Dr. Subbarao’s guest lecture at IIMB

Dear Friends,

We were privileged to have Dr. D Subbarao, speak at IIMB. He discussed about the global crisis of 2008 and India's response. He specifically shared the view that during the crisis it is very difficult to know the reasons and make mid-way correction and the policy maker does not have the benefit of hind sight. In the initial stages of the crisis, monetary policy was accommodative but then, with hind sight, probably, liquidity should have been drained faster and earlier than it was during his tenure. Also, a number of good suggestions are offered to the Governor but then the Governor has to take into consideration many different aspects of the economy before taking a decision. One such issue was related to building of international reserves.  These and other important economic issues being presently debated in the country discussed by the former Governor.........

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 Hope you find it interesting.

Thanks

Charan Singh

Banks will discover the importance of SMEs: H R Khan

............."Banks will discover the importance of the SME segment for profitability and growth and new models to serve the SME segment profitably will be found, as more than three-fourths of the segment is still waiting to be served." .....

Read | Business Standard News

Where the Twain Shall Meet

..........Developing trust between the government and the central bank was visible even before the first step was taken by the government on either fiscal prudence, or committing to eliminating subsidies. When Rajan last month cut the statutory liquidity ratio of banks, the proportion of deposits to be held in government bonds, it was a sign of buying into the new government's promise. But the bonhomie could just be confined to fighting inflation. When it comes to changing the regulatory structure, it may not be smooth sailing given the many power centres and the recommendations of the Srikrishna Committee which could be the bedrock of reforms. Also, the internationalisation of Indian government securities and derivatives could put the RBI and the government in opposite camps. Despite his credentials as an advocate of free market practices during his career as a professor of finance, Rajan is seen to be slipping into the role of a typical regulator defending the turf and being conservative. Although he had argued for liberal markets, some believe that many of those ideas would be in cold storage...................

Read - ET

Regulators function as Nawabs: Srikrishna

...........Defending the recommendations to separate the regulatory, investigatory and adjudicatory responsibilities of the financial sector regulatory bodies such as the Securities and Exchange Board of India, the RBI, the Insurance Regulatory and Development Authority and others, Mr. Justice Srikrishna said regulators such as the State they represent were for the people and not vice versa. “The problem is that we have created regulators that function as mini State or ‘Nawab’…We [in the Commission] believe that, in a democracy, no one, not even the President, not even the regulator, is above the rule of law,” he said........

Read - The Hindu

Justice Srikrishna defends FSLRC recommendations

Critical remarks made last month on the Financial Sector Legislative Reforms Commission (FSLRC)'s recommendations by Reserve Bank of India (RBI) Governor Raghuram Rajan were met with a heavy dose of resentment on Tuesday when the commission's chairman and retired Supreme Court judge Justice B N Srikrishna sought to separate the views of 'the independent academic Dr Rajan from that of RBI Governor Dr Rajan' on certain aspects............

Read | Business Standard News

Trust the RBI

This refers to “Devious agenda to erode RBI’s autonomy” by S S Tarapore (July 14). The RBI should be independent with a clear mandate of protecting the currency. Price stability is the main responsibility of the central bank. It should be given a free hand in targeting inflation, and that target should be the CPI, as the RBI Governor Raghuram Rajan believes. The Government cannot instruct the RBI to cut rates when the CPI inflation goes out of the RBI’s comfort zone. We can find a lot of ways to suck out all the NPAs and free up capital in the banking system. All these problems can be solved if we trust the RBI to find solutions to our current problems. 

- CR Arun

HBL

Aiming at the wrong target

...........This would represent a major departure from the current ad hoc arrangement, wherein RBI targets some combination of a number of different nominal variables, such as nominal gross domestic product (GDP), the exchange rate, Wholesale Price Index, and so on, and in which the central bank is not obliged to reveal to the public exactly what it is targeting and why. While there is much debate on whether CPI targeting is appropriate for an emerging economy such as India, that is for another time. Here, I would like to explain what is meant by "inflation targeting" in the first place, and where this policy - now used by leading central banks around the world - originates...........

