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, May 27, 2013
Frontline Managers Conference
Social costs of financial exclusion - Dr.N.A.Mujumdar
.........If only the commission had cared to look at India's own empirical experience, it would not have been misled. Perhaps the commission was too obsessed with " international best practices." The evolution of the Indian financial system is unique in a number of ways. The founding fathers of the Reserve Bank of India ( RBI) built into its statutes the responsibility of promoting agricultural credit. This was unusual for a country which was still a British Colony. Nationalisation of major commercial banks in 1969, the phenomenal branch expansion programme, unprecedented in the history of world banking and fixing credit targets with a view to ensuring wider disbursal of credit - these were indeed bold steps at that point of time in financial history - much before financial inclusion became internationally fashionable.............
Which way is public policy headed? - Dr.Deepali Pant Joshi
..........In recent times, however, the financial sector has, of its own accord, assumed overweening importance. This has resulted in chronic ‘financialisation’, a situation where all value that is exchanged, whether tangible, intangible, present or future promises, is reduced to a financial instrument or a derivative of a financial instrument with hectic trading allowed...............
Reserve Bank sets tone for innovative, inclusive dev
....... Financial Literacy Material is also getting added emphasis to link the financially excluded segment with the banking system. This is aimed at promoting massive awareness about financial products. A model for conduct of literacy camps has been designed by RBI to be followed by banks. Detailed operational modalities are also being put in place for effective financial access to the excluded. Consistency in the financial literacy material has been planned for reaching the target audience in a simple and lucid manner. Financial literacy material, a Financial Literacy Guide, a Financial Diary and a set of 16 Financial Literacy Posters as a standard curriculum in literacy camps prepared by regulator will be an innovative step in devising suitable communication channels so that the messages reach the target audience effectively............
Promoting financial literacy in villages
....A National Bank for Agriculture and Rural Development (NABARD)-sponsored financial literacy project in the rural areas of Jalore and Sirohi districts in Rajasthan is expected to benefit about 25,000 villagers by the end of this month by creating awareness of basic concepts of savings, deposits, loans and insurance. The NABARD has taken the initiative launched through a private agency, Fino Pay Tech, with the objective of promoting financial literacy leading to greater financial inclusion and empowerment which has been identified as a priority by the Reserve Bank of India............
Sangam University BBA MBA Students Attend Financial Literacy initiative
Under the Financial Literacy initiative, a batch of 40 MBA / BBA students of Sangam University, Bhilwara along with their three faculty members visited Reserve Bank of India RBI Jaipur Office on May 16, 2013. The trip was aimed at getting better insight regarding functions and working of Reserve Bank of India. Dr. Sathyan David, Regional Director inaugurated the special session which was arranged for the Sangam students in the Lecture Hall of RBI Jaipur. Highlighting about history of money, evolution of central banking and the role of Central Bank in economies of countries, Dr Sathyan advised the students to read a variety of journals and books, so that they may keep themselves abreast with the latest developments around the world. Two short films on the History of RBI were also shown to the students..............
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Banks need to come clean on notes
..........In its latest directive, the RBI bemoans that “certain branches of banks continue to follow old practices like stapling, writing number of note pieces in loose packets on watermark window of notes disfiguring the watermark impression and rendering it difficult for easy recognition.” It has also asked them to sort out the notes into bundles that are “issuable” and “non-issuable”. Only clean notes should be given to the public, it says..................
Obituary
I am sorry to advise you of the sad demise of Shri Madhav.D.Shinde, in Mumbai on May 13, 2013. He was 86 years old and had served in DESACS for a number of years as AGM. He eventually joined NABARD, from where he retired. May his soul rest in peace.
- P.P.Ramachandran (via e-mail)
Most companies view office romance as personal turf
.........Even in transferable jobs, relationships have flourished. The Reserve Bank of India (RBI), for one, has seen several such instances and has even helped couples get posted in the same city for their convenience. It has been observed when people spend time together at the workplace, they are likely to get into personal relationships...............
Slips with holograms to replace coins on Kolkata buses
Kolkata,
May 25 (IANS) The familiar scenes of commuters arguing with conductors
in Kolkata buses over short change may soon be a thing of past as the bus operators have now hit upon the idea of handing out coupons, or "due slips" with holograms, in lieu of change. Faced with an acute shortage of coins,
operators on select routes would give these slips to the passengers.
These will contain the amount of change to be refunded, the bus number,
as well as the routes on which they can be availed............
