.............The bulk of these bad loans are related to infrastructure projects, which have made banks circumspect over lending. "Is it of concern? Yes. Is it scary? No," Rajan told the Times of India, adding "...the point is there are two or three silver linings in the cloud of distressed assets." He said many delayed infrastructure projects were "getting back on stream" as the economy improved, and booming equity markets will also help banks raise the required capital........
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Monday, September 1, 2014
A new banking structure - Janmejaya Sinha
...........Do not create a Bank Investment Company (BIC) or a Banks Board Bureau. It will be the banking division that will populate the BIC. It is better to trust the board of the reconstituted public sector bank - in fact, the Axis Bank model works. If you need a special purpose vehicle for investment, create it for central public sector enterprises and take these enterprises out of the ministries that control them..........
LOCAL AREA BANKS - Can Small be Beautiful? - M.G.Warrier
.........Writing in the Hindu Business Line (August 8, 2014) S S Tarapore made the following crisp observations about small banks and payment banks:
“The issue of a payments bank needs discussion...Small banks are vulnerable because of their limited geographical spread; a single natural disaster can wipe out the bank. Again, historically the Indian experience with small banks has not been encouraging.” If RBI is serious about the proposal to open small banks, the banking regulator should carry out a country-wide survey to assess the potential for opening small banks in different geographic areas, as the spread and growth of similarly placed institutions in commercial and cooperative sectors differ in different areas depending..........
What is shadow banking?
Edited excerpts of Deputy Governor of Reserve Bank of India R Gandhi's address at ICRIER's International Conference - Governance and Development: Views from G20 Countries
...........The type of entities which are called shadow banks elsewhere are known in India as the non-banking finance companies (NBFCs). Are they in fact shadow banks? No, because these institutions have been under the regulatory structure of the Reserve Bank of India, right from 1963 i.e. 50 full years before many in the world are thinking of doing so. In the wake of failure of several banks in the late 1950s and early 1960s in India, large number of ordinary depositors lost their money. This led to the formation of the Deposit Insurance Corporation by the Reserve Bank, to provide the necessary safety net for the bank depositors. The Reserve Bank did then note that .........More Banks may Soon be Headless as a Wary Govt's Slow on Clearance
At least half a dozen state-owned banks, which account for about a fifth of the industry, will be without chiefs by the end of September, potentially hurting their growth prospects and restricting their ability to take advantage of an economic recovery if the government does not hurry the selection process.................
Read - ET
Read - ET
Small change, big signal
.........“There is no shortage of change from the supply side. The problem is with the distribution at the local level,” says Charanjiv Singh, president, Chandigarh Beopar Mandal. A delegation of traders had recently met RBI officials in this regard. They were told that the SBI would be organising regular coin fairs and events to fulfil the business needs and at a recent event, change worth around than Rs. 2 crore was distributed. What is the amount needed in small change for the tricity to be comfortably able to settle all transactions? There are no easy answers, a refined guess would be more than Rs. 15 crore a month is needed in denominations of coins of one, two and five and in notes of Rs. 10 and Rs. 50. However, even as there are strenuous efforts to ensure that there is no shortage of change, there are positives per force that can actually result from the situation, some economists reckon........
Counterfeiters lapping up Rs 100, 1,000 bills: RBI
....."To instill confidence of the public in banknotes in circulation and with a view to controlling and mitigating the risk of financial loss as also loss of reputation, banks have been advised to re-align their cash management in such a manner so as to ensure that cash receipts in denominations of Rs 100 and above are not put into re-circulation without the bank notes being machine processed for authenticity," ..........
Unlock cell phone potential
..........Mobile banking has also revolutionized the e-commerce opportunities. It has introduced customers to virtual banking, allowing customers to virtually access all the services a bank provides. By downloading the Mobile Banking app provided by your bank, you can carry out all your banking transactions and more. Choose to access your personal accounts, view account statements, transfer or transact funds between multiple accounts, pay for utility services, shop, make purchases and do much more on your mobile..........
Dish TV discount on RuPay cards
Aimed at promoting government’s ambitious Pradhan Mantri Jan Dhan Yojana, DTH services provider Dish TV will offer 10% discount to subscribers paying their bill through the RuPay-enabled cards. The discounted subscription offer for the Direct-to-Home (DTH) television service will be launched early next week all across India for those covered under Jan Dhan yojana, Dish TV India Ltd chief operating officer Salil Kapoor said. “We want to give a special offer under the Jan Dhan Yojana. We will offer 10% discount of every recharge. We feel that this yojana is very crucial. It will enable everybody in the country to have a bank account,”.......
