...... A vital matter affecting everyone in the country - the "tolerable inflation rate" - was never discussed in Parliament. When I first made the suggestion for a new RBI Act about 15 years ago, I felt that the late N A Palkhivala would be an ideal chairman for the review committee. The government should find someone of his stature to head the proposed commission.
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.
Monday, April 1, 2013
FSLRC report: Will financial sector really benefit from it? - Dr. Subir Gokarn
........The objective of distributing responsibility for making the monetary policy decision is legitimate. I don’t have any problems with the objective which is to take the onus of the judgement away from one individual and spread it across a structure a formal collective process. How it has to be structured is a question that raises several questions. So, who are these people? Will they be employees of the RBI or employees of the government? What does that mean for their loyalties? Are they independent even though they have contractual arrangements with either RBI or the finance ministry or some other entity? These are the sort of nitty grities that can make or break this arrangement because ultimately, this arrangement depends entirely on the perception of autonomy and independence. If that committee is not perceived to be autonomous or independent, the entire credibility of monetary policy becomes suspect...........
My View on "Govt Sins come back to haunt us"
......The rupee has already depreciated by more than 20 % in the last couple of years and further devaluation if any will only boomerang.Time for RBI and the GOVT to shed their ego and act jointly on a war footing before the situation worsens further...........
My View on "The FSLRC Report is flawed in its approach"
....The very fact that four members have dissented and expressed their own views, is an indication that the recommendations if implemented will not help to bring efficiency and soundness to the financial system which has been well nurtured and made to resist to yield to any temptations unworthy of, by the Reserve Bank and other regulators..........
Freedom for the RBI
.......One way to look at these recommendations — apart from the one on entrusting public debt management and bond auctions, now handled by the RBI, to a separate agency — is that they undermine the idea of an independent central bank. In the context of the recent not-so-veiled differences between the Finance Ministry (which constituted the FSLRC) and the RBI over the issue of rate cuts, it is even quite natural to voice such suspicions. But that amounts to a very mechanical reading and naïve understanding of central bank autonomy.......
Regulators exist only to protect consumers: B N Srikrishna
.....The time frame depends on how the government wants to go about it. We have shown the path forward and the time frame depends on whether the government traverses the path walking, running, by bullock cart or by a Ferrari. That the situation was not hunky dory is seen from the fact that the government thought it fit to appoint a high-powered commission, with such a wide remit.........
RBI against panel proposal to form super-regulator for financial firms
......"At present, the jurisdiction of Reserve Bank extends over critical economic pricing variables like money market interest rates, medium to long-term interest rates and exchange rates. These rates have a bearing on monetary policy function. Since the Commission proposes to continue monetary policy with Reserve Bank, it is necessary that the regulatory jurisdiction over these (G-Sec, Bond and forex) markets continues with Reserve Bank.".......
India’s new monetary politics
...................It is well accepted that the conduct of monetary policy has to be handed to technocrats who take a longer view, rather than politicians with incentives to think for the short term. It is precisely such operational independence that provides a buffer against what economists call the time-inconsistency problem, which in practical terms often means increasing tolerance for inflation in pursuit of growth. Such inflationary bias will be minimized only when there is minimal government leverage over monetary policy................
FSLRC and consumer protection
Consumers are blindsided. You could say the same about FSLRC members
.......My conclusion is that the FSLRC is clueless as to why caveat emptor actually does not work. A dead giveaway is its principle that consumer protection should "promote, and not hamper, innovation". The FSLRC talks glowingly of preserving financial innovation without explaining as to what really defines "innovation" and in whose interest? ........
Do away with special laws for SBI, LIC: FSLRC
.....Besides SBI and LIC, the other financial institutions which are governed by special laws include associate banks of SBI, EXIM Bank, National Housing Bank, NABARD, SIDBI and General Insurance Corporation. "The undertakings of all statutory institutions should be transferred to ordinary companies incorporated under the Companies Act, 1956 and their regulatory treatment should be identical as that applicable to all other financial companies," the FSLRC report said......
RBI asks fin regulators to keep close watch on product design
....."Financial sector regulators/supervisors and consumer protection bodies need to keep a close watch on product design and financial innovation in order to ensure that these are oriented towards consumer needs and expectations," Chakrabarty said recently in an event on Financial Consumer Protection. He said financial service providers should treat their customers fairly to protect them from vulnerabilities.........
