RBI Governor praises Raj Govt's performance

Reserve Bank of India (RBI) Governor D Subbarao today hailed Rajasthan Govt's performance in financial/economic sector. Addressing a news conference here this afternoon after the Bank's Central Board s meeting, Mr Subbarao said Rajasthan Government had done well. However, he added a note of caution saying that much more and much better was needed to be achieved. He also commended the performance of banks in the state for attaining a highest deposit credit ratio of 94 per cent, however, pointed out that three of the 33 district showed credit ratio as low and 40 to 50 per cent. Mr Subbarao also demonstrated sensitive approach in respect of the state government s demand of maintaining loan/fund flow for the power companies and said he has requested banks to consider the request swiftly but on merits. The RBI does not intervene in such matters, we have not intervened in any such matter nor would do so in this matter too , he said. However, he added that since the RBI was responsible to respond to the concern/demands raised by a state government, hence,banks were asked to be considerate to the loan proposals from the power companies provided the proposals were liquidity supported by the government and clear the viability test. The Governor also appreciated the state government s demand for ensuring adequate finances, under priority social sector funding, for people of minority communities. He said as many as 23 minorities dominated blocks were identified in different districts and credit counselling camps would be held in these block by the end of January next for ensuring bank loans to this stratum of society.

http://news.webindia123.com/news/Articles/India/20111013/1850196.html 

RBI Governor Duvvuri Subbarao says no rate hike pause for now and signals priority is to check price rise

JAIPUR: Reserve Bank of India Governor Duvvuri Subbarao has dashed hopes that he may pause from raising interest rates again on October 25 as he reiterated his commitment to tame prices even if it hurts growth. "Had we not raised the rates, how much would have been the inflation? Despite so much tightening, inflation runs as high as 9.8% as of August," Subbarao told reporters after RBI's board meet in the Pink City. "We have to weigh growth, inflation and external factors influencing the economy."  Indian corporates and some in the government have been lobbying for a pause in interest rate increases since higher cost of funds is hurting economic expansion. Some cite actions by other central banks in the region which cut rates due to rising international instability.   But policymakers at RBI believe that in the absence of sufficient action from the government to improve supplies, demand should be curbed by making money more expensive. To make matters worse, the government said it would borrow Rs 53,000 crore more than budgeted in February that may put pressure on rates. The RBI has raised the key policy rate - the repo rate, at which it lends to banks against securities, 12 times since March 2010 to tame stubborn price pressures but with little success as headline inflation has stayed above 9% for more than a year. The RBI's tolerance level is around 4-4.5% and aims to bring it down to 3% in the long term in line with international levels.  September inflation numbers will be released on Friday, which will be a key input for policy review on October 25. Though market consensus is for another 25 basis points increase in repo rate, economists at a recent pre-policy meeting with the RBI have called for a pause in rate hikes amid concerns over slowdown in the global economy and a possible spillover on the domestic front.  On Thursday, Subbarao admitted that the series of rate increases over a year-and-a-half has "decelerated growth" over the past three quarters. But he is focused on the poor. "In calibrating interest rates, the RBI takes into account the need of the industry, which wants interest rates low as well as the need of the poor, who want low inflation," Subbarao was quoted as saying by Bloomberg News. "We have had to raise rates to combat inflation."

ON RUPEE

Subbarao said the slide in the rupee in past months has pushed up import costs, expressing RBI's growing concern with the depreciation in the local currency. "There has been a dip in global prices of crude from July 1 to October 1, 2011. But due to depreciation, the net rupee price of oil has gone up by 3%," he said, without giving any indication of its RBI's interference in tackling the rupee fall. The rupee has declined 5.9% in September and is down more than 10.5% from its 2011 peak of 43.86 reached in late July.

ET

RBI's tough choice: High inflation or high growth?

Weekly inflation data released on Thursday showed a slight decline with primary article inflation easing to 10.6 per cent and food article inflation easing to 9.32 per cent. However on a week on week basis, inflation continues to rise and monthly inflation due out on Friday is also expected to be close to 9.7 per cent. In light of persistent inflationary pressures, the RBI governor on Thursday indicated that despite the deceleration in growth, interest rate hikes can’t be ruled out. The key question that the common man and even the RBI governor may have been thinking about is when will inflation come down and when will the burden of high interest rates start to ease. Mr Subbarao on Thursday again acknowledged that despite 12 successive rate hikes inflation remains above the RBI's comfort zone. But he added that the RBI is sensitive to the impact high interest rates are having on growth. "We are sensitive to growth but inflation remains above the RBI's comfort levels," he said. What's complicating matters for the RBI is the weakness in the India rupee. A weaker rupee makes imported goods specially imported more expensive adding to inflation pressures. The RBI estimates that the rupee weakness has led to an effect increase of 3 per cent in the cost of oil for India – a fact that will add to inflation pressures in the economy. High inflation, high interest rates and a slowing economy are also creating pressures for the banking sector with fears of a buildup in bad assets. While NPAs particularly in PSU banks are starting to rise, the RBI seems comfortable that there are no systemic risks yet. Nevertheless, the RBI says it will conduct a fresh round of stress tests for banks before the end of the year. "We are sensitive to growth but inflation remains above the RBI's comfort levels," the RBI Governor said. As the RBI team heads back to Mumbai the focus shifts to the mid quarter review of credit policy due on October 25. With inflation remaining high, economy slowing down and banks feeling the pressure, the decision on whether to hike rates or not will be tougher than ever before.

NDTV Profit

Rules vs discretion in central banking

Discretionary policies produce suboptimal results as they deny people the benefits of ‘policy commitments’...........

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IMF backs RBI's monetary tightening policy ahead of policy review

NEW DELHI: The International Monetary Fund has endorsed the current monetary tightening in India ahead of the policy review by the Reserve Bank of India on October 25, providing a counter to the rising chorus of demand for a pause in interest rate hikes......

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“Measures of Core Inflation in India – An Empirical Evaluation by Janak Raj and Sangita Misra”

The Reserve Bank of India today placed a Working Paper titled “Measures of Core Inflation in India – An Empirical Evaluation by Janak Raj and Sangita Misra” in the web site. The study is relevant in the Indian context as supply side shocks have led to large variations in relative prices and the generally accepted measure of inflation i.e. ‘headline inflation’ seems for policy purpose. The authors have discussed various techniques employed to measure core inflation. They have argued that the exclusion-based core inflation is the preferred choice of policymakers and hence accordingly measure core inflation for India. According to them non-food manufacturing, which the Reserve Bank uses as a measure of demand side pressures, is the best representative of a core measure of inflation. However, given that the weightage of non-food manufacturing components accounts for only 55 per cent as compared with a larger share of 80 per cent in most of the countries, inflation management is more challenging in India than in other countries. The Reserve Bank of India introduced in April this year, a ‘RBI Working Paper Series’ (RBI - WP) to provide a platform to the Reserve Bank Staff for presenting their research studies as well as to receive feedback from informed researchers. The views expressed in all the research publications of the Reserve Bank, including the RBI Working Papers Series, do not necessarily reflect the views of the Reserve Bank and as such should not be reported as representing the views of the Reserve Bank of India. Feedback, if any, on the papers could be addressed to the respective authors of the research studies.

