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Monday, August 25, 2014
Raghuram Rajan, Nachiket Mor deserve better - LATHA VENKATESH
A tale of two RNBCs - Dr.S.S.Tarapore
..............This resulted in a long battle of attrition that lasted till 1996. In 1979 Peerless approached the Calcutta High Court that the 1978 Act did not apply to it. The court ruled in favour of Peerless. ears later, in 1987, the Supreme Court concurred with the Calcutta High Court, but indicated that the RBI could regulate these companies differently than the Non- Bank Finance Companies ( NBFCs); the application of the NBFC Directions to these companies would result in a closure of these companies; to avoid such an eventuality, the Supreme Court urged the RBI to issue separate directions which would safeguard depositors and also enable the companies to live. Thus came into being the Residuary Non- Banking Companies ( RNBC), Directions 1987............
Strategy and structure - Dr.Subir Gokarn
.......I think that all these objectives are of critical importance. Having been associated with a consulting business for some time, when we did projects for state governments, I was struck by the absence of a systematic database on what different states were doing to address the problems posed by the client. Significant person-hours were spent on many projects just putting this information together and there was no guarantee that it was comprehensive; more importantly, it remained in the private domain. This kind of knowledge is unquestionably of great significance in helping.........
'RBI just taking baby steps on customer rights'
........."The RBI could have learnt from insurance regulator IRDA (Insurance Regulatory and Development Authority) brought out a separate regulation for protection of policyholders several years back. The RBI has taken just baby steps to protect the customers," S.Saroja, co-ordinator, Citizen consumer and Civic Action Group (CAG) told IANS.........
Lighter touch
................The RBI should indeed step in to protect consumers from fraud. That is its duty. But well-intentioned regulation should still be examined to see if it in fact makes people better or worse off. In this case, the RBI may not have kept consumers' interests in mind. Regulation of the online transfer of small sums - most taxi rides are well below Rs 500 - should be minimal, in order to spur innovation and growth, as well as to benefit consumers. In general, this intervention shares the clumsiness of the Indian state's various attempts to regulate the internet - sadly, it has usually proven itself to be a few steps behind technological progress in this arena. The RBI should step back from micro-regulation, and instead define broad consumer-protection rules that payment gateways can follow. Safety and security are important - but...............
IIMB opens ‘Policy Speaks’ series with talk by YV Reddy
"When there is a crisis in public sector banks, the Government bails them out and vice versa. In times of stress, how can two weak wings of the same system support each other? When both government sector and financial sector are highly leveraged, then it is a problem. However, I credit the people of India for a stable economy as, fortunately, the household sector here is low leveraged. The stability to Indian financial sector is therefore provided not by banks or by government but by the people of India," ..................
Poor savings outlook
While data for FY14 won’t be out for a few months, data for financial savings of the household sector collected by RBI suggest things won’t be too different from FY13, not surprising given the sub-5% growth for the year. As a share of the GDP, net financial savings of households in FY14 came in at 7.2%, not too different from the previous two years, but dramatically lower than the 12% in FY10. Within this, ..........
Requiem for the Planning Commission
.............The gradual rise of the market economy progressively undermined the need for a planned economy. Not surprisingly, the Commission moved away from planning outcomes to indicative planning. However, along the way, the Commission evolved as the secretariat for the National Development Council, the apex body for cementing centre-state relations. And this function is very much relevant today, especially with a second round of economic reforms to be led by the states.............
Dampeners for the new animal spirits
..........Brokerages like Barclays and Standard Chartered are now making projections of six per cent GDP growth in 2014-15. That is at the upper limit of the Reserve Bank of India (RBI)'s projections and higher than the 5.8 per cent mentioned recently by Finance Secretary Arvind Mayaram. The MoSPI estimates of Q1, GDP growth will be released on August 29. After two fiscals of sub-five per cent growth, six per cent would be a big turnaround. If we offset the CAD numbers implying 2.5 per cent GDP growth in dollar terms, versus the six per cent rupee-denominated growth assumptions, the rupee is expected to fall by about...........
