VITALINFO

Thursday, July 4, 2013

Obituary

Shri.D.G.Borkar died on July 2, 2013 in Mumbai. He was 90 years old. Borkar was one of the veteran officers of the Economic Department in the halcyon days of Chandavarkar, Narasimham, Khatkhate and Bhatt. He was a tough disciplinarian. He gravitated to I F D and from there moved on to become Joint Chief Officer in D B O D, Hyderabad. He used to contribute letters to Times of India on economic and banking matters. He was a close friend of mine and read scores of books given by me -- especially those relating to R B I.

Smt. Vaidehi Sreeram Deshpande (nee. Vijaya Chandwadkar) expired on June 30, 2013 in Pune. She was ailing for the last 3 months.She leaves behind her daughter and husband Shri. Sreeram Deshpande, also from the DEAP. Smt.Deshpande was one vivacious personality and extremely popular and had a wide circle of friends.

- P.P.Ramachandran (via e-mail)

Banks choose CBLO market over RBI's liquidity window

Taking benefit of low interest rates, some banks on Wednesday preferred to tap the collateralised borrowing and lending obligation (CBLO) market over the Reserve Bank of India (RBI)'s liquidity window..........

Read | Business Standard

First Women Cooperative Bank in Jammu soon

......... the J&K Women Credit Cooperative Ltd has already applied to the RBI for permission to setup first women cooperative bank in Jammu. The J&K Women Credit Cooperative Ltd has been already advancing loans to its women members for setting up business ventures, to become economically self dependent. The J&K Women Credit Cooperative Ltd has so far advanced rupees three crore seventy six lakh to its members for the purposes...........

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

RBI puts on hold debt private placement rules for NBFCs

The Reserve Bank of India said on Wednesday it would hold off implementing a notification issued last week that mandated a minimum wait of six months between two private placements from a non-bank financial firm. Instead, the RBI said a decision on "the appropriate minimum time gap" would be taken by the central bank "in due course," after the industry raised some concerns about the measures.........

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

Indian rupee's descent isn't over yet

.......Some bankers and analysts feel the RBI has remained a mute spectator to the rupee's steep fall. "The RBI's hands are tied," says a banker on condition of anonymity. They say the RBI should have strongly intervened in the foreign-exchange market to support the local currency. The central bank's stated position is that it intervenes in the foreign-exchange market only to reduce extreme volatility and not to defend the rupee at any particular level. Deputy Governor H.R. Khan said in late June the RBI will take all necessary steps to protect the rupee. Still, the RBI has sold dollars on several occasions to prop up the local currency. This is evident from a fall in India's foreign exchange reserves...............

Read - Business Today

'Illegal' penalty by banks challenged

......Petitioner Sunil Khare claimed that due to neglect by RBI, various banks have forcibly recovered a staggering Rs3,000 to Rs5,000 crore in the name of penalty for non-maintenance of minimum balance. The petitioner added that only SBI discontinued this practice in April last year, but only after collecting about Rs1,500 crore. Citing a research conducted by him, Khare said most of the banks, including public sector, are charging penalty ranging from 80% to a whopping 365% per annum.........

Inoperative Accounts / Dormant Accounts and Unclaimed Deposits

....However, it may be mentioned that some banks had certain internal guidelines / periods before an account can be termed as dormant and / or inoperative. Bankers needs to check their internal circulars for this purpose, but the above period of two years is applicable as per RBI guidelines. Therefore, as per RBI guidelines, there is no difference between dormant accounts and inoperative accounts..............

Card Frauds --- RBI to be blamed......

The recent spurt in frauds involving credit / debit cards is a sad reflection of the regulator. RBI has failed to ensure adequate security to card holders. Card issuing banks do not care much to the directives from RBI. This is a fact I have observed many times. The latest directive to issue or replace existing cards with chip embedded features is yet to kick off. In USA even for a transaction of one dollar, one can swipe his card. But here in India, most of the merchant establishments ( point of sale) charge 2% over and above the transaction value . The RBI totally failed to stop this. On one hand our country prints very high volume of currency notes and to ensure its distribution to all regions of the country, we have a huge administration. To constantly withdraw the soiled notes, we have high tech mechanism. This is really ridiculous to say the least. We need to change the existing policies, both RBI and Finance Ministry. We know in real estate transactions, the buyer and seller never indicate the actual transaction value in the title deeds at the time of registration. Money changes hands in the form of cash (black money). This way more black money is generated. Cant we have some system of transferring funds through banks by the Sub-Registrar's Office ? Govt., / RBI should pass orders to stop using cash beyond a limit in any transaction, say Rs 10,000/-. Only using cards one should transfer funds. Necessary legislation may be made in this regard. But I wonder whether any one cares ?

