Khandu urges RBI to ensure detection of fake currencies

Arunachal Pradesh Chief Minister Dorjee Khandu has asked to keep note-sorting machines for all banks in the state to check the increasing cases of circulation of fake currency notes.  Raising this issue during a meeting with Shyamala Gopinath, Deputy Governor, Reserve Bank of India (RBI), at Itanagar last evening, Mr Khandu lamented the fact that even the banks in the state have been mistakenly issuing fake currency notes in absence of proper note-sorting machines and devices. He said the issue needs to be seriously tackled to safeguard the nation’s economy. Expressing concern over the shortage of staff in the banks, he said it is causing severe inconvenience in the customers who stands in long queues to get their work done. The Chief Minister further suggested for increasing the strength of the staff in the banks and requested to conduct recruitment in the state so that more and more local youths could participate in the procedure and get job in banks. During the discussion, the Deputy Governor informed about unscrupulous activities of unincorporated bodies operating in the state which needed to be content immediately by enacting a Protection of Interest of Depositors (in Financial Establishments) Act, setting up of Economic Offences Wing and Framing of Rules under Chit Fund Act, 1982. She said the state government being the administrator under the money Circulation 1978 can authorise an official to initiate section against such bodies. ''Out of 34 unbanked blocks in Arunachal Pradesh, 11 have been selected for opening of bank branches which would be opened by March 2012,'' the Deputy Governor revealed.  She, however, requested the state government to put in place suitable infrastructure and ensure that necessary amenities in terms of road, telephone, electricity, premises and connectivity are in place. She further highlighted the need to implement the Crop Insurance scheme for the farmers of the state for which the union government would be providing 50 per cent and the state government needs to provide the rest. Responding to the suggestion, Mr Khandu agreed to issue appropriate directives to the departments concerned to take up the plan immediately in view of the state facing regular flood problems every year wherein instance of crop damages have become a regular feature. Apart from the regular discussion, issue on setting up of Rural Self Employment Training Institute (RSETI) was also discussed. The RBI sought land for setting up of the RSETI in all districts to which the Chief Minister assured to provide all possible assistance.

Savak Soharab Tarapore blasts inflation-pussyfooting, says RBI failed so far

Former Reserve Bank Deputy Governor Savak Soharab Tarapore has said the "soft and calibrated monetary policy measures" taken by the central bank so far to batten down runaway inflation have failed and has called for more sterner and concerted steps to tackle price rise that has become a national crisis. "There is no alternative to unequivocal and unswerving policy action to tackle inflation that has now become a major structural problem. The efforts of the RBI in controlling inflation have failed so far," he told at a function organised by research agency Dun & Bradstreet at Mumbai over the weekend.  Warning that the government's as well as RBI's pre-occupation with high growth at the cost of inflation will be counterproductive and disastrous, he called for "a proactive, forward-looking monetary policy to batten down inflation and not the baby-step measures as it has been recently doing." Stating we can't get away from the fact that inflation is all pervasive as it has become generalised, Tarapore, who played a key role during his days at RBI in monetary policy, foreign exchange regulation as well as on capital account convertibility, said, "the over 13 per cent food inflation just cannot be wished away as a supply-side problem." "Even after a 4 percentage point slump last week, the number is intolerably high and gnaws into the vitals of large tracts of the population." Arguing that "there is no soft monetary policy" when it comes to fighting inflation, he blasted the belief gaining currency among policymakers that it is possible to curb price rise by resorting to small, calibrated steps thus not hurting growth. "You can't slay the dragon of inflation without hurting growth," he said, quoting economist CA Yandle.  "There is an element of disenchantment with inflation targeting at RBI now. This does not mean it cannot wield a strong monetary policy to control inflation," Tarapore said. "If the timely action is delayed and inflation rises to unacceptably high levels, the monetary policy required is very harsh, as a cold turkey approach becomes inevitable." Stating that the most important remit of any central bank is to keep inflation low, he said, since the Reserve Bank cannot keep prices low by producing more goods, it must ensure that there isn't too much money in the system chasing too few goods. Pointing out that the consumer price index-based inflation is the globally accepted measure of price rise, he said, "the WPI-based inflation, which we follow even now, is a poor indicator of inflation at the grassroots level," and lamented that we are yet to have a consumer price index (CPI), which can be used for policy purposes. Quoting an NCAER study, he said as many as 40% of the households account for only 14 per cent of income, but spend as much as 63% of their incomes on food, leaving little for saving. On the other hand, the top 20% account a vast 52% of total income and bulk of savings and also 45% of aggregate non-food consumption. Warning that the biggest treat to the high growth story is the inflation spiral, he said, "given the large number of the poor in our country, a 6-7% sustained growth with a 3-4% inflation would be preferable to a 9% growth with a 9-10% inflation. "High economic growth with high inflation is not a sustainable policy option," the eminent economist and monetary policy expert concluded.

