............To facilitate such restrictions on entities found to have 'wilfully' defaulted on bank loans, the Reserve Bank is exploring ways to share details of these defaulters with Sebi on a real time basis, sources said. Subsequently, these defaulters can be barred from raising funds through capital markets, as also through issuance of securities or other avenues under the jurisdiction of the Securities and Exchange Board of India. The matter is yet to be discussed by Sebi internally and ...........
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 30, 2014
SBI selling assets before they are ready to be classified as NPAs
..............In line with the revised guidelines of the Reserve Bank of India (RBI) on managing sticky assets, SBI, India’s largest lender, is selling loans where interest repayment is delayed by more than 60 days to asset reconstruction companies (ARCs). Loan repayments that are more than 90 days overdue are classified as non-performing assets (NPAs) under existing regulations..............
Banks' Gross NPAs Rise to 3.85 Per Cent, State-Run Lenders Lag: Care
..........Its estimate is based on the study of the 26 state-owned banks as well as 13 from the private sector, including all the big banks. "Overall Gross NPA Ratio has risen from 3.26 per cent as on March 31, 2013 to 3.85 per cent as on March 31, 2014," the rating agency said in a report. The 3.85 per cent number would have been higher by 0.30 per cent, but for the sale of over Rs 10,000 crore of assets by the banks to the asset reconstruction companies in the latter part of the recently concluded fiscal year, it said. A December 2014 report by the Reserve Bank of India (RBI) had pegged the overall system's gross NPAs at 4.2 per cent in ..............
Who Benefits From India's New Budget
.......To encourage banks to extend loans related to infrastructure projects, the Reserve Bank of India will exempt banks from certain cash and liquidity requirements in relation to funds deployed for use on longer-term infrastructure projects. This measure already went into effect and should have an immediate impact to ease the burden............
Rate cut? The wait just got longer
.......The RBI's last policy communique hinted at a change in its monetary stance, as the underlying tone took a relatively dovish leaning. The unchanged repo rate at 8.0 per cent was vindicated by a balanced assessment of the growth-inflation outlook, which was primarily based on anticipation of appropriate policy actions by the new government. However, .................
August too early for rate cut by central bank
............The respondents to the BS poll unanimously said they expected the status quo. Amid an uncertainty over monsoon, if the central bank keeps the repo rate - the rate at which RBI lends to banks; currently at eight per cent - unchanged, it will be a third straight policy review in which it will do so. The reverse repo rate is seven per cent at present. The retail inflation rate had stood at 7.3 per cent in June, compared with 8.28 per cent the previous month. The current level is under RBI's January-end projection of eight per cent, though above its comfort level.....
RBI cancels licenses of six Delhi-based NBFCs
...........Following the cancellation of registration certificate, these companies cannot transact the business of a non-banking financial institution, it added. However, the RBI did not provide any reasons for the cancellation of certificate of registration..........
Brics and straws
........So, unless one of the other Brics becomes a significant contributor, the Brics Bank may face problems 10 years down the line. But suppose not. Why should the Brics Bank be any better than the World Bank at loaning money to needy countries? Is it envisaged that it will lend on easier terms or less stringent collaterals or softer investment criteria than the World Bank, let alone commercial lenders? If so, is that a wise strategy?.....
Rajiv Lall to be MD of IDFC's bank
A month and a half after the board of directors of IDFC nominated him as executive vice-chairman of its to-be-launched bank, Rajiv Lall has also become the latter entity’s managing director. This ends speculation over whether IDFC would appoint an external candidate as MD. “I will be heading the new bank as MD and will step down as chairman of IDFC. Both IDFC and IDFC Bank will have separate non-executive chairpersons,”...........
IDFC lists 4-pillar approach for banking foray
...........“As a bank, we will be the best capitalised bank of any start-ups in the history of Indian financial services sector. We expect to start the banking operations with a capital of Rs.12,000 crore. Out of our (IDFC) total net worth of Rs 17,000 crore, Rs.5,000 crore will remain with the parent and the rest will be allocated to the banking entity. In this, we will have allocated or set aside enough to protect us from the worse case possibility in terms of stressed assets,”........
