Dhanlaxmi Bank’s net profit surges 168 per cent

....In an official statement the bank said that PG Jayakumar, executive director, who has been with the bank for 34 years, has been given the charge of managing director and CEO at the board meeting in Mumbai on Monday. The board is seeking approval from the Reserve Bank of India (RBI)..............

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AIBEA demands Dhanalaxmi bank to merge with Public Sector Banks

Hyderabad, Feb 7 : The All India Bank Employees Association (AIBEA) today demanded the Reserve Bank of India (RBI) and the UPA government to take steps immediately to merge Dhanalaxmi Bank with one of the Public Sector Banks in the interest of the customers and employees and officers of the Bank. Informing this to UNI, AIBEA General Secretary C H Venkatachalam said for quite some time, the performance of the 85 years-old Kerala-Bbased private sector Dhanalaxmi Bank has been causing concern, notwithstanding the repeated statements of the Bank management that all was well with the Bank. He said in view of the deteriorating financial condition of the Bank, the Reserve Bank of India had directed a 15 point Monitorable Action Plan (MAP) and RBI has been closely monitoring the affairs of the Bank. Mr Venkatachalam said the main reason for the problems of the Bank was the management's attempt to convert this traditional Bank into an ambitious modern Bank. Many officials were appointed in the Bank with huge remuneration, unrelated to their capacity or the performance of the Bank. The name of the Bank was changed 'from Dhanalakshmi Bank to Dhanlaxmi Bank', he said and added the Corporate office of the Bank was unwarrantedly shifted from Thrissur in Kerala to Mumbai, he charged. 

http://www.newkerala.com/news/2011/worldnews-156274.html

ASSOCHAM Says India’s Gold Imports are Unsustainable

..... The study follows a report by the Reserve Bank of India, which noted that the country’s current account deficit is a cause of concern because of its rigid gold and oil demand..........

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Gold loan companies' shares crash on RBI's public deposit move

Shares of gold loan firms lost heavily on Tuesday after a Reserve Bank of India rap on a major entity, Manappuram Finance, for breaching the rules on raising money from the public........

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RBI notice not to affect our financials, credit rating: Manappuram Finance

Watch the video.............. 

Manappuram’s board to weigh move after RBI ban

....The charge against the company was that it was accepting deposits through an unregistered group firm, Manappuram Agro Farms. Company officials had stated that public deposits flowing into the accounts of Manappuram Agro were ‘under the customer’s own volition’ and that ‘it was an error of judgement’.......

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Insurance regulator to get independent advisor

......A finance ministry official said the proposed advisor might be appointed from the next financial year if the premium collection does not improve in the last quarter. “It is one of the possible ideas we are working on. He/she will directly report to the government and assist the regulator with policy decisions,” he added. However, the advisor will remain outside the board. This is because the board already has a government nominee. Also, induction of an additional board member will necessitate an amendment to the Irda Act, 1999. “At least to start with, the advisor will be outside the board, because amending the Act is a cumbersome process,” the official said. “The main idea is to bridge the gap between the ministry and the regulator.”..........

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Coop banks sign pact with TCS for CBS

The Gujarat State Cooperative Bank (GSCB) and 10 district central cooperative banks (DCCBs) have signed a service level agreement with Tata Consultancy Services (TCS) for core banking solutions (CBS). The decision, which is a part of the initiative taken by National Bank for Agriculture and Rural Development (Nabard)'s Gujarat region office, would provide efficient banking services to customers of cooperative banks in Gujarat. "This is expected to significantly enhance customer base in both rural and urban segments. Besides enabling faster services, the decision would open up newer possibilities of providing new cost-effective banking products and services to the farming community in particular," a statement issued by Nabard said. The agreement was signed on Tuesday in Ahmedabad. About 705 branches of these banks will be covered under CBS - Phase I. TCS will be the application service provider (ASP). Nabard has set the target of completing the entire project by December 31, 2012. 

BS

Home loans may get cheaper with new mortgage guarantee company

The RBI had few years ago come out with separate regulations for mortgage guarantee

.........Home loans may soon come at better terms, with the concept of mortgage guarantee set to take off in the coming weeks. Mortgage guarantees will ensure softening of interest rates as well as more credit availability for retail home loan borrowers, Mr R. V. Verma, National Housing Bank Chairman, has said......

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Economist on India Central Banking: Financial Illiteracy on Display

.....Under the present Governor, Duvvuri Subbarao, a softly spoken figure, it has made a tough series of rate rises in the past two years to try to curb a stubborn spell of inflation (a battle that may not be over). And although the bank finds it hard to tempt star graduates to work in its tower overlooking Mumbai harbour—"if you look at its people and those of the Fed, there's no comparison," laments one bigwig—relative to most Indian state bodies the RBI has more brains, muscle and integrity. It is about the only institution in the country you never hear accused of graft ............

Click to read...................

