2011 — When macro events ruled markets

..............The RBI, in its Macro Economic and Monetary Development quarterly report, holds a positive view on agriculture prospects for 2011-2012, with above normal southwest monsoon and equitable spatial distribution. This said, with a high base effect, this sector may find it difficult to outdo the bumper numbers of last year. The Survey of Professional Forecasters conducted by the RBI has, in fact, revised its agricultural growth expectations lower to 3.2 per cent for 2011-12.

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Spoilers for MFIs’ fund-raising plans despite RBI move

Mumbai: The microfinance industry is unlikely to get much respite from the recent RBI decision to increase external commercial borrowing (ECB) limit for them, as the rupee fall and the bad financial health will act as spoilers to their fund raising efforts, say industry experts. “Though increasing the ECB limit is a step in the right direction taken up by the regulator, it is difficult to raise money from overseas now due to the sharp volatility in the rupee,” a top MFI officia said. Without proper hedging, it will be difficult to take such kind of exposures which will impact the balance sheet of MFIs, he added. The official also pointed out that it is difficult to convince foreign investors to put in money at a time, when the domestic business is not doing good. “The health of MFIs is not good after the Andhra Pradesh Ordinance last October. Unless the issues relating to the sector are sorted out, it will be difficult to raise money overseas,” he said. The Reserve Bank last week increased the ECB limit for MFIs to $10 million in a financial year from $5 million earlier and also allowed ECB credit by international banks, foreign equity holders and overseas organisations into the domestic MFIs. Another industry official said the raising the ECB cap is a good step in the medium-term. “Increasing the credit limit through ECB window is definitely a good step by the RBI. However, one can’t see it in isolation. Without the sophistication of dealing with a volatile currency, MFIs will not able to raise money at now,” Bangalore-based Janalakshmi MFI chairman Ramesh Ramanathan pointed out. He also said without domestic credit flow to the sector, these solutions would not be very effective to solve liquidity issue. Ramanathan, however, noted that this step will be beneficial to the industry in the medium-term. Following a spate of suicides by harried MFI borrowers after being allegedly harassed by collection agents of MFIs, Andhra Pradesh, the largest MFI market with over a quarter of the Rs 20,000 crore micro advances, issued an Ordinance, which strictly regulated the collection and lending practices of microlenders. Later on, AP passed a legislation to effect the Ordinance into an Act.These regulations had a very debilitating impact on the industry as borrowers refused to pay up, leading to a credit crisis in the industry. Their woes escalated when banks refused fresh loans as these micro lenders were forced to default on their debt servicing.

Firstpost

RBI to introduce plastic currency

VIJAYAWADA, DEC 23: The Reserve Bank of India ( RBI) will soon bring into circulation ‘ plastic currency’ on an experimental basis. Disclosing this here last night, while addressing a programme, RBI Governor D Subba Rao said the environmental clearance was obtained for the experiment. He said the proposal of plastic currency had been there for 15 years and would be conceptlised on experimental basis soon. He said he had got opinion from people that preserving of plastic currency might be difficult for the rural people. He said the RBI was advising banks not to circulate mutilated and torn notes as it got complaints from the general public. Subba Rao said it was utmost responsibility of the RBI to ensure that all banks functioned well. If a bank incurred became bankcrupt, it would affect other banks too, he added. He informed that in Andhra Pradesh, out of 6,600 villages 5,800 villages had bank branches or bank correspondent under the programme of 100 per cent financial inclusion. “Opening bank account alone is not sufficient. They should be operated which is the objective of the scheme,” he said and asked the bankers to ensure the villagers operate their account. 

Meghalaya Guardian

Pastures turn greener for NRIs

.....However, non-resident Indians should also take into account that the weakening of the rupee, if it continues, has the potential to eat into their returns on maturity................

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Banks hike interest rates steeply to lure NRE deposits

.........The Reserve Bank of India's move to deregulate interest rates on non-resident external (NRE) rupee deposits and ordinary non-resident accounts has encouraged banks to attract dollars. Many banks have announced a steep increase in interest rates on fixed deposits held by non-resident Indians ..............

