......Like CAG, the Reserve Bank of India, too, has come under intense pressure. When the apex bank, much to the chagrin of the fiscal mandarins, did not reduce the policy rate, the Finance Minister P. Chidambaram said, “The government will walk alone”. By saying so, he sort of revealed his upset mind. There have been not-so-subtle suggestions to the Governor to rethink on the RBI stand on the policy rate. The recent spate of avoidable public interludes between the Government and the heads of Constitution-backed institutions show up the entire system somewhat negatively. This is not doing well either to the country, in general, or to the economy, in particular. What is required is co-operative co-existence and not demonstration of one-upmanship.
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.
Monday, November 19, 2012
Nirmal shines for RBI
Nirmal S smashed an unbeaten century to power Reserve Bank of India to a facile nine-wicket win over BDSA South Western Railway, Bangalore, in the KSCA Group II, Division II league match.....
A new direction for financial inclusion?
It is crucial for RBI to realize the value of banking for the poor and refocus its efforts accordingly
....... it is crucial for RBI to realize the value of banking for the poor and refocus its efforts accordingly. But the solution won’t solely come from RBI’s efforts. Banks will need to envision long-term profitability as a possibility, and low-income customers will need to experience tangible benefits from the services offered. However, most importantly right now, the newly constituted committee will need to show that it has the guts and foresight to move past stagnation and onto a sustainable way forward.
Read - Mint
J&K Bank convenes DLRC, conduct fin lit camps
J&K Bank organized District Level Review Committee meeting in Shopian for the quarter ended September, 2012. District Development Commissioner Shopian Mohammad Javeed Khan presided over the meeting that reviewed the progress for the second quarter of current fiscal year. The meeting was attended by District Level Officers of government departments, representatives from all banks, NABARD and RBI........
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RBI Needs to Evaluate Principles of Islamic Monetary System
.........It is advisable that RBI should evaluate principles of Islamic monetary system and see whether those principles can guide India have better monetary policy to safeguard our banks, financial institutions, agriculture, industries, manufacturing industries, exports, currency value and more importantly with anti-inflationary but inclusive high growth rate. Hope RBI will genuinely review the matter seeing it as a national matter to resolve the country’s financial and economic issues instead of counting it as a religious issue related to minority community wherein scholars can have any say. RBI can hold Shariah Advisory Board as well as other technical boards to supervise and regulate Islamic Banking in India.........
Speed of reforms will determine market direction
.....If the government addresses the fiscal deficit issue and global commodity prices remain soft, then inflation should move southward as we head into CY13. This should help RBI to focus more on spurring growth by reducing rates and this would be positive for long-duration funds.......
Is economy out of rut as inflation eases? Experts discuss
The inflation number is easing but the Governor of the Reserve Bank of India (RBI) says he is not impressed. How do you see the trajectory of inflation going forward? Do you think that atleast the momentum of inflation is behind us and the pace will decline further?.......
Clear And Present Danger
.......Over the last five years, Indian banks, particularly the PSBs, have become more proactive in handling risk and compliance functions. However, asset quality continues to pose a serious challenge. Thus, the ‘capital’ (requirement of higher CAR) challenge will continue to occupy centre stage.
Bankers’ Achilles Heel
Legendary investor Warren Buffet once said that you never know who is swimming naked until the tide goes out. As GDP growth in India declined in the last two years, banks suddenly found themselves saddled with more non-performing loans (NPLs) than they had bargained for. The Reserve Bank of India’s (RBI) report on Trends and Progress of Banking in India 2012 puts NPLs in the banking system at a rather high Rs 1.43 lakh crore (or Rs 1.4 trillion) at the end of 31 March 2012, the balance sheet date taken into consideration for banks............
The year ahead: expectations and apprehensions
..........The winter session of parliament is important. While the government is keen to introduce new legislation, the opposition has a different agenda. The danger is that the upcoming parliament session may be a repeat of the monsoon session in spite of the persuasive efforts by the prime minister. Proposed reforms will most likely not go through, leaving the canvas as blank as it was before. But if reforms do go through, the economy will bounce back. As it is, the economy has to recover without much assistance from the government. That is possible if inflation comes down in the first quarter of 2013, as expected by the RBI. That will prompt it to reduce the rate of interest. If inflation drops to 6 per cent and the RBI cuts the repo by 200 bps over three-four months, there would be a qualitative change in the economy.........
