale Price Index) is somewhat comfortable. It is likely that the RBI will take advantage of this to push through two more rate cuts. We are certainly expecting one in May and, perhaps, one more in the first half of the financial year. After that, the base effect starts to work against inflation. Besides, the diesel price hikes will have considerable second round impact across sectors. In September, the inflation cycle reaches the bottom and will pick up again thereafter. Hence, the central bank may decide to go easy on rate cuts in the second half of the financial year...........

Read - ET

Ideas can not only ‘change your life’, but can destabilise financial sector!

My View on  "Bank for overseas
 Keralites mooted"

An All Women’s Bank from FM, another NRK(Non-Resident Keralites) Bank from Government of Kerala, probably an ‘All Kids’ Bank’ from someone else…what next? This is what RBI Governor told ‘Weekly’ in Mauritius:

“You need to improve your domestic savings in order to reduce dependence on foreign savings. You need to generate domestic savings. For that you need to have a competitive and efficient banking sector which can give a higher rate of return to the savers but at the same time give competitive rates of interest to the borrowers. That means that the net interest margins of the banks must be small. In other words, banks must be more effi cient in financial intermediation. If you accept that improving domestic savings is a challenge, the remedy lies in the banking sector becoming more efficient.” Are these ‘ideas’ in conformity with Governor’s view? 

- M.G.Warrier

Look beyond the gloss

...........Banks offer many ‘special’ privileges on special women’s accounts, right from lower minimum balance and extension of withdrawal limits, to free accident cover and concessional locker rates. For instance ICICI Bank’s Advantage woman savings account offers a zero balance facility and an air accident insurance of Rs. 50,000. The women’s savings account offered by HDFC offers accidental death cover of Rs 10 lakh, and accidental hospitalisation cover of Rs 1 lakh.........

Read - HBL

A tale of two economic downturns

Now that most people believe the economy is at or near the bottom during the current cycle, it would be interesting to compare a few current economic indicators to where they were at the bottom of the previous cycle in the early 2000s, after the end of the technology boom. But isn’t the current downturn, coming as it does after a global financial crisis, much worse than the slowdown after the tech wreck? ..........

Read - Mint

Cut the rates, never mind the spreads

..........With the pace of growth of deposits now having slowed to decade-lows, some banks have been compelled to up rates to be able to hold on to customers. So, at a time when banks should have been able to lower loan rates—in response to the signalling from the Reserve Bank of India (RBI)—they’re not doing so. In a sluggish economic environment, loan growth too has decelerated—though it continues to outpace the increase in deposits—and it might have helped if banks had been able to stimulate some demand............

Read - FE

Mismatch in maturity profiles of banks’ assets & liabilities - K.Sivaraman, Former Regional Director

......It would have been more interesting if the Report had provided the share of ultra short-term, wholesale and high-cost deposits. One guess is that the share of such deposits could be anywhere between 15 and 20 per cent of the total deposits. The other issue is whether strict compliance with KYC norms has been achieved in obtaining such deposits. This assumes importance in the context of the reports of alleged money laundering and role, if any, played by banks in this regard.......

Read - HBL

Economic revival not yet in sight

.....The pressure on the fisc and the worrisome current account deficit are negative factors for potential investors, domestic and foreign. Indeed, the situation is no better than the early ' 90s, when the government was forced to pledge gold with the Bank of England. The cushion of nearly $ 300 billion in forex reserves can evaporate quickly, should the pull- out by the FIIs gather speed. How to make India an attractive destination for foreign investment is the challenge for the economic policy- makers.....

Read - FPJ

Stable but critical

....... Although it is down slightly compared to last month, inflation is still above 10 per cent. As the Reserve Bank of India has been saying for some time, this significantly limits the monetary policy response to slowing growth. The ball is very much in the government's court, then, and the clock is running down very fast.

Read | Business Standard

Policy makers should react stronger to revive growth

.....S S Tarapore, former deputy governor of Reserve Bank of India warns, "The Exim policy cannot be a substitute for prudent monetary, fiscal and exchange rate policies. In the absence of shock therapy for dealing with inflation and CAD, there would be a major upheaval, as India would eventually face the ignominy of international censure." His prescription is that the RBI should buy when there are capital inflows to prevent an appreciation of the rupee and refrain from selling when there are outflows. "The upshot is that the rupee would depreciate as it indeed should. At the margin, it is preferable to have an undervalued rupee rather than an overvalued rupee", he says. ......

Read | Business Standard

Well-known industrialist R P Goenka passes away in Kolkata

....He was a past president of the Confederation of Asia-Pacific Chambers of Commerce & Industry and former chairman of the Board of  Governors of Indian Institute of Technology (IIT), Kharagpur. He had served in the past as a director on the Central Board of the Reserve Bank of India, General Insurance Corporation of India, Steel Authority of India Limited and Industrial Development Bank of India.............