Fiscal consolidation needed for stimulating growth: RBI

.... "There is an inflexion point beyond which fiscal deficits militate against growth. Government borrowing is not bad per se, but excessive borrowing is. There is therefore a need to cap total public debt as a proportion of GDP,".....

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Banks employee federations demands 5-day work week

KOLKATA: All-India Bank officers' confederation and All-India State Bank officers' federation have demanded implementation of five-day work week for the banking industry.  "In view of alternate channels available to customers such as ATM, internet banking, mobile banking etc, a 5-day week may be implemented in the banking industry," G D Nadaf, the general secretary of All-India Bank officers' confederation and All-India State Bank officers' federation said here yesterday.  "This saves avoidable cost on water, power, energy, fuel etc, spent for four hours work on Saturday," Nadaf said, adding that 5-day week is in vogue at central government, establishments, Treasury, Forex, IT industries and foreign banks too. He also urged the Centre and the Indian Banking Association for early commencement of the 10th bipartite negotiations, resolution of residual issues and updation of pension in tune with central government pension scheme. He also alleged that bank officers are 'exploited' and forced to work for long hours in the absence of defined working hours.

ET

Tax exemption limit at Rs 2 lakh likely

The government is likely to provide some relief to individual income tax payers in the forthcoming Budget by raising the exemption limit to Rs 2 lakh, as provided in the Direct Taxes Code (DTC), and hiking the slabs for different tax brackets...........

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Not possible to hit 8.5% growth without inflation: Gokarn

During Edelweiss's seventh annual conference, RBI Deputy Governor Subir Gokarn said that it will be difficult to achieve 8.5% growth again without triggering inflation. "The risk with aspiring to grow is that inflation can catch up with you very quickly," he said. Therefore, he believes that growth has to be discounted somewhat so as to get a better handle on the growth-inflation balance.................

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Act on inflation, fiscal deficit to keep sovereign rating intact: S&P

.... An S&P report released on Monday upheld India's current rating at BBB- with a stable outlook, but warned that negative factors combined with the government's weak policies "may lead us to a tipping point". "We don't expect to downgrade or revise the outlook on the long-term rating in the near future," the report said. "(But) continuous loose fiscal policy or policy setbacks on the monetary, financial, and economic fronts that lower India's medium-term growth prospects could result in a rating downgrade."......

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‘Market rally, RBI intervention, strong PMI helped rupee appreciate’

.... Soumyo Datta of Citibank, in an interview to CNBC-TV18 said strong PMI data, a rally in the equity markets and RBI intervention have helped the rupee rally in 2012. “Rs 47.90 per dollar will be the next target for the rupee,” he said......

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RBI relaxes cap on banks' forex positions

..........."Some limits based on their (banks') merchant positions have been relaxed. If they have a requirement, they can come and approach us through the Fedai (Foreign Exchange Dealer's Association of India)," RBI Deputy Governor HR Khan told reporters...............

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Best Banker Award 2012 to Shri R K Dubey, Executive Director, Central Bank of India

Shri R K Dubey, Executive Director, Central Bank of India has been conferred with the Best Banker Award 2012 by Shri K C Chakrabarty, Dy. Governor, Reserve Bank of India. The Award was presented during SME Banking Conclave 2012 on " Ensuring Growth of SMEs for Better Future", organized by Small & Medium Business Development Chamber of India at Mumbai on 04/02/2012. Shri G N Bajpai, Former Chairman, Securities & Exchange Board of India Shri A Krishna Kumar, Managing Director, State Bank of India and Shri M. Narendra, Chairman & Managing Director, Indian Overseas Bank were also present on the occasion.

http://www.4-traders.com/CENTRAL-BANK-OF-INDIA-9059895/news/CENTRAL-BANK-OF-INDIA-Best-Banker-Award-2012-to-Shri-R-K-Dubey-Executive-Director-Central-Bank-of-In-14005185/

Rates to respond to sustained inflation down move: RBI

..... "Certainly interest rates will respond to sustained movement in inflation downwards and it is on this basis that we have signaled that this cycle has reached its peak,".....

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ATM card delivery fraud: ICICI Bank fined

New Delhi: ICICI bank has been directed by a consumer forum to pay Rs 20,000 as compensation to one of its consumers whose ATM card was delivered to a wrong hand, who withdrew money from the account fraudulently........

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Fiscal dominance over monetary policy

..........It was expected that with the abolition of the instrument of ad hoc Treasury Bills and implementation of FRBM Act, there could be relief from fiscal dominance of monetary policy. But recent trends showed contrary evidence. There is an urgent need to free monetary policy from fiscal dominance to ensure price stability, financial stability and sovereign debt sustainability........

