Banks not to witness shocks on account of bad loans: Chanda Kochhar

Dismissing concerns of rising bad loans, ICICI Bank Managing Director and CEO Chanda Kochhar today said that banking sector unlikely to witness any substantial shocks on account of NPAs and the focus in the current fiscal will be on restructuring of loans of mid-size companies.............

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Bankers agree rate cut by RBI can't lower inflation, but still want it

Bankers agreed that inflationary conditions offered little room for lowering interest rates, but stuck to their demand for a rate cut, saying it was the only tool available to revive the "animal spirits" in the economy in the absence of policy action.  In their customary pre-monetary policy meeting with Reserve Bank of India (RBI) Deputy Governor Subir Gokarn, bank chiefs also acknowledged that rate cut was not a panacea for the nation's economic ills...............

Read - ET

RBI, banks push each other to reduce rates

The Reserve Bank of India (RBI) on Monday asked banks to explain why across-the-board reductions in interest rates had not taken place despite the April 17 cut of 50 basis points in the key policy rate. On their part, banks asked RBI to cut both cash reserve ratio (CRR) and the repo rate by 25 basis points each so that liquidity can ease and lending rates can come down.............

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Why bankers still harp on rate cut

.....after the last policy review, prior to which the clamour for a rate action got louder due to the dismal factory output data, RBI Governor reiterated his resolve to fight inflation, even at the cost of growth. Nothing much has happened to change the RBI’s stance since. On the contrary, there are indications that things are going to get more difficult towards the year-end due to scanty monsoon........

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Rising interlinkage in financial system under RBI scanner

.....the failure of a bank with large borrowings from insurance and mutual funds segments may have significant implications for the entire system, the RBI says, hinting at a possible tightening of norms, especially on short-term borrowings. ........

Read - Indian Express

No relaxation for textile debt recast

The Reserve Bank of India (RBI) will not allow any special dispensation for loans to be restructured by banks for the textile industry, as only 20 per cent of units in the sector are under stress. Industry representatives are to meet finance ministry officials on Friday to discuss the debt recast issue. In a recent meeting with bankers, top RBI officials said banks had to undertake a debt recast according to the norms that specify higher provisioning after restructuring of debt............

Read - BS

Bank licences: Focus on realty link

For corporates seeking bank licences, there is one key concern: how would the Reserve Bank of India interpret exposure to real estate activity? This was the highlight of corporate responses to draft guidelines announced by RBI earlier. The central bank on Tuesday published the responses to its draft guidelines stating that it would keep the suggestions and reactions in mind while framing the final guidelines.................

Read - TOI

Redefining money guardians: Who should set up new banks

Bank aspirants in India Inc have asked for greater clarity on the central bank’s definition of promoters. In feedback to the Reserve Bank of India (RBI) in response to the draft norms on new banks, companies have also sought more clarity on various issues thereon, from corporate structure to priority sector targets. The draft norms were made public in August last year. These proposed several measures for considering applications to be issued a banking licence. Among these were the eligibility of promoters, the corporate structure, minimum capital requirement, corporate governance norms and business model, among others...........

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New banking license: RBI gets feedback on draft guidelines

The Reserve Bank of India (RBI) on Tuesday put up comments/suggestions received from the related parties on the draft guidelines for new banking license in private sector, released on August, 2011. Those comments were received from general public, consultants, analysts, industrial / business houses, NBFCs and others. The regulator will consider the feedback before finalizing the guidelines............

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Banking aspirants want to do away with holding co norm

.... The Reserve Bank Tuesday said many corporates interested in entering banking have called for doing away with the requirement of promoters wholly owning the proposed non-operative holding company (NOHC).  "Doing so will diversify the shareholding structure of the NOHC and will improve corporate governance and avoid regulatory overlap," the RBI said in a release attributing the view to business houses, NBFCs and a federation.........

Read - Zee News

Post office bank proposal awaits RBI nod

The central government is awaiting the Reserve Bank of India (RBI)’s reply to the department’s proposal to float post office banks, according to Union minister of state for communication and information technology Sachin Pilot..........

Read - BS

North shouldn’t block

A former Reserve Bank of India Governor, while still in office, confided that he would never keep the government in the loop on most decisions of the central bank. But the then mandarins in the finance ministry never made it easy for him. They put pressure on him on a variety of issues since he invariably needed the ministry’s concurrence on policy matters. This particular governor got his way on most issues and, much to the chagrin of the officials, earned the reputation of preparing India for the financial crisis of 2008. In fact, he felt it was not necessary to meet even the finance secretary, the most senior official in the ministry, during his North Block visits. On some occasions, he would visit the capital just to meet the prime minister and would not even call on the finance minister. There were many critics who had a healthy disrespect for his domineering style, but nobody took him head on regarding his regulatory decisions. He overruled ministry interventions, backed by the quality of his decisions. Another capital market regulator or chairman of the Securities and Exchange Board of India (Sebi) would frustrate the finance secretary of the time by not answering calls or responding to text messages. Here again was a regulator who had turned around financial institutions, knew his domain well and refused to budge from decisions despite the government’s reservations. These are just two examples to show that regulators never had an easy relationship with the government ...........

Read - Indian Express

Reddy`s Libor reckoner

The Libor rate-fixing scandal erupted on June 27, when the UK's Financial Services Authority (FSA) imposed the equivalent of a $450-million fine on Barclays Bank. There's someone in India who knew about the scandal at least three days earlier. Y Venugopal Reddy, former Reserve Bank of India Governor, was delivering the Per Jacobsson Foundation Lecture at the Bank of International Settlements in Basel, Switzerland.......

