...........When a board is thrust on a PSB without any consultation with the chairman, the composition of such a board may well follow the given legislative structure, but the probability of that board having an optimal composition, with interests of the directors aligned to that of the bank, would be very low. On top of it, if as the Nayak Committee Report observes "some non-official directors are of poor quality or get on to the board with parallel agendas (as is now commonly alleged) the chairman then begins to view sections of the board as unhelpful to the interests of the bank". The ecology of the board room can then no longer remain pure.........
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Friday, June 20, 2014
IBA perverse logic on so called CAPACITY TO PAY is preposterous
The stand of IBA is preposterous. Even with 25% increase we will be lagging behind the government employees if one realistically evaluates their projection in wake of announcement of 7th Pay Commission in the anvil. My argument is backed by Justice Kantilal Desai in his Award popularly known as Desai Award where in para 5.137 he has made pellucid the following........
Induct market experts in key ministries: Marti Subrahmanyam
............“My impression is that our central bank and key economic ministries have very few experts on international markets, with hands-on experience, in key positions. Such experience will include research, trading and management in such markets. Most of our bureaucrats do not have much of an idea about what is happening in international markets, at any level of detail, unlike other emerging market countries I can think of, including Brazil, Turkey and China, which have such experts in key decision-making positions. The only notable exception in our context is the RBI Governor, Raghuram Rajan,”...........
‘Devil’s Advocate’
My View on "Regulating the regulators":
In print media, The Hindu group of newspapers has been consistently playing the role of ‘Devil’s Advocate’ without waiting for a congenial time to speak out. The Hindu Business Line through its editorial ‘Regulating the regulators’(June 19) has proved this once again. It was this paper which published the first ever serious indictment of the Financial Sector Legislative Reforms Commission on May 3, 2013. I am referring to S S Tarapore’s article ‘A Plot to Destroy RBI’. The article concluded with the following observations:
“Devil in the detail
The Commission recommends the setting up of a statutory Monetary Policy Committee (MPC) to take executive decisions on monetary policy with each member having a vote and the Chairperson having a veto, which must be explained with a public statement. The devil is in the detail.
There would be only two RBI members and five external members appointed by the Government. The Ministry of Finance nominee would be a non-voting member on the MPC but would articulate the Government viewpoint.
With Big Brother watching over their shoulder, brave would be the external member who would deviate from the Government line. The RBI would be better off with the present arrangement.
The leitmotif of the FSLRC is to charge the gate of the temple of money with iconoclastic fervour. One prays that in this internecine battle, the RBI’s Pretorian Guards fight off the charge of the Commissioners.
One must remember that countries that destroy their central banks destroy themselves.”
- M.G.Warrier
RBI FIGHTS BACK
With reference to the editorial “Regulating the regulators” (June 19), it must be pointed out that the first serious indictment of the FSLRC was made in this paper by SS Tarapore in his article “A plot to destroy RBI” (May 3, 2013). As rightly pointed out in the editorial, it is quite possible that the RBI Governor’s observations may get entangled in criticism in the context of the timing, and the seriousness with which they have been made can get diluted. But, for those who have been following the matter, Rajan’s statements do not come as a surprise. It is a relief that there is some strong leadership in the financial sector.
Not much research is needed to conclude that the finance ministry and FSLRC, in a hurry to resolve certain minor issues, ignored the evolution of the role of the RBI and the care with which the bank has nurtured the financial sector.
It would appear that the Commission did not get an opportunity to understand the present relationship between the RBI and the Governent. The regulatory apparatus and legislations in the financial sector are in working condition. Till Rajan’s emergence, the FSLRC’s effort to re-invent the institutional structure of regulatory bodies had pushed regulators and supervisors with the exception of the RBI to a confused state.
Perhaps the purpose would be served better if the RBI is allowed to function with its present mandate and a coordination committee sorts out issues among the remaining regulators. If the Government’s aim is to reduce the number of regulators, a merger of the regulatory agencies outside the RBI could be considered eventually.
- MG Warrier
The proposal by FSLRC to set up a tribunal to review the RBI and the SEBI’s decision is unwelcome and Rajan’s criticism of the proposal is valid. The RBI’s actions on monetary policy are based on well-established systems and practices. And any policy decision can trigger differences of opinion and may also turn out to be wrong in hindsight. But that doesn't make them subject to review by a tribunal. There is no end to regulations and regulators. So, shall we have a regulator to review the decisions of the Supreme Court?
- Sridhar Narasimhan
TWENTY YEARS AGO TODAY - RBI move to monitor customer service
‘The customer is the king.’ Indian banks are slowly becoming aware of the importance of this dictum. To make banks more customer-oriented the Reserve Bank of India, in consultation with Indian Banks Association (IBA) has drawn up a uniform format for evaluation and monitoring of containing 25 core customer service areas. The RBI has advised the banks to undertake periodic evaluation of customer service. Further, IBA has prepared a uniform format of a complaint book which has been so designed that the complainants can be given “acknowledged copy” immediately.
Tigerair, ICICI Bank tie up to offer complimentary Singapore return ticket
.....India’s largest private sector bank, ICICI Bank’s credit, debit and prepaid cardholders will be offered “Pay to go, complimentary return” scheme. “During the offer period, the customers of ICICI Bank can avail the opportunity to pay only for one-way fare to Singapore, where in the return ticket will be complimentary. The customer will have to pay only for airport taxes and other charges on the return fare,” the airline said in a statement.......
Sour grapes, anyone?
..........Indeed, prior to September 2010, when the restrictions on the product came into force, ULIPs were the darling of insurance firms and their agents. So are insurers finally becoming pro-investor? Or, has the realisation dawned after agents have stopped pushing the product due to low commissions?
