RBI implements web-based bidding for G-Sec primary auctions

.... Reserve Bank on Wednesday said it implemented its web-based online bidding in primary auctions of government securities. The module on web-based negotiated dealing system auction will allow internet-based direct participation of gilt account holders.......

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Lavasa plays infra card to get RBI leeway on debt recast

.... Now, lenders have approached the RBI, requesting to treat a part of the loan to Lavasa project as infrastructure funding. Till date, banks had categorised loans to Lavasa as exposure to commercial real estate. This, according to the central bank, is a sensitive sector. The banks' exposure to commercial real estate has higher risk weight, which means lenders have to set aside higher capital......

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Banks asked to roll out new farm loan products

.....Recently, a Reserve Bank of India (RBI) committee under former Union Bank chairman M.V. Nair had proposed that half of all agricultural credit should go to small and marginal farmers. The discussion with bankers will be based on a report prepared by the National Bank for Agriculture and Rural Development (Nabard) and RBI’s College of Agricultural Banking. Nabard officials were not immediately available for comment. Nabard and the RBI wing reviewed the existing credit delivery mechanism to farmers and suggested ways to improve the credit cover.......

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Govt plans to regulate pyramid marketing

...MLM schemes are mostly a state subject, according to CEIB. They come under RBI scrutiny if the entities running them function as non-banking financial companies, and under Sebi if listed......

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SHYAMALA GOPINATH TO HEAD ADVISORY BOARD ON FRAUDS

Former Deputy Governor of RBI Shyamala Gopinath will now head the Advisory Board on bank, commercial and financial frauds, which looks at cases relating to state-run banks and financial institutions, referred to it by the Central Bureau of Investigation and over which the Central Vigilance Commission has oversight. Gopinath is also on the board of the NSE as a director.

ET

Now, chamber of commerce for rural women entrepreneurs

After successfully running a bank and a business school for rural women entrepreneurs, Mann Deshi Bank is now all set to form its own chamber of commerce at Mhaswad in Satara district, 180 km away from Pune. It is formed coordination with Mann Deshi Foundation has formed the first Mann Deshi Chamber of Commerce for Rural Women in India (MCCRW) in partnership with 'President Clinton Foundations’ initiative - Clinton Global Initiative (CGI) based in New York, USA. MCCRW is first of its kind for rural women who have been created to provide women entrepreneurs in rural areas with mentorship, knowledge, and support through policy advocacy. The chamber of commerce will organize monthly workshops for members, and eventually provide targeted support to address each member’s specific needs. The announcement was made on Tuesday by Chetana Sinha, founder chairman, Mann Deshi Mahila Bank and CEO Rekha Kulkarni in Pune.……….

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Banking Act changes to give RBI needed flexibility

……Providing the regulator with more effective control of the industry and proposing to increase penalties to crores from thousands, the Bill will provide the RBI with more flexibility in its efforts to manage liquidity and rein in inflation via the Cash Reserve Ratio (CRR) tool. The words 'at least three per cent' is proposed to be replaced by 'such per cent'. The Bill also empowers the RBI to grant banks such exemptions from the CRR provisions as it thinks fit. The Bill also seeks to activate the significant funds that accrue in dormant accounts by aggregating into a single fund, which can be used to promote the interests of depositors…….

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RBI Outreach Programme for Financial Inclusion held at Dungarasan, Sihori, Mehsana on 31.03.2012

Smt. Nupur Mitra, CMD, Dena Bank addressing the gathering at RBI’s Outreach Programme for Financial Inclusion held at village Dungarasan, Tal. Sihori, Dist. Banaskantha on 31.03.2012. Seen on the dias are R-L Dr. K.C. Chakrabarty, Dy. Governor RBI, Shri Sudarshan Sen, Regional Director, Reserve Bank of India, Ahmedabad; Shri K. Chandrachoodan, Banking Ombudsman, Ahmedabad and Shri Vikrambhai Gambhirji Thakore, Sarpanch, Dungarasan village

APN News

Who can lead the World Bank? : Subir Roy

..... Looking back, no modern-day Indian could have filled the role better than I G Patel. After successively heading the Department of Economic Affairs, the Reserve Bank of India and the London School of Economics, he became one of a group of wise men who were repeatedly called upon to draw the contours of a better world. Manmohan Singh, whose career ran in tandem with Patel’s, would have been a formidable nominee had he been available and younger…….

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The conundrum before RBI : A.Seshan

.... Conundrum — a hard or puzzling question; Fallacy — faulty reasoning; Paradox — a seemingly contradictory statement, even if actually well-founded; and Pandora's Box — a process which once activated will generate many unmanageable problems.

The situation before the RBI as it prepares the annual review of policy is such that all the expressions defined in the previous paragraph are found to be applicable.....

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Why Subbarao could be the loneliest man in India today

..... As S.S. Tarapore, former RBI Deputy Governor, noted: “If the RBI is to pull itself out of the quagmire it would need to raise the repo rate from its present level of 8.5 percent to 9.5 percent.” Now you know why Subbarao is a lonely man. To fight the tide of overblown expectations on a rate cut, when the macro numbers are telling him to do the opposite, he will have to hold rates. He is not going to be the most popular gent around for a while.

