...........On a final note, here is something completely out of the box to think about. The RBI exercises full control over monetary policy, printing currency, declassifying notes and managing the level of cash/liquidity in the economy. In the opinion of this writer, it would be revolutionary if the RBI simply decided to take on the job of issuing “digital currency” to the PBs against cash deposits they maintain in a pooled account with the central bank – very similar to what every BC in this country already does for its distribution / channel partners today for remittances and every Telco with prepaid talk time. Technologically it is fairly straightforward to implement. It provides 100% CRR, ensures Zero Risk. As the central bank also settles funds across the financial network, interchange and cash management fees can be reduced drastically promoting a less-cash revolution – something that the RBI has passionately argued for............
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Wednesday, July 23, 2014
RBI to start announcing too-big-to-fail banks in Aug 2015
..............They are complex institutions but RBI says that about 4-6 banks would come under the category of Systemically Important, they will be asked to keep additional capital. All this kicks in from August 2015 and every August thereafter the set of banks will be revised to check whether some of them have fallen off or some new banks have come into the Systemically Important category. So, the worry is coming in a distance away..........
Arun Jaitley calls for World Bank governance reforms
...........“Finance minister Jaitley, while complimenting the World Bank president for setting the twin global goals (of removal of global poverty and increasing shared prosperity), also stressed on capital increase and the need for voice reforms in the bank so that not only does the bank play its global role in poverty reduction and development, but also reflects the emerging world order in its governance,”.................
Time for a SAARC bank
............This is the reason why India should take the lead for a new SAARC Development Bank (SDB). This will help supplement the capital flows that may take place through other multilateral institutions. Being anchored within South Asia, it would work as a regional development bank. The SDB would leverage its own capital base for raising tier 2 capital, as also borrowing long-term funds based upon its balance sheet strength. China is already pitching an Asia Infrastructure Development Bank to India. There is no doubt that China sees this as an opportunity to expand its project exports markets in Asia. While India could partner China to a limited extent in this concept, its own long-term future interests are more ........
A page from history: 70 years before the Brics bank
............. Much has been written about how the global power that came to dominate the post-war world got its way against the older power that was soon to be cut down to size by decolonization. But the transcripts also show how the Indians punched way above their weight. So did delegates from Belgium, Cuba, Czechoslovakia, Greece and Norway, according to the editors of the transcripts. One issue should interest all those who currently worry that the New Development Bank that will be set up by the Brics nations will be a tool of Chinese hegemony.................
POSITIVE AND NEGATIVE IMPLICATIONS AND CONSEQUENCES OF MERGERS
The talk of bank mergers is thicker in the air now, than never before. It is reliably learnt that the government at the centre is really serious this time, as this subject has been touched under Point No.129 on Page No.24 of Union Budget for 2014-15 submitted in the Indian Parliament by Hon’ble Finance Minister on 10-07-2014. So, what is in the offing? What will be the effect of bank mergers? What do mergers mean to ordinary employees? What are their implications and consequences? Whether bank mergers are good or bad in Indian context? We will analyse all these points from various perspectives hereunder............
Read........
Read........
Is the HDFC Bank dream run over?
...............Even from the perspective of last six months, HDFC Bank has been an underperformer in the markets, with both ICICI Bank and Axis Bank being the preferred choice of investors. Kotak Securities believes that its underperformance is expected to continue as both ICICI Bank and Axis Bank have been progressing well on retail loan strategy, reduced/slowed exposure in select corporate sectors, a diversified fee income and a well-capitalised tier I ratio of greater than 12 per cent.............
Incipient recovery on the anvil for India: SBI
An ‘incipient recovery’ is round the corner for the Indian economy and it is expected to clock a GDP growth rate of 5.5 per cent in the first quarter of the current fiscal amid signs of improved sentiment on consumer spending and the monsoon, says a report. As various macro-economic indicators ranging from inflation to external sector are showing positive signs, “an incipient recovery is round the corner”, said the SBI research report...........
