.......Now question arises who is to be blamed for the delay in submission of Charter of Demands. Can we blame GoI or IBA for this lapse. Now GoI has announced constitution of 7th PC more than two years from the due date. This means during this time, the Commission will go through the full process of consultations, and all employees organizations will get sufficient time to put up their demands and revise them after internal and external discussions. Who stopped UFBU to start the process of completion of Charter of Demands at least one year from the due date?............
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Thursday, October 3, 2013
MASSIVE INCREASE OF 50 SLABS IN DA LIKELY
......There has been high increase in CPI in the month of July 2013 followed by increase in August 2013. The inflation trends of recent times indicate that in September 2013 too the inflation figures will be high. Assuming that there will be increase again of similar nature, the revised DA is likely to be around 96.45%, (increase of massive 50 slabs) for the months of November 2013 to January, 2014 (i.e. increase of 50 slabs). [The present DA is 88.95% for the months of August, September and October, 2013]. The PROJECTED DA is as follows:........
City cries: Change we need
......RBI’s annual report released a couple of weeks ago acknowledges the problem. “There has been a spate of complaints about non-availability or short supply of coins in recent times,” it said. The Government had also asked the RBI to take appropriate action with regard to adequate distribution of coins. Now it is also examining the recommendations of a high-level panel headed by deputy Governor KC Chakrabarty on the measures to be taken to increase the supply of coins. The matter is being discussed with the Security Printing and Minting Corporation of India Ltd...............
Finance Ministry should do it........
My View on "An appeal to the Hon'ble Members of the Central Bo...":
The relevant provisions for notification came into being much later than RBI (Staff) Regulations, 1948 and if the Regulations were to be notified it should have been done simultaneously with introduction of the provision in the statute (if this position is wrong, someone who has information may please enlighten). By discussing this issue at this stage, some officials who plead ignorance about past and depend on hearsay are diverting attention from more important issues. If at all the Regulations are to be notified, it is for Finance Ministry to do it in consultation with RBI and the notification should be of the Regulations as they stand today (i.e.without fresh amendments or additions to accommodate afterthoughts).
- M.G.Warrier
Here’s how banks can goof up with your education loan
....... “Depriving a customer of loan against bank’s own administrative instructions was deficiency in service and accordingly the bank was directed to disburse the loan immediately to the complainant without insisting on margin money. The bank was also directed to pay Rs 10,000 to compensate the complainant towards expenses incurred for arranging loan from the alternate source and also for pursuing the case with the bank and OBO,” the RBI document said.......
Challenge for corporates
The RBI’s stringent and binding guidelines for granting new licences will surely go a long way in addressing the apprehensions and reservations voiced by the lawmakers. It should serve as an eye opener to our MPs who are opposing the grant of new bank licences to industrial houses. The country certainly needs more banks and more players with substantial resources. Let us not forget that a good number of corporates in the country run their ventures with commendable business acumen and unimpeachable integrity. The entry of some of them into the banking sector will bring about a paradigm shift and usher in some welcome moves. The resultant competition will also invigorate the existing players to rise up to the challenge. All in all, bank customers stand to gain. Let them get their due.
- C. G. Kuriakose, Kothamangalam, Kerala HBL
Rural Banking
This refers to the editorial “Bank on facts” (Business Line, October 1). It is obvious that the present strength of banking financial institutions is insufficient to expand banking services to the masses. Also, it is learnt that the Government — with its limited resources — finds it hard to reach out and cater to the masses; that aptly gives room for the private firms to fill the vacuum. There is no harm in industrial houses applying for bank licences and the same being granting to them, provided there are a host of stringent conditions to be followed by the licence-holders. In the absence of organised financial institutions in rural areas to cater to the financial needs of the people, they (people) are forced to rely on the local unorganised entities/ individuals/landlords; they usually ask for properties in lieu of the money they lend and charge a higher rate of interest. This is because of the low penetration of the banking institutions in rural areas. The standard of living can be improved by letting the private firms start the banking operations in rural areas. To address these concerns, the RBI should perform the role of a ‘watchdog’ .
