The Reserve Bank of India will announce its second-quarter review of monetary policy next Tuesday. This being a half-yearly announcement, it will cover domains other than monetary, so there is much anticipation about the measures that the RBI Governor, Raghuram Rajan, will announce on these. However, when it comes to monetary policy itself, the actions taken in the mid-quarter review of September 20 and a subsequent reduction of the Marginal Standing Facility (MSF) rate on October 7 have given clear indications of the RBI's short-term and medium-term monetary stance...........
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.
Friday, October 25, 2013
Indian Banks Head Out to the Country
......The Reserve Bank of India has made it easier—fewer restrictions and regulations, less paperwork—to open branches in rural areas because it wants to encourage lending to the farmers and small businesses there. While the costs of reaching rural areas can be high, banks say it is worth it as they start long-term relationships with customers who will need an increasing amount of banking services, including, eventually, insurance and mutual funds.........
Pension Deficit
.......Equally true, it is difficult to project future contributions accurately especially if the NPS takes off. Most important, given the structure of India’s population, the EPS can only be in trouble after a few decades when the proportion of those contributing to the fund becomes bigger than those taking out from it. The time to fix the scheme is now, whether that means greater contributions from the government or from the employer—or by curtailing benefits—is a different matter.
RBI forms panel to implement new bill payment system
.............. The Reserve Bank of India has constituted a GIRO Advisory Group (GAG) to implement a national Indian Bill Payment System so that households will be able to use bank accounts to pay school fees, utilities, medical bills and make remittances electronically. The terms of reference of GAG, which is headed by Prof. Umesh Bellur, Professor, Indian Institute of Technology, Bombay, include suggesting the nature of organisation to undertake the GIRO-based bill payments and framing guidelines for setting up and operating the GIRO-based bill payments.............
Now, just Aadhaar number enough to open an account in Axis Bank
Mumbai: Axis Bank Ltd on Thursday became the first bank to allow customers to open an account with just their Aadhaar number. The Reserve Bank of India (RBI) on 2 September allowed paperless electronic authentication—or electronic know-your-customer (e-KYC)—provided by the Unique Identification Authority of India (UIDAI) as “officially valid.”..............
RBI asks RRBs to ensure service providers adhere to regulatory needs
......“Regional Rural Banks may necessarily enter into agreement with the service provider that the infrastructure and applications are made available for audit / inspection by the regulators of the country,” said RBI. The central bank also said that RBI and National Bank for Agriculture and Rural Development (NABARD) should have access to all information resources that are consumed by RRBs, though the resources are not physically located in the premises of banks........
Here's an index to judge real estate sentiments
.......The National Housing Board’s RESIDEX and RBI’s Housing Price Index (HPI) are currently the only available indexes tracking the Indian Real Estate Markets. There is, however, no credible and impassionate tracking of the sentiment of residential real estate players in India currently and IIMB-CRERI aims to fill this gap.............
Tightening reversal unlikely to spur growth or lower rates
............RBI is focused on lowering rates by looking at the WPI, though what has hit savings is a very high CPI. As a result, the central bank has not been able to trigger a revival in investments despite rate cuts. For four years, real interest rates have remained negative for savers. Low real rates are good for growth but not when real rates are depressed due to high inflation. ..........
What's cooking in inflation numbers?
........So, what's the linkage between inflation numbers and optimism? India's rural population is now more fashionable and is willing to sacrifice consumption of consumer durables/non-durables (as reflected in the declining share of household requisites) to maintain such a lifestyle. If this is true, then obviously, there is a definite reason to celebrate with strong agricultural growth propelling rural demand this fiscal. However, the bad news is that such behaviour may also explain in part why India's core inflation is not declining fast enough and may not do so, however hard we may try.......
