.........There is much discussion today on providing foreign banks near national treatment but unfortunately no interest in providing our public sector banks (PSBs) the same. The favourite whipping boys in India - of the government, the Reserve Bank of India (RBI), the media, competitor banks, rating agencies, random intellectuals and even some industrialists - the PSBs, are in dire need of immediate attention and reform..........
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, December 11, 2013
RBI's Joshi on the bank's wide-ranging strategies to raise financial awareness
Addressing the Indian challenge of linking larger numbers of financially excluded people to the formal financial system, the focus of the Reserve Bank of India's (RBI) strategy at the "base level" is to create awareness of basic financial products, RBI Executive Director Deepali Pant Joshi said at the 10th anniversary of the Citi-FT Financial Education Summit in Hong Kong on Saturday. She pointed to "outreach visits" by the bank's senior executives to remote villages, "financial literary centres", and "awareness campaigns" as "steps that have been taken by the Reserve Bank of India and other stakeholders to promote financial literacy in India". "Financial literacy centres (FLCs) have been opened… to create awareness about financial products and provision of counselling facilities for customers of banks," Joshi said, adding India now has "more than 800 FLCs". She said the RBI also helps to distribute pamphlets and comic books, enact plays and skits, and arrange stalls in local fairs to raise financial awareness.
Ministries spar over due-diligence reports
........The intervention is significant because RBI Governor Raghuram Rajanhad set January 2014 as the deadline for awarding these licences. And, the availability of "due-diligence" reports on these companies are critical for the committee set up under former governor Bimal Jalan to meet that deadline. The need for these reports to be completed becomes more crucial as the committee is expected to carry out the first-level screening of applications to set up new private banks at its second meeting, scheduled for December 16........
More The Merrier
......Rajan will do well to remember what Prime Minister Manmohan Singh told Subbarao before he moved over to Mint Road “In the Reserve Bank, one runs the risk of losing touch with the real world. With your mind space fully taken up by issues like interest rates, liquidity traps and monetary policy transmission, it is easy to forget that monetary policy is also about reducing hunger and malnutrition, putting children in school, creating jobs, building roads and bridges and increasing the productivity of our farms and firms. Keep your ear close to the ground.” Advice that will stand all bankers in good stead, given the interesting times we live in.
The Right Choice
.....The turmoil in the larger economy has led banks to do what former RBI Deputy Governor, Rakesh Mohan, famously described as “lazy banking”; eschew all risks. Lend to the big boys and invest in government securities. It is this reluctance to go down the food chain and hand-hold the needy — part design, part default — which is now the bane of banking in India. Small businesses and poorer sections of society find it difficult to access credit. Many are forced to borrow at high rates from moneylenders. This finds manifestation in societal tensions and farmer suicides............
Conference on Ethics and Corporate Governance
Chief Guest Shri Anand Sinha, Deputy Governor, RBI
Key note Speakers Prof. Dipankar Gupta, Retd Prof JNU & Member, Central Board, RBI
Valedictory Address Shri Prashant Saran, Whole Time Member, SEBI
Other Speakers Shri Ashishkumar Chauhan, MD & CEO, BSE Ltd.
Shri S N Ananthasubramanian, President, ICSI
Shri Sandip Ghose Director, NISM
Shri M S Sahoo, Secretary, ICSI
Shri P K Choudhury, Chairman & Group CEO, ICRA Ltd.
Shri Hemant Kanoria, CMD, SREI Infrastructure Finance Ltd.
Dr. Deepali Pant Joshi, Executive Director, Reserve Bank of India
ICICI Bank organizes 100th Coin Exchange Mela in Delhi
ICICI Bank, India's largest private sector bank, organized the 100th Coin Exchange Mela in Delhi at its Malviya Nagar branch in the city under the guidance of the Reserve Bank of India..........
SBI Notified Special Recruitment Drive for Management Executives 2013-14
State Bank of India invited application for recruitment to the post of Management Executive in State Bank of Hyderabad in Middle Management Grade Scale-II (MMGS II). The candidates eligible for the post can apply through prescribed format before..............
Read........
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Microfinance India Summit 2013 - Release of the State of the Sector Report
Microfinance is facing a crucial time when it hopes to become part of the financial delivery system in India and be part of the financial inclusion agenda. Given this background – Here are the highlights of the report:
Low Current Deficit: More To It Than Meets The Eye
......After the current account deficit went past 5%, the government and the RBI swung into action by raising import duty and restricting imports of the precious metal by mandating minimum re-exports. Gold
imports in the July-September quarter fell to 148.2 tonnes from 219.1
tonnes in the yearago period. For the fiscal year, it is forecast to
fall to about 900 tonnes from 1,000 tonnes in 2012. The
physical gold imports data may be encouraging, but the window for
smuggling may be just getting wider. It is not that policy-makers are
not aware of it, but may be under the belief that even if smuggling
rises substantially, it could hardly match even a quarter of imports
through official channels.......