- S. Lakshminarayanan, Cuddalore HBL
4 PSU bank GMs elevated as Executive Directors
The Centre has elevated four General Managers in various public sector banks to the post of executive directors.............
आईएएस स्नेहलता श्रीवास्तव को नाबार्ड सीएमडी का अतिरिक्त चार्ज
मध्य प्रदेश काडर की वरिष्ठ आईएएस अधिकारी स्नेहलता श्रीवास्तव को सरकार ने एक आदेश जारी कर राष्ट्रीय कृषि और ग्रामीण विकास बैंक (नाबार्ड) के सीएमडी पद का अतिरिक्त कार्यभार सौंप दिया है। इस पद पर अब तक प्रकाश बक्शी सेवाएं दे रहे थे, जो सोमवार को सेवानिवृत्त हो गए हैं।..........
NABARD now offers loans to corporate sector
..... G.R. Chintala, Chief General Manager (CGM), Regional Office, Bangalore, said it was for the first time that NABARD would be financing storage infrastructure projects of private companies and private entrepreneurs. The lending rate of interest is 9 to 10 per cent to private firms and 8 per cent to State-owned boards and corporations with government guarantee.........
Now, whistle blowing mechanism for public deposit taking companies
.....However, individuals coming up with frivolous complaints through this mechanism would be liable to face action, including reprimand. The whistle blowing mechanism, popular in many developed nations, would provide an opportunity for employees to report any misdoings within their company........
Forward-looking plans
.........The competition to be backward should end. Instead, the competition to be forward has to take over. Fund allocation could be based on projects and their implementation. Though the panel report came when Raghuram Rajan was an economic advisor to Government, will he reconsider and revise it as Reserve Bank Of India Governor?
Raghuram Rajan panel report 'thinly disguised attempt' to help potential ally, Jayalalithaa tells PM
CHENNAI: Rejecting the Raghuram Rajan Committee report for "skewed" allocation formula, Tamil Nadu chief minister JJayalalithaa has said it was a "thinly disguised attempt to provide an intellectual justification to deliver resources to a potential political ally." .........
RBI needs $50-100 bn for bullet-proof balance sheet: BofA-ML
....It added the recent measures like the concessional swap facility for fresh NRI dollar deposits will not be enough to recoup the reserves, which have gone down to $277 billion from a peak of over $324 billion. However, contrary to fears of a depreciation in the local currency if the RBI starts buying, the report said RBI’s entry into the market will boost the confidence of investors and actually lead to an appreciation of the rupee..............
From ‘taper’ to ‘shutdown’
.......The lesson is simple: we must keep our own house in order. The global economic environment will continue to be uncertain, irrespective of whether or not there is a Fed tapering or a federal default. The countries most vulnerable to capital outflows in such situations are the ones with macroeconomic imbalances on their external and fiscal fronts. While the Government and the Reserve Bank of India have taken some steps in bringing down the current account deficit to more manageable levels, these clearly aren’t enough........
Dipping value of bonds may hurt private banks
MUMBAI: Private banks, which have weathered the economic slowdown in the past few quarters, may also face earnings pressure in the September quarter as a slump in bond prices dents profits. The surge in yields during the quarter after the Reserve Bank of India raised shortterm interest rates to defend the currency, may hit some lenders such as.........
Vat's up
The going has not been good for property developers across the country for some time now. While the continued economic gloom and the high interest rate regime has been impacting their cash flows, restrictions brought in by the Reserve Bank of India (RBI), from time to time, are also crippling their borrowing ability. They have been hit both ways — neither can they sell their existing built-up stocks, nor can they launch new projects to kindle interest in the market................
Aadhaar: The number that makes a nation ‘Niradhaar’
Is UIDAI’s Aadhaar, the same thing that it claims to be? Here is a simple analysis of the UID project from Dr Anupam Saraph, who designed and implemented identity schemes for government and private organisations......
'Hiring in banking sector likely to go up by 30% this year'
......The Reserve Bank of India has announced giving licences to new banks to operate by the end of FY 2013-14, PSU Banks adding more than 8,000 branches in current fiscal and private sector banks, rural banks and foreign banks expanding their own branch network are factors that will huge job opportunity in the sector, he said. To cope up with this kind of hiring and to include every geographies of the country in the process, the number of examination centres this year will increase to 210 from 45 last year, he said...........