Tuesday, July 22, 2014
RBI to continue as govt's debt manager
The Reserve Bank of India is likely to continue as the government's debt manager. Finance Ministry is internally firming up its view on not giving any statutory status to the much debated public debt management agency and instead allowing RBI to continue managing Centre's borrowing programme. The issue remains that the RBI will continue to be the chief manager of the central government’s borrowing program....................
Tweaking guidelines won’t do; RBI needs to re-think the idea of niche banks ab initio
............Despite the underwhelming performance of both regional rural banks (RRBs) and local area banks (LABs) set up with the same well-meaning intent of financial inclusion, the RBI is determined to try again! Hence its recent draft guidelines on payments banks and small banks based on the well-meaning, but naïve and theoretical recommendations of the Nachiket Mor committee. Clearly the Bank (governor?) seems keen to give to a second life to an idea that many have (rightly) written off. Only time will tell whether it’s a case of flogging a dead horse or whether this time it’s going to be different, even if it comes after a number of false and costly starts. Remember, restructuring of RRBs did not come cheap!............
Justice out of context
My View on "Justice Srikrishna defends FSLRC recommendations":
The present defence of FSLRC stance on RBI confirms the fear expressed by some including this writer that the Commission did not take into account the Indian context and the evolution and present position of Reserve bank of India. To oppose Dr Rajan’s view expressed in June 2014, Justice Srikrishna is quoting from 2009 documents. After that Dr Raghuram Rajan had opportunity to learn much more about India and RBI. The position RBI Governor takes now is that of India’s central bank and old ‘circumstantial’ evidences should not be relied upon to oppose it. Professional views based on hard facts will get precedence over ‘old academic’ views. As Dr Rajan is used to being subjected to personal attacks, the FSLRC Chairman will have to do lot of elaboration to defend the FSLRC recommendations in the Indian context.
- M.G.Warrier
Narendra Modi joining Raghuram Rajan to boost banks fuels confidence
............ncreased policy support may help shore up profitability now at a 12-year low, according to CARE Ratings, at a time when the Reserve Bank of India (RBI) governor Raghuram Rajan’s efforts to rein in bad loans are starting to show results. Non-performing debt as a proportion of total advances fell to 4% as of 31 March from 4.2% in September, which was the highest since 2005-2006, RBI reported in June........
Mendacity is a system of lies
...............This is a point not dwelt upon by academics today, and we should all be concerned that proponents of big government like Alan Blinder, Jennet Yellen.............
Scam e-mail messages in the name of RBI
.......The RBI also spends money on warning advertisements. However, in our experience of meeting people over hundreds of seminars and workshops conducted by Moneylife Foundation (a not-for-profit sister entity) is, that financial literacy cannot work with sporadic advertisements from regulators. It has far more impact if financial literacy is imparted in a serious and systematic manner with an explanation of how scams work and their financial consequences. Making the nation financially literate or even more careful is a herculean task, but a little nudge from the RBI to corporate CEOs would go a long way in ensuring that this becomes a part of the awareness training for all employees.......
Financial Products Tailor-Made For Women
.........According to the latest data available with the Reserve Bank of India the share of women deposit holders has also witnessed a rise from 26 per cent in 2012 to 30 per cent in 2013. Thankfully, financial service providers have been quick to ride this wave and there are a number of women-centric products that offer special advantages. Here is a closer look at some such benefits........
Retirement Is Not End Of Taxes, Inflation
..........People who are in their 70s and 80s had retired at a time when inflation was not a big menace and most banks paid a rate of interest which was either close to or around the doubledigit mark. But times have changed. The rate of interest paid by banks in fixed deposits is now very much linked to the rate of inflation and, more often than not, they are lower than the inflation rate. This naturally leaves FD customers in a slightly disadvantageous position as they are usually left with a negative real rate of interest (rate of interest rate of inflation). Added to this is the incidence of income tax on some of the retired people. The two combine to force retired people to either dip into their savings corpus to meet their standards of liv ing, or cut down on expenses to manage with whatever income they generate on their retirement corpus...........
