Discontinue circulation of higher-denomination notes

Deputy Governor of Reserve Bank of India (RBI) KC Chakravarty has rightly advised people from investing in gold,in favour of larger national interest where bulk of gold is purchased for jewellery, religious-offerings and investment with hardly a minute share for any industrial or medicinal use. RBI top-official also warned of possibility of some sudden and sharp decline in gold-prices which may even cause bankruptcy to large and small investors. Theoretically the advice is perfectly right in larger national interest. But practically no one will follow the advice. It is for RBI to take some concrete steps to bring down sharply gold-prices so that people may follow advice of RBI Deputy Governor like by banning forward trading of the yellow metal. India is biggest consumer of gold either as investment or otherwise. As such, gold-demand in India determines rise and fall of international prices of gold. It was wrong that Indian government succumbed to political and other pressures while Indian Finance Minister had to take back measures from the Union Budget for 2012-13 which could effectively check use of black money in purchase of jewellery. Idea of re-introducing maximum 14-carat gold for jewellery can be re-introduced with 10-percent excise-duty on jewellery. Since most investment in gold is made out of black money.Sincere steps should be taken to transform currency-circulation in banking transactions so that surplus currency may be ordinary ‘paper’ for all practical purposes. India should follow sensible advanced countries by discontinuing circulation of higher-denomination notes of rupees five hundred and above because such currency is used as black money to buy gold. All sale-purchases exceeding say Rs 20000, even though payment may be made in parts, must be through banks. In case of cash-payments, currency-tax @ 30-percent may be imposed. All expenses exceeding Rs 1000 must be allowed when made through cheques/ drafts. Payments of essential services like water, telephone, electricity and municipal taxes for bills exceeding Rs 1000 must be by cheques/ drafts only. Drafts/ Pay-Orders/ Traveller-cheques must carry names and address/ account-numbers of purchasers with reduced validity-period of say 45 days to check their misuse as ‘benami’ drafts for carriers of black money.

- Madhu Agrawal (The Sentinel - Assam)

Mobile banking has failed to take off in India: RBI

.........The Reserve Bank of India (RBI) Deputy Governor H R Khan has hinted that mobile banking has failed take-off in India and hence has called upon banks and mobile companies to work together for the benefit of their customers. At a seminar in Bhubaneswar, Khan said that the growth rate in the value and the volume of mobile based transaction is much lower compared to the number of bank accounts and number of mobile subscribers.............

Read - ET

Global convergence of banking regulations and its impact on the Indian banking system - G Padmanabhan

Address by Mr G Padmanabhan, Executive Director of the Reserve Bank of India, at the Bankers Club, Raipur, 13 July 2012

.....The need for convergence in banking regulation stems from the fact that while banking has become global, banking regulation is national. Therefore, addressing the issue of regulatory arbitrage is at the centre-stage of policy concern. The international standard setters have been attempting to achieve convergence by issuing broad principles that should inform national regulatory frameworks, which are peer reviewed under the aegis of the Financial Stability Board and the Basel Committee on Banking Supervision for ensuring cross-border harmonization. While formulating national regulatory policies, national authorities are expected to exercise constrained discretion on certain aspects.......

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Enhancing visibility

RBI Governor D. Subbarao recently exhorted banks to “reoccupy the last mile” in lending to small borrowers, which is now occupied by the micro-finance institutions (MFIs). What is IOB’s performance in this area?

IOB has always been a front-runner in extending micro-credit. More than 1,300 business correspondents (BCs) have been engaged by the bank. Training is being imparted to them to carry out their duties effectively. About 738 BCs have been trained until now through 36 programmes.........

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A fading growth story

.......There is growing recognition that many countries, including India, will find it difficult to fly as high as they did during the boom years. Reserve Bank of India governor D. Subbarao has already said that the rate at which the Indian economy can grow without generating high inflation is now around 1.5 percentage points lower than the potential in the years immediately preceding the global crisis..........

Read - Mint

HC intervention helps Ashok Amritraj get back FDs

......Amritraj said he was made to run from pillar to post when he approached the bank through Abid for the amount due to him on maturity of the FDs. He sent two letters to the bank and, after receiving no response, issued a notice dated August 31. Despite a communication from RBI through the office of Banking Ombudsman, no step was taken by the bank to make the payment, he said........

Read - BS 

Public banks profit to fall 18%: StanChart

The new corporate debt recast (CDR) norms issued by the Reserve Bank last week will have a massive impact on the profitability of public sector banks to the tune of 18 per cent, says a report by Standard Chartered Securities. However, the report says, the impact on private sector banks will be minimal, up to 2 per cent in profit terms.........

Read - Indian Express

Banking at doorsteps

 

The report, ‘‘Most villagers willing to pay a fee for banking at their doorsteps’’ (Business Line, July 24) brings out the mindset of the present consumer community in India. People want services at their convenience at nominal costs. While the Government and the RBI boast of inclusive banking, there are areas when there is no real access to banks. The lack of transport restricts a vast majority of villagers to move to the banks. People in the rural areas should be assured of the ATM services within a distance of 2-3 km from where they live. A part of the profits earned by the banks should be earmarked for rendering these services to the rural people. The introduction of ‘banking correspondent’ is a good idea to help the people, but security and integrity concerns should not be overlooked.

- C. P. Velayudhan Nair (HBL)

RBI studies cheap and quick remittance mode

Sending money home for millions of migrant labourers may become a lot cheaper and faster if the recommendations of an IIT panel are adopted by RBI and public sector banks. The IIT study has shown how existing infrastructure could be used for instant transfer of small amounts at a reasonable cost.........

Read.........

Loan pricing by banks comes under RBI lens

Just two years after its launch, the base rate — the benchmark reference rate for all bank loans — has come under the Reserve Bank of India’s scanner as the regulator feels the methodology of rate fixation has hindered the transmission of monetary policy measures................

Read - BS

A zero current account deficit for India?

........Talking about a new growth strategy, former RBI Governor Y.V. Reddy suggests the country should aim at a zero current account deficit in the medium-term. India is far too vulnerable to oil price and capital account shocks, the combined effect of which is to double the deficit, he says........

