Banking on the Muslims: Interest payments rejected under Islamic law could be used to help the poor of India

Thousands of crores lying unaccounted in banks across the country and belonging to Muslims could be used for the uplift of the poor section of the community, provided the Reserve Bank of India (RBI) gives the go-ahead. A move to such an effect has been put forward to the Union finance ministry by the National Commission for Minorities (NCM) chairman Wajahat Habibullah.  Habibullah's idea is based on the Islamic tenet which considers giving and receiving interest against the cause of the religion. This has resulted in a huge amount of money lying unaccounted in banks, which the NCM hopes could be somehow made use of for the benefit of Muslims in India. And one of them is opening the doors to 'interest-free' banking in India for the community.............

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RBI's KC Chakrabarty counters Gokarn on possibility of rate cut

MUMBAI: Reserve Bank of India Deputy Governor KC Chakrabarty on Friday said interest rates in India were not too high to impact growth, throwing cold water on hopes of central bank action to revive a sputtering economy. This comes only days after fellow Deputy Governor Subir Gokarn raised expectations of a rate cut by saying moderate core inflation and softening global crude prices offered the central bank room to lower policy rates..............

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Sensitisation programme on currency notes

A programme was organised by the Lead District Office and the Bankers' Club here for probationary officers/ newly recruited officers of various banks in the district to sensitise them on currency notes. Officials from the Reserve Bank of India spoke on various features of the currency notes, detection of fake notes, clean note policy, and note exchange policy, among others, a release here on Friday said. V.Ashokan, Deputy General Manager of Syndicate Bank, inaugurated a seminar. He said bankers had big role to play in implementing the decisions of the government and the RBI. E.K. Revikumar, Manager, RBI, engaged the sessions. A.A. Kumar, RBI Assistant General Manager, V.S. Jayaram, Lead District Chief Manager, C.V. Jayachandran, secretary, Bankers Club, and N.Mohanan spoke.

HBL

Impact of policy rate hikes on GDP growth being ‘overplayed'

.....“I don't think that our interest rates are that high, or the policy rates are so high that they should significantly affect growth. Growth is affected due to a variety of reasons and this (policy rate) is just one of them,” ......

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Low GDP growth not due to high interest rates: RBI Deputy Governor

Mumbai, June 8: The Reserve Bank Deputy Governor, Mr K.C. Chakrabarty, today sought to stave off criticism that the nine-year low GDP growth was primarily due to the 20-month high interest rate regime, saying it was driven by a host of other factors. “I don’t think that the interest rates are that high, or our policy rates are that high that should significantly affect growth. Growth is being affected for a variety of reasons. We are overplaying the interest rate aspect (for low growth). It may be one of the reasons,” Mr Chakrabarty told the Skoch summit here......

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Financial Literacy - Concept and its Importance in India

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No rate cut: RBI should help the rupee, not politicians

...........Subbarao should hold his horses. He should instead look to Big Ben and Moderate Mario for cues, not North Block. US Fed Chairman Ben Bernanke, despite signs of a slowing US economy, declined to send smoke signals that would suggest that another round of quantitative easing (QE3) or some other form of monetary stimulus is round the corner...........

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Why India Should Not Follow China in Cutting Rates

.......Inflation risks are still high. The Reserve Bank of India can risk raising inflation (further) by cutting rates, when prices are (already) at an elevated level,” Taimur Baig, Chief Economist, Global Markets Research at Deutsche Bank wrote in a note titled 'RBI Should Not Be Cutting Rates on June 18, But Would It Anyway?' ..................

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Credit policy: Will RBI bite the bullet on June 18?

A rate cut from RBI seems to be the demand of the hour. The industry wants it, the government wants it and market players want it. The ball is now in RBI's court..............................

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Chinese checkers

The 25 basis points rate cut by People’s Bank of China (from 6.56% to 6.31%), a first since the 2008 global economic crisis, is the most clear signal that India too—as the other engine of global growth—needs to get back into this role. Despite the comments by KC Chakrabarty, deputy governor of RBI, rates are hurting..............

Read - FE Editorial

RBI must cut rates to stimulate growth: Basu

............ In his personal opinion, the Reserve Bank of India should cut policy rates to support growth. India should take advantage of the depreciating rupee to boost exports, Dr Basu said. “We should take advantage of the depreciating rupee. Much of this depreciation is because of external factors and many other world currencies have also depreciated.” .....................

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Not possible to grow at 7.5%, domestic factors slowing growth: Montek

.....That level is not comfortable, Ahluwalia said, adding that the central bank needs to do a “balancing act”. “Monetary policy needs to be forward looking, (there is) too much emphasis is being laid on the short term rate,” he said. “Lowering the rate would be a good signal, but there are a number of other factors.”  The RBI is scheduled to hold its mid-quarterly policy review on June 18, and................

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RBI is way behind the curve

China just reduced interest rates by 25 basis points, the first reduction since 2008. Australia has reduced its interest rates twice in the last month by a cumulative 75 basis points. These decisions have been applauded by all, governments, investors and analysts. RBI reduced interest rates by 50 basis points near the end of April and most analysts (especially those belonging to foreign banks) were severely critical of the RBI decision. Why this asymmetrical treatment? Sometimes I half-believe in conspiracy theories interested in keeping Indian growth down so that Indian governments will be less arrogant!..................

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Has RBI just ruled out a rate cut?

........A rate cut would have been possible if inflation was lower. The RBI, so far, hasn’t been able to reign in inflation because of structural rigidities in improving the supply side. It cut repo rates by 0.50 basis points to 8%, in April, a surprise move which caught many investors, savers and the financial community off guard. In fact, the RBI panicked as inflation was actually rising when the central bank had left rates intact for a period of time, after continuously hiking rates, for more than a year, to reign in inflation. Hence...........................

