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Saturday, November 30, 2013
The Roadmap to Financial Deepening - Dr Deepali Pant Joshi
The “remaking” of Indian banking
......It must be noted that there is little innovation in the nature of the remaking Rajan recommends. What is being done and what is planned to be done are all proposals that have been unveiled in the past, by a series of “committees” (from Narasimham I and II, through Tarapore and Mistry, to Rajan) that were set up to launch the trial balloons that would test the political and public response to various kinds and degrees of financial sector “reform”. ...........
RBI creates awareness on Banking Ombudsman
The Reserve Bank of India in association with Lead Bank conducted an awareness programme on ‘Banking Ombudsman Scheme’ among the existing customers as well as the prospective customers of various banks, here on Friday. A.S.H. Ruchi, secretary-cum- Deputy General Manager in the office of Banking Ombudsman at RBI in Chennai, explained the functioning of Ombudsman and what types of complaints pertaining to various banking services could be taken up with him....
Responsibility of safe ATMs rests with commercial banks’
Dr. Charan Singh, RBI Chair Professor, IIMB, answers questions on who should play a role in ensuring safety at ATMs - the police, the Reserve Bank of India, or commercial banks. He also outlines a strategy for safer ATMs.......................
Assault at ATM: Bank union asks RBI to scrap ‘white-label’ model
.......Banks were following different methods of filling cash, daily maintenance and security at the ATMs and many of these functions were outsourced, leading to customer complaints. In the case of `white-labels’ it would be the responsibility of the private agencies to locate, instal, and maintain ATMs, but with no provision of security. In view of this, the RBI should scrap this move, Nandakumar said.
Withdrawal symptoms
With ATMs mushrooming across the city, it is common practice for many to avoid the ones where there is a queue to withdraw cash (a general scene during the start of the month). However, with gruesome ATM attack reported in the city and Andhra Pradesh, Bangaloreans now feel that it is better to wait in queue at ATMs than go to a deserted one. Many say they are tagging along with someone to feel safe......
A New Currency in Karnataka
A new type of currency is gaining ground in Karnataka’s Belgaum district. Issued by various shops, restaurants and other establishments, each note measures about an inch by two inches, is printed on laminated paper and available in denominations of mostly Rs 5 or less. Instead of offering them change, such establishments issue their patrons tokens marked with a rupee amount and the name of the establishment issuing it. ..............
Minor boy arrested in Bihar with fake notes
A minor boy was arrested with fake currency notes worth Rs.1.06 lakh in Bihar's East Champaran district. It is for the first time that a child has been caught with fake notes, officials said Friday. The 14-year-old boy was arrested late Thursday by the Directorate of Revenue Intelligence (DRI) on a specific tip-off that the people involved in the Fake Indian Currency Note (FICN) trade were using children as carriers.........
Savings account customers may get interest sooner than 3 months
Bank customers will now get interest on their savings accounts as well as term deposits at an interval shorter than a quarter, as per a new directive by the Reserve Bank of India (RBI). Most of the banks currently credit the interest accrued on the savings accounts every six months.......
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The other side of the coin
My View on "Finance Ministry to seek special dividend from pro...":
This practice of ‘budgeting’ receipts from PSUs and putting pressure on organisations to declare dividend may not improve the image of finance ministry, even if the ministry succeeds in its pressure tactics and the ‘income’ enables it to show a reduced deficit figure. Actually the surpluses of profit-making PSUs should be ploughed back to further investment in infrastructure and R&D as also for supporting less profitable public sector ventures, rather than forcing a reverse flow of funds to government. The extent of pressure on organisations was visible last year also. RBI’s ‘surplus transfer’ of a huge amount even at a time the central bank’s reserves had not reached the optimum level fixed by the bank itself (2 per cent including Asset Development Reserves) should be viewed in this context.
- M G Warrier, Thiruvananthapuram
RBI to launch retail inflation-linked bonds in December
The Reserve Bank of India (RBI) plans to launch retail inflation-linked bonds in the second half of December, offering households a shield against negative returns on their savings. The 10-year bonds, which will be available through banks, will have a face value of Rs.5,000, an RBI announcement on Friday said. Investment in the bonds has been capped at Rs.5 lakh per applicant per year.......
Traders hope RBI will roll back cash constraints
..........“It is reasonable to expect the return of normalcy in the money markets as the rupee seems to have stabilised and the FCNRB and Tier 1 window would have attracted more than $30 billion,” said Sandeep Bagla, associate vice president at ICICI Securities Primary Dealership. However, a move to fully remove the cap on LAF borrowing is unlikely to come soon given some RBI officials are seen reluctant to return to the era of easy money for banks.
Monetary policy virtually ineffective: P. Chidambaram on inflation
Consumer inflation in India is entrenched due to high food and fuel prices, and monetary policy has little impact in curbing these prices, said Finance Minister P. Chidambaram on Friday. "I have been advised that inflation has got entrenched and monetary policy does not have any or has very little impact on food prices and fuel prices,"..............
Is the proposed law to regulate microfinance in jeopardy?
.....The state also said that it is doubtful if the Reserve Bank of India, which is saddled with larger issues facing the monetary system, will find time and attention to regulate this micro-sector. “Even in the recent past, authority which is already vested in RBI to regulate non-banking financial companies has not been used effectively, as a result of which crises like what happened in Andhra Pradesh could not be prevented”,................
