Wrong time for jugaad

.....Prudence, therefore, demands the Governor keep his powder dry. For now ! Indeed, the popular assumption that a rate cut alone is enough to lead to faster economic growth reminds me of the old joke on the uncanny parallels between two years, 1981 and 2005. 1981: Prince Charles got married. Liverpool was crowned soccer champion of Europe. Australia lost the Ashes. The Pope died. 2005: Prince Charles got married. Liverpool was crowned soccer Champion of Europe. Australia lost the Ashes. The Pope died. What’s the lesson to be learned? The next time Charles gets married, someone should warn the Pope! Likewise, don’t jump to hasty conclusions. Quick-fixes don’t lead to quick results !

Read - ET

Inflation and the rate cut conundrum

.....Rising inflation expectations are one indication that people expect high inflation to continue despite what policymakers may say. So RBI needs to win a decisive battle against inflation if it has to maintain its credibility; premature rate cuts could be damaging in the long run. But how can we know if such a victory is round the corner? ......

Read - Mint

Which rate to cut?

..... as Bank of America-Merill Lynch points out, a cut in the cash reserve ratio and open-market operations are far more essential than a repo rate cut. That’s because a policy rate cut by the Reserve Bank of India may not translate into a decline in lending rates until liquidity improves.....

Read - Mint

Goldman, SBI bet on rate cut; others expect drop in CRR

The Reserve Bank of India (RBI) will spring a surprise on Tuesday by cutting its key lending rate, factoring in easing inflation and slowing growth in Asia’s third largest economy, economists at Goldman Sachs and the nation’s largest lender State Bank of India (SBI), said on Monday...........

Read - Mint

Diesel vs inflation

Apart from the headlines of the finance ministry’s mid-year economic analysis (MYEA) lowering its GDP target for FY13 from the budget’s amazing 7.6% estimate to a more sober 5.7-5.9%, there are several interesting points for a larger discussion. On the eve of RBI’s credit policy meeting, apart from talking of the slowing core inflation numbers, the MYEA points to the role of interest rates in cutting corporate profitability..........

Read - FE

Taming Inflation

.......There is no clarity or uniformity in perspective on such things among those who are responsible to prescribe corrective measures. The ‘Inflation elephant’ is perceived as a different monster by scholars from different schools of economics.

Read - Moneylife

Adjudicating NBFC claims

Apropos the report “Provisioning norms to hit profitability of NBFCs” (December 14), the Reserve Bank of India has, at different points in time, promised a level playing field between banks and non-banking financial companies (NBFCs). But it has made no effort to recommend to the government that the recovery mechanism of the Debt Recovery Tribunal, for faster adjudication of NBFC claims against borrowers, be extended to all registered NBFCs. At present, the mechanism covers only notified NBFCs.

Ramakanth Inani Hyderabad (BS)

Cops plan film on chit funds companies

........Besides sensitizing public, police have decided to train their own personnel about the legal aspects and investigation procedures while dealing with such complaints. The Crime Branch, in association with the Reserve Bank of India(RBI), will organize a training programme here on December 21 to teach nearly 40 police officers on prevention and detection of financial frauds. The EOW has also decided to bring two bankers on deputation to assist investigating officers crack cases relating to banking fraud. "We recently hired a chartered accountant for the EOW. Now we will urge the RBI to get two bankers (group-B and C) on deputation for effective investigation," ........

Read -TOI

SBI Business Facilitators fight to survive

As per RBI’s Financial Inclusion Plan we were working as Business Facilitator in State Bank of India since 2007 or later. SBI had engaged us on experience basis. SBI’s performance in rural areas was very good with the help of Business Facilitator. We in fact, put our everything to promote and reciprocation.  After joining in SBI all the Business Facilitator’s left their previous job. On the 11th April 2012, SBI has terminated all the Business Facilitator in India without any proper reason..........

Read..........

Bankers Need To Strike At the Root Cause of Sickness

.... Bankers prefer to  blame interest rate for worsening asset quality or blaming global recession for rise in bad debts or requesting RBI to reduce Repo rate , reduce CRR or  pay interest on CRR to earn profit. It is important to say that even if CRR is removed or government permits payment of interest on CRR or reduce repo rate, corrupt , unskilled officers and incompetent officers cannot ensure safety of their assets.   These banks have already earned huge profit by reduction in CRR rate.  After all, liquidity generated by release of CRR or payment of interest on CRR  provides  relief for few months and for few quarters only.    Even if   CRR is  abolished, bankers will have to accept the bitter truth and will necessarily need to cure the  ills in the  system to keep the asset in good condition. .........

