......However, these initiatives for strengthening financial inclusion are yet to have a substantial impact on the lives of the excluded population. Over half the Indian population is unbanked. Only about 55% of the population in the country has a deposit account and around 9% has credit accounts with banks. According to data from Reserve Bank of India (RBI), India is the home to largest number of unbanked families (more than 145 million). There is only one bank branch per 14,000 people. The total number of villages in the country is estimated to be more than around 6 Lakh, but the number of scheduled commercial banks (SCBs) and Regional Rural Banks (RRBs) stand at only 33,495........
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.
Wednesday, October 16, 2013
Vinoop keen to make an impact
.....After his father’s (an RBI employee) transfer brought him to Kerala, Vinoop, in his maiden appearance for the State in the Cooch Behar Trophy in the 2010-11 season, scored 545 runs and took 26 wickets. Kerala qualified for the elite group for the first time in the history of the tournament. Based on that performance Vinoop was chosen for Kerala Cricket Association’s S.K. Nair award for Cricketer of the Year for the 2010-11 season. Vinoop was also called up to the Kerala Ranji Trophy squad for the last match against Himachal Pradesh at Thalassery in 2011 though he didn’t play........
Obituary - God's Good Man passed away
I deeply regret to advise you of the sad demise of Shri.R.S.Kadkol on October 15th in Mumbai. He was recently in hospital for three weeks for breathlessness. He was 77 years old and retired as A G M in DEAP almost twenty years ago. He had sought voluntary retirement in view of his wife's sickness. She pre-deceased him. Kadkol, who had joined RBI in the Economic Department, went on to become in charge of the Lucknow Office of the DEAP for a number of years. He had a stint in Credit Planning Cell. A true gentleman to his finger tips, Kadkol was always in smiles--ever helpful and he had totally abjured anger. He had a very wide circle of friends who benefited from his anecdotal talents. Travel bug had bit him and we are fortunate to have his travel memoirs--journeys to Char Dham, Nagaland, Mizoram , Badrinath and Kedarnath. He wrote for "Hitguj" regularly. We pray that his soul rests in peace. He was truly "God's Good Man".
- P.P.Ramachandran
‘Second time’ unlucky?
My View on "Is the Raghuram Rajan-Chidambaram bonhomie too goo...":
From what we get to read in the media, Dr Rajan has quickly (as compared to his predecessors) learnt the art of reframing his arguments to convince North Block that RBI is an institution with an identity which needs to be protected in national interest and the central bank needs the fiscal policy and real sector reforms support from GOI. His IMF background has not uprooted him from the Indian context and he is not hiding his anxiety to protect the interests of the majority of the country’s population which lives below the internationally accepted poverty line (per day expenditure of $2). RBI since at least the dawn of independence, has taken on itself the responsibilities relating to institution building and credit deployment for various purposes depending on priorities of the governments of the day, in addition to the central bank’s core functions. The Indian central bank’s focus on financial inclusion and taming inflation which are in tune with the vision expressed by Dr Rajan before taking over as Governor. By now, he has got a feel of the constraints with which RBI has been having a tight rope walk in harmonizing the monetary policy in recent times with the unbridled fiscal policy guided by pulls and pushes of a coalition government at the Centre. Finance Ministry has been asserting ownership rights over RBI almost in the same way it has been handling PSUs by interfering even in RBI’s internal HR matters. The FM who put his Secretary Dr D Subbarao as the Governor of RBI hoping to have a submissive Governor found a different person in Subbarao soon after he started functioning from Mint Road. In that context, perhaps, it will need some introspection, a willingness for give and take and lot of luck only can save the FM from being ‘second time’ unlucky.
- M.G.Warrier
Sadhu dreams of buried gold, government starts digging
.....Yogi Swami Shobhan Sarkar says the gold he dreamt of belonged to a nineteenth-century ruler, Rao Ram Bux Singh. He says he wants it in government hands to help India recover from an economic crisis. Not everyone is so keen to put bullion into the Reserve Bank of India's vaults. Temples sitting on about half as much gold as in Fort Knox are resisting efforts by the central Reserve Bank of India to audit their holdings...........
FM's tough decisions?
...The question is when will he take tough decisions? What are those tough decisions to keep a check on the CAD? It is a matter of fact that he does not listen to others. He is an unchallenged leader. He is just like a freestyle wrestler who nobody wants to challenge out of respect..........
