No cap on MFI interest rates

Amidst hue and cry over micro-finance institutions (MFIs) charging the rural poor exorbitant interest rates, Reserve Bank of India norms continue to allow these entities a free hand in determining their charges. The banks lending to MFIs too continue to have full discretion in fixing their rate of interest.   RBI has issued a latest master circular reiterating its earlier stand on micro-credit on February 14. Master circulars are like ready-reckoners on RBI rules related to a particular aspect. MFI sources said the latest circular removes doubts whether a cap on their rates was in offing, hinting there was a chance of upward revision now. Farm activists of the region, on the other hand, are crying foul, saying finally MFIs were replacing the usurious moneylenders in villages.  The circular said the interest rate applicable to loans given by banks to micro-credit organisations or by micro-credit organizations to self help groups (SHG) or their members would be left to their discretion. At the same time, the circular said competing MFIs were operating in the same area trying to reach out to the same set of poor. This had resulted in multiple lending and overburdening of the rural households.  MFI lending is divided into loans to SHGs mainly run by women and having a common bank account and joint liability group that need not have a common account. D Sathiah, head of strategic services of Basix, a NBFC engaged in micro-lending, said with this circular there were chances of the rates going up by 2% as even the banks might be now charging more.  He said the circular amounted to reiteration of the earlier status while the Malegham Committee on micro-finance had recommended MFIs should charge up to 24% though not directly mentioning a cap should be imposed. However, he also said that there was negligible lending by the banks to MFIs that also meant there might not be much change.  Moin Qazi of Asia Pragati, also a MFI, said that a cap should have been imposed on lending rates. MFIs get funds at around 12% from the banks but lend at around 24%. The rates were as high as 32% before the issue came into limelight. Even as a higher rates were needed to cover defaults, a spread of almost 100% of the cost of the funds was too high, he added.  Farm activists say that the move would only add to the farm distress. States were preparing laws to control MFIs with Andhra Pradesh already having put in a place a regulatory body, the circular would shield the MFIs, said Kishore Tiwari of Vidarbha Jan Andolan Samiti. He said, "there is an urgent need to appoint a regulator for this sector."

9.5% interest on EPFO may get nod

The Employees Provident Fund Organisation ( EPFO) stood its ground on offering 9.5% interest to over 4.71 crore subscribers with Labour and Employment Minister Mallikarjun Kharge expressing hope that the finance ministry will shortly give its concurrence to the proposal. The Finance Ministry has to give concurrence to the rate of return decided by CBT and notify allowing tax exemption on the entire such earnings on PF deposits.  Downplaying the ongoing tussle between the two ministries over hiking the interest rates on PF deposits, Kharge said there was " no tussle between the two ministries over giving 9.5 per cent interest rate." Following discovery of Rs 1,731.57 crore in suspense account, the EPFO trustees favoured raising the rate of interest on provident fund deposits to 9.5 per cent for its 4.71 crore subscribers from 8.5 per cent which is being paid by EPFO since 2005- 06.

Is a further hike in interest rates by the RBI required to keep inflation in check?

The majority concurs that the Reserve Bank of India should increase rates.  The central bank raised interest rates six times in 2010 to help tame inflation. But analysts are divided over whether further rate increases will help in combating inflation. The problem now is not demand-pull inflation. Food prices, which are stoking inflationary expectations in the economy, are being driven by supply bottlenecks. An increase in key rates will do little to check food inflation. Further rate increases will only take a toll on India's growth story just when the economy is recovering from the slowdown. The growing interest rate differential between India and the US will also attract a torrent of capital, putting pressure on the rupee and hurting the interests of exporters.

RBI may go for further monetary tightening measures: PMEAC

The Reserve Bank may take further monetary tightening measures to tame inflation which stood at 8.23 per cent in January, the Prime Minister’s Economic Advisory Council said today. “RBI will have to take a view looking at level of inflation. It is still at an uncomfortably high level. Some action, continued action, by the RBI (to tighten monetary policy) may be required,” PMEAC chairman C Rangarajan said. His remarks came even as inflation , though down marginally from December, continued to be above 8 per cent, a level where it has stood at since January 2010. The RBI has already hiked its short-term lending and borrowing rates by 25 basis points at its third quarterly review last month to tame inflationary pressure.  The apex bank has also termed inflation control as its topmost priority.  Asked about the fall in inflation numbers in January, Dr. Rangarajan said: “In some ways, it was expected. We can see inflation falling to 7 per cent by March.”  At last month’s review, the RBI had revised its inflation estimate to 7 per cent by March-end, from the earlier 5.5 per cent.  Inflation declined marginally to 8.23 per cent in January from 8.43 per cent in the previous month, as prices of certain commodities like wheat, pulses and sugar eased, although essential items like onions and other vegetables continued to remain firm. Besides, food items, many experts have also voiced concern over global crude prices which have crossed a 28-month high at $ 102 per barrel on account of political instability in the Middle-East, specially Egypt.

AP insists it won’t repeal law on MFIs

Andhra Pradesh insists that it won’t change a stringent new law that has brought the activities of microfinance institutions (MFIs) to a virtual halt in the state that accounts for one-fourth of the Rs.20,000 crore industry.  This runs counter to the conclusion of a panel set up by the Reserve Bank of India (RBI) that the state law “will not survive” if the recommendations it has made are accepted. “That does not change our stand,” Reddy Subramaniam, principal secretary of the Andhra Pradesh government, said in a phone interview. “We are fully aware of the situation.” He was asked whether the panel recommendations covering contentious issues such as high interest rates and over-lending would suffice to replace the state Act. RBI is currently in the process of studying the proposals made by the Y.H. Malegam panel on MFIs. Top central bank executives, including Deputy Governor K.C. Chakrabarty, are likely to meet Andhra Pradesh government officials and senior bureaucrats of some other states on 22 February to discuss the effects of dual regulation, according to two persons familiar with the development. Subramaniam confirmed that RBI has called a meeting on 22 February for feedback from the Andhra Pradesh government on the Malegam committee report. The banking regulator may seek a consensus on MFI regulations by asking states not to promulgate separate laws on the sector, said one of the persons cited above. “This (states having separate regulations) can create huge difficulties for MFIs operating in multiple states,” said the person, who heads a Hyderabad-based MFI. Nearly 80% of the industry is controlled by MFIs that are incorporated as non-banking financial companies (NBFCs). A proposed Central microfinance Bill, yet to be tabled in Parliament, envisages the National Bank for Agriculture and Rural Development as the regulator for smaller MFIs.