The murky world of suitcase banking
..........Both the banking regulator and the government, the majority owner of such banks, now seem to be determined to clean up the system. It’s not an easy job as the major risk, in some cases, is the senior management itself. But that’s one leg of the problem. Who will look into the other leg—the so-called investment banks, non-banking financial companies (NBFCs) and advisory services firms that entice bankers to indulge in what the industry calls “suitcase banking”? Investment banks are regulated by the Securities and Exchange Board of India (Sebi) while the Reserve Bank of India (RBI) oversees NBFCs. Will they take a close look at the murky world of suitcase banking?................
PENSION UPDATION – A MIRAGE : P R R NAYAR
........Far
from being a solace, this would be a source of anxiety to the beneficiaries especially for the older
ones (presently aged up to 86 plus). It
is not unreasonable to presume that the actual disbursement of arrears is bound
to get embroiled in inheritance
legalities at least in quite a few cases,
as the pensioners concerned
(including family pensioners) would, by then, be not alive. Being a highly
probable victim of such a contingency, I wrote to the Bank about 100 days ago
suggesting a smooth course of action.............
Website for Senior Citizens
Here is an amazing initiative towards building an exclusive website for Senior Citizens in India. This website which is an interactive web-portal, is meant to be a consolidated guide for all the Senior Citizens in India. We realized that the several needs for Senior Citizens, must be available, all at One Place. Hence, this portal is an initiative in that direction. In immediate future, the data captured and made available here, shall cater to needs of Citizens within Maharashtra State. The rest of the States will be covered in a phased manner over coming months. While navigations within this portal shall help in covering various features, hereunder are noteworthy aspects of your needs which you can expect to be served. Information is classified as below:..........
A bank for, by and of Indian rural women
...............Yet, nothing prepared her for the adulation that followed in 2006, when she received the CII-Bharti Woman Exemplar Award, presented by National Confederation of Indian Industry to honour poor, underprivileged women. In 2007, the Reserve Bank of India (RBI) invited her to speak at a meeting, (her first of many that followed) to motivate women to dream of a better tomorrow................
CBI zeroes in on big fish: Ex-RBI manager, SEBI men, ROC officer
The Central Bureau of Investigation (CBI) has zeroed in on at least four senior officials, including two of market regulator SEBI and a retired manager of the Reserve Bank of India, for their alleged role in laundering huge amounts money in the multi-crore Saradha financial scam..............
A marathon to celebrate the city’s rich heritage
..........“The idea is to reach out to people, celebrate our city’s iconic structures and generate funds for conservation,” says A.R.A. Rajinikanth, a trustee. The run, he says, will begin at Queen Mary’s College (which is celebrating its centenary this year), go past Ice House, Presidency College, the Public Works Department, Anna University, the University of Madras, Napier Bridge, War Memorial, Fort St. George, RBI and Port Trust — all structures with a wealth of history behind them. Since it will be difficult to explain the importance of these buildings while people are running, the organisers have been holding events over the past couple of weekends to engage with people prior to the run...........
Summer Internship with Reserve Bank of India
........Hospitality is yet another place which beyond comparison to most of the other organizations. A formal session with each and every DGM, GM and even the regional director sparkling enlightening discussions makes a lot for learning for every intern. Farewell lunch and coffee with the regional director over a meeting, together with the formal feedback makes the organization a great place to work especially for people who are research oriented and want to excel in the area. At Reserve Bank together with the technical knowledge of regular matters over the economic and financial systems of the country, learning from experience is yet another thing which you could achieve from the mentors. Exposure to city side is also encouraged which substantiates the learning through data collection and theory with the practical world and gives insights about things which can never be covered in books and thereby making it a truly practical experience................
Read..........
Check your wallet, fake notes on the rise
Mumbai: Fake notes in circulation are on the rise even as the Reserve Bank of India (RBI) and enforcement agencies strive to clear out forgers with increased security features and higher scrutiny. Banks reported higher detection of counterfeit notes after the RBI introduced a target-based incentive/penalty system. During 2013-14, 4.88 lakh pieces of counterfeit notes were detected. Of this, 4.68 lakh pieces (95.9%) were detected by bank branches and 19,827 (4.1%) by RBI offices...........
RBI diktat on Uber could affect Google and Apple too
.........The diktat has ramification for a wide range of internet companies operating in India which will have to alter their payment models. At present, the mobile application stores of Apple and Google, for example, do not follow the two-stage authentication process mandated by RBI for credit card transactions. Every time a user buys an application from these stores, the transaction is completed using the customer's credit card details already saved in these firms' database. This might be a violation of RBI's credit card transaction guidelines, which require a second-stage check in the form of a one-time password or verification services like 'verified by Visa'. After the central bank's strong note, most of these entities might have to upgrade their technology to operate in India.....
