.........आरबीआई के क्षेत्रीय निदेशक के आर दास ने बताया कि बैंक ने यूपी-उत्तराखंड के 2600 डाकघरों से करार किया है। इन डाकघरों को लॉटरी स्कैम से बचाने संबंधी संदेश लिखी मुहरें दी जाएंगी। इन्हें वे प्रत्येक चिट्ठी पर लगाएंगे। जिससे घर-घर में जागरूकता फैलेगी। इसी प्रकार रेलवे स्टेशन के डिस्प्ले बोर्ड के जरिए भी संदेश का प्रचार-प्रसार किया जाएगा। वहीं रेडियो पर भी लॉटरी स्कैम से बचने और फौरन किन विभागों को सूचित किया जाए, इसके बारे में बताया जाएगा।
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Thursday, June 14, 2012
Counterfeit currency: Threat to internal security
The World is observing ‘Anti-Counterfeiting Day’ on 13th June 2012; however India is still struggling to come out of the clutches of fake currency issue. The latest report by Home Affairs Ministry notifies that large quantities of ‘Fake Indian Currency Note’ (FICN) are pumped into India from countries like Pakistan, Nepal, Bangladesh, Sri Lanka, Malaysia, Thailand, and the UAE. Shocking but true, reports by the Reserve Bank of India (RBI) reveal that the practice of counterfeit currency is almost as old as the printing of currency. At some period in history, it was considered treasonous enough to warrant punishment by death. It was in 1650 AD that paper money was developed and counterfeiting flourished, especially within America where counterfeit money was more common than genuine money.............
MFI sector upbeat as banks open fists, Bill
........Separately, the MFIN is also in dialogue with the Reserve Bank of India to extend the deadline for meeting the new provisioning and capital adequacy norms beyond April 2013. If the central government also obliges with the new MFI Act, hopefully a new chapter could be opened in the microfinance sector.
Financial services regulation: Is there a future for NBFCs?
....... Usha Thorat committee’s recommendations and PSL (Priority Sector Lending) guidelines are still to come and are likely to reduce leverage and ROEs for NBFCs, given that capital requirements are expected to increase with Tier- 1 increasing from 10% to 12%. ....................
RBI asks banks to improve IT governance
......"It is expected that all banks adopt appropriate frameworks for both IT and IS governance and put in place the proper structure and systems," RBI said in a notification. The RBI has also requested banks to take suitable steps in this regard and ensure that the issues relating to governance, information security and business continuity get adequate attention at the Board level.........
Coordination or control?
The edit “Competing exemptions” (June 12) rightly questions the need for bringing telecommunications and banking within the ambit of the Competition Commission of India (CII). The need for coordination between organisations arises from the degree of interdependence of their functions. Such a situation does not seem to exist here. If one of the regulators falters in its responsibility, the remedy is to improve its working rather than a check by another entity. Moreover, regulators in these two sectors – the Telecom Regulatory Authority of India and the Reserve bank of India (RBI) – have very able people running them. So, the idea of putting these sectors under CCI seems to be a camouflage to monitor and control them rather than coordinate their activities. Moreover, the assignment of resolving conflicts between sector regulators and CCI to a Cabinet committee would add layers to the decision-making process that is already fraught with delays.
Y G Chouksey Pune (BS)
RBI directive on erosion of loan collaterals to hit companies
.......A Reserve Bank directive that seeks to protect banks from erosion of loan collaterals is threatening to worsen credit flow to slowdown-hit companies that are lagging in payment of salaries and statutory dues. The RBI has recently instructed banks to ensure that borrowers have no outstanding statutory dues, such as Employees' Provident Fund (EPF) contributions, by seeking an auditor's certificate for such compliance in their credit appraisal process............
RBI asks RRBs, cooperative banks to frame policy on unclaimed accounts
.........On a review, with a view to further strengthen the regulatory framework for inoperative accounts and unclaimed deposits, state and central cooperative banks or regional rural banks are advised to put in place a board-approved policy on classification of unclaimed deposits, grievance redressal mechanism for quick resolution of complaints, record keeping, and periodic review of such accounts," RBI said in a circular..................
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My View on "Finance ministry preparing new policy road map for banking sector "
This is the right approach. We must use the existing banking infrastructure simultaneously with creating new ones. The human resources and physical infrastructure in cooperatives and RRBs and to some extent in rural branches of commercial banks were ignored while promoting sophisticated borrowed ideas like SHGs and Banking Correspondents. Cooperatives and RRBs were trained to cater to the rural areas and handle small accounts. When technology invaded from above, they were left in the lurch. The present approach of Centre will give RBI an opportunity to revive a neglected sector.
M G Warrier
Will one more regulator help matters?
With the Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Insurance Regulatory and Development Agency (IRDA), Pension Fund Regulatory & Development Authority (PFRDA), Telecom Regulatory Authority of India (TRAI) and Forward Markets Commission (FMC), India already has a plethora of regulators trying to set things right in the economic flux. It seems there is one more on its way...........
RBI to issue Rs 20 denomination notes with rupee symbol
Reserve Bank Wednesday said it will soon issue banknotes of Rs 20 denomination with the rupee symbol and inset letter R in the Mahatma Gandhi Series-2005 notes........
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Corporate india vs Government: Full circle
.......The group flaunts an endless supply of cash while wrapping its lack of financial transparency into a strange corporate philosophy called ‘corporate materialism’ which proclaims that “in the last 33 years not even a single rupee of dividend has been declared by the group and not even a single rupee has been shared from the profit by anybody.” Will anyone explain how the RBI or the ministry of corporate affairs have allowed a group with this weird financial claim to collect over Rs70,000 crore of public money (according to its own newspaper advertisements)? Or how the group has the funds to sponsor the Indian cricket team for so many years? Sahara claims to have spent an astounding Rs1,085 crore on sports and social activities until the end of June 2010..................
