Salaam to Salim's HR vision

Shri Salim Gangadharan, Regional Director, Reserve Bank of India, Kerala retired from the Bank's service as at the c.o.b. on 31^st October 2013, bringing to end an illustrious career of over 36 years. I had the fortune of being his Private Secretary in FED during 2008 - 2011 till he took over as Regional Director, Kolkata. Salim Sir, a thorough gentleman is bestowed with both intellect and compassion in abundant measures. He used to be very approachable, down to earth and helpful in nature. It was a great learning experience working with him. In fact, the guidance and motivation given to me from time to time made me more confident and helped me to excel in my work. His radiant ever smiling face was infectious which made me as well as the other staff at ease during our interaction with him. For him 'Reserve Bank' is not the top management or the various cadres but all the people –‘RBItes’ who made RBI. “Human resource is the greatest asset of the organization” he used to say and left no stone unturned in optimally utilising these resources for the benefit of the organisation. He believed in sincerity, honesty and hard work and he himself has set an example with his passion for work. As his innings with RBI has come to an end, I wish him happy, peaceful and a healthy retired life ahead. 

- Beena Nair, PS, DEBC

Pensioners Meet at CAB Pune

.......While welcoming the retirees O-in-C Shri Panigrahi mentioned that such meetings are opportunity to the administration of the College to interact with the senior retired colleagues and to invitee suggestions from them for improving the customers’ service. A lecture cum presentation from Dr. H.S.Deshmukh a renowned Uro-surgeon was also arranged .........

Read - ReTyred Express

Short term problems are easier to solve - Letter to Governor by P.R.R.Nayar

....That age is one of the decisive determinants for monetary relief – need for financial security increasing with each passing day – is clear from the Government’s benign treatment of its “very senior" pensioners.  A similar approach is both logical and possible in the RBI too even as things stand..........

Read........... 

SCORING WITH CRICKET

What do bankers turn to if they have to make a succinct point? Cricket. RBI Governor Raghuram Rajan said the diverse analyst assessments of the Indian economy are akin to the oft-shifting stance of the fans towards the cricket team. Indian cricket fans are manic-depressive, he said in Boston. They elevate players to god-like status when the team performs well, ignoring weaknesses; but when it loses... every weakness is dissected. Last week, Bank of Baroda chairperson SS Mundra, commenting on its Q2 performance, said the bank had tried to play with a straight bat on a bouncy wicket, as he tried to explain the difficult market conditions. 
ET

Wrong signals

My View on  "Top 30 NPAs form one-third of total bad loans": 

The following issues need study in a wider context:

i) To the FM’s embarassment, October review revealed that one-third of all NPAs of PSBs were contributed by top 30 NPA accounts in each bank. There is still no indication that any action is under way, beyond 'monitoring'.

ii) While much ado is there about base rates, deregulation of savings bank interest rates did not add to the interest income of real SB account holders.

iii) The Net Interest Margins enjoyed by banks in India are among the highest in the world.

iv) The theory that ‘interest cost is not the major ingredient in project cost’ is interpreted to mean that small borrowers can afford to pay higher rates of interest.

v) Big depositors get preferential rates of interest and big borrowers get attractive terms for borrowing including special attention when their loans become NPAs.

vi) The impact of changes in base rates on ground level interest rates(both deposit and credit) administered by banks during the last 3 years needs a closer examination.

vii) The finance ministry’s recent linking of interest rates on festival season consumption loans to release of additional share capital to PSBs (Secretary Rajiv Takru made an open statement on the issue during 3rd week of October) has sent wrong signals to stakeholders in the banking sector. 

- M G Warrier, Mumbai

FAIR-WEATHER FRIENDS

When Duvvuri Subbarao described foreign banks as “fair-weather friends”, it was not clear what was the trigger. Nearly two years later, his successor Raghuram Rajan has provided the answer. During the peak of the credit crisis, the CEO of a foreign bank from New York called up its India head to transfer all funds to headquarters. Thankfully, when the local head consulted the RBI, he was told not to do so. They may just remain fair-weather friends. 
ET

Countdown begins for new bank licenses

........ However, we are to recall that, the Raghuram Rajan Committee, in 2008 pointed out that "the Indian banking sector is fragmented and there are too many small uncompetitive players in the system". This thought will take us to look at the prospect of RBI giving "conditional" licenses in 2014 to some of the applicants; in fact, we feel that this may be done in a phased manner! We do not know what the applicants have stated in their "Mission Statement"! It is possible that there may be some who may have proposed, (or indicated) their plans to take over or buy out some of the smaller banks in existence; or even have had 'secret' talks for mergers! Who knows, there may be someone, who wants to buy out the several cooperative banks in the country, who are scattered all over the place!.........