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Credit where it's due

Bimal Jalan on the challenges ahead for the banking system

So far as India's banking sector is concerned, I think there has been large growth and it is regarded as one of the best in the developing world for the reason that we adopted a policy measure quite some time ago as a country that we should follow the best international standards, whether you are public sector or private sector. That is very important in terms of capital adequacy, in terms of provisioning of bank loans, in terms of whatever definition you have. Because earlier, you know, in the eighties, early nineties and so on, it was thought that the public sector had special characteristics and you don't have to abide by those rules. If you go by those rules, there was enough room in terms of capital adequacy. But it is very important for an internationally functioning financial system, whichever institution it has, either public or private sector, that it conforms to the best rules. And as you probably know insofar as the banking system is concerned, that is what you might call the vanilla banking sector as an entity which takes deposits and lends. Not the American type of banking system, which has got subsidiaries and collateral deposits and the kind of crisis that they had. But now now I am talking about the end of the nineties and early 2000s. When there is a Bank of International Settlements in Basel, of which a number of countries are members and they have international norms regarding the capital adequacy. Then if a loan has been rescheduled, you couldn't say that it is a non performing assets or NPAs. But if it has been rescheduled because of the default in payments, then it is an NPA. But talking about the commercial banking sector that India's NPAs are, in comparison with the rest of the world, somewhat better. All the indicators of what a good banking system is, we would meet those standards. It is a different point about interest rates and I'm leaving that apart. But even there, in terms of spread, that is, the cost of banking is how much you charge above the minimum interest rate. It would compare quite favourably with the rest of the world. In terms of the cost and the cost of raising deposits, for example, the different segments in our system, the cross subsidisation of rural banking from normal banking, I don't want to go too much into it. My point is that India's banking system is among the best and we have avoided being over-exuberant. As you can see, the 2008 rate crisis affected the profits of the banks, but we didn't go haywire. We did not adopt the kind of mess, the kind of subsidiaries, collaterals and the kind of investment banking systems that some parts of the world like the US adopted. Now all of them are considering a conservative, straightforward system, where a bank is a bank. And the most distinguishing point about a bank, which you must remember, is that banks themselves, irrespective of what capital they have, the reserves they have, are dealing with other people's money. You and I deposit money into the bank and the bank lends it to somebody else. The lending decision is made by the bank. They are using our money to re-lend as it were. So this is the distinction between say the banking system and some other types of financial system, say stock exchanges. So my summary point is that, the Indian banking system is by any reckoning regarded as exceptional. It's a sound, rule-abiding banking system. It's not that there are no defaults and no problems, but in aggregate. Some banks will show high profits and some low profits, but that is a separate issue altogether. I think very well of our financial system as a whole and the banking system in particular. Regarding the proposed banking laws amendment bill Act 2011, which is pending approval in Parliament, I have not studied this legislation very closely. It isn't fair for me to make a comment, given my earlier association with the banking system. But some parts of it are certainly good. For example the subsidiary idea is a good idea. But of course it has to be reciprocal in some sense. We have to have same freedom to expand our banking system abroad. And that is the way the banking system works. For the rest I have not studied it very closely and I wouldn't like to make any comment. When it comes to allowing more private banks to open in the country, I don't think it's an issue so long as standards are upheld. The most important thing that we must remember is again that we are dealing with other people's money. And therefore you need some rules of the game, as it were, that if you are borrowing from banks, or if you are doing something which is creating liabilities on the banking system as a whole, then you have to be careful. The same principle was adopted when we introduced the licensing system for new banks a few years ago. I am all in favour of it. But we have to make sure that there is no conflict of interest. There are many dimensions and the rules are the same and the third and utmost important point is that there must be close surveillance, in terms of transparency, responsibility and accountability. Then you have the issue of financial inclusion, and bringing un-banked people into the system. There is simply no question that RBI has given this objective of financial inclusion the highest priority. Because it is not only the interest rate question, everybody needs financing if you are in business or farming or any other productive enterprise. There will be a time gap between the return and the investment you make. There is no question that it has to be one of the highest priorities. I am very glad that RBI has given it the highest priorities. But at the root of it there are issues, in the sense that with the expansion of literacy, you have to improve communication skills so that even people in rural areas can access the banks on their own and it can be done. India has been able to launch its mobile telephony. That is my favourite example that we started with a PCO (public call office), where anybody could make a call and then mobile telephony. So the scope is tremendous and I am absolutely sure that it can be done and it will be done. But we have a very long way to go. In the last 15 years what has happened in the mobile telephony or access to communication and access to banking system, well these two are not comparable in terms of cost. If you set up a branch, it costs a great deal of money and to be viable, it has to return the money. But what I am saying is that it can be done. In fact it has to be one of the highest priorities and just as with education and health and other things we are trying to make forward strides. So this is another area of great importance in my mind.In theory, it's great that we're seeing informal money transfers happening in un-banked areas through media like the mobile phone. But in practice it's of utmost importance to have security check-ups. If I have your phone number now, I can use it to transfer money from your bank account to somewhere else. Then you need to evolve a system of cross checks and also make sure that the scope for any falsification of your identity is as narrow as it can be, and now obviously we have other things this is going to improve hopefully. We have to create a system which is consistent with the security aspect so that the mobile telephony cannot be misused. Hacking is becoming a primary issue and not only in our country. So we have to learn as we go along. I would go slowly rather than hasten, as security is of utmost importance, particularly for poor people and less well-off persons even in urban areas. SAThere is no straight answer when it comes to how the role of RBI will evolve in future years. It depends on how well you do this job. There are always trade-offs. So therefore the trade off in the RBI business or anywhere like inflation or growth, there is a trade off and you have to strike the trade off correctly. The rest of the world is also coming around to the view that the banking system, the pure banking system, has to be in some way guided, related, supervised and assessed by the central banks. Because central banks are creators of money. And they have the ability and authority and experience to supervise the banking system. So I am in favour of that. Even those who have separate financial authority are coming back to the model, America for example. I have no doubt that it will be good for banks which are dealing with other people's money and where interest rates are vital, to be part of the regulatory system. The RBI shouldn't interfere in the day to day. But it has to make sure that your and my money is safe, that the credit-deposit ratio is under control. All these things are very vital in making the banking system good, and something persistent and long term. So I am in favour of such a system and there also RBI, if I may say so, has made tremendous amount of progress. There is no day-to-day intervention and that should be avoided. We should make our process even more at arm's length from the RBI. The RBI should not be involved in management of banks. Our system works, it is working reasonably well, and while nobody can say it is a 100 per cent model, but no other system around the world works as well. We can say that our financial system is much more stable than many other countries'. We have to make sure that the supervisory, regulatory system is transparent and accountable, and is at arm's length. RBI should get into management of banks, or be on their boards and things like that. In terms of the future, I will say the biggest challenges that any well-functioning, good banking system, which we are: one, financial inclusion, two, making our banking system much more integrated with the financing of the small and medium sector as well as the rural sector. The small and medium sector is of utmost importance to my mind. So you should have a kind of banking system that is approachable by any enterprise, which is productive. All this will take time and we can do it. And one of utmost importance is of technology induction. So the banking system becomes more or less paperless, if possible, but with security. It is not an easy task, but it is a challenge we have come to and will meet over a period of time.

Business Today

RBI Governor, S.M. Krishna visit Tirumala



Thanksgiving :

RBI Governor D. Subba Rao with wife Urmila offering prayers at the Lord Venkateswara Temple in Tirumala on Friday



The hill temple of Lord Venkateswara witnessed the visit of two VVIP devotees on Friday — Minister for External Affairs, S.M. Krishna and the Governor of Reserve Bank of India, Duvvuri Subba Rao. While the MoEA was here on a pilgrimage-cum-official programme — to declare open the new premises of the passport office at Tirupati, the RBI Governor Dr. Subba Rao was purely on a pilgrimage and he has even subtly declined on that ground to speak the media, as they tried to take a few bytes from him as he came out of the temple after their morning darshan. The two dignitaries visited the temple separately accompanied by their spouses and other family members and were given a warm welcome by the temple authorities as they reached the Mahadwaram. As is the custom in the Tirumala temple, after paying their obeisance to the Lord, they went round the precincts of the shrine and were later seated at the Ranganayakula Mandapam where the temple authorities presented them with the Lord's prasadams even as priests blessed them with long life and prosperity reciting verses from the scriptures. 

