Banks in Karnataka disburse 28% of annual target in Q1

Banks in Karnataka have to quicken the pace of their financial inclusion (FIs) efforts in order to meet the target of covering the remaining 1,682 unbanked villages in the State, said the Chairman of State-level Bankers' Committee (SLBC) – Karnataka, Mr Basant Seth, also the CMD of Syndicate Bank, on Wednesday. Addressing the SLBC – Karnataka meeting, he said an additional 6,029 unbanked villages have been identified with of population of 1,000-2,000 and allocated to the banks through lead district managers (LDMs) for providing banking services. Mr Seth also said banks in the State have disbursed 28 per cent (at Rs 11,543 crore) of the annual target for the current fiscal (2011-12) under priority sector credit during the first quarter (Q1) ending June 2011. Under secondary and tertiary sectors, disbursement stood at Rs 2,003 crore and Rs 1,896 crore respectively. The target under agriculture credit is revised upward to Rs 31,380 crore in tune with national priority. The aggregate deposits stood at Rs 3.5 lakh crore while aggregate advances was Rs 2.6 lakh crore with a credit deposit ratio of 72.71 per cent. The advances to priority sector stood at Rs 1.1 lakh crore crore, constituting 42.44 per cent of credit, surpassing RBI stipulation of 40 per cent. Mr Seth urged the banks to accelerate credit flow to minority communities to improve the level to stipulated 15 per cent. Similarly, the advance to agriculture sector was Rs.47054 crore comprising 18.23 per cent of the total credit, which is above the stipulated level of 18 per cent. Advances to MSME sector stood at Rs 47343 crore.

Speaking on the occasion, Ms Uma Shankar, Regional Director RBI cautioned the banks for 7.3 per cent drop in CD ratio to 72.71 per cent in Q1 FY 2011-12, against 80.01 per cent same period last year. She also cautioned banks to adhered to strict deadline iron out differences with service providers and achieve the set financial inclusion goals by March 2012. “Banking correspondents (BC) model in the state needs to be standardised and rolled out faster. Along with training in banking, banks should also think about providing soft-skill training for BCs,” said Ms Shankar.  Mr S.N.A. Jinnah, Chief General Manager NABARD, said self-help groups (SHGs) are well covered in the State. But few districts have low density of SHG coverage and we need to focus on those districts to push for priority lending. Mr S.V. Ranganath Karnataka Chief Secretary, said the Government is looking for active assistance of Nabard to take up study on national rural livelihood mission.  The State Government is actively studying the proposal of using SHGs to actively increase their involvement in rural development.

HBL

IRMA gets its first woman director

The Institute of Rural Management, Anand, (IRMA) has got a female director for the first time since its inception in 1979. Professor Jeemol Unni who since the last two years was serving as Reserve Bank of India (RBI) chair at IRMA has taken over as regular director of country's premier rural management institute. Unni has taken over as director from acting director professor Rakesh Saxena. Since May, the institute was being managed by an acting director after its former director professor Vivek Bhandari stepped down.

TOI

StanChart admits its IDRs had ‘impurities’

Speaking on the recent Reserve Bank of India (RBI) guidelines on offering banking licences to corporates, Bindra said, “As long as the RBI can ensure that there is an arms length that is well enforced and there is an inclusive growth, more are welcome.”..

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Pension ULIP: New Avatar

The Insurance Regulatory and Development Authority (IRDA) had earlier mandated all pension products to ensure a guaranteed rate of 4.5%pa which was also indexed to the reverse repo rate of the Reserve Bank of India (RBI)...........

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Use technology to scale up financial inclusion: Pranab

...Stressing the government's firm belief that financial inclusion is a necessary condition for inclusive growth, Mr. Mukherjee pointed to the important role that public sector banks (PSBs) have to play in this regard “given the distribution platform they enjoy and experience they have in serving the rural hinterland for the past five decades”.....

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RBI focuses on better customer service

Prevention is better than cure’ seems to be the focal point of the latest action points of the Reserve Bank of India (RBI) in the Annual Conference of Banking Ombudsman. So, the apex bank is looking at setting a template of good customer service that will prevent consumer grievance....

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Subir Gokarn rules out RBI intervention in currency market

Gokarn was speaking at the annual conference of Federation of Indian Chambers of Commerce and Industry (FICCI) in Mumbai. The Reserve Bank of India (RBI) will consider intervention in the foreign exchange market only if there is a danger of currency fluctuations adversely affecting the markets and the economy, Subir Gokarn, a Deputy Governor in the central bank said on Wednesday. Gokarn was speaking at the annual conference of Federation of Indian Chambers of Commerce and Industry  Gokarn was reacting to questions on Switzerland central bank’s move on Tuesday to cap the franc’s gains by setting a floor against the euro. The Swiss National Bank yesterday imposed a ceiling on the franc of 1.20 versus the euro, and pledged to defend the target with the utmost determination. "Switzerland has decided that the burden of inflows as a result of the turbulence around them is putting pressure on their currency in a way that is disrupting their real sector. So, they have decided to react," Gokarn said. He went on to add that the move by the Swiss National Bank is not in any way an abandonment of their fundamentally floating exchange-rate system. It is an attempt to deal with temporary factors, Gokarn said. "Our view on exchange rate management is essentially the same. We are looking to not target the exchange rate," he said. But, if there is pressure of any kind that disrupts the real sector the RBI would consider intervention. India has not faced that situation so far, Gokarn said.

IIFL

Refinancing best done by separate bodies: Gokarn

Deputy Governor Subir Gokarn said the Reserve Bank does not want to re-enter the refinancing space, saying this is best carried out by dedicated institutions. "If any refinance is needed then we need to create a separate institution with its own balance sheet and its own governance structure and not get embedded into the marco regulatory functions of the central bank," Gokarn told a summit on capital markets organised by FICCI here. He was answering a query from the audience whether the regulator has any plan to refinance the troubled microfinance sector. Pointing out that over the years RBI had moved away from refinancing, he said, "I don't know why the central bank becomes the obvious choice for everyone for this kind (refinancing) of an activity?  "If you look at refinancing as a national policy driven activity though, it had started off as a part of the central bank's mandate with the hiving of IDBI in 1971 and Nabard in 1982 with an idea to incubate them and allow them to operate on the strength of their own balance sheets," he said. This hive off was also aimed at ensuring that RBI's macro regulatory functions do not get compromised because of such specific micro functions," he said. "We have moved away from this over the years and I think that is the way it should be. IDBI and Nabard were separated to do these jobs and these are best left to separate institutions and not the RBI," he concluded.

