Finance Minister, Arun Jaitley, will address the Reserve Bank of India board here on August 9 amid expectations that the central bank will complement government actions by reducing the rates to boost growth. “The meeting has been scheduled for August 9 where he would be addressing the board members and talk about announcements made in the Budget to perk up growth,” a source said. Jaitley, who presented his maiden Budget, is likely to inform the RBI board about the steps taken to contain the fiscal deficit and may underline the need to reduce the interest rates to promote growth. It has been a custom that the Finance Minister addresses RBI board, consisting of RBI Governor and existing three deputy governors, after the Budget..............
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Monday, July 28, 2014
Fiscal correction not to be trifled with - Dr.S.S.Tarapore
...............A seminal idea is the setting up of an Expenditure Management Commission (EMC) which will give an interim report in the current financial year and a final report later. It would be preferable if the Commission were to give a series of reports on specific expenditures using the 80/20 rule by concentrating on select areas (say, 20 per cent of all areas) which have a potential for substantial savings (say, 80 per cent of all savings). Further, the Commission should look into..........
Explaining expectations - Dr.Subir Gokarn
..............Not very much, if one were to go by the Reserve Bank of India's quarterly household inflation expectations survey. The median expectation for the rate of inflation one year ahead is depicted in the graph. Expectations clearly dipped sharply during the 2008 financial crisis, but this was a period of strong monetary stimulus. They rose steeply as the crisis appeared to abate and then remained..............
Is it Finacial Inclusion or Exclusion? - Dr.T.V.Gopalakrishnan
..........All households can also be forced to ensure that from whom soever they take some service should be having bank account. The banks should be given separate timing and a separate set off staff with a social bent of mind to open the accounts. The people should be attracted to banks and banks should be willing to receive them heartily and happily. I think the approach.........
Monetary policy and its formulation may undergo a sea change
..................Much to the chagrin of the Reserve Bank of India and its authorities, the central government has started the process to rework the monetary policy formulation in line with the Indian Financial Code as suggested by the Financial Sector Legislative Reforms Commission. The objective is to come up with modern monetary policy framework with clearly set targets, accountability in decision making and actions open to judicial review.............
The Poverty of Economics - T C A Srinivasa-Raghavan
...............The question that needs asking now is this: how well equipped is modern economics to handle the new problems arising from this global plenitude of labour and capital? After all, it developed as a discipline based on the analysis of scarcity. All its tools are designed to deal with scarcities, not surpluses. My economist friends say economics has been concerned with scarcities in .........
Policy triggers and wild cards
................ If the monsoon doesn't misbehave from now on, the "glide path for inflation", as Raghuram Rajan calls it, will be along the lines the RBI chief is hoping for. Despite the lower inflation numbers for June, most observers think the RBI will maintain status quo in the next policy review in August. The dangers of higher food inflation, and also of a possible spike in global crude, could mean the RBI adopts a wait-and-watch policy. Some ..........
RBI School Quiz at GITAM
.......The quiz consists of questions pertaining to the RBI, Indian banking history and its achievements over the last 79 years, banking, accounting, finance, India’s economy, trade and commerce apart from general knowledge. The winning teams from each centre will join the other winners from across South India. The zonal round is scheduled for November 7 in Chennai. Pradeep Atmaram from Bangalore will host the show as quiz master, while RBI governor Raghuram Rajan is expected to distribute prizes to the winners...........
College conducts panel discussion on union budget
Sri Sairam Institute of Management Studies conducted a panel discussion on ‘Critcal Union Budget Analysis -2014’ recently. It was presented by three eminent speakers, Dr. R. Kannan, economist, former principal advisor, RBI and former member, IRDA;........
Two bank officials booked for transferring Rs 3 lakh ‘by mistake’
.......The banker instead of transferring the money to the company’s account credited the money to wrong account number. “According to the Reserve Bank of India (RBI) rules, my amount should be credited back if the bank officials mistakenly mentioned wrong account number,” SK Gupta, complainant, said. Gupta said: “When I contacted Amit Aggarwal, in whose account the money was transferred, he denied returning money. The officials of the bank also denied providing me any help.”..........
