Ramdev effect: Trader converts Rs. 24 lakh into 100-rupee notes

Mumbai:  Besides throwing the ruling Congress party into a political quagmire, Baba Ramdev's abruptly-terminated fast-unto-death seems to have had a series of unintended consequences as well. One of the more bizarre ones relates to a metal trader in Pydhonie, who was so afraid of currency notes of 500 and 1,000-rupee deno-minations going out of circulation that he onverted his savings amounting to Rs. 24 lakh to notes of Rs. 100. He even paid an agent Rs. 24,000 to help him do so. It may be recalled that one of the yogi's demands was the withdrawal of Rs. 500 and Rs. 1,000 notes from circulation to make bribery more difficult.  The incident took place on Saturday evening, when, according to sources from Pydhonie, the metal trader panicked on hearing the list of Baba Ramdev's threats and demands. "He thought the government would accede to this demand immediately and he would lose Rs. 24 lakh out of the money he kept stashed away in cash as savings, because it was in denominations of Rs. 500 and Rs. 1,000.  Ramdev effect: Trader converts Rs. 24 lakh into 100-rupee notes. Besides throwing the ruling Congress party into a political quagmire, Baba Ramdev's abruptly-terminated fast-unto-death seems to have had a series of unintended consequences as well. One of the more bizarre ones relates to a metal trader in Pydhonie, who was so afraid of currency notes of 500 and 1,000-rupee deno-minations going out of circulation that he converted his savings amounting to Rs. 24 lakh to notes of Rs.100. He even paid an agent Rs. 24,000 to help him do so. It may be recalled that one of the yogi's demands was the withdrawal of Rs. 500 and Rs. 1,000 notes from circulation to make bribery more difficult.  The incident took place on Saturday evening, when, according to sources from Pydhonie, the metal trader panicked on hearing the list of Baba Ramdev's threats and demands. "He thought the government would accede to this demand immediately and he would lose Rs. 24 lakh out of the money he kept stashed away in cash as savings, because it was in denominations of Rs. 500 and Rs. 1,000.  He approached an agent to get it converted to notes of Rs. 100 and smaller, who charged Rs. 1,000 for every lakh," said a person close to the trader. Alpana Killawala, spokesperson for the Reserve Bank of India, said these kinds of transactions aren't illegal and even banks offer the facility of exchanging notes of higher denominations for those of smaller ones. "There is no irregularity till the time only currency notes are being exchanged. There are many banks that offer this facility as well.  But, for higher amounts, the banks are supposed to note down PAN card numbers and also deposit the money," she said. A source said many people prefer to get this done via agents instead of banks, to avoid the Income Tax glare. Mahindra Angara, president, Metal Traders' Association, said, "I haven't heard of anything of this sort. This must be a one-off case."  Baba Ramdev had called for the abolition of currency notes of higher denominations, claiming that the move would reduce corruption. He had stated that when the notes are of higher denominations, the bundles made out of them are thinner and easier to hide.  He had contended that the exchange of bigger bundles and in greater numbers would attract attention and dissuade people from giving and accepting bribes. Ramdev had, however, stated at the beginning of the strike that he was putting this particular demand on the backburner. 

NDTV Profit  

Coins in memory of Bhagat Singh remain a distant dream

It was in September 2006 that the Union Government decided to issue commemorative coins in memory of Shaheed Bhagat Singh to honour the sacrifices made by him to help the country attain freedom. Even after four and half years of the same, the coins have still not become a reality. An RTI query by social activist PP Kapoor has revealed that the Union Government was unaware of the number of coins produced thus far to be put into circulation. In reply to the query which was put up to the PMO, the Security Printing and Minting Corporation of India (SPAMCI) stated that commemorative coins of Rs 5 and Rs 100 denomination were produced by the India Government Mint (IGM), Kolkata only for the release function held at the martyr’s native village Khatkar Kalan in Bhagat Singh Nagar district in Punjab in September, 2008. After which, the general public did not get to see the coins in circulation. Though the SPAMCI stated that birth centenary coins of Rs 5 denomination were to be produced in ferritic stainless steel having a quality of 25 million pieces, it had no information about the number of coins produced till date. In the reply dated May 13, 2011, the corporation said that the dies for the same were being provided by IGM, Kolkata to IMG Hyderabad, which was assigned the task of producing these coins and work was under progress. The corporation also mentioned that dies and punches were being arranged by IGM and blanks were being done by IGM Hyderabad. It stated that after minting the coins, these would be handed over to the RBI for distribution. However, there was no mention of the coin of Rs 100 denomination in the reply. Social organisations led by the All-India Shaheed Bhagat Singh Brigade have already appealed to the Centre to introduce the commemorative coins of Rs 100 and Rs 5 denominations announced by it on the birth centenary of Bhagat Singh. Chairman of the brigade Yadavinder Singh Sandhu wrote a letter to the PM last year, urging him to bring the coins into daily.

The Tribune

Top urban co-op banks set to expand area of operations

India's top three urban co-operative banks — Saraswat Co-operative Bank, Cosmos Co-operative Bank and Shamrao Vithal Co-operative Bank — may soon spread their wings across the country and give private sector banks tough competition.  Following the Reserve Bank of India's nod for expanding its area of operations, the Mumbai-headquartered Saraswat Bank is drawing up plans for an all-India footprint.  Currently, the area of operation of India's largest UCB is restricted to six States — Maharashtra, Goa, Karnataka, Gujarat, Madhya Pradesh and Delhi. It has a network of 217 branches. “We have already applied to the RBI for issuing licences at 96 locations. Our target is to reach a business (deposits plus advances) level of Rs 50,000 crore by March-end 2016 from Rs 27,313 crore as on March-end 2011,” said Mr Eknath Thakur, Chairman, Saraswat Bank. The RBI is amenable to granting permission to well-managed and financially sound UCBs to expand their area of operation. Hitherto, UCBs could not expand their operations beyond a few States. Cosmos Bank (as on March-end 2011, total business, Rs 15,521 crore; and branches, 119) and Shamrao Vithal Bank (total business, Rs 10,512 crore; and branches,105) have sought the regulator's permission to expand their area of operations.

