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My View on  "The challenge of financial inclusion": 

One wishes, those who are responsible for taking financial inclusion from ‘word of mouth’ to something that makes an impact on the lives of people who have no representation anywhere because they do not have, as of now, money to go to a bank for opening an account, take Dr Raghuram Rajan’s following quote in this article seriously and do something:

“Simplicity and reliability in financial inclusion in India, though not a cure all, can be a way of liberating the poor from dependence on indifferently delivered public services and from venal politicians,” he said. Further, “in order to draw in the poor, the products should 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 money lender, easy to understand life and health insurance and an avenue to engage in savings for the old age.” 

- M.G.Warrier

Better if had 'Re'sponded........

 "PENSION UPDATION – A MIRAGE : P R R NAYAR": 

Any benefit extended to a person should be passed on within a reasonable time so that the purpose of such benefit is achieved - i.e. the beneficiary enjoys it in his lifetime. Shri Nayar's case is very saddening - A mere acknowledgement would have given him some solace. In the hi-tech environment, it is not difficult for the RBI to send at least an acknowledgement automatically responded by the system giving a reference number. Many institutions have introduced this practice for any e-mail sent to them. 
- Saraswathy Srinivasan

RBI is not an insensitive organization. But, any organization is dependent on its employees for communicating with the world outside. RBI has a Department of Communication also. My humble view is that Shri P R R Nayar’s communication on pension arrears quoted here deserved a response. Even a response that ‘Bank is not in a position to respond to this for …(stating reason here)…’ would not have created this much of frustration in the mind of Shri Nayar who ‘knew the limitations of RBI’. Perhaps, someone who reads this will help RBI to send a response to Shri P R R Nayar. The point made by Saraswathy Srinivasan is absolutely right. Let me give an example of another organisation which handled my letter on a related issue. I wrote a personal letter to Vinod Rai when he was CAG. The point I made was that a letter addressed to DG(Leeladhar) which was signed by Rai had resulted in undue delay in RBI taking a decision on not only pension updation but revision of Family Pension and enhancement of Ex-Gratia to pre-1986 retirees. I requested him to do something to get over the impasse. CAG officially forwarded my letter to RBI with a request to take action. CAG also endorsed a copy of his letter to me. I didn't hear anything further from RBI is a different matter. 

- M.G.Warrier

'Account'able for FinClusion

My View on  "Unclaimed insurance amount: Whose money is it, any...": 

Copied below is an excerpt from my article "Do we need a regulator for 'unclaimed' deposits?" posted at moneylife.in on May 3, 2013:

The government should guide all organisations sitting on unclaimed deposits or maturity proceeds of other financial instruments like insurance policies to exhaust all reasonable options available to track the depositors or their heirs whose money would be transferred to unclaimed accounts before such transfer every year. From notice boards at bank branches to electronic media could be used to draw the depositors’/beneficiaries’ attention. If banks’ secrecy provisions stand in the way, necessary changes should be thought of. 

It would be also worthwhile to enquire whether the organisations including banks were periodically updating the database on their folios. Last year the Employees Provident Fund Organization proposed not to pay interest on inoperative accounts in EPF accounts consequent to a proposal to freeze about three crore accounts (amount involved was about Rs10,000 crore) in which there was no fresh contribution during the previous three years or more. Such moves send out disturbing signals about safety of depositors’ funds with public sector organizations.

Ironically, the position will only aggravate with compulsory opening of more accounts to promote financial inclusion, insistence on Aadhaar-enabled accounts even before Aadhaar is yet to reach and crediting of government scheme benefits through bank accounts. The GOI and RBI may look at the issue from a social security angle, lest people lose faith in government-sponsored savings schemes and social security measures and even in the financial sector regulator." 

- M.G.Warrier

Why low household savings in Gujarat?

My View on  "Formal employment remains key to financial inclusi...": 

The article is well structured. But, a few points which in my opinion it has missed out are:

1. Regarding Gujarat: Concentration of industries like gem cutting, textiles- mainly through power looms and not industrial factory types and huge wholesale and retail trades in textile related areas and construction industry Large segment of migrants (coming from states like Rajasthan, Bihar, Orissa and UP) who work in these sectors do not have any bank account. One can see large serpentaine queue of migrants waiting at the entrance of Public Sector Banks like SBI in various centres like Surat to send remittances to their home. Thanks to CBS, they are able to remit funds to their home accounts though they do not have one at the work place. So, it also reflects in the low household savings in Gujarat.

