RBI, FinMin steps to boost Re, economy fail to impress market

In keeping with their promise to improve market conditions, the Finance Ministry and the RBI on Monday increased the amount of rupee-denominated debt that foreign investors can own in the Indian market. The slew of measures announced today could lead to greater capital flows on the debt side and also help arrest the slide in rupee, which has lost over 21 per cent against the dollar over the last one year, official sources said................

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‘Much ado about nothing’ said a note by a foreign bank, to its clients soon after the announcements by the Reserve Bank of India.........

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..........In other words, while the new moves announced on Monday may be a useful tactical response to the pressure on the rupee, the more strategic need is to raise the domestic savings rate through stronger public finances and lower inflation.

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..........."We will soon see a set of measures apart from what has also been announced, particularly, on implementation of large projects on which the Prime Minister has set up new mechanism to move things faster,” Ahluwalia told reporters after RBI announced measures to boost foreign funds inflow...........

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The Reserve Bank's measures to stem the rupee fall received mixed reactions with PMEAC Chairman C Rangarajan saying the steps will attract capital inflows and will have an impact on the currency while India Inc termed the steps as "minimal"..........

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Pranab Mukherjee and the art of dashing expectations

.....But coming as it did after a weekend of anticipation boosted by statements from both Mukherjee and the Prime Minister who commented on possible steps to stem the rupee slide, Monday’s moves by the government and RBI are being seen as hugely disappointing, and too little at a time when much more was needed. After all, as former RBI Governor Bimal Jalan used to repeat rather eloquently, monetary policy is also a lot about managing expectations. The government has sorely failed on that score.

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It was Chidu who messed up the economy, not Pranab

......The right policies include cutting down subsidies, reducing fiscal and current account deficits, improving governance, keeping down inflation and giving enough leeway to the RBI to act independently. Unfortunately, Chidambaram failed to adopt the right policies, leading to India going back into time rather than going forward.......

.....Chidambaram tussled with then RBI Governor YV Reddy on capital controls as the governor saw all signs of a bubble forming. There was lack of governance, leading to the huge telecom 2G scam and the countless land scams. There were no tax reforms to increase the tax-GDP ratio. Chidambaram’s policies were given a thumbs up by corporate India that again failed to see a bubble leading to the accumulation of debt both in rupees and US dollars........

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RBI Chennai holiday on July 2

Chennai, June 25: The Reserve Bank of India has announced that its office in Chennai will remain closed for public transactions, including Government transactions, on July 2, on account of annual closing of accounts. All commercial banks and co-operative banks will, however, remain open on that day for transacting business, a release from the bank said. The Chennai Bankers Clearing House as also the clearing houses managed by commercial banks in other centres in Tamil Nadu will function as usual on July 2, it adds.  

HBL

Reminiscing Talwar

Apropos T N Ninan’s column “The ‘Talwar Amendment’” (Weekend Ruminations, June 23), here is another Talwar moment. R K Talwar had shown exceptional foresight and commitment in the early seventies by getting State Bank of India (SBI) to finance an agri-business venture, the first such project by any Indian bank. In the first half of 1976, a colleague from the Indian Institute of Management, Ahmedabad, and I were retained to advise Mr Talwar and his top-level team at SBI about the serious problems the firm faced back then and possible solutions. We concluded that the promoter’s errors of judgment in dealing with unforeseen circumstances were the root cause. We worked out a detailed nursing plan, with the promoter managing the company’s affairs under far stricter SBI oversight. Talwar accepted this, but Mr Natarajan, then third in the hierarchy, strongly opposed it. The cement company case was very much the talk of the SBI Head Office Executive Floor. I asked Talwar, who had grown very friendly in an avuncular sort of way, whether he was acting in a contradictory manner in the two cases. He firmly said no, it was a matter of intention behind the act and not the actor per se. Soon thereafter, Talwar was replaced by P C D Nambiar (who passed away recently) and Mr Natarajan became MD. SBI rejected our advice and instituted legal proceedings. The case went on for 17 long years. Mr Talwar took no part in it and remained in his Pondicherry exile. I had to brief many of his successors about the case. Finally, the promoter, who fought his own case, prevailed with his honour intact, but little else. The firm was wound up and his family faced penury and estrangement. SBI incurred huge legal costs, and agri-business finance earned an undeserved bad name.

- Shreekant Sambrani Vadodara

...and his legacy

The iconic banker, R K Talwar, as succinctly narrated by T N Ninan, displayed extraordinary courage by standing up to his political masters during his eventful career at SBI. Those who have worked in SBI are also aware of how Talwar resisted Sanjay Gandhi’s demand to finance Maruti Udyog (MU). It may be noted that Talwar did not like the way Gandhi short-circuited the proper channels in the Bank and directly approached the chairman to take up the application of MU. Talwar was a steadfast practitioner of the principles of corporate governance, employee empowerment and delegation much before the terms became buzzwords of modern-day management.

- K V Rao Bangalore

Now, file I-T returns at kiosk, mobile van near you

....The “mobile vans”, in smaller cities, will act as a “single window” for salaried and other small and marginal taxpayers. Metros and other big centres will have “tax kiosks”.These vans and kiosks, which will be stationed at one location for 1-2 days, will be manned by trained Tax Return Prepares who would help taxpayers in filing returns...........

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Odisha issues advisory against fictitious offers

...................These offers are generally made through letters, e-mails, mobile phones and SMSs. The RBI has advised general public to immediately register a complaint in the local police station and Cyber Crime Authorities whenever they come across such fraudulent offers, they said...............

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Vijaya Bank opens 171 ultra small branches in a day

Bangalore : Vijaya Bank announced the opening of 171 Ultra Small Branches in a single day on Monday, under Financial Inclusion (FI) in villages around the country. Vijaya Bank CMD H S Upendra Kamath inaugurated 100 Ultra Small Branches in FI villages of Mandya District, Karnataka. Other 71 branches were opened on the same day in other states. The bank has provided banking services to all the allotted 407 villages with population of above 2,000.

