A question of control

This refers to the report “Govt tightens grip on RBI” (December 7). There is nothing unusual or objectionable if, in a democracy, the legislature wishes to have a say in policies that are implemented through various arms of the government. In this context, the government’s concern on the contours of the Reserve Bank of India’s (RBI) staff management is understandable. At the same time, this makes glaringly obvious the anxiety of a government that is losing its grip on governance and is, therefore, attempting to showcase some instances of making its boys obey.

The RBI Staff Regulations, 1948 and HR management of the central bank have stood the test of time and never been a cause of problems for the Centre. RBI’s central boards and governors have been consistently showing the maturity to consult the central government on important matters and, by and large, all finance ministers including the present prime minister have respected the RBI’s autonomy. The current impasse appears to be the result of some misunderstandings at lower levels. The earlier the issues are settled amicably before they affect individual egos, the better.

MG Warrier, Mumbai

First among equals

Reserve Bank of India employee representatives have objected to the finance ministry’s reported move to keep North Block informed of the salary structure and perks. However, a section of the market feels that the central bank should not be granted preferential treatment when other financial sector regulators such as the watchdog for the capital markets, insurance and pension are adopting the same practices. 

It’s fight to the finish for SBI top job

Lobbying is in full swing for the top job at the country’s largest bank, the State Bank of India , with its chairman OP Bhatt set to complete his term early next year. Some of the potential candidates, who also include CEOs of large state-owned banks, are ensuring that there are no problems on the vigilance front, which will help expedite the process.

Microfinance institutions under stress, not threat: RBI

Microfinance institutions (MFI) are an integral part of financial inclusion in India but are currently under some stress, Reserve Bank of India Deputy Governor Subir Gokarn said on Tuesday. "The MFI industry might be under little stress as the banks are finding it difficult to lend to them at this moment. But the system as a whole is not under threat," Gokarn told reporters on the sidelines of an outreach programme on the outskirts of Kolkata.

Govt tightens grip on RBI

Board meet to give govt final say on central bank’s staff-related matters.

The government is likely to have a final say on issues such as salary, service conditions, promotions and incentives of the Reserve Bank of India’s employees. These are, till now, under RBI’s own purview.  The government has been pressing RBI for three years to make its staff regulations statutory under Section 58 of the RBI Act, 1934, and bring it under the subordinate legislation of Parliament. According to sources, a resolution to this effect is expected to be approved at the board meeting scheduled this Thursday in Kolkata. RBI had so far been resisting the move. Recently, the government asked RBI to take its approval before finalising pay raises for the central bank’s employees. The regulator resisted and a compromise was agreed, under which RBI would ‘brief’ finance ministry officials about pay revisions before implementing these. However, the central bank insisted it would not seek government approval. “RBI is an autonomous body. If it gives in to the government demand to make staff regulation statutory, then all decisions on central bank employees, like service conditions and benefits, which are now taken by RBI will need government’s approval,” said Samir Ghosh, general secretary, All India Reserve Bank Employees’ Association. Ghosh has written letters to RBI Governor D Subbarao and other central board members, requesting they not sacrifice independence on staff matters. “The central government is very much insistent in this regard and desires to get it approved in the board meeting of the bank at the earliest. This, we apprehend, will further dilute the independent functioning of RBI and make it a subservient institution to the finance ministry,” Ghosh wrote to one of the board members. During the year, there were at least two instances when certain actions of the government had prompted Subbarao to highlight the importance of RBI’s autonomy. The first was over the ministry’s decision to refer all regulatory disputes on hybrid financial products to a committee headed by the finance minister. RBI also expressed its concern about the proposed Financial Stability and Development Council, on the reasoning that financial stability should be the exclusive mandate of the central bank.

RBI ASKS BANKS TO OPEN RESOURCE CENTRES FOR FINANCIAL INCLUSION

The Reserve Bank of India (RBI) has urged commercial banks to open financial inclusion resource centres throughout the country. These would work as a store-house of all relevant information pertaining to financial inclusion. “Though RBI is doing its bit by opening financial inclusion resource centres, it’s not enough. So, commercial banks should also open such centres as this is a good development and commercial proposition,” RBI Governor D Subbarao said on the sidelines of the launch of a financial inclusion resource centre here today.  The central bank, which has opened such centres in Pune and Chandigarh, was planning to open two more, one each in Kolkata and Mumbai, he added. RBI is pushing banks to provide basic banking services in villages with a population of 2,000 and above by 2012 and those with a population of less than 2,000 over the next three to five years.

