HC asks Centre, SEBI to reply to plea on automated trading

....Besides Sebi and Finance Ministry, Justice Rajiv Shakdher has also issued notices to Reserve Bank of India, BSE and NSE on the plea alleging algorithmic trading put small investors at a disadvantage in comparison to big brokers and FIIs. .....

Read - BS 

RBI Executive Director promotes financial inclusion

Speech by Deepak Mohanty focuses on need for more financial inclusion in rural areas; says the availability of credit is more important than the cost...... 

Deepak Mohanty, an Executive Director of the Reserve Bank of India, promoted financial inclusion throughout the country in a speech delivered at a Bhubaneswar conference on August 20. Mohanty believes achieving inclusive growth means bringing the poor and underprivileged sections of society within the banking fold "with a view to improving the well-being of our society". The number of banking outlets in villages with populations of more than 2,000 people trebled between March 2010 and March 2012 to 82,300, and Mohanty says the central bank will now tackle provision to smaller communities.  To make more credit available, banks have been given complete freedom to price their advances so that lending in the rural areas is a commercial proposition, Mohanty says. He adds that at this stage of development, the availability of credit is more important than the cost.

Click here to read the speech.

Goa to Goa – changed contours of the Indian Forex Markets – new realities and priorities - G Padmanabhan

Inaugural address by Mr G Padmanabhan, Executive Director of the Reserve Bank of India, at the 23rd Annual Forex Assembly of the Forex Association of India, Goa, 18 August 2012

....Volatility is an unavoidable feature of all financial markets and heightened volatility in the forex market that we witness today is neither unprecedented nor unexpected. All economic agents with currency risk will have to frame a conscious risk management policy to cope with the impact of the volatility on their cost, revenue and profit. Even as the Reserve Bank strives to maintain orderly conditions in the forex market, certain behavioral issues that tend to accentuate volatility have to be understood by all market participants and factored into their response and risk management strategy....

Read........

India Inc using hedging instruments to trigger instability: RBI

The Reserve Bank of India (RBI) has come down heavily on India Inc for not prudently using hedging tools available to them. Rather, the hedging instruments are often used to trigger instability in the market. Commenting on whether the corporate sector had failed to take a “well-deliberated and calculated call”, when it came to hedging, RBI’s Executive Director, G Padmanabhan, said the corporate sector had become complacent regarding the rupee’s stability, particularly during 2009-2011 when the Indian currency was range-bound between 44-46 a dollar............

Read - BS

SBI wins contest

Thiruvananthapuram : The State Bank of India (SBI) won the inter-bank ‘aththapookalam’ contest organised by the NABARD Recreation Club here on Sunday.  The State Bank of Travancore (SBT) and the Reserve Bank of India (RBI) won the second and third places respectively. Eight banks participated in the contest held at the Regional Office here. RBI Regional Director Salim Gangadharan distributed the prizes. NABARD general manager K R Rao was also present.

IBN Live

About 10 lakh bank employees to go on strike on 22-23 August

Employees from around 47 banks are planning to go on a two-day strike on 22nd-23rd August to protest the proposed reforms in the banking sector and outsourcing of jobs. Around 10 lakh bank employees and officers working in 27 public sector banks including State Bank of India (SBI) and 12 old generation private sector banks and eight foreign banks will resort to two days nationwide strike on 22nd and 23rd August, says United Forum of Bank Unions (UFBU)............

Read.........

Are Indian banks heading for a crisis?

.... all restructured assets turn bad, then gross NPAs as a percentage of loans assets jump from 2.94% to 7.61%. This will not happen. By the Reserve Bank of India’s estimate, about 20% of restructured assets generally turn bad. If indeed that happens, the gross NPA ratio rises to 3.87%, and if 30% of the restructured assets turn bad, it reaches 4.34%...........

Read - Mint

Banks game for disclosing names of those failing to pay up money raised from public

....Banking regulator Reserve Bank of India has similar information about defaulting companies categorised as bad, defaulting and non-performing assets. This information is also maintained by the credit information companies. But it is shared only among banks and is not in the public domain....... 

Read - BS

Capital emerges as hub of fake notes racket

NEW DELHI: The capital seems to have become the favorite haunt for counterfeiters. In the first six months of 2012, the security agencies have recovered fake currency with a face value of over Rs 4.15 crore against last year's Rs 4.08 crore. In 2009 and 2010, the recoveries amounted to Rs 3.27 crore and Rs 3.01 crore, states Reserve Bank of India ( RBI) while replying to an RTI application filed by activist S C Aggarwal. The data shows that since last year, Delhi has been emerging as the main hub of fake currency circulation, replacing earlier key areas like Maharashtra, Uttar Pradesh, Andhra Pradesh and West Bengal............

Read - TOI

'10 agents control coins flow in city'

........The Jaipur office of RBI claims that they have taken steps to monitor and meet the demand for coins in different parts of Rajasthan. "Entry of general public is regulated after verification of their identities. Monitoring of the exchange hall operations is also scrupulously undertaken to ensure that services are not utilized by frequent visitors," an RBI official said. To deal with the dearth of coins, RBI also organized coin mela recently apart from distributing it from the counters. "Currency chest holding banks have been advised to issue coins to public keeping in view their genuine requirements. These currency chests, at our instance, are functioning on Sundays as well to exchange notes and coins," the official added.