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Is the independence of auditors in government banks being compromised?

....However, from the year 2008-2009, the government in its wisdom granted managerial autonomy to the public sector banks to appoint their statutory auditors, by directly sourcing the names of auditors from the panel maintained by Controller & Auditor General of India (CAG) and getting it approved by the RBI, which in effect is a mere formality. However, the RBI has informed the banks that though the autonomy is given to PSBs, the norms for empanelment and remuneration of auditors shall continue to be as prescribed by it. Further, RBI has advised all PSBs to frame their own policy for appointment of statutory central/branch auditors.......

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RBI seeks economists' views as inflation worries persist

The Reserve Bank of India (RBI) on Tuesday reiterated its concerns on inflation and a widening current account deficit in a meeting with economists a week before its annual monetary policy review, according to two economists who were there…….

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The only alternative to gold: inflation-indexed bonds

…..The Reserve Bank is now trying to put in place measures that will make it convenient for individuals to buy and sell gilts. However, this might take some time and might require the central bank to make sure that the public sector banks, which have built a fairly extensive branch network, use their distribution capacity to sell down government bonds without adding a steep bid-ask spread. There are also lessons to be learnt. The Reserve Bank had introduced in 1996 a network of small shops – called satellite dealers — to retail government bonds. The scheme had to be shut down in 2002 for a variety of reasons, including the fact that the market micro-structure was not evolved adequately to allow for retail participation……

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Nationalised banks to speed up processing of corporate loans

.....Until a few months back, large loan proposals could only be cleared in management committee meetings (MCMs) of the boards. “The MCM is convened only once in 20-30 days. Presence of the bank chairman and managing director, executive directors, RBI nominee director, Finance Ministry representative and two other directors is a must in the meeting......

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Court sets aside Paramount plea to quash IDBI order

.....Judge noted that Redressal Committee of IDBI had held that there was no merit in submission of petitioner and that IDBI should declare the company and its directors in RBI list of wilful defaulters, keeping in mind time frame indicated in orders of High Court.....

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Beyond interest rate cuts

.....Many a time the expectations from monetary policy get whittled down to expectations around reduction in policy rates and greater availability of liquidity. From a long-term perspective, the efficiency it injects in the financial sector in bringing down the cost of intermediation is important. A key contribution of monetary policy should be in promoting efficiency and bringing down the intermediation cost as well as spreads.......

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Banks’ business correspondents may get to sell micro-insurance

....The Reserve Bank of India (RBI) has permitted banks to use the services of intermediaries such as business facilitators and correspondents to provide banking services to expand the reach of the banking sector. BCs service 76,801 villages and 3,653 urban locations as of end-March 2011, according to RBI data......

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MFIN seeks RBI's intervention to enable MFIs to collect dues

Microfinance Institutions Network (MFIN) today sought Reserve Bank of India’s (RBI) intervention to enable micro lenders to collect their Rs 7,000-crore dues, which is stagnated since November 2010 in Andhra Pradesh. "We requested the Reserve Bank to take more direct role in the dialogue with the Andhra Pradesh government. Sidbi (Small Industries Development Bank of India) has also been doing the dialogue," MFIN President Vijay Mahajan told PTI.……..

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RBI removes `1.2 lakh cr from the banking system

.....But bankers said that the cash conditions would stabilise ahead of the RBI lean season credit policy as the government begins disbursal of plan expenditure resources to the states and return of advance tax funds into the banking system......

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Oriental Bank of Commerce cuts base rate by 10 bps

......The RBI's move in the recent months to cut the cash reserve ratio has helped OBC get as much as Rs 2,000 crore released. This money was not earning any interest when it was placed with the central bank. ......

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Credit policy important for infrastructure and banking stocks: Deven Choksey

………More than the action at this point of time the beginning of the financial year, it would be the tone of RBI which would matter a lot because if they end up suggesting that they want to bring down the rate of interest over next 4 to 6 quarters by 1% to 1.5%, then in such kind of a situation, the banking stocks particularly would find lot of favour………

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Glum external sector data worry RBI

…..According to several economists who attended the customary pre-monetary policy meeting with the Reserve Bank of India (RBI) on Tuesday, since there was no stable source of funding the gap, the regulator was concerned that if growth did not pick up, capital flows would suffer……

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Compensate bond investors at 8% for late interest credit: RBI

"........an agency bank should compensate an investor in relief/savings bonds for financial loss due to late receipt/delayed credit of interest warrants/maturity value, at a fixed rate of 8 percent per annum," RBI said in a circular……..

