Time running out to find solutions for global crisis, warns RBI chief

...Unresolved quickly, global problems can slam the brakes on emerging market economies (EMEs), said Dr D. Subbarao, Governor, Reserve Bank of India.....

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RBI wary of selling dollars on market volatility, deficit

The Reserve Bank of India has not intervened in a big way in the currency markets, unlike most of its emerging Asian peers, because it can ill-afford to expend a limited and fragile holding of foreign exchange reserves, RBI sources say. That reluctance to intervene is just one of the factors that sets the RBI apart. It also is currently the most hawkish in the region, waging an expensive and tough war against inflation, while most of the world frets about slowing US growth and a European debt crisis......

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Pranab takes up rupee depreciation with RBI chief

Washington, Sept 24: The Finance Minister, Mr Pranab Mukherjee, has said that intervention in the currency market would be considered at an appropriate stage and he has discussed with the Reserve Bank of India Governor, Dr D. Subbarao, the situation created by the depreciating rupee in the past few days. “I had a discussion with the RBI Governor as he is here,” Mr Mukherjee told a group of Indian reporters here. The Finance Minister and RBI Governor are here to attend the annual meetings of the Indian Monetary Fund and the World Bank. Mr Mukherjee said the Government was closely monitoring the situation and intervention in the currency market would be considered whenever necessary. “We will watch the situation for some time and as and when intervention would be required that will be considered at that stage,” Mr Mukherjee said in response to a question. To check high volatility in local currency value, central banks worldover intervene in markets through buying or selling of foreign currencies, as required. This week alone, the rupee lost 231 paise, or 4.89 per cent, against the US dollar. On Friday, rupee closed at 49.43 per dollar after falling to 49.90 per dollar. The sharp depreciation in the rupee has been mainly attributed to rising demand for dollars from foreign institutional investors (FIIs) and oil companies. Meanwhile, responding to questions on price rise, Mr Mukherjee said substantial inflationary pressure was there because of demand. “There is a demand side pressure. There is no doubt about it, because we had to resort to huge fiscal expansion from December 2008 to first quarter of 2009... stimulus package (to deal with the global financial crisis was) almost three per cent of GDP”, he said. The fiscal expansion had its impact on fiscal deficit which went as high as 6.6 per cent of the GDP from 2.5 per cent, he said. As regards food inflation, he said, it was substantial due to the constraints on the supply side. “Therefore, we have to remove those supply side constraints. We have taken some short and medium term steps,” he added. The headline inflation is nearing 10 per cent despite the Reserve Bank of India raising key policy rates 12 times since March 2010 to contain price rise.

HBL 

MODERATING DEMAND - India's rate-increase cycle nearing its end, says Gokarn

The country's central bank is close to the end of its record series of interest-rate increases as inflation will probably slow next year, Deputy Governor Subir Gokarn said. “You could say that the cycle is nearing its end,“ he said, “given the projection that inflation will start coming down and will continue to move down from December onwards.“ He declined to specify when the Reserve Bank of India (RBI) may stop raising rates. The inflation rate will drop because “oil prices do not ap- pear to be going higher“, and “we are seeing some deceleration in domestic growth because demand is being moderated“, Gokarn said in an interview in New York on Thursday. Rising interest rates have helped slow consumer demand, he said. RBI boosted India's repurchase rate for the sixth time this year on 16 September, in- creasing benchmark borrowing costs by a quarter of a percentage point to 8.25% as policy makers seek to tame the fastest inflation among the big- gest emerging markets. Indian wholesale prices rose 9.78% in August from a year earlier. “Inflation will slow in the coming months due to a combination of past rate increases and the slowdown in the global economy,“ said Dharmakirti Joshi, a Mumbai-based economist at ratings company Crisil Ltd. “The global slowdown will cool inflation but the fall in the rupee could offset the effect.“ The central bank's move last week contrasted with other central banks in the so-called Bric (Brazil, Russia, India, China) nations. Brazil unexpectedly cut its target Selic rate last month to shield the Latin American economy from a global slowdown, and Russia reduced the rate charged on repurchase loans on 14 September in a bid to bolster the amount of cash on the market amid sliding oil prices. Reserve Bank governor D. Subbarao has raised borrowing costs by a total 350 basis points since mid-March 2010, the fastest run of rate increases since the central bank was established in 1935, Bloomberg data show. “Our inflation pressures stem from a bunch of factors that are unique to our economy,“ Gokarn said. “Unlike many countries, whose growth comes significantly from export contributions, we are slightly more skewed to our domestic environment. The global downturn may “help us to manage inflation“, as commodity prices drop and demand for exports weakens, Gokarn said. India's $1.7 trillion economy expanded 7.7% in the three months ended 30 June from a year earlier, the slowest pace of growth since the last quarter of 2009. Inflation still remains a “key risk“ for India and there is a “likelihood of inflation re- maining high for the next few months“, the central bank said in a statement after announcing the last rate increase on 16 September.

Mint

We are rapidly running out of time: Subbarao

The Reserve Bank of India (RBI) Governor Duvvuri Subbarao said there is a bigger risk that the recession in the US and the sovereign debt crisis in European nations may materialise simultaneously, which can hit emerging market economies through several channels like exports, capital flows and confidence. “The messages that we heard are sharp, specific and candid. If I were asked to pick the headline message of the presentation, it is that we are rapidly running out of time, and may, therefore, be running out of solutions,” Subbarao said during his intervention in a meeting at the International Monetary Fund, ahead of the Fund-Bank meeting in Washington this weekend. He said the main impediment to an effective resolution common to both flashpoints, the US recession and Europe debt crisis, “appears to be political”. In the US, the tension is between fiscal stimulus in the immediate term and credible fiscal consolidation over the medium to long term. But in the euro area, there is a shared monetary framework, but without a shared fiscal framework. “What is standing in the way of a credible and confidence inspiring resolution of the fiscal-financial imbroglio are political compulsions,” he said. The World Bank said yesterday the euro zone debt crisis threatens the mild recovery underway in emerging European and Central Asian nations, adding main risks for parts of the region come from their exposure to banks in cash-strapped Greece and Italy. At the IMF meeting, Subbarao said the present crisis has demolished the decoupling theory that assumed emerging market economies would continue to be resilient despite downturn in advanced countries. “In an age of globalisation, the decoupling theory was never persuasive. The 2008 crisis dented its credibility and the 2011 crisis has completely demolished it.” According to the RBI governor, stability of EMEs has been hit by the crisis in advanced economies through several channels like trade, capital flows, and commodity prices, but it is the confidence channel which is the most important one. “By far, the most important channel of transmission is the confidence channel which could hurt investment and growth prospects in EMEs — when confidence is hit, even strong fundamentals do not matter,” he said. He warned the probability that all these channels become active and feed on each other is quite high. Though the crisis could affect different EMEs differently, but what is common across EMEs is that their growth momentum will be interrupted if the current global problems are not resolved quickly, according to him. Comparing the crisis of 2011 with that of 2008, Subbarao said the policy space for stimulus is much less now, as fundamentals of both advances and EMEs are different. In the years just before the 2008 crisis unfolded, advanced economies experienced steady growth and emerging economies saw accelerated growth with all round price stability, which is not the case now. “In 2008, the world responded to the crisis in coordination. There were differences, but these differences were resolved, and governments and central banks acted firmly, decisively and where required creatively. A similar perception of coordination is lacking today,” he said. Subbarao said the crisis of 2008 originated in the financial sector and transmitted to the real sector, but the rescue was by the public sector. “In 2011, it is the other way round. The crisis is originating in the public sector and hitting the financial sector, and undermining the confidence of the private sector.” In addition, in 2008, both advanced economies and emerging economies were at the same phase of the business cycle and now, they are at different phases. Subbarao concluded by saying as the world is waiting with great anxiety about the outcome of the weekend’s Fund-Bank annual meetings and the G-20 meetings, countries once again have to show the resolve of 2008 to meet those expectations.

