There will be no harm if the Reserve Bank of India cuts policy rates to support growth, said Diwakar Gupta, Managing Director and CFO, State Bank of India. Since raising interest rates 13 consecutive times did not work in controlling inflation, lowering rates may not harm either, he added............
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.
Monday, December 10, 2012
Shift+Deleted..............
Shri.P.Easwara Menon, retired Manager from Thiruvananthapuram Office, passed away in Alleppey on December 7, 2012. He was 65 years old and succumbed to a massive heart attack. He was an expert in Computers and Software and his knowledge was fully utilised by DSIM and DIT, Mumbai .
- As reported by P.P.Ramachandran (via e-mail)
Religious soul departed........
Shri.C.B.Meherchandani died of heart attack on November 11,2012 in Mumbai. He was 71 years old and retired as Grade B Officer from DEBC in 2001. He was a deeply religious person and a keen Television mechanic--which was his hobby.
- As reported by P.P.Ramachandran (via e-mail)
Medical treatment proved no guarantee.......
Shri.Padmanabha N Karkera died on December 3, 2012. He suffered from respiratory ailments. He died in Mangalore, where he was taking medical treatment in Manipal Hospital. He retired from as Deputy General Manager from Deposit Insurance and Credit Guarantee Corporation, Navi Mumbai. He had opted for voluntary retirement. He was 66 years old.
- As reported by P.P.Ramachandran (via e-mail)
Rangarajan cautions against sharp changes in tax policies
Uncertainties in tax policy should be minimised, at least in the short-term, and forward-looking changes be made only in the medium-term, said C Rangarajan, chairman of the Prime Minister's Economic Advisory Council. His comments came while the government is reviewing amendments to the Income Tax Act and the General Anti-Avoidance Rule ( GAAR). “The investor should be confident enough that no sharp changes are likely to be there at least during the implementation of the project,” Rangarajan said at a seminar on tax reforms and tax administration..........
VTA Demands Gradual Implementation Of CTS-2010 Cheques
...........Accordingly VTA has send memorandum to Union Finance Minister P. Chidambaram and RBI Governor Duvvuri Subbarao specifically appealing that such move should be made applicable gradually to avoid needless legal litigations and erroneously breach of trust within the parties. Implementing such a move over night shall cause unwanted multiple cheque bounce cases as many account holders still possess old cheque books and weak awareness shall enhancement problems after 1.1.2013, hence VTA demanded withdrawal of such RBI circular dated 3.9.2012.
'Realign production structure to bring in more protein’
......“There has been a change in the structure of food shortages in the country. We seem to have got into a situation where food prices are being driven by a particular segment, primarily protein prices including milk, egg, fish and meat,” he said. Higher food inflation also tends to tilt the growth-inflation balance to more on the inflation front. “So managing inflation tends to become a challenge,” he said. Lower food inflation will improve the growth-inflation balance,.........
Fake money menace on the rise in Vizag
......Almost all banks take adequate precautions before refilling ATMs in order to prevent such complaints besides curbing circulation of counterfeits, said State Bank of India deputy general manager (business and operations), Manoj Khattar. He said that so far as SBI's Visakhapatnam zone was concerned, no complaints had been reported so far on receipt of fake notes from the bank's branches. As per RBI guidelines, Forged Note Vigilance Cells (FNVC) have also been set up at the head office of various banks to closely monitor fake note cases, a senior bank official said..........
Reaching ATMs an uphill task for disabled
........All India Bank Employees' Association of India (AIBEA) general secretary C H Venkatachalam said banks are yet to follow the RBI instructions. "It's unfortunate that most ATMs don't have facilities for the physically challenged. Many disabled people have their salary accounts in these banks and have to use ATMs," he said........
No bank account for people with disabilities
....It is also learnt that pursuant to a communication from the National Trust Act (for Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities) unit, the RBI did send out a circular advising banks to rely upon guardianship certificates issued under the Mental Health Act or the above Act for opening/operating bank accounts. Besides, it also makes recommendations on improving customer service in banks to various categories of disabled people........
KYC norms have made investments in financial instruments all but impossible
Janmejaya Sinha, chairman for Asia-Pacific at the Boston Consulting Group, described in graphic detail his travails trying to establish his identity after he’d shifted to a new address in the same city. Well, that was before the recent tightening of know-yourcustomer (KYC) norms and Sinha at least had the consolation that he’d moved to a new and, presumably, better accommodation . There is no such consolation for millions of others who will have to endure similar, if not worse, travails; thanks to flawed KYC norms..........
