The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Tuesday, November 29, 2011
PSU banks: Should govt set profit targets for them?
...The finance ministry wants banks to lift their return on assets (RoA) to 1.5 percent by 2015 from 0.96 at end of 2010-11. One way of improving the RoA is to reduce bad loans. However, the RBI wants banks to pass on the benefit of reduced bad loans in the form of lower interest rates for borrowers....
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RBI restraint on forex mkt was credit-positive
In the absence of interim dividend receipts, government has to look at alternatives to achieve 4.6% fiscal deficit. The Union finance ministry is banking on dividends from cash-rich central public sector units (PSUs), financial institutions and even the Reserve Bank of India (RBI) to prevent its finances from going awry. It is asking all these bodies to pay a higher dividend to tide over its lack of money. The move is in contrast to a trend in the private sector, as companies are likely to pay less dividend this financial year to shareholders than in 2010-11. The Budget estimate for revenue in 2011-12 from PSU dividends and financial institutions is Rs 42,623 crore, lower than the revised estimate of Rs 48,727 crore for 2010-11. However, the ministry is expecting a higher payout, especially from RBI. Of Rs 42,623 crore, Rs 23,494 is budgeted from PSUs and Rs 19,129 crore from RBI, nationalised banks and financial institutions. “We are talking to them to pay dividends on higher side. Ultimately, the decision will be taken by the boards of these institutions,” said a ministry official. As the government is a majority shareholder, it benefits when government institutions declare higher dividend. In June, the finance ministry had asked all these bodies to remit their dues correctly. It started monitoring the payouts well in advance, unlike earlier years, and asked them to strictly adhere to the prescribed guidelines on payment of dividends. These rules say all profit-making PSUs should declare a minimum dividend of 20 per cent of net profit or equity, whichever is higher. The minimum dividend payout for companies in oil, petroleum, chemical and other infrastructure sectors is 30 per cent. Many PSUs, however, deviate from the guidelines and pay less dividend. In the absence of interim dividend receipts, the government has to look at alternatives to augment tax revenue, other non-tax revenue and non-debt capital receipts, to achieve the fiscal deficit target. The government’s revenue under the ‘dividend and profits’ head was Rs 21,230 crore in 2002-03. It was Rs 38,607 crore in 2008-09 and Rs 50,248 crore in 2009-10, when the economy was slowing. The government had pinned hopes on dividend income, as it was facing a cash crunch due to the measures taken to come out of the slowdown. On the other hand, the aggregate dividend payout by corporate India may be lower in 2011-12 than in 2010-11. Only 75 companies had declared an interim dividend in the first half of the current financial year, as compared to 107 in 2010-11. Dividend payouts by PSUs and financial institutions could be a substantial source of non-tax revenue for the government, at a time when it is trying to restrict its fiscal deficit to 4.6 per cent of the GDP.
BS
Bad loans have seen a sharp rise over the last three years
... Studies have shown that NPA growth lags bank credit growth by two years as it takes time for the excesses during a credit boom to turn into bad loans. According to the Reserve Bank of India (RBI), if 25% of restructured advances turn into NPAs, the gross NPA ratio would be 3% and if 100% turn into NPAs, then the ratio would be 5%.....
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ED issues show-cause notices to BCCI, SBT
... ED found that BCCI did not receive RBI approval to transfer money to the account in South Africa though SBT. SBT did not follow the required due diligence process before executing the transfer when the lender was supposed to verify RBI clearance and the end use of funds, said the ED official cited earlier.....
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‘Bank on Wheels’ launched in Meghalaya
Shillong : The State Bank of India on Monday introduced “Bank on Wheels” in Meghalaya to provide banking facilities to its customers and especially to 4,500 unbanked villages in the State. The programme, as part of financial inclusion plans of the Central government and Reserve Bank of India, was launched by SBI managing director A Krishna Kumar at a function at SBI main branch premises here on Monday morning. Meghalaya Rural Development Society (MRDS) will operate the “Bank on Wheels” for SBI in implementing the project and motivate people in unbanked villages to open bank accounts. Established to oversee mobilization of Social capital, MRDS is implementing livelihoods programme in five districts of the state - Ri-Bhoi, East Khasi Hills, Jaiñtia Hills, East Garo Hills and South Garo Hills. “The bank on wheels will go to interiors with the help of MRDS to motivate people to open bank accounts. There’s no specific target, but will try to cover at least five villages in a week and try to contact as many people as possible,” SBI managing director A Krishna Kumar said. Kumar said a total number of 662 unbanked villages were allotted to SBI to be covered with March 31 next year and already 496 villages were covered. “Opening of bank accounts will be very simple for the customers (villagers) and they would only need to produce a certificate from the headman along with photographs,” he said MRDS Chief Executive Officer Robert Garnet Lyngdoh said the banks on wheels will initially cover villages under Saipung block in Jaiñtia Hills and later the services will be replicated in other districts. “We will motivate villagers to open bank accounts with SBI at zero balance or no frills account. Kisan Credit Card will be provided to farmers who opened their account in order to avail small loan from the bank,” Lyngdoh said. The ‘Bank on Wheels’ will tour villages in the area and the main target to motivate villagers to open ‘no frills accounts’ is on market day, he added.
