........The present columnist has been an early advocate of allowing industrial houses to apply for bank licences. Memories of the pre-nationalisation period, when industrial houses dominated the banking scene, are no longer relevant, as there are concentration ratios and prohibition on connected lending, which would prevent earlier malpractices from re- emerging. In the upshot, it would appear that political economy considerations will prevail and the actual granting of licences will take place only after May 2014...........
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Monday, October 7, 2013
Confusing signals from RBI
.......Is RBI really worried about growing inflationary pressures or is it concerned about propping up consumer demand in the festive season? Is it seeking to embrace a nominal anchor or will it be a willing participant in old-style directed credit programmes? Does it want money market conditions to be tight or will it lose nerve each time bond yields drift up? These are questions that puzzle us for two reasons. ...........
Slow burn - Subir Gokarn
.......The most dire judgement of the report is that, no matter what is done from now on, the cumulative impact of previous emissions will be the predominant driver of the late 21st century outcomes. In other words, there is nothing we can do to stop the burn; at best, we can keep it on simmer. Everything now seems to rest on adaptation and mitigation.
SBI Moreh branch
........Speaking at the inaugural function, RBI Guwahati Regional Director PK Jena said that the Chief Minister as well as the Chief Secretary earlier asked SBI to open a branch at Moreh as the UBI branch already functioning there was overflowing with customers. Jena stated that only banking infrastructure can provide foreign exchange facilities...........
Bankers wage revision 10th Bipartite Settlement next meeting
......In banking industry 11.10.2013 talk deemed the final talk and bank employees are hopeful of final negotiation. As indication received from govt sources govt is also willing to settle demands of bank employees with total increase of approx 30 percent with merger of 60% DA.........
Blame high inflation, not RBI, for killing growth: Chakrabarty
...............“You don’t blame the RBI for killing growth, you blame inflation for killing growth...our pursuing moderate or low inflation objective is to facilitate growth and not to kill growth,” he said, addressing students of a management school here. “The basic complaint against RBI is that it is killing growth by keeping interest rate high. But people forget that interest rate is high because inflation is high and inflation is high because people are not working. For inflation to come down, you have to produce more food grains at less prices,” he said............
'Bankers and RBI officials are not fools'
......The response came when he was asked about the risk of inflation going up if interest rates are lowered to boost consumption. “People who make these decisions, bankers and RBI officials, must have done their math, isn't it? Give some credit to them, they are not a bunch of fools.”...........
THE SECRET DIARY OF RBI GOVERNOR
.......... Life as the RBI Governor is hard. Everyone wants to see me, have a chat, give me advice. Nothing can move without my signature on forms which are presented in triplicate. Already, I detect signs of hostility. .......
Raghuram Rajan At IIM Raipur
Raghuram Rajan, Governor of RBI addressed the students at the Indian Institute of Management(IIM) Raipur, on the 4 October, 2013. He spoke about the challenges faced by Indian economy and need of sustainable growth in our country................
Crisis and complacency
A little over a month has passed by since the post of the chief economic advisor (CEA) in the finance ministry fell vacant. A few names have been doing the rounds as likely candidates to fill the vacancy caused by Raghuram Rajan's movement from North Block as CEA to Mumbai's Mint Road as the governor of the Reserve Bank of India (RBI). It is not clear who among the likely candidates will get the final nod of approval.........
Forex swaps - A.Seshan
In the daily statement on money market operations issued by the Reserve Bank of India (RBI), the swaps are now shown as ‘refinance under the forex swaps’. In fact, till a few days ago, it was called just ‘refinance’. I do not understand the appropriateness of the term ‘refinance’, which means an advance to a bank by way of supplementing resources when it issues a loan in a desired direction. Cannot the RBI just call it ‘forex swaps’ to avoid confusion? Secondly, the amount is indicated in rupees. It changes daily due to the variations in exchange rate. It would be helpful for analysts if the RBI indicates the dollar amount also along with the underlying exchange rate, which seems to be the Reference Rate announced by the bank.
- A.Seshan, Mumbai (HBL)
Booster dose..........
My View on "Star trio on panel for new banks":
About the appointment of Dr Rajan as Governor, I had observed in The Global ANALYST that “This time, the process has been more transparent and all have accepted that among the candidates considered, the most meritorious has been selected.” Appointments to this panel should be a confidence booster to those who have been believing in RBI’s work ethics and ability to rise to the occasion. Whatever be the recommendations of this panel on the new bank license applications it will be vetting, nation will benefit from their collective wisdom and views on the future structure of financial institutions including banks in India.