Paying for past sins?
......But we must accept that fiscal policy is being forced to be, undesirably, pro-cyclical and is accentuating the slowdown. So let's not blame our woes on "global factors". Even as the Reserve Bank of India (RBI) is being goaded to cut rates to boost growth, fiscal tightness is impinging on that very growth impulse. In an ideal world, one would expect fiscal and monetary policy to be counter-cyclical and pull in the same direction. Instead, they have been horribly out of sync post-Lehman........
1991 reloaded
.....But governors of central banks have to be more circumspect. That is probably why Governor Subbarao spoke very guardedly about the green shoots during his I G Patel Memorial Lecture at London School of Economics. This is what he said: “…There is nothing inevitable about the India growth story. 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.”........
Obituary
Shri B.E.Akali (also known as Shri Rohra) passed away on 22nd March 2013 in Mumbai. He was 84 years old. He had worked in several departments of the Bank.
Smt.Shirin Phiroze Sahiyar died on March 29th March 2013 in Mumbai. She was a victim to cancer. She was 75 years old and retired as Steno from the DEAP. She was very popular and leaves a large circle of friends.
- P.P.Ramachandran (via e-mail)
VITAL(INFO) inclusion ...............
Dear Tarambale,
This is to request you to include me in your mailing list for VITALINFO. In fact so long as I was in CAB I was getting it from you and got lot of valuable information. After my retirement it was stopped and I was thinking retired officers are not eligible to get it but very recently I have been informed that you have not prohibited retirees from getting this VITALINFO compiled by you. so I have made this request N HOPE to be included in your mailing list at the earliest.
With regards and thanks
K C Misra
Retd GM, CAB, RBI, Pune
Building BRICS without straw
.......... In a post-crisis world buffeted by financial instability and weak growth in major advanced economies, BRICS have a historic opportunity to enhance their position in global institutions of governance, and to be a stabilising force through demand rebalancing to weather global economic and financial turbulence. The benefits of cooperation are therefore immense for BRICS as well as for the global economy, but the challenges en route are daunting.
Reduced fiscal deficit key to lower lending rate: Montek
.....Seeking to drive home this point to a gathering of industrialists here on Friday, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said blaming the Reserve Bank of India (RBI) and its interest rate policy was a “slightly over-simplified approach. I am not saying that’s [interest policy] not an important instrument, but availability of medium-term money at reasonable rates cannot be achieved simply by operating on the repo rate in the system. It is actually achieved by reducing the fiscal deficit.”......
Soiled note count nosedives over 5 yrs
......Most banks are supposed to and authorised to accept soiled bank notes in exchange for full value. They are expected to extend this facility even to non-customers, but many banks refuse. “People may be taking better care of the high denomination notes and that could be the reason the number of notes coming for exchange is less,” Roy pointed out. RBI spokesperson Alpana Kilawala, “I won’t be able to comment now on the reason behind the reduction in the number of soiled notes coming for exchange.”
28 fake notes detected
.....Banking sources added that the counterfeit notes were detected after the cash from the branch had recently gone to one of the ‘currency chests,’ functioning as an extended ‘arm’ of RBI. It should be noted that about one-and-a-half years back, counterfeit notes were detected in a similar manner from among the remittances received at SBI branches in the district located at Tirupur-Uthukuli road, Dharapuram, and along West Car Street at Avinashi.........
Cosmos Co-op Bank plans 27 new branches
The Cosmos Co-operative Bank, India’s second biggest in its segment after Mumbai-based Saraswat Co-operative Bank, is planning to open 27 new branches in Maharashtra, Gujarat and Andra Pradesh to increase business, a top official said. “We have received permission from the Reserve Bank of India (RBI) to open 18 new branches and upgrade the existing nine extension counters into new branches,” Krishnakumar Goyal, chairman at Cosmos Co-operative Bank told Financial Chronicle. He said the bank will open 14 new branches in Maharashtra, four in Gujarat and two in Andra Pradesh in this financial year 2013-14. The location for seven more branches will be decided later, he said.............