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Debt buyback

The RBI Deputy Governor is reported to have said that “the aggregate objective of OMOs is to put in a certain amount of liquidity into the market and not help the government borrowings… Reality of the situation is OMO is driven by liquidity shortage, not by the government borrowing.” (“RBI hints at more OMOs to tackle liquidity crisis”, Business Line Web site, February 4). In this context I would like to cite the following extract from para 28 of the Annual Policy Statement of the Bank for 2009-10 in relation to buybacks of securities: “Keeping in view the large budgeted government market borrowing in 2009-10 coming on top of a substantial expansion in market borrowing in 2008-09, it was important for the RBI to provide comfort to the market so that the borrowing programme is conducted in a non-disruptive manner. Accordingly, the central bank simultaneously indicated its intention to purchase government securities under open market operations (OMO) for an indicative amount of Rs 80,000 crore during the first half of 2009-10.”

- A. Seshan (HBL)

Cash-deposit ratio of banks still too high

....The Reserve Bank has streamlined the process flow in credit-push systems such as the National Electronic Funds Transfer, Real Time Gross Settlement, Electronic Credit System (credit) and National Electronic Clearing Service systems, and banks are in a position to credit beneficiaries account without any hassles. .......

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Your rights against a recovery agent

.... “Recovery Agents engaged by Banks” guidelines were issued by RBI on 24 April 2008. As per the annual report on banking ombudsman, 2009-10, as many as 1,609 complaints were received against direct selling agents and recovery agents put together. Here’s a list of what recovery agents can’t do.......

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Behind the fear of debt

....A few days later, the RBI Governor, Dr D. Subbarao, referring to the rise in debt flows, publicly emphasised that India has “a preference for non-debt flows over debt flows”, and “within non-debt flows, more of FDI”.Along with the expression of such fears, the government has been liberalising foreign investment rules to attract equity inflows in lieu of debt. The most recent such policy allows individual investors to invest in equity. ........

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RBI stops Manappuram from taking deposits

....“RBI looked at our records and found out that it was an error of judgement and asked us to stop accepting deposits. We are in the process of refunding the money to customers,” ......

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Banks in Noida assure safety of customers' assets

... About 104 Bank branches, which have been operating in Noida from residential areas for decades, have been asked to shift to other locations. The order triggered panic among customers as they are not sure about the safety and security of their bank assets and belongings kept in lockers. The RBI taking cognizance of the complaints had directed the banks to ensure safety of assets of account holder and locker holders.....

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Dhanalakmi Bank chief Amitabh Chaturvedi resigns

MUMBAI: Amitabh Chaturvedi, MD and CEO of Dhanalakmi Bank has put in his papers, sources close to the development told ET. Mr Chaturvedi joined the bank in October 2008. His resignation comes within months of Reserve Bank of India approving his extension as chief of the bank for three years till October 2014. ET is awaiting a response from the bank on MD resignation. Meanwhile, Amitabh Chaturvedi could not be reached for a comment immediately on his cellphone. "There are chances that the bank will make some announcement to the stock exchange today, if the board accepts his resignation,"" said sources who could not be quoted. "There are differences between Mr Chaturvedi and some board members on issues related to HR and performance of the bank,"" they added. Mr Chaturvedi, a chartered accountant by qualification, spent the initial years of his career with ICICI Bank and subsequently joined Reliance Capital. However he had taken a six-month break before joining old generation private bank - Dhanalakmi Bank.

ET

Mahesh Bank launches RuPay ATM card

Hyderabad, Feb. 5: The increasing use of ATM cards will be cost-effective for banks as well as customers, according to Mr A.P. Hota, Managing Director and Chief Executive Officer of National Payment Corporation of India. Speaking after formally launching ‘Mahesh RuPay ATM card' Mr Hota said Mahesh Bank had taken a lead in the cooperative sector in south India by launching its ATM card. R. Ramesh Kumar Bung, Chairman, Mahesh Bank said his bank's business had crossed Rs 1,775 crore and the branch expansion was being spread to different states. Mr A S Rao, Regional Director, Reserve Bank of India said the number of urban cooperative banks had come down from 115 to 103 in the recent past. ATMs were a versatile instrument and an important delivery channel, he added. The National Payment Corporation of India Ltd has launched the ‘Rupay' ATM card mainly for no frills account holders in collaboration with banks. It is expected to reduce overall transaction costs for banks by introducing competition to international card schemes like Visa and Master.

HBL

Liquidity problem

February 5, 2012: In the banking and corporate world, the word ‘liquidity' is heard quite often. But how does one explain liquidity to a general audience? Former Governor of the Reserve Bank of India, Y.V. Reddy, well-known for his ready wit, had a 300-strong audience in splits when he gave liquidity a new definition at a function held in Hyderabad recently. “For a Central Bank or banks, liquidity means something related to cash reserves, while for a company, liquidity is generally linked to solvency or cash in hand. But in Hyderabad, after 6 p.m., liquidity means beer or whisky,” he quipped. He sure got the point across effectively, though the definition may have been far from accurate.

