The Prime Minister's Economic Advisory Council has recommended phased dilution of government stake in public-sector banks, from 58 per cent to 51 per cent, and introduction of on-tap licensing of new banks. In a note prepared last week, the council, headed by C Rangarajan, said the stake reduction would help raise the additional capital required to implement the Basel III norms, meant to strengthen the banking system...........
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, November 11, 2013
New bank licences: Sebi scans listed applicants, group firms
As the Reserve Bank of India (RBI) gears up to issue new bank licences, capital markets regulator Securities Exchanges Board of India (Sebi) has also a job at hand that involves scrutinising all applicants coming under its jurisdiction directly or through group entities. Sebi’s scrutiny follows detailed queries shot off by RBI to various regulators in India and abroad as a part of its due diligence of entities seeking to enter banking arena.........
Foreign banks in India: Vital statistics
........Here is a brief snapshot of foreign banks in India in terms of five key parameters—branch network, capital and reserves, deposits, investments and advances......
Foreign banks get a foot in the door
.......New rules for foreign banks have been under discussion here for years. The abrupt release of the latest regulations after the close of trading on Wednesday represents the most recent in a series of moves to increase competition in financial services by Raghuram Rajan, the prominent economist who became the governor of the Reserve Bank of India, the central bank, on September 4.............
New bank licences: Sebi scans listed applicants, group firms
......According to a senior official, Sebi is looking into the capital market track-record of all the group entities of 26 banking aspirants, some of whom are either listed entities or have presence in Sebi-regulated businesses like mutual funds, brokerage and investment banks.............
Global forex probe: large banks like HSBC, Barclays, Citi under scanner
........Those looking into the matter mainly include Swiss Financial Market Supervisory Authority FINMA, UK’s Financial Conduct Authority (FCA), as also other regulators in Europe and the US, while they are also approaching Indian regulators like Sebi and RBI for the worldwide probe.............
Fresh tremors for the rupee?
.......The Reserve Bank of India (RBI)'s first major (and classical) defence was to raise short-term rates on July 15 when it both capped the amount that could banks could borrow from the repo window and increased the emergency marginal standing facility rate by a hefty three percentage points. In effect, the marginal cost of funds climbed three percentage points and pulled up all short-term rates with it. While the collateral damage of this action was huge,.........
‘No ‘sunset date’ for closing dlr window for oil cos’
............“If you are talking about special window for oil companies, there is no sunset date. No, the RBI will assess that, the first thing is volatility should not come into the market,” ..............
A new gold standard for imports
........The government should get the State Bank of India (SBI) (which is already familiar with the gold deposit scheme successfully targeting temples) to conceive and launch a visible and persuasive gold deposit scheme - with a catchy name and TV advertising - with a one- to three-year tenure for individuals. The government should define an annual cap of 200 tonnes for this scheme, to limit its effect on our current account deficit in the future since we will have to import later to pay these individuals back. As soon as we get.......
Mobile banking gains momentum: monthly deals up 150% in 2013
....Mobile banking is comparatively a new phenomenon in India as it started in 2000 when HDFC Bank became the first bank to launch mobile banking. Initially, banks did not see much transactions but a big shift happened with the advent of smartphones. Though, smartphones are now generating major traffic on mobile banking, banking transactions can also be done on basic phones......
Our confusing tax code
........Many assume paying income tax is the same as Tax Deduction at Source (TDS), says certified financial planner Suresh Sadagopan. "This is because banks do not deduct tax at source if your interest income from fixed deposits is up to or more than Rs 10,000," he says. Therefore, many make small deposit accounts across more than one bank and save on TDS. Instead of one Rs 5-lakh deposit, many make five Rs 1-lakh deposit accounts. Yet, there is an incidence of income tax liability under the head of income from other sources when you take into account all the interest incomes together. When investors put money in tax-saving bank deposits, that have a lock-in of five years, they assume the interest earned on these deposits is also tax-exempt. This is untrue............