Banks hounded following panic over fake currency
.............In a recent example, a chief manager of a nationalised bank in the city, had to tender alternative note of Rs 50 denomination, when a vegetable vendor sought for an exchange. According to the bank official, traders strongly believe that, currency note in the denomination of Rs 50, with the picture of bunch of flowers on the top right edge, is fake. It’s not just the vendors. Even at malls, government offices and buses, this note is inspected by the receiver who will hold it against the sun, before rejecting it. There have been many instances when people have had to produce another note to replace the one with the flower.............
‘या चिल्लर काढूया’
व्यवहारात चलनी नाण्यांची सातत्याने जाणवत असलेली टंचाई व्यापारी व ग्राहकांच्या पुढाकाराशिवाय संपणे शक्य नाही हे ओळखून जळगावमधील एकता रिटेल किराणा मर्चंटस पतसंस्थेने 'या चिल्लर काढूया' अभियान आयोजित केले आहे. ..............
A house by the Thames
........."Most Indians began investing in the London property market after the crash in global property prices in 2009," says Sunil Mishra, CEO of Karvy Private Wealth. This was helped by the Reserve Bank of India's liberalised remittance scheme that allowed an individual to invest up to $200,000 in a financial year in various instruments, including real estate, abroad. "There was an increase in the last three to four years in the number of high-net-worth individuals who came to us with real estate queries for London," says Mishra. Last year, the Reserve Bank of India reduced the limit under the scheme to $125,000. But this is still enough to get you started. It means that a family of four can cumulatively invest up to $500,000 per year.......
PRATHYASA - A bulletin of Reserve Bank Retired Employees Association, Kochi
PRATHYASA - A bulletin of Reserve Bank Retired Employees Association, Kochi - July 2014 issue.....
The Vijay Mallya Story
........The book under review is a vivid account of the colourful life and troublesome times of Vijay Mallya — a liquor baron who developed wings and soared into the airlines business and crashlanded causing untold agony to himself and his employees..........
Read - FPJ : Book Review by P.P.Ramachandran
RBI says banks not allowed to trade in bonds for infra lending
Banks will not be allowed to trade bonds issued by other lenders for infrastructure lending that would be exempted from mandatory reserve requirements under the guidelines issued last week, said Reserve Bank of India (RBI) deputy governor R. Gandhi. The RBI last week allowed lenders to issue bonds for infrastructure lending, but barred the banks from holding each other’s bonds................
State to lay down rules for public interest disclosure
.........SLCC convener M K Verma, who is also the Regional Director, RBI (Bihar and Jharkhand), said on recommendation of financial stability and development council (SFDC), RBI has decided to convene the SLCC meeting every three months now onwards instead of half yearly meeting. He said in the wake of present drive for financial inclusion the role and importance of NBFCs could not be undermined. "Various state governments must understand the relevance of NBFCs in stability of country's economy and regulators like SEBI, Insurance regulatory authority of India, Registrar of Companies (ROC) national Housing Bank and Institution of chartered accountants of India must expedite the NBFC though under proper regulations," ..........
Change in rules by banking body challenged in High Court
.............During the hearing, the Bench also raised questions about the validity of the 10 per cent reserve list clause, which was not mentioned in the advertisement for vacancies. The petitioners have pointed out that the matter involves the career of a large number of candidates who have qualified the written exam and interview. “The IBPS has contradicted its own earlier notification. It has violated the fundamental right of equal opportunity, as no one can change the rules of game after starting the process,” said petitioners Rakesh Kumar, Shruti Yaksh and Vikram Kumar..............
Govt asks IDBI Bank, UBI to plan merger
After years of debate, the government has set the ball rolling on merger of public sector banks, asking IDBI Bank and United Bank of India to prepare a consolidation plan. This is, however, expected to be preceded by State Bank of India taking its subsidiary State Bank of Patiala into its fold..........
