......The Reserve Bank is simply following the trend of global central banks increasing surveillance on shadow banking. Basel III norms require central banks to tighten supervision on shadow banks across the globe through steps such as defining minimum capital. Deputy governor Anand Sinha has expressed the need to tighten shadow banking rules on various forums. RBI's focus is on regulating the informal lending and borrowing business. Its concern stems from the interconnectedness of financial institutions. ........
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, January 17, 2013
‘Amendment good for co-operative movement’
.........“Instead of a people’s movement, the co-operative sector in the state has become a political movement. With even badly managed banks and sugar mills being assured of state funding and subsidies owing to political influence, the burden on the exchequer has been enormous,” said Dr Ratnakar Mahajan, former member of the state planning board..........
It will be a busy term for Sebi's new member
.......A veteran of the banking industry, Raman started his career with Bank of India in 1974, and over the years gained expertise in corporate credit, international banking and human resources. He also has also worked overseas as chief executive of Bank of India’s US operations..........
Wednesday, January 16, 2013
'Innovation will drive financial inclusion'
....... India remains an underpenetrated market when it comes to financial services. I believe one of the big changes that we may see with the new wave of banking licences is the focus on innovation to drive financial inclusion. The new banks will look at under-penetrated segments of the market, where existing competition is low, in order to service customers who are currently excluded. The new banks will probably have to develop new, low-cost distribution models. Technology will also play an important role here and I believe we will see the next level of use of technology, especially for analytics. This will result in efficient customer acquisition, better risk management, better customer service and reduce the cost to serve............
RBI alerts banks on Bihar-Nepal border on fake note circulation
MOTIHARI: Reserve Bank of India has alerted all the braches of banks in north Bihar adjoining Indo-Nepal border to take serious precaution in transactions of currencies at their counters as this area has been marked as sensitive for circulation of fake currency notes .The RBI circulated a letter directing the banks to take extra precaution in transaction of Rs 100, 500 and 1000 notes and install machines to check fake notes..........
Succession plans
..... The last few years have seen a half-hearted attempt on the Centre’s part to fill vacancies at crucial positions — adversely affecting the Reserve Bank of India and UTI, among others...........
No cause for optimism
.......Given the manner in which the Finance Ministry behaved most petulantly towards Subir Gokarn, the RBI Deputy Governor, refusing to give him another three-year term, more or less the norm for the post, it is quite likely that its wish for a reduction in the bank rate might be fulfilled at the end of the month. Be that as it may, it should be noted that............
Reserve Bank of India Governor Duvvuri Subbarao tempers expectations of rate cut
MUMBAI: Reserve Bank of India Governor Duvvuri Subbarao on Tuesday tempered expectations of interest rate cuts beginning this month, saying prices of consumer products and manufactured items are still rising. Subbarao, who has refused to give in to pressure from industry and the finance minister to lower key rates, said though the rate ........
3,000 new bankbranches in UP by 2014: RBI Governor
...........The chief minister drew the Reserve Bank Of India Governor's attention to the fact that on the basis of 2011 census while there should be a bank's branch for the population of 13,000 at all-India level, in Uttar Pradesh a bank's services are available for the population of about 16,500 people. The chief minister requested Subbarao to bring all districts of Uttar Pradesh at the all-India level for which the Reserve Bank of India governor assured him that 3,000 new bank branches would be opened in rural areas of the state till 2014..........
Primary credit societies need RBI nod to be a bank
........Earlier, under the provisions of Section 22, on becoming a co-operative
bank, a credit society could continue to carry on its banking business
until such a licence was granted by RBI. The Amendment Act now provides
that a primary credit society
will have to obtain a licence to continue its banking business. The
effect of this amendment is that primary co-operative credit societies,
engaged in banking business, shall be required to convert themselves
into co-operative banks and obtain a licence from RBI..............
Banks press RBI on repo, CRR
......RBI committee, headed by B Mahapatra, had recommended abolition of the regulatory leeway given to banks for debt recast and suggested banks must classify a loan as a non-performing asset if restructured. At present, loans can remain classified as standard even if restructured, though the provisioning requirement increases.