Read - TOI

Banks to be affected by RBI move on group exposure: Moody's

....."If the RBI adopts them, the new guidelines would be credit positive for India's banks, but credit negative for group companies that rely on parent banks for capital and brand support," Moody's Investors Service said in a report. It said the "affected banks" include ICICI Bank, State Bank of India, Bank of India, Bank of Baroda and Kotak Mahindra Bank.......  

Read - BS

Do PSU banks favour big firms?

RBI Deputy Governor’s assertion is borne out by the data, suggesting big gaps in RBI’s regulatory capacity

K.C.Chakrabarty, Deputy Governor of the Reserve Bank of India (RBI), has, in a recent lecture, more than hinted that all may not be well with the manner in which loans are being restructured. In fact, the deputy governor has gone so far as to say that neither is restructuring happening ‘in a transparent and objective manner’ nor is it ‘non-discriminatory’. These are serious charges that are being levelled at banks but the data on the ground suggests they might not be totally unjustified...

Read......

Restructuring loans driven by banks, not borrowers

....In a recent speech, deputy governor K.C. Chakrabarty said, “When it comes to restructuring, our banks have a substantial bias towards more privileged borrowers vis-à-vis small borrowers.” The second takeaway from this data is that recasting loans is being driven by banks themselves rather than borrowers. As Chakrabarty said, “It (the data) seems to suggest that restructuring of accounts is being resorted to avoid classification of accounts as NPA (non-performing assets).” That’s also borne out by his assertion that, “many unviable accounts were restructured by establishing viability only with some kind of financial engineering”........

Read - Mint

आरबीआइ गवर्नर बनना है रघुराम राजन को

......उन्होंने रिजर्व बैंक का डिप्टी गवर्नर बनाने की सरकार की पेशकश ठुकरा दी थी. वे रिजर्व बैंक के गवर्नर बनना चाहते थे. वे तब तक इस पद को नहीं पा सकते जब तक वे या तो रिजर्व बैंक के डिप्टी गवर्नर या वित्त मंत्रालय में किसी पद पर काम नहीं कर लेते..........

Read - आज तक

Men at work

Improve ratings

Projecting a realistic picture of the economy is a crucial step towards avoiding further rating downgrades. Though many of Chidambaram's predecessors have held the Reserve Bank's ruthless interest rate hikes in the past two years responsible for negative ratings, RBI Governor D. Subbarao has been unrelenting. The central bank is unlikely to ease the rates anytime soon. Sovereign rating methodologies put a lot of weight on the fiscal condition, which makes addressing the fiscal situation a priority. But with the inflation raging and investments dropping, the fiscal situation is on shaky knees. “The inflation in August is likely to remain high. Given the situation, the RBI, too, is not expected to offer much relief by cutting interest rates in its next evaluation,” said Dharmakirti Joshi, economist at CRISIL. Consumer inflation, which affects the lives of individuals more directly, has been in double digits for the past four months. So, the RBI wants the government to address reasons for a slowdown other than the rate cut. “We have come to a rough conclusion that about a third of the slowdown is due to interest rate hikes and the rest due to a combination of other domestic and some global factors,” said Subir Gokarn, RBI deputy governor, in a television interview.

Read - The Week

A push for pulse

The Reserve Bank of India Deputy Governor, Subir Gokarn, is worried about the spurt in prices of pulses that could be the precursor to a fresh ‘protein shock’. He has reasons to be so.......

Read.........

Centre plans new window for home loans

Home loan borrowers may no longer have to wait for the Reserve Bank of India to ease interest rates as government is planning to furnish cheap housing credit through another window.......... 

Read - Deccan Herald

The Chidambaram solution

...... To quote the Reserve Bank of India: ”Housing loans constitute around half of the total personal loans in India and as a result a boom and bust in the housing market can affect quality of assets. The build-up of systemic risk in this area in India was avoided mainly due to implementation of macroprudential policy by the Reserve Bank like changing the risk weights for loans to real estate. “.......

......it is a bit cynical to try and achieve the latter objective by making the banks take on excessive credit risk. He should stick by the view that bank managements, including those in public sector banks, must be given their autonomy when deciding on their lending practices and the task of regulating them and influencing their behaviour must be left to the central bank.

Read - The Hindu

Save a Thought for the Savers

........with the part that seems to suggest your concern for borrowers might, once again, outweigh your concern for savers and induce you to ‘direct’ the Reserve Bank of India (RBI) to lower interest rates. Yet, savers hugely outnumber borrowers ; any democraticallyelected government should be more concerned about savers rather than borrowers. Indeed , there can be no borrowers if we did not have savers willing to provide funds. But time and time again, policymakers have taken savers for granted.............

Read - ET

Retail-focused NBFCs face speed breakers

....Despite the stricter norms imposed by the Reserve Bank of India in April, curtailing the LTV of gold lenders, both Muthoot Finance and Shriram City Union Finance (gold loans form 40 per cent of its total assets) continued to post robust loan growth of 41 per cent and 23 per cent, respectively. Analysts though remain sceptical on the sustainability of Muthoot's loan growth for this fiscal in the wake of the new LTV norms and are factoring in an increase of just 1.9 per cent.......

