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Thursday, August 21, 2014
Raghuram Rajan: Rockstar Of India’s Financial Sector
Need to tweak policies for affordable housing: R Gandhi
........."One such product could be saving induced home loan deposit scheme. Customers may be induced to start a saving balance by way of monthly or periodic deposits. This will create a track record for future loan repayment. Once you reach a threshold, the financial institution can think of giving the individual a loan. The balance can be used as a collateral or margin and the financial asset should be used as a base to assess repayment capacity,"...............
Cost of houses pretty high, scope for reduction: RBI's Mundra
............."I believe there is enough scope for home prices to come down from the higher perch because of huge inventory pile-up in several markets," he said addressing a gathering of realty players in the financial capital. "In a country where over 60% of the population lives with less than $2 a day, the cost of houses are still pretty high," he said, pointing to an RBI report which said there was a huge shortage of dwelling units. Mundra said that housing shortage is very severe among the weaker sections. Findings of an internal RBI panel report indicated that ..........
RBI deputy governor says no signs of stress in real estate sector
Reserve Bank of India (RBI) deputy governor S.S. Mundra on Wednesday said that though the real estate sector is prone to volatility and formation of asset bubbles, there are no signs of stress in the sector so far. “Despite complains about the flow of credit to the real estate sector, figures show that the loan growth to commercial real estate has been strong and robust mirroring other segments,” Mundra said..................
Go for it, Guv
With reference to your editorial, “Take five” (August 20), if our governor thinks the RBI needs a COO we should support the move. To ask for transparency in every appointment in the RBI is asking for too much. We have a governor who is the envy of the world; we should trust him. The governor wants to take the union on board, which is a good sign. We have rights and unions too have rights; let’s exercise them in a sensible manner.
- CR Arun
The argument of the outsider, though it is not so in this case, could also be stretched against the appointment of the RBI governor! The imperatives of placing the right person in the right job have culminated in having Raghuram Rajan at the helm of affairs at the RBI and he is doing his best to resuscitate the ailing Indian economy which has evidently recovered from the onslaught of the global slump of 2008 and its attendant hardships. He should be enabled with reasonable autonomy and objective liberty to make changes as he desires both administratively and functionally to tweak economic growth. The attempts for supremacy among equal functionaries are natural. We remember the irreconcilable spat between the erstwhile Deputy Governor KC Chakrabarty and former SBI CMD Pratip Chaudhuri on CRR. When everything is subject to change for betterment, The Reserve Bank of India Act 1934 must also be put through the needy amendments to have a COO on par with the existing Deputy Governors. Resistance to the proposition for a COO has to be dislodged with corrective decisions.
- B Rajasekaran
FinMin yet to get a proposal from RBI on COO appointment: Sandhu
........."We have not got any proposal so far (from the RBI on appointing a COO). Once the proposal comes then definitely we will have to address the issue," Sandhu said speaking to reporters on the sidelines of a banking conclave
Interim COO at RBI not possible: FinMin
.........“An interim COO cannot happen as the law does not allow this. The (RBI) Act has to be amended first. There is no ambiguity on that,” said G S Sandhu, secretary, financial services. “We have not got any proposal so far (from RBI on a COO). Once the proposal comes, we will have to address the issue.”.......
Need to 're'visit HR in 'Re'serve Bank - V.S. Das, Former Executive Director
My View on "RBI revamp - M.G.Warrier":
Is it necessary to re-organise the Bank? What are the compelling reasons? A few weeks ago the Governor had said with respect to the FSLRC report: : "If it aint broke, don't fix it. "
I am sure the Committees headed by the Executive Directors would have gone in depth into the need for organisational reform and advised the Governor suitably.
I only want to say that when it comes to HR there is need to tread carefully and with a certain degree of sensitivity. For people serving the RBI, it is, after all, a career and life-long commitment and not just a job, as it is for an IAS officer or in the armed forces. There are professional aspirations, pride in the institution which has been serving the nation admirably. Unless HR is handled with due sensitivity it could vitiate the traditionally congenial organisational the camaraderie among officers and staff, climate and culture that the RBI has nurtured for decades. I am told things are changing rapidly, and, unfortunately, not necessarily for the better.