- M.G.Warrier
Hole in a Rs.10 coin
A Parry’s Corner-based businessman received a jolt when he found an ‘otta kalana’ a Rs. 10 coin in a bunch of coins that he got in exchange for rupee notes at the Reserve Bank of India recently. M. Syed Ibrahim runs a hotel in Parry’s Corner and regularly goes to the RBI for small change. On Monday, he went to the bank to exchange Rs. 500 for Rs. 10 coins. When he returned home with the pouch of coins, he counted them and then he found that he had a coin without the central part of the coin, indicating the denomination was missing........
How do we not flash the cash? Its Delhi!
Can we live without flashing our money in people's faces? Not really, even if the Reserve Bank of India politely asks us not to. Politeness doesn't stand a chance in front of all that's loud and flashy, and whether the RBI likes it or not, flaunting garlands of crisp notes is here to stay at shaadis, political rallies and the like.....................
Read - TOI
Read - TOI
ATMs may run dry on shortage of guards this festival season
..........The fall in armed security guards is because of various reasons including the fact that police in many states have raised objections on the issue, saying that private arm licence cannot be used for purpose other than defined by the law, said the association. This has lead to staff crunch with cash logistics firms, which don't get a formal licence to operate armed services for cash logistics..........
The Mobile Banking Tussle
...“You have the three Vs of Big Data — volume, velocity and variety. There is a huge opportunity to leverage Big Data for sustainable business growth and improving customer engagement and customer intimacy,” feels G. Padmanabhan, Executive Director, RBI. He adds that banks have to learn about innovation from the likes of Amazon, Flipkart, Google, Twitter, Facebook, Nintendo Wii or a Microsoft Xbox. The question, he says, is: can banking in India become the ultimate customer experience?...............
With Eye on Succession Planning, Axis Bank Reshuffles its Top Deck
Bank CEO Shikha Sharma rejigs key roles to ensure that top talent gets broader exposure, aims to put in place a second rung
.......“This
has not been triggered by any event. Switching roles gives an
individual a well rounded exposure. One has to do succession planning,
which this bank lacked in the past,” said Sharma, who is also the bank’s
managing director. “This is part of the reorganisation planned at the
beginning of the year and a move towards leadership development.”..........
Women’s co-op bank builds check dams
.......The
Mann Deshi Mahila Sahakari Bank Ltd., founded by social activist
Chetana Sinha, has set up check dams at Fulkoti, Shirsav and Mhaswad, at
a total cost of Rs 1 crore. The state government had provided the
funds, but the bank implemented the project. These check dams are now
expected to benefit over 20 villages in the area............
Read - TOI
Keep banking, industry separate: Sinha-led panel
....The committee would like Reserve Bank of India to have a mechanism of incentive/ disincentive in place so that this mandate/stipulation could be strictly enforced and it does not remain only on paper, as is the case now. For every three branches in urban areas, there must be a branch in a rural area. Permission to open branches could be given in lots of four at a time which would enable RBI to properly enforce this norm,’’ ...........
7 new bank licences coming, says FM
......Addressing a function at the State Bank of Mysore, Chidambaram said the new banks should not try to become clones of existing banks. “We don’t want the seven of them to look like each other with different mastheads. We want each one of them to cater to the needs of a special group of customers. You will have competition, efficiency and progress only if people attempt different things and do things differently,” he added. Though the finance minister didn’t elaborate, the RBI had earlier talked about differentiated licensing on the lines of the US and Singapore..........
K C Chakrabarty says only provisional list of new banks by January
........"Let me clarify, no new bank will come by January. A provisional list of applicants who are eligible to get a licence will be decided in January. New banks will take at least two years to come,"............
A case for stake dilution in PSBs
.....It is a matter of fact that on the one hand, the dominance of PSU banks has contributed to all-round growth for nearly 45 years and financial stability in the wake of global financial crises, while on the other, budgetary constraints as well as the shareholding cap fixed by the government at 51 per cent, and meeting Capital Adequacy Ratio (CAR) norms, has cast a heavy financial burden on the central government. ..........
Raghuram Rajan's new brain-trust
.......In what is being seen as a move to induct new but vastly experienced people into policy making and the regulation framework, Rajan has tried to balance the need for new thoughts and experience. RBI watchers say these appointments represent a significant step forward in central banking governance and policy actions...........
New banks will mean little to customers
.........In response to complaints of poor customer service or malpractices, K.C.Chakrabarty, Deputy Governor of the RBI, has just one advice: change your bank. As explained in the first paragraph, this is impractical. He also admits that the RBI has no mechanism or framework for customer protection. Nobody in the Bimal Jalan committee is likely to speak powerfully for customers. I wait for the day when Raghuram Rajan, the new RBI governor, will first use the word "financial conduct" in one of his statements. Until then, consumers will have little to look forward to in the new bank licences.