Cheque mate

Two months after the Reserve Bank of India (RBI) introduced the new guidelines for the Cheque Truncation System (CTS) in the National Capital Region, some customers have had a nasty surprise: Many cheques started returning to issuers, due to alterations and over-writing in them. The CTS is an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically. In this process, the existing system of settlement of payment on the basis of physical cheque movement is eliminated. The technology was introduced in the NCR and will be subsequently implemented in Chennai by the middle of the year and in other places like Mumbai. This will minimise the scope for frauds and provide benefits to both banks and the customers. As a result, any cheque which has over-writing or other corrections will be returned to the issuer of the cheque. However, changes or correction can be done on dates and for any other changes, one needs to issue a fresh cheque. The cheque images captured at the presenting bank in the NCR are transmitted to the clearing house for onward transmission to the payee or drawee bank. It is the responsibility of the drawee bank to capture the inward data and images and generate the return file for unpaid instruments. The electronic image of the cheque is sent to the drawee branch along with the image of the deposit slip which is clipped with the cheque by the customer. CTS reduces the scope for clearing-related frauds and minimises the cost of collection of cheque. For the bank, the benefits would be immense which would help them to introduce new products and optimise resources. Globally, CTS is being practised across many countries for faster clearing of cheques. The RBI has given a directive to banks prohibiting alterations/corrections on cheques cleared under the image-based CTS. The central bank has also clarified that rule does not apply to cheques cleared under other clearing arrangements such as MICR clearing,non-MICR clearing, over-the-counter collection (for cash payment), or even for direct collection of cheques outside the Clearing House arrangement. Diwakar Nigam, managing director of Newgen Software, the company which has developed the CTS software in NCR, says the system offers better reconciliation and will help prevent fraud. “It will also help a customer to get clearance within NCR in one day’s time and bring in efficiency in the process. It will also reduce the heavy paper-load as the process will be completely digitalised.” He says the second stage will cover Chennai and other southern regions and then to Mumbai. However, it will take three to five years to implement the process across the country. Realisation of proceeds of cheques can be done the same day itself and not 3-4 days which is currently the case across the country. For inter-city cheques, it takes two days for the clearance. CTS is more secure and is protected by a comprehensive Public Key Infrastructure-based security architecture which incorporates basis security and authentication checks such as dual access control. It is more secure a system and does not create any delay or inconvenience to the customer in case the cheque is lost in transit. Bankers say customers should use a dark-colour black ink pen while drawing the instruments and utmost care must be taken while using the rubber stamp and it should not be used on the printed code of the instruments. The physical cheque is warehoused with the presenting bank, in case the customer wants to get back the instrument. Experts the central bank must conduct an awareness campaign on over-writing and other corrections on cheques. “People usually sign near the correction as that is what has been done for many years. But with CTS, a cheque which has an alteration, even with a signature beside the alteration the bank will not accept the cheque and instead return it to the customer,” says a banker. Analysts say customers will have to be careful while issuing cheques for credit card payments, utility payments, insurance and investments, as most of them are linked to late payment fees. As a result of the central bank’s new directive, many utilities have been turning away cheques with any form of correction or alteration even if the changes were validated by the cheque drawer’s signature and that too in places either than the NCR. To avoid any late payment charges, they must pay well before time so that in case the cheque is returned, the customer will have enough time to issue a fresh cheque.

Inflation eases, but no one’s ready to bet it’s a trend yet

Headline inflation rate based on wholesale price index (WPI) did show signs of easing when it fell to a two-month low of 8.23% in January from 8.43% in December. But not everyone’s convinced the road heads down from here. Going by the naysayers, high global commodity prices and supply side bottlenecks could throw surprises going forward. “As of now, inflation has probably peaked out. But we will need to keep an eye on global commodity prices and supply side bottlenecks,” said Anubhuti Sahay, economist, Standard Chartered Bank. A Prasanna, economist, ICICI Securities Primary Dealership, said, “In headline terms, inflation is going to ease, but the point is it would not come down too fast. It will come down only gradually.” This means inflation will continue to be a cause of concern for the Reserve Bank of India (RBI). A few economists in fact feel WPI inflation will rise again.  “February 2011 headline inflation can rise back to about 8.50%. Even though food inflation is now easing, non-food inflationary pressures remain strong on the back of rising commodity prices globally, especially energy,” said Gaurav Kapur, senior economist with the Royal Bank of Scotland NV. The strength of inflationary pressures is visible from the fact that despite a significantly high statistical base effect of almost 1.5%, the headline inflation in January eased by just about 20 basis points, Kapur pointed out. According to the economists, inflation will be above RBI’s comfort zone of 7% by March and will be hovering in the 6% zone for the entire 2011, forcing the central bank to keep hiking rates further. “Inflation will be about 6% pretty much during 2011 due to which RBI will be concerned,” Prasanna said. Siddhartha Sanyal, chief economist for India, Barclays Capital sees March inflation numbers at 7-7.5%. “Talking about the bigger picture, the stickiness in inflation still remains. In FY12 also, the inflation will remain sticky,” Sanyal said. All the economists DNA spoke to expected the RBI to go for one more hike in the repo rate and reverse repo rate, of 25 basis points each, in the next mid-quarter review of monetary policy to be held on March 17.

Don't malign the MFIs

The controversy over the role of microfinance institutions (MFIs) refuses to die down. While one side believes MFIs are ripping off customers and adding to indebtedness of households, which has resulted in higher suicide levels, the other side presents equally compelling arguments. It points to how MFIs are saving rural folk from moneylenders, how their interest rates are lower than moneylenders, how they're more convenient for borrowers, and so on. While the political class, especially in Andhra Pradesh where MFIs have their largest business, have come down against MFIs, even the Malegam Committee of RBI has seen some merit in the arguments—yet it has put many curbs on how MFIs are to function, on the interest rates they can charge, and so on. While the importance of microfinance in consumption-smoothening should not be underestimated, it has a larger impact when the loans are given for productive assets. Evidence from Bangladesh and Indonesia indicates that high-quality, dependable, receptive and long-term oriented MFIs for the poor can go a long way in improving access to finance (Morduch and Rutherford, 2003). Recent studies have also pointed to the crucial role that can be played by MFIs by providing composite services; given the wide array of financial transactions that typify the financial life of the poor.      

