.............The Union Budget was presented on July 10, the same day the RBI board was to meet in Chennai. This was a constraint for the government-nominated board members in attending. Shortly before the meeting, the finance secretary's office sent a letter to RBI stating such issues should be discussed only when the government nominees were present, according to a person with direct knowledge of the matter. The letter suggested RBI defer the issue till the next board meeting, where the government nominees will be present.......
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Monday, July 21, 2014
Justice Srikrishna defends FSLRC recommendations
.........“Thankfully the independent academic Dr Rajan also disagrees with the RBI Governor Dr Rajan on this aspect. In his 2009 report, A Hundred Small Steps, Dr Rajan wrote, ‘regulatory actions should be subject to appeal to the financial sector appellate tribunal.’ This is the thinking that guided the FSLRC’s deliberations,and it is the position we still take today.”......
Common concerns over technology in financial sector
............We thank reader M. G. Warrier from Mumbai (mgwarrier@gmail.com) for his extremely perceptive observations in response to our last week’s article. He points out that the term ‘middle-class’ refers to “the majority of people sandwiched between the rich and the poor and facing extinction in the near future by migrating downwards to the BPL (below poverty line) category as and when the poverty line is drawn realistically.’’ That then is a vivid description of the deep insecurity the middle-class faces. There are several aspects to this — last week we raised a few issues and in this column we will try to discuss a few more. Examples are drawn from banks, but the observations are valid for the whole of financial sector..............
Con men pose as RBI officials, directly call victims
..............Fraudulent emails sent in the name of Reserve Bank of India Governor Raghuram Rajan to unsuspecting people, seeking details of their bank accounts to send 'income tax refunds' directly to them, are passe. Con men are now directly calling people and posing as senior officials from RBI, while seeking details of their debit cards. RBI, who have only just begun receiving complaints from people about the fraudulent calls, however, stress that they never seek such details for any purpose, and have warned members of the pubic to refrain from responding to bogus calls. ...........
RBI’s circular: Patil joins in chorus
..........According to the minister, the state govt is opposed to the RBI circular and would urge the central govt to get this circular withdrawn. If this step was not taken, it would mean depriving the cooperative sector of nearly 20 thousand crores of rupees. The state govt would soon send a delegation to New Delhi, the minister added...............
UFBU Meeting for Wage Revision Meeting Date!!!
New Govt has praised importance of Public Sector Banks but not cared about the pending wage revision of bank employees since November 2012. Now bank employees are compelled to call meeting on 15.07.2014 for urging date for wage revision meeting date...........
Obituary
A.BALAGURU, RBI, Chennai expired 18-07-2014. Funeral at 11 a.m. on 19-07-14. Mourned by Family & Friends. Contact: 8220019287 & 9841058245
Now a New Year deadline
........The reason for this being that notes printed and issued from 2005 onwards have better security features and cannot be easily counterfeited. However, that is not the case with pre-2005 notes which makes them susceptible to counterfeiting. The move is well-thought out drive to flush out the fake notes from the economy. The RBI governor Raghuram Rajan has already emphasized that this move is aimed not at demonetization but a technical action to reduce counterfeiting of banknotes and provide more reliable currency to the public. Having said that, RBI does recognize that withdrawal of pre-2005 notes on a nationwide scale is a time consuming affair...........
Now, taxman will contact you directly
............The move will not only secure communication between the IT Department and taxpayers, but also improve efficiency of the e-filing process. The directive states that the validation of the mobile number and e-mail ID is a one-time process. However, if the taxpayer changes his or her mobile number or e-mail address, he will have to register the new number or e-mail ID again. Taxpayers have also been directed to include e-mails from the IT Department in the `safe' or `white' list so that the communication from the department does not get blocked, rejected or end up in the spam folder, the directive states. A single mobile number or e mail ID can be used for a maximum of 10 accounts.........
Read - ET
Let your pot of gold create social impact
..........According to the RBI, 60 per cent of the population does not have a bank account. These people depend on money lenders. When a customer takes a loan from an MFI, he builds a credit history; now we also have credit bureaus that have close to 100 million records. MFIs get this section of the population into the mainstream. If banks want to lend to them at a later date, they have a credit history to base their decision upon. People doing small businesses or the unorganised sector, who do not have salary slips, PAN number, etc., now have proper records to back their income and cash flows......
The currency wars
In October 2012, then Reserve Bank of India governor D Subbarao had asked visiting US Fed chairman Ben Bernanke and treasury secretary Timothy Geithner for a rupee-US dollar swap arrangement. The two had refused, saying the Indian rupee was not fully convertible and so it would not be possible for a swap to work. Two months later, the RBI signed a swap deal for $15 billion with the Bank of Japan. It has now been extended to $50 billion..............