Read - Mint

NBFCs pare fund raising efforts

.....Any slowdown in growth first impacts freight movement and sales of heavy trucks are therefore considered an economic bellwether. In March, RBI mandated stringent norms for NBFCs raising funds for gold loans. This included the loan-to-value (LTV) being reduced to 60% from 75%, which came into effect immediately. This meant that borrowers will have to give more jewellery as collateral for the same loan amount. The LTV cap may result in slower growth for gold loan companies. .......

Read - Mint

Microlenders struggle for survival despite debt recast

.....these firms can survive only if banks convert their loans to equity and RBI relaxes norms related to provisions to cover bad loans in Andhra Pradesh. While a relaxation from the apex bank is widely expected, commercial banks are reluctant to convert their loans to equity or offer fresh funds fearing they will have to take a further hit on their exposure. RBI norms say MFIs need to make 100% provision on non-performing assets (NPAs) from 1 April 2013.......

.....

Read - Mint

RBI refuses to give priority lending tag to refinancing of HFC loans by banks

The Reserve Bank of India and the government may be on a collision course yet again, this time on the treatment of banks' refinancing of specialist mortgage lenders as priority sector lending. In the latest set of priority sector rules issued last week, the central bank has ignored the indirect priority sector lending clause for refinancing of housing finance companies' loans by banks, reversing its own circular three weeks ago...........

Read - ET

RBI rules out equal treatment for NBFCs with banks

The Reserve Bank of India (RBI) has declined to raise a cap of 60% of the value of ornaments that gold loan companies are allowed to lend to customers or bring commercial banks under the ambit of the ceiling, thus maintaining the edge of banks, which can lend more for the same pledged worth........

Read - Mint

Wrong solution

The RBI Deputy Governor K.C. Chakrabarty’s solution to ease the current account situation is pretty naive (RBI asks people to shed craze for yellow metal, July 23). If the gods can be pleased with a 2-carat ornament, why not present gold-plated jewellery? Isn’t it naive to ask a religious person who wears a 22-carat gold ornament to offer a 2-carat gold ornament to the gods? To ease the current account deficit, the government must look at ways to boost exports and provide incentives for the same, instead of cutting down gold consumption.

- Ramesh Thuravil, Hyderabad (Deccan Chronicle)

IDBI Mutual Fund launches gold fund

......Under the scheme, investors would not hold gold physically and the asset management company (AMC) would keep the equivalent amount of imported gold in its vault with Bank of Nova Scotia. "Gold is a great investment asset. We see investment in gold as a component of prudent diversification to hedge against uncertainties, inflation and for long-term benefits,".......

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The pensiveness of a lonely economist - T. C. A Srinivasa-Raghavan

....Economists are not generally given to speaking of each other in deeply reverential tones and Indian economists even less so than others, at least about fellow Indians. But as with all such rules of mean behaviour, there is one exception: I.G. Patel.........

Read - The Hindu

The finance ministry’s writ

In the recent times there has been much talk about the Union finance ministry trying to micromanage the affairs of the public sector banks. D. Subbarao, and Y. V. Reddy, the current and past governors of the Reserve Bank of India (RBI), have argued for the majority owner—the Government of India (GOI)—to exercise its control over the banks through the board process rather than through notifications. In this context it is useful to understand the constitution of the public sector bank boards to look at this dynamic......

Read - Mint

RBI’s monetary policy strategy meeting on Tuesday

.....“We will urge the RBI to revisit this issue (interest rates) to ensure that capital is available to the industry .. given the slowdown, there is every justification to ensure that Indian industry remains competitive and manufacturing grows,”....

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Udupi: Quarterly Meeting of District Level Review Committee for Banking Held

.....A Vijaya Kumar, lead district officer, RBI, Bangalore informed the latest instructions/guidelines issued by RBI on various issues related to banking activities. While reviewing the performance of banks in the district, he emphasized the need to achieve various mandatory targets by all the banks........

Read..........

RBI to issue Rs 5, 10 coins to commemorate 60 years of Parliament

NEW DELHI: To commemorate the ocassion of 60 years of Indian Parliament, the Reserve Bank will introduce Rs 5 and 10 denomination coins having the image of the Parliament House..........

Read - ET

What about polymer rupee notes?

.....What is important, however, is the tragic admission by Reserve Bank of India (RBI) that there is a 95% increase in counterfeit notes in the country over the past five years, most of which, regrettably, have come via Pakistan, and smuggled through the land borders of Nepal, Bangladesh and of course Pakistan. The smuggled counterfeit currency notes are of higher denominations, mostly in Rs500 and Rs1,000.
If polymer bank notes are introduced in India, this will eliminate the backlog of unusable worn out bank notes and combat counterfeiting menace.....

Read............

Common interview likely for posts in state-run banks

.....“We are talking with banks for a centralized system for interviews. Candidates will have to attend one common interview, which will be conducted by bank officers with the help of outside experts,” .....

Read - Mint

Get together of RBI Retirees at Bangalore

Some of our enterprising retiree friends have been arranging half yearly Get-together of RBI retirees from Bangalore since 2010. Fourth such function was arranged on 7th July, 2012 in the Community centre of Jayanagar Colony, Bangalore. In the latest meet, which was the fourth, the organizers decided to add another novel idea of "FELICITATION" to the participants who had completed 80 years. Seven such participants were FELICITATED with a shawl and idols of Lord Krishna and Ganesha. The meet is generally a GET TOGETHER with coffee, tea, biscuits followed by a lunch on cost sharing basis. In between, the participants share their experiences and if time permits also play a game of "Housie". The number of participants which was about 90-95 in the beginning has increased to about 130 in the latest meet. The group of organizers comprises six members, including a lady member, and the captain of the team is Sh. S.Venkat Subba Rao Retired General Manager from Bangalore. 

- Madan Gauria / D.Kasturi

Those who are interested can have a glimpse of the photos taken during the function by clicking at " View Album" below:

Click to view album........