Taxman to write polite letters to assessees
.......“The practise of writing letter to a taxpayer who has not reported his or her transaction to the I-T authorities is here to stay and we know its importance. It has been decided that letters from the taxman should be more polite and courteous in tone and tenor. In all cases, the department would take it initially that the taxpayer made an inadvertent mistake in not reporting the transaction under question,”............
Tuesday, July 29, 2014
Mundra set to be RBI Deputy Governor
NEW DELHI: Bank of Baroda chairman and managing director S S Mundra is set to take over as the fourth deputy governor of the Reserve bank of India after Prime Minister Narendra Modi cleared his appointment days before he is due to superannuate. Sources said formal orders will be issued within a couple of days.............
Towards a better monetary policy - Dr.S.S.Tarapore
..........It is essential to get away from the asymmetry of a strong clamour for policy rate reductions but strong resistance to policy rate increases. Under such a system, it would be possible to have well calibrated discrete changes in policy interest rates. As Rakesh Mohan, India’s Executive Director on the IMF Board recently said “ With inflation raging at 7- 10 per cent lending rates cannot be less than 12- 14 per cent.” Reserve requirements Policy interest rate movements will need to be sharper if the monetary transmission process is exclusively dependent on policy interest rates. At least for some time in the foreseeable future, it would be necessary to also use reserve requirements as an instrument of monetary policy.......
Read - FPJ
Why RBI is unable to bring down inflation expectations – its roots lie in rural areas
...........The problem, as former RBI Deputy Governor Subir Gokarn acknowledges in an article in Business Standardtoday (28 July), is that inflationary expectations continue to remain high despite a fall in the indices. The only time in the last few years when inflationary expectations dipped was in 2008 – thanks to the global financial crisis and the sharp drop in commodity prices. But that was a fluke. Policy – fiscal nor monetary - did not impact inflation at all. Quoting from the RBI’s household inflation expectations survey, Gokarn says that urban inflationary expectations “rose steeply as the (2008) crisis appeared to abate and then remained in the 12-14 percent range for a long period before rising further to the 14-16 percent range over the last couple of quarters until March 2014. During this period, monetary policy was contractionary, going by the increase in the repo rate….except for the first three quarters of 2013, which coincided with the rise in expectations.” Put simply, Gokarn is saying that monetary policy has not been able to douse........
Unconventional monetary policy and the Indian Economy - Deepak Mohanty
Paper presented by Mr Deepak Mohanty, Executive Director of the Reserve Bank of India, in the SAARCFINANCE Governors’ Symposium, Colombo, 24 July 2014
............It is widely perceived that in absence of unconventional monetary policy measures, financial sector meltdown and recession, particularly in advanced economies, would have been more severe, which in turn could have significantly impacted the global economy. However, opinion remains divided on the efficacy of prolonged recourse to unconventional monetary policy. It is argued that greater risk taking behaviour as an outcome of unconventional measures could undermine financial stability. Furthermore, there is the risk of...........
Inter-generational equity
My View on "Fiscal correction not to be trifled with - Dr.S.S....":
How fast the finance minister Arun Jaitley and RBI Governor Dr Raghuram Rajan imbibe the content of four small paragraphs under the sub-heading ‘Inter-generational equity’ will decide the time that will be needed for India Growth Story to fall back on track. This portion of the article (highlighting the words like ‘inter-generational burden of excessive government borrowing’, ‘internal debt explosion’, ‘consolidated sinking fund (CSF)’, ‘sale of family silver’ and ‘created money’) should be widely circulated among policy makers and the beneficiaries of the opening up of the economy, who, so far, belong to the higher strata of Indian society. CSF is an idea which should be pursued vigorously. Actually, cooperatives in states like Kerala had factored in this idea in their debenture(long term borrowing) programmes.
The recent tendency on the part of government to suck out created profits/surpluses from balance sheets of statutory bodies and PSUs (including banks) will soon affect the health of the financial sector. The suggestion that transfer of surplus ‘income’ by RBI to GOI should be allocated to the CSF should be seen in this perspective. Last year, I had concluded an article in The Global ANALYST with the following observations:
“To ensure that temptations of government emanating from external compulsions do not dilute the strength of RBI’s balance sheet, GOI should take measures to augment the share capital and reserves of RBI after carrying out appropriate amendments to RBI Act. Till such time RBI should be allowed to retain surplus income by transfer to reserves. Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks the Bank has to absorb from time to time, the central bank’s reserves need to be augmented on an ongoing basis.”