BS

RBI Q2 policy review on 25 October

Mumbai: India's central bank on Friday said Governor D. Subbarao will announce the second quarter (Q2) review of the monetary policy for 201112 on 25 October. It will be done in a meeting with chief executives of major banks at 11 a.m in Mumbai, the Reserve Bank of India (RBI) said in a statement.

Mint

Disciplined disciple passed away......

Shri.S.K.Datta passed away on July 26, 2011 in Kolkata. He was 77 years old. He was “Core Faculty” in the Bankers Training College in the area of Industrial Relations and Personnel Management. His book “A Guide To Disciplinary Action” published by B.T.C is the Bible for all those in RBI who handled disciplinary matters. He worked for over fifteen years in the field of personnel administration in both private and public sector organizations. As a Faculty member he impressed all with his profound knowledge, great communication skills and a bubbling sense of humour. He had a rich collection of actual disciplinary cases and he used to keep the trainees spellbound. He retired as Principal of the Bankers Training College.  May his soul rest in peace. 

As reported by P.P.Ramachandran (via e-mail)

MSCB accounts: Nabard, statutory auditors differ

.......The Supreme Court has already ruled in MSCB's favour, saying it was entitled to the entire Rs 1,800 crore from the state government for the guarantee. The government would have to do it fast, as it would pave the way for the bank to get a licence from RBI by March next year.”

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‘RBI hails JK Bank for taking banking services to remotest corners’

Srinagar, Sep 23: A Khidmat centre was inaugurated at Tilwani, a remote village in Islamabad (Anantnag). The village has been ‘adopted’ for financial inclusion by the Reserve Bank of India. The centre was inaugurated on Thursday by K.K.Saraf, Regional Director, RBI in presence of Rajeshwar Rao, Banking Ombudsman and G M Sahibzada, J&K Bank Executive President.  Others present on the occasion included M S Wani, Vice President J&K Bank and D.P.Sharma, Officer-in-charge RBI’s local office, DGMs of RBI G.C.Talukdar, Ramesh and Kiran Sharma.

Saraf on the occasion hailed J&K Bank for its “support and cooperation” in taking banking services to the remotest corners of the state.  “With such an exemplary cooperation from both the J&K Bank and the people of J&K, I believe we can achieve the target of hundred per cent financial inclusion in the state,” he said. Sahibzada said, “J&K Bank is committed to take banking facilities to everyone in the state, irrespective of their economic standing, educational status and geographical location.” “Our products and technology-enabled services shall follow them wherever they are, both directly, through our network of branches and ATMs and indirectly through the innovative model of massive Khidmat Centre network.” Emphasizing on the role of Khidmat Centres towards taking financial inclusion programme further, Sahibzada said, “The centres have the potential to become centres of positive economic change. They are close to rural population and can change the state’s economic landscape”. “The latest in the basket of services of Khidmat Services is a small but wonderful Point-of-Transaction (PoT) machine. People living in remote villages like Tailwani will have to just visit the branch once – to open the account. Later, Khidmat Centres, which are easily accessible to them, being one for every six villages, will provide them all the requisite banking facilities like cash deposits, withdrawals and even loans through swiping of smart Cards through these high-tech PoT machines,” he added.

Greater Kashmir

Usha Thorat on MRPL board

Mangalore Refinery and Petrochemicals Ltd has informed the BSE that Mrs Usha Thorat, former Deputy Governor of Reserve Bank of India, has been nominated by Oil and Natural Gas Corporation, the holding company, on the board of MRPL as an independent director with immediate effect. After a service of nearly four decades with the RBI, Mrs Thorat retired in November 2010 as its Deputy Governor. She was the Deputy Governor of RBI for five years. She is serving as Director of the Centre for Advanced Financial Research and Learning.

