Better if RBI allowed to function with its present mandate

My View on t "Regulators need flexibility, freedom to regulate -...": 

In response to the article ‘A plot to destroy RBI’ (The Hindu Business Line, May 3, 2013), I had commented:

“ Not much research is needed to conclude that finance ministry and FSLRC, in a hurry to resolve certain minor issues, ignored the evolution of the role of RBI and the care with which RBI has nurtured the financial sector. Fed Reserve and RBI function in two different worlds. To say that time is not right for dismantling or truncating the RBI which is doing creditably well as is being admitted in several international forums, would be telling the obvious. 

The dissenting notes recorded by 4 out of 7 members who signed the final report are well-argued documents, which inter alia plead the case for maintaining the basic features of RBI and assert the need for allowing the central bank to carry on with its present mandates. One wonders what motivated the FSLRC Chairman to finalize the report ignoring the difference of views expressed especially by K J Udeshi, P J Nayak and Y H Malegam. 

It would appear that the Commission did not get opportunity to understand the present relationship between the RBI and GOI. The regulatory apparatus plus legislations in financial sector in India are in working condition. The FSLRC’s effort to re-invent them has pushed the present regulators and supervisors to a confused state, making the possibility of an intelligent debate on the issue remote. 

The idea of creating a Unified Financial Agency for all financial regulators except RBI, truncating RBI by separating Public debt Management and keeping the agency doing that work (presumably with the same work force) in RBI premises, later UFA subsuming even RBI, all give a feeling that the FSLRC was not allowed to ‘apply its intelligent mind’ and in the eagerness to satisfy all, and so fast, it has forgotten its own brief. Perhaps, the purpose would be served better, if RBI is allowed to function with its present mandate, a coordination committee sorts out issues among the remaining regulators. If GOI aim is to reduce the number of regulators, after necessary groundwork, merger of the regulatory agencies outside RBI one by one, as work stabilizes could be thought of. The twin goals of one Unified Financial Agency and managing the man-power-related issues that may arise with merger here could be better handled this way.

- M G Warrier, Thiruvananthapuram,

Subhalakshmi Panse joins Federal Bank board

..........A post-graduate in Science, Panse has a Diploma in Business Management and Masters in Management Sciences from Pune University. She also holds an MBA from Drexel University, USA. Panse was a member of the RBI appointed committee on Corporate Governance and Chairman of the IBA committee on Cheque Truncation System ....

Read - HBL

Give retirees a break

The fact that despite nine rounds of talks, the Indian Banks’ Association and United Forum of Bank Unions could not reach a consensus is worrisome. The Government needs to intervene because the pending issues of bank retirees relating to pension updation and increase in family pension, among others, are nearly two decades old. There was some talk of wage revision way back in the 1960s. Since a majority of retirees have crossed the age of 70, these issues warrant urgent attention. 

- CP Velayudhan Nair

The Hindu

More Insight Into Talks Held on 14th June 2014

.........The only silver lining in the meeting was that IBA is favourably inclined to consider demand of extending 100% DA neutralization to all pensioners.  IBA also seems to have shown positive response to improvement in Family Pension. However, unions still need to do lot of work as IBA has not committed anything and only shown positive response.   Thus, a ray of hope continues for pre 2002 retired Bank employees for 100% DA. As regards updation of pension, IBA has outlined it involves substantial financial burden to the Banks .This means in all sectors, including central and state Govt., whenever there is an industry wise wage increase, pension will also be increased. In Banking sector it is not so. Hence ......

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

What's your address?

..............the Reserve Bank of India (RBI)'s decision advising banks to only ask for one (current or permanent ) address and its documentary proof from prospective customers, while accepting the customer's declaration of the postal address, can be a game-changer if implemented properly. However, the rub lies in expecting banks to verify the postal address through "positive confirmation". They are unlikely to make efforts .........

Read | Business Standard

Banking on payment banks

........ The payment bank concept is conceptually interesting but it will be difficult to predict if it will be economically viable. Payment banks will find it difficult to maintain a cash reserve ratio (CRR) of four per cent without any interest. And, investing only in government securities will not be........

