.............. In other words, an inflation-wary RBI is unlikely to jump the gun on interest rates. Even if by some miracle the RBI does cut the repo rate, the benchmark policy rate that is currently at its highest since March 2008 at 8.5 percent, the truth is most banks will be unable to follow suit.........
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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.
Tuesday, February 28, 2012
The dilemma ahead of midterm review of monetary policy
.............. RBI would continue to stay concerned both on inflation and growth going into FY13 and as of now bias seems to be on inflation. The external factors are not expected to turn growth supportive in the near future. While RBI’s priority would be to guide inflation into its tolerance level of 4.0-6.0%, it is also important to support the Government in its efforts to address fiscal issues through growth supportive monetary policy.............
Read............Responsible lending key to microfinance
Microfinance is a very emotional word and small credit plays an important role in taking small farmers and entrepreneurs out of poverty. But microfinance cannot bring the financial inclusion because in our system we don’t allow microfinance firms to accept deposits.............
I think it is important for any financial system that the credit culture is not eroded. What is worrying me is that the whole debt restructuring process is dependent on 50% recovery. The excesses happened in lending should also be kept in mind when we talk about such kind of reaction. There is a clear case of overlending and there is a clear case of forgiving that borrowing as well. So the message should be there has to be some kind of responsibility..............
Read................. Microfinance industry may get a lifeline
….“The new guidelines, if implemented, are going to hugely help MFIs as banks will have to lend in large amounts to them to meet their lending targets. Since most of the NBFCs cater to priority sector related segments like agriculture, women and other weaker sections, NBFC-MFIs can expect a fair share of bank credit,”.....
Read.......... Fitch gives cautious outlook for NBFC sector
….Last year, the Reserve Bank of India (RBI) excluded bank loans to NBFCs from the priority sector category, thereby reducing banks' incentives for direct lending to NBFCs. Presently, about 65 per cent of the NBFC funding comes from banks. The RBI's move "will increase funding costs for NBFCs in 2012 and beyond," Fitch said, adding that the outlook for 2012 is stable……
Read.......... Consolidation seen in NBFC space: Fitch
..... If the Usha Thorat Committee's recommendations, stipulating a minimum net worth of Rs 5 crore and asset size of Rs 50 crore for registration of NBFCs, are implemented, then the small NBFCs segment could undergo major consolidation, the agency said in a report. A majority of the non-deposit taking NBFCs are small in size and regulatory supervision becomes heavier only when their asset size exceeds Rs 100 crore.......
Read...........On microfinance
The report “Small loans add up to lethal debts” (Feb. 26) on debtor suicides linked to microfinance companies was heart-rending. That the poor, who believe that small loans can improve their living, become victims of the companies run by so-called financial wizards, is unfortunate. It appears that the companies are no better than the mahajans of pre-independence days.
Aditya Anirudh, Bangalore
Micro-finance institutions, established to provide small loans to the disadvantaged sections, have been lured into the path of becoming for-profit organisations. Manmohanomics and Monteknology have played a crucial role in making India a global market in which retailers and middlemen become millionaires while food producers are left to kill themselves. The patrons of liberalisation have a lot to explain to the bereaved families of those who have committed suicide in the past two decades because of their inability to repay debts.
Krishnaprasad Balan, Chennai
The report is excellent but the readers should know the brighter side of microfinance too. Because of the Andhra Pradesh fiasco, institutional resources to MFIs virtually stopped for almost a year. The industry has just come out of the crisis, with the RBI intervening to soothe the market and funders realising that it is safe to lend to MFIs which operate in credit-ready markets initially developed by them. The borrowers, in repeat cycles of borrowing, see this transparent mechanism as a far cheaper and desirable option. Many MFIs graduated from the initial mission of empowerment and social development to become lenders. The RBI has now virtually capped the market by indirect regulation. Why did Rajyam, mentioned in the article, borrow Rs.1.18 lakh? If she needed the money to invest in her livelihood activity, it points to the failure of the banking system. It is precisely this unfilled space in the rural credit market that the MFIs have occupied. Borrowing from eight different MFIs indicates a sad feature of an unhealthy microfinance market. Rajyam borrowed beyond her capacity — a situation akin to the state of the urban credit card industry three years ago. In the case of Rajyam and many others, the over-enthusiastic “profit-only” MFIs were responsible for dumping money in unprepared markets. The article should teach the nation what should not be done. But, let us not conclude that all microfinance is bad.
