My View on "Wage Revision in Banking Sector"

Dear Shri Warrier,

Your article is ahead of its time i.e; not digestible to the intellectually challenged bureaucracy at this point of time. Rationale wage policy still eludes us. It is learnt that Shri Rajiv Takru , Secretary Financial Services, has agreed to the fact that the pensioners who retired before 2002 may be given 100% neutralisation in DA subject to fact that the entire expenditure would be met from the wage load agreed to by IBA and UNIONS. It means existing employees must agree to share the burden of long back retired employees. Will they agree? Our own D.G.(Admin) says that 70% of wage revision should be on fixed criterion and 30% should be a variable component.How is he going to cajole the UNIONS? IBA has postponed the talks which was scheduled to be held on 4 March indefinitely so as to receive necessary guidance from MoF which itself does not know how to proceed.Are wages to be fixed on the basis of views of semi literate leaders of Unions who have their own axe to grind (More LEVY) to delay the agreement or on the basis of an enlightened policy to attract talent to banking sector? Should not this matter engage the attention of FM Shri Chidambram, RBI GOV, Shri Montek Singh, Shri Raghuraman, Chief Economic Advisor etc; who have stake in India's growth where banking is of paramount importance? 

- Sitendra Kumar

Women’s bank will remove prejudices: Chidambaram

.........After inaugurating Canara Bank’s new branch at Siravayal, near Karaikudi on Saturday, Mr Chidambaram said the exclusive bank for women would be started this year with six branches. He said the bank for women is being started not because women do not get financial assistance in other banks, but there has been an inadvertent bias and prejudice against women in lending loans. The proposed bank, he said would realise the needs of women and lend financial assistance for self employment, women empowerment and education............

Read - The Hindu

CIC to hear appeal seeking names of SBI’s defaulters

.... In his second appeal with the CIC, the activist has quoted an earlier CIC decision in the case of P P Kaoppr Vs Reserve Bank of India in which then information commissioner Shailesh Gandhi had directed RBI to disclose names of defaulters of PSU banks on the bank's website.

Read - TOI

Now, banks harass wives of alcoholic debtors

............Bailancho Saad is in receipt of some complaints about wives having to face harassment from bank officials when alcoholic husbands default on payments. In one such case it had to approach Porvorim police station to stop bank officials from harassing the wife. In view of a rise in such cases, Bailancho Saad wants to approach the Reserve Bank of India (RBI) to have regulations so that there is proper verification before a loan is sanctioned. "We have prepared the draft," said Martins, who says the drinking problem has reached dangerous proportions in the state and yet there is no intervention by the government.

Read - TOI

Good response to all-women bank proposal: FM

Union Finance Minister P Chidambaram today said his budget proposal on setting up the country's first all-women bank has received good all-round response. "Though the Reserve Bank Norm says that initial capital of Rs 500 crore is enough to start a bank, the all-women bank would be set up with an initial capital of Rs 1,000 crore,".........

Read | Business Standard

SBI to open 1,200 branches, 8 overseas offices next fiscal

...........Under the bank's domestic expansion plans, about 100 branches would be opened in West Bengal, Uttar Pradesh, TamilNadu, Maharashtra and Andhra Pradesh. Meanwhile, the state-owned bank is in the process of recruiting 1,500 probationary officers to man its increasing operations. The bank has received 17 lakh applications for these posts..........

Read - FE

‘All subsidies through electronic mode soon’

RBI official calls for night schools for farmers to help them attain financial literacy

Reserve Bank of India Regional Director A.S. Rao on Friday exhorted people of Sivarampuram, a Financial Inclusion (FI) village of the Syndicate Bank's Tallur branch, to prepare themselves for electronic transfer of all subsidies in the future. Reviewing the progress of the RBI's outreach programme in the sleepy village, he said “We are keen on restricting the use of cheques in view of the scope for their misuse and encouraging in their place electronic transactions. With the click of the mouse, all subsidies by the Union and the State governments will be made through electronic mode soon.”...............

Read - The Hindu

RBI: wake up, smell the coffee

.....If that is the reality, and it is, and RBI still persists in citing food inflation as a cause for it not cutting rates, then it would be yet another illogical chink in RBI’s armour. And to be consistently inconsistent, it should raise repo rates in its fight against food inflation. And RBI should offer at least an obfuscation as to why its concerted hiking of interest rates has resulted in a zero impact on CPI inflation, and why it expects “this time to be different”...........