PAN’s the way to ‘cheque’ refund status
............. To check the refund status online, one must log into https://tin.tin.nsdl.com/oltas/refundstatuslogin.html and enter your PAN and assessment year. One can even check through the toll free number of SBI help desk at 18004259760 or even via email to itro@sbi.co.in or refunds@incometaxindia.gov.in. One can see the status messages depending on the actual state of processing or if there are any disparities noticed by the department. The assessee can ........
State Bank of Hyderabad Donates Bus to School
State Bank of Hyderabad MD & GE P Pradeep Kumar handing over the bus key to Sriram Charitable Trust managing trustee Uma Ghurka at Ghattuppal in Nalgonda district on Sunday. Others in the picture are State Bank of Bikaner & Jaipur MD B Sriram, SBH MD Santanu Mukherjee and CGM (commercial banking) Jyoti Ghosh, RBI CGM Vijay Chugh and Oriental Bank of Commerce former CMD KN Prithviraj.......
Read - The New Indian Express
Reserve bank of India organizing RBI quiz
......The preliminary and quarter final rounds will be held in Hyderabad on July 25 and in Visakhapatnam it is slated at Mother Teresa Dental Auditorium, GITAM University on July 28. Governor of RBI Raghuram Rajan is expected to distribute prizes to the top winners.........
Man held for allegedly duping a Mumbai Coin Society member of Rs1.16 lakh
..................In August last year, while going through an online shopping portal, the victim found that a rare ten rupee note dated 1960, signed by the then RBI governor LK Jha, was up for sale. He then contacted the mobile number of the seller and got the deal done for Rs45,000 for the note. Later, a person by the name of Anand Mehta got into a deal with the victim for a Persian Gulf note and a pre-independence five rupee Indian note containing the photograph of King George. In order to get these notes, the victim had deposited Rs1.16 lakh in the bank account referred by Mehta............
A commendable move
........... There are also other indicators on bank notes — various shapes displayed in raised print — to represent particular denominations. These can be felt by touch only on new bank notes. But it can still be hard to decipher the values they connote. Similarly, there are in circulation today coins of the same denomination in different sizes (two rupees), as also coins of different denominations in the same size (50 paise and one rupee). Besides, there are three types of five-rupee coins, all of which can cause confusion to the blind. Standardisation and consistency in coin design could ensure the distinctness of each value. Wavy edges and hexagonal shapes were present in coins that have been withdrawn...........
Forum tells RBI to take steps to save consumers
......................The forum urged Reserve Bank of India to take strict action against firms indulging in malpractices. "We have been witnessing this kind of malpractices in different cases. We have also pointed out in our earlier orders that Government of India and RBI should take strict action against such organizations which is necessary for the protection of the right of the customers," said East District Consumer Disputes Redressal Forum..............
Can't bank on service
.........If you visit a bank with small denomination currency notes or to exchange a damaged currency note, the experience is not encouraging. Banks are even reluctant to dispense small denomination notes and coins. For traders, handling a large volume of small denominations received during the course of their business continues to be a problem. Thus, a large pool of small sums of money remains outside the banking system, leading to .........
Small banks, big risks
..........Financial inclusion as an asset category is full of risks and even the new small banks cannot de-risk their business model. Payment banks would, of course, be up for grabs. Had the Reserve Bank of India (RBI) announced small banks first, there would have been more applicants for this category. RBI has been focusing only on .............
Bank Told to Refund Pre-closure Charges
...............The Forum observed that a circular issued by the RBI say that levying of pre-closure charges on home loans amounts deficiency in service and unfair trade practice. The Forum stated that in the case under consideration, the bank was liable to refund the pre-closure charges, with interest, from the date of complaint until realisation...........
This is no way to tame inflation: economist
...........The monetary policy of RBI is far removed from them in terms of price rise. That apart, the monetary policy is creating purchasing power asymmetry among different social classes. Consumers who are benefited by monetary reforms are not large enough to reduce the price of essential commodities. The market, which the monetary reforms could not influence normally, pushes the price higher; such markets exist beyond the RBI’s monetary measures. It is interesting to note that ........