A Case For Prepaid
.....Electronic prepaid technology can potentially transform the provision of basic banking services to such individuals. ‘Know your Customer’ (KYC) requirements are much lower for prepaid instruments in most developed nations. Another key consideration is that the technology and operational cost of offering prepaid accounts is much lower than that of ‘no frills’ bank accounts, making it commercially more viable for banks and governments trying to extend banking services to these segments. The Reserve Bank of India’s Payment System Vision Document (2012-15) has, in this context, rightly identified use of e-prepaid instruments as one of the primary approaches to enable financial inclusion........
Thriving In Adversity
....Most economists are not very optimistic about growth improving sharply in the near future. The central bank, which started raising rates from October 2011, has steadfastly refused to reduce them even by a token 25 basis points, despite suggestions by the finance ministry. Reserve Bank of India Governor D. Subbarao has said several times that his primary focus is to control inflation — and unless that comes down, it will be difficult for him to justify reducing the rates. But the flip side is that unless rates come down, many bankers do not expect the economy to pick up, or the credit offtake to improve.......
‘Aadhaar only an identity proof, not address proof’
.....There has been confusion among banks over accepting Aadhaar as the sole “know-your-customer” (KYC) proof. The Reserve Bank of India (RBI), in a notification, had also insisted that the banks satisfy themselves that the address contained in Aadhaar is correct. “As per RBI guidelines, Aadhaar is enough for meeting know-your-customer requirements for no-frill accounts. But for large accounts, an address proof is also required along with Aadhaar,” Mittal told reporters after a meeting between finance minister P.Chidambaram and the chief ministers of six northern states.......
Ganeshaspeaks: Rupee may continue to fluctuate heavily
Right from the beginning of the year 2013 till 31st May 2013, Jupiter will transit through the ascendant of India's country chart. This indicates that India's growth will remain gradual yet it will be persistent. As the transiting Jupiter will be aspecting the 7th House, India's continual exercise to maintain good terms with its enemy countries will continue (it may still remain futile, though). From 1st June 2013 till the end of the year 2013, Jupiter will be transiting through the 2nd House of India's country chart, where Natal Mars is posited. As a result of this transit, the Reserve Bank of India (RBI) may take necessary steps to boost the Indian economy.......
RBI must enter forex market to support Rupee, curb inflation: BoA-ML
Leading US brokerage Bank of America-Merrill Lynch (BofA-ML) has called upon the Reserve Bank to enter the forex market and buy dollars to recoup the rupee and thus arrest the imported inflation, which is the main reason for the continued price spiral..........
Public-sector 'wives' better placed?
...........RBI had introduced the base-rate mechanism with effect from July 1, 2010, to take care of this problem, but it has clearly failed to address the issue. There has been a small positive step taken by RBI. Earlier, if an aware “wife” decided to switch “husbands” (pre-pay her loan and shift to another lender), she had to pay pre-payment charges to her current “husband”. This was adding insult to injury. At least RBI has ensured that the existing “husbands” will no longer be able to charge pre-payment charges. Hence, at least the more aware “wives” can be assured of a better deal. But, the regulator cannot wash his hands off the issue by just making the divorce cost less. They must ensure all “wives” get treated equally, whether or not the “wives” are aware of this. Meanwhile, the only thing that you can do if you are a “wife” (i.e. you have a floating-rate home loan) is to take a divorce from your lender and move to another as soon as he starts treating you like an old “wife”...........
The Strategist Quiz (#280)
........What is common between the Hong Kong Bank, Standard Chartered Bank and Reserve Bank of India buildings in Mumbai and the richest man in Ireland of the year 2011...........
One lucky winner will receive a cheque for Rs 2,000. Send your entries to strategist@bsmail.in. All entries must carry the postal address of the contestant. Last date for receiving entries: November 20, till 8 pm. Previous winners and employees of Business Standard and their families are not eligible to participate.
Read - BS
Bank for the buck
....‘After Times Bank was set up, the RBI observed that there were certain regulatory issues pertaining to its promoters. We were not very comfortable with them. It was informally discussed with the chairman of the bank who volunteered to step down from the board of directors. In course of time, the bank was persuaded to voluntarily merge with some other bank.’........
Forfait trade gets new global rules
.....In India, forfaiting as an export financing option has been approved by the Reserve Bank of India. The facility is to be provided by an international forfaiting agency through an authorised dealer (see RBI Circular 42 A. D.(M.A.) series dated October 27, 1997). Forfaiting proceeds, on a without recourse basis, are to be received in India as soon as possible after shipment but within the period specified by RBI for realisation of export proceeds........
