Reserve Bank of India, Chennai intends to hold exhibitions on Foreign Exchange Management Act (FEMA) at five locations in Tamil Nadu viz. Chennai, Tiruchirapalli, Madurai, Tuticorin and Coimbatore. The thrust of the exhibitions will be to promote awareness on Rules and Regulations governing the forex business in India and foreign exchange facilities available for residents and non-residents under FEMA. Target audience includes customers of commercial banks, exporters, importers, NRIs, Chartered Accountants, college students and corporates. Each exhibition will be organized over two days and will comprise of auditorium events and display stalls.
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Monday, April 4, 2011
Regional Rural banks revamp in line with Chakrabarty report
Recapitalisation to be combined with new monitoring structure, with performance time lines. Almost half of the 82 regional rural banks (RRBs) in the country would be recapitalised, with the infusion of Rs 2,200 crore in two stages by the end of 2011-12, and the authorised capital of all 82 banks would be increased to Rs 500 crore from the present level of Rs 5 crore. Besides, the performance of RRBs would be monitored by state level committees headed by finance secretaries of state governments with officers from the National Bank for Agriculture & Rural Development (Nabard), sponsor banks and the Reserve Bank of India. This is to be done half-yearly, instead of the yearly one by the Union finance ministry. This follows acceptance by the central government of a slew of recommendations from a committee headed by K C Chakrabarty, Deputy Governor of the RBI, for RRBs to achieve a capital to risk-weighted assets ratio (CRAR) for RRBs of at least nine per cent by March 31, 2012. The report was given a year before. A Nabard official, who did not want to be named, told Business Standard: “Chairmen of all RRBs have been asked to initiate necessary action in respect of action points pertaining to their bank. The committee had assessed the capital requirement for all the 82 RRBs to enable these to have a CRAR of at least seven per cent as on March 31, 2011, and at least nine per cent from March 31, 2012, onwards.” Adding: “The committee had included provisions required for arrears of wages due to revision of pay scales, gratuity and leave encashment, and had recommended that depreciation on SLR (statutory liquidity ratio) investments by marking to market (writing down assets to reflect current value) as applicable to commercial banks may be made effective by RBI from April 1, 2013, onwards. Accordingly, the recapitalisation requirement would be Rs 2,200 crore for 40 of the 82 RRBs. This amount will be released in two installments, comprising Rs 1,337.50 crore in 2010-11 and Rs 862.50 crore in 2011-12.” Further, a memorandum of understanding would be signed with Nabard by each RRB, as also with the state government concerned and the sponsor bank, on the roles of various stakeholders and the performance benchmarks to be achieved, with schedule. On an increase in the authorised capital to Rs 500 crore, the committee had observed that the accumulated losses of RRBs as on March 31, 2009, were about Rs 2,300 crore. The RRBs carry, at the same time, share capital deposits aggregating Rs 3,900 crore. As a one-time measure, therefore, the committee had recommended that RRBs be permitted to write off the accumulated losses as on March 31, 2010, against the share capital deposits. Any balance left as share capital deposit may then be appropriated as paid-up share capital. “However, as the RRBs would continue to need higher capital in view of their expanding business, the committee had recommended that their authorised share capital be increased to at least Rs 500 crore. Necessary amendments will be made to the RRBs Act to facilitate it,” the official informed.
IBA appoints new member
The managing committee of Indian Banks’ Association (IBA) has appointed A. S. Bhattacharya, CMD of Bank of Maharashtra, a premier nationalized Bank as Member.
