RBI Governor to visit Vijayawada on Thursday

Reserve Bank of India current Governor Duvvuri Subba Rao, who got a two-year extension against traditions, will visit the city on Thursday to address Jandhyala Dakshina Murthi Memorial Trust Seventh Memorial Lecture on RBI in everyone’s Life. Hailing from Eluru in West Godavari district, he will also address and interact with members of The Andhra Chamber of Commerce and Industry same day and speak on ‘Current issues in Macro Economic Management.’ Addressing a joint press conference, the Chamber president Muttavarapu Murali Krishna and former Vijayawada Mayor Jandhyala Shankar said that at a time when the country was reeling under such an economic upheaval in adverse international conditions, Mr. Subba Rao was playing a key role in stabilising the Indian economy and it was an opportunity for the citizens here to listen to him. While Mr. Subba Rao will address the members of Chamber at 10.50 a.m. at A-Convention Centre in Brundavan Colony, he will share the dais with National Statistical Commission Chairman R. Radha Krishna at the Siddhartha Academy Auditorium at 5.45 p.m. After his schooling from the Sainik School in Korukonda, near Vizianagaram, he graduated in Physics B.Sc. (Hons.) from Indian Institute of Technology Kharagpur and the recipient of Director's Gold Medal. Before being selected for the Civil Services by topping the 1972 batch, Mr. Subba Rao got a M.Sc. degree in Physics from IIT, Kanpur. At the press conference the Chamber secretary R.K. Chukkapalli said that in his career Mr. Subba Rao worked as the joint secretary in the Department of Economic Affairs, Ministry of Finance, Government of India between 1988 and 1993. Subsequently he became the Finance Secretary to the Government of Andhra Pradesh between 1993 and 1998. He was in the Prime Ministers’ Economic Advisory Council from 2005 to 2007 before becoming the Finance Secretary in 2007, he added.

HBL

UK-based co denied security nod to supply currency paper

UK-based De La Rue has been denied security clearance to provide paper for printing of Indian currency notes as its supply last year failed to meet some of the required specifications. De La Rue had contracts with Bharatiya Reserve Bank Note Mudran Pvt Ltd for supply of bank note paper to India, Minister of State for Finance Namo Narain Meena said in reply to a question in Rajya Sabha today. However, during July-August 2010, it came to the notice of the authorities that the paper being supplied by the British currency paper maker was "not conforming" to some of the prescribed specifications. "Accordingly, the supply of the paper was suspended. The deficiency in the paper was subsequently admitted by De La Rue also. Meanwhile, the security clearance was denied to De La Rue and thus the supplies were not resumed," Meena said. The minister further said that as on date, no paper is lying in godowns in India for transportation to currency printing presses. "In the absence of security clearance to De La Rue, the supplies cannot be resumed and stocks cannot be used," Meena added. Meena also said Bharatiya Reserve Bank Note Mudran has also informed that the contract with the UK company can be terminated relying on fact that the paper supplied by it was not strictly as per the contract specifications. Bharatiya Reserve Bank Note Mudran, a wholly owned subsidiary of RBI, was set up in 1995 with a view to augment the production of bank notes in India to enable the central bank to bridge the gap between the supply and demand for currency notes.

BS

Women Swipe Debit Cards Less

Women might be bigger spenders than men, but they use their debit cards less frequently, says a survey by the Reserve Bank of India (RBI). The central bank had commissioned the survey to assess customer satisfaction in the usage of automated teller machines (ATMs) across the country. According to the survey, debit cards are mainly used for withdrawing cash and shopping. The use of debit card for shopping was the highest in Maharashtra and Andhra Pradesh. Shopping with debit cards was found to be more popular among young spenders. Debit cards are yet to become popular for payment of bills and ticket purchases. The number of debit and credit cards as on 30 September 2011 was 25 crore and 1.76 crore, respectively. Though the number of outstanding credit cards saw a decline, the volume and value of transactions with credit cards recorded a growth of 13 per cent and 22 per cent, respectively, in 2010-11.

Business Today

out of control

...The Reserve Bank of India is acutely conscious of the problems with outflows, and the consequent impact on foreign exchange reserves. On the one hand, it refrained from intervening in the foreign exchange market except to contain volatility and excessive speculation. On the other, it has opened up other avenues for capital inflows by freeing up interest rates and other restrictions on foreign currency deposits......

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19 banks penalised for flouting derivative norms

The Reserve Bank has imposed penalties on 19 commercial banks, including SBI, HDFC Bank, ICICI Bank and Citibank, for violating norms on derivatives, Parliament was informed on Tuesday. RBI has informed that they had imposed penalties on 19 commercial banks on April 26, 2011, for contravention of various instructions issued by RBI in respect of derivatives such as failure to carryout due diligence in regard to suitability of products and selling derivatives products to users not having risk management policies, Minister of State for Finance, Mr Namo Narain Meena said in a written reply in the Rajya Sabha. RBI has issued show cause notices to banks. In response to this, banks submitted their written replies, he said. “On a careful examination of the banks’ written replies and the oral submissions made during the personal hearings, the Reserve Bank of India found that the violations were established and the penalties were thus imposed,” he said. While a fine of Rs 15 lakh each was slapped on Axis Bank, Barclays, HDFC Bank, ICICI Bank, Kotak Mahindra and Yes Bank, Rs 10 lakh each was imposed on Citibank, BNP Paribas, SBI, Credit Agricole —CIB, Development Credit Bank, ING Vysya Bank, Royal Bank of Scotland and Standard Chartered Bank, he said. Besides, a fine of Rs 5 lakh each was slapped on Bank of America, DBS Bank, Deutsche Bank, HSBC and J P Morgan Chase Bank, he added. Mr Meena also said that RBI has informed that the estimated loss of Rs 33,000 crore in the foreign exchange derivative transaction may not be the actual losses but the gross Market to Market (MTM) gains or losses to the customers.

HBL

Banks asked to look for new credit delivery tools

The Reserve Bank of India (RBI) on Tuesday asked banks to equip themselves to deal with emerging challenges and be prepared to cash in on the opportunities unleashed by higher growth in dealing with the needs of small and medium enterprises. “Banks have to look for new delivery mechanisms. They must economise on transaction costs and provide better access to the currently under-served. To serve new rural credit needs, innovative channels for credit delivery will have to be found,” said K. C. Chakrabarty, Deputy Governor, RBI, while speaking on ‘Empowering MSMEs for financial inclusion and growth — issues and strategies', at the Central Bank of India SME Conclave here. Notwithstanding the increase in credit outstanding to the sector, access to adequate and timely credit at a reasonable cost was a critical problem faced by this sector, said Mr. Chakrabarty. Another issue faced is that the MSE borrowers, especially new generation entrepreneurs, do not have collaterals to offer to avail of bank finance.The ability of MSMEs (especially those involving innovations and new technologies) to access alternative sources of capital like angel funds/risk capital needs to be enhanced considerably. For this purpose, removing fiscal/regulatory impediments to use such funds by the MSMEs should be considered on priority, said Mr. Chakrabarty. Growing incidence of sickness in the sector is another area of concern.An exit route for non-viable units was necessary to manage sickness, said Mr. Chakrabarty. “Business failure in India is viewed as a stigma, which adversely impacts individual creativity and development. The existing legislations may have to be toned up so as to provide for efficient liquidation of non-viable businesses.”