I am aware that in the past there has been occasional tinkering with HR policies, creation of new structures, posts, positions. Some of these decisions may not have been altogether objective and in the organisation's interests. They can be re-visited and the damage undone. I do believe that the decision to have automatic promotions from one grade to another will not stand the organisation in good stead. It might already have created a whole lot of organisational problems. I am also of the view that progressively adding to the strength of EDs diminishes the importance of the position and is not even called for going by the workload. It is also absurd that the RBI should have so many Principal Chief General Managers when there used to be only one - the senior-most Grade F. Is there no better way of providing job delight and professional progress other than promotions and change of designations?
I think what is very necessary in a monolithic institution like the RBI is constant review and fine tuning of our complicated systems and work processes. I am rather dismayed that there is no department or unit in the any of the five proposed clusters to address this important task. Many years ago we had a Management Services Department (MSD) to perform this role, to objectively and periodically evaluate and rationalise our systems and procedures. What a pity that the department, staffed by experienced and trained officers in various functional areas of the Bank was abruptly dismantled, unfortunately for wrong reasons - for censuring faulty systems and making constructive suggestions. Can we think of reviving it? Otherwise, let every department have a Systems and Procedures Wing reporting directly to the CGM-in-Charge. It can be monitored by the concerned EDs.
Times have changed and the Bank is perenially in the public domain, almost every day. Therefore, Mr. Warrier, it is not such a bad thing, after all, to have all the stake holders, including the public, on board. I believe this would faciltate greater transparency and objectivity in how we would like to take our institution forward.
I wish the RBI all the very best in their endeavour to make the organisation more efficient and professional.
- V.S. Das, Former Executive Director
Manmohan Singh sought a soft job, but was told by Indira Gandhi to become the governor of the Reserve Bank of India
........Authored by the second of his three daughters, Daman Singh, the book, titled 'Strictly Personal: Manmohan and Gursharan', says that Indira Gandhi wanted Manmohan Singh as a member of the Planning Commission to prepare the Sixth Five-Year Plan (1980-85). "But when he expressed his difficulty in retiring 10 years early (from the civil service), she was magnanimous enough to appreciate this. She also took the trouble to find a way out. The post of member-secretary was created, for which he did not have to resign," says the book, published by HarperCollins India (pp 452, Rs.699). "Two and a half years later, she wished to appoint him governor of the Reserve Bank of India. When he (Singh) went to see her, he mentioned that he had been in a tough job for many years and that he was now looking for a 'soft' option." "She looked up and, with a radiant smile... said you are only 50. You are too young to do a soft job," said the book..........
RBI Srinagar Quiz competition on Friday
SRINAGAR: RBI will be holding its quiz Contest in Srinagar on Friday. K.K Saraf, Regional Director JK said that competition is being held at 61 locations with the Srinagar contest to be held on Friday. Meanwhile Army Public School, Kalu Chak students Amitesh Mahotra and Aayushman won the City Round for the Jammu qualifying for the Zonal Finals be held at New Delhi on November.........
Read - Kashmir Reader
Read - Kashmir Reader
FinMin backs banks on capping free ATM usage
...........G S Sandhu, secretary in the Department of Financial Services, justified the move on the grounds that banks had to recover the huge costs they were incurring. "ATMs cost money...banks have been incurring heavy expenditure on ATMs. They have been subsidising that. The move is aimed at curtailing the subsidy. So, five transactions are allowed free of charge and beyond that, there will be some charge," Sandhu said on the sidelines of an annual general meeting of the Indian Banks' Association...........
RBI sets up working group on taxation practices
.........In a bid to promote financial savings, the Reserve Bank of India (RBI) has constituted a working group to study various issues relating to taxation of financial instruments in India and suggest rationalisation. The members of the working group includes YH Malegam, director, central board, RBI and HP Ranina who is a corporate tax lawyer............
Bridging the savings gap
............However, the RBI report on financial inclusion and the proposed SVS scheme are guilty of not incorporating knowledge from the latest behavioural economics research to ensure that expanded access to bank accounts translates into sustained usage. What we now know from behavioural economics—a branch of study that tests insights from psychology as they relate to economic behaviours—is that there are considerable gaps between human intention and action, and decisions around savings are no exception. Behavioural issues such as ..........