Moneycontrol

RBI justifies ban on pre-payment charges

The Reserve Bank today justified its move to ban pre-payments charges on floating rate loans, saying there is no legitimacy for banks to levy any penalty in such loan contract. "In a floating rate contract, the borrower bears the complete interest risks and cannot be asked for compensation if he decides to pre-pay. On the other hand, in a fixed rate contract, the lender is committing resources, and then there is some legitimacy in asking for compensation," Deputy Governor Subir Gokarn told reporters on the sidelines of a FICCI event here. Yesterday, the Banking Ombudsmen had suggested that banks need not impose any charges for pre-paying loans taken under floating rates by customers. Many banks charge a pre-payment penalty ranging from 2-3% if a borrower chooses to pre-pay personal or home loan, irrespective of the nature of the loan contract-floating or fixed rate loans, citing as part of their cost of servicing their own loans. "Floating rate loans pass on the interest rate risk from banks, which are much better placed to manage it, to borrowers and, thus, banks only substitute interest rate risk with potential credit risk," the Ombudsmen noted. The banks will, however, be free to recover or charge appropriate pre-payment penalties in the case of fixed rate loans, the 10 action points to improve customer service said. The Banking Ombudsmen met at the RBI yesterday along with IBA representatives. Though the suggestion of the Banking Ombudsmen are morally suggestive in nature, it is generally accepted by the banks. Technically speaking, their suggestions have to be followed up by a circular from the RBI. In his inaugural remarks Governor D Subbarao had said "often, prevention was better than cure. In customer service area too, rendering good customer service was like 'prevention' and was better than the 'cure' which was the various grievances redressal mechanisms." Minister of State for Finance Namo Narain Meena in a written response in the Rajya Sabha too had said yesterday that the government in May 2010, had advised PSBs, IBA and National Housing Bank that no pre-payment charges may be levied by the lending institutions when the loan amount is paid by borrowers out of their own funds. State run banks like SBI claim that they do not levy any pre-payment charges if the pre-payment is paid by the borrowers from own sources, and not re-financed by another lender.

Moneycontrol

RBI seeks one-time tax relief to arm MNC banks

The Reserve Bank of India has sought a one-off tax exemption from the government for foreign banks that convert into local subsidiaries as it intensifies efforts to ring-fence the domestic financial system from global shocks. The permission, if granted by the government that's already facing widening fiscal gap, may lead to thousands of crores of notional revenue loss. "It is likely that the foreign banks which have attained a particular asset size may be asked to convert into wholly-owned subsidiaries. RBI is also expected to extend the branch licensing policy applicable for domestic banks to foreign banks. Like domestic banks, they would have to ensure that at least 25% of their branches are in unbanked rural centres," said a banker, familiar with the proposal.  Currently, it's not very easy for foreign banks to acquire branch licences from the regulator. On an average, the central bank issues about 14 branches to all foreign banks every year. Along with the national treatment, sources indicate that foreign banks would have to meet the 40% priority sector target. At present, the priority sector limit for foreign banks is pegged at 32% against the 40% target set for domestic banks. Foreign bankers had asked RBI to consider relaxation in mandated farm lending targets, considering their limited reach. "The central bank, along with the Indian Banks' Association, is relooking at the definition of priority sector, which should address foreign banks' problems. Hence, this should not be a show stopper any more," said a person familiar with the proposal.  "RBI has suggested that the government evaluate extending one-time tax relief to foreign banks that migrate to the wholly-owned subsidiary model," he said. Under tax rules, a branch of a foreign bank in India is treated as a foreign firm.

ET

India may soon join sovereign fund club; fund to fuel natural resources acquisitions overseas

MUMBAI: India's policy makers will discuss next week a proposal mooted by corporate chiefs to float a sovereign wealth fund (SWF), which would potentially invest in overseas projects and companies to secure access to natural resources for one of the fastest-growing economies in the world. A committee headed by Reserve Bank of India Governor D Subbarao will discuss the merits of the proposal on September 15, according to senior officials. The committee operates under the umbrella of the Financial Stability and Development Council, or FSDC, a forum of regulators monitoring financial stability and inter-regulatory co-ordination.

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RBI permits modification in ECB procedures

Mumbai: The Reserve Bank Wednesday allowed authorised dealer category banks to approve proposals of ECB borrower to change their lenders. ".... it has been decided to delegate powers to the designated AD Category-I banks to approve the request from the ECB borrowers with respect to change in the recognised lender when the original lender is an international bank or a multilateral financial institution...," RBI said in a notification. According to existing procedures for external commercial borrowings, any request for change of lender for an existing ECB is required to be referred by the Authorised Dealer Bank to the Reserve Bank for necessary approval. The new rules will also apply in case the lending party is a regional financial institution, government-owned development financial institution, export credit agency or supplier of equipment. However, the new lender has to a recognised one as per existing norms for raising External Commercial Borrowing (ECB). "However, changes in the recognised lender in case of foreign equity holder and foreign collaborator will continue to be examined by the RBI," the notification said. The modifications to the ECB guidelines will come in to force with immediate effect. "All other aspects of the ECB policy, such as USD 500 million limit per company per financial year under the automatic route, eligible borrower, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged," RBI said. ECBs are used as an additional source of funding by Indian corporates to augment available domestic resources. Corporates registered under the Companies Act, 1956, can access ECBs up to USD 500 million in a financial year under the automatic route. The ECB, which is not covered by the automatic route, is considered under the approval route on a case-by-case basis by the RBI.

Zee News

Wait gets longer for Banking Regulation Amendment Bill

The Standing Committee on Finance will not submit its report on the Banking Regulation Amendment Bill 2011 during the current session of Parliament ending on Thursday. This may delay granting of new banking licences. Sources in the standing committee told Business Line, “Annual reconstitution of the committee is due, so any report will be finalised only after that. The report can be expected only during the winter session.” This committee was supposed to give its report on pension and banking Bill during the current session but has given just on pension only”. However, the main reason for delay, according to a member of the committee, is that more deliberations are required. The banking industry as well as the corporates planning to apply for new licence are eagerly waiting for the passage of the Bill. For the existing players, the Bill, once enacted, will help in attracting more investment. This Bill proposes to raise voting rights of the shareholders of nationalised banks from one per cent to 10 per cent. On the other hand, the Bill proposes to remove the existing restriction on voting rights limited to 10 per cent in the case of the private banks. The Reserve Bank of India has already clarified that it would wait for the amendment of the Bill before granting new banking licences. The Bill proposes to confer power upon the Reserve Bank to call for information and returns from the associate enterprises of banking companies to inspect the same, if necessary. The Bill also proposes to confer power upon the RBI to supersede the board of directors of a banking company for a total period not exceeding 12 months and appoint an administrator to manage the banking company during the said period. The RBI feels that such a power will help it in regulating the new as well as existing entities in much better manner. Once the standing committee gives its report on the Bill, the Government might make some changes in it. This will require approval from the Cabinet, then the revised Bill can be brought for consideration and passage. Sources said the agenda for winter session seemed very heavy. The Government has to get the Constitutional Amendment Bill for the goods and services tax (GST) and Direct Taxes Code passed on priority. So, putting banking Bill on priority will not be easy, they added.

