..........The Indian fisc is highly regressive in that tax receipts are approximately equally divided between direct and indirect taxes. It is one thing to enhance ‘sin’ taxes (liquor and tobacco) and quite another to raise indirect taxes across the mass consumption basket. As part of distributive justice, the Government should bite the bullet and tighten direct taxes where there are glaring gaps, while easing the burden on the relatively vulnerable segments. A higher income tax slab of 40 per cent could be introduced for annual incomes above Rs 25 lakh. Responsible industry leaders in the US, Germany and France have themselves suggested higher taxes for the ‘super-rich’........
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.
Friday, February 8, 2013
IMF: RBI must keep inflation in check
.........“We think the best the RBI can do to restore confidence and revive investment is to bring inflation down,” Papi told CNBC Asia’s “Squawk Box” on Thursday. “While we see that the pressures on wholesale prices have come down, we are still concerned about inflation in consumer prices as it still exceeds 10 percent.”.........
Move to Chip- based cards to prevent credit card frauds
.......While the Reserve Bank of India (RBI) has taken the initiative to make two-factor authentication mandatory for card-less transactions (e.g online), the same requirement for card transactions is at least a year away. But why wait till then? If you are looking for a new credit card or simply want to make your current credit card more secure, choose the chip-based card.............
Realtor held on cheating charge
.....The accused invested the money in real estate business. He later misappropriated the money and cheated the depositors for wrongful gain. Gupta had no permission from SEBI or the RBI to collect deposits from the public. He collected deposits under three separate plans from the public and .......
Thursday, February 7, 2013
India’s me-too monetarism
.....Instead of the discipline of rule-based policy that Christensen would like to see, India seems to be indulging in a kind of me-too monetarism that may be overly loose. It will be interesting to watch how RBI policy evolves during the course of the year. In the meantime, Christensen is promising to write more about Indian monetary policy — and that is a good thing........
Subbarao seeks 200 new bank branches in State
GUWAHATI,
Feb 6 – Reserve Bank of India (RBI) Governor D Subbarao today called upon the
nationalized banks to set a target of establishing 200 new bank branches in the rural areas of
Assam during the financial year 2013-14. He was addressing the State Level
Bankers’ Committee (SLBC) meeting at the Assam Administrative Staff College
which was also attended by the heads of all the nationalized banks having branches in
Assam, the Chief Secretary and senior officers of the State government and
officers of the banks, official sources said........
CRR = 900 km metro, 25% larger economy
DFS' unique identity
.....Bidding farewell to Mittal, one of the officials said everyone now knew what DFS was, unlike a few years ago when people simply called it the “banking division” and its secretary was referred to as the “banking secretary”.
10 lakh employees to join two-day banking strike: AIBEA
.........."While the Government is so keen to bail out corporates, it has no time or intention to mitigate the sufferings of the people and working masses. Hence this strike has become necessary to express our serious concern and opposition and to demand remedial measures,"............
The growing current account risk
...........The conference call that Reserve Bank of India Governor D. Subbarao had with economists a day after the announcement of the monetary policy on 29 January offered further proof that the external situation is a major worry. Many of the questions dealt with it. Subbarao said in one of his answers that future interest rate cuts will not depend on the inflation trajectory alone. The size of the current account deficit will also be considered. That statement should temper some of the more unrealistic expectations of deep rate cuts in the coming months. Meanwhile, former RBI Governor Y.V. Reddy has put forth an intriguing idea in his forthcoming book on Indian economic policy, which was excerpted in Mint on Monday. Reddy argues that India should aim for a zero current account deficit over an economic cycle, so that India has the space to absorb shocks in bad years.........
Why RBI should go easy on bank licences
......The government is trying to push the RBI in giving out new banking licences with daily media reports on what kind of corporates can be given these licences. The fact that the government is getting involved in new bank licences at a time when its own banks are showing the worst performance in the banking sector leads to serious questions on the intentions of the government. The RBI will only give out a few licences based on merits but given the government involvement there will be raised eyebrows on why certain corporates received licences and certain corporates did not receive licenses. The RBI should hold back on bank licences until the banking sector gets back on track with balance sheets improving. The government should leave the RBI on the banking licence issue.......
