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Thursday, August 14, 2014
‘Venal Politicians’ Exploit the Poor to their Advantage: Rajan
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Raghuram Rajan and India’s cursed equilibrium
.....“The poor and the under-privileged need the politician to help them get jobs and public services. The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply. And the politician needs the votes of the poor and underprivileged. Every constituency is tied in a cycle of dependence, which ensures that the status quo prevails.”.........
Is crony capitalism the next target of Raghuram Rajan?
..........The truth is that we are years away from knowing if Modi is the moderniser he claims. Rajan, though, can play a key role in keeping the prime minister on the right track. The central bank governor is proving himself to be an adept politician; on Monday he was careful to praise Modi’s plan to create bank accounts for the poor -- into which aid cash can be transferred -- even while implicitly criticising the government’s decision to kill the WTO deal. If Rajan can make a dent in the billionaire problem he’s long lamented, he may just make India -- and the world -- a more vibrant place.
India needs bankruptcy code: Raghuram Rajan
..."Do we need a bankruptcy code? absolutely! It is something I have been saying for six years in reports that we need a bankruptcy code," he said while speaking at an event here late this evening. Replying to a specific question on the need for bankruptcy laws, Rajan said he was hopeful that the code embedded in the amended Companies Act passed last year will help things, but it has been stuck due to some issues which need to be worked out. It may be noted that ..........
RBI Governor Raghuram Rajan cautions against merger of unhealthy banks
...........“If you merge two unhealthy banks, you create a big unhealthy bank which will create bigger problems for the economy. If you merge an unhealthy bank with a large healthy bank, and the large healthy bank is not able to swallow the problems and will land the large healthy bank in problems,” Rajan said. Speaking on the governance issues, Rajan called for the separtion of the functions of the chairman and CEO of the public sector banks “I think the government and the RBI are together are working on improving governance, because it is government's prerogative because they own it. But as a stability regulator, we also have to figure out and offer suggestions on how this can be done. There are..........
Tomatoes, housewives and Raghuram Rajan
..........Why? One possibility is that consumers form their inflation expectations based on the price movements of commodities they buy frequently. Vegetables are one example. The price of onions—or tomatoes in July—is a conversation starter in most households across the country. The persistence of high inflation expectations shows that consumers are not yet convinced the authorities are winning their war against inflation.....
The DBT alternative
Reserve Bank Governor Raghuram Rajan has made what is probably the most cogent case in favour of direct benefit transfers (DBT) to pull the poor out of poverty. He has gone beyond the familiar argument that transferring money into Aadhaar-enabled bank accounts is a less leaky and market-distorting way to help the poor than providing them under-priced grain, fuel and essential public services. In doing so, he has pointed out..........
High interest rates will help in long-run: Rajan
.......Rajan, who has been under fire for keeping the interest rates high for long, explained that in the face of bottlenecks on supply sides, the RBI is seeking to keep some control over the demand side by keeping the interest rates high. "We're saying let us keep interest rates to control demand but also bring inflation down steadily without a dramatic disinflation over a quarter or so. It also means we have to keep interest rates (high) till such time as we have high inflation," he said........
'RBI should continue to manage public debt for now'
There is merit in continuance of the present institutional arrangement whereby the Reserve Bank of India manages the public debt, according to Deputy Governor Harun R Khan. In the context of the clamour in some quarters for an independent Debt Management Office (DMO), Khan said: “The size and dynamics of government market borrowing has a much wider influence on interest rate movements, systemic liquidity. “An autonomous DMO, driven by specific objectives exclusively focusing on debt management alone, may not be able to manage this complex task involving various trade-offs.”..........
SHOT DOWN - Govt turns down RBI's COO plan
........The government has turned down a move by the RBI management to appoint a chief operating officer for the central bank. It has instead asked it to seek amendments to the RBI Act to appoint a fifth deputy governor. The stand taken by the finance ministry is seen as a signal to Mint Street that the government will set the overall architecture, under which regulatory agencies have to function..........
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FinMin rules out COO appointment in RBI
The proposed appointment of a chief executive officer with the rank of a deputy governor in Reserve Bank of India (RBI) has been ruled out by the finance ministry as the government is of the view that no interim arrangements should be made for such high profile appointments. The RBI Act provides for a maximum of four deputy governors. But the central bank, which has initiated a restructuring of human resources, had proposed to increase the number of deputy governors to five and executive directors to 11, from 9 at present........
