WB discourse on financial inclusion - Dr.N.A.Mujumdar

This article was written by Dr N A Mujumdar before his demise on April 6, 2014

...........Hence financial inclusion is not a mechanical process of multiplying numbers. Creating new bank accounts does not necessarily translate into use and realisation of benefits. Financial inclusion is typically defined as the proportion of individuals and firms that use financial services. But to get the real picture, one has to look beyond mere numbers. The report cites two extreme cases to demonstrate the point. One, the case of the dormant accounts of South Africa referred to above. India has gone through the process, and in fact, the Reserve Bank of India has addressed giving a qualitative content to the concept of financial inclusion..............

Read - FPJ

Leave RBI alone

Former RBI deputy governor K.C. Chakrabarty’s statement that it should be made accountable to Parliament as it is created by the legislature, and has “more autonomy and less accountability”, is surprising even though coming from someone as outspoken as Mr Chakrabarty. He admits the RBI’s current accountablity to Parliament is through the finance ministry, but obviously feels this is not direct enough as he suggests a debate on it. That could be fraught with danger........

Read - Deccan Chronicle

RBI is now govt’s ATM

...............But the main point is RBI is making a lot of money. And at the end of the year, much of its profit is paid as dividend to its master. Which is the Government of India. Last August, it paid a dividend of Rs 33,000 crore to GOI, equal to half of the 3G bonanza, and twice of its previous year. At this rate it is proving to be a reliable ATM for the government. Is that a healthy relationship?.......

Read - Mumbai Mirror

Not an easy task, but good in national interest

My View on  "RBI’s Accountability to Parliament – A. Seshan": 

RBI Accountability to Parliament - through Government (Executive) or directly placing it's Annual Reports to Lok Sabha (Speaker) and Rajya Sabha (Chairman) i.e. Legislature under Constitution of India will need revisit to RBI Act and political consensus for amendments. In the power corridors, day to day actions and precedents matter. Bureaucracy is live to coerce standards vis a viz statements > the authority flow from political authority through them.

As Protocol Officer, I have closely watched the placement of Governor / Dy. Governors / Central Board Directors status in public domain. Arms twisting methods were made from Finance Ministry and RBI side both. Governor forwarding letter addressed to Finance Secretary on the front page of RBI Annual Reports was talked like a report from a chairman of public sector undertaking to controlling officer >> his superior. There were many instances where either one of them was made to wait for the other in his office for few minutes to express superiority though both belonged to bureaucracy cadre. we as a common man understand this body language.

I have watched many such occasions even during prior appointment meetings. I attended a Finance Secretary for prefixed meeting with Governor where FS was asked to make wait for 5 minutes in conference room before taking him to governor's chamber (normally FS was directly taken to Gov chamber)as per rule. When Chief Economic Adviser who was waiting in conf room saw FS he was too surprised and raised eye brows. after 5 minutes Gov comes to conf room and takes FS with him to his chamber by putting his arm on his shoulders. Big men have big behaviors and style of working.

In such a scenario, RBI accountability to parliament will not be a easy task in politico - bureaucratic nixed setup. There could be many more such day to day encounters. But, I will be happy , if it is done in national interest. 

- Chandrabhan Gupta

Counterfeit 5 and 10 rupee notes are in circulation!

........ When she walked into a bank to verify the same, she was shocked to confirm it was indeed a fake currency note and also to hear bank officials admitting that it was common these days to get Fake Indian Currency Notes (FICNs) in denominations of Rs 5, Rs 20, Rs 50, and Rs 100! All those who think that fake currencies in wide circulation are restricted to higher denominations of Rs 500 and Rs 1,000 can disabuse themselves..........

Read - Bangalore Mirror

Ignorant courts

My View on "High Court notice to Reserve Bank of India on reli...": 

It is a pity that High Courts are ignorant about bank notes and coins. While the former are issued by the RBI, the latter are minted by the GOI and supplied to the RBI for distribution.

- Kishore

Updation should be at par GOI

This is in continuation of my mail to you a couple of days ago. If we  are required to fall in line with the regulations of the Government in relation to Pension Updation (revision), we should also be entitled to the benefit of the regulations granting higher percentage of pay as basic pension when the pensioner attains the age of 80 years and above. We should also have the benefit of the merger of  a certain percentage of DA with 'Pay' once DA comes to 100 % of the 'Pay' as is available in the Government. In other words, we should have all the benefits available to the pensioners of the Government. 