Ananda Mukherji, Chennai (HBL)
It's the Economy, Stupid!
It was as if someone flipped a switch at midnight, December 31, 2011. The flipping of that switch magically turned around all that was terrible about India’s economy into the zone of happy faces and markets headed north………………
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iCreate Software sponsors IBA Risk & Compliance 6th Annual Summit, 01 Mar 2012, Mumbai
Organized jointly by Indian Banks' Association and SP Media, publisher of India Banking Review, this is the country's flagship conference for policy level debate on issues related to risk management and regulatory compliance in banking……………..
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Governance and Financial Regulation to be the focus of Oxford India Business Forum 2012
....The panel will include Sir Thomas Harris, Special Advisor, Standard Chartered Bank; Usha Thorat, Director of the Centre for Advanced Financial Research and Learning (CAFRAL), Reserve Bank of India; Ms Chitra Ramkrishna, Joint Managing Director, National Stock Exchange........
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Indian Railways defies reform
.......A decade ago, Rakesh Mohan, an eminent economist and former Deputy Governor, RBI, in an exhaustive report on Indian Railways, observed that the contours of policy, regulatory and management functions of the railways are fuzzy. He also said that Indian Railways is perhaps the most studied institution in this planet. Perhaps, now, it is time to ask some eminent political economists why Railways remains static, despite so many study reports.
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Nehruvian rate of growth
..... The Reserve Bank of India (RBI) is unlikely to set monetary policy based on this new inflation measure in the near future, given that the data series is yet to be tested for consistency, etc. Nonetheless, the inflation rate is high enough to warrant tempering of rate cut expectations.....
Read..........High security chamber mooted to keep temple treasures
.......... M V Nair, eminent conservationist and co-ordinator of the Supreme Court appointed committee, said the blueprint of the proposed chamber would be prepared by experts from the RBI...................
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RBI takes a leaf out of Chinese model to curb speculation
The recent steps taken by Reserve Bank of India (RBI), similar to the China model to curb property speculation don’t seem to have worked too well. Instead, genuine buyers have been feeling the brunt even if it’s for now……
Read............... RBI ups tenure of gold loans by 30 days to 270 days
The Reserve Bank of India said it has extended the maximum tenor for loans to import gold to 270 days from 240 days, effective immediately. The new maximum includes 90 days for manufacture and export of gold products, instead of 60 days previously, and 180 days to fix the price and for repayment, the RBI said.
ET
eMudhra, Watchdata team up to offer data validation tech for banks
...........eMudhra has set up an R&D team to develop online authentication techniques for Indian consumers, and has developed SWYS Key authentication techniques in conformation with standards prescribed by the Reserve Bank of India. According to a press release, eMudhra's system allows the user to validate the key data and further digitally sign the transaction to ensure that “what you see is what you sign” and have a safe transaction..........
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Monday, February 27, 2012
MLT passed away............
I regret to advise you of the sad demise of Shri.M.L.T.Fernandes, retired Executive Director. He was 77 years old and he passed away in Mumbai on Friday 24th February, 2012. He was affectionately known as TOM and was a very popular Executive of the Bank. Many in our Group would have worked with him. He was my C G M when I was Head of the U B D in Trivandrum.
May his soul rest in peace.
