...................Rajan also focused "firmly" on inflation, though it still has not been enough to change inflation expectations. But adds supervision of the financial system "continues to be sub-par". Says Rajan needs to do more to spur banks to deal with their asset quality.......
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Tuesday, August 26, 2014
Revised liquidity framework to create predictability: RBI Deputy Governor H R Khan
........."It should have a positive impact in terms of predictability and timing," Khan said on the sidelines of a meeting with state finance secretaries.
RBI to redefine deposits as ponzi scams mount
........“We are discussing it with states and the Centre. We need to define in such a way that who will be the regulator for different types of collection of money. Today, certain things are clear, certain things are unclear. So in the unclear area we are trying to bring more clarity,”
Tough Times Ahead for Bankers : Need for SS Mundra To Rise To Occasion To Play The Role of Bridge Between Bankers and GoI / RBI
.......... It is regrettable that Mr K C Chakrabarty (who too was from banking fraternity), Ex-Deputy Governor, who was better equipped to handle this issue and was in better times, miserably failed to protect the interests of the bankers. Rather he was instrumental in bashing the bankers by issuing controversial statements like PS bankers salaries being more than private sector banks etc. He preferred to take confrontation with the then Governor of RBI to satisfy his ego of supremacy and never supported Aam banker. I hope Mr SS Mundra will not let down the bankers and play a positive role. If he fails to rise to the occasion, bankers will face tough times ahead and Indian banking is likely to suffer irreparable damage in next two years or so. I am of the firm that one post of Deputy Governor has been kept reserved for a banker only such eventualities where the interests of the bankers may be ignored due to lack of knowledge about the problems being faced by bankers. ..........
RBI officers, staff threaten strike over lateral recruitments
THIRUVANANTHAPURAM, AUG 25:
Officers and employees of the Reserve Bank may go on strike if the Governor takes a rigid position on the issue of lateral recruitments into the apex bank. The United Forum of Reserve Bank Officers and Employees is sharply opposed to internal restructuring being attempted "without proper consultations". The United Forum is an umbrella front representing officers and employee unions of the Bank. It has conveyed to the Governor that direct recruitments into the higher cadre should be limited to experts with adequate experience and domain knowledge and strictly on contractual basis, says Samir Ghosh, Convenor............
Kolkata students shine at RBI quiz
.............With RBI as the organizer, it was expected that many questions will touch upon banking and finance. But some questions were tough for even Regional Director Rudra Narayan Kar. "Yes, some questions did leave me stumped. And I'm amazed at the level of awareness among today's children," he told TOI. If the teams couldn't get one right, multiple hands from the audience shot up to answer. However, some rounds did see some interesting responses — for example,..............
Mor(e) Inside Outside
My View on "Raghuram Rajan, Nachiket Mor deserve better - LATH...":
One wishes, things were as simple as this. But they are not. When media discusses an issue, participants in the debate get freedom to choose the layers they want to analyse. They can even decide the timing. This much is obvious. Back in 1960’s when I was in RBI as a trainee, the class-room joke was, in RBI a 10 paise coin will look down upon 5 paise and dictate terms. At that time the reference was to the Clerk Grade I (who got an additional allowance) bossing over Clerk Grade II. Perhaps, much has not changed inside RBI even at the highest level even today. Though the practice of having majority of the top 5 positions filled from outside has been working well, of late, their dependence on their employer for survival and on the ‘experts’ inside for getting things done make their life tough. Added to this are HR-related issues. The excellent leadership provided by Dr Rajan has not gone down well with those who were under the impression that ‘they’ were running the show. It is easy to divert from real issues by raising personal issues. Mor and lateral induction are being used to discredit Dr Rajan in this context.
- M G Warrier
Follow RaRa
My View on "The challenge of financial inclusion":
One wishes, those who are responsible for taking financial inclusion from ‘word of mouth’ to something that makes an impact on the lives of people who have no representation anywhere because they do not have, as of now, money to go to a bank for opening an account, take Dr Raghuram Rajan’s following quote in this article seriously and do something:
“Simplicity and reliability in financial inclusion in India, though not a cure all, can be a way of liberating the poor from dependence on indifferently delivered public services and from venal politicians,” he said. Further, “in order to draw in the poor, the products should address their needs — a safe place to save, a reliable way to send and receive money, a quick way to borrow in times of need or to escape the clutches of the money lender, easy to understand life and health insurance and an avenue to engage in savings for the old age.”