Banks seek shorter term for tax-saving deposits

Banks have once again knocked on the doors of the Government to reduce the duration of the tax-saving term-deposit scheme to three years from five years. They want this change so that the resources so raised not only support infrastructure lending, which has gained traction over the last one year or so, but also suitably address the duration mismatch between assets and liabilities. Banks have not been able to make much headway in mobilising funds under the tax-saving term-deposit scheme. Given that they could miss out on higher returns should interest rates head north, savers perceive the five years lock-in as too long a duration to commit funds. “The tax savings term-deposit scheme in the current form is not favoured by savers as funds get locked in for five years. As premature withdrawal of the deposit is not allowed, the saver will have to forego an opportunity to earn better returns in case interest rates go up. Further, loan/overdraft against these deposits is not available,” said Mr K. Unnikrishnan, Deputy Chief Executive, Indian Banks' Association. Savers will be willing to park their money in the tax-saving term-deposit scheme if the duration is cut to three years, he added. Banks had made a similar representation to the Finance Ministry last year also. Banks pay around 8.5 per cent interest on tax-saving term deposits. According to the Bank Term Deposit Scheme, 2006, deduction is available on investments under Section 80C of the Income-Tax Act, 1961, on investments (minimum of Rs 100 and up to a maximum of Rs 1 lakh a year) in term deposits of five years' maturity in a scheduled bank. Under Section 80C, premium towards life insurance and unit-linked insurance plans, subscription to public-provident fund, employee's contribution to provident fund, investment in National Savings Certificate and equity-linked savings scheme, and repayment of principal amount in a home loan qualify for deduction (up to a maximum of Rs 1 lakh a year) from a taxpayer's gross total income.

BYST Entrepreneur Awards 2010

Runner up- Ms Madhvi Khandve from Rural Maharashtra (BYST- BoB Entrepreneur) being felicitated by Hon’ble Ms Usha Thorat, Former Deputy Governor, RBI & Pramit Thaveri, CEO, Citi India.Business - Mfg of Ladies Garment at BYST Entrepreneurs win - Citi-Group Micro Entrepreneur Awards 2010. Award Function on January 27, 2011. at Jamshed Bhabha Theatre, Nariman Point, Mumbai. Every year BYST nominates its entrepreneurs for various national and international awards for entrepreneurial excellence. Citi-Group Micro Entrepreneur Award is one of those. The Citi Micro Entrepreneur Awards program is an endeavor to recognize the spirit of enterprise that has taken persons from poverty to a life of dignity. The awards acknowledge individual micro entrepreneurs, who have exhibited a superior ability to emerge from the below the poverty line through the use of micro-credit to build self-sustaining enterprises, create employment and contribute meaningfully to their communities. This year 6 of BYST’s entrepreneurs have won this prestigious award, for best entrepreneur of the year Out of these 6 entrepreneurs- 5 are the ones jointly supported by BYST & Bank of Baroda under BYST-BoB Entrepreneur Development Program. The awards function was held on Thursday, January 27, 2011 at Mumbai. Hon’ble Mrs. Usha Thorat, Former Deputy Governor, Reserve Bank of India was the Chief Guest at the ceremony. She along with Mr. Pramit Thaveri, CEO, Citi India, felicited the awardees from across all the four regions of the country, East and North East, West and Central India, North and South India. The awards are presented under the categories of National winner, National Runner-up and the Social Responsibility Category winner.

RBI may review KYC norms for tainted cos

The Reserve Bank of India may review ``Know Your Customer'' (KYC) and `"customer due diligence'' procedures followed by banks for loans to companies that have come under the scanner of investigating authorities.    Banks that have lent to DB Realty have said that their funds are fully secured. However, in addition to ensuring security of loans, RBI has asked banks to do ``enhanced customer due diligence'' for loans where a ``politically exposed person'' is the final beneficiary. In the case of DB Realty, the firm had availed of bank loans and had also provided an indirect loan to Kalaignar TV, a company which would qualify under the RBI definition of a `politically exposed entity''. RBI guidelines require banks to get approval from their top management to loans whenever a ``politically exposed persons'' benefits from a bank loan.

‘Cheque bounce cases at place of transaction’

The Delhi high court has ruled that cases of cheque bounce can only be entertained by courts at the place of transaction. The ruling has come in response to an appeal filed by Zeenat Insaf, a resident of Mumbai. She had challenged a Delhi trial court’s jurisdiction to entertain a complaint by Dr Sudanshu Bhattacharya, a cardio thoracic vascular surgeon in Mumbai. Bhattacharya had operated upon Insaf’s father at Breach Candy Hospital.  She had made a payment through a cheque of a bank located in Mumbai. Bhattacharya gave the cheque before his bank in Mumbai. The cheque bounced. The cardiologist contacted his lawyer in Delhi. He sent a notice to Insaf. A complaint against her was filed before a Delhi court on the grounds that the lawyer who sent the notice was located in Delhi. The Delhi high court said that sending a notice from Delhi would not confer jurisdiction on Delhi courts. Delhi courts have no territorial jurisdiction to entertain and try complaints filed by a respondent who is based in Mumbai.