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India needs radical change here and now !

.....We, in India, were able to withstand the crisis situations initially because of an insulated rupee and fairly strong fundamentals thanks to an astute Reserve Bank of India (RBI) Governor who refused to institute full convertibility of the rupee. Our bludgeoning domestic middle-class market absorbing all that is produced or imported, booming stock market and good monsoons went into the phases of Shining India of high growth rate.............

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RBI raises number of NRI remittances

The Reserve Bank of India, on Friday, permitted non-resident Indians (NRIs) to send remittances more frequently, a step to boost foreign currency inflows and check rupee fall. Resident Indians are now allowed to receive as many as 30 remittances from NRI friends and relatives during a year as against 12 earlier, according to a latest RBI circular. Analysts said the RBI decision would help raise foreign exchange reserves.........

Read - The Hindu

RBI move

Mumbai, June 8: The RBI today allowed resident Indians to receive as many as 30 remittances from NRI friends and relatives during a year against 12 earlier. The apex bank also said it would pump Rs 12,000 crore into the market on June 12 by buying government securities to ease the liquidity situation.

The Telegraph

Customers seek lower limit on credit cards

...."People are using cards for basic purposes such as air tickets and utilites payment. Also, there are more place where cards are accepted," said Narahari. RBI data shows that at present there are over 90,000 ATMs and 6.5 lakh PoS terminals in the country.

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‘Remit IT dues in advance'

Chennai, June 8:  The Reserve Bank of India has advised income-tax assesses to remit their income-tax dues in advance to avoid last- minute rush and long wait in queues. The rush for remitting dues at the bank is generally heavy towards the end of June and it becomes difficult for the RBI to cope with the pressures of receipts, despite providing additional counters, said the RBI in a press release. Apart from the RBI, select branches of nationalised, public and private sector banks in Tamil Nadu are authorised to accept payment of income-tax dues in cash or by cheque.

HBL

RBI to banks on unique ID codes

Banks must assign unique customer identification codes to their new as well as existing clients by May 31, 2013, the Reserve Bank of India said in a notification on Friday. The unique identification code will help in stronger enforcement of know-your-customer norms, and aid banks in identifying customers, tracking the facilities availed, etc.

BS

RBI cuts RTGS deal threshold to Rs1 lakh till Saturday

The threshold limit in RTGS System transactions has been cut to Rs1 lakh from existing Rs 2 lakh until 9th June............

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K C Chakrabarty may get 2-yr extension as RBI dy governor

The government is likely to extend K.C. Chakrabarty’s tenure as Deputy  Governor of the Reserve Bank of India (RBI) by two years. Chakrabarty, appointed Deputy Governor in June 2009, was given a three-year term that ends on June 14. The other three deputy governors are Subir Gokarn, Anand Sinha and H R Khan. A Deputy Governor in the central bank can be appointed for five years and the retirement age is 62 — the age limit is 60 for other RBI officials. A candidate has to be younger than 60 to be eligible. An exception to this rule was made during the re-appointment of Shyamala Gopinath in 2009..............

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RBI signs MoU with Central Bank of Bahrain

Mumbai: The Reserve Bank has signed a Memorandum of Understanding (MoU) with the Central Bank of Bahrain (CBB) to promote greater co-operation and sharing of supervisory information between the two regulators. The MoU was signed by RBI Executive Director P Vijaya Bhaskar and Khalid Hammad A Rahman, Executive Director of CBB, on May 29, the Reserve Bank said in a statement Thursday...............

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RBI: Accounting and accountability

.......Part of the explanation for the failure of RBI may have to do with its misguided monetarist economic mode. That there are plenty of such arcane models floating around can be illustrated with reference to the current debate on the rapid depreciation of the rupee, and what to do about it. Some argue that if RBI wants to prevent its currency from depreciating, and/or depreciating so rapidly, then it should increase interest rates. This analysis was not even appropriate in a fixed exchange rate world, and that world disappeared fully 40 years ago in 1971. For decades now, capital flows, and exchange rates, respond to prospects for economic growth and not to changes in interest rates. That some analysts still peddle this snake oil thesis is surprising..........

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'India can get up to $90 bn in 2 years'

....During the roadshows, the finance ministry would highlight the changes that had been brought in the QFI regime, the liberalisation of the external commercial borrowings (ECB) norms and measures taken to deepen India’s bond market. Officials from the Ministry of External Affairs, Securities and Exchange Board of India, Reserve Bank of India (RBI), Bombay Stock Exchange and National Stock Exchange would also be participating in the campaign named - India as an incredible investment destination...................

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E-mail lottery fraud: Accused denied bail

...............He had received an e-mail on September 29, 2011 which said he had won a lottery of one million pounds. He also received phone calls from Patel asking him to deposit money in different bank accounts in the name of "fee, anti-terrorist and anti-drug abuse clearance from UNO, transfer charges to RBI and revenue to the government of United Kingdom"...................

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Now, public sector banks on ‘USB' drive

‘Ultra-Small Branches' will help improve financial inclusion, says RBI

.........Recently, an RBI circular noted the need for having an intermediate brick and mortar structure (ultra-small branch) between the present base branch and BC locations. The circular suggested that these USBs could be either newly set up or by conversion of the BC outlets. Such USBs should have minimum infrastructure, such as a core banking solution terminal linked to a pass book printer and a safe for cash retention for operating large customer transactions....

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Mumbai body seeks PI Patil's suspension

..The Maharashtra police team returning to Mumbai after escorting RBI cash containers was intercepted by the Pernem police on March 15 at Patradevi and 10 officials of Maharashtra police, which included PI Shivaji Raut, were detained. According to the notice served by the advocates of the organization, friendship between PI Patil and the arrested PI let the offenders go scot free.............