Deccan Herald

Can you use your mobile phone in bank?

State Bank of India and other banks insist that you cannot use your mobile phone inside banks. This is nonsense because there are no laws against it............

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Prime minister rejects stagflation theory

...... "Monetary policy is the preserve of the central bank. The Reserve Bank enjoys autonomy. There are always consultations between the government and the Bank. But, we respect the autonomy.".......

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RBI has put the pressure back where it should be: Jim Walker, Asianomics

The Reserve Bank of India's move to keep policy rates unchanged last week demonstrates why it is labeled as Asia's best central bank..........

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Sliding rupee: Will New Delhi & RBI finally end the blame game?

.....Last one year's experience shows that a quid pro quo doesn't work: RBI's grim reminders about the fiscal deficit have had little impact on the government, which refused to raise diesel price or cut subsidies. The lesson from this is that the use of monetary policy - rather the non-use of it - cannot force a government to act. RBI may have successfully built an impression that it's an independent central bank, but one wonders to what extent such an exercise helped the India story.

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All Eyes On The RBI Governor

.....What actually surprised me was his comment that the Reserve Bank of India (RBI) Governor would announce fresh steps to shore up confidence in the financial markets. I know for sure there is hardly anything RBI Governor D. Subbarao can do to protect the rupee from depreciating further but then nobody can rule out anything when a situation is as alarming as it has turned out for the Indian currency in the last two weeks. All eyes are now again on Subbarao to pull a rabbit out of the hat. To be fair to the bureaucrat-turned-central banker --- and a non-economist --- there is absolutely nothing left in his armoury to arrest the rupee slide against the US dollar in view of weak fundamentals back home and a strong dollar.......

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Private banks geared for Basel III

With the introduction of Basel III norms, Indian banks’ minimum capital requirement, as a proportion of risk-weighted assets, is set to rise in the next six years. This could apply pressure on the return on equity of Indian banks, especially those in the public sector. Given that banks need to have core equity (shareholder funds) in excess of 8 per cent by 2018, the ability to leverage may also be limited going forward..............

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What prompted RBI to stay put?

.....Many analysts were of the view that a reduction in rates was imperative in the face of a definite slowdown in investment and economic activity. However RBI has maintained status quo in its current monetary policy. Why has RBI maintained a status quo with respect to the rates?.......

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CMIE says inflation to move up on rupee fall

......The continuing depreciation of the rupee is expected to fuel inflation and push the headline number to 7.3 percent for FY13, making a reduction in interest rates for borrowers unlikely in the near term, an economic think-tank has said.  The Centre for Monitoring Indian Economy (CMIE) has upped its fiscal-end inflation target to 7.3 percent from the 6.7 percent and Reserve Bank's 6.5 percent, due to the slide in the rupee........

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In a catch-22 situation

.....It may be arguable, but an interest rate cut would probably have had the psychologically important consequence of preserving, if not boosting sentiment such as what is seen in the stock markets. The counter argument is, for that to happen the rate reduction ought to have been of a higher magnitude, say at least 0.50 percentage points. Besides, it is extremely doubtful whether sentiment can be sustained over the long-term through rate cuts and other short-period monetary measures.

Read - The Hindu

Investigate why RBI killed growth

{	An independent enquiry commission needs to examine why Subbarao deliberately chose a mix of policies that were tailor-made to create a recession.

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Print Sardar's image on currency notes, says Dinsha Patel

.....an MP from Kheda Dinesh Patel wrote a letter to the RBI governor and requested him to consider Sardar Patel, the Iron Man of India. Patel said that Sardar played a big role in the Indian freedom movement and later in the unification of princely states under one flag.........

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RBI to remain closed on July 2

GUWAHATI, June 23:The office of Reserve Bank of India, Guwahati will remain closed for public transations on Monday, July 2, 2012 on account of annual closing of its accounts for the year 2011-2012, stated a release.

The Sentinel

Opening FD account

I have a savings bank account with a well-known nationalised bank. I wanted to open a fixed deposit. Since I did not have adequate balance in the SB account, I drew a cheque in favour of the bank from an account with another bank where I had sufficient balance. The normal procedure should have been to send the cheque for clearing and then issue the FD receipt. But the bank said that, under the RBI instructions, I should first transfer the amount to my SB account and then apply for opening an FD account. It may mean a third visit to collect the FD receipt. I do not know whether the procedure has been laid by the RBI. In this day and age, it is antiquated.

- A. Seshan (HBL)

White Label ATMs: Non-bank entities to operate in payment system

....One can realise that with the number of requirements under the scheme and with the networth requirements RBI has well ensured that not everyone except giant business houses would be able to undertake the business set-up to ensure integrity and public safety as there is surely an inherent risk by letting private entities enter to set up and operate WLAs. Further, no switch-over of scheme is permitted. As said, going ahead the RBI may decide to relax the norms........

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Non-banking entities may open 80,000 ATMs in next 8 months

........In spite of the banks' pioneering efforts in this direction, much needs to be done, it said, adding, there is a need to expand the reach of ATMs in Tier III to VI cities. The RBI final guidelines had said non-bank entities proposing to set up WLAs have to apply to RBI for seeking authorisation under the Payment and Settlement Systems Act, 2007.......

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Bold economist

Instances of radicalism wherein people insist on thinking for themselves and reject party-mindedness are rare to come by. Perhaps that is the way with Duvvuri Subbarao, as he steadfastly debunked government’s theory leaving interest rates and cash reserve requirements unchanged citing inflationary pressures despite economic growth slumping to a near decade low. The Reserve Bank of India (RBI), which is as hushed inside as an Egyptian sphinx, is a place for establishment reserve. The office occupied by Subbarao, a soft-spoken, affable, sixty-two-year-old economist, has high ceilings, several wood-panelled shelves of economic textbooks, overlooking the Mumbai harbour. Its echoing hallways are lined with sombre pictures of past governors............ 