- P R Raghukumar, EXRBITES Group

Service before service charge

This refers to the welcome directive by the Reserve Bank of India ( RBI) rightly requiring all the banks to have a uniform and transparent system of levying service charges, regardless of where the service is being availed. The department of financial services should take a further step by ensuring common and uniform rates of service charges and interest rates at least, for all public sector banks. Banks can compete by offering better service, rather than on rates of service charge. The merger of smaller public sector banks into some larger public sector banks will largely reduce overheads.

- Madhu Agrawal (FPJ)

PSU banks to hire 50k employees this fiscal: Chidambaram

........"This year public sector banks are expected to add 10,000 branches of which 2,000 are to be by Regional Rural Banks. Correspondingly there will be recruitment. In fact all the banks put together are expected to recruit some 50,000 persons in the current year,"...........

Bankers sing FM tune, agree to cut interest rates

............Chidambaram said banks did say that the room to pass on RBI’s repo rate cut was restricted. “Nevertheless all assured me they would review their base rates in July and take appropriate decisions. Reduction in rates will be a powerful booster to the economy and credit growth,”.....

Read | Business Standard

Banks to focus on top defaulters: Chidambaram

........“You focus on the top defaulters, as well as keep on eye on the top performing accounts... They are keeping a close watch on the top 30 non-performing accounts in each bank and action will be taken on the defaulters,” ...................

Read - The Hindu

Are Banks the New NPAs?

Apropos the report ‘Marquee Names Lining up to Enter Bank Street’ (ET, Jul 2), it’s surprising that corporate entities such as Reliance Industries and Mahindra & Mahindra have not shown interest in a bank licence. In fact, Mahindras pulled out citing inflexible RBI guidelines. With so many riders, banking business in India is no longer attractive. The companies that would soon be blessed with banking licences would regret their decision to enter the field. Barring a few private sector banks such as HDFC Bank, most players are itching to get out. The regulatory condition on financial inclusion for the new entities has no meaning and will not be helpful to the rural folk. A few public sector banks that celebrated massive financial inclusion within a few days of opening new branches have seen massive dormant accounts in their books. Reason: banks do not know the art of making money from rural lending.

- K V RAO, Bangalore (ET)

Issues over Kumar Mangalam Birla's role now at RBI

With a company in the Aditya Birla Group a strong contender for a new banking licence, the presence of its chairman Kumar Mangalam Birla on the board of Reserve Bank of India (RBI), the deciding authority, has raised concerns over the fair and transparent selection process.................

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

Shadow warriors

......The RBI is using the new licenses to further its agenda of financial inclusion. It is indeed strange that while two out of three Indians have mobile phones, only one in three has a bank account. Inclusion, though, could become costly for the taxpayers if it is achieved with weak banks.............

Stop, Look, Proceed

.......Going by the high standards it has set, the RBI may ultimately grant licences to only half a dozen or so of the 26 applicants. Such a stance is probably justified, keeping in view the public deposit-taking of banks, whose failures have systemic implications that are wider than for most other industries. These concerns have assumed far greater significance in the post-2008 global financial crisis era............

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

“Deep Pockets” need not be the sole criteria for Bank licenses

.............I therefore urge RBI to ring fence itself from political influences and ensure that licenses are granted only to the deserving candidates who while meeting the capital needs prescribed have a “Social Objective” to serve the community and have the ability to mobilize savings and deploy funds at the grassroots level. If not, the new licensees will become one more problem in the Indian society.

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

No preferences, no govt say in issue of bank licences: FM

....."There is no preference. All the guidelines have to be satisfied ... Government will have no say in the selection of the applicant who will get a bank licence. We are not entertaining any sifarishes (recommendations) of the applicants,".......

Licence to be cautious

........... It would be difficult to deny them entry into banking, while allowing someone who has no comparable experience to set up a bank. But have the concerns about related party transactions gone away? Certainly not. If corporate entry is inevitable, the only way to allay such concerns is for the RBI to ensure that its supervisory capabilities are up to the task of preventing such practices. The recent revelations about widespread violations of know your customer (KYC) norms by some banks certainly raise some questions about supervisory effectiveness. The RBI must make explicit how it plans to restructure its internal systems and resources to be able to deal with these new challenges...................

