The 'Talwar amendment'

Monday will mark the 37th anniversary of the imposition of “internal” Emergency, on June 25, 1975, with President Fakhruddin Ali Ahmed signing the proclamation late at night, even before it had Cabinet approval. An important vignette about those days has come out, in a booklet written by N Vaghul to honour the memory of R K Talwar, the trail-blazing chairman of State Bank of India (SBI) from 1969 until his abrupt departure in 1976, at the height of the Emergency. The vignette that deserves a wider audience relates to Talwar’s ouster....................

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Micro-finance in a remittance economy

.....Financial inclusion has become an emerging focus for policymakers around the world, and it is nowhere more relevant than in India. Analysts estimate that up to half the Indian households do not have a bank account. In fact, the Census 2011 found that more than 40 per cent of the population lives two km or more from the nearest bank branch or agent. For India to facilitate more balanced economic development, universal access to basic financial services is essential. There are no easy solutions. Strict regulation of banking and other financial services is vital to address money laundering, terrorist financing and fraud......

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Now, transfer your bank account between branches while retaining account number

....."The customer should be allowed to transfer his account from one branch to another branch without restrictions. In order to comply with KYC requirements of correct address of the person, fresh address proof may be obtained from him/her upon such transfer by the transferee branch," the RBI said in its notification. Some banks were insisting on opening of fresh accounts by customers when approached for transfer from one branch of the bank to another. "Such insistence on opening of fresh account or making the customer undergo full KYC process again causes inconvenience to them, resulting in poor customer service. It is not reasonable in view of the fact that most bank branches are now on CBS (core banking solution) and KYC records of a particular customer can be accessed by any branch of the bank," the RBI notification said.....

Read - Business Today

Words of comfort

....“The government (is taking) action in terms of supportive measures for ensuring higher inflows of foreign exchange ... the government is conscious of the (situation) and is taking appropriate action,” he said, adding the exchange rate was market determined. Attributing the current decline in the value of the rupee to the volatile international situation, Gujral said, the RBI was intervening to check sudden short-term movements in the domestic currency. The Reserve Bank has taken a slew of measures to encourage exporters to bring back foreign exchange and give freedom to banks to pay a higher interest rate on NRI deposits........

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‘Transactions still taking place at a sustainable pace’

.........However, reduced CRR and Repo/Reverse rate cuts do not automatically translate into reduced interest rates for mortgages, which would have pushed up the sales volumes in the residential sector.

Banks have to take into account other factors before deciding on lowering their interest rates for retail customers,............

Read - The Hindu

Government likely to rescue district banks

After bailing out the Maharashta State Cooperative bank, the state government might have to dig into its treasury again to ensure survival of district cooperative banks (DCBs) in the red. Six DCBs are under RBI's scrutiny for negative net worth and below par capital to weighted risk assets (CRAR) ratio..........

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Pension relief

The report, “Pension scheme of RRBs to be on a par with other banks” (Business Line, June 22) brings out the interest evinced by the Finance Minister in solving the pension issue in respect of RRB staff, whose pension amounts were meagre. Mr Pranab Mukherjee deserves appreciation for the fact that he took out time amidst his tight schedule in clearing the pending files dealing with the problems of retirees.

A similar long pending issue is one of DA losses of those who retired from banks before 2002, on account of non-100 per cent DA-neutralisation. The affected retirees fall in the age group of 70+. An average retiree in this category incurs losses to the tune of Rs 2,000-4,500 which is a large sum in testing times of cost hikes of food items and medicines. If the Finance Minister could solve this matter before he lays down office, it would be a boon to these senior citizens.

- C P Velayudhan Nair Thiruvananthapuram (HBL)

Bank NPAs

The RBI Deputy Governor Mr K.C. Chakrabarty, feels interest rates are “not too high” to affect “corporate” growth. Seemingly, he was more concerned about rising bank bad debts. Even new private sector banks had relatively high gross NPAs at 2.18 per cent in March 2012. Nationalised banks have yet higher NPAs as percentage of gross advances. Lowering policy interest rates is only a tool for inflation targeting. Essentially, good credit appraisal helps reduce NPAs. NPAs rise when the big loans to large industries remain in arrears. The banking system suffers from its loans to the aviation, infrastructure, telecom, metals and commodity sectors.

- K.U. Mada Mumbai (HBL)

RBI's D Subbarao on difference between 2012 and 1991 crisis

.....The debate occurred when India saw foreign exchange reserves fall below a level enough to cover for only 8 months of imports. The crisis situation in 1991 was triggered by the balance of payment pressure where India’s foreign exchange reserves fell to a level where they could cover for only two months of imports. Is 2012 going to be a repeat of 1991?.......

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Subbarao Copying Bernanke Excites Demand for Bonds

.....Subbarao is acting two days after Bernanke extended buying of longer-dated debt to lower the cost of business investment and home buying. Investors in Asia’s third-biggest economy are seeking the safest assets as the BSE India Sensitive Index of shares is headed for a quarterly drop after gross domestic product increased the least in nine years in the three months through March. “The RBI is killing a lot of birds with one stone by buying bonds,” .......

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Hopeful of a 25bps rate cut by RBI in July: JP Morgan

.....Looking at the fairly tight liquidity situation, Gupta feels the RBI will prefer OMOs over CRR for infusing liquidity. Although, the RBI has disappointed with an unchanged repo rate, Gupta anticipates a rate cut of at least 25 basis points in the July policy.........

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Kerala assembly censures banks for denying education loans

....Moving a motion, treasury bench legislator Thomas Unniyadan called for the attention of the house that banks in the state, despite Reserve Bank of India (RBI) guidelines and three different rulings by the Kerala High Court, were saying no to students who approach them for educational loans......