Economists See Rates Rising 1% More in ’11

RBI’s task of controlling inflation, especially since it’s supply-driven, will be more complicated - Economists expect the Reserve Bank of India to raise key policy rates by 50-100 basis points (1 bp is 0.01%) this year after they analysed the latest inflation figures released by the government. The annual inflation rate, measured by the variation in wholesale price indices (WPI), rose 8.3% in January. Though much of the price rise, which has moderated over the previous month’s levels, has been largely due to supply-side factors, economists expect the Reserve Bank of India’s job, which is essentially focused on managing the demand side, to be more complicated.
“The current spell of inflation in India remains supply driven, but an elevated headline print and sticky core inflation will make the job of the central bank more complicated,” said a report by Sidharth Sanyal and Rahul Bajoria of Barclays Capital. The central bank continues to prioritise inflation management over growth concerns. We expect RBI to deliver another 75 bps hike in the repo rate during 2011, taking it to 7.25% by the end of the year. However, given the current structural pressure on liquidity along with high inflation, we think policy rate hikes may no longer be “costless” for future growth,” the report said.  “We maintain our view of RBI hiking by an additional 50bps in 2011. This would take the repo and reverse-repo rates up to 7% and 6%, respectively,” said a report by Rohini Malkani of Citi. “The composition of food inflation reveals that persistent high prices appear to have a structural as well as cyclical component. This, coupled with higher oil prices, is likely to result in inflation being sticky at 6.5-7% with an upward bias through 2011.”  Besides, both HSBC and Deutsche Bank expect RBI to raise rates by 100bps. “We expect the central bank to hike policy rates by 100bps through the course of 2011, taking the repo rate to 7.5% by the end of the year,” said a report by Taimur Baig and Kaushik Das. “We see substantial risks of WPI inflation remaining higher than RBI’s forecast of 7% by end-March 2011. A bigger concern is that from the second quarter of 2011, the base effect would turn adverse and put further pressure on WPI inflation,” they said in the report. “Add to that a likelihood of a nominal hike in diesel (5-6%) and petrol (10%) prices by the middle of the year, there is then little scope of WPI inflation to stabilise below 8% through the course of 2011,” the report added

Khandu urges RBI to ensure detection of fake currencies

Arunachal Pradesh Chief Minister Dorjee Khandu has asked to keep note-sorting machines for all banks in the state to check the increasing cases of circulation of fake currency notes.  Raising this issue during a meeting with Shyamala Gopinath, Deputy Governor, Reserve Bank of India (RBI), at Itanagar last evening, Mr Khandu lamented the fact that even the banks in the state have been mistakenly issuing fake currency notes in absence of proper note-sorting machines and devices. He said the issue needs to be seriously tackled to safeguard the nation’s economy. Expressing concern over the shortage of staff in the banks, he said it is causing severe inconvenience in the customers who stands in long queues to get their work done. The Chief Minister further suggested for increasing the strength of the staff in the banks and requested to conduct recruitment in the state so that more and more local youths could participate in the procedure and get job in banks. During the discussion, the Deputy Governor informed about unscrupulous activities of unincorporated bodies operating in the state which needed to be content immediately by enacting a Protection of Interest of Depositors (in Financial Establishments) Act, setting up of Economic Offences Wing and Framing of Rules under Chit Fund Act, 1982. She said the state government being the administrator under the money Circulation 1978 can authorise an official to initiate section against such bodies. ''Out of 34 unbanked blocks in Arunachal Pradesh, 11 have been selected for opening of bank branches which would be opened by March 2012,'' the Deputy Governor revealed.  She, however, requested the state government to put in place suitable infrastructure and ensure that necessary amenities in terms of road, telephone, electricity, premises and connectivity are in place. She further highlighted the need to implement the Crop Insurance scheme for the farmers of the state for which the union government would be providing 50 per cent and the state government needs to provide the rest. Responding to the suggestion, Mr Khandu agreed to issue appropriate directives to the departments concerned to take up the plan immediately in view of the state facing regular flood problems every year wherein instance of crop damages have become a regular feature. Apart from the regular discussion, issue on setting up of Rural Self Employment Training Institute (RSETI) was also discussed. The RBI sought land for setting up of the RSETI in all districts to which the Chief Minister assured to provide all possible assistance.

Savak Soharab Tarapore blasts inflation-pussyfooting, says RBI failed so far

Former Reserve Bank Deputy Governor Savak Soharab Tarapore has said the "soft and calibrated monetary policy measures" taken by the central bank so far to batten down runaway inflation have failed and has called for more sterner and concerted steps to tackle price rise that has become a national crisis. "There is no alternative to unequivocal and unswerving policy action to tackle inflation that has now become a major structural problem. The efforts of the RBI in controlling inflation have failed so far," he told at a function organised by research agency Dun & Bradstreet at Mumbai over the weekend.  Warning that the government's as well as RBI's pre-occupation with high growth at the cost of inflation will be counterproductive and disastrous, he called for "a proactive, forward-looking monetary policy to batten down inflation and not the baby-step measures as it has been recently doing." Stating we can't get away from the fact that inflation is all pervasive as it has become generalised, Tarapore, who played a key role during his days at RBI in monetary policy, foreign exchange regulation as well as on capital account convertibility, said, "the over 13 per cent food inflation just cannot be wished away as a supply-side problem." "Even after a 4 percentage point slump last week, the number is intolerably high and gnaws into the vitals of large tracts of the population." Arguing that "there is no soft monetary policy" when it comes to fighting inflation, he blasted the belief gaining currency among policymakers that it is possible to curb price rise by resorting to small, calibrated steps thus not hurting growth. "You can't slay the dragon of inflation without hurting growth," he said, quoting economist CA Yandle.  "There is an element of disenchantment with inflation targeting at RBI now. This does not mean it cannot wield a strong monetary policy to control inflation," Tarapore said. "If the timely action is delayed and inflation rises to unacceptably high levels, the monetary policy required is very harsh, as a cold turkey approach becomes inevitable." Stating that the most important remit of any central bank is to keep inflation low, he said, since the Reserve Bank cannot keep prices low by producing more goods, it must ensure that there isn't too much money in the system chasing too few goods. Pointing out that the consumer price index-based inflation is the globally accepted measure of price rise, he said, "the WPI-based inflation, which we follow even now, is a poor indicator of inflation at the grassroots level," and lamented that we are yet to have a consumer price index (CPI), which can be used for policy purposes. Quoting an NCAER study, he said as many as 40% of the households account for only 14 per cent of income, but spend as much as 63% of their incomes on food, leaving little for saving. On the other hand, the top 20% account a vast 52% of total income and bulk of savings and also 45% of aggregate non-food consumption. Warning that the biggest treat to the high growth story is the inflation spiral, he said, "given the large number of the poor in our country, a 6-7% sustained growth with a 3-4% inflation would be preferable to a 9% growth with a 9-10% inflation. "High economic growth with high inflation is not a sustainable policy option," the eminent economist and monetary policy expert concluded.