Reading RBI’s tea leaves
.....One way of reading the tea leaves is to look at what RBI has done in the past when growth slowed down dramatically. You don’t have to go too far back—in the third quarter of FY09, at the time of the Lehman crisis, GDP growth fell to 5.8%, better than the Jan-March 2012 GDP growth rate of 5.3%. What did RBI do at the time? .......
Read - Mint
Read - Mint
Corporation Bank expects 1% cut in CRR
Mangalore-headquartered Corporation Bank expects Reserve Bank to cut CRR (cash reserve ratio) by 100 basis points in its next week's mid-quarter policy review to facilitate liquidity flow into the system. "We would welcome the rate (CRR) cut at least by 100 basis points. That would send a right message also. We feel the worst (on financial front) is over. If they cut the CRR by one per cent, the system will get Rs 65,000 crore," said Ajai Kumar, Chairman and Managing Director, Corporation Bank. ...........
Revive Growth with Focus
......In tandem, the RBI would do well to ease liquidity, so as to incentivise heightened economic activity. It needs to mandate a lower cash reserve ratio for commercial banks, given the easier trend in crude prices and the reduction in the core inflation rate. Additionally , the monetary authority needs to indicate lower cost of funds by further reducing its repo rate..............
Dear money policy compromises growth
.....The RBI's approach from mid-2010 to keep interest rates high in order to control inflation only set growth expectations back and de-energised the economy. It rested on a simplistic assumption that money supply is all that mattered. By raising interest rates, the liquidity in the system would dry up as borrowers opted out of fund-raising to complete projects. This would also reduce overall demand in the economy, as households would save, attracted by higher interest rates, and reduce consumption expenditures.........
Why we need a large CRR slash, not a rate cut
.....A rate cut without comfortable liquidity conditions is unlikely to lead to significant reduction in lending rates. Therefore, even if the RBI chooses to cut the repo rate on June 18, it may not be very effective without easier liquidity conditions than what exist now. A lower CRR will also increase RBI’s ability to intervene in the forex market without putting too much strain on inter-bank liquidity. A large CRR cut would allow banks to cut their lending rates immediately, while only a 25 bps cut may only have a salutary impact on lending rates.......
Why a rate cut on 18 June will aggravate India’s problems
Even though Dalal Street is eagerly awaiting an interest rate cut after the weak April industry output, Chetan Ahya, Managing Director, Morgan Stanley has warned that premature easing by RBI may aggravate the economy’s current problems...............
ATM companies top small banks in valuation
............ What has set the market on fire is RBI's two-year-old decision to allow accountholders free access to any ATM across the country. Although access is free for customers, banks pay each other a transaction fee every time their depositors access ATMs of other banks. This has turned ATMs into profit centres for banks and the number of machines has grown from 60,000 in March 2010 to 75,000 last year and is now a few hundred short of the one-lakh milestone.......................
India ranks 23rd in financial literacy among 28 countries says Visa
....India is the third-largest growing economy of the world apart from being one of the highly preferred investment destinations. However, when it comes to financial literacy among Indians, results are quite dismal. A survey revealed that more than 70% of Indian respondents cannot manage their personal economic emergence for more than three months. Of course, poor financial planning is the key reason.......
Could This Be India's Golden Moment?
The first quarter of this year saw India’s economy grow a mere 5.3 percent, the slowest rate in nine years. The single biggest factor has been the hefty increase in benchmark interest rates by the Reserve Bank of India over the past two years—from 4.25 percent in January 2010 to 8.5 percent in January 2012. While the central bank’s motivation has been to keep inflation in check, a direct side effect of the interest rate hikes has been a rapid cool-down of the pace of investments in infrastructure and the manufacturing sector................
Wednesday, June 13, 2012
Monetary policy isn't a popularity contest
If the RBI cuts interest rates now, it will prolong the much-needed macro adjustment
......The RBI’s approach of not being wedded to a particular rupee level and sensibly avoiding its senseless defence by running down foreign exchange reserves has saved us so far from a bigger disaster. I know it is difficult for people, including some economists, to think of massive exchange rate depreciation as being positive, but in the kind of the macro cross-currents India finds itself, currency weakness is part of the solution, not part of the problem......
.......Frankly, the RBI should not be in the business of doctoring financial markets’ mood to make up for the government’s inaction and incompetence by ignoring the over 10 per cent consumer inflation just before an uncertain monsoon. If it attempts to do that by responding under political pressure, or as if in a popularity contest, or as a prisoner of market expectations, it’ll only be contributing to the very macro instability due to entrenched inflation it is trying to address.
Ashok Lahiri to get another extension?
Grapevine has it that Executive Director in the ADB Manila Ashok Lahiri is getting one year extension. Extended tenure of Lahiri was to end in July. Earlier the name of Deputy Governor of the RBI K C Chakraborty was in circulation for the post.
http://www.whispersinthecorridors.in/ReadArticle.php?id=14107&table=whispers
http://www.whispersinthecorridors.in/ReadArticle.php?id=14107&table=whispers
PRERANA SHIVIR for Reserve Bank of India (RBI) – Kolkata
Friday, 01st June, Mystic Managers was invited to conduct a workshop on Stress Management at RBI premises for RBI employees at Kolkata. Mystic Coach Abhishek conducted Yoga and Pranayam based theoretical and practical session for more than 25 participants. The most common reported ailments were Joint Pain, Indigestion, High Blood Pressure, Acidity and Obesity. Most of the participants were struck by the precise and scientific approach with which Abhishek explained & demonstrated Yoga postures. RBI has requested Mystic Managers to conduct another session in June itself for those who could not attend that day. Abhishek was ably assisted by Mystic Trainer Shibnath Basak.