Uttar Pradesh government planning to inject life into ailing cooperative banks

.....the state government would inject Rs 373 crore to brush up the functioning and meet the overhead cost of these banks as per the estimates made by the joint task force comprising officials from the RBI, NABARD and the registrar cooperative. As against the promised central assistance, Rs 629 crore had already been received and efforts made for the release of the remaining Rs 916 crore.......

Read...........

ICICI Bank organises customer outreach programme in Leh

...."ICICI Bank is pleased to partner with this initiative of Reserve Bank of India. Outreach programmes are an excellent way to help customers understand their rights. ICICI Bank strongly believes that empowered customers are truly responsible.".......

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Urban financial inclusion on Allahabad Bank radar

.....The Bank has been allotted 13 lead districts in UP spanning 1,200 villages. Under the Reserve Bank of India (RBI) mandate, the lead banker has the responsibility of coordinating with the government agencies and other banks for financial services and inclusion in that district....

Read........ 

Curbs on gold

This is with reference to the observations made by the RBI Deputy Governor, Dr K.C. Chakrabarthy, in “Curb offering gold to God, or as dowry” (Business Line, July 22) . The first will hurt the sentiments of the devotees, as the offerings to God should be the best, according to Hindu mythology. Second, dowry is a social evil. The RBI can speak with data in hand. But the common man is aware that large-scale purchases are made by the wealthy to divert unaccounted money. The Government came out with good tax strictures on gold sale but had to sulk under pressure from bullion merchants, who initially downed their shutters, only to open it later for fear of business loss during Akshaya Tritiya. . Subsequently, the Government withdrew all stringent levies. The best way to curb gold purchase is to bring all purchases, irrespective of the value, under the tax net. The RBI has rightly observed that there is no intrinsic value for gold. It can perhaps resort to market intervention by purchasing gold, which can have a stabilising effect.

- S. Veeraraghavan Madurai (HBL)

Longer debt recast line likely

Within the next two years, the number of cases referred for debt restructuring might go up substantially, with the Reserve Bank of India proposing a tougher regulatory regime in this regard by mid-2014, experts said. A senior executive with the Indian Banks’ Association said it was possible that banks would see a rush of proposals before the end of the presently more lenient regime. That would also increase the provisioning burden. He said IBA was yet to finalise views on the proposed regime.......

Red - BS 

RBI’s report on restructured loans shirks the issues

.......Most of the other recommendations also fail to address the seriousness of the issue at stake. For example, the Mahapatra Group makes recommendations about conversion of debt into preference or equity shares, cautioning that banks should only exceptionally convert their debt into preference shares. Preference shares are a non-voting as well as subordinated instrument. Conversion into, as an option, needs to take a futuristic look at the turnaround of the entity, and may be an excellent kicker. However, these are strategies which need to be exercised with great degree of caution. Making any list of rules for the action on the part of banks is like missing the intricacy of the point altogether.  In short, it may be likely that the RBI may accept the recommendations of the Mahapatra Group and banks may happily use restructuring as the device to keep their NPA levels cosmetically low.

Read............

Rural market is $1.8-trillion opportunity: HUL's Manwani

....Manawani also emphasised on sustainable sourcing and said the company is working in Karnataka, Punjab and Maharashtra with small tomato farmers to help them adopt sustainable agricultural practices. "In 2011, 60 per cent of tomatoes used in Kissan Ketchup in the country were from sustainable sources," he said. He further said the company's wide distribution reach can help the Reserve Bank in its financial inclusion plan. "Along with the government, banks and corporates can play a synergistic role in realising this plan. Companies like HUL have a wider distribution network than any government agency as our products reach almost every village in the country. And leveraging this high quality last-mile can help bring financial inclusion to every Indian," he said......

Read - ET

Priority lending norms will have little impact: Barclays

.....It also noted that two potentially adverse recommendations made by the MV Nair committee, on which the guidelines are based, like capping limit on securitisation and having a target on lending to small and marginal farmers, have not been adopted in the final guidelines.

Read...... 

Another headache for India: Weather-driven inflation!

Faced with slowing economic growth and a dangerously high balance of payments deficit, about the last thing India needs is food prices pushing inflation higher, but that is just what the weather gods are brewing...................

Read..........

Foreign banks ask for more branches

.....“We are all for economic development. But we will urge RBI to broaden the definition of the priority sector. Otherwise, we will have to serve segments where we have no expertise, said a senior banker with another large foreign bank. “It is like throwing away money blindly and hoping it will come back.”.......

Read...........

RBI issues norms for a new class in NBFCs

.....Here is another step to tighten regulations for non-banking finance companies. The Reserve Bank of India (RBI) on Monday issued separate set of guidelines for a newly introduced category christened as Non-Banking Financial Company-Factors. Under this new class, a company has to seek registration from the regulator with a minimum net owned fund (capital + reserve) of Rs 5 crore......

Read...........

RBI introduces new category of NBFCs

......However, the RBI said that these NBFCs should raise the asset/income percentage as required or unwind the factoring business within two years from the date of this notification. They would be granted CoR (Certificate of Registration) as NBFC-Factors only after they reached the required asset or income percentage, the RBI added.

Read - The Hindu

Foreign banks wary about new priority sector norms

The RBI’s priorty sector rules that require foreign banks in India to lend 40% of their loans to priority sector has shaken the big banks Standard Chartered, HSBC and Citi. What hurts is not the increase in the percentage of loans to priority sector, but that henceforth export loans won’t qualify as priority loans......

Read..........

Non-banking financial companies shut down branch offices in Ramgarh

RAMGARH: A number of non-banking financial companies (NBFCs) have started closing their branch offices in Ramgarh after receiving notices from district administration to produce permission from the Reserve Bank of India and the Union finance ministry as proof of having the right to collect deposits from investors........

Read - TOI

Textile companies seek Rs 12,000 crore debt recast

....RBI has asked banks to look into textile debt restructuring on a case-to-case basis. The debt restructuring process will kick off from the first week of August. The textile industry is hopeful that a two-year moratorium on the repayment of principal amount against term loan will provide enough liquidity and help them meet export orders at a time when the US market is showing slow signs of recovery.....