RBI opposes $20 billion wealth fund from forex reserves

The Reserve Bank of India (RBI) has opposed the creation of a $20 billion sovereign wealth fund, for acquisition of energy assets overseas, out of foreign exchange reserves and wants the government to create the corpus for it from the Budget.......

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With govt and SBI doing its job, RBI can go easy on rate hikes

..........The Reserve Bank of India (RBI) does not have to tighten policy rates further in its quest to bring down inflationary expectations. The government and the State Bank of India (SBI) are helping bring them down on behalf of the central bank............

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IOB looking at opening second branch in Bangkok

Indian Overseas Bank plans to open a new branch in Bangkok, its Chairman and Managing Director, Mr M. Narendra, has said. “We have applied to the RBI for one more branch in Bangkok. They (Thailand authorities) have agreed to it. This will be the second branch for IOB in Thailand. We are the only Indian bank to have a branch presence in Bangkok,” Mr Narendra told Business Line.

HBL

Loans under Kisan Credit Cards to be treated as direct farm lending

Mumbai : Banks offering credit to farmers under the Kisan Credit Card would be treated as direct finance for agriculture under priority sector lending, the Reserve Bank of India clarified in a notification issued on Thursday. Credit under the KCC is primarily for agricultural purposes, the RBI said.  This will offer banks one more avenue to reach the target for direct lending to agriculture, which is 14.5 per cent of total advances. The total target for agri lending is 18 per cent of total advances. According to the RBI regulations, working capital and term loans for financing production and investment requirements for agriculture and allied activities are treated as direct finance to agriculture under priority sector.

HBL

Banks, financial institutions to get more teeth for loan recovery

Tough times are ahead for home loan and corporate defaulters. The Government has decided to introduce the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2001, during the Winter Session of Parliament............

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RBI’s choice in a time of confusion

Were it a simple matter of taming inflation, the central bank’s choice would be straight. With a sinking global economy and tepid growth, it isn’t.........

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Subbarao Hints at More Rate Hikes Till Inflation is Tamed




Inflation is hurting the poor, says RBI Governor Subbarao; A moderation in growth will help address inflation, says his deputy Gokarn



 The Reserve Bank of India has said the central bank needs to control inflation before it can lower interest rates, hinting that it may hesitate to pause on raising rates although industry and Indian lenders have pitched for a halt to monetary tightening. Inflation is hurting the poor, RBI governor D Subbarao said in Jaipur on Wednesday. “(We) need to tame inflation before bringing down rates,” he said. Subbarao said rising inflation was a concern and that controlling inflation was the main focus of the monetary policy. The central bank will review its monetary policy on October 25. Subbarao’s deputy Subir Gokarn too echoed similar views earlier in the day saying a further rate hike would hinge on the inflation scenario. “We raise rates not because it is an end in itself. To the extent, we see the problem persisting, then there is a basis to raise rates but if we see the problem is starting to ease off, then that would provide the basis for a change,” he told students in Jaipur. Headline inflation which was close to 10% in August is likely to come down by the end of this fiscal, Subbarao said.  The Reserve Bank of India has raised interest rates 12 times since March 2010 to tame inflation but with little success as it has remained over 9% for over a year. With factory output growth also slowing down, industry and bankers have made out a case to the central bank to put an end to rate tightening. On its part, the central bank wants the government to address supply-side issues to curb prices.  Subbarao said the Indian economy would expand between 7.5% and 8%. “Despite having some adverse impact of dismal global economic conditions, the economy of India is strong. The growth is likely to be between 7.5% and 8%,” he said at a meeting of the Rajasthan Chamber of Commerce in Jaipur.  There are already signs of a slowdown in growth. Factory output in August rose marginally to 4.1% YoY well below the consensus estimate of 4.7%. In sequential terms, industrial production contracted 0.3% monthon-month (seasonally adjusted) following the 1.1% month-on-month contraction in July. On a 3m/3m (seasonally adjusted) basis, growth declined 5.1% 3m/3m (annualised rates) against 5.9% in July.  The Reserve Bank of India expects that a moderation in growth could help address inflation. “Controlling inflation remains one of the most important items on the agenda of the central bank. While oil and food prices are putting pressure on inflation, a moderation in growth will help ease inflation,” said Gokarn.  Subbarao said RBI is conscious of the need to bring down interest rates to help the economy grow.

ET

RBI Governor Subbarao inaugurates newsibition in Jaipur

Jaipur: Reserve Bank of India (RBI) Governor Dr D Subbarao today inaugurated a newsibition (news-cum-exhibition) at the Jawahar Kala Kendra here with the motive to enlighten people about development of central banking in India and facilitate them to have a general understanding about the processes of economic development.  Mr Subbarao who arrived here last evening on a three-day visit, will preside over meeting of the Central Board of Directors of the bank here tomorrow. “The meeting which is to be held in the Pink City after a gap of seven years, would be attended by four Deputy Governors and 12 directors of the bank to provide general superintendence and direction to the affairs-policy of the bank”, a RBI Spokesman said here. “It was mandatory for the bank to hold six meetings of board of directors every year but out of the convention the bank holds seven meeting in a year”, the spokesman said. 

http://www.newkerala.com/news/2011/worldnews-85654.html 

New Rs 2, Rs 5 coins out to confuse you

THIRUVANANTHAPURAM: Be more conscious about your money. Chances are high that you give a Rs 2 or a Rs 5 coin instead of Re 1. The newly-released Rs 2 and Rs 5 coins will confuse not only the visually challenged, but also the general public. The size of the new Rs 2 is exactly similar to the existing Re 1 coin. The stainless steel coins have round edges. The new Rs 2 carries the rupee symbol and ‘2’. This is the only difference with the Re 1 coin. Those who see the other side would mistake Rs 2 for Re 1 and vice versa. The colour of Rs 5 will help, but the size would deceive the visually challenged. The new Rs 5 is a bit larger than a 50 paise coin and a bit smaller than the Re 1 coin. The size and round edges will show a resemblance to the Re 1 coin, but its golden colour will catch one’s attention. However, chances are high for the visually challenged to confuse it with a 50 paise or Re 1. Visually challenged people had protested in 2006 when a Rs 2 coin was introduced with striking resemblance to the Re 1 coin. With the introduction of more such coins, the RBI is likely to face the wrath of the visually challenged as well as the general public.

IBN Live

RBI serious on problem of fake currency & Banks: D Subbarao

The Governor of Reserve Bank of India D Subbarao said that RBI is serious about problem of fake currency and Banks and Police have been directed to take strict action in such cases and to ensure prevention of fake currency. Addressing a meeting of Rajasthan Chamber of Commerce in Jaipur today Mr Subbarao said that RBI has instructed banks to ensure clean notes also.He said that plastic currency will be introduced in the country and it will be started with 10 Rs note.