HBL

As western banks weaken, desi ones see opportunity

Despite deteriorating global economic conditions, public sector banks (PSBs) are increasing their overseas presence.  The main driver is the business opportunities that India's increasingly global business houses are throwing up........

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Tease me good

In quick succession, ICICI Bank and HDFC Bank have come out with a new version of combined fixed and floating home loan products, rekindling the issue of teaser home loans yet again. The second coming of these loans shows that the home loan market has expanded enough for competition to peak. Other banks that have also announced their intention to tap the retail sector aggressively will soon offer their version of the scheme. These could include State Bank of India, the pioneer in 2009. RBI deputy governor KC Chakrabarty has also said that the regulator is not inclined to put a halt to the schemes as long as banks make the extra provisioning of 2% instead of 0.4%. The higher provisioning will dent the profit margins but the revival of the teaser loan shows that the banks still see money in it. Teaser loans undoubtedly pushed up the credit offtake for housing loans last year and gave the middle class much-needed relief from the increasing interest rates. The size of the home loan market at the end of July this year—at R3.61 lakh crore—makes it difficult for RBI to push banks beyond a point. For banks, the strategy of teaser loans works profitably when the income stream of the borrowers is carefully assessed. At a moment when the interest rate is peaking, the timing of the teaser loans can be questioned as they block new customers at higher rates. But, given that credit growth is sluggish at 2.5% in the current financial year till August as compared with 3.8% in the same period last year, banks need the home loan sector to move.

FE

RBI has no intension to stop teaser loans: Gokarn

MUMBAI: Reserve Bank Deputy Governor Subir Gokarn on Wednesday said the central bank has no plan to ban teaser loans but warned that any such product will attract 2 per cent additional provisioning. "There is no attempt or intent on the part of the RBI to stop these products or prevent them any way. We are only saying that there are some additional risks involved in such products and hence more provisioning has to be made for any such products," Gokarn said on the sidelines of a Ficci seminar here. "Whether they fall into such (teaser) category is something my colleagues in the regulatory department to decide, but the policy response to any such structure is that once it is deemed to satisfy any of those criteria of (teaser loans), it would attract higher provisioning requirement of 2 percent which we imposed recently. "So if you have a product that falls into such a structure, then you will have to make the additional provisioning. It is very clear," he said when asked whether the regulator is planning to bracket the recently launched home loan schemes by ICICI Bank and HDFC as teaser loans. Recently ICICI Bank and mortgage lender HDFC had offered a fixed rate home loan products to attract more borrowers, as credit growth slowed in the face of rising interest rates.

TOI

Reserve ratios need to come down gradually, says RBI Governor Duvvuri Subbarao

MUMBAI: RBI Governor Duvvuri Subbarao said on Tuesday that the proportion of deposits banks need to set aside with themselves as well as the Reserve Bank of India need to come down, but gradually.  "Combined CRR (cash reserve ratio), SLR (statutory liquidity ratio) at 30 percent is still quite high and needs to come down, but that has to happen gradually," Reserve Bank of India (RBI) Governor Duvvuri Subbarao said speaking at the National Finance Symposium organised by the Indian Institute of Foreign Trade.

ET

'Funding for MFIs continues to be subdued' - Udaia Kumar, MD, SHARE Microfin

The draft Bill is a positive development, as it recognises microfinance institutions as extended arms of banks and brings them under RBI's direct supervision. But nothing has changed in field operations. The repayment rate in Andhra Pradesh continues to remain low, at about 10 per cent. There is also very limited opportunity to give fresh loans and expand the balance sheet....

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No target for R, to step in if economy affected: Gokarn

“Our view on exchange rate management has been the same. We do not target the exchange rate unless there is great pressure of any kind,”...

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Pre-payment penalty: RBI proposes, will banks size up?

In a move that is likely to cheer borrowers immensely, banks have been asked to do away with the pre-payment penalty clause on floating-rate loans. However, it still remains to be seen how banks choose to implement the proposal of the Reserve Bank of India (RBI)....

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RBI pre-payment advisory: Banks say will toe the line

A day after the Reserve Bank of India, through an advisory, asked banks not to levy pre-payment charges in the case of floating rate loans, most banks are gearing up to implement the decision. On Tuesday, the RBI had said that banks should not recover a charge on pre-payment of floating rate loans after a decision was taken to this effect at the Annual Conference of Banking Ombudsmen on September 5. Executive vice president – Retail Assets, Kotak Mahindra Bank, Kamlesh Rao said, “The bank will certainly consider the same and decide on the implementation,” adding that he needed to go through the RBI communication. MD Mallya, CMD, Bank of Baroda, said that he will take a decision only after going through the advisory. The RBI communication, however said that Mallya “participated in the conference” that was chaired by the central bank’s Deputy Governor KC Chakrabarty. An official of another private sector bank also said that the bank will look towards implementing the decision. Giving the rationale behind central bank’s decision, RBI Deputy Governor Subir Gokarn said, “Floating rate contract is one where the borrower absorbs the interest rate risk and hence the lender of a long-term loan is not bearing any interest rate risk and does not have to make an accommodation to manage that risk.” He added that for a fixed rate loan there is some legitimacy in asking for compensation since the bank commits its resources when lending for a period of 15-20 years and if the contract is terminated before the agreed period, then the resource cannot be deployed immediately and the bank has to bear a cost. The housing finance companies, regulated by the National Housing Bank (NHB), however, are already following this norm and the banking industry is lagging behind on the same. The NHB had issued a circular on October 18, 2010, advised the housing finance companies from charging prepayment charge in cases where the borrowers pre pay from their own sources. “It is advised that pre-payment levy or penalty should not be collected from the borrowers when the housing loan is pre-closed by the borrowers out of their own sources. All HFCs are advised to ensure compliance of the above with immediate effect,” said the NHB in its circular.

