Ethics and Corporate Governance

My View on Conference on Ethics and Corporate Governance

There were several reports on Corporate Governance ( which has to be on ethical basis) and innumerable discussions on the subject. Now that another conference was organized on the 11th December, 2013, under the auspices of NISM, we can be absolutely certain that the issue has been clinched and henceforth there would be highest standards of Ethics and Corporate Governance in the country!! 

- A. Chandramouliswaran

I recall the first such conference held by ASCI in 1999 when as the Conference Director, I and Dr Y.R.K. Reddy came out with the first ever publication in India on the subject - Corporate Governance in Banks and Financial Institutions in 2000 published by Tata McGraw Hill. Many issues raised therein by stalwarts are still hanging lose. Hope the present conference would address them. 

- Yerram Raju

RBI win against Real Indian FC

......RIFC really tested RBI and made them work hard for this win but Kamal Negi's goal in the added injury time of second half proved to be too little too late. Rajiv Karir put RBI ahead as early as the second minute of the match after a slight blip from the RIFC goalkeeper Hardik Damor who couldn't collect the ball cleanly and it slipped into the net.Zahid Safeda consolidated the tally in the 16th minute scoring past three defenders who stood in line of the shot. RBI went into the breather with a 2-0 advantage and ..........

Read - TOI

Bust inflation now

.........Raghuram Rajan must use RBI's forthcoming study on monetary policy framework to nudge the central bank towards being more accountable on inflation management. RBI's lack of credibility has cost India dear. Monetary policy cannot deliver long-term growth except in a limited way by ensuring price stability............

Read - TOI

Triple whammy?

........This is the backdrop in which the mid-quarter monetary policy decision will be taken next week. Going by Reserve Bank of India Governor Raghuram Rajan's statements over the past three months, the dominant consideration will be the acceleration in inflation, including the hardening of the core; on this basis, another hike in the repo rate now becomes the most likely outcome. The deceleration in industrial production may provide a basis for maintaining the status quo, but Dr Rajan will likely see a risk here of signalling an acceptance of an inflation threshold of 11 per cent plus - which could be acceptable to him only if ...............

Read| Business Standard

Rajan says he is uncomfortable with inflation numbers

....“We just got those numbers.The CPI number, certainly according to the market expectation, has surprised on the upside...I think it is too quick for me to react to this specific number," Rajan said after the central bank's board meet here on Thursday...........

Read | Business Standard

RBI needs to be cautious

........ Hopefully when RBI’s report on the monetary framework comes out, it will explain why one price index is responding to economic impulses and the other not. Indeed, since RBI has put out its projected CPI inflation target of 9% for the year absent of policy interventions, what the market needs to know is what level of policy rates it was looking at as appropriate. Perhaps why, while saying RBI does not plan to use any one data point, Rajan has said..........

Read - FE

Concern or crisis?

Indian banks, and consequently the entire banking system, have managed to attract criticism on the back of rising non-performing loans (NPLs)—to the extent that any mention on Indian banking in the global arena is mainly regarding NPLs and restructured loans. The inherent strengths of the retail deposit backed banking system and a two-century-old track record of no bank failures have receded into the oblivion. Let us examine whether the so-called NPL crisis is really a crisis situation.......

Read - FE

To check for potential NPAs, RBI orders audit of Allahabad Bank

......The banking regulator has notified Allahabad Bank about the audit to assess the potential non-performing assets and ‘special mention accounts’, finance ministry sources told FE. The RBI’s focus on ‘special mention accounts’ of banks is part of its efforts to ensure that the lenders upgrade their Early Warning Systems so that timely action can be taken before more accounts slip into the NPA category, .....

Read - FE

Banks may soon begin charging customers for ATM usage

......Banks are worried. If the 100,000 ATMs have 20 million transactions a day that means 600 million transactions a month. So, if each transaction costs Rs 6, the total expenditure for banks would be Rs 360 crore a month. If the proposal goes through, this cost would have to be borne by customers. Imposition of any fee would mean the end of free ATM usage for customers...........

Read | HBL

Banks want more time for biometric card authentication

.........RBI's working group on the subject, chaired by Gowri Mukherjee, had advised testing the feasibility of using Aadhaar as an additional factor of authentication for domestic transactions.

