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.
Friday, October 11, 2013
Dr Subbarao And The Chakravyuha
RBI sending out contrarian signal
.........Meanwhile, the RBI has sent out a contrarian signal by ` persuading’ banks to offer cheap loans for buying consumer durables. A couple of public sector banks, already groaning under huge nonperforming assets, have felt obliged to cut the lending rate for buying scooters, television sets, etc. The last monetary policy review had seen the central bank tighten liquidity. In fact, a few days ago, it had clamped down on the zero- interest schemes that were offered by makers of consumer durables during the festival season. According to reports, the central bank was pressured by the finance ministry to try and neutralise the effect of that ban by persuading public sector banks to lower interests for borrowers intending to buy consumer goods this festival season. Otherwise, one cannot see the RBI squeezing liquidity..........
‘Two plus two must make twenty-two’
The long and short of it
.......The Governor was obviously referring to the increasing stress on account of non-performing loans in Indian banks’ balance-sheets — primarily on account of long-term loans made to the infrastructure sector, namely, in power, roads, aviation, telecom, metals and other sectors; and how banks could have well avoided all that stress if India’s domestic financial markets were developed enough to provide long-term finance. This would allow banks to focus more on providing short-term working-capital finance to industry and projects.........
Suddenly generous
The government is playing the politics of appeasement to woo Central government employees and pensioners by implementing the recommendations of the seventh pay commission prior to the Lok Sabha elections next year (“Pay populism”, Sept 27). Nothing else can explain its sudden generosity. But intelligent citizens are aware that a great degree of uncertainty is often associated with pre-election promises. One cannot say for sure if all these populist measures will ever see the light of day after the government is formed.
- Janga Bahadur Sunuwar, Bagrakote, Jalpaiguri (The Telegraph)
बीते दिन - ए. यू. शेख़
Remembering RBI days. We have seen all sorts of things during 30-40 years at various depts/centres.....
Grateful for his lessons.............
Shri E.P.VEERARAGHAVAN was my first Inspecting Officer. I was an understudy for Vriddachalam coop. Bank of ACD days. I am grateful for his lessons. May his soul rest in peace.
- Jayaram Nayar
Ownership rights................
My View on "RBI vs GoI":
Let us read the observation “While RBI is signalling a hike in interest rates, the finance ministry has said it is willing to give banks more capital provided they used this to lend more in certain areas and at lower interest rates. If the finance ministry gives banks Rs 100 of additional capital, banks can lend up to Rs 1,000 given the current capital adequacy norms.” in this edit again. GOI today is using its ‘ownership rights’ on public sector banks even beyond the level IMF used to do through conditionalities while extending ‘aid’ to poor nations decades ago. Traditional priority sector which has not lost relevance in the development context is being ignored and finance ministry is asking public sector banks to lend at lower interest rates for consumption and luxury. As regards capital adequacy norms and infusion of additional capital, perhaps a relook at SLR norms (which provide captive sources at lower than market rate funds to government), accumulation of bad loans because of GOI policies and need for a level playing field for PSBs may be necessary to assess costs and benefits for the institutions.
- M.G.Warrier
‘I’m independent’ - Raghuram Rajan
India's Rajan: 'Zero' Chance of Asking IMF for Money
...."One thing that I can say with confidence is that the chance of us going to the IMF for money is zero," Rajan said at an event on the sidelines of the annual IMF and World Bank meetings of finance minister and central bankers...........
RBI governor Raghuram Rajan's initiatives may see public banks close valuation gap with private peers
MUMBAI: Stock markets throw up many a paradox. But nothing is starker than the valuation gap between the public sector banks and private ones. Of course, there may be good reasons for that, but that may be changing soon if the Reserve Bank of India governor Raghuram Rajan has his way in transforming the banking system treats loans recast and defaulters.......
HC Stops SBI’s Move to Withdraw Check-off Facility
........SBI’s
move to discontinue the check-off facility, effected during the term of
its just-retired chairman Pratip Chaudhuri, was seen as a way to quell
trade union activities. The High Court verdict was closely watched as an
order supporting the axing of the facility could have made similar
trade union arrangements elsewhere vulnerable............
