Achieving the indirect agriculture lending target under the revised Reserve Bank of India guidelines on priority sector lending may prove to be an uphill task for banks.......
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Friday, July 27, 2012
RBI to amend norms governing NBFC-MFIs
.........Following feedback received from stakeholders, the RBI will amend some directions governing MFIs, said Mr P. Vijaya Bhaskar, Executive Director, RBI, at a seminar organised by the Microfinance Institutions Network (MFIN). The directions were issued last December. Mr Vijaya Bhaskar assured the MFI representatives that their institutions were an integral part of the RBI’s financial inclusion programme.......
Guidelines on investments of surplus funds by CPSE's soon
.....The Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), UTI Mutual Funds and SBI Mutual Funds have made presentations to the committee in regard to investment of surplus funds by CPSEs. The RBI has suggested to the panel various investment options such as mutual funds and government securities wherein these PSUs can invest their money, the official said......
Yet another blow for Indian banks?
......In order to prudently recognise the inherent risks in existing assets classified as standard on restructuring, an RBI working group has called for additional provisioning on these assets. It states that the provision requirement on such existing accounts should be increased from the present 2% to 5% in a phased manner over a two-year period. Thus provision will be increased to 3.5% in the first year and 5% in the second year. However, in cases of new restructuring of standard asset, the working group recommends that a 5% provision should be made with immediate effect. If this move is implemented, state run banks will see a strain in profits, while private sector banks will be relatively sheltered.......
Mobile security for Andriod users
.......It further added that there has been an increase in mobile banking. According to the Reserve Bank of India (RBI), banking through mobiles increased five-fold to Rs 1,140.6 crore between January and May compared with the same period a year ago. These trends are driving the need for mobile security measures to protect information for enterprises, businesses and small and medium businesses (SMB)..........
Why treat big defaulters with kid gloves?
..........The RBI has done well to call upon the banks to insist upon promoters coughing up 15 per cent in the diminution in the value of the undertaking, or 2 per cent or the loan, whichever is higher, as a price for the rescue act. But banks should opt for coercive proceedings under the securitisation law, rather than yield to the mirage of CDR.
Ebbing fortunes for Indian banks
.........Policy uncertainty and high rates also mean that investment is on hold – how many projects can be so lucrative as to return a reasonable margin after paying between 14 per cent and 16 per cent for money borrowed from the banks? The Reserve Bank of India keeps interest rates high to support the rupee and attempt to keep inflation in check. But many Indians feel the policy is misguided and serves to discourage badly needed investment.......
Read.........
Read.........
Thursday, July 26, 2012
Financial Services Secretary DK Mittal defends repeated directives to banks
Chidambaram: An easy person to categorise - Y.S.P.Thorat
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| Y S P Thorat Chief Executive Officer, Rajiv Gandhi Charitable Trust, Former Executive Director, RBI and former Chairman, NABARD |
.....The first time I met him, which despite his prodigious memory I am sure he won’t remember, was when during his first tenure as Finance Minister, I was asked to brief him from the Reserve Bank of India (RBI) side on a Parliamentary question together with the concerned Joint Secretary. On the earlier day both of us met, went through the background papers, tied up our briefing notes and went off to the Delhi Gymkhana for the evening. Early next morning we were shown into the FM’s office together with a colleague from NABARD.........
Pranab Mukherjee likely to be interactive and not an aloof president
......Pranab Mukherjee has also demonstrated a rare ability to read the writing on the wall. This was evident in his agreeing to work under Prime Minister Manmohan Singh, which, given his seniority and experience, could not have been easy. As finance minister in the early eighties , Mukherjee had signed the order appointing Manmohan Singh as the RBI Governor. Yet he stood solidly behind the PM as Singh increasingly resorted to running the government through GOMs and EGOMs, most of them headed by Mukherjee . He showed this realism once again in 2010 accepting that he wouldn't be able to become prime minister, and turning his attention to Raisina Hills......
RBI not keen on banking licences for corporates
.........Although the RBI has not officially said it is against corporates getting banking licence, a major factor that has come in the way could be the stipulation that RBI will give weightage to “sound credentials and integrity” of the applicants. The RBI had earlier said that promoters and promoter groups with diversified ownership, sound credentials and integrity that have a successful track record for at least 10 years in running their businesses should be eligible to promote banks. The catch, however, is that the RBI’s decision will also be guided by feedback from other regulators and agencies like Income Tax Department, CBI and Enforcement Directorate........
25 villages to come under financial inclusion programme
........Speaking at the quarterly meeting of the district-level review committee for banking in Udupi district here, Mr. Subramani said the financial inclusion programme was being monitored closely by the Union Government and the Reserve Bank of India (RBI). The 25 villages had been identified based on service area approach and the banks concerned had been informed about it........