Gradually build countercyclical buffers: RBI panel to banks
...........The report was prepared by an internal working group on implementing CCCB in India, headed by RBI Executive Director B Mahapatra. The report said the credit-to-gross domestic product (GDP) ratio would be used to take decisions related to the CCCB. Factors such as growth in gross non-performing assets, incremental credit-deposit ratio for three years, interest coverage ratio and house price index also be considered..........
Need to bolster our reserves
...............Besides short-term debt, sharp swings in capital flows are also a contingency that must be kept in mind in judging whether or not our reserves are adequate. This was highlighted by the SS Tarapore committee on capital account convertibility way back in 1997. One precondition was that cumulative portfolio investment inflows and short-term debt must not be more than 60 per cent of our foreign exchange reserves. In other words, our forex reserves must be plentiful – in fact, with a margin to spare — to take care of heightened volatility in capital flows in and out of the Indian economy and to meet our most pressing debt obligations without defaulting!............
Read - FPJ
Infra bond norms a plus for Indian banks: Moodys
.................The new regulations are also expected to foster an improvement of banks' competitive positioning vis-à-vis housing finance and infrastructure finance companies. Moody's said banks' lower cost of funding allows them to be much more competitive on pricing. This is especially relevant for basic mortgages, where............
Needed: A modern bankruptcy law for India’s financial markets
........Banks and NBFCs recovered loans through muscle men who even resorted to physical assault. Small borrowers faced hard times as they had borrowed to go with the tide of consumerism without being able to predict the disaster. Reports of suicides by defaulters surfaced. The Reserve Bank of India was forced to intervene and court orders were passed to stop banks from using muscle men. During this period voices for review of the personal insolvency laws surfaced. The terms insolvency and bankruptcy are not synonymous, though both deal with liabilities exceeding assets — insolvency refers to a ‘financial state’ and bankruptcy to the distinct legal ‘private state’. The laws regulating insolvency are the Presidency Town Insolvency Act of 1909 covering Kolkata, Chennai and Mumbai and the Provincial Insolvency Act, 1920 for the rest of India.......
Fixing NPA problem of banking sector, step by step:
..According to Kotak, potential economic recovery and lower interest rates over the next two-three years will improve banks’ and borrowers’ financial condition. Creation of a bad bank and transfer of impaired assets to the bad bank is a possible solution to this. Asset reconstruction companies can play a similar role in the Indian context. Lower interest rates can result in lower interest expenses for borrowers and investment gains for banks that can offset NPLs. A 100 bps decline in interest rates can add 1-3 percent to the net worth of certain PSU banks, the report adds. Apart from these generic solutions.........
Reserve Bank study finds Gujarat has to spend huge funds from coffers to pay up for interest taken on loan
A new study, “Debt Sustainability at the State Level in India”, by Balbir Kaur, Atri Mukherjee, Neeraj Kumar and Anand Prakash Ekka of the Department of Economic and Policy Research of the Reserve Bank of India (RBI), has found that, as of March-end 2013, a huge 17 per cent of the revenue expenditure of the Gujarat government goes into paying up interests on loan taken by it over the years, which is higher than most states. Suggesting that this is ........
KBS Local Area Bank may become a small bank
...........“The concept of small bank is interesting. From a strategic point of view it offers a lot of opportunity. But we will take a final decision after discussing the matter at the board level, and with our shareholders and investors,” Manmath Dalai, managing director and chief executive of KBS Local Area Bank, told......
Crop loan waiver: new twist to loan waiver
The waiver of crop loans in Telangana took a new turn with the RBI seeking a fresh report on the damage caused to crops on account of heavy rains/hailstorms due to the Phailin cyclone in October last year. The government had declared over 300 mandals as cyclone-affected to seek reschedulement of loans amounting to Rs 7,000 crore. However, the RBI wants to examine the cyclone effects on its own............
If merged, HDFC-HDFC Bank to be 2nd largest after SBI: IDFC
........According to Chowdhary, this merger will lessen the cost of merger entity and the cost of transition will also decline as cost of regulation reduces. Also, this merged entity would be the country’s second largest financial services player post State Bank of India (SBI). Chowdhary expects the merged entity to benefit HDFC Bank particularly. IDFC has an outperform rating on HDFC Bank as it expects the lender to continue posting healthy earnings going ahead..........