HBL

Mazumdar-Shaw, GM Rao feature on RBI board list

Mumbai: The Reserve Bank of India (RBI) will reconstitute its board of directors soon by appointing new industrialists, two people familiar with the development said. G Mallikarjuna Rao, GMR Group chairman, Kiran Mazumdar-Shaw, chairman of India’s largest biotechnology company Biocon Ltd, Anil Kakodkar, former chairman of the Atomic Energy Commission and Sunil Mittal, chairman of Bharti Airtel, India’s largest mobile telephony company by subscribers, are some of those the central bank has zeroed in on and recommended to the finance ministry, the final authority to vet the proposal. The finance ministry has cleared the appointment of Rao, a person in the finance ministry with direct knowledge of the development said, but, surprisingly, did not confirm Mittal’s appointment. A Bharti Airtel spokesperson did not respond to an email query. Mittal, known as the poster boy of Indian mobile telephony, was on the board of Standard Chartered as a non-executive director from August 2007 to July 2009. “There is nothing confirmed yet, so it would not be possible to comment on this,” a GMR spokesperson said in an email. According to the RBI Act, 1934, the tenure of the RBI board is either for four years or till the new board is appointed. “The board has completed its four-year term,” said Alpana Kilawala, RBI’s head, corporate communications. The board has 16 members, chaired by governor D Subbarao and his four deputies along with finance ministry officials and industrialists. The board now has industrialists Kumar Mangalam Birla, chairman of aluminium to cement maker Aditya Birla Group, Azim Premji, chairman of Wipro, India’s fourth largest software company by revenues, and Sanjay Labroo, managing director and chief executive, Asahi India Glass. The finance ministry is represented by R Gopalan, secretary, department of economic affairs. The RBI, being a regulator, needs to keep its finger on the market’s pulse, said Ashwin Parekh, national leader, global financial services, Ernst & Young India Private Ltd, the Indian arm of the global consulting firm. “It invites large industrialists on its board because they are large borrowers and they have their credit experiences to share, which helps in policymaking.” “Also, corporates are the first ones to know about the liquidity issues in the market,” Parekh added. The Aditya Birla Group, with interests in financial services from mutual funds to non-banking finance, is keen to start a bank. On August 29, 2011, the RBI had announced draft guidelines for fresh bank licences, stipulating a minimum capital of Rs 500 crore. Moreover, industrialists will have to create a holding company without any interest in their operating companies to start a bank. None of the other industrialists recommended by the RBI have any interest to start a bank. The board members’ appointment process starts with the apex bank recommending names selected from diverse industries to the finance ministry for its perusal. GMR Group’s chairman Rao, who held a 5% stake in the erstwhile Vysya Bank Ltd, sold his entire stake in 2006, and has no plans to enter financial services. The group, which built India’s largest greenfield airport in Hyderabad, is now reconstructing the airport in New Delhi and has interests in power generation and roads. “It is important to have people from different fields on the RBI board,” an industrialist, whose name is under consideration, said. “Until the board has representation from the industry, it is difficult to address the sector issues.” The person cannot be identified as his name is not yet confirmed. “Inviting an industrial conglomerate on the board will help the RBI understand the regulators’ actions in foreign countries,” said Parekh of E&Y. Bharti Airtel has a wide presence not just in India but also outside India and being the largest telecom service provider in the country, understands the country’s pulse, Parekh said of Mittal being considered for the board seat. “It is said that financial inclusion in the country will be driven by mobile services,” he pointed out.

FE

Nerkar no more...........

Shri Arvind Nerkar passed away on 17th September, 2011 in Mumbai. He was 71 years old at the time of his death. He was in a train bound for Goa. Shri.Nerkar had worked in DBOD and was also Faculty member in B T C. He was for a number of years Adviser to the Central Bank of Oman--to which he was initially sent by R B I on deputation. He was Dean Academic Excellence, M E T, Mumbai. He is survived by his wife and three children. We pray that his soul rests in peace.

As reported by - P.P.Ramachandran (via e-mail)

Banks in Dharwad told to set up financial literacy centres

The Reserve Bank of India (RBI) has suggested to banks in Dharwad district to have a Financial Literacy and Credit Counselling Centres (FLCC) at each Blocks. Mr R. Ramachandran, Manager, RBI- Bangalore, while reviewing the performance of banks in the district under Financial Inclusion Plan (FIP), advised the banks that just designating business correspondents (BCs) does not serve the purpose of FIP. “There should be full-fledged implementation of FIP by operation of biometric cards,” Mr Ramachandran said.

HBL

Subbarao: India is ready to help IMF to fight global crisis

Reserve Bank of India (RBI) Governor Duvvuri Subbarao said on Thursday that India is ready to extend support to the International Monetary Fund ( IMF) to overcome the global economic crisis. In his statement during the meeting of finance ministers and central bank chiefs of the BRICS ( Brazil, Russia, India, China and South Africa) nations that met at Washington, Subbarao said that all the nations of the group are ready help IMF. " BRICS countries are prepared to support the IMF in augmenting its resources, of course subject to their individual country circumstances," he said. The BRICS countries have unanimously considered providing money to the International Monetary Fund or other global financial bodies to increase their firepower for fighting financial crisis. " It is natural that when rich countries get into problems, the demand for IMF support, in terms of quantum of support, is bound to be higher, than when poorer countries or emerging economy get into problems. So, it is possible that IMF resources are starched and they might need additional support," said Subbarao. The leaders on Thursday also called the G20 nations to act swiftly and decisively to ease the euro zone debt crisis, the same way they fought the global financial crisis in 2008.

FPJ

Should for-profit companies be permitted to act as business correspondents for banks?

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.....Within the past one year, the Reserve Bank of India (RBI) has brought forth many initiatives with regard to financial inclusion and one of the most important changes is "permitting for-profit companies (corporates) to act as business correspondents for banks" with a view to enhance the cause of financial inclusioni . There are several lessons for the RBI and other stakeholders from the 2010 Indian microfinance crisis on this aspect. It is hoped that the RBI would look at these lessons and revise its decisions accordingly. .....

Wrong approach to inflation

...In accordance with widely accepted economic theory, the Reserve Bank of India has been trying to cure inflation by raising interest rates. It has done so virtually every month; unfortunately, even after nearly a dozen such exercises, inflation still persists. As Sir Francis Bacon pointed out over four hundred years ago, a theory is merely a theory; it cannot be taken as fact unless it is confirmed by experiment. In the present case, the theory that inflation can be cured by making money costlier has not worked. It is not a fact.....

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Rupee decline fails to cheer many NRKs

KOCHI: Even as the depreciation of rupee is good news for Kerala, which is largely dependent on remittances and exports, not many of the migrants from the state are able to make use of the windfall. With two major festivals, Onam and Eid, just over, most of them had already sent their savings to their relatives back home before the current slide of the rupee began. Remittances to Kerala are estimated to be equivalent of one-fifth of the state's GDP, and its migrant population is said to be around 2.1 million. The Indian currency hit a fresh two-year low of Rs 50 against the dollar on Friday, and it gained marginally after reports of RBI intervention. Nearly 80 per cent of the remittances to Kerala are described as distress remittances, which the migrants send home every month to support their families. Only those who had the capacity to hold back their savings are able to leverage on the rupee slide, and they constitute the remaining 20 per cent. Migrants from Kerala in other countries are also expected to reap harvest of the current hike in dollar value.

TOI

Rupee posts biggest weekly fall in 15 years

"Right now, the market is hungry for dollars and till the time there is significant dilution in the demand, intervention from the central bank will only cushion the rupee's fall, not reverse the trend,"...

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Volatility in financial markets likely to remain; pressures on euro seem inevitable: Barclays Capital

... But RBI Deputy Governor Subir Gokarn told a news channel that if the RBI intervenes, it would be with a "very narrow objective of smoothening what might be a very volatile market situation, nothing beyond that"......

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India warns world of 'currency war'

Indian Finance Minister Pranab Mukherjee on Thursday warned the international community that there is danger of a currency war if the ongoing economic crisis deepens........

