Ebbing fortunes for Indian banks

.........Policy uncertainty and high rates also mean that investment is on hold – how many projects can be so lucrative as to return a reasonable margin after paying between 14 per cent and 16 per cent for money borrowed from the banks? The Reserve Bank of India keeps interest rates high to support the rupee and attempt to keep inflation in check. But many Indians feel the policy is misguided and serves to discourage badly needed investment.......

Read.........

Financial Services Secretary DK Mittal defends repeated directives to banks

NEW DELHI: DK Mittal, the finance ministry official whose detailed instructions to banks have drawn rebukes from Reserve Bank Governor Duvvuri Subbarao and his predecessor YV Reddy, has strongly defended his actions on the ground that his intention was to jolt state-owned banks out of their "lazy banking" habits and force them to lend more to farmers and small businesses................

 

Read - ET 

Chidambaram: An easy person to categorise - Y.S.P.Thorat

Y S P Thorat 
 Chief Executive Officer, Rajiv Gandhi Charitable Trust,
Former Executive Director, RBI 
 and former Chairman, NABARD

.....The first time I met him, which despite his prodigious memory I am sure he won’t remember, was when during his first tenure as Finance Minister, I was asked to brief him from the Reserve Bank of India (RBI) side on a Parliamentary question together with the concerned Joint Secretary. On the earlier day both of us met, went through the background papers, tied up our briefing notes and went off to the Delhi Gymkhana for the evening. Early next morning we were shown into the FM’s office together with a colleague from NABARD.........

 

Read.......... 

Pranab Mukherjee likely to be interactive and not an aloof president

......Pranab Mukherjee has also demonstrated a rare ability to read the writing on the wall. This was evident in his agreeing to work under Prime Minister Manmohan Singh, which, given his seniority and experience, could not have been easy. As finance minister in the early eighties , Mukherjee had signed the order appointing Manmohan Singh as the RBI Governor. Yet he stood solidly behind the PM as Singh increasingly resorted to running the government through GOMs and EGOMs, most of them headed by Mukherjee . He showed this realism once again in 2010 accepting that he wouldn't be able to become prime minister, and turning his attention to Raisina Hills......

Read - ET

RBI not keen on banking licences for corporates

.........Although the RBI has not officially said it is against corporates getting banking licence, a major factor that has come in the way could be the stipulation that RBI will give weightage to “sound credentials and integrity” of the applicants. The RBI had earlier said that promoters and promoter groups with diversified ownership, sound credentials and integrity that have a successful track record for at least 10 years in running their businesses should be eligible to promote banks. The catch, however, is that the RBI’s decision will also be guided by feedback from other regulators and agencies like Income Tax Department, CBI and Enforcement Directorate........

Read - Indian Express

25 villages to come under financial inclusion programme

........Speaking at the quarterly meeting of the district-level review committee for banking in Udupi district here, Mr. Subramani said the financial inclusion programme was being monitored closely by the Union Government and the Reserve Bank of India (RBI). The 25 villages had been identified based on service area approach and the banks concerned had been informed about it........

Read - The Hindu

My View on "RBI to hire up 6 companies to overhaul HR practices"

This is a step in the right direction. Recent years saw several flaws in HR Management in the central bank. Adhoc recruitment of Executive Interns without planning their future deployment or absorption, succumbing to pressure on promotion policies, not being able to convince GOI on need to implement competitive remuneration packages for recruiting and retaining efficient officers, failure to decide on updation of retirement benefits at least on par with GOi are just some examples. When it comes to infusing professionalism in specialised areas like supervision and forex and debt management RBI is facing several constraints, many of them emanating from its failure to argue with North Block as Finance Ministry shows an attitude akin to master-servant relationshp. In all these, as is normal for Indians, if an 'external' consultant tells in a language common man won't understand, RBI Governor will be able to convince his bosses just by quoting from consultant's reports.

- M G Warrier

Obituary

Mr. K. Venkatarama Ayyar (K.V. Ayyar), Former Jt. Chief Officer, RBI  passed away on 21.07.2012 in Mumbai. Phone: 022-2506 5242

- The Hindu

Mrs. Srinivasan d/o late K.V.Ayyar told that he joined RBI in 1946-47.  He held the post of Joint Chief Officer in DBOD.  Thereafter he was on deputation with Indian Bank and retired from there in 1980.  

