........The relationship between the finance ministry and the banking regulator, the Reserve Bank of India (RBI), has probably been as bitter and strained as the one between the government and CAG. Unlike CAG, RBI is not a constitutional body but it enjoys a special position among all financial sector regulators and, apart from regulating banks, it is also the monetary policy authority. Yet, the finance ministry’s treatment of RBI has often given the impression that the former has little respect for the latter’s independent status. It began with the idea of setting up a new body called the Financial Stability and Development Council, which was to be chaired by the finance minister, and the RBI Governor was to head only one of the council’s sub-committees. The RBI management made no secret of its disapproval of the idea but this made no impact on the government and the new arrangement has been put in place...........
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Thursday, December 27, 2012
RBI proposal may put 70% NBFCs out of business; over 9,000 companies may lose licences
.....More than two-thirds of non-banking finance companies (NBFCs) face closure if the Usha Thorat panel recommendation on minimum asset size is implemented by the Reserve Bank of India, shutting a vital source of funding in many parts of the country. Nearly 9,000 companies lending to borrowers in small towns and villages that lack banking facilities could be in danger of losing their licences as their asset size is less than Rs 25 crore.......
NBFCs partner India's growth story
...In all fairness, the NBFC sector was not in regulatory shadows as RBI has, over the years, tweaked and implemented a differentiated regulatory regime for deposit accepting, systemically important, and other non-bank institutions. A few famous failures of deposit-accepting institutions in the 1990s led to legal and regulatory measures to curb and regulate the activities of looselyregulated institutions that garnered substantial deposits from areas where banking could not, and indeed would not, reach. New generation private sector banks and newly-energised and technology-powered public sector banks helped by filling in the gap and the situation was quickly contained. Regulatory focus then shifted to the non-deposit accepting NBFCs and attendant issues relating to classification, public funds and core investment companies. Once the framework for such lenders was put in place with a bank-like prudential and capital regime, it gave the market the confidence required for growth.........
Digital financial inclusion in India – Current status and the way forward
......In view of the widely prevalent economic disparities, financial inclusion becomes imperative to usher-in inclusive growth. The agenda of inclusive growth is reflected in the policies and regulations that the policymaking and regulating institutions, like Government of India and RBI have been working upon in last ten years. Measures have been taken to include the financially neglected rural areas by relaxing the KYC norms and the use of banking correspondents aggressively. RBI has been proactive in including the cashdriven, under banked, semi-urban and urban population for their digital financial inclusion. They’ve done so by increasing the number of ATMs by 25% each year for last couple of years, reducing their transaction costs for electronic payments by having banks reduce the MDR for debit cards and NPCI -driven IMPS and Rupay card thus, enabling low cost digital transactions...........
Commemorative Coin
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| The President, Shri Pranab Mukherjee releasing the Commemorative Coins at the Special Convocation of Banaras Hindu University to Mark the Concluding Ceremony of Birth Centenary of Mahamana Pandit Madan Mohan Malavia, at Varanasi, Uttar Pradesh on December 25, 2012. The President of Nepal, Dr. Ram Baran Yadav is also seen |
Fake notes that fooled currency detector
..........“We were shocked when we learnt that a bank had accepted the counterfeit currency. Initially, we suspected some bank employees. “But when we met local RBI officials with the recovered cash, they told us that 14 out of the 17 security features matched the counterfeit currency. Even they were shocked,” ..........
High Mark fallout: Vepa Kamesam resigns from the Board
.....Vepa Kamesam, one of the most high profile directors has resigned from the High Mark Board. However, it is not clear as to what would happen to the 1.63 lakh shares that Mr Kamesam was allotted. Mr Kamesam, a former Deputy Governor of the Reserve Bank of India (RBI) was one of the four directors who, along with Prof Anil Pandya, chairman and founder-director of High Mark, bagged 70% of the employee stock ownership plan (ESOP). Mr Kamesam was allotted 1.63 lakh shares in the credit bureau as ESOPs........
