India’s numero uno ‘golden achievement’ is not making the government proud these days. In fact, the Indian government is not happy as the finance ministry and the Reserve Bank of India (RBI) say gold is putting extreme grave pressure on the country’s economy! Can high gold imports and consumption create economic stress on a developing country like 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.
Thursday, November 29, 2012
RBI issues draft norms on fixed rate loan products
The Reserve Bank of India (RBI) has brought the issue of long-term fixed rate loan products, including home loan, on the discussion table. On 9 November, RBI published on its website the draft report of a committee headed by K.K. Vohra, Chief General Manager, Internal Debt Management Department, RBI, assessing the feasibility of introducing long-term fixed interest rate loan products. The Vohra committee was set up after it was pointed out in the April 2012 monetary policy that while interest rates on deposits are predominantly fixed, most of the retail loan products, especially home loans, are sanctioned on floating rate, which exposes borrowers to interest rate risk..........
Allow MFIs to become business correspondents: MFIN
.....MFIN demand for allowing NBFC-MFIs to become business correspondents comes close on the heels of the Finance Minister P. Chidambaram’s remarks that financial inclusion architecture is incomplete without microfinance........
FM P Chidambaram asks banks to initiate penal action against wilful defaulters
NEW DELHI: Worried over rising bad loans, the government has asked state-owned banks to crack the whip on willful defaulters and initiate penal proceedings against them............
Farce of PSBs competing with one another
Finance Minister P. Chidambaram is right when he says Indian banks should not fight shy of consolidation because we need global-sized banks to take on the might of foreign competition, both in our home turf as well as abroad. And this is not the first time he has made this suggestion. But one wonders why he has not impressed upon his own Government to kick-start the process of consolidation by starting off with public sector banks (PSB). What is the big difference, after all, between Punjab National Bank, for example, and Canara Bank, given that both are substantially owned by the Central Government?.......
Bank mergers
Regarding the editorial “Banking muscle”(Business Line, November 28), while it is desirable to have banks of international stature, in a growing economy such as India’s, the need is to have more banks/branches, especially in the rural areas, and to improve efficiency of service. The expansion of banking networks, banking products, is required. Expanding the existing banks through acquisition of smaller ones may have the adverse effect of fall in efficiency, and thereby, profitability.
T.R.Anandan, Coimbatore (HBL)
Now FM Is Bent Upon To Destroy Indian Banking Sector - Regulators Are Our Only Hope
With the grace of God, India has always seen some wonderful people (of course only a small percentage), who are honest and dedicated, and do not bend even under pressures. In recent times we have seen people like RBI Governor, CAG Chief, SEBI chief etc. who have resisted the government attempts to dilute our strong fundamentals
....It is not that I am against issuing of new bank licences to corporate, but I am worried about the hurry shown by FM to hasten the process without putting in place the guidelines and nudging RBI for starting the process of issuing new bank licences to corporate. Raja too issued spectrum in great hurry. The question arises why FM is in such a great hurry? Is he afraid that his government may not last for long and then he will not be able to oblige corporate close to Congress? Can this great hurry lead to some other scam. Government has already lost all credibility. RBI Governor has clearly said that they are considering the same on merits and will initiate steps as soon as amendments are put on record. Now let us suppose RBI clears these and later on this Government falls, then who will take responsibility for such action by RBI......
FM: Integrate microfinance firms with financial system
.............“We are hopeful that the Bill will be cleared by the Standing Committee, then brought to Parliament for passage. Once the Bill is passed, I hope that it will provide an adequate legislative framework for the entire gamut of micro-finance services,” .......
Read - IE
Read - IE
Buying a home to get cheaper as RBI says no to restructuring of real estate loans
....Builders will get the benefit of paying the same loan over a longer period without feeling the pinch to repay, RBI Deputy Governor KC Chakrabarty is supposed to have told bankers in a recent meeting, said the two bankers who did not want to be identified. Banks will be at ease once the loan is prevented from becoming a sub-standard asset, Chakrabarty said........
Banks can perform only if economy improves: PNB's Kamath
........But the finance minister clarified the government did not have a roadmap for consolidation and added that the process had to be driven by the management-boards of banks. So, consolidation is not on the top of my mind as of today. Though I cannot comment on this as the chairman of the Indian Banks' Association (IBA), but as chairman of PNB, it not a priority. But if there is an enabling environment and availability of opportunity, I will not hesitate to encash that opportunity.........
Don’t use LIC to prop up divestment
If the Reserve Bank of India (RBI) is the lender of last resort for the Indian Government, the Life Insurance Corporation of India (LIC) — with some prodding from the Government that owns it — seems to be imposing the title ‘saviour of last resort’ on itself. ..........
