Woori Bank launches first Indian branch

...........Commenting on the entry of Woori Bank in India, RBI Regional Director N S Vishwanathan said that Woori Bank will be the second foreign bank after the Bank of Ceylon that the RBI Chennai will be directly regulating and monitoring.

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Banks' inspection reports to come under RTI: Central Information Commission

…..The CIC's order came in a case pertaining to Kanpur-based United Mercantile Cooperative Bank Ltd. in its order, the CIC stated that the Reserve Bank of India (RBI) should disclose the audit report of the bank, because citizens have the right to know and not disclosing the report is "against the basic tenets of democracy and transparency". It was in July 2011 that one of the share-holders of the said cooperative bank, Ashwini Dixit, had sought the copies of the annual audit of the bank conducted by RBI. The bank had allegedly committed a fraud and the local newspapers had widely reported the matter. "The bank has not paid me even a single penny as dividend from 1997 to 2008," said Dixit. He had filed an RTI application with both the Urban Cooperative department and RBI. "I only wanted to know if the non-performing assets of the bank were going up every year, and what was RBI doing to curb that," said Dixit.…….

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RBI on call

In its latest recommendations on spectrum auctions, the Telecom Regulatory Authority of India wants the Department of Telecom (DoT) to consult the ministries of finance and law on various points of law and rules. This is standard, but the new point is that this time, DoT has also been told to seek the advice of the Reserve Bank of India (RBI), a reflection that the regulator is leaving nothing to chance. In the 170-page report, the Authority has highlighted the need for dialogue with RBI and the finance and law ministries on issues like safeguarding deferred payments by bidders, additional spectrum allocation, clearing funding roadblocks for telcos and revising the tax structure for the industry.

BS

S&P subtext: We don’t believe you Mr FM; so what’s next?

..... RBI Governor Duvvuri Subbarao, while putting up a brave defence of some of Mukherjee’s measures and reducing the repo rate by a higher-than-expected 50 basis points, did make it clear that he was, at best, hopeful of the government delivering on the numbers. “Like everyone else, we are also very concerned about the government delivering on that. Therefore, we reiterated the message this time about the importance of delivering on the 5.1 percent, in particular that the adjustment of subsidies is necessary, although not sufficient, for the delivery of the 5.1 percent,” Subbarao said earlier this month while unveiling the monetary policy for 2012-13…..

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Focus on growth

This is with reference to “S&P revised India outlook to negative” (Business Line, April 25). We might boast of a growing economy, but perhaps it is not. In the face of the economic slowdown prompted by rising interest rates, alarming fiscal deficit at 5.9 per cent of GDP and high inflation, Standard and Poor's downgrading of India's rating to negative, should not come as a surprise. A silver lining in the dark cloud, however, is a cut in key policy repo rate by 50 bps by the RBI in the recent Monetary Policy, which is likely to provide a fillip to growth. While banks have been mandated to cut the lending rates to pass on the benefits to the borrowers, the Government has a more responsible role to play in ensuring fiscal discipline..

- S. Umashankar, Nagpur (HBL)

Obituary

G. LAKSHMINARAYANAN, Retired Staff, Officer-RBI, Chennai Born - 6th October 1927 Passed away - 18th April 2012, Bangalore. Deeply mourned by L.Sriraman, Vasumathi Madhavan and L. Srinivasan Ph- 080-23646311

The Hindu

RBI ups housing loan limit to Rs 10 lakh for weaker section

…………"It has been decided to increase the limit from Rs 5 lakh to Rs 10 lakh for the bank loans extended to non-governmental agencies, approved by NHB for their refinance, for on-lending for the purpose of construction or reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers." the RBI said in a notification………………

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India to have comprehensive financial sector consumer protection legislation: RBI

India is examining the possibility of enacting a comprehensive financial sector consumer protection legislation the Reserve Bank of India said. Although India has a law for consumer protection it is not specifically for the financial sector consumers. Currently a bank customer can approach the banking Ombudsman, to resolve its dispute with the bank. This was indicated by the deputy governor K C Chakrabarty at a panel discussion on financial literacy and consumer protection at Washington recently………

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Banks used exotic means to hoodwink Reserve Bank

Banks adopted various ways to sell illegal and ‘exotic’ derivatives in their profit pursuit, bypassing the Reserve Bank of India’s (RBI) guidelines and causing losses of as much as Rs34,000 crore, which they then tried to cover up by forging documents, DNA investigations have found...........

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RBI norms to take sheen out of gold loan business

….While the RBI regulations restricted the ability of NBFCs to leverage, the LTV rules do not cover commercial banks engaged in the gold loan business. This has made the business unattractive for NBFCs, analysts and industry officials said…..

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Over 130 government Web sites hacked during January-March 2012

...........As per the Reserve Bank of India, 2,232 Internet fraud cases involving Rs.1,234.94 lakh were registered in the year 2010 while Central Bureau of Investigation (CBI) registered two cyber crime cases involving Rs.17 lakh during 2010. ...........

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Reserve Bank of India putting in measures to prevent credit, debit card fraud

....... The guidelines issued in 2011 have a clear roadmap for moving towards more secure ways of credit/debit card transactions ultimately through Aadhar-based biometric authentication," says RBI spokesperson Alpana Killawala…………….

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NPCI seeks RBI nod to integrate mobile payment solutions

The National Payments Corporation of India (NPCI) has sought the Reserve Bank's approval to make the payment services provided by telecom companies and the mobile wallet services offered by banks work with each other, a senior official said today. "The idea is to make these different services inter- operable for the convenience of customers. We have approached the RBI to make payments services provided by various telcos work with each other. If we get the RBI approval, we will deploy the solution,"………….

