RBI Board meets at Bhopal

The Central Board of the Reserve Bank of India met today in Bhopal. The meeting reviewed key economic, monetary and financial developments. Dr D. Subbarao, Governor, Reserve Bank of India chaired the meeting. Shri Y.H. Malegam, Prof. Suresh Tendulkar, Prof. U.R. Rao, Shri Lakshmi Chand, Shri H.P. Ranina, Smt. Shashi Rajagopalan, Shri Suresh Neotia, Dr. A. Vaidyanathan, Prof M. M. Sharma and Shri Sanjay Labroo were present at the meeting of the Central Board. Deputy Governors of the Reserve Bank, Smt. Shyamala Gopinath, Dr. K.C. Chakrabarty, Dr. Subir Gokarn and Shri Anand Sinha were also present.  The Central Board of Directors of the Reserve Bank meets at least once every quarter. The Board has scheduled meetings in Mumbai, Chennai and Kolkata each year. The post-budget meeting of the Board, traditionally held in New Delhi, is addressed by the Union Finance Minister. The other meetings of the Board are held in the remaining state capitals by rotation. The main function of the Central Board of the Reserve Bank is to provide overall direction to its affairs.  The Governor had a meeting today with the senior State Government and bank officials. The banks agreed to achieve a overall target of 65% CD ratio and target of 40% CD ratio in the 8 low CD ratio districts, mostly tribal by 2011-12. It was decided that a team of officers from Reserve Bank of India, Commercial Banks and State Government would  visit villages to make assessment of the work done, prepare a financial inclusion plan and ensure that by end of March 2012 all 2736 villages with population of above 2000 are covered in Madhya Pradesh. The banks may also draw up a special plan to include nearby villages below 2000 population. The State Government has also assured to include financial education in the curriculum of schools at higher secondary level by the academic year 2012-13. The other issues discussed at the meeting included higher credit flow for education loans, issues relating to urban co-operative banks and security of bank branches.   Earlier, on February 7 and 8, 2011, Dr. Subbarao visited Chhattisgarh. The Governor visited Khadma Village in Dharmatri district of Chhattisgarh for an outreach programme, where he interacted with the villagers, school children and SHGs, etc. The Governor called on the Chief Minister Dr. Raman Singh and discussed issues of mutual interest. Along with the Chief Minister, he laid the foundation stone of office building for RBI Office at Naya Raipur.  The Governor also interacted with students of IIM, Raipur. 

RBI Governor highlights five dilemmas in regulatory role

Reserve Bank of India (RBI) Governor D Subbarao and four Deputy Governors addressed a gathering of bankers in a meeting organised by Bankers' Club, Bhopal on Wednesday at Hotel Noor-us-Sabah Palace. Executive Director of Central Bank of India RK Dubey was also present on the occasion.  Speaking on the occasion, Subbarao highlighted the five dilemmas being faced by the RBI in its regulatory role. He also underlined the fact that unless the commercial banks, which are the conduit to implement various policy decisions, do not understand the underlying concerns, such policies will not be effective.  Elaborating on the five dilemmas, he stated that the first issue is how to balance the demands of growth and inflation management. Food inflation and commodity price inflation, as is well known, are the two main drivers of inflation. Changing food habits, especially in rural areas, due to increased consumption capacity, is causing structural inflation. Rise in commodity prices, such as oil, is resulting in commodity price inflation. Credit growth is another factor contributing to inflation. The challenge before the RBI is to balance the demands of growth and inflation, and ensure that the relevant policies result in expected outcomes. Deputy Governor Shyamala Gopinath explained the importance of financial stability reports which enable Reserve Bank of India to foresee different scenarios and undertake remedial measures. Developments in the recent past show that even in developed financial economies having well developed market, systemic risk is significantly higher than under adverse market conditions. Deputy Governor KC Chakrabarty exhorted banks to activate all their field controlling offices and branch offices so that banking facilities reach the entire population. At present, bank credit is not available to a majority of the population and almost a half of the population is bereft of banking services. Thus the need for activating the field units, Chakrabarty explained. Deputy Governor Subir Gokarn made an assessment of the state of the economy and the rapidly changing global environment. It is difficult to predict about emerging scenarios. Rising oil prices is causing greater concern. Deputy Governor Anand Sinha explained the need for collective behaviour of the system. He also underlined the need for bringing non-banking system under some kind of regulation, similar to the banking system. Executive Director of Central Bank of India RK Dubey spoke about the declining CD ratio in the State and pointed out that financial tie ups for big industrial units are mostly finalised outside the State and do not get reflected in the CD ratio of the State. 

