PNB to develop Chandigarh village as model village

Punjab National Bank (PNB) has adopted one village in Chandigarh, which will be developed as a model village in terms of banking infrastructure and baking services.  PNB, which is a leading bank here, would provide banking services through ICT-enabled Business Correspondent model in its adopted village Kishangarh. A survey of village has been completed jointly by the Reserve Bank of India and PNB to ensure 100 per cent financial inclusion in the village. All those households that are disconnected from banking services would be issued biometric cards, said an official of RBI here. Speaking on this occasion, RBI Executive Director, G Gopalakrishna said that RBI had asked banks to cover unbanked villages by year 2012 as part of financial inclusion programme. "RBI has asked banks to cover villages that have not been covered yet and they have to complete this task by 2012," he said. He stressed the need to use technology like mobile technology, ICT model besides banking correspondents and brick and mortar model in reaching out to ruralites. “Still 50 per cent of the total population is not covered by banks. There are 32,000 bank branches across the country, while there are about 600,000 villages in the country, there is still a long way to go. Only by leveraging technology can we bridge this gap. We should ensure every person has a bank account, so that he can avail of various financial services offered by the government and other agencies,” he added.

The vice chair of India's fledgling Financial Stability & Development Council has helped to stabilise country's banking system

The new vice chair of India's fledgling Financial Stability & Development Council has helped to stabilise his country's banking system and comes 29th in the GFS Power 50. Despite being two thirds owned by the public sector and generally regarded as well capitalised, Indian banks did not escape the financial storm of 2007-2008, much to the alarm of the country's public and state officials. Dr Duvvuri Subbarao took over as governor of the Reserve Bank of India at the heart of the crisis in September 2008 and, following stints as a leading World Bank economist and secretary to the Prime Minister's Economic Advisory Council, was well equipped to minimise the fallout. Subbarao's influence in government in 2010 was underlined when he was offered the vice chairmanship of the Financial Stability & Development Council, a new body set up by finance minister Pranab Mukherjee, which will oversee the Insurance Regulatory and Development Authority (Irda), Securities and Exchange Board of India (Sebi) and Pension Fund Regulatory and Development Authority. The governor had previously expressed concerns that the autonomy of regulators would be undermined by the Council and, after effective lobbying, was offered the role chairing its only sub-committee. The governor has argued in favour of a review of the country's disparate and at times inconsistent banking laws to open up competition between financial institutions. Subbarao has also worked to restrain bank executive pay, with the Reserve Bank issuing draft compensation guidelines in July. Indian banks must now submit an annual declaration confirming that compensation structures are in line with Financial Stability Board standards. Subbarao set up a Financial Stability Unit within the central bank to make regular and systematic assessments of the stability of the Indian financial system and has worked with the Institute of Chartered Accountants of India to ensure that its banks comply with international accounting standards. Respected on the world stage and a regular speaker at the Bank of International Settlements, the 61-year-old has heavily criticised the "euphoria of financial alchemy" that preceded that crisis, insisting that the "real sector" should drive the financial sector and not the other way around. But he has also claimed that making banking boring - as advocated by the likes of economist Paul Krugman - is not necessarily a cure to the "ills" of the financial world. Banking, he believes, must still evolve, grow and innovate.

Reserve Bank of India releases Second Financial Stability Report

The Reserve Bank of India presented its assessment of the health of India’s financial sector in the second Financial Stability Report (FSR), released here today. The report reflects the Reserve Bank’s continuing endeavour to communicate its assessment of the incipient risks to financial sector stability. The first FSR was released in March 2010. The second FSR holistically assesses, from a systemic risk perspective, disparate elements of the financial sector eco-structure – the macroeconomic setting, policies, markets, institutions. The movements of various vulnerabilities between March and December 2010 and assessment of the resilience of the financial system have been presented in this Report. It also reflects the considerable efforts made within the Reserve Bank to upgrade the methods and techniques for assessing the health of the financial system in identifying and analysing potential risks to systemic stability.