Nagaland Post
HC quashes case against retired judge
Chennai : The Madras High Court has quashed a case against a retired high court judge relating to alleged flouting of RBI guidelines by a finance firm in which he was a director after his retirement from judicial service. Allowing the petition by G Ramanujam seeking quashing of the case, Justice A Arumughaswamy said from a perusal of the records it was clear that the petitioner had resigned before the alleged violation of the RBI rules and the resignation had also been accepted by the Registrar of Companies. The judge was of the view that the petitioner was in no way concerned with the complaint and quashed the proceedings against the retired judge pending before the Additional Chief Metropolitan Magistrate, Economic Offences I. In his petition, Ramanujam submitted that he had a distinguished tenure as a judge of the court for 16 years from 1969 and after retirement in 1985 he was appointed a director of Viswapriya Financial Services and Securities Limited. Due to his failing health, he resigned from the company on December 25, 2008 which was accepted by the board. Charging five of the company's Directors, including the retired Judge, with offences under the RBI Act, the RBI in a complaint said the firm on February 5, 2009 had published an advertisement offering 'generous returns' on investments. The former judge contended he had submitted his resignation which had been accepted by the Registrar of Companies on January 30, 2009 itself before the advertisements were published.
HBL
Don't mess around with rupee: RBI tells banks
MUMBAI: Stop messing around with the rupee"- a message from the Reserve Bank of India (RBI) that's slowly but surely beginning to reach banks. At a weekend meeting in Kochi, senior RBI officials told leading banks to refrain from unbridled currency speculation and misusing open positions which can add more volatility in a choppy market. Bankers fear that the RBI may tighten rules to curb speculation if banks don't fall in line. The regulator hinted that it was aware which banks were building what kind of trading positions and if necessary the RBI may take a relook at the net open positions that each bank is allowed to run. Trimming the net open position (NOP), or the net dollar position that a bank can hold overnight after obtaining RBI's approval, can severely curb a bank's trading bets. "It's one thing for a bank to buy dollars today for a customer who needs it tomorrow morning. It's another thing to run long dollar simply to trade," said a banker present at the meeting. The rupee has fallen by more than 17% against the dollar since Standard & Poor's downgraded US credit rating in August. But on Monday, the domestic currency gained from its Friday closing of 52.23 against the dollar to close the day at 51.96 -an exchange rate movement that can be partly attributed to the weekend meeting. Bankers admit that the rupee's fall against the dollar in the past few months has tempted quite a few treasuries to short the local currency. Besides buying dollars under the NOP limits, some of the MNC banks have carried out arbitrage deals between the onshore market and the offshore dollar-rupee market, better known as the non-deliverable forward (NDF) market. In such trades, a bank may sell a month forward in the local market and buy onemonth forward in the NDF market to lock in the gain. The RBI team, led by Deputy Governor H.R.Khan, indicated that the central bank may tweak its policy for arriving at the daily dollar-rupee reference rate. The proposed move may make it difficult for currency traders to make a killing in NDF trades which are settled against the reference rate.
ET
Rise of rupee unlikely to sustain, says Moody’s
...The inflation risk notwithstanding, the report appreciated the Reserve Bank of India's (RBI) restraint in its intervention in the foreign exchange markets. The analysts said, “The monetary authority’s decision not to spend large quantities of international reserves to support a higher rupee over the past three months is credit positive.”...
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Thank god the cool-headed RBI isn’t propping up the rupee
The rupee’s sharp fall of recent weeks against the US dollar has been arrested – and even marginally reversed — this morning by an improvement in risk sentiment. News of a likely loan lifeline from the IMF to Italy, and of a larger rescue mechanism, have buoyed up investor sentiment and the rupee, which had been battered by the avalanche of bad news out of Europe in recent days. The turnaround in sentiment has come not a day too soon, since the chorus of voices demanding an intervention by the RBI to prop up the rupee was becoming a little too loud and a little too shrill. In UBS economist Jonathan Anderson’s theatrical characterisation, the rupee is a “drama queen”, given to hysterical excesses and dramatic flailing of limbs. The RBI had indicated that while it would step in during periods of excessive currency volatility to smoothen things out, it wasn’t about to prop up the rupee. That principled position, based on pragmatic considerations of the market situation, wasn’t always appreciated. The rupee’s slide of recent days was, as Firstpost argued here, largely a function of the heightened risk aversion (and a flight to the relative safety the US dollar) although some elements of India’s deteriorating macro economy were also to blame. We had said then that once the hysteria over Europe abated, the rupee would turn around, even if it doesn’t quite leap back to its earlier values. That view, and the RBI mandarins’ cool head when all around them were losing theirs, has been borne out by today’s trend reversal. Rating agency Moody’s too has commended the RBI’s “restraint” – that is, its unwillingness to intervene in the currency market – as “credit-positive” for India. The agency’s chief India sovereign rating analyst Atsi Sheth notes that that the RBI had, rather than aggressively selling dollars to reverse the rupee’s depreciation, limited its intervention to periods of extreme volatility. For sure, a falling rupee brings bad news. “The immediate effect of a falling rupee is clearly negative for unhedged importers and borrowers in foreign currency,” points out Sheth. “Moreover, it raises the government’s petroleum products related subsidy burden, widening an already high fiscal deficit.” And the currency depreciation was also further adding to inflation, which was already above 9 percent. Yet, the RBI authorities’ decision “not to spend