Saturday, November 9, 2013
"Must Reserve Bank Pay Interest On CRR Balances ?" - V.K.Sharma
.........It is not that RBI cannot, and should not, pay interest on CRR as demanded in some quarters. Only that to have the desired extent of impounding to influence aggregate demand in the real economy, M3 will still need to be contracted by a certain amount. What will happen if interest is paid is that the effective/ substantive contraction/withdrawal of money will be less to the extent of interest - reserve/ primary/base money - paid by RBI and so CRR will have to be so much higher than, say 4% at present, to achieve the required contraction in M3 (Money Supply) to achieve the required compression in aggregate demand in the real economy !.........
RBI's Financial Literacy Quiz Guwahati Team wins in National Finals
Kochhar, most powerful Indian businesswoman
ICICI Bank MD and CEO Chanda Kochhar has been named as the most powerful businesswoman in India for the third consecutive year by Fortune Magazine. Shikha Sharma of Axis Bank and Aruna Jayanthi of Capgemini India have taken the second and third place in the Fortune list of 50 most powerful businesswomen ranking for 2013................
New CMD of Bank of Maharashtra
Sushil Muhnot has taken over as Chairman & Managing Director of Bank of Maharashtra. Prior to joining Bank of Maharashtra he was working as CMD of Small Industries Development Bank of India ( SIDBI). Muhnot is a B Text (Tech), MBA with CAIIB and Masters in Ecology and Environment. He has wide experience in banking and financing...........
The cycles of history
..........My third and final observation has been about the curious lack of interest on this matter in India. Scanning the Indian press from afar, I saw little comment - positive or negative - on the reorganisation from either editors or government officials. The general attitude appears to be that the Bank is an irrelevant organisation, so why bother. Personally, I feel this is a mistake. Throughout its history, the Bank has been shaped by its interaction with India and this will continue for the foreseeable future. It behoves India to take an equivalent interest in the reshaping of the World Bank.......
Proven failure of NABARD
I would add one more to the list that it has passed on to NABARD a part. Even for the Cooperative sector, it should resume the supervisory and regulatory responsibility because of the proven failure of NABARD to handle it. Secondly, at the time when such function was entrusted NABARD was owned partly by RBI whereas now it is fully owned by the State Government. Both structurally and functionally, the regulatory function of financial entities should rest with the RBI.
- Yerram Raju
Sound advice
My View on "Precautionary Margin Fund - - Dr.T.V.Gopalakrishna...":
A sound advice from a regulator banker who made extensive research on the NPAs. NPAs have reached Himalayan heights due to three factors:
banks dependence on external agencies for due diligence; excessive emphasis on rating agency ratings that has become a prerequisite under Basel regulations; and failure in credit risk assessment. These have been accentuated by the falling growth of the economy under global influence partly and policy paralysis domestically.
- Yerram Raju
Better late than never.............
The short and crisp article puts forth an agenda for reforms PSBs should have seen taking off at least a decade earlier. Post-independence, India developed its public sector with a vision which was unique and nationalisation of first group of private sector banks was the culmination of a well-planned economic development initiative starting with the first Five Year Plan. Unfortunately, the decades that followed saw a planned effort from vested interests to undermine the value and efficiency of Indian public sector. This resulted in stifling of institutions like UTI and stagnation of several public sector organisations. Private sector flourished by sucking the creamy layer of indusries and services sectors, with government support in various forms including tax relief amounting to lakhs of crores. The neglect of public sector banks in the matter of infrastructure and HR issues from recruitment of clerks to board appointments has to be seen in this wider context. This article is a timely reminder for initiating appropriate reforms in public sector in general, as private sector has only modest share in economic development initiatives affecting the majority of Indians.
- M G WARRIER, Mumbai
Role of Regional Rural Banks in Rural Development
.......... The regulations governing rural development are also covered in detail. Real-World Data gives the use of data from sources such as NABARD, RBI, GoI,and APGVB helps the reader apply the concepts and theories discussed in the book to systems and events in the World.