HBL

Do rising NPAs reflect an ailing banking sector?

Indian banks, once considered as bankable as the India growth story, are today feeling the heat from rising growth concerns........

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Indian money gone global

............ India is an increasingly attractive banking market, and virtually all the leading international banks are eager to expand their presence here. Surely it should be possible to demand their strict compliance with Indian laws not just here, but globally, and to officially disfavour those organisations that don’t play ball when global compliance is sought..................

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The crisis now is worse than in 2008, says India Inc

.... There are some who point out some critical differences between the crisis now and in 2008. Maruti Suzuki Chairman R C Bhargava says, “In 2008, the banking system had collapsed and banks were not willing to lend either to corporates or to individuals, to buy a car for instance. In 2011, banks have cash but consumers are not buying because of high interest costs, high fuel costs and inflation — problems the government can easily resolve.”..........

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'Merger of small MFIs will help ailing sector'

The consolidation — mergers and acquisition — of small microfinance institutions (MFIs) struggling to raise money would help address the problems of the ailing sector, said Reserve Bank of India (RBI) Deputy Governor, K C Chakrabarty. The sector, struggling with high non-performing assets (NPAs), should consider mergers for increasing its creditworthiness. Small lenders should come together if they want to secure funds with ease. “Then they (MFIs) should become big....They should merge”, Chakrabarty told reporters on the sidelines of an event organised by Central Bank of India. The apex bank brought MFIs under its direct supervision by creating a separate category of MFIs —non-banking financial company MFIs. The new guidelines prescribe stringent provisioning and lending norms. While large entities are in some way able to raise funds, smaller ones are on the verge of closing, as their sources of funding have dried. Though Chakrabarty suggested a way out for small MFIs to sustain their business, he said those with a good credit history continue to receive funding from banks. “There are enough MFIs taking money and paying it back. These are getting the money,” he said. However, despite the new regulations, Chakrabarty said banks needed to be cautious in lending to the sector. “Banks need to be selective. If they feel the borrower is capable of paying back, they would lend,” he said. Banks reiterated the views expressed by the regulator. “Consolidation of MFIs would be a step in the right direction, as it helps increase their capital base. Also, it would lead to healthy competition between big MFIs and definitely better regulation and management of the sector,” said A S Bhattacharya, chairman and managing director, Bank of Maharashtra. Another senior official of a public sector bank said banks were taking into account the capital base, regions of operation and activities of MFIs before lending. Credit rating agencies also feel bringing together small and scattered micro lenders would help in changing the perception of lenders towards the sector. “Consolidation would help in diversifying risks and increasing the loss absorption capacity of MFIs. The advantages of large-scale operations can also be leveraged for raising funds,” said Naresh Takkar, managing director, ICRA. Yesterday, RBI had allowed MFIs to raise up to $10 million through external commercial borrowings.

BS

Subir Gokarn says rupee 'relatively stable' due to steps taken

..... "The measures we have already unveiled are not the only ones we have. There are a number of other measures we can undertake to bring stability to the money market, and when the need arises we will use them,"............

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Weak fundamentals driving rupee down, says RBI Deputy Governor KC Chakrabarty

MUMBAI: Reserve Bank Deputy Governor KC Chakrabarty today opined that the rupee is under pressure due to the large fiscal deficit and other weakening macroeconomic fundamentals. "If the country has high fiscal deficit and high inflation, and also has high current account deficit, I don't see why the currency will not depreciate," said Chakrabarty told reporters on the sidelines of an event hosted by the Central Bank of India and the SME Chamber here. The rupee has been the worst performer in the Asian region having lost over 18 percent this calender year. The fall was escalated since the US downgrade by S&P early August and touched an all time low of 54.30 to dollar last Thursday.  Today, it closed at 53.05 to a greenback. Though RBI had discretely intervened in the market since mid last month, selling nearly 6 billion dollars to arrest the rupee fall, besides initiating measures like freeing up the foreign currency deposit rates and capping open positions by dealers, they failed to make the desired effect.

ET

Rupee recoups losses on RBI comments

...... "Gokarn mentioned the RBI has other weapons in its arsenal to use in the foreign exchange market, which means the central bank is willing to take additional steps to arrest the rupee's fall,"...............

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RBI’s measures to contain rupee volatility may hurt bank earnings

For now, the Reserve Bank of India’s (RBI) measures to curb speculation in the foreign exchange market haven’t stopped the slide of the rupee. Not only that, they have disclosed other problems..........

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Supporting the rupee

Though belated, the government and the Reserve Bank of India have come out strongly in support of rupee that is rapidly declining in relation to the dollar. The new measures, both administrative and policy, fall into three broad categories. One, the rules governing overseas investment have been relaxed in certain cases so as to increase the supply of dollars in the domestic market and thereby correct its demand-supply imbalance. The ceiling on debt instruments by foreign institutional investors and the interest cap on external commercial borrowings have been raised. The lock-in period for overseas investors in infrastructure bonds has been reduced. Two, in a surprise move — on the day before the credit policy review last week — the RBI clamped down on forward trading in foreign exchange. The avowed objective is to curb the rampant speculation which, in its view, weakens the rupee further. In the third category are the new incentives provided to non-resident Indians to invest more with banks in India. These are significant in themselves and they need to be evaluated in a larger context and over a longer time-frame than in the immediate term. It is fairly clear, however, that the rationale for almost all these measures is traceable to the rupee's sharp decline and the imperative of arresting it. Absent this justification, the case for introducing many of them at this juncture becomes weak. For instance, given the RBI's concerns over accumulation of short-term external debt, there is no reason for facilitating larger external borrowings by companies. Now, with the foreign institutional investors getting a greater access to the debt markets, including the gilts and corporate bond market, the external economy will be vulnerable to foreign capital flows. The RBI might have succeeded, at least temporarily, in halting the rupee's decline by sending out strong messages to currency speculators — as, for instance, by disallowing the rebooking of cancelled forward contracts in foreign exchange. But clearly these measures are in the realm of micro-management and should go once the perceived threat to the rupee recedes. The deregulation of interest rates on non-resident bank accounts cannot be justified except in the narrow context of encouraging overseas Indian investment at all costs. Past experience suggests that these deposits can exit just as easily as they enter. Besides, with the prevailing low dollar interest rates, there is tremendous scope for arbitrage with minimal exchange rate risk to the Indian expatriate. Neither individual banks nor the macroeconomy stands to gain by mobilising such funds.