Read - Moneylife

Banks set up 24x7 self-service branches

............Customers can do real-time cash deposits, withdraw money, deposit cheques and get instant receipts, transfer funds, open fixed deposits and generate bank statements at these branches. These also offer account-related information through internet banking and video conference............

Read | Business Standard

Banking reforms

......Other weak sectors are non-banking financial companies and co-operative banks. Rajan will need strong political support to bring about the reforms that he wants to. Alongside, we require strong commercial banks to compete with multinational banks for which the amalgamation of PSBs is necessary......

Read - FE

Indian Banks Better than Foreign Peers on Basel

............Though RBI is yet to provide any guidelines for liquidity risk management, the guidelines as per the Basel document require banks to maintain greater liquidity and improve their ability to withstand liquidity stress. We believe that Indian banks are positioned fairly well to adapt to the new liquidity requirements, when they become applicable, given that the banks maintain an aggregate CRR and SLR level of around 30% of their deposit base..........

Read - ET

RBI and FII debt

The RBI top brass has been quite curious about why FIIs are still not buying Indian government debt despite yield difference. Some of those who met RBI in pre-policy meetings said the answer lies in the governor's CPI leaning. If CPI is going to be the yardstick for interest rates, then the central bank may not be done with rate hikes as yet. Investors would rather wait than invest knowing capital loss is for sure.

ET

Experts doubt CPI-based Inflation Indexed National Savings Certificates success amid surging prices

.........“RBI Governor Raghuram Rajan has mentioned the need for a product that offers a real rate of return several times. He believes that such a product  will divert investments from gold as a medium of saving. If IINSCs don’t succeed, there will be others that will follow suit,”...........

Read......

Every anna counts

......One day, my uncle proudly displayed his ‘anna’ collection to his father’s friend. But when the friend broke the news that all those coins were worthless, my uncle was shattered; he began crying piteously. All the money he had saved by virtually starving became junk. When I see images on television of wailing people who have lost money at the hands of unscrupulous operators, I am reminded of my broken-hearted uncle, and of the need to exercise care with money..........

Read - HBL

Are cryptocurrencies the way of the future?

.....India is a potential hotspot for growth of cryptocurrencies and the community. It seems the cryptocurrencies user community in India has quite a strong base, exceeding 50K in number. But the regulatory body such as RBI seems far from regulating or accepting it. However, this has given an opportunity for the cryptocurrency community in India to expand, develop cryptocurrencies-related businesses in the space, and educate people on the opportunities for economic growth associated with cryptocurrencies.......

Read - The Hindu

NGO demands review of SKDRDP

.........Mr. Nayak said the SKDRDP received a sum of Rs. 2,600 crore at an interest rate of 8.5 per cent from NABARD (National Bank for Agricultural and Rural Development) and other banks while lending the same to self-help groups at a higher rate of 16 per cent. Money charged in excess of 12 per cent interest charged by nationalised banks should be returned the beneficiaries, he said. Dharmadhikari of Sri Kshetra Dharmasthala Veerendra Heggade recently defended the 16 per cent interest. Mr. Heggade said the SKDRDP has been permitted by the Reserve Bank of India to charge interest at 24 per cent........

Read - The Hindu

How pilgrims, and banks, progressed

.........What the Knights Templar got right was creating a monetary authority that people could trust. Essentially, this is what a central bank in a country, like the Reserve Bank of India (RBI), also does. But these days, besides just backing a currency and acting as the government’s official banker, central banks also control the total amount of money that is in circulation in a country. One such target is controlling inflation. One way to easily increase money supply is by just printing new currency notes. But printing notes at will is a risky business and too much too soon can suddenly spike the inflation rate. So central banks choose to control the interest rate instead..........