- M.G.Warrier
Better if had 'Re'sponded........
"PENSION UPDATION – A MIRAGE : P R R NAYAR":
RBI is not an insensitive organization. But, any organization is dependent on its employees for communicating with the world outside. RBI has a Department of Communication also. My humble view is that Shri P R R Nayar’s communication on pension arrears quoted here deserved a response. Even a response that ‘Bank is not in a position to respond to this for …(stating reason here)…’ would not have created this much of frustration in the mind of Shri Nayar who ‘knew the limitations of RBI’. Perhaps, someone who reads this will help RBI to send a response to Shri P R R Nayar. The point made by Saraswathy Srinivasan is absolutely right. Let me give an example of another organisation which handled my letter on a related issue. I wrote a personal letter to Vinod Rai when he was CAG. The point I made was that a letter addressed to DG(Leeladhar) which was signed by Rai had resulted in undue delay in RBI taking a decision on not only pension updation but revision of Family Pension and enhancement of Ex-Gratia to pre-1986 retirees. I requested him to do something to get over the impasse. CAG officially forwarded my letter to RBI with a request to take action. CAG also endorsed a copy of his letter to me. I didn't hear anything further from RBI is a different matter.
Any benefit extended to a person should be passed on within a reasonable time so that the purpose of such benefit is achieved - i.e. the beneficiary enjoys it in his lifetime. Shri Nayar's case is very saddening - A mere acknowledgement would have given him some solace. In the hi-tech environment, it is not difficult for the RBI to send at least an acknowledgement automatically responded by the system giving a reference number. Many institutions have introduced this practice for any e-mail sent to them.
- Saraswathy Srinivasan
- Saraswathy Srinivasan
RBI is not an insensitive organization. But, any organization is dependent on its employees for communicating with the world outside. RBI has a Department of Communication also. My humble view is that Shri P R R Nayar’s communication on pension arrears quoted here deserved a response. Even a response that ‘Bank is not in a position to respond to this for …(stating reason here)…’ would not have created this much of frustration in the mind of Shri Nayar who ‘knew the limitations of RBI’. Perhaps, someone who reads this will help RBI to send a response to Shri P R R Nayar. The point made by Saraswathy Srinivasan is absolutely right. Let me give an example of another organisation which handled my letter on a related issue. I wrote a personal letter to Vinod Rai when he was CAG. The point I made was that a letter addressed to DG(Leeladhar) which was signed by Rai had resulted in undue delay in RBI taking a decision on not only pension updation but revision of Family Pension and enhancement of Ex-Gratia to pre-1986 retirees. I requested him to do something to get over the impasse. CAG officially forwarded my letter to RBI with a request to take action. CAG also endorsed a copy of his letter to me. I didn't hear anything further from RBI is a different matter.
- M.G.Warrier
'Account'able for FinClusion
My View on "Unclaimed insurance amount: Whose money is it, any...":
Copied below is an excerpt from my article "Do we need a regulator for 'unclaimed' deposits?" posted at moneylife.in on May 3, 2013:
The government should guide all organisations sitting on unclaimed deposits or maturity proceeds of other financial instruments like insurance policies to exhaust all reasonable options available to track the depositors or their heirs whose money would be transferred to unclaimed accounts before such transfer every year. From notice boards at bank branches to electronic media could be used to draw the depositors’/beneficiaries’ attention. If banks’ secrecy provisions stand in the way, necessary changes should be thought of.
It would be also worthwhile to enquire whether the organisations including banks were periodically updating the database on their folios. Last year the Employees Provident Fund Organization proposed not to pay interest on inoperative accounts in EPF accounts consequent to a proposal to freeze about three crore accounts (amount involved was about Rs10,000 crore) in which there was no fresh contribution during the previous three years or more. Such moves send out disturbing signals about safety of depositors’ funds with public sector organizations.
Ironically, the position will only aggravate with compulsory opening of more accounts to promote financial inclusion, insistence on Aadhaar-enabled accounts even before Aadhaar is yet to reach and crediting of government scheme benefits through bank accounts. The GOI and RBI may look at the issue from a social security angle, lest people lose faith in government-sponsored savings schemes and social security measures and even in the financial sector regulator."
- M.G.Warrier
Why low household savings in Gujarat?