Banks seek shorter term for tax-saving deposits

Banks have once again knocked on the doors of the Government to reduce the duration of the tax-saving term-deposit scheme to three years from five years. They want this change so that the resources so raised not only support infrastructure lending, which has gained traction over the last one year or so, but also suitably address the duration mismatch between assets and liabilities. Banks have not been able to make much headway in mobilising funds under the tax-saving term-deposit scheme. Given that they could miss out on higher returns should interest rates head north, savers perceive the five years lock-in as too long a duration to commit funds. “The tax savings term-deposit scheme in the current form is not favoured by savers as funds get locked in for five years. As premature withdrawal of the deposit is not allowed, the saver will have to forego an opportunity to earn better returns in case interest rates go up. Further, loan/overdraft against these deposits is not available,” said Mr K. Unnikrishnan, Deputy Chief Executive, Indian Banks' Association. Savers will be willing to park their money in the tax-saving term-deposit scheme if the duration is cut to three years, he added. Banks had made a similar representation to the Finance Ministry last year also. Banks pay around 8.5 per cent interest on tax-saving term deposits. According to the Bank Term Deposit Scheme, 2006, deduction is available on investments under Section 80C of the Income-Tax Act, 1961, on investments (minimum of Rs 100 and up to a maximum of Rs 1 lakh a year) in term deposits of five years' maturity in a scheduled bank. Under Section 80C, premium towards life insurance and unit-linked insurance plans, subscription to public-provident fund, employee's contribution to provident fund, investment in National Savings Certificate and equity-linked savings scheme, and repayment of principal amount in a home loan qualify for deduction (up to a maximum of Rs 1 lakh a year) from a taxpayer's gross total income.

BYST Entrepreneur Awards 2010

Runner up- Ms Madhvi Khandve from Rural Maharashtra (BYST- BoB Entrepreneur) being felicitated by Hon’ble Ms Usha Thorat, Former Deputy Governor, RBI & Pramit Thaveri, CEO, Citi India.Business - Mfg of Ladies Garment at BYST Entrepreneurs win - Citi-Group Micro Entrepreneur Awards 2010. Award Function on January 27, 2011. at Jamshed Bhabha Theatre, Nariman Point, Mumbai. Every year BYST nominates its entrepreneurs for various national and international awards for entrepreneurial excellence. Citi-Group Micro Entrepreneur Award is one of those. The Citi Micro Entrepreneur Awards program is an endeavor to recognize the spirit of enterprise that has taken persons from poverty to a life of dignity. The awards acknowledge individual micro entrepreneurs, who have exhibited a superior ability to emerge from the below the poverty line through the use of micro-credit to build self-sustaining enterprises, create employment and contribute meaningfully to their communities. This year 6 of BYST’s entrepreneurs have won this prestigious award, for best entrepreneur of the year Out of these 6 entrepreneurs- 5 are the ones jointly supported by BYST & Bank of Baroda under BYST-BoB Entrepreneur Development Program. The awards function was held on Thursday, January 27, 2011 at Mumbai. Hon’ble Mrs. Usha Thorat, Former Deputy Governor, Reserve Bank of India was the Chief Guest at the ceremony. She along with Mr. Pramit Thaveri, CEO, Citi India, felicited the awardees from across all the four regions of the country, East and North East, West and Central India, North and South India. The awards are presented under the categories of National winner, National Runner-up and the Social Responsibility Category winner.

RBI may review KYC norms for tainted cos

The Reserve Bank of India may review ``Know Your Customer'' (KYC) and `"customer due diligence'' procedures followed by banks for loans to companies that have come under the scanner of investigating authorities.    Banks that have lent to DB Realty have said that their funds are fully secured. However, in addition to ensuring security of loans, RBI has asked banks to do ``enhanced customer due diligence'' for loans where a ``politically exposed person'' is the final beneficiary. In the case of DB Realty, the firm had availed of bank loans and had also provided an indirect loan to Kalaignar TV, a company which would qualify under the RBI definition of a `politically exposed entity''. RBI guidelines require banks to get approval from their top management to loans whenever a ``politically exposed persons'' benefits from a bank loan.

‘Cheque bounce cases at place of transaction’

The Delhi high court has ruled that cases of cheque bounce can only be entertained by courts at the place of transaction. The ruling has come in response to an appeal filed by Zeenat Insaf, a resident of Mumbai. She had challenged a Delhi trial court’s jurisdiction to entertain a complaint by Dr Sudanshu Bhattacharya, a cardio thoracic vascular surgeon in Mumbai. Bhattacharya had operated upon Insaf’s father at Breach Candy Hospital.  She had made a payment through a cheque of a bank located in Mumbai. Bhattacharya gave the cheque before his bank in Mumbai. The cheque bounced. The cardiologist contacted his lawyer in Delhi. He sent a notice to Insaf. A complaint against her was filed before a Delhi court on the grounds that the lawyer who sent the notice was located in Delhi. The Delhi high court said that sending a notice from Delhi would not confer jurisdiction on Delhi courts. Delhi courts have no territorial jurisdiction to entertain and try complaints filed by a respondent who is based in Mumbai.

RBI holds district-level quarterly meet

The Reserve Bank of India General Manager Vikram S Bajwa presided over the quarterly meeting of the District level review committee. The District advisory committee was held in the Punjab National Bank zonal training centre in Dehradun on Friday. Addressing senior bank officials,  Bajwa said that banks should work to further improve customer services and ensure their full contribution towards facilitating financial inclusion. He said that banking services should be provided through POS machine/BC module in villages with a population of more than 2,000 and Atal Adarsh villages.  The PNB circle head V.K.Srivastav, officials of various banks in the District, heads and representatives of different departments concerned were also among those present.  

