Road to Basel

RBI’s new Basel III guidelines, notified on Wednesday, pose a challenge not just in terms of how banks are going to find the R1.5-2 lakh crore of fresh capital, but also in terms of their ownership structure. Indeed, since the focus is more on Tier 1 capital which has been redefined to include mainly common equity-equity capital and reserves, this implies that banks will be further challenged going ahead. The issue of where the capital is going to come from is more pertinent for the public sector banks which have so far been dependent on the Budget for funding............

Read - FE

Basel 3 norms: RBI asks banks to set aside more risk capital

........In its Basel 3 notification on Wednesday, the RBI said that Indian banks are required to set aside minimum common equity of 5.5 per cent (Tier–I) capital for its risky assets (loans). Banks also have to bring in additional equity at a minimum of 1.5 per cent of its risky assets (loans)...........

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Western Union may start domestic money transfers

......In India, local money transfers are mainly conducted through 155,000 post offices. Banks also provide remittance services with the help of business correspondents (BCs) to get rural penetration. In March, the Reserve Bank of India (RBI) allowed interoperability at retail outlets or sub-agents of BCs, which means they can cater to more than one bank at a time. The central bank had also allowed banks to appoint companies as BCs, to achieve the broader goal of financial inclusion. These measures have made the local payments space more remunerative for new players..........

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Riches-to-rags story of the gold loan industry

........The microfinance business has taken a beating. The hype created around the initial public offering, and thereafter, of SKS Microfinance, is still fresh in the minds of investors. Gold prices have touched lifetime highs in India, thanks to a depreciating rupee. However, RBI is concerned about the future of GLCs if gold prices were to soften in India. Gold prices are softer abroad by about 12 per cent.........

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Hilly districts in Uttarakhand show low CDR

Dehradun: The credit deposit ratio (CDR) which is around 51 percent in Uttarakhand has failed to show improvement, particularly in hilly districts, a big cause for worry for the state government. As per the RBI stipulation, at least 60 percent of the CDR should be achieved by the banks.......

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This is how RBI wants banks to reach smaller villages

...... RBI Deputy Governor K C Chakrabarty has been advocating for a profitable branch model of financial inclusion. According to a rough estimate, 50% of Indian populations still remain either under-banked or unbanked. "While all the efforts made for financial inclusion have expanded the access to banking services, it is important that quality services are provided through the newly set-up information and communication-based delivery model," RBI had said.

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RBI Monetary Policy for 2012-2013: Policy on deposit rates requires change

.....The Reserve Bank of India (RBI) has been de-regulating interest rates on bank deposits in bits and pieces over the last several years. While doing so, it has created an artificial divide between the rich and poor by taking an arbitrary decision in allowing banks to offer differential interest rates on deposits. In the case of fixed deposits, RBI had allowed banks to offer higher or lower than the normal interest rates for single-term deposits of Rs15 lakh and above. Again while de-regulating interest rates on SB (savings bank) accounts, the RBI once again created an arbitrary divide by stipulating that banks are free to offer different rates for SB depositors maintaining a balance in excess of Rs1 lakh in the account. The RBI has never given any rational explanation for allowing such discrimination......

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SEBI & RBI: Aren’t regulators accountable for the use mess

....An investigation began only after a change of guard at USE. As always, several directors of the USE including two former CEOs, have quit in quick succession. Meanwhile, Shyamala Gopinath, the RBI deputy governor in charge, who inaugurated all four forex-derivatives bourses, has moved on to a nice post-retirement directorship at the NSE. We believe that these openly capricious rules were all designed to help the NSE.......

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On The Turnpike - Book review by P.P.Ramchandran

THOSE LOOKING FOR A QUICK AND COMPREHENSIBLE INSIGHTS INTO THE WISDOM AND FOLLIES OF INDIAN ECONOMIC POLICY OVER THE LAST 60 YEARS WILL FIND THIS BOOK INSTRUCTIVE AND AMUSING.

