New Delhi: Moderating inflation will provide "greater space" to the Reserve Bank to cut interest rate to promote sagging growth, Prime Minister Economic Advisory Council Chairman C Rangarajan said on Tuesday. "I would say that decline in WPI is higher than what was expected. It gives greater space for monetary authority to act," he said while unveiling the review of economy for 2012-13..................
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Tuesday, April 23, 2013
Create More Banks, Chit Funds will Die
...... It makes no sense to force banks to open branches in rural areas. Instead, the government should allow the use of low-cost technology, like mobile banking, to spread financial inclusion. The Reserve Bank of India should embrace the idea of allowing mobile companies or their joint ventures with existing banks to offer banking services.
Read - TOI
RBI may allow 7-8 new banks
The number of new licences to be issued, which would be much higher than what the prospective applicants had estimated, was arrived at after rounds of discussions with the government. In its discussion paper on the matter, released in August 2010, RBI had said a “few” licences would be given, leading the market to believe the number would be three or four. According to banking industry sources, the government, which is keen on financial inclusion through spreading formal modes of credit to all parts of the country, insisted that more new players be allowed...........
Co-op banks can't use Sarfaesi for debt recovery: Gujarat HC
The high court here has said cooperative banks cannot use the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), 2002, for recovery of debts from its defaulters. A bench of Chief Justice Bhaskar Bhattacharya and J B Pardiwala, in a common judgement, today declared the central government notification dated January 28, 2003, bringing cooperative societies within the purview of the Act as null and void. They said this clashed with the Banking Regulation Act, 1949................
Teaching the honest to become dishonest
......The consequences are inevitable. Banks are now unwilling to lend to the agricultural sector, unless backed by collateral, which can be easily sold off. As a result, marginal farmers, who do not have collateral to offer, are compelled to borrow money from moneylenders at usurious rates.........
Is the good news for real?
After a long, long time, there is some favourable news on the economy. The International Monetary Fund (IMF), in the latest edition of its flagship publication — World Economic Outlook — says that the Indian economy has bottomed out, meaning that the worst is over............
Beware the nostrums of economists
...........“The ideas of economists,” John Maynard Keynes famously wrote, “… are more powerful than is commonly understood. Indeed the world is ruled by little else.” He might have added that the ideas of economists can often be dangerous. Policies framed on the basis of the prevailing or dominant economic wisdom have often gone awry and the wisdom was later found to rest on shaky foundations...........
Tips to replace non CTS-2010 compliant cheques
............The customers who have deposited non-CTS cheques as post-dated cheques
(PDCs) for EMIs to a finance company, or bank for repayment of a loan,
will have to replace these with the compliant ones for instalments after
31 July. The non-compliant cheques will not be honoured by banks and
will amount to non-payment and default on the part of the customer..........
How can having a single customer ID help
.....The Reserve Bank of India had advised the banks to lay down a customer identification process, which should be carried out at different stages such as banking relationship, carrying out a financial transaction or when the bank has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data. This requirement can be easily met by the bank if it has a unique ID per customer. Hence, most banks are now being seen taking initiatives to provide one customer ID per customer..........
Campaign against fake cell phone messages
.............A few gullible people responded to the messages by sharing personal details including bank accounts and also paid initial amounts as “service charges”. However, after receiving the amounts, the senders would vanish. Mr. Narasimhachar said the advertisement inserted by the Reserve Bank of India recently was appreciable but the apex bank had confined itself to disowning its role as claimed by the fraudsters. The apex bank should receive complaints from public and refer the matter to the police in doubtful cases, he said...............
RBI for lower commission to curb KYC abuse like money laundering
The Reserve Bank may push private sector lenders to rationalise the commission they pay to wealth and relationship managers, as it tries to check dubious transactions and flouting of know-your-customer norms.........
Prof loses 87k from salary a/c in debit card fraud
....... “The
bank neither informed me about the transactions, nor ever asked me to
register for SMS alerts. In fact, an official said they cannot give an
assurance if either the insurance firm or the bank can
reimburse the money. They also asked me to send documents to their
Bangalore head office despite submitting the FIR and documents here,”.........