2. On Savings and Consumption: True, savings ratio has not grown or grown very marginally year on year in the last few years. The author attributes it to the higher consumption. Recent study showed that there is a slackening in consumption. 

3. Study the savings and investment ratio: It would be more important to see if savings go for investment or not. It would increase production (both manufacturing and services) and in turn employment. If savings made by the economy is not channelled towards investment then that would adversely affect the growth of the economy. 

- Dr.S.Santhanam

Why Uber, Google Play and Amazon should not lose sleep over RBI’s latest diktat

..........According to Pallav Pradyumn Narang, Partner with Arkay & Arkay, Chartered Accountants, A Tax, Assurance and Advisory firm based out of New Delhi, the notification is significant and there are already concerns that it may affect the Indian businesses of service providers such as Uber, Amazon, Google Play, Apple App Store etc. However, he says a key distinction has to be made between goods and services provided in India as compared to those provided from outside of the country’s borders. Here's why Narang thinks these service providers should not be losing sleep over the RBI notification...........

Read.........

Only 10 free ATM transactions per month

........“This move will only benefit banks with large ATM networks. Mid-segment banks having fewer ATMs are anyway dependant on other banks’ ATMs, which increases the cost of transaction. In the short term, banks would need to rethink their ATM expansion strategies, which will now witness a slowdown,”.........

Read - Mint

Free use of ATMs restricted

...........The changes proposed are, therefore, neither in the interest of bank customers nor the banks themselves, and it is a retrograde step, as it adversely affects the spreading of banking habit among the poor and the down trodden, who can ill afford to pay these high charges levied by banks for the use of ATMs. There is certainly no case for banks to curtail the existing facilities available to ATM users, much less in their own ATMs for their own customers, as imposing additional charges on the depositors will only result in negating the efforts of the government in spreading financial inclusion, which is being attempted at a very heavy cost to the exchequer. There is no doubt, therefore, that by restricting free usage of ATMs, banks are “biting the hands that feed them”, hurting both the banks and their customers. 

Read - Moneylife

Is it not time for Depositors to unite and fight against exploitation? - Dr.T.V.Gopalakrishnan

.............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. It is unfortunate that banks and bad borrowers are thriving exploiting the depositors by all possible means and it is the best opportune moment for Money Life to organise Depositors and fight for their justifiable rights.

Read........

Card payment conundrum

........As the Uber case reveals, there may be a case for relaxing norms for card payments up to some small value - say, Rs 1,000 a day by deleting second authentication. This will hopefully facilitate the growth of other small-value card payments and more such businesses in the country. However, people feel uncomfortable in sharing the card verification value or CVV number with companies on a regular basis, which could create difficulties for the cardholders in case a company goes rogue..........

Read | Business Standard

Payment gateways seek clarity on RBI directive on global online transactions

..........Shiv Putcha, associate director, mobility at IDC, said that RBI is rightly concerned with the payment process as the digital payments is growing at a rapid pace and has a chance of affecting the forex situation of the country."We dont have a clarity yet on these payments that go overseas: whether these are service tax complaint. RBI does not want a back and forth forex transactions over which it has no control.”........

Read - FE

There is a lag between opening a basic account and activation: Rajiv Sabharwal

............If you don’t open an account, you will never have a transaction. This is a chicken and egg situation; you have to start somewhere. These financial inclusion accounts will become viable with the money which the government has moved to the citizen. Once that happens and followed by the fact that once the habit gets created, the market can start extending loans.............

Read | Business Standard

From Bhave to Birla

CB Bhave, then member KM Abraham, former coal secretary PC Parakh and Aditya Birla Group chairman KM Birla is not just a matter of vindication for these gentlemen, it is a matter of utter shame. Not just does the CBI have egg all over its face, the questions for the government of the day are, one, how it plans to protect civil servants while doing their job and, two, how are corporates expected to remain honest. Despite.........

Read - FE

Reserve Bank hints at more SLR cuts in the near future

.........DK Joshi, chief economist of Crisil, said, “One can expect further reduction in SLR. An SLR reduction is a move towards reducing structural constraints to monetary policy transmission and providing banks with more flexibility in their lending decisions.” Though the impact of the change in policy rate is still unfolding, the transmission of policy rate to deposit and lending rates of banks is relatively less pronounced as compared to money market rates reflecting the presence of structural rigidities in the credit market said the report.............

Read......

