......Two basic questions need to be answered. One, in the end who controls the 100 Mavros, or Rs5,000 that the member needs to keep in his virtual account? And second, if the idea of virtual money or mutual mutual aid fund is so great, then why the government or Reserve Bank of India (RBI) is not implementing this? Why such a great novel (!) idea needs to be sold through chain marketing route instead of customary marketing system that has served human society for thousands of years?.......
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Thursday, April 25, 2013
Govt asks banks to reach out to customers for Aadhaar-based DBT
.......In the latest directive, banks have been advised to issue advertisements in the local print and electronic media appealing account holders to open bank accounts and get Aadhaar seeded into it. Banks will also have to put up banners at their branches and ATMs with similar appeal. Pre-recorded messages will be sent from call centres to advise customers to open bank account and get Aadhaar seeded. Applications will be developed for collection of Aadhaar from customers through bulk SMS or e-mails. Banks will enable their ATM network to advise customers to seed Aadhaar..........
Axis Bank appoints KPMG for money laundering inquiry
......"KPMG is conducting an external investigation into the alleged money laundering case. We have moved 20 employees, who were allegedly involved, to the administration department (from their respective vertical). We have deactivated their employee IDs. All inquiries are already initiated. So far, we have not found any evidence of money laundering in the bank,"..........
RBI study finds 34 banks violating KYC norms
Mumbai: An ongoing study by the Reserve Bank of India (RBI) to verify charges of money laundering by banks has found several violations of know-your-customer (KYC) norms. This could have possibly aided tax evasion by customers, said an RBI official familiar with the study. The study covers 34 banks spanning the public and private sectors, including foreign banks in India, that are active in selling gold coins and wealth management products...........
RBI tells HDFC Bank not to make up its own KYC verification rules
.............HDFC Bank, which has been the subject of innumerable customer complaints about harassment to resubmit Know Your Customer (KYC) documentation, has been told by the regulator, Reserve Bank of India (RBI), not to demand a full re-submission unless there is a significant change in customer profile. Moneylife has received many complaintsfrom customers being harassed by the bank for re-submitting KYC details which have all been forwarded to Aditya Puri, the managing director. Initially, the bank took the stand that it was only following RBI directives on KYC and that continuous re-submission of details was also a global norm. ........
Redo your KYC if bank asks for it; it’s for your own good
......Normally banks create a customer profile based on details such as financial status, location, purpose for opening the account, the expected origin of the funds, employment and sources of wealth. When the transactions in the account are observed to be not consistent with the profile, the bank can ask for KYC documents...........
RBI scrutinising banks’ adherence to KYC norms in Bengal
............According to B. P. Kanungo, Regional Director (West Bengal and Sikkim), RBI, “We have conducted a scrutiny across several banks on a test-case basis on the behest of our central office. The report has been submitted to the central office,” Kanungo told newspersons on the sidelines of an interactive session on the Indian banking sector organised by the Bengal National Chamber of Commerce and Industry here on Wednesday...........
Ekla Chalo Re: Chidambaram soldiers on despite challenges
............Perhaps the greatest challenge Chidambaram will continue to face will be that of political will from the UPA, given the current political turmoil and the compulsions it will bring. To that extent, despite RBI chipping in with rate cuts and the overall macro indicators turning that wee bit favorable, Chidambaram will still be walking alone.
Mr Bernanke's glasnost
.......Central banks globally seem to have realised that drafting and pursuing monetary policy in utter secrecy - a strategy pursued even by governors in the Reserve Bank of India, or RBI, till a few years ago - can actually be counterproductive, especially in asset markets sensitive to interest rates. These developments might have prompted Federal Reserve Chairman Ben S Bernanke to embark on a unique communication exercise...............
Huff, puff, India will finally be a $2 trillion economy this year
......... “The next decade will be a crucial decade for India. If we grow at 8-9 percent per annum, we will graduate to the level of a middle-income country by 2025. It is once again a faster rate of growth which will enable us to meet many of our important socio-economic objectives.”........