- A.Chandramouliswaran

Booby trap

My View on "'Pay revision' and 'Pension updation' two sides of...": 

By dangling a carrot of 'updation' and re-opening of pension option to the existing employees, the Govt. of Inida is very cleverly and motivatedly trying to break the unity of RBI employees-past & present. All of us should be wary of the hideous motives of GOI/Min. of Finance and should not get into the booby trap. 

- Anonymous*

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Let's continue our mission with new Govt. also..................

There appears to be confusion and loss of perspective while dealing with the issues and we have forgotten that the RBI Management had assured A+ position to the RBI employees right from its inception which has found expression in various settlements reached with the various Associations. To quote from the RBI History: 'As a Central Bank, the Bank  had special responsibilities as an employer.....it had to provide sufficient remuneration and incentives to attract personnel of high calibre, with integrity and ability well above the ordinary.....In the tradition of a progressive employer, welfare measures such as passage concessions, medical facilities and provision of housing accommodation were also taken.....he (Governor) and the Directors were prepared always to view the cause of  the staff sympathetically ad have already laid down a policy that we should be prepared to give our staff slightly more than what other comparable are prepared to pay, thus giving a lead to a policy of enlightened employment of white collar labour.'  Yes, employees of a Central Bank deserved better treatment in the matter of wages and perks and this solemn assurance was upheld on the floor of Parliament. My humble request to Shri L.R.Parab is to lay our hands on the said Statement if necessary under RTI.  It was sometime in 1986/87.  I had prepared a note on the subject sometime back which seems to have been overlooked for some inexplicable reasons.  (I was closely associated with handling of these issues when I was in erstwhile PPD).  To be specific, in terms of para. 2(2) of the Staff Regulations,  'Nothing in these Regulations shall operate to override any special agreement entered into by the Bank with any of its employees.'  There is legal sanctity behind these Settlements and the Management simply cannot withdraw any of these service conditions unilaterally (at the behest of the Govt).  One recalls, the Government had told RBI to withdraw the facility relating to travel abroad on LFC.  (This was an extension of the travel to Nepal which was already available to employees hailing from Nepal).  In reply, the Govt. were told that the facility cannot be withdrawn unilaterally by the Bank, which will amount to a breach of the Agreement.  Later, the Govt. did not pursue the matter and the facility continues to this day.  The Governor and the Central Board are new and cannot be expected to be fully aware of the historical perspective and further developments unless properly briefed.  The basic issue is, has there been any change in the situation or circumstances when the approval for introduction of the Pension Scheme was accorded by the Government. Govt. officials on the Board may come and may go (or for that matter some top bosses in RBI) but should this relationship between the RBI Management and employees and the basic structure of service conditions including wages/perks and the Management's commitment can be allowed to change in a manner detrimental  to the interests of the employees (including retired employees).  If the present Govt. has failed us, let us take up the issue with the new Govt who hopefully would restore the autonomy/independence of the credible institutions like RBI as promised by them.  

- Surendra Khot  

Now, nano ‘fingerprints’ to secure credit cards

 Scientists have developed invisible nano ‘fingerprints’ that could be embedded into money, gadgets and credit cards, making it impossible to counterfeit the objects. Unique patterns made from tiny, randomly scattered silver nanowires have been created in an attempt to authenticate goods and tackle the growing problem of counterfeiting.  The nanoscale ‘fingerprints’ are made by randomly placing.........

Read - TOI

Online payments, fund transfers rise in acceptance

.................‘The payment system vision document: 2012-15’ of the Reserve Bank envisages encouraging electronic payment systems for ushering in a less-cash society. Its vision is to ensure payment and settlement systems are safe, efficient, interoperable, authorised, accessible, inclusive and compliant with international standards............

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

Every problem is an opportunity to innovate

.........Around that time, a committee appointed by the RBI recommended involving women, tribes and youth in an inclusive approach to finance for better rural reach. But putting together a proposal and mobilising about 1100 women to collect a mandatory amount of share capital (`6,00,000) was not easy. “Back then, very few women ventured into this sector; even the RBI was nervous because it had never issued a license for such a bank. I did a lot of homework and asked many questions to ensure there would be no glitches. Despite this..............

Read - DNA

FinMin directs banks to deal firmly with fraud, wilful default

..........."Cases of fraud have been detected in many banks. There is no difference in fraud and wilful default as both are intentional in nature," Financial Services Secretary Gurdial Singh Sandhu told PTI. "So banks have been asked to declare such cases as wilful default and appropriate legal action should be initiated by banks," he said..................