HBL

Smoking zones work

Responding to our question on ‘unofficial smoking zones' in workplaces (despite a ban), readers acknowledge that while smoking is harmful, given the law that denies ‘official' smoking zones, such unofficial areas are stress busters for habitual smokers. There are some readers like Pradeep Ghorpade from Mumbai who question the absence of official smoking zones too. Edited excerpts:

As an international traveller, I was impressed by the smoking areas provided in international airports, restaurants and public places. Should we also provide similar smoking areas in our workplaces, and in public places such as airports, railway stations, bus stands and shopping malls? Most co-workers ignore it when one of their colleagues smokes in unofficial smoke areas such as toilets, basements or parking areas. This ensures that the employee does not leave the campus and returns quickly to his work desk or factory shed. 

— Mathew Abraham, RBI, Thiruvananthapuram (HBL)

Don’t let plastic cards melt hard-earned cash

......The biggest risk in all plastic cards, debit or credit, arises when a customer loses the card and his or her signature is there on the card to be easily forged and misused at merchant shops. It may be difficult to eliminate the risk of fraud altogether but here are a few things you can do to mitigate it.......

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NPCI to launch PIN-based debit cards by March

....National Payment Council of India (NPCI), set up by the Reserve Bank of India to promote card payments system, will launch its RuPay debit card in March. RuPay is the country’s first domestic payment card network and aims to match existing payment facilitators such as Visa and MasterCard and provide debit and credit card services........

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Bank of Maharashtra convenes 114th SLBC in Mumbai

Reserve Bank of India calls for dedicated SME verticals at banks

MUMBAI: The Reserve Bank has asked banks to set up dedicated verticals to help small and medium businesses to deal with financial matters. "An SME-promoter knows the product, but he doesn't know finance," RBI Deputy Governor K C Chakrabarty said, speaking at an industry seminar organised by the SME Chamber of India here over the weekend. Banks, which have long-term association with such SMEs as lending partners, can further this relationship by providing consultancy on finance, cash-flow management, taxation and other related things for a fee, he said. "I think this is a product innovation, which needs to be done by banks and it needs to be done across the globe," Chakrabarty, whose responsibilities include customer services, said. A desk should be available centrally that will help SMEs and can handle multiple SMEs, he said. SMEs will have to pay for such service, he said. "I am not saying anything is free, you charge them for that." However, banks should eye volumes in the business and ensure that the costs are low, Chakrabarty added. He also came down hard on the high interest rates charged by banks in lending to SMEs, asking if they can be compared with rates charged to corporates. As a matter of proper governance, Chakrabarty said, "I will be happy if banks disclose this in the balance sheet.”

ET

Banks play safe, favour large firms to SMEs

Banks, saddled with rising bad debt in view of the economic slowdown, are believed to be directing a major chunk of their lending to large companies, choking credit to the small and medium enterprises (SMEs)....................

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What Basel-III norms mandate

....One of the fundamental assumptions of accounting is the concept of going concern. Basel-III norms as issued by the RBI should raise a few eyebrows when they refer to tier-2 capital as gone-concern capital in their guidelines, though it is apparent that this is only to distinguish it from tier-1 going-concern capital. ......

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RBI eases forex restrictions for select PSU and private banks

...... "The RBI wants to ensure that banks make use of the limit for client needs and not indulge in speculation. It may not be the best thing to do, but these are unusual times,"........

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Banks should ensure person offering guarantee is a close relative of borrower

....The Reserve Bank of India, in its recent Financial Stability Report, has identified deterioration of asset quality as the highest risk facing banks. The RBI has also highlighted the fact that the year-on-year growth of NPAs (non-performing assets), at 30.5 per cent, was higher than the credit growth at 19.2 per cent. .............

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Banks ask borrowers to cover their personal loans, overdraft facilities

............ According to bankers, borrowers are being sold the covers under the proposition of ‘no headache to families, in case of an untimely death or even unemployment’. “Borrowers are showing interest because if there is a default due to death, the family will not be pestered or will not be burdened with a loan,” said the retail head of a private sector bank......................

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Is audit losing its relevance?

...... A recent move by the RBI to reduce branch audits of banks has received significant attention of the media. As per media reports, banks have written to the RBI suggesting reduction in branch audit to reduce non-value added costs.It is argued that with concepts like core banking system and centralised record keeping, the relevance of the audit of branches of public sector banks (PSBs) has significantly declined. RBI will definitely decide the issue considering the pros and cons of reducing audit of branches of PSU banks........

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Budget 2012: Agenda for banking sector this year – M.S.Sriram

The government and the Reserve Bank of India (RBI) is half done on financial inclusion. More branches are being opened. Four elements of inclusion have also been articulated: a basic bank account with an overdraft facility; entrepreneurial credit on the lines of a Kisan credit card; an accumulating savings product; and a remittance facility...........

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The data divergence

....On several occasions in the recent past, important users of official data have questioned its veracity. The monthly Index of Industrial Production, which tracks industrial output, has been extremely volatile after it moved to a new series. The RBI has found it to be unreliable for framing monetary policies. The monthly WPI inflation figures have likewise been criticised but the main point of criticism is that, despite some recent improvements, it does not capture the price movements that affect the consumers directly.......

