On microfinance

The report “Small loans add up to lethal debts” (Feb. 26) on debtor suicides linked to microfinance companies was heart-rending. That the poor, who believe that small loans can improve their living, become victims of the companies run by so-called financial wizards, is unfortunate. It appears that the companies are no better than the mahajans of pre-independence days.

Aditya Anirudh, Bangalore

Micro-finance institutions, established to provide small loans to the disadvantaged sections, have been lured into the path of becoming for-profit organisations. Manmohanomics and Monteknology have played a crucial role in making India a global market in which retailers and middlemen become millionaires while food producers are left to kill themselves. The patrons of liberalisation have a lot to explain to the bereaved families of those who have committed suicide in the past two decades because of their inability to repay debts.

Krishnaprasad Balan, Chennai

The report is excellent but the readers should know the brighter side of microfinance too. Because of the Andhra Pradesh fiasco, institutional resources to MFIs virtually stopped for almost a year. The industry has just come out of the crisis, with the RBI intervening to soothe the market and funders realising that it is safe to lend to MFIs which operate in credit-ready markets initially developed by them. The borrowers, in repeat cycles of borrowing, see this transparent mechanism as a far cheaper and desirable option. Many MFIs graduated from the initial mission of empowerment and social development to become lenders. The RBI has now virtually capped the market by indirect regulation. Why did Rajyam, mentioned in the article, borrow Rs.1.18 lakh? If she needed the money to invest in her livelihood activity, it points to the failure of the banking system. It is precisely this unfilled space in the rural credit market that the MFIs have occupied. Borrowing from eight different MFIs indicates a sad feature of an unhealthy microfinance market. Rajyam borrowed beyond her capacity — a situation akin to the state of the urban credit card industry three years ago. In the case of Rajyam and many others, the over-enthusiastic “profit-only” MFIs were responsible for dumping money in unprepared markets.  The article should teach the nation what should not be done. But, let us not conclude that all microfinance is bad.

Ananda Mukherji, Chennai (HBL)

It's the Economy, Stupid!

It was as if someone flipped a switch at midnight, December 31, 2011. The flipping of that switch magically turned around all that was terrible about India’s economy into the zone of happy faces and markets headed north………………

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iCreate Software sponsors IBA Risk & Compliance 6th Annual Summit, 01 Mar 2012, Mumbai

Organized jointly by Indian Banks' Association and SP Media, publisher of India Banking Review, this is the country's flagship conference for policy level debate on issues related to risk management and regulatory compliance in banking……………..

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Governance and Financial Regulation to be the focus of Oxford India Business Forum 2012

....The panel will include Sir Thomas Harris, Special Advisor, Standard Chartered Bank; Usha Thorat, Director of the Centre for Advanced Financial Research and Learning (CAFRAL), Reserve Bank of India; Ms Chitra Ramkrishna, Joint Managing Director, National Stock Exchange........

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Indian Railways defies reform

.......A decade ago, Rakesh Mohan, an eminent economist and former Deputy Governor, RBI, in an exhaustive report on Indian Railways, observed that the contours of policy, regulatory and management functions of the railways are fuzzy. He also said that Indian Railways is perhaps the most studied institution in this planet. Perhaps, now, it is time to ask some eminent political economists why Railways remains static, despite so many study reports.

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Nehruvian rate of growth

..... The Reserve Bank of India (RBI) is unlikely to set monetary policy based on this new inflation measure in the near future, given that the data series is yet to be tested for consistency, etc. Nonetheless, the inflation rate is high enough to warrant tempering of rate cut expectations.....

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High security chamber mooted to keep temple treasures

.......... M V Nair, eminent conservationist and co-ordinator of the Supreme Court appointed committee, said the blueprint of the proposed chamber would be prepared by experts from the RBI...................

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RBI takes a leaf out of Chinese model to curb speculation

The recent steps taken by Reserve Bank of India (RBI), similar to the China model to curb property speculation don’t seem to have worked too well. Instead, genuine buyers have been feeling the brunt even if it’s for now……

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RBI ups tenure of gold loans by 30 days to 270 days

The Reserve Bank of India said it has extended the maximum tenor for loans to import gold to 270 days from 240 days, effective immediately.  The new maximum includes 90 days for manufacture and export of gold products, instead of 60 days previously, and 180 days to fix the price and for repayment, the RBI said.

ET

eMudhra, Watchdata team up to offer data validation tech for banks

...........eMudhra has set up an R&D team to develop online authentication techniques for Indian consumers, and has developed SWYS Key authentication techniques in conformation with standards prescribed by the Reserve Bank of India. According to a press release, eMudhra's system allows the user to validate the key data and further digitally sign the transaction to ensure that “what you see is what you sign” and have a safe transaction..........

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MLT passed away............

I regret to advise you of the sad demise of Shri.M.L.T.Fernandes, retired Executive Director. He was 77 years old and he passed away in Mumbai on Friday 24th February, 2012. He was affectionately known as TOM and was a very popular Executive of the Bank. Many in our Group would have worked with him.  He was my C G M when I was Head of the U B D in Trivandrum.

May his soul rest in peace.

