Enabling Urban Microfinance - Dr Deepali Pant Joshi

(Keynote Address by Dr Deepali Pant Joshi, Executive Director, Reserve Bank of India at the Conference on The Challenges of Enabling Urban Finance organised by Minorities Development Department, Government of Maharashtra and MAVIM the State Womens’ Development Corporation on September 16, 2013 at Mumbai)

 ......We need financial inclusion for the urban areas to link people to mainstream financial service providers so that they can access the entire suite of financial products and services from the mainstream financial institutions. Till this happens, I do see an important role for microfinance. Conventional wisdom has it that access to microfinance services can enable the poor to smoothen their consumption, manage their risks better, build their assets, develop their microenterprises, enhance their income-earning capacity and enjoy an improved quality of life. The primary clientele of MFIs consists, almost by definition, of those who face severe barriers to access financial products from conventional financial institutions. These barriers comprise mainly high operational costs and risk factors..........

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The financial tsunami of 2008 - A.Seshan

...........That the humongous creation of money wasn't justified was evident from banks' excess investment in government securities, some of the facilities being either not availed of or utilised only to a limited extent and the round-tripping of money released by RBI through the reverse repo operations for quite some time. The persistence of inflation in recent years is the spill-over from the monetary excesses of 2008-09. The chickens have come home to roost............

Read | Business Standard

Financial inclusion fructifies

Financial Inclusion (FI) according to Reserve Bank of India (RBI) broadly means the provision of financial services, such as payments and remittance facilities, savings, loans and insurance services at affordable cost by the formal financial system to the low income families who tend to be excluded. The RBI set up the Khan Committee in 2004 to look into issues of financial inclusion. Its recommendations were incorporated into the mid-term review of the RBI policy (2005–06). The RBI directed all banks with a view to .................

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Old guards in RBI junk govt proposal on exports

.............“We communicated to RBI and it has its own views on that because priority sector has a window. So there are arguments on both sides. If advances to exports are going to eat into the share of other priority sectors, then RBI has to take a considerate opinion,” he said. Officials said old team in RBI is not in favour of expanding the priority lending list. As such, all hopes now lie on new RBI Governor Raghuram Rajan to convince the team and deliver on this front as well, they added. With Rajan moving from the North Block to the Mint Road earlier this month, the finance ministry may expect a lenient view on the issue...................

Read | Business Standard

Not safe yet

The afterglow of Raghuram Rajan’s appointment as the Reserve Bank of India Governor has helped the rupee’s value appreciate against other currencies rather substantially from the lows of just over Rs 68 to a dollar that it hit at the end of August; the big question is whether it will stay there. A look at some other factors throws a little light on possible answers.....

Read - The Telegraph

Banking on in uncertain times

.....They say every adversity brings with it a concealed opportunity. And only on dispassionate assessment can you see and seize the opportunity. At a time when most corporations across sectors are struggling to make reasonably good business, private sector banks are dealing with economic slowdown with utmost focus of purpose and sense of business. These banks are offering special services, which have high acceptance value in terms of important transactions and they are leaving no stone unturned in promoting these services in a better way. But the awareness of these services is not as great as it should be. Hence, it is lucrative to understand how special these services are as compared to the existing services offered by the banks...............

Read - ET

Bhartiya Mahila Bank to recruit 115 probationary officers

NEW DELHI: Bhartiya Mahila Bank, the first nationalised bank for women expected to be operational from November, intends to recruit 115 officers initially. The bank has invited applications through online mode from female candidates for 115 posts. Candidates may apply online till September 30..........

Read - ET

Govt takes to cattle class again

......The Finance Ministry has started to tighten its belt............

Read - ET

Coin vending machine, a big relief for railway staff

.............The machine put up by Karur Vysya Bank, near the unreserved ticketing counter has been useful in ensuring a continuous supply of coins. The vending machine spews coins in the denominations of Rs. 5, Rs. 2 and Re 1 when currency notes are inserted. Passengers who are short of coins are advised by the counter staff to get coins from the vending machines...............

Read - The Hindu

PIL seeks halt to circulation of coins with Mata Vaishno Devi's image

.......In his plea, the petitioner stated last month that he came to know that the RBI was to commemorate the silver jubilee of Mata Vaishno Devi Shrine Board and had in its two separate notifications earlier announced that it would circulate the coins. "The decision was taken without realising the fact that this could hurt sentiments of different religions...," the plea said, seeking an order restraining the RBI from doing so..............

Read - HT

Shortage of coins gets worse, causing frustration and loss

...... And the Reserve Bank of India (RBI) has confirmed the huge shortfall in supply of coins: in 2012-13, only 6,878 million coins were released though the indent was for 9,554 million, and the gap is likely to widen this year..........