CREDAI concerned over rise in repo rate
........“Keeping in view the demand-supply gap in the affordable housing segment, the government needs to support the sector by focusing on development initiatives such as recognising affordable housing as a priority sector for funding and providing added incentives to the lenders and developers. The RBI should consider increasing the exposure to Commercial Real Estate (CRE) segment from three per cent to at least 12 per cent and encourage the funding of SME projects in tier-I, tier-II and tier-III towns and cities to boost the segment. Such initiatives will facilitate the flow of formal credit to the sector and encourage the developers to take up more projects in the affordable housing segment,” he added...........
Bittersweet news on interest rates
........Since the RBI is concerned that deposit mobilisation is not happening aggressively banks will have to borrow from other sources to meet the credit demand. While inflation is still not at durable levels, banks and financial institutions are not sure if the central bank will cut the rates in the coming months. It is too early for them to consider any upfront rate reduction on lending rates. In their quest to attract higher deposit mobilisation, if they increase the rates the lending rates would automatically go up which will not help resolve the issue. .......
Introduce differential interest rate system
.......“If the key short-term bank rates are raised by RBI in this manner to suck out the excess liquidity from the system to contain inflation, the industrial growth will get stunted. The RBI has to come forward with a ‘sector-specific differential interest rate’ methodology if the existence of capital intensive and SME (small and medium enterprises)-dominated segments like garment industry need to be protected,” ........
A one-point agenda for RBI
........Deep institutional reform of the RBI is called for, if India is to avoid the trap of volatile investments, economic/financial instability and recurring boom/bust scenarios. The RBI must have a narrow mandate on price stability and it must deliver on that mandate. It is no longer economically defensible to say that the RBI can be the jack of so many trades — monetary authority, exchange rate manager, debt manager (which compels money-financing of budget deficits), regulator and supervisor of banks and NBFCs...........
Election Commission did not permit Finance Ministry to inaugurate Bhartiya Mahila Bank from Delhi headquarters
............The Election Commission owing to the code of conduct for poll-bound Delhi, Rajasthan and Madhya Pradesh has not granted the permission to the government. Thus, the Bank shall now be launched from Mumbai on the due date............
Plus ça Change
..........There seems to have been as much rivalry between peers as there is today; when Central Bank faced a run in 1913, Bank of India tried to stop the wealthy Cowasji Jehangir from helping the bank. And the constant spats between Osborne Smith, the first RBI governor, and civil servants Sir James Grigg and Sir James Taylor, are reminiscent of the recent cold war between North Block and Mint Road. Dadabhoy's book is more than a mere glimpse — it's a detailed account of the evolution of India's financial sector...........
Banking on India
.......The new policy on foreign banks is hence progressive considering our own tryst with deeper financial liberalisation, though the individual banks will have to take a call on whether they would really like to get their fingers wet. It would depend on the time horizon that they are working with, and plain vanilla entry, prima facie, does not really look appealing. It is unlikely that more than a couple of the large banks would find the terms attractive as the latter stand at the moment. .........
Better bank for the buck
......It’s possible, therefore, that the larger and more entrenched banks will opt for the WoS route; though a couple of the smaller players have said they will give it a shot, some might prefer to stay with their existing models based primarily on fee-based incomes. RBI has been generous enough to give foreign banks a choice even though it would prefer they operate through a WoS since that would lower systemic risk. The rest is up to them.
US business body welcomes Indian banking sector reform
WASHINGTON: The US business body has welcomed the new RBI rules governing access for foreign banks operating in India, describing the move as a positive step and called for opening up of other areas in particular the insurance sector. ..............
Reaction Is Cautiously Positive to India’s Bank Rules
..........“We are positively inclined toward growing our presence in India under the new regulations, though the size and manner of expansion are details that are yet to be determined,” said Sanjiv Bhasin, chief executive of the Indian arm of DBS, a Singaporean bank. “At this time, any sizable global banking institution cannot ignore markets like India, China and Indonesia. It is question of the priorities of each respective bank and when it is a suitable to enter the market for that institution.”..........
Fewer, Bigger Banks Needed
This
refers to ‘Public Sector Banks Need Urgent and Bold Reform’ (ET, Nov
8). Consolidation in the PSB space requires political will, which is
missing. Agreed, even the smallest PSB now has total business of around .
