Anti-RBI measures

This refers to “A plot to destroy RBI” (Business Line, May 3). As pointed out, the Financial Sector Legislative Reforms Commission’s recommendations would effectively dismember the RBI, a strong monitory body. Crisis such as high inflation, mounting current account deficit and inability to achieve fiscal consolidation can be solved only through a united effort of the Government and the RBI. Reforms should not be an instrument for a political party’s whims.

- N. R. Nagarajan (HBL)

It is only KYC norm violation, says RBI

Reserve Bank of India (RBI) Deputy Governor K.C. Chakrabarty, on Monday, refuted money laundering charges levelled against various banks, and said that all exposures by Cobrapost.com were connected to know-your-customer (KYC) norms. “We are seeing how the banks are following up on the KYC norms. There are certain differences in the manner of reporting of KYC norms in each bank…Need to strengthen KYC guidelines,” he said..........

Read - The Hindu

Not hopeful of RBI action on money laundering: Cobrapost

............."Although the RBI has announced action, both at the systemic level and at the individual bank level, one can only hope they are not cosmetic, and the latest expose would spur both the RBI and the IRDA to address the malaise, for all times to come," says the Cobrapost release..............''

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Who's accountable?

Apropos Debashis Basu's column "The price of regulators' ignorance" (Irrational Choice, May 6), the author has firmly placed accountability where it should belong. The Securities and Exchange Board of India (Sebi) and the Reserve Bank of India are lax in their responses to anything that does not concern a big corporate house or a significant macroeconomic issue. Ponzi schemes are run so openly and...........

Read | Business Standard

Cobrapost: Bankers and insurers in damage-control mode

.....Banks and insurance companies have gone on a firefighting mode after allegations by online portal Cobrapost that they violated money laundering norms. Though all of them denied the allegations, they, however, said if any instance of money laundering comes to their notice in the investigation, action would be taken against erring employees........

Read | Business Standard

Money laundering charge: FinMin asks banks, LIC to act tough

.....The Finance Ministry, on Monday, asked public sector banks and the Life Insurance Corporation of India (LIC) to take immediate action against employees ‘appear to be advising’ customers on ways of violating KYC (know-your-customer) and other regulatory norms...........

Read - The Hindu

New expose puts more banks in spotlight

.....“In its continuing undercover operation, spanning several months, Cobrapost finds dozens and dozens of major public sector banks, and many more private banks, across the country are blatantly involved in money laundering, as are major insurers. In all, 23 banks and insurance companies have been exposed,” the portal said in a release......

Read - The Hindu

Cobrapost Expose 2: Banks, LIC face FinMin heat

..............Cobrapost has captured on video-tape how employees of banks and life insurers are helping customers launder unaccounted cash, bypassing KYC (know-your-customer) norms. They offer to invest unaccounted cash in products that form part of the regular financial system and help launder the unaccounted money, it alleged. The laws violated include the Prevention of Money Laundering Act, the Income Tax Act and the Indian Penal Code, it said..........

Read - HBL

India Asks Banks, Insurer to Probe Website's Claims

..............The order comes after a local news website, Cobrapost.com, released dozens of videos earlier in the day purportedly showing employees of some banks and insurance companies advising its reporter posing as a customer on how to hide money from tax authorities. The reporter used a hidden camera to record conversations with these employees.................

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Cobrapost fails to sting bank stocks

..........."If everyone is in the wrong, then who is doing the right thing? We will need to wait and see what the Reserve Bank of India (RBI) will do," .......................

Read - BS

Cobrapost II finds all hands in till: Black money is India story

..........The fact that the sting confronted three of the best-run private banks was a big point of interest, since we all know that profit incentives are huge in these banks. But today’s sting, which bared a similar state of affairs in the big public sector banks as well as the smaller private sector ones, actually will come as a relief to the targets of the first sting. This is because it shows that the handling and laundering of black money – or rather money which the taxman is unaware of – is part of the current banking system. It actually lets the Big Three of private banking breathe easier..............