What the RBI wants

* Reserve Bank of India (RBI) has directed banks not to recover pre-payment charges in floating rate loans

* The decision on home loans was taken at the Annual Conference of Banking Ombudsmen held in Mumbai on Monday

* RBI has said that customers should not be levied pre-payment charges as banks are better placed to manage interest rate risks

http://www.expressindia.com/ 

RBI hawkish ahead of monetary policy review despite global gloom

Reserve Bank of India remains bent on fighting domestic inflation despite weakening global conditions, officials with direct knowledge of policymaking said, a week before it is widely expected to raise interest rates once again. The Reserve Bank of India, which has lifted rates 11 times in 18 months, makes its mid-quarter review on September 16. Though senior bank officials are hawkish, RBI Governor Duvvuri Subbarao will not make a final decision before the release of August inflation data on Sept. 14, the sources said. "We still have high food and non-food manufacturing inflation, good credit growth to industry and growth is also quite good according to our view," said an official with direct knowledge of the matter. "So, domestic factors will continue to be the key driver for policy framing," the official said. RBI officials have kept up the hawkish talk in recent weeks even as fears mount that western economies are slipping back into recession, although the central bank is widely believed to be nearing the end of its tightening cycle as its earlier actions exact a toll on demand in Asia's third-largest economy.  Also, the finance ministry is putting pressure on Subbarao, whose term was recently extended for two years, not to continue tightening for much longer. Finance Minister Pranab Mukherjee this week was quoted as saying that he hoped the RBI will not raise rates further.  Senior finance ministry officials said continued steady rate increases may not have the desired effect of cooling inflation without overly disrupting growth. "Yes, inflation still remains the big concern but I see that peaking off at the end of the year, but growth will also come into sharp focus," one of the officials told Reuters.  Last week's jump in food inflation, high non-food manufacturing inflation, the knock-on impact of a June fuel price increase and resilient credit growth all point to a need for continued vigilance, several RBI officials said, declining to be identified given the sensitivity of the matter.

ET

Once bitten, SBI says enough with teaser loans

"We have no plans as of now to launch any special home loans," Chairman Pratip Chaudhuri told reporters here. Reminiscing of the bank's earlier brush with the Reserve Bank in this regard, he said, "We have been through the teaser loan definition. We respect the regulator's stance."

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RBI cancels licence of Tandur Mahila Cooperative Bank

Mumbai: The Reserve Bank of India (RBI) has cancelled the licence of Andhra Pradesh-based Tandur Mahila Cooperative Urban Bank as there was no scope for revival of the ailing lender. RBI has also requested the Registrar of Cooperative Societies, Andhra Pradesh, to issue an order for winding up the cooperative bank and appoint a liquidator, a central bank release said Wednesday. Post-liquidation, every depositor of the cooperative bank will be entitled to repayment of deposits up to a monetary ceiling of Rs 1 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), it added. The cooperative bank, which was granted a banking licence by RBI on June 21, 2000, had been inspected by the apex bank many a times. However, deteriorating functioning standards along with financial irregularities left no scope for revival of this cooperative, RBI noted in its order.

Zee News

Banks' IT spending to surge 50% to Rs 10,000 cr annually

As Indian banks gear up for the second wave of technological enhancement, their spending is likely to shoot, a little over fifty per cent, to Rs 10,000 crore annually. According to The Boston Consulting Group (BCG), the current expenditure on information technology (IT) for banks on the whole is Rs 6,500 crore per year, about 2.7 per cent of their revenues. The first phase of IT upgradation largely included migration of banks to a core banking system, which allowed for consolidation of banking services offered across regions and channels. “We expect Indian banks’ IT expenditure to touch Rs 10,000 crore annually in four to five years as they get ready for their second wave of IT investments,” said Saurabh Tripathi, partner and director, BCG. Currently, the IT spending of public sector banks, which form a major chunk of the banking sector is about 62 per cent of the total spending on technology by all banks. According to bankers, the increase in IT spend is likely to benefit them in the long term. The major areas of thrust will be automated data storage, compilation, upgradation and analysis, along with automated decision making that will involve loan sanctions as well. “Indian Bank is working to move towards the Client Relationship Model (CRM), which will allow comprehensive data analysis and decision making without manual intervention. Once we fully migrate to the CRM model, we will be able to increase the customer base by 30 per cent through comprehensive customer profiling and servicing,” said T M Bhasin, chairman & managing director. Indian Bank spent Rs 55 crore on technology last financial year and expects the total IT expenditure to be around Rs 92 crore this financial year. M V Nair, chairman and managing director of Union Bank of India, said.   “We need to catch up fast with IT improvisation to save costs and improve customer experience.” Most banks are now looking to enhance customer experience, as well as return on investment (ROI) simultaneously through technology after they have fulfilled the minimum core banking requirements.

The Reserve Bank of India (RBI) has also laid ample emphasis on IT upgrade of the banks and come up with IT Vision 2011-17 for the financial sector. “In the banking industry, use of information technology is omnipresent. The Vision Document also sets priorities for commercial banks to move forward from their core banking solutions to enhanced use of IT in areas like management information systems, regulatory reporting, overall risk management, financial inclusion and customer relationship management,” K C Chakrabarty, Deputy Governor of RBI said in a recent speech. However, experts said banks also need to look at return on their investment in information technology. “For the next wave of IT investments, an ROI framework is crucial. For this, the whole approach for IT projects has to undergo a dramatic change. It needs to start with identification of business value and IT projects have to justify themselves by bottom line value created in lower costs or higher revenues,” Tripathi of BCG said. Although Indian banks are increasingly looking to spend on technology in the coming years, their expenditure remains quite low as compared to developed economies. “Overall, the industry spends 2.7 per cent of its revenues on technology – including capital expenditure, operating expenditure and specialist employee costs. Globally, this number is as high as nine per cent. Part of the reason is that Indian industry has to move to a more value-added role of technology,” BCG said.

BS

The only way EMIs can now go is up

Just a day after banks agreed to waive prepayment charges at a meeting with the Reserve Bank of India (RBI), home loan borrowers are faced with a bigger problem, a rise in equated monthly instalments (EMIs).
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Uptrend to be short-lived

...Reserve Bank of India (RBI) governor D Subbarao said today that he would not like to comment on the subject of another rate hike, before looking at headline inflation data for August which will be released on 14th September. The RBI will hold a mid-quarter monetary policy review on 16th September....

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82nd SLBC held : J & K Bank disburses 631.76 Cr to priority sector in Q1 of FY 2011-12

J&K Bank alone has disbursed Rs 631.76 Crores out of the credit facilities aggregating Rs 914.73 Crores extended by all the banks operating in J&K state during Q1 of FY 2011-12, which accounts for the 69% of the total priority sector credit disbursed in the state. These 914.73 Crores have been extended to 46,273 beneficiaries against the target of Rs 3619.69 Crores for 2, 37,892 beneficiaries under Priority Sector. Against the target of 1492.44 Crores, J&K Bank has achieved 42% of its Annual Credit Plan (ACP). Chairman and CEO J&K Bank (Convenor SLBC) Mr. Mushtaq Ahmad stated these facts and figures as part of the review on performance of banks in the state while presenting the report at 82nd meeting of J&K State Level Banker’s Committee (SLBC). Chairman J&K Bank presided the meeting. The meeting was attended by Umang Narola (IAS), Commissioner/Secretary, Industries & Commerce, F.A.Peer (IAS), Commissioner/Secretary Labour and Employment, Mr. K K Saraf Regional Director (J&K), RBI, Mr. M L Sukhdeve CGM, NABARD (J&K), senior functionaries of state government, senior executives of banks, Reserve Bank of India, NABARD and other developmental agencies.