Audit reports of banks signed by deceased: Regulators to discuss the problem at FSDC meeting
......"There are allegations that audit reports have been signed in the name of dead auditors. If at all there are any discrepancies found, the strictest action will be taken," a senior government official told ETon condition of anonymity. The issue was initially unearthed by the finance ministry and the Reserve Bank has been made aware of it, said two people with knowledge of the developments. "There were some informal reports received by the government and the RBI was apprised of ..............
Bangalore residents not too keen on some ATMs shutting at night
..............However, as an interim measure, banks are now planning to shut down low-transactions ATMs at night or relocate them to safer lcoations based on usage patterns. The Bangalore Police had recently instructed banks operating ATMs in the city to post full-time security personnel, install CCTV cameras both inside and outside and install alarms at all sites...........
Online money transfers gaining popularity: RBI
......."While electronic wires/SWIFT continue to be the dominant mode of transferring remittances by overseas Indians, in the recent period, there has been a significant increase in the share of remittances transmitted through direct transfer to bank accounts and through on-line mode," ........
Foreign banks seek clarity on parent guarantee rules, restriction on dividend payments
.....Foreign banks have sought clarity from RBI on having to produce a letter of comfort from their parents for all liability. This (letter of comfort), foreign banks said, could have capital implications for their parents. There's also restriction on dividend payout unlike the earlier practice where there was no restriction. "We have been a high-dividend paying company with a consistent track record. We never held back dividend even during the financial crisis. For us, that's a much bigger .. ..............
Banks can be happy small lenders
...There is a strong case for the entry of banks from the risk management perspective too. For example, the establishment of the microfinance credit bureau supplemented by Aadhaar card has created a framework for monitoring customer relationship across products. In addition, quality human resources are available for banks across the country with sound knowledge and understanding of the sector. Lastly, technology and connectivity across the country are available to banks for accessing real-time information to mitigate risks.............
Sharp cuts in interest rates can heal a bruised economy
.............In his three months as the Governor of the RBI, Rajan has made three important policy statements. All of them have shown a fixation upon controlling inflation: in none has he shown the slightest concern for growth. His second quarter policy statement on October 30 is the most explicit. In it he comes within a hair’s breadth of saying that growth is not a goal to be pursued for its own sake. It will happen automatically when the government sets everything else right. At the head of his list is inflation. Rajan believes in an ‘activist’ monetary policy, i.e in one that keeps the nominal rate of interest higher than the rate of inflation. So, to the intense disappointment of industry he has continued with his two predecessors’ high interest rate policies................
Sumit Bose Appointed Finance Secretary
NEW DELHI
Revenue secretary Sumit Bose, a 1976 batch Indian Administrative Service
officer, will be the new finance secretary. Bose, a Madhya Pradesh
cadre officer, is the senior-most officer in the finance ministry.
Arvind Mayaram (economic affairs), Ratan P Watal (expenditure), Rajiv
Takru (financial services) and Ravi Mathur (disinvestment) are the other
secretary-level officers in the finance ministry. As per tradition, the
senior most among all the secretaries is designated as finance
secretary. Finance secretary steers the budget-making exercise. The post
of the finance secretary fell vacant after RS Gujral, who was also
looking after the expenditure department, retired on November 30. Watal
took over as secretary in the expenditure department.
ET
ET
RBI seeks clarity on FII investment in pharmaceutical sector
........"The RBI basically wants clarity since there is a new regime in place for the pharma sector," said a finance ministry official who didn't want to be named. The ministry has initiated discussions with the Department of Industrial Policy and Promotion (DIPP), which has administrative charge of the FDI policy, to take a final call on the issue.............
Putting People First
....It will be a while before telecom firms set up banks in India (since the Reserve Bank of India, or RBI, supports a bank-led financial-inclusion model), but they do have a good grip on the customers within the banking sector. Thus, new business models have to draw upon innovative technologies such as the social media revolution. While this is exciting, it’s also fraught with risk, and banks are understandably slow on this uptake...............
New worries for banks
.......The incidence of chargeback complaints is about 0.031 per cent and it could be brought down to 0.010 per cent, according to NPCI’s estimates. Acknowledging RBI’s concerns, Sangeet Shukla, senior advisor (risk) at Indian Banks’ Association (IBA), said incidence had come down in recent years. RBI’s worry is on three counts — customer grievances, system integrity and time taken (delays) to correct the transactions...........
Corporate debt recast: More failures than successes
....In order to stop the misuse of CDR mechanism, a Reserve Bank of India committee – headed by its executive director B Mahapatra has recommended that from April 2015, banks will not enjoy the regulatory forbearance while recasting debt. At present, post restructuring, a loan could continue to remain standard asset, subject to certain conditions. Restructured standard asset attracts a provision requirement of 5% as compared to 0.4% of standard advances. The Mahapatra committee has recommended that from April 2015, all restructured assets will attract a provision of sub-standard asset, that is, 15%. Higher provision requirement will hurt banks’ profitability.........
AIBEA blows the whistle on bad loans of Indian banks
......AIBEA’s demand will resonate with depositors who are being asked to pay higher charges for every service, to ensure higher profits for banks every quarter. AIBEA, for once, is on the same side as two big stakeholders of banks—bank customers and shareholders. Clearly,..........