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Cobrapost expose: Aniruddha Bahal on the rot in our financial system

............ I have no idea what the government of India contemplates to do to make the financial sector hawala free and black money free. No one (government authorities ) contacted us – the RBI, ED, CBI didn’t contact us. Only the Income Tax department contacted us and we gave them the Cds.............

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My View on "Why RBI should give up govt debt management"

There is sense in the argument “ The only way to make the government pay the real price for its borrowing is setting up a separate debt management office.” But at this juncture if the central bank stop supporting GOI’s finance (read debt) management, there will be chaos in the Indian financial market. FSLRC does not seem to have gone deep into the country-specific issues or the evolution of the responsibilities of RBI. ‘Cut and paste’ approach to institution-building in financial sector will be disastrous. 

- M.G.Warrier

RBI says will deploy all options to tackle cash crunch

The Reserve Bank of India (RBI) said on Monday that it will consider all the options available to it to tackle tight liquidity in the market including adjusting banks' cash reserve ratio, and not just confine itself to bond purchases...............

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Justification for rate cut, a myth

..........In fact, one would perhaps find the RBI as being too cautious on growth projections. If the monsoon turns out to be normal, and also temporally and spatially well spread, and the Government’s current efforts help to at least marginally invigorate the investment climate, it is possible for growth to end up somewhat higher at six per cent or so..........

Read - HBL

RBI panel favours differential tax regime for exporters

......The Reserve Bank had constituted a Technical Committee on Services/Facilities for the Exporters under the Chairmanship of RBI Executive Director G Padmanabhan to suggests ways for improving financial support from alternative sources. Among others, the Committee has made recommendations relating to review of Gold Card Scheme for extension of export credit to exporters, appropriate inclusion of export finance under the priority sector lending and raising of foreign currency loans on pool basis for extension of export credit to exporters......

Read - Mint

Norms for bonds linked to inflation in a month

GREATER NOIDA, MAY 4:  

The final guidelines for inflation-indexed bonds are likely to be ready in a month’s time, RBI Deputy Governor H. R. Khan has said. This means there has been a further delay to the earlier indicated timeline of mid-May for announcement of the features for the proposed bonds. “We are at an advanced stage of discussion with the Finance Ministry. It will be finalised in a month”, Khan told reporters on the sidelines of a Confederation of Indian Industry event on Indian Financial Markets here on Saturday. This meeting was held as part of the ongoing 46th Annual Meeting of the Board of Governors of the Asian Development Bank..........

Read - HBL

Cell banking adherents rise

.............India has more than 86 crore mobile subscribers, and there are rising concerns that the banking sector is not fully exploiting the potential in mobile banking. In September, H.R. Khan, deputy governor of the RBI, said that only 52 banks were offering this service and among them, only a few have achieved sufficient mass. Sabharwal, however, said ICICI saw a huge potential in mobile banking, and it expected an exponential increase in the number of users.............

Read - The Telegraph

Tripura to expand banking net

............The minister said besides taking up the issue with the RBI, the government had also taken it up with the state-level banking co-ordination committee. “We had persuaded the SLBCC and the RBI to launch 52 branches in the last two financial years, 2011-12 and 2012-13. Forty seven of them have become operational and we hope the remaining branches will be set up within a short span of time.”..................

Read - The Telegraph

Why RBI’s fresh attack on gold is also doomed to fail

...................However, at a time when gold prices are falling, the RBI action seems more like vengeful action. What lies behind this? The unstated reason why governments and central banks dislike gold is simple: gold is money, and they don’t like anyone else creating money even when they won’t restrain their own excessive printing and debauching of paper money.............

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Malabar Hill couple lose Rs 60,000 as credit cards get swiped in US

....."After confirming the fraud, the bank blocked my primary card, which I have been using since 1992," D'Souza told TOI. "The bank should not have cleared the transaction on the add-on card since that too was carried out in the US in similar circumstances.........