In Radical Recast, Mor may Come to RBI as COO
............“RBI board has approved the broad contours of the restructuring plan, including the creation of a position of a COO,“ the central bank said in response to a query from ET. The new position may not be ranked at deputy governor level as sought by Rajan, at least for the time being, said two people familiar with the matter. The next rung, or the third-highest rank at the central bank, is that of executive director. Nachiket Mor is regarded as the most likely candidate for the COO job. Mor is a former executive director of ICICI Bank and also headed the RBI committee on financial inclusion. Rajan wants to trim the 27 different departments at the central bank. He's also said to be keen on making lateral hires from the private sector. The board's approval for his plan is a boost for Rajan, ...........
Fitness and Luck
My View on "Diplomatic Banker Has a Will of Steel":
This is not an attempt to compare myself with Mundra. But to tell why I agree with the moral of the story that luck has a role in one’s career, I have to go back to my own entry to RBI as a clerk. In 1964, Madras Office of RBI could not shortlist my name for written test for the recruitment of Clerks/CNEs (Coin/Note Examiners) as I didn’t have high marks for my SSLC Examination. In Thiruvananthapuram RBI (where there were only specialised departments), recruitment was based on degree marks and I qualified in the written test. After the interview less than five candidates were selected, and I was not one of them. In 1968, I was still within the age limit when Trivandrum RBI recruited clerks after 1964 and I joined the Bank with a first rank both in written test and interview. Most of the time when Bank had an option, I was rejected in the first interview and selected second time. The Bank successfully rejected me in the last interview I attended (for F Grade) after which I opted for early retirement under an attractive (lucrative?) scheme. Even my medical fitness was an issue at entry point, and later in life I made some money writing about it (Fitness and Luck).
- M G Warrier, Mumbai
Govt Rejected Bank Employees Salary Increase Demand of 25 % : Unions in Strike Mood
Govt has rejected 25% Salary increase demand of bank employees and for further wage talk asked bank unions to come with agreeable increase. The letter is issued by IBA on persuasion for wage talk by UFBU. Now bank employees unions Federation UFBU is in process of declaration of agitational programmes including strike. UFBU has conveyed their message to all affiliate union-associations and bank employees......
Govt to review senior public sector bank appointments
......For the past few years, appointment of several bank chiefs, executive directors as well has independent directors have been viewed with a degree of suspicion and have often re sulted in controversy . The candidates are selected on the basis of an appraisal of the confidential reports (ACRs), which carry 70 marks, and candidates appearing for interviews for executive directors and CMDs can get another 30 marks. Apart from the RBI governor, financial services secretary , an RBI deputy governor and external experts are part of the appointments board. Similarly , there is no clarity on what goes into deciding the allotment of banks........
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Govt approves compassionate appointments in public sector banks
............While approving the compassionate appointments in public sector banks, the communication has sought to discontinue the extant provision of an ex-gratia in lieu. The Government has also advised the IBA to take appropriate action to circulate the scheme to all public sector banks for adoption with the approval of the respective boards. MV Murali, Convenor of United Forum of Bank Unions (UFBU), said the compassionate appointments scheme was unilaterally withdrawn by the Indian Banks’ Association (IBA) a decade ago. Since then the workmen unions and officers’ associations under the UFBU umbrella have been demanding its restoration......
Banking institute notifies common written exam for clerical posts in PSBs
The Institute of Banking Personnel Selection (IBPS) will conduct a common written examination (CWE) for recruitment of clerks in public sector banks other than the State Bank Group in December this year. According to a notification for CWE Clerks - IV, online registration for the examination commenced on Tuesday and would continue up to September 1..........
Now, you can send money through a social network
.................Oxigen wallet, a mobile wallet from payment solutions firm Oxigen Services, is being billed as India’s first mobile wallet to enable money transfers through social networks. The service, driven by an app, is bank and telecom operator agnostic. Anyone with a mobile handset, irrespective of the telecom operator, can download the app and use the wallet.........
State Bank group to roll out cash recyclers across country
..........The recyclers, according to the bank’s request for proposal, will also have bunch note accepting and dispensing capabilities, with a minimum capacity of 200 notes at a time and accepting/ dispensing all rupee denominations — 50s, 100s, 500s and 1,000s. The machine will be able to recognise the year of issue of the currency and can be configured in a way that while currency printed in or up to a certain year may be accepted (or rejected) by the machine, it may not be dispensed. For customers who are not tech-savvy and uncomfortable using a PIN for transactions, the cash recyclers will come with biometric authentication capability, with a fingerprint reader, according to Aadhaar specifications.......
Ease KYC norms
........... I have been asked to call on the bank branch with original of proof of identity and address and a copy of a recent passport size photograph for the bank’s record, failing which the bank will be compelled to close my account. No new set of documents is demanded for 20 years in case of driving licence and for 10 years in case of a passport My bank has asked for a new set of documents within 6 months. RBI should specify a period, say 10 years, for updating of KYC information.