Read - BS

Peers lavish praise on Abid Hussain

How did former Governor of Reserve Bank of India Y.V. Reddy locate his moorings in the IAS? On the day he joined the service as Assistant Collector of Visakhapatnam, his boss and district Collector Abid Hussain straightaway entrusted to him adjudication of a dispute in irrigation and left on an appointment. The order prepared by Mr. Reddy was later signed by Hussain. That was not all on day one. Hussain that night asked Dr. Reddy to accompany him to a dinner in an elite circle. But, the latter turned down the offer saying he was not comfortable in such places. Hussain then warned Dr. Reddy ‘being anti-rich is as bad as being anti-poor’...............

Read - The Hindu

The importance of being PK Tayal

....The DCA having done it’s bit and ‘compounded’ or regularised the illegality, RBI decided to play the perfect babu—it didn’t proceed on the benami share angle or the siphoning off funds and allowed Tayal to take over the Bank of Rajasthan since there was no pending investigation/charge against him. A decision it must have rued later since, over the years, it appointed an additional director on the bank’s board, a CEO, and even ordered a special audit of the bank’s books, after which the bank got merged. Though RBI did the wise thing by containing whatever problem the audit report revealed—RBI never made the report public—in order to avoid any sort of panic in the banking sector, Tayal managed to walk away with 1 ICICI Bank share for every 4.72 shares he held in the Bank of Rajasthan, directly or indirectly......

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Public sector banks on branch expansion spree

.......Recently, the Reserve Bank of India relaxed the norms for branch licensing and encouraged banks to open more branches in tier-2 centres (cities and towns with a population of between 50,000 and 1,00,000). Despite these efforts, the penetration of banking services in the country is still low. An average branch services around 13,000 customers, indicating the demand for services and the potential still available. Nearly 60 per cent of the population does not have access to banking services, according to RBI reports.

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Fibre tokens end coin shortage in Bagalkot town

BAGALKOT: Call it illegal tender, but the parallel currency of fibre tokens in denominations up to Rs 5 has solved the big problem of small change at a town in Bagalkot district. Shortage of coins had forced shopkeepers in Mahalingapur to hand out a chocolate or a toffee in lieu of change in a purchase made. Customers had no other option, but to grumble and accept whatever that came their way. But the new solution could be looking at sudden death if the central bank orders a crackdown on the parallel currency............. 

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RBI to try plastic currency in 5 centres

Notes of Rs 10 denomination to be distributed through the central bank's five regional offices

Amid instances of counterfeiting of notes, the Reserve Bank today said it is working on launching plastic currency and will soon launch a pilot project for the same. "Counterfeiting of plastic notes is very difficult. So we are planning to launch some plastic money on pilot basis in 4-5 centres. Like Jaipur, Shimla, Bhubaneshwar and other centres. We are working on it," RBI Deputy Governor H R Khan told reporters ..........


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Clearing Corporation of India launches trade repository for OTC Forex Derivatives

....The repository was launched in presence of RBI Deputy Governor Subir Gokarn at the CCIL, which facilitates clearing and settlement of transactions in g-secs, money market instruments and foreign exchange products. CCIL said, the TR will help the RBI in effective monitoring of systemic risk as it gives clarity on trade positions, prices and transaction volumes........

 

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Open market operations will depend on liquidity situation: RBI

....."Depending on the liquidity situation, RBI will come with OMOs... we have indicated on a sustainable basis plus or minus 1 per cent (deposits). If it is beyond that, then we will consider (OMOs)," RBI Deputy Governor H R Khan told reporters on the sidelines of a National Housing Bank (NHB)event.........

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Macro-economic stability will ensure low-cost housing: RBI

Against the backdrop of banks showing reluctance to provide loan to real estate, RBI said it has been following a cautious policy to ensure sustainability and viability of the housing sector. “Our main focus is to maintain macro-economic stability. If there is macro-economic stability, if there is lower inflation, and if there is no asset price bubble, obviously interest rates will come down and houses will be affordable,” RBI Deputy Governor H R Khan said. He said RBI would ensure that the housing sector remains sustainable and viable over a long period of time. “Our approach has been to see that the whole sector becomes de-risked,” Khan added........

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RBI sets cap on debit card usage fee

The Reserve Bank of India has set a cap on merchant discount rates,or usage fees, for debit card transactions from September 1 to encourage merchants to choose electronic payment mode over cash transactions, executive director G Padmanabhan said. “What we are struggling to achieve today in the country is whether the merchant on his own must be encouraged to receive a card transaction rather than a cash transaction,” he said on the sidelines of an event ...........

Read - BS

Can PM do What Pranab Could Not?

....With Pranab Mukherjee out of the finance ministry, the Prime Minister will also need to leverage his equation with RBI Governor D. Subbarao to bring down interest rates, give an impetus to investment and reverse the slide in the growth story. Mukherjee had an uncomfortable relationship with the RBI Governor and, despite his constant nudging, the latter, in the past one year, consistently refused to lower interest rates. Just 10 days before he demitted office (June 26, 2012), Mukherjee dropped enough hints to suggest that he wanted a reduction in interest rates, but that did not happen in the quarterly review of the monetary policy on June 18. The RBI will have to reduce interest rates to rev up the economy. It will not be an easy decision to take, for, it risks inviting the charge that it was deliberately putting roadblocks in Mukherjee's economy revival plans..........