Read - The Hindu

Taxability of expatriate benefits: Some key issues

...........The ruling upheld that the tax paid by the employer on behalf of the employee constitutes a non-monetary perquisite in the hands of the employee, making it eligible for exemption under Section 10(10CC) of Indian Income Tax Act. As a result, the employer can pay tax on behalf of the employee on non-monetary perquisites with a single gross up instead of multiple gross up. The court further clarified that tax paid by the employer is also excluded from the definition of salary for the purpose of valuing accommodation benefit provided by the employer to the employee...........

Read - FE

Using Mobile Banking for New Microfinance Business Models

........BanKO is starting to blur the lines between microfinance and mobile banking. It is still very early days in our own business and for similar business models in general. But we have already begun to see good results from our work and we have learned a lot along the way. Exciting innovation can happen when elements of these two worlds begin to merge.

Read......

Educated persons found lacking financial literacy, often!

............While there are various other aspects of financial literacy, it is important to equip oneself with bare minimum skills and knowledge necessary to become financially literate. Many investors end up losing their hard-earned wealth in the absence of financial literacy, so it is better that one equips oneself with financial literacy.

Read - Moneylife

Commercial paper issuances set to get boost as short-term rates ease

Issuances of Commercial Papers (CP) are set to get a get a boost as the Reserve Bank of India (RBI) has eased the system liquidity further due to which short-term rates are trading between the repo rate and the Marginal Standing Facility (MSF) rate. As per estimates of issue arrangers, CP coupon rates dropped by about 20 basis points since RBI's second quarter review of monetary policy on October 29.........

Read | Business Standard

REAL ESTATE SECTOR AGHAST OVER RBI’S HIKE IN REPO RATE

..........." Considering the overall economic situation and challenges being faced by the industry, we were looking forward to the reduction in repo rates, to ease the burden on the buyers and developers. The continuation of the policy to increase in repo rates in the monetary policy, to control the inflation, will further increase the problems of the developers who are grappling with high interest rates. We were hopeful that besides easing the liquidity, RBI will start addressing the industry concerns for growth and give the necessary impetus.” ...

Read - FPJ

Boosting Apex Bank's Balance Sheet - M.G.Warrier

.........A central bank with a strong balance sheet will be an added support to government when fiscal policy gets into rough weather. RBI, at this stage, should think in terms of generating reasonable income from deployment of captive funds it is mandated to manage, without compromising on safety of investments. In this context..........

Read - The Global Analyst

Nachiket Mor likely to be appointed RBI Deputy Governor: report

Raghuram Rajan's man Friday

New Delhi: Nachiket Mor, once tipped to head India's largest private sector lender ICICI Bank, is likely to be appointed as a Deputy Governor of the Reserve Bank of India in 2014, the Business Standard reported. Mor, 49, is currently a director of the central board of the RBI. He was appointed to this post in May earlier this year. Following his appointment to the RBI, Mor has been given major responsibilities........

Read.........

Why exclude PSBs?

RBI may have more role for Nachiket

This refers to the report "RBI may have more role left for Nachiket" (November 4). Though Nachiket Mor's credentials are excellent for the Reserve Bank of India's financial inclusion panel, the absence of any public sector bankers in the panel is surprising............

Read | Business Standard

Perks - Employees should have the freedom to decide

My View on  "Give Civil Servants Cash, not LTC": 

The temptation to convert perks into hard cash by foul means is not a phenomenon unique to civil servants enjoying LTC. Your edit has nailed a malady which has spread into the entire remuneration and compensation system in the organised sector across public and private sectors and the legislators. Depending to the specific payment you refer to, justification will differ from tax issues to industry comparisons and legal constraints to employee preferences. One wonders why government and employers feel so shy about transparency in the payments they make. Limiting comments to the perks issue, government should consider the option of including this issue in the Terms of Reference of VII Pay Commission asking the Commission to structure the pay scales keeping in view the range of Cost to Company (Govt) per employee in each category. Pay and all allowances including government expenditure on housing, healthcare and retirement benefits should be factored in C to C. The employees should have the freedom to decide the ratios of various perks they would like to enjoy within their overall eligibility. 

- M G WARRIER, Mumbai 

NEED OF THE HOUR ?

I feel that even our Chairman Sh. S.K.Roy is also helpless in this matter since he is supposed to obey the orders of current FM who is known to be insensitive to sufferings of aged LIC Pensioners.  FM's fear is that Pension Upgradation if granted to LIC Pensioners will have to be passed on to Banking, General Insurance as well as RBI Pensioners i.e. entire Financial Sector for which he is not ready at all............

