The finance minister has asked chiefs of public sector banks to play a more proactive role in terms of recruiting their employee rather than being excessively dependent on Institute of Banking Personnel Selection (IBPS) to fill vacancies. P. Chidambaram conveyed this to bank chiefs at a meeting in Delhi while adding each banks should design its recruitment policy to suit its own requirement. At present, IBPS screens and conducts a uniform online examination on the applicants on behalf of public sector banks. IBPS does not interview the candidate for the PSU bank, but has a say in directing candidates, who have cleared examination, to different banks for interview. "Bankers have been satisfied with IBPS and recently some banks were thinking of asking IBPS to interview candidates on their behalf. However, the FMs view on the subjects will results into rethinking on this matter," said a banker present in the meeting............
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Wednesday, December 5, 2012
Keltron core banking software for co-op banks
....The aim is to provide access to cost-effective package with total technology support to the cash-strapped cooperative institutions in the State. The changeover to core banking technology has now become imperative thanks to constraints associated with the legacy systems to deal with tough competition. All new-generation banks and almost all nationalised banks have completed the changeover to the sophisticated technology offered by core banking. But this has come at a price since they have all plumped for proprietary technology owned and services provided by big multinational companies......
PIL against finance companies
The Madras High Court Bench here on Tuesday ordered notice to Union Finance Ministry and Reserve Bank of India seeking their reply to a public interest litigation petition alleging collection of exorbitant rate of interest by private non-banking financial companies such as Muthoot Finance Company and Manappuram Finance Company from those availing gold loans..........
No need to change RBI's inflation comfort level, says Rangarajan
.....In 1998, Rangarajan had called inflation rate at six-seven per cent as “acceptable level”. His idea of threshold was: at what level of inflation do adverse consequences set in? “Then, inflation level was as high as 10-11 per cent, so cutting down inflation to six per cent was also very difficult,” said Rangarajan. He noted that high inflation created problems on the exchange rate side, and it was desirable to contain inflation to four-five per cent — a comfort zone as set by RBI. According to Deepak Mohanty, Executive Director, RBI, if inflation persisted beyond the threshold level of 4-5.5 per cent, it could lower economic growth over the medium term. In his paper titled “Inflation Threshold in India: An Empirical Investigation,” he said prolonged high inflation, even if originating from the supply side, could give rise to increased inflation expectations and cause general prices to rise.......
Govt's bank challenge
The new Basel III norms, which are to be implemented from January 1, 2013, should render the global banking system much less vulnerable. But their implementation starts at a time when Indian banking is under stress. Public sector banks (PSBs), which hold roughly 70 per cent of all assets, are in especially poor shape. There is provision for Rs 15,000 crore of PSB equity infusion in the 2012-13 Budget. But given decelerating growth and a big fiscal deficit, the government will struggle to recapitalise PSBs..........
926 bank branches in Mumbai, Navi Mumbai to receive advance tax
.....“As many as 926 computerised branches of public and private sector banks will receive advance income tax in Mumbai and Navi Mumbai. These arrangements have been made for the convenience of the income tax assesses,” RBI said in a statement on Tuesday.........
Rs 32,000 fake notes at banks in a year
Raipur : Fake currency notes of over Rs32,000 were recovered last year from different branches of banks in the capital city. The counterfeit notes included currency denomination of Rs1,000, Rs500, Rs100 and Rs50, police said. Officials at the Civil Lines Police station said in all fake currency worth Rs31,650 were submitted with the police station that was deposited in Axis Bank Pujari Chamber Pachpedi Naka, SBI main branch, Union Bank, Bank of India, Tatyapara, in past one year. The notes were sent to Reserve Bank of India, Nagpur, for verification. After it was confirmed police registered a case against the unidentified person.....
Concern in LS over ATMs dispensing fake notes
......Raising the matter during Zero Hour, RSP member Prashanta K Majumdar said circulation of fake currency in the country had grown to such an extent that counterfeit notes were conveniently finding way to banks and re-circulated through ATMs. He alleged that banks could be in collusion and those running the ATMs could also be involved. "The source needs to be checked. When ATMs dispense fake notes, those running them should be held responsible," .........