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SBI launches virtual debit card called State Bank Virtual to curb online frauds

......The electronic card can be created by the account holder or customer using SBI's Net banking facility for ecommerce transactions. State Bank Virtual has a limited shelf life and can be used for only one transaction to limit the exposure of the account. It allows the user to create a virtual card for any online transaction and the person is not required to share details of the principal account on the merchant Website thus insulating the account from any possible fraud............

Read - Business Today

Time to act, not panic

......RBI has ensured adequate liquidity and there are few signs of local investors being crowded out by higher government-spend. And, as RBI Governor Duvvuri Subbarao pointed out last week, not only is India’s import cover much higher than it was in 1991 (this was in response to the refrain that 2012 was the new 1991), forex reserves are around 95% of external debt as compared to just 7% in 1990-91.......

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"CAGED" MONETARY POLICY"

We have a ‘caged’ Monetary Policy. Top echelons in government, by habit, pre-empt any maneuverability available to RBI Governor, by explicitly stating the direction and extent of relaxation in monetary policy, well before the announcement. The Finance Minister, through supportive fiscal policy should prepare a fertile ground for monetary policy to fructify. Independent of fiscal policy, RBI will not be able to achieve any perceivable results. Last 20 months or so we have seen the helplessness of the central bank. It is time our political bosses started looking at grass-root level improvements in availability of basic necessities and comforts. To start with, perhaps, government can follow the example of present RBI Governor, who speaks out his problems and constraints in the open, explains what he can do and is doing, almost at monthly intervals and reviews and audits the progress made in the financial sector as a result of policy interventions on an ongoing basis. He also doesn’t mince words when it comes to the expectations of the central bank from those responsible for evolving and implementing fiscal policy. Though they are all material and significant in the context of the country’s positioning in the comity of nations, the improvement in the per capita availability of mobile phones or the 5000km reach of ‘Agni 5’ or Koodamkulam being one among the largest 10 nuclear power plants in the world won’t satisfy the aam aadmi, till he finds a satisfactory answer to his problems of hunger and basic necessities.

-  M G WARRIER (ET)

The irrelevance of the base rate

........Instead, SBI has cut rates for auto loans and money given to small and medium enterprises (SMEs). Its current base rate continues to be lower than many other banks’ that have cut their base rate but its decision to leave the base rate untouched and cut loan rates for certain business raises a pertinent question, that of the efficacy of base rate..................

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MSCB plans diversification

Enthused after receiving banking licence from the Reserve Bank of India (RBI) last week after more than a century of operations, Maharashtra State Cooperative Bank (MSCB) plans to diversify into corporate financing. It would thus, be reducing lending to the cooperative sector, especially sugar and spinning mills.The 1906-founded bank has identified information technology, manufacturing and engineering, infrastructure, state electricity boards and renewable energy for funding.……..

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RBI clears appointment of P Rudran to head Arcil

The Reserve Bank of India (RBI) has cleared appointment of P Rudran to head the troubled company Arcil or Asset Reconstruction Company of India. Rudran's appointment comes amidst high profile exit by senior level officials who quit the company following the accounting practice questioned by the banking regulator………….

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Muthoot slows down gold loans after RBI norms

..... “RBI has formed a working group to analyse the impact of gold imports on financial stability and whether NBFCs extending gold loans have any role in influencing gold prices. The group is expected to submit its report by end-July 2012. We have also given our views to the working group. I’m sure that the apex bank will have a better understanding of the sector, once this report is submitted. We will wait till then before renewing our thrust on gold finance.”........

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Financial inclusion should be a bank-led model: RBI

…………“Our experience shows that the goal of financial inclusion is better served through mainstream banking institutions as only they have the ability to offer the suite of products required to bring in the effective or meaningful financial inclusion,” said RBI Deputy Governor K C Chakrabarty in a speech delivered in Washington, DC on Sunday. The speech was released on the central bank’s website on Tuesday………….

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'Explain insufficient funds while dishonouring cheque'

.....Merely saying 'insufficient funds' cannot be a valid reason for banks to dishonour a cheque, unless it is explained what amount would have been sufficient to honour it, a consumer forum has held. The Central Delhi District Consumer Forum ruled it while ordering ICICI Bank to pay Rs 25,000 as compensation to a customer for dishonouring her cheque of Rs one lakh on grounds of insufficient funds in her account, despite the same having more than Rs one lakh in it.....

Read - Express India

Basel norms: Surely not just an exercise in compliance?

In the recent past a lot has been written about India's move to Basel III, the new global rules for ensuring that our banks have enough capital and do not face the vagaries that are being currently faced by their Western counterparts. Much of the focus of the discussion to date has been on the 'how' behind such a move. However, in our rush towards adoption and our obsession with the 'how', we seem to have missed the 'why'………..

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Allahabad Bk seeks RBI nod to open four new branches overseas

On the occasion of the 148th Foundation Day celebrations of the bank, the bank's Chairman and Managing Director J P Dua said the lender has sought RBI's permission to open branch in Dhaka, Shanghai, Singapore and Hong Kong…………….

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India, Pakistan to allow each other's banks to set up branches across the border

…….The troubled neighbours are set to allow banks from both sides to open branches in each other's territory amid a renewed attempt at reviving relations. The two central banks - Reserve Bank of India and State Bank of Pakistan - are readying to invite applications from interested commercial banks, following a meeting of their officials earlier this month when they sorted out most prickly issues…………..