Read | Business Standard

Bank hopefuls stare down road fraught with cost, risks

.........“You have to be profitable at the same time. If you have a bank which has losses for seven years continuously, nobody will put their deposits there.”...........

RBI, Pick Widely-Held Cos for New Banks

........regulation is supposed to prevent and detect such behaviour. Second, when a bank becomes fragile, a “resolution corporation” (e.g., the US FDIC) is supposed to seize control, and sell off or shut down the bank. In India, we have problems on both fronts. Banking regulation and supervision is weak as the RBI is beset with an array of problems. The resolution corporation does not exist. The problems of ownership, governance and compensation should be seen as one unified question............

Aspirants to banking licences hardly inspire confidence

.........Looking at the list of aspirants it appears, as though, everybody wants to try their luck in this once in 10-year jackpot. However, given the time constraints and the quality of applicants, it would be interesting to see if any new licence is given before the general election.

Read - Moneylife

In rural Orissa, it’s the bank that will come visiting

..........."As these people can't come to the bank due to the absence of communication facilities, we thought of taking banking services to the tribals through mobile ATMs. Under the project, the farmers can deposit their surplus funds and avail of finances through mobile vans where a small counter and an ATM will be installed. The mobile ATMs would also enable the government to pay MNREGS beneficiaries, give scholarships to the children of Kisan credit card holders, disburse old-age pensions, and compensate farmers for losses due to natural calamities. The new banking system would also facilitate direct cash transfer for subsidised gas users," ..........

TAKING BANKING ACTIVITY TO STUPID LENGTHS

........Many bureaucrats in Ministry of Finance, top officials of RBI and CMDs and EDs of banks are under the mistaken notion that any monetary transaction may be included in banking service and banks may engage themselves in such activities, provided they are legal and profitable. Everyone including the banks failed to see the distinction between finance and banking. In course of time, the banks who must be the guardians and catalysts of an economy have started playing the role of a servant of all others in the society. Is a banker reduced to a mere accounts-keeper for all sections of the society?...............

Businessman murdered in Devarajeevanahalli

...........According to police, Mr. Huda was giving gold loans and running chit funds. He had deposited huge sum of money in Amanath Co-operative bank, withdrawal from which has been restricted due to orders from Reserve Bank of India. Police suspect that Mr. Huda may not have been able to return the money to his depositors and this could be the motive behind the murder...........

Read - The Hindu

Carat and stick approach yet to dent gold rush

The government’s efforts to reduce consumption of gold have not yet made an impact on the gold buyers in Kerala. Though it is too early to draw a conclusion on the consumption pattern, market men see little scope for turning people away from the lure of gold......

Read - The Hindu

After 28 months, UTI finally gets MD in Leo Puri

Mumbai: Leo Puri on Wednesday became the first non-IAS officer to lead UTI Mutual Fund, which has been headless since February 2011 after then chief U K Sinha moved out to head SEBI...........

Wednesday, July 3, 2013

India needs more housing products for youngsters, elderly

Bhubaneswar, July 1 : India has a huge population of youngsters and elderly, and the housing sector needs to develop products to cater to their needs, Reserve Bank of India deputy governor H.R. Khan said here Monday..............

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

Debit card skimming: Do deals on Mt Everest, but you're good as weakest link, says RBI

..........."Technology has enabled an interlinked world and payment infrastructure. While this is welcome, being able to initiate payment transaction even from top of Mt Everest, please also remember that you are as good as the weakest link,"................

Lax security authentication led to card-skimming frauds: RBI

(left) Uday Kotak, Executive Vice Chairman & Managing Director, Kotak Mahindra Bank Ltd, G. Padmanabhan, Executive Director, RBI, Kiran Shetty, Regional Vice President & Managing Director, Western Union Budiness-India and Hikmet Ersek, President, Chief Executive Officer and Director, Western Union Company at a press conference the launch

(left) Uday Kotak, Executive Vice Chairman & Managing Director, Kotak Mahindra Bank Ltd, G. Padmanabhan, Executive Director, RBI, Kiran Shetty, Regional Vice President & Managing Director, Western Union Budiness-India and Hikmet Ersek, President, Chief Executive Officer and Director, Western Union Company at a press conference the launch "Domestic Money Transfer (DMT)" Services in Mumbai on Tuesday.