Read | Business Standard

Pricing sub-sovereign debt

.......This proposal of pricing state government debt at market-based valuations which RBI is currently contemplating is a natural step ahead of the fixed spread method. RBI’s proposal to price state government debt at market-based valuation will make credit availability pricier for states, even those ones that have a robust economy. Currently, ............

Read - Mint

Indian asset manager sees strong investment case for equities and debt

......RBI has given a lot of stability to the rupee. The RBI measures combined with curb on imports have narrowed the current-account deficit. “The country has demonstrated its ability take strong and swift action in the face of a currency slide and capital outflow that has differentiated India from other emerging markets,” said Jagwani..........

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

IDBI BANK ‘More Branches will Make IDBI More Competitive’

......After I had taken over, we opened 305 branches in a year. And this year, we would open 500 branches. Now, see Union Bank and IDBI Bank would have the same asset size, but they have 5,000 branches and we have just 1,400 branches. So, I am scaling up branch footprint.....

Read - ET

Businessman gets anticipatory bail

........Based on a complaint, the Cyber Crime Cell of CCB investigated the matter. It came to light that the petitioner’s driver purchased a small fraction of shares from the complainant. As a share holder, he obtained a copy of an RBI’s report concerning certain financial aspects of the complainant, doctored it and uploaded it on a website, it was alleged. The IP address of the website was traced to the petitioner............

Read - The Hindu

Private banks shun asset reconstruction firm route to offload bad assets

 Even as the public sector banks have made a beeline to dispose of their bad loans to the asset reconstruction companies (ARCs) in the March quarter, private banks are not only unenthused in adopting this route, but have also virtually shunned this.............

Read.........

Waiting to write ‘history’

..............The latest in the series is an authorisation from the Finance Department to a senior secretary to enter into an agreement with the Reserve Bank of India for opening of the government account in favour of the Governor of Telangana State for carrying on ordinary banking business as well as meeting public debt from June 2 when the State will come into existence.............

Read - The Hindu

Cannot consider Madhu Kapur as co-promoter: Yes Bank board

.....“Madhu Kapur being successor of late Ashok Kapur cannot be considered as Indian partner or Indian promoter and accordingly, cannot inherit the rights under articles of association or the status of promoter of Yes Bank,” the spokesman said. “Since the advocates of Madhu Kapur as start up to any amicable resolution requires the bank to recognize her rights as Indian partner, the board is not in a position to accede to any such request for the reason mentioned above.”..........

Read - Mint

The great Indian rate trick

A Reserve Bank of India (RBI) working group’s suggestion to create an Indian Banks Base Rate (IBBR) to which all commercial banks can link their loan rates is yet another shot by the regulator to bring in transparency in loan pricing and ensure better transmission of monetary policy. Reset every month, IBBR will be an average of the prevailing base rates of top 14 public sector banks, seven private banks and three foreign banks. This needs to be done as the existing base rate system has turned into a joke..........