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RBI's lifeline: Aviation sector can borrow abroad for working capital

.......The ECB will be allowed to the airline companies based on the cash flow, foreign exchange earnings and their capability to service the debt, according to a RBI notification. The RBI has given aviation companies time up to May 2014 to raise funds through the ECB route.....

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PSU banks loan restructuring faulty? NPAs decline

The Reserve Bank of India (RBI) has observed certain deficiencies in compliance of its guidelines on restructuring of loans by state-owned banks during annual inspection, the government today said. Some of the deficiencies observed during the Annual Financial Inspection (AFI) by RBI of the public sector banks (PSU banks) include repeated restructuring and non-classification as per record of recovery,..........

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More buses, heritage tram on cards

…….Mitra said that on the CM's instruction, the transport department wants to create links between all district headquarters and blocks. "Also, we are losing about Rs 25 lakh a day for not being able to return change to passengers. We will talk to the RBI on this matter," he said……………

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RBI clears Axis-Enam deal, integration likely in 3rd qtr

……….The deal has now been cleared by the RBI without any more riders. We need to get approval from the Securities and Exchange Board of India (Sebi), the high court, and also from our shareholders and creditors. We expect this process to be complete and the integration to happen by the end of the third quarter,”……………

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Firms allowed to buy back foreign bonds at discount

.......The inter-ministerial panel with half-a-dozen secretaries and officials from RBI and Sebi also approved the creation of compulsory redemption reserves for companies with such FCCBs following a proposal mooted by RBI Deputy Governor H R Khan. Accordingly, companies will have to compulsorily park up to 25 per cent of the value of FCCBs at maturity into the redemption fund. The corporate affairs ministry is formulating its view on this.......

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A growth-oriented policy

A cut in the policy repo rate by a straight 50 bps at one go is a surprise move but came after a long waiting. It is an indication that the apex bank would start moving towards a softer interest regime to take the growth process forward that has witnessed consistent moderation to contain the menace of inflation. In a nutshell, the policy document is a reflection of growth concerns and, with inflation level showing signs of cooling, the GDP growth projection for the current fiscal at 7.3% is reasonable to start with. Industry circles should be happy with the move and bankers should think of having a re-look at the lending rates.

- Srinivasan Umashankar, Nagpur (FE)

How close is the next crisis?

......A week after Reserve Bank of India governor D. Subbarao took almost everyone by surprise by cutting the key monetary policy rate by 50 basis points (bps), the bond market has hardly budged. On Tuesday afternoon, the benchmark 10-year bond was trading at around 15 basis points higher than its level the day before the policy announcement. The emerging consensus is that the Indian central bank does not have much firepower left in its armoury, perhaps another couple of 25 bps cuts at best. Bond prices recognize this stark truth....................

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What was RBI thinking?

Was the 50 basis point rate cut by RBI prompted by RBI’s judgement that the risk of inflation is lower, or was it a case of succumbing to political pressure? A careful reading of the credit policy, and even more so, of the report on Macroeconomic and Monetary Developments (MMD) released with the credit policy statement points to a serious discrepancy between RBI’s action and its views on output and prices.................

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RBI policy: What should determine interest rates

….So, they do not have to worry if, in following the RBI's 'diktat', they end up making losses. But as we have pointed out in the past, the repercussions of banks blindly following the RBI's diktat go well beyond the banking sector. The sharp increase in the bad loans of public sector banks and, hence, in taxpayerfunded capital infusions, for instance, is the direct consequence of PSBs lending aggressively at the RBI's behest during the downturn when commercial considerations called for a cutback in lending. It is unfortunate that instead of learning from past mistakes, we seem determined to repeat them.

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RBI rate cut: Will the joy be short-lived

.... Even the Confederation of Indian Industry (CII) did not celebrate much the summer gift from the Reserve Bank of India Governor Duvvuri Subbarao - a half percentage point cut in the benchmark interest rate. Because the joy may be short-lived.  "CII appreciates RBI's concern on future growth being constrained due to supply-side bottlenecks in infrastructure, energy, minerals and labour. CII has been strongly advocating de-bottlenecking supply-side constraints," was the measured reaction from the lobby group……

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An empty purse does not increase global power - Renu Kohli

The thorny negotiations in Washington that finally doubled the International Monetary Fund’s lending power offer some lessons for India, which has been an active member of the G20 and BRICS, the newly influential and prestigious sub-groups of the IMF’s 188-country strong membership. Some might even say India played, or at least aspired to play, a lead international role ever since the crisis broke out. But an empty purse is now tying its hands in taking a lead..................

Renu Kohli is a New Delhi-based macroeconomist; she is a former staff member of the International Monetary Fund and Reserve Bank of India

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The importance of being Basu

…..Basu in that sense was a greenhorn in the government system, having had no experience other than in academia. Even when he was in the World Bank for a short stint, he was given an academic designation of a visiting professor. So the Indian government indeed went out of its way to appoint him as its chief economic advisor. At around the same time, the government opted for another non-government economist to be the deputy governor of the Reserve Bank of India (RBI). That was Subir Gokarn, who until then had experience of only working in academia, a think tank and a global rating agency, but not in the government. Gokarn’s appointment, too, was unusual………….. 

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Govt to amend law so RBI can sell 1% stake in Nabard

......“The decision was taken that RBI’s equity will get transferred to the government. But the complete transfer could not take place because the laws say that equity shareholding in Nabard will be jointly held by the government and RBI,” a finance ministry official said, requesting anonymity. “The change in the law will ensure that the complete stake is held by the government.” Nabard chairman Prakash Bakshi confirmed the development........