RBI proposes escrow mechanism to route FDI
..........."There have been cases of receipt of remittances for issuance of share capital and return of the investor's money before the expiry of the 180 days without issuance of shares. This by passes the FDI/ECB guidelines," sources said. The RBI argued that the misuse can be checked if usage of money is allowed only after issuance of shares. They said that the RBI's proposal would help in protecting the foreign investor as "he becomes entitled for a say in the management only once the shares are issued".......
Large firms may be asked to raise 10% of working capital from bond market
....The RBI’s proposal on working capital is aimed at developing the corporate bond market and ensuring credit discipline among large companies, say bankers. Moreover, once large companies diversify their sources of working capital finance, banks will be able to step up flow of credit to the micro, small and medium enterprises...........
Better CAD in FY14 if we act, says council
........This projection of CAD for 2013-14 is optimistic compared to that of the International Monetary Fund, which pegged it at 4.9 per cent. In its Review of the Economy 2012-13, the council asked the government to contain gold, oil and coal imports to rein in the rising CAD. According to the latest Reserve Bank of India data, the CAD rose to a record 5.4 per cent of GDP in the first nine months of 2012-13, against 4.1 per cent in the corresponding period of 2011-12........
US may soon get a leash on Indian financial institutions
.....While the Reserve Bank of India (RBI) was earlier asked to prepare the draft IGA, Sebi has now sought feedback from market participants on the key changes required to be made in the draft. These suggestions will be forwarded to the Centre for incorporation in IGA.............
IMD forecast not reliable: Vikhe-Patil
.........The state government recently held a meeting in Mumbai with the officials of Bank of Maharashtra, the convenor of the state level bankers' committee. The government has decided to set up a branch of public sector banks in every village having minimum population of 5,000. Such villages are mostly in Marathwada and Vidarbha regions where currently no branch of a public or private sector bank is functioning. "Many district central cooperative banks are not functioning, so these banks can be helpful. The initiative has received in-principal approval from the Reserve Bank of India. The public sector bank will disburse close to 40% of the total credit flow in the state,"......
Wednesday, April 24, 2013
Distinguished economist of "Brains Trust" no more...................
Dr. Punyadeo D. Ojha, M.A. Ph.D. served as a Deputy Governor of Reserve Bank of India from 29.04.1985 to 28.04.1990. He had experience of over 33 years in the field of Banking. He was Professor and Head of Economics Department in Bombay Colleges and also taught post-graduate students, Bombay University.
He had contributed several articles in various learned journals both national and international. Among others, his articles on 'Pattern of Income Distribution and Concept of Absolute Level of Poverty' have been acclaimed as 'pioneer' by noted economists and professionals (including Gunnar Myrdal). His article on 'Poverty' has helped clarification of the concept of 'persons below poverty line' - it has now assumed an integral part of economic policy discussions and formulation. He was considered one of the "Brains Trust" of the Economic Department.
May his soul rest in peace.
- P.P.Ramachandran
Sikkim’s Anil Kumar is World’s third most ‘academic people
Why RBI is still dragging its feet over polymer currency notes?
.....It is imperative that RBI must make a clear-cut statement on the progress made so far in the trial that was carried out in selected cities. The central bank must clarify whether we have secured the necessary technology and equipment to mint these polymer notes within the country and categorically announce the time-frame within which India will launch this into the financial system........
Case of oversight
.............. The Saradha incident also provides ammunition for policymakers to lean on the State governments to tweak their chit fund laws, to grant SEBI or RBI powers to seek information and inspect the books of chit funds. Financial institutions, as a class, are prone to the risk of ‘contagion’. Not only can the operational failure of an entity be transmitted to others, bad reputation too can fasten on just as well to other entities, to the detriment of the industry as a whole..........
Will the Dog stop barking in India? - Renu Kohli
...........If global inflation unfolds differently than before in response to changes in the economic cycle, there is a strong case for RBI to take another look at the inflation dynamics and its inferences for monetary policy. IMF’s findings provide it with food for thought in this regard..............
3-6-3 banking costs the poor money
.........Often protected by local politicians, these MLM schemes have perfected the art of staying in the grey area between the turfs of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi). The first is supposed to regulate deposit-taking companies and the second is supposed to regulate collective investment schemes. These blowouts cause not just economic hardship leading to suicides and push people below the poverty threshold, but in a wider sense put further pressure on the already beleaguered citizen, who has one more reason to get pushed to the brink of anarchy...........
