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.
Wednesday, October 23, 2013
The limitations of inflation targeting - Dr. A.Vasudevan
Finding the Next Amul Success Story in Banking
Read - ET
Chillar party at your doorstep
AHMEDABAD: You won't need to stand in a long queue outside banks to exchange currency notes of big denominations now. The Reserve Bank of India (RBI) van will visit your residential and business areas in the next six days, starting October 24 to provide bank notes of Rs 10 denomination. The apex bank has also decided to release fresh notes worth Rs 3,397.9 crore and coins worth Rs 14.99 crore to meet the demand this Diwali...........
RBI’s Goodbye to Banking Matrimony
........“There are regulatory challenges, as foreign banks would want to control
more than 10% of the bank. Also, a merger will not be possible unless
these foreign banks set up a subsidiary. We do not know whether the
rules will be for distressed banks only.” The likely caveat from the
RBI may be that those foreign banks have to set up a subsidiary in
India and have to list their shares on the
stock exchanges. And that’s what former Governor Duvvuri Subbarao had
proposed. But barring a few such as DBS’ chief Piyush Gupta, most
foreign banks are averse to doing so..........
Men still have a role to play in Mahila Bank
While men may be precluded from taking a loan from it, they have not been left out when it comes to employment in India’s first ‘Mahila’ (women’s) public sector bank. Men account for about 36 per cent of the candidates found provisionally eligible for appointment as Probationary Officers in the Bharatiya Mahila Bank. The probationary officer post is an entry-level position in the officer’s grade in public sector banks. Bharatiya Mahila Bank had advertised 115 vacancies for this rank last month, and selected 103 candidates, according to the results notification..........
Change of label?
My View on "Mint Road now closer to North Block":
This comment is with reference to the portion “The ministry is also expecting a more cordial relationship with Rajan on other issues such as setting up of a Debt Management Office(DMO) in the ministry” in this story.
If FM is able to exert sufficient pressure fast enough (let me be specific, before Rajan is able to comprehend the history and context of Public Debt Management in India), one will not be surprised to find the present team in RBI managing Public Debt getting GOI label and getting rechristened as DMO which is part of Finance Ministry.
There is no irrationality in Government taking over and managing public debt on its own when the fiscal policy management has matured. The haste with which the finance ministry is trying to go through the process is unwarranted. Such a move at this juncture will destabilise one more arm of the government as the ministry is already burdened with several other preoccupations and compulsions arising from loss of credibility, compulsions of coalition politics and a host of other relationship issues with regulators and financial institutions including banks.
RBI has been managing smoothly the public debt of central government under Section 21(2) and that of state governments by agreement as provided for under Section 21A of the RBI Act, 1934 for several decades. It is in the interest of country’s financial stability which is the basis for economic development, not to disturb the present arrangement at least until the government is in a position to take up the comprehensive review of the monetary system envisaged in the preamble of the RBI Act. The desperation with which FM pleads with PSUs for higher dividends to make up for the shortfalls in fiscal planning is any indication, one can imagine what can happen to government borrowing dependent only on the ‘ownership rights’ of a government which is pulled and pushed by weak coalition partners.
As government under the existing disposition has enough authority to ‘direct’ RBI in an eventuality, there is no need to hurry through the transfer of management of public debt from RBI to GOI at a time when more attention should be paid to clear the mess which is already there on the drawing board of finance ministry.
- M G Warrier, Mumbai
RAJAN’S SILENCE STUMPS ECONOMISTS
Economists
present at the pre-monetary policy meet with the Reserve Bank of India
Governor Raghuram Rajan were in for a shock. It was probably their first
meeting ever in which the Governor did not say anything at all. Many
were wondering whether it was deliberate, or because of one economist
yammering away on inflation irrespective of what others had to say.
ET
ET
NO INTEREST IN SENTIMENT SURVEY
With
so much uncertainty over official economic data, a number of analysts
including policy-makers like the Reserve Bank of India are depending on
their own internal surveys to gauge the situation. They conduct surveys
on business optimism, inflation expectations by households and
investment situation. One of the top consultants conducting one such
survey was bewildered. For every ten questionnaires sent out, replies
were received from just two, or three. Another indication of the
sentiment?
ET
ET
Monetary policy review: RBI may hike repo rate by 25 bps
......As monetary policy returns to a more normal setting, RBI and the government will have to address the chronic problems. In India’s case, these are high inflation and high fiscal deficit. In the case of the latter, there is no solution in sight, although the government could achieve its target for the year through ad hoc measures. A more durable solution will have to await the formation of the next government. That leaves RBI with the tough task of bringing inflation under control. Inflation has actually trended down ............
