Subbarao acknowledges cash crunch facing banks

.........Reserve Bank of India governor Duvvuri Subbarao on Thursday said there are liquidity constraints across the system. His comments came amid growing concerns that domestic liquidity condition will remain stretched for some time more.Interestingly, Subbarao’s comments came close on the heels of RBI deputy governor Subir Gokarn on Wednesday reportedly indicating that the apex bank will refrain from cutting the amount the banks need to set aside as reserves...............

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Probability of global recession low: D Subbarao, RBI Governor

KOLKATA: The probability of a global recession is low, even though the US is growing slowly and Europe is experiencing negative growth, RBI Governor D.Subbarao said today. "The probability of a global recession, I think, is low," he said at a CII event here, adding that even though India's growth rate is falling, this cannot be termed as recessionary. "The US is not growing remarkably, but slowly. Europe is experiencing negative growth and Japan is also recovering," he added. On the challenges currently facing the country, he said the RBI's job is to strike the right balance between growth and price sensitivity. "I am sensitive to 80 per cent of the people of the country who are affected by price rise. We will have to balance the concerns of the corporate leaders crying against interest rate hikes and the poor." Subbarao said it is a legitimate concern that inflation did not come down appreciably despite hikes in the interest rate 13 times since March, 2010, but maintained that the rate of price rise would have been even higher had monetary tightening steps not been taken. "It is a valid criticism. Had the RBI not acted, inflation rate now would have been 12 per cent or 13 per cent and not 9.7 per cent at the moment," he said. On capital account convertibility of the rupee, he said it would not take place unless there was fiscal stability, more developed financial markets, stable growth and steady inflation.

ET

India Inc: Don’t blame govt, blame yourselves for current mess

.................The most telling incident of all was in January 2005, when then RBI governor, Dr YV Reddy, mentioned some kind of tax on FII flows. The same evening, Finance Minister P Chidambaram announced on television that no tax was being considered. The sensitivity of FII flows to the government’s actions was driven by corporate India, which was the beneficiary of those flows at that point of time........

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Sadhna : A Women’s Handicraft Enterprise of Sewa Mandir Awarded at National Level

The Annual Function of Citi Micro Entrepreneur Awards 2011 held at Mumbai on 5^th December saw an award for Udaipur. Sadhna, a women’s handicraft enterprise from Udaipur conquered the title of ‘National Winner – Community Owned Enterprise’ among the 77 nominated organizations from all over the country. Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India presided over the event in which 10 winners were honored in the category of National, Regional, Youth, Innovative, Green and Community owned entrepreneurs. The winners were presented with a trophy, a citation and cash prizes amounting to Rs. 1.87 million.

Udaipur Times

State entrepreneur

IMPHAL, Dec 9: State entrepreneur Wangkheirakpam Memi Devi has been conferred with Citi Micro Enterpreneur award.  Memi received the award, which comprises of Rs 50,000 and a citation, from Reserve Bank of India Deputy Governor Dr KC Chakrabarty in a grand award ceremony held in Mumbai recently. Memi who is the first recipient of the award among North East entrepreneurs was selected for the award in the Innovative Enterpreneur section. Chanura Microfin Manipur will organise a reception function in her honour at the auditorium of Jawaharlal Nehru Manipur Dance Academy tomorrow. 

The Sangai Express

COINEX Exhibition holds many attractions

Pune : The fact that many people in the city take their hobby of collecting ancient coins very seriously was proved on Saturday when a rare silver coin from the era of Mughal emperor Jehangir fetched a whopping Rs 90,000. The event was the auction of antique coins, banknotes and medals at Coinex Pune 2010, a numismatic exhibition. The highest bid amongst banknotes was for an Indo-Portuguese one, at Rs 22,000. A Commander of the Order of the British Empire medal fetched Rs 41,000, the highest for medals. From Gulbarga Sultanate coins estimated at Rs 800, gold coins from Aurangzeb's period estimated at Rs 30,000 and extremely rare punch marked Kuntala Janapada coins at Rs 1 lakh, the auction had 244 fine to rare lots up for bidding. Conducted by Girish Veera, a numismatist and owner of Oswal Antiques, Mumbai, the auction saw around 60 serious buyers and many enthusiasts. “We had considered 80 per cent sale of the items displayed, but it shot up to 88 per cent. The auction got unprecedented response. What was more encouraging was the greater awareness among the collectors,” said Veera, who auctioned for the fourth time in the city. Rare lots that had fervent bidding were copper coins from Shivaji's period with 'Chhatrapati' on the obverse and 'Shri Raja Shiva' engraved on the reverse. These were estimated at Rs 1,500 but were sold for Rs 7,500. Another coin in the name of Shah Alam II, with engravings in Devnagari and Urdu, fetched Rs 22,000. “Antique coins provide a good investment option. If the investors buy the coins from reputed dealers and invest wisely, good returns are guaranteed. Antique coins are invaluable and with the prices of both the yellow as well as the white metal, skyrocketing it has increased the demand also. As most of these coins are made in gold or silver one can expect a return of 36-40 per cent per annum,” said Veera.

