It is both strength and opportunity for cooperative banks to further financial inclusion in the country. In one of the recent speeches, Mr Anand Sinha, Deputy Governor of Reserve Bank of India (RBI), said that many artisans, migrant labours, small businessmen, retailers etc in semi-urban and rural areas of a number of un-banked and under-banked districts in the country find it difficult to join the formal financial sector and make use of various opportunities. He had suggested that urban cooperative banks (UCBs) take a lead in bringing them to banking network on social and economic grounds...............
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 28, 2012
Urban cooperative banks hit by new RBI rules
....."The new parameters are harsh indeed, and likely to hamper smooth functioning of the cooperative sector. The matter has been taken up with the RBI. There are some banks in the region who may not be able to meet the new parameters. What is worse is that the rule has been made applicable in retrospect, from March 2011,".....
RBI draws up plan to usher in less-cash deals
The Reserve Bank of India (RBI), on Wednesday, said that it planned to enhance the availability and acceptability of alternative payment instruments in lieu of cash to move towards less-cash economy and promote ‘mobile wallets’ as a single instrument for carrying out financial transactions. “The level of customer protection available in paper transactions and electronic transactions in India varies. In paper transactions in the case of fraudulent or unauthorised transactions, the responsibility to prove ‘good-faith’ lies with the banks, whereas in electronic transactions, the onus mostly lies with the customers,” said RBI in its ‘Payment System Vision Document 2012-15’, which was released on Wednesday for public discussion. Comments can be sent to the RBI by July 31.............
e-Payment must for public sector banks from July 1
....."The cost of handling a cheque during its life cycle, from printing till storage and destruction, is Rs 25 to Rs 40," said a finance ministry official. "Banks have significantly invested in technology as well as in developing various applications for electronic payment. That should be put to use." The circular said concerted efforts should be made by the banks and their sponsored regional rural banks to popularize e-payments and to bring down the number of transactions through cheques........
In lighter vein................. RBI introduces 1, 50, 100 Crore Rupees currency notes to keep up with inflation in corruption
With persistent double digit inflation, the price of high level corruption has also sky-rocketed, so much so that it has become increasingly cumbersome to conduction high value transactions using wads of Rs.500 and Rs.1000 notes. In order to reduce such dead-weight transaction costs and improve liquidity in the corruption sector, the RBI has decided to introduce currency notes in denominations of 1, 50 and 100 crores into the economy. The FICCE (Federation of Indian Chambers of Corruption in Everything), an apex body that caters to the interests of big players in the black economy has lauded the move.............
Coriander s/o Pulao, Aadhaar No 499118665246
Coriander and an apple, as per the Unique Identification Authority of India (UIDAI), are residents of India as they have been given an Aadhaar number. And this, perhaps, has been the last straw. Expressing shock at this, not to mention there having been several complaints of impersonation, the Union home ministry has asked UIDAI to get an internal as well as external security audit done by a third party to fix the lacunae in the enrolment system and avoid any more goof-ups.......
RBI asks primary dealers to stop short-term debt issues
The Reserve Bank of India (RBI) said standalone primary dealers will not be allowed to raise capital through short-term bonds from July 1, and should instead issue long-tenure debt to strengthen their capital base and align with Basel III norms for banks..............
Banks to hire vendors to run ATMs
To do away with regular complaints about non-delivery of cash from ATMs (automated teller machines), India’s central bank, the Reserve Bank of India, has reportedly asked all bankers to discontinue setting up their own ATMs. By next month bankers will hire vendors to set up ATMs and run them on fee basis. “From next month onwards we will not set up our own ATMs. At present, vendors only maintain ATMs and they take time to respond to bank calls. It creates trouble to customers. Now, the vendors will not only run and maintain the machines but also install and maintain them. They will receive payments against per successful transaction,” a senior banker told Business Standard.
BS
Why getting Raghuram Rajan as PM’s adviser makes no sense
......The wisdom of appointing a man of Rajan’s stature to enhance and influence the government’s economic policymaking is, however, open to question. Not because he doesn’t have ideas to contribute – he does – but because the government is not exactly lacking in ideas to fix the economy. The government’s all-star economic team – from Manmohan Singh himself to Montek Singh Ahluwalia to C Rangarajan to Kaushik Basu to RBI Governor Duvvuri Subbarao – have between themselves analysed the economy threadbare, and can comfortably agree on the broad contours of policy action needed.......