Growth vs inflation
This is with regard to “Inflation hits 7-month high as food prices soar” (Business Line, October 15). ( Trends in inflation over the last two years show that the monetary policy measures are not acting as an effective antidote. . Various supply side constraints keep fuelling inflation from time to time. Onion price hike is one example. Similarly, international crude oil prices continue to add to inflation woes in India. The headline inflation hardly gets impacted and hence the RBI approach of containing inflation though monetary policy measures may not work in India. When minimum wages are hiked every year and minimum support price for foodgrain is upped periodically, how we can expect inflation to go down? With Government setting the 7th Pay Commission, more people, including in the private sector, will have greater purchasing power, which is a sure-shot recipe for inflation. In view of all this, we must learn to live with neo-normal inflation. Inflation will continue to be high in the country and we need to move beyond the text book approach of inflation control. We need to look at high growth rate which will increase revenue sources for the government, helping it start welfare measures for poor people. Food security can be supported by high growth resulting in high collection of direct and indirect taxes. Shouldn’t the RBI look at growth more than inflation? It is now time to think like a contrarian.
- Vivek Sharma, Mumbai (HBL)
India in depth: Changing recipe of monetary sauce
........The central bank needn't become a completely open book. But a more robust response to inflation is a welcome break from the past. A monetary policy rule that targets several variables risks falling between stools. That's the case now. Inflation is almost at double-digit levels but the economy, which grew just 4.4 percent in the June quarter, is operating below capacity. The paradox is partly explained by the RBI's actions..........
The global economic situation and India - Charan Singh
.....According to the IMF, India’s growth potential has been impacted because of infrastructure and supply bottlenecks arising from problems in mining, energy, telecommunications; slowdown in permits and project approvals; and over-stretched corporate balance sheets. Also, given that current account deficit (CAD) is large and inflation is high, monetary policy options are limited in the face of decelerating growth.........
India's banking sector is inefficient and customers pay the cost, making reforms imperative
.......Presently, Indian banking packs a lot of inefficiency, which is passed to consumers in terms of higher costs. Enhanced competition in any business will result in declining profitability as the opportunity to make easy money disappears. Banks here however have largely maintained their profitability over the last decade, suggesting that the 154 commercial banks hardly push each other. Compare Indian banks' profitability with the UK and what comes through is that customers here are paying the price for inadequate competition.....
Beyond finance reform
......Dr Rajan's liberal views on foreign banks, for example, may not find favour with whichever political configuration forms the next government. But, on the other hand, measures that increase transparency will help all players make more informed and, consequently, efficient decisions on both resource allocation and pricing. The banks themselves should be fully behind this. Overall, while the merits of individual components of the strategy can be debated, the pursuit of the broad objectives of penetration, efficiency and safety will certainly contribute to better economic performance..........
Don't forget co-ops and pri-secs
My View on t "India Needs More Banks, Foreign or Not":
Surprisingly, except for some occasional mention about ‘financial inclusion’ reforms in India seems to be an urban, if not metropolitan affair. When we talk about penetration of banks in rural areas by importing ‘foreign banks’ or via Banking Correspondents or earlier through Self Help Groups financed by commercial banks, we are forgetting the existence of cooperatives and private sector organisations which are already there doing a lot of service. Just as we do not want rural people to become literate for selfish reasons, we do not want rural institutions rural institutions to upskill for fear of their eating into urban business. Reforms need to spread to rural areas. For this, literacy need to be improved, rural institutions including rural financial institutions need to be allowed to survive and become viable.
- M.G.Warrier
No to foreign banks
RBI Governor Raghuram Rajan has talked of bank reforms that will allow foreign banks to enter India ‘in a big way.’ “Once you have a fully owned subsidiary, we’ll allow you ‘a lot of’ freedom.” This will be a ‘near national’ treatment to the foreign banks, he has said, speaking in Washington. But why do we need this? Indians have already tasted the bitter fruits of the pro-US economic reforms introduced by Manmohan Singh in the form of daily tumbling rupee, anti-aam aadmi large-scale scams worth trillions of rupees, and US dollars deposited in foreign banks not brought back to India till date. India doesn’t need any bank reform but governance reforms in totality at the earliest in the all-round interest of the Indians, and not in the interest of any neta, babu, foreigners or foreign banks.
- Hansraj Bhat, Mumbai (HBL)
Foreign Banks: The Long Wait To Continue
The fact remains that no other country allows foreign banks to set up shop like we do
.......Speaking in Washington, Reserve Bank of India (RBI) governor, Raghuram Rajan, said more freedoms for foreign banks “is going to be a big, big opening because — one could even contemplate (them) taking over Indian banks, small Indian banks and so on”. He added: “if you (foreign banks) adopt a wholly-owned subsidiaries (WoS) structure, we will allow you near national treatment”. But it’s the use of the words “near national treatment”, and the caveat he added “reciprocity: your country should allow the same to our own banks”, that matters..........