Read - BS

Progress toward Improved Client Protection in the Indian Microfinance Sector

.....While acknowledging that numerous obstacles remain for the sector as a whole, Ms. Bansal praised specific improvements in the client protection environment: the Reserve Bank of India provision of a framework for regulating client protection; the development by industry associations of an industry Code of Conduct; and the influence of social investment funds.......... 

Read.......

AP crisis an eye opener for all stakeholders: SKS Microfin

....With regard to questionable recovery practices, the RBI had stipulated that all customer connectivity should happen at a public place. The representatives of the MFIs have the right to visit the work place or the house of the borrower only if she defaulted on payment of two consecutive instalments....... 

Read - BS

Practical tips to use RBI's Liberalised Remittance Scheme

....While the scheme looks attractive on paper, it is ridden with several practical roadblocks. Confusion exists on what is allowed under the scheme, what documents are needed to be submitted and so on. Let us try to throw light on these practical aspects........

Read - ET

Exporters bring back dollars as Re begins to rise

......RBI has now asked oil companies to source half of their dollar requirements from State Bank of India, so that there is a single bank raising dollars rather than getting quotes from many banks and creating a shortage in the market.

Read.........

MSME sector seeks panel to monitor credit flow

.....“There is an apprehension that since banks now operate in an environment of de-regulation, advisories such as the RBI’s often succumb to the pressures of profit and bottom lines. Hence in order to obviate such a situation, a monitoring committee must be put in place by the ministry of finance, to enable all MSMEs to benefit from the RBI’s directives,” said Ahmed...........

Read - BS

Karnataka among five States selected for issuing Aadhaar-enabled Kisan Credit Card

.............The Aadhar-enabled cards would help farmers in under-banked districts. Bidar, Chamarajanagar, Gulbarga, Bangalore Rural, Koppal and Raichur have been identified as under-banked districts in the State by the Reserve Bank of India (RBI). The RBI has directed State-level Bankers’ Committee to take steps to open bank branches in these districts.

Read - The Hindu

RBI’s ' honeymoon' with micro finance

.....Dr Y.V Reddy, former RBI Governor, later confessed that many financial experts believed, but did not have the courage to admit publicly, that micro finance is India's sub- prime. In fact MFIs are worse than money- lenders. Money lender lends out of his own money, whereas here, MFIs are actually borrowing money from depositors and banks and on- lending the money. So, " MFIs is essentially a leveraged money lender". The studied silence of experts, including RBI, has cost, as the post- 2010 crisis shows, the economy, particularly small borrowers a great deal. RBI seeks to take shelter under the fact that it had no power to regulate the MFIs. But the argument is specious. If RBI today regards MFI lending as subprime lending, surely it could have egged on the Government of India to take appropriate steps and take them immediately. In fact, RBI's guilt runs much deeper. We are tempted to ask Dr. Reddy: It is one thing to say that RBI had no statutory powers to regulate to MFIs; but was it obliged to support MFIs? This support came not only from RBI but also from public sector banks ( PSBs), NABARD and SIDBI, RBI could have stipulated that PSBs should lend only to non- profit MFIs.......

Read - FPJ

MFIs as BCs: Game changers in financial inclusion

......On the flip side, concerns of aggressive bidding have come from the central bank. Harun R Khan, Deputy Governor, RBI, had said during the course of a speech on June 30, 2012 at the Indian Institute of Public Administration, Bhubaneswar.  “Pursuit of higher volume of business for revenue maximisation may dilute prudential requirements exposing the banks concerned to whole host of risks like reputation risk, strategic risk, compliance risk, operations risk besides the risk of contaminated asset portfolio,” Khan had said. With financial inclusion slated to be extended to 3,50,000 more villages in the coming months, this space is set to witness many changes and could see forays into insurance also, an almost neglected area. This holds out opportunities for many players. As A K Bhattacharya, General Manager, RBI, Bangalore says, “The coverage is abysmal.”.............

Read - Deccan Herald 

Can’t compare gold loans with microfinance

....For all their superficial similarities, the worlds of microfinance and gold loans are as apart as chalk and cheese. Microfinance caters to those at the bottom of the pyramid. By definition, gold loans cannot be about the bottom of the pyramid because it presumes ownership of some measure of gold, which is a form of savings in India. At the same time, given the way that gold loans and microfinance emerged from the backwaters almost simultaneously, analysts would certainly feel tempted to draw parallels......

Read - HBL

A more customer-friendly approach to banking needed - Dr.T.V. GOPALAKRISHNAN

.....The concept of Know Your Customer has unfortunately become very handy to keep away the customers instead of understanding the customers, helping them to improve their banking habits, provide them the dignity that they deserve. The objective of KYC is to eliminate undesirable customers from the point of view of their possible indulgence in illegal and anti-social activities but unfortunately all prospective customers are suspected and kept away by citing some deficiencies in some documents which they provide to banks.......

