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Friday, December 13, 2013
Decline in investment stunting India’s growth: D. Subbarao
No escaping tight money policy - Dr.S.S.Tarapore
RBI Central Board meets in Kolkata
11th Meeting of the FSDC Sub Committee
......The Sub Committee discussed the recent trends in the current account deficit and relative stability in the foreign exchange markets due to measures initiated by the regulators and the Government and also the improvement in the external environment. Other major issues taken up in the meeting included...........
Regulators need to be more vigilant against ponzi schemes: RBI
......The Reserve Bank is trying to gather market intelligence and then inform the concerned authorities for taking appropriate action, Mr Rajan said. "The state governments also need to pay attention."
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India waits for Iran to open oil payments route - RBI
India is waiting for Iran to tell it how to make payments for oil allowed under last month's deal with global powers on sanctions and will pay in instalments, Reserve Bank of India (RBI) Deputy Governor H.R. Khan said on Thursday.......
Read | Business Standard
Read | Business Standard
PSU bank staff wage a war for wage hike
.....The unions for the first time have also demanded a revision of pension of retired bank employees – not revised since 1986. “A general manager of a bank who retired 10 to 15 years ago is drawing much lesser pension that any of his junior-most subordinate who retired in subsequent years. The pension of retired central government employees automatically gets revised while this doesn’t happen in banks,” says KV Acharya, president of All India Bank Pensioners and Retirees Confederation (AIBPARC). After the October talks, there is no announcement of the further talks. ........................
I would like to be enlightened
My View on Rationale, logic and facts of updation
I have read Shri Parab's comments on the captioned subject in the Newsletter of date. I have nothing but appreciation and admiration for the efforts put in by Shri Talekar on the subject and also for the in depth knowledge of Shri Parab on the subject especially the detailed calculations. I am still at a loss to know the grounds on which the GOI are not acceding to the request for upgradation of pension. I find it difficult to believe that the GOI would not have adduced any grounds for their refusal to agree to the upgradation. I find it more difficult to believe that the top management of the RBI would keep quiet and would have refrained from demanding and knowing the grounds on which the GOI are finding it difficult to agree to the proposal. I had raised this issue even earlier to the readers of the Newsletter and am disappointed that no one found that the issue raised is deserving of any reply. Certainly, the argument of the GOI could not have been merely that if the demand of RBI is conceded, it would invite similar demand from the entire banking sector and the LIC as this is not only irrelevant but also irresponsible and hence deserves to be rejected with all the contempt it deserves. Hence, I would like to be enlightened on the subject by any one of the large number of avid readers of Mangesh's Newsletter. Even Dr Subbarao, our respected former Governor, who has been a regular reader of the News Letter, should not have any objection in sharing with us what could be shared subject to the limitations, if any, of the Official Secrets Act.
Is it possible that because RBI had,over a period of time, reckoned more and more allowances as counting for superannuation benefits ( I am not sure whether the substantial "Central Banking Allowance" which was granted some time ago does also count for superannuation benefits which could possibly create more problems for the issue of Upgradation of pension), GOI are finding it difficult to convey its concurrence ? I have raised this issue since another reason for the objection of the GOI to agree to upgradation, viz that it requires an amendment to the RBI Pension Regulations, has been taken care of (to the best of my knowledge) by the Bank forwarding to GOI an amendment after securing the approval of the Committee of the Central Board. If the problem is as suspected by me, the Bank should be prepared to rectify the situation and meet the objection of the GOI in the larger interest of the resolution of the issue.
Finally, I am deeply conscious of the fact that my knowledge on the subject is not deep and comprehensive and I may be excused if I have gone wrong. I would like to be enlightened on the subject.
A.Chandramouliswaran
Minutes of the meeting
.......... Perhaps, it is time the RBI published the minutes of its boardroom discussions so that the public is informed if there is any undue influence from the Board of Directors in keeping real interest rates in the banking system negative. Alternatively, it could publish...........
Cosmetic efforts
My View on "RBI's Joshi on the bank's wide-ranging strategies ...":
While RBI's Joshi rightly highlighted the current efforts of the Central Bank on financial awareness, the snail space at which such efforts are moving only expose the lack of interest on the part of the actual players: even the FLCs are not functioning the way they should. In fact their creation happened with lot of drive and push from the RBI. If such efforts do not internalize in the organizations for effective delivery, they remain cosmetic. The opportunity cost of monitoring from the central bank would be quite high. It is desirable that an external monitoring group be set up by the RBI where region-wise, a representative of reputed academic or training institution, a representative from NGOs, a representative from the RBI regional office as members who can oversee the outputs of the FLCs at the ground level.