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Odisha opposes RBI decision to hike rate of RIDF loans

BHUBANESWAR: Strongly opposing the Reserve Bank of India's (RBI) recent decision of enhancing the rate of interest over RIDF loans by the NABARD, Odisha government today asked the Centre not to implement the new interest on loans sanctioned prior to April 2012………………

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RBI allows RRBs, cooperative banks to transfer funds online

To popularise electronic transfer of funds, the Reserve Bank today allowed regional rural banks (RRBs) and cooperative banks to participate in the centralised payment systems. With this, all the banks can now transfer funds electronically through real time gross settlement system (RTGS) and national electronic funds transfer (NEFT).……..

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More banks can join electronic payment system

In a move to popularise electronic payment system, the Reserve Bank of India (RBI), on Monday, allowed all licensed banks, including urban co-operative banks, State co-operative banks and district central cooperative banks, to transfer funds through the centralised electronic payment system as sub-members. These banks would participate in the centralised payment systems, Real Time Gross Settlement System (RTGS), and the National Electronic Funds Transfer (NEFT), through their sponsor bank, which is a direct member of this system, the RBI said in a notification to all banks.......

Read - The Hindu

‘Note’ worthy: Fake currency flooding banks

….Sources in the RBI said in a meeting of Fake Indian Currency Notes (FICN) Co-ordination Cell (FCORD), fake currency operators are using banks in West bengal’s Malda district to introduce fake notes into organised banking channels…..

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Proposed KYC depository may not be limited to banking sector

….The central know-your-customer (KYC) depository announced in the Union budget may not be limited to just the financial sector but may include others such as telecom as well. The KYC database is expected to facilitate easier customer acquisition and reduce the possibility of fake documents being used as identity proofs.……

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Ministry wants bank audit panels to get more time to vet earnings

….The audit committee is part of the bank board. At present, both the audit committee meet and the board meeting take place on the same day, because of the price-sensitive nature of the information. The bank management first presents the balance sheet to the audit committee, which then approves and gives it to the full board on the same day. The results are communicated to stock exchanges after the board approves these……..

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Dhanlaxmi Bank to grow gold loan business

......Speaking to newspersons in Mumbai on Monday, Mr Jayakumar said gold lending is a very attractive and secure business and many banks are aggressively pursuing it. The RBI is perhaps more comfortable with banks doing this business than NBFCs because banks follow the required Know Your Customer norms before giving loans.........

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Most candidates who clear bank clerical exam are from UP

......Uttar Pradesh had the highest number of successful candidates in the common written exam for clerical posts conducted last year. The Institute of Banking Personnel Selection had conducted the exam for recruitment to 19 public sector banks in four phases during November-December 2011.....

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Be wary of investment schemes that guarantee very high returns

.....The RBI and Sebi regularly issue public notices and warnings about such schemes and companies. In a July 2011 notice, the RBI observed, "Certain firms posing as MLM agencies for consumer goods and services have been mobilising large deposits from the public (with promise of high return) by opening accounts at various banks. These funds, running into crores of rupees, were being pooled at the principal accounts of the firms and eventually flowing out of the accounts for purposes appearing illegal or highly risky."..........

Read - India Today

RBI fixes Rs 50,000 cr ceiling for market stabilisation scheme

In order to absorb excess liquidity, the Reserve Bank has pegged the quantum of intervention through Market Stabilisation Scheme (MSS) at Rs 50,000 crore...........

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RBI cancels licence of Bhadran Cooperative Bank

The Reserve Bank of India (RBI) has cancelled the licence of Gujarat-based Shri Bhadran Mercantile Cooperative Bank, following deterioration in its financial condition and save the interest of depositors. The decision was taken in view of the fact that bank had ceased to be solvent, all efforts to revive it in close consultation with the government of Gujarat had failed and the depositors were being inconvenienced by continued uncertainty, RBI said in a statement……….

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Sahara co-op society not under us: RBI

….In an e-mail response to the complaint, a senior RBI official said, “It is observed that your complaint pertains to the functioning of Sahara Credit Co-operative Society Ltd., which is a co-operative credit society. We advise that Reserve Bank of India (Urban Banks Department) does not regulate and/or supervise the functioning of co-operative credit societies.”……

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Credit growth to Gujarat small units shrinks

….“There is immense uncertainty in the market. We do not know what the Reserve Bank of India (RBI) will announce in its monetary policy review later this month. Macro economic factors are hurting. All banks are concerned about an increase in non-performing assets (NPAs),”……

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Service tax: Your bills will jump. So will inflation

……..The RBI has repeatedly urged the government to get a handle on its wayward finances in the past. However, apart from an assurance of reducing the fiscal deficit to 5.1 percent by the end of the next financial year, there was no road map on how it plans to reach that mark. So, overall, high service charges, climbing inflation and lower chances of an interest rate cut. Not a great way to start the new financial year.

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RATE CUT WILL BE A CLOSE CALL

Reserve Bank of India (RBI) Governor D. Subbarao will present the first monetary policy of fiscal year (FY) 2013 next week. Interestingly, when one looks back, the first monetary policy of FY12 was a watershed event. The RBI changed its approach of gradual calibrated tightening and surprised the markets with a 50 basis points (bps) hike in rates. One bps is one hundredth of a percentage point. RBI firmly acknowledged that in the long run high inflation hurts growth because investment suffers from inflation uncertainty............

