Financial Sector Legislative Reforms Committee Report (FSLRC) - what to do and when? - Raghuram Rajan

Talk by Dr Raghuram Rajan, Governor of the Reserve Bank of India, at the First State Bank "Banking and Economic Conclave", Mumbai, 17 June 2014

........Yet one reading of the FSLRC is that almost everything the regulator does, not just the framing of regulation or the process by which decisions are reached but also the exercise of regulatory judgment as well as policy decisions, is to be subject to legal appeal. For that, it wants to create a Financial Sector Appellate Tribunal. The intent is to place more checks and balances on regulatory actions. Note that the process by which the regulator reached a decision, as well as the conformity of the decision with basic principles such as natural justice, can already be challenged through a writ petition in High Court. Even now, some regulatory decisions can be appealed to the central government. But how much checking and balancing is enough? Do we want.........

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Judicial review of decisions may make RBI ‘paper tiger’: Raghuram Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan on Tuesday slammed proposals by a high-level committee to open up all regulatory decisions to a judicial review and to merge all financial sector regulators into a single entity. The first recommendation by the Financial Sector Legislative Reforms Commission (FSLRC) risks reducing RBI and other regulators to a “paper tiger”, said Rajan,................

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FSLRC suggestions on regulators scope 'schizophrenic': Rajan

Mumbai: Reserve Bank of India Governor Raghuram Rajan on Tuesday trashed the much talked about Financial Sector Legislative Reforms Commission (FSLRC) and described one set of its recommendations as "somewhat schizophrenic". Saying that he wanted to debate parts of the FSLRC report, Rajan said there are two issues -- the oversight of regulators and their size and scope. "The second area of tension is the appropriate size and scope of regulators. The FSLRC's recommendations seem somewhat schizophrenic here," he said...................

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RBI’s Raghuram Rajan questions FSLRC recommendations

...“If we attempt to do this, we will undermine the very purpose of a regulator,” Rajan said. Rajan further questioned the recommendations of FSLRC with regards to the appropriate size and scope of regulators. “The FSLRC’s recommendations seem somewhat schizophrenic here,” said Rajan. He added that on the one hand FSLRC speaks of synergies in bringing together some regulators into one entity, but it also suggests breaking up other regulators “with attendant loss of synergies.”...............

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Regulators need flexibility, freedom to regulate - Rajan

Taking over from where his predecessor D Subbarao left off, the incumbent RBI Governor Raghuram Rajan said that the regulators must be given the flexibility and freedom to regulate. He was speaking at the State Bank Banking and Economics Conclave in Mumbai today. In the context of Financial Sector Legislative Reforms Committee report, Rajan implied that there is no need to create two structures for regulations.........

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Rajan says taking away bonds regulation from RBI may hamper market

Reserve Bank of India (RBI) Governor Raghuram Rajan said on Tuesday he was not in favour of taking regulation of bond markets away from the central bank as the move may hamper development of the market. However, Rajan said the RBI will not stand in the way if the government wanted to manage its own debt.......

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India better prepared to deal with Iraq crisis fallout: Rajan

............."As far as the external front goes, we are in much better position than we were last year. We have sufficient reserves. The CAD is low. And I think one should not worry too much on external environment front," RBI Governor Raghuram Rajan said. He was responding to queries on the impact of the Iraq crisis, which has affected global crude oil prices and the rupee, on the country's economy. ............

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A Study in Contrast, Finmin-RBI Relationship Under Two Govts

...............Unlike his predecessor who did not miss an opportunity to tell the world, including the RBI, on what he wanted, Jaitley is yet to speak on either interest rate or exchange rate. All that Jaitley is talking about is inflation control and growth. Is it a sign of the RBI getting a free hand to decide on monetary policy? Many believe it may be too early to say. But there are early signs though. 

Read - ET

Indian banking sector - role in triggering future growth - R.Gandhi

Valedictory address by Mr R Gandhi, Deputy Governor of the Reserve Bank of India, at the 

6th ICC Banking Summit, Kolkata, 14 June 2014

........However, taking note of the predominant position of banks in the Indian financial system and taking a realistic view, can we expect the bank finance to comprehensively cater to all types of investment needs? Irrespective of whether it is short, medium or long term, or whether it is loan, debt or equity financing, or it is with low, medium or higher risk propositions? Should we turn our banks like...........

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HR KHAN'S TERM TO BE EXTENDED?

Yet another Deputy Governor's post at the Reserve Bank of India will fall vacant soon. The term of HR Khan, who was appointed for a three-year term in July 2011, is about to come to an end. But the question being asked is if it will get extended? The buzz is that the central banker who has been handling the markets may get his term extended by a year or so. If that's the case, then the next in line may have to wait a lot longer to get the DG position. Some close to retirement will be fuming though.

ET

CHANGES AFOOT AT RBI

With punters spinning new stories every other day, the RBI will revive its market intelligence unit, which has languished for years. Mint Street will also have an international relations division and reorganise itself into five clusters or verticals, while departments like DBOD, DNBS, UBD and RPCD will be renamed. This was the upshot of a video conference the RBI top brass had with different centres last week. For the staff, the more immediate question is: who will occupy the new post of `officer on special duty' ­ Executive Director Deepak Mohanty or former banker Nachiket Mor?