Padmanabhaswamy temple-model security for RBI
The Regional Office of the Reserve Bank of India at Kochi could soon be provided a five layer security cover like the Padmanabhaswamy temple in Thiruvananthapuram in view of the increasing risk to its currency crest. The Kochi police is understood to have worked out a detailed action plan for carrying out evaluation of the security measures necessary. RBI General Manager, C.V. George had at a security review meeting in Kochi last week asked for more security and also urged the police to put an end to unauthorised parking in front of the bank. He made it clear he did not want private buses halting near it either, fearing this could provide a cover for intruders. ...........
Rs 4 crore shredded notes seized in Bellary
.....Bellary superintendent of police Dr Chandragupta told HT the RBI’s normal practice was to shred old notes or those with some wrong prints and dump them in its yards. Such notes were used for paper making, which Sreenivasa did, he added. “However, a team has been to Indore to verify the facts given by him. We have been in touch with the RBI and they have the same opinion of the factory owner.....
Read - Hindustan Times
15 of 21 bankers take fake bill for real
It happened at a recent training programme attended by managers of urban co-operative banks in the state
Bangalore : If you think counterfeit notes can't easily make it to our banks, then here's a shocker for you. A test conducted during a recent training programme for bank managers saw 15 out of the 21 participants approving a fake note of Rs 500 denomination. The programme was organised at the Regional Institute of Cooperative Management to train managers of urban co-operative banks from different places in the state and to update them on banking-related issues, especially identification of forgery. The test was done in two rounds. In the first round a genuine Rs 500 note was shown to all 21 participants, and all of them approved it as original. In the second round, a counterfeit bill of the same denomination was shown, but 15 of them said it was original. “We were surprised by the outcome of the test,” said Phaneendar B N, a forensic expert on documents and handwriting who was one of the trainers at the programme. “We gave each of them two notes to examine as they deal with such situations everyday. Only six of them managed to identify the counterfeit.” The officials failed to detect the fake water-mark, a fake embossing of the number 500 behind Mahatma Gandhi's image below the number 500, fake silver stick, and a fake superimposing image of number 500 above the national emblem. “If this is the situation in urban cooperative banks, how will it be in rural banks and cooperative societies,”.................
Financial studies set to become part of school curriculum
......Mr Sukumaran added that the capital market regulator is taking the lead in co-ordinating with other regulators, such as the Reserve Bank of India, the Insurance Regulatory and Development Authority and others. “The biggest challenge is that the school syllabus has so many different subjects. We are trying to examine if financial education can be embedded into the existing school curriculum. If you are looking at comprehensive financial literacy then we need separate text-books,”.......
Financial inclusion progresses amid viability challenges
.....Financial inclusion is the process of ensuring access to appropriate financial products and services needed by weaker sections and low-income groups at an affordable cost by mainstream institutional players. The number of no-frills savings account with an overdraft facility has increased from 13,000 in 2010 to 15.20 lakh in 2012, according to a presentation made by Dr K. C. Chakrabarty, Deputy Governor, Reserve Bank of India, at a recent summit. As part of the financial inclusion process, banks have opened 3,171 rural branches in the last two years. To encourage banks to open branches in the rural areas, they are permitted to freely open branches in tier III to tier VI centres, subject to reporting to the RBI......
My Mobile Payments launches mobile wallet service in India
.......“In a country like India where mobile phones are more widespread than the financial systems, mobile payment is the next big alternative payment method. MOM does all paperless transactions and it is in line with RBI’s vision of making 70 per cent of the financial transactions paperless by end of 2012.”.......
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India output growth flat, adds to BRIC straggler's gloom
.....That has spurred expectations the central bank will cut its repo rate by 25 basis points (bps) to 7.75 percent next Monday, adding to a 50 bps cut in April. But the RBI faces tough choices. Several economists warned that a rate cut without policy measures to reduce supply bottlenecks will drive inflation higher. "Monetary easing to boost aggregate demand without a supply response will prolong the fight against inflation," said Rajeev Malik, senior economist at CLSA Singapore.........
In another breather for telcos, spectrum mortgage gets RBI nod
........Other conditions put down by RBI include a robust methodology to discover the market price of spectrum and a margin to take care of downward fluctuations in prices and a credible valuation methodology to value spectrum reflecting the true realisable value of the airwaves. Further, in case of default by a borrower, the bank should have the unfettered right to sell, transfer, assign exchange or dispose of the spectrum, without any restraining condition, the ministry has said. Also, in case of cancellation or revocation or voluntary surrender of telecom licence before the realisation of full dues, the right on spectrum should be with the lenders, it has added.................
Finance ministry preparing new policy road map for banking sector
......The North Block has already begun discussion with the central bank on the framework that will prescribe profit, capital adequacy, size and any other condition it deems fit for such banks to graduate into full-fledged banks. "We have written to the RBI asking for a clear roadmap for the smaller banks that want to expand," a senior finance minister official told ET...............
Free all e-banking transactions from charges
.....Addressing the chief executives of public sector banks and financial institutions here on Tuesday, the Finance Minister appreciated the recent decision taken by Oriental Bank of Commerce to waive all charges for Net-based real time gross settlement (RTGS) /national electronic fund transfer (NEFT) transactions up to Rs 1 lakh. He said, “I am confident that all the public sector banks would follow this excellent initiative. I would also urge upon the Reserve Bank of India to proactively work on this front and to see that all electronic banking transactions are possible without any charges being levied.”......
Banks told to cut NPAs
..............“I urge you to deploy various tools at your command for containing and rolling back NPAs in accordance with the guidelines of the Reserve Bank of India,” .................
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Public sector banks - 2: Brazen quixotic and thoughtless directives from Delhi
....Notwithstanding the fact of substantial private shareholding in PSBs and the managerial autonomy granted to them in 2005, the central government’s power to give direction to banks in regard to matters of public interest, after consultation with the RBI derived from the Banking Companies (Acquisition and Transfer of undertaking) Act 1970—in short Bank Nationalisation Act 1970—remains intact.The nature of consultation with the RBI is not clear nor is it clear whether the government could overrule RBI’s advice in matters where the RBI is professionally competent. Be that as it may, in the recent past, the ministry of finance, Department of Financial Services (DFS) has issued a number of directions, advisories and directives to PSBs........
