NEW DELHI: The finance ministry has asked the Reserve Bank to consider giving infrastructure status to the housing sector, and relax provisioning norms for it so banks can extend attractive loans to buyers. RBI has mandated that banks set aside from their profits an amount equal to 1% of total standard assets in commercial real estate, which also includes housing projects. This means if a bank lends 100 towards a commercial real estate project, it will have to keep aside 1 to offset any loan to the sector turning bad. The provisioning rises to 15% of net investment in case of secured sub-standard asset. A finance ministry official confirmed the government has asked RBI to look at all possible options to provide an impetus to the housing sector...........
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.
Tuesday, December 11, 2012
Traffic diversions jam major roads
BHUBANESWAR: Commuters in the city had a harrowing time negotiating traffic diversions following the stir by Gana Sikhyaks at Lower PMG Square here on Monday. The vehicles remained stranded for nearly two hours at the intersection with not a single traffic cop in sight. Most vehicles turned off the engine near the Reserve Bank of India after being diverted from the Lower PMG. The commuters had to take a detour from the back side of the bank negotiating traffic coming from the opposite direction. .......
Banking Bill hits Opposition wall, stalls on procedural issue
A determined Opposition on Monday thwarted the Banking Laws (amendment) Bill 2012 in the Lok Sabha, raising doubts about its being passed in the coming days. This Bill was listed for consideration and passage in the Lower House on Monday. Monday was, however, a mixed day for banking reforms, with Finance Minister P. Chidambaram succeeding in getting a Bill on debt recovery passed by the Lok Sabha. The Bill (recovery of debts) was passed after the entire Opposition staged a walkout over it not having been referred to the Standing Committee. On the Banking Laws (amendment) Bill, senior Bharatiya Janata Party leader Yashwant Sinha demanded that three new provisions sought to be introduced by Chidambaram be first referred to the Standing Committee on Finance......
India’s growth story: A comparative view
As GDP growth slows and industrial performance worsens, the government is hard put to find explanations. Part of the blame has been conveniently placed at the door of the central bank, with fingers pointed at the Reserve Bank of India’s reluctance to cut interest rates that were raised to combat inflation. But the more fundamental explanations being offered are the poor performance of the global economy and the difficulty of pushing ahead with more “reform” in India’s divided polity. Since little can be done about the former, the Congress Party’s economic policy agenda has been focused on accelerating reform at all costs, with special attention on policies that favour foreign capital..............
Need 2% rate cute by RBI for growth to come back on track: Nandan Chakraborty, Axis Capita
....Well, it is a mix of everything. If it is left only to the RBI to revive growth, they would not be able to do it at all. Historical trends indicate that you need at least 2% cut in the interest rates to be able to revive growth back to trend line. On the other hand, if you do that, then the inflation shoots up........
RBI unlikely to cut rates on Dec 18: Report
.....Over the past three months, the Reserve Bank has reduced the cash reserve ratio, the portion of deposits banks are required to keep with RBI, by 0.50 per cent to 8 per cent. But these cuts did not lead to an easing of overnight rates. Though the RBI has finally decided to resume open market operations (OMOs) to ease liquidity, BofA ML said that “Governor Subbarao may not want to take chances with the RBI’s inflation fighting image by cutting rates at 7.5 per cent inflation.” India is the only BRIC where lending rates are almost at their 2008 peak, the report said......
Do RBI rate cuts really matter to the common man?
......So let us stop making fuss of the credit policy or its supposed failings. It’s time now that RBI needs to improve on making the formal source of credit available to common people easily. The Reserve bank should now make the most of the opportunity offered by Aadhaar-based cash transfers so as to enable a full-fledged mobile banking across the country. Also they need to implement new licenses between the banks and the phone companies so that the method of formal finance reaches any and every body across the Indian Territory. Not only this, RBI should take steps so as to make policy rates more relevant to more people.
Read.......
To control inflation, use structural reform
.......Assorted blunders add to the chaos, eg, judicial rulings that contravene the sanctity of contracts, and misguided institutional action, like the Reserve Bank of India (RBI) trying to force the government towards fiscal responsibility instead of concentrating on providing stability and support for growth. This is aggravated by a government that does not seem to act in the public interest, and a frustrated Opposition that stalls governance and parliamentary proceedings............
FAPCCI seeks drastic cut in interest rates
....The Federation of Andhra Pradesh Chambers of Commerce & Industry has urged the Reserve Bank of India for a higher percentage of interest rate reduction to boost industrial production. “Given the current industrial and economic scenario, there is an urgent need for the RBI to reduce interest rates not by a token of 25 or 50 basis points, but by 200 basis points,” the trade body said in a letter to the RBI Governor......