Read......

Bank cartelisation: Customers’ response - S.S.Tarapore

.....There are rumblings that the Competition Commission of India (CCI) is looking into issues such as whether the monolith of banks fixing the 4 per cent Savings Bank rate are resorting to cartelisation. The RBI, as the industry regulator, should take a call as to whether this practice reflects cartelisation. The CASAs of individual banks could be examined as part of the bank- wise Resource Management exercise. In the absence of RBI action it would only be appropriate that the CCI should look into this matter. The All- India Bank Depositors' Association (AIBDA) should proactively implead itself as an interested party on the issue of bank cartelisation.......

Read - FPJ

‘Adopt camp-based model for opening of accounts by SHGs’

Reserve Bank of India Deputy Governor K.C. Chakrabarty has favoured a camp-based model for achieving the ambitious goal of bringing all the self help group members and SHG federations into the ambit of banking services. The model, he said, should be adopted in view of the existing complaints about difficulties faced by members in opening their bank accounts. Conduct of camps will ensure that members gathered at a single venue enabling completion of required formalities under the supervision of the officials of the Government and banks...........

Read - The Hindu

‘Banking being brought closer to masses’

Deputy Governor of the Reserve Bank of India H.R. Khan, while formally launching financial inclusion and literacy programme at Nomula village in Nakrekal mandal said that efforts were being made to bring banking closer to the masses, as 30 per cent of the population did not have access to such facilities. The bank has adopted the village. Mr. Khan said as part of the efforts, business correspondents were being appointed to take banking to the doorstep of people, as opening an account was like ‘passports for financial development’. He conducted an awareness programme for the students of the local ZP High School on identification of fake currency notes........

Read - The Hindu

Public private non-partnership

“I am the least qualified person to talk on capital markets because I am a fixed deposit person and not a fixed income person,” 

Read - BS

Growth: Lost between RBI and North Block

......Continuing with unquestioned faith on the part of the RBI on central bank autonomy, which is illusory; and of the Central Government on austerity and fiscal discipline as a panacea for growth (leave alone distribution) can no longer be trusted as a solution for a revival of the ailing economy.

Read - The Hindu

There is life beyond the RBI

............The Fed said it would allow inflation to run a little faster than its 2% target as long as unemployment remains too high. This is a reversal of nearly 100 years of Fed policy that had accorded paramount importance to price stability at the expense of concerns about shortfalls in employment and growth. Now, the Fed has said that it will give equal time to inflation and growth. Is Mr Subbarao listening or he will continue to go after inflation and capsize the economy boat? But Subbarao may surprise the core inflation gives the Governor some excuse to cut...........

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

Life exchanged...........

N.R.Iyer, Aged 68 years Retired Assistant Manager, Foreign Exchange Department, RBI passed away on 11-12-2012 after brief illness Will be fondly missed by Shuba, Sudu, Gayatri, Anand, Arjun And Varun. 

TOI

Super regulator

.....Instances of the finance ministry’s attempt to act as a super regulator over all regulatory bodies in the financial sector are becoming increasingly common. This will destabilise the equilibrium deftly built by eminent individuals who headed the finance ministry and the Reserve Bank of India (RBI) in the formative years of financial regulation in India (there were few regulators in the financial sector, almost till the reform days), and consciously maintained by their successors till the recent past........

Read - BS

Candid confessions

.... the Reserve Bank (RBI) just won’t let West Bengal develop. “Everything we earn, RBI takes away. What is this RBI? I have empty vessels. What can empty vessels do?” .......

Read - BS

PSB should learn to say ‘no’: RBI

....."Knowingly you give money to some unviable projects. That is a governance issue...In many cases, our public sector bankers have forgotten to say 'no', except to small borrowers. A banker's first characteristic should be to say no," ........

Read..........

RBI's new regime for NBFCs will discipline markets: Purwar

......The new rules by Usha Thorat have put in many onerous capital conditions, the NPL recognition from the current 180 days to 90 days like any bank, whole host of disclosures, not just credit rating, the usual disclosures which banks have to make but also disclosure on credit rating, any penalties by any regulator at any point in time. If an NBFC is over Rs 1,000 crore they must also disclose provision coverage, liquidity ratio, extent of financing of parent company products, off-balance sheet exposures, structured products, that all lot of money. Will NBFCs become weaker or stronger after these rules?.....