Gujjars file petition against two J&K banks over non-representation
......."We have filed petition against two J&K banks before National Commission for Schedule Tribes (NCST) and Reserve Bank of India (RBI), accusing both for not implementing reservation in recruitments and promotions for schedule tribes of the state at various levels," ..........
City urban bank’s merger with COSMOS soon
Merger of the Bhubaneswar Urban Cooperative Bank (BUCB) with the COSMOS Bank has reached a final stage with the State Government issuing a clear-cut direction to the State’s Registrar of Cooperative Societies (RCS) to go ahead with the amalgamation process.........
Saturday, November 17, 2012
Cooperatives are model for inclusive growth: D Subbarao
Fall in share of co-ops in farm credit a concern: Subbarao
The declining share of co-operatives in agriculture credit is a cause for concern, RBI Governor D. Subbarao has said. “Until the early 1990s, cooperatives provided almost 62 per cent of the agriculture credit in the country. But over the years, their share has declined, going down to 16 per cent by 2009-10,” Subbarao said at a conference on co-operatives in Pune. Co-operatives are institutional set-ups where people come together and pool their resources to attain mutually profitable outcomes..........
Mr FM, managing banks is best left to bankers
.....After failing to push the RBI to toe his line on cutting rates, Chidambaram now seems to be resorting to different tactics. After all, his ultimate aim is to see a fall in interest rates. But this is sure to have disastrous consequences on the business of banks, which are already reeling under the adverse impact of government interventions.......
RBI, finance ministry split wide open
A day after finance minister P.Chidambaram prodded the Reserve Bank of India (RBI) to speed up the process of licensing new banks, governor D.Subbarao said on Friday that the central bank would do so only after making sure that the groundwork is in place and all “enabling conditions” are met. The RBI chief’s remarks seemed to indicate a widening divide on policy between the finance ministry and the central bank, which have also differed over the timing of interest rate cuts to prop up sagging economic growth...........
No new banking licences without legal backing: RBI Governor D Subbarao
PUNE: A day after Finance Minister P Chidambaram asked the Reserve Bank to speed up the process of issuing new bank licences, Governor D Subbarao today said it would be not possible without fulfilling the enabling conditions for the same. "We have been preparing for launching this process (of issuing new bank licences) but all the ground work, all the enabling conditions for launching this work have to be fulfilled," he told reporters on the sidelines of a function here........
In reverse order
......... The RBI has all through been maintaining that it needs to be empowered suitably before licensing new banks, especially those promoted by large corporates who should not be allowed to view them as captive fund pools. If the Government was really keen that new banking players be allowed – which it still is – there was nothing stopping it from amending the banking regulations as desired by the RBI. It can still do so, rather than try and browbeat the banking sector regulator.
Bancon 2012 in Pune on November 24-25
.....BANCON 2012 will be inaugurated by Finance Minister P. Chidambaram RBI Deputy Governor Subir Gokarn is expected to give a special address on India’s gold import problems and suggest solutions........
Inflation dip will be gradual, says RBI’s Chakrabarty
Inflation may have hit a nine-month low of 7.45 per cent in October, but concerns over price rise have not ended. K.C. Chakrabarty, Deputy Governor of the Reserve Bank of India, said that inflation cannot come down all at once. “It (inflation) is today at (around) eight per cent. It will not come down at one go. It will go down gradually,” he said on Friday after meeting the Chief Ministers of the northern States..............
Subbarao warns against non-inclusive growth, casino banking
.....Inaugurating two-day international conference on 'Leveraging cooperative advantage', organised by the RBI-run College of Agricultural Banking as a part of International Year of Cooperatives of the UN in Pune, Subbarao said, "The recent financial crisis has taught us some very important lessons. "The general disenchantment with 'casino banking' in certain developed economies underscored the dangers of over-financialisation of the real economy," Subbarao said. Casino banking is the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits.......
FM proposes, RBI disposes on licences
....The finance minister reasoned on Thursday that “the power or the authority” which the RBI wants is already available in the other provisions of the law and with the central bank’s own regulations and guidelines for new banking licences. “We are only formalising them by amending the Banking Regulation Act. And I have assured RBI that the Act will indeed be amended, hopefully in the Winter Session of Parliament, and if not in the Winter session, then in the Budget session.” The minister also said that even if the RBI proceeded to receive applications and process them, the first banking licence was not likely to be issued in the next 6-8 months. “So by the time the licence is issued and the banks come into existence, the Act would have been amended.” Subbarao proffered a correction, saying it will take at least 8-9 months to issue the first new bank licence if the Act is amended in the Winter Session which begins on November 22..........
