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Thursday, July 31, 2014
Govt appoints S S Mundra as RBI Deputy Governor
Small banks or banks for ‘small’ people? - Vijay Mahajan
............Comparing this with the RBI Guidelines on Small Banks released a few days ago, one can see how consistent Raghuram Rajan has been and how he has implemented the idea faithfully now that he is able to, as the RBI Governor. For this he, his RBI Board colleague Nachiket Mor and the senior RBI team all deserve congratulations. The draft guidelines have only a few minor flaws and, if these are attended to, we can hope to see the rise of a new generation of financial service providers, who would help end the currently unacceptable situation in terms of gross spatial, sectoral and segmental inequalities in terms of access to financial services...........
Is RBI Honest With Money Markets?
.........``The intent is to provide sufficient liquidity to the markets, that means both short term liquidity consistent with maintaining the call money rate close to the policy rate,’’ RBI Governor Raghuram Rajan had said. But the reality seems to be different. The central bank’s efforts to funding the market with term repos, i.e., funds for a longer duration, have not helped. Because the RBI which believes that the banking system has to be deficient for its interest rate policy to be effective, is behind the curve. RBI which wanted banks to do better forecasting ...........
RBI Guidelines: A Balanced View At Last
..........It may be considered that presenting details relating to the RBI valuation may in fact lead to confusion as it may not be equal to the final transaction price. Internationally, too, specific valuation considerations are rarely disclosed, with most financial reporting aimed at allocation of the purchase price rather than how it was arrived at. Another small observation is that the disclosure requirements do not mention issue of shares/ convertible debentures. Further, issue/ transfer of CCPS is not covered. This could perhaps be an oversight, but in any case, it may be a good idea for this clause to be taken up for further debate. Overall, the RBI has certainly lived up to expectations by liberalizing the pricing guidelines and opening up the valuation of cross-border transactions to the wider principles of fair market value. It is a well-balanced move and will be welcomed by companies and investors alike.
Read - Business World
Women empowerment: Narendra Modi govt may merge Bharatiya Mahila Bank, Rashtriya Mahila Kosh
.............She said the performance of Bharatiya Mahila Bank and Rashtriya Mahila Kosh was not satisfactory and that is why government was mulling merger of the two to strengthen the lending facility to women. "There is already a women's bank in the Finance Ministry which has not worked and we have Rashtriya Mahila Kosh which too has not worked," Gandhi said in an interview. Listing empowerment of women as a priority area, Gandhi said facilitating funding needs of poor women will be one of the priority initiatives of her Ministry.......
Regulating banks: The number fixation
..........In the absence of a suspected conspiracy amongst so many banks in a particular case, should not the punitive action be in relation to the weaknesses of the general lending standards of a specific bank? In that case, should the prime accused not be the Kolkata-based nationalized bank which had reported a huge increase in bad loans some time ago?...................
Bank staffer's holiday turns tragic, loses wife & mom-in-law
Twenty-four-year-old Vitthal survived under the debris for five hours. An employee of State Bank's branch at Mazewadi in Pune, Vitthal Titkare had come to spend a holiday with his wife at her maternal home in the ill-fated Malin village. His wife, Deepali, and mother-in-law, however, lost their lives in the landslide that flattened the entire vil lage early on Wednesday .........
Read - TOI
Read - TOI
Double standard
Unlike banks and regulators in US and other european countries, in India, bank managements do not have courage to classify a wilful defaulter as a wilful defaulter. The case in point is Kingfisher Airlines. While the Consortium leader SBI has not yet classified the loan to KFA as a wilful default, one of the lender banks have classfied their portion as wilful default. RBI is also dead silent about it. But, when it comes to small loans almost all the loans defaulted are classified as wilful defaults by banks and actions initiated against the borrowers. When the KFA was solvent the banks chose to convert their debts into equities at over Rs.60 per share which is languishing at just Rs.2 today. But, the lead bank does not want to classify the loan as a wilful defaulter. It is just funny. This double standard of bank managements for reasons best known to them in dealing with corporate defaulters is the main reason for the sorry state of affairs of increasing NPAs in banks in India. Chapter 11 may suit US but not India as most of the corporate loans are given by PSBs and a large proportion of them were given not on the basis of proper appraisal but out of various external considerations. Corrupt bankers have spoiled the system and RBI should have taken action against such bankers. So, there is merit in setting up of a body to oversee the functions of RBI and fix accountability so that corruption at bank level in dealing with corporate loans can be prevented.
- S.Santhanam
Trust in 'governance'
My View on "Trust deficit":
While recording this response, I remembered a recent VITLINFO caption: "T(rust) lost between U and I". Nation cannot survive without building trust in 'governance' in the minds of the majority of its population.
- M G Warrier
RBI will offer clarity on age bar for private bank chiefs soon: Sobti
..................."RBI has not yet come out with any policy as far as the age bar for private sector banks is concerned. But we understand that they are working on a policy and that we should have one shortly, sooner than later. Once that policy comes then we will know what happens in the future. So, as things stand today, the extension is for one year, which is till January of 2015. But we expect, .........