Read......

INFLATIONARY EXPECTATIONS DECLINE

.....Higher interest rates with a lag affect demand growth negatively, which, in its turn, is expected to impact inflation. However, this linkage is spread out over several quarters and happens to be extremely tentative. This made the current Economic Survey to admit that the linkage between monetary policy instruments and inflation is apparently “slender”. Anyone who has studied the time lag procedure in transmitting the impact of interest rate hike on inflation in India will find it difficult to disagree.........

Read - Mint

Patchy monsoon may push up inflation to 8%

....While the easing of overall inflation — based on the wholesale price index — has fuelled expectations that the Reserve Bank of India (RBI) may ease rates to support growth, economists now say the prospect of an interest rate cut in the July 31 monetary policy review appears to be dim.....

Read.......

India Inc waiting for 'good signals' on policy front: Assocham

NEW DELHI: Pointing out a decline in overall business confidence, industry body Assocham today said corporates which are braving negative perception may not be able to hold on bottomelines unless "good signals" emerge on the policy front.............

Read - ET

RBI to probe end use of agricultural loans

........The Reserve Bank of India (RBI) is expected to closely examine why ba­nks are failing to meet priority sector lending targets and the limits set for agricultural advances and we­a­ker sections of society. The end use of agr­i­c­u­ltural credit con­tracted un­der the interest subve­ntion scheme will be un­der the regulator’s scr­u­tiny, so that agricultural ad­vances at sp­e­cial rates of interest are directed at agriculture and not diverted for other purposes. A senior RBI official told Financial Chronicle that the end use of all bank credit should be examined to find out if promoters are diverting money. “But in agriculture, it is more important as government gives a subvention......

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Witnesses take the stand in Paazee scam case

COIMBATORE: The trial of the multi-crore financial fraud involving Paazee Forex Trading Firm began at The Tamil Nadu Protection of Interests of Depositors (TNPID) court here on Friday. Two officials from the Reserve Bank of India (RBI) appeared for cross examination to verify whether the tainted firm had sought permission from RBI as per the required norms. The firm's three directors were produced before the court. Shanthini Moolchand, Deputy General Manager of RBI, Mumbai, was prosecution witness number one who appeared before the court and Public Prosecutor (PP) S Natarajan cross examined her. She had explained that non-banking financial institutions needed permission from RBI, but Paazee forex trading firm failed to do so...........

Read - TOI

Last link with the erstwhile ACD of RBI lost.......

Finest gentleman

One of our dearest senior colleague Shri Sharad D.Rajhansa left for heavenly abode on Tuesday, 17^th July 2012 at Mumbai.  All of those who worked with him at Jaipur, Chandigarh and Mumbai Head Office of NABARD will always remember him as a finest gentleman.  He was known as clear headed executive ready to help and guide colleagues. His contribution to ACD (PCD/POD) would always be remembered.  Shri Rajhansa retired as Executive Director, NABARD.

- RAMESH WADHWA, Ex-DGM, NABARD

Ever smiling......

Shri Rajhansa joined RBI in 1963-64 as Rural Credit Officer in Agricultural Credit Department of RBI. Known as a very good human being, always smiling and ever willing to help anybody, Shri Rajhans was highly respected personality. He joined NABARD thereafter. He was dear to everyone who worked with him or was associated with him. Irrespective of their position, he would guide and help. He was always found smiling and even in most difficult and adverse situations he would keep his calm and solve the issues to the satisfaction of one and all. I have never seen him loosing temper.

- Subhash C. Wadhwa, Ex-NABARD

Last link with the erstwhile ACD of RBI lost.......

It was indeed a great shock to me to know the passing away of Shri. S.D. Rajhansa. He was more than a friend philosopher and guide to all of us. With his passing away, and with stalwarts like Shri. H.C.Agarwal, Shri. R. Sundarvardan and Shri. G.P.Bhave, also no more, NABARD has lost the last link with the erstwhile ACD of RBI. Not only his knowledge of the subject was vast, he was always patient and willing to share it with newcomers like us. He was equally famous for his fabulous handwriting, and clear and unambiguous orders. Shri. P.R.Nayak, the then Chairman regularly used to mark cases of almost all departments to him for expert guidance. At one stage, I had heard Shri. P.R.Nayak say, "Let us show this to Mr. Rajhansa. If he agrees I will agree with the proposal"

- Deepak Gore

Guiding force.......

Rajhansa Sir was one of the few knowledgeable and yet receptive, erudite and yet straightforward, strong willed and yet humble persons I have come across in life, and had the fortune of working with him.  I am deliberately writing "working with him" because no one ever worked above or below him - he was the real team man.  He was a no-nonsense man and yet had no ego.  He had the courage and conviction to stand up for his well analysed thoughts, and yet had the heart and mind to accept opposite views, and then equally stand-up with all the courage and conviction for the new idea. And because of these qualities, he was a guru to many young entrants like me. Rajahansa Sir will always be with me as a guiding force because he gave me the conviction that one need not be afraid when one is truthful in his approach.

- Prakash Bakshi, Chairman, NABARD

Milestone......

Rajhans with his coveted cool and smile is really a RAJ HANS with high qualities of head and heart which endeared him to all his colleagues. He has exemplary qualities of a thorough gentleman to the core – like a tree fully laden with fruits, ever bending downwards!!! At work, too, as an old guard / stalwart of ACD of RBI, he was clear and strong in his uncompromising views but not grudging the contrary views of junior or senior colleagues!!! His contribution to the policy development and operational manuals in both RBI (ACD) and NABARD will remain as great mile stones. 

- P V A Rama Rao

More and more banks making online transfer free

......recommended that without disturbing the back end, each bank move to a single universal IFSC that is known to all other banks. This would remove the requirement of identifying the bank and branch through an IFSC. This will make online transfers across banks and branches easier for consumers by just identifying the bank name and account number. “Single IFSC code for fund transfers will take some time to happen as at present, not all branches of banks allow electronic fund transfers. Banks are already working on this,”........