Simplify ECS, NEFT, RTGS, IFSC
Instead of bland ads RBI and all commercial banks ought to have come out with them much earlier. Most banks have neither issued new cheque books nor informed their customers of the impending change. The cheque books issued by my Bankers - Union Bank already bear this markings. Who says PSB are slow? Instead of discarding the old cheque leaves, the bank should encourage customers to make use of them for cash withdrawals, inter-account transfers within the branch like utility payments/yourselves and to customer within the same branch. The RBI should simplify ECS, NEFT, RTGS, IFSC by merging them with the account number so as to enable the customer to direct transfers to the account instead of having to repeat IFSC etc. for ECS and NEFT remittances. It can make life easy both for the customers and the banks. Can the RBI consider this and come out with appropriate Directions?
- Nagesh Kini (Moneylife)
Cheque truncation system: What is it, how will it benefit you?
......Though the RBI has given clear instructions to all banks to issue only multi-city payable at par CTS 2010 standard cheques , many banks are still issuing cheque books with CTS 2010 standard, but without specifying the fact that they are payable at par all branches. RBI should strictly enforce this basic requirement in the interest of making available this facility to all bank customers as a part of the up gradation of the clearing system in the country. At present a number of banks levy charges for use of cheques beyond a certain number of cheque leaves per month. The RBI should stipulate that the new cheque books issued under CTS 2010 in lieu of the old cheque books should not be charged for, if customers have already been charged for the old cheque books, as this change over is at the instance of RBI and the banks........
Fiscal deficit is likely to stay closer to 6%: Economists
....Reserve Bank of India Deputy Governor Subir Gokarn had recently said that India’s fiscal deficit is somewhere around 5.5 per cent of the GDP and will take time to get back to 2008 levels. “The fiscal deficit was at 2.5 per cent in 2008… Due to build-up of subsidies following high oil prices, it grew to around 6 per cent of GDP and is now somewhere in the region of 5.5 per cent, Gokarn said at an Indo-Swiss Chamber of Commerce meeting. The RBI deputy governor said that the global environment has turned hostile and the markets were not recovering as fast as expected. As a result, the “exports are suffering”.......
BS poll: Street divided on RBI action in Dec policy review
A Business Standard poll, conducted among prominent fund managers and economists, shows that the Reserve Bank of India (RBI) is likely to keep interest rates unchanged in its mid-quarter review of monetary policy, scheduled for December 18. However, the street seems divided on whether the central bank would opt for another cut in the cash reserve ratio (CRR).........
The new normal - A.Seshan
.....The Preamble to the RBI Act 1934 mandates “monetary stability” as its objective. Till the middle of the 1980s, it meant stability in prices or the purchasing power of the rupee. It has since been conveniently distorted to mean the stability of the inflation rate. The difference between the two interpretations, its impact on policy-making and the consequence for the common man can easily be guessed. While the judiciary cannot lay down policy, the interpretation of the law is its legitimate function. It is time for public interest litigation to know the Supreme Court’s views on the interpretation of the Preamble.
What could be the new normal for inflation?
Former RBI Governor Y V Reddy has found takers among economists for his idea mooted recently that the central bank should revisit its normal rate for inflation from the current 4-5% since it was set before India was integrated with the global economy. However, Prime Minister's Economic Advisory Council Chairman C Rangarajan, himself a former RBI governor, favours retaining the current comfort zone in terms of inflation.........
Plea to reschedule loan repayment of MSMEs
....In a letter to the Regional Director of RBI, Chennai, President of VDMSEA M.V. Swamynatthan said the industrial production emerging from MSMEs in the State has shown declining trend in the last two years due to power crisis. As a result, the rank of MSME has slipped from the number one position at the national level as result of higher rate of closure......
Moody’s outlook on Indian banks continues to be negative
Moody’s Investors Service’s outlook on Indian banks continues to be negative against a backdrop of slow economic growth, high inflation, high interest rates and a weak local currency. Moody’s, which had lowered its outlook on Indian lenders to negative from stable in November 2011, said on Tuesday that its view for the next 12-18 months remained negative as it expects “these factors to lead to a further deterioration in asset quality, an increase in provisioning costs, and a fall in profitability”.......