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The difficulty of being Duvvuri Subbarao

Decisions can often turn out to be of two kinds - the right one;and the one your boss wants you to make. The twain do not always meet. Duvvuri Subbarao, the Governor of the Reserve Bank of India (RBI), earlier this week, showed us what a right decision is.................

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Pare down growth expectations

The RBI has an unenviable task. Due to policy paralysis, the central bank has been forced to go beyond its mandate. But its attempts to shore up the economy have also made it obvious that the high-inflation-and-lower-growth cycle cannot be cured merely by monetary tools..........

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Who other than the Mahatma can adorn our rupee notes and why?

..........With anti-counterfeiting rather than bestowing national honours as its aim, the RBI priorities for which faces to choose might be slightly different. And several years back K.D.Savkur, then the head of the Currency Department, explained them for me - they wanted faces that were of details that would be hard to copy, and that ideally meant faces with plenty of hair. The department had gone so far as to shortlist national leaders with full beards, like Rabindranath Tagore and Maulana Azad, who would fit their aims. Mother Teresa, with no beard but a heavily lined face, might have been another. Unfortunately for the currency department it only makes recommendations on currency designs, and the final choice is made in a series of opaque consultations between the RBI and ministry of finance.........

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All well in RBI, confirms drill

 On Friday evening the personnel at the Reserve Bank of India's (RBI) office at Jaipur were startled when they were informed about an incident of fire in the building.  The employees hurriedly vacated the building and were met by the fire department's vehicles and personnel at RBI premises.  Later they realised that it was all a mock drill and the personnel went back to working......

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The central bank surprises again.

.........The RBI was far less accommodative in its policy statement than what was expected. The central bank’s less accommodative stance would clearly be sentiment-negative at the moment and would impart greater uncertainty regarding its future action. That said, I do think that the RBI will likely turn pro growth in the coming months. Growth indicators have thrown much larger surprises compared with the inflation indices. Industrial activity is clearly weak and headwinds to growth still exist............

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ATM fraud: Complex web of four organised gangs

.......Had Federal Bank of India adhered to the revised RBI guidelines issued in March, it would have saved itself the loss of crores of rupees. In March RBI had issued guidelines to private banks to do away with the feature of retrieving currency notes by their ATM machines if the customer does not collect the amount within 30 seconds. While a majority of private banks removed this feature from their ATM machines, Federal Bank of India did not introduce the same. “The miscreants knew this fact clearly. As per the guidelines if the uppermost note is not collected after withdrawal within 30 seconds, the machine retrieves the note and flashes a message of failed transaction,” said Mohali SSP (Cyber Crime Investigation) Pradeep Kumar. As per the revised guidelines, RBI had advised the removal of the feature of ATM machines retrieving notes after 30 seconds.........

Read - Express India

JK Bank organises KCC mela

........“Following RBI and Government of India’s gesture of extending interest subvention clause to J&K Bank, we have devised a campaign to ensure every farmer in the service areas allotted to J&K Bank receives KCC as early as possible”, ...........

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Why the rupee is marching to its own gloomy beat

.....The Reserve Bank’s quiet easing is similar to giving a diabetic sugar-free lunch and then sneaking a cup of shrikhand for desert. The only thing that determines the price of any asset is demand and supply. The increasing supply of money did contribute to the INR’s latest fall. The Reserve Bank did leave interest rates untouched to send a signal that the value of the rupee is as strong as it was before the policy was announced. But the markets disagreed: “How can you increase the supply of an asset and keep the price of it at the same level?”......

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Political impasse creates lack of confidence

.....Do you think that the Reserve Bank of India has gone on a prolonged ‘monetary tightening mode', hurting the growth in the process?

I believe that the RBI is acting prudently, and without being influenced by the political process. However, the balance of payments and fiscal deficit have forced the RBI to play its role which, I think, they are doing well.....

Read - The Hindu

Down! Down! Down!

.....RBI governor D Subbarao, was perhaps acutely conscious of the cold realities when he presented the monetary policy hours before US-credit rating agency Fitch came out with its scathing report on the Indian economy last week. He withstood mounting pressure from local businesses to cut interest rates. These firms had been arguing that the steep cost of raising loans had upset their capacity-expansion plans........

Down! Down! Down! - Hindustan Times

Steps for improving economy to be out on Monday: Pranab

Finance Minister Pranab Mukherjee on Saturday said that the government would announce certain measures in consultation with the Reserve Bank of India (RBI) on Monday to improve the country’s economy that was showing signs of weakness. Talking to reporters here, Mukherjee said that on Friday the Department of Economic Affairs had consulted with RBI Governor D Subbarao on the measures to be taken in this connection........

Read - Indian Express

Govt, Reserve Bank of India to take steps to stem rupee fall: FinMin Mukherjee

.....“I have asked the Secretary (R Gopalan), Department of Economic Affairs, to discuss the rupee situation with the RBI Deputy Governor (Subir Gokarn). The DEA Secretary (R Gopalan) will take steps to contain rupee slide,”.........

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Revival of 6 industrial units hangs fire

.....He said even the Reserve Bank India (RBI), Bihar region, had endorsed the SLAB-approved rehabilitation package for the six SIIs which were considered to be viable for rehabilitation on the basis of their diagnostic study.........

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The 'Talwar amendment'

Monday will mark the 37th anniversary of the imposition of “internal” Emergency, on June 25, 1975, with President Fakhruddin Ali Ahmed signing the proclamation late at night, even before it had Cabinet approval. An important vignette about those days has come out, in a booklet written by N Vaghul to honour the memory of R K Talwar, the trail-blazing chairman of State Bank of India (SBI) from 1969 until his abrupt departure in 1976, at the height of the Emergency. The vignette that deserves a wider audience relates to Talwar’s ouster....................