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Buy 50% of forex needs from a PSU bank: RBI to oil cos

.....“Importers are clearly rushing to cover and exporters are simply holding back. There is no supply in the market. If you analyse the quantum of exports and imports month-wise, there is no spike. In fact, imports have only gone down sharply. So, the rupee movement and the behaviour of the exporters or importers should be seen in that context. Today’s decision by RBI on oil imports should be seen as a sentiment .....

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Rupee fall offsets low crude effect on inflation: RBI Dy Guv

....Reserve Bank of India ( RBI) Deputy Governor K C Chakrabarty said it is unlikely that the continuing fall of crude will drive down inflation in the country as the decline is not substantial in rupee terms. When asked if falling crude will help ease inflation, Chakrabarty answered in the negative saying, " The fall in crude prices has been partly offset by depreciation of rupee. In rupee terms, oil prices have not gone down much"..........

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Slowdown leads to greater CDR, rise in banks’ stressed assets

.....As reported earlier in Firstpost, Reserve Bank of India Deputy Governors KC Chakrabarty and Anand Sinha had met the CEOs of a dozen major banks in February to discuss their asset quality. The banks had told RBI at the time that while asset quality continued to be a concern for banks, some had been trying to focus on smaller accounts to improve quality of assets. RBI Governor Duvvuri Subbarao had said even in April that RBI had told banks to improve the risk management practices in order to detect bad loans before they went bad. The Monetary Policy unveiled by RBI in April proposed that banks put in place a robust mechanism for early detection of signs of distress and measures, including prompt restructuring in case of viable accounts wherever required, with a view to preserving the economic value of such accounts. .........

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RBI understands need for weaker rupee - HSBC

......"RBI understands the need for a weaker INR" to help address the wide current account deficit and because onshore liquidity remains tight, HSBC argues..............

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ATM trick: Bank cheated of of Rs 1 cr

.....The withdrawals were not normal. Explaining the modus operandi, Pradeep Kumar, SSP, Cyber Crime Investigation, Mohali, said the gang members used to demand a withdrawal of Rs 10,000 from ATM of Federal Bank. But they used to take only Rs 9,900 and leave the last Rs 100 note inside the ATM. As a matter of policy, the ATM machine would retrieve the note, which would flash a message of “failed transaction” in the software system of the private bank whose ATM card was used for withdrawal. Interestingly, cashing in on this message (failed transaction), the miscreants used to call up the helpdesk of private banks demanding refund of Rs 10,000. Apprehending legal action and poor customer response, the private banks used to immediately debit the said amounts in the accounts of the accused........

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Department of Posts to introduce ATMs

........This is part of the department’s plan to gradually convert the post offices across the country to full fledged banks, including in rural areas, with modern banking facilities. According to him, it is also part of an initiative from the department to reinvent itself with the changing requirements of the time.

“The department is in the advanced stages of getting a banking licence from the Reserve Bank of India (RBI),”.......

Read - The Hindu

Axis Bank to raise funds via pvt placement basis

....The board of directors on Friday approved borrowing/raising funds by issuing debt instruments on private placements basis within the limits prescribed by the RBI and other regulatory authorities from eligible investors, in one or more tranches.......

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United Bank to set up office in Myanmar

Kolkata, June 22: United Bank of India has received approval from Central Bank of Myanmar for setting up of a representative office in Yangon. It is the first Indian bank to have presence in the country, said a press statement issued by the bank. The bank has already received RBI’s approval for opening its representative office in Myanmar, the bank’s Executive Director, Mr Deepak Narang, had said recently. “…Though we will not be able to carry out financial transactions through our representative office, we will get leads which can then be routed into our branches,” he said.

HBL

Monetary policy evokes unease - K Kanagasabapathy

.....While one of the Deputy Governors who is in charge of monetary policy indicated that there was room for reducing policy rates, another Deputy Governor, though not in charge of monetary policy (but a member of the Monetary Policy Advisory Committee), indicated that interest rate is not a significant factor in explaining slowdown in investment and economic activity. Even as the market was miffed by such contrary signals, the Finance Minister, through his interactions with the media, almost confirmed that the RBI will take actions (to ease policy further), and even directed public sector banks to follow up with immediate cuts in lending rates. What he forgot was that after his official nomination for the President’s post, his voice as Finance Minister had lost its weight. After the announcement of the policy, he was apologetic that the Governor need not consult him for mid-quarter policy reviews, further conveying the impression that if it had been a quarterly or annual review, the RBI would have been obliged to follow the Government’s direction! Two things emerge out of this. It is well known that, legally speaking, the RBI is not that autonomous with respect to monetary or banking policy.....

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Reforms at RBI: A route to effective monetary policy

The Public Debt Management Agency of India Bill seeks to take away the debt management function from the Reserve Bank of India (RBI) and assign it to an independent agency. This will eliminate one of the many conflicting interests of the central bank and is in keeping with the best practice scenario offered by the most recent studies on optimizing the role of the central bank..............

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Basu wants PM to take charge of Finance Ministry

Chief economic advisor Kaushik Basu wants Prime Minister Manmohan Singh to take charge of the finance ministry after Pranab Mukherjee moves to Rashtrapati Bhawan saying that he is an extremely capable person. "The Prime Minister is a trained economist... He was there in the 1991 reforms ... (although) it is a political decision... who come and goes... but one thing is for sure that he is extremely capable," Basu said in an interview...............

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Exporters Express Worry Over Low Credit Supply

.....The credit flow should be ensured, then only the exports would be positive...Last month they were negative. The bankers have to have a look at it," he said, adding that apart from driving up credit, others issues such as relaxation in rebooking or cancellation of forward contracts and curbs on the exporter earners' foreign currency account (EEFCs) were also discussed at the meeting. With the rupee touching an all time low of Rs 56.60 to the dollar today, the issue was discussed during the meeting, and exporters asked for measures to bring some stability in the currency by checking the volatility, Ahmed said. RBI Deputy Governor H R Khan chaired the meeting, and several top officials from banks including Bank of Baroda, Bank of India, Standard Chartered Bank and dedicated agencies such as Exim Bank and ECGC (Export Credit Guarantee Corporation) were present.

