The Chattisgarh Chamber of Commerce and Industries has asked the Reserve Bank of India Governor D Subbarao to change certain rules pertaining to administration of banking regulations. The office bearers of the chamber have asked for an appointment with the RBI Governor in this regard. The president of the chamber Shrichand Sundrani, general secretary Jitendra Baralta, treasurer U N Agrawal and others demanded that the no FIR (First Information Report) should be lodged on submission of fake currency notes in banks as businessmen do not always check every currency note before accepting it. They should be instead destroyed instead of filing FIR. Presently, an FIR is obligatory if bank receives fake currency. The president of the chamber said that another regulation which needs to be looked into is that of automatic closure of any account from which there is no transaction for a period of 6 month. He said that opening of accounts of every group-member of a business venture is compulsory as per the orders of the Income Tax department. These accounts are not in regular use. The office bearers also made several other demands like clearing loan applications in time, standardisation of amount necessary for opening bank account etc.
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Wednesday, February 9, 2011
RBI Governor in Bhopal on Feb 9
The Governor of the Reserve Bank of India Dr D Subbarao will be in Bhopal on February 9. He will preside over a meeting of RBI’s central board in the capital. He will also inaugurate an exhibition depicting the 75 year history of the bank.
NE lags in electronic clearing system: RBI
Ruling that the Northeast was yet to pick up the electronic clearing system (ECS), a senior Reserve Bank official today said Clearances through the ECS in the region is only one per cent of the national average. "More awareness in required to refine the payment and settlement systems in the region. Of late, Manipur has started payment of salaries through this system. In Meghalaya some debit clearing (like BSNL bills) is done through ECS," RBI Regional Director Surekha Marandi said. Addressing a workshop on popularizing ECS for payment of salaries and pension, she said the electronic transfer of payments were safe, efficient, time saving time and it helped better fund management. "Clearances through cheques take three days time, while through ECS it is done in one day. The ECS also ensures better customer satisfaction," she said.Meghalaya Chief Minister Mukul Sangma said all state government employees will be brought in the loop."The beneficiaries of government schemes and other weekly payments will be done through this system in near future," Sangma said. Meghalaya additional chief secretary (in charge finance) BK Dev Verma said the ECS reduces the paper work and the exercise of going to banks. "The possibility of fraud is also nil," he said. Meghalaya government is in the process of starting e-payment of pension. "Next, we will start the payment of salaries through ECS. The banks have to gear up to handle the tasks, because gradually all government transactions will be done through electronic payment," Verma said.
Banking access to all villages with 2,000 people: RBI
The Reserve Bank of India (RBI) has planned to make banking accessible to all villages with population more than 2,000 by March 2012, bank governor D. Subbarao said Tuesday. " RBI has planned that all villages with population more than 2,000 must have access to banking such as through ATMs, business correspondents and rural mobile banking ," Subbarao told students of the Indian Institute of Management-Raipur (IIM-Raipur) while making a presentation on the working of RBI. "It is a challenge before the RBI to maintain growth and control inflation," he said. He explained in detail about several functions of the RBI - from printing and distributing currency to acting as monetary authority, regulatory and supervisory body for banks. The RBI chief also sought to correct people's 'wrong perception' regarding RBI as a regulatory body for interest rates, saying RBI doesn't regulate interest rates on borrowing and lending except for NRI deposits and savings bank accounts. He also explained how RBI acts as an 'external sector gatekeeper' by managing current account deficit
Kamath worried over inflation impeding growth
ICICI Bank Chairman K V Kamath today sounded alarm bells on rising inflation saying price rise numbers at the current level are not at all comfortable. "Current inflation numbers are not at comfortable levels. If we need to make growth sustainable, we need to control inflation and interest rates," Kamath told reporters on the sidelines of the Nasscom India Leadership Forum 2011 here. On the impact of the successive interest rate hikes by the Reserve Bank of India (RBI), he said, if interest rates are hiked further, it can play a spoilsport for the present high level of growth. On whether high interest regime is here to stay, Kamath said, till inflation does not come under control, it will remain high. He further said, it is difficult to foresee an easy money regime now as inflation so far has not been responding to the efforts of the central bank. "For the past one-and-a-half years, inflation has not been responding to the traditional monetary and fiscal instruments," Kamath said.