Financial inclusion excludes the client
...........Current RBI instructions on financial inclusion plans don't cover group-based lending models such as joint liability groups (JLGs) and SHGs, although these approaches have helped the unbanked connect with banks. Why is a client segment that avails of two or three basic services from the bank out of the ambit of financial inclusion? Finally, the banker's attitude needs to change from sheer target-chasing to facilitating the poor's entry into the formal financial system. Banks, RBI and the government need to send the right message and remove barriers to enable greater participation of the poor in the formal banking system for their economic good. .....
‘Simplicity, reliability and direct benefits to the poor is the way forward’
IIMB's PGP2 students, led by Dr. Charan Singh, RBI Chair Professor of Economics, make valuable suggestions to accomplish the gigantic task of financial inclusion
At the Expert Panel Discussion hosted by IIM Bangalore on the Union Budget a month ago, Dr. Charan Singh, RBI Chair Professor of Economics at IIMB who chaired the deliberations on July 10, quoted the Finance Minister on the fact that Prime Minister Narendra Modi would make a special mention of Financial Inclusion in his Independence Day address to the nation. Financial Inclusion assumes added significance as it clearly figures highly enough on the new government's agenda to be addressed in the Prime Minister's maiden Independence Day speech. It could well be a major policy document of the new government which lays down the framework to be followed for next few years........
New beginning for financial inclusion
..............The earlier policies that pushed for financial inclusion were not very successful. According to the Reserve Bank of India (RBI), nearly 50% of the basic saving bank deposit accounts that were opened during the “Swabhimaan” campaign remained dormant. The banking correspondent (BC) agents that delivered banking services at the village level found the business model flawed as it failed to provide adequate remuneration commensurate with their efforts and investments. The banking product suite offered for these accounts was also limited............
Public money, personal greed
............ It will have an adverse effect on the attitude of the common people towards public sector banks (PSBs). Along with the restructuring of bank boards, the selection of PSB chiefs has also emerged as an important factor. ..........
How to deal with corrupt bosses of state-owned banks—Part II
........The biggest bane of public sector banks in India that account for roughly 70% of the industry, is the opaque appointment process of the top bosses. There is hardly any norm there; most appointments are based on discretion of the bureaucrats involved in the process with the Reserve Bank of India deciding to look the other way. Should an executive be first made the CMD of a relatively small bank and then move on to head a bigger bank? Or, should the person be straightaway made the boss of a large bank? Can a banker who has spent close to three decades in a small bank be suddenly catapulted to the corner room of a very large bank? Or, should he be chosen to head a small bank because of his background? Nobody knows the answers to these questions........
RBI okay with India joining Euroclear, but with a rider
........The proposal from the Reserve Bank of India (RBI), and submitted to the finance ministry, says it would be okay with allowing investors such as sovereign wealth funds to settle government bonds on the system, but not foreign institutional investors (FIIs). FIIs are the biggest foreign investors in teh country, and the RBI proposed that their exclusion from settling government debt on Euroclear be reviewed annually, one of the sources said. Officials of the RBI, the finance ministry and the Securities and Exchange Board of India (Sebi) will discuss the proposal next Tuesday, two of the sources said..........
India Post set to hit the ground running when it gets bank licence
................Payments Banks are expected to achieve their objectives by enabling high-volume, low-value transactions in deposits and payments / remittance services in a secure technology-driven environment. Given that it is already engaged in such activities, it will likely be a case of seamless integration into a new avatar for India Post. Currently, India Post provides mail, financial and retail services through more than 1.5 lakh post offices.........
‘State CARD Bank could leverage new RBI norm’
Kerala State Cooperative Agricultural and Rural Development Bank (CARD Bank) could look to a recent Reserve Bank of India move to issue licences for small and differentiated banks to expand its activities, said MLA and vice chairman of National Cooperative and Rural Development Banks’ Federation (NCARDBF) K. Sivadasan Nair here on Tuesday. Mr. Nair was speaking at the inauguration of the first State-level seminar on long-term cooperative credit structure, organised under the aegis of Kerala State CARD Bank.....
SBH allocates Rs 10 crore for CSR programmes this fiscal
......."The bank has allocated Rs 10 crore towards CSR programmes to take up social activities in the current financial year," Mukherjee said at a function here yesterday. On the occasion, he presented 100 traffic barricades to the Vijayawada Traffic Police.........
Andhra Pradesh State Cooperative Bank division in Nabard Consultancy Services' court
After finding the division of the assets of Andhra Pradesh State Cooperative Bank (APCOB) a hard nut to crack, the management board on Monday handed over the task to Nabard Consultancy Services (NABCONS). NABCONS, the consultancy arm of Na tional Bank for Agricultural and Rural Development (Nabard) will provide a roadmap for the bank, within 45 days, sources said. ..........
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