P.P.Ramachandran (via e-mail)
‘RBI outreach programme ensures inclusive growth'
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| Reserve Bank of India Chief General Manager V. Vasanthan speaking at the valediction of the RBI outreach programme at Elavanur village in Karur district on Saturday |
Karur : Reserve Bank of India (RBI) lays stress on inclusive growth wherein all stakeholders have access to proper banking services. Every citizen, especially those in the rural areas, must be a positive stakeholder in the process, said RBI Chief General Manager, V. Vasanthan. At the valediction of the RBI outreach programme conducted at Elavanur village in K. Paramathi union in the district on Saturday, Mr.Vasanthan said the RBI during its platinum jubilee celebrations a couple of years back decided to spread its message of existence directly to the masses, who already were getting the benefits of the banking system through other banks controlled by the RBI. Thus, the outreach programme came about and a total of 76 villages were chosen across the nation in which the RBI officials camped and spread banking awareness.Poverty eradication. Helping eradicate poverty and ushering in economic development through a proper understanding of the needs of the people and creating awareness of the schemes, credit facilities and efficacy of the banking services besides instilling in the people the need to save money for a bright future were the core areas of the programme, Mr.Vasanthan explained. Elavanur in Karur district, Mookaiyur in Ramanathapuram, A. Mathur in Pudukkottai, Thiruvalanthurai in Perambalur, and Manalmedu in Puducherry were chosen as the target villages to implement the programme. While the RBI has already completed its engagements in Elavanur, Mookaiyur and Manalmedu, at A. Mathur and Thiruvalanthurai, the programme has reached the conclusion stage, the senior RBI official indicated. Mr.Vasanthan spoke on the strength of savings and the power of money. Stating that banks provided the right avenue for safe saving, “We have to spread the message of the power of saved money to every household, especially in the rural places. Economic development involving every individual and making available banking services to the poor is the need of the hour and the RBI is precisely doing just that through the outreach programme.'' The RBI wanted to ensure that the fruits of the banking services and monetary policy reached every rural doorstep in time to usher in economic development, he said adding that banks had a pivotal role in ensuring that happened. Making available credit facilities was a priority, he outlined. RBI General Manager M.M. Majhi noted that the thrust of the outreach programme was ensuring success of initiatives such as the financial inclusion scheme and that in turn was to ensure that credit reached the needy. Opening of no frills account benefited all the downtrodden, he explained. Aravakurichi MLA K.C. Palanisamy, Karur Revenue Divisional Officer S. Shanthi, NABARD General Manager, Chennai, Vasudevan, Assistant General Manager A. Parthiban, Pallavan Grama Bank Chairman S. Rangarajan, Chief Regional Manager, Indian Overseas Bank, Dindigul Region, C. Anbu, Director IOB Rural Self Employment Training Institute, K. Chandrasekaran, Lead District Manager Murugesan, and Elavanur Panchayat president Gnanasekaran were present.
HBL
“Banks have to do a balancing act during debts recovery”
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| G.S.Hegde, Principal Legal Advisor to Reserve Bank of India speaking at a workshop on SARFAESI in Madurai on Saturday |
Two-day workshop on SARFAESI Act inaugurated
Banks have to do a great balancing act when it comes to the subject of debts recovery. They have to ensure that the bank recovers the debts and protects its liquidity and at the same time it should not put the borrower in embarrassing situation said, G.S.Hegde, Principal Legal Advisor to Reserve Bank of India. Delivering the inaugural address at the two-day workshop on SARFAESI Act (The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,), titled ‘Is SARFAESI a complete code for recovery,' here on Saturday, Mr. Hegde talked about the days of debts recovery prior to the days of Debts Recovery Tribunal Act and the transitions and also cited how the Delhi High Court had mentioned that the DRT Act as unconstitutional. SARFAESI Act allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery or reconstruction. Mr. Hegde mentioned that the banks should have only trained recovery agents and every bank shall have a grievance redressal forum with regard to debt recovery. He also spoke on how important it is to deal with humaneness and cited Justice A.R.Lakshmanan's observations in a case where he says how recovery agents have become modern day Shylocks in his words “A man's self-respect, stature in society are all immaterial to the agent who is only primed at recovery. This is the modernised version of Shylock's pound of flesh.” Speaking earlier, D. Stanley David, presiding officer, DRT, Madurai said that bank officers should not have a closed mind and drive out the borrower but have to help him at the maximum to see whether he could avail loan. A seminar book was released by N. P. Rajan, Deputy General Manager, Indian Bank, Madurai Zone and the first copy was received by K. Lakshmipathikumar, DGM, Canara Bank, Madurai circle. The workshop among others deals with topics on, What is fair valuation of secured interest, Priority of charges, Agricultural Land and The Companies Bill-2011. Pala Ramasamy, Advocate, L. Balaji, Valuer were the convenors of the workshop.
HBL
TAFCUB colsely monitoring affairs of Urban Co-OP Banks
A State-level Task Force on Co-operative Urban Banks (TAFCUB) working under the direct control of Reserve Bank of India (RBI) was closely monitoring the affairs of the Urban Co-operative Banks, said RBI Regional Director A S Rao here today. Participating as chief guest at the 37th branch opening function of the A P Mahesh Co-operative Urban Bank Limited, a leading Multi State Scheduled Bank at Champapet, near here, Mr Rao said the compliance of regulatory norms and working of Urban Co-operative Banks has improved. The Directors of Urban Banks have also to update their knowledge on the guidelines issued by the Regulatory Authorities for better monitoring the affairs, Mr Rao said and added the unbanked areas still exist in the state and the bank managements should throw light on it, he suggested.
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