8.5 lakh bank account opened in Bihar
.......Regional director, Reserve Bank of India (RBI), Patna, M K Verma described it as a "laudable move" and said banking inclusion of the underprivileged has been the RBI's priority and several programmes had been held by it to achieve the same. Verma said on Friday the scheme will not only help the marginalized sections but also the government in ?capital formation'. The country had a very shallow (capital) market, hence the government had to opt for foreign direct investments and foreign institutional investments. Bringing more people under the ?banking umbrella' might help in increasing the depth of the Indian (capital) market..........
Jan Dhan imbibes all 5 Ps of financial inclusion - A.P.Hota
..........Aadhaar linkage will be taken up at the time of account opening itself. RuPay cards will be provided to all the account-holders, making the task of cash withdrawal from ATMs and micro-ATMs with the business correspondents easier. Mobile technology will be used for basic services. The RuPay card scheme built by the National Payments Corporation of India (NPCI) has an inbuilt feature of accident insurance of up to Rs 1 lakh. Other forms of micro-insurance like term/endowment insurance and ..
Allahabad Bank holds camp
Allahabad Bank organised a camp under Prime Minister Jan Dhan Yojana at its Mount Road branch. R.L.K. Rao, General Manager, Reserve Bank of India, was the chief guest. K.H. Venkateswaran, assistant general manager, Mount Road branch, said the Chennai region has mobilised about 15,000 BSBD accounts during the camp. More than 100 people attended the camp and received financial inclusion kits.
The Hindu
From literacy to numeracy
...........The number of new accounts is the wrong metric, perhaps, for a government to target. It should instead target continuing transactions, or the number of active accounts. Only when the target of PMJDY, the average "unbanked" man and woman, sees a benefit to being a part of the banking system, will inclusion actually take off. That's why, in fact, another piece of news from last week may hold the key to the success of financial inclusion. .........
The great Indian financial inclusion circus
..............One cannot find fault with Modi’s earnestness. People in remote villages drink American fizzy drinks like Coke and Pepsi and carry mobile telephones in their pockets but they are pariahs when it comes to banking; India’s banks do not find doing business with them profitable. According to a 2012 working paper of the World Bank, only 35% of India’s adult population has access to formal banking.............
......................Should we blame Modi for the great Indian financial inclusion circus? To be fair to him, he has resorted to inclusion at gunpoint out of sheer frustration. Lazy bankers have been refusing to expand their services, citing high transaction and technology cost for going rural, while they are sanguine about thousands of crores in loans, given to corporate borrowers, turning bad. For the first time, in January 2006, the Reserve Bank of India had allowed banks to appoint business correspondents and address the so-called last mile problem in providing banking services to the masses, but nothing much has happened except for opening millions of so-called no-frills accounts. .........
Financial inclusion, at last
...............But what might really motivate the poor to have a Jan Dhan Yojna account is what is called a RuPay debit card. Under the latter, a clean overdraft facility is to be extended to every account holder. Imagine the relief a poor villager would get should he be able to use this facility to meet his emergency needs. Informal money- lenders charge usurious interest rates and hold the borrowers to ransom. The important thing to note is that the interest rate to be charged for the overdraft facility would be even lower than that ..........
Fake Accounts may Cloud `Jan Dhan' Plan
............Bankers aren't sure whether existing account holders would get Rs. 1 lakh acci dental insurance cover. It's also not clear as to who is going to foot the bills for the insurance premium and other costs to keep accounts running. “The government needs to spell out clearly who are the targeted people for this scheme,“ said HK Pradhan, professor of finance and economics at XLRI, Jamshedpur. “If banks try to merely achieve the target without proper screening, the entire purpose of the new drive will be defeated.“.............
Narendra Modi's Jan Dhan: what's new?
.........The Reserve Bank of India (RBI), ministry of finance and public-sector banks have been trying to do forcible financial inclusion for years now, on which many bright minds and hundreds of crores have been spent. Meanwhile, the government allowed a whole new business segment to come up - microfinance. Microfinance companies have tried to replace the moneylender with an only slightly less usurious business model, funded by venture capital and even the stock market. The PMJDY has no truck with the learnings from any of this. .........