Micro-finance is in danger zone: Jairam Ramesh
Micro-finance is in a "danger zone" and to think that poverty alleviation in India is possible through this "discredited model" is "crap", Rural Development Minister Jairam Ramesh said today. "Nothing can stop an idea whose time has gone. And micro-finance is in a danger zone. It is a discredited model. It has raised more questions that it has answered," the Minister said in his valedictory address at the Micro finance summit here.....
Indian corporate bond market still remains a mirage
........Many in the government and elsewhere have often stressed on the need for developing the Indian corporate bond market to fund infrastructure projects given that banks which have funds of short- to medium-term maturities run the risk of a mismatch by financing long-term bonds. But the central bank had in the past not quite shared this view. Former Governor Y.V.Reddy has said that nowhere in the world are infrastructure projects financed by the public bond market except perhaps in the deepest bond market in the world - the US. It may not be easy for the government to nudge the regulators in that direction considering the local version of a fiscal cliff. And, as a long-term observer of the Indian securities market put it, it is also a matter of perspective. The RBI reckons that it has done quite a bit on reforming and deepening the government securities market. But the fact remains that.........
SBI to open 24-hr locker-cum-gold loans branch in Vizag
VISAKHAPATNAM, NOV 28:
State Bank of India (SBI) is opening a dedicated ‘Locker Shoppe-cum-Gold Loans’ branch in Visakhapatnam having round-the-clock operations, a top officer said today. “The proposed branch would remain open for 24 hours for locker operations and gold loans which would be sanctioned up to 8 pm everyday,” said SBI General Manager (Andhra Circle) Gopal Krishan Kansal on the sidelines of a function.......
Bank staff and CVC
“Take public sector bank staff out of CVC purview” (Business Line, November 26) is a relevant suggestion. While the CVC machinery at the Central level and at individual bank levels is doing a wonderful job in vigilance-related tasks, yet an atmosphere has been created where the general mass of bankers feel demotivated and, in fact, scared to take even genuine banking business and credit-related decisions. The Government must revisit the rules that force bankers to file FIRs against borrowers for their credit defaults. Frauds have to be prevented, fraudsters have to be penalised but innocent bankers and right decision makers need to be protected at all costs. The wearer alone knows where the shoe pinches.
I.K. Kilam (HBL)
University in Chandigarh at work on software for banks
Chandigarh based Punjab Engineering College (PEC) University of Technology is developing a software to ensure security of information that banks use, under guidelines issued by the Reserve Bank of India (RBI). The project is being funded by IT major IBM India, and the PEC University is working on the technology development for the project.......
Karnataka Bank implements revised RBI norms on KCC
MANGALORE: Karnataka Bank Ltd. has introduced the revised guidelines of Reserve Bank of India on Kisan Credit Card (KCC) scheme. This will help large section of farmers across India. As per the scheme which is effective from November 15, farmers can avail working capital loan in the form of overdraft for raising various crops and maintaining their farm equipments and also term loan for meeting their investment credit requirements.........
Read - TOI
Read - TOI
Fraudsters turn cloning HDFC credit cards into a business
......"Domestic cards were cloned by Kamal and international cards by Devender Chauhan of Agra with the help of a professional hacker. The data of genuine customers was stolen through the skimmer (an instrument used to copy the data of a card) and then copied on a plain card having magnetic strip," ........
Banks wary of lending to MFIs, says Nabard study
Commercial banks are losing their confidence in lending to microfinance institutions (MFIs), according to a National Bank for Agriculture and Rural Development study. This is evident from the fact that fresh lending to MFIs by banks during 2011-12 declined by 38 per cent to Rs 5,205 crore against Rs 8,449 crore last year..........
Making ATMs run like a well-oiled machine
How would an operator in Chennai monitor whether the light in an automated teller machine (ATM) in Jammu has been switched on/off or whether the air-conditioner inside an ATM in Sikkim is working? There is help for such problems in the form of machine-to-machine (M2M) technology, which has been developed by a Chennai-based company. The ATMs will be connected through the Internet and will communicate with each other, transmitting vital data to a central location........
Wednesday, November 28, 2012
Should Corporate Bonds Count as SLR?
....The main
objective of SLR bonds is to generate liquidity whenever needed. This
can be done either through repo market or through outright sale. Gsecs
are well-accepted collateral in a deep and liquid repo market and are
also eligible for availing refinance from RBI. The g-sec secondary
market is also reasonably liquid and can generate cash on T+1 basis. The
repo market in case of corporate bonds is yet to take off and the
secondary market is illiquid and lacks market infrastructure similar to
g-secs. SLR instruments, issued by the RBI through a transparent auction mechanism, are easily accessible to all classes of investors......