Two-year FDs fetch more than 5-yr deposits
Banks are offering their highest returns in the one to two-year category of deposits, an indication that they expect interest rates to come down in the medium term. A host of banks have revised their lending and deposit rates but are reserving the most-attractive returns on the medium-term fixed deposits. The highest rate offered by the country's largest lender, State Bank of India, is 9% and this is the return on its 555-day and 1,000-day deposits. But those who decide to keep their money for a longer term will less. A five-year deposit with SBI will fetch only 8.25% while the return on 10-year deposits is 8.75%. Conventional economics says that rates rise along with tenure, and the current pricing of deposits appears to be an anomaly. But bankers have an explanation for this. They say there are two reasons for why medium-term rates are higher. The first is that they believe that inflation would come down which would make lower fixed deposit rates more acceptable in the next year. Secondly, they say that it is impossible to predict future rates and since most of their loans are extended on floating rates, they would rather have the option to reprice deposits after a year. Meanwhile, more banks have increased their lending rates. in the wake of the 0.25% increase in policy rates by the Reserve Bank of India even as the liquidity position eased marginally in the money markets.
NABARD asks bankers to implement government sponsored schemes in Himachal
NABARD has asked regional rural banks (RRB), leading commercial banks, cooperative banks to play a proactive role in implementing government sponsored schemes formulated for weaker sections of society. Speaking a day long workshop here today, AD Ratnoo, CGM NABARD Shimla asked the participating banks to action plan for the coming year, which needed to be submitted to NABARD so that targets set out could be monitored. The branch managers of banks were asked to ensure that they were equipped with the guidelines and instructions of RBI, NABARD and central government sponsored schemes such as Dairy Entrepreneurship Development Scheme, Integrated Development of Small Ruminants, Rabbits Self-Help Groups and Joint Liability Groups.
RBI snubs NRIs, says not eligible for interest sops on home loans
The Reserve Bank today said non-resident Indians would not be eligible for incentives on interest on home loans of up to Rs 10 lakh. Banks provide one per cent interest subsidy for home loans of up to Rs 10 lakh. "Housing loans extended to NRIs for construction of farm houses, and to staff members of the banks are not eligible for subsidy under the scheme," it said in a notification. The central bank said the notification follows the recent clarifications issued by the government. The government, in the Budget of 2009-10, announced a scheme of one per cent interest subvention in respect of individual housing loans up to Rs 10 lakh, provided the cost of unit does not exceed Rs 20 lakh. The scheme was valid till September 30, 2010, with an initial allocation of Rs 1,000 crore. During the last Budget, the scheme was extended till March 31, 2011, with an additional provision of Rs 700 crore. Further, RBI directed the banks to use their own funds for upfront credit of subsidy under the scheme till government makes reimbursement and added that loans sanctioned prior to October 1, 2009 would not qualify for reimbursement under it. "While calculating the interest subsidy, each disbursement may be treated as a separate loan and for each disbursement, subsidy claim may be made for twelve instalments," RBI said. The apex bank also asked all the lenders to submit their claims on a monthly basis in respect of all housing loans eligible for subsidy under the scheme.
Tuesday, February 8, 2011
Experts solve forex riddle for students
With a view to provide basic information about foreign exchange (forex) facilities available for students/ researchers going abroad, the Reserve Bank of India (RBI) in association with Indian Institute of Technology (IIT), Patna organised an interactive session programme titled “Forex for you”. Students from IIT, NIT and other engineering colleges attended the session. A panel of experts comprising G. Mahalingam, Regional Director, RBI Patna, S. Maurya, Deputy General Manager, RBI, Shrimohan Yadav, General Manager, RBI, Naveen Chandra, AGM, SBI, and A. Saha, GM, Thomas Cook answered students queries over financial issue. Students were inquisitive about a number of things such as how to unravel black money, how to control inflation, how monetary value is determined, what will be the future of the economy, implications of artificial depreciation of Chinese yuan, what quantum of forex could be taken away to a foreign country and how much of it could be remitted back, whether an engineering graduate can undergo training in RBI, can banks be asked to reduce the interest rate on education loans etc. “The experts broadly spoke about the various facilities relating to foreign exchange available to students and to the general public for different purposes such as travel, study, employment, business, medical needs etc,” In response to a question regarding the future of Indian economy, Mahalingam said: “India is managing its affairs pretty well. Fiscal deficit is well managed, the only concern is the inflation which is because of supply side problem and RBI can interfere to control it only when it is a demand driven.” “Please don’t worry about India’s economy. You (students) go abroad for study and comeback as we want you to be in the country,” Mahalingam told students.