large quantities of international reserves to support a higher rupee over the past three months is credit positive for two reasons,” reckons Sheth. First, an intervention would have used up foreign exchange reserves — without meaningfully reversing the depreciation, since global risk aversion and India’s widening current account deficit would have forced the rupee to fall further against the dollar despite the intervention. Second, notes Sheth, effective globalisation requires market participants to adjust their investment, consumption and borrowing plans according to the availability of foreign capital and import costs. Over the past few years, external borrowing by Indian firms has risen significantly in response to the differential between higher domestic and lower foreign interest rates. Foreign borrowing has also funded rising imports. The recent currency depreciation highlights that exchange rate risk, along with interest rate differentials, ought to be incorporated into private sector decisions about external leverage. If the RBI had authorised the use of official foreign exchange reserves to maintain the exchange rate at a level higher than dictated by market forces, they would have assisted importers and foreign borrowers — at the expense of exporters and domestic producers competing with imports, reasons Sheth. This would have delayed or distorted private sector adjustment to global market signals. In her estimation, currency depreciation would ultimately force an adjustment by making imports more expensive and exports cheaper – and thus help narrow the current account deficit over the next few quarters. Of course, if inflation in India remains higher than in its trading partners, it would limit the extent to which a rupee depreciation would enhance Indian export competitiveness. In any case, the anaemic growth projections to the global economy paint a rather tepid outlook for export growth. The RBI’s other actions intended to arrest the steep decline in the rupee – such as the relaxation of capital controls, and the raising of caps on interest rates on non-resident Indian depots, on commercial borrowings and on foreign participation in domestic bond markets – would help support the rupee, or at any rate check its precipitous decline of recent days. Yet, it’s hard to see a sustained appreciation of the rupee so long as the current account deficit widens and global risk aversion remains high. There’s nothing to say that the rupee won’t slide back if eurozone panic is accentuated again in the event the the rescue plans don’t materialise in the manner that they’ve been announced. But today’s trend reversal in the rupee’s value, however minuscule, validates the RBI’s stand on the underlying reasons for the rupee’s slide, and the fact that panicky intervention — of the sorts that some commentators had sought -would have only compounded the problem. Perhaps it’s time for the back-seat drivers to mute their commentary — and allow RBI honchos to get on with what is decidedly a challenging task in a volatile environment…
Firstpost
'World prices, not rupee to hit inflation'
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The rupee, a mirror for india
....The weakness of the rupee is justified, unfortunately. In general, people hold a currency for its purchasing power. Inflation erodes that purchasing power. Persistently high inflation gives rise to expectations of depreciation of a currency that becomes self-fulfilling. The process by which this happens is beyond the scope of this 800-word column and can be found in elementary international economics textbook.....
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RBI rupee stance bags Moody's thumbs up
Read......."Had authorities used official reserves to maintain the exchange rate at a level higher than dictated by market forces, they would have assisted importers and foreign borrowers at the expense of exporters and import-competing domestic producers," Moody's noted.....
Preventing volatility
RBI should adopt a more proactive stance in the currency market
... Should the RBI use the policy tools it commands, and revert to the dirty float by targeting a more predictable band around REER once again? As things stand, the advantages could outweigh the disadvantages.....
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Wanted: An interventionist RBI
...Going by the decades-long policy, RBI should have tacitly intervened at least through June and July to pull down the rupee, since in real terms the rupee wasn’t at 44 by July end but probably 42. The big September trade deficit in this ....
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Monday, November 28, 2011
Caught between a weak rupee and a system starved of cash
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HDFC Bank, Vodafone India launch mobile banking product for rural coverage
He said, “It's the upper echelons of society who are using mobile banking now. We want the poor also to benefit, especially those in remote villages.” .....
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HDFC Bank-Vodafone venture: Who is to supervise?
Who will supervise the HDFC Bank Vodafone joint venture, asked a reporter? Mr Aditya Puri quipped that the RBI would supervise HDFC Bank and HDFC Bank would in turn supervise Vodafone. Dr Chakrabarty clarified that the RBI as the bank's supervisor would hold it responsible for Vodafone adhering to all the relevant guidelines of the RBI.
Sharing the cake!
What is the sharing of revenue/fees between Vodafone and HDFC Bank? Mr Puri's response: “We can't share the cake unless it is broken. So first, let us break-even and then we'll think of how to share the revenue.”
Alert to the threat from competition
When a reporter asked Mr Sood of Vodafone whether they had entered into a similar tie-up with another leading private sector bank, Mr Puri was quick to seize the opportunity. To everyone's amusement, he encouraged the reporter, “Ask him again. We also want to know!”
Location
The product for financial inclusion was launched at the historic Chomu Palace Hotel at Chomu, 45 km from Jaipur. Chomu Palace is a 300-year-old fort. But its claim to recent fame is as the main location for the shooting of the 2007 Bollywood hit Bhool Bhulaiya, described succinctly on Wikipedia as a ‘psychological thriller comedy horror film'! Apparently the actors in the film who shot in this place for a couple of weeks did see some apparitions. Newspersons were spared the spookiness since the press conference wound up before nightfall! Thankfully.
