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.
Wednesday, July 23, 2014
Here's Why Subbarao Will Not Take Up a Finance or Govt Job
TN files highest number of maintainable complaints with Banking Ombudsman
Tamil Nadu has seen the highest number of maintainable complaints filed with the Banking Ombudsman during the year 2013-14, with almost 76% of the complaints filed were maintainable, says U Chiranjeevi, Banking Omudsman, Reserve Bank of India (RBI), Chennai. The area has seen an increase of 21% in terms of complaints against Banks with the Office of the Banking Ombudsman during the year 2013-14, he said. The highest number of complaints were against State Bank of India (SBI) and its associate banks during the period,...........
Politics & economics inter twined
...........Today we have the Board for Financial Supervision and the Board for Payment and Settlement Systems. The Financial Stability Unit conducts macro- prudential surveillance for financial system on an on- going basis.The RBI has evolved as one of the most respected institutions in India with the active support of the Government.This is a very useful and thought- provoking book with articles of a high calibre by outstanding experts in several fields. Space constraint has restricted us from covering all contributors.
Read - FPJ (Book Review by P.P.Ramachandran)
Budget creates confusion about retirement products
...............While there is a mention of ‘Uniform tax treatment for pension fund and mutual fund linked retirement plans’, no one is clear about what he really meant. Put it down to shoddy work by the officials in the finance ministry, who as usual have no truck with the savers and their issues...........
RBI quiz contest
The Reserve Bank of India, Kochi, as part of its initiative in promoting financial literacy, will organise a quiz competition for school students of Ernakulam, Alappuzha, Thrissur and Idukki districts on August 6......
On pensions, it is rank injustice
............“OROP implies that uniform pension be paid to Armed Forces personnel retiring in the same rank with the same length of service, irrespective of their date of retirement, and any future enhancement in the rates of pension to be automatically passed on to past pensioners. This implies bridging the gap between the rate of pensions of the current pensioners and the past pensioners and also future enhancements in the rate of pension to be automatically passed on to the past pensioners.”.........
TReDS to facilitate financing of trade receivables of MSMEs: RBI
........... In its draft guideline on TReDS, RBI said that this will from corporate buyers through multiple financiers. The TReDS will facilitate the discounting of both invoices as well as bills of exchange. Further, as the underlying entities are the same (MSMEs and corporate buyers) the TReDS could deal with both receivables factoring as well as reverse factoring so that higher transaction volumes come into the system and facilitate in better pricing............
Reforms on loan waiver needed
My View on "Contingent liabilities of states a cause for conce...":
The suggestions are worthy of immediate attention by the GoI. It is also desirable to consider either a separate legislation or as part of the overall legislative reform of financial sector, that all the State Governments be barred from either announcing or implementing the write-off of loans issued by the banks for any category. Even Government of India shall indulge in this compulsive act only under extraordinary circumstances of severe natural calamities affecting various parts of the country from out of a separate Calamity Relief Fund to be set up with participation from the State Governments, NABARD, commercial banks and Insurance Companies. What is uninsurable alone should qualify for such waiver that should be approved by the Parliament. Several State Governments in their annual Budgets should clearly spell out specifically such write-off amounts issued under a guarantee mechanism or public borrowing facility.
- Dr.Yerram Raju
FinMin wants banks to be exempt from CSR spend
............ationalised banks are incorporated under the Nationalised Bank Act. Though it is not clear if public-sector banks also need to spend on CSR activities - Reserve Bank of India laws allow them to make donations - the finance ministry wants all banks to be exempted from the stipulation for now. If the corporate affairs ministry agrees to the request, it will be a big relief for banks, particularly the public-sector ones. The move comes at a time when the government is constrained in infusing capital.............
NRI woman gypped of Rs.4.97L by cyber crook
.......The caller claimed to be a bank official and told the victim that she hadn’t been operating her bank account regularly and that the bank was contemplating closing her account if she didn’t want to operate it. “The woman said she would not want to get her account deactivated, after which the caller asked for her net-banking details for verification. The unsuspecting woman then gave her net-banking details to the caller, believing him to be a bank official. After the phone call, the woman received an alert from the bank, informing her of a transfer of Rs4.97 lakh from her account,”..........
