HDFC Bank, second largest private bank in the country, organized a 'Coin Mela' at Aminabad Branch in Lucknow. The Coin mela was inaugurated by Mr. Gouresh R. Kotian, Dy. General Manager, Issue Department, RBI, Lucknow. The initiative was in conjunction with RBI's Clean Note Policy to provide fresh notes in exchange for solid ones. HDFC Bank organized a total of 18 successive 'Coin Melas' in 16 cities in a single day, across the nation. Apart from the four metros namely; Mumbai, Delhi, Chennai, Kolkata, the mela also took place in semi-metros such as Ludhiana, Chandigarh, Patna, Indore, Jaipur, Ahmedabad, Bangalore, Hyderabad, Pune, Cochin and Gurgaon. People from all walks of life took advantage of the coin mela to exchange their soiled notes and old and disfigured coins. The Bank exchanged over Rs. 27.00 Lakh worth of coins and notes during this exercise in Lucknow. A total of Rs.1280.06 lakh were exchanged across the 18 locations. A similar ‘Coin Mela’ at its Ujjain branch in Indore was inaugurated by Mr. S.C. Gandhi, Manager, Issue Dept, RBI, Bhopal. The initiative was in conjunction with RBI’s Clean Note Policy to provide fresh notes in exchange for solid ones.
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Saturday, February 26, 2011
Financial inclusion and literacy twin pillars: RBI Governor
Reserve Bank of India Governor Dr D Subbarao stressed the need for the 'financial literacy' in the context of the present fiscal scenario, stating that it had to be an integral part of financial inclusion and consumer protection. ''In RBI, we treat financial inclusion and financial literacy as Twin Pillars,'' Mr Subbarao said while addressing the 24th Foundation Day and Convocation of Sambalpur University. He said many people think RBI to be a mysterious institution. In a bid to clarify such monolith, the RBI Governor explained the activities of the institution and the range and diversities of the apex bank. Dr Subbarao said the RBI was the regulator and supervisor of Banks, non-banking financial companies and significant parts of the financial markets. In a market system, regulation is required in order to protect the interests of the stakeholders and preserve the financial stability, he added. Orissa Governor M C Bhandare said the imperatives of neo-liberal economy had influenced the priorities and perspectives of higher education in India in ''startling'' new ways. He appealed to the staff and students of this university to face the challenges that are likely to come in the future. The Governor said Orissa, well endowed with mineral resources, had not achieved the desired progress and development. ''Poverty and illiteracy are the biggest hurdles and are two ugly spots which need to be removed,'' he said and urged the graduating students to play a major role.
RBI to hold financial outreach programme
VILLUPURAM: The Rural Planning and Credit Department (RPCD) of the Reserve Bank of India will organise a “financial outreach programme” at Karuvachi near here on Saturday. A statement from the Chennai RPCD said during the current financial year (2010—2011), RBI has proposed to conduct the programme in four villages in Tamil Nadu and one in Puducherry. Of these, already two in Tamil Nadu, including Paluvanchi in Tiruchi and Seelapandiankalam in Dindigul, and, Mangalam in Puducherry, had been covered. The objectives of the programme are to create awareness among rural people about RBI in general and banking activity in particular so as to include them in the mainstream financial system by opening no frills or savings accounts, extending small credit and issuing smart cards. At the Karuvachi programme, Principal Secretary to Tamil Nadu Finance Department K.Shanmugam, Collector R. Palanisamy, Indian Bank executive director Rajeev Rishi, General Manager (RPCD) M.M.Majhi, deputy general manager S.Selvarajan and assistant general manager M.A. Nasser will participate
Court notice to RBI in co-op bank merger case
Gujarat High Court has issued notices to Reserve Bank of India, Abhyuday Co-operative Bank Ltd and the registrar of co-operative societies while hearing a petition challenging the merger of a multi state co-operative bank with a state level bank. The petitioners questioned the legality and validity of the order passed by joint registrar (audit), co-operative societies, Gandhinagar, on October 8, 2008, which paved way for the merger of Abhyuday Co-operative Bank Ltd with erstwhile Manekchowk Co-operative Bank Ltd. The plea was filed on the grounds that there is no directive in law on the merger of a co-operative bank constituted under state mechanism with a multi state co-operative bank. The petitioners sought an appropriate writ, order or direction to quash and set aside the joint registrar’s order. The petitioners, alleged debtors of Manekchowk bank, stated that they received no individual notice prior to the merger. While Abhyuday Co-operative Bank Ltd is constituted under the Multi State Co-operative Societies Act, Manekchowk Co-operative Bank Ltd was formed under the Gujarat Co-operative Societies Act. Manekchowk bank had instituted summary lavad suit No 182 of 2003 for an amount of Rs 1,77,04,503 against the petitioners before the board of nominees. The court has posted the case for further hearing on March 1.