Fighting inflation: then and now
...... it would be risky for RBI to base its monetary response upon the new CPI, whose linkages with other macroeconomic variables are not yet understood and when growth was as weak as 4.1% two quarters ago. The vast difference in the two inflation indicators vis-à-vis the wider economic conditions suggest caution at this point. Understandably, the central bank is chary and anxious to restore its inflation fighting credentials; it would rather err on the side of over-tightening than be lax second time round. History suggests that this time it is different.
This Diwali, PC must see the big picture
....... The reason for this is that the different circulars issued by the RBI, the customs department and the director-general of foreign trade, which comes under the commerce ministry, are confusing. Consignments, therefore, are not being cleared fast enough by customs. If the bullion industry has a case, then the finance minister can look into it. Mr Chidambaram will have to find a way out of this impasse of lowering interest rates. His other saviour could be RBI governor Raghuram Rajan, who on October 29 will announce the credit policy.
Thursday, October 24, 2013
RBI policy review: Black-and-white approach, not 3D
..........In recent years, RBI has found itself juggling an increasingly complex reaction function. Rajan’s predecessor famously noted that the central bank was trying to conduct monetary policy across three dimensions—inflation control, mitigation of balance of payments risks, and the interplay with fiscal policy. But the D. Subbarao-led RBI, by trying to do too much, failed to varying degrees across each of these three dimensions. Monetary policy was set tight enough to push gross domestic product (GDP) growth below trend and exert a degree of control over wholesale price inflation, but not tight enough to rein in consumer price inflation. The game of cat and mouse with North Block, which houses the finance ministry, has helped encourage some fiscal discipline, but not enough...........
Rajan, Subbarao unite to help FM sail through crisis
........This is for the first time that both the incumbent and the former Governor would attend the FSDC meeting. The last FSDC meeting in July was attended by both Rajan and Subbarao, but that was in their capacity as Chief Economic Advisor and RBI Governor, respectively. “Dr Subbarao has also been called for the meeting. It will be a kind of farewell to him from the Finance Minister,” a finance ministry official, who did not wish to be identified, told Business Standard...............
Need to rebalance RBI’s interest structure
.........It is believed that the economy is susceptible to a rundown when short rates exceed long rates. A further slowdown, in any case, needs to be prevented and is quite feasible since the compelling conditions that necessitated an interest hike have been contained. There is now enough room for the RBI to restore balance...........
Why govt funds for Sanskriti School? HC
The Delhi High Court today expressed its displeasure over the city's reputed Sanskriti School, run by the wives of senior central officers, for receiving government funds, saying "you cannot create a separate island for children of these bureaucrats". "What is the necessity for various state governments and ministries, including the Defence Ministry and Reserve Bank of India, to fund the school run by the officers' wives"? the bench headed by Chief Justice N V Ramana said. ...........
Retd bankers want say in talks with IBA
.......However, as the UFBU comprises only the serving bank officials, several vital concerns of the retired officials remain unaddressed. Though the issues concerning the retirees are also taken up at the meetings between representatives of bank officials and managements, the focus remains on the matters pertaining to the serving officials due to lack of representation of retired members. Hence, even as the salaries of the serving officials have increased by more than 200 per cent as a result of three wage settlements since 1995, the pension of the officials who retired prior to 2002 is yet to be revised.........
State Bank of India Transfers 70 Executives
.........Change
of portfolios and transfer orders have been issued for six deputy
managing directors, 16 chief general managers and 46 general managers.
SBI executives expect more transfers as Bhattacharya gets her core team
ready for the next three years. Bhattacharya was appointed chairperson
of the country’s biggest bank earlier this month. SBI insiders say
this is one of the biggest reallocation in recent times, which should
also be viewed in light of promotions ordered in August and September.......
Prakash Bakshi, former NABARD chairman, to talk on ‘Emerging Opportunities For Enterprises In India’s Agri & Food Industry’
.......The summit will cover topics such as: Future outlook for India’s food & agri businesses; what opportunities and challenges are lying ahead in the agri sector; what are the emerging private equity and M&A opportunities in agri & food industry; and how to build effective agri infrastructure & supply chain logistics. It will also cover primary processing—food commodities, grains, dairy & poultry; processed foods, food service and retail...........