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Dharna against co-op banks functioning

.....Addressing the dharna, Ramesh Srivastava alleged that money of common men deposited in co-operative banks was mismanaged due to the careless attitude of the concerned department. Corruption, despite regular inspections, is the main reason behind the problem. He alleged that the concerned department and the RBI were only completing the formality of inspection. He also mentioned various other factors that were marring the functioning of these banks.........

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Outlook downgrade of FIs unwarranted: Mittal

.....Pointing to concerns pertaining to the lack of capital with public sector banks (PSBs), Mr. Mittal noted that the issue of crisis of capital in Indian banks was highly over-rated as banks in India park about 28.75 per cent of their deposits with the government and the Reserve Bank of India — 24 per cent in the form of SLR (statutory liquidity ratio) and 4.75 per cent as CRR (cash reserve ratio). This, he said, was “a practice which is followed nowhere else in the world but in India and, as such, there can be no crisis of capital.”

Read - The Hindu

By doing nothing, Subbarao speaks his mind

Dr. Duvvuri Subbarao is a mild-mannered man. He speaks softly, listens carefully and acts in measured steps. Until now, that is. The RBI governor’s decision earlier this week to keep interest rates on hold in the face of growing clamour for a rate cut tells us that underneath the soft exterior hides a tough central banker...............

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Cut can hurt

........One possible explanation for what might have given RBI the determination to keep interest rates unchanged could be the fear of an even sharper volatility of the rupee if it did. For a central bank, which explicitly targets the stability of the exchange rate and faces a shrill clamour for selling dollars from its reserves, cutting rates could have created an equally unpleasant situation in the coming days. The same industrialists who are asking for rates cuts today would have demanded that the RBI prevent a rupee depreciation, without appreciating the link between the two..............

Read - Indian Express

Bank business correspondent models need to have controls to safeguard clients’ interests

.....The RBI must therefore revisit KYC norms immediately, adapt it in the light of what happened in 2010 in AP microfinance and thereafter attempt to ensure the implementation of the revised KYC norms in a rigorous manner by all concerned institutions including banks and BCs and their sub-agents.......

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Now, send money home more frequently

.....Those using the money transfer service largely belong to the working class. They try and send their savings when the rupee is weak, say experts. This mode is advantageous for those who do not have a bank account or whose work sites are far away from cities or towns, such as an offshore oil rig. Or, the beneficiaries might be living in remote villages or towns, which might not have access to net banking or a bank branch might not be close by. “RBI's move would also help those who receive salary more frequently; for instance, salaries are paid every week in the US. NRIs there would be able to send money more frequently,” ......

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Blame Game

The present state of the stock market is pitiable. The market was slowly showing some improvement in the past 3-4 days in the expectation that the RBI will ease the market condition to a higher level by cutting commercial bank interest rates. But contrary to our expectation, the RBI has not done anything except blame the government that it has not taken any measure to improve the economy. The government, on the other hand, blames the business community and the latter blames commercial banks. But commercial banks say they cannot do any favour to the business community as the RBI is controlling the interest rate. Blaming each other will not solve any of our problems. So long as this condition prevails, we cannot find a remedy to revive the economy.

- V VENKITASUBRAMANIAN  (ET)

Right on the money

Subir Roy is a bit unfair to the Reserve Bank of India (RBI) in his analysis of the economy (“RBI lets everybody down,” June 20). Monetary policy has to take care of money supply in the economy. It cannot be blamed if public confidence in the economy is low. Money does not pour in just because cost of borrowing is low. It pours in if the rate of profit is higher than the cost of borrowing. .............

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Beware of fictitious offers promising money: RBI

....In the appeal circulated through the Uttarakhand government's directorate of information and public relations, the RBI has asked the people not to get trapped in such offers and said the best way to avoid such offers is to ignore such e-mails or telephone calls received from unknown persons. ....

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Gold Financiers’ Growth Stalls as Rules Tighten: Corporate India

..........The Reserve Bank set up a panel headed by K.U.B. Rao to analyze the implication of gold imports for financial stability, price trends and the role of non-bank finance companies in influencing rates. The panel is expected to submit its report by the end of July, the central bank said. “All the uncertainty and speculations on whether there will be more regulations will be over in the next two months after the RBI comes out with its report on gold,” ...........

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Gold loan companies insist on efficient KYC practices after RBI missive

Strict 'Know Your Customer' (KYC) norms, prescribed by RBI, are compelling gold loan companies to put in place better customer identification practices. Now, the companies are asking customers to produce Aadhar cards for identification purpose. Leading player Muthoot Finance has already implemented it and other major companies are expected to follow suit..............

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RBI awarded for its precautionary approach to the regulation of derivatives market

Shri G Padmanabhan, Executive Director and Smt. Shyamala Gopinath, Former Deputy Governor, Reserve Bank of India receiving the Dufrenoy Award for Responsible Innovation 2012. The award was conferred on the Reserve Bank of India for Responsible Financial Innovation on June 18, 2012 in Paris

.....The conference was attended by professionals from financial services industry, regulatory bodies, policy institutions and media. Smt. Shyamala Gopinath, former Deputy Governor, Reserve Bank of India was invited to speak at this conference. She spoke on the RBI’s approach to innovation, specifically to regulating OTC derivatives. The Reserve Bank was nominated by the Observatory on the basis of the speech delivered by Smt. Gopinath.........

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....The award has been given for RBI's precautionary approach to the regulation of derivatives market, the central bank said in a statement. RBI has been recognised and appreciated "for the very reason it was criticised not so long ago," RBI executive director G Padmanabhan said in his acceptance speech.....

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Subbarao for FM?