Nomura Raises India Growth Estimates

..........Meanwhile in the near term, Nomura pegged India’s second quarter GDP growth at 5.9% year over year, up from their previous estimate of 4.7%.  India is on a tear. And investors  holding the Wisdom Tree India (EPI) exchange traded fund are loving the dynamic duo of Narendra Modi at the Prime Minister position and Rajan Raghuram running the Reserve Bank of India. ...........

Read - Forbes

Reconstruction question

.........Bad assets not only eat into internal accruals that might otherwise be used to enhance capital, they also weaken the ability of banks to attract fresh capital from outside. In the Indian context, if the government wants to preserve its majority shareholding in the public-sector banks, it will need to commit an even larger amount of funds because of this. Finding ways to both reduce the burden of existing NPAs and contain their rise in the future has clearly become a regulatory imperative........

Read | Business Standard

Growth-inflation dynamic

.............The growth -inflation dynamic was bound to figure prominently as indeed it does in all RBI statements., There cannot be substantial changes in the RBI’s monetary stance between the third bi-monthly monetary review of August and the annual report. With inflation continuing to remain at high levels, the possibility of a rate cut in the near future is practically ruled out. This is very much in line with recent monetary policy statements .The RBI’s hawkish stance to counter inflation -interest rates have been raised three times by 25 basis points each since September last,-will therefore continue. Retail inflation which was coming down ..........

Read - The Hindu

PSBs in limbo

.............It is not easy to restructure PSBs, given the scale of micro-management of these banks during the United Progressive Alliance government's regimes. The legacy of government directives has further confused the top managements in public banks. PSBs have acquired a habit of complying with these directives first and then adhering to the instructions of the Reserve Bank of India. Even if the government ownership is diluted to 33 per cent, what is the guarantee PSUs will get a new governance structure? ..........

Read | Business Standard

Finance Ministry Mulls Splitting CMD Post for PSU Banks

..............Earlier, bifurcation of the CMD's post was also suggested by Reserve Bank to the Finance Ministry. RBI had accepted that CMDs of public sector banks enjoy absolute power along with boards. The central bank had also said CMDs often dominate the board during their tenure and therefore it also recommended that the post of CMDs be separated to empower the board. In PSBs, the top executive is designated as CMD, with the exception of the largest lender State Bank of India, where the top position is commanded by the Chairman and there are four Managing Directors with clearly defined executive roles under her/him.............

Read.........

PM asks banks to make financial inclusion a national priority

.........In an email to all bank officers, the prime minister described the task as “gigantic”, but asked banks to put in all their efforts to make sure no one was left without a bank account. “We need to enroll over 70 million households and open their accounts. This is a national priority and we must rise to meet this challenge. There is an urgency to this exercise as all other development activities are hindered by this single disability. I am sure we will overcome this situation collectively,” he said..........

Read | Business Standard

Fin Inclusion can Curb Ponzi Schemes: Rajan

....“SLCCs (state-level coordination committees) should focus on financial inclusion for flow of public savings to the formal channels and protection of deposits of public mopped up by unauthorised and unscrupulous entities“, Reserve Bank of India governor Raghuram Rajan told state secretaries. The 27th conference of the state finance secretaries held in Mumbai discussed the matter of ponzi schemes threadbare to protect gullible and poor savers from being lured by pyramid operators. State secretaries have agreed to develop a dedicated website for SLCC members for sharing the developments and best practices and information on dubious entities. They suggested strengthening of the Economic Offences Wing and Cyber Cells to curb the menace.........

Read - ET

Credit card transactions: Has RBI created an Uber-mess?

............Should the RBI then adopt the model for all players or should it punish Uber and the likes in an effort to prevent possible fraud and to level the playing field for all service providers? To help make up your mind, here’s a selection of Business Standard’s top stories on the whole issue...........

Read | Business Standard

RBI seeks corrective plan on Bhushan Steel loans

The Reserve Bank of India (RBI) has put the Rs 40,000 crore exposure of banks in Bhushan Steel under the corrective action plan (CAP) for stressed loans. There are three options — including bringing new investor, restructuring the account and recovery of loans — under CAP for stressed assets. “We’re waiting for the RBI to work out/ approve the suitable formula under CAP. The RBI will decide the strategy,” said the chairman of a leading PSU bank.......

Read | The Indian Express

RBI cautions states against debt-waiver schemes

...............Rajan said debt-waiver schemes have an “adverse impact on the financial health of the banks whose capital needs have gone up due to enhanced prudential requirements and deterioration in asset quality and the macro economy in general.” Rajan’s comments comes after the new government of Andhra Pradesh announced loan waivers of Rs 35,000 crore..............