HBL
RBI cautioned on invest account fraud, banker jailed for 3 yrs
The Reserve Bank of India has been asked by a Delhi court to evolve a proper mechanism to ensure that bank employees do not siphon public money by manipulating customers'' stock investment accounts and other financial instruments. Special judge Anoop Kumar Mendiratta gave this direction while sentencing suspended Syndicate Bank clerk Praveen Kumar Gupta to three years in jail for diverting over Rs 37 lakh to his accounts by fudging various stock investment accounts and other security instruments with the bank over 12 years ago. The court issued directions to the RBI, terming the fact of the case, unearthed by investigative agency during its probe, as "tip of the iceberg". "The mode adopted by the accused for fraudulent multiple encashing of the same instrument despite maintenance of balancing book in the bank calls for deeper analysis as the same could not have been possible but for want of complete lack of supervision or abdication of duties by senior officials," said the court. "Appropriate guidelines need to be formulated by RBI Governor to be followed by all the banks which may work as benchmark to check the commission of frauds in similar schemes. It is necessary to ensure proper conciliation and accountability of banking transactions by the employees in such schemes," it added. The court also ordered for sending a copy of its judgement to the RBI Governor "for compliance". The court direction came in a case involving falsification, manipulation and tampering of stock investment accounts, ledgers and stock invest instruments by Gupta between 1992 and 1997 to siphon off over Rs 37 lakh.
MSN News
Indian Bank sets up self-employment training institute
.....Mr Bhasin said that the financial inclusion movement in the country was initiated by Indian Bank in Puducherry in December 2005, as the National Pilot Project on Financial Inclusion. (Incidentally, the then Chairman and Managing Director of the bank was Dr K.C. Chakraborty, who is today a Deputy Governor in the Reserve Bank of India.)......
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Banks see decline in complaints
....Mumbai: The number of customers who have registered complaints of unsatisfactory service with the Reserve Bank of India (RBI) has fallen in the year that ended 31 March after a sharp rise in the preceding fiscal............
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Be aware of new cheque norms lest it proves costly
The decision of the Reserve Bank of India (RBI) to restrict the time period for the validity of issued cheques and demand drafts will have a major impact on the manner in which people use these instruments. There are a lot of times when the life of the cheque comes to an end..........
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I don’t believe in policy paralysis business, it’s being overdone: Puri
CHOMU (RAJASTHAN): HDFC Bank managing director Aditya Puri is known to speak his mind. Unlike several of his colleagues in the corporate sector, who are bearish on the economy and are blaming government's inaction for moderation in growth, HDFC Bank chief says the fears are overdone. "I don't believe in this policy paralysis business in the sense you can't have 7.5% growth with policy paralysis. It is being overdone. Some industries which have had problems may have had some paralysis but that also if you are not in line with the laws and regulations," he told TOI in an interview on the outskirts of Jaipur. But he does agree with demands that the government needs to boost overall sentiments and suggests that tax policy can be used to contain inflation. "We need decisions on fiscal policy to control inflation, which the RBI has been saying for a while, because if you control only through monetary you are quite likely to bring growth below acceptable parameters. That has ramifications on tax collections, fiscal deficit, on the rupee and on business sentiments. And, it may not, as we have seen, in the full control of inflation."
TOI
India Post launches overseas money transfer
HYDERABAD: Transferring money to India from 190 countries across the world will now become easier through the MoneyGram service launched by India Post. The service will be available at 99 Head Post Offices and Mukhya Dak Ghar across Andhra Pradesh, according to a press release from the department. In India money can only be received from abroad through the service. For transferring the amount, the sender will have to fill up the ‘Send Form’ at the overseas MoneyGram counter and pay the principal amount apart from charges. A special 8-digit reference number will be given to the sender which will be conveyed by him to the payee. For receiving the money, the payee in India has to approach a post office offering the service and fill up the ‘Receive Form’ along with the reference number. To ensure that the amount reaches the right hands, the payee will have to carry a valid photo identification such as PAN card, driving licence, passport, voter ID, ration or Aadhaar card. For a foreign national to receive money in India, the original passport with valid Visa has to be presented at the time of collecting money. The limit on the amount sent through the transaction is US $ 2,500 and the payment will be made in Indian rupees at the prevailing exchange rates. Further, the transaction can be used only for personal remittances and towards remittances favouring foreign tourists visiting India. Trade-related transactions such as purchase of property, investments, donations or contributions to charitable organisations and credit to NRE accounts are not allowed under the scheme.The service operates as per the guidelines of RBI and all KYC/AML/CFT rules of RBI will be applicable. Also, not more than 12 remittances are allowed to be received by a single individual in one calendar year.
IBN Live
FinMin diktat sets stiff targets for PSU banks
.. Bankers say such a diktat is unprecedented and a departure from the practice of allowing banks to decide their own growth path.....
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Opportunities beckon for banks
...Extensive studies conducted by the RBI, using sophisticated techniques, reveal a high degree of interconnectedness among Indian banks. This can make the system vulnerable in the event of failure of one or more banks depending on the degree of interaction.........
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Small savings agents upset
...The government's decision to raise the interest rates and slash agents' commission on a range of popular post-office saving schemes beginning Thursday will make small savings more rewarding for millions, but it has also triggered howls of protest from lakhs of agents whose income depends on selling these products............
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Kerala govt's Shariah finance firm nears start
...The Kerala government-promoted Shariah-compliant Al Barakah Financial Services Ltd hopes to start operations from next fiscal, pending RBI licence for non-banking finance company (NBFC).....
