VITALINFO - 'Dedication n motivation on a proper track'

My View on  "VITALINFO through running train...........": 

A person who has addiction of taking a cup of coffee early morning will be satisfied even if he gets half cup. It is to satisfy certain neurons in our brain. VITALINFO is an addiction; it is all right to get it partly rather than missing it completely. As faculty members we give examples of Indira Gandhi, Subhash Chandra Bose and American President Abraham Lincoln for their dedication and commitment to work. I have now found one more example for my dedication and motivation class. Hats off to you Mangesh jee. We should demand for an RBI Ratna for you if not a Bharat Ratna. 
- Mukesh Kumar, MoF CAB Pune 

Wow!! 
- Dr.D.Subbarao, Former Governor

Dear Mangesh, Thanks a lot for all that you are doing singlehandedly. Your dedication is unparallel. God bless you. 

- Subhash Wadhwa ( Ex CGM NABARD, MD AFC) 

Dear Mangesh,

It is a wonderful website making available all financial news in r/o our country at one place. Being away from home in USA I find it very useful. You deserve much more than that what is stated therein. Hats off to your hard work and dedication day in and day out. To collect, compile and compose such vast information and make it available every morning before seven is not a small job. Only a person of your caliber can do it. VITALINFO has become a habit with our members like morning cup of tea. Keep it up. 

- Madan Gauria, EXRBITES Group Moderator

Well done dear Tarambale! Your today's work may be titled as 'Running Commentary on a proper track'. Keep it up and keep going! 

- M. Y. Bhat, AGM, HRMD, Belapur 

Awesome Tarambale ji... Hats off to you for your dedication. 

- Anjaya Shyamnath, Manager, Belapur

Dear Mangesh, 

The interest shown by all top executives in your blog is a testimony to the quality of coverage and contents therein. God bless you. 

- Ravi Sharma

Great!! This is dedication. This is passion. Regards 
- Shankarnarayan

VITALINFO has become a vital part of our life.Great to see that you have found time for us from a running train too! Thanks. 

- Rajappan Nair

Dear Mr Tarambale,

Though it was not an urgency, you still devoted your time in the train for bringing us an update of what is happening in and around RBI. I appreciate your sense of dedication and commitment. Thanks and With warm regards and best wishes, 

- P.Aravind

Tarambale sb.

Your commitment has been extraordinary and not possible for the ordinary mortals with their chores of personal issues. Like the running train from which you could able to feed the VITALINFO to the beloved readers, I wish long & unending  journey to VITALINFO. I also request you to send the copy of the Vitalinfo to another banker fraternity at email address   : kmanjurao@gmail.com 

- K R Padmanabha Rao, Project Director, NIRD

Ministry of Rural Development, Govt. of  India

Many thanks. Balance we will make up from our own sources or wait for tomorrow's VITALINFO. If it disappears altogether, even for a day, many of us feel having missed something from the daily routine. You are wonderful.Warm regards. 

- M G Warrier

Congrats for your commitment and motivation. 
- Srinivas Bokkasam

Dear Shri Tarambale,

When I clicked on VITALINFO today in the office, I heard a train sound. Your post clarifies the position!!! With best wishes. 

- Kaza Sudhakar

Sir,

Please forward two e-mails mentioned below to Mangesh Tarambale with a request to include them in the mailing list of updates on Banking. 

inamdarsanjaym@gmail.com  ajitkumardharkar@gmail.com  

- S M Inamdar, Assistant Manager, DBOD 

Mangesh, 

Kindly include Bangalore RD Uma Shankar in your mailing list.Thanx 

- Susobhan Sinha

Xth BPS - Great Idea Sir ji - No Ullu Banawing

..........Thus, now IBA has given an idea for negotiation through letters and not through meetings.  Now, it seems IBA wants that UFBU should give in writing that UFBU is agreeable to slash their demand from 25% rise to say 18% to 20%.  Then IBA will write back that it is still not acceptable and they can go maximum upto 12%.  Again a stalemate and then again IBA will write letter to  UFBU to slash demands which UFBU may agree to reduce to say 15%.  Then IBA may agree to increase their offer to say 13.5% and UFBU jump to grab the same.............

Read........