State Bank of India reshuffles portfolios of senior executives

State Bank of India (SBI), the nation’s largest lender, has reshuffled the portfolios of senior executives even as Pratip Chaudhuri, one of its deputy managing directors (DMD), emerged as the front-runner for the chairman’s position, which will fall vacant after O.P. Bhatt retires in March. The SBI group, which controls a quarter of the total banking assets in the country, has promoted some chief general managers as DMDs and reshuffled the portfolios of some of its existing DMDs, particularly at the risk and human resource divisions. In early December, the finance ministry had interviewed State Bank’s four DMDs—Chaudhuri, Hemant Contractor, Diwakar Gupta and A. Krishnakumar—to identify the successor of current chairman Bhatt. Before that they were interviewed for a post of managing director (MD) too. Chaudhuri, the front-runner for the post of chairman after Bhatt’s retirement, now oversees the bank’s foreign operations.  Traditionally, SBI has had two MDs and close to a dozen DMDs. Currently, it has only one MD; a successor to S.K. Bhattacharya, who retired in October, has not yet been named. R. Sridharan, the lone managing director, is in charge of associates and subsidiaries. Unlike other public sector banks, SBI has split the position of chairman and managing director. Both its chairman and two managing directors are generally selected from within the group. The retirement age of top officials in SBI, including the chairman is 60. The bank has named DMD Contractor, who was earlier in charge of corporate banking, chief financial officer in place of S.S. Ranjan. The five new DMDs are Santhosh Nair, Shyamal Acharya, Arundhati Bhattacharya, R. Venkatachalam and Shivkumar. Among the new DMDs, Nair will take charge of corporate banking, a portfolio that was earlier handled by Contractor.  Acharya, who was chief general manager of Mumbai circle, is taking over as DMD, mid-corporate group, replacing A.P. Verma, who has been named chief credit and risk officer.  Among the remaining new DMDs, Bhattacharya, who was CGM, Banglore circle, has been appointed corporate development officer, replacing N. Raja, who is set to retire on 31 December. Shivkumar, who was a CGM in Hyderabad, has been promoted to DMD but is yet be given a portfolio. Ranjan is also waiting to be assigned a new portfolio. Lack of adequate talent among public sector banks has been a subject of debate among policymakers for quite sometime now. The compensation offered by state-run banks is far less than what the executives of private and foreign banks earn. In September, Reserve Bank of India governor D. Subbarao said that in the absence of a suitable compensation package, state-run banks would lose talent to private sector lenders. “The executive compensation in the public sector, as is well known, is lower than that in the private sector... If public sector banks are required to compete with private sector banks on a level playing field, there is a good case for compensating them too on a competitive basis,” Subbarao said.

Retail investors back Jalan committee report

25 paise and below coins not acceptable from June 30

Come June 30, 50 paise will be the minimum coin accepted in the markets as all denominations below it will cease to be legal currency.  "From this date, these coins (denomination of 25 paise and below) shall cease to be a legal tender for payment as well as on account," the Finance Ministry said in a statement today.  It further said that the minimum denomination coin acceptable for transaction will be 50 paise from that date.  Also, the entries in books of accounts, pricing of products, services and taxes should be rounded off to 50 paise or whole rupee from that date.  "The procedure for call in shall be notified separately by the Reserve Bank of India," it added.

Allahabad Bank launches mobile banks in Jharkhand

Allahabad Bank Thursday launched mobile bank van services in Jharkhand to target villagers. J.P. Dua, CMD of Allahabad Bank, flagged off a mobile bank van from the bank's Ranchi zonal office. It is the first bank to start such a service in the state. 'It will function like a full bank where people could deposit and withdraw cash. It will function in 12 villages of Dumka district,' a bank official told IANS. Reserve Bank of India Governor D. Subba Rao was in Jharkhand early this month and during his visit he assured the state government about expanding bank facilities.

We have no solution for MFIs who have been hit: RBI

The Reserve Bank of India (RBI) on Thursday made it clear that it has no solution for Micro finance Institutions that have been hit, but said the Malegam Committee may look at "grey areas" in their regulation.  RBI Deputy Governor K C Chakrabarty said MFIs are in the business of taking money and giving loans and if people do not pay back, RBI has no solution for it. "People have to pay back money to the lender who has given the money.If they don't pay back, we have no solution," he told reporters in response to questions after inaugurating "Grameena Vikas Kendra" (branchless banking unit) of Corporation Bank at Mallohalli in the Bangalore district.