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Will intervene in forex market only to smoothen volatility: Gokarn

The Reserve Bank of India (RBI) will maintain its stance of intervening in the foreign exchange market only to smoothen volatility, Deputy Governor Subir Gokarn told CNBC TV-18 on Friday, after the rupee touched its weakest level in more than 28 months. “We at this point do not see any intervention from a rate targeting view point. That is something that would reflect a change in policy stance, which we are not doing at this point,” Gokarn told the television channel in an interview from New York. “If we do intervene at all, it will be with a very narrow objective of smoothening what might be a very volatile market situation, nothing beyond that,” he said. Several analysts have called for the RBI to intervene in the forex market in order to prevent the recent sharp depreciation in the rupee from fuelling imported inflation, which could add to already high domestic price pressures. The RBI has always maintained that it does not use the rupee as a tool for inflation management. However, in its latest policy, it said a falling rupee may have adverse effects on inflation. “One should not look at our exchange rate policy within the narrow boundaries of inflation management,” Gokarn said. “There is larger logic and context to our exchange rate policy and we have over the last few years allowed the rupee to float within the broader structural boundaries of debt limitations or debt restrictions, so that policy remains,” he added. His comments come on a day when the rupee hit 49.90, its lowest since 14 May, 2009, and a day after it shed 2.5 percent to post its biggest single-day loss in nearly three years. The local unit has declined nearly 12 percent from its 2011 high of 43.8550 against the dollar reached in late July. “It is important for people to recognise that volatility in the exchange rate is a part of the game now and your investment or return calculations have to take that into account and you have to decide how you are going to hedge that risk,” Gokarn said. The RBI has refrained from intervening in the foreign exchange market for eight straight months until July, latest central bank data showed earlier this month. However, there has been speculation in the forex market over the last few days that the RBI may have stepped in to support the local unit. Several traders had said the RBI likely sold dollars on Thursday. However, this can only be confirmed when the central bank releases the intervention data for this month in November.

Firstpost

Rupee depreciation expected: Rangarajan

The depreciation in the value of rupee was expected to an extend and could be temporary, said Prime Minister’s Economic Advisory Council Chairman C Rangarajan. He added the entities, which have a foreign exchange commitment must always hedge themselves from against the trends in the value of rupee. Speaking to reporters on the sidelines of the Annual Day celebrations of the Madras School of Economics, where he serves as chairman, Rangarajan said, “There is some panic regarding the direction in which the advanced economies will move and all of this is contributing to a situation in which the currencies are taking some beating.” The rupee has fallen at a time when currencies in many other emerging economies also took a beating. This is a reflection of what is happening not in India, but in the rest of the world, he said. But it must also be noted the rupee had stayed very strong for quite a number of years and therefore some decline in its value was also expected, he said. We would have to wait and see for some more time before coming to a conclusion where the rupee would settle, he added. Any entity, which has a foreign exchange commitment must always hedge itself and I do hope most of them would have hedged themselves against the trends in rupee value, he said. Commenting on the possible global economic slowdown, Rangarajan said the United States is taking efforts towards reviving the economy and the European debt crisis might also be resolved in some way. He said things might be more clear in a month’s time. Allaying possibilities for recession, he said the negative growth might not happen while the growth rate of developed economies would be slowed down and if it continued to remain so, would have some impact on India both in terms of trade flows and capital flows.

BS

Don’t defend the rupee, RBI

... If RBI were to successfully defend the rupee, many more firms would find dollar borrowing more attractive. Indeed, firms and households, anyone who can have access to low-cost foreign borrowing, would borrow in dollars (even if they did not need the money themselves) and lend in rupees, keeping the margin as profit. Since few would expect the central bank to be able to defend its currency in the long term, this is likely to be short-term borrowing. The consequence of a successful defence by RBI is thus likely to be an increase in short-term dollar-denominated foreign debt. This would make the Indian economy even more vulnerable to a currency crisis.

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RBI wary of selling dollars on market volatility, deficit

The Reserve Bank of India has not intervened in a big way in the currency markets, unlike most of its emerging Asian peers, because it can ill-afford to expend a limited and fragile holding of foreign exchange reserves, RBI sources say......

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Interest rate vs buyer interest

Let us have a critical analysis of this interest rate tool vested with the RBI as a part of various monetary control measures and the effect of such action on the economy at the macro level, as it is the man in the street who faces the music ultimately.............

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Subbarao kept PC in loop



Several consultations with then FM on 2G, former Finance Secretary told PAC



The UPA Government and the Congress may be defending Home Minister P Chidambaram against charges of complicity in the 2G scam, but former Finance Secretary D Subbarao’s deposition before the Public Accounts Committee (PAC) on February 3, 2011, clearly shows that he had “fairly and regularly” appraised the then Finance Minister about former Telecom Minister A Raja’s move to allot spectrum at seven-year-old price without auction. Details available with The Pioneer show that on being grilled by the MPs on his communication and meeting with Chidambaram during the scam period, Subbarao told the PAC: “There were several consultations with the Finance Minister (Chidambaram) at several stages. So, I cannot recall exactly whether this particular letter (November 29, 2007 from DoT) was discussed on a stand-alone basis or together with other developments in the telecom sector, but I do recall that in that period (October 2007 onwards), I was discussing with the Finance Minister, fairly regularly on telecom sector issues.” Meanwhile, Finance Minister Pranab Mukherjee is expected to meet Prime Minister Manmohan Singh on Sunday to thrash out the issues related to Ministry note on Chidambaram’s role in 2G spectrum allocation. In order to accommodate his unscheduled meeting with the PM, Mukherjee’s departure from Washington has been advanced by a few hours. Now he is expected to leave Washington early Sunday morning instead of afternoon.  Subbarao was responding to the volley of questions from several members of the PAC, on how his directive of November 22, 2007 — to stay the allotment of spectrum and GSM licences to Reliance Communication and Tata Teleservices at 2001 price — was not adhered to. The directive had also sought to find new market-based price for spectrum, and suggested auction. But on November 29, 2007, DoT wrote to Subbarao that they were going by the 2003 Cabinet approval for the spectrum allotment policy. After the DoT reply, the Finance Ministry kept quiet. To the questions, whether he had consulted Chidambaram, the former Finance Secretary, who is currently the Reserve Bank Governor, reiterated: “On this letter of November 29 from the Telecom Secretary, I cannot specifically say that I had taken this particular letter to the FM, but I certainly was discussing with him on a regular basis.” The recent note by the Finance Ministry to the PMO, and minutes of Raja and Chidambaram’s meeting, clearly show how Subbarao was overruled by Chidambaram to favour Raja’s controversial 2G spectrum allotment. These documents also substantiate Subbarao’s deposition before the PAC that Chidambaram was in the loop. When Subbarao was pressed by MPs, to provide evidence about his communication and meeting with Chidambaram, he told the members and PAC Chairman Murli Manohar Joshi, “Sir, there may not be a paper trail, but there was certainly discussion going on. Sir, as you know — you have been a Minister yourself in the Government — not everything is on paper or reduced to writing. Maybe there were some file endorsements, but I cannot recall them because the note file is not here.” To a question, whether he brought the violations and difference of opinion to the notice of the Cabinet Secretary or Chidambaram, Subbarao deposed, “I do not recall having said specifically that we should go back to the Cabinet. That I cannot really say without seeing the file. But I should have briefed the Finance Minister about the ongoing discussions.” Indicating pressure from Chidambaram and Raja, why no auction of spectrum took place, even after he specifically suggested auction, Subbarao said: “…We (Government) were always arguing on the basis of level playing field rather than on the basis of any growth dimensions that might have subsidised. And if they (Ministers) have chosen so, then as a civil servant, I could not contest that.” 

