RBI wants more banks to launch mobile banking

Ms Shyamala Gopinath, Deputy Governor, RBI, flanked by Mr S. Raman (left), CMD, Canara Bank, and Mr P. Vijaya Bhaskar, Regional Director, RBI, at the launch of ‘CanMobile’ in Bangalore on Monday

Bangalore: The Reserve Bank of India (RBI) wants more and more banks to launch services on mobile, its Deputy Governor Shyamala Gopinath said here today. Launching Canara Bank's CanMobile, a mobile banking product, she said RBI has already enabled mobile banking and issued guidelines in this regard. "...And we do hope that more and more banks now join in the launch of this product," she said. According to Canara Bank's Chairman and Managing Director S Raman, the product is user-friendly, safe, secure and swift. It facilitates customers to conduct transactions on 24X7 basis from anywhere with the use of mobile handset. Registered customers of "CanMobile" can now access Canara Bank's services for balance enquiry, viewing of last five transactions, transfer funds intra-bank and inter-bank through Inter Bank Mobile Payment System (IMPS) provided by National Payments Corporation of India (NPCI). At present, the bank does not levy any service charge for funds transfer. Customers can daily transfer up to a limit of Rs 50,000 through Java/GPRS enabled mobiles and up to Rs 5,000 through non-Java/non-GPRS enabled mobiles by using Unstructured Supplementary Services Data (USSD)/SMS. Mobile banking services work on both Java-based and non-Java based applications, bank officials said.

BS

Foreign Exchange for You

http://www.marundeshwara.com/rbiforex/  

Pay Panel Gains won’t Come with Retrospective Effect

Finmin examining 13th Finance Commission’s suggestion to offer new scales only from future date

The windfall government employees receive by way of pay commission award arrears may no longer be forthcoming. The government is examining a proposal to implement pay commission awards prospectively on the lines of finance commission awards, as large arrears throw the finances of both the Centre and states in disarray. "We are examining the suggestion," a finance ministry official told ET. He, however, added that the final call on the issue would be taken when the next pay commission is constituted. Pay commissions are usually set up at intervals of 10 years. The Sixth Pay Commission, the most recent, gave its recommendations in March 2008. It had proposed pay raises between 20% and 40% for government employees. The finance ministry had told a parliamentary panel last week that the issue should be deliberated upon as retrospective implementation of pay commission awards has had adverse impact on the finances of the Centre as well as the states, a government official privy to the meeting said.

ET

Bust co-op banks deplete deposit insurance fund

Since its inception in 1962, DICGC has paid out about Rs 3,908 crore in claims out of bank failures. Around one-fourth has come in the last four years, from April 2007 to April 2010, itself when DICGC paid out about Rs 1,200 crore to depositors....

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'Repositioning aims at designing new products for the future' - Prakash Bakshi, Chairman, Nabard

Both the Reserve bank of India (RBI) and the Union government have always given Nabard that freedom to contribute to policy and strategy formulation. We continue to have that freedom and the change in shareholding proportions have not made a difference ...

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You can complain about your bank to the ombudsman

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Exchanges lobby for key changes in proposed regulatory framework

Bimal Jalan committee recommendations face criticism at MCA panel; consensus on allowing exchanges to list...

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Waving the white flag - A K Bhattacharya

Financial and corporate sector regulators seem to be at peace with the government