A matter of image
.............The report says that Rajan's international image is responsible for a better relationship with the finance ministry. This is not true for his political masters. The current finance minister has the intelligence to project the Reserve Bank of India's independence on trivial issues (read policy rate changes). During the elections, the RBI will be pushed to the sidelines. Rajan is aware of this.........
Stemming inflation and sequencing the exit
.........The RBI is likely to increase its March-end inflation forecast but at the same time trim down the GDP growth forecast. The classic monetary policy dilemma is back but we think that on balance the RBI is likely to hike the repo rate by 25bps in the October policy to stress on its anti-inflationary stance.........
Have we turned the corner?
In August, India’s economy was headed for a macro-economic crisis, its currency was in a free fall. Since the new Governor of the RBI took over, he has talked the economy back to a position where everyone is happy. What can be a better sign of normalcy than the Deputy Chairman of the Planning Commission having gone back to what he is best at: namely, telling us that, yes, inflation is high but it will come down next month? So what caused the near crisis? And have the causes gone away?...........
Sensex inches away from 21,000: Is it seeing a villain in Raghuram Rajan?
.......All the major domestic and foreign factors having been taken care of as of now, the only major macro event from where the markets pick their next cue is the RBI’s policy meet on October 29, say analysts. “I’d say that the concerns that most of the emerging markets and CAD-challenged countries like India faced due to the fears of tapering, have receded. This has been the reason why...........
Planning Commission scraps Raghuram Rajan index for Central fund distribution
......."We are considering how to reconcile it (Rajan index) with the different indices we currently use in the Commission," Planning Commission deputy chairman Montek Singh Ahluwalia told The Indian Express. He said the Rajan report has to be placed before the National Development Council, the forum which brings all chief ministers and the Union Cabinet together to decide on plan related issues............
The Next Financial Inclusion Challenge: Private Sector Leadership
......What needs to happen to meaningfully advance financial inclusion for the poor – an end-state in which everyone has access and can use the broad range of financial services they need to improve their lives? World Bank President Kim has identified 2020 as a target for achieving universal access to basic transaction services via mobile money, debit cards or simplified bank accounts. This is an important first step towards that broader range of services.........
Banks complete first phase of financial inclusion
Commercial banks have achieved the target of providing banking outlets to all villages in Karnataka, with a population of over 2,000 people. Till now, the banks have covered 3,395 such embanked villages by providing outlets, of which brick and mortar branches have been opened in 402 villages in the first phase under the financial inclusion scheme........
Moolah Mantra
......... Financial planning has been highlighted in the regulations and the certification there under as eligible category for accreditation. The recently notified Reserve Bank of India guidelines on wealth management in banks are also on the same lines. It is expected that implementation of these guidelines will also expand the career opportunities for financial planner (FP) in the banking sector...........
Will banking dreams of corporates under probe be scuttled?
........With agencies now going after business houses with a vengeance - what many are calling a witch hunt of sorts, even honest bureaucrats are scared stiff to take any decision. So will this growing vigilante atmosphere also make the job of the RBI, which is all set to give out new bank licenses to corporate houses, much tougher than anticipated? .......
SBI to get Rs 2000 cr as part of Rs 14K cr banks fund infusion
The Finance Ministry today decided to pump in Rs 2,000 crore in State Bank of India and Rs 1,800 crore each in IDBI Bank and Central Bank of India as part of the Rs 14,000 crore capital infusion plan for the current fiscal. "SBI is getting Rs 2,000 crore. Bigger banks are getting more," Financial Services Secretary Rajiv Takru said here...........