- Yerram Raju
Lessons from failures
My View on "Banks can be happy small lenders":
I join Mr Surnan in asking the author to check his figures right. Today the SHGs are gradually surfacing the NPA portfolio with a 7 percent of them notwithstanding huge sops like interest subventions and zero interest credit to them by States like Andhra Pradesh. The author may like to look at some of the initiatives of the CCD, Hyderabad chaired by Prof. Trilochan Sastry and the Access Livelihoods Consulting, Hyderabad who are promoting producer cooperatives and producer companies respectively. Their model envisages heavy pre-investment capacity building efforts of the farmers and women engaged in production of the commodities around which the primary organisations are created and later federated for gaining economies of scale and handholding until these organisations realize their goal of sustainability and self-governance. As long as organisations like BASIX, a long standing and one of the first few MFIs in the country under Mr Vijay Mahajan concentrated on livelihood promotion and pre-investment training it flourished and when finance and profit ruled over governance the organization went southwards nearing extinction. MFIs have to learn lessons from failures and concentrate on livelihood promotion as key to their success.
- Yerram Raju
The other side of the coin..........
My View on "Revealed! Secrets of money printing and how centra...":
There are fifty paise, one, two and five rupee ‘the same-look and size’ coins confusing general public (the Governor, RBI; the Secretary, GOI and their deputies not excluding) in their daily dealings/transactions. RBI has ‘withdrawn’ (now, not legal tenders) over a period of time Annas of different denominations as also one, five, ten, twenty, twenty five …paise coins. RBI and GOI may consider ‘withdrawing’ the same size -similar look coins in a year or two/three by due notification. These ‘withdrawn’ coins may be melted at the Mints and replaced with new coins of different size and pattern after proper dialogue and deliberation.
- R.G.Nakhate, Mumbai,
The third eye
My View on "SBI plans study on customer experience":
The Study initiated, I am sure, would be objective and analytical and would take a good representative sample across the rural, semi-urban, urban and metros. While in the case of rural and semi-urban it is more the reach through the traditional channels, mobile banking and ATM at best, while in the others it is all the POS, ATMs, online and network operations and other technology outreach initiatives. This third eye would be a good pointer for the future of the Bank in the ever expanding customer base within the country in the context of new entrants into the industry.
- Yerram Raju
Future is not bright
My View on "Microfinance India Summit 2013 - Release of the St...":
The Report provides good insights into the initiatives thus far and the way forward. The rising NPAs in SHGs is no big news as any such initiative with only money getting into the hands and not converting into assets lose out on sustainability. Unless corrections come in at least now, the future is not going to be bright for the SHGs and NABARD's ability to provide livelihood opportunities and build capacities on that platform is highly suspect. There are a few institutions in the non-governmental sector actively engaged in promoting producer cooperatives and producer companies in the rural areas with the active involvement of the National Skill Development Corporation and these throw up opportunities for growth with sustainability as they proceed with capacity building upfront and making the groups believe that they have to work for profit and not for charity and that they should not sacrifice their basics in their search for alms.
- Yerram Raju
Treat it right
....... It is right that the two key challenges confronted by the PSBs are "manpower" and "capital". While a few of them have already exhausted the threshold limit of 51 per cent of government holdings, others are either in the process or about to exhaust the limit. This makes it difficult for them to build the capital base further...........
Ethics and Corporate Governance
There were several reports on Corporate Governance ( which has to be on ethical basis) and innumerable discussions on the subject. Now that another conference was organized on the 11th December, 2013, under the auspices of NISM, we can be absolutely certain that the issue has been clinched and henceforth there would be highest standards of Ethics and Corporate Governance in the country!!
- A. Chandramouliswaran
I recall the first such conference held by ASCI in 1999 when as the Conference Director, I and Dr Y.R.K. Reddy came out with the first ever publication in India on the subject - Corporate Governance in Banks and Financial Institutions in 2000 published by Tata McGraw Hill. Many issues raised therein by stalwarts are still hanging lose. Hope the present conference would address them.
- Yerram Raju
RBI win against Real Indian FC
......RIFC really tested RBI and made them work hard for this win but Kamal Negi's goal in the added injury time of second half proved to be too little too late. Rajiv Karir put RBI ahead as early as the second minute of the match after a slight blip from the RIFC goalkeeper Hardik Damor who couldn't collect the ball cleanly and it slipped into the net.Zahid Safeda consolidated the tally in the 16th minute scoring past three defenders who stood in line of the shot. RBI went into the breather with a 2-0 advantage and ..........
Bust inflation now
.........Raghuram Rajan must use RBI's forthcoming study on monetary policy framework to nudge the central bank towards being more accountable on inflation management. RBI's lack of credibility has cost India dear. Monetary policy cannot deliver long-term growth except in a limited way by ensuring price stability............
Triple whammy?