Seven reasons why TDS provisions are draconian & flawed
The citizens of this country are punished due to some draconian provisions in the Income Tax (I-T) Act, Rules and notifications. They could even be taken for a ride about the constitutional legality of tax deducted at source (TDS). Harassment because of TDSprovisions began under the Congress-led government but nobody has bothered to listen to the woes of lakhs of taxpayers. Here are some thoughts on behalf of tortured taxpayers, for consideration by a government that has promised Achche Din for all of us............
Infra bond norms a plus for Indian banks: Moodys
..............The new regulations are also expected to foster an improvement of banks' competitive positioning vis-Ã -vis housing finance and infrastructure finance companies. Moody's said banks' lower cost of funding allows them to be much more competitive on pricing. This is especially relevant for basic mortgages, where price competition is already intense, forcing housing finance companies to operate with thin margins..........
India and Canada should collaborate on global monetary reform
........In April, RBI Governor Raghuram Rajan joined other emerging-market leaders in a call for better international monetary policy coordination and centralization of liquidity swaps at the IMF. A short-term liquidity facility at the Fund would be cheaper, more widely shared, and easier to monitor than the growing welter of bilateral swaps. It would also make rapid access to liquidity in times of crisis more equitable. But the US shut the idea down, just as it did in 2011. In the face of the US intransigence on both swaps and the reform of voting rights in the IMF, India seems to be throwing in the towel. The Reserve Bank of India (RBI) recently upped its swap line with the Bank of Japan from $15bn to $50bn and India will be part of the $100bn framework of currency swaps announced last week under the BRICS's Contingent Reserve Arrangement (CRA). .............
RBI relaxes norms for loans against gold ornaments
..........."Banks, as per their Board approved policy, may decide upon the ceiling with regard to the quantum of loans that may be granted against the pledge of gold jewellery and ornaments for non-agricultural end uses," RBI said in a notification. The apex bank said it has received representations from banks requesting to increase the prescribed ceiling and to review other conditions applicable for loans against pledge of gold ornaments and jewellery, where both interest and principal are payable at maturity...........
Inflation: the war is still on
...........There will undoubtedly be pressure on the Reserve Bank of India (RBI) to reduce interest rates if inflation continues to decline. Indian companies with too much debt in their balance sheets will likely be at the forefront of these demands. Yet, it should be remembered that India still has very high inflation. A sustainable economic revival is not possible unless inflation is much lower than its current level. RBI governor Raghuram Rajan is absolutely correct when he says that there is no trade-off between inflation and growth at this juncture. (More technically, the sacrifice ratio is zero right now because the function charting inflation and growth is convex rather than a straight line.) It is heartening that finance minister Arun Jaitley has implicitly endorsed this view in his early statements.............
WhatsApp users in the country have started a campaign asking people to boycott onions and tomatoes for a week to 10 days to bring down prices. Tomato prices have doubled to Rs 80/kg after supply in the state went down following a disease in the plants. Even Himachal Pradesh has cut down on supplies, following heavy rains. Onions are currently retailing at Rs 30-40/kg. But it is expected to go up. The campaign is likely to add chillies to its list as prices have soared to Rs 90/kg. Word about the no “onion & tomato” week (from July 22-30) has been spreading like wildfire........
We hope to see some softening in rates by end of calendar year: Shikha Sharma
Shikha Sharma, managing director and chief executive officer of Axis Bank, said that corporate loan demand still remains weak, even though retail demand has held steady. Sharma expects a pick-up in loan offtake by the end of the year and also expects interest rates to start softening slowly. Edited excerpts:
Curb inflation through competition reforms
...............Competition reforms can help growth, improve governance and check unnatural inflation, at least in the medium term. Unnatural inflation mostly occurs when there are supply side constraints, which the Reserve Bank of India has also flagged. These constraints are due to various reasons, including entry barriers or lack of enforcement. Incumbents create artificial entry barriers to curb competition, which goes hand in hand with governance deficit.............
IIT, IIM grads among 27,000 applicants for 15 Bandhan posts
............“We expected this kind of response to our advertisement. One of the criteria for these jobs will be candidates’ willingness to align with the Bandhan philosophy: Working with the poor. We need people from different strata. So, while highly qualified professionals are needed, so are plain graduates,”.............
Banks Preparing for the Future Usher in A Tech-Tonic Change
.....What scores of banks and bank nationalisation could not achieve in the past four decades -financial inclusion -may become a reality considering the way banking is evolving because of technology and smart phones, which are bringing the universe to the palms of people in remote villages. That is good news for both banks and their customers. It improves profitability for the financial intermediary and makes banking hassle-free for customers. They will no longer have to wait in long queues and maintain files of bank documents..........
