Jayalalithaa opposes RBI's revision of interest rates on RIDF

..... "I understand that the RBI has revised the interest rate for RIDF loan to eight per cent per annum. Such a high rate will make RIDF loans unviable and the States will be forced to cut down on investment in rural infrastructure which is vital for inclusive development,".......

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Financial inclusion

This is with reference to “Banks have to play the ‘central' role in financial inclusion” (Business Line, April 27). Dr K. C. Chakrabarty, Deputy Governor, RBI, has rightly emphasised the need for brick and mortar branches in rural areas to achieve inclusive growth. I remember his revelation that in one of the districts of Tamil Nadu, nearly 90 per cent of the farm produce was routed through non-banking channels, indicating a poor contribution of PSBs even after four decades of bank nationalisation. The National Rural Financial Inclusion Plan aims at providing financial services, including credit, to at least 50 per cent of financially-excluded households by 2012 through rural or semi-urban branches. Unless concerted efforts are made to implement plans, financial inclusion will remain an ‘illusion'.

- L.Rangarajan, Nagpur (HBL)

Effects of deregulation

It is interesting to see the way banks are reacting to RBI's April 17 credit policy announcement. A few banks have cut both the lending and deposit rates for select maturities. Some others have preferred to cut the lending rates by a specified percentage points, keeping the deposit rates unchanged. It is an era of deregulation that helps banks make their own assessment of market needs, keeping in mind the resources available with them. For sure, deregulation is achieving the intended purpose.

- S. Umashankar, Nagpur (HBL)

Stage set for debut of new private banks

......Decks have been cleared for the Reserve Bank of India (RBI) to issue new bank licences to private sector players, with the Union Cabinet on Thursday approving amendments to the Banking Regulations Bill which clarifies regulatory issues in this respect. The government hopes the Banking Laws (Amendment) Bill will be passed in the Budget session of Parliament......

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RBI allows account portability within bank

The Reserve Bank of India on Friday asked banks to allow intra-bank account portability in cases where full KYC (know your customer) details of the concerned account have been ascertained. The facility would enable the customers to shift their account to any of the desired branch any number of times, without any change in the account number..................

Read - Business Today

Separate policy by RBI for curbing misuse of credit cards: Govt

The Reserve Bank has framed a separate policy to prevent credit card misuse, the government said on Friday. "This includes the requirement of additional factor of authentication for online transactions, online alerts to the customers for all types of card transaction at all channels..."..........

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NPCI Wants To Make Mobile Payment Platforms Inter-Operable

With the aim of integrating all mobile payment systems under one umbrella, the National Payments Corporation of India (NPCI) has sought for an approval from the Reserve Bank of India (RBI) to make the mobile payments services by telecom companies like Airtel Money and m-wallet services offered by banks,…………

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Banks report over 100 home loan frauds in three months

.......In a written answer on home loans, the Minister of State for Finance, Mr Namo Narain Meena, said the Reserve Bank of India had no specific information about home loan scams at any public sector bank. To curb incidents of frauds, the RBI had advised banks to introduce a system of concurrent audit, he said.

The Central Bank had also asked banks to review the working of internal inspection and audit machinery by the audit committee of the Board of Directors. Banks were also advised to constitute a special committee of the board exclusively to monitor frauds of Rs 1 crore and above..........

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IRDA advised to study, relax norms for rural branches

....... Insurance firms need prior approval from the Insurance Regulatory and Development Authority, or IRDA, before opening any branch. In a letter to Insurance Regulatory and Development Authority or IRDA, the finance ministry has argued that banking sector regulator the Reserve Bank of India has also eased the norms on branch opening and the IRDA needs to do the same.  "Our opinion is that it (relaxed norms) will give the much required impetus to financial inclusion," said a finance ministry official.  While opening the branch policy for tier-II cities in 2011, RBI had also reasoned that the earlier initiatives to relax the norms had lead to an increase in the pace of number of branches opened. Private insurers also believe that the move may give a push to rural plans of insurance firms........

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Ensuring microfinance’s future prospects

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Banks will bring in the much-required transparency, holistic customer service and robust governance in the MFI sector while providing the much-required funding support at the same time. The Reserve Bank of India will also find it easy to let banks-led MFIs offer thrift and other products than private sectors MFIs fuelled by private equity firms..............

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Global cues, slowdown in economy putting pressure on rupee

.............CEO of India Forex, Abhishek Goenka believes that the RBI is not in a position to intervene in the market because the forex reserves are still not at satisfactory levels. As well with growing imports, current account deficit is under lots of pressure. Hence, there is no chance that rupee will become strong in comparison to dollar. 

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Little-known benefits of a savings bank account

For most of us, the first association with a bank is through a savings account. There was a time not long ago when you needed an existing account holder's endorsement to open the account, whose only aim was keeping liquid money. The account, like the banking system, has evolved a lot since...............

Read - Business Today

Fitch, Moody's should stop romancing India: CLSA

.......... "I think it justifies given some of the cross currents that India is facing. Quite frankly, I think Fitch and Moody's need to also shed a bit of their romantic image of India and become a bit more realistic as S&P has,"..................