The conditions

The RBI will allow an urban co-operative bank to become a pan-India bank provided it has, among others, a minimum capital-to-risk-weighted assets ratio of 9 per cent, a minimum Grade II classification, net worth of Rs 500 crore or more, according to Mr Shashikant Bugde, Chairman, Cosmos Bank. “We have applied to the RBI to have a pan-India presence. Currently, we have branches in Maharashtra, Gujarat, Madhya Pradesh, Karnataka and Andhra Pradesh.  “Once the regulator gives us permission, we will expand our operations to Delhi, Goa, Tamil Nadu, Rajasthan and Tripura,” he said. Shamrao Vithal Bank plans to open branches in all States once the central bank's permission comes through, said Ms Himangee Nadkarni, Chief Financial Officer.

Business Line

Co-operative sector banks sinking, says HC

Raising concerns over the deteriorating state of co-operative sector banks in Maharashtra, the Bombay High Court on Tuesday said the General Manager of the Rural Co-operative Banking Cell of the Reserve Bank of India (RBI) be made a party to a litigation seeking action against the pathetic condition of the Kolhapur District Central Co-operative (KDCC) Bank.  The court felt the scope of the litigation could be widened to all co-operative sector banks instead of restricting it to the KDCC Bank.  “Many co-operative sector banks are virtually sinking, this is very serious and we cannot keep our eyes closed in such a situation,” the court remarked. “Tell us if there is any co-operative sector bank which is earning profit because of its operations,” Justice BH Marlapalle asked the state government.  Kolhapur-based activist Sunil Modi had filed the petition through his lawyer Uday Warunjikar stating that despite several inspections and audits indicating rampant malpractices in KDCC Bank, no criminal action had been initiated so far. Justice Marlapalle and Justice UD Salvi have asked the Registrar to file an affidavit stating measures taken by him against erring directors and officers of KDCC Bank.  Warunjikar told the court that many directors of KDCC Bank happen to be influential politicians, either sitting or former ministers.  “Probably, that is the reason why no action has been taken,” the court said.  According to Modi’s petition, the liabilities of the bank had exceeded the value of its assets. The net worth of the bank was minus Rs 22.08 crore as on March 31, 2007. In 2008, the net worth of the bank had plummeted to minus Rs 157.79 crore. The case will be heard further on June 22.

IE

The End May Be Nigh for Microfinance in India

The likes of the Andhra Pradesh law–and the inability of the RBI to counter it by asserting that it is the ultimate regulator of non-bank financial companies– creates “regulatory uncertainty that has a negative impact on the investment climate......


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Better planning for longevity risk is essential

The third component concerns commercial type organisations, whether in the private or in the public sector. The PFRDA should be given the powers to require these organisations to project organization-specific longevity risks, to subject them to stress tests, and to prepare plans for meeting such risks. They should include public sector financial institutions, including the Reserve Bank of India; private corporations with DB plans; public organisations such as the Indian Railways, Indian Post, public sector banks and others.

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Bank borrowings from RBI signal rate hike

Banks' rising borrowings from the Reserve Bank of India indicate that lenders foresee a spike in interest rates next week as the advance tax....

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Government of India appoints P K Panda as director of Bank of India

Bank of India has announced that Government of India, Ministry of Finance, Department of Financial Services, vide their notification dated 30 May 2011 has nominated P K Panda, Regional Director, Reserve Bank of India, Bhopal as director of the bank in place of G Mahalingam with immediate effect and until further orders. 

Face Value - A Whole Heap More to do for the Nabard Man

Unlike his three immediate predecessors, the new chairman of National Bank for Agriculture & Rural Development (Nabard) has an advantage. Prakash Bakshi, who assumed the reins last week is out and out a Nabard man. This gives him an edge at a time when the bank is facing challenges in channeling loans to boost capital formation in agriculture, strengthening the rural cooperative credit structure and empowering regional rural banks for successful execution of the government’s financial inclusion agenda by 2012. The past three chairpersons — Ranjana Kumar (2003-2005), YSP Thorat (2006-2008) and UC Sarangi (2008-2010) — all very distinguished professionals, joined the bank from outside and had to spent months to understand the functioning of Nabard. Before assuming charge at Nabard, Mr Kumar was the chairperson of Indian Bank and Mr Sarangi was the principal secretary to the Maharashtra chief minister. Mr Thorat was executive director with RBI and joined Nabard as MD before elevated to the chairman’s position.  In contrast, Mr Bakshi, a doctorate in Economics, has risen through the ranks and having spearheaded key departments like cooperative revival, farm sector, micro credit and financial inclusion, is readily abreast with the emerging demands of these verticals. Before being picked as the head of the institution, Mr Bakshi was at the vanguard of the 29-year-old entity’s first-ever organisational and business restructuring drive and many expects his elevation will add momentum to this initiative. He started his career as a lecturer at Ravishankar University, Raipur, before joining the Reserve Bank of India in 1979. He was part of Nabard since its inception on July 12, 1982. It’s now widely accepted that the country needs to look beyond traditional areas of farming and focus more on allied activities such as dairy, poultry or fisheries to clock a 4% agricultural growth, which is reckoned as a must for a sustained GDP growth of 9% or above. In this light, Nabard needed an overhaul so that it can adjust to the changing scene and make worthy contribution to boost the more or less-stagnated capital formation in agriculture. Another significant agenda before Nabard now is to create an enabling environment for the country's financial inclusion effort. For this, rural cooperative banks and regional rural banks (RRBs) need to be revamped fast and being the regulator, Nabard has to find ways to put them on modern banking technology platform. Under Mr Bakshi’s direction, it has already taken steps to this direction and as the chairman, he has to ensure proper execution of the efforts taken.  “He is very focused and will not mince words,” said a senior Nabard official. His colleagues find him accessible and business oriented. Earlier in his career, he was associated with the Vaidyanathan Committee for cooperative revival, member-secretary for the committee to examine the capital structure of RRBs. Such experience will certainly guide him in strengthening these two key agencies. Mr Bakshi will also have to take efforts to graduate the self help group-bank linkage programme to the next level. The scheme, immensely successful in empowering the rural women in a country where women do not get rights so easily, has reached saturation in several pockets and there are signs that many groups are disintegrating. He was part of the team that designed the world’s largest micro-credit programme, and now he needs to devise ways to hold the groups together and increase the extent of bank loans to them. His skills will also be put to test as Nabard is now busy drafting the revised microfinance bill, which is expected to give a direction to the country’s fledgling MFI sector.