AIRBIOPF demands interim relief till pension is updated

..... ” it is also gathered that the formal letter of approval from the Ministry of Finance, Govt. of India for the amendment to pension regulation clause 2(2) is yet to be received by the Bank. More than three months have elapsed since the letter of acceptance of the conditions has been sent by Reserve Bank of India to Ministry of Finance, Govt. of India.”........

Read.....

A complex chain

...........One organisation which knows the stakes, and has been steadily working on the innovations and changes required, is the Reserve Bank of India (RBI). Inclusion was a key portion of the current governor's report to the previous administration on financial sector reforms in 2008. Understanding that commercial banks are not the ideal mode of delivery, Raghuram Rajan's RBI  has come up with ideas on limited banking through innovations like payments banks, which can maintain small savings accounts, and small banks. Dr Rajan has spelt out things further by listing the necessary product and process innovations. Products have to be devised to meet the needs of the poor - who have to have a safe place where they can keep their savings, make and receive payments, and borrow quickly in case of need. Besides.........

Read | Business Standard

P K Jena – Regional Director, RBI – Interview – Odisha Banking Conclave 2014

Mr. P K Jena, Regional Director, Reserve Bank of India (RBI), speaking on Odisha Economic and Banking Conclave 2014

Watch the video........

Bankers with blinkers

My View on  "KYC for India": 

True it is not easy to open accounts despite pronouncements by top executives of RBI . The banks especially private sector banks work with blinkers without application of mind and brain. Too stickler about documents without appreciating the credentials of the person. Perhaps same predicament was faced by person who headed committee on customer services when he went to open account in Delhi as he had shifted from govt accommodation to private. The bank employees need to be educated about personal interview rather than too much thrust on proof of residence. Transferee officers always face this problem. High time to review the rules. 

- Ravi Sharma

India Must Make Drastic Changes In Its Monetary Policy

.....The hard truth is that even if a country “gets things right” regarding spending, subsidies, taxes and regulations, its economy won’t become a thriving, innovative giant with deep capital markets unless its money achieves a Rock of Gibraltar-like reputation for reliability. Raghuram Rajan, the new governor of the Reserve Bank of India  (RBI), seems to understand the harmful impact of inflation. But for India to break decisively from its bad monetary habits of the past, two key things are critical...........

Read - Forbes India

Raghuram Rajan's call for coordinated global monetary policy a distant dream

....Governor Rajan's desire that emerging economies have a larger say in setting the global monetary policy agenda is an idea whose time has not come. The reason is simply that the US Federal Reserve does not have a preset path to normalising it's monetary policy over the medium term. Although, the Fed has been reducing it's monthly purchases of bonds and mortgage backed securities (MBS) by $10 billion each month, there is still a lot of speculation amongst market participants as to when ...... .. 

Read - ET

Why capping own ATM usage is not a good idea

................Public sector banks – which demanded such cap on free transactions— may not only end up incurring higher cost but also lose market share to their private sector counterparts if they restrict their own customers to use ATMs.

Read | Business Standard

ATM loot - Unite and fight for rights - Dr.T.V.Gopalakrishnan

My View on  "A(ll) T(ime) M(ess) - Dr.Yerram Raju": 

Banking itself is becoming a mess and the way things are moving depositors would be asked to pay a fee for depositing the money. The use of technology is to save cost of transactions and ATMs have facilitated to save a lot of cost in terms of maintaining branches and staff at a high cost.SB account holders get a pittance of 4% for their balances and on that they have to pay taxes also if the interest exceed Rs 10000. Banks can manage to accommodate lakhs of Crores of NPAs and write off of loans again at the cost of depositors as there is absolutely no resistance from them. Charging for ATM withdrawal is nothing but a planned loot and RBI should not be party to this.Time depositors unite and fight for their rights. 

- Dr.T.V.Gopalakrishnan

Can govt banks ride the momentum for change?

............For one, there are reports that the finance ministry has put off the appointments of at least 10 CMDs of public sector banks until the new norms are notified. The finance ministry is not only keen to split the roles of CMD, but also wants to appoint them for a fixed tenure of five years. Apart from banking experts and former RBI governors who have advocated such a move, a committee constituted by the central bank to review governance of banks had also endorsed this administrative restructuring. In a report submitted in May, the committee chaired by PJ Nayak, former chairman and chief executive officer of Axis Bank, said, "It would be desirable for the two positions to be separated. Until then there is a very real possibility of the several chairmen positions across banks being filled on the basis of political allegiance rather than professional skills. This could imperil banks."..........