TCA Srinivasa- Raghavan is a well known analyst whose columns have adorned several financial dailies. He had a role to play in Third volume of RBI History. The book under review is a ‘Coffee- Table book’ brought out by the Finance Ministry on the occasion of the Indian Economic Service completing fifty years. One must say the Ministry of Finance has put no restraint on the author......


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RBI lays down road map to make banks safer, avoid crisis repeat under Basel Committee recommendations

MUMBAI: The Reserve Bank of India has laid out a six-year road map to make Indian banks safer and avoid recurrence of the 2008 crisis, but it will need an estimated Rs 1.5 lakh crore in capital at a time it is scarce................

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Banks must maintain 7% core capital: RBI's Basel III norms

........ Reserve Bank of India (RBI) on Wednesday directed Indian banks to maintain a minimum tier I capital or core capital which is equity and reserve under the final guidelines on Basel-III capital regulations. Moreover, the regulator, for the first time, asked lenders to keep a capital conservation buffer of 2.50%. "These guidelines would become effective from January 1, 2013 in a phased manner," RBI said in a statement........

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Bank deposits, advances fall through April

Bank deposits and advances fell through April, after rising sharply towards the end of the previous financial year. The growth in deposits over the year was 13.3 per cent while loans grew 17.6 per cent, as on April 20, showed data released by the Reserve Bank of India (RBI) on Wednesday............

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Forget twin deficits, India has quadruplet deficits to worry about

...............Already, the latest purchasing managers’ index (PMI) print indicates that while the economy is still expanding, there are major input and output cost pressures, indicating that while the RBI did stick its neck out and cut the repo rate by a deep 50 basis points (something critics have frowned upon), there are risks associated with it since inflationary pressures are still intense. Clearly, RBI has put growth concerns above inflation this time round, and the results will have to be assessed in detail over the next few months...........................

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Kerala suicide figures in RS; action sought against bank

.....a medical college student in seventh semester in Cochin had to discontinue education after being denied loan by State Bank of India. The loan was denied under an RBI directive to banks to not to sanction loans to students admitted under management quota..................

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Are NPAs really bottoming out?

The Reserve Bank of India has hinted that non-performing assets (NPAs) of the banking system have almost bottomed out. In an interview with Mint, Anand Sinha, Reserve Bank of India’s deputy governor, has said that he expects NPAs should have bottomed out by now as world economies have shown signs of improvement. As far as India is concerned, he says that despite the potential upside risk, inflation has subsided now and there has been a rate cut, which can result in lesser NPAs.......

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We’re closely watching forex market, says RBI

The Reserve Bank of India on Monday said it is closely watching the forex market and will intervene only if there is excess volatility in rupee, even as the domestic currency fell to a nearly four-month low against the US dollar. “The RBI doesn’t look for a fixed level of rupee. We will only intervene if there is excess volatility,”.......

Read - Indian Express

Importance of bank account stressed

Hyderabad : The second phase of the Urban Financial Inclusion programme was held here on Monday, as part of the Reserve Bank of India's Financial Inclusion Programme. Senior officials from RBI including Chief General Manager Rose Mary Sebastian, General Manager R. N. Dash, and Deputy General Manager of the lead bank State Bank of Hyderabad Jasbir Singh Aneja spoke about the necessity of maintaining a bank account. All the districts in Andhra Pradesh have been fully covered under the programme which envisages at least one bank account per family, either for savings or for loans. For extending the programme to the slum dwellers in Hyderabad, already one such event was conducted a few months ago in Charminar.

The Hindu

Oline fraudsters use RBI name to con public

......The fraudsters copy and use the name and logo of the RBI to such perfection that even highly educated people are becoming easy victims to it. What's more, even certificates are issued with impersonated signatures and stamping of RBI's top officials. There have also been attempts to contact the victims, circulate fake mail ids and also to duplicate the RBI website.............