Public sector bank chiefs go on-the-fly to control NPAs
Bad loans, or the so-called non-performing assets (NPAs), are rising. And provisioning norms – which mandate the money banks have to be set aside for impaired loans — are tougher.With the going tough, chiefs of public sector banks have decided to take matters into their own hands, literally. Using mobiles, they are now monitoring the ground level situation on bad loans real-time, and directing efforts to maximise recoveries.........
Banking muscle
Bankers’ conferences are a platform to flag new or flog old ideas. Last week’s meet at Pune saw Finance Minister P. Chidambaram using the opportunity to reiterate a pet theme of his – of the need for consolidation among Indian banks. We must create at least 2-3 banks of international size as the Chinese have done, Chidambaram noted, repeating what he had also been espousing in his earlier stints as Finance Minister. In fact, this issue has been flagged ever since financial sector reforms got underway with the opening up of the Indian economy in the early 1990s, receiving real prominence with the second Narsimham Committee on banking sector reforms in 1998. .......
Eyes wide shut
At a banking conference last week, spiritual leader Sri Sri Ravi Shankar was teaching bankers how to meditate. As a starting point, he asked the audience to close their eyes. Many bankers did not do so, despite being asked several times. It was the programme host who provided the explanation at the end of the session: they are bankers, he said, that’s why they’re a little scared to close their eyes.
BS
Bankers get a dressing down for failure to extend education loans
Collector Darez Ahamed on Tuesday lambasted a number of bankers for their failure to extend education loans. “Do not sit on the applications. If you feel that they are not eligible, reject them as it becomes legal and then they can approach the courts if need be,” he told them. Speaking at the third district–level consultative committee meeting of bankers here, he pointed out that as many as 164 applications for education loan have been pending with one particular bank, 114 of them in one particular branch.......
.........Those who took part included A.S.Pillai, AGM,RBI, K.Kothandapani, district manager, NABARD, and K.Sumathi, project director, DRDA.
Till the RBI manages its dollar war chest effectively, its focus on inflation will not yield results
....perhaps the greatest across-the-board negative impact on growth has originated in the severe monetary brakes that the Reserve Bank of India (RBI) has applied. The story of the 13 consecutive interest rate hikes beginning in March 2010 and ending in October 2011 is well known. Less well known is the severe restraint the RBI has applied to monetary growth. Adequate monetary growth provides the grease that oils the forward movement of a growing economy. While too much of it can make the aggregate demand run ahead of real incomes and, thus, fuel inflation, too little of it can arrest, even cripple, the forward movement. Over the decades, the RBI has maintained a relatively steady double-digit annual growth in the monetary base, which determines the availability of credit in the economy........
Now, let the money talk
.......Business correspondents across the country will pan
out with hand-held devices, similar to the card machines you see at
shops, that will work as mobile all-time-money kiosks, for consumers.
The machine will enable both authentication and identification of the
recipient and the local ATM. Aadhaar, which the RBI has notified as
Know-Your-Customer (KYC) data for banks, will help increase the reach
of banking system and financial inclusion by leaps and bounds,
something banks have been struggling with, as it makes little economic
sense to open a branch in a remote village. And that is not all. The
electronic digitised platform created by UID for Aadhaar will also help
insurance companies, mobile operators, consumer companies and even app
providers to reach out and expand their consumer base......
Chains of gold
. A scheme where individual Indians can sell gold for hard currency may help reverse the one-way flow, but this is probably too radical for the mandarins to consider. Creative financial engineering could perhaps find other ways to unlock that store of 25,000 tonnes. RBI Deputy Governor Subir Gokarn recently suggested offering gold-backed bonds or reverse mortgage schemes on household holdings of the metal. Previous experiments with such schemes have not been successful. This was partly due to rigidity in income-tax treatment and also because jewellery had to be melted down. Any new scheme would have to be structured to circumvent such known issues — but, given the trend, the sooner such ideas are implemented, the better.
Curing Indians of gold
.....gold demand will dampen as the economy starts picking up, as investment opportunities open up and as inflation starts to slow to reasonable levels. But there’s a bit of chicken and egg here: till gold demand remains strong, the rupee will remain weak, and that pushes up inflation which then causes another rush for gold. This is where Gokarn’s suggestion—RBI will soon put out a paper on this—comes in. Today, if someone wants to buy gold as a hedge, this increases imports and hence the current account deficit. If, however, consumers get the features of gold without the physical import, things will be quite different........