Making sense of a bank’s balance sheet
............As compared to the interest paid on fixed deposits (term deposits), the interest offered on demand and savings bank deposits (popularly known as CASA or current account and savings accounts) is very low. As such, when banks mention that they are trying to increase the share of low-cost funds, it means that they are trying to garner more funds in the form of CASA. This would eventually help them improve their net interest margins (NIMs). As for borrowings, they are somewhat similar to the debt that non-financial companies take. Apart from deposits, banks can also borrow funds through loans from other sources. These can include the Reserve Bank of India as well as other institutions and agencies, be it domestic or foreign...........
Borrow less, don’t blame RBI: Time Jaitley stops doing a Chidu on us
........Unless these things happen, any call by the finance minister asking the RBI to cut interest rates needs to be taken with a pinch of salt. The RBI may decide to humour the finance minister and go ahead and cut the repo rate (the rate at which it lends to banks). Nevertheless, any material fall in interest rates will happen only once the government is able to make serious efforts towards curtailing the fiscal deficit. And the next time you hear Jaitley asking the RBI to cut interest rates, remember, he is trying to do a Chidambaram on us.
Time for RBI to cut interest rate, says Anand Mahindra
......"Now he (RBI Governor) has some breathing space, where the fuel price index would go down. So, in the next few months, if this situation continues, forex inflows are strong, IIP goes up, inflation is abetting, fuel prices are going down...This is the time now (for RBI to cut rate)," ............
The challenge of financial inclusion
.....There is a long history of financial inclusion in India. It has traditionally been understood to mean opening new bank branches in rural and unbanked areas. Nowadays, however, financial inclusion is seen to be something more than opening bank branches in unbanked areas to take formal financial services across the length and breadth of the country...........
Formal employment remains key to financial inclusion
..........Diced by states, data show there are significant variations in household debt from formal banking channels, which begs the question, what policies will raise access across the country? We analysed household debt from the banking system on two parameters: debt per household, which measures debt in absolute terms, and debt as a share of state gross domestic product, which indicates debt as a proportion of income, and which by proxy shows ability to repay loans.........
RBI may allow NBFCs to lend against all categories of shares
..........It is now learnt that RBI is planning to modify the circular to allow NBFCs to lend against all category of shares. However, NBFCs will be required to declare to the exchanges the Group 1 shares that are pledged with them. Group 1 shares are a category of limited stock defined by the Sebi........
50% of microfinance institutions could convert to banks: regulatory body CEO
............Alok Prasad, CEO, MFIN, said about half of the members could graduate to become banks. Such a move will give them an opportunity to also provide liability (deposit) products and money transfer services in addition to the existing business of providing short duration collateral-free loans for small amounts and third-party products such as micro-insurance to the poor.............
Arun Jaitley & His Team Wrongly Clubs Corruption With Risk Management in Banks
...........Now most of the banks have in place a system called “risk ratings” of the corporate which is used in credit proposals. Inspite of the fact that some banks have robust risk rating system, their NPA levels are very high. Why? The reason is not missing risk management policies but deep rooted corruption in the banking sector, whereby even the honest lower functionaries are asked to tinker with various parameters of rating system to keep the account in higher rated category so that higher limits can be sanctioned or it can continue to be in standard category. The tools of transfer and charge sheet are used to create a terror in the office. You can peep in your credit division or talk to a person associated with risk ratings in the field. If he is frank with you, soon the honest rater will explain as to how AGM / DGM at Regional levels wants the rating to be perked up by tinkering few parameters. All this is done ............
Forensic report to be ready in next ten days: Dena Bank chief
........Dena Bank expects the forensic investigations report on its Malabar Hill branch scam to be available in the next ten days, its Chairman and Managing Director Ashwani Kumar has said. Professional services firm Deloitte is looking into the matter post the Finance Ministry’s directive that forensic investigations be carried out on the scam, Kumar said..................
What could follow the PlanCom?
............Modi's comments have been echoed by many CMs over the years. Economists like Arvind Panagariya have called for the end of central schemes in favour of block grants, to allow states to choose their development priorities. Central plans, the argument goes, ignore the differing development stages and capacities of India's diverse states. Without central schemes, there shall be no need for a commission to plan, design or evaluate them....................