The RBI needs to act
............There is also a strong case that the RBI should be ready to act in anticipation of a possible catastrophic event emerging from Europe. The implications of a disorderly exit by Greece from the euro for the banking and credit system are far from clear. If credit were to dry up across the international financial system, as it did following the collapse of Lehman Brothers in 2008, the RBI should be ready to cut rates sharply. After Greece’s next round of national elections, the future path of the euro will become clearer; but they are scheduled for Sunday, and the results may not be known in time for Monday’s credit policy. The RBI is, thus, faced with a dilemma.............
FE View: Up to poor RBI now
..........They are stuck because of what, in short hand, is called 'policy paralysis' – the government's inability to give corporates land, to get coal allocation, environment clearance, and so on. How an interest rate cut by RBI can fix this is anybody's guess. Don't hold your breath
RBI cutting rates not the right solution now: HSBC
.....In my view, it wouldn’t be the right solution to the growth problem because that has to come from supply side reforms, from broader structural reforms. But you could argue that there is somewhat more pressure on the RBI to deliver a rate cut. So, I would say that the possibilities of a rate cut are quite high this time around......................
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Banks' CRR cut demand gets government support
...........Interestingly, SBI’s demand for CRR cut was also supported by the government, owner of the public sector banks. “Banks are saying the best way is to cut CRR. This is also appropriate from the point of view of Basel-III. Banks can pass on the benefits to customers. As owner of public sector banks we can say banks would welcome a one percentage point cut in CRR, but ultimately the decision will be taken by the Reserve Bank of India. Unless interest rates are lower, there is difficulty in having higher growth rate. Today higher interest rate is feeding into inflation,” Financial Services Secretary D K Mittal said.................
Why RBI should lower policy rates
.....The data tell us that while the economy has slowed down, prices continue to be sticky. The RBI did say in the past that it would not mind sacrificing a bit of growth to bring inflation under control. But the growth numbers for 2011-12 would surely have been a source of discomfort to RBI. In a recent interview, the RBI Governor, Dr D. Subbarao, pointed out that given the inflation dynamics in the economy, 7 per cent may be the potential growth rate. The implicit argument is that 7 per cent growth would bring down inflation to more acceptable levels. This approach, of effectively curbing growth, delayed the rate-easing cycle by almost two quarters, before its fallacy became evident......
Cut lending rates for recovery
......We hope the Reserve Bank of India (RBI) will continue to ease to support growth on June 18. Given April 17’s 50-basis point cut, it may be too much to expect another repo rate reduction, especially as RBI had warned that the room for further easing was limited. No matter. It is just as critical that RBI Governor D Subbarao cut the cash reserve ratio to normalise money growth. After all, until liquidity improves, banks will find it difficult to cut lending rates even if the RBI cuts policy rates. Unless lending rates come down, growth will surely fall short of our modest 6.5 per cent this year, forget the RBI’s 7.3 per cent. What about inflation? We do expect it to pierce.................
S&P's unfair comparison
This refers to the report “India may be the first fallen BRIC angel: S&P” (June 12). There may be some substance to the warning signals contained in the rating agency’s report. But the agency has done a disservice to players in financial markets – who still factor in the views of Standard & Poor’s (S&P) in their decision-making process – by openly airing partisan political considerations of its rich masters in a report that should have been a professional assessment of financial stability aspects. In terms of country representation or share in world GDP, Bric (Brazil, Russia, India and China) economies form a small group and India should not be too bothered about the kind of comparisons S&P has made. The rating agency could do well to infuse some standard in its assessments that should apply uniformly to similarly placed nations. It is better to compare comparables. Finally, India should have its own rating agency of international repute. Finance ministry releases alone will not be enough to counter “judgments” like the one being passed by the extended arms of external interests.
M G Warrier Mumbai
...and dubious timing
The timing of S&P’s report makes one doubt the rating agency’s “objective”. The issues of dual power centres in the government and political roadblocks to “so-called” reforms are not new — we have been facing these for almost eight years. There is no apparent or immediate trigger for the rating agency to come out with such a report.
N Ramamurthy Chennai (BS)
The story of India’s falling forex reserves
Echoing former Reserve Bank of India (RBI) governor C. Rangarajan, Ashima Goyal, a member of the central bank’s technical advisory committee, has called upon RBI to use foreign currency reserves to support the rupee................
No-frills accounts rise over two-fold in last two years
.........The RBI has launched the financial inclusion programme to provide financial services to people in unbanked areas. RBI's approach to financial inclusion is aimed at connecting people with the mainstream financial institutions like banks, the apex bank said. "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 effective or meaningful financial inclusion," RBI said..................
Credit cards need better regulation
....Who will come to the rescue of the aam aadmi? A bank cannot be allowed to suck the blood of the common man in the form of interest. It will not be out of place to mention here the RBI directive on interest rates. It stipulates as follows: “Though interest rates have been deregulated, charging of interest beyond a certain level is seen to be usurious and can neither be sustainable nor be conforming to normal banking practice. Boards of banks have, therefore, been advised to lay out appropriate internal principles and procedures so that usurious interest, including processing and other charges are not levied by them on loans and advances.”.....
RBI asks banks to allot unique customer IDs
............The RBI said that increasing complexity and volume of financial transactions require that customers do not have multiple identities within a bank, across the banking system and across the financial system. To overcome this, it is important to pool information pertaining to different account holders in a centralised database.
Gold loan firms to form self-regulatory body
Gold loan companies, which have been under the regulatory scanner for alleged malpractices, are coming together to form a self-regulatory organisation (SRO) to adopt fair-trade practices, and also to represent their case better with the Reserve Bank of India (RBI).......