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Inauguration of Financial Literacy and Credit Counselling Centre

Inauguration of Financial Literacy and Credit Counselling Centre At Hyderabad by A.S.RAO, Regional Director ,RBI, Hyderabad

State Bank Hyderabad (SBH), State Bank of India(SBI ) and their sponsored regional rural banks in AP, jointly sponsored a society named Runa Viveka Aacharana with its Head quarters at State Bank of Hyderabad HO Hyderabad to establish FLCC In Lead Bank districts of SBH and SBI.  In terms of RBI Model scheme on FLCCs , Lead Banks have to open FLCCs in District Head quarters to start with and to be covered in mandals /Towns in phases.

ET

Finance ministry must leave banking regulation to Reserve Bank of India

........ Clearly, this does not augur well for the economy. If the household sector saves less, borrowing costs are unlikely to stay low. Cost of capital could actually move up. In an economy faced with flagging growth, prevalence of high borrowing costs is the last thing required. The finance ministry must think again, and leave banking regulation to the banking supervisor.

Read........

Micro-management of banks by Govt

“Occasionally, there are concerns over the government exercising its ownership rights not through the established channel which is board mechanism, but outside board (of directors),” so said, according to reports, the Governor of the Reserve Bank of India. He seems to have added that “I don’t think it is a good example of corporate governance”. Strong words those, coming from the Governor, who is generally given to understatement and not critical of government in public. Well deserved too, looking at the large number of circulars — threatening to be an avalanche — emanating from the Department of Financial Services on issues of day-to-day management of banks. By micro-managing public sector banks (PSBs), without being fully equipped to do so, the Government officials could end up harming them, through inappropriate advices as discussed in brief in this article.........

 

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PSU bank boards told to discuss only major issues

........The ministry’s growing interference in the working of public sector banks has invited criticism from RBI with governor D. Subbarao pointing out that the government should exert its ownership rights only through established channels like the boards. “In the next board meeting, we will put up an advisory to our board, following which this structure would be adopted,” said a chairman and managing director of a public sector bank. “Operationally, it will not change things much for us. If RBI has no issues with reporting items not being put up to the boards, then we are open to it.”

Read - Mint

Finance Ministry asks banks to prepare capital requirement plan

.........With the implementation of RBI capital regulation norms on Basel-III from January 1, 2013, there is a pressure on banks to have more equity capital. It is, therefore, felt that there is an urgent need to devise a robust strategy or plan for optimal utilisation of capital available with the public sector banks, sources added........

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RBI governor D Subbarao to meet experts on July 25 in run-up to monetary policy

....The RBI Technical Advisory Committee (TAC) on Monetary Policy is chaired by Governor D Subbarao while four Deputy Governors act as members to the committee. Besides, it also has two members from the RBI Central Board and five external members. The TAC, at its meeting in Mumbai, would advise the RBI in the light of the macroeconomic and monetary developments, and help RBI in strengthening the process of monetary policy formulation. A day before the TAC meeting, RBI chief would be chairing the monetary policy strategy meeting to firm up the policy view in the light of prevailing macro-economic conditions.........

Read - ET

My View on "Economy leaps, but the old limp - K Kanagasabapathy"

Kanagasabapathy's article is excellent. He has put the RBI pensioner's case, by just a small and appropriate reference towards the end of his article, in a larger and broader perspective. I used to be critical of the violent agitation of the unions while pressing for resolution of certain issues. Now, when I see the irresponsible stand of the GOI ( the incumbent President cannot also escape his share of the blame), I have gained a different perspective on the Management-Union relationship.

- A. Chandramouliswaran

Raghuram Rajan likely to be next CEA, to join by Dec

.....For Rajan, who earlier worked as chief economist at the International Monetary Fund, the CEA’s job will make him a key member of Manmohan Singh’s team of officers to oversee the management of the economy and economic policies. Rajan’s name had figured a few years earlier as one of the candidates to head the Reserve Bank of India. The government had opted for then finance secretary Duvvuri Subbarao, who completes his extended tenure next year.......

Read - BS

Under- belly of predatory financial system

..... Parenthetically, we should add that Dr Reddy, the then RBI Governor, successfully resisted the pressures to introduce such credit products in India. He was dubbed as a " Conservative". In this global financial crisis, the Indian financial system dominated by the pubic sector and untainted by financial " innovative" products stood rocklike........

Read - FPJ

Too little and very late

In the six months that elapsed between the Reserve Bank of India (RBI) setting up a working group (WG) on norms for debt restructuring and the submission of its recommendations, the levels of impairment and restructured debt have reached alarming levels............

Read - Mint

The price we must pay

....As it turns out, Subbarao, whose KRA is controlling prices, doesn’t know what he doesn’t know about inflation. Then, maybe his boss does? Well, our finance ministry isn’t any wiser on this score. A committee of economists and statisticians has tried to capture prices in over half the economy that escapes our wholesale and retail inflation indices, but it’s diabolically difficult to keep an eye out for every time someone somewhere calls the plumber to fix a leaky tap......

Read - Hindustan Times

The inflation conundrum

..........The Indian government’s outgoing chief economic adviser Kaushik Basu has said inflation is a “partially-understood discipline”. I bet he is a bit generous in his assessment. The ideal way of putting it could have been inflation in India is a “hardly understood” or a “much misunderstood” discipline. In the past three years, many—including Basu himself and India’s central bank—have gone wrong in their projections of the inflation trajectory. Now, the Reserve Bank of India (RBI) seems to be opening a new front on the inflation debate—what inflation trend should it look for to formulate monetary policy? Wholesale? Retail? Or, the so-called core, or non-food and non-oil, inflation? Which inflation index should RBI target?......

Read - Mint

Inflation risks dictate unchanged rates

As the Reserve Bank of India (RBI) limbers up for its next policy review on 31 July, the usual clamour for lower policy rates is making itself heard. The prime rationale for lower policy rates is, of course, the weakness of economic growth, which slipped to a nine-year low of 5.3% in the last quarter of the fiscal ended March...........

