Beware of Insurance Agent’s ‘Triple Benefit’ Sales Pitch

This life insurance product is available for a limited period. It won’t be available after December 31. Don’t miss the opportunity to get triple benefits of savings, insurance and tax-saving.” Recognise the sales pitch? No? Well, you are most likely to hear those lines from an insurance advisor before the end of the year. The advisor is right: the three-in-one policy that he tries to sell won’t be available after December 31, since that is the deadline set by insurance regulator IRDA to withdraw the existing traditional endowment products. What he doesn’t tell you is that there will be better ‘customerfriendly’ products available from the New Year.........

Read - ET

Pitching for limiting Reserve Bank of India functions

..............“It (RBI) is the monetary authority and it will be a regulator of banks, but all other functions I think should be revisited and we should ask ourselves whether RBI is the best authority to discharge those functions or is there any other authority in the system which can take over those functions or is it necessary to create a separate authority,”..............

Read - The Hindu

Clipping RBI's wings

The UPA government ruined the economy. They have also sown the seeds to kill the otherwise Sound Financial system of the country by appointing FSDC and FSLRC to take away the powers of RBI which has systematically and meticulously built up the Financial System against all odds and earned the well deserved recognition from all over the world to keep the financial system insulated from global financial crisis. If RBI 's powers are clipped further, one can see the collapse of the Financial system at the earliest and the damage cannot be  easily repaired . Political agenda if allowed to overlook and supersede  the economic agenda, the country can have only a very bleak future.The financial system particularly the banking system is very healthy strong and sound  only because the Reserve Bank's approach to have a strong financial  foundation keeping in view the growth of the economy and make it a super economy on par with other advanced economies. 

- Dr.T.V.Gopalakrishnan

This refers to the report “Pitching for limiting Reserve Bank of India functions”(December 15). FM’s hurry to go ahead with measures to implement FSLRC report, sans legislation, is understandable in the context of the political developments last week. The motive, namely to complete a pending agenda before a LS Election with unpredictable results, cannot be faulted. 

Coming to the details, the observations

 “It(RBI) is the monetary authority and it will be a regulator of banks, but all other functions I think should be revisited and we should ask ourselves whether RBI is the best authority to discharge those functions or is there any other authority in the system which can take over those functions or is it necessary to create a separate authority,”

and

“What the FSLRC says is that some functions of the RBI can be better done by the government and some functions can be entrusted to new bodies. I think it is a well-argued thought and well-reasoned thought,”

lack clarity and need further elucidation.

If RBI has failed as an institution, why FM is favouring revisiting only select functions RBI is mandated to do? If the FM’s perception is correct, the need of the hour is first reforming RBI, or examining the need for such a reform. As regards FSLRC report, the implementation should follow due process of deliberation and legislation and proceeding with implementation hurriedly may end up in controversies much larger in magnitude than those surfaced after such bull-dozer approach in the cases of NPS and AADHAAR. 

- M G WARRIER, Thiruvananthapuram

The origin of runaway inflation - A.Seshan

................I was also one of the authors of the Liberalised Exchange Rate Management System along with OP Sodhani and PB Kulkarni. I was a member of the Policy Group on External Debt Statistics in a two-man committee along with Y V Reddy, then joint secretary in the finance ministry. Second, when the project to prepare the document was initiated, I was approached by RBI authorities to head the History Cell, a prestigious assignment from the professional point of view. Unfortunately, I could not accept owing to other heavy commitments. It is possible to review this massive volume in two parts only selectively. Overall, it is a chronicle well told by a team of experienced officials with good documentation and guided by a distinguished advisory committee of experts. I only wish they had had access to the finance ministry archives also, ................

Read | Business Standard

Reforming Regulatory Environment Need of the Hour - M.G.Warrier

........It’s high time that rating agencies, or for that matter whosoever judges the performance of economies changed their parameters to factor in the inherent strengths and weaknesses of nations. Countries like India with huge resources including human resources and much less consumption needs as compared to developed’ countries and nations which.............

Read..........

Corporate Ethics and Corporate Governance – Who will guard the guards? : Dr. (Smt) Deepali Pant Joshi

Speech delivered by Dr. (Smt) Deepali Pant Joshi, Executive Director, Reserve Bank of India at the National Institute of Securities Markets, Kolkata on 11th December, 2013

..........Banks constitute the largest financial intermediaries globally and possess stupendous powers of leverage. The RBI plays a direct role in Bank governance through the regulation and supervision of Banking Institutions. This role assumes greater salience viewed in conjunction with the need to ensure systemic and financial stability. Banks enjoy the benefit of high leverage with the downside protection of deposit insurance which weakens their incentives for strong management. They also remain ‘Too Big to Fail’ (TBTF). The current Basel accord lays even greater stress on...............