 
P.P.Ramachandran (via e-mail)

‘RBI outreach programme ensures inclusive growth'

Reserve Bank of India Chief General Manager V. Vasanthan speaking at the valediction of the RBI outreach programme at Elavanur village in Karur district on Saturday

Karur : Reserve Bank of India (RBI) lays stress on inclusive growth wherein all stakeholders have access to proper banking services. Every citizen, especially those in the rural areas, must be a positive stakeholder in the process, said RBI Chief General Manager, V. Vasanthan. At the valediction of the RBI outreach programme conducted at Elavanur village in K. Paramathi union in the district on Saturday, Mr.Vasanthan said the RBI during its platinum jubilee celebrations a couple of years back decided to spread its message of existence directly to the masses, who already were getting the benefits of the banking system through other banks controlled by the RBI. Thus, the outreach programme came about and a total of 76 villages were chosen across the nation in which the RBI officials camped and spread banking awareness.Poverty eradication. Helping eradicate poverty and ushering in economic development through a proper understanding of the needs of the people and creating awareness of the schemes, credit facilities and efficacy of the banking services besides instilling in the people the need to save money for a bright future were the core areas of the programme, Mr.Vasanthan explained. Elavanur in Karur district, Mookaiyur in Ramanathapuram, A. Mathur in Pudukkottai, Thiruvalanthurai in Perambalur, and Manalmedu in Puducherry were chosen as the target villages to implement the programme. While the RBI has already completed its engagements in Elavanur, Mookaiyur and Manalmedu, at A. Mathur and Thiruvalanthurai, the programme has reached the conclusion stage, the senior RBI official indicated. Mr.Vasanthan spoke on the strength of savings and the power of money. Stating that banks provided the right avenue for safe saving, “We have to spread the message of the power of saved money to every household, especially in the rural places. Economic development involving every individual and making available banking services to the poor is the need of the hour and the RBI is precisely doing just that through the outreach programme.'' The RBI wanted to ensure that the fruits of the banking services and monetary policy reached every rural doorstep in time to usher in economic development, he said adding that banks had a pivotal role in ensuring that happened. Making available credit facilities was a priority, he outlined. RBI General Manager M.M. Majhi noted that the thrust of the outreach programme was ensuring success of initiatives such as the financial inclusion scheme and that in turn was to ensure that credit reached the needy. Opening of no frills account benefited all the downtrodden, he explained. Aravakurichi MLA K.C. Palanisamy, Karur Revenue Divisional Officer S. Shanthi, NABARD General Manager, Chennai, Vasudevan, Assistant General Manager A. Parthiban, Pallavan Grama Bank Chairman S. Rangarajan, Chief Regional Manager, Indian Overseas Bank, Dindigul Region, C. Anbu, Director IOB Rural Self Employment Training Institute, K. Chandrasekaran, Lead District Manager Murugesan, and Elavanur Panchayat president Gnanasekaran were present.

HBL 

“Banks have to do a balancing act during debts recovery”

G.S.Hegde, Principal Legal Advisor to Reserve Bank of India speaking at a workshop on SARFAESI in Madurai on Saturday

Two-day workshop on SARFAESI Act inaugurated

Banks have to do a great balancing act when it comes to the subject of debts recovery. They have to ensure that the bank recovers the debts and protects its liquidity and at the same time it should not put the borrower in embarrassing situation said, G.S.Hegde, Principal Legal Advisor to Reserve Bank of India. Delivering the inaugural address at the two-day workshop on SARFAESI Act (The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,), titled ‘Is SARFAESI a complete code for recovery,' here on Saturday, Mr. Hegde talked about the days of debts recovery prior to the days of Debts Recovery Tribunal Act and the transitions and also cited how the Delhi High Court had mentioned that the DRT Act as unconstitutional. SARFAESI Act allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery or reconstruction. Mr. Hegde mentioned that the banks should have only trained recovery agents and every bank shall have a grievance redressal forum with regard to debt recovery. He also spoke on how important it is to deal with humaneness and cited Justice A.R.Lakshmanan's observations in a case where he says how recovery agents have become modern day Shylocks in his words “A man's self-respect, stature in society are all immaterial to the agent who is only primed at recovery. This is the modernised version of Shylock's pound of flesh.” Speaking earlier, D. Stanley David, presiding officer, DRT, Madurai said that bank officers should not have a closed mind and drive out the borrower but have to help him at the maximum to see whether he could avail loan. A seminar book was released by N. P. Rajan, Deputy General Manager, Indian Bank, Madurai Zone and the first copy was received by K. Lakshmipathikumar, DGM, Canara Bank, Madurai circle. The workshop among others deals with topics on, What is fair valuation of secured interest, Priority of charges, Agricultural Land and The Companies Bill-2011. Pala Ramasamy, Advocate, L. Balaji, Valuer were the convenors of the workshop.

HBL

TAFCUB colsely monitoring affairs of Urban Co-OP Banks

A State-level Task Force on Co-operative Urban Banks (TAFCUB) working under the direct control of Reserve Bank of India (RBI) was closely monitoring the affairs of the Urban Co-operative Banks, said RBI Regional Director A S Rao here today. Participating as chief guest at the 37th branch opening function of the A P Mahesh Co-operative Urban Bank Limited, a leading Multi State Scheduled Bank at Champapet, near here, Mr Rao said the compliance of regulatory norms and working of Urban Co-operative Banks has improved. The Directors of Urban Banks have also to update their knowledge on the guidelines issued by the Regulatory Authorities for better monitoring the affairs, Mr Rao said and added the unbanked areas still exist in the state and the bank managements should throw light on it, he suggested.

http://news.webindia123.com/news/Articles/India/20120226/1935471.html

Mahesh Cooperative Bank opens 37th branch

Hyderabad, Feb. 26: The AP Mahesh Cooperative Bank opened its 37th branch in Hyderabad today, with plans to open two more in the next few months. Mr Ramesh Kumar Bung, chairman of the bank, said the bank had crossed a business of Rs 1,800 crore, which was the target set for March 31, 2012.  Mr A.S. Rao, Regional Director of RBI, Hyderabad, expressed happiness over the bank's steps to avoid in-house lending, apart from its initiatives to upgrade technology. 

