Sunday, September 11, 2011

Small change big problem!

HYDERABAD: 'Paanch Rupaiya Baarah Aana' was never more precious, at least in Hyderabad which is currently reeling under a severe shortage of change. Traders say both banks as well as the Reserve Bank of India have been unable to meet the demand for currency in various small denominations over the last few months. The problem, they say, has only worsened in the last one month with banks, big or small, putting up the 'no change' board on their counters.
City businessmen who deal with thousands of rupees of change everyday say that the shortage is acute with even brokers who charge them a commission not being able to supply the much-needed stock of small denomination. "I need Rs 1,000 to Rs 2,000 in change everyday but I have not been able to get it in the last couple of months. I need a stock of enough coins so that customers who pay in bigger denomination are not inconvenienced," says the owner of a sweet shop which has branches across the city. Bigger players like restaurateurs say their requirement for change every month is close to Rs 25 lakh and hence they use the services of brokers. There is a well-established broker network that operates in the twin cities selling small change, but retailers say that the commission has shot up in the last one month. The commission for Rs 100 change in Re one coins has gone up from Rs 10 to Rs 14. "To exchange Rs 1,000 with Rs 5 coins, the going rate is Rs 100. In the last 15 days the commission has gone up by Rs 2 to Rs 4," said a retailer. Traders mostly need coins of denominations of Re 1, Rs 2, Rs 5 and Rs 10 which are issued by RBI to select banks. The notes and coins are distributed by these banks to their counterparts. The change is also directly available to the public at RBI, where people take tokens and await their turn to collect it at the counters. However, the otherwise smooth system of procuring 'chillara' in the city has turned into an ordeal. "I have been making trips to my local bank everyday this week but there is no change. They tell us to come back the next day but they never have stock," said a grocery store owner in Begumpet. A broker in Madhapur told STOI that he had no change and that there was an acute shortage of Re 1 coins.
At the root of the problem, say observers, are brokers themselves, who have managed to bag a good chunk of change from banks and RBI. The hard-to-find small change can be found in heaps on the pavements adjoining the Reserve Bank of India. With bags filled with currency notes and coins, these individuals get their stash either from the counters of RBI directly or from other brokers who have easy access to the counters, they say. When STOI visited the bank under the guise of procuring change, the counters had exhausted their 'quota' for the day but a broker was able to provide the change. "Those who come regularly cannot get change without paying a commission. During the start of the month it can get very difficult for us as the crowd is more. During Dussera and Diwali the commission goes up because the demand for change is very high," says a trader. A shop owner in Banjara Hills further stated that there was a shortage of even Rs 100 notes and added that it was the broker mafia at RBI that was solely responsible for the menace. RBI officials, however, maintained that there is no shortage of coins. They said that the RBI does temporarily moderate the quota of coins it disburses based on the supply from mints. "There is too much for Rs 5 coins now but mints send as per their schedule," said A.S.Rao, Regional Director, RBI. He, however, said that there was no problem of change being faced by the bank currently. There is also the additional burden of the Reserve Bank of India supplying coins and notes to 410 currency chests across the state, the highest number of chests that any regional RBI centre in the country supplies to in the country. Also, the bank had its limits when it came to traders needing change for thousands of rupees everyday, he said.
TOI

Talking ATMs for the visually challenged!



Students blindfolded to get a feel of the daily lives of the visually impaired during ‘Antarchakshu - The Eye Within,’ an event organised by the Xavier’s Resource Centre for Visually Challenged (XRCVC), at St Xavier’s College in Mumbai on Friday

Mumbai : “This is the first time that I have seen the world through the eyes of a visually challenged person and it's an experience that I will never forget,” said a participant at Antarchakshu, an event organised by the Xavier's Resource Centre for the Visually Challenged (XRCVC). From buying groceries, playing foot ball and even withdrawing money from an ATM, participants were blindfolded and put through a maze of daily chores by the Xavier's volunteers, to sensitise people on a day in the life of a visually-challenged person.  In fact, the highlight of the event was the talking ATM for the visually-challenged which was displayed at the college. “There are partially talking ATMs which have been deployed in many banks, but they are useless for us as they say the bare minimums like – welcome and thank you,” said Sam Taraporevala, Director of XRCVC who is also visually challenged.  The Reserve Bank of India had stated in its circulars (2008, 2009) that “Banks should make at least one third of the new ATMs installed as talking ATMs with Braille keypads and place them strategically in consultation with other banks to ensure that at least one talking ATM with Braille keypad is generally available in each locality for catering to the needs of visually impaired persons.” “The visually challenged need an ATM that can guide them properly. We have developed a software which will ensure that the visually impaired can operate the machine themselves keeping in mind safety of the transaction,” said Nagesh M Nayak, Partner – professional services, NCR. The company has been developing these specialised machines for different banks. Many of them have deployed these machines on a pilot basis. Each ATM has headphones attached to it so that the visually challenged can hear the instructions and fill in the required data. “The labels on the ATMs are written in Braille. There is also an option to blank out the screen as a safety mechanism to ensure that no bystander misuses the pin,” said Nayak. Apart from the machine displayed by NCR, there was also another talking ATM with similar features displayed by Diebold. “We only provide the machine, the voice clips are added by the bank which the ATM is supplied to,” said Rakesh Suryavanshi from Diebold. Although the ATM manufactures were tight lipped about the banks they were supplying their machines to, they were hopeful that the they would be deployed by the banks soon and visually-challenged customers would truly benefit.
HBL