My View on "Formal employment remains key to financial inclusi...":
The article is well structured. But, a few points which in my opinion it has missed out are:
1. Regarding Gujarat: Concentration of industries like gem cutting, textiles- mainly through power looms and not industrial factory types and huge wholesale and retail trades in textile related areas and construction industry Large segment of migrants (coming from states like Rajasthan, Bihar, Orissa and UP) who work in these sectors do not have any bank account. One can see large serpentaine queue of migrants waiting at the entrance of Public Sector Banks like SBI in various centres like Surat to send remittances to their home. Thanks to CBS, they are able to remit funds to their home accounts though they do not have one at the work place. So, it also reflects in the low household savings in Gujarat.
2. On Savings and Consumption: True, savings ratio has not grown or grown very marginally year on year in the last few years. The author attributes it to the higher consumption. Recent study showed that there is a slackening in consumption.
3. Study the savings and investment ratio: It would be more important to see if savings go for investment or not. It would increase production (both manufacturing and services) and in turn employment. If savings made by the economy is not channelled towards investment then that would adversely affect the growth of the economy.
- Dr.S.Santhanam
Why Uber, Google Play and Amazon should not lose sleep over RBI’s latest diktat
..........According to Pallav Pradyumn Narang, Partner with Arkay & Arkay, Chartered Accountants, A Tax, Assurance and Advisory firm based out of New Delhi, the notification is significant and there are already concerns that it may affect the Indian businesses of service providers such as Uber, Amazon, Google Play, Apple App Store etc. However, he says a key distinction has to be made between goods and services provided in India as compared to those provided from outside of the country’s borders. Here's why Narang thinks these service providers should not be losing sleep over the RBI notification...........
Only 10 free ATM transactions per month
........“This move will only benefit banks with large ATM networks. Mid-segment banks having fewer ATMs are anyway dependant on other banks’ ATMs, which increases the cost of transaction. In the short term, banks would need to rethink their ATM expansion strategies, which will now witness a slowdown,”.........
Free use of ATMs restricted
...........The changes proposed are, therefore, neither in the interest of bank customers nor the banks themselves, and it is a retrograde step, as it adversely affects the spreading of banking habit among the poor and the down trodden, who can ill afford to pay these high charges levied by banks for the use of ATMs. There is certainly no case for banks to curtail the existing facilities available to ATM users, much less in their own ATMs for their own customers, as imposing additional charges on the depositors will only result in negating the efforts of the government in spreading financial inclusion, which is being attempted at a very heavy cost to the exchequer. There is no doubt, therefore, that by restricting free usage of ATMs, banks are “biting the hands that feed them”, hurting both the banks and their customers.
Is it not time for Depositors to unite and fight against exploitation? - Dr.T.V.Gopalakrishnan
.............Charging for ATM withdrawal is nothing but a planned loot and RBI should not be party to this.Time depositors unite and fight for their rights. It is unfortunate that banks and bad borrowers are thriving exploiting the depositors by all possible means and it is the best opportune moment for Money Life to organise Depositors and fight for their justifiable rights.
Card payment conundrum
........As the Uber case reveals, there may be a case for relaxing norms for card payments up to some small value - say, Rs 1,000 a day by deleting second authentication. This will hopefully facilitate the growth of other small-value card payments and more such businesses in the country. However, people feel uncomfortable in sharing the card verification value or CVV number with companies on a regular basis, which could create difficulties for the cardholders in case a company goes rogue..........
Payment gateways seek clarity on RBI directive on global online transactions
..........Shiv Putcha, associate director, mobility at IDC, said that RBI is rightly concerned with the payment process as the digital payments is growing at a rapid pace and has a chance of affecting the forex situation of the country."We dont have a clarity yet on these payments that go overseas: whether these are service tax complaint. RBI does not want a back and forth forex transactions over which it has no control.”........
There is a lag between opening a basic account and activation: Rajiv Sabharwal
............If you don’t open an account, you will never have a transaction. This is a chicken and egg situation; you have to start somewhere. These financial inclusion accounts will become viable with the money which the government has moved to the citizen. Once that happens and followed by the fact that once the habit gets created, the market can start extending loans.............
From Bhave to Birla
CB Bhave, then member KM Abraham, former coal secretary PC Parakh and Aditya Birla Group chairman KM Birla is not just a matter of vindication for these gentlemen, it is a matter of utter shame. Not just does the CBI have egg all over its face, the questions for the government of the day are, one, how it plans to protect civil servants while doing their job and, two, how are corporates expected to remain honest. Despite.........
