The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Tuesday, August 27, 2013
Anchors aweigh!
Christening by fire
............Going by his amazing credentials, there could hardly be anyone better equipped to take on this challenge; moreover, he has also authored a full-fledged report on the Indian financial sector reforms that would have given him a first-hand feel of the issues, challenges and reforms for the banking and financial sector. There are not too many people who are given the opportunity to implement what they have preached. And so the Governor should simply go for implementing his own recommendations and liberalise the banking and financial sector; introduce an arm’s length regulation with a lighter touch; make RBI a more market-friendly regulator; and consolidate fragmented capacities that presently characterise this sector. These reforms have long been in waiting and need immediate attention..............
Bank complaints dip
............According to Banking Ombudsman S. Chattopadhyay, the regional office was conducting visits incognito at various branches to ensure proper banking services. She said banks were urged to increase its compliance with the regulations in the Banking Codes and Standards Board of India (BCSBI). An increase in the awareness among customers about the proper use of the banking ombudsman scheme also attributed to the decline in the number of complaints................
Financial inclusion is possible when the policy, mindset, philosophy and frame work are established
........Expressing his view on event theme ‘Journey Ahead: Tie-in Social Obligation Business Opportunity’, Mr. B.A. Prabhakar-Chairman Managing Director of Andhra Bank said, “RBI wants financial inclusion for inclusive growth but 50% of the villages in the country do not have any financial services. Banks must use ICT enabled services to reach out to rural masses to increase financial literacy. Banks must conduct camps / set up more centers in villages to reach out to common people.”..............
.....Other eminent speakers present at DB Financial Inclusion Conclave were A.D.M.Chavali, Executive Director, Indian Overseas bank , Mr. R.N. Dash – GM, RBI, Mr. V.B. Bhgavathi –GM- Andhra Bank, Mr. Alok Prasad, CEO-MFIN, Mr. G.S. Iyer –GM-Canara Bank, Mr. Kumara Swamy – DGM-SBH, Mr. Guru Harinadh Rao-DGM Corporation Bank..............
Inadequate storage, a major challenge for foodgrain management: RBI
..........To increase availability of food, the Reserve Bank of India suggested that the Government should take steps to create a market at the doorstep of the farmers, both for input supplies and marketing of the product. The central bank also flagged the issue of uneven distribution of warehouses and storage capacity relative to the population as well as the volume of foodgrains production across States in its annual report. With the diversification in agricultural activity as also the continued pressure on food prices, the RBI observed that there is an urgent need to address supply chain and marketing inefficiencies...............
Surrender their gold, country will prosper......
A couple of days back, the TOI carried a news item that gold plating is done extensively in the houses of Mukesh Ambani and Shah Rukh Khans. These are just two cases reported. In India, so many such individuals are living. It is reported in the article that about 25000- 30000 tons of gold are hoarded in India. If the above examples are any indication, the gold hoarding in India is a classic case of following Pareto's Principle with 80% of the gold wealth in the hands of 20% of the people in India. In reality, it may be 90-95% of gold will be just in the hands of 5-10% of the people in the country. So, target them and make them surrender their gold, country will prosper. Suggestion to increase investment climate and provide real and reasonable rate of return on savings will help to a great extent. In the long run, if we allow Islamic Banking with suitable checks and balances, it would increase the flow of foreign investments particularly from the UAE countries.
- S.Santhanam
The domestic household stock of gold in India estimated at over 25,000 tons, the country’s annual purchase of over 30 per cent of global gold purchase leading to an estimated cumulative demand of 1200 tons by 2020 and low share of gold in country’s forex reserves as compared to other countries and not always economic and prudent handling of this precious metal, all these and more point to the urgency in having a national policy for gold management. The economic and technical policy aspects highlighted in the article should get the attention they deserve from GOI. The policy should look at a strategy that will encourage transparency in transactions, elimination of wastages, standardization of valuation norms and facilities for gradually converting even the existing stock of gold with individuals and institutions to conform to internationally acceptable standards. RBI and Centre, in the early 1990’s actively considered setting up a Gold Bank with a mandate to do real gold-related banking, also taking care of the forex dimensions of the idea. However, the project was a non-starter presumably for profit-related reasons and possibly, external pressure. Perhaps the time is opportune to reopen the debate on professional management of India’s gold resources. Authorities should think in terms of dedicated professional institutions at regional/state level which will handle gold from a banking angle equipped with linkages for import and export of gold and gold products with borrowing and lending capabilities. The initiative has potential to take India out of the balance of payment and CAD problems the country is facing now.