- M G Warrier, Mumbai
Taxmen to focus on pay and perks of corporate bosses
.........At a meeting of chief commissioners last week, it was decided to focus on top companies, including public sector entities. The move is part of an exercise to bolster revenue from tax deducted at source (TDS), which has emerged as a major source of collections and information flow for the income tax department. Typically, TDS accounts for over one-third of the gross income tax collections. As a result, the compensation structure of top executives will be scrutinized “with a view to examine the nature of allowances/perks and reimbursements“, said tax department sources........
Mysterious cylinder near Parliament causes scare
..............The cylinder was found around 20 metres away from the Reserve Bank of India and 100 metres away from Parliament before 10.30 pm. The guards called the Police Control Room number twice, only to find it engaged, following which the Delhi Fire Service was informed. ..............
Quizzing young minds
..............Talking about the objective of the event, Regional Director of RBI K.R. Das said: “The quiz hopes to create awareness on the functions of the banking sector, covering economics, finance and current affairs among the young minds.” Vice-Chancellor of GITAM University G. Subrahmanyam lauded the efforts of the RBI for bringing inclusive growth and strengthening the Indian economy........
Moody’s backs RBI measures
The rating agency said the RBI move would increase foreign investment in government securities over the next several months, adding that this will improve India’s “incipient growth by helping to stabilise the domestic market interest and currency rates”. Moody’s pointed out that the revised investment limit was not large enough for foreign ownership in government debt to cross 10 per cent, limiting the country’s exposure to global fluctuations............
NABARD to play pivotal role in all-round development: Jaitley
........Chaired by Dr Deepali Pant Joshi, Executive Director, Reserve Bank of India, the second session on Rural Finance: State of the Sector dwelled upon the fact that the number of small and marginal farmers’ accounts were minuscule among the new accounts opened highlighting the fact that there is an urgent necessity to bridge this financial exclusion..........
Read...........
Payments Bank
How would it be if your neighbourhood supermarket or even your mobile phone doubled up as a bank? Well, that is precisely what the Reserve Bank of India (RBI) is pushing for, in its efforts to get more people into the banking system. Last week, the RBI issued guidelines for a new category of ‘payment banks’ which can provide payment services to migrant workers, low-income households and small businesses, among others...........
India Post can start payment bank, but must apply afresh
India Post, the world’s largest postal network, can qualify for a new category of banks called “payment banks”, but will have to apply afresh to obtain a licence. Guidelines for payment banks were recently released by the Reserve Bank of India..............
Growing in the Indian soil
My View on "Differentiated banks: has their time come?":
The need of the hour is a comprehensive overhaul of the structure supporting financial services including those coming under ‘banking’. Where possible existing weak arms like cooperatives and remaining Regional Rural Banks should be helped out by redefining their roles and strengthening their capabilities. Going on borrowing new ideas from developed world will look attractive initially, but their possibility of ‘growing in the Indian soil’ should be studied first. These thoughts seem to have been factored in in the recent RBI initiatives, if one considers the anxieties about big banks, talk about increasing banking network in rural areas and the concern for financial inclusion together. What is missing is the will to use the existing structure and to look at financial services in entirety in the Indian context.
- M.G.Warrier
The NDA’s ambitious financial inclusion plan
Bank accounts for every Indian and banking services within 5km of every town and village, and all by March 2016—that’s the ambitious financial inclusion plan Prime Minister Narendra Modi will likely detail in his Independence Day speech. Named Sampoorn Vittiyea Samaveshan (SVS), the scheme has been sketched out in a paper prepared by the department of financial services.
Read more at: Mint
Taking financial inclusion beyond bank accounts
............ Financial inclusion, predominantly, has been more or less limited to opening bank accounts. Banks are not interested in these accounts as there is not much of a business here, and account holders are not enthusiastic about it in the absence of a workable payment system. Here lies the clincher which also answers the second question. The underlying message of the new financial inclusion plan, therefore, has to be much more than opening bank accounts.........