Read | Business Standard

Here's what RBS sees about Indian banks in 2014

Indian banks are likely to hit the international market with Basel III compliant capital issuances (bonds) in 2014. This will ideally improve capital adequacy of banks with no dilution, Royal Bank of Scotland said in a report released on Thursday.......... 

Read - ET

New Bank Licences: Rajan optimistic on Jan date

.............."My hope is that by early next year, we will be able to announce the licences. I think we are on target for that, maybe a few weeks this way or that way," Rajan said at a press meet on Thursday...........

Read | Business Standard

What should India's new banks focus on?

......As the new aspirants wait to hear from the Reserve Bank of India (RBI), they should be developing the plan for the plan. This will not be easy as the mandate set out by the Reserve Bank of India is challenging. It calls for one out of every four branches opened by the new banks to be located in rural areas - reflecting the central bank's concern that only 59% of households in India had access to banking services in 2011, according to the most recent census data. Furthermore, the banks will need......... .. 

Read - ET....

Bank unions oppose move to grant licences to corporates

United Forum of Bank Unions (UFBU), which has declared an all-India strike on December 18, is of the view that corporates should not be given banking licences. They were in the first place responsible for the collapse of many banks during 1947-1969, according to M.V. Murali, Convenor, UFBU. He is also General Secretary of both National Confederation of Bank Employees and All-India State Bank of India Staff Federation..............

Read - HBL

We want a bank licence, but not at any cost, says Shriram Group patriarch

...........“We have made it clear to the regulator that, in the present form of new bank licence norms, it is a huge challenge for the group NBFC, with assets under management (AUM) of over Rs 60,000 crore, to transfer its businesses to a bank. We want a bank licence but not at any cost," ........

Read | Business Standard

Gopalakrishnan pitches for passage of key economic bills

....."...To me what is positive is that proactive action can reverse the situation and that is the reason why I believe the RBI Governor also yesterday talked about continuing on the appropriate bills that need to be passed even during the run-up to the elections so that we can keep up the momentum," .........

Read............

IOB gets RBI nod to open 2nd branch in Bangkok

Indian Overseas Bank (IOB) has received the Reserve Bank of India (RBI) approval for opening a second branch at Bangkok, its Chairman & Managing Director M. Narendra has said..........

Read - HBL

Court allows plea to produce Jayalalithaa's seized valuables

.....Special Court Judge John Michael D'Cunha ordered the transit of the seized material from Chennai to Bangalore by December 21, observing that it was required for giving fair justice. The seized material is deposited in an RBI treasury in Chennai...........

Read.......

RBI’s tough-speak

RBI Governor Raghuram Rajan has done well to point to the need for Opposition parties to stop playing political football and instead clear pending Bills – those on GST, the Direct Taxes Code and insurance, for instance. While one argument is that they can easily be passed by the next government, as Rajan said, a stable post-election government can’t be taken for granted. Indeed, even if the ..........

Read - FE

Raghuram Rajan warns government on fiscal reforms

A new government after the 2014 general election may have a tough time managing the economy if the present one does not work with all political parties to enact key financial legislation and carry out fiscal reforms, Reserve Bank of India (RBI) Governor Raghuram Rajan warned on Wednesday. “Otherwise markets and rating agencies may not be willing to give the new government much slack,” he told delegates of the Delhi Economics Conclave organized by the finance ministry.....

Read - Mint

Financial inclusion in India – an assessment : P Vijaya Bhaskar

Speech by Mr P Vijaya Bhaskar, Executive Director of the Reserve Bank of India, at the MFIN (Micro Finance Institutions Network) and Access-Assist Summit, New Delhi, 10 December 2013

............It is one’s earnest hope and desire that the issues raised herein would trigger an informed debate and discussion, which could provide an invaluable feedback in the run up to the Report of Nachiket Mor Committee, which at present is examining the entire gamut of issues surrounding Financial Inclusion. Further on, the research community may like to go into such aspects of Financial Inclusion, which would provide valuable leads to the regulators and all the stakeholders concerned in achieving meaningful and holistic Financial Inclusion at the earliest in our country. 

Read..........