.......Through the Nabard amendment Bill, the government will also combine the posts of chairman and managing director.  “Combining the two posts is in line with the industry practice,” said Bakshi. “Most of the banks have one post of chairman and managing director.”

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HDFC Bank set to open rural one-man branches

.......... Earlier this month, the Reserve Bank of India (RBI) had asked the state-level bankers’ committees (SLBCs) to prepare schedules for covering all unbanked villages with a population of less than 2,000. SLBCs are to then notionally allot these villages to banks for providing financial services in a time-bound manner. RBI is to issue a detailed guideline soon…………….

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Larger SC bench to examine cheque bounce cases' conflict

New Delhi: The Supreme Court has referred to a larger bench the question whether a person can be tried for a cheque bounce, even before the expiry of the 15 days notice period issued by a complainant...........

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For more fact than fiction in statistics

.........The declining quality of official statistics relating to the economy has been a serious concern to economists, researchers, analysts and policy makers in recent years. In recent months, economists as well as the RBI have been critical of the official data and the central bank had gone to the extent of terming it “analytically bewildering”...................

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कहां जा रहे हैं सिक्के, सरकार पता लगाएगी

.......बाजार से गायब हो रहे सिक्के रिजर्व बैंक के लिए भी परेशानी का कारण बन चुके हैं। इस समस्या से आम आदमी भी वाकिफ है। हालत यह है कि फुटकर दुकान से सामान लेने के बाद उसे शेष पैसे की जगह अब टॉफी, अन्य कोई चीज या कागज पर लिखी पर्ची ही मिलती है जो उस दुकान के सिवा कहीं और फूटी कौड़ी की भी कीमत नहीं रखती। लाख कोशिशों के बावजूद सरकार यह पता नहीं लगा पा रही कि बाजार में सिक्कों की कमी क्यों हो गई है? मामले की तह तक जाने के लिए वित्त मंत्रालय और रिजर्व बैंक ने मिलकर आरबीआई के डिप्टी गर्वनर केसी चक्रबर्ती की अध्यक्षता में एक समिति गठित की है। यह समिति अगले माह रिपोर्ट पेश कर सकती है। वित्त मंत्रालय के एक वरिष्ठ अधिकारी ने बताया कि इस मामले पर पहले भी तीन बैठक हो चुकी हैं लेकिन सिक्के गायब होने का ठोस कारण पता नहीं लगाया जा सका है। .............

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Dena Bank cricket team wins "Sir Benegal Ramarau Trophy"

Dena Bank cricket team, won the "Sir Benegal Ramarau Trophy" for Inter Bank Cricket Tournament conducted by Reserve Bank of India Sports Club, defeating the defending champions Bank of Maharashtra by 144 runs, in the final played on 20th April 2012 at Cross Maidan, Mumbai..........

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Warts and all, micro finance is working

..........The other charge is that MFIs lend to the same clients beyond their ability to repay. In the past, there were no regulations on this aspect. And MFIs had a genuine difficulty in finding out the existing borrowings of a client because the client rarely revealed the true position. The RBI has now laid down a rule that only two MFIs can lend to one borrower and both together cannot provide loans beyond Rs.50,000. Thus, this prevents the possibility of over-lending...........

Read - The Hindu

RBI permits all financial institutions to participate in CDS

..... "It has now been decided to permit all India financial institutions, namely, EXIM Bank, NABARD, NHB and SIDBI to participate in the CDS market as user to hedge the underlying credit risk in corporate bonds in their portfolio," the RBI said in the notification…………

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Address compensation package, governance issues, MFIs told

The Reserve Bank of India (RBI) on Monday asked microfinance institutions (MFIs) to improve their corporate governance and rationalize compensation packages to bring a semblance of order to the crisis-ridden sector..............

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Synopsis of the Guest Lecture by Sh.Anand Sinha, Deputy Governor, RBI

....... A guest lecture by Sh. Anand Sinha, the Deputy Governor of the Reserve Bank of India (RBI) was organized by the ECONOMICS CLUB, IIT Delhi on 20th April,2012.It was indeed an enlightening experience to hear the Deputy Governor speak. The event started with a very comrehensive presentation by Sh Sinha explaining the role of Central Banks around the world,the role of RBI in India and a brief outline of India's macro-economic situation with respect to the rest of the world.This was followed up with a brief Q&A session during which Sh.Sinha answered various questions from the audience…….

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Banks' earning to come under pressure due to Basel-III: Anand Sinha

Earnings of banks are likely to come under pressure due to the higher capital requirements for the  implementation of Basel-III norms, Reserve Bank of India Deputy Governor Anand Sinha said in Mumbai. "There is going to be pressure on banks' earnings, not only in India but across the world. That's why, Basel-III implementation has been made longer, so that there will be least disruption. However, if you have to do the same activity with significantly higher capital, there will be pressure on return on equity (RoE)," Sinha told reporters on the sidelines of a workshop on `Strengthening Microfinance Institutions' (MFIs)..........

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RBI not in favour of allowing MFIs to take deposits: Sinha

RBI Deputy Governor Anand Sinha today indicated the central bank was not in favour of allowing micro-finance institutions (MFIs) to take deposits from public. "After all, whatever legislation passes, we have to work with that. But, RBI's position has been that deposit-taking should be limited to banks," he told reporters in reply to a question on whether MFIs should be allowed to take small deposits...........
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FII holding in BoB falls below threshold limit: RBI

The Reserve Bank of India (RBI) today said aggregate shareholding of foreign institutional investors (FIIs), NRIs and persons of Indian origins (PIOs) under the portfolio investment scheme in Bank of Baroda (BoB) have gone below the prescribed threshold limit. "The aggregate share holdings in BoB by FIIs or NRIs or persons of Indian origins [PIOs] under the portfolio investment scheme [PIS] have gone below the prescribed threshold limit stipulated under the extant foreign direct investment policy," the RBI said in a notification.……………..