Gold demat? Why is the RBI suggesting a Ponzi scheme
.....Suggesting dematerialisation is like suggesting a cold shower for high fever. The logic could be that since the body is hot, why not cool it down? Why go through the elaborate exercise of trying to identify the infection that is causing these symptoms? But this is the remedy being proposed for the problem of high gold imports. Gokarn is treating the symptoms and not the root cause. The root cause behind Indians buying gold is currency debasement on account of the Reserve Bank running a very accommodative policy by monetising the fiscal deficits of successive governments. This can’t be addressed by making gold imports difficult or by “dematerialising gold”........
India's investment grade outlook stable: Moody's
......Moody’s said a reversal in the central bank’s monetary policy stance would revive investor sentiment. The Reserve Bank of India has hinted it might cut rates from January. In its last policy review meeting, the central bank had kept the repo rate unchanged at eight per cent, but cut the cash reserve ratio by 25 basis points to 4.5 per cent.......
If liquidity remains tight, RBI to conduct OMOs: H R Khan
The Reserve Bank of India ( RBI) will conduct open market operations (OMOs) to infuse liquidity in the system if the present tightness persists. While speaking on the sidelines of the Ficci-BOAO conference here, Deputy Governor H R Khan said, “Whenever there is need, we will do OMOs.” Adding, when asked if there was a need at present, “At this point of time, I can’t say if there is a need to do OMOs.”........
Microfinance sector showing signs of recovery: Report
......According to the State of the Sector Report 2012, brought out under the aegis of microfinance facilitation organisation Access Development Services, the loan amount disbursed by microfinance institutions, as well as the average loan ticket size, has shown signs of recovery in fiscal 2011-12. But the industry is struggling to recover from the impact of the SKS Microfinance crisis and the imposition of State-level regulation in Andhra Pradesh, which led to a virtual cessation of microfinance activity in what was till then the largest market for microfinance in the country........
My View on "A CASE FOR PAYING INTEREST ON CRR BALANCES"
I agree with the comments of Shri Chandramouliswaran. I thank him for the suggestion that I should contribute to the debate on the payment of interest on CRR balances flowing from the article under reference. I have already argued for not paying interest as the banks are making money through the working of the money multiplier (See “Nothing for banks to gripe about”, Business Line, September 11,2012 and the subsequent article “Government gets it wrong on CRR” of November 7,2012.) The question of paying interest on CRR balances does not arise, as the system is amply rewarded by the power to create money out of thin air. Obviously, in such matters, while the RBI looks at the system, individual banks think in terms of the bottom lines of their balance sheets. That the banks and the system will benefit more from a lower CRR with no interest payment than a higher CRR with interest payment has been pointed out by other experts on the subject. If the interest is to be paid on balances with RBI what will be the role of the reverse repo rate? The first part of the statement that “SLR is primarily aimed at restricting the expansion of bank credit as also to ensure solvency of banks” is not correct. Investments in SLR also contribute to the working of the money multiplier when government spends its balances with the RBI. There is no difference between credit and investment so far as the money multiplier is concerned.
The Market Stabilisation Scheme was introduced to sterilise the inflows of foreign currency mopped up by the RBI by selling rupees through intervention undertaken to stabilise the value of the domestic currency. Who would have bought those bonds without interest payment? Unlike OMO where the banks have a choice to participate or quote their own terms, CRR works across the system like a blunt tool and is more effective than the former. The author argues that an interest rate of 8-9 per cent will make it attractive for banks to park money in the central bank. What will be its impact on the market rate for government securities?
In the USA thanks to the three versions of Quantitative Easing the system is flooded with liquidity. The created money is making a round trip to the Fed. Due either to the reluctance to lend on risk aversion or the lack of demand for credit, banks find the interest of 0.25 per cent on total balances with the Fed more attractive than investment in Treasury Bills. As on September 14, 2012, the yields on one-month, three-month, six-month and one-year Treasury Bills were 0.08, 0.11, 0.13 and 0.18 per cent, respectively (See “Will the Fed’s QE 3 work?”, A. Seshan, Business Standard, September 20,2012). Banks’ total cash reserves with the Fed amounted to $1.55 trillion on September 5, 2012, of which 93.5 per cent was excess. This is what will happen if the suggestion of the article is implemented. It may lead to an acute shortage of liquidity and credit and destabilise the money market.