Obituary
Mr. K. Kanniappan, Retd. Dy. Manager (NABARD), RBI, Chennai passed away on 25.12.2012. Phone: 044-2628 2892 / Mobile: 94444-45799 / 98841-81124
Banks to have one branch per 1,000 people for direct cash transfer
.....“It shall be the endeavour to ensure that there is at least one bank branch / BCA in every gram panchayat(s). Since the population of gram panchayat varies across the states, banks need to ensure that about 1,000 to 1,500 households are available in the sub-service area of BCA,” the finance ministry said in a circular to public sector banks and regional rural banks...........
SREI to install 25,000 ATMs in rural India
....The final plan will be subject to RBI approval. These CSCs are being set up under the government’s plans to bridge digital divide between rural and urban areas,.....
PSBs might miss the CTS deadline
..........According to Hota, most banks started their procurement procedure after the government directive for the CTS rollout had come. It will take minimum 10-15 weeks to deliver the equipment and there are only a limited number of vendors offering such equipment. “These factors are delaying implementation of CTS and we are trying to meet the deadline,” said Hota. While banks are supposed to complete issuing new format cheques to customers by March 2013, the deadline for complete migration to CTS 2010 is December 2013.
C Rangarajan to inaugurate banking expo
Former Governor of Reserve Bank of India and chairman of the Prime Minister's Economic Advisory Council, C Rangarajan, will inaugurate IBEX INDIA 2013, India's only trade exhibition and conference for banking technologies at the Bandra-Kurla Complex, Mumbai on January 17. The exhibition will be open till January 19 2013. Rangarajan will also deliver the keynote address on January 17 on "Delivering Technologies for Innovative Banking", which has been structured to discuss a spectrum of issues across all banking functions that are of relevance to the Indian banking sector........
Banking on competition
...... In fact, the competition energised public sector banks to get their act together and advance in terms of technology and staff upgradation, designing and delivery of new products and services. It is in this context that the entry of more new banks – as a consequence of the latest amendments in the banking laws – will add to the competition and improve overall banking in the country............
Breaking the bank
........RBI might want to relook the loan classification rules to make them tighter and ensure adequate provisioning. As it is, agencies like Moody’s are convinced that the asset quality of Indian banks is set to worsen and more important, that the provisions for such potential slippages are inadequate. However, it is in the prevention that the solution lies; banks need to arm themselves with better credit appraisal skills and ..........
Amended legislation paves way for new banks in the next year
.....The development injected new life into the sector which has been struggling to cope with rising bad debts and pressure on the bottom line in the wake of global slowdown that also affected the performance of the Indian corporate sector.........
Of debt and distress
.....Although RBI has realised that banks are not setting aside enough capital to take care of potentially toxic assets and the fact that promoters have got away with too small a sacrifice in the restructuring packages—the observations of a panel set up by it suggest this—there has been little action on this front so far. In any case, tougher norms will help only in the future; for now, the damage has been done...........
HSBC denies hawala charges
......HSBC has also been accused of running illegal banking operations through its Dubai and Geneva arms. RBI had given HSBC a month to respond. Mr Thakur said he was dissatisfied with HSBC’s response and would petition the RBI again. “The core issues raised in the complaint initially are still completely untouched and unanswered,” said Mr Thakur. The police are now seeking the intervention of the RBI governor for a threadbare probe into the bank’s dealings in India.
Seizing the India opportunity
.....Only 40 per cent of India's 1.2-billion people have bank accounts. Of India's 600,000 villages, only 30,000 have direct access to banks. Penetration of other financial services products such as life insurance, mutual funds, brokerage accounts, and so on, will show even lower penetration levels compared to many other markets.......
'No relation between RBI's OMO and disinvestment'
The Department of Disinvestment has said that the impression created by the news item "Did RBI's OMO help govt's NMDC selloff?" is not correct. Reserve Bank of India (RBI) is an independent banking regulator who regularly conducts OMOs (Open Market Operations) as a normal tool of monetary policy as per its analytical mechanisms and policy decisions...........
Karur Vysya Bank open to acquisition, if it’s a right fit
.....“We don’t want to be an acquisition target… Moreover, beyond 5 per cent shareholding Reserve Bank of India's permission is required… The RBI does not encourage unfriendly acquisitions.”......
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