Govt yet to finalise on names to fill top slots in SBI
The government is yet to finalise a successor to State Bank of India (SBI) Chairman O P Bhatt, who retired on March 31 and fill up other senior-level management vacancies. Pending appointment of new chief of the SBI, the government has given additional charge of Chairman to R Sridharan, who is currently the Managing Director of the bank until further orders. Besides, vacancy of Chairman, three positions of the Managing Directors are to be filled in the bank which alone commands about 25% market share. The government has also not found replacement for S K Bhattacharya, who retired as Managing Director last year. Although the process for appointment of successor of Bhatt and other top executive began in December last year, no formal announcement has been made for filling up vacancy arising out of superannuation or otherwise. The SBI board comprises of an executive chairman and two managing directors. With amendments in the SBI Act, it made provision to appoint two more managing director by the Government of India, which holds about 59 per cent stake in the bank. Currently, country's largest insurer Life Insurance Corporation has three managing director besides the executive Chairman. Sridharan, the senior most executive of the bank, would manage the affairs of the bank. His term is coming to an end in June this year. Pratip Chaudhuri, currently the Deputy Managing Director and Group Executive international banking of State Bank of India, is understood to be leading the race for the chief of SBI. Besides, Hemant G Contractor, Chief Finance Officer and Diwakar Gupta Deputy Managing Director and Group Executive (rural business and national banking) is also believed to be in the reckoning for the job. The name would be finally cleared by Appointment Committee of the Cabinet (ACC) headed by the Prime Minister Manmohan Singh. The other members include Home Minister P Chidambaram and Finance Minister Pranab Mukherjee. Chaudhuri joined SBI as Probationary Officer in 1974. He took over charge as DMD (international banking) in April, 2009. The search panel to appoint the next SBI chairman, headed by Reserve Bank of India governor D Subbarao, had interviewed 4-5 candidates in December, 2010.
Sunday, April 3, 2011
Monetary Policy Statement 2011-12 on May 3, 2011
Dr. D. Subbarao, Governor, Reserve Bank of India will announce the Monetary Policy Statement 2011-12 on Tuesday, May 3, 2011. This will be done in a meeting with the chief executives of major scheduled commercial banks at 11.00 a.m. on May 3, 2011 at the Central Office, Reserve Bank of India, Mumbai.
I Can Do Financial Planning - Book Review by P. P. Ramachandran
Swapna Mirashi is a Financial Literacy Consultant and author of two books. She was a member of the Steering Committee of Financial Literacy of the Reserve Bank of India. Mirashi developed a comprehensive rural financial literacy manual for ICOCI Bank and is a regular contributor to financial journals. The book under review is a manual of financial planning. Financial planning is a process of planning and managing your current finances to meet your goals. Income, expenses, savings, assets and liabilities have to be so organised as to secure your aims - buying of a house, provide for education and wedding of your children and plan your retirement. This is a well- organised step by step manual enriched with smart worksheets and checklists. It encourages you to design your own personal financial plan. Almost every page contains a box that highlights important concepts. The first step is to set clearly your goals - with a time frame. If your start planning early in your career you have to set aside less money each month. A basic need is to assess clearly your financial position. It is advisable to have realistic goals commensurate with your assets and income. A cogent analysis of your financial needs is a must. Set reasonable goals and take firm steps to achieve them. The next subject tackled is ' investment'. Seek out profitable avenues like provident fund, fixed deposits and ensure a good balance between growth and steady income. Acquire a thorough knowledge of avenues of investment. Arrive at an ideal portfolio. Due to inflation you have to invest in such a way that the value of your money is retained. A wise management cycle is to save regularly - invest wisely - spend intelligently and at the same time ensure your security. ou have to master the process of investing, gauging risks and taking right decisions. There are various investment channels - some riddled with risks and some high yielding. Study stocks and shares and available exemptions. ou can arrange your investment portfolio and review periodically your holdings. Another crucial area is planning and managing your debt portfolio. ou have to be aware of risks involved. Risk is the possibility of a loss or negative out come. Vulnerability to risks varies from individual to individual. You have to be aware of certain practices that inevitably lead to risk. This manual offers guidance on methods of managing and overcoming risks. Information is offered on briefly on regulators like RBI, SEBI and those who regulate insurance market and pension fund market. It is safe and essential to build an emergency fund to combat risks, Different types of risks are analysed. The manual provides sample planning steps to achieve common financial goals. The volume has a valuable glossary, a tiny list of books ( why no books by India analysts are included is not clear) and a number of useful websites. The Governor of the Reserve Bank of India Dr. D. Subbarao, who contributes a " Foreword" rightly, hails the book as: " A rewarding learning experience." Surely this manual is very valuable and offers an easy- to- implement advice to wise financial planning. The Reserve Bank deserves warm praise for bringing out this book as part of its efforts to encourage financial literacy. THIS BOOK IS AN ATTEMPT TOWARDS EQUIPPING THE READERS WITH THE SKILLS OF PLANNING AND BUDGETING FOR A FINANCIALL SECURE FUTURE.
