........One time-tested way to shake incumbents out of their inefficiency and sloth is to introduce competition. So, the governor is justified in thinking that as more foreign and private participants enter the banking sector, public sector banks will have no choice but to get their act together. In principle, this is sound thinking. There are at least two exceptions. One is an Indian phenomenon and the other applies to the financial sector globally................
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.
Tuesday, December 3, 2013
Market hopes RBI will stick to early data release
......“If Rajan could release the numbers one month ahead of schedule, it means the data are available. But It’s strange no one in the RBI ever thought of releasing it early despite the impact of the numbers on general policy-making,” a senior banker said. Market participants now expect the central bank to continue the trend of releasing data as soon as they are available.........
M. V. Tanksale is IBA’s new chief executive
M.V. Tanksale, former Chairman and Managing Director of Central Bank of India, has taken over as Chief Executive of the Indian Banks’ Association. Tanksale succeeds K. Ramakrishnan, who was at the helm of the Association for five years up to November 30, 2013........
Three cheers for VITALINFO
Mangesh has hitched his wagon to a star,
He and VITALINFO will travel very far,
The news items served up daily are like tasty cookies in a jar,
Mangesh picks them up while dashing around town in his lovely sports car.
- Frank
Vital Info’s three – and it calls
for celebration,
It’s your baby, conceived and
nurtured with pure dedication.
To collate information, catering to
the needs of the RBI fraternity,
At four you begin ; when in deep slumber - the rest of our community.
At four you begin ; when in deep slumber - the rest of our community.
Laurels and accolades, exemplify
your outreach and popularity,
It’s no mean feat to sustain this
daily contribution, with alarming alacrity.
News paper reading, now a chore so
mundane and boring,
For addicted we are to your daily
Vital Info serving.
Oh Dear Mangeshji, this little ode
out of pure adoration,
Vital Info’s three –
and it calls for celebration.
- S Thomas Punnoose, MoF
FAXation
Dear Friends,
Appended below is the copy of letter sent by Forum of Retired Employees of RBI, Chennai to the Governor by FAX today on Updation of Pension.
Yours,
B.Chandraiah
Vishwavir Ahuja taps BankAm learnings to build Ratnakar Bank’s profile
For a sports fan, getting to watch Sachin Tendulkar's final Test match from the president's box was a rare privilege. But imagine being too busy with work to go when even Reserve Bank of India Governor Raghuram Rajan found the time to watch the game. Then again, that's just the kind of focused professional Vishwavir Ahuja is. The managing director and chief executive officer of Ratnakar Bank had a strategy meeting that was too vital to miss.......
Read - ET...
Rates of little interest
The outlook has turned in favour of high interest rates in the foreseeable future. High inflation and RBI’s commitment to reduce inflation through interest rate calibrations implies that the cost of borrowing would remain high and could even increase. Some of the major commercial banks raised their base rates in the last month. This would hurt the profits of the corporate sector because a change in the base rate impacts the full spectrum of borrowers from banks.............
Better HR, better banks
....... PSBs are in no way inferior and have the resources and infrastructure to show greater levels of efficiency. What is lacking is a proactive human resources (HR) policy. The real HR policy draws a line of demarcation between performers and under performers, so that it is able to identify those who excel. ..........
Back to gold?
The article “Let’s go back to good old gold” (Business Line, November 29) should be music to the ears of the World Gold Council. In an era where gold prices are expected to go down, the author’s recommendation for an increase in gold’s share in reserves management will reverse this trend. While I regard gold as an equivalent monetary asset in times of need, I would not like to go with the author in recommending a one-third reservation, as it will impact the monetary policy to a greater extent. Gold is a precious metal, preferred by households. The way the author has argued for gold, I am tempted to work out an approach for bringing real estate under reserves management. However, all assets cannot be brought under reserves management; only monetary assets can be included. Though gold is also a near-equivalent monetary asset, providing for a larger share may be counter-productive and will bring down the economic performance. Also, it will lead to greater focus on gold price movement too, which may not always be in the best interest of reserves management.
- Raghavan Guruswami (HBL)
Bank for and by women a step forward in India
………Joyashree
Roy, a professor of economics at Jadavpur University in Kolkata, said a women’s
bank seems more like a political stunt than a genuine policy decision guided by
socio-economic factors“ An exclusive
bank for women, especially in an urban society, is not relevant anymore,” she
told the Bangkok Post. “In some rural societies where women are not allowed to
go out alone or interact male strangers, a bank such as this may help.” An
exclusive women’s bank, Roy said, does not bring about a change in the mindset
of the society toward women or address gender-related social issues adequately.