Read - FE

Lend a big hand, RBI

There has rarely been a more apposite hour for Duvvuri Subbarao to do more than the due. Rating agency Standard & Poor’s said on Friday it will be difficult for the government to meet revenue projections due to the economic slowdown, which, it said, risks India’s credit rating. Now that’s one more reason why the RBI must change its discourse and plump for growth..........

Read - DNA

Subbarao on the Economy, With Interesting Graphs

Some of the best inferences to future macroeconomic policies are hidden inside the speeches made by key RBI personnel. On March 13, just a day prior to the release of the Feb inflation number, RBI Governor D. Subbarao presented at the London School of Economics. Some notes and takeaways.........

Read......

Conflicting signals on rate cut: who's saying what

Next week, the entire focus would be on what Reserve Bank of India Governor D Subbarao does in the review meet on Tuesday, March 19. Though there is confusion about the outcome, it appears that a rate cut is imminent.........

Read | Business Standard

RBI needs to strengthen its balancesheet: Report

The Reserve Bank of India (RBI) in its latest currency and finance report raised several issues that directly conflict with the government's position. Firstly, the RBI has argued that it needs to set aside more reserves to strengthen its balance-sheet and support its market intervention. Secondly, it argues that an independent debt management office at the current juncture of high deficit may be a bad idea. The report on currency and finance is basically a report that is brought out by RBI staff belonging to the Department of Economic and Policy Research. So, in that sense it is not a voice of the Reserve Bank of India (RBI) or what RBI stands for..........

Read.........

Wage Revision in Banking Sector

......The advantages of a delayed settlement for institutions is buying some time to actually make the enhanced payments and for the trade unions, the comfort of collecting a higher amount of levy from the higher amounts of arrears that will be received by employees. The wage settlement for the current period (November 1, 2012 to October 31, 2017) is likely to be different from the above pattern, as Reserve Bank of India (RBI) has stepped in, to ask public sector banks to start make adequate provisioning against liabilities the banks will have to meet on account of wage revision from November 1, 2012 from January-March, 2013 quarter and IBA has almost committed to reach an agreement with unions on wage revision by March 2014. This is a move in the right direction.............

Read.......... 

Govt to introduce new ITR form this month

The government will introduce new forms for filing of income tax returns for the assessment year 2013- 14 by the end of this month, Minister of State for Finance S. S. Palanimanickam informed the Lok Sabha. He said the new Income Tax Return ( ITR) form would incorporate the changes introduced in the income tax norms.......

Read - FPJ

Rs 52,000-cr farm loan waiver: Govt, RBI seek report from banks

The Ministry of Finance and Reserve Bank of India have asked banks to submit a report on the Rs 52,000-crore agricultural relief and debt waiver scheme, 2008............

Read - HBL

Cobrapost money-laundering sting on HDFC Bank, ICICI Bank, Axis Bank - full report

.......It took a single reporter equipped with a low-end hidden camera, to unearth these endemic money laundering practices in HDFC Bank, ICICI Bank and Axis Bank: by merely posing as a walk-in customer wanting to launder huge sums of cash for a politician. The interactions between officials of the banks and the reporter clearly brings out the connivance of senior management of these banks in facilitating money laundering and other illegal transactions..........

Read - IE

Black money: pvt banks warn staff of zero tolerance

.....Cobrapost had claimed that its undercover investigation revealed that top three private banks offered money laundering as product to their customers and violated several provisions of the Income Tax Act, Foreign Exchange Management Act (FEMA), Prevention of Money Laundering Act and regulations mandated by the Reserve Bank of India (RBI). While bankers claim that employees are advised not to violate norms at periodic intervals, a fresh set of communication mandating strict adherence to compliance were sent after Cobrapost's allegations on Thursday.......

Read | Business Standard

Will take firm action if needed: Govt on Cobrapost expose

.......On the basis of the preliminary information I have, it showed that this sting has been carried out at various locations by the Cobrapost in different parts, I think different states, different branches and so on. It was pretty explicit from what I saw in passing. So, prima-facie appeared little serious. The Reserve Bank of India (RBI) has got into the act immediately, we have got into the act, we are trying to collect more information. The banks have been contacted by my department as well and the RBI has also contacted them. Unfortunately the Governor and the Deputy Governor both were out of the country. I have spoken to the other Deputy Governors, he spoke to the CGM concerned, the executive directors and they are all on the job............