S K Kotian, Ex-DGM, RBI passes away
S K Kotian, the director of Bharat Co-operative Bank Limited passed away on Sunday February 6 owing to brief illness. Kotian basically hails from Kallamundkoor in Moodbidri taluk of Dakshina Kannada district. He retired as Deputy General Manager with Reserve Bank of India and continued to serve the Board of directors in Bharat Co-operative Bank. He was the active member of Billavar Association at the suburban Borivali. He is survived by his wife and two daughters
RBI to open sub-offices in NE capitals – Surekha Marandi, Regional Director
Reserve Bank of India will open sub-offices in all the capital states of North-East, starting with Agartala. RBI Regional Director Surekha Marandi told PTI today the process of setting up the first sub-office in Tripura capital of Agartala is on. "We are waiting for Tripura government''s offer. As soon as the state government allots a building, we will start the process," she said. The RBI official said the sub-office at Agartala should be ready by the end of this year. Sub-offices will be set up in other capitals as well in a phased manner, Marandi said, adding that RBI was trying to increase the outreach of banks in the region.
New cheque clearance system to begin in Chennai by mid-2011
Rejection of cheques with over-writing or other corrections, currently limited to the national capital, will begin in Chennai by the middle of the year, but the pan-Indian implementation of this new cheque clearance system by RBI may take a few years more. The new Cheque Truncation System, under which cheques are cleared through their digital image being passed through the banking system and without their physical presentation, will be implemented in Chennai in its second phase by Newgen Software. The system was introduced in Delhi by the company in December 2010, marking the first phase of the new system, proposed by RBI earlier last year.
Andhra Bank submits financial inclusion roadmap to RBI
Andhra Bank, one of the leading public sector banks in the country has submitted a roadmap to the Reserve Bank of India (RBI) to provide banking services to 1144 unbanked villages in the country with a population of over 2000 by March 2012. The Hyderabad-based bank has also fixed an interim target to cover around 500 villages by the end of the current financial year under the Financial Inclusion Plan . The RBI has asked the public sector banks to extend their banking services to the unbanked villages having a population of over 2000 by March 2012. Andhra Bank would offer banking services trough the Business Correspondents (BCs) model by leveraging technology. The bank has already covered 195 villages under FIP, sources said. In order to strengthen the FIP, the bank has opened 8.60 lakh “No Frill Accounts” under branch banking. With its pan-India presence, the bank has 2615 delivery channels consisting of 1587 branches, 36 extension counters, 38 satellite offices and 954 ATMs. Out of the total target of 1144 villages to be covered under the FIP, 101 villages are in the bank’s Berhampur zone, that covers seven districts in the south Orissa and Srikakulam district in Andhra Pradesh. The districts in Orissa to be covered under FIP are Ganjam, Gajapati, Nabaranagapur, Kandhamal, Kalahandi, Koraput and Rayagada. Before the end of the current financial year, we will cover at least 30 villages under the FIP, said Regidi Appadu, Deputy General Manager (DGM) of the bank’s Berhampur zone. All the 30 villages are located in Srikakulam district in Andhra Pradesh. Under the FIP, the bank has already undertaken the Andhra Bank Gramina Kranti Patakam, a Smart Card based project for payment of the wages for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the social service schemes like the old-age pensions at the panchayat level. “Out of 7.45 lakh beneficiaries in Srikakuam district in Andhra Pradesh, the bank has already issued the smart cards to 3.40 lakh people”, Appadu said. The same scheme would be launched in Orissa after signing memorandum of understanding (MoU) with the state government. “The scheme is likely to the implemented in Orissa after March this year”, he added.
RBI directive will not affect us, says Manappuram chief
The Reserve Bank of India's directive that loans given against jewellery as collateral would no longer be eligible for priority sector lending will not have much of an impact on NBFC Manappuram General Finance and Leasing, according to a top official of the company.
Finmin, RBI should join hands on inflation
Last year’s Budget had two surprises for the Indian financial sector. First, finance minister Pranab Mukherjee’s announcement that the Reserve Bank of India (RBI) would soon issue licensing norms for new private firms in the banking space and, second, the formation of the Financial Stability and Development Council (FSDC). On both issues, I am told RBI was consulted only a few days ahead of the budget. And, on both, the Indian central bank had reservations. It had been talking about consolidation in the banking sector, and not entry of new companies, till Mukherjee said this in his budget speech in February 2010. Even though the stated objective of FSDC is to “strengthen and institutionalize the mechanism for maintaining financial stability” and it plans to monitor macro-prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination issues “without prejudice to the autonomy of regulators”, both RBI and the capital market regulator are distinctly unhappy and they see it as a dent on their autonomy. The first draft on FSDC, circulated by the ministry, evoked strong reactions from RBI. It was circulated just before the promulgation of an ordinance by the President of India that sought to resolve the face-off between the stock market and insurance regulators. The 18 June ordinance, the Securities and Insurance Laws (Amendment and Validation) Ordinance, 2010, which later became a law, empowers the finance ministry to resolve all future regulatory disputes, including those involving RBI. Faced with stiff resistance from RBI, the ministry made cosmetic changes in the structure of FSDC and the regulatory dispute resolving law, but it did not budge an inch from its resolve to push through these issues. One wishes that it shows same resolve to address other financial sector related issues, some of them are a decade old. The biggest threat to growth is high inflation and it can be contained only when the finance ministry and RBI mount a joint offensive, through fiscal and monetary measures. Mukherjee can make a beginning, using the budget 2012 as a platform.