Read....

Yet to Play The Game!

.........Surprisingly, RBI has most of the times talked about opening more banks as part of financial inclusion, overlooking the potential of India Post. Even a few days back, RBI governor Raghuram Rajan stated, “Easier entry of foreign banks into India is welcome. This would raise competition and efficiency and bring in technology and expertise to foster financial inclusion.” But in reality, without considering India Post as a tool for financial inclusion, it will be very difficult for India to achieve its vision of including the masses..............

Read - The Sunday Guardian

Private interest litigation

.............Apart from the Court ruling that allegations of mala fide are no good unless there is actual proof of such mala fide, the larger point is that highly paid professionals do take up government jobs, either for the prestige attached to them or in order to serve a larger cause. While UIDAI chairman Nandan Nilekani is an obvious example, a more recent example is that of RBI Governor Raghuram Rajan. If every government action is going to be the subject of PILs, it is difficult to see how the government can possibly run............

Read - FE

Why RBI is a failed doctor

..........Basic problems of the economy are bleeding of Government revenues via leakages and corruption; increased consumption by Government servants and spending for buying of votes; and using foreign investments for meeting consumption needs. The RBI is helpless. Inflation will be controlled but economic growth will suffer if it increases interest rates. On the other hand, growth will be helped but inflation will increase if it lowers interest rates. The RBI is trying to find a middle course between these twin problems. This is like a doctor trying to find a middle treatment for a patient suffering from diabetes, asthma and typhoid at the same time................

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

Reserved bang

............Rajan is known to ruffle feathers with his undisguised criticism and sharp, spot-on analysis of economic situations. He correctly predicted the global financial crisis as professor at the University of Chicago Booth School of Business three years before it toppled economies in 2008. Before he was appointed the chief economic adviser to the government, Rajan had severely criticised the government's performance at a book launch in Delhi. His one-year stint as economic adviser was seen as an apprenticeship before the real job at the RBI................

Read - The Week

Battling unintended consequences

................Then there was the push to encourage more foreign borrowing by Indian companies in the run-up to the financial crisis, despite the concerns of the Reserve Bank of India (RBI). Managing the sizeable capital inflows was already a challenge, and the central bank was also raising local interest rates to check inflation. Going abroad offered a convenient and cheaper unhedged option for companies, since they expected the rupee to continue to appreciate. Former RBI Governor Y V Reddy put a stop to the borrowing binge in 2007. That action, for which he was severely criticised, singularly prevented more painful fallout from the global financial crisis. But it did not prevent the inadequate preparation for dealing with the pressure of maturing external liabilities a few years later.............

Read | Business Standard

We intend to bring inflation down

.........We talk to people at the finance ministry every day. The lines of communication are open and they were open before also. I don't think the image of the RBI and the finance ministry not communicating is a fair one. But whether we are on the same page on everything is a valid and legitimate question. There are some issues on how we will achieve the common goal of growth and controlling inflation. But the timeframe to achieve that can be different. On many issues, whether it was the RBI under Dr D. Subbarao or the RBI today, I don't think there was a lack of communication or a lack of agreement. ..........

Read - The Week

Rajan rules out rate target, inflation key concern

.......The new RBI governor has once again said inflation-busting is the key objective of the monetary policy, especially at a time consumer price inflation has resolutely stayed above 9 per cent. The subtle, nuanced shift in the recent monetary policy statement by highlighting consumer price inflation rather than that measured by the wholesale price index (WPI) has sparked speculation that the RBI may raise interest rates once again. Rajan admitted that as the RBI hunkers down and tackles inflation, “there may be more of a growth sacrifice”........

Read.......

Despite the downturn, banks preferred choice of many job aspirants

........."Indian banks have immense potential," says Priyadarshi. "Because of their global outreach and size, they are exciting to work for. They provide excellent working conditions and learning opportunities, attractive compensation packages, friendly work environment, online learning and more." .......

Read - Business Today

RBI may allow gold loan NBFCs to increase loan-to-value ratio

...........Muthoot Finance lost several loans valued Rs 1 lakh to Rs 2 lakh to banks after RBI insisted that loans above Rs 1 lakh should be disbursed only in cheques. “Such loans are largely disbursed to traders and small entrepreneurs who are in need of instant cash for emergencies,” KP Padmakumar, executive director, Muthoot Finance had said while talking about the September quarter results.

