India needs Effective Bankruptcy Laws

RBI Governor Raghuram Rajan wants effective resolution of bad loans that shows zero tolerance of mismanagement and fraud but makes room for genuine, surmountable difficulty. This means changing India’s current laws and procedures for dealing with corporate sickness.............

Read - ET

FinMin sends Raghuram Rajan report to PlanCom for 'necessary action'

........"Following the recommendations of the Finance Minister and pursuant to the directions of the Prime Minister, I am enclosing a copy of the report of the (Rajan) Committee for necessary action," said an official communication from the Finance Ministry to the Planning Commission..........

Read - IE

Fake notes a worry for BMTC

...“Earlier, I never used to come across counterfeit notes, but now the situation has changed. A couple of times I myself had to pay from my pocket as passengers had duped me with fake notes. It is now a common hazard being faced by all conductors,” he said. “It is not easy for anyone to follow these people. So whenever I receive a Rs 500 note, I check it multiple times to ensure that I will not be at receiving end,”............

Read - Deccan Chronicle

Fake currency gang busted, 2 arrested

...."The accused would buy steel at Rs 45-50 per kilogram and make 50 to 60 coins out of a sheet of metal," said an officer, adding that the trio would incur a cost of about Rs 1.20 for every coin they made. The accused would pay the workers 20 to 30 paisa for every coin they made. Manoj would deliver the coins and would charge as low as Rs 15,000 when the RBI charges around Rs 25,000 for every bag of coin. ..........

Read - TOI

Hunt on for new finance secretary

Even as the Ministry of Finance (MoF) has started preparations for Budget 2014-15, and has asked different ministries to enumerate their estimates of receipts as well as expenditures for the next financial year, the Budget in all probability will be prepared by a new finance secretary and also a new chief economic advisor (CEA) to the MoF. Finance Secretary R S Gujral is due to retire next month, while the post of CEA fell vacant after Raghuram Rajan took over as the governor of the Reserve Bank of India last month.............

Read........

Chidambaram questions IMF’s methodology for calculating India’s growth projections

....."For example, India’s growth rate, which was projected at 5.6 per cent (at market prices) in the WEO July Update, has now been revised significantly downwards to 3.8 per cent. I would like to ask, respectfully, what is the information that IMF has gathered between July and September, that we do not have, that has impelled the Fund to drastically change the estimate? We do not share this pessimistic outlook. We also believe there is a need for review of the methodology for growth projections as in the past IMF projections have often been at divergence with final growth numbers," ...........

Read - The Hindu

Gold: The new rules for investing

...........You can also monetise your old gold coins/jewellery by depositing your holdings with the gold deposit schemes of banks. The minimum maturity period for these deposits has been reduced from three years to six months by the Reserve Bank of India. The deposit scheme now offered by SBI allows you to deposit physical gold in jewellery or coin form for a nominal interest payment with the bank. When you make a deposit, the bank melts the jewellery, tests the purity of gold and then issues a deposit certificate which you hold till maturity.............

Read - HBL

Bankers cut consumer loans, cry foul on government missive

........“This is a case of directed lending. Directed lending in an economy can inherently result in losses mainly because credit discretion tends to be absent,” said Abizer Diwanji, a partner and head of financial services at global consulting firm EY, formerly known as Ernst and Young. “If lending is directed through incentivization, then the government should ensure that it is being done in a good credit risk policy framework. Risk management is very important,” Diwanji said, adding that directed lending for a limited period may not damage the system..........

Read - Mint

This festive season, play your cards right

.....According to the Damodaran panel report, the percentage of interchange/ merchant fee charged by the card service providers for both debit and credit card being the same, a merchant is indifferent to a credit/debit card. Card data indicates that more than 80 per cent of the cards are debit cards and the customers feel that debit card is akin to cash as it directly debits their accounts and does not confer any advantage by way of a credit facility...........

Read - IE

Sebi working on guidelines for social media use in capital market

......That apart, with increasing popularity of platforms like Twitter and Facebook, capital market regulators worldwide are also looking to tap such tools to understand overall trends and also gather market intelligence. A senior Sebi (Securities and Exchange Board of India) official said it would take some time before the regulator finalises guidelines related to social media use...........