Read - HBL

For the record

....Having discussed the need for KYC, let me now speak a propos a complaint that will elucidate on how banks harass consumers despite them submitting the necessary KYC documents........

Read - The Hindu

Lok Sabha to decide on Banking Act changes; more powers for RBI likely

.... It proposes to confer upon the Reserve Bank the power to call for information and returns from the associate enterprises of banking companies, and also to inspect the same, if necessary.The Bill also proposes to empower the Reserve Bank to supersede the board of directors of a banking company for a total period not exceeding 12 months, and appoint an administrator to manage the banking company during the said period. The RBI feels that such power will help it in regulating new as well as existing entities in a better manner.......

Read - HBL

Govt has higher stakes than RBI, says Chandy

THIRUVANANTHAPURAM, AUG. 19: 

The Government has even higher stakes than the Reserve Bank with respect to implications from growth versus inflation dilemma. This is what Chief Minister Oommen Chandy had to say at a function hosting an invited lecture featuring the Reserve Bank Governor D. Subbarao here recently.....

Red - HBL

Coin shortage likely to aggravate in state

Jaipur : .... "RBI has been taking proactive steps to monitor and meet the demand for coins in different parts of the Rajasthan. Coin melas are being frequently organized by the office directly or through the banks concerned whenever any requirement is felt. If the need arises, we will continue doing so," the RBI official said.

Read - TOI

Coin shortage makes everyday life difficult in West Bengal

.....The Reserve Bank of India (RBI), however, claims that the "demand-supply mismatch" is a problem of perception. "It is not a rule," said a RBI official. "Much effort has been made in the last two months to strengthen (coin) distribution channels. Now we are taking steps to see that even this isolated phenomenon does not happen." The official said the RBI had pumped in Re.1, Rs.2 and Rs.5 coins in Kolkata. The central bank distributed 1.78 billion coins last fiscal. It has issued more than 800 million coins in the first four months of this fiscal (April to July). It has organised about 150 coin melas in the state, where the public, small traders and shop owners exchanged currency for coins. The RBI, which operates 13 coin vending machines at its Kolkata office, is distributing 500,000 coins daily. It has also opened two distribution counters, especially for meeting the demands of transport organisations. The country's largest lender, the State Bank of India (SBI), echoed the RBI's view....... 

Read.......

RBI forms committee to reduce gold import

......“RBI has formed a committee which will come out with its report in two to three months recommending how to contain the gold demand,” said RBI Deputy Governor Harun Rashid Khan here. While the oil import is 70 per cent of the domestic requirement, the gold import is 100 per cent, he said. However, he added that the gold import has now come down. On the volatility of the rupee-dollar exchange rate, Khan said, “We don’t target any exchange rate. Our approach is that there should be orderly movements and no volatility.”...... 

Read - The Pioneeer

India Central Banker Says Rates Will Follow Inflation

........We have to balance growth and inflation risks, and when we see the inflation risk being the dominant one, as we have seen now, we cannot afford to ignore that risk, especially since pressure points on food and oil prices are re-emerging," Subir Gokarn said at a conference of foreign-exchange dealers. His comments echo those of fellow Reserve Bank of India Deputy Governor K.C. Chakrabarty, who Thursday pointed to the risks from rising food and oil prices that could weigh on the RBI's rate decision when it next meets in September........ 

Read........... 

Chidambaram hints at a less intrusive approach on banks

.....Reserve Bank of India (RBI) Governor D. Subbarao had expressed his displeasure over the frequent diktats by the ministry and said the government should influence decisions through bank boards instead. Chidambaram has proposed a less intrusive approach and said all advisories issued by the secretary, department of financial services, will be vetted by the finance minister, according to bankers who attended the meeting. D.K. Mittal, secretary, financial services, did not respond to a call or message left on his mobile phone......

Read - Mint 

We aren’t totally machine-centric

....One of the Deputy Governors of RBI pointed out that why should banks restructure only corporate loans and why not other loans? 

We are doing it. In March this year, we found there were lot of NPAs in education loans. So a policy was formulated and strategy evolved under which we got in touch with the parents. We contacted the students. Wherever we found they are not getting jobs, we restructured the loan. Similarly for agriculture, if there is some drought, flood or crop failure, there is a provision in the RBI policy and we are making full use of that and doing restructuring...... 

Red - The Hindu

Dhanlaxmi seeks RBI nod for new auditor

Kerala-based Dhanlaxmi Bank Ltd has approached the Reserve Bank of India (RBI) to appoint new auditors after Walker Chandiok and Co. and audit consultancy Grant Thornton Advisory Pvt. Ltdwalked out in early August, a month before the completion of their three-year tenure, following major differences with the management of the old generation private lender..................

Read - Mint

Banks rush to raise money where companies fear to tread

....The banks are raising money when the global economic outlook is uncertain and credit rating agencies Standard and Poor’s and Fitch Ratings Inc. have revised India’s outlook to negative from stable, making overseas money potentially more expensive for Indian entities. The Reserve Bank of India (RBI) data shows corporate borrowings from abroad have slowed in the last one year.....