'MSC bank not yet eligible for licence'
PUNE: Reserve Bank of India (RBI) Governor D Subbarao said on Friday that the apex bank was still working on measures to make the Maharashtra State Cooperative (MSC) Bank eligible to apply for a banking license. "There are some issues regarding the credit and debt recovery and the bank is working on it," he said while speaking to reporters after delivering the keynote address on leveraging cooperative advantage at the two-day international conference on cooperation. It was organised at the city-based College of Agricultural Banking.............
Learning from the HSBC mess - G Sreekumar & L Prakash Sai
.....While “tailoring banking solutions to suit individual needs” and “personalising services”, banks need to ensure that they do not tread on legal and regulatory requirements. It may be “one world”, but jurisdictions are many, and being present in several at the same time entails having to tailor ones processes and compliance to meet stringent requirements across the world........
Sreekumar is General Manager of the Reserve Bank of India, currently on sabbatical at the Indian Institute of Technology, Madras. Sai is Professor at the Department of Management Studies at IIT Madras.
Read - BS
RBI officials skip meet on mining issue
PANJIM: The Reserve Bank of India, which earlier had agreed to visit the state and talk to the banks about the restructuring of loans of truckers who are suffering due to the mining recession, did not visit the state, and have apparently withdrawn their resolve for the moment. The news comes close on the heels of the State Government committee, which was tasked with the job of collecting information of aggrieved truckers itself admitted that most of the trucks were either owned by mining companies or illegally owned by government servants, policemen, politicians with less than one-fourth of them being genuine sufferers. The Regional Director of the Reserve Bank of India did not visit the state as scheduled indicating that the RBI had withdrawn its gracious hand........
Problems in opening bank accounts are being addressed: FinMin
NEW DELHI, NOV 16:
In the backdrop of complaints from states that people are facing difficulties in opening bank accounts using Aadhaar card, the Finance Ministry on Friday said the issue is being addressed through organising mass camps for the purpose. “States’ concerns were very valid that account opening is difficult, which we admit that there is difficultly. So the idea would be to admit the problem and then find a solution. We are going ahead with that,” Financial Services Secretary D K Mittal said here...........
A deluge of offers
Almost everyday we wake up to the news that RBI has begun easing liquidity in the financial system. Over the last few weeks, it has reduced the CRR by 50 basis points or 0.50 per cent, thereby infusing liquidity to the tune of Rs.35,000 crores into the banking system. As we all know, CRR is Cash Reserve Ratio, a percentage of amount that all banks will have to deposit with RBI as per the rates prescribed by the central bank from time to time.........
India Inc wakes up to Indian Ink
....Sectoral regulators such as Sebi, Reserve Bank of India, oil and gas regulator Directorate general of Hydrocarbons and telecom regulator TRAI, pharma regulator etc are covered by the Act and have designated chief public information officers to address RTI queries. Many of these regulators including RBI and Sebi are putting in constant efforts to put up a significant portion of their dealings in public domain through their respective websites......
A tax formula to beat inflation
.....If the RBI Governor D. Subbarao had studied engineering and not physics in the IITs, he would have known that engineers often use a three-term control system — the first to control the function, the second to control the integral of the function and the third to control the differential of the function. In economics, that would have been taxing incomes, wealth and change in incomes. For some reason or other, economists are interested only in taxing incomes and wealth and not changes in income. That is a pity because inflation is directly related to increases in (money) incomes. Theoretically, if changes in incomes are taxed, inflation should tend to become zero........
FDI in banking
It is evident that the RBI, which is the regulator of the banking sector, had a strong case for issuing elaborate guidelines on bank ownership to ensure diversification. Those reasons retain their relevance even today. So there is no case for altering them, especially if the evidence suggests that accessing foreign equity, if needed, to enhance the capital of banks is possible within the current regulatory framework..........
Friday, November 16, 2012
RBI Governor to inaugurate International Conference on Cooperatives in Pune on November 16, 2012
Dr. D. Subbarao, Governor, Reserve Bank of India will inaugurate and deliver a key-note address at a two-day International Conference on Cooperatives on November 16, 2012 in Pune. The conference is being hosted by the Reserve Bank’s College of Agricultural Banking, Pune on November 16 and 17, 2012 to commemorate the International Year of the Cooperatives.........