Read - FE

Indians treat economy as they treat their cricket: Rajan

......"We Indians treat our economy very much the way we treat our cricket," Rajan said at a think tank event on Thursday, his first after taking over as RBI Governor. When the cricket team is doing well, the players can do no wrong. They are elevated to the level of God -- "disregarding the weaknesses that actually exist". When they do badly people throw rocks at their doors and castigate them for the same weaknesses, which were overlooked earlier, and which now look serious........

Read - HT

India won’t seek IMF funds in 5 years: Rajan

.."There's no way we are close to being a country in financial or economic crisis... There is not a chance we will go to the IMF for money in the next five years," he said at CNN's Debate on the Global Economy. The RBI has taken a series of measures to strengthen rupee and promote growth.........

Read - IE

RBI to launch new RTGS system on Oct 19

.......The RTGS system would process transactions such as inter-institutional/inter-bank transactions — the transfer of funds between two members/participants —RBI said in a statement. It would also deal with customer transactions — funds transfer/receipt on behalf of the customer of an RTGS participant member...........

Read | Business Standard

Balancing act

.....Mr. Rajan needs more than a spanner to fix the problems being faced by the economy and in his first monetary policy announcement, after succeeding Mr. Subbarao, he has been tactical in his approach to address the situation with a long-term view rather than from a short-term perspective........

Read - The Hindu

Why should RBI immediately disband newly appointed Committee on Financial Inclusion?

.......Let us look this with regard to the financial sector in the United States, which provides very useful learning with regard to conflicts of interest and their relationship to crisis situations. They hold very important lessons for the RBI which seems to be embarking on a very dangerous journey in its effort to turbo charge financial inclusion as well as give out banking licenses in a tearing hurry!..........

Read - Moneylife

Remedies may be costlier

My View on  "THE CURIOUS CASE OF RAGHURAM RAJAN": 

Monetary easing and encouraging consumption to pep up the credit markets do not seem to gel well with the current risk environment. Further, aping the west in a conservative and cautious financial market is likely to put the risk appetite in wrong direction. The realization may come late and remedies may be costlier. The author is right in raising doubts about Dr Rajan's approach at the current juncture. 

- Yerram Raju

Expression of views.........

My View on  "Priority for non bank finance companies in bank li...": 

While Dr Chakravarty’s freedom to express views need be defended, RBI Deputy Governor’s endorsement of NBFCs for banking licences quoting Kotak Bank’s success is likely to be interpreted in different ways. He could have followed Governor Dr Raghuram Rajan who said the number of new bank licences could be zero to 26. May be Dr Chakravarty remembers the subsequently corrected version of FM’s remark about seven new banks doing seven ‘different’ things.  

- M.G.Warrier

Don’t worry about CAD

........While some of these measures could eventually get reversed once normalcy returns, it is important to impart structural stability to CAD with respect to gold imports. In this context, the policymakers can explore the possibility of setting up an apex body — The Gold Bank — which can procure and retain gold abroad through offshore foreign currency borrowing. Using this gold-backed backing, the scheduled commercial banks can offer a Gold Deposit Account to retail customers, which can represent notional units of gold and provide gold price return in weight terms. This will not only promote financialisation of incremental demand for gold, but also incentivise the deferment of the need for importing physical gold.........

Read - HBL

Don’t give credit to govt, RBI for lowering CAD

......The government and the RBI know this but their concern on the weak INR overrode practical economics. The question is when will the restrictions on gold and silver imports be taken off? What will happen when the CAD shoots up on pent up demand for the commodities? Well, tomorrow is another day and we’ll take it as it comes, is the policy of the government and RBI. Hopefully, tomorrow will not come at the wrong time...........

Read..........

Bankers, legislators abstain from DLRC meeting

The administration has decided to write to the Reserve Bank of India (RBI) about the absence of representatives of some banks from meetings being held in the district. Not only private sector banks but also public sector banks are reportedly taking these meetings for granted. Even legislators have not been attending the meeting............

Read - The Hindu

‘Inconsistent’ monetary steps by RBI leaves Tirupur knitwear industrialists puzzled

..........“Really, we did not know what the apex bank is doing with this type of disordered decisions. It has been only a couple of days prior to this reduction, the same RBI raised the Repo rate by 25 basis points with the ‘opposite justification’ that the inflation is on a high and there is a need to suck out excess liquidity from the system. “While hiking the repo rate during September last week also the MSF has been brought down from 10.25 per cent to 9.5 per cent, which is paradoxical by its nature,” G. R. Senthilvel, secretary of Tirupur Exporters and Manufacturers Association, said.......