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Jain Irrigation & partners to invest Rs 100 cr in new NBFC

Small Ideas, Big Revolutions.

Jain Irrigation Systems along with other partners will invest Rs 100 crore to roll out a new Non Banking Financial Company (NBFC) soon for providing loans to farmers, a top official said. Last week, Jain irrigation had announced it has got RBI's permission to start a NBFC 'Sustainable Agro-commercial Finance Ltd (SAFL)'..........

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Bankers seek pro-industry measures from RBI

.... "A rate cut is not a panacea for all the pains of the economy. At the current inflation rate, I don't see any room for the central bank to cut interest rate. While the RBI can do something to ease money supply, the government should do everything to ease supply-side bottlenecks," .....

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High inflation may restrain RBI from cutting rates: Rangarajan

....“I believe if the inflation rate, particularly non-food manufacturing, shows decline then there will be scope for RBI to adopt easier stance,”.......

Read - Mint

Banking on debt

The latest figures on India’s external account released by the Reserve Bank of India point to medium term changes that underlie the weakening of the rupee. But the government’s response may not be the most appropriate............

Read - HBL

A robust system in turbulent times

....A closer monitoring of banks is also required because “distress dependencies” between banks has risen. RBI’s analysis of the branch network of Indian banks reveals that the systemic importance “of the most connected” banks has increased.........

Read - The Hindu

Bankers ask RBI to ease liquidity

....Top bankers Monday urged the Reserve Bank of India (RBI) to ease liquidity in the banking system to help revive industrial growth. Executives of leading lenders including State Bank of India, ICICI Bank, HDFC Bank, Axis Bank and Punjab National Bank met RBI Deputy Governor Subir Gokarn and requested for easing the liquidity.....

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Rock bottom rates

....To the extent high interest rates, by eating into the operating profits of companies, have dampened business sentiment and the overall inducement to invest, the RBI’s current monetary policy stance may actually prove counterproductive.......

Read - HBL

Clamour for remedial steps

A circumspect banking community today asked the Reserve Bank of India to at least bring down the cash reserve ratio (CRR) if not the policy rate as a way to crank up credit growth and kick-start the economy...........

Read - The Telegraph

Banks face RBI heat on no rate cut

The Reserve Bank of India (RBI) has come down heavily on banks for not cutting interest rates, despite a reduction in the policy rate by as much as 50 basis points (bps) in April. In the pre-monetary policy meeting with bankers on Monday, the central bank wanted to know the reasons for the failure of policy transmission..............

Read - BS

RBI launches website to explain detection of fake currency

Seeking to spread awareness among public about fake notes, the Reserve Bank has launched a website explaining ways to detect counterfeit notes. With a tagline 'Pehchano Paise Ki Boli, Kyunki Paisa Bolta Hai', the website -- www.paisaboltahai.rbi.org.in -- gives visual presentation with pointers on currency notes of 10, 20, 50, 100, 500 and 1,000 rupee denominations............

 

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RBI pitches for cash-less carry

The day is not far when you pay your vegetable vendor, hair dresser and neighbourhood grocer with your credit card

The Reserve Bank of India (RBI) has prepared a road map to provide card swipe machines to more than one crore retail businesses in the next three years to promote electronic transactions for ushering in a less-cash society in the country.....

Read - Deccan Herald 

South Indian Bank inaugurates Currency Chest, Coin Vending machine

Scarcity of coins, notes of small denomination hits state economy

......At present Manipur is facing scarcity of coins and small denominations of Rs 5, Rs 2 and Rs 1.Besides, one finds it hard to see any new notes of Rs 10 in the state, thereby suggesting the possible scarcity of the same in the near future. While Manipur has been facing the problem for the last many years, there are plenty of such coins and small denomination currency notes in other states.  In the absence of coins and small denomination currency notes, one is forced to buy matches, sweets or chewing gums at shops, even if they don't them since there is no change to return at the time of buy anything something whose price is below Rs 10 .....

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RBI to release new Rs. 5 coin soon

To commemorate 150 years of the Comptroller and Auditor General of India, the Reserve Bank of India (RBI) has announced that it would shortly put into circulation a new series of coins of the Rs. 5 denomination with the new symbol for the Indian rupee inscribed on it............

Read - The Hindu 

Obituary

Cornelius D'Souza (Kenny), 65 years, retired RBI Officer, Bangalore passed away on July 7, 2012.  Funeral cortege leaves residence A 101, Spartacus Apartments, 30th Cross, 4th T Block, Jayanagar, Bangalore 560 041 on Monday, 9th July 2012 at 2.30 p.m. to Christha Prabhalaya Church, Jayanagar. Funeral mass at 3 p.m. followed by burial at Hosur Road cemetery.  Contact details : Dr. Simia Almeida - 09980560454.

http://www.daijiworld.com/chan/ob_disp.asp?oid=4760

RBI directive a setback for Islamic NBFCs

At a time when the National Commission for Minorities is pressing hard upon the Union Finance Ministry to explore ways to start interest-free banking in the country, the recent RBI directive has dampened its spirit..........