At the Annual General Meeting of Indian Merchants Chamber (IMC), the new president of the association, Niranjan Hiranandani, said a post was going to fall vacant in the finance ministry and it could well be filled by the current Reserve Bank of India Governor D Subbarao. He said people at IMC would be pleased to see a knowledgeable person like him in North Block. The governor had just made an elaborate presentation in defence of the central bank's decision to not to succumb to industry's demand for rate cuts in the mid-quarter policy. Although he took all policy-related questions head on, he chose not to comment on this one and managed to keep smiling as he listened.

BS

‘Tough surroundings made me learn survival tactics’

Although Narendra Jadhav failed only once in his life, that too in a unit test in standard VII, he faced some tough time during his school days. In his life story narrated to Arun Shevate, which has been documented in Napas Mulanchi Gosht, a book which tells inspiring stories,.................

 

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Government knows better banking than RBI

.....Both RBI and NABARD would need to spend more sleepless nights to make the bankers and the SHGs to sleep well when they implement the CC limit facility to SHGs. Otherwise, the CC limit facility will turn out to be a Cash and Carry facility with more NPAs at bank level and more suicides at SHG level. Earlier, the regulators step in better for the banks and the SHGs...........

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Mid-quarter reviews of RBI to stay

The Reserve Bank of India (RBI) will continue with its mid-quarter review of the annual monetary policy for at least a year, it was decided after reviewing the performance of the review. The reviews were introduced by RBI Governor D Subbarao in September 2010, to take the surprise element out of the off-cycle actions. The effectiveness of this exercise was to be reviewed after two years. “Mid-quarter reviews are intended to communicate our assessment of economic conditions more frequently,” Subbarao had said in July 2010. Mid quarter reviews had attracted criticism from central bank watchers on the ground that it creates more pressure on the central bank for meeting expectations.

BS

Finalise roadmap for services to villages by Aug, RBI to banks

......."The finalised roadmap with details of allocated villages to various banks should be submitted to the respective Regional Office of Reserve Bank of India as per format given latest by August 31, 2012," the RBI said in a notification to banks.............

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FinMin appoints 7 new executive directors for PSU banks

The long wait came to an end for the short-staffed public sector banks. The ministry of finance, department of financial services, on Monday appointed seven general managers (GMs) in one-go for the post of executive directors (EDs) to fill up the vacancies across banks. There are total 17 such posts lying vacant with the banks.........

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Committee calls for providing connectivity to Indian airports

.....In a report released this week, the committee headed by former Reserve Bank of India deputy governor Rakesh Mohan said that road development agencies of the Centre and states as well as the railways should work together to provide connectivity to airports.......

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Giving the Mahatma company

........ RTI activist Manoranjan Roy tried to find out how and when the Mahatma became the mainstay of our currency but the RBI said that there was no document recording the change. The question to be asked is: Do we really need a face on our currency? So far, all the coins have the emblem of the Ashoka Pillar, which stands for peace and non-violence. This is featured in currency notes as well. Currently, the only personality gracing our currency notes is Mahatma Gandhi. These are the symbols that an average Indian is able to identify with. The very idea of having a new face on our currency throws it open to misuse by the ruling party to glorify their leader(s) according to political requirements...........

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'Deciding on inflation vs growth RBI's prerogative'

Amid the Reserve Bank of India (RBI) maintaining status quo on policy rates and the cash reserve ratio, Economic Affairs Secretary R Gopalan has said it is for RBI to decide between inflation and growth.
“It is a question of making a fine judgement, and RBI is the authority to make that judgement. It has taken a call,” Gopalan said at a press conference..............

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Basu hears the tiger roar in 7 Race Course Road

.......Though Basu termed the Reserve Bank's decision to keep interest rates unchanged as 'maturity' despite the Finance Minister's hint to focus on growth, he seemed disappointed. A rate cut would have been a signal, he said, that India preferred growth and could live with inflation.......

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Hopelessly hopeful

......What were the arguments cited in favour of an interest rate? It had been contended that high interest rates had not been able to control inflationary expectations. Instead, it was argued, the high rates had effectively throttled investments. But RBI governor D. Subbarao countered this perception. “Our assessment of the current growth-inflation dynamic is that there are several factors responsible for the slowdown in activity, particularly in investment, with the role of interest rates being relatively small. Consequently, further reduction in the policy interest rate at this juncture, rather than supporting growth, could exacerbate inflationary pressures,” the RBI stated, adding, “Notwithstanding the moderation in core inflation, the persistence of overall inflation both at the wholesale and retail levels, in the face of significant growth slowdown, points to serious supply bottlenecks and sticky inflation expectations… It is relevant to assess as to what extent high interest rates are affecting economic growth. Estimates suggest that real effective bank lending interest rates, though positive, remain comparatively lower than the levels seen during the high growth phase of 2003-08. This suggests that factors other than interest rates are contributing more significantly to the growth slowdown.” To many, the RBI cocked a snook at the finance minister........

Read - The Asian Age

RBI has shocked itself: Surjit Bhalla

Expert Surjit Bhalla says the RBI has shocked itself by not changing policy rate in its recent policy review, saying that it becomes difficult to analyze the central bank if it keeps shifting the goal post. Madan Sabnavis, chief economist, CARE Ratings, says the scenario has been changing rapidly and the RBI has only been following the trend

Replace CAMELS with RBS for risk assessment: Chakrabarty panel

......While the present risk evaluation of commercial banks through the 'CAMELS' system is a point in time assessment, the proposed risk-based supervision system (RBS), if implemented, will take into account both present and future risks, the Committee headed by RBI Deputy Governor KC Chakrabarty said...................

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RBI: over to you, Delhi… seriously

Fiddle away, Delhi, while the Indian economy burns. Just don’t expect the Reserve Bank of India to play fireman anymore................... 