Read - Mint

High inflation, low growth: Is India stagflating?

.....To be sure, RBI has always maintained that it looks at all the price statistics including WPI, consumer price index (CPI) and GDP deflator. However, for all practical purposes, WPI has drawn more attention since better timeliness and availability of disaggregated data allow deeper analysis of inflation trends, a point that RBI Executive Director Deepak Mohanty had alluded to in a speech in 2010 (Measures of Inflation in India: Issues and Perspectives)..........

Read - ET 

ICICI Bank: On-the-go banking

ICICI bank has launched a new version of its mobile banking app — iMobile — which is packed with features designed to make the customers’ lives easier. When people are increasingly choosing to give up the joys of shopping to browse online and order without wasting time, mobile banking that saves people that dreaded trip to the bank can be a welcome relief for users..............

Read - BS

Muthoot Fincorp to revive gold financing scheme

....The gold loan firms are looking forward to some positive developments from the report by KUB Rao committee, which is expected to come by July-end. The committee was constituted to study the business of gold loans and its possible links to gold prices and lending practices.

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Goodbye To Diplomacy

A Reserve Banker in retirement has given an unusually frank and alarming picture of policy errors and their dire consequences. But his main point is cloaked in government-speak

There was a time when Rakesh Mohan held interesting views and expressed them in a forthright manner. That got him into some trouble. His short stint in the finance ministry was not a success. But eventually, the masters of bureaucracy found a way of taming him: they made him Deputy Governor of the Reserve Bank. He was in charge of monetary policy, but also spent much time chairing meetings, posing with visiting functionaries and giving sermons to bank trainees. It was difficult to be rash in the funereal environment of the Reserve Bank; but just in case he might break out, Mohan was given a strong staff of a secretary and two research assistants to keep him on the straight and narrow path. The precautions worked; it is difficult to think of a memorable speech from Mohan in his deputy gubernatorial role........

Read - Businessworld

‘Be helpful and courteous to others’

.......“Keeping your ears open is the best way to gain knowledge. We should always be helpful and courteous to others,” he said. Five toppers in Standard X CBSE Board Examinations at the RBI Staff Quarters School, Besant Nagar, — Sahla Fathima Thalappil, B.Aparna, P. Nishitha, A.R. Aiswarya and Yasmin Aphrose — were honoured on the occasion. K. Krishnamurthy, secretary, RBI Residents Welfare Association delivered the vote of thanks.

Read - The Hindu

My View on ‘Govt and banks — a con game at some level’

One wishes, those responsible for policy formulation in Delhi listen to the sane and balanced observations loaded with common sense the veteran central banker Dr Y V Reddy has made in this interview. Reinforcing his own views drawing from the experiences of I G Patel, he has conveyed the message that solutions to India’s economic problems need to be country-specific.  Having accepted the model of ‘mixed economy’, India had gone a long way developing several industries and institutions in public sector by the time the private-sector-oriented reforms were introduced in 1991. It was a genuine slip that policy-makers at the helm failed to take advantage of the opportunity to smoothly blend the initiatives in public and private sectors in the initial stages. An impression was given that private sector was to compete with public sector and not to complement its efforts. In the process, private sector managed to corner areas where quick results were possible and left all ‘dirty’ work for public sector. We have come a long way without looking back and the present pulls and pushes do not allow us to sit back and think dispassionately. In such situations, listening to veterans like Dr Reddy will do well. We have to concede that whether in public sector or in private sector, for ensuring overall progress, the country’s resources have to be managed judiciously and that is the context in which Dr Reddy bats for ‘adequate regulatory mechanisms’.

- M G Warrier, Mumbai

My View on "If I was RBI Governor, I would cut rates: Kaushik ...":

Luckily for the economy he was not. The whole problem in the economy is with the Government and it has miserably failed to contain inflation, fiscal deficit, current account deficit, subsdies, corruption, black money, and mal administration in the area of production,procurement,storage,transportation and marketing of particularly food products. It is easy to blame RBI as it does not enjoy full autonomy to give it back in the same tone. Had he been RBI Governor he also would have faced the same embarassment as the presnt Governor is facing beacuse of Government's apathy, mismanagement and interference where it is not expected or required.

- Dr. T.V. Gopalakrishnan

Economy leaps, but the old limp - K Kanagasabapathy

................The legislation is pending for several years. Within the organised government sector itself, and between private and public sectors and between small and medium and large sectors, no uniformity of approach in policy is lacking. For example, the Reserve Bank of India, an organisation attempting to protect people from the evil of inflation, is struggling to gain parity in pension matters vis-à-vis its owner, the Government. The plight of the organised sector is bad enough; there is no need to talk about the plight of the old in the unorganised sector and in rural areas................

Read more...........

The article has captured well the plight of old people in this growing economy. Old aged people get ignored economically, socially and emotionally has been well brought out. Even in the organised sector the retired people suffer for want of adequate compensation and they are unable to make both ends meet,leave alone taking care of health and living with dignity. The live example is the retired employees of the Reserve Bank of India itself which knows the pain that inflation can inflict on the poor masses. The RBI has ignored and deserted its own retired officials at the dictates of the Government although they are entitled to enjoy the retirement benefits on par with central government officials. Seeing the plight of RBI own retired employees who suffer from all imaginable problems which include lack of pension and health care benefits,how the nation can take care of growing number of old people in the economy is a million dollar question? Ignore them is the best policy of the Govt.

-  Dr.T.V.Gopalakrishnan

RBI pensioners are a true example of Macbeth's plight--"Cribbed,Cabined and Confined". Their just demands are cruelly denied at the behest of a recalcitrant Government--of which RBI has become a true--"H M V "-- HIS MASTER'S VOICE. Thus, pensioners are languishing for denial of their Pension Updation. In a letter to the Governor I had given a list of 50 members of the staff who have died --in the last one year--denied their enhanced pension. The Bank has got us embroiled in a Court case and it a painful sight to witness eighty-year old pensioners trekking at this age to the Mumbai High Court.The Governor wailed two days ago that he pays his barber Rs 150 for a haircut. He is not aware that the pensioners of RBI go the roadside barber for a Rs 15 haircut.Their pitiable Pension does not permit a higher payment. If you have tears, said Mark Antony, in a diffrent context, prepare to shed them now. Shed your tears for the RBI Pensioners--who have given their "Blood, Toil,Tears and Sweat" to this magnificent institution.

