My View on "Can RBI end India’s cronyism?........"

CBI should not probe business decisions- PSBs tell the Finance Minister......

We have been hearing this argument for a long time. It is not advisable to accept this argument especially in the context of the recent justifiably stepped up campaign against rampant corruption in Government and Public Sector enterprises. What is needed are adequate safeguards against ill informed proceedings against top executives of public sector banks which are already provided by the Fraud Board constituted in the RBI to which cases are referred to by the Finance Ministry. The Board scrutinises the papers, calls for such additional evidence as is required and then gives its recommendations to the Finance Ministry. When the Finance Ministry gives its clearance to the CBI, on the basis of the report of the Fraud Board, then only the Preliminary Enquiry (P.E) is converted into a regular case by the CBI. This procedure has been facilitated by the "Single Directive" in terms of which cases against officials in the rank of Joint Secretary and above require clearance from the Government. 

The proceedings of the Board in the past have given ample indication where top executives of banks have sanctioned or renewed loans in a fraudulent manner either for illegal gratification or on account of pressure either from political masters or from other sources. The whole process had been done in some of these cases in such a clever manner giving an impression that the recommendation for sanction has been made from the First level officer in the hierarchy whereas the real picture was that it was done at the instance of verbal orders of the top executives !!

- A.Chandramouliswaran (via e-mail)

Govt banks line up 2,000 cr bad loan sale

.....All cash deals of stressed asset deals had dried up in the last few years following introduction of stricter norms by Reserve Bank of India. According to the norms, banks while selling non-performing assets have to work out the net present value of the estimated cash flow associated with the realisable value of the available securities net of the cost of realisation........

Read - BS 

Lower inflation not enough for a Dec move by RBI: Barclays

......"While a positive surprise, we think today's print should not be seen as a resounding signal that inflationary pressures are dissipating in India," Barclays said in a research note, adding that "it may not be a game-changer for the RBI's policy guidance".......

Read..........

There is need to exercise caution on SLR status for corporate bonds

.....After all, the present surplus SLR securities with the banking system alone can generate over Rs 5 lakh crore through open market operations (outright purchase of government bonds by RBI) or through the overnight cash support mechanism through the repurchase window. In implementing the present proposal, the government would only help transfer corporate risks to banks and eventually to itself. In such an eventuality, the government would also effectively loosen its fiscal strings, contradicting its proffered pursuit of fiscal prudence......

Read......

The real problem for India is D Subbarao: Shankar Sharma

........I am saying irrespective of that, the markets are going to go up. If this had not happened, the market would still be up because the macro numbers for India have bottomed out. The real problem for India, I have said this many times, is Subbarao. If we fix the mindset of his, you fix a large part of the problem. I do not know whether it is fixable or not. He has now said that in January we will see some action on the rate front, which I find a little bit strange. After all, why would you want to broadcast that out to the world well ahead of the actual event?

Read - ET

Monetary easing by stealth

By claiming CRR is a less powerful monetary instrument, the RBI laid the foundation of its anti-growth image today

The Reserve Bank of India (RBI) Governor has received his fair share of plaudits for resisting what the markets read to be pressure from North Block to cut the repo rate in the October monetary policy. The endorsement seems legitimate to some. If indeed Governor Subbarao was perceived to have kowtowed to the finance minister, this could have damaged the central bank’s credibility in the long term. The bigger question, however, is: can defending the central bank’s autonomy be an end in itself? Or should the governor have acted differently in the interest of the economy and cut the policy rate instead, raised eyebrows over autonomy and independence be damned?.......

Read - BS

Loan loss cover for govt banks dip amid rising NPA

.....Most PSBs have reported PCR less than 70 per cent during the second quarter this year. Earlier, Reserve Bank of India (RBI) had mandated banks to have a minimum 70 per cent PCR but withdrew the norm in September 2011 as asset quality pressure on banks started taking a toll of their profitability..........

Read - BS

RBI needs NIB support

.........With the government now looking a bit tired—the much-promised National Investment Board which was to jumpstart clearances for stalled projects still hasn’t come up—FIIs flows halved in October. The government’s inability to hold its end of the bargain is going to make RBI’s life tougher.

Read - FE Editorial

Banks' brazenness

....The present mess in large public sector banks (PSBs) is of their own making. In the wake of the global financial crisis, the Reserve Bank of India (RBI) took a lenient view on non-performing asset (NPA) provisioning, and introduced revised restructuring norms to help affected borrowers. Banks took these as a bonanza. Despite large PSBs making profits, they were unwilling to provide for NPAs......

Read - BS

Several UCBs fall under RBI scalp

The start of the month of November saw many urban cooperative banks coming under the scalp of Reserve Bank of India for one reason or the other.........