The Pioneer

Six Sigma can give customers value for money

...By adopting global best practices like Six Sigma, financial institutions can reduce their operating costs and bring in the much-needed customer satisfaction to grow their business.

Read more..........

RBI allows banks, NBFCs to set up infra debt funds

...The Reserve Bank of India (RBI) will allow banks and non banking financial companies (NBFCs) to set up Infrastructure Debt Funds (IDFs) to accelerate and broaden the funding sources for the country’s huge infrastructure spend plans.....

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RBI takes ‘outreach programme’ to south Kashmir village

Srinagar, Sep 22: As part of its financial inclusion and awareness drive, the Reserve Bank of India (RBI), Jammu office today organized an outreach programme at village Tailwani, Islamabad (Anantnag). The programme was presided over by K K Saraf, Regional Director, RBI, Jammu and among others attended by DDC, Islamabad (Anantnag), Kifayat Hussain Rizvi, Banking Ombudsman, New Delhi and J&K M Rajeshwar Rao and others. Saraf said during the Platinum Jubilee Year (2009-10) of establishment of RBI, it was decided to reach out to the remotest villages of the country for extending banking services so that the common man is linked to the banks without actually visiting a bank branch through Information and Communication Technology (ICT) initiatives. Saraf said that Tailwani village was one of the villages chosen by RBI for outreach activities in J&K for 100 per cent Financial Inclusion during 2010-11 by using ICT for issuance of smart cards through the Business Correspondent (BC) model.  The main aim was to achieve the objective of financial inclusion and providing doorstep banking services to the rural poor, small and marginal farmers, people of small means, women, etc.  He also explained to the gathering that the biometric smart cards have inbuilt security features and are therefore very safe for conducting transactions. The card holders would also get receipt for each transaction. 

Greater Kashmir

RBI asks banks to implement safety measures for card usage

MUMBAI: In order to minimise fraud cases and ensure security of transactions, the Reserve Bank of India (RBI) on Thursday asked banks to implement various safety measures related to credit card and debit card usage over a period of next two years.  The central bank directed banks to strengthen the existing payment infrastructure and future proofing system along with adoption of fraud risk management practices within a period of next 12-24 months, RBI said in a notification.  "The increased usage of credit/debit cards at various delivery channels also witnessed the increase of frauds taking place due to the cards being lost/stolen, data being compromised and cards skimmed/counterfeited. There is, therefore, an imperative need to secure such card based transactions...," it said. It also emphasised on the need to migrate to Euro pay MasterCard Visa (EMV) chip and PIN based cards from the present magnetic strip cards as the later is vulnerable to skimming and cloning.  "The need for a complete migration to EMV chip and PIN based cards could be considered based on the progress of 'Aadhar' (Unique Identification Card) in about 18 months," it noted.  As per the circular, the central bank has directed banks to implement improved fraud risk management practices by September 30, 2012. The banks have also been directed to strengthen merchant sourcing and monitoring process by September 30, 2012. The central bank also given a timeframe till September 30, 2013, to banks for securing the technology infrastructure.  To strengthen infrastructure for accepting these cards, RBI has said that commercial readiness of acquiring infrastructure to support PIN at POS (points of sale) should be ready by June 30, 2013.  Similarly, the enablement of all POS terminals to accept debit card transactions with PIN should be completed by June 30, 2013.  The apex bank also directed banks to be ready from technical perspective to issue EVM cards by June 30, 2013.

ET

Banks’ grievance redressal not satisfactory, says Chakrabarty

Mumbai: Reserve Bank of India (RBI) Deputy Governor K.C.Chakrabarty has said that the efficacy of the mechanism for redressing customer grievance in Indian banks is far from satisfactory, despite having undertaken a number of initiatives for ensuring fair treatment to customers. “It is necessary to further develop a credible and effective functional system of attending to customer complaints by strengthening banks’ internal structures to attend not only to the basic customer needs, but (also) the special needs of disadvantaged groups, such as pensioners and small borrowers, including farmers,'' he said at the Annual Conference of the International Network of Financial Services Ombudsman Schemes — INFO 2011 at Vancouver, Canada on Tuesday. Moreover the challenge of financial education, in a multi-lingual and multi-ethnic country like India, poses many operational difficulties, given the low levels of financial literacy and a population of 30% which is uneducated, he added. “We are trying to tide over this situation by adopting multi-disciplinary and multi-channel strategies. Taking into account these considerations, a committee was constituted by the RBI,'' he said. The committee was to look into the banking services rendered to retail and small customers and pensioners, structure and efficacy of the existing grievance redress mechanism, the functioning of Banking Ombudsman Scheme, possibility of leveraging technology for better customer service in the light of increasing use of Internet and IT for bank products and services, etc. and to recommend steps for improvements. Chakrabarty further said the lessons that the global financial crisis have been expensive and painful. “Let us not blindly believe in the ability of the markets and competition to take care of all segments of the population,” he said. “There are sections of financial consumers who always have the highest sense of protection and there are the vulnerable sections of the society who feel left out. We have to move to an order where the market forces, competition, effective regulation and a vibrant Ombudsman scheme all co-exist and handle matters concerning financial consumers’ protection in a harmonised way,” said Chakrabarty. 

FE

RBI asks banks to beef up security for e-transactions

The Reserve Bank of India (RBI) has asked banks to strengthen their payment infrastructure for safety in automated teller machines (ATM) and point of sale terminals. It has set a two-year timeline for banks to upgrade the systems beginning with implementation of fraud risk management services by September 30, 2012. In accordance with the suggestions by the working group appointed by the regulator in March this year, RBI has also asked for better sourcing and monitoring process at the merchant level by the same time frame. The regulator has directed banks to migrate to EMV chip cards and PIN-based cards by June 30, 2013. The central bank has also said that Aadhaar-based biometric identification instead of the personal identification number (PIN) should be used for all card transactions which include transactions in ATM and point of sale transactions. “The need for a complete migration to EMV Chip and PIN-based cards could be considered based on the progress of Aadhaar in about 18 months,” RBI said. It is, however, clarified that banks are free to migrate to EMV Chip and PIN-based technology, depending on their commercial judgment and decision taken by their respective boards, the regulator added.