Banking aspirants line up with clarifications on licence norms
.....The RBI will, however, go by 'fit and proper' criteria, which will include having a past record of sound credentials and integrity and financial soundness with a successful track record of 10 years, while giving licences. Many aspirants are also seeking clarifications on the 'fit and proper' criteria especially on issues that date back to more than a decade........
RBI set to unveil new norms for credit co-ops
.....Credit cooperatives are
not part of the payment system but they operate somewhat like banks,
accepting deposits. These institutions have been regulated by the
registrar for cooperatives. Unlike cooperative banks, they are not part
of the payment system and do not issue their own cheque books. However,
they maintain accounts with commercial banks and draw cheques on behalf
of customers. Recent amendments to the Banking Regulation Act
provide the central bank with more powers over the credit societies. New
guidelines will subject them to know your customer and anti-money
laundering norms similar to banks and also require reporting of
suspicious transactions......
RBI to enforce parity in interest rates for equals
.....RBI insists that banks should treat both new and old customers on par when they decide to reduce interest rates, rather than have promotional offers at reduced rates of interest to attract customers. Though most home loans are on floating interest rates, customers hardly ever get a reduction. Instead, they get their interest rates hiked in response to RBI’s repo rate hike or other policy decisions of the bank.......
RBI signs MoU with Banque De France and ACP
.....The MOU was signed by Mr. Robert Ophele, Deputy Governor, BdF and Chairman of Board of the ACP and by Shri G. Jaganmohan Rao, Chief General Manager-in-Charge, Department of Banking Supervision, on behalf of RBI. The MoU was signed in the presence of Dr. K.C. Chakrabarty, Deputy Governor, and Mrs. LE Lorier, Deputy Governor, BdF. The function was held at College of Agricultural Banking, Pune. The MoU provides a formal, yet legally non-binding, gateway of information between the supervisors. The MoU provides for sharing of information on health of the supervised entities, cooperation between the supervisors during on-site examinations, coordinated efforts during times of crises, frequent meetings between the supervisors, preserving the confidentiality of information shared.......
Read - The Asian Banker
High CAD points at India's waning competitive skill: Gokarn
.........."There is something fundamentally wrong with the competitiveness situation. If the trade gap is close to USD 60 billion, over 12 percent of gross domestic product (GDP), suggesting that we are not able to sell to the rest of the world effectively and we are increasingly dependent on rest of the world for our domestic consumption,"...........
Ministerial row holds up exports sops
.....After the CAD touched 6.7% of the GDP, the Finance Ministry stated that both the RBI and the government would continue to monitor the CAD and would take additional steps whenever warranted. Highly placed sources in the Commerce and Industry Ministry said that despite assurances to take effective steps by way of various sops, including financial incentives, to the labour-intensive exports sectors, the Finance Ministry is yet to take up “serious discussions” on the exact shape the package of sops will take.......
Finmin Seeks More Proactive Role From Non-Official Directors of PSU Banks
........According to the official, the ministry wants these directors to be
familiar with the key operations of the bank, and has said that the
performance of public sector banks should be compared with that of their
peers on matrices such as risk management, non-performing assets (NPAs) and customer acquisition and diversification........
A Smoother Road for Banks or Borrowers?
........ In fact, the RBI’s March 18 notification is a major departure from its earlier stand on infrastructure lending. The RBI in April 2009 said that the rights, licences, authorisation
and the like charged to banks as collateral for projects, including
core sector ones, should not be reckoned as tangible security. So
what changed? With the RBI’s apparently huge concession to the
infrastructure sector becoming a reality now, the question that arises
is who in the corridors succeeded in convincing central bank governor
Duvvuri Subbarao to ease its earlier stringent norms. Despite
being a former Union finance secretary, Subbarao has a reputation of not
coming under pressure from anyone including his ex-boss and finance
minister P Chidambaram. During the reviews of monetary policies, he had
earlier surprised the government when he refused to budge an inch on
lowering of interest rates despite North Block openly appealing the
central bank to be a party on India’s growth story. Who then had
convinced the man on Mint Street?.......
Read - ET
Fraud costs ICICI Prudential Rs 90 lakh, police probe on
......"... We received several complaints from our customers complaining about the phone calls being received from people posing employees of the company and as officials of IRDA (Insurance Regulatory and Development Authority) making various promises inducing them to do certain acts which were prejudicial for the interests of the customers.........