Read......

‘Cut interest rates’

The Federation of Karnataka Chambers of Commerce and Industry has urged the Reserve Bank of India (RBI) to consider downward revision in the interest rates.........

Read - The Hindu

No rate cut needed

The discouraging data on industrial production and exports have once again become an excuse for entrepreneurs to ask for an interest rate cut. That affects lending rates if banks are dependent on the RBI for funds. This is not the case now. ...

Read - BS

India’s Economy: Limping Along

.......Hence the pressure on the RBI to cut interest rates is heavy, and is increasing as data continues to disappoint. The RBI is maintaining that inflation is its primary concern and is thus not moving interest rates to counter the growth slide, a move which might also weaken the currency and thus exacerbate the trade deficit in the near term.  In short, the RBI’s key interest rate is probably going to stay unchanged, as pressure to cut from the slowing economy cancels out inflationary pressure to increase it.

Read..........

‘Govt has taken revolutionary steps to boost cooperative sector’

.Highlighting the importance of Cooperative Week, the Minister said that the cooperative movement was launched in India about hundred years ago and the year 2012 has been declared as International Year of Cooperatives. The objective of the cooperative is to help the farmers and poor sections of the society, women folk through cooperative mode. The cooperative has progressed substantially worldwide and millions of people are availing benefits through the network of cooperative movement. The State has also registered satisfactory progress in this sector, particularly during the past three years. He said still lot has to be done in this sector and hoped that the objective will be achieved with the cooperation of all stakeholders.......

Read......

Despite threat of bad loans, steady growth to keep Indian banking sector afloat

........The fear about the Indian banking system is almost similar, thanks to the scores of defaults and restructuring of loans to prevent a loan from getting classified as bad. Are the bad loans in the Indian banking system so bad that it can wreck the economy? If history is any indicator, they are not............

Read - ET

FM to meet heads of PSU banks on Thursday

.....The high-profile meeting will be held in the backdrop of the half-yearly review of monetary policy by the Reserve Bank of India (RBI) wherein central bank left benchmark interest rate unchanged on concern of inflation........

Read - HBL

My new book will talk about SKS experience: Vikram Akula

....Financial inclusion obviously is my life’s work and I will always be passionate about it. The time is not now for me to come back but perhaps in the future, in the right opportunity in the right context, of course, I am very passionate about the subject......

Read - BS

Micro-finance investors now eye NBFCs

........"There is an increasing amount of private equity coming to NBFCs and we expect risk capital interest to grow even further. Private equity knows that there is a huge under-served market, and NBFCs can access the same in a more efficient manner," said Ramakrishna Nishtala, co-founder and chief operating officer, Vistaar. Recent regulations by RBI have also brought greater confidence to investors.......

Read - ET 

Do Stockguru investors have a case against SEBI and RBI?

Stockguru, a chain-money scheme, openly flouted various SEBI rules. Moneylife pointed this out in December 2010 and again in April 2011 but SEBI, under both former chairman CB Bhave and current chairman UK Sinha, and RBI took no action. Aggrieved investors can possibly file a case of gross regulatory lapse against SEBI and RBI.........

Read - Moneylife

THE END OF THE DERIVATIVES DREAM

RBI’s conservative approach to anything called financial innovation is known. But the way its ED VK Sharma blew into pieces the arguments for various instruments and the market is not what the experts make it out to be at Finnoviti 2012. He picked holes in every one of the markets in India. “It would be no exaggeration to say that these hugely negative spreads of IRS to G-Secs are as counter-intuitive, quirky, anomalous, warped and preposterous as a father’s negative age spread to his son’s is!” 

ET

The financial innovations that never were - V.K.Sharma

Keynote Address delivered by V.K. Sharma, Executive Director, Reserve Bank of India, at Finnoviti 2012 organised by Banking Frontiers, Mumbai, India, on November 8, 2012

......A typical, but fallacious, and vacuous, rationalisation offered of this counter-intuitive, warped, wierd and preposterous feature is that while IRS yields are influenced by expected path of future interest rates, those of G-Secs are influenced by their supply!! Nothing could be farther from the truth for this rationalisation turns the very logic and reason on its head. For, as I said, being pure time value of money, G-Secs are influenced by, and immediately price in, inflationary expectations arising from higher fiscal deficit which, in turn, is the cause of additional supply of G-Secs and not the other way round.......

Read - HBL

Can RBI end India’s cronyism?