“Both banks and state governments are majority stakeholders in the financial inclusion process. While this will ensure better governance in states due to better transparency, banks will get low-cost deposits to protect themselves from asset-liability mismatches,” he said.  He, however, added the financial inclusion process was slow in many regions and should be expedited.  Earlier, banks had submitted their financial inclusion plans to the regulator, according to which around 200,000 business correspondents and customer service points would start work over next two-and a-half years. Also, 4,000 branches in unbanked villages and 100 million no-frills accounts would be opened. Recently, RBI made a policy change by allowing for profit organisations to act as business correspondents to speed up financial inclusion. “Commercial banks should see financial inclusion as an opportunity rather than an obligation,” Subbarao said. He said technology should be used to meet financial inclusion targets.

RBI conducts fiscal outreach programme

NORTH GUWAHATI, Dec 6 – As a part of the second phase of the financial outreach programmes, the Reserve Bank of India, Guwahati conducted a financial outreach camp at Sesawng village of Aizawl district in Mizoram recently. The objective of the camp was to create awareness about financial products, schemes and services offered by the financial institutions, banks and government departments. Various financial institutions, including Mizoram Rural Bank, Mizoram Cooperative Apex Bank Ltd., KVIC, DRDA, DIC, NEDFi, NABARD, SIDBI, etc., participated in the camp and put up their respective stalls to disseminate information on their financial products. The Executive Director of RBI, VS Das graced the occasion as the chief guest while other guests included Surekha Marandi, Regional Director of North Eastern States, Vanlalnghaka, Additional Secretary Finance, Banking Ombudsman of North Eastern States and other senior officials. The audience included residents of the village and children from various schools.  Later, a meeting was held where among others, V.S.Das, executive director of the RBI, explained the role of the bank in containing inflation to ensure price stability in the country by promoting sound banking system. The speeches delivered by the appointed bank officials were followed by a question-answer session wherein various queries raised by the audience were answered by the chief guest and other senior bank officials.  A quiz programme on topics relating to RBI and banking was also conducted for school children and prizes were distributed to the winners. Mementos were distributed to the winners. Mementos were distributed to all the participants. The Executive Director, V.S.Das also announced the gift of computers to the Govt. High School and Middle Schools.

Bhave may get 2 year extension as SEBI Chief

Move In Line With Tenure Of Regulator Bosses -

In a surprise move, incumbent Sebi chief C B Bhave is being considered for extension in service by a high-level search panel that was set up to find his successor at the market regulator.

RBI tells public about its activities, schemes

The Reserve Bank of India, Kanpur has set up a financial literacy camp at the ongoing Kanpur Mahotsav at Motijheel Ground with an objective to acquaint common people with its role and functions.  The camp aims to apprise the common masses about various activities and the schemes of RBI, like banking Ombudsman scheme, young scholar scheme, summer placement scheme, non-banking financial companies etc. The camp aims to create public awareness on salient features of a genuine currency note. The public and the visitors to the stall are also being apprised about due diligence to be taken while depositing money with non-banking financial companies. Financial literacy material was also distributed among the public.  In coordination with SBI, Motijheel branch, exchange facility for fresh notes and coins has also been provided to the public.  

V.Kannan - Executive Director of Oriental Bank of Commerce

V.Kannan assumed charge as Executive Director of Oriental Bank of Commerce.  Prior to this, he was General Manager, Bank of Maharashtra, where he started his career in 1976.

Money transfer at your fingertips

The days of writing cheques were long past passe. Till recently, the easiest way to transfer money was through Internet or phone banking. The entire process took another step forward last week--now you can transfer money through your cellphone. The National Payments Cor- poration of India (NPCI) has launched an inter-bank mobile payment service (IMPS), which will enable savings account holders to transfer money to another account within the country using their cellphone.
Is it available to all? To avail the facility, it is man- datory that the bank in which you hold an account and the one in which the beneficiary has an account are linked to the IMPS. Currently, seven banks have gone live with the system-- State Bank of India, ICICI Bank Ltd, Union Bank of India, Bank of India, HDFC Bank Ltd, Axis Bank Ltd and Yes Bank Ltd. Seven more are in the process of going live and several others are in the preliminary phase.