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Micro-finance in a remittance economy

.....Financial inclusion has become an emerging focus for policymakers around the world, and it is nowhere more relevant than in India. Analysts estimate that up to half the Indian households do not have a bank account. In fact, the Census 2011 found that more than 40 per cent of the population lives two km or more from the nearest bank branch or agent. For India to facilitate more balanced economic development, universal access to basic financial services is essential. There are no easy solutions. Strict regulation of banking and other financial services is vital to address money laundering, terrorist financing and fraud......

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Now, transfer your bank account between branches while retaining account number

....."The customer should be allowed to transfer his account from one branch to another branch without restrictions. In order to comply with KYC requirements of correct address of the person, fresh address proof may be obtained from him/her upon such transfer by the transferee branch," the RBI said in its notification. Some banks were insisting on opening of fresh accounts by customers when approached for transfer from one branch of the bank to another. "Such insistence on opening of fresh account or making the customer undergo full KYC process again causes inconvenience to them, resulting in poor customer service. It is not reasonable in view of the fact that most bank branches are now on CBS (core banking solution) and KYC records of a particular customer can be accessed by any branch of the bank," the RBI notification said.....

Read - Business Today

Words of comfort

....“The government (is taking) action in terms of supportive measures for ensuring higher inflows of foreign exchange ... the government is conscious of the (situation) and is taking appropriate action,” he said, adding the exchange rate was market determined. Attributing the current decline in the value of the rupee to the volatile international situation, Gujral said, the RBI was intervening to check sudden short-term movements in the domestic currency. The Reserve Bank has taken a slew of measures to encourage exporters to bring back foreign exchange and give freedom to banks to pay a higher interest rate on NRI deposits........

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‘Transactions still taking place at a sustainable pace’

.........However, reduced CRR and Repo/Reverse rate cuts do not automatically translate into reduced interest rates for mortgages, which would have pushed up the sales volumes in the residential sector.

Banks have to take into account other factors before deciding on lowering their interest rates for retail customers,............

Read - The Hindu

Government likely to rescue district banks

After bailing out the Maharashta State Cooperative bank, the state government might have to dig into its treasury again to ensure survival of district cooperative banks (DCBs) in the red. Six DCBs are under RBI's scrutiny for negative net worth and below par capital to weighted risk assets (CRAR) ratio..........

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Pension relief

The report, “Pension scheme of RRBs to be on a par with other banks” (Business Line, June 22) brings out the interest evinced by the Finance Minister in solving the pension issue in respect of RRB staff, whose pension amounts were meagre. Mr Pranab Mukherjee deserves appreciation for the fact that he took out time amidst his tight schedule in clearing the pending files dealing with the problems of retirees.

A similar long pending issue is one of DA losses of those who retired from banks before 2002, on account of non-100 per cent DA-neutralisation. The affected retirees fall in the age group of 70+. An average retiree in this category incurs losses to the tune of Rs 2,000-4,500 which is a large sum in testing times of cost hikes of food items and medicines. If the Finance Minister could solve this matter before he lays down office, it would be a boon to these senior citizens.

- C P Velayudhan Nair Thiruvananthapuram (HBL)

Bank NPAs

The RBI Deputy Governor Mr K.C. Chakrabarty, feels interest rates are “not too high” to affect “corporate” growth. Seemingly, he was more concerned about rising bank bad debts. Even new private sector banks had relatively high gross NPAs at 2.18 per cent in March 2012. Nationalised banks have yet higher NPAs as percentage of gross advances. Lowering policy interest rates is only a tool for inflation targeting. Essentially, good credit appraisal helps reduce NPAs. NPAs rise when the big loans to large industries remain in arrears. The banking system suffers from its loans to the aviation, infrastructure, telecom, metals and commodity sectors.

- K.U. Mada Mumbai (HBL)

RBI's D Subbarao on difference between 2012 and 1991 crisis

.....The debate occurred when India saw foreign exchange reserves fall below a level enough to cover for only 8 months of imports. The crisis situation in 1991 was triggered by the balance of payment pressure where India’s foreign exchange reserves fell to a level where they could cover for only two months of imports. Is 2012 going to be a repeat of 1991?.......

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Subbarao Copying Bernanke Excites Demand for Bonds

.....Subbarao is acting two days after Bernanke extended buying of longer-dated debt to lower the cost of business investment and home buying. Investors in Asia’s third-biggest economy are seeking the safest assets as the BSE India Sensitive Index of shares is headed for a quarterly drop after gross domestic product increased the least in nine years in the three months through March. “The RBI is killing a lot of birds with one stone by buying bonds,” .......

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Hopeful of a 25bps rate cut by RBI in July: JP Morgan

.....Looking at the fairly tight liquidity situation, Gupta feels the RBI will prefer OMOs over CRR for infusing liquidity. Although, the RBI has disappointed with an unchanged repo rate, Gupta anticipates a rate cut of at least 25 basis points in the July policy.........

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Kerala assembly censures banks for denying education loans

....Moving a motion, treasury bench legislator Thomas Unniyadan called for the attention of the house that banks in the state, despite Reserve Bank of India (RBI) guidelines and three different rulings by the Kerala High Court, were saying no to students who approach them for educational loans......

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Buy 50% of forex needs from a PSU bank: RBI to oil cos

.....“Importers are clearly rushing to cover and exporters are simply holding back. There is no supply in the market. If you analyse the quantum of exports and imports month-wise, there is no spike. In fact, imports have only gone down sharply. So, the rupee movement and the behaviour of the exporters or importers should be seen in that context. Today’s decision by RBI on oil imports should be seen as a sentiment .....