The central bank should implement the Mahapatra committee proposals speedily without allowing any exceptions

.....the Reserve Bank of India (RBI) should gradually withdraw the cover it provides for politically motivated lending decisions. In other words, it should not dilute its reporting and provisioning standards on loans made, especially to public sector enterprises. Yes, this would show the financial health of the Indian banking sector in poor light. However, allowing sunshine into Indian bank financials is far better than taking a sanguine view of their health based on diluted standards. Moreover, politicians have not used the time afforded by the restructuring to eliminate the underlying causes that give rise to NPAs in the first place.......

Read - Mint

Subir Gokarn's fate hangs in balance as panel meets to shortlist candidates

Reserve Bank of India Deputy Governor Subir Gokarn’s fate hangs in balance as a search committee will meet soon to shortlist the names of candidates who will be interviewed for the post. Gokarn (53), who was appointed in 2009, will complete his three year term on November 23. Sources familiar with the developments said Gokarn would appear for the interview for having a second term..........

Read - BS

A search committee met this week to find a likely successor for the man whose inputs are vital for monetary policy making. The man with the look of Marx has been the face of RBI to explain why interest rate was not raised, or not cut. There are many who want to succeed him, given the rising stature of the central bank under D Subbarao. Many wonder whether an economist from a global bank, who was tipped to take the seat last time, will be the person again when the seat falls vacant on November 23?

ET

Archana Bhargava may Join Bank of Maharashtra as ED

Archana Bhargava, the ED of Canara Bank, is likely to be moved to Bank of Maharashtra as the bank’s second ED, so says the rumour mill. She rose to the rank of GM at PNB before joining Canara Bank as ED in March 2011. According to the banking sector, earlier she was to be promoted to one of the small-sized PSU banks as CMD, but now there appears to be some kind of rethinking. Meanwhile, the government is yet to appoint a CMD at Canara Bank after S Raman retired in September 2012. 

ET

Should RBI control cooperative banks ?

Three selfless cooperators have thrown themselves into analyzing the ills/benefits of RBI control of cooperative banks on the platform of Indiancooperative.com. We think it in the fitness of things to publish it for the benefit of the people in general.........

Read.........

The RBI's smoke and mirrors

.........Monetary policy is a blunt tool, and only the RBI can know how it will ensure credit to productive sectors by keeping the repo rate unchanged. It is true that the RBI has to deal with several constraints, some of which are fallout of government inaction. Consequently, monetary policy alone cannot be the lasting solution to India’s inflation. Still, the RBI will achieve better success if it comes across as being less confused about what it is trying to fix: low growth or still-high inflation. In the absence of such clarity, it’ll have little success, as has been the case.

Read - BS

Banking lokpal planning to offer SMS facility

JAISALMER: Efforts have been stepped up to create awareness about the banking lokpal system in the country and results so far have been encouraging as there is a significant increase in the filing of complaints by consumers, said Rajasthan head of banking lokpal.........

Read - TOI

Build robust mechanism to prevent e-banking fraud: RBI

.......The Reserve Bank of India wants banks to build a robust mechanism to prevent incidents of fraud in areas of mobile/Net banking and electronic fund transfer. “With greater infusion of technology in banking, the incident of frauds in Internet banking has witnessed an increase in recent times. Banks need to improve customer awareness to contain incidents of frauds involving customers,” the RBI said in its latest Report on Trend and Progress of Banking in India.....

Read - HBL

Flouting the norm

......... With just about two months before these cheques become invalid, at least one public sector bank, Central Bank of India, continues to flout the RBI directive. As late as October 31, 2012, customers have been issued cheque-books that are not in accordance with the stipulated CTS-2010 standard........

Read - BS

CRR cut won't have much impact on liquidity or interest rates

.....The FM has been asking the RBI to take action, while the RBI has been selective this year in terms of lowering the repo rate (April) and the CRR (February, March, September and October). The RBI evidently sees interest rates and inflation more from a macro view and implicitly looks at real interest rates. But, how do banks react to rate cuts? Are they really sensitive to rate changes or are they just asking for more? ......

Read - ET

Assocham submits infrastructure growth roadmap to FinMin

...... It suggested that banks may be permitted to issue long-term, tax free bonds for the purpose of lending to infrastructure sector at a lower rate of interest. Provisions may also be made by the Reserve Bank of India (RBI) to provide interest subsidies to the banks for their exposure in this sector, it said.........

Read - BS

Playing the victim after getting caught

......In 1992, the enactment of a Special Court (Trial of Offences Relating to Transactions in Securities) Act ensured that some were carefully kept out of the net. ANZ Grindlays Bank, which credited cheques issued by various banks to the account of scam-accused Harshad Mehta, was untouched by the civil and criminal cases of the Special Court. It was permitted to enter into long-winded arbitration proceedings with State Bank of India (SBI) and the National Housing Bank (NHB). The Bank had infamously argued that crediting cheques to brokers’ accounts was ‘an accepted market practice’. One may argue that treating ANZ gently was done in the national interest, since India had just managed to avoid a default on external borrowings. The manoeuvre saved the Reserve Bank of India (RBI) from embarrassment. After all, NHB was a wholly-owned subsidiary and RBI deputy governors graced the SBI’s board.  ......