Interestingly as of now, all the branches of the bank are in the cities —
Mumbai, Kolkata, Chennai, Bangalore, Guwahati, Ahmedabad and Lucknow. The
Reserve Bank of India normally requires 25% of a bank’s branches to...
RBI begins process to determine systemically important banks
......RBI on Monday released the draft framework which outlines the methodology to be adopted by the RBI for identifying these lenders and regulatory policies. Such banks will have higher capital requirement and regulatory oversight. RBI has sought comments till 31 December.........
India in for a slow and stable 2014
.......Can it get worse? Once again, if the pundits are to be believed, it cannot get worse from here. After two years of steady fall in economic growth and earnings, it would appear that we've hit rock-bottom. With economic growth picking up marginally to 4.8% in the July to September quarter, despite a fall in government spending compared to April to June quarter this year, GDP growth has remained range-bound. While ..............
Insurers not hopeful of banks entering broking business
.......“The industry was not too hopeful of large private and public sector banks entering the insurance broking segment, but we had thought smaller public and private sector banks would see a business opportunity here. But with RBI putting stringent norms, these banks, too, will be dissuaded,”............
SBI loan fraud case: Private firm executive gets limited protection
NEW DELHI: A private firm executive, who has been named as an accused along with a Deputy Managing Director of State Bank of India in a case of alleged graft in disbursal of loan of above Rs 400 crore, was today granted "restricted protection" from arrest for three weeks by a Delhi court.
SBI says busy season fails to lift credit off-take
......On reports of the RBI pulling up banks for not transmitting the twin rate hikes, the SBI official said it was not fair to say RBI has some grave reservations on the issue, which got discussed at the customary post policy interaction between RBI and bank chiefs last week.
Sumit Bose likely to head PFRDA
..........Bose, a 1976 batch Indian Administrative Service officer from the Madhya Pradesh cadre, is retiring in March 2014. As the selection process would be finalised only by January or February, Bose would be in a position to take up the role, said an official who did not wish to be identified as the government would also consider other names who apply for the post before finalising on the PFRDA chairman.............
Banks Prefer ‘Security’ to Lending Risks
Banks are parking surplus funds in mutual funds and government bonds in the absence of attractive lending opportunities. Investment
by them in mutual funds surged to . 60,883 crore on November 15 from .
27,090 crore at the end of September, despite the Reserve Bank of India
(RBI) wanting the
institutions to focus on the core business of lending. As for
government bonds, the banks have exceeded the minimum statutory
liquidity ratio of 23% of deposits by close to 7 percentage points...........
Banking hours
Bank unions’ demand for a five-day week work regimen/schedule and their suggestion to make up the loss of one working day by suitably extending the business hours from Monday to Friday (Business Line, December 2) is fair and worth considering, in view of the electronic banking channels available. Bank staff are perforce doing almost a full day’s work on Saturdays within lesser working hours. The experience/feedback is that a higher number of banking frauds are being committed on Saturdays as would-be-fraudsters are aware that the staff are over-stretched to finish the work in time. When the RBI observes a five-day week, why should it be denied to the other banks?
- C. G Kuriakose (HBL)
Banking precautions
......... The very nature of the banking business has become competitive. Those who have opted out of the banking race will eventually celebrate their decision, and those who have been granted licences will regret their diversification. It is not the Reserve Bank of India's mandates that would mar their prospects. Shrinking net interest margins, continuing defaults resulting in higher level of non-performing assets, poor legal solutions, are enough to kill the industry...........
RBI panel for buffers of up to 2.5% of risk assets
.....B Mahapatra, RBI Executive Director and head of the panel, has linked the buffer capital to the credit-to-gross domestic product (GDP) ratio, which tends to rise during economic boom and fall during a downturn. RBI may also consider indicators such as growth in gross non-performing assets, the industry outlook assessment index and the interest coverage ratio for CCMB...........
Central bank for gradual phasing-in of CCCB
The RBI on Monday placed on its website a draft report for implementing the countercyclical capital buffer (CCCB) framework. The report suggests the need for setting aside upto 2.5% of risk-weighted assets based on the credit-to-GDP ratio and growth in gross NPAs of banks. "Lower threshold of CCCB when the buffer is activated may be set at 3 percentage points of the credit-to-GDP gap, provided its relationship with GNPA remains significant and the upper threshold may be kept at 15 percentage points of credit-to-GDP gap," the report says. .......