ET

RBI to shift 3 forex divisions to Delhi in July

................The three divisions to be shifted to New Delhi are Liaison/Branch/Project Office (LO/BO/PO) Division, Non Resident Foreign Account Division (NRFAD) and Immovable Property (IP) Division. These divisions would be located at Parliament Street office of the RBI. The new FED, CO Cell will be headed by P Shimrah, General Manager, RBI...............

Read - Ahmedabad Mirror

Slice of History - RBI at Loggerheads with its Own Entities

...........There were four areas of linkage in the relationship between the Reserve Bank and the two financial institutions. From RBI’s point of view, these were: management participation, staff and organisational support, financial support and policy support. The first two of these were not critical and were taken for granted since IDBI and UTI, after all, were set up by the central bank itself. It was ..................

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Revamp the NPS

.................One option to salvage the credibility of NPS would be to restore the defined-benefit-based pension scheme for all employees who would have been eligible for such pension but for the introduction of NPS. Using the National Pension System to cover ..............

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RBI accords SRO status to Mfin

......Last year, the RBI had said that it would recognize industry associations as SROs based on the recommendations made by the Y.H. Malegam committee. Mfin claimed that this was the first time the RBI had bestowed SRO status on any industry body.

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Cautionary tale

...............It is flabbergasting to note that the top 30 loan defaulters account for one-third of gross NPA loans of public sector banks. The RBI should publish the top defaulters’ names to save depositors’ money being misused by mega borrowers. Swiss banks are ready to provide information about black money stocks. So can the RBI...........

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Mehengai ‘daayan’ revisits

........The Government will need to plan ahead to address supply-bottlenecks and logistics issues to make sure that food inflation does not spike. Timely release of staples from FCI, reforms in Agriculture Produce Market Committees and co-ordination of imports and exports of agricultural commodities will be necessary. The inflation will also moderate due to high base effect of last year. If there is no escalation of Iraq tension, I expect crude oil prices to remain benign. This will help to meet RBI expectations of sustainable lower inflation in the second half of the year. In this scenario, one cannot expect interest rate cuts from RBI in the near term..........

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Focusing on the supply side

..........The Narendra Modi government should not repeat the mistakes of the previous government by thinking that it is the Reserve Bank of India (RBI)'s duty to address the issue of inflation. It is time for RBI Governor Raghuram Rajan to remind the finance ministry of the importance of the "supply side"............

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Let a few national banks remain

........All this sounds quite nice, but will it improve things? The problem with public sector banks, as with the entire public sector, is that the long arm of the political executive exercises its influence in management matters through a pliant civil service (it also has its own agenda). This makes for lack of professionalism in management as well as no concern for the bottom line. There is no reason to suppose that simply by creating an extra layer - that is, the BIC - bank managements will become more professional and..........

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Syndicate Bank plans to appoint 5,000 new staff

............Among the 2,700 officers proposed to be recruited, 2,000 would be direct recruits through the IBPS (Institute of Banking Personnel Selection) route and the rest under the specialised officers’ category, said the bank’s Executive Director, M Anjaneya Prasad.............

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DBS Bank seeks relaxation on priority sector norms for WOS route

............In its guidelines on wholly-owned subsidiary for foreign banks released November last year, RBI said the priority sector lending requirement for foreign banks will be 40%, like their Indian rivals. Out of this, 18% of loans have to be offered to the farm sector. The current cut off for foreign lenders in the PSL segment is 32% (foreign banks with more than 20 branches, it is 40%) but once they take up the WOS route, banks will have to move to achieving.................

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Private banks double headcount in 5 yrs

.............“A lot of banks have been hiring in anticipation of a revival in economic growth. Some of them were also expanding their size and building infrastructure to grow their businesses. While I expect private banks to remain net recruiters, they might not be hiring at the same pace as before,” .............

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Uday Kotak seeks shareholders’ approval for term extension

Kotak Mahindra Bank Ltd will seek shareholders’ approval to re-appoint the bank’s founder, executive vice-chairman and managing director Uday Kotak for a further three-year term from January 2015 to December 2017, the private sector bank said in a notice to stock exchanges. Shareholders’ approval will also be sought to re-appoint Dipak Gupta as joint managing director for three years from January 2015 to.........................

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One Year on, UPA Showcase Mahila Bank Staring at Losses

........... “We don't mind having some losses initially,“ said its chairman and managing director, Usha Ananthasubramanian. “We need to be a differentiator and create an identity first.“...........

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NAIDU'S LOAN WAIVER PLAN HITS RBI WALL

.........Waiving of the crop loans was expected to cost Rs 15,000 crore to the State exchequer. RBI Executive Director Deepali Pant Joshi has written to the Government saying the policies like waiving of loans will weaken the banking system in the country and it will be an injustice to the people who repay the loans on time. RBI official said that it would allow waiver of loan only if the State Government makes the payment in cash and it will not accept any securities from the State Government. The letter warned that the frequent waiver of loans will hurt..........