RBI panel revives Manmohan Singh's 1992 idea of 'gold bank'
A Reserve Bank of India (RBI) panel has revived the proposal of setting up a gold bank, or 'Bullion Corporation of India', to reduce imports of the metal- an idea mooted over two decades ago by Manmohan Singh, the Minister of Finance at the time. "With considerable changes in policy related to gold over the past 20 years, the proposal for setting up a Bullion Corporation of India (BCI) needs to be revisited and activated," a committee, headed by K U B Rao, to study the issue of gold imports said in its final report...........
Extreme shine: Gold import restrictions an emergency step, says RBI
India's central bank, the Reserve Bank of India (RBI) said it would consider imposing value and quantity restrictions on gold imports by banks, which account for 60 percent of India's imports of the yellow metal, under extreme conditions, as the world's biggest consumer of gold battles a record high current account deficit............
Read - IE
Read - IE
RBI panel asks banks to provide gold- linked financial products
A Reserve Bank of India ( RBI) panel asked the government to design innovative financial instruments to ensure real returns and said it must take steps to curb gold imports to reduce the current account deficit ( CAD). In its report released on Wednesday, the panel headed by K. U. B. Rao, Advisor, Department of Economy and Policy Research at the RBI, proposed a slew of measures like mandatory quoting of PAN numbers for high- value purchases, restriction on gold loans and check on NBFC branches dealing with gold loans. The RBI working group on issues related to gold imports also said " under extreme circumstances", RBI may consider to stop import of gold by banks..........
PAN card must for high-value gold purchases: RBI panel
Seeking to check demand of gold, a RBI committee today proposed a slew of measures like mandatory quoting of PAN card numbers for high-value purchases, restriction on gold loans and check on NBFC branches dealing with gold loans.............
Read - IE
Read - IE
How to Reduce Gold Imports: A New Kind of Gold Bonds
.......launch of an innovative gold bond scheme coupled with bringing
transparency in the secondary market of gold trade would enable the
country to significantly reduce import of gold..........
Microfinance bodies, officials eat up 150 cr of farm loan waivers
.......TOI
had reported on January 17 that the RBI has asked all banks responsible
for the implementation of the waiver scheme to register FIRs against
bank officials and MFIs who fraudulently draw part of the benefit meant
only for individual farmers. As per the direction of the finance
ministry and the RBI, banks have started the recovery of such fraudulent
payments, starting with the accounts that have been scrutinized by the
CAG.........
NBFCs demand recovery powers, tax benefits like banks
......RBI had constituted a working group under former Deputy Governor Usha Thorat to look into the issues and concern of the NBFC sector. The group had submitted its report to RBI in August 2011. Based on the committee’s report, RBI came out with draft guidelines for the sector in January 2013. The working group had recommended that NBFCs be given benefit under Sarfaesi Act and given the tax benefits for provision. However, RBI’s draft guidelines did not mention this as it’s the government which will take a decision. During a meeting organised by industry body FIDC (Finance Industry Development Council), RBI’s Deputy Governor Anand Sinha had indicated that the central bank may take the issue to the finance ministry.
Faux fisc lift to bring banks to their knees
.......In 2011, the working group on operating procedure of monetary policy under chairmanship of RBI executive director Deepak Mohanty had suggested auctioning of government’s cash balances. The auctioning would be at the discretion of the RBI. RBI Governor D Subbarao admitted government cash balances have been higher and held for longer than their historical regime. He said that RBI has requested the government to disclose the cash balances so that everyone is on the same page.........
