.....Technology is also said to be the way forward with India seeing a mobile and internet revolution and more traditional banks need to accept the same. Human resources is also another challenge as 40-50% of PSU banking staff is expected to retire over the next few years. Plus attrition in the banking sector used to be low with staff staying in the same bank for their entire career. Stickiness is however low among new employees, thus the realignment of HR policies along with employee needs is required. But while there are a lot of challenges on the ground we believe that the banking sector can meet them head-on as they have done in the past. We hope to see a fresh face of banking in India.
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, September 14, 2012
From November, pay more for credit card repayment in cash
Prepare to fork out a higher service charge while paying your credit card bill in cash. HDFC Bank, the largest issuer of credit cards in the country, has decided to double its service charge for cash payments at its branches or automated teller machines (ATMs).............
Don't harass your children!
WHO WILL GET YOUR MONEY?
- BANK ACCOUNTS: Reserve Bank of India (RBI) guidelines specify that the deceased's nominee would receive the money in the capacity of a trustee, of legal heirs. The same applies for all other financial transactions such as public provident fund, mutual funds and others where the nominee plays the role of a trustee rather than the owner.
- INSURANCE: Section 39 of the Insurance Act says the appointed nominee will be paid, though he/she may not be the legal heir. The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money.
- STOCKS: Under Section 109A of the Companies Act, if the nomination is made under procedure prescribed by law, the nominee will be entitled to become the rightful owner of shares. And, such right shall exclusively favour the nominee and exclude all other persons.
- PROPERTY: Section 30 of the Maharashtra Co-operative Societies Act says in event of the death of a member of a society, the shares of the deceased will be transferred to the nominee. But, this transfer cannot result in vesting of the flat with the nominee. He/she is merely a trustee for the deceased's estate. But that's not the final word.
- SELF-ACQUIRED PROPERTY: A will is the deciding factor. In its absence, the property will be classified as 'inherited property'. "The property, consequently, will have to be shared equally between the successors
- JOINT OWNERSHIP OF SELF-ACQUIRED PROPERTY: The surviving owner becomes the sole owner.
- INHERITED PROPERTY: All members of the immediate family will get an equal share of the pie.
RBI quiz for students to improve financial literacy
Bangalore : Interested students may contact nodal officer Murlee Krishna on 080-22244001 or 9945722776, or e-mail: murleekrishna@rbi.org.in by September 21...........
Survival of business correspondent model at stake, says report
......According to a recent study conducted by Sa-Dhan - the national association of community development finance institutions - the lack of commercial viability in the form of low compensation is threatening the very existence of the BC model, which was encouraged by the Reserve Bank of India to promote financial inclusion. “The shortcomings for the BC model are the cost structure, bank’s lack of commitment, absence of financial literacy, lack of knowledge between customer service point operators (CSPs) and clients and lack of grievance redressal system,” the study said.......
Diesel hike gives RBI room to cut rates: PMEAC
....."I think the opportunity of action for RBI is provided by this action of the government...The government has showed that it can take a very hard decision,"...........
Despite diesel price rise, economists unsure of RBI's Monday response
The rise in diesel prices three days ahead of its scheduled mid-quarter review of monetary policy will put pressure on the the Reserve Bank of India to cut interest rates for boosting demand. However, say economists, the central bank is unlikely to respond in a hurry. “It is too early for RBI to react to the revision. This is not the only measure required to bring the fiscal house in order; there are also issues on the revenue side,”.........
Financial markets seen more resilient after Lehman crisis
........ “RBI’s decision to adopt Basel-III guidelines with more conservative requirements indicates its willingness to impose higher cost in the near term to achieve long-term financial stability of the banking system.”............
Insurance set to get big boost
.....The troika of the Insurance Regulatory and Development Authority (IRDA), the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are often locked in turf skirmishes, even as they serve an overall pool of savings that need to be turned into productive investments for economic growth.......
Investment intentions take a hit in 2011-12: RBI study
New investment intentions plummeted by 41 per cent to Rs 2,50,900 crore in 2011-12 as compared to Rs 4,26,300 crore in the previous year in the wake of the economic slowdown, the Reserve Bank of India has said.........
Tax payers can pay dues in select bank branches in Delhi: RBI
...."It is observed that the rush for remitting income-tax dues into the Reserve Bank of India has been far too heavy towards the end of March/June/September/December and it becomes difficult for the Reserve Bank to cope up with the pressure of receipts although additional counters to the maximum possible extent are provided for the purpose," RBI said in a statement.......