Read - Mint

RBI’s Accountability to Parliament – A. Seshan

Apropos of Deputy Governor (Chakrabarty)'s statement that RBI should be accountable to Parliament I am reminded of the debate we had in the Bank during the time of Dr I G Patel as Governor. A suggestion was then made by the Finance Ministry, at the instance of a Member of Parliament, that the Reserve Bank of India should submit its Annual Report to the Parliament rather than the Ministry of Finance. As a Deputy Director in the then Banking Division of the Department of Economic Analysis and Policy I was asked to handle the matter on a reference from the Secretary’s Department. At this point of time I can only remember a few points I made then. In the first place, I argued that even the so-called independent central banks of the time, with the exception of the Bundesbank, were losing that status. For example, I pointed out the fact that the  Federal Reserve was being subjected to public audit and the Chairman of the System needed to appear before the Congressional Committees to justify the central bank’s policy from time to time. The confrontation between President Truman and the US Federal Reserve System on the question of who decided the Treasury Bill rates was resolved on the understanding that the Fed was ‘independent within government’ and there was no absolute independence whatsoever. I proposed that there might not be any objection to the proposal from the Ministry of Finance and the RBI need not feel panicky over the matter. I do not know what the final reply was from RBI to Government. Surprisingly the RBI History has not touched on this episode. 
Even now the officials of the Bank appear before Parliamentary Committees like the Estimates Committee to answer questions on the RBI’s policy. I myself was a member of the delegation from the Ministry of Finance that appeared before the Estimates Committee headed by Shri Jaswant Singh to discuss public debt. It was called in the context of my article on the burden of domestic public debt in India that had been published in the Reserve Bank of India Occasional Papers(June 1987) wherein I warned of the possibility of an Internal Debt Trap. It led to an intense public debate in the press and  the Parliament with appreciative comments from Shri N A Palkhivala in all the budget speeches he gave in 1988 all over India. There is already accountability of the Bank to Parliament. Whether it can be further enhanced by the Bank being asked to submit its Annual Report to Parliament where it could be discussed like the Economic Survey should be a matter for public debate.  There are many other issues like the objectives of monetary policy, autonomy of the Bank, etc., brought up from to time. I have suggested in the past that, instead of dealing with them in an ad hoc and piecemeal  manner it will be useful to have a high-power committee on the working of the Reserve Bank of India that will inter aliaprepare a new law to replace the Reserve Bank of India Act 1934 after examining all the issues and keeping in mind trends in  central banking in the new century. The thinking on central banking has undergone marked changes ever since the RBI Act was passed.  In the last quarter century many central banks of both the developing (eg. The Philippines) and the developed (eg. New Zealand) countries have enacted legislation to replace the existing Acts on the central bank. It is time for the new government in New Delhi to consider the matter on a priority basis.
 - A.Seshan, Economic Consultant,
{Former Officer-in-Charge, Department of
Economic Analysis and Policy, 
Reserve Bank of India, and 
(IMF) Adviser to National Bank of Kyrgyzstan and 
Bank of Sierra Leone}

Rajan responded with monetary policy panel on interest rates

........ Reserve Bank of India Governor went along with the unanimous recommendation of the members of its monetary policy panel to maintain status quo on interest rates in the Monetary Policy Statement for 2014-15.  The eleven member Technical Advisory Committee (TAC), which is headed by Governor Raghuram Rajan, on monetary policy said upside risks to headline inflation in the near term provide the rationale for a pause............

Read | Business Line

NABARD retirees tired...........

My View on "Pension updation?? Its Divide & Rule........": 

In the case of NABARD pensioners GOI is behaving more heartlessly. Even the revision in family pension allowed to RBI pensioners is not allowed although the requirement of the GOI have been satisfied by the Bank, such as Board approval for statutorization of the Staff Rules which the GOI put as condition precedent. Even the Pension Regulations amendments as required by the GOI which have been approved by the NABARD Board and sent to the GOI and RBI are not approved till now. The plight of the pensioners who had retired prior to 1997 is much more pitiable. God knows when the GOI and its bureaucrats will wake up to the hardships of the pensioners of NABARD and extend relief.  

- M V Gupta. Principal Legal Advisor (Retd) NABARD, Mumbai 

PR & PU periodicity should be the same

My View on Pension updation?? Its Divide & Rule........

Dear Mangesh,

Pension Upgradation—Issues

Shri B.Kamath, my very good friend, is pained by the delay in giving effect to the approval in principle given by the Ministry on the captioned issue.  He is fully justified in his reaction and many of the retired officers share his anguish. As Shri Kamath sees it, the delay is a result of the “Divide and Rule Policy” of the Ministry of Finance. So far as linking the issue of “rationalisation of perks” of the serving employees with the Pension Option and Updation issues, this criticism would be justified. Perquisites of serving employees have nothing to do with the issues under hand and hence Governor, with all the authority under his command, would do well to reject this part of the proposal with the contempt it deserves.

Let us come to the issues of the periodicity of pension updation and reckoning of ‘pay’ for updation (or revision as GOI calls it).  The concept of pension updation, if I am correct, was introduced only in the 5^th Pay Commission (perhaps improved further in the 6^th Pay Commission) and hence, if we demand it, justifiably on the ground that our Scheme is on the lines of the GOI Pension Scheme, then the rules relating to fixation of ‘pay’ have to be on the lines of one prevailing in the GOI. In my view, if we insist that pay revision would have to be as hitherto, viz. once in 5 years, then the updation has also to be along with the pay revision. Otherwise, it would not be possible to ensure that all those who have retired from the same grade draw the same pension regardless of the date of their retirement. Let me give an example. My wife retired in the grade of CGM in July 2004 and she got the benefit of the pay revision with effect from November 2002. (I had retired in October 2000 in a grade higher but my pension is lesser than hers!) If another officer in the same grade as that of my wife had retired, say, after November 2007 with the benefit of pay revision given effect to from November 2007, his/her pension would be higher than the pension of my wife unless pension updation has been done along with pay revision in 2007.  I am not sure whether it would be realistic for us to expect that pension updation has to be agreed in our case once in 5 years because our pay revision is once in 5 years.