RBI bats for increasing financial literacy
The Reserve Bank of India (RBI) feels a lot of work is needed to be done on financial literacy in the country. “While a number of measures have and are being taken across the country, given the enormity of the task, a lot of ground still needs to be covered,” said K C Chakrabarty, Deputy Governor of RBI, while addressing the workshop on financial literacy at Nabard in Mumbai...........
RBI releases Financial Literacy Material
.......The objective of Financial Literacy material is to aid creating financial awareness and educate common people on management of money, importance of savings, advantages of saving with banks, other facilities provided by banks and benefits of borrowing from banks. This guide is a ready recknor for trainers involved in Financial Literacy and Financial Inclusion. The Financial Diary has been prepared..........
Read.........
Integrated Rural Development & Management: Shaping rural futures
......In the NER the change has been there but relatively at a slower pace. Investment flows are jacking up mainly due to larger involvement of the banks [public sector inclusive of the Regional Rural Banks and Cooperatives particularly]. Government schemes are gaining ground and subsidy-centric approach is being slowly replaced by market-oriented activity-diversification based approach. The RBI and NABARD efforts as well as the activities of other development agencies [government and non-government] are accentuating the changing process to a satisfactory extent..............
Govt mulling raising NABARD authorised capital to Rs 20,000 crore
............Besides other things, the government will also take a call on merging the post of Chairman and Managing Director in the financial institution. Following the changes, which would be carried out through amendment to the NABRAD Act, 1981, the institution will be able to introduce new credit products, forge new linkages and develop new clients. Once the changes are made in the Act, NABARD, which is the apex rural and farm development bank and whose role is to promote credit growth in these areas, would be able to undertake short term lending operations. The transfer of RBI's equity to government would end the conflict of interest between the regulator and regulated entity.
SBI Chairman to visit Guwahati
Chairman, State Bank of India, Pratip Chaudhuri will be visiting Guwahati and Nagaon on February 6 and February 7, along with the Governor of RBI, Dr D Subbarao to attend the special State Level Banker’s Committee meeting convened at the behest of the State Government at the Administrative Staff College, Khanapara in Guwahati..........
Axis Bank deploys 500 cash deposit machines
Axis Bank has deployed 500 cash deposit machines in various branches in over 300 cities across the country, said a press release issued by the bank on Wednesday. The cash deposit machines network enables customers unmatched convenience of depositing cash in real-time, with funds credited instantly to their accounts for all successful transactions without the hassles of filling lengthy deposit slips and waiting in the queue at the teller.............
Takru meets PSB chiefs
..........In his maiden meeting with PSB chiefs after taking over as Secretary of the Department of Financial Services in the Finance Ministry, Mr. Takru also took up for discussion a host of other issues such as the aspect of financial inclusion and the direct benefit transfer scheme which is operated through the banking channel.........
Basel III implementation: A new challenge for Indian banks
........ Basel III was designed to address the weaknesses of the past crisis and to make the banking sector much stronger and efficient enough to face any crisis. The major thrust area of Basel III is improvement of quantity and quality of capital of banks, with stronger supervision, risk management and disclosure standards. The new norms will definitely address the systemic loopholes in Basel II, but it will have some impact on banks.........
Read - Business Today
‘BSP netas used bank to launder cash’
......"The bank had sanctioned Rs 2 crore but as per repayment schedule, total recovery would be only Rs 30 lakh in five years and for the same loan account the bank had not followed the share linking norms," the RBI's inspection report said. When contacted, Mishra strongly refuted the charge and threatened to proceed against RBI. The BSP leader said he had taken a loan from the Indian Mercantile Bank and had mortgaged his Windsor Place property, the worth of which was more than the loan amount........
Banking for the braveheart
The book under review is by a banker with great experience in his field and academics. The testimonials in the blurb from the leading lights of the profession testify to the author’s expertise. It took me quite some time to go through the whole book; it contains many features of a technical nature not known to me despite my five decades of experience in central banking vis-Ã -vis commercial banking................