Focus on intermediaries
..... it is time for the Reserve Bank of India to step in. Bank relationship managers, for quite some time now, have been mis-selling insurance and mutual funds. They even bundle loans with insurance products, something that is not allowed by the regulator, by making customers sign a no-objection certificate. Similarly, for auto loans, there are default documents which a customer is made to sign even before he has defaulted. As Cobrapost investigation has shown, bank managers were proposing to use lapsed policies and others’ bank accounts to launder money. Though the apex bank keeps on insisting that there isn’t any systematic failure, what more evidence does it need?........
RBI deputy governor chides 'elite' private banks on low education loans base
............The problem is not that of technique or skill, it is a problem of attitude ... it is a problem of the corporate philosophy, which needs to be changed, and this has to be addressed at the Board level, at the enterprise level," he said, speaking at a seminar on sustainability here...............
Will Tweak KYC Norms if Required: RBI Dy Guv
.....RBI Deputy Governor K C Chakrabarty today said the central bank may introduce some corrective measures in KYC norms as an when necessary to check any "transaction-level aberrations" in the functioning of banks. "System is good, there is no problem. There are... (at the) transactional level, some aberration will always take place and there is a need to look into those issues and as and when it is necessary, banks will take the corrective measures. And if necessary, from the Reserve Bank, regulator side, we will issue the corrective measures," he said..........
No evidence of money laundering by ICICI, Axis, HDFC Bank: RBI
..........The Reserve Bank of India has clarified that there is no transactional evidence of money laundering found in the top three private sector banks (ICICI Bank, HDFC Bank and Axis bank) involved in the Cobrapost expose. "In none of their branches there was a case of money laundering... No transaction has taken place," said K.C. Chakrabarty, Deputy Governor, RBI.........
HDFC Bank yet to find transactions violating anti-money laundering law
........."The issue is being reviewed and investigated from multiple quarters. Clearly, all the investigations have shown that there have been no instances of transactions actually taking place. Our belief is that the existing processes seem to have worked in not allowing these transactions to happen," ..........
RBI asks banks to pay 8% interest for delay in crediting pensions
......The Reserve Bank of India (RBI) has asked all agency banks to compensate all pensioners, including non-state resident pensioners at a fixed rate of 8% for delay in credit of their pension, revised pension or arrears for the delayed period beyond due date. Replying to a complaint filed by Commodore Lokesh Batra, the central bank issued these instructions to agency banks. Commodore Batra has complained about the delay in receiving revised pension of pre-2005 to defence commissioned officers and family pensioners..............
Who’ll watch finance watchdogs?
.....Clearly, the RBI has seriously fallen short of attaining amorphous objectives such as “operating the credit system to the country’s advantage”. As for monetary stability, the less said the better. The RBI’s serious under-performance in generating and preserving monetary stability — which is the same as preserving the purchasing power of the paper currency — is there for all to see. The inflation experience testifies to that. The case for clearly defined and measurable economic objectives for a policy-maker and regulator such as the RBI is very strong. And that is precisely what the FSLRC has recommended......
HC orders notice to district administration
.........He gave a representation to the Chief General Manager and the General Manager of the Reserve Bank of India, Madurai District Collector and the tahsildar of Melur, he said. No action was taken on his representation and hence, he moved the court,............
No application yet to RBI for setting up new private banks: Govt
............RBI had invited applications two months ago and the last date is July 1, 2013. "RBI has informed that as on date no applications for licence under the guidelines have been received and no licence has been granted under these new guidelines," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha............
Cyber squatters bank on domain names to profit from new licences
..........Domain names of banking aspirants are on auction for as low as Rs 7 lakh, but the irony is that the natural owners are not sure whether they would commence a bank with the same name. ltbank.com is available on auction for RS 7 lakh. Websites such as shrirambank.com, tatabank.com, and mahindrabank-. com are all in place, but they are not owned by those seeking to run a bank........