Read........

Money-laundering charge: RBI officers to examine transactions

The Reserve Bank of India plans to send officers from its regional offices to scrutinise transactions at those branches of ICICI Bank, HDFC Bank and Axis Bank where an online magazine captured on camera branch staff allegedly offering to convert clients’ black money into white.............

Read - HBL

ICICI suspends 18; Axis removes tainted staff from key roles

"ICICI Bank has suspended 18 employees, pending enquiry," the bank's spokesperson said. The largest private sector lender in the country has also constituted a high-level inquiry committee, to report in two weeks. Axis Bank has removed employees said to have been involved in the racket from operational roles, pending enquiry, and relocated them to the bank's administrative office, sources said..........

Read | Business Standard

Why the Cobra’s sting will not poison any of the banks

If there is one prediction one can make about the CobraPost sting that exposed HDFC Bank, ICICI Bank and Axis Bank managers as being more than willing to help people launder money, it is this: after everything is said and done, more will be said than done. A few low-level bank officials may be hauled over the coals, but the banks themselves will get away scot-free. Consider what the government and the RBI have said so far in what appears to be an open-and-shut case, ............

Read.........

10 things that the CobraPost sting tells us about banks

.............. what the sting clearly tells us is that everybody who pays income tax in this country is basically an idiot who is being taken for a royal ride. If you have a lot of black money and you are not paying tax on it, chances are somebody out there is waiting for you with a red carpet...........

Read..........

Money-laundering probe: RBI to see Cobrapost video clips on bank 'frauds'

Intensifying its probe into charges of alleged money-laundering by banks, the Reserve Bank has decided to study video clips that show bank staff encouraging tax evasion and overseas remittances. The investigation will focus on the possible violation of KYC norms even as banks are independently probing any fraud by their staff, said three persons familiar the development............

Read - ET

Is RBI to be Blamed for Money Laundering by ICICI, HDFC and Axis Banks?

.........If the allegations turns out true, the private sector banks would be under the scanner as they could have approached RBI for funds instead of indulging in illegal activities. In the meantime, the RBI should also be blamed as it holds control over all the scheduled banks being the supreme banking authority of the country. It holds the cash reserves of all the scheduled banks; controls the credit operations and banking system through licensing and inspection; and acts as bankers' bank by lending money in times of crisis.........

Read..........

And thus great institutions are born

........IFMR Trust, which works in other areas of finance as well, has a separate arm for Rural Financial Inclusion.  That’s the term that best suits what they do, for they are not a bank, they are not a micro-finance institution, they are not money-lenders in the conventional sense, but they offer several of these products and services to their constituents............

Read......

(This link has been sent by Shri Balasubramanian Krishnamurthy for the readers of VITALINFO)

FinMin’s two faces: One unit wants to penalise while the other believes in incentives for the same goal!

........Last month, while speaking at a seminar on “Principles for Financial Market Infrastructures and Innovations in Retail Payment Systems”, Harun R Khan, Deputy Governor, RBI said, “Although, the recent financial crisis did not show any strong evidence of correlation between payment systems and financial stability, going forward, payment systems, both large value and retail, could be the source of instability when the financial transactions moves largely to electronic mode that gives rise to several operational and financial risks.” .......

Read - Moneylife

RBI asks banks to issue debit, credit cards with photo

NEW DELHI: Banks have been advised by Reserve Bank of India (RBI) to consider issuing debit and credit cards with photographs of the cardholders to prevent misuse of stolen cards, the Lok Sabha was informed today.......

Read - TOI

APGVB opens 135 ultra small branches

..............“We have set a target of opening another 400 USBs during next fiscal and decided to convert at least 50 USBs into full-pledged brick and mortar branches,”...........

Read - HBL

RBI Governor D Subbarao can prove his critics wrong in next policy review

......As he pads up for his last innings at RBI, Subbarao may even come across as a man with greater conviction — like some of his predecessors who reminded you of cricket umpiring legend Dickie Bird, having perfected the art of masking occasional mistakes with confidence and class. He has certainly become wiser: the exit of his imposing deputy — who had to wait till the last moment for a ministry green signal, which never came — was a veiled reminder that someone has to take the blame for failing to heed a blunt message.......