JK Bank surpasses target in priority sector lending
.........The meeting under the chairmanship of DDC, Kupwara, reviewed achievements under Annual District Credit Plan 2011-12. MLA Lolab, Abdul Haq Khan, MLA Langate, S A Rashid and representatives of Reserve Bank of India and NABARD were present in the meeting.........
RBI's holding of gilts rising
.......Ever wondered how the government borrowing programme sails through so easily? Well, the RBI lends a helping hand. The RBI's holdings in gilts, or government bonds, have risen by almost two percentage points to 14.4 per cent in the six months ended March 31, 2012. The holdings have trebled from lows of 4.8 per cent as of March 2008......
CBI court permits Ketan Parekh to go abroad again
A special CBI court in Ahmedabad on Tuesday granted tainted stock market trader Ketan Parekh, prime accused in multi-crore securities scam, permission to visit United Kingdom (UK) for two months. The permission was granted by additional chief judicial magistrate H S Khutwad based on a application by Parekh who is also main accused in the Rs 1,200 crore scam in the Madhavpura Mercentile Cooperative Bank (MMCB) here, which has led to closure of the bank. The RBI had recently canceled the banking licence of the MMCB, nearly 11 years after the multi-crore scam came to light.........
Job alert: SBI to hire 9,500 employees
The country's largest bank SBI has said it plans to hire 9,500 employees this fiscal and its main thrust will be on retail banking in the coming years.....
Tuesday, June 12, 2012
Broad view of small pictures
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| REGIONAL ECONOMY OF INDIA — Growth and Finance: Edited by Deepak Mohanty |
.....The Reserve Bank of India (RBI) may be proud of its achievements in establishing the Department of Statistics and Information Management (DSIM). In a speech delivered at the Annual Statistics Conference at Chandigarh in March this year, Dr. Mohanty explained the role of the DSIM within the RBI and how “The statistician in the Reserve Bank performs a multifarious role.” It encompasses collection, compilation, analysis and dissemination of information relating to monetary, banking, corporate and external sectors. The RBI's web-enabled Database on Indian Economy (DBIE) is a gold mine for researchers both within the country and abroad. While the research undertaken in the departments of the RBI located in Mint Street are well known through publications, Reports, Occasional Papers, etc., not much is known about the work done in the regional branches. This book is an attempt to disseminate research done by some of them......
Read - The Hindu
Firms take business correspondent route to gain banking expertise
......Back in August 2010, RBI had first mooted the idea of allowing corporates to act as BCs in a discussion paper, counting on their ability to employ “larger resources, higher organizational strength and financial backing” as a boost for the bank agent model. Moreover, big companies would be wary of reputational risk and hence efficiently monitor their agents, the regulator had noted. A month later, on 28 September 2010, RBI allowed their entry. Both experts and stakeholders caution that the challenges are substantial..........
UP directs banks to be alert on fake currency
.....The minister also accepted that cases of fake notes from bank ATMs have also come to the light and added that suggestions have been given to the RBI for not allowing money into ATMs manually and deploy guards there after their character verification..............
Govt agenda to dictate PSU banks' board meets
Finmin asks nominee directors to highlight key issues of financial inclusion, rationalisation of branches and priority sector lending
Government nominees on the boards of public sector banks, financial institutions and insurance companies might now dominate the agenda at their meets. Concerned that the boards give a slip to the government’s areas of interests, the finance ministry has instructed all its nominees to prepare a list of key issues that should be discussed before moving on to the agenda set by the company.................
Rising NPAs
This refers to “Rising bank bad loans, slowing credit growth” (Business Line, June 10). Recently, the RBI Deputy Governor, Mr K.C. Chakrabarty, said that the interest rates are “not too high” to affect “corporate” growth. He was more concerned with the rising bank bad debts. Even the new private sector banks had relatively high gross NPAs at 2.18 per cent in March. The SBI and nationalised banks still have higher NPAs as a percentage of gross advances. Good credit appraisal, not lowering policy rates, helps reduce NPAs. There is considerable scope for tightening appraisals and intensifying due diligence. NPAs rise when big loans extended to large industries remain in arrears. There is near unanimity that liquidity in the system is not an operational hitch in “transmission mechanism”. The banking system suffers from its loans to sectors such as aviation and infrastructure, and their return will be a long-term story. With slowing growth, the RBI believes that despite inflationary pressures, there is “room to lower rates” to induce growth, when actually the lending and recovery mechanisms need strengthening.
- K. U. Mada Mumbai
Sail through common exam for public sector banks
.....Banks are one of the biggest recruiting agencies in the country and there is a great response for the managerial jobs for the fact that they are open to candidates from almost all the streams. Instead of attending the tests of all the banks individually earlier, the aspirants now have to take the Common Written Examination conducted by the Institute of Banking Personnel Selection (IBPS) for entry into 19 public sector banks. The next IBPS exam is just a few days away, and will be conducted on June 17.........
Bank loans for vocational courses soon
In a landmark of sorts, the Indian Banking Association (IBA) has decided to extend the ambit of its Model Educational Loan Scheme to include vocational education and training. This means that all banks, which are associated with IBA, as well as a other banks that RBI may include, will now also offer education loans for students in the vocational sector..................
Microsoft helps BoI meet RBI compliance directives
Bangalore, June 11: Bank of India (BoI) has partnered Microsoft to deploy Microsoft Active Directory Rights Management Services (AD RMS). The company in a release said that the project will help it to safeguard corporate digital information and enables safe and secure banking operations. Microsoft AD RMS is currently available for 100 users of BoI and will be extended to about 15,000 users in the next phase of deployment. “By being in-line with the RBI data security guidelines, it ensures safety and security of corporate data,’’ said Mr Sameer Ratolikar, Chief Information Security Officer, Bank of India.