Set up cells for bad loans in banks, House panel tells RBI
The Standing Committee on Finance has urged the Government and Reserve Bank of India (RBI) to set up a special ‘NPA management cell’ to review write-offs and restructured advances. This cell – which should be set up at the highest level – should also monitor the pace of recovery of non-performing assets (NPAs), the Parliamentary panel said in a report tabled in the Lok Sabha...........
Can't auction, don't ration either
...........But the idea of auctioning licences isn't appealing, and the governor of the Reserve Bank of India (RBI) rightly rejected the suggestion. We must understand that the key driver for opening up the sector to new players is to encourage new ideas, innovations and capital to enhance financial inclusion or the number of people that have access to banking services and financial products. Today, only a little over half the country's population is covered by existing banks and a much lower slice has access to most of the products, particularly credit and remittances. We have a dual banking need. On the one hand, we need big banks that can service large and growing Indian companies that are expanding globally; on the other, we need small, specialised banks with expertise to service domestic small and medium enterprises and rural requirements.............
Indiabulls Financial Services to bid for banking licence
....."We are in consultation with the RBI. If it will be a prolonged process of issuing a licence, we would change the name immediately. If not, there is no point in changing the name now and changing it again.".........
'Unlike in 1993, new banks will find it tougher now'
Read | Business Standard
'Govt, RBI steps resulted in improvement in NPA recovery
...........Besides, the government advised PSBs to take a number of new initiatives to increase the pace of recovery, to conduct special drives for recovery of loss assets, to put in place early warning system, to replace system of post dated cheques with Electronic Clearance System and to constitute a Board level Committee for monitoring of recovery, he added. "The steps taken by the government and RBI have resulted in year-on-year improvement in recovery of NPAs (non-performing assets) by PSBs," the Minister said..........
Rules relaxed for PSUs investing abroad
The Reserve Bank of India on Tuesday said Navratna Public Sector Undertakings — ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) — will be allowed to make overseas investments in the incorporated Joint Ventures/Wholly Owned Subsidiaries in the oil sector.....
High agri growth will help in arresting inflation: Industry
New Delhi: Indian industry Tuesday hoped that the projections given by the PM's economic advisory panel for farm sector growth will help in arresting inflation which would provide room to the RBI to cut interest rates. "We are particularly happy to note that agriculture is projected to grow above its trend rate in the current year, which augurs well for arresting inflationary expectations, providing necessary leg room for RBI to manoeuvre monetary policy in favour of growth"...........
Inflation vs inflation
...............The WPI and the new CPI have significantly diverged and, consequently, the debate between the pro- and anti-WPI viewpoints has not abated at all. With the RBI's recent and prospective interest rate cuts being very much in the spotlight, the softening in the WPI provides a rationale for these actions, while CPI inflation, still in double digits, cautions against them. The critical question is whether the divergence between the two indices is contributing to significant policy errors....................
Rangarajan says fisc’s done falling
.............. “Investment rate is estimated to be 35.8% of GDP in 2012-13. There has been a sharp decline in the productivity of capital as the incremental capital output ratio has shot up from its historical level of around 4 to much higher levels. It appears that investment capital accumulated in projects is not yielding commensurate output.”...............
Low inflation gives RBI more space to cut rates: Rangarajan
..........." Inflation at around 6 percent gives scope for rate cut," Rangarajan said. The central bank has been maintaining tight monetary policy for the last three years to contain inflation.However, he admitted that even at 6%, inflation was high and it needed to be reduced further. RBI Governor D Subbarao will announce the Monetary Policy Statement for 2013- 14 on May 3. Earlier this month, even Finance Minister P Chidambaram had favoured further interest rate cut by the Reserve Bank as headline inflation has softened................
The missing link in inflation theory
........For instance, to control inflation during economic expansion during 2005 lasting until 2007, RBI followed a contractionary monetary policy. The tighter credit policy of April 2007 was influential in reducing inflation rates from 6.7% to 3.5% within the next four months. But contractionary demand management policy may not be a good idea to control inflation especially when the cause of food price inflation is supply-side factors. What is required is the use of supply management policies like investment in suitable infrastructure, developing new technology to improve agricultural productivity and efficient supply chain management............