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Banking on India Post

....The Communications Minister, Mr Kapil Sibal, wants the Reserve Bank of India (RBI) to grant a banking license to India Post. The proposal makes eminent sense, especially at a time when financial inclusion has become a pervasive buzzword............

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eMudhra to certify digital signatures for e-banking transactions in Mauritius

....“The RBI in its April 2011 guidelines has given a deadline asking all the banks to comply with Information Technology act. The IT act recognises digital signatures as the only recognised form of authentication for online and electronic banking transactions”......

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RBI for change in ‘sick' nomenclature for MSMEs

Mumbai, Feb. 4: The Reserve Bank of India wants the definition that classifies industrial units in the micro, small and medium enterprise category as ‘sick' changed as barely 2 per cent of such units have got rehabilitated in the last few years. The proposal to revise the definition is aimed at detecting signs of incipient sickness among MSME units so that preventive measures could be taken by all stakeholders, including banks, to nurse them back to health. “As per the current definition, a unit is classified as sick when there is erosion in the net worth due to accumulated cash losses to the extent of 50 per cent. By the time the units reach this stage they are nearly dead. So, the definition of sick units needs to be changed,” said Mr K. C. Chakrabarty, Deputy Governor, Reserve Bank of India. A Government standing advisory committee is looking into the possibility of making this change, he said at a seminar organised by the Small & Medium Business Development Chamber of India. The Deputy Governor called upon banks to set up financial management advisory desks to help MSMEs with non-core functions such as accounting, taxation and financial management. Banks could charge a reasonable fee to provide these services to the enterprises. Underscoring the extent of financial exclusion when it comes to MSMEs, Mr Chakrabarty said about 93 per cent of the SME promoters depended on self-finance or informal sources of financing. He observed that the top management of banks should show their commitment to the MSME sector by clearly spelling out the targets for expanding the MSME portfolio at the branch level and closely monitoring them. Further, to ensure transparency, banks should disclose the interest rates they charge their borrowers segment-wise in the balance sheets. The deputy governor said banks should tighten their credit appraisal standards. They should not relax their standards just because credit guarantee institutions such as the Credit Guarantee Fund Trust for Micro and Small Enterprises and the Export Credit Guarantee Corporation of India will pick up the tab should loans turn bad. Entrepreneurs, said Mr Chakrabarty, should be encouraged to experiment with business ideas. If the entrepreneurs fail in their ventures, they should have an easy exit policy.

HBL

RBI pulls up banks for laxity in SME finance

...Reserve Bank of India Deputy Governor KC Chakrabarty on Saturday pulled up banks for showing laxity in financing small and medium enterprises (SMEs) in the country......

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And they are no more...............

Shri K.V.Balasubramanian, retired Grade C officer (DBOD) and Shri. Mahadevan, Retired Banking Assistant, DBOD, both from Mumbai reached God's abode on 25th and 26th Jan. 2012.
- As reported by Venugopalakrishnan  (via e-mail)

I regret to advise the death of Shri M.Sankarnarayanan in Trivandrum on January 28, 2012. He was 70 years old and served in RBI from 1962 to 2002. He retired as Deputy Treasurer in TVM Office.

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

Luck at lunchtime

..... “I have been amused to see the kind of money people spend on this. It is corporate gambling,” opines an RBI employee, a regular visitor to the shop. “If they had so much money, they could very well go to the quiz shows on television and try their luck there.” He, however, does not buy tickets. He only watches others splurge on them and entertains himself....

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How any one can expect RBI can be an autonomous body?

It is not very much clear Why Shri A. Chandramouliswaran, a former Executive Director has given a small writeup about RBI autonomy - a myth (VITALINFO -1st Feb. 2012). The Central Board shall consist a Governor and not more than four Deputy Governors to be appointed by the Central Govt. Four directors to be nominated by the Central Govt one from each of the four local boards. Ten directors to be nominated by the Central govt. One Govt offiial to be nominated by the Central Govt. The Central Board is full of Govt nominees and they will toe the Central Govt policies. How any one can expect RBI can be an autonomous body. One of our friends has also commented about the delay in our pension upgradation. I put a straight question whether any of the Central Board Directors raised the upgradation of pension issue of retired employees in any of the Board Meeting. So far it has not been included as item for discussion. They will be busy framing endless rules, regulations, codes, norms and guidelines for the corporate world, banks, insurers, and every financial intermediary. India's regulators, like the political class and powerful bureaucracy, are accountable to none, because we do not have a structure of transparency, oversight and accountability. 

 - K.P.SASTRY, Retd. Asstt. Manager, RBI, Hyderabad

pskalluri@yahoo.com

India to get index to assess trends in housing sector

...A joint initiative of the Reserve Bank of India and the Housing and Urban Poverty Alleviation (HUPA) ministry, the first set of data for ten cities is expected to be released by March end. Initially, HSUI will be released on a pilot basis for just ten of the fifty Indian cities......