Banking licence: RBI seeks more info
.......The
information sought from the applicants include their income-tax filings
and info on other companies within the group. According to sources, the
applications are being screened by three teams under RBI executive
director B Mahapatra. The teams are looking at separate issues such as
group holding structure, business plan, compliance and financial
inclusion. According to sources, the RBI may not consider firms that do
not have resources to make an upfront investment of Rs 500 crore. By
the end of next month, the RBI is expected to complete its internal
screening of the applications and update the board before handing
over the proposals to the expert committee headed by former RBI
governor Bimal Jalan. Other members in the panel include C B Bhave,
Nachiket Mor and Usha Thorat............
Co-op banks often used for money-laundering, says Chidambaram
.........As the Reserve Bank of India (RBI) looks after the banking side of the UCBs, the minister said besides strengthening legal provisions, the RBI should look to “restrict the lending aspects of such banks, making provisions of narrow banking or even canceling of their banking licenses.” Like scheduled commercial banks, many cooperative banks have been accused of violating anti-money laundering norms (set up by the RBI) and KYC norms with impunity. A big drawback in effectively controlling UCBs is the duality of control. While RBI regulates deposit mobilisation, loan grants, etc. a bulk of the functions is government-controlled through the multi-state cooperative societies or state cooperative societies.............
RBI tightens ‘at par’ cheque norms for UCBs
...“It has been observed UCBs are utilising at par cheque facility extended by Scheduled Commercial Banks not only for their own use but also for their customers, including walk-in customers,” the central bank said in a notification. An “at par” cheque is payable at any branch of the issuing bank, without any excess charges to the bearer of the cheque. Co-operative banks have been advised to utilise these cheques for only specific purposes, such as for their own use, for account holders who are compliant under know-your customer (KYC) norms, and for walk-in customers against cash worth less than R50,000 per individual, RBI said in a notification.............
Post Banks apt for financial inclusion: Assocham
.........The Department of Posts (DoP) has applied for a banking licence. The Reserve Bank of India is expected to issue licences to shortlisted entities in January 2014. "This is a huge resource at hand and touches almost every part of the country's interior. Just Rs 100 per household saved every month could bring over Rs 12,000 crore from 45% of unbanked households in rural areas," Assocham said..........
Banking on Financial Inclusion
.............We consider Financial Inclusion and Financial Literacy as twin pillars where Financial Inclusion acts on the supply side i.e. for creating access and financial literacy acts from the demand side i.e. creating a demand for the financial products and services”............
Financial literacy—a regulatory cop-out
....It worries me therefore when financial literacy, or getting people educated about their money, takes on the nature of a global good. Much like polio eradication, as the goal to get citizens “financially literate” gains ground, I cannot but see the long arms of predatory capitalism at work. ....
‘Banking licence to MFIs may help financial inclusion’
.......Bandhan MicroFinance, among the largest microfinance outfits, is now awaiting the Reserve Bank of India’s nod for commencing banking activities. Mr. Ghosh said that once large micro finance institutions entered the banking services, it would help financial inclusion, too.
Bankers don't bother..............
There were instructions from RBI that banks should not compel customers wishing to hire lockers to place fixed deposits with the bank.I do not know whether these instructions are still prevalent. In any case, the record of RBI in enforcing its regulations issued to banks has been poor and in this background it would not be surprising if banks do not bother about these instructions !
- A.Chandramouliswaran
RBI cancels Aurangabad based co-operative bank’s licence
Reserve Bank of India on Tuesday said it had cancelled the licence of Vishwakarma Nagari Sahakari Bank Maryadit, Aurangabad (Maharashtra), effective 12 September as the bank “had ceased to be solvent and the depositors were being inconvenienced by continued uncertainty”........
IIM-A to launch 4th edition of PGPX knowledge summit
..........While the event will feature KC Chakrabarty, deputy governor, Reserve Bank of India (RBI) as the keynote speaker, the panels will feature various activities such as presentations and speaker discussions, among others. The panel will culminate with Q&A from the audience. Moreover, a PGPX alumni-meet, will be hosted on campus alongside ConneXion...........
Special RBI measures got India $9.6 bn in forex: FM
......"Banks have taken advantage of RBI's liberalisation of FCNRB and Tier I capital schemes. So far, under the two schemes put together, banks have brought in $9.6 billion," .............
NPA Priority
......And that is banks are singularly unsuitable to meet priority sector needs as their appraisal systems are geared towards larger and more structured lending to the organised sector, and the sooner the government realises this, the better. NBFCs, micro-finance institutions and specialised lenders do this job better since they can actively mentor such borrowers...........
Smaller banks face higher NPA risk
..... What
adds to the pressure on smaller banks is the fact that several of them,
such as Bank of Maharashtra and Corporation Bank, witnessed
restructured accounts turn into NPAs. While the average for public
sector banks was 27% during the June quarter, in case of Bank of
Maharashtra, nearly half the restructured accounts, which were under
financial strain, turned NPA. State Bank of Travancore (48%) was at second position, followed by Syndicate Bank (45%) and Canara Bank (43%).......