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SBI MUSEUM: A peek into the evolution of Indian banking

....Spread over 7,500 sq feet, the museum chronicles the evolution of SBI from the days of the Bank of Calcutta in 1806. A treasure trove of interesting facts, the gallery details the evolution of India’s banking system which was initially driven by the shroffs (local moneylenders), to the emergence of commercial banks in the 18th century. Visitors can take a peek into the personal finances of legends Bengali Renaissance period legends such as Rabindranath Tagore; polymath and social reformer, Ishwar Chandra Vidyasagar and theosophist, Annie Besant. Believe it or not, the bank even returned a cheque issued by the then Governor-General, William Bentinck, for exceeding the credit limit by just four annas (25 paise).......

Read - HBL

Kris Gopalakrishnan to head govt cloud computing panel

....While appreciating the benefits of cloud computing, the RBI Deputy Governor, Mr Anand Sinha, recently pointed out that it being a new technology, data integrity and confidentiality seem to be a major concern at this stage. “Further, if too many participants rely on a single service provider, it may lead to a risk of overconcentration inasmuch as the failure of the service provider will be catastrophic,” he said at Hyderabad.........

Read - HBL

Disbursal of KCC loans: Private sector banks not included in RBI circular

.....The State Level Banker’s Committee (SLBC) keeps promising the State Government that the directives of the RBI and the Union Finance Ministry are being ‘strictly followed’ in Kerala while allotting shortterm, Kisan Credit Card (KCC) loans to farmers and the Service Area Approach (SAA) is integral to it. But a circular issued by the Union Finance Ministry to CEOs of all Public Sector Banks (PSBs) on May 30,2012, which is in the possession of Express, has not mentioned the SAA,which was withdrawn on December 8, 2004. Also,in the directive on the basis of a listed Reserve Bank of India circular, no mention is there on the inclusion of private sector banks for disbursal of KCC loans...........

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High court directs status quo on bank's plea

....Bombay high court has issued notice to the Central government and directed a status quo to be maintained on a plea by Dhanashree Mahila Sahakari Bank at Miraj, Sangli district against the cancellation of its banking license by the Reserve Bank of India.......

Read - TOI

Check banks

I completely agree with T N Ninan’s piece “Personal accountability” (Weekend Rumination, July 7). Banks are expected to concentrate on lending and borrowing, rather than focusing on third-party products. For the sake of meeting revenue targets, customers are being mis-sold and duped these days. The Securities and Exchange Board of India and the Reserve Bank of India (RBI) do nothing to prevent these unethical sales. RBI needs to seriously regulate banks’ non-banking activities like insurance, broking and mutual funds.

 - Balaganesh, Chennai (BS)

Bankers to meet RBI's Gokarn, will urge RBI to cut rates

MUMBAI: CEOs of commercial bank will urge Reserve Bank of India (RBI) to cut rates to improve investment sentiments at the customary pre-policy credit policy meeting which is scheduled on Monday. The RBI will announce its first quarter review policy on July 31 amids slowdown in economic growth and concerns of rising inflation. In the last mid quarterly review held in June, t he RBI left interest rates and the cash reserve ratio for banks unchanged on fears of worsening inflation.............

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Lazy banking or easy banking?

....In April, after RBI surprised the market with a half-a-percentage point cut in the policy rate, sending a strong signal to banks to cut loan and deposit rates, ICICI Bank Ltd, IDBI Bank Ltd and Punjab National Bank cut their base rates marginally; but most banks have been tweaking their loan rates for different business segments, leaving the base rate untouched. This makes the base rate irrelevant as this is the benchmark for all loan rates. RBI had forced banks to replace the erstwhile prime lending rate with the base rate as the prime rate became irrelevant with banks giving a bulk of the loans at below that rate. In some sense, the base rate is also going the same way.....

Read - Mint

India Inc's deposits lose out amid better liquidity

....On the back of this improved liquidity, banks have stared refusing bulk deposits even at card rates — the interest rate offered to retail depositors. Some banks are not accepting bulk deposits of more than Rs 10 crore from one customer. Banks were paying around 9.5 per cent interest on three-month deposits until recently, but now that rate has come below nine per cent......

Read - BS 

Tracking flux in forex assets

Fluctuation in the value of forex assets has a significant impact on India’s foreign exchange reserves. The country’s foreign exchange reserves fell by $10.4 billion to $294.3 billion during 2011-12, after rising by $25.8 billion in 2010-11 and $27.1 billion in 2009-10, according to RBI data. ........

Read - HBL

Bank licences can be given on the basis of existing regulations, says C Rangarajan

....."I see that there is a scope for more banks to come in as they come with new ideas... I think if old regulations are inadequate, then they must be modified otherwise RBI can also consider using old regulations, on the basis of which it can give new licences,"......

Read - ET 

RBI misled by inflationary expectations

.....As inflationary expectations are crucial in monetary policy formulation, it would serve the economy better if the RBI were to expand the scope of its expectation surveys to correctly ascertain the same. Till such time, it would be better if the central bank adopted the indirect method to ascertain inflationary expectations. In the upcoming policy review on July 31, the policy tilt should be to revive growth unless there is clear indication that easing would aggravate inflation.

Read - HBL

RBI Governor Duvvuri Subbarao not to cut rates unless PM can contain fiscal deficit

....The stars may be appearing to align for Reserve Bank of India Governor Duvvuri Subbarao to cut interest rates by month-end, but it may not happen yet unless Manmohan Singh, who holds the finance portfolio, pulls a rabbit out of his hat by July 30 to contain fiscal deficit.......

Read - ET

Monetary policy and the growth syndrome

....It is to the credit of RBI Governor Subbarao that he successfully resisted these pressures to demonstrate that real life situations are for more complicated to be amenable to text- book solutions. Monetary policy making remains an art and not a science......