Read - ET

Raghuram Rajan: From financial crisis prophet to next RBI chief?

NEW DELHI: The man widely expected to be next RBI favours clipping the autocratic power of the role and giving more say to a monetary policy committee. Raghuram Rajan, who in 2005 predicted the global financial crisis, also believes that inflation of around 5 percent is "reasonable" in a developing economy, rejecting the notion of a "new normal" for India of 7-8 percent. That's a view shared by the central bank, which has struggled for years to curb inflation and a sign that Rajan would not radically alter the thrust of monetary policy...........

Read - ET

Subir Gokarn first director for research of Brookings India

Subir Gokarn, the former Deputy Governor of the Reserve Bank of India (RBI), has been named the first director of research for Brookings India. He will also serve as a Brookings Senior Fellow..............

Read | Business Standard

RBI organizes Outreach Program in Galak, Kathua

Reserve Bank of India, Jammu conducted an Outreach Programme today at Galak village in Kathua district as part of its financial inclusion and awareness drive. Jasbir Singh, Executive Director, RBI, Central Office, Mumbai presided over the function and Ms. Zahida Khan, District Development Commissioner, Kathua was the chief guest. Shri A.K. Jain, Deputy General Manager, State Bank of India, Nayeem-Ullah, President, J&K Bank, Vikas Gupta, SDM, Billawar, other senior government officials and bankers attended the programme. A large number of villagers including women, senior citizens, farmers, teachers and students were also present. The Outreach Programme was inaugurated by the Executive Director in presence of a large gathering. In his welcome address, Regional Director, RBI, Jammu K K Saraf highlighted the objective of holding the financial literacy programme in the village. He also explained the Banking Correspondent model through which banking facilities could be availed by the rural masses........

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

Obituary

Mr. T.N. Krishnan, Retd. ACO, RBI, Chennai passed away on 12.03.2013. Phone: 044-2431 4949

Hindu

RBI likely to vote for growth in its policy review: Mayaram

........."We believe that the RBI will do a comprehensive and nuanced analysis of the economy and take the right decision and we hope it will vote for growth. I am happy with what he (RBI Governor D Subbarao) has said,"...........

Read........

‘Recession an opportunity to introspect on internal processes’

A recession is an opportunity for the IT industry to introspect on their internal processes and organisation, operational efficiency and quality of their workforce. The situation demands that they optimise on all these fronts, B.L. Deekshatulu, Distinguished Fellow, Institute for Development and Research in Banking Technology, Reserve Bank of India, Hyderabad, said here recently..........

Read - The Hindu

The reasons for a rate cut by RBI

....Economic growth hit a nadir in the December quarter and the latest data do not show much progress since then. RBI data show that bank credit to industry went up a mere 0.8% in January, compared to the preceding month. Bank credit to the services sector declined by 1.1% in January. That indicates economic activity remains extremely sluggish. In short, the signs point to a rate cut next week. Unfortunately, the rate cut in January and reduction in the cash reserve ratio hasn’t been transmitted to borrowers and some banks have instead increased deposit rates.........

Read - Mint

‘Early to talk of a turnaround, but numbers point to it’

......The RBI will do what it thinks is appropriate. They have said repeatedly that they have multiple objectives and they will work on it. Inflation control has been the primary objective and growth is related but not a secondary objective.........

Read - IE

Bullying India’s Central Bank Won’t Help Its Economy

.........Chidambaram’s duel with the RBI is of a piece with global developments. Although countries caught up in the global slump of the last five years initially coordinated their monetary and fiscal survival strategies, the lingering crisis is testing that comity. Indeed, many governments are reconsidering the so-called independence of central banks. Whether this process will eventually lead to a complete rescinding of central bank independence is uncertain, but one thing is definite: The uneasy relationship between fiscal and monetary authorities will certainly get renegotiated......

Read..........

India’s rich are the problem

Even as the Reserve Bank of India (RBI) frets over the high rate of inflation and wards off pressures to cut interest rates, it is faced with another challenge. Balance of payments data for the second quarter of 2012-13 show that the current account deficit continues to rise, and has touched a record 5.4 per cent of GDP. Both of these developments that would be considered signs of “overheating” occur at a time when growth is slowing...............