Autonomy, Not Mergers, a Cure for PSU Banks' Ills
............The State Bank of India and its associates may justify a call for amalgamation of the associates with the parent because of overlap. But can that logic be extended to public sector banks in general forcing the merger of smaller ones with the big to create a bigger entity? Reserve Bank of India governor Raghuram Rajan plans to give bank licences on tap. There is a plan to have differentiated bank licences which will help take financial services to nearly two-thirds of the population which does not have access to it. But the government is, in principle, comfortable with merging some staterun banks, though it has not spelt out how it plans to go about it. Is it not a contradictory argument by the two most powerful arms of administration for more banks to achieve financial inclusion and, at the same time, talk about a reduction in the number of banks?...........
Read - ET
Can the elephants dance?
The government has put consolidation of public sector banks back on the table, and if the grapevine is to be believed, one of the criteria would be to identify banks that complement each other on geographical reach. For example, ..........
No proposal for merger of United Bank with IDBI Bank
............"We confirm that so far no proposal for merger of United Bank of India with IDBI Bank has been discussed at IDBI Bank's board meeting and also no communication from Government of India in respect of the above has been received by the bank," IDBI Bank said in a statement........
Mallya good boy, says UCO
................... “First, we have to notify him. Then, he will respond. He has to be given a chance to appear before the grievance redressal committee. Thereafter, the issue can be taken to a court,” a UCO Bank official said. “We have asked for details of SBI’s forensic audit of Kingfisher to take a call,” he said. SBI has classified the bank as a defaulter, not a wilful one. A wilful default is a bigger criminal charge than a simple default. Once declared a wilful defaulter it is impossible to get any loans in future. So a downgrade in this case helps Mallya because he has a lesser crime to fight. Mallya is now involved in various cases against banks which are closing in to recover the huge loans..........
Loan Waiver: Raghuram Rajan's RBI puts spanner in Andhra Pradesh CM Chandrababu Naidu's agri loan plan
In a major shock to the Andhra Pradesh government, the Governor Raghuram Rajan-led Reserve Bank of India (RBI) has said that it did not see any reason to concede the former's request for rescheduling of agricultural loans as a precursor to the proposed loan waiver. The RBI's fresh missive sent to Chief Secretary I Y R Krishna Rao on July 26, in response to the state government's July 17 letter, will push Chief Minister N Chandrababu Naidu into an awkward position as he went to town claiming credit for "achieving" the loan rescheduling as a first step in implementing his promise of total loan waiver.............
Central bank unlikely to ease key rates
...................Easing of inflation was not contributed solely by a base effect, as its sequential build up was also modest. So far, the retail inflation trajectory has been consistent with the path anticipated by Reserve Bank of India (RBI). Thanks to the RBI's sustained tightening, the real deposit rates have turned positive since January, 2014. The question is whether this comfort could be sustained, given the downside risks posed by a deficient monsoon and geopolitical risks in Ukraine and West Asia. So far, ...........
Reserve Bank reverts to multiple price bids for bond auctions
...........RBI adopted the uniform price method in June last year, when bond yields were volatile, with foreign institutional investors pulling out from the domestic markets amid a weakening currency. However, the macro fundamentals have improved since last September, with the rupee stabilising after recouping most of the losses. A new government at the Centre has renewed hope among foreign investors. It is expected to hasten the opening to foreign investment and control the fiscal deficit.........
What’s Plan B, SBI plans to ask its borrowers
............... “These are the learnings from the last cycle and the due diligence will be greater in future,” she said, pointing out that some of the models that were put in place had not worked. The SBI chairman feels, however, that the early warning system put in place by the regulator would help alert banks about potential non-performing assets. Bhattacharya said that banks have asked the government to ensure that..........
Finmin rejects proposal to set up SAARC bank
The finance ministry has rejected a proposal by the commerce ministry to set up a development bank for South Asian Association for Regional Cooperation on the lines of the proposed BRICS bank, a finance ministry official said. The ministry rejected the proposal as there is already an institutional mechanism-- South Asian Development Fund-- to take care of the development needs of the region, the official said.......