Moving financial capability forward - innovation scale and impact : Deepali Pant Joshi

Intervention by Dr Deepali Pant Joshi, Executive Director of the Reserve Bank of India, at the 10th Anniversary of the Citi-FT Financial Education Summit, Hong Kong, 7 December 2013

........Greater financial access combined with financial education creates financially responsible citizens. This mix of financial access and financial education provides a foundation for appropriate market conduct and prudential regulation. Improving individuals' financial behaviour is a long-term policy priority. Financial education needs to commence early and continue through adulthood. In order to achieve the objective of financial inclusion, our financial literacy efforts are primarily directed towards dissemination of simple messages of financial prudence, in vernacular languages, through large awareness campaigns across the country combined with vigorous roll out of financial inclusion plans by banks, insurance and pension funds, and others. It is important to note that being literate is not a necessary prerequisite for attaining financial literacy as...........

Read......

Rationale, logic and facts of updation

Friends,  

The members of the Central Board of the Bank were not told so boldly the rationale, logic and  facts of updation in the Bank as has been told in the latest communication / appeal dated 9th Dec. 2013 to them by our GS Shri MB Talekar. This is to the best of my knowledge. I humbly wish all of  you to go through it seriously and be convinced that ultimately we would win the case as our fight is for just cause of our community. Kindly do not lose hopes as the issue has so far been dealt with in wrong direction by mighty elements like GOI. Showing perseverance and develop strong pressure  is the need of the hour for our community across the board. 

- L R Parab

Read - ReTyred Express

Mamata Banerjee has no time to meet RBI Governor

......RBI Governor Raghuram Rajan is coming down to Kolkata on Wednesday afternoon and will hold the central board meeting on Thursday. It is a custom for the governor to meet the chief ministers of states where the RBI holds its central board meetings. RBI officials said the state secretariat did not respond to a request by the banking regulator for a meeting with the chief minister. The Kolkata central board meeting is the second since Rajan took over as the RBI Governor in September .. 

Read - ET

RBI banks on experience to breeze through

....RBI is an experienced team coached by the veteran former state footballer Vijay Kachhi and as expected the RBI team comprising of stalwarts like Rajesh Tadvi, Rajiv Karir, Anil Tomar, Abhishek Tripathi and many more showed better ball control and coordination and was in complete control of the proceedings............

Read - TOI

High inflation in Nov set to keep pressure on RBI

...........If actual data for November reflects median forecasts in the poll it would harden expectations for another interest rate hike at the RBI's meeting next week. "Will Dr Rajan feel the need to respond to the rise in both WPI and CPI inflation? We expect he will and still look for a (final) 25 basis point hike at the 18 December meeting," .......

Read | Business Standard

RBI to introduce steps to bolster bond market: Rajan

....“We are much better prepared to deal with any possible tapering, partly because we built some reserves... Current account deficit (CAD) numbers are far better, far healthier than in May. But we would not say we are complacent, as there could be unexpected effects of tapering,” ............

Read | Business Standard

RBI paper on bad loans next week: Raghuram Rajan

.............“Given that the non-performing assets of PSU (public sector unit) banks are higher than others, they cannot rest on their laurels and should improve efficiency,” Rajan said. Among other things the RBI would recommend banks to form a lenders’ committee “early” to negotiate with defaulters and “accelerate provisioning” for bad loans if the negotiations fail, he said. Banks should also restructure stressed loans on viable terms and “be more transparent” on such restructuring mechanisms, he added........

Read - Mint

RBI for independent valuation of debt recast plans to ensure fairness

......."We need to have more transparency in restructuring," Rajan said in Kolkata at an CII event.  "For cleaning up the system, we need to recognise the problem early, resolve it early and recover the money," he said. RBI will elaborate all these plans next week in a discussion paper on recognising financial distress............. 

Read - ET

Foreign banks reluctant to take up RBI offer on local incorporation: survey

.....The report, the first since RBI released guidelines for foreign banks in India in November, says banks are looking for clarity in terms of the amount of stamp duty they pay, accounting norms and also a so-called comfort letter that the Indian central bank is seeking from their parents for local incorporation............

Read - Mint

Report on new bank licences 3 months after screening: Jalan

........“RBI is doing an intensive scrutiny of all the parameters, according to the guidelines. It has set a timeline of three months after RBI has done its scrutiny. We do not want to rush these things, as it concerns public money,” Jalan said on the sidelines of the Delhi Economic Conclave here on Wednesday, indicating the new licences wouldn’t be given out by January, contrary to expectations...........