Soft loans will be hard on the exchequer
........It is notable that this policy announcement was made with the apparent implicit approval of the Reserve Bank of India (RBI) Governor Raghuram Rajan - he was present at the finance ministry meeting that approved the "in-principle" decision to infuse more capital in public sector banks to drive the festive season. This is the same economist who famously warned of the impact of indiscriminate subprime lending in the US, well ahead of the crash of 2008, and who has made inflation control the centre of his last monetary policy.............
India's third biggest gold fund reopens to investors
..............Reliance Gold Savings Fund, which manages about $300 million according to Lipper data, will begin accepting subscriptions from Wednesday after suspending inflows on August 1, according to a notice sent to investors. The government and the central bank launched a series of measures this year to curb the country's appetite for gold as India battled a ballooning trade deficit and a weak currency. Gold is the biggest item on India's import bill after oil......
Financial markets and the real economy
....Overall, it may be premature to believe that the current account deficit could be well below $70 billion (as finance minister P. Chidambaram says) or that the current account deficit is no longer a problem (as RBI governor Raghuram Rajan says). Coming back to the apparent stability of the exchange rate, we should not forget that this is the result primarily of a daily demand of $350-400 million being met outside the market, through the swap facilities made available to the oil importers. We should not forget that............
Teaser home loans make a comeback
Three foreign banks — Citibank, Standard Chartered Bank and HSBC Bank — have launched semi-fixed interest rate home loans, popularly known as teaser loans, to attract customers during the festive reason. To avoid the Reserve Bank of India’s frown, they have made these products transparent. A few years ago many banks had launched teaser loans but subsequently withdrew them. In case of Citibank and HSBC Bank, the new offering is valid on loan bookings till November 30..............
Rising NPAs a Worry, But You Can Bet on Select Pvt Banks
..“Private
sector banks are likely to perform better than their public sector
counterparts due to their lower NPAs, aggressive management and ability
to protect margins. Despite their higher valuations, you could buy some of these stocks on dips,”............
No end to banks' woes; NPAs at 4.4% by Mar 2015: S&P
Indian banks will continue to face asset quality troubles till March 2015, and the gross non- performing assets (NPAs) in the system will grow to 4.4% by then, global credit ratings agency S&P said today. "Sluggish economic growth, rising interest rates, and the volatile currency are hurting the country's highly leveraged corporate sector," it said in a note, adding that NPAs will grow to 4.4% by March 2015, from 3.4% in March 2013 due to corporate defaults........
How banks play with our money
..........Don’t believe me? This is what K.C. Chakrabarty, Deputy Governor of the Reserve Bank of India, had to say on the matter in the course of a speech he delivered in Udaipur earlier this month: “Our experience in India demonstrates that the pricing of the products and services — both on the liability as well as on the asset side — are heavily weighed against the retail customers as a group.” Translating for bankerspeak, what the person tasked with overseeing banks is saying is that whether it is relating to deposits (liabilities) collected from retail customers (you and me) or loans (assets) extended to them, the terms of trade are all on the side of the banks. In other words, you are not getting a fair price for your money, and you are not being charged a fair sum for your credit............
Hackers hit bank, steal Rs 16 lakh
MUMBAI: Personal details provided to the bank as part of know-your-customer (KYC) norms are no more secure. In a recent fraud, at least Rs 16.7 lakh was stolen from a Mumbai company’s bank account after fraudsters hacked into the bank’s server and tampered with the information submitted under KYC guidelines.............
Frauds are just a click away...
.......Information Technology Act 2000 mandates a statutory compliance from banks to ensure that the internet banking service offered is safe and secure. The Reserve Bank of India has directed the banks to have a comprehensive internet banking policy to protect the customers against security breaches. Rules regarding IT (Reasonable Security Practices and Procedures and Sensitive Personal Data Information ) u/s 43A, require banks to follow the ISO 27001 security standard for internet banking. The user is expected to keep his login ID and password safe and secure and ensure that no security breach happens due to any negligence. Loss of password by the user is very common as the user falls prey to phishing attacks or.............