Read - Mint

More Without Frills

Rural banking has spread less than what the RBI would like to believe, and cannot be improved unless the bank leaves dogma behind and faces reality

..... Rural banking can be made profitable, but it requires a different business model: low-cost local staff close to villagers, and continuous effort to make banks useful. The public sector model is quite inappropriate for rural banking. That is why it has progressed so slowly in India and, more importantly, why it has been reported to be more successful than it actually is. The RBI wakes up every few years, exhibits a few statistics, and likes everyone to believe that banks are penetrating villages. The first thing it needs to do is honest, objective surveys into the real state of financial transactions in rural areas. And rural banking will wake up only when the RBI allows new forms of enterprise into it.

Read.....

Rupee Co-operative Bank Ltd., Pune (Maharashtra)- Penalised

.......In the statutory inspection of the bank under Section 35 of the Act with reference to its financial position as on March 31, 2011, RBI observed that the bank had violated RBI instructions by granting term loans to some borrowers much in excess of the limit of Rs.10.00 lakh prescribed vide the operational instructions. On top of that, the bank had also sanctioned fresh Cash Credit limit to the existing borrowers in excess of Rs10.00 lakh, in 4 cases, again in violation of the operational instructions..............

Read.......

United Bank of India to open new branches

....the bank plans to add 84 new branches across India in urban and semi-urban locations. He added that an approval for 34 branches has been sought by the Reserve Bank of India and rest were in the pipeline. Twenty branches would be opened in rural area for which permission was not required. Narang said that in the current situation of subdued economic growth and lackluster credit demand, the bank was aiming the retail sector to push the credit offtake....... 

Read.......

Depositors untraced

.....The bank has wrongly declared his account inoperative. As per RBI clarification, since the interest on Fixed Deposit account is credited to the savings bank account as per the mandate of the customer, the same should be treated as a customer induced transaction. As such, the account should be treated as operative account as long as the interest on Fixed Deposit account is credited to the Savings Bank account. However, this kind of savings bank account can be treated as inoperative account after two years from the date of the last credit entry of the interest on Fixed Deposit account.  The issue of unclaimed and inoperative deposit accounts came to lime light, when a few days back, the Reserve Bank of India told banks to spruce up their act in dealing with deposit accounts which have remained inoperative and are unclaimed so far....... 

Read......

Canara Bank to launch life insurance cover scheme

Canara Bank is launching "Canara Freedom Suraksha", a life insurance cover of Rs one lakh for all its savings bank customers as a value-added service at a very nominal premium, the bank said in a statement........

Read - Indian Express

Poor monsoon portends ‘protein shock’: Gokarn

.....“We had a huge protein shock in 2009-10. That was mainly on account of a sharp increase in prices of pulses consequent to the monsoon performance of 2009. We are in a similar monsoon situation now and so the risk of pulses prices accelerating is high right now,” .......

Read - Indian Express

Amalgamation of regional rural banks: Is this unfair to sponsor banks?

.....The MOF has recently got the consent of the sponsor banks, state governments and consulted NABARD which looks after rural credit. As the sponsor banks are regulated by the Reserve Bank of India (RBI), it would have been appropriate to consult it as well. Be that as it may, DOF has directed sponsor banks in various states to transfer /take over RRBs of other banks as specified by the DOF.... 

Read..........

RBI tells urban co-ops to change ‘no frills’ accounts into SB A/Cs

The Reserve Bank of India (RBI), on Friday, asked the Urban Co-operatie Banks (UCBs) to convert the existing basic banking ‘no-frills’ accounts into ‘Basic Savings Bank Deposit Account.’ Also, the ‘Basic Savings Bank Deposit Account’ be treated as a normal banking service available to all and it should not have a requirement of any minimum balance.........

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RBI's stance on pricing of credit is beneficial for MFIs

.....RBI's current preposition while removing the cap is that it expects the sectoral participants to be responsible and accept the premise under which the cap is being removed. So, it is beneficial to this sector as they can manage the spreads better in a changed environment. There is no doubt that learning from the lessons in the last two years, we would ensure that the rates are continuing to be reasonable in the changed context. ......

Read - ET

Central banks have got their powder wet

.....The Reserve Bank of India in its April-June quarter monetary policy on July 31 left the key policy rate unchanged. The RBI raised the baseline projection of WPI-based inflation to 7 per cent for March 2013 — as against the earlier projection of 6.5 per cent — and revised its growth projection to 6.5 per cent from 7.3 per cent, as predicted in its April policy. There’s an old adage on Wall Street that cautions investors to “never fight the Fed.” The point being, the unlimited resources and staying power of the Federal Reserve are so dominant that they will overcome and outlast any other market influence. If you believe in that, then it would...... 

Read - BS

RBI opens more counters to deposit income tax

....Deputy General Manager (Banking) Rajeev Dwivedi said that the facility to deposit income tax by cash or cheque is also available at 145 branches of public sector banks, including SBI and at three branches of private banks in the city........