Read - TOI
Credit card abuse up, debit card users more prudent
.......“Though we have not seen this trend in our base, but if the numbers do say that, then it is a matter of concern as people only withdraw cash from ATM machines (using a credit card) when they have absolutely no money,”..........
Default insurance
.............The Reserve Bank of India has said that India’s first mortgage guarantee company, the India Mortgage Guarantee Corporation (IMGC), can start functioning. Its capital will come from three investors – the National Housing Bank (38 per cent), an American company called Genworth Financial (36 per cent) to provide technical help and ADB and IFC (with 13 per cent each). It is interesting to note that the Government will not have a stake..............
More liquidity to help banks reduce interest rate: Ravneet Gill
The Reserve Bank of India recently said foreign banks those have more than 20 branches should have a steeper target for priority sector lending. Deutsche Bank—which has 17 branches in India—however, does not see the stipulation as a hindrance to its branch expansion plan...........
Parliament panel seeks committee to monitor NPAs
......“The committee will urge the government/ Reserve Bank of India to constitute a special NPA management cell at the highest level to review the write off, up-gradation and restructured advances and also to monitor the pace of recovery of NPAs. A report on results achieved thereof may be submitted to the committee within three months from presentation of this report,............
Bond spreads might remain at current levels till RBI monetary review
.......However, the 10-year bond spread is expected to remain at current levels. Bond spread refers to the difference between the yields of two bonds. Few companies have tapped the domestic bond market but most await RBI’s monetary policy announcement on May 3. If the apex bank cuts the repo rate, the coupon rates of corporate bonds will drop.........
Parl Panel for opening branches in unbanked areas
......."The Committee in their earlier reports had expressed their view that the rural branches should be considered as a service centre and not merely as a profit centre," Standing Committee on Finance said in a report tabled in Parliament today. "With this perspective in view, the Committee believe that the proposition of brick & mortar branches in sparsely and unbanked areas would still be sustainable in the longer run and thus needs to be pursued earnestly," it said.........
‘Focus on low-cost deposits, advances for growth’
......... in this era of keen competition when the banking industry growth rate is moderate, the quality of service and assets scores over quantity. The strength of an organisation lies in effective management of assets. Both staff and customers are critical to the growth and development in the banking sector,...............
Banks’ liquidity issues
This refers to your editorial “More freedom for cash” (Business Line, April 22). If at all banks face any liquidity crunch, it is of their own making and the RBI cannot be expected to come to their rescue. Banks in India face a liquidity crunch because of poor mobilisation of deposits thanks to poor customer service, high inflation, and reluctance to cash in on financial inclusion as a business opportunity. The way banks function now, with 78 per cent CD ratio when there is not much of demand for fresh credit, is indicative of a serious deficiency in asset-liability management. The NPA deposit ratio needs to be analysed in detail. The banking system has been having liquidity problem for quite some time and the solution for that cannot be relaxing the regulatory measures of the RBI.
T.V.Gopalakrishnan (HBL)
Bulls on a strong footing
........The second and more important trigger was the decline in the inflation numbers released last week. This sharp drop in the rate of inflation has increased hope that the Reserve Bank of India (RBI) will be more aggressive in cutting policy rates this time around. That was the primary reason behind the short covering in bank Nifty — which was on the forefront of correction for the past two months — and banking stocks were the main contributors to the rise of Nifty last week..........
Too early for optimism on trade balance
The recent fall in commodity prices might not be sufficient to bring down the country's widening current account deficit (CAD). Experts say more is needed for a significant change in this regard. The Reserve Bank of India (RBI) views the high CAD as a key challenge. RBI Governor D Subbarao said earlier this month that the CAD for the financial year which ended on March 31 was unlikely to be less than five per cent of gross domestic product (GDP).......
Regional rural banks may be allowed to tap private capital
.....The Bill, introduced by Finance Minister P. Chidambaram in the Lok Sabha on Monday, aims to amend the Regional Rural Banks Act 1976. One of the proposed amendments seeks “to make provisions for raising capital by regional rural banks from sources other than the Central Government, the State Government and the sponsor bank.” However, there is one condition — in no event should the combined shareholding of the Central Government and the sponsor bank go below 51 per cent.......