Hope govt adopts fiscal consolidation plan: D Subbarao

The government should adopt a plan of fiscal consolidation in the coming financial year to April 2012 and beyond, the Reserve Bank of India Governor Duvvuri Subbarao said on Thursday. Subbarao's comments come just over two weeks before Finance Minister Pranab Mukherjee releases his budget for the next financial year on Feb. 28. Persistently high food prices have been a bugbear for the Reserve Bank. The central bank at its January 25 credit policy had warned of food inflation spilling over to the general inflation process as it raised the reverse repo and repo rates by 25 bps. Today, Governor D Subbarao has said that it is difficult to balance growth and inflation. Recent spurt in oil prices and the crisis in Egypt would add to India's domestic woes. Subbarao said, "Spurt in oil prices on Egypt crisis will hurt India," adding,"we have to be prepared for a further spurt in oil prices." He said structural rigidity and rising commodity prices are pushing inflation higher. He also does not see much movement in prices of wheat and rice, adding that it is difficult to say that the government's welfare schemes are feeding inflation. Food inflation eased in late January to just over 13% after having reached a one-year high of more than 18% on December 25, due to soaring prices of onions and potatoes.  The RBI chief also urged for a consolidation in the Indian banking system. He said it is up to banks to come forward with merger proposals. He added that the size of Indian banks was smaller compared to their global peers. His advice to banks was to "set interest rates in a way that they do not hurt growth." He further said that the central bank would evaluate the business models of applicants looking to setup new banks. The Malegam Committee had recently recommended a 24% interest rate cap on loans paid by microfinance institutions. He said he would meet representatives of states and MFIs to discuss the Malegam report and work out modalities to implement the panel's recommendations. He also revealed that plans are in the works to form a panel to study a slowdown in foreign direct investment. Subbarao said that the panel would suggest ways to encourage FDI.

RBI must understand factors responsible for decline in FDI: Subbarao

The Reserve Bank of India would conduct an internal study on practices responsible for the decline in the direct foreign investment (FDI) flows in the country. Talking to media in Bhopal after the meeting of the central board of Reserve Bank of India, Governor D. Subbarao said that RBI must understand the factors responsible for the decline in the FDI.

Bank unions suggest ‘Banking Ombudsman’ be changed to ‘Banking Lokpal’

Bank employee unions insist name of grievances cell should be easily understood by common citizens; also push for a special counter for senior citizens. A committee set up by the Reserve Bank of India (RBI) to look into the issues of customer services has agreed to change the name of the Banking Ombudsman to something simpler like the 'Banking Lokpal', which is less of a tongue-twister.  This suggestion was made by the Indian National Bank Employees' Federation (INBEF) to the committee headed by M Damodaran as many customers from rural areas were not familiar with the term ombudsman and would therefore not be forthcoming with their complaints on banking services to the department.   Subhash Sawant, general secretary, INBEF, said, "Many bank customers mainly from rural customers do not understand what ombudsman is all about. When we ask them to file a complaint with the ombudsman, they simply ask us, 'What is ombudsman?'  The Federation has also suggested that the number of offices of the banking ombudsman be increased. Currently there is only one office that is based in Mumbai and it covers mainly Maharashtra and Goa. It has also asked that a special counter should cater to senior citizens at the branches of all banks, during the first 10 days of every month, as the number of pensioners has increased sharply.  In its reply to IBNEF with respect to its suggestions, the committee said, "The title of the RBI Banking Ombudsman may be changed to a simpler, easily understandable one. The area of operations of the Ombudsman may also be enlarged." In a letter to the Federation the committee also said, "The number of pensioners is increasing. Special counters for pensioners may be considered especially during the first week of every month."   "The committee has agreed in principle to our recommendations. We welcome the response on the matter of senior citizens. About the matter of changing the name of the banking ombudsman, we will know when the report is out," Mr Sawant said.  Other bank unions were also represented along with the IBNEF at the meeting with the Damodaran committee which also discussed issues like clean currency notes, shortage of banking staff and banking-related security.