Read.......

All that glitters... Dr.Subir Gokarn

............First, all the handwringing about gold that has gone on over the past couple of years has, of course, been motivated by the enormous surge in the current account deficit, to which gold imports were a significant contributor. The reality is that imports accelerated sharply about five years ago and, while they were certainly a factor, the massive widening of the deficit in 2011-12 and 2012-13 was more the consequence of .........

Read | Business Standard

Streamlining policies, procedures and operations relating to NRIs and foreign investors: Overseas looking Glass - Dr.S.S.Tarapore

........With the easing of exchange controls after 1991, there has been a perverse effect as the monolith regulation has given rise to multiple regulators as the powers have devolved from RBI to banks and further with the delegation of powers within each bank. In the upshot the bank customer faces a myriad of regulations which are not standardized. In May 2011, the RBI set up a Committee to review the Forex procedures for individuals both resident and non-resident with Ms. K.J. Udeshi (former Deputy Governor RBI) as Chairman. The Committee submitted its report in August 2011 and a number of procedural hurdles were eased. Nonetheless, there are still a number of unnecessary procedural impediments which need to be remedied........

Read - The Times Kuwait

Raghuram Rajan has failed to curb inflation

Reserve Bank of India Governor, Raghuram Rajan, who was touted as the next "big" thing for the Indian economy, has come in for scathing criticism for failing to tame inflation after taking charge in September. Inflation in the consumer price index rose to 11.24% in November primarily because of a 14.5% rise in food and vegetable prices. "The RBI must realise that in the changed scenario where the various government schemes have raised the purchasing power of rural India, CPI and food inflation are not going to be tamed by making loans costlier...........

Read - The Sundy Guardian

FM meets RBI Guv before policy; rate hike near certain

........“We discussed the economic situation and a variety of issues. The meeting was good, cordial. (there was) Exchange of information. Finance ministry and RBI are always in communication,”......

Read - FPJ

RBI pip XYZ to enter semis

RBI Sports and Recreation Club of Ahmedabad piped XYZ Football Club 3-1 in the penalty to make it to the semifinal of the Times of India Baroda Open T20 Soccer Tournament currently underway at MS University Pavilion ground. RBI got fair opportunities to score but they failed to capitalize any of them resulting in the goalless finish during regulation time.........

Read - TOI

Interpreting Financial Policies for the Common Person

.........The book is for the “ Aam Aadmi” who has not specialized in finance and economics but is keen to know what makes the economy tick. The author believes that the common person should have a working knowledge of the nature and significance of financial policies. The lay citizen must not be trampled by the juggernaut of jargon. So Tarapore explains important concepts and terms in simple easy- to- comprehend language.......

Read - FPJ

Obituary

This is to inform that Shri Roshan Lal Sharda, AGM (Retd) left for his heavenly abode on 10th December 2013. Tiye ki Baithak was held yesterday. He joined RBI in 1963 and has worked in Jaipur, New Delhi and Ahmedabad offices of the bank. 
- Arora Shori Lal

RBI to issue new currency notes

....The new series of Rs 500 notes will also be launched with domination currency notes incorporating the new rupee symbol and without any inset letter. The Rs 500 notes will bear the signature of RBI chief Raghuram Rajan. The year of printing of the notes will be 2013.......

Read - TOI

Biggest Ever Slap on Face of Bank Management and IBA

.........I am not sure, how many of our colleagues will benefit from this judgment as the same is loaded with few complex interpretations.   However, it is tribute to our senior bank colleagues and their families that they have been fighting tooth and nail.  Once again this case belongs to a widow of a banker, who decided to not leave the Bank of Baroda Management and fought upto Supreme Court...............

Read.........

Harsh Bhanwala is new Nabard Chairman

....Bhanwala, who had earlier worked as an officer at Nabard, succeeds Prakash Bakshi, who retired as Nabard Chairman in September............