Read | Business Standard

The Indian Banks’ Association is shockingly anti-consumer

...............But the way, the bank lobby fought to keep giving savers minimal return and the time it took the RBI to do this speaks of IBA’s successful lobbying might. Bank consumers are not a unified entity and are unable to fight back................

Read - Mint

8th Half Yearly Get-Together of Ex-RBIites

Hello dear Friends,

It looks that the days are rolling very fast; for, before the impressions of the previous get-together could fade away, it was already time for another get-together. This was held on Saturday 5^th July 2014, in which many of you participated. Here is a brief report thereof.

Before giving a clout of the event, we, the organizers thank the participants who attended the meet in good numbers. For your information we state that 176 invitations were sent in all against which 132 of our friends responded. We consider this as a very encouraging one.

About the Meet:

The assembly was at 10:30 AM. Most of the participants had reached the venue quite early and even seen exchanging pleasantries / chatting amongst them, enjoying their cup of coffee/tea, with biscuits and cashew nuts. While the atmosphere was so encouraging, this went on for nearly an hour. This scene was very pleasant to oversee since some of them happen to come for the first time and they expressed happiness for the re-union with their beloved friends after a long gap of 10 to 15 years.

The meeting started around 11.30AM with Invocation by Shri.N.M.Rajashekharaiah followed by obituary reference of our departed friends and a minute’s silence was observed. It was a very sad moment as the departed souls images flashed in everybody’s mental screen. This however, was overcome when Shri.S.Venkata Subba Rao, our chief organiser of the meet got on to welcome the gathering. This was followed by our next programme of honouring our seniors who had completed 80 years of age, viz., S/Shri.K.Gopalan and N.Subba rao.  While Shri.Gopalan (ex-CGM NABBARD) was honoured by another elder person, Shri.E.P.G.Subramanyam (ex-DyGM, RBI), Shri.Subba Rao (ex-MGR RBI) was honoured by Shri.N.D.Vasanth(ex-Dy GM). Shri Gopalan spoke few words in response to the honour.

A happy development during the period was that Shri.Venkata Subba Rao became the recipient of both the “ Kempegowda award” (of the BBMP) and “Bangalorean of the Year – 2013” (the latter is conferred by one of the most prestigious institutions – “ Bangalore Foundation”). In this background, he had sponsored an instrumental music, a classical programme – “Flute by Master Pramukh accompanied by Shri.Ananth on violin and Shri. Chandrashekhar on Mridanga.”  The artistes rendered the programme for about 45 minutes which was so pleasant and absorbing that almost all the participants enjoyed the same in full measure. By then, it was 1 PM and time for break for lunch. The Lunch was sumptuous and delicious. After lunch, the participants dispersed with a sense of satisfaction.

Shri.N.D.Vasanth (ex Dy.GM) completed 50 years of married life. To celebrate this occasion, he distributed “Laddoos” to all the participants.

Shri.G.K.Jairam (ex AGM, RBI) very kindly clicked a number of snaps of RBIites and Shri.C.R.Raghavendra (ex Dy.GM – NNPP) uploaded the photos. 

- ORGANISERS

Info shared by William Panakal

Make the bigger 80C investments better

.................A hike in deduction is good news as it not only lets you save on taxes but also incentivises investments in the section 80C basket, which has some good options. So, which of these should you choose?..........

Read - Mint

Finmin to bifurcate the post of Chairman and MD in PSBs

.................“There is a proposal under consideration — we could have separate persons as chairman and managing director, as we have in the case of State Bank of India (SBI). This will help improve governance at PSBs,” said Financial Services Secretary G S Sandhu. He added he was hopeful the proposal would be cleared quickly, as the Financial Stability Development Council, headed by the finance minister, had also recommended this...........