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RBI’s Chakrabarty explores financial education in emerging markets

Kamalesh Chandra Chakrabarty, a Deputy Governor of the Reserve Bank of India, delivered a speech on June 5 that explored the benefits of extending financial education in emerging markets. Speaking at a literacy forum in Mumbai, Chakrabarty said that financial education "essentially involves two elements, one of access and the other of literacy". He explained that financial education should commence at school level, so students could act as "ambassadors" to spread financial knowledge to the wider community.................

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Bank boards asked to take stock of unclaimed deposits

........In a circular to all banks, RBI has said that lenders should put in place a board approved policy on classification of unclaimed deposits; grievance redressal mechanism for quick resolution of complaints, record keeping and periodic review of such accounts. Four years back in August 2008 RBI had asked banks find the whereabouts of the customers and their legal heirs. At that time RBI had said that banks should review accounts every years wherever there are no transactions. The circular has defined an inactive/inoperative account as one where there has not been any transaction in the account for over a period of two years. Banks have also been directed to reactivate inoperative account without any charge. However, despite these instructions the number of inoperative accounts had only grown. This has compelled the central bank to come out with fresh directives on these funds.

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RBI asks banks to set up financial literacy centres

.According to the RBI study, since the counselling centres were set up by banks themselves, there was a fear among borrowers that they might turn into debt collection units. Under the new scheme, FLCCs would continue to function with renewed focus on financial literacy. However, most of the responsibility has now been passed on to banks. This will lead to opening of 630-plus FLCs in all the districts throughout the country. Further, financial literacy activities will also be undertaken by all the rural branches of commercial banks and regional rural banks. RBI has said that it will prepare financial literacy material on its own and distribute it to banks.

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Will a change of government give a new direction to economy?

The whole economy is in shambles. The RBI and the central government will have to put their heads together by taking the right steps to boost growth

The present foreign exchange imbroglio and economic crisis faced by our country brings back to memory the near disaster faced in 1991, when the country had to airlift 67 tonnes of gold to pledge with Bank of England and Union Bank of Switzerland to raise $605 million of foreign exchange loan to avert a default in international payments. In January 1991, the foreign exchange reserves of our country had reached a precarious position ..............

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Case for a 75 basis points’ cut

With GDP growth sharply decelerating to 5.3% in the last quarter of 2011-12, RBI Governor D Subbbarao’s job becomes quite easy during the mid-June quarterly review of monetary policy. The bias of the central bank will more pronouncedly shift in favour of propping growth, especially with the latest data set showing a negative growth in manufacturing during January-March 2012................

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The stickiness of interest rates

....While SBI may be comfortable with its liquidity, it’s quite another story for the sector. After two rounds of cash reserve ratio cuts, banks are still borrowing Rs.70,000 crore to Rs.1 trillion under the Reserve Bank of India’s (RBI’s) liquidity adjustment facility. Not only that, banks have had to turn to alternative sources of financing such as certificates of deposit (CDs). Is it any wonder then that three-month, six-month and even one-year CD rates remain near their January highs?........

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FinMin seeks rate cut by RBI to spur ecomomic growth

Following its commerce counterpart, the finance ministry, too, has pitched for a cut in policy rates by the Reserve Bank of India (RBI) in its policy review scheduled for June 18. This, the ministry said, would spur economic growth, which slipped to a nine-year low of 6.5 per cent in 2011-12. On what the government felt on the interest rate scenario, Economic Affairs Secretary R Gopalan said, “We see a possibility of growth picking up if the interest rates are reasonable.” He said RBI would take into account the inflationary situation as well as external factors, while deciding on its interest rate stance in the policy review.............

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De - Jargoned | Monetary policy and its implications

Hopes in the financial markets are getting built around the expected rate cut in the mid-quarter review of the monetary policy on 18 June. But why are markets watching its review so closely?

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JP Morgan Economist: RBI Should Relook Currency Strategy

India's central bank needs to have another look at the way in which it intervenes in the currency markets because its recent dollar sales haven't been able to stop the rupee's slide, a senior economist said Wednesday. "Intervention is a legitimate instrument, but the Reserve Bank of India didn't do it the right way," said Jahangir Aziz, J.P. Morgan senior Asia economist. "The RBI could have intervened in a more strategic manner when the market was willing to accept it as a signal that the RBI is coming out and defending the currency."...................

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Cabinet approves Rs632 crore capital infusion in regional rural banks

....Following recommendations of Reserve Bank of India (RBI) deputy governor Dr KC Chakrabarty, the government had initiated recapitalisation process in 2009-10 for 40 financially weak RRBs, which mainly provide credit to rural and agriculture sectors......

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All rural branches of banks to impart financial literacy: RBI

The Reserve Bank Wednesday said all rural branches of banks will have to impart financial literacy. This move comes after the central bank found Financial Literacy and Credit Counselling Centres (FLCC) were located in the urban and semi-urban areas. "Banks may consider setting up need based FLCs in other locations as well. Financial literacy activities will also be undertaken by all the rural branches of Scheduled Commercial Banks including RRBs," the RBI said in its guidelines on Financial Literacy Centres (FLCs)...........

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Aviation ministry seeks ATMs, forex counters for transit passengers in international airports

NEW DELHI: To make life easier for transit travellers and those who apply for visa on arrival, the aviation ministry has requested the Reserve Bank of India to allow ATMs and currency exchange counters before immigration areas in international airports. "Transferring passengers (who spend anywhere between two hours and 24 hours at airport) are required to spend substantially on food and beverages and use other facilities in the transfer area, and spending in foreign currency is not feasible," the ministry has said in a consultation paper on developing India as an aviation hub. Existing Reserve Bank of India guidelines does not allow foreign exchange counters before the immigration in airports' arrival terminals..............