Read - HBL

Seminar on banking

The M.B.A. Department at JB Institute of Engineering and Technology (JBIET) conducted a day-long seminar on “Strategies for Sustainability in Banking and Insurance Sectors” last week. The seminar was organised to create awareness among students, academicians and professionals to encourage participation, and promote research in the field, a press release said. Professionals from banking and insurance sectors including RBI Deputy General Manager Rakesh Kumar Rajput, IRDA member M. Rama Prasad, NIRD professor Bijay Kumar Swain and editor of IRDA Journal U. Jawaharlal participated in the seminar and shared their insights with the students and academics. The event was coordinated by MBA Department head P. Kameshwari.

The Hindu

Bank licences to take a while

...........RBI governor Raghuram Rajan had said the banking regulator will try to issue new bank licences within, or soon after, the term of deputy governor Anand Sinha, who is 'shepherding' the process, expires in January 2014. However, the sources said since the process includes the RBI's scrutiny and a screening by an external panel led by former RBI governor Bimal Jalan, the ministry now feels that the issuance of licences may spill over to the new fiscal or could even be after the formation of a new government at the Centre (following general elections in April-May)...........

Read - FE

The widening cracks in India’s banking system

.......How deep is the problem? A full-blown banking crisis seems highly unlikely. But there is reason for concern if economic conditions continue to deteriorate. The results of the latest stress tests conducted by the banking regulator should be released in its forthcoming report on financial stability; they will make for interesting reading...........

Read - Mint

Bankers’ leaps

..............The Reserve Bank of India realized its levity, and has renamed the accounts Basic Savings Bank Deposit Accounts. It recognizes that the name is a mouthful, so it has allowed the use of the acronym BSBDAs. It had earlier banned from recruitment as banking correspondent anyone who was in business or who made a profit. It has now realized that no one in a village would..................

Read - The Telegraph

Managing the too-big-to-fail

......Banks in India have a number of options to comply with the new loss absorbency requirement. These include capitalising retained earnings (assuming profitability is maintained), raising new equity, or reducing risk-weighted assets, which means reducing trading activity and lending. Banks will also probably try and keep lending off their balance sheets, either by helping Indian companies to issue bonds, or through securitisations. The capital surcharge could therefore......

Read - Mint

And now, a desi digital currency in the offing

...........There is even a ‘laxmicoin’, India’s very own digital currency, in the making. Sample this: at least three different companies are in talks with Indian banks and other financial institutions to set up a domestic exchange that will allow the purchase and sale of bitcoins. The most prominent among the companies is U.S.-based Buttercoin, a free bitcoin exchange backed by investors such as Google Ventures. However, according to a senior banking official, this would require, at the least, a number of approvals and a ‘no-objection’ certificate from the Reserve Bank of India as well as co-operation from State Bank of India........

Read - The Hindu

Pesky price rise monster

.......From his corner office on the 18th floor as the RBI Guv overlooks the bulging megalopolis below, he weighs the old debate of growth versus inflation once again. The debate at one level is nearly as old as the Western Ghats, for India's policy mavens have been unable to come up with any worthwhile supply-side interventions. All that the Governor Raghuram Rajan is left with is monetary tools and I am sure he will have to use this instrumentality yet again on December 18 when he comes up with another policy review...............

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

Global bitcoin conference calls for RBI recognition

....Globally, there are concerns of bitcoins being used as a money laundering channel. In October, the US government clamped down on Silk Road, an online marketplace that sold drugs for payments made in bitcoins. "Anything can be used for illegal purposes. If RBI forms a framework, this will be one of the easiest systems out there that can be monitored by government agencies and there is no way one can destroy the trail of the currency," ...........

Read - FE

RBI to unveil norms for early detection of stressed loans

..............A high-level working committee of RBI officials, reporting directly to the governor's office, will issue a discussion paper on corporate distress and financial restructuring. The move follows a sharp rise in non-performing assets (NPAs), as well as debt restructuring, mostly for public-sector lenders over the past couple of years........

Read | Business Standard

Inflation not reacting to interest rate hikes: K. V. Kamath

.......Delivering the third Ravi Mathai Memorial Lecture at the Golden Jubilee Celebrations of the Hyderabad Alumni Chapter of Indian Institute of Management-Ahmedabad (IIM-A), he said inflation had not reacted to the medicine of repeated interest rates hikes. The Reserve Bank of India is scheduled to announce its mid-quarter monetary policy review on December 18. The untamed inflation would lead us to the basic question of the nature of problem affecting the economy, Kamath said,.....

Read - HBL

The high price of food

It is strange that RBI governor Raghuram Rajan has blamed the Agricultural Produce Marketing Control Acts of different states for high food inflation. The APMC Acts certainly need to be looked into, and drastic reforms are needed to the non-transparent way in which auctions are carried out at mandis, but to say they are responsible for high food prices does not make sense...........