Not the right time to abolish CRR - S.S.Tarapore
....The Government, in desperation, is turning to scrutiny of the RBI balance-sheet. A central bank’s balance-sheet cannot be examined on the lines of a corporate balance-sheet. When the central bank shows high profits, it often indicates that the economy is precariously placed. Per contra, when the central bank shows low profits as its foreign assets form a larger proportion of its assets, it reflects strength of the economy. The Government is welcome to study the RBI balance-sheet and, in fact, should do so to better understand the central bank’s imperatives........
Panel struggles to find Gokarn's replacement
A panel looking for a replacement for Subir Gokarn, whose three-year term as a Reserve Bank of India deputy governor ends in a week, has been unable to find many eligible candidates. Of the three shortlisted so far, only one has confirmed interest. The search committee, headed by RBI Governor D Subbarao, will have a third meeting on Monday to consider a few more names for the position that falls vacant on November 23. The committee was also considering an extension for Gokarn, sources said..........
SBT launches zonal office at Kollam
State Bank of Travancore (SBT) has opened its ninth zonal office in Kollam on Monday. Union Minister for Labour and Employment Kodikkunnil Suresh inaugurated the office at Arpan Towers, Kadappakkada, an official spokesman said here. P. Nanda Kumaran, Managing Director, SBT, presided over the function. Sajeev Krishnan and E. K. Harikumar, Chief General Managers, were present. Salim Gangadharan, Regional Director, RBI, Kerala-Lakshadweep, delivered the keynote address..........
New MD for Maharashtra State Co-operative Bank
Maharshtra State Co-operative Bank (MSCB) has appointed Pramod Karnad as the new Managing Director of the bank. Karnad was officiating as the Managing Director for the past 20 months, the bank said in a statement..........
RBI fiat on reporting attempted fraud cases
The Reserve Bank of India on Thursday said henceforth banks need not report attempted fraud cases of Rs 1 crore and above to the regulator’s Fraud Monitoring Cell. However, banks should continue to place such cases before the audit committee of their own board........
'Chanda Kochhar most powerful businesswoman'
ICICI Bank MD and CEO Chanda Kochhar has been named as the most powerful women in business in India for the second consecutive year by Fortune Magazine........
Read - Express India
A model banker for rural India
....the kind of proximity and access to the banking system that Sharma provides is almost non-existent in most of rural India; only 39% of the rural population has a bank account, and 73% does not have access to the formal credit system. It is a problem the government has made intermittent efforts to address. In August, the Reserve Bank of India (RBI) asked banks to make financial inclusion —delivering financial services to the poor and the unbanked—more meaningful and urged them to examine the quality of their local managers known as ‘business correspondents.’.......
Ernakulam to be declared first district with 100% banking
KOCHI, NOV. 15:
Ernakulam is set to become the first district in the country to have 100 per cent banking. The district will be dedicated to the nation as the first one having Meaningful Financial Inclusion on November 22 at a function here. Chief Minister Oommen Chandy, State Finance Minister K.M. Mani, Union Minister K.V. Thomas, RBI Governor D. Subbarao, UID Chairman Nandan Nilekani and CEOs of major banks are expected to attend the function...........
RBI keen to amend banking regulation bill
The Reserve Bank of India (RBI) is keen on the amendment of the banking regulation bill and the central bank wants powers including inspection of associates and dissolution of the bank board. They are keen about mandating these through the amendment of the banking regulation bill........
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Interest rate cut would depend on inflation: Chakrabarty
New Delhi: Indicating that the reduction in key interest rate would depend upon price situation, RBI Deputy Governor K C Chakrabarty on Thursday said its comfort level for inflation is 4-5 percent. "We are looking for 4-5 percent inflation which is our comfort level," he said on the sidelines of the meeting of heads of public sector banks with Finance Minister P Chidambaram here..........
Falling core inflation may prompt RBI to cut rates: Crisil
Falling core inflation on the back of slowing economic growth is likely to create space for the Reserve Bank to ease monetary policy in the early part of the next year, rating agency Crisil said today..............
Set right debt recovery tribunals
Announcing the last credit policy review, the RBI mentioned that the rise in non-performing assets (NPAs) was ‘disturbing.’ The reference was to the steep rise in NPAs of the banking sector in the first quarter of the current fiscal, from 2.9 per cent in March to 3.25 per cent in June. However, the recovery of NPAs.........
PSBs to hire 63,200 persons this fiscal
....There were 84,489 vacancies at various levels in state-owned banks at the end of the last financial year. Most of these banks have undertaken recruitment drives in recent years. The public sector banks have a sanctioned strength of about 8 lakh employees as on March 31, 2012.