Bigger NBFCs should get benefits of banks: Sanjiv Bajaj
...There has been past cases where NBFCs were converted into banks very successfully. But that was long back. We will wait for the final guidelines on bank licences and see what requirements RBI puts down, than decide. I think the criteria will be different for different NBFCs.........
The next step for Indian banking
India’s banks are at the turnstiles. They can go out, graduating to greater strength and playing a more useful role in the economy; or they can go round in circles without changing much. The current juncture is important for several reasons. One, new banking licences are to be issued, focusing attention on the intrinsic health of the sector. Two, after the financial crisis of 2008, the developed world is still grappling with the task of devising systemic changes that will prevent a repeat. Three, a key lesson from the crisis is that deregulation and emergence of mega industry players do not, in themselves, assure sustainable growth. No bank is too big to fail...........
Should industrial houses be given bank licences?
..........The Reserve Bank of India (RBI) is expected to issue final guidelines for licensing private sector banks shortly. Whether the guidelines should allow industrial houses to promote a new bank is hotly debated. This needs to be first understood against the backdrop of how many new banks should be allowed licences..............
FinMin finalises norms for new bank licenses, sends to RBI
T
he finance ministry has finalised norms for new bank licenses and has sent its comments to the Reserve Bank of India (RBI). CNBC-TV18's Siddharth Zarabi reports this exclusive...........
RBI, bankers seek transparent systems for credit flow to MSMEs
.....As part of an earlier policy decision to look into the concerns surrounding the flow of credit to micro, small and medium enterprises (MSMEs), Deputy Governor K C Chakrabarty held a meeting with Chief Executives of banks this evening. .......
Tale of 2 indices: Why CPI is headed north and WPI sout
.........if we are to assume the following events in 2013 – rising fuel prices, rising food prices, and higher taxes – one could predict that the WPI will start moderating faster than the CPI after rising in the initial months. The government will thus want the RBI Governor to look at the WPI and not the CPI this month – and also in the rest of 2013. As things stand, with Subbarao now in lameduck category – his term is due to expire in September – a slow reduction in interest rates is a possibility...........
Here come the rate cuts
...Whether RBI chooses to go in for a rate cut—and 25 bps or 50 bps—will depend on whether it chooses to be consistent or not. Though RBI’s stated policy variable has been the modified core inflation, in recent monetary policy statements RBI has confounded all watchers by changing its goalposts from WPI to core inflation to CPI and even, in the August statement, to the output gap.........
Bankers want RBI to focus on growth; seek cut in repo, cash reserve ratio
......"While inflation concerns remain, growth is a bigger concern...so, while we understand the issues related to inflation at this point of time, it was our recommendation that there should be a rate cut so that growth comes first,"............
RBI’s views may be sought on Coke arm’s extension plea
The Foreign Investment Promotion Board (FIPB) could seek the Reserve Bank of India’s views on Hindustan Coca-Cola Beverages’ (HCCB’s) proposal for delayed redemption of preference shares in favour of its holding company, Hindustan Coca-Cola Holding (HCCH). HCCH is the Indian arm of the US beverages major Coca-Cola. “It is a FEMA issue and thus the RBI has to give a view on it,”...........
Sebi for allowing ETFs to park 20% gold holdings with banks
......"Sebi has suggested this as one of the options to curb gold imports and channelise investment of retail investors from physical gold to gold-linked instruments," a senior government official said on condition of anonymity. In a draft report on gold imports released on January 2, the RBI had also suggested that ETFs be allowed to invest their gold holdings in gold certificates with banks. .............
Delhi mulls further curbs on gold imports to cut current account deficit
......Recently, the Reserve Bank of India executive Director Deepak Mohanty urged investors to shift from physical gold as a hedge against rising prices to financial products like inflation-linked bonds. While the CAD was indeed worrying, Chidambaram said it was within India’s capacity to underscore the crucial importance of FDI and FII.............