UB-Diageo deal helped J&K Bank recover 90% of Kingfisher loan
Big banks such as State Bank of India are still struggling to recover their loan from the grounded Kingfisher Airlines, but one small bank has made a smart move and got back most of its loan. The J&K Bank took advantage of the United Breweries-Diageo deal and has managed to recover Rs 90 crore out of the Rs 100-crore loan exposure to the airline........
Sharia-compliant Kerala firm may be violating rules
The Kerala government-promoted NBFI Cheraman Financial Services (CFSL) appears to be functioning in violation of RBI directives, which prohibit it from claiming to be a Sharia-compliant fund. The website of the NBFI mentions that the company operates in a Sharia-compliant manner and intends to become a one-stop shop for all financial products based on the Sharia concept. The RBI has strictly prohibited use of terms like interest-free finance, participatory finance, profit-sharing and Islamic banking, either explicitly or implied.........
Wednesday, October 2, 2013
Infra bottlenecks will dilute potential benefits of weak rupee: Subir Gokarn
Implications of new bank licences - B Mahapatra
the Post Graduate Students’ Conclave on “Implications of new bank licences”, at the National Institute of Bank Management, Pune, 28 September 2013
....Finance is fuel for the economy. Banks being at the core of the financial system, provide this fuel. The progress of the real economy depends upon the growth of the banking and financial system. An efficient financial system transforms the savings into investments and channelizes the investments to productive sectors of the economy to spur growth. India is an emerging market economy and has the potential to grow faster. As the Indian economy refocuses on the expansion of manufacturing and infrastructure sectors, the credit needs of the real economy would be much higher compared to the services sector. Entry of new banks would, in a way, help in the economic development of the country..........
Creating an independent debt office
......The discussions between the budget division of the ministry of finance and RBI on cash management as RBI is the banker to the government should be associated with a requirement that RBI and the budget division will supply to the IDMA forecasts of the government’s net cash requirement and exchequer cash flows. This will help the IDMA to ensure the government does not have surplus cash on hand whilst it is borrowing unnecessarily on the capital markets and incurring debt servicing costs. An IDMA should be legally a part of the ministry of finance but operate at arm’s length from it as part of its brief of being an executive agency..........
TC Nair: Right Man, Right Place, Right Time!
.....Financial Technologies was hunting for former regulators and, while many had turned down the offer, this former whole-time director of SEBI and ex-managing director at Bharatiya Reserve Bank Note Mudran Ltd was happy to accept. While other directors of the FT-MCX group were probably worried about the onerous new liabilities and punitive provisions of the Companies Act 2013, Mr Nair is probably relying on his hitherto charmed existence.......
Financial Inclusion: Success Is in the Details
......Financial inclusion—access to formal savings, credit, transaction, and insurance accounts at affordable cost to three quarters of the world’s poor—is an ambitious undertaking and its success hinges on such details as easy, secure interoperability. Success so far in India, a country where almost half the 1.2 billion population remain without the formal banking services, has been mixed in the past six years. The money for these financial services has to start somewhere, so the Reserve Bank of India (RBI) chose G2P government disbursements via mandatory No Frills (NFA) savings accounts for low-income beneficiaries in rural areas as one of the initial drivers............
Dump the textbooks
We have an "out-of-the-box" problem on our hands and it needs an "out-of-the-box solution", not something out of an antiquated textbook
....... The markets chose to focus entirely on the hike and chose to ignore the cut. After the brief honeymoon in which he charmed hard-nosed bankers and reincarnated gossip columnists in equal measure, Raghuram Rajan, after his maiden policy, somewhat unintentionally emerged as a much less charming uber-hawk. One argument is that this biased reading of the market is partly the RBI's fault. Bankers might have understood the barrage of ad hoc measures like the hike in the...........