Economic recovery on the horizon
......Drawing optimism from the greater political stability at the centre coupled with the government's supportive policy framework, the Reserve Bank, in its latest Annual report, said that the Indian economy would soon shift to the higher growth trajectory. RBI had said that the economy may grow faster than in the previous year, with acceleration in mining, manufacturing, construction and trade, hotels, transport and communication sectors. The apex bank expects economic growth to be 5.5% in the current financial year. While .....
Food inflation still bites
India's persistently high inflation is a major cause for worry for the Reserve Bank of India (RBI). Among the Asian peers, India's headline inflation is the highest so far. Headline inflation is driven by inordinately high levels of food prices. While the El Nino effect has receded, slow monsoon continues to be a threat. India may not yet face a drought but the situation remains worrisome.............
Image management, the missing art at PSBs
............There are reports that some PSB chairmen are going the extra mile to deflect any possible criticism by installing closed-circuit TVs to presumably record the proceedings of their investment committees. If true, these steps can only be termed outlandish. If any one wants to cheat, they can do so in a thousand other ways and still not be caught by television cameras. Which brings us to the cardinal point: there is no substitute for trust. The best of selection procedures cannot prevent a delinquent bank chairman. .....
Fin Inclusion: SBI Aims to Create Savings Habit
Public sector banks are always at the receiving end when it comes to their adaptability to latest developments. But the State Bank of India is moving aggressively to remain relevant in a market which is set to witness a revolution with differentiated banks, says B Sriram, managing director, in an interview with Sangita Mehta and MC Govardhana Rangan. Edited excerpts:..........
Read - ET
Read - ET
Bank of Baroda told to pay Rs.1L relief over home loan bungle
.......... Accordingly the complainant produced the papers following which the bank gave clearance for the loan. It promised to transfer the money directly to the bank account of the seller. However, the bank didn’t release the payment. After sometime, Kushwaha was told that the file had been misplaced. In the consumer court, the bank cited forged documents as reasons for not releasing the loan amount. The forum said if the bank had any doubt, it should have informed Kushwaha before issuing the approval letter...........
Sebi, RBI mull fund-raising restraint on wilful defaulters
.......To facilitate such restrictions on entities found to have 'wilfully' defaulted on bank loans, the Reserve Bank is exploring ways to share details of these defaulters with Sebi on a real time basis. "My own feeling is that we should go along with RBI on this, but the process will take some time," Sinha told PTI. "There is a difference between NPA and wilful defaulter. Wilful defaulter means that the bank has already come to a finding and the process has gone to a certain level ..... ..
Saturday, August 30, 2014
Raghuram Rajan: In step
We cannot be seen as a paper tiger: Raghuram Rajan
..................RBI has had cordial relationships with both the governments and sometimes there’s a view in the press that there should be differences. Indeed, there are issues where we are not on the same page, and we try to persuade. Eventually, because decisions have to be made, one side goes along with the other. There are, of course, occasional differences between how the government views something and how RBI views something and those differences in horizon as well as some differences in background will prompt discussions. The classic example is the central bank’s views on growth, inflation and interest rates.................
CBI probes RBI officials named by Nitu Sarkar
.........The CBI lawyer submitted that they have reasons to believe that Sarkar and Sandhir acted as conduits of Saradha boss Sudipta Sen to manage Sebi and RBI. He argued that the duo could keep Sebi at bay for three years after the agency first issued a letter against the Saradha operations in 2010. Bhagat pointed out that Sebi sprung to action in 2013 when the maturity cheques of depositors bounced. CBI officials will scrutinize the probe progress and work on the information stored in Sandhir's laptop and the RBI officers' names before they plan their next course of action, likely next week...........
Reading (Re)quest
Dear Shri Warrier
I am one of the readers of VITALINFO and I also contribute my comments/ opinions on matters related to banking from time to time. I also read with interest your opinions. I would like to read your book. Where can I get a copy? My e mail ID is santhraj@yahoo.com I am an ex-NABARDIAN from Pune. Looking forward to hearing from you.