Read - ET
Read - ET
RBI may hike NPA provision ratio if needed: Chakrabarty
.......Speaking about NPAs of banks, Chakrabarty attributed a majority of them to poor administration and risk management practices of lenders and went to the extent of terming it as 'non-performing administration.' "I call NPA as non-performing administration. We have to make the administration functioning," Chakrabarty, who oversees banking supervision at RBI, said. The RBI Deputy Governor said the "change in the administration" has to come in a slew of areas which would be internal as well as external. Lending rates would have been far lower if banks had got their NPAs down, Chakrabarty said. "It is a burden on the people who are paying the money. People forget that if NPAs would have been 1%, banks' lending rates would have been 4% lower with the same inflation, and same repo rate. "That's why we should tackle NPAs -- not only for the survival of the system, but also for the survival of the customer," Chakrabarty said............
RBI should reconsider provisions of master circular on export of goods and services
.........RBI issues a fresh Master Circular every year incorporating the changes made during the previous year. However, it does not help to retain year after year the provisions that are illogical or too complexly worded. RBI must also review the necessity to retain outstanding or export proceeds due as the basis for determining eligibility. A better basis would be export performance or outstanding beyond the permissible period.
Social costs of the global economic crisis
.....ndia's export growth which had lost momentum in the second half of 2011- 12, mainly owing to slow- down in external demand has shown further deterioration in 2012- 13. Exports in April- September 2012- 13 declined by 6.8% as compared to the level during the corresponding period of 2011- 12. There was considerable decline in exports to the Euro area. A more demonstrable case of external sector affecting India's growth is the risks from the impending US " Fiscal Cliff". As the RBI puts it. " A major downside risk to global growth is now looming from the US fiscal cliff. The US Congressional Budget office forecasts that the US fiscal deficit will decline by 3.3 percentage points to 4% of GDP in 2013. Such as sharp fiscal consolidation may have a deleterious impact on global growth. There could be an adverse impact of the US fiscal cliff on India's growth. If global growth slumps there would be spilled over impact on the current account as well……." It now seems difficult for India to attain even a 5% GDP growth in 2012- 13. Thus the full impact of the global financial and economic crisis on the Indian economy is now manifesting itself........
More action in Parliament
.....While the original Banking Laws (Amendment) Bill had specific provisions to take banking mergers out of the competition watchdog’s ambit, there has been talk also of the Government wanting to drop that exemption clause. The RBI, in turn, has fiercely opposed such a move. Whether it is the RBI or CCI that will have the ultimate say on bank mergers and acquisitions would be clear from the final version of the Bill that gets tabled on Monday.......
India is suffering from inertial inflation A.Seshan
“It’s a systemic crisis that India is going through.” — Bimal Jalan
As the markets eagerly await the Reserve Bank of India (RBI’s) mid-quarter review of its policy, the controversy over price stability and growth needs to be understood in the proper context. Economists are fond of using terms from physics to make their discipline look scientific. The concepts of “equilibrium”, “velocity”, “acceleration”, among others, were thus conceived long ago. A more recent entry is “inertia”. It would mean that the economic system gets stuck at particular levels of economic variables, owing to the absence of forces to disturb the state of equilibrium. “Inertial inflation” is one such concept. It refers to a situation when the rate of price increase attains a stable equilibrium, where it remains until a shock is administered to move it to a new position........
Mixed signals from RBI on rate cut, inflation
Reserve Bank of India (RBI) is keeping the nation guessing on prospects of an interest rate cut in the mid-quarter review of monetary policy scheduled for December 18 by giving mixed signals on inflation, which determines the central bank's stance. Deputy Governor Subir Gokarn on Saturday said inflation continued to be primary concern for the central bank. But only two days earlier, Governor D Subbarao said he expected inflation to come down from January and will consider the growth-inflation trajectory in framing monetary policy - which suggested a benign expectation....