RBI to issue Rs 5 coins on Vaishno Devi Shrine Board's 25 yrs
...On the reverse of the coin, "the face of the coin shall bear the picture of Mata Vaishno Devi in the centre with inscription 'Shri Mata Vaishno Devi Shrine Board' in Devnagri script on the upper periphery and Shri Mata Vaishno Devi Shrine Board in English on the lower periphery",..........
Financial Policies
S.S.Tarapore was the distinguished Deputy Governor of RBI and had served there for 35 years. He was seconded to the IMF from 1971- 1979 and was the Chairman of several committees and is presently connected with the Administrative Staff College of India and the Skoch Development Foundation. The book under review – his articles from financial dailies - is a running commentary of India’s recent financial policies and raises issues affecting the policy makers and participants in financial markets. It is divided into a dozen parts with 84 short chapters. The distinguishing quality of the volume is that ...............
RBI Governor to address IPE
.....The Reserve Bank of India Governor D. Subbarao is expected to kick off the golden jubilee year celebrations of the Institute of Public Enterprise (IPE), Hyderabad, with a lecture on June 7........
House panel for multi-disciplinary body to monitor public deposits
.........The body should consist of representatives of the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Ministry of Corporate Affairs and State Governments. This view emerged on Friday in a meeting of the Standing Committee on Finance to discuss the scam involving money pooling schemes, especially the Saradha scam in West Bengal. RBI Governor D. Subbarao and his deputy Anand Sinha made a presentation on various regulatory aspects. SEBI chief U.K. Sinha is slated to submit his views on May 31........
Subbarao agreed with minority of advisors, show minutes
...........The meeting was chaired by Subbarao. The other internal members present were the four deputy governors — Urjit Patel, K C Chakrabarty, Anand Sinha and H R Khan. RBI officers Deepak Mohanty, Michael D Patra, B M Misra, B K Bhoi and Pardeep Maria also attended. External members were Y H Malegam, Indira Rajaraman, Shankar Acharya, Errol D’Souza, Ashima Goyal, Arvind Virmani and Chetan Ghate. Most members felt the global economy was weaker than before. On the domestic front, most felt overall demand was weak..............
Legislating SARFAESI Act
............The other issue that Dr. Drabu has extensively dealt with in his column is the extension of the Reserve Bank of India Act, 1934 to the State. My knowledge and information about it is in my capacity as the former Special Secretary to Government Finance Department where banking was one of the important assignment I handled. On SARFEASI, Dr. Drabu has dangerously concluded his column saying: “If the Government enforces SARFEASI it will only succeed in PSU banks being seen as outposts of financial imperialism. The contention will be that the people of the State have to mortgage their special status to get a commercial loan. It is a choice that no one should not be asked to make.”...........
Read - Greater Kashmir
Banks force customers to take insurance with study loans
.........Banks providing education loans are violating the Reserve Bank of India (RBI) guidelines by forcing their clients to take a life insurance equal to the loan amount to negate the risk involved in the same. The RBI guidelines state that it is not mandatory to get a life insurance along with an education loan; banks may provide life insurance only with the consent of the borrowing party.............
Where were you when chit funds cheated people, panel asks RBI
The parliamentary standing committee on finance on Friday questioned Reserve Bank of India governor D Subbarao on the chit fund fraud. BJP leader Yashwant Sinha, who is the chairman of the committee, is likely to write to finance minister P Chidambaram on the urgent need for the ministry to build a mechanism to curb the chit fund menace........
Who killed Namdeo?
........Farmers are often denied institutional credit. Eighty per cent of them are defaulters, and are not eligible for bank loans. The state has not bothered to approach the Reserve Bank of India (RBI) to seek reconstruction of loans to enable defaulters to repay and seek fresh loans, says Kishore Tiwari of Vidarbha Jan Andolan Samiti. This is despite the RBI's willingness to consider it, he says..........
Why blame the RBI?
........ Being a bankers' bank, regulator and supervisor, no doubt the Reserve Bank of India (RBI) has the moral and physical responsibility to ensure that banks do not err, and indulge in transactions that are against prescribed rules and guidelines. However, one ought to acknowledge that the RBI, with its limited resources of manpower - 17,000-odd staff - cannot be expected to scrutinise millions of transactions involving exotic products carried out by banks and their associate business concerns, having thousands of branches, and whose only philosophy is to make money at any cost...........
All-women co-op bank opens first branch in Pune
Established
in 1997 in Mhaswad village of Mann taluka in Satara, the bank is
opening its first branch in Pune at Dhayari on May 27.