Earlier, Mr. K K Saraf RD (J&K) RBI reiterated the importance of SLBC forum and impressed upon the banking fraternity and the state officials/agencies to work in a coordinated way to accelerate the process of economic development of the state. Commenting upon the report, he remarked that the overall performance seems encouraging because of marked performance of J&K Bank. He emphasized that all the banks have to play a vital role and show better performance in the coming times. A number of decisions that were taken during the meeting included the emphasis on the financial inclusion programme. A sub-group was formed to work out the modalities to take the initiative forward as the top most priority in line with the guidelines of government of India.  Moreover, all the member banks were advised to take necessary measures for substantially improving the Credit-Deposit ratio in the state.  The meeting concluded with the presentation made by the representative of Banking Codes and Standards Board of India (BCSBI). The presentation was aimed at generating awareness about the utility of banking codes and Standards in promoting fair banking practices and upgrading the level of customer service.

http://www.jkbank.net/pressreleasetemplate.php?id=413

Wall collapse: BMC writes to MPT, RBI

The Sewri incident on Saturday that crushed 5 children to death has started alarm bells ringing and woken- up government agencies from their slumber. BMC has now written not only to MHADA asking to survey the same site, but also to Mumbai Port Trust ( MPT) and Reserve Bank Of India ( RBI) citing dangerous buildings in their areas. " MPT has many godowns around areas like Sewri, Haji Bunder and Kolsa Bunder that are dilapidated and dangerous. We have written to them to survey these properties and take preventive action. The RBI has one building at Chaar Raasta, opposite Fatima High School. We have written to engineers and estate departments of these agencies. It is the duty of local authority to alert the property owners, private or otherwise, to survey their properties to avoid incidents like the one that happened at Sewri," said Harshad Kale, ward officer, F/ South ward. This letter is sent only because we are the concerned local authority" Kale added.

FPJ

Moneylife Foundation sends memorandum on TDS to the FM RBI

...The memorandum has been sent to the Pranab Mukherjee, Finance Minister, RS Gujral, Finance Secretary, DK Mittal, Banking Secretary, Dr D Subbarao, Governor, RBI, Kishori Udeshi, chairperson, Banking Codes and Standards Board of India (BCSBI), Dr KC Chakrabarty, Deputy Governor, RBI and MD Mallya, chairman, Indian Banks' Association (IBA).......

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TDS certificates should be sent to customers: RBI to banks

The banking regulator today announced 10 points that banks must work on to improve services for customers

The Reserve Bank of India (RBI) today announced that banks must issue certificates for tax deduction at source (TDS) duly completed, for account holders, and dispatch to their mailing addresses.  This was one of the decisions taken at its annual conference on banking ombudsman that was held on Monday. The RBI also listed nine other action points to improve bank customer services, which includes pre-payment charges on floating rate mortgages, providing customers a view of account using technology and creating awareness of the banking ombudsman scheme.  TDS has been a big harassment for customers and not too long ago Moneylife Foundation had sent a memorandum on the TDS matter to the finance ministry and the RBI on the issue. The memorandum to the RBI highlights the TDS problem for bank depositors and suggests that income from fixed deposits should be exempt from tax. It also proposes that banks found to be deficient in services, wrongful deduction of tax, not providing accurate tax certificates, or uploading inadequate or wrong information, should be awarded exemplary punishment either by the banking ombudsman or the RBI.  Among the other issues that have been listed is the need to provide a long-term fixed rate housing loan, compensation for loss due to unauthorised transactions through ATM/Internet and proper monetary compensation for mental harassment suffered by the customer. The RBI stated that "banks must not recover pre-payment charges in floating rate loans. Banks may offer long-term fixed rate housing loans to their customers and address their asset liability mismatch (ALM) issues by recourse to the interest rate swaps market. Floating rate loans pass on the interest rate risk from banks which are much better placed to manage it, to borrowers and, thus, banks only substitute interest rate risk with potential credit risk. The bank will, however, be free to recover / charge appropriate pre-payment penalties in the case of fixed-rate loans."  The Indian Banks' Association (IBA) has been asked to standardise the most important terms and conditions of at least 10 important banking transactions and circulate among banks for adaptation. It also said that banks should initiate the process of providing one view of the bank account, including deposits, loans, etc, using technology such as core-banking solutions and complete this within a year. The RBI said that "under the Banking Ombudsman Scheme, banking ombudsmen will annually share with the local media, information regarding complaints received and resolved, including important cases and awards given," towards creating awareness. On disputes in ATM/Internet-based transactions, the RBI said, "In the event of any monetary dispute involving the customer and the bank, the onus should be on the bank to prove the customer's negligence or mistake. The customer must be compensated for losses arising out of customers' non-authorised transactions."  The action points lists the need for creating awareness of customer services in banks through a series of events to be conducted by the RBI, in which bank customers, bank officials and banking ombudsmen will participate. The RBI also highlighted the issue of monetary compensation for mental harassment suffered by bank customers and it is examining the issue along with the IBA. "Issues that may receive attention in the analysis would be whether only actual loss should be considered for compensation, whether mental harassment issues can be codified for compensation, and whether compensation should be capped, or whether the policies of the banks' boards on compensation should include mental harassment as a ground for compensation," the RBI stated. It has also asked banks to initiate steps to incorporate in their code of 'Fair Practices to Customers', insurance of some reasonable amount on their customers' credit and debit card transactions, providing periodical loan statements to small borrowers, and conveying to borrowers information on the annualised all-in cost (annual effective rate) on their loan accounts.  The RBI has also asked banks to give their views on the recommendations of the Damodaran Committee for immediate implementation.

Moneylife

RBI Special Investigation Cell To Deal With Bank Corruption

Special investigation cell in the banking supervision department of RBI has been set up to deal with complaints of corruption in the public sector banks. Replying supplementaries in the Lok Sabha on 26^th August, the Finance Minister Mr. Pranab Mukherjee said apart from this officer in the Cabinet Secretariat will also examine the complaints received against Board level appointees of public sector banks. Mr. Mukherjee explained that the nature of complaints against Board level appointees include allegations of writing of loans, taking over of accounts, other banks and irregularities in grant of advances. He said the abuse of official position and possessing disproportionate assets by them are also being investigated. He informed the House that Central Vigilance Commission took up 235 anonymous complaints for verification in the last four years.

http://www.currenteventsworld.com/categories/details/business-and-economy/rbi-special-investigation-cell-to-deal-with-bank-corruption.html

Chinese bank ICBC gets licence to operate in India

The Reserve Bank of India (RBI) on Monday granted license to Industrial and Commercial Bank of China (ICBC) to set up commercial operations in India. ICBC is the world's largest lender by market capitalisation. The licence to ICBC comes just ahead of proposed discussions between the two countries on "strategic economic dialogue".  ICBC could be just the first of four Chinese banks to enter the Indian markets. China has been pressing for regulatory approval to start commercial operations on the grounds of the "reciprocity principle". Four Indian banks -- State Bank of India, Bank of Baroda, Bank of India and Canara Bank -- have a branch each in China. ICBC is one of China's big four, which includes Bank of China, China Construction Bank and Agricultural Bank of China. India and China had signed a memorandum of understanding (MoU) during Chinese Premier Wen Jiabao's visit, which would allow Chinese banks to set up branches in India.