Crack the exam, select your posting
If clearing a bank exam is good enough, imagine being offered a chance to indicate your order of preference — of both the bank and the State/Union Territory you would like to work in. The Institute of Banking Personnel Selection (IBPS), the autonomous body which is in charge of conducting the Common Written Test on behalf of the participating organisations (the banks), has sent a communication to this effect to those who have cleared the CWE for clerical cadre...............
In unchartered territory
The Reserve Bank of India is expected to soon announce the final operative guidelines for non-banking financial companies (NBFCs). An RBI-constituted panel, headed by its former deputy governor Usha Thorat, recommended tightening of rules for NBFCs, proposing that these companies should have minimum assets of Rs 25 crore. Thorat has also suggested that their minimum equity capital be raised to 10 per cent of risk-weighted assets from 7.5 per cent currently. The panel released its recommendations on December 12, 2012. However, the RBI is not trying to finalise operational guidelines based on these recommendations..............
Tides turning for Islamic banking in India?
.....“However, once the Microfinance Bill is enacted, all the microfinance activities will come under RBI and problems will surface again. Issuing of Islamic bonds – sukuk – may be made possible, though, with minor changes in the rules without making major changes in the laws,” .........
Islamic microfinance market size reaches $1b, says Pakistan body
....... if one takes an overview of the last 10 years of the Islamic finance industry, it can be observed that with the passage of time Islamic banking, Sukkuk, Takaful and Islamic fund, have progressed quickly. In the next three years Islamic microfinance will progress more quickly relative to other Islamic financial products,............
Muthoot FinCorp’s microfinance arm expanding into 2 more States
......The company, which has also applied for a name change, expects to get the NBFC-MFI approval from the RBI in three-four months. Since there is a margin cap of 10-12 per cent on the interest rate that an NBFC-MFI can charge above the bank lending rate, customers will benefit if the company gets the NBFC-MFI recognition..........
RBI earns over 40% returns from its gold reserves
MUMBAI: The Reserve Bank of India is sitting on handsome returns on its gold reserves despite the recent crash in the yellow metal's price. The RBI's gold stock of about 400 tonnes, currently valued at $25.7
billion, has appreciated 41% since it bought 200 tonnes in
October-November 2009 from the International Monetary Fund...........
Industry body recommends cut in gold's LTV ratio
KOCHI: Association of Gold Loan Companies (AGLOC) on Monday recommended a reduction in Loan-To-Value (LTV) ratio of gold in the background of recent crash in the price of the metal. "We have asked our members to conform to the 60% LTV ratio stipulated by the Reserve Bank of India, said by George Alexander Muthoot, president of AGLOC and the MD of Kochi-based Muthoot Group.............
Pilot writes to state CMs for police action in fraud schemes
In a multi-pronged strategy to deal with the menace of fraudulent chit funds and ponzi schemes, the Centre has written to state chief ministers for vigorous police action against erring entities and has also sought an increased surveillance by the RBI. Besides, the Corporate Affairs Ministry has also decided to spread public awareness about such schemes through bulk SMSs, TV tickers and messages on Post Office Passbooks, while a joint campaign is being explored with Sebi as well. ...............
Centre assures state of new warning system
....... "Other than the regulatory bodies like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi), the ministry of corporate affairs and the state government, henceforth, will interact directly so that operators can't take advantage of the gap between the multiple agencies,"..............
Mamata sets up panel to probe chit fund scam
.......“Any commission set up by the State government in its terms of reference has the jurisdiction to inquire into matters listed in the State List of the Constitution. In this instance, there are Central agencies like the Securities and Exchange Board of India and the Reserve Bank of India involved and a commission set up by the State government cannot investigate their role,” ....
India currency futures stifled by central bank rules: MCX-SX
Indian currency futures volumes have been stifled by the RBI move last year to prevent rupee weakness which has indirectly created prices variations between listed and over-the-counter derivatives, a senior official at domestic exchange MCX-SX told Reuters.............
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