Sakaal Times

Fake currency of Rs 12 cr face value detected till Sept

The Reserve Bank has detected 2.64 lakh pieces of fake currency notes with the face value of Rs 12.25 crore up to September this fiscal, Parliament was informed today. In a written reply in the Lok Sabha, Minister of State for Finance Namo Narain Meena said between April and September 2011, the banking system has detected 2,64,282 pieces of fake currency notes of face value Rs 12,25,70,560. In the 2010-11 fiscal, 4,35,607 pieces were reported, having face value of Rs 19.01 crore, he added. Meena further said that RBI, Finance Ministry, Home Ministry, security agencies as well as CBI are working together to address the menace of fake currency notes. "The works of these agencies are periodically reviewed by a nodal group set up for this purpose. In this context, CBI has also been declared as the nodal agency for coordination with the states and the Directorate of revenue Intelligence has been nominated as the Lead Intelligence Agency for smuggled fake notes," he said. Besides, National Investigations Agency has been empowered to investigate and prosecute such offences, he said.

BS

India needs Islamic Finance for infrastructure development: Experts

......Answering questions from journalists, Mr Khurshid Najmi, former joint advisor, RBI and presently Partner, India Law Services said that High level Committee on Financial Sector Reform-CFSR of the Planning Commission of India (2008) headed by Dr Raghuram Rajan has recommended interest free finance & banking to be introduced in the main banking sector for growth with inclusion and innovation............

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Ready for 6.5 per cent? - T N Ninan

…..Corporate investment will not revive till interest rates have dropped some way down, and a cautious Reserve Bank that believes in “baby steps” will take months before it brings down interest rates to levels that change the calculus on business risk. So a 6.5 per cent rate of growth in 2012-13 seems plausible, even probable……

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RBI notifies new FDI norms for pharma sector

The Reserve Bank on Friday notified new rules doing away with automatic approval for foreign direct investment (FDI) in existing pharmaceutical companies. Tightening the norms, the government had last month done away with automatic approval of FDI in the existing pharmaceutical companies. "FDI, up to 100 per cent, would be permitted for brownfield investment (i.e. investments in existing companies), in the pharmaceutical sector, under the government approval route," RBI said in a notification. Under the new rules, for any merger or acquisition, the overseas investor will have to seek permission from the Foreign Investment Promotion Board (FIPB). After six months, it will be the monopoly watchdog Competition Commission of India (CCI) which will vet such deals. The decision follows directions from Prime Minister Manmohan Singh, who along with his senior Cabinet colleagues had deliberated on October 10 over concerns arising out of several acquisitions of domestic pharmaceutical companies by overseas firms. For the new investment, 100 per cent FDI will be allowed under the automatic route, under which investors only inform the Reserve Bank about the inflows and no specific government nod is required. "FDI, up to 100 per cent, under the automatic route, would continue to be permitted for green field investments in the pharmaceuticals sector," RBI said.

Business Today

Bank deposit growth outpaces credit

......…RBI has projected a deposit growth of 17 per cent and credit growth of 18 per cent by the end of March 2012. But the current trend suggests otherwise…..
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Banks to compensate customers for delays at prevailing rate

Mumbai, Dec 9 : Banks should compensate customers on account of financial loss incurred due to late receipt or delayed credit of interest at the prevailing rate, the Reserve Bank of India said today. An investor of savings bonds has to be compensated at the savings bank rate on financial loss incurred due to late receipt or delayed credit of interest warrants/ maturity value of investment, RBI said in a notification. The interest rate on savings deposits have been recently deregulated. RBI said the banks shall compensate investors for delays as per their saving account rate without any discrimination.

MSN News

Luring deposits, the unfixed way

.....Some banks have, however, taken to a novel way of rewarding their depositors. They have come out with a new term `unfixed deposits' ...........