RBI, Bank of Japan agree on currency swap arrangement
The Reserve Bank of India (RBI) and the Bank of Japan on Tuesday agreed on a currency swap arrangement against the dollar for up to $15 billion that will be valid for three years...........
Read.......
Read.......
Why FDI debate in Lok Sabha interlinked to one on FEMA amendments
When Parliament debates the amendments to the Foreign Exchange Management Act (FEMA), it will be taking up five critical changes to the law notified by the Reserve Bank of India (RBI) between May and October this year...........
IDBI deputy MD's selection process under lens
....The ministry was pushing Rego's case after the Appointments Board, headed by RBI governor D Subbarao, marked him as the top choice for one of the two deputy MD posts at IDBI Bank, which is lying vacant for several months. But within a few weeks, the personnel department wrote to the financial services wing pointing out certain shortcomings. It said that during 2007-08 and 2008-09, Rego's work had been praised, but the rating had not been changed. The financial services department, however, upgraded the ratings from "very good" to "outstanding" and gave him a score of 70 instead of 66, which had also been given to another candidate who was a contender for the job........
Gold addiction
RBI deputy governor Subir Gokarn has said that the only way to save the widening current account deficit—and hence the rupee—is to get Indians de-addicted from gold. Referring to it, your editorial “Curing Indians of gold” (FE, November 28) has welcomed RBI’s move for the launch of gold-backed instruments. It is one side of the coin. But we cannot ignore the consumer demand also. Today, ornamental gold sale is thriving and its advertisements are choking the media. Though ornamental gold might have helped people in some way by its ever-increasing value, for raising loans etc, the craze for gold ornaments is in a way also a curse for the Indian society. Besides many risks, it is also the source of dowry evil !
- Jacob Sahayam, Thiruvananthapuram (FE)
Gold Loans Help Aam Aadmi
.....Unfortunately, even a 4% duty has sufficed to revive gold smuggling:
customs seizures are up. Former RBI Governor C Rangarajan has said that
raising the duty further will be counterproductive. Another former Governor, Y V Reddy, has asked, "If Mercedes-Benzes and aftershave
lotions can be imported, why not gold?" I would go further. If Tata and
Birla can use billions in foreign exchange to buy companies abroad
though many acquisitions have been duds — why prevent the aam aadmi from
also using a little foreign exchange to invest in a dollar-denominated
asset like gold?........
Should RBI allow banks to buy back gold?
....The Reserve Bank of India should not allow banks to buy back gold. That could possibly result in currency devaluation and inflationary spikes. While the monetisation of gold assets will boost liquidity in the system, capital market instruments will be better than allowing banks to hold gold assets.....
Tuesday, December 4, 2012
Global environment to get less hospitable for India: Gokarn
The stress in our domestic markets may prevail for sometime as the Reserve Bank of India (RBI) raised concerns that the global environment has turned hostile and our main markets are not recovering. “The global market environment has turned hostile and our main markets are not recovering as fast as it was initially thought, so, exports are suffering,” said Subir Gokarn, Deputy Governor, RBI, at an event on Monday......
Is a foreign governor better for RBI?
........On balance, it may be argued that while the British case has a greater probability of succeeding, the same may not hold true for emerging markets, including India. Governors of RBI have generally had some exposure to working in the government, which is helpful as they are practical and know how policies function. Working of the two arms becomes easier when there is understanding. Having a very independent governor can be an issue, especially if there is intransigence in aligning with other government policies. One must remember that the monetary arm of the government, the central bank, cannot work in isolation as its job is to harmonise the financial sector with the requirements of the real sector, where growth takes place. The situation is akin to a corporate where all departments have to work together in harmony, and a person who is home-grown would have an advantage.........
Vital support..........
I am short of words to express my sincere feelings for the support I am getting from my family in the journey of VITALINFO..........
Soft spoken gentleman no more........