Until even a few months ago, the media was abuzz with talks of inter-regulatory conflicts and differences of opinion. The finance minister’s move to create a financial stability and development council (FSDC) had upset the Reserve Bank of India (RBI). The Securities and Exchange Board of India (Sebi) was not too happy with the way the Insurance Regulatory Development Authority (Irda) was asserting its rights of supervision over certain investment schemes that straddled the worlds of both insurance and mutual funds. Even the ministry of corporate affairs and Sebi could not see eye to eye on many issues that concerned how companies should list themselves on the stock exchanges.  At a theoretical level, such differences could well have created the impression of a healthy functioning system where open debate and expression of dissent lead to more informed decisions and better governance. However, that was not how senior officials in the government or the regulatory bodies looked at such differences. Most of the officials saw in them the manifestation of a turf battle — a desire to gain more control and acquire a larger jurisdiction. If the finance ministry gave the impression of trying to usurp the position of a super-regulator for the financial sector, the central bank through its carefully-worded statements resisted such moves. Even Sebi made no secret of its displeasure over Irda’s attempt at expanding its regulatory jurisdiction. The change in the last couple of months is that the financial and corporate sector regulators seem to be at peace with the government. So much so that when the RBI unveiled a few weeks ago its discussion paper on the proposed holding company structure for financial conglomerates, there were no murmurs of protest from any of the other regulators. The discussion paper had mooted the idea that the central bank would regulate the entire holding company irrespective of the different subsidiaries and the different non-banking businesses they may undertake. The proposal should have caused some concern for the insurance or the capital market regulators. In fact, however, there was no such reaction from any one of these regulators. Similarly, the corporate affairs ministry and Sebi appear to be at peace with each other. Gone are the days when there would be heated debates over the question of who should have the final say on guidelines for listing of companies on stock exchanges or the manner of raising capital from the market. Close observers of the central ministries note that the absence of any acrimonious debate between the government and the regulator is largely due to a change in personalities. They point out that the finance ministry has seen new officials in charge of the capital markets division as well as the financial sector department. Similarly, Sebi now has a new chairperson, who like his predecessor is also a former Indian Administrative Services officer, but he is far more cooperative and understanding of the current teams in the ministries of finance and corporate affairs. It is this change in the personalities at the helm that seems to have made a big difference. Today, Corporate Affairs Secretary D K Mittal and Sebi Chairperson U K Sinha resolve their issues through mutual discussion before they can become a matter of public debate. The Irda chairperson is also more comfortable with the new regime in the finance ministry, when he has to deal with it for resolving policy issues confronting the insurance sector. The RBI Governor has come to terms with his position vis-a-vis other financial sector regulators, which the government has now accepted and recognised. The RBI governor is not the same as other financial sector regulators. That is why he heads a sub-committee of the FSDC, while other regulators are only members. While personalities do make a difference in resolving issues, their contribution and effectiveness are limited only up to a point. Often, problems in regulation and governance arise because of structural anomalies. For instance, there is no reason the markets regulator would be administratively linked more to the finance ministry and much less to the ministry of corporate affairs. Sebi’s links with the finance ministry are a legacy of the past. The office of the controller of capital issues was part of the finance ministry until the government abolished it soon after the formation of Sebi. Ideally, therefore, Sebi should have closer liaison with the corporate affairs ministry. However, in practice the finance ministry has always had a bigger say in Sebi matters, quite apart from maintaining a capital markets division. For a year or so when Jaswant Singh became the finance minister in 2002, he went to the other extreme by transferring the entire company affairs department to the finance ministry. Once he left the ministry in 2004, the United Progressive Alliance government restored status quo ante, but the finance ministry’s control over Sebi continued. It is perhaps now time to remove that anomaly. If there is any ministry that should look after Sebi, it should be the corporate affairs ministry.

BS

Swings in banks' earnings is not reflective of best practices: RBI

"Financial reporting should not be as per the minds of bank chairmen," said KC Chakrabarty, deputy governor at the Reserve Bank of India . "When bank chairmen change, profits tend to fall. Things should not turn topsy-turvy if bank chairmen change.".......

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Students awarded PG diploma in rural banking

The convocation ceremony of the first batch of one year fully residential Post Graduate Diploma in Rural Banking (PGDRB) (batch 2010-11) was held here at Bankers Institute of Rural Development. S K Mitra, Executive Director, NABARD, head office Mumbai, who was the chief guest of the function, awarded diploma certificates to the pass-outs.  Amarendra Sahoo, Regional Director RBI (Lucknow) and N Krishnan, Chief General Manager, UP regional office Nabard, Lucknow also graced the occasion and guided the pass-outs of PGDRB. A total of 20 students received the diploma certificates after successfully completing the programme.  During the placement week students were offered employment by Dena Bank, PNB, Andhra Bank (result awaited), Axis Bank, HDFC Bank, NABARD Financial Services Ltd etc. The next batch of PGDRB (2011-12) will commence on July 25. The programme has now been affiliated to Indira Gandhi National Open University (IGNOU).