PNB needs to overhaul branch banking model for rural scale-up
......While the Delhi-based public sector lender's deep branch network could give it an edge, it will need to change its traditional branch banking to apprise risks and monitor activity. This will help in operating cost efficiency, India Ratings said in its rating review........
HDFC Bank to charge customers for InstaAlert SMSes
......"Effective April 1, 2013, customers registered for InstaAlerts through 'SMS' will be charged," the bank said in a notification. However, InstaAlerts delivered through Emails would remain free. Customers registered for InstaAlert service with 'SMS' as the delivery channel will be charged Rs 15 per quarter in case of salary or savings accounts, while the charge would be Rs 25 per quarter for Current Account customers...............
Thane Dist Central Co-op bank duped Rs 1.30 crore
...........As the trio failed to pay loan instalments, the bank on March 28 auctioned the gold deposited with it. During the auction, the bank officials of the bank came to know that the gold deposited with them was fake..........
MLAs call for action against 'guilty' officials
......"It is apparent that the financial crisis has been caused by some of the members of the board of directors, but no action has been initiated against them. We want to create pressure on the authorities to take action." Bapat also alleged that the Reserve Bank of India (RBI) on February 23 put the bank under moratorium but between February 21 and 23, Rs 4 crore was withdrawn from the Bank. This act is suspicious and should be investigated thoroughly, he said.......
SBH waives FD pre-closure penalty
...... SBH is also launching a new term deposit scheme from April 1 with a maturity period of seven days to 14 days at 5 per cent interest for single deposit of Rs 25 lakh and above,...
Passing rate cut benefits: Banks face ALM hurdle
The RBI, over the last 12 months, has reduced interest rates by 75 basis points. The transmission of the cut by the banking system, in terms of lowering consumer level rates on loans, has been limited, largely due to the asset-liability mismatches (ALM) building up in the Indian banking system that has restricted the ability of the banks to transmit monetary easing.............
Saturday, March 30, 2013
RBI chief Subbarao to attend IMF conference next month
Financial inclusion likely to be part of banking code: Chakrabarty
‘Use e-court fee instead of stamp papers’
The Madras High Court has suggested to the Registry and all civil courts and Motor Accident Claim Tribunals to follow e-court fee payment system instead of judicial stamp papers. Justice R Sudhakar gave the suggestion while passing orders on a civil suit from United India Insurance Company praying for permission to pay the court fee of `48 lakh in the form of RBI challan instead of filing a big bundle of judicial stamp papers..................
AIRREA stir put off
.........."The proposed strike was deferred after conciliation with the government", said Dilip Kumar Mukherjee, secretary general of the association. AIRRBEA had called a strike on March 30 in support of its six point charter of demands. These included implementation of pension scheme for the rural bank employees at par with their counterparts in nationalized banks, amalgamation of all RRBs in the country and formation of the National Rural Bank (NRB) etc........
Modern central banking
Monetary committee needs to be handled carefully
.............Since the MPC in itself is a good idea as it brings a greater number of experts on board, it is important to ensure the baby doesn’t get thrown out with the bathwater. Ways have to be found to ensure the selection process is more independent and transparent, perhaps the number of persons to be appointed solely by the government can be reduced—let’s not forget regulators like the Chief Election Commissioner who have fixed tenures have tended to do a decent job. The onus of making it work lies with the government.
Read - FE Editorial
My View on "FSLRC report: RBI's authority in question"
No point in doing an MRI of FSLRC report or the dissenting notes. Application of ‘collective wisdom’ is conspicuous by absence in the whole affair. Some vested interests are itching for a truncated central bank with diminished role with no say in the non-bank financial sector, the government securities market and the foreign exchange market. Logically implying that RBI would have no say in the management of the exchange rate and thereby in the forex reserves. Add to this the Commission’s view on government debt management. The Commission opts for a separate Debt Management Office (DMO), totally separated from the RBI, which is the dispensation North Block has been trying to push and RBI has been resisting for valid reasons for a long time now. Our finance ministry and FSLRC, ignore the evolution of the role of Reserve Bank of India and the care with which RBI has nurtured the financial sector concurrently successfully safeguarding GOI interests even in several areas which do not come under traditional central banking functions. When found necessary, at the appropriate time, new institutions were built by RBI in association with GOI to transfer responsibilities which either conflicted with its core functions or became unwieldy or unmanageably heavy. Time is not opportune for dismantling or truncating RBI which is doing creditably well as is being admitted in several international forums. Any regulatory changes should be to consolidate and restate the roles so far evolved and should not be a tool for Finance Ministry or any government department to usurp powers or responsibilities now with statutory regulators.