I would not want any benefit given to the serving employees to be taken away for the sake of retired employees and it is also not my intention to deprive them of any benefits for the sake of expeditious settlement of the pension updation issue. It is for this reason that I have said that the linking of rationalization of perquisites of serving employees with the pension issues has to be rejected.  It is only because that pay revision and pension updation cannot, in my opinion, be delinked, we may have to agree that the periodicity of pay revision has also to be the same as that of pension updation.

I would request those who have more knowledge in this area to enlighten the readers of MT’s Newsletter. 

- A.Chandramouliswaran

Denying level playing field

My View on  "‘RBI should be accountable to Parliament’ - Dr.K.C...": 

Preamble of the Reserve Bank of India Act, 1934 had inter alia stated: “…but whereas it is expedient to make temporary provision on the basis of the existing monetary system, and to leave the question of the monetary standard best suited to India to be considered when the international monetary position has become sufficiently clear and stable to make it possible to frame permanent measures;

It is hereby enacted as follows:-“

The opportunity for the review envisaged actually came when GOI appointed the Financial Sector Legislative Reforms Commission (FSLRC) which submitted its report sometime back. The plethora of issues considered by the FSLRC did not allow the Commission to focus on the kind of change envisaged in the preamble of the RBI Act. The ‘cut & paste’ FSLRC report which imported ideas not necessarily suitable in the Indian context, instead of trying to build on the strength of RBI attempted to re-invent a new institutional structure. It is not the lack of RBI’s allegiance to legislative supremacy that is at the root of the present friction between GOI and RBI. The assertion of ‘ownership rights’ by lower level functionaries of GOI over all public sector organisations including statutory bodies like RBI and their interference in the legitimate functioning of institutions even in HR issues deny the top managements of these institutions a level playing field with their counterparts elsewhere. 

- M.G.Warrier

Portfolios of EDs

...........Sources in the central bank indicate, both seniority and merit was considered by making the appointments. The central bank has nine executive directors, and one of them S Karuppasamy, retired recently. R Gandhi, who was executive director, has now been promoted to deputy governor. Also, .......

Read - BS

Shri DK Mohanty

1.Department of Economic & Policy Research

2. Department of Statistics & Information Management

3. Monetary Policy Department

4. Secretary's Department

5. Financial Stability Unit

Shri P. Vijaya Bhaskar

1. Department of Non-Banking Supervision

2. Financial Markets Department

3. Department of Communication

4. Risk Monitoring Department

Shri B. Mahapatra

1. Department of Banking Operations & Development

2. Department of Government & Bank Accounts

3. Inspection Department

Shri G. Padmanabhan

1.Department of Information Technology

2. Department of Payment & Settlement Systems

3. Foreign Exchange Department

4. Department of External Investments & Operations

Shri Jasbir Singh

Deposit Insurance and Credit Guarantee Corporation

Dr (Smt.) Deepali Pant Joshi

1. Customer Service Department

2. Rural Planning and Credit Department

3. Right to Information Act (also First Appellate

Authority)

Shri N S Vishwanathan

1. Department of Expenditure & Budgetary Control

2. Urban Banks Department

3. Legal department

4. Alternate Appellate Authority (under RIA)

Shri U S Paliwal

1.Department of Currency Management

2.Premises Department

3.Human Resource Management Department

(including Rajbhasha)

Shri Chandan Sinha

1. Internal Debt Management Department

2. Department of Banking Supervision

3. Central Security Cell

Portfolios of DGs

City Rife with Counterfeit Currency Notes

........Officials say that the fake notes being circulated in the city come through outsiders who reach the state for jobs and other business activities. Migrant labourers, truck drivers and interstate businessmen coming to the city are suspected to be the links of the counterfeit notes mafia. In majority of the cases, the arrested persons hail from West Bengal, which is notorious for many counterfeit note printing units..........