APN News

RBI allows UCBs to act as money changers

Mumbai: The Reserve Bank on Wednesday said the Urban Cooperative Banks (UCBs) would henceforth be eligible to act as full-fledged money changers. In a notification, the apex bank said that UCBs "would be considered for authorisation as Authorised Dealer Category-I/ Authorised Dealer Category-II" as they fulfil eligibility norms with regard to money changing. Authorised banks and Full Fledged Money Changers are allowed to provide facility for reconversion of Indian Rupees to the extent of Rs 50,000 to foreign tourists on receipt of valid passport and VISA, ticket confirmed for departure within 7 days and original ATM slip.

Zee News

RBI guv Subbarao stresses on financial inclusion in state

Jaipur: The Reserve Bank of India governor D Subbarao said banks in Rajasthan will ensure that all 3,883 identified villages with total population of more than 2,000 are meaningfully covered in the first phase of financial inclusion plan by March 2012. Attending a special State Level Bankers’ Committee (SLBC) meeting here on Wednesday, he said that banks will draw up specific strategies to improve the credit-deposit ratio in three districts, namely, Dungarpur, Rajsamand and Sirohi which have low CD ratio. Banks will set up at least one financial literacy and credit counselling centre in the minority blocks in the state by the end of January 2012, he added.  Earlier in the day he inaugurated a newsibition (newscum-exhibition) at the Jawahar Kala Kendra aimed at enlightening people about development of central banking in India. Today, he is scheduled to preside over meeting of the central board of directors of the apex bank here on Thursday. The meeting will be held in the Pink City after a gap of seven years.

TOI

RBI hints 2nd quarter review may not lower policy rates

Ahead of second quarter review of monetary policy on October 25, RBI indicated that it may not lower the key interest rates as inflation is still high. "...We need to bring inflation down in order to bring interest rates down," RBI Governor D Subbarao said here. He further said that the central bank is conscious of the need to bring down interest rates to boost economy, but it might take time. RBI is for a low interest-rate regime but that will take time, he said. The Governor expressed concern over the rising inflation, but said it could be controlled by the end of this year. The Reserve Bank of India (RBI) is scheduled to hold its quarterly review of credit policy on October 25. However, it is unlikely that the RBI will pause its rate hike strategy on account of the slowdown in industrial output growth. The RBI has already hiked rates 12 times since March, 2010, to control inflation, which stood at 9.8 per cent in August. During August, the Index of Industrial Production (IIP) declined to 4.1 per cent against 4.5% recorded in the same month a year ago. Factory output stood at 5.6% in the April-August period, as against 8.7% in the same period last year, according to official data released today. Addressing members of Rajasthan Chamber of Commerce, Subbarao said the economic growth will remain between 7.5% and 8%. Earlier during the day at special State Level Bankers' Committee (SLBC) meeting of Rajasthan, the Governor said financial inclusion needs to be meaningful. Banks in Rajasthan will ensure that all 3,883 identified villages with total population of more than 2,000 are meaningfully covered in the first phase of financial inclusion plan by March 2012, RBI said in a statement. It said banks will draw up specific strategies to improve the credit-deposit ratio in three districts of Rajasthan, namely, Dungarpur, Rajsamand and Sirohi which have low CD ratio. State government of Rajasthan will release its share of Rs 39 crore towards recapitalisation of five regional rural banks in Rajasthan, it said. The Governor and other senior officials of RBI are in Jaipur to attend a meeting of the Reserve Bank's Central Board of Directors being held in Jaipur tomorrow. 

Moneycontrol

RBI hints mood change on lower rates

Jaipur : The Reserve Bank of India (RBI) is conscious of the need to bring down interest rates to help the economy grow, said RBI governor D Subbarao at an industry event. Earlier in the day, deputy governor Subir Gokarn had said that the RBI will change its monetary policy stance only if inflation eases and further rate increases will depend on the price rise situation. “It (further rate hike) depends on the inflation situation,” said Gokarn. “We raise rates not because it is an end in itself. To the extent we see the problem persisting, then there is a basis to raise rates but if we see the problem is starting to ease off, then that would provide the basis for a change.” Gokarn also said that higher income levels were increasing the tolerance for higher inflation.

HT

RBI may change policy stance if inflation eases, says Gokarn

Jaipur: The Reserve Bank of India (RBI) will change its monetary policy stance only if inflation eases and further rate increases will depend on the price rise situation, Subir Gokarn, deputy governor at the central bank, said on Wednesday. “It (further rate hike) depends on the inflation situation,” Subir Gokarn said while addressing students in Jaipur. “We raise rates not because it is an end in itself. To the extent we see the problem persisting, then there is a basis to raise rates but if we see the problem is starting to ease off, then that would provide the basis for a change.” India’s food and fuel inflation accelerated in mid September, indicating persistently high inflationary pressures in the economy. Data for September, due around 12 noon on Friday, is likely to show the wholesale price index probably rose 9.70 percent a year earlier, easing slightly from 9.78 percent in August. However, inflation continues to stay at nearly twice that of the RBI’s comfort levels, raising the possibility of another rate increase by the Reserve Bank of India on 25 Oct, when it meets to review monetary policy. Gokarn also said higher income levels were increasing the tolerance for higher inflation. The benchmark 10-year bond yield rose following Gokarn’s comments on the policy stance, while weaker-than-expected factory output data, already factored in by the market, also lead to some selling. Industrial output in August rose a lower-than expected 4.1 percent from a year earlier, government data showed. The 10-year paper was trading at 8.73 percent, up 3 basis points from its previous close. The inflation data would now be crucial for helping cement views regarding the policy stance. Gokarn said robust domestic demand will help absorb the shock from the global slowdown. Indian manufacturing growth nearly stalled in September, turning in its weakest showing since March 2009 on slowing output and order growth as a year-and-a-half of interest rate increases and weakening global conditions take a toll on Asia’s third-largest economy. “Countries like China and India has large population and hence has robust demand which will help in absorbing the global shock.”

Firstpost

IIP sluggishness persists, but RBI may maintain tight stance

The fears of a slowdown are becoming more real with the factory output showing a lower-than-expected growth of 4.1 per cent in August, as the high cost of credit, rising prices and uncertain global environment continue to curtail demand and investment. This was only marginally better than the output growth in July at 3.8 per cent. It grew 4.5 per cent in August last year. Finance Minister said the IIP (index of industrial production) figures may impact India’s second (July-September) quarter GDP. “It is not encouraging. It is a bit disappointing and it may affect the GDP of second quarter,” he told reporters here. The Indian economy grew 8.5 per cent in 2010-11, but in the first quarter slowed down to 7.7 per cent, the lowest in six quarters.  Economists and analysts, however, said that the Reserve Bank of India that is scheduled to review its monetary policy on October 25, is unlikely to put a break in its hawkish stance given the high headline inflation, that stood at 9.8 per cent in August. Inflation, it seems, is a bigger concern for the central bank with deputy governor Subir Gokarn today saying that RBI’s decision on the direction of interest rate movement will depend on the inflationary situation.