With abundant grief, I am sharing with you the news relating to the sad and sudden demise of our friend Shri K.Ravindran [retd. from C O, DAPM, Mumbai] at his native place in Thrissur, Kerala on 1st Dec.2012, due to massive cardiac arrest. He served in Economic Dept. as EA, before promotion as AM [merit] and worked in Chennai office from 1985 & later went back to Mumbai to work in CPC, DA, DAPM -vigilance, etc. A soft spoken gentleman, he was of great help to all who approached him, especially when he was in CO [DA-vig.]. May his departed soul rest in Heavenly Peace!
- As reported by Subramanian Ramachandran
Supervisory college for SBI, ICICI Bank
India’s banking regulator is introducing the supervisory college concept for two of the country’s largest domestic banks that have a worldwide presence. The objective is to keep these lenders abreast of the latest worldwide regulatory rules and evaluate their worthiness for global operations. As part of this process, the Reserve Bank of India (RBI) met State Bank of India (SBI) officials along with regulators from the UK, the US, Europe and a few other countries on Monday, said two persons familiar with the development. They declined to be named as RBI is yet to formally announce this exercise...........
RBI may not cut rates unless inflation falls
RBI has become more mindful of growth risks and it is unlikely to shift from its anti-inflationary stance till inflation peaks out, says a Kotak Economic Research Report.........
Why more banks?
.....We already have umpteen number of banks, both in the government sector and private, and a careful study of the functioning of these banks would reveal inadequacy in expected achievements despite absolute freedom given to them by both the finance ministry and RBI...........
Should FEMA be amended?
....In a parallel development, no sooner had the DIPP Press Notes 4 to 8 been released, a Delhi Lawyer lodged a PIL in the Indian Supreme Court challenging these Press Notes as being ultra vires in overreaching the RBI, as the relevant provisions of ( FEMA) had not been amended. The court was apprised by the attorney general that on the next working day itself, RBI had issued a notification pursuant to DIPP’s action, permitting deletion of the item of multibrand retail from Schedule ‘A’ of FEMA and providing for amendments to provide for the sectoral holding......
State proposes to impose ban on money circulation schemes
....“No individual or company or firm or business association, in any form, shall run a scheme that induces enrolment of new members by offering benefits or commission, by whatever name called, to upline members in the pyramid out of the action or performance like sale or purported sale of goods or services by the downline members,” it says. Nodal police authority will be submitting periodical information to the Reserve Bank of India about the money circulation schemes. A competent authority, which would be declared by the State government, would be responsible for taking all actions, including winding up entities indulging in money circulation scheme.......
Sign of Ageing
The
Supreme Court has rightly taken note of dishonour of cheques due to
mismatch of the drawer’s signature with specimen signature available
with the bank. Signature variation with mala fide intention must be
viewed seriously and the drawer of such cheques should be punished.
However, in most cases, the signature may vary due to ageing of the
account holder. In such cases, the bank must issue a notice to the
customer or, if notice to individual customers is not possible, issue a
paper notification and advertise in the media with standing instructions
to customers to change their signatures in bank records once every 2-3
years. Clearance of cheques issued by account holders who do not comply
with the requirement may be put on hold till they change signature in
bank records.
ET
ET
Gold: Why central banks aren’t taking their own advice
......At a function organised by the National Institute of Public Finance and Policy in Delhi, while C Rangarajan, currently Chairman of the PM’s Economic Advisory Council, was mildly critical of efforts to drive gold imports underground by taxing it heavily, another former Governor, YV Reddy, came out more strongly on the side of gold. Rubbishing arguments that tried to paint gold as an unnecessary indulgence, Reddy asked rhetorically: “If Mercedes Benz and after-shave lotion can be imported, why not gold? It is both an investment and consumption good. Many people seem to mistake that it is only a hedge against inflation. There is a demand for it. It is being imported.” While Reddy went on to add needlessly, “If you can, try to stop it”, Rangarajan underscored the point that any such effort was bound to fail and only invite more smuggling........
Check your cheque
.....While the Reserve Bank of India (RBI) deadline does not mean that after this date cheques will be dishonoured, customers must replace their old cheques, says A P Hota, managing director and CEO, National Payments Corporation of India (NPCI). “Old cheque leaves will not start bouncing after January 1, 2013. This is an indicative deadline for banks not to issue old cheques and to ask customers to replace the old cheques. The RBI has not indicated to banks not to honour old cheques,” he says. Most banks don't charge any fees for replacing old cheques but some might charge a nominal fee.......