Read - ET

Mad scramble for loose change

.........“There is always a steady demand for coins. We do not get any over-the-counter deposits that are made in coins and the lack of supply forces us to refuse customer requests on most occasions,” says the deputy general manager of a private sector bank, and adds that the only time the banks get coins from the customers is for Government Challan remittances which are still in odd denominations. Most banks receive coins in bulk during the festival season, especially Pongal and Diwali. Small packets with 100 coins of Rs. 5 denomination are kept handy and given to people who ask for change. “When temples have accounts with our banks, their deposits are one of the major sources of coins,” said P. Varsha, a bank employee............

Read - The Hindu

FCNR scam?

.........This is a racket loathed by central banks in all developed markets and I hope the Reserve Bank of India will also prohibit banks explicitly from creating such fictitious deposits. Apart from ethical questions, there is no way the bank can earn 4 per cent on the dollar deposits in India - together with hedging costs when they lend the funds back in rupees, unless they raise rupee lending rates at the cost of the domestic borrower.

Read | Business Standard

Gold loans: “Free-market” Rajan shows his true colours

........Despite my reservations on central banking, I was actually impressed with the contents of Rajan’s day zero speech. But in a very short span, the lofty standards of free markets and market regulation have descended to a situation of I-know-what’s-right. But as any Austrian school economist would say, “what else do you expect from a Chicago monetarist?”

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'Without enough clarity do not jump in with very strong view'

......Will he roll back CRR? The answer would be probably not. But I think, he might give indications. If FOMC gives a positive indication, RBI might give an indication that it is looking to roll it back. May be not now but over the next 2-3 months. But at the same time he (RBI governor) would continue to stick to what he had said that these measures are temporary. That will be seen as a market positive............

Read | Business Standard

RBI report raises red flag on NSEL crisis

.....According to top government sources, the report prepared under RBI Deputy Governor, KC Chakrabarty highlights key risks and also questions whether the FT Group led by Jignesh Shah is fit and proper to run such a business. Sources say the report also doesn't rule out the possibility of insider trading and manipulation in the NSEL set-up..........

Read - ET

Objectifying males

I'm just thinking, if openly admiring, drooly, nudge-nudge comments and words like ‘sexy’ and ‘hottie’, which are being used by many urban women commentators and press columnists about Raghuram Rajan — the new RBI governor, were used about an attractive woman who assumed some high-profile, high-visibility post, how much wailing and gnashing of teeth there would be!................

Read - Pune Mirror

Banking on Rajan Raj

My View on  "Why there is a need to put an end to 'Banana Banki...": 

In India, almost all such cases of NPAs are relating to corporate loans. More often in these cases, one could find collusion between the bank management, the corporate entity and many a times a political heavyweight (Minister, MP, MLA etc). In the case of KFA, the beautiful combination of the corporate and the politician are very well structured with Mr Mallya himself a member of the honoured house of Rajya Sabha. The very fact that EDs of PSBs are chosen who had scored just one or two marks in their interviews with RBI also a member of the selection committee, it is evident that such officials when they become CMDs of PSBs are more keen to protect their posts and in the process help politicians and corporates to share the loot of PSBs (unpaid / restructured loans) and of course, they also take a cut in all these. While the PSBs are at the mercy of politicians and bureaucrats at the GOI level the Cooperative banks are at the mercy of the politicians and bureaucrats at the state level. It is a vicious cycle. RBI by its long silence and inaction also is responsible for this state of affairs in the country. Will Rajan Raj clean the stable and make the banking a real professionally run one? Very little hope for the common man as it is virtually impossible to break the nexus among the three (corporate, PSBs and politicians). Even God has moved away from the scene of action. 

- S.Santhanam

RBI chief poised to ease predecessor’s crisis measures

...........Rajan needs to arrest India's worst economic slowdown in a decade even as exchange-rate volatility remains near a five-year high on United States Federal Reserve plans to taper stimulus policies. The rupee's 9 per cent rebound from a record low in August gives the RBI room to scale back steps taken since mid-July to tighten cash supply, Kotak Mahindra Asset Management said................

Read - Times of Oman

India Inc wants 'out-of-box' solution from RBI in Fri policy

............."Given that growth in the economy is at a low point, business confidence is weak and the investment cycle has come to a grinding halt, we expect the new RBI governor to initiate measures that would enthuse the market participants, boost investor sentiment and bring confidence back in the economy,"........................