PM wants revival of economy with 'animal spirit'
Signalling his keenness to boost the economy a day after taking charge of the Finance Ministry, Prime Minister Manmohan Singh on Wednesday directed urgent steps for revival of investor spirit and reversal of the climate of pessimism with regeneration of "animal spirit". Taking stock of the country's economy in a series of high level meetings here, he identified tax issues, sluggishness in insurance sector and aspects related to mutual funds as problem areas and pressed for quick corrective steps. The meetings were attended by Planning Commission Deputy Chairman Montek Singh Ahluwalia, PMEAC Chairman C Rangarajan and top Finance Ministry officials. He will meet RBI Governor D Subbarao and Planning Commission members tomorrow as part of his review of affairs concerning the economy.............
AP annoyed at closure of bank branches in tribal areas
......Earlier, SLBC president and Andhra Bank CMD B. A. Prabhakar disclosed that many branches had been closed in East Godavari district’s tribal areas like Maredumilli, Y. Ramavaram, Addateegala, Devipatnam, Rayapalli and Gangavaram. After learning about their closure RBI had ordered reopening of these branches at once, he said.
Banks' business growth little changed in June: RBI
India banks' growth in deposits and loans was sluggish in the month to June 15, the Reserve Bank of India said on Wednesday.........
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Will the new RBI guideline bring in more QFI money?
Industry opinion is that this measure is likely to do very little as most investors overseas have better options
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RBI directs Uday Kotak to lower stake in the bank
The Reserve Bank of India has directed Uday Kotak, promoter of Kotak Mahindra Bank to lower his equity stake in the bank from 45.2 per cent to 10 per cent in phased manner. Uday Kotak has been given time till 2018 to bring down his stake to 20 per cent and lower it to 10 per cent in subsequent two years.............
Short measures
The Reserve Bank of India (RBI) has announced certain liberalising measures relating to the capital account. The central bank’s press release does not mention the objective, but one can guess it. If the idea is to improve capital inflows to relieve the downward pressure on the rupee, it is not likely to be realised by raising the ceiling on foreign subscriptions to government securities. They will go into the forex reserves of the RBI, which will give an equivalent credit to the government account in rupees. Thus, the funds will augment the bank’s reserves and not the forex supply in the market. There may not be any addition to net RBI credit to the government. RBI should clarify the accounting procedure for the benefit of analysts. It will, however, mean the monetisation of current fiscal deficit that will have an expansionary effect on money supply. This is worse than what is done now through the buybacks of gilts under open market operations, which imply retrospective monetisation of the past fiscal deficit. The response is not likely to be large since foreign subscribers have to bear heavy hedging costs against the possible depreciation of the rupee at the time of redemption of the securities.
- A Seshan Mumbai (BS)
Right move
This refers to the editorial ‘Balancing act’ (Business Line, June 27). Just after its mid-quarter review, the RBI has sought to upgrade the falling rupee by attracting foreign investments. The introduction of government bonds is a welcome move. Enhancing the limit for foreign institutional investments is a right step to attract dollar inflows. It is also expected that this will attract foreign investments in view of relaxation in rules. It will be easier for new classes of investors to invest in gilts as the RBI’s move also ends entry barriers. It will also be a good chance for Corporate India to go in for ECBs.
- Jayant Mukherjee, Kolkata (HBL)
Stop gold coin sales
This refers to the report “Central Bank likely to impose curbs on gold coin sale” (June 27). The Reserve Bank of India should take serious steps to curtail gold coin sales by not only banks, but other channels also like MMTC, post offices and so on. By doing this, the government will achieve two targets: one, it will be able to gradually wean investors away from such non-productive assets; and, two, it will save considerable amount of foreign exchange that is spent on gold imports.
- V Sridhar Kolkata (BS)
Curb gold; raise duties; borrow more – Are these solutions?
.....the Reserve Bank wants to impose curbs on banks selling gold coins to customers. A report in Business Standard quoted an RBI official as saying: “Banks were allowed to sell gold by importing it to fight the excess dollar flows. By the same logic, the measure should be reversed now as we are at the opposite end of the spectrum. It was a temporary measure, which unfortunately was made permanent by banks.” Temporary measure? Is liberalisation a temporary measure?.......
TJSB Sahakari – 40 and going strong
......The bank has also received permission from the Reserve Bank of India for starting mobile banking services and the bank has completed all the testing to start inter-bank mobile payment system (IMPS). The bank has received approval from the Reserve Bank of India for opening branches in Maharashtra, Goa, Gujarat and Karnataka. During the current financial year, 20 branches would be opened. The business target is the Rs 10,000-crore milestone.
