Indian banking at crossroads - challenge of risk management from globalisation to financial inclusion : R.Gandhi

Valedictory address by Mr R Gandhi, Deputy Governor of the Reserve Bank of India, on the occasion of Seminar on Banking, organized by the Indian Merchant's Chamber, Mumbai, 8 May 2014

....... The Reserve Bank too has adopted a proactive and calibrated approach towards demanding and facilitating robust risk management efforts by the banks. Reserve Bank has been adopting a considered approach of limiting the systemic risk originating from both the pro-cyclicality as well as interconnectedness dimensions. For example, countercyclical measures were adopted as early as 2004 to stall heating up of certain specific sectors by increasing the risk weights and provisioning ratios for sensitive sectors such as capital market, housing, commercial real estate during the period when the boom was building up. Several measures were taken to reduce the inter-connectedness among banks on the one hand and between banks and NBFCs on the other, to address the cross-sectional dimension of systemic risk and regulatory limits have been placed on exposures to capital market exposures. Such.........

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50% Indians Without Bank Accounts Represents a Revolution of Demand: Dr Deepali Pant Joshi, RBI

.....“Fifty percent Indians still don’t have a bank account. How do you allow this 50% to be part of the economy? You thus have a revolution of demand. How will you ensure that they can avail of banking services? How will you use technology to reach out to them and at the same time give a better and more user friendly experience - that is the biggest challenge and opportunity facing the Indian banking industry,” said Dr Deepali Pant Joshi, Executive Director, Reserve Bank of India (RBI)...........

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RBI goes to school to spread financial literacy

.............RBI's Assistant General Manager Shailaja Singh highlighted the importance of passwords for online transactions and said passwords must be kept confidential. "People should not 'pass the (pass) word'," she said and added customers, instead of making verbal complaints about the deficiency of services of any bank, should write the complaint, get it duplicated, submit the same to the bank authorities concerned and get it 'received' on the duplicate. This documented proof of complaint would enable them to approach the RBI later, if need be. In his address, RBI's Bihar-Jharkhand Regional Director M K Verma dealt with a plethora of topics, including the recent RBI move to allow minors above the age of 10 years to open and operate savings bank accounts independently, if they so desired...............

Read - TOI

Canara Bank launches credit scoring model to finance SMEs

.........The eligibility is decided based upon aggregate scores secured by the loan applicant on various parameters prescribed under behavioural, management, business and financial aspects. The model was launched here yesterday by Executive Director, Reserve Bank of India (RBI), Deepali Pant Joshi.

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The Economist who can rescue India

.......For now, though, Rajan faces what may be the toughest job in global economics. Instead of becoming Modi’s monetary lackey, Rajan should speak truth to power the way central bankers in the US and Europe did once upon a time. Rajan is just the man to play the honest-broker role New Delhi has lacked during the past decade. If he can turn the tables..........

Read - Mint

Will high inflation, low IIP set the stage for a clash between RBI and BJP-led govt?

........Does that suggest any softening of the Reserve Bank of India’s stance on interest rates? Probably not. With the monsoon expected largely to be below normal as a result of El Nino (a global weather phenomenon that causes floods and droughts), it’s unlikely that RBI governor Raghuram Rajan will be in any position to cut interest rates..........

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After the victory, avoid pitfalls

.............So what should the Modi regime focus on to improve governance? One way to address this question would be to list what the new government should avoid doing. There are three clear decisions that it should not contemplate in the current situation. In spite of some provocations from sections within the BJP, it should avoid tinkering with the functioning of the Reserve Bank of India (RBI). Maintaining the apex bank's functional autonomy should be as important as allowing the current governor to remain focused on the job to manage the supervision of monetary policy and banking regulation. In other words, there is no need to change the RBI governor............

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Far from sacking him, Raghuram Rajan is the man the new govt will need the most

.....However, there is one indisputable fact: far from thinking of replacing the RBI governor, the new government would do well to allow him the flexibility and freedom to keep a close watch on  inflation so that any future reform measures do not lead to serious inflationary consequences.

Read - Forbes India

Could RBI Governor Rajan Be Ousted By a New Government?

As India appears to be on the threshold of political change, some economists, executives and investors are wondering whether a new government would dare to try to push out the country’s hawkish central bank governor Raghuram Rajan. The Reserve Bank of India governor is appointed by the government, and can technically be fired by the government as well......

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Rajan Keeps Fingers Crossed Amid Change of Guard in Delhi

...........That was Rajan’s way of sending a message that he is no pushover to some sceptics who reckon that he may have a tough time ahead when a new political formation comes to power in Delhi next week. But the RBI governor, who has earned praise both at home and abroad for his handling of external sector management and approach towards cleaning up the mess in the banking sector, could well be up against one of his biggest challenges soon. A change in guard in Delhi and with it a new approach towards economic policy management could trigger a review of the current stance on monetary policy with its singular focus on inflation control. ...........