Rajan Then…And Now
......Since Y.V. Reddy, successive RBI chiefs with some of the deputies have vigorously defended their policy-making turf, much like Beckett as the archbishop of Canterbury. On several occasions, the defence has been ‘we, the prudent’ versus ‘they, the prurient’. This dichotomy, though occasionally useful, needs to make way for better dialogue between the RBI and the finance ministry. But I doubt it. Given these four forces, I wouldn’t bet on an accommodative or expansionary stance of the RBI in the next few quarters. India Inc. and North Block better look elsewhere for solace.
Rajan Panel report: It's a battle of the States
.........From who makes the best biryani, to who plays the best cricket, we disagree on a lot of things across state borders in India. So it's not surprising that we are rarely able to agree on which Indian states are more and less developed. Goa's richer but Kerala's more educated and Tamil Nadu does better on women's health but Gujarat on employment - so who does best all-round?............
Say NO..............
My View on "An appeal to the Hon'ble Members of the Central Bo...":
Government have been pressurising the RBI for the last 15 years to make the RBI Staff regulations statutory. On several occasions, the matter was considered by the Committee of the central Board and the Central Board and they have rejected the proposal. Hence, the proposal of the Government should not be agreed to and they would have to be told in categorical terms that the matter had been considered in the past on more than one occasion and the matter would have to be shelved by them for all time to come.
- A.Chandramouliswaran
e-BAAT programme held
Reserve Bank of India, Bhubaneswar in association with the State Bank of India, Berhampur zone organised an electronic banking awareness and training (e-BAAT) programme for customers. Customers were educated about electronic banking products like net banking, mobile payments, use of debit and credit cards, delivery channels and its security aspects......
Powers of chairman will be exercised with board approval: SBI
State Bank of India, in a notification to the BSE, said the financial and administrative powers of the chairman will be exercised with the approval of the board of directors/management committee of the bank, as the case may be, till such time a regular incumbent is appointed by the Government as chairman. This notification follows Pratip Chaudhuri, Chairman, SBI, demitting office on September 30 upon superannuation.........
Breather for Pratip Chaudhuri in contempt petition filed by SBI officers’ union
The Madras High Court has fixed October 10 for hearing a contempt of court petition against Pratip Chaudhuri, who retired as chairman of State Bank of India on Monday. Senior counsel for the bank stated that Chaudhuri could not be present in court as required ‘since he was retiring’ from the Mumbai office that very day...............
Tech, engineering graduates find bank jobs attractive: Survey
The fast pace of growth in the banking sector is proving to be a major draw for young graduates, especially from the engineering background, according to a recent study. A large number of banking career aspirants hold a B.Tech or Degree in an engineering stream, says a BankersChoice online survey by TalentSprint. Science graduates come next, it added. "About 78 per cent of respondents see banking as a dream job, more than half of them are engineers," it said...........
In banking, don’t ape the West
........The rationale for such an eagerness for fresh bank licences and the entry of business houses into financial intermediation --- at a juncture when all around the world banks appear troubled, when Indian corporate houses, the drivers of Indian growth are not doing well, for reasons other than the shortage of capital --- may appear intriguing. But this is India, where rationality and sense need not necessarily move hand in hand; un-torched by the financial crash of 2008 and its aftermath the Indian policymakers and middle class can afford to be sanguine about principles that were found to be severely wanting elsewhere.......
Stop Being Cry Babies Bankers. Prudential Norms are Good For You
......."Different measures of macro-prudential regulation exert differential impact on banks across ownership," says Saibal Ghosh of RBI's department of economic and policy research in a research paper. It is important for "policymakers to take a holistic view of all prudential measures and their potential impact on the banking system in order to avoid possible pitfalls"...........
RBI backs out from move to analyse temple gold stocks
The Reserve Bank of India (RBI) is learnt to have taken a U-turn on the controversial data collection on gold stocks in temples. The apex bank has informed the Travancore Devaswom Board which manages 1,200-odd temples, including the Sabarimala hill shrine, that its letter seeking details may be ignored.......
RBI begins move to core CPI
......RBI has done well in recent years to steer clear of the discredited global consensus that central banks should focus on just inflation control through the manipulation of short-term interest rates. Indian monetary policy has been more eclectic for good reason, focusing on other issues such as growth, financial stability and the exchange rate as well. But there have been times when this eclecticism has been overdone. Some of the more bitter critics of the Indian central bank also claim that it has essentially kept shifting the goal posts so as to evade responsibility for the failure to control inflation..............