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Crisil floats new method to measure core inflation

....According to some school of economists, the core measure used by the RBI has two drawbacks: a) It is prone to volatility: it includes base metals prices, directly linked to international price movements, which are influenced by temporary shocks and b) It is less useful for gauging future demand-side pressures: it excludes processed food prices (manufactured food)......

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Markets need more information

....Until Dr Y V Reddy became its Governor, the RBI was fairly indifferent to the importance of public communication too. He, ably assisted by Rakesh Mohan, who was the economics deputy governor, completely changed the template. The RBI didn't make the transition because it loved the public. It did so because it realised how important it was to counter the rumours on which the financial markets depended in the absence of proper central bank communication. True, there is a lot that the RBI doesn't put out and there is a lot of scope to simplify the language in which it communicates during its policy reviews.....

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RBI must innovate to manage crunch

We are a week away from the Reserve Bank of India’s (RBI) annual monetary policy for fiscal 2013. Two sets of critical data—factory output for February and inflation in March—will be released before the policy, and both have a bearing on its theme. At this point, what is crystal clear is that partial devolvement of the year’s first bond auction is not a happy omen, and the Indian central bank will have a challenging year ahead grappling with tight liquidity and a record government borrowing..........

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HYC form?

Regulations are at the top of my mind now. I am not running a small business but I just completed a set of forms that the Reserve Bank of India site tells me is to prevent money laundering. As per the euphemistically called KYC or ‘know your customer' norms, I am required to provide very confidential information, including account numbers, specimen signatures, photo, contact information, copies of passport, address proof, etc. all in one form. Clearly designed by somebody who hadn't had their first cup of coffee in the morning. I am threatened that my account will be frozen if I do not comply by a certain date. I have done this once before but bank rules require it to be updated regularly. I cannot for the life of me understand why my bank cannot selectively identify large customers prone to money transfers, a more likely group for money laundering. Moreover, all this information placed on one form lends itself to leakages, stolen identity, and so on. I couldn't find any report on whether any money laundering effort been prevented since these were instituted? At least till such a review is undertaken, the RBI may be better off calling this the HYC form, to stand for Harass Your Customer.

HBL

Inflation will hurt the Common Person - S.S.Tarapore

.....Ideally, the RBI should raise the present repo rate from 8.5 per cent to 9.5 per cent, though the RBI would then face extreme hostility from all economic agents. If it cannot face this heat, the least that the RBI should do is to retain the repo rate at 8.5 per cent and it certainly should not reduce the cash reserve ratio. If the RBI signals a reduction of the repo rate on April 17, 2012, the Common Person should immediately lock in all available funds into 2- 3 year deposits.......


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Govt eases promotion rules for PSB officers

.... Human resource reforms in the state-run banks have been a major concern for the government and policymakers in the face of a high attrition. Besides lower compensation, slow promotion is also seen as a reason for high attrition. Reserve Bank of India governor D. Subbarao had said in late 2010 that there was a “good reason” to revisit the salary structure in government-owned banks to check losing talent to competitors in the private sector.........

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Matter of concern

The picture presented by the Reserve Bank of India of the country’s current account deficit (CAD) is very disquieting. CAD is the difference between the export of goods and services and the foreign exchange outgo on imports and other payments. In the last quarter of 2011, the CAD was 4.3 per cent of the GDP and from last April to Decmber, it was 4 per cent. It was 2.7 per cent in 2010-11 and is now much higher than official projections. What is worrying is that it is more than the 3 per cent figure of the foreign exchange crisis period of 1990-91……………….

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Online fraudsters pose as RBI Governor

Online fraudsters have devised a new modus operandi to dupe gullible netizens, by sending emails, purportedly from none other than the Reserve Bank of India. Going a step further, not only the names of United Nations Secretary General Ban Ki-moon and RBI Governor D Subbarao are being used in the mails, purportedly being sent as 'payment notification', released by the RBI; but going a step further, the mails also carry D Subbarao's picture adding to their 'authenticity'. In return, the 'target' is asked to furnish all his personal and financial details and deposit a sum of few thousands rupees initially to avail a bounty of thousands of US Dollars..............

Read - Indian Express

Financial nightmare starts, RBI ban likely, Rs 400 Crores in arrears

...Possibly, the Reserve Bank of India may ban the State Government from drawing funds any time after April 19 . An official source informed The Sangai Express that on March 31, the last day of the financial year 2011-12, an amount of Rs 700 crores was drawn for different purposes including payment of salaries for employees.....

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Widening current account deficit is a matter of concern, says Jalan

Expressing concern over the country's widening current account deficit (CAD), the former RBI Governor, Mr Bimal Jalan, has asked the government to take “tough decisions” to deal with the problem.........