Malware in ordinary email can lead to online banking shock
...... Most
financial hack attacks, experts said, start with ‘phishing’, where
fraudsters steal a victim’s personal info by sending out emails that
appear to have originated from legitimate financial institutions. These
emails usually ask the user to update or validate account info after
clicking on a link in the mail. Some phishing emails also come
with an attachment that downloads malware onto computers. The malware
can record keystrokes and steal critical data like logins and passwords
without the user knowing. The information is automatically sent to the
scammer via the internet whenever the malware finds an open internet
connection........
De-jargoned: credit card charges
...............The best thing that you can do before swiping a credit card is read the fine print. Ensure to read your credit card statement every month. Also remember that banks revise charges often, so keep a track of it.
Oracle Helps Banks Deal With Financial Crime And Comply With New Regulations
To help banks mitigate risks while complying with the new Reserve Bank of India guidelines in the present volatile financial market, Oracle today announced the availability of its Financial Crime and Compliance Management (FCCM) solutions in India. Oracle Financial Services Anti Money Laundering and Fraud Analytics provides an end-to-end solution that leverages a robust data model and comprehensive dashboard capabilities to deliver a single transparent, holistic view of all financial crime and compliance related activities across the enterprise. .......
Wednesday, October 23, 2013
The limitations of inflation targeting - Dr. A.Vasudevan
Finding the Next Amul Success Story in Banking
Read - ET
Chillar party at your doorstep
AHMEDABAD: You won't need to stand in a long queue outside banks to exchange currency notes of big denominations now. The Reserve Bank of India (RBI) van will visit your residential and business areas in the next six days, starting October 24 to provide bank notes of Rs 10 denomination. The apex bank has also decided to release fresh notes worth Rs 3,397.9 crore and coins worth Rs 14.99 crore to meet the demand this Diwali...........
RBI’s Goodbye to Banking Matrimony
........“There are regulatory challenges, as foreign banks would want to control
more than 10% of the bank. Also, a merger will not be possible unless
these foreign banks set up a subsidiary. We do not know whether the
rules will be for distressed banks only.” The likely caveat from the
RBI may be that those foreign banks have to set up a subsidiary in
India and have to list their shares on the
stock exchanges. And that’s what former Governor Duvvuri Subbarao had
proposed. But barring a few such as DBS’ chief Piyush Gupta, most
foreign banks are averse to doing so..........
Men still have a role to play in Mahila Bank
While men may be precluded from taking a loan from it, they have not been left out when it comes to employment in India’s first ‘Mahila’ (women’s) public sector bank. Men account for about 36 per cent of the candidates found provisionally eligible for appointment as Probationary Officers in the Bharatiya Mahila Bank. The probationary officer post is an entry-level position in the officer’s grade in public sector banks. Bharatiya Mahila Bank had advertised 115 vacancies for this rank last month, and selected 103 candidates, according to the results notification..........
Change of label?
My View on "Mint Road now closer to North Block":
This comment is with reference to the portion “The ministry is also expecting a more cordial relationship with Rajan on other issues such as setting up of a Debt Management Office(DMO) in the ministry” in this story.
If FM is able to exert sufficient pressure fast enough (let me be specific, before Rajan is able to comprehend the history and context of Public Debt Management in India), one will not be surprised to find the present team in RBI managing Public Debt getting GOI label and getting rechristened as DMO which is part of Finance Ministry.
There is no irrationality in Government taking over and managing public debt on its own when the fiscal policy management has matured. The haste with which the finance ministry is trying to go through the process is unwarranted. Such a move at this juncture will destabilise one more arm of the government as the ministry is already burdened with several other preoccupations and compulsions arising from loss of credibility, compulsions of coalition politics and a host of other relationship issues with regulators and financial institutions including banks.