2 lakh crore and a fairly large network, and merger with other banks
is not an easy proposition. But for a sound and vibrant banking system,
we need to have fewer strong banks instead of many smaller banks. A
beginning can be made by merging identified small banks with their
bigger cousins so the merged entity gains reach to acquire pan-India
presence.
- SRINIVASAN UMASHANKAR, Nagpur (ET)
- SRINIVASAN UMASHANKAR, Nagpur (ET)
RBI's foreign bank norms signal prospect of more reforms: Fitch
........"As such, the recent rules are a good beginning - but insufficient, by themselves, to shake up the domestic banking landscape. But what it potentially signals is that further banking reforms - currently being considered - are not too far off," ..........
Reduce regulatory burden to attract investors to India - Naina Lal Kidwai
.......Despite important economic reforms since 1991, regulatory burden on Indian businesses is real and these issues need to be resolved to realise our growth potential. The report of the Committee for Reforming the Regulatory Environment for Doing Business in India (or the Damodaran Committee report) agreed that there were hurdles and said: “The seemingly mindless explosion of regulations, impacting seriously on management time and cost has created a negative perception of the regulatory environment in which business is conducted”............
RBI permits third party payments for export, import transactions
.............Among the key conditions RBI said that for export transaction firm irrevocable order backed by a tripartite agreement should be in place while for import transactions firm irrevocable purchase order / tripartite agreement should be in place.......
IIMA’s biz summit to host Vinod Rai, C Rangarajan
.......The duo are slated to speak at the session titled "The Global Turmoil and India Story", which attempts to reflect upon the turbulent times that have beset the country and the resulting uncertainty in corporate decision making, at IIMA.....
Bonds to the rescue?
......What are these bonds? Has this idea come up from the Reserve Bank of India’s restrictions on bank finance to the sector like the 80:20 order? Again, are these bonds mooted on the Singapore pattern? The last 2-3 Central budgets have been earmarking substantial allocations for roads, highways, airports and ports based on the policy of encouraging infrastructure development, which is fundamental to overall economic development. However, because of budgetary constraints and the growing current account deficit (CAD) as also ......
Allow municipal bonds to be traded: Assocham to RBI
.......In a note submitted to the Reserve Bank of India (RBI), the chamber has stated that as pace of urbanisation gathers momentum and new cities are created as a consequence of industrial corridors, need for creating such municipal bond market will be of necessity...........
AMBEA concerns
......In a statement, the association said if the government does not initiate necessary steps at the earliest then it is likely that the Reserve Bank of India (RBI) may cancel the license of the bank whose normal functioning has been paralyzed due to the absence of CEO......
Govt drawing new roadmap for boosting services exports
..........On data collection, Kher said, the Kolkata-based DGCI&S will be the anchor and will be responsible for capturing data from three sources -- the RBI, the survey based exercise which Central Statistical Organisation and DGCI&S would do together and all other methods of collecting data......................
DCC bank polls: Congress wants nominations rejected
.........“An inquiry by the Joint Registrar of Cooperative Societies had proved that the bank had violated several provisions of the Act. It had introduced a one-time settlement scheme for loans without the permission of either the National Bank for Agriculture and Rural Development (NABARD) or the Reserve Bank of India. The bank had waived the principal amount of loans of several defaulters in violation of guidelines. It was also found that the bank had repeatedly advanced loans to Naranja Sahakari Sakkare Karkhane, which was a regular defaulter,” Mr. Ali said.....
Vighney, Nikhat take the honours
Hyderabad : P. Vighney Reddy of Reserve Bank of India and Nikhat Banu of Gujarati Seva Mandal won the men’s and women’s singles titles in the Swami Vivekananda 150th birth anniversary State-ranking table tennis tournament here. Vighney defeated Somnath Ghosh (SCR) 11-7, 11-5, 11-4, 11-4 in the men’s final, while Nikhat overcame A. Sreeja (GTTA) 11-5, 11-6, 11-9, 11-9, 11-7 in the women’s final.