CAD to remain within limit: Chidambaram
.....Encouraged by better-than-expected growth in the July-September quarter, Finance Minister P. Chidambaram, on Monday, expressed confidence that the economy would expand by 5 per cent, and the fiscal and current account deficits would remain within limits, notwithstanding the present stress. “We are going through a period of stress, but there is a ground for optimism... We hope things will become better in the second half of the current fiscal (2013-14). We hope to achieve a growth rate of 5 per cent,”........
Deciphering the new growth normal
......Slower demand for credit had been pushing banks to buy government debt, causing bond yields to collapse. Banks' credit-deposit ratios took off only from late 2003. Additionally, the build-up of global liquidity cycle coincided with the boost to domestic demand from an exceptionally good monsoon in 2003. Also, there was a lot of underutilised lending firepower with local banks that began to be put to use. Thus, a boom in both external and domestic liquidity contributed to the subsequent eye-catching upswing in economic growth........
Fix This Financial System - Varun Gandhi
......Our
financial regulators desire independence and institutional support.
Today, work is allocated between the RBI, Sebi, IRDA, PFRDA, FMC, SAT,
DICGC and FSDC, leaving significant gaps, agency overlap and the
potential for regulatory capture. As proposed by the Financial Sector
Legislative Reforms Commission, the RBI should focus on formulating
monetary policy, along with enforcing consumer protection in the deposit
banking and payment systems. .............
Read - ET
Banks cap foreign spends on cards to check frauds
...........In the last couple of weeks, a few foreign and domestic banks sent text messages or e-mails to their card customers, informing them their cards would have limits for international transactions. These limits, however, will only be applicable for foreign transactions and will not impact any spending done within India. Customers have also been allowed to increase or decrease the cap by contacting their respective banks............
Reserve Bank revises norms on general credit card scheme
......It clarified the issuance of GCC would not prevent banks from issuing any other credit card to their customers for their consumption needs. Consumption credit provided by banks is to be reported separately under the head of overdraft or consumption credit in the FIP reporting format prescribed by RBI. "These guidelines will supersede the GCC guidelines issued by Reserve Bank of India in December 2005 and May 2008," the central bank said.
Mobile payments are gaining currency
......According to the report, the introduction of IMPS has been the biggest driver of mobile payments since the RBI gave the nod for transactions over mobile phones in 2005-06. The data indicate that IMPS, which was launched in India in November 2010, is finally beginning to gain acceptance among cell phone users. The facility is provided by the National Payments Corporation of India (NPCI) through the national financial switch. IMPS offers instant, 24x7 inter-bank electronic fund transfers through mobile phones in a secure manner............
Cyber criminals try to steal passwords of PNB customers
......“Last week, Websense Security Labs came across a phishing email targeting PNB customers. The phishing attack was aimed to obtain password of corporate and individual customers,” Websense Regional Director India Surendra Singh told PTI. PNB is not the client of the company, but these phishing mails were sent to several individuals and some corporate who are clients of Websense, he added. PNB officials were not immediately available for comments...........
Chinks in ATM armour bared
....“The ATMs directly managed by SBI are manned. Some that have been outsourced do not have guards. After today, we think security personnel must be deployed at all kiosks,” she added. The SBI has some 100-odd ATM kiosks in the city, of which nearly 30 are outsourced. Many other banks, like PNB, too have unmanned ATMs. Subhash Chandra Arora, AGM of PNB, admitted that only their fringe kiosks are manned, whereas the ones in the city are not. He sought refuge in an RBI guideline that asks people not to resist bank/ATM heists, risking one’s life. He also insisted that deploying security had its own flip sides.......
ATM – All Time Money
......That is the scenario of capital ATM functioning, what about rest part of the state and districts? Unbothered about their consumers as many banks even after repeated callous have not aligned to justify uninterrupted service. RBI in one side asks bankers to provide ease access of ATMs with non-stop service in almost all the populated places where the banks pay no heed to consumer satisfaction and flexibility. So, it’s rather doubtful to say that ATM stands for All Time Money observing a real case scenario of pathetic condition being facing by the consumers hailing from the state like Sikkim.
How to Stay Safe with the New Card Payment System
...“The
RBI had given instructions to banks that they should convert all
magnetic stripe cards into chip cards and also, that all debit and
credit cards will be used domestically only. Those who want to go abroad
should get a chip card issued and can spend as per FEMA regulations.
Those who have not got chip cards because banks have not issued them
will have to get a threshold limit approved, which in any case should
not be more than $500 per day. Banks can approve a higher limit after
mutual discussions with the customer on the basis of spends made during
earlier visits,” says AC Mahajan, chairman, Banking Codes and Standards
Board of India......
Read - ET
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