India’s battle with inflation: Just a phase I was going through
.....Critics argue that the RBI has already been cutting by stealth, using liquidity-management tools and verbal guidance to make sure market interest rates have dropped even as the policy rate has stayed unchanged since March. Ditching the inflation target would, by this account, just be an admission that it never had the stomach to enforce it in the first place. The RBI would put things differently. Although its empirical work has previously suggested that 5.5% is the maximum healthy level of inflation, lately something has changed. Despite a sharp economic slowdown prices have kept on rising. A big chunk of demand seems to be insensitive to what the RBI does. The government borrows regardless. Rural consumers, who are doing well and are often outside the formal financial system, are shifting to richer diets, pushing up food prices. That leaves the RBI with a lousy option,......
Rising wages offsetting inflation, says Gokarn
.......“Why is high inflation not generating same kind of unrest or outrage that it used to historically?” Gokarn said, adding that “an important answer to this could be that rural wages have actually been rising by about 20 per cent annually for the last five years.”......
Read - IE
Inflation is key worry for RBI, says Gokarn
MUMBAI, DEC 8:
The Reserve Bank of India’s monetary policy signal is to control inflation as it will support growth in the long term, said Subir Gokarn, Deputy Governor. “It is very important for people — consumers, investors and stakeholders — to have some confidence in the system’s commitment to lower inflation,” Gokarn said at the Bombay Management Association’s 15th Finance Convention............
Consolidation needed in banking sector: Central Bank CMD
..... Indian banks were nowhere in the global list of big banks and therefore it was preferrable that mergers should take place to achieve size and compete in the global market. “Our Finance Minister has expressed the wish that consolidation should take place in the banking sector, but it is not happening. When two banks come together, there should be compatibility in organisational cultures and there should be technological convergence — objectives which are difficult to achieve, but by no means impossible,”........
States should amend cooperative laws: Pranab
...“By this amendment the right to form cooperative society has now become a fundamental right. The act has paved the way for development of a stronger cooperative movement. To take this initiative further to the grassroot level respective state governments also need to create enabling environment by amending state laws etc as and when it is necessary,” Mukherjee said after giving away the National Cooperative Development Corporation (NCDC) Awards for Cooperative Excellence 2012 at Rashtrapati Bhavan on Saturday...........
Basel bonds flop in India
........“The transition to Basel III is not coming at a good time for Indian banks, as they are facing asset-quality issues and the overall business outlook looks grim,” said another banker. There are several hurdles to these new bonds in India, not least being the lack of understanding on the buy side. The loss-absorption features required for sub bonds to count towards Basel III capital may put the paper beyond the reach of investors like pension funds and insurance companies, if their funds are not allowed to invest in equities. To qualify as additional Tier-I or Tier-II capital, bonds will need to write down to zero if the Reserve Bank of India (RBI) deems a bank to be non-viable, forcing sub bondholders to wear losses before any public funds are used in a bail-out........
At 3 crore rural accounts, banks set global record
The banking sector has opened over three crore accounts in rural India as part of their financial inclusion drive. Compared to the number of rural households in the country of over 22 crore this is about 13 per cent. The government data upto March 31, 2012 also shows the extent to which the banking sector has to stretch to make the Aadhaar programme a success.........
When will HDFC merge with its bank? Well, er....
.....In short, even the father tacitly agrees that the only thing holding back a merger is the regulatory requirement. The Reserve Bank of India (RBI) mandates that banks have to keep aside a certain percentage of their liabilities (a.k.a. deposits) as cash reserve ratio (CRR, 4.25 percent now) and another 23 percent as SLR (statutory liquidity ratio) – something that housing finance companies don’t have to bottle up needlessly.........
How Saraswat Bank beat the odds?
As farmers suffer, NABARD offers soft loans to corporates
.....NABARD’s response to a RTI query reveals that it released Rs 13.3 crore BCG for a ‘repositioning’ report that it admits has never been submitted. Sources in NABARD allege that an additional payment of Rs. 9 crore has also been released to “rollout the recommendations”. NABARD Chairman Prakash Bakshi, under whose leadership these transactions were sanctioned, did not respond to detailed questions that were emailed to him on December 3, including on the fresh release of Rs 9 crore to BCG or what hit NABARD’s balance sheet was likely to take after the repayment to RBI of the unauthorised fund transfers to corporates.......
Rs. 37 crore handed out for publicity
Prakash Bakshi was made the Chairman of NABARD despite serious vigilance cases pending against him during his tenure as the Executive Director, NABARD. One case pertained to the release of Rs. 100 crore on 31.12.2008 to Andhra Pradesh Cooperative Bank (APCOB) as a clean advance, which is not allowed as per NABARD’s policy and therefore illegal...........