The recent instances of illegal debit card-skimming leading to money theft from other bank accounts can be attributed to non-practice of authentication processes in the jurisdiction where the money got withdrawn, Reserve Bank Executive Director G Padmanabhan said today. "The problems relating to illegal card transactions happened because we are interlinked, and the two-factor authentication and the other security measures did not exist in overseas market where these cards were cloned and used," he said while speaking at an event organised by Western Union Money Transfer and Kotak Mahindra Bank ..........

Read | Business Standard

‘Aadhaar, chip & pin need to coexist’ - A.P.Hota

......Our main achievement is that we are “cardifying” customers of those banks who have never seen a card. Until Rupay came hardly 50-60 banks were issuing cards. Now the number of banks issuing cards is 106. We plan to reach out to 500 to 600 banks in a year for issuance of cards. Out of 58 rural banks, 50 have started issuing Rupay cards which can be used in any ATM or for retail payments and ecommerce................

Read -TOI Mumbai Edition page 18

Indian banks not yet ready to issue EMV standard cards

................The success of the migration exercise is exemplified by the case of Malaysia, which fully converted to EMV chip ATM cards by end-2005. Card fraud was reduced by 85 per cent from $5.9 million in 2003 to $0.3m in that year alone. Lee adds that the RBI has been working toward putting in place a system to make both credit card and debit card transactions safer. With its latest directive for banks and financial institutions to migrate to the EMV technology by June 30, 2013, RBI is pushing banks to implement safety measures and eliminate cases of fraud, thereby ensuring secure transactions.

Transparent, honest, friendly, committed "Priestly" Joseph.........

I have had occasion to know F.R.Joseph inside the office when we worked in Chennai office around the same period and outside the office when both of us were deputed to attend an OECD conference in Washington. The person in the office and outside is the same, very transparent, honest, friendly, committed and very humane. Interacting with him is so easy as there are no artificial barriers or ego hassles. Once Mr. S.A.Hussain told me jokingly that his initials stand for ‘Father’ as in the case of a priest. I found it very easy to believe that, as the ideal qualities that one associates with the priestly class is very much present in Mr. Joseph! Mr. Joseph has not grown old with his years when one sees his interaction with the youngsters in the RBI staff blog. He is as youthful as anybody else in the way he thinks and speaks and relates to the young people in the Bank. There is a sense of joy which emanates from him when one interacts with him despite his very sober appearance. RBI will miss him but it is good to know that we can reach out to him any time we need his help and he will be there to help. I wish him a very fulfilling innings ahead in whatever he chooses to do as I know it will definitely be something good.

- Kamala Rajan, Chief General Manager, UBD

Devotion and Involvement.......... thy name is VITALINFO Dailyzine................

Dear Mangesh,

I was not in town for quite some time. Hence when a topic came up of institutionalisation of VITALINFO, I could not offer my comments immediately. VITALINFO is just like a child for you. You brought this up somewhere about three years back with the same devotion a parent brings up his child and it is well established now. Serving and the retired RBItes eagerly await everyday the appearance of VITALINFO on their comps just like waiting and getting the printed copy of the newspaper. VITALINFO has become a habit like having a cup of tea in the morning You must have it. For this only one person who is responsible is Shri Mangesh. Hats off to him for the devotion and involvement in bringing out the issues of VITALINFO day in and day out. As Shri Mangesh has brought out this VITALINFO from nowhere and made it a big success, I feel it should continue to be under his leadership as long as Shri Mangesh likes it. No need of tinkering with it. As long as Shri Mangesh likes to have it under his care, let it be with him. A personal word from me; I know Shri Mangesh from the day he reported for duty in Finance and Accounts Department of ARDC in the year 1980. Shri Mangesh continues to be humble devoted and highly involved. I wish Shri Mangesh all the best and so also to VITALINFO.

- N.D.Laxmikantha, General Manager (Retd)

Obituary

I am sorry to inform you about the sad demise of Shri Deen Dayal Garg last night at Jaipur. He was my colleague as Faculty Member in CAB, Pune. Before that we were together in Hyderabad for about 6 years. He was in-Charge of DEAP in Hyderabad. He was also President of RBI Officers Ameerpet Quarters residents Welfare Association. As the Quarters were new he took lot of initiatives in organizing various activities and facilities for the families and children of residents. I was closely associated with him in all these activities for almost 13 years. He was also my neighbor in Parijat Officers Quarters in Pune. He was a very popular faculty and his lectures were always enjoyed by the trainees and other faculty members. He had expressed his desire to donate his body to Mahatma Gandhi Medical College and Hospital at Jaipur. His son Sumeet informed me that this has been done as per his wishes. I pray for the departed SOUL. MAY HIS SOUL REST IN PEACE.