HBL

Governor Subbarao’s trilemma

..... Formalized or not, RBI will likely continue to balance price stability, financial stability, and fiscal sustainability. And this means more of the corridor approach to policy. As long as growth, inflation, bond yields, and the exchange rate remains within RBI’s tolerance levels, policy instruments will all be used simultaneously and adjusted in modest steps to keep the objective variables within limits. But if any of the target variables breaches its benchmark, the policy regime will shift to target the recalcitrant variable. And if that means pushing other variables over the edge then RBI will not hesitate to use unconventional force of its own.

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How much is too much for MFI loan rate?

K.C. Chakrabarty, the senior most Deputy Governor of the Reserve Bank of India (RBI), who oversees rural credit, among other things, says microfinance institutions (MFIs) will be around for next 10 to 15 years till commercial banks are able to reach out to every nook and cranny of the nation, but these institutions will not be able to scale up. Usha Thorat, who used to look after rural credit as RBI deputy governor till she retired in 2010, says the biggest challenge of MFIs in India is to marry scale with responsible lending. Both of them were panelists at Mint’s Clarity Through Debate conclave on microfinance and financial inclusion in Mumbai last week..........

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The awakening of the postal giant - S.S.Tarapore

There is considerable excitement about the possibility of the Postal Department approaching the Reserve Bank of India ( RBI) for a banking licence. The postal system has a wide network of 155,000 offices of which 139,000 are in the rural areas. The scheduled commercial banks have 74,000 branches of which only 22,000 are in the rural areas. The small savings schemes operated by India Post on behalf of government amount to Rs 600,000 crore. Given the sheer size of India Post and the avowed commitment of the government to undertake financial inclusion, the revamping of India Post has some urgency. The assistance of prominent international consultants has already been taken to work out a vision and roadmap for revamping the Indian Postal system to enable it to take its legitimate place in the firmament of the Indian financial system.....................

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Industries sick, industrialists fine

February 26, 2012: It's not uncommon to hear that industries are sick, but there are not many instances of industrialists being affected by this industry sickness. The reason, in a way, could be deduced from the comments of Dr Y. V. Reddy, former RBI Governor, at a meeting recently. Dr Reddy said the Bureau for Industrial and Financial Reconstruction (BIFR) had been manipulated many times. That is the reason, you find more industries sick than industrialists, he remarked.

HBL

7 bank unions call for strike on Feb 28; services may be hit

......The Centre-appointed Khandelwal panel had suggested a slew of measures, including outsourcing more and more non-core activities in a time-bound manner.The panel had also recommended raising the standard of recruitment, including the methodology and content for tests, besides making the testing of computer skills mandatory for both officers and clerks.The Khandelwal committee on human resources (HR) had also suggested that the minimum qualification for clerks and sub-staff should be graduation and class 10, respectively.

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Want to borrow money cheap? Play penny stocks

.... The borrower repays the operator through cash in installments within a pre-decided period. For the operator, this system helps boost value of his penny stocks. The lending also fetches him a neat fee without complying with the RBI norms........

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HSBC welcomes M V Nair panel report on higher priority sector lending target

.... "We welcome the report as it calls for a level playing field for all, because the proposed increase is not just for one particular sector but is flexible," HSBC India Country Manager Naina Lal Kidwai........

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'Hopeful of RBI nod for Enam-Axis deal by March'

.....Because of some bad experiences, the Reserve Bank of India does not encourage banks to run stock broking as a department, it prefers the banks to open subsidiaries for that. The RBI's reported discomfort with the deal was about the fact that Axis's brokerage subsidiary Axis Securities and sales would buy Enam, but the bank would be paying for it with its own shares.......

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Allow Kingfisher to fly into the sunset

....There are those who argue that banks should rescue the airline by infusing more funds. Even the Deputy Governor of the Reserve Bank of India, Dr. K.C. Chakraborty, is on record saying that banks are not just commercial but also risk-taking entities. He even said that if banks felt that by giving a little, they could recover their entire money, that's what they will do......

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RBI for only ‘pure’ FDI in realty

....The Reserve Bank of India (RBI), which has taken a firm stand against allowing external commercial borrowings (ECBs) in the real estate sector, now wants to clamp down on overseas investments in the sector through instruments that carry a fixed or variable internal rate of return. The central bank seems to be clear on allowing only pure foreign direct investment (FDI) in real estate where not firms but only specified projects can accept these foreign funds. ........

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Heed the warnings

The Prime Minister's Economic Advisory Council (PMEAC), headed by C. Rangarajan, has just released its Review of the Economy for 2011-12. In many ways, the review flags off the budget season. Its views and analysis are bound to be echoed in the Economic Survey, the Union Budget and the Railway Budget. The Reserve Bank of India has scheduled a policy review in March. While its interest rate policy will remain in focus, the central bank's views on the macroeconomy count far more than they ever used to. In short, there is going to be no dearth of economic information in the coming weeks. The publication of the review is just the beginning...............

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Finmin persuades RBI to agree to SUUTI route for divestment

....However, the Reserve Bank of India (RBI) and some within the government had raised concerns about the high interest liability which comes with such loans. Moreover, the RBI had previously rejected the proposal to reduce the margin requirement from the existing limit of 50%.......