Read - Mint

Enact laws to protect depositors’ money

............Certain entities, which are out of purview of financial sector watchdogs, have often taken advantage of the regulatory loopholes to raise large amount of deposits. States like Tamil Nadu and Odisha have already enacted model Acts to take care of depositors’ interests. Sinha sought cooperation of the states in this initiative by conducting investor awareness workshops and training officials. Sinha also sought help from the states to curb the off-system “dabba trading”, the RBI release said..................

Read - Mint

Reinventing the Planning Commission

.............In general, the problem for the designers of the new organization is to understand where to draw the cut-off line for deciding when the Commission needs to step in. That is the design issue. But more than that, the Commission needs to be staffed and led by people who are not aggrandizing in nature. Originally, the Planning Commission too was expected to be a think-tank. But within some years...........

Read - Mint

After the plan panel goes

..........Given this history, what should come next? Given the size of India’s states, given their increasing competence in governance, the present moment is an ideal time to scrap all plan transfers. The Finance Commission should be able to exercise its constitutional role unfettered, determining revenue-sharing transfers to the states, but in the form of unrestricted funds. The Finance Commission should abandon all its efforts at imposing conditions. The Finance Ministry should provide technical analysis of individual ministry proposals for spending, including..............

Read - FE

An ode to the Planning Commission

.........By the 1990s, planning was no longer a major social gestalt. It was now a technocratic, bureaucratic body, centred around fragmentary debates. The legend had shrunk but its power to determine life chances remained. By the time the results of Mr. Modi’s victory were declared, the future of the Planning Commission was in doubt. There was a sense that planning was impervious to the needs of the new federalism. In his Independence Day speech, Mr. Modi dismissed and dispensed with the institution without a footnote of thanks. There was a sadness to his rank indifference. But politics cannot dismiss history. Planning was once a great idea, a wonderful fable of the dreams, even the arrogance of knowledge. It was a great experiment which became erratic, but its history, its genius, its innovations need to be told and told fully......

Read - The Hindu

HDFC Bank expanding in UP backwaters

............He informed HDFC Bank had also achieved its target of opening 62 new branches in UP under the central plan to augment the network of commercial banks' branches in the state by March 31, 2014 for effective financial inclusion and higher branch-population ratio. Meanwhile, HDFC Bank rolled out its series of 'secured banking workshop' in the state. It is aimed at educating customers on matters concerning safe banking and secured transactions..........

Read | Business Standard

Banks dole out festive offers

...........With banks focusing on e-commerce in a big way, it is expected more offers for online shopping are in the offing. SBI, for instance, is planning to come up with specific offers in this segment for its debit card consumers. “Since the most card spends happen around the festival season, we are looking at coming out with several offers across the categories of consumer durables, lifestyle, apparel, etc, for our consumers. We are looking at e-commerce as actively as other retailers,” said an SBI official............

Read | Business Standard

PF return less than inflation: EPFO

How much is your provident fund corpus worth? An internal presentation by EPFO — which has discussed investments in real estate, infrastructure and shares as possible options to boost returns — has said that Rs 100 deducted from your salary in 2005, when marked to inflation, was worth Rs 97 eight years later.............

Read - TOI

Complying with I-T provisions of clubbing income

..............Taxmen have plugged the loophole by extending clubbing provisions to the son’s wife also. It is provided that any income arising directly or indirectly to son’s wife, as a result of transfer of asset otherwise than for adequate consideration, shall be the income of transferor. It is pertinent to note that, the relationship of husband-wife, father-in-law/mother-in-law and daughter-in-law should subsist both at the time of transfer of asset and at the time of accrual of income. Therefore, if assets are transferred before marriage to the would-be daughter-in-law for inadequate consideration, there shall be no clubbing even after marriage...........

Read - FE

Raghuram Rajan, Nachiket Mor deserve better - LATHA VENKATESH

I have so far resisted commenting on other journalists and their views but this once I am violating myself given rule. The myriad articles accusing RBI governor Raghuram Rajan of bringing his school fellow and friend Nachiket Mor into the RBI as its Deputy governor or COO are outright lies. May be these fellow journalists of mine don’t intend to lie (since some of them are really nice people) but on this one, they are making some really facile conclusions with little or no evidence and based entirely on gossip. For one thing, the decision to restructure RBI was not Rajan's baby at all. It was a job begun before he took over................

Read more at: Read..........