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RBI to cancel licences of 26 loss-making cooperative banks

The Reserve Bank of India will shortly cancel licences of 26 loss-making cooperative banks, including 16 in Uttar Pradesh, Deputy Governor K C Chakrabarty today said. A capital of Rs 2,000 crore is required for running 16 cooperatives banks in the state and RBI may not cancel the licenses of these banks if the state government supports them, Chakrabarty told reporters on the sidelines of an event here.............

Read - IE

Coop Bank launches USBs at North Andamans

DIGLIPUR - 12 Apr 2013 : Under Door Step Banking services, the Andaman and Nicobar State Cooperative Bank (ANSCB) launched Ultra Small Branch (USB) at Radhanagar & Kishorinagar on 11th April, 2013 as per the Financial Inclusion Initiative (FII) of RBI...........

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‘Constitute special task force to improve working efficiency in minority welfare projects’

......Pitching for the interest free banking, he wrote, “We accept that Interest free banking has yet to prove its safety standards. But that requires involvement of qualified and experienced professionals dealing in risk management of assets. Unprofessional management in a framework with number of regulatory hurdles for interest free banking has caused failures in past." You are supposed to represent the Government view point, but the community holds lot of expectations from you and hope that you would always do justice with the community striving hard to get faith based financial services, he added, urging him to “arrange healthy discussion over the issue between RBI, and financial experts serving the community under adverse regulatory conditions for interest free banking to get best possible way out under present regulatory framework.”.........

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RBI mulls easing fund transfer norms for new cos to boost FDI

....The issue was recently discussed at a high level meeting presided over by Department of Economic Affairs Secretary Arvind Mayaram. The meeting was also attended by DIPP Secretary Saurabh Chandra, Chief Economic Advisor Rahguram Rajan and RBI officials. “The RBI’s proposal received in-principle nod at the meeting and it was asked to a draft notifications,” a source said. The proposal, sources said, will facilitate inward remittances to meet pre-incorporation expenses of a company by non-residents...........

Read - Deccan Herald

Why central banks are a joke; we need more honest money

............The media in general treats central bankers with far more respect than they deserve. Even more so in India. The statements of D Subbarao last week on the reasons for price increases in food commodities had “economic innocence” written all over them........

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Common sense on capital flows

.... Though subject to caveats, the new thinking, which will condition the IMF’s surveillance and reporting efforts, explicitly recognises a few scenarios that call for intervention by individual countries to protect their interests. For emerging markets whose financial institutions and markets are still not fully developed, unbridled capital flows carry greater risks. This is a view that the Indian policy establishment has for long supported. Way back in July 2006, the Tarapore Committee on capital account convertibility prescribed macroeconomic adjustments and market development as essential prerequisites before relaxing capital controls.......

Read - The Hindu

The RTI activists' fights

............A veteran of 90 such applications, retired banker Abhay Kolarkar has had better experience with central government agencies. " LIC, RBI and PF departments give quick replies." The information received is useful and clears ambiguity .........

Read - TOI

Cobrapost expose: IRDA report likely next week

.....Yesterday, Deputy Governor of RBI, H R Khan had said the central bank is initiating action against ICICI Bank, HDFC Bank and Axis Bank in connection with allegations of money laundering by Cobrapost. “Actions are on the way. Scrutiny has been done, action is being taken both in respect of systemic level and at the individual banks,” he had said when asked if RBI has completed investigations on Cobrapost exposes.......

Read - The Hindu

Be world class, Narayana Murthy tells corporates -

.....Creating more jobs and better income is the way to removing hunger and ill-health from every part of the country. Only true leadership can bring in the change, he said. A.P.Hota, Managing Director, NPCI; Salim Gangadharan, Regional Director, Reserve Bank of India; Shyam Srinivasan, MD, Federal Bank; P.G.Jayakumar, MD, Dhanlaxmi Bank; and C.V.George, president, Bankers’ Club, Kochi, and others spoke.

Read - The Hindu

Finance ministry wants 20% dividend from banks

......"It's absurd to make such demands when banks are not doing well. It would be prudent to retain profits instead of paying steep dividends. Ultimately, the banks have to go back to the government for capital infusion,"........

Read - ET

Sliding rupee and CAD wrecking Indian economy

.....The pressure on rupee continued in 2012-13 because of the ongoing euro-zone crisis. The import cover for forex reserves as a result has declined from 14.4 months in 2007-08 to less than seven months now. It has further hit the rupee. Some estimates say if the situation does not improve it could go to Rs 60 and beyond. The RBI is scared of intervention. It has a cost. It leads to further dwindling of reserves. The liquidity of rupee also increases. It may stoke inflation, which already remains high. It impacts every aspect of the economy.......