Reserve Bank hints at more SLR cuts in the near future
.........DK Joshi, chief economist of Crisil, said, “One can expect further reduction in SLR. An SLR reduction is a move towards reducing structural constraints to monetary policy transmission and providing banks with more flexibility in their lending decisions.” Though the impact of the change in policy rate is still unfolding, the transmission of policy rate to deposit and lending rates of banks is relatively less pronounced as compared to money market rates reflecting the presence of structural rigidities in the credit market said the report.............
Nomura Raises India Growth Estimates
..........Meanwhile in the near term, Nomura pegged India’s second quarter GDP growth at 5.9% year over year, up from their previous estimate of 4.7%. India is on a tear. And investors holding the Wisdom Tree India (EPI) exchange traded fund are loving the dynamic duo of Narendra Modi at the Prime Minister position and Rajan Raghuram running the Reserve Bank of India. ...........
Reconstruction question
.........Bad assets not only eat into internal accruals that might otherwise be used to enhance capital, they also weaken the ability of banks to attract fresh capital from outside. In the Indian context, if the government wants to preserve its majority shareholding in the public-sector banks, it will need to commit an even larger amount of funds because of this. Finding ways to both reduce the burden of existing NPAs and contain their rise in the future has clearly become a regulatory imperative........
Growth-inflation dynamic
.............The growth -inflation dynamic was bound to figure prominently as indeed it does in all RBI statements., There cannot be substantial changes in the RBI’s monetary stance between the third bi-monthly monetary review of August and the annual report. With inflation continuing to remain at high levels, the possibility of a rate cut in the near future is practically ruled out. This is very much in line with recent monetary policy statements .The RBI’s hawkish stance to counter inflation -interest rates have been raised three times by 25 basis points each since September last,-will therefore continue. Retail inflation which was coming down ..........
PSBs in limbo
.............It is not easy to restructure PSBs, given the scale of micro-management of these banks during the United Progressive Alliance government's regimes. The legacy of government directives has further confused the top managements in public banks. PSBs have acquired a habit of complying with these directives first and then adhering to the instructions of the Reserve Bank of India. Even if the government ownership is diluted to 33 per cent, what is the guarantee PSUs will get a new governance structure? ..........
Finance Ministry Mulls Splitting CMD Post for PSU Banks
..............Earlier, bifurcation of the CMD's post was also suggested by Reserve Bank to the Finance Ministry. RBI had accepted that CMDs of public sector banks enjoy absolute power along with boards. The central bank had also said CMDs often dominate the board during their tenure and therefore it also recommended that the post of CMDs be separated to empower the board. In PSBs, the top executive is designated as CMD, with the exception of the largest lender State Bank of India, where the top position is commanded by the Chairman and there are four Managing Directors with clearly defined executive roles under her/him.............
PM asks banks to make financial inclusion a national priority
.........In an email to all bank officers, the prime minister described the task as “gigantic”, but asked banks to put in all their efforts to make sure no one was left without a bank account. “We need to enroll over 70 million households and open their accounts. This is a national priority and we must rise to meet this challenge. There is an urgency to this exercise as all other development activities are hindered by this single disability. I am sure we will overcome this situation collectively,” he said..........
Fin Inclusion can Curb Ponzi Schemes: Rajan
....“SLCCs (state-level coordination committees) should focus on financial inclusion for flow of public savings to the formal channels and protection of deposits of public mopped up by unauthorised and unscrupulous entities“, Reserve Bank of India governor Raghuram Rajan told state secretaries. The 27th conference of the state finance secretaries held in Mumbai discussed the matter of ponzi schemes threadbare to protect gullible and poor savers from being lured by pyramid operators. State secretaries have agreed to develop a dedicated website for SLCC members for sharing the developments and best practices and information on dubious entities. They suggested strengthening of the Economic Offences Wing and Cyber Cells to curb the menace.........
Read - ET
Credit card transactions: Has RBI created an Uber-mess?
............Should the RBI then adopt the model for all players or should it punish Uber and the likes in an effort to prevent possible fraud and to level the playing field for all service providers? To help make up your mind, here’s a selection of Business Standard’s top stories on the whole issue...........