Ration card's out, bank on Aadhaar
.........In a circular dated July 17 addressed to banks, the RBI said that it has revised its “know your customer“ guidelines with the government's prevention of money laundering norms. One of the changes is that the RBI has now specified “officially valid documents“ to be the Aadhaar card, voter ID card, permanent account number (PAN) card, driving licence, passport, or the NREGA card. The list is identical to the earlier list except for one change. The earlier definition also included “any other document as may be required by the banking company or financial institution or intermediary“. This has now been replaced with “any document notified by the central government“............
Read - TOI
Financial inclusion again
.........What makes the planned financial inclusion move all the more curious is that the government has publicly stated it plans to work on giving more autonomy to banks. It would be interesting to know how bank boards feel about opening so many new accounts and with the kind of overdraft facilities being talked about.
Indian Banking Comes a Full Circle – No Model Is Right Model
..........How is that in a matter of few months that the regulator buys two different arguments, and grants the opposite wishes? Is the regulator framing policies for the industry, or individual cases determine what the policy is? The irony is that this is not the first time that the Indian financial sector is undergoing gender reassignment, but the second time in less than two decades. In the 90s, .............
45 years of Bank Nationaliastion in India
........On the 45th anniversary All India Bank Officers Confederation celebrated the day and said that with nationalization, the priorities of the banking sector changed from ‘Class Banking’ to ‘Mass Banking’. ’The functioning has progressed from manual operations to sophisticated technology. The social banking in our country has not only passed the test of time but also exceeded the expectations. They withstood the global collapse of many big banks in 2007 and our economy was cushioned from crumbling because of the public sector character of our Banks.................
'Post offices can boost financial inclusion'
.............. “There is a need to create financial identity in rural and semi-urban areas in order to support and strengthen financial inclusion. This can be achieved by promoting financial literacy; and, the post office can easily access this base.” He said the presence of post offices in rural areas is a major asset that can be used to attain financial inclusion. He proposed that the banking system..........
After opening doors to differentiated banks, RBI now reviews Islamic banking norms
The Reserve Bank of India (RBI) has begun the process of reviewing regulations on Islamic banking in India. The central bank has set up an internal committee to examine the matter, according to two persons familiar with the development, who spoke on condition of anonymity. Islamic banking, practiced in some countries, especially in the Middle East, follows Shariah law. The model differs from conventional banking on.....
Policy changes boost confidence in Indian banks
.....Policymakers are stepping up efforts to make lenders more resilient after the Reserve Bank of India warned of increased risks to their stability last month. The return on equity of local banks, a gauge of profitability, fell to 9.6 per cent as of March 31, the lowest since at least 2002, the RBI said in a June 26 report. Earnings shrank as economic growth near a decade-low curbed lending and led to higher provisions for bad loans. Under the new rules for long-term debt offerings, banks may.........
Payments banks for Rs.10 deposit
.............Some people call it an example of genuine liberation and reform, something that has the potential to unlock the value at the bottom of the pyramid. Other RBI watchers are happily stunned at the guidelines—this is as drastic as not launching a Mars rocket, but putting a man there! But the pushback from old banks has begun: the most-repeated argument is that these banks will not be viable, they will fail, the economics doesn’t work. In the candid voice of an old industry veteran in finance: bar one or two, most other existing banks are not really “in the money”. It’s not as if they know how to stay solvent themselves that they can push back on payments banks. In fact, this is a win-all. The new banks will force the old ones to get more efficient and get over lazy banking...................
Small, payments banks in the making
...................“We find it as a progressive move by RBI. With payments banks coming in, you will see innovations and consumers will benefit in terms of every day transactions. Remittance will become simpler and convenient. It will also open doors to sell spot loan products to the unbanked population,”...................
Six mega banks to be under RBI watch
About four to six banks may be designated as domestic systemically important banks (D-SIBs) under various buckets, the RBI said on Tuesday as it unveiled the framework for identifying systemically important banks. D-SIBs will also be subjected to differentiated supervisory requirements and higher intensity of supervision based on the risks they pose to the financial system the RBI said...........