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Union Bank ATM for differently-abled

.....An ATM for the differently abled had been specified in the Reserve Bank of India circulars in 2008 and 2009. The central bank had stated that all banking services including ATM cards need to be offered to all customers without any discrimination........

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Staff costs higher at public sector banks

....In a speech delivered recently at a conference of public sector HR managers, the RBI Deputy Governor, Dr K. C. Chakraborty, said, “One thing is, thus, loud and clear — the competitive advantage in terms of staff costs that we always thought the public sector banks had is no longer there. ......

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Will we get another rate cut from RBI on 18 June?

The Reserve Bank of India will review its monetary policy on 18 June. Will it announce another interest rate cut? The chances seem brighter after central bank Deputy Governor Subir Gokarn said on Monday there is scope to cut interest rates to boost the country’s flagging growth. Gokarn said that the slowdown in growth and a fall in oil prices provided room for a possible interest rate cut.............

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RBI Jaipur Receives Fake Notes from Udaipur, case registered

Twenty Three notes in denominations of Rs. 500 and Rs. 1000 were branded as fake by a Manager at Reserve Bank of India, Jaipur while he was in the process of receiving cash from the ‘Chest’ Branches of Udaipur. The Manager has registered a written complaint with the Superintendent of Police, Udaipur against an unidentified person..................

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Real import of rupee fall

...........The Government is clearly unwilling to do much about the rapid decline in the value of the rupee. Despite the rupee losing around a quarter of its value against the dollar over the last year, the RBI has not been pushed into making any dramatic interventions in the realm of exchange rates. Instead, the Government has focused on coming to terms with a devalued rupee, even accepting the political dynamite of a sharp increase in petrol prices. The official thinking is clearly on the side of devaluation as an essential step in macroeconomic correction...........

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Freedom from prepayment fee

Taking an aggressive stance, the Reserve Bank of India (RBI) has decided that banks cannot levy foreclosure charges or prepayment penalty on home loans on floating rate. The order is to be implemented with immediate effect. In a circular issued on 5 June, RBI warned banks to strictly follow the instructions brought out in its monetary policy statement for 2012-13. The apex bank thinks that removal of foreclosure charges and prepayment penalty on home loans would reduce rate discrimination between existing and new borrowers and competition among banks and hence result in finer pricing of floating rate home loans...........

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No penalty on home loan prepayments; but why this half-hearted measure?

RBI says the waiver of pre-payment penalty is applicable only for home loans carrying floating rate of interest. Why are borrowers who had obtained home loans on fixed interest basis being left out?..........

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RBI told banks to be serious while dealing with unclaimed deposits

Reserve Bank of India told banks to spruce up their act in dealing with unclaimed deposits. It has advised to them to put in place a board approved policy on classification of unclaimed deposits, grievance redressal mechanism for quick resolution of complaints, record keeping and periodic review of such accounts. It has also directed banks to conduct the first periodic review of unclaimed deposits by September 30, 2012................

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Exploring the challenge of financial education across emerging economies : K C Chakrabarty

Keynote address by Dr.K.C.Chakrabarty, Deputy Governor of the Reserve Bank of India at the Visa-FT Financial Literacy Forum Series, Mumbai 5 June 2012

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Economic Harakiri

........... If we are to believe the Reserve Bank of India it is the global recession, the financial turmoil in Europe, the stubborn high inflation and the swollen fiscal deficit, everything in short, except its own monetary policies. It has taken the collapse of industrial growth, a panic withdrawal of money from India by foreign institutional investors and a collapse of the rupee to force Pranab Mukherjee to break the code of Omerta and put the blame squarely on the Reserve Bank’s ‘tight monetary policies.’ But when it came to the steps Mukherjee was as much at sea as RBI governor D Subbarao and his advisers. His panacea is to ‘address the imbalance on the fiscal front’, i.e. cut the budget deficit by spending less. The prime minister is obviously of the same opinion...............

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India’s economic policy set to undermine RBI’s ‘good’ work

The Reserve Bank of India (RBI) is in danger of losing its vaunted reputation as one of India most trusted institutions as it attempts to maintain its role in promoting price and financial stability against a backdrop of government policies that do not necessarily enhance the RBI's medium-term goals, according to an article published in the latest edition of the Central Banking Journal. The article says the RBI has gained a strong reputation for its commitment to support growth as well as maintaining price stability. Moreover, its detailed intervention in the regulation of banks, financial products and capital flows has also drawn extensive praise during the past five years. The RBI has shown what report author Hugh Sandeman, a financial advisor and journalist, refers to as a "lack of intellectual inhibition in the exercise of old-fashioned common sense"...............

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India’s economic growth closely tied to global risk appetite

.....The hopes that the Reserve Bank of India would quickly reduce interest rates, thereby imparting a much-needed boost to investment, have been dashed. Growth has fallen much more than expected, while mastering inflation is proving to be more difficult than envisaged. Add erratic government policies, a large current account deficit, a drying up of capital inflows, a political logjam and a world economy in imminent danger of slipping into a double dip, and you start to wonder how things could possibly get worse. Oh wait, that list seems to have left out El Nino.........

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PSU banks dial IT helpline

After a successful stint with IT in financial inclusion, the RBI is now pushing for better reforms in the IT infrastructure of banks, with a special emphasis on PSU banks.

......According to the RBI, one of the objectives of IT initiatives is to lower operating costs, whereby it turns financial inclusion into a profitable business. This, in turn, will help create a huge upside for banks in the form of stable deposits. Also, given how important mobile phones have become as a means for communication, using this technology for funds transfer as well as retail payments holds huge potential. As such, mobile banking is the most happening area of development in the banking sector and is expected to complement, and to an extent replace, the credit/debit card system in the future. “While it has the potential to overcome issues relating to cost, infrastructure and resources; it does pose some new issues of its own,” said Sinha of RBI. RBI has established the National Payment Corporation of India for focused attention on the development and implementation of requisite technologies for enabling new modes of delivery....................