Online fraud and cash economy
Credit card frauds are on the rise. This when the Reserve Bank of India (RBI) is keen on encouraging people to use less cash and employ electronic transfers besides payment methods such as credit and debit cards. It’s easy to see why—this allows cash flow to be tracked and should make it less easy for unaccounted money to wash through the system............
Global credit card fraud: New malware behind fraud, suspect bankers
.......While RBI has done its
best to make transactions secure it cannot prevent international frauds.
Since most of the cards issued by MasterCard and Visa
are international cards they can be freely used outside the country.
The card information can also be used in online transactions because in
some countries there are e-commerce sites that conclude a transaction
without even the CVV2 number which is printed on the reverse of the
credit card.
CONTINUE MOBILE BANK
At a function in the presence of RBI officials, Tamilnad Mercantile Bank launched its mobile bank service in Tuticorin during 2008. The bank officials mobilised deposits from petty traders, housewives and workers and opened a sizeable number of savings bank accounts. Now it is understood that the mobile bank is to stop its operation from February 4, 2013. It will mean a lot of inconvenience for account holders of mobile bank to go to bank branches for transactions. It is requested that the mobile bank should continue to function as usual.
- E.S. Krishnan, Tuticorin (The Hindu)
Aircel launches ‘Mobile Money’
.........All a person has to do to transfer money from Chennai to Tirunelveli is to deposit the money with a correspondent in the former area, after which an SMS is sent to the recipient confirming the transaction details. The recipient has to merely go to a banking correspondent in their respective area to retrieve the cash. “While we sign up the retailers who wish to serve as banking or business correspondents, they go through a certification process by ICICI Bank – which puts the onus of complying with RBI regulations on them. This will work even if both parties have no ICICI bank account, with the minimum amount needed to start an account being Rs. 100,”.............
Wednesday, February 6, 2013
The irony of paradoxes !
......But the RBI has to work very hard for this as Indian banks follow no voluntarism most of the time. After the long spell of policy inertia, the RBI is finally making plans to allow more licenses to new banks but that alone will not guarantee its entering of bonhomie with the finance ministry. Still they stand at distances while discussing the fate of economy. This dumps the prospect for change.............
Read..........
Read..........
CAD: A slippery slope that may stop Reserve Bank of India in its tracks
The frequency with which a topic comes up in a discussion indicates the
significance of it. By that yardstick, current account deficit takes the
centre stage at the Reserve Bank of India policy making as inflation and fiscal deficit are pushed to the background. The central bank Governor Duvvuri Subbarao
referred to the current account deficit, the excess of spending
overseas over earnings, at least 22 times in a call with economists on
January 30..............
Fake notes of Rs 8.83L deposited in A’bad banks
Over Rs 8.83 lakh in fake currency notes have been deposited in various banks across the state over a period of six months, according to a complaint lodged by Special Operations Group (SOG) with the Crime Branch on Sunday in this regard.............
RBI should ‘cheque’ out its position
.....Some Scandinavian countries have rung the curtain on cheques already, with Internet banking and its adjunct electronic payment taking firm root. Britain has said that 2014 would see the last of cheques. The RBI seems to be in a tearing hurry to join these worthies — and some would go to the extent of saying that it has got its priorities wrong. Some would argue that for a country such as India with a huge rural population, the country has jumped the gun by becoming a ‘service economy’ even before developing sound agrarian and manufacturing bases as necessary adjuncts. Cynics see a similar trend in the RBI’s tearing hurry — seeking to free the country of cheques, even as banking penetration is hardly complete, with banks being conspicuous by their absence in large swathes of rural India. But in all fairness to the RBI, it must be said that usage of cheques can be minimised by incentivising its non-usage and disincentivising its usage in places where they are in vogue.......
Ombudsman washes hands of internet banking frauds
The infinite ease of internet banking has made it a great hit among urban customers. But if one of them loses money in an internet banking fraud and if the bank does not reimburse the victim, the Banking Ombudsman too could well wash his hands of it. The Maharashtra State Banking Ombudsman has refused to intervene in a dispute between a Kolhapur-based businessman, R. Unnithan, and his bank claiming that the case involves ‘elaborate documentary and oral evidence.’.........
