Depositors’ interests must be paramount - Dr.S.S.Tarapore

..........While the RBI would no doubt wish to wait for the Nachiket Mor Report, there is one issue relating to the savings bank deposit rate, which needs urgent attention. In remote rural areas, the first contact a customer has with banks is through the opening of a savings bank account. As part of the financial liberalisation, term deposit rates were freed in the mid 1990s and each bank now fixes its own structure of term deposit rates. Since the mid- 1990s, the deregulation of the savings bank deposit rate has been debated extensively. The major banks have made shrill noises that deregulation of the savings bank deposit rate will result in chaos.........

Read - FPJ

Tradeoffs inevitable in managing currency, says Gokarn

..........“The rupee rising is bringing down the cost of unavoidable imports. It is therefore feeding through into lower inflationary pressures domestically. So, to prevent the currency from rising in an inflationary situation means that you are going to have to do something more on the interest rate side to offset the inflationary pressures of an undervalued currency. That is the choice that has to be made,”.............

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PlanCom member Narendra Jadhav keen to contest on Congress ticket

............ “The Congress high command will take a final decision on Jadhav's nomination. In Jadhav, the party will nominate an educationist with a reckoning at the global level.” Prime Minister Manmohan Singh has called Jadhav, “a role-model for the disempowered millions in our country.” As an economist, Jadhav worked with Reserve Bank of India, the International Monetary Fund, the Afghan and Ethiopian governments. As vice chancellor of Pune University, Jadhav transformed it to a model state university in India. In 2008, the Maharashtra chief minister appointed him as the chairman of a one man high powered committee in the context of farmers’ suicides. The Jadhav Committee Report has been accepted by the government and is being implemented.......

Read | Business Standard

“Updation of Pension” - A misnomer

...........The Government has wrongly taken the demand for “Updation of Pension” as a demand for revision of the “Pension Scheme” itself. It has therefore to be clarified that the demand is only for rectification of the anomaly in difference of the amount of pension paid to the present  Pensioners and others who retired earlier...................

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Give Me That Promotion, Sir !!

The following poem of Dr Tapan Kumar Pradhan, Assistant General Manager, Thiruvananthpuram has entered the Final of Poemhunter World Wide Poetry Contest. You may like to read it, as many people have found it quite interesting....

Read and rate the poem............

VITALINFO- Always n All ways Appreciable - Dr.T.V.Gopalakrishnan

May I request you to add Ms. Niranjana Shah to your invaluable VITALINFO. She was, for many years, in the erstwhile CPC and then in DBOD and the Ombudsman's Office in Ahmedabad and Mumbai. I had the opportunity of working with her in the CPC for many years. Warm regards,

- S.S.Tarapore

Dear Mangesh,

I am presently in Singapore and now I feel all the more the importance and utility of your blog. I am able to keep myself updated with the latest in Banking, Finance and Indian Economy. You are really doing a wonderful job with all commitment, sincerity and involvement and no word of appreciation will be adequate enough to acknowledge your efforts and painstaking in bringing all the information under the world of Finance together for the benefit of many who are in India and abroad. May god bless you with all strength and enthusiasm always and in all ways.   

– Dr.T.V.Gopalakrishnan

I came across VITALINFO and I found it to be good and interesting.  Kindly include my name also in the list to enable me to have it regularly. Regards

- S K Shukla, Manager, Planning Cell 
HRMD, CO, Mumbai

NEW RS.10 NOTES

This is with reference to the Reserve Bank of India’s announcement about new Rs.10 currency notes with signatures of new RBI Governor Raghuram Rajan. Only some time back the RBI had announced plastic notes of the same denomination in select Indian cities on an experimental basis. The RBI should issue plastic notes rather than the traditional paper ones. With currency notes of smaller denominations — Re.1, Rs.2 and Rs.5 — already discontinued, the RBI should issue smaller-sized notes to save on currency printing. Sizes of currency notes were last reduced about half-a-century ago, when currency notes of Re.1 and Rs.2 were quite common in circulation. With coins in the denominations of Rs.5 and Rs.10 already in circulation, the RBI should discontinue printing notes of these denominations too. Since the life of lower denomination currency notes is quite low, it is senseless to waste public money on printing lower denomination currency notes of up to Rs.10. India should follow the example of the United Kingdom and the United States and stop printing currency notes of higher denomination like Rs.1,000 to check the menace of black money and fake currency. 

Madhu Agrawal, Dariba, Delhi (Hindu)

Forthright and fearless - Ramphal will be remembered........

My View on Touching tribute by Shri Donde

I have been following your daily inputs starting with Mr. Donde's beautiful narration of the qualities of two comrades who have started their next journey. I had the privilege of interacting with Shri Ramphal Sharma as a fellow active member of the Officer's association. The most likeable quality in him was his forthrightness, fearlessness and sincerity of purpose. He was never scared of calling a spade a spade. But then always smiling. When ever I visited Delhi I made it a point to meet Ramphalji for a few minutes and to enjoy his tidbits. 