Read - The Hindu

Centre to infuse Rs. 1,154 cr capital into Union Bank

Union Bank of India will see a capital infusion of Rs.1,154 crore by this month-end, said its Executive Director G. Subrahmanyam. An extraordinary general meeting (EGM) of the bank would be held on Saturday to approve the infusion.........

Read - The Hindu

Panel to define FDI, FII formed

.....he Government has constituted a four-member committee headed by Economic Affairs Secretary Arvind Mayaram for giving clear definitions to Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII), with an aim to remove ambiguity over the two types of foreign investments. The DIPP Secretary, an RBI Deputy Governor and a SEBI Whole-time Member are the other members of the “high power committee.”.....

Read - The Hindu

The postal department can deliver banking services to India's ignored hinterlands

.........This is a godsend for the government if exploited adequately. The low level of banking penetration has been a long-running problem, one that is unlikely to be solved by the entry of new banks. The capital costs of establishing banking networks in rural areas as well as the fear of an inadequate customer base are likely to serve as bottlenecks. The evolution of the postal department into a banking entity would neatly swerve around these bottlenecks. This has already worked in countries from Germany to South Africa...........

Read - TOI

More woman power: SEWA bank looks beyond Gujarat

....."While I am happy that the new all-women national bank will further empower women but becoming a scheduled commercial bank was never our idea…we believe in expanding steadily and laterally then vertically,".....

Read - Hindustan Times

Spice Global plans to approach RBI for bank licence

New Delhi: Spice Global is planning to apply to the Reserve Bank of India (RBI) for a bank licence for which guidelines were issued last month. Spice, a $2 billion diversified conglomerate, plans to offer full-fledged banking services; with a focus on smart banking which is showing a 227 per cent annual growth, to its customers, Spice Global on Thursday said in a statement............

Read......

Canara Bank files case against Deccan Chronicle with CB

Public sector lender Canara Bank has filed charges of fraud with the Central Bureau of Investigation (CBI) against Hyderabad-based media group Deccan Chronicle Holdings (DCHL) for siphoning off funds loaned to the company, a top official from the bank told FE. The official added that the bank is simultaneously informing the Reserve Bank of India (RBI) and approaching the Debt Recovery Tribunal (DRT) for recovery of dues through the liquidation of the company’s assets.....

Read - FE

Finance ministry swings into action on money laundering issue

Taking note of allegations of money laundering in three private banks, the government has begun the fact-finding work. Rajiv Takru, Secretary, Department of financial services, told Business Standard over phone that it is an important matter. "The truth has to be established. It will not be glossed over," Takru said. Reserve bank of India is already dealing with the development.........

Read | Business Standard

RBI quizzes 3 private banks on laundering

The Reserve Bank of India on Thursday asked ICICI Bank, HDFC Bank and Axis Bank for information on allegations that they are helping customers convert black money into white as a standard service. Earlier in the day, investigative website Cobrapost, which made this sensational charge, said such illegal conversions, called money laundering, are being done with the full knowledge of the senior managements of the three banks. RBI Deputy Governor Urjit Patel said, “We have been in touch with the banks and have asked for information on the matter.”

The apex bank is expected to follow this up with a formal notice soon.........

Read - Hindustan Times

PSU lenders blame it on 'incentive culture'

 Officials in public sector banks blame the target-driven incentive culture in new generation private banks for the officials' willingness to be complicit in evading anti-money laundering laws. Although most of the suggestions by officials caught on camera are downright illegal, bankers are uncertain whether any offence has been committed as no cash deposits have taken place........

Read - TOI

Private banks in fire-fighting mode after allegations of money laundering

....."Prima facie, we don't think that money has been laundered. Only promises were made but actual transactions did not happen. We are investigating the matter and asked our managers to explain their actions,".....

Read | Business Standard

RBI May Tighten KYC and Fund Transfer Norms

...the RBI may take a closer look at the KYC guidelines for cooperative banks since the expose by cobrapost.com alleges that it is easier to route money through coooperative banks to convert it into white money. Cooperative banks come under the dual jurisdiction of state governments and the RBI, making it difficult for the RBI to effectively regulate them.