Valuing Bank Stocks
.....A bank is not at all like other industries in respect of ownership. In fact, being an owner of a bank is very demanding and legally complex. Firstly, the Reserve Bank of India (RBI) puts a limit on the ownership in a bank. The main promoter cannot have a clear majority. The day-to-day functioning, the deployment of the bank’s assets, etc, are all subjected to guidelines laid down by law.......
Read - Moneylife
Banking on faith
Banking is a business transaction between bankers and consumers. Thus, any negligence on the part of banks would amount to deficiency in service under the Consumer Protection Act 1986. It is unfortunate that many a time people encounter various problems with banks and find it difficult to get it resolved because of the unfriendly approach of these banks...............
PSBs have no need to fear consolidation, nor should they consolidate out of fear
The debate on bank mergers is back on the table. The finance ministry is reportedly nudging public sector banks
(PSBs) to consider mergers to ensure a strong banking sector, driven,
perhaps, by the finance minister's preference for large banks. However, it would be naive to expect mergers to solve the woes of PSBs,
especially the most pressing issue of lack of capital to comply with the
higher capital requirements mandated under Basel III........
You can bank on this career
According to a study presented to the Planning Commission, the banking sector has the potential to account for as much as 7.7 per cent of the Gross Domestic Product of India. With the expansion plans of public sector banks, the retirement of a large number of people in middle-level management and the introduction of new services such as bancassurance, the banking sector in India will require an addition of more than 7.5 lakh skilled people in the next five years. This has given a fillip to the aspirations of graduates across the country who are prioritising their career choices............
Pratip Chaudhuri - SBI's conscience keeper?
.....The sweet lime soda and asparagus soup arrive, giving us an opportunity to ask him about his own fair share of disagreements with the Reserve Bank of India (RBI). But Chaudhuri laughs them off and says his comments about the abolition of cash reserve ratio ( CRR) had nothing to do with SBI. He just wanted to initiate a discussion on a topic that affects all banks. He is glad RBI recognised the problem and has been reducing CRR gradually......
DK Mittal gets additional charge of disinvestment department from government
The government on Monday gave financial services secretary D.K.Mittal additional charge of the disinvestment department, a move that may shore up floundering disinvestment programme.....
Govt to finalise Rs 15,000 cr fund infusion in PSBs this week
.....Asked about holding company structure, Mittal said the Reserve Bank of India has given its feedback and the Finance Ministry is analysing it. "RBI has broadly agreed on this... However, there is a need to look at regulatory platform because it would be such a large conglomerate (holding company) and how to be regulated. What kind of capital adequacy it should have," he said. "Broadly, they (RBI) said we support this view...The government is yet to take a view on (holding company structure for the public sector banks)," he said. The 2012-13 Union Budget had proposed setting up of a financial holding company that would help raise resources to meet capital needs of state-owned banks......
Sahara & the art of eating Dosa
........ But, did you ask what about the Dosa? My grandmother once told me a story about a king who wanted to capture his lost kingdom. He repeatedly attacked the capital and failed each time. When he was tired and was about to give up, he overheard a conversation between a mother and his kid, who was trying to eat the dosa from the middle and getting his fingers burnt. Mother scolded the son: “Don’t be like our stupid king and go for the centre, which is the hottest. Start from the edges, where it is a lot cooler.” The king sprang up, marshalled his forces, attacked the fringes, gained strength and confidence and eventually won back the kingdom. People dealing with Sahara should first learn eating the dosa.
State Bank of India may use POS terminals for utility bill payments
The State Bank of India is evaluating the prospects of utilising the point of sale (POS) terminals installed at merchant establishments to accept remittances towards utility bills........
IIM Kashipur holds finance summit on economic reforms
.....Dr V Ranganathan, mentor – faculty at IIM Kashipur, RBI Chair Professor on infrastructure and member of the Telecom Regulatory Authority of India, said making economic reforms are not enough, reforms in governance and attitude is the need of hour. Increasing the efficiency & response should be given more attention and reforms should not be limited only to papers but rather be implemented properly.
Read.......