HBL

Inflation above comfort level: Pranab

The government today said inflation, which is above comfort level, is a matter of concern and steps are being taken to address the price situation...............

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Policy rates unlikely to be eased this fiscal

The RBI has kept the policy rate and the CRR unchanged in its mid-quarter policy review as inflationary pressures are yet to diminish, particularly in the case of non-food manufactured products. However, the guidance provided was distinctly less hawkish, highlighting that further rate hikes may not be warranted and that subsequent monetary policy actions are likely to ease the policy rate. Nevertheless, the RBI has not provided a timeline for the same. While the pace of growth of the Indian economy has clearly moderated in the recent months, a number of temporary factors contributed towards the substantial contraction (5.1 per cent) in manufacturing output indicated by the Index of Industrial Production in October 2011. Notwithstanding the measures taken by the central bank to arrest the depreciation of the rupee, it is unclear at what level the currency would stabilise in the near term. Therefore, the RBI is expected to remain cautious regarding the possibility that a weaker rupee may result in a flaring up of inflationary pressures. Accordingly, the apex bank is likely to keep the policy rate unchanged in the fourth quarter of 2011-12, and embark on monetary easing in Q1 2012-13, once inflation moderates below 7 per cent.

Naresh Takkar, MD and CEO, ICRA Ltd -  HBL

Air India debt recast: SBI-led team petitions RBI for longer tenure

....The State Bank of India-led consortium of banks is believed to have made fresh representations to the Reserve Bank of India urging it to provide additional exemptions from provisioning on the debt-recast plan of Air India...........

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Parliamentary panel wants RBI norms on farm credit followed effectively

NEW DELHI: A Parliamentary committee has directed the government agencies to ensure that RBI guidelines related to institutional credit for farmers during natural calamities are followed in letter and spirit. The Committee on Agriculture, headed by Basudeb Acharia, which presented its report in Parliament today called for more effective steps by the government to mitigate the impact on deficient monsoon on the farm sector. The panel expressed satisfaction over the RBI's scheme to provide relief to farmers in the event of occurrence of natural calamities, but it felt that the government needs to work more seriously on implementing the scheme.  "What perturbs the committee is that in spite of these RBI guidelines, their proper implementation leaves much to be desired. This is because farmers have to go through a myriad of processes and cumbersome procedures before they finally receive some financial support to help them tide over the crisis brought by natural calamities," it pointed out.  The committee is of the view that faulty implementation forces farmers to approach private moneylenders for debt.  "It is precisely these bottlenecks, which force farmers to knock at the doors of private moneylenders who by virtue of their informal and speedy disbursal of credit, force farmers into the vicious and never ending debt cycle from which they get no respite," it observed. In view of the difficult situations faced by the farmers in the event of a natural calamity, the committee has urged the concerned government agencies to follow the RBI guidelines "in letter and spirit".

ET

One lakh fake notes at ICICI

Dombivli : On December 16, the Manpada police station registered a case of a bank receiving fake currency notes by an unknown depositor.  ICICI Bank, Dombivli Branch lodged a complaint after it detected Rs 1,38,200 in fake currency that was deposited to the bank. A bank manager at ICICI-MIDC branch in Dombivli confirmed the news, on the condition of anonymity. "We have received fake notes earlier also but not such a big amount," he said. When contacted, Kalpesh Kunt, in charge of ICMC, the collection centre for banks in the MIDC area, said he would get in touch with us later since he was out of the area. ICICI officials examine the currency deposited in the bank by the public at Currency Chest of ICICI, which is located in the basement of the MIDC branch, for forged or damaged notes. The bank authorities do not know yet which account received the fake currency because the notes were discovered during an inspection of all the cash brought in from ICICI's city branches. Officials immediately lodged an FIR with the Manpada Police station.  P Bhalerao, assistant police inspector on duty from Manpada Police, said, "The case is being investigated. We have registered the case under sections 489 (a) (b) and 420 of Indian Penal Code for cheating and forgery. We will have to probe every account holder's cash deposits to get a lead." Preliminary submissions made by the bank to police reveal that the fake notes were in denominations of Rs 1,000 (54 notes), Rs 500 (165 notes), Rs 100 (14 notes) and Rs 50 (14 notes). According to the ICICI bank spokesperson, "Genuine notes are only put into circulation by us after processing is done in high-end note sorting machines in line with the RBI's note-sorting policy. Forged notes detected by these machines are again checked manually by highly experienced bank staff and reported to the RBI and National Crime Records Bureau. Post that, the bank lodges a FIR with the local police. The same process has been followed by the bank while lodging the FIR. This has been done in compliance with the RBI guidelines with regard to identification and reporting of such currencies."

Mid Day

RBI's pause on key rates worries SMEs

........ Even as the Reserve Bank of India (RBI) has decided to hold its monetary policy tightening measures by keeping the key rates unchanged, small and medium enterprises (SMEs) have raised concerns over the continued high cost of bank finances. In its mid-quarter monetary policy review last week, the RBI kept the cash reserve ratio (CRR) unchanged at 6 per cent, while repo rate and the reverse repo rate remained unchanged at 8.5 per cent and 7.5 per cent respectively. Meanwhile, banks have not shown any indication of modification in the current interest rate structure for loans.................

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Plan panel proposes liberal bank exposure regulations for fund-starved UMPPs

A high-level working group in the Planning Commission has proposed a special bank lending dispensation for ultra mega power projects (UMPPs), considering the high debt component of these capital-intensive projects. It has said the Reserve Bank of India's (RBI) prudential norms for UMPPs could be more liberal considering their relatively high fund requirements............