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Bilateral meetings with U.S., other nations fruitful: Pranab

…..Mr. Mukherjee was also accompanied by Chief Economic Advisor Kaushik Basu, Economic Affairs Secretary R Gopalan and RBI Governor D Subbarao…….

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And now, de-globalisation?

.........It is quite clear that RBI’s cut was with clenched teeth and came with a warning that further instalments will not be easily forthcoming. Of course, D Subbarao had made it clear as early as last February that he wanted to see some discipline in the budget. Alas, the budget itself was pretty much given up to electoral considerations. Off-budget noises promised action on the diesel front—Raghuram Rajan was urging the Prime Minister the other day to grasp the diesel nettle............

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A Fiscally Tough year ahead

………RBI Governor, Subbarao, on the other hand also has a difficult task on hand – managing liquidity, decline of the rupee and juggling interest rates. And all this is not going to be easy. All in all, its going to be a tough year ahead for the people of the country, the Government as well as the RBI.

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RBI's rate cuts not to impact lending rates much yet

The more things change, the more they remain the same. This adage seems to explain the state of India's banking sector. The Reserve Bank of India’s (RBI) aggressive cut in repo rate is unlikely to impact the fortunes of the sector. Over the last few quarters, Indian banks have seen growth coming off and bad loans rising, due to high rates and policy issues. The market has been building in hopes of a rate cut since last year, as it would trigger growth and ease asset quality issues…………….

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RBI rate cut — too little, too late?

……The surprise was that the RBI cut the rate by 50 bps in one go. What the market expected was 25 bps because that is the speed at which the RBI has been moving since March 2010, except on one occasion when the rate was raised by 50 bps. Will the drop in repo from 8.5 to 8 percent make all the difference?.................

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'Rate cut breather for asset quality of banks'

The repo rate cut has signalled a change in the rate cycle and the effect of the Reserve Bank of India’s action will ease pressure on the asset quality of banks, especially public sector ones, according to rating agency Moody’s. The extended rate tightening trend had posed risks to asset quality by pushing banks to increase lending rates. It meant moderation in demand and hit corporate borrowers’ ability to repay loans, Moody’s said. The outcome of an unfavourable economic environment and higher interest costs led to increasing non-performing loans (NPLs) and restructured loans. These asset quality pressures were particularly visible among public sector banks.…………..

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Tax policy: Anxious time for depositors

......While RBI- government discussions are meant to be conducted behind closed doors, it is unfortunate that the top policy- makers in government have been voluminously articulating in the public, before the RBI's policy announcement, that the RBI should reduce its policy rates. In the event, if the policy decision turns out to be wrong the brunt of the blame should be on government......

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India lags developing countries in opening bank accounts

.....NPCI Managing Director and Chief Executive Officer A.P. Hota said it is wrong for the World Bank report to compare the African success with India. “In countries like Kenya, South Africa and Zambia, there are just one or two telecom companies who corner 70-80% of the market, so a Vodafone can be present everywhere in the country. But in India, there are 16-17 players and it is difficult for a single player to have that kind of network,” ......

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TJSB Sahakari Bank aims at Rs 10,000 cr business in FY13

..............Vaishampayan said that in the last financial year, the bank had opened 12 new branches in Maharashtra, Karnataka and Goa to tap more business. “We have received a green signal from the RBI to open 20 more new branches in financial year 2013,” he said, adding that the bank will invest a total of over Rs 12.50 crore in expanding its footprint...................

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Central registry to include all property deals

.......…pilot project for registering all properties would begin before March 2013, the National Housing Bank’s Chairman R V Verma told Business Standard. It will start with states already having an e-registry platform. The Reserve Bank of India, in a notification on May 19, 2011, had announced operation of a central registry, meant to have details of all properties against which loans had been taken.………

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Relief for old customers?

RBI has made a cut in repo rates for the benefit of loan-takers. But, usually, banks never pass on such benefits to existing loan-takers. On the other hand, these same banks immediately increase interest rates whenever there is an increase in the repo rate. Moreover, banks compete in offering lower interest rates to new loan takers, while earlier customers for similar loans have been paying much higher interest rates. The ideal is to fix uniform rates for all banks for various types of loans and deposits. But, even if such an ideal aspect ‘disturbs’ the new-era economic liberalisation, every bank should be directed to have non-bargainable interest-rates for different types of loans and deposits, same for old and new customers. For the repo rate cut as announced on April 17, 2012, RBI should, through a circular, direct all banks to pass on the benefit to their existing customers without waiting any request from them.

- Subhash Chandra Agrawal, New Delhi (FE)

MCA for allowing banks as aggregators on commixes

……….While the Reserve Bank of India (RBI) is still deliberating on the issue of allowing banks as direct hedgers in the commodities market (as institutional traders), MCA feels banks can be allowed to play the role of aggregator hedgers to increase volumes…………

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Shooting in the dark

.......Recently, the Reserve Bank of India (RBI) too has highlighted the implications of frequent and large data revisions on policymaking. Data revisions take place due to two reasons. First, is the .............