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HC stays CIC's order asking RBI to reveal loan defaulters

New Delhi, Dec 9 : The Delhi High court today stayed the direction of the Central Information Commission (CIC) asking the Reserve Bank of India to provide details of industrialists who have defaulted in repayment of loans taken from nationalized banks. A bench of Justice Vipin Sanghi, in its interim ex-parte order, asked the information-seeker to respond to the petition filed by the RBI challenging the CIC order. The court listed the next hearing on February 27, 2012, on the RBI's petition which said the CIC's directives were in violation of the Right to Information Act. The CIC had on November 14 this year under section 8(2) of the RTI Act directed the RBI to provide the information sought by information-seeker P P Kapoor by December 10, 2011. Counsel T R Andhiyaarjuna, appearing for the RBI, contended the CIC's order would have a far-reaching impact as this kind of information is confidential and the Information Commissioner has dealt with the matter in a wrong way, without considering all the relevant provisions under the RBI Act. He also said the order of the CIC directing the RBI to provide information was beyond its jurisdiction under the transparency law, as the RBI is exempted from providing such info under section 8(1)(a). "It's not open to the CIC to issue such a direction under section 8 (2) of the RTI Act when the RBI is exempted under section 8 (1) (a)," he added. 

IBN Live

RTI Blues: HC gives respite to NABARD

The Delhi High Court on Thursday stayed an order of Central Information Commission (CIC) asking National Bank for Agriculture and Rural Development (NABARD) to provide copies of its inspection reports about cooperative banks of various states to an information seeker under the transparency law. bench of Justice Vipin Sanghi stayed the operation of CIC’s order asking NABARD to reveal inspection reports from 2005 till date to the applicant under the Right to Information Act keeping in view its earlier similar order in which it has provided same relief to RBI. Apart from inspection reports of various cooperative banks, the information seeker Kishan Lal Mittal has also sought copies of correspondence with Maharashtra government, RBI or any other agency regarding Maharashtra State Cooperative Bank. Earlier, the Public Information Officer (PIO) had refused to provide information on the ground that under section 8 (1) (a) of the RTI Act, disclosure of such reports would adversely affect the economic interests of the state. In appeal, the Information Commissioner directed the bank to provide the copies of the inspection reports before 10 December 2011. The court listed the matter for further hearing on February 13, 2012. The High Court had on November 30, stayed the CIC order asking RBI to provide copies of its inspection reports about a bank to an information seeker under the transparency law. The court had stayed the operation of CIC’s order asking Reserve Bank of India to reveal inspection reports of Makarpura Industrial Estate Cooperative Bank Ltd under the Right to Information Act.

http://indiancooperative.com/lawslegislations/rti-blues-hc-gives-respite-to-nabard/

RBI asks Banks to cover one lakh SHGs by 2012

The Central Board of Directors of the Reserve Bank of India has directed Banks to make an effort to cover at least one lakh Self-Help Groups (SHGs) by March 2012. There are total 1.55 lakh SHGs to be credit linked in the State, out of which 29,622 SHGs have already been covered by banks. The decision was taken at the Central Board of Directors meet in Kolkata on Thursday. Dr. D. Subbarao, Governor, Reserve Bank of India chaired the meeting. All the 7486 villages with population of more than 2000, will be covered by banking facilities by March 2012 under the Financial Inclusion Plan. Banks had already covered 4348 villages by November 2011, RBI said. The Central Bank has directed the state government of West Bengal to support its initiative of extending electronic benefit transfer (EBT), to begin with, in four districts where pilot project had already been initiated. EBT facility will be extended to all the districts in West Bengal covering all villages. Banks are asked to work out modalities with the active support of State governments in this regard. RBI will conduct a survey in West Bengal to assess the ground realities with regard to loans to be availed by General Credit Card holders. The survey will be conducted in partnership with State government and banks in four districts including Murshidabad, Howrah, Malda and North 24-Parganas. The survey would be completed by end-December 2011. Based on the findings of the survey, the SLBC will decide on the way forward. RBI has also asked Banks to achieve credit deposit (CD) ratio of 65 per cent by the end of March 2012. Current CD ratio in the State was 62 per cent which was significantly lower than the national average of 74 per cent. RBI said that a higher target for CD ratio to be achieved during 2012-13 would be reviewed after that but would largely be subject to demand for large corporate credit. The urgency of extending State contribution for recapitalisation of the three Regional Rural Banks (RRBs) in West Bengal necessary for their improved performance was reiterated during the meet. In order to give boost to credit in the State and to ensure district level participation, the Chief Minister has agreed to attend one State Level Bankers’ Committee (SLBC) meeting in the next three months. Further, it was also decided during the meeting that the District Magistrate, Regional Managers of banks and officials of the Reserve Bank will attend the District Consultative Committee meetings to encourage credit enhancement and financial inclusion at the district level.