ICICI likely to place infra bonds up to Rs 3,000 cr with LIC
............ICICI Bank is the sole arranger of the issue. The bank declined to comment on the matter. LIC officials were not reachable. Following the Reserve Bank of India (RBI)’s move to exempt the cash reserve ratio and statutory liquidity ratio rules on funds raised via long-term infra bonds, ICICI Bank will be the first lender to issue these...........
Monday, July 28, 2014
Jaitley to address RBI board on Aug 9
Finance Minister, Arun Jaitley, will address the Reserve Bank of India board here on August 9 amid expectations that the central bank will complement government actions by reducing the rates to boost growth. “The meeting has been scheduled for August 9 where he would be addressing the board members and talk about announcements made in the Budget to perk up growth,” a source said. Jaitley, who presented his maiden Budget, is likely to inform the RBI board about the steps taken to contain the fiscal deficit and may underline the need to reduce the interest rates to promote growth. It has been a custom that the Finance Minister addresses RBI board, consisting of RBI Governor and existing three deputy governors, after the Budget..............
Fiscal correction not to be trifled with - Dr.S.S.Tarapore
...............A seminal idea is the setting up of an Expenditure Management Commission (EMC) which will give an interim report in the current financial year and a final report later. It would be preferable if the Commission were to give a series of reports on specific expenditures using the 80/20 rule by concentrating on select areas (say, 20 per cent of all areas) which have a potential for substantial savings (say, 80 per cent of all savings). Further, the Commission should look into..........
Explaining expectations - Dr.Subir Gokarn
..............Not very much, if one were to go by the Reserve Bank of India's quarterly household inflation expectations survey. The median expectation for the rate of inflation one year ahead is depicted in the graph. Expectations clearly dipped sharply during the 2008 financial crisis, but this was a period of strong monetary stimulus. They rose steeply as the crisis appeared to abate and then remained..............
Is it Finacial Inclusion or Exclusion? - Dr.T.V.Gopalakrishnan
..........All households can also be forced to ensure that from whom soever they take some service should be having bank account. The banks should be given separate timing and a separate set off staff with a social bent of mind to open the accounts. The people should be attracted to banks and banks should be willing to receive them heartily and happily. I think the approach.........
Monetary policy and its formulation may undergo a sea change
..................Much to the chagrin of the Reserve Bank of India and its authorities, the central government has started the process to rework the monetary policy formulation in line with the Indian Financial Code as suggested by the Financial Sector Legislative Reforms Commission. The objective is to come up with modern monetary policy framework with clearly set targets, accountability in decision making and actions open to judicial review.............
The Poverty of Economics - T C A Srinivasa-Raghavan
...............The question that needs asking now is this: how well equipped is modern economics to handle the new problems arising from this global plenitude of labour and capital? After all, it developed as a discipline based on the analysis of scarcity. All its tools are designed to deal with scarcities, not surpluses. My economist friends say economics has been concerned with scarcities in .........
Policy triggers and wild cards
................ If the monsoon doesn't misbehave from now on, the "glide path for inflation", as Raghuram Rajan calls it, will be along the lines the RBI chief is hoping for. Despite the lower inflation numbers for June, most observers think the RBI will maintain status quo in the next policy review in August. The dangers of higher food inflation, and also of a possible spike in global crude, could mean the RBI adopts a wait-and-watch policy. Some ..........
RBI School Quiz at GITAM
.......The quiz consists of questions pertaining to the RBI, Indian banking history and its achievements over the last 79 years, banking, accounting, finance, India’s economy, trade and commerce apart from general knowledge. The winning teams from each centre will join the other winners from across South India. The zonal round is scheduled for November 7 in Chennai. Pradeep Atmaram from Bangalore will host the show as quiz master, while RBI governor Raghuram Rajan is expected to distribute prizes to the winners...........
College conducts panel discussion on union budget
Sri Sairam Institute of Management Studies conducted a panel discussion on ‘Critcal Union Budget Analysis -2014’ recently. It was presented by three eminent speakers, Dr. R. Kannan, economist, former principal advisor, RBI and former member, IRDA;........