Grabbing depositors funds
The RBI will be the latest to join the bandwagon on grabbing funds lying with banks to implement a Depositor Education & Awareness Fund (DEAF). The question is: Will the Fund actually serve depositor interest or live up to its hilarious acronym and remain deaf to consumer issues? Deposits and benefits that remain unclaimed after 10 years will be transferred to DEAF. RBI has already initiated a process of disclosing unclaimed deposits, although there are plenty of complaints about the transparency with which individual banks have been implementing this..........
Regulatory forbearance on NPAs must never be a permanent feature
......The Reserve Bank of India
(RBI) has done well to accept the broad thrust of the recommendations
of the expert group set up to look into prudential guidelines on
restructuring advances. The committee had suggested a phased end to regulatory forbearance (central bank-speak for turning a Nelson's eye to impaired bank assets). ...........
Single regulator may cure many ills
....As far as banks and non-banking finance companies (NBFCs) are concerned, it is important for them to first obtain permission from RBI before applying to Sebi for an investment advisory license. We hope RBI allows department or divisions of banks and NBFCs that render investment advisory services to get regulated by Sebi, keeping in mind the larger interest of the customers.............
INTERVIEWS TO FILL PSU BANKS’ CHAIRMEN BY NEXT WEEK
The appointment’s committee will hold interviews to fill PSU banks’
chairmen posts before mid-February, within a fortnight of new secretary for
banking services Rajiv Takru taking charge as the three-year term for the
interview panel comes to an end in about two weeks. Since waiting for the new
panel could delay appointments, the outgoing panel will rush. So, aspiring
candidates are gathering information on Mr Takru.
ET
Reining In NBFCs
Change in Directorate
.....Central Government, vide its notification dated February 04, 2013, has nominated Shri. Rajiv Takru, Secretary, Department of Financial Services, Ministry of Finance, to be a Director on the Central Board of Directors of State Bank of India.......
Rajiv Takru nominated on RBI Central Board
The Central Government has nominated Rajiv Takru, Secretary, Department of Financial Services, Ministry of Finance, New Delhi as a director on the Central Board of Directors of the Reserve Bank of India.........
Read...........
Read...........
‘Who are you?’ asks Sebi’s adviser regulation
............The Reserve Bank of India (RBI) needs to ensure that banks fall in line because bank branches are dens of mis-selling at the moment. RBI must lean on banks to get Sebi Adviser Regulation-compliant. The regulation navigates the regulatory turf quagmire of dealing with banks by asking banks, non-banking financial companies (NBFCs) and other corporate bodies that have bundled advice and vending to segregate the two. What this means is that the bank branch will now have..........
WAIT FOR RBI DEPUTY GUV URJIT PATEL’S VIEW GETS LONGER
ET
‘Risk involved in investing in gold has heightened’
Pitching For Debt
Interest on current account
.................The move will also help more flow of funds into the system for productive use. There is no reason why banks not pay interest on current account deposits. The proposal takes a balanced view and should be welcomed and, to start with, anything up to 2% appears perfectly justifiable.
Guv Subbarao and a Consensus that was a Discussion
ET
IMF says central banks should be responsible for financial stability
Washington: Financial stability should become a core central banking objective alongside monetary policy, although potential conflicts between the two functions might require some institutional re-design, the International Monetary Fund (IMF) said on Monday. IMF in a study noted that although central banks had delivered low inflation, they had failed to prevent the devastating global financial crisis of 2008-2009........
Most banks say benefit of rate cut to show up after 3 months
Several private and public sector banks that have not cut lending rates despite the reduction in key rates last week by the Reserve Bank of India (RBI) said they would be able to cut rates only when their cost of funds come down – which could take three months. So far, only a handful of public sector banks have cut lending rates, while the bigger players have either stayed away from any reduction, or slashed rates selectively.........