RBI paper mill to save Rs 1,280 crore of imports annually
.........The new paper mill has a production capacity of 12,000 metric tonnes and will cost Rs 1,500 crore to build. It is expected to cut India's import demand by more than half. India, which prints more than 20 billion notes annually, requires about 22,000 metric tonne of bank note paper. According to information sourced through a Right to Information request from Bank Note Paper Mill India Pvt Ltd, an RBI subsidiary, there is likely to be a delay of about one year in setting up the mill from the original schedule of April 2014.........
J&K continues to be focal point for fake currency, drugs smuggling cartels
.......As per the official data available with EXCELSIOR, Rs 1.16 crore worth counterfeit currency was seized during the past four years (2011, 2012, 2013 and 2014 (up to June 30) in Jammu and Kashmir. During the year 2011, a total of 6855 fake currency notes were seized in the State. Of these 2320 were recovered by different branches of RBI and 4535 seized by police. Total value of these fake currency notes was worked out at Rs 38,63,590 and in this connection 39 FIRs were registered against 73 accused persons. In 2012, a total of 7201 fake currency notes worth Rs 31,74,350 were seized and accordingly ...........
RBI Likely to Keep Interest Rates on Hold in August: HSBC
.............In the June 3 policy review, the RBI left key rates unchanged and unlocked about Rs. 40,000 crore of funds by reducing the amount of deposits banks are required to park in government securities. This was the second time in a row that interest rates were left unchanged amid demands for moderation to spur growth. The RBI's next credit policy review is scheduled on August 5.........
A rate cut seems unlikely
..........A couple of years ago, RBI decided there would be eight policies to reduce the noise in the market and make things more predictive. But when there was the forex crisis last year, interventions brought in some correction. The latest stance is there will be six policies with the right to intervene when required. But the direction seems to be clearly on reducing uncertainty in the markets as when players start to guess every time, they tend to create distortions. The content of policy has changed. There was a time when the policy document touched on every aspect of the financial system and there were sections on bank lending, prudential regulation, market development, ULBs, etc. It was a comprehensive review and way forward for the entire system. This has also been dispensed with as RBI has separated all reforms and financial sector issues from monetary policy. The credit policy is now just a call on monetary policy measures with.......
Bankers split over rate cut
.........“It's a close call for the RBI in August. Weak food inflation in June allows the central bank to give more time for the government's supply-side measures to work. However, headline inflation is still too close to the year-end target to dismiss the prospect of a rate hike. In the end, we think the RBI is likely to pause again in Au gust to get a better sense of the inflation trajectory,“ .............
Read - TOI
A good time to start reducing policy rate
............In other words, the economy is trying to enter a positive territory. Given this scenario, one would expect RBI to move towards ensuring availability of adequate liquidity. The central bank has already taken cognizance of it. The budget has a provision for “lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and priority sector lending”.................
Andhra govt exploring other options on farm loan recast
.............. “If RBI refuses to recast the loans, the only alternative is to clear the loans of borrowers and take money from the government at a later date, as promised.” He added if the borrowers didn’t repay the loans, they might have to pay interest on the overdue, as these loans wouldn’t get interest subvention and might surpass the loan waiver cap of Rs 1.5 lakh a family, as fixed by the state government. Earlier, RBI had told state government officials in case it considered restructuring the loans, it would extend the facility only to.....
Rural India does not need loan waivers
...............Banking being a Central subject, there is a clear need for an RBI diktat against using public institutions — which are repositories of public money — for acts that can vitiate the repayment culture. Should public institutions like banks be used for mere political gains? To carry forward the principle of “minimum government and maximum governance”, what banks need is autonomy in its true sense. However, many feel even the Central bank is only constitutionally independent, and the Government has the power to direct its actions. But this needs to change. Election manifestos of political parties, which carry such populist schemes, should be treated as a party liability and not a sovereign liability of the state with taxpayer’s money..........
India must build a credit history database
.............India’s financial inclusion strategy has failed primarily due to information asymmetry: The inability of institutions to gather information about the repayment capacity of a borrower pushed these institutions to be extra cautious in extending credit. Many expected that micro finance schemes would solve this problem by creating social networks. These networks, they hoped, would act as replacements, establishing the link between the users and the institutions by facilitating...........
FinMin sets up panel to give more teeth to debt recovery laws
.............The members of the panel entrusted to revisit existing debt recovery laws include Anurag Jain, Joint Secretary Department of Financial Services, Former law Secretary V K Bhasin, representatives of DRT, RBI, IBA and bar associations, sources added. Besides, panel has been also assigned to draft as new statute with harsh penal provisions for wilful defaulters. The panel was set up to plug the loopholes in the current legal framework for debt recovery..........
Indian banks start to shift loan books from Singapore after facing aggresive scrutiny by Monetary Authority of Singapore
.........Officials from commercial banks said these norms have been in place for a while, but following the global financial crisis, MAS has been closely monitoring the situation. Indian banks had brought this issue to the notice of the finance ministry following which the Reserve Bank of India has been asked to take up the matter with MAS. According to an RBI official, a substantial portion of Indian banks' book comprises loans that are not for funding operations in the Singapore market...............
Russian, Indian Central Banks Could Use National Currencies in Payments
The Bank of Russia and the Reserve Bank of India have agreed to set up a working group to devise tools to use national currencies in bilateral payments, the Russian regulator said Wednesday. The group, that may involve representatives of banks and also ministries and agencies of both countries, will be controlled by the central banks of Russia and India..........
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