 

RBI raises red flag on Aphro Trust

.......A release by the RBI Department of Non-banking Supervision, Chennai Regional Office, stated that it had came to their notice that the Trust and its associates functioning from 27/49, 5th Main road, 3rd layout, Teachers Colony, Kolathur, Chennai 600 099, was unauthorisedly using its name to claim that loans were extended under RBI guidelines.........

Read - The Hindu

‘Many coop. banks have accepted pay panel report’

...........Mr. Patil said that urban cooperative banks in Karnataka had achieved 95 to 96 per cent loan recovery.Ophthalmic surgeon M.M. Joshi said that with the advancement of technology, cooperative banks too had registered progress through proper use of technology. Officials of the Reserve Bank of India, Bangalore, R. Sequeira and Usha, and the former Minister A.M. Hindasgeri were present.

Read - The Hindu

Consumer forums can award damages more than what is sought

........The ICICI Bank had filed three separate appeals in the State Commission challenging the total compensation awarded by the district forum in the separate complaints filed by Ramesh Sharma, saying he had sought only Rs 1,00,000 as damages but the forum had granted him Rs 1.64 lakh on the basis of RBI guidelines. "We need not therefore reduce the amount of compensation because the said amount is in accordance with the directions of the Reserve Bank of India (RBI)," the bench presided by Justice Barkat Ali Zaidi said..........

Read - BS

Cut-rate commissions quoted for rural banking

......“Financial inclusion programmes should be implemented on commercial lines and not on a charity basis,” said K C Chak­raborty, Reserve Bank of India deputy governor, at a recent panel discussion in Washington.  “It is important that banking with the poor is perceived and pursued as a sustainable and viable business model,” he added........

Read.........

RBI loan recast plans will increase transparency: Fitch

Global rating agency Fitch today said RBI proposals on treatment of restructured loans would increase transparency and be positive for the Indian banking system amid economic slowdown. Among others, a RBI working group recently recommended increased loan-loss provisions and ultimately ending forbearance on asset classification, and instead recognising these stressed assets as non-performing in line with internationally practices......

Read........

India needs to do away with regulatory forbearance on restructured assets

......The recommendation that the RBI may (must?) do away with regulatory forbearance regarding asset classification, provisioning and capital adequacy on restructuring of loans does both. It brings our norms on asset classification on par with developed market standards. And it ensures that powerful promoters are not able to arm-twist banks into throwing good money after bad.........

Read - ET

RBI likely to relax provisioning guidelines for microlenders

......Offering the MFIs a possible reprieve, the RBI is considering allowing them to make provisions against their bad loans in Andhra Pradesh over a period of three to four years, said one of the two persons quoted above. Industry officials said that such a move will only be a temporary solution.............

Read - Mint

To loosen or not to loosen policy - A Seshan

.........The central bank’s dilemma is whether or not to loosen its policy. Commercial banks and the corporates look at monetary policy from their sectoral angles whereas the RBI has to take a macroview. In this context, the statement of Aditya Puri of HDFC Bank is refreshing. He said: “'I don't think with this inflation rate you can expect a rate cut, ….. The monetary policy cannot be the basic panacea for all ills.”...........

Read..........

RBI can’t deny rate cuts for long

.....The Reserve Bank of India’s (RBI) strong anti-inflation rhetoric, after it decided to hold policy rates steady in June, has led to a toning down of expectations from the monetary policy review in July. To an extent, the markets have moderated their expectations of monetary easing over the remaining months of FY2013 as well. I, however, feel that given the widespread weakness in the economy, internally RBI must be in a far bigger dilemma than what recent public statements suggest. As such, the upcoming policy decision remains in fine balance and........

Read - Mint

Income versus inflation

Most analysts, including in RBI, will tell you inflation is India’s biggest problem right now; indeed, RBI Governor Duvvuri Subbarao was on record recently as saying inflation was at a level where it was hurting economic growth. If inflation is allowed to go unchecked, the argument goes, inflationary expectations get embedded into every economic player’s actions, and runaway inflation is the result. No economy, the experts will tell you, has grown in the long run without having inflation under control.......

Read.........

Worries over growth

...... Perhaps the RBI needs to revisit some of its assumptions and adopt a stance that prevents further deterioration in growth. Concerns over growth are becoming serious and the RBI should be seen to be addressing them as well.

Read - BS

India’s growth and inflation in the time of drought

......If, on the other hand, the government does try and reduce the deficit, it will lower consumption, thus reducing growth. On the positive side, though, the hope is that it might prompt the Reserve Bank of India to reduce rates, supporting growth in the interest rate-sensitive sectors.

Read - Mint