Read - Moneylife

The core of the inflation debate

.... As monetary policy transmission has a lagged impact on inflation, central banks tend to be forward-looking and factor in the expected changes in core inflation, rather than respond to temporary cost-push pressures. Keeping this in mind, RBI has hinted at a further loosening of monetary policy, perhaps a rate cut in early 2013. Nonetheless, while core inflation could moderate in the coming months, high food and fuel inflation will keep WPI inflation well above RBI’s stated tolerance limit of 4.5-5% for the foreseeable future. This will still make it difficult for RBI to communicate the rationale behind a repo rate cut, as and when it is done......

Read - FE

Cut and thrust

..........The friction, however, is far from over. It now appears that RBI Deputy Governor Subir Gokarn, 53, who strongly backs inflation-control over growth, may not get an extension, though he is well below the retirement age of 62 years. The government has constituted a search panel to replace Gokarn whose term expires on November 23. Also, the finance ministry is likely to dig deep into the RBI's accounts books, as it is the government that tables the central bank's accounts in Parliament. Perhaps, Chidambaram would soon be able to show Subbarao who is the boss............

Read - The Week

Asset liabilities

....The only way to curb formation of NPAs in banks is to discipline the borrowers by strict appraisal standards and close monitoring of loan accounts. They need to be rated based on their conduct of loan accounts. Banks should levy a small fine when their performance deteriorates.....

Read - BS

Electronic transactions rise 53% in first half of fiscal: RBI

Electronic transactions in the country in first nine months were reported at Rs 14,88,353 crore rising 53% over similar period last year according to the data released by the Reserve Bank of India (RBI). Electronic transactions include electronic clearing services (ECS), national electronic funds transfer (NEFT) and card payments (credit and debit).............

Read - BS

Big loopholes in farm credit

The RBI closes some, but many others still exist

....Some loopholes that allowed banks to avoid lending directly to farmers and yet claim to be meeting farm credit targets have recently been plugged by the Reserve Bank of India (RBI) when it altered priority-sector lending norms. Most banks found extending finance to agricultural institutions far more convenient than loaning funds directly to farmers, which entailed a higher recovery risk and transaction cost. Thus, the share of indirect credit in total agricultural credit supplied by commercial banks surged from 11 per cent in the mid-1990s to nearly 30 per cent in 2011......

Read - BS

CBI should not probe biz decisions, public sector banks tell FinMin

Top public sector bank officials have told the Finance Ministry and the Reserve Bank of India that the Central Bureau of Investigation should not call into question the commercial decisions taken by them in good faith. They warned that if the investigating agency starts questioning the commercial decisions taken for growing the loan book, then the decision-making process as well as the officers’ morale will be affected............

Read - HBL

RRBs need to open 1,700 branches this fiscal: RBI report

.....The Government’s plan to recapitalise RRBs is yet to gain momentum in some States. Based on the recommendations of the K.C. Chakrabarty committee to study the current level of capital to risk-weighted assets ratio (CRAR) of RRBs, the Government had announced a recapitalisation programme in 40 of the 82 RRBs to ensure that their CRAR level reaches nine per cent by March 2012......

Read - HBL

RBI to banks: Show action taken on unhedged forex risks

At a time when the risks from unhedged foreign currency exposure of companies has emerged as a big scare for the banking sector, the Reserve Bank of India (RBI) has directed banks to furnish action taken reports on the issue before end-December 2012. The direction on filing the compliance reports stems from the RBI advisory in February under which banks were told that they should “rigorously evaluate the risks” arising out of unhedged foreign currency exposure of the corporates and price them in the credit risk premium while extending fund-based and non fund-based credit facilities..........

Read - Indian Express

Retail inflation up at 9.75 % in Oct

Vindicating Reserve Bank of India Governor D. Subbarao’s stand on not easing interest rates during the monetary policy review last month on account of persistent inflationary pressures, retail inflation moved closer to double digits at 9.75 per cent in October from 9.73 per cent in the previous month. As per the CPI (consumer price index) data released here on Monday, even as the month-on-month rise in the price spiral appears to be minuscule, the fact remains that there is as yet no sign of a cooling-off to suggest a downtrend in inflation in the near-term........