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Low inflation vital to secure growth, says RBI

.....Some analysts had commented on the discouraging effect of RBI’s decision on already slowing growth. “That’s one way of interpreting it. But we don’t know the counter factual. We don’t know what would have happened to inflation, to growth if RBI didn’t tighten the policy,” Subbarao said.......

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SBI to reduce lending rates to exporters soon

Within days of the Reserve Bank massively increasing the export refinancing limits of banks, State Bank of India today said it will soon bring down interest rates on loans to exporters. "We will surely cut lending rates to exporters following the RBI enhancing export credit refinance limit to 50 percent in the policy review. However, the quantum of the reduction will be decided by our Alco (asset liability committee) meeting, which will be held next Saturday," SBI Chairman Pratip Chaudhuri told PTI over phone from Guwahati............

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RBI allows non-bank entities with Rs 100 crore networth to own White Label ATMs

.....The non-bank entities will be allowed to own and operate White Label ATMs and they will provide the banking services to bank customers in India, based on debit cards, credit cards or prepaid cards issued by banks. RBI has however confined their role only to acquisition of transactions of bank customers. "Such non-bank entities should have a minimum net worth of Rs 100 crore as per the latest financial year's audited balance sheet, which is to be maintained at all times," RBI said on Wednesday.......

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The myth about low PSU bank pay

.....So should RBI now withdraw its guidelines on private sector bankers’ salaries? No. Should we now be ready to throw the idea of poorly paid PSU bankers out of the window? Well, possibly out of the study table but not the window. Averages are known to hide a lot. This time they have behaved like swimsuits, revealed a lot as well. What’s happening here? The PSU bank workforce is significantly more aged than the private banks. The average age of employees of state-owned banks is around 50, whereas the same for their private counterparts is around 30. However well the private banks may be paying their employees, it is hard to beat the public sector average since the employees are 20 years senior...........

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Don't poach loans from rivals, FinMin tells PSU banks

..........Sources from banking circle say the issue of takeover financing was discussed between the finance ministry and bank chiefs in their last meeting in Delhi where DK Mittal, secretary, financial services, asked banks not to indulge in takeover of loan. However, KC Chakrabarty, deputy governor, Reserve Bank of India, felt such a practice cannot be completely discouraged. "At times a customer may be unhappy with the prevailing lender. He should, therefore, have the right to choose a new lender," said Chakrabarty.......... 

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Kerala to float NRK bonds for development projects

....Citing the latest study on the Kerala diaspora by the Centre for Development Studies (CDS), Joseph told the assembly that the total money that arrived in the last fiscal in Kerala banks, mostly from Middle-East employed Keralites, was a staggering Rs.50,000 crore. He was replying to a motion moved by treasury bench legislator P.Ubaidullah who sought the immediate attention of the state government to channelise the NRK deposits in Kerala banks for productive purposes. "We also have decided to open an exclusive bank for NRKs and we have now got in touch with the Reserve Bank of India (RBI) for the necessary clearance," added Joseph.......

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RBI’s directive on unoperative/unclaimed deposits violated

.........If you thought that the recent Reserve Bank of India’s (RBI) directive to banks would make it easier for customers to retrieve long lost deposits of a deceased kin, think again. Apparently, one such bank has violated RBI’s directive, in spirit and word, one week before RBI’s 30 June 2012 deadline for compliance. This was brought to notice by a Moneylife reader. Karnataka Bank, instead of putting names and addresses of unclaimed deposit holders, has instead put the onus on the users to search for names.........

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Union Bank of India starts process to hire 1636 clerks

....One of the leading PSU bank, Union Bank of India has started recruitment process for 1636 vacancies for the post of Single Window Operator 'A'/Clerk..........

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Banks told to release crop loans to farmers on time

.....Expressing dissatisfaction that just 18 per cent of the target had been met in disbursing loans for allied activities in 2011-12, Mr. Jayaram appealed to officials of the Reserve Bank of India (RBI) and the lead banks to initiate action against those banks that did not disburse enough loans for allied activities in the district......

Read - The Hindu

Ensure opening of Aadhaar-enabled accounts: RBI asks RRBs

 The Reserve Bank today directed Regional Rural Banks (RRBs) to ensure opening of Aadhaar- enabled banks accounts for beneficiaries of the Mahatma Gandhi National Rural Employment Guarantee Scheme and other social security schemes, for facilitating electronic transfers.............

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SBI chairman visits Shillong

SHILLONG, June 19: Is the change of small coins by traders in the city causing artificial shortages of coins? According to State Bank of India (SBI) officials, the coin vending machine at the SBI, Shillong Main Brach, is mostly used by traders. “We mostly find traders visiting this vending machine,” an SBI official told a group of reporters on Tuesday. According to SBI officials for the year 2011-2012, Rs 50 lakh worth of coins were distributed to customers and for the current year, Rs 4-5 lakh has already been distributed. Meanwhile, SBI officials also stated that they would ask the Reserve Bank of India (RBI) officials to increase supply of coins to the State. Meanwhile, the SBI officials also informed that there are two mobile banks in Meghalaya who visit remote areas of the State for providing banking transaction at the doorstep of people. Earlier, SBI chairman Pradip Chaudhari, as part of the Corporate Social Responsibility (CSR) of the bank, donated an ambulance to the Christian Hospital.

The Sentinel

Deadbeat corporate borrowers? Not in India

Lenders are willing to amend loan terms instead of acknowledging NPAs

.......While restructuring is allowed by the RBI, the murkier "evergreening" of loans is frowned upon. Several bankers said it is widespread, but declined to give details. The practice is said to be particularly common in commercial real estate, where tougher restructuring guidelines require banks to classify a loan as non-performing and set aside more funds as provisions - effectively removing any official middle ground between a performing loan and a default..........