-R.M.Deole, Ex-CGM

Yes, minister !

.............On the central bank front, I have found two key changes reassuring. First, the frequency of communication has reduced. This, I have learnt from experience, helps rather than hurts in times of severe crisis. The more the number of sound bites from policy makers, the greater is the scope for confusion and the consequent volatility in the markets. Second, the bulk of the communication from the central bank on the rupee and markets has been coming from the Governor, and not from his deputies. While the central message has not been any different from the past - that it is somewhat pointless to lean against the hurricane of a pan-emerging market currency sell-off - the fact that it has come from the top boss has made a difference.............

Read | Business Standard

RBI gives in-principle nod for an all-women bank

NEW DELHI, JULY 2: The Reserve Bank of India (RBI) has given its in-principle approval for the Central Government to set up the country’s first all-women bank. The proposed all-women bank will be the first ever commercial bank to be floated by the Central Government. It is expected to have a pan-India presence with six branches to start-with. The headquarters for the all-women bank is likely to come up at New Delhi...............

Read | Business Line

My View on "Kaun Banega RBI Governor?"

Last year, Dr Subbarao had, in media interactions, indicated that he was not keen to continue beyond September, 2013. But no RBI Governor in the past also has given out his mind about his expectations about further extension of tenure especially after the ‘normal’ 5 years term. Assuming he will not press for being relieved, politically and from a mere expediency angle, certain factors are in favour of giving a one year extension to Dr Subbarao. With 2014 Elections round the corner, experimenting with a new face at Mint Road, howsoever ‘faithful’ to North Block s/he may be, will be a risk GOI should better avoid. For the new incumbent also, it will save a lot of ‘adjustments’, if s/he takes over post-2014 Elections. My plea is in the interest of continuity at the top. RBI has seen the way in which postings of Rakesh Mohan and Gokarn(to name just two) were handled in certain circumstances. Across government, public sector and private sector, it is high time GOI gave serious thought about succession plans at the top. In SBI, out of top 72 executives at the highest level 60 will retire before March 31, 2015, according to one media report. Several institutions are headless wonders. Personally, my view is that, as stated here appointments to posts like Governor, RBI should be for a minimum period of 5 years, with provision for reappointment for a further equal term. Retirement age has become a joke, with average age of ‘decision makers’ crossing 65.

- M.G.Warrier

It is very unlikely that any extension would be granted to Shri Subba Rao. Shri Subba Rao would not also accept it in the unlikely event of such an offer being made to him as he is a man of great principles and integrity and would want people to know that he had seriously meant what he had told the Government that he is not interested in any further extension. He would perhaps go down in the History of RBI as the only Governor who had made his intention of not wanting any further extension clear even at the beginning of the first extension of tenure which made his tenure for 5 years which should have been the tenure even in the first instance.

- A. Chandramouliswaran

Who is a good regulator

....... the term of Reserve Bank of India governor D. Subbarao is coming to an end. Securities and Exchange Board of India’s chairman U.K. Sinha recently won praise for sticking to his stand on minimum public shareholding norms. Here’s a look at the qualities that a regulator should have:..................

26 reasons for the RBI Governor to lose sleep !

..............it might seem easier for a camel to pass through the eye of a needle than to get a bank licence! But, then being Governor, RBI, was never meant to be bed of roses!..............

............In theory it is easy to separate wheat from chaff while granting bank licences; in practice it will test the RBI governor's mettle. The life of the Reserve Bank of India (RBI) governor has just got tougher! As if battling currency and economic slowdown woes was not enough, Governor Subbarao now has 26 new reasons to lose sleep! Twenty-six applicants have made a pitch for a private bank licence.................

FM takes on Subbarao again

In a veiled message to the Reserve Bank of India ( RBI), Finance Minister P Chidambaram has hinted that it should not focus solely on containing inflation but also look at the larger mandate of growth and creation of jobs. Ahead of his meeting with PSU bank chiefs today, he also said banks would have to be heard before advising them on taking a balanced view about passing on the benefit of rate cuts to consumers. " RBI must understand its mandate in a broader sense............

India's aspiring banking moguls fail to impress: Andy Mukherjee

.........The Reserve Bank will have to debate the wisdom of letting these shadow lenders have access to low-cost retail deposits. Some of them have concentrated risk exposure to one business or asset class - such as trucking, or gold. As deposit-taking institutions, they might pose a risk to the system. The central bank has imposed strict conditions to ensure the new lenders are safe. They will have to park 4 percent of any deposits they attract with the RBI as cash, and invest another 23 percent in government bonds. This will limit their ability to finance lots of new loans. However, it also means.............