'Top 30 NPAs of PSBs account for one-third of total bad loans'
........To improve the health of the financial sector and to improve asset quality of banks, besides preventing slippages, the Reserve Bank of India from time to time issues instructions to the banks. According to the norms, he said, each bank was required to have a robust mechanism for early detection of signs of distressed including prompt restructuring in the case of all viable accounts; to have a loan recovery policy which sets down the manner of recovery dues, targeted level of reduction and monitoring of write-off..........
Shining Through
........“I wanted to do something that would keep me busy beyond retirement age, and help me leave behind a legacy,” says Ahuja. His bet: Ratnakar Bank could move into a higher orbit with the right mix of brains and capital. But the ‘old’ private bank, set up in 1943, had its own concerns, and Reserve Bank of India had appointed two board directors to keep a watch on its affairs. Besides, both Indiabulls and Kotak Mahindra Bank were eyeing Ratnakar Bank. But in just three years, Ahuja and his team have delivered. From being a relatively unknown entity, it has gone on to become the Fastest Growing Small Bank in the BW | Businessworld Best Banks Survey 2013............
Stuff Of Folklore
....Axis Bank sees financial inclusion as an integral component of its rural strategy. It offers no-frills accounts, tailor-made fixed deposits and recurring deposit products to meet the savings requirements of customers. As of end-March 2013, the bank had opened 61.61 lakh no-frills accounts covering 42,338 villages. It tied up with telcos to provide savings and remittance facilities via mobile phones and their distribution outlets. The bank’s outreach efforts find reflection in the way it has gone about opening branches. It added 325 new branches, taking their number (along with extension counters or ECs) to 1,947, of which 883 branches and ECs are in semi-urban and rural areas and 1,064 branches are in metropolitan and urban areas. Ask Sharma why she believes these will be key growth drivers (the cost of doing business in these markets is high), and she tells you that the income gap between rural and urban India is declining and the rural consumer seems to be growing stronger..........
For The Long Run
...If there is one thing, Puri hates is the tag of an “elite bank”. He emphasises the point about HDFC Bank’s target being the aam aadmi. During 2012-13, the bank’s network expanded to 3,062 branches across 1,845 cities, up from 2,544 branches across 1,399 cities the previous year. The increase of 518 branches includes 193 micro branches, which are primarily two- or three-member branches meant to expand and deepen penetration in rural markets, including unbanked areas. The bank’s focus on semi-urban and under-banked markets continued with over 88 per cent of new branches coming up in semi-urban and rural areas. Puri’s belief is that it will be these markets that will drive the HDFC Bank story in the years to come, and he is ready to play the waiting game...........
Sailing Against The Tide
.......Sobti is not particularly concerned by the fact that IndusInd Bank still boxes in a lower weight category compared to peers like ICICI Bank, HDFC Bank and Axis Bank. A caveat is in order: IndusInd does compete with all of the aforementioned banks, but there is no crazy head-to-head duel for market share with any of them. “You must remember that we have grown at a steady 25-30 per cent annually. And we have over the last few years raised nearly Rs 4,000 crore in capital.” Sobti’s stint at IndusInd Bank has paralleled an economy that has largely been marked by indifferent sentiment, yet dud loans have been kept under control........
Making Rules Pay Off
....Not only would banks need to increase their chest of capital in the normal course of business, but the composition of this capital would also need to be re-jigged in order to create buffers to deal with particular economic conditions. Broad-level estimates published by the Reserve Bank of India in its annual report for the financial year 2011-2012 suggest that in order to achieve full Basel III implementation by 31 March 2018 (assuming a 20 per cent per annum uniform growth in risk-weighted assets or RWA of banks), the banking sector will require approximately Rs 1.6-1.75 lakh crore of common equity in addition to Rs 3.15-3.35 lakh crore in the form of non-equity capital...........
Rajat Gupta episode taught us values: Dominic Barton, McKinsey
.......the Reserve Bank of India and its governor were regarded in positive light. "The central bank is getting a lot of buzz," Barton said. "So people are saying, wow, that's interesting. And Raghuram Rajan is seen as a driver doing certain things. And that excites people."
Dent in your balance
...If the customer fails to maintain the minimum balance in the account, a fine is levied on it. The quarterly balance system can be slightly tricky; sometimes, without a customer even realising it, he might end up not maintaining the requisite average balance. It is, therefore, advisable to leave the requisite minimum balance for a fair number of days so that it gets adjusted .........
How not to get cheated while buying insurance
.....Ajay is yet to receive proper justice for the financial loss and mental trauma due to this mis-selling. Had this been done in U.K, the story would have been slightly different for him. Similar complaints were registered in U.K and the banks were slapped with fines worth £ 1.3 billion from the central bank. Sadly, RBI which is believed to be having stringent norms is yet to levy fines of such order on Indian banks. Well, this is the story of just one individual. There have been tons of individuals who are still suffering the loss due to mis-sold products of our dear Indian banks. Some of us have realized and others haven’t. Now that.........
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