Cheque it out

Under any other circumstances, it would have been a philosophical question. But the woman who had just asked "What is money?" was standing on the floor of Reserve Bank of India's monetary museum. Clearly, she wanted a scientific answer. Her target group of impoverished kids in yellow T-shirts, however, wasn't prepared. They stared blankly at the coins displayed on the walls in response. It was difficult to define money, which for them was always an elusive entity. It was something Mahatma Gandhi smiled from and their parents cried for. It was something which their father, whenever he ran short, would beg the neighbourhood money-lender for. Something that they hid inside notebooks or pencil boxes for the same reason that they believed affluent people deposited it in banks-"for protection from rats".
Thankfully, however, such innocent perceptions of cash and the notions that banking is only for the rich would not last very long in their young minds. Driven by the firm belief that "unless you know how to manage money, you can't make more of it", many banks, NGOs and social institutions are now trying to equip underprivileged kids with the all-important life skill that no school curriculum currently accounts for-financial literacy. These two words, which the RBI has been emphasising for a while now, form "the first step towards achieving our larger focus-financial inclusion", says Alpana Killawala, RBI's head, Department of Communication. That is why the bank organises regular museum, bank and clearing house visits for street children and even kids of sex workers, during which Killawalla answers innocent questions such as "If you have the power to print money, why can't you print unlimited money and abolish poverty?"
In 2007, the RBI had even come up with a series of comic books where a teenage protagonist, Raju, helps kids learn how to save, how to open a bank account and how to apply for a loan while another character Moneykumar, an RBI employee, explains how his bank works. At the various workshops on financial literacy that are now being held by banks as part of their corporate social responsibility (CSR), these characters are handy visual aids. Besides these, role-play games, jigsaw puzzles, quizzes, videogames and most importantly, bank visits, also help the assimilation of concepts such as fixed deposit accounts, savings acccounts and interest rates. "The experience of entering the air-conditioned premises of a bank and getting a first-hand feel of its functioning is something that always elicits very positive reactions from the kids," says Subhayu Mishra, vice-president and head, corporate communications, Barclays (India). The bank had partnered with a US-based NGO to conduct financial literacy workshops for 9th-, 10th- and 11th-standard students across various cities last year and has even tied up recently with UNICEF in a flagship project to improve the lives of slum girls between the age of 12 and 18 by explaining the "basic working of a financial arithmetic".
To make the otherwise staid subject of finance fun, the trainers consciously keep the lessons conversational. Divya Dayal, group head, human resource management and CSR at Mizuho Corporate Bank which has conducted 12 such workshops in municipal schools, says their lectures usually begin with a discussion on the meaning of the movie title Aamdani Atthanni Kharcha Rupaiya, which the students can identify with. "People at the bottom of the pyramid find different informal ways for alternate sources of income but due to less access to the related information on financial literacy, such people are cheated and exploited by unscrupulous elements, so-called financial advisors and touts," explains Dayal who, during her interactions with students, was startled to discover their overly casual approach to "living on borrowed money". Usually, after drawing up a list of their monthly family expenses, when students were asked how they would make up for the deficit, they would all chorus, "lala" or "sahukar". "This local money lender is seen as the saviour, and the students have no idea that his usurious rates of interest from vulnerable borrowers are wrong," muses Dayal, who is now endeavouring to change that perception.
While many of the students are aware of basic banking, they believe that such facilities are available only to the affluent, she says. "Also, they have heard and seen credit cards but the concept of credit and debit has to be explained," reveals Dayal, whose bank is planning to groom women taxi drivers, night-school students and parents of slum students. "You have to be careful not to lapse into financial jargon," says Vidya Venkatiswaran, a volunteer with SIFE (Students in Free Enterprise), which has been conducting workshops for physically challenged students at Chembur's NASEOH and for vocational training students. "Some students work two to three shifts and are inquisitive about share markets, DMAT accounts and insurance schemes," says Venkatiswaran, who has even screened movies like Rocket Singh-which showed the protagonist launch a successful startup company-to encourage them to develop entrepreneurial skills. "We even give them a small financial reward and encourage them to open bank accounts," she adds. There's no doubting the benefits of catching them young. Rajesh Alphanso of Mizuho Corporate bank, who was initially amazed by how much kids at a Colaba municipal school were ready to spend on festivals such as Ganesh Chaturthi, asked them to make a distinction between their needs and wants. He now notices a visible change. Not only do some students commit to educating their parents about refraining from borrowing from the money-lenders, but a boy's mother even advised him to "pay close attention during the financial literacy class", making Alphanso feel triumphant. And yes, the kids' definition of money is no longer philosophical.  "The local money lender is seen as the saviour, and the students have no idea that his usurious rates of interest from vulnerable borrowers are wrong". 
http://timesofindia.indiatimes.com/city/mumbai/Cheque-it-out/articleshow/9941099.cms

Banker hunt leads NBFCs to headhunters

The draft guidelines for licensing of new banks in the private sector released last week, have set off a flurry of activity among stakeholders seeking to eye a number of candidates with the help of headhunters. Non-banking finance companies (NBFC) have given out mandates to recruiters to look for suitable candidates for the corner offices.
Business groups and enterprises who are seriously looking at a banking foray have also engaged consulting firms for charting out a road map. This involves looking at the existing competitive landscape; emerging opportunities and business focus – corporate, retail and geographical coverage of banks. Headhunters, whom Business Standard spoke to, said companies have sent out feelers to eligible candidates seeking their interest to join their companies, as and when it takes shape. R Suresh, MD-India, Stanton Chase International, is busy with two new NBFC clients, one from Chennai and the other from Mumbai, to meet their need of C-level executives. “We are working with two large companies which expect to get a banking license. One of them is setting up certain additional functions also. We are involved in the recruitments.” According to Viren H Mehta, director, Ernst & Young, top priority for the NBFCs is to zero in on people who could be part of the top management team. Along with chief executive officer, risk management, operations and treasury, there are other key appointments which would merit attention. “The profile of the leadership team is the most important aspect as it would carry a lot of weight in the Reserve Bank of India’s assessment of the company’s capability to run the new entity,” says Mehta. For Uday Sodhi, chief executive officer of headhonchos.com, selections at the top and senior management level, will be a long process of evaluation and could take over six months. “Many companies and groups which are interested in setting up banks have approached us. Now they would access our vast and rich data-base on banking sector professionals. Then, they will interact with bankers.” The demand for covering unbanked areas and bringing them under financial inclusion, will help those companies with rural banking experience. Those with experience of setting-up operations or businesses will also be sought after. However, headhunters say there was no dearth of talent in the market which may severely impact dynamics. Advent of new banks will create new openings and people will get a chance to showcase their capabilities. Entry of new banks may also impact compensations, albeit at some point in future. “Those looking for people will have to structure innovative packages. Those at the receiving end (read banks or financial entities that become target for talent search) will have to employ defensive strategies, including an improvement in pay packages to retain talent,” says Sodhi. “Existing banks, especially foreign and private ones, would take a cue from the emerging competition. This may push compensation packages and rewards for professionals in key functions. The real change would happen once they start feeling the heat. The war to retain and woo talent is not going to be easy,” says Mehta.
BS

Kotak Mahindra Bank to expand branch network

Ahmedabad: Kotak Mahindra Bank on Saturday said it would expand its branch network in the country from the existing 325 to 500 over the next 18 to 24 months period, a senior official said. "We shall be increasing our branch network by 22 to 25 percent every year. The immediate target is to increase the network from the existing 325 to 500 over the next 18 to 24 months," Kotak Mahindra Bank Executive Vice President and Head Branch Banking, Virat Diwanji, told reporters here.  "We shall be opening four new branches in Ahmedabad in next nine to 12 months," he said. The bank currently has 11 branches in the city. As per a RBI statement, Ahmedabad ranks seventh among the top 200 centres in the country arranged in terms of aggregate deposits at Rs 72,215 crore, showing an annual growth of 20.2 percent as on March 2011. Replying to a query on what if RBI goes in for another round of hike in key rates Diwanji said, "As a banker I would like to have lower interest rates". "But, the current situation in the economy where inflation is rising you really need to control that and one of the ways in which we in this country have done it very well is by regulating the interest rates," he added.
Zee News