Read - The Hindu

Bleak economic scenario

.....The RBI cannot be expected to surrender its remit to hold inflation within reasonable limits. At 9.75 per cent consumer price inflation is at least four per cent too high for anyone's comfort. Hence the refusal by RBI Governor D Subbarao to reduce the prime lending rate at the time of the latest monetary review a few days ago. Should CPI continue to stay high, it is unlikely the central bank would cut the policy rate even in the fourth quarter. If Chidambaram is keen on rate- reduction, he should first tackle the burgeoning fiscal deficit.

Read - FPJ

More than a lakh ATMs in India; SBI controls 59%

........The NPCI has been an umbrella organization created by the Reserve Bank of India, which acts as an umbrella body to monitor all payments through ATMs, and looking at transactions between banks regarding these machines. For this reason, the National Financial Switch is operational to monitor the connectivity and keep an eye on the registeration of the ATMs. Banks actually have to furnish details of their ATm network wherever there is one................

Read......

Now, Mastercard with LCD screen, built-in keyboard

Mastercard in Singapore has launched a new credit card that has an LCD display and built-in keyboard. The card has touch-sensitive buttons and the ability to create a ‘one-time password’, doing away with the need for a separate device sometimes needed to log in to online banking....

Read - Indian Express

For banks, all that glitters is coins

....“There is definitely some traction in sales vis-à-vis last year despite the rise in price of gold. There is less mark-up due to surging gold rates. However, we do anticipate a growth of about 20 per cent compared with last year,”........

Read - HBL

Happy Diwali.............

VITALINFO wishes its readers a very happy and prosperous Diwali. Countdown has begun to celebrate the 2nd Anniversary of VITALINFO on 29th November 2012.......

Decimating Reserve Bank of India

It was in March 2012 that the Economist, London, showered praise on Reserve Bank of India ( RBI), " Judging by the numbers, RBI is among the world's best central banks. Its record on banking, growth and inflation is decent enough". The journal also gave credit to RBI for escaping Asian currency crisis of 1997 and the more recent global financial crisis of 2008. The Economist emphasised: " Relative to most Indian state bodies, the RBI has more brains, muscle and integrity. It is about the only institution in the country you never hear accused of graft". RBI has thus made us proud and one would have thought that the Government of India would make every effort to further strengthen the institution. Alas! This does not seem to be so. On the other hand, there are efforts to cut it down to its size and to decimate it. Perhaps rulers like sycophancy and nobody accuses RBI of being docile. In fact it is its independent thinking which has raised its stature to its present heights.........

.....Restricting RBI functions to monetary policy formulation and supervision of banks is neither logically sustainable nor practicable. It would serve no purpose except decimating RBI. The FSLRC would do well to revisit the whole range of issues involved........

Read - FPJ

In His Fight with Finmin, Subbarao Gets PM Support

.......The father of economic reforms, and a former central bank Governor, made no secret of where his sympathies lie in the duel between the finance ministry and the central bank over the direction of interest rates amid stubbornly high prices. Industry bodies have also been urging the RBI to cut rates to boost economic growth, which is likely to slide to 6% for the year ending March 31, 2013, compared with over 8% in 2010-11.  “Central banks have to balance the compulsions of stimulating growth and controlling inflation,” Singh told titans of the corporate world assembled at The Economic Times Awards for Corporate Excellence.  “Both are important. But we must recognise that lower inflation is good both for growth and for making growth more socially inclusive,” said Singh. “The Reserve Bank of India has sought to support a revival of growth by reducing the CRR successively over two quarters.”.........

Read - ET

India's central bank chief: a hawk flying solo against inflation

Indian central bank Governor Duvvuri Subbarao's standoff with a finance ministry that wants interest rates reduced sooner rather than later may prove the defining moment of his tenure. But while he wins plaudits for asserting the Reserve Bank of India's autonomy, Subbarao's policy draws mixed reviews...........

Read.......

RBI staff take up cudgels against councillor

BHUBANESWAR: Residents of RBI residential staff quarters in Nayapalli are at loggerheads with the local councillor over plantation drive on the roadside. The RBI staff even said though they have got permission from the Bhubaneswar Municipal Corporation (BMC) to plant saplings along the boundary of their colony, the councillor did not allow them to do so. According to residents of RBI colony, people have been dumping garbage and...........

Read - TOI

APSMFC in need of drastic overhaul

....The minorities welfare secretary has complained to RBI, seeking investigation and action against Vijaya Bank branches in connection with the fraud, and demanding recouping of defrauded amount to APSMFC. The secretary has also constituted two teams with audit officers drawn from various departments for auditing the accounts of the corporation and its district offices. The services of a chartered accountant have also been engaged for auditing the accounts of the corporation for the last four years......