The wages of growth in India
.....The question is: which set of numbers is correct? This is not merely an academic question but has important implications for policy decisions. In recent months, GDP numbers have been stealthily revised down, RBI has expressed reservations about the industrial production data and now the data on wages, too, is cause for confusion. It’s high time for a complete overhaul of our macroeconomic data collection systems. Is the Indian economy experiencing a wage depression?
Why India’s gold fever isn’t easily cured?
..Moving a step further, in October, the RBI barred banks from financing the purchase of gold in any form other than working capital finance. RBI is only “trying to cure the symptoms rather than the problem,” said Rajeev Malik, senior economist, CLSA Singapore. “There are several drivers of India’s demand for gold, including a convenient store for unaccounted wealth, use as an inflation hedge and rising demand for investment in gold,” Malik said. “The push towards unlocking of this vast reservoir of gold savings is a welcome step and could be marginally effective.”.........
Inflation, not gold, is problem
........Finally, gold has maintained value against inflation. In the last five years, as inflation climbed higher, fixed deposits or small savings schemes have not kept up, earning investors a negative real return. Equities, which are supposed to beat inflation, have proved a disappointment, too. To some extent, gold demand will dampen as the economy starts picking up, as investment opportunities open up and as inflation falls to reasonable levels. But there is bit of chicken and egg here: strong gold demand weakens rupee, weak rupee pushes up inflation which then causes another rush for gold.........
Robbed by cyber criminals, Kandivli man to approach telecom authority
.....Cyber lawyer Pankaj Bafna said, “Landing of bank correspondence in wrong hands could prove to be dangerous.” The Reserve Bank of India (RBI) has made sending of the know your customer (KYC) forms mandatory since April. “A person may have shifted his residence, but does not inform the bank about it. Hence, the KYC forms are sent every three years so that the customers can update their details. This could ensure that sensitive data does not land in wrong hands.” Experts advise caution while uploading details of your e-mail account on a networking site.....
Public cash holdings rise by Rs 44,000 cr
.....With at least five states headed for the elections beginning with Gujarat on Thursday, currency with the public jumped by Rs 44,000 crore in a single fortnight. Currency with the public according to the RBI data amounted to Rs 11,08,120 crore for the fortnight ended November 16. Currency with the public represents cash holdings with the public......
Electronic transactions rise 30 per cent till October: RBI
....The banks, especially the foreign banks operating in the country, have started aggressive marketing of credit cards even outside the banks’ customer base. The practice was followed by banks before the crisis year of 2008 and was stopped thereafter.
Banks See New Charge in M-Banking
....In a
country like India, where there are only 90,000 bank branches and
banking services reach only about 40% of the population, the need to
open more branches is compelling. Mobile banking, backed by a robust
banking-correspondent architecture, overrides the need to set up more
branches. “Mobile banking will help lot of customers who are financially
excluded,” says Sabharwal. It also works for banks because a physical
bank is expensive......
FinMin: Use e-payment route to beat disruptions at branches
....The Finance Ministry, it appears, wants to make sure that calamity, strike or other disruptions at banks/branches don’t disrupt revenue collections. The Ministry has asked members of the public to use alternative channels such as ATMs, Internet, and other electronic means to pay tax and other statutory dues in case of any service disruptions at the bank/branch in handling government business.......
Union Bank launches Xperience branch in Kolkata
....Union Xperience branches are a part of the bank’s initiative towards bringing superior customer experience for its customers. The bank has introduced automation through self service machines like pass book printers, cheque deposit machines and queue management among others and also completely revamped the sales and service model in these branches, said a bank press statement. The bank also launched its green banking service at the branch,.....
Monday, December 10, 2012
Monks of Mint Street
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| The five mantras of the old monks of Mint Street are simple but sagacious |
It is rare to get four exceptionally important policymakers—all being architects of post-reform monetary structure and policy in India—on the same stage. Something like this happened recently in Mumbai when three former Governors of the Reserve Bank of India (RBI) and the current head engaged in a freewheeling discussion from the same platform. As none of them was a career central banker, the group could not have been more diverse in terms of the style and substance of their trade...........
Seminar on 'Future Challenges of Banking in India' held
Bhubaneswar: The Regional College of Management (Autonomous) conducted a Seminar on ‘The Future Challenges of Banking in India’ here on Friday. The chief guest of the occasion was Harun Rashid Khan, the Deputy Governor of RBI. On this occasion, RCMA and HDFC bank, as a part of Corporate Social Responsibility and Institution Social Responsibility, organized a Blood Donation Camp in the RCMA campus......
No harm trying a policy rate cut, says SBI’s finance chief
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............
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
 |
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
 |
| 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,”...............
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