RBI seeks corrective plan on Bhushan Steel loans
The Reserve Bank of India (RBI) has put the Rs 40,000 crore exposure of banks in Bhushan Steel under the corrective action plan (CAP) for stressed loans. There are three options — including bringing new investor, restructuring the account and recovery of loans — under CAP for stressed assets. “We’re waiting for the RBI to work out/ approve the suitable formula under CAP. The RBI will decide the strategy,” said the chairman of a leading PSU bank.......
RBI cautions states against debt-waiver schemes
...............Rajan said debt-waiver schemes have an “adverse impact on the financial health of the banks whose capital needs have gone up due to enhanced prudential requirements and deterioration in asset quality and the macro economy in general.” Rajan’s comments comes after the new government of Andhra Pradesh announced loan waivers of Rs 35,000 crore..............
Enact laws to protect depositors’ money
............Certain entities, which are out of purview of financial sector watchdogs, have often taken advantage of the regulatory loopholes to raise large amount of deposits. States like Tamil Nadu and Odisha have already enacted model Acts to take care of depositors’ interests. Sinha sought cooperation of the states in this initiative by conducting investor awareness workshops and training officials. Sinha also sought help from the states to curb the off-system “dabba trading”, the RBI release said..................
Reinventing the Planning Commission
.............In general, the problem for the designers of the new organization is to understand where to draw the cut-off line for deciding when the Commission needs to step in. That is the design issue. But more than that, the Commission needs to be staffed and led by people who are not aggrandizing in nature. Originally, the Planning Commission too was expected to be a think-tank. But within some years...........
After the plan panel goes
..........Given this history, what should come next? Given the size of India’s states, given their increasing competence in governance, the present moment is an ideal time to scrap all plan transfers. The Finance Commission should be able to exercise its constitutional role unfettered, determining revenue-sharing transfers to the states, but in the form of unrestricted funds. The Finance Commission should abandon all its efforts at imposing conditions. The Finance Ministry should provide technical analysis of individual ministry proposals for spending, including..............
An ode to the Planning Commission
.........By the 1990s, planning was no longer a major social gestalt. It was now a technocratic, bureaucratic body, centred around fragmentary debates. The legend had shrunk but its power to determine life chances remained. By the time the results of Mr. Modi’s victory were declared, the future of the Planning Commission was in doubt. There was a sense that planning was impervious to the needs of the new federalism. In his Independence Day speech, Mr. Modi dismissed and dispensed with the institution without a footnote of thanks. There was a sadness to his rank indifference. But politics cannot dismiss history. Planning was once a great idea, a wonderful fable of the dreams, even the arrogance of knowledge. It was a great experiment which became erratic, but its history, its genius, its innovations need to be told and told fully......
HDFC Bank expanding in UP backwaters
............He informed HDFC Bank had also achieved its target of opening 62 new branches in UP under the central plan to augment the network of commercial banks' branches in the state by March 31, 2014 for effective financial inclusion and higher branch-population ratio. Meanwhile, HDFC Bank rolled out its series of 'secured banking workshop' in the state. It is aimed at educating customers on matters concerning safe banking and secured transactions..........
Banks dole out festive offers
...........With banks focusing on e-commerce in a big way, it is expected more offers for online shopping are in the offing. SBI, for instance, is planning to come up with specific offers in this segment for its debit card consumers. “Since the most card spends happen around the festival season, we are looking at coming out with several offers across the categories of consumer durables, lifestyle, apparel, etc, for our consumers. We are looking at e-commerce as actively as other retailers,” said an SBI official............
PF return less than inflation: EPFO
How much is your provident fund corpus worth? An internal presentation by EPFO — which has discussed investments in real estate, infrastructure and shares as possible options to boost returns — has said that Rs 100 deducted from your salary in 2005, when marked to inflation, was worth Rs 97 eight years later.............
Read - TOI
Read - TOI
Complying with I-T provisions of clubbing income
..............Taxmen have plugged the loophole by extending clubbing provisions to the son’s wife also. It is provided that any income arising directly or indirectly to son’s wife, as a result of transfer of asset otherwise than for adequate consideration, shall be the income of transferor. It is pertinent to note that, the relationship of husband-wife, father-in-law/mother-in-law and daughter-in-law should subsist both at the time of transfer of asset and at the time of accrual of income. Therefore, if assets are transferred before marriage to the would-be daughter-in-law for inadequate consideration, there shall be no clubbing even after marriage...........
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