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Pending, a long list of bills

..... "We have proposed some amendments in the Rajasthan Protection of Interests of Depositors (in financial establishments) Act and will send it to RBI for the final consideration. By the end of this month, the process will get completed.......

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How electronic payments work

National Electronic Fund Transfer (NEFT) and Electronic Clearing Systems (ECS) are both modes of electronic payments. But that is where the similarity ends. The two terms are often mixed up or not fully understood. Here's explaining the two routes of transferring funds online.............

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RBI cannot pursue policy oblivious to growth: D Subbarao

..... "In a country like ours where fiscal deficit is high and is likely to be high, no matter what we might wish, when the government borrowing is such a large part of the total credit outflow, can the central bank realistically remain indifferent to the government borrowing?".....

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RBI's Gokarn: Open market ops not aimed at helping govt

..... The Reserve Bank of India's choice of securities to buy in open market operations is not aimed at reducing the cost of borrowing for the government but to ensure an adequate supply of liquidity in the banking system, Deputy Governor Subir Gokarn said......

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Key takeaways from RBI's research conference

The following are the concluding remarks by Deepak Mohanty, Executive Director, the Reserve Bank of India (RBI), at the Second International Research Conference 2012, at Reserve Bank of India, Mumbai on February 2, 2012.

...........We have had one and half days of intellectually stimulating discussions on a range of critical central banking issues revolving around the New Trilemma that has been defined by this Conference. While we may not have clear solutions, expectations from central banks are very high. The deliberations in this Conference, I believe, make some contributions in guiding policy and spurring further research.................

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‘Bee’ there

India’s first ever annual National Bee Day will be celebrated on February 5, 2012 at Maharashtra Nature Park, Dharavi. Under The Mango Tree, an organisation that promotes beekeeping with the indigenous bee Apis cerana indica to increase agricultural productivity, enhance income and improve livelihoods of marginal farmers in India, is organising this day with the objective of this celebration is to create awareness about bees and the role they play in the eco system, among people. According to this organisation, in the UK, it has been estimated that the economic costs due to pollination by bees and other pollinators is approximately £440 million pounds a year (Source: BBC, 2010) but similar estimates do not exist for India. In beekeeping however, the hybrid Apis mellifera has been given more importance than Apis cerana indica, our indigenous bee which is in the environment all across India and is an excellent pollinator. With this is mind, Under the Mango Tree plans to focus attention on bees on Cerana Day which is on February 5. This day would be celebrated with several activities like bee walks, cooking with honey, honeybee films for children and adults, kids crafts and games, an interactive session with Mumbai’s beekeepers, honey tasting, food stalls, face painting and bee costumes, bee photo exhibition and also a special panel discussion on bees and pollination. Also, the report of a study undertaken to assess the impact of beekeeping on local crops in Valsad, a district in South Gujarat, will be released by Usha Thorat, Former Deputy Governor, RBI, the study report. This will then be followed by a panel discussion on role of bees in pollination.

The Afternoon

How long can govt be on RBI life support?

The Reserve Bank of India has joined the ranks of central banks intent on saving the country — and the world — from collapse by printing money. The RBI is the fifth big central bank to finance fiscal deficits through bond purchases, the other four being the Fed (US Federal Reserve), ECB (European Central Bank), BOJ (Bank of Japan) and the BOE (Bank of England)........

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Low-Casa banks rake it in with savings rate hike

..... Banks with low current account savings account (Casa) balances have been on an advertising overdrive ever since the Reserve Bank of India unshackled savings account rates........

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The ‘concessional window' is off. Relatives of directors of commercial banks won't be able to avail themselves of concessional loans henceforth. The Reserve Bank of India has said that restriction as contained in Section 20 of the Banking Regulation Act, 1949, “will apply to grant of loans and advances to spouse and minor/dependent children of the directors of banks.'' “However, banks may grant loan or advance to or on behalf of spouses of their directors in cases where the spouse has his/her own independent source of income arising out of his/her employment or profession,'' the apex bank said. The facility thus granted, however, should be based on standard procedures and norms for assessing the creditworthiness of the borrower. “Such facility should be extended on commercial terms,'' the RBI asserted. As mentioned in the circular dated March 1, 1996, all credit proposals for Rs.25 lakh and above should be sanctioned by the bank's board of directors/Management Committee of the board. The proposals for less than Rs.25 lakh might be sanctioned by the appropriate authority in banks in terms of the powers delegated to them, the RBI said.

HBL

Republic Day celeberations, RBI, Nagpur

Rate-sensitive sectors bound to benefit, say fund managers

............"With the RBI initiating monetary easing by way of cutting CRR by 50 bps, which was higher than our estimates, interest rate sensitives are bound to benefit.".......

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RBI to banks: Take call on stressed sector exposure

The RBI has put the ball squarely with the banks on the question of whether to take fresh exposure to the power sector in the wake of fuel woes and mounting distribution sector losses raising serious viability concerns.............