TOI

RBI monitoring economy, liquidity before policy action

Ahead of its mid-quarterly policy review, the Reserve Bank of India (RBI) today said it is monitoring the economic data and also the liquidity situation, and would take a forward-looking view while deciding on the policy action. "We would monitor various data...and take a forward-looking view and take action," RBI Deputy Governor Shyamala Gopinath told reporters here when asked how the central bank plans to arrest the economic slowdown.  The central bank has raised key policy rates nine times since March 2010, to check inflation, which is hovering above 8%, much above the comfort level of 5-6%. The RBI is scheduled to come out with mid-quarterly review of the policy on June 16. The policy initiatives, however, will have to be taken with a view to containing inflation without sacrificing growth, which has started showing signs of a slowdown. India's economic growth during January-March quarter of 2010-11 slowed down to 7.8% from 9.4% during the corresponding period the previous fiscal. The GDP growth rate this fiscal is expected to moderate to about 8-8.5% as against the original estimate of 9%. Referring to the issue of liquidity, Gopinath said there was no shortage of funds in the system. "We are closely monitoring the liquidity situation. We are aware that the market is in repo mode, they are borrowing from us and that is something in line with our monetary stance," she said. The Reserve Bank, Gopinath added, "does not see much of a stress in the call rates...The short term rates, but we are closely monitoring the situation. We are aware that advance tax payment will start a week later. We invariably monitor the situation". On capital inflows, Gopinath said there was nothing that the central bank was "really concerned about", especially with regard to stability on the external front. As a matter of policy, she said, Foreign Direct Investment (FDI) was welcome into the country.

BS

Bank’s books should not be as per chairman’s wish : RBI

K C Chakrabarty slams reporting standards of banks

There is nothing new in a government-owned bank facing profit pressures due to provisioning immediately after a chairman retires. What is new, however, is the Reserve Bank of India (RBI) expressing its displeasure over this ‘legacy’ in public. Without naming any individual or organisation, RBI Deputy Governor K C Chakrabarty on Monday said, “Reporting has to be credible. You see our banks…when the chairman retires, profit declines. If we don’t make the system credible and create a standard, people will report anything.”  “Reporting should not be according to the chairmen, but according to the books. So, we need to improve the standard of reporting and examination. Whenever one goes from financial reporting to non-financial reporting, the challenges increase. If, in financial reporting, you are not able to bring in integrity, how would you do so in non-financial reporting? That’s the issue,” Chakrabarty said. State Bank of India (SBI), had, under new chairman Pratip Chaudhuri, last month announced its results for the fourth quarter of 2010-11 and had reported its lowest quarterly profit in more than a decade, owing to high provisioning. SBI's total provisions rose 82.10 per cent to Rs 6,059 crore and provisioning for bad loans rose to Rs 3,264 crore. Chakrabarty also criticised various organisations which reward banks having high net interest margins (NIMs). “Bank with the highest NIMs get best bank awards. Banks are in intermediation business; if their net interest margins are high, it means their cost of intermediation is high. How can you give them the best bank award?” he asked.