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Fiscal policy support

This is with reference to “Fiscal indiscipline curbs RBI's options” (Business Line, April 6). Monetary policy initiatives will make sense only with implicit fiscal policy support. The Prime Minister and Finance Minister must look into three issues that have a bearing on the country's economic development. These are: Corruption and black money including balances held abroad; Forex Reserves Management. Enforcing austerity and prudence in recourse to import should not be seen as ‘controls'; Super-rich should be encouraged to be more participative in productive deployment of their resources and social security arrangements.

- M G Warrier, Thiruvananthapuram (HBL)

Rising and buzzing

.....Wide anticipations of rate cut by the Reserve Bank of India (RBI) in the April 17 policy meet amid expectation of a $1 trillion investment over the next five years are also fuelling sentiments. RBI has already pumped in Rs 80,000 crore worth of liquidity into the system through 125 basis points cut in cash reserve ratio in two tranches. The fall in interest rate is expected to help the capital-intensive sector to raise cheap loans......

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‘Our asset portfolio is robust'

.....In an interview to Oommen A. Ninan, Chairman and Managing Director of Bank of Baroda (BoB), and Chairman of Indian Banks' Association, M. D. Mallya, says he is keeping his fingers crossed on the rates decision. The state-run bank gets a quarter of its business from international operations, which are growing at about 30-35 per cent. Excerpts:-

Read - The Hindu

The carrot and the stick

…..But perhaps rather than swapping the carrot of expected policy easing for the stick, and implied rebuke, of unchanged policy rates, RBI could maximize its increasingly limited room for manoeuvre by announcing a modest 25 bps repo rate cut while highlighting that any further rate actions await both the decisive action on subsides implied by the budget’s forecasts and an assessment of their inflationary impact. The decision is clearly finely balanced. What is clear, however, is that RBI has little scope for any significant easing of policy and that the radical reshaping of the policy mix that the Indian economy desperately needs can only be driven by fiscal policy rather than the central bank.

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The hidden Ponzi scheme : A.Seshan

…..The government is planning to set up a Public Debt Management Agency on the ground that the existing arrangement results in a conflict of interest for RBI. Then, can RBI continue to engage in buybacks with a view to providing liquidity to the market to subscribe to fresh issues of securities? Would it not be defeating the purpose inherent in stripping RBI of public debt management?......

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No significant exposure to euro zone: RBI

Policy makers need to be cautious about the indirect effects of the euro zone’s sovereign debt crisis on India, though the country’s banks do not have a significant exposure to these according to the Reserve Bank of India (RBI). Speaking at a seminar yesterday, RBI Deputy Governor Anand Sinha said, “The Indian corporate sector and banks had an exposure of about $206 billion as of June 2011, according to data provided by the Bank for International Settlement (BIS). Of this total, our exposure to European banks is not significant.”…….

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NREGS: Meghalaya to pay via smart cards

....“Under the financial inclusion goal of the RBI, NREGA payments have to be made mandatory through bank accounts and not as cash payments. This is to ensure transparency and promote technology-based banking. Most areas in the Northeast are un-banked. So, we are disbursing NREGA payment through individuals representing banks who visit remote villages.......

Read - Indian Express

Regional Economy of India – Book review by P. P. RAMACHANDRAN

One of the happy developments in the field of “ economic literature” is the collaboration between the Academic Foundation and the Reserve Bank of India resulting in a series of books that throw a flood of light on banking, economics and our economy. The book under review is the latest and is edited by Deepak Mohanty, Executive Director of RBI

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RBI mela to root out coin shortage

BHUBANESWAR: Shopkeepers asking customers to buy a toffee or a matchbox instead of asking for change is a common phenomenon these days. It seems as if coins of Re 1, Rs 2, and Rs 5 have suddenly disappeared from the market. To meet the coin shortage and help traders, the Reserve Bank of India, Bhubaneswar, on Saturday organized a coin mela at the Unit-I market. "We distributed coin worth Rs 10 lakh among the traders. Our aim is to bring more coins into the market and help both traders and consumers," said Venkateswar, Deputy General Manager of RBI. He, however, denied that there is a shortage of coins. "People are not recycling the coins resulting in this artificial shortage," he said........

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Inclusive growth is key for financial deepening: Pranab

.......“Financial inclusion is close to my heart …It is a necessary condition for financial deepening, which will help us address the basic issue of growth with equity,” ........

Read - The Hindu

When banks lose your cheque...

....... keep this as a thumb rule – if you have deposited a local cheque, RBI rules say that credit should be given on the same day or utmost, the next day. For outstation cheques, the maximum timeframe for collection of cheques drawn on State capitals/major cities/other locations is 7/10/14 days respectively. So, if the amount has not reached your account within the mandated days, you can immediately approach your bank to find out what is wrong.............

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Nabard to oppose any amendment to Co-operatives Act

... "If the West Bengal government goes ahead with amending the Act without informing Nabard, then we will oppose it," National Bank for Agriculture and Rural Development (Nabard), Chief General Manager of regional office, S Padmanabhan said.......