Assocham for quick action against rogue finance firms
Industry body Assocham on tuesday made a strong pitch for bringing the rogue finance companies to task for duping investors by promising abnormally high returns. "We want quick action to be taken against the rogue companies which are neither registered with SEBI nor having the RBI permission for collecting money from the public," Assocham National Vice-President Sunil Kanoria said.............
Chit fund scam: RBI, bank alerts in December ignored by WB govt
.............“We had informed the Reserve Bank of India (RBI) that we were not comfortable with the operations of the chit funds which offered above 40 per cent returns to the public, mainly in the rural areas. We have asked the state government to protect depositors’ interest,” said a banker who attended the SLBC meeting in December.............
Chit Funds or Cheating Schemes?
..... The Saradha incident also provides ammunition for policymakers to lean on the State governments to tweak their chit fund laws, to grant SEBI or RBI powers to seek information and inspect the books of chit funds. Financial institutions, as a class, are prone to the risk of ‘contagion’. Not only can the operational failure of an entity be transmitted to others, bad reputation too can fasten on just as well to other entities, to the detriment of the industry as a whole.............
More safety measures for funds transfer
....Once banks implement the measures that RBI has asked for, it could help curtail frauds. “A normal user will have a small list of beneficiaries, whereas a fraudster will typically try to add a number of beneficiaries to make subsequent tracking and recovery difficult. By capping both the number of beneficiaries and the amount, the extent of fraud can be limited,” ...........
Money laundering: HDFC Bk sings RBI's tune on systemic risk
........."While we had our own internal audit, we have ordered for a forensic investigation by consultancy firm Deloitte. At the same time, the regulator too is doing its own scrutiny. As of now, there is no transaction of this type (money laundering), which any of these audits receives. There is no systemic risk,".......
Predictably, the 30% bank does it again
.....HDFC Bank’s secret sauce for the metronomic consistency in profit growth is a tweaking of provisions. The bank maintains a “floating” provision on top of the regular loan-loss provision for specific bad assets. This buffer allows it to maintain net profit growth in its desired range. For the March quarter, the bank set aside a lower sum for bad loans. Despite that, its provision coverage ratio (for bad loans) is not much changed at 80%........
‘Pvt, foreign banks must say yes to education loans'
..... “Many times, directives of the RBI do not work. It is the inner appreciation and corporate philosophy that must include this. Hence, banks need to finance aggressively to educate people. Society attitude needs to change towards this.”........
SBI launches prepaid card with relaxed KYC norms
.....The card is an open loop prepaid card and will be available at all SBI branches. It can be used for cash withdrawal at any ATM of SBI and its associate banks free of cost and at other banks' ATMs for a fee. It can also be used at Point-of-sales (POS) terminals at merchant establishments, at any merchant site accepting VISA cards for e-commerce transactions. It can also be used as an add on card for existing account holders on VISA network. SBI already has 75,000 POS terminals and plans to double this number in a year..........
YES Bank launches Sustainability Series
......The Sustainability Series, conceptualized in association with UNEP FI (United Nations Environment Program Finance Initiative), GIZ (Gesellschaft fuer Internationale Zusammenarbeit GmbH) and RIRA (Responsible Investment Research Association), will aim to promote Sustainable Finance in India within the Financial Sector. The Sustainability Series was inaugurated by Reserve Bank of India (RBI) Deputy Governor Dr. K. C. Chakrabarty. While speaking at the inaugural function, Chakrabarty said, “Environmental viability is not independent from Financial Viability and one needs to innovate to find viability in Sustainability. Indian Banks play an important role and they need to approach sustainability not just from a reporting lens but in a holistic manner.”................
Tuesday, April 23, 2013
Lower inflation gives RBI greater space to cut rate: Rangarajan
New Delhi: Moderating inflation will provide "greater space" to the Reserve Bank to cut interest rate to promote sagging growth, Prime Minister Economic Advisory Council Chairman C Rangarajan said on Tuesday. "I would say that decline in WPI is higher than what was expected. It gives greater space for monetary authority to act," he said while unveiling the review of economy for 2012-13..................