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KC Chakrabarty: Regulator with a sense of humour

It is not often that a banker who nurtures a dream of becoming a deputy governor of India's central bank is also able to fulfil it. KC Chakrabarty is one such banker. That he had set his sights high at the start of his career was evident when he asked colleagues at Bank of Baroda just what they found so unbelievable about his RBI dream. That was the level of confidence Chakrabarty displayed in his early days at the bank and which is still on display despite a temporary knock over a year ago when he strayed from the line at Mint Street.............

 

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Banks may not have to file FIRs on detecting fake currency

.......The report has recommended that the central bank frame a policy for mandatorily providing note sorting machines (NSMs) at all bank branches with average cash receipt of Rs 25 lakh and above so that the detection of forged notes can be made at the point of entry at each counter. Further, the RBI should incentivise banks to use of NSMs and other fake note detecting devices.

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Banks' arms may come under RBI purview

The joint ventures (JVs) and subsidiaries of banks might come under the Reserve Bank of India’s purview if a high-level committee’s recommendations are implemented. At present, the central bank can only monitor banks’ subsidiaries and JVs, but it does not have supervisory power. The committee, chaired by RBI Deputy Governor K C Chakrabarty, said: “Along with focus on supervision of banks on a solo basis, RBI should also focus on consolidated supervision of banking groups.”...........

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Top 3 banks reward CEOs with handsome pay hike

...........In January, 2012, the Reserve Bank of India [RBI] had released guidelines on compensation of whole-time directors, CEOs, risk takers and control function employees of foreign and private sector banks. As per those guidelines, private banks need to frame a compensation policy and implement it from 2012-13 financial year. Also, the banks' capital adequacy and cost to income ratios must support the remuneration packages of its senior management employees, the central bank said.

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Doc with ‘60 looks’ has bank in a tizzy

Looks clearly are everything, as this 38-year-old doctor from South Mumbai found out recently. A plastic surgery along with a drastic weight loss programme proved costly for Dr Srihari Patil (name changed) when a private bank froze his account after collecting 60 CCTV shots of ‘different-looking men’ withdrawing money from the same account...............

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Aug deadline for rural banking plan

The Reserve Bank on tuesday asked banks to finalise the road map for providing banking services to villages with less than 2,000 population by August. “The finalised road map with details of allocated villages to various banks should be submitted to the respective Regional Office of Reserve Bank of India as per format given latest by August 31, 2012,” the RBI said in a notification to banks. This will help the government to transfer the benefits directly into the account of the beneficiary. It would also save the government administrative cost presently incurred in cash disbursements of social benefits.

BS

Inclusion goes urban

......While everyone talks about financial inclusion in rural and semi-urban areas through rapid expansion of bank branches, urban inclusion is rarely looked upon. However, now with the urgent need to grow their business and gaining a considerable customer base, banks are finally shifting their focus to this segment through various means.......

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India is on a good wicket, never mind the Fitch bitch

......The Reserve Bank is one of the few central banks in the world that has maneuverability on interest rates. The repo rate is at 8 percent levels while rates of US, UK and ECB are at 0.5-1 percent levels. The RBI is, however, fighting an economy that has been through high inflation and a government that is still not committed to fiscal reforms and is not likely to cut rates to extremes to improve growth. However, there is comfort that there is room for rates to be cut, leading to positive expectations down the line......

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Hats off to RBI

Contrary to predictions made by interested quarters, the Reserve Bank of India has sent a strong message that it is a tough monetary regulator. It has not changed the policy rates for valid reasons. The corporate world, advocating reduction in interest rates, cannot expect to drive the central bank as per its desire.  The RBI indirectly blames the Government — by saying its decision to cut rates in April was based on the premise that the process of fiscal consolidation would get under way, along with other supply-side initiatives. It also conveys that the government has not implemented oil sector decontrol and reforms, with “the consequent subsidy burden on the Government crowding out public investment at a time when reviving investment, both public and private is a critical imperative”. We have to see whether the Government gets the message and addresses these issues. The RBI is clear that it will not relent. Its priority is management of liquidity and it will use Open Market Operations to this end. Hats off to the RBI.

- S. Kalyanasundaram Chennai (HBL)

Monetary policy: ‘A prudently taken conscious decision’

....“The RBI’s monetary policy action of keeping the policy rates and CRR unchanged is a very prudently taken conscious decision if one sees it against the persisting or rather increasing retail inflation,’’......

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RBI chief says govt must cut spending

........The Indian government must reduce spending and not just raise taxes for fiscal consolidation, the Reserve Bank of India's Governor Duvvuri Subbarao said on Tuesday, a day after the central bank kept interest rates steady............

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RBI Governor Duvvuri Subbarao may yet turn out to be right

The leadership said, For heaven's sake, don't do anything, we can't take the risk! Never since the Independence did India have this high a rate of growth! There was almost a fear that the RBI was risking the growth with its counter-cyclical policy. Naturally, from a political angle, the time horizon is short, and financial markets also have somewhat similar, if not shorter, horizons." Governor Duvvuri Subbarao did not say these words on Monday after he shocked the markets by not lowering the interest rates, or easing the cash reserve requirements. That was former Reserve Bank of India Governor Yaga Venugopal Reddy about the powers-that-be at the Nand and Jeet Khemka Distinguished Lecture at the University of Pennsylvania in 2009.............

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Need to revive investments to spur growth: Subbarao

.....“You do not know the counter to that had the RBI not adjusted policy rates.” “If the (current) interest rates have stifled growth, how are the real interest rates in the pre-crisis levels higher than the rates today and the real average weighted lending rates lower than that in the pre-crisis levels?”.........

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RBI can't ignore impact on current a/c deficit: Reddy

Former RBI Governor YV Reddy says that monetary policy cannot ignore impact on aggregate demand and current account deficit. He said that the policy has to take care of inflation as well..............

