Looking at some of the Reserve Bank of India's goals and aspirations : Duvvuri Subbarao

Speaking notes by Dr Duvvuri Subbarao, Governor of the Reserve Bank of India, for the Golden Jubilee Celebration Function of the Reserve Bank Staff College, Chennai, 8 July 2013........

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LOBBYING OR REPORTING?

 ................“When you are talking to your source, he/she is giving you a point of view from inside, that may or may not end up being correct. In this particular case, there are only three names that are doing the rounds. However, we chose to highlight Chaudhuri because we learnt that he has strong chances of making it as the head of the country’s central bank”. Bhattacharya doesn’t deny the fact that lobbying can happen and names can be thrown up by sources keeping in mind their personal interests. He says, “There are times when some sources plant names just to scuttle someone else’s chances. And if the reporter goes blindly to his source without any understanding of the issue he is reporting on, chances are he could be taken for a ride”........

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Banking on a Vision

..........Joining the banking industry in 1982 as a career central banker, he has played a key role in implementation of MICR technology and Electronic Funds Transfer, among other things. His research document ‘ RTGS System in USA – Lessons for India ’ in 1997 was the starting point of RTGS design and implementation in our country. “ Of my 27 years in RBI, I spent 15 working very closely with information technology,” he says. “ I have grown as a leader by doing handson work, leading various payment system projects, and leading teams of project officers year after year,” he says. Forging new paths in the banking system has been a herculean task, and Mr Hota realised that a key priority would be to build confidence in his people, making them recognise that things that seemed impossible were do- able..............

Read - FPJ

PREACH, DON’T PRACTICE

One of the hot subjects that top officials at the Reserve Bank of India talked about after the credit crisis was the approach to policy-making. ‘Counter-cyclical’ measures were the talk of town, at least on Mint Street, meaning that create a buffer in good times so that you weather the bad times. Currency traders now wonder whether it was only meant for preaching and not practice! When the global market was awash with US dollars, RBI imposed so many restrictions on debt-raising overseas. Now, it is busy liberalising ECB norms. The irony is that there is hardly anyone willing to buy Indian paper.

ET

Closure of RBI Public Counters - AIRBEA letter

............It is, therefore, clear that what RBI is doing at the ground level and what it says in public including to the Government, who in simple belief, are informing the same to the country’s important Parliamentarians and peoples’ representatives, are quite at variance. Clearly, RBI have a pre-set time table to close its services and RBI offices are being forced to implement that, no matter whether the public receive service elsewhere as assured. We request you to please look into the matter urgently............

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RBI sets eyes on non-bank lenders

...........Some local market participants, however, see the RBI's recent interest in this alternative financial system as part of an ongoing effort to clean up the country's financial sector and prevent the growth of a less-regulated shadow banking system. That fits with recent regulatory actions against financial companies such as Sahara India. "It could be the case that the RBI has concerns about fundraising by NBFCs from the public at large under the private placement route, and the case of Sahara India as well as the chit fund cases in West Bengal are likely to have contributed to the RBI initiating these changes"............

Read - FE

Who Will Make It to The High St of Finance?

.......... For the successful applicants, it is also worth remembering that an amendment to the Banking Regulation Act empowers the RBI to inspect the accounts and business of any associate enterprise of the applicant bank and also to supersede the board for up to 12 months. For those that have missed the boat, the wait for the next opportunity is uncertain as the RBI has given no indication as to when it will reopen the next window for applications. The RBI has now made its decisions. It is now up to successful applicants to develop business plans and identify key bankers as they have only 18 months to implement their plans after getting their in-principle approval.

Read - ET

Communist Party voices concern over Birla's role at RBI

.....Communist Party of India (CPI) Tuesday expressed concern over the continuation of Kumar Mangalam Birla on the board of the Reserve Bank of India (RBI), saying it was a "conflict of interest" as his group firm is in the race for a new banking licence..............