BS

RBI warns banks on poor customers

In the name of financial inclusion, banks should not blindly follow a policy of customer acquisition, providing new access to new customers. Instead, they must address the issues faced by poor customers properly, for it might otherwise lead to a long term mistrust and loss of confidence in the banking system. According to Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty, financial inclusion is an important tool for economic development, but it might also impact the poor adversely by increasing their indebtedness and wiping out their savings and assets. “While financial inclusion is a necessary pre-condition for financial stability and inclusive economic development, the negativities that may affect a poor, ill-informed, new customer can be enormous — from high level of indebtedness due to excessively high prices and predatory lending, to complete loss of savings and assets created out of loans and those collaterally charged to the banks,” Chakrabarty said during his address at INFO, 2011, at Vancouver. He added if problems faced by the poor ill-informed customers are not addressed in a proper manner, it might lead to a long term in formal financial institutions and loss of confidence in the banking system. It is, therefore, imperative that all consumers should benefit from the same level of security and protection, whatever be the institution they operate with, he said. Hence, for banks, these initiatives should not be treated as costs, but need to be reckoned as investments necessary for business stability, he added. “Unchecked market forces and lax policies, combined with relaxed regulatory oversight, can result in customers being exploited while efforts to open financial markets to serve the bottom of the pyramid are made through financial inclusion measures,” he added.

BS

Axis Bank launches ‘MyDesign Card'

Axis Bank on Wednesday announced the launch of “MyDesign Card”, India's first debit card which allows the customer to incorporate a personal image of his or her choice. Speaking at the launch function, Jairam Sridharan, head (consumer lending & payments), said the popularity of debit cards, especially for purchases, was growing rapidly in the country. “By empowering our customers to design their debit cards, “MyDesign” aims to promote closer customer engagement with the bank,” Mr. Sridharan said. He said the facility can be availed by logging online to the bank's portal or apply for the card through any branch of the bank. In “MyDesign', the customer can incorporate images of themselves and their loved ones, and recapture moments from their fondest memories on their debit cards. The module also provides customers with an option to choose an image from a wide gallery which includes sports, zodiac signs, Indian & international tourist spots, wildlife and pets, landscapes, music, automobiles and many other images, he said.

BS

How independent is the RBI?

The Reserve Bank of India (RBI) last week raised interest rates for the 12th time in 18 months and signalled it is not yet done with rate tightening as it struggles to control inflation that has run up a 13-month high. Hours after the announcement, Kaushik Basu, the finance minister's chief economic advisor, said he had expressed reservations about a rate increase, suggesting there is pressure against further tightening from the government. Meanwhile, India's headline inflation, at nearly 10 percent in August, remains way above the RBI's comfort zone, and even Basu admitted that the country was facing a difficult inflationary situation.

So, the question is: How independent is the RBI?

WHAT DOES THE LAW SAY?

The RBI is not constitutionally independent, as the 1934 act governing its operation gives the government power to direct it. The government appoints the central bank governor and four deputies. "The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest," the act says. Technically, the government is also permitted by the act to supersede the central bank if it believes the RBI has failed to carry out its obligations.

HOW DOES IT WORK IN REALITY?

Over the last quarter century as India's economy was liberalised, the RBI has been more independent. However, there continues to be much consultation between the bank and the finance ministry, and the government has been known to exert its will, against the wishes of the central bank chief. There is no legal act mandating autonomy of the RBI, but there is a growing convention that the RBI is allowed autonomy to do what it wants, analysts say. Consultations between the central bank and the finance ministry are not unusual in India.

IS "CONSULT" JUST A POLITE WORD FOR "GOVERNMENT ORDER"?

Not necessarily. The RBI and government have clashed over monetary policy in the past, notably during the tenure of the previous governor, Y.V. Reddy, and then-Finance Minister Palaniappan Chidambaram. In 2007, global interest rates were softening but the central bank under Reddy maintained a hawkish stance, citing inflationary risks stemming from high oil prices. The government favoured lower interest rates to help sustain high growth and bring relief to borrowers. The RBI's view prevailed and it hiked policy rates. In June of the following year, however, Reddy was prodded by the finance ministry to raise rates against his wishes, he revealed in an interview after he left office. More recently, government officials alarmed over slowing economic growth were advocating a pause in the central bank's 18 month long monetary tightening cycle. However, the RBI persisted with a larger-than-expected rate hike in July, followed by another increase at its September policy review and said it was too soon to ease back from its anti-inflationary bias. But the finance ministry and the RBI generally try and find common ground on issues concerning monetary policy.

SO WHAT GOVERNS THE RBI'S INDEPENDENCE?

Personalities to a very large extent. Reddy, for example, was seen as fiercely independent. Mild mannered Subbarao is seen more open to consultations with the finance ministry, although he has demonstrated independence with criticism of the government's inability to rein in fiscal deficit.  He also aired his reservations over setting up a council headed by the finance minister to reconcile differences between regulators.

WHAT OTHER INFLUENCE CAN THE GOVERNMENT HAVE?

Appointments. The government appointed Subbarao, who was the top bureaucrat in the finance ministry, as central bank governor, bypassing Reddy's deputy Rakesh Mohan, who had been seen as a strong candidate. This was a rare instance where the top bureaucrat in the finance ministry was appointed to the top job at the Indian central bank immediately after serving out his stint as finance secretary. The government can also issue directives on non-monetary policy matters such as foreign investment rules in the banks.

WHO SHOULD INVESTORS BE WATCHING FOR POLICY CLUES?

Both the government and the central bank. Top officials, including Finance Minister Pranab Mukherjee and his chief economic adviser Kaushik Basu, and Planning Commission Deputy Chairman Montek Singh Ahluwalia speak frequently on matters of monetary policy, and their views are considered influential in policy decisions. But it is the governor who has the final say. He decides the timing, means, and degree of policy moves. Subbarao opted for a 50 basis points rate hike in July when the majority of the technical advisory panel members favoured a pause in monetary tightening or at the most a 25 basis points rise in rates. Last week, he went ahead with the rate hike cycle even after Mukherjee's adviser Basu had suggested a pause.