........“One of our main aims in coming to Pune is to get a bigger market for the rural women. It will be a challenge because the dynamics of urban and semi-urban areas are different from that of rural areas. Economic activities pursued by women in cities are different. The Pune branch of the bank will help Mann Deshi scale and expand its operations.”............
Read - TOI
CENTRAL BANK OF INDIA’S “FIRST WOMEN’S BRANCH” IN MADHYA PRADESH INAUGURATED
On the inaugural function Shri M V Tanksale, Chairman & Managing Director, Central Bank of India handing over a cheque of loan amount to the woman beneficiary. Shri P R Ravimohan, Regional Director, RBI, Dr. Rajendra Singh, Chief General Manager of NABARD and Shri Umesh Singh, Field General Manager, Central Bank of India, Bhopal Zonal Office were also present on the occasion............
HC notice to Centre, RBI and Amanath bank
The Karnataka High Court on Thursday ordered issue of notices to the Union government, the Reserve Bank of India and the Amanath Bank on a batch of petitions filed by bank’s depositors seeking permission to withdraw their money.............
NDCC bank board dissolved superseded, administrator appointed
.........While the state government stated that it had sought permission from the Reserve Bank of India (RBI) for appointing an administrator, the office of the commissioner for cooperation and registration of cooperative societies stated that the report filed by NABARD pointed out serious discrepancies in the working of the bank.........
FM tells banks to gear up for a growing economy
The economy will revive this fiscal, and will grow by one percentage point more than last fiscal, Finance Minister P. Chidambaram said here on Saturday. “In the next year, I expect it to grow by another one per cent (percentage point) more,” Mr. Chidambaram said while inaugurating the new building of Canara Bank................
From financing to funding
..........In addition to this, it is not too well kept a secret that banks are refinancing and restructuring loans. These are currently being done to “evergreen” accounts. As such, much of this is being done in partial or complete violation of the regulatory guidelines. This makes the banking sector very weak and vulnerable. The need is to refinance and restructure in line with the economic cycle and in a constructive manner. In this context, it might be worthwhile for RBI to relook at some of its more stringent and mechanical prudential norms. And instead of focusing too much on interest rate, focus on relaxing some prudential norms but tighten the provisioning policy. Instead, RBI relaxed the provisioning norms..............
Something to cheer about
.........The expected cuts in interest rates as well as the cash reserve ratio (the proportion of deposits that banks have to park with RBI) may finally nudge commercial banks to reduce lending rates, thus, encouraging borrowers to engage in commercial activity (for individuals, this could mean buying a house or car; for businesses, this would mean investing in expansion or buyouts). There are political and policy signals as well. At long last,..........
No tax exemption for inflation-indexed bonds: RBI
........."The new instruments to be issued down the line when perhaps CPI index stabilises, we may move over (to consumer price inflation). But currently, the choice is for WPI inflation for the current series which is going to be issued (on June 4)," Reserve Bank Executive Director R Gandhi said. Gandhi, who oversees the internal debt management department, was speaking during a specially-arranged conference call with market participants to clear doubts surrounding inflation index bonds (IIBs), the first tranche of which is to be issued on June 4. ................
The story behind the bond rally
Bond dealers in Mumbai, India’s financial capital, have started enjoying their Friday evenings once again. Despite a record highRs.5.79 trillion gross government borrowing programme for the current fiscal, bond yields are dropping and wholesale price inflation is declining every month to levels below what analysts expect.............
RBI will take some time to act against banks flouting KYC norms
The Reserve Bank of India may take some time to act against banks violating the know-your-customer (KYC) norms, according to Rajiv Takru, Secretary, Department of Financial Services. “We should not expect any action from the RBI in the next week or 10 days. The Board of Financial Supervision in the RBI has to follow a certain process,” ............
Cash-rich PSUs may team up to launch new-generation bank
With the Reserve Bank of India (RBI) expected to issue banking licences to a host of prospective companies, a fresh licence may be given to a consortium of cash-rich public sector enterprises (PSUs). “The finance ministry is keen that one new bank licence be given in the public sector space to a consortium of say three-four cash-rich PSUs,” a top government official, who did not wish to be identified, told HT...........
'Bank mergers lead to too-big-to-fail entities'
..........Are our regulators well positioned to evaluate the consequences to competition in different sub-markets and across regulatory jurisdictions? Is there a role for the Competition Commission of India (CCI) here? Finally, we have seen bank mergers lead to too-big-to-fail entities. What constitutes a merger too far? How do the relative merits of prudential regulation and competition regulation weigh?.................
