3D VITALINFO

My View on "VITALINFO - 'Dedication n motivation on a proper t...": 

I am really very delighted that your hard work and dedication is being appreciated by so many of us. You richly deserve the accolades. Congrats and thanks very much for the daily VITALINFO. 

- V.S. Das, former Executive Director

Please add me into your big list of admirers for the stupendous task you are handling. I only now know the exact meaning of the words 'dedication' and 'commitment'. God bless you and give you good health. 

- B K Katyal, Ex-CGM

Dear Mangesh,

Rain or shine

At home or away

Mangesh always holds sway

Neither for a penny nor for a dime

He brings our VITALINFO

always on time.

A billion thanks Mangesh

- B. K. Kamath, Retd CGM

Dear Mangesh,

One should learn from you the three 'D's that "what is called dedication, devotion and discipline. It is amazing experience to read your VITALINFO.  I am truly indebted to you for this selfless service of yours!  There is no suitable word in the dictionary to praise you.  I was struggling to post my comments on your blog/site but couldn't succeed!  Hence this is my personal message to you.  Kindly accept my best wishes and Kudos to VITALINFO !!! May God bless you!  Regards 

- Janaki, CAFRAL

Dear Mangesh

Congrats for the accolades you are getting for your well deserved single handed work from all and in particular from ex Governor. I fully agree with the suggestion of Mr.Mukesh Kumar MoF CAB and endorse the same ..You may get more energy and zeal to continue to offer us a full cup of coffee every morning. Best Luck. 

- R R Kulkarni, Ex.GM NABARD and Ex. MoF CAB Pune

Sir

The comments of Shri Mukesh Kumar, F.M. are the same we wish to express. You have got all the Medals in these words. Keep it up. 

- S S Hendre, AM, CAB, Pune

VitalInfo will never ever get derailed with this kind of dedication. 

- Gopal

Wishing you all the best in the untiring effort to keep us up to date. 

- Aravindakshan Menon

Looks, VITALINFO has grown into a 'FAMILY NEWSPAPER' for RBites. While it covers financial sector developments excellently well, VITALINFO also allows members of RBI family to share their thoughts. Mangesh, I still feel that you should get more support from RBI and appreciation from the users of VITALINFO. Warm regards 

- M G Warrier

Dear Mangesh,

Kindly include the name of Shri D.T.Khilnani, author of the book "Foreign Exchange Management Manual". He had worked with me in the Economic Department thirty years ago and I am proud of his achievement. Kindly ensure that he gets VITALINFO regularly. 

- P.P.Ramachandran

No decision on appointment of chief economic adviser

The finance ministry has not yet decided on the name of the new chief economic adviser, a top official said. According to the official, finance minister Arun Jaitley has met several people but has not finalized the name. The post of CEA has been lying vacant since Raghuram Rajan left the finance ministry to join the Reserve Bank as governor in September last year............

Read - TOI

Income tax dues can be paid at RBI offices, 29 banks

...........“Pay IT dues in advance at RBI or at authorised bank branches...These will obviate the inconvenience involved in standing in long queues at the Reserve Bank offices,” RBI said in a notification today. It said the assessees can use alternate channels like select branches of banks or the facility of online payment of taxes offered by these banks..........

Read - HBL

‘Interest rates likely to come down by this year-end’

........I think rates will come down by the end of this year. For this the RBI governor needs clear understanding on inflation and fiscal deficit. I don’t think interest rate at this point of time will bring in a major turnaround. Because rates for corporate borrowings, personal and car loans are down at this point of time and there is not much demand...so when it picks up RBI can always infuse liquidity by reducing SLR and CRR. So, I think we are in the right trajectory and dollar rupee is stable...........

Read - DNA

A Banker's Shock

Bankers are known to drag their feet over demand for loan restructuring from small borrowers. A banker who had prolonged a restructuring demand from a client, got a shock of his life, when the promoter, in sheer frustration, walked up to the banker and laid the keys of his headquarters and factory on the banker's table saying: `You run the companay'.The banker was bewildered. Will this become a new norm?

ET

RBL Bank plans to raise Rs.1500 cr in maiden float

RBL Bank has hired four banks to manage a planned $250 million (Rs 1,511 crore) share sale in the first initial public offering in nine years by a private sector lender in the country, said people with knowledge of the matter..........

Read - DNA

IDBI Exec To Head UBI?

The latest buzz within United Bank of India, the troubled lender which is showing signs of recovery quicker than expected, is that a top IDBI Bank executive could be its next chief. The IDBI executive seems to have collected UBI's annual report a few week's ago from the lender's Mumbai office. The executive was earlier to head another bank, but a vigilance commission enquiry halted the appointment.

ET

Banks Get an Electric Shock, Fear a Surge in Bad Loans

The Supreme Court's ruling on Monday that declared the allocation of more than 200 coal blocks illegal has made the banking sector nervous about the final outcome, given that any likely cancellations will hurt borrowers' ability to repay loans and steeply increasing the bad debt burden...........