Read - The Hindu

ICICI Bank organizes Coin Exchange Mela at Chandigarh

Chandigarh: ICICI Bank, India’s largest private sector bank, organised a Coin Exchange Mela on October 10, 2013 at its Sector 19C branch in Chandigarh, under the guidance of the Reserve Bank of India. ......

Read........

Indian Bank open new branches

.....Out of the 180 banking branches in Krishangiri district, 33 are from Indian Bank. The bank is leading in SHG lending and educational loans. Indian Bank’s share in SHG lending is 45 per cent and that of educational loan is 38 per cent. The new branches are being opened as part of the financial inclusion policy of the Reserve Bank of India.......

Read - The Hindu

Why you should always check your bank balance statement

........So ensure you read your bank’s monthly account statement carefully and watch out for any discrepancies. If you don’t track your account regularly, there is a good possibility that any deductions or penalties could easily go unnoticed.......

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

Cyclone scare: Odisha seeks RBI help to ensure relief payments by banks

In view of the severe cyclonic storm 'Phailin' that is set to hit the coast of south Odisha by Saturday evening, the state government has sought the intervention of the Reserve Bank of India (RBI) to facilitate government payments towards relief expenditure. The state government has sounded a high alert in 21 districts that have been identified to be vulnerable to the impending storm........

Read | Business Standard

SBT to expand footprint outside Kerala

.........By expanding in this region, “we will also meet the 18 per cent net banking credit extension to the agriculture sector laid down by the RBI,” said Sajeev Krishnan, managing director, SBT. The bank on Friday opened its regional office and retail assets central processing cell here. The facility will have 14 employees, to be headed by the respective AGMs.  It will come under the Chennai zonal office. ........

Read | Business Standard

Dr Subbarao And The Chakravyuha

Bureaucrat-turned-banker Dr Duvvuri Subbarao took charge as the Governor of the Reserve Bank of India (RBI) just when an economic chakravyuha (a multi-tiered battle formation) was taking shape. And all through his five years in office, he kept comparing his fate to that of Abhimanyu, the fallen hero of the GREAT epic Mahabharata. In the end, while demitting office, he had acknowledged that he will be known as “babysteps Subbarao” for a host of reasons. For one last time, let’s take a look at the challenges Dr Subbarao had faced before we move on to the stable monetary growth initiatives of his successor, Raghuram Rajan...........

Read.....

RBI sending out contrarian signal

.........Meanwhile, the RBI has sent out a contrarian signal by ` persuading’ banks to offer cheap loans for buying consumer durables. A couple of public sector banks, already groaning under huge nonperforming assets, have felt obliged to cut the lending rate for buying scooters, television sets, etc. The last monetary policy review had seen the central bank tighten liquidity. In fact, a few days ago, it had clamped down on the zero- interest schemes that were offered by makers of consumer durables during the festival season. According to reports, the central bank was pressured by the finance ministry to try and neutralise the effect of that ban by persuading public sector banks to lower interests for borrowers intending to buy consumer goods this festival season. Otherwise, one cannot see the RBI squeezing liquidity.......... 

Read - FPJ

‘Two plus two must make twenty-two’

The Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now,” came in handy for the new State Bank of India chief to exhort the two lakh-plus employees to deliver more value to the customers and the bank. “So, let us plant that tree today so that our successors of tomorrow can say that we did the right thing by them,” said Arundhati Bhattacharya, the first woman chief of India’s largest bank.........

Read - HBL

The long and short of it

.......The Governor was obviously referring to the increasing stress on account of non-performing loans in Indian banks’ balance-sheets — primarily on account of long-term loans made to the infrastructure sector, namely, in power, roads, aviation, telecom, metals and other sectors; and how banks could have well avoided all that stress if India’s domestic financial markets were developed enough to provide long-term finance. This would allow banks to focus more on providing short-term working-capital finance to industry and projects.........