- A.Seshan
Cash Reserve Ratio “By” the Banking System but is it “For” the Indian Banking System
......For many, CRR was an imposition on the commercial banks operating in the economy for the purpose of controlling credit default and creation was perfectly in accord with the regulation and culture which prevailed in yesteryear of Nineties. If we look into today’s scenario, we find just the opposite. Indian economy along with the global economy is becoming highly globalized, integrated, interrelated, where interest rates are predominantly market-determined and there is also no automatic monetization of budget deficits. The central bank controls the supply of money and can increase or decrease the same by buying and selling bonds through open market operations which is undertaken independently.......
Don't delay new bank rules too long, Asia urges Europe
......"The fact is that the U.S. and euro zone are the most important regions where Basel III should have been implemented," Anand Sinha, Deputy Governor of the Reserve Bank of India, told a Thomson Reuters Pan-Asian regulatory summit in Hong Kong. "It would have been very helpful, even if there is a delay, if the U.S. and euro zone could have indicated a definite timeline, that is not there."......
Inflation in India higher than other BRICS nations: Thomas
New Delhi: Inflation in India is higher as compared to other BRICS countries, Food Minister K V Thomas informed Parliament on Tuesday. "According to the RBI sources, inflation in India is higher as compared to other BRIC nations," he said in a written reply to the Lok Sabha....
Reviving microfinance
....a spate of suicides allegedly triggered by excessive indebtedness in rural Andhra Pradesh had Andhra’s government acting populist by forbidding MFI officials to visit households to recover loans, and by requiring MFIs to register each of the operations with a local authority. This led to massive difficulties in recovering loans, as numerous borrowers took advantage of the law to refuse repayment, in a state which was responsible for almost a third of the industry’s $5.3 billion loans. And it didn’t help when RBI followed suit by recommending a cap on interest-spreads........
Chidu hopeful of early passage of micro finance Bill
....“Once the bill is passed, I hope that it will provide an adequate legislative framework for the entire gamut of micro-finance services,” he said at Microfinance India Summit 2012 here. The Bill seeks to empower the Reserve Bank to regulate the micro finance industry and fix interest rates ceiling on loans to be provided by lenders.....
MFIs should follow respectful method of loan recovery: FM
.....MFIs in some states especially Andhra Pradesh faced problems on account of use of strong arm tactics for recovery of loans. This also resulted in suicide by some borrowers.
Chidambaram also asked MFIs to verify data on borrowers with credit bureau to avoid multiple borrowing or over indebtedness. "I will request the micro finance sector to adapt itself to the expectation of public at large, especially, with regard to their code of conduct," he said.......
RBI changes in FEMA may spell more trouble for UPA
Government may face fresh trouble in Parliament over the recent RBI amendments in FEMA to allow FDI in multi-brand retail, with CPI(M) today saying these have to be voted within a time-frame as laid down in law. The statement by senior CPI(M) leader Sitaram Yechury came on the fourth day of disruption of Parliament over the FDI issue as he blamed UPA government for the impasse saying it was not willing to have a vote on the FDI issue.......
Delhi High Court sets aside order in CRB Capital case
......A Division Bench of the Court comprising Justice B. D. Ahmed and Justice Veena Birbal quashed the order on a bunch of appeals by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and others. The RBI opposed the sanctioning of the scheme approved by more than 50 per cent of the stakeholders of the company at a meeting here, arguing that the Court could not approve it without deciding its petition for winding up the company. It further argued that the scheme was violative of the provisions of laws and against the public policy.......
ED to probe Flipkart, Bharti Walmart for violations of FDI rules
............“The Reserve Bank of India has informed that matters related to Bharti Wal-Mart/Cedar Support Services Ltd and M/s Flipkart Online Services Pvt. Ltd, respectively, have been referred to the Directorate of Enforcement for further investigation,” the government said in a statement on Monday.........
White label ATM
.....While travelling to remote locations, you may have faced problems in terms of availability of ATMs. But that problem may soon get solved. RBI has put conditions on opening white label ATMs in such a way that non-bank entities will have to open the maximum number of ATMs in tier III and tier VI cities, including towns and villages.......
Remittances into Kerala to rise 40% this year
......Recent policy measures by the Reserve Bank of India have also given a fillip to the remittance business. After the interest rates on NSE and NRO accounts were deregulated last year, banks looked to shore up low cost deposits through this route, by increasing rates which were controlled. NRE saving deposits mirror domestic saving rates at 4% while interest on NRE term deposits range from 8.5% to 9% (domestic term deposit rates also range from 8.5% to 9%). "Earlier, such deposits were tied to the LIBOR (London Interbank Offered rate) rates,".......
SBI to set up 600 more cash deposit machines
.....The decision to install more cash deposit machines is also driven by the multiple benefits that are likely to accrue, including commercial establishments using the facilities bringing more new business to the bank. SBI has now 135 such machines in various cities, and the daily cash collection through them is Rs.3 crore.......