ET

Inflation over the decades

The Reserve Bank's repeated rate hikes point to its concern over inflation. Consumer price inflation has been in double digits for the two consecutive years......


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Impersonal Numbers

Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty does not mince his words. He has taken issue with what has been an age-old practice among banks: of freshly-minted..............

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RBI wants more banks to launch mobile banking

Ms Shyamala Gopinath, Deputy Governor, RBI, flanked by Mr S. Raman (left), CMD, Canara Bank, and Mr P. Vijaya Bhaskar, Regional Director, RBI, at the launch of ‘CanMobile’ in Bangalore on Monday

Bangalore: The Reserve Bank of India (RBI) wants more and more banks to launch services on mobile, its Deputy Governor Shyamala Gopinath said here today. Launching Canara Bank's CanMobile, a mobile banking product, she said RBI has already enabled mobile banking and issued guidelines in this regard. "...And we do hope that more and more banks now join in the launch of this product," she said. According to Canara Bank's Chairman and Managing Director S Raman, the product is user-friendly, safe, secure and swift. It facilitates customers to conduct transactions on 24X7 basis from anywhere with the use of mobile handset. Registered customers of "CanMobile" can now access Canara Bank's services for balance enquiry, viewing of last five transactions, transfer funds intra-bank and inter-bank through Inter Bank Mobile Payment System (IMPS) provided by National Payments Corporation of India (NPCI). At present, the bank does not levy any service charge for funds transfer. Customers can daily transfer up to a limit of Rs 50,000 through Java/GPRS enabled mobiles and up to Rs 5,000 through non-Java/non-GPRS enabled mobiles by using Unstructured Supplementary Services Data (USSD)/SMS. Mobile banking services work on both Java-based and non-Java based applications, bank officials said.

BS

Foreign Exchange for You

http://www.marundeshwara.com/rbiforex/  

Pay Panel Gains won’t Come with Retrospective Effect

Finmin examining 13th Finance Commission’s suggestion to offer new scales only from future date

The windfall government employees receive by way of pay commission award arrears may no longer be forthcoming. The government is examining a proposal to implement pay commission awards prospectively on the lines of finance commission awards, as large arrears throw the finances of both the Centre and states in disarray. "We are examining the suggestion," a finance ministry official told ET. He, however, added that the final call on the issue would be taken when the next pay commission is constituted. Pay commissions are usually set up at intervals of 10 years. The Sixth Pay Commission, the most recent, gave its recommendations in March 2008. It had proposed pay raises between 20% and 40% for government employees. The finance ministry had told a parliamentary panel last week that the issue should be deliberated upon as retrospective implementation of pay commission awards has had adverse impact on the finances of the Centre as well as the states, a government official privy to the meeting said.

ET

Bust co-op banks deplete deposit insurance fund

Since its inception in 1962, DICGC has paid out about Rs 3,908 crore in claims out of bank failures. Around one-fourth has come in the last four years, from April 2007 to April 2010, itself when DICGC paid out about Rs 1,200 crore to depositors....

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'Repositioning aims at designing new products for the future' - Prakash Bakshi, Chairman, Nabard

Both the Reserve bank of India (RBI) and the Union government have always given Nabard that freedom to contribute to policy and strategy formulation. We continue to have that freedom and the change in shareholding proportions have not made a difference ...

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You can complain about your bank to the ombudsman

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Exchanges lobby for key changes in proposed regulatory framework

Bimal Jalan committee recommendations face criticism at MCA panel; consensus on allowing exchanges to list...

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Waving the white flag - A K Bhattacharya

Financial and corporate sector regulators seem to be at peace with the government