........This is the backdrop in which the mid-quarter monetary policy decision will be taken next week. Going by Reserve Bank of India Governor Raghuram Rajan's statements over the past three months, the dominant consideration will be the acceleration in inflation, including the hardening of the core; on this basis, another hike in the repo rate now becomes the most likely outcome. The deceleration in industrial production may provide a basis for maintaining the status quo, but Dr Rajan will likely see a risk here of signalling an acceptance of an inflation threshold of 11 per cent plus - which could be acceptable to him only if ...............
Rajan says he is uncomfortable with inflation numbers
....“We just got those numbers.The CPI number, certainly according to the market expectation, has surprised on the upside...I think it is too quick for me to react to this specific number," Rajan said after the central bank's board meet here on Thursday...........
Read | Business Standard
Read | Business Standard
RBI needs to be cautious
........ Hopefully when RBI’s report on the monetary framework comes out, it will explain why one price index is responding to economic impulses and the other not. Indeed, since RBI has put out its projected CPI inflation target of 9% for the year absent of policy interventions, what the market needs to know is what level of policy rates it was looking at as appropriate. Perhaps why, while saying RBI does not plan to use any one data point, Rajan has said..........
Concern or crisis?
Indian banks, and consequently the entire banking system, have managed to attract criticism on the back of rising non-performing loans (NPLs)—to the extent that any mention on Indian banking in the global arena is mainly regarding NPLs and restructured loans. The inherent strengths of the retail deposit backed banking system and a two-century-old track record of no bank failures have receded into the oblivion. Let us examine whether the so-called NPL crisis is really a crisis situation.......
To check for potential NPAs, RBI orders audit of Allahabad Bank
......The banking regulator has notified Allahabad Bank about the audit to assess the potential non-performing assets and ‘special mention accounts’, finance ministry sources told FE. The RBI’s focus on ‘special mention accounts’ of banks is part of its efforts to ensure that the lenders upgrade their Early Warning Systems so that timely action can be taken before more accounts slip into the NPA category, .....
Banks may soon begin charging customers for ATM usage
......Banks are worried. If the 100,000 ATMs have 20 million transactions a day that means 600 million transactions a month. So, if each transaction costs Rs 6, the total expenditure for banks would be Rs 360 crore a month. If the proposal goes through, this cost would have to be borne by customers. Imposition of any fee would mean the end of free ATM usage for customers...........
Banks want more time for biometric card authentication
.........RBI's working group on the subject, chaired by Gowri Mukherjee, had advised testing the feasibility of using Aadhaar as an additional factor of authentication for domestic transactions.
Here's what RBS sees about Indian banks in 2014
Indian banks are likely to hit the international market with Basel III compliant capital issuances (bonds) in 2014. This will ideally improve capital adequacy of banks with no dilution, Royal Bank of Scotland said in a report released on Thursday..........
New Bank Licences: Rajan optimistic on Jan date
.............."My hope is that by early next year, we will be able to announce the licences. I think we are on target for that, maybe a few weeks this way or that way," Rajan said at a press meet on Thursday...........
What should India's new banks focus on?
......As the new aspirants wait to hear from the Reserve Bank of India (RBI), they should be developing the plan for the plan. This will not be easy as the mandate set out by the Reserve Bank of India is challenging. It calls for one out of every four branches opened by the new banks to be located in rural areas - reflecting the central bank's concern that only 59% of households in India had access to banking services in 2011, according to the most recent census data. Furthermore, the banks will need......... ..
Read - ET....
Bank unions oppose move to grant licences to corporates
United Forum of Bank Unions (UFBU), which has declared an all-India strike on December 18, is of the view that corporates should not be given banking licences. They were in the first place responsible for the collapse of many banks during 1947-1969, according to M.V. Murali, Convenor, UFBU. He is also General Secretary of both National Confederation of Bank Employees and All-India State Bank of India Staff Federation..............
We want a bank licence, but not at any cost, says Shriram Group patriarch
...........“We have made it clear to the regulator that, in the present form of new bank licence norms, it is a huge challenge for the group NBFC, with assets under management (AUM) of over Rs 60,000 crore, to transfer its businesses to a bank. We want a bank licence but not at any cost," ........
Gopalakrishnan pitches for passage of key economic bills
....."...To me what is positive is that proactive action can reverse the situation and that is the reason why I believe the RBI Governor also yesterday talked about continuing on the appropriate bills that need to be passed even during the run-up to the elections so that we can keep up the momentum," .........
IOB gets RBI nod to open 2nd branch in Bangkok
Indian Overseas Bank (IOB) has received the Reserve Bank of India (RBI) approval for opening a second branch at Bangkok, its Chairman & Managing Director M. Narendra has said..........
Court allows plea to produce Jayalalithaa's seized valuables
.....Special Court Judge John Michael D'Cunha ordered the transit of the seized material from Chennai to Bangalore by December 21, observing that it was required for giving fair justice. The seized material is deposited in an RBI treasury in Chennai...........
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