HBL
Timothy Geithner to visit India later this month for economic talks
Aiming to further expand the bilateral economic engagement, US Treasury Secretary Timothy Geithner would travel to New Delhi and Mumbai later this month for the third annual meet of the US-India Economic and Financial Partnership. Geithner would be in New Delhi on June 27 and would travel to Mumbai on June 28. In Mumbai, he would meet the Reserve Bank of India (RBI) Governor, Duvvuri Subbarao, and the business leaders from a variety of industries.......................
No credit for small farmers
The M.V. Nair Committee has defined agriculture too broadly, making it easier for banks to avoid riskier lending to the small and marginal farmers.
Despite having only a 15 per cent share in GDP, agriculture still employs more than 60 per cent of India's rural population. The Centre continuously boasts of doubling credit to this sector and providing interest relief of two per cent for prompt payments, and the like. But a look at the Reserve Bank of India statistics on direct credit for farmers during the past five years reveals that there is a fall in actual money going to farmers..................
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"My View on "RBI's KC Chakrabarty counters Gokarn ...":
The comments of Mr.Warrier are excellent. Deputy Governors should be clearly told by the Governor that they should express views in public only on matters pertaining to the departments handled by them. This would avoid contrary views being expressed by the Bank through their Deputy Governors. Government officials like Economic Affairs Secretary and Economic Adviser to the Finance Minister have also been expressing views on interest rates which is the domain of the RBI. Finance Minister should advise them to stop expressing their views on matters which should come from the Governor. It is no use in Government saying that RBI is an autonomous institution and then allowing its officials to cause embarrassment to the Governor. Of course, Governor has been pursuing policy as he considers best and has least been affected by the views of the Government officials.
Kudos to the Governor.
Kudos to the Governor.
A. Chandramouliswaran, Former Executive Director
Financial inclusion net to cover more people to curb leakages, generate savings
....The Reserve Bank of India advised all banks to set up low-cost outlets or ultra small branches to act as a bridge between bank branches and business correspondents. These low-cost branches will provide support to 8-10 BC units and have minimum infrastructure like pass book printer, cash retention facility and terminals equipped with modern banking technology. .....
Govt keen to revive co-op banks whose licenses RBI has cancelled: Shivpal
Cooperative Minister Shivpal Singh Yadav told the Assembly today that the government was in touch with the Reserve Bank of India and NABARD to ensure the functioning of 25 cooperative banks whose banking licenses had been cancelled by the RBI......................
Bank fraud: Notice issued to close accounts
A day after Noida police busted a gang that cheated several banks of crores by obtaining loans through fake documents, notices have been served on banks to close the 130 accounts that were opened by the gang over a period of time. The police also have asked RBI to issue an advisory. The police said soon bank officials responsible for issuing loans and verification will be investigated....................
RBI may have to sacrifice growth to tame inflation: KC Chakrabarty
Between growth and inflation, which one do you think deserves priority right now currently?
For the monetary authority, the central bank, inflation will always remain the most important factor. But that does not mean we cannot grow, we can. The Reserve Bank follows a system, which you called a multiple indicator, so you look into various indicators that combine the monetary policy together. But then inflation and implying stability will continue be the most important factors. We are saying one thing from a long time that we cannot have high growth with high inflation. If we want high growth, there is a need to bring the inflation down and temporarily, we have to sacrifice the growth to bring down the inflation. But we should not hesitate, ultimately growth will pick up and we will be not able to have high growth without a moderate or low inflation.............
India a victim of loss of confidence and not opportunities: Rajkumar Dhoot
....“Therefore in such testing times responsibility of the apex bank RBI becomes all the more important to address growing concerns on the falling investment and liquidity faced by the system as the government borrowings shoot up,” .........
Financial sector regulators to take stock of economy
......The meeting, which will be held in Hyderabad, is also expected to analyse the reasons behind the depreciating Indian currency. The FSDC sub-committee is scheduled to meet just ahead of the Reserve Bank of India’s mid-quarterly monetary policy review on June 18. The RBI is widely expected to cut key rates by at least 0.25 per cent to ease liquidity and stimulate lending..........
RBI may stand pat now, cut 50 bps in July
The Reserve Bank of India (RBI) is unlikely to cut policy rates this month. Chances are, it could slash 50 basis points (bps) in July than by a smaller measure in June because by then, it will have more certainty on data – be it on growth, inflation, monsoon or the global economy.......................
RBI rate cut alone seen unlikely to spur cheaper loans
A rate cut by the Indian central bank next week will not be enough to spur banks to lower lending rates immediately, bankers said on Monday. Instead, Indian banks, saddled with high-cost, long-term deposits and narrowing profit margins, are hoping for a cut in the cash reserve ratio, which would boost liquidity and in turn lower the cost of funds, and would allow them to ease deposit and lending rates...............
Macro-economic situation calls for a pro-growth monetary policy
.....Given this situation, one can expect a 25 basis point cut in policy rates (repo and reverse repo) and a 50 basis point cut in the Cash Reserve Ratio (CRR) in the RBI's Mid-Quarter Review. The reduction of policy rates, however, is only one part of the story. For growth to pick up, it has to be urgently accompanied by strong policy actions by the Government, including movement in the second generation reform process.......................
Don't blame RBI for poor GDP, govt action vital: Munjal
Q: Does industry feel that the Reserve Bank of India has crimped growth?
A: Actually, it's not the Reserve Bank alone. The economy is in the present situation partially because of extreme monetary tightening and partially because the government is unable to take fiscal initiative. In the current situation, oil prices have softened over time and inflation has not gone up. So there is headroom, according to a Reserve Bank deputy governor, to improve liquidity in the banking system and to lower interest rates at the same time. But it has been suggested that government also take fiscal decisions.............
RBI: Hard choices, easy options
.........The situation facing the Reserve Bank of India (RBI) as it formulates its mid-quarter review of monetary policy is depressing. The growth rate for the last quarter of 2011-12 was 5.3 per cent, the lowest in many years. What is disheartening is that it continued a trend that started in ...............