Apna Bank makes big strides
......In recognition of its excellent customer services and overall progress, for the first time in the history of banking, the RBI and the Maharashtra Government have consented merging of Care Co-op. Bank Ltd. In a Non Scheduled Co-operative Bank – Apna Sahakari Bank Ltd. After that another co-operative bank from Western Maharashtra region, The Ashta Urban Co-op. Bank having nine branches, has merged into Apna Bank. Recently, one of the oldest co-op bank from Kolhapur region known as Shree Balbhim Co-op Bank Ltd having 10 branches is also merged into Apna Bank. Apart from this the bank has opened seven more branches during this financial year. Apna Bank having 46 branches and ATM centres at all over Maharashtra as on March 31, has received multi-State permission from the Reserve Bank of India to open the branches at Gujarat, Goa and Karnataka. The bank has been allowed to provide direct RTGS/ NEFT Services by Reserve Bank of India...........
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Wednesday, June 27, 2012
Foreign banks seek finance ministry help to speed up decision on applications for new branches
....."Foreign banks which are still waiting for further clarity on the wholly owned subsidiary model proposed by the sectoral regulator want RBI to fast track the branch licensing process till it comes with its final guidelines," said the official who did not want to be identified. He declined to name the banks. The official, however, said that it was for the RBI to take a final call on the issue. As of now there are 41 foreign banks in the country with 323 branches.....
Security concerns worry RBI
Bankers have expressed concern over closure of branches in agency areas on “grounds of security”. Raising this issue at the SLBC meet on Tuesday, Andhra Bank CMD and SLBC president B.A. Prabhakar said the RBI had listed the centres in East Godavari like............
Floating currency notes claim youth in Assam
Guwahati A youth's body was on Tuesday fished out from a wetland here in which scores of people entered to collect Indian currency notes that were found floating on the water. The youth, in his early 20s, had dived into the Silsako Beel on Tuesday morning along with some other eager beavers to look for and pocket the currency notes floating on the water, the police said quoting eyewitnesses.......
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RBI asks urban co-operative banks to stop pre-payment penalty
.....It has, therefore, been decided that UCBs will not be permitted to charge foreclosure charges / pre-payment penalties on home loans on floating interest rate basis, with immediate effect” RBI said in a notification........
Cap Won’t Fit
This refers to ‘Myopic’ (ET, Jun 26). The hike in the cap on the amount of government and corporate debt for foreign portfolio investors reflects the RBI’s concern for the falling rupee and its attempt to prop up the same. However, capital inflows on account of portfolio investment is certainly not stable like the one resulting from FDI. The FDI policy needs drastic review so as to encourage the same. The policy as regards multi-brand retail needs greater perspective. The falling rupee calls for addressing the issues affecting macroeconomic fundamentals and not just tinkering with caps on foreign portfolio investment.
- VIJAY MULLAJI (ET)
- VIJAY MULLAJI (ET)
Half Measures
This refers to ‘Myopic’ (ET, Jun 26). The RBI’s move is not expected to cause much volatility in capital inflows. The cap on foreign investment in government bonds has been increased from $15 billion to $20 billion, but its effect on capital inflows will be small as it amounts to only about 2.5% of the total debt. In fact, as a short-term measure to increase dollar inflows, RBI could have increased the cap further, as there is a good demand for sovereign bonds among FIIs. Other measures, like liberalisation of terms and conditions for FII investment in infrastructure, are not expected to attract much increase in investment due to delays in project implementation.
- V SRIDHAR
‘MFIs HAVE REGULATORY GAPS IN OPS’
Do MFIs follow the code of conduct laid down by the Reserve Bank of India? Banks, which lend to them, always try to find a solution to it before lending. Their job will now be much easier as the Small Industries Development Bank of India has started assessing the MFIs and is ready to share its findings. Sidbi has engaged rating companies for the job and has evaluated 13 MFIs, so far, including big names such as Bandhan and SKS Microfinance. The reports suggest that although MFIs follow the broad contours of RBI rules, they still have regulatory gaps in their operations.
