In two months before Duvvuri Subbarao took his first baby step of raising key rate by 25 basis points in April 2010 to fight inflationary pressures, yields on benchmark bonds had surged about a hundred basis points. A similar act may be playing out now on the Mint Street, though in the opposite direction. Market is flashing signs of lower interest rates though Reserve Bank of India Governor Raghuram Rajan is showing little signs of easing anytime soon. ........
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Tuesday, June 10, 2014
The power of small - Charan Singh
...........The MSME sector has great potential to help economic recovery and accelerate growth. In view of its significant capacity to create employment, the MSME sector deserves special attention. To incentivise MSMEs, the government could consider tax concessions or even tax holidays, which are offered by many countries. The government could also consider providing subsidies to MSMEs, including interest subsidies. Finally, to tap their employment generation potential, the problems of MSMEs need to be considered in a disaggregated manner. In fact,....................
Better regulatory coordination vital
.............K C Chakrabarty, who recently retired as Deputy Governor of the Reserve Bank of India (RBI), said unless regulatory arbitrage was reduced, there would be a tendency to avail of gaps, adding not being able to address this issue was a collective failure of society. He was speaking at a function organised to release Sahara: The Untold Story, a book by business journalist Tamal Bandyopadhyay.............
Putting the spring back into the economy
............The other crucial thing that the government needs to do in order to sustain growth is to control inflation. Inflation has always been partly demand-driven and partly structural, due to elements like supply bottlenecks. In India, in the last few years, it’s the structural part which is almost always driving inflation, particularly food inflation. While the Reserve Bank of India (RBI) and monetary policy can ensure that inflation does not lead to hyperinflation, unless we solve the problem in the food sector, we will keep on having high inflation rates. Hence, interest rates will not be able to come down, hampering growth.
In order to solve this problem, .............
CM inaugurates Gujfed initiative
This is no secret that Gujarat Urban Co-operative Bank Federation (GUCBF) is ahead of its counter parts operating in other states. Or what else can explain its initiative to form an umbrella organization to promote technological modernization, capacity building, research and financial literacy among cooperative banks on the RBI’s suggestion.
The Centre of Banking Research and Excellence was inaugurated in Ahmadabad at the hands of Gujarat Chief Minister Anandi Ben on Saturday, a proud Gujfed Chief Jyotinder Mehta informed Indian Cooperative.
RBI had set up a Committee five years ago to work out an umbrella organization for the urban cooperative banks. The Committee recommendations were sent to all the state headquarters. Acting on the suggestions, Gujarat Chapter of Nafcub has taken initiative to start the Umbrella Organization aimed at improving the functioning of UCBs.
“And we were lucky to rope in the services of V S Das, the then ED and member of Committee from RBI. After retirement he has agreed to oversee the entire operation” Mr Mehta said to Indian Cooperative.
Sources say the umbrella body would be the first of its kind in the country and offer the cooperative banking sector services like asset liability management, fund management and investment banking.
There are 233 urban co-operative banks and 18 district co-operative banks in Gujarat with over 10 million account holders. Nearly 3 million farmers are linked to different credit societies in Gujarat. The cooperative banks in the state have Rs 40,000 crore in deposits and have doled out Rs 30,000 crore in advances.
“Gujfed has also started what is known as “Sahkar Setu 2014” aimed at envisioning the next generation cooperatives. Next Gen Co-op would be futuristic encompassing the latest technologies”, beaming Mehta added.
PSU babus can't travel `Jaipur to Delhi via Sao Paulo' anymore
.The government has issued a comprehensive set of guidelines for employees of public sector banks, financial and insurance companies and other regulatory bodies, significantly limiting their leave travel concession (LTC) claims. The notification was prompted by the widespread misuse of LTC/LTA facilities by government and public sector employees, exposed by TOI over the last year and now under CBI investigation..........
‘Full financial inclusion a pipe dream’
Six of India’s senior bankers and heads of microfinance institutions (MFIs) gathered at Mint’s first annual South India Banking Conclave to discuss the issue of making financial inclusion sustainable and how to address the challenge of combining profitability with inclusion. The consensus that emerged out of the discussion is that both banks and MFIs are moving in the right direction and it has to be combined with financial literacy but it will take time to cover the entire country..........
Ind-Ra: RBIs Policy Stance Guided by Upside Risks
India Ratings & Research (Ind-Ra) believes the Reserve Bank of India's (RBI) policy stance of maintaining status-quo on policy rates is the right step under the current macroeconomic environment. The agency does not expect any change in the policy rates in the near term. We believe besides looking for a predictable and sustained downward trajectory of inflation, the RBI will watch out for the fiscal stance of the new government before changing the rates...........
WHAT’S SO DOVISH?