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Among nationalised banks, the small outperform the large in Q3

.......The weak macro conditions have prompted the RBI to lower the credit growth projection for 2011-12 to 16 per cent. In such a scenario, it would help the nationalised banks to adopt a calibrated approach to business growth giving equal emphasis on margins and asset quality.

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Goverment mulls PSU banks to cut loan rates by March

.... Since CRR is the slice of customer deposits that banks have to keep as cash with the RBI, a cut in the ratio following repeated rate hikes was perceived as the onset of a dovish monetary policy. But since no bank has lowered returns on deposits since the RBI action, their cost of fund continues to be high.......

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India outsourced: Manmohanomics 2.0

....... Meanwhile, progressive fiscal mismanagement threatens to usher in a fresh economic crisis. Managing the consequences of this, has once again been outsourced. The Reserve Bank of India is now entrusted with the task of ensuring macroeconomic balance in a circumstance where the union government has abandoned its role in defining and adhering to fiscal policy. So clever has been this manoeuvre that in public perception it is RBI’s failure to keep interest rates down that is being blamed for slowing economic growth—akin to blaming the fireman for causing a flood in the neighbourhood while putting out a fire........

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Relax documentation requirements

..... A recent Reserve Bank of India (RBI) circular granting this relaxation says the exchange being purchased must be for a current account transaction — and not included in the Schedules 1 and 2 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000........

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SBI waives levy on savings bank accounts without minimum balance

....The Reserve Bank had clarified sometime back that it has not stipulated any minimum balance to be maintained in savings accounts. Nor has it stipulated levy of any service charge, if the minimum balance is not maintained in such accounts. Such stipulations are made by individual banks themselves, as per their board-approved policies. ........

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ED urges I-T dept, Reserve Bank to probe Google India’s forex violations

The Enforcement Directorate (ED) has decided to probe Google India further and has suggested that Reserve Bank of India (RBI) and the Income-Tax department investigate the company’s alleged forex violations. ...........

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RBI to facilitate better banking service in rural areas

IMPHAL, Feb 25: Executive director of RBI, R Gandhi inaugurated an ATM booth and also a Financial Literacy and Counseling Centre at Imphal East DC complex today morning. Later, a financial outreach program was conducted at Achanbigei village, Imphal East. Speaking at the occasion, the executive director mentioned that the RBI intends to create awareness about banking services among the rural mass through such outreach program He advised the residents to avail the services offered by banks for taking up economic activities and be a part of the banking system by opening bank accounts. He also warned the public not to be lured by the high rate of interest on deposits offered by unauthorized bodies through fictitious e-mail messages, etc. Suggesting that banks need not perceive the financial inclusion drive as a compulsion, rather they should realize that a tremendous business opportunity is beckoning in the rural sector. He stressed upon the need for adopting suitable banking models supported by ICT based solutions involving business correspondents in the remote areas. As part of the outreach program of RBI, the executive director and regional director Surekha Marandi interacted with school students and also with members of SHGs and farmers clubs. United Bank of India joining RBI’s initiative also organized a free health check up camp at the village and SBI extended a note/coin exchange facility. As a collective effort of the banks, many individuals opened no frills accounts and farmers availed KCC loans for taking up agricultural activities. Further, the banks while observing the difficulties of persons living with HIV/AIDS as a major challenge decided to extend loans to the affected persons as an endeavor towards their corporate social responsibility.

http://kanglaonline.com/2012/02/rbi-to-facilitate-better-banking-service-in-rural-areas/

Pilot loan scheme for HIV-patients in Manipur

In a first of its kind initiative, the United Bank of India and the State Bank of India have decided to provide customised loans for HIV patients in the country. The scheme to “support entrepreneurship” will be launched under the aegis of the Reserve Bank of India on a pilot basis in Imphal East district. It will then be extended to the rest of Manipur and other parts of the country.The scheme was announced at an outreach programme of the RBI in Imphal East on Saturday, attended by a high-level team from Guwahati and RBI executive director R Gandhi.RBI Deputy General Manager Thotngam Jamang said the scheme had been conceptualised to help HIV-positive people gain meaningful economic activity. “Many of them have skilled knowledge and are well versed in traditional economic activities such as crafts etc. But there are few employment opportunities. These loans will support entrepreneurship. We are also looking at facilities like health check-ups etc,” he said...............

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SBI ATM inaugurated at DC Office, Porompat

Imphal, February 25 2012: Executive Director, RBI, Mumbai, R Gandhi and Regional Director, RBI, Guwahati, Surekha Marandi today inaugurated a State Bank of India ATM at DC Office of Imphal East, Porompat. Assistant General Manager, SBI, Administrative Office, Shillong Region -V, S R Saha, Deputy Commissioner, Imphal East, Dinesh Singh and Deputy General Manager, Outreach, SBI, Lead Head Office, Guwahati, S K Kandar were also present at the function. It may be mentioned that the newly installed ATM is the 28th ATM of SBI in Imphal.


http://e-pao.net/GP.asp?src=Snipp9..260212.feb12

Same-day cheque clearance near reality

The time taken for clearance of a cheque between two banks could come down to a day before long. Banks are largely in line with the Reserve Bank of India’s targets for cheque truncation.................

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Three Day Workshop on “Inflation and Monetary Management by RBI”

The aim of this Workshop is to understand the causes and implication of different measures of Inflation in India......

