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, July 15, 2014
Devious agenda to erode RBI’s autonomy - Dr.S.S.Tarapore
RBI's reserves need to be augmented
My View on "RBI dividend in FY15 may be more than budgeted":
The pressures on GOI and particularly Finance Ministry are such that on several occasions they succumb to them for ‘political’ or ‘survival’-related reasons. The Indian Financial Sector and government finances (including state government finances) are supported by a strong central bank. RBI’s strength depends also on its strong balance sheet. In this context, copied below is the concluding paragraph of Chapter II.1 “Strengthening the Central Bank” from my recently published book “Banking, Reforms & Corruption; Development Issues in 21st Century India”(Sampark, Kolkatta, Email: samparkworld@hotmail.com):
“Way forward
To ensure that temptations of government emanating from external compulsions do not dilute the strength of RBI’s balance sheet, GOI should take measures to augment the share capital and reserves of RBI after carrying out appropriate amendments to RBI Act. Till such time RBI should be allowed to retain surplus income by transfer to reserves. Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks the Bank has to absorb from time to time, the central bank’s reserves need to be augmented on an ongoing basis.”
- M G Warrier
Payment banks: A viable business model?
..........Bankers say if the model is to be a success, a payment bank should neither offer fixed-deposit products nor savings bank accounts. "The payment bank model could be viable if technology is used to bring down costs. In different geographies, there are a few examples of the model being a success - Kenya and the Philippines. The payment banks need not offer any fixed-deposit products. They can only offer a current-account and a remittance-service product. The volume of transactions, as these will be in areas where bank branches are yet to penetrate, and effective use of technology could make the business model viable," said Usha Thorat, former Deputy Governor, RBI.............
RBI working on rural ATMs with low denomination currency
..............Disclosing this in Hyderabad on Monday, the RBI Deputy Governor R. Gandhi said given the typical needs of rural banking customers apart from requirement of low denomination currency, research is currently is underway on rural ATMs.......................
Unlimited ATM use may prove costly
...........The specification on security has not been made a rule by the banking authorities due to various reasons. Once the security issue is taken up in all earnestness, compelling banks to adhere to strict security measures, the cost of operation of the ATMs is bound to go up. Significantly, RBI had pointed out in a circular concerning the ATM operation earlier that in countries such as U.K., Germany, and France, bank customers have access to all ATMs in the country, free of charge except when cash is withdrawn from white label ATMs or ATMs managed by non-bank entities..........
Rs 500 fakes more in circulation as Rs 1000 notes 'costly'
...............This came to light after some consignments of fake currency were intercepted by security agencies and during interrogation of people involved in the racket it was found that counterfeiting of Rs 1,000 was costlier than notes of lesser denominations, official sources said.................
Concern for the common man
..............A further division of the middle-class into the salaried class, wage earners and so on can also be made. But the most important segment of the middle-class which deserves far greater attention than what it gets now is the category of senior citizens.............
Financial integration of the state
.......On currency matter, Dr. Drabu avers that the State’s leadership has played a deceit on its people and on the new J&K Bank-RBI financial arrangement, he, by implications means to say that it has done away with the remains of the State’s financial autonomy. Taking these statements as these are said, then the PDP leadership should in right earnest exercise their constitutional right to undo wrongs once it comes to power in December 2014. That should be normally doable when the power and the legislative muscle would be available to it for the purpose. But the question that.......
Read - Greater Kashmir
Target - inflation
............Reserve Bank of India Governor Raghuram Rajan won't stand in the way of genuine reforms, many of which he has himself recommended in the past. As long as mandarins in the finance ministry can restrain their urge to push the RBI into irrelevance, it should be possible for Mr Rajan to make the RBI bureaucracy see the merit of rules-based monetary policy. A "grand bargain" between the finance ministry and the monetary authority could result if the ministry's plan to overhaul financial regulation does not drastically curtail the RBI's remit. A bigger obstacle might be.........