Create More Banks, Chit Funds will Die
...... It makes no sense to force banks to open branches in rural areas. Instead, the government should allow the use of low-cost technology, like mobile banking, to spread financial inclusion. The Reserve Bank of India should embrace the idea of allowing mobile companies or their joint ventures with existing banks to offer banking services.
Read - TOI
RBI may allow 7-8 new banks
The number of new licences to be issued, which would be much higher than what the prospective applicants had estimated, was arrived at after rounds of discussions with the government. In its discussion paper on the matter, released in August 2010, RBI had said a “few” licences would be given, leading the market to believe the number would be three or four. According to banking industry sources, the government, which is keen on financial inclusion through spreading formal modes of credit to all parts of the country, insisted that more new players be allowed...........
Co-op banks can't use Sarfaesi for debt recovery: Gujarat HC
The high court here has said cooperative banks cannot use the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), 2002, for recovery of debts from its defaulters. A bench of Chief Justice Bhaskar Bhattacharya and J B Pardiwala, in a common judgement, today declared the central government notification dated January 28, 2003, bringing cooperative societies within the purview of the Act as null and void. They said this clashed with the Banking Regulation Act, 1949................
Teaching the honest to become dishonest
......The consequences are inevitable. Banks are now unwilling to lend to the agricultural sector, unless backed by collateral, which can be easily sold off. As a result, marginal farmers, who do not have collateral to offer, are compelled to borrow money from moneylenders at usurious rates.........
Is the good news for real?
After a long, long time, there is some favourable news on the economy. The International Monetary Fund (IMF), in the latest edition of its flagship publication — World Economic Outlook — says that the Indian economy has bottomed out, meaning that the worst is over............
Beware the nostrums of economists
...........“The ideas of economists,” John Maynard Keynes famously wrote, “… are more powerful than is commonly understood. Indeed the world is ruled by little else.” He might have added that the ideas of economists can often be dangerous. Policies framed on the basis of the prevailing or dominant economic wisdom have often gone awry and the wisdom was later found to rest on shaky foundations...........
Tips to replace non CTS-2010 compliant cheques
............The customers who have deposited non-CTS cheques as post-dated cheques
(PDCs) for EMIs to a finance company, or bank for repayment of a loan,
will have to replace these with the compliant ones for instalments after
31 July. The non-compliant cheques will not be honoured by banks and
will amount to non-payment and default on the part of the customer..........
How can having a single customer ID help
.....The Reserve Bank of India had advised the banks to lay down a customer identification process, which should be carried out at different stages such as banking relationship, carrying out a financial transaction or when the bank has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data. This requirement can be easily met by the bank if it has a unique ID per customer. Hence, most banks are now being seen taking initiatives to provide one customer ID per customer..........
Campaign against fake cell phone messages
.............A few gullible people responded to the messages by sharing personal details including bank accounts and also paid initial amounts as “service charges”. However, after receiving the amounts, the senders would vanish. Mr. Narasimhachar said the advertisement inserted by the Reserve Bank of India recently was appreciable but the apex bank had confined itself to disowning its role as claimed by the fraudsters. The apex bank should receive complaints from public and refer the matter to the police in doubtful cases, he said...............
RBI for lower commission to curb KYC abuse like money laundering
The Reserve Bank may push private sector lenders to rationalise the commission they pay to wealth and relationship managers, as it tries to check dubious transactions and flouting of know-your-customer norms.........
Prof loses 87k from salary a/c in debit card fraud
....... “The
bank neither informed me about the transactions, nor ever asked me to
register for SMS alerts. In fact, an official said they cannot give an
assurance if either the insurance firm or the bank can
reimburse the money. They also asked me to send documents to their
Bangalore head office despite submitting the FIR and documents here,”.........
Read - TOI
Credit card abuse up, debit card users more prudent
.......“Though we have not seen this trend in our base, but if the numbers do say that, then it is a matter of concern as people only withdraw cash from ATM machines (using a credit card) when they have absolutely no money,”..........