Read | Business Standard News

Financial literacy essential: RBI official

The lack of financial literacy in the State is the cause of the common man falling prey to financial fraudsters, Reserve Bank of India (RBI) Assistant General Manager P. Ravindran has said. He was delivering a talk, on ‘RBI and the common man,’ organised by the Bankers Academy of Career Excellence at West Hill here on Monday. The absence of financial literacy could be disastrous, especially when they have dispensable money in their hands, Mr. Ravindran said.......

Read - The Hindu

Financial Inclusion in India – a Review of Initiatives and Achievements

………….According to committee on Financial inclusion headed by Dr. C. Rangarajan defined financial inclusion as “The process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.” Financial inclusion does not stand for delivery of financial services for all at all cost. But it means that the delivery of financial services and products at affordable costs of excluded sections of population and low income groups. It plays a crucial role to remove away the poverty from the country. Financial inclusion is to provide equalopportunities to vast sections of population to access mainstream financial services for better life, living and better income. It provides path for inclusive growth…………. 

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New financial inclusion plan on the anvil

The Centre is planning to launch a new financial inclusiveness programme from August 15  making two bank accounts per family mandatory. Of the two bank accounts, one account will have to be compulsorily opened in the name of a woman member of the family and..............

Read | Business Standard News

NABARD’s financial literacy programme on trains

.................On the occasion, NABARD Chief General Manager Jiji Mammen said that the NABARD would launch the literacy programme on another 11 fast passenger trains. The bank noticed that the financial inclusion programmes were not yielding the desired results as the rural folk were not utilising the banking services optimally. To tide over the problem, financial literacy programme was taken up, he said, adding, it was first time that trains were being used medium for means of communication..........

Read - The Hindu

RuPay to go global, take on card biggies

........Three banks have been given the responsibility of making the desi payment card an international one on a pilot basis. Bank of Baroda, Central Bank of India and Saraswat Bank have begun to issue the international RuPay cards. “RuPay International will be a full-fledged service from next year. Now, we are running it on pilot basis with three banks. The RuPay card payment system is an indigenously developed card system that will help the banks cut their transaction cost to one-third of the prevailing rates,” said A P Hota, managing director and CEO, National Payments Corporation of India (NPCI). Initiated by the Reserve Bank of India, the domestic payment system project is now successfully run by NPCI. RuPay symbolises India’s ability to have a domestic payment card system without having to depend on international card providers like Visa and MasterCard that dominate the Indian market today............

Read - DNA

Slice of History - Banking Before Laws Were Enacted

As India was struggling with the transition of the partition post-independence, there were concerns as to how to protect the interests of the banking sector in the country. So until a full-fledged law was enacted, the Reserve Bank of India in 1945 recommended to the government that an Ordinance be promulgated to bring into immediate effect provisions in the Banking Bill regarding inspections. This was in addition to suggesting a system of licensing of banks and branches in India. The Ordinance was to be operative until the enactment of the Banking Bill. Accordingly, in January 1946,.........

Read - ET

Book value on basic economics

...........In the first book in this series, Monetary Policy, Partha Ray, professor of economics at the Indian Institute of Management (IIM)-Calcutta, spells out the theoretical background to help us take a view on such matters. He comes with the advantage that he has been director of economic and policy research at the RBI, as well as an advisor to the International Monetary Fund in Washington, D C...........

Read | Business Standard News

BRICS leaders create development bank

..............The new bank will be headquartered in Shanghai, China. The first president of the bank will be from India while the first chair of the board of governors will be from Russia. Sources said India's demand for an equal share in the bank has also been accepted. The deal was reached after intense last-minute negotiations to settle a dispute between India and China over the headquarters of the new bank,.....

Read | Business Standard News

Funds Transfer Pricing in Banks

......Volume     based      evaluation   of   business   performance is faulty simply because there is no direct correlation between volume of business done and profit earned.  It is possible for a bank to increase its net profits even while there is shrinkage of its balance sheet size.  If the balance sheet of the bank has increased but the profit has not, it could be because of multiple factors such as that incremental business was being done at a negative margin or........