Read.......

‘MFIs not mainstream channels for achieving financial inclusion’

HYDERABAD, DEC 15: Microfinance Institutions are not mainstream channels for achieving financial inclusion, said K.C. Chakrabarty, Deputy Governor, Reserve Bank of India. Speaking to newspersons here on Saturday on the sidelines of a conference on community based approaches for inclusive growth, he said the requirements for financial inclusion were very huge......

Read - HBL

My View on "RBI received large number of credit card complaints against SBI, ICICI Bank in FY12: Government"

Customer Service Department in the Central office of RBI should ask banks against whom large number of complaints were received, as to the systemic improvements made, where called for, by the banks to avoid such a large number of complaints including action taken against the concerned staff whose negligence had resulted in the complaints.This is necessary as a large number of customers silently suffer and do not write to the Banking Ombudsman in the RBI and action on the lines suggested would take care of the suffering silent majority. Customer Service Department in the Central office should ask for special reports either quarterly or half yearly from the Ombudsmen in the regional offices to help them take action.

- A.Chandramouliswaran

Nagpur Municipal Corporation finally removes 25 pandals

NAGPUR: Acting on the high court's directives to the civic authorities, the anti-encroachment squad of the Nagpur Municipal Corporation and state public works department (PWD) removed pandals erected at RBI Quarters Square in Civil Lines on Saturday. The 25 organizations that were staging demonstrations for their various demands at these pandals were caught unawares by this swift action............

Read - TOI

RBI rejects govt cheque over sign mismatch

MUMBAI: A cheque issued by the state government through the Reserve Bank of India (RBI) to a Bombay high court judge recently ended up being dishonoured. That government bungling does not spare even a HC judge was evident when the highest bank didn't honour the cheque, issued for an amount less than Rs 3,000. The reason RBI cited for not clearing it was signature mismatch........ 

Read - TOI

BJP to oppose Banking Law (Amendment) Bill

....BJP is demanding that the government either drop the 'contentious' provision from the bill, or refer it back to the standing committee on finance, which had examined the bill. However, the government would like to take forward its long-pending financial sector reform agenda. Chidambaram had conveyed to BJP leaders — Sushma Swaraj and Arun Jaitley — last week the urgency for the passage of the banking law (amendment) bill, which will allow RBI to issue new banking licenses............

Read - ET

Oil cos told to consult RBI before buying dollars

...At a meeting with oil companies earlier this month, ministry officials told a team of senior officials from private and state-owned oil companies to keep the central bank in the loop when they buy dollar. RBI officials were also present in the meeting.  "This could be in the form of an advance notice to RBI which, if necessary and depending on the flow, can sell dollar  in the market to even out swings....This, perhaps, is the best possible option because the RBI has made it abundantly clear that it will not offer a separate window to help oil companies carry out off market dollar purchase," said a person who attended the meetings. ......

Read - ET

RBI policy, US fiscal cliff talks to dictate market trend: Experts

....."Uncertainty will remain on cards initially over RBI's policy and then over the US fiscal cliff," Vikas Jain, MD, Aditya Trading Solutions said. "We should see some correction this week, after breakthrough rally of past few weeks, as the central bank does not seem ready yet to cut rates on Tuesday," ........

Read - ET

A cautiously happy ending to 2012

..Apart from broad considerations of monetary policy, RBI also needs to review bank balance sheets with Basel-III implementation on the cards from January. The sector is under stress, with public sector banks facing serious pressure owing to rising non-performing assets (NPAs) and restructuring requests. Banks will need to raise huge sums over the next five years........

Read - BS

No-action policy ahead of January rate cut?

......If RBI refrains from a CRR cut and chooses to make it a no-action policy on Tuesday, the statement may sound relatively dovish and the central bank can aim at a deeper, half-percentage-point rate cut in January. There could be a CRR cut, too, then.........

Read - Mint

Subbarao may have to Keep Rates Unchanged

.......Although the government has said it will lower subsidies through cash transfers, there are doubts about the scale of its operations. Yet another factor that will weigh on Subbarao's decision on Tuesday will be the Federal Reserve launching QE3+, or quantitative easing, ie, printing of more US dollars to buy government bonds. If this stokes commodity prices, including crude oil, it may delay cuts in India. But those worried about economic growth slipping to a decade low of about 5% this year, from 9% a few years ago, believe that it may be too late if the governor postpones a rate cut........