Read - HBL

Suddenly generous

The government is playing the politics of appeasement to woo Central government employees and pensioners by implementing the recommendations of the seventh pay commission prior to the Lok Sabha elections next year (“Pay populism”, Sept 27). Nothing else can explain its sudden generosity. But intelligent citizens are aware that a great degree of uncertainty is often associated with pre-election promises. One cannot say for sure if all these populist measures will ever see the light of day after the government is formed.

- Janga Bahadur Sunuwar, Bagrakote, Jalpaiguri (The Telegraph)

बीते दिन - ए. यू. शेख़

Remembering RBI days. We have seen all sorts of things during 30-40 years at various depts/centres.....

Read..........

Grateful for his lessons.............

Shri E.P.VEERARAGHAVAN was my first Inspecting Officer. I was an understudy for Vriddachalam coop. Bank of ACD days. I am grateful for his lessons. May his soul rest in peace. 

- Jayaram Nayar 

Ownership rights................

My View on  "RBI vs GoI": 

Let us read the observation “While RBI is signalling a hike in interest rates, the finance ministry has said it is willing to give banks more capital provided they used this to lend more in certain areas and at lower interest rates. If the finance ministry gives banks Rs 100 of additional capital, banks can lend up to Rs 1,000 given the current capital adequacy norms.” in this edit again. GOI today is using its ‘ownership rights’ on public sector banks even beyond the level IMF used to do through conditionalities while extending ‘aid’ to poor nations decades ago. Traditional priority sector which has not lost relevance in the development context is being ignored and finance ministry is asking public sector banks to lend at lower interest rates for consumption and luxury. As regards capital adequacy norms and infusion of additional capital, perhaps a relook at SLR norms (which provide captive sources at lower than market rate funds to government), accumulation of bad loans because of GOI policies and need for a level playing field for PSBs may be necessary to assess costs and benefits for the institutions. 

- M.G.Warrier

‘I’m independent’ - Raghuram Rajan

................ it is healthy that the finance minister and RBI Governor speak out in public “because that shows that they are not in such close communion that they won’t have any differences in opinion.”...........

Read - DNA

India's Rajan: 'Zero' Chance of Asking IMF for Money

...."One thing that I can say with confidence is that the chance of us going to the IMF for money is zero," Rajan said at an event on the sidelines of the annual IMF and World Bank meetings of finance minister and central bankers...........

Read..........

RBI governor Raghuram Rajan's initiatives may see public banks close valuation gap with private peers

MUMBAI: Stock markets throw up many a paradox. But nothing is starker than the valuation gap between the public sector banks and private ones. Of course, there may be good reasons for that, but that may be changing soon if the Reserve Bank of India governor Raghuram Rajan has his way in transforming the banking system treats loans recast and defaulters.......

Read - ET

HC Stops SBI’s Move to Withdraw Check-off Facility

........SBI’s move to discontinue the check-off facility, effected during the term of its just-retired chairman Pratip Chaudhuri, was seen as a way to quell trade union activities. The High Court verdict was closely watched as an order supporting the axing of the facility could have made similar trade  union arrangements elsewhere vulnerable............

Read - ET

RBI cautions co-op banks against lump sum disbursal of loans to builders

Builders and real estate developers may no longer get large sums of money as loans at one go from the government. The Reserve Bank of India (RBI) has advised the state and Central urban cooperative banks to link the sanctioned individual housing loans to construction stages, interest/EMI etc before disbursing such loans to them. Known as "innovative housing loan schemes", banks generally disburse sanctioned individual housing loans to builders as a lump sum instead of linking it to the stages of construction...........

Read - IE

RBI reviews norms on urban co- op banks’ unsecured lending

The Reserve Bank of India on Thursday said unsecured loans worth up to Rs. 10,000 sanctioned by urban co- operative banks would be exempt from the aggregate ceiling on unsecured exposure of 10% of total assets as per audited balance sheet as on Mar 31 of the previous financial year. Earlier, the said limit was raised to 25% of the bank's total assets with the permission to grant unsecured loans of up to 20,000, with prior approval of the central bank, to individual accounts.........

Read - FPJ

RBI grants infrastructure NBFC status to IIFCL

New Delhi: The Reserve Bank of India (RBI) has granted the state-owned India Infrastructure Finance Co. Ltd (IIFCL) the status of an infrastructure non-banking finance company (NBFC), but with relaxed capital adequacy requirements—a move that will allow the company to lend more to infrastructure projects and also not require the government to recapitalize it to meet capital requirement norms prescribed for infrastructure NBFCs.......