Grant more banking licenses, but have strict regime: Economic Survey
India's Economic Survey 2010-11, tabled by Finance Minister Pranab Mukherjee in the Lok Sabha Friday, recommended more banking licences but added that strict regulations must be in place before granting licenses to more players. "Providing access to banking facility to all the citizens is one of the main objectives of the inclusive development. While providing banking access, the issue of regulatory robustness for the banking sector should not be compromised," said the annual report on the state of the economy in the current fiscal. According to the survey, the minimum capital requirement for those proposing to start a banking institution should be graded, while the government should consider having two banking licenses - one for those who would provide basic financial services to unbanked areas and the other to those involved in all spheres of banking services. The survey said that industrial houses and non-banking finance corporations (NBFC) should be considered for full banking licenses, only with clearly defined roles and regulations. "MFIs (micro finance institutions) and NBFCs should be considered for being given license for basic banking. It is very essential that the basic banking functions are clearly and objectively defined."
Obituary
MR.R.V.VARADARAJAN (88 years) Rtd. DCO, RBI, Mumbai expired on 24.02.2011 at Chennai. May his soul rest in eternal peace.
RBI action against PayPal as new edition of capitalism - Priyankan Goswami
The ongoing issue in the country between PayPal the new RBI guidelines is being shamelessly portrayed as a correct step of Reserve Bank of India by the bureaucrats, stock brokers and high capitalists of the country. Although the new rules of PayPal are set to disturb and create huge inconveniences to the Indian freelancers and small scale & growing IT Service providers, these lots are found to continue giving reasons for the guidelines. The 7 day time limit within which PayPal users are bound to withdraw money is being portrayed by the pro-RBI lot as a mandate which will allow better tax flow and help boost economy. However in actual, -by the new guidelines PayPal was mandated by RBI to pay interest to its Indian users for keeping money for more than seven days, something which a global virtual monetary service can never comply because of obvious reasons. This is plain dictatorship from RBI in either bringing PayPal into a framework within which the Banks in India operate, or to tie down their hands and restrict their powers in Indian market ( one of the biggest globally) so that other Banks in India can take benefits off the gap created by the situation. In fact with PayPal being tamed down, it is bigger and better chance to reap benefits for other Payment gateway services of other banks / Providers in India & abroad such as ICICI Payment Gateway (PAYSEAL), Citibank Payment Gateway, HDFC Bank Payment Gateway and AXIS Bank Payment Gateway and even third party gateway providers like CC Avenue- Mumbai, Transecute- Mumbai & Time of Money. It would be worth mentioning that with the increasing popularity and huge fan following of Pay Pal amongst Indian customers was hampering the business of Banks in India more and more, until these dictatorial guidelines restricted PayPal, at the cost of huge blow to Indian freelancers of course. Another question that arises here is why the Indian freelancers who work for their living for foreign services have to pay taxes to the Indian Government, apart from paying service taxes for using Internet and Phone connections. Such freelancers are mostly dependent on small projects (ranging from data entry to creation of small software’s) of foreign companies and clients because of the inability of the Government and current system to provide them with their daily bread and butter. They would work for another country with no aide and help from the Indian government and yet pay taxes to Indian Government. What for? With the new guideline asking PayPal to report any transactions above 500 dollars to the government, the RBI tried to showcase that the Government is now trying to have better transparency and control of funds flowing in and out of the country. But the question is, – all this while was there no check or verification on transactions taking place to and fro? The answer is YES, there were of course verifications of the PayPal transactions. As reported in a previous article in Times of Assam, the flow of funds to Indian PayPal customers is actually through PayPal India, which is monitored and transactions verified by Authorities. So the claim by RBI and the pro-RBI guideline group is nothing but a false propaganda, misleading public, to tie up PayPal and thereby help the capitalistic banks in India to rise and shine. We cannot ignore the fact the millions of fraudulent money hidden by Indians in Swiss Banks have been ignored by Government so far by Authorities except for giving Ashwashan (Assurances) to eradicate it. In fact a huge number of such people whose money is well hidden in Swiss Banks are the bureaucrats, stock brokers, bankers, etc who run the show in capitalistic India. Ultimately the entire game plan of RBI in this gimmick is something similar to the Government’s lowering down costs of vegetables and food items for the public and increasing price of petrol or cooking gas at the same time, so that the people ultimately pays more (yet be happy to see onion or brinjal prices going down!). There’s no doubt rulers of India are getting more and more capitalistic, helping the same rich section getting richer by sucking everything out of the common public. The Pay pal RBI story is part of the same ploy; inconvenience to freelancers, small scale IT service providers are going to create opportunities to the bigger players, restriction on PayPal would allow Indian Banks to capture more market.