NABARD asks OSCB to set up FLCs in state
With an aim of educating rural people about banking systems in the state, NABARD has approached the Odisha State Co-operative Bank (OSCB) to play a major role in establishing Financial Literacy Centres (FLCs) because Co-operative Banks have wide grassroots presence in the state. Meanwhile, NABARD authorities have asked the OSCB to allow each District Cooperative Bank to start FLC at least in one block as part of the endeavour to educate rural masses on banking system...........
Read........
Read........
Tuesday, January 15, 2013
Urjit Patel takes over as RBI Deputy Governor
Urjit Patel takes charge as RBI Deputy Governor, to head monetary policy division
A revolution on the cards
....The Reserve Bank of India, apprehensive about Visa and MasterCard monopolising the payment market, wants fair competition. “The need for RuPay is on account of the high cost borne by Indian banks for affiliation with international card associations in the absence of a domestic price setter,” said RBI Deputy Governor H.R. Khan. “Also, the connection with international card associations results in routing even purely domestic transactions through a switch located outside the country.” In the case of a Visa card transaction, the data is sent to a processing centre in the US or Singapore, which, in turn, sends it to the card-issuing bank in India. With 90 per cent of transactions being domestic, all data on Indian spending first goes to the US. If the banks start accepting RuPay cards, NPCI could act as a switch for transactions. RBI feels that a vast segment of the population has been left untouched by the growth in the electronic payment market, despite the three-decade-old presence of international card networks in India. ......
Bankers want RBI to allow interest on current accounts
Banks will ask the Reserve Bank of India to allow them to pay interest on current account deposits at tomorrow’s meeting, in the run up to the central bank’s monetary policy review. Currently, banks don’t give interest on current accounts. Doing so, bankers believe, will encourage cash to flow into the system which otherwise stays with the establishments. Current accounts are now 9.85 per cent of total deposits with banks...........
Progress of banks reviewed
......LDO,RBI emphasised upon the achievement on the CD ratio of 40 per cent in the district by March 2013, which currently stands at 32.70 per cent. He exolted upon the bankers to come forward in lending in key areas, so as to achieve CD ratio. He also emphasised on the financial inclusion of all unbanked villages in the district.........
New banking licences: Finance Ministry raises hope about final guidelines
....The ministry has proposed that the RBI should clearly define 'promoter', besides suggesting an appropriate banking structure in the country with a few national and international level banks at the top, an official familiar with the matter told ET. The ministry has also suggested that the RBI drop the condition that restricts promoters with exposure to stockbroking and real estate from seeking bank licences, added the official, who did not wish to be named. ............
Banking on reform
........When it comes to economic policy, it is better to be safe than sorry because decisions once taken cannot be reversed easily. This is true of the Banking Laws (Amendment) Bill, 2012, which was passed by Parliament on December 20. The amendments to the existing laws will be followed up by the RBI through suitable policies. The reforms will not transform the landscape of banking in India, or fully open up the sector to foreigners and industrial houses, though it will admit a few of the serious ones from among them. But there seems to be a grudging acceptance that the current structure of Indian banking is not helping the expansion of banking services, thereby putting the government’s financial inclusion and growth objectives at risk. ..........
Short Cuts to Success
.............RBI Governor D. Subbarao has defied two successive finance ministers, Pranab Mukherjee and P. Chidambaram, both of whom wanted an interest rate cut in 2012. There are now expectations he may finally relent in January 2013 when RBI announces its next review of monetary policy. The January cut, if it happens, will be a minor one. RBI will have to follow that with several cuts throughout the year if private investment has to be revived.....
Conflicting rationale before Reserve Bank
The consumer and wholesale price inflation numbers for December 2012 gave contrasting pictures, just a fortnight ahead of the Reserve Bank of India (RBI)’s monetary policy review...........
Stable, but for how long?
......Financial inclusion, financial literacy and consumer protection are interconnected threads in the pursuit of financial stability. Given the strong linkage between stability and inclusion, it is only right that the FSR should highlight, for the first time, the several regulatory initiatives taken and the progress achieved so far........
Hopes of rate cut by Reserve Bank of India on a high as inflation hits a three-year low
Headline inflation dropped to its lowest in three years in December, reinforcing expectations that the Reserve Bank of India will cut rates at its policy review on January 29 to boost the economy, which is headed for its worst showing in a decade. The inflation numbers are the latest piece of data providing backing to those, notably the finance ministry, calling for a cut in interest rates after a fall in industrial output in November reported on Friday. ...........