Read | Business Standard

PSU banks top appointments may be delayed; changes likely

.......Further, top positions in two regulatory bodies — insurance regulator IRDA and pension regulator PFRDA — and the chairman post in UTI Mutual Fund have been lying vacant for quite some time. As many as 4 PSU banks are already functioning without a chairman and an MD. “The next batch of appointments is likely to be done only after the government finalises the new norms for appointment of bank chairman. The government is now expected to split the role of chairman and MD posts as recommended by several committees and former RBI governors. The process followed by the UPA government in its last months in office is unlikely to be followed,” said a top-level source. There is yet to be clarity on who will be the chairman, whether it should be a serving or a retired banker or a non banker, he said.......

Read - FE

PSU Banks Must Consider Securitising Loans

.....The good part is there is an innovative solution available: securitisation -or sale -of a portfolio of performing loans. Public sector banks are not used to this unlike private peers such as ICICI Bank, Axis Bank and Kotak Bank, and some non-banks. The reasons are cultural and trust-related, but the time to cross these barriers is nigh. When a loan is securitised, it goes off the balance sheet, so the amount of capital to be set aside is proportionately lower and is primarily restricted to the assets remaining on the balance sheet. What's more, enabling mechanisms such as securitisation guidelines and infrastructure debt fund regulations are already in place.................

Read - ET

RBI takes steps to create consumer protection code

.........A consumer charter of rights was in the works and RBI was working with the government at enhancing financial literacy and “strengthening the customer grievance redressal mechanism.” It was also looking to “expand supervision, market intelligence, and coordination with law and order to reduce the proliferation of fly-by-night operators.” In effect, Dr Rajan is promising achche din (good times) to savers............

Read - Moneylife

The only real worry is inflation: HDFC Bank’s Aditya Puri

.......I don’t think rates will stay high for that long. If the fiscal deficit comes down to 3.5%, I’m sure the RBI (Reserve Bank of India) governor would be amenable to bringing down rates. Once the structural issues of inflation and fiscal deficit are sorted out, rates will come down.  As soon as the government can deliver on the 4.1% fiscal deficit and if we can get some handle on food inflation. Definitely not for a year. But I don’t think interest rates not going down for another year is that important. Frankly,..............

Read - Mint

FINANCIAL INCLUSION MAY GO DOWN THE TOILET DRAIN

..........Between 2011 and 2012 and 2012 and 2013 commercial banks set up a total of 5,484 new bank offices in rural India as per RBI directives. While at first glance this might sound encouraging, probing reveals that a rise in brick-and-mortar branches has not had much impact on financial inclusiveness. For one, despite some growth in rural credit, rural areas continue to be under-financed compared to urban centres. Last year, the rural and semi-urban populations got only about eight per cent and 10 per cent of total credit disbursed by commercial banks. Even the RBI acknowledges that while 30 per cent of all new branches set up by commercial banks in India are in rural areas, less than 10 per cent of total credit is allocated to rural areas.

The way to go about financial inclusion is to..........

Read - The Pioneer

Financial inclusion may remain an unsolved puzzle for now

............In recent years, the Reserve Bank of India (RBI) adopted a more structured approach directing all state-run and private sector banks to submit a board-approved, three-year financial inclusion plan (FIP). It started in April, 2010, and banks were asked to prepare another three-year FIP for the period 2013-16. Lenders were asked to design self-set targets in respect of opening rural brick-and-mortar branches, hiring business correspondents, covering un-banked villages and offering financial products such as basic savings bank deposit (BSBD) accounts, kisan credit cards and general credit cards. Yet, more than 40 per cent of the country’s 1.2 billion people continue to remain financially excluded......

Read | Business Standard

OBC, Dena in Rs.436 cr FD scam

.........The concerned branch officials are on finance ministry radar. The ministry cautioned all bank CMDs, through a communication last week, about such cases. “There are apparent procedural lapses by bank officials. Malafide, if any, on the part of the bank staff as well as officials of the companies which open these bulk deposits can be established only after investigation,” the ministry said.