Look at the demand side
....................What are the typical challenges of the "demand side" of financial inclusion? Complex products, lengthy procedures, a lack of credit history and collateral. The real needs of financially-excluded consumers are different from the perceived needs. Bankers' mindsets have become so rigid that.........
Funding hazard
...................While finding resources for infrastructure is important, it is equally important that the Reserve Bank of India and not the finance ministry decides what loans are to carry what reserve requirement. This announcement is further dented by the fact that the government is encouraging banks to lend long-term based on short-term resources and into sectors..........
Now, FDI treatment possible for partly paid-up shares
.............The price of these partly paid equity shares have to be determined upfront. The investors will have to bring in 25 per cent of the total consideration amount upfront, including the share premium. The balance amount towards fully paid equity shares has to be received within 12 months, said RBI. RBI said the condition to bring the balance money within 12 months could be relaxed where the equity issue size was above Rs 500 crore and the issuer (listed company) complies with norms pertaining to the monitoring agency........
‘RBI must permit second restructuring of debt’
...............Earlier bankers were under no time pressure to act (on the requests for debt restructuring). Banks took more time to take decisions on restructuring. In the process, six to nine months were wasted and clients’ operations suffered. The borrower was using all the working capital to service the loan. Now under the new guidelines, if the client puts in a request, banks have to respond and the RBI has put the onus on the bank. If it gets a request for debt restructuring, the bank has to give the borrower a response within 30 days by forming a Joint Lenders’ Forum (JLF)............
No need of local address proof to open an account
.........The central bank stated that migrant workers and transferred employees were facing problems in submitting proofs of current and permanent addresses while opening a deposit account. There are many people who change cities for jobs or other reasons, and may not have an address proof for the city where they reside. This used to be a problem when one went to open an account with a bank or a deposit with an NBFC...............
SBI to rope in heritage body
In the wake of the fire that gutted the top floors of the State Bank of India building on Rajaji Salai, the bank has shifted three key branches functioning out of there to other locations. SBI also proposes to involve the Heritage Conservation Committee in the restoration process of the landmark structure.......
Citibank retains numero uno spot among foreign banks in India
............"Citibank’s performance reflects good revenue momentum, judicious expense management and a quality credit portfolio. While the all-round performance of retail has contributed to a significant share of the growth, costs have reduced through automation, technology implementation and by streamlining operational procedures,”.........
HC orders Police chief to investigate Rs 200-crore theft
..........In a paper authored by RBI Deputy Governor K C Chakrabarty in July 2013, the total loss from technology-related fraud in the last four years, till March 2013, was put at over Rs 357 crore. Of this, over Rs 183 crore was reported from new private sector banks. Foreign banks reported a loss of over Rs 145 crore in the same period. Chakraborty had said the predominance of the new private sector banks and the foreign banks in the number of such frauds was “intuitive” as they lead the technology enabled service delivery in the Indian banking sector. “There have been several instances wherein fraudsters have employed hostile software programmes or malware attacks, phishing, vishing (voicemail), SMSishing (text messages), whaling (targeted phishing on high networth individuals) apart from stealing confidential data..,” Chakraborty wrote in the paper............
ICICI Bank outpaces rivals in growing credit card biz
.........CICI Bank — with a base of 3.21 million cards at the end of April, 2014 — is now the second largest credit card issuer in India. However, the bank continues to maintain its stance that it remains cautious while offering unsecured credit. ICICI Bank's unsecured portfolio of credit cards and personal loans were at Rs 7,270 crore at the end of March, 2014, and was only 2.1 per cent of the bank's overall loan book. “The growth rate is high due to the low base,” .............
RBI asks fin cos to deploy infra for Aadhaar
.....RBI’s circular on Aadhaar coincides with news that the government is planning to give legal sanction to Aadhaar and use it for extending direct benefits to individuals under various welfare schemes. In his maiden Budget last week, finance minister Arun Jaitley also indicated that dependence on Aadhaar would continue by stating that the government would aim to reduce subsidies through targeted subsidies under the direct benefit transfer scheme..............