Read - ET

Chidu offers ‘bitter medicine’ but he should try some himself

..............When inflation is still high, the government should curtail its deficits, but Chidambaram has been pressuring the Reserve Bank to cut rates to revive growth. Instead of taking the bitter medicine of cutting non-productive expenditures which will create space for a rate cut, he has been pressuring the RBI to cut rates anyway. Who wants difficult decisions, when easy ones are at hand? Rate cuts are just sugary placebos, and Chidambaram is happy to have that instead of the bitter pill he has been tomtomming.......

Read.......

PM says inflation at unacceptably high level

Ahead of the Reserve Bank of India’s (RBI’s) monetary policy review next week, Prime Minister Manmohan Singh on Saturday said inflation has risen to “unacceptably” high levels in the past two years, and it needs to be brought down to five-six per cent from over 7.24 per cent in November. However, bankers, including the largest lender State Bank of India (SBI), made a case for a cut in the repo rate................

Read - BS

Premature optimism?

...... All in all, look to tomorrow’s policy statement for what it says on the macro-economy and its global linkages. As for specific monetary action, the betting is on a CRR cut and that too mainly to mollify those arguing vigorously for a rate cut. By January next, the RBI has hinted that it might begin to ease interest rates. Hopefully, it will have clearer economic data to support its action.

Read - The Hindu

RBI will likely wait again

.....Even at the time of half-yearly review of monetary policy in October, RBI Governor D. Subbarao, had mentioned that he did not expect inflation to start easing till the fourth quarter of the fiscal. He had kept his options of acting on the rate front in January if there were other helpful factors. There is some expectation that the RBI will once again tweak the cash reserve ratio to cater to the concerns on tightening liquidity. The CRR was reduced by 25 basis points from 4.5 per cent to 4.25 per cent with effect from November 3. At that time, the RBI had made it clear that the reduction was being done to pre-empt a prospective tightening of liquidity conditions........

Read - HBL

Choice is between 25 bps cut in CRR or policy rates

.......RBI may need to shift its bias from inflation to growth this time but may find it tough to defend rate cut delivery against its firm stance of caution against elevated inflation and low real interest rates. While it will be easy and straight-forward for RBI to deliver 25 bps CRR cut to cover advance tax outflows and maintain dovish stance on the way forward, RBI may also consider the other option of delivering 25 bps rate cut with caution on inflation. There are four options before RBI:..........

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

‘RBI must Cut Rates by 50 bps. A Slump is Easier to Usher in, Tough to Get Out of’

I would recommend RBI to cut CRR and repo rate by 50 bps each. A slowdown is easier to usher in but more difficult to get away from. The best way to bring down prices is to increase supply. 

Read - ET

RBI nod for IFC Code to Kangra cooperative bank

Dharamsala: Kangra Central Cooperative Bank (KCCB) has become the third cooperative bank in the country and the first in North India, to have its own Indian Financial System Code (IFSC). KCCB has been allotted IFS code by Reserve Bank of India, Sandeep Kumar MD of the bank stated. Other two cooperative banks having IFSC standing are are Maharashtra State Co-Op Bank and Bombay Central Co-Op Bank.......

Read..........

Naina Lal Kidwai is first woman president of Ficci

Marking a distinction of being the first woman and a professional manager to take the charge of the leadership of Ficci, Country Head of HSBC India Naina Lal Kidwai assumed the office of Ficci president on Saturday............

Read - BS

Senior, mid-level executives face high stress

Majority of executives in banking, marketing and media sectors, surveyed by industry body Assocham, have said they face high stress levels, leading to mental and physical fatigue, especially in big cities........

Read - HBL

High bad debts temporary: SBI

..........SBI's NPAs rose to 5.15 per cent in the second quarter ended September, from 4.19 per cent over the year-ago period because of deteriorating asset quality.  He said the bank has made adequate provisioning norms. "We have been providing in excess of the prudential provisions. Whatever Reserve Bank asked us to provide, we have been providing that, plus a little more." Gupta said..........

Read - TOI

PSU bank employees’ strike on Dec 20

Employees of public sector banks will observe one-day country-wide strike on December 20 in protest against the government’s move to place the Banking Law Amendments bill in the current session of Parliament..........