RBI to meet export bodies on June 21
The Reserve Bank of India will meet representatives of export associations, industry bodies and banks on June 21 to discuss issues such as exchange rate volatility, export credit and also procedural issues affecting India's exports. This meeting will come close on the heels of the announcement of the annual supplement to the Foreign Trade Policy. India's merchandise exports grew 20 per cent in dollar terms during 2011-12 to $302 billion...........
Banks to take call on fixed deposit rates after policy review
Mid-size public sector banks would wait till the mid-term policy review by the Reserve Bank of India before taking a call on reducing interest rates on fixed deposits, top officials said today.....................
Banks want timeline set for firms to exit debt recast mechanism
......Bankers say the Reserve Bank of India could enhance the provisioning requirement for restructured accounts classified as standard advances to 5 per cent from 2 per cent. The enhanced provisioning requirement, whereby more capital will need to be set aside to cover possible defaults, will ensure that banks show urgency in the restructuring and exit of companies from the CDR process..........
Realtors rain EMI sweeteners
Home loan customers now have a reason to smile even before the Reserve Bank of India’s much-awaited credit policy review on June 18, where the central bank is widely expected to slash rates. In a bid to increase sales without lowering prices, real estate developers in Mumbai and the National Capital Region (NCR) are offering to pay customers’ EMIs till possession..............
Monday, June 11, 2012
SBI breaches RBI norms on RIL exposure for 4th year in 2011-12
State-run banking giant SBI has said it temporarily exceeded RBI-prescribed credit exposure limit for the fourth year in a row in 2011-12 with regard to loans given to Mukesh Ambani-led Reliance Industries..........
Cutting the Gordian knot
Contradictory statements from RBI officials hurt market sentiments
........... Early last week, RBI deputy governor Subir Gokarn rekindled the hope when he said that the central bank has some elbow room to reduce policy rates following a moderation in core inflation and drop in global oil prices. Liquidity in the banking system is in “comfort zone” as of now, said Gokarn, citing a recent drop in banks’ daily borrowings from RBI and steady, overnight cash rate. According to Gokarn, lower-than-expected economic growth will have some bearing on the central bank’s projection of GDP growth for 2012-13. The stock markets moved up, factoring in a 25-basis points rate cut. By the end of last week, things again turned upside down. KC Chakrabarty, RBI deputy governor, on Friday said inflation was the first priority for the central bank and that policy rates were not that high to restrict growth significantly, watering down the case for an interest rate cut. The stock markets witnessed some quick profit booking as confusion lingered in the market. Chakrabarty doesn’t believe that a drop in policy rates, even if it were as high as 200 basis points, would significantly help India Inc in reducing lending rates. He argued that adequate capacity is available right now to ramp up India’s manufacturing growth back to 8-9 per cent, from the present 2-3 per cent levels, before one could expect any massive investment in new capacities. Policymakers should refrain from sending out confusing signals........................
Avoiding the quicksand
.......................The deepening global crisis has even forced Beijing to act with alacrity. The Chinese Central Bank surprised the world with a 25 basis point cut in interest rate. This is the first time since the global financial crisis in 2008 that China has cut the interest rate. The China move has led Federal Reserve Chairman Ben Bernanke to declare that it would do whatever to protect the U.S. financial system and the economy. It is against this backdrop that the ensuing policy review of Reserve Bank of India on June 18 has raised a huge expectation. It's time the monetary and fiscal authorities spoke a common language and get the country to stay away from the the quicksand.
Let the regulators decide, please
Chief of the Securities and Exchange Board of India UK Sinha rarely speaks out of turn. Irrepressible KC Chakrabarty, deputy governor of the Reserve Bank of India, almost never gives up an opportunity to do so. On Friday, both landed up on the front pages of newspapers for very similar reasons, however. They had both rapped the governments’ handling of the economy. Both criticised the finance ministry for its take on the economy. The criticisms come at a time when the finance minister is just a nod (pun intended) away from moving over to the Rashtrapati Bhavan. Both Sinha and Chakrabarty have sort of made it clear then that there is no one who is now steering the economy from Raisina Hill. So, on June 18, to ask the RBI Governor to nod to a vacant seat and take a call on the rates in what will essentially be a political decision is unfair (Chakrabarty). Later, to expect a new finance minister to cobble up support with the allies and the BJP to pass all those economic bills the government has promised to pass through Parliament (Sinha) also looks very tough.....................
My View on "RBI's KC Chakrabarty counters Gokarn on possibility of rate cut"
The game those who are responsible for policy formulation are playing takes one back to the age-old transactional analysis, with PAC. Kaushik Basu and team can take the 'Parent' position, RBI the 'Adult' slot and Aam Admi the 'Child' position. Between the 'critical parent' and 'the crying child' RBI Governor gets jammed.To add to his embarrassment, his own team members come to open and share their wisdom(Gokarn) and ignorance with public.Top people within the organisation should better use internal forums to share their views and avoid airing divergent views in public on the eve of Governor's deliberations preceding policy announcements.
M G Warrier
Of heads, elbows and rooms
...........The day after the Union finance minister categorically, and quite correctly, ruled out any scope for fiscal stimulus, the Reserve Bank of India (RBI) suddenly discovered elbow room for cutting interest rates to push growth. This is the new anatomy of the Indian economy: since there is no headroom for fiscal stimulus, there has to be elbow room for monetary policy action. The compulsions are clear. Both these policy “guidance”—one negative and one affirmative—came as soon as the data showed that growth had slumped to its lowest level in nine years’ threatening to pull the gross domestic product (GDP) growth to below the comforting number of 6%..........