Rising NPAs
..............With so grave being the consequences of a loan becoming an NPA, a question that naturally arises is: Why do banks sanction such loans which cause such huge losses to the bank? There are several reasons behind this. One is compulsion. In the name of thrust on agriculture, government frames such rules that Banks are forced to give collateral free loans (that have little or no scope of repayment) in the area of agricultural credit— better known as priority sector advances. It goes without saying that ............
Debt waiver promises may soon be history in electoral politics
.............According to highly-placed sources, the RBI is working on the modalities to ensure that no political party makes ‘untenable’ promises on debt-waiver, and the IBA has already moved its pawns in this regard. “The RBI is acting tough on the present developments of debt waiver promised by the new governments in Andhra Pradesh and Telangana through its disinclination to permit issue of fresh government bonds,”.........
Carry up to ₹25,000 while travelling abroad: RBI
...........The RBI said the increase in the amount of Indian currency notes that can be taken out of the country is in view of the evolving economic conditions and with a view to facilitating travel requirements of residents travelling aboard as well as non-residents visiting India.
PSU banks lag peers in code implementation
..............Only five out of the 48 banks got ‘high’ rating; 25 got ‘above average’ rating; 17 got ‘average’ and one was ‘below average.’ The rating model that was used by BCSBI was developed in consultation with credit rating agency Crisil. BCSBI was floated by the Reserve Bank of India in 2006 to ensure that a comprehensive code of conduct for fair treatment of customers was evolved and adhered to...........
Beleaguered DCCBs working to introduce core banking
.........Though officially it cannot carry out banking operations, as RBI has struck down its banking licence application, the cooperative plans to put CBS in place by this month-end. The management hopes that this will help strengthen its case before the court, which is hearing its petition against the RBI order. The next hearing is scheduled on June 20. CBS will ensure anywhere banking, linking all branches of NDCCB. This is also expected to help get back teachers' salary accounts, which have been pulled out of NDCCB this month. One of the reasons for the withdrawal was that NDCCB did not have CBS, said a source here............
Co-operative banking system in Kerala gets flexible
......Scores of raids have been carried out on illegal money lenders and credit firms by the police, and hundreds have been arrested so far. Home Minister, Ramesh Chennithala, has said the government would wipe out the ‘blade mafia’. He has asked the Reserve Bank of India to strictly enforce its regulatory role over registered NBFCs as many registered NBFCs are also charging high interest rates. Though the interest rates charged by the co-operative societies are low,........
Mid-sized banks may struggle to mobilise retail deposits
......The RBI on Monday released the final Basel III framework on liquidity standards which includes guidelines on LCR, liquidity risk monitoring tools, and LCR disclosure standards. The main objective of LCR is to promote short-term resilience of a bank’s liquidity risk profile by ensuring that it has sufficient high-quality liquid assets to survive a significant stress scenario lasting 30 days. “Obviously, it (LCR implementation) will be a challenge. All banks will have to structurally increase their liquidity base, both on the asset and liability side. “In the short term, banks will maximise their ............
There's no Magic Wand to Curb Food Inflation
.......Inflation cannot be reined in by a well-intentioned finance minister like Arun Jaitley or RBI governor Raghuram Rajan. Of course, prudent fiscal and monetary policies are important. But we have to fix the fundamentals first. If there's a glut in the farm market, especially in perishables, then prices crash. This happens the world over, and even in the West farmers need subsidies. In India, when there's a surplus, farm produce simply rots. There's no seamless supply chain of logistics and cold storage, to carry it from the farm to shop shelves and super-markets. There is little capability to........
Centre cracks the whip on NGOs, direct foreign funding put on hold
.......The MHA has directed the Reserve Bank of India of Indian to put on hold foreign funding to NGOs. Also, NGOs will have to inform the RBI prior about any funding they receive from abroad. The Centre's action came a day after the IB prepared yet another report on NGO Greenpeace, recommending cancellation of permission given to it for collecting funds abroad besides reassessment of its tax compliance..............
HomeMin likely to take over Aadhaar biometric data
............Since the new system is meant to ascertain citizenship of individuals - and not only their identity - verification of data gathered by UIDAI will have to be carried out by sending enumerators to each Aadhaar number holder to match the information against the biometrics collected..........
SBI among 24 PSBs Ineligible for Rs 50,000cr EPFO Investments
........“As per the investment guidelines for provident fund savings, the EPFO can now only invest in term deposits of five public sector banks -Bank of Baroda, Canara Bank, Syndicate Bank, Vijaya Bank and Bank of India,“ said a senior government official. “These five banks are not the biggest, but their bad loans are still below the threshold limits set by the board,“.............
Sebi board approves sharing KYC details with financial regulators
............"Today we have passed a resolution that the regulation will be amended that will permit that other regulated entities, which are regulated by other regulators they will also have access to the data," Sebi Chairman UK Sinha told reporters after the board meeting here. "So this is a move towards aligning one single KYC across the financial market. This is a first move in that direction which will be very very investor friendly," Sinha added............
HDFC’s Deepak Parekh seeks faster clearances, permission for land finance
...................“If regulators feel there is excessive speculation in real estate, it is prudent to prohibit banks and housing finance companies (HFCs) from lending for land transactions. However, when there is no real estate bubble, as is currently the case, then banks and HFCs should be allowed to fund land transactions. This is because in property transactions, land costs comprise almost 70-80% of the total cost,”.................
SKS Microfinance: enough fuel for growth
..............Some of the uncertainties that hung over the microfinance sector have been resolved. The Reserve Bank of India (RBI) is the sole regulator. It has cleaned up industry rules after the Andhra Pradesh crisis of 2010, when microfinance institutions came under the scanner of authorities after reports of suicides due to alleged coercive recovery methods. RBI has introduced new norms. For instance...............
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