Regards,

P.P.Ramachandran

Curb offering gold to God, or as dowry: RBI’s Chakrabarty

........“Gold has no intrinsic value and yet the demand for it keeps rising. We must remember that offering gold as dowry or to God must be reduced. Indians must offer 2 karat gold instead of 24 karat for religious purposes,” Dr Chakrabarty said at a regional banking summit. Emphasising the need for a social revolution in India, the Deputy Governor said “the culture of wearing gold ornaments was when we were a rich country but now that we are poor, we cannot continue the same.” He observed that the yellow metal cannot fetch returns without selling it. Usually, selling gold is the last resort for Indians.........

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Chakrabarty defends higher priority sector target for foreign banks

Mumbai: Defending the decision to put foreign lenders with a substantial presence at par with their domestic counterparts on priority sector lending, Reserve Bank Deputy Governor KC Chakrabarty Saturday said the MNC banks must play their role in the nation's development. "You must participate in the development process of the country if you want to think big," Chakrabarty told reporters on the sidelines of an ICAI event here....................

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We look into all aspects of entities regulated by us: RBI

The Reserve Bank today said it is looking into all aspects of the entities it regulates, a comment that comes in the wake of HSBC being pulled up by the US Senate for failing to prevent money laundering activities. In response to a query on the money laundering issues involving HSBC, Reserve Bank of India Deputy Governor K C Chakrabarty said that as a regulator, RBI looks into all the aspects of the entities it regulates...........

Read - ET

Meeting RBI panel recommendations won’t be a challenge: S.L. Bansal

S.L. Bansal, CMD, Oriental Bank of Commerce, speaks to NDTV Profit on the RBI panel’s recommendations on the new potential regulations for restructures loans.....

RBI's additional provisioning norm quite steep, says BoB

Q: The Mahapatra Committee on corporate debt restructuring, the working group has put out its report and one of the recommendations is that the provisioning for standard assets after they are restructured should be 5% up from the current 2% in two stages, 3.5% in the first year and 5% in the second year. What would be your reactions to this? Would it be a lot of pain?

 

A: It looks to be quite steep at a time when there is a lot of restructuring happening in the present economic scenario amidst the slowdown that has happened in various sectors and the policy logjam or whatever is happening. So 5% will be quite a burden when there is a lot of pressure on profits and the capability of the banker. But from the RBI's angle, they perhaps feel that the present economic slowdown and the likelihood of the account slipping into NPAs at some point of time maybe a required cushion to be built into the restructured accounts, into the asset. But we must not ........

 

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Corporates, small units may flock to banks to restructure loans

......Once the RBI disallows regulatory forbearance, banks may balk at restructuring loans as they will not have the benefit of relaxed asset classification and provisioning norms, say bankers. The RBI working group, which is working at aligning prudential guidelines on restructuring of loans in India with international prudential measures, has said that in view of the current domestic and global economic situation, the RBI may get banks to adopt the global best practices on loan restructuring after two years.......

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Now, forgers shift focus to Rs 1,000 notes

Counterfeiters are increasingly pushing fake notes of higher denominations into the market, with a 54% rise in detection of fake Rs 1,000 notes in the banking sector, the Reserve Bank of India (RBI) has said. The total value of fake currency seized by banks in 2011-12 amounted to Rs 24.7 crore...........

Read - TOI

Indian national held with banned Indian notes

BHADRAPUR: An Indian national has been arrested for carrying banned Indian currency notes. Police held the Indian national for carrying 540 notes of Rs 500 denominations. Use of Indian currency notes of Rs 1,000 and Rs 500 is banned in Nepal. Rama Kolti of Siligudhi, India, was arrested from Bhadrapur Aiport while he was all set to fly to Kathmandu on Thursday. He has been sent to Kathmandu for necessary actions, said police.

The Himalayan Times

India’S Journey on the Road to Financial Inclusion - Alxa Robert

.....A recent directive from Reserve Bank of India has acknowledged the need of stepping up opening of branches in rural areas so as to improve banking penetration and financial inclusion. Banks have been advised as part of risk management to adopt ICT solutions including biometric identification of the customer. The domestic Scheduled Commercial Banks (SCBs) have been directed to allocate at least 25 percent of the total number of branches to be opened during a year to unbanked rural centres (Tier 5 & Tier 6 centres). When it comes to insurance, we have financial exclusion on an even larger scale. Less than 20 percent of the population has any kind of life insurance...........

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Women engaged in MFI biz have higher income: Study

Kochi : .........The main aim of the study was to understand the key issues in micro-finance through various models, among others, SCMS Group Director Radha Thevannor said, while releasing the study here. "Women households engaged in micro enterprise activities were found to have higher income in India and Ghana on account of certain favourable policy directions from government agencies like RBI and organised institutions like SEWA and Kudumbasree," T Arun, Director, Institute of Global Finance and Development, Lancashire Business School told reporters..........

Read - Manorama

When to prepay home loan

....With the Reserve Bank of India changing the loan-to-value ratio from to 80 per cent, buyers have to cough up at least 20 per cent of the property price. In addition, the apex bank has also said that banks should not include registration and stamp duty fees in the loan-to-value, thereby increasing the demand for cash substantially. And then, there is the loan repayment aspect as well which one has to provide for a number of years..........

Read - BS

If I was RBI Governor, I would cut rates: Kaushik Basu

Gautam Chikermane: If you were RBI governor, would you cut rates today?

Kaushik Basu: If that happened, I would have far more access to research than I have now. So answering this question in advance is a hazard, like cutting interest rates in the middle of an inflation. But, on balance, my answer is yes. I would risk the hazard and cut rates.