Moneycontrol

RBI is everyone's punching bag – S.S.Tarapore

It is wrong to blame the RBI for the slowdown and high inflation. At best, it can be criticised for not having come down hard on inflation. Besides, monetary policy has been proactive when the other arms of policy have not delivered. The Reserve Bank of India (RBI) released its mid-quarter monetary policy Review on September 16, 2011. Predictably, the RBI raised the repo rate from 8.0 per cent to 8.25 per cent, the reverse repo rate from 7.0 per cent to 7.25 per cent and the marginal standing facility from 9.0 per cent to 9.25 per cent. These baby steps should not have caused any furore. But the uproar was on account of global problems, and a fall in output together with persistently high inflation in India.

INFLATION THREAT

The global situation has gone from bad to worse and the US, Europe and Japan are hurtling into an abyss. The Emerging Market Economies (EMEs), having been accommodated on the High Table of the Big Boys, will be expected to give a helping hand to the industrial countries. In India, real growth is showing signs of some slowdown from the heady 9 per cent levels and the cherished aspirations of a 10 per cent growth rate are dashed. It is conceded in official circles that India would find it difficult to attain a 9 per cent annual rate of growth during the 12th Plan. Despite the efforts of the RBI, the inflation rate is close to the psychologically dreaded level of 10 per cent. It bears mentioning that the official price indices, the world over, generally understate the actual rate of inflation. Even if the rate of inflation comes down, the level of inflation would be higher and thereby put a cruel burden on the weaker sections of society. Given the international and domestic developments, it is imperative that India quickly crushes inflation. Increases in policy rates by 0.25 per cent should surely not be considered as harsh measures. Even the cumulative increase since March 2010 of a little over 3 percentage points should not be considered as drastic, given that after the global financial meltdown Indian interest rates were very low. The repo rate of 8.25 per cent is still a negative real rate and, therefore, the monetary tightening can hardly be called harsh. It is reported that India Inc. is angry with the RBI. Further, critics of RBI argue that if a series of interest rate increases have not been able to bring down inflation, any further interest rate increases would be counter-productive.

NEEDLESS CRITICISM

The other arms of economic policy have just not delivered and the only wing of policy that has been proactive is monetary policy; it is grossly unfair to blame RBI for the slowdown of the economy along with continued high inflation. The criticism of the RBI, if at all, should be that it has not operated fast enough and sternly enough—but that is nobody's case. The window of opportunity is very narrow and baby steps taken over a prolonged period create more tensions than sharper policy steps. The late Dr I. G. Patel, when he was the Governor, would often stress that one-shot measures create less policy tensions than a series of small steps. The government has an overbearing role in the formulation of monetary policy. Hence, it is not fair or appropriate for the government to distance itself from the latest monetary policy. Sound bytes emanating from the government seemed to imply that monetary policy was the last hope for dealing with inflation, which incidentally is generalised and much as government policymakers wish to deny it, generalised inflation is a monetary phenomenon. There is an unwritten code of conduct that the government does not criticise the RBI in the open as it is a party to the decisions. The Chief Economic Adviser, the renowned Dr Kaushik Basu, in an unprecedented outburst on the eve of the policy, is reported to have said that monetary tightening had harmed growth instead of taming inflation, which was a public message to RBI to desist from raising interest rates as higher interest rates would attract more foreign capital and thereby fuel inflation.  The ground realities are that, on the contrary, there have been capital outflows. Again, the Finance Minister expressed the hope that the existing policy to control inflation would not be extended. As Ms Kalpana Kochhar, Chief Economist, Asia Region of the World Bank, rightly pointed out, the reference to Turkey as a model to follow was not appropriate as Turkey had received massive capital inflows; in contrast, in the case of India there have been capital outflows. Policymakers of today should read the Parliamentary records of the early part of 1982, when the then Finance Minister, Mr, Pranab Mukherjee, in a Calling Attention Motion on the RBI Monetary Policy provided a magnificent defence of the RBI. This should be a mandatory read for all policymakers. The formulation of the September 16, 2011, monetary policy of the RBI must have been a period of great anxiety for the top management of the RBI. Kudos to the RBI for holding on to its faith.  Dr Manmohan Singh, as Governor, in the early 1980s, would say that the Governor of RBI was performing loneliest job in the country. As the French philosopher Voltaire said, it is dangerous to be right when the government is wrong.

HBL

RBI's Gokarn:Indian Domestic Demand Buffer To Global Turbulence

NEW YORK (Dow Jones)--Huge domestic demand within India provides a buffer to global economic turbulence, said the deputy governor of the country's central bank. "The advantage of the Indian economy is that it has a high level of domestic demand," said Subir Gokarn, deputy governor of the Reserve Bank of India, speaking in New York.  While this is positive in the longer term, in the short term, it creates volatility, he noted. As seen in the previous credit crisis, this volatility creates a liquidity crunch. "Sharp exits of capital pose the risk of liquidity constraints," Gokarn said, noting the country's monetary policies have tried to maintain liquidity. Speaking about the rupee declining, he said there is "no target to defend it at any particular level, no line in the sand." Any intervention is for "smoothening, not targeting," he said. A major challenge for the country is inflation, he said, in an environment where food prices are rising and oil prices are not declining despite slower growth in the global economy. India needs to increase its food productivity, he said, in an attempt to ease the situation.  It is also essential to rebalance demand such that there is a balance between consumption and investment.  

WSJ

Priority sector lending norms for NBFCs in public interest: Thorat

Mumbai: Usha Thorat, chairperson of the Reserve Bank of India’s (RBI) panel on finance companies, has said that the Reserve Bank of India (RBI) is not being unfair to non-banking financial companies (NBFC) when it comes to priority sector lending norms, according to a release by Indian Merchant's Chamber (IMC). Responding to the industry players, she said consumers’ protection is a strong regulatory objective and the proposed recommendations of a working group report on NBFC have come from two main premises namely, funding risk and concentration. “The risk is associated in wholesale funding to select sectors and a similar risk exists in concentration on a particular industry. Though, concentration on a specific sector develops expertise of NBFCs in that sector, but downturn in any of such sectors, could pose greater risk,” she said. R Sridhar, MD, Shriram Transport Finance Company, however, argued: “The cost of borrowing has gone up by about 50%in last few years. Our cost to consumers has also gone up. If due attention is not paid to NBFCs, the small borrowers would be forced to go back to the moneylenders.”