Read - DNA

Rising NPA level worries bankers in Odisha

............The NPAs have mounted to Rs 6,951.38 crore, about 8.26 per cent of the total outstanding advances of Rs 84,156.97 crore, as on June 30. The sector-wise agriculture term loans top the list with NPAs of 17.49 per cent, followed by short term crop loan at 13.28 per cent. Similarly, in agriculture allied sector, 9.32 per cent loans have turned bad.............

Read - Business Standard

ICICI Bank does a first, launches EMI on debit cards scheme

........To begin with, ICICI Bank has tied up with Samsung India to offer this facility across 9,000 stores in the country including large format retailers, multi-brand outlets and stand-alone stores for purchase of mobile phones, tablets and consumer electronics, among others. ICICI Bank will add other brands under this facility in the months to come. “The tie-up will offer financial flexibility, drive engagement and create easy product accessibility for our consumers,”.........

Read - FE

SEBI’s Bark, Bite and Leash

.........As for SCORES, SEBI’s complaint redressal mechanism, SEBI and the two national stock exchanges continue to put out glowing reports about their successful redressal of complaints. Yet, inexplicably, investors are extremely unhappy, partly because their complaints go into a black hole and partly because the SEBI Act simply does not allow for it to provide damages or grant compensation, even by recovering the amounts from defaulting or fraudulent entities.

Read - Moneylife

Trust asks government to take over temple in Mangalore

..........In a release, the trust said the donations to the temple should be regulated and used by the government. They have also asked for stricter Reserve Bank of India regulations of micro-finance institutions..........

Read - The Hindu

You have to pay income tax on your vacant property

..........Therefore, a preferential treatment is given to one self-occupied house property, which has not been actually let out at any time and the annual value of that particular property is taken as ‘nil’. So, if you have one house, which you occupy, its annual value will be considered as nil. But if you own more than one house and are using all of them for “self-occupation”, you are entitled to exercise an option. You can choose which of the properties should be considered for nil value for taxation. Based on your choice, the annual value of the other-self occupied house properties will be determined on a notional basis as if these had been let out...................

Read - Mint

Rot at the Top

.............The Reserve Bank of India (RBI), the banking regulator, until recently, remained content with issuing warnings about burgeoning bad loans. RBI governor, Dr Raghuram Rajan, in his early days in office, was more concerned that inquiries by the Central Vigilance Commission (CVC) that prevented bankers from functioning effectively. Is he now convinced that the bigger problem with Indian banking is the rot at the top? ..........

Read....

The elusive equilibrium - Book Review

........In his Overview, Dr. Jalan takes the stand that the main problem is not the so-called “policy paralysis” or lack of macroeconomic policy reforms, but simply that India’s administrative system has become ‘non-functional’ and non-responsive to the interests of an average citizen. He goes on to blame it on our failure to deliver essential services such as education, water and health. He refers to pervading corruption and how it affects public weal. If we leave out the minutiae, one may well argue that a great part of the failure in the delivery of services is due to the excessive concern over fiscal deficits and the austerity measures attached to them. If administrative failure was the cause, why was improvement in administration per se not made a part of the reform process?......

Read - The Hindu

It’s a little too cosy now

..........Few can deny that Indian businesses remain highly vulnerable to discretionary government actions, despite economic liberalisation. As Reserve Bank of India governor Raghuram Rajan pointed out in a recent speech, the effort and focus should shift from getting more and more politicians from “fixing” the system to “reforming” the system. Making the system of corporate-political funding fully transparent can be the all-important first step.

Read - Hindustan Times

Finance ministry prefers amendment to RBI Act for appointing a COO

.........The finance ministry is not in favour of any ad hoc arrangement for a lateral hire, which essentially means that the COO appointment cannot be made in a hurry as changing the RBI Act could take a while. "An amendment to the Act can't be done just like that. It will be a political decision and require wider stakeholder consultation," said a ministry official, who added that the internal disquiet over the issue would also have to be taken into account.  Some RBI employees have written to b .. 

Read - ET

RBI's COO will be an internal candidate: Sources

....Now, the fifth deputy governor (DG) was suggested by the internal report as a COO because he or she was expected to look after the internal affairs of RBI. Now if it becomes a DG then it requires the amendment of the RBI Act but the report itself sees that COO position as an internal candidate because it has nothing external about it. An outsider can’t bring much to it. It has to be someone who has risen from the ranks who can reorganise or refashion the running of RBIs internal affairs..........

Read.........

