COBRAPOST

The Sting operation by COBRAPOST on three high profile and successful private sector banks has clearly revealed that their officials were prepared to indulge in a Money laundering operation. The officials involved, the conversations have all been brought out with out any doubt. I am told ( I had not listened to all the conversations in the website of Cobrapost) that one official of a bank was prepared to open thousands of accounts in benami names! As far as I have understood, it was not the case of COBRAPOST that money-laundering operation had indeed taken place in these cases. If officials have indicated their willingness to open benami accounts and resort to money laundering operations, it is a reasonable deduction that they might have done in some cases in the past which had not come to public knowledge or knowledge of the authorities. In these circumstances, it is most unfortunate that a statement has again been made ( as reported in the newspapers) by a top ranking official of RBI that no money laundering operation had taken place in these cases. 

The officials of the three banks who have been caught on camera in the sting operation deserve very severe punishment not excluding even dismissal. This can only confirm the seriousness and sincerity of the statements of these banks that the conduct of the concerned officials is out of step with the policy of the banks. If the banks hesitate to award severe punishment to the concerned officials, RBI would have to insist on this if they wish to effectively enforce their regulations.

- A. Chandramouliswaran, Former Executive Director

It’s all About that Rate

This refers to ‘Chits are not Cheats’ (ET, Apr 25). The article makes the RBI the villain of the piece. Spreading banking through physical branches and mobile technology cannot be an insurance against people falling victims to Ponzi schemes. When banks offer low rates of interest on savings, people will be attracted to schemes that offer higher rates. The 2008 financial turmoil in the West was also caused by low interest offered by banks on deposits and investors looking for higher yields in unregulated markets. 

- S SOLOMON RAJ (ET) 

Mamata Banerjee under attack for asking people to smoke more

...........After declaring the 10 percent additional tax on cigarettes, Banerjee with a smile had said: "Smoke a little more to help the investors". Congress MP and spokesperson Renuka Chowdhury described Banerjee's suggestion as "alarming and destructive"............

Read - TOI

Saradha Chit Fund Scam: Why Mamata Reacts, not RBI?

.........Ironic but not rational. The society or tax-payer at large cannot always foot the bill of fraudulent players in society. Though chits come under the state list, the Centre and the RBI cannot wait for scams. When microfinance players can be curbed with an iron hand, why not the street-corner chit fund organisers? The question should be how soon than when?...........

Read.........

Smoke ‘n’ mirrors

...........The larger point, as our lead story brings out, is that the process for tackling such frauds is riddled with problems. The fact is that Saradha did not happen while no one was watching. Sebi had been investigating the company for three years. That Saradha continued to raise money from investors speaks volumes about how inefficient the regulatory process is............

Read - FE

Saradha fraud: Blame the RBI for the repressed formal financial sector

.....The relationship between the regulated and the unregulated parts of finance is not that between night and day, where the one is the obverse of the other. The RBI's regulation is more like a tourniquet tied too long: it staunches the bleeding, all right, but it also cuts off blood supply to another part of the body, killing tissue and nerve. .......

Read - ET

Saradha investors queue up at Ratu

...............Taking a cue from this huge racket, the Jharkhand government has brought over 100 non banking finance companies (NFBCs), operating in different districts of the state, under the scanner. These NFBCs have been booked in the past couple of months for violating the public deposit norms of the Reserve Bank of India (RBI) and the Security and Exchange Board of India ( SEBI). Over 20,000 people who had invested in these companies now feel cheated..........

Read - TOI

SEBI digs deeper, chit scam gets bigger

.........For SEBI, it has been a long, lonely and frustrating battle against not just the Rose Valley group, but five more companies, including Saradha, where lakhs of investors have deposited money in various schemes. At the regulator's instance, the Union Finance Ministry wrote to the West Bengal government almost a year back to rein in such companies that are defrauding investors. But little or no action has been forthcoming so far, said sources in regulatory agencies............