A tale of two RNBCs - Dr.S.S.Tarapore

..............This resulted in a long battle of attrition that lasted till 1996. In 1979 Peerless approached the Calcutta High Court that the 1978 Act did not apply to it. The court ruled in favour of Peerless. ears later, in 1987, the Supreme Court concurred with the Calcutta High Court, but indicated that the RBI could regulate these companies differently than the Non- Bank Finance Companies ( NBFCs); the application of the NBFC Directions to these companies would result in a closure of these companies; to avoid such an eventuality, the Supreme Court urged the RBI to issue separate directions which would safeguard depositors and also enable the companies to live. Thus came into being the Residuary Non- Banking Companies ( RNBC), Directions 1987............

Read - FPJ

Strategy and structure - Dr.Subir Gokarn

.......I think that all these objectives are of critical importance. Having been associated with a consulting business for some time, when we did projects for state governments, I was struck by the absence of a systematic database on what different states were doing to address the problems posed by the client. Significant person-hours were spent on many projects just putting this information together and there was no guarantee that it was comprehensive; more importantly, it remained in the private domain. This kind of knowledge is unquestionably of great significance in helping.........

Read | Business Standard

'RBI just taking baby steps on customer rights'

........."The RBI could have learnt from insurance regulator IRDA (Insurance Regulatory and Development Authority) brought out a separate regulation for protection of policyholders several years back. The RBI has taken just baby steps to protect the customers," S.Saroja, co-ordinator, Citizen consumer and Civic Action Group (CAG) told IANS.........

Read | Business Standard

Lighter touch

................The RBI should indeed step in to protect consumers from fraud. That is its duty. But well-intentioned regulation should still be examined to see if it in fact makes people better or worse off. In this case, the RBI may not have kept consumers' interests in mind. Regulation of the online transfer of small sums - most taxi rides are well below Rs 500 - should be minimal, in order to spur innovation and growth, as well as to benefit consumers. In general, this intervention shares the clumsiness of the Indian state's various attempts to regulate the internet - sadly, it has usually proven itself to be a few steps behind technological progress in this arena. The RBI should step back from micro-regulation, and instead define broad consumer-protection rules that payment gateways can follow. Safety and security are important - but...............

Read | Business Standard Editorial

IIMB opens ‘Policy Speaks’ series with talk by YV Reddy

"When there is a crisis in public sector banks, the Government bails them out and vice versa. In times of stress, how can two weak wings of the same system support each other? When both government sector and financial sector are highly leveraged, then it is a problem. However, I credit the people of India for a stable economy as, fortunately, the household sector here is low leveraged. The stability to Indian financial sector is therefore provided not by banks or by government but by the people of India," ..................

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Poor savings outlook

While data for FY14 won’t be out for a few months, data for financial savings of the household sector collected by RBI suggest things won’t be too different from FY13, not surprising given the sub-5% growth for the year. As a share of the GDP, net financial savings of households in FY14 came in at 7.2%, not too different from the previous two years, but dramatically lower than the 12% in FY10. Within this, ..........

Read - FE Editorial

Requiem for the Planning Commission

.............The gradual rise of the market economy progressively undermined the need for a planned economy. Not surprisingly, the Commission moved away from planning outcomes to indicative planning. However, along the way, the Commission evolved as the secretariat for the National Development Council, the apex body for cementing centre-state relations. And this function is very much relevant today, especially with a second round of economic reforms to be led by the states.............

Read - Mint

Dampeners for the new animal spirits

..........Brokerages like Barclays and Standard Chartered are now making projections of six per cent GDP growth in 2014-15. That is at the upper limit of the Reserve Bank of India (RBI)'s projections and higher than the 5.8 per cent mentioned recently by Finance Secretary Arvind Mayaram. The MoSPI estimates of Q1, GDP growth will be released on August 29. After two fiscals of sub-five per cent growth, six per cent would be a big turnaround. If we offset the CAD numbers implying 2.5 per cent GDP growth in dollar terms, versus the six per cent rupee-denominated growth assumptions, the rupee is expected to fall by about...........

Read | Business Standard

The murky world of suitcase banking

..........Both the banking regulator and the government, the majority owner of such banks, now seem to be determined to clean up the system. It’s not an easy job as the major risk, in some cases, is the senior management itself. But that’s one leg of the problem. Who will look into the other leg—the so-called investment banks, non-banking financial companies (NBFCs) and advisory services firms that entice bankers to indulge in what the industry calls “suitcase banking”? Investment banks are regulated by the Securities and Exchange Board of India (Sebi) while the Reserve Bank of India (RBI) oversees NBFCs. Will they take a close look at the murky world of suitcase banking?................