Foreign lenders won't buy local banks sans clarity
............"Foreign banks buying smaller ones could be one way but just foreign banks becoming larger by becoming subsidiaries or whatever other form which gives them the ability to expand physically, bring in more capital and also bring in technology which is what they are good at and risk management is really the key need for India,"...........
Inflation to ease; RBI likely to cut MSF rate: Assocham
..."The recent stability in rupee coupled with kharif output will ease sequential inflationary pressures going forward. This should prompt the RBI to continue on the path of monetary policy normalisation by reducing the MSF rate further," Assocham President Rana Kapoor said..........
Rupee revived by Raghuram Rajan as carry trade favourite
Reserve Bank of India (RBI) governor Raghuram Rajan has turned the rupee from a pariah to the world’s favourite currency after just a month in office as he intensifies efforts to quell inflation and lure capital. Investors selling dollars to buy rupees earned 10% since Rajan took over on 4 September, the most among 44 currencies tracked by Bloomberg and a turnaround from a 2.8% third- quarter loss......
Rising inflation ensures Rajan can’t do much on repo rate
.......However, the latest inflation figures have put paid to all such hopes, at least for now. While Rajan did try and inject some liquidity into the system by lowering the Marginal Standing Facility for banks twice since he took over, his hands are clearly tied on the repo rate front. The repo rate—the rate at which RBI lends short-term funds to banks—is the benchmark RBI uses as the key monetary policy tool. The last time around—on 20 September—RBI actually had to increase the repo rate by 25 bps to signal its resolve in tackling rising prices........
25 mn small borrowers' data now a click away
......However, there are a number of challenges in collating data from small borrowers. While several MFIs submit data to the credit bureaus on a weekly basis, only a few provide data on a monthly basis, which limits the scope of the database, according to Ghosh. Again, lack of uniformity in data structure poses a challenge in the process. Yet, the biggest challenge in having a coherent database of small borrowers comes from non-government organisations, credit co-operative societies and self-help groups (SHGs), which do not furnish data to the credit bureaus.........
'One-fourth of MSMEs do not have access to banks for credit'
As high as three-fourth of India's Micro, Small and Medium Enterprises (MSMEs) do not have any access to banks or institutional financing channels making their businesses vulnerable, according to a study. Only about 33% of the country's MSMEs have access to banks or institutional financing channels, said a study jointly done by financial advisory firm ResurgentIndia and industry chamber Assocham.........
RBI rejects takeout finance plan of IIFCL’s London arm
........The RBI’s move is a setback of sorts for the state-owned infrastructure lender, IIFCL, which was betting big on takeout finance to speed up disbursements from its London subsidiary. Takeout financing at London was envisaged to be similar to IIFCL’s takeout scheme in India. Under takeout financing, loans made by banks to infrastructure firms are sold to IIFCL so that banks recover their funds ahead of the payment schedule under the loan agreement...........
HDFC Bank: Cheques and imbalances
HDFC Bank managed to beat Street expectations once again. During the quarter ended September, it reported a net profit of Rs 1,982 crore ahead of Street's consensus estimates of Rs 1,964 crore. This would come as a positive surprise to investors prepared for worse, given several headwinds the bank faces: Low credit growth, tight liquidity, rising interest rate, falling GDP growth and pressure on assets. .........
Corporation Bank's new CMD sets clear agenda
.........The current business environment was highly dynamic and changes were occurring at a rapid pace, Bansal said, adding new bank licences were being considered, which would increase competition further. Regulatory pressures were increasing and credit offtake continued to be challenging, he said in a communication to employees................
Postal Life Insurance day celebrated
....Postal life insurance was started with effect from 01 February 1884 for central government/ state government officials, defence personnel, officials of govt institutions, municipal corporation and boards, government universities, employees of nationalized banks, additional bodies of State Banks of India and Reserve Bank, operational units under central/state government, UTI, IDBI and employees of state insurance corporation...........
Aadhaar de-duplication myth busted. Any answers, Mr Nilekani?
..........According to a report in Matrubhoomi, a Kerala-based newspaper, PV Narayanan, a resident of Panatthadi panchayat received two Aadhaar numbers: 548780623023 and 356459270677. The names on both these letters issued by UIDAI are same, with slight different photos. Narayanan probably may have registered at two places or centres. But, surprisingly, his fingerprints seem to have passed the so-called ‘robust’ de-duplication test of UIDAI. Since Aadhaar includes an iris scan, this too seems to have been missed...........
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