Good going, Governor

The banks may be owned by the central government, but the money they lend belongs to the public. Governor Rajan has done well to stick to his guns, and finance minister Jaitley in not pressuring him to do otherwise

.............Given that the state will now contest RBI’s claims with its own set of data, it is obvious the chapter is far from closed, and a lot will depend on whether or not the central government weighs in favour of the state or remains a neutral observer. But what is important is RBI has not just learnt the lessons of the last Rs 60,000 crore loan waiver just ahead of the 2009 general elections—farm repayments slowed the next year also as farmers realised banks could be arm-twisted—it is willing to do something about it as well. It is not as if, in the past, RBI has not tried to block the political class from taking matters in its own hand; it is just that it has been quite unsuccessful. In Andhra Pradesh, RBI was helpless when the government said that loans to MFIs need not be repaid as they were at usurious rates, though RBI tried to fix things later through a committee tasked with regulating MFIs. .........

Read - FE Editorial

RBI's action is unquestionable - Dr.Yerram Raju

My View on t "Loan Waiver: Raghuram Rajan's RBI puts spanner in ...": 

In a Round table of Farmers organized by the Farmers Rural Science Foundation and the Confederation of Kisan Organisations during the first week of July this year that was well attended by farmers from both the States of Telangana and Andhra Pradesh, farmers responded to a question whether they wanted loan wavers or more timely loans the reply was affirmative to the latter. RBI's action is unquestionable at the moment for its investigation revealed the true position. 

- Dr.Yerram Raju

RBI query jolts AP govt over record paddy production amid drought

.........The RBI said the Directorate of Economics and Statistics figures show that the state achieved record production of paddy last year, but the state report says 572 mandals were affected by cyclone, heavy rains and drought. The RBI wanted to know how record production of paddy was possible, when almost all the mandals were affected by cyclone or drought. The RBI letter said that according to the Directorate of Economics and Statistics, all mandals yielded more than 50 per cent paddy. It added that if............

Read - Deccan Chronicle

NSEL crisis: Lessons aplenty for everyone

File photo

It was a hot summer day three years ago, May 2011 to be precise. A group of top financial regulators in the country met at the ivory-coloured tower on Mint Road that housed the headquarters of India's central bank. D Subbarao, then governor of the Reserve Bank of India (RBI), chaired the meeting at which top regulators of stock markets, insurance and pension were present. The group, known as the Sub-Committee of the Financial Stability and Development Council (FSDC), reviewed macro economic and financial sector developments, focusing on issues related to systemic risk. One of Rao's deputies was a woman named Shyamala Gopinath, in her late 50s. Gopinath raised an important issue. She was worried about a new entity called National Spot Exchange Ltd (NSEL), calling itself an exchange was trading in agricultural, industrial and precious commodities, and seeing increasing interest among small investors and speculators. She feared ............

Read | Business Standard

Monetary policy: A rate cut mirage

......................No central bank, least of all RBI, operates in a political vacuum and the last policy statement is best interpreted as another salvo in the ongoing game of cat and mouse between RBI and North Block (where India’s finance ministry is housed). The deliberate downplaying of latent upside inflation risks and emphasis on the scope for rate cuts provided the appropriate fiscal policy, must be viewed as an understandable, even laudable, attempt by RBI governor Raghuram Rajan to establish a co-operative equilibrium with the new National Democratic Alliance government. Finance minister Arun Jaitley’s budget, delivered on 10 July, however, is likely to have left Rajan underwhelmed. .............

Read - Mint

Small Banks Are Here, But Are They Dead On Arrival?

............But if there are questions of viability for these institutions, it would be difficult to comply with the rules. The central bank has moved swiftly ahead with Governor Raghuram Rajan’s desire to deliver on his promises. But the minds of the conservatives that frame the rules at Mint Street are moving at snail’s pace. The proof of the soundness of the rule will reflect in the number of applicants, or the amount of easing rules the applicants lobby for.

Read - ET

Will Lady Luck Finally Smile on BoB's Mundra?

The 4-month wait of Bank of Baroda chairman S S Mundra may come to an end this week.
The government is likely to announce the replacement for RBI deputy governor K C Chakrabarty, who quit a few months ahead of his scheduled retirement. It is said that just one signature, that of the prime minister, is awaited. Had the government notification not come before the end of the month, he would have lost the opportunity to be a central banker since he is retiring this month end. Rumour mills churn out a story saying CMD of a Delhi-based bank, known for his never-say-die attitude, is still hoping and lobbying for it.