UP eyes 3000 bank branches to better investment scene
..........the government, according to sources, has also decided to suggest to the RBI governor to set up at least 3,000 new branches of banks in the state and also issue the licences for the reopening of the 15 cooperative banks, which have been denied the deposit facility at present.
Read - TOI
Read - TOI
Monday, January 14, 2013
Leaving interest rates alone would be a heroic move - S.S.Tarapore
.....Policy Options Given that the inflation rate is way above the RBI's comfort zone of 4.5- 5.0 per cent, the large fiscal deficit, the large CAD, the overvalued rupee exchange rate, the overextension of credit and the sluggish deposit growth, there is no case for a reduction in the repo rate or the CRR. In fact, the situation calls for tightening of monetary policy to squeeze inflation. The powerful political economy forces of industry and government will not permit the RBI to undertake the policy tightening which is necessary. It would be a heroic act on the part of the RBI to keep the present policy stance unchanged. What is likely to happen is that, in all probability, the RBI would, on January 29,2013, reduce both the repo rate and the CRR, each by 0.25 per cent........
The challenge of gold
.....One promising remedy would be “financialisation” of gold, both the imported component as well as the domestic stock. Banks and institutions need to introduce attractive savings packages based on gold. Simultaneously, alternative avenues for investment should be made to provide a real rate of return that is higher than what obtains now. Only then can domestic consumers be weaned away, at least partially, from their craving for gold......
Microfinance - Book Review by P.P.Ramachandran
..........NGOs are the backbone of financial intermediation for the self- help groups. Even with the strident official backing, their work has become an inalienable and invaluable part. Assisting the credit institutions has been an upsurge in the growth in MF institutions. This growth led the RBI to appoint a Committee headed by Dr. Malegam to recommend appropriate regulations for the sector. The Finance Ministry has formulated a Finance Bill proposing to confer regulatory powers on the RBI. The book under review is a history of the development of MF institutions and is an exhaustive analysis of the literature concerning that. MF is one of the growing tools of development and microcredit has become an integral part of social banking The SHG- BL programme backed by Nabard is the largest MF programme in the world. There are a number of government programmes, which support the poor. The book is a comprehensive survey of the literature on MF movement in India and abroad...........
Ex-RBI staffer fights to save her flat
........Nearly four decades ago, when she was a top official with the Reserve Bank of India, she had invested most of her savings into purchasing the two-bedroom flat, one that she hoped she could retire peacefully into. As luck would have it, she (with the help of her 96-year-old sister Taramati Israni) has been left battling her nephew for her 900-sq-ft home. Her nephew Mukund Bhide came back into her life four years ago and after a while, she made him a joint beneficiary on all her bank accounts so he could do the running around for her. “He swindled me of lakhs of rupees and took away the original share certificate of my house without my knowledge.” .........
Ex-MLA denies scam in Bapunagar bank
...........However, former Rakhial MLA Kanubhai Kotiya, husband of an accused Lilavati Kotiya, refuted the allegations made by the Reserve Bank of India (RBI). “The scam complaint registered against us is false. The whole thing has been misinterpreted by the RBI. As far as fake accounts are concerned, we have not done any such thing,”...........
RBI governor’s assurance to Vijayamma
RBI Governor D. Subba Rao has reportedly assured YSR Congress honorary president Y.S. Vijayamma that the future of the staff working in public counters of RBI regional offices will not be jeopardised by their closure. He was replying to a letter written by Ms. Vijayamma.
RBI plan: Financial literacy for students
....“We are in touch with UP Board officials and they have responded well to our initiative. In some of the books, they have already incorporated some topics like how to detect forged currency notes, etc. We are confident that other concepts would be added soon. It is important to educate young children about banking,” said Hemant Kumar Soni, DGM, rural planning and credit department, RBI while addressing the media..........