PSB unions call for watchdog

In view of the recent housing loan bribery scam involving top officials from public sector banks (PSBs) and LIC Housing Finance, bank unions have sought the setting up of an independent audit commission for banks. All-India Bank Employees Association (AIBEA), the largest union of bank staff, has demanded that the government constitute an audit commission similar to the Comptroller & Auditor General (CAG) so that greater transparency can be ensured.

Another demand of the staff union is doing away with the methodology by which the central auditor for a PSB is selected. “Previously, Reserve Bank of India appointed the central auditors for the banks to audit their annual accounts,” said Venkatachalam. “Now (for over a year) the PSBs select a panel of auditors and RBI selects one out of it. Since banks can influence an auditor of its choice, we’ve demanded revoking the system”.  Since PSBs are custodians of R35 lakh crore in deposits, they should be accountable to the nation for all their financial activities, the union claimed.

RBI may allow lower provision cover ratio during downturn

The Reserve Bank of India is working on a comprehensive policy that will allow banks to bring down the provision coverage ratio during downturn. However, this will have to be done in a phased manner, said Mr Anand Sinha, Executive Director, RBI.  The RBI had asked banks, in October 2009, to maintain a provision coverage ratio of 70 per cent. “We asked banks to maintain a provision coverage ratio of 70 per cent as part of the build-up phase. It has perhaps been causing some kind of discomfort. It is not meant to be kept at that level. There will be a release phase, which we are working on. We will come out with a comprehensive policy under which banks may be allowed to use the provisions made under certain conditions,” said Mr Sinha, while addressing Bancon 2010.

SEBI Chief may get extension

The government is likely to ask C B Bhave to continue as SEBI chairman. Sources said the Prime Minister's Office recently asked the Cabinet Secretariat why Bhave's term should not be extended. THE government is likely to ask C B Bhave to continue as the capital market regulator. Bhave's term expires in February 2011 and a search committee was set up in September -almost six months in advance -to find the next chairman for the Securities and Exchange Board of India (SEBI).  A meeting of the search committee that was scheduled to meet on Friday to interview about a dozen shortlisted candidates was cancelled just a day before. A new date for the meeting is yet to be finalised, the sources said.  When asked if the government asked him to continue, Bhave refused to comment.

Rejig of SBI’s top brass in works

New Delhi: The State Bank of India, the country’s largest bank, is set to get a new-look top management with the government starting the process to find a replacement to Om Prakash Bhatt, who is due to retire as chairman in March. In addition, three new managing directors will be appointed over the next few months. Earlier, SBI could at best get two managing directors. However, after an amendment to the law governing the public sector lender, four managing directors can be appointed.   At present, R Sridharan is the only managing director after S K Bhattacharya retired in October.  While Hemant Contractor, deputy managing director (DMD) in charge of corporate banking, and Pratip Chaudhuri, DMD in charge of international banking, are likely to be appointed as managing directors, it is unclear who the fourth MD would be.  Chaudhuri and Contractor would also be contenders for the top job at SBI once Bhatt steps down after a fiveyear term. Sources privy to the appointment process told TOI that other DMDs who have at least two years of residual service and have adequate experience as deputy managing directors would be considered for the chairman’s post.  Sources said the finance minister has already asked that the process be expedited and a selection committee comprising finance ministry and RBI officials, besides external experts, would soon evaluate the candidates.  Bhatt is one of the longest serving SBI chairmen and is credited with reinvigorating the public sector lender.

Sinha set to be Deputy Governor of RBI

New Delhi: The government is set to appoint Anand Sinha as the fourth deputy governor of RBI. His appointment had run into a hurdle due to some complaints received by the government. But officials said that Sinha's appointment will be notified in the next few days.

Banking regulations need to be streamlined: Subbarao

Reserve Bank of India Governor D Subbarao  on Friday pitched for streamlining banking regulations, saying some were 'confusing' even though they served the banking system well.
On the existing arrays of laws in the banking sector, he favoured a single legislation to remove inconsistencies. Subbarao also asserted that the proposed financial sector reforms should be driven more by the sectoral regulator Reserve Bank of India than by a legislative panel.