Local area banks hopeful on RBI move
...........There are four LABs in the country which are functioning satisfactorily, said the banking regulator. However these are not considered scheduled banks, a hindrance for them in getting certain benefits. "One of the advantages of getting a scheduled bank status is that smaller loans are covered under the credit guarantee scheme. We, the LABs, are not eligible for this," said T Eswara Chandra Rao, managing director of Coastal Bank, an LAB licenced by RBI in 1999...........
India’s Payment Banks: What’s not in there – Anand Raman
...........On a final note, here is something completely out of the box to think about. The RBI exercises full control over monetary policy, printing currency, declassifying notes and managing the level of cash/liquidity in the economy. In the opinion of this writer, it would be revolutionary if the RBI simply decided to take on the job of issuing “digital currency” to the PBs against cash deposits they maintain in a pooled account with the central bank – very similar to what every BC in this country already does for its distribution / channel partners today for remittances and every Telco with prepaid talk time. Technologically it is fairly straightforward to implement. It provides 100% CRR, ensures Zero Risk. As the central bank also settles funds across the financial network, interchange and cash management fees can be reduced drastically promoting a less-cash revolution – something that the RBI has passionately argued for............
RBI to start announcing too-big-to-fail banks in Aug 2015
..............They are complex institutions but RBI says that about 4-6 banks would come under the category of Systemically Important, they will be asked to keep additional capital. All this kicks in from August 2015 and every August thereafter the set of banks will be revised to check whether some of them have fallen off or some new banks have come into the Systemically Important category. So, the worry is coming in a distance away..........
Arun Jaitley calls for World Bank governance reforms
...........“Finance minister Jaitley, while complimenting the World Bank president for setting the twin global goals (of removal of global poverty and increasing shared prosperity), also stressed on capital increase and the need for voice reforms in the bank so that not only does the bank play its global role in poverty reduction and development, but also reflects the emerging world order in its governance,”.................
Time for a SAARC bank
............This is the reason why India should take the lead for a new SAARC Development Bank (SDB). This will help supplement the capital flows that may take place through other multilateral institutions. Being anchored within South Asia, it would work as a regional development bank. The SDB would leverage its own capital base for raising tier 2 capital, as also borrowing long-term funds based upon its balance sheet strength. China is already pitching an Asia Infrastructure Development Bank to India. There is no doubt that China sees this as an opportunity to expand its project exports markets in Asia. While India could partner China to a limited extent in this concept, its own long-term future interests are more ........
A page from history: 70 years before the Brics bank
............. Much has been written about how the global power that came to dominate the post-war world got its way against the older power that was soon to be cut down to size by decolonization. But the transcripts also show how the Indians punched way above their weight. So did delegates from Belgium, Cuba, Czechoslovakia, Greece and Norway, according to the editors of the transcripts. One issue should interest all those who currently worry that the New Development Bank that will be set up by the Brics nations will be a tool of Chinese hegemony.................
POSITIVE AND NEGATIVE IMPLICATIONS AND CONSEQUENCES OF MERGERS
The talk of bank mergers is thicker in the air now, than never before. It is reliably learnt that the government at the centre is really serious this time, as this subject has been touched under Point No.129 on Page No.24 of Union Budget for 2014-15 submitted in the Indian Parliament by Hon’ble Finance Minister on 10-07-2014. So, what is in the offing? What will be the effect of bank mergers? What do mergers mean to ordinary employees? What are their implications and consequences? Whether bank mergers are good or bad in Indian context? We will analyse all these points from various perspectives hereunder............
Read........
Read........
Is the HDFC Bank dream run over?
...............Even from the perspective of last six months, HDFC Bank has been an underperformer in the markets, with both ICICI Bank and Axis Bank being the preferred choice of investors. Kotak Securities believes that its underperformance is expected to continue as both ICICI Bank and Axis Bank have been progressing well on retail loan strategy, reduced/slowed exposure in select corporate sectors, a diversified fee income and a well-capitalised tier I ratio of greater than 12 per cent.............
Incipient recovery on the anvil for India: SBI
An ‘incipient recovery’ is round the corner for the Indian economy and it is expected to clock a GDP growth rate of 5.5 per cent in the first quarter of the current fiscal amid signs of improved sentiment on consumer spending and the monsoon, says a report. As various macro-economic indicators ranging from inflation to external sector are showing positive signs, “an incipient recovery is round the corner”, said the SBI research report...........
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