Read | Business Standard

Chandrababu discusses crop loan waiver issue with RBI Guv

Andhra Pradesh Chief Minister N Chandrababu Naidu today spoke to Reserve Bank Governor Raghuram Rajan over phone and discussed the crop loan waiver issue in the backdrop of reports that the RBI was opposing it. Chandrababu reportedly explained to Rajan the circumstances in which the TDP had promised waiver of crop loans as.........

Read | Business Standard

Understanding Liquidity Management by RBI

.......LAF is a facility extended by RBI to scheduled commercial banks (excluding RRBs) and primary dealers to avail of liquidity in case of requirement or park excess funds with the RBI in case of excess liquidity on an overnight basis against the collateral of Government securities including State Government securities. As we have seen above OMO is also a liquidity management tool in the hands of RBI, but that is a tool used..........

Read..........

Online trading possible with urban co-operative banks: RBI

Urban co-operative banks are now allowed to open a demat account for customers to provide online trading facility, according to the Reserve Bank of India. “However, considering the high risk involved in such services, it has been decided to allow only Scheduled Primary (Urban) Co-operative Banks, with prior approval of the Reserve Bank, to provide online trading facility to their demat account holders by entering into a tie-up with a broking entity,” the RBI said in a notification..........

Read - HBL

RBI accords self regulatory organisation status to MFIN

The Reserve Bank has recognised Micro Finance Institutions Network (MFIN), the industry association for the micro-finance industry, as a self regulatory organisation for NBFC-MFIs. "MFIN,...Has been formally recognised by the Reserve Bank of India (RBI) as the SRO (self regulatory organisation) for NBFC-MFIs. This makes MFIN the first RBI recognised SRO in the country," the industry association said in a release today..............

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

RBI directs banks to disclose sector-wise advances in financial statements

The Reserve Bank of India has asked banks to disclose sector-wise advances in the ‘Notes to Accounts’ to the financial statements from the financial year 2014-15 onwards. Within the sector-wise advances, the central bank called for disclosure on priority sector (agriculture and allied activities, advances to industries sector eligible as priority sector lending, services, and .......

Read - HBL

RBI fiat likely to temper interest in Kotak Bank

Shares of Kotak Mahindra Bank may come under pressure on Thursday, as the RBI said foreign institutional investors should seek its approval for buying more shares as FII holding in the bank, under the portfolio investment scheme, has reached the trigger limit.......

Read - HBL

RBI keen on sub- 51% govt stake for PSBs

........" The RBI believes that the fiscal situation, the existing PSU bank management troubles, and the Nayak committee report provide the government with a good opportunity to consider lowering its stake below 51% in a calibrated manner," a banking industry official told ........

Read - FPJ

Surat Diamond Association urges RBI to exclude SME units from 90 days payment terms

.......But, the Indian banks do not make payment to the overseas parties if the buyer of rough diamonds fails to make payment within 90 days. If the manufacturers misses the deadline of 90 days, then the payment process is extended upto more than 60 days. Dinesh Navadia, president, SDA said, "We have written a letter to RBI to exclude the SME sector from the 90 days payment circular. If our demand is not met than the manufacturers will go on an indefinite strike after 10 days.".........

Read - TOI

Power sector: A risky asset for Indian banks

...........The poor financial health of discoms in India is one of the key factors weighing on the asset quality of Indian banks, says the credit rating agency in its report, ‘Indian Banks: Exposures to State Electricity Board Distribution Companies.’ So far, these problems have almost..........

Read - HBL

To Cut Fraud Risk, You Can Bank on Virtual, Forex Cards

..........Virtual Cards E-wallets or virtual cards are meant only for online payments. Banks like SBI, Axis Bank, Kotak Mahindra and HDFC Bank offer such facilities free of charge currently . The mechanism allows you to generate a virtual card that functions like a credit or debit card for online payments. To create a virtual card, you need to transfer the required funds from your account into this `card', set a limit, and..........

Read - ET

BTI Payments eyes grocery, telecom shops to install white label ATMs

.......The company, which holds the RBI licence for 9,000 white label ATMs, is making elaborate arrangements to install 1,000 units this fiscal. White label ATMs are not owned by banks and are just cash-dispensing machines. “We have set our eyes on Tier II, III and smaller cities and found that grocery stores, telecom shops and photocopying facilities are the ideal places to install ATMs as a lot of activities revolve around them,” .....