India’s ATM market is set to grow more than three-fold by 2015

In 1987, HSBC set up the country’s first automated teller machine (ATM) in Mumbai’s Andheri East. Soon, almost all banks followed suit. By end March 2010, India had 59,737 ATMs. And the number is set to grow manifold in the future, too. There will be about 175,000 ATMs by 2015, according to the latest forecast by Retail Banking Research (RBR), a strategic research and consulting company based in the UK. That is an expected growth rate of 193 per cent in ATMs. And it is this lucrative prospect that makes the big two ATM vendors in the world — Diebold and NCR — drool. “We are pretty overwhelmed with the prospects for 2015. The installed ATM base is growing at more than 20 per cent year-on-year,” says Naresh Hosangady, South Asia vice-president and managing director of Diebold. “There are only 51 ATMs out here for a million heads,” points out Jaivinder Gill, who runs the show at NCR India. The comparative ATM numbers per million for Brazil, Russia and China are higher — 704, 536 and 155, respectively.  According to RBR, ATM growth in the first half of this decade was driven by private banks. State-run banks have since taken charge, with the State Bank of India and its eight associate banks leading the pack. The SBI Group set up 18,000 ATMs in the past seven years. Its share of installed ATM terminals went up from 32 per cent to 36 per cent during this period. The group created a world record in ATM shipments when it set up 10,000 terminals in 2009-10. It was the key reason why the share of state-run banks in ATMs now stands at 70 per cent, up from 50 per cent in 2003. Six others — private players such as ICICI Bank, HDFC Bank and Axis Bank, and the state-run Punjab National Bank, Union Bank of India and Canara Bank — have together set up more than 2,000 ATMs. They account for a combined market share of 34 per cent. ATM numbers will move up sharply.  “The places where you have ATMs are also going up. Take malls, for instance,” says Gill, referring to the retail boom — you have many more places to swipe when you shop, eat and play. Then you have debit cards, which are to reach 450 million by 2015, double the current base. Of course, it remains to be seen if point-of-sale swipes will mean that many less number of people will flock to ATMs. If so, it can technically act as a brake on ATM installations. But the counter point is that with cheque-truncation, ATMs are now more than just cash dispensers. The shared-ATM networks of banks have dramatically changed the story. Currently, there are five of them — the National Financial Switch (NFS), Cashnet, Cashtree, Mitr and BANCS. NFS is the leader. In March 2010, NFS had 56,711  ATMs of 38 banks — 95 per cent of the country’s ATMs were on it. And ATM usage got a huge boost when the Reserve Bank of India (RBI) asked banks not to charge cardholders of their rivals. Users can now make five free transactions a month on an ATM of other banks. You pay for more of such usage.         

MBGB branches placed under CBS

All the branches of Madhya Bihar Gramin Bank (MBGB) have been put under the central banking system ( CBS) and, therefore, all the customers of a particular branch of the bank have been linked to its all other branches.  MBGB chairman P N Singh said this on Thursday at a function held here to celebrate the foundation of the bank.  RBI Regional Director G Mahalingam inaugurated the cultural function. Singh also received a trophy and award for the best Gramin Bank from NABARD General Manager V Mohan Doss. He was also given a personal award for being the best chairman among all the chairmen of the various gramin banks in the state. Among others, Punjab National Bank General Manager V Sriniwasan also praised the performance of MBGB.

95% households in NE do not have access to banking – Shyamala Gopinath, Deputy Governor, RBI

Altogether 95 per cent households in North East do not have access to banking services against the national average of 43 per cent, RBI Deputy Governor Shyamala Gopinath said. "Despite efforts by RBI during the last 75 years, there are as many as 145 million households in the country not having access to banking", she said while speaking at the RBI's Financial Outreach camp at Karsingsa near. She said RBI has been launching such programmes in all the states of the region to extend banking services to every unbanked village. "Our institution has taken a conscious decision to bring the households into the banking fold which will not only result in making available the affordable banking services to everyone but will inculcate savings and investment habits among the people", she said.  "The challenge is enormous, but necessary, because financial inclusion is what will give people an opportunity to build better lives for themselves and their children", she added. Karsingsa, a village within the vicinity of the state's capital, having a population of over 2000 does not have banking facilities. The camp has served as a boon for the denizens as 203 No Frill Account (Zero Balance Account) with zero deposits were opened with SBI branches at Nirjuli and Naharlagun.

Central banks must respond in real time, says Subbarao

When Duvvuri Subbarao took charge as the twenty-second governor of the Reserve Bank of India (RBI) in September, 2008, he had to act swiftly to counter the impact of the global economic slowdown on the Indian economy.  Subbarao’s first eight months in office saw RBI reducing its repo rate six times and reverse repo rate four times, to support a slowing domestic economy. Repo rate was reduced 475 basis points and reverse repo rate 275 basis points during this period.  “When asked what he thought of the French Revolution, Mao Zedong had famously replied: It is too early to tell. People who take a long view of history, like Mao, take the position that it is just too soon to draw the lessons of the crisis,” Subbarao said on Friday in his welcome remarks at the start of the third PR Brahmananda Memorial Lecture by Stanley Fischer, governor of the Bank of Israel.  “Policy practitioners do not have the luxury of historians; they have to respond to unfolding developments in real time,” Subbarao added.  It appears that RBI’s efforts to pull the domestic economy out of slumber have succeeded, as India’s gross domestic product (GDP) growth is seen accelerating to 8.6 per cent in the current financial year. The country’s economy had expanded 8 per cent in 2009-10 and 6.8 per cent in 2008-09.  However, inflation appears to be playing the spoilsport, with the headline number climbing to 8.4 per cent in December, driven by high food prices. The central bank has also revised its inflation forecast for March to 7 per cent from 5.5 per cent earlier.  Rising prices have prompted RBI to raise its key policy rates seven times since March 2010. The repo rate has been raised 175 basis points to 6.5 per cent, while the reverse repo rate was raised 225 basis points to 5.5 per cent during this period. Things have become complicated, as the growth in India’s industrial output in December slid to a 20-month low of 1.6 per cent. Earlier this week, in Bhopal, Subbarao had admitted that balancing growth and inflation was a tough act.  “We want to set interest rates in a way that inflation can be contained without hampering the growth rate. But, this is not going to be an easy balancing act to resort to,” he had told reporters.  Most analysts reckon slow growth in industrial production is unlikely to convince RBI to keep rates unchanged in its next policy met, due on March 17, as inflation continues to remain a major concern.  “While there is a deceleration in growth, inflation is a bigger problem... we thus maintain our view of the RBI raising (rates) by an additional 50 basis points in 2011 and 2012,” Rohini Malkani and Anushka Shah, analysts with Citigroup Global Markets, said in a note.  Goldman Sachs expects RBI to increase rates 25 basis points in March and another 50 basis points in this calendar year. Some analysts, who did not wish to be named, however, said it was too early to take a long-term view on the direction of interest rates, with food inflation cooling to a seven-week low of 13 per cent for the week ended January 29 and growth in industrial production faltering.  A further slowdown in investment activities, coupled with easing food prices, might encourage RBI to take a pause before raising rates again, they said.  Subbarao, himself, believes that the central bank’s policy should take into consideration the present macroeconomic challenges.  “The central bankers were a triumphant lot in the years before the crisis.... The crisis then came as a serious blow to the credibility of central banks... the challenge for central banks, as indeed for all policy makers, is to learn the lessons of the crisis and reflect them in their policies,” Subbarao said. 