Read | Business Standard

Why Sanjiv Bajaj wants to start a bank

.......Nevertheless, Bajaj's challenge now lies in the next leg of growth, and expanding his business if he does not get a banking licence. He concedes that finding the right people to grow the businesses is a worry. "We have built a certain culture in our organisation, and finding the right kind of people to fit into our culture is our single biggest challenge." ........

Read | Business Standard

‘Another positive step in growing ties’

The Reserve Bank of India’s approval of Doha Bank’s application to start full-scale banking operations in India is “another positive development” in the growing business co-operation between India and Qatar, said Indian Ambassador Sanjiv Arora. The proposed opening of a branch of Doha Bank in Mumbai, a major global centre of finance and business, would make a useful contribution to further expanding trade, investments and banking between the two countries, .....

Read - Gulf Times

RBI advice

The RBI has advised the income tax assesses to remit tax dues in advance of the due date to avoid last minute rush. The bank wanted the assesses to remit tax dues in advance by using alternative channels such as select branches of the accredited agency banks.

The Hindu

Novel idea

.....The details of the bond scheme, including their design, will be important in determining their appeal. But the plan has evoked much interest. The bonds have the potential to become a popular alternative to many current schemes. There is also a view that they may pose a challenge to many bank savings schemes, which do not always give full protection against inflation. That can persuade banks to improve the terms of their schemes and service to the customers.............

Read - Deccan Herald

Kerala State Financial Enterprises launches Educare chit scheme

...."The launch of the scheme was delayed because we had to wait for clearance from the Reserve Bank of India. Now that the clearance has been obtained, we are moving ahead with the scheme that will also hopefully help develop the habit of saving money among the students," KSFE chairman P T Jose said............

Read - TOI

SBI plans study on customer experience

........To be conducted across all 14 circles, the study will identify opportunities to improve customer experience across various areas and benchmark SBI’s processes and service against best-in-class banks in India and overseas. The bank expects actionable plans emerging from the study, which will cover about 600 branches and about 300 ATMs including 100 off site ATMs, to help improve customer satisfaction, leading to growth in its business...........

Read - HBL

Provide interest subvention on term loans to farmers: SBI chief

Capital formation in agriculture sector can be even more if the Government were to provide interest subvention on term loans to farmers, SBI Chairperson Arundhati Bhattacharya has said. The current interest subvention facility is confined to short-term crop loans and not for term loans availed by farmers...........

Read - HBL

Bad debts and mergers

........ While admiring the ministries, the regulator and the expert committees of the regulator for fixing a time schedule before which the new bank licences are to be issued, the common man feels that a similar strict time schedule should have been prescribed for dealing with the equally important issue of the merger of public sector banks, and the reduction of their increasing non-performing assets. ........

Read | Business Standard

Rs 210,000 cr: That’s how much money RBI has printed in 3 months

.....The net effect of the $34 billion inflows is an injection of Rs 2,100 billion (Rs 2,10,000 crore) into the banking system. This injection is primary in nature, i.e money was printed by the Reserve Bank of India (RBI). The mechanics of the swap transaction are given at the end of the analysis. When we say printed, it means the money exists in the books of banks as cash............

Read..........

Revealed! Secrets of money printing and how central bank circulates fiat currency

......Well! Don’t be dumb struck! Here, we have answer for all your questions about money. Currency notes, precisely, are printed by the central bank of any country. In India, the central bank is called the Reserve Bank of India (RBI). Likewise ........

Read - Daily Bhaskar

Business of new and worn banknotes thriving in Delhi

........This business of notes is livelihood for hundreds in Old Delhi, with vendors offering convenience to customers by charging a fee of up to 20 percent to replace damaged banknotes. A mildly damaged 500 rupee note, for instance, can be exchanged for 480 rupees, while a bundle of crisp, new 10 rupee notes valued at 1,000 rupees is priced at 1,050 rupees. Such roadside vendors work jointly with agents who collect old notes and submit them at the Reserve Bank of India (RBI) office in central Delhi to claim their exchange value according to rules. The same agents also source new notes and distribute them to vendors for a piece of the profit.............

Read........