RBI hauls up banks for not following its policy actions
........At a meeting with chief executives of the banks on Friday, RBI's Deputy Governor Anand Sinha sought to know why the lenders had not raised lending or deposit rates in tandem with the central bank's moves. RBI has raised the repo rate, the rate at which it lends money to commercial banks, twice by 25 basis points each since September 20 to contain inflation. However, most banks have desisted from raising rates. Although...........
'Good assets vital for banks to enter insurance'
..............Banks will be allowed to conduct insurance broking departmentally; there is no need to form a subsidiary or a joint venture. "In order to avoid any conflict of interest, banks undertaking insurance broking cannot enter into agreements either for corporate agency or for referral arrangements for insurance, either departmentally or through subsidiaries/group companies," RBI said, adding these guidelines would be reviewed after three years. The validity for the approvals granted would also be three years..............
How correspondents take banking to rural India
Patil is one of thousands of so-called Business Correspondents, or local bank representatives, who are taking banking to the doorstep of people in far-flung villages across the country. They help mostly illiterate Indian villagers understand the basics of banking in line with the Reserve Bank of India's 2009 guidelines on bringing the unbanked population into the fold of banking. The central bank said the process of financial inclusion involved access to banking and credit markets as well as financial education. Though still a relatively new concept, India already has more than 200,000 business correspondents who are as diverse as their rural customers : they could be carpenters, school teachers, village clerks, farmers or rural women with no education whatsoever........
Bajaj Fin may rejig mgmt to abide by RBI’s banking norms
.........The MD of Bajaj Auto said that it is engaging experts to ensure that while the new bank complies with the requirements at the same time lending to Bajaj Auto is not impacted. “Auto Finance division of Bajaj Auto is managed by me through my colleague who too is a Bajaj Auto employee. If Bajaj Finance becomes a bank then to avoid any 'conflict of interest' we may have to relinquish our roles in managing the auto division,” Bajaj told CNBC-TV18. He also voiced concerns at a time when Bajaj’s competitors are becoming aggressive in auto lending the company could ill-afford to hamper two-wheeler and three-wheeler lending for Bajaj Auto...........
NPAs: RBI wants info-sharing platform
Reserve Bank of India (RBI) Deputy Governor Anand Sinha has insisted banks must set up an information-sharing platform to reduce non-performing assets. In a closed-door meeting with bank chiefs on Friday, Sinha is understood to have asked for suggestions on how to use credit information on companies in improving communication between banks............
Banks on a bumpy road this fiscal
..........Banks had a major NPA cycle which started over a year back and substandard assets are now moving to a higher level. This means that on the same NPAs additional provisioning would have to be made. The going is expected to get tougher for banks as well as different sections of customers. Banks are worried about possible increase in slippages in sectors which have so far been largely immune to risks. The problems in the corporate sector have hit banks badly in the recent past...........
India clears way for Chinese banks
......“This is an excellent opportunity for banks in China to try and expand their Indian footprint if they wish to, because India is not going to be an indefinitely open market,” says Ananda Bhaumik, senior director at India Ratings. That is because the recently announced framework of the Reserve Bank of India (RBI) states that when the capital and reserves of the foreign banks in India exceed 20 percent of the capital and reserves of the banking system, RBI would bring back restrictions on further entry of new wholly owned subsidiaries (WOS) of foreign banks............
Non-resident Indians cashing in on the rupee’s woes
.........“The money that is being brought into India – is it eventually going to be spent in this country or is going to go back? If the money is going to stay in India, probably because the NRI has some commitment, such as having bought a house, they have dependent parents, or they have dependent family members – then it certainly makes a lot of sense to remit that money into the country.............
Sahara’s Subrata Roy blames troubles on comment about Sonia Gandhi
..........Roy alleged that his publicly aired view about Gandhi earned his Sahara group the wrath of the Reserve Bank of India (RBI), which eventually forced it to wind down its deposit-taking business through so-called residuary non-banking finance companies. The central bank, though, had previously lauded the same business as “inclusive banking”, Roy said..........
High food prices eating away at growth
........In fact, the RBI’s monetary policy has failed to control inflation. On the contrary, high interest rates are singularly responsible for choking the growth of several sectors of economy, such as housing and real estate development, production and sales of white and brown goods and the linked industrial products such as cement, metals, power, paints, wood products, petrochemicals, home furnishings, etc. Maybe it is time for a rethink on RBI’s inflation control policy, which seems to be heavily tilted towards curtailing monetary expansion. Whereas much of the current high rate of inflation is on account of increasing prices of food items primarily due to supply shortage. And.........
Farmers' suicide in Bundelkhand: Centre, UP response sought
......."Once these affidavits are filed, the court can assess whether the action of the lending institutions is in accordance with the master circulars issued by the Reserve Bank of India and whether any further direction of the court would be necessary to protect the interests of the farmers in the region," the Division Bench said. The court made the aforesaid observation in the light of the RBI's submission that it had issued "master circulars" on July 1, 2010 and July 1, 2013 "laying down guidelines for relief measures to be taken by banks in areas affected by national calamities". .........
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