BS

RBI doesn't see stress on liquidity in short term

Bangalore: Deputy Governor Shyamala Gopinath says central bank hopes the government’s borrowing programme will go on smoothly. The Reserve Bank of India (RBI) did not see any stress on liquidity in the short-term as indicated from ruling call rates, Deputy Governor Shyamala Gopinath said today. Earlier, market participants were expecting a liquidity crunch in the system on the back of advance tax outflows, which is due by June 15. “We are closely monitoring the liquidity situation and are looking into various aspects of liquidity management. As of now, we don’t see a real stress on liquidity as indicated in ruling call rates,” Gopinath said here on the sidelines of launching mobile banking products of Canara Bank. She, however, declined to comment on whether the central bank would conduct open market operation in June in order to ease any possible crunch in liquidity. At an event in Mumbai, RBI Deputy Governor K C Chakrabarty said banks might use the newly introduced marginal standing facility (MSF) in the middle of this month when liquidity was expected to tighten sharply owing to advance tax payments. “Every quarter it happens. I don’t think there is anything different in it. A new type of liquidity management facility has come. So, it will be tested. There can be problem at any time. The system has to adjust itself,” Chakrabarty said. He was speaking on the sidelines of an event on new financial reporting and risk management. RBI introduced MSF during the annual policy statement, which allowed banks to dip below one per cent of their statutory liquidity ratio to avail cash from this window. This facility will be available to banks at 100 basis points over the repo rate. On the government’s borrowing programme, Gopinath said RBI was hopeful the process would go on smoothly. “Government borrowing entirely depends on the market and how they bid for the auction. But, we do hope that it will go on smoothly,” Gopinath said. On the possible direction of policy rates, she said it would depend on the evolving circumstances. “We have increased policy rates by 50 basis points in the last credit policy review. We are also closely watching the various data coming from the market. Our future actions will depend on our own assessment of the circumstances as they evolve,” she added. The apex bank has raised policy rates by nine times in the last 14 months in order to contain rising inflation rate. Impact of this policy rate hike has moderated economic growth in the recent time as shown in the latest IIP data. About quality of foreign fund flow, she said that the central bank was not concerned about the quality of fund flow aspect as of now. “Both government and RBI prefer more foreign direct investment into the country. However, we are not concerned about the quality of fund flow in the present circumstances,” she said.

BS

RBI cautions public against fictitious offers

Chandigarh: The Reserve Bank of India (RBI) has advised public not to fall prey to fictitious information of being beneficiary of funds such as those from winning lotteries. This misleading information claims remittance of such funds by overseas entities to banks in the country. Remittance in any form towards participation in lottery schemes is prohibited under the Foreign Exchange Management Act, 1999, RBI's Regional Director Jasbir Singh told reporters here today. These fictitious offers are made through letters, e-mails, mobile phones, SMS, he said. Singh said the fraudsters were now resorting to issue of certificates, letters, circulars sent through e-mail on letterheads that look like that of the RBI and purportedly signed by its top officials to make them appear genuine. "The fraudsters also convince the victims by impersonating as senior officials of the RBI with telephone numbers and fictitious e-mails IDs," he said. He said these elements were trying to take money from the gullible people under different heads such as processing fees, transaction fees, tax clearance charges, conversion charges and clearing charges. The victims of fraud are persuaded to deposit the amount in accounts with banks in India and such amounts are immediately withdrawn, he said adding that multiple accounts were being opened in the name of individuals or proprietary concerns at different bank branches for collecting transaction charges etc. The RBI advice came in the wake of many residents falling prey to such tempting offers and losing money. He advised victims to register their complaints with cyber crime of police.