IE

New norms for FCCBs on the cards

... India’s banking regulator plans to frame rules that will curb the enthusiasm of companies floating foreign currency convertible bonds (FCCBs) to raise money even as many Indian companies are grappling with the challenges of redeeming such bonds.....

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Press pause on rate hikes, chambers tell RBI

New Delhi : The Reserve Bank of India should pause its interest rate hikes as the deceleration in industrial growth is now clearly apparent, with both consumer and capital goods segments showing sluggish growth, Mr B. Muthuraman, President, Confederation of Indian Industry, said. He was reacting to the Index for Industrial Production numbers.  Industry performance in July-August 2011-12 is estimated at around four per cent compared with 7.2 per cent in the year-ago period. The RBI has hiked the key policy rate, repo rate, by 350 basis points since September 2009.  The Punjab, Haryana Chamber President, Mr Salil Bhandari, said there was need to ensure credit availability to industry at reasonable rates and moderation in input costs.  GDP growth in the second quarter of 2012 may fall below 7.5 per cent, he said in a release.  The Federation of Indian Chambers of Commerce called for reversal of some of the monetary tightening measures to stimulate domestic demand.  “The growth in consumer goods sector, especially consumer durables, is much below expectations, especially so in the festive season,” said Mr Harsh Mariwala, President, FICCI. He said “Investment demand has also been affected in the last few months as indicated in the negative growth of machinery which was -1.8 per cent in April-August 2011. “We expect the growth in industrial sector and investments to be low in coming months as the impact of rising cost of credit would continue.”

HBL

Is there a way out for India’s slowing economy?

...The next RBI policy meeting is on 25 October and perhaps another 25 basis point-hike (hopefully the last one) may be in store if the inflation number for September, out this week, shows no sign of calming.....

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BRIC currencies may snap losing streak

Rio de Janerio/ Beijing: All four BRIC currencies -- the Brazilian real, Russian rouble, Indian rupee and Chinese yuan -- will recoup at least some of their recent heavy losses over the next 12 months, a Reuters poll showed on Wednesday. The latest Reuters BRIC FX survey showed the real, rouble and rupee recovering slowly after diving more than 10 per cent against the dollar over the last three months, as low borrowing rates in sluggish developed economies force investors to seek yield in dynamic emerging markets. The rouble and rupee, will take the lead, expected to gain more than five per cent and six per cent, respectively, according to the median estimate of around 70 analysts, economists and strategists polled by Reuters.

FE

Move to make IFFCL infra finance firm gains steam

The Union Cabinet is likely to discuss a finance ministry proposal to convert India Infrastructure Finance Company Ltd (IIFCL) into an infrastructure finance company, a kind of NBFC, with a higher authorised capital. IIFCL currently does not fall under the regulatory oversight of the Reserve Bank of India (RBI) and is controlled by the finance ministry. The position will alter if the proposal fructifies. Last year, the RBI had created a new category of non-banking finance companies, called infrastructure finance companies. The other categories are asset finance companies, loan companies and investment companies. A Bill to alter the 2006-founded IIFCL is expected to be discussed at a meeting of the Cabinet likely to be held tomorrow, officials said. If the proposed changes are approved, IIFCL will be converted into a special category infrastructure finance company with a higher paid-up capital of around Rs 5,000 crore. Currently, the state-owned company has an authorised capital of Rs 2,000 crore and paid-up capital of Rs 2,000 crore. The Cabinet is also expected to discuss a proposal from the department of public enterprises that would empower all profitable central public sector enterprises to decide on overseas acquisition of raw natural assets without seeking approval from the government. The meeting is expected to also discuss a proposal to enable India join a global organisation of wine and vineyards.

BS

Wrong Number

Economists, policy planners and even RBI Governor D Subbarao have complained about the quality and veracity of data that the government’s statistics office puts out. Only the minister who is in a position to do something about it is conspicuously unconcerned. That’s because Shrikant Jena, who was handed the ministry of statistics and programme implementation portfolio in the last ministerial reshuffle, is deeply unhappy at being denied a cabinet berth. So much so that not only has this unglamorous ministry reverted to its old ways after enjoying a brief revival under Jena’s predecessor M S Gill, but Jena has not held even one press conference since taking charge. Officials say the minister is reluctant to meet even beat correspondents — not because there is no information to give but because he’s simply not interested in the ministry.

BS

Great ire stalls Greater Ranchi

The spectre of protests over land acquisition has reared its ugly head again, as around 50,000 settlers on land earmarked for Greater Ranchi project are united in their stand against even a topographical survey, going to the extent of taking two surveyors hostage on Tuesday for three hours as part of their sustained resistance strategy. According to the Greater Ranchi project, buildings such as secretariat, high court, marketing complexes, IT parks and others will come up, signifying Jharkhand’s entry into the “modern age”. The HEC areas will have high court building, Assembly, secretariat, residences of ministers and MLAs, the offices of the Reserve Bank of India, etc. The rest will come up at Sukurhutu on the outskirts of Ranchi where survey is yet to begin.

The Telegraph

Bangla duo held for string of burglaries

KOLKATA: Police on Wednesday arrested a Bangladeshi duo, suspected of being involved in at least five daylight burglaries. theft.They are suspected to be involved in crime within Ultadangaas RBI officersa quarters, Ayakar Niwas, Government Housing Society and South Eastern Railway officersa quarters. They had also cleaned an apartment in Nakeldangaas Eastern Railway officers' quarters.

TOI

Our books clean: Dhanlaxmi Bank

.... Amitabh Chaturvedi, MD & CEO, Dhanlaxmi Bank, said the bank has complied with all the rules laid down by the Reserve Bank of India(RBI). “We continue to interact with the RBI on a regular basis and there is no concern on compliance or the asset quality front,” he said......

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Retirement Expo comes to an end

Sudhir Gokarn, Deputy Governor, Reserve Bank of India and Dr Sheilu Sreenivasan, Founder President of Dignity Foundation at the concluding session of three- day Retirement Expo, organised by Dignity Foundation, for senior citizens in Mumbai. Gokarn, presided over the celebrations and emphasised the importance of retirement years by inducting its retiring employees into Dignity Foundation productive ageing schemes. Senior citizens, who thronged the venue were wooed by Banks, insurance companies, pharma, fitness centres, spas, senior citizens housing societies, assisted living device manufacturers, health professionals and multi- professional gurus of active living.