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Thank you, S&P: Why the rating agency did us a favour

..... But an investor who came to India one year ago on hopes of seeing 8-9 percent growth will shy away as he hears of 7 percent while he may add to investments in countries which are moving from 0 percent to 1 percent GDP growth. In this context, the Reserve Bank of India (RBI) is in a Catch 22 situation. Ideally, the deteriorating CAD is an indication that the currency in overvalued and hence must be allowed to depreciate. But a steady depreciation................

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RBI advice helped States, not Centre : K Kanagasabapathy

......The Reserve Bank of India has been bringing out a study of State finances ever since 1950-51, a unique contribution from any central bank. The quality of the publication in terms of its analytical contents has been constantly improving. In its latest publication released at the end of March 2012, it has also incorporated a theme chapter on the ‘‘Role of the Reserve Bank in State Finances'', which traces the growing responsibilities that the RBI took upon itself, beyond its mandated roles of serving as a banker and debt manager of the State governments. This thematic chapter is a must-read for anyone focusing on..........

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Now, time for an SLR cut

…………….The reduction in SLR does not affect money supply. Will it not affect banks’ subscription to fresh issues of securities in a year when massive borrowing is planned? The answer is “no”. We have seen excess SLR investments in the past even when growth of non-food credit was good. It was because, both for maintaining prudential ratios and for avoiding the rising trend in non-performing assets, banks prefer investment in gilt-edged securities. A deputy governor of RBI once characterised this tendency as “lazy banking”. Second, with the massive limit of Ways and Means Advances from RBI to the government at Rs 50,000 crore and the possibility of conducting buybacks, the central bank can always ensure that the government’s needs are met. Since there is no release of impounded funds, there is no relaxation of the central bank’s basic stance of tightness. At the same time, from the point of view of public relations, reducing the SLR by two percentage points will give the impression of improving liquidity. It will be a win-win situation for RBI.

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- A Seshan, Economic consultant and a former officer-in-charge in the Department of Economic Analysis and Policy at the Reserve Bank of India

Govt appoints U S Paliwal as RBI nominee director on Corporation Bank's board

New Delhi: The Government of India has appointed U S Paliwal as the Reserve Bank of India nominee director on the board of state-run lender Corporation Bank with effect from April 25, 2012, the bank said.
The new director will hold office until further orders, Corporation Bank said in a filing to the stock exchanges Wednesday.

http://in.finance.yahoo.com/news/govt-appoints-u-paliwal-rbi-110603647.html

Soiled note business thrives in Ranchi

RANCHI: Have you ever thought that the currency notes which get mutilated can become somebody's bread and butter? Yes, the business of exchanging good currency notes by returning the soiled ones is thriving lucratively but illegally in the city beside the Reserve Bank of India's (RBI) office..................

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Shortage of coins in city, Madan seeks RBI help

KOLKATA: State transport minister Madan Mitra said on Thursday that the state government was making a daily loss to the tune of Rs 25 lakh due to shortage of coins. Mitra said he was going to discuss the issue with the Reserve Bank of India (RBI)…………………

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RBI to issue Rs. 20 and Rs. 50 notes

The Reserve Bank of India will shortly issue Rs. 20 and Rs. 50 denomination banknotes without inset letter and with the rupee symbol in the Mahatma Gandhi 2005 series, bearing the signature of D. Subbarao, Governor of RBI, and the year of printing on the reverse of the banknote, a release said. All banknotes in the denomination Rs. 20 and Rs 50 issued by the bank in the past will continue to be legal tender.

HBL

S&P, Moody's are like docs with two views: KC Chakrabarty

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Deregulation works

It is interesting to see the way in which banks are reacting to the Reserve Bank of India’s credit policy announcement. Some banks have cut the lending and deposit rates for select maturities. Others have preferred to cut the lending rates by specified percentage points, keeping the deposit rates unchanged. This is an era of deregulation — which helps banks make their own assessment of market needs, keeping in mind the resources available to them. For sure, deregulation is achieving the intended purpose.

- Srinivasan Umashankar Nagpur (BS)

Focus on transactions in no frills accounts: RBI

Banks need to focus on transactions in accounts opened under financial inclusion, according to Dr K.C. Chakrabarty, Deputy Governor of RBI......

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‘Financial system is strong'

.....In the light of credit rating agency S&P cutting India's outlook to “negative”, Reserve Bank of India Deputy Governor K. C. Chakrabarty said the RBI would intervene in the forex market only when there was high volatility in the currency market and not just because of the ratings. “India's financial system is strong and that is what is our internal assessment. The RBI will intervene if there is volatility because of the rating and if there is need to intervene,” Mr. Chakrabarty said.................

Read - The Hindu

Banks have to play the ‘central role' in financial inclusion

Hyderabad, April 26: Appropriate delivery models are vital for achieving financial inclusion, according to Dr K. C. Chakrabarty, Deputy Governor, Reserve Bank of India. Speaking on developing a framework for financial inclusion at a national seminar here on Thursday, he said financial inclusion had become fashionable of late. “But this fashion has to become a passion,” he added. The seminar was organised by Crux Management Services in association with State Bank of India's Institute of Rural Development and Nabard. Stating that banks had “great reluctance” to open brick and mortar branches in un-banked area, he said a combination of traditional branch model and business correspondent model should be adopted. Banks should open intermediary structures between base branch and customer locations..........