RBI watchful of non-compliance by PSU banks
........RBI has come down heavily on banks for not complying with the regulators annual inspection report findings. In a notification released last year the RBI had told banks to take the inspection findings seriously and to comply with them immediately after receiving the report...........
RBI can’t fight inflation on its own
....... With so many factors at work, if RBI goes for a rate cut, which many believe will happen, it is suggested that the government lend adequate support in terms of reducing non-essential imports such as gold, and taking measures to control fiscal deficits. The good news is with direct cash transfer slowly being put in place, it is expected that the government will be able to better utilise its funds, and control the fiscal deficit........
Appointments with a purpose
The newfound enthusiasm surrounding the selection of financial services secretary reaffirms the government's intent to oversee state-run banks
....., the animated discussion that is going on among civil servants over Mittal’s departure and the choice of his successor is unusual. There are several reasons for this. Even though Mittal’s role was not as critical as that of his counterparts in the departments of economic affairs, revenue or even expenditure, and until recently he would not even have an independent office in North Block, the ministry’s headquarters, his job per se was not unimportant. Ask any public sector banker or those working for the Reserve Bank of India and they would tell you how Mittal became an important player in India’s financial sector and how he used the financial services department to keep a tight vigil on the way the state-controlled banks functioned or even were regulated. ......
When and where the roads of Govt and Reserve Bank will meet? - T. V. GOPALAKRISHNAN
.......The economy can perform well only if both the Government and the RBI are on the same road and they take joint efforts mutually respecting each other’s role. Hope the roads they are presently on are not parallel...........
Fiscal situation may worsen: Assocham
.....“The slower pace of GDP growth has affected the manufacturing and trade sectors thereby resulting in lower than estimated excise duty collections. Higher policy rates of RBI, in an effort to contain inflation, has led to an investment downturn,”.......
50 bps rate cut likely in RBI policy review: Credit Suisse
....“Following a break of nine months, we expect the Reserve Bank to cut the repo rate at its January 29 meeting, probably by 50 basis (0.5 per cent) points to 7.5 per cent,” .......
Provisioning norms for NBFCs will hit profitability: Assocham
......“New NBFCs are likely to be more adversely affected due to the need for additional capital. If the required capital could not be raised with reasonable cost, they may be forced to restrict the scale of operations or shrink their business, and this may pave way for some consolidation too,”..........
Tata Capital says new norms to eat into bottom lines of NBFCs
..........The draft norms, based on the recommendations by the Usha Thorat (Former RBI Deputy Governor) committee and released last month, seek to bring NBFCs at par with commercial banks. Stating that banks operate with benefits like recovering money under the Sarfesi Act and having access to low-cost deposits, he said, "Only on the disadvantages side you are going to bring it (banks and NBFCs) at par, and thus it becomes difficult."..........
Bharat Bank bags 1st prize for best H.R.Project
ET
Shri Ratnakar Deole has wrongly been quoted as Former ED. He retired from Premises Department, Central Office as Chief General Manager.
Banks set to slash rates for MSME loans
.....A senior banker familiar with the issue, who did not want to be named, said, “In cases where over leveraged companies have managed to get a fine rate, RBI is asking banks for an explanation on how they arrived at the rate. RBI is insisting that rating should be directly linked to the price of a loan.” The Reserve Bank of India (RBI) had set up working group last year headed by Deputy Governor Anand Sinha for transparency in pricing of loans, but the committee is yet to submit its report......
Financial holding co to infuse equity into PSBs likely
The finance ministry will soon send a note to the Cabinet for setting up a financial holding company (FHC), which will leverage its capital base to infuse funds into public sector banks, a senior ministry official said. The proposal, based on the recommendations of the Shyamala Gopinath committee, has the backing of the Reserve Bank of India (RBI). The ministry will also send its views on bank licence norms to RBI next week.............
Will Chidambaram become Rahul’s Manmohan Singh?
..........However, it is the constant pressure on the RBI top brass that has thoroughly exposed PC’s undemocratic nature. He is unwilling to share power. Whether it is D Subbarao, or his predecessor Y V Reddy, PC has covertly and overtly sought to erode the autonomy of the central bank by trying to force his will on it, especially in regard to the benchmark policy rate............