After fast food, drive-through banking
A concept more usually associated with burger or vada pav sale outlets has been found to work well with the business clientele of banks. The idea in question is the ‘drivethrough’ facility, where a customer comes to an outlet in his or her vehicle and transacts the business without getting out of it. “I went to America 12 years ago and saw this kind of banking,” says Jyotindra Mehta, now chairman of the Gujarat Urban Cooperative Banks Federation. He used to be the chairman of Rajkot Nagarik Sahakari Bank Ltd (RNSBL) and thought it was worth trying. There were logistic issues with the branches at Rajkot, and it was decided to try the experiment at the south Gujarat city of Surat, 470 km away, where there was a single branch. In that bustling commercial centre, people are generally in a hurry; in addition, the Surat branch (it has about 50,000 acount holders) had a growing problem in offering vehicle parking. Thus began the experiment with a drive-through bank. The clientele liked it. They could make cash and cheque transactions without getting out of the car, at a window. And so, in time, it was decided to offer it in Rajkot, too. There were some limitations, so instead of cash and cheque (in Surat, one can now make cash transactions up to `1lakh through the window) facilities, it was decided to offer only those for demat transactions. That began a year before. “You just drive in a car to the window and transact,” says Bhavesh Rajdev, branch manager of the demat division of RNSBL. About 35,000 demat holders are entitled. “When the market is good, it is around 100 a day.” “We will implement the drive-through banking facility in other branches, too. But we need to set up proper infrastructure and it will take some time,” says Kalpak Maniyar, chairman of RNSBL.
Anganwadi awaits RBI model village
LOHARDAGA: The construction of an anganwadi centre at the RBI's model village Doba under Kuru block in Lohardaga, which was undertaken in December 2010, is yet to be completed. The Reserve Bank of India has adopted the village under its model village banking programme, while the district administration had promised to take special care on development work here. The construction of the anganwadi centre at Doba Bar Toli undertaken under the Backward Region Grant Fund (BRGF) scheme was scheduled to be completed by December 2010. Incidentally, the work began in early December when the administration was gearing up to welcome RBI governor D Subbarao. The work came to a halt as soon as the governor's programme concluded. Deputy commissioner Ratan Kumar said the delay in the work was due to a dispute between villagers over the selection of site, which ended in November before the work started. "I was informed about the problem by block level officials. I will look into the matter," he said. The DC said plans were ready to be implemented. "Soon the village road will be black-topped. This scheme is being taken under the Integrated Action Plan."
No more fights with BEST bus conductors over change
Now, you won’t have to fight over change with the bus conductor. The Reserve Bank of India (RBI) has agreed to give Rs25 lakh in coins every month to the Brihanmumbai Electric Supply and Transport (BEST) undertaking. Earlier, the RBI used to give Rs16 lakh in coins every month to the undertaking. “Passengers have been complaining about the lack of change. Often arguments take place between the conductor and passengers. So, we had requested the RBI to give us more money in coins and they agreed to give us Rs 25 lakh a month,” said Sanjay Potnis, BEST committee chairman. The Siddhivinayak Mandir Trust in Prabhadevi has also agreed to give Rs 2 lakh in coins, whenever the public undertaking wants.“Now, we are getting more than enough from the RBI so there is no need take coins from anyone else,” said a BEST official on condition of anonymity because of protocol issues. Commuters are very happy with RBI’s decision. Versova resident Nikita Dalal, who travels by bus every day to Bandra, said, “This news is a big relief. I often face this problem. Now, I will demand change from the conductor.
Saturday, April 2, 2011
Opening of Rural Planning and Credit Department at RBI, Panaji Office
Rural Planning and Credit Department has started functioning from today at the Reserve Bank of India office, Panaji. The Department, among other things, undertake financial inclusion and financial literacy initiatives as also look after implementation and monitoring of the Lead Bank Scheme. Its functional jurisdiction will cover the State of Goa. The address and contact details of the department are :
Reserve Bank of IndiaRural Planning and Credit Department
3A/3B, Third Floor, Sesa Ghor
Patto, Panaji-403001
Tel No.0832 2438656
Fax No.0832 2438657
The Reserve Bank of India started functioning in Goa in 1983 when Goa was still a Union Territory. It catered to the foreign exchange needs of the people and institutions in the Union Territory of Goa.
