Punjab National Bank (PNB) has adopted one village in Chandigarh, which will be developed as a model village in terms of banking infrastructure and baking services. PNB, which is a leading bank here, would provide banking services through ICT-enabled Business Correspondent model in its adopted village Kishangarh. A survey of village has been completed jointly by the Reserve Bank of India and PNB to ensure 100 per cent financial inclusion in the village. All those households that are disconnected from banking services would be issued biometric cards, said an official of RBI here. Speaking on this occasion, RBI Executive Director, G Gopalakrishna said that RBI had asked banks to cover unbanked villages by year 2012 as part of financial inclusion programme. "RBI has asked banks to cover villages that have not been covered yet and they have to complete this task by 2012," he said. He stressed the need to use technology like mobile technology, ICT model besides banking correspondents and brick and mortar model in reaching out to ruralites. “Still 50 per cent of the total population is not covered by banks. There are 32,000 bank branches across the country, while there are about 600,000 villages in the country, there is still a long way to go. Only by leveraging technology can we bridge this gap. We should ensure every person has a bank account, so that he can avail of various financial services offered by the government and other agencies,” he added.
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Friday, December 31, 2010
The vice chair of India's fledgling Financial Stability & Development Council has helped to stabilise country's banking system
The new vice chair of India's fledgling Financial Stability & Development Council has helped to stabilise his country's banking system and comes 29th in the GFS Power 50. Despite being two thirds owned by the public sector and generally regarded as well capitalised, Indian banks did not escape the financial storm of 2007-2008, much to the alarm of the country's public and state officials. Dr Duvvuri Subbarao took over as governor of the Reserve Bank of India at the heart of the crisis in September 2008 and, following stints as a leading World Bank economist and secretary to the Prime Minister's Economic Advisory Council, was well equipped to minimise the fallout. Subbarao's influence in government in 2010 was underlined when he was offered the vice chairmanship of the Financial Stability & Development Council, a new body set up by finance minister Pranab Mukherjee, which will oversee the Insurance Regulatory and Development Authority (Irda), Securities and Exchange Board of India (Sebi) and Pension Fund Regulatory and Development Authority. The governor had previously expressed concerns that the autonomy of regulators would be undermined by the Council and, after effective lobbying, was offered the role chairing its only sub-committee. The governor has argued in favour of a review of the country's disparate and at times inconsistent banking laws to open up competition between financial institutions. Subbarao has also worked to restrain bank executive pay, with the Reserve Bank issuing draft compensation guidelines in July. Indian banks must now submit an annual declaration confirming that compensation structures are in line with Financial Stability Board standards. Subbarao set up a Financial Stability Unit within the central bank to make regular and systematic assessments of the stability of the Indian financial system and has worked with the Institute of Chartered Accountants of India to ensure that its banks comply with international accounting standards. Respected on the world stage and a regular speaker at the Bank of International Settlements, the 61-year-old has heavily criticised the "euphoria of financial alchemy" that preceded that crisis, insisting that the "real sector" should drive the financial sector and not the other way around. But he has also claimed that making banking boring - as advocated by the likes of economist Paul Krugman - is not necessarily a cure to the "ills" of the financial world. Banking, he believes, must still evolve, grow and innovate.
Reserve Bank of India releases Second Financial Stability Report
The Reserve Bank of India presented its assessment of the health of India’s financial sector in the second Financial Stability Report (FSR), released here today. The report reflects the Reserve Bank’s continuing endeavour to communicate its assessment of the incipient risks to financial sector stability. The first FSR was released in March 2010. The second FSR holistically assesses, from a systemic risk perspective, disparate elements of the financial sector eco-structure – the macroeconomic setting, policies, markets, institutions. The movements of various vulnerabilities between March and December 2010 and assessment of the resilience of the financial system have been presented in this Report. It also reflects the considerable efforts made within the Reserve Bank to upgrade the methods and techniques for assessing the health of the financial system in identifying and analysing potential risks to systemic stability.
State Bank of India reshuffles portfolios of senior executives
State Bank of India (SBI), the nation’s largest lender, has reshuffled the portfolios of senior executives even as Pratip Chaudhuri, one of its deputy managing directors (DMD), emerged as the front-runner for the chairman’s position, which will fall vacant after O.P. Bhatt retires in March. The SBI group, which controls a quarter of the total banking assets in the country, has promoted some chief general managers as DMDs and reshuffled the portfolios of some of its existing DMDs, particularly at the risk and human resource divisions. In early December, the finance ministry had interviewed State Bank’s four DMDs—Chaudhuri, Hemant Contractor, Diwakar Gupta and A. Krishnakumar—to identify the successor of current chairman Bhatt. Before that they were interviewed for a post of managing director (MD) too. Chaudhuri, the front-runner for the post of chairman after Bhatt’s retirement, now oversees the bank’s foreign operations. Traditionally, SBI has had two MDs and close to a dozen DMDs. Currently, it has only one MD; a successor to S.K. Bhattacharya, who retired in October, has not yet been named. R. Sridharan, the lone managing director, is in charge of associates and subsidiaries. Unlike other public sector banks, SBI has split the position of chairman and managing director. Both its chairman and two managing directors are generally selected from within the group. The retirement age of top officials in SBI, including the chairman is 60. The bank has named DMD Contractor, who was earlier in charge of corporate banking, chief financial officer in place of S.S. Ranjan. The five new DMDs are Santhosh Nair, Shyamal Acharya, Arundhati Bhattacharya, R. Venkatachalam and Shivkumar. Among the new DMDs, Nair will take charge of corporate banking, a portfolio that was earlier handled by Contractor. Acharya, who was chief general manager of Mumbai circle, is taking over as DMD, mid-corporate group, replacing A.P. Verma, who has been named chief credit and risk officer. Among the remaining new DMDs, Bhattacharya, who was CGM, Banglore circle, has been appointed corporate development officer, replacing N. Raja, who is set to retire on 31 December. Shivkumar, who was a CGM in Hyderabad, has been promoted to DMD but is yet be given a portfolio. Ranjan is also waiting to be assigned a new portfolio. Lack of adequate talent among public sector banks has been a subject of debate among policymakers for quite sometime now. The compensation offered by state-run banks is far less than what the executives of private and foreign banks earn. In September, Reserve Bank of India governor D. Subbarao said that in the absence of a suitable compensation package, state-run banks would lose talent to private sector lenders. “The executive compensation in the public sector, as is well known, is lower than that in the private sector... If public sector banks are required to compete with private sector banks on a level playing field, there is a good case for compensating them too on a competitive basis,” Subbarao said.
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