Read - ET

Banks, customers go slow in adopting new cheque book

.....While most of the banks had given public notices on the change, asking the customers to collect new cheque books, it has evoked only partial response from customers. Several banks that promised to send CTS-compliant cheque books to the account holders by post have not been able to make much headway.....

Read - The Hindu

RBI relief for 35 account holders of Rupee Bank

PUNE: The Reserve Bank of India (RBI) has allowed 35 account holders of the Rupee Cooperative Bank Limited to withdraw amount up to Rs 1 lakh. Mahendra Doshi, general manager of the bank, said on Thursday that a two-member administrative board of the bank identified these 35 people as genuine cases like pensioners, education loan holders and patients who are in desperate need of money........

Read - TOI

2,500cr lying unclaimed in bank a/cs

....The largest stash of unclaimed money is in the savings accounts of nationalized banks, where Rs 425 crore lie in 8.7 million accounts. State Bank of India, not surprisingly, leads the pack. Agrawal was shocked that the RBI was not taking any action on dormant accounts. It can be assumed that all these accounts hold a small amount that people tend to forget or ignore...........

Read - TOI 

Canara Bank to focus on rural development, agriculture

.........As per the directions of the Reserve Bank of India (RBI) Canara Bank had taken steps to open micro branches in villages that have a population of less than 2,000. A few years ago customers were not satisfied with the service provided by the bank owing to shortage of staff. Now steps have been taken to recruit staff to provide better service, he added...........

Read - The Hindu

India growth story still credible, says RBI Governor

"If we do the right things, we can get back on a high growth trajectory. We can  accelerate growth and improve welfare only if we effectively implement wide ranging economic and governance reforms. Slipping up on this will amount to a costly and potentially irreversible squandering away of opportunities."

Read.......

Banking On Inclusion

.........Deepak Singhal, Regional Director, Reserve Bank of India upholds that financial inclusion needs to be based on the core principles of affordability, availability, reliability and awareness. “Financial Inclusion is based upon both supply and demand. By opening an account you can create supply but there has to be demand as well and that can only happen by increasing awareness,” he says.  Even as a brick and mortar presence is important for banks in rural areas, Singhal is of the opinion that the focus should be on creating demand for banking services in the existing rural bank branches present in 36,000 Indian villages.  One of the major guidelines for  new (private) players vying for a banking licence is their plan for financial inclusion, Singhal reinforces................

Read..........

Ensure interest subvention for genuine candidates: Collector

....Speaking at an awareness programme organised by the Banking Ombudsman Office, Chennai, in co-ordination with the Indian Overseas Bank, the lead bank of the district, he wondered how Rs. 700 crore could have been extended as agricultural crop loan whereas the cultivable area available in the district itself is only 80,000 hectares of land. “Even at the highest scale of finance, this does not match.”.....

Read - The Hindu

Now, a phishing email in the name of RBI

...........The email says RBI has launched a new security system, asking users to click on a link to open a page with list of banks in place. Once anyone chooses a particular bank, it asks for all net banking details, including card numbers and the secret three digit CVV number, among others...........

Read - TOI

Govt Finalises 20 Names for Top Posts in PSU Banks

MUMBAI: The government has finalised a list of over 20 bankers for appointment to senior positions in state-run banks for the next financial year, 2013-14.  The appointments committee headed by Rajiv Takru, secretary.......

Read - ET

An open letter to RBI governor D Subbarao

Frankly, we admire your intellectual honesty in calling a spade a spade. Coming to the point straight, we do get a sense that this time the Reserve Bank of India (RBI) may spring a surprise by cutting the repo rate 50 basis points. Economists and bond market players hope a cut of mere 25 basis points in the repo rate, but lower inflation numbers and the urge to pump up growth may push you to turn adventurous. People are keeping their fingers crossed...........

Read | Business Standard

Retired bank heads gear for new innings

Retired public sector bank chairmen are all set to begin their second innings thanks to the Reserve Bank of India (RBI). With the RBI coming out with new banking licence norms for private sector entities, companies are keen to have such experienced people on board. While firms are yet to finalise their plans on new banks, several of them have already initiated informal parleys with headhunters and senior executives of state-owned banks.......