HBL

Inflation biggest challenge for RBI: D Subbarao

VIJAYAWADA: Stating that effective management of inflation is the biggest challenge lying ahead of the Reserve Bank of India, bank chief Duvvuri Subbarao said that there is no meaning in achieving double digit growth rate when 80% of the population is still burdened by high prices. Speaking at a seminar organised by the Andhra Chamber of Commerce and Industry ( here on Thursday, Subbarao said that RBI was closely monitoring the markets and taking steps to put the economy on the rails. "I am still hopeful of achieving a double digit growth rate at the end of this fiscal. However, I set the target only at 6% as the international markets are volatile and not giving any clue as to how they would take change," he said. Subbarao claimed that India has the capability of achieving 10% growth rate despite small hiccups. He said that it would be a great moment if the nation pulls off 10% growth rate soon. Referring to the repeated complaints from the industry, the apex bank chairman defended that increasing the interest rates was a compulsion when the inflation was going high. He said that the RBI was forced to hike the interest rates at least 13 times in the past two years, which helped the bank in bringing the inflation down to around 9%. "Inflation would have been anywhere around 12-14% had we not raised the interest rates on the loans," he explained. He said that the growth rate would be considered good only when the nation's inflation was also in limits as rising inflation affects more than 80% of the people. "In fact, pensioners and small depositors have always been complaining about poor returns. How can we pay them better if not by raising the rates on industry?" he asked. He, however, assured the industry captains that the RBI would look into rationalizing the rates after completely steadying the boat of inflation that is floating on the waters. He said that they wanted to reduce the inflation rate to around 7% by March end, which would help them taking some bold decisions. Refusing to divulge the strategies on managing the falling rupee value, Subbarao said that RBI was closely watching the situation. "No central bank would like to disclose whether it really intervened in the markets to steady its currency or not. It would come to light only after two months," said Subbarao. He said foreign investors were adopting the wait and watch policy resulting in tough situation in the stock markets. "This situation made the US dollar an attractive option for the investors (foreign) making the rupee weak," he told the gathering. He said that massive purchase of dollar in future markets was also complicating the markets. Earlier, he said that incomes of rural people too have increased considerably making them aspire for quality of food. He said that such a trend, though good, too had forced the inflation to go high. He said that people from all areas were spending a lot on expensive food and valuables. He added that people need not take the depreciation of rupee value as damage to their self-dignity. "Prices of potato go up and come down. Similarly, rupee value too," he observed. 

TOI

Fake currency notes found from Bank of India during audit

Barabanki, Dec 23 : Fake currency notes with a face value of Rs 46,500 have been found in the currency chest of the main branch of Bank of India in Kotwali police station area here, police said today. Bank manager Jagdish Prasad in a complaint with the police had stated that during the audit carried out a month ago, 86 notes in the denomination of Rs 1000, Rs 500 and Rs 100 were found to be fake, police said. A team from Reserve Bank of India today checked the notes and found them to be fake and have sent them for forensic examination, they added.

IBN Live

RBI slaps Rs 5 lakh penalty on Gondal Nagrik Sahakari Bank

MUMBAI: The Reserve Bank has imposed a penalty of Rs 5 lakh on cooperative sector lender Gondal Nagrik Sahakari Bank for its failure to adhere to guidelines on disclosure of loans to directors. "The RBI has imposed a monetary penalty of Rs 5 lakh on the Gondal Nagrik Sahakari Bank Ltd... for granting loan to directors, not correctly reporting loans to directors to RBI in the statutory returns on advances to directors...," the apex bank said in a statement. Gondal Nagrik Sahakari Bank was also found guilty of not submitting cash transaction reports to the Financial Intelligence Unit-India (FIU-IND). The RBI had earlier issued a show-cause notice to the bank in response to which the bank submitted a written reply. "After considering the facts of the case and the bank's reply as also personal submissions in the matter, the RBI came to the conclusion that the violation was substantiated and warranted imposition of the penalty," the statement said. 

ET

Maintain your pre-eminence, Duvvuri tells entrepreneurs




Expert talk:

RBI Governor Duvvuri Subba Rao speaking at an interactive session in Vijayawada on Thursday

 

The industrialists of Krishna district are front-runners in small-scale and minor industries. Vijayawada was the first of the smaller towns in the country to get an Autonagar. “The industrialists and entrepreneurs here should maintain their pre-eminence,” said Reserve Bank of India Governor Duvvuri Subba Rao. Addressing the Andhra Chamber of Commerce and Industry here on Thursday Mr. Subba Rao said that the service sector was also very strong in the city. “For the past 60 or 70 years you have shown that you can come out in flying colours and emerge number one in competition,” he observed. He launched a website of the Andhra Chamber of Commerce before speaking on ‘India – Growth and inflation—what we know and don't know'. Andhra Chamber secretary Chukkapalli Ramakrishna Prasad said that the association through its members was taking several steps to reduce inflation. President of the chamber Muthavarapu Murali Krishna said that it was through the efforts of the Andhra Chamber that various airlines were operating eight flights to the Gannavaram airport and soon the number would go up to 13 and about 600 passengers were using the airport daily. In the evening Mr. Subba Rao delivered the prestigious Dr. Jandhyala Daskhina Murthi Memorial Trust lecture on “RBI in every one's life”. National Statistical Commission chairman R Radha Krishna presided over the programme. Former mayor and trustee Jandhyala Sankar and more trustees C. Nageswara Rao, C.V.K. Prasad and M. Subrahmanyam were present. 

HBL

Saving account rate hike could put pressure on banks’ margins

.....“Banks are likely to partially offset the impact of the increase in interest cost by levying transaction and servicing charges and thus pass on the additional cost to the customer.” ...........

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SUUTI plan not enough

........... “Most banks may not have enough headroom in their capital market limits to fund the kind of amount the government is looking at. They may have to seek relaxation from RBI,”..............

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K.C.Chakrabarty: Creating MNCs of Tomorrow

Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. It is the cash flow that matters. A business that grows fast devours cash. Constant investment have to be made to just keep even.