RBI restricts Vishal Finlease from accepting public deposits
....."The company - Vishal Finlease Pvt Ltd - has been stopped from accepting public deposits for violating RBI guidelines. Its certificate of registration has been cancelled," said an RBI official in the department of non-banking supervision. .............
Thursday, September 13, 2012
22% growth in bank complaint-solving
PATNA: The Office of the Banking Ombudsman (OBO), a separate office under the RBI, has cleared 2,718 out of 2,820 complaints lodged between July 2011 and June 2012, according to the annual report presented by Ombudsman of Bihar and Jharkhand Srimohan Yadav on Wednesday. With this, the OBO has registered a growth of 22% in problem-solving measure, he said..........
Around 300 students from Jharkhand to take part in RBI quiz
About 300 students from 50 schools of Ranchi, Bokaro, Jamshedpur and Dhanbad would represent Jharkhand in the RBI quiz by Reserve Bank of India. Reserve Bank of India(RBI) has launched RBI Q, an all India inter school quiz with a view to create awareness and interest about the history and the role of RBI, banking and finance, economics, current affairs, personalities and events that have contributed to the growth of the country over the years....
Short-term banking courses up for grabs
The banking industry has become a major growth-oriented industry after the phenomenal expansion of branch networks. It is an important tool to facilitate the development of the Indian economy.....
New exemption limit on life cover likely
....For long, life insurers have been seeking a separate income tax exemption limit of Rs.50,000 for premiums. So, the latest government move will cheer them as it will help promote insurance plans as tax-saving instruments. Earlier, investments on pensions were treated separately for tax deductions. There was an income tax limit of Rs.10,000 under Section 80CCC. It was withdrawn in 2005 and the tax department started treating it with aggregate deduction of Rs.1 lakh. The finance ministry is considering to reintroduce the exemption for pensions separately. ......
RBI meet on payment, settlement system by Sept end
Mumbai: The Reserve Bank will hold a meeting by month end to discuss the payment and settlement system, Executive Director G Padmanabhan said here on Wednesday. The central bank had issued a vision document on payment system concerning to cards, ATMs, internet and mobile in 2009, which was open for feedback from various stakeholders........
Growth in prepaid payment instruments not encouraging: RBI
......“Significant changes are required in the technology and business model of non-bank PPI issuers to be accepted at the point of sale terminals, they need to adhere to the form factor specification and connectivity to their switch,.......
Read - BS
Make way for the signal !
The Reserve Bank of India Governor was about to address a conference organised by National Bank of Agriculture and Rural Development (Nabard) in Mumbai, which also involved patching through a video-link between him and some of Nabard’s rural centres. The auditorium is located in the basement of Nabard’s office so, naturally, there were problems connecting to the centres. Instead of fixing the problem or arranging for an alternative, the staff forced people standing at the entrance to the auditorium to leave. The logic? It was these people who were apparently “blocking” the signal! Naturally, this “theory” didn’t hold but it doesn’t say much for Nabard’s adoption of high-end technology, which the conference was supposed to showcase.
MFIs want new RBI guidelines implemented in phases
...."The new norm is not practical and will make MFIs unviable," said MFIN chief executive Alok Prasad. "We have taken up the matter with RBI as the operating cost for most MFIs in the country is still high despite being part of the most efficient MFI system in the world. It will be difficult to bring down the cost immediately." Prasad said Indian companies offer micro loans at the cheapest interest rates.......
No policy space?
....The question for many is: what will the policy response be to this full-fledged crisis in manufacturing? Those who argue for a response from the Reserve Bank of India (RBI) are likely to be disappointed. Manufacturing inflation may have fallen, but consumer prices are still increasing at a rate way out of the RBI’s comfort zone. On Friday, inflation numbers will reveal whether the consumer price index is in double digits or not. Meanwhile, RBI Deputy Governor Subir Gokarn has already dismissed concerns about liquidity. Global influences on monetary policy, too, point in the direction of steady domestic interest rates.....