PAN and I-T challans can be corrected online

Income Tax (I-T) Department’s has eased the process of correction or modifications in PAN and challan. The TDS reconciliation analysis and correction enabling system (TRACES) has eased the lengthy process and becomes more user-friendly and hassle free with few easy steps in correcting errors by enabling online correction of PAN and challan.....

Read - Moneylife

Banks Deliver a Punch to Aadhaar

........."While RBI has said that banks may issue cards without the Aadhaar feature, the POS machines and ATMs have to be mandatorily Aadhaar-enabled. Now, if banks don't issue credit or debit cards that are enabled for Aadhaar acceptance, why should we procure new types of ATMs and POS for a handful of customers who prefer biometric readers for transactions?" said a panel member. Banks rarely defy RBI instructions. But this time they plan to point out difficulties in implementing the directive......... 

Read - ET

PEs eye opportunities in Indian ATM space

With about 1,40,000 automated teller machines (ATMs) in the country, and the number rising about 28 per cent a year, India remains one of the most under-penetrated ATM markets. This, coupled with the Reserve Bank of India (RBI)’s move to allow third-party white-label ATMs, has made the sector attractive to India-focused private equity (PE)/venture capital (VC) funds and strategic investors.........

Read | Business Standard

Canara Bank seeks court order to attach DCHL properties

......The bank’s lending to DCHL was in excess of Rs.350 crore, and almost half of this was not secured. Besides, the mortgaged properties were found to be fraudulent, as the same were mortgaged with other banks and financial institutions, the CMD said............

Read - The Hindu

What about near national treatment for state banks? - Janmejaya Sinha

.........There is much discussion today on providing foreign banks near national treatment but unfortunately no interest in providing our public sector banks (PSBs) the same. The favourite whipping boys in India - of the government, the Reserve Bank of India (RBI), the media, competitor banks, rating agencies, random intellectuals and even some industrialists - the PSBs, are in dire need of immediate attention and reform..........

Read | Business Standard

RBI's Joshi on the bank's wide-ranging strategies to raise financial awareness

Addressing the Indian challenge of linking larger numbers of financially excluded people to the formal financial system, the focus of the Reserve Bank of India's (RBI) strategy at the "base level" is to create awareness of basic financial products, RBI Executive Director Deepali Pant Joshi said at the 10th anniversary of the Citi-FT Financial Education Summit in Hong Kong on Saturday. She pointed to "outreach visits" by the bank's senior executives to remote villages, "financial literary centres", and "awareness campaigns" as "steps that have been taken by the Reserve Bank of India and other stakeholders to promote financial literacy in India". "Financial literacy centres (FLCs) have been opened… to create awareness about financial products and provision of counselling facilities for customers of banks," Joshi said, adding India now has "more than 800 FLCs". She said the RBI also helps to distribute pamphlets and comic books, enact plays and skits, and arrange stalls in local fairs to raise financial awareness.

Central Banking

Ministries spar over due-diligence reports

........The intervention is significant because RBI Governor Raghuram Rajanhad set January 2014 as the deadline for awarding these licences. And, the availability of "due-diligence" reports on these companies are critical for the committee set up under former governor Bimal Jalan to meet that deadline. The need for these reports to be completed becomes more crucial as the committee is expected to carry out the first-level screening of applications to set up new private banks at its second meeting, scheduled for December 16........

Read | Business Standard

More The Merrier

......Rajan will do well to remember what Prime Minister Manmohan Singh told Subbarao before he moved over to Mint Road “In the Reserve Bank, one runs the risk of losing touch with the real world. With your mind space fully taken up by issues like interest rates, liquidity traps and monetary policy transmission, it is easy to forget that monetary policy is also about reducing hunger and malnutrition, putting children in school, creating jobs, building roads and bridges and increasing the productivity of our farms and firms. Keep your ear close to the ground.” Advice that will stand all bankers in good stead, given the interesting times we live in. 

Read......

The Right Choice

.....The turmoil in the larger economy has led banks to do what former RBI Deputy Governor, Rakesh Mohan, famously described as “lazy banking”; eschew all risks. Lend to the big boys and invest in government securities. It is this reluctance to go down the food chain and hand-hold the needy — part design, part default — which is now the bane of banking in India. Small businesses and poorer sections of society find it difficult to access credit. Many are forced to borrow at high rates from moneylenders. This finds manifestation in societal tensions and farmer suicides............

Read......