India Today

Current SLR, CRR still considered high - RBI chief

The minimum mandatory amount of deposits that banks need to set aside to invest in government bonds need to come down gradually, said Indian central bank Governor Duvvuri Subbarao on Tuesday, sparking concerns of excess supply of gilts in the secondary market. The Reserve Bank of India (RBI) has mandated banks to set aside a portion of their deposits as statutory liquidity ratio (SLR) or the minimum amount it must hold in gold, cash or government bonds. In addition, banks have to set aside a portion of their deposits as cash with the central bank, a requirement called the cash reserve ratio. These reserves can act as a liquidity buffer for banks during crisis time. "SLR at 24 percent, CRR at 6 percent is still considered high. At some point it (CRR, SLR combined) was 65 percent and now it is 30 percent," said RBI Governor Duvvuri Subbarao in his address at the National Finance Symposium organised by the Indian Institute of Foreign Trade. "It is our objective in RBI to bring it down but in a calibrated way." Government bond yields rose after Subbarao's comments on the need to lower SLR on concerns that such a move could prompt banks to offload some of their bond holdings. The minimum regulatory requirement acts a captive demand for government bonds. The 10-year benchmark bond yield rose by one basis point to 8.29 percent after the comment. It closed at 8.28 percent on Monday. "Though it is RBI's medium term goal to reduce SLR and CRR, in a knee-jerk reaction, yields went up as they (traders) were worried that RBI may cut SLR to infuse liquidity," said a dealer at a foreign bank. Currently banks' overall holding of SLR bonds is around 29 percent, according to analysts. The central bank had last reduced the SLR by one percentage point to 24 percent, effective Dec. 18, 2010, to ease acute tightness in liquidity. Subbarao said that the SLR requirement had help protect Indian banks during the global credit crisis and the new global banking rules under Basel III have a provision which mimics the SLR rule. Yet, the central bank chief said that some reduction in the ratio may be needed. "We should bring it (SLR) down so that credit is available and so that private sector is not crowded out," Subbarao said on the sidelines of the event. The RBI has also not tinkered with CRR since April 2010, when it had last raised the reserve ratio by 25 basis points to 6 percent. The RBI governor also said that the central bank is looking at relaunching inflation indexed bonds. "We are looking at reintroducing inflation indexed bonds. One concern of course is, in a period of relatively high inflation that we now have, whether it will be successful. We will think through this, but we will certainly introduce it." Inflation indexed bonds are floating rate bonds linked to the inflation rate and such bonds help investors to shield their investments from mark-to-market volatility. However, an investor will be interested in buying such bonds only when they expect inflation to rise further going ahead unlike now, when most expect prices to cool off in next few months.  

Moneycontrol

‘CRR, SLR must be reduced in a calibrated manner’

There is need to bring down the Cash Reserve Ratio and Statutory Liquidity Ratio in a calibrated manner, so that banks will have more money to lend as credit, said Dr D. Subbarao, Governor, Reserve Bank of India. CRR is the portion of deposits that banks have to deposit as cash with the RBI and is currently at 6 per cent. SLR is the percentage of deposits that is mandatory for banks to set aside as investments in government securities and is currently at 24 per cent. Speaking on the sidelines of a seminar in Mumbai, on Tuesday, Dr Subbarao said that while CRR and SLR cannot be down away with, the thinking within the RBI is that both the reserve ratios must be reduced in a calibrated manner. “It is SLR which has protected us (Indian banks) from the global financial crisis,’’ Dr Subbarao said. Under Basel III guidelines, there are other provisioning requirements which mimic the SLR role, he added.

HBL 

FIEO, GNI launch international trade management course in Gujarat

In a bid to boost the buoyant export industry in the state, the Federation of Indian Export Organisations (FIEO) has partnered with Ahmedabad-based Global Network Institute (GNI) to launch a short duration course on International Trade Management Course at Ahmedabad. The course titled 'Certified International trade expert' (CITE) is an outcome of an Memorandum of Understanding (MOU) signed between the the apex body for exports, FIEO and Global Network institute, that was signed in July earlier this year. Some of the broad areas that will be covered in the short duration course are as processes involved in import- export, documentation for the same, the custom excise guidelines to follow, the role of RBI and its pertinent guidelines, technology transfer and also on how to develop the export market.

BS

TEASER LOANS TO ATTRACT ADDITIONAL PROVISIONING: RBI

The Reserve Bank of India (RBI) said today loans that are fixed in the initial years and become floating later would be considered as teaser loans and banks must make provisions as mandated by the regulator.  “Interest rates that are a mixture of these two (fixed and floating) are called teaser rates,” said K C Chakrabarty, deputy governor, RBI. “If there are rules, they (teaser loan products) will attract additional provisioning,” he added. He, however, clarified that such products are legitimate and the regulator has not banned such products but only laid down rules to provide for such loans.  RBI had in October 2010, increased the standard provisioning requirement by five times to two per cent for teaser or dual loan products, as compared to other categories. Following this mandate, State Bank of India and Housing Development and Finance Corp had to withdraw their dual-rate home loan schemes.  However, last month, India’s largest private sector bank, ICICI Bank introduced two home loan products, with interest rates fixed for one and two years respectively. The country’s largest mortgage finance company, HDFC followed suit which announced a dual-rate scheme on Monday, offering home loans at a fixed rate for the initial three or five years and at a floating rate thereafter.  While increasing the provisioning on such products, RBI has defined the teaser products as loans, offered at a comparatively lower rate of interest in the first few years, after which rates are reset at higher rates.  Bankers argue that in the recent schemes the fixed rate offered in the initial years are at par with the current market rates. They also said the floating rates on these products are linked to the base rate and any cut in the minimum lending rate will also reduce the floating rates in coming years. Hence, the new products will not require higher provisioning.  A mixture of fixed and floating interest rates is called teasing. Such loan products are legitimate and the regulator has not banned them, but only laid down rules to provide for such loans.

BS

Banks mustn't levy pre-payment fee for floating loans: RBI

... In the Ombudsman conference, RBI Governor D Subbarao said, "Prevention is better than cure. So, rendering good customer service is like 'prevention' and is better than the 'cure' which is the various grievances redressal mechanisms."......