Read - ET

India Post retains banking ambition

.........."We intend to get into the banking space," said Kalpana Tewari, member (planning & technology) at the department. "We are waiting for the final guidelines to see how we fit into it and the benefits to the organisation. At present, we only have savings bank accounts and do not have credit or overdraft facility, since it is beyond our mandate. We have to work on these areas.".............

Read | Business Standard

India Needs Its Banks to Clean Up Their Act

...............The Nayak report called for the government to reduce its stakes below 50 percent, giving private investors a majority stake. But for populists who believe the banking sector should help promote public interest, the proposal, which would amount to de facto privatization, bordered on sacrilege. India’s central bank chief, the well-regarded Raghuram Rajan, has suggested a middle ground. Already, Rajan and his Reserve Bank have taken smaller steps, such as tightening rules for restructuring bad loans and threatening penalties if banks don’t sell off those loans to force them to come clean about their bad assets and gradually get them off their books...........

Read..........

'Minimum government, maximum governance' in public sector banks

........In effect, PSBs are subject to dual regulation by the finance ministry and RBI. All PSB board directors are appointed by the government based on criteria that are often not clear. Handicapped by the lack of specialist skills, the quality of PSB board deliberations tends to be poor and focussed more on tactical issues than on providing strategic direction3. The average tenures of PSB chairmen and executive directors are very short, and the process of promoting talent to senior positions has become bureaucratised. Compensation structures have also grown distorted such that ..........

Read | Business Standard

Banks Need a Cultural Revolution Under Modi

........It is easy to blame the malaise on wicked politicians, industrialists who have a stake in such appointments and pliant officials. The Nayak committee, which reviewed governance of bank boards earlier this year, said the boards are disempowered and the selection process for directors is being compromised.That means weak board governance. The committee reckons only radical reforms will work. Its blue print envisages bank boards being chosen by a Bank Boards Bureau comprising former bankers and then the bank boards themselves approving the selection process for CEOs. It also suggest a longer tenure for the CEO -which the finance ministry is also talking of now. On paper, it would be difficult to find fault with the selection process given that those who are part of it, including the secretary in charge of financial services and management professors from elite institutions, are not those who will just play ball.In almost all cases, vigilance approval also comes through. The question then is whether political pressure comes after that or before the final hurdle, forcing the leadership to settle for sub-optimal choices............

Read - ET

Jan Dhan: Banks target 1 cr accounts in two days

There is unusual level of activity at most public sector banks with the finance ministry setting an ambitious target of opening one crore bank accounts over two days — Thursday and Friday — which is nearly a third of the accounts in Delhi and a tenth the number in Maharashtra. This translates into each public sector bank branch opening close to 125 accounts each over the next two days, along with issuing Aadhaar numbers on the spot and authenticating the new address wherever the beneficiary of the no-frills account certifies a change in address......

Read - TOI

Experts put their heads together on new avatar of plan panel

................“This is a work in progress, it’s not important to discuss upon the deliberations of today’s meeting, the outcome is important. And that decision will be taken by the Prime Minister. We also discussed upon how should the plan be allocated to states as well as upon the autonomy status to be granted to the new body,” Mr. Sinha said. He said it was a long standing need to reinvent the Planning Commission and the Prime Minister has taken a bold step. Replying to a question on how the plan allocation to the states will be given, he said it may be done through the Finance Commission. The meeting took place in two different groups simultaneously, one headed by Mr. Sinha had previous members of the Planning Commission, while the second group consisted of economists including Rajiv Kumar and Pronab Sen.....

Read - The Hindu

Planning Commission replacement shouldn't allocate funds, say experts

............."The experts felt the appraisal function of schemes and programmes, which the Planning Commissions used to perform, should be handed over to the finance ministry," an official said. There was also a view that the new body could carry out long-term planning (with a 10-30-year horizon), the entire funding for which should be decided beforehand, without pre-empting contributions by state governments. Officials said the matter would now be decided by the prime minister.........



Read | Business Standard

FinMin orders forensic audit of UCO Bank

........."We have ordered a limited forensic audit after complaints were filed with regards to some accounts. Those accounts have turned non-performing," official sources said. This is the fourth public sector bank (PSB) where forensic audit is being conducted after alleged cash-for-loan scam came to light with the arrest of Syndicate Bank Chairman and Managing Director S K Jain earlier this month.................

Read | Business Standard

SC decision to ultimately benefit economy: Environment Minister IBA chief says banks may be hit by coal block order

.........."Banking sector pe impact ka jahaan tak savaal hai, jitni koyle ki khadaanein agar productive hai, agar us me se koyla nikal raha hai, aur who koyla agar production purpose ke liye ja raha hai, woh agar ruk jayega, toh swabhavik hai ki woh power production ko impact karega. Aur agar hamara paisa us power unit me laga hai, toh us account ke NPA hone ke chances badh jayenge (if the supply of coal from productive coal mines is restricted to power units then its natural that power generation will be affected. And if banks' money is in those power units, then the chances of that particular account becoming a nonperforming asset increase)," said Tanksale............