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RBI dances centrestage; Economy gulps for air as global typhoon grips world

..... The RBI smartly changed track and intervened in the forward foreign exchange market in November 2011 after a gap of 12 months. Even though, there is an enormous amount of economic literature on the spot market intervention by central banks, there is little on forward markets........

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Is the Indian banking industry in consolidation mode?

The past decade has been a sellers’ market as far as the Indian banking sector is concerned,” K.C. Chakrabarty recently said in a speech. The outspoken Deputy Governor of the Reserve Bank of India bluntly said this would change and banks would have to differentiate their offerings if they wanted to stay in business. “The mantra would be to innovate or perish.” Intense competition could drive “a spate of mergers and lead to consequent consolidation within the sector. The entry of new players will also spur efficiency and productivity in the system,” he added. A few mergers in local banking have been bailouts of private banks — ICICI Bank for Bank of Rajasthan, IDBI Bank for United Western Bank and Oriental Bank of Commerce for Global Trust Bank. Mergers among state-run banks (27 of them) had been mooted earlier, but we are far from it. Indian banks will be under pressure to raise capital as it is going at a premium. A year from now, they will have to migrate to Basel-3 guidelines; the cap-ad ratio will rise by 2.5 per cent to 11.5 per cent by March 2017. A Crisil estimate puts the amount needed at Rs 2,70,000 crore. While banks are adequately capitalised — barring one or two — pressure is on account of dud loans in infrastructure sectors especially power, aviation and telecom.  The recent hikes in interest rate and slowing economic growth may also adversely impinge on the repayment capacity of some categories of borrowers especially those from the small sector. “We are at the cusp of a defining decade in the banking system,” said Chakrabarty.

http://www.businessworld.in/businessworld/businessworld/content/Merging-Traffic.html?storyInSinglePage=true

EDB introduces account portability

Srinagar, Feb 25: Here is some good News for customers of Ellaquai Dehati Bank. Bank has introduced account portability feature for transfer of customer from one bank branch to another branch. “The account portability is done in the system within minutes and is hassle free. Staff at our branches is trained to execute the facility,” said A K Razdan, Chairman EDB, at a meeting held here. A statement said under this facility the customer can shift his/her account to any of the desired branch any number of times, without any change in the account number, with just a change in the home branch code. The facility would enable the customer to have the freedom of operating his/her account from any of the branches of the bank. “Recently bank introduced Electronic Fund Transfer scheme under (NEFT) arrangement with RBI for bank to bank fund transfer which will be highly beneficial to our customers especially to fruit growers in the rural areas. With a broader network of our branches operating in the 13 Districts of the State, these facilities will be a great comfort to our customers for easy access to fund transfer and banking facility in nearby branch of their work place/residence,” statement said.

Greater Kashmir

G20 finance ministers, central bankers meet in Mexico

…..Indian Finance Minister Pranab Mukherjee is not participating in this meet as he is pre-occupied with the Budget preparations back home. The country is being represented by RBI Governor D Subbarao and Economic Affairs Secretary R Gopalan……..

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IDBI Intech to offer data mining, business analytics solutions

….."This too is a product which has a market due to RBI regulations. We see a market of Rs 200 crore for this product. Public sector banks have to be partially compliant with automated data flow regulations of the RBI by June and fully compliant by December. So, we see a huge potential here."........

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NMCC asks RBI to lower interest rates | NMCC

If you think the Reserve Bank of India will start reducing repo rates in its March 15 policy review without giving credence to the fiscal deficit situation, think again. For the way long-term interest rates would move will depend largely on the fiscal deficit and the flow of funds from abroad........

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Small loans add up to lethal debts

The microfinance industry pursued a path of rapid business growth in recent years; two investigations now link it to debtor suicides............

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Fiscal deficit holds the key to changes in interest rate: Montek

If you think the Reserve Bank of India will start reducing repo rates in its March 15 policy review without giving credence to the fiscal deficit situation, think again. For the way long-term interest rates would move will depend largely on the fiscal deficit and the flow of funds from abroad..........

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Are jewellery saving schemes a good investment option?

...................Though one may argue that jewellery saving schemes give higher returns compared to banks whose recurring deposits give a return of 9-9.5 per cent, that comparison is quite incorrect due to the unequal risks involved. Unlike banks and NBFCs which are regulated by RBI, jewellers do not fall under the purview of any regulatory body. You may thus be left with limited recourse if you entrust large sums, especially to small time jewellers. The Reserve Bank of India is however said to be mulling over bringing such schemes under its purview, on the mushrooming of these schemes in the market.

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‘Financial inclusion programme to serve villagers better'

P. Vijaya Bhaskar, Executive Director of the RBI distributing a cheque to self help groups members at Krishnasagar in Khammam district on Friday

Financial literacy holds the key to attain economic self-reliance and herald inclusive growth, said P. Vijaya Bhaskar, Executive Director, Reserve Bank of India (RBI)

He was speaking at an outreach and financial literacy awareness camp at Krishnasagar village in Burgumpadu mandal on Friday. Addressing a large gathering of farmers, members of self-help groups and others, Mr. Vijaya Bhaskar said the financial inclusion programme was aimed at spreading financial literacy and extending the banking services to the villages. The RBI has been implementing the financial inclusion programme to bring more number of people especially the rural masses under the banking network. Business correspondents are being appointed in the unbanked villages having a population of over 2,000 and zero balance accounts were being provided to the rural poor as part of the endeavour to ensure banking services to the villagers. All these initiatives are intended to achieve the set goal of financial inclusion, he remarked. Later, addressing the students of the tribal welfare junior college in the village, Mr. Vijaya Bhaskar emphasised the need for financial education. Students should equip themselves with the requisite financial knowledge like the functioning of banking system its products and services, he said. During his speech earlier, the Integrated Tribal Development Agency, Bhadrachalam, Project Officer Praveen Kumar said the tribals constitute 28 per cent of the total population of the district. He deplored that the reluctance on the part of some bankers to provide loans to the tribal people of SHGs was depriving the latter of an opportunity to avail subsidies under various government schemes. Mr. Vijaya Bhaskar asserted that steps would be taken to ensure prompt sanction of loans to all the eligible SHGs. He disbursed loans sanctioned by the APGVB under the bank linkage to the members of the SHGs on the occasion.