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RBI directs banks not to overstate value of house property for loans

Stating that banks have been found overstating value of houses they finance by adopting practices like including stamp duty and other charges in the cost, the RBI today directed lenders to refrain from such practices..............

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RBI seeks details of banks' exposure

.... RBI is aiming to find out the amount of loan that is given to those companies other than acquiring licences, which are mostly for capital expenditure.......

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RBI directive on deposits with Manappuram Finance

Reserve Bank of India (RBI) has advised the general public against depositing or renewing deposits with Manappuram Finance Limited, Thrissur, as the company is registered with RBI as a non-deposit taking Non-Banking Financial Company with effect from March 22, 2011. An RBI release said the company was not permitted under the Reserve Bank of India Act, 1934, to accept/renew deposits from the members of the public. 

HBL

RBI launches industrial outlook survey for Jan-March 2012

....The RBI has been conducting the Industrial Outlook Survey on a quarterly basis since 1998. The latest will be the 57th round of the survey. It has entrusted the task of conducting the survey for the current quarter to the Centre for Research Planning and Action (CERPA).....

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Purchasing Managers’ Index: Optimism in the air

....With the PMI hinting at a revival in growth, interest rate cuts by the RBI may be just what the doctor ordered to put the economy back on track. However, the apex bank may not be in a hurry. More so, because upside risks to inflation still remain high.....

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SBI set to publish pics of defaulters to force them to pay dues

.... "The idea is to discourage the public from defaulting on loans. We will send them notices before going ahead with such measures,"......

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LIC takes the electronic route for all policy payments

....Operated by the Reserve Bank of India (RBI), NEFT is a nationwide system that facilitates transfer of funds from one account of any bank branch to another. At present, around 74,000 banks across the country are participating in this system.......

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RBI cannot be ‘indifferent’ to Govt’s borrowing plan

Dr D. Subbarao, Governor, RBI (left), along with Mr Martin Wolf, Chief Economics Commentator, ‘Financial Times’, at the Second International Research Conference organised by the RBI in Mumbai on Thursday

Mumbai, Feb 2: The Reserve Bank on Thursday said that it can not work as inflation targeter, as it will not serve the best interest of macroeconomic management. “The Reserve Bank can’t be an inflation targeter, or a core inflation targeter. That will not serve the best interest of the macroeconomic management of the country,” said Mr Duvvuri Subbarao, RBI Governor at the two—day Second International Research Conference, organised by the Bank, here. He also maintained that central bank, which hiked policy rates a record 13 times last year to tackle inflation, cannot pursue a policy completely oblivious to growth. Mr Subbarao, however, said that in the past 60 years no government was insensitive to inflation, and inflation management usually takes precedence over growth concerns. RBI had come under criticism in the last one—and—a—half years for aggressive monetary stance on inflation. “If supply side constraints affecting inflation are not managed, is it realistic to expect RBI to contain inflation?” Mr Subbarao asked, and added that the central bank too was confused as to which index of inflation should be targeted as there are many indices. About the rising government borrowing, Mr Subbarao said it may not be possible for the monetary policy to remain “indifferent” to government borrowing programmes.

HBL

Pulling every lever

India’s central bank is one of its best institutions. It is also complicit in a government-borrowing binge

..... The uncomfortable question for the RBI is whether it is partly responsible for the slowdown, albeit indirectly. If you have a central bank that always gets you home safely at the end of the night the temptation for politicians may be to go crazy. The RBI’s position is especially delicate on the fiscal deficit. The central bank oversees a financial system that is a conduit for funnelling savings into government bonds, 70% of which are owned either by the central bank or by the banking system, which remains dominated by state-owned lenders.......

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RBI can't work as inflation targeter: Duvvuri Subbarao

.... "The Reserve Bank can't be an inflation targeter, or a core inflation targeter. That will not serve the best interest of the macroeconomic management of the country," Governor Duvvuri Subbarao said at the two-day Second International Research Conference, organised by the Bank.......

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RBI: Best to be Unpredictable in Currency Management

India's central bank Governor Thursday said it is best to be unpredictable in tactical currency management, reiterating the bank's policy of not disclosing details of intervention in the foreign exchange market..........

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Private sector banks to handle government business – How about a level playing field?

.....However, this notification issued by RBI, though not very clear, hopefully will include payment of pension to employees of the central and state governments and those of the defence forces, who now get their pensions only through the PSBs. It would be of great help to these pensioners, if both the governments start disbursing of pensions through any public or private bank according to the choice of the pensioner, thereby helping the retired employees, especially the senior citizens in their old age.......

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We can’t focus only on inflation, says Subbarao

Governor says it is unrealistic for the central bank to target inflation while being oblivious to growth

The Reserve Bank of India (RBI) cannot focus only on inflation and leave growth and sovereign debt management to the government, governor D. Subbarao said on Thursday even as he insisted the banking regulator should continue to remain autonomous........