- M.G.Warrier
FSLRC members dissent about regulatory overreach and controls
| ............“The regulations governing capital controls on inward flows should be framed by the Government, in consultation with the RBI. The regulations governing capital controls on outward flows should be framed by the RBI, in consultation with the Government.”........... |
Read - Moneylife
Is a unified financial regulator a good idea? - YES
The Financial Sector Legislative Reforms Commission (FSLRC) is right in opting for a single or super regulator to replace those in equity, commodities, pensions and insurance sectors. The idea is to move from sectoral regulation to a broader framework of rules and principles...........
Is a unified financial regulator a good idea? - NO
.......Before we address the FSLRC’s suggestions for a regulatory model, it might be useful to ask if we would like to replicate the models followed in the West: the conglomerate financial institution, the “too-big, too correlated too interconnected to fail” enterprise that stymied both the UK and US regulators. If we decide to stay with diversified institutions, “with different ownership, incentives and objectives”, as Joseph Stiglitz put it in his recent lecture at the RBI, then, well-trained multiple regulators could be the best bet.
Debate over rate right
.....the Srikrishna committee has wormed in some insidious elements in its recommendation that should set alarm bells ringing. These elements raise questions about the independence of the RBI going forward, and whether or not monetary policy should be conducted at an arm’s length from the government of the day. Neither the federal open market committee of the Federal Reserve nor the monetary policy committee of the Bank of the England — the policy-framing bodies in the two countries — has a representative of the government sitting in on the deliberations........
The FSLRC Report is flawed in its approach
The best thing to do is to moth-ball it!
What is the prognosis for the report of a 10-member Commission, signed only by seven members, four of who append notes of dissent? Not very bright, perhaps! And when the Commission in question is also headed by retired Justice BN Srikrishna whose reports, he rued in an interview to The Economic Times, are either not acted upon (Mumbai riots) or are selectively acted upon (Sixth pay Commission), the future of the report must necessarily be a bit bleak...........
Read - ET
Sting’ in the air
The 2007-08 nightmare of the US financial system collapse and its universal effect on regulators and the central banks will not go away in a hurry, and the RBI is no exception. That the RBI has put in place a number of riders for permitting more private players in Indian banking is understandable. After all, allowing higher foreign stakes in aviation or retail is different from opening up insurance and banking.The RBI has been averse to private bank conglomerates, as it would need to arm itself with greater insight into their workings, which have spread unease across the globe.
R. Narayanan (HBL)
Government’s sins come back to haunt us!
......The RBI puts it well :’To minimize the possibility of external shocks further disrupting India’s growth sustainability over the next few years it is important to not only focus on financing of CAD but also on compressing CAD to lower more manageable levels..........
Read - ET
ICICI Bank shuts door on ex-employees
That’s when the human resource (HR) dropped the bomb. “There is a change in policy. We are not taking back former employees, at all.” The new policy at the largest private-sector lender in the country, with a muster roll of over 58,000 employees (as of March 2012), would apply across the group; so, the old boys could not even join a sister concern, according to officials. .........
Industrial, commercial hot spots top in credit cards sales: Survey
The usage of plastic money (credit cards, debit cards) is catching up in India as industrial hot-spots and tourism destinations report high rates of card usage, says a survey. According to a survey by Retail Management Solutions provider, Ginesys, besides tier I cities, the usage of plastic money is high in industrial hot-spots and tourism destinations...........
Following BRICS bank plan with interest: IMF
.......... “We welcome the announcement of the establishment of a BRICS development bank and stand ready to work closely with the new bank to end poverty and build shared prosperity throughout the developing world,”......