Analysts and commentators were quick to dub the latest credit policy statements by RBI governor Raghuram Rajan “dovish”. And how did they come to that conclusion? On the basis of a sentence in the policy which said: “If the economy stays on this course, further policy tightening will not be warranted. On the other hand, if disinflation, adjusting for base effects, is faster than currently anticipated, it will provide headroom for an easing of the policy stance.” Look closely at the statement, it is nothing exceptional. Similar statements were made by Rajan himself earlier and by many other governors. Yet when the mood is different, the same statement acquires a different hue!
PMO to Look into PSU Banks' Bad Loans, Governance Structure
The Prime Minister's Office is keen to champion fast-track reforms in public sector banks to lift the overhang of rising bad loans that make it a challenge to re-start the investment cycle and pose a fiscal headache for the government on account of banks' capital infusion requirements. At the same time, the PMO is looking to overhaul and strengthen government-owned banks' governance structures at the earliest so that the problem of bad loans doesn't return with the next cyclical downturn. The Modi government could take a cue or two from private banks whose management and credit appraisal structures have helped them contain the rising tide of non-performing assets that have accompanied India's slowing economy in recent quarters, ..........
Things not moving..........
My View on "Functioning of the Reserve Bank of India - A.Chand...":
Dear Chandramouliswaran Sir,
I totally agree with your comments.Things are not moving in the required and desired level at commercial banks and RBI. Despite RBI inspections, why NPAs are going up and up in every bank, specially Public Sector Banks.
- William Panakal
Banks may take legal route to end agriculture loan waivers
..........Banks may also insist upon mandatory insurance for all farm loans as a protection against future loan waivers, though this may raise the cost of funds for the agriculture sector as a whole. The Indian Banks' Association, the industry lobby group, has sounded out both the Reserve Bank of India and the Union government about the hazards of a waiver, said two people familiar with the development. They said that no final decision has been taken on the proposed legal action and banks were stil ..
Farm loans
..........Ironically, in both the cases, mostly PSU banks have borne the burden of the NPAs since agile private banks exited their exposure in Kingfisher in time and lent substantially low volumes to the agriculture sector. Whatever the private banks have lent to the agri sector, the farm loan waiver can not be enforced on them. It can now be established that if PSU banks remain state-owned, they have to face more such farm loan waivers in one or other way. In such a case........
Maharashtra farmers to protest outside RBI office
Hailstorm affected farmers in Maharashtra are set to demonstrate outside the Reserve Bank of India office in Navi Mumbai on Tuesday. Farmers have claimed that the commercial nationalised banks, rural banks, private and corporative banks are not following the RBI Master Circulars to help and support the farmers. “Using the loopholes in the lending policies of RBI, these banks are actually lending to corporates rather than to the farmers and agriculture. This is forcing the farmers to approach private and illegal moneylenders, who charge usurious interest. This is the main reason for thousands of suicides of farmers being reported every year and for lowering of agricultural growth rate,” a statement by All India Kisan Sabha said....................
`Rajan Sympathetic to Bankers' Cause
.............Reserve Bank of India Governor Raghuram Rajan has been an advocate of prudent lending and prompt repayment principles. He is sympathetic to the bankers' cause and is likely to argue against waivers, said the person. “The regulator is also against the plan,'' said the person. “We are looking at a public interest litigation (PIL), but if something concrete happens even before that, we may drop it.'' Even among bankers there are doubts about the fallout of such a litigation as some believe that there is very little they can do to challenge policy decisions...........
Let's wait and watch
My View on "Write off of loans and offer of freebies - Dr.T.V....":
Dear TVG,
Write offs of loans are for votes and the governments, rather the ministers responsible for such decisions are not loosing anything from their pockets and when they get the votes and come back to power, they make more money. If we see the stats of most of the politicians wealth from one election to the other, it is manifold. So we can imagine, why these write offs. It's the tax payers money is being used for such activities. I only wish the new Central Government will put a stop to all these. Let us wait and watch.
- William Panakal
SLR cut signals RBIs optimism on credit pick-up: B Prasanna
..............Thus, in all, RBI is unlikely to hike repo rate in the current fiscal. The hurdle for a rate cut is also high. The drivers highlighted above suggest that even if inflation decelerates, the momentum is unlikely to decline so significantly so as to suggest 6% final inflation target can be credibly achieved. Thus, RBI is likely to remain in a wait and watch mode for longer.............
Virtual visits
You need to visit your bank but can’t bear the thought of stepping out in the heat. If you are a customer of IndusInd Bank, all you need is a computer or even a smartphone to ‘visit’ the bank. A new service called Video Branch enables customers to schedule a video conference with the bank staff, whether with the branch manager or your relationship manager. Transactions that can be made using this service are booking a fixed deposit, RTGS and NEFT funds transfer, which can be done immediately through a video chat with the contact centre executive. Scheduling a video conference can be done through the bank’s website.