Read - Mint

24 months a bit too long?

Reserve Bank of India Deputy Governor K C Chakrabarty said on October 5 that new banks would take 24 months to be operational after getting licences. But a look at some of the key steps to be taken after securing bank licences shows the process should not take more than a year. ...........

Read - BS

New banks: More the merrier but will they be better?

......Therefore, having more banks is definitely a good idea as it will usher in more competition which will probably mean better services. In terms of spread of inclusive banking, one may not be too sure as the question is that if there were opportunities, the existing banks would have already been there. But quite surely the RBI will ensure that branches come up in these regions. Employment will increase and there will be better choice for the customers and..........

Read........

Kotak Bank plans to double branches in three years

....."The critical point has been RBI's decision to free up licencing of bank branches" said Kotak, referring to the RBI governor Raghuram Rajan's decision to allow banks open branches freely as long as they were within the parameters prescribed by RBI. Kotak said that the bank would add another 100 branches before the end of the current financial year. .........

Read - TOI

RBI concerned as credit growth outstrips deposit mobilization

..."Our problem is that banks are giving too much loans compared to the deposits they mobilize. Their credit-deposit ratio is 78% and their incremental CD ratio is more than 80%. Our concern is that if banks are not able to mobilize deposits, so how will they be able to grow their loans," said KC Chakrabarty, Deputy Governor, Reserve Bank of India speaking at an event to launch a financial inclusion programme by Kotak Mahindra Bank to cover milk producers in Gujarat and West Bengal.........

Read - TOI

Finance Ministry asks public sector banks to ramp up rural ATMs

The Finance Ministry today asked state-run banks to expedite installing automated teller machines (ATMs) in rural areas, which is falling short of the budget target. Against the target to install 34,668 by the end of March 2014, the public sector banks have put up only 5,726 ATMs by end of August, Snehalata Srivastava, the additional secretary in the Department of Financial Services, said.......

Read - ET

Do-it-yourself becomes new banking norm

...."Most online transactions are real-time and do not involve paper-based transactions , thus saving customer time. We are witnessing rapid customer adoption for net banking over and above their normal account related transactions. They are now viewing net banking as a single stop for all their banking requirements,"...........

Read - TOI

Bigger, better, safer! RBI's new move to improve mobile banking

.......The committee shall examine the how practical it is to use encrypted SMS-based funds transfer. The operation is executed by using an application that can run on any handset. The committee set by RBI shall lay a road map for the implementation of the concluded solutions and other options for the mobile banking..........

Read.........

Six banks sign up for Aadhaar-based remittance

Customers of six banks will now be able to transfer money from one bank account to the other by keying in the receiver’s 12-digit Aadhaar number. The National Payments Corporation of India (NPCI) launched the Aadhaar-based remittance system in association with Unique Identification Authority of India (UIDAI) and six banks..........

Read - HBL

Plan panel officials disagree with Rajan panel report on state funding

.........Planning Commission officials, who do not wish to be identified, spoke against replacing the Gadgil-Mukherjee formula; they say it is a time-tested one. Doing away with the existing classification of special category status to remote and hilly states, as recommended by the Rajan panel, needs approval from the National Development Council (NDC, comprising Centre and states), they contended. “Any move to alter the time-tested Gadgil-Mukherjee formula could open a can of worms,” a key Planning Commission official told Business Standard........

Read | Business Standard

Rajan's growth report on states is flawed: Bibek Debroy

..........Assuming it was a criterion, the present exercise isn't particularly easy to understand. It smacks of arbitrariness and subjectivity.  Having said this, is there any neat way to figure out why Gujarat does relatively badly in the Raghuram Rajan report? Not really, because the report doesn't give raw data. In sum, this entire report is rather cavalier in approach.  

Read - Business Today

When policy interventions go wrong

When the Andhra Pradesh government sought to restrict microfinance institutions' (MFI) activities in December 2010, it was with good intentions. But the results were bizarre: "The average household expenditure dropped by 19 per cent, and the largest decrease was observed in expenditure on food," says The real cost of credit constraints: Evidence from micro-finance, a recent paper from the Indira Gandhi Institute of Development Research (IGIDR) written by Renuka Sane and Susan Thomas.............