Read - TOI

Two Decades Of Economic Reforms

.....The general perception today is that India may now be on the path of sustained high growth based on high rates of domestic saving, high quality of entrepreneurial and managerial skills and the cumulative effect of economic reforms on productivity. Eighteen authors discuss various facets of the problems. The RBI has eight contributors three Governors, three Deputy Governors, one Executive Director and a Principal Adviser. Among other distinguished contributors are Montek Singh Ahluwalia, Kaushik Basu, Vijay Kelkar and Arvind Panagriya. There is an essay by our President Pranab Mukherjee. The Editor could scarcely have gathered a more talented team..........

Read - Book Review by P.P.Ramachandran

No more diktats from FinMin to banks: FM

State-run lenders may no longer get advisories from the finance ministry on how to run their operations. Finance Minister P Chidambaram on Saturday made it clear that the government would not unnecessarily interfere in the day-to-day affairs of the banks, and any advisory, if at all required, would be sent only after his approval. The assurance from the finance minister came at a meeting with chiefs of public sector banks today. This has brought relief to some bankers who often expressed their displeasure, though not officially, over the frequent instructions from the finance ministry.............. 

Read - BS

Make it easy for students to get education loans, bankers told

Finance Minister P. Chidambaram has come to the rescue of students facing difficulty in getting education loans.  Henceforth, a bank manager will be penalised for “wilful rejection” of eligible education loan applications. At the same time, it has been decided that students securing admission under management quota will also be eligible for education loans......

Read - HBL

Govt asks bankers to form committee to advise it on housing

......"I have requested IBA to appoint a small group to tell me how to resolve the problems of demand for housing one side, incomplete housing projects on other side and completed housing segment which are lying vacant on the third side. Its a conundrum, but I think it can be solved,"........

Read.........

FM asks PSBs to cut EMIs for consumer durable loans

Finance Minister P Chidambaram on Saturday asked public sector banks (PSBs) to reduce equated monthly instalments (EMIs) on loans for consumer durables, in order to kickstart investment cycle and bolster the sagging economic growth. He also asked banks to ensure the cash lying with the public — about Rs 11 lakh crore —was channelised into the banking system. For this, he wanted banks to upgrade their ATMs to function as cash-accepting machines too, from only cash disbursal tools at present............

Read - BS

India urges state banks to increase lending for consumer durables

....India's interest rates are among the highest in major economies and the slowdown has renewed calls for the Reserve Bank of India (RBI) to lower them at a September 17 policy meeting......

Read..........

RBI to decide on rate cut in September policy

..........."You cannot say when the rate cut will come. Wait for our September policy," RBI Deputy Governor H R Khan said at the sideline of a function organised by Institute of Chartered Accountants of India (ICAI)...........

Read.......... 

RBI mantras soon to contain gold imports

Bhubaneswar: Concerned over draining out of forex reserves due to high import of gold, the Reserve Bank of India (RBI) has constituted a committee to find out ways to reduce gold imports into the country. “RBI has formed a committee which will come out with its report in two to three months recommending how to contain the gold demand,” said the RBI Deputy Governor, Harun Rashid Khan..........

Read..........

India Factoring: the way to get SME credit beyond banks

......."Factoring bill brought in clarity of assignments. Earlier, we did not have any right to proceed legally against the buyers (on behalf of SMEs) in case of any default. Moreover, we could not expect our clients, who own smaller business entities to pay off the debt. The Bill now empowers us to have the same legal right," Sarbadhikary said. Following the Factoring Bill, the Reserve Bank of India recently issued guidelines creating a new non-banking finance category christened as NBFC-Factors. This has separated the class from other NBFCs, which have been facing a slew of regulatory issues...............

Read....... 

Economic growth veers around industrial performance: RBI

....."Experience of high and low economic growth phase in the Indian context is typically characterised by the variability of the industrial sector although relatively it has a small share," .......

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Inept politicians spell doom for Indian economy

.......Tensions between mandarins in New Delhi and a hawkish central bank are also adding to the investor unease. While the finance ministry wants the Reserve Bank of India to cut interest rates and help spur investment and consumer spending, the central bank is not willing to play ball with inflation remaining already high. Instead, the RBI has been urging the government to fix its finances such as the fiscal deficit which hit 5.9 per cent of GDP in 2011-12 and could well overshoot this year with the sharp slowdown in growth denting revenue collections. “The task for the government is to generate supply so that we produce more and that will bring down inflationary pressures,” RBI Governor D. Subbarao said in a speech at an event in Thiruvananthapuram in southern Kerala state. “The task for the RBI is to restrain demand.”......

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Electronic and Mobile Banking in India: Gearing-up for Growth

Financial inclusion has witnessed extraordinary investments and efforts from a variety of stakeholders in India over the past two years. The central bank (RBI), the Ministries of Finance and of Rural Development (MoF and MoRD) have undertaken numerous reforms and measures to make the policy and regulatory climate more conducive for the banks, agent network managers, agents and for the customers. Though setting stringent targets for financial inclusion, and constantly pushing banks to achieve those, has been the prime emphasis of Government, recent moves to increase the digitisation of subsidies may prove to be more effective. Nonetheless,..... 