NBFCs Allowed to Use e-Know Your Customer Service to Verify Identity: RBI
..............The RBI said information containing demographic details and photographs made available from UIDAI via e-KYC platform may be treated as an officially valid document under the PML Rules. The apex bank further asked NBFCs to have proper infrastructure in place to enable biometric authentication for e-KYC. However, the RBI made it clear that .............
Reforms on for state-run banks but govt won’t cede control
..............“We would like to take up initially mergers that are most merit-based. SBI and its subsidiaries could be one, and probably banks that are facing problems in their current form,” he said. “The banks have not been shortlisted yet, but many banks were part of the earlier scheme that was worked out by the government....United Bank of India, Dena Bank and some other southern banks.”................
How Narendra Modi-govt plans to overhaul PSU banks
..........Specifically, Sandhu pointed out that improving the independence of the independent, the non-official directors on bank boards is something that is starting right away. The government is mulling on it. They are also thinking of giving the chairman of the bank a five-year tenure and splitting the position of chairman and managing director—again a Nayak committee recommendation. All of this indicating that the government is thinking very seriously about autonomy for public sector banks and for improving the quality of bank boards. This helped the PSU bank index outperform the general market today............
LIC’s Rs. 1,280 crore rescue act for 3 banks
A clutch of public sector banks are knocking at the doors of state-owned insurance giant Life Insurance Corporation (LIC) to raise funds. At least three banks -- Central Bank of India, United Bank of India and Bank of Maharashtra -- will make a preferential allotment to LIC to raise funds urgently needed for expansion. Banks need more money to fund their growth and meet regulatory requirements. Under preferential allotment, shares are allotted to.........
On Way to Becoming a Bank, IDFC may Gain from Easier Infra Lending Norms
............Given the company’s transition to becoming a bank, the loan book was earlier expected to decline to meet the regulatory requirement of CRR, SLR and priority sector lending. But with the recent move, the company may be able to continue its infra lending during the transition and after. In the latest Budget, the finance minister proposed to reduce regulatory requirements of long-term funds raised for lending to long-term infrastructure projects. Currently, ..........
New BRICS bank will give India a boost
...........The New Development Bank, with an initial corpus of $50 billion which could later be doubled to $100 billion, could be an alternative to the IMF to fund not just India’s infrastructure needs, but also of other developing countries, like many in South America, who don’t like borrowing from the IMF because of the many strings attached. “The Modi-Government has to ensure that the Development Bank gets operationalised soon as funding other develop economies will increase India’s global clout,” an economist from a Delhi-based research agency said...........
RBI yet to approve crop loan rescheduling proposals of AP, Telangana govts
....RBI Deputy Governor R Gandhi said initial discussions had taken place between the central bank and the two state governments. “We have asked them (state governments) to come back with full details, which we are awaiting,” he told media persons on the sidelines of FINSEC-2014, a financial sector conclave, organised by FICCI here today.......
Over 5k bank officials face action in loan waiver scam
The government has initiated action against more than 5,400 bank officials related to irregularities in the agricultural debt waiver scheme. At least 6,823 ineligible beneficiaries have been detected so far and Rs 627 crore recovered from them. In response to a question in Lok Sabha, finance minister Arun Jaitley said 6,823 ineligible beneficiaries were detected in the 2008-09 agriculture debt waiver scheme. The minister said that action was initiated against 5,411 bank officials and 22 FIRs were registered............
Read - TOI
Read - TOI
Money trickles into T-account
...............An instance was the amount due to Telangana as its share from centrally sponsored schemes which was in June credited to the Consolidated Fund account of Andhra Pradesh maintained with the RBI. Both the governments took up the matter with the Centre which prepared the respective estimates and asked the RBI to apportion the same between the two States...........
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