Read - Hindustan Times

New Banks For An Old Problem

..........“At the very general and abstract level, you cannot have financial inclusion in isolation from other reforms in other sectors. For someone who has to go to pick something in the forest every day for his food, where does the question of a bank come in?” says Y.V. Reddy, former Governor of RBI, who took away India Inc’s punch bowl during his tenure at Mint Road. “There is no evidence in the world to say modern private banks give emphasis to financial inclusion. That is not to say there is no need for more banks from the point of view of competition. But it is wrong to say that they will by themselves bring in more financial inclusion,” he says. ...........

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

The anatomy of regulatory independence

.....There was little change in RBI’s position from its creation in 1935 and 1991. After 1947, it was handmaiden of an economy in the pincer-grip of vicious planning. Independence was irrelevant as credit allocation, rates, bank ownership, and currency were controlled. And automatic monetization of fiscal deficits was pervasive. Government intervention was rampant, degenerating into banks being required to adhere to economic policies instead of prudential ones. Governor Rama Rau's resignation in 1958 after unceremonious treatment by the finance minister was symptomatic of the prevailing conditions. With the reforms of 1991, new banking licences in 1993-94 and elimination of ad hoc treasury bills in 1997, RBI’s autonomy turned a new leaf. This was bolstered by the FRBM Act relieving RBI of the task of underwriting federal borrowing. The debate on autonomy in India restarted in the mid-2000s, with the famed scuffles between the then RBI Governor Y.V.Reddy and the finance minister. But this was not just a clash between two personalities and had a structural element to it........

Read - Mint

Subbarao Likely to Grant PC’s Wishes

Reserve Bank of India (RBI) Governor Duvvuri Subbarao on Wednesday sent the strongest ever signal that he would walk with Finance Minister P Chidambaram to revive economic growth by acknowledging the credibility of the fiscal consolidation plan presented in the Union Budget............

Read - ET

Currency wars a zero sum game: Duvvuri Subbarao, RBI

....."We all understand it is a zero sum game. Everyone can't devalue at the same time and benefit, everyone loses,"...........

Read - ET

India Post readies plan to start bank

......"This will benefit rural areas enormously. There are nearly 1.55 lakh post offices and no capital cost of building is required. We are connecting post offices. As it is, we are offering savings bank in post offices and this is a natural progression. The matter is under discussion with the finance ministry and RBI,".............

Read - TOI

Inflation should be brought down to 4-6%: Subbarao

............"Inflation above 6 per cent would justify, indeed demand, tightening of the monetary policy stance. It is this understanding that has informed our monetary policy stance," Subbarao said while delivering the fifth IG Patel memorial lecture at the London School of Economics. "Monetary policy is inevitably the first line of defence to guard against inflation getting generalised through unhinged inflation expectations," the governor said, adding he wants inflation to ideally be in the 4-6 per cent range.......

Read.......

Do not hustle RBI

.....Therefore, all pros and cons should be taken into account before the RBI announces its new monetary policy next Tuesday. It should not be influenced by the tall claims by the PM and others in the government that the economy would revert to the six or seven per cent growth rate next year. It would not. For, there is a lot that has dragged down growth below the five per cent mark.....

Read - FPJ

Shallow recovery

Consumer inflation, at 10.9% in February, doesn’t look like its easing in a hurry and a big oil bill and weak exports will leave the current account deficit (CAD) at around 5% of GDP in FY13, but RBI has no option but to bat for growth in its monetary policy review on Tuesday. There hasn't been any serious monetary transmission after the last repo rate cut of 25 bps in late January, but having trimmed the policy rate, the central bank would want to keep the momentum going. ............

Read - FE

Pro-growth Subbarao raises rate cut hopes

.."It is important to remember that the drivers of the India growth story - get-up-and-go entrepreneurism, the demographic dividend, a large and growing middle class, the opportunity for productivity catch-up, democracy and a decent legal system - are all intact," ........

Read - TOI

PM sees return of growth; RBI governor says policy changes crucial

 Prime Minister Manmohan Singh told lawmakers on Wednesday that robust growth will be restored in two-three years even as central bank governor D. Subbarao said in London that this would be possible only if the government is able to bring about structural changes, a view that could hold implications for the next monetary policy review on 19 March...........