KYC for India

..........It was good to see Reserve Bank of India Governor Raghuram Rajan change the Know Your Customer (KYC) norms, when his predecessor D Subbarao faced problems producing the necessary address proof to open a bank account after he moved to Hyderabad recently. This is one of the many good things Rajan has done so far in his short stint at Mint Road. .........

Read | Business Standard

VITALINFO through running train...........

Dear all,

Today's limited edition of VITALINFO is being published through running train enroute Bangalore to Mumbai (now at Kurduwadi station).  Much as I would wish to, I am able to bring out this limited edition only leaving many more important info items. Kindly bear with me.

Regards

Mangesh

Paying to use your own money?

Should you be charged for withdrawing your own money? The Reserve Bank of India’s (RBI) recent directive suggests that since you are using an additional facility of ATM, there should be charges. Banks justify the additional expenses by saying that since additional costs have to be incurred to maintain and provide ATM kiosks, account holders need to work out how to deal this new directive..........

Read | Business Standard

A(ll) T(ime) M(ess) - Dr.Yerram Raju

My View on "Making ATM transactions expensive: Is RBI contradi...": 

Strange that customer service for the RBI turned into Bank service. In most urban and metro ATMs they cease to be Any Time Money. The Banks feed in Rs.500 and/or Rs.1000 in the working ATMs. They expect the customer to go the bank counter to get the change for higher denominations!! Second, several ATMs refuse to function. For example, SBI ATM at Survey of India, Hyderabad under Prashantinagar branch limits works for only less than 100 days in a year and at times best known to the Bank. This position prevails for the past five years and there was absolute disregard to the customers of ATM. Just as the RBI wants to punsih the customer with a penalty for use in excess of 5 times to draw his own money, and treating even balance enquiry as use, it should penalise the Banks that do not feed the ATMs properly and that do not maintain the ATMs within the absolute reach and convenience of the customer. 

- Dr.Yerram Raju

Recovery is the key

....“We believe private sector banks such as ICICI Bank, Axis Bank and HDFC Bank will perform well in the medium to long term. These banks may continue to take away market share of PSBs, as the latter are expected to go slow on lending amid bad loans and capital requirements. While we see things improving for PSBs too, we remain very selective on the space, with SBI and BoB among our top picks.”.....

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

RBI's Bharat Bill Payment System: What It Will Mean for You

......By interconnecting all the different organisations working in this space, the RBI wants to create a single brand image that can be used anytime, and anywhere. It is a great idea, one which should bring a lot of benefits to the customers. But getting all the different agencies on board is key to its success - it's a move that could help e-commerce a lot, for example. Right now, all online stores use different payment gateways, and ..........

Read..........

Splitting bank CMD posts before board empowerment is like putting cart before horse

....experts warn that going ahead with the plan without properly empowering bank boards could be like putting the cart before the horse. Among those who have  issued a note of caution are former Axis Bank chairman PJ Nayak, who headed a Reserve Bank of India (RBI) panel that originally recommended the separation of posts. The Nayak report had recommended separation of the two posts, but only at the end of a three-phase transition process to fully empower the boards. “Such board empowerment requires several complementary measures to be taken. It is unclear as yet whether they will be (taken),” ...........

Read.........

RBI license to Coop Bank to open 12 more new branches

.......In a significant development in the banking sector of the remote A&N Islands, the Reserve Bank of India (RBI) has granted license to A&N State Coop Bank to open three more bank branches at Kamorta, Chouldari and Dollygunj.  These branches are apart from the nine branches license for which was granted by the RBI in April this year.  The nine branches to be opened across various places of A&N Islands include Long Island, Nimbutala, Kishori Nagar, Mahatma Gandhi Govt College Mayabunder, Junglighat, Burmanallah, Betapur, Chowra and Wandoor............

Read.......

Mauritius play abused by India Inc: CBI

.........The ministry has now taken up the matter with the Reserve Bank of India. A committee headed by then RBI governor D Subbarao had approved the recommendation of the panel that chose the now tainted SK Jain for the top job at Syndicate Bank. In separate letters written to banking secretary GS Sandhu and revenue secretary Shaktikant Das last week, the CBI chief has said that many corporate houses were indulging in “third-party transfers” in violation of RBI guidelines. Sinha has flagged to Sandhu that banks too have been party to these illegal “third-party transfers”, wherein billing is routed through an intermediary in a third location, which is frequently a tax haven.....