Read - Hindustan Times

RBI officials depose before court

Coimbatore, July 20 (PTI) Two senior RBI officials today deposed before a Court here, which is trying the Rs 839 crore Pazee Forex Trading Scam, in which thousands of investors were cheated. H C Rathi, AGM, RBI, Mumbai and Chandini, DGM, RBI,Chennai told the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) (TNPID) Court that RBI had not filed any complaints or cases, including under Foreign Exchange, against the firm.....................

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Inflation due to govt, industry — not RBI - M.Y.Khan

...........We have to realise that inflation is a baby of multiple factors such as: GDP growth, excess money supply, short supply of goods in the market, manipulation in the market, misconceived expectations, exchange rate movement, depreciation of the Indian currency due to large current account deficit, cost-push factor, rise in per capita income and increase in demand due to shifting of population to higher income bracket, and decline in poverty ratio.The Reserve Bank does not have multiple instruments to control all these variables. It is the government which has to grapple with the complexities of inflation, rather than hold the Reserve Bank responsible for the rise in inflation rate.

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‘Govt and banks — a con game at some level’

Dr Y.V. Reddy makes a public appearance whenever he is delivering a lecture or writing/releasing a book. When he was in Mumbai earlier this week, to release a compilation of I.G. Patel’s essays, it was a good opportunity to get his views on some current issues. Retirement from the Reserve Bank of India has not dimmed his memory, his quick thinking or his gift of picking the right phrase to articulate his thoughts. He continues a busy career as a globe-trotting advisor even as he holds an emeritus professor’s chair at the University of Hyderabad. Most recently he flagged a number of important issues in his landmark lecture a month ago (Per Jacobsson Foundation Lecture at Basel). He makes reference to some of those issues in this interview...........

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Golden escape route

.....Although it is true that a third of the global demand for gold is from India, the extraordinary penchant for gold (in preference to other forms of savings) wasn’t always there. In 2001-02, for instance, the fresh money that went into small savings avenues was more than three times the value of gold imports; now gold pips small savings. Shares and mutual funds too have been preferred options in some past years. The dramatic increase in the preference for gold is therefore new. And the former Reserve Bank governor, Y V Reddy, put his finger on the problem last week when he said at a lecture in New Delhi that the system has simply not given savers a fair deal.........

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RBI unlikey to ease monetary policy soon

...."In the likely absence of any meaningful fiscal consolidation, RBI will be reluctant to cut interest rates, as without effective fiscal/structural measures growth may not be helped by lower rates while inflation could shoot up."........

Read - ET

Reserve Bank of India plans to tighten the debt restructuring norms

.....RBI working group headed by Deputy Governor Anand Sinha has said that RBI could do away with the regulatory forbearance regarding asset classification, provisioning and capital adequacy on restructuring of loan and advances in line with the norms followed internationally. This would means that banks will have to classify an asset as substandard and make provisions on it the moment it is restructured........

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RBI to issue Rs5 coins bearing ICMR emblem

The Reserve Bank of India (RBI) will shortly put into circulation rupee five denomination coins bearing the emblem of Indian Council Medical Research (ICMR)........

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Fake notes with face value over Rs 101 cr detected: RTI reply

.....The RBI said it has instructed all scheduled banks that bank notes in denominations of Rs 100 and above should be reissued by the banks over their counters or through ATMs only if these banknotes are duly checked for authenticity/ genuineness and fitness by machines........

Read - BS

Printing that small note costs big money

....In response to the RTI query on the average life of currency notes, the RBI said, “No study has been done so far in this regard. However, conventional wisdom indicates that smaller denomination notes have a lower average life than banknotes of higher denomination (100, 500, 1,000).” ........

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Eulogising mediocrity – from cricketers to RBI governors

...........Anyway, I always listen to central bankers’ interviews with a sense of humour. How the greatest price manipulators in the history of commerce (which is what setting “interest rates” really does) can sit and talk with a straight face about reforms, markets and liberalisation is a great mystery. But the probable answer is that, with the exception of Alan Greenspan, most central bankers are Keynesian in their beliefs and so they are probably just lip-synching. But there is hope! As Reddy showed, once can always learn.

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Personal guarantee must before loan restructuring: RBI panel

.....The RBI had in January set up the panel to review the existing prudential guidelines on restructuring of advances by banks and financial institutions and suggest modifications taking into account the best international practices and accounting standards. The panel, which is headed by RBI Executive Director B Mahapatra, said corporate guarantee should not be considered as a substitute for the promoters' personal guarantee...........

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FII investment in MindTree hits trigger limit: RBI

....The Reserve Bank today said FII investment in MindTree has reached the trigger limit under portfolio investment scheme and purchase of further equity shares of company will require its approval. "...The aggregate net purchases of equity shares in Mindtree Ltd by Foreign Institutional Investors (FIIs) in the primary/secondary markets under Portfolio Investment Scheme (PIS) have reached the trigger limit," the RBI said in a notification today. Therefore, "further purchases of equity shares of this company would be allowed only after obtaining prior approval of the RBI," it said.........

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Priority sector credit rules for large foreign banks, too

....In the draft norms, the banking regulator had said these loans would be classified under the priority sector up to a maximum of five per cent of adjusted net bank credit or credit equivalent of off-balance sheet exposure, whichever was higher. In today’s revised guidelines, RBI removed this cap and said “investments by banks in securitised assets, outright purchases of loans and assignments to be eligible for classification under priority sector, provided the underlying assets qualify for priority sector treatment and the interest rate charged to the ultimate borrower by the originating entity does not exceed the base rate of such bank plus eight per cent per annum.”.

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Divert 40% loans to priority sector: RBI to some foreign banks

Foreign banks with more than 20 branches in India will have to channel 40% of their lending to the priority sector, which includes agriculture and small and medium businesses, in five years, the Reserve Bank of India (RBI) said on Friday...............

Read - Mint

Where are the farmers in the great economy debate?

.........When the RBI Governor refuses to cut rates citing inflation, there’s a collective sigh of disappointment from the business class. The reaction follows the similar pattern when political parties stall bills that certain sections believe could usher in progress..........

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