Compensate bank customers if they fail to get desired service
.......Though most of the public sector banks did come out with time norms for services like encashment of cheques and issue of drafts and displayed them in their notice boards, these norms were never seriously followed.They remained only on paper, as there was no penalty imposed on banks for non-adherence to these time norms. It is possible for the RBI under its existing powers to stipulate penalties for non-delivery of stipulated services by banks and provide for compensation to the banking public for failure of any bank to honour its commitments to its customers. ......
New bank licences | The contenders
The deadline for applying for a banking licence expires on 1 July. At least two dozen companies, both in the private and public sectors, are busy drawing up plans for their entry into banking, being opened up again a decade after the Reserve Bank of India (RBI) allowed the entry of two new banks. India nationalized 14 large banks in 1969 and another six in 1980. RBI has so far given licences to only a dozen private banks in two phases, including the conversion of a cooperative bank into a commercial bank..........
Merging PSBs won’t help
........The merits of consolidation in the banking space have been discussed often but attempts to merge banks have met with little success, partly because employee unions have resisted the idea. Perhaps the Reserve Bank of India (RBI) will give its perspective on the subject in a paper on that it plans to put out soon. There’s little doubt, however, that many of the smaller public sector banks have been stressed over the past year or so...............
Clip Discretionary Wings of PSB Chiefs, Says CBI
.....A
CBI court recently sentenced a former chairman of Indian Bank to one
year rigorous imprisonment by in a cheating case causing loss to the
bank. The banking sector body, Indian Banks Association, has opposed the
move citing that such measures will impact the bank’s competitiveness. “Discretionary
power is a part of the bank’s financial and managerial autonomy. The
IBA has opposed any such measure,” said an IBA official, requesting
anonymity............
Damodaran committee report on biz climate likely next month
.................SBI Chairman Pratip Chaudhuri, NTPC chief Arup Roy Choudhury, BHEL chief Director B P Rao, representatives from Sebi, Reserve Bank of India and the Ministries of Corporate Affairs, Finance, Power, Petroleum, Highways, Commerce and Industry and Urban Development are also part of the panel. Recently, Corporate Affairs Minister Sachin Pilot had said that he has asked the committee for concise, tangible and actionable suggestions...............
Make ‘basic’ banking services free!
.............The RBI should, therefore, now take up the cause of depositors in right earnest not only in the interest of improving the savings rate in the country, but also with a view to restore the trust of the public and get their patronage before grating new banking licenses, as banks have lost the confidence of the general public due to their callous attitude towards the customers and the recent exposures of unhealthy practices in the functioning of commercial banks in our country.
Online fraud: Why should you not blame banks
........From time to time, the Reserve Bank of India has made it clear that it nerve asks personal bank account details. The central bank has of late, embarked on a series of measure to stop this growing menace to fleece bank customers. "We keep requesting CERT-IN to block the ip addresses from which such mails are sent. But the fraudsters use dynamic ip addresses and therefore blocking of ip addresses is not a very effective way to stop such frauds. Banks have also been asked to post a warning on their websites,"............
Are housing finance companies relevant? - NO
.....Of course, there is hardly any difference in the regulatory powers vested in RBI and NHB, which narrows the scope for regulatory arbitrage. With regard to interest rate and prudential regulations when RBI issues some guidelines, the NHB follows suit, or at times takes the lead like in waiver of prepayment penalty on home loans. In this case, the NHB moved first and then the RBI issued its notification asking banks to waive prepayment penalty.............
Are housing finance companies relevant? - YES
.........Despite debate on the differences between banks and HFCs and the need to have a separate regulatory regime for the latter, there is compelling rationale for dedicated housing finance companies.HFCs are governed by the NHB while banks are regulated by the RBI. The NHB is a sub-regulator of the RBI, specifically created for overseeing HFCs. All the regulatory changes seen on home loans have emanated from the NHB and have later been replicated by the RBI............
‘Gujarat’s is an example of balanced growth’
.......Among the other feathers in his cap are being a member of the Reserve Bank of India Western Area Board, a member of the Competition Commission of India, and holding positions on the boards of a number of public and private sector companies. At present, he is Director with Adani Institute of Infrastructure Management and Adani Institute of Medical Sciences.............