Monday, December 3, 2012
Subbarao conducts poll on inflation, wins handsomely
The icing on the cake was the support extended by his predecessor, Yaga Venugopal Reddy
It’s not often that Reserve Bank of India Governor D Subbarao personally conducts a poll on the central bank’s stance on inflation. That’s precisely what he did at a conference in Mumbai today. Participating in a panel discussion, which was being moderated by him, Subbarao suddenly turned to the audience and asked them to raise their hands on whether they wanted RBI to give priority to growth. Only a few hands went up. The next poser was whether they supported the central bank’s anti-inflationary stance. An overwhelming majority of the audience, comprising economists and researchers at the Indira Gandhi Institute of Development Research voted in favour. The icing on the cake was the support extended by his predecessor, Yaga Venugopal Reddy, who also supported his monetary policy stance during the panel discussion...........
Subbarao in talks with former RBI bosses
A
t the recently held Indira Gandhi Institute of Development Research (IGIDR) annual conference, RBI governor D Subbarao held an engaging discussion with former RBI governors namely Bimal Jalan, YV Reddy and C Rangarajan, chairman, PMEAC.
Below is the edited excerpt from the panel discussion.........
Reducing deposit rates is difficult in view of inflation
.....Interest rates will have some softening bias. In the last six to nine months, inflation has not come down as expected. The RBI has given an inflation target of 7% for this financial year. From a bank’ s perspective, base rate is somewhere around 9.75-10.50%. Overheads are roughly around 2-2.50% for every bank. Cost of funds, that is deposit rates, are around 5-8%. So where is the scope for interest rate reduction? Banks will either have to reduce deposit rates or cut overheads. Reduction of overheads is not possible in one day. Banks can reduce lending rates, if they can.........
Dark clouds for India's public-sector banks
.......The RBI has repeatedly advised banks to strengthen their credit monitoring mechanisms. All the PSBs have thus put in place dedicated credit monitoring departments at the corporate as well as at the secondary and tertiary levels to monitor accounts at an early stage of showing stressed signals. Regardless of these efforts, cash recoveries together with upgradation to standard category have been overshadowed by a higher level of slippages. In the case of the top five to ten banks, the sharp rise in NPA levels is on account of a few big-ticket advances and because some restructured accounts have not turned at the pace anticipated...............
A cup of morning tea...........
Special Greetings to Shri Mangesh Tarambale for successfully completing two years of VITALINFO. Let there be many many more years of success. God Bless You.
- A U Shaikh, Ex-AGM, Premises Dept, Mumbai
Carry on Mangesh for years to come. May God bless you with all the energy & vitality required to keep the early morning cup of tea/coffee called "VITALINFO" ready for the EXRBITES Group by the time the members get up.
Regards
B.D.Mahajan, Ex-DGM,
Sir, Yes, very appreceative, yeoman service to the group, many thanks !
Onkar Nath, Ex-Manager, Jammu
Congratulations and greetings on the second anniversary. Every day, we share and enjoy the results of Mangesh's work, which he starts when most of us are sleeping. We are grateful. Many happy returns of the day to VITALINFO!
- M.G.Warrier, Ex-GM
Congratulations and greetings on the second anniversary. Every day, we share and enjoy the results of Mangesh's work, which he starts when most of us are sleeping. We are grateful. Many happy returns of the day to VITALINFO!
- M.G.Warrier, Ex-GM
Dear Shri Mangesh Tarambale, congratulations on successfully completing two years of Vitalinfo. I find that Vitalinfo is a very good source of information and is very useful to a retired banker like me. you are rendering a very good service. May God bless you with health, wealth and prosperity.
Yours truly,
Sarveswara M.V
Cybercrime in RBI chief's name
.....A forged letterhead of RBI showing its address as Shantipath in Chanakyapuri New Delhi is an attachment and the mail ends with "Yours in service D Subbarao RBI Governor". The letter reads "Reserve Bank of India Union Pay Settlement Committee and the ATM International Inc wishes to congratulate you on the successful emergence in our ongoing fund remittance promo to all ATM card users across the globe. The mail also asks the mail recipient to furnish personal details including name address contact number age and occupation and a fee of US $350. The mail claims that only after that an amount of $1.8 million will be transferred to their account. .......