Read - ET

Needless controversy

.......... No other finance minister has needled and harassed successive RBI governors as much as Chidambaram did in order to impose his own arbitrary will on the central bank. Even when the new government is yet to be constituted, a media- driven controversy on the fate of Rajan, in which the outgoing finance minister needlessly waded in, could unnecessarily sour relations between the RBI Governor and the new boss in the finance ministry. Regardless, ...........

Read - FPJ

A wait and watch policy expected from RBI next month

In a struggle between growth and inflation, the Reserve Bank of India (RBI) may decide to maintain a status quo in key policy rates on June 3. According to experts though Consumer Price Index (CPI) linked inflation has risen once again in April, but there has not been significant uptick in core inflation. Besides that the fiscal stance of the soon to be formed new government will be a key driver before making any changes in the policy stance by RBI......

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Nayak report calls for single bank licensing regime

........"It would be desirable for the bank licensing regime to move to a uniform license across all broad-based banks, irrespective of ownership, subject to inter-jurisdictional reciprocity considerations in respect of foreign banks, and niche licenses for banks with more narrowly defined businesses,"............

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A window of opportunity

.......Reserve Bank of India (RBI) Governor Raghuram Rajan has been a consistent advocate of floating exchange rates and this may come in the way of his willingness to buy up dollars, thereby preventing the rupee from discovering its true value. However, this is not a position that should be cast in stone, particularly when the issue is viewed in the broader context of financial stability. While........

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RBI panel for diluting govt stake in public sector banks to below 50 %

............The panel, headed by ex-Chairman of Axis Bank, P. J. Nayak, said governance at the 26 public sector banks (PSBs) suffered due to several ‘externally imposed constraints’ like dual regulation by the RBI and the Finance Ministry, and external vigilance by agencies such as the CVC and CAG, among others. “If the government stake in these banks were to reduce to less than 50 per cent, together with certain other executive measures, all these external constraints would disappear,” the report says............

Read - The Hindu

Chidambaram chairs tenth meeting of Financial Stability and Development Council

.................he Council took stock of the Indian economy and deliberated on domestic and global growth scenario, fiscal, monetary and external sector, foreign capital flows, inflation, developments in financial markets, as also the outlook and challenges facing the economy.

The Council also discussed the detailed assessment of ...........

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Even bank fixed deposits have variants

.....The first thing to remember is that most FDs are tax inefficient. If you are in the 30.9% income tax bracket, an 8.50% annual return from an FD gets reduced to a net return of 5.87%. For 20.6% tax bracket, net return will be 6.75%, and 7.62% for those in the 10.3% bracket. Opt for an FD only if you are in the lowest tax bracket or have no tax liability..........

Read - Mint

Cash crunch at SBI ATMs

..........ATM services of India’s largest public sector bank are hit across Jharkhand and Bihar wherever SIS Services Private Limited, a leading cash-in-transit (CIT) or money-ferrying company, services them, as the company struck work five days ago in the two states over a dues-related row. According to SIS officials, cash management major National Cash Register (NCR), which outsourced them the job in Jharkhand and Bihar, stopped paying them since October 2013................

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Switch to Digi-money Will Mean More Transparency

...........Competition between e-money payment system and internet based transactions using bank accounts may benefit consumers. The mobile payment system may become the ‘rails’ for product distribution by financial intermediaries. Business model for MNOs would develop around products pushed through the e-money-paymentsystem and ownership of patterns of financial behavior in the e-money economy. MNOs in their existing legal form could be licensed as ‘domestic money exchanges’ and as ‘payment operators’, which may require multiple regulators, but one for each function --RBI and Trai.............

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Consolidated fund of Telangana a/c opened

............With Governor’s approval, Secretary, Finance, went to Mumbai on Tuesday to sign an agreement with the RBI and open an account for Telangana State which will become operational from June 2. According to the Andhra Pradesh Reorganisation Bill-2014, the cash balance and credit balance of the existing State of Andhra Pradesh will be divided between the two successor States on the basis of population ratio. This apportioning will be carried out by adjusting the credit balances for the two States in RBI books........

Read - The Hindu

Madhu Kapur accuses Rana Kapoor of misusing his post at YES Bank

..........."Mr Rana Kapoor is misusing his position as managing director of the bank. The resources of the bank are being used by Mr Rana Kapoor to directly and indirectly deny us our rights, including by using the bank and independent directors as a front to raise untenable preliminary objections...In view of the above, you are requested to give no approval to the appointment of any person as chairman or managing director of the bank, unless it is jointly recommended by Mr Rana Kapoor and is according to the articles of association," Madhu Kapur and her children wrote in a letter addressed to one of the RBI deputy governors..............

Read | Business Standard