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Watch the video........... 

'No pre-payment charge on floating rate bank loans'

Mumbai: To help common people better manage their borrowing costs in view of fluctuating interest rates, banking ombudsmen have asked all banks not to levy any fee for pre-payment of floating rate loans. "Banks must not recover pre-payment charges in floating rate loans," said an action plan prepared by the ombudsmen at a meeting here Monday.  Most banks levy pre-payment charges on loans, including floating rate loans.  The banking ombudsmen, after their annual conference here at the Reserve Bank of India (RBI), said banks should not levy pre-payment charges because they were better placed to manage interest rate risks than customers.  "Floating rate loans pass on the interest rate risk from banks, which are much better placed to manage it, to borrowers and, thus, banks only substitute interest rate risk with potential credit risk," according to a statement released by the RBI Tuesday.  The banks will, however, be free to charge appropriate pre-payment penalties in the case of fixed rate loans, it said.  The banking ombudsmen's conference, chaired by RBI Deputy Governor K.C. Chakrabarty, suggested 10 action points to improve customer service.  It said in the event of any monetary dispute involving the customer and the bank, in case of ATM or Internet-based banking transactions, the onus should be on the bank to prove the customer's negligence or mistake. "The customers must be compensated for the losses arising out of transactions not authorised by them," it said. 

http://twocircles.net/2011sep06/no_prepayment_charge_floating_rate_bank_loans.html

RBI asks banks to strictly follow SCSS instructions

The Reserve Bank of India (RBI) has directed all banks to strictly follow instructions under the Senior Citizens Savings Scheme (SCSS) and ensure that benefits reach retired army personnel, Parliament was informed today. "RBI has issued instructions to all agency banks on June 9, 2011, for strictly adhering to existing instructions and ensuring extension of benefits of the scheme to the retired army personnel," Finance Minister Pranab Mukherjee said in a written reply to the Rajya Sabha. In May 2011, the government received a complaint from a retired defence officer regarding non-implementation of the SCSS by banks, due to non-receipt of relevant instructions from RBI on the eligibility criteria of investment by ex-service men. Mukherjee said in response to the complaint, the government had written to RBI on May 20 this year for issuing necessary instructions to all banks operating SCSS. RBI has, however, informed that all instructions received from the government pertaining to the Scheme, from time to time, have been circulated to all banks for implementation, he added.

Moneycontrol

New teaser home loans will benefit banks more than you

When the State Bank of India launched its so-called teaser loans – called teasers because they carried low fixed-rates in the initial one or two years, and adjusted upwards later – the Reserve Bank of India frowned. .......

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Insurance for your bank deposits

Deposits held in joint accounts in more than one branches of a bank will also be treated as single holding if the names of the holders appear in the same order in all these accounts.  Interestingly, if the order is changed, then they will be considered as held in a different capacity and different right. Therefore, the protection cover will be applied separately......

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Minimum support price? It’s all wishful thinking, says RBI

Clearly, agriculture has been plagued by several problems. K C Chakrabarty, RBI Deputy Governor, says the sector suffers from four major problems: declining yields, low productivity, regional disparities and inappropriate food stock management...........

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High bank interest rates dent small savings corpus

...A committee constituted under former RBI Deputy Governor, Ms Shayamala Gopinath, recommended revising the interest rate on various small saving schemes. Now with the RBI raising interest rate on saving bank account from 3.5 per cent to 4.0 per cent, effective May 3, 2011, the spread between the bank savings deposit and term deposit rates had widened significantly.....

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Banking licences

RBI issued draft guidelines on new bank licences to business houses recently saying it was a move to increase competition in the sector and for inclusive growth. There is enough competition already, and no more competition is rightly envisaged in policy. The state of PSBs needs to be relooked. They should be provided sufficient capital and should address the HR problems on an urgent basis. The number of branches are to be increased and unbanked areas are to be narrowed down. As far as the inclusive growth factor is concerned, the manner in which PSBs are involved in rural areas, that is not the case with other private players and hence the factor needs more effective redressal than in its current form. The Indian banking industry, with its more conservative approach, has stood tough in sailing through many odds in recent times. We need to maintain it rather dissolve the same.

Sreeram Puppala, Chandigarh (FE)

India's GDP growth: Real or Statistical?

The Reserve Bank of India (RBI) has tried, in vain, to reign over the rising inflation. The Indian central bank has raised key lending rates 11 times since March 2010. But that has only arrested economic growth. And the evidence is beginning to show clearly.....

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Abandon idea of allowing corporates to open banks: CPI to govt

New Delhi: The CPI Tuesday asked the government to "abandon" its idea of allowing the corporates to open banks saying the decision was a "naked step to appease" big business and surrendering to the "pressures" of IMF and World Bank. The RBI's recent draft guidelines on the proposed New Bank Licensing Policy is "an open surrender to the pressures of IMF and World Bank and a naked step to appease the industrial houses and big business companies in India", the CPI Central Secretariat said in a statement here. It said the government had "not learnt lessons from the recent global economic crisis in which hundreds of private banks collapsed. World over, the experience of industrial houses running banks has been bitter". But the UPA government was "so keen to hand over banking business to these industrial houses with a meagre capital of Rs 500 crore unmindful of its implications and consequences", it said. Opposing the "retrograde" policy, the CPI asked the government to "abandon this idea in national interest", noting that over 10 lakh bank employees recently struck work in protest against this policy. The CPI-M also has opposed the government's decision, saying it was a "completely irrational and retrograde" move that would cause "incalculable damage" to national economy. Referring to the "bold decision" of Indira Gandhi to nationalise banks, CPI said the private-run banks then "never contributed to basic economic development and were confined to using the banks to build their own empires. There was so much of abuse and misuse of people's money". Maintaining that the party and its trade union had in the 1960s conducted powerful struggles to demand nationalisation, it said since then, public sector banks have played a significant role in catering to the needs of the economy and the common man. 