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Saving the debt markets

......Indian investors love fixed returns and the Indian government is a prodigious borrower. Why, then, is the Indian bond market in the doldrums? This is the question analysed threadbare in a recent speech by the RBI Deputy Governor, Mr Harun R Khan, at a recent conference of money and bond market participants .....

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Panel suggests easy fund availability for MSME sector

..... According to a recent RBI directive, collateral-free loans up to Rs 10 lakh should be extended by banks to MSE sector. Greater availability of credit can contribute to the faster modernisation and expansion of these enterprises and the augmentation of their productivity and competitiveness.
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Dr Subbarao, easy money isn’t the answer. Stand firm

….Dr Subbarao, as you set your monetary policy goals later this month, think of the retirees and middle class earners who lose the value of their income and savings from easy money. It may seem like a lonely fight when you deal with the political and governing class, but there is a silent majority that appreciates sound money and stable prices…..

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Fear of higher slippages from restructured assets overdone : RBI

..... "Anecdotal evidence points to the fact that maximum 15-20 percent slippages happen in case of restructured assets. That is not bad as 80 per cent of assets remain standard," Sinha said on the sidelines of 6th International Banking and Finance Conference......

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Dynamic provisioning: What can it do to banks?

The Reserve Bank of India has put out a discussion paper on dynamic provisioning norms stating that banks should start maintaining higher provisions in good times so as to adjust for bad times................

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Slow economic growth may hurt banks' asset quality, says Pranab

...... Quoting the financial stability report of the Reserve Bank of India (RBI), Mukherjee said though there had been some deterioration in financial soundness indicators yet capital adequacy remained well above the regulatory requirements and asset quality indicators continued to compare favourably with ratios in peer countries.......

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State Bank of India Sees Lower Deposit Growth

.... . Chaudhuri expects the banking system to report 14%-15% deposit growth in the last fiscal year. Separately, central bank Deputy Governor Anand Sinha said banking system deposit growth isn't as high as envisaged. These statements come at a time when the government is scheduled to borrow a gross 5.7 trillion rupees ($111.66 billion) and a net.....

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'Subsidy to discoms must be transparent'

.....“The State budgets follow cash accounting as opposed to accrual-based accounting,'' says a study by the RBI on State finances. As such, “information on unpaid subsidies, loans extended against State government guarantees/letters of comforts as also guarantees invoked, if any, should be transparently reported by the State governments,'' the apex bank feels........

Read - The Hindu

The dollar drain

....Very clearly the capital inflow surge was forcing the central bank to buy up the surplus foreign exchange in the country, to prevent excessive appreciation of the currency, since that was eroding the competitiveness of India’s exports. The result was that the RBI was burdened with excess foreign reserves, and was therefore finding it difficult to control money supply.....

Read - The Hindu  

RBI for waiving ATM charges for senior citizens, differently-abled

....The Reserve Bank of India wants banks to do senior citizens and physically/visually challenged customers a good turn. The banking regulator wants banks to see if these category of customers can be allowed unlimited number of ATM transactions at any bank ATM. It also wants the annual ATM card fee waived for these customers....

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Most banks to work full day today

After three holidays this week, all public sector and many private banks would function full day tomorrow. Banks usually are open for public dealings between 10 am and 1 pm on Saturdays. However, the Finance Ministry has asked all the public sector banks to function full day this Satuday, official sources said. Country's largest bank SBI has said that all its branches will remain open till 5 pm on Saturday. " In order to facilitate transactions for our customers, it has been decided to keep all branches of our bank open for public transactions up to 5 pm on April 7, 2012," State Bank of India ( SBI) said in a notice. Many private sector lenders, including HDFC Bank and Karur Vysya Bank, have also decided to work full day this Saturday. Banks were closed for public dealing on Monday. They again remained closed on April 5 & 6 on account of Mahavir Jayanti and Good Friday, respectively.

FPJ

CAR head constable injured in freak incident

Bangalore,Apr 6 (PTI) In a freak incident, a Head Constable attached to the City Armed Reserve was today injured when his loaded gun accidentally fired while on duty in front of the Reserve Bank of India here, police said. Venkatesh had slung the gun in "shoulder-arm" position, police said, adding, he sustained minor burns and bruises. He has been admitted to hospital and is stated to be out of danger, police sources said. Venkatesh was recently deputed to RBI.

IBN Live

Axis-Enam passes RBI litmus test; deal to go through after 17-month wait

The Reserve Bank of India, or RBI, has approved Axis Bank's purchase of Enam Securities, ending a 17-month wait and paving the way for the private bank to expand its business to include investment banking and other advisory services…………….

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Netizens like e-banking to online shopping

.... A majority of Indians prefer to use the internet for banking and other financial services than shopping online, shows a new survey..........