Read - TOI
Read - TOI
State Bank of Patiala launches CSR initiative for girl child
...................S.A. Ramesh Rangan, Managing Director announced that the Bank will contribute a fixed amount for each opening of new saving, current account and transactions put through electronic or alternative modes of transactions towards fulfilling its social obligations as a responsible corporate citizen. The Bank will contribute Rs 50 each for every current account opened, Rs five for each new savings account and 10 paisa for each transaction on the alternative delivery platform like internet banking, mobile banking, ATM transactions and point of sale. Similarly Rs two each would go to this corpus for every new user of internet and mobile banking. Rangan made this announcement while inaugurating 25 branches in one go through video conferencing .............
Payment banks to be new revenue stream for telcos
............“The move will boost mobile banking services and financial inclusion. Mobile payments could not be expanded as telcos were unable to offer cash-out transactions. Though RBI’s proposals don't allow telecom operators to set up banks to lend, we believe they will allow cash-out transactions, which enable a consumer to withdraw at any location. This can be a game-changer to boost mobile payments and financial inclusion in India as in Africa,”.......
Profitability of PSBs under stress
State-run banks' profitability in the first three months of this financial year have remained under stress. A rise in bad loans, higher provisioning and loss on sale of investments have dragged down their earnings growth. ........
RBI’s questions on farm loans worry state
.............The government will inform the RBI that the farmers have already started cultivation and they need money to continue their agriculture operations. Meanwhile, the RBI is posing questions to its Hyderabad branch to send details with regard to waiver of crop loans. A few days ago RBI had asked its Hyderabad branch to send mandal-wise crop yield in Andhra Pradesh. Now, the RBI has asked the Hyderabad branch to send mandal-wise loan disbursement to the farmers with their account numbers and quantum of loan they have taken, including from co-operative and rural banks.........
RBI slaps total of ₹1.5-cr penalty on 12 banks in Deccan Chronicle Holdings case
...........“After considering the facts of each case and the individual bank’s reply, as also, the personal submissions etc., by some of the banks before its Committee of Executive Directors, the Reserve Bank came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty,”.......
Govt & banks not doing enough to recover NPAs: Employees’ body
..........."There are no serious efforts to recover the banks' money with the defaulting big corporates. Their assets should be confiscated." "Our data also suggest that R50,000-crore NPAs are related to big borrowers who have borrowed over R10 crore and above. Why are the banks silent over this? This is public money," ...............
The banking safe zone
..................These are some practices that can escape the scrutiny of the Reserve Bank of India. To make sure that banks are really in the safe zone, it would be ideal to factor in the assessment to be given by the banking codes and institutions such as the Insurance Regulatory and Development Authority, Securities and Exchange Board of India and so on.
Small banks may play a bigger role
..........The removal of geographical restrictions will make these banks profitable. Otherwise, making these banks profitable, while restricting its operation to some districts, would be highly challenging in the initial years thus making it quite difficult for the promoter to dilute his stake to 40% within three years and further down to 26% within 12 years as stipulated by RBI's guidelines. Critics argue that...........
Small banks: lessons from local area banks
...............There are four LABs in the country. They have been performing satisfactorily on most banking parameters, and have achieved deeper penetration without posing systemic risk. Two LABs failed in their early days but that instance was handled effectively. RBI would greatly benefit by reviewing its handling of LABs. Three major aspects need attention: ownership, capital and stability; systemic issues and concentration risks; operational issues of business model, freedom and autonomy...........
Do we need more banks to push financial inclusion?
................"Both payments banks and small banks are niche or differentiated banks; with the common objective of furthering financial inclusion. While small banks will provide a whole suite of basic banking products, such as deposits and supply of credit, but in a limited area of operation, payments banks will provide a limited range of products, such as, acceptance of demand deposits and remittances of funds," ............
Differentiated banks: has their time come?
.............There can be no two opinions on the value of these differentiated banks to the Indian financial system. But the key question is how many serious promoters will finally emerge? The business model of Payments Banks may not be attractive enough. These banks can accept current and savings bank deposits but cannot undertake lending activities. After meeting the reserve requirements (CRR and SLR) like any commercial bank, they will have to invest in government securities. The returns in terms of the spread income may not be attractive enough. Although the guidelines do not say so,......