SBI has last laugh, 'teaser' loans get nod
If there's one person who would be pleased with the Economic Survey, it would be State Bank of India chairman O P Bhatt. The government has after all sided with him in the public sector banker's battle with the regulator over "teaser rates". To begin with, government has said home loans offered by SBI (and almost all banks earlier), for which interest rates remain fixed in the initial years before turning flexible, should be called "terraced" loans. On these loans, typically, monthly installments would rise over time. Singling out the success of SBI's fixedcum-floating rate home loans, the survey said the product launched after the financial crisis of 2008 helped several new home buyers. Till November 2009, SBI had sanctioned over 28,000 such loans with an aggregate value of Rs 3,273 crore and defaults on them have been negligible. Amid protests from some of SBI's rivals, RBI tried to discourage banks from offering similar loans by mandating that they set aside more capital to deal with potential default. But the government does not seem to be in favour of this approach. "In general, it is worthwhile giving banks and financial institutions the freedom to introduce new products and thereby expand the options available to consumers and firms," it said.
Govt to remove `hurdles' for MFIs
Hyderabad: With micro finance institutions trying to lure the poor by introducing new products that supposedly do not come under the purview of MFI Act, the state government is all set to issue a notification that will replace the word "SHG women" and include a generic word " BPL households", so that MFIs continue to adhere to the stringent norms laid down in the Act. According to sources in the chief minister's office, the law department vetted the notification on Friday in order to ensure that MFIs adhere to the existing stringent rules. "The notification aims at bringing all kinds of MFI loan products, existing and future, under the purview of the Act. The MFIs are lending extensively to poor self-help group women and even their families. The notification will be made public in a day or two," the source at the CMO said.
Friday, February 25, 2011
RBI tells banks to stop re-circulation of soiled notes
SAMBALPUR(Orissa): Soiled notes may soon be a thing of past as the Reserve Bank has asked all bank branches handling large amounts of currency to put in place note-sorting machines by the end of next month with a view to halting re-circulation of unfit currency notes. "The Reserve Bank is committed to a 'clean note' policy. RBI exchanges soiled notes for clean ones, and mutilated notes for new ones subject to certain conditions," central bank Governor D Subbarao said at the Convocation function of Sambalpur University here. "In pursuit of our clean note policy and to check counterfeiting, we also prescribed that by March 31, 2011, all bank branches with cash receipts of over Rs 50 lakhs per day be equipped with a note sorting machine so that every high denomination currency note is checked for fitness and genuineness before being put back in circulation," he said. Furthermore, he said, RBI has instructed banks to ensure that the notes that they issue through their ATMs are also pre-checked for genuineness and cleanliness. He pointed out that cost and longevity are important dimensions of currency management. "We are a large cash economy; in fact, we are the second largest producer and consumer of currency in the world, next only to China . Producing such a large amount of currency is expensive," he said. Talking about introduction of plastic notes, Subbarao said, one option for economizing is replacing paper currency with plastic one as some countries such as Singapore and Australia have already done. "We are planning to try this out on a pilot basis, starting with a plastic note in the Rs 10 denomination, which we will distribute out of five of our regional offices in the country including our Bhubaneswar office," he said. During the pilot phase, RBI needs to study not only the relative costs but also the carbon footprint associated with the recycling and disposal of plastic notes vis-Ã -vis paper notes. "If the pilot proves successful, we will mainstream the use of plastic currency," he said. By far the most important facet of currency management is building in security features to prevent counterfeiting. People should be aware of these security features so that they can tell a forged note from a genuine one, he said. This is the motivation for the awareness campaign that the Reserve Bank has launched in the print and electronic media to educate people on the security features, he said.