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Rupee fall offsets low crude effect on inflation: RBI Dy Guv

....Reserve Bank of India ( RBI) Deputy Governor K C Chakrabarty said it is unlikely that the continuing fall of crude will drive down inflation in the country as the decline is not substantial in rupee terms. When asked if falling crude will help ease inflation, Chakrabarty answered in the negative saying, " The fall in crude prices has been partly offset by depreciation of rupee. In rupee terms, oil prices have not gone down much"..........

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Slowdown leads to greater CDR, rise in banks’ stressed assets

.....As reported earlier in Firstpost, Reserve Bank of India Deputy Governors KC Chakrabarty and Anand Sinha had met the CEOs of a dozen major banks in February to discuss their asset quality. The banks had told RBI at the time that while asset quality continued to be a concern for banks, some had been trying to focus on smaller accounts to improve quality of assets. RBI Governor Duvvuri Subbarao had said even in April that RBI had told banks to improve the risk management practices in order to detect bad loans before they went bad. The Monetary Policy unveiled by RBI in April proposed that banks put in place a robust mechanism for early detection of signs of distress and measures, including prompt restructuring in case of viable accounts wherever required, with a view to preserving the economic value of such accounts. .........

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RBI understands need for weaker rupee - HSBC

......"RBI understands the need for a weaker INR" to help address the wide current account deficit and because onshore liquidity remains tight, HSBC argues..............

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ATM trick: Bank cheated of of Rs 1 cr

.....The withdrawals were not normal. Explaining the modus operandi, Pradeep Kumar, SSP, Cyber Crime Investigation, Mohali, said the gang members used to demand a withdrawal of Rs 10,000 from ATM of Federal Bank. But they used to take only Rs 9,900 and leave the last Rs 100 note inside the ATM. As a matter of policy, the ATM machine would retrieve the note, which would flash a message of “failed transaction” in the software system of the private bank whose ATM card was used for withdrawal. Interestingly, cashing in on this message (failed transaction), the miscreants used to call up the helpdesk of private banks demanding refund of Rs 10,000. Apprehending legal action and poor customer response, the private banks used to immediately debit the said amounts in the accounts of the accused........

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Department of Posts to introduce ATMs

........This is part of the department’s plan to gradually convert the post offices across the country to full fledged banks, including in rural areas, with modern banking facilities. According to him, it is also part of an initiative from the department to reinvent itself with the changing requirements of the time.

“The department is in the advanced stages of getting a banking licence from the Reserve Bank of India (RBI),”.......

Read - The Hindu

Axis Bank to raise funds via pvt placement basis

....The board of directors on Friday approved borrowing/raising funds by issuing debt instruments on private placements basis within the limits prescribed by the RBI and other regulatory authorities from eligible investors, in one or more tranches.......

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United Bank to set up office in Myanmar

Kolkata, June 22: United Bank of India has received approval from Central Bank of Myanmar for setting up of a representative office in Yangon. It is the first Indian bank to have presence in the country, said a press statement issued by the bank. The bank has already received RBI’s approval for opening its representative office in Myanmar, the bank’s Executive Director, Mr Deepak Narang, had said recently. “…Though we will not be able to carry out financial transactions through our representative office, we will get leads which can then be routed into our branches,” he said.

HBL

Monetary policy evokes unease - K Kanagasabapathy

.....While one of the Deputy Governors who is in charge of monetary policy indicated that there was room for reducing policy rates, another Deputy Governor, though not in charge of monetary policy (but a member of the Monetary Policy Advisory Committee), indicated that interest rate is not a significant factor in explaining slowdown in investment and economic activity. Even as the market was miffed by such contrary signals, the Finance Minister, through his interactions with the media, almost confirmed that the RBI will take actions (to ease policy further), and even directed public sector banks to follow up with immediate cuts in lending rates. What he forgot was that after his official nomination for the President’s post, his voice as Finance Minister had lost its weight. After the announcement of the policy, he was apologetic that the Governor need not consult him for mid-quarter policy reviews, further conveying the impression that if it had been a quarterly or annual review, the RBI would have been obliged to follow the Government’s direction! Two things emerge out of this. It is well known that, legally speaking, the RBI is not that autonomous with respect to monetary or banking policy.....

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Reforms at RBI: A route to effective monetary policy

The Public Debt Management Agency of India Bill seeks to take away the debt management function from the Reserve Bank of India (RBI) and assign it to an independent agency. This will eliminate one of the many conflicting interests of the central bank and is in keeping with the best practice scenario offered by the most recent studies on optimizing the role of the central bank..............

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Basu wants PM to take charge of Finance Ministry

Chief economic advisor Kaushik Basu wants Prime Minister Manmohan Singh to take charge of the finance ministry after Pranab Mukherjee moves to Rashtrapati Bhawan saying that he is an extremely capable person. "The Prime Minister is a trained economist... He was there in the 1991 reforms ... (although) it is a political decision... who come and goes... but one thing is for sure that he is extremely capable," Basu said in an interview...............

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Exporters Express Worry Over Low Credit Supply

.....The credit flow should be ensured, then only the exports would be positive...Last month they were negative. The bankers have to have a look at it," he said, adding that apart from driving up credit, others issues such as relaxation in rebooking or cancellation of forward contracts and curbs on the exporter earners' foreign currency account (EEFCs) were also discussed at the meeting. With the rupee touching an all time low of Rs 56.60 to the dollar today, the issue was discussed during the meeting, and exporters asked for measures to bring some stability in the currency by checking the volatility, Ahmed said. RBI Deputy Governor H R Khan chaired the meeting, and several top officials from banks including Bank of Baroda, Bank of India, Standard Chartered Bank and dedicated agencies such as Exim Bank and ECGC (Export Credit Guarantee Corporation) were present.

