My View on "Can the government and the RBI work together?":
- M.G.Warrier
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.
Saturday, July 19, 2014
Need reforms but with foundations intact - M.G.Warrier
After 20 Months UFBU Still Struggling To Come to Consensus Among Themselves
........Thus, in nut shell we can say the meeting expressed unhappiness for the delay, and decided to request for another meeting with FM and shot a letter to IBA wherein it did not fit it even necessary to mention about meeting with FM. They will now try to come to a consensus for approaching IBA with that view..........
RBI asks banks not to charge usurious interest rates on loans
........“It is not proposed to issue any guidelines to the banks to offer loans to borrowers at uniform rate of interest in view of variation in their costs, business models, margins etc,” finance minister Arun Jaitley said in a reply to Lok Sabha. “Reserve Bank of India has advised boards of banks to lay out appropriate internal principles and procedures so that usurious interest (including processing and other charges) are not levied by them on loans and advances,” he said....................
Contingent liabilities of states a cause for concern, says RBI paper
...Stating this, a working paper of the Reserve Bank of India titled ``Debt sustainability at the State level in India’’ sounded a warning that the contingent liabilities, primarily in the form of issuance of guarantees by the state governments, remained an area of concern. ``The strong presence of contingent liabilities calls for a holistic assessment of debt position of states by reckoning their off-budget fiscal position, including the impact of operations of state public sector enterprises,’’ it said. Going forward, there could be downside risks in case the slowdown in growth......
67 years since partition, India still owes Pakistan Rs 5.6 billion
................From the first-ever Statement of Affairs that the SBP issued on its second day of existence — July 2, 1948 — to the latest one released on June 27, 2014, the central bank has listed the unsettled claims on the RBI among its “assets” unfailingly for the last 66 years. The SBP’s issue department — which deals with currency and the assets that underlie it — shows the outstanding claims on the RBI under two distinct categories, says the paper............
Sriram, Kannan appointed SBI Managing Directors
...........Both come to SBI from Group associates, where they held senior positions. Sriram, previously Managing Director of State Bank of Bikaner and Jaipur, will be handling international banking, while Kannan, who was MD and CEO, SBI Capital Markets, will be looking after associates and subsidiaries division of the country's top lender, a bank release said..........
Popularising RuPay
..........The State Bank of India, the largest public sector bank has started issuing RuPay card only three months back and has realised the benefits of the same. According to SBI officials, though it has long term agreement with Master and Visa cards, still it would be good for the bank to pay money to them and switch over completely to RuPay. Experts believe that if only SBI adopts RuPay fully, the scheme would be a success. Although for international operations, fee of RuPay is yet to be decided, the NPCI says that it would be better to keep it low to maintain it attractiveness in international business also..........
Sellers of National Pension System need better incentives
......The government must do two things. One, it should make better use of its pension subsidy. The government now offers a subsidy of Rs 1000 to encourage a poor person to join the NPS. A better way would be for the government to use the money to underwrite initial overhead costs in asset management, distribution and central record keeping. The wafer-thin asset management fee should be topped up..........
Milestones set, but road map not clear
.............Dividend contribution from the Reserve Bank of India (RBI) goes up by Rs. 13,000 crore. It must be noted that any outflow from the RBI has an expansionary effect. Taking all these factors into account, it appears that achieving the fiscal deficit of 4.1 per cent is going to be difficult. If the government is serious about adhering to the fiscal deficit target, it must be willing to cut expenditures as revenues fall short of budgeted levels. Pruning of expenditures must be done in such a way that this has the least adverse impact on the economy.........
Finally, small is beautiful in Indian banking
...............Narrow banking—or the model of investing the last penny of deposits in government bonds—ensures safety but it’s difficult to make such a bank profitable unless the employees see this as charity and don’t take a salary. I wonder why would anybody apply for a payments bank licence while such activities can be done through the small banks? Yes, the small banks are being allowed to do everything a commercial bank is expected to do but on a smaller scale................
The changing face of finance
...............This is the classic concept of narrow-banking, where banks only invest in government paper and hence avoid the pitfalls of NPAs or capital adequacy. Being driven by only technology, however, will not be feasible given the state of digital infrastructure and computer literacy in the country............
NBFCs perceive several constraints
........“We have to see what we can do and what we can’t. Prima facie, as compared to an universal banking model, it looks more doable. The lower capital requirement is a positive. However, many NBFCs have an all-India footprint. We have to see in how many districts small banks are allowed to operate. Whether it is 4 or 5 or 15 or 20, or even more? A realistic approach regarding footprint is required,” ........
Biyani may apply for payment bank
.........It would apply, now that supermarket chains have been permitted to float such banks, said an executive within the group. A payment bank is essentially an entity which can accept deposits and facilitate remittances and payments but cannot lend money. “We are applying,” the executive said. “We can easily do money transfers and take deposits. We had this mechanism when we used to run the NBFC (non-banking finance company).” ......
Can we bank on them?
This refers to the report on the RBI issuing guidelines on payment banks and small banks (July 18). The RBI has prescribed a capital adequacy ratio of 15 per cent for payment banks. As the proposed bank can only invest in government securities and no lending is permitted, this clause is unnecessary. Its outside liabilities cannot exceed 20 times of net worth, which takes care of the interest of depositors. As these banks can take only demand deposits, to maintain liquidity, a substantial portion of deposit has to be kept idle. They have to maintain CRR and SLR also. What is left can only go to government securities. One wonders how these banks will be able to pay interest on deposits.