HBL

Chandigarh Rose Festival gets underway

..... H.S. Kalra, a retired Reserve Bank of India employee who was visiting the festival with his wife said: "We have been visiting the festival since many years now. It has become an annual affair for us. This time, the fresh fruit and flower decorations are better than the last time."............

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Bank employees to strike work

All Class three and four employees of the Reserve Bank represented by the All India Reserve Bank Employees' Association and All India Reserve Bank Workers' Federation will take part in the country-wide strike called by the trade unions on February 28. The Union government and the RBI management's neo-liberal economic policies have badly affected the functioning of the bank and its employees, said a release issued by the association.

HBL

RBI lifts Rs 50,000-a-day cap over mobile banking transactions

....."Banks are increasingly extending mobile banking facilities to their customers. Interbank mobile payment service developed and operated by National Payment Corporation of India has also enabled real-time transfer of funds through...mobile phones between accounts in different banks. The volume and value of mobile banking transactions is also showing an uptrend," RBI said in a statement.......

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Lowering of key rates by RBI depends on fiscal deficit: Montek

…."Interest rate is going to be determined predominately by what happens to the fiscal deficit. The industry is convinced that no matter what happens to fiscal deficit, the RBI will lower the repo rate,".....

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Eurozone needs package to tackle debt crisis, says Pranab

……RBI recently said the European debt crisis pose a major downside risk to country’s overall growth outlook and the continuing uncertainty there “will adversely affect Indian growth through trade, finance and confidence channels”..........

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SBI & its associate banks top list of banking ombudsman complaints

.........State Bank of India (SBI) and associates figure prominently in the list of the annual report of the banking ombudsman scheme for the year 2010-2011 accounting for 31 per cent of the total complaints received against them. Nationalised banks were second in the list with 29 per cent of complaints, followed by 24 per cent against private sector banks and 10 per cent against foreign banks, said the Report released by the Reserve Bank of India on Friday......’

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Maharashtra tops debit card usage for shopping: Survey

The usage of debit cards for shopping purpose was the highest in Maharashtra followed by Andhra Pradesh, as per the findings of a survey commissioned by the Reserve Bank of India to assess customer satisfaction in the usage of ATMs across the country...........

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Customer complaints: PSU banks better than private ones

Public sector banks have usually recorded a greater share of customer complaints. When compared with the number of complaints registered with private sector banks the former appear to have better record in customer satisfaction. Of the total complaints with the Reserve Bank of India's Banking Ombudsman as of March 2011, private sector banks (including foreign banks) accounted for as much as 35 per cent, a high figure given that they hold only 12 per cent of the total deposits and loan accounts...........

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Concerns on ATMs, credit & debit cards top complaints

While lenders are keen on diverting basic banking facilities from the traditional branch model to the automated electronic route, the area needs more attention in terms of efficiency, according to the annual report on the banking ombudsman released by the Reserve Bank of India (RBI). The report also said call centres set up by banks to address customer grievances are not able to fulfil their objective effectively. According to the report, 24 per cent of the total complaints received by banks in 2010-11 pertained to transactions carried out through automated teller machines (ATMs), debit and credit cards. Complaints filed in this category primarily related to unsolicited cards & policies, charging fees on ‘free’ cards, abusive calls, skimming of cards, excessive charges, wrong debit to accounts and non-dispensation of money from ATMs. RBI said most queries relating to credit cards were handled by call centres, adding the staff employed at such centres was not very familiar with the card products and the customers of banks. “As such, the response from the call centres is not helpful in resolving customer grievances,” RBI said in the report. Issues related to pension payments ranked second in the list of grievances. Non-adherence to the prescribed working hours and delays, refusals and failure to offer services were other areas of complaints. In 2010-11, there was a drop of 10 per cent in the total number of complaints, though at 94 per cent, the rate of disposal was the same as that a year ago. RBI Deputy Governor K C Chakrabarty, who is also the appellate authority for the banking ombudsman, said the small drop in the number of complaints did not point to any specific trend. “What is a matter of satisfaction is the rate of disposal has been sustained,” he said in the report. Selling unsuitable products and charging unfair or unreasonable fees pose challenges to customer services in the Indian banking industry, he added.

BS

Think before you draw money

…“Besides, ATMs, we suggest, should not be located in deserted areas because people can easily access them. There is already an RBI guideline for single PIN transaction that will require banks to generate a new PIN for each transaction that will be sent to the customer’s mobile phone,”....

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TN & UP have highest value of NPA properties in 2011-12: says NPAsource.com study

....Total NPAs in India as of March 31, 2011 were more than Rs. 90,000 crore as per the statistics released by the Reserve Bank of India (RBI) which does not include co-operative banks, SFCs, FIs & NBFCs, whereas globally this figure would run into trillions of dollars...........