A Budget, not a moon shot
......... If these targets can be achieved they will help reduce inflation more rapidly and allow the Reserve Bank of India to reduce interest rates and help revive growth. With faster growth more revenues will make fiscal consolidation more achievable. Early introduction of the GST would help, as it will boost revenues albeit with some lags...........
Elusive revival
.........However, a sustained economic recovery is a complicated task if we look at the underlying trends. The government has committed itself to fiscal compression. Inflation is still enough of a problem for the Reserve Bank of India to shy away from rate cuts. Investment activity is still weak. The global economic recovery is uneven. A year after the............
Govt lines up big fin inclusion push
.....The proposed comprehensive financial inclusion programme envisaging insurance and pension cover, apart from a default cover for lenders is likely to envisage opening 15 crore more bank accounts, 12 crore of which will be in rural areas over next four years, according to a note sent to the Indian Banks Association (IBA) by financial services secretary G S Sandhu. According to the note, Modi’s new comprehensive financial inclusion programme has three major shifts from the one pursued by the previous government........
Government ARC: a bailout by another name
..............This is not the first time that a proposal for a public sector asset reconstruction company has been floated. A similar proposal came up during the first NDA regime as well, at a time when Indian industry was going through a recession, and bad loans in the banking system had spiked. Thankfully, the proposal was nixed at that time and instead a new regulatory framework for ARCs was created by legislating the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act in 2002. That act led to the setting up of the............
RBI starts scrutiny of cos suspected of illegal money raising
..................Sources said the Reserve Bank of India (RBI) has begun analysing details of entities, which are believed to have raised money from the public illegally without getting registered as NBFCs. The cases are being pursued after reference from the Corporate Affairs Ministry to probe 34,754 companies (other than those registered with RBI). NBFCs are regulated by the RBI........
Andhra Pradesh to mortgage institutions
.......... The government has decided to mobilise funds without depending on RBI rules to implement the waiver of farm loans. Another option under consideration by the state government is issue of development bonds. Mobilisation of additional funds to implement waiver of farm loans has become a big problem for the Andhra Pradesh government........
Infra financing: Barking up the wrong tree
.........So, are good days here for banks and companies setting up infrastructure projects? I’ve a slightly different take on RBI’s two-pronged approach to prop up infrastructure financing and protect banks from asset-liability mismatches. Since there is no cap on maturity of bank loans and no bar on refinancing loans, there is nothing new about the 5:25 model. Banks are always encouraged to resort to take-out financing—a method of providing finance for longer duration projects by sanctioning medium-term loans with an understanding that the loan will be taken out of books of the financing banks after a certain number of years. The take-out financing model has not taken off. So, RBI has tweaked it and................
Differentiating to include
.............The thrust of the RBI's strategy now is to move from mandate to viability, which requires a completely different model to address those three critical factors. De-risking is the key element of the payments banks proposal, while local knowledge is what is supposed to differentiate the small banks. By drawing boundaries on what both types of institutions can do, a separate space is being carved out, which is under no real threat from the bigger players. This also encourages a range of players to try their hand at it. However, it must also be recognised that........
Niche banking
.........The move to licence payments banks is an acknowledgement of the scope for niche banking in India. You don’t need all banks to do the same thing; in fact, technology already permits financial inclusion to be achieved in ways other than through the opening of more brick and mortar branches in remote locations. What matters eventually is that the delivery of financial services is economical — mobile firms charge about 1 per cent against the 5 per cent for sending money through India Post — while ensuring customer protection and no risk to financial stability. The latter concern is largely addressed by the stipulation that depositor monies be invested in government bonds below one-year maturity. The ultimate objective should be to enable every Indian to have a safe and secure bank account. Such .........
Some players likely to stay away from second round of bank licensing
Doubts over financial viability of small and payment banks could keep away some players from the second round of bank licensing. The central bank's proposal to ring-fence new banking entities from any financial or non-financial services of the promoter could also play a spoilsport. The Reserve Bank of India on July 18 kicked off the differentiated banking licence regime by proposing, in its draft guidelines on small banks and payments banks, to allow the ..........
India's youngest bank Bandhan to empower women, rural folk
......Ghosh said RBI Governor Raghuram Rajan wants the new bank (Bandhan) to penetrate poverty-hit rural areas to promote lending and saving among farmers, small businesses and others whom traditional banks have been reluctant to serve. "Bandhan is a third generation bank. Instead of ATM (Automated Teller Machine), our 275,000 human teller machines have been in constant touch with the rural people, specially women." Ghosh said that he had all the time given emphasis on the "practicability of the business, whatever may be the volume of trade.".....