Read | Business Standard

Perverse incentive structures in banks under RBI scanner

RBI has warned banks that it is taking a closer look at the ‘perverse incentive structures’ that are leading to ‘widespread mis-selling’ of third party products such as insurance to account holders..........

Read - Moneylife

Arundhati Bhattacharya set to become State Bank of India MD

..............Bhattacharya will become the first woman managing director of the bank. She is seen as a strong contender to become chairperson of the bank when Pratip Chaudhuri retires in end-September. To become eligible as chairman of SBI, a candidate needs to have two years of residual service. Among the present, none meets the criterion, as three will retire by April next year and one in November 2014....................

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My View on "Govt proposes to fix tenure of PSU chiefs"

Fixing tenure for PSU CEOs is a good move but certainly not good if the applicant is close to his retirement in the normal course by two years. The CEOs should have basic interest in the growth of the company optimally in a competitive environment. It is desirable to pick up CEOs in the age group of 45-50. The tenure should be such that they are given chance to understand the firm and compete and therefore should be for a period of five years. Second, selection of directors has become a farce in most PSUs and PSBs as it must have been felt that anyway their role will be minimal! If the norm of CEO selection at 45-50 is accepted it would leave enough scope to pick up the directors from an experienced pool of efficient ex-CEOs who will have scope to contribute significantly for the growth of the PSUs. This should apply even to the PSBs and the Insurance Companies in the Government fold. 

- Yerram Raju

My View on "Personalization of banking: Woes of bank customers..."

The article is a true reflection of the sufferings of senior citizens. Technologies have not lessened the crowds at the counters, for several senior citizens still cannot access them and it is imprudent for the sophisticated banker to expect them to go to netbanking and resolve their problems. While it may be difficult at the present juncture for the banks to earmark either a clerk or officer dedicated to the service of senior citizens in the context of either paucity of staff or to realise their profit goal, the easiest thing is to open exclusive counter for limited hours displayed and notified by mail to all the senior citizen account holders to transact their business. Most ATMs exactly behave the way the author described. Banks seem to care little. The Banks must keep at least 500 and 100 denomination notes for all drawals of less than Rs.5000 per day until the merchandise accept debit cards for any and all transactions even for buying a cup of coffee from the restaurants as in the west. 

- Yerram Raju

Fixed deposits earning you negative returns

Holders of fixed deposits have been earning a negative return in real terms for most of the preceding five years, thanks to inflation outstripping interest rates.  To make matters worse, depositors continue to be taxed on this nominal income. Although bank fixed deposits have never been tax friendly, the level of compliance has been sketchy. But compliance is slowly getting stricter. In the past, RBI norms required banks to take into account deposits in one branch for the purpose of tax deduction at source—a rule which allowed depositors to break up FDs across branches to avoid TDS. .........

Read - TOI

RBI asks banks to open Aadhaar linked accounts, appoint Complaint Redressal Officer

.........The RBI has told banks that besides opening accounts they should also be seeding Aadhaar number. RBI said that it recently met with Unique Identification Authority of India (UIDAI), finance secretaries of select States, where officials emphasized that banks should proactively take steps to open a large number of bank accounts, seed these accounts with Aadhaar numbers and view it as a sustainable & scaleable business opportunity. During the meeting UIDAI also spoke about utilizing the services of LPG distributors for opening of bank accounts and seeding Aadhaar numbers in bank accounts.......

Read - ET

It’s Time PSU Banks Woke Up to The New Normal

...........There is a transformation which is happening in the Indian banking scene where state-run companies dominate three-fourths of the market. That is the best part of the story. The disturbing factor is that barring State Bank of India, all other state-run banks are staring at a low-cost funding crunch that could change the banking landscape forever...........

Read - ET

Banks tighten noose: To ‘name and shame’ guarantors for loan defaulters

..........Interestingly, public sector banks are at the forefront of taking such measures and those already making public the photographs and other details of loan defaulters include the country’s biggest lender SBI and UCO Bank, Allahabad Bank, Indian Bank and Indian Overseas Bank................