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MFIs can tap ECB

The Reserve Bank of India (RBI) on Monday allowed micro finance institutions (MFIs) to raise funds via external commercial borrowings (ECBs) up to $10 million or equivalent during a financial year for permitted end-uses under the automatic route. The MFIs eligible for the same will be: those registered under the Societies Registration Act, 1860; those registered under Indian Trust Act, 1882; MFIs registered either under the conventional state-level cooperative acts, the national level multi-state cooperative legislation or under the new state-level mutually aided cooperative acts and not being a co-operative bank; non-banking finance companies (NBFCs) categorised as ‘non-banking finance company-micro finance institutions' (NBFC-MFIs) and companies registered under Sec. 25 of the Companies Act, 1956, and involved in micro finance activity. Further, the MFIs registered as societies, trusts and co-operatives and engaged in micro finance activities should have a satisfactory borrowing relationship for at least three years with a scheduled commercial bank authorised to deal in foreign exchange; and would require a certificate of due diligence on ‘fit and proper' status of the board/committee of management of the borrowing entity from the designated authorized dealer (AD) bank.  ECB funds should be routed through normal banking channels. NBFC-MFIs will be permitted to avail themselves of ECBs from multilateral institutions such as IFC and ADB/ regional financial institutions/international banks / foreign equity holders and overseas organisations. Companies registered under Sec. 25 of the Companies Act and engaged in micro finance activities will be permitted to avail themselves of ECBs from international banks, multilateral financial institutions, export credit agencies, foreign equity holders, overseas organisations and individuals. Other MFIs will be permitted to raise funds via ECBs from international banks, multilateral financial institutions, export credit agencies, overseas organisations and individuals. However, overseas organisations and individuals complying with specific safeguards may lend.The RBI has also stipulated that the designated AD must ensure that the ECB proceeds are utilised for lending to self-help groups or for micro-credit or for bona fide micro finance activity, including capacity building. It has also been decided that non-government organisations engaged in micro finance activities can avail themselves of ECB up to $10 million or equivalent under the automatic route as against the present limit of $5 million or equivalent per financial year. The RBI has also said that these amendments to ECB policy would come into force with immediate effect and the framework with respect to MFIs would be reviewed after one year.

HBL

India's Finance Minister Lays the Foundation Stone of the Country's First Bank Note Paper Mill

.............The project is likely to be completed by October, 2013. The completion of the project will reduce our dependence on foreign supplier. This will also reduce the possibility of diversion of papers supplied by foreign supplier to other destinations for the purposes of generating fake currency. We have to take the drive of indigenization to a logical conclusion by becoming self reliant. Our long term goal should be to meet our domestic requirement related to currency and subsequently cater to the demand of the international market. Looking into the technological and scientific temperament of our younger generation, I am sure we can achieve it. 

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Follow KYC norms or face penalty, RBI tells banks

Mumbai: The Reserve Bank on Monday asked banks to strictly follow the Know Your Customer (KYC) norms or Anti- Money Laundering (AML) standards, failing which it will take penal action. "Any contravention thereof or non-compliance shall attract penalties under Banking Regulation Act, 1949," RBI said in a notification. Banks are required to strictly adhere to Know-Your- Customer (KYC) norms, Anti-Money Laundering (AML) standards, Combating of Financing of Terrorism (CFT), Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002, it said. RBI said banks are required to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers. Banks and Financial Institutions should have policies, controls and procedures, duly approved by their boards, in place to effectively manage and mitigate their risk adopting a risk-based approach, it said. As a corollary, banks would be required to adopt enhanced measures for products, services and customers with a medium or high risk rating, it added. In this regard, it said, Indian Banks' Association (IBA) has taken initiative in assessment of money laundering and financial terror and risk in the banking sector. The IBA guidance also provides an indicative list of high risk customers, products, services and geographies. Banks may use the same as guidance in their own risk assessment, it added.

Zee News

State govt flays bankers for laxity

Senior officials say banks are indifferent towards funding development projects. For another time in a row, state government on Monday came down heavily on bankers for their being indolently indifferent towards funding developmental activities in the state. A slew of officers had an heated exchange with bankers to extent that a senior government official levelled charges, “Bankers just do paper work in the state”. Not only RBI, data available with Business Standard also reveal bankers are forming in the state in terms of farm loans, credit deposit ration, rural housing loans, farm loans and above all education loans. The credit deposit ratio, the officials complained, was very low even less than 40 per cent mainly in tribal-dominated area where bankers have no scarcity of government business. While holding a discussion with bankers in state-level bankers committee meet, state chief secretary, Avani Vaish warned the bankers, “We will take up the matter with RBI, if bankers do not sanction education loans and developmental activities.” On the other hand, bankers shifted blame to the students and the government by saying that the given targets are exaggerated and hard to achieve. “How can we fund 60,000 seats when state has only 30,000 seats in the professional colleges?” a banker asked. Earlier also KC Chakraborty, Deputy Governor of RBI had pulled up the state bankers for their lethargy in funding students for higher education and low credit deposit ratio and even farm loans. A senior official, Sanjay Shukla exposed a case to which many bankers were unaware and put a question mark how bankers are working in the state, “We have a Central government scheme to provide quality housing to urban poor. The Central and state government would extend 70 per cent of finance, construction work is in progress but bankers just simply turn down beneficiaries even for a loan of Rs 1-1.5 lakh despite the properties which the beneficiaries will own, will have at least Rs 10 lakh market value. All housing projects, under the scheme, are in posh areas. This reflects how bankers are working in the state.” The bankers committee is unaware of the scheme. Another official Ashok Shah, director institutional finance alleged, “Bankers just brushed away demands for loans and do paper work only.” Bankers had a rather poor reply. They either want a commission in financial inclusion from government or want properly-trained business correspondents for rural accounts operations. But, hardly have any answer why they have funded zero amount to students or to poor in urban and rural areas for housing activities. “There is a problem in communication and we will have to have a systematic approach to solve these issues,” said MV Tanksale, chairman of the Central Bank of India who is also the head of state level bankers committee, “It will take 4-5 years for us to reach all rural areas in terms of financial inclusion.” According to data available with the Business Standard, there are as many as 100,000 seats in professional colleges all over the state but bankers have a very lengthy documentation process. They also want heavy collateral. “I have felt it in three-four cases in which I am the guarantor and I have perception that bankers do not work, they have sanctioned loans to students residing outside the state and studying in colleges outside the state,” Shukla added. The data available with the Business Standard indicates that banks like Punjab National Bank, Indian Bank, IDBI Bank, Dena Bank, Axis Bank and Corporation Bank, Axis Bank and State Bank of Bikaner and Jaipur have not covered any villages under banking service in villages of 2000 population. In case of rural housing bankers, these have funded 6,033 cases against more than 2 lakh potential and 40,000 forwarded by state government. The Nabard has also revealed that per hectare funding by bankers is very poor and only 40 per cent orRs 8,000-9,000 per hectare against the national average of Rs 22,000 per hectare. The credit-deposit ratio in tribal district of Sidhi, Umaria, Shahdol, Rewa, Singrauli Mandla and Annuppur is not above 35 per cent since 2008.

BS

RBI offers new branch licences to StanChart, Deutsche Bank

............. “I think RBI held back on issuing new branch licences to large foreign banks primarily because of two reasons. First, there was some regulatory discomfort over governance and control in some of these banks. Second, RBI also wanted to link the new branch licensing process to the subsidiarisation model. It was probably waiting till the guidelines for this model were finalised,”.....................

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Arresting falling rupee; whose responsibility?

.......... Creating confidence among investors, both foreign and Indian, is an arduous task and is certain to take lot of time. On the other hand, it takes no time for reputation to go down the hill. The policy of drift followed by the Government must quickly make way for decisive actions and reforms. Even if Government sends signals that long awaited measures and legislations would be taken up after elections in UP, that will shore up some confidence and make the RBI’s task that much easier. This battle, of arresting falling rupee, will have to be jointly fought by the Government and the RBI.