Two bank officials booked for transferring Rs 3 lakh ‘by mistake’
.......The banker instead of transferring the money to the company’s account credited the money to wrong account number. “According to the Reserve Bank of India (RBI) rules, my amount should be credited back if the bank officials mistakenly mentioned wrong account number,” SK Gupta, complainant, said. Gupta said: “When I contacted Amit Aggarwal, in whose account the money was transferred, he denied returning money. The officials of the bank also denied providing me any help.”..........
Banks hounded following panic over fake currency
.............In a recent example, a chief manager of a nationalised bank in the city, had to tender alternative note of Rs 50 denomination, when a vegetable vendor sought for an exchange. According to the bank official, traders strongly believe that, currency note in the denomination of Rs 50, with the picture of bunch of flowers on the top right edge, is fake. It’s not just the vendors. Even at malls, government offices and buses, this note is inspected by the receiver who will hold it against the sun, before rejecting it. There have been many instances when people have had to produce another note to replace the one with the flower.............
‘या चिल्लर काढूया’
व्यवहारात चलनी नाण्यांची सातत्याने जाणवत असलेली टंचाई व्यापारी व ग्राहकांच्या पुढाकाराशिवाय संपणे शक्य नाही हे ओळखून जळगावमधील एकता रिटेल किराणा मर्चंटस पतसंस्थेने 'या चिल्लर काढूया' अभियान आयोजित केले आहे. ..............
A house by the Thames
........."Most Indians began investing in the London property market after the crash in global property prices in 2009," says Sunil Mishra, CEO of Karvy Private Wealth. This was helped by the Reserve Bank of India's liberalised remittance scheme that allowed an individual to invest up to $200,000 in a financial year in various instruments, including real estate, abroad. "There was an increase in the last three to four years in the number of high-net-worth individuals who came to us with real estate queries for London," says Mishra. Last year, the Reserve Bank of India reduced the limit under the scheme to $125,000. But this is still enough to get you started. It means that a family of four can cumulatively invest up to $500,000 per year.......
PRATHYASA - A bulletin of Reserve Bank Retired Employees Association, Kochi
PRATHYASA - A bulletin of Reserve Bank Retired Employees Association, Kochi - July 2014 issue.....
The Vijay Mallya Story
........The book under review is a vivid account of the colourful life and troublesome times of Vijay Mallya — a liquor baron who developed wings and soared into the airlines business and crashlanded causing untold agony to himself and his employees..........
Read - FPJ : Book Review by P.P.Ramachandran
RBI says banks not allowed to trade in bonds for infra lending
Banks will not be allowed to trade bonds issued by other lenders for infrastructure lending that would be exempted from mandatory reserve requirements under the guidelines issued last week, said Reserve Bank of India (RBI) deputy governor R. Gandhi. The RBI last week allowed lenders to issue bonds for infrastructure lending, but barred the banks from holding each other’s bonds................
State to lay down rules for public interest disclosure
.........SLCC convener M K Verma, who is also the Regional Director, RBI (Bihar and Jharkhand), said on recommendation of financial stability and development council (SFDC), RBI has decided to convene the SLCC meeting every three months now onwards instead of half yearly meeting. He said in the wake of present drive for financial inclusion the role and importance of NBFCs could not be undermined. "Various state governments must understand the relevance of NBFCs in stability of country's economy and regulators like SEBI, Insurance regulatory authority of India, Registrar of Companies (ROC) national Housing Bank and Institution of chartered accountants of India must expedite the NBFC though under proper regulations," ..........
Change in rules by banking body challenged in High Court
.............During the hearing, the Bench also raised questions about the validity of the 10 per cent reserve list clause, which was not mentioned in the advertisement for vacancies. The petitioners have pointed out that the matter involves the career of a large number of candidates who have qualified the written exam and interview. “The IBPS has contradicted its own earlier notification. It has violated the fundamental right of equal opportunity, as no one can change the rules of game after starting the process,” said petitioners Rakesh Kumar, Shruti Yaksh and Vikram Kumar..............
Govt asks IDBI Bank, UBI to plan merger
After years of debate, the government has set the ball rolling on merger of public sector banks, asking IDBI Bank and United Bank of India to prepare a consolidation plan. This is, however, expected to be preceded by State Bank of India taking its subsidiary State Bank of Patiala into its fold..........