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Overtime at North Block

The volatile rupee and high current account deficit have resulted in a return to working weekends for some senior finance ministry officials and staff. Finance Minister P Chidambaram has started attending the office on weekends, including last Saturday and Sunday when he called a meeting to discuss the rupee......

Read | Business Standard

Currency derivative clampdown: Will it really help rupee?

...........The steps that have been taken are actually in the currency Futures market, not in the larger over-the-counter (OTC) market. Traders have been saying that the RBI, by moral suasion, has made the banks compulsorily reduce their positions in OTC. However, on the currency Futures market, it has come with Sebi-imposed rules............

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Use Modi to Manage Rupee

..........Any move by any non-BJP party that is likely to destabilise the government would immediately be damned as a move to help Modi. So scared is the Samajwadi Party of such stigma thus that it suffers Beni Prasad Verma’s insults in silence and dare not withdraw support for the government. The logic works for other parties as well. This stability gives the government space for new policy manoeuvre. It is time to be bold and take tough decisions to revive India’s growth, strengthen macroeconomic balance and stem the rupee’s slide.................

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RBI may ask oil firms to buy dollar from single bank

...........Following the suggestion, RBI had met officials of Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation in Mumbai on Monday. “In our presentation, we had made various suggestions, including a special window for OMCs to access dollars at market rates and also buying it from a single bank. However, no written directive has come from RBI,”.........

Read | Business Standard

Rupee at 60: Here’s why India is a steal for foreigners right now

.........I believe that 60 is the number where there could be a clear psychological turning point for the rupee as it is 30-35 percent lower than where the currency was in 2010-11. Despite inflation, despite policy paralysis, despite economic mismanagement, the rupee may be about to find it feet. If the rupee stabilises, the government will claim it was its efforts that did the trick. Don’t believe it.  The rupee does not dance to P Chidambaram’s tunes. It is on its own trip based on more fundamental fundamentals and right now it could well believe that it has arrived. It is the dollar that should be a sell for Indians from now on..............

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It’s time to pull out all the stops

.......Having crossed 61 to a dollar, the debate now is veering around the next psychological barrier — a scary 65. More than the number, it’s the rupee’s sharp and unhindered slide that is causing unease. If the country’s top economy and currency administrators have gone into a huddle in recent days, it is only symptomatic of the anxiety gripping India’s macroeconomic managers...............

Read - HT

Sliding Re Forces Rulebook Change

.....The Reserve Bank of India banned banks from indulging in proprietary trading in currency derivatives, which took the pressure off the currency, and the Securities & Exchange Board of India raised margin requirements for non-bank traders in a notification issued late on Monday evening. Further, state-run oil firms have accepted RBI’s proposal to bid for US dollars through just one bank on a given day instead of multiple bids that magnified dollar demand and led to many banks building up positions, said people familiar with the development........ 

Read - ET

Hard to stop the slide

......Convening a meeting of the corporate bosses therefore is meant to convey the impression that the government is concerned about the downturn in the economy, rather than about doing something really concrete to about it. Notwithstanding the perfunctory claims by finance minister and others in the government that ` all is well’ each time the currency plumbs new depths of depreciation, there can be no denying that economic policy- makers are unsure about measures to support the rupee against a further slide. On Sunday, Chidambaram met RBI Governor D Subbarao, the Prime Minister’s Economic Advisory Council Chairman C. Rangarajan and Economic Affairs Secretary Arvind Mayaram. Deputy Chairman of the Planning Commission and a great talker in his own right, Montek Singh Ahluwalia, also attended. According to reports, they discussed the pressure on the rupee and steps to be taken to hold it from falling further. A day later, the rupee touched a new all- time high. On Monday, the RBI intervened in the foreign exchange market, which helped the rupee end the day at 60.62 against the dollar. But, frankly, if the structural weaknesses in the economy remain unaddressed, the central bank will run out of dollars to ease the pressure on the currency...........