RBI has been managing smoothly the public debt of central government under Section 21(2) and that of state governments by agreement as provided for under Section 21A of the RBI Act, 1934 for several decades. It is in the interest of country’s financial stability which is the basis for economic development, not to disturb the present arrangement at least until the government is in a position to take up the comprehensive review of the monetary system envisaged in the preamble of the RBI Act. The desperation with which FM pleads with PSUs for higher dividends to make up for the shortfalls in fiscal planning is any indication, one can imagine what can happen to government borrowing dependent only on the ‘ownership rights’ of a government which is pulled and pushed by weak coalition partners.
As government under the existing disposition has enough authority to ‘direct’ RBI in an eventuality, there is no need to hurry through the transfer of management of public debt from RBI to GOI at a time when more attention should be paid to clear the mess which is already there on the drawing board of finance ministry.
- M G Warrier, Mumbai
RAJAN’S SILENCE STUMPS ECONOMISTS
Economists
present at the pre-monetary policy meet with the Reserve Bank of India
Governor Raghuram Rajan were in for a shock. It was probably their first
meeting ever in which the Governor did not say anything at all. Many
were wondering whether it was deliberate, or because of one economist
yammering away on inflation irrespective of what others had to say.
ET
ET
NO INTEREST IN SENTIMENT SURVEY
With
so much uncertainty over official economic data, a number of analysts
including policy-makers like the Reserve Bank of India are depending on
their own internal surveys to gauge the situation. They conduct surveys
on business optimism, inflation expectations by households and
investment situation. One of the top consultants conducting one such
survey was bewildered. For every ten questionnaires sent out, replies
were received from just two, or three. Another indication of the
sentiment?
ET
ET
Monetary policy review: RBI may hike repo rate by 25 bps
......As monetary policy returns to a more normal setting, RBI and the government will have to address the chronic problems. In India’s case, these are high inflation and high fiscal deficit. In the case of the latter, there is no solution in sight, although the government could achieve its target for the year through ad hoc measures. A more durable solution will have to await the formation of the next government. That leaves RBI with the tough task of bringing inflation under control. Inflation has actually trended down ............
Banking licence: RBI seeks more info
.......The
information sought from the applicants include their income-tax filings
and info on other companies within the group. According to sources, the
applications are being screened by three teams under RBI executive
director B Mahapatra. The teams are looking at separate issues such as
group holding structure, business plan, compliance and financial
inclusion. According to sources, the RBI may not consider firms that do
not have resources to make an upfront investment of Rs 500 crore. By
the end of next month, the RBI is expected to complete its internal
screening of the applications and update the board before handing
over the proposals to the expert committee headed by former RBI
governor Bimal Jalan. Other members in the panel include C B Bhave,
Nachiket Mor and Usha Thorat............
Co-op banks often used for money-laundering, says Chidambaram
.........As the Reserve Bank of India (RBI) looks after the banking side of the UCBs, the minister said besides strengthening legal provisions, the RBI should look to “restrict the lending aspects of such banks, making provisions of narrow banking or even canceling of their banking licenses.” Like scheduled commercial banks, many cooperative banks have been accused of violating anti-money laundering norms (set up by the RBI) and KYC norms with impunity. A big drawback in effectively controlling UCBs is the duality of control. While RBI regulates deposit mobilisation, loan grants, etc. a bulk of the functions is government-controlled through the multi-state cooperative societies or state cooperative societies.............
RBI tightens ‘at par’ cheque norms for UCBs
...“It has been observed UCBs are utilising at par cheque facility extended by Scheduled Commercial Banks not only for their own use but also for their customers, including walk-in customers,” the central bank said in a notification. An “at par” cheque is payable at any branch of the issuing bank, without any excess charges to the bearer of the cheque. Co-operative banks have been advised to utilise these cheques for only specific purposes, such as for their own use, for account holders who are compliant under know-your customer (KYC) norms, and for walk-in customers against cash worth less than R50,000 per individual, RBI said in a notification.............