Read - Mint

PENSION UPDATION – A MIRAGE : P R R NAYAR

........Far from being a solace, this would be a source of anxiety to  the beneficiaries especially for the older ones (presently aged up to 86 plus).  It is not unreasonable to presume that the actual disbursement of arrears is bound to get embroiled in  inheritance legalities at least in quite a few cases,  as the pensioners  concerned (including family pensioners) would, by then, be not alive. Being a highly probable victim of such a contingency, I wrote to the Bank about 100 days ago suggesting a smooth course of action............. 

Read......

Website for Senior Citizens

Here is an amazing initiative towards building an exclusive website for Senior Citizens in India. This website which is an interactive web-portal, is meant to be a consolidated guide for all the Senior Citizens in India. We realized that the several needs for Senior Citizens, must be available, all at One Place. Hence, this portal is an initiative in that direction. In immediate future, the data captured and made available here, shall cater to needs of Citizens within Maharashtra State. The rest of the States will be covered in a phased manner over coming months. While navigations within this portal shall help in covering various features, hereunder are noteworthy aspects of your needs which you can expect to be served. Information is classified as below:..........

Go the website.........

A bank for, by and of Indian rural women

...............Yet, nothing prepared her for the adulation that followed in 2006, when she received the CII-Bharti Woman Exemplar Award, presented by National Confederation of Indian Industry to honour poor, underprivileged women. In 2007, the Reserve Bank of India (RBI) invited her to speak at a meeting, (her first of many that followed) to motivate women to dream of a better tomorrow................

Read.........

CBI zeroes in on big fish: Ex-RBI manager, SEBI men, ROC officer

The Central Bureau of Investigation (CBI) has zeroed in on at least four senior officials, including two of market regulator SEBI and a retired manager of the Reserve Bank of India, for their alleged role in laundering huge amounts money in the multi-crore Saradha financial scam..............

Read - The Indian Express

A marathon to celebrate the city’s rich heritage

..........“The idea is to reach out to people, celebrate our city’s iconic structures and generate funds for conservation,” says A.R.A. Rajinikanth, a trustee. The run, he says, will begin at Queen Mary’s College (which is celebrating its centenary this year), go past Ice House, Presidency College, the Public Works Department, Anna University, the University of Madras, Napier Bridge, War Memorial, Fort St. George, RBI and Port Trust — all structures with a wealth of history behind them. Since it will be difficult to explain the importance of these buildings while people are running, the organisers have been holding events over the past couple of weekends to engage with people prior to the run...........

Read - The Hindu

Obituary

C.NAGARAJAN Retd. RBI Chennai S/o C.S.Chandrasekara Sastry Son in Law of Capt. PNS Raman expired on 15 August 2014 - Mrs. Shantha Nagarajan, Sriram, Srikumar. 9380034180

The Hindu

Summer Internship with Reserve Bank of India

........Hospitality is yet another place which beyond comparison to most of the other organizations. A formal session with each and every DGM, GM and even the regional director sparkling enlightening discussions makes a lot for learning for every intern. Farewell lunch and coffee with the regional director over a meeting, together with the formal feedback makes the organization a great place to work especially for people who are research oriented and want to excel in the area. At Reserve Bank together with the technical knowledge of regular matters over the economic and financial systems of the country, learning from experience is yet another thing which you could achieve from the mentors. Exposure to city side is also encouraged which substantiates the learning through data collection and theory with the practical world and gives insights about things which can never be covered in books and thereby making it a truly practical experience................

Read..........

Check your wallet, fake notes on the rise

Mumbai: Fake notes in circulation are on the rise even as the Reserve Bank of India (RBI) and enforcement agencies strive to clear out forgers with increased security features and higher scrutiny. Banks reported higher detection of counterfeit notes after the RBI introduced a target-based incentive/penalty system. During 2013-14, 4.88 lakh pieces of counterfeit notes were detected. Of this, 4.68 lakh pieces (95.9%) were detected by bank branches and 19,827 (4.1%) by RBI offices...........

Read - DNA

RBI diktat on Uber could affect Google and Apple too

.........The diktat has ramification for a wide range of internet companies operating in India which will have to alter their payment models. At present, the mobile application stores of Apple and Google, for example, do not follow the two-stage authentication process mandated by RBI for credit card transactions. Every time a user buys an application from these stores, the transaction is completed using the customer's credit card details already saved in these firms' database. This might be a violation of RBI's credit card transaction guidelines, which require a second-stage check in the form of a one-time password or verification services like 'verified by Visa'. After the central bank's strong note, most of these entities might have to upgrade their technology to operate in India.....