UPA's last chance?
...........Banking is a two-way relationship with several changing dimensions. ATMs and hand-machines with banking correspondents cannot substitute for the personal relationship a banker cultivates with his/her clientele over time. But it is quite unlikely that the present political leadership will opt for such a change, since time is running out for them.
‘ Interest- free’ Islamic banking in offing
The minority affairs ministry is working with the Reserve Bank of India to introduce the " interestfree" Islamic banking system, which will enable over 15 crore Muslims to use banking facilities without tinkering with the Islamic code of belief that prohibits them from earning any interest. It may provide " vehicles of financial instruments which can facilitate interest- free financial products, including loans, for the community's benefits," says Minority Affairs Minister K Rehman Khan, who wrote to the Reserve Bank of India Governor D Subbarao last month, to first introduce some financial instruments as a pilot. He had suggested that the RBI set up a committee to examine the possibility of such financial instruments........
R.K.Dubey joins Canara Bank as CMD
R K Dubey has assumed charge as Chairman and Managing Director of Canara Bank, one of the leading public sector banks in India with effect from Jan 11. A professional banker par excellence, Dubey carries with him vast knowledge and multi- dimensional banking experience, spanning over three decades. His key areas of expertise include planning and budgeting, resource mobilization, credit, risk management, HR, IT and marketing. A post graduate in English, Dubey's academic credentials also include LLB, MBA in HR and a Certified Associate of the Indian Institute of Bankers. Born on 10.09.1954, Dubey joined PNB in the year 1977 as a management trainee and moved up to the ranks of a General Manager in 2008 and was appointed as Executive Director of Central Bank of India in 2010.FPJ
Raj Kumar Goyal takes charge as Executive Director of Central Bank
Raj Kumar Goyal has taken charge as Executive Director of Central Bank of India, one of the largest nationalised banks of the country with effect from Jan 11. He replaces Rajeev Kishore Dubey. Goyal was earlier working with Bank of India as General Manager, HRD. He has more than thirty five years of experience in banking having worked extensively in the areas of credit, human resources, general operations and international banking at Bank of India's London Branch.
FPJ
Demand for SBI module office in Gulbarga gains momentum
.....The establishment of the module office would lead to the opening of new branches and increase the bank’s commercial activities. Although Gulbarga district had been sanctioned 9 licenses by RBI to open new branches in different parts of the district, only two new branches will be opened. The remaining licenses are being shifted to other districts. If SBI’s module office had been set up here, all nine branches would have opened in Gulbarga district, the source said........
Friday, January 11, 2013
Underlying reasons for gold rush - S.S.Tarapore
Banking Ombudsman Scheme may be widened
........Another likely revision, which has also been proposed by the Damodaran Committee on customer service, is to ask banks to strengthen their internal Ombudsman schemes so that the RBI's Banking Ombudsman can function as the Appellate Authority, says an official of the Indian Banks' Association. Currently, the Deputy Governor of RBI is the Appellate Authority.......................
Food court to add spice to Chennai book fair
....It will not be all books
at the fair. The RBI will put up a stall to create awareness about
banking facilities and to sensitise people about fake currency notes. An
ATM by Union Bank will also be set up at the venue. School education
minister N R Sivapathi will inaugurate the book fair ...........
RBI to hold coin melas
The Reserve Bank of India has launched camps with various banks to meet the increasing demand for coins this Pongal. On Friday, coin melas will be organised at Indian Bank, Purasawalkam and at Canara Bank in Koyambedu, a press release said.
M D Mallya BS Banker of the Year
M D Mallya, who retired from Bank of Baroda (BoB) as chairman in November last year, is the Business Standard Banker of the Year 2011-12. He was chosen by a four-member jury, headed by former Sebi chairman M Damodaran.................
SBI chief bats for rate cut
State Bank Group chairman Pratip Chaudhuri has argued for a 50-100 basis point reduction in cash reserve ratio (CRR) and a 50 basis-point cut in repo rates, saying that these would do enormous good to the economy, at a time when credit absorption was flagging due to high interest rates..................