Are you ready for the new cheque regime?
.....The CTS will do away with the need for physical movement of cheques from a bank branch to a clearing house before the amount is credited to the customer’s account. Instead, entrenched with standardised features such as watermarks and a pantograph, cheques will be cleared electronically through an encrypted and highly secure online gateway........
Accepting a new high
...... “I am not saying that we would definitely change the number, but we will certainly revisit our strategy.” Could this be a prelude to revisit the aggressive monetary policy position of the central bank in its quest for low inflation? If that is so, then there is danger that RBI’s stance will lose credibility........
Cash transfer—are banks ready?
........One way of meeting the challenge could be allowing new banks to open shops. The banking regulator is not willing to do so unless the law that governs banking regulation in India is amended and RBI is empowered to supersede the board of a rogue bank. It is insisting on this as a precondition to allowing industrial houses to open banks as it feels that without this power, it will be difficult to supervise smart corporations who can divert money to their own group companies and deny funds to competition. Incidentally, among the first set of banks that was allowed to set shops in 1994 there was at least one corporate house...........
IIP crawls, all eyes on RBI
......However, falling global oil prices and declining core inflation as well as growth offered the RBI room to adjust interest rates, RBI deputy governor Subir Gokarn said last week. While inflation remains iffy, largely due to food products, at 5.3%, GDP growth in the March quarter was the lowest in nine years. As Citigroup economist Rohini Malkani puts it, “While our base case is one more round of rate easing, subdued trends in growth coupled with lower core inflation could result in the RBI easing more than ours as well as market expectations.”......
NGOs told to introspect
.....Dr. Rao, who has been appointed member of the Economic Advisory Board of the Reserve Bank of India (RBI) recently, delivered the keynote address at the inaugural of a two-day national seminar on “Nation Building – Role of NGO s – Agriculture and Rural Development”, organised by the Department of Political Science of M.R. College (Autonomous) ......
Banks gain little of what gold NBFCs lost, local lenders real beneficieries
In the past two quarters after the Reserve Bank of India (RBI) capped the loan-to-value, gold loan non-banking financial companies (NBFCs) have de-grown their book sizes and just the two major players have lost a business of over Rs 9,000 crore. However, banks, which have been active in the gold loan space, do not seem to have benefitted much from this. Instead, the unorganised moneylenders and pawn brokers are the ones who would have gained more from the loss of gold loan NBFCs..........
Bright side to India’s gold fetish
......PAPER GOLD DOESN’T WORK
This has the Reserve Bank of India thinking up yet newer ways to curb gold purchases. Could banks offer some kind of ‘paper gold’ or derivative gold so that the country does not have to actually import gold in order to satisfy its masses? Well, the paper gold idea has been tried, but has not enjoyed great success.........
Read - HBL
Too many curbs on gold import will push up smuggling: PMEAC
........"If we ban gold imports, the smuggling will go up... there are already indications that smuggling of gold has gone up in the last three months,".........
Read......
Adding glitter to paper gold
.....Exchange-traded funds (ETFs) with gold as the underlying assets are mutual funds listed on the stock exchange. Many such ETFs have been launched recently, and are flourishing. Obviously, many more new products are necessary for a more complete integration that alone will make an impact on gold consumption. RBI Deputy Governor Gokarn made out a persuasive case recently for new gold-backed financial products such as modified gold deposits and gold accumulation plans besides gold-linked accounts and pension products. Many of these are popular in important financial centres such as Singapore. The average citizen in those places is better informed about the financial markets — exchange rates, gold prices and so on. That would make it easier for the authorities to popularise new innovative products, linking gold to the banking system......
The golden rule
What can a central bank do to control the demand for gold? Precious little, going by a conversation between two respected former governors of the Reserve Bank of India, C Rangarajan and Y V Reddy, at an event organised by the Indira Gandhi Institute of Development Research. Reddy joked that the prejudice against gold has a gender bias. He looked at Rangarajan and recalled that he once told him that his wife (Rangarajan’s) had this fondness for gold and kept buying it. Rangarajan tried to dissuade her, but in the end he agreed that she was right.