Read - HBL

Financial Sector Legislative Reforms Committee Report (FSLRC) - what to do and when? - Raghuram Rajan

Talk by Dr Raghuram Rajan, Governor of the Reserve Bank of India, at the First State Bank "Banking and Economic Conclave", Mumbai, 17 June 2014

........Yet one reading of the FSLRC is that almost everything the regulator does, not just the framing of regulation or the process by which decisions are reached but also the exercise of regulatory judgment as well as policy decisions, is to be subject to legal appeal. For that, it wants to create a Financial Sector Appellate Tribunal. The intent is to place more checks and balances on regulatory actions. Note that the process by which the regulator reached a decision, as well as the conformity of the decision with basic principles such as natural justice, can already be challenged through a writ petition in High Court. Even now, some regulatory decisions can be appealed to the central government. But how much checking and balancing is enough? Do we want.........

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

Judicial review of decisions may make RBI ‘paper tiger’: Raghuram Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan on Tuesday slammed proposals by a high-level committee to open up all regulatory decisions to a judicial review and to merge all financial sector regulators into a single entity. The first recommendation by the Financial Sector Legislative Reforms Commission (FSLRC) risks reducing RBI and other regulators to a “paper tiger”, said Rajan,................

Read - Mint

FSLRC suggestions on regulators scope 'schizophrenic': Rajan

Mumbai: Reserve Bank of India Governor Raghuram Rajan on Tuesday trashed the much talked about Financial Sector Legislative Reforms Commission (FSLRC) and described one set of its recommendations as "somewhat schizophrenic". Saying that he wanted to debate parts of the FSLRC report, Rajan said there are two issues -- the oversight of regulators and their size and scope. "The second area of tension is the appropriate size and scope of regulators. The FSLRC's recommendations seem somewhat schizophrenic here," he said...................

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

RBI’s Raghuram Rajan questions FSLRC recommendations

...“If we attempt to do this, we will undermine the very purpose of a regulator,” Rajan said. Rajan further questioned the recommendations of FSLRC with regards to the appropriate size and scope of regulators. “The FSLRC’s recommendations seem somewhat schizophrenic here,” said Rajan. He added that on the one hand FSLRC speaks of synergies in bringing together some regulators into one entity, but it also suggests breaking up other regulators “with attendant loss of synergies.”...............

Read - Mint

Regulators need flexibility, freedom to regulate - Rajan

Taking over from where his predecessor D Subbarao left off, the incumbent RBI Governor Raghuram Rajan said that the regulators must be given the flexibility and freedom to regulate. He was speaking at the State Bank Banking and Economics Conclave in Mumbai today. In the context of Financial Sector Legislative Reforms Committee report, Rajan implied that there is no need to create two structures for regulations.........

Read - HBL

Rajan says taking away bonds regulation from RBI may hamper market

Reserve Bank of India (RBI) Governor Raghuram Rajan said on Tuesday he was not in favour of taking regulation of bond markets away from the central bank as the move may hamper development of the market. However, Rajan said the RBI will not stand in the way if the government wanted to manage its own debt.......

Read | Business Standard

India better prepared to deal with Iraq crisis fallout: Rajan

............."As far as the external front goes, we are in much better position than we were last year. We have sufficient reserves. The CAD is low. And I think one should not worry too much on external environment front," RBI Governor Raghuram Rajan said. He was responding to queries on the impact of the Iraq crisis, which has affected global crude oil prices and the rupee, on the country's economy. ............

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

Watch the video

A Study in Contrast, Finmin-RBI Relationship Under Two Govts

...............Unlike his predecessor who did not miss an opportunity to tell the world, including the RBI, on what he wanted, Jaitley is yet to speak on either interest rate or exchange rate. All that Jaitley is talking about is inflation control and growth. Is it a sign of the RBI getting a free hand to decide on monetary policy? Many believe it may be too early to say. But there are early signs though. 

Read - ET

Indian banking sector - role in triggering future growth - R.Gandhi

Valedictory address by Mr R Gandhi, Deputy Governor of the Reserve Bank of India, at the 

6th ICC Banking Summit, Kolkata, 14 June 2014

........However, taking note of the predominant position of banks in the Indian financial system and taking a realistic view, can we expect the bank finance to comprehensively cater to all types of investment needs? Irrespective of whether it is short, medium or long term, or whether it is loan, debt or equity financing, or it is with low, medium or higher risk propositions? Should we turn our banks like...........