- M.G.Warrier
Accounting gimmicks
This refers to the editorial "Non-performing managers" (August 26). The Reserve Bank of India (RBI) deputy governor's remarks on the reasons for the unabated growth in non-performing assets (NPAs) of public sector banks is true and this callousness gets accentuated when the slowdown of the economy also becomes handy to justify the non-performance. ..........
History Of Indian Banking Industry
.......The banking sector in India functions under the umbrella of the RBI—the regulatory, central bank. The Reserve Bank of India Act was passed in 1934 and the RBI was constituted in 1935 as the apex bank. The Banking Regulations Act was passed in 1949. This Act brought the RBI under government control.Under the Act, the RBI received wide ranging powers in regards to establishment of new banks, mergers and amalgamations of banks, opening and closing of branches of banks, maintaining certain standards of banking business, inspection of banks, etc. The Act also vested licensing powers and the authority to conduct inspections with the RBI. The Indian Banking system consists of different types of financial institutions which are responsible for the development of the country’s economy...........
RTI Judgement Series: CIC cannot abdicate its responsibilities to an expert body like RBI
...........While giving this judgement on 1 November 2011, Shailesh Gandhi, the then Central Information Commissioner said, “The Commission cannot abdicate its responsibilities under the RTI Act to RBI on the ground that the latter is an expert body. If the position of the Full Bench is to be accepted, it would lead to a situation where RBI would have the final say in whether information should be provided to a citizen or not. Extending this logic, all Public authorities could be the best judge of what information could be disclosed, since they are likely to be experts in matters connected with their working. The Commission cannot rely solely on the decision of the public authority and must look into the merits of the case itself. It must determine, on its own, whether the denial of information by the PIO was justified as per Sections 8 and 9 of the RTI Act.”.............
Command Responsibility - A Must For Banking Sector
....My mind stops working when I try to probe as to whether our CMDs and EDs en masse are so dumb that none of them could visualize the problems that can be faced by India on the current account deficit due to mass level encouragement of sale of gold? Is each one of them is such a big fools that none of them could feel that KYC norms are being flouted under their very nose, and finally on the expose of Cobrapost, RBI had to slap almost each one of them with penalty running in crores? Why RBI and MoF are silent on this incompetence of bank chiefs. What has gone wrong with their selection of CMDs and EDs that has led to a situation where non of them is competent enough to see through such lapses at such a mass and national level? I will call this the biggest failure of MoF / RBI in choosing such dumb people to head PS Banks..............
Despite 1/30 marks, four bankers set to be EDs
New
Delhi: Can you get a job after securing one mark out of 30 in an
interview? Yes, if you are an aspirant for the job of an executive
director in a public sector bank. The finance ministry has
recommended appointing four general managers of state-run banks as executive directors, on promotion, despite the candidates managing to
barely open their accounts during an interview conducted by a panel
headed by financial services secretary Rajiv Takru.........
Read - TOI
Read - TOI
His Master's Voice..............
My View on "Non-performing managers":
This is a balanced view of the present position of the top management of PSUs and PSBs in general. To comment on the non-performing administration in the public sector and government-owned bodies, these days, no deep research is needed. PSUs in India including Public Sector Banks have become whipping boys of government, regulators and the new generation advocates of privatization. Government (some officials and ministers) think they are the owners of PSUs and PSBs (in a way, they are!) and use them for carrying out their agenda and for milking them dry to quench their thirst. These institutions (and government) get the private sector-rejects or retired/retiring government officials at their top who carry out the wishes of their masters in government. It is not that these organizations cannot compete with their private sector counterparts. They will outperform them, if a level playing field in terms of skill, technology, opportunities and autonomy in management (including freedom in managing HR) is assured.