RBI order on 'Small Bank' not ideal for present needs: Samit Ghosh
..............."The solution lies in promoting specialised banks for financial inclusion which can provide directly - savings, loans and remittances, and as third party service provider (insurance and pension). (It is) similar to the 'Small Bank' recommended by the RBI recently but without any geographical restrictions. The restriction should be on occupations such as workers, micro-entrepreneurs and marginal farmers,....
Have money, have bank
..............While small banks will provide a bevy of basic banking products, such as deposit taking and lending, but in a limited area of operation, payments banks will provide acceptance of demand deposits and remittances of funds but will not be allowed to undertake lending activities, the RBI’s draft norms say. “While the initiative of the RBI to come up with multiple models of banking is laudable, one hopes that this round of broad-basing banking system will and push the dream of financial inclusion deeper inside India. Needless to add, previous attempts to increase banking penetration in the last 5 years to achieve this objective has been dismal,” ...........
SBI, PNB, BoB & BoI preparing blueprint to identify takeover targets
....................The top managements of the four banks are in the process of preparing a blueprint that would explain the rationale for absorbing one or two entities, said the people cited above, none of whom wanted to be named. Employees at these state-run banks are engaged in the exercise after finance minister Arun Jaitley gave the lenders the go-ahead to decide how they would strategise to remain relevant in the emerging economic scenario...........
What ails foreign banks in India?
............With inflation moving south and economy showing faint signs of recovery, it will be interesting to watch how foreign banks play the growth in Asia’s third largest economy. Some of them may end up paying the price for over aggression and reading the tea leaves wrong............
Child plans to make bigger comeback
Child plans are making a bigger comeback in the Indian insurance market, with the trend of buying plans for young children and infants emerging. "We believe this trend is emerging because of increased sensitivity of young parents towards the rising cost of education. For example,........
Deutsche Bank, HSBC accused of silver price manipulation
.............."The extreme level of secrecy creates an environment that is ripe for manipulation," according to the complaint. "Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits."....
Canara Bank launches new products
Canara Bank Chairman and Managing Director R K Dubey on Saturday launched a new set of technology-enabled initiatives like mobile-Wallet, easyCash and P-serve which will provide more flexibility to customers for performing banking transaction through technology channels..........
Exim Bank wants RBI to hike leverage ratio
.................“We have been requesting RBI to recognise us as a special case of a development finance institution which helps the country’s interests,” he said, adding it has been requesting for the leverage to be increased to 15 times of the NOF. At present, the bank has to depend on government infusion to increase its capacity to lend, he said, adding that it is expecting an infusion of Rs. 1,300 crore this fiscal from the government............
Systemically Important Financial Institutions
.........With some changes, RBI has adopted the methodology put forward by the Basel Committee. After assessing banks on indicators such as size and interconnectedness, the central bank will give a score for relative systemic importance. Banks with scores above the cut off, which is to be decided, will be termed as D-SIBs. Such banks will..........
SEBI chief: Lesser dependence on bank funding key to growth
..............The SEBI Chairman said even as made clear by the RBI Governor, if “we want the country to grow at the pace that we all of us aspire to”, then the “dependence upon bank financing has to come down”. When compared with countries of India’s size or which had grown faster than India, it would show that sources of funding other than bank funding were needed. SEBI’s effort was to tell people to how to do it, he added. Sinha, while cautioning industrialists to apply their mind seriously about entering the capital markets to raise resources, said if entrepreneurs were interested in doing so, it was SEBI’s job to provide the necessary advice/clarifications.........
Pre-paid forex cards: Money changers told to follow strict due diligence
..................The RBI has issued the above mentioned directive as it has come across cases of some authorised dealers/ full-fledged money changers neither exercising due diligence nor adhering to KYC norms while selling prepaid foreign currency cards (issued by a few select banks) to their customers..........
Demand for RBI action against sugar company fraud
The former Minister and president of Hyderabad Karnataka Horata Samiti Vaijnath Patil has asked the Reserve Bank of India (RBI) to launch an inquiry into the alleged financial irregularities and fraud by Chincholi Sugars and Bio Industries while raising a loan of Rs. 210 crore from four banks. Releasing a copy of the complaint............
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