Coming soon: Pre-filled I-T return forms
In a bid to increase tax compliance, the income-tax department is considering providing pre-populated forms for filing returns. A good portion of information, such as data received from employers and third-party sources, may be pre-filled by the tax department in these forms — in line with the global practice...............
Banks can corrupt everything
.........Use “sundry” accounts of the bank, they suggested, to deposit all the illegal cash from where it is to be routed into investment. Either use accounts of other customers, for a fee, to transfer money abroad, or use some shell company and take away a chunk of foreign currency as expenses toward business-cum-leisure trips. They would pamper you, offering you ‘privilege banking’ or ‘priority banking’, pulling out all stops to make the deal happen.
Read - The Goan
A wake up call from Cyprus for “debt-ridden” states like Kerala - M G WARRIER
.......Sometime last year, the RBI Governor who visited Kochi, during his morning walk found daily wage workers from Andhra Pradesh on the street, who told him that they were paid about Rs600 per day and were able to save and send home ‘something’. These commendable achievements are shadowed by near anarchy on the labour front, which has affected industrial progress and political instability.........
Read - Moneylife
Gold Imports Send India's Current Account Deficit To A Record High
............The central bank didn't quantify the increase in gold imports but the government has for sometime blamed them for the rise in the nation's current account deficit................
When CAD is bad, govt should let the rupee drop to 60
....... “The worsening CAD is partly signalling that the rupee is overvalued. But the RBI and everyone else are missing that clue. That is because policymakers further open up the tap to attract more volatile, risk-driven foreign capital to finance a worsening CAD. Indian policymakers are making a simple mistake to think that as long as capital inflows finance a worsening CAD, the rupee is appropriately valued. This is incorrect. ...........
HSBC overhauls incentive structure for its sales staff
........."We now reward based on how many consultations they (staff) have with
the customers. Did your customer increase the value of assets with you?
These are the kind of things based on which we are incentivising."........
Soon, prisons in Maharashtra will have ATMs
The government has decided to install automated teller machines (ATMs) in prisons across the state. Nationalised banks will be awarded contracts for a limited period and provided adequate security by the ministry of home affairs........
Rare coins donated to RBI Museum
The Reserve Bank of India has released an information brochure showcasing a few of the 138 rare antique coins donated from the collection of late M. R. Jambunathan by his daughter Ms Indira Anantharam Iyer........
Fake rupee notes on the rise, in India and abroad
........Also, contrary to the general practice of suspecting Rs 500 notes, you should be wary of Rs 100 notes, the data show. These account for 56 per cent of the counterfeit bank notes detected in India. The Rs 500 denomination notes made up a third of counterfeits detected. Notes of Rs 1,000 denomination accounted for 5.2 per cent, but even fake notes of Rs 10, Rs 20 and Rs 50 denomination have been detected.
FM inaugurates 300 bank branches in UP
Finance Minister P Chidambaram today marked the inauguration of 300 bank branches in Uttar Pradesh, the largest number of bank branches launched in a single day in India. He compared the feat to a “triple century in a cricket match”. The branches, belonging to 30 banks, are spread over 75 districts, primarily in rural areas...............
Securing a loan is a right: Chidambaram
......With obvious reference to commercial banks, he said the attitude towards loans should be changed. “A farmer has a right to an agricultural loan,” he said, adding the youth had a right to loans to start their own enterprises. “If you are qualified and have the ability to repay, you have a right to get a loan,”..........
Committee on FDI, FII definition to meet on April 4
.......“The meeting of committee is scheduled for April 4. The committee will take about two-and-a half months to come out with the report,” a senior finance ministry official said. The DIPP Secretary, an RBI Deputy Governor and a SEBI whole-time member are the other members of the committee. Mr. Mayaram had earlier said that there is a lot of confusion in mind of foreign investors because of distinction between FDI and FII..........
IRDA introduces credit rating norm for selecting foreign reinsurers
......The reinsurance programmes would commence from the beginning of every financial year. The details would have to be submitted to the regulator at least 45 days in advance. One of the objectives of reinsurance programme, according to the regulator, is to maximise retention (the portion of risk which an insurer assumes for its own account)......