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A plateful of memories

....Dr Basu spoke of his extremely comfortable relationship with Mr Pranab Mukherjee, a thoroughbred political person but one who also had a grasp of economics. He spoke of how he enjoyed the confidence of the Prime Minister. Did he know Dr Manmohan Singh from his Delhi School of Economics days? “No, I met him first when he was the Governor of RBI,” Dr Basu said.......

Read - HBL

Clean the stables

...... He publicly chastised the Governor of the Reserve Bank of India, who was unsuccessfully trying to control inflation through monetary policy without the necessary fiscal measures by the government. Mukherjee expected the RBI to cut interest rates for stimulating growth. But he would do nothing to reduce the deficit. He appointed a super-committee with himself as its head to oversee the RBI, the securities and exchange board of India and the insurance regulatory and development authority, ostensibly to settle jurisdictional disputes between them.........

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A robust system in turbulent times

....A closer monitoring of banks is also required because “distress dependencies” between banks has risen. RBI’s analysis of the branch network of Indian banks reveals that the systemic importance “of the most connected” banks has increased. The risk that the failure of a large bank could ripple through all parts of the financial system has increased because of growing inter-dependence of banks, insurance companies and mutual funds. The random failure of a bank, which has large borrowings from the insurance and mutual funds segments of the financial system, may have significant implications for the entire system,” says the report......

Read - The Hindu

Till debt do us part

.....The simple point that now cuts across all lines is that excessive government borrowing sets into motion a chain of events that crowd out productive private investment directly in terms of fund availability or indirectly by pushing up the rate of interest. Indeed, in a rare sign of autonomy, RBI has virtually put reduction of fiscal deficit as a precondition for interest rate cuts.....

Read - Mint

Student loans benefit 8673 in district

......Mayank Mehta, deputy general manager of Union Bank of India, K R Jayaprakash, lead district manager, K D Joseph, AGM, Reserve Bank of India, Venu S Menon, AGM, NABARD and officials from other banks attended the DLRC meeting. 

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Building on definition

....So, various arms of the government came up with their own lists of what constituted infra. These included the Reserve Bank of India, or RBI (lending), RBI (external commercial borrowings), Insurance Regulatory and Development Authority (Irda), income tax department, Securities and Exchange Board of India (Sebi), Department of Economic Affairs, National Statistical Commission, Central Statistical Organisation, Empowered Sub-Committee of Committee on Infra (read Planning Commission), Economic Survey and India Infrastructure Finance Company. By 2010, there were at least 14 official lists floating around.....

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Underprivileged customers

One can understand RBI Governor Dr D. Subbarao getting piqued as India has been ranked 50 in the first-ever index of financial inclusion prepared by the Indian Council for Research on International Economic Relations (ICRIER), below countries like China, Kenya and Morocco. Financial inclusion means making banking and others financial services available to the poor. Over the last two-three years, Dr Subbarao has been literally prodding banks to go for financial inclusion, so one can imagine his disappointment to see India, a democracy, at the bottom of the ladder on this score...........

Read - Deccan Chronicle

India’s Journey on the road to Financial Inclusion

The July 2012 issue of eGov, the world’s premier magazine on e-Governance (http://egov.eletsonline.com/) , has been released in the market, in both online and print formats. The issue is focused on the subject of financial inclusion. The comprehensive cover story on the subject of Financial Inclusion has in depth analysis of policies of Finance Ministry, RBI, other regulatory organisations and many private industry players. It has a full length interview of Anurag Jain, Joint Secretary, Department, of Financial Services, Ministry of Finance. Other people interviewed for the Financial Inclusion story include the likes of A P Hota, Managing Director & CEO, National Payments Corporation of India (NPCI); Niraj Kumar Gupta, Chief General Manager, Financial Inclusion Department, NABARD; Vishakha RM, Director – Sales & Marketing, Canara HSBC Oriental Bank of Commerce Life Insurance Company. There are quotes and views taken from Dr K C Chakrabarty, Deputy Governor, Reserve Bank of India. Many of India’s most important microfinance institutions and banks have been engaged in the issue. 

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India’s New Development Agenda - Book review by P.P.Ramachandran

.....The authors of the Report lack a sense of Indian economic history” — a stern indictment indeed. Incidentally, the Committee did not include a member from RBI. ‘ Monetary and Credit Policies’ form the subject matter of part three and has ten essays. There is a critical analysis of policies in the post- reforms period and a stirring call on the part of RBI to evolve a blueprint of area- specific plans to facilitate banks and financial institutions to promote inclusive growth in the real sector. A number of essays analyse credit and monetary policies during 2007- 2009........ 

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SHGs in Konark criticize Canara Bank's delaying tactics to approve loan

Women Self Help Groups representative of Konark NAC area criticize Canara Bank officials' delaying tactics to approve loan. This resentment come into the public during the ‘Canara Grameen Utsav’ which was organized today at Yatriniwas, Konark. The exhibition showcases glorious growth story of Canara Bank . It was inaugurated by Sri S Raman ,Chairman & MD of Canara Bank . S Saha , GM Canara Bank, Bhubaneswar, Sri K K Gupta Chief General Manager NABARD & Shri V Ramachandra Rao, Regional Director RBI were present in this occasion................