Read - IE

Chit fund cheats

.........Punishment for fraud is rare. RBI and SEBI rules and regulations on investments apply to banks, mutual funds or other structured financial bodies. There is need to fill this regulatory vacuum and to bring the chit funds and other similar money-raising schemes under effective scrutiny..........

Read - Deccan Herald

Lazy Bones and Ponzi Dreams

‘Create More Banks, Chit Funds will Die’ (ET, Apr 23) rightly stated that the lack of sufficient financial inclusion is responsible for the proliferation of Ponzi schemes. Even existing public sector banks have failed to attract rural customers. Banks even drive out people stating they have reached the target in savings accounts. Even when achieving financial inclusion targets, banking efforts have been directed towards opening deposit accounts and loans. These accounts also become dormant since account holders are not motivated to continue the banking relationship. So, Ponzi schemes and moneylenders benefit. 

- KV RAO, Bangalore  (ET)

Mamata drags Chidambaram’s wife into chit fund scandal

........Moving aggressively to contain the political fallout from the unravelling of Saradha, in which thousands have put in their money, Mamata's Trinamool asked Chidambaram to clarify the links of his wife, Chennai-based senior lawyer Nalini Chidambaram, with the Saradha chief...........

Read - TOI

Bengal govt ignored investors’ complaints

........One complaint was lodged by a women from Nadia. She had deposited Rs 50,000 in one of the investment schemes of Saradha. She sent a letter to the RBI on February 1, requesting it to give details on whether the investment scheme was registered or not. The RBI replied that it does not look after this matter and asked her to lodge a complaint with the Economic Offence Wing of the Finance department. But no action was taken..........

Read - IE

Banks plan to introduce certificate of deposit curve

.........However, few experts are of the view that the proposed idea may not be a success as it cannot be compared with the government securities curve. “There is no credit risk for government securities. Here this curve does not take into account the credit risk involved and the demand and supply factors,” ...............

Read | Business Standard

United Bank to apply for overseas licences to RBI

............"We will apply for overseas licences to RBI as bank's capital adequacy is good coupled with robust risk management practices," Archana Bhargava, the bank's newly-appointed chairman and managing director Bhargava told reporters in Kolkata on Thursday..................

Read.....

Bengal has appetite for credit: RBI

KOLKATA: Despite banks attributing West Bengal's low credit-deposit ratio to lack of demand, Reserve Bank of India (RBI) views the state has a reasonable appetite for credit.  "I do not agree to the banks maintaining that credit absorption in low in West Bengal due to lack of growth, the state has a good appetite for credit", Regional Director (east) of RBI B P Kanungo said. ............

Read - ET

STATE LEVEL INTER SCHOOL ESSAY COMPETITION FOR THE STUDENTS OF WEST BENGAL 2013

With a view to spread financial literacy the Reserve Bank of India (RBI), Kolkata is conducting a 

State Level Inter School Essay Competition for school Students in West Bengal as detailed below...............

Read..........

Archana Bhargava appointed as CMD of United Bank of India

The Centre has appointed Archana Bhargava as Chairman & Managing Director of United Bank of India, a public sector lender. Prior to this appointment, Bhargava was an Executive Director at Canara Bank (since April 1, 2011).......

Read - HBL

Public sector banks face acute manpower crisis

............ So severe is this issue that it prompted the Reserve Bank of India to call the 10 years to 2020 as the decade of retirement. In its 2010 report, the Khandewal Committee set up by the government to look into human resources issues in India’s banking industry outlined that over the following 2.5 years the percentage of staff reaching superannuation would reach alarming levels—80% at the general manager level, 65% at the deputy general manager level and 58% at the assistant general manager rank. This reflects a lack of human resource planning at these banks...........

Read - Mint

KVG Bank solar lamp scheme to check school dropouts

  

To reduce the number of school dropouts in north Karnataka and to give the bank visibility in the region, Karnataka Vikas Grameena Bank (KVG Bank), a regional rural bank, has come up with a novel scheme styled Light for Homework. “The scheme is built on the lines of the Bisi-Oota (mid-day meal) programme run by the State government. Here, we give a solar lamp to a student in rural area to encourage studies,”.......