Why the HDFC Bank merger with HDFC does not make great economic sense
............ Their combined market valuation could top Rs 3,50,000 crore, leaving both State Bank of India (Rs 1,93,000 crore) and ICICI Bank (Rs 1,67,000 crore) far behind. However, beyond size and scale, the merger might not make too much economic sense to the combined entity, at least in the initial two or three years. This is because it will take the combined entity that much time to fully utilise the leeway provided by the central bank to raise long-term funds and generate cheaper current and savings liabilities matching its assets.............
HDFC, HDFC Bank say merger idea still premature
..........."The board of directors of both companies have met, but the merger proposal hasn't been considered yet. As a result, it will be too premature to say anything." Since HDFC is a non-banking finance company, CRR, SLR and PSL targets are applicable to it. However, if it goes for a merger, the merged entity will have to adhere to regulatory requirements on these fronts. Though RBI has granted forbearance to banks, the norms are applicable to future funds, not to existing books. This is seen as a hurdle to a merger........
Bank of Maharashtra to float infra bonds
.......“We hope to build up the infrastructure portfolio and go for infra bonds soon… maybe, earlier than six months,” Bank of Maharashtra CMD S Muhnot told media persons on the sidelines of a banking conclave, organized by Ficci. Muhnot said the funds raised would help the bank increase its exposure to the sector to about 17% of its loan portfolio by this fiscal-end from the current 14%.........
Monday, July 21, 2014
FinMin spanner in RBI's COO talks
.............The Union Budget was presented on July 10, the same day the RBI board was to meet in Chennai. This was a constraint for the government-nominated board members in attending. Shortly before the meeting, the finance secretary's office sent a letter to RBI stating such issues should be discussed only when the government nominees were present, according to a person with direct knowledge of the matter. The letter suggested RBI defer the issue till the next board meeting, where the government nominees will be present.......
Justice Srikrishna defends FSLRC recommendations
.........“Thankfully the independent academic Dr Rajan also disagrees with the RBI Governor Dr Rajan on this aspect. In his 2009 report, A Hundred Small Steps, Dr Rajan wrote, ‘regulatory actions should be subject to appeal to the financial sector appellate tribunal.’ This is the thinking that guided the FSLRC’s deliberations,and it is the position we still take today.”......
Common concerns over technology in financial sector
............We thank reader M. G. Warrier from Mumbai (mgwarrier@gmail.com) for his extremely perceptive observations in response to our last week’s article. He points out that the term ‘middle-class’ refers to “the majority of people sandwiched between the rich and the poor and facing extinction in the near future by migrating downwards to the BPL (below poverty line) category as and when the poverty line is drawn realistically.’’ That then is a vivid description of the deep insecurity the middle-class faces. There are several aspects to this — last week we raised a few issues and in this column we will try to discuss a few more. Examples are drawn from banks, but the observations are valid for the whole of financial sector..............
Con men pose as RBI officials, directly call victims
..............Fraudulent emails sent in the name of Reserve Bank of India Governor Raghuram Rajan to unsuspecting people, seeking details of their bank accounts to send 'income tax refunds' directly to them, are passe. Con men are now directly calling people and posing as senior officials from RBI, while seeking details of their debit cards. RBI, who have only just begun receiving complaints from people about the fraudulent calls, however, stress that they never seek such details for any purpose, and have warned members of the pubic to refrain from responding to bogus calls. ...........
RBI’s circular: Patil joins in chorus
..........According to the minister, the state govt is opposed to the RBI circular and would urge the central govt to get this circular withdrawn. If this step was not taken, it would mean depriving the cooperative sector of nearly 20 thousand crores of rupees. The state govt would soon send a delegation to New Delhi, the minister added...............
UFBU Meeting for Wage Revision Meeting Date!!!