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Dharna against co-op banks functioning

.....Addressing the dharna, Ramesh Srivastava alleged that money of common men deposited in co-operative banks was mismanaged due to the careless attitude of the concerned department. Corruption, despite regular inspections, is the main reason behind the problem. He alleged that the concerned department and the RBI were only completing the formality of inspection. He also mentioned various other factors that were marring the functioning of these banks.........

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Outlook downgrade of FIs unwarranted: Mittal

.....Pointing to concerns pertaining to the lack of capital with public sector banks (PSBs), Mr. Mittal noted that the issue of crisis of capital in Indian banks was highly over-rated as banks in India park about 28.75 per cent of their deposits with the government and the Reserve Bank of India — 24 per cent in the form of SLR (statutory liquidity ratio) and 4.75 per cent as CRR (cash reserve ratio). This, he said, was “a practice which is followed nowhere else in the world but in India and, as such, there can be no crisis of capital.”

Read - The Hindu

By doing nothing, Subbarao speaks his mind

Dr. Duvvuri Subbarao is a mild-mannered man. He speaks softly, listens carefully and acts in measured steps. Until now, that is. The RBI governor’s decision earlier this week to keep interest rates on hold in the face of growing clamour for a rate cut tells us that underneath the soft exterior hides a tough central banker...............

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Cut can hurt

........One possible explanation for what might have given RBI the determination to keep interest rates unchanged could be the fear of an even sharper volatility of the rupee if it did. For a central bank, which explicitly targets the stability of the exchange rate and faces a shrill clamour for selling dollars from its reserves, cutting rates could have created an equally unpleasant situation in the coming days. The same industrialists who are asking for rates cuts today would have demanded that the RBI prevent a rupee depreciation, without appreciating the link between the two..............

Read - Indian Express

Bank business correspondent models need to have controls to safeguard clients’ interests

.....The RBI must therefore revisit KYC norms immediately, adapt it in the light of what happened in 2010 in AP microfinance and thereafter attempt to ensure the implementation of the revised KYC norms in a rigorous manner by all concerned institutions including banks and BCs and their sub-agents.......

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Now, send money home more frequently

.....Those using the money transfer service largely belong to the working class. They try and send their savings when the rupee is weak, say experts. This mode is advantageous for those who do not have a bank account or whose work sites are far away from cities or towns, such as an offshore oil rig. Or, the beneficiaries might be living in remote villages or towns, which might not have access to net banking or a bank branch might not be close by. “RBI's move would also help those who receive salary more frequently; for instance, salaries are paid every week in the US. NRIs there would be able to send money more frequently,” ......

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Blame Game

The present state of the stock market is pitiable. The market was slowly showing some improvement in the past 3-4 days in the expectation that the RBI will ease the market condition to a higher level by cutting commercial bank interest rates. But contrary to our expectation, the RBI has not done anything except blame the government that it has not taken any measure to improve the economy. The government, on the other hand, blames the business community and the latter blames commercial banks. But commercial banks say they cannot do any favour to the business community as the RBI is controlling the interest rate. Blaming each other will not solve any of our problems. So long as this condition prevails, we cannot find a remedy to revive the economy.

- V VENKITASUBRAMANIAN  (ET)

Right on the money

Subir Roy is a bit unfair to the Reserve Bank of India (RBI) in his analysis of the economy (“RBI lets everybody down,” June 20). Monetary policy has to take care of money supply in the economy. It cannot be blamed if public confidence in the economy is low. Money does not pour in just because cost of borrowing is low. It pours in if the rate of profit is higher than the cost of borrowing. .............

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Beware of fictitious offers promising money: RBI

....In the appeal circulated through the Uttarakhand government's directorate of information and public relations, the RBI has asked the people not to get trapped in such offers and said the best way to avoid such offers is to ignore such e-mails or telephone calls received from unknown persons. ....

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Gold Financiers’ Growth Stalls as Rules Tighten: Corporate India

..........The Reserve Bank set up a panel headed by K.U.B. Rao to analyze the implication of gold imports for financial stability, price trends and the role of non-bank finance companies in influencing rates. The panel is expected to submit its report by the end of July, the central bank said. “All the uncertainty and speculations on whether there will be more regulations will be over in the next two months after the RBI comes out with its report on gold,” ...........

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Gold loan companies insist on efficient KYC practices after RBI missive

Strict 'Know Your Customer' (KYC) norms, prescribed by RBI, are compelling gold loan companies to put in place better customer identification practices. Now, the companies are asking customers to produce Aadhar cards for identification purpose. Leading player Muthoot Finance has already implemented it and other major companies are expected to follow suit..............

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RBI awarded for its precautionary approach to the regulation of derivatives market

Shri G Padmanabhan, Executive Director and Smt. Shyamala Gopinath, Former Deputy Governor, Reserve Bank of India receiving the Dufrenoy Award for Responsible Innovation 2012. The award was conferred on the Reserve Bank of India for Responsible Financial Innovation on June 18, 2012 in Paris

.....The conference was attended by professionals from financial services industry, regulatory bodies, policy institutions and media. Smt. Shyamala Gopinath, former Deputy Governor, Reserve Bank of India was invited to speak at this conference. She spoke on the RBI’s approach to innovation, specifically to regulating OTC derivatives. The Reserve Bank was nominated by the Observatory on the basis of the speech delivered by Smt. Gopinath.........

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....The award has been given for RBI's precautionary approach to the regulation of derivatives market, the central bank said in a statement. RBI has been recognised and appreciated "for the very reason it was criticised not so long ago," RBI executive director G Padmanabhan said in his acceptance speech.....

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Subbarao for FM?

At the Annual General Meeting of Indian Merchants Chamber (IMC), the new president of the association, Niranjan Hiranandani, said a post was going to fall vacant in the finance ministry and it could well be filled by the current Reserve Bank of India Governor D Subbarao. He said people at IMC would be pleased to see a knowledgeable person like him in North Block. The governor had just made an elaborate presentation in defence of the central bank's decision to not to succumb to industry's demand for rate cuts in the mid-quarter policy. Although he took all policy-related questions head on, he chose not to comment on this one and managed to keep smiling as he listened.