DENA, UNITED TO GET NEW HEADS
Ashwani
Kumar, executive director (ED) of Corporation Bank, is on course to
join Dena Bank when Nupur Mitra CMD of the bank retires by December. The
government has issued a notification relating to this and told him to
join Dena Bank by mid December itself. Meanwhile, Bhaskar Sen, CMD of
United Bank of India is also due to retire in December. However, it is
not yet clear as who will succeed him. Earlier, Archana Bhargava, ED of
Canara Bank, was tipped to take over as CMD. However, the buzz is that
she is moving to Bank of Maharashtra as a second ED.
ET
ET
Tuesday, November 27, 2012
The Swami and the economist
Anyone who doesn’t know what Reserve Bank of India Deputy Governor Subir Gokarn looks like may mistake him for a spiritual guru. At least that is what the wife of Bank of Maharashtra Executive Director C V R Rajendran initially thought. Gokarn’s special address at a banking conference hosted by the bank last week was followed by a special discourse from spiritual leader Sri Sri Ravi Shankar. In his inauguration speech, Rajendran said, “When we were going through the profiles and photographs of the invitees, my wife asked why there were two Swamijis at the conference.” When Rajendran told her Gokarn is an economist, his wife asked whether there is a relationship between the two. There is, he replied. “One is the cause of my problem and the other is the solution; one decides how many sleeping tablets I take in a day and the other tells me how to relieve this stress.”
BS
Lock and stock
Gokarn got some mild revenge soon after over the issue of curbing gold demand. He suggested several financial instruments as an alternative to physical investment in gold, but Rajendran countered with a novel idea — increase locker rents 10 times to discourage people from buying gold. The idea would work because women don’t feel safe wearing gold in public these days and store all of it in banks. “Locker charges are not regulated, so no one stops you from doing that,” came Gokarn’s quick response.
BS
RBI drags MS University to court
VADODARA: In a biggest setback to its repute, the Reserve Bank of India (RBI) has filed a civil suit against M S University (MSU) demanding recovery of Rs 97,63,000. Country's central bank has moved Ahmedabad court demanding recovery of the corpus fund worth Rs 50 lakh which it had given to the state university in 2002 to constitute a RBI Chair at the department of banking and insurance at faculty of commerce. It is worth mentioning here that having a RBI Chair is a matter of prestige for all academic institutes. MSU was the only state university in Gujarat and among other few universities across the country which was selected by the RBI for financial assistance for promoting external research............
'MSMEs in Bihar need support from all corners'
.......Also present on the occasion was RBI General Manager C S Azad, who informed the participants about the customer-friendly "Application Tracking System" by the Union government, where loan applications and their status tracking could be done online and the banks would have to give reasons if they decline finance. "However, only a few banks have started it and it is still in pipeline at most banks," said Azad. He added that RBI had altered the definition of "sickness" on November 1 to recognize sick MSME units early and take necessary action to revive them..................
Time running out as Chidu battles against odds
......Chidambaram has expressed the hope that with inflation declining, RBI may get an opportunity to reduce rates now. RBI itself had talked about such a possibility beginning January. That could be one rare silver lining for the beleaguered finance minister.
‘Less-cash’ society for better cash handling, says RBI dy guv
India must become a ‘less-cash’ society for better efficiency in cash management, Deputy Governor Reserve Bank of India (RBI) H R Khan said here, on Sunday. “Handling loads of cash leads to not only tremendous inconvenience in terms of carrying but also involves high costs. Despite the presence of debit cards, the cash transaction volume is still very high. We are third in the world in terms of cash to Gross Domestic Product ratio at 14 per cent. This must change,” Khan said. He was speaking at the ‘Bancon 2012’ organised by Bank of Maharashtra in association with the Indian Banking Association (IBA).......
An 'optimistic' mistake - A.Seshan
....The Reserve Bank should examine whether the depreciation of the rupee has anything to do with the large-scale forex transactions in the recent period. The heavy repo transactions need to be examined to find out their destinations. Treasury earnings can be sizeable on large transactions, even if the margins are small. The excess SLR (statutory liquidity ratio) investments and large bid-cover ratios at the Treasury Bill auctions do not support the claim of any shortage of liquidity in the market......
My View on "A CASE FOR PAYING INTEREST ON CRR BALANCES"
There is a fundamental flaw in the argument that the Reserve Bank should make it attractive for banks to place funds under the CRR requirement. Banks are already keeping securities in excess of the SLR requirement at the cost of lending to various sectors which is the primary function of banks. The skill and efficiency of banks are seen in managing risk in their lending operations and earning income even while keeping a check on the NPAs. It is difficult to accept the comparison made with the interest paid by the RBI on Market Stabilisation bonds when the excess liquidity caused by the inflow of foreign exchange is withdrawn. It would be interesting to know the response of Shri A. Seshan to this article as he has a wealth of knowledge on the subject.