http://www.microfinancefocus.com/

Ignoring grim short-term with long-term optimism

..........When the Reserve Bank of India was busy raising interest rates to control inflation — it did so 13 times in 20 months — in an attempt to squeeze speculative or non-essential demand out, Indian householders were busy doing exactly the opposite........

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Go for PPPs in agriculture

....Interestingly, the Deputy Governor of RBI recently commented that, while agricultural credit has grown, it is more from the urban and metropolitan branches of the banks, which raises the question as to which segment the credit is actually flowing to......

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Tackling informal collateral and collateral substitutes in Indian microfinance

The RBI must ensure that informal collateral and/or abusive collateral substitutes do not contaminate microfinance in the future. It should also seriously think on incentives/disincentives that can be set up to eliminate use of informal collateral and/or abusive collateral substitutes, where they exist..............

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RBI Board meets at Kolkata; State Govt., Banks and RBI to work together for meaningful Financial Inclusion

The Central Board of Directors of the Reserve Bank of India met today at Kolkata. Dr. D. Subbarao, Governor, Reserve Bank of India chaired the meeting. Directors Sarva Shri Dr Anil Kakodkar, Kiran Karnik, M.V.Rajeev Gowda, Y.H.Malegam, Azim Premji, Dipankar Gupta, G.M.Rao, Ms Ela Bhatt and Dr Indira Rajaraman. The Government nominee Shri R.Gopalan, Secretary, Department of economic Affairs and Government nominee on the Board also attended at the meeting. Deputy Governors Dr. K.C.Chakrabarty, Dr. Subir Gokarn, Shri Anand Sinha and Shri H.R. Khan were also present.

The Central Board meets at least once every quarter. Apart from holding meeting in Mumbai, Chennai, Kolkata and one in New Delhi after the Union Budget which is addressed by the Finance Minister, the rest of the meetings are held in other state capitals by rotation. The main function of the Central Board of Directors of the Reserve Bank is to provide overall direction to the Reserve Bank’s affairs.

Earlier, the Governor met the Chief Minister Miss Mamata Banerjee and discussed issues of mutual interest. The Governor also met local bankers and State Government officials. At this meeting, the following decisions were taken:

·         Banks will endeavour to achieve credit deposit (CD) ratio of 65 per cent by the end of March 2012. Current CD ratio in the State was 62 per cent which was significantly lower than the national average of 74 per cent. A higher target for CD ratio to be achieved during 2012-13 would be reviewed after that but would largely be subject to demand for large corporate credit.

·         Banks will make efforts to cover at least one lakh Self-Help Groups (SHGs) by March 2012. There are total 1.55 lakh SHGs to be credit linked in the State, out of which 29,622 SHGs have already been covered by banks.

·         To get a clear picture of ground realities with regard to loans to be availed by General Credit Card holders, a team of officials of State government, banks and the Reserve Bank will conduct a survey in four districts of West Bengal – Murshidabad, Howrah, Malda and North 24-Parganas. The survey would be completed by end-December 2011. Based on the findings of the survey, the SLBC will decide on the way forward.

·         All the 7486 villages with population of more than 2000, will be covered by banking facilities by March 2012 under the Financial Inclusion Plan. Banks had already covered 4348 villages by November 2011.

·         State government will give all support to the Reserve Bank in extending electronic benefit transfer (EBT), to begin with, in four districts where pilot project had already been initiated. The objective, however, will be to extend EBT facility to all the districts in West Bengal covering all villages. Banks would need to work out modalities with the active support of State governments in this regard.

·         In order to give boost to credit in the State and to ensure district level participation, the Chief Minister has agreed to attend one State Level Bankers’ Committee (SLBC) meeting in the next three months.

·         To encourage credit enhancement and financial inclusion at the district level, the District Magistrate, Regional Managers of banks and officials of the Reserve Bank will attend the District Consultative Committee meetings.

·         The urgency of extending State contribution for recapitalisation of the three Regional Rural Banks (RRBs) in West Bengal necessary for their improved performance was reiterated. 

Moneycontrol