Cap likely on home loan pre-payment penalty

Home loan borrowers may get a piece of good news soon. Pre-payment penalties, which are 2 per cent or above of the outstanding loan for most banks at present, may be brought down to 0.5-1 per cent.  The Reserve Bank of India (RBI) is in talks with banks to bring down pre-payment penalty charges and has sought their views on how much the cap should be. People in the banking industry say a consensus has emerged among lenders that a penalty within 1 per cent of the outstanding loan will be feasible.  “There are two reasons why banks charge pre-payment penalty. First, from the asset-liability management perspective, when a bank lends for a longer tenure, it also needs to raise funds accordingly. So, there are liabilities to be paid off over a period of time. This becomes difficult when loans are paid before time. Second, in view of the administration and processing costs, banks may tend to charge less in the initial years in the hope that charging more in future would make up for it,” IDBI Bank Executive Director R K Bansal said.  The regulator’s objection to high charges is with respect to fair treatment to customers.

Lifting FDI curbs will help India trigger fund inflows: Locke

Reducing tariff and non-tariff barriers and lifting restrictions on foreign direct investment ( FDI )) could help India trigger fund inflows, crucial to help fix the country's creaking infrastructure, US Commerce Secretary Gary Locke said here Friday.  Earlier Friday, Locke met with the famed Dabbawalas of Mumbai and appreciated their management skills and strategising abilities.  Locke also met the Reserve Bank of India Governor D.Subbarao.

SBI's loan mela inaugurated by G.Mahalingam, Regional Director, RBI

A large number of prospective loan seekers thronged the SBI's three-day-long 'Vasant Rin Utsav' which was inaugurated by Reserve Bank of India's Regional Director G Mahalingam at S K Memorial Hall here on Friday.  After the inauguration, keys of six cars and sanction letters of five loans were given away to borrowers by the chief general manager, SBI, Jeevandas Narayan, who was present as chief guest.  The main attraction of the fair is 50 % concession in processing fee for car loans and 0.25% concession in interest rate from 37th month till the tenure of the home loans. About 12 car dealers and 20 builders have put up their stalls at the fair.

Star TV Talent Leadership and HR Awards at the World HRD Congress

Sandip Ghose, Regional Director, RBI, New Delhi distributing Star TV Talent Leadership and HR Awards at the World HRD Congress

RBI Governor holds talks with CS

Reserve Bank of India Governor D Subbarao and senior RBI officials held talks with the Chief Secretary Awani Vaish and senior officials of the State Government at Bhopal on Thursday. They expressed concern over the ratio reduction in loan deposit in tribal-dominated districts. It was informed at the meeting that there was 40 per cent depletion in loan deposit in eight tribal districts. The Reserve Bank of India Governor instructed the banks to come up with improvement in this regard. There should be 65 per cent loan deposit in the state and 40 per cent in tribal districts. The banks assured that they would extend the figure in next financial year. Welcoming the visit of Reserve Bank of India Governor to Madhya Pradesh, the Chief Secretary said that the regional office of Reserve Bank of India was working actively. The Reserve Bank of India Governor said that he was very much impressed with the State Government for designing joint agenda, which could not be seen in other States. At the meeting, the State Government drew the attention of the Reserve Bank of India Governor to State Government grant to set up hand held device, smart card and bio metric ATM by banks. Subbarao was informed that banking facility at the village more than 2000 population needed in Madhya Pradesh. Subbarao appreciated this initiative and said it would be decided only after positive results of financial audit in next financial year. E-kiosk is being used by State Bank of India that should be conducted by other banks too. The RBI Governor was apprised of education loan for the education of poor children under Government guarantee. Subbarao asked the banks to provide educational loan of Rs 4 lakh without guarantee so as to benefit maximum people. The security to banks was also discussed at the meeting. 

BOB opens its all Ladies staff Branch at Pune

Bank of Baroda has opened its all women staff branch at Sinhgad Road,Pune.The branch was inaugurated at the hands of Shri R K Bakshi,ED of Bank of Baroda,in the presence of Ms Kamala Rajan, CGM & Principal, College of Agriculture Banking, RBI, Pune. N Ramani,Corporate General Manager and C D Kalkar,GM-Maharashtra & Goa Zone of the Bank.Speaking on the occasion,R K Bakshi said that women are making mark in all walks of life and banking is no exception.He assured the customers that the branch will be providing advisory services to the customers in addition to normal banking products and services.

RBI again raps banks on teaser loans

The Reserve Bank of India (RBI) has once again expressed its discomfort over teaser loan rates and questioned banks’ business model for offering such schemes.  “Some banks are taking deposits at an interest rate of 9 per cent and giving long-term loans, especially home loans, at 8.5 per cent. I don’t know what type of accounting is needed to show that this is not a very profitable business,” RBI Deputy Governor K C Chakrabarty said, while addressing a seminar on International Financial Reporting Standards.  October, RBI had raised the standard provisioning requirement for teaser loans five-fold, to two per cent, to discourage banks from offering such schemes. Teaser loans are those which charge lower interest rates in the initial period and a higher one in later years. State Bank of India (SBI), the country’s largest bank, has been running such a scheme for the past two years. SBI tweaked the scheme following the increase in provisioning requirement. It has since written to RBI to exempt these from the requirement.    Its defense of the scheme is that it has helped the common man. SBI chairman O P Bhatt recently said, at the World Economic Forum in Davos, that almost 80 per cent of the home loans given by SBI were below Rs 10 lakh, which meant the ‘aam admi’ was being empowered. He said the bank had given home loans to nearly 300,000 people in India. “I am not fighting with RBI, but only clarifying. We only gave a discount on the rate for the first two to three years and the rate is higher than the cost of my funds. So, what is wrong in what SBI does?” Bhatt had said. However, the banking regulator believes such schemes expose banks to the risk of defaults in future, as the borrower might not be aware of the scale of increase in monthly installments as interest rates rise. Most lenders which had offered such home loan schemes had then withdrawn these, such as HDFC and ICICI banks, following the regulator’s expressed concern.   

Flexible inflation targeting best, says Bank of Israel Governor

Bank of Israel Governor and a former official of International Monetary Fund (IMF) Stanley Fischer has argued that "flexible inflation targeting is the best way of conducting money policy". "The tripartite set of goals of money policy set out in modern central bank laws provide the best understanding of what a central bank should try to achieve.  Among other issues a central bank should aim to maintain price stability, to support the other goals of economic policy, particularly growth and employment, so long as medium term price stability ­over the course of a year or two or even three ­is preserved, and to support and promote the stability and efficiency of the financial system," Fischer said while delivering the third PR Brahmananda Memorial Lecture on `Central Bank Lessons from the GlobalCrisis'.  "But 'flexible' does not mean that a country should not intervene in the foreign exchange market, or that the capital account should be completely open. Rather, it means that the country should not draw an exchange rate line in the sand and declare 'thus far, and no further'. Countries should not commit themselves to defending a particular exchange rate," he said.