Central banks, govts have no choice but to act
.....I think we are at a stage where central banks, governments, including India by the way, have absolutely no choice but to act. Actually, to be honest I called 5.5% last week, which people at that time thought that maybe this guy has sort of lost it a little bit... What that actually means is that RBI, which is caught between a rock and a hard place, will act and it will sort of err on the side of ensuring that growth doesn’t completely go off the cliff, and in a sense it will be a mini crisis for India where Delhi will have to act as well........
Some unpleasant forex arithmetic
.....The Reserve Bank of India’s (RBI’s) market intervention strategy and the efficacy of its administrative measures to support the rupee have to be seen from this perspective. In a period when portfolio flows are weak, RBI has to fill this gap by offering dollars from its stock of reserves. The success of “intervention”, thus, depends on what percentage of this $2.5 billion deficit RBI absorbs by supplying dollars. There are again a couple of things about RBI’s intervention strategy that are becoming clearer as the rupee comes under successive rounds of depreciation pressure. First, RBI is unwilling to do much when there is risk aversion all around. This was quite apparent ........
‘Banks not proactive in tracing customers of unclaimed accounts’
In a scathing criticism to the banks, the Reserve Bank of India has said that despite its instructions, banks have not been pro-active in tracing customers linked with unclaimed deposits/inoperative accounts. The central bank said the need to identify the owners of these unclaimed deposits/inoperative accounts is closely linked to KYC due diligence.............
e-fraudsters may use fake RBI letters to dupe you
......The con letter appears to be coming from the Foreign Exchange Transfer Department of RBI where it informs the recipient that he or she has been 'compensated with a sum of £500,000'. The letter is signed by chief general manager-in-charge Salim Gangadharan. It goes a step further and claims that the £500,000 is a legal fund from the UK to the less privileged in India - pensioners, scam victims, orphans, the sick, needy and the poor - and that the application has been pending since 2007.................
Scammers take clue from RBI directive
Scammers seem to be adapting to changes fast, as a spam e-mail offering unclaimed funds in Indian banks has been landing in the in-boxes of scores of email users these days. The RBI recently directed the banks to take steps to disburse the about Rs 1,700 crore that were remaining unclaimed in various bank accounts in the country. Taking the cue, an e-mail with the sender mentioned as Funds Remittance Department of RBI, New Delhi, “informs” that the recipient was entitled to unclaimed fund of $500,000.............
MUCBF appeals CKP coop Bank depositors not to withdraw funds to avoid RBI action
............However, if the depositors continue to withdraw, the bank may face liquidity crunch and in that case, the RBI could impose moratorium and put a cap on further withdrawals. He also said that the Federation had never taken up the case of any co-op bank against which the RBI had taken action but in case of CKP Bank the issue was different and hence the Federation was supporting it, he said. The bank itself had also come up with an advertisement recently saying that its position was sound and the depositors' money was secured........................
42 cooperative banks under RBI scrutiny for rule violation
The Reserve Bank of India has put 42 cooperative banks under a revival programme that involves a thorough scrutiny after the lenders failed to meet critical parameters on minimum capital and net worth.
RBI has barred the lenders from accepting fresh deposits from the public after they missed the 31 March deadline to satisfy the norms. The programme, known as the monitorable action plan (MAP), is a last-ditch effort by the central bank to revive the businesses of distressed banks. The banks have till 30 September to revive their businesses and improve capital adequacy............
Banks push FD schemes ahead of possible interest rate cut by RBI
With expectations of an interest rate cut gaining momentum ahead of the Reserve Bank of India’s (RBI) mid-quarter monetary policy review scheduled for June 18, banks are going all out to promote their deposit schemes and dangling the carrot of higher rates before a possibility of interest rates falling.........
All eyes and hopes rest on RBI
.......However, RBI faces a difficult choice. Which macroeconomic variable does it look at? Double-digit inflation or rapidly decelerating growth—which has already begun to derail the unprecedented momentum that the economy had acquired in the last decade? Undoubtedly, a disciplined Union government could have made all the difference if it had done more than being a mere paper tiger when it came to tackling the fiscal deficit—or gross borrowings of the government. Regardless of which way RBI calls, there are serious consequences for the economy. In more ways than one, it will be the toughest choice faced by RBI governor D. Subbarao; this says something for a man who took charge in the midst of the Lehman crisis that triggered the 2008 global economic crisis. All eyes on RBI then..................
Competition watchdog may look at all sectors
........The DFS and the DoT had sought exemption, saying the sector regulators (the Reserve Bank of India and the Telecom Regulatory Authority of India) had sufficient expertise to deal with cartelisation, monopolistic behaviour or unfair competition. The DFS had argued under the Banking Laws (Amendment) Bill, 2011, Parliament’s standing committee on finance had approved the exemption of bank mergers from the purview of the Competition Act..................
No significant improvement in FY13
.The build-up in the banking sector was attributed to assumptions on the Street the Reserve Bank of India (RBI) will cut repo rates by 50 basis points and the cash reserve ratio by 50 basis points on June 18........
No-frills accounts rise over two-fold in last 2 years
............The Reserve Bank (RBI) has launched the financial inclusion programme to provide financial services to people in unbanked areas. RBI's approach to financial inclusion is aimed at connecting people with the mainstream financial institutions like banks, the apex bank said. "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 effective or meaningful financial inclusion," RBI said. The number of business correspondents (BCs), who carry out banking operations on behalf of banks, increased to 96,828 from 33,042, it said..........
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NHB not to up capital requirement for HFCs
.........A committee chaired by former Reserve Bank Deputy Governor Usha Thorat had recently recommended for increasing the minimum capital requirements to 15 percent from the present 12 per cent for non-banking finance companies (NBFCs). In defence of the move not to increase the capital requirements, Verma said HFCs, which include players like HDFC, LIC Housing Finance, Dewan Housing, have a clearly defined business model which has low risks, as compared to NBFCs. "In NBFCs, the portfolios can be widely varying and there can be very quick changes or dynamics in their balance sheets. That is not something which can happen to HFCs,".......................
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