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RBI asks banks to evaluate risk of unhedged forex of companies

.... "In view of the importance of prudent management of foreign exchange risk, it has been decided that banks, while extending fund based and non-fund based credit facilities to corporates, should rigorously evaluate the risks arising out of unhedged foreign currency exposure of the corporates and price them in the credit risk premium," the Reserve Bank said in a circular on Thursday......

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Gorkan Says Visible Price Drop in India Will Trigger Cut in Interest Rate

..... “The stance now is that we have reached the peak and any further action will be toward easing,” Gokarn, said while discussing the rupee, the budget deficit and bond repurchases in an interview in his office today. Once the central bank has confidence that the “direction will continue, that’s really going to be the trigger. The visibility of the decline, I think, is the most important indication.”.....

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Got breast milk?

....For a new mother, Smita has a tough daily grind. After taking care of the chores at home, she rushes to work at the Reserve Bank of India (RBI) dispensary from 9 a.m. to 11 a.m., after which she goes to SDMH, and around 2 p.m. returns to the RBI dispensary for an hour. She also sees patients at her home clinic between 5.30 p.m. and 6.30 p.m.......

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Broader role for Monetary Policy : K Kanagasabapathy

....Keeping these post-crisis developments in view, the Reserve Bank of India (RBI) has aptly chosen the theme of Monetary Policy, Sovereign Debt and Financial Stability: The New Trilemma for its second two-day international research conference opened on February 1. The RBI Governor Mr Duvvuri Subbarao has eloquently brought out in his keynote address at the conference the rationale for the choice of the subject and several issues associated in dealing with this new trilemma.............

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Who’s funding growth?

When the RBI Governor talks of the growth momentum decelerating in the context of the sharp deceleration in gross fixed capital formation and, barely a week later, the Chief Economic Advisor says there are reasons to believe India is on a path of cyclical upswing, it’s time to read the data carefully.............

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On buybacks of RBI

This refers to the report “Subbarao says there is need to cap public debt” (February 2). Reserve Bank of India (RBI) governor has acknowledged the undesirability of the central bank buying back old government securities to keep down yields for new bonds. The main objective of a separate public debt office being set up is to resolve the conflict of interest in the central bank functioning as a monetary authority and also as a banker to the government. In a recent interview to the press, a deputy governor of the central bank indicated that it would continue to engage in buyback operations even after it was relieved of the function of public debt management. He made the point that only the portfolio management (yield and so on) will be taken away, while the financing part will be retained. Is this how it works in western central banks? The continuance of buybacks will defeat the purpose of a stand-alone debt office. Would it not be better to go back to the old transparent arrangement under which RBI took the securities on its books in the first instance and unloaded them on the market later at favourable times?

-  A Seshan Mumbai (BS)

Banks not sure of meeting priority sector lending target

..... The RBI also said total credit disbursement to the agriculture and allied areas grew by only 5.6 percent to Rs 4.60 lakh crore in December, which was as high as 25.4 percent in the same period last year, indicating a sluggish growth in priority sector lending. However, some of the bankers also said though they are hopeful of meeting the target.......

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Govt scraps release of weekly inflation data

.... “People used to react to numbers which the data generators had no confidence in,” Sen said. “The finance ministry and RBI wanted the weekly numbers, as these had their analytical models tied to the weekly data. The finance ministry and RBI had argued strongly for holding up the numbers, as otherwise, they would have to alter the whole model,”.....

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Court wants special law to protect SHGs from usury

The State government can enact a special law to protect self help groups (SHGs) from falling victim to “unfair and illegal” practices of microfinance institutions (MFIs), which collect “usurious” rate of interest under threat and coercion, the Madras High Court Bench here has suggested. A Division Bench of Justices Chitra Venkataraman and R. Karuppiah was disposing of a public interest litigation petition filed by All India Democratic Women's Association (AIDWA) State General Secretary U. Vasuki, levelling various charges against MFIs. The judges said that the proposed special law for the SHGs could be modelled on the lines of the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act 1997, which was enacted to protect people who had invested huge sums of money in financial institutions that turned out to be dubious. Petitioner's counsel U. Nirmala Rani had sought a direction to the Reserve Bank of India (RBI) to take appropriate action against MFIs in the State under Banking Regulations Act 1949 and evolve a mechanism to redress the grievances of affected members of SHGs. However, RBI counsel K.R. Laxman submitted a copy of the Micro Finance Institutions (Development and Regulation) Bill 2011 in the court and said that it was now in Parliament for discussion. Once passed, it would help in regulating the MFIs. After recording his submission, the judges said: “It is no doubt that with all the provisions in the Tamil Nadu Protection of Interests of Depositors Act, we still have NBFCs (Non-Banking Financial Companies) cheating unwary public, a fact which cannot be denied by the petitioner herein too.”

HBL

More cities, cheaper land needed for affordable housing

....“The policymaker's dilemma is to whether make affordable housing or enable all to afford houses. In India, affordable housing is difficult. Rural to urban migration puts further pressure,” Mr H.R. Khan, Deputy Governor, Reserve Bank of India, said.......

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