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How to attract non-banks to financial services

..... India’s formal financial services sector is yet to meet the growing needs of a large part of the population. When it comes to domestic remittances, 57% of migrant workers in India use hawala couriers and other informal channels to remit money, according to a recent study. Another perspective is India’s informal lending economy. Analysts estimate that almost 40% of the participants in India’s informal economy resort to chit funds, barter and moneylenders for financing.It’s logical that an informal sector thrives in the absence of convenient, reliable, speedy and regulated financial services..........

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Growth, India's highest priority

.....Mismatches between growing demand and constrained supply, leading to persistent inflation. The Reserve Bank of India’s (RBI’s) raising interest rates to tackle this has only compounded the problem of reduced profits and investments, made worse by central and state government failures to augment supply...........

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Akhilesh asks Nabard to allocate Rs 2,250 cr for Uttar Pradesh

..Referring to RBI ban on 25 non-licenced district cooperative banks, Akhilesh requested Nabard to lift the ban immediately and allow the bank to do banking business......................

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Prashant Bhushan intervenes in Sahara-Sebi case, files petition in SC

.....Further, the companies do not follow prudential norms laid down by the Reserve Bank of India (RBI) for banks and non-banking finance companies handling similar or even lesser amounts of public money, the petition alleged. These norms include cash reserve ratio (4.75 per cent), statutory liquidity ratio (25 per cent) and capital adequacy ratio (10 per cent). “The omissions on account of investor protection stipulated in the Sebi Act on the issue of debentures have been detailed in the Sebi order,” the petition said. It also argued the manner in which these unsecured funds have been invested also make them extremely risky.....................

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MMCB has Rs320 crore cash & Rs1,625 crore in liabilities

After virtually freeing Ketan Parekh from the obligation of paying all of the Rs1,100 crore he owes to Madhavpura Mercantile Co-operative Bank (MMCB), the Reserve Bank of India (RBI) has left MMCB with a liability of Rs1,625 crore. This is against just Rs320 crore cash that the cooperative bank has in hand.......................

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Justice not in sight for MMCB depositors trial yet to begin

.......Now, with RBI cancelling the banking licence of MMCB, the fate of over 10,000 depositors, remain uncertain, while the key conspirators have managed to get relief from the courts. "The trial had been delayed following various kinds of applications by the accused. It was only after the Gujarat High Court directions on our petition to expedite criminal proceeding against the scam accused in 2011 that the things have now got moving,"..............

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RBI for overhaul of banks' HR practices

The Reserve Bank of India (RBI) has called for a complete overhaul of human resource practices at banks, especially public sector ones where several staffers are due to retire in seven to eight years. Dr. K C Chakrabarty, one of the central bank’s Deputy Governors, says this sort of increasing intervention in the affairs of public sector banks was needed due to lack of management capacities at the latter........

......Indicating there was no proper mechanism of performance management in PSBs, Chakrabarty said the results of not having one could be disastrous. “We are all having to deal with the problem of people who are ‘promotable’ but not ‘postable’ and people who are ‘postable’ but not getting promoted. This is because we have failed to discriminate between performers and non-performers,” Chakrabarty said........

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RBI committed to encouraging exports: RBI Executive Director G Padmanabhan

VARANASI: The Reserve Bank is committed to encouraging the country's exports and is organising seminars to address the concerns of exporters, a senior official today said.  In order to boost India's exports, seminars have been organised in different cities, RBI Executive Director G Padmanabhan today told reporters on the sidelines of a function here.......

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BANKS CAN BE FINANCIALLY ILLITERATE’

“Even banks can be financially illiterate”. The speaker was none other than RBI Deputy Governor K.C. Chakrabarty, thundering in his customary style. When a member of a women’s NGO asked why banks were hesitant to lend to women from her NGO, he said: “Opening a bank account will not give you money. Giving them a smart card will not give you money. Appointing a BC will not give you money. Even if they deposit money, it will not give you money, since you will pay interest on that. What they don’t understand is that they will make money only when they lend. If they don’t, they are financially illiterate.” 

ET

'Andhra microfin firms failed to assess loan need'

Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty on Tuesday blamed the failure of microfinance institutions in Andhra Pradesh to their inability to provide loans in sync with customers’ capacity to repay. Microfinance institutions in Andhra Pradesh failed because they had not assessed the credit needs of the people properly, Chakrabarty said in a speech at the Visa-Financial Times conference on financial literacy on Tuesday. Chakrabarty said financial institutions that did not assess clients’ credit requirements, and also their ability to repay loans within the required time frame, were only working to digging your own grave. The deputy governor’s comments added another dimension to the role played by microfinance institutions in the failure of their business in Andhra Pradesh,along with the pressure of laws enacted by the state............

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PSBs unamortised pension bill pegged at Rs 14,000 cr

....To avoid a dent in ROE, most banks would seek approval from the Reserve Bank of India to directly write off from the reserves account. RBI had permitted State Bank of India to write-off pension liability worth Rs 7,900 crore from reserves in financial year 2011. If RBI refuses to allow banks to directly adjust the unamortised amount with the balance sheet (reserves), then ROEs of public sector lenders may be hit severely in the current fiscal......