Panel to oversee Presidency faculty

The state government has formed a committee to oversee faculty recruitment at Presidency University to ensure quality. Former RBI governor Bimal Jalan, economist Amiya Bagchi, chairman of West Bengal Council for Higher Education, Subimal Sen and vice- chancellor of the university, Amita Chatterjee,  have been named by the state higher education department as members of the committee. Advertisements will be published in newspapers and applications invited from candidates across the country and abroad. "Presidency University has a long tradition of excellence. Every recruitment made will be done keeping in mind that this tradition has to be furthered," said state higher education secretary, Satish Tewari.

Unhappy about poor show, chief secy asks banks to set target

Unhappy with poor credit-deposit (CD) ratio in Jharkhand, chief secretary A K singh on Wednesday asked the bankers in the state to pull their socks up by setting monthly targets and conducting day-to-day monitoring. Singh's comments came at a time when the Reserve Bank of India is monitoring the financial inclusion drive of the banks all over the country. The chief secretary was addressing the 32nd state level bankers' committee (SLBC) meet on Wednesday. The chief secretary was irked to find that the CD ratio in the state by December 2010 was 43.99 per cent which was not only below the national benchmark of 60 per cent but also lower than the December 2009 figure of 45.22 per cent. 

It is up to government to deal with black money issue: RBI

Reserve Bank of India (RBI) today said it had limited powers to deal with the issue of black money as confidentiality clause came in the way of handling the problem of money kept in bank lockers.  Current rules do not allow banks to find out what had been kept in their lockers, RBI Governor D Subbarao said at a press conference here. "All this is governed by a confidentiality clause about which nothing can be done at the moment," he said, answering a query on unaccounted money in the lockers of Indian banks. Answering another question, Subbarao, who was on a two -day visit to the city, said although the RBI had no role to play in the Union Budget, it stood for fiscal consolidation of the banks. Subbarao said maintaining a balance between financial growth and controlling inflation was a tough task, but the apex bank was competent enough to handle this scenario.  

India to face challenge of inclusive growth

Reserve Bank of India (RBI) Governor D. Subbarao said India would face the challenges of inclusive growth in the coming days as the country would move on a higher growth trajectory.  Inaugurating an exhibition named Newsibition here on Wednesday, Subbarao said: ""In the second decade of the new millennium we are going to face challenges of inclusive growth and of meeting the challenges of transcending to higher growth rate."  Newsibition traces the journey of the Reserve Bank down 75 years through photographs, documents and visuals. The exhibition has been divided into nine sections representing different phases of Reserve Bank's evolution.  "Last year, the Reserve Bank of India (RBI) completed its 75th year. Since the time RBI was established 75 years back, how it grew and the area in which RBI worked, the governors of RBI, the security features of the currency notes, this is all we want to show through this exhibition," said Alpana Killewala, Spokesperson of RBI.  The exhibition is part of the Bank's outreach and financial literacy efforts, which commenced with the setting up of the Reserve Bank's Monetary Museum in Mumbai.

GOVT BANKS OPT FOR FASTER PROMOTIONS

It is now possible for public sector bank employees to climb the career ladder faster. Keeping in mind the shortfall that is expected at the top in the coming years, banks are tweaking their human resource policies. According to studies conducted by different banks, around 340,000 lakh employees will retire in the next 10 years. To compensate for this and support expansion, banks have to look at employing 500,000 to 700,000 people in the next 10 years.  To start with, some banks have introduced a fast-track promotion channel through which a deserving employee can rise much faster as compared to the traditional route.  Union Bank of India’s fast track channel can promote a scale-1 employee to scale-5 in 11 years.  “Thus, if a person joins our bank at the age of 23-25 years, he/she can be an assistant general manager by the age of 35-40,” said Chairman and Managing Director M V Nair.  The bank has promoted 548 employees through this system in the last four financial years. “This amounts to 11 per cent of total promotions in the period,” said Nair.  To take the shorter route, an employee must clear written tests, group discussions and personal interviews. promotion channel. “Currently, the average age at the general managyears,” said to look into issues related to human resources in public sector banks had pointed out that in the next five years, 80 per cent general managers, 65 per cent deputy general managers, 58 per cent assistant general managers and 44 per cent chief managers would retire. To address the issue, the committee had proposed a comprehensive strategy for succession planning and leadership development.