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

Inflow of fake currency rises in election time

.......The 40-page RBI working paper authored by Sanjay Bose and Abhiman Das have pointed to 3.90 lakh counterfeit currency notes detected in the banking system annually on an aggregate basis over a five-year period, 2007-12. This translates to about seven fake notes for every one million currency notes in circulation. It is lesser than the IB assessment but is based on a scientific study done by the two authors for RBI’s department of economic and policy research. But, the report concedes that there has been a steady increase in FICN in higher denominations of Rs 1,000 and Rs 500. .........

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

Withdrawal of gold import curbs to be calibrated: Mayaram

Curbs on gold imports in India will not be withdrawn immediately, but will be done in a calibrated manner, economic affairs secretary Arvind Mayaram said on Friday.........

Read - Mint

L&T Fin seeks RBI nod to buy promoter stake in Yes Bank

................“If the bank is issuing shares, it will be done with full public disclosure,” Monga had said earlier this week. If the stake buy goes through, this would be the first deal where an NBFC would be acquiring a bank in India. Earlier in 2004, RBI had allowed IndusInd Bank to acquire Ashok Leyland Finance business.........

Read - FE

Top-3 pvt banks live up to expectations

Notwithstanding a tough macro economic environment, leading private banks ICICI, HDFC and Axis put up resilient growth in the March quarter. While Axis Bank’s profits were ahead of estimates, those of ICICI Bank and HDFC Bank was in line with expectations..........

Read | Business Standard

Raghuram Rajan votes

Reserve Bank Governor Raghuram Rajan voted at a booth near his official residence off Peddar Road in south Mumbai

Granting licences to corporate sector tricky affair: KC Chakrabarty

Deputy Governor’s job is less challenging than the CMD of a bank

............ Distribution of currency/coins is a big issue. This is because we have left it to the RBI and banks. The RBI focuses more on distribution, as a result they are unable to monitor whether banks are doing it or not. The view of the government- constituted high level committee on currency management, which I chaired, is that, we must use the private parties (franchise model) for distribution. We have already done it for foreign exchange which has worked well................

Read | Business Standard

‘RBI should be accountable to Parliament’ - Dr.K.C.Chakrabarty

.......Ultimately, the central bank is created by the government … by Parliament. How can I say we will be a separate country? We are not talking about independence, it is about autonomy and I don’t think that is a big issue. Today, we have more autonomy and we have less accountability. Ideally, the central bank should be accountable to Parliament. .............

Read - TOI

If NPAs are high, everybody is responsible: K.C. Chakrabarty

.....f you are bringing somebody from commercial banking, what should be his appropriate role? In fact, somebody must find out why a commercial banker was brought to RBI. When the Board for Financial Supervision (BFS) was created, at that time there was a parliamentary committee which had gone into the securities scam. You read the recommendations of the committee and see what reply RBI gave.* If Reserve Bank does not stick to its own commitment to Parliament, what can I say? Personally for me, it has been a great learning experience. RBI has been very fair to me; it may not be fair to the banking system................

Read - Mint

My contrarian views have been vindicated: Chakrabarty

......"Being open and transparent is the hallmark of democracy. As a supervisor, my job is to communicate and shout, create the awareness. (Sooner) you do that, you will get a better result and more you delay, to that extent will be the damage. That is why I am happy about my stint in RBI," ...........

Read - BS

Rollout of ₹10 plastic notes hits technical hurdle: RBI’s Chakrabarty

.............To improve last mile connectivity, the RBI has decided to involve private entrepreneurs in the distribution function. The cash-in-transit companies/ business correspondents have been allowed to process coins and banknotes, including packaging, sorting and delivery to banks’ customers and for retrieval. Banks, including urban co-operative banks and regional rural banks, are also being involved to ensure that last mile delivery of cash-related services penetrates throughout the country. Chakrabarty said the RBI has also initiated a pilot exercise under..........

Read - HBL

Inclusion indecisiveness

.........It is somewhat surprising, then, that a road map for implementing the key recommendations of the Mor committee is yet to be outlined. Although hesitancy over this causing the delay has been denied, the fact that the last monetary policy announcement on April 1 did not specifically mention any plans to implement the recommendations lends some credence to the concern. Considering the importance that Governor Raghuram Rajan attaches to the agenda, one of the five pillars on which he is building his financial stability and development strategy, there were expectations of a big push based on the report. However, what seems to have come in the way are reservations..........

Read | Business Standard

BJP will eliminate discretion: Arun Jaitley

..........Asked to comment on speculation that there might be a change of guard at the Reserve Bank of India, Jaitley said, "We are not getting into issues relating to persons. I don't think we have reached that stage at all."......