Read..........

HR KHAN'S TERM TO BE EXTENDED?

Yet another Deputy Governor's post at the Reserve Bank of India will fall vacant soon. The term of HR Khan, who was appointed for a three-year term in July 2011, is about to come to an end. But the question being asked is if it will get extended? The buzz is that the central banker who has been handling the markets may get his term extended by a year or so. If that's the case, then the next in line may have to wait a lot longer to get the DG position. Some close to retirement will be fuming though.

ET

CHANGES AFOOT AT RBI

With punters spinning new stories every other day, the RBI will revive its market intelligence unit, which has languished for years. Mint Street will also have an international relations division and reorganise itself into five clusters or verticals, while departments like DBOD, DNBS, UBD and RPCD will be renamed. This was the upshot of a video conference the RBI top brass had with different centres last week. For the staff, the more immediate question is: who will occupy the new post of `officer on special duty' ­ Executive Director Deepak Mohanty or former banker Nachiket Mor?

ET

RBI to shift 3 forex divisions to Delhi in July

................The three divisions to be shifted to New Delhi are Liaison/Branch/Project Office (LO/BO/PO) Division, Non Resident Foreign Account Division (NRFAD) and Immovable Property (IP) Division. These divisions would be located at Parliament Street office of the RBI. The new FED, CO Cell will be headed by P Shimrah, General Manager, RBI...............

Read - Ahmedabad Mirror

Slice of History - RBI at Loggerheads with its Own Entities

...........There were four areas of linkage in the relationship between the Reserve Bank and the two financial institutions. From RBI’s point of view, these were: management participation, staff and organisational support, financial support and policy support. The first two of these were not critical and were taken for granted since IDBI and UTI, after all, were set up by the central bank itself. It was ..................

Read - ET

Revamp the NPS

.................One option to salvage the credibility of NPS would be to restore the defined-benefit-based pension scheme for all employees who would have been eligible for such pension but for the introduction of NPS. Using the National Pension System to cover ..............

Read | Business Standard

RBI accords SRO status to Mfin

......Last year, the RBI had said that it would recognize industry associations as SROs based on the recommendations made by the Y.H. Malegam committee. Mfin claimed that this was the first time the RBI had bestowed SRO status on any industry body.

Read - Mint

Cautionary tale

...............It is flabbergasting to note that the top 30 loan defaulters account for one-third of gross NPA loans of public sector banks. The RBI should publish the top defaulters’ names to save depositors’ money being misused by mega borrowers. Swiss banks are ready to provide information about black money stocks. So can the RBI...........

Read - HBL

Mehengai ‘daayan’ revisits

........The Government will need to plan ahead to address supply-bottlenecks and logistics issues to make sure that food inflation does not spike. Timely release of staples from FCI, reforms in Agriculture Produce Market Committees and co-ordination of imports and exports of agricultural commodities will be necessary. The inflation will also moderate due to high base effect of last year. If there is no escalation of Iraq tension, I expect crude oil prices to remain benign. This will help to meet RBI expectations of sustainable lower inflation in the second half of the year. In this scenario, one cannot expect interest rate cuts from RBI in the near term..........

Read - DNA

Focusing on the supply side

..........The Narendra Modi government should not repeat the mistakes of the previous government by thinking that it is the Reserve Bank of India (RBI)'s duty to address the issue of inflation. It is time for RBI Governor Raghuram Rajan to remind the finance ministry of the importance of the "supply side"............

Read | Business Standard

Let a few national banks remain

........All this sounds quite nice, but will it improve things? The problem with public sector banks, as with the entire public sector, is that the long arm of the political executive exercises its influence in management matters through a pliant civil service (it also has its own agenda). This makes for lack of professionalism in management as well as no concern for the bottom line. There is no reason to suppose that simply by creating an extra layer - that is, the BIC - bank managements will become more professional and..........