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Markets waiting to exhale

….The shift in monetary policy creates a potential trading opportunity. It could lead to a rally in the debt market, if RBI dares to follow through with further cuts. Funds dealing in medium- and long-term debt could see a jump in net asset values, or NAVs, through Q1 and Q2, 2012-13. Bond yields in the treasury market are straightening out though still tight and inverted at some tenures……

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Fuelling concern

.....The Reserve Bank of India's annual monetary policy (2012-13), unveiled on April 17, came as a shot in the arm for the three companies — IOC, BPCL and HPCL. “Fuel inflation moderated from over 15 per cent in November-December, 2011, to 10.4 per cent in March, 2012, even as global crude oil prices rose sharply, reflecting the absence of commensurate pass-through to domestic consumers. It is imperative for macroeconomic stability that administered prices of petroleum prices are increased to reflect their true costs of production,” the apex bank said.......

Read - The Hindu

Rate cut must be backed by simplification of the system

........ The RBI has virtually admitted that it has not succeeded in controlling inflation through the lone monetary policy measure. Had the good sense prevailed earlier, at least the contribution RBI has made towards the inflationary situation by making investments and business expenses dearer could have been avoided. The silver line is that RBI itself now realises its mistake. It even takes a part of the responsibility for slowdown in industrial and manufacturing growth. It also admits that fall in credit offtake was also the result of its 13-time rise in interest rates. The RBI analysis states that fall in Indian banks’ liquidity resulted because of its tight monetary policy.............

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Making sense of RBI’s ‘ gamble’ on growth

....RBI has decreased repo rates as it wants to kickstart the growth in the Indian economy, which as the numbers reveals is clearly slowing down. For example the growth numbers for the Indian economy has slipped from 7.7% in the first quarter, to 6.9% in the second quarter and further to 6.1% in the third quarter. Many believe that one of the reasons for this slowdown is the high interest rates prevailing in the economy. By reducing the repo rate by 50 basis points, RBI has indicated that it is tackling this issue of high interest rates..............

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Externalities of rate cut

The article ‘‘RBI has jumped the gun'' (Business Line, April 20) finds fault with the RBI for slashing interest rates by 50 basis points and points to the ‘real threat' of a resurgent inflation. The ground realities do not reflect the possibilities of such a situation. If banks concentrate on raising deposits and lending in March, it need not be interpreted as ‘window-dressing' but as an attempt to raise the performance level to present a better balance-sheet for the year. Being the financial year end, the efforts may also relate to reducing income-tax liabilities by some.

- T. R. Anandan (HBL)

Onus on Centre now

......the RBI has decided to send out a strong signal for monetary transmission. This, the Governor is convinced, can happen only through a decisive action — a 50 basis point cut in this instance. For another, the apex bank has discovered that liquidity tightening has been stronger than it had bargained for. Deepak Mohanty, Executive Director, admitted that the “liquidity has been much tighter” through the second-half of 2011-12................

Read - The Hindu

The debate about growth and deficits

It might be a little late in the day to write about the monetary policy announcement of April 17, but I am going to do it anyway. My defence is that it deserves a broader assessment than the standard “hawkish-versus-dovish” template affords……………

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Economy stares at an avalanche

…..However, with no clarity on fiscal consolidation and dormant inflation in the prices of fuel, electricity, coal, fertilisers and indirect taxes, RBI does see the risk of inflation spiking again, and hence limited the rates cuts. Which means lending rates would come down but only gradually, as and when the cost of funds for banks comes down……………..

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'India 2nd most confident country'

......."India has overtaken Japan to become the third-largest economy in terms of purchasing power parity (as per IMF report) and is heading for accelerated growth, following RBI cutting repo rate by 50 bps and inflation moderating to acceptable level," Ipsos India CEO Mick Gordon said. "This should provide some confidence to the overall sentiments and help in stimulating investment. If the inflation momentum eases in near future, it will give RBI more room to cut rates further to boost investments and growth," he added............

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We are also helping Europe to some extent

Do you think RBI’s inflation concerns are legitimate and another inflationary flare-up could lead to a reversal in its monetary policy stance?

Of course, from the demand side, the monetary policy is to be addressed keeping in view the inflationary situation in the system. There is inflationary pressure. Fortunately, manufacturing inflation has come down to 4.5%, core inflation has been reduced. That is why RBI could take the decision. But pressure is still there..............

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Can central bankers & other technocrats rule the world?

When Duvvuri Subbarao sprang a 50 basis point rate cut on an unexpected market this week, investors were delighted, as they always are by cheaper money, but a few pundits read into the announcement a veiled threat that this was the last help the government could expect from the Governor of the Reserve Bank of India, until it put its fiscal house in better order..................

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New Delhi faces need to cut deficit for higher growth

India's government must do more to narrow its budget deficit to promote long-term growth and tame inflation, Reserve Bank of India Governor Duvvuri Subbarao said. "In India, it's not growth versus austerity, but austerity for growth," Subbarao said yesterday in a panel discussion moderated by Charlie Rose in Washington, where the central bank chief is attending meetings of the International Monetary Fund and Group of 20 nations...........

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Watch the video...............

6 co-op banks have 15-20pc NPAs: NABARD report

..............As per the NABARD’s assessment note the non compliance of norms in the appraisal for disbursal of loans is one of the main reasons for default. During the assessment it was also found that the co-operative banks lended to the sugar co-operatives even when they were in losses and this was done without any guarantee from the state government on repayment before the loans were released. Chief General Manager of NABARD, M V Ashok, said “Six of the unlicenced district co-operative banks were poorly managed and lack of compliance of the credit appraisal system norms led to the financing of undeserving units leading to the heavy NPAs.”................