FE

RBI tightens return filing format for NBFCs

The Reserve Bank of India (RBI) today tightened the return filing format for non-banking financial companies (NBFCs) under which they would have to make disclosures about their deposit and lending activities to the central bank more frequently. As per the new regulation, deposit taking NBFCs would have to submit reports on deposits and prudential norms to the RBI on quarterly basis, as against annual and half-yearly basis respectively earlier. Similarly, the apex bank asked non-deposit taking NBFCs to file statements on capital funds, risk weighted assets, risk asset ratio, among others on quarterly basis. The regulations relating to reporting about liquid asset, exposure to capital markets, among others have been retained. The deposit taking NBFCs will have to file quarterly returns on liquid assets to the RBI. Also, NBFCs with a total assets of Rs 100 crore and above will file monthly returns on exposure to capital market, the notification said. Non-deposit taking NBFCs would continue to file monthly returns on important financial parameters. The RBI said the returns, under the new norms, concerning deposits, prudential norms for deposit taking NBFCs and statement of capital funds, risk weighted assets, risk asset ratio for non-deposit taking NBFCs should be submitted for the July-September quarter. All these filings will have to be done by NBFCs to the central bank in the revised formats notified by the apex bank, the RBI said.

BS

Arcil revises profit after RBI questions accounting policy

India's largest stressed assets buyout firm, Arcil - promoted by the country's top lenders - has slashed its earnings and restated its profits for FY11 besides shelving a proposal to pay dividend to its shareholders, after the Reserve Bank of India raised questions relating to the company's accounting practices....

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A dangerous remedy

......Should RBI take a “pause”? We think not. Even after relentless raising of policy rates, real interest rates—however measured—are barely positive. Clearly, there is still scope for further tightening. If the fear is that high rates will hit the country hard.....

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RBI to intervene, if required: Pranab Mukherjee

...“The RBI Governor has made it quite clear that as and when the situation warrants, the RBI will intervene. Right now, there is no such situation,” Mr. Mukherjee said....

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RBI suspected to have sold dollars at around Rs 49.15: traders

The Reserve Bank of India (RBI) was suspected to be selling dollars in the forex market on Thursday at around Rs 49.15 to arrest steep losses in the local unit after global risk aversion prompted investors to move into safer assets like debt. The RBI was likely to have started selling dollars from 49.15 per dollar, helping drive the partially convertible rupee back below the 49 mark, 11 dealers said. At 3:10 pm, the rupee was at 48.98/99 per dollar, after hitting 49.18, its weakest since 2 September, 2009, when it was down 1.7 percent on the day.

Firstpost

RBI has managed exchange rate well

The Indian rupee has depreciated by more than eight per cent so far this month, after remaining stable for a fairly long period. Naturally, there has been a growing pressure on the Reserve Bank of India (RBI) to aggressively intervene in the forex market to stem the rupee's decline, since imported inflation rises and risks associated with exchange rate volatility are growing. Despite the rupee falling to its lowest level against the dollar in more than two years on Thursday, RBI has stayed on the sidelines, stating it would intervene aggressively only when it saw excessive volatility. Many experts feel this stance of RBI's would aggravate the uncertainty in equity markets and scare foreign investors away. However, as a central monetary authority, RBI has to focus on the effectiveness of forex interventions. We cannot forget such interventions do involve important costs. Among others, these costs are the risks of financial losses on the operations, the cost in terms of resources devoted to the conduct of these operations, and the cost in terms of credibility, if the intervention fails to deliver the desired effect. The considerations of the costs versus gains of intervention might have prevented RBI from intervening aggressively, though there has been some intervention in the market, as reported by some of the newswires. While the current attack on the rupee is primarily sentiment-driven, on account of the growing turbulence in Europe, the rupee has developed a strong depreciation bias, due to India's widening current account deficit and growing dependence on short-term flows. These factors may not allow our currency to recover substantially (and sustainably), even after RBI intervenes aggressively. Also, according to RBI's report on forex reserves in August, India's external liabilities are more than its external assets. So, RBI would like to use forex reserves more prudently. Besides, a depreciation bias would help exports and employment generation, which is the need of the hour. We also need to understand central banks the world over prefer selective, rather than complete, public disclosure of their interventions to make such moves more effective.

Rupa Rege Nitsure, Chief Economist, Bank of Baroda (BS)

It’s premature to say RBI will change its stance

.... You would ideally not expect them to suddenly change the stance and they are continuing with that because inflationary expectations have still not been addressed and that is RBI’s main concern. So it’s premature to say that they will change the stance. I would still put a probability of a 25 basis points hike in October.....

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RBI finds itself isolated in war on inflation

...Until now, the government and the RBI have largely been on the same page when it comes to monetary policy, with near double-digit inflation not only an economic worry but also a political headache. But over the past few weeks, criticism and advice for the RBI chief have been more blunt than usual......

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Dharwad achieves 66% under agri-lending Rapid Action Plan

Hubli : The Reserve Bank of India (RBI) has suggested to banks in Dharwad district to have a Financial Literacy and Credit Counselling Centres (FLCC) at each Blocks. Mr R. Ramachandran, Manager, RBI- Bangalore, while reviewing the performance of banks in the district under Financial Inclusion Plan (FIP), as Lead Bank (Vijaya Bank) is opening Financial Inclusion Resource Centre and also Financial Literacy and Credit Counselling Centre jointly sponsored by Syndicate and Vijaya Bank under the banner of Jnana Jyoti Financial Literacy and Credit Counselling Centre at Dharwar on September 30. The District Level Review Committee (DLRC) meeting chaired by Mr S.V. Dindalkoppa, Project Director, Zilla Panchayat-Dharwar, was held at Karnataka Chamber of Commerce premises. Advising the bank that by just designating business correspondents (BCs) does not serve the purpose of FIP, “There should be full-fledged implementation of FIP by operation of biometric cards,” Mr Ramachandran said. He advised the bankers to speed up the process to cover the remaining 51 unbanked villages of above 2,000 population by the end of this year. Mr Y.N. Mahadevayya, Nabard Assistant General Manager, while reviewing the progress made in the district under Rapid Action Plan of Banks, observed that the coverage is only 66 per cent, remaining 43,000 farmers are to credit linked according to the district statistics by September 30.  While reviewing the district credit plan (as on June 2011), he observed that the total priority disbursal during the quarter is Rs 264.38 crore against a target of Rs 369.72 crore thereby achieving 72 per cent.  Under agriculture Rs 116.46 crore, Small scale Industries (SSIs) Rs 12.45 crore and other priority sector the achievement stood at Rs 135.47 crore.  He advised the bankers to step up advances under agriculture and SSI.  Mr B.A. Tata, Regional Manager, Vijaya Bank, Regional Office-Hubli, speaking on the occasion said the bankers should make special efforts to cover all eligible non-loanee farmers under rapid action plan by end of this month and also advised the bankers to complete Financial Inclusion Plan (FIP) in unbanked service area villages of population above 2,000. As of now coverage is only 26 out of 77 villages.

HBL