zeebiz.com

RBI Plans to Reintroduce Inflation-Indexed Bonds

MUMBAI -- The Reserve Bank of India plans to reintroduce inflation-indexed bonds that aim to shield investors from chronic pricing pressures, Governor Duvvuri Subbarao said Tuesday. He, however, didn't say by when the central bank would do so. "One cause of concern is that in a period of relatively high inflation, which we are in now, whether they would be successful," Mr. Subbarao said at a conference. "So we will think through this but we will certainly reintroduce them." Inflation-indexed bonds are linked to the price index and help insulate their coupon payments from inflation. Such bonds were introduced some years ago but weren't successful due to feeble market interest. Moses Harding, head of global markets group at IndusInd Bank, said the issuances at this juncture won't appeal to investors as inflation may not accelerate much higher. "These kind of products will have demand when there is a fear of runaway inflation," Mr. Harding said. But expectations are that inflation may peak during October-December, which may cull demand for such securities, he added. Inflation in July was 9.22% from a year earlier, and is likely to remain between 9% and 10% until around December before easing to 7% by March. RBI Gov. Subbarao also reiterated that the central bank aims to gradually reduce the statutory liquidity ratio, or banks' mandatory bond holding requirement. "SLR at 24% and CRR (banks' cash reserve ratio) at 6% are still considered to be high," he said. "There is an objective to bring it down in a calibrated manner." Growth in Asia's third-largest economy has been moderating due to the sustained monetary tightening by the RBI to control uncomfortably high inflation. Economists worry the central bank's aggressive anti-inflationary stance could badly crimp credit growth and lead to a sharper slowdown in the economy. "It's not that SLR should be thrown away but certainly we should bring it down so that there is credit availability and the private sector [borrowing] is not crowded out," Mr. Subbarao said. The central bank would also continue to move gradually on achieving full capital account convertibility, he said. The Indian rupee is fully convertible on the current account but only partially convertible on the capital account to protect against sudden outflows of foreign capital in times of crisis that can destabilize the economy.

WSJ

The future of microfinance looks pretty good: Vijay Mahajan

...The future is pretty good. The guidelines from the Reserve Bank of India (RBI) announced in May and subsequent draft MFI Bill by the Government of India are good signs. If you read them together, the possibility of extreme profits are eliminated. At the same time, the need for microfinance is protected.....

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SBI may expand to Pakistan soon as central banks explore banking ties

NEW DELHI: The central banks of India and Pakistan are likely to meet in Karachi later this month to explore banking ties as part of measures to step up bilateral trade between the two nuclear rivals.  The south Asian neighbours, who have been to war three times since independence from British rule, do not allow their banks to open branches in each other's territory. A decision to open dialogue on this, with the State Bank of Pakistan taking the lead, was taken at the meeting of the Indo-Pak joint working group on economic and commercial cooperation in New Delhi recently.  "The central bank of Pakistan will send an invite to the RBI (Reserve Bank of India) for holding the meeting by mid-September," a government official told ET.  The two sides had agreed at the commerce secretaries' meeting in April this year that closer cooperation between their banks was important to give a push to bilateral trade and the process of opening branches in each other's country needed to be fast-tracked.  India and Pakistan have signed what is widely considered a path-breaking trade pact that includes grant of most favoured nation, or MFN, status to India, removal of non-tariff barriers, such as strict quality standards by India, cooperation in the power sector and removal of investment barriers.  "It depends totally on the RBI on how they want to proceed on the proposal," the official said.  The two central banks will give inputs to their respective commerce secretaries, who will discuss the issue at their proposed meeting in November.  Although permission to bank in each other's country is likely to boost bilateral trade, the RBI is expected to tread cautiously as the facility could also be used for terror financing.  "There is definitely a concern that the banks could be used as a conduit for transferring money to fund terrorist activities," the official said.  Besides, Indian exporters say any reciprocal access to banks will help Pakistan's exporters more as India already has many national and international banks providing pre-and post-shipment credit.  "Branches of Indian banks there can help make the trade and finance situation better in Pakistan due to better credit facilities, policies and products," Orient Craft chairman and managing director Sudhir Dhingra said.  The current bilateral trade between the two countries is less than $2 billion.  India estimates it could rise to $4 billion if MFN is offered as it would save businesses the trouble of shipping through third countries like Dubai.

ET 

RBI adopts village in Karur to strengthen financial literacy

The Reserve Bank of India (RBI) has adopted a remote village lacking in financial literacy to implement its outreach programme in the district. Elavanur village in K. Paramathi block is set to reap the benefits of personnel banking directly under the guidance of the RBI. The village is one among the four in Tamil Nadu and Puducherry selected in the current year. At a meeting at the village on Saturday, RBI Deputy General Manager S. Selva Raj spoke on the salient features of the programme and exhorted the people to join the banking mainstream. He told them that in future all government welfare measures and benefits would be routed through bank accounts of the beneficiaries. Mr. Selva Raj said the RBI has identified one village in each district to implement the programme under which the financial literacy level would be bolstered.  The habit of banking by helping them open no frills account, and bringing all households under the banking umbrella, would be imbibed into the masses. The objective is to ensure inclusive and equitable growth of the selected village, and the development noticed in the model village be replicated in other villages with the active participation of the villagers, administration and banks operating in the area. On financial inclusion scheme, Mr. Selva Raj said the poor need not be bullied by the cumbersome process of banking and by opening no frills account they need not maintain any minimum balance. Eligible people in Elavanur village could get bank credit support based on their income. Lead District Manager K. Chandrasekaran said the RBI adopted Elavanur village in consultation with the lead bank.  The success of the programme depended on the involvement of the people and there was a possibility that eligible artisans, farmers, students and entrepreneurs of the village would get bank credit support through better financial literacy. RBI Assistant General Manager Natarajan said frequent meetings would be conducted in the village to improve the people's exposure to banking activities. He gave a demonstration on identifying counterfeit currency. A quiz programme was organised on banking activities and prizes were distributed to the winners. Ramasamy, Manager, Lakshmi Vilas Bank, Chinnadarpuram; and RBI AGMs Ganesan, V.L. Satheesh Kumar and Manoj Kumar spoke.

HBL 

Kotak Mahindra unveils the Money Ka Matlab campaign

Chandigarh : Private lender Kotak Mahindra Bank today unveiled a new campaign called Money Ka Matlab (What does money mean to you), aimed to develop better banking products by discerning consumers insights about money. Under this campaign, which starts from today, two renowned bikers - Vir Nakai and Leon Dawson are embarking on a two week long road trip from Chandigarh to Bangalore asking people to understand meaning of money. Kotak Mahindra Bank flagged off this 3,500 km motorcycle expedition covering 7 states (11 cities) including Chandigarh UT, Gujarat, New Delhi, Rajasthan, Mumbai, Goa and Bangalore. Both of these bikers will tweet and blog about their experiences while capturing how Money Ka Matlab changes from one city to another.The most fundamental aspect of our lives is money.Getting a perspective of what money means to different people will extensively help us in understanding their needs and aspirations, which eventually will help us serve them better, with relevant products and responsive service offerings, said Mahesh Balasubramanian, Executive Vice President and Co-Head Branch Banking, Kotak Mahindra Bank, on this occasion. Asked about banks plans, Mahesh said that the bank had planned to expand its branch network from 323 to 500 branches in next 18-24 months. We have already applied with RBI for opening new branches, he said. Started its operations in 2003, Kotak Mahindra Bank would continue to focus on secured lending business including mortgage, commercial and retail, he said.

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