Conference on Ethics and Corporate Governance

Chief Guest Shri Anand Sinha, Deputy Governor, RBI 

Key note Speakers Prof. Dipankar Gupta, Retd Prof JNU & Member, Central Board, RBI 

Valedictory Address Shri Prashant Saran, Whole Time Member, SEBI 

Other Speakers Shri Ashishkumar Chauhan, MD & CEO, BSE Ltd. 

Shri S N Ananthasubramanian, President, ICSI 

Shri Sandip Ghose Director, NISM 

Shri M S Sahoo, Secretary, ICSI 

Shri P K Choudhury, Chairman & Group CEO, ICRA Ltd. 

Shri Hemant Kanoria, CMD, SREI Infrastructure Finance Ltd. 

Dr. Deepali Pant Joshi, Executive Director, Reserve Bank of India

Read.......

ICICI Bank organizes 100th Coin Exchange Mela in Delhi

ICICI Bank, India's largest private sector bank, organized the 100th Coin Exchange Mela in Delhi at its Malviya Nagar branch in the city under the guidance of the Reserve Bank of India..........

Read........

SBI Notified Special Recruitment Drive for Management Executives 2013-14

State Bank of India invited application for recruitment to the post of Management Executive in State Bank of Hyderabad in Middle Management Grade Scale-II (MMGS II). The candidates eligible for the post can apply through prescribed format before..............

Read........

Microfinance India Summit 2013 - Release of the State of the Sector Report

Microfinance is facing a crucial time when it hopes to become part of the financial delivery system in India and be part of the financial inclusion agenda. Given this background – Here are the highlights of the report:

Read......

Low Current Deficit: More To It Than Meets The Eye

......After the current account deficit went past 5%, the government and the RBI swung into action by raising import duty and restricting imports of the precious metal by mandating minimum re-exports. Gold imports in the July-September quarter fell to 148.2 tonnes from 219.1 tonnes in the yearago period. For the fiscal year, it is forecast to fall to about 900 tonnes from 1,000 tonnes in 2012. The physical gold imports data may be encouraging, but the window for smuggling may be just getting wider. It is not that policy-makers are not aware of it, but may be under the belief that even if smuggling rises substantially, it could hardly match even a quarter of imports through official channels....... 

Read - ET

Audit reports of banks signed by deceased: Regulators to discuss the problem at FSDC meeting

......"There are allegations that audit reports have been signed in the name of dead auditors. If at all there are any discrepancies found, the strictest action will be taken," a senior government official told ETon condition of anonymity. The issue was initially unearthed by the finance ministry and the Reserve Bank has been made aware of it, said two people with knowledge of the developments. "There were some informal reports received by the government and the RBI was apprised of  .............. 

Read - ET

Bangalore residents not too keen on some ATMs shutting at night

..............However, as an interim measure, banks are now planning to shut down low-transactions ATMs at night or relocate them to safer lcoations based on usage patterns. The Bangalore Police had recently instructed banks operating ATMs in the city to post full-time security personnel, install CCTV cameras both inside and outside and install alarms at all sites...........

Read - HBL

Online money transfers gaining popularity: RBI

......."While electronic wires/SWIFT continue to be the dominant mode of transferring remittances by overseas Indians, in the recent period, there has been a significant increase in the share of remittances transmitted through direct transfer to bank accounts and through on-line mode," ........

Read - TOI

Foreign banks seek clarity on parent guarantee rules, restriction on dividend payments

.....Foreign banks have sought clarity from RBI on having to produce a letter of comfort from their parents for all liability. This (letter of comfort), foreign banks said, could have capital implications for their parents. There's also restriction on dividend payout unlike the earlier practice where there was no restriction. "We have been a high-dividend paying company with a consistent track record. We never held back dividend even during the financial crisis. For us, that's a much bigger .. ..............

Read - ET

Banks can be happy small lenders

...There is a strong case for the entry of banks from the risk management perspective too. For example, the establishment of the microfinance credit bureau supplemented by Aadhaar card has created a framework for monitoring customer relationship across products. In addition, quality human resources are available for banks across the country with sound knowledge and understanding of the sector. Lastly, technology and connectivity across the country are available to banks for accessing real-time information to mitigate risks.............