RBI hints at policy stance rejig to rein in inflation
Reserve Bank of India (RBI) Governor D Subbarao, on Thursday, said it can change policy stance at any time to rein in inflation based on the macroeconomic situation. “Notwithstanding (the) scheduled quarterly and mid- quarterly reviews, we reserve the right to alter our policy stance at any time to respond to the evolving macroeconomic situation,” Subbarao said said at the Convocation function of Sambalpur University. The statement assumes significance in the light of double digit food inflation and rising crude oil prices. Subbarao said “we are deeply conscious that inflation is a regressive tax that hurts the poor the most as their earnings are not protected against rising prices.” He admitted “the tension that we need to manage is that economic growth requires that we maintain a low interest rate regime whereas inflation management warrants that we raise interest rates.” As part of managing growth-inflation dynamics in the post-crisis period, RBI has raised policy interest rates seven times since March 2010. Subbarao said, “we are sensitive to the need for supporting growth as economic growth is a necessary condition for poverty reduction.” On capital inflows, Subbarao said, “the liquidity infusion policy of the US Fed, popularly known as quantitative easing (QE), has triggered larger capital flows to emerging market economies (EMEs).” This has in turn put upward pressure on EME exchange rates eroding their export competitiveness and pushing up asset prices. EMEs had to adjust their macroeconomic policies to manage the implications of these flows, he said.
RBI to float discussion paper on deregulating savings a/c rate
The Reserve Bank today said it will come out with a discussion paper on deregulation of interest rates on savings account. "There is a view that we should deregulate the interest rate on savings bank accounts too. We are examining the pros and cons of doing that and will shortly put out a Discussion Paper for eliciting feedback," RBI Governor D Subbarao said at the Convocation function of Sambalpur University. At present, RBI only monitors interest rates on NRI deposits and on savings bank accounts, while interest rates both to savers and borrowers now work on the market principle of competition among banks. "Regulation has both costs and benefits. excessive or inappropriate regulation increases intermediation cost, impedes efficiency and stifles innovation...," Subbarao said. Currently, banks pay 3.5 per cent on savings deposit. While the RBI as part of the economic reforms programme deregulated fixed deposit rates, it had not freed the rates which banks pay on savings deposit. While banks adjust fixed deposit rates keeping in view their asset liability position, they pay 3.5 per cent on savings bank as mandated by the Reserve Bank.
Managing growth vs inflation biggest challenge: RBI
Terming management of tension between demands of growth and of inflation as a major challenge after the global financial crisis, the Reserve Bank of India (RBI) today said though India recovered early, it was hit by inflation before others. "In the aftermath of the crisis, our biggest challenge has been to manage the tension between the demands of growth and of inflation," RBI Governor D Subbarao. "Even though we have recovered from the crisis ahead of most other countries, inflation too has caught up with us sooner than elsewhere," he said. Economic growth requires maintaining a low interest rate regime whereas inflation management warrants raising interest rates. "In managing this tension, we are deeply conscious that inflation is a regressive tax that hurts the poor the most as their earnings are not protected against rising prices," the RBI governor said. As part of managing growth-inflation dynamics in the post-crisis period, the apex bank has raised policy interest rates seven times since March 2010, he said, adding the apex bank was are also sensitive to the need for supporting growth, a necessary condition for poverty reduction. On financial inclusion programme that seeks to provide banking access to poor and those living in the villages and remote parts of the country, the RBI chief said banks had been advised to draw up board approved Financial Inclusion Plans for a period of three years upto March 2013. Subbarao said this should be integrated with the business plan of the bank. A uniform model has not been imposed so that each bank can build its strategy in line with its business model and comparative advantage, he said. In order to further financial literacy, the RBI has established centres focused on financial education at its regional offices in Chandigarh, Pune and Bangalore. "We hope to replicate this in other cities too," he said. The RBI has also encouraged commercial banks to set up financial literacy and credit counselling centres to help people develop better financial planning skills and to learn of the opportunities available in the financial sector, Subbarao said. "Most importantly, we are encouraging both central and state governments to include financial literacy in school and college curriculum so that the next generation enters the adult world financially literate," he said.