RBI Board meets at Bhopal

The Central Board of the Reserve Bank of India met today in Bhopal. The meeting reviewed key economic, monetary and financial developments. Dr D. Subbarao, Governor, Reserve Bank of India chaired the meeting. Shri Y.H. Malegam, Prof. Suresh Tendulkar, Prof. U.R. Rao, Shri Lakshmi Chand, Shri H.P. Ranina, Smt. Shashi Rajagopalan, Shri Suresh Neotia, Dr. A. Vaidyanathan, Prof M. M. Sharma and Shri Sanjay Labroo were present at the meeting of the Central Board. Deputy Governors of the Reserve Bank, Smt. Shyamala Gopinath, Dr. K.C. Chakrabarty, Dr. Subir Gokarn and Shri Anand Sinha were also present.  The Central Board of Directors of the Reserve Bank meets at least once every quarter. The Board has scheduled meetings in Mumbai, Chennai and Kolkata each year. The post-budget meeting of the Board, traditionally held in New Delhi, is addressed by the Union Finance Minister. The other meetings of the Board are held in the remaining state capitals by rotation. The main function of the Central Board of the Reserve Bank is to provide overall direction to its affairs.  The Governor had a meeting today with the senior State Government and bank officials. The banks agreed to achieve a overall target of 65% CD ratio and target of 40% CD ratio in the 8 low CD ratio districts, mostly tribal by 2011-12. It was decided that a team of officers from Reserve Bank of India, Commercial Banks and State Government would  visit villages to make assessment of the work done, prepare a financial inclusion plan and ensure that by end of March 2012 all 2736 villages with population of above 2000 are covered in Madhya Pradesh. The banks may also draw up a special plan to include nearby villages below 2000 population. The State Government has also assured to include financial education in the curriculum of schools at higher secondary level by the academic year 2012-13. The other issues discussed at the meeting included higher credit flow for education loans, issues relating to urban co-operative banks and security of bank branches.   Earlier, on February 7 and 8, 2011, Dr. Subbarao visited Chhattisgarh. The Governor visited Khadma Village in Dharmatri district of Chhattisgarh for an outreach programme, where he interacted with the villagers, school children and SHGs, etc. The Governor called on the Chief Minister Dr. Raman Singh and discussed issues of mutual interest. Along with the Chief Minister, he laid the foundation stone of office building for RBI Office at Naya Raipur.  The Governor also interacted with students of IIM, Raipur. 

RBI Governor highlights five dilemmas in regulatory role

Reserve Bank of India (RBI) Governor D Subbarao and four Deputy Governors addressed a gathering of bankers in a meeting organised by Bankers' Club, Bhopal on Wednesday at Hotel Noor-us-Sabah Palace. Executive Director of Central Bank of India RK Dubey was also present on the occasion.  Speaking on the occasion, Subbarao highlighted the five dilemmas being faced by the RBI in its regulatory role. He also underlined the fact that unless the commercial banks, which are the conduit to implement various policy decisions, do not understand the underlying concerns, such policies will not be effective.  Elaborating on the five dilemmas, he stated that the first issue is how to balance the demands of growth and inflation management. Food inflation and commodity price inflation, as is well known, are the two main drivers of inflation. Changing food habits, especially in rural areas, due to increased consumption capacity, is causing structural inflation. Rise in commodity prices, such as oil, is resulting in commodity price inflation. Credit growth is another factor contributing to inflation. The challenge before the RBI is to balance the demands of growth and inflation, and ensure that the relevant policies result in expected outcomes. Deputy Governor Shyamala Gopinath explained the importance of financial stability reports which enable Reserve Bank of India to foresee different scenarios and undertake remedial measures. Developments in the recent past show that even in developed financial economies having well developed market, systemic risk is significantly higher than under adverse market conditions. Deputy Governor KC Chakrabarty exhorted banks to activate all their field controlling offices and branch offices so that banking facilities reach the entire population. At present, bank credit is not available to a majority of the population and almost a half of the population is bereft of banking services. Thus the need for activating the field units, Chakrabarty explained. Deputy Governor Subir Gokarn made an assessment of the state of the economy and the rapidly changing global environment. It is difficult to predict about emerging scenarios. Rising oil prices is causing greater concern. Deputy Governor Anand Sinha explained the need for collective behaviour of the system. He also underlined the need for bringing non-banking system under some kind of regulation, similar to the banking system. Executive Director of Central Bank of India RK Dubey spoke about the declining CD ratio in the State and pointed out that financial tie ups for big industrial units are mostly finalised outside the State and do not get reflected in the CD ratio of the State. 

Hope govt adopts fiscal consolidation plan: D Subbarao

The government should adopt a plan of fiscal consolidation in the coming financial year to April 2012 and beyond, the Reserve Bank of India Governor Duvvuri Subbarao said on Thursday. Subbarao's comments come just over two weeks before Finance Minister Pranab Mukherjee releases his budget for the next financial year on Feb. 28. Persistently high food prices have been a bugbear for the Reserve Bank. The central bank at its January 25 credit policy had warned of food inflation spilling over to the general inflation process as it raised the reverse repo and repo rates by 25 bps. Today, Governor D Subbarao has said that it is difficult to balance growth and inflation. Recent spurt in oil prices and the crisis in Egypt would add to India's domestic woes. Subbarao said, "Spurt in oil prices on Egypt crisis will hurt India," adding,"we have to be prepared for a further spurt in oil prices." He said structural rigidity and rising commodity prices are pushing inflation higher. He also does not see much movement in prices of wheat and rice, adding that it is difficult to say that the government's welfare schemes are feeding inflation. Food inflation eased in late January to just over 13% after having reached a one-year high of more than 18% on December 25, due to soaring prices of onions and potatoes.  The RBI chief also urged for a consolidation in the Indian banking system. He said it is up to banks to come forward with merger proposals. He added that the size of Indian banks was smaller compared to their global peers. His advice to banks was to "set interest rates in a way that they do not hurt growth." He further said that the central bank would evaluate the business models of applicants looking to setup new banks. The Malegam Committee had recently recommended a 24% interest rate cap on loans paid by microfinance institutions. He said he would meet representatives of states and MFIs to discuss the Malegam report and work out modalities to implement the panel's recommendations. He also revealed that plans are in the works to form a panel to study a slowdown in foreign direct investment. Subbarao said that the panel would suggest ways to encourage FDI.