My View on "RBI to hire up 6 companies to overhaul HR practices"
This is a step in the right direction. Recent years saw several flaws in HR Management in the central bank. Adhoc recruitment of Executive Interns without planning their future deployment or absorption, succumbing to pressure on promotion policies, not being able to convince GOI on need to implement competitive remuneration packages for recruiting and retaining efficient officers, failure to decide on updation of retirement benefits at least on par with GOi are just some examples. When it comes to infusing professionalism in specialised areas like supervision and forex and debt management RBI is facing several constraints, many of them emanating from its failure to argue with North Block as Finance Ministry shows an attitude akin to master-servant relationshp. In all these, as is normal for Indians, if an 'external' consultant tells in a language common man won't understand, RBI Governor will be able to convince his bosses just by quoting from consultant's reports.
- M G Warrier
Obituary
Mr. K. Venkatarama Ayyar (K.V. Ayyar), Former Jt. Chief Officer, RBI passed away on 21.07.2012 in Mumbai. Phone: 022-2506 5242
- The Hindu
Mrs. Srinivasan d/o late K.V.Ayyar told that he joined RBI in 1946-47. He held the post of Joint Chief Officer in DBOD. Thereafter he was on deputation with Indian Bank and retired from there in 1980.
RBI raises red flag on Aphro Trust
.......A release by the RBI Department of Non-banking Supervision, Chennai Regional Office, stated that it had came to their notice that the Trust and its associates functioning from 27/49, 5th Main road, 3rd layout, Teachers Colony, Kolathur, Chennai 600 099, was unauthorisedly using its name to claim that loans were extended under RBI guidelines.........
‘Many coop. banks have accepted pay panel report’
...........Mr. Patil said that urban cooperative banks in Karnataka had achieved 95 to 96 per cent loan recovery.Ophthalmic surgeon M.M. Joshi said that with the advancement of technology, cooperative banks too had registered progress through proper use of technology. Officials of the Reserve Bank of India, Bangalore, R. Sequeira and Usha, and the former Minister A.M. Hindasgeri were present.
Consumer forums can award damages more than what is sought
........The ICICI Bank had filed three separate appeals in the State Commission challenging the total compensation awarded by the district forum in the separate complaints filed by Ramesh Sharma, saying he had sought only Rs 1,00,000 as damages but the forum had granted him Rs 1.64 lakh on the basis of RBI guidelines. "We need not therefore reduce the amount of compensation because the said amount is in accordance with the directions of the Reserve Bank of India (RBI)," the bench presided by Justice Barkat Ali Zaidi said..........
Cut-rate commissions quoted for rural banking
......“Financial inclusion programmes should be implemented on commercial lines and not on a charity basis,” said K C Chakraborty, Reserve Bank of India deputy governor, at a recent panel discussion in Washington. “It is important that banking with the poor is perceived and pursued as a sustainable and viable business model,” he added........
RBI loan recast plans will increase transparency: Fitch
Global rating agency Fitch today said RBI proposals on treatment of restructured loans would increase transparency and be positive for the Indian banking system amid economic slowdown. Among others, a RBI working group recently recommended increased loan-loss provisions and ultimately ending forbearance on asset classification, and instead recognising these stressed assets as non-performing in line with internationally practices......
India needs to do away with regulatory forbearance on restructured assets
......The recommendation that the RBI may (must?) do away with regulatory forbearance regarding asset classification, provisioning and capital adequacy on restructuring of loans does both. It brings our norms on asset classification on par with developed market standards. And it ensures that powerful promoters are not able to arm-twist banks into throwing good money after bad.........
RBI likely to relax provisioning guidelines for microlenders
......Offering the MFIs a possible reprieve, the RBI is considering allowing them to make provisions against their bad loans in Andhra Pradesh over a period of three to four years, said one of the two persons quoted above. Industry officials said that such a move will only be a temporary solution.............
To loosen or not to loosen policy - A Seshan
.........The central bank’s dilemma is whether or not to loosen its policy. Commercial banks and the corporates look at monetary policy from their sectoral angles whereas the RBI has to take a macroview. In this context, the statement of Aditya Puri of HDFC Bank is refreshing. He said: “'I don't think with this inflation rate you can expect a rate cut, ….. The monetary policy cannot be the basic panacea for all ills.”...........
RBI can’t deny rate cuts for long
.....The Reserve Bank of India’s (RBI) strong anti-inflation rhetoric, after it decided to hold policy rates steady in June, has led to a toning down of expectations from the monetary policy review in July. To an extent, the markets have moderated their expectations of monetary easing over the remaining months of FY2013 as well. I, however, feel that given the widespread weakness in the economy, internally RBI must be in a far bigger dilemma than what recent public statements suggest. As such, the upcoming policy decision remains in fine balance and........