The Hindu
Friday, November 8, 2013
Balancing Act for India’s Top Banker
His track record in his two months in office suggests a reluctance to embrace the monetarism for which the University of Chicago economics department has been known, while he has embraced limited financial deregulation. Along the way, he has avoided any signs of doctrine, preferring to see the results of each move before acting again. “I’m willing to be persuaded by the data,” he said in an interview at the central bank, in a wood-paneled reception room with one wall lined with the portraits of his predecessors............
Portrait of the real Rajan
My View on "How RBI Governor Raghuram Rajan has quietly assert...":
The cover story “His Own Man” together with the excerpts from the October 29 interview given by RBI Governor Dr Raghuram Rajan (Business Today, November 24) has crisply and clearly portraited the real Rajan whom different people are perceiving differently, depending on their ‘constituency’ interests. It is comforting to find that Rajan is as forthright in expressing his views post- September 4, as he was when he wrote his book Fault Lines. Putting it differently, those who have read Fault Lines will not be shocked by his approach to issues as expressed in his responses after he took over as RBI Governor. In August this year writing for The Global ANALYST, I had made the following comments about Rajan:
“The FM who put his Secretary Dr D Subbarao as the Governor of RBI hoping to have a submissive Governor found a different person in Subbarao soon after he started functioning from Mint Road. In that context, perhaps, the FM is going to be ‘second time’ unlucky…”
We are lucky to have institutions like RBI which have grown with work ethics and skills that match with the best in the world. For allowing this to happen, we must thank our political leadership which put national interests above anything else, whenever issue at stake was country’s prestige.
- M G Warrier, Mumbai
FinMin brings back lateral transfer of CMDs in govt banks
The finance ministry has shortlisted the names of executive directors who are likely to head public sector banks in 2014-15. Six public sector banks will see their chairmen and managing directors retiring in 2014-15, which are Bank of Baroda, Indian overseas bank, Canara Bank, Oriental Bank of Commerce, Vijaya Bank and United Bank of India. The selection panel comprising Anand Sinha, deputy governor, Reserve Bank of India and Rajiv Takru, secretary, financial services in the ministry of finance, among others, interviewed 19 executive directors last week...........
Head and heart nicely captured..............
My View on Salaam to Salim's HR vision
 |
| File photo - Fare-thee-well - Shri Salim Gangadharan |
Beena has captured the qualities of head and
heart possessed by Salim excellently well in this short note. Myself having
been a miser all through in appreciating others, when looking forward to the
wrong side of seventy, feel that many of us are ‘lavish’ in criticism and do
not speak out when we observe good qualities in our bosses and colleagues.
Though I had no occasion to work with Salim, he is a good friend and I have
enough reason to endorse Beena’s comments, as I have been in touch with him
since a long time and if he is retiring as RD, Thiruvananthapuram earning the love
and affection of the entire RBI Family (including retirees and family
pensioners), that itself is proof for his friendly and affectionate
relationship with colleagues and management skills. I wish him the very best in
his second half of life.
- M G Warrier,Mumbai
I am proud that Salim is a great friend of
mine. Salim is very different from many others I have met and interacted. He is
rational and very social as his name itself indicates. A real HR development
executive. I am proud that we were together as Faculty Members in BTC along
with Jayaram, Mahapatra(s), Vijay Bhaskar. We introduced the concept of more
than two FMs handling a training session jointly. It was a hit and a golden
time for all of us and also all the participants of various programmes. He was
an expert on bank supervision, an expert in forex, a democratic leader et all -
in fact an all rounder. I wish him my best wishes for an active life.
– P.Aravindan
Salim a true friend and a learned
guide. Thank you P.Aravind for reminding about BTC.
- Jay
Salim Sir, I would also like to wish you a
happy retired life. I, however, wish to add, that the years of retirement can
and should mean a world of new opportunities. The world is still your oyster,
you are not the guy, who will, post retirement, retire to a cloister as your
body, mind and spirit are still full of sap and moisture.