RBI diktat on failed ATM transactions – Pushpa Girimaji

Banks are particular about time when it comes to recovering EMIs from customers. But when it comes to re-crediting amounts wrongfully debited from a customer’s account, they suffer from sudden amnesia. Refer here to the RBI guidelines on resolving customer complaints pertaining to failed ATM transactions. As per the revised RBI directive issued on May 27 this year, banks have to remit to the account of the customer, amounts wrongfully debited following a failed ATM transaction within seven days. If not, banks have to pay the customer penalty at the rate of Rs 100 per day till the date the amount is credited to the account. This time-line has come into effect from July 1. Earlier, through its circular of July 17, 2009, the RBI had given banks 12 days’ time for re-conciliation of the account. If the bank failed to stick to this deadline, it had to pay Rs 100 per day to the aggrieved consumer. Now it has reduced this time limit to seven days and has directed banks to widely publicise this`A0change at all ATM locations and also by individual intimation to customers. I wonder how many banks have followed the last advice.  In fact it was way back in October 2008 that the RBI responded to a large number of complaints about this issue and directed banks to pay back the money to the consumer within 12 days. Said the RBI in its circular dated October 23, 2008: " Of late, we have been receiving a number of complaints from bank customers, regarding debit of accounts even though the ATMs have not disbursed cash for various reasons. More importantly, banks take considerable time in reimbursing the amounts involved in such failed transactions to card holders. In many cases, the time taken is as much as 50 days."
"After examining the procedures involved in verification and resolution of such complaints, the Reserve Bank has concluded that delay of the magnitude indicated above is not justified, as it results in customers being out of funds for a long time for no fault of theirs. Moreover, this delay can discourage customers from using ATMs. Therefore, it has been decided that, to start with, banks shall reimburse to the customers the amount wrongfully debited within a maximum period of 12 days from the date of receipt of customer complaints", the RBI said. As banks failed to adhere to the deadline and consumer complaints continued, the RBI decided to get tough with the banks. So in its circular of July 17, it not only mandated a penalty`A0for delays, but also insisted that banks place before the board of directors, a quarterly report on the quantum of penalties paid and action taken to avoid recurrence, and the board shall send this report along with its observations to the Reserve Bank, it said. It also warned banks that non-adherence to the directives would invite regulatory action. In its latest circular of May 27, 2011, it has reiterated these points while reducing the time limit for remitting the account to seven days. So whenever the ATM fails to dispense the money that you  asked for, check your account to make sure that the amount is not wrongly debited from your account. If it has been, then follow these steps:
(1) First and foremost, give the bank a written complaint giving details of your case, including the ATM transcript. This has to be done within 30 days.
(2) Refer to the RBI directive of`A0May 27, 2011, titled "Reconciliation of`A0transactions at ATMs failure — time limit." Remember, your money has to be credited within seven working days of your complaint. If not,`A0the bank has to pay you penalty at the rate of Rs 100 per day.
If the bank fails to follow the RBI directive, complain to the Nodal Officer of the bank, and if he fails to act, too, go to the Banking Ombudsman for redress of your complaint. You can get the details, addresses and e-mail IDs of the Banking Ombudsmen on the RBI website (www.bankingombudsman.rbi.org.in) and can complain online.
The Sunday Tribune

Setting the bar for new banks

The RBI, in its guidelines, has ensured that the core objective of improving financial inclusion is not compromised by the new entrants.

The banking sector has been in a consolidation phase over the last few years. This is evidenced by the fact that only two banks were issued licences in the last decade, while there have been around 19 bank mergers and acquisitions. New banks have not had it easy either since only seven of the 12 banks set up since 1993 are currently operational. Given this backdrop, the Ministry of Finance's announcement of new bank licences in February 2010 came as a surprise. The Reserve Bank of India (RBI) has now gone ahead and prepared the draft guidelines for issuing bank licences. This time around, there is a significant dilution from the RBI's stubborn stance with respect to allowing big industrial houses to set up a bank. While preparing the guidelines, however, the central bank has managed to set the bar high so that only serious players can enter the system. It also made sure that the core objective of improving financial inclusion is not compromised by the new entrants. However, this skews the cost-benefit equation of the new entrants towards the former (cost). We also expect non-banking finance companies (NBFC) to benefit more than un-related entrants.

Draft guidelines

The RBI has made it clear that only private entities owned by resident Indians can own a bank. This rules out government-owned companies such as Power Finance Corporation and Rural Electrification Corporation. The companies that can spare cash to set up a bank would be big corporate houses such as such as the Tata, Birla, Bajaj, Mahindra, Larsen and Toubro and Reliance. The RBI intends to ring-fence the bank from the parent entity by setting up a non-operating holding company (NOHC) that will be governed by the RBI.  There are other quantitative and qualitative requirements that corporates have to adhere to beyond capital infusion. Diversified shareholding of corporates and more than 10 years of track record are also necessary. The central bank may seek feedback from various regulators, investigation and enforcement agencies on applicants. Good corporate governance is the RBI's trump card which will allow it to ignore companies that have flouted rules historically. The RBI has ruled out banking licences for groups with income or assets of more than 10 per cent of the total from real estate and/or capital market. This excludes capital market majors such as India Infoline Financial Services, Indiabulls group, Religare and Edelweiss from setting up a bank.

Issues with the regulation

The regulation stipulates that new banks should list two years from the date of receipt of licence. As the operation may commence two-three months after receipt of the licence, the bank may have very little operational history before listing. This will prevent it from demanding an attractive price in the offer. Also, post-listing, the bank will have an inflated capital which would prolong the improvement in profitability.  That the promoters have to bring down the proportion of ownership to 40 per cent by end of year two is also tricky. The banks can raise fresh equity from the capital market to meet this requirement, but that would bloat the capital unnecessarily. Alternately, they can divest stake from existing equity but this would mean no additional infusion of capital for another three years since the regulation stipulates so. Weak equity markets can also derail such capital raising or divestment. The last time Yes Bank listed we were in a bull market which allowed it to demand a 2.25 times price-to-book valuation. It was the lone new private bank to list in that period. Prospective bank licences may crowd the primary market and capital raising might not be that easy. Another drag on profitability is the requirement that 25 per cent of the total branches have to be set up in under-banked areas where cost of breaking-even for a branch may be high.  Since in the initial year of operations, access to low-cost deposits is low, higher cost of funds coupled with high wholesale borrowing, will impact the spreads and profitability adversely. For incumbent banks only a quarter of incremental branches have to set up in unbanked areas. This puts new banks in disadvantaged position. New bank licencees are also required to adhere to 40 per cent priority lending sector norms from the outset. Also, they cannot use the NBFCs to meet most their priority sector lending targets post-RBI regulation.  The way out for new banks could be to look out for acquisition candidates immediately after getting a licence. They may, however, have to pay a premium for acquiring old private banks (which have been attractive acquisition candidates for long). This would lead mean sub-optimal allocation of capital. Additionally this wouldn't serve the Finance Minister's vision of having more banks.