Read - FE

Banks ride on e-commerce wave to woo consumers

It is not just retailers that are cashing in on the e-commerce wave; banks, too, are not far behind in wooing customers by offering online deals and discounts. Private-sector banks have been either launching e-commerce sites exclusively for their customers or have been tying up with more online retailers to provide better offers.........

Read | Business Standard

NPAs of PSBs could rise on tighter asset sale norms

.........Thanks to lax norms on asset sales, banks have resorted to aggressively selling bad assets to asset reconstruction companies (ARCs) by paying up five per cent of the total value of security receipts issued by the ARC. By paying a small amount, banks were aggressively transferring bad debts to ARCs, .........

Read | Business Standard

Saving capitalism from the government

.But often, honest candidates fail to make the cut, and corrupt politicians continue to be patronized by voters. Reserve Bank of India governor Raghuram Rajan noted the same in a lecture presented last week: “Every so often we see the emergence of a group, usually upper middle class professionals, who want to clean up politics. But when these ‘good’ people stand for election, they tend to lose their deposits. Does the electorate really not want squeaky clean government?..........

Read - Mint

Financial inclusion pangs

................There is no dearth of products launched by the government for financial inclusion. If there is any dearth, then that is in the implementation of such schemes. Often, inclusion measures give new tools in the hands of comparatively well-off people to earn more dishonest money. ........

Read - BS

Banks gear up for financial inclusion drive in 2 states

.............Having already covered over 95 per cent households in rural and urban areas under the existing financial inclusion plan in Punjab and Haryana, bankers expect the remaining households in these two states to be covered soon. In order to achieve the target in time, the banks have been allocated wards in urban areas and sub -service areas in rural areas by the convenor bank in these states.........

Read | Business Standard

Banking imbroglio between India, Singapore

...."The very high and differential treatment in respect of applicability of AMR for Indian banks compared to other foreign banks is adversely impacting the viability and profitability of Indian QFBs present there. In fact, the high and differential AMR requirement is one reason why there is no application for a third QFB licence from any other (Indian) bank," .........

Read - BS

India: Central Bank to Determine Whether Mobile App Uber is Violating Foreign Exchange Rules

......The Association has accused Uber of dodging the routine two-stage credit card authentication process, mandated by the RBI, through the use of an international payment gateway. According to the complaint, fares collected in India should not be routed through an international payment gateway as Uber is just a facilitator for a transaction, between a driver and a customer, who are both Indian citizens. Two Indian citizens cannot do business in a foreign currency, unless one holds an RBI forex broking licence, the complaint adds........

Read........

PSU bank staff must be given more support and motivation: Former RBI Dy Governor

.......Leeladhar, who was honoured yesterday with a lifetime achievement award of the State Bankers’ Club for his commitment to banking, noted: “We have the best of the people in public sector banks, but we need to give a little more motivation to them.”........

Read - HBL

Conversation with Reserve Bank of India boss

........I ask Rajan how he has found returning to India. “The hierarchies took some getting used to,” he admits with a smile. India’s antiquated bureaucracy still operates by passing physical files between departments, while rank is established via protocols such as who arrives last on a conference call. “Of course, you don’t make your own phone calls,” he says. “And the personal assistants will fight very hard, when there is any ambiguity, to establish their superiority over the person they’re calling.”.........

Read.........

Crony capitalism threatens growth

The Reserve Bank of India Governor Raghuram Rajan has forcefully underscored the danger that crony capitalism poses to India’s growth story. While delivering the Lalit Doshi memorial lecture, he argued that it creates oligarchies that slow down growth. This is not the first time that he has held forth on this topic. India has the ‘ dubious distinction’ of the largest number of billionaires per trillion dollars of GDP; that many of them have amassed wealth from land, real estate and natural resources due to proximity to government. This eliminates competition, widens disparities and slows growth. The dark side of crony capitalism is reflected in the sharp rise in big- ticket corruption after reforms were implemented since 1991, a fact that upsets even the ardent advocates of liberalisation. The late economist I G Patel admitted that one of his greatest disappointments was that reforms have not “ made much impression on corruption.” This was par for the course in the earlier license- permit raj -- in which vast discretionary powers encouraged rent- seeking or garnering of huge benefits by manipulating the environment in which economic activities take place by those in authority.