Is CPI a better inflation indicator than WPI?
....Retail inflation is a superior indicator of the underlying demand situation in the economy, which determines the extent to which retailers can pass on a sustained rise in wholesale prices. While, in a strong demand environment, retailers can pass on the entire increase in wholesale prices or even more to their end-consumers, if demand remains weak, retailers could witness pressure on margins. While there is little doubt that RBI will soon begin to consider CPI as a primary measure of inflation, it might have to make some adjustments to the overall CPI. The monetary policy has limited efficacy to deal with the direct impact of food and fuel inflation. Currently, .........
Economy improving, RBI will take call on rate: finance ministry
......."The Q2 GDP growth should be better than first quarter... The Finance Minister has said we need to incentivise growth. "That continues to be the stand of the government. As far as the interest rate is concerned, it is completely the domain of RBI and Governor will take a call on that," Mayaram said. RBI is scheduled to announce its second quarter policy review on October 29.........
Golden touch: why the current account deficit is set to shrink
..........Over the past three months the government and the Reserve Bank of India (RBI) have launched a string of steps to attract foreign capital to arrest a sliding rupee and contain the CAD that hit a record high of 4.8% of GDP last year. Last week, it relaxed norms for domestic companies to trade shares on foreign bourses aimed at attracting dollar inflows. This followed a slew of other measures including.............
Poor are more trustworthy and bankable: Chidambaram
.........."The poor of India are bankable, the poor of India can be trusted, the poor of India are good borrowers, the poor of India are honest borrowers and the poor of India are much better borrowers than the rich because of their repayment," ........
FM heat on unregulated financial sector
....“It is my intention that we adopt the basic spirit of the framework provided by FSLRC in building a strong institutional foundation for our financial sector,” ............
Safe savings scheme may get delayed
KOLKATA: Awaiting a nod from the Reserve Bank of India, Bengal's safe savings scheme, which is aimed at countering the Ponzi menace and likely to be operational from October 5 and currently awaits a nod from the Reserve Bank of India (RBI) , may get delayed by a month..........
Banks want RBI’s 0% ruling to include NBFCs, captives
.. "We are expecting NBFC guidelines from the RBI in a couple of weeks. Right now, RBI's directive intends in spirit, if not in letter, that all financiers - banks, NBFCs, captives - show the subsidy on interest and subvention separately so the customer knows what the break-up is." Till the RBI guidelines come along, however,there are several 0% schemes still running in the market including those by captive financing arms of luxury car companies ..........
CBI probe sought into Amanath bank affairs
.......To write off all debts and dues to the bank from those who have borrowed funds, and to save their skin, members of the management pressed Canara Bank and the Reserve Bank of India for a merger of the bank with Canara Bank. Canara Bank has shown interest in the merger, which, however, will jeopardise Amanath Bank, the petitioner said..............
India opens negotiations with Iran on payments for import of crude oil
..........A team from India, consisting of officials from the Finance Ministry, Ministry of External Affairs, Petroleum Ministry and Reserve Bank of India (RBI), are likely to visit Tehran very soon to engage with their counterparts and resolve the impasse...........
Nandan Nilekani is part of every committee and group that is making Aadhaar mandatory
........The Supreme Court has ruled that the unique identification (UID) number or Aadhaar is not mandatory to avail essential services from the government. What is strange is all those ministries and departments that are making Aadhaar ‘mandatory’ are doing so on recommendations from a committee or group associated with Nandan Nilekani, the chief of Unique Identification Authority of India (UIDAI). This is pure conflict of interests..........
Muslims not getting loans commensurate with population
............Part of the problem, says Minority Affairs Minister K. Rehman Khan, is lack of awareness within the Muslim community of the programmes designed by the government for its uplift. This is compounded by the absence of NGOs in the community. Ever since the 15-point programme was unveiled in 2006, the RBI has been issuing periodic guidelines to all banks, flagging the need to ensure that 15 per cent of all priority sector lending goes to minorities. The irony is that the target was essentially the Muslim community, as the Sachar Committee Report on the Social, Economic and Educational Status of Muslims in India found Muslims had trouble opening bank accounts and accessing credit. There has been an improvement in the situation, but the problem persists.