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State-run banks’ average salary overtakes that of private peers

The average cost per employee for public sector banks has overtaken that of their private sector peers since FY11—a development that has emerged from data released by RBI on Tuesday. This has prompted RBI to raise issues of productivity. The central bank has warned that public sector banks are losing their cost advantages with per-employee expense of public sector banks today being 150% of their peers in the private sector. The central bank has said that an HR transformation is required to address the issue of lower productivity as there is competition for talented manpower. "The per-employee expenses of public sector banks have gone above that of private sector banks and today, is more than 150% than that of private sector banks. This is despite the fact that pension expenses of PSU banks are not fully reflected in their staff expenses," said K C Chakrabarty, RBI Deputy Governor, while addressing public sector bank chiefs at an HR conference last week. The Deputy Governor came up with numbers which showed that the staff strength of public sector banks had gone down between 1998-99 and 2010-11 due to retirements and voluntary retirement schemes, but that of private sector banks has gone up significantly. Also, PSU banks expanded their employee base to grow operations pan-India in the '80s and a big chunk of their employees are in their 50s and set to retire in the present decade. As against this, private banks have expanded in the last four years and their lower-end staff are in their 20s and middle managers are in mid-30s.........

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Stop home loan prepayment penalty: RBI

......."It has...been decided that banks will not be permitted to charge foreclosure chargesprepayment penalties on home loans on floating interest rate basis, with immediate effect," the Reserve Bank said in a communication to banks. The RBI noted that the Damodaran Committee had observed that foreclosure charges levied by banks on prepayment of home loans were resented by home loan borrowers........

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Has RBI move sunk Madhavpura Mercantile Co-operative Bank revival plan?

....We had already sent proposals to various foreign banks who had in principle agreed to extend support to our plan. As we were given time we were preparing all the documents but suddenly RBI decides to shut the bank," said Mehta. RBI in its order cancelling the licence mentions that 'MMCB was neither aware of the antecedents of the NRI investor nor genuineness of the sources of funds'. The order says that co-operative bank couldn't furnish any evidence suggesting in-principle approval from any foreign bank or Indian government for such a scheme........

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MMCB: Govt bodies to get dues first

The future of the deposits of about 10,000 account-holders of scam-tainted Madhavpura Mercantile Cooperative Bank (MMCB) looks bleak. Institutional stakeholders like Deposit Insurance & Credit Guarantee Corporation and Bank of India may get priority for dues recovery. The RBI yesterday cancelled the banking licence of the bank, on the Rs 1,200-crore scam that had surfaced in March 2001, involving sharebroker Ketan Parekh and his associates. According to senior officials of MMCB, the bank has a total liability of Rs 1,459 crore — Rs 792 crore deposit liabilities and Rs 667 crore other liabilities.

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Bangalore police get tough on slipshod bank security

Police in the R.T. Nagar district of Bangalor have instructed insurance companies not to pay out claims to banks unless the bank presents a certificate from the police. The action is in response to an ongoing problem in which robberies are carried out against banks and armoured cars, and are later found to have been the result of the bank's failure to follow RBI guidelines for security while transporting cash, said an article at DNA India................

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Banks continue to treat customers shabbily!

.....I then got a call from loan department saying that I will have to pay 3% pre-payment charges on the amount that I wished to pre-pay. I protested saying RBI had asked banks to do away with these charges. I was told, "We have no such information and your request for waiver has been forwarded to higher authorities." A couple of days back I got a mail saying that for making the pre-payment I would have to travel to their "loan branch" and I couldn't make the payment at the branch where my account was! .....

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Now, lounge banking for the rich

Lounge or private waiting area has so far been a forte of airports and luxury hotels. But this is changing with most private sector banks now introducing lounges in select branches to service private banking and wealth management clients.  Earlier, banks had set up dedicated branches for high networth customers. With the number of affluent individuals in India on the rise, several private banks are now setting up lounges in many branches across cities.................

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Ensure premature termination of term deposits in case of demise of a joint holder

......Economist SS Tarapore, a distinguished economist and a former deputy governor of the Reserve Bank of India (RBI), in his column Maverick View in the Hindu Business Line – When death visits a bank deposit raises certain vital concerns that call for immediate action on the parts of RBI/DBOD, BCSBI and IBA..................

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Ins and outs of a growth slump

....Why is the manufacturing sector slowing down?

The sector’s contraction during January-March quarter confirms what most analysts had feared: The Reserve Bank of India’s (RBI’s) bitter medicine to raise interest rates to cure inflation has not tamed prices, but cast side effects on growth. Moreover, firms are also holding back planned capacity expansions, leading to slow growth.

Read - Hindustan Times

CII moots 10-point agenda for reviving Indian economy

......The CII expressed concern that low economic growth will affect job creation, inclusive growth and social uplift of people. Addressing a news conference after the council meeting, CII President Adi B. Godrej called for a monetary stimulus by the Reserve Bank of India (RBI) over the next six to nine months to help revive growth. "Fortunately, inflationary expectations are coming down. Global commodity prices particularly of crude oil have started falling. This is the right time to create the monetary stimulus that can help revive the economy," he said......

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Moily calls for strengthening economic, financial institutions

........The main objective of this meeting was to formulate capacity building programmes for senior management functionaries of the banking sector and related regulators. The meeting focused on imperative issues and developments in the field of CSR, IFRS, Corporate Governance and BASEL III

A Memorandum of Understanding (MoU) between the Indian Institute of Corporate Affairs (IICA) and Institute of Chartered Accountants of India (ICAI) was also signed on this occasion. This will mean that the IICA will be used as the hub for the training programmes conducted by the ICAI in their 14-acre state of the art campus in Manesar and will ensure a close working partnership on several fronts between the two institutes.The participants in the meeting included Manoj Kumar, Joint Secretary, Ministry of Corporate Affairs, J N Shah, President, The Institute of Chartered Accountants of India, Dr. Bhaskar Chatterjee, DG and CEO, IICA and CMDs or top management from 29 banks such as the Reserve Bank of India, State Bank of India, Punjab National Bank, Overseas Bank of India, etc.

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Stability matters, not just inflation

...Let me get to the point. It is about time the Reserve Bank of India (RBI) started giving financial stability top priority yet again and building levees against the bore tide of another global financial crisis. While it certainly cannot be complacent about inflation at this stage, it has to get concerns about the health of the financial system ....................