RBI cautions co-op banks against lump sum disbursal of loans to builders
Builders and real estate developers may no longer get large sums of money as loans at one go from the government. The Reserve Bank of India (RBI) has advised the state and Central urban cooperative banks to link the sanctioned individual housing loans to construction stages, interest/EMI etc before disbursing such loans to them. Known as "innovative housing loan schemes", banks generally disburse sanctioned individual housing loans to builders as a lump sum instead of linking it to the stages of construction...........
RBI reviews norms on urban co- op banks’ unsecured lending
The Reserve Bank of India on Thursday said unsecured loans worth up to Rs. 10,000 sanctioned by urban co- operative banks would be exempt from the aggregate ceiling on unsecured exposure of 10% of total assets as per audited balance sheet as on Mar 31 of the previous financial year. Earlier, the said limit was raised to 25% of the bank's total assets with the permission to grant unsecured loans of up to 20,000, with prior approval of the central bank, to individual accounts.........
RBI grants infrastructure NBFC status to IIFCL
New Delhi: The Reserve Bank of India (RBI) has granted the state-owned India Infrastructure Finance Co. Ltd (IIFCL) the status of an infrastructure non-banking finance company (NBFC), but with relaxed capital adequacy requirements—a move that will allow the company to lend more to infrastructure projects and also not require the government to recapitalize it to meet capital requirement norms prescribed for infrastructure NBFCs.......
24 months a bit too long?
Reserve Bank of India Deputy Governor K C Chakrabarty said on October 5 that new banks would take 24 months to be operational after getting licences. But a look at some of the key steps to be taken after securing bank licences shows the process should not take more than a year. ...........
New banks: More the merrier but will they be better?
......Therefore, having more banks is definitely a good idea as it will usher in more competition which will probably mean better services. In terms of spread of inclusive banking, one may not be too sure as the question is that if there were opportunities, the existing banks would have already been there. But quite surely the RBI will ensure that branches come up in these regions. Employment will increase and there will be better choice for the customers and..........
Kotak Bank plans to double branches in three years
....."The critical point has been RBI's decision to free up licencing of bank branches" said Kotak, referring to the RBI governor Raghuram Rajan's decision to allow banks open branches freely as long as they were within the parameters prescribed by RBI. Kotak said that the bank would add another 100 branches before the end of the current financial year. .........
RBI concerned as credit growth outstrips deposit mobilization
..."Our problem is that banks are giving too much loans compared to the deposits they mobilize. Their credit-deposit ratio is 78% and their incremental CD ratio is more than 80%. Our concern is that if banks are not able to mobilize deposits, so how will they be able to grow their loans," said KC Chakrabarty, Deputy Governor, Reserve Bank of India speaking at an event to launch a financial inclusion programme by Kotak Mahindra Bank to cover milk producers in Gujarat and West Bengal.........
Finance Ministry asks public sector banks to ramp up rural ATMs
The Finance Ministry today asked state-run banks to expedite installing automated teller machines (ATMs) in rural areas, which is falling short of the budget target. Against the target to install 34,668 by the end of March 2014, the public sector banks have put up only 5,726 ATMs by end of August, Snehalata Srivastava, the additional secretary in the Department of Financial Services, said.......
Do-it-yourself becomes new banking norm
...."Most online transactions are real-time and do not involve paper-based transactions , thus saving customer time. We are witnessing rapid customer adoption for net banking over and above their normal account related transactions. They are now viewing net banking as a single stop for all their banking requirements,"...........
Bigger, better, safer! RBI's new move to improve mobile banking
.......The committee shall examine the how practical it is to use encrypted SMS-based funds transfer. The operation is executed by using an application that can run on any handset. The committee set by RBI shall lay a road map for the implementation of the concluded solutions and other options for the mobile banking..........
Read.........
Six banks sign up for Aadhaar-based remittance
Customers of six banks will now be able to transfer money from one bank account to the other by keying in the receiver’s 12-digit Aadhaar number. The National Payments Corporation of India (NPCI) launched the Aadhaar-based remittance system in association with Unique Identification Authority of India (UIDAI) and six banks..........