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India's potential growth rate has come down: RBI

 Reserve Bank of India ( RBI) Governor D. Subbarao said India's potential of maintaining a high economic growth has come down. RBI's comment came in the backdrop of a sharp drop in the economic growth, especially in industrial production.....

Details

Can't tame inflation without sacrificing some growth: RBI

RBI Governor D Subbarao is sticking to his guns, a day after the bold status quo credit policy. The RBI Governor said that it was inevitable that some growth would have to be sacrificed to rein in inflation. Interestingly, the Governor has said there's no room for a blame game.............

Watch the video...........

RBI governor calls government's bluff on Re, inflation

A day after India Inc expressed disappointment at the central bank's decision to hold interest rates, RBI governor D Subbarao on Tuesday called for an end to the blame game between the three critical players of the economy-business, the central bank and the government-and underlined the need for them to work together. To deflect the constant demands made on the RBI to address growth issues by cutting rates, the governor instead lobbed the ball back to the government, urging the Centre to reduce fiscal deficit by cutting expenses and bring about reforms in domestic taxation and the foreign investment regime..................

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Cut unproductive expenditure: RBI to government

........Will the government be able to deliver on the 5.1 percent of GDP...and even if they deliver, what will be the quality of adjustment? how much by taxing, how much by expenditure compression? The government must also reduce expenditure, not raise taxes alone in order to make fiscal consolidation sustainable," ........

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RBI lets everybody down

...........The dharma of the central bank in a developing economy is to worry about both growth and inflation; in a developed economy about both jobs and inflation. Much of the continuing misery in the world today stems from ignoring half the mandate.

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RBI does not allow itself to be browbeaten by short-term interests

RBI governor D Subbarao has stood firm in the face of incessant demands not only from vested interests in industry but, more importantly, from his de-facto bosses in the finance ministry, and restored faith in an essential prerequisite of a vibrant democracy: independent institutions.............

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Goalposts shifted, RBI scores self-goals

......Subbarao’s tenure isn’t much better than Rangarajan’s, and perhaps is much worse. Inflation in 2011 was the same as in 2009, and unlike the prior decade, domestic inflation is about 5 percentage points per year higher than comparator inflation. This persistently and abnormally high inflation has little to do with monetary policy and everything to do with the populist agricultural policies of the kulak-oriented UPA, led by socialist supremo Sonia Gandhi and the National Advisory Council. So one cannot, and should not, blame the RBI for the high food inflation induced by high procurement prices given to the rich kulaks of India (in the UPA’s prose, the aam farmers). But one should blame the RBI for being naively quixotic in its pursuit of reducing administered price inflation by killing the economy.........

Read - Indian Express

RBI warns the government...but disappoints markets

This refers to the edit “Inadequate response” (June 19). It may not be fair to criticise the Reserve Bank of India (RBI) for keeping policy rates steady. It would have been very difficult for it to affect reductions purely on the basis of core inflation figures when the headline inflation, which affects the common man more, is refusing to come down from double-digit numbers. Besides, growth-stimulating investment in the context of high inflation needs well-coordinated fiscal and monetary measures. While reducing policy rates in the last quarter, RBI had cautioned the government about this and expected it to take steps for fiscal consolidation and removal of supply side constraints. But the government affected a half-hearted, inadequate increase in petrol prices, leaving diesel price untouched. How long can RBI carry the burden of managing the balance between growth and inflation with the government showing no political courage to bring down heavy subsidies, liberate restrictions on foreign investments and remove curbs on access to resources like land and minerals. By taking this bold step, RBI has given a sound warning to the new finance minister and the government to discharge their part of responsibility.

- Y G Chouksey Pune

...but disappoints markets

The government’s failure to address supply side constraints is the reason for the high level of inflation. In the absence of a credible policy initiative from the government, the Reserve Bank of India has clearly indicated that monetary policy tools alone will not be sufficient to control inflation and prop up growth. Of course, it is up to the government to initiate policy prescriptions, but RBI could still have cut policy rates by at least 25 basis points to boost market sentiments. Indeed the industry bodies are disappointed.

- Srinivasan Umashankar Nagpur (BS)

Reforms deficit

This refers to the editorial ‘Missing a ‘rate’ trick (Business Line, June 19) During its mid-quarter review, the RBI has done a good job in enhancing the limit of export credit refinance (ECR) from 15 per cent to 50 per cent, which will increase the credit flow to the export sector.  It has managed to keep the deposit rate steady which will also help the people, especially senior citizens, to get higher interest against their hard earned money deposited in banks. The RBI asked the central government to control the fiscal deficit, which the government has failed to do. The government has also failed to carry forward economic reforms such as FDI in multi brand retail, decontrol of urea and petro-product prices, pension reforms and the Insurance Bill.

- Jayant Mukherjee Kolkata (HBL)

Can’t outsource to RBI

.....But that said, what are we to make of the policy? Rate cuts cannot, as RBI argues, raise GDP growth if the problems are structural or if there is, to use the common catchall phrase, ‘policy paralysis’. But rate hikes make viable projects unviable by lowering project IRRs and, by the same logic, rate cuts make them viable........

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Inflation jinx

The Reserve Bank of India's decision to hold interest rates steady in its midterm policy review has disappointed both industry and markets. A cut in rates, they argue, would boost investments and growth. But the RBI is right in taking a contrarian view............... 

 

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Status quo on policy rates, a right move - T. V. Gopalakrishnan

Kudos to the RBI for a bold mid-quarter monetary policy review, defying the expectations of the market and without yielding to the pressures of the Finance Minister to reduce the rates. The Reserve Bank has taken a series of measures in the past few years to contain inflation and provide adequate credit for growth. But, unfortunately, neither growth nor price stability could be achieved to the desired extent..............

 

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RBI decision on rates after taking everything in account: Cong

...... "RBI is an independent regulatory authority. If they have taken a certain decision, they must have taken everything into account...If there is a crisis in the Eurozone, it does have its implications for the Indian economy,"...........