FPJ

Workshop on forex concepts held at Kochi

Kochi, Oct. 11: A one-week orientation workshop on foreign exchange was inaugurated here by Mr C.V George, General Manager, Reserve Bank of India, Kochi. The brief meeting was presided over by Mr Abraham Chacko, Executive Director of Federal Bank.  The programme, intended to improve expertise and capabilities of bank officials, is organised by the Federal Bank under the auspices of the Reserve Bank of India and the Foreign Exchange Dealers Association.  In his inaugural speech, Mr George stressed the need to improve knowledge of foreign exchange among bank officials, at a branch level.  Mr Chacko said exporter/importer and NRI clients could benefit if bank officials were more skilful at handling forex operations.  Mr Madhavan, AGM welcomed the participants and guests. Mr P. M. Pethe, Officer on special duty (Training), FEDAI, Mumbai, offered felicitations and Mr R. Pradeep Kumar, Chief Manager,proposed vote of thanks. The workshop will conclude on October 15. 

HBL

You have got (fake) mail from RBI

MUMBAI: A recent email doing the rounds, purportedly from the Reserve Bank of India (RBI), informs account-holders that they are in for a windfall as the central bank has decided to release unclaimed deposits to the beneficiary. The email, the latest version of online frauds, is full of errors. It states that RBI governor D Subbarao met with the senate committee on finance, although there is no such committee. RBI spokesperson Alpana Kilawala said the mail was fraudulent, there was no such communication, and Subbarao had not attended any such meeting. "We lodge police complaints when such fraudulent mails are brought to our notice. We have put up two advisory notes on our website asking people not to pay money to receive funds from abroad. RBI never asks for your bank account details." Scams employed by fraudsters include one where the recipient is told to send funds to cover the cost of remitting proceeds of a lottery he has won. In another phishing scam, account-holders are sent a link to a website that looks like the genuine homepage of a bank site, but is a trap to record the useras password. International scamsters seek account details of individuals whom them entrap into acting as a money mulesa as a conduit for transferring funds stolen from other accounts. The fake RBI email states that the recipient is listed as a beneficiary in the recent schedule for payment. "We are writing this email to inform you that 750,000 GBP {Seven Hundred Fifty Thousand Great British Pounds Sterling} will be release to you, as it was committed for (RBI) Governor that Beneficiary will have to pay crediting fees only. So you are therefore required to pay 24,500 INR ONLY. To credit your account immediately making a decline for 2 working day after date of receiving this mail. Also reconfirm/provide your bank account details-for crediting." An earlier statement by RBI advised the general public against responding to offers of moneys from abroad. It stated that they are fraudulent and advised people to immediately register a complaint with the local police or cyber crime authorities when they receive such offers or become a victim of such fraud.

TOI

Sudoku for RBI

.....RBI has inadvertently compromised the effectiveness of its own tight monetary stance by the way it signals and complements it. This is unfortunate since RBI has undertaken some welcome initiatives to enhance its communication. But when it comes to central banks, effective but less frequent communication is always better than more frequent but less effective communication......

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The problem with government cash balances

... The Deepak Mohanty committee, which was set up by RBI to study the operating procedure of monetary policy, has recommended an auction of excess government cash balances, to stop the uncertainty in liquidity conditions. The group also suggested that data on government cash balances be made public on a daily basis, to improve the assessments made by market participants.....

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JK Bank, RBI hold financial literacy programmes

Srinagar, Oct 11: With a view to make the students and teachers aware about banking and its contemporary functioning, J&K Bank organized awareness programmes in collaboration with Reserve Bank of India (RBI) at Ganderbal Higher Secondary School and Government Degree College Kulgam. The programmes registered a good presence of teachers, commerce and management students of the institutions besides Cluster Heads Ganderbal and Kulgam. Raj Kumar Meena, Assistant General Manager RBI, who was Chief Guest on the occasion gave a brief lecture to students and informed them about Banking, RBI, Fake Note Currency identification, ATM operations, Financial Inclusion, Fake Lotteries, impact of recession, deficit finance, Monetary & Fiscal policies, Role and functions of Non Banking Finance Companies (NBFC) & Banks Ombudsman, etc. Speaking at Kulgam Degree College, AGM (RBI) R K Meena also spoke in length about the role, functions and activities of RBI. He replied and responded to various queries raised by the students of the College while interacting in a post-lecture session.  A quiz was also held in which various participating students were presented gifts by the RBI official. Some informative literature from RBI was also distributed among the participants on the event. The lectures were followed by question answer/sessions wherein all the queries of the students were answered.  Quiz was organized and prizes distributed among students who answered the questions about the awareness programme. School authorities at Ganderbal thanked the Bank and RBI for conducting such type of programme and requested that such type of programmes should be conducted in future also.

Greater Kashmir

For exporters, borrowing from bank will be 2% cheaper

The Reserve Bank of India (RBI) today announced 2% interest subsidy on Rupee export credit to the labour-oriented and small scale sectors to cushion them from slowdown in the major markets like the US and Europe. Exporters of handicrafts, handlooms and carpets will be eligible for the interest subvention to be available up to March 31, 2012, the RBI said. The exporters in the small and medium enterprises across all the sectors would also be entitled for cheaper bank credit, subject to a minimum interest rate of 7%. In a direction to the banks, the RBI said that the government has decided to extend the scheme from April 2011 to March 2012, for the four category of exporters. "Banks may ensure to pass on the benefit completely to the eligible exporters," it said. The decision to help exporters was announced on a day when the high-level Board of Trade (BoT) reviewed the situation arising out of renewed worries about the US economy and the debt crisis in Europe. The BoT, headed by Commerce and Industry Minister Anand Sharma and comprising well-known industrialists, discussed issues like currency volatility, availability of dollar credit and high cost of credit. Although India's exports grew by 54% in April-August period, the time ahead is viewed as full of challenges. "I am apprehensive about the roll-out of next seven months. I hope we should be able to achieve $280 billion exports this fiscal," Minister of State for Commerce and Industry Jyotiraditya Scindia said. Exporters' body FIEO welcomed the interest subsidy but wanted more. "We were expecting 3% and also for sectors like textile, gems and jewellery and engineering," it said in a statement.

BS

SBI and Bhatt (11/10/2011) – Eye View................

"I agree with the author that Shri Bhatt would have to be asked a few inconvenient questions and should not be allowed to go scot free. In fact, in the case of every former Chairman of a Public Sector bank, this has to be done since there has been a lot of temptation on their part to paint a rosy picture of the bank by adopting dubious methods including even blatant violations of the regulations of the RBI. RBI nominees have not been able to do much to reign in the bank chairmen as they are not sure of the kind of support they would receive from the top management of Bank. In the case of SBI, Deputy Governors of the Bank have been invariably the nominees and they should be able to do on their own what they consider appropriate and if necessary warn and take action against the Chairman. Government should not be allowed to interfere in the actions of the Bank. They would have absolutely no excuse for doing what they are expected to do. The reason perhaps as why even the Deputy Governors have not been tough while performing their role on the board of SBI is that as an institution Reserve Bank has been a weak regulator in terms of taking deterrent action for irregularities/ violations. It is high time the Bank instilled fear in the minds of the top executives of commercial banks. I am not suggesting for a moment that the Bank has to be arbitrary. When the wrong doing has been proved with out any trace of doubt, after reasonable opportunity has been given to the aggrieved party, extremely deterrent action has to be taken. We have to take a leaf from other central banks and see how they have been able to instill fear in the commercial banks operating in their countries."