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Number of ATMs to Double, to Also Accept Deposits

The government today said banks have been asked to upgrade their ATMs to double-up as cash collecting machines as well to mobilise Rs 11 lakh crore lying as cash with people. Also, the public sector banks have been asked to double the number of ATMs from about 63,000 in the next two years, Finance Minister P Chidambaram told reporters after reviewing working of state-owned banks and financial institutions. "People must take to banking ... Something like Rs 11 lakh crore lies as cash in hands of people. That Rs 11 lakh crore money should not lie in hands of people, it should lie in banks," ......

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4 things you must know about your ATM Card

.....ATM cards are cashless and yet they are cash, the carriers of your hard earned money. Just as the responsibility of your cash lies with you, your ATM card and whatever happens to it is ultimately your responsibility. Be cautious, be vigilante and most importantly be aware of all the regulations and rights that are associated with debit cards......

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Subbarao meets P Chidambaram, discusses economic situation

Reserve Bank Governor D Subbarao today met Finance Minister P Chidambaram and discussed the macro-economic situation. This was Subbarao's second meeting with Chidambaram, following his taking over the charge of the Finance Ministry this month......

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RBI Deputy Governor Chakrabarty's term extended until June 2014

......."Government of India has re-appointed Dr. K. C. Chakrabarty as Deputy Governor, Reserve Bank of India, for a period up to June 30, 2014 i.e. till he attains the age of 62 years or until further orders, whichever is earlier," ............

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Jasbir Singh is RBI ED

.......While Singh, given the charge of Deposit Insurance and Credit Guarantee Corporation, succeeds G Goplakrishna who will now look after Department of Banking Supervision of RBI. Goplakrishna, one of the seniormost EDs in RBI, is likely to be a strong contender for the deputy governor’s post when Anand Sinha retires in February.

Read - BS

Everybody’s favourite whipping boy!

Public sector banks are a hapless lot. They are at the receiving end from both the finance ministry and the Reserve Bank of India (RBI). They cannot expect much from bureaucrats who have no practical knowledge of banking, perhaps, but surely they deserve better from the RBI, which as the banking sector regulator, should be a little more au fait with reality? All the more reason why Deputy Governor KC Chakrabarti’s statement (jibe?) that ‘public sector banks have not been as judicious in the use of restructuring as a credit management tool as the private sector and foreign banks’ is particularly below-the-belt.......

Read - ET

RBI has only itself to blame

.....Possibly, this is something that the vocal RBI Deputy Governor KC Chakrabarty should turn his attention to instead of railing at these banks, for the misdemeanours of the broader system. Because more than how these banks behave, the broader issue is how RBI approaches institutional issues in the banking sector, chasing will-o’-the-wisps. It is these aberrations that possibly encourage banks to pick up shortcuts.......

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Should Infosys ‘guide’ RBI?

There is apparently nothing common between Infosys, India’s pioneering company in IT domain and the Reserve Bank of India (RBI), the nation’s central bank. But a closer look shows that of late both have shown remarkable capability in missing targets forecast by them though with contrasting results...........

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Gentleman Economist

.....Rajan is known to be a consensus builder, humble to the point of being almost self-effacing. But don't be taken in by that. He can hold his own in any debate on economic policy; hardly surprising for a man who was awarded the inaugural Fischer Black Prize, given by the American Finance Association every two years to a financial economist under 40 who has made the most significant contribution to the theory and practice of finance..........

Read -ET

No estimate regarding increase in FICN in circulation: Govt

...."The Reserve Bank of India (RBI) has informed that they have no estimate regarding increase in counterfeit currency notes in circulation," Minister of State for Finance Namo Narain Meena told Rajya Sabha in a written reply yesterday. To address the multi-dimensional aspects of the FICN menace, several agencies such as the RBI, Ministry of Finance, Ministry of Home Affairs, Security and Intelligence agencies of the Centre and States, Central Bureau of Investigation (CBI) etc, are working in tandem to thwart the illegal activities related to Fake Indian Currency Notes (FICN), he said.........

Read - Zee News

Also Read - US invites India to visit fake currency detection unit

RBI doesn’t determine the true interest rate in economy

......The fact that the repo rate does not determine the true rates in the economy does not mean that the RBI can afford to be lax on it. The RBI is the only voice that can bring a sense of responsibility to the economy as the government and the corporate sector will always push for cheap rates since it can help fund fiscal profligacy and profits. However, when factors are pointing to a sharp slowdown in economic activity, the RBI has to be proactive with its policy rate........

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Inflation pain will not go away soon even if govt, RBI act together to reduce it

On the morning of July 31, when Reserve Bank of India Governor D. Subbarao presented the first-quarter monetary policy review, the message was clear: RBI could not fight inflation alone. It also revised the inflation forecast from 6.5 to seven per cent in March 2013. That evening, it was announced that P. Chidambaram would take over as Finance Minister. About a week into his new job, he declared that fiscal policy would work in tandem with monetary policy. He said a committee would draw up a fiscal consolidation plan. But the government's ability to take hard decisions may have been compromised by a long period of inaction.......

Read - Business Today

RBI examines different benchmarks in corporate bond market

..........The Reserve Bank of India is concerned that the use of different benchmarks for investors and issuers in the corporate bond market is making trading less transparent and creating opportunities for manipulation. The investigation is the direct result of the Libor scandal that has rocked the world's largest lenders and made regulators everywhere more vigilant of how rates are set............