In a developing nation's economy, it's the small and micro enterprises (SMEs) which play a vital role. If India has to have a growth rate of 8-10% for the next couple of decades, it needs a strong micro and small sector and micro entrepreneurs need to be nurtured. They not only give employment to a large number of people but also support bigger industries by supplying raw material, basic goods, finished parts and components, etc. The felicitation of micro entrepreneurs today, is not to be mistaken as the ultimate goal of the enterprise. It is in fact, only the beginning of its process in achieving greater heights. A small enterprise today will be a big enterprise tomorrow, and might well become a multinational enterprise eventually, if given the support, among others, to build their skills and knowledge levels. In MSME sector, the failure rate may perhaps be relatively higher - the reasons for which range from delayed/inadequate availability of credit to non-availability of backward and forward support system. Despite the risk, financing of first time entrepreneurs is a must for financial inclusion and growth. Thus, the banks and other agencies should take pride while servicing the micro entrepreneurs as they are playing an instrumental role in the formation of MNCs of tomorrow. There is a need for sensitisation of the bank's staff towards the needs of small entrepreneurs. The banks should develop systems such that the field staff is regularly updated and is equipped to appraise the financial requirements of small enterprises. The banks may use the platform provided by the technical institutions and send their staff to such institutions on a regular basis. Training is also required to be imparted to the branch managers and their loan officers for change in their mindset away from the perceived risk in financing micro and small enterprises.

Lessons from Emerging Countries

We should learn from the experience of Korea which has now become a leader of many globally important brands. However, barely forty years ago, Korea had no industry at all. The Japanese, who ruled Korea for decades, did not allow any. They also did not allow any higher education, so there were practically no educated people in Korea. By the end of the Korean War, South Korea had been destroyed. Today Korea is world -class in two dozen industries and the world's largest in ship building and other areas. Not far behind Korea is Taiwan, which like Korea was preindustrial in 1950. Today, Taiwan is a world leader in a number of high- tech areas, including microchips. Entrepreneurship and innovation are the key drivers of success in these two counties and turned them into world class manufacturers and industry leaders. The Koreans have set up small groups of their brightest people to systematically apply the discipline of innovation to identify and develop new businesses. Innovation requires us to systematically identify changes that have already occurred in the business - in demographics, in values, in technology or science - and then look at them as opportunities.

Four Pitfalls to Avoid

Many new businesses start out with high promise but suddenly run into trouble after a year or two. There are four typical mistakes entrepreneurs make and all four are foreseeable and avoidable. Here, I draw extensively from what Peter F. Drucker has very rightly pointed in one of his books. He said that there are four typical mistakes entrepreneurs make. Firstly, majority of successful new inventions or products do not succeed in the market for which they were originally designed. To illustrate the point, I would like to tell you of a man by the name of John Wesley Hyatt who invented the roller bearing for the axles of railroad freight cars. The railroads, however, were not ready for radical change; and Hyatt went bankrupt. Then Alfred Sloan, the man who later built General Motors, asked his father to buy Hyatt's bankrupt business. Unlike Hyatt, Sloan was willing to broaden his vision of the product. It turned out that the roller bearing was ideal for the automobile, which was just coming to the market. In two years Sloan had a flourishing business; for twenty years Henry Ford was his biggest customer. Similarly, very few would know that Novocaine was invented by a German chemist, Alfred Einhorn for use as general anesthetic in major surgery but it was not found suitable and ultimately it was used successfully by dentists. In fact, Peter Drucker had said that majority of successful new inventions or products do not succeed in the market for which they were originally designed.

Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. It is the cash flow that matters. A business that grows fast devours cash. Constant investments have to be made to just keep even.

When a business grows, the person who founded it gets too busy. Rapid growth puts an enormous strain on the business. It outgrows its production facilities and management facilities. The quality falls, customers do not pay and deliveries are missed. The best way to avoid a crisis is to create a management team. Young entrepreneurs cannot pay to bring in a management team. So it is necessary to identify the core competencies of the people working with you. One may be good at marketing, the other, say in, customer service. They have to be utilised for their respective competencies to be able to deliver their optimum. This planning should take place well in advance.

Lastly, when the business is a success the entrepreneur needs to ask what the business needs at this stage and whether he is concentrating on the right things. While entrepreneurship starts by putting himself before business and questions that are at the forefront is " What do I want to do?" or " What is my role?" , but when it succeeds the right questions to ask is " What does the business need?" and " Do I have these qualities? ". As successful entrepreneurs, having gained experience and wisdom from past mistakes, going forward, it is necessary to ensure that the same mistakes are not repeated. First generation entrepreneurs can also take a lesson from the successful entrepreneurs to avoid committing the same mistakes.

Support from all stakeholders

There are ample opportunities in small businesses in India and such opportunities will transform the country in the coming future. For such transformation to happen there needs to be support from all stakeholders, government, banks, corporate, regulators, civic society, etc. Technology universities may be set up and the government can tie up with the best in the world to help in research. We need to harness entrepreneurship and look at skill building. A scheme for utilising NGOs to provide training services to tiny micro enterprises could be encouraged. Entrepreneurship development is important in view of its visible impact on wealth creation and employment generation. To facilitate and encourage this, skill building has been impressed upon by the Prime Minister's Task Force for MSMEs. Enterprise Development Centres (EDC) should be set up by the Central/State Governments with incubators to provide training not just for setting up of new units but also to provide continuing education on different aspects like product design, packaging, technology upgradation, financial management and marketing. Entrepreneurship development is the key factor to fight against unemployment, poverty and to prepare ourselves for globalisation in order to achieve overall economic progress.

(Abridged version of the keynote address by Dr K. C. Chakrabarty, Deputy Governor, RBI at the Citi Micro Entrepreneur Awards at NCPA, Mumbai. Full text can be accessed from www.rbi.org.in)

AfroAsian Business Chronicle

NABARD officers get an exposure of programmes

........While the Andhra Pradesh government had initiated measures to rein in the MFIs, the Reserve Bank of India (RBI)-appointed Malegam Committee had also come out with a slew of measures, ............

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Bright and dark spots in RBI's FSR report

...........“The FCCBs raised in pre-financial crisis years carrying zero or low coupons would need to be replaced with domestic borrowings, whose rates are much higher today,” .....................

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Banks scramble to attract NRE deposits

................Banks are trying to outbid each other in the race to garner NRI deposits. A number of banks have either doubled or trebled the rates they were offering just a few days ago on NRI deposits. This follows the deregulation of rates by the Reserve Bank of India...........

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Mind your comments, PM tells India Inc.

....Dr. Singh reportedly told the industry leaders that during the last few weeks inflation had eased and if this trend was sustained, the Reserve Bank of India (RBI) was expected to ease the monetary policy. He said he was aware of the industry concern about the high interest rate which was affecting investment plans but in order to curb inflationary pressures some reduction in aggregate demand was essential.....