Saturday, May 18, 2013
Building bridges of camaraderie
When N R Pillai, a retired Assistant General Manager of the Reserve Bank of India, was accompanying His Holiness Swami Sankaracharya Onkaranand Saraswathi, the head of the Prayag Peeth, on a visit to the Lord Krishna temple in Guruvayur, he received a call on his mobile. Dr Mohammed Syed, a trustee of the Cheraman Mosque, asked whether Swami Saraswathi would drop in at the mosque on the way back to Kochi. The Swamiji readily agreed.............
Friday, May 17, 2013
Monetary policy in a cauldron - S.S.Tarapore
......A reduction in the cash reserve ratio requirements for banks would have been more damaging. Again, the RBI needs to be parsimonious in undertaking open market purchases of securities. The next Mid-Quarter Monetary Policy Review on June 17 and the First Quarterly Review on July 30 should be strategically used by the RBI to resist pressures for easing monetary policy.........
Getting RBI communication right - CHARAN SINGH
............In India, in the context of global market integration and increasing demand from media, there has been a significant progress in removing the mystique surrounding monetary policy as reasoned by YV Reddy (2008). RBI ensures a high degree of transparency about its objectives, policy formulation, and decision making as it helps to increase the effectiveness of monetary policy by promoting more informed decision making by economic agents. RBI’s communication policy involves regular publications, monetary policy documents, research studies and special speeches. In all cases, RBI’s communication has been improving over the years, especially in terms of number of speeches delivered by the top management across the world, mainly in India...............
Market and media’s Mahabharata syndrome
........The next paragraph of the report quoted Subbarao, saying at an event in Frankfurt the previous day, “We certainly will take note of the softening of inflation and the external payments situation in the next mid-quarter policy statement on 17 June.” A Bloomberg report too highlighted the inflation part in the beginning and later said he would take note of both while forming the policy in June. In other words, Subbarao made a general statement that he would take into consideration both the fall in inflation as well as trade but the media—both newspapers and websites—as well as the market chose to listen to only one part of his statement..........
Reforms’ unintended fallout
A mint-fresh working paper by the Reserve Bank of India once again trains the spotlight on a problem that, for five decades, every policy-maker has planned to snuff out, failed to, and then wished it would go away if ignored. But financial exclusion simply hasn’t, and we now have the central bank applying its forensic skills to an examination of its magnitude. The title of Working Paper Series 5/20/13 is almost admonitory: “Persistence of Informal Credit in Rural India: Regulatory Policies Need to Recognise Changing Landscape.” Authored by Narayan Chandra Pradhan, the paper is an updation of sorts; it puts together all extant surveys on indebtedness, the formal and informal channels of rural credit recorded from 1971-72 to 2002-03 by various agencies.............
VITALCATION..................
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| VITALINFO on vacation mode............... Will resume on 27th May 2013. Till then bye................. |
Obituary
I am sorry to advise you of the sad demise of Shri Madhav.D.Shinde, in Mumbai on May 13, 2013. He was 86 years old and had served in DESACS for a number of years as Assistant General Manager. He eventually joined NABARD, from where he retired. May his soul rest in peace.
- P.P.Ramachandran (via e-mail)
Mom and me contest
The results are in for The Hindu MetroPlus ‘Mom and Me’ photo contest, held to celebrate Mother’s Day. Readers were invited to send in their favourite photos of themselves with their mothers.............
ROSHAN KRISHNA AND RAJI GOWRISHANKAR
F-48, RBI Officers Quarters, Belhaven Gardens, Kowdiar, Thiruvananthapuram-695003. The best five entries have won gift coupons for..........
Read - The Hindu
RBI’s proposal a boon to SMEs
Recommendation of Reserve Bank of India’s technical committee to include export credit under the priority sector lending portfolio of all commercial banks is a boon for the predominant Small and Medium Enterprises (SMEs) in export hubs like Tirupur as the move will increase flow of finance...........
HC has wide powers to issue writs against cooperative banks
........The full bench comprising Chief Justice A M Khanwilkar, Justice R B Misra and Justice D D Sud on a question as to whether the Kangra Central Co-operative Bank and other cooperative banks are within the meaning of Article 12 of the Constitution of India, observed that in exercise of powers under Article 226 of the Constitution of India, writs or orders can be issued even against any person or authority, if facts and situation of the case so warrant..............