Details

RBI reviewing guidelines on mis-selling by banks in wealth management services

............The Financial Stability Report released by RBI has taken note of mis-selling in the wealth management division of banks. An issue which has been constantly been highlighted by Moneylife, needs to curbed with many checks and disclosures in place. Taking serious note of the mis-selling that occurs in wealth management and investment advisory services offered by banks, the Reserve Bank of India (RBI)'s Financial Stability Report released on 27 June 2013 says that it is in the process of reviewing its guidelines...........

Read - Moneylife

Commerce Ministry seeks liberalised packing credit scheme from RBI

...“We would ... request that RBI’s special export credit refinance to support PCFC (packing credit in foreign currency) (and it) may be enhanced from 50 per cent to 100 per cent,” Commerce Secretary S R Rao said in a letter to RBI Governor D Subbarao...........

Read - HBL

What will you do if taxman knocks at your door?

Any communication from I-T department and especially receiving a notice can send shivers down your spine, even though it might be a routine enquiry or a simple clarification sought. Notice can be issued for varied reasons and there is no standard single solution to deal with different notices in the same way, but you can surely follow these 12 golden steps as mentioned below in response to any kind of notice you may receive: Neither panic nor ignore: .............

Read - DNA

Pension account after death of a pensioner – RBI Instructions

.....In this connection, we advise that in case the spouse (Family pensioner) opts for existing joint account for credit of family pension, banks should not insist on opening of a new account when the spouse is the survivor and having a joint account with the pensioner and in whose favour an authorization of payment of family pension exists in the Pension Payment Order (PPO)..........

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Deem grant of education loans as service to society, banks told

.........Noting that banks acted as a bridge between students and their ambitions for better education, the District Collector said banks should do their best to resolve quickly complaints regarding the disbursal of education loans. She said that special consideration should be given to make the process of granting education loans easy. “Disbursal of scholarships, welfare pensions, and other benefits through bank accounts should be accelerated,” Ms. Latha said. “The banks should create awareness among the public to not depend on private financiers for financial aid,” V. Raveendran, Assistant General Manager, Reserve Bank of India, said in his address............

Read - The Hindu

Fair & Lovely Mutual Funds

......What about consumers? Why don’t they protest? Well, because these nicely perfumed gels and lotions may not make you fairer, but they are harmless; they moisturise and they allow people to live in hope. In other words, the consumer is a willing sucker in this case and there is little harm done. Can mutual funds (MFs) try to sell their schemes like fair & lovely? MFs have an obligation to perform. If an MF scheme, over a period of time, gives you low or negative returns, it hurts your financial future. It is not harmless......

Read - Moneylife

Sebi to ask Subrata Roy led Sahara about unverified investors

.....However, a pilot verification project undertaken by Sebi found that a vast majority of these investors were not traceable, the market regulator said in a status report presented before its board late last month. "These cases will be referred to Saharas in due course, for their explanation/clarification," Sebi informed its board.................

Read - IE

Fanbox mail scam: Watch out for automatic debit from your bank, PayPal account

.............In future, if you get any spam or suspicious looking email claiming you have won something or have something unclaimed, it is best advised to filter and delete it right away. Moreover, never link your bank account or credit/debit card online to any third party, even if the site is credible. As for Fanbox, it is best you stay away from it, no matter what their claims are.

Read - Moneylife

Microfinance Institutions Get a Boost From Development Funds

We are here to write big cheques. We do not write small sums,” said Rajat Sood, vice-president, General Atlantic, a PE fund, in a message to the microfinance industry that’s attempting to limp back to life after the SKS Microfinance fiasco nearly killed the fledgling industry. Sood was speaking at a seminar arranged by industry body Microfinance Institutions Network (MFIN). Investors are showing some interest these days after fleeing the sector en masse...........

Read - ET

TMB banks on public float for growth

......The bank's conservative holding, while ensuring that its financials remained robust, has come in the way of its expansion plans. It was denied permission by the Reserve Bank of India to open branches in the metro cities because of its legal trouble and lack of public equity. As a result, TMB has in recent years lost out to competition. .....

Read | Business Standard