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God Help Us: We now have three finance ministers

......According to BusinessLine, Rangarajan’s days are packed, with Reserve Bank of India (RBI) Governor Duvvuri Subbarao, and LIC Chairman DK Malhotra set to meet him next week. As a former RBI Governor himself, it is quite clear that Rangarajan’s voice will be heard louder on Mint Street than even Pranab Mukherjee’s. As a known monetary conservative, Rangarajan is sure to back Subbarao’s hawkish stand on inflation, which has meant RBI holding rates high despite the economic slowdown. But Rangarajan’s role will extend beyond guiding monetary policy........

.......For the time being, India has two sort-of FMs – Rangarajan and Ahluwalia. One is there because he is non-controversial, and the other because he is close to Manmohan Singh. And of course, we have the PM-cum-FM. Is three too much of a crowd?

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Union Bank to set up 100 'talking' ATMs

Union Bank of India would install 100 ‘talking’ automated teller machines (ATMs) this financial year to enable the visually challenged to carry out ATM transactions. On Saturday, the public sector lender inaugurated its second talking ATM in Thane. The first such ATM was set up on June 6 at the Blind People’s Association campus in Ahmedabad The bank would open 50 such ATMs at Passport Seva Kendras across country........

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Tips for safe online and mobile banking

Access to the Internet is now ubiquitous and so its popularity as a medium to make financial transactions is beyond doubt. Such popularity also means the online banking system is constantly prone to attacks........

Read - Business Today

Textile debt recast meet on July 13

....In a letter to the Union Ministry of Finance last month, the Reserve Bank of India (RBI) said that it had no objection to proposals such for two-year moratorium on term loans and conversion of working capital into working capital term loan. However, the apex bank felt that the asset classification benefit on second restructuring was not justified.......

Read - The Hindu

Little progress on affordable housing ECBs

The big-bang Budget announcement of allowing external commercial borrowings (ECBs) for affordable housing has hardly seen any follow-up action. Government officials and industry stakeholders close to the development indicate the move is unlikely to be implemented anytime soon, as issues like hedging of foreign exchange risks are yet to be resolved. The Ministry of Finance, along with the Reserve Bank of India (RBI), would have to finalise the guidelines and issue a notification on ECB norms............

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India outpaces developing world in inflation rankings

..........For policymakers, the worrying bit about the current bout of inflation is that it continues to stay above the comfort zone despite the fact that the Reserve Bank of India (RBI) has been easily the most aggressive Asian central bank..............

Read - Indian Express

Interest-ing times

........In India, similarly, while an RBI rate cut—our columnist Surjit Bhalla estimates a 100 bps cut results in a 0.44 ppt hike in GDP growth—will help, there is no substitute for policy action by the government..............

Read - FE Editorial

India Inc has to live with dollar at Rs 50: Kaushik Basu

..... although rupee was depreciating too much, India's apex bank, the Reserve Bank of India, could not resort to sale of too much dollars to prevent a sharper fall in rupee as there was a tendency to panic if foreign exchange reserves dipped.......

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OMO to continue to be driven by liquidity judgement: Gokarn

......OMOs are being driven by judgments about liquidity conditions and they will continue to be driven by judgments over liquidity conditions. Whatever is causing liquidity stress whether it is foreign exchange markets or something else, we are focused on maintaining liquidity conditions within the comfort zone that we stated and that will continue to be the benchmark against which we decide whether to do OMOs or not,”........

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Decision to raise FIIs investment limit in government debt appears surprising

Former RBI Governor Y V Reddy said recently that some global financial conglomerates are more powerful than even central banks. It is a moot point as to whether these financial bodies are as influential in India's markets, but they are going to benefit for sure from a quick fix and myopic policy to attract capital flows in the near term............

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Sticky rupee path

.....“The next few months are difficult. We expect it to remain around 50 and we have to live with that,” he added. Although the rupee was fluctuating “too much”, he said it was not possible to sell dollars to prevent a sharper fall as there was a “tendency of panic” if foreign exchange reserves shrink......

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Dr. Subbarao inaugurates RBI gallery at the Indian Business Museum at the IIM-K

Peep into past
Duvvuri Subbarao, RBI Governor, takes a look at the photos of his predecessors exhibited at the RBI gallery at the Indian Business Museum in the Indian Institute of Management, Kozhikode, on Friday

 

Industry chiefs queue up to meet Rangarajan

If you think the Yojana Bhawan on Parliament Street in the national capital is hogging all the limelight after the Prime Minister took over the Finance portfolio, you are wrong........

......The RBI Governor, Dr D. Subbarao, and the Life Insurance Corporation Chairman, Mr D.K. Malhotra, are also likely to meet Dr Rangarajan soon......

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Ban elevator economics

.....Though a policy statement is not expected to provide either a theoretical or empirical backing of its assertions, it nevertheless is expected to have some such support, albeit one lurking in the background. The RBI policy statement accepted that growth had slowed to exceptionally low levels, that headline inflation remained inflated, and concluded that a cut in interest rates would increase inflation without improving investment. So if symmetry holds, as it should, an increase in interest rates would not hurt investment (“relatively small” effect) but would have a disproportionately large effect in reducing inflation. Which is precisely what RBI has been doing for the last year and a half—with the result that both investment and growth have collapsed, and inflation has not moderated. So the RBI policy statement is not supported by either reality, or logic.......