Vegetable vendors shy away from Monday 'haat' at Unit-IV
..........With Postal Colony, RBI Colony, AG Colony, Shastri Nagar and Madhu Sudan Nagar near the market, at least 2,500 customers visit the 'haat' daily. But the number of customers is at least five times on Mondays, when 700-800 additional vegetable vendors and farmers from outside join regular retailers and vendors.............
Financial Inclusion of Muslims: Major Roadblocks
.........Indian Muslims (with 13.47% share in national population) just share have just 0.78% and 2.2% share in employment with RBI and SCBs..........
........Section 17 (1) authorizes RBI to accept deposits without interest; and section 45 allows RBI to appoint any bank as its agent to execute the work. Section 6 (1) (b) allows SCBs to work as an agent; section 6 (1) (m) allows banks to acquire and undertake the whole or any part of the business of any person or company, when such business is of a nature enumerated or described in this sub- section; and section 6 (1) (o) carries the provision to include new sort of business for banking companies. Section 19 of BR Act 1949 allows SCBs to open subsidiaries for specific business activities. So RBI on behalf of Government of India and the public can appoint any SCB as its agent to execute Participatory Banking......
Friday, March 29, 2013
Love the bank, hate the banker - Raghuram Rajan
.......Consider, for example, the debate about bank regulation. Bankers are widely reviled today. But banking is also mystifying. So any critic who has the intellectual heft to clear away the smokescreen that bankers have laid around their business, and can portray bankers as both incompetent and malevolent, finds a ready audience. The critic’s message—that banks need to be cut down to size—resonates widely. Bankers can, of course, ignore their critics and the public, and use their money to lobby in the right quarters to maintain their privileges. But, every once in a while, a banker, tired of being portrayed as a rogue, lashes out. He (it is usually a man) warns the public that even the most moderate regulations placed on banks will bring about the end of civilization as we know it. And so the shrillness continues, with the public no wiser for it........
Policy has to focus on domestic drivers for growth: Subir Gokarn
..............Gold is an important issue and the Reserve Bank came out a few months ago with a set of recommendations relating to development of financial products that can substitute for gold. On one hand these are things like inflation index bonds but there are also other gold specific products, what I would like to call dematerialise gold products or Demat gold products, which give you the investment attributes of gold, but without the need to physically possess it. That is the set of alternatives where the physical import of gold may be reduced even though people want to invest in it..............
Srikrishna emasculates RBI, shifts power to finmi
..............The RBI remains the regulator for the banking sector. But look closer, and the central bank’s centrality in financial regulation is gone: it will run monetary policy, regulate the banking sector and enforce consumer protection. Nothing more. What has gone out of its jurisdiction are the following...........
FSLRC report: RBI's authority in question
.........The dissenting notes have come from KJ Udeshi, former Deputy Governor, RBI, PJ Nayak, country head of Morgan Stanley (but formerly chairman and managing director of UTI Bank and joint secretary in the capital markets division of the finance ministry), YH Malegam, currently in the Board of Directors of RBI and JR Verma, the academic from IIM Ahmedabad..............
Panel for more government say on monetary policy
........Raghuram Rajan, the finance ministry's chief economic advisor, who many expect to replace Subbarrao when his term ends in September, told Reuters last week he favoured clipping the power vested in the post of governor and supported a committee approach. When it comes to making policy decisions, Subbarao in practice does take the views of staff and an advisory committee on board. But he often goes against the panel's advice, minutes of central bank meetings have shown. Under the draft bill, which would replace 15 different financial sector laws, the seven member monetary policy committee would be headed by the governor and include two members appointed by the government in consultation with the bank along with three outright government appointees............
Keeping NBFCs under RBI purview makes no sense: FSLRC chief
....That is another argument that doesn't make sense to me. NBFCs that take deposits have been recommended to be placed under the purview of the RBI with the mandate of acquiring a banking licence. But there are NBFCs that are doing business without taking deposits from the public. Now why did they come into existence at all?............
RBI freedom under threat
......The role of the RBI Governor will be severely circumscribed with the report suggesting that an executive monetary policy committee (MPC) will be formed to vote on policy decisions — borrowing an idea from the US Federal Reserve and the Bank of England. “The MPC would meet regularly, and vote on the exercise of these powers, based on forecasts about the economy and the extent to which the objectives are likely to be met,” the report said. RBI Governor Duvvuri Subbarao appears to have had some inkling of the momentous change that had been suggested........