Read - HBL

In a first, SBI takes its officers' body to court

......The SBI brass has been in talks with officers’ representatives on service conditions, including working hours. SBI officials maintain an agreement signed in 2003 provides flexibility for changing the banking hours. “Seven-day banking does not mean the bank would ask employees to work on all seven days,” an official said. The SBI chairman and top officials held negotiations with the office-bearer of the association on October 4 but the talks did not yield fruit. After officers in some circles held demonstrations on November 30, the management moved court for action. An office-bearer said the move for seven-day banking was at odds with unions fighting for introducing a five-day week for bank employees. Meanwhile, SBI has sought an explanation from the association for allegedly instigating officers to protest against the management. It also issued chargesheets and showcause notices to some leaders.....

Read - BS

Pinnamaneni award for former RBI Governor

......Dr. Rao said that Dr. Reddy was being conferred the award for his role in “Quarantining the Indian Economy from the domino effect of the global financial crisis.” The 13 Governor of RBI, M. Narasimham, was also in the list of several stalwarts who received the award, and Dr. Reddy was, therefore, the second RBI governor to receive it.......

Read - The Hindu

Direct cash transfer can help control inflation: KC Chakrabarty, RBI Deputy Governor

MUMBAI: Describing the government's ambitious direct cash transfer scheme as a "powerful tool", Reserve Bank Deputy Governor K C Chakrabarty has said the initiative will help reduce fiscal deficit, which in turn will also bring down inflation if implemented well. "The direct cash transfer scheme will reduce the fiscal deficit, which in turn will facilitate inflation control," Chakrabarty, the senior-most of the four deputy governors at the Mint Road, told PTI in an interview...............

Read - ET

Nomination facility also available for joint account holders: RBI

....The banking regulator said has noticed that sometimes customers opening joint accounts with or without "either or survivor" mandate, are dissuaded from exercising the nomination facility. It clarified that nomination facility is available for joint deposit accounts too and advised banks to ensure that their branches offer nomination facility to all deposit accounts including joint accounts holders. In a note to regional rural banks issued earlier this week, RBI has once again focused on this issues. "Banks are advised to ensure strict compliance of the instructions," RBI Chief General Manager C.D.Srinivasan said. .....

Read - ET

‘Education loan can be obtained from any branch’

G.H. Rao, Assistant General Manager, Reserve Bank of India, has said that there is no restriction on service area for banks to extend education loan to eligible customers. The service area limitation is applicable only to government-sponsored schemes. Speaking at the district-level bankers’ committee meeting here on Friday, Mr. Rao said that people could obtain an education loan from any bank branch of their choice, irrespective of the location of their residence. “No bank can reject a loan application on the grounds that the residence of the applicant is out of the bank’s service area,” he reiterated...............

Read - The Hindu

Now, you may use your old cheques till March 2013

Banks will have to roll out cheques compliant to CTS-2010 standards from April 1 next year

.....RBI in its circular to the banks also said, “Residual non-CTS-2010 standard cheques that get presented in the clearing system beyond this extended period (March 2013) will continue to be accepted for the clearing but will be cleared at less frequent intervals." This means the non-CTS-2010 compliant cheques will take more time for the clearing beyond March 2013. The central bank, however, indicated that it might impose some kind of fees for such cheques after March 2013........

Read - BS 

Surmounting the insurmountable

........Of late, there is a clear recognition of the magnitude and dimensions of the inadequacies in credit flow to weaker sections and sectors with low individual credit needs at higher levels in GOI and RBI. Perhaps, rural credit is the most talked about and studied subject in our country since late 1950’s and from the establishment of SBI to the current efforts to develop MFIs, there have been a number of fresh initiatives to support rural development. Last July, while speaking on ‘Challenge of financial inclusion’ RBI Governor Duvvuri Subbarao referred to the magnitude and dimensions of the inadequacies in credit flow to weaker sections and sectors with low individual credit needs. Such recognition of the need for action, at the highest level, is comforting. ..............

Read..........

Bitter medicine needed to get back to high growth path: Chidambaram

...........“Some bitter medicine has to be taken this year. We have to take some bitter medicine. There is no other way...this bitter medicine is good medicine. It will restore the health of the economy and next year we can look forward to much higher growth,” ..........

Read - HBL

Moderation in inflation a very good signal: Montek

...........“I don’t regard seven plus per cent inflation as comfort zone. But the important thing is that if you think it is heading down, then may be the time has come to recognise that inflation is clearly softening and growth is weak and I am sure that RBI knows what to do,”........

Read - HBL

Will the RBI cut rates?