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Hard Sell for RBI

In your editorial “Stance of silence” (December 19), you have said: “In the end, a central bank’s job is essentially to manage expectations; if it does merely what is expected of it, it may not be seen to be in control.” In this connection, the results of the two surveys of the central bank on inflation expectations and consumer confidence should be of interest. Around two-thirds of the households are aware of the Reserve Bank of India’s (RBI’s) monetary actions. Of them, only about one-fourth are convinced that the Bank is doing the needful. Of the latter respondents, less than 60 per cent feel that its policies have an impact on controlling inflation. The survey was restricted to selected urban areas, probably for operational reasons. One can expect the position to be no better, if not worse, in rural areas. How can the RBI manage expectations if a large segment of the population is either not aware of its actions or not convinced of their effectiveness? It needs to think of some innovative ways of reaching the masses. Could it consider appointing someone like Katrina Kaif or Karishma Kapoor as its brand ambassador?

A Seshan, Mumbai (BS)

Too early to expect a loosening of monetary policy

.Though the balance between growth and inflation seems to be tilting, inflation still continues to remain outside RBI's comfort zone, and while the regulator has taken a pause on rate hikes, it is too early to expect any loosening of the monetary policy............

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Why RBI’s hands are tied in checking Re fall

...........RBI has responded when pushed to the wall. Perhaps, next time around RBI will be more proactive in managing currency expectations.

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Deregulation sparks rate war to draw NRI deposits

........“The deregulation of the rate will help stop the flow of NRI funds to NRO accounts and divert them to NRE accounts. It will help banks like us from being burdened with more high-cost deposits in NRO accounts,” ............

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Customer protection should be given top priority, says Sinha

Mumbai, Dec 18: Customer protection should be given highest priority by all financial institutions since it is vital for overall financial stability, Deputy Governor of the Reserve Bank of India, Mr Anand Sinha, said here today. “Consumer protection is not only important to attract more people into the fold of financial system, but also vital for maintaining the financial stability of the economy,” Mr Sinha said at the Financial Planning Congress 2011 organised by Financial Planning Standards Board of India here. He also said that there should be appropriate changes in the legislation to empower the central bank to take appropriate measures to improve the level of consumer protection. “Issues relating to management of banking institutions and secrecy of consumer information among others should be addressed in the legislative process,” he added. Justice B N Srikrishna, chairman of Financial Sector Legislative Reforms Commission (FSLRC) said concerted action should be taken up by various regulators to protect the customer from mis-selling and frauds. “A financial product should suit the socio-economical and educational qualification of a customer, so that he gets optimum benefit of his investment,” he said. He also said that the FSLRC would look into all matters relating to consumer protection in its report. Other speakers at the event also emphasised on the importance of financial literacy for protection of investors’ interest. “Financial literacy is another area on which regulators and financial institutions should work upon,” Chairman of Pension Fund Regulatory and Development Authority (PFRDA), Mr Yogesh Agarwal said.

HBL 

Odisha passes depositors interest protection bill

Bhubaneswar: With aim to protect interest of depositors in non-banking financial companies (NBFCs)and un-incorporated bodies (UIBs), the state assembly has passed Odisha Protection of Interest of depositors (in Financial Establishments) Bill, 2011. The Bill was passed with few amendments moved by Finance Minister Prafulla Ghadai last night. "The new legislation will help curb illegal activities of unscrupulous NBFCs and UIBs," Ghadai said. The Bill will protect the interest of depositors by way of return of their deposits with benefits/interests at the instance of the state government. "The existing RBI Act does not have provision to protect the interest of common depositors," he said. With a number of NBFCs and UIBs luring the people with high returns and vanishing overnight leaving the common depositor frustrated, the government had no alternative but to bring in a stringent legislation to curb the menace, the minister said. It had been observed that some NBFCs and UIBs collect and receive deposits with sole intention of defrauding the people in different parts of the state, mostly in remote areas. The new legislation has the provision of making it mandatory for all such institutions to register themselves with the government.

Zee News

This is not the way to protect rupee

Both the government and RBI will be happy to see the local currency bouncing back, but will the trend last?

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RBI should look to bring in reforms on asset side of banks

MUMBAI: Despite many reforms in the banking system over the last two decades, challenges like diversified structure of financing and complexity of financial products should be addressed for long-term stability, industry experts said here today.  "Though there have been many reforms in the banking space in the last two decades, issues related to long-term financing, rising complexity of financial products with globalisation along with various sources of funding still remain. Regulators have to address these issues for long-term stability of the sector," Member of Financial Sector Legislative Reforms Commission (FSLRC), Y H Malegam said at Financial Planning Congress' 11 organised by Financial Planning Standards Board of India here. He, however, said Indian banks are better placed than their global counterparts as far as capital adequacy and exposure to risky assets are concerned. 

TOI

One cheer for RBI

....The last missing cheer, of course, is for the missed CRR cut. While signalling a change in stance is all very well, you can’t sit back and watch—you need to be pro-active, particularly when the market is on a rampage. An off-meeting CRR cut followed by more FX intervention will be just the ticket to bolster RBI’s very slowly recovering credibility............

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Majority of Indian MFIs may have to shut shop

Tough new regulatory requirements laid down by RBI and a shortage of funds may adversely hit MFIs in next 2-3 yrs..........

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Ground Zero for Financial Inclusion

.... The drive for financial access has got a new fillip with the RBI allowing for-profit firms get a role in financial inclusion. For Indian banking industry, this day must be treated as Ground Zero towards universal financial access. But for-profit financial inclusion will still make a loss, argues Sameer Kochhar, Editor-in-Chief, Inclusion......

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RBI monetry policy: A wise and significant pause