How high are Indian banks’ bad loans?
................The Reserve Bank of India’s annual report, while acknowledging the problem, points out: “Compared over time and across countries, India’s NPAs (non-performing assets) are not high. Historically, the gross NPA ratio was at 12% in March 2001.” There is some truth to the central bank’s statement. As the chart shows, India’s gross non-performing loans (NPL) ratio at close to 4% is far lower than that of some European economies which were caught in a debt crisis....................
A.P. to approach RBI again on rescheduling of crop loans
........According to official sources, RBI Governor Raghuram Rajan has convened a meeting with Chief Secretaries of all States on August 25 to discuss various banking-related issues. Separate time has been sought to discuss the plea of the State government.........
Cheque bouncing has become tedious with SC verdict
..........A fortnight ago, the Supreme Court has made it a little more difficult. Until now, the aggrieved person could file a case at his place of residence or business. A three-member bench of the Supreme Court has now ruled in K Bhaskaran versus Shankaran Vaidhyan Balan that in cheque bouncing incidents, cases can only be filed in those courts within whose jurisdiction the drawee bank is situated. Thus, if ABC Company in Tuticorin receives a cheque drawn on a bank in Dibrugarh, Assam, ABC Company would have to file the case in Dibrugarh – not easy for the company in Tuticorin. This will naturally not only result in delays but huge expense as ABC would have to engage lawyers in Assam and even have someone travel to Dibrugarh. To add to the woes of those seeking redress, the judgement would apply retrospectively. Therefore hundreds of thousands of cases would be transferred to different states...........
Can't Using Credit Cards be Safe and Also Easy?
...........No one will quibble with the regulator when it says that security is the paramount consideration when framing rules for online payments. But is it anyone's case that we can have either security or convenience, but not both? The RBI can definitely do better. It must change the rules to permit single-factor authentication while putting in place adequate security safeguards. Users must know clearly what they are signing up for, and all security certifications must be in place.Grievance redressal must be swift and violators must be given exemplary punishments. All the same, the components of the ecosystem -merchants, credit card firms, third-party wallets, phone companies and app stores -also have to conduct themselves responsibly and not jeopardise their own prospects.........
RBI says all companies must apply 2-step payments for credit cards
.......Although the RBI did not specifically address any company, it noted "it has come to our notice" cases in which domestic credit card transactions avoided the additional verification process by using an overseas payment system. The RBI noted companies would have until Oct. 31 to ensure the two-step verification process was being followed, while noting that payments must be routed through a domestic bank and settled in Indian rupees. "It is advised that entities adopting such practices leading to wilful non-adherence and violation of extant instructions should immediately put a stop to such arrangements," the RBI said in a circular.........
Unclaimed insurance amount: Whose money is it, anyway?
........The unclaimed amount includes money payable to a policyholder as death claim or maturity claim, survival benefits, premium due for refund and premium deposited but not adjusted against premium or indemnity claims. Any amount unclaimed beyond six months from the due date for settlement will be displayed on the website. According to the regulator's August 14 circular issued to all insurers, excluding General Insurance Corporation of India, the information regarding unclaimed amount will have to be updated every six months on the insurance company's website.......
Are there mistakes in your tax return?
..........The taxman also gets suspicious if you are in vesting too much or withdrawing too little. A Mumbai-based individual was asked to explain how she was sustaining herself because her entire salary was flowing into investments. She was using the cash allowances received from her employer for her day-to-day needs and investing the entire salary that came by cheque.“The tax officer will estimate the household expenditure you are likely to incur based on your earning capacity, family size, lifestyle and number of earning members. If your bank statement does not show commensurate withdrawals for expenses, the question will arise how you are surviving on so little,“ .........
CBI clears Bhave in MCX-SX issue
........This follows the agency coming to a conclusion that Bhave's role in granting permission to the private exchange was not of serious nature to warrant registering a case, highly-placed sources said. Hence the recommendation for a departmental action against Bhave, a 1975 batch IAS officer of Maharashtra cadre, who took voluntary retirement from service in 1996. The sources said that the CBI has finalised the case in which similar action is being recommended to the Finance Ministry against former SEBI member K M Abraham............
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