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India urged to buy more gold as reserve value soars
... A working paper by the central bank had advised the Indian government to go in for more purchase of the precious metal……
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Islamic Banking Is the Need of the Hour: Experts
...Even as RBI and government aren't keen on allowing Islamic banking, experts from the world of Islamic finances today said it is a question of "how soon and not whether it will be allowed", as this mode of banking can greatly help a fund-starved country get long-term finances......
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RBI communicates dollar/rupee shift
...It is interesting that the RBI's communications about a somewhat hands-off approach or policy with respect to the dollar /rupee market has not been assimilated well. Be it as it may, it may well pay for the corporate sector to “listen” to RBI communications on this subject more closely in the future. Indeed, the RBI has been quite consistent in stating that it does not target any particular rate level or range for the rupee. This message has been particularly drilled through in the past couple of years at every available opportunity.....
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What ails my rupee
..The Reserve Bank of India’s (RBI) statements that it would not support any particular level of the rupee and will only intervene to stem the volatility in the market has significantly contributed to the depreciation of rupee........
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Sunday, November 27, 2011
23 per cent increase in credit needs expected
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Collector U. Sagayam (left) releases the Potentially Linked Credit Plan at a bankers' meeting at the Madurai Collectorate on Thursday |
The National Bank for Agriculture and Rural Development (NABARD) has projected the credit requirements of priority sectors in Madurai district to touch Rs. 3,489 crore in 2012-13, an increase of 23 per cent compared to the current fiscal in which Rs. 2,847-crore outlay has been prepared in the annual credit plan. The NABARD's potential-linked credit plan (PLCP) for the next fiscal was launched by Collector U. Sagayam at the District Level Review Committee meeting for bankers held at the Collectorate here on Thursday with A.J. George, Assistant General Manager of Reserve Bank of India (RBI), receiving the first copy. According to R. Shankar Narayan, NABARD's Assistant General Manager, the PLCP had taken into account the potential available for development in all sectors and also the infrastructure available for exploiting the potential. It projected that crop loans would increase from Rs. 1,232 crore in the preceding fiscal to Rs. 1,508 crore in 2012-13, which was in tune with the thrust of the Central government. Investment to the tune of Rs. 205 crore was expected to flow into the agro-processing sector. Allocation for non-farm sector has increased to Rs. 448 crore from Rs. 362 crore. Other Priority Sectors, which include transport, retail trade, self employment, housing and caution loan, were expected to require Rs. 1,408 crore against Rs. 852 crore in 2011-12. As per RBI guidelines, the PLCP would be the base document for preparing the Annual Credit Plan of the next fiscal. Addressing the bankers and officers, Mr. Sagayam said that all departments and banks must cooperate to ensure the targets laid out were achieved, and ensure that the credit potential identified in the PLCP was fulfilled. Emphasising on importance of credit to achieving integrated development of rural areas, the Collector also highlighted the need for timely purveying of agricultural credit to small and marginal farmers.
HBL
RBI Governor to visit Dungabori
JAGIROAD, Nov 26: The Reserve Bank of India (RBI) Governer D Subbarao will visit Dungabori village in Morigaon district on November 30. Sources said that the RBI with an aim to uplift the rural banking and rural infrastructure had undertaken some economic schemes. Under such schemes, Regional Office of RBI, Guwahati has selected Dungabori village. The Governor will visit Dungabori and will announce a few financial packages with the banks here.
The Sentinel
'Active bank a/c to help get you Punjabi bride'
CHANDIGARH: If you're an eligible Punjabi bachelor without an active bank account, chances are you won't get a bride. Reserve Bank of India governor Dr Duvvuri Subbarao half-jokingly and half-seriously gave advice to parents of girls looking for grooms to check if the boy has an active bank account. If he doesn't have one, it is better not to marry your daughter to such a person. Subbarao came to the city to deliver the Haksar memorial lecture at the Centre for Research in Rural and Industrial Research (CRRID), a government-supported research institute of social sciences. Subbarao recalled his induction days in the Indian Administrative Service (IAS) in early 1970s. The RBI Governor said all his batch mates at Mussourie were sent on field investigations and one of his women colleagues was intrigued to find that parents of girls in Punjab and Haryana refused to marry their daughters to boys whose villages did not have drinking water. Subbarao said his colleague reported the matter while sharing her experiences. The parents of the girls thought their daughters will have to undertake drudgery every day just to arrange water. The RBI governor said it appears now parents of girls of these states don't encounter this problem. But, if they really want well-being of their daughters, they now have a new indicator - whether the groom has an active bank account or not. Is he financially included? Subbarao explained how a financially excluded person may find it difficult to get loans and government's help under social schemes. He said just 5% of Indians have bank accounts but most of them don't operate their accounts. Even commercial banks consider financial inclusion as an obligation, not an opportunity, he pointed out. Financial inclusion is going to help the poor, banks in terms of fund flow and economy that can take care of its poor people in a transparent manner, he added.