- A well wisher
Dear Salim,
I had missed your date of retirement and then
got busy in our local Durga Puja and Diwali celebrations. At the outset, I take
this opportunity to wish you and your family a very Happy Dusherrra and Diwali
and also wish you a happy, healthy and peaceful re-tyred life (sic) as because
a man of action like you can never sit idle and must be engaging yourself with
some innovative and self-actualisation activity, which would have been
otherwise got suppressed under the weight of routine official duties. Your
qualities of head and heart are well known at least to me who have seen you
since 1980s in Kolkata (the then Calcutta). Let me wish you All Well once again
and please keep in touch in the retired RBI-ites club, so that we can share our
joys and sorrows of living in the days to come.
- Prabal Sen, Kolkata
I had the privilege to be associated with Salim
sir for about 5 years during his stint in FED, CO. He was a natural teacher
which held him in good stead during his faculty stint at BTC. He would always
break down the complex regulatory/prudential/ accounting issues into simple
concept and would moderate his articulation to suit the audience absorptive
capacity. His contributions to every spheres of central banking like banking
regulation and supervision, capital account management, treasury or market
products like currency futures are well documented in the various committees he
headed or was associated with or his lectures as a faculty in BTC. He was a
task master to the core and would optimise the given resources by identifying,
nurturing talents, delegating power and responsibility, encouraging independent
decisions, but at the same time being steadfastly behind his people in every
decision or action. His firm belief at all time was that “One alone cannot
achieve everything, it’s only as a team with people around you, one can achieve
remarkable feats”. He motivated others with his passion for work and there was
no way the team under him would not excel. He had deep rooted compassion for
people which emanated from his belief ‘Do good to others and Good will come
back to you”. Humility wrapped his persona as a second robe and made him
popular figure in RBI, culminating in remarkable tenure as Regional Directors
in Kolkatta and Thiruvanthpuram.
2. As his innings with central bank has come to
end, his next innings on the larger canvas of life beckons him. Wishing him
success and healthy stint in his endeavour to give back to society all that
society has given him over the years.
- Harsh
Photo courtesy : Sajid, Mohammed P, Assistant General Manager, Thiruvanantpuram
Photo courtesy : Sajid, Mohammed P, Assistant General Manager, Thiruvanantpuram
Inauguration of academic block
Mangalore : G. Gopalakrishna, Executive Director, Reserve Bank of India will inaugurate the academic block of Nitte Institute of Banking and Finance, Deralkatte, at 10.30 a. m. on Saturday. The institute, under Nitte University, has been established to promote academic programmes, specialised training in banking operations and provide research and consultancy services to the banking Industry. Chairman and Managing Director of Syndicate Bank Sudhir Kumar Jain and Chairman and Managing Director of Corporation Bank S.R. Bansal would be the guests of honour.
Hindu
Cheque clearance made easy in Bhopal
BHOPAL: Eliminating the need for physical movement of cheques for clearance, new cheque truncation system (CTS-2010) went live in the city on Wednesday. After Mumbai, Bhopal became the second centre in the western region to be introduced to the new way of banking. Reserve Bank of India (RBI) Regional Director J B Bhoria said through CTS-2010, electronic images of cheques carrying key information will be captured and transmitted...........
HDFC Bank launches rural financial literacy initiative in Kerala
......HDFC Bank will conduct financial literacy camps in 39 rural and semi-urban branches across Kerala. As per instructions from the RBI, these branches will serve the Malampuzha block in Palakkad district and the Mathilakam block in Trichur district of Kerala. The camps will enable both adults and school children from 234 Panchayath wards in 26 villages to attain a conceptual understanding of financial products and services. ...........
Is bank liable if client is robbed in branch?
Can a bank be held liable if a customer is robbed inside the bank premises, but before he has deposited cash with the cashier? The National Consumer Disputes Redressal Commission (NCDRC) has delivered conflicting verdicts. In a recent judgment NCDRC ruled that......