SBI will continue to grow ahead of the industry
.....I would not comment on others. But for us savings bank growth is phenomenal. We have not been dented by increase in savings bank rate by some of the smaller private sector banks. We have a huge distribution network. Even if these banks offered higher savings bank rate, how many people they have reached out to? Secondly, if return is the issue we offer a 6.5 per cent return on a seven-day deposit. So we think that saving bank is not an instrument for return maximisation. Savings bank is an instrument of convenience for payments. We have done a number of things outside the deposit rates. We have made multi-city cheques available to all customers at no extra cost........
Saturday, December 8, 2012
Walk the extra mile to become employable, students told
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Success Mantra |
.......“There is no substitute for hard work,” Chief General Manager in-charge, Reserve Bank of India, G. Jagan Mohan Rao, said and called upon the students to have confidence in their capabilities. He explained the working of the Reserve Bank and the money markets. “There is nothing wrong in changing jobs for money, and there is no real loyalty to the employer. But, what is required is loyalty to the job on hand. Do it and properly,” he emphasised.......
All well that ends cell
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| Discussion: U Subbarao (second from l) talking to people outside her bungalow |
Read - Mid-Day
City boys win RBI’s all-India quiz
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| RBI Governor D Subbarao presenting the prize to Surya Girish and Siddharth M Joy of Chinmaya Vidyalaya HSS, Vazhuthacaud, the winners of RBIQ |
Surya Girish and Siddharth M Joy of Chinmaya Vidyalaya HSS, Vazhuthacaud, Thiruvananthapuram, are the winners of the RBIQ, an all-India inter-school quiz organised by the Reserve Bank of India. Tanmay Kakati and Shreyas Sarkar of Maharishi Vidyamandir Public School of Guwahati are the runners-up.The finals of RBIQ were held in National Library, Kolkata............
RBI to take steps to address liquidity deficit: Gokarn
........"Whatever causes it, whether due to political developments or global developments, rupee depreciation contributes to inflation – particularly through its impact on unavoidable imports like oil. So, that concerns remain and it is not something we refuse to acknowledge. We hope that things stabilise both on domestic and global fronts where rupee finds some stability,".......
Signature variation
The Supreme Court has decided that a person may face criminal proceedings — jail and fine of hefty amount — if a cheque issued by him/her gets dishonoured on the ground that the signature does not match the specimen signature available with the bank. With due respect to the apex court, this decision must be reconsidered as the signatures of many senior citizens vary over a very short period of time because of health reasons. Whenever the signature is not as per the specimen, the account holder can be called by the branch manager to provide a new specimen signature. Customers can give their phone number on the reverse of the cheque and if the signature does not tally, he can be asked over phone to confirm if he issued that cheque. The cheque can be held back and cleared a day or two later, after getting this confirmation. Although the apex court’s intention to prevent fraud is laudable, this step will cause more trouble to senior citizens.
- M. Kumar, New Delhi (HBL)
CID trains cops to fight financial frauds
.....Private hotels in Ranchi host meetings of various NBFCs almost every day. Most of them are non-descript and are not registered with RBI. The government also does not have any data on the existence of such NBFCs. General Manager, department of non-banking supervision and foreign exchange, Aditya Kishwar, said the NBFCs were mushrooming in every lane and alley. "I had come across more than a dozen such companies during a visit to Godda district recently," he added. Citing case studies, an RBI official said an NBFC was offering LED television worth Rs 20,000 to its customers after they deposited Rs 500 to them for two years........
Niche lending
.....One must remember that NBFCs like HDFC, Sundaram Finance, Shriram Transport and Manappuram have thrived all these years largely because of their acumen in spotting and delivering niche credit services to borrowers ignored or neglected by commercial banks. They built a profitable business from extending home loans to the middle class, truck financing, SME loans and gold loans on the basis of knowing their borrowers thoroughly and assessing their risk profile more efficiently than banks could. But with these segments today over-run by competition from banks, the NBFCs should carve out new lucrative niches to lend – not difficult in a chronically under-banked market like India. The RBI, too, needs to play a more facilitative role here. The time is ripe, perhaps, to implement the Usha Thorat Committee’s report of August 2011, which suggested that RBI shouldn’t actively regulate smaller NBFCs that don’t raise public funds. The recommendations of allowing NBFC branches to function as banking correspondents and permitting them to use the SARFAESI Act’s provisions for loan recoveries are also worth considering......