Read - TOI
Read - TOI
State Bank of Patiala launches CSR initiative for girl child
...................S.A. Ramesh Rangan, Managing Director announced that the Bank will contribute a fixed amount for each opening of new saving, current account and transactions put through electronic or alternative modes of transactions towards fulfilling its social obligations as a responsible corporate citizen. The Bank will contribute Rs 50 each for every current account opened, Rs five for each new savings account and 10 paisa for each transaction on the alternative delivery platform like internet banking, mobile banking, ATM transactions and point of sale. Similarly Rs two each would go to this corpus for every new user of internet and mobile banking. Rangan made this announcement while inaugurating 25 branches in one go through video conferencing .............
Payment banks to be new revenue stream for telcos
............“The move will boost mobile banking services and financial inclusion. Mobile payments could not be expanded as telcos were unable to offer cash-out transactions. Though RBI’s proposals don't allow telecom operators to set up banks to lend, we believe they will allow cash-out transactions, which enable a consumer to withdraw at any location. This can be a game-changer to boost mobile payments and financial inclusion in India as in Africa,”.......
Profitability of PSBs under stress
State-run banks' profitability in the first three months of this financial year have remained under stress. A rise in bad loans, higher provisioning and loss on sale of investments have dragged down their earnings growth. ........
RBI’s questions on farm loans worry state
.............The government will inform the RBI that the farmers have already started cultivation and they need money to continue their agriculture operations. Meanwhile, the RBI is posing questions to its Hyderabad branch to send details with regard to waiver of crop loans. A few days ago RBI had asked its Hyderabad branch to send mandal-wise crop yield in Andhra Pradesh. Now, the RBI has asked the Hyderabad branch to send mandal-wise loan disbursement to the farmers with their account numbers and quantum of loan they have taken, including from co-operative and rural banks.........
RBI slaps total of ₹1.5-cr penalty on 12 banks in Deccan Chronicle Holdings case
...........“After considering the facts of each case and the individual bank’s reply, as also, the personal submissions etc., by some of the banks before its Committee of Executive Directors, the Reserve Bank came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty,”.......
Govt & banks not doing enough to recover NPAs: Employees’ body
..........."There are no serious efforts to recover the banks' money with the defaulting big corporates. Their assets should be confiscated." "Our data also suggest that R50,000-crore NPAs are related to big borrowers who have borrowed over R10 crore and above. Why are the banks silent over this? This is public money," ...............
The banking safe zone
..................These are some practices that can escape the scrutiny of the Reserve Bank of India. To make sure that banks are really in the safe zone, it would be ideal to factor in the assessment to be given by the banking codes and institutions such as the Insurance Regulatory and Development Authority, Securities and Exchange Board of India and so on.
Small banks may play a bigger role
..........The removal of geographical restrictions will make these banks profitable. Otherwise, making these banks profitable, while restricting its operation to some districts, would be highly challenging in the initial years thus making it quite difficult for the promoter to dilute his stake to 40% within three years and further down to 26% within 12 years as stipulated by RBI's guidelines. Critics argue that...........
Small banks: lessons from local area banks
...............There are four LABs in the country. They have been performing satisfactorily on most banking parameters, and have achieved deeper penetration without posing systemic risk. Two LABs failed in their early days but that instance was handled effectively. RBI would greatly benefit by reviewing its handling of LABs. Three major aspects need attention: ownership, capital and stability; systemic issues and concentration risks; operational issues of business model, freedom and autonomy...........
Do we need more banks to push financial inclusion?
................"Both payments banks and small banks are niche or differentiated banks; with the common objective of furthering financial inclusion. While small banks will provide a whole suite of basic banking products, such as deposits and supply of credit, but in a limited area of operation, payments banks will provide a limited range of products, such as, acceptance of demand deposits and remittances of funds," ............
Differentiated banks: has their time come?
.............There can be no two opinions on the value of these differentiated banks to the Indian financial system. But the key question is how many serious promoters will finally emerge? The business model of Payments Banks may not be attractive enough. These banks can accept current and savings bank deposits but cannot undertake lending activities. After meeting the reserve requirements (CRR and SLR) like any commercial bank, they will have to invest in government securities. The returns in terms of the spread income may not be attractive enough. Although the guidelines do not say so,......