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Banks to open SME branches in industrial areas of Uttarakhand

There is good news for the MSME sector in Uttarakhand. The State Bank of India (SBI), India’s largest bank, will open an MSME branch at the Selaqui industrial area, near here. Besides, a financial institution hub is also on the cards, with the Uttarakhand government stating that it can be set up at the Sahastradhara Information Technology Park, where the Reserve Bank of India, Small Industries Development Bank of India (Sidbi), National Bank for Agriculture and Rural Development (Nabard) and other public sector banks (PSBs) can open their regional offices..........

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Despite HC orders, Nagpur District Central Cooperative Bank scam case stuck for 10 yrs

.........Currently Reserve Bank of India (RBI) has issued orders restricting the NDCCB from accepting fresh deposits. A district central cooperative bank (DCCB) is a key source of agriculture finance, the ban on deposits has severely hampered its operations. Incidentally, once again a panel backed by Kedar is in power at NDCCB. The scam has taken its toll the Wardha and Osmanabad district central cooperative banks too. Funds of these banks are alleged to have been remitted to Home Trade through Kedar.

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Why get emotional on forex rate?

MUMBAI: RBI Governor D Subbarao, who addressed businessmen at the Indian Merchant's Chamber on Tuesday, stressed on the need for joint efforts to ensure growth. "I don't think this blame game can go on. All of us...you (businessmen), the RBI and the government have to look for solutions and not give in to a sense of despondency," ................

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RBI extends 2 pc interest subsidy scheme for exporters

The Reserve Bank today extended the 2 per cent interest subsidy scheme by another year on rupee export credit to the labour-oriented and small scale sectors to cushion them from slowdown in markets like the US and Europe..................

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35% population of Haryana not covered under financial inclusion

CHANDIGARH: Around 35 % population of Haryana is still to be covered under the financial inclusion plan, said K Sayeed Ali, chief general manager of NABARD's state regional office on Tuesday.........

................Ali referred to Dr. Rangarajan Committee report which had stressed for the need for complete Financial Inclusion by bringing the excluded population who are presently deprived of financial services into the banking net. ....................

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District Bank personnel to disburse crop loans for lead bank

MUMBAI: Nationalised Banks can utilise the services of District Co-operative Banks to disburse crop loans, said Harshvardhan Patil, Maharashtra's co-operatives minister.  The decision follows notices issued by the Reserve Bank of India to six district Credit Co-operative Banks to stop accepting any more deposits as their performance was not upto the mark. ...........

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Cornered non-banking finance companies delve into soul-searching

....."RBI is taking a very critical look at gold loan NBFCs in the last few years by bringing in regulations like the loan-to-value cap of 60% on gold loans. It has also set up the K U B Rao Committee to study various issues in the gold loan business and we expect the committee to file its report in two or three months. When the report comes out, we will incorporate those recommendations into the SRO," ......

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RBI advice to assessees

Thiruvananthapuram, June 19: The regional office of the Reserve Bank of India has advised assessees to remit income tax sufficiently in advance of the due date. The appeal is being issued in their own interests so that last-minute rush and related inconvenience may be avoided, an official spokesman said here. It has been observed that the rush for remitting income-tax dues into the Reserve Bank has been far too heavy towards the end of June. It becomes difficult for the bank to cope with the pressure of receipts although additional counters to the maximum extent possible are provided for the purpose.

HL

RBI looking into record high gold imports

The sharp rise in gold imports has drawn the central bank’s attention and it is studying the factors contributing to this. Reserve Bank of India (RBI) Governor D Subbarao on Tuesday said they were looking into the reasons. “We are trying to solve why gold imports were at a record high,” he said..............

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Odisha's Urban Co-op Bank set to merge with Cosmos Bank

The Odisha government has given its nod for merger of the loss-making Urban Co-operative Bank with Pune-based Cosmos Co-operative Bank, official sources said. Commenting on this state's Chief Secretary B K Patnaik said, "The merger of the two banks will be completed in three to four months and will help to protect deposits of about 13,000 investors.”...........

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Lights, camera, action...... but no (rate) cut...............

"Policy" in Media - Click on the following links to read more.................

India Inc disappointed with RBI for not cutting rates


India interest rate unchanged on inflation fears


RBI keeps rates unchanged, disappoints industry & stock market


Economists React: RBI Stands Pat on Rates


RBI stuns, keeps rates steady as growth crumbles


Overall inflation a worry: RBI


RBI policy review brings no smiles for borrowers, key rates unchanged


Bankers miffed, but economists hail RBI stance


Rates lower than in 2003-08, other forces impacting growth: RBI


Chambers disappointed with RBI’s monetary stance


RBI was right in not cutting interest rates: Prashastha Seth, IIFL Wealth


It is too early to feel comfortable about inflation: Gaurav Kapur


RBI to government: We’ve done enough, it’s your turn now


RBI's decision disappoints borrowers

Monetary policy: ‘Growth takes backseat, inflation comes to forefront’

Subbarao’s signal: Done enough, time for govt to act

Salaam, Subbu! The Good Doctor gives us a bitter medicine

Perspective: Has RBI left growth to fend for itself?

Why Subbarao told the finmin to take a walk

RBI is so very wrong

Six reasons why Subbarao kept rates unchanged

RBI won’t play to gallery, keeps key rates unchanged

Anand Sharma wants RBI to rethink on rate issue

RBI not touching interest rates shows 'disconnect' with govt: BJP

Gutsy RBI Holds Rates

RBI's communication flip-flop baffles market

Ambit’s Holland Says Lower Rates Alone Won’t Boost India Growth

RBI Hunkers Down

Decoding RBI's monetary policy: the what and why of it

Rationale for status quo

Inadequate response

A do-nothing RBI policy

Missing a ‘rate’ trick

A difficult policy choice