P Chidambaram inaugurates bank at his birth place; turns emotional
......."After opening 2,131 branches allover the world, the bank, founded by my grandfather, had come to this place. There is already one Indian Overseas Bank branch here but it needed one more bank for development.. Because of my attachment to this place, I am moved today." .........
Mandarins of money
.........For a contemporary feel, the book brings into public glare a major controversial episode in the RBI’s early history—the disagreement between Sir James Grigg, ICS, the finance member of the viceroy’s executive council, and RBI’s first governor, Sir Osborne Smith. Sir James Taylor, who was RBI’s deputy governor then, was also from the ICS and the two seem to have ganged up against Smith, a professional banker. Interestingly, this episode barely finds mention in the official history of the RBI, which has chosen to euphemistically term it a case of “temperamental incompatibility”..........
Time to be optimistic?
.......The government’s desire to fund the current account by whatever means is one of the reasons for the high level of short-term debt. Policy measures justified on expediency have a flip side, which is becoming obvious. In short, the picture might be less gloomy but the external account is still not out of the woods.
SBI lags in business, profits per employee: RBI report
State Bank of India is number one in many aspects but when it comes to business and profits per employee, the country's largest lender ranks below the national average, says a Reserve Bank report. As per the latest data on Indian banking sector, the business per employee of SBI in 2012-13 was Rs 9.43 crore, while the all banks' aggregate was Rs 12.13 crore. Every employee on an average contributed Rs 6.5 lakh to the bank's profit in the last fiscal, according to 'A Profile of Banks: 2012-13', released by RBI. ............
Scratch your head about interest rates
.........We have now been told something that is stranger still. North Block and RBI have come together and want to cajole public sector banks to give cheap loans to selected sectors, especially consumer durables, and banks will be provided additional capital infusion of more than the budgeted Rs 14,000 crores to ensure this............
Read - ET
Banks tighten scrutiny on loan recasts
.......“An investigative audit of the books of the company seeking CDR is important,” said one of the bankers. “Banks will soon write to RBI (Reserve Bank of India) on this.” The core group, which meets twice a year, consists of State Bank of India, the nation’s largest lender, ICICI Bank Ltd, Punjab National Bank and Bank of India, among a few others. Changes in the CDR rules can only be made by the banking regulator..........
Andhra MFIs in a fix as Bill gathers dust
..........."In legal terms, there are two types of microfinance companies - NBFC MFI and NGO MFI. Almost 90 per cent of microfinance business in India is conducted by NBFC MFIs and they are squarely under RBI's regulations. NGO MFIs are currently not under RBI's regulations but the Bill proposes to bring these companies under the central bank's purview. In Andhra Pradesh, the state government's Act has still not been repealed. So, it is material for microfinance companies that have operations in that state. But nationally, RBI is the regulator for the sector," said a senior MFIN official.................
‘ZERO INTEREST SCHEMES’: WHOSE INTEREST?
........RBI’s move is anything but vindictive. Notably, there are many other schemes in the market that are still operating. With these smart moves, RBI has tried to solve a few problems. Evidently, real estate and consumer goods industries are two very large sectors having significant impact on economy of India. These are interest sensitive industries that run primarily on loans. Recent policy decisions by RBI clearly indicate that fighting inflation will be its main objective. Accordingly,..............
Read - The Pioneer
Confusion on legitimacy of 'Sharia-compliant'
It seems that the state may lock horns with the RBI over the status of the Sharia-compliant Cheraman Financial Services Limited (CFSL). Coming down heavily on the state government’s initiative in starting CFSL, BJP leader Subramanian Swamy said that the “RBI has not approved any Islamic/ Sharia institution anywhere in the country”. RBI, in a reply to an RTI application filed by Swamy, stated that the Central Bank has not given licence to any financial entity in Kerala to start an Islamic Bank............
Most MSMEs lack access to banks & financial institutions: Assocham study
Only about 34 per cent of companies operating in the micro, small and medium enterprises sector have access to banks and financial institutions, while the rest raise money through informal channels, says a survey. "Lack of adequate finance due to shortage of organised lending from banks and other formal sources together with absence of transparency regarding their financial condition is proving to be a stumbling block in growth of MSMEs in India," the survey by industry body Assocham and Resurgent India said.........
Gold loans no more quick and easy for you & me
......Despite their higher interest rates in comparison with banks, borrowers preferred gold loan NBFCs for the quick and hassle-free liquidity they provided. The central bank has not just added more procedures to the disbursal, it also does not want NBFCs to advertise any claims of ‘instant processing’. It has prohibited them from issuing ‘misleading advertisements’ claiming availability of loans in two to three minutes.........
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