TOI
Vodafone, HDFC Bank launch mobile banking in Rajasthan
ET
Urbanization key to speedy growth: RBI Governor
TOI
FDI in multi-brand retail will cool inflation: RBI
ET
Database of Madurai farmers having loans to be created
A database of all farmers in the district who have availed bank loans is going to be created through special camps in December. Farmers who are yet to avail any loans would be registered and bank accounts opened for them to bring them into the formal banking system, according to Collector U. Sagayam. Addressing the District Level Review Committee meeting for bankers at the Collectorate here on Thursday, he told officials and bankers that this initiative would help increase agricultural production and prevent migration of people from villages to cities. Residents of rural areas who were not engaged in agriculture would be given credit of upto Rs. 10,000 for livelihood activities. Further, he said that the district administration had identified four villages in the district to be developed as ‘model villages' for all-round development. The bankers were told to ensure that banking services were extended to all households in those four villages. While farmers would be given crop loans, those aspiring for self-employment would also be given access to credit. The four villages were Kottanathampatti in Melur Taluk, Periyakattalai in Peraiyur Taluk, Karadikkal in Tirumangalam Taluk and Chellampatti in Usilampatti Taluk. The meeting also discussed implementation of Total Financial Inclusion scheme in the district, among other issues. As per Reserve Bank of India (RBI) instructions, banking services must be extended to all villages with a population of 2,000-plus by March 2012 and villages with a population of 1,000 to 2,000 by March 2013. Of the 160 villages in Madurai district that come in the first category, all but nine have been covered. In the second category, 170 villages have been identified and the bankers assured the Collector that they would be covered by December 2012, three months ahead of the deadline. Mr. Sagayam also instructed bankers to extend credit to Sri Lankan refugees and transgenders for whom Mahalir Thittam had already formed 70 groups self-help groups. The State government had announced economic assistance of upto Rs. 15 lakh with 25 per cent subsidy. M. Prabakar, Project Director, District Rural Development Agency (DRDA); S. Vijayakumar, Assistant General Manager of Canara Bank, the Lead Bank for Madurai district; N.P. Rajan, Deputy General Manager, Indian Bank; R. Shankar Narayan, Assistant General Manager, National Bank for Agriculture and Rural Development (NABARD); A.J. George, RBI Assistant General Manager; KN. Subramanian, Lead District Manager; and K.M. Kanagaraj, District Disabled Rehabilitation Officer; took part in the meeting.
HBL
Falling rupee, debt, dollars & deficit: Do we have enough forex reserves?
The RBI is taking no chances - get the dollars in as fast as possible, build up reserves while you can and prepare for the worst. Indeed, even the timing of this week's Cabinet approvals for foreign direct investment in retail, can be seen in the light of the need to bring dollars in at at a critical time...
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It's time to rejig the elephant's dance: Subbarao
...“India's growth story is still credible….As people, we are understandably eager for our economy to sprint like a tiger rather than amble like an elephant. Yet, few animals have an elephant's stamina. ....
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Finally, govt decides on bill for multi-level marketing firms
Jaipur: The state government has decided to come up with a bill against fraudulent multi-level marketing firms in the aftermath of multi-crore fraud by the Gold Sukh Trade India Ltd with thousands of people in Rajasthan. Sources said that chief minister Ashok Gehlot has asked the officials to prepare a draft of the bill in which separate legal provision against such fraudsters will be made. "We will start the process of preparing the draft on the lines of similar laws against multi-level marketing firms in several states of the country. The existent laws in these states will also be considered if they can included in the bill to be introduced in Rajasthan," a senior home department officer told TOI. The chief minister Gehlot had taken a meeting of senior police and administration official at CMO on Friday and asked them to prepare a special strategy to put a check on such frauds. Sources said that such firms are operational throughout the state. "Almost 99% multi-level marketing firms cheat the investors in one way or the other. Specific provisions regarding what kind of MLM companies are fraud will be made in the bill," said the officer. As per the existent law, if any company wants to engage in any business activity, it needs to register itself under the Indian Companies Act 1956. Once registered, they become incorporated under the act and termed as public limited company or private limited company. These companies are then regulated by a regulator enacted by Parliament or by the state government concerned.For banking and non banking financial services, RBI is the regulator and for stock markets, the regulator is Security Exchange Board of India (SEBI). However, there are certain companies which do not fall under purview of any of the regulators and that is where companies like Gold Sukh operates and takes advantage of the grey area.
TOI
Volatile times ahead for the rupee
....The RBI has some measure of control over the range it wants to target. But the RBI dare not try to rigidly control the rupee because it could rapidly exhaust the forex reserves if it attempted to do that in the face of a major market trend.......
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Staring down the barrel
...The rupee's downward spiral against the dollar held investors awestruck last week even as importers and exporters scrambled to protect their forex exposure. Rear-guard action by the RBI to stem the slide by announcing a slew of measures including increased FDI limit in retail salvaged sentiment in the later part of the week.....
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Tough task for Centre to raise funds for infra financing: RBI -
...“Both the government and RBI have taken a number of initiatives to develop corporate bond market and some further initiatives are in pipeline,” ....