Read - TOI

RBI for standard definition of infrastructure

NEW DELHI, NOV 10: 

Reserve Bank of India (RBI) will soon come out with a standard definition of infrastructure. Archana Mangalagiri, General Manager, RBI, said this at the India infrastructure Investment Forum here................

Read - HBL

North Sikkim gets SBI Financial Literacy Centre

Sikkim Express

Demand for Ambedkar’s image on currency notes

Members of Dalit Liberation Movement of India (DLM), led by its national convenor, Dalit Pandian staged a demonstration in front of the Head Post Office here on Saturday placing a demand to the Union government to print images of B.R. Ambedkar on currency notes......

Read - The Hindu

RBI pumps in more coins

Traders may not have to bicker with busy shoppers for loose change this festive season. On Saturday, Reserve Bank of India, Chennai region, pumped in coins worth nearly Rs. 30 lakh into busy trade hubs across the city. This is intended to meet the heavy demand ahead of Deepavali.......

Read - The Hindu

India's bane is policy paralysis, says Jalan

Former Reserve Bank of India (RBI) Governor Bimal Jalan has said India's major problem is that the government does not seem to be interested in governance. While releasing a book by late Dr DK Rangnekar, titled The Politics of Poverty,......

Read - Hindustan Times

BANCON 2012

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

Risk management, a serious business

.....A very erudite speech on the topic “Managing currency and interest rate risks” was delivered by Harun R. Khan, Deputy Governor of the Reserve Bank of India, at a seminar in Bombay recently. Pointing out how financial market risks affected the real economy, he said that the big increase in volatility had induced uncertainty which, in turn, had a negative impact on the real economy as well. Financial and non-financial companies, unable to anticipate their future, are adopting a more cautious approach to their business planning and employment policies.......

Read - The Hindu

Is Cash Reserve Ratio a national waste?

.....the system of CRR which gives no interest to banks on these deposits makes banks suffer financial loss. Let the CRR be an effective tool for monetary policy, but what is the harm in passing some of the earnings made by RBI on these CRR deposits? Else let us abolish this system. After all, there is no harm in regulator learning from regulated ones. While CRR may not be a national waste, it is indeed a drain on the resources of banks which is obtained from public........

Read - Moneylife

CPI’s Achuthan asks RBI for all files related to Bharti-Walmart

Bharati Enterprises’ Vice-Chairman and Managing Director Rajan Bharti Mittal’s recent statement that the company had given “everything required” to the Reserve Bank of India (RBI) on its retail joint venture with US-based Walmart, has irked the Communist Party of India (CPI). Contesting Mittal’s statement, M.P. Achuthan, a CPI Member of Parliament, has written to RBI Governor D. Subbarao demanding a copy of the documents filed by Bharti, Walmart and Cedar Support Services Ltd (a unit of Bharti’s) with the RBI..........

Read - HBL

RBI hails Gehlot Govt’s financial management

Jaipur: The Reserve Bank of India (RBI) has hailed the Rajasthan Government’s financial management and successful efforts for attaining goals targets of economy prescribed by the bank. A latest report the RBI has praised the steps and action taken by the state government under the leadership of Chief Minister-cum-Finance Minister Ashok Gehlot for overcoming the budgetary revenue deficit and restricting the fiscal deficit below the prescribed limits under the FRBM Act.........

Read........

Who next?

.....But this is not being written just to sing Mr Chidambaram’s praises. If he is to win acceptability for the top job, he needs to demonstrate that he can establish working relations with people of different political persuasions — remember that he had run-ins with state governments when he was home minister. He has a history of being prickly when faced with criticism, and not very tolerant of dissent, as he demonstrated recently by being peevish when the Reserve Bank did not do what he wanted, on interest rates. He also tends to micro-manage.......

Read - BS

RBI did it

This refers to the editorial “Will RBI do its bit?” (FE, October 30). The dire, uncertain condition of the Indian economy has been perfectly mirrored in the RBI’s quarterly survey. This editorial and the front page story “SBI capex loan crash mirrors investment strike at India Inc” told us the facts. Inflation will likely remain on a sticky path. Fiscal cliff of the US might reduce the growth rate of the developing world, including India. It’s good the current government seems on a reform path. Let’s hope that further dose of economic reforms will accelerate our economic growth.

- Shishir Sindekar, BYK College of Commerce, Nashik (FE)

.....As the popular saying goes—“No pain, no gain”—understandably, the policy initiatives taken might not bring cheer in the short term but definitely has the potential to turn the economy around in the medium to long term. In a nutshell, it is a well-documented policy aimed at striking a right balance between growth and inflation and take the economy on a higher growth pedestal.......