Read | Business Standard

Syndicate Bank plans to appoint 5,000 new staff

............Among the 2,700 officers proposed to be recruited, 2,000 would be direct recruits through the IBPS (Institute of Banking Personnel Selection) route and the rest under the specialised officers’ category, said the bank’s Executive Director, M Anjaneya Prasad.............

Read - HBL

DBS Bank seeks relaxation on priority sector norms for WOS route

............In its guidelines on wholly-owned subsidiary for foreign banks released November last year, RBI said the priority sector lending requirement for foreign banks will be 40%, like their Indian rivals. Out of this, 18% of loans have to be offered to the farm sector. The current cut off for foreign lenders in the PSL segment is 32% (foreign banks with more than 20 branches, it is 40%) but once they take up the WOS route, banks will have to move to achieving.................

Read | Business Standard

Private banks double headcount in 5 yrs

.............“A lot of banks have been hiring in anticipation of a revival in economic growth. Some of them were also expanding their size and building infrastructure to grow their businesses. While I expect private banks to remain net recruiters, they might not be hiring at the same pace as before,” .............

Read | Business Standard

Uday Kotak seeks shareholders’ approval for term extension

Kotak Mahindra Bank Ltd will seek shareholders’ approval to re-appoint the bank’s founder, executive vice-chairman and managing director Uday Kotak for a further three-year term from January 2015 to December 2017, the private sector bank said in a notice to stock exchanges. Shareholders’ approval will also be sought to re-appoint Dipak Gupta as joint managing director for three years from January 2015 to.........................

Read - Mint

One Year on, UPA Showcase Mahila Bank Staring at Losses

........... “We don't mind having some losses initially,“ said its chairman and managing director, Usha Ananthasubramanian. “We need to be a differentiator and create an identity first.“...........

Read - ET

NAIDU'S LOAN WAIVER PLAN HITS RBI WALL

.........Waiving of the crop loans was expected to cost Rs 15,000 crore to the State exchequer. RBI Executive Director Deepali Pant Joshi has written to the Government saying the policies like waiving of loans will weaken the banking system in the country and it will be an injustice to the people who repay the loans on time. RBI official said that it would allow waiver of loan only if the State Government makes the payment in cash and it will not accept any securities from the State Government. The letter warned that the frequent waiver of loans will hurt..........

Read - The Pioneer

CM seeks revival of licences of 3 district banks in Vidarbha

............he RBI had cancelled licences of Nagpur, Wardha and Buldhana district co-operative banks while those at Solapur, Beed and Osmanabad were facing problems, Chavan said, adding that these made it difficult for farmers to avail crop loans. The Chief Minister requested the RBI officials to revive the licenses of the three banks as the government was ready to pay it Rs 320 crore. "NABARD should increase minimum interest crop loan and convert short term loans into long term loans," he added............

Read | Business Standard

RBI's stand should pave the way for a solution

My View on  "Special category financial profligacy": 

When Mr Naidu made this public pre-elections as part of Election Manifesto, why did not the RBI and IBA raise their objection to this? Second, why did not the Election Commission raise its objection by asking the parties to show resources for fulfilling such promises? Several other Agriculture States like Tamilnadu, Karnataka, Kerala, Punjab, Orissa (where floods and cyclones are as recurrent or more recurrent than AP), Haryana and UP, or for that matter resource-starved West Bengal as well, did not indulge in this luxury of loan write-off by the State in spite of continuing farmers suicides. What the farmers want is more loans at cheaper interest rates and cross holding of risks through insurance mechanism and market stabilization mechanism. Compromises became promises and they became noose around the neck of the State. Now that RBI made its stand clear, it should pave the way for a solution. 

- Yerram Raju

'Ratnakar Bank plans IPO of up to $250 mln in 2015'

...................On how much Ratnakar is looking to raise from the listing, Ahuja said the equity dilution would depend on the growth capital needs of the bank. He said nothing had been finalised. Ratnakar Bank's share offering will be the first Indian bank listing on domestic bourses since state-owned Punjab & Sind Bank raised $105 million through an IPO in 2010, according to Thomson Reuters data..............

Read - FE

State Bank to ramp up POS terminal network

................Overall, banks collectively had a network of 10.76 lakh POS terminals. According to Sushil Kumar Mishra, Deputy Managing Director, SBI, by adding 1.20 lakh POS terminals every year over the next couple of years, the bank will be catapulted to the numero uno position among all banks. Already, SBI has the largest network of ATMs..............