Now invest up to Rs1.5 lakh in Public Provident Fund
.................The government has issued a notification raising the limit from annual PPF deposit limit from Rs1 lakh to Rs1.5 lakh in pursuance of the announcement made by finance minister Arun Jaitley. PPF is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal. The interest rate on deposit in PPF for 2014-15 fiscal is 8.7%. Jaitley had increased the PPF investment limit in line with the hike in .........
India Post's banking application: RBI lobs ball in government's court
Reserve Bank Deputy Governor R Gandhi today said the Union government has to take a final call on application for banking licence by the India Post, which has a network of over 1.5 lakh post offices countrywide. "India Post is in the hands of the government. It is the government which has to approve them to come to us for licence," Gandhi told reporters here.
5-year term for public sector bank heads mooted
.................The Finance Ministry is proposing to appoint public sector bank heads for five years, in a move to bring in more transparency in the appointments. “We are proposing that they should be appointed for five years — initially for three years and a further two years based on assessment,” said G. S. Sandhu, Secretary, Financial Services, Union Ministry of Finance, on the sidelines of the 67th annual general meeting (AGM) of the Indian Bank’s Association (IBA) here on Wednesday............
Bluff of bankers and an indifferent RBI
..............Bankers, including central bankers, tell us that nobody in banks wants to take decisions anymore. This is now a familiar pattern and going on for decades. Harassed borrowers then approach politicians and all investigations stop. At the root of the problem is the Reserve Bank of India, which has refused to act. In connection with our article, “Rot at the Top” about lack of accountability in Reserve Bank of India (RBI) and public sectors banks, Mr MR Sivaraman, a highly regarded retired Revenue Secretary of the union government, wrote to us with an interesting story about RBI’s negligence............
RBI’s draft norms for smaller banks: Raghuram Rajan is repeating a mistake
............To be sure, the RBI corrected its mistake by deciding not to grant any further LAB licences. Seventeen years later, the central bank is close to committing the same mistake by the creation of the proposed smaller banks. Going by the draft guidelines of the RBI, the smaller banks will not be very different in mandate and operational scope compared with that of LABs.
The operations of smaller banks will “normally” be restricted to contiguous districts to give a “local feel” and culture. Any possibility of expanding the presence comes after a period of initial five years of stabilisation period. For initial three years, the smaller banks would require prior approval of the RBI. There is not much difference from LAB rules, except the fact that smaller banks can expand to districts in the adjoining states “if necessary”. But that’s a scenario one has to wait and watch to see whether it happens in reality. Now, the problem is that ........
Risk management courses may be made mandatory for senior PSU bank officials
Financial services secretary G.S. Sandhu said that the government is looking to make it mandatory for general mangers and deputy general managers in public sector unit (PSU) banks to do a course in risk management before taking up their post in light of the loan scams that have been exposed recently..............
PSU banks to have long-term CEOs, professional boards?
......... Former deputy governor KC Chakrbarti was the first to highlight the sharp difference in the asset quality between the private and public sector and had ascribed it to governance. Two of the key recommendations by the Nayak panel was to professionalise the management by distancing them from the influence of the finance ministry. A holding company structure was suggested as a means to achieve this. Secondly, it was also recommended that the post of chairman and CEO be separated and the boards have more accountability.........
Centre plans major banking reforms; SARFAESI Act to be amended
Two moves by the government will significantly impact India’s banking segment— a decision to amend the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, during the Winter Session of Parliament to allow banks to take charge of companies that wilfully default on loan repayment and second, a plan to put in place a holding company structure for public sector banks........
Shorts and social issues
This is the second edition of YES! I am the change challenge. It is being conducted by YES foundation, the social development arm of YES Bank. It aims to inspire and empower youth to make five-minute-long social films........
Banks nudge customers to take e-way
.......“The cost of a net banking transaction is one-fifth of an ATM transaction and, for mobile banking, it is much lower. We are considering the implications of the RBI circular on our business models and will also be intimating our customers if there are any changes,” ...............