Until even a few months ago, the media was abuzz with talks of inter-regulatory conflicts and differences of opinion. The finance minister’s move to create a financial stability and development council (FSDC) had upset the Reserve Bank of India (RBI). The Securities and Exchange Board of India (Sebi) was not too happy with the way the Insurance Regulatory Development Authority (Irda) was asserting its rights of supervision over certain investment schemes that straddled the worlds of both insurance and mutual funds. Even the ministry of corporate affairs and Sebi could not see eye to eye on many issues that concerned how companies should list themselves on the stock exchanges.  At a theoretical level, such differences could well have created the impression of a healthy functioning system where open debate and expression of dissent lead to more informed decisions and better governance. However, that was not how senior officials in the government or the regulatory bodies looked at such differences. Most of the officials saw in them the manifestation of a turf battle — a desire to gain more control and acquire a larger jurisdiction. If the finance ministry gave the impression of trying to usurp the position of a super-regulator for the financial sector, the central bank through its carefully-worded statements resisted such moves. Even Sebi made no secret of its displeasure over Irda’s attempt at expanding its regulatory jurisdiction. The change in the last couple of months is that the financial and corporate sector regulators seem to be at peace with the government. So much so that when the RBI unveiled a few weeks ago its discussion paper on the proposed holding company structure for financial conglomerates, there were no murmurs of protest from any of the other regulators. The discussion paper had mooted the idea that the central bank would regulate the entire holding company irrespective of the different subsidiaries and the different non-banking businesses they may undertake. The proposal should have caused some concern for the insurance or the capital market regulators. In fact, however, there was no such reaction from any one of these regulators. Similarly, the corporate affairs ministry and Sebi appear to be at peace with each other. Gone are the days when there would be heated debates over the question of who should have the final say on guidelines for listing of companies on stock exchanges or the manner of raising capital from the market. Close observers of the central ministries note that the absence of any acrimonious debate between the government and the regulator is largely due to a change in personalities. They point out that the finance ministry has seen new officials in charge of the capital markets division as well as the financial sector department. Similarly, Sebi now has a new chairperson, who like his predecessor is also a former Indian Administrative Services officer, but he is far more cooperative and understanding of the current teams in the ministries of finance and corporate affairs. It is this change in the personalities at the helm that seems to have made a big difference. Today, Corporate Affairs Secretary D K Mittal and Sebi Chairperson U K Sinha resolve their issues through mutual discussion before they can become a matter of public debate. The Irda chairperson is also more comfortable with the new regime in the finance ministry, when he has to deal with it for resolving policy issues confronting the insurance sector. The RBI Governor has come to terms with his position vis-a-vis other financial sector regulators, which the government has now accepted and recognised. The RBI governor is not the same as other financial sector regulators. That is why he heads a sub-committee of the FSDC, while other regulators are only members. While personalities do make a difference in resolving issues, their contribution and effectiveness are limited only up to a point. Often, problems in regulation and governance arise because of structural anomalies. For instance, there is no reason the markets regulator would be administratively linked more to the finance ministry and much less to the ministry of corporate affairs. Sebi’s links with the finance ministry are a legacy of the past. The office of the controller of capital issues was part of the finance ministry until the government abolished it soon after the formation of Sebi. Ideally, therefore, Sebi should have closer liaison with the corporate affairs ministry. However, in practice the finance ministry has always had a bigger say in Sebi matters, quite apart from maintaining a capital markets division. For a year or so when Jaswant Singh became the finance minister in 2002, he went to the other extreme by transferring the entire company affairs department to the finance ministry. Once he left the ministry in 2004, the United Progressive Alliance government restored status quo ante, but the finance ministry’s control over Sebi continued. It is perhaps now time to remove that anomaly. If there is any ministry that should look after Sebi, it should be the corporate affairs ministry.

BS

Swings in banks' earnings is not reflective of best practices: RBI

"Financial reporting should not be as per the minds of bank chairmen," said KC Chakrabarty, deputy governor at the Reserve Bank of India . "When bank chairmen change, profits tend to fall. Things should not turn topsy-turvy if bank chairmen change.".......

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Students awarded PG diploma in rural banking

The convocation ceremony of the first batch of one year fully residential Post Graduate Diploma in Rural Banking (PGDRB) (batch 2010-11) was held here at Bankers Institute of Rural Development. S K Mitra, Executive Director, NABARD, head office Mumbai, who was the chief guest of the function, awarded diploma certificates to the pass-outs.  Amarendra Sahoo, Regional Director RBI (Lucknow) and N Krishnan, Chief General Manager, UP regional office Nabard, Lucknow also graced the occasion and guided the pass-outs of PGDRB. A total of 20 students received the diploma certificates after successfully completing the programme.  During the placement week students were offered employment by Dena Bank, PNB, Andhra Bank (result awaited), Axis Bank, HDFC Bank, NABARD Financial Services Ltd etc. The next batch of PGDRB (2011-12) will commence on July 25. The programme has now been affiliated to Indira Gandhi National Open University (IGNOU).

TOI

RBI monitoring economy, liquidity before policy action

Ahead of its mid-quarterly policy review, the Reserve Bank of India (RBI) today said it is monitoring the economic data and also the liquidity situation, and would take a forward-looking view while deciding on the policy action. "We would monitor various data...and take a forward-looking view and take action," RBI Deputy Governor Shyamala Gopinath told reporters here when asked how the central bank plans to arrest the economic slowdown.  The central bank has raised key policy rates nine times since March 2010, to check inflation, which is hovering above 8%, much above the comfort level of 5-6%. The RBI is scheduled to come out with mid-quarterly review of the policy on June 16. The policy initiatives, however, will have to be taken with a view to containing inflation without sacrificing growth, which has started showing signs of a slowdown. India's economic growth during January-March quarter of 2010-11 slowed down to 7.8% from 9.4% during the corresponding period the previous fiscal. The GDP growth rate this fiscal is expected to moderate to about 8-8.5% as against the original estimate of 9%. Referring to the issue of liquidity, Gopinath said there was no shortage of funds in the system. "We are closely monitoring the liquidity situation. We are aware that the market is in repo mode, they are borrowing from us and that is something in line with our monetary stance," she said. The Reserve Bank, Gopinath added, "does not see much of a stress in the call rates...The short term rates, but we are closely monitoring the situation. We are aware that advance tax payment will start a week later. We invariably monitor the situation". On capital inflows, Gopinath said there was nothing that the central bank was "really concerned about", especially with regard to stability on the external front. As a matter of policy, she said, Foreign Direct Investment (FDI) was welcome into the country.