RBI signs cooperation pact with central bank of Australia, NZ
MUMBAI: The Reserve Bank has signed cooperation agreement with central banks of Australia and New Zealand for exchange of information. The MoUs provide a formal, yet legally non-binding, channel for information exchange between the supervisors, RBI said in a statement. ..........
That seventies feeling
It is no secret that the Indian economy has been in a fair bit of trouble in recent quarters. The latest economic review published by the Reserve Bank of India (RBI) in October shows why there is no easy way out of the current muddle............
No, this isn’t a pre-NaMo bull run
.......The planned reduction in the quantum of asset purchase by the US Federal Reserve has been postponed for a few months, at least. This has resulted in resumption of foreign portfolio inflows which has pushed stock prices and has also provided the much needed stability to the currency market. The Reserve Bank of India is also doing its bit in the meantime to shore up its firepower by bumping up the foreign exchange reserve. However, there is another argument that is beginning to gain ground. It is now being said that the stock markets have started factoring in a change of guard in New Delhi...........
IMF economist Siddharth Tiwari likely be next CEA
Eminent International Monetary Fund (IMF) economist Siddharth Tiwari, with about 25 years of experience at the multilateral agency, is likely to succeed Raghuram Rajan as the next chief economic advisor (CEA) in the finance ministry. Tiwari, an Indian national, is the director of strategy, policy, and review at the IMF and has got vast experience of Asia & the Pacific, as well as Africa and Europe. Though there is no official confirmation, officials said he was being considered after some other candidates did not show much interest, fearing a political change after next year’s elections, while some names were struck down by the finance minister............
How much India should care for S&P’s views
...................But a low rating for the country sounds warning signal to the investor that the country is at risk. Now, given that the government and the RBI are doing their best to encourage borrowers to tap the euro markets for funds to shore up our forex reserves, a downgrade would men bad news for these companies as enhanced perceived risk will automatically push up the cost of borrowing. Also, when there was a currency crisis a couple of months back, the concept of a sovereign bond was also spoken of, in which case the rating would matter. ...........
A slick ahead
............RBI’s dilemma is that it cannot meet such massive requirements of these firms from its dollar kitty. Sooner or later, these firms have to return to the market or some demand management has to be effected. The onus of doing that, however, lies with the Union government.
Read - Mint
Read - Mint
India Post to set up ATMs at 4 branches in Chennai
CHENNAI: India Post may be fighting to remain relevant in a digital world, but don't write a requiem for it just yet. After emerging as a contender for a banking licence when the Reserve Bank of India issued final guidelines for new permits earlier this year, India Post drew up a plan it is now ready to implement. India Post, Chennai city, will offer core banking solutions in four head post offices in the region as part of a pilot project. As part of its trial run before making a full-fledged foray into banking, India Post will also set up ATMs at the head post offices in Mylapore, T Nagar and Tambaram and on Anna Salai. .............
Public Sector Banks Need Urgent and Bold Reform
.......For the first time, in case of SBI, Indian government has adopted the
idea of fixed tenure for CEO. This has to be embraced more broadly.
Finally, openness to lateral induction of talent at all levels and HR
processes and policies aligned to the private sector. Government HR
policies on recruitment, promotion and performance management are not
suited to create a high-performance
culture required to compete with the private sector. Those who argue
the public sector will stay dominant in Indian banking take heart from
the fact that it still controls 73% market share in assets after almost
two decades of competition from the private sector. To their dismay,
that number is lower in...........
How banks can use HUL’s sachet strategy to crack rural market
.......Recently the Reserve Bank of India appointed a technical committee, comprising senior executives predominantly from the banking and mobile sectors, to examine the feasibility of implementing an SMS-based funds transfer service using an app that can support any type of mobile handset, including feature phones. The technical committee will also consider the advantages/challenges of having a single app across all handsets in an SMS encrypted environment. It will submit its report by the end of this year. This new initiative is a welcome move as it will help promote mobile-based fund transfers even in rural areas..........
Read..........