Plan panel officials disagree with Rajan panel report on state funding
.........Planning Commission officials, who do not wish to be identified, spoke against replacing the Gadgil-Mukherjee formula; they say it is a time-tested one. Doing away with the existing classification of special category status to remote and hilly states, as recommended by the Rajan panel, needs approval from the National Development Council (NDC, comprising Centre and states), they contended. “Any move to alter the time-tested Gadgil-Mukherjee formula could open a can of worms,” a key Planning Commission official told Business Standard........
Rajan's growth report on states is flawed: Bibek Debroy
..........Assuming it was a criterion, the present exercise isn't particularly easy to understand. It smacks of arbitrariness and subjectivity. Having said this, is there any neat way to figure out why Gujarat does relatively badly in the Raghuram Rajan report? Not really, because the report doesn't give raw data. In sum, this entire report is rather cavalier in approach.
When policy interventions go wrong
When the Andhra Pradesh government sought to restrict microfinance institutions' (MFI) activities in December 2010, it was with good intentions. But the results were bizarre: "The average household expenditure dropped by 19 per cent, and the largest decrease was observed in expenditure on food," says The real cost of credit constraints: Evidence from micro-finance, a recent paper from the Indira Gandhi Institute of Development Research (IGIDR) written by Renuka Sane and Susan Thomas.............
Bank cap infusion likely to go up by Rs 5,000 crore
.....Last week, a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram had decided that there would be sufficient fund infusion in the banks to enable them to extend loans to select sectors. The Finance Ministry had said the step would revive consumer demand and in turn economic growth. But the measure was later criticised by RBI Deputy Governor K C Chakabarty as being imprudent. “It is not a very prudent measure to increase consumption by lowering interest rates. If the rate goes up it will become NPA,” Chakrabarty had said soon after the government decided to prop up consumer demand through lowering of rates......
Banking on festival cheer
.............This anxiety forced Finance Minister P. Chidambaram to announce that banks would offer cheaper loans to stimulate demand for two-wheelers, cars, and consumer durables. Significantly, Mr. Chidambaram’s hint to banks came after a meeting he had with the RBI Governor Raghuram Rajan. He also indicated that banks would be provided extra capital to execute his `pump-priming plan’...........
Taxpayers still face IT department’s computerization hurdles
........While taxpayers have so far been patient, looking at the long-term benefits that computerization would bring, how long can they be expected to put up with such new problems arising every year? While one understands that all bugs in a system cannot be completely eliminated, the tax department needs to be much more proactive and needs to take steps to ensure that taxpayers do not suffer because of the department’s shortcomings.
EC eyes black money flow, asks banks to scan deals
............As per the guidelines issued to the banks, any unusual transfer of money through RTGS ( Real Time Gross Settlement) system during the poll process without any precedent of such transfer will have to be reported. Further, any deposit of cash or withdrawal of cash exceeding Rs one lakh from back account of candidates or spouse or dependents as mentioned in the affidavit filed by candidates, which is available with the commission, should be reported.........
Axis Bank to pay Rs 66,000 for denying credit cards to cops
.The New Delhi District Consumer Disputes Redressal Forum observed that the bank had "deliberately declined" to grant credit card facilities to the officers, of SHO/Inspector rank, despite RBI guidelines and held the bank guilty of "unfair trade practice". "We have gone through opposite party's (bank) reply and evidence and noticed the bank had taken entire salary account of Delhi Police officials assuring all of them to provide credit facilities as per RBI guidelines. The opposite party deliberately declined complainants' credit card applications arbitrarily despite RBI guidelines. ..........
All about closing credit cards!
Enough can’t be said on the diligent care one must take when handling a credit card! Sometimes, you may feel that a particular card is not of much use to you, or you may realise that you are holding several credit cards and many of them are not getting used. So you may wish to cancel your credit card. However, you may sometimes realize that despite taking the initiative to cancel the card, you continue to receive statements from the bank declaring that you have unpaid dues in your account. What is the reason behind this?.....
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