BS

Bank’s books should not be as per chairman’s wish : RBI

K C Chakrabarty slams reporting standards of banks

There is nothing new in a government-owned bank facing profit pressures due to provisioning immediately after a chairman retires. What is new, however, is the Reserve Bank of India (RBI) expressing its displeasure over this ‘legacy’ in public. Without naming any individual or organisation, RBI Deputy Governor K C Chakrabarty on Monday said, “Reporting has to be credible. You see our banks…when the chairman retires, profit declines. If we don’t make the system credible and create a standard, people will report anything.”  “Reporting should not be according to the chairmen, but according to the books. So, we need to improve the standard of reporting and examination. Whenever one goes from financial reporting to non-financial reporting, the challenges increase. If, in financial reporting, you are not able to bring in integrity, how would you do so in non-financial reporting? That’s the issue,” Chakrabarty said. State Bank of India (SBI), had, under new chairman Pratip Chaudhuri, last month announced its results for the fourth quarter of 2010-11 and had reported its lowest quarterly profit in more than a decade, owing to high provisioning. SBI's total provisions rose 82.10 per cent to Rs 6,059 crore and provisioning for bad loans rose to Rs 3,264 crore. Chakrabarty also criticised various organisations which reward banks having high net interest margins (NIMs). “Bank with the highest NIMs get best bank awards. Banks are in intermediation business; if their net interest margins are high, it means their cost of intermediation is high. How can you give them the best bank award?” he asked.

BS

RBI doesn't see stress on liquidity in short term

Bangalore: Deputy Governor Shyamala Gopinath says central bank hopes the government’s borrowing programme will go on smoothly. The Reserve Bank of India (RBI) did not see any stress on liquidity in the short-term as indicated from ruling call rates, Deputy Governor Shyamala Gopinath said today. Earlier, market participants were expecting a liquidity crunch in the system on the back of advance tax outflows, which is due by June 15. “We are closely monitoring the liquidity situation and are looking into various aspects of liquidity management. As of now, we don’t see a real stress on liquidity as indicated in ruling call rates,” Gopinath said here on the sidelines of launching mobile banking products of Canara Bank. She, however, declined to comment on whether the central bank would conduct open market operation in June in order to ease any possible crunch in liquidity. At an event in Mumbai, RBI Deputy Governor K C Chakrabarty said banks might use the newly introduced marginal standing facility (MSF) in the middle of this month when liquidity was expected to tighten sharply owing to advance tax payments. “Every quarter it happens. I don’t think there is anything different in it. A new type of liquidity management facility has come. So, it will be tested. There can be problem at any time. The system has to adjust itself,” Chakrabarty said. He was speaking on the sidelines of an event on new financial reporting and risk management. RBI introduced MSF during the annual policy statement, which allowed banks to dip below one per cent of their statutory liquidity ratio to avail cash from this window. This facility will be available to banks at 100 basis points over the repo rate. On the government’s borrowing programme, Gopinath said RBI was hopeful the process would go on smoothly. “Government borrowing entirely depends on the market and how they bid for the auction. But, we do hope that it will go on smoothly,” Gopinath said. On the possible direction of policy rates, she said it would depend on the evolving circumstances. “We have increased policy rates by 50 basis points in the last credit policy review. We are also closely watching the various data coming from the market. Our future actions will depend on our own assessment of the circumstances as they evolve,” she added. The apex bank has raised policy rates by nine times in the last 14 months in order to contain rising inflation rate. Impact of this policy rate hike has moderated economic growth in the recent time as shown in the latest IIP data. About quality of foreign fund flow, she said that the central bank was not concerned about the quality of fund flow aspect as of now. “Both government and RBI prefer more foreign direct investment into the country. However, we are not concerned about the quality of fund flow in the present circumstances,” she said.

BS

RBI cautions public against fictitious offers

Chandigarh: The Reserve Bank of India (RBI) has advised public not to fall prey to fictitious information of being beneficiary of funds such as those from winning lotteries. This misleading information claims remittance of such funds by overseas entities to banks in the country. Remittance in any form towards participation in lottery schemes is prohibited under the Foreign Exchange Management Act, 1999, RBI's Regional Director Jasbir Singh told reporters here today. These fictitious offers are made through letters, e-mails, mobile phones, SMS, he said. Singh said the fraudsters were now resorting to issue of certificates, letters, circulars sent through e-mail on letterheads that look like that of the RBI and purportedly signed by its top officials to make them appear genuine. "The fraudsters also convince the victims by impersonating as senior officials of the RBI with telephone numbers and fictitious e-mails IDs," he said. He said these elements were trying to take money from the gullible people under different heads such as processing fees, transaction fees, tax clearance charges, conversion charges and clearing charges. The victims of fraud are persuaded to deposit the amount in accounts with banks in India and such amounts are immediately withdrawn, he said adding that multiple accounts were being opened in the name of individuals or proprietary concerns at different bank branches for collecting transaction charges etc. The RBI advice came in the wake of many residents falling prey to such tempting offers and losing money. He advised victims to register their complaints with cyber crime of police.

BS

The medium and the message

New initiative:The ubiquitous post card now gets a new role

THIRUVANANTHAPURAM: India Post, or the Department of Posts, which was in the limelight in Kerala for the wrong reasons — a move to close down post offices — recently, is back in the news. This time, the reason is a bold and adventurous initiative of the department, in association with the Reserve Bank of India. When the department decided to make available the writing space on the address side of the post card for advertisements, the RBI, Thiruvananthapuram, saw in it a wonderful opportunity to take the message of financial literacy to the common man. The RBI had conducted a painting competition for schoolchildren in Kerala and Lakshadweep on the topic of banking and finance as part of its financial-literacy initiatives during its platinum jubilee celebrations in 2010. The prize-winning entry has found a place on the post card. The painting depicts the bank as a tree, the roots of which take nourishment from the soil of currency notes to produce the fruits of houses, factories, consumer goods, medical services, and so on. There are a few lines in Malayalam, which on translation go thus, “Come to the nearest bank, borrow or deposit as per your need, and make your life safe and comfortable,” under the tree. The cards in this category are known as “Meghdoot” post cards and costs only half that of the regular post cards. The stamp depicts the picture of Homi J. Bhabha, the father of Indian space science. The cards are available in select post offices. It is thanks to a function organised by the RBI that many came to know of the existence of such a post card, probably because the Postal Department did not show the drive and initiative it showed in transforming one of its products in publicising it as well. The function involved the formal release of the card by Shyamala Gopinath, Deputy Governor, RBI, during her visit to bank's office here on Wednesday. Suma Verma, Regional Director, RBI, and Banking Ombudsman F.R. Joseph were present.  