Not just bank accounts
.........Payment systems such as Airtel Money and Paypal, for example, address a market demand that bank accounts do not. Similarly, different consumers require different levels of insurance, and for different things. A one-size-fits-all approach through central planning does not address the complex suite of financial services that households require. In a marked difference from the past, .........
More than 50% panchayats in Bihar don't have banks
............Out of 8,463 panchayats in Bihar, 5,298 are yet to be covered with banking service, Finance minister Bijendra Prasad Yadav pointed out in the meeting of the State-Level Bankers' Committee (SLBC) here on Wednesday. The banks have been tasked to proceed with setting up branches in panchayats and achieve the target in a time-bound manner, Yadav said. Expressing frustration over the lethargic pace of financial inclusion in Bihar, he said that the banks' performance will be reviewed at the next SLBC meeting to be held in the next quarter and the state government would withdraw its money from under-performing banks...........
Obliging bank customers find themselves poorer by thousands
...........An unsuspecting Mr. Siddaraju obliged the caller by sharing his card details and even switched off his mobile phone for a couple of hours as per the caller’s advice to “facilitate speedy renewal” of his ATM card. Hours later, when he went to the ATM to check his account, he found that he had become poorer by Rs. 29,000 following a series of back-to-back online purchases.............
Banking frauds force finance ministry to take tough measures
......... “We are asking banks to be cautious about borrowers with high debt and too little equity. Banks have been asked to prepare a list of borrowers who are high on debt, and initiate the process of selling off their non-core assets. On the vigilance investigation on bankers, we will see to it that innocent bank officials are not taken to task so that procedural delays do not hamper sanction of credit.”........
Jaitley’s next challenge: Raft of loan scams could gum up the works for banks, corporates
......The common link to all these four stories is that we are heading towards a situation where the courts and the investigative agencies are going to get increasingly involved in probing banks, companies and even government decisions involving them. This is a situation tailor-made for another decision-making paralysis, this time at the banking and corporate ends. Bank finance is the lifeblood of an economy, and if bank managers are suddenly going to be looking over their shoulders and sitting on decisions for fear of the CBI or courts, there is going to be a huge lending freeze looming ahead. Neither the CBI nor courts are particularly well-equipped to judge financial sector decisions and could have a tendency to presume routine practices are scams when they may just be bad decisions. This is not to say there were no scams, but we need them to be probed by financial-literate investigators...............
HDFC Bank is India's most valuable brand: Report
Private sector lender HDFC Bank has been named as India's most valuable brand in the first ever BrandZ Top 50 Most Valuable Indian Brands ranking. Country's largest telecom operator Bharti Airtel stood at the second position in the ranking while State Bank of India ranked third in the study.........
The micro credit solution
..........Unless a concerted effort is made to increase the income-generating ability of the poor, the financial inclusion drive will not lead to any worthwhile outcome. The ability of the poor to run micro ventures to produce goods and services is not spread widely. To kick-start the process, ..........
Planning Commission, RIP
........With more money flowing directly to states, there is a greater need to track the efficacy of public spending, a role ideally suited for the panel or its Independent Evaluation Office. Before state and local governments are ready to spend money, a lot of capacity building also needs to be done to ensure those given more freedom are in a position to do something with it. Whatever shape the plan panel’s successor takes, it has to be ensured the new body does not remain as much a symbol of central oppression as its predecessor. While the plan panel had several redeeming features, it cannot be denied it has been used as a tool of favouritism over the years............
Acche din for the financially excluded or too much din?
........... Despite the efforts of the government and the Reserve Bank of India (RBI) over the past few decades, India's current state of financial inclusion is quite dismal, with approximately half the population outside the ambit of formal banking (a World Bank estimate is even lower showing that only 35.2 per cent adults have an account with a formal financial inclusion.) To accomplish the mission of full financial inclusion two major areas need a rethink.........
Is the rally in gold loan companies overdone?
......But cost-cutting can take a firm only so far. Customers have not come back in droves as expected once the RBI norms were eased, and gold assets under management have continuously declined. Yes, gold auctions will likely peter out now, but declining gold prices could act as dampener. Note that in the June quarter, Manappuram Finance reported a 4% decline in disbursements. Moreover, there is increasing competition from banks after the RBI removed a cap on the maximum ticket size on loans. In that context,..........
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