RBI must understand factors responsible for decline in FDI: Subbarao

The Reserve Bank of India would conduct an internal study on practices responsible for the decline in the direct foreign investment (FDI) flows in the country. Talking to media in Bhopal after the meeting of the central board of Reserve Bank of India, Governor D. Subbarao said that RBI must understand the factors responsible for the decline in the FDI.

Bank unions suggest ‘Banking Ombudsman’ be changed to ‘Banking Lokpal’

Bank employee unions insist name of grievances cell should be easily understood by common citizens; also push for a special counter for senior citizens. A committee set up by the Reserve Bank of India (RBI) to look into the issues of customer services has agreed to change the name of the Banking Ombudsman to something simpler like the 'Banking Lokpal', which is less of a tongue-twister.  This suggestion was made by the Indian National Bank Employees' Federation (INBEF) to the committee headed by M Damodaran as many customers from rural areas were not familiar with the term ombudsman and would therefore not be forthcoming with their complaints on banking services to the department.   Subhash Sawant, general secretary, INBEF, said, "Many bank customers mainly from rural customers do not understand what ombudsman is all about. When we ask them to file a complaint with the ombudsman, they simply ask us, 'What is ombudsman?'  The Federation has also suggested that the number of offices of the banking ombudsman be increased. Currently there is only one office that is based in Mumbai and it covers mainly Maharashtra and Goa. It has also asked that a special counter should cater to senior citizens at the branches of all banks, during the first 10 days of every month, as the number of pensioners has increased sharply.  In its reply to IBNEF with respect to its suggestions, the committee said, "The title of the RBI Banking Ombudsman may be changed to a simpler, easily understandable one. The area of operations of the Ombudsman may also be enlarged." In a letter to the Federation the committee also said, "The number of pensioners is increasing. Special counters for pensioners may be considered especially during the first week of every month."   "The committee has agreed in principle to our recommendations. We welcome the response on the matter of senior citizens. About the matter of changing the name of the banking ombudsman, we will know when the report is out," Mr Sawant said.  Other bank unions were also represented along with the IBNEF at the meeting with the Damodaran committee which also discussed issues like clean currency notes, shortage of banking staff and banking-related security.

Panel to oversee Presidency faculty

The state government has formed a committee to oversee faculty recruitment at Presidency University to ensure quality. Former RBI governor Bimal Jalan, economist Amiya Bagchi, chairman of West Bengal Council for Higher Education, Subimal Sen and vice- chancellor of the university, Amita Chatterjee,  have been named by the state higher education department as members of the committee. Advertisements will be published in newspapers and applications invited from candidates across the country and abroad. "Presidency University has a long tradition of excellence. Every recruitment made will be done keeping in mind that this tradition has to be furthered," said state higher education secretary, Satish Tewari.

Unhappy about poor show, chief secy asks banks to set target

Unhappy with poor credit-deposit (CD) ratio in Jharkhand, chief secretary A K singh on Wednesday asked the bankers in the state to pull their socks up by setting monthly targets and conducting day-to-day monitoring. Singh's comments came at a time when the Reserve Bank of India is monitoring the financial inclusion drive of the banks all over the country. The chief secretary was addressing the 32nd state level bankers' committee (SLBC) meet on Wednesday. The chief secretary was irked to find that the CD ratio in the state by December 2010 was 43.99 per cent which was not only below the national benchmark of 60 per cent but also lower than the December 2009 figure of 45.22 per cent. 

It is up to government to deal with black money issue: RBI

Reserve Bank of India (RBI) today said it had limited powers to deal with the issue of black money as confidentiality clause came in the way of handling the problem of money kept in bank lockers.  Current rules do not allow banks to find out what had been kept in their lockers, RBI Governor D Subbarao said at a press conference here. "All this is governed by a confidentiality clause about which nothing can be done at the moment," he said, answering a query on unaccounted money in the lockers of Indian banks. Answering another question, Subbarao, who was on a two -day visit to the city, said although the RBI had no role to play in the Union Budget, it stood for fiscal consolidation of the banks. Subbarao said maintaining a balance between financial growth and controlling inflation was a tough task, but the apex bank was competent enough to handle this scenario.  

India to face challenge of inclusive growth

Reserve Bank of India (RBI) Governor D. Subbarao said India would face the challenges of inclusive growth in the coming days as the country would move on a higher growth trajectory.  Inaugurating an exhibition named Newsibition here on Wednesday, Subbarao said: ""In the second decade of the new millennium we are going to face challenges of inclusive growth and of meeting the challenges of transcending to higher growth rate."  Newsibition traces the journey of the Reserve Bank down 75 years through photographs, documents and visuals. The exhibition has been divided into nine sections representing different phases of Reserve Bank's evolution.  "Last year, the Reserve Bank of India (RBI) completed its 75th year. Since the time RBI was established 75 years back, how it grew and the area in which RBI worked, the governors of RBI, the security features of the currency notes, this is all we want to show through this exhibition," said Alpana Killewala, Spokesperson of RBI.  The exhibition is part of the Bank's outreach and financial literacy efforts, which commenced with the setting up of the Reserve Bank's Monetary Museum in Mumbai.

GOVT BANKS OPT FOR FASTER PROMOTIONS

It is now possible for public sector bank employees to climb the career ladder faster. Keeping in mind the shortfall that is expected at the top in the coming years, banks are tweaking their human resource policies. According to studies conducted by different banks, around 340,000 lakh employees will retire in the next 10 years. To compensate for this and support expansion, banks have to look at employing 500,000 to 700,000 people in the next 10 years.  To start with, some banks have introduced a fast-track promotion channel through which a deserving employee can rise much faster as compared to the traditional route.  Union Bank of India’s fast track channel can promote a scale-1 employee to scale-5 in 11 years.  “Thus, if a person joins our bank at the age of 23-25 years, he/she can be an assistant general manager by the age of 35-40,” said Chairman and Managing Director M V Nair.  The bank has promoted 548 employees through this system in the last four financial years. “This amounts to 11 per cent of total promotions in the period,” said Nair.  To take the shorter route, an employee must clear written tests, group discussions and personal interviews. promotion channel. “Currently, the average age at the general managyears,” said to look into issues related to human resources in public sector banks had pointed out that in the next five years, 80 per cent general managers, 65 per cent deputy general managers, 58 per cent assistant general managers and 44 per cent chief managers would retire. To address the issue, the committee had proposed a comprehensive strategy for succession planning and leadership development.