Bank licences: If some of these guys can run a bank, so can I

........Why should broking houses like JM Financial or a Tourism Finance Corporation or an infra company like SREI Infra want to start a bank? Why should India Post, which runs a fairly inefficient postal service and a shoddy postal savings scheme, think it can run a bank? The RBI has been busy trying to circumscribe gold loan companies from expanding their operations, but that hasn’t stopped Muthoot Finance from throwing its hat into the ring. Maybe, just maybe, the Muthoots of the world want to become banks merely because the RBI is not so nice to gold loan companies............

Why haven’t more companies sought bank licences?

Monday, the last day for the submission of applications for bank licences on Monday, saw a rush, not the anticipated stampede. Two decades ago, in 1993, when the Reserve Bank of India (RBI) opened doors to new banks for the first time, there were 113 applications. A decade later, in 2003, when applications for licences were sought a second time, there were around 100 applicants. This time, there are just 26. This, after it was reported that just about everyone was keen to enter the sector—banking, after all, is a lucrative business as it gives one access to cheap deposits. And 50% of India’s adult population does not have access to formal banking services. What’s wrong with the Indian market?.............

With only 26 banking aspirants, RBI's job is half done

........One reason could be the stringent norms put in by the central bank for issuing licence, both in terms of monetary requirement and compliance. Even Chidambaram has said that the only criteria for licence would be clearing the eligibility criteria. If everyone is eligible, all would get a licence. And it is widely believed that since the RBI gave enough time for the applicants to meet the criteria and submit their proposals, most would have ensured that they meet the eligibility criteria atleast on objective grounds. That leaves RBI to reject their application only on grounds of subjectivity............

Read | Business Standard

Big boys come out to play as battle for banks begins

.........The country today has 26 public sector banks, 22 private sector banks, 41 foreign banks and 56 regional rural banks, but more than half the population doesn’t have access to banking services. That’s where the central bank’s financial inclusion agenda comes in. The RBI has mandated that a fourth of a new bank’s branches must be set up in unbanked regions. More than the R500 crore of minimum capital — not a large amount these days — the bigger entry barrier will be the RBI’s “fit and proper criteria” and passing muster will not be easy.........

No ceiling on number of new bank licences: Chidambaram

............."If there are very few eligible applicants, then the number of banks that will get licences will also be few. I don't think that the Governor has any ceiling in mind,"..................

Read | Business Standard

Adding 'spice' to the banking licence

On June 21 when the Reserve Bank of India (RBI) said incomplete applications or those received after July 1 would not be considered for new bank licences, a new company got registered itself under the Companies Act and exactly 10 days later it was in the queue at the central bank headquarters for a bank licence. Noida-based Smart Global Ventures Pvt Ltd, which applied for a banking licence along with 25 other aspirants on Monday, is a new firm owned by the Spice group. S Mobility, which was formerly known as Spice Mobility, got it registered with the Registrar of Companies on June 21.....................

Read | Business Standard

India Post needs to become corporate for banking foray

.........The application by the Indian Postal department, which is a division of the ministry of communication and information technology, has raised some curiosity in the Reserve Bank of India (RBI). This was because RBI’s new bank licence norms – that was released in February this year – talked about new bank licence in the ‘private’ sector. Since India Post is a part of the ministry, it cannot be considered as a private sector entity..............

Read | Business Standard

We plan to have around 70% of branches in rural areas: Hemant Kanoria

........We are planning to have around 68-70% of our branches in the rural areas. We will convert some of our centres in a slow and systematic manner or add a branch near the centre and so the progress will be slow initially. We are planning to have a larger rural presence and then have some urban presence rather than the other way round..........

Read | Business Standard

No cap prescribed for bank licences: Takru

.............At this stage, anybody who has applied would be considered a serious applicant. Now, the RBI will go through the process of identifying those who meet the criteria out of the 26 who have applied. After that we would know who all have been shortlisted. Then we move on to the next phase where they have to make priorities. So it is only at that stage that a final comment can be passed...............

Read | Business Standard

Losing on licence

Shares of most companies, which applied for banking licence, declined on Tuesday, a day after they submitted the papers to the Reserve Bank of India. Analysts said the recent euphoria in these stocks would fizzle out in the near term, as there is uncertainty about when the licences could be granted..............