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Gold is not a wasteful investment

....There is only one way for the runaway inflation to come down — by reducing the credit growth in the economy. This can be achieved without compromising growth if the government is able to reduce its penchant to spend taxpayers' money without any improvement on the fiscal side. On the monetary front, this can be achieved by the Central bank pushing the interest rates even higher. There is a third way by which the credit in the system can be reduced; as the forex reserves move out of the country, the corresponding liabilities against them, i.e. the rupee liquidity, has to reduce sans any RBI intervention through OMOs or CRR cuts, and this is exactly what is happening through the gold imports.......

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Views turn dovish, RBI seen cutting rates: Reuters Poll

Most economists polled now expect the Reserve Bank of India (RBI) to cut interest rates at its policy review later this month, driven by dismal economic data, falling oil prices and recent comments by a central bank official.......................

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Rate cuts not the solution in India: JPMorgan

....The bank added that easing monetary policy would not necessarily lead to faster growth, saying the "elevated" macro-economic and regulatory uncertainty, as well as supply constraints, are "far more" responsible for the investment slowdown.  "Policymakers may be well served to focus on these areas rather than undertake substantial monetary easing in light of the events of the last 3 months,"................

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Sharma urges RBI to cut interest rates to boost economy

......“I would urge them (RBI) to look at the present depressed investment climate and the disturbing numbers of fall in manufacturing core sectors and IIP (Index of Industrial Production) numbers............

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When RBI revises rates, and what it means at the bank

......Normally, a rate cut is a signal to banks to lower interest rates. However, several factors at play complicate decision-making by the RBI, especially in trying to balance the twin objectives of keeping inflation anchored and boosting economic growth. Rate hikes increase the cost of capital; reductions have the opposite effect. It therefore becomes very easy for everyone to associate a tight monetary policy stance with growth suffocation...........

Read - Indian Express

RBI hints at rate cuts ahead of policy review

MUMBAI, 4 JUNE: With the economic growth slipping to nine-year low levels, Reserve Bank Deputy Governor Subir Gokarn today said below trend growth and falling crude oil prices offer the central bank a window to ease policy stance. “(For one,) the growth is somewhat lower than expectations and that may have positive, moderating impact on core inflation. Two, oil prices have come off somewhat more than expected. Those are the two factors that suggest more room (for monetary policy),” Mr Gokarn told reporters on the sidelines of an event here...............

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RBI unlikely to act on CRR, repo; may look at SLR: BoI

With the upcoming Reserve Bank policy right around the corner, expectations have started building up for some action on cash reserve ratio front from the central bank. Executive Director of Bank of India , N Seshadri, however feels that the RBI is unlikely to move on either CRR or repo rates.............

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No, Subbarao won’t be able to clean UPA’s garbage dump

........The predicament of the RBI was best explained in a recent column titled Seeking Divine Intervention, written by Rajeev Malik, an economist at CLSA. He said: “There are three institutions that keep India running: the Supreme Court, the Election Commission and the Reserve Bank of India (RBI). To be sure, most of the economic mess in India has the government behind it. And often the RBI is called in as a vacuum cleaner. But even the world’s best vacuum cleaner cannot be successfully used to clean up a garbage dump.”

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Lower Rates? No Way

The conventional wisdom was that monetary easing was in the offing. With inflation expected to ease and a stimulus required to revive flagging growth, the pundits predicted that the Reserve Bank of India (RBI) would cut interest rates. Sure enough, on April 17 the RBI cut the repo and reverse repo rates by 50 basis points (bps). But there’s a fly in the ointment............

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RBI drops hint about rate cut

Mumbai: A fortnight before the mid-quarter policy review, Reserve Bank of India (RBI) Deputy Governor Subir Gokarn hinted at a possible rate cut, prompting a rise in bond and share prices as the markets responded positively to the signal. Adding to optimism was the prospect of a normal monsoon, with the first rains of the season expected to make landfall in Kerala by 6 June. “Growth is somewhat lower than expectations and that may have (a) positive, moderating impact on core inflation. Two, oil prices have come off somewhat more than expected. Those are the two factors that suggest more room (for monetary policy),” PTI reported Gokarn as saying on the sidelines of an event in the city................

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Is RBI using wrong tools to fix economy’s problems?

.....RBI’s moves go in the wrong direction. How do we ensure that the price on a financial market is driven by fundamentals? The answer: We must have a deep and liquid market, and a broad array of sophisticated speculators. RBI’s actions are going in the exact opposite direction. They are trying to make the market illiquid. But it is in an illiquid market that we will get market inefficiencies and weird behaviour of the price. They are increasing the chance that something nutty happens on the rupee. This circular is also a reminder about poor legal process at RBI. Every action by a regulator must articulate a rationale. Financial regulations are motivated by exactly two possibilities – consumer protection or micro-prudential regulation. The government agency that wields the power of financial regulation must show the clear rationale, describing what is the market failure that this regulation is seeking to address. The government agency must show the cost-benefit analysis, explaining why the costs of this action outweigh the benefits. As is typical of financial regulators in India today, RBI’s documents show no rationale.........

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Facts about official figures : Sujan Hajra

......the public in general and financial market participants in particular are more sensitive to the first data release rather than the subsequent revisions. Keeping such psychological factors in mind, there seems to be an attempt by official agencies to scale down the real extent of economic deterioration during periods of major economic slowdown at the time of the first release of major macro data. Official agencies are entrusted with the responsibility to accurately report the underlying economic conditions. Deliberate attempts to conceal the real picture can lead to wrong decisions and turn a bad situation worse. It also discredits official statistical agencies. 