Read - TOI

RBI remains a Cassandra, and the rate cut won’t help

........................Will this rate cut help? The answer is a shoulder shrug. In the past, whenever the repo rate was cut, banks did not respond with alacrity to such changes in lending rates though deposit rates were lowered faster. One must remember that the repo rate is only a signalling mechanism and even if the average repo borrowing is, say, Rs 1 lakh crore a day on a regular basis for a year, the higher cost on account of the repo not being cut by, say, 1 percent is just Rs 1,000 crore...........

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'Less scope for further monetary policy actions'

............."On the issue of credit growth, the important thing to remember is we are predicting credit growth slightly above last year and you find that to be difficult to understand. But we are also predicting output growth to be a little larger than the last year. Therefore, I do not see much of a disconnect," said Urjit Patel, deputy governor of RBI. He added that in this financial year, the deposit growth may be better because, as inflation comes down, the real rate of return from financial products would rise...........

Read | Business Standard

Justification for rate cut, a myth

..............Reducing policy rates because of the focus on growth is justified; but to base it on the premise of moderation in price rise pressures seems unfounded...............

Read - HBL

Subbarao blazes a trail

...........Subbarao’s term is ending later this year. If he is not reappointed, his last hurrah will be remembered for quite some time. One must hope that his successor trails the same independent path of Subbarao and his several predecessors.

Read - HBL

Why is RBI chief Subbarao so cynical?

............RBI Governor Duvvuri Subbarao has himself spelled out the risks. “Upside risks are still significant in view of sectoral demand supply imbalances, the ongoing correction in administered prices and pressures stemming from increases in minimum support prices,” he said. Is Subbarao’s risk assessment genuine or has it been exaggerated to put the government under pressure?..........

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Liquidity situation will improve in a few months: Subbarao

The liquidity situation should get less uncomfortable in a few months from now, according to RBI Governor D. Subbarao. The RBI will consider all the options available with it to tackle tight liquidity conditions, including adjusting banks’ cash reserve ratio (CRR) or any other mechanism, and not just limit itself to bond purchases by conducting open market operations (OMO). “The assumption that OMO will be the preferred tool is wrong, don’t go with that assumption,” Subbarao said at a post-policy conference call with analysts........

Read - HBL

Mismatch between intent and action?

........Over the years, RBI has received accolades the world over for being among the best central banks. As such, while it would be a simplistic view to be critical of RBI, this perhaps also underlines the complex challenges facing RBI in balancing the dynamics of growth versus inflation. This also highlights the cross-currents of the potential of the Indian economy on the one hand and on the other the headwinds that it faces due to external factors such as weak global economy and quantitative easing-induced commodity prices flare ups and internal factors such as infrastructural bottlenecks and policy logjam.........

Read - Mint

Securitisation tax to hit NBFCs?

........If securitisation option becomes difficult, it is a serious issue for the banks. However, it is almost an existential issue for transport finance companies. To a very large extent, the growth of NBFCs in India has piggy-backed on the priority sector norms, through the securitisation route. One single transport finance company supplied more than one-third of the total securitisation volume in 2012-13. If securitisation becomes difficult or costly, the costs are obviously passed on to the originators. And this has a direct impact on the profits and growth of NBFCs.........

Read - Moneylife

Banks not shying away from lending: Pratip Chaudhuri, SBI

.....Banks generally hold a little excess SLR. You cannot always calibrate your cash balances very accurately. So you need to have some surplus cash. For example, in our case instead of 23 SLR, we hold 27% or 26%, that excess SLR. If we need we pledge with RBI or we do a repo with RBI and get ourselves funded.......

Read - ET

SBI Chairman says not looking at group consolidation for now

........But the issue has not gone off its radar and may well be taken up for consideration after July, Pratip Chaudhuri, SBI Chairman, told Business Line here. He was in the Capital to attend the board meeting of State Bank of Bikaner & Jaipur (SBBJ)............

Read - HBL

Commercial banks may create BITCOIN rivals

Commercial banks are looking to create alternative currencies to BITCOIN, the digital money whose popularity continues to soar..........

Read - DNA