Read - TOI
FM tells PSBs to step up NPA recovery
..........The minister said he hoped NPAs were a "function of the economy" and would improve with the recovery in economic growth. "We are monitoring the top 30 NPA accounts in each bank. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting,"......
Insurance cover coming for online fraud
.......The NPCI insurance cover will be over and above any policy taken by a member-bank. The policy will cover compromised and disputed transactions carried on the National Financial Switch (which facilitates inter-bank ATM transactions) ATM Network. It will also cover disputed transactions on the NFS Network. .............
Company deposit plans to need insurance cover
.........The proposed measures, which form part of the draft rules for the new Companies Act, also bar the companies from promising huge returns and hefty agent commissions in excess of the prevailing rates prescribed by the Reserve Bank of India (RBI) for such deposits. Releasing the draft rules, the corporate affairs ministry said that action would be initiated against the companies that fail to comply with the new rules, called Regulations for Acceptance of Deposits by Companies............
Be cautious of the money mirage
....The Indian markets have been primarily pump-primed by FIIs who have invested Rs 7,500 crore in 11 trading sessions. Though sentiments had changed since some of the financial reforms brought in by the new RBI Governor, Raghuram Rajan, sentiments alone cannot revive an economy bogged down by supply-side constraints and creaky infrastructure............
Lift kara de: ‘Broke’ Sami pleads for time to pay service tax
Says legal battles with ex-wife and the RBI freezing his account have left him with nothing
Troubled Pakistani singer Adnan Sami has admitted that he has indeed defaulted on service tax amounting to Rs 10 lakh, but said in an emotional plea that the legal battle with his former wife Sabah Galadari had left him “bankrupt”.
Read - Mumbai Mirror
Why 80:20 scheme has high risk for customers?
........Effectively this means that if builders fail to service loans on time, it is the buyer who is defaulting on the loan. The bank would claim such as home loan a Non Performing Asset if the builder does not pay and would tag the home buyer a defaulter. This means the credit score of the home buyer may go for a toss for no fault of his. If the builder delays and defaults on the payment of interest, the home buyers’ credit score would plunge and over a period of time, he would be a defaulter for the CIBIL. Till the time RBI announced a ban on such schemes, the banks were selective about the projects and the builders with whom they want to go with such an arrangement............
Bringing gold under savings head to ease deficit burden
.........At present, the valuables are placed under a separate heading within Gross Capital Formation (GCF), which is a proxy for investment thereby reducing both the savings and the private final consumption expenditure. However if it is treated as consumption item, it could push the country’s GDP while in case of savings, it would help the government in easing its fiscal deficit pressure. Reserve Bank of India about two years ago had pointed out the need to look into the issue..........
Banks must depute senior officers to recover NPAs: FM
.....“Banks have been advised to empower or set apart an officer of senior rank, at least of General Manager rank, to look at recovery, especially recovery from written off accounts... We will try to recover as much as possible from the written off accounts,” he said, noting that defaulters often try to stop the recovery process............
FM wants govt banks to cut rates; lenders reluctant
........While the government has been asking banks to lower rates, the central bank has yet to show signs of monetary easing. In its last policy review, in September, it had raised the repo rate — the key policy rate at which it lends short-term funds to banks — by 25 basis points; and, it might may go for another hike on October 29............
PSBs to get 14k cr in Round 1
........Although
finance minister P Chidambaram has promised that banks that offer more
discounted loans during the festival season, will be eligible to get
more capital, the calculation will be done only after the schemes end on
January, financial services secretary Rajiv Takru indicated. Chidambram
said a few banks had told him that they do not need more capital for
the schemes aimed at boosting demand for automobiles and white goods..........
Read - TOI
RBI okays Bengal's state-sponsored deposit-taking scheme
.......Following an application from West Bengal Infrastructure Development Finance Corporation (WBIDFC), RBI has has given its nod allowing the state-government owned body to collect public deposit. "WBIDFC already had Non-Banking Financial Company (NBFC) certificate from RBI. It had earlier raised firms for different development projects from financial institutions. But to raise public deposits one needs to fulfill more criteria. We had written to RBI on this," an official said.........
FM spreads Diwali cheer, says gloom overdone
......“Even in this current environment, we have got so many proposals and these are being processed,” Chidambaram told reporters after a three-hour-long meeting with chiefs of public sector banks (PSBs) at which he reviewed their quarterly performance. The finance minister announced that the Reserve Bank of India’s (RBI) twin schemes to attract foreign funds, through Foreign Currency Non-Resident (Banking) accounts and for the purpose of tier I capital, had attracted $9.6 billion.............
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