Threat to existing players

Yes Bank and Kotak Mahindra Bank, the latest entrants, have garnered a market share in advance of 1.5 per cent over the last seven years. If one notices the market share patterns of banks, public sector banks have bigger market share in advances as compared to what they had six years ago. They had 71.4 per cent share of advances in June 2005 which currently is at 74.8 per cent. Private banks' share has remained unaltered in this period. This means that the new entrants dented old private banks' and foreign banks' share. It can, therefore, be surmised that the competition from new banks would hurt the newer players before posing a threat to incumbent players.

NBFCs best placed

As of March 2010, NBFCs assets were around 11 per cent of the total bank assets. So any transfer of assets from these companies to new banks would give them a head-start over other new entrants. The RBI has recently reduced the regulatory arbitrage for NBFCs through a series of regulations. These changes could provide the impetus to push some of them into converting into banks. NBFCs have a choice to convert into a bank or transfer a part of their asset book to newly set up a bank. In both the cases, they are not allowed to duplicate lending done by newly set up bank. This augurs well for the NBFCs which have a rural presence as it will allow them to adhere to priority sector norms. Shriram Transport and Mahindra Finance stand to gain in this way as they have a strong rural presence. Existing NBFCs that convert into banks have to stick to the norm of setting up branches in unbanked areas (with less than 9,900 population) for only the branches in Tier-1 and Tier-2 cities.  For branches in Tier-3 to 6 areas, these norms need not be applied. This places them at an advantage to other private banks that have to open a quarter of their branches in areas in unbanked areas.
HBL

Pranab to lead Indian delegation for Fund-Bank meetings at Washington

The Finance Minister, Mr Pranab Mukherjee will embark on a week-long visit to the United States from September 21 to attend the 2011 Annual IMF World Bank meetings, which are scheduled September 23-25 at Washington. He will lead the Indian delegation that would comprise the Reserve Bank of India (RBI) Governor, Dr D Subbarao besides senior officials from the finance ministry and RBI, official sources said. This will also be the first time that Mr Mukherjee will personally interact with the IMF Managing Director, Ms Christine Lagarde after she assumed charge at the helm of this multilateral lending institution.
HBL

Can RBI move ahead of the curve?

There is now increasing apprehension that, for the 12th time in succession (since February 2010), RBI will resort to monetary tightening in September. For the statistically minded, there is also a contrarian view within RBI against rate hikes (RBI minutes of monetary policy meeting). .......

Read.........

RBI may pause on policy rate rise this time, says Deloitte

Financial advisory company Deloitte does not expect the Reserve Bank of India (RBI) to raise policy rates at its monetary policy review next week, even as inflation stands at 9.2 per cent in July. However, it also expects the central bank to continue with its tight monetary policy to tame inflation till it reaches six per cent, though not this time around. "Our perspective is the RBI will pause this time following a 50 basis point rise in policy rates in its July review," Deloitte, Haskins & Sells Director Anis Chakravarty said. The RBI has raised policy rates 11 times since early 2010 when it reversed its soft monetary stance as the ripple effects of global financial crisis had waned by then. In its July review, RBI had raised repo (short-term lending) rate by 50 basis points, following which reverse repo (short-term borrowing) rate automatically rose by 50 basis points. “It is not that RBI will raise policy rates every time to tame inflation,” explained Chakravarty, while stressing the central bank will not completely pause the rates tightening process unless inflation falls to six per cent. In its recent report on global economic outlook, Deloitte said, "Inflation is unlikely to subside in the near term and the RBI will probably continue raising interest rate until it stabilises at six per cent". Chakravarty expects inflation to be in the range of 9.2-9.5 per cent in September. The August number will come next week. He said the RBI is determined to fight inflation and is not going to focus on gross domestic product and Index of Industrial Production numbers. It is not the prime responsibility of the RBI to look at GDP and IIP numbers, that is the government's job, he said. The Reserve Bank's hawkish monetary stance has been blamed for stifling India's economic growth. India's GDP growth declined to 7.7 per cent in the first quarter of the current financial year from 8.8 per cent in the corresponding period of the previous year and 7.8 per cent in the fourth quarter of last financial year. This is despite the revision in the growth rate in the first quarter of last financial year to 8.8 per cent from 9.3 per cent estimated earlier. Had the growth rate remained the same then economic growth rate would have decelerated to 7.2 per cent.
BS

Asia awaits India rate decision in week ahead

LOS ANGELES (MarketWatch) — An Indian interest-rate decision and a possible legislative battle in Australia are among events that may impact Asian markets next week. The Reserve Bank of India is slated to hand-down its mid-quarter policy decision on Friday. The RBI has hiked benchmark rates 11 times since March 2010 as it seeks to battle heavy inflation in India, and a Dow Jones Newswires survey is showing expectations for another half-point increase at the upcoming meeting. In addition to any surprises on the rate moves, analysts and investors will also watch for any details on plans to bring back inflation-indexed bonds, as announced earlier this month by the central bank’s Gov. Duvvuri Subbarao.

RBI may hike the key interest rates again

The mid-term Credit Policy review is scheduled for next week. There are talks of a possible interest rate hike by the Reserve Bank of India (RBI). The inflation rate is still strong and this indicates further monetary tightening. However, the RBI has already tightened the monetary policy several times in the last one and half years, and they have reached a level where they are beginning to impact industrial growth. On the other hand, the developed countries in the West are facing tough challenges - keeping their economies on the growth path and warding off a possible double-dip recession. A double-dip recession there will certainly impact the GDP growth here to a certain extent. Analysts believe it is crucial to maintain a fine balance between inflation, industrial growth and monetary policy tightening. Policymakers would consider some major parameters while taking a decision on the monetary policy tightening. The headline inflation based on the Wholesale Price Index (WPI) data here as well as on the food articles is still in an uncomfortable zone. There are various domestic as well as international factors that are responsible for this high inflation rate. The demand-supply mismatch here and the soft monetary policies in the international markets are behind the volatility in the prices of international commodities.  Analysts believe the high inflation rate will play on the minds of policymakers during the forthcoming midterm monetary policy review. The RBI is expected to maintain its tough stance.  The sustainability of economic growth in the developed markets in the West is being questioned ever since they came out of recession last year. There are issues with respect to rising government debt and possibility of cracks in the financial /banking systems. Although the domestic economy is not significantly dependent on exports, some impact on the economic growth here in case of a double-dip recession in the West is certain.  This will be a major factor given the fact that the global economies are on uncertain growth paths. A further tightening of the monetary policy can dent the economic growth here too.
ET

