Weak rupee plays spoil sport to companies in Q3

….."The Reserve Bank of India (RBI) had tightened monetary policy in India to control high inflation. This made domestic funding costly and caused many companies to source funds through sources like external commercial borrowings (ECB) and Foreign Currency Convertible Bonds (FCCB). Such instruments, for which interest payments have to be made in rupee, became costly due to fall in rupee rates,"……

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At a glance

....Manthan 2012, the first edition of the finance summit of IIM Kashipur, held Manthan 2012, the first edition of the finance summit of IIM Kashipur, witnessed a mix of eminent industry personalities from the field of finance, academia and students on a platform to put forward their view on ‘Global financial crisis and impact on Indian businesses’. Anand Sinha, Deputy Governor, RBI, delivered the keynote address.......

At a glance

UBI plans to fill up 2,000 vacancies

….to comply with the Reserve Bank of India’s (RBI) prescription, the UBI has covered 406 villages under the Financial Inclusion Programme………

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Mobile banking seeks boost

While many banks have mobile banking for retail customers, some are vying for corporate clientele

.... To boost mobile banking in India, the Reserve Bank of India lifted the cap of Rs 50,000 on daily transactions in December. However, the banking regulator empowered banks to set limits based on their own risk perception and with approval of their respective boards.....

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Phone bills-credit score: a fair link-up?

.... The banking ombudsman scheme is working well and has successfully brought down the level of consumer grievances in the retail lending sector. RBI also monitors “consumer unfriendly practices” and makes sure that the banks are “persuaded” to give up such practices. A case in point is the manner in which most major banks have agreed to waive prepayment charges on existing floating rate loans (even where the contracts with the consumer provided for such a charge).....

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Loans get cheaper as rivalry squeezes rates

Interest rates on bank loans are finally heading south. Even before the Reserve Bank of India (RBI) signals a reversal in the interest rate cycle, banks are embarking on cutting lending rates, at least on select loans, bowing to the need for expanding business in the face of competition............

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Investor of last resort

....With what it is being asked to do now in terms of bailouts, LIC will be second only to the Reserve Bank of India (RBI) in its financial relationship: if RBI is the lender of last resort for the government, LIC is fast becoming its investor of last resort.The enabling change—removing the 10% cap on LIC’s investment in government-owned companies—has been made recently so that LIC can bail the government out of its divestment disaster.The systemic implication of this change and how LIC is being used are dangerous. If at any time RBI acts tough with the government, LIC is well positioned to become an on-tap lender to the government. This is a systemic danger.........

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RBI creates awareness about fake currency

Tirupati: How to find out whether a foreign currency is fake or genuine? How to transfer money from one country to another? These doubts can be clarified at the Reserve Bank of India’s exhibition and interaction programme. RBI inaugurated a two-day exhibition and interaction programme here on Saturday to spread awareness among the public about fake currency and fraud activities. It is the ninth exhibition in the state. It was earlier conducted at places including Hyderabad, Nizamabad, Guntur and Vizag. Speaking to The Hans India, Basheer, Deputy General Manager of RBI, said that the programme’s aim was to create awareness among students, children, public and educated youth about fake currencies, bogus lotteries, fraudsters false promises and to know about the NRI banking activities and money transfer from one country to another. He advised the public not to fall prey for fraudsters’ promises, whether they are lotteries or multi-level marketing schemes. “That is the reason, we invited principals, faculty, academicians and industrial associations’ representatives,” he added. The same exhibition will be organised at Nellore town from February 21, for two days, he said.

http://www.thehansindia.info/News/Article.asp?category=5&subCategory=4&ContentId=40614

Workshop on " Managing Global Turbulence"

The Bombay Chamber of Commerce & Industrys Banking, Finance & Economics Committee is organising a Workshop on " Managing Global Turbulence" with special reference to SMEs on February 21 at Rangeshwar Hall, Y. B. Chavan Centre, Mumbai. The keynote address will be delivered by Dr. Subir Gokarn, Deputy Governor, RBI, other speakers include Jamal Mecklai- Chair, Economic Policy & Affairs Group, Bombay Chamber & CEO, Mecklai Financial, Samiran Chakraborty- Regional Head of Research India, Standard Chartered Bank, Sajjid Chinoy- India Economist, JP Morgan & others.

FPJ

India’s gold fetish —Sonali Ranade

.....The RBI must proactively think in terms of creating an institutional structure for comprehensive management of gold in the domestic economy. Given the deregulation of all interest rates, the RBI has considerable leeway in using markets to create a market for gold that minimises the use of physical gold as an investment vehicle while being transparent to all investors.The RBI should set up Gold Bank of India, which would take in deposits in gold and also lend gold against adequate collateral to other banks and institutions. It would have complete freedom to import or export gold.......

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Rejuvenating the Cooperative Sector

........Perhaps a more important feature of cooperative development is that the penetrative out- reach of the command area of the rural cooperative is formidable as emphasized by V. K. Sharma ( see RBI Bulletin Jan 2012). Commercial Banks and Regional Rural Banks ( RRBs) account for some 33,000 rural branches. In sharp contrast, the network of cooperative credit institutions accounts for a total of 1,22,590 service centres: 33 State Cooperative Banks with 953 branches: 371 District Central Cooperative Banks ( DCCBs) with 12,858 branches: and 109,000 Primary Agricultural Credit Societies ( PACs). Thus although in terms of magnitudes of flow of credit, the role of cooperative credit institutions is somewhat modest, the ubiquitous presence of these institutions is quite obvious. This has great relevance for financial inclusion. Unfortunately, Reserve Bank of India ( RBI) seems to think that financial inclusion is the exclusive prerogative of commercial banks. There is a need to involve cooperative credit institutions in this exercise............

http://epaper.fpj.co.in/Details.aspx?id=15817&boxid=14229578

RBI asks banks to formulate UCI code for customers

The Reserve Bank of India has advised banks to consider putting in place unique customer identification (UCI) numbers for customers and filter out multiple banking facilities availed by them through a de-duplication exercise.......