- S Kalyanasundaram, Chennai
The RBI’s guidelines are a welcome step, which is an essential measure towards meeting the objective of financial inclusion. But the guidelines should be more prudent, and let this not be a repeat of the Local Area Banks, a concept that was launched some years ago.
- Lakshminarasimhan
HBL
Profitability of payment banks under question
.........Payment banks are expected to offer only demand deposits - current account and savings deposit products and not fixed deposits. Currently, the cost one-year fixed deposit is typically in the range of nine per cent. Keeping a tab on operational cost is also seen as a challenge. For instance, deposits being covered by the deposit insurance scheme would also hike the running cost for them due to higher premiums...........
Norms on small banks fail to impress micro lenders
........... "While the guidelines are progressive and consistent with the financial inclusion agenda, it is almost impossible for most microfinance companies to meet the norms and convert themselves into small banks. Following the crisis in the sector, barring a few, all microfinance institutions in Andhra Pradesh now have negative net worth,".....................
Tough to bank upon
........... Now the central bank has put out draft guidelines for payments banks—essentially to provide payments, remittance services and deposit products—and small banks that will operate in specific geographies catering to the credit needs of micro and small businesses and small farmers in unbanked and under-banked areas. Neither of the models appears to be a particularly enticing business proposition. ..........
Telcos may be First in Queue for Payment Bank Licence
.........Rajan Mathews, director general of Cellular Operators of Association of India (COAI), the lobby body representing GSM mobile operators, said the RBI move would boost mobile banking services and financial inclusion, saying the “biggest deterrent to expansion of mobile payments“ so far has been their inability to offer cash-out transactions. “Though RBI's proposals don't allow telcos setting up banks to lend, we believe they will allow cash-out transactions, which I reckon can be a game-changer to boost mobile payments and financial in clusion in India as in Africa,“ he said. The cash-out facility, Mathews said, would enable a person who has deposited money with a mobile company to withdraw it at any location he wishes............
As RBI opens floodgates, be ready for an Airtel Bank, or a Railway Bank
..........Assuming the promoters of Airtel pass the RBI’s fit-and-proper text for starting a payment bank, it could attract a substantial chunk of the dormant savings account balances from traditional banks – the low-cost CASA (current account, savings account) money that is just lying around, earning banks a huge margin. Most banks pay nothing on current accounts and just 4 percent on savings accounts. An Airtel Bank, if it comes to be, would have other advantages. It would need a starting capital of only around Rs 100 crore, and would need nothing more than an internet presence to start and run banking activities. The RBI guidelines specifically allow for internet-based banks........
Welcome Shift to Differentiated Banking
......... A banking licence will allow a telecom company to realise in full the phone's ability to function as a portable electronic vault that can be charged remotely and run down to make all kinds of payments. The only trouble with harnessing technology for remote area banking is the vulnerability of electronic networks to hacking. The RBI will have to draw up effective, stringent cyber security standards and..........
Local and Rural Banks a Failure
Apropos `Even a Telco may get a Banking Licence...' (ET, Jul 18), it is necessary for the RBI to examine why local area banks (LABs) and regional rural banks (RRBs) failed to boost financial inclusion. Deposit customers and borrowers found it more convenient to transact with scheduled banks in larger rural and semi-urban centres compared to LABs and RRBs, resulting in their operations becoming unviable. Extending banking services through business correspondents and post offices appears to be a better option. Mobile phone service providers can be used to speed up remittances.
- S SOLOMON RAJ MumbaiET
What BRICS bank presidency means for India
............The BRICS-promoted bank, with a subscribed capital of $50 billion, divided equally between the five nations and another $100 billion as currency reserves pool, addresses two major aspects of any growing economy: one, the need for funds for getting on to the map of the developed economy from a developing one, and, second, protecting each others’ currency caused by outflows of foreign exchange........
State at loggerheads with Center over RBI circular
.......... "We have heard that Acche Din Aa Gaye Hai, but this circular does not show that Acche Din Aaye Hai. Nabard officials should understand this circular and oppose it since the very existence of Nabard is based on the strength of the farmer who is dependent on cooperative sector in the state.".....
Amanath Bank: withdrawal limit stays, says court
............Justice Ram Mohan Reddy, who heard the submissions, has asked Canara Bank to go through the details of loans and value of the mortgaged assets with ACB to verify whether it is feasible to allow depositors to withdraw more money from their accounts during Ramadan. The next hearing is on July 21........
CBI files case against Dena bank manager
...............According to the CBI, Mr. Barot allegedly approached seven corporate firms posing as a representative of the bank. Claiming that they would get returns at a high interest rate, he allegedly convinced them to put huge sums of money with the bank as fixed deposits. “He represented himself as a financial advisor of the corporates and ‘facilitated’ the bank in mobilising term deposits to the tune of Rs. 256.49 crore from them. Against the deposits, the accused got sanctioned a total loan of Rs. 220 crore from the bank in conspiracy with the former Bank Manager and got the amount diverted to himself,” ...........
Subscribe to:
Posts (Atom)