.....The RBI’s first duty is to keep inflation down. So, it will not take any action that will serve to increase it. This means that it will not lower interest rates by any significant amount because lower rates will mean higher borrowings and greater spending. The problem, however, is that inflation is still running at a very high level. More money to spend will mean an immediate upward pressure on inflation because supply takes time to catch up. On balance, therefore, it is reasonable to expect the RBI not to cut rates in December........

Read - HBL

Counterfeit notes may impact inflation, says RBI

....."The Reserve Bank of India has informed that the presence of large number of counterfeit notes may impact inflation and can be used for anti-national activities," said Minister of State for Finance Namo Narain Meena in a written reply in the Lok Sabha. He, however, said no estimates of counterfeit currency in circulation was available........

Read - FE

New rules to rein in money chains

The State government is all set to bring in fresh rules to rein in money-chain companies and multi-layered marketing firms in the wake of mounting cases of ‘ponzi’ schemes being operated in the State. The new rules, Money Circulation Scheme (Banning) Rules, 2012, are being framed under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, in exercise of the powers under sub-section (1) of Section 13 of the Act and in consultation with the Reserve Bank of India (RBI), official sources told The Hindu on Friday......

Read - The Hindu

Banks tap Wolters Kluwer for RBI complaince

.....With our solution, customers are assured of the end-to-end workflow of regulatory reporting," said Shawn Paul, regional director - Asia-Pacific and Japan (APJ), at Wolters Kluwer Financial Services. "RBI has notched up the pressure on banking institutions in order to secure complete Automated Data Flow compliance by March 2013. Therefore firms in India are requiring a provider with strong local expertise of the requirements in order to start producing the reports by the end of 2012.".......

Read.........

Door-step banking a boon for NREGA workers

....Tripura is the only state where more than 90 per cent of the population are covered by the Aadhar scheme. The Tripura government first introduced Aadhar-enabled payment system in old age pension on October 18, 2012 at Borakha village in West Tripura district. Dinesh Mushahary, chairman of the Tripura Gramin Bank, said that Tripura was one among a few states taking banking facilities to the doorsteps of the masses..........

Read - IE

Is Aadhaar being used as a political tool by the UPA government?

......According to Dr KC Chakrabarty, Deputy Governor Reserve Bank of India (RBI), only 40% Indians have bank accounts. HR Khan, also Deputy Governor of RBI, had said that as of June 2012 around 1.88 lakh villages in India were connected to banking system. This also means, residents from about 5.12 lakh villages (if the Aadhaar linked DCT is really meant for such financially excluded regions), are still out of the banking system. In other words, to make the DCT a success, the UPA government need to bring people from these villages into banking system first........

Read - Moneylife

Bounced cheques: SC offers a new interpretation

The apex court has taken a strict view of cases where cheques are dishonoured

In a recent judgement on cheque bounce issues, the Supreme Court, while taking into consideration genuine cases, has suggested to follow the principle of the Laxmi Dyechem Vs State of Gujarat & Others, on a case to case basis as it is also necessary to properly judge the intention of the accused to avoid wrongful conviction.......

Read - Moneylife

RBI received large number of credit card complaints against SBI, ICICI Bank in FY12: Government

........During 2011-12, Reserve Bank of India (RBI) has received 5,198 complaints against State Bank of India (SBI), followed by ICICI Bank (1,211) and HDFC Bank (1,153), Finance Minister P Chidambaram said in a written reply to the Lok Sabha. The Minister said that complaints have been received from customers on issues, including those on undue penal charges, late payment charges, issue of unsolicited cards and harassing telephone calls among others..........

Read - ET

Kotak ‘positive’ On NBFCs after RBI released draft guidelines

......Kotak Institutional Equities (Kotak) has voiced positive sentiments on Non-Banking Financial Companies (NBFCs) on the back of the recently announced draft guidelines issued by the banking regulator, the Reserve Bank of India (RBI). The report released on 13 December 2012 stated, “We are positive on the business of asset-finance NBFCs even as the recent rally caps upside.” In other words, it is positive on the sector even though the market has discounted the upside movement because it believe the guidelines will make NBFC fundamentally stronger over the long-term........

Read - Moneylife

Cartelising savings bank rate? - S.S.Tarapore

Whether or not the Competition Commission has issued a notice to banks, the issue of savings banks rates should act as a wake-up call for the RBI

.....In an ideal situation, the industry regulator (RBI) should first intervene and only if the issue is unresolved, the Competition Commission should intervene. In the present situation, the RBI is aware of the ground realities. If it felt that there were signs of cartelisation, it should have used strong moral suasion to ensure that banks do not cartelise. Its silence could indicate that the RBI does not see this as a case of cartelisation. It is not clear whether the CCI has issued a notice to banks. Even in the absence of a formal notice by the CCI, this should be a wake-up call to the RBI and alarm bells should be ringing for banks........