ET
SBI to Motivate Staff by Keeping them Cool
State Bank of India has decided to aircondition all its branches across India — be it semi-rural or rural branches. The aim is to provide the same working ambience to employees to motivate them to perform at optimal levels. SBI chief Pratip Chaudhuri said that the bank’s aim is to complete this project this fiscal year itself. Given the size of SBI — 14,680 branches with 67% in rural and semi-urban places — it is quite an ambitious task for the bank. The big question is whether some of the hill states would be in a position to ensure power all through the day.
ET
Tools Reserve Bank of India uses for monetary and liquidity management - Money Matters
You know that monetary policy is RBI’s primary responsibility but may not know the tools that RBI has at its disposal
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Monetary policy affects inflation, but in a muted way
.......In short, the paper makes the point RBI made in its last credit policy—that monetary policy has a limited impact and the government must do its bit.
PM keeps finance portfolio with himself
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Call rates alone don’t determine liquidity: RBI
....The impact of monetary policy actions on inflation has been "modest" and with a lag effect, another working paper published by Reserve Bank of India said. The subdued impact of the monetary policy has been largely due to structural factors that guided the increase in food prices, along with the increase in global commodity prices, it said. "The impact of monetary policy actions on inflation is modest and subject to lags," the report, authored by Muneesh Kapur and Harendra Behera, said. Inflation remained in double digits for close to two years till 2011......
RBI steps positive, but inflow won't be immediate: Experts
.... while RBI’s steps are positive, inflow may take some time. “It’s definitely a positive measure. The bottleneck on refinancing of loans having been removed. I think it will serve two purposes. One the limit can be quickly used up, because project loans and capex loans typically take a long time in getting drawn. So even if an ECB was placed for a new project, it will take long time to be drawn. Therefore, the dollar inflows into the country will take a long time,” .........
............ Neither the currency nor equity markets cheered the new RBI policy measures announced on Monday , but only hoped for more. To arrest the falling rupee, the central bank hiked the limit of external commercial borrowing (ECB) to USD 10 billion. Moreover, the regulator also increased the limit of overseas investment in government bonds by USD 5 billion to USD 20 billion. However, Sajjid Z Chinoy, Asia Economics, JP Morgan explains that the measures are no game changers but only tactical in nature.......
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......To a market primed for more spectacular policy announcements such as foreign direct investment in retail, the actual measures announced by the Reserve Bank of India (RBI) on Monday, which focused primarily on the rupee, came as a disappointment. But given its constraints, the RBI has, in fact, done a good job of putting together a package that can support the flagging rupee. Of the various measures announced, the one that may prove most effective in bringing in dollar inflows immediately is the enhanced limit for foreign institutional investments in government securities.......
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The Reserve Bank of India's much hyped booster dose for a mauled rupee comes with a cost. The central bank's latest move to liberalise external commercial borrowings (ECB) is actually a continuation of its reliance on debt inflows to check the rupee slide. In the last six months, RBI has been increasingly attracting debt inflows through foreign debt, NRE and FCNR (B) deposits......
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......To a market primed for more spectacular policy announcements such as foreign direct investment in retail, the actual measures announced by the Reserve Bank of India (RBI) on Monday, which focused primarily on the rupee, came as a disappointment. But given its constraints, the RBI has, in fact, done a good job of putting together a package that can support the flagging rupee. Of the various measures announced, the one that may prove most effective in bringing in dollar inflows immediately is the enhanced limit for foreign institutional investments in government securities.......
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The Reserve Bank of India's much hyped booster dose for a mauled rupee comes with a cost. The central bank's latest move to liberalise external commercial borrowings (ECB) is actually a continuation of its reliance on debt inflows to check the rupee slide. In the last six months, RBI has been increasingly attracting debt inflows through foreign debt, NRE and FCNR (B) deposits......
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Interest rates and the rupee
....The RBI has indeed opted to use its reserves in recent months, resulting in a significant decline in the volume of foreign currency assets it holds. But this has at most prevented a sharper depreciation of the rupee than has actually occurred. It has not helped correct the depreciating tendency. Continued reliance on this means of enhancing the supply of foreign exchange in the market could shrink reserves to a degree that risks triggering a speculative run on the rupee. Not surprisingly, the RBI is seeking ways of enhancing capital flows into the economy.......
RBI steps only short-term measures, India needs more investment: SBI
te Bank of India (SBI) Chairman Pratip Chaudhuri, while terming measures taken the Reserve Bank of India (RBI) as only short-term, said there is need to enhance equity and foreign investment for the country's long-term growth............