Read - Mint

Sharp cuts in interest rates can heal a bruised economy

.............In his three months as the Governor of the RBI, Rajan has made three important policy statements. All of them have shown a fixation upon controlling inflation: in none has he shown the slightest concern for growth. His second quarter policy statement on October 30 is the most explicit. In it he comes within a hair’s breadth of saying that growth is not a goal to be pursued for its own sake. It will happen automatically when the government sets everything else right. At the head of his list is inflation. Rajan believes in an ‘activist’ monetary policy, i.e in one that keeps the nominal rate of interest higher than the rate of inflation. So, to the intense disappointment of industry he has continued with his two predecessors’ high interest rate policies................

Read - DNA

Sumit Bose Appointed Finance Secretary

NEW DELHI Revenue secretary Sumit Bose, a 1976 batch Indian Administrative Service officer, will be the new finance secretary. Bose, a Madhya Pradesh cadre officer, is the senior-most officer in the finance ministry. Arvind Mayaram (economic affairs), Ratan P Watal (expenditure), Rajiv Takru (financial services) and Ravi Mathur (disinvestment) are the other secretary-level officers in the finance ministry. As per tradition, the senior most among all the secretaries is designated as finance secretary. Finance secretary steers the budget-making exercise. The post of the finance secretary fell vacant after RS Gujral, who was also looking after the expenditure department, retired on November 30. Watal took over as secretary in the expenditure department. 
ET 

RBI seeks clarity on FII investment in pharmaceutical sector

........"The RBI basically wants clarity since there is a new regime in place for the pharma sector," said a finance ministry official who didn't want to be named. The ministry has initiated discussions with the Department of Industrial Policy and Promotion (DIPP), which has administrative charge of the FDI policy, to take a final call on the issue.............

Read - ET

Putting People First

....It will be a while before telecom firms set up banks in India (since the Reserve Bank of India, or RBI, supports a bank-led financial-inclusion model), but they do have a good grip on the customers within the banking sector. Thus, new business models have to draw upon innovative technologies such as the social media revolution. While this is exciting, it’s also fraught with risk, and banks are understandably slow on this uptake...............

Read...........

New worries for banks

.......The incidence of chargeback complaints is about 0.031 per cent and it could be brought down to 0.010 per cent, according to NPCI’s estimates. Acknowledging RBI’s concerns, Sangeet Shukla, senior advisor (risk) at Indian Banks’ Association (IBA), said incidence had come down in recent years. RBI’s worry is on three counts — customer grievances, system integrity and time taken (delays) to correct the transactions...........

Read | Business Standard

Corporate debt recast: More failures than successes

....In order to stop the misuse of CDR mechanism, a Reserve Bank of India committee – headed by its executive director B Mahapatra has recommended that from April 2015, banks will not enjoy the regulatory forbearance while recasting debt. At present, post restructuring, a loan could continue to remain standard asset, subject to certain conditions. Restructured standard asset attracts a provision requirement of 5% as compared to 0.4% of standard advances. The Mahapatra committee has recommended that from April 2015, all restructured assets will attract a provision of sub-standard asset, that is, 15%. Higher provision requirement will hurt banks’ profitability.........

Read | Business Standard

AIBEA blows the whistle on bad loans of Indian banks

......AIBEA’s demand will resonate with depositors who are being asked to pay higher charges for every service, to ensure higher profits for banks every quarter. AIBEA, for once, is on the same side as two big stakeholders of banks—bank customers and shareholders. Clearly,..........

Read - Moneylife

'Top 30 NPAs of PSBs account for one-third of total bad loans'

........To improve the health of the financial sector and to improve asset quality of banks, besides preventing slippages, the Reserve Bank of India from time to time issues instructions to the banks. According to the norms, he said, each bank was required to have a robust mechanism for early detection of signs of distressed including prompt restructuring in the case of all viable accounts; to have a loan recovery policy which sets down the manner of recovery dues, targeted level of reduction and monitoring of write-off..........

Read | Business Standard

Shining Through

........“I wanted to do something that would keep me busy beyond retirement age, and help me leave behind a legacy,” says Ahuja. His bet: Ratnakar Bank could move into a higher orbit with the right mix of brains and capital. But the ‘old’ private bank, set up in 1943, had its own concerns, and Reserve Bank of India had appointed two board directors to keep a watch on its affairs. Besides, both Indiabulls and Kotak Mahindra Bank were eyeing Ratnakar Bank. But in just three years, Ahuja and his team have delivered. From being a relatively unknown entity, it has gone on to become the Fastest Growing Small Bank in the BW | Businessworld Best Banks Survey 2013............