Read - HBL

A growing distance

The distance between North Block and Mint Road has been growing for quite some time. The latest evidence of tension is the finance ministry’s decision to introduce a clause in the Banking Amendment Bill allowing banks to trade in commodity futures, despite the central bank’s reservations on the issue. The ministry has argued that this will enable banks to hedge exposure to agricultural lending arising out of price fluctuations. While it is the ministry’s prerogative to submit to Parliament the laws under which regulators like the Reserve Bank of India (RBI) will have to work, it is possible that it has not listened closely enough to the regulator’s arguments, as a major stakeholder.........

Read - BS

No tangible development in RBI-adopted Bhadrak village

The Reserve Bank of India (RBI) Platinum Jubilee outreach activities seem to have remained ineffective in Bhadrak district. The tribal-dominated village Jalanga was selected by the RBI to be adopted under Samagra Gramin Vikas Yojna. The UCO Bank had adopted it. However, given the ground realities, the mission of adopting the village is yet to be achieved. The RBI in a response to one RTI application filed by rights activist Radhakanta Tripathy stated five villages namely Jalanga, Chandipur, Pokatunga, Chhatabara and Bhedabahal from Odisha had been adopted under the SamagraGramin Vikas Yojna, among the 115 villages adopted under the scheme across the country.........

Read - The Pioneer

Financial inclusion in J&K our target: RBI

Srinagar, Dec 12:Interactive meet organized by the Reserve Bank of India in association with J&K Bank concluded today. Speaking on the occasion, Regional Director (Jammu), RBI, K.K.Saraf expressed that financial literacy and financial inclusion are their focused targets in J&K. He said that in anticipation of increase in volume of foreign exchange business due to revival of tourism and handicraft sectors in J&K, need was felt to hold a session on FEMA, 1999 for general awareness of bankers and customers. Chief General Manager RBI Mumbai Rashmi Fauzdar, Executive President, J&K Bank, Parvez Ahmad, Presidents J&K Bank Shafat Ahmad, Nayeemullah, Vice President.P.K. Tickoo, DGM FED RBI Jammu A.K Mattu and DGM FED RBI Mumbai P K Kar were also present on the occasion..........

Read......

Supervision beyond borders

...........It is true that complexity faced by supervisory colleges at the global level, along with the diversity of regulatory approaches only amplifies the challenges of effective cooperation and coordination. Nevertheless, supervisory colleges offer the right model for supervision and regulation of internationally active banking groups. Therefore, colleges established by the RBI will go a long way in achieving supervisory efficiency and effectiveness by building and nurturing relationships among supervisors beyond formal rules, regulations and geographical borders.

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ICICI Bank opens 101 gramin branches across six states

......"Financial inclusion is the bedrock on which the edifice for an inclusive social and economic ecosystem can be built. While the task of bringing the 1.2 billion population within the fold of banking is indeed daunting, it is as much an opportunity for the banks. I feel that brick and mortar branches, as delivery point for banking services, would continue to play a critical role for at least next 20 years," KC Chakrabarty, Deputy Governor of the Reserve Bank of India (RBI) said while inaugurating one of the bank's gramin branches at Khatwa, a village in Rajasthan........

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Industry must educate masses on economic reforms: HR Khan

......."There is a huge need for communication (as to) why reforms are necessary. It is not only to attract foreign investors...it is in the interest of the country," he said. "There is a vested interest in the country against business. They think business is a crime. (They say) any reforms and people will suffer. But nobody explains, starting from the top political leadership to the captains of the industry, academia. Nobody goes and talks to the general people,".......

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Beyond the politics of the banking law amendment

............... After Independence, the Forward Contracts (Regulation) Act was passed in 1952 to regulate this market and FMC was born. In the mid-1960s, the government banned futures trading of most commodities, believing this fuels inflation. The ban was lifted in 2003, leading to the birth of national electronic commodity exchanges but even a decade after this, FMC continues to remain a wing of the central ministry. In a free-market economy, futures trading is essential as it helps price discovery and price risk management and forward prices signal the imbalance between demand and supply. The entry of banks into this market will add depth to the market and they should be welcomed but not before the FMC becomes an independent, strong regulator. If the government is serious about reforms, it should move aggressively to amend both the banking laws and the securities contract law. Neither will work in isolation.