M Karunanidhi seeks Prime Minister Manmohan Singh's intervention over textile debt restructuring
DMK chief M Karunanidhi today urged Prime Minister Manmohan Singh to direct RBI to issue necessary notification for the Rs 35,000 crore debt restructuring package for textile industry announced by the Centre last month, saying any further delay would lead to a large number of textile units and SMEs becoming non-performing assets (NPAs) by June 30. ............
Let it happen... Rupee fall is only natural
You hear it almost every day now: The rupee is at an all-time low! Not just that, it's also the weakest one among its Asian peers. We need this to stop!
India is going through a pubescent stage that all emerging economies inevitably go through. It took its success for granted, started spending wildly and deciding badly. But, eventually all parties end and the music stops. When that happens, you have to be prepared to slug it out through the hard times...........
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RBI mulls ban on gold-coin sales at banks to clamp import
.....Akshaya Tritiya may not be auspicious for banks in the future. The Reserve Bank is considering a ban on sale of gold coins by banks to partly curb rising gold imports and because the central bank believes it is not relevant to core banking operations. .......
TUG OF WAR FOR ATMs
Syndicate Bank has plans to open 500 ATMs and 300 branches this fiscal. But not all new branches will have ATMs. Even among the existing branches, many do not have ATMs. This is because the bank has 2,710 branches and 1,210 ATMs. The new CMD of the bank, MG Sanghvi, has decided that only those branch managers who provide a confirmation that they will issue at least 3,000 ATM cards will be eligible for ATMs at their branches. This will not only inspire competition among branches, but eventually improve business volumes of the bank.
ET
Tuesday, June 26, 2012
Some banking giants more powerful than central banks: ex-RBI guv
RBI least predictable among major Asian central banks
The Reserve Bank of India (RBI) has emerged as the least predictable central bank in Asia, ahead of Bank Negara Malaysia, the central bank of the South Asian nation. Data on central banks' policy actions compared with what was a consensus view of the market, Credit Suisse analysts have found that RBI has surprised the market in nearly 27% of the cases. The Philippine central bank, BSP, is at the other end of the spectrum, surprising the market in just about 14% of the cases...........
Hunt for money in Assam wetland
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| People search for currency notes in a water body at Chachal in Guwahati on Monday |
GUWAHATI: Known as a storehouse of various species of fish, the Silsako beel (wetland) near here has never disappointed fishermen who depend on it to eke out a living. The beel has always provided a steady source of income to them. But on Monday morning, it had something more to offer when some fishermen went there to net their day's catch - currency notes. As the news spread, thousands from the city's Chanchal area went to the spot and got engaged in a treasure hunt hoping to change their lives overnight. The area witnessed a festival-like ambience as hundreds of people started jumping into the water hoping to find money. Many even found Rs 500 and Rs 1,000 notes floating on the water mysteriously. "I saw some fishermen making a hue and cry in the water. I thought they found a big fish but later came to know that they have found some currency notes..........
Helping hand
The Reserve Bank of India wears two hats. It is the regulator of all banks; it is also the chief manager of government banks. If they continue to dominate the banking system without being the most efficient or customer-friendly, the credit must go, at least partly, to the RBI. When it sees an opportunity to send some profits the way of government banks, it is happy to oblige them. The latest instance of helpful market manipulation comes from the foreign exchange market...............
RBI rules out equal treatment for NBFCs with banks
.....“NBFCs as a class of financial institutions are concentrated niche players, hence the CRAR (capital to risk weighted assets ratio) has been fixed at 15%, well above 9% for banks,” RBI said in a clarification. “NBFCs which describe themselves as ‘gold NBFCS’ are further exposed to the risk of having to deal in a specific commodity. Hence the risk is higher in them vis-a-vis all other NBFCs.” They can’t be compared with banks, even those that extend jewellery loans, as this may be a “minuscule portion of the balance sheet and all banks are diversified entities”, it said.......
My View on "Bold economist"
This article takes me back to my own comments in Business Standard (August 11, 2011)as under:
"Vote for stability"
In these turbulent times, the timely decision by Centre to give a two-year extension to RBI Governor Dr Subbarao stands apart as a decisive vote for stability at the Central Bank. This will strengthen the RBI to pursue the right course it has been following in different areas of its responsibility. A change of guard at this juncture would have resulted in slowing down of the processes of change in areas like fighting inflation, forex reserves management, financial inclusion and outreach and transparency in policy prescriptions where Dr Subbarao has made perceptible progress. On his part, the Governor should take this opportunity to hasten the initiatives he has taken to make RBI a change agent in the economic development of the country. Beyond the mandated responsibilities, one expects RBI to do much more in the areas of financial inclusion, gold and wealth management (as part of its forex reserve management), revival of grass-root rural financial institutions like cooperatives and balanced economic development across regions by ensuring an appropriate realignment of the outreach of institutional infrastructure using financial sector reforms as a tool". One wishes tenures of positions where skills get sharpened on-job were longer and incumbents knew about it while joining.