Saturday, September 10, 2011

Banks can lend below base rate to tribals, differently-abled: RBI

The Reserve Bank today said banks can lend below the base rate, or the minimum lending rate, to tribals and physically challenged persons. "Such lending (to tribals and handicapped), even if below base rate, would not be considered as a violation of our base rate guidelines," the central bank said in a circular.  At present, banks get refinanced from National Scheduled Tribes Finance and Development Corporation (NSTFDC) and National Handicapped Finance and Development Corporation (NHFDC) for loans extended to tribals and differently-abled people. Such lending would not be in contravention to the apex bank's rule, which restricts lending below base rate to borrowers, the RBI added. Banks may charge interest at the rates prescribed under the schemes of NSTFDC and NHFDC to the extent refinance is available. As per micro credit scheme of NSTFDC, banks can provide subsidised loans at interest rates not exceeding 8 per cent, where refinance at 3-5 per cent from the corporation is available. Similarly, under various schemes of NHFDC, loans are provided at concessional rates to beneficiaries, subject to refinance option from the development corporation. At present, base rates of banks are hovering around 10 per cent and the lenders are not allowed to lend below this rate.
NDTV Profit

Public Provident Fund panel report may not mean much

The suggestion of the committee on comprehensive review of National Small Savings Fund to improve the state of the Public Provident Fund (PPF), 1968, may sound great on paper, but it has drawn less enthusiasm from experts. Headed by former Reserve Bank of India (RBI) Deputy Governor, Shyamala Gopinath, the committee has suggested that the deposit limit under the PPF scheme be raised to Rs1 lakh per annum from Rs70,000. “The limit of Rs 1 lakh is never enough because it is plugged with every other tax savings instrument. So this is not going to increase the benefit much. The deduction amount itself has to be increased so that the benefit increases,” says Sandeep Shanbhag, director, Wonderland Consultants. It also suggest that interest rate on advances against deposits be fixed in PPF scheme at 2% against 1%. “In conjunction for the rise in limit for the demand to sustain, there should also be status quo on other benefits. For example, if they make the interest rate market linked, automatically some bit of allure is gone. If they remove the EEE benefit, the allure is reduced,” said Jayant Pai, vice president, Parag Parikh Financial Advisory Services. The committee is of the view that the interest rates on small savings schemes need to be market linked. Few financial planning support this.  “This makes the scheme sustainable. One of the big subsidy is that even the interest is tax free. Linking it to the market will be fair. Otherwise, it is unnecessarily creating a government handout during times when interest rates are low,” says Harsh Roongta, chief executive officer, Apnapaisa.com. Roongta agreed that increasing the limit will also benefit investments. The committee has further recommended benchmarking interest rate on small saving schemes to interest rate on government securities of similar maturities with a positive spread of 25 basis points on all schemes. The National Savings Certificate and Senior Citizens Savings Scheme would be exempted, where the spread would be 50 bps and 100 bps, respectively.
DNA

Re-engineering financial inclusion in agriculture is key to promoting inclusive growth



In fact, there is a clear need to look closely at most, if not all agriculture value chains in the country from the primary producers' perspective and re-engineer financing arrangements to enable and facilitate a wide range of innovative financing solutions that can reduce the vulnerability of the primary producer. I do hope that the concerned ministries and stakeholders, including the Reserve Bank of India (RBI) and National Rural Livelihood Mission (NRLM) take up this task on a war footing…that is very critical if indeed they are serious about fighting poverty and ensuring inclusive growth for large numbers of Indians living in Bharat.
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Only 35 of 346 NBFCs pass R1K cr annual asset stress test: FE study

Mumbai: A working group constituted by the Reserve Bank Of India and headed by its former Deputy Governor Usha Thorat has recommended that NBFCs with assets of R1,000 crore and above should be inspected comprehensively on an annual basis with a stress test carried out to ascertain their vulnerability. An FE study reveals that out of 346 major NBFCs, only 35 NBFCs have assets of R1,000 crore and above as on March 31.  Kishor P Ostwal, CMD,CNI Research said, “ NBFCs are allowed to set up banks and the risk involved in a bank for a systemic failure is very high. Therefore, RBI wants to regulate the major NBFCs.” Out of 35 NBFCs, Muthoot Finance, Manappuram Finance and Future Capital showed more than 100% growth on their assets during 2010-11 and are consistently doing better during last three years. The total assets of Manappuram Finance have increased by 209.8% to R7,578 crore during 2010-11 from the level of R2,446 crore during 2009-10.The Kerala based company's total gold loan disbursements rose to R18,057 crore during the year from R7,123 crore of previous year. It also posted a two-fold net profit growth to R283 crore for the financial year 2010-11. Similarly the assets of Muthoot Finance increased by 126.3% to R13,273 crore during 2010-11 from the level of R5,865 crore during 2009-10. It is the largest gold financing company in India in terms of loan portfolio. The company's gold loan outstanding increased by 114% to R15,728 crore during the year 2010-11 from R7,341 crore during 2009-10. The company registered a growth of 117% in its net profit to R494 crore for the financial year ended March 31, 2011. The assets of future capital increased by 176.1% to R3,304 crore during 2010-11 from the level of R1,196 crore during 2009-10. A downward trend in asset growth was seen in the case of JM Financial, Network 18 Media and Bajaj Finserv. The asset of Bajaj Finserv decreased by 9.1% to R1,390 crore during 2010-11 from the level of R1,529 crore during 2009-10.In 2010-11, there are 12 NBFCs which have more than R10,000 crore assets but in the previous year there were only eight. Four companies namely Dewan Housing, Muthoot Finance, M&M Financial and Sundaram Finance have entered in the list of R10,000-group during 2010-11. The lowest growth in assets was registered in the case of Can Fin Homes, Tata Inv, PNB Gilts, SKS Microfinance and Shriram Trans. The assets of Can Fin Homes increased only 3.5% to R2,214 crore during 2010-11. Top five NBFCs according to assets during 2010-11 are HDFC, Power Finance, REC, LIC Housing Finance and IDFC. Among these five, highest increase in assets was registered in the case of IDFC. The assets of IDFC has increased by 42% to R47,367 crore during 2010-11 from the level of R33,346 crore during 2009-10. Profit after tax (PAT) of the company increased by 26.1% from 1,013 crore in 2009-10 to R1,277 crore in 2010-11.In July 2010, IDFC got the infrastructure finance company status within the NBFC category from the RBI.
FE