Read - HBL

'We're Here For The Long Haul'

..............India today has 150,000 ATMs across the country. A few years back there was big momentum, when ministry of finance came up with the tender to put up with ATMs for public sector banks.  However a lot of ATM operators went over-board in bidding for these tenders with private operators quoting interchange cost as low as Rs 7-8. No one looked at the long-term viability. Barring the operator who ran ATMs for SBI, all the other players are bleeding having contracted it with stringent guidelines. SBI was manageable because the customer base is higher and consequently number of transactions was also more. Banktech group having run ATM’s and PoS in Australia for 20 years understands the long term nature of the white label ATM business. While BTI came to India in 2006 and............ 

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

Now, transfer funds from US to Indian bank accounts instantly

..........The instant money transfer will be done by using the Immediate Payment Services (IMPS), a unique remittance processing platform offered by the National Payment Corporation of India. “Through this tie-up, money can be transferred instantly by a Xoom user from the US to not only bank accounts held in Punjab National Bank but to any bank account in India,” KR Kamath, Chairman & Managing Director, PNB, said at a press conference here. At present, IMPS has 63 banks (in India) as part of its ecosystem..........

Read - HBL

ICICI Bank launches 'iMobile' app for Windows phones

..................The app also introduces the next level of customer convenience by offering one-touch access to important services on its dashboard, he added. The app lets the user select his favourite past recharge transaction and allows a quick recharge without having to enter all the details again...........

Read | Business Standard

India 3rd most hit by online banking malawares

...........India has made it to the top 3 most affected countries by online banking malwares after the US and Japan. The country slowly rose to the top 3 due to spike in the number of online customers in the country, which could be attributed to a vastly improved banking industry, the report said. Online banking malaware creators updated their portfolios yet again with the addition of new routines to their usual weapons of choice, it added...........

Read | Business Standard

Is it Time for India to Get Bitcoin Savvy?

........ As of now, Indian laws do not recognise any type of digital or virtual currency. The Foreign Exchange Management Act (Fema) provides an inclusive definition of the term currency and includes all currency notes, money orders, cheques, credit cards and such other similar instruments as may be notified by RBI. It is interesting to note that Fema gives RBI the power to notify “similar instruments“ as currency. In 2000, RBI had notified ATM Cards and debit cards as currency. Therefore, RBI has the power under Fema to also notify Bitcoins as currency if it is able to justify that it is similar to currency notes, cred it cards, etc............

Read - ET

How to shrink Rs.50,000 to Rs.248

...........Calling the policy “unconscionable”, the high court has declared the contract illegal and void and has asked the insurer to return Rs.50,000 to Kapoor along with Rs.10,000 towards expenses in filing the writ petition. It has also asked Irda to scrutinise SBI Life’s policies, and if found guilty of a breach, to wind up its business. The court has asked Irda to examine the policies for any hidden terms and charges with an objective to deceive the policyholder, and if found guilty, to direct SBI Life to discontinue such policies and................

Read - Mint

RBI is answerable to Parliament

.....Will the RBI be the only one that has autonomy with no accountability? That will be a dangerous thing. The RBI is a creation of Parliament. Therefore, it should be accountable to Parliament. The RBI is answerable to Parliament through the ministry of finance. If you want the ministry not to intervene in RBI affairs, you should make the RBI directly accountable to Parliament. To say that it will undermine the autonomy of the RBI is a wrong understanding of autonomy. Parliament has to resolve what level of inflation and interest rate is acceptable to them............

Read - The Week

FMC sets up panel to examine feasibility of CCC for commexes

.......Among other issues, the panel will review the membership categories and separation of clearing membership and trading membership with introduction of professional, self clearing members in commodities market. The five-member group, headed by V K Sharma, former RBI Executive Director, would comprise members from National Institute of Public Finance and Policy (NIPFP), Department of Economic Affairs, Warehouse Development Regulatory Authority and FMC........