RBI introduces Working Paper Series
The Reserve Bank of India today released two Working Papers on its website. These are:
Working Paper 1: An Empirical Analysis of the Relationship between Currency Futures and Exchange Rates Volatility in India by Somnath Sharma; and Working Paper 2: The Implications of Renminbi Revaluation on India’s Trade – A Study by S. Arunachalaramanan and Ramesh Golait. The Reserve Bank of India has decided to introduce a ‘RBI Working Paper Series’ (RBI - WP) to provide a platform to the Reserve Bank Staff for presenting their research studies as well as to receive feedback from informed researchers. One of the hallmarks of research in central banks is to sense the relevant developments and emerging challenges and provide quality research inputs for policy making. To be able to do this, the research studies should be on subjects linked with the goals and objectives of the central bank and should be conducted in a scientific way. With proactive and strategic role of the central bank staff, the research inputs could serve as necessary tools for scientific policy-making and efficient functioning of the central bank. The initiative to publish the Working Papers comes in the wake of encouraging the Reserve Bank staff to contribute towards such efforts. The Reserve Bank has another research publication called the ‘Occasional Papers’. Research published in ‘Occasional Papers’ is work produced by the Staff of the Reserve Bank on a broad range of issues. Papers published under ‘Working Papers’ Series are quick analytical research papers on issues and challenges of contemporary relevance to the Reserve Bank. Unlike Occasional Papers, which are published with specific periodicity, RBI - WP Series will be published, as and when ready and in digitised form only. ‘DRG Studies’ is also another attempt to carry out an in-depth study on contemporaneous subjects. These are prepared under the auspices of Development Research Group (DRG) involving an outside expert leading an internal researchers’ team. The views expressed in all the research publications of the Reserve Bank, including the RBI Working Papers Series, do not necessarily reflect the views of the Reserve Bank and as such should not be reported as representing the views of the Reserve Bank of India. Feedback, if any, on the papers could be addressed to the respective authors of the research studies.
R Sridharan named Acting Chairman of SBI
Mumbai: R Sridharan will be taking over as Acting Chairman of the country's largest lender State Bank of India from O P Bhatt, who superannuated. Sridharan, who currently serves as the Managing Director and Group Executive (Associates and Subsidiaries) at the bank will take over as Acting Chairman from April 1, according to a source close to the development. He started his career in State Bank of India in 1972, the same year as Bhatt, and has been with the top lender throughout. Sridharan, a graduate from the University of Madras, had taken over his current position in December 2008. The Ministry of Finance has reportedly zeroed in on Deputy Managing Director Pratip Chaudhuri as Bhatt's successor, but with a formal announcement not yet made, it has appointed an Acting Chairman.
FSDC’s efficacy yet to be tested, says RBI’s Mohanty
Mumbai: By setting up the Financial Stability and Development Council (FSDC), under the chairmanship of finance minister, the coordination mechanisms within the financial sector have been strengthened, said Deepak Mohanty, executive director, Reserve Bank of India (RBI). But, Mohanty added, that it is yet early to assess their efficacy which will be tested by future developments. The recent experience of managing global financial crisis by central banks showed that conventional policy framework may not always be sufficient to deal with crisis, he said. “The central banks have to be flexible enough and innovative in their policy approach to respond promptly to the build-up of sectoral imbalances,” said Mohanty, while participating in the Central Banks Conference of the Bank of Israel, Jerusalem on Friday. He was speaking on ‘Lessons for Monetary Policy from the Global Financial Crisis : An Emerging Market Perspective’. According to Mohanty the monetary policy frameworks in EMEs, mostly based on multiple indicators (in China, India and Russia) and multiple instruments were found to be more effective in responding to the crisis situation without being confronted with zero lower bound. Liquidity management operations being an integral part of execution of monetary policy in EMEs, sequencing of policy measures in a combination of rate and quantity instruments proved to be more effective, he explained. While interest rate continues to be the dominant instrument for implementing monetary policy, supplementing it by other quantity or macro-prudential instruments even in normal times will not only enhance the flexibility of monetary policy to attain multiple objectives but also could obviate the risk of hitting the zero lower bound, he said. In the context of stability of the external sector, a key initiative could be to develop the local currency bond market.
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