Read - HBL

Beware! New virus steals bank account info and password

..........The malware, the advisory states, " steals credentials like file transfer protocol passwords, bank account logins, infects removable media, changes browser settings and downloads and executes arbitrary files". The virus is so deadly and potent, cyber sleuths say, that it has ability to hide itself from anti- virus solutions and acquires various aliases to attack a genuine system or Internet- based connection which works to play emails and other user services. The virus is such lethal in its operations that it " infects the removable media by copying itself to its recycle bin and creates an autorun. inf file," the advisory said........

Read - FPJ

A 25 bps rate cut on the cards

The previously hesitant Reserve Bank of India (RBI) Governor D.Subbarao looks set to deliver a third consecutive 25 basis points (bps) repo rate cut at the next meeting on 3 May. This is also very unlikely to represent the last such move with another couple of quarter point reductions set to follow before the end of the September quarter. For more than a year now, we have expected the repo rate to bottom at 6.75% in 2013 and see no reason to change that forecast.........

Read - Mint

In the RBI’s interest

.................For India, the latest drop in commodity prices will offer a temporary balm to an economy battered by soaring prices and low growth for the most part of the last one year. Costlier crude oil, gold and other commodities had knocked up prices of most goods. It had also widened the current account deficit (CAD) to record levels. Lower commodity prices and a narrower CAD, therefore, make the job that much easier for the Reserve Bank of India to pare interest rates and for oil companies to cut retail fuel prices.

Read - Hindustan Times

Dutch disease

.........This term was first coined and used by The Economist in 1977. Dutch disease is basically a condition when exports in one sector affects activity in other sectors; it is normally associated with new-found natural resources..........

Read - Mint

Sebi giving final touches to anti-evasion pact with US

........While the Reserve Bank of India was earlier asked to prepare the draft Intergovernmental Agreement (IGA), Sebi is now seeking feedback from the market participants on the key changes required to be made in the draft, according to officials familiar with the development. These suggestions will be forwarded to the Centre for incorporation in the IGA............

Read | Business Standard

TMC MP blames Centre, RBI for not acting against Saradha group

..."The Centre did not take action. RBI could have taken steps. But it did not act,..........

Read - ET

A dispassionate look at Ponzi schemes

.............. Better still, unlike banks, these schemes had no KYC (Know-Your-Customer) requirements; nor did they ask any pesky questions about the source of funds etc. This, no doubt, suited the large black economy flourishing in the country. Net result was you had all the ingredients of a financial scam in the making. In such a scenario, greater access to formal banking (read more bank licences, never mind that NONE of the new private banks has an extensive presence in the rural areas) is clearly not an answer. What about an omnibus financial sector regulator on the lines recommended by the recent FSLRC (Financial Sector Legislative Reforms Committee) report? Would that be an answer? ..................

Read - ET

Facing the music

Social networking takes people to new highs, but it can also be the source of all-time lows if the Facebooker concerned is caught out in a scandal...........

Read | Business Standard

Saradha crisis: Mamata hikes VAT on tobacco for relief fund

...........Having said on Monday that “what has gone, has gone”, Banerjee on Wednesday announced a 10 percentage point hike in value-added tax (VAT) on tobacco products to raise money for a Rs.500 crore rescue fund. Either the consumer or the provider, or both, of tobacco products will pay for Banerjee’s largesse, which will be distributed among the worst affected by the demise of the Saradha Group, one of the biggest deposit-taking companies in West Bengal and its neighbouring states. It has already claimed two lives: an agent and a depositor killed themselves last week...........

Read - Mint

Chits are not Cheats

Blame the RBI for the repressed formal financial sector, making room for Saradhas to flourish

 ..........The relationship between the regulated and the unregulated parts of finance is not that between night and day, where the one is the obverse of the other. The RBI’s regulation is more like a tourniquet tied too long: it staunches the bleeding, all right, but it also cuts off blood supply to another part of the body, killing tissue and nerve.........