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Be ready to battle uncertainties: RBI chief

Students storm Reserve Bank of India Governor Duvvuri Subba Rao for autographs after an interactive session on 'Current issues in macro economic management' organised by Andhra Chamber of Commerce and Industry in Vijayawada on Thursday

Saying that it was hard to spell out when the Reserve Bank of India (RBI) would be in a position to reduce interest rates, the RBI Governor D. Subbarao, has asked industrialists and others to go ahead with their projects. Addressing members of the Andhra Chamber of Commerce and Industry here on Thursday, Dr. Subbarao said that the best time to make investments was now. Saying that fortune favoured those who took risks, he advised investors to be ready to “battle the uncertainties”. He said the criticism RBI was facing today was that the raised interest rates were moderating growth. But the RBI also had a responsibility to discharge to the 80 per cent of the people in the country who did not have a voice and were affected by rising inflation. Growth was causing inflation and the two needed to be balanced. The goal of the apex bank was to bring down inflation to manageable level. Talking about interest from the savings point of view, Dr. Subbarao said while the savers wanted a higher rate of interest the borrowers wanted a lower rate of interest. It was for the RBI to strike a balance. While rupee depreciation was beneficial to exporters it was a loss to importers. It was a loss to the Government which was importing and giving subsidies and it was a loss to those who had borrowed from abroad. Unfortunately, even exporters were not benefiting because they were not “re-negotiating the terms of the contract” after depreciation of currency.

HBL

Inflation biggest challenge for RBI: D Subbarao

VIJAYAWADA: Stating that effective management of inflation is the biggest challenge lying ahead of the Reserve Bank of India, bank chief Duvvuri Subbarao said that there is no meaning in achieving double digit growth rate when 80% of the population is still burdened by high prices. Speaking at a seminar organised by the Andhra Chamber of Commerce and Industry ( here on Thursday, Subbarao said that RBI was closely monitoring the markets and taking steps to put the economy on the rails. "I am still hopeful of achieving a double digit growth rate at the end of this fiscal. However, I set the target only at 6% as the international markets are volatile and not giving any clue as to how they would take change," he said. Subbarao claimed that India has the capability of achieving 10% growth rate despite small hiccups. He said that it would be a great moment if the nation pulls off 10% growth rate soon. Referring to the repeated complaints from the industry, the apex bank chairman defended that increasing the interest rates was a compulsion when the inflation was going high. He said that the RBI was forced to hike the interest rates at least 13 times in the past two years, which helped the bank in bringing the inflation down to around 9%. "Inflation would have been anywhere around 12-14% had we not raised the interest rates on the loans," he explained. He said that the growth rate would be considered good only when the nation's inflation was also in limits as rising inflation affects more than 80% of the people. "In fact, pensioners and small depositors have always been complaining about poor returns. How can we pay them better if not by raising the rates on industry?" he asked. He, however, assured the industry captains that the RBI would look into rationalizing the rates after completely steadying the boat of inflation that is floating on the waters. He said that they wanted to reduce the inflation rate to around 7% by March end, which would help them taking some bold decisions. Refusing to divulge the strategies on managing the falling rupee value, Subbarao said that RBI was closely watching the situation. "No central bank would like to disclose whether it really intervened in the markets to steady its currency or not. It would come to light only after two months," said Subbarao. He said foreign investors were adopting the wait and watch policy resulting in tough situation in the stock markets. "This situation made the US dollar an attractive option for the investors (foreign) making the rupee weak," he told the gathering. He said that massive purchase of dollar in future markets was also complicating the markets. Earlier, he said that incomes of rural people too have increased considerably making them aspire for quality of food. He said that such a trend, though good, too had forced the inflation to go high. He said that people from all areas were spending a lot on expensive food and valuables.He added that people need not take the depreciation of rupee value as damage to their self-dignity. "Prices of potato go up and come down. Similarly, rupee value too," he observed.

TOI

Six thousand villages in AP to have banking correspondent

VIJAYAWADA: The Reserve Bank of India has identified 6,063 villages in Andhra Pradesh for appointment of banking correspondents under the financial inclusion scheme, central bank's Governor D Subba Rao said here today. Around 5,800 villages in the state already have these correspondents. "Ernakulam district of Kerala has completed financial inclusion 100 per cent and in Andhra Pradesh, East Godavari district will be made a fully financially inclusion district very shortly," Subbarao said in a keynote address at Siddhartha Academy. Every Indian needs to be brought under the purview of banking, he said. On the interest rates, he said RBI has no role in fixing the interest rates of the banks. The banks are at liberty to fix their interest rates. He said that interest rates even on NRI accounts were deregulated very recently, and RBI only decides the repo and reverse repo rates.

ET

I’m also doing my bit- Gokarn

At a function where RBI Deputy Governor Subir Gokarn was present, the organisers made a point of not welcoming him with flowers but giving him a certificate instead, which guaranteed that 10 trees would be planted in his name in a national park. Gokarn thanked the organisers and said that he had got three such certificates already. He was quick to add that his contribution to the environment went well beyond this: “You’ll have noticed,” he said, “that RBI reports have become thinner since I joined!”  
FE

Banking on stability

Mint's Anup Roy says RBI's Financial Stability Report concludes India's banking sector can withstand some shocks, though bad loans pose a concern.

Out-of-textbook thinking

..... The truth is that a central bank’s remit, in the words of Paul Volcker, is indeed to manage expectations — but the best way to manage expectations is to make them more rational and informed, through clear announcements of what the causes of inflation are, and what the RBI can, cannot, should not, and will not do. So far all the RBI’s increased transparency has shown is that its governor and senior advisors are happy to ignore the advice of its Technical Advisory Panel — people who have presumably not just read the textbooks, but done their homework, too................

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‘I am more at home with doubles'

...... When her father M. A. Ponnappa, a Manager with the Reserve Bank of India (RBI) was posted to Hyderabad, Ashwini enjoyed the privilege of being coached by two Dronacharya awardees — S. M. Arif and Pullela Gopi Chand, besides Indonesian Edwin Iriwan...............

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Yes Bank customers with at least Rs. 1 lakh in savings account to get 7%

........ If you are a Yes Bank Ltd customer and have at least Rs. 1 lakh in your savings account, you would now earn 7% per annum, a hike of 100 basis points (bps) from the earlier 6%. The bank announced the hike on Thursday. However, savings accounts having a balance of less than Rs. 1 lakh would continue to get 6% on their deposits........

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RBI to release third quarter policy review on January 24

Mumbai: The Reserve Bank of India will announce the third quarter review of the monetary policy on January 24 at 11:00 am (0530 GMT), it said in a statement on Thursday.