The Hindu

Central Registry under the SARFAESI Act: Boon or bane?

According to the RBI, “the objective of setting up a Central Registry is to prevent frauds in loan cases involving multiple lending from different banks on the same immovable property.”.......

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New MSF could be tested during tight liquidity period: RBI

The Reserve Bank of India (RBI) expects the new marginal standing facility (MSF) to be tested during the tight liquidity period next week when banks and corporates pay their quarterly advance tax. "Every quarter it (advance tax) happens. I don't think there is anything different in that. A new type of liquidity management facility has come, so it will be tested," RBI deputy governor K C Chakrabarty told reporters on Monday on the sidelines of an event here. If, however, a problem arose, the system would have to adjust itself, he said. The apex bank had introduced the MSF while unveiling the annual monetary policy, stating that banks can borrow upto one per cent of their total deposits from the Reserve Bank under the MSF facility at a rate, which is 100 basis points higher than the short-term lending (repo) rate. Expressing concern over banks like SBI whose profits have dipped drastically after their chairman left, Chakrabarty said "books should not be as per the minds of the chairman, reporting should be as per books." There is a need to improve both the standards of reporting as well as that of examination, he said. "We have to improve the standard of reporting, the standard of examination. If in financial reporting you are not able to bring in the integrity, then how will you do it in non-financial reporting, that is the issue," he said, adding that the issue was a matter of "concern". Chakrabarty's comments come at a time when the country's largest public sector lender State Bank of India's March quarter profits last fiscal dipped 99% to Rs 20.8 crore after the new Chairman took over. When asked if RBI was also responsible for the problem of reporting standards, he said, "we are all collectively responsible. The issue is what went wrong and how do we improve the system...I don't think standard has any problem. Integrity of information is a problem, not the standard," he said. When asked if RBI was also responsible for the reporting problem, he said, "we are all collectively responsible. The issue is what goes wrong and how do we improve the system...I don''t think standard has any problem. Integrity of information is a problem, not the standard," he said. On black money, the RBI Deputy Governor said that existence of black money reduces scope for development and is a cause of concern.

Money Control

Govt revives consolidation of PSU banks

As the government and Reserve Bank of India prepare to open up India’s banking sector and allow in more foreign banks and private sector entities, it appears that public sector banks are moving towards consolidation. The State Bank of India is slowly moving........

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Plea seeks direction to RBI to frame rules for gold mortage

Chennai : A PIL has been filed in the Madras High Court seeking a direction to Reserve Bank of India to frame rules to ensure "title and tax payment" for gold and gold ornaments while being pledged in banks. At present there are no rules and regulations framed by RBI for banks to lend money against gold ornaments, G.Annadurai, an advocate, in his petition said. The petitioner submitted that purity of gold was enough for mortgage of gold in banks. Any person can mortgage anyone's gold with or without owner permission, even stolen gold also, the petitioner claimed. Ensuring of title, tax payments and proper documentation was not at all taken into account by banks because no rules had been framed by RBI, the petitioner contended. The petitioner alleged that advancing or lending money against gold and gold ornaments is an illegal activity when there were no rules and regulations by RBI for the same.

ABN Live

No merger of SBI associates till 2012: Pratip Choudhuri

JAIPUR: Country's largest lender State Bank of India (SBI) will not go for the merger of its remaining associate banks till 2012. SBI chairman Pratip Chaudhuri told ET that the merger will happen only after 2012. "We had merged State Bank of Indore in 2010.  Any merger process need at least two years for consolidation and absorption as it involves lot of cost and exercise to build synergy. We can initiate the next one only after the previous merger takes the desired shape," he said after addressing the SBBJ officials.  The merger process has also been slowed down as the bank is battling its own issues relating to growing NPAs, pension liabilities and reaching the 70% provision coverage ratio prescription that the Reserve Bank of India (RBI) had given.  In such situation, it is unlikely to have enough time and capital to initiate the next round of consolidation process which was started in 2008 with the merger of State Bank of Saurashtra . There are five associate banks of SBI which are waiting for the consolidation exercise.  Two of them are fully owned - State Bank of Patiala and State Bank of Hyderabad , while remaining three are not 100% owned - State Bank of Mysore , State Bank of Travancore and State Bank of Bikaner and Jaipur (SBBJ).  "Out of these five next would be possibly one which is fully-owned (associate bank). However it's too early to say which one," he said. On the forthcoming Rights issue, Chaudhuri said that the issue is likely to happen in the second or third quarter of this fiscal year. "The process is on track. The government is fully committed to the proposed SBI rights issue," he said.

ET

Banks' KYC norms barrier to cheap remittance: IIT-M study

In a technical report, Ashish Das, professor at department of mathematics, IITMumbai , has highlighted how banks have created barriers for walk-in customers who seek to instantly.....