The Reserve Bank of India (RBI) Governor, D Subbarao, has been true to his word. In October 2011, while announcing the midyear review of the central bank's monetary policy, he assured us that "the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 and then continue down a steady path to 7% by March 2012... providing room for monetary policy to address growth risks in the short run." Consequently, "the likelihood of a rate action in the December midquarter review is relatively low. Beyond that, if the inflation trajectory conforms to projections, further rate hikes may not be warranted." In keeping with that promise, the governor kept all policy rates unchanged in the RBI's mid-quarter review last Friday. In the process, he has turned a deaf ear to finance minister Pranab Mukherjee's not-so-subtle hint just two days before the mid-quarter review. Speaking at the Delhi Economics Conclave, the FM made no bones about where his preferences lay. "It is necessary for policymakers to send clear signals, mindful of the fact that options today are much more limited. India cannot afford to relax on its efforts to promote growth," Mukherjee said. The message was clear. It is time for a reordering of priorities. "Read my lips, cut rates," the FM seemed to urge the RBI governor. But the governor has chosen not to. Is he being dogmatic? Remember the beleaguered Margaret Thatcher's famous boast, "the lady's not for turning"? So, has the governor, likewise, dug in his heels when he should, perhaps, have been more 'flexible'? After all, by his own admission, "domestic growth is clearly decelerating, reflecting the combined impact of several factors: the uncertain global environment, the cumulative impact of past monetary policy tightening and domestic policy uncertainties." The answer is an emphatic 'no'. The reality is despite depressing index of industrial production (IIP) figures that show a 5.1% decline in industrial production in October 2011 and somewhat encouraging inflation numbers, the RBI cannot afford to relax its guard on inflation. True, food inflation, the most worrisome sort in a country like ours, is down to 4.35% for the week ended December 3, 2011. But what we gain on the food front is likely to be more than offset by a rise in the prices of manufactured articles and of fuel and power, thanks to the depreciating rupee and rising inflationary pressures worldwide. According to the International Monetary Fund's September 2011 World Economic Outlook, consumer price inflation is likely to rise from 1.6% in 2010 to 2.6% in 2011 in advanced economies, and from 6.1% to 7.5% in emerging and developing economies. In the Indian context, we have an additional problem. Our inflation numbers understate actual inflation since domestic prices of administered petroleum products do not reflect the full pass-through of global commodity prices. As under-recoveries of oil marketing companies increase, it is only a question of time before an increase in the price of administered petroleum products becomes inevitable.

ET

What does RBI know that we don’t?

.... The central bankers are obviously reading the tea leaves differently from those in North Block. They are, though they won’t say as much, preparing for the real possibility of a macroeconomic shock that has its origins in the rapid deterioration of the fiscal imbalance; the bleak global outlook is only exacerbating the problem..........

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From inflation to growth

Last week, the RBI, at long last, applied brakes on its high- interest rate regime. That was the good news. After raising the policy rate for 13 times on the trot since March last year, it was time too that it paused. But Governor D Subbarao disappointed a lot of people who were actually expecting a rate cut. The economic situation did not warrant it at this stage. Given the virtual run on the rupee, this was not a bad decision at all. Markets can wait for a couple of weeks for the rupee to stabilize before the policy rate can be trimmed a notch. Happily, the RBI has begun to support the rupee with the objective of stabilizing it at about the current rate against the dollar. Thanks to high inflation, the real interest rate continues to be negative. Even though due to seasonal factors food prices have moderated in recent weeks, overall core inflation continues to be high. But the policy review last Friday by the central bank suggested that it is no longer worried about inflation. It would henceforth engage itself in boosting growth. Which means some easing of the policy rates at the next review. The sharp drop in the factory output, particularly in the capital goods sector, might have acted as the spur for the RBI to switch from inflation to growth as its main objective. However, neither fighting inflation nor boosting growth is entirely in the hands of the central bank. There are clear limits to what a monetary policy can achieve. Frankly, successive RBI governors have conscientiously done their bit in this regard. As Finance Minister, P Chidambaram had sought to inject his own agenda but the RBI Governor at that time had successfully resisted pressures. D Subbarao is fortunate that Finance Minister Pranab Mukherjee is sensible enough not to seek to interfere in his functioning. Therefore, the broad hint of a rate cut in the next policy review by the central bank is good as far as it would go to improve the economic sentiment. Markets on Friday tumbled by a record 345 points after learning that there was no immediate rate cut available for them to cheer. However, the two- year low by the SENSE is no reflection on the monetary policy. It is a reflection on the overall state of the country of which economy is an integral part. Unless the Government gets its act together, and political uncertainty gives way to a sense of stability, the economy will remain hostage to adverse factors. It would not be correct to shift the entire blame to the global factors for the slowdown. There has been some moderation in the price of crude oil in recent weeks. However, the increase in exports is not matched by a commensurate drop in imports, thus widening the trade gap further. Hard currency borrowers are feeling the pinch of a depreciated currency. As foreign loans mature in the next two years, the currency could come under further pressure. The sharp drop in the value of the rupee is largely because of the failure of the Government to create a propitious climate for fresh investment in the core infrastructure sectors such as power, roads, transport, mining, etc. Growth in all these areas has come down sharply in the last couple of years. Indeed, on the present reckoning the overall growth in the current financial year may not even touch seven percent, though the RBI has projected a rate of 7.6 percent.

FPJ

Playing safe

“The RBI had a difficult choice before it.” It was not unexpected that the Reserve Bank of India (RBI) would relax its tight monetary policy after 13 consecutive interest rate hikes since March 2010. These hikes added 350 basis points and had the unintended consequence of slowing down the economy already hit by other macro-economic problems and an unfavourbale external environment. The apex bank has now retained the status quo on repo or lending rates, as promised in its second quarter policy statement in October. Though its expectations at that time have not come true, it probably had to effect a pause. There was even a view that the RBI should go beyond a pause and actually start reversing the interest rate hikes. But it obviously wanted to play safe when matters are still not under any semblance of control. The RBI had a difficult choice before it. Inflation has shown signs of moderating from its peak levels but it is still above 9 per cent. The entire dear money policy was meant to bring inflation down to acceptable levels. But the goal of 7 per cent inflation by the end of the financial year is difficult to achieve. Though food inflation has registered a significant decline, there are other difficult indicators. The depreciation of the rupee and the increase in crude prices are likely to fuel the inflationary spiral. The likely increase in government expenditure in the coming months and its impact on fiscal deficit also have to be reckoned with. In spite of all these, the RBI felt that the impact of the rate hikes on the economy has been severe, with industrial production even showing a negative growth in October. There is a severe credit crunch and corporate investments and tax collections are falling. Since the monetary policy tweaking had almost reached its limit, the bank may have felt it had to halt before the slowdown gained further momentum. The RBI’s projection of a 7.6 per cent growth for the economy this year seems to be in doubt. That may be the reason why it has stated that from now monetary policy actions are likely to reverse the cycle, responding to the risks to growth. That may be an indication that the first rate cut after many months is likely to happen in its January policy review. However, it may still be not the last word because inflationary pressures are still strong. 

DH

Cautious policy

This is with reference to the editorial “Behind the curve” (Business Line, December 17). The rupee has plunged to a record low against the dollar and is under stress. Unsustainably high level of inflation, growth rate falling below 7 per cent, and widening fiscal deficit are worrisome factors. Pressure was obviously on RBI not to increase the key policy rates any more. Reduction in the cash reserve ratio was expected this time around, but by maintaining it at the present level of 6 per cent, the RBI has clearly preferred a wait-and-watch policy. India Inc is happy as high interest rates aren't good for the economy and eat into the profits of companies, reducing the surpluses. It's a cautious policy initiative aiming at the right balance between growth and inflation, while taking the economy again on a growth trajectory. 