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Access to banking is a right, says RBI

.........“Banking services should now be made a fundamental right, with financial inclusion drive turning from fashion to a passion for the country. But, just opening a bank account is not enough. There have to be transactions in it. Our approach now is with a minimum bouquet of products and services which include a pure savings facility with recurring deposit and a facility of entrepreneurial credit too,” said K C Chakrabarty, Deputy Governor, Reserve Bank of India....................

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RBI not to interfere in bank service charges

HYDERABAD: The Reserve Bank of India (RBI) will not stop banks from collecting charges for various services or insist on a minimum balance, as it is the choice of the customer where to open account, Deputy Governor K.C. Chakrabarty said here Thursday.  "This is business. We can't interfere. We are not here to control business. We can only bring more competition," Chakrabarty told reporters on the sidelines of a national seminar on financial inclusion...............

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When a quiet change in RBI Act led to a giant scam

...... “Never in the history of India had these kinds of derivatives sold by banks,” he added. “The insertion of a new clause in the RBI master circular was the real devil, and we have internal notes of the central bank,” .................

Story

Govt Clears Banking Bill, Retains 10% Voting Right

.....The proposed amendments as regards the RBI's role would enhance the regulatory powers of the apex bank and increase the access of the nationalised banks to the capital market for expansion of the banking business, the draft had said............

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Give home loan up to Rs 25 lakh in priority sector: RBI to UCBs

Mumbai: In order to facilitate enhanced lending, Reserve Bank on Thursday allowed Urban Co-operative Banks (UCBs) to provide housing loans up to Rs 25 lakh under the priority sector lending schemes. "UCBs would, henceforth, be permitted to utilise the additional limit of 5 per cent of total assets for grant of housing loans to individuals upto Rs 25 lakh, which is covered under the priority sector," RBI said in a notification. At present, it said, UCBs are permitted to assume aggregate exposure on real estate, commercial real estate and housing loans up to a maximum of 10 per cent of their total assets with an additional limit of 5 per cent of their total assets for housing loans up to Rs 15 lakh. On its second quarter monetary policy review in November 2010, the RBI permitted all UCBs to lend up to 10 per cent of their total assets to housing, real estate and commercial real estate and an additional 5 per cent for purchase and construction of dwelling units, costing up to Rs 10 lakh. "Due to the high cost of dwelling units, UCBs found it difficult to use the additional limit of 5 per cent of total assets," the central bank said. In May 2011, the RBI hence allowed UCBs to utilise the additional 5 per cent of their total assets permitted earlier, for housing loans up to Rs 15 lakh.

Zee News

Look before you leak data online

…………..“The Indian Banks Association is planning to put this point across before the Reserve Bank of India that banks should not be liable for paying compensations to customers. That’s because if we compensate for a few genuine cases, then others may also claim tomorrow something on these lines and start asking the bank for compensation,” said a senior official at the IBA……………

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Indian market for banking technology set to grow: Frost & Sullivan

……"IT investments in the sector will be driven by multiple forces. These include, the need to comply with RBI norms, support changing business models and leverage cloud computing and mobility solutions, which will result in comprehensive transformation in the IT landscape of large, cooperative and rural banks".

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SBH designs recurring-term deposit scheme

In what it claims to be a first-of-its-kind from the Indian banking industry, the State Bank of Hyderabad (SBH) is thinking about launching a new product, which will combine the features of recurring deposit (RD) and term deposit schemes.................

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Earn less, pay more

After months of expectations that a rate cut was on the anvil, the Reserve Bank of India (RBI) finally took the plunge last week by cutting the repo rate by 50 basis points — quite a pleasant surprise for the market. However, the rate cuts that followed have not been too convincing. Some banks have cut deposit rates across tenures, while certain others have chosen to cut the base rate — implying there will be some relief on the lending front as well................

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YES Bank reduces ATM target; to focus on core retail space

With the RBI permitting white label ATMs, that is, those that are owned and operated by non-bank entities, our job becomes easier,....................

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Emerging Leaders : Duvvuri Subbarao, Governor, Reserve Bank of India

……When Subbarao took over as the Governor of the Reserve Bank of India (RBI), after a long career that ended as the senior most bureaucrat in the finance ministry, there were a few who saw the move as an attempt by the government to have greater influence over monetary policy. Though it is not unusual for former bureaucrats to head the RBI, the current Indian Prime Minister Manmohan Singh being the most famous example, it was speculated that Subbarao was given the job as he would be more accommodative of the government’s economic policy priorities………………..

……………Subbarao’s legacy is no doubt secured as the RBI Governor who successfully steered monetary policy during one of the most stressful periods in financial history. But Subba, as he is known to close friends, is unlikely to rest on his laurels. Several decades of experience as a public official are whispering in his ear to remain laser-focused on the several risks the Indian economy currently faces. The majority of Indians would now be thankful that, in Subbarao, the government picked one of the most able people to do that job. 

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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...........

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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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