Read - Express India

Dr.T.V.Gopalakrishnan's views on "Fiscal indiscipline curbs RBI's options - S S Tarapore"

Feedback / comments on  Fiscal indiscipline curbs RBI's options - S S Tarapore

The article has brought out well about the need for RBI not to fall prey to the pressures of politicians, industrialists, and top Govt officials to reduce the policy rates. The economy is in fact in reverse gear and in case the RBI decides to change the policy rates as wanted by all including the bankers, neither the economic growth nor the price stability can be achieved. It will worsen the situation and damage control will become a difficult task and more than anybody the masses will suffer. The inflation, the ccurrent account deficit, the fiscal deficit, the GDP growth, the severe fall in exchange rate, poor flow of both FDI and FII funds, loss of confidence in attracting foreign funds thanks to retrospective changes proposed in some of policies relating to tax on international investments etc are not favourable for investment and growth in the near future, the Reserve Banks' policy is the only hope left to put the economy on right and growth track. Will RBI heed to the requirement?

- Dr.T.V.Gopalakrishnan

RBI may plan differential rate regime for fiscally weak and strong states

The Reserve Bank of India (RBI) may be contemplating measures to minimise the distortions in borrowing rates of state governments where both fiscally sound and weak ones pay nearly the same rates for their loans, a top central banker said…………….

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Time to look at the common man

..... Once there were signs of the country coming out of recession in 2009-10, the builders again went on developing only luxury homes. Banks went on funding such high-end projects in a big way, even ignoring the RBI's cautions. And HFCs also followed suit in a bid to not lose the market share. Today, if the real estate sector is tottering in high debts, low liquidity and tepid demand, it is because of excessive exposure to high-end projects. The situation has been invited by both the builders and banks and as such both should be equally blamed. The builders should understand that by developing affordable housing projects, which is a long-term viable business preposition, the value earned from focussing on the deserving masses would be more than satisfying.....

Read - The Hindu

Subir Gokarn's view on macro economic concerns

RBI tells mkts to price state bonds on financial health

Mumbai : The Reserve Bank of India (RBI) Deputy Governor Subir Gokarn on Friday said states with weaker finances are able to raise cheaper funds due to the market perception that state debt is sovereign-guaranteed. There was a need to bring about formal institutional fiscal discipline, he said. “State government debt is apparently implicitly guaranteed by the sovereign. So, with or without a formal guarantee the market perceives that state debt has been fully backed,” said Gokarn. Because of this, states with weak fiscal condition don’t pay much premium compared to those with strong fiscal conditions, he added. He was addressing the 14th Annual Money and Finance Conference organised by the Indira Gandhi Institute of Development Research here today……….

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It’s early to act on inflation: RBI

……….. RBI’s stance suggests it will wait for inflation, which has been in the negative territory for eight consecutive weeks since early June, to creep up before embarking on any reversal of its expansionary policies. “However, we are aware that sometime down the line pressure could hit us, and certainly when signs of inflationary pressures show up, we will take action,” he said adding, that the RBI is monitoring the situation…….

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Piling the pressure on D Subbarao to bring down interest rates

……On April 17, it is a given that RBI governor would cut rates. The only issue now is whether there would be a series of interest rate cuts, that has been the cry from industry for long. It looks doubtful given the big inflation variable in the interest rate matrix.

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Farm credit growth declines in Dec quarter

…..The SLBC report also noted that agriculture advances could not meet the targets set by an RBI-appointed Committee. "The performance against benchmark under Agriculture Advances fell short by 1.17 per cent and remained at 16.83 per cent as against the benchmark of 18 per cent," the report stated.……

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Nabard to get Rs 500 crore capital infusion during 2012-13

….As per the RBI's guidelines, the outstanding total resources mobilised at any point of time by a Financial Institution should not exceed 10 times its NOF.  The apex agriculture and rural development bank got a capital support of Rs 1,000 crore during the financial year ended March 2012. At present, the authorised capital of Nabard is Rs 5,000 crore, of which the paid up capital is Rs 3,000 crore……

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States rely more on market borrowing

..... The decline in the share of NSSF is in line with the recommendations of the Shyamala Gopinath committee, which had suggested a reduction in the mandatory share of State governments in the collection of small savings under NSSF from 80 per cent to 50 per cent. The idea is to “equalise the burden shared by the Centre and the States, as the interest rates on borrowings from the NSSF are higher than the market rates.” .......

Read - The Hindu

Govt borrowing creates liquidity stress

.....As liquidity shortage has breached its tolerance, RBI, has reduced CRR on two occasions in the recent past. Notwithstanding the two cumulative reductions, banks on an average borrowed Rs 1.50 lakh crore from the RBI on a daily basis between March 10 and March 31, 2012. What have been the drivers of persistent liquidity shortage in the system in the last six months? ........

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Man of mettle

....Sinha set aside apprehensions of a panel led by former RBI Governor Bimal Jalan, by going ahead and allowing stock exchanges to be listed on rival platforms. This is considered a big reform measure, given the elaborate mechanism he put in place to guard against listing malpractices by the stock exchanges themselves......