Read - Mint

Gold: The best possible liquid investment, finds RBI

........After a knee-jerk reaction to rising stock prices, assets and liabilities of nonbanking finance companies (NBFCs), the central bank's working group had concluded that gold could turn out to be the best collateral even for banks. Indeed, it went to the extent of making gold a vehicle for financial inclusion. "There is great scope for expanding financial inclusion in extending gold jewellery loans," said a recent report by the working group headed by KUB Rao. "If banks continue to increase their gold jewellery loans portfolio, the reliance of economically weaker sections of the society on money lenders and pawn brokers will come down considerably."..............

Read - ET

Pot of gold or mirage?

.............. Our public sector banks and other public financial institutions in insurance, unit trusts etc., he says, are encouraging a cosy politician-industrialist  nexus to take a hold of the Indian economy, resulting in almost a Russian style klepto-market-capture model, rather than a properly regulated market economy, emerging in India. Wonder how many of the CEOs and promoters who are aspiring for a bank permit are listening to Mr Mistry’s warning.

Read | Business Standard

Core banking must for co-op banks by Dec 31: RBI

........"The Government of India has also observed that UCBs without CBS do not integrate well with the banking system and hence there is the need to quickly adopt this model. CBS is a necessity in today's banking scenario. UCBs are, therefore, advised in their own interest, as also in the interest of their customers, to adopt CBS as soon as possible," RBI said.

Read..........

Rupee bank officials to approach RBI

PUNE: The administrative board of the Rupee Co-operative Bank Ltd will meet Reserve Bank of India officials in Mumbai on March 14, to press for relaxation in the withdrawal amount by account holders, a senior official from the bank said on Monday..........

Read - TOI

RBI questions district cooperative bank requests for banking licence

NAGPUR: The six beleaguered district cooperative banks (DCCBs) in the state, of which three are from Vidarbha, have been served a show cause notice by Reserve Bank of India (RBI). The apex bank has sought a reply within a fortnight as to why their applications to get a banking licence should not be rejected............

Read - TOI

NDCCB wants state to buy its building to bail it out from crisis

NAGPUR: The Nagpur District Central Cooperative Bank (NDCCB), which is struggling to garner funds to meet Reserve Bank of India's (RBI) parameters to secure a banking licence, has approached the state government to buy its building in Mahal.............

Read - TOI

Depository banks approach Sebi

..........BNY Mellon, a global investment firm that acts as a depository (a holding entity for a security) for more than 2,700 American and global DR programmes, recently held meetings with the finance ministry, Securities and Exchange Board of India (Sebi), and the Reserve Bank of India (RBI) on the possibility of allowing such instruments, according to a statement from the company.............

Read | Business Standard

Urban woman moving towards financial liberty

A survey by HDFC Life Insurance Co. Ltd and ValueNotes shows that the Indian urban woman is becoming financially independent and has a higher sense of financial liberty. She is actively planning for........

Read - Mint

WBIDFC claims Rs 120 cr missing from UCO Bank a/c

West Bengal Infrastructure Development Finance Corp (WBIDFC) today claimed that around Rs 120 crore was missing from its fixed deposit accounts with UCO Bank. The infrastructure financing arm of the state government had parked the money with the Kolkata-based bank in two separate transactions..........

Read | Business Standard

Karnataka Bank to open 20 more branches in as many days

..... “Our bank has won certificates of recognition from the Reserve Bank of India and the National Payments Corporation of India for efficiency in maintaining our ATMs,” .....

Read - The Hindu

Dial ‘M’ To Swipe

..... “They had some apprehensions as ours was a non-linear device. What happens to card-holder data when it is travelling over a public network, was one issue. Since there are three parties in each transaction, there was no charge-back protection. And as these card associations are international, they have set protocols. Indian banks are very hidebound, unlike their US counterparts. So we had to get a waiver from the card association and also convince banks to start using our technology, which meant that while on paper we are two years old, in reality we have been operational for only a little over four months,”..........

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

Economy Facing Stagflation: Rangarajan

.......“It is pertinent to note that stagflationary tendencies have already reared their head in emerging markets, like India, where financial intermediation was never a problem,” Rangarajan says in a paper titled Growth or Austerity: The Policy Dilemma’ co-authored with Alok Sheel. The assessment brings to fore the monetary policy challenges for RBI, which is facing demands for lower interest rates despite strong inflationary expectations.............

Read - ET