May his soul rest in peace. 

- B K Katyal

SBI rewards performers with overseas training

Talent retention is increasingly emerging as a challenge for public sector banks (PSBs). Their limited ability to reward top performers is one area where PSBs lose out to private sector peers. With some new banks expected to enter the space in about a year or so, the competition for talent is sure to get tougher. Recently, banking major SBI hit upon an idea to reward its performers in a way that may become an example for other PSBs. Last fiscal was a good year for DFHL, the bond dealing arm of SBI. However, it was not possible for the bank to reward DFHL’s top performers with huge bonuses or hikes. So Pratip Chaudhuri, the recently retired chairman of SBI, offered DFHL’s performers a week’s training at London School of Economics or Euromoney — at the bank’s expense. The training helped the executives establish foreign links for the bank’s bond house, which is almost a necessity in the present market.

TOI 

New RTGS system to improve financial market efficiency: Rajan

.......“With its advanced liquidity and queue management features, the new RTGS system is expected to significantly improve the efficiency of financial markets,” Mr. Rajan said while inaugurating the ISO 20022-compliant system. The RTGS system is used to settle interbank fund transfers by banks and their customers and is critical in facilitating orderly settlement of payment obligations. With its implementation, new regulations will replace the operating guidelines and regulations of 2004.......

Read - The Hindu

Planning Commission to take views of states on Rajan report: Official

........Planning Commission will hold wider consultation with stakeholders, including states, before firming up its views on the controversial Rajan panel report that has suggested abolishing the special category status to states. “We have to make up our mind about taking it to the National Development Council (NDC). We have to consult with the states in advance,” a top Planning Commission official said................

Read - HBL

Financial Inclusion - Where do we stand?

.....The term financial Inclusion gained popularity in early 2000 when a United Nations study revealed the direct relation between financial exclusion and poverty. Since then, the government has taken a lot of initiatives to attain financial inclusion. In 2004, the Khan committee was setup to look after financial inclusion and recommendations of the commission were incorporated into the mid-term review of the policy (2005–06).  RBI has taken several measures to increase the rate of financial inclusion. The branches of commercial banks have increased from 8321 in 1969 to 100,277 as on December 31, 2012...........

Read - The Indian Economist

Foundation plans to start financial literacy classes in Govt. schools

.......Even the Reserve Bank of India has come out with the view that various aspects of financial literacy must be included in the school curriculum. Rather than taking financial literacy as a separate subject, which might be viewed as an additional burden by students and teachers, the Country Director said they were integrating financial concepts with subject curriculum of mathematics and social science. While mathematics was used to teach students how to calculate the change they get while shopping, social sciences was used to highlight environmental benefits of switching off lights when not required, besides the cost-saving involved.........

Read - The Hindu

India may benefit from financial access initiative

.........On the goal of universal access to financial services Mr. Kim said this month that it was “within reach thanks to new technologies, transformative business models and ambitious reforms,” adding that by as early as 2020 instruments as e-money accounts, debit cards and low-cost regular bank accounts could significantly increase financial access for those who are now excluded. Recognising that 650 million people still lack sufficient access to financial services in India the Reserve Bank of India introduced a regulation in 2006 allowing banks to use the services of third-party, non-bank agents to extend their services right to people’s doorsteps, the multilateral Consultative Group to Assist the Poor recently noted............

Read - The Hindu

Fasten seat belts but wear a parachute

............The Reserve Bank of India (RBI) will have leeway on the external front, assuming the FOMC meeting doesn't change status quo. In its policy review at end-October, the RBI is expected to raise the repurchase rate again, to combat inflation. But it is also expected to reduce the marginal standing facility rate and it might carry out more open market operations to ensure banking sector liquidity. The Centre is promising to recapitalise public sector banks with more than the budgeted Rs 14,000 crore in the hope of stimulating domestic consumption in the festive season. Now for the bad news. There has been another...........

Read | Business Standard

India and the IMF

........A pertinent question raised by Mr. Chidambaram has to do with the rationale, the reasons behind such a sharp downgrade: what is the significant bad news that the IMF has received between July and September to warrant such a steep downgrade? Many others too have made the point that the IMF’s methodology for calculating national accounts statistics is based on market prices whereas India publishes its estimates on factor cost. The Central Statistics Office (CSO) does give calculations on market prices also but those at factor cost are the usual reference point..........

Read - The Hindu

While America was shuttered

......Former Reserve Bank of India (RBI) governor Duvvuri Subbarao must be thanking his lucky stars that his term in office ended when it did - right in the midst of the exodus of investors out of the country - on 3 September 2013. The capital flight out of India is no better depicted than by the nearly 20% drop in the Indian rupee versus the greenback from 54.79 rupee per US$ at the start of 2013 to a record low 68.15 rupee on the 28th of August. While the rupee's sharp depreciation was sparked by the sell-off in emerging markets ahead of widespread expectations of a taper in September, India's negative economic fundamentals - slowing growth, high inflation and ballooning budget and current account deficits (the highest among the BRICs) - greased the Indian currency's slide...............