Read - BS

Abolish post of revenue secy: Shome panel

.............“The present functions of the department of revenue should be allocated to the two Boards. This would empower the tax departments to carry out their assigned responsibilities efficiently,” the Tax Administration Reform Commission (TARC) said. Instead of a revenue secretary who is an Indian Administrative Service officer, it suggested a governing council, headed by a chairperson of the two Boards, by rotation, and with participation from outside the government, to be set up at the apex level to oversee the functioning of the two Boards................

Read | Business Standard

Special category financial profligacy

.....In Seemandhra’s case if the money asked for was for fulfilling infrastructure gaps—as Hyderabad has gone to Telengana—there would have been some merit in the demand. But Naidu wants to write off farm loans. The demand should not even be considered. This is particularly so, since the limit on state borrowing imposed by the Reserve Bank of India (RBI) is the only obstacle to Naidu’s plans of throwing R54,000 crore at his pet project. To put the figure in context,..................

Read - Mint

Innovative financial inclusion models are the only solution

............Is this business profitable for Ratnakar Bank? Are you doing this for survival or by force? 

Ahuja: We started our journey as a new transformed bank two-three years ago. We had to pitch against SBI and so many other banks for the segment of the market which is quite well banked and understood. We bet that financial inclusion—what we call development banking—would become a fairly significant business for us in the next five to 10 years. We created a bank within a bank for that, our entire financial inclusion strategy is structured on a very different platform than the conventional bank. We don’t use the...................

Read - Mint

Large industries make MSMEs' cash flow lumpy, says RBI Dy Governor Gandhi

.........“There is also an oft-heard complaint from bankers that MSMEs are often quite lackadaisical when it comes to settling their dues. It needs to be recognised that MSMEs often act as ancillaries to large industries, and their cash flows are lumpy. The business orientation of large industries often affects the MSMEs directly, in turn hampering the recycling of funds and business operation of MSME units. “Banks need to take a proactive view, carefully analysing the linkages of the MSME units, when ..............

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

RBI reviewing regulatory framework for NBFCs: RBI Deputy Governor

.......While delivering the 33rd Frank Moraes Memorial Lecture organised by United writer's association and the Frank Moraes foundation, Gandhi said as for the regulator, it is the constant endeavour of Reserve Bank to enable prudential growth of the sector, keeping in view the multiple objectives of financial stability, consumer and depositor protection, and need for more players in the financial market, addressing regulatory arbitrage concerns while not forgetting the uniqueness of NBFC sector.........

Read | Business Standard

Wage hike talks inconclusive

............So far about nine rounds of negotiations have taken place. While a senior IBA functionary dubbed the trade unions’ 25 per cent wage hike demand as ridiculous, the unions feel the bank managements are being plainly stubborn. The talks ended on an inconclusive note on Friday. The ninth five-year bipartite wage settlement, which ran from November 1, 2007, to October 31, 2012, resulted in bank employees getting a 17.5 per cent pay hike................

Read - HBL

RBI asks cos to have director to ensure AML norms compliance

............"If the director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations... He may by an order, levy a fine on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than Rs 10,000 but may extend to Rs 1 lakh for each failure," RBI said in a notification today...........

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

Make taxpayers’ life easier: Panel

A government panel on tax reforms has recommended sweeping changes, including pre-filled returns for individuals, a common return for I-T and wealth tax, and an overhaul of the administration to focus on customer satisfaction and reduce disputes. The Tax Administration Reforms Commission (TARC), headed by Parthasarathi Shome, has said that the government needs to ensure that refunds are paid, with interest, within a stipulated timeframe...............

Read - TOI

Clarification - Obituary

Dear Sir,

Regarding the obituary news of Mrs D Sukumaran Nair appearing in the Vitalinfo there is a small clarification. Mrs  Ramani Nair, W/o Shri Sukumaran Nair passed away. Shri Sukumaran Nair was working as DGM, DBOD ( Not Mrs Nair)

Regards

- KP Madhavan Nambissan 

P.S. The error is deeply regretted which occurred while editing the info correctly reported by Shri P.P.Ramachandran.

NBFCs: State Seeks Centre’s Intervention

...............The State Government has administrative limitation in enforcing the fair practice code prescribed by the RBI which necessitates unavoidable intervention by the Central Government. In view of this, the RBI was requested to take effective steps to check and control the rampant growth and operation of unlawfully functioning NBFCs,” Chennithala said in the letter. “However I feel that necessary directives from the Central Government to the RBI and all public sector financial institutions working in our state is necessary,” he said...........