Siffy News

Thinksoft bags Rs 50 million RBI project

Chennai : Software testing company Thinksoft Global Services has bagged a Rs 50 million project from the Reserve Bank of India for offering end-to-end user acceptance testing programme. As per the deal, Thinksoft would be responsible for full project management including test strategy, planning and execution. Besides, it would also provide an automated test pack for RBI using its in-house automation framework, a release from the city-based company said. "The deal is valued at Rs 50 million and the testing cycles are expected to be completed in a year," it said. "It gives us a sense of pride at having been selected for this important assignment by the country's central bank, through a very transparent, rigorous and stringent selection process in a very competitive landscape. It demonstrates that RBI is very serious about getting the end state quality right and we will work hard and collaborate with RBI in making this project a resounding success.." Thinksoft Global Services CMD Asvini Kumar said. The scope of the core banking solutions testing would cover the automation and integration of the banking operations in all regional offices of the bank. Consulting firm KPMG was commissioned by RBI to help them identify the independent testing vendor, it added. Thinksoft Global Services has 750 employees with delivery centres in Chennai, Bengalore and Mumbai. It is supported by local offices in New York, London, Dubai, Singapore, Brussels and Sydney, the statement added.

IBN Live

RBI removes cap on mobile banking transactions

Customers will soon be able to transact more than Rs 50,000 through their mobile phones. The Reserve Bank of India has removed the cap of Rs 50,000 per day per transaction through mobile banking. It has now been decided that individual banks can place transaction limits based on their own risk perception and with approval of their respective boards. The RBI said that banks are increasingly extending mobile banking facilities to their customers. Inter-bank Mobile Payment Service (IMPS) developed and operated by the National Payment Corporation of India (NPCI) has also enabled real-time transfer of funds through the medium of the mobile phone between accounts in different banks.  The volume and value of mobile banking transactions are also showing an uptrend, said the RBI. According to Mr Lalit Sinha, General Manager, Alternate Channels and New Initiative Department, Union Bank of India, it is a welcome move by the RBI. As of now mobile banking transactions happen only from person to person and are used mainly for remittances. But the next phase is where mobile transactions would be used for merchant payments, that is, for purchasing goods. In these cases the limit of Rs 50,000 would prove to be insufficient. “A few banks are in the testing phase for this and should be rolling it out soon. So, the RBI's move has come at the right time. We will do our own risk assessment and have a reasonable limit,” Mr Sinha said. Recently, Citi India had launched a cash management service for corporate customers, which will help them receive payments from their retailers or customers through mobile phones. In such cases, the higher limit would be helpful.

HBL 

RBI warns banks on poor loan quality

Companies have raised foreign currency convertible bonds or FCCBs in pre-financial crisis years carrying zero or low coupons. The RBI said that these bonds would need to be replaced with more expensive domestic borrowing. The Reserve Bank of India has warned banks on the deteriorating asset quality and has called it the most significant risk. The central bank released the latest Financial Stability Report on Thursday. The central bank has also put a red flag on the rising speculative activity in the stock market and risks posed by the falling rupee on refinancing of corporate loans. RBI highlighted that the incremental credit to power and telecom sectors was higher than the aggregate credit growth and advised banks to carefully monitor asset quality. “Restructured assets in power, telecom at 8.5 per cent of total restructured assets as of June 2011,” RBI said in the report. This was 5 per cent at the end as of March 2011. Such accounts as a share of aggregate banking sector non performing assets rose to one per cent from 0,4 per cent during the same period. Bank shares have underperformed the rest of the market over the past six months as many analysts have raised the issue of rising level of non-performing loans. The BSE Bankex fell 21 per cent while the BSE Sensex has shed 10 per cent in value. On financial markets, RBI has raised a red flag on the surge in speculative trading. It has observed that the there is a surge in the derivative trading and it is not accompanied by an increase in the turnover in the cash market. This means the market is witnessing a higher speculative activity than before. The ratio of cash trading volume to the derivative market trading volume fell to 0.1 from 0.4 at the beginning of 2011. The central bank has also noted that intermediaries are playing in the derivative market on their propreitary or own accounts. The overall participation of the retail investor has declined and the evolving structure needs to be watched. The share of proprietary trading in derivatives segment has gone up considerably to 48 per cent in 2010-11 from 35 per cent in 2008-09 whereas the share of non-institutional clients or retail client has declined to 42 per cent from 59 per cent during the same period.  RBI has also highlighted external factors of concern.  The rupee depreciation has led to a significant refinancing challenges. Companies have raised foreign currency convertible bonds or FCCBs in pre-financial crisis years carrying zero or low coupons. The RBI said that these bonds would need to be replaced with more expensive domestic borrowing. RBI has permitted the buyback of FCCBs at a discount, extended the window for such buyback and allowed firms to refinance from overseas borrowers under the automatic route. “Proposals for restructuring of FCCBs not involving change in conversion price are being considered under the approval route depending on the merits of the proposal,” the report said. Between 2005 and 2010, Indian companies issued FCCBs of US$23bn of which US$7.8bn (at redemption value) worth of FCCBs mature in 2012. “With stock prices depressed, a large majority of the issues would need to be redeemed, and refinanced by domestic ‘expensive’ debt in most cases, creating refinancing risk as well as impacting profitability,” said IIFL, a Mumbai-based securities firm in a note last month.

NDTV Profit

CD ratio in UP

This refers to the brief report “SBI chief on low CD ratio in UP” (December 21). Coming from the SBI chairman, the observation that “When we talk about the CD ratio, we generally refer to the retail, agricultural and small loans only” deserves closer attention from the Reserve Bank of India. A more rational computing of the ratio based on mopping up from and utilisation of credit in the area is necessary to make decentralised planning for area development effective. The common man’s understanding is that the credit deposit suggests that it is the proportion of bank credit deployed in an area to the aggregate deposits mobilised by banks from the same area. Excluding bank finance flowing from other area branches or including credit provided by bank branches outside the district for computing CD ratio of the district will distort the picture. For example, if loan accounts operated from Mumbai by a bank under a centralised accounting system are included for computing the CD ratio for Maharashtra, the state’s CD ratio will get inflated, misleading planners and analysts.