Read.........

Raghuram Rajan's RBI gears up to launch interest rate futures

......Using only one bond future is the preferred option for many market participants since it would simplify the structure. However, the RBI is concerned that traders could seek to influence the market by aggressively trading the underlying bond, according to people involved in the discussions............

Read - FE

Dept of Posts cuts banking fund proposal to Rs 623 cr

..........The DoP has applied for a banking licence. The Reserve Bank of India is expected to issue licences to shortlisted entities in January 2014. “The DoP has lowered the proposal for funds it needs to start banking operations from about Rs 1,900 crore estimated earlier to about Rs 623 crore,” a government official told PTI. The Government has sent the DoP’s fund proposal to the Expenditure Finance Committee. Once cleared by EFC, the proposal will be placed before the Cabinet for final approval.............

Read - HBL

New regime for foreign banks?

...........While foreign banks await RBI’s new norms, if the regulator continues to insist on being reciprocated as a precondition to the opening up of the sector, things will not change dramatically unless overseas watchdogs change their stance. For instance, if US is not ready to welcome Indian banks with open arms, Citibank cannot make it big in India to cash in on the opportunities that a burgeoning middle class and increasing rural consumption offer...........

Read - Mint

Private banks head for the hinterland

.........A lot of problems associated with rural banking are still around — accessibility, high dependence on human resources and lack of banking literacy among villagers, for example. But bank officers are learning to deal with these issues, travelling long distances, identifying and educating potential customers, forming groups, and assessing their financial needs as well as their ability to run a business. The focus is mostly on women customers and self-help groups. Banks are providing them with savings accounts, micro insurance and recurring deposits. They are also linking them to their big clients who could become customers for the products coming out of their cottage industries and agri ventures...........

Read - TOI

FM to grill govt banks' chiefs tomorrow

Finance Minister P Chidambaram will take stock of public sector banks’ performance on Tuesday, to assess whether credit is being provided to productive sectors, selected sectors are being given a boost and if the lenders are reining in the growth of non-performing assets (NPAs). He will also review interest rates on non-resident Indian accounts, in focus to take advantage of the rupee’s depreciation...........

Read | Business Standard

Moody's review meet with SBI brass this week

.......The ongoing reliance on a fiscally constrained owner (the government) to maintain capital at the levels desired by the regulator (the Reserve Bank of India) also had a bearing on the rating action, the agency had said. It had affirmed SBI’s financial strength rating at D+ but changed the outlook on this parameter to negative from the earlier stable. An SBI executive said the interaction (for the review) is to focus on capital adequacy and asset quality (non-performing assets and restructured loan book) of the bank................

Read | Business Standard

Credit cards: Cash Back or Reward Points – which one to choose?

.......... In any case, a credit card should be used with caution and your expenses should remain within your budget, irrespective of nature of the card. Before going in for any card, carry out a cost-benefit analysis basing it on your current expenditure and sign on the form only after you are sure.

Read - FE

Kudos to credit bureaus

...........The microfinance industry has worked hard to create credit data on such a large number of borrowers. The Reserve Bank of India deserves appreciation for ensuring the setting up of credit bureaus under the Credit Information Act and coaxing and cajoling banks to share and seek information. Such data help.................. 

Read | Business Standard

Product design key to success, say Indian bankers

Even as Reserve Bank of India (RBI) is working on launching a futures instrument in government bonds, market players are having reservations over the design of the proposed product, citing poor experience in the past with such derivative instruments............

Read - Financial Express :: Financial Newspaper of Bangladesh

Kotak Mahindra Bank may acquire smaller players

Uday Kotak, VC & MD of Kotak Mahindra Bank, has set stiff expansion targets. The bank, which took over a decade to grow to 500 branches, is set to double its network in another three years. Also, the RBI has asked the bank to bring down the promoters’ stake from 45% to 20% by March 2018. But the scope for diluting capital through fresh issuance is limited, considering that it has a capital adequacy of over 16%. And bank stocks — despite the recent improvement — are still not doing well. According to bankers, this gives Kotak an option to play the consolidation card by acquiring some smaller players and the bank is believed to be looking at such opportunities. 

TOI

Syndicate Bank enters league of large banks: CMD S K Jain

......"Bank has been progressing on sound financials, and registered business level of Rs 3,46,000 crores with 33 million customers as on September 30. The bank is now in the league of large banks," ......

Read - ET

20,000 Gram Panchayats in Maharashtra to get e-banking facilities

MUMBAI: In a bid to curb financial irregularities by self-help groups and money lenders, Maharashtra government has decided to start e-banking facilities in 20,000 state Gram Panchayats. There are around 28,000 Gram Panchayats in the state and out them 20,000 would have the e-banking facility..........

Read - ET