Srinivasan Umashankar, Nagpur (HBL)

No non-event, this

In its mid-quarter monetary policy review on December 16, the Reserve Bank of India did not change the policy interest rates, the repo and the reverse repo rates. They remain unchanged at 8.5 per cent and 7.5 per cent, respectively. Nor did it tinker with the Cash Reserve Ratio, which stays at 6 per cent. The repo rate is the rate at which the RBI lends to banks while the reverse repo is the rate at which it takes money from banks, both against securities.The repo rate has emerged as the key reference rate. The reverse repo is pegged at one percentage point below it. Those significant changes were introduced in the annual policy statement of May 3, which also saw the introduction of the marginal standing facility whose rate is fixed at one percentage point above the repo rate. The absence of changes in the interest rates does not make the policy announcement a non-event. One tends to assume that headline making interest rate moves are the whole of monetary policy. Everything else does not seem to matter. It ought to be mentioned here that a monetary policy announcement does not cause the same level of excitement, which, say, a budget announcement does. Until recently, monetary policy issues were presumed to interest bankers (to whom it is generally communicated in the first instance) rather than the common man. To a large extent that was true: for the man on the street there was little to relate to interest rate or exchange rate policies. But the paradigm is surely but steadily changing. Ordinary citizens develop a vested interest — they may own a house bought with a bank loan or financed their children's education through an educational loan. Many, of course, travel abroad making them aware of the intricacies of foreign exchange transactions.  For them and many others, there is a growing need to understand the intricacies of official policies. The list can go on and on but suffice it to say that to the extent official policies are made more accessible, it is in everyone's interest. The latest mid-quarter review is one of the eight policy statements by the RBI in a year. The increased frequency — one every 45 days — helps the central bank keep in constant contact with the financial markets. It is also part of a process of demystifying official policies. However, one outcome flowing from the frequent announcements is that the monetary policy statements have become predictable. There are pros and cons in such an approach. On the plus side, there is greater transparency as well as continuity in policy. Important issues discussed just 45 days ago will not be forgotten. For instance, in the quarterly review (October 26), the RBI more than hinted of a soft monetary policy ahead when it said that that the possibility of a rate review in the December statement was ‘relatively low' and that henceforth the monetary policy will have more room for addressing short-term concerns. The flip side, of course, is that the central bank probably loses its surprise element when it wants to take the market participants by surprise. However, on December 15, the RBI sought to impose curbs on speculation in foreign exchange forward contracts as part of its gambit to stem the rupee's slide against the dollar. The rupee rebounded sharply on the next day. All these show that there is still room for surprise announcements in between policy dates. Effectively, the RBI had announced a change in its stance in the last policy announcement itself. On the eve of the latest statement, the consensus among money managers and others was that the RBI will maintain the status quo neither reduce the interest rates nor hike them. However, in the days prior to the policy announcement, there were strong arguments for and against a rate hike. Inflation continues to be a main worry, although the RBI is hopeful of containing it within its projected target of 7 per cent by March, 2012. On the other side, growth concerns have begun to occupy the centre stage. “While inflation remains on its projected trajectory, downside risks to growth have clearly increased,'' the RBI said. “From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth,'' it said.

HBL

Stance of silence

Growth is in trouble, so the RBI should be wary of continued inaction

Reserve Bank of India, in its mid-quarter policy review, has unambiguously signalled a shifting of stance. Not only does the RBI reiterate in its statement that “further rake hikes may not be warranted”, but it concludes by saying that “from this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth”. This is a welcome recognition from India's monetary authority of grim reality. There is little doubt that a tight money policy — which continued even as domestic policy making froze and the external environment turned the most uncertain it had been since the financial crisis of 2008 — has caused the India growth story to come to a screeching halt. The RBI was forced to acknowledge industrial production, particularly in capital goods, appears to be stumbling badly, reflecting the constraints on investment of a high interest regime. As the RBI says: the causes of the decline in growth can be traced to an “uncertain global environment, the cumulative impact of past monetary policy tightening and domestic policy uncertainties”. Admittedly, the RBI cannot be held responsible for either the concern radiating out across the financial markets from the euro zone, or for New Delhi's inability to push through growth-enhancing reform. Yet it has been clear for some time that growth and inflation are both slowing. A strongly-held belief that inflation expectations are not adjusting quickly enough has perhaps caused the central bank's reactions to be slower than most observers would like. Hopefully this approach will not continue in the crucial months and weeks to come. Inaction has also been on display in the foreign exchange market, in which speculators have been allowed to take one-way bets on the rupee — while the RBI seemed to think that, even though it was a regulator, its hands were tied. Some actions have now been taken to discourage speculation in the foreign exchange market. It remains to be seen if they will be enough. The primary focus of the RBI, however, should remain slowing growth and inflation. Food inflation is at its lowest point in four years; fuel prices are being slowly moved up and down by oil marketing companies; the growth slowdown itself is being reflected in pricing. While inflation may still be above the RBI's comfort zone, it is difficult to believe that rational observers still have inflationary expectations that are high enough to be problematic if a rate cut were to be announced. In the end, a central bank's job is essentially to manage expectations: if it does merely what is expected of it, it may not be seen to be in control. The RBI perhaps raised rates too slowly, and in stages that were too small to properly impact market participants. As it moves towards cutting rates, questions should be asked in Mint Road as to how to avoid that trap this time. The answer, perhaps, is to ensure that a reasonably-sized cut in rates is taken soon enough, which will be able to work its way through the system — and perhaps rescue some part of 2012-13 GDP growth.

BS

FDI policy makes messy entry into new year

...... The FDI policy framework entails four different agencies, and each can work in a silo impervious to the thinking in the other two. The first is the Reserve Bank of India (RBI), India’s central bank, which administers exchange controls under the only real “law” on the subject – the Foreign Exchange Management Act (FEMA). The RBI makes subordinate legislation in the form of regulations under FEMA, which should govern cross-border investments in and out of India. Yet, on a number of issues, the positions adopted by the RBI on day-to-day matters of exchange controls goes way beyond the basic scheme and purpose of exchange controls.................

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Banks agree to ease norms for customers

“Customers should have a choice. The committee held wide-ranging consultations with bankers and other people, and as a chairman, I am happy that some of these have been accepted.” IBA chairman Mallya confirmed that banks met RBI to discuss the Damodaran committee recommendations on Friday.