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RBI to meet lenders on rising bad loans - Economy and Politics

RBI Deputy Governor K.C. Chakrabarty says that the meeting likely to take place on 29 February or 1 March

....“RBI might want to understand about any possible systemic risk in the system due to rise in bad loans, which would help them to formulate their policies to address this issue.”The central bank and commercial banks have insisted that the situation is not alarming and the Indian banking system is resilient enough to tide over the problem........

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RBI should use bank lending to push companies file reports with Registrar of Companies

The Companies Act, 1956, mandates all kinds of companies - private, public, Section-25 company, closely-held company or a company in which the public is substantially interested - to file annual reports with the Registrar of Companies (RoC). These reports include financial statements and annual returns, essentially, of directorships and shareholding pattern. However, many companies routinely fail to comply with this norm.  The Reserve Bank of India should now step in and ask banks to withhold credit to companies that fail to comply with reporting requirements.........

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ICICI Bank receives RBI nod for Infrastructure Debt Fund

Leading private sector lender ICICI Bank has received an in-principle approval from the RBI to set up the country's first Infrastructure Debt Fund (IDF).The fund would cater to the country's fast growing infrastructure sector, which requires investments worth $1 trillion in the 12th Five-Year Plan period (2012-17)...........

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You have to shell out more

...........It has been reported in the press that the Reserve Bank of India (RBI) has directed banks to exclude the cost of stamp duty, registration fee, service tax, VAT etc., while funding house property. The National Housing Bank (NHB), the regulator for Home Finance Companies (HFCs), may follow suit soon.In other words, the home loan aspirant will have to bring in higher margin money (property cost less the loan amount), as home loan eligibility reduces considerably, from the above measures..............

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Aviation NPAs a manageable problem: Chakrabarty

Mumbai : The Reserve Bank on Friday said the stress being faced by lenders from their exposures to the aviation sector is a “manageable problem”. “Yes, aviation is a problem ... a problem, at this stage we feel is manageable,” RBI Deputy Governor KC Chakrabarty told reporters on the sidelines of an event here. Chakrabarty declined to make account-specific comments but said RBI is keeping an eye on the developments. He also said the specially convened meeting on NPAs announced after the January 24 policy announcement, will be held either on February 29 or March 1.

IE

Kingfisher lenders to meet again mid-next week

 ...... The development comes in the backdrop of reported refusal by Mallya to stand personal guarantee for fresh funding and the lenders' insistence on the promoter brining in at least 25 percent of its funding needs as fresh equity. It may also be recalled that RBI Deputy Governor K C Chakrabarty's had on Wednesday in Bangalore that "banks are commercial entities. If they feel that by supporting a unit, the unit can survive, they must explore that possibility. Banks are risk-taking entities".......

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Govt does not admit to existence of bonded labour: Bombay HC

.... Public prosecutor Pandurang Pol informed the court that the Reserve Bank of India (RBI) has schemes for micro-financing of poor people, including those in rural areas. However, the same does not cover bonded labourers as one of the main conditions of lending is repayment,......

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PIL against two finance firms

.......A public interest litigation petition has been filed in the Madras High Court Bench here seeking a direction to Reserve Bank of India (RBI) to cancel licences granted to two non-banking financial companies — Muthoot Finance Company and Manappuram Finance Company — both based in Kerala on charges of levying exorbitant interest on gold loans........

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Goldmine in family silver

..........And unlike banks that have strict guidelines and need RBI’s permission for branch expansion, NBFCs are not bound by such rules for branch expansion. Muthoot Finance’s branch count as on December 2011 was 3,480 while Manappuram’s stood at 2,738. Compare this with the branch network of the decade-old Punjab National Bank that stands at 4,000 and the inequality is obvious.............

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Golden Jubilee Celebration of Reserve Bank of India, Bhubaneswar

Governor Sri M C Bhandare Inaugurating the Golden Jubilee Celebration of Reserve Bank of India, Bhubaneswar

 

RBI workers urged to observe industrial strike

The All India Reserve Bank Employees Association and the All India Reserve Bank Workers' Federation on Thursday urged its members to jointly observe the strike called by central trade unions across the country on February 28. "The call to the RBI employees to join the strike on February 28 was given to show solidarity with the working class in the country," Samir Ghosh and SV Madhadik, general secretaries of AIRBEA and AIRBWF respectively said in a statement in Kolkata.

DNA

Centre nominates D. K. Mittal on RBI's central board

.....Mr Mittal's nomination follows the recent amendment to the RBI Act, 1934, allowing the Central Government to nominate two Government officials to the central board instead of one. The RBI Governor has been underscoring the importance of central bank autonomy at various public forums. ......

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RBI Governor asked to fix gaps in tax immunity schemes

….."The RBI needs to ensure that banks entrusted to implement said (tax immunity) schemes place necessary checks and plug the holes and also monitor the implementation of the schemes in right earnest," Special CBI judge A K Mendiratta said while hearing a nearly two-decade-old case……..

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Not so high

..............In recent years, speeches by RBI officials have veered into smug exercises of self-praise. A greater recognition is needed that RBI has failed on the central bank’s prime task: delivering price stability. Achieving price stability will be a slow and long battle, one critically interwoven with household expectations. ................