Banks are not providing collateral free loans to MSME sector’
.........Speaking at the 124th State Level Bankers Committee (Haryana) meeting, MSME-DI Director Vijay Kumar said, "Banks in Haryana are violating the RBI guidelines by not providing collateral free loans to MSME in the state...it is very discouraging." As per RBI guidelines, loans up to Rs 10 lakh to MSME units must be disbursed collateral free. It was pointed out in the meeting that 66 per cent of new MSME units were disbursed loans up to Rs 10 lakh while rest of them were denied loan.............
Financial exclusion
“Reforms’ unintended fallout” (Business Line, May 15) is inspiring enough to make one surf through the RBI working paper referred to by the writer. Financial exclusion is a fallout of liberalisation policies pursued for more than two decades by our original reformers......
Read - HBLFinancial Inclusion: Obligation or Opportunity
................The ultimate aim of financial inclusion shall be complete only when underprivileged are converted into micro-entrepreneurs across the country. Financial Inclusion shall always remain a journey and never a destination. RBI aspires to achieve 100% financial inclusion in India. But the duty lies not only with the government and regulators but also with the service providers and end-customers by exploring the paradigms of opportunities.
Why growth has stalled – and it’s not what the FM is telling u
........The solution is to create a separate body to develop a robust non-banking financial sector and free it from the RBI as well as the bureaucratic clutches of state governments. The RBI’s hands are full and so there is no point in complaining that it is not alert about the crores coming from non-bank sources – leading to dubious use and abuse. The developmental authority for the non-bank sector should primarily focus on helping partnership and proprietorship firms in the economy through appropriate credit mechanisms and non-strangulating regulations............
In 6 years, PM has become 8 years older
.........In his affidavit filed along with nomination papers as a Rajya Sabha candidate from Assam on Wednesday, the Prime Minister has stated that he is aged 82. However, in his affidavit as a Rajya Sabha candidate filed in 2007, Dr. Singh mentioned his age to be 74...........
The autonomy politics
........Last week, RBI governor D Subbarao, visited Kashmir. He made an important statement at Srinagar. D Subbarao said that Omar Abdullah has assured him that state government will enact SARFAESI Act in the assembly or extend it through an ordinance shortly. The act if extended or enforced, according to experts will have serious impact on state’s autonomy as it will dilute Article 370.............
Read..........
Axis Bank MD & CEO gets salary hike
.......her salary will stand revised from Rs 1.78 crore per annum to Rs 1.96 crore, while HRA will go up from Rs 59.52 lakh per annum to Rs 65.47 lakh. Leave fare concession will increase from Rs 11.15 lakh per annum to Rs 12.26 lakh. Utility bills entitlement will be Rs 3.30 lakh per annum...............
Salaried gets relief for now
...........The other point is that there has been a hue and cry over the salary class being penalised with higher taxes or increased compliance, which is probably why that has led to the salaried class being left out, feel tax experts. An easier way would have been probably to attach an annexure and ask to declare all assets all taxpayers have, opine experts...........
Swiss bank ATM in parliament compound! No wonder they are happy
In a move that practically guarantees civility in parliament and an unprecedented cooperation between the government and the opposition in the last year of the UPA II, a high level committee chaired by the finance minister has given clearance for the setting up of a Swiss bank ATM inside the parliament compound exclusively for the legislators of the lower and the upper houses. In a hush-hush ceremony, the prime minister inaugurated the single ATM and dedicated it to the nation........
PMC Bank Deploys Array's Application Delivery Controller
........."Array Networks solution has enabled our customers with high speed connectivity for internet and mobile banking transactions. The performance of the internet banking servers was noticeable. Array has helped us to enhance the business continuity for Internet & Mobile banking applications and we are able to meet the RBI compliance because of the Array Networks ADC solution.".........
Developers’ Response Is Positive But Cautious
The breather for capital starved housing sector has come in, in the form of Reserve Bank of India’s decision to ease External Commercial Borrowing norms for housing. Developers across India are indeed happy with the development. According to Rohit Poddar, Managing Director, Poddar Developer, this is a positive development which will enable Companies in the affordable housing sector to raise cheaper debt by 3%-4% p.a. “It will be important to ensure that the policy is non-cumber some to execute as many of the developers in the affordable housing sector are from the SME Sector,” he said.........
Corporate group-run banks: why now?
..... it is unclear why lending would be enhanced if companies use retained earnings or access funds from capital markets to sponsor new banks. If the argument is that Indian firms are in a better position than banks to assess local risks, corporate capital could instead be invested directly in fresh projects. Further, if the new corporate group-owned banks are expected to boost lending by unlocking additional savings because they can convince depositors of their ability to assume longer-term project risks, they could do the same as companies..........