Kill cash
..........A payments company like Visa, MasterCard or RuPay, an RBI initiative, can take care of settling payments. Scale will bring down their fees. And for every crore rupees worth of tiny transactions they settle, they can be paid something from the government so that they have an incentive to make a good job of settling small payments in remote areas. The banks are the agencies to deploy the swipe machines. They can split their incentive from the Centre with the payment companies..................
Credit cards linked to fixed deposits are good for customers and even better for banks
........After the credit crisis in 2008, banks hit the break on credit card issuances that hit a high of 27 million cardholders in 2007- 2008 - defaults hit a high of 20- 22% and banks like ICICI, one of the most aggressive issuer of cards in India, had to clean up their portfolio. By F12, the same had come down to 17 million as per RBI data. The secured card is usually the first card that one takes in the US, a developed market for credit cards, to start building one's credit history. Indian banks are now pitching the same to clients with low CIBIL scores, over- the- counter, or on email. Various banks, like SBI and DCB, have trained scouts on market visits and ICICI began offering instant FD- linked cards to net banking customers only recently..............
Reserve Bank of India sees stress on state finances from 2017-18
..........India's central bank raised concerns over states governments' debt repayment capacity from fiscal year 2017/18 because of higher market borrowings and the recently announced bailout scheme for state-owned power companies. "The increase in market borrowings of state governments since 2008-09 could lead to large repayment obligations from 2017-18 onwards," the Reserve Bank of India said in its annual publication on state finances, 'State Finances: A Study of Budgets of 2012-13', released on its website...............
Encourage NBFCs to continue and build on their business models: G S Sundararajan
........RBI wants to convert existing NBFCs into banks…
If we want to continue to achieve financial inclusion, we should realise some NBFCs like us and banks are in mutually exclusive customer segments. Hence, if we want NBFCs to get into banking space, then they should be encouraged to continue with their business models and, at the same time, expand on their additional products to the existing customer base after conversion.
What if RBI insists?
In the current scenario, there are some businesses which we can do as a bank. So, there is a choice, which we will have to exercise. As long as we are able to convince the regulator that there will be no regulatory arbitrage, I am sure they will support us in furthering financial Inclusion...................
RBI floats draft norms on capital needs for counterparty risk
In order to enhance risk management system of banks, the Reserve Bank of India (RBI) has proposed tweaking norms for capital adequacy with regard to their exposure in derivative instruments. Under the new framework, banks’ exposure to central counterparty (CCP), a clearing house, arising from OTC derivatives, exchange traded derivatives and Securities Financing Transactions (SFTs) will be subjected to capital requirements for counterparty credit risk, the RBI said in a draft guidelines........
Government mulls interest-free banking incentive to woo Muslim voters
........It is learnt that a recent exchange of letters between minority affairs minister K Rehman Khan and RBI Governor D Subbarao in December has given a new push to the issue, hanging fire for want of requisite changes in the existing banking laws. The RBI has been insisting that to make it possible, an amendment is required in the Banking Companies Regulation Act, 1949. This was conveyed to the finance ministry recently after Khan raised the issue with the RBI governor through a letter, dated December 5, 2012.......
Dump gold abroad
.........Even if two per cent of the gold holdings with the public can be garnered through an attractive scheme for exporting, the government will be able to influence the international prices. A gold bond scheme that offers the lowest of the market value of gold or an inflation-adjusted assured return can easily attract the public, and accumulating gold stock for export will not be difficult.
How to stop the gold rush
.......RBI talks of gold deposits, accumulation and pension schemes. Will
people really come forward and deposit their gold and take it back
after say 5 or 10 years? If it is held for security or vanity, then this
will not happen. Also, most gold held by households could be in the
form of jewellery and not coins especially in rural areas, which makes
such a scheme a non-starter as the individual would expect the same to
be returned at the end of the tenure. If the idea is to churn this gold
for meeting further demand, then the scheme may not work. ................
'Both farmers and bankers culpable’
..............Official sources said that it is imperative on the part of supervisory bodies such as the RBI to make sure that the crops and area mentioned in the loan applications are genuine, and loan is used for the stated purpose.