- S Santhanam, PhD (Eco)
General Manager (Retd), NABARD, Pune
Res: D 9 Amrapalishree CHS Ltd, Near Aga Khan Palace, Yerawada, Pune 411006
Interesting article
As one, who was inside RBI when the Agriculture and Rural Debt Relief Scheme (ARDRS),1990 was introduced and implemented, I am able to appreciate the anxieties and worries expressed by RBI Governor in the context of the present demand for more debt waiver schemes. Major component of banks’ resources is public deposits and government is dependent on taxpayers’ contribution for meeting financial commitments. Mentioned this to highlight that both banks and government have trusteeship responsibilities in regard to the funds they handle. When crops fail or natural calamities wash off assets of entrepreneurs, there has to be a transparent support system which will help those who suffer loss. If nation needs products including agricultural produce growing/manufacturing which is not commercially viable, subsidizing costs of production and marketing them becomes necessary. The present support system which works through subsidies(front-end and back-end), various tax concessions at different levels and write-offs and waivers of debt is neither transparent nor scientific. A review and revision of the entire system, factoring in the following aspects(list not exhaustive) has become overdue: (i) In agricultural sector, there is need for a comprehensive and compulsory crop insurance scheme. Those farmers who do not avail bank credit also should be encouraged to participate. May be an appropriate disincentive scheme denying any government support in case of crop loss may be necessary to ensure 100 per cent participation. Initially, the scheme should get financial support from central and state governments and banks(as a percentage of agricultural credit provided by the bank) (ii) Rationalise subsidies including interest subsidy. At present, at least in some states, interest subsidy is working as a disincentive for improving productivity. (iii) Life insurance and insurance of crops and investments up to a bench mark level compulsory for all bank loans.
- M G Warrier, Mumbai
RBL Bank firms up plan to rapidly expand credit card base
.........."While we had plans to start the credit card business on our own, the acquisition provided an opportunity to accelerate the process. The objective was to take over a running business along with the infrastructure and hence get a head start. We took over a performing book consisting of vintage customers with good spends and risk profile. Now, our aim is to scale this business up significantly in the next two to three years,"....
Wanted: 5,000 independent directors
.........Corporate legal experts point out that several hundred companies need to re-constitute their board over the next two months, in line with requirements of Sebi's listing agreement when it comes to independent directors (IDs), and having woman directors on board. It is estimated corporate India would see an additional need for up to 5,000-odd independent directors by 2019........
Leadership crisis in PSBs—a reform agenda
..........Over a period of time, the process of selection of CMDs and EDs and nominations on the board have come for severe criticism. The selection to these top positions is patchy, ad hoc and nebulous. Selection of EDs and chairmen is undertaken as a routine exercise by the government with ad hoc criteria (changing with every exercise), a routine interview lasting for a few minutes and a highly opaque system of allotment of banks to the selected candidates. The system has perpetuated for too long and has failed to deliver the best in class leaders............
Lure of lucre
...........Seriously underpaying senior management increases the temptation to be corrupt. Singapore's decision to pay its top bureaucracy market-linked salaries explicitly acknowledged this problem. But this is only part of the story. The lack of a proper incentive structure is reinforced by slack governance and political-bureaucratic interference. Nominee directors appointed by the government on bank boards are reputed to use their positions to earn rents. Even if not all of them do this, how can a board, whose members succumb to temptations, scrutinise and judge the chairman and other senior managers? The problem is undoubtedly compounded by the substitutability between political-bureaucratic patronage and hard cash....
Fiscal liberty sans literacy
.........Having said this, one cannot overlook the fact that jumping in at the deep end of the pool is also a way to learn swimming — albeit a dangerous way. One can learn from the SEWA experience. Focus on savings, not credit. Be extremely discerning about when to give credit. Succumbing to the lure of showcase credit figures would be a disaster. Spreading financial awareness is more important than creating infrastructure to impart these services. As such they are mutually exclusive events, but the importance of the former should not be undermined. Involve NGOs to spread awareness. A RuPay debit card, heavy on technology, would be a problem in a rural village than help, without the Do’s and Dont’s clearly hammered.
.......
Supervising myriad small institutions can be a challenge
..........The Reserve Bank of India’s recent strengthened oversight and guidance on impaired assets and restructured loans are steps in the right direction. Moreover, international experience suggests that governance structures in state-owned banks merit special attention, such as by ensuring a healthy complement of independent and professional directors, strong fit-and-proper appointment processes, and by mandating that they be at arms length from political interest which may impact commercial decisions. What is the IMF’s view on the extent of financial inclusion or exclusion in India and do any of the recent policies seem like they could help in that respect?..................