The concern is that .......

Read - FPJ

For inclusion, banish cash - Janmejaya Sinha

............According to the Reserve Bank of India's data, cash still accounts for 90 per cent of all monetary transactions in India. Even as growing numbers in cities are using electronic payment systems, such as the National Electronic Funds Transfer (NEFT), these made up a paltry 3.2 per cent of total payments across the country in 2012-13. In fact, even old-fashioned cheques account for less than 10 per cent of total payments. A medium-term vision to bring down cash from 90 per cent to even 50 per cent of payments would dramatically spur inclusion..................

Read | Business Standard

Making ATM transactions expensive: Is RBI contradicting its own stance?

.......In other words, by suddenly making ATM transactions expensive, the RBI has broken the process of gradual transition to paperless banking and is sending people back to the congested bank branches to withdraw money. While there is a rationale behind limiting ATM transactions in other bank-ATMs (ATM networks of most banks have improved in metros over years), there is no logic in limiting on bank-ATM transactions. The government has also been pushing state-owned banks and financial institutions to make payments only through electronic transfers and not through cheques from 1 September 2011. The larger idea is part of its e-governance initiative to move towards a paperless funds transfer system. The rationale, according to RBI deputy governor, H R Khan, is that for the banks, this approach would be economical proposition as it would reduce paper handling costs.........

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KYC for Subbarao

.......... "Dr Subbarao, excuse me for using your example," Rajan said, adding, "So most recently we did away with the requirement that you should have proof of current address. Proof of any address will do and the bank will determine the proof of current address over time.".........

Read | Business Standard

The five P's of financial inclusion

............Financial inclusion is about getting five things right: product, place, price, protection, and profit. If we are to draw in the poor, we need products that address their needs; a safe place to save, a reliable way to send and receive money, a quick way to borrow in times of need or to escape the clutches of the moneylender, easy-to-understand accident, life and health insurance, and an avenue to engage in saving for old age. Simplicity and reliability are key - what one thinks one is paying for is what one should get, without hidden clauses or opt-outs to trip one up. The transactions costs of obtaining the product, including the price and the intermediary charges, should be low. Furthermore, any regulatory burden should be minimal. New and inexperienced customers will require protection. The RBI is beefing up the consumer protection code, emphasising the need for suitable products that are simple and easy to understand. Financial inclusion cannot be achieved without it being profitable. So the last 'P' is that there should be profits at the bottom of the pyramid............

Read | Business Standard

NREGA increased rural wages only 10%, rest from other sources: Raghuram Rajan

.........."Women instead of working in fields or working as agricultural labourers at the younger end have gone to schools and at the older end moved back into households. That is not an entirely bad development; in fact that reflects the greater wealth in rural areas," Rajan.........

Read | Business Standard

Myopia of the elite: Raghuram Rajan’s take on the PDS versus DBT debate

......Being the incumbent Governor of India’s central bank which last checked is yet to abandon its commitment to social justice and development, the basis of his prescription should ideally be a number of field-surveys of the actual Kirana stores of the cities, towns and villages of our country. However, he didn’t make it clear during his speech. It seems he probably distilled this recommendation, supported by equal vigour by other supply-side economists too, during his years of residency in the USA, where even local groceries look like elite departmental stores of India.........

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FM hints at sops to increase savings

........."Low domestic growth and high inflation continue to have an adverse effect on saving-investment dynamics. While households' financial savings (which include bank deposits) as per cent of Gross Domestic Product (GDP) have been falling, expenditure on valuables (which includes gold) has risen over the past few years though it declined in 2013-14. This trend reflects financial disintermediation with households switching away from financial savings to valuables mainly gold," the Reserve Bank of India (RBI) has said in its financial stability report released in June. RBI believes that the consistent high inflation and the consequent low real rate of return on financial assets are the reasons that people have been reducing their exposure to financial savings........

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PSU banks may decide staff housing loan policy on their own

...........The Department of Financial Services of the Ministry of Finance had earlier advised that housing loan to bank employees be negotiated strictly as part of the bipartite wage settlement. But responding to an IBA communication, banks have now been given the option to either decide on their own or suggest if they feel this to be a part of wage negotiations. The IBA has been advised "to take appropriate action to convey the same to all public sector banks for deciding the matter…''

Read - HBL

Defensive story will continue for some time

.......Overall, the picture is somewhat reassuring. The economy seems to be pulling itself out of a two-year period of stagnation. However, this is unlikely to be a "V-shaped" recovery with a sharp rebound. It seems we'll see gradual improvement quarter-by-quarter................