No RBI approval needed for bank branches in North-East: Tripura minister

The Reserve Bank of India (RBI) has relaxed norms for setting up bank branches in North-East India and no prior approval of the apex regulatory body is required in this regard, a senior Tripura minister said on Thursday. The clarification came during a meeting between RBI Governor D Subbarao and Tripura's Finance Minister Badal Choudhury in Mumbai on Wednesday. Worry was expressed over the gradual fall in the credit-to-deposit ratio in the region. 

SEED bags Indian Bank FI mandate

SEED, India’s largest Banking Correspondent has bagged one of Tamil Nadu’s biggest Financial Inclusion projects from Indian Bank. The smart card based project will reach around 5500 villages earmarked under the Indian Bank’s Financial Inclusion project to offer banking services to the rural population.  The project will help bring an estimated 11.92 lakh households, equaling to around 23 lakh people under the fold of banking services, thus leading to inclusive growth. Tata Consultancy Services (TCS) is the technology partner in the project. he project was inaugurated at Venthoni village near Paramakudi in Ramanathpuram district of Tamil Nadu by Dr. K C Chakrabarty, Deputy Governor Reserve Bank of India. Other dignitaries present at the function were Shri T.M. Bhasin, Chairman & Managing Director of Indian Bank, Shri V Rama Gopal, Executive Director of Indian Bank, and Shri Rajeev Rishi, Executive Director of Indian Bank. 

Inflation always a concern: Deputy Governor K.C.Chakrabarty

The Reserve Bank of India (RBI) Deputy Governor K.C.Chakrabarty said on Thursday that inflation was always a concern, and a pause in rate hikes does not mean a halt.  India's food inflation accelerated to a ten-week high in mid-December on rising prices of vegetables, while the fuel index also rose, adding to inflationary worries in Asia's third-largest economy.

New managers for economy

You could call it a big change of guard in the government’s “econocracy” – or the economic administration. A new set of experts is set to take charge of the macro-economic management next year, touching the central bank, regulatory agencies and a clutch of state-controlled banks that lord over the economy. Finance secretary Ashok Chawla is set to retire on January 31 and Securities Exchange Board of India chairman CB Bhave, will retire a month later. UTI’s asset management company’s chairman and managing director UK Sinha, is set to succeed Bhave. Later, RBI governor D Subbarao’s three-year tenure ends in September but it is not yet known whether he will get an extension. His predecessor YV Reddy had got a five-year term at one go. Bimal Jalan, on other hand, got a two-year extension as RBI governor after his initial three-year tenure had ended before Reddy took over. Government sources, who did not wish to be identified, indicated that commerce secretary Rahul Khullar is tipped to take over as the next finance secretary ahead of the presentation of budget in February. “This would mark a departure from the normal practice of having a same person as the finance secretary through the budget cycle of drafting to presentation,” said an official. Two new RBI deputy governors are set to take charge next year to fill in for Usha Thorat, who retired recently, and Shymala Gopinath who is due to retire in May. OP Bhatt, chairman of State Bank of India, the country’s largest bank, will retire in March. Deputy managing director Pratip Chaudhuri is tipped to take over in his place. This apart, chairmen and managing directors of at least seven more public sector banks  will retire during 2011. HSU Kamath will join Vijaya Bank as chairman on April 1, 2011, replacing Albert Tauro, while Nagesh Pyadh will replace TY Prabhu as the new CMD of Oriental Bank of Commerce. Besides, Dena Bank CMD D L Rawal is due to retire in October and Ramnath Pradeep’s term as  CMD of Corporation Bank, ends on September 30.

Bankers' Committee asked to prepare annual meeting calendar

With an aim to better supervise the development efforts of Government agencies and banks, the Reserve Bank of India on Wednesday asked State Level Bankers' Committee (SLBC) to prepare a yearly calendar of their meetings by January 15 every year. SLBC and Union Territory Level Bankers' Committee (UTLBC) are required to meet at quarterly intervals. In a notification issued on Wednesday, the apex bank said in recent times these meetings have become irregular and many a times the agenda was not circulated in advance.

