Banks told to work out policy on lending against gold

The Finance Ministry has asked all public sector banks (PSBs) to come up with a policy for lending against the security of gold. This move comes in the wake of the RBI tightening the noose around gold loan companies............

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South Korea's Woori Bank sets up its first branch in India

South Korea-based Woori Bank, a part of the Woori Financial Group, has launched its first branch in India, at Chennai, to provide assistance to Korean companies in the country in corporate banking and to serve local clients. The Chennai branch would be the head office of Woori Bank in India. The bank, which is the second largest commercial bank in South Korea with its focus on corporate banking, has received in-principle approval from the Reserve Bank of India in June, 2011, to set up its branch in India. It has already infused around $35 million in India, said a senior executive from Woori Bank.……..

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Why VITALINFO went missing..........

My father-in-law passed away on 18th evening. I wish to regret that VITALINFO could not be published for two days, i.e. on 19th and 20th April 2012.  I received several calls, SMSs, e-mails from many of you expressing the sentiments for missing VITALINFO.  I thank all of you for all the support, guidance and interest shown by you in VITALINFO.  I assure that the VITALINFO will be back from tomorrow, i.e. 21st April 2012.

Thanks n regards 

Subbarao pleases all, including RBI

Reserve Bank of India governor D Subbarao (centre) along with (left to right) Deputy Governors H.R. Khan, K.C. Chakrabarty, Anand Sinha and Subir Gokarn before the announcement of the monerary policy

The higher than expected 50 basis points rate cut has pleased all concerned including the RBI. The government is happy as it believes a rate cut will help push up growth, markets are happy as the rate cut was higher than expected and the RBI is happy as it does not have to act in haste in the next few policy reviews................

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‘RBI should continue to manage public debt'

....The learning from the recent global crisis is that those systems where central bank manages government debt are more effective. When fiscal deficit is as high as it is in India, it is not only about debt management in the conventional sense. It has larger implications for liquidity management and monetary policy transmission. The balance of advantage would lie in the RBI continuing to manage public debt until fiscal deficit comes down to very comfortable levels.......

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Reserve Bank of India brokers thrive 'short-changing'

HYDERABAD: Right outside the highly secured Reserve Bank of India (RBI) office at Saifabad, an illegal business activity has been thriving involving hundreds of unemployed men and women - who have taken up the role of unofficial currency vendors. Charging anywhere between 2% and 10% to exchange higher denomination notes with lower denomination ones, these brokers have monopolized the bank role dispensing change. If there were a handful of such brokers working discreetly about five years ago, it has now become a full-fledged open trading centre with more than 200 vendors jostling for space outside the bank at any given time. Each day, this bunch of brokers exchange an estimated Rs 10 lakh and sometimes even more…………………….

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RBI bats for retail depositors, gets tough on bank NPAs

………. “The main point of the RBI was that deposit rates given to customers must be non-discriminatory, transparent and contestable. This is not micro-management; banks can calibrate deposit rates as they want, whenever they want, but all we were asking for is that they should be non-discriminatory, transparent and contestable.”…………..

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Financial inclusion must be qualitative, not quantitative

The message is loud and clear from the Reserve Bank of India (RBI). While bringing more villages within the realm of financial services remains the focus, steps must be taken to improve service quality and increase the number and value of transactions in these areas, the banking regulator said. “Going forward, the focus will be more on the number and value of transactions in no-frills accounts and credit disbursed through information and communication technology-based business correspondent outlets. For this purpose, banks have been advised that financial inclusion plans prepared by their head offices are disaggregated at respective controlling offices and further at branch levels," RBI said in its monetary policy statement for 2012-13, released here on Tuesday............... 

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Final norms on implementation of Basel III by April-end: RBI

Mumbai: The Reserve Bank on Tuesday said it will come out with the final guidelines on implementation of new global risk mechanism, Basel III capital regulations by end of the month……….