Banks told to integrate operations with Regional Rural Banks for rural lending

NEW DELHI: In an attempt to extend the reach of banks in rural and semi-urban areas, the finance ministry has asked public sector banks to integrate their operations with regional rural banks (RRBs).  "Charges for various banking services used by customers of RRBs are to be aligned with the sponsoring banks," a finance ministry official said on condition of anonymity. "Further, cheques or drafts issued by RRBs should be treated at par with their sponsoring bank." The government expects RRBs to offer more, and quicker, loans to borrowers in India's hinterland as part of its financial inclusion drive. It wants RRBs to disburse at least s 51,000 crore worth of loans, or 10.7% of the 475,000 crore lending target it has set for public sector banks for the current fiscal. The finance ministry has also directed public sector banks to relocate their branches from areas where there is an existing branch of an RRB. This will help in increasing the coverage area of banking services, the finance ministry official said. "RRBs can play a major role in financial inclusion," the official said, adding, "they not only do agricultural lending, but also play a significant role for small and medium enterprises." The government and the Reserve Bank aim to provide banking facilities in 73,000 villages with a population of more than 2,000 by March next year. This is estimated to provide bank accounts to about 50 million rural households. "Regional banks are further asked to develop an e-governance plan within this month and adopt the human resource practices followed in their sponsoring banks," the above quoted official said. RRBs have a network of 15,475 branches. Nearly a fifth of these are sponsored by the country's largest lender, State Bank of India. In order to meet its financial inclusion agenda, the government is looking to strengthen RRBs and has provided them 500 crore in 2011-12. Under the new directions, employees of RRBs will be sent on deputation to sponsoring banks to give them better exposure and those above 45 years of age will not be appointed as chairmen of RRBs. Some public sector banks, however, said the integration of banking services would take some time. "There are concerns over non-performing assets and lending practices followed by RRBs, which needs to be streamlined first," said an official with Bank of India. Finance minister Pranab Mukherjee has directed RRBs to reduce the level of non-performing assets, or bad loans, to below 5% by the year-end. Under the new directives, chairmen of the sponsoring bank would have to review the status of audit of their sponsored RRBs. Nearly 40 of the over 82 RRBs need capital support, which is pegged at 2,200 crore. The delay in investments from state governments has undermined RRBs ability to fund the farm sector.
ET

ICICI Bank to hire around 6,000 this fiscal: Kochhar

Mumbai  : The country’s largest private lender, ICICI Bank, will recruit up to 6,000 people this fiscal to help its business growth and expansion. “Our business is growing between 18 and 20 per cent and we are also adding branches...its expected that we would hire between five to six thousand people in our workforce,” the Managing Director and Chief Executive, Ms Chanda Kochhar, told reporters here today. Most of the recruitments will be at the entry level and will be done either directly or through institutes training graduates in banking and insurance where the bank has tie-ups, she said.
Asked about the Banking Ombudsmen’s recent suggestion to ban pre-payment charges on floating rate loans and how ICICI Bank will be gearing up for it, Ms Kochhar said: “I think it is a recommendatory discussion about action points. So we should wait for the clarifications to emerge.”  Though the suggestion of the Banking Ombudsmen is 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.
HBL

Now, LIC Housing Fin launches teaser home loan

Mumbai : More lenders are joining the fixed-cum-floating interest rate home loan bandwagon. LIC Housing Finance on Friday launched such a product. ICICI Bank had introduced such a product last month and HDFC Ltd launched one last week. Under the new home loan product, “New Advantage 5”, LICHF is offering home loans at a fixed rate of interest for the first five years and floating rates thereafter. The floating rates will be linked to the prime lending rate prevailing at the time of the switch.  For loans up to Rs 30 lakh, LICHF will charge a fixed interest rate of 11.15 per cent in the first five years; for loans above Rs 30 lakh and less than Rs 75 lakh, 11.40 per cent; and for loans of Rs 75 lakh and up to Rs 1.5 crore, 11.65 per cent. LICHF's product will be available till December-end 2011 with a condition that the first disbursement should be availed by the customer on or before January 15, 2012. Lenders are launching fixed-cum-floating rate products at a time when interest rates appear to be peaking. If the interest rates start easing, say, six months down the line, the home loan borrower will not get the benefit as he will be stuck with the fixed rate home loan, said a senior banker. Borrowers need to weigh the pros and cons of the product being offered by lenders, he added. “From hereon, interest rates may rise, at the most, by 50 basis points. The interest rate structure of the new home loan product introduced by the three lenders (ICICI Bank, HDFC, and LICHF) suggests that they have adequately protected their interests,” said a public sector banker.  The RBI is of the view that fixed-cum-floating products come under the ‘teaser loan category' and, hence, lenders will have to make additional provisioning.
HBL

Credit Agricole, Karnataka Bank penalised for derivative norm violation

Mumbai : The Reserve Bank of India has imposed a penalty of Rs 10 lakh on Credit Agricole – Corporate & Investment Bank and a penalty of Rs 5 lakh on Karnataka Bank Ltd for non-compliance with its directives on derivatives. The penalty on France-based Credit Agricole has been imposed for failing to carry out proper due diligence on user appropriateness and suitability of products, the RBI said in a statement. The central bank said the compliance function in the foreign bank failed to ensure strict observance of all statutory provisions contained in various legislations, issued by it in respect of derivative transactions. The penalty on Karnataka Bank has been imposed for failing to carry out proper due diligence on user appropriateness and suitability of products and failing to document the pricing, periodical valuation of products and quantifying financial risks in derivatives. The Reserve Bank had issued show-cause notice to both the banks. The banks submitted their written replies in response. On a careful examination of the banks' responses and their oral submissions made during personal hearings, the RBI found that the violations were conclusively established. The RBI, therefore, penalised these banks in exercise of the powers vested with it under the provisions of the Banking Regulation Act, 1949.
HBL

RBI lets dealer banks approve change of lender in external commercial borrowings

....Authorised banks have now been allowed to approve requests from ECB borrowers with respect to change in the recognised lender without referring it to the RBI.....
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Cop's kin among those who ransacked petrol pump

NAGPUR: The city police appear to be dragging their feet in bringing to book four youths who ransacked the Indian Oil Corporation (IOC) petrol pump at Reserve Bank of India square early on Friday morning and made away with Rs 8,000 from pump attendant. Shockingly, the youths had wrenched away a nozzle, sprayed diesel on petrol pump employees and threatened them of dire consequences.
TOI

'Time to re-examine RBI's anti-inflationary measures'

Ahead of the RBI's monetary policy review scheduled on September 16, the Federation of Indian Export Organisations (FIEO) Thursday said that the apex bank should reexamine its policy to use monetary measures to tame inflation.  FIEO President Ramu S Deora said in a press statement that India should take a cue from Brazil which has actually reduced repo rates notwithstanding inflation which is also beyond its comfort zone. "This is also substantiated by UNCTAD which lay emphasis that the policy to control inflation was to rely on an income policy that aims to check inflationary pressures instead of on a monetary policy," he added. FIEO Chief stated that economic slowdown is expected to continue if RBI continues to raise interest rates in the hope of reigning in inflation which stood at around 9.22 percent, well above the RBI's target rate of 4 percent to 4.5 percent. India's economy grew 7.7 percent in the the first quarter of the current fiscal, compared with the same period of 2010 and it was the weakest for the last six quarters. Ate present, gross fixed capital formation is at its lowest ebb at 7.9 percent y-o-y lower than 11.9 percent a year ago and as a result of increasing input costs the pace of industrial growth slowed to 5.1 percent y-o-y from 6.1 percent in the previous quarter. "Construction slumped to 1.2 percent, agricultural GDP slowed to 3.9 percent but these figures were offset by growth in services at 10 percent y-o-y. Situation on the global front is equally grim.The pace of global recovery has been slowing down in 2011. Global GDP is expected to grow by 3.1 percent as reported by UNCTAD, following an increase of 3.9 per cent in 2010," FIEO added. Deora said that despite the slowing momentum of growth, prices continue to rise unabated and one can anticipate an aggravated decline in growth momentum as a result of lagged impact of interest rate hikes bulk of which came in June and July.