NHB wants housing finance cos to take stock of their portfolio

The National Housing Bank has asked housing financing companies (HFCs) to take stock of their portfolio and examine the involvement of intermediaries.  National Housing Bank chairman and head RV Verma said: “We met the CEOs of housing finance companies some time ago. These meetings are part of the internal process, wherein we take in details of the quality of loan book disbursed by the company and also to make sure that there are no intermediaries.”

U.S. praises Reserve Bank of India in Iran dispute

The United States Wednesday praised the Reserve Bank of India for reducing its dealings with Iran's central bank, saying the Islamic Republic misuses its financial relationships to support its nuclear program.

Advertise with care

Now a days commercials seem better than TV programmes but ad makers should not take too much liberty with their subjects.  A bank that wants to show that its ATMs offer a choice of currency denominations uses a wedding procession as a backdrop, with the bridegroom wearing a garland of currency notes. It is irresponsible of a bank commercial to feature a situation that clearly violates the Reserve Bank of India’s Clean Note Policy. - K R Vaikuntam, Thrissur

RBI definition of Financial Inclusion

The Reserve Bank of India (RBI) in December 2009 changed the definition of financial inclusion by stating that financial inclusion is not restricted merely to opening of bank accounts but must also include the provision of all financial services like credit, remittance and overdraft facilities for the rural poor.

Overhaul for foreign banks

The Reserve Bank of India (RBI) is set to open the doors for foreign banks to expand in the country, but is likely to link it to the policies of the country from which the bank desiring to expand in India hails. Government sources told Hindustan Times that the central bank is likely to take into consideration the principle of “reciprocity” while allowing foreign banks to set up branches or subsidiaries in India.

Regulators test their autonomy

The standout regulator controversy was the turf war between the Insurance Regulatory and Development Authority (Irda) and the Securities and Exchange Board of India (Sebi) over the unit-linked insurance plans (Ulips), the popular hybrid mutual-fund-cum-insurance products. It was a battle that was avidly followed as much for its significance as the personalities of J Harinarayan of Irda and C B Bhave of Sebi, both former bureaucrats. In some ways, it also demonstrated the point that in India, the question of regulator “autonomy” is ephemeral at best. The Union finance ministry set a cat among the pigeons by using the Sebi-Irda tussle to pass an ordinance increasing its own regulatory powers over the Reserve Bank of India. A non-plussed and beleaguered RBI regained ground when former RBI governors cried foul and came to the central bank’s support. The soft spoken RBI Governor Duvvuri Subbarao voiced widely-shared fears about central bank autonomy and North Block backed off a bit, but not fully. The RBI-FinMin saga is yet to fully play out.

Pratip Chaudhuri set to head SBI

State Bank of India Deputy Managing Director Pratip Chaudhuri is likely to replace incumbent Chairman O P Bhatt when he retires in March 2011 after completing his five-year term. The finance ministry has cleared Chaudhuri for the top job at the country’s largest bank. The selection is subject to approval by the appointments committee of the Cabinet and the Prime Minister. Chaudhuri, who is also group executive of international banking at the staterun lender, was actually interviewed for the managing director’s post earlier this month, along with three other deputy managing directors: Hemant Contractor (head of corporate & wholesale banking), K Krishna Kumar (head of IT), and Diwakar Gupta (head of rural & national banking). The four were also candidates to the top job at SBI. A search committee headed by Reserve Bank of India Governor D Subbarao shortlisted the names of Chaudhuri and Contractor for the post. With the selection of Chaudhuri as SBI chairman, Contractor, Gupta and Kumar will be made managing directors. SBI will have four managing directors, following a recent amendment to the SBI Act, which increased the number of posts. At present, SBI has only one Managing Director, R Sridharan, after S K Bhattacharya retired in October. Sridharan is due to retire in June. Sources said the government wanted to select a person with at least two years of residual service for the chairman’s post. Chaudhuri, 56, with his rich experience in banking, fit the eligibility criteria. Just like Bhatt, he also joined SBI as a probationary officer in 1974. He took charge as deputy managing director & group executive (international banking) of SBI in April 2009.