- A.Chandramouliswaran (via e-mail)
Bank licences
.....The RBI seems to have sidelined its guidelines because of its reluctance to issue new banking licences. India survived the financial and banking crises in recent years because of the bitter lessons that it had learnt in banking in the 1950s. Reducing the number of banks almost to a fifth of its original number paved the way for better control over the system. Hence, the RBI is well-advised to issue new licences with adequate preparatory steps.......
Daddy, can I have a bank?
...... However, there are two sets of objections to letting industrial houses in even after the regulatory lacunae are plugged. The first arises out of a genuine apprehension that large industrial houses, already entrenched in several spheres of the financial sector, might, after getting a bank licence, indulge in regulatory arbitrage and even attempt regulatory capture. There is, besides, no reason to fundamentally alter the ownership structure of Indian banking by letting big business groups in. With the right policy measures and incentives, existing banks will be able to better achieve objectives such as financial inclusion.
Tackle Inflation
RBI
Deputy Governor Subir Gokarn’s announcement that the central bank is
considering allowing alternative ‘gold-like’ instruments must be seen in
the light of two factors. One, our failure to quell the growing
appetite for gold and, two, the threat that rising gold imports pose to
an already precarious balance of payments position. As the country’s
monetary authority and banking sector regulator, the RBI is
understandably keen to dissuade people from buying gold........
Read - ET
Read - ET
If FM has courage, he’ll give us inflation-indexed bonds
.....rate of consumer inflation (or even 1.5 percent) instead of a bank fixed deposit at 9 percent (the highest available with good banks right now). This means one would get 11 percent this year on indexed bonds. The fact that government is not offering such a safety net against inflation means it has no intention of preventing the debauchery of the rupee through high-inflation policies. High inflation boosts gold even more since gold imports worsen the current account deficit and weaken the rupee —artificially bloating the returns on gold in rupees. The finance minister and even the central bank are barking up yet another wrong tree by pretending gold is the problem, when the problem is inflation.......
Finance minister P Chidambaram asks CEOs of PSU banks to cut margins
MUMBAI: Finance minister P Chidambaram has told the chief executives of state-owned banks not to be obsessed with higher margins and instead attract borrowers with lower interest rates. Bank managements, according to him, should be happy with a 3% margin - a suggestion that has not gone down too well with bankers........
Unseating gold
.....RBI would be up against the formidable challenge of unseating gold from the pedestal that the yellow metal enjoys in the collective psyche of Indians. Even if that could be assumed as somehow capable of being overcome, a far greater challenge awaits the RBI. This has to do with a more fundamental aspect of financial intermediation that banks are grappling with: How to generate a profit from operations that promises a fair ‘real’ rate of return on deposits and yet keeps interest rates on borrowings affordable enough for fresh investments to take place in the economy.........
Striking gold
.....The RBI’s K.U.B. Rao committee is examining how to mutate gold properties into financial savings instruments. While inflation kills the value of all financial instruments, those for gold retain their value. So the key element to build into the gold-backed papers will be inflation indexing. Successive governments have asked the RBI to independently consider this suggestion, but the bank has been reluctant so far.........
RBI allows Indusind Bank to raise FII limit to 49%
The Reserve Bank Monday allowed Indusind Bank to increase its FII investment limit to 49 percent but asked it to ensure that the aggregate foreign investment in the bank does not exceed 74 percent. "The Reserve Bank...Advise that its approval to the Induslnd Bank for raising FII investment limit to 49 percent is subject to the condition that aggregate foreign investment in the bank should also not exceed the composite sectoral cap of 74 percent," the apex bank said in a statement.............
आरबीआई चौक बना संविधान चौक
नागपुर. मनपा प्रशासन द्वारा रिजर्व बैंक चौक को संविधान चौक नाम देने में हो रहे विलंब से नाराज सामाजिक संगठनों ने रविवार की देर रात चौक का नामकरण खुद ही कर डाला। आरबीआई चौक का नामकरण कर उसे संविधान चौक नाम दिया गया। समूह के रूप में जमे लोगों ने देर रात 20 फीट ऊंचा और 55 किलो वजनी लोहे का नामफलक ठीक डॉ. बाबासाहब आंबेडकर की प्रतिमा के समक्ष डिवाइडर पर खड़ा कर दिया.........