Read - Nagaland Post

FDI inflow

.....But, these figures could be misleading. Most of the businesses and industries operating in various states like Reliance and Tata have their Corporate Offices in Mumbai and the FDI flowing to them is taken as if in Maharashtra. Unless..........

Read - Kashmir Times

Wilful defaulter: Who will bell the cat?

.........According to the Reserve Bank of India, a wilful defaulter is one who has the ability to pay up but doesn’t pay; who diverts funds; or, who has sold the property that was used as a security to obtain the loan. Since money is fungible, it is extremely difficult to establish that a borrower has indeed diverted bank funds. After the collapse of US investment bank Lehman Brothers Holdings Inc. that led to an unprecedented credit crisis globally and sharply eroded value of many companies, quite a few Indian corporations went shopping overseas...........

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Finmin asks banks to bring down net NPA to 1% by Mar '14

......Banks are free to choose which ever way they would like to bring down their bad loans. Whether they do it through specialised recovery branch or other method, it is up to the individual banks to decide..........

Read | Business Standard

Banks do one third of entire year's business in March

......According to figures released by Reserve Bank of India on Friday, bank deposits and credit have grown 17.4% and 17% respectively. The surge in deposit and credit growth in March has been so sharp as to enable the banking industry surpass Reserve Bank of India's credit and deposit growth target of 16% and 15%. Incidentally, banks have..........

Read -TOI

India Security Press stir at Nashik called off: Union

A 'stop work' agitation at the India Security Press and Currency Note Press units here was called off today following assurance from top officials of the Security Printing and Minting Corporation of India, a union leader said. "SPMCIL Deputy General Manager B J Gupta, New Delhi, and General Manager of India Security Press T R Gauda held meeting with the protesting union leaders and assured them of resolving the issue within a forth-night", said Working President of ISP labour unit Jagdish Godse. ...........

Read | Business Standard

Is the gold boom over?

.....“People may prefer keeping gold in physical against electronic form because RBI (Reserve Bank of India) may come out with some gold deposit schemes. They may want to earn some interest on gold from deposit schemes rather than losing out on the management fees to the fund house as gold prices are falling.”..........

Read - Mint

RBI turns its focus to gold loan cos

The crash in gold prices has turned the spotlight on gold loans companies. The Reserve Bank of India has moved into a high-alert mode and will call for information from gold loan companies and provide directions to those with high loan-to-value ratio, sources said...........

Read - TOI

Private banks eye a bigger share of agricultural loan business

...."The move will ensure a level playing field among public and private banks. Till now, public sector banks have been enjoying a cost advantage over us. Small and marginal farmers preferred public sector banks because of lower interest rates. The subvention scheme will allow us to compete with them,".....

Read | Business Standard

Public Sector Banks Don’t Want to Play Aadhaar Cards

The government’s plan to make the Aadhaar number the centrepiece of the cash-transfer system is now facing opposition from a new quarter: banks. Several banks, led by State Bank of India, have expressed reservation against jettisoning their current systems in favour of the platform created by the Unique Identification Authority of India (UIDAI), which issues the Aadhaar number and wants to make it the basis to authenticate an individual’s identity before every transaction in bank accounts into which welfare benefits are deposited..........

Read - ET 

Banking agents encourage multiple transactions in bank accounts to earn higher commission

Business correspondents (BCs) have found an innovative way to milk the government's financial inclusion agenda by encouraging multiple transactions in bank accounts to earn higher commission........... 

Read - ET

Ponzi schemes: Familiar plots, different players

.....The reason why the schemes still sprout is the absence of clarity on who will police them. The financial sector regulators or Parliament have not drawn up solutions. The latter is worried about encroachments on state powers, so it is most commendable that UK Sinha’s team has taken it upon themselves to bring faith in the regulators and belief in a regulated financial sector.

Read - FE

RBI may suspend licence of Amanath Bank

The fate of thousands of small-time investors and savings bank account holders is uncertain as the Indian banking regulators started tightening its noose around minority cooperative society Amanath Bank. Now, the bank is staring a possible suspension of its licence by Reserve Bank of India (RBI) in the face........

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Amanath leaves customers in spot

Bengaluru: Somashekhar, a resident of Shantinagar is worried over his aged father’s lifetime savings deposited at Amanath Bank. With the Reserve Bank of India (RBI) capping the withdrawal limit of accounts at the crisis ridden Ama­n­ath Bank at Rs 1,000, thousands of investors and account holders continued to crowd the bank’s branches posing questions on when they will get their money back.............

Read - Deccan Chronicle

Abraham to move Lokayukta court in Wakf scam

.....Releasing a list, Abraham said that the total estimate of Karnataka Wakf properties scam is around Rs 2 lakh crore. "Reserve Bank of India has indicted Rehman Khan and others, including his sons, daughters, son-in-law, brothers, wife and relatives of embezzlement to the tune of around Rs 300 crore..........

Read - TOI