Read - TOI

Start saving in banks: RBI to students

SHILLONG, April 23: Reserve Bank of India (RBI) Deputy General Manager T. Lhundim has stressed on the necessity of inculcating the habit of saving in the banks among the students community of the country. “Students are the future generation of our country so it is very important that we educate them about the importance of developing good financial habit,” Lhundim said. He was addressing the gathering at the Financial Literacy Campaign programme organized by RBI at Tpep-pale Secondary School, Jowai, on Wednesday.

Read - Meghalaya Times

Worth trying scrap gold

My View on  "RBI restrictions hit gold flow to Bangalore": 

The issues raised here are very relevant. The inherent fear to touch or talk about the huge domestic stock of gold in India is behind the artificial scarcity of the yellow metal and all concomitant problems like smuggling, unrealistic pricing and so on. The fear of gold was captured by K U B Rao in his report on Gold Management released in January, 2013 in the following words:

“Indians’ obsession for large investment in physical gold is the outcome of the confluence of numerous and divergent factors. Given the complexities involved in the lure for gold in India, a holistic strategy that deploys a combination of demand reduction measures, supply management measures and measures to increase monetisation of idle gold stocks needs to be put in place. Creation of an alternative asset class that may provide returns comparable to return on investment in physical gold with similar flexibility is important. A necessary pre-condition for reducing the excessive demand for the precious metal is to ensure benign inflationary environment along with achieving and maintaining macroeconomic stability.”

If there is a will, there should be some way, to exploit productively at least a small portion of the domestic stock of gold which will minimise the need for gold import. There is no escape from standardising a major portion of non-jewellery surface gold and making it available for productive purposes. When every other asset can be accounted, government cannot be apologetic only about gold. Establishment of the Bullion Corporation of India proposed by the Working Group can play a major role in recycling and pooling of domestic scrap gold. In this context, the Committee’s following observation is relevant:

“Temples in India holds large quantities of gold jewellery offered by devotees to the deities. There is also significant amount of scrap gold in the country. Some estimates say that scrap gold that comes into the system is nearly 300 tonnes per annum. It would be worth trying to channel the existing supplies of scrap gold in the country into the financial system, so that the unproductive nature of the gold asset is turned into a financially-productive medium.” 

- M G WARRIER, Thiruvananthapuram

Pension updation?? Its Divide & Rule........

Dear Mangesh,

I am writing this out of deep anguish and acute frustration. When the British left India in 1947, the Indian politicians inherited their most lethal weapon, i.e. the divide and rule policy. We thought that our decade long wait for justice by way of pension upgradation finally ended when the GOI allegedly conveyed its "in principle" approval. But, alas it was not to be. By putting conditions such as revision once in ten years, excluding certain allowances from purview of pension and rationalisation of perks, GOI has driven a wedge between the serving and retired officers. Like the Kashmir issue and river water sharing disputes between two neighbouring states,  the cleavage of interests between aforesaid classes defies any imminent solution.The result is that those of us who are on the wrong side of seventies will soon end up as items in the Obituary Columns of VITALINFO and/or Without Reserve and oblivion without realising our dream of drawing a decent pension that we deserve.

 - B. Kamath, Retd. CGM

RBI v/s GOI pay comaprision

"Discrimination amongst retirees neither just nor equitable"

In continuation of my comments posted in VITALINFO on 23-04-2014 : The position of pay inclusive of all allowances at the minimum (appxly) and at the maximum (appxly) in respect of Grade B and above in RBI vis a vis in GOI (not exact-but-comparable ) is furnished below .................  - R.G.Nakhate Read.............

Ill conceived Government direction

My View on  "Need to move an Interlocutory Application": 

Points raised by Shri Batki and Shri Parab are Valued points. The pension to RBI Pensioners is to be paid from the pension fund raised from the contribution of the RBI Employees and NOT from the Consolidated Fund of India. As such, imposing of any conditionals by Finance Ministry are not reasonable on any ground and also do not provide natural justice to Pensioners. The Writ Petitioners may like to approach and raise their objections in Bombay High Court stating that the Speaking Order of The Government and the current Guide lines (conditionals) to RBI are contrary and need to be quashed.The pension Updation is to be allowed in the light of recent Supreme Court Judgments and RBI / Govt. to be directed not to make a different category within the pensioners contrary to law. An early hearing by High Court is necessary as many senior citizen are affected by this ill conceived Government direction to RBI by linking to pay revisions / modernization of the allowances of RBI Officers though these allowances are not paid to the pensioners. 