New Govt has praised importance of Public Sector Banks but not cared about the pending wage revision of bank employees since November 2012. Now bank employees are compelled to call meeting on 15.07.2014 for urging date for wage revision meeting date...........
Obituary
A.BALAGURU, RBI, Chennai expired 18-07-2014. Funeral at 11 a.m. on 19-07-14. Mourned by Family & Friends. Contact: 8220019287 & 9841058245
Now a New Year deadline
........The reason for this being that notes printed and issued from 2005 onwards have better security features and cannot be easily counterfeited. However, that is not the case with pre-2005 notes which makes them susceptible to counterfeiting. The move is well-thought out drive to flush out the fake notes from the economy. The RBI governor Raghuram Rajan has already emphasized that this move is aimed not at demonetization but a technical action to reduce counterfeiting of banknotes and provide more reliable currency to the public. Having said that, RBI does recognize that withdrawal of pre-2005 notes on a nationwide scale is a time consuming affair...........
Now, taxman will contact you directly
............The move will not only secure communication between the IT Department and taxpayers, but also improve efficiency of the e-filing process. The directive states that the validation of the mobile number and e-mail ID is a one-time process. However, if the taxpayer changes his or her mobile number or e-mail address, he will have to register the new number or e-mail ID again. Taxpayers have also been directed to include e-mails from the IT Department in the `safe' or `white' list so that the communication from the department does not get blocked, rejected or end up in the spam folder, the directive states. A single mobile number or e mail ID can be used for a maximum of 10 accounts.........
Read - ET
Let your pot of gold create social impact
..........According to the RBI, 60 per cent of the population does not have a bank account. These people depend on money lenders. When a customer takes a loan from an MFI, he builds a credit history; now we also have credit bureaus that have close to 100 million records. MFIs get this section of the population into the mainstream. If banks want to lend to them at a later date, they have a credit history to base their decision upon. People doing small businesses or the unorganised sector, who do not have salary slips, PAN number, etc., now have proper records to back their income and cash flows......
The currency wars
In October 2012, then Reserve Bank of India governor D Subbarao had asked visiting US Fed chairman Ben Bernanke and treasury secretary Timothy Geithner for a rupee-US dollar swap arrangement. The two had refused, saying the Indian rupee was not fully convertible and so it would not be possible for a swap to work. Two months later, the RBI signed a swap deal for $15 billion with the Bank of Japan. It has now been extended to $50 billion..............
A Budget, not a moon shot
......... If these targets can be achieved they will help reduce inflation more rapidly and allow the Reserve Bank of India to reduce interest rates and help revive growth. With faster growth more revenues will make fiscal consolidation more achievable. Early introduction of the GST would help, as it will boost revenues albeit with some lags...........
Elusive revival
.........However, a sustained economic recovery is a complicated task if we look at the underlying trends. The government has committed itself to fiscal compression. Inflation is still enough of a problem for the Reserve Bank of India to shy away from rate cuts. Investment activity is still weak. The global economic recovery is uneven. A year after the............
Govt lines up big fin inclusion push
.....The proposed comprehensive financial inclusion programme envisaging insurance and pension cover, apart from a default cover for lenders is likely to envisage opening 15 crore more bank accounts, 12 crore of which will be in rural areas over next four years, according to a note sent to the Indian Banks Association (IBA) by financial services secretary G S Sandhu. According to the note, Modi’s new comprehensive financial inclusion programme has three major shifts from the one pursued by the previous government........
Government ARC: a bailout by another name
..............This is not the first time that a proposal for a public sector asset reconstruction company has been floated. A similar proposal came up during the first NDA regime as well, at a time when Indian industry was going through a recession, and bad loans in the banking system had spiked. Thankfully, the proposal was nixed at that time and instead a new regulatory framework for ARCs was created by legislating the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act in 2002. That act led to the setting up of the............
RBI starts scrutiny of cos suspected of illegal money raising
..................Sources said the Reserve Bank of India (RBI) has begun analysing details of entities, which are believed to have raised money from the public illegally without getting registered as NBFCs. The cases are being pursued after reference from the Corporate Affairs Ministry to probe 34,754 companies (other than those registered with RBI). NBFCs are regulated by the RBI........