ET

Trust deficit

.................The need to keep managers and workers equally satisfied and secure for improving productivity has been brought out well in the article. The conflict between those who want to treat employees as partners and those who want to exploit labour will continue as long as the ownership of resources and laws governing their management continues to be in the hands of those who represent the latter......

Read | Business Standard

LIQUIDITY MANAGEMENT - RBI's Experiment Turns Volatile

The Reserve Bank of India's new liquidity management experiment backed by deputy governor Urjit Patil panel's monetary framework has created more volatility in the money market than reducing it, making some believe that it is tightening of interest rates by stealth. Interbank rates for overnight money which are supposed to be closer to the policy rates, in this case the repo rate -the rate at which the central bank lends to banks -have been going widely off the mark in the past three months......

Read - ET

Black Money Floats Despite Currency Withdrawal Drive

The Reserve Bank of India’s drive to weed out pre-2005 currency notes does not appear to have helped flush out much black money from secret vaults as it shredded notes worth less than Rs 15,000 crore till June. Although the central bank had said while launching the exercise in January that it was aimed at reining in counterfeit notes, some experts also saw it as an effort to flush out black money. The value of notes collected and shredded as part of the drive in the first six months, however, make the exercise appear rather routine. RBI shredded 6.18 crore 1,000 rupee notes amounting to.............

Read - ET

RBI survey finds 47% of banking agents ‘untraceable’

................A recent survey conducted by the RBI College for Agriculture Banking and the Consultative Group to Assist the Poor (CGAP) reveals that not only were a substantive number of banking agents untraceable, but that even among those found to be working, a significant number have never conducted even a single transaction. According to the survey, which tried to contact 2,358 agents across 15 large states in the period between September and November 2013, only 53 per cent could be reached and the remaining 47 per cent could not be reached...........

Read | The Indian Express

Bank of Baroda installs cash-recycling ATMs

............These ATMs allow cash recycling operation where by the deposited cash can be dispensed in future transactions. This helps in improving the efficiency for the bank ATMs ..........

Read| Business Standard

Vijayan Spoke His Mind, But Look For That Caveat

Insurance regulatory chief T S Vijayan's first major outing since he took charge was revealing in more ways than one. The man who had troubling last days at the Life Insurance Corporation showed signs of overcoming his reluctance to air his views. He was quite open about many things that the audience at the foundation day celebration of New India Assurance were not prepared for. His topics ranged from transparency in insurance products to the need for foreign direct investment in insurance sector and many more. To hear the views of the regulator at public forums is what everyone eagerly waits for -be it the industry or media. But to everyone's disappointment, his disclaimer was “these are my personal views“ and it should not be deemed as the regulator's view. An insurer present at the function said there is no insurance that these would be taken as personal views.

ET

Staying Back Late? Top Pvt Bank Wants To Know Why

A top private sector bank seems to have created a flutter by asking its staff to send a mail justifying why they had to stay back longer than normal working hours. The flummoxed staff, which did not get the instructions in writing, is wondering whether it is to make them efficient, or that if they send a mail, it would be part of the record which could come back to haunt them at the time of performance review. Many have decided, for the time being, not to write any mails since nothing has come from the officials.

ET

Aspirants can chase more than one lakh jobs

Finally, 'acche din' seems to be around the corner for government job seekers. At least 80,000 jobs will be available in the banking sector by the end of this year. The reason behind this spurt is that the number of nationalised banks in the country has now gone up to 21. Apart from the banking sector, thousands of jobs will also be available in insurance, Intelligence Bureau, Staff Selection Committees and various other sections. Since there are a lot of vacancies in these sections, aspirants are making a beeline..........

Read - DNA

OLD MONEY MEETS NEW - GOLD AND BITCOIN COURTSHIP PICKS PACE

Call it bitgold. It's what you get when you combine bitcoin, one of the world's newest would-be currencies, and gold, one of the oldest. Add mistrust of centralised authority, a dash of rebelliousness and a dollop of profit motive and you might have the Independence Coin, the first gold-backed crypto-money, unveiled this month at F reedomFest, a liber tarian convention in -where else? -Las Vegas.............

Read - ET

RBI suggests Sebi action against 'wilful' defaulters

............To facilitate such restrictions on entities found to have 'wilfully' defaulted on bank loans, the Reserve Bank is exploring ways to share details of these defaulters with Sebi on a real time basis, sources said. Subsequently, these defaulters can be barred from raising funds through capital markets, as also through issuance of securities or other avenues under the jurisdiction of the Securities and Exchange Board of India. The matter is yet to be discussed by Sebi internally and ...........