- Capt. C B Gupta

NPS doors opened for people above 60 taking up govt jobs

........“Keeping in view the difficulties being faced by subscribers, the authority has now decided to enrol all eligible government employees into NPS, irrespective of the age at the time of entry, subject to the condition that the total period of contribution to the NPS account shall not be more than 42 years,” .........

Read - FE

A new economic agenda

........The Indian financial system also suffers from a hangover of cronyism and corruption which has left government budgets on the verge of bankruptcy. This too needs fixing. It cannot be rectified by a Reserve Bank of India vitiating the investment climate with an obsession to contain inflationary pressure. It is like killing a patient to lower his body temperature..........

Read - The Hindu

IFC, partners focus on e-payment systems for India’s low-income households

........Addressing the workshop on future challenges, Vijay Chugh, Chief General Manager in the Department of Payment and Settlement Systems, said, “There is an urgent need for all stakeholders to collaborate to enable access to an efficient payment system for the unbanked and under-banked population at an affordable cost. This is envisaged in the Reserve Bank's vision statement.”........

Read.........

Bandhan to appoint consultants for banking foray soon

....."We are talking to various consultancy firms like KPMG, BCG, McKinsey and Ernst & Young, among others, for appointing a consultant. We will shortly give a mandate to one of them," ........

Read - BS

Forensic audit no solution to unearth the facts

...........The RBI mandates a failsafe warning mechanism to effectively monitor bad loans by putting in place appropriate  flagging indicators. Already in place  are a plethora of checks and balances from  bottom to top for reporting on shortfalls in securities, exceeding drawing powers, day-to-day on-line reporting requirements, ratification requests...............

Read - Moneylife

Gujarat HC Restores RBI's Power to Decide NPA Period

........"Section 2(1)(o) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is held unconstitutional," the bench of Chief Justice Bhaskar Bhattachrya and Justice J B Pardiwala said. The High Court also observed that the Parliament was wrong in taking the power to decide NPA guidelines away from RBI. Before the amendment in 2004 to the Act, RBI was the regulator for the banking, non-banking institutions and securitization agencies for deciding the period after which the loans can be treated as NPA. Till 2004, RBI had set the NPA period for banks at 90 days, and at 180 days for NBFCs.........

Read - Outlook

Minus JKB and HDFC, banks miser at lending in JK

Srinagar, Apr 24: Not only the nationalized banks operating in J&K are conservative in lending but performance of most private sector banks in providing loans in the State is even worse.
 A cursory look at the performance of banks reveals that these banks are accumulating huge deposits in the state while their contribution to the credit portfolio in the state is negligible........

Read - Greater Kashmir

IndusInd Bank to foray into asset reconstruction

........."I think our new initiative, which is going to launch in the next two months, is about asset reconstruction. We will do asset reconstruction within the bank but in tie-ups with ARCs. The business plan is ready. We believe a huge stock of assets is coming into the ARCs as a business area that we need to look at and we will exploit," ........

Read | Business Standard

Markets await revamped IIBs from Reserve Bank

.......“The poor appetite is mainly because it is not transferable, that is, it cannot be traded in the secondary market and premature redemption is allowed only after three years with a penalty,” Mr. Khurana added. It will be difficult to quantify the exact demand for the product, but with the gross borrowing programme at Rs.6 lakh crore (approximately), “this could catch the interest of investors provided there is sizable liquidity created through continuous issuances”.............

Read - The Hindu

Yes Bank appoints two new directors amid legal case

.......The new directors have been appointed “in accordance with extant Reserve Bank of India (RBI) regulations and the New Companies Act 2013”, the bank said in a statement. It also announced the formation of two new committees, IT strategy and CSR (corporate social responsibility), as mandated by the new companies law. Yes Bank is one of the respondents in a case filed in the Bombay high court by Madhu Kapur, wife of late co-founder Ashok Kapur, demanding the right to nominate directors to the bank’s board..........

Read - Mint

Cheers and challenges for Raghuram Rajan - A.Vasudevan

.........Financial stability is the foundation on which central banking is based. With non-performing assets of banks on the rise at present in India and with uncertainties about the durability of the economic revival of industrialized economies, it is important that RBI makes it a point to provide the rationale for moving towards inflation targeting at this juncture. RBI should also provide an idea about the nature and quantum of its accountability for....................

Read - Mint