Parent branding to have a big role in banking foray

..........Some experts caution that an established brand name could help a company after getting the licence to win new customers, but the regulator might not consider this while taking a call on issuing licences. "While for the layman, branding would appear to make a difference, RBI will examine all prerequisites ranging from the track record, governance record, management, etc before taking a decision. A brand may be strong, but RBI would certainly like to ensure the enterprise has it in it to succeed by meeting all the other commitments," says D R Dogra, chief executive officer and managing director of CARERatings.

Read | Business Standard

Banking on openness

.........The challenges of bank supervision and limited supervisory capacity will need to be overcome. The proposed Indian Financial Code has suggested two new elements that will help improve capacity. One, a banking regulator, whose job is to ensure consumer protection, and a much stronger law to anchor it. Two, the setting up of a resolution corporation whose job will be to help minimise the burden on the taxpayer. The resolution corporation will also, alongside the RBI, supervise all banks. This will mean additional supervisory oversight over the new banks. The RBI needs to give new licences, but the government must ensure that it brings in improved customer protection and a resolution corporation as it does so.

Banking options

.........The RBI has been accused of leniency towards banks and officials perpetrating irregularities. Its response to the recent Cobra Post expose, showing commercial bankers aiding in money laundering, should have been harsher. By penalising three banks a pittance -- between Rs1 crore and Rs5 crore -- and not demanding the heads of senior officials, the RBI has cut a sorry figure. With new players, who bring along the risk of conflict of interest, the RBI must show willingness to flex and use its regulatory muscle.

More bank for the buck

.............RBI’s job in selecting candidates isn’t going to be easy—India Post, for instance, looks well-positioned to deliver on inclusion given its rural reach even though its track record is quite poor on various other parameters. The important thing, however, is that RBI has an impressive list to choose from. Meanwhile, even as new players come into the banking arena, the finance ministry and RBI would do well to facilitate mergers and takeovers; consolidation could bring about greater efficiencies.

Banking licence: Biggies set to gain, small players will lose

The new banking licence will allow large industrial houses like the Tatas and Reliance to gain because it can mitigate the risk of venturing into non-banking areas. However, it will be a death trap for smaller players as they move into areas where money can't be made.............

Watch the video and record your reply...........

New Banks: Discourage Any Bet on Rules Change

...........The Indian ‘License Raj’ landscape has been full of changing goal posts and favouritism in the name of course correction with changes in rules to tailor the needs of businesses — be it the US cola companies, which were permitted with a clause on mandatory public shareholding, or scores of power companies, which are obliged with changes in tariff structure, or usage of resources. Twenty six applications to own banks – some surprising ones and some familiar ones dropping out – raise the question whether the optimists are hopeful of having their way once the licences are given, or that the pessimists have thrown in the towel even before the first ball was bowled...............

Read - ET Mumbai Edition page 18

RBI may cut CRR, postpone repo rate cut till rupee stabilises

.........."The RBI will understandably want to avoid controversy by cutting rates till the INR stabilises. Yet, we retain our 75 basis points (0.75 percentage points) RBI rate cut call for FY14," the report said, adding in its July 30 meet RBI is likely to skip rate cut to avoid any controversy. "We continue to expect the RBI to cut CRR the mandatory portion of cash banks have to park with RBI --by 25 basis points, on July 30, to revive growth, if INR volatility prevents it from cutting rates," ..................

Read | Business Standard

Nabard’s largesse takes rural poor for ride

..........Investigation reveals that Mr. D. K. Mittal’s brother, Dr. Sanjeev Kumar Mittal is on the Board of Shivalik Bank. During his tenure as DFS Secretary, Nabard, Mr. Mittal permitted Urban Cooperative Banks, which are under the RBI’s supervisory jurisdiction, to promote and finance Joint Liability Groups (JLGs) in rural areas. Shivalik Bank went on to become the lone beneficiary of this concession.................

Read - The Hindu

RBI moves to curb rupee speculators

Concerned about the rupee’s fall to a record low, India’s central bank has discreetly phoned trading desks with unusually explicit messages to cut their speculative positions in the currency, said three senior market participants with direct knowledge of such calls. While the Reserve Bank of India (RBI) regularly monitors positions and flows in the currency market, these people said it was unusual for the central bank to call so often or state so explicitly that banks should cut their intraday net open position limits—or their outstanding positions in futures and forwards markets............

Forex crisis: When will we ever learn?