Income versus inflation
Most analysts, including in RBI, will tell you inflation is India’s biggest problem right now; indeed, RBI Governor Duvvuri Subbarao was on record recently as saying inflation was at a level where it was hurting economic growth. If inflation is allowed to go unchecked, the argument goes, inflationary expectations get embedded into every economic player’s actions, and runaway inflation is the result. No economy, the experts will tell you, has grown in the long run without having inflation under control.......
Worries over growth
...... Perhaps the RBI needs to revisit some of its assumptions and adopt a stance that prevents further deterioration in growth. Concerns over growth are becoming serious and the RBI should be seen to be addressing them as well.
Read - BS
Read - BS
India’s growth and inflation in the time of drought
......If, on the other hand, the government does try and reduce the deficit, it will lower consumption, thus reducing growth. On the positive side, though, the hope is that it might prompt the Reserve Bank of India to reduce rates, supporting growth in the interest rate-sensitive sectors.
Read - Mint
Read - Mint
Bonds yields rise as rate cut hopes fade further
......Traders had already started pricing in the prospect the Reserve Bank of India will fight inflation over boosting growth in its July 31 decision. However, those expectations were further cemented after Pronab Sen, principal adviser to India's Planning Commission, told newswire Dow Jones the RBI was likely to hold rates steady next week, adding the government needed to cut subsidies to improve confidence about its fiscal health. The RBI is independent of the government, and Sen does not have a direct influence on monetary policy, but the views nonetheless hit already fragile market sentiment........
Wednesday, July 25, 2012
RBI to hire up to 6 companies to overhaul HR practices
Private firms to help RBI frame, implement and deliver integrated HR solutions in the areas of policies, processes and systems
The Reserve Bank plans to rope in outside consultants to overhaul its human resource practices, a move that would affect its nearly 18,000 employees. The central bank will form a panel of up to six independent professional firms to help RBI in framing, implementing and delivering integrated HR solutions in the areas of HR policies, processes and systems, among others..........
Growth rate slowing down faster than expected: Saugata Bhattacharya, Axis Bank
RBI chief rues corporate governance deficit in public sector banks. Is there no remedy?
.....There is, therefore, a need for change in the present composition of the boards by splitting the post of chairman and managing director in nationalised banks as well. The RBI should have the unfettered authority to appoint a thorough professional as the non-executive chairman of every PSB. The central bank should, however, ensure that this is not meant to be a back-door entry for politicians to enter the banks, but an opportunity to cleanse the system and create an independent professional board for every bank. This could substantially improve corporate governance at the board level, thus helping to prevent unethical practices and unwarranted interferences in the operations of the PSBs.......
Markets bet on Subbarao surprise
Reserve Bank of India (RBI) Governor Duvvuri Subbarao has made a series of hawkish statements since the mid-quarter review on June 18, but market participants are still betting on the governor’s inclination to surprise the market. While the overall feeling still is that the central bank will hold the rate during the first quarter review of the monetary policy, scheduled on July 31, many feel there is still the chance of a rate cut...........
Don't put the cart before the horse
.....In cricket, they say you are judged as much by the deliveries you let go as you are by the deliveries you play at. In that spirit, RBI needs to sit this one out. That will add to the pressure on the government to act first. Anything else will be tantamount to putting the cart before the horse.
One eye on Delhi, one on the skies
.....The implication of all of this, in our view, is that the RBI will remain cautious about cutting rates. Cutting rates at this stage would, at best, tease up demand, but do little to improve the supply side. In turn, this could lift inflation pressures. It may also be worth keeping the powder dry to have firepower in the event global conditions take another leg down.....
Instead of customers, banks may bear fake notes loss
The common man who unknowingly comes in possession of fake currency is left a harried soul. It's only when fake notes are detected in the money withdrawn from a bank's counter that one gets compensated. But, in cases where a customer fails to detect a fake note at the bank's counter, the bank not only refuses to compensate the fake currency but may also take legal action against such gullible customer. To save customers from the ordeal, the Reserve Bank of India (RBI) has asked banks to put strict provisions in place to check the menace of fake notes. "The recommendations have been made to address the entire gamut of issues concerning the counterfeit currency," said an official of RBI, Mumbai..........
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............. Global convergence of banking regulations and its impact on the Indian banking system - G Padmanabhan
.....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.......
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.........
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..........
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........
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.........
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.........
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................
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........
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. .......
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.......
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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...........
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........
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,".......
Tuesday, July 24, 2012
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.........
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......
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,”....
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........
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..........
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.....
If polymer bank notes are introduced in India, this will eliminate the backlog of unusable worn out bank notes and combat counterfeiting menace.....
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,” .....
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:
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.......
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.".......
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....
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.......
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.
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......
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.
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...................
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.”.......
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......
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.
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......
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........
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.....
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.........
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.....
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.............
Monday, July 23, 2012
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......
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...........
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, 17th 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.
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,”........
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.
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.........
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.”
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........
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.........
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.......
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........
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............
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......
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?......
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...........
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)..........
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..............
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.
Sunday, July 22, 2012
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........
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