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Fiscal indiscipline curbs RBI's options - S S Tarapore

.......The RBI has to face a head-on conflict with all economic agents. Without appreciating the central bank's difficult task, Ministers and top officials have been sabre-rattling that it is time for a reduction in policy interest rates and, more specifically, that such easing is imminent. The RBI's own forward guidance has complicated life for it.........

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Finance ministry advises banks to popularise e-payments to reduce usage of cheques, bank drafts

…….The Reserve Bank of India has also been keen to move away from cheques and drafts. Last week, the central bank had reduced the validity period of cheques, drafts, pay orders or banker's cheques to three months from six months.

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RBI initiates creative pitch

Reserve Bank of India (RBI) looks to empanel advertising agencies in Mumbai. It has invited applications from reputed, INS-accredited advertising agencies for empanelment for a period of three years. The agencies should have the ability and resources to service all 28 regional offices of the RBI and be able to execute routine advertisements as well as multi-media, multi-lingual, pan-India public awareness programmes…………

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Banks with majority foreign stake like ICICI Bank, HDFC Bank not to be considered foreign banks

……….Officials from RBI and departments of industrial policy and promotion, economic affairs and financial services last month had decided to work out a new formulation to ensure that these banks are not constrained by the FDI rules when they pick equity though strategic investments, corporate debt restructuring or treasury operations…….

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M-Banking a powerful financial inclusion tool: K C Chakrabarty

....Way back in 2008 the RBI had recognized the mobile phone’s potential. The first set of guidelines was taken in 2008. The Reserve Bank consciously opted for a bank-led model although their approach remains technology neutral. Mr Chakrabarty said that mobile for banking in financial inclusion cannot become a viable proposition on a standalone basis if the purpose is to achieve meaningful financial inclusion. To make it viable and attract volumes, it has to be provided as a package along with other products and services. This can be achieved only by entities that can provide add-on services like emergency and entrepreneurial credit, saving facilities, other products and services such as insurance, besides remittances.......

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RBI rate cut depends on inflation outlook: Gokarn

Ahead of its annual monetary policy, the Reserve Bank on Thursday said cutting policy rate to promote investment depends upon moderation in inflation and fiscal consolidation. "We need to have low inflation, we need to have rising investment ratio, we need to have strong fiscal consolidation and this in turn provides space for monetary policy to actually support investment ..." RBI Deputy Governor Subir Gokarn said..............

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Banks look for more cash reserve ratio cuts

…."A CRR rate cut of at least 50 bps in the upcoming credit policy review will help kick-start the economy and ensure room for manoeuvre through higher liquidity,"……

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Will RBI cut rates?

…..Tight liquidity conditions have resulted in yields on sovereign paper shooting up. All these conditions don’t seem to suggest RBI is going to cut rates meaningfully anytime soon, even as the markets have been factoring it in for a while. Going by recent developments, strategists believe the central bank will step in and buy government securities tactically to comfort the sentiment when the 10-year gilt goes past 8.5 per cent. The clamour to cut rates has almost reached a fever pitch now, as it’s apparent that RBI’s massive tightening has only hurt growth and failed to tackle “imported inflation”……..

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Madhavpura Bank: Finally facing liquidation

.....Interestingly, now that the case has effectively closed the possibility of KP paying any more instalments to MCCB, the RBI has woken up and reportedly threatened to shut down the Bank. A show-cause notice has been issued to the board asking why its licence should not be cancelled....

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Government's heavy-handed regulation of microfinance will kill it and bring back moneylenders

…..Since 2005-06, financial inclusion has been on RBI's agenda. One element of the strategy is through no-frills accounts, diluted know-your-customer (KYC) norms, banking correspondents (BCs) and use of IT. For example, Puducherry, Himachal Pradesh and Kerala have announced 100% financial inclusion in all districts and pan-India, all villages with population of more than 2,000 will be served through bank branches or BCs. But there are several villages with population less than 2,000 and this kind of financial inclusion for 6,00,000 villages isn't going to happen fast. Indeed, there is a patronising angle to microfinance. We don't talk of microfinance when we approach our banks for financial products. But for that, we need to wait for 2020, or later still……..

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Rural credit story far from satisfactory: Yashwant Sinha

Q: Would it be right to say that the RBI and banks have become urban centric, urban oriented and this job is best left to people like Mahajan, state governments and other NGOs or can the RBI and banks - do they have it in their mind space to get into this at all?

Sinha: It should be a well-planned and determined effort on the part of the RBI, the Indian Banks Association and on the part of the banks to do what is expected from them. For the NGOs, to supplement the work that the banks are doing in the rural areas so that the requirements of the rural people is met.

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Sebi mulls new ethics code for brokers, frequent inspections

.....the Sebi also plans to strengthen the concept of beneficial ownership in KYC process in coordination with other financial regulators like RBI and IRDA. Sebi has simplified and strengthened the KYC process, making it uniform for all intermediaries and has also implemented the concept of single KYC so that the investors need not undergo the same process again and again when they approach other intermediaries......

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Banks to work full day this Saturday

In view of three holidays this week, public sector banks have been directed to function full day on Saturday, April 7..............

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