Dipan Mehta positive on banking space
........."The private sector banks came out with very decent set of numbers for the September quarter despite various challenges which were there in the quarter with all the various measures which the Reserve Bank of India (RBI) took to curtail currency volatility. There was a spike in the debt markets also and wholesale debt funding costs also went up. Despite all these issues by and large private sector banks continued their secular growth as we have seen.".........
The more the merrier
.......It has been a long-standing position of the central bank that the wholly owned subsidiary mode is preferable, since it induces the foreign bank to maintain a domestic balance sheet and, importantly, a governance framework. In the absence of clear incentives for subsidiaries, foreign banks logically prefer the branch mode; but now, those who see India as a long-term growth opportunity have the basis for deciding between the two modes. The two main operational advantages that a wholly owned subsidiary will now have are the......
Open question
.........How effective the incentives for subsidiarisation are going to be is an open question. WOS will be treated like domestic banks as far as the RBI's branch guidelines are concerned. However, this will only prove to be tempting if foreign banks aim to expand in the retail segment. Currently, foreign banks like HSBC and Citibank seem more invested in trade and corporate finance. It is unlikely that liberal branch expansion rules will be a game changer for them. Additionally..........
Foreign Banks India Ltd
.....The above carrot-and-stick approach policy makes sense, when major foreign banks are themselves keen on grabbing a bigger slice of the market for financial products in a $2 trillion (and growing) economy. Indian consumers stand to gain from their expanded operations and greater competition. But consumer interest will also be served by ring-fencing or making a clear delineation of their assets and liabilities from those of the foreign parents; especially important in the aftermath of the 2008 global financial crisis........
NO RUSH HOUR SEEN AT MINT STREET
.......“For
banks that have been here for a long time, it would be in a sense
retrospective legislation for us to say now you will have to change the
form,’’ governor Raghuram Rajan had said. “They have come in with some
ground rules and we can’t overnight
change the rules on them. So we have to give them some incentive and
the incentive we are giving them is near national treatment on a
reciprocal basis.’.................
Read - ET
Foreign banks respond with caution to RBI’s proposal for local incorporation
..........The RBI statement on the new norms for foreign banks is silent on the tax or stamp duty implications. However, former RBI governor D. Subbarao in an address to bankers in June had said “major issues with regards to capital gains tax and payment of stamp duty have been resolved”. “There are still some legal issues which we hope to resolve in the next few months,” he had said, without specifying what these issues were............
Bigger play for foreign banks may mean better deal for you and me
..........Allowing foreign banks greater operational ground may both help protect the interests of depositors and fund capital projects in India. It may even bring about cost-effective banking backed by technology, thus increasing banking penetration. While mergers and acquisitions may be some time away, smaller banks like IndusInd Bank, ING Vysya, Yes Bank, Dhanalakshmi Bank, Karnataka Bank and Ratnakar Bank — which are looking for capital to expand their footprint or scouting for investors — will see their valuations rise dramatically........
Foreign lenders wait for better clarity
.....RBI does not have the authority to offer tax incentives to foreign banks for creating subsidiaries. A year ago, the finance ministry had agreed to offer tax neutrality for subsidiarisation of foreign banks, but lenders had also demanded tax deduction for the cost incurred on conversion, as well as relief from payment of stamp duty. So far, there is no clarity on whether the government will agree to these demands........
Madhya Pradesh police bust dabba trading racket
.........“Since they were operating the fake exchange through mobile phones, it has become a multi-locational crime. We are looking to find if there is any violation of the rules on foreign exchange, Sebi rules, RBI rules, tax law and other rules and Acts, besides cyber crime. We will have to also see from where they got the software. So, it has become necessary to seek support of various investigation agencies. The CBI has multi-locational presence and can investigate the case better,”......
First women's bond from World Bank raises USD 165 mn
...........Bonds tied to social or environmental targets are part of a new trend of social finance, as a growing class of investors seek to bridge the gap between philanthropy and pure financial returns. Besides helping businesswomen, women's bonds can help raise awareness about the importance of gender issues in development, said Jingdong Hua, vice president and treasurer at the International Finance Corporation. "The gender issue ... weaves so tightly into every social and development issue we're facing today," he told Reuters...................
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