Read | Business Standard

Bank cap infusion likely to go up by Rs 5,000 crore

.....Last week, a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram had decided that there would be sufficient fund infusion in the banks to enable them to extend loans to select sectors. The Finance Ministry had said the step would revive consumer demand and in turn economic growth. But the measure was later criticised by RBI Deputy Governor K C Chakabarty as being imprudent. “It is not a very prudent measure to increase consumption by lowering interest rates. If the rate goes up it will become NPA,” Chakrabarty had said soon after the government decided to prop up consumer demand through lowering of rates......

Read - Deccan Herald

Banking on festival cheer

.............This anxiety forced Finance Minister P. Chidambaram to announce that banks would offer cheaper loans to stimulate demand for two-wheelers, cars, and consumer durables. Significantly, Mr. Chidambaram’s hint to banks came after a meeting he had with the RBI Governor Raghuram Rajan. He also indicated that banks would be provided extra capital to execute his `pump-priming plan’...........

Read - The Hindu

Taxpayers still face IT department’s computerization hurdles

........While taxpayers have so far been patient, looking at the long-term benefits that computerization would bring, how long can they be expected to put up with such new problems arising every year? While one understands that all bugs in a system cannot be completely eliminated, the tax department needs to be much more proactive and needs to take steps to ensure that taxpayers do not suffer because of the department’s shortcomings.

Read - Mint

EC eyes black money flow, asks banks to scan deals

............As per the guidelines issued to the banks, any unusual transfer of money through RTGS ( Real Time Gross Settlement) system during the poll process without any precedent of such transfer will have to be reported. Further, any deposit of cash or withdrawal of cash exceeding Rs one lakh from back account of candidates or spouse or dependents as mentioned in the affidavit filed by candidates, which is available with the commission, should be reported.........

Read - FPJ

Axis Bank to pay Rs 66,000 for denying credit cards to cops

.The New Delhi District Consumer Disputes Redressal Forum observed that the bank had "deliberately declined" to grant credit card facilities to the officers, of SHO/Inspector rank, despite RBI guidelines and held the bank guilty of "unfair trade practice". "We have gone through opposite party's (bank) reply and evidence and noticed the bank had taken entire salary account of Delhi Police officials assuring all of them to provide credit facilities as per RBI guidelines. The opposite party deliberately declined complainants' credit card applications arbitrarily despite RBI guidelines. ..........

Read - ET

All about closing credit cards!

Enough can’t be said on the diligent care one must take when handling a credit card! Sometimes, you may feel that a particular card is not of much use to you, or you may realise that you are holding several credit cards and many of them are not getting used. So you may wish to cancel your credit card. However, you may sometimes realize that despite taking the initiative to cancel the card, you continue to receive statements from the bank declaring that you have unpaid dues in your account. What is the reason behind this?.....

Read - FE

THE CURIOUS CASE OF RAGHURAM RAJAN

........However, the “man of the moment” has his plate quite full and absolutely scrambled. Though his intention to further open up the financial sector is in consonance with his academic and professional credentials, he also now has to reconcile with the existing focus on inflation in the central bank. Last three Governors of the RBI (D.Subbarao, Y.V.Reddy and Bimal Jalan) were known to be cautious in their approach to open up, but whether Rajan would break the tradition (true to his background) towards a more liberalised monetary sector or not – remains a question of immense interest in near future. Meanwhile, his posturing is generating fair amount of curiosity in the minds of everybody involved and interested in the monetary affairs of the country.

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

Ignore the IMF, Go with Rajan on Growth

On India’s growth prospects, RBI Governor Raghuram Rajan is more correct than the International Monetary Fund (IMF). The Washington-based multilateral lender, which released its World Economic Outlook on Tuesday, has trimmed India’s growth forecast down from 5.6% to 3.8%, calculated at market rates. This is the steepest fall in terms of.................

Read - ET

RBI vs GoI

........While RBI is signalling a hike in interest rates, the finance ministry has said it is willing to give banks more capital provided they used this to lend more in certain areas and at lower interest rates. If the finance ministry gives banks Rs 100 of additional capital, banks can lend up to Rs 1,000 given the current capital adequacy norms. And since banks will now have to raise less funds in the market, either through CASA or bulk deposits, their cost of funds will fall and can be passed on to consumers. ............