Read - ET

Mamata rejects oppn charge, sets up relief fund for Saradha investors

......Setting aside Rs 500 crore for those hit by the scam, Mamata assured the duped investors of the Saradha Group that they will be compensated, saying that the compensation will be partly funded by extra 10 percent tax on cigarettes. “Money will be given to small, medium investors affected by the scam,” Mamata assured. Questioning why didn’t the RBI and other central agencies act, Mamata said that action will be taken against the Trinamool Congress members if found guilty of any involvement in the chit fund scam. Defending the West Bengal Police, Mamata said that the police have already arrested two top officials of the company apart from Sudipto Sen....

Read..........

Rs 4,000 cr at stake, SEBI asks Bengal to probe five more chit fund companies

.........."It is a pressure cooker bomb situation in Bengal now with scores of dubious financial institutions mushrooming and duping millions of investors with the lure of quick financial returns. One (Saradha) has gone bust, several other disasters are waiting to happen,"..........

Read - IE

How Saradha Group went belly up

........Why did the group fail? The causes of failure are not new. In 1975, a committee appointed by the Reserve Bank of India (RBI) and chaired by James Raj, former chairman of the erstwhile ICICI Ltd, analysed finance and chit fund companies in Delhi and found the following reasons, and a few others, behind their failure:..................

Read - Mint

MMM India, another MLM taking people for “double-your-money” ride

......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?.......

Read - Moneylife

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..........

Read | Business Standard

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,"..........

Read........

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...........

Read - DNA

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. ........

Read - Moneylife

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...........

Read - Mint

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...........

Read - HBL

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.

Read.........

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...............

Read | Business Standard

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.”........

Read.........

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".......

Read - ET

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...........

Read - HBL

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........

Read | Business Standard

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.............

Read | Business Standard

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,"......

Read - TOI

Distinguished economist of "Brains Trust" no more...................

Dr. P.D. Ojha,  former Deputy Governor, Reserve Bank of India and former Chairman of NABARD passed away on April 22, 2013 in Mumbai.  He was 80 years old. A distinguished economist he was  in charge of various departments dealing with medium and large industrial units, including financing and policy aspects of export activities, urban co-operative banks, non-banking companies, leasing, hire purchase and capital markets. He was an authority on financial markets circles and Economic Adviser to several leading Indian corporations as well as the Government of India and the Securities Exchange Board of India. 

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

Web classy, a web portal and an independent news source site has ranked Sikkim’s Anil Kumar Yadav as the world’s third most ‘academic people’. Yadav, 45, who works as Deputy General Manager in Reserve Bank of India (RBI), Gangtok is a holder of degrees and diplomas of 28 qualifications.....................

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

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........

Read - Moneylife

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..........

Read - HBL

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..............

Read - Mint

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...........

Read - Mint

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?........

Read | Business Standard

On the money

 "It's not money laundering, it's your financial illiteracy."

Read | Business Standard

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...............

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

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..........

Read.......

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.........

Read - HBL

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," ..........

Read | Business Standard

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..............

Read - Moneylife

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......

Read - HBL

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,............

Read - The Hindu

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............

Read........

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........

Read - TOI

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...........

Read - HBL

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.............

Read | Business Standard

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.".........

Read - ET

'Unlike in 1993, new banks will find it tougher now'

There is a word of caution for new banking aspirants from the banking regulator. “With all the priority sector obligations that the new banks have to comply with, it will not be a cakewalk for them,” cautioned Reserve Bank of India Deputy Governor K C Chakrabarty on Tuesday................

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..........

Read........

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.....

Read - HBL

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"...........

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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....................

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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.”...............

Read - DNA

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................

Read - FPJ

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............

Read - FE

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.............

Read | Business Standard

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.............

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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.............

Read - Times of Assam

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,” ...........

Read - Mint

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,".......

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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%........

Read - Mint

‘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.”........

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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..........

Read | Business Standard

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.”................

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