RBI order on 'Small Bank' not ideal for present needs: Samit Ghosh
..............."The solution lies in promoting specialised banks for financial inclusion which can provide directly - savings, loans and remittances, and as third party service provider (insurance and pension). (It is) similar to the 'Small Bank' recommended by the RBI recently but without any geographical restrictions. The restriction should be on occupations such as workers, micro-entrepreneurs and marginal farmers,....
Have money, have bank
..............While small banks will provide a bevy of basic banking products, such as deposit taking and lending, but in a limited area of operation, payments banks will provide acceptance of demand deposits and remittances of funds but will not be allowed to undertake lending activities, the RBI’s draft norms say. “While the initiative of the RBI to come up with multiple models of banking is laudable, one hopes that this round of broad-basing banking system will and push the dream of financial inclusion deeper inside India. Needless to add, previous attempts to increase banking penetration in the last 5 years to achieve this objective has been dismal,” ...........
SBI, PNB, BoB & BoI preparing blueprint to identify takeover targets
....................The top managements of the four banks are in the process of preparing a blueprint that would explain the rationale for absorbing one or two entities, said the people cited above, none of whom wanted to be named. Employees at these state-run banks are engaged in the exercise after finance minister Arun Jaitley gave the lenders the go-ahead to decide how they would strategise to remain relevant in the emerging economic scenario...........
What ails foreign banks in India?
............With inflation moving south and economy showing faint signs of recovery, it will be interesting to watch how foreign banks play the growth in Asia’s third largest economy. Some of them may end up paying the price for over aggression and reading the tea leaves wrong............
Child plans to make bigger comeback
Child plans are making a bigger comeback in the Indian insurance market, with the trend of buying plans for young children and infants emerging. "We believe this trend is emerging because of increased sensitivity of young parents towards the rising cost of education. For example,........
Deutsche Bank, HSBC accused of silver price manipulation
.............."The extreme level of secrecy creates an environment that is ripe for manipulation," according to the complaint. "Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits."....
Canara Bank launches new products
Canara Bank Chairman and Managing Director R K Dubey on Saturday launched a new set of technology-enabled initiatives like mobile-Wallet, easyCash and P-serve which will provide more flexibility to customers for performing banking transaction through technology channels..........
Exim Bank wants RBI to hike leverage ratio
.................“We have been requesting RBI to recognise us as a special case of a development finance institution which helps the country’s interests,” he said, adding it has been requesting for the leverage to be increased to 15 times of the NOF. At present, the bank has to depend on government infusion to increase its capacity to lend, he said, adding that it is expecting an infusion of Rs. 1,300 crore this fiscal from the government............
Systemically Important Financial Institutions
.........With some changes, RBI has adopted the methodology put forward by the Basel Committee. After assessing banks on indicators such as size and interconnectedness, the central bank will give a score for relative systemic importance. Banks with scores above the cut off, which is to be decided, will be termed as D-SIBs. Such banks will..........
SEBI chief: Lesser dependence on bank funding key to growth
..............The SEBI Chairman said even as made clear by the RBI Governor, if “we want the country to grow at the pace that we all of us aspire to”, then the “dependence upon bank financing has to come down”. When compared with countries of India’s size or which had grown faster than India, it would show that sources of funding other than bank funding were needed. SEBI’s effort was to tell people to how to do it, he added. Sinha, while cautioning industrialists to apply their mind seriously about entering the capital markets to raise resources, said if entrepreneurs were interested in doing so, it was SEBI’s job to provide the necessary advice/clarifications.........
Pre-paid forex cards: Money changers told to follow strict due diligence
..................The RBI has issued the above mentioned directive as it has come across cases of some authorised dealers/ full-fledged money changers neither exercising due diligence nor adhering to KYC norms while selling prepaid foreign currency cards (issued by a few select banks) to their customers..........
Demand for RBI action against sugar company fraud
The former Minister and president of Hyderabad Karnataka Horata Samiti Vaijnath Patil has asked the Reserve Bank of India (RBI) to launch an inquiry into the alleged financial irregularities and fraud by Chincholi Sugars and Bio Industries while raising a loan of Rs. 210 crore from four banks. Releasing a copy of the complaint............
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