Read - BS
Varied thoughts on the exchange rate
......In the context of the exchange rate, I recently came across a curious paper titled “The Art of Currency Manipulation”, (26 June), by Kaushik Basu, Rajan’s predecessor. From what I could make out, Basu (now the chief economist at the World Bank) blames the “currency manipulator”, whoever he may be, for the volatility of the rupee’s exchange rate, also taking a swipe at RBI (“The central bank and regulator, ….have very little notion of how the currency manipulator works and so have dealt with this problem very inadequately.”)..........
RBI should go for at least 100 bps rate cuts
.... If you want to buck up the sentiments of investment in the country, one indicator the RBI should focus on is the base rate, which has been contained for a while and should be brought back to an investible rate. I believe that if credit is available at around 10%, many projects may become viable and consumption can catch on. Therefore, RBI cannot utilise the monetary policy alone as inflation control as it will not control the consumption. I certainly recommend that RBI should intervene and reduce the interest rates by at least 100 basis points across one or two instances. Doing so will be a positive indicator for the markets and encourage investment.....
Why low deposit rates may be short-lived for banks
.....The overall loans-to-deposits ratio still remains at 75%, reflecting that out of every Rs 100 as deposits, Rs 75 has been lent. With banks mandated to own at least 23% in government bonds and 4.75% in cash with the Reserve Bank of India, banks are relying on other sources of funds to lend. These ratios will never match. Banks, in their eagerness to please investors, have, in the past few years, raised short-term deposits, (which are low cost), and lent long term for building power plants and roads.
Read - ET
Inflation likely nudged up to 6.95% in August
India's rate of inflation probably picked up in August from July's near three-year low as poor summer rains drove up food prices, a Reuters poll showed, giving the RBI even less room to cut policy rates next week to reinvigorate economic growth. While central banks elsewhere are trying to ease monetary conditions to counter a global slowdown, the Reserve Bank of India (RBI) has consistently flagged high inflation as a key risk for Asia's third largest economy.......
IRead......
Centre readies plan to revive exports, says secy
..........The Reserve Bank of India (RBI) has also been urging the government to unveil a clear fiscal consolidation strategy and tackle the problem of subsidies . The central bank says lack of fiscal consolidation measures weighs heavily on any plan to ease tight monetary policy..........
Cut in FD rates will not lead to capital flight: SBBJ boss
Q. There has been an ongoing debate on abolition of cash reserve ratio (CRR). What is your reading about it?
A. CRR has its own philosophy to which it was set up. RBI has its own reason to keep it. From bankers’ perspective, we raise money and expect return on that. CRR money goes away without any interest. For banks, it is definitely a drain on profits. It is definitely a burden on banks. If depositors’ security is a concern, then the regulator should pay some interest on CRR. RBI normally does not pay interest on CRR. Some 20 years back, it used to pay interest but beyond 3% when CRR had gone up as much as 15-16%. With changing pace of time, discussion on this issue should take place. You cannot continue to do banking as you used to do in the past.
RBI sets stage for a bank supervision overhaul
| CHANGING TACK The changing landscape of banking supervision |
|
Read - BS
Forensic audit of Deccan Chargers owners accounts begins
.......The move is set to derail the proposal of DCHL to go in for corporate debt
restructuring (CDR) of its outstanding loans with the bankers. DCHL's board has
passed a resolution on asking the CDR cell to rejig its existing debt. "The
board of directors of the company, at its meeting held on September 7, 2012,
has passed a resolution to restructure the existing debt of company by an
application to Corporate Debt Restructuring (CDR) cell under CDR mechanism as
envisaged under the Reserve Bank of India guidelines,".....
DYK | Banks, NBFCs are rated by RBI on CAMELS concept
Through its annual process of financial inspection, the Reserve Bank of India (RBI) inspects and supervises commercial banks and non-banking finance companies (NBFCs) every year. It also gives a rating to banks and NBFCs, but the results remain out of public domain. Known as the CAMELS rating, the process has been on since late 1990s.............
Read - Mint
Time to worry about retail loans
....one key reason for ballooning retail NPLs in 2008-09 was the damage to the recovery environment as the Reserve Bank of India (RBI) clamped down on lenders’ recovery practices after reports of borrower harassment followed by suicides. The important point to note is that the banking system handled this in a oblique fashion by clamping down on further loans, but not through an improvement in the recovery climate that remains broadly the same even now...........
Geithner to visit India next month
....On October 10, Geithner will travel to Mumbai, the country's financial center, to meet with Reserve Bank of India (RBI) Governor Duvvuri Subbarao, as well as Indian business leaders from a variety of industries.......