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Fake notes: Can’t ‘bank’ on banks

JAIPUR: Getting forged notes from ATM counters has now become a regular affair in the city. Mithya Singh, a college student got a fake Rs 500 note from her neighborhood ATM. She didn't realize it until a teller in a multinational bank at Raja Park rejected the note as fake.  A shocked Singh explained that she withdrew the money from the ATM of a nationalized bank just a few hours ago. The cashier, unmoved by the entreaties, cited the RBI guidelines and Singh had to forgo the money.  Singh's is not a one-off case, and with no provisions for compensation, it's the common man who has to bear the brunt. RBI (Reserve Bank of India) too feels that it's a problem with no solution in sight. "There is no policy on replacing the fake currency if it comes out from an ATM. It is difficult to prove that this note has come out of a particular teller machine," an RBI official said. People, therefore, try to get rid of such notes and often slip them with genuine ones to shopkeepers. This, in turn, leads to circulation of fake currency which largely remains unchecked.  "I received a fake Rs 500 note from an ATM. I did not check it while taking out the money. Later, when I realized that it was a fake it tried using it at several places. After a few failed attempts, I somehow managed to use it at a petrol pump," said Mukesh Goyal, a shopowner at Chandpole.  RBI has issued strict guidelines to all the banks to ensure unfit or forged notes are not circulated by the ATMs. However, in the absence of any compensation policy, banks seem to shortchange customers. "It is mandatory for every bank to instal a cash sorter machine to detect counterfeit notes in their currency chest. If the process is followed properly, chances of loading fake notes in the machine will be remote," the RBI official said.  Victims often have to bear harassment by the bank staff in case forged notes are detected.  "I went to a bank to deposit a sizeable amount of money which I had collected from various sources including ATMs. While counting, the cashier found that six notes were fake. He immediately seized the notes and later the bank also lodged an FIR. The cops quizzed me about the places from where I got the money. I was interrogated as if I had printed the fake notes. It was adding insult to the injury," said Raghuvansh Rai, who works with a private company at Sitapura. The banks, however, say it's difficult to identify genuine customers.  "If we start substituting the fake notes with an original, there will be no end to it. Also there is no mechanism to find from which ATM a note has been taken out. However, often we replace it if a person has maintained an account with us for the past 4-5 years. Banking business runs on trust and we realize its value," said Himanshi Dhawan, manager of a leading bank.

TOI

No provision to compensate ‘duped’ ATM customers

JAIPUR: RBI has issued strict guidelines to the banks so that dispensation of counterfeit notes thorough ATMs can be reduced, if not stopped. However, RBI does not have any provisions to compensate if ATMs dispense forged notes.  RBI has asked banks to ensure that only properly sorted and examined notes are fed into the ATM. All the banks with average daily transactions above Rs 50 lakh have been instructed to instal sorting machines.  A master circular issued by the RBI clearly mentions "the government of India and the national security council have taken a view that dispensation of counterfeit notes through the ATMs would be constructed as an attempt to circulate the counterfeit notes by the bank concerned."  ATMs in the country are replenished in two ways.  Either the bank concerned refills them or hires the cash in transit (CIT) companies, which fill the ATMs on behalf of the banks. In both cases, the banks have the authority to carry out adequate checks before loading. The banks also need to follow the proper procedure for hiring the companies.  "Banks have a major responsibility in ensuring that fake currency does not circulate in the market. For that, they need to adopt measures recommended by the RBI. If they follow the parameters seriously, the problem of ATMs dispensing fake notes can be tackled," an RBI official said.  However, not many banks are fulfilling their duties properly. An RBI official asserts, "Even after constant reminders, banks ignore our recommendations. It is a fact that banks do not process notes properly. Sorting machines are not duly maintained or updated regularly. There has to be a sense of responsibility and ownership in the banks to check the flow of counterfeit notes."  In the absence of any provisions in the law to compensate a customer who receives fake notes, banks easily get away.  "Every counterfeit note is a useless piece of paper. Banks are not liable to compensate the customers as there is no mechanism to establish that a forged note has come out from a particular ATM. Also banks are not making fake notes, so they are not liable to pay for it," the official said.  He added, "We can't take any action against banks unless we receive sufficient number of complaints against a particular ATM of a bank. However, we do conduct a surprise checks to ensure that banks are complying with all our guidelines.

TOI

Lock funds into 2- 3 yrs maturities - S.S.Tarapore

....The forward guidance offered by the RBI is worrisome as the guidance is clearly that the interest rate cycle would be reversed in January 2012. The qualification that a relaxation of policy in the next review would be contingent on the evolving situation would be lost in the din of the clamour for easing monetary policy. Now what should the common person do? The best he/ she could do is to quickly lock into longer maturity term deposits as banks could well lead the way by reducing the rates on longer- term deposits...........

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India needs to re-examine stand on Islamic banking: Experts

.......“Participatory banking in India includes cooperative banks, non-banking financial institutions and micro-credit programmes etc. We need to pitch Islamic banking within the framework of participatory banking in India which will involve profit and loss sharing arrangements with no fixed or predetermined interest rate and investment banking with no fixed or prefixed return rate...........

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Govt, RBI must find a lasting solution to tackle NPAs

..It is for the Government and the Reserve Bank to seriously view the NPA menace and introduce a solution perhaps acceptable to all stakeholders of banks other than borrowers. ..............

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SBI Cards to customise offers around spending patterns

.... “As consumerism grows, and as people become comfortable with plastic, the credit-card market is bound to grow. People are already very comfortable with plastic in terms of debit cards. The usage of credit cards probably would ride, in some sense, on that......

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RBI should look to bring in reforms on asset side of banks

....... "Though there have been many reforms in the banking space in the last two decades, issues related to long-term financing, rising complexity of financial products with globalisation along with various sources of funding still remain. Regulators have to address these issues for long-term stability of the sector,"...........

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Investment Awareness and Investors Meet 2011 held in Sikkim

E.E.Karthak

Gangtok, December 16, 2011: The Investment Awareness and Investors’ Meet 2011, was organised on 14th of December 2011 at Hotel Golden Pagoda, Gangtok with EE Karthak, GM, Reserve Bank of India as the Guest of Honor. The seminar covered the investment awareness on different market such as equity, commodities, debt, currencies and on different Mutual Funds available in the market and the current condition of Global Economy and the opportunities with the Indian Economy. Another main issue of the discussion was the role of RBI and different regulatory boards of India such as SEBI, Forward Market Commission and on the increasing inflation rate in different sectors resulting in rising commodity prices and Currency market volatility. The most appreciable and attractive part of the event was the speech of GM, RBI on the Investment Awareness and appeal the investors not to invest on any illegal funds or companies. It was also stressed that investors should check and read all the offer documents before making any investments. The programme was fully on general awareness rather than any sales.  The seminar greeted PK Pradhan, Chairmen, Citizen Urban Cooperative bank on the successful completion of 10 years of local cooperative bank Citizen Urban Cooperative bank as an inspiration for the youth. The event was hosted by Minjo Lama Pakhrin. It was organised by PCS Securities Limited and PCS Commodities Private Limited. 

http://isikkim.com/2011-12-investment-awareness-and-investors-meet-2011-held-in-sikkim-17-03/