Post Banks apt for financial inclusion: Assocham
.........The Department of Posts (DoP) has applied for a banking licence. The Reserve Bank of India is expected to issue licences to shortlisted entities in January 2014. "This is a huge resource at hand and touches almost every part of the country's interior. Just Rs 100 per household saved every month could bring over Rs 12,000 crore from 45% of unbanked households in rural areas," Assocham said..........
Banking on Financial Inclusion
.............We consider Financial Inclusion and Financial Literacy as twin pillars where Financial Inclusion acts on the supply side i.e. for creating access and financial literacy acts from the demand side i.e. creating a demand for the financial products and services”............
Financial literacy—a regulatory cop-out
....It worries me therefore when financial literacy, or getting people educated about their money, takes on the nature of a global good. Much like polio eradication, as the goal to get citizens “financially literate” gains ground, I cannot but see the long arms of predatory capitalism at work. ....
‘Banking licence to MFIs may help financial inclusion’
.......Bandhan MicroFinance, among the largest microfinance outfits, is now awaiting the Reserve Bank of India’s nod for commencing banking activities. Mr. Ghosh said that once large micro finance institutions entered the banking services, it would help financial inclusion, too.
Bankers don't bother..............
There were instructions from RBI that banks should not compel customers wishing to hire lockers to place fixed deposits with the bank.I do not know whether these instructions are still prevalent. In any case, the record of RBI in enforcing its regulations issued to banks has been poor and in this background it would not be surprising if banks do not bother about these instructions !
- A.Chandramouliswaran
RBI cancels Aurangabad based co-operative bank’s licence
Reserve Bank of India on Tuesday said it had cancelled the licence of Vishwakarma Nagari Sahakari Bank Maryadit, Aurangabad (Maharashtra), effective 12 September as the bank “had ceased to be solvent and the depositors were being inconvenienced by continued uncertainty”........
IIM-A to launch 4th edition of PGPX knowledge summit
..........While the event will feature KC Chakrabarty, deputy governor, Reserve Bank of India (RBI) as the keynote speaker, the panels will feature various activities such as presentations and speaker discussions, among others. The panel will culminate with Q&A from the audience. Moreover, a PGPX alumni-meet, will be hosted on campus alongside ConneXion...........
Special RBI measures got India $9.6 bn in forex: FM
......"Banks have taken advantage of RBI's liberalisation of FCNRB and Tier I capital schemes. So far, under the two schemes put together, banks have brought in $9.6 billion," .............
NPA Priority
......And that is banks are singularly unsuitable to meet priority sector needs as their appraisal systems are geared towards larger and more structured lending to the organised sector, and the sooner the government realises this, the better. NBFCs, micro-finance institutions and specialised lenders do this job better since they can actively mentor such borrowers...........
Smaller banks face higher NPA risk
..... What
adds to the pressure on smaller banks is the fact that several of them,
such as Bank of Maharashtra and Corporation Bank, witnessed
restructured accounts turn into NPAs. While the average for public
sector banks was 27% during the June quarter, in case of Bank of
Maharashtra, nearly half the restructured accounts, which were under
financial strain, turned NPA. State Bank of Travancore (48%) was at second position, followed by Syndicate Bank (45%) and Canara Bank (43%).......
Read - TOI
FM tells PSBs to step up NPA recovery
..........The minister said he hoped NPAs were a "function of the economy" and would improve with the recovery in economic growth. "We are monitoring the top 30 NPA accounts in each bank. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting,"......
Insurance cover coming for online fraud
.......The NPCI insurance cover will be over and above any policy taken by a member-bank. The policy will cover compromised and disputed transactions carried on the National Financial Switch (which facilitates inter-bank ATM transactions) ATM Network. It will also cover disputed transactions on the NFS Network. .............
Company deposit plans to need insurance cover
.........The proposed measures, which form part of the draft rules for the new Companies Act, also bar the companies from promising huge returns and hefty agent commissions in excess of the prevailing rates prescribed by the Reserve Bank of India (RBI) for such deposits. Releasing the draft rules, the corporate affairs ministry said that action would be initiated against the companies that fail to comply with the new rules, called Regulations for Acceptance of Deposits by Companies............