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

Chidambaram blames banks for going 'soft' on loan recovery

..... "Why do you leave blame at the door of the government? The responsibility and therefore the blame should stop with the board of directors. If the NPAs and restructured loans are combined, the distressed loan ratio is close to 10 per cent, or around Rs 5,50,000 crore, as per the figures from the Reserve Bank of India...........

Read - IE

How ‘wilful defaults’, write-offs cost banks Rs.1.6 lakh cr last decade

......Most defaults were “technically settled” at a fraction (sometimes one-fourth) of the principal sum lent out. The rest was written off under oral instructions “from above”. Even though the RBI was in the dark about the quantum of such happenings, the finance ministry was quite aware of this. Its own department, – the Central Economic Intelligence Bureau (CEIB) – kept track of such borrowings, and it was from the CEIB that this correspondent got several details. However, no action was taken against the bank managers, the companies or their officials. Multiply such stratagems several-fold, and you can then appreciate the numbers presented by Chakrabarty in his talk on November 11 this year (see table). It can be seen that just 181 companies accounted for almost 78% (`10,596 crore) of big frauds (of over `50 crore) and involved a period of at least five years for “crystallisation” of the loans as bad debts. Of these,..........

Read - DNA

Will the easing pressure on liquidity persist?

...........In any case, RBI seems predisposed towards a neutral liquidity kind of scenario, said a fixed income and bond markets strategist from a foreign bank. The central bank is set to inject Rs.10,000 crore into the system through its 14-day term repo auction on Friday. That said, liquidity might again start to tighten a bit once the new year is underway.........

Read - Mint

Microfinance Bill set to lapse yet again

........A lack of consensus has held up the proposed law. The Reserve Bank of India (RBI) is not comfortable with the proposed regulatory structure for microlenders suggested by the legislation and the ministry of rural development believes it is designed to protect microlenders and will seriously hamper the country’s self-help group (SHG) movement...............

Read - Mint

Aadhaar-based authentication not mandatory

........Chandrasekhar had asked the ministry, and also raised the issue to RBI governor Raghuram Rajan on 10th October, whether government was proposing to direct all banks to absorb these increased cost of banking due to Aadhaar requirements, and not to pass these costs to consumers in order to safeguards their interests. Chandrasekhar said even earlier experiments with Aadhaar-based biometric ATMs during 2004 and 2007 had failed, as it proved to be a high-priced proposition for implementation.....

Read - Moneylife

Premium on continuity

Much of what Finance Minister P. Chidambaram and RBI Governor Raghuram Rajan said at the Economic Conclave 2013 is not new. There is, however, a special contextual significance. It is for the first time after the recent State Assembly elections that top policymakers of the UPA government are seen reiterating the broad contours of the government’s economic agenda and policy goals. Considering that the Congress party heading the UPA lost heavily in the elections and faces an equally grim challenge in the general elections barely six months away, the purpose of such reiteration is not quite clear. .........

Read - The Hindu

Cheque forgery: Bank told to pay victim 7.2 lakh

.....In his complaint lodged with the forum in 2009, Ramker Jaiswal said some unknown person had withdrawn Rs 1 lakh from his account by encashing a forged bearer cheque at the Ambernath branch of Canara Bank. He said that the cheque was cleared though the signature on it looked different from his own, which was available in the bank records. .......

Read - TOI

Nine reasons for getting an income tax notice

.......In recent months, thousands of taxpayers have been served notices after discrepancies were noted in their tax returns or their TDS details. This sudden rise in the number of tax notices is not because people have stopped paying tax or filing their returns. It’s just that the tax authorities now have an integrated database on taxpayers and can track all financial transactions. Here are some common reasons for getting a notice. ..............

Read - TOI

Decline in investment stunting India’s growth: D. Subbarao

........“Investment was growing at a rapid pace before the (financial) crisis and that has declined. Today’s investment is tomorrow’s production capacity—that is the most worrying part,” Subbarao said. He was speaking at National University of Singapore’s (NUS) Business School. Subbarao, who retired as the central bank’s 22nd governor, said investments had declined because of governance issues and infrastructure constraints. “India is unique among the countries in the world that we are a supply-constrained economy, and the biggest supply constraint is infrastructure,”..........