Wednesday, September 12, 2012
Reserve Bank of India’s Payment System Gambit
......The RBI’s intended mission of a safe, efficient, accessible and inclusive world-class payments system is appropriate and is a very critical cog in the giant wheel of India’s economic growth. The payments industry and the outside world will be watching the strategy to unfold in the coming years. We all hope that all the good intentions get translated to actions and that India’s payments system takes its rightful place among the leading markets for electronic payments.......
Signature comment
A man from an audience that Reserve Bank of India’s
witty and outspoken Deputy Governor K C Chakrabarty was addressing in Mumbai
recently asked for his autograph. He would always treasure it, he told
Chakrabarty, as the autograph of the future governor of RBI. To this
Chakrabarty responded, “The governor’s office is not vacant, and I’m a middle
class person. By saying this you will take away even my existing job.”
BS
RBI Nominee Director on the board of Bank of India
Bank Of India has informed the Exchange that "In terms of Notification No.F.No.6/3/2011-BO.I dated 06.09,2012, Government of India has nominated Shri P. R. Ravimohan, Regional Director, Reserve Bank of India, Bhopal as Reserve Bank of India Nominee Director of the Bank in place of Shri P. K. Panda with immediate effect and until further orders under Clause (c) of Sub-Section 3 of Section 9 of The Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 read with Sub-Clause (1) of Clause 3 of the Nationalised Banks (Management & Miscellaneous Provision) Scheme 1970/1980".
ICICI Bank opens new branch in Cuttack
ICICI Bank, the country’s largest private sector lender, has opened a new branch at the Mahanadi Vihar area in Cuttack. The new branch was inaugurated by P.S.Venkataswaram, Deputy General Manager, Reserve Bank of India (RBI) -Odisha........
Beware of money mules
....RBI’s stringent restriction to curb increasing phishing and Trojan scams has now led to the mushrooming of money mules. “These mules are identified by fraudulent elements for the safe transfer of stolen money out of the country. As RBI guidelines do not allow anybody to transfer money overseas, the phishing and Trojan scamsters use this method. Though mules can be tracked down, many times they target dormant accounts to take out the money,” explained M Palanisamy, the Banking Ombudsman of Karnataka......
Sectoral Session on Financial Services
Emerging Kerala 2012
Biennial Global Connect
14 September 2012: Hotel Le Meridien, Kochi
Program Schedule
(1030 – 1230 Hrs): Sectoral Session on Financial Services
1120 Hrs Discussions & Interactions – Panelists:
1) Dr. Subir Gokarn, Deputy Governor, Reserve Bank of India
2) Mr. Uday Kotak, Executive Vice Chairman & MD, Kotak Mahindra
3) Mr. Shyam Srinivasan, MD & CEO, Federal Bank
4) Mr. H.K. Dubey, ED, HUDCO
5) Mr. P. Nanda Kumaran, Managing Director, SBT
6) Mr. C. Parthasarathy, Managing Director, Karvy
My View on "Nothing for banks to gripe about"
 |
| - A.Chandramouliswaran |
I have great respect for Shri Seshan for his knowledge,meticulous research, for updating himself practically on a daily basis with the latest data regarding the economy in general and banking system in particular, extensive study even at this advanced age and finally for his enormous energy in spending several hours daily on reading, writing not only on banking subjects but also on music, tennis etc.Hence, it is with utmost humility that I wish to raise an issue with him. CRR was 6% till some time ago. With the amendment of the RBI Act, CRR could be even 10% or more. Would the RBI be justified in not paying any interest on CRR,i.e even if the cash balance is required to be maintained in excess of the statutory minimum of 3%, say,at 10%? Banks have a certain cost of funds and would be handicapped in keeping the cost of their lending operations competitive if they do not earn any interest on a substantial portion of their funds. This issue has assumed more relevance in recent times with even Public Sector banks being recognised as commercial entities( notwithstanding its social obligations in line with the directives of the Government/RBI) and expected to make profits for its shareholders who to a significant extent are now private shareholders.
Bharat does not quite beckon young bank staff
......Young bankers can probably look forward to more positive changes soon. A recent report by Crisil points out that last year consumption expenditure in rural areas exceeded that of the urban . Perhaps, that is reason for hope.