Read - FE

The ride will not be easy

.....Regarding rates, my best guess is a repo rate cut of 50 basis points in the fourth quarter, and for gradual rate cuts to continue in FY14. However, there is a risk that the Reserve Bank of India (RBI) continues its hawkish stance, given inflation is unlikely to move below its target level anytime soon. Hence, it might choose to continue to focus on liquidity management through other tools. RBI chief D Subbarao did at least state last week that easing could be possible in January........

Read - BS

How banks got the count wrong

Financial inclusion is the new mantra in banking. Taking the poorest of the poor along the banking channels and providing means to a meaningful life is an ideal goal. But whether it could be achieved under the existing system is a moot question. If at all it is achievable, how soon can it be done? Officially Ernakulam will be the first district in the country to win the unique distinction of being the first to achieve ‘meaningful financial inclusion’. It will be declared at a function to be chaired by RBI Governor here on November 22......

Read - The Hindu

Trouble at the bank

.....The pressure on the SBI and other leading public sector banks, including the PNB and Canara Bank, is the result of the huge loans these banks have been nudged to make in the infrastructure sector in the past few years amid a sliding domestic and global economy. They have had little chance of selling these loans to long-term infra financiers who are still being set up. ......

Read - Indian Express

Don't reject educational loan applications, RBI tells banks

".......... Banks are advised not to reject any educational loan application for reasons that the residence of the borrower does not fall under the bank's service area," RBI said in a notification today.......

Read - BS

Maharashtra state co-op bank back in black

MUMBAI: A year after the Reserve Bank of India (RBI) dismissed the board of the Maharashtra State Cooperative Bank (MSCB) and appointed two state officials to run the bank citing high negative net worth, the apex bank has scripted a turnaround. The MSCB has wiped out its losses and has collected a net profit of nearly Rs 18 crore. A National Bank for Agriculture and Rural Development audit of the bank's 2009-10 balance sheet had revealed that its net worth had turned negative by Rs 140 crore on account of money set aside or provided for bad loans......

Read - TOI

'Pre-payment penalty should be reasonable'

The Reserve Bank of India (RBI) on Friday placed on its website the draft report of the ‘committee to assess the feasibility of introducing more long-term fixed interest rate loan products by banks’. The report has been placed for public comments. According to the recommendations, banks should charge Pre-payment penalty on fixed rate loan products to the extent of the amount due only, and not on the initial loan amount sanctioned as some banks are doing. It should also be reasonable. Moreover, the pre-payment penalty could be graded, based on the period after which the loan is repaid - like five years, 10 years and so on...........

Read - BS

Farming has no credit

...........When asked, a senior banker at a leading bank said, “Agriculture is an inconvenient necessity. Not only are bad loans in the sector high, but the amounts offered are very low.  Our risk is not adjusted well. Not to mention the ever-present risk of waivers.” But banks have to meet the Reserve Bank of India (RBI) rules on priority-sector lending. The RBI mandates banks to give at least 18 per cent of their total loans to agriculture. Failure to do so invites the RBI’s displeasure........

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Provide home loans with lower EMI: RBI

Banks should look at the possibility of introducing home loans with lower EMIs and higher repayment period of up to 30 years, according to the Reserve Bank of India. The RBI draft report on home loans has suggested that banks should introduce and popularise long-term fixed rate home loan with a provision of re-fixing the interest rate after period of seven to 10 years. At present, banks give home loans with a maximum tenure of 20 years.........

Read - Mumbai Mirror

MP a better performing State: RBI Dy Guv

.....Chakrabarty further said he has been citing the example of Madhya Pradesh at various forums for the implementation of various developmental activities and rapid progress that the State is witnessing. Investments expected as a result of the Global Investors’ Summit present an opportunity for the banks to participate in the growth of the State. Financial Inclusion is very important for the development of the state. Amongst the thrust areas for the banks were Financial Inclusion, flow of credit to agriculture and MSE sectors, education loans and efficient management of NPAs, he added.......

Read - The Pioneer

SBI now has the largest overseas presence among Indian banks

State Bank of India has taken the leadership position in overseas presence with 52 offices as on March 2012, ahead of Bank of Baroda's 47. ..........

Read - ET

Chidambaram chairs fifth FSDC meeting

New Delhi, Nov 10 (IBNS) The Fifth Meeting of the Financial Stability and Development Council (FSDC) was held here on Saturday under the Chairmanship of Union Finance Minister P. Chidambaram. The meeting was attended by Dr. D. Subbarao, Governor, RBI, U. K. Sinha, Chairman, SEBI, Yogesh Agarwal, Chairman, PFRDA, R.K.Nair, Member, IRDA, Dr. Arvind Mayaram, Secretary, Department of Economic Affairs, D. K. Mittal, Secretary, Department of Financial Services and other senior officials of the Ministry of Finance.....