Read - Indian Express

India to offer microloans for people living with HIV

..... Providing loans to HIV positive people isn’t a great financial risk, says Thotngam Jamang, Deputy General Manager of the Reserve Bank of India, which oversees commercial operation of banks in India. “Many of them have skilled knowledge and are well versed in traditional economic activities such as crafts, et cetera. But there are few employment opportunities. These loans will support entrepreneurship.” Jamang adds that the banks will arrange regular health check-ups for loan recipients......

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Central banker’s reformist vision

........... Jalan covers a lot of ground in this compendium of various papers, speeches and essays and is consistently in favour of liberalisation and reform. He rejects, quite unequivocally, the old and failed “command and control” policies copied from the Soviets. He also questions the efficacy of the elaborate five-year plans in the absence of a dynamic “public delivery system” at the “Centre, State and district” levels. Jalan plainly states: “Without strengthening the ability of the Government to do what it alone an do, and narrowing the focus of its activities to what matters most for the future development of the country — education, health, clean environment and a functioning infrastructure — India cannot adequately seize the opportunities that lie ahead.” He goes on to say, “No amount of macro-policy reforms by themselves will be sustainable or yield permanent results.”........

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MICR, IFSC code must on passbook, a/c statement: RBI

The Reserve Bank has made it mandatory for all banks to print the MICR and IFSE code on the passbook and statement of account of the customers...................

Read - Hindustan Times

ATM fraudsters auction data abroad: SBI

.....The authorities had detected 29 Canara Bank ATMs fitted with skimmers in Chennai and eight in Bangalore recently. The fraudsters had stolen in 1.5 lakh data and sold them off to Russia...........

Read - Indian Express

Fake currency notes came via LoC trade route: Cops

.............Police said the currency notes had been neatly packed in 33 bundles of ladies fabric suits, and had been sent from Pakistan through the LoC trade route. The LoC trade is conducted between businessmen from Pakistan Occupied Kashmir (PoK) and those from Jammu and Kashmir along two routes...................

Read - Express India

Your inflation woes worsen

........our tryst with inflation is far from over. The Reserve Bank of India (RBI), last week, cut interest rates on signs of moderation in inflation. But here's why it may be too soon to conclude that inflation has been reined in as far as you — the consumer — are concerned...............

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Govt's 7-7.5% growth target over ambitious: Deepak Parekh

…………"The RBI has swallowed the bitter pill despite no decline in inflation , but it’s about time that we give a little bit of growth to the economy. I'm not satisfied over the recent policy flip-flops by the government."……………..

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Random Numbers

.............That explains why finance minister Pranab Mukherjee was so jittery last week when T.C.A. Anant, secretary in the ministry of statistics, admitted something went horribly wrong in February. The ministry revised January’s index from the very encouraging 6.8 per cent to a measly 1.1 per cent. (Manufacturing is 40 per cent of the Indian economy and 15 per cent of its jobs). The revised IIP data was a key factor for the Reserve Bank of India (RBI) to cut the policy rate by 50 basis points—the first time in three years. It did so, RBI governor D. Subbarao says, with an eye to slipping growth.

Of course, if the RBI had known this data from the start, would it have acted earlier?............

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3rd successive year of profit for Shikshak Bank

........ Vice chairman Sanjay Narke says that the bank now hoped to entirely wipe out the losses in couple of years and an improvement in the grading according by Reserve Bank of India (RBI). "With financial parameters improving Shiskshak Sahakari Bank qualifies for providing real time gross settlement services (RTGS), and there are also plans to implement core banking system which enables anywhere any time banking,".............

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Accounting standards advisory panel reconstituted

.....This time around, there has been only minimal change to the constituents with as many as seven members of last year's panel getting re-appointed. The Presidents of all the three professional institutes — ICAI, Institute of Cost Accountants of India and Institute of Company Secretaries of India — are on the reconstituted panel. The members who got re-appointed are Mr P.R. Ravi Mohan, Chief General Manager of RBI (RBI nominee); Ms Usha Narayanan, Executive Director, Securities and Exchange Board of India; Mr Ashok Haldia (Assocham nominee); Mr S. Santhanakrishnan (CII nominee); Mr Sunil Gupta, Joint Secretary, Central Board of Direct Taxes; and Ms Renuka Kumar, Joint Secretary, Ministry of Corporate Affairs.................

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Tackling fake currency

The Reserve Bank of India has asked banks to ensure that fake notes are detected at the branch level to avoid inconvenience caused to the common man in case he unknowingly comes in possession of counterfeit notes. “It has already been stipulated that bank notes in the denomination of Rs 100 and above are processed through machines conforming to the standards/parameters prescribed by the Reserve Bank, before issuing them over their counters or through ATMs,” said the RBI in its annual policy statement................

Tackling fake currency - Indian Express

RBI has jumped the gun : S.S.Tarapore

There is a real threat of a resurgence of inflation, and the external sector indicators are not favourable. In this situation, monetary easing by the RBI was, perhaps, too much and too early..................

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Monetary policy

The two articles ‘RBI has jumped the gun' and ‘What is ‘aam aadmi' to make of RBI's gambit?' (Business Line, April 20) decipher the implications of a ‘caged' monetary policy for the economy and, more particularly, for the common man. One, top echelons in government pre-empt any manoeuvrability available to the RBI by explicitly stating the direction and extent of relaxation in monetary policy. Two, a soft repo rate leads to arbitrage operations by banks borrowing from the RBI and investing in certificate of deposits. Three, insensate window-dressing by banks contaminate parameters on which policies are built. It is time the political bosses started looking at grass-root level improvements. .