A.Chandramouliswaran, Former Executive Director (via e-mail)

RBI's PNB auditor action illegal: HC

New Delhi : The Delhi High Court has held as illegal the decision of RBI to discontinue the services of a Statutory Central Auditor (SCA) of Punjab National Bank (PNB) without fair and proper enquiry into the allegations against the firm. "The Court holds that the impugned decision of the RBI, as communicated in its letter on June 24, 2009 to the PNB, to discontinue the Petitioner as an SCA, even for the limited extended period ending 30th June 2009, was violative of the principles of natural justice and was, therefore, illegal," Justice S Muralidhar said. The observations came on the plea of accounting firm, Gupta and Gupta Chartered Accountants, alleging arbitrariness on the part of RBI in asking PNB to discontinue it (firm) as an SCA without fair and proper enquiry. RBI, in a letter written on June 24, 2009, permitted PNB to discontinue the firm as an SCA on the allegations of the bank that it was delaying the audit of accounts. \"RBI ought not to have unilaterally accepted the complaint by the PNB without seeking explanation from the Petitioner (Gupta & Gupta Chartered Accountants) on PNB\'s specific allegations,\" the court said. Allowing plea of the firm, the court said \"there is merit in the contention of the Petitioner that the discontinuance of an SCA, selected through such a rigorous process, is likely to have adverse consequences for its reputation and goodwill if such discontinuance is as a result of a complaint about its competence or integrity," it said. SCAs are appointed by RBI on the recommendations of statutory auditor CAG for a period of four years to audit the accounts of public sector banks. In 2005, five SCAs had been appointed to audit the accounts of PNB.  "The greater the power to appoint and remove an SCA, the higher the responsibility on the RBI as the holder of such power to exercise it in a fair and reasonable manner after following a just procedure which comports with the principles of natural justice,\" the court said. The firm had alleged that it was discontinued as an SCA by PNB apprehending that it can detect some irregularities by the bank in granting loan to some real estate companies. The firm also contended that it was singled out for being discontinued as SCA and that this amounted to blacklisting of the petitioner firm apart from being mala fide. It also submitted that it was even not served any show cause notice.

Expressindia

There is scope to increase gold holding: RBI working paper

The Reserve Bank which bought a whopping 200 ton gold for USD 6.7 billion from IMF in 2009, can go in for more purchase of the precious metal, a central bank working paper said. "India's purchase of gold as a diversification strategy is fully justified and is in line with the global trend and still there is scope to increase its holding," it said. The gold holding of the Reserve Bank of India increased to 557.7 ton after accretion of 200 ton in 2009. In India's case, it said, while foreign reserves increased substantially over the years, the physical stock of gold as part of official reserves, however, remained stable.  Eventually, gold's proportion in the total foreign reserves came down sharply. In fact, even with the latest purchase of gold by the Reserve Bank, gold accounted for just around 7.9% of the forex reserves. The findings of the study show that central banks in most of the emerging market economies (EMEs) and advanced economies had either bought fresh stock of gold or stopped selling their existing stock of gold in the wake of the recent global crisis. Further, it stated that India's purchase of gold apparently did not have any impact on the gold price trend and hence the stock of gold is in line with the global accumulation trend. India's recent purchase of 200 tonnes of gold, apparently, did not cause any aberration on the international gold price trend, probably as gold was not bought from the open market, it added. It is difficult to address the 'optimum level of gold' for India, though there is a strong economic rationale to hold sufficient quantity of gold as part of official reserves, especially during uncertain periods like global financial crisis, the study added.

Moneycontrol

PPI can address RBI’s criterion on microfinance clients’ income limit

The Grameen Foundation, India has presented an alternative proposal to meet the Reserve Bank of India’s criterion on income limits for eligible clients of microfinance institutions. In a concept note, Grameen Foundation says that inexpensive, objective tool like Progress out of Poverty Index (PPI) can enable MFIs to find out what percentage of their total clients fall below recommended ceilings, based on poverty lines mapped to income level........

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RBI’s wasteful plan to fly notes to Chhattisgarh

NAGPUR: The Reserve Bank of India's (RBI) strategy to dodge the Naxals in Chhattisgarh seems to end precisely at the point where the danger actually begins. RBI office in Nagpur, which is supposed to supply currency notes to banks in Chhattisgarh, has been airlifting the consignment to this trouble-torn state since about a year. The aircraft for the purpose is supplied by Chhattisgarh Government. RBI felt this was a smart move to avoid Naxals who may be lurking to loot the cash on the ground. However, the exercise is actually quite silly and a waste of public money. The aircraft flies the notes from Nagpur to Chhattisgarh capital Raipur or, at the most, to Jagdalpur, which is also a town well-connected with a highway.  Up to this point there is hardly any danger from Naxals. From there, the notes are transported to the bank branches in interior Bastar region where the real Naxal strongholds are. But this part is being done by road as has always been the case. The cash is carried in guarded vehicles.  Perhaps after realization of futility of this plan, there was a change recently. Now notes are taken by train to Raipur and then flown to Jagdalpur. This also is quite redundant as Raipur-Jagdalpur road is considered safe with civilian vehicles including passengers buses plying night and day. Naxals do not carry out operations on such roads as traffic piles up within minutes on either side. RBI thus ended up pushing up cost of exercise without minimizing any risk. The really perilous areas begin after Jagdalpur and there the notes continue to be taken as it was before. The consignment is either lifted by the banks' representatives or RBI officials take it to respective banks or currency chests (store-houses for currencies commonly used by the banks) in vehicles having armed escorts.  Chhattisgarh is facing Naxal problem for long. All this while, notes have been supplied by road in escorted vehicles after reaching them to Raipur by train, said an insider. The bank's regional director at Nagpur Phulan Kumar preferred not to divulge much details. He said a different route is used each time. A senior official in Chhattisgarh police said there were plans to develop helipads in interiors so that helicopters could land there.  RBI officials are provided routes on the basis of intelligence inputs on Naxal presence. "Although the road up to Jagdalpur is considered safe, the Naxals may even strike there. So it is better to fly at least till this town," said the official. A system under which RBI will supply notes up to Raipur or Jagdalpur from where the respective banks will lift the supplies is also being considered, informed a source.  The earlier plan of airlifting the consignment from Nagpur itself was proving cumbersome as only a limited quantity could be flown. Notes can be transported in bulk through trains.  For state government aircraft, RBI work is low priority and it is assigned after other engagements are fulfilled. This often holds up the notes' remittance. Taken by train, the notes remain at Raipur until airlifted according to the plane availability, said a source. 