BS
Is gold boon or curse for India?
......"We are concerned about gold, lending against gold by non-bank finance companies (NBFCs) because of financial stability concerns and we have been concerned about gold from an external management perspective because of the pressure it puts on current account or capital account depending on your account for it," he explains. Subbarao was speaking at the Indira Gandhi Institute of Development Research (IGIDR) annual conference. However, he clarifies that RBI has not put any fresh restriction on gold but only barred banks from lending for purchase of gold...........
'Fake currency is a crime that knows no boundaries'
......What the world is concerned about is – among other things they are concerned about – grave crimes with grave ramifications like terrorism, human-trafficking, drug-trafficking, and smuggling. These are grave crimes, which know no borders. Fake currency is a crime, which knows no borders. These crimes are committed and those crimes are punishable under specific laws. But the proceeds of the crime continue to flow into the economy........
President invited for Uttar Pradesh assembly's 125-year celebrations
.....In a letter written to the president, the chief minister said it was the wish of the legislators and the people of the state that Mukherjee be the chief guest at the momentous function, scheduled between January 8 and 10, 2013. Akhilesh Yadav also wrote to Communications Minister Kapil Sibal for release of a special commemorative stamp and to union Finance Minister P. Chidambaram for release of a special coin by the Reserve Bank of India (RBI) for the anniversary......
PSU banks under lens for ‘fixing’ savings account rate
Competition Commission of India, the fair play watchdog, has decided to look into the common, 4% interest rate being paid by all public sector banks on savings bank deposits despite the Reserve Bank of India moving to an unregulated regime in October 2011. "They seem to be acting in tandem and it needs to be investigated. Because of this policy, small depositors are losing out and banks are also losing business," said a CCI official, who did not wish to be identified. The official also said that banks such as Kotak Mahindra and Yes Bank, which had started paying up to 7% on savings bank deposits, had seen a surge in inflows. .........
Few ATMs disabled-friendly
.....To a query to the RBI via an RTI application filed by Singh seeking the number of ATMs made accessible to disabled, the reply sent on October 31, 2012, states "this department has no infor -mation". To another query on action taken by the department of banking operations and development following the RBI's letter to the department of banking supervision in January 2012 to ensure compliance by banks, the reply stated deputy chief commissions, office of the chief commissioner for persons with disabilities and ministry of social justice, government of India, have been advised to look into the matter.......
Cheque signature mismatch may lead to criminal proceedings: SC
...." Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138 of Negotiable Instrument Act, so also dishonour on the ground that the ' signatures do not match' or that the ' image is not found', which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act," the bench said......
Chidambaram asks banks to give more education loans
Around 24 lakh students took loans for education with banks having an outstanding amount of Rs 52,000 crore, Union Finance Minister P Chidambaram said today, as he asked banks to lend more money for this purpose.......
Thousands of depositors trapped in scam-hit coop bank
.....“The Board of Directors jointly and severally failed to exercise control and supervision over the sub-committees and overall control and manage the affairs of bank in the interests of shareholders, depositors and the public by violating various guidelines issued by RBI in various circulars,” said the re-audit report, prepared by Kirtane and Pandit. On a writ petition filed by the depositors, the Bombay High Court stayed sale of the bank’s immovable properties. It also issued orders not to cancel the bank’s licence without its prior permission, but the RBI on February 10, 2012 issued notice revoking the licence.......
Saturday, December 1, 2012
FM’s pushing too hard
Microfinance in Banking Industry: Challenges faced by the banks
....The Reserve Bank of India appointed a sub-committee of its board to look into issues concerning the microfinance sector and its implications on policies of the banks. Then the RBI Deputy Governor said “Already banks have been allowed direct lending at a small charge in remote areas through business correspondence and technology have been introduced to reach out the unbanked areas” With a view to improve poor people, a pilot project for providing micro credit by linking Self-Help Groups (SHGs) with banks was launched by National Banks for Agriculture and Rural Development (NABARD) in 1991-92 with a view to facilitating smoother and meaningful banking with the poor. RBI had then advised commercial banks to actively participate in this linkage programme. The scheme has since been extended to Reginal Rural Banks (RRBs) and co-operative banks.......
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