India has not scored well on financial inclusion of the poor, says RBI Deputy Governor
.........Accepting that the country has not scored well on financial inclusion parameters, Dr. Chakrabarty, who is also the Chairperson of the RBI High-Power Committee on Financial Inclusion, expressed a greater need for mainstreaming financial inclusion to facilitate access of the poor to financial services. Addressing the gathering after hearing the testimonies of activists and workers about their problems in delivering credit, safeguarding savings, ensuring insurance and pension and the issues of savings, loan and remittances, the RBI Deputy Governor described the process of financial exclusion as lack of access by citizens to appropriate low cost, fair and safe financial products and services from mainstream providers..........
Read - The Hindu
‘Group banking is ideal for migrant workers’
......Deputy Governor of Reserve Bank of India, K C Chakrabarty said “there are 10 crore people attached to banks linked with RBI. With 90 thousand branches and 50 lakh transactions taking place every day, issues may arise in case of individual migrant worker opening of bank account.”.........
Need to rethink priority sector lending
.........The significant aspect is the high levels of NPAs, which, at the level of rural development banks, is quite disastrous. Clearly, the business model does not work well at this level. The recovery ratios are also quite low and vary between 39.4% for PACs to 91.8% for SCBs. Given that these loans are directed mainly to farm-based borrowers, the problem is actually with the sector rather than the banks. Two questions may be posed here. The first is whether the concept of priority sector lending is anachronistic in a regime where banks are answerable to their shareholders and adhere to prudential norms relating to bad assets and capital. Forcing banks to lend in areas where the probability of assets turning bad is higher may not be right. One reason why foreign banks do better is that they have less exposure to this segment........
RBI tells investors to buy inflation-linked bonds instead of gold
.......Deepak Mohanty, Executive Director of the Reserve Bank of India, said high gold imports were weighing on the country's current account deficit and suggested investors shift their investments to bonds that provide a hedge against inflation. "Inflation-indexed bonds could also be another option to offer investors inflation-linked returns and detract them from gold investments," Mohanty said in a speech released on Friday............
There is some macroeconomic cyclical influence on NPAs: Gokarn
KOLKATA, DEC 7:
Dr Subir Gokarn, Deputy Governor, Reserve Bank of India, on Friday said there is some macroeconomic cyclical influence on the pattern of non-performing assets (NPAs) in the Indian banking system. However, the NPAs would start fading once the business cycles start to turn. “Clearly there is some macroeconomic cyclical influence on the pattern of NPAs. But as the business cycle starts to turn that should fade away,” he said while speaking at a leadership summit organised by the CII-Suresh Neotia Centre for Excellence here today.............
'RBI considering comments on bk exposure norms to grp cos'
T
he Reserve Bank is examining the comments from stakeholders to firm up norms including on the issue of providing capital by the banks to their subsidiaries, the government said. "The RBI is presently considering the comments received from the stakeholders to finalise the norms that also include the issue of providing capital by banks to their subsidiaries," the Minister of State for Finance Namo Narain Meena said in written reply to the Lok Sabha........
RBI raises concerns on widening CAD
The Reserve Bank of India (RBI) raised concerns on the widening Current Account Deficit (CAD) of India as the central bank feels that the current level of CAD is far above the the level sustainable for India. “As per estimates, at a nominal growth rate of about 13%, the sustainable current account to GDP ratio is 2.3%. Reserve Bank’s own research shows that economy can sustain CAD of about 2.5% of GDP under a scenario of slower growth,” said Deepak Mohanty, Executive Director, RBI in his speech at an event in Bhubaneswar..........
Moody’s, and Indian banking blues
...........Notwithstanding the explicit sovereign guarantee to the domestic banking industry that “it is too big to fail’ when the chips are down, the fact remains that the rating agency has sounded the bugle of caution to the authorities in general and to the banking industry in particular, that a business-as-usual approach will not do. That is also the reason why the apex bank has said in its annual banking document that “distress dependencies among banks have risen, warranting closer monitoring”. How far the RBI cracks the whip to ensure sound financial practices in the coming days will be watched and welcomed.