Bandhan gets 25,000 applications for 15 posts in proposed bank
...........On July 2, Bandhan, the microfinance institution, which recently got an in-principal nod from the Reserve Bank of India to start a bank, came up with an advertisement for 15 posts in the proposed bank. In nearly 17 days, the MFI has received more than 25,000 applications for the posts, according to C S Ghosh, chairman and founder, Bandhan. In addition, several top-notch executives of the corporate world expressed interest in joining the bank, informed Ghosh.........
Road map for PSU banks fund-raising by next month
..................Next month, the government will frame a draft Cabinet note on equity dilution in State Bank of India (SBI), the country's largest bank. "We have not yet decided on SBI stake dilution. We are preparing a road map at the moment (for raising capital by public sector banks)," Financial Services Secretary G S Sandhu said at a Canara Bank event here............
Move over, big brother
.............It is too early to say whether these mechanisms will challenge the role of the International Bank for Reconstruction and Development (IBRD) or the World Bank and the International Monetary Fund (IMF), which have been the bedrock of the Bretton Woods system under U.S. hegemony. But they at least serve as a reminder that the era of Western and American dominance of the world is ending, giving way to a more complex and diversified world order: the multiplex world. The move by BRICS, though outwardly economic in nature, has serious geopolitical undertones...............
Questions remain on viability of proposed payments banks
...While most agree there is space for such banks in India, the restrictions and conditions proposed have raised questions on whether the model would be a viable business proposition. Payments banks are a new category of banks envisaged to provide limited services such as accepting savings deposits and remittances, particularly in rural areas. One key concern will be profitability. This is because payments banks will not be allowed to lend, effectively cutting off interest income—the main income source for a bank—although remittance services are permitted and could become the main income stream. Again,...............
BRICS Bank: Taking shape despite the fluidity around
..........So what actually will it be? The beginning of the end of western control over global financial systems, or an idea that will collapse as its members start to fight amongst themselves? I’m biased, of course. Like the Chinese ambassador to India, and Raghuram Rajan, I believe that developed countries still owe a debt to emerging nations for the aftermath of the 2008 financial crisis, which they’ve refused to pay. I can still be objective though. .......
Bharatiya Mahila Bank races past Rs 1 crore deposits in just seven months
........Interestingly, all the loans have been taken by women but in case of account holders, women make 98% of the total as men also have opened accounts in the state's only women's bank. The officials believe that the interesting loan schemes including loans for opening beauty parlour and kitchen modernization along with traditional house, car and education loans and lower interest rates on loans are the reason for the banks increasing popularity among women............
Set to grow faster, but won't sacrifice profitability: ICICI Bank
.............Kochhar, who implemented her famous '4C-strategy' at the bank soon after taking charge as Managing Director and CEO of India's biggest private sector bank in 2009, also said that this strategy has worked well and a foundation has been put in place now for the bank to grow at a faster pace than industry. However, this growth won't be at the cost of profitability or by getting into a high-risk business model, Kochhar told............
Banker Who Believes Client is Always King
.........But the grueling experience taught him to be calm and to be in control of his emotions, virtues that have rewarded him well during a career working in every department of the banking business and building relationships with clients. Mehra’s IIM batch incidentally was a year senior to that of Raghuram Rajan, now the Reserve Bank of India Governor..............
HDFC, HDFC Bank merger buzz restarts
The buzz over a possible merger between HDFC and HDFC Bank,which was talked about a decade ago in the aftermath of the ICICI-ICICIBank merger, has once again resumed. All the pieces appear to be falling into place with the RBI classifying low value home loans as infrastructure lending, which is exempt from reserve requirements such as CRR and SLR. HDFC has been disbursing loans efficiently and maintaining growth despite its size, and its sheer scale now makes it a strategically important institution. There is also a thinking that such a big organization should now be regulated as a bank. Should a merger happen, the new entity will be the second most valuable company in India after ONGC, considering that the combined value of the two institutions at current market prices is well over Rs 3.5 lakh crore.
HDFC Securities launches 'e-Will' writing service
.............There has been tremendous response to this product and a large number of customers across the country are getting themselves registered because of convience factor everyday, he said. To begin with, he said, 'Do it Yourself Will Service' would be available to customers of HDFC Bank having customer base of 2.8 crore. HDFC Securities has 20 lakh users. However, this service would be extended to non-HDFC Bank customers later ..........
SBI asked to pay Rs. 8 lakh in damages
..........The district consumer disputes redressal forum (DCDRF)–North has directed State Bank of India (SBI) and its insurance company to pay a compensation of Rs. 8.68 lakh for pre-closing the insurance policies of a consumer without prior information.......
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