“The banks could also work jointly to set up a shared database which would enable them to securely see information on a customer (KYC information and facilities availed from various banks etc.) based on a unique identifier i.e. his Aadhaar ID,” says KC Chakrabarty, Deputy Governor, RBI

RBI asks banks to formulate UCI code for customers - Indian Express

Women's SHG fund to get cabinet nod in next meet

.... The ministry of rural development had suggested that loans given to SHGs be brought under priority sector lending of banks and recommended a dedicated national bank for women SHG instead of a one-time fund.  "Both the issues need approvals from the Reserve Bank of India. As of now there has been no significant development on any of these proposals,".......

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In terms of economic fundamentals, we are fine: Ex-RBI Governor Bimal Jalan

….I wouldn't like to comment on what I could have done or what the RBI should do. But fortunately for us, the inflation scenario has improved. That's a great advantage. Inflation rates might still be higher than what we want, but there is no severe problem like there was, say, 3 or 4 months back when prices were very high. This is a ripe time, therefore, to boost investment in the economy……. 

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SBI to decide on cutting lending rates for students and small businessmen on Tuesday

…….While SBI may be taking a lead in cutting education loan rates, Central bank was first to lower home loan rates and Bank of Maharashtra lowered its base rate, although marginally, last week. Decision to cut rates comes after Reserve Bank of India (RBI) signaled a reversal of interest rate cycle in January…………

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Indian Bank introduces account portability facility

NEW DELHI: State-owned Indian Bank has introduced account portability feature which allows its customers to retain the account number even if they change the branch. The facility would enable the customer to have the freedom of operating his or her account from any of the branches, Indian Bank said in statement. "The customers can shift his or her account to any of the desired branch any number of times, without any change in the account number, with just a change in home branch code," it said. "Customers can approach his home branch or the transferee branch with the request letter for transfer of account," it said. Home branch having the customer's account certifies the know your customer (KYC) documents while transferring the account to another branch, it added. Indian Bank has got the account portability feature in-built in core banking software, for transfer of the deposit accounts from one branch to another branch, it said.

ET

Private banks lobbying with Kerala govt for biz share

Thiruvananthapuram : The Reserve Bank authorisation to open up the Central/State Government business to ‘all private sector banks' has triggered intense lobbying locally...........

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No RBI Word yet on KR Pradeep’s Appointment at Lakshmi Vilas

Professional links to cos he audits seen as a hindrance to his appointment as bank’s chairman

RBI is holding back the approval to appoint chartered accountant KR Pradeep as the chairman of Lakshmi Vilas Bank as the regulator believes his professional relationships may come in the way of decision making at the helm of the private sector lender. “KR Pradeep runs an accounting firm under his name out of Bangalore and handles the accounts of various corporates which is one of the concerns raised by RBI,” said a person familiar with the regulator’s view. “RBI has also asked the bank to suggest two new names for the post,” said the person not wanting to be identified. The Karur-based bank has been without a chairman for more than a year now after S Narayan retired in January 2011. PM Somasundaram, MD and CEO at the bank, could not be reached for comments. But Pradeep said in a text message: “RBI is actively considering my name for approval.” The central bank’s hesitation in the approval is also due to the fact that Pradeep falls under the promoter category, which owns about 11.5% stake in the bank, said the person. RBI is paranoid about people with corporate links at the top of a bank as there are chances of prudence in lending getting compromised. This is one of the reasons why it has been imposing conditions even in case of proposed new banking licences. The central bank has called the bank’s senior management for a discussion on the appointment this week. “They had asked us to submit two additional names but the question of doing that does not arise since Pradeep’s name has been cleared at the AGM,” said another person who knows the bank’s stance. “We are not pursuing the matter actively as there is an MD and CEO running the bank.” Somasundaram, an alumnus of Standard Chartered, joined Lakshmi Vilas Bank in 2010 to transform the sleepy community lender into a full-fledged bank that could prepare it to compete with the giants such as ICICI and HDFC Bank which have begun encroaching into its territory. While he managed to reduce the bad loans, it has a long way to go in terms of products and services.  “We are working hard to shed the image of an old private sector bank,” Somasundaram said in an interview with ET last year. “We want to play the role of a new generation bank by offering services on par with leading private sector banks. For this, we need to focus on retail and improve our services.”

ET

Will appointment of auditors by regulators enhance independence?

.... Until 2005, the RBI was directly involved in the appointment of auditors in public sector banks. Currently, public sector banks appoint auditors under the supervision of RBI. The accounting profession generally believes that auditors enjoy a higher level of independence when regulators appoint auditors. In October 2011, the then President of the Institute of Chartered Accountants of India, Mr. Ramaswamy, argued in favour of appointment of auditors of public sector banks directly by the RBI.......

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White-label ATMs have hurdles of cost and competition to overcome

The Reserve Bank of India (RBI) may have come out with its draft guidelines last week allowing private operators to set up white-label ATMs (WLA) or stand-alone ATMs. But it is never going to be an easy task for the operators considering the costs involved in setting up private ATMs and in competing with the bank ATMs in attracting crowds.............

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