Will govt get a greater say in fixing monetary policy?
In an interview to Bloomberg TV a few days after he announced the new Union budget, finance minister P. Chidambaram said in response to a question about interest rate policy: “I think the RBI should take comfort from what we have announced as the fiscal consolidation path and I am sure the monetary policy advisory committee will advise the governor appropriately.” It was odd that the finance minister had signalled to the monetary policy advisory committee rather than governor D. Subbarao directly, especially since the latter has often taken decisions contrary to what the committee had advised him..........
Consumer interests at centre of new financial sector omnibus law
...........The Code has drawn up a single judicial tribunal for the sector called Financial Sector Appellate Tribunal, a Resolution Corporation to wind up companies that get into distress, the Financial Redressal Agency, Public Debt Management Agency and the modified Financial Stability and Development Council.
Read - IE
Turn LIC, RBI into regular cos, says Srikrishna panel
A high-powered expert panel set up by the government to suggest a recast of the financial sector laws has recommended a level-playing field for financial firms by doing away with specific laws for public sector entities such as Life Insurance Corporation and State Bank of India. The justice B N Srikrishna headed Financial Sector Legislative Reforms Commission (FSLRC) has mooted incorporation of such entities like others in the sector under the Companies Act to ensure ownership-neutrality in regulation and supervision...........
Bank Alone Not a Safe Deposit for Women
After
lauding P Chidambaram’s move to set up a state-run women’s bank, there
is a growing concern in Congress that this may not be enough to fulfill the party’s promise to empower rural women with better access to credit.
Senior Congress leaders and sections of the government, feel that a
specialised financial institution similar to Nabard or Sidbi would be
more effective in meeting the party’s objective. In a letter to
Chidambaram, Rural Development Minister Jairam Ramesh has suggested an
alternative strategy and proposed setting up a “specialised
developmental financial institution” on the lines of Sidbi through an
act of Parliament............
Read - ET
Read - ET
Banking on the fair sex
GUWAHATI: Chidambaram may have hit upon the idea now, but Lakhimi Baruah of Jorhat has been running a profitable all-women bank for the past 14 years. When finance minister P Chidambaram announced an all-women public sector bank in his Budget speech, Lakhimi Baruah was thrilled. The 64-year-old, who lives in Jorhat in Assam, has been providing banking services for women, by women since 1998. "You don't know how happy I am that the finance minister proposed this. It will empower women financially," she says..............
Money chain case: woman held
........ The firm was running its business in violation of the provisions of the Prize Chits and Money Circulation Scheme (Banning) Act 1978 and also Section 45 (s) of the Reserve Bank of India Act. Though the company had promised to purchase land in the name of its clients, none of the depositors had been given documents of such purchases..............
Bank of Maharashtra convenes 118th SLBC Meeting
 |
| (L-R) are : Shri. Madhukar Choudhari, Commissioner, Cooperation, GoM, Shri. M. V. Ashok Chief General Manager, NABARD, Smt. Phulan Kumar, Regional Director, Nagpur, RBI, Shri. J. B. Bhoria, Regional Director, Maharashtra & Goa, RBI, Shri. Narendra Singh C & MD, Bank of Maharashtra & Chairman, SLBC – Maharashtra, Shri Munaf Hakim, Chairman, Maharashtra State Minorities Commission, Shri C. VR. Rajendran, Executive Director, Bank of Maharashtra, Shri Shravan Hardikar, CEO, Maharashtra State Livelihood Mission and Shri A. A. Magdum, General Manager, Priority & Convener, SLBC, Maharashtra |
Come April, you can use RuPay even online
......These online-enabled cards may turn attractive for mainstream banks, unlike ATM-only and debit ones, which are targeted more towards co-operative and regional rural banks, and rural and semi-urban bank branches, respectively, because of less internet-savvy clientele there. “Mainstream banks will not issue RuPay cards to their customers till the e-commerce option is enabled. From April, they will start issuing,” said A P Hota, managing director and CEO, NPCI. To begin with, two banks will issue new RuPay cards from the second half of April, and others are likely to follow suit, Hota added. ........
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