Tax breaks likely on home, accident cover
Soon you may be able to get tax deduction on buying an insurance plan for your home or a personal accident cover. The finance ministry is considering a proposal to give additional tax benefits for purchasing these general insurance policies. The proposal, currently under examination, suggests hiking the tax deduction limit under Section 80-D of the Income Tax Act to provide an additional deduction of at least Rs 10,000 per year for purchasing a home or a personal accident cover...........
Read - IE
Read - IE
FII investment ceiling raised in IRB Infra, Radico Khaitan
.....The RBI said the approval is given subject to the condition that compliance with FDI policy and FEMA regulations including downstream investment would continue to remain on IRB Infrastructure Developers and Radico Khaitan.
RBI urged to revamp affordable housing loans
The Union Minister of Housing has made a plea along with Finance Minister to the RBI for restructuring of loans for affordable housing in case the project is delayed due to extraneous reasons beyond the control of the developer............
RBI takes UP cooperative bank CEO, directors to court for ‘money laundering’
The Reserve Bank of India
(RBI) has filed a criminal case in Lucknow’s chief judicial magistrate’s court
against directors and the CEO of a cooperative bank -- Indian Mercantile
Cooperative Bank Ltd – for alleged money laundering worth hundreds of crores
involving fictitious entities. The bank is linked to BSP Rajya Sabha MP Akhilesh
Das Gupta. His wife, Alka, a former head of the bank who is still on its board,
has been made a respondent by the RBI.........
Read - TOI
Grameena Vikas Bank opens 125 ultra-small branches
.....Andhra Pradesh Grameena Vikas Bank (APGVB) has opened 125 ultra-small branches across the State on Tuesday. With this the total number of ultra-small branches (USBs) of the State Bank of India-sponsored regional rural bank now stands at 230. “We are proposing to open another 170 ultra-small branches to take the total tally of 400 by March 2013,’’ K. Lakshmana Rao, Chairman, APGVB, said in a release. These branches are likely to be converted into full-pledged branches after attaining a sizable business volume according to the Reserve Bank of India guidelines.......
Aircel, ICICI Bank team up for mobile money banking service
......On signing up, customers will be able to use Mobile Money service instantly on any mobile phone even without a data connection service. A customer need not have an account with ICICI Bank. Once signed on the customer will be automatically directed to the bank, he said. All the necessary regulatory permissions, including Reserve Bank of India, have been acquired for the new service.......
Tuesday, February 5, 2013
Gold Bank of India: Idea whose time has come?
The upcoming budget session may see a proposal to set up a gold bank under Reserve Bank of India, India's central bank, a report that has been published in the South Indian daily, Malayala Manorama speculated. The proposal can be traced back to the 1992 budget presented in the Parliament, but which eventually gathered dust..............
Title conferred on Sanskrit scholar
.......A former officer of Reserve Bank of India, Sri Sastrigal possessed a sound knowledge of the Rig Veda and the bhashyam in Rig and Yajurveda. He passed the Sahitya, Nyaya, and Mimamsaand Vedanta Siromani degrees, obtained doctorate degree from Rashtriya Sanskrit Sansthan in recognition of his contribution to Advaita Vedanta.................
Issue of Rs 5 coins to commemorate the occasion of 150 years of Kuka Movement
 |
| A great patriot remembered Union Finance Minister P. Chidambaram releasing a commemorative coin on Satguru Ram Singh in New Delhi on Friday to mark the 150 years of the Kuka Movement |
Bond yields inch up on RBI deputy governor's comment on HTM cut
Benchmark 10-year bond yield is up 1 basis point at 7.92 per cent following RBI Deputy Governor H.R. Khan's comment that the RBI looking to cut the held-to-maturity ratio of banks from April. .........