Statewide launch of e-FMS for MGNREGA wage payments
....The Reserve Bank of India's Deputy Governor H R Khan said banks have been asked to open as many ATMs in rural areas for making money-withdrawal convenient for beneficiaries. Though the Centre had piloted e-FMS in Karnataka, Gujarat, Rajasthan and Odisha in 2010, Odisha is the first to roll out the service after its successful dry run at Sheragada block in Ganjam district in 2010-11. RBI's Khan had introduced the scheme in Ganjam, Gajapati and Mayurbhanj on June 29 this year......
India needs a weaker rupee
....what should RBI’s policy for the rupee be? Judging the ‘right’ level of a currency is more an art than a science. It is intuitive that, ceteris paribus, a country with a faster economic growth should have an appreciating currency while the currency of a country with higher inflation should depreciate relative to that of a country with lower inflation. .....
Commercial banks falter in advancing crop loans
As many as 28 out of 41 commercial banks operating in the state have failed to achieve the 18 per cent lending target stipulated by the Reserve Bank of India (RBI) for the agricultural sector, by September end. Public sector lenders that have fallen short of the target include State Bank of India (15.01 per cent), Allahabad Bank (11 per cent), Andhra Bank (17.02 per cent), Bank of Baroda (15.43 per cent), Canara Bank (11.8 per cent), Central Bank of India (8.28 per cent), Oriental Bank of Commerce(2.1 per cent) and Punjab National Bank (17.87 per cent) among others........
Indian banks hit by slowdown, government to infuse capital: Chidambaram
....Chidambaram said most public sector banks required infusion of additional capital and the government would take a decision on this in a couple of weeks. He said top three banks which required immediate infusion of capital were - Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. "We have a budgetary provision and will allocate the capital to the banks," he said. .....
70% loss cover would have wiped out PSBs' profits
....Though the Reserve Bank of India (RBI) had withdrawn the requirement for 70 per cent loan loss cover from September 2011, private sector banks, whose asset quality is better than their public sector counterparts’, have maintained provision covers of more than 70 per cent........
Lower deposit rate and pass the benefit to borrowers: FM to banks
....According to bankers who attended the meeting, the finance minister wanted to know which banks were still offering nine per cent or more for one-year deposits. “At a time when the central bank has signalled interest rates will ease, some of the banks have even hiked their deposit rates and offering more than nine per cent,” said the chairman and managing director of a public sector bank.......
Bank hands credit card statement to third party, to pay Rs 15L
.......The manager of a Citibank branch in Delhi has been ordered by the Delhi Consumer Disputes Redressal Commission to pay Rs 15 lakh as compensation to a customer whose credit card statement was released to a third party, in violation of Reserve Bank of India guidelines........
Australian bank Westpac opens branch in Mumbai
.....Westpac has been present in the country through a representative office since 2007 and was awarded banking licence by the Reserve Bank of India in April......
Thursday, November 15, 2012
Bankers meet tomorrow on Goa mining crisis
On the directions of the Reserve Bank of India (RBI), Mumbai Regional office, State Bank of India, Lead Bank for Goa, has convened a meeting of the bankers in Goa on Friday to discuss the demand for restructuring\ rescheduling of the loans of the mining stakeholders facing financial crisis. Sources in the Lead Bank, which is coordinating the meeting, told The Hindu on Wednesday that J. B. Bhoria, Regional Director, RBI, Mumbai Region, will chair the meeting. Sources, however, said the meeting was restricted to discuss the issue of the barge loans alone........
ET summit to focus on solutions for poor
....The topics that will be covered in this session of the ET Financial Inclusion are: Regulations that Protect the Poor – Perspectives on the recent RBI regulations and Draft MFI Bill; Designing Insurance to meet the needs of the poor; SHGs, No Frill accounts and Beyond: The Government’s role in Financial Inclusion; and Alternative MFI Financing: Diversifying beyond Bank Funding......
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Banks should abide by RBI guidelines on recovery: FCIK
Srinagar, Nov 14: Valley’s apex industrial body, the Federation Chamber of Industries Kashmir (FCIK) today urged banks operating in the state to strictly abide by the Reserve Bank of India guidelines on loan recovery. .......
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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........
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".......
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......
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?
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?.......
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..........
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.
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......
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.........
‘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.........
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. ...
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.......
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............
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........
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......
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.......
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
Wednesday, November 14, 2012
THE END OF THE DERIVATIVES DREAM
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
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