A non-financial newspaper broke the news. It front-paged a story that foreign debts to be repaid in the next nine months plus deficits on trade account for oil imports will consume most of our reserves. Was it not possible to foresee this? After all, we have always had a Finance Minister, a Finance Ministry with a slew of bureaucrats and advisers, an Economic Advisory Council to the PM, a Planning Commission and the RBI, not to mention the several Government and RBI-funded thinktanks — establishments (with sensor-driven toilets) costing taxpayers hundreds of crores of rupees every year...................

Rupee expectations: a self-fulfilling prophecy of RBI - Renu Kohli

...........This is what forced the central bank to depart from tradition with its quicker data release, not, as some reports suggest, a preference for a positive surprise. A belated attempt to dislodge entrenched expectations about the rupee’s weakness, it remains to be seen if the RBI can now successfully reshape market beliefs about the rupee’s fair value. The story may not yet be over.

Banks to up provisioning for unhedged foreign currency exposures

The Reserve Bank of India on Tuesday introduced incremental provisioning and capital requirements for bank exposures to corporates having unhedged foreign currency exposures. These measures have been introduced as unhedged foreign currency exposure (UFCE) of corporates is a source of risk to them as well as to the financing banks and the financial system. Large unhedged forex exposures have resulted in accounts becoming non-performing in some cases............

Wealth mgmt: Kotak says separation will not solve mis-selling

......"My view is that if you run it properly as a separate division with clearly identified process, it works. And the way we are thinking about is: do whatever is right for the customer and everything else follows,"............

Read | Business Standard

FM might ask banks to review lending rates

As banks choose to hold their lending rates despite rate cuts by the Reserve Bank of India (RBI) in the last few months, Finance Minister P Chidambaram might ask public sector lenders to review their interest rates............

Read | Business Standard

Gold turkey

...........The government has tried many measures to discourage savers from buying gold. A few days back Palaniappan Chidambaram, the finance minister appealed “everyone to resist the temptation." But the answer lies in offering better real returns for savers. With that in mind, in early June, the Reserve Bank of India (RBI), the central bank, which manages the government’s debt auctioned 10 billion rupees ($170m) of 10-year inflation-indexed bonds. It was the first time it had sold such "linkers" in a decade............

Read - The Economist

RBI diktat hits gold buyers hard

...... "The directive is totally unwarranted. It curtails the freedom of a person. As far as a customer is concerned, it is his or her right to decide whether to pay in cash or use credit card for purchasing gold ornaments," said Kerala Chamber of Commerce and Industry (chairman K N Marzook. While the government was promoting accountability in transactions on the one hand, directives like this would promote the circulation of black money, he said. "There is accountability in transaction if someone uses a credit card," he added..........

Trucks with 200 cr in cash, gems seized on fake currency tip-off

.........While the Reserve Bank of India has sent officials to the I-T department to ascertain if the currency notes are genuine, the NIA has denied any terror links to the cash seized. The NIA reportedly got involved as the source who provided information on the consignment was an agency informant.......

Read - TOI Mumbai Edition page 3

Rupee slide: Libraries may axe foreign publications

.........One of the many such cases is the Indian Institute of Management, Bangalore, which is mulling to cut on number of books being ordered from outside the country. "Every year we order about 2000-2500 such books. However, the rupee depreciation is costing us over 10 per cent more for ordering these books. Since we usually order throughout the year, this academic year we may have to reduce the order," said a source at the institute's library on condition of anonymity...........

Read | Business Standard

YES Bank says Shagun lacks proven track record

..........."The committee considered/reviewed the application of Shagun Gogia purely based on merits in the best interest of the bank and not based on any technical or legal aspects involving her nomination," the minutes said. While the committee found Gogia met certain basic eligibility criteria like age and qualification, her experience and track record was not commensurate with the profile of directors of other peer banks..............

Read | Business Standard

PSBs Reward Staff to Recover Loans

....“In a normal situation, a banker is expected to do recovery of loan, but these incentives are typically given for old NPAs where special effort has to be put and which are typically beyond call of duty,”..................

Read - ET Mumbai Edition page 10

Banks moving in the right direction to cut NPAs: Rajiv Takru

............Of the 26 players who applied for a bank licence on Monday, many don’t seem to meet the conditions prescribed by the Reserve Bank of India (RBI), but Financial Service Secretary Rajiv Takru says they are all eligible at the moment, and it is only after a proper examination and verification of their documents that the RBI would eliminate non-serious players and prioritise the serious ones.......

Read | Business Standard

Subscribe to: Posts (Atom)