Payments banks and financial inclusion
.............Now, the question arises whether payments banks would have relevance once the existing banks implement Jan Dhan Yojana. The existing banks may argue that there may not be any need for payments banks. However, the arguments in favour of payments banks are many. First, the service availability gap is so large that the niche banks for inclusion and payments services would supplement the efforts of existing banks. They would not necessarily be in competition. Besides,..............
'India needs Financial Conditions Index'
...........The paper titled 'A Financial Condition Index for India' authored by RBI research officer Anand Shankar stated: "Economic agents often alter their expectations about economic activity and hence their behaviour in response to movement in financial variables." Over the decades there have been tremendous developments in financial markets. Newer financial products have been invented, cutting edge technology has been increasingly used in financial markets, transaction costs have fallen, innovations in product design have been implemented and financial markets around the world are more integrated today than ever before..........
Freedom in Inclusion
...........The concept of financial inclusion is not new in India. Over the years, the government has taken concrete steps towards it. The Reserve Bank of India (RBI) set up Khan Commission in 2004 to look into financial inclusion and its recommendations were incorporated into the mid-term review of the policy (2005–06). It urged banks to review their existing practices to align them with the objective of financial inclusion. The RBI also stressed the need of making available a basic banking ‘no frills’ account either with ‘zero’ or very minimum balance as well as charges that would make such accounts accessible to vast section of the population. However, India has failed to achieve a great success. The statistics on financial exclusion in India provide a very depressing scenario. Out of over 6,00,000 rural habitations in the country, only about 30,000 or just 5% have a commercial bank branch. Just about 40% of the population across the country have bank accounts and this ratio is much lower in the north-eastern states. The number of people.........
PM’s Jan Dhan Yojana faces access deficit
..........It was not concerns over the creditworthiness of the poor which were holding banks back from extending credit, Mr. Rangarajan said. “Currently, our banks are meant to be equipped to disburse loans of millions of rupees and also a few thousand rupees. What is needed is a reorganisation of the structure of banks,” he said. There is also a significant gender gap in banking; by 2012, for every 1,000 deposit accounts opened in the name of men, just 394 were opened in the name of women. Chhattisgarh, West Bengal, Madhya Pradesh, Maharashtra and Gujarat were even worse than the national banking sex ratio, while Delhi and the four southern States were better.............
Jan Dhan Yojana: Banks to get ‘handsome’ compensation
........The commission payable to banks (which then pass on the share to BCs) under the Direct Benefit Transfer (DBT) scheme launched under UPA rule is 1% of the total DBT amount transferred. While there was a plan to raise this to 2% of the “actual amount transferred through BCs", under the new PMJDY the commission could be even higher, the sources indicated. Also, they added, the finance ministry would assess the performance of each Public Sector Bank in implementing the PMJDY and consider it as one of the main parameters while capitalising them..........
A new attempt at financial inclusion
.........In draft guidelines released last month, the central bank envisaged a new category of banks to provide limited services such as accepting savings deposits and remittances, particularly in rural areas. These banks have been designed to provide basic banking services like deposits and remittances to people who deal with small amounts. These banks are needed to have a wide network of branches or access points, particularly in remote areas, and have to keep costs low by using technology in order for their services to be accessible to a larger number of people.................
Foreign hand in Indian stocks
...........In light of this FII dominance, the RBI governor is right to worry about the impact of capital outflows. The herd-like behaviour of global capital is well known and anything that triggers a stampede out of India is likely to cause significant market drops. This is demonstrated by the fact that some of the largest falls in stocks have been in the three periods where FIIs became more circumspect in their enthusiasm for Indian stocks. The first was during the global financial crisis in 2008, the second during the acute phase of the European sovereign debt crisis in 2011, and the last was the recent hiccup........
Funds may raise exposure in commercial paper
........."Banks' requirement for short-term CDs may not be much for meeting liquidity requirements as RBI is open to do overnight variable rate repo auctions. The intra-day liquidity requirements can be met through these repo auctions," said Saurabh Jagwani, senior manager, Andhra Bank..........