Read - FE Editorial

Rajan effect working well for currency

Raghuram Rajan seems to be a perfect talisman for the rupee. Ever since he's taken over as the governor of the Reserve Bank of India, the currency has appreciated by 8.76 per cent and is now stabilising between Rs 61-62 against the dollar. Not surprisingly then that Rajan has opted to cut the marginal standing facility (short-term rates) by another 50 basis points, barely weeks after he cut it by 75 basis points on September 20. Incidentally, his predecessor had opted to tighten short-term rates to bring more stability to the rupee, and Rajan's rollback indicates that the currency crisis is over for now.........

Read | Business Standard

Bank Tarzan meets Jane(t)

Washington, Oct. 9: President Barack Obama nominated Janet L. Yellen as the US Federal Reserve chairwoman, one of the most important economic policy-making jobs in the world. The nomination will put Yellen, 67, on course to be the first woman to lead the world’s most influential central bank in its 100-year history. She will also be the first woman to head a central bank in any Group of Seven industrial nation. The elevation of Yellen, who has been the Fed’s vice-chairwoman since 2010, will provide some relief to global markets, including that in India, which will expect her to tread carefully in winding down the US economic stimulus........

Read - The Telegraph

Technical committee to look at ways to boost mobile banking

.......The committee will also look at any other solution that could expand the reach of mobile banking and, accordingly, draw up a roadmap to implement the solutions. B Sambamurthy, director, Institute for Development & Research in Banking Technology, will be the chairman of the committee and Vijay Chugh, chief general manager, RBI, the member-secretary. The committee members will comprise officials from State Bank of India, ICICI Bank, HDFC Bank and Axis Bank. It also includes Anthony Thomas, chief information officer, Vodafone India.......

Read | Business Standard

Sound Move, Reserve Bank

With the concrete measures now taken by the RBI, the rupee is beginning to settle at around 60-61 against the dollar, much to the relief of exporters. Against this backdrop, the RBI has preferred further easing of liquidity by cutting the marginal standing facility rate. The ongoing festival season that is to stretch up to March next year is expected to create a rise in demand, leading to credit expansion. The  lending and deposit rates of banks to that extent might require some alignment. In a nutshell, it is a welcome development by the RBI to make conditions more conducive for banks to operate, which will contribute the growth of the economy. The important thing is that Dr Rajan has successfully tried to restore much needed confidence in the markets, which is a right beginning to take the economy forward to high-growth terrain.

- SRINIVASAN UMASHANKAR, Nagpur (ET) 

Making the job easier...........

The Finance Minister could have named the group which should own these seven banks, making the Jalan commitee's job easier. He could then have the upper hand in dictating the future of the pending applications.

- T K E Das, Ex-General Manager

Priority for non bank finance companies in bank licenses: K C Chakrabarty

MUMBAI: Government will give non-banking financial companies (NBFCs) priority when awarding new commercial banking licenses as they already own an existing network of financial services in the country, central bank deputy governor K.C. Chakrabarty said on Wednesday..........

Read - ET

Ban has come at the right time: Chakrabarty

.....On the timing of last month’s directive to banks asking them to desist from offering zero per cent EMI schemes through credit cards, Chakrabarty said the timing is absolutely right. “During the festive season, mis-selling is at its peak, so wrong things should not happen when more people come (to buy). Whatever you (banks) are doing, convey it to the customers,,” he said. “There is no ban on giving loans on credit cards. What we are saying is don’t charge customers. Don’t charge more per cent by saying zero per cent,” he added.......

Read - HBL

Credit card loans: RBI says has no issues if done transparently

....."There is no ban on giving loans on credit cards. Don't charge 12 per cent actually and claim that I am charging only zero per cent interest," RBI Deputy Governor K C Chakrabarty told reporters here. It could be noted that RBI had last month banned zero per cent interest schemes offered by various bank to credit card holders saying the scheme lacks transparency. The move is likely to dent banks festive season sales........

Read - FE

Obituary

E.P.VEERARAGHAVAN (81) Retired Officer, RBI, Chennai expired on 5-10-2013. Ph: 22604902.

Hindu