Mumbai slips to 72nd rank in global financial centre list
Reflecting the worsening business conditions in India, Mumbai has slipped six places to 72nd rank, the bottom 10, on the Global Financial Centre Index ( GFCI), while London has retained its top slot. Mumbai is the only Indian city to find a place on this bi- annual list of 80 financial centres globally and was ranked 66th in its previous edition published in March this year..........
TRAI cracks the whip on banks against pesky calls, SMS
......"Keeping the larger public interest in view and to prevent public inconvenience, the Authority has decided to exercise temporary regulatory forbearance and has directed the banks to look into the specific cases of breach, initiate corrective action and report back to the Authority within a period of seven days, failing which the banks are liable to have all their telecom resources disconnected throughout the country."........
Life insurance policies: Turning a new leaf
.....Insurers will have to withdraw all existing products and come out with new ones. However, they will continue to renew old policies where the contract had already been made with the policyholders. At the time of renewal of group policy, the insurer will have to give the policyholder an option to switch to the modified version. And where the policyholder does not switch to the modified version, the insurer will have to take a specific written consent that he/she will continue with the old policy...........
Tuesday, October 1, 2013
Will Reddy follow the Raghuram Rajan lead?
...The RBI Governor has, however, created a difficult choice for the Centre to solve. In about a year the 14th Finance Commission under YV Reddy is expected to publish the results of a similar exercise. The Commission has a similar remit, viz on what basis should states get a share of the tax revenue pool. One part of the pool is assigned on the basis of share of tax receipts but the rest is assigned on a set of indicators which measure how far the states are located from the national mean on fiscal performance, poverty and pressure of population..........
Decoding Governor Rajan
.......The confusion is understandable, given that the RBI revised two policy interest rates in opposite directions. To be fair, the policy statement and RBI Governor Raghuram Rajan's post-policy comments made it clear what the central bank was attempting. But any conclusion limited to a single word - such as "eased" or "tightened" - that would normally be associated with the decision of any central bank was elusive...........
Raghuram Rajan needs to walk a long way before he can pare interest rates
On his first day in office on September 4, Raghuram Rajan, the new governor of the Reserve Bank of India, pointedly underlined the likelihood of his surprising the financial markets with his actions. "A central bank should never say 'Never'," said the 50-year-old Rajan. Two weeks later Rajan showed he had meant what he said. ................
Now pay your wife rent and claim HRA
........On appeal, however, the Tribunal ruled that since the house was owned by the wife and rent was paid, which was proven via bank transfers, Ramdharani is entitled to exemption under section 10(13A), which pertains to HRA under Income tax Laws, 1961. Since the appellant fulfilled the twin requirement of occupying the property and paying rent, he is liable to get rent exemptions, the Tribunal held. The ruling is likely to set the benchmark in similar cases, said chartered accountants, pointing out that the practice has so far been frowned upon by the authorities concerned..............
Govt yet to name new State Bank of India chief
.........Sources said in a late evening communication, the government told the SBI management till a new chairman was appointed, all the four managing directors should hold charge of their respective areas of operation. None of the managing directors was given interim charge of the chairman's post, which has led to speculation a new chairman would be appointed soon........
An appeal to the Hon'ble Members of the Central Board of RBI
........Despite these clear articulations in the RBI Act itself, why the Government is so keen to take RBI Staff Regulation under its wings is utterly incomprehensible, excepting, most probably, to evade "consultation with the Governor of the Bank". This is perceived by the staff of the Bank and their representative trade unions as an affront to the august office of the RBI Governor,...........
National Pension System - Not an Effective Option ! - M.G.Warrier
........As things stand now and the way in which NPS is being marketed today, no one can find fault with the general feeling that let alone NPS being a shelter for the worker not covered by any formal retirement benefit schemes now, but it is posing a threat to existing established retirement plans in the organized sector. NPS has already dismantled defined benefit pension scheme in the organized sector............