Read - Mint

No escaping tight money policy - Dr.S.S.Tarapore

.............There have been episodes when political uncertainties have resulted in governance problems and monetary policy has borne the brunt of the adjustment — 1979-80, 1990-91, 1995-96 and 1997-98 — and on each occasion monetary policy has curbed inflation. This time around, the Reserve Bank of India (RBI) faces a major dilemma...........

Read - HBL

RBI Central Board meets in Kolkata

The Central Board of the Reserve Bank of India met today at Kolkata. Dr. Raghuram G. Rajan, Governor, Reserve Bank of India chaired the meeting. Dr. Anil Kakodkar, Shri Kiran S. Karnik, Prof. M.V.Rajeev Gowda, Dr. Nachiket M. Mor, Shri Y. H. Malegam, Prof. Dipankar Gupta, Shri G.M.Rao, Ms. Ela R. Bhatt, Dr. Indira Rajaraman, Shri Y.C. Deveshwar, Prof. Damodar Acharya, Directors, attended the meeting. Dr. K.C. Chakrabarty, Shri Anand Sinha and Shri Harun R. Khan, Deputy Governors, were present...............

Read........

11th Meeting of the FSDC Sub Committee

......The Sub Committee discussed the recent trends in the current account deficit and relative stability in the foreign exchange markets due to measures initiated by the regulators and the Government and also the improvement in the external environment. Other major issues taken up in the meeting included...........

Read........

Regulators need to be more vigilant against ponzi schemes: RBI

......The Reserve Bank is trying to gather market intelligence and then inform the concerned authorities for taking appropriate action, Mr Rajan said. "The state governments also need to pay attention."

Read......

India waits for Iran to open oil payments route - RBI

India is waiting for Iran to tell it how to make payments for oil allowed under last month's deal with global powers on sanctions and will pay in instalments, Reserve Bank of India (RBI) Deputy Governor H.R. Khan said on Thursday.......

Read | Business Standard

PSU bank staff wage a war for wage hike

.....The unions for the first time have also demanded a revision of pension of retired bank employees – not revised since 1986. “A general manager of a bank who retired 10 to 15 years ago is drawing much lesser pension that any of his junior-most subordinate who retired in subsequent years. The pension of retired central government employees automatically gets revised while this doesn’t happen in banks,” says KV Acharya, president of All India Bank Pensioners and Retirees Confederation (AIBPARC). After the October talks, there is no announcement of the further talks. ........................

Read......

I would like to be enlightened

My View on Rationale, logic and facts of updation

I have read Shri Parab's comments on the captioned subject in the Newsletter of date. I have nothing but appreciation and admiration for the efforts put in by Shri Talekar on the subject and also for the in depth knowledge of Shri Parab on the subject especially the detailed calculations. I am still at a loss to know the grounds on which the GOI are not acceding to the request for upgradation of pension. I find it difficult to believe that the GOI would not have adduced any grounds for their refusal to agree to the upgradation. I find it more difficult to believe that the top management of the RBI would keep quiet and  would have refrained from demanding and knowing the grounds on which the GOI are finding it difficult to agree to the proposal. I had raised this issue even earlier to the readers of the Newsletter and am disappointed that no one found that the issue raised is deserving of any reply. Certainly, the argument of the GOI could not have been merely that if the demand of RBI is conceded, it would invite similar demand from the entire banking sector and the LIC as this is not only irrelevant but also irresponsible and hence deserves to be rejected with all the contempt it deserves. Hence, I would like to be enlightened on the subject by any one of the large number of avid readers of Mangesh's Newsletter.  Even Dr Subbarao, our respected former Governor, who has been a regular reader of the News Letter, should not have any objection in sharing with us what could be shared subject to the limitations, if any, of the Official Secrets Act.

Is it possible that because RBI had,over a period of time, reckoned more and more allowances as counting for superannuation benefits ( I am not sure whether the substantial "Central Banking Allowance" which was granted some time ago does also count for superannuation benefits which could possibly create more problems for the issue of Upgradation of pension), GOI are finding it difficult to convey its concurrence ? I have raised this issue since another reason for the objection of the GOI to agree to upgradation, viz that it requires an amendment to the RBI Pension Regulations, has been taken care of (to the best of my knowledge) by the Bank forwarding to GOI an amendment after securing the approval of the Committee of the Central Board. If the problem is as suspected by me, the Bank should be prepared to rectify the situation and meet the objection of the GOI in the larger interest of the resolution of the issue.

Finally, I am deeply conscious of the fact that my knowledge on the subject is not deep and comprehensive and I may be excused if I have gone wrong. I would like to be enlightened on the subject.