BS

The medium and the message

New initiative:The ubiquitous post card now gets a new role

THIRUVANANTHAPURAM: India Post, or the Department of Posts, which was in the limelight in Kerala for the wrong reasons — a move to close down post offices — recently, is back in the news. This time, the reason is a bold and adventurous initiative of the department, in association with the Reserve Bank of India. When the department decided to make available the writing space on the address side of the post card for advertisements, the RBI, Thiruvananthapuram, saw in it a wonderful opportunity to take the message of financial literacy to the common man. The RBI had conducted a painting competition for schoolchildren in Kerala and Lakshadweep on the topic of banking and finance as part of its financial-literacy initiatives during its platinum jubilee celebrations in 2010. The prize-winning entry has found a place on the post card. The painting depicts the bank as a tree, the roots of which take nourishment from the soil of currency notes to produce the fruits of houses, factories, consumer goods, medical services, and so on. There are a few lines in Malayalam, which on translation go thus, “Come to the nearest bank, borrow or deposit as per your need, and make your life safe and comfortable,” under the tree. The cards in this category are known as “Meghdoot” post cards and costs only half that of the regular post cards. The stamp depicts the picture of Homi J. Bhabha, the father of Indian space science. The cards are available in select post offices. It is thanks to a function organised by the RBI that many came to know of the existence of such a post card, probably because the Postal Department did not show the drive and initiative it showed in transforming one of its products in publicising it as well. The function involved the formal release of the card by Shyamala Gopinath, Deputy Governor, RBI, during her visit to bank's office here on Wednesday. Suma Verma, Regional Director, RBI, and Banking Ombudsman F.R. Joseph were present.  

The Hindu

Central Registry under the SARFAESI Act: Boon or bane?

According to the RBI, “the objective of setting up a Central Registry is to prevent frauds in loan cases involving multiple lending from different banks on the same immovable property.”.......

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New MSF could be tested during tight liquidity period: RBI

The Reserve Bank of India (RBI) expects the new marginal standing facility (MSF) to be tested during the tight liquidity period next week when banks and corporates pay their quarterly advance tax. "Every quarter it (advance tax) happens. I don't think there is anything different in that. A new type of liquidity management facility has come, so it will be tested," RBI deputy governor K C Chakrabarty told reporters on Monday on the sidelines of an event here. If, however, a problem arose, the system would have to adjust itself, he said. The apex bank had introduced the MSF while unveiling the annual monetary policy, stating that banks can borrow upto one per cent of their total deposits from the Reserve Bank under the MSF facility at a rate, which is 100 basis points higher than the short-term lending (repo) rate. Expressing concern over banks like SBI whose profits have dipped drastically after their chairman left, Chakrabarty said "books should not be as per the minds of the chairman, reporting should be as per books." There is a need to improve both the standards of reporting as well as that of examination, he said. "We have to improve the standard of reporting, the standard of examination. If in financial reporting you are not able to bring in the integrity, then how will you do it in non-financial reporting, that is the issue," he said, adding that the issue was a matter of "concern". Chakrabarty's comments come at a time when the country's largest public sector lender State Bank of India's March quarter profits last fiscal dipped 99% to Rs 20.8 crore after the new Chairman took over. When asked if RBI was also responsible for the problem of reporting standards, he said, "we are all collectively responsible. The issue is what went wrong and how do we improve the system...I don't think standard has any problem. Integrity of information is a problem, not the standard," he said. When asked if RBI was also responsible for the reporting problem, he said, "we are all collectively responsible. The issue is what goes wrong and how do we improve the system...I don''t think standard has any problem. Integrity of information is a problem, not the standard," he said. On black money, the RBI Deputy Governor said that existence of black money reduces scope for development and is a cause of concern.

Money Control

Govt revives consolidation of PSU banks

As the government and Reserve Bank of India prepare to open up India’s banking sector and allow in more foreign banks and private sector entities, it appears that public sector banks are moving towards consolidation. The State Bank of India is slowly moving........

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Plea seeks direction to RBI to frame rules for gold mortage

Chennai : A PIL has been filed in the Madras High Court seeking a direction to Reserve Bank of India to frame rules to ensure "title and tax payment" for gold and gold ornaments while being pledged in banks. At present there are no rules and regulations framed by RBI for banks to lend money against gold ornaments, G.Annadurai, an advocate, in his petition said. The petitioner submitted that purity of gold was enough for mortgage of gold in banks. Any person can mortgage anyone's gold with or without owner permission, even stolen gold also, the petitioner claimed. Ensuring of title, tax payments and proper documentation was not at all taken into account by banks because no rules had been framed by RBI, the petitioner contended. The petitioner alleged that advancing or lending money against gold and gold ornaments is an illegal activity when there were no rules and regulations by RBI for the same.

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