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IDBI Bank to declare KFA wilful defaulter

.......IDBI Bank Chairman & Managing Director M S Raghavan said the bankers' consortium was taking steps against Kingfisher Airlines. "We will declare (Kingfisher Airlines as a wilful defaulter) very, very soon. We have already taken it (the proposal) to the (bank's) board," he said and clarified IDBI Bank's exposure to the airline was Rs 750 crore, and not Rs 950 crore as reported in media reports. IDBI Bank was the first bank to declare Kingfisher Airlines' default and it went to court to recall its loan. The bank is now taking the next step to recover its dues......

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Planning decommissioned

.......It is not that the panel's demise came instantly. In fact, the downfall started in the 1990s when the government clipped the powers the Planning Commission exercised on the states. It tried to remain relevant by exercising its authority through other avenues, but could not ever reach its old glory. Modi has been able to mothball the Planning Commission because it is not a Constitutional body, unlike the Finance Commission.......

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Experts throw light on India’s tax structure, foreign exchange reserves

......G. Padmanabhan stated that the Indian government is improving foreign exchange reserves through non-borrowing methods by increasing capital account inflows and reducing current account outflows. India's central bank has also shown increased efficiency in its monitoring mechanism. The emphasis is now more on the flow of Foreign Direct Investment (FDI) than the Foreign Institutional Investors (FII) inflows. The RBI has also formed a special committee on keeping a daily watch on foreign exchange market for better control, he added...............

Read - Times of Oman

Foreign Exchange Management Manual - Book Review by P.P.Ramachandran

.........The author D. Khilnani is a veteran in the field of Exchange control having served in the Reserve Bank for 33 years and was associated with every facet of exchange control. For a long time, foreign exchange was treated as a controlled commodity because of its limited availability. The early stages of foreign exchange management in the country focused on control of foreign exchange by regulating the demand due to limited supply. Exchange control was introduced in India under the Defence of India Rules on a purely temporary basis. The statutory power for exchange control was provided by the Foreign Exchange Regulation Act ( FERA) of 1947 which was subsequently replaced by a more comprehensive Foreign Exchange Regulation Act, 1973. This Act empowered the Reserve Bank to control .........

Read - FPJ

How to regulate shadow banks

............Many economists argue that the forms of shadow banking are so diverse that the current literature on its regulation (that tends to be largely US-centric) has little relevance. It is difficult to disagree with this entirely but a couple of things need to be borne in mind. First, financial instruments and structures similar to the US are slowly evolving in India. I would take the case of money market mutual funds and their increasing role in disintermediation - companies issuing short-term debt (commercial paper) instead of borrowing from banks. Let me make a quick qualification. We are ...................

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RBI forms committee to monitor shadow banking; realty in focus

.......Confirming the development, RBI spokesperson Alpana Killawalla told HT: "An inter-regulatory group has been set up to monitor developments in the area of shadow banking under the chairmanship of RBI executive director P Vijaya Bhaskar." Shadow banking refers to banking-like activity by non-banking finance companies (NBFCs) that remain outside the regulatory net. They generally operate as intermediaries between investors and borrowers.......

Read - HT

RBI bars 6 ISIS men from holding accounts

........An RBI notification dated August 14 says: "…it should be ensured that the name/s of the proposed customer does not appear in the list. Further, banks should scan all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list." "As far as freezing of funds, financial assets or economic resources or related services held in the form of bank accounts of the designated individuals/entities are concerned, action should be taken as detailed…"

Read - HT

Life's tough for bank treasury officials

.........Ashish Joshi (name changed) is desperate for some divine intervention these days. For, he believes the “temple” on Mint Road (headquarters of the Reserve Bank), guiding his destiny so far, has turned him away. Joshi, a senior executive in the treasury department of one of the largest foreign banks present in India, says he isn’t alone. Peers in other banks share his angst.  “The uncertainties in global and domestic markets are a way of life for us. But what hurts is RBI’s apathy,” says Joshi, who has added a few creases on his forehead in recent days..........

Read | Business Standard