Lowering the SLR is feasible only when we have fiscal discipline

RBI Governor D Subbarao's endorsement of a lower statutory liquidity ratio (SLR) or mandated buying of government bonds by banks is sound in theory but difficult to implement. The SLR, like the cash reserve ratio (CRR) that mandates banks to keep a certain fraction of their liabilities in cash with the RBI, operates as a tax on banks. It forces them to deploy funds as mandated by the central bank rather than in more profitable avenues.  To the extent it pre-empts their lendable resources, it crowds out other borrowers. On paper, therefore, it is hard to justify an SLR; which is why the Narasimham Committee (that laid out the blueprint for banking sector reform in the early 1990s) called for a reduction in the SLR to 25% (and CRR to 3%). What is the sanctity of 25%? The answer to that explains why, in practice, a reduction in SLR would be difficult. The SLR provides the government with a captive source of funds. When liquidity is plentiful and there is no demand for bank funds from the private sector, this may not matter. In fact, banks may opt to hold more government bonds than mandated by the SLR. But when the economy is booming and demand for funds is robust, as was the case in the pre-financial crisis years, the SLR ensures the government's borrowing programme is not jeopardised and, further, goes through at rates lower than what the government would have to pay, if it were to compete with other borrowers for funds. Agreed, the government no longer borrows at a fixed (read, artificially low) interest rate, as in the pre-reform years but through auctions where the rate is largely market-determined. Agreed, also, that the high SLR served a two-fold purpose during the global financial crisis. It provided individual banks a liquidity cushion. And it helped mitigate the consequences of a decline in bank lending at a macro level as it was possible to spur lending through a reduction in SLR to 24%. But none of this (not even the new Basel III agreement that mimics something like an SLR) justifies financial repression of banks of such a high order. There is no reason why banks should pay for the sins of the government. It is far better for the government to stop sinning. 

ET

RBI clears Enam-Axis Bank deal

The Reserve Bank of India has approved Axis Bank’s revised plan to acquire the broking and investment banking businesses of Enam Securities. This ends nearly 10 months of uncertainty over the deal. The terms of the earlier proposal were revised following the central bank’s discomfort with the structure of the deal that entailed Axis Bank offering shares to Enam, while the acquisition was done by a subsidiary. Sources familiar with the developments said the clearance came a few days earlier. While the details of the revised structure were not known, the sources said it would remain an all-stock deal. The deal would still require approval from other regulators. According to sources, while Axis Bank would acquire Enam’s businesses through shares, the bank’s subsidiary, Axis Securities and Sales, may pay cash to the bank before merging the businesses with itself. The bank’s board will soon meet to take stock. Earlier on Friday, the bank issued a statement that the deal continued to be all-stock. While giving its in-principle approval for the transaction in April this year, the central bank had also specified certain conditions, expected to increase the bank’s tax burden. As a result, the bank wrote to the RBI, seeking “certain modifications” in the terms and conditions specified. The terms specified by the RBI included a revised scheme of accounting and change in the eventual structure of the business proposed to be acquired. According to sources, the bank was exploring different options to revise the deal structure without attracting additional tax burden. The bank had also said upon examining the implications of the conditions, it had sought certain modifications to the approval granted by the RBI. “Pending the receipt of the necessary approvals, no effect of the acquisition has been given to the financials for the quarter ended June 30, 2011,” the bank had said. The RBI had also stalled Axis Bank’s plan to induct Vallabh Bhansali, co-founder and chairman of Enam, as an independent director on the bank’s board. Axis Bank had earlier said Enam would de-merge its equities and investment banking businesses into a wholly-owned subsidiary of Axis Bank. The bank would also de-merge its investment banking business into this subsidiary. Enam shareholders will get 5.7 shares of Axis Bank for every one share held in the broking company. In other words, Enam shareholders will get 3.3 per cent stake in the bank on enlarged capital. The deal value is estimated around Rs 2,067 crore. 
BS

RBI’s Enam rider makes life difficult for Axis Bank

Axis Bank is trading lower by over 4.70 percent after The ET reported that the Reserve Bank of India (RBI) has made it clear to the bank that the proposed acquisition of Enam’s broking and investment banking business has to be an all-cash deal. The Rs 2,067-crore deal has been pending with the RBI since November 2010. Axis Bank closed at Rs 1,096.3 at 1.45 p.m on Friday. Analysts say it would be difficult for Axis Bank to go through the deal if it is made to pay cash for the transaction. The reason being that the same set of valuation can not be applied for a cash down deal and a share swap deal. Axis Bank was to swap 5.7 shares of its own for every one share of Enam. DNA had quoted analysts as saying it would be better if the deal falls through since the deal is expensive for Axis Bank. RBI had put some conditions to the deal — the two participants, Axis Bank and Enam, must complete the transaction within six months. The caveat is expected to have a negative tax impact on Axis. Earlier, the central bank raised questions of giving Vallabh Bhansali a board seat in Axis Bank. RBI had earlier rejected the first proposal submitted to it in which Enam’s promoters were given shares of Axis Bank, while its business was transferred to a subsidiary. Axis Bank then submitted a new proposal whereby the business of Enam would ‘momentarily’ be acquired by the bank which will hold the assets and later transfer these to a subsidiary. This too is unlikely to be cleared, according to news report, as it will set a precedent for future deals. The report also quotes a senior bank official as saying the board will meet to consider a revised plan. Till such time, Axis Bank is likely to remain volatile.
Firstpost