Default insurance
.............The Reserve Bank of India has said that India’s first mortgage guarantee company, the India Mortgage Guarantee Corporation (IMGC), can start functioning. Its capital will come from three investors – the National Housing Bank (38 per cent), an American company called Genworth Financial (36 per cent) to provide technical help and ADB and IFC (with 13 per cent each). It is interesting to note that the Government will not have a stake..............
More liquidity to help banks reduce interest rate: Ravneet Gill
The Reserve Bank of India recently said foreign banks those have more than 20 branches should have a steeper target for priority sector lending. Deutsche Bank—which has 17 branches in India—however, does not see the stipulation as a hindrance to its branch expansion plan...........
Parliament panel seeks committee to monitor NPAs
......“The committee will urge the government/ Reserve Bank of India to constitute a special NPA management cell at the highest level to review the write off, up-gradation and restructured advances and also to monitor the pace of recovery of NPAs. A report on results achieved thereof may be submitted to the committee within three months from presentation of this report,............
Bond spreads might remain at current levels till RBI monetary review
.......However, the 10-year bond spread is expected to remain at current levels. Bond spread refers to the difference between the yields of two bonds. Few companies have tapped the domestic bond market but most await RBI’s monetary policy announcement on May 3. If the apex bank cuts the repo rate, the coupon rates of corporate bonds will drop.........
Parl Panel for opening branches in unbanked areas
......."The Committee in their earlier reports had expressed their view that the rural branches should be considered as a service centre and not merely as a profit centre," Standing Committee on Finance said in a report tabled in Parliament today. "With this perspective in view, the Committee believe that the proposition of brick & mortar branches in sparsely and unbanked areas would still be sustainable in the longer run and thus needs to be pursued earnestly," it said.........
‘Focus on low-cost deposits, advances for growth’
......... in this era of keen competition when the banking industry growth rate is moderate, the quality of service and assets scores over quantity. The strength of an organisation lies in effective management of assets. Both staff and customers are critical to the growth and development in the banking sector,...............
Banks’ liquidity issues
This refers to your editorial “More freedom for cash” (Business Line, April 22). If at all banks face any liquidity crunch, it is of their own making and the RBI cannot be expected to come to their rescue. Banks in India face a liquidity crunch because of poor mobilisation of deposits thanks to poor customer service, high inflation, and reluctance to cash in on financial inclusion as a business opportunity. The way banks function now, with 78 per cent CD ratio when there is not much of demand for fresh credit, is indicative of a serious deficiency in asset-liability management. The NPA deposit ratio needs to be analysed in detail. The banking system has been having liquidity problem for quite some time and the solution for that cannot be relaxing the regulatory measures of the RBI.
T.V.Gopalakrishnan (HBL)
Bulls on a strong footing
........The second and more important trigger was the decline in the inflation numbers released last week. This sharp drop in the rate of inflation has increased hope that the Reserve Bank of India (RBI) will be more aggressive in cutting policy rates this time around. That was the primary reason behind the short covering in bank Nifty — which was on the forefront of correction for the past two months — and banking stocks were the main contributors to the rise of Nifty last week..........
Too early for optimism on trade balance
The recent fall in commodity prices might not be sufficient to bring down the country's widening current account deficit (CAD). Experts say more is needed for a significant change in this regard. The Reserve Bank of India (RBI) views the high CAD as a key challenge. RBI Governor D Subbarao said earlier this month that the CAD for the financial year which ended on March 31 was unlikely to be less than five per cent of gross domestic product (GDP).......
Regional rural banks may be allowed to tap private capital
.....The Bill, introduced by Finance Minister P. Chidambaram in the Lok Sabha on Monday, aims to amend the Regional Rural Banks Act 1976. One of the proposed amendments seeks “to make provisions for raising capital by regional rural banks from sources other than the Central Government, the State Government and the sponsor bank.” However, there is one condition — in no event should the combined shareholding of the Central Government and the sponsor bank go below 51 per cent.......
Crack the exam, select your posting
If clearing a bank exam is good enough, imagine being offered a chance to indicate your order of preference — of both the bank and the State/Union Territory you would like to work in. The Institute of Banking Personnel Selection (IBPS), the autonomous body which is in charge of conducting the Common Written Test on behalf of the participating organisations (the banks), has sent a communication to this effect to those who have cleared the CWE for clerical cadre...............