Policy direction should drive the work of the proposed financial sector legislative reforms commission and not the other way around, Subbarao said.The RBI Governor was delivering the inaugural address at the two-day Bancon 2010, one of the premier annual bankers meets. He said there is an urgent need to streamline the plethora of regulations governing the banking system in the country. There is a whole lot confusing laws out there. But it has served the system well by helping maintain an orderly banking system.

The Banking Regulation Act has not only stood the test of time, but several of its provisions have all helped the Reserve Bank in preventing crises and maintaining financial stability", he said.

"But the recent global financial crisis has taught us that our regulations have to change according to the need of the time . . .", Subbarao said. Arguing that there is an urgent need for streamlining and fine-tuning the existing array of laws, the Governor said, we need to do so to level the playing field as the existing laws are uneven. A single legislation will bring about clarity and do away with the inconsistencies currently governing the banking system. "The prime motivation for rewriting the laws should be to integrate the various statutes, reflect the lessons from the (recent global financial) crisis and aid inclusive growth", Subbarao said. The global financial crisis threw up a number of areas requiring significant legislative action either because there is no legislation or because the prevailing legislation is inadequate, he said. Subbarao said the decision to set up a financial sector legislative reforms commission to rewrite and clean up the financial sector laws, to bring them in line with the requirements of the sector, was very timely and vital. However, the Governor was quick to add, "I have one caveat. It is important to recognise that bringing about policy changes or regulatory architecture cannot be the remit of a legislative reforms commission". "Such changes have to be debated as a prelude to the work of a commission so that the commission has a clear policy direction", the RBI Governor said."In short policy direction should drive the work of the proposed legislative commission and not the other way around", Subbarao said.

The country's 81 banks -- out of which 24 are state-run, 21 private and rest 34 are foreign banks, are governed by a number of laws. The current statutory arrangement we have is a baffling plethora of laws governing different segments of the banking industry, Subbarao said. He explained that while the nationalised banks are governed by the Banking Companies (Acquisition and Transfer of Undertaking) Acts of 1970 and 1980, State Bank of India  and its subsidiaries are governed by their respective statutes.

When it comes to private sector banks, he said they come under the purview of the Companies Act of 1956 and the Banking Regulation Act of 1949.He said foreign banks which have registered their documents with the registrar under Section 592 of the Companies Act are also banking companies under the Banking Regulation Act. The Governor said even certain provisions of the Banking Regulation Act have been made applicable to public sector banks. "Similarly, some provisions of the RBI Act too are applicable to nationalised banks, State Bank of India and its subsidiaries, private sector banks and foreign bank", he told the meeting. 

RBI to introduce plastic notes to address fake currency issue - Dr.Amarendra Sahoo

http://www.hindustantimes.com/audio-news-video/RBI-to-introduce-plastic-notes-to-address-fake-currency-issue/Article2-624561.aspx

Learning 2010

The Celebration of Learning 2010 had been organised to commemorate just that, the admission of 170 slum children to Delhi University and other institutes of higher education. And what a celebration it was. Asha was delighted to welcome honoured guests, all of whom have been incredible supporters of Asha’s Higher Education Programme. Mr K R Kamath, CMD, Punjab National Bank, HE Mr Peter Varghese, Australian High Commissioner, HE Mr Bob Hiensch, Ambassador of the Netherlands, HE Mr Kenneth Thompson, Ambassador of Ireland, HE Mr Rupert Holborow, New Zealand High Commissioner and Mr Sandip Ghose, Regional Director Reserve Bank of India, contributed words of wisdom and encouragement to our students after they heard the story of one such child who courageously explained his journey before the extraordinary gathering. 

SINGH INTERIM NABARD CHIEF

Rakesh Singh, additional secretary in the Department of Financial Services, took over the additional charge of chairman of the National Bank for Agriculture and Rural Development from Umesh Chandra Sarangi on Thursday. Singh, an IAS officer of 1978 batch from the Punjab cadre, would hold the charge till a new chairman is appointed. Interviews for the post took place on November 23. Sarangi, who took over on December 3, 2007, has been repatriated to the Maharashtra government.