HBL
RBI eases address proof rules for bank A/c
............In a notification, RBI said, “Henceforth, customers may submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation. In case the address mentioned as per ‘proof of address’ undergoes a change, fresh proof of address may be submitted to the branch within a period of six months.” The RBI further added that in case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer............
RBI signs MoU with South Korean regulator
..........“RBI has been signing MoUs ..with supervisors of other countries to promote greater co-operation and share supervisory information among the authorities,” the central bank said in a statement on its website. Deputy governor H.R. Khan represented RBI at the ceremony in Seoul.
PSU banks autonomy can be a reality
...............The new government has taken the right step by deciding to lower its stake but it will be more prudent if there is no interference in the operations of the banks. This according to the PJ Nayak report can come when the government's stake in all public sector banks are transferred to a holding company.............
FinMin puts amalgamation of regional rural banks on hold
............... Bill to amend the RRB Act is being considered by the parliamentary standing committee on finance. The amendments are aimed at increasing the pool of investors to tap capital for RRBs. A senior public sector official said now, the focus would be on improving the performance of RRBs, including their profitability. Further amalgamation on this front should happen only after examining the viability of the exercise, the official added...........
Public sector banks can get a BIC leap forward
...............The BIC will help distance the government from the boards and managements of PSBs, without any loss in its ownership of the banks. The BIC would "hold equity stakes in banks which are presently held by the government" and be constituted as a core investment company under RBI registration and regulation. A shareholder agreement between the government and BIC would assure the latter of its autonomy, and set its objective in terms of financial returns from the banks it controls. The board of the BIC would be professionally constituted with a professional CEO, a non-executive chairman nominated by the government and independent directors with adequate skills and expertise. The report recommends..............
It's final: RBI tells banks to keep 60% liquidity coverage ratio from January 2015
................The concept says that financial institutions should have 100% assets back-up to ride out short-term liquidity disruptions. Accordingly, banks are required to hold an amount of highly-liquid assets, such as cash or treasury bills, equal to or greater than their net cash over a 30 day period...............
More services on anvil at non-home ATMs
.............. “Several banks have the cash deposit facility at ATMs that are not inter-operable as yet. So only the bank consumers can use it. We have sought RBI’s permission to make it independent now. In fact, a request has also been sent to make another feature-bill payment also interoperable,”...........
Now, wristband that allows you to make payments
...........The bank's Barclaycard division plans to roll out its 'bPay' band, at sponsored events this year, ahead of a wider launch in 2015. The device uses the contactless payment technology in Barclays' credit and debit cards, which lets users make payments by scanning them against terminals, 'The Telegraph' reported. A user can add money to their 'bPay' band using their Visa or MasterCard credit or debit card. The money can then be spent on small purchases up to a single transaction value of 20 pounds by swiping the bands over a terminal.............
Man withdraws Rs 10k, bank sends SMS for Rs 25k debit
A journalist from Nandurbar in northern Maharashtra has been making rounds of a police station in Borivli (East) for a month after he found that Rs 25,000 had been debited from his bank account when he had only withdrawn Rs 10,000. He has submitted evidence to the police, but they have been dragging their feet on the matter..............
Read - TOI
Read - TOI
Banks seek tax breaks on deposit income
.......One suggestion from the banks is that interest income from bank deposits should be subject to indexation benefit. In other words, tax would be paid only on the real returns above the rate of inflation. Speaking to TOI, a senior banker said that going forward mobilizing deposits to fund growth could be a challenge. Banks are facing competition from fixed maturity plans of mutual funds, government small saving schemes and taxfree bonds of financial institutions. “For tax payers, it does not make sense to maintain fixed deposits which attract tax........
Use MFs To Save For Post-Retirement Life
.........According to financial planners, through judiciously choosing the right mutual fund schemes after identifying investment requirements, you can save enough to meet post-retirement financial needs even if you are faced with rising medical costs, increasing life expectancy and high inflation. Your savings should be enough to maintain the lifestyle that you are enjoying now. However, retirement planning is like running a marathon in which patience and discipline are the two most important aspects of winning............
Raised cash reserve ratio may hit co-ops’ profitability
.............Non-interest bearing CRR to be maintained by even district cooperative banks has now been raised 100 bps to 4.00 per cent on par with State Cooperative Banks with effect from July 12. RBI has sought to balance this with a cut in the SLR from 25 per cent to 22.50 from the fortnight beginning July 12. Sources in the cooperative sector said district-level banks would find their profitability eroded in the bargain..................
Sidbi repositioning itself to fulfil financial needs of MSMEs
.....................“Risk capital is a requirement that is not catered to by commercial banks. We at Sidbi would like to play a role that is both complementary and supplementary to commercial banks. We want to fill the void and fulfil the financial needs of the MSMEs.”
A primer on classification of banks in India
Apart from offering licences on tap, the regulator will also offer differentiated licence for niche activities. As a result, payment banks, local area banks in the country will come into existence with universal banks that are present now............
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