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Meghdoot post card launched by RBI Deputy Governor

The Reserve Bank Deputy Governor, Ms Shyamala Gopinath, formally releasing the Meghdoot post card during a visit to the regional office of the apex bank in Thiruvananthapuram. Also seen are (left) Ms Suma Verma, Regional Director, Reserve Bank, Thiruvananthapuram (left) and Mr Mr F. R. Joseph, Banking Ombudsman for Kerala and the Union Territory of Lakshadweep (right)

Thiruvananthapuram, June 5: The Deputy Governor of the Reserve Bank of India (RBI), Ms Shyamala Gopinath, formally released ‘Meghdoot' post cards during her visit to the regional office of the apex bank here on Wednesday last. Among those who were present on the occasion included Ms Suma Verma, Regional Director, and other officers of the regional office, an official spokesman said here. Meghdoot post cards, priced at 25 paise, have been brought out by India Post and allows for writing space on the address side for advertisement. The Indian Post Office Rules, 1933, were amended to incorporate Meghdoot post cards into circulation. A post card shall be deemed to be a Meghdoot post card if it is so marked and provides in the space on the left hand portion of the address side, space for a single colour or multi-colour printed advertisement subject to conditions. These are (i) advertisement shall bear pictorial depictions or messages or both; (ii) no advertisement shall be printed anywhere else except the space provided thereof on such post card; (iii) on the address portion of such post card the words ‘Meghdoot post card' shall be printed in Hindi and English; (iv) the obverse side of such post card shall be used for communication only; (v) such post card shall be a single post card; and (vi) it shall conform to specified dimensions.  The regional office of the banking regulator here has made use of the post card for dissemination of financial literature material, the spokesman said. This was achieved by depicting the imprint of a prize-winning entry of the competition on the topic ‘Banking and Finance' conducted as part of the apex bank's financial literacy initiatives during the platinum jubilee celebrations last year for school children throughout the State of Kerala and Lakshadweep. According to the spokesman, the slogan in Malayalam below the painting, meaning, ‘come to the nearest bank, borrow or deposit as per your need and make your life safe and comfortable,' says it all. The cards can be purchased at half the cost of a regular post card from select post offices. 
Business Lineness Line 

RBI Dy Governor to address the bankers’ club members

Kochi: Dr. K.C. Chakrabarty, Deputy Governor, Reserve Bank of India will address a joint meeting of State Forum of Bankers’ Clubs and Bankers’ Club Greater Kochi on June 9. The meeting will be held at the new building of South Indian Bank at Rajagiri Valley, at nearby Kakkanad, K.U. Balakrishnan, General Secretary, State Forum of Bankers’ Clubs said in a press release, here.

Manorama

Demonetisation of notes not practical

Yoga guru Baba Ramdev has demanded demonetisation of Rs 1,000 and Rs 500 currency notes as a measure to curb black money. The government has, however, ruled out demonetisation saying it is virtually impossible to implement. If these currency notes were to be demonetised, Indian government would have to print many times more currency notes of small denominations for which the mints do not have the capacity. Enough quantity of security paper and ink is also not available immediately, a government official said. The Chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan, who was the RBI Governor in the 1990s, said demonetisation of Rs 1,000 and Rs 500 currency notes was “very arduous to administer”, implying it was not a practical suggestion.

RBI warning against ‘lotteries’

Dehradun : Reserve Bank of India Deputy General Manager Rajeev Dwivedi said that the RBI has been consistently warning the general public to be wary of fraudsters, offers of easy money and information about winning fake lotteries. He said that those involved in such rackets contact members of the general public through letters, e-mails, telephone calls and SMS on their mobile phones and inform them about fantastic opportunities like receiving a large sum of money from a foreign country as the winnings of a jackpot of some scheme. In many cases the letters and e-mails are written on such letterheads and from such websites that are similar to institutions like the RBI in order to deceive the receivers about the identity of the sender. In many cases the names of senior officials of such institutions are also fraudulently used along with their forged signatures in such communications to fool the public. The racketeers tell the recipients of their mails to pay money in different accounts in the form of processing fees, transaction fees, tax clearance charge and conversion charge. If a person deposits money in order to pay such fees, the sum is swiftly withdrawn from the account but the person doesn’t receive the promised cash prize.

Pioneer

Talent mapping exercise on at Central Bank of India

Public sector banks have always enjoyed a reputation as a storehouse of talent — after all, most new private banks often poached and filled their top posts with public sector bank officials when they started out......

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LITTLE HOPE

Inclusion has been much in the air. The prime minister speaks about inclusive growth whenever he gets a chance. Since growth does not favour those favoured by the government, it keeps thinking about gifts to take to the unfavoured. It has endeavoured to take jobs to the poor. It has also tried to reach them wheat and rice, despite mounting evidence that they disappear on the way to enrich intermediaries. However, there is a third variant of inclusion that is little talked about. If the government had its way, any adult villager would be able to earn Rs 100 a day for a 100 days in the year. If he is not to blow up the windfall on normal vices, he should be able to put away the money against a rainy day. A rural hut is not the ideal place to hoard the money. So the government had asked the Reserve Bank of India to ensure that there is a branch of a bank in every village. Banks belong to the government, but they belong even more to their workers. The employees are well paid, and expect to send their children to school and rush them to a doctor if they get a scratch. Most villages cannot fulfil such expectations; so naturally, they cannot expect banks to come to them. But banks have to show their owner that they have not been sitting idle. And the RBI is not satisfied with their opening no-frills accounts. It expects them to offer at least five products: savings accounts, overdrafts, remittance facilities, recurring deposits, and credit cards. How can they offer such sophisticated services to primitive villagers?  They hit upon a brilliant idea: they ask local shopkeepers, tractor suppliers, fertilizer sellers and such people to run their branches for them, and give them the fancy name of business correspondents. In this way they managed to double the number of villages with banking services in the past year till March 31 to some 110,000. But they themselves opened only 1,685 branches; in the rest of the villages, they appointed business correspondents, whose number went up from 33,000 to 58,000 in a year. Meanwhile, they kept themselves busy opening branches in towns; two-thirds of their new branches opened in the past five years were in cities. The business correspondents have not been sitting idle; they had opened 7.5 crore no-frills accounts by March this year. But they are not doing much business. The average balance in the accounts fell from Rs 988 to Rs 883. The average overdraft per account was a measly Rs 27. So the chances are that business correspondents will soon discover that their business is not profitable, and will relinquish their agencies en masse. The RBI will not accept defeat; but the sooner it does so, the less time and resources it will waste on a hopeless strategy.  

The Telegraph

Monetary policy operating procedure: Ahead of its time?