Be cautious of the money mirage
....The Indian markets have been primarily pump-primed by FIIs who have invested Rs 7,500 crore in 11 trading sessions. Though sentiments had changed since some of the financial reforms brought in by the new RBI Governor, Raghuram Rajan, sentiments alone cannot revive an economy bogged down by supply-side constraints and creaky infrastructure............
Lift kara de: ‘Broke’ Sami pleads for time to pay service tax
Says legal battles with ex-wife and the RBI freezing his account have left him with nothing
Troubled Pakistani singer Adnan Sami has admitted that he has indeed defaulted on service tax amounting to Rs 10 lakh, but said in an emotional plea that the legal battle with his former wife Sabah Galadari had left him “bankrupt”.
Read - Mumbai Mirror
Why 80:20 scheme has high risk for customers?
........Effectively this means that if builders fail to service loans on time, it is the buyer who is defaulting on the loan. The bank would claim such as home loan a Non Performing Asset if the builder does not pay and would tag the home buyer a defaulter. This means the credit score of the home buyer may go for a toss for no fault of his. If the builder delays and defaults on the payment of interest, the home buyers’ credit score would plunge and over a period of time, he would be a defaulter for the CIBIL. Till the time RBI announced a ban on such schemes, the banks were selective about the projects and the builders with whom they want to go with such an arrangement............
Bringing gold under savings head to ease deficit burden
.........At present, the valuables are placed under a separate heading within Gross Capital Formation (GCF), which is a proxy for investment thereby reducing both the savings and the private final consumption expenditure. However if it is treated as consumption item, it could push the country’s GDP while in case of savings, it would help the government in easing its fiscal deficit pressure. Reserve Bank of India about two years ago had pointed out the need to look into the issue..........
Banks must depute senior officers to recover NPAs: FM
.....“Banks have been advised to empower or set apart an officer of senior rank, at least of General Manager rank, to look at recovery, especially recovery from written off accounts... We will try to recover as much as possible from the written off accounts,” he said, noting that defaulters often try to stop the recovery process............
FM wants govt banks to cut rates; lenders reluctant
........While the government has been asking banks to lower rates, the central bank has yet to show signs of monetary easing. In its last policy review, in September, it had raised the repo rate — the key policy rate at which it lends short-term funds to banks — by 25 basis points; and, it might may go for another hike on October 29............
PSBs to get 14k cr in Round 1
........Although
finance minister P Chidambaram has promised that banks that offer more
discounted loans during the festival season, will be eligible to get
more capital, the calculation will be done only after the schemes end on
January, financial services secretary Rajiv Takru indicated. Chidambram
said a few banks had told him that they do not need more capital for
the schemes aimed at boosting demand for automobiles and white goods..........
Read - TOI
RBI okays Bengal's state-sponsored deposit-taking scheme
.......Following an application from West Bengal Infrastructure Development Finance Corporation (WBIDFC), RBI has has given its nod allowing the state-government owned body to collect public deposit. "WBIDFC already had Non-Banking Financial Company (NBFC) certificate from RBI. It had earlier raised firms for different development projects from financial institutions. But to raise public deposits one needs to fulfill more criteria. We had written to RBI on this," an official said.........
FM spreads Diwali cheer, says gloom overdone
......“Even in this current environment, we have got so many proposals and these are being processed,” Chidambaram told reporters after a three-hour-long meeting with chiefs of public sector banks (PSBs) at which he reviewed their quarterly performance. The finance minister announced that the Reserve Bank of India’s (RBI) twin schemes to attract foreign funds, through Foreign Currency Non-Resident (Banking) accounts and for the purpose of tier I capital, had attracted $9.6 billion.............
Tuesday, October 22, 2013
Mint Road now closer to North Block
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