Read | Business Standard

Making sense of a bank’s balance sheet

............As compared to the interest paid on fixed deposits (term deposits), the interest offered on demand and savings bank deposits (popularly known as CASA or current account and savings accounts) is very low. As such, when banks mention that they are trying to increase the share of low-cost funds, it means that they are trying to garner more funds in the form of CASA. This would eventually help them improve their net interest margins (NIMs). As for borrowings, they are somewhat similar to the debt that non-financial companies take. Apart from deposits, banks can also borrow funds through loans from other sources. These can include the Reserve Bank of India as well as other institutions and agencies, be it domestic or foreign...........

Read - HBL

Borrow less, don’t blame RBI: Time Jaitley stops doing a Chidu on us

........Unless these things happen, any call by the finance minister asking the RBI to cut interest rates needs to be taken with a pinch of salt. The RBI may decide to humour the finance minister and go ahead and cut the repo rate (the rate at which it lends to banks). Nevertheless, any material fall in interest rates will happen only once the government is able to make serious efforts towards curtailing the fiscal deficit. And the next time you hear Jaitley asking the RBI to cut interest rates, remember, he is trying to do a Chidambaram on us.

Read........

Time for RBI to cut interest rate, says Anand Mahindra

......"Now he (RBI Governor) has some breathing space, where the fuel price index would go down. So, in the next few months, if this situation continues, forex inflows are strong, IIP goes up, inflation is abetting, fuel prices are going down...This is the time now (for RBI to cut rate)," ............

Read | Business Standard

The challenge of financial inclusion

.....There is a long history of financial inclusion in India. It has traditionally been understood to mean opening new bank branches in rural and unbanked areas. Nowadays, however, financial inclusion is seen to be something more than opening bank branches in unbanked areas to take formal financial services across the length and breadth of the country...........

Read - The Hindu

Formal employment remains key to financial inclusion

..........Diced by states, data show there are significant variations in household debt from formal banking channels, which begs the question, what policies will raise access across the country? We analysed household debt from the banking system on two parameters: debt per household, which measures debt in absolute terms, and debt as a share of state gross domestic product, which indicates debt as a proportion of income, and which by proxy shows ability to repay loans.........

Read | The Indian Express

RBI may allow NBFCs to lend against all categories of shares

..........It is now learnt that RBI is planning to modify the circular to allow NBFCs to lend against all category of shares. However, NBFCs will be required to declare to the exchanges the Group 1 shares that are pledged with them. Group 1 shares are a category of limited stock defined by the Sebi........ 

Read - ET

50% of microfinance institutions could convert to banks: regulatory body CEO

............Alok Prasad, CEO, MFIN, said about half of the members could graduate to become banks. Such a move will give them an opportunity to also provide liability (deposit) products and money transfer services in addition to the existing business of providing short duration collateral-free loans for small amounts and third-party products such as micro-insurance to the poor.............

Read - HBL

Arun Jaitley & His Team Wrongly Clubs Corruption With Risk Management in Banks

...........Now most of the banks have in place a system called “risk ratings” of the corporate which is used in credit proposals.   Inspite of the fact that some banks have robust  risk rating system, their  NPA levels are very high.  Why?  The reason is not missing risk management policies but deep rooted  corruption in the banking sector, whereby even the honest lower functionaries are asked to tinker with various parameters of rating system to keep the account in higher rated category so that higher limits can be sanctioned or it can continue to be in standard category. The tools of transfer and charge sheet are used to create a terror in the office.  You can peep in your credit division or talk to a person associated with risk ratings in the field.   If he is frank with you, soon the honest rater will explain as to how AGM / DGM at Regional levels wants the rating to be perked up by tinkering few parameters.  All this is done ............

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Forensic report to be ready in next ten days: Dena Bank chief

........Dena Bank expects the forensic investigations report on its Malabar Hill branch scam to be available in the next ten days, its Chairman and Managing Director Ashwani Kumar has said. Professional services firm Deloitte is looking into the matter post the Finance Ministry’s directive that forensic investigations be carried out on the scam, Kumar said..................

Read - HBL

What could follow the PlanCom?