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Saturday, November 26, 2011
Banks told to develop own biz models to provide service in rural areas
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Ms Uma Shankar, Regional Director, RBI, handing over a loan sanction letter to one of the beneficiaries in a credit campaign launched at Bagalkot. Mr C. Sambasiva Reddy, Chairman, KVG Bank, and Mr A.K. Bhattacharya, GM, RBI, are also seen |
Hubli, Nov. 25: “Banks should develop their own business models to achieve financial inclusion (FI) roll out”, said Ms Uma Shankar, Regional Director, Reserve Bank of India, Bangalore. Speaking after inaugurating the credit camp for small and medium sector organised in Bagalkot by Karnataka Vikas Grameena Bank (KVGB), Ms Shankar said banks should also introduce bankable schemes and open financial literacy and credit counselling centres in the North Karnataka to improve the credit flows. “So far, only about five per cent of the six lakh villages across the country have been provided with banking facilities. “The task of achieving inclusion of a large populace, who are deprived of banking services, is clear. Thus RBI's main focus is towards promoting greater inclusion,” she added. While appreciating the efforts of KVG Bank under financial inclusion, she said the regional rural banks play a major role in inclusion. Banks should take advantage of simplified procedure of know your customer (KYC) norms towards reaching more people. “To address the issue of uneven spread of bank branches banks are permitted to freely open branches in smaller towns with population up to 49,999 people. “Banks were mandated to allocate at least 25 per cent of the total number of branches to be opened during a year to unbanked rural centres,” Ms Shankar added. A model scheme on Financial Literacy and Credit Counselling Centres (FLCCs) was formulated by the RBI. In Karnataka, as on date, 30 such centres are functioning covering 27 districts.“In Karnataka, the RBI had identified nine villages for transforming them into model villages by providing banking facilities to all residents,” she said. Mr C. Sambasiva Reddy, Chairman of KVGB, appraising the bank's performance and its social involvement said “KVG Bank has taken much care of implementation of financial inclusion and already has appointed 285 business correspondents (BCs) and opened 52 financial inclusion branches.”
HBL
Usha Thorat and Margaret Cole Join ICFR's International Advisory Council
London : The International Centre for Financial Regulation has appointed Usha Thorat and Margaret Cole to its international advisory council. Usha Thorat is Director of the Centre for Advanced Financial Research and Learning, Reserve Bank of India, and Cole is a managing director of the Financial Services Authority.
http://www.icffr.org/
Banks should be resources of growth: Thorat
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Expert advice: Former Deputy Governor of Reserve Bank of India Usha Thorat at a function organised by Fisat Business School in Kochi on Friday |
KOCHI: Banks have to provide financing resources necessary for the sustained growth trajectory of the Indian economy, said Usha Thorat, former Deputy Governor of the Reserve Bank of India. She was delivering the maiden lecture of the FISAT Business School (FBS) lecture series in Kochi on Friday. "We are looking at a high growth rate of 8-9% of the Indian economy and banks will have to play an exceedingly important role in facilitating this rate of growth. Such a growth will have to come from the manufacturing and agriculture sectors. But so far our stress has been on the services sector," Thorat said. "Infrastructure and urbanisation will call for huge project financing and this will be another challenge that Indian banking will have to face. Meeting the challenges of globalisation is another task ahead for the Indian banking sector," she said. Thorat also talked about the possibilities that information technology could offer the banking industry. "To achieve broader inclusive growth, banks must leverage technology and put in place a ubiquitous interoperable payment system to increase the efficiency of processes, dealing with millions of clients and to achieve better internal risk management," Thorat said. Noting that people have been investing in gold and real estate instead of monetary savings, she said, "To increase the rate of growth or even sustain current growth rate of the economy, more savings will have to go in the form of financial savings. This would mean that banks must increase their focus on financial inclusion programmes; besides, there would have to be a benign inflationary environment which would be conducive for people to move their savings from real estate and gold to financial savings."
TOI
Cops try to dissuade MoD babu from filing FIR after theft
It's the fag end of the year, the time when the Delhi Police try every trick in the book to dissuade complainants from registering FIRs. A deputy director in the ministry of defence experienced this firsthand when he went to get a burglary case lodged recently. In the early part of November, the Laxmibai Nagar residence of Ashok Kumar Singhal, 57, was burgled for the second time in 2011. Appallingly, not only have the police been unable to crack both cases, they tried to convince the MoD official not to file an FIR when the second heist took place. Their reason: it was "very difficult" to trace the accused. According to Singhal, his brother informed the law enforcers about the crime on November 7 and a written complaint was also submitted in this regard at the Sarojini Nagar police station. The case was finally registered on November 17, with the police officers concerned claiming that they were informed about the incident only on November 15. "The police are contradicting their own written documents. They stamped my brother's complaint on November 7 and then tried not to register the case when I came back from a vacation. They tried to convince me on the pretext that the stolen items would be returned if they stumbled upon the accused," Singhal recalled. The victim lives in a type IV government quarter in the south Delhi locality with his wife, an Assistant Manager in the RBI, and a daughter who is an eleventh standard student. "I have always believed in the system. But I am amazed how the police try to hush up problems rather than solving them," Singhal remarked. On November 5, the Singhal family departed to Tamil Nadu for a holiday. On November 7, a neighbour informed his brother in Delhi that the door of their house was ajar. "My brother rushed to the site from Saket and informed the police. He filed a complaint of theft at the Sarojini Nagar police station," Singhal said. The MoD official returned from the holiday on November 14 and went to the police station the next day. "The incident has taken place between November 4 and 14, and a case has been registered," the FIR read. It had no mention of the complaint filed on November 7. In February, too, burglars had stolen articles such as 200 grams of gold. "The police haven't divulged any information on the progress of that case as well," he said. Shockingly, the November burglary is the fourth crime in the same lane of Laxmibai Nagar. "It has become a routine and nobody is concerned," Singhal said.