BS

‘Tough surroundings made me learn survival tactics’

Although Narendra Jadhav failed only once in his life, that too in a unit test in standard VII, he faced some tough time during his school days. In his life story narrated to Arun Shevate, which has been documented in Napas Mulanchi Gosht, a book which tells inspiring stories,.................

 

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Government knows better banking than RBI

.....Both RBI and NABARD would need to spend more sleepless nights to make the bankers and the SHGs to sleep well when they implement the CC limit facility to SHGs. Otherwise, the CC limit facility will turn out to be a Cash and Carry facility with more NPAs at bank level and more suicides at SHG level. Earlier, the regulators step in better for the banks and the SHGs...........

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Mid-quarter reviews of RBI to stay

The Reserve Bank of India (RBI) will continue with its mid-quarter review of the annual monetary policy for at least a year, it was decided after reviewing the performance of the review. The reviews were introduced by RBI Governor D Subbarao in September 2010, to take the surprise element out of the off-cycle actions. The effectiveness of this exercise was to be reviewed after two years. “Mid-quarter reviews are intended to communicate our assessment of economic conditions more frequently,” Subbarao had said in July 2010. Mid quarter reviews had attracted criticism from central bank watchers on the ground that it creates more pressure on the central bank for meeting expectations.

BS

Finalise roadmap for services to villages by Aug, RBI to banks

......."The finalised roadmap with details of allocated villages to various banks should be submitted to the respective Regional Office of Reserve Bank of India as per format given latest by August 31, 2012," the RBI said in a notification to banks.............

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FinMin appoints 7 new executive directors for PSU banks

The long wait came to an end for the short-staffed public sector banks. The ministry of finance, department of financial services, on Monday appointed seven general managers (GMs) in one-go for the post of executive directors (EDs) to fill up the vacancies across banks. There are total 17 such posts lying vacant with the banks.........

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Committee calls for providing connectivity to Indian airports

.....In a report released this week, the committee headed by former Reserve Bank of India deputy governor Rakesh Mohan said that road development agencies of the Centre and states as well as the railways should work together to provide connectivity to airports.......

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Giving the Mahatma company

........ RTI activist Manoranjan Roy tried to find out how and when the Mahatma became the mainstay of our currency but the RBI said that there was no document recording the change. The question to be asked is: Do we really need a face on our currency? So far, all the coins have the emblem of the Ashoka Pillar, which stands for peace and non-violence. This is featured in currency notes as well. Currently, the only personality gracing our currency notes is Mahatma Gandhi. These are the symbols that an average Indian is able to identify with. The very idea of having a new face on our currency throws it open to misuse by the ruling party to glorify their leader(s) according to political requirements...........

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'Deciding on inflation vs growth RBI's prerogative'

Amid the Reserve Bank of India (RBI) maintaining status quo on policy rates and the cash reserve ratio, Economic Affairs Secretary R Gopalan has said it is for RBI to decide between inflation and growth.
“It is a question of making a fine judgement, and RBI is the authority to make that judgement. It has taken a call,” Gopalan said at a press conference..............

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Basu hears the tiger roar in 7 Race Course Road

.......Though Basu termed the Reserve Bank's decision to keep interest rates unchanged as 'maturity' despite the Finance Minister's hint to focus on growth, he seemed disappointed. A rate cut would have been a signal, he said, that India preferred growth and could live with inflation.......

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Hopelessly hopeful

......What were the arguments cited in favour of an interest rate? It had been contended that high interest rates had not been able to control inflationary expectations. Instead, it was argued, the high rates had effectively throttled investments. But RBI governor D. Subbarao countered this perception. “Our assessment of the current growth-inflation dynamic is that there are several factors responsible for the slowdown in activity, particularly in investment, with the role of interest rates being relatively small. Consequently, further reduction in the policy interest rate at this juncture, rather than supporting growth, could exacerbate inflationary pressures,” the RBI stated, adding, “Notwithstanding the moderation in core inflation, the persistence of overall inflation both at the wholesale and retail levels, in the face of significant growth slowdown, points to serious supply bottlenecks and sticky inflation expectations… It is relevant to assess as to what extent high interest rates are affecting economic growth. Estimates suggest that real effective bank lending interest rates, though positive, remain comparatively lower than the levels seen during the high growth phase of 2003-08. This suggests that factors other than interest rates are contributing more significantly to the growth slowdown.” To many, the RBI cocked a snook at the finance minister........

Read - The Asian Age

RBI has shocked itself: Surjit Bhalla

Expert Surjit Bhalla says the RBI has shocked itself by not changing policy rate in its recent policy review, saying that it becomes difficult to analyze the central bank if it keeps shifting the goal post. Madan Sabnavis, chief economist, CARE Ratings, says the scenario has been changing rapidly and the RBI has only been following the trend

Replace CAMELS with RBS for risk assessment: Chakrabarty panel

......While the present risk evaluation of commercial banks through the 'CAMELS' system is a point in time assessment, the proposed risk-based supervision system (RBS), if implemented, will take into account both present and future risks, the Committee headed by RBI Deputy Governor KC Chakrabarty said...................

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RBI: over to you, Delhi… seriously

Fiddle away, Delhi, while the Indian economy burns. Just don’t expect the Reserve Bank of India to play fireman anymore................... 

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Low inflation vital to secure growth, says RBI

.....Some analysts had commented on the discouraging effect of RBI’s decision on already slowing growth. “That’s one way of interpreting it. But we don’t know the counter factual. We don’t know what would have happened to inflation, to growth if RBI didn’t tighten the policy,” Subbarao said.......