Read.........

Top 30 NPAs form one-third of total bad loans

..................Reserve Bank of India Governor Raghuram Rajan had last week sent out a clear message that willful defaulters would be dealt with strongly. Asserting that the finance ministry and RBI were on the same page when it came to recovery, he had stated that this is not being said to create an atmosphere of fear or to be vindictive.......

Read........

India’s banks will struggle for growth as economy slows

............And things do not look like they are going to improve any time soon. With a sluggish economy and persisting policy bottlenecks, the chances of companies taking on more loans to expand business are low. If the RBI is unable to reduce rates for a protracted period, given currency declines and high inflation, Morgan Stanley predicts that bad loans will increase by more than 4 per cent to 5 per cent over the next two years, and several companies might be forced to restructure their loans. State-owned banks are running mostly with stretched balance sheets and net impaired loans at some of these banks are now almost 100 per cent of equity,..............

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

Rupee to trade in 62-63 range without RBI measures: Assocham

The rupee is unlikely to fall below 63 to a dollar even if the Reserve Bank of India (RBI) withdraws temporary measures such as direct sale of dollars to oil importing companies and the foreign currency non-resident (FCNR) swap facility put in place to support the currency, as speculative activity around it has mostly ebbed in the foreign exchange market, according to a paper released by the Associated Chambers of Commerce and Industry of India (Assocham)................

Read - The Hindu

ISLAMIC BANKING: Need of the hour

.......The position of former governor of RBI D.Subbarao regarding Islamic Banking was not favourable but newly appointed governor of RBI Dr. Raghu Ram Rajan has already given green signal to Islamic Banking in India by giving affirmation to Kerala by setting the stage for starting up the first Islamic non-banking finance company (Al Barakah Financial Services Ltd) in India with the partnership of state government department (Kerala State Industrial Development Corp-KSIDC). My memory is still afresh with...........

Read - Greater Kashmir

Rajan's two-tier coal pricing idea gets Plan panel support

The Raghuram Rajan plan for a dual pricing of coal has found support in the Planning Commission. The Commission has asked the Prime Minister's Office to introduce two-tier pricing of the fuel that could be operated within the framework of the current fuel supply agreements (FSA) India's public sector Coal India (CIL) is now signing up with thermal power companies..........

Read - IE

Monetary policy and inflation control - Dr.S.S.Tarapore

........ The statement recognises that the RBI accommodation to banks can only be a marginal support and going forward, the more durable strategy for mitigating mismatches between supply of and demand for funds, is for banks to step up efforts to mobilise deposits. With the more recent upturn of inflation, inflation expectations remain elevated. The policy statement recognises that it is important to break the spiral of rising price pressures in order to curb erosion of financial savings. The policy stance and measures are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth. The RBI would “ closely monitor inflation risks while being mindful of the evolving growth dynamics.” The RBI has to undertake a fine tightrope balancing act between its legitimate concern for inflation control and the government’s instinctive preference for fostering a revival of growth, particularly in the industrial sector...........

Read - FPJ

An evolving multilateralism - Dr.Subir Gokarn

...........Like the previous two domains, managing global macroeconomic stability has also seen paradigm shifts. The dominant International Monetary Fund (IMF) view of the world was shaken by the obvious inappropriateness of its recommendations in response to the East Asian crisis in 1997-98. This led to the affected countries and their similarly endowed neighbours emphasising the value of self-insurance, in the form of rapid accumulation of foreign exchange reserves. This assured them some independence from the multilateral framework in the event of another crisis. But......

Read | Business Standard

RBI may have more role for Nachiket

......Mor has also been included in the four-member high-level advisory committee headed by former RBI governor Bimal Jalan to vet bank licence applications. Many believe these to be the precursor to something much bigger. If the buzz in the central bank corridors are anything to go by, a much greater role at RBI could be coming Mor’s way. He is seen as a strong contender to be a Deputy Governor. Of the four deputy governors RBI has, two are promoted from within the ranks, while the other two — usually an economist and a former commercial banker — are hired from outside. The terms of two RBI deputy governors are to end in 2014. Anand Sinha, promoted from within RBI and spearheading the process of new banking licences, retires in January. And, former banker K C Chakrabarty’s term ends in June........

Read | Business Standard