Next monetary policy review on Oct 29
The Reserve Bank of India will announce the Second Quarter Review of Monetary Policy 2013-14 on October 29, 2013. In the mid-quarter monetary policy review on September 20, the RBI, recognising that inflationary pressures are mounting, had raised the repo rate by 25 basis points to 7.50 per cent......
Police clueless after fake notes crop up from Trichy banks
.....It was on September 27 that RBI officer KS Joshi registered a case at the Trichy city police commissionerate. However, CCB assistant commissioner, Trichy Pugalendhi, termed the complaint as nothing unusual. "The complaint from RBI regarding fake notes in banks is a routine one. It is too late for them to complain about the counterfeit notes because the police could not fix the person who deposited the money in the bank. If the bank officials catch the person who deposited the fake notes red-handed, we can investigate the case. Otherwise, it is tough to pursue the case. Hence, the bank officials should be more cautious in receiving cash from customers because such carelessness ruins our economy." .........
Transparency is not a bad word!
My View on "The story behind 0% interest EMI schemes":
The observation “The RBI has raised an alarm once again to protect consumers but one needs to be careful on occasions when retailers dangle schemes which may look attractive but may ultimately prove to be a bad financial decision.” need to be seen in the wider context of government’s and regulators’ concern to protect public (read consumer’s, in this context) interest. If the approach is broadly understood, there will be more awareness about the need for vigil on the part of consumers and a better understanding of the concept of ‘self regulation’ by organisations handling public funds and those doing ‘business’. Transparency is not a bad word!
- M.G.Warrier
Halal Street
.........However, it encountered one hurdle after another. First, getting RBI and Securities and Exchange Board of India (SEBI) approval proved hard. Later, BJP politician and former Union Minister Subramanian Swamy filed writ petitions against the Kerala Government, alleging that its support for sharia finance went against the secular principles that guide a government. The case was dismissed in 2011, and this August, the NBFC received its RBI licence to operate as a non-deposit taking NBFC.................
SBI Cards wants RBI to rethink ban on zero per cent EMI schemes
SBI Cards will soon approach the Reserve Bank of India seeking a review of the latter’s decision to ban ‘zero per cent’ EMI (equated monthly instalment) schemes for purchase of consumer goods through credit cards. The standalone card issuer will pitch for a rethink on the decision with a promise of better communication with customers in the coming days, Pallav Mohapatra, Chief Executive Officer, SBI Cards, told Business Line. SBI Cards will soon write to the RBI in this regard, he added. However, Mohapatra said the RBI move would “not be a very big blow” to SBI Cards, but admitted it could impact turnover........
Goodbye to Gadgil’s formula on state funding?
...If it is going to replace the good old Gadgil formula—named after the economic historian D.R. Gadgil who devised it for providing plan assistance to states—as it appears, then it needs to be far more rigorous. The index also needs to have a deeper connection with the history and politics of the fiscal federal system and the transfers that emanate from it. There are five problems with the report. First, its recommendations don’t address the basic issue of the aggregate pool of plan transfers available for distribution among the states. ...........
Alteration of bank licence norms unfair: EY
Ashvin Parekh, senior advisor, EY says it is unfair on the government's part to change the rules after the whole process of applying for a banking licence is over. The Standing Committee on Friday recommended that industry and banking be kept separate, as it is not sure whether the safeguards put in place by the RBI including the fit and proper criteria, and group exposure norms would be effective enough to prevent banks promoted by industrial houses from cozying up to their industrial owners..
Why business groups should not own banks
......Our objection to corporate ownership of banks is based on the very idea of efficient financial intermediation. A bank is a financial intermediary that raises money from depositors to lend to borrowers. In a country such as India, households are a major source of deposits while companies are large borrowers. A bank should ideally be a neutral intermediary, with no interest in the game other than intermediation. In other words, it should neither own a business group nor be owned by one. Else, it has strong incentives to abandon its unbiased position as an intermediary. The new Indian banking rules undermine this fundamental assumption........
Bank on facts
........The Reserve Bank of India’s (RBI) guidelines for issuing new licences require promoters to ring fence their banks’ operations from activities of other group concerns. The new banks will be barred from extending credit or investing in equity/debt instruments of any promoter group entities or associated individuals. This effectively rules out the possibility of corporates promoting banks mainly with a view to mobilise public deposits, which they can then lend out on favourable terms to their own companies............