But what is inexplicable about the report is its reticence about the objectives (of monetary policy) which are sought to be achieved by the laid out operating procedure. Surely, when you lay down policy implementation......

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Financial Literacy and Financial Inclusion – S.S.Tarapore

The world over, it is recognized that for economic growth to be sustained, the marginalized must be brought into the mainstream. It is also recognized that for 'Inclusion' to be successful, there must be 'Financial Inclusion'. With large tracts of poverty in India, it is the mainstream which is marginalized and as such the task is indeed daunting. 'Financial Literacy' is of paramount importance as without it, financial inclusion would fail. While with concerted efforts financial inclusion can be attained in a few years, financial literacy, in the normal course, would take two generations and as such financial literacy is even more important than financial inclusion. Financial inclusion cannot be attained in a vacuum and there are a number of concomitants or preconditions which have to be met to ensure successful financial inclusion. Some of the key concomitants are: (i) There should be real activity in the area where there is a thrust for financial inclusion. (ii) Social sector facilities like health, education and family welfare have to be upgraded. (iii) There must be adequate attention to the economic infrastructure such as accessibility to roads and communications, water, electricity, housing and other basic amenities. (iv) Macroeconomic policies have to be sensitized to ensuring distributive justice. In the absence of these concomitants, financial inclusion would degenerate into consumption loans which do not generate income and as such financial inclusion would fail. The eminent economist, the late Dr. D. T. Lakdawalla, twenty years ago, said that it is not as if when there are national calamities, succour should not be provided to the victims. The correct response to such a situation is fiscal grants and not bank loans. In 1991, the then Finance Minister, Dr. Manmohan Singh said that banks should not become part of the grants economy. The interest rate structure in India is distorted in that capital, which is scarce, is artificially priced low. The Indian polity has a bias in favour of low interest rates. Since the income of the average depositor is much lower than that of the average borrower, there is a strong bias against small savers. The target for March 2012 is that banking facilities should be provided to habitations having a population in excess of 2,000. It is estimated that in pursuance of this target, 5 crore accounts would need to be opened by March 2012. Since brick and mortar branches cannot be opened in all 73,000 habitations, a system of Business Correspondents (BCs) has been instituted to reach out to these habitations. The banks have to undertake due diligence while appointing BCs. BCs would be the face of the bank and if they are found wanting the banks would be subject to a reputation risk. In the initial phase, since 2005, banks were required to open No Frills Accounts (Savings Bank Deposits) with minimal Know our Customer (KC) requirements and millions of accounts have been opened. It is unfortunate that most of these accounts are dormant. In the recent thrust, the objective is not to merely provide No Frills Accounts but to provide facilities for recurring deposits, fixed deposits, remittances, overdraft facilities, kisan credit cards and collection of cheques. A thought that needs consideration is whether it would be better to have less ambitious numerical targets with greater emphasis on quality of service. On May 3, 2011, the Reserve Bank of India (RBI) raised the Savings Bank Deposit Interest Rate from 3.5 per cent to 4.0 per cent. Banks are already considering imposing service charges in such a manner that it would cripple No Frills Accounts. Also some banks have asserted that if the Savings Bank Deposit interest rate is deregulated, they would offer higher interest rates to large depositors and lower rates to smaller depositors. Some banks have taken an extreme position that they would just not pay any interest to No Frills Account holders. In a few cases banks have resorted to brutal charges on small account holders. For instance, when a bank made a mistake in the address of an account holder in the computerized passbook, the bank demanded a charge of Rs 50 to rectify the error. One fervently hopes that this is an extreme outlier and not representative of the banking system's operations. It could be argued that bank customers have been provided a redressal system, but the ground reality is that most customers are afraid to complain. It is unfortunate that despite all the efforts to improve customer service, the quality of service depends on who you are and who you know. Financial literacy is a prerequisite to effective financial inclusion but this is the hardest to achieve. General literacy does not ensure financial literacy. It is paradoxical that those who deem themselves to be generally the most literate are, in many cases, the most financially illiterate. It should be mandatory to integrate primary financial literacy into primary education. Since this will take time to permeate through the system, as today's children become tomorrow's adults, there should be a special drive for adult financial literacy. The government and the RBI should not hesitate to bear the costs of promoting financial literacy. The present approach of pamphlets and cartoons reflects an elitist approach. Rather, financial literacy should build on the phenomenal arithmetical skills of the illiterate there is a need to channel these in- born skills. Finally, those entrusted with the task of financial literacy should not approach it as a chore but a noble cause which should be approached with dedication and missionary zeal. As the late Walter Reuther, the eminent US trade union leader, said: "There is no greater calling than to serve your fellow men. There is no greater contribution than to help the weak. There is no greater satisfaction than to have done it well".

Free Press Journal

More credit than due

The RBI has released data to show that bank credit expansion tilted heavily towards Services, and within that to two segments — non-banking financial companies (NBFCs) and commercial real estate. On a year-on-year basis to March 2011, credit to the former witnessed an expansion of.......

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EU urges Indian government not to make mandatory for European banks to dilute stake to 74% in subsidiary

NEW DELHI: The European Union has sought concessions for its banks if they are asked to migrate to the wholly-owned subsidiary model proposed by the Reserve Bank of India (RBI).  The 27-country block has urged the Indian government not to make it mandatory for European banks to dilute their stake to 74% in the subsidiary. The issue was raised at a bilateral meeting called in Delhi last month to discuss the India-EU Free Trade Agreement.

ET

Polaris targets overseas CBS biz

“The entire core banking of RBI will now run on Polaris' Intellect Core Banking System, which includes system integration and maintenance of software for the next ten years. Polaris will replace the existing..........

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Capital inflows not sensitive to interest rate changes: RBI

KOLKATA: Foreign capital inflows are insensitive to interest rate changes in the country, according to a Reserve Bank of India (RBI) study. It said that a percentage point rise in interest rate results........

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