Friday, August 29, 2014
Rupee lessons
Conference of Chief Compliance Officers
The objective of the conference is to have a dialogue between the Regulator/ Supervisor and Chief Compliance Officers of banks on the key aspects of their role in ensuring compliance, with special emphasis on Risk Based Supervision.....
Date: August 27, 2014
Venue: Conference Hall II, 15th Floor, Reserve Bank of India, Central Office, Mumbai
Time Topic Speaker
9:30 – 9:35 AM Inaugural Address G Gopalakrishna, Director, CAFRAL
9:35 – 10:00 AM Key Note Address - Significance of Compliance, Functions in banks – management perspective - S S Mundra, Deputy Governor, RBI
PENSION UPDATION - RBI AC NO 8 DATED 18.03.2013 CHALLENGED IN DELHI HIGH COURT
One more Writ Petition against RBI AC No. 8 Dated 18.03.2013 amending RBI Pension Regulation 1990, w.e.f. 12.01.2013 and fixing the same date for it's implementation was heard by Delhi High Court today for early hearing as per Delhi High Court rules. Hope for further order details in few days. Notices were received by UOI and RBI and their advocates were present in the court.
- Capt. C B Gupta
Concerns relating to Organisational Restructuring and Lateral Recruitment
..............We look forward for a detailed and meaningful interaction with the Bank on the issues and hope that the Bank won't take any unilateral action in a hurry which may vitiate the environment. The proposed changes shall be having long term impact on the organisation. We also need to have clarity on the human impact issues.........
RBI to hold RBI Quiz at PRSU on September 8
Reserve Bank of India (RBI), Raipur will organize Reserve Bank of India Quiz (RBIQ) at the auditorium of Pt. Ravishankar Shukla University, Raipur on September 8 from 8 am. This quiz will be a part of an All-India Inter School Quiz being conducted in 62 locations across the country and open to school children from Classes IX to XII. Reputed quizmasters from Greycaps Pvt. Ltd. will conduct the quiz. RBIQ aims at creating awareness on financial literacy and .......
Act in 8 weeks: NHRC to heads of RBI, PNB
CHANDIGARH: In the suicide case of Ajay Sehgal, branch manger of Punjab National Bank (PNB), Panchkula, the National Human Rights Commission (NHRC) on Thursday issued notice to the top officials of Reserve Bank of India (RBI) and PNB. The NHRC has directed the secretary, ministry of finance, New Delhi, the governor, Reserve Bank of India, chairman and managing director, Punjab National Bank, and regional chairman, Punjab National Bank, Chandigarh, to "take appropriate action within eight weeks."..........
Modi critic Arvind to become PM’s chief economic advisor
..........Many in the government compare Modi’s choice with that of the late PM Narasimha Rao, who had cherry-picked Manmohan Singh to initiate first generation economic reforms. Subramanian has endorsed Modi’s campaign message that India needed a period of renewed growth, but has emphasised upon policy actions. What had angered the BJP leaders most was that he had questioned India’s decision to block a World Trade Organization deal over provisions that would limit the government’s grain stocks. A senior journalist with BJP leanings had even uploaded links where Subramanian had savaged the Modi government on the WTO, Gujarat model and the Budget..............
Tech Key to Financial Inclusion
.......Technological innovations like integrated machine that has functionality of cash withdrawal and deposit; facility of scanning documents to facilitate new account opening and loan disbursal; and biometric identification of users, voice commands and narration for all facilities in multi-language format could help increase banking penetration. Centralised online loan application processing will not only help in more efficient appraisal and disbursal but also impart cost efficiency and consistency. It will also shift the onus and risk of loan sanction to the central/regional authority from local managers............
Inflation expectations
..............Inflation expectations can simply be defined as economic agents’ perception about future inflation. Central banks intend to achieve low and stable inflation where inflation expectation is well anchored. “…a steady and low inflation combined with well-anchored inflation expectations helps the monetary authority in achieving the other objectives of monetary policy, such as economic growth and financial stability,” said Deepak Mohanty, Executive Director, Reserve Bank of India (RBI), in a speech on the subject in November 2012..........
Bracing for change | PSU bank reforms: The elephant in the room
............But not all of the troubles being faced by these banks can be passed off as second round impacts of the economic slowdown. The genesis of some of these issues goes back years, if not decades. Other issues link back to the broader problem of corruption and lack of governance. To understand what went wrong, we need to think back a decade to 2003-04 when infrastructure lending started in earnest..................