But, to make this possible, the selection procedure, at least from middle-management level and compensation package will need an overhaul. Career progression with appropriate provision for inter-mobility within the organization and at higher levels within the sector will have to be planned with the ideal age profiles at various levels and the need for a minimum tenure of 5 years for those who reach that level.
- M.G.Warrier
The more things change, they actually change...
..........A quick look at why the base rate mechanism is relatively more transparent than its predecessor (PLR) would be in order. Banks are not allowed to lend below their base rates to any borrowers. Hence, if market rates dip below the base rate, they have no choice but to drop base rates to get consumers. Base rates of banks currently range from 9.7 per cent and upwards. On top of the base rate, the bank charges a spread...........
Govt banks will find it difficult to raise equity
........Public sector banks are reeling under asset quality pressure, that has impacted their share price, analysts said. “It may sound alarming, but the market fears the bulk of the public banks’ net worth might get wiped off if they fully account for their non-performing assets,” .........
A common currency for South Asia to end rupee’s woes
............The falling rupee is treated as a problem of the finance ministry and the Reserve Bank of India, and not as a national crisis; not as an issue that affects India’s self-worth and standing abroad. Foreign policy and diplomacy are increasingly driven by economic objectives. Curiously, the Indian rupee’s fate never figures in our ‘External Affairs’. The government is able to do nothing to raise the strength and stature of the rupee to match India’s international profile. At the least, the government should be able to make one other country feel affected by the rupee’s fortunes. Far from that, even Indians are sold on the dollar when they see no future for the rupee. Yet, this crisis could be an opportunity for India to re-float the idea of a common currency in South Asia..................
Why you need to be doubly careful with Rs 1000 notes
.............But unlike in the past, this time it was the bank’s note sorting machines which were able to detect the fake currency notes in the system. Banks have been warned by the apex bank to impound and report all fake notes detected by them. So, what happens if you are at a bank branch to deposit some cash and the banker (or the counterfeit note identification machine) spots a fake note?..............
New notes
A new series of currency notes in different denominations with the rupee symbol should be issued in smaller sizes to save on printing costs. The size of currency notes was last reduced about half-a-century ago when notes of Re.1. and Rs.2 were in circulation. With Rs.5 and Rs.10 coins already introduced, the Reserve Bank of India should discontinue printing notes of these denominations. Since the life of lower denomination notes is quite short, it is senseless to waste public money on printing notes of up to Rs.10.
- Madhu Agrawal, Dariba Hindu
How a communication gap made the rupee crisis worse
......."The problem is that the RBI is trying to juggle too many balls, which sends confusing signals and damages its credibility," global brokerage Nomura's India economist Sonal Varma wrote in a scathing report on Wednesday....................
Raghuram Rajan to force RBI focus onto Indian rupee, but analysts see plunge to 69
.........."Raghuram Rajan could streamline the RBI's focus to stabilising the currency and inflation while being supportive of growth," said Nizam Idris, head of FX strategy at Macquarie Bank in Singapore. "The RBI must realise it cannot control the Indian rupee, rates, capital flows and inflation all at the same time." Most of the RBI's moves to break the Indian rupee's fall so far have not helped............
‘ Interest Rates Should be Brought Down to Stimulate Growth’
..........The
Reserve Bank of India has dried up liquidity from the banking system to
stem the rupee’s fall, which is having an adverse impact on interest
rates, thus hurting growth prospects. What is your view on this
scenario? .................