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SBI to reduce lending rates to exporters soon

Within days of the Reserve Bank massively increasing the export refinancing limits of banks, State Bank of India today said it will soon bring down interest rates on loans to exporters. "We will surely cut lending rates to exporters following the RBI enhancing export credit refinance limit to 50 percent in the policy review. However, the quantum of the reduction will be decided by our Alco (asset liability committee) meeting, which will be held next Saturday," SBI Chairman Pratip Chaudhuri told PTI over phone from Guwahati............

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RBI allows non-bank entities with Rs 100 crore networth to own White Label ATMs

.....The non-bank entities will be allowed to own and operate White Label ATMs and they will provide the banking services to bank customers in India, based on debit cards, credit cards or prepaid cards issued by banks. RBI has however confined their role only to acquisition of transactions of bank customers. "Such non-bank entities should have a minimum net worth of Rs 100 crore as per the latest financial year's audited balance sheet, which is to be maintained at all times," RBI said on Wednesday.......

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The myth about low PSU bank pay

.....So should RBI now withdraw its guidelines on private sector bankers’ salaries? No. Should we now be ready to throw the idea of poorly paid PSU bankers out of the window? Well, possibly out of the study table but not the window. Averages are known to hide a lot. This time they have behaved like swimsuits, revealed a lot as well. What’s happening here? The PSU bank workforce is significantly more aged than the private banks. The average age of employees of state-owned banks is around 50, whereas the same for their private counterparts is around 30. However well the private banks may be paying their employees, it is hard to beat the public sector average since the employees are 20 years senior...........

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Don't poach loans from rivals, FinMin tells PSU banks

..........Sources from banking circle say the issue of takeover financing was discussed between the finance ministry and bank chiefs in their last meeting in Delhi where DK Mittal, secretary, financial services, asked banks not to indulge in takeover of loan. However, KC Chakrabarty, deputy governor, Reserve Bank of India, felt such a practice cannot be completely discouraged. "At times a customer may be unhappy with the prevailing lender. He should, therefore, have the right to choose a new lender," said Chakrabarty.......... 

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Kerala to float NRK bonds for development projects

....Citing the latest study on the Kerala diaspora by the Centre for Development Studies (CDS), Joseph told the assembly that the total money that arrived in the last fiscal in Kerala banks, mostly from Middle-East employed Keralites, was a staggering Rs.50,000 crore. He was replying to a motion moved by treasury bench legislator P.Ubaidullah who sought the immediate attention of the state government to channelise the NRK deposits in Kerala banks for productive purposes. "We also have decided to open an exclusive bank for NRKs and we have now got in touch with the Reserve Bank of India (RBI) for the necessary clearance," added Joseph.......

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RBI’s directive on unoperative/unclaimed deposits violated

.........If you thought that the recent Reserve Bank of India’s (RBI) directive to banks would make it easier for customers to retrieve long lost deposits of a deceased kin, think again. Apparently, one such bank has violated RBI’s directive, in spirit and word, one week before RBI’s 30 June 2012 deadline for compliance. This was brought to notice by a Moneylife reader. Karnataka Bank, instead of putting names and addresses of unclaimed deposit holders, has instead put the onus on the users to search for names.........

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Union Bank of India starts process to hire 1636 clerks

....One of the leading PSU bank, Union Bank of India has started recruitment process for 1636 vacancies for the post of Single Window Operator 'A'/Clerk..........

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Banks told to release crop loans to farmers on time

.....Expressing dissatisfaction that just 18 per cent of the target had been met in disbursing loans for allied activities in 2011-12, Mr. Jayaram appealed to officials of the Reserve Bank of India (RBI) and the lead banks to initiate action against those banks that did not disburse enough loans for allied activities in the district......

Read - The Hindu

Ensure opening of Aadhaar-enabled accounts: RBI asks RRBs

 The Reserve Bank today directed Regional Rural Banks (RRBs) to ensure opening of Aadhaar- enabled banks accounts for beneficiaries of the Mahatma Gandhi National Rural Employment Guarantee Scheme and other social security schemes, for facilitating electronic transfers.............

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SBI chairman visits Shillong

SHILLONG, June 19: Is the change of small coins by traders in the city causing artificial shortages of coins? According to State Bank of India (SBI) officials, the coin vending machine at the SBI, Shillong Main Brach, is mostly used by traders. “We mostly find traders visiting this vending machine,” an SBI official told a group of reporters on Tuesday. According to SBI officials for the year 2011-2012, Rs 50 lakh worth of coins were distributed to customers and for the current year, Rs 4-5 lakh has already been distributed. Meanwhile, SBI officials also stated that they would ask the Reserve Bank of India (RBI) officials to increase supply of coins to the State. Meanwhile, the SBI officials also informed that there are two mobile banks in Meghalaya who visit remote areas of the State for providing banking transaction at the doorstep of people. Earlier, SBI chairman Pradip Chaudhari, as part of the Corporate Social Responsibility (CSR) of the bank, donated an ambulance to the Christian Hospital.

The Sentinel

Deadbeat corporate borrowers? Not in India

Lenders are willing to amend loan terms instead of acknowledging NPAs

.......While restructuring is allowed by the RBI, the murkier "evergreening" of loans is frowned upon. Several bankers said it is widespread, but declined to give details. The practice is said to be particularly common in commercial real estate, where tougher restructuring guidelines require banks to classify a loan as non-performing and set aside more funds as provisions - effectively removing any official middle ground between a performing loan and a default..........

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KC Chakrabarty: Regulator with a sense of humour

It is not often that a banker who nurtures a dream of becoming a deputy governor of India's central bank is also able to fulfil it. KC Chakrabarty is one such banker. That he had set his sights high at the start of his career was evident when he asked colleagues at Bank of Baroda just what they found so unbelievable about his RBI dream. That was the level of confidence Chakrabarty displayed in his early days at the bank and which is still on display despite a temporary knock over a year ago when he strayed from the line at Mint Street.............

 

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