The new themes evolving in the banking system
..............There is also a new theme which is being proposed which would introduce a new order of banking. We are now emphasizing separating the ownership of the banking system from the management. This is a very commendable initiative but its ramifications have to be well evaluated. If we accept the premise that public sector banking enjoys the confidence of the deposit holders arising out of the implicit sovereign guarantee, then its withdrawal would have larger implications in the deposit base of the entities. It would certainly bring about a very level playing field for private sector banking but will have its own cost and consequences............
Will changing banking structures do any good?
..........“I feel cooperative banks should actively be involved in financial inclusion because they have an existing presence in rural areas. If we can address whatever their shortcomings are, we should move to upgrade them and they can be a major source of financial inclusion,” says Aditya Puri, managing director of HDFC Bank Ltd. To be sure, RBI in its annual report said that it will try and bring changes to the existing cooperative bank structure by allowing mergers and takeovers of assets and liabilities of negative-net worth banks without the acquiring bank having to bear the burden of the loss. “At present, conversion of a UCB (urban cooperative bank) into a commercial bank is not permitted. The Reserve Bank plans to engage with the government of India for enabling legal changes to help large and willing multi-state urban cooperative banks to convert themselves into commercial banks,”..........
Postal network to widen reach
.....................India has around 150 million postal savings accounts, which are being seen as the potential customers of the Jan Dhan scheme. The postal department, which has been pushed into oblivion in the last two decades by private courier companies and the spread of Internet, is suffering an annual loss of over Rs 6,000 crore. However, post office savings schemes and money order windows remain popular. Rural post offices, which account for nearly 90 per cent of the network, cover a large part of the country where bank branches are absent. “As financial inclusion, which means bringing payment and lending windows to rural India where banks have been hesitant to penetrate, will remain an important objective for any government, the idea of Post Bank remains one, which has to be used effectively,” officials said..............
RBI eases norms, 1 photo ID proof to open bank account
Reserve Bank of India has, as part of Prime Minister Narendra Modi's push for financial inclusion, relaxed 'know your customer' (KYC) norms to open new bank accounts. RBI said there would be no need for applicants to submit separate documents for address and identity proof to open a savings account. The central bank has directed banks to accept a single document, like a driving licence, which contains the applicant's photograph and address to open an account. ..........
Modi wants to take RuPay cards to global level
"... We are all aware globally about the popular Visa Card. Should we not also aspire that our 'RuPay' card becomes acceptable all over the world? Should it not also have the same credibility? After today's event, it looks like there is full possibility," .................
Read - Deccan Chronicle
Read - Deccan Chronicle
Bank on accounts
........n a recent speech on financial inclusion, the RBI governor observed that there has to be five features in banking services if financial inclusion is to be achieved. He emphasised that the financial products offered by banks should be suitable for the people concerned, such as, a safe and reliable way of saving, a quick and hassle-free service when quick loans are needed and similar attributes. Governor Rajan had also indicated that the place for offering such service should be near at hand. That means, the bank branches would have to be opened in unbanked and remote areas. Above all, for financial inclusion to be successful, it must be profitable for banks, Rajan emphasised. Going by the plans of the government, the services under universal banking access programme will be extended by using the prevailing practices of business correspondents (BCs) who virtually operate as single-person bank branches now. For the current programme, many more BCs would have to be appointed. Along with that brick and mortar branches are also to be opened........
Jan Dhan Yojana: Bankers go the extra mile, many rush to camps to get 'freebies'
..........It’s people like Das and Jana who the banks are targeting as per Modi’s ambitious plan to eradicate financial “untouchability”. Bankers are thus taking pains to make people understand that the scheme is not a loan mela of the 1980s when banks gave loans to farmers which were never returned. Under the Yojna, account holders will also get an overdraft facility of Rs 2,000 initially which can later be extended up to Rs 5,000. But bankers say that they will have to put in a stringent norm in place so that no one misuses the scheme..........
Govt's financial inclusion scheme a hit on Day 1
.............In a country where 40 per cent of the population does not have access to banking services, Thursday's programme would mark the beginning of the end of "financial untouchability" and rid the country of poverty, Modi said. He recalled the bank nationalisation of 1969, aimed at extending the reach of the financial system to the doorsteps of the poor. "But I regret to say after 68 years of Independence, not even 68 per cent of the population is covered by the banking system," ......