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CM seeks revival of licences of 3 district banks in Vidarbha

............he RBI had cancelled licences of Nagpur, Wardha and Buldhana district co-operative banks while those at Solapur, Beed and Osmanabad were facing problems, Chavan said, adding that these made it difficult for farmers to avail crop loans. The Chief Minister requested the RBI officials to revive the licenses of the three banks as the government was ready to pay it Rs 320 crore. "NABARD should increase minimum interest crop loan and convert short term loans into long term loans," he added............

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RBI's stand should pave the way for a solution

My View on  "Special category financial profligacy": 

When Mr Naidu made this public pre-elections as part of Election Manifesto, why did not the RBI and IBA raise their objection to this? Second, why did not the Election Commission raise its objection by asking the parties to show resources for fulfilling such promises? Several other Agriculture States like Tamilnadu, Karnataka, Kerala, Punjab, Orissa (where floods and cyclones are as recurrent or more recurrent than AP), Haryana and UP, or for that matter resource-starved West Bengal as well, did not indulge in this luxury of loan write-off by the State in spite of continuing farmers suicides. What the farmers want is more loans at cheaper interest rates and cross holding of risks through insurance mechanism and market stabilization mechanism. Compromises became promises and they became noose around the neck of the State. Now that RBI made its stand clear, it should pave the way for a solution. 

- Yerram Raju

'Ratnakar Bank plans IPO of up to $250 mln in 2015'

...................On how much Ratnakar is looking to raise from the listing, Ahuja said the equity dilution would depend on the growth capital needs of the bank. He said nothing had been finalised. Ratnakar Bank's share offering will be the first Indian bank listing on domestic bourses since state-owned Punjab & Sind Bank raised $105 million through an IPO in 2010, according to Thomson Reuters data..............

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State Bank to ramp up POS terminal network

................Overall, banks collectively had a network of 10.76 lakh POS terminals. According to Sushil Kumar Mishra, Deputy Managing Director, SBI, by adding 1.20 lakh POS terminals every year over the next couple of years, the bank will be catapulted to the numero uno position among all banks. Already, SBI has the largest network of ATMs..............

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'We're Here For The Long Haul'

..............India today has 150,000 ATMs across the country. A few years back there was big momentum, when ministry of finance came up with the tender to put up with ATMs for public sector banks.  However a lot of ATM operators went over-board in bidding for these tenders with private operators quoting interchange cost as low as Rs 7-8. No one looked at the long-term viability. Barring the operator who ran ATMs for SBI, all the other players are bleeding having contracted it with stringent guidelines. SBI was manageable because the customer base is higher and consequently number of transactions was also more. Banktech group having run ATM’s and PoS in Australia for 20 years understands the long term nature of the white label ATM business. While BTI came to India in 2006 and............ 

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Now, transfer funds from US to Indian bank accounts instantly

..........The instant money transfer will be done by using the Immediate Payment Services (IMPS), a unique remittance processing platform offered by the National Payment Corporation of India. “Through this tie-up, money can be transferred instantly by a Xoom user from the US to not only bank accounts held in Punjab National Bank but to any bank account in India,” KR Kamath, Chairman & Managing Director, PNB, said at a press conference here. At present, IMPS has 63 banks (in India) as part of its ecosystem..........

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ICICI Bank launches 'iMobile' app for Windows phones

..................The app also introduces the next level of customer convenience by offering one-touch access to important services on its dashboard, he added. The app lets the user select his favourite past recharge transaction and allows a quick recharge without having to enter all the details again...........

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India 3rd most hit by online banking malawares

...........India has made it to the top 3 most affected countries by online banking malwares after the US and Japan. The country slowly rose to the top 3 due to spike in the number of online customers in the country, which could be attributed to a vastly improved banking industry, the report said. Online banking malaware creators updated their portfolios yet again with the addition of new routines to their usual weapons of choice, it added...........

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Is it Time for India to Get Bitcoin Savvy?

........ As of now, Indian laws do not recognise any type of digital or virtual currency. The Foreign Exchange Management Act (Fema) provides an inclusive definition of the term currency and includes all currency notes, money orders, cheques, credit cards and such other similar instruments as may be notified by RBI. It is interesting to note that Fema gives RBI the power to notify “similar instruments“ as currency. In 2000, RBI had notified ATM Cards and debit cards as currency. Therefore, RBI has the power under Fema to also notify Bitcoins as currency if it is able to justify that it is similar to currency notes, cred it cards, etc............

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How to shrink Rs.50,000 to Rs.248

...........Calling the policy “unconscionable”, the high court has declared the contract illegal and void and has asked the insurer to return Rs.50,000 to Kapoor along with Rs.10,000 towards expenses in filing the writ petition. It has also asked Irda to scrutinise SBI Life’s policies, and if found guilty of a breach, to wind up its business. The court has asked Irda to examine the policies for any hidden terms and charges with an objective to deceive the policyholder, and if found guilty, to direct SBI Life to discontinue such policies and................

Read - Mint