M G Warrier, Thiruvananthapuram (BS)

2011 revisited | Microfinance sector's rough patch

The Rs 30,000-crore microfinance industry grappling with allegations of charging usurious rates, saw their fortune dwindling in 2011 with the Reserve Bank capping the interest rates for small loans. The story of SKS Microfinance's bombastic market debut in 2010 was overshadowed in 2011 as reported management tussle in the company hogged the limelight through the year. This was followed by the exit of Founder and Executive Chairman Vikram Akula. SKS, which brought the MFI sector into limelight in 2010 with a Rs 1,650 crore (around $350 million) IPO, had raised hopes of other players to tap the capital market. But the series of low moments faced by the sector, including concerns of corporate governance and strong-arm tactics for loan recovery, pushed it into the dark. Microfinance -- the business of doling out small loans at high interest rates to poor people unable to access conventional lending instruments -- has come under intense regulatory scrutiny following farmers suicide in Andhra Pradesh in late 2010. The spillover effect of the 2010 crisis was seen in 2011 when the Reserve Bank came out with regulations capping interest rates charged by microfinance institutions (MFIs) from small borrowers at 26%. In order to help sector, RBI brought the cash-starved MFIs within the priority sector lending category. The decision allowed them to access credit from commercial banks. It also created a separate category of NBFC-MFI. Now, the loan by banks to MFIs for on-lending to small borrowers fall under 'priority sector' category and fixed the loan amount for an individual borrower at Rs 35,000 from an MFI. The central bank said the loans could be disbursed to rural families with an annual income of Rs 60,000 or urban and semi-urban households with income up to Rs 1.20 lakh. The RBI, however, left it to the borrowers to decide on the repayment period either weekly, fortnightly or monthly. It has also asked the MFIs to ensure that 75% of the loan extended is utilised by the borrowers for income generation purpose. The sector had come under criticism for multiple lending, inscrutable business models and high interest rates of over 30% reaching a peak and coercive recovery tactics used by the lenders.

BS

Do not run after NRI deposits - K. Kanagasabapathy

Remittances should ideally account for a larger proportion of NRI inflows than NRI deposits, as they do not create any external obligation

In a way signalling a total deregulation of interest rates (after deregulation of the savings deposit rate), the Reserve Bank of India (RBI) announced deregulation of Non-Resident Indian (NRI) deposit rates on December 16, 2011. There is but one difference. This is also a step towards capital account liberalisation, and marks a significant shift in approach to external liabilities management. The ‘prevailing market conditions'—perhaps, the fast depreciating rupee, and the objective of ‘providing greater flexibility to banks' in mobilising these deposits — provide a context to attracting more funds through this route, minimising, thereby, the pressure on the current account deficit. An examination of the evidence would show that no significant extra inflows of funds can be expected from this channel. Even if the funds do come, they are a risky proposition for a number of reasons. First, NRI deposits figure as a ‘debt creating' flow in balance of payments accounts; hence this deregulation encourages such flows, deviating from the current stance on capital account management.  Second, even if NRIs are attracted because of the likely higher return (even without deregulation, the existing deposit rates are more attractive), given the higher cost of funds already faced by banks, besides the maturity and currency risks such deposits carry in their balance sheets, banks may not clamour for such deposits. Only three banks, one in public and two in private sector, all from the southern region, have announced new rates, which are not significantly higher. Third, since these deposits are held in India, the host countries do not provide any insurance cover, nor does India provide this cover, since these deposits are from outside India. The entire credit risk is borne by the depositors. Finally, during periods of crisis and political uncertainties, this source was observed to be very unstable and unreliable. Stability to the external sector has been provided more by ‘private transfers' or workers remittances, as part of ‘invisibles' in the current account. By not being a capital flow, these do not create any external obligation, and to the extent these flows are large the burden of current account gets minimised, providing enormous cushion to meet the otherwise fast-growing deficit in merchandise account. After reaching India, these funds may indirectly strengthen domestic consumption, saving or investment, but there is no external obligation created whatsoever. Remittances have increased from $2.7 billion in 1980-81 to $3.8 billion in 1991-92, the year of the Gulf crisis, and further to $12.4 billion in 1996-97 and a whopping $53.4 billion in 2010-11. The quarterly flows have not dwindled at any time. As percentage of GDP such flows represent nearly 3 per cent, reducing the current account deficit to that extent. In contrast, NRI deposit flows in capital account were unstable, particularly during the Gulf crisis. After touching $2.5 billion in 1988-99, they drastically came down to $0.3 billion in 1991-92, creating enormous pressure on the reserves position. In the recent period — despite relatively better returns being offered here than abroad for such deposits, and global financial turmoil and banking crisis abroad — the flow decelerated from $4.3 billion in 2008-09 to $1.1 billion in 2010-11. In relation to GDP, it generally remained well below 0.50 per cent, and in 2010-11 it was only 0.19 per cent. A comprehensive study by James Gordon and Poonam Gupta (‘Non-Resident Deposits in India: In Search of Return?', Economic &Political Weekly, September 11, 2004) found that these deposit flows were ‘influenced by standard risk and return variables and negatively (by) political and geopolitical uncertainties, such as the government resigning in mid-term or tension on India's borders and also external events' such as financial crises. The current domestic non-economic environment could have a bigger adverse impact on these flows than economic factors. While many countries do practise some form of discriminatory treatment for non-residents, the special treatment of non-resident ‘nationals' is unique to India. Evidence shows that this ‘patriotic' approach has not helped in practice. Recognising this, the second Tarapore Committee on fuller capital account convertibility recommended practically an abolition of this distinction, and said non-resident deposits should be open to all non-residents, subject to KYC norms and differential tax treatment. This is worth serious examination. As a source of accretion to foreign exchange reserves, the contribution from such deposits has not been that significant. In times of crisis, this does not bolster the reserves position. An internal working group of RBI (headed by Mr D. Anjaneyulu) in 2004 on external liabilities management recommended that ‘the policy preference should continue to be in favour of equity as against debt, ensuring at the same time that an increasing proportion of non-resident flows into the country is in the form of remittances'. Since then, the RBI has introduced several measures to promote easy money transfers across borders, which, in fact, has produced favourable results. This approach should be persevered with.