Andhra Pradesh to mortgage institutions
.......... The government has decided to mobilise funds without depending on RBI rules to implement the waiver of farm loans. Another option under consideration by the state government is issue of development bonds. Mobilisation of additional funds to implement waiver of farm loans has become a big problem for the Andhra Pradesh government........
Infra financing: Barking up the wrong tree
.........So, are good days here for banks and companies setting up infrastructure projects? I’ve a slightly different take on RBI’s two-pronged approach to prop up infrastructure financing and protect banks from asset-liability mismatches. Since there is no cap on maturity of bank loans and no bar on refinancing loans, there is nothing new about the 5:25 model. Banks are always encouraged to resort to take-out financing—a method of providing finance for longer duration projects by sanctioning medium-term loans with an understanding that the loan will be taken out of books of the financing banks after a certain number of years. The take-out financing model has not taken off. So, RBI has tweaked it and................
Differentiating to include
.............The thrust of the RBI's strategy now is to move from mandate to viability, which requires a completely different model to address those three critical factors. De-risking is the key element of the payments banks proposal, while local knowledge is what is supposed to differentiate the small banks. By drawing boundaries on what both types of institutions can do, a separate space is being carved out, which is under no real threat from the bigger players. This also encourages a range of players to try their hand at it. However, it must also be recognised that........
Niche banking
.........The move to licence payments banks is an acknowledgement of the scope for niche banking in India. You don’t need all banks to do the same thing; in fact, technology already permits financial inclusion to be achieved in ways other than through the opening of more brick and mortar branches in remote locations. What matters eventually is that the delivery of financial services is economical — mobile firms charge about 1 per cent against the 5 per cent for sending money through India Post — while ensuring customer protection and no risk to financial stability. The latter concern is largely addressed by the stipulation that depositor monies be invested in government bonds below one-year maturity. The ultimate objective should be to enable every Indian to have a safe and secure bank account. Such .........
Some players likely to stay away from second round of bank licensing
Doubts over financial viability of small and payment banks could keep away some players from the second round of bank licensing. The central bank's proposal to ring-fence new banking entities from any financial or non-financial services of the promoter could also play a spoilsport. The Reserve Bank of India on July 18 kicked off the differentiated banking licence regime by proposing, in its draft guidelines on small banks and payments banks, to allow the ..........
India's youngest bank Bandhan to empower women, rural folk
......Ghosh said RBI Governor Raghuram Rajan wants the new bank (Bandhan) to penetrate poverty-hit rural areas to promote lending and saving among farmers, small businesses and others whom traditional banks have been reluctant to serve. "Bandhan is a third generation bank. Instead of ATM (Automated Teller Machine), our 275,000 human teller machines have been in constant touch with the rural people, specially women." Ghosh said that he had all the time given emphasis on the "practicability of the business, whatever may be the volume of trade.".....
Bandhan gets 25,000 applications for 15 posts in proposed bank
...........On July 2, Bandhan, the microfinance institution, which recently got an in-principal nod from the Reserve Bank of India to start a bank, came up with an advertisement for 15 posts in the proposed bank. In nearly 17 days, the MFI has received more than 25,000 applications for the posts, according to C S Ghosh, chairman and founder, Bandhan. In addition, several top-notch executives of the corporate world expressed interest in joining the bank, informed Ghosh.........
Road map for PSU banks fund-raising by next month
..................Next month, the government will frame a draft Cabinet note on equity dilution in State Bank of India (SBI), the country's largest bank. "We have not yet decided on SBI stake dilution. We are preparing a road map at the moment (for raising capital by public sector banks)," Financial Services Secretary G S Sandhu said at a Canara Bank event here............
Move over, big brother
.............It is too early to say whether these mechanisms will challenge the role of the International Bank for Reconstruction and Development (IBRD) or the World Bank and the International Monetary Fund (IMF), which have been the bedrock of the Bretton Woods system under U.S. hegemony. But they at least serve as a reminder that the era of Western and American dominance of the world is ending, giving way to a more complex and diversified world order: the multiplex world. The move by BRICS, though outwardly economic in nature, has serious geopolitical undertones...............