Friday, September 9, 2011

A banker's cook-book

Kitchen experiments with the RBI Deputy Governor, who never misses an opportunity to rustle up his favourite Mangalorean cuisine. At the RBI, his “core function” as an economist is the monetary policy and the research departments; with supporting functions including communications. But at home, Subir Gokarn, RBI's Deputy Governor, often plays a very different, and perhaps more interesting, role… experimenting in the kitchen with Mangalorean cuisine.
With great verve and passion he goes into the intricacies of the northern Konkan food having “thinner, more sour and a little hotter gravy, compared to the southern dishes with thicker gravies, more garlic. Each has its own charm and I am fond of both.” Gokarn's romance with cooking goes back several decades. After completing his Masters in Economics in Delhi, as a 21-year-old he shared a barsati with two others in the Capital, where he worked for a government organisation. “It was a great time of life… we had a kitchen and decided to experiment in winter.” They harnessed a kerosene stove, a pressure cooker and some utensils, played around with different recipes, and soon Gokarn was hooked enough to peep into the kitchens of other friends and pay close attention to what they were making and how. He started with the basics such as rice, dhal, sabzi and a simple chicken curry. After a couple of years he went for his Ph.D in Economics to the US, where cooking became a part of survival. Here too he shared an apartment with a group of people who liked experimenting with food. “We'd get together, drink beer, cook food… and cooking became a way of life.” Gokarn completed his doctorate in 1989, worked for a year in the US and returned home in 1990 to join the Indira Gandhi Institute of Development and Research, where he was a faculty member for eight years. Cooking remained an intrinsic part of his life until his recent position in the RBI, which involves a lot of travel.
So what kind of cooking did he do?
“We had a maid who would cook the routine/basic stuff; but anything exotic and beyond the basic my wife Jyotsana and I would make,” he says, adding that they'd even “jazz up the dhals”. Gokarn is a Chitrapur Saraswat Brahmin and his region, now in Karnataka, was once a part of the Bombay presidency.

Two distinct cuisines

Elaborating on the specialities of this regional cuisine, he says throughout the Konkan coast — from Kerala up to Maharashtra — there are some common elements. “Essentially coconut is used as the base for most of the curries, with the souring agent being tamarind, kokum or vinegar. The Goan Christian cuisine used vinegar, so there is the combination of the sweet and sour in our food. Actually this is home food for me, and then we improvised around it; it never struck me as cuisine.”  But when he returned from the US and started looking around for more information on the food of his region, “I realised this was a separate cuisine.” What helped was the translation into English of a recipe book originally in Marathi. He got hold of a copy, improvised some more and never looked back! On the kind of dishes that distinguish this cuisine, Gokarn says, “If you go to seafood restaurants in Mumbai there are two generic cuisines there. One is Malvani (the standard cuisine of the Konkan region of Maharashtra, Goa, and some northern parts of West Karnataka), which is best represented by the Gajalee chain of restaurants. This is more the north coast cuisine; then there is the Trishna Mahesh Lunch Home, which serves Mangalorean cuisine, which has its own distinct taste.”

Kitchen tiffs!

Gokarn says his cuisine is somewhere “in between, so I experiment between the two.” During his long years in Delhi, he and Jyotsana often whipped up a meal for family or other get-togethers.  But were there any quarrels/arguments in the kitchen, which are common whenever a husband-wife team takes over the kitchen at the same time? “Well, not necessarily in the kitchen,” is his tongue-in-cheek reply. “Of course, she would always complain, and still does, that I do the dishes that get the most attention… the more dramatic part of the menu… and she does most of the work and doesn't get any attention! So I tell her: ‘Look, I go and buy the meat, clean it up, etc… anyway, that's an ongoing scrap!” Not one to give up easily, I persist. Does his wife complain about him messing up the kitchen, because most men are messy cooks? Does he clean the kitchen after cooking?
Gokarn's reply: “My wife complains, yes, but that's about many things! Messing is only one of them. But I do clean up; and of course the maid is there too, so that support system is there.”  Now in Mumbai with the RBI, and having to travel on work, he still cooks, but less frequently. “I eat out much more now, and when my daughter, who is in a residential school in Pune, comes home, we like to eat out.” And, he cooks for his daughter too. “She likes the dhal fry I make, which is a basic dhal with a dhaba kind of seasoning that she likes. She likes chicken curry and kheema with pao. But my cooking is very eclectic and I always improvise as and when the whim strikes. I enjoy it a lot.” His favourite restaurants are those serving oriental food; “in Delhi my favourite oriental restaurant was the Oriental Octopus. In Mumbai there are several places, but recently I have started going to Asia Seven. Then there is the Malvani food, which I prefer to Mangalorean, but I eat at Trishna quite a lot.”

Jazz and Blues

Gokarn's other passion is music — jazz and Blues. “I developed a great fondness for both when I was in the US and started to collect both on a systematic basis.” Interested in both the history and evolution of these music genres, when he worked as a faculty in the University, he had six credit hours of free tuition for anything he fancied. “So I signed up for a course in the anthropology department, on the anthropology of American music.  In terms of learning that was my most enjoyable experience as it had no professional significance; it was pure enjoyment.”  He returned from the US with an enormous collection of CDs and cassettes, but “never had the context to listen to it, and this music went into the background.”  Till, of course, he got a lucky break — his daughter upgrading her iPod and passing on the old one to him! He quickly transferred some 50 CDs on his iPod; “now I am back into Blues. On the morning flight (to attend a BL Club event in Chennai) I was on a Blues trip!” Now of course, with the RBI giving him an iPad, as a “work facility”, Gokarn also hopes to put his music onto it. For a little while perhaps, it'll be still be his laptop, along with the iPad, for work…. and more music and games, such as bowling, on the iPad!
Beyond banking hours
Reading: Time and mind space for any serious reading is very little now. Of course I look through books… but don't finish most that I start. If I am to finish, I'd do thrillers. I love Jeffrey Archer and Frederick Forsyth; find them very relaxing, especially at airports and on flights. I like business histories; a lot of my thinking on organisations, evolution and strategy, challenges — apart from my own corporate observations and experiences — is shaped by such reading.
Fitness: I used to be a regular gym person in Delhi. It fitted in beautifully with my routine for seven years. It was basic cardio in the gym and, in the winters, walks in the Lodi gardens. But now, because of the travel, even though I have a gym just below my apartment, my frequency has gone down dramatically.
Stress: Am worried about my erratic fitness schedule. It's something I need to watch because this is a high-stress job. You are on your toes, have to give full attention pretty much through the day; there are very few moments when you can let go. My previous job was not as stressful; I had a lot of time on my own because I was focused on writing. Here it is interaction almost right through the day and a whole range of issues to think about.
Religious views: None at all; I have no religious affiliation.
Dream for himself: To be as effective and ethical as I can be.
Ethics: Very important; it is an absolutely critical part of any judgement or decision I take. It's sad that the moral science classes we grew up with have disappeared from our syllabus. In a way, those are similar to what business schools teach through case studies.
Widening divide between rich and poor: I am most worried about absence of employment opportunities for large numbers coming into the workforce every year. Only a few can afford a business or higher education. We have to deal with this to give them not only skills but also some upward mobility in terms of income. We need to skill people very differently. The current educational framework is a sort of one size fits all, where you go through 10-12 years of school and are expected to learn something. I am not very sure that's relevant any more. Inequality will always exist, but we need to address some fundamental barriers and constraints. People who aspire should get the means to meet those aspirations. We need safety nets to protect people from complete deprivation.
HBL