TOI

RBI's automated data reporting norms to create Rs 500-cr mkt for IT firms

The Reserve Bank of India’s decision to automate the process of filing regulatory reports appears to have opened a door of opportunities for technology firms. Industry players expect banks to invest over Rs 500 crore over the next one year to migrate to the new system of automated data flow. Mid-sized software companies are also sensing an opportunity to cross-sell their other banking software products along with the automated data flow solution. For instance, iCreate Software, a Bangalore-based information technology firm, has already secured contracts from HDFC Bank, IndusInd Bank and Dhanlaxmi Bank within three months of launching their automated data flow solution Biz$core ADF. IndusInd Bank has decided to use iCreate’s enterprise business intelligence solution along with the automated data flow software. While the latter will help the bank in meeting compliance needs, the business intelligence solution will aid in managing information effectively for business requirements. Vivek Subramanyam, chief executive officer of iCreate, stressed the need for a technology solution to remove manual intervention in regulatory reporting. “Automated reporting increases the level of confidence on data, and decision-making becomes more accurate,” he told Business Standard. “There are 150 to 250 types of regulatory reports that banks have submit to RBI at periodic intervals. We are completely focussed on this opportunity and are engaging with the entire banking fraternity to position our Biz$core ADF solution.” He said the company’s automated data flow solution cost “single to early double digits” crore of rupees. In August, Ramco Systems, a software firm in Chennai, launched an automated data flow solution to help banks adhere to RBI guidelines on submission of regulatory reports without manual intervention. “Our ADF solution,” says Kamesh Ramamoorthy, chief operating officer of the Chennai-bases software firm, “can be deployed on any database management system. It can go live within weeks.” However, some banks are likely to rely on their in-house teams to develop this software instead of outsourcing it to a technology firm. According to a senior official of a Mumbai-based private sector bank, if the in-house technology team of a bank is strong, then developing the software makes more sense as the lender can customise the solution according to its requirements. Another option is that the bank will build the software on its own, but will seek assistance of a technology firm for integrating it with the main system. But most banks are expected to use third-party software as they have to comply with RBI’s guidelines within a specified time period. “It is not their core operations,” says an industry expert. “Hence, they will choose products of software companies to meet the guidelines.” The new guidelines on automated regulatory report filing were released after the central bank was alarmed by the trend of eroding profitability of state-run banks soon after the retirement of the chairman. The move is aimed at minimising the scope of errors and manipulation in reports that are submitted to RBI at periodic intervals by banks.

BS

Nobel lessons for RBI

...Sargent and Sims’s work on rational expectations show that policymakers cannot depend on information asymmetry to tame inflation. But it also makes clear that government policies that change incentives like those meant for the social sector programmes suffer no such problem. A clear prescription for keeping hands off the rate tools and hands on the outreach programmes......

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Sargent, Sims and RBI

...These economists have used a lot of econometric modelling to prove their theories and, given the nebulous and symbiotic relation between the two sets of factors, RBI should probably build a strong theoretical basis for its policy actions based on empirical evidence. This will explain, if not resolve, the ongoing debate of the tenuous relationship between interest rates and inflation, where the majority view is gravitating towards the school that given the lags involved, we may just about be shooting in the dark.....

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Dhanlaxmi bank hits 52-wk low on union allegation

... Our representatives have already met RBI in Thiruvananthapuram last week,” G.D.Nadaf, general secretary, AIBOC, told Moneycontrol.com. “We briefed RBI about Dhanlaxmi’s current financial strength and sought for its immediate intervention............

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Maha CM offers support to MSC Bank in appointing new board

Mumbai : In a bid to revive the Maharashtra State Co-operative Bank Ltd (MSC), whose board of directors were dismissed by the Reserve Bank of India (RBI) in May this year, the Chief Minister Prithviraj Chavan today said that the bank should follow the guidelines of the apex bank strictly while conducting its operations. He also said the state government would support the bank in appointing a new board of directors. "If the bank has to function properly it should follow the guidelines laid down by the RBI strictly," Chavan said speaking at the concluding function of the Centenary year of the MSC bank at YB Chavan centre here. The RBI after dismantling the MSC board had appointed state government’s agriculture secretary Sudhir Goel and planning secretary Sudhir Shrivastav as administrators. Chavan also said, "the government would lend its support to the bank to appoint a new board of directors. Whatever errors were committed should be accepted and rectified."

Moneycontrol

Maharashtra co-op bank may miss March deadline

Maharashtra State Cooperative Bank (MSCB), whose board of directors was dissolved five months ago, is expected to miss the deadline of March 2012 to get the banking licence. For 1906-founded institution has to meet crucial criteria of four per cent capital-to-risk (weighted) assets ratio (CRAR).

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Banks can't arbitrate

Some banks may agree to a particular interest rate during negotiation, but increase it at the time of sanction. The Reserve Bank of India does not bother to regulate such practices, but the national commission has given a landmark ruling that will help those in similar situations.....

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Customer first, RBI tells banks

.....To create awareness about the ombudsman scheme, the RBI has suggested that the ombudsmen should annually share with the local media information on complaints received and resolved, including important cases and awards given. The banks will organise a series of town hall events to create awareness about customer service. The system will attempt to reach out to the customer, impart knowledge, and empower them….

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RuPay may Open the Gateway to Inclusion

The new local card payment service provider will reduce the overall transaction cost for banks by introducing competition to international card schemes and is likely to charge a lower processing fee. It is being seen as a tool to reach out to the rural unbanked, reports Sangita Mehta

A few years ago, an arm of the Reserve Bank of India had launched the inter-bank ATM switch, a device that allows automated teller machines to talk to each other. This prompted the RBI to waive off an additional transaction fee that debit card holders incurred on using ATMs of other banks. The move, which initially faced the flak of the banking industry, led to an explosion in ATM usage across the country. Another such flare-up looks imminent with the upcoming launch of RuPay, a domestic payment gateway akin to global networks such as Visa and MasterCards. Though industry experts are once again skeptical on the government playing the role of a service provider, if the ATM experience is anything to go by, creation of a domestic payment network will widen the role of credit providers, giving a boost to financial inclusion in the country’s vast rural hinterland. Coming at an opportune time, when electronic payments are being seen as a tool to reach out to the unbanked, the RuPay card system — an initiative of the RBI-promoted National Payments Corporation of India — is creating unease among global card associations as it will reduce overall transaction cost for banks by introducing competition to international card schemes. Recently, Visa invited some 50 Indian urban co-operative banks to make a presentation on its products with an aim to lure local lenders to join the global payments network. Visa’s efforts to connect with urban cooperative lenders, hitherto not a priority for card associations such as Visa and MasterCard, just five months ahead of the RuPay launch is being viewed by experts as prompted by fear of impending competition. Currently, Indian banks pay . 200-300 crore to Visa and MasterCard for processing debit and credit cards. This cost is expected to come down after the launch of RuPay card system, which is likely to charge a lower processing fee. The benefit of a lower fee will be reaped by customers as well to whom the banks pass on the cost. The RuPay system will also lower the cost of transactions for shops that are reluctant to use the electronic mode of payment on which they currently lose 1.5% of their margin. “Currently, the merchant fee is significantly high and there is room to bring it down,” says AP Hota, chief executive officer, NPCI. China already has its domestic payment network Union Pay, a benchmark against which RuPay may be compared. Union Pay has 200 member banks, including 30 outside China, and is accepted in 104 countries. The European Union has also been talking about a region-wide payments network.  The RuPay system also aims to build an environment in which payment information remains within the country. “Why should the transaction go international and expose itself to various risks,” says Hota.