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Positive approach to NBFCs needed

....The RBI has promised draft guidelines on a new regulatory framework for non-banking finance companies (NBFCs) by end-June 2012. The NBFCs serve the demand for finance that banks shun. It is common knowledge that banks in India leave a lot on the table. India tops the charts in financial exclusion. The RBI is seen coercing the banks on financial inclusion in the same policy statement. Coercion rarely leads to sustainable development. But sustainable NBFCs can be a powerful vehicle of finance that should be supported by a positive regulatory framework.....

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RBI tightens norms for gold finance

...The Working Group, headed by K U B Rao (a senior RBI official), will conduct a detailed study of the issues connected with rising gold import and loans. The group will submit its report by July-end.
Among other things, it will examine the current practices of NBFCs involved in lending against gold and also whether it is influencing price of precious metal.......

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Gold loan curbs are because of risk concentration: RBI

……..RBI Deputy Governor Anand Sinha said the gold loan NBFCs had expanded in a very rapid manner and that led to underlying risks. “The predominant business for these companies is gold and they are relying on just one product. So there is a lot of concentration risk. What we have tried to do is to bring about some stability through our measures and also take care of customer issues. That is why the fair practice code has also been strengthend.” Sinha said there was no concern on banks’ direct lending against gold because banks were very diversified.………….

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RBI asks banks not to levy pre-payment charges on home loans

Providing relief to home loan borrowers, the Reserve Bank of India (RBI) on Tuesday asked banks not to levy any penalty on pre-payment of loans taken on floating rate. "Though many banks have, in the recent past, voluntarily abolished the pre-payment penalties on their floating rate home loans, there is a need for ensuring uniformity across the banking system in this regard," RBI said in the annual monetary policy announcement for 2012-13.....

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'Monetary policy is a sentiment booster’

The RBI’s monetary policy for 2012-13 is a sentiment booster, according to an economist. Terming it as a positive surprise, Dr Biswa Swarup Misra, Associate Professor, Xavier Institute of Management, Bhubaneswar, told Business Line that before the policy, the expectations were that it will be a 25 basis points cut or the rates will be kept unchanged. “Now, the RBI has gone for a 50 basis points repo rate cut. If not anything, it will act as a sentiment booster,” he said...........

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‘If Calculations Go Wrong, Remedies will be Different’

RBI Governor Subbarao chats up with ET on rate cut, inflation, current account deficit, customer service and more

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A risky wager

......Central bankers as a breed are not exactly known for their gambling instincts, driven as they are by cold economic numbers in their decision-making. Yet, Reserve Bank of India Governor D. Subbarao has gambled big in deciding to drop policy rates by a larger-than-expected 0.50 percentage points in his Annual Monetary Policy Statement announced Tuesday.........

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RBI's rate cut to arrest worsening asset quality of banks

.....In a bankers' meeting in Mumbai on Tuesday, the RBI Governor said the banks' asset quality continues to be under pressure and they are keeping strict vigil. In February, the two deputy governors - CK Chakrabarty and Anand Sinha - also met close to a dozen bank chairmen to assess the NPA situation. "The banks told us they are more sensitive to the need to manage NPAs than in the past," Subbarao said on Tuesday........

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RBI's repo rate cut after three years is just a token

........ "The reduction in the repo rate is based on an assessment of growth having slowed below its post-crisis trend rate which, in turn, is contributing to a moderation in core inflation," RBI said in its annual monetary policy statement. "These considerations inherently limit the space for further reduction in policy rates," RBI added...........

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Credit policy: Are Government, RBI on the same page?

……..However, Governor D Subbarao's policy statement reads more like a warning letter to the government than an effort to stimulate growth. He is clearly not convinced that the government would deliver on promises that it has made on fiscal consolidation or even on supply-side infrastructure that could help curb inflation……..

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Loans to get cheaper as RBI cuts repo rate ‎

The Reserve Bank of India cut repo rates by 0.50 per cent to 8.0 per cent. Repo rate is the rate at which banks borrow money from RBI. This is a reference rate used by banks to lend to their customers like companies and individuals