Read - ET

Indian panel lowers GDP forecast to 6.7%

.....The estimates are pretty much in line with Reserve Bank of India’s projections, but the growth number seems to be on the optimistic side on the assumption that agriculture growth won’t be as slow as (the) market expects,” ........

Read - Pakistan Daily Times

Government needs to accelerate growth and investment: Dr Bimal Jalan

ET Now caught up with Dr Bimal Jalan, former RBI Governor, for his take on the GDP forecast for FY13 and the road ahead. Excerpts:

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Of 9% economic growth and Manmohan’s pipedreams

........So, to get economic growth back on track, India has to control inflation. The Reserve Bank of India (RBI) has been trying to control inflation by keeping the repo rate, or the rate at which it lends to banks, at a high level. One school of thought is that once the RBI starts cutting the repo rate, interest rates will fall and economic growth will bounce back. That is specious argument at best. Interest rates are not high because the RBI has been keeping the repo rate high. The repo rate at best acts as an indicator. Even if the RBI were to cut the repo rate the question is will it translate into interest rates on loans being cut by banks? I don’t see that happening unless the government clamps down on its borrowing. And that will only happen if it’s able to control the subsidies........

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Bond yields inch up on PM advisor comments

.........Bond yields are still down 1 bp on the day, as it comes on the heels of inflation warnings from RBI Governor Duvvuri Subbarao on Monday and RBI Deputy Gov. Subir Gokarn on Thursday.....

Read - ET

HDFC to pay 1 lakh for damages

The HDFC Bank has been asked by a district consumer forum here to pay "exemplary damages" of Rs one lakh to one of its credit card holders for harassing him by raising an "illegal" demand of Rs 46,490 for a purchase that was never made.............

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Give growth a chance - K Kanagasabapathy

.......This is the time for the RBI to do a rethink. Its stubbornness at keeping inflation, and inflation expectations at bay, is well-placed. However, keeping an eye on inflation should not mean turning a blind eye to growth, which has never been the case with the RBI. Inflation management does not mean that the central bank becomes oblivious to other concerns. This is particularly so because monetary actions work with some lag. Without waiting for the next policy announcement in September, the RBI should cut the policy rate as also the CRR by at least 25 basis points each.

Read - HBL

How to keep your debit and credit card secure

....But just how do you stop such frauds? Well, there are various layers to card security and many ways that banks use to protect you from fraud. The more effective ones are in place for online transactions, such as the 3D Secure PINs and passcodes, which were recently mandated by the RBI.......

Read - ET

RBI faces a "No, minister" moment

....when it comes to asserting the independence of the Mumbai-based Reserve Bank of India from political masters in New Delhi, D. Subbarao, governor of the central bank, has large shoes to fill. His predecessor Y.V. Reddy had been an RBI Deputy Governor for six years and was at the International Monetary Fund in Washington before he returned to run the central bank. Distance from New Delhi allowed Reddy to chalk out a course that was often seen as adversarial by the finance ministry. The relationship between Reddy and Chidambaram, who was also the finance minister between 2004 and 2008, was sometimes stormy. By contrast, the current governor was the top finance ministry bureaucrat when Chidambaram picked him to run the central bank. Saying no to a benefactor is hard. But Subbarao would do well to convince Chidambaram that untimely monetary easing could threaten stability. His case is strong...... 

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Hold your nose

India’s public-sector banks are sitting on something unpleasant

....The Reserve Bank of India (RBI) is on the warpath. K.C. Chakrabarty, a Deputy Governor, says: “It’s a concern. The banking system will not collapse because of this tomorrow. The system hasn’t become unstable. But if this continues for one or two years, it will become unstable.” The RBI plans to tighten the rules on restructured loans again, having loosened them in 2008 to protect India from the global crunch and given special treatment to infrastructure loans, deemed a national priority, in 2010.......

Read - The Economist

Law graduation falls for scam twice, loses 7 lakh

MUMBAI: A woman has been arrested for cheating a Khar-based law student of Rs 7 lakh by posing as a Customs official and Reserve Bank of India manager. The accused, Donshung Ruvandar (27), has been remanded in police custody and her two Nigerian friends, who were also a part of the scam, are wanted in the case.......

Read - TOI

RBI directive on‘survivor’ clause

......The RBI observed that many banks have neither incorporated the “either or survivor” or “former or survivor” clause in the account opening form nor have they taken adequate measures to make the customers aware of the facility of such mandate. This has put the “surviving” deposit account holders to unnecessary inconvenience.

Read - HBL

Maharashtra moves closer to direct cash subsidy model

........The state has plans to use UID numbers to transfer cash directly into the accounts of beneficiaries of state and national schemes. Chavan said that the state had plans to adopt the model universally for all welfare schemes. To facilitate this, the Reserve Bank of India has asked banks to use UID numbers extensively for opening of bank accounts.

Read - TOI

India says ban high-value notes: FinMin

.....One common demand from the public is that high denomination currency notes, particularly Rs 1,000 and Rs 500, should be demonetised", says a committee headed by the CBDT chairman in its report to the Finance Ministry.......

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