Read..........

SBI selling assets before they are ready to be classified as NPAs

..............In line with the revised guidelines of the Reserve Bank of India (RBI) on managing sticky assets, SBI, India’s largest lender, is selling loans where interest repayment is delayed by more than 60 days to asset reconstruction companies (ARCs). Loan repayments that are more than 90 days overdue are classified as non-performing assets (NPAs) under existing regulations..............

Read - Mint

Banks' Gross NPAs Rise to 3.85 Per Cent, State-Run Lenders Lag: Care

..........Its estimate is based on the study of the 26 state-owned banks as well as 13 from the private sector, including all the big banks. "Overall Gross NPA Ratio has risen from 3.26 per cent as on March 31, 2013 to 3.85 per cent as on March 31, 2014," the rating agency said in a report. The 3.85 per cent number would have been higher by 0.30 per cent, but for the sale of over Rs 10,000 crore of assets by the banks to the asset reconstruction companies in the latter part of the recently concluded fiscal year, it said. A December 2014 report by the Reserve Bank of India (RBI) had pegged the overall system's gross NPAs at 4.2 per cent in ..............

Read..........

Who Benefits From India's New Budget

.......To encourage banks to extend loans related to infrastructure projects, the Reserve Bank of India will exempt banks from certain cash and liquidity requirements in relation to funds deployed for use on longer-term infrastructure projects. This measure already went into effect and should have an immediate impact to ease the burden............

Read - Forbes

Rate cut? The wait just got longer

.......The RBI's last policy communique hinted at a change in its monetary stance, as the underlying tone took a relatively dovish leaning. The unchanged repo rate at 8.0 per cent was vindicated by a balanced assessment of the growth-inflation outlook, which was primarily based on anticipation of appropriate policy actions by the new government. However, .................

Read | Business Standard

August too early for rate cut by central bank

............The respondents to the BS poll unanimously said they expected the status quo. Amid an uncertainty over monsoon, if the central bank keeps the repo rate - the rate at which RBI lends to banks; currently at eight per cent - unchanged, it will be a third straight policy review in which it will do so. The reverse repo rate is seven per cent at present. The retail inflation rate had stood at 7.3 per cent in June, compared with 8.28 per cent the previous month. The current level is under RBI's January-end projection of eight per cent, though above its comfort level.....

Read | Business Standard

RBI cancels licenses of six Delhi-based NBFCs

...........Following the cancellation of registration certificate, these companies cannot transact the business of a non-banking financial institution, it added. However, the RBI did not provide any reasons for the cancellation of certificate of registration..........

Read - Deccan Herald

Brics and straws

........So, unless one of the other Brics becomes a significant contributor, the Brics Bank may face problems 10 years down the line. But suppose not. Why should the Brics Bank be any better than the World Bank at loaning money to needy countries? Is it envisaged that it will lend on easier terms or less stringent collaterals or softer investment criteria than the World Bank, let alone commercial lenders? If so, is that a wise strategy?.....

Read - FE

Rajiv Lall to be MD of IDFC's bank

A month and a half after the board of directors of IDFC nominated him as executive vice-chairman of its to-be-launched bank, Rajiv Lall has also become the latter entity’s managing director. This ends speculation over whether IDFC would appoint an external candidate as MD. “I will be heading the new bank as MD and will step down as chairman of IDFC. Both IDFC and IDFC Bank will have separate non-executive chairpersons,”...........

Read | Business Standard

IDFC lists 4-pillar approach for banking foray

...........“As a bank, we will be the best capitalised bank of any start-ups in the history of Indian financial services sector. We expect to start the banking operations with a capital of Rs.12,000 crore. Out of our (IDFC) total net worth of Rs 17,000 crore, Rs.5,000 crore will remain with the parent and the rest will be allocated to the banking entity. In this, we will have allocated or set aside enough to protect us from the worse case possibility in terms of stressed assets,”........

Read - The Hindu

Taxman to write polite letters to assessees

.......“The practise of writing letter to a taxpayer who has not reported his or her transaction to the I-T authorities is here to stay and we know its importance. It has been decided that letters from the taxman should be more polite and courteous in tone and tenor. In all cases, the department would take it initially that the taxpayer made an inadvertent mistake in not reporting the transaction under question,”............

Read - FE