Banks must raise profitability before Basel-III kicks in: Govt
......."In the preparatory phase, if banks can improve their profitability, perhaps the need for capital from government will go down to that extent,"........
Advice from the trenches
Dear Professor Raghuram Rajan,
Congratulations on joining the crew of Indian policy makers as chief economic advisor (CEA). It is high time the ministry of finance (MoF) had a practical and realistic macro framework.....
.......Indian finance ministers cannot resist public comments about what the Reserve Bank of India (RBI) should and/or will do, even if they sometimes sound foolish. Perhaps taking a lead from them, several MoF officials mimic that approach, never mind that they cannot set their own fiscal house in order. I hope you’ll successful in bringing around a refreshing change in this respect. Financial markets are becoming more important, and the last thing one needs is an airing of differences in public or even an active undermining of the RBI.......
Read - BS
Inflation bugbear
.....Even if RBI and the government do work together effectively to reduce inflation, the pain won't go away for another six months......
Read - Business Today
Govt to take steps to help RBI relook at monetary policy
....."We still believe food inflation is a cause of major concern and it needs to be tackled in a manner that we are able to give comfort to the regulator Reserve Bank that it is time for them to have a relook at the monetary policy,".....
Rate cut may be deferred
.......Lack of government action to address the country’s fiscal woes might prolong the wait for rate cuts from the Reserve Bank of India (RBI), economists say. RBI has not changed the policy rate since the annual monetary and credit policy announced in April, owing to sticky inflation and hopes the government would act to support the central bank’s efforts. Currently, the repo rate, or the rate at which banks borrow from RBI, is eight per cent.......
You Economists Don’t Know Nothing
....In India, RBI Governor YV Reddy got credit for tightening credit and real
estate regulations during the boom. Yet the stock market in India rose
seven-fold and the real estate market even faster. Central bankers'
theories and tools look very weak today: raising interest rates has not
cured inflation in India, and cutting them has not yielded growth in the
US or Europe.......
Read - ET
The Indian economy’s new normal
.....J P Morgan economists Jahangir Aziz and Sajjid Chinoy said in a 7 September note that the persistence of high inflation despite falling growth is because the potential growth rate of the Indian economy has fallen to 6-6.5%, lower than the 7.5% assumed by policy makers and the financial markets. Reserve Bank of India governor D. Subbarao has said earlier that the potential growth rate of the Indian economy --- or the growth it can sustain without setting off an inflationary fire --- is 7.5%, a full percentage point lower than the pre-2008 levels.......
Read - Mint
Gold as currency: India should take the lead
.....In the 1920s, when the British sought to pass the Reserve Bank bill in the Legislative Assembly, Indian leaders voted against it. As London’s Financial Times reported in 1927, the intent of setting up the Reserve Bank of India was to provide gold at a rate that would “make it unprofitable for dealers or the public to demand it for non-monetary purposes”. The British wanted to make it an almost impossible task to redeem the rupee for gold by allowing its redemption only in London.......
Gold loan NBFCs will feel regulatory heat: ICRA
....The new regulations, in the form of loan-to-value (LTV) cap and funding constraints, will significantly restrict expansion capabilities of these NBFCs, said ICRA Management Consultancy Services (IMaCS). By the new Reserve Bank of India norms, NBFCs can lend only up to 60 per cent of the value of pledged gold (the LTV ratio is capped at 60 per cent)......
Showcause notices concern collective responsibilities: Modi
....In simple terms, the act requires certain foreign exchange transactions to be approved by the Reserve Bank of India (RBI) and the current investigations surround the potential contravention of the law in the BCCI's dealings with Cricket South Africa [CSA) for IPL 2. .....
Read....
Govt can provide equity support to public banks for Basel-II
......The comments come within a week after RBI Governor D Subbarao pointed out that the government would find it difficult to fund banks’ migration to the Basel-III norms due to its precarious fiscal condition.
Tuesday, September 11, 2012
Banker by profession, poetess by passion
यह रिवायत चल पड़ी है आज के इस दौर में
उन को ही ठुकराओ जिनका आप पर एहसान है
 |
Mrs Elizabeth Kurien, known as "Mona"
Ex-Manager, Insp. Dept, Central Office
and a member of EXRIBTES Group
|
......She can read the pulse of the market with the same ease as the poetry of Ghalib and Faiz. Finance and banking stirs her as much as ‘ghazal’ and ‘nazm’. Yes, she has a head for not just figures but also for the fine arts.......