Budget to decide on growth-inflation tradeoff
At over 8 per cent, inflation has been consistently high over the past few months. And that probably is the biggest challenge for finance minister Pranab Mukherjee, who faces the difficult choice of choosing between a strategy aimed at containing high prices or sustaining the growth momentum. Experts say, presenting a non-expansionary Budget, which means a fiscally tight Budget with higher taxes on commodities and services, is the only way out. But a look at the government's accounts and policy compulsions might render it difficult. The Reserve Bank of India (RBI) would like the government to adopt a credible fiscal consolidation plan. That is important because monetary policy framed by the central bank is effective when there is fiscal consolidation. “The government must adopt a credible fiscal consolidation plan, which is important because monetary policy is most effective when there is fiscal consolidation,” said RBI Governor D Subbarao.
State Level Bankers' Committee review held
DEHRADUN, 23 Feb: The State Level Bankers' Committee third quarterly review of all banks upto December was conducted here today. The meeting was inaugurated by Principal Secretary and FRDC Rajiv Gupta. He directed the banks to increase the flow of loans in villages and suburban areas. A review was also conducted of all the plans and projects being run by banks like the 'Atal Adarsh Gram Yojana', 'Chief Minister's Jadi-Booti Vikas Yojana', 'Kisan Credit Card' scheme, 'Pradhan Mantri Rozgar Srajan Programme' and others.Present on the occasion were Sunil Pant, Chief General Manager, State Bank of India, Principal Secretary Alok Jain, Dr Amarendra Sahu, Regional Director of the RBI, Lucknow and others.
Cuttack bank fined for RBI rule violation
The Urban Co-operative Bank, Cuttack is once again in news for wrong reasons. The RBI on Monday imposed a monetary penalty of Rs one lakh on the bank for flouting the apex bank's instructions. The Urban Co-operative bank had opened four collection centres in various schools of the city without prior approval of the RBI. The Urban co-operative bank authorities claim that the counters were opened to provide better services to the people. "We had opened the collection counters to provide better services to our customers. At the counters we collected school fees from the students. We did not violate the instructions intentionally," said Manas Ranjan Pattanaik, chief executive officer of Urban co-operative bank. He added that an appeal will be made before the RBI for a reconsideration of the penalty. According to sources, the RBI had issued a show cause notice to the Urban Co-operative bank earlier, in response to which the bank submitted a written reply also. But the RBI was not satisfied with the reply and had imposed the fine of Rs one lakh. The RBI release said "After considering the facts of the case and the bank's reply in the matter, the RBI came to the conclusion that violations were substantiated and warranted imposition of the penalty."
RBI rejects NBFCs' parity demand
RBI has rejected the demand for level-playing field by NBFCs on par with banks. Responding to a presentation made by NBFC representatives, RBI deputy Governor Shyamala Gopinath said: " banks were governed by separate and more stringent set of rules and they have various statutory liquidity requirements. So there is no point in asking for parity with banks." NBFCs discussed a number of issues, including tax deduction allowed to banks on their NPAs, NBFCs not being included in the process of financial inclusion, among others. They also asked for a revision of deposit limits accepted by them, which has remained unchanged since 1998. One of the major points of contention was the various versions of the definition of 'infrastructure' being used by various regulatory bodies, which needs some streamlining based on the nature of assets, class of sector and other parameters. Besides, they also asked for extending the scope of SARFAESI to NBFCs. NBFCs met the RBI top official, following the central bank's recent circular asking them to step up capital to 15% of their assets from the earlier stipulated 12%. Ms Gopinath said: "In our communication with NBFCs, we had found that except for one, most of them already maintained their capital adequacy ratio above the benchmark."
RBI Working Group to clear up NBFC issues
The Reserve Bank of India (RBI) has formed a working group to look into the various issues related to the Non Banking Finance Companies (NBFCs). "We have formed a working group that is headed by Usha Thorat, former Deputy Governor, RBI which will look into various issues and problems faced by NBFC," said Shyamala Gopinath, deputy governor, RBI while addressing the seminar organised by Indian Merchants' Chambers on issues and challenges faced by NBFC sector. The working group also includes members of NBFC sector.
Consolidation of public sector banks back on front burner
The long-standing proposal for consolidation of public sector banks is back on the government's agenda. Senior officials in the banking sector have told FE that finance ministry is likely to appoint a committee to look into the consolidation of such banks. An announcement is expected in the Budget. The committee, which will have officials from the finance ministry, Reserve Bank of India and some bankers, will look into the merits of bank consolidation, recommend a plan of action to achieve the goal and also identify possible banks to take the process forward. Recently, the standing committee on finance headed by Yashwant Sinha also recommended that the government to spell out clear policy on bank mergers and conduct an in-depth analysis on various aspects of bank consolidation.
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