Raise banks' provisioning to recast loans: Sinha
......“What we have issued are the draft guidelines. So let us what the response is. The timing is something which can be looked into,” Sinha said. “But the fact is that provisioning will have to be increased.”..........
RBI delivers beyond expectation yet market in bearish mode
....RBI delivered to expectations on rates with 25 bps cut and surprised the market with 25 bps CRR cut but lack of optimism (and confidence) in RBI’s tone (and guidance) drove asset markets into bearish mode............
RBI treads with care and caution
......Banks want that they should be freed of the burden to collect taxes on interest earnings. If that is done, more funds would flow in. If deposit rates are to remain at around six to eight per cent, lending rates have to remain at least two percentage points higher than that. Can a slowing economy afford that? Possibly not. But it also calls for taking steps that are beyond the purview of the RBI. During last over three years little has been done to pep up the economy and check prices. The RBI is rightfully apprehensive of an economy that shows little growth.
My View on "RBI asks banks to beef up wage hike, pension provisioning"
The next wage settlement in banking industry will have to factor in, among other things, the following ground level realities:
i) After the introduction of New Pension System (NPS), there are two categories of employees in banks. The claims of employees covered by NPS for higher wages factoring in the reduction in real wages on account of subscription to NPS and the need to save more to ensure income comparable to the pension available to the employees who joined earlier than them are genuine.
ii) Industry parity. Workmen staff/Officers doing similar work in different categories of banks will have to be given comparable wages, additional compensation being provided for extra work.
iii) Outsourcing. Let us not forget Maruti experience. Employees who are on regular employment of banks, even on contract, will have to be given clarity about their absorption in the institutions and a living wage till then. Circumventing labour laws is not in the long term interest of industry.
iv) Institutions will have to revisit the recruitment policy (right from basic qualifications needed), career progression (traditional path is no more relevant or practical) and placement policy (rural posting, need for special skills etc.)
Centre should perhaps consider a quick review by a national level expert group with a view to providing some broad policy guidelines to be followed by industries across public and private sectors, while negotiating wage structure. Transparency in policy will go a long way in reducing sporadic eruptions emanating from suppression of genuine human needs.
- M G Warrier, Thiruvananthapuram
Common man’s “guzaarish, khwahish, farmaish” to the FM on the ensuing budget!
.....The most deserved gift the FM can give to the banking public before the venerable former governor of RBI and the present PM Manmohan Singh lays down his office next year is to totally abolish TDS (tax deducted at source) on bank interest, as it is the most obnoxious of all regulations of the Income Tax department. Despite all the goading by RBI to banks, even today, majority of banks do not bother to send the TDS certificates to their customers every quarter as required by law, unless one demands for it. At present tax is deducted at source on bank interest paid in excess of Rs10,000 per year.......
Senior citizens and FDs
....Ideally, such instructions with industrial and social implications should have been issued through the Reserve Bank of India (RBI) after due deliberations. North Block appears to be unaware of how interest rates evolved to the present stage. At the time of retirement in the early 1990s, retirement benefits deposited in banks or post offices gave a return of 12 per cent per annum. Now, the return has come down by 20 to 30 per cent. Hence, the 50 to 100 basis points of additional interest on deposits of senior citizens was instructed to be paid by banks by the RBI.........
Microfinancing serves to make poor poorer
.....The microfinance movement is suspect because virtually no discussion is made of the rate of profit on the deployed loans. It is implicitly assumed that the rate of profit will be higher than the rate of interest. But this assumption has no basis whatsoever. Rather, it is seen that people in the villages often deposit their savings at low rates of interest of about 5- 7 per cent in fixed deposits with the banks. They would scarcely do so if they could earn more than 30 per cent from the same money by opening a shop or establishing a mini rice mill. It is also seen that the price of many items produced by the poor, such as paper envelopes, candles, buttermilk and vegetables, is falling. The microfinance movement becomes an instrument of expansion of poverty in this background of declining prices and rates of profit. The poor become poorer because they have to pay out a part of their meagre earnings as interest to the banks. Mr. Mohammed unus and Dr Manmohan Singh, both do not talk about the prices of commodities made by the poor.........