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Inflation v/s growth: RBI may not cut rates immediately

....However in India, the central bank is battling inflation versus growth. Inflation measured by the wholesale price index (WPI) for the month of May stood at 7.55%. With monsoon being below average for the month of June, inflation could rise further in the coming month. "Though the economic environment is conducive to a rate cut, high inflation and poor monsoon progress is a concern. Hence the central bank may maintain a status quo in the coming monetary policy," .......

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Is RBI the one-eyed hawk in a world of blind bankers?

......Interestingly, since the world is giving away money for free, the pressure will be on the Reserve Bank of India (RBI) to follow suit and cut rates. With a repo rate at 8 percent, the RBI now has probably the highest rate in the world. The question is: is it just a obstinate hawk that refuses to see reason, or it is the one-eyed man in a world led by the blind?....

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RBI to pursue wait and watch strategy on rate cut, may not follow global peers

......The presidential polls are currently a hurdle for any strong reforms from the government to tame the burgeoning fiscal deficit. The deficit is a repetitive concern which RBI has been highlighting as one of the reasons behind its inability to cut interest rates as a strategy to boost growth. Reacting to the triple booster from its global peers, RBI Governor D. Subbarao told reporters, in Chennai, that central bank is sensitive to inflation and committed to bring it under control. "We will continue to make all efforts," he said. Leaving interest rates untouched is one such effort. But some promising steps from the government could propel RBI to take a rate-cut decision in its ensuing policy review on July 31. Until then, India is not likely to be part of the global orchestra........

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Greed and fraud: Lessons for India

....The fraud has two major lessons for countries like India that are nascent players in the world of advanced financial instruments. On November 10, 1998, the Mumbai inter-bank offer rate (Mibor) was set up on the lines of Libor as a benchmark rate for all interest rate swaps, forward rate agreements, floating rate debentures and term deposits. The Reserve Bank of India (RBI) may have to monitor Mibor more closely now with adequate checks and balances to ensure that banks and financial institutions do not report suppressed rates to paint a rosy picture of their financial standing. Though unlike in the western world, most key rates in India are determined or benchmarked by RBI, scrutinising Mibor by the banking regulator would go a long way to prevent a Barclays kind of scandal in the Indian market.......

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RBI revises criteria for declaring dividend by UCBs

The Reserve Bank of India (RBI) said urban cooperative banks (UCBs) which have less than 5% of non-performing assets (NPAs) and comply with capital to risk-weighted assets ratio norms may declare dividends without its prior permission..........

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Fin Min asks RBI to ready final norms for bank licences

Prime Minister Manmohan Singh is keen to finalise the guidelines for new bank licences. Bloomberg UTV has learnt that the finance ministry, headed by the Prime Minister, has asked the Reserve Bank of India to ready the final norms for bank licences...............

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RBI releases database to locate bank branch, related information

....."Users of this database can search for bank branches /offices on the basis of the name of the centre, some key words in the address and combinations of state/district/bank. "The information in this branch locator will be updated on a daily basis. The information is downloadable in excel format from this branch locator," RBI said in a notification.......

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Banking frauds: State run banks to adopt innovative mechanisms and global practices

.....From the regulator's perspective, Vijaya Bhaskar, ED of RBI explained that fraud is an area of concern as it undermines the trust, which is the foundation stone of the banking business. He emphasized that the three lines of defense against Fraud - the employees, the systems and controls and the external agencies like the regulator and law enforcement agencies- should be strengthened.........

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FinMin asks banks to pare cheque-based transactions

The Finance Ministry has asked public sector banks and regional rural banks to bring down cheque-based transactions by popularising electronic payments. It has directed these banks to pare cheque-based transactions by at least 20 per cent in the current financial year in the top 20 per cent branches in terms of business volumes. Further, banks’ board of directors have to set targets for shifting customer transactions to the electronic mode and monitor them on a quarterly basis..........

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Solar ATMs for rural India

Vortex, a young Chennai-based company, could be adding new energy to India’s rural economic growth with its award-winning solar-powered automatic teller machines (ATMs). Called “Gramateller Indi” (“graamam” means “village” in Tamil), the low-power consumption machines operate at one-tenth the cost of conventional ATMs. State Bank of India, the country’s leading banking chain, has already ordered 300 Gramatellers; 19 other banks are using these sun-powered cash venders in villages and small towns. The immediate demand for the solar ATMs reflects and empowers India’s quietly surging rural economy, estimated to be worth about US$450 billion. Rural India, considered the backbone of the national economy, is expected to overtake the urban market in size by 2017................

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New ATMs for differently-abled will make transactions easier

......The Union Bank of India (UBI) will launch a fully accessible, speech-enabled, bilingual ATM in Thane’s Passport office on Saturday for differently-abled people. It will be the first such ATM in the city. “UBI is the first bank in the country to deploy fully-accessible ATMs to help the differently-abled make transactions independently,” .......

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Sacrificing growth necessary to rein in price rise: Subbarao

....Subbarao informed that a 15-year old girl from Andhra Pradesh had written a letter to him saying that she had seen newspaper reports about RBI's plans to start plastic currency as a pilot project. She had expressed her doubts over the environmental friendliness of plastic currency, he added. The RBI governor said he then asked officials to conduct detailed environmental studies. The Centre for Environment Studies, Nagpur had conducted vigorous studies and informed the RBI that carbon footprint of plastic currency is lower than paper currency, he added. Pointing out that countries including Singapore and Australia have plastic currency, Subbarao said, "Plastic currency is suitable to India as it can withstand our weather conditions." .......