CBI inquiry sought over misuse of interest subvention scheme
........Sources in the NABARD point out that the Reserve Bank of India is already seized of the issue. In its circular dated November 9,2012, the RBI said “the government of India, through its budget announcement for 2006-07, introduced an interest subvention scheme with a view to ensure (sic) availability of short-term crop loans up to Rs.3lakh to farmers at a reduced rate of seven per cent per annum. This scheme has continued ever since with minor variations. Currently, with three per cent additional subvention for timely repayment, the effective cost of short-term crop loan comes to four per cent for farmers.”.........
Delhi-NCR: The crown and the jewel
................But the RBI instructing scheduled banks to not allow a rollover of loans given to real estate developers into next financial year will mean that developers will see an urgency to dispose of their unsold inventory to raise funds to pay back their loans. This holds the potential for a major correction in residential prices in the NCR region................
Thursday, January 10, 2013
G-secs need more retail investors, says RBI’s Khan
..... “On the face of it, it looks very odd that the Government promotes instruments of corporates and gives tax concession but does not extend the same treatment to its own instrument.” “This is being looked at from the Government side,” ........
RBI to mull slashing held-to-maturity limit for banks
The Reserve Bank of India (RBI) is considering a proposal to bring down the held-to-maturity limit in debt for banks in a non-disruptive manner, Deputy Governor H.R. Khan said on the sidelines of an event on Wednesday. "We are working on that," Khan said, adding a decision was not finalised...........
Syndicate Bank new branch at Nagaram
HYDERABAD, JAN. 9:
Syndicate Bank has opened a new branch at Nagaram, Keesara Road here. A.S. Rao, Regional Director, Reserve Bank of India, Hyderabad had inaugurated the branch in the presence of M. Anjaneya Prasad, Executive Director, Syndicate Bank.........
Do central banks deserve greater independence?
........Although there is some truth in what Stiglitz believes especially on the accountability front, the scenario is a bit different in India. For starters, the RBI's efforts to have a regulatory check over Indian banks certainly ensured that the Indian banking system was not affected as much as their Western counterparts. Secondly, if the argument is for RBI to have lesser autonomy, then one has to assume that the government is clean and responsible...........
North Block vs Mint Road
.........A closer look at the larger agenda in the Centre’s hand, the major part of which it expects to execute in 2013, will reveal that the abnormalities covered in this article are just symptoms of a chronic malice that is troubling governance at the top. Still, how, where and when the undeclared war that North Block is fighting with Mint Road, in an effort to clip dissent ends, will be decisive in the development of Indian economy..............
'Change' required............
I request the Reserve Bank of India to issue sufficient change to banks. There is heavy shortage in the market and if we need change, we have to pay extra Rs.10 for every Rs.100 worth coins. We are unable to get change even in the banks. Therefore, I request the RBI officials to issue sufficient change to local banks for the account holders at least so that we can draw the small coins.
S. Padmavathi, Viveknagar, Chikkadapally ( Hindu)
VTA demands gradual implementation of cheque truncation system
.....The VTA has dispatched a memorandum to union finance minister P Chidambaram and RBI governor Duvvuri Subbarao appealing to them that such move should be made applicable gradually to avoid needless legal litigations and erroneously breach of trust within the parties..........
Read - TOI
Need For Strengthening NBFCs
....Sinha was speaking at a discussion on “RBI’s Draft Guidelines based on Usha Thorat Committee Report on Issues and Concerns in the NBFC Sector organised by the Indian Merchants’ Chamber. Speaking at the discussion, Guest of Honour Ms Usha Thorat said: “Because of the diversity of NBFC sector, which operates in different verticals, the draft affects various NBFCs in different ways vis-Ã -vis the banking sector.” .......
Financial inclusion: Bogged down by faulty execution
It had the trappings of a blockbuster reform, but lost its way in policy tinkering and bad execution. This is how one could sum up the financial inclusion efforts of the Union Government and the public sector banks, especially in North India, in recent years. Misguided policy interventions and hiccups in financial inclusion architecture design at the Finance Ministry level implied that little gains could be achieved in the areas of ATM rollout by public sector banks or business correspondents (BCs).........
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