Make banks loosen the purse strings, CM tells RBI chief
Chief minister Mamata Banerjee on Thursday conveyed her concern to RBI governor D Subbarao over the paucity of loans granted to people in rural Bengal. Subbarao was at Writers’ Buildings on a courtesy visit. “Although it was a courtesy call, the CM took up with him several issues including loans to small traders, small and medium enterprises and self-help groups as also the state’s credit-deposit ratio. The RBI chief accepted her contention,” finance minister Amit Mitra said...........
Sebi seeks Sahara account details from banks, help from RBI
......Meena said Sebi has written to “Nabard, Enforcement Directorate, Central Economic Intelligence Committee, RBI and Financial Intelligence requesting them to share with Sebi any material/information in their possession about the Sahara group of companies, more particularly SIRECL and SHICL”. He added, “They were also requested to examine or inquire any possible violation of the provisions of law falling under their jurisdiction and share with Sebi the outcome of such examination/inquiry.”...........
Muthoot Fin gets shareholder nod for white label ATMs
Gold loan NBFC Muthoot Finance has received shareholder approval to set up white label automated teller machines (ATMs) across the country. RBI has permitted non-banking entities to set up and run ATMs known as white label ATMs due to the lower presence of banks and ATMs in tier-II and tier-III cities. In terms of existing regulations, only banks are permitted by RBI to set ATMs as extended delivery channels...........
Govt working to exempt failing bank M&As from CCI purview
..............Earlier, the Reserve Bank of India had made a case for exempting banking sector mergers from the CCI purview arguing that the CCI may not be well equipped to handle bank M&As. However, a Group of Ministers chaired by finance minister P Chidambaram, ruled out blanket exemptions to any sector. The GoM decided that any sector wanting an exemption should make a case to the CCI under Section 54..............
Read - IE
Friday, December 7, 2012
Low economic growth will be factored in monetary policies: RBI Governor D Subbarao
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| RBI Governor D. Subbarao with Deputy Governors Subir Gokarn, Arvind Mayaram and KC Chakrabarty at the Central Board Meeting of Reserve Bank of India in Kolkata |
....... "We in the RBI are always trying to manage the balance between growth and inflation. The fall in growth to 5.3 per cent in the last quarter is a steep moderation." ...........
RBI Governor hints at rate cut as growth falters
“We are expecting that inflation will trend down starting the fourth quarter. As we go into our mid-quarter policy on December 18 and the quarterly policy on January 29, we will take into account the growth-inflation trajectory and calibrate our monetary policy accordingly,”
Read - The Hindu
Bang for the buck
........ In 1995, the then Finance Minister Dr Manmohan Singh was invited to inaugurate HDFC Bank. Because of imminent elections, a formal inauguration was scrapped. However, Dr Singh did come, with Dr C Rangarajan, the then RBI Governor. Dr Singh was impressed with computerisation and ATMs. “The bank had prepared dummy ATM cards in the name of Singh and Rangarajan. While demonstrating how an ATM worked, Ram (the bank’s technology head) inserted the card with Singh’s name into the machine and punched in the keys. The ATM instantly flashed a message indicating insufficient funds,”.......
Cell phone antenna near RBI Governor’s house has short life
A cell phone network booster near the RBI Governor’s Bungalow at Carmichael Road was dismantled within two hours of it being installed, following complaints from nearby residents. On Thursday, an 85-year-woman in one of the residential colonies near the RBI Governor’s bungalow called up Malabar Hill resident Prakash Munshi after she saw a leading mobile network company erecting a mast near the bungalow. “The woman was worried about radiation from the Vodafone antenna as her house was metres away. She was more concerned about her family and the other residents in the area than herself. Soon, I got a call from another resident from the area. After speaking to both, I called up the office of the RBI Governor immediately,”...............
Psst. RBI has Rs 7,00,000 cr under its pillow, but don’t tell Chidu
The good news is that the Reserve Bank of India (RBI) is richer than what it has been telling us so far. The bad news is that everyone is getting to know this, including the finance ministry. It’s bad news because the government is trying to extract every rupee from everyone to make ends meet. Extracting money from the RBI is the easiest job for any finance minister. In an article in The Economic Times, former Infosys CFO TV Mohandas Pai and his colleague at Aarin Capital Partners Rajesh Moorti have now disclosed the extent to which the RBI may be understating its underlying surplus – and it could be over Rs 7 lakh crore. And how did this money come to light? Did the RBI hide it? Not quite, but it has been showing it under different heads........