Read - The Hindu
She can be contacted on ek.mona@yahoo.com
- Thanks to Shri Madan Gauria, Chandigarh for sending this VITALINFO...........
Have you also something to share, contact VITALINFO.....
She can be contacted on ek.mona@yahoo.com
- Thanks to Shri Madan Gauria, Chandigarh for sending this VITALINFO...........
Have you also something to share, contact VITALINFO.....
Strengthen RBI's balance sheet - M.G.Warrier
 |
| M.G.Warrier Former General Manager, Reserve Bank of India |
To ensure that temptations of the government emanating from external compulsions do not to dilute the strength of RBI’s balance sheet, the government should take measures to augment the share capital of the RBI after amending the RBI Act....
BC model facing resistance: Sa-Dhan
The business correspondents (BCs) model, which was encouraged by the Reserve Bank of India (RBI) to promote financial inclusion in the country, is facing many challenges, according to a study by Sa-Dhan, the national association of community development finance institutions. The study, which focused on financial inclusion models including self-help group-bank linkage, microfinance institutions and BC model, pointed out that the BC model currently required urgent intervention to sustain........
RBI Liquidity position comfortable: Gokarn
....For the last several weeks liquidity levels have been within our comfort zone (but) we monitor this on a daily basis”, Reserve Bank Deputy Governor Subir Gokarn told reporters .......
Lessons in finance
A student at a finance conference organised by the Indian Institute of Foreign Trade asked Goldman Sachs MD Bunty Bohra where the world would be if finance stopped being the prime mover for creating products and making profits. Bohra was clearly taken aback by the question but his answer was simple: “You are asking an investment banker this question? The world would come to an end!” To which a Reserve Bank of India Deputy Governor laconically suggested, “Then you can teach finance.
BS
Gokarn dampens hope for cash reserve ratio cut
Bankers expecting a reduction in the cash reserve ratio (CRR) at the Reserve Bank of India’s (RBI’s) mid-quarter policy review, scheduled on the coming Monday, will be disappointed at Deputy Governor Subir Gokarn’s comment on liquidity..........
Banks must get electric haircut
....which is why there will be a temptation to somehow convince RBI to grant one-time waivers which would allow banks to continue to classify these as standard assets. RBI, sadly, has allowed such waivers in the past. It has allowed banks to continue to classify Air India as a restructured asset instead of as an NPA and, last year, it allowed banks to lower their provision cover ratio as a higher ratio would mean that banks would have to report lower profits—
Bankers & Trust
Regulators and bureaucrats usually give a nuanced response whenever faced with irate customers on the lines of 'we will look into it'. K C Chakrabarty, Deputy Governor, Reserve Bank of India , though , is a contrarian and does not mince his words while tearing into middle-class attitudes . Speaking at an event to commemorate the memory of M R Pai who founded the All India Bank Depositors ' Association at the Indian Merchants Chamber, Mr Chakrabarty said bank customers should be self-driven as far as financial literacy is concerned . "Banks thrive on asymmetry of information ," he said , pointing out how even in simple products like fixed deposits , banks mislead by advertising high rates on special schemes like 555-day deposits and provide lower returns on longer-term deposits . He blamed middle-class inertia for banks getting away with poor service and questioned their tolerance despite being spoilt for choice. Incidentally , Chakrabarty's words would have rung a bell for those who knew Pai . He was a great believer in the maxim that a well-worded complaint could make a huge difference .
Banking on CRR
The cash reserve ratio (CRR) is required to ensure and control liquidity in the banking system. However, it should be used sparingly and as a last resort. Banks earn no interest on the money locked up as CRR. Hence the Reserve Bank of India (RBI) should not be reluctant to share with bankers at least 50 per cent of its potential earnings on CRR balances. It should not be forgotten that it is public money with banks that is being apportioned to be parked as CRR and it is the public that will suffer if banks earn no interest. If banks are allowed to earn interest on CRR, it will encourage them to price their products to the advantage of customers.
- Vijayasenan P Chennai (BS)
Nothing for banks to gripe about
.....CRR is not a tax but a fee. The banking system benefits from the licence it gets from the central bank to carry on business because it mints money through the working of the multiplier. It is a form of seigniorage enjoyed by the banking system similar to what the government gets through the printing of currency notes. Hence, the question of paying interest on CRR balances does not arise, as the system is amply rewarded by the power to create money......