Jan Dhan Yojana launched in district
...........Banks such as Canara Bank, State Bank of India, and Kerala Gramin Bank took the lead by opening more than 5,000 accounts under the scheme, he added. District Collector C.A. Latha, district panchayat president Kanathil Jameela, Reserve Bank of India Assistant General Manager P. Ravindran and Deputy General Manager of NABARD Suresh Kumar were present during the district-level launch.
RBI to release annual GDP data Friday
With the Reserve Bank of India (RBI) due to release the GDP (gross domestic product) figures Friday, growth in the current fiscal is expected top 5.5 percent as predicted by the country's central bank. The RBI, in its annual report for 2013-14, had projected the GDP growth for 2014-15 at 5.5 percent, emerging out of the sub-5 percent growth in the preceding two years........
Mumbai EOW uncovers Rs 1,000 crore banking fraud at Dena Bank, IOB, other PSBs
The Mumbai Economic Offences Wing on Thursday said it had busted a largescale banking racket amounting to Rs 1000 crore involving multiple persons who conspired to perpetrate widespread fraud at Dena Bank and Oriental Bank of Commerce, as well as some other banks. The criminal syndicate allegedly also carried out large-scaled Fixed Deposit scams at other public sector banks, including UCO Bank, Syndicate Bank, Bank of Baroda, Vijaya Bank, and Dhanalakshmi Bank. ..........
Bank FD scam gets bigger, 9 FIRs filed
.........Elaborating on the modus operandi, police said the accused approached the trusts and individuals to open FDs with public-sector banks using middlemen. In return, these entities were given a slightly higher rate of interest. Once the FD was opened, the accused gave fake receipts to the entities and used the original ones to open accounts with forged documents.....
Bad loans, ARCs and asset reconstruction
....................Debt restructuring exercises by banks were rendered unsuccessful due to the prolonged industry and economic recession. One can see under-utilization of capacities already created during the high growth phase and a large number of unfinished/under construction projects, be it in core sector infrastructure, hotels or real estate. A large number of metals and mining companies have turned sick due to a “man-made scarcity” of raw materials such as coal and iron ore in a mineral-rich country. So why have effective tools such as CDR or SARFAESI failed in such crucial times?.........
Don’t slam the brakes
..........While the RBI’s general concern for consumer protection may be valid, in this case, by requiring two-factor authentication, the RBI could be accused of standing in the way of financial innovation. It appears to be telling taxi companies: you are competing on a mediocre level-playing field in a regulatory system that disregards innovation. It seems to be telling consumers: you do not have the freedom to make a choice between convenience and safety. The RBI does not allow a consumer the freedom to waive this high-security procedure even for a transaction of Rs 500. The root cause of this is........
Thursday, August 28, 2014
Shri B.Mahapatra - The Quintessential central banker ReTyres - S.Ganeshkumar
RBI PS Fraternity and VITALINFO on behalf of all its readers wish Shri B.Mahapatra a very happy n healthy ReTyred life ahead..............
Executive Director Shri B Mahapatra lays down office today after
selfless service of more than three decades in the Bank. He has great qualities
and is a quintessential central banker. Many of us would remember his clear
lectures when he was in the Bankers' Training College (little wonder since the
first job of Shri Mahapatra was that of a lecturer!) when apart from imparting
knowledge, he was one of the authors of many books aimed at demystifying many
technical topics. Many may not know that his immediate job before RBI was in the
State Bank of India - and Banking operations and development has been his forte
since then and till now. As the Regional Director of Kolkata office, he not only
ushered in many innovative ideas but most importantly, he had the human touch
and one could say that he knew almost the entire RBI, Kolkata family. A thorough
professional, he excelled in clarity of thought and expression (his simple yet
clear explanation about the use of Aadhar card as the document for KYC in a
recent State Finance Secretaries conference won accolades from the Chief
Secretaries gathered at the conference!) and a person who ensured that work was
always done on time, every time. There is comfort for us that he would continue
to be with us for six months more in an advisory role (something that he
excelled in performing in his career!); we wish this connoisseur of cricket a
fantastic second innings in the days to come!
- S.Ganeshkumar, CGM-In-Charge, DGBA
- S.Ganeshkumar, CGM-In-Charge, DGBA
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