Read..........

Stuff Of Folklore

....Axis Bank sees financial inclusion as an integral component of its rural strategy. It offers no-frills accounts, tailor-made fixed deposits and recurring deposit products to meet the savings requirements of customers. As of end-March 2013, the bank had opened 61.61 lakh no-frills accounts covering 42,338 villages. It tied up with telcos to provide savings and remittance facilities via mobile phones and their distribution outlets. The bank’s outreach efforts find reflection in the way it has gone about opening branches. It added 325 new branches, taking their number (along with extension counters or ECs) to 1,947, of which 883 branches and ECs are in semi-urban and rural areas and 1,064 branches are in metropolitan and urban areas. Ask Sharma why she believes these will be key growth drivers (the cost of doing business in these markets is high), and she tells you that the income gap between rural and urban India is declining and the rural consumer seems to be growing stronger..........

Read........

For The Long Run

...If there is one thing, Puri hates is the tag of an “elite bank”. He emphasises the point about HDFC Bank’s target being the aam aadmi. During 2012-13, the bank’s network expanded to 3,062 branches across 1,845 cities, up from 2,544 branches across 1,399 cities the previous year. The increase of 518 branches includes 193 micro branches, which are primarily two- or three-member branches meant to expand and deepen penetration in rural markets, including unbanked areas. The bank’s focus on semi-urban and under-banked markets continued with over 88 per cent of new branches coming up in semi-urban and rural areas. Puri’s belief is that it will be these markets that will drive the HDFC Bank story in the years to come, and he is ready to play the waiting game...........

Read.........

Sailing Against The Tide

.......Sobti is not particularly concerned by the fact that IndusInd Bank still boxes in a lower weight category compared to peers like ICICI Bank, HDFC Bank and Axis Bank. A caveat is in order: IndusInd does compete with all of the aforementioned banks, but there is no crazy head-to-head duel for market share with any of them. “You must remember that we have grown at a steady 25-30 per cent annually. And we have over the last few years raised nearly Rs 4,000 crore in capital.” Sobti’s stint at IndusInd Bank has paralleled an economy that has largely been marked by indifferent sentiment, yet dud loans have been kept under control........

Read........

Making Rules Pay Off

....Not only would banks need to increase their chest of capital in the normal course of business, but the composition of this capital would also need to be re-jigged in order to create buffers to deal with particular economic conditions. Broad-level estimates published by the Reserve Bank of India in its annual report for the financial year 2011-2012 suggest that in order to achieve full Basel III implementation by 31 March 2018 (assuming a 20 per cent per annum uniform growth in risk-weighted assets or RWA of banks), the banking sector will require approximately Rs 1.6-1.75 lakh crore of common equity in addition to Rs 3.15-3.35 lakh crore in the form of non-equity capital...........

Read........

Rajat Gupta episode taught us values: Dominic Barton, McKinsey

.......the Reserve Bank of India and its governor were regarded in positive light. "The central bank is getting a lot of buzz," Barton said. "So people are saying, wow, that's interesting. And Raghuram Rajan is seen as a driver doing certain things. And that excites people." 

Read - ET

Dent in your balance

...If the customer fails to maintain the minimum balance in the account, a fine is levied on it. The quarterly balance system can be slightly tricky; sometimes, without a customer even realising it, he might end up not maintaining the requisite average balance. It is, therefore, advisable to leave the requisite minimum balance for a fair number of days so that it gets adjusted .........

Read - FE

How not to get cheated while buying insurance

.....Ajay is yet to receive proper justice for the financial loss and mental trauma due to this mis-selling. Had this been done in U.K, the story would have been slightly different for him. Similar complaints were registered in U.K and the banks were slapped with fines worth £ 1.3 billion from the central bank. Sadly, RBI which is believed to be having stringent norms is yet to levy fines of such order on Indian banks. Well, this is the story of just one individual. There have been tons of individuals who are still suffering the loss due to mis-sold products of our dear Indian banks. Some of us have realized and others haven’t. Now that.........

Read | Business Standard