RBI relaxes borrowing rules for mobile auction winner
The Reserve Bank of India (RBI) has relaxed overseas borrowing rules for successful bidders in the country’s cellphone airwaves auction, making it easier for them to raise money to pay the cash-strapped government. The RBI said on Monday the winning bidders could use short-term foreign currency loans as bridge finance, without seeking approval from regulators..........
RBI to Sun, Rustomjee: End PE pact or resort to compounding
There is a new twist in the ongoing battle between Mumbai-based developer Rustomjee and private equity player Sun Apollo. According to sources, the RBI has intervened in the case and stated that both parties have violated ECB guidelines. For the first time in a real estate transaction, the central bank has opened the option of compounding or paying a fine for the violation. ..........
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New cheque books
....But they all maintained that the new cheque books would not be sent to the customers directly. They needed to duly fill the required slips. The Reserve Bank or the Indian Banks’ Association should publish ads to clarify these doubts. They should ensure that the new cheques are sent to the account holders’ addresses with a formal request.
Flouting RBI norms, bank agents harass 81-year old for son’s dues
Mumbai: Flouting the norms and guidelines by Reserve Bank of India regarding practicing ethical business standards while handling the credit card customers, some recovery agents allegedly harassed and threatened 81-year old woman of kidnapping if she failed to pay Rs 96,000 as credit card dues of her son........
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Take public sector bank staff out of CVC purview
......Unlike other categories of banks, PSBs come under the purview of the Central Vigilance Commission (CVC). Each PSB has a vigilance department headed by a Chief Vigilance Officer (CVO). The CVO is appointed after an interview conducted by the Banking Department, with officers drawn from PSBs and the RBI.........
RBI to Work on Pact to Counter US Law Impact
The
government has asked the Reserve Bank of India to draft an agreement
that Delhi can sign with Washington to shield Indian financial
institutions from a controversial US legislation, which seeks to
penalise entities that fail to report dealings of American residents to
the US revenue authority. The Foreign Account Tax Compliance Act,
due to come into force from January 1, proposes a 30% withholding tax on
any payment made to a foreign financial institution by a US firm if it
does not comply with the regulation. “We are examining as to how we
need to deal with it...RBI will prepare a draft of an enabling domestic
legislation,” a finance ministry official told ET.......
Bank did not try to ‘know the customer’
CHANDIGARH: In the multi-crore bank fraud at the Punjab and Sind Bank in Sector 24, "Know Your Customer" (KYC)', a mandatory provision for every bank while sanctioning loans to any customer or client, was completely ignored while sanctioning around 131 bank loans to the tune of Rs 20 crore. The fraud amount is expected to go much higher according to investigators. KYC requires the applicants to update the bank with their residential addresses, PAN numbers, names, contact numbers and other details going by mandatory guidelines of Reserve Bank of India (RBI).........
Fraud e-mails in name of Governor, RBI says beware
It’s a simple trap: A “confidential” e-mail notifies the recipient of a large sum that has been set aside for him. The e-mail declares itself to have been sent by the Foreign Exchange Transfer Department of Reserve Bank of India (RBI) and bears the signature of RBI Governor, D Subbarao. It demands a small amount for release of money. The catch is simple too: “RBI never contacts the public via unsolicited phone calls or e-mails asking for money or any other type of personal information.” The sender of the e-mail demands what seems to be a small amount of Rs 15,500 to release a massive sum of Rs 4,38,57,443.75 to the recipient’s bank account. Also requested are details of PAN card, bank account, payment receipt and passport size photos. The e-mail tells the recipient that he or she is listed as a beneficiary in the recent schedule for payment of outstanding debts incurred by the British government, pending for 2012. Spokesperson of RBI Alpana Killawala told Newsline that such “fraud” e-mails have been doing the rounds and clarified that the RBI has not sent out any such mails......
Government panel suggests campaign against MLM, pyramid and ponzi schemes
....The recommendation has been made by the inter-ministerial committee, headed by Consumer Affairs Secretary and comprising of members from Reserve Bank of India (RBI), Finance Ministry, Corporate Affairs Ministry and Law Ministry among others, sources said. The panel has suggested that this consumer awareness programme can be used to make the public aware about pitfalls of ponzi schemes, which typically involves collection of money from public in different layers with promise of rising returns with every new investors added to the scheme......
Bank penalised
The Reserve Bank of India has penalised Bharathiya Sahakara Bank Niyamitha, Chamarajanagar, with Rs. 1 lakh for violating provisions of Banking Regulation Act, 1949. A RBI release said that the Sahakara Bank had violated the RBI directions on know your customer guidelines.
HBL
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