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Reserve Bank of India to introduce plastic money on pilot basis

KOZHIKODE: The Reserve Bank of India (RBI) is planning to introduce plastic currency on a pilot basis as it has been proven to be economical and environment-friendly when compared to paper currency, said RBI governor D Subbarao here on Friday................

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ICT based financial inclusion - carving a new path through innovation - K C Chakrabarty

Address by Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India, at the

Inaugural Plenary session of the 7th BANKing TECH Summit 2012, Mumbai, 28 June 2012

.......Recently, I came across the report submitted by Consultative Group to Assist the Poor (CGAP) and ACCESS based on the “Retreat on the Business Correspondent (BC) model” which was jointly organized by the College of Agricultural Banking (C.A.B.), Reserve Bank of India and ACCESS. The report spells out the challenges faced by both banks and BCs in extending facilities to the recently financially included and to the financially excluded. The findings indicate that the banks have to ensure that the BC model finds space in the business strategies of the banks and not in the footnotes of their annual reports and that the banks should make client acquisition under this model a business proposition; and not treat it as a CSR activity. An important observation indeed!...........

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No-frills accounts aren’t a nuisance: D Subbarao

...."By and large banks have outsourced the 'last mile' to intermediaries such as microfinance institutions and self-help groups. This is a model that has worked, and one that we should pursue, and refine. Nevertheless, the question is, 'is there a business case for banks to do some of the last mile themselves? Can banks rely entirely on outsourcing? Isn't there a valuable experience to be gained by banks by dirtying their hands more and reoccupying the last mile?" .........

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Central Bank of India scraps levy on NEFT transactions up to Rs 1 lakh

Central Bank of India has made all National Electronic Funds Transfer transactions up to Rs 1 lakh free from levy of any charges with effect from July 1, 2012...........

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RBI nixes textile sector’s plea for debt revamp

The RBI has rejected a debt restructuring proposal from the textile industry. The industry was hoping for a Rs 35,000-crore package. However, the Reserve Bank of India said it had no objection to a two-year moratorium on term loans and conversion of working capital into working capital term loan (WCTL) within a timeframe of three-five years.............

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Making gold work

This refers to the article ‘‘Managing gold, a policy challenge’’ (Business Line, July 6). This is a timely alert to the Government and the RBI to manage India’s domestic stock of gold to the country’s advantage. Instead of handling the issue piecemeal, the Government and the central bank should evolve a gold policy which should factor in:

The imbalance between import and export of gold and gold-based products;

Mapping the domestic stock of gold and jewellery;

Gradually converting the official gold stock with government and banks into standard gold, acceptable internationally;

Charging inspection fee (there should be arrangements for inspection) and an annual charge payable to government on gold beyond a stipulated limit retained with private individuals/institutions.

This will partly finance the security costs borne by the government.

- M. G. Warrier Mumbai (HBL)

Gold investor? Restrictions on coins can curtail your options

Rupee depreciation and higher outflows of dollar in the form of imports have been concerns of the government for some time now. While the government has been taking measures to curb import of gold into the country by hiking duties and taxes, Reserve Bank of India (RBI) too, has started doing its bit. The central bank has already asked banks to go slow on gold coin sales, and a proposal to ban them from the sales is also doing rounds. Financial Chronicle evaluates the likely impact of such a measure on banks, investors and other investment avenues in gold........

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RBI working to resolve issues facing microfinance industry: Governor Subbarao

....The Reserve Bank of India (RBI) is working to resolve the issues facing the microfinance industry, including compliance to capital and provisioning norms, to bring the ailing sector back on track, Governor D Subbarao said, as per media reports from Chennai.......

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Whammy after whammy for India’s Muslims

....Now, with India back on the slow trail, the world’s second largest Muslim population awaits darker days. Through five straight years of over 8 per cent growth in 2007, economists were projecting an annual expansion rate of 11 per cent from 2011 on. But in the last week of June, the Governor of Reserve Bank of India, D Subbarao, admitted for the first time that the “potential” for India’s economic growth has “come down”. Mr Subbarao was not exaggerating. In the post-2008 era, India’s economy experienced rapid deceleration.......

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Jain Irrigation gets RBI nod to launch agri NBFC

Jain Irrigation Systems has obtained regulatory approval from Reserve Bank of India to launch a new non-banking finance company (NBFC), which will focus on farm sector and operate in rural and semi-urban areas. The NBFC, to be named Sustainable Agro-commercial Finance Ltd (SAFL), will commence as a joint venture with Jain Irrigation, promoter entities and IFC, a member of the World Bank Group, as equity shareholders. Some banks and financial institutions will join the equity shareholding at a later stage, the micro irrigation company said........... 

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SKS soars on buzz that RBI may ease norms for non-banking finance companies

....The latest spurt in the SKS scrip comes on the back of Reserve Bank of India Governor D Subbarao's comments that the apex bank was mulling relaxing norms on provisioning, net worth and capital adequacy for NBFC MFIs. "In particular, Andhra Pradesh-based MFIs, saddled with huge losses, large NPAs (non-performing assets) and eroded capital, are facing an especially acute problem in complying with the capital and provisioning norms. RBI is working on resolving these issues, so that MFI operations can get back on track," Subbarao is quoted as having said......

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RBI asks banks to innovate cost effective village branch model

Chennai: The Reserve Bank has asked banks to develop cost effective village branch model in order to promote financial inclusion. "Indeed, I think there is a strong case for a much larger effort on innovating a cost effective village branch model," RBI Governor D Subbarao said .........

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