Don’t relax the inflation target
The RBI Governor should think twice before pegging the target rate of inflation at a higher level and calling that the ‘new normal’. There is no basis to the argument........
Read - HBL
Read - HBL
West Bengal's public finances among the weakest: Subbarao
Kolkata: RBI Governor D Subbarao on Thursday said the state of public finances of West Bengal is poorer than most of the states in the country. "In the field of West Bengal's public finances, it is weaker than most states of the country. RBI recognises that," he told reporters after RBI's central board meeting here.........
RBI asks states to keep a tab on chit funds
.....“The responsibility for checking (on such funds) and prosecution for violation of the law is with the state governments. We have written to all of them to be vigilant about this and take appropriate action,” .......
Read - IE
Mamata finally meets RBI Governor
It is customary for a RBI Governor to meet the CM when he visits the state
......Yesterday, there were different accounts on why the chief minister decided to scrap the meeting. The most popular reason (three people confirmed it): Banerjee was watching the parliamentary proceedings on FDI in retail that was being telecasted live at the time of her scheduled meeting with RBI governor. Banerjee was certainly not pleased with the outcome as she has been resisting the move to allow foreign investors investing in the multi-brand retail sector. Another reason was the chief minister was pressed for time as there was a state cabinet meeting. The cabinet meeting started at 6 PM and according to sources she presided over it for about 15 minutes.
'Cash scheme may not push up inflation'
The government’s direct cash transfer scheme for subsidies might not lead to an increase in inflation, said D Subbarao, governor at the Reserve Bank of India (RBI). “If cash is used for necessary consumption, (then) it will be productively spent. I don’t think there will necessarily be any implication of inflation on that,” he said to a media query after the central bank’s board meeting ..........
Banks advised to increase the pace of NPA recovery
.....The cause for concern is the fact that the NPAs of public sector banks rose close to one percentage point from 3.17 per cent to 4.01 per cent in six months to September 2012, according to official records of the Finance Ministry. On its part, the RBI has asked banks to have a loan recovery policy, which sets down the manner of recovery of dues, targeted level of reduction (period-wise), norms for permitted sacrifice/waiver, factors to be taken into account before considering waivers, decision levels, reporting to higher authorities and monitoring of write-off/waiver cases......
Core investment companies need RBI nod to invest overseas
.....CICs desirous of making overseas investment in the financial sector will need to have a Certificate of Registration (CoR) from RBI and comply with all the regulations applicable to registered CICs, the central bank said in a statement......
United Forum’s Dharna at Kolkatta for Pension Updation
RBI Central Board Meeting has been held at Kolkatta on 6 Dec. 2012. The United Forum of RBI Officers and employees held mass dharna today by the officers, employees and the retirees before the Central Board, as done at Chennai office earlier, demanding immediate updation of Pension. The Governor met the Office Bearers and told them that he is at it. He assured his help in solving the issue in favour of the employees at the earliest.
- B.Chandraiah (via e-mail)
Proposal to close down the public counters in the Banking Hall
During the recent Tele conference the Dy. Governor Shri Chakrabarty has announced the Bank’s proposal to close down the public counters in the Banking Hall from the New Year.
The office bearers of the United Forum went on a deputation to the Deputy Governor at Mumbai immediately to protest against the Bank’s ill advised move. The Office bearers of the United Forum met the Regional Directors at all centres to convey their protest. The United Forum which met at Kolkatta today decided to go on a day’s strike at all centres if the Bank contemplates to implement this decision.
- B.Chandraiah (via e-mail)
Mass Memorandum to Governor requesting improvement in Ex Gratia to pre-1986 retirees
The Forum of Retired Employees of RBI, Chennai has decided to highlight the need for improving the Ex Gratia and Medical allowance to the Pre 1986 Retirees and the recipients of family ex gratia. The Forum’s office bearers will float a mass memorandum to be submitted to the Governor. They will collect signatures of all the pre 86 retirees etc. individually in the memorandum and the job has been commenced today.
- B.Chandraiah (via e-mail)
Cheque bounce cases: FinMin mulls ‘Lok Adalat type’ redress mechanism
To cut down the number of cheque-dishonour cases, the Finance Ministry is looking at an alternative dispute resolution mechanism, such as a Lok Adalat. The idea is to consider prosecution under Section 138 of the Negotiable Instruments (NI) Act only if the alternative mechanism too fails. Section 138 deals with penalties in case of dishonour of cheques due to insufficient funds in the bank account of the drawer......