A.Chandramouliswaran

Minutes of the meeting

.......... Perhaps, it is time the RBI published the minutes of its boardroom discussions so that the public is informed if there is any undue influence from the Board of Directors in keeping real interest rates in the banking system negative. Alternatively, it could publish...........

Read | Business Standard

Cosmetic efforts

My View on "RBI's Joshi on the bank's wide-ranging strategies ...": 

While RBI's Joshi rightly highlighted the current efforts of the Central Bank on financial awareness, the snail space at which such efforts are moving only expose the lack of interest on the part of the actual players: even the FLCs are not functioning the way they should. In fact their creation happened with lot of drive and push from the RBI. If such efforts do not internalize in the organizations for effective delivery, they remain cosmetic. The opportunity cost of monitoring from the central bank would be quite high. It is desirable that an external monitoring group be set up by the RBI where region-wise, a representative of reputed academic or training institution, a representative from NGOs, a representative from the RBI regional office as members who can oversee the outputs of the FLCs at the ground level. 

- Yerram Raju

Lessons from failures

My View on  "Banks can be happy small lenders": 

I join Mr Surnan in asking the author to check his figures right. Today the SHGs are gradually surfacing the NPA portfolio with a 7 percent of them notwithstanding huge sops like interest subventions and zero interest credit to them by States like Andhra Pradesh. The author may like to look at some of the initiatives of the CCD, Hyderabad chaired by Prof. Trilochan Sastry and the Access Livelihoods Consulting, Hyderabad who are promoting producer cooperatives and producer companies respectively. Their model envisages heavy pre-investment capacity building efforts of the farmers and women engaged in production of the commodities around which the primary organisations are created and later federated for gaining economies of scale and handholding until these organisations realize their goal of sustainability and self-governance. As long as organisations like BASIX, a long standing and one of the first few MFIs in the country under Mr Vijay Mahajan concentrated on livelihood promotion and pre-investment training it flourished and when finance and profit ruled over governance the organization went southwards nearing extinction. MFIs have to learn lessons from failures and concentrate on livelihood promotion as key to their success. 

- Yerram Raju

The other side of the coin..........

My View on "Revealed! Secrets of money printing and how centra...": 

There are fifty paise, one, two and five rupee ‘the same-look and size’ coins confusing general public (the Governor, RBI; the Secretary, GOI and their deputies not excluding) in their daily dealings/transactions. RBI has ‘withdrawn’ (now, not legal tenders) over a period of time Annas of different denominations as also one, five, ten, twenty, twenty five …paise coins. RBI and GOI may consider ‘withdrawing’ the same size -similar look coins in a year or two/three by due notification. These ‘withdrawn’ coins may be melted at the Mints and replaced with new coins of different size and pattern after proper dialogue and deliberation. 

- R.G.Nakhate, Mumbai,

The third eye

My View on "SBI plans study on customer experience": 

The Study initiated, I am sure, would be objective and analytical and would take a good representative sample across the rural, semi-urban, urban and metros. While in the case of rural and semi-urban it is more the reach through the traditional channels, mobile banking and ATM at best, while in the others it is all the POS, ATMs, online and network operations and other technology outreach initiatives. This third eye would be a good pointer for the future of the Bank in the ever expanding customer base within the country in the context of new entrants into the industry. 

- Yerram Raju

Future is not bright

My View on  "Microfinance India Summit 2013 - Release of the St...": 

The Report provides good insights into the initiatives thus far and the way forward. The rising NPAs in SHGs is no big news as any such initiative with only money getting into the hands and not converting into assets lose out on sustainability. Unless corrections come in at least now, the future is not going to be bright for the SHGs and NABARD's ability to provide livelihood opportunities and build capacities on that platform is highly suspect. There are a few institutions in the non-governmental sector actively engaged in promoting producer cooperatives and producer companies in the rural areas with the active involvement of the National Skill Development Corporation and these throw up opportunities for growth with sustainability as they proceed with capacity building upfront and making the groups believe that they have to work for profit and not for charity and that they should not sacrifice their basics in their search for alms. 

- Yerram Raju

Treat it right

....... It is right that the two key challenges confronted by the PSBs are "manpower" and "capital". While a few of them have already exhausted the threshold limit of 51 per cent of government holdings, others are either in the process or about to exhaust the limit. This makes it difficult for them to build the capital base further...........

Read | Business Standard

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, .....

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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.

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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...........

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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......... .. 

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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..............

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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," ........

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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," .........

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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..........

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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...........

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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 ..........

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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