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Increase education loan lending: Nair Committee recommendations

.......The committee headed by MV Nair, chairman, Union Bank of India, in a report suggested to that limit under priority sector for loans for studies in India may be increased to Rs15 lakh and Rs25 lakh in case of studies abroad, from existing limit of Rs10 lakh and Rs20 lakh, respectively. The RBI has sought comments on the report of the Committee............

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Experts discuss RBI's recos on priority sector lending

The RBI committee under the current Union Bank Chairman MV Nair has come out with its recommendations on lending to priority sector. It has reviewed the existing guidelines on lending to priority sector categories including agriculture, MSME and export. In an interview to CNBC-TV18, BA Prabhakar, CMD of Andhra Bank, MV Nair and N Seshadri, ED of Bank of India, discuss pros and cons of the recommendations........

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RBI may cut rates on respite from inflation

The time is ripe for the Reserve Bank of India (RBI) to start the rate reversal cycle. economists say. This is because owing to a high base effect, inflation is expected to remain low for a few more months. Economists expect a cut in the repo rate, or the rate at which banks borrow from RBI, in at least one of the two policy review meetings scheduled for the March-April period…………

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The new normal

In an interview to The Wall Street Journal, Reserve Bank of India Governor D. Subbarao has said that the Indian economy can manage a maximum of 7% growth without stoking inflation. This is significant, especially as it comes from Subbarao, known to choose his words carefully. What he is trying to say is that unless the current bottlenecks in the economy are fixed, the Indian economy will have to get used to a much lower rate of growth than what it recently experienced: 9%. In other words, this is going to be the new normal. It is more than double the low growth rate trap that India found itself in the 1970s—the so-called Hindu rate of growth—but lower than the ideal. The writing is on the wall: reform or perish. Low growth will hit tax buoyancy and curb spending, especially for the raft of inclusive measures. But is the UPA listening?

Mint

Cost of a rate cut delay in India

......... It is critical that the RBI resume rate cuts. Every week of delay costs in terms of investment and income. The RBI need not wait for its quarterly review to engineer a change. It can do that at any time to correct financial imbalances. The immediate need is a lower rate and it has to be initiated now. Each passing week means a loss of Rs 21.8 billion in investment and Rs 73.6 billion in GDP.

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How fast can India grow?

..... “We are not locked into a 7% growth rate. We should certainly accelerate that, and it’s certainly possible to do that, but for that, supply responses must come.”......

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What is non-inflationary rate of growth (NIRG)?

Employee retirement benefit costs up 45% at top- 100 cos

Public sector banks face more pressure...............

.............While, the liabilities have increased significantly in the last one year, the proportionate rise in assets has not been commensurate, which would impact profits..................

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Repositioning will improve operations: Nabard

State-run National Bank for Agriculture & Rural Development (Nabard) has justified its restructuring and repositioning exercise, based on the recommendations of the Boston Consulting Group. Speaking to Business Standard, chief general manager K R Nair said the exercise was aimed at improving the scope of operations by increasing the production credit and investment credit portfolios, as well as their impact. Nabard has said the repositioning initiative did not replace or modify its traditional credit and development functions…………..

…………..All India Nabard Officers' Association, a representative body of 2,700 officers have said it was apprehensive that the Boston Consulting Group's recommendations, if implemented without wide-scale debate, would lead to dilution of Nabard's role.

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National policy on investor awareness to be out soon

........... We have also been working very closely with the Reserve Bank of India (RBI) and others to provide a national policy on investor events. We think grievance redressal and investor awareness both have to go hand in hand. So we have been working with RBI and others towards this national policy and the final outcome is going to come out very soon; the draft policy has already been approved.........

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Aadhaar panel favours e-payment for all social safety net schemes

....The task force has also suggested that the Reserve Bank of India may consider recognising the Aadhaar letter as proof of identity and proof of address for money transfer. The central bank should notify guidelines for interoperability of business correspondents. The RBI should publish a policy in conjunction with the Government to formulate a plan and set targets for reducing the usage of cash in the Indian economy.For banks, the task force has suggested that at least one microATM be deployed in every bank branch. Banks have been asked to deploy a network of one million business correspondents.........

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India Police Crack Down on Coin Scrapping

..... “The letter, dated June 29, 2010, issued by RBI just requests the manager of Punjab National Bank’s Mascati Market branch in Kalupur to extend exchange facility of old and mutilated notes and coins to Gupta and six others. However, Gupta was blacklisted in February 2011, when we suspected him to be misusing the facility for profit-mongering.”......

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Soon, coin to mark Bhagat Singh's birth centenary

BARNALA: The Bhagat Singh aficionados' are elated over union government decision of introducing Rs. 5 coins having legendary martyr picture. The reserve bank of India(RBI) has announced to soon introduce coins devoted to martyr' birth anniversary with Bhagat Singh picture on one side of the coin………….

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Black money & Prez Patil: Is it time to scrap Rs 500-1,000 notes?

…………One such decisive step was taken in January 1946 when currency notes of Rs 1,000 and Rs 10,000, which were then in circulation, were demonetised primarily to curb unaccounted money. The higher denomination bank notes of Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in 1954, and were again demonetised in January 1978. This action was taken through the with the passage of the High Denomination Bank Notes (Demonetisation) Act, 1978..........

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ICIF Discusses Islamic Finance& Banking at BHU

…………..The paper concluded stating that Government of India – Finance Ministry & RBI – should now re-examine its stand on Islamic Finance and create an attractive environment for Islamic Finance investors to participate in the market as undertaken by modern, secular and industrialised countries. It would go a long way to contribute a lot to the inclusive growth of the marginalised and the minorities…………..

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