Short-term interest rates to stay firm
...........On August 23, the RBI had conducted an open market operation of government securities of Rs 8,000 crore as part of its plan to prevent the hardening of long-term yields which had recently hit a five-year high. Interest rates at the shorter end have remained firm because of the liquidity tightening steps taken by the RBI. For instance, the inter-bank call money rate (at which banks borrow from each other) continues to remain above 10.25 per cent...........
Can RBI tame rupee speculation?
..........There could be two motives behind these explanations. The first could be to explain the RBI’s rationale behind the recent moves to curb speculative activity in the foreign exchange market. The other more significant object seems to be to explain why, despite all its measures, the rupee continues to run amok. There is no disputing the fact that the RBI has a tough fight on its hands, curbing the volatility in all the three rupee markets – the inter-bank spot and forward market, exchange traded currency futures and options market, and the offshore NDF market for the rupee. The task is made more difficult by the inter-linkage or the price transmission between these markets...........
Why most economists did not see the rupee crash coming
Economists and analysts have turned bearish on the future of the rupee, over the last couple of months. But very few of them predicted the crash of the rupee. Among the few who did were, SS Tarapore, a former deputy governor of the Reserve Bank of India, and Rajeev Malik of CLSA. Tarapore felt that the rupee should be closer to 70 to a dollar. As he pointed out in a column............
Banks may extend edu loan repayment period
With
the rupee continuing to hover near 64 to a dollar and 100 to a pound,
many banks are contemplating extending the repayment period of
educational loans taken by students to pursue higher studies abroad.
“This would result in the EMI (equated monthly installment) coming
down,”.................
Read - TOI
Read - TOI
Banks slap charges on phone banking
.........However,
those who opt out of SMS alerts will continue to get alerts that are
prescribed by RBI. For instance, RBI insists that banks send SMS alerts
for withdrawals beyond Rs 5,000. But many banks have kept this as a
negative option, which means that unless customers specifically ask for
the free alerts, they will be billed Rs 60 for all alerts.
Ratnakar Bank will absorb most RBS staff on equal terms: Madan Menon
.........In India, RBS has signed an agreement to sell its credit card business, mortgage portfolio and banking business for smaller companies to Ratnakar Bank, subject to approval of the Competition Commission of India. This is in line with our plans for retail and commercial banking we had announced in November 2012. The deal comprises about 1,20,000 retail customers; Ratnakar Bank also plans to absorb the employees of RBS associated with these businesses. ............
RBI allows Jharkhand to run Cooperative Banks
........मुख्यमंत्री हेमंत सोरेन ने पद की शपथ लेने के बाद सहकारी बैंक का लार्इसेंस प्राप्त करने की दिशा में अधिकारियों को तेजी से प्रयास करने के आदेश दिये थे। मुख्यमंत्री की सक्रियता के कारण राज्य बनने के 12 वर्षों के बाद झारखण्ड को सहकारिता बैंक शुरू करने का लार्इसेंस प्राप्त हो गया है। आर बी आर्इ के प्रतिनिधि ने सहकारिता मंत्री हाजी हुसैन अंसारी की उपसिथति में मुख्यमंत्री को लार्इसेंस सौंपा..................
Coop. bank employees criticise RBI move
......The federation has planned a country-wide demonstration in front of 375 Central Cooperative Banks and 12,340 branches of District Central Cooperative Banks on September 18; rallies on September 30 in major centres of the State and a protest on October 25 all over the country.
Farmers, co-op employees to protest against Bakshi panel report
..........Setting the tone for an elaborate discussion on the report of the expert committee constituted by Reserve Bank of India under Nabard Chairman Prakash Bakshi, N.G. Ranga Kisan Samastha General Secretary Ch. Seshaiah said that it was unfortunate that the Nabard had lost its original focus on promoting agriculture and rural development.............
eMudhra launches India’s first path breaking digital security center
...........eMudhra Consumer Services, a leading provider of consumer financial services inaugurated India's first Digital Security Center (DSC) in Bangalore. This center will provide customers with a secure comprehensive solution - ‘TRUSTFACTOR' for online banking transactions......................
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