A glass half full
............Be that as it may, looking ahead, there are indications that the current account deficit may be plateauing. While exports declined during the quarter by about 1.5 per cent, trade data for the first couple of months of the second quarter do suggest something of an exports revival. Given the extent of rupee depreciation over the past three months, this is not surprising and is most welcome...........
Watch out for the CPI rate-shock - Renu Kohli
...Importantly, it is a bit naïve to think that the “monetary policy framework” committee will overlook the new-CPI’s limitations pointed out by the former RBI Governor as these are very specific: lack of robustness, dominance of supply side factors and inadequate data coverage for services’ price indices. Neither do these become irrelevant with change of guard at Mint Street, nor do they change colour to align with a new policy frame work! These are purely data limitations that must be addressed, without which a robust policy framework would lack credibility...........
CPI’s core problem
.....Renu Kohli has, both today as well as earlier, raised some important questions about the quality of data. Why should the CPI series for rural and urban inflation converge when both the rates of inflation as well as the weights of various commodity baskets are so completely different in rural and urban areas? Intriguingly, this convergence in inflation trends applies to the sub-components of CPI inflation as well; it is difficult to understand, similarly, why ‘bedding and clothing’ inflation in core-CPI should be rising on average 15% since January 2012..........
Consumer interests hurt as ambitious Aadhaar-linked e-KYC burdens the consumers
...In an interactive session of two and a half hours the representatives of the NGOs, activists and citizens brainstormed and finalised on a memorandum. The foremost issue discussed was the very fact that implementing Aadhaar contradicts the very objective with which it was introduced. It aimed to pioneer the financial inclusion but the entire system of transaction charges negate the objective. The whole process in expensive and results in deposits burdened with the charges.........
A practical agenda in financial inclusion: What RBI Governor Dr Rajan needs to do?
.........Given the above, Dr Rajan’s first task would be to ensure that the RBI puts out a proper working definition of “financial inclusion” and ensures that all stakeholders promoting and/or looking at financial inclusion use the same consistent definition. Otherwise, outreach figures on financial inclusion would be meaningless and cannot be evaluated or compared in a serious manner...............
Empowering the masses through Financial Inclusion
.In realising the objective of achieving “financially inclusive growth”, the biggest challenge is improving financial literacy so that borrowers could take informed decisions. Bank’s extensive financial literacy programmes overcome this problem by reaching thousands of customers and small entrepreneurs. As per the RBI guidelines, each Lead Bank is expected to open a Financial Literacy and Credit Counselling Centre (FLCCCs) in every district where it has lead responsibility. We have opened FLCCCs in many districts for providing financial education/credit counselling free of charge. In addition to this, ............
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Expedite Financial Inclusion, Takru Tells Banks
...The
bureaucrat, who was to discuss bad loans with bank chairmen in the
financial capital, put it on the backburner asking them to aid the
efforts of Reserve Bank of India Governor Raghuram Rajan for financial
inclusion. “He suggested us to expand the network in business
correspondents, micro ATMs, filling Adhaar-linked savings account for
subsidised LPG cylinders,” a bank chief told ET requesting anonymity. “He enquired about the current scenario on NPAs and cases for restructured loans.”...............
Cooperative banks put Madhavpura Bank behind, head for Gujarat
AHMEDABAD: Eight cooperative banks have expanded into Gujarat, a state scarred by the 2001 Madhavpura Bank scam that saw a collapse of cooperative banks in the state. Most of the new entrants have taken the mergers and acquisitions (M&A) route, the preferred option in the wake of a Reserve Bank of India ban on issue of new cooperative bank licences following the scam,.........
UCBs asked to provide audit certificates of farm debt waiver
....."Considering that there is a wide divergence between the percentage of errors found in the sample audit carried out by CAG and the percentage of errors found by banks while conducting their own verification exercise, the government has desired that all the banks should submit their auditors' certificates with regard to accuracy of the re-verification exercise," RBI said in a notification. .........
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