Not fair
It is time for banks to reduce lending rates across the board
................Around 50 per cent of the total deposits are bulk deposits, which are driven by market rates. HDFC Bank, the second biggest private lender, decided to selectively cut rates. A day after the RBI announcement, HDFC Bank cut interest rates in auto segment for the benefit of new customers alone — by 25 basis points for cars and trucks and by 50 basis points for two wheelers. In effect, RBI’s effort for a lower interest rate regime is stuck mid-way. It is time for banks to reduce lending rates across the board and step up lending.
Post-policy blues
.........The RBI has cut the policy rate and infused some liquidity in the economy. It has, however, been cautious about promising much more. Companies that face an immediate escalation in costs, thanks to higher fuel prices and rising wages, know that a small reduction in borrowing rates will not compensate for this. Nor will it goad Indian bureaucrats to take decisions faster. The central bank has emphasised “non-monetary” factors as the key constraint to growth and I doubt if any Indian entrepreneur will disagree with this prognosis..........
Inappropriate utilisation, lack of awareness about schemes causing concern
Though the Union Government and RBI had come out with a plethora of fiscal and monetary benefits to boost the exports, its inappropriate utilisation and also lack of adequate awareness to extract the maximum out of the incentives in Tirupur knitwear cluster are causing concern...........
SBI says can’t issue fixed-rate loans
State Bank of India (SBI), the country’s largest lender, has no intention of offering fixed-rate loan products as proposed by the Reserve Bank of India (RBI). The central bank had released a report last month, listing out suggestions to help banks introduce such products.........
NSE to spread financial literacy; signs pact with Gitam varsity
The country is badly in need of trained personnel in stock market trading to guide the investors and National Stock Exchange (NSE) is tying up with universities to offer specialised courses in financial markets, according to G.C Sharma, Head, Financial Education of NSE.......
FinMin to assess progress of financial inclusion, DBT schemes
..........Among others, the meeting will take stock of the progress achieved in seeding the unique identification ‘Aadhaar’ number in banks accounts; details of bank account and Aadhaar received from various ministries/departments; and steps for strengthening banking infrastructure, including opening new bank branches, installation of onsite ATMs, mobile banking, and so on.
NABARD credit proposals released
..........Mr. Sampath said that based on NABARD projections, the Lead Bank in the district would prepare the Annual Credit Plan. He underscored the point that the ACP would encourage farmers to take to horticulture crops in a significant manner in the district. He called upon all bankers to extend their cooperation in realising the goals to be set in the Annual Credit Plan. NABARD Deputy General Manager A. Balachandran, DGM of Indian Bank S. Natarajan, and District Development Officer (Reserve Bank of India) J. Kandasamy were present.
Doubling of food production crucial before 2020: RBI
.....RBI Governor while unveiling the quarterly monetary policy expressed concern over the contrarian behaviour of food inflation which moved into double digits in December 2012, ‘reflecting both cyclical and structural factors’. During the period even though headline inflation rate fell to 7.2%, food inflation remained high, revealing.......
Read........
FM to sweeten home loans with tax break
Finance minister P Chidambaram may have good news for home loan
borrowers in the union budget for the financial year 2013-14 to be
presented later this month. The government is considering hiking the tax
deduction limit on home loan interest from the present Rs. 1.5 lakh to
more than Rs. 2 lakh per annum........
Chidambaram offers help for Repco Bank
.....Inaugurating its new branches and training centres here on Saturday, the Minister said that it was a matter of regret that when all other banks came under his control, the Repco Bank was governed by the Ministry of Home Affairs. It should develop in a phased manner and become full-fledged like the Pandian Grama Bank, Indian Bank and Indian Overseas Bank, he said and offered to take up the issue with the Reserve Bank of India (RBI).........
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