Read | Business Standard

Focus on India's Rajan at first central bank policy meeting

....The Reserve Bank of India (RBI) Governor has been lionised by India's media, with one top columnist calling him the "Poster Boy of Banking" whose "chiselled features are as sharp as his brain". But analysts say that Rajan, a former International Monetary Fund chief economist famed for forecasting the 2008 global financial meltdown, faces a Herculean task at the RBI's helm as he seeks to tackle what economists call a “trilemma”, or an "impossible trinity" of problems. With expectations of his abilities so high, "some are bound to be disappointed,"HSBC economist Leif Eskesen said................

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Monetary policy: Raghuram Rajan's RBI likely to leave key policy rates unchanged

.......The majority of economists polled expect RBI's focus to remain on rupee stability with price stability coming a close second. Eighteen of 35 economists polled expect Rajan to retain his predecessor's stance, while 12 expect a more growth-oriented approach........

Read - IE

Games RBI can play

.........Most people know the governor as a bright economist; few know that he is also a mean squash player. Having lost to him several times on the MIT squash courts, I know that he appreciates an essential principle of the game: always get to the "T". The "T" is the point on the court that puts you in the best position to get to the ball, no matter where it might unexpectedly appear next, especially if one doesn't quite know the nature of the opponent or what kind of game might ensue. Indeed, who is the real opponent here, and what sort of game has the new governor signed up for? There are at least five scenarios..........

Red - IE

Policy conundrum at its best

......Finally, to me, this monetary policy would be more of a watch-and-go policy for the RBI. If the tightening by the Fed is more aggressive than the priced-in amount of $5-10 billion withdrawal a month, then there may be no option for the RBI but to hike the repo rate. Or else, the chosen strategy could be to narrow the interest rate corridor from the current 300 bps to say a 250 bps to start with—by reducing the MSF rate by 25 bps and also increasing the repo rate by 25 bps. These are interesting times and I consider it a privilege as a macro-economist to witness such a phase in my career span.

Read - FE

RBI, Don’t Hesitate to Innovate Policy

.......The RBI, it has been reported, is thinking on these lines, to step up demand for homes and automobiles. There is every reason for India’s central bank to innovate, departing from the beaten track that has not led us anywhere particularly productive...........

Read - ET

Reverse liquidity tightening

Reserve Bank of India took a number of steps to tighten liquidity and raise rates in mid-July. As a consequence of these steps interest rates today are up to 400 basis points higher than they were in the beginning of July. While this rate hike is reminiscent of the rate hike of 200 basis points by Bimal Jalan on January 16, 1998, when he stepped in to defend the rupee in the Asian crisis, such a steep policy rate hike has never been done before. Moreover, it was implemented through non-transparent and quantitative measures that have damaged the operating procedure of monetary policy..........

Read - FE

RBI includes more segments under infra definition for ECB

......Taking into account the harmonised master list of infrastructure sub-sectors, it has been decided to expand the existing definition for infrastructure sector for the purpose of availing ECBs, the RBI said ..........

Read - The Hindu

Cheap home loans: Is RBI about to start asset price bubble?

........If Rajan is even thinking of this scheme, he is not the man who gave us a rousing free-market speech on 4 September. And he will be ignoring the exact warning he gave America on lower rates being used as a placebo to combat the more fundamental issue of unaffordability. Worse, he will be bailing out builders and realty sharks rather than the man who is struggling to buy a house in pricey urban areas..............

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Panel of secretaries on NSEL to meet again on Sept 20

New Delhi: A panel of secretaries, headed by Economic Affairs Secretary Arvind Mayaram, will again meet on September 20 to discuss the two reports on crisis-hit NSEL............

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No evidence, yet cheating case haunts this Manipuri woman

........“Inside jail, I felt very scared and secluded as Indian prisoners thought I was a foreigner,” she said. She wondered whether she had been subjected to this because she was from Manipur. “People here do not know that we are Indians too. They always look at us with suspicion.” However, the police say they have a strong case. Investigating officer Ankush Katkar told The Hindu that Mary used to help the main accused by calling the victims. “She spoke to the complainant, posing herself as an officer from the Reserve Bank of India.”........

Read - The Hindu

Karnataka Bank bags Assocham award

MANGALORE: City-based private sector Karnataka Bank has been adjudged runner-up of Associated Chambers of Commerce and Industry of India - Social Banking Excellence Award, 2013, under private sector banks category, in recognition of initiatives taken up by the bank in the sphere of social banking..............

Read - TOI

West Bengal to assist banks on loan recovery

Under pressure from the Reserve Bank of India (RBI), the West Bengal government has finally agreed to extend administrative assistance for recovery of bad loans or non- performing assets (NPAs) from defaulters............

Read - Hindustan Times