Are our banks lending more than they get as deposits
Indian banks are lending more than what they get as deposits — this is what was Reserve Bank of India (RBI) Governor Duvvuri Subbarao’s concern during the third quarterly review of the monetary policy. The governor said the incremental credit-deposit (C/D) ratio of the banking sector was 102 per cent at the end of December 2010, up from 58 per cent in the corresponding period of the previous year. Incremental C/D ratio indicates how much a bank has lent for every additional rupee it has received as deposit. Ideally, banks cannot lend, for example, more than Rs 70 for every Rs 100 they mobilised as deposits, because they need to set aside Rs 30 in the form of cash reserve ratio (CRR) and statutory liquidity ratio (SLR). But, RBI says, for every additional Rs 100 deposit, banks are lending Rs 102, even after meeting CRR and SLR obligations.
After SKS, more MFIs to cut exposure to Andhra
Many microfinance institutions (MFIs) are considering reducing their business in Andhra Pradesh after the state government decided to continue with the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Act. State-based Share Microfinance and Spandana Spoorthy said they would reduce their exposure to the state from 40 per cent to 5-10 per cent if the state government continued with the Act. Last week, SKS Microfinance, the only listed MFI in the country, had threatened to pull out of the state if the government did not revoke the Act. Last year, the Assembly enacted the Act and imposed stringent regulations in response to complaints over high interest rates and coercive loan recovery practices adopted by MFIs. “Operations have come to a standstill in the last three months. Fund-raising has become an issue and banks are yet to disburse loans,” said Uday Kumar, chairman and managing director of Share Microfinance.
RBI to issue new Rs 10 coin
The Reserve Bank of India will soon put new coins of Rs 10 denomination into circulation to felicitate its Platinum Jubilee. The front face of the coins will have the Ashoka Pillar embossed in their centre, an RBI release said. The reverse will bear the emblem of the Reserve Bank of India, a palm tree tiger, along with the year "1935-2010" below the emblem, it said.
Pvt banks, NBFCs may be hit on RBI's take on gold loans
The last quarter before the closure of financial year, private banks are busy buying loans from non-banking finance companies to meet their 40 per cent priority sector lending target set by the banking regulator. The Reserve Bank of India on Friday said that banks cannot show loan given against gold jewellery under priority sector lending. This news comes as a thunderbolt for both private banks and NBFCs specialising in loans against gold. The move by RBI is due to the high interest rate charged on these loans – 18 to 24 per cent – and end-use of funds by the NBFC got from banks may not be for priority sector lending. These loans given against gold jewellery are called ‘bridge loans' as they for a short duration of three months usually taken by small traders and businessmen. Mr S.K. Mishra, General Manager (priority sector), Indian Overseas Bank, said the impact would be greater on private banks compared with public sector banks. Public sector banks have a large network of branches in the rural areas and therefore easier to meet the priority sector lending.
Bank on decentralisation
The changes that have been taking place in State Bank of India (SBI) since July 2006 coincide with the chairmanship of O P Bhatt who took over in July 2006, ending his five-year term in March 2011. There is no doubt that the bank’s performance data in the last five years has improved. Despite the handicaps that the bank faced in the form of highly unionised staff at the branch level, and the demerits associated with public ownership, the bank has done well, surpassing its peers on various business indices. SBI’s excellent track record can be attributed to Bhatt’s leadership. Bhatt introduced certain changes to achieve the stated objectives. However, these changes have made branch managers the weakest link in the whole system. It may be recalled that former SBI chairman R K Talwar said every branch manager represents the chairman of the bank. Accordingly, Talwar strove to decentralise the decision-making process to strengthen the branch manager’s position. Since then, SBI has come full circle with Bhatt weakening the branch manager’s position. Bhatt and his team believed that centralising management would speed up the decision-making process. If the bank were to take an independent survey of customer satisfaction at branches, the data would speak for itself. The computerisation of SBI branches has done little to improve service levels. Also, one does not see or experience the performance celebration at branch levels for reasons best known to the branch staff. However, having taken the lead in all business parameters, it is for SBI’s next leadership to sustain the bank’s performance in the years to come —this would be the best tribute to Bhatt’s leadership. This is on the assumption that the government (and the Reserve Bank of India) does not renew his tenure, although he deserves it. K.V.Rao, Bangalore
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