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RBI signals cheaper housing, infra loans

To boost demand for infrastructure and housing, the Reserve Bank of India (RBI) on Tuesday said banks would not have to maintain cash reserve ratio (CRR) or statutory liquidity ratio (SLR) and will not have to meet priority-sector lending targetsfor funds raised through bonds for extending credit to these sectors. While the exemption from CRR and SLR requirements was announced by the Finance Minister in his Budget speech, the banking regulator further sweetened the deal by including loans for affordable housing...........

Read | Business Standard News

Realtors hail RBI move to ease norms for affordable housing

...............In order to encourage infrastructure development and affordable housing, RBI today exempted long term bonds from mandatory regulatory norms like CRR and SLR if the money raised is used for funding of such projects. "It is a welcome step. This will lead to lower interest rates for affordable housing projects," CREDAI Chairman Lalit Jain said.......

Read | Business Standard News

Amanath bank: court’s query to RBI on withdrawal

.........Justice Ram Mohan Reddy issued directions in this regard as it was pointed out on behalf of the depositors and the ACB board that depositors were being put to severe hardship during the month of Ramzan as it had been more than a year since the restriction was imposed by the RBI. The court asked Canara Bank to re-evaluate the free-holding assets of the ACB, while directing the ACB to submit the details of mortgaged assets and the valuation of such assets made at the time of grant of loans.............

Read - The Hindu

Prithvi Info Solutions: Second largest stakeholder denies investing in the company!

US-based Sarat Kumar Addanki, the second largest stakeholder of Prithvi Information Solutions, has made sensational allegations of fraud, mismanagement and possible identity theft against the promoters. He has complained to SFIO, SEBI, RBI and stock exchanges. Will they finally act against Prithvi?...........

Read - Moneylife

SC refuses to stay Madhu Kapur-YES Bank case in HC

............The bank argued that the nomination of three directors, challenged by Madhu Kapur in the high court, was with the approval of the shareholders. In any case, the Banking Regulation Act did not allow challenge to the decision of the board of directors in a court of law. Therefore, the petition of Madhu Kapur was not maintainable and should not be heard by the high court, it was argued.........

Read | Business Standard News

Large number of banks can co-exist with few big ones: Kochhar

As new players get ready to join India's banking space, top banker Chanda Kochhar feels there is space for a few large banks and a large number of other lenders to cater to the country's banking needs. At the same time, the proposed issuance of differentiated banking licences or licensing of niche banks for specialised segments should not result in any regulatory arbitrage in the system and the core principles should be applied to all new players, said the CEO and Managing Director of ICICI Bank.........

Read | Business Standard News

Goa banks seeks RBI relaxation on 'mining dependent' loans

............Parrikar told reporters that banking institutions have decided to write to the RBI to relax certain norms so that the adjustments could be worked out to make repayments easier and affordable. "Banks have some technical difficulties. Today we adopted a resolution asking the RBI to address these technical difficulties. If required, the state government will also seek RBI intervention. We have requested them to relax certain norms," ...........

Read - DNA

Canara Bank wants to settle Deccan Chronicle debt issue at one go

...........“When the promoters came to us with a request to restructure the loan, we said we will consider to settle (the cases) if they are ready for a one-time settlement of the dues,” Dubey said on the sidelines of a financial sector conclave being organised by industry body Ficci. The company is yet to respond to the bank's offer......

Read | Business Standard News

Two flats merged into one must get tax exemption

If two adjacent flats are bought from different people through two agreements and then converted into a single unit with a common kitchen, then the owner is exempt from paying capital gains tax, the Bombay high court has said..........

Read - TOI

New rules for Gold fixed deposits

.................But SEBI is yet to wake up to thousands of crores invested by consumers in gold savings schemes of jewellerswhich can easily qualify as collective investment schemes. SEBI and RBI had replied to an Right to Information (RTI) application stating that such schemes are not regulated by them at all.............

Read - Moneylife