- M.G.Warrier
My View on "Opening FD account"
On the basis of my experience, I find that banks invariably find it easier to justify their procedures with their customers by passing on the buck to RBI. I am sure RBI would not have issued any such instructions. I would suggest that Seshan ask the bank to show him the relevant RBI instructions as I used to do.If in the unlikely event of any such instructions having been issued by RBI, he should dissect them with his usual analytical ability and extraordinary clarity and take up with the RBI Customer Service Department.
- A.Chandramouliswaran.
ASSOCHAM welcomes the bold steps taken by RBI to shore up the falling rupee
ASSOCHAM welcomes the bold steps taken by RBI to shore up the falling rupee both in the long term as well as in the short term by raising ECB limit to US $ to 10 billion and investment by FIIs to US $ to 20 billion in G-Securities.............
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Camson Biotech, HDFC Bank in pact to take banking services to farmers
Camson Biotech has tied up with HDFC Bank to take banking services to over three lakh marginal farmers all over the country. By an agreement with the bank, its 3,000 dealers will be eligible to become business correspondent (BC) or business facilitators for the bank. BCs appointed in rural areas will execute all transactions that a customer avails of at bank branches. Currently, HDFC Bank has 460 BCs. The RBI has drawn detail guidelines for appointing BCs in a bid to reach banking services to remote rural areas..........
Business correspondents: Bank boards must be made responsible for outsourcing
.....First, on its part, the Reserve Bank of India (RBI) must ensure that bank boards have a clear policy framework—with regard to outsourcing through BCs—that can be implemented in real time. And it is not a “cut and paste” policy document that I am talking about. I am referring to an outsourcing policy, with regard to BCs (and their sub-agents), where respective bank boards have thoroughly debated the pros and cons of various activities (to be outsourced) after understanding the attendant risks and benefits.........
Costs of policy convolution
.....So, let us see what is happening. RBI holds interest rates steady. Private sector cost of borrowing does not come down. Public sector borrowing costs are held down by its bond purchases. Further, the public sector garners most of the savings and liquidity with its disdain for restraining spending and spending meaningfully. The government announces a hike in the minimum support price for agricultural produce, while consumer price inflation reigns above 10%. So, what we have is a central bank that cites inflation concerns and holds rates steady, but monetizes the budget deficit in record sums; a government that is supposedly pro-poor, but ensures double-digit inflation with its fiscal irresponsibility; investors (who are they?) who bid up stocks and sell the currency. Even a good criminal novel-writer could not have created such a convoluted set of circumstances, goals and actions......
Costlier food, crude may have caused inflation
Rise in food and crude oil prices could have contributed to high in inflation in past two years despite tight monetary policy, says a RBI working paper. “Despite the monetary tightening by the RBI during 2010 and 2011, inflation remained high and this could be attributed to the structural component of food inflation as well as the surge in international commodity prices beginning the second half of 2010 and continuing into the first half of 2011,” the paper concluded.......
RBI decisions are 'non-package': BJP
....."The four announcements made by RBI and Finance Ministry are a non-package. People were expecting a real package but the government has given non-package," .......
Union Bank’s London arm to start operations by March
The London subsidiary of Union Bank of India is expected to be operational by March next year. The wholly owned subsidiary of Union Bank of India, UBI UK Ltd, has already received the Reserve Bank of India’s approval and was waiting for the local regulator’s approval, according to Mr D. Sarkar, Chairman and Managing Director............
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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‘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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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.
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........
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...........
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...............
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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Monday, June 25, 2012
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.".......
RBI has put the pressure back where it should be: Jim Walker, Asianomics
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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.
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.......
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..............
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?.......
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........
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.
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.........
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........
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.......
Sunday, June 24, 2012
Bold economist
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.........
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......
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............
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.........
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”, ...........
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?”......
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.....
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........
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........
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,”.........
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.........
Saturday, June 23, 2012
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....................
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......
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.....
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........
‘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,............
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..........
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?.......
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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