............Modi's comments have been echoed by many CMs over the years. Economists like Arvind Panagariya have called for the end of central schemes in favour of block grants, to allow states to choose their development priorities. Central plans, the argument goes, ignore the differing development stages and capacities of India's diverse states. Without central schemes, there shall be no need for a commission to plan, design or evaluate them....................

Read | Business Standard

How high are Indian banks’ bad loans?

................The Reserve Bank of India’s annual report, while acknowledging the problem, points out: “Compared over time and across countries, India’s NPAs (non-performing assets) are not high. Historically, the gross NPA ratio was at 12% in March 2001.” There is some truth to the central bank’s statement. As the chart shows, India’s gross non-performing loans (NPL) ratio at close to 4% is far lower than that of some European economies which were caught in a debt crisis....................

Read - Mint

A.P. to approach RBI again on rescheduling of crop loans

........According to official sources, RBI Governor Raghuram Rajan has convened a meeting with Chief Secretaries of all States on August 25 to discuss various banking-related issues. Separate time has been sought to discuss the plea of the State government.........

Read - The Hindu

Cheque bouncing has become tedious with SC verdict

..........A fortnight ago, the Supreme Court has made it a little more difficult. Until now, the aggrieved person could file a case at his place of residence or business. A three-member bench of the Supreme Court has now ruled in K Bhaskaran versus Shankaran Vaidhyan Balan that in cheque bouncing incidents, cases can only be filed in those courts within whose jurisdiction the drawee bank is situated. Thus, if ABC Company in Tuticorin receives a cheque drawn on a bank in Dibrugarh, Assam, ABC Company would have to file the case in Dibrugarh – not easy for the company in Tuticorin. This will naturally not only result in delays but huge expense as ABC would have to engage lawyers in Assam and even have someone travel to Dibrugarh. To add to the woes of those seeking redress, the judgement would apply retrospectively. Therefore hundreds of thousands of cases would be transferred to different states...........

Read - DNA

Can't Using Credit Cards be Safe and Also Easy?

...........No one will quibble with the regulator when it says that security is the paramount consideration when framing rules for online payments. But is it anyone's case that we can have either security or convenience, but not both? The RBI can definitely do better. It must change the rules to permit single-factor authentication while putting in place adequate security safeguards. Users must know clearly what they are signing up for, and all security certifications must be in place.Grievance redressal must be swift and violators must be given exemplary punishments. All the same, the components of the ecosystem -merchants, credit card firms, third-party wallets, phone companies and app stores -also have to conduct themselves responsibly and not jeopardise their own prospects.........

Read - ET

RBI says all companies must apply 2-step payments for credit cards

.......Although the RBI did not specifically address any company, it noted "it has come to our notice" cases in which domestic credit card transactions avoided the additional verification process by using an overseas payment system. The RBI noted companies would have until Oct. 31 to ensure the two-step verification process was being followed, while noting that payments must be routed through a domestic bank and settled in Indian rupees. "It is advised that entities adopting such practices leading to wilful non-adherence and violation of extant instructions should immediately put a stop to such arrangements," the RBI said in a circular.........

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Unclaimed insurance amount: Whose money is it, anyway?

........The unclaimed amount includes money payable to a policyholder as death claim or maturity claim, survival benefits, premium due for refund and premium deposited but not adjusted against premium or indemnity claims. Any amount unclaimed beyond six months from the due date for settlement will be displayed on the website. According to the regulator's August 14 circular issued to all insurers, excluding General Insurance Corporation of India, the information regarding unclaimed amount will have to be updated every six months on the insurance company's website.......

Read - FE

Are there mistakes in your tax return?

..........The taxman also gets suspicious if you are in vesting too much or withdrawing too little. A Mumbai-based individual was asked to explain how she was sustaining herself because her entire salary was flowing into investments. She was using the cash allowances received from her employer for her day-to-day needs and investing the entire salary that came by cheque.“The tax officer will estimate the household expenditure you are likely to incur based on your earning capacity, family size, lifestyle and number of earning members. If your bank statement does not show commensurate withdrawals for expenses, the question will arise how you are surviving on so little,“ .........

Read - TOI

CBI clears Bhave in MCX-SX issue

........This follows the agency coming to a conclusion that Bhave's role in granting permission to the private exchange was not of serious nature to warrant registering a case, highly-placed sources said. Hence the recommendation for a departmental action against Bhave, a 1975 batch IAS officer of Maharashtra cadre, who took voluntary retirement from service in 1996. The sources said that the CBI has finalised the case in which similar action is being recommended to the Finance Ministry against former SEBI member K M Abraham............

Read - Deccan Herald