HBL

Don't treat depreciation of rupee with self respect: RBI Governor

Reserve Bank of India (RBI) Governor Duvvuri Subbara today asked people of the country not to treat depreciation of rupee with depreciation of self respect as there would be fluctuations. Addressing a seminar on Current Issues in Macroeconomic Management Organised by the Andhra Chamber of Commerce and Industry, he said as price of potato goes up and comes down same way price of rupee goes up and comes down and there is no need to treat depreciation of rupee with self respect. For the last few weeks, the rupee is depreciating. In fact, there is depreciation in currencies of other countries. But the depreciation of rupee is higher than other currencies, he admitted. Mr Subbarao said due to depreciation of rupee, the exporters were getting benefited while the importers were incurring loss and pointed out that the Government of India was a major importer to meet the requirements of subsidised supplies. We are watching the market carefully. We will take some administrative measures to check speculations to ensure that the rupee is not further depreciated, he made it clear. 

http://news.webindia123.com/news/Articles/India/20111222/1896473.html

All OK, says RBI on financial stability. But is it really so?

........... The RBI is surely right to say that the Indian financial system is stable, but if policy-makers are not proactive, the system will grow more unstable as the chickens of bad loans and asset losses come home to roost in 2012.

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Monetary tightening may ease if inflation falls: PM

.if the easing of inflation seen in the last few weeks is sustained, the RBI will be able to ease up on monetary tightening as well................

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RBI report puts spotlight on fiscal deficit

India's banking system is stable and can withstand global shocks, but there are weak spots like decelerating growth and rising fiscal deficit which are needed to be addressed, said a Reserve Bank report. "The domestic financial system remains stable in the face of an adverse international backdrop ... soft spots (are needed) to be addressed going forward," said the RBI's Financial Stability Report (FSR) released on Thursday. Referring to the weak spots, the report said, "Poorer global growth prospects and sovereign debt crisis in Europe has heightened external sector vulnerability. At the same time the domestic growth has weakened while inflation has remained high". As regards weakening rupee, the report said, "Exchange rate depreciation has inflationary implications through the increase in the cost of oil and other imported goods which are inputs in overall production". Moreover, it said the increase in petrol and diesel prices and minimum support prices have a cascading effect on the entire economy. It is also moderating impact of the monetary policy measures taken by the RBI earlier. Rupee has weakened nearly 18 per cent since January and is currently trading at Rs 52.65 against dollar. The other major challenge before the government would be to contain fiscal deficit during 2011-12. "The fiscal situation remains challenging as the revenue collection was lower than expected in the first half of the current year," it said. The government proposes to bring down the fiscal deficit to 4.6 per cent in the current fiscal, from 4.7 per cent in 2010-11. However, poor disinvestment and tardy revenue collection is putting pressure on fiscal deficit. As far as growth is concerned, it is likely to moderate to 7.5 per cent in 2011-12 from 8.5 per cent a year ago. The report, further, said that the global risks to the stability of the domestic financial system have intensified over the past 6 months. "Emerging developments in the macro economy and in the financial soundness indicators of the banking system pose some concerns as do the sharp corrections accompanied by high volatility in financial markets," RBI said.

Business Today

RBI flags deteriorating loan portfolios of banks

....The Systemic Risk Survey conducted by the RBI for the first time has identified deterioration of asset quality as the highest risk..........

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RBI fears rate war may stress bank margins

.......Competition in this space, which was non-existent earlier, could rise as banks with low Casa ratio would rush to garner such deposits by raising rates, RBI said. The effect could be muted, the regulator said, based on the churn in customers and the cost structure adopted by the individual banks.............

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India urged to promote interest-free banking system

... The memorandum, addressing Indian Finance Minister Pranab Mukherjee, Reserve Bank of India Governor Subba Rao, Minister for Overseas Indians' Affairs Vayalar Ravi, and the general manager, State Bank of India, Jeddah Branch, requested that a notification may be published in the Official Gazette of India to include interest-free banking as a form of business and advise the Reserve Bank to issue necessary instructions to all banks to introduce interest-free banking or open interest-free banking windows.......

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Develop East Godavari as 1st financial inclusion district: RBI

Rajahmundry (AP), Dec 21 : Reserve Bank Governor D Subba Rao today directed banks to take steps to develop East Godavari district as the 'first financial inclusion' district in the country. Speaking at a bankers' meeting organised by State Bank of India and Andhra Bank here, the Governor asked the banks to prepare a comprehensive plan to develop East Godavari as the first financial inclusion district besides intiating steps to develop this district as a model district. Stating that the RBI has been giving special attention to financial inclusion for the past five years, Subbarao said the main objective behind financial inclusion is not only of opening bank accounts but also to provide information about subsidy, interest, banks loans and other schemes launched by the government for the benefit of people. He asked banks to inform customers about the various schemes launched by the Government for the benefit of public. In FY10 budget, Finance Minister Pranab Mukherjee had set a target of taking banking services to all the villages which have over 2,000 population by the end of FY13. To facilitate this, the Government, along with RBI, has allowed banks to relax KYC (know your customers) norms and also allow transactions through banking correspondents in places where it is not viable to set up bank branchs. Around 60,000 villages will be covered under this scheme. There are 6 lakh ubanked villages in the country, the Governor said. There are 6,600 villages in Andhra Pradesh with over 2,000 population where no banking services are available, he added.

IBN Live

Banks committed to RBI to make know-your-customer process easier

MUMBAI: Banks have committed to the Reserve Bank of India (RBI) to make the know-your-customer (KYC) process easier for individuals holding a bank account, a move that will come as a blessing to thousands of people moving from one city to another. This was conveyed by bank chiefs to the RBI at a recent meeting to discuss issues relating to the implementation of the M Damodaran committee report on customer services. The KYC norms, which were introduced after the 9/11 attacks in the US, are aimed at establishing a customer's identity and proof of residence and plug any loopholes in catching bogus accounts. The Damodaran committee was formed to look into banking services rendered to retail and small customers and pensioners. The committee was also mandated to look into the grievance redressal mechanism practised by banks and suggest measures for expeditious resolution of complaints. It submitted its report in August this year. The banks told the RBI that an individual who already has a bank account will not be required to furnish information on proof of residence. Instead, the person can just provide a statement of account from the bank. Some time ago, the central bank had told banks that there have been several complaints from customers who are required to fill up lengthy forms and submit documents everytime they open a new account. Especially those who either move to a new city in search of jobs or get transferred, as they do not own a house there. "Banks have mutually decided that for verifying residential proof, they will develop a mechanism wherein they can verify with each other if an individual is an account holder. However, an individual will have to provide supporting document for establishing his or her identity," said a bank chief who attended the meeting but did not want to be identified. 

TOI