Mahabank opens special branch for SHGs

Lending institutions should try to create capacity to use credit in a responsible manner among the self help groups (SHGs), help them produce goods or services that are needed by the society and also guide them in marketing such goods or services, Reserve Bank of India deputy governor Subir Gokarn said on Sunday. Gokarn was speaking at the inaugural ceremony of a specialized SHG branch of the public sector Bank of Maharashtra.  "This three-pronged approach would help the very purpose of any initiative for financial inclusion of the unbanked," Gokarn said. He said financial inclusion for different groups will have unique challenges, hence unique solutions. Gokarn underlined the importance of SHGs as a channel for women's empowerment in the country. Asish Saha, Director, National Institute of Bank Management, said of the Rs 6,198 crore savings by SHGs, women SHGs accounted for nearly 73 per cent and of the Rs 14,453 crore loan approved to SHGs by the banks, Rs 12,429 crore went to women SHGs. This has proved beyond doubt that women SHGs were an important factor in the country's economy, he said. The new SHG branch will take care of the formation of new SHGs, opening of their accounts with the branches, their credit linkage, monitoring, guiding and assisting them in marketing of their products.  Chairman and managing director of the bank, A S Bhattacharya, said the new branch would cater to around 1,500 SHGs and would be able to sanction loans worth Rs 150 crores by March 2012. The branch will sanction loans of Rs 10 crore to around 1,000 SHGs by the financial year end, said Ratna Galoans Ganapathy, manager of the branch. Ganapathy said the bank will work with Nabard and NGOs to identify SHGs needing assistance. The bank will offer training and guidance to the SHGs for maintaining accounts and completion of other documentation, Ganapathy said.

GLPC’s Mission Mangalam MoUs to connect govt, poor and scholar

On the occasion of the Golden Jubilee Year celebration of Gujarat State, Hon. Chief Minister Shri. Narendra Modi launched an ambitious campaign by the name MISSION MANGALAM. The objective is to organize the poor into Self Help Groups / Sakhi Mandals, link them with banks, build capacities in them and lead them towards sustainable livelihoods. To implement this mission a company was formed in April 2010 by the name Gujarat Livelihood Promotion Company Limited (GLPC). This company has initiated a major program of Corporate-Business Partnerships to conceptualize and implement projects in rural areas which would generate more than a MILLION LIVELIHOODS, to be realized in the next 3 to 5 years. This initiative has got overwhelming response from some of the biggest industries and business houses in the country. Till now more than 32 companies have expressed their commitment to sign MoUs with GLPC during the Vibrant Gujarat Summit, 2011, held this week. It is estimated that these MoUs would trigger projects which would generate and augment livelihoods in the rural areas of Gujarat to the tune of 12 lakhs i.e. 1.2 million in the next 3-5 years. The total financial commitments to enable the above would be exceeding Rs. 20,000 Crores. These MoUs would be signed during a seminar organized under the aegis of Rural Development Department by GLPC upon the theme INCLUSIVE DEVELOPMENT THROUGH SOCIAL BUSINESS ENTERPRISES. This seminar would be addressed by eminent thinkers and practitioners. Smt. Usha Thorat, former Deputy Governor, RBI would give the financial perspective and Dr. Bibek Debroy, eminent economist and academician would present the economist’s perspective during the Seminar. Mr. B.K. Sinha, IAS, Secretary, Rural Development, Government of India would be the Chief Guest in the Inaugural session.

Licensing new banks — the feedback mirrors the sharp differences

The Reserve Bank of India has received huge responses to its discussion paper on ‘Entry of new banks in the private sector'. The subject — licensing new private banks — is extremely sensitive. No matter how cautiously the central bank frames the policy, the final selection will be controversial for many reasons. It is just as well that the RBI has already decided than an independent expert group will vet and recommend eligible applications to the RBI.

RBI to plug regulatory gaps in NBFC biz

The Reserve Bank of India plans to strengthen the regulatory framework for non-deposit taking systemically important non-banking finance companies as tightening of the regulation for the banking sector has increased the incentives for regulatory arbitrage by moving business to NBFCs. Pointing out that setting up an NBFC is a more attractive option as entry point norm for them (at present net owned funds of Rs 2 crore) is low as compared to that for banks (Rs 300 crore) and that they are subject to relatively lighter touch regulation, the RBI, in its second financial stability report said “some concerns remain especially in the context of the rapidly expanding NBFC sector.” Referring to the fact that certain NBFCs, coming under the purview of other regulators, have been exempted from the regulatory purview of the RBI subject to certain conditions, the central bank said this has given rise to instances of certain functional activities of some exempted NBFCs (for example merchant banks) remaining unregulated.

ICAI cautions RBI on bank branch audits

Accounting regulator ICAI on Sunday cautioned the Reserve Bank of India against over-reliance on a centralised audit system for banks that have completed computerisation of their operations in view of the Rs 400 crore fraud unearthed at Citibank's Gurgaon branch. "The Citibank fraud has brought to forefront that audits need to be more vigorously followed at the branch level,rather than relying upon the audit of the information generated at the central/regional or zonal level alone," ICAI President Amarjit Chopra said.  The RBI, he said, is contemplating to do away with the branch audit system for banks that have opted for core banking solutions.H e said that deliberations are being held within the banking division of the finance ministry and in the RBI to replace branch audits with a centralised auditing system at such banks.