Read - The New Indian Express

Payment banks barred from any other financial operations

The Reserve Bank of India (RBI) has accepted the Nachiket Mor panel’s recommendations on introducing payment banks, but has made significant changes on the characteristics of the proposed entities. To start with, the central bank will set the initial capital requirement at Rs 100 crore as opposed to Rs 50 crore suggested by the Mor panel. For the purpose of computing capital adequacy ratio, payment banks will only factor in operational risk and not market risk and credit risk, unlike full service banks.......

Read | Business Standard

RBI should reveal top defaulters’ names

............The RBI currently circulates a list containing details of non-suit filed accounts of defaulters owing Rs. 1 crore and above, besides that of wilful defaulters with outstandings of Rs. 25 lakh and above. But these are only to banks and financial institutions for their confidential use. According to the RBI, this information on defaulters is being held by it in a ‘fiduciary capacity’ on behalf of the banks. Such posturing, though, negates the very purpose of compilation of the defaulters’ list. In fact, one of the stated objectives of the Central bank when it first issued a circular on disclosure of information on defaulters (No DBOD No BC47/20.16.002/94 dated 23.04.1994) was to “make public the names of the borrowers who have defaulted”. The argument of banking secrecy will not wash any more....................

Read - HBL

Why should government fund PSU banks all the time?

......Press reports indicate that some of the public sector banks (PSBs) are seeking more capital ahead of the budget, which is scheduled to be presented by the second week of July. According to these reports, cash-strapped public sector banks "hit by a higher proportion of stressed assets and global Basel III requirements" have begun listing out capital requirements ahead of the budget in July.........

Read - Moneylife

PSU banks' asset quality woes likely to continue: Fitch

......RBI Deputy Governor H R Khan had recently said that though there was some moderation in non-performing assets of banks, it would be too early to say that the industry has left behind the worst. The Fitch report said that efforts to deal with reported NPLs may mean the peak in stressed assets could be lower than its earlier forecast of 15% by FY'15.........

Read | Business Standard

Cosmos Bank to open 4 branches in Tamil Nadu

.......The branches, one in Chennai city and one each in Coimbatore and Hosur, will be opened during this financial year. The four branches of Amravati Peoples’ Bank which merged into the Cosmos Bank, will be shifted to the State..........

Read - HBL

Mergers will cost SBI Rs 5,000 crore

............... “According to an internal assessment about Rs 1,000 crore is required for the merger of one associate bank to itself and it takes about a year to reorganise and rehabilitate the employees. Capital will be a key concern for the bank as it will also have to set aside funds for growth and expansion....................

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

Dena Bank targets Rs 500 cr SME lending in UP

........The Bank has planned to establish specialised NRI Branches, Retail Processing Hubs and SME Processing Centre across India for faster transactions and loan approvals. "We are focussing on small advances to the agricultural and SME segments for increasing our lending portfolio and credit ratio," .......

Read | Business Standard

Central Bank in image makeover

..........The bank’s Executive Director, BK Divakara, was in the city to inaugurate the renovated premises of the bank’s Mid-Corporate Finance Branch and Main Branch on Friday. Speaking to Business Line on the sidelines of this function, he said the bank’s Board has set aside a sizeable budget for the refurbishment exercise. “This main branch commenced operations from this premises in March 1935,” he said, bringing to mind the rich tradition and history of the bank. The total outlay for refurbishment of branches has been estimated at Rs. 650 crore. Asked the need for taking up this mammoth exercise after all these years, he said, “We not only believe in customer satisfaction, but in their delight as well to sustain and survive in this competitive environment.”..........

Read - HBL

Sebi asks depository participants to share FPI info with banks

........The latest move is part of Sebi's efforts to harmonise KYC norms with that of the Reserve Bank of India (RBI).  Sebi-approved depository participants are responsible for granting registration to FPIs under the new framework. "DDPs (Designated Depository Participants) are advised to share the relevant KYC documents with the banks concerned based on written authorisation from the FPIs," the Securities and Exchange Board of India (Sebi) said in a circular. Accordingly, .......

Read | Business Standard