In black and white
.........In February, the RBI issued guidelines for issuing a fresh round of banking licences. These guidelines allow big corporate houses, existing non-banking financial companies, Indian-owned private sector companies and public sector companies to apply for licences. With so many new entrants, the importance of due diligence by the regulatory authorities cannot be overemphasised. The purpose of banking as an instrument of financial inclusion and access to financial services will be wholly defeated if policy decisions and loopholes in law promote the illegal hoarding of wealth..............
Exposure at Rs 7,000 cr, banks rush to UAE over Winsome Diamonds claims
A team of bankers is visiting Dubai to find out the reasons for loan repayment default by Mumbai-based Winsome Diamonds and Jewellery after the company claimed that it could not clear dues as its Gulf customers failed to pay instalments.............
Interest in inflation
...........The problem, however, is that the bonds are being indexed to wholesale and not consumer price inflation. Since households are only bothered about the latter – currently ruling almost twice that of the former – IIBs hardly offer an alternative to gold or real estate as a hedge against inflation. Nor has the Government proposed any Section 80 deductions or other tax sops for investment in these bonds. ..........
Inflation Indexed Bonds – solution or false hope?
...........To top it RBI and the government have gone to town claiming that IIBs are a natural hedge against inflation and could help to curb gold purchase in the country. It needed to be remembers that majority of gold purchased is in jewellery form. Much of it is bought for status collection and only few venture to buy it for investment purposes and majority of the investment............
Why inflation bonds are the best thing Chidu ever did for savers
........Warts and all, IIBs are the best thing P Chidambaram has ever done for savers. So go for it – now or later. You are unlikely to regret it. But watch for an update just before the launch. We will tell you if there is a thorn embedded in the fine print.
May Gold Bless You !
.............Yellow metal is stealing headlines worldwide for the last few days. The precious metal regarded as the best bet against the inflation for not too long back is facing serious heat at the moment. A fall of around 10% in the last week spells doomsday for the gold investors. The brunt has been faced mostly by the aggressive investors who offered a sizable chunk (50%-60%) of their investment portfolio to gold. Also, gold is the only hedge against the rising inflation especially in the Indian context where Index inflation Bonds (IIB’s) are still a distant reality...........
Gold Funds may be Hit by RBI Curbs on Imports
Gold
exchange traded funds (ETF), among the hottest financial products in
recent times, may face a curious problem because of a recent RBI
circular which bars the import of gold on a consignment basis for
domestic use. Authorised participants (APs) who create and redeem
units backed by gold, and fund houses said this could crimp liquidity in
the product and prevent growth of assets under management in quantity
terms unless RBI clears the air on the issue.............
Read - ET
Read - ET
Looking beyond gold
......... The consequences of the steep gold import bill on the trade balance and hence on the current account deficit is well known and does not bear repetition. The Finance Ministry and Reserve Bank of India are only too aware of the problem but appear to have run out of meaningful options to curb the apparently insatiable demand for gold...........
Cobrapost fallout: Govt, RBI looking at hiking penalty amount
.........."The maximum penalty under the law is Rs 1 crore now and that is very less. There is active discussion now on increasing limit of penalty. So that is something which is under consideration," Rajiv Takru, secretary, department of financial services told reporters today. “As a matter of fact, this (hike of penalty) was discussed at the RBI board and a point was made that the penalty amount is probably less," he added.................
Banks Feel the Sting, Ask Staff to Go Slow with Cover Drive
ICICI
Bank and HDFC Bank, the lenders found to have violated basic
Know-Your-Customer (KYC) norms, have ordered their staff to go slow on
sale of insurance products that are seen as the main means used by
customers to avoid taxes and legitimise ill-gotten wealth. These banks
have verbally requested staff in many of their branches not to pursue
sale of insurance voluntarily till the dust settles on the cobrapost.com sting operations, said three people familiar with the instructions...................
Another Bengal scheme in Sebi net
.............The regulator said that while details of the amount that Basil raised were available from the documents submitted to the RoC, there is no information available about the number and identity of the subscribers to the issue. Sebi has directed Basil not to collect any money from investors, refrain from disposing of properties or assets of the company and diverting any funds.
Expert panel moots insurance cover to secure investments
........The committee observed that the chit foreman finds it difficult to raise money to honour his commitment to subscribers as RBI has prohibited chit companies from accepting any deposit from the public. Securitization could be a right step to enable the foreman to arrange liquidity, the panel said in its recommendations. “The chit fund association’s request to allow undertaking fee-based activity like selling insurance policies and other financial products seemed fair,”.......