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The author is chief economist at AnandRathi Group and has served as Director of Economic Research and Policy in the Reserve Bank of India

PM to review infrastructure development tomorrow

....Another key concern is funding. Almost all the industries have complained that the cost of domestic funds is too high and external assistance hard to get. Keeping this in mind, the Government is likely to advise the Reserve Bank of India (RBI) to take the necessary steps to reduce the cost of funds. The RBI is slated to review monetary policy on June 18.........

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Indian banks need huge capital infusion in next 4-5 years

......Though RBI didn’t quote an estimate, it did guide that capital requirements for growth as well as transitioning towards Basel-III are very high. RBI is mindful of the pressure that is likely to put on government finances, especially when it is walking a tightrope with respect to its fiscal state. RBI was categorical that capital requirements are unlikely to be relaxed and the government either has to pare down its stake in government-owned banks (considering that it has 58%-plus stake now in many government-owned banks) or think of a holding-company structure to manage the banks’ capital needs.....

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No FII debt threat

A Reserve Bank of India (RBI)-appointed panel has quite rightly called for creating conditions that enable greater participation by foreign institutional investors (FII) in the Government securities or G-Sec market. True, there has been an enormous expansion in the domestic G-Sec market, with annual trade volumes more than doubling to about Rs 31 lakh crore in the last eight years. But much of this is only courtesy a rise in the stock of G-Secs issued.............

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'RRBs should not be ignored'

.... As per the directions of RBI and NABARD and Syndicate Bank, the bank plans to provide banking facilities to habitations having a population of less than 1,000 using appropriate technologies under Ultra small Branch Concept along with 50 additional regular branches in different areas said Reddy........

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NPAs of Urban Coop Banks more than double in Gujarat

....."We expect this to be a step in right direction for the UCBs in Gujarat. Management of NPAs is a major concern for banks and such facility would provide ample room to select investor, thereby yielding better value for the asset. This is a new concept and banks should adopt it," said Jyotindra Mehta, chairman, GUCBF. According to RBI guidelines, a credit account will be classified as NPA if it is out of order for more than 90 days. After the introduction of grading methodology, UCBs have been asked to keep their net NPAs below 10 per cent. Nationally, the gross NPAs of UCBs stood at 10.1 per cent in 2009-10, while it fell in 2010-11 to 8.5 per cent. The loan amounts have increased over the years and the profitability of UCBs too have improved. This resulted in increased provisioning for bad loans over the years.

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First posting in rural area may become mandatory at public sector banks

First posting at rural branches or offices after recruitment may become mandatory at public sector banks (PSBs). Banks might rework the compensation structure to make rural postings attractive. At present, the pay package has a definite tilt in favour of city and metropolitan areas. These emerged from a brainstorming top managers – chairman and managing directors and executive directors – had over the weekend to position PSBs for today’s highly competitive business environment. They also dwelt on expectation profile, talent building, succession planning, compensation packages, and information technology infrastructure. The two-day conclave was organised by Bank of India. With a thrust on financial inclusion and huge funding for villages under various programme, business opportunities will grow manifold in the rural sector. The ground work for it has to be done now, said the CMD of Mumbai-based bank..................

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Mumbai's Zoroastrian Cooperative Bank acquires Surat-based City Coop Bank

Mumbai-based urban cooperative bank, Zoroastrian Co-operative Bank Limited (ZCBL) has acquired Surat-based City Co-operative Bank Limited making the former a multi-state scheduled urban cooperative bank. The ZCBL has been authorised by the statutory authorities to acquire the Surat-based City Co-operative Bank. The acquisition brings six branches of City Cooperative Bank under ZCBL, which currently has 12 branches located in parts of Mumbai and Pune. Currently, ZCBL has about 45,000 to 50,000 accounts with a total business of Rs 1,100 crore as on March 31, 2012 and its net worth is nearing Rs 100 crore. The bank maintains the Capital Adequacy Ratio (CAR) in excess of 14 per cent, as against the requirement of 9 per cent set by the Reserve Bank of India (RBI)...........

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RBI cancels Madhavpura Mercantile's banking licence

.....“RBI has cancelled the licence of MMCB on Monday evening as we were not able to make recovery.” Total recovery pending is over Rs 1,100 crore and NPAs have touched 99.9 per cent of total deposits," .....

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PNB reworks deal with MetLife to fit regulatory bill

....According to the deal, all PNB branches (more than 5,600) will sell MetLife’s insurance products. The bank will earn a fee for selling those products. The new proposal has been submitted to the regulator for approval. Interestingly, the former proposal was approved by the Reserve Bank of India but hit a roadblock with the Insurance Regulatory and Development Authority (Irda) over the valuation......

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Bank Business Correspondents: Miles before the idea works

.....Other major problems encountered are non-operation of accounts; making manual payments using the department's E pay-order to banks, multiple accounts to the same person, not carrying out biometrics based de-duplication, Non establishment of customer complaint centers and non supply of transaction data for monitoring by the department.” All of these and similar issues need the attention of the Reserve Bank of India (RBI) and other regulators, especially when the bid is extremely low cost!..................

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Bank branches go high-tech

....The revolution in mobile technology will do a lot for banks. It enables customers to carry out transactions via cellphones or tablets. The Reserve Bank of India is revising a few norms around mobile banking, and this is expected to give a fillip to the category..............

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Sri Lanka to have India trade show in August

......In South Asia, economic nationalism and trade barriers were partly triggered by global currency weakness of the post World War II failed Bretton Woods unstable peg system, though global trade barriers also rose during the Great Depression. Until the middle of the last century exchange rates between the two countries were fixed one-for-one through a currency board in Sri Lanka. Even after the creation of the Reserve Bank of India in the 1930s the Indian rupee remained strong and stable as the RBI was restrained by a gold standard. But after independence from British rule, the central banks of the two countries raced with each other to weaken their currencies by printing money to finance budget deficits, a battle which was eventually won by Sri Lanka............

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