Questions remain on viability of proposed payments banks
...While most agree there is space for such banks in India, the restrictions and conditions proposed have raised questions on whether the model would be a viable business proposition. Payments banks are a new category of banks envisaged to provide limited services such as accepting savings deposits and remittances, particularly in rural areas. One key concern will be profitability. This is because payments banks will not be allowed to lend, effectively cutting off interest income—the main income source for a bank—although remittance services are permitted and could become the main income stream. Again,...............
BRICS Bank: Taking shape despite the fluidity around
..........So what actually will it be? The beginning of the end of western control over global financial systems, or an idea that will collapse as its members start to fight amongst themselves? I’m biased, of course. Like the Chinese ambassador to India, and Raghuram Rajan, I believe that developed countries still owe a debt to emerging nations for the aftermath of the 2008 financial crisis, which they’ve refused to pay. I can still be objective though. .......
Bharatiya Mahila Bank races past Rs 1 crore deposits in just seven months
........Interestingly, all the loans have been taken by women but in case of account holders, women make 98% of the total as men also have opened accounts in the state's only women's bank. The officials believe that the interesting loan schemes including loans for opening beauty parlour and kitchen modernization along with traditional house, car and education loans and lower interest rates on loans are the reason for the banks increasing popularity among women............
Set to grow faster, but won't sacrifice profitability: ICICI Bank
.............Kochhar, who implemented her famous '4C-strategy' at the bank soon after taking charge as Managing Director and CEO of India's biggest private sector bank in 2009, also said that this strategy has worked well and a foundation has been put in place now for the bank to grow at a faster pace than industry. However, this growth won't be at the cost of profitability or by getting into a high-risk business model, Kochhar told............
Banker Who Believes Client is Always King
.........But the grueling experience taught him to be calm and to be in control of his emotions, virtues that have rewarded him well during a career working in every department of the banking business and building relationships with clients. Mehra’s IIM batch incidentally was a year senior to that of Raghuram Rajan, now the Reserve Bank of India Governor..............
HDFC, HDFC Bank merger buzz restarts
The buzz over a possible merger between HDFC and HDFC Bank,which was talked about a decade ago in the aftermath of the ICICI-ICICIBank merger, has once again resumed. All the pieces appear to be falling into place with the RBI classifying low value home loans as infrastructure lending, which is exempt from reserve requirements such as CRR and SLR. HDFC has been disbursing loans efficiently and maintaining growth despite its size, and its sheer scale now makes it a strategically important institution. There is also a thinking that such a big organization should now be regulated as a bank. Should a merger happen, the new entity will be the second most valuable company in India after ONGC, considering that the combined value of the two institutions at current market prices is well over Rs 3.5 lakh crore.
HDFC Securities launches 'e-Will' writing service
.............There has been tremendous response to this product and a large number of customers across the country are getting themselves registered because of convience factor everyday, he said. To begin with, he said, 'Do it Yourself Will Service' would be available to customers of HDFC Bank having customer base of 2.8 crore. HDFC Securities has 20 lakh users. However, this service would be extended to non-HDFC Bank customers later ..........
SBI asked to pay Rs. 8 lakh in damages
..........The district consumer disputes redressal forum (DCDRF)–North has directed State Bank of India (SBI) and its insurance company to pay a compensation of Rs. 8.68 lakh for pre-closing the insurance policies of a consumer without prior information.......
Saturday, July 19, 2014
Need reforms but with foundations intact - M.G.Warrier
My View on "Can the government and the RBI work together?":
- M.G.Warrier
After 20 Months UFBU Still Struggling To Come to Consensus Among Themselves
........Thus, in nut shell we can say the meeting expressed unhappiness for the delay, and decided to request for another meeting with FM and shot a letter to IBA wherein it did not fit it even necessary to mention about meeting with FM. They will now try to come to a consensus for approaching IBA with that view..........
Subscribe to:
Posts (Atom)