Clash of interests
Who will blink first—Chaudhuri batting for the customers or Chakrabarty insisting on banking austerity?
Apart from inflation, what else does the Reserve Bank of India fear? The central bank, under D. Subbarao, is not too scared of the Central government. But it is worried about the autonomous noises made by India's largest public sector bank. Successive chairmen of State Bank of India have drawn the ire of the banking regulator. ........
Read.......
Forum keen to fund projects in 'Emerging Kerala'
.....Khurshid A Najmi, former legal adviser of RBI, said it was for the RBI to grant license to operate on participatory banking. No changes in banking laws are required for permitting interest free banking, he said.
Club smaller PSBs into a larger bank
..... A plausible escape route could be to redistribute the bulk deposits into smaller accounts—in the past, some banks have done that. Basel III norms, as RBI Governor Subbarao has pointed out, will impose an annual cash set-aside of up to R20,000 crore by the finance ministry to recap all the PSBs. In today’s scenario, this is a huge cheque to write. On the upside, the government can rejig the shareholding of smaller banks at far lower costs for the economy, since they are evidently not doing much of public banking. As some of them are nicely capitalised, merging them with the more stressed large banks can save some of the humongous payout.....
NPCI rolls out inter-bank service for merchant payments
National Payments Corporation of India (NPCI) has launched an inter-bank mobile payment service (IMPS) for merchant payments. This is aimed at making mobile payments to merchants and enterprises easier.......
AP Mahesh Coop Bank declares dividend
....The Reserve Bank of India had acceded to the request of the bank to extend its area of operation to the entire states of Maharashtra, Rajasthan and Gujarat, .......
Volume spurts in bond mart as DIIs flock to sovereigns
....Trade volumes remained high even today topping Rs 32,000 crore. This was despite the Reserve Bank of India’s Deputy Governor Subir Gokarn virtually spiking all market speculation of a possible reduction in the key monetary tool, the cash reserve ratio. A reduction would have increased cash in the banking system. But Gokarn said the cash was comfortable in the banking system. The RBI’s stance, traders said stemmed from the low deficit in the banking system of less than one per cent of the aggregate deposits. A cash deficit of one percent is the RBI’s declared comfort zone......
MFIN seeks 2 years' time to meet loan cap norms
The Microfinance Institutions Network (MFIN), the representative body of microfinance institutions (MFIs), has sought two years’ time from the Reserve Bank of India (RBI) for meeting the newly-introduced norms on margin cap on loans.........
Fuel fiasco a big letdown for markets
....The RBI has many reasons to ease rates, given that GDP growth is expected to fall sharply from estimated levels of 6.5%, mainly because of lack of credit offtake and below-par monsoons. Incremental Credit Deposit Ratio (ICDR) for 2012-13 till date is just 9.5%, indicating a sluggishness in credit growth.....
RBI seeks to relax corp bond rules for primary dealers
The Reserve Bank of India (RBI) has proposed allowing standalone primary dealers to act as market makers in corporate bond trading as part of a slew of proposals intended to relax guidelines and increase liquidity in this debt segment. The RBI is also proposing allowing standalone primary dealers to invest up to 50 percent of funds borrowed from call money markets into corporate debt, according to a draft communique seen by Reuters and confirmed by several market sources......
External debt remains within manageable limits: report
....The status report presents a detailed analysis of India’s external debt position as at the end of March this year and is based on the data released by the Reserve Bank of India (RBI) on June 29, 2012. Apart from analysing the trend, composition and debt service of the country’s external debt, it provides a comparative picture of its debt vis-a-vis other developing countries and analyses the external sector vulnerabilities in view of the fluid global economic situation......
Is Chidambaram our next Muhammad bin Tughlaq?
....Palaniappan Chidambaram will go down, along with a reluctant RBI chief Duvvuri Subbarao, as the joint holders of the Tughlaq No 3 title. Under pressure from a worsening fiscal deficit, Chidambaram will not only be printing more money than ever, but even the money he collects as revenue from disinvestment may be really be little more than an IOU for money to be printed in future. He will be committing the government to remain a Tughlaq well into the future.....
Why is RBI giving us the wrong advice on gold?
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But what puzzles me is a more serious issue. Either gold is money or it’s not. I happen to believe it is. But Chakrabarty is entitled to his opinions........
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