Banks get electoral rolls to create Aadhaar accounts
The government is using electoral rolls to open bank accounts in the 51 districts chosen for the roll-out of the direct cash transfer of subsidies. “Banks have been given electoral rolls in rural areas and they have to ensure that per family at least one account is opened,” a senior bank official said. Public sector banks have been asked to open the bank accounts by December 15. The accounts would be used to transfer cash subsidies directly to beneficiaries........
What’s fair for banking industry may not be so for the customers
.....as the Banking Codes and Standard Board of India (BCSBI) embarks on a “Review of the Code’s of Banks Commitment to Customers” many national regulators are introducing, reviewing and strengthening legislation and guidelines to govern the way in which financial products are developed, sold, and serviced. And, in almost all instances, the principles which underpin these guidelines are the same. The clear and simple message is this—treat your customers fairly and be prepared to prove it......
Banks will requires Rs 5 lakh crore capital by Mar,2018: Meena
The government today said Indian banks will require capital to the tune of Rs 5 lakh crore by March, 2018. "...the broad level estimates of RBI, based on the data obtained from banks, suggest that by March 31, 2018 the total regulatory capital requirements of Indian banks would be to the tune of Rs 5 trillion; of which non-equity capital will be of the order of Rs 3.25 trillion while equity capital will be order of Rs 1.75 trillion," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha.........
Capital cliff ahead
.....the Indian banking system will need almost $40 billion of additional capital by 2018. Various other analysts have also come out with similar numbers. Even the RBI has talked of such large numbers in its various reports. Thus, Mr Varma is not an outlier, nor do his calculations or assumptions stretch credulity. In fact one can argue that the numbers will be even larger if we assume that the RBI goes ahead and implements higher provisioning norms for restructured assets and some form of dynamic provisioning......
A season of currency risks in India
......The provocation to remember all this is the concern repeatedly expressed by our banking supervisor on the issue of the unhedged foreign currency exposures of Indian companies and the credit risks they can lead to. The Reserve Bank of India (RBI) has been addressing banks on this subject for almost a decade: the Deputy Governor’s address at the FT-Yes Bank International Banking Summit on 16 October and the governor’s second quarter review of monetary policy on 30 October also referred to it. This was followed up by a circular on 21 November stating that “unhedged forex exposure risks are not being evaluated rigorously and built into pricing of credit by banks. RBI wants action-taken reports on the subject from commercial banks before the end of this month.”......
What’s stressing banks
.....While RBI may need to react to Moody’s somewhat sweeping condemnation of how banks are governed, Moody’s also points out that India’s loan classification rules were far more lenient than in other parts of the world; it pointed out that very often bad loans were being categorised as ‘restructured assets’ in the process allowing banks to get away with lower provisioning. RBI needs to work on this and some of it will probably be addressed in the new rules but simply framing rules may not be enough, there is also something about the lending culture that needs to change. RBI Deputy Governor KC Chakrabarty, for instance, has pointed out that much of the restructuring doesn’t seem transparent and, moreover, that there seems to be some element of discrimination. Neither of these is desirable but.......
De-jargoned: Business correspondent
....According to guidelines issued by the Reserve Bank of India (RBI), various entities including non-governmental organizations and microfinance institutions registered under the Societies Act or Indian Trusts Act, societies registered under the Mutually Aided Cooperative Societies Act or the Cooperative Societies Act of States, post offices or various other individuals who qualify the RBI criterion can become BCs........
Paper glitters more
......An interesting idea recently suggested by RBI Deputy Governor Subir Gokarn of popularising “paper gold” — financial savings instruments which are backed by gold — is worth pursuing immediately. Long available in centres like Singapore, these products in effect call upon banks to buy and sell gold at market determined prices so that their customers can enjoy all the benefits of gold investment without the hassles of storing it physically. The craze for physical gold will hopefully come down then.
Holder of an instrument not affected by the taint of fraudulent preference: Court
.....The taint of fraudulent preference did not extend to the holder in due course said the Delhi High Court inReserve Bank of India vs JVG Finance Ltd when the petitioner sought to restrain the said Anup Rawla from en-cashing the Indira Vikas Patras.......
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