Read - The Hindu

RBI may set up fixed rate loan committee

Mumbai: The Reserve Bank of India (RBI) is planning to set up a committee to look into the issue of facilitating the development of fixed rate loan products in the banking system, RBI Deputy Governor, Anand Sinha said. “We will set up a committee soon to facilitate the development of fixed rate loan products in the market, which are presently absent in the system,” Sinha told reporters on the sidelines of an Assocham event here.......

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Bad loans may have peaked: RBI DG

....Given the current situation...looks like there would not be undue alarm in the near future. So, assuming that things do not deteriorate in a very significant way, the NPAs might have peaked or the asset quality might have bottomed out. The expectation is that from here on the asset quality should improve,” ........

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Agricultural Credit: Why are the government funds to boost agriculture not reaching small farmers

..........There are several such anomalies in farm-sector lending. For instance, between 2000 and 2010, according to the Reserve Bank of India, farm loans increased 755% to Rs 3,90,000 crore. And Budget 2012 has increased the agri-lending target for 2012-13 to Rs 5,75,000 crore, from Rs 4,75,000 crore in the previous year. But productivity gains during the same period-18% growth in farm yields between 2000 and 2010-don't suggest an increase remotely close to that. Neither do sales of inputs like seeds, fertilisers and tractors. "For every unit of nominal GDP growth, there is 1.3-1.5 units of credit growth," says former RBI deputy governor Usha Thorat. By that principle, a three-fold rise in agri credit should double output. But we are not seeing anything like that......................

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Govt, RBI working on changing rules to give India Inc more leeway in repaying FCCBs

MUMBAI: The government and Reserve Bank of India are working on changing rules to give corporates more leeway in repaying foreign currency convertible bonds (FCCBs) that have turned into millstones in a dismal market..............

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RBI and falling rupee: Battle just keeps getting tougher

The Reserve Bank of India’s battle to contain a falling rupee just got tougher. The current account deficit is widening and a weak global investment climate coupled with policy paralysis in New Delhi, sticky inflation and slowing growth have increased the aversion of foreign investors to India, pushing the capital account into the red. Last week’s move by rating agency Standard & Poor’s to cut the country’s credit rating outlook to “negative” has complicated matters further for the RBI, which has few options other than intervention and tinkering with rules on export credit to encourage inflows, RBI officials say..............

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Agents of change

.......Ananya Roy, also doing an internship with the RBI, has been assigned a project on FDI in retail. She has to assess the current scenario of the Indian retail sector and then evaluate the benefits (if any) of introducing FDI to the sector. Roy has so far become aware of some of the consequences of FDI in the Indian scenario on the face of infrastructure, policy and supply chain issues. “Since regulation of FDI has been a debatable issue, the perspectives of RBI and its working methods have provided me with immense takeaways. It has also helped me get better clarity on the issues of employment, food price volatility and in understanding the condition of current retailers and farmers as well,” says Roy...........

Read - Hindustan Times

Visually-challenged demand ATM cards

........“As per the Reserve Bank of India’s directive, all commercial banks should provide talking-facility with� Braille keypads at one-third of the newly installed ATMs and place them strategically in consultation with other banks,” .................

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'IDBI Bank to open taluk, village-level branches for farmers'

....... the bank plans to open around 150 branches during this year. Apart from expanding the regular branch network, the bank plans to open smaller branches at the taluk level and larger banks at the village level with limited staff strength, to take care of the financial needs of the farmers. RBI has permitted the bank to open such branches without any formal licence where the population was less than one lakh, and the bank was gearing to open them in coming weeks.............

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Weak rupee good for economy, to make industry competitive: Rakesh Mohan, former RBI Deputy Governor

In an interview ET Now, Rakesh Mohan, former RBI Deputy Governor, shares his views on the weak rupee, government policies and economy.........................

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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.

Continue reading...........

- 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

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

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. 

Continue reading......................

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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