‘Time has not come for CBI probe into Saradha scam’
...... The Bench also ordered that a paper-book (relating to the Saradha case) be prepared by May 23 and directed that anyone intending to implead himself do so by May 23. At least three petitions have so far been filed at the Calcutta High Court demanding a CBI probe into the scam. Other agencies such as the Reserve Bank of India (RBI), Enforcement Directorate (ED), SEBI and CBI have all been a party to the case..........
Amend Act to check chit fund frauds, says Dasgupta
..........Commenting on the chit fund scam in West Bengal, Mr. Gupta regretted that only 15 State governments had so far enacted laws for protecting the interests of depositors, at the instance of the Reserve Bank of India. The existing Act on chit funds covered only prize chits and money circulation schemes but there was no specific reference to the MLMS for goods and services. Such schemes — called pyramid or ponzi — should be regulated to prevent frauds. The Chid Fund Act should be amended to cover the MLMS, he said.............
‘Cheat’ funds thrive on lax rules
.............“Absence of a regulator to monitor the activities in the chit fund sector is a major hazard,” points out P. Rajendran, Managing Director of Kerala State Financial Enterprises.
“The entry and exit load is low in chit fund business, providing ground for fraudulent groups to enter the scene. It is high time that a regulator akin to RBI, TRAI, and IRDA is instituted in the chit fund sector,” he says............
Chit funds: Ministry of corp affairs moots new law
Ministry of corporate affairs has mooted new law to cover chit funds. The ministry has proposed that the issue of chit funds should be examined in light of RBI's definition of financial institutions..............
Fund scams target Indians beyond the reach of banks
........."We trusted them like fools because the return they assured was four times more than a nationalised bank," said Ghosh, who says she lost 100,000 rupees in the collapse of Saradha, believing it to be a government-approved fund............
Vikram Pandit to steer JM Financial bank foray
.........The other point is that there has been a hue and cry over the salary class being penalised with higher taxes or increased compliance, which is probably why that has led to the salaried class being left out, feel tax experts. An easier way would have been probably to attach an annexure and ask to declare all assets all taxpayers have, opine experts...........
Here's why HDFC is in a sweet spot compared to banks
........"HDFC is in an enviable position - funding cost is falling while loan yields are holding up (base rate driven). This is causing spreads to expand while gaining market share. Top line is expected to grow at 20 percent plus over three years, which should help multiples (at long-term average now) expand," the research report said setting a price target from Rs1,010 to Rs1,125 over a period of next one year.........
Thursday, May 16, 2013
RBI to issue inflation-linked bonds
........The central bank said Wednesday it will begin the sale of the inflation-indexed bonds from June 4. In the first tranche, the RBI will issue bonds of Rs.1,000 to Rs.2,000 crore. The bonds are a new type of debt that Finance Minister P Chidambaram had announced in the budget in February...............
Bonds erase gains after hitting Dec 2009 lows
.....The comments came after data on Tuesday showed headline wholesale inflation fell below 5 percent in April, raising expectations the RBI could cut interest rates again at its next policy review on June 17. It has cut policy rates by 75 basis points so far this year. Bond yields have dropped close to 40 basis points since the May 3 policy due to hopes of easing inflation, expectations for continued bond purchases from the RBI and a global market rally.............
Sting in the tale
......The RBI's greatest weakness in this regard is the skill levels of its supervisory staff. The long-standing preference for generalist cadres, which comes with the presumption that anybody can do any job with appropriate training and orientation, must make way for the position that certain functions - such as supervision - require specialised skills developed in the course of acquiring a professional qualification. For supervisors to easily spot violations, they must have skills comparable to the people whom they are supposed to be keeping watch over. Recognition of this lacuna is particularly important at a time when new bank licences are being considered. The new entrants will have to be subject to more intense scrutiny as they put their control systems in place........
Deposit and despair
.....Though Mamata Banerjee claimed that she got to know about the scam only on April 15, Bengali New Year’s day, there is ample proof that the government received alerts from the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Central government on the need to regulate the activities of various illegal fund-collecting companies, including Saradha..........
Finance Ministry ratifies 8.5% interest on Provident Fund deposits for 2012-13
The Finance Ministry has approved payment of 8.5 per cent rate interest for 2012-13, up from 8.25 per cent in the previous fiscal, benefiting over 5 crore Employees Provident Fund Organisation's (EPFO) subscribers deposits.............
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