In unchartered territory
The Reserve Bank of India is expected to soon announce the final operative guidelines for non-banking financial companies (NBFCs). An RBI-constituted panel, headed by its former deputy governor Usha Thorat, recommended tightening of rules for NBFCs, proposing that these companies should have minimum assets of Rs 25 crore. Thorat has also suggested that their minimum equity capital be raised to 10 per cent of risk-weighted assets from 7.5 per cent currently. The panel released its recommendations on December 12, 2012. However, the RBI is not trying to finalise operational guidelines based on these recommendations..............
Tides turning for Islamic banking in India?
.....“However, once the Microfinance Bill is enacted, all the microfinance activities will come under RBI and problems will surface again. Issuing of Islamic bonds – sukuk – may be made possible, though, with minor changes in the rules without making major changes in the laws,” .........
Islamic microfinance market size reaches $1b, says Pakistan body
....... if one takes an overview of the last 10 years of the Islamic finance industry, it can be observed that with the passage of time Islamic banking, Sukkuk, Takaful and Islamic fund, have progressed quickly. In the next three years Islamic microfinance will progress more quickly relative to other Islamic financial products,............
Muthoot FinCorp’s microfinance arm expanding into 2 more States
......The company, which has also applied for a name change, expects to get the NBFC-MFI approval from the RBI in three-four months. Since there is a margin cap of 10-12 per cent on the interest rate that an NBFC-MFI can charge above the bank lending rate, customers will benefit if the company gets the NBFC-MFI recognition..........
RBI earns over 40% returns from its gold reserves
MUMBAI: The Reserve Bank of India is sitting on handsome returns on its gold reserves despite the recent crash in the yellow metal's price. The RBI's gold stock of about 400 tonnes, currently valued at $25.7
billion, has appreciated 41% since it bought 200 tonnes in
October-November 2009 from the International Monetary Fund...........
Industry body recommends cut in gold's LTV ratio
KOCHI: Association of Gold Loan Companies (AGLOC) on Monday recommended a reduction in Loan-To-Value (LTV) ratio of gold in the background of recent crash in the price of the metal. "We have asked our members to conform to the 60% LTV ratio stipulated by the Reserve Bank of India, said by George Alexander Muthoot, president of AGLOC and the MD of Kochi-based Muthoot Group.............
Pilot writes to state CMs for police action in fraud schemes
In a multi-pronged strategy to deal with the menace of fraudulent chit funds and ponzi schemes, the Centre has written to state chief ministers for vigorous police action against erring entities and has also sought an increased surveillance by the RBI. Besides, the Corporate Affairs Ministry has also decided to spread public awareness about such schemes through bulk SMSs, TV tickers and messages on Post Office Passbooks, while a joint campaign is being explored with Sebi as well. ...............
Centre assures state of new warning system
....... "Other than the regulatory bodies like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi), the ministry of corporate affairs and the state government, henceforth, will interact directly so that operators can't take advantage of the gap between the multiple agencies,"..............
Mamata sets up panel to probe chit fund scam
.......“Any commission set up by the State government in its terms of reference has the jurisdiction to inquire into matters listed in the State List of the Constitution. In this instance, there are Central agencies like the Securities and Exchange Board of India and the Reserve Bank of India involved and a commission set up by the State government cannot investigate their role,” ....
India currency futures stifled by central bank rules: MCX-SX
Indian currency futures volumes have been stifled by the RBI move last year to prevent rupee weakness which has indirectly created prices variations between listed and over-the-counter derivatives, a senior official at domestic exchange MCX-SX told Reuters.............
Monday, April 22, 2013
Pathways to obsolescence - Dr.Subir Gokarn
.....Organisations succeed and grow because they figure out how to do a few things very well. These things - products or services, with all the attendant processes - then expectedly tend to crowd out everything else they do. People move up the ladder because they have been associated with successful activities. Over a period of time, the top leadership comprises exclusively people who have all come up in exactly this fashion. The focus of the organisation on these activities and the reward and recognition systems tied to them gradually leads to the disappearance of everybody who has other interests or perspectives, particularly from the top leadership......
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