Read - FPJ

Aon Hewitt to design Bandhan pay packet

.........Aon Hewitt’s mandate includes designing a job grading structure along with a comprehensive and market benchmarked compensation and performance management programme for the proposed Bandhan Bank. “We aim to develop a unique banking organisation and want to ensure that the transformation of the organisation from being a microfinance company to a bank is rooted deeply in its philosophy and way of working..........

Read - The Telegraph

EPFO can invest 100% in govt bonds, PF rate at 8.75% for FY15

In a major policy shift to ensure security after workers’ retirement, the central board of trustees (CBT) of Employees Provident Fund Organisation (EPFO) on Tuesday raised the upper limit for investment in government bonds to 100% from the present 55% and rejected a proposal to allow putting employees' money into relatively risky equities or exchange traded funds. The CBT also approved the interest rate on PF for 20014-15 at last year's level of 8.75% as against the proposal of cutting it to 8.7%...........

Read - FE

Ambit Capital says RBI governor Raghuram Rajan 'above average but could have been better'

...................Rajan also focused "firmly" on inflation, though it still has not been enough to change inflation expectations. But adds supervision of the financial system "continues to be sub-par". Says Rajan needs to do more to spur banks to deal with their asset quality....... 

Read - ET

Revised liquidity framework to create predictability: RBI Deputy Governor H R Khan

........."It should have a positive impact in terms of predictability and timing," Khan said on the sidelines of a meeting with state finance secretaries. 

Read - ET

RBI to redefine deposits as ponzi scams mount

........“We are discussing it with states and the Centre. We need to define in such a way that who will be the regulator for different types of collection of money. Today, certain things are clear, certain things are unclear. So in the unclear area we are trying to bring more clarity,”

Read - Mint

Tough Times Ahead for Bankers : Need for SS Mundra To Rise To Occasion To Play The Role of Bridge Between Bankers and GoI / RBI

.......... It is regrettable that Mr K C Chakrabarty (who too was from banking fraternity), Ex-Deputy Governor, who was better equipped to handle this issue and was in better times, miserably failed to protect the interests of the bankers.  Rather he was instrumental in bashing the bankers by issuing controversial statements like PS bankers salaries being more than private sector banks etc.  He preferred to take confrontation with the then Governor of RBI to satisfy his ego of supremacy and never supported Aam banker. I hope Mr SS Mundra will not let down the bankers and play a positive role.  If he fails to rise to the occasion, bankers will face tough times ahead and Indian banking is likely to suffer irreparable damage in next two years or so. I am of the firm that one post of Deputy Governor has been kept reserved for a banker only such eventualities where  the interests of the bankers may be ignored due to lack of knowledge about the problems being faced by bankers.  ..........

Read........

RBI officers, staff threaten strike over lateral recruitments

THIRUVANANTHAPURAM, AUG 25:  

Officers and employees of the Reserve Bank may go on strike if the Governor takes a rigid position on the issue of lateral recruitments into the apex bank. The United Forum of Reserve Bank Officers and Employees is sharply opposed to internal restructuring being attempted "without proper consultations". The United Forum is an umbrella front representing officers and employee unions of the Bank. It has conveyed to the Governor that direct recruitments into the higher cadre should be limited to experts with adequate experience and domain knowledge and strictly on contractual basis, says Samir Ghosh, Convenor............

Read - HBL

Kolkata students shine at RBI quiz

.............With RBI as the organizer, it was expected that many questions will touch upon banking and finance. But some questions were tough for even Regional Director Rudra Narayan Kar. "Yes, some questions did leave me stumped. And I'm amazed at the level of awareness among today's children," he told TOI. If the teams couldn't get one right, multiple hands from the audience shot up to answer. However, some rounds did see some interesting responses — for example,..............

Read - TOI

Mor(e) Inside Outside

My View on  "Raghuram Rajan, Nachiket Mor deserve better - LATH...": 

One wishes, things were as simple as this. But they are not. When media discusses an issue, participants in the debate get freedom to choose the layers they want to analyse. They can even decide the timing. This much is obvious. Back in 1960’s when I was in RBI as a trainee, the class-room joke was, in RBI a 10 paise coin will look down upon 5 paise and dictate terms. At that time the reference was to the Clerk Grade I (who got an additional allowance) bossing over Clerk Grade II. Perhaps, much has not changed inside RBI even at the highest level even today. Though the practice of having majority of the top 5 positions filled from outside has been working well, of late, their dependence on their employer for survival and on the ‘experts’ inside for getting things done make their life tough. Added to this are HR-related issues. The excellent leadership provided by Dr Rajan has not gone down well with those who were under the impression that ‘they’ were running the show. It is easy to divert from real issues by raising personal issues. Mor and lateral induction are being used to discredit Dr Rajan in this context. 

- M G Warrier

Follow RaRa

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.............

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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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