India Today
Subsidies are bad: D Subbarao
Chandigarh: Advocating fiscal consolidation and containment of fiscal deficit, Reserve Bank Governor D Subbarao today termed subsidies given on fuel, fertiliser and irrigation as "bad" ones and stressed on weeding out unproductive expenditure. Delivering the P N Haksar Memorial lecture here, Subbarao said, "In charting a roadmap for fiscal consolidation, we need to be mindful of the quality of fiscal adjustment-- which is to weed out unproductive expenditure and protect growth promoting expenditure," he said. Sharing his thoughts on subsidies in his address on 'Rejigging the Elephant Dance: Challenges to Sustaining the India Growth Story, Subbarao said, "There are bad subsidies and there are good subsidies". "Bad subsidies like fuel subsidy, subsidy on LPG may be Rs 300 but every time you buy LPG you are getting subsidy to the extent of Rs 300. Not only you, Mr Birla, Mr Ambani, every time they buy a cylinder, they will also get subsidy," he said. "Then there is fertiliser subsidy...soil degradation happens because of fertiliser subsidy and thereafter irrigation subsidy," he said. Subbarao said there were good subsidies as well, like giving cycles to girls to come to school and constructing toilets for girls in schools located in villages. "These are good subsidies," he asserted. He said about 75 per cent of the government's expenditure constitute payment of salaries, pension etc. He emphasised on the importance of a stable and predictable macro-economic environment which was necessary for growth. "Fast growth gained through an excess can be an allure because the signs of instability brewing in underbelly are often not visible real time. But when implosion inevitably happens, the losses by way of lost growth and welfare can be monumental," he said.
FE
Good governance key to keeping India growth story intact: RBI
Chandigarh, Nov 25 (PTI) Concerned over the economic slowdown, RBI Governor D Subbarao today outlined the 10 challenges to keeping India''s growth story intact and asserted that "providing good governance" would be critical in this regard. There may be several challenges to acceleration of growth, he said, adding that identification of these areas and drawing up plans to address them is the relatively easy part. "What is infinitely more difficult is the translation of those policies into action," he said. Delivering P N Haksar Memorial Lecture here, Subbarao said, "In the ultimate analysis, it is the quality of governance that separates success and failure in economic development..." Among the 10 challenges, he said it would be imperative to bring inflation down to 5 per cent or even lower to regain the growth momentum and accelerate the rate further. He said a high inflation scenario makes both savers and investors uncertain and there is a need for a stable macroeconomic environment. Emphasising on the importance of a stable macroeconomic environment, he said the fiscal deficit needs to be controlled and inflation must come down. "The first is reduction of fiscal deficits... The second task is to bring inflation down first to 5 per cent and then even lower (for stable macro-economic environment)...," he said. The governor said the current inflationary woes are a consequence of both supply shocks and demand pressures. Maintaining that the RBI''s monetary tightening policy has been aimed at restricting demand and anchoring inflationary expectations, he said, "This has to be supplemented by supply side responses to raise the potential output of the economy."
MSN News
'Need to bring inflation to 5%'
Reserve Bank of India (RBI) Governor D Subbarao on Friday said inflation must be brought down to five per cent, or below that, to stabilise the macroeconomic environment and facilitate sustainable growth. "A high-inflation scenario makes both savers and investors uncertain," said Subbarao. He added the monetary tightening policy was aimed at restraining demand and anchoring inflation expectations. India's inflation indicator — the wholesale price index — has been above nine per cent for the last few months. To tame inflation, RBI has raised policy rates by 375 basis points in thirteen tranches since March 2010. The central bank expects inflation to ease in the December-January period, before declining to seven per cent by the end of March. While monetary tightening addresses demand-side pressures, the central bank's efforts must be complemented by supply-side responses. "The current inflation we are experiencing is a consequence of both supply shocks and demand pressures," Subbarao said, adding it was necessary to reduce the government's high fiscal deficit to stabilise growth to sustainable levels. For the current financial year, the government had estimated fiscal deficit at 4.6 per cent of the gross domestic product (GDP), and this now increasingly seen as a difficult target. The RBI governor said India's growth was credible, but the country needed to increase agricultural productivity, expand employment and productivity, promote financial inclusion and bridge infrastructure deficit. He said infrastructure deficit was hampering faster economic growth and efforts to curb the deficit had fallen short. The annual infrastructure investment would have to be increased to 10 per cent of GDP from the current six per cent to meet the requirement of $1 trillion over next five years, as estimated in the 12th Plan. Pointing to the need of infrastructure financing in India, Subbarao said projects should be financed by long-term sources like insurance and pension funds, not banks, which could face exposure risks and asset-liability mismatches. "Since these markets in India are still not deep enough, the burden of financing infrastructure is falling on banks," he said. Corporate debt would go a long way in augmenting infrastructure financing, but the market was demand-constrained and needed attention, he added. On financial inclusion, he said banks continued to see it as an obligation, not an opportunity. He emphasised banks need to change their perceptions and tap business opportunities in unbanked areas.
‘Elephant dance must be rejigged’
RBI Governor D Subbarao on Friday said just as East Asians resembled tigers and China the dragon, India stood for an elephant. India's high-growth trajectory before the crisis proved elephants, too, could dance. "But the elephant dance was interrupted by the ‘zoo party’ of the global financial crisis. To get it back on course, we need to rejig the dance," he said.
BS
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