Read - Mint

Bank mergers to be kept out of competition watchdog purview

....Simply put, all mergers in the banking industry will come only under the ambit of RBI. One need not wait for any approval from the Competition Commission in the case of bank mergers if the Bill in the current form is enacted into law........

Read - HBL

RBI rejects FinMin proposal for interest on CRR

..........DK Mittal, secretary, department of financial services, wrote to the RBI, proposing payment of interest of CRR as currently, banks are not getting any interest on CRR . “The RBI has said no to the ministry’s proposal on payment of interest on their CRR holdings,” said a source. If the RBI accedes to the government proposal, it will have to shell out close to Rs 19,000-20,000 crore — assuming an interest rate of 7 per cent — every year as interest on CRR. As total deposits of the banks amounted to Rs 64,10,000 crore as of November 2012, banks have kept around Rs 2,72,000 crore with the RBI at the current CRR level of 4.25 per cent. A section of bankers, led by SBI chairman Pratip Chaudhuri, has even demanded total abolition of CRR. The RBI has argued that the annual transfer of surplus to the government will become negative if the central bank pays interest on CRR and subject the central bank to ‘reputational risk’..........

Read - IE

Cheque bouncing

It is unfortunate that the Finance Ministry is mulling over cheque-bounce cases and considering an alternative mechanism before launching prosecution. If the reason for this is due to the large pendency of cases, the remedy is to establish more courts to deal with such cases. Action under Section 138 of the Negotiable Instruments Act has been a real deterrent to persons issuing cheques without any intention to honour them or without adequate balance in their accounts. This action should not be diluted by bringing in a dispute resolution mechanism.

- G.V.Raman, Executive Chairman, Shriram Group Companies (HBL)

Cheque, Mate

The RBI move to compel banks to issue only CTS 2010-design cheques is welcome, but it is a pity most banks have failed in the initiative despite being informed in 2010. With D-Day looming, they have suddenly woken up and are putting pressure on customers. To avoid hardship to customers, a stay order has to be brought in suo moto by the apex court for deferring the rollout of new cheques to January 1, 2014. This will allow customers one year to be prepared and strict instruction must be given to banks to stop issuing cheque books from old stock.


- CHANDRASEKARAN T R (ET) 

Transactions using debit, credit cards to be encouraged: FM

Government will encourage net banking and financial transactions using debit and credit cards despite rise in number of cyber frauds as such transactions are recorded and leave an audit trail, Finance Minister P Chidambaram said today. He said during Question Hour in Rajya Sabha that frauds involving net banking and debit/credit cards is a small fraction of the total number of transactions in the country.......

Read - IE

New RBI norms likely to affect NBFCs' return on asset: Crisil

............"We believe that tightening in bad asset recognition norms to 90 days from 180 days and the increased standard provisioning requirement to 0.40% from 0.25% will adversely affect the profitability of NBFCs. As a result, the return on asset is expected to drop by 0.25% over the next two-three years,"............

Read - DNA

PLASTIC NOTES OF RS 10 SOON

New Delhi Don’t get scandalised if you get a plastic note of Rs 10 denomination in cities of Jaipur, Shimla, Bhubaneswar, Mysore and Cochin. It is not a counterfeit or fake note but a real money tender printed on polymer substrate to be circulated soon by the Reserve Bank of India in these five cities on a field trial basis. Any currency issued by the RBI is valid across the country, but not in this case, as the trial is limited to five cities......

Read - FPJ

Expect inflation to moderate in 2-3 months: RBI

The Reserve Bank expects inflation to moderate further in the next 2-3 months that may lead to cut in interest rates by the Central Bank, RBI Deputy Governor K C Chakrabarty said today. "We are trying to bring down inflation ... There is a probability that inflation would come down in the next few months. In the next 2-3 months inflation should come down," he said after inaugurating a rural branch of ICICI Bank here.........

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PFC has sought change in RBI draft guidelines on new banks

......as per the draft guidelines published by the RBI, PFC, as a government owned Bank could not seek licence to start a new Bank. The PFC had, however, in its comments to the RBI on the draft guidelines had sought the Apex bank to permit government institutions to have a equity stake in new banks ...........

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HSBC: How Simple Became Complicated, and costly

HSBC takes its name from its roots as the Hongkong and Shanghai Banking Corporation, but there has long been a joke inside and outside the firm that the name stands for "How Simple Became Complicated".............

Read - DNA