Highlighting the high cost of creating a payment network, Visa and MasterCard feel that payment networks work better when there are fewer of them. Ajay Banga, chief executive officer, MasterCard, in his maiden visit to India, after taking charge, pointed out that the launch of a local card system will not dilute the relevance of global card networks. Several countries where domestic proprietary networks were set up had turned to MasterCard to ensure that banks have the latest technologies, including fraud management, sophisticated scoring, fast transaction approvals, among others, he said. If every country strives to set up its own payment network, it would not only be very expensive, but also lead to systemic inefficiencies, he added. Amex and Visa also feel that they will continue to remain relevant in a market where growth opportunity is immense. Of the total bank consumer transactions in India, less than 5%, or nearly . 1.14 lakh crore, are in the electronic form. While the urban middle class is slowly migrating to electronic payments for bills, millions of man hours are still wasted by people standing in queues. Uttam Nayak, India head of Visa, says that the country has a long way to go in electronification of payments. “But where I look for answers is in the kind of investments they (NPCI) will bring in. Secondly, they will have to convince customers that it is the most secure, reliable and convenient mode of payment,” he says.

ROAD MAP

In the first stage, NPCI has launched the RuPay debit card. The first such card was issued by Gopinath Patil Parsik Janata Sahakari Bank. Although, not a debit card, the RuPay ATM card allows customers of rural banks and small cooperatives to access a wider ATM network. According to Hota of NPCI, which has PSU banks as its stakeholders — the roadmap for RuPay is ready. The company plans to start with a RuPay debit card by the end of this fiscal, which will be accepted in 50,000 domestic merchant establishments. In the initial phase, RuPay will not have an international reach and can be used only for domestic transactions. “But, currently, over 94% of all transactions by Indian cardholders are within India,” says Hota. “However, we will have a leeway from the RBI to talk to international players about the acceptance of this card outside India.” Subsequently, NPCI will roll out credit cards, but that would be three years from now.

CHALLENGES
The immediate test for the RuPay payment system will be to strike a chord with rural merchant associations and shops in order to build a payment network where the poorest customer has access to electronic fund transfer. Also, such a network would require an investment of more than . 1,000 crore by the banking industry without immediate returns. The Unique Identification Authority of India and Indian Banks Association have identified the need for 12-14 lakh micro-ATMs, which are point of sale machines given to business correspondents.  Moreover, an increasing usage of mobile transactions, which enable direct debit through mobile phones, could pose a major challenge to the RuPay.

ET

Safety cover for deposits

...The least that the Government and the Reserve Bank of India could do is revise upwards the current Rs 1 lakh insurance limit on retail deposits, which was fixed in 1993. The Damodaran Committee on Customer Service in Banks had recommended that this be raised to Rs 5 lakh....

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RBI meet on training in Hindi at Corporation Bank in Mangalore




(From left) Dr S Rajagopal, GM, RBI, Bangalore, H S Saini, GM, Corporation Bank, Narendra Singh, Executive Director, Corporation Bank, Kamala Rajan, Chief GM, RBI and Principal, College of Agricultural Banking, Pune, Vivek Maindargi, Asst GM & Member Secretary of CCTH, Ravi Kumar, GM, Staff College, RBI, Chennai and John D'Souza, Dy GM, Corporation Bank at the meeting of the Coordination Committee on Training in Hindi under the auspices of College of Agricultural Banking (CAB), RBI at Corporation Bank in Mangalore.

 

The 82nd meeting of the Coordination Committee on Training in Hindi ( CCTH) under the auspices of College of Agricultural Banking (CAB), Reserve Bank of India, was organised at corporate office in Mangalore. Reserve Bank reviews training efforts in Hindi of all the PSU banks once in a quarter. The meeting was hosted by Corporation Bank and chaired by Kamala Rajan, Chief GM. The meeting was attended among others by Narendra Singh, Executive Director of Corporation Bank and senior HR functionaries of all PSU banks.

FPJ

Rate hike: Bankers say enough !

The country’s leading bankers don’t want any more policy rate hikes by the Reserve Bank of India (RBI). Speaking at the Business Standard Banking Round Table in Mumbai on Monday, five of the six bank chiefs said ‘no’ when asked whether RBI should raise rates in the second quarter review of the monetary policy on October 25. Bankers gave three broad reasons for their view. First, early signs of a slowdown are becoming increasingly visible, with small and medium-sized industries already feeling the stress. Second, long-term investment demand will take a hit as confidence has taken a hard knock in the absence of policy initiatives. And third, the underlying strong domestic demand, which has kept the India story going, may have reached a tipping point. The central bank has increased rates 12 times in the past 18 months. The round-table was attended by State Bank of India chairman Pratip Chaudhuri, Bank of Baroda chairman & MD M D Mallya, ICICI Bank MD & CEO Chanda Kochhar, Axis Bank MD & CEO Shikha Sharma, Citi India CEO Pramit Jhaveri and Deutsche Bank India CEO Gunit Chadha. The bankers said in case RBI decided to hike the policy rate once again, banks would not have any option but to pass it on to customers. “If RBI does a rate hike, interest rates have to be raised because the input price increase has to find a reflection in output rates,” Chaudhuri said. Chadha said it was inevitable banks would have to transmit some of the policy rate increase to the system. Others said liquidity would be a key factor that would shape banks’ strategy in deciding future interest rates. Banks expect liquidity to dry up further. “Whether the lending rates go up or not will depend on how the liquidity situation pans out. Liquidity will be the big thing to watch in the coming two months because we are entering the festive season,” Kochhar said, adding the drying up of liquidity in overseas markets would have an impact on domestic liquidity. Bankers said they were seeing a slowdown in loan growth. Even the festive mood is yet to reflect in loan demand. On the other hand, as Sharma pointed out, there were signs of a slowdown in home and auto loan growth. The overall mood on economic growth, however, was optimistic. Most bankers pegged growth at 7.5-8 per cent. Bankers also don’t see any large-scale increase in non-performing assets. “Some large companies only need some hand-holding. Retail loans are yet to see stress on asset quality,” Kochhar said.

BS