- M. G. Warrier, Thiruvananthapuram

In the middle of a muddle

.......Since according to that yardstick inflation is still with us and would possibly climb, it could be argued that the RBI, which is convinced that a hike in interest rates is the appropriate weapon against inflation, was pushed into cutting interest rates at this point. However, the muddle over policy seems to afflict the RBI as well. In its recent assessment of Macroeconomic and Monetary Developments over the last financial year, the central bank has also come out in favour of increases in petroleum product prices and other input prices to address the threat posed by “suppressed inflation”. That is, since the transmission of international prices is inevitable, imported inflation can only be suppressed and not avoided. And, if supressed, inflation is a threat. However, if that be the case, since further inflation is almost a certainty, the RBI’s by its own logic would be forced to reverse its interest rate reduction decision. Why cut interest rates then?.................

Read - The Hindu

A delicate balance

The Reserve Bank of India’s annual credit policy, considered as the second biggest economic event after the budget, has brought cheer on the faces of India Inc and the market, heralding a new era of hope for the government, which had almost halted on reforms of late. RBI Governor D. Subbarao has done the unthinkable, cutting interest rates to the tune of 0.5 per cent — the sharpest in three years and also nudged the bank CEOs to find a way to reduce rates. Clearly, the message is to deliver, pass on the rate cut immediately to home buyers, businessmen and investors, whose lacklustre performance has contributed in further slowing down of the economy.…….

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India economy to recover, more rate cuts seen: Reuters Poll

......Indeed, the RBI was still raising interest rates long after many others started cutting them, severely crimping growth and punishing the rupee. Other central banks like the U.S. Federal Reserve and the Bank of England, with interest rates at the zero barrier, have resorted to printing money to shore up their economies, with limited results thus far. With the repo rate at 8 per cent, the RBI still has room to cut. Even after the RBI's 50 basis point cut this week, economists now expect it to be lowered to 7 per cent by June next year instead of 7.5 per cent in the January survey............

Read - The Asian Age

Here’s how borrowers lose when govt orders banks to cut lending rates

……….The RBI has signaled to banks that it will take care of their liquidity needs. It has allowed banks to go below 2 percent of SLR (statutory liquidity ratio) to access standby funds (called MSF, or marginal standing facility) in case of desperate need. Banks are already running excess SLR of 5 percent, giving them a liquidity cushion of around Rs 3,00,000 crore. The natural path for banks to take given rate cuts and given access to liquidity is to reduce deposit rates first. Lower deposit rates will translate to steady to higher profits for banks, as lending rates will remain sticky for a while. Once loans come up for re-pricing, banks will lower loan rates if demand for loans at higher levels is low………………

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Lending rate cuts likely to put pressure on banks' margins

In the wake of the Reserve Bank of India’s (RBI) rate reversal signal, the ongoing and impending reductions in banks’ base rate — the benchmark lending rate to which all loans are linked — may deplete lenders’ margins. Especially those of public sector lenders, which had aggressively raised deposit rates only last month and which they have to service for at least a year. Banks that have cut their base rate after RBI’s move have also reduced deposit rates. However, the benefit of the latter cut would come with a lag; the effect of a loan rate cut would be felt immediately. It is difficult for banks to bring down deposit rates sharply when competing assets, such as small savings offer similar rates.………….

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The MSC bank gets banking license from RBI

PUNE: The Maharashtra State Cooperative Bank received banking license from the Reserve Bank of India on Thursday, 46 years after its establishment in 1966. The MSC bank is the apex co-operative bank of the three tier co-operative banking sector in Maharashtra. It is a major lender for agriculture and agri-business, mainly the sugar industry in the state. The bank is run by an administrator from May 2011, appointed on the advise of the RBI. The bank had to fulfil four conditions related to cash reserve ratio (CRR), statutory liquidity ratio (SLR), capital adequacy ration (CRAR) and net worth.  

ET

RBI to notify proposal allowing airlines to access foreign funds

New Delhi: The government on Thursday said it expects the Reserve Bank of India (RBI) to notify the budget announcement of allowing the cash-strapped Indian civil aviation sector to borrow up to $1 billion in external loans for a period of one year within seven days. “RBI is expected to issue a relevant circular or notification giving effect to the aforesaid budget announcement within seven days,” the Finance Ministry said in a statement.……………….

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Banks told to work out policy on lending against gold

The Finance Ministry has asked all public sector banks (PSBs) to come up with a policy for lending against the security of gold. This move comes in the wake of the RBI tightening the noose around gold loan companies............

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South Korea's Woori Bank sets up its first branch in India

South Korea-based Woori Bank, a part of the Woori Financial Group, has launched its first branch in India, at Chennai, to provide assistance to Korean companies in the country in corporate banking and to serve local clients. The Chennai branch would be the head office of Woori Bank in India. The bank, which is the second largest commercial bank in South Korea with its focus on corporate banking, has received in-principle approval from the Reserve Bank of India in June, 2011, to set up its branch in India. It has already infused around $35 million in India, said a senior executive from Woori Bank.……..

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Why VITALINFO went missing..........

My father-in-law passed away on 18th evening. I wish to regret that VITALINFO could not be published for two days, i.e. on 19th and 20th April 2012.  I received several calls, SMSs, e-mails from many of you expressing the sentiments for missing VITALINFO.  I thank all of you for all the support, guidance and interest shown by you in VITALINFO.  I assure that the VITALINFO will be back from tomorrow, i.e. 21st April 2012.

Thanks n regards