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Monitor end-use of subsidised crop loans, banks told

The Reserve Bank of India (RBI) said banks have failed to ensure the end-use of funds disbursed as crop loans and some borrowers were diverting such loans for other purposes. RBI has asked banks to strictly monitor end-use of short-term crop loans under the interest subvention scheme and make sure these are not used for any other purpose. RBI cautioned banks that crop loans not meeting this criteria will not be considered as agricultural loans..........

Read - BS

Govt, banks yet to meet targets

.....Despite clear cut instructions of RBI to ensure cent per cent financial inclusion in all 24 districts, till date only seven districts, namely Dumka, Jamtara, Pakur, Godda, Lohardaga, Hazaribag and Ramgarh, have been declared cent percent financially included. As per another guideline of the RBI, banks have been asked to extend banking facility to hamlets with a population between 1,600-2,000 and as many as 875 villages have been identified under the scheme.......

Read -TOI

Post office discount is no golden deal

....Are we comparing apples with oranges? Is the gold sold by the post office and banks superior to that sold by retailers and hence can it command a higher price? The post office and banks advertise their trust value, and the high-quality and purity of the gold retailed by them. They stress upon the tamper-proof packaging and assayer certificate. But retailers maintain that the gold sold by them is also of similar high quality, with similar safeguards. In fact, retailers say that since the post office and banks only sell and do not buy back gold coins, many of these coins eventually find their way to retail stores, which in turn sell them. So, how can the purity and quality of the coins be any less, they ask......

Read - HBL

All public, select private banks in Delhi to collect tax payments

........"It is observed that the rush for remitting income-tax dues into the RBI has been far too heavy towards the end of March/June/September/December and it becomes difficult for the RBI to cope up with the pressure of receipts although additional counters to the maximum extent possible are provided for the purpose," RBI said in a press release today........

Read - ET

Redefine priority sector lending - K Kanagasabapathy

.....The Narasimham Committee of 1991, which went into the issue of directed credit, observed after drawing attention to the problem of low and declining profitability, that there was a need for gradual phasing out of the directed credit programme, and that the proportion should be fixed at 10 per cent of the aggregate credit to cover the really needy and poor. This recommendation was not heeded by the Reserve Bank or the government. A similar approach for redefining the sub-targets was made by the recent Nair committee, stressing the need for flow of credit to small and marginal farmers and micro enterprises. This also went unheeded.......

Read - HBL

My View on "Government gets it wrong on CRR"

I have read with interest the article of Shri Seshan. It is, as always, interesting. I have two observations. First, CRR is stated to be not a repressive tax but a fee for the licence to create money and hence there is, therefore, no question of paying interest on CRR balances. Accepting this argument,  the question is what should be the limit up to which cash can be impounded by the RBI with out any obligation to pay interest? Surely, it cannot be with out any ceiling. So long as it is confined to the statutory minimum which has to be a small percentage, non-payment of interest would be all right. Secondly, I would like to inform the readers of VITALINFO that the question of audit of RBI by the CAG was indeed suggested long long ago by a Member of Parliament ( if my memory serves me right, the MP belonged to CPM) and the then Finance Minister, Shri Y.B. Chavan, made out a strong case against this proposal and defended the RBI to the hilt.

- A. Chandramouliswaran

This refers to “Govt gets it wrong on CRR” (Business Line, November 8). The author has rightly pointed out that the government shouldn’t pressurise the RBI towards interest payment on CRR. Instead, the government, the RBI and banks should work towards reducing non-performing assets (NPAs) and other administrative charges, which constitute wastage. Reducing expenditure, wastage, is one way of earning profits. If the RBI takes interest on CRR, the ultimate financial burden is borne by the ordinary customers of banks. This is not a permanent solution. The process for lending of loans should be strengthened, while also being user-friendly. Automation of processes across banks, in public and private sector, will reduce corruption. Promoting greater awareness amongst bank customers, and the public at large, will enhance efficiency.

Vedula Krishna, Visakhapatnam (HBL)

This refers to ‘Govt gets it wrong on CRR’ (Business Line, November 8). The Reserve Bank of India acts as a bankers’ bank and ensures stability of the entire monetary system. All banks enjoy the benefit of credibility due to regulation enforced by the RBI. Hence, they must pay for it. One way to measure the benefit derived can be by way of deposits mobilised by them. Hence, it is quite logical that they must forego interest on CRR, which is based on their deposit figures.

S Kalyanasundaram, Chennai (HBL)