The Standing Committee on Finance has urged the Government and Reserve Bank of India (RBI) to set up a special ‘NPA management cell’ to review write-offs and restructured advances. This cell – which should be set up at the highest level – should also monitor the pace of recovery of non-performing assets (NPAs), the Parliamentary panel said in a report tabled in the Lok Sabha...........
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Wednesday, April 24, 2013
Can't auction, don't ration either
...........But the idea of auctioning licences isn't appealing, and the governor of the Reserve Bank of India (RBI) rightly rejected the suggestion. We must understand that the key driver for opening up the sector to new players is to encourage new ideas, innovations and capital to enhance financial inclusion or the number of people that have access to banking services and financial products. Today, only a little over half the country's population is covered by existing banks and a much lower slice has access to most of the products, particularly credit and remittances. We have a dual banking need. On the one hand, we need big banks that can service large and growing Indian companies that are expanding globally; on the other, we need small, specialised banks with expertise to service domestic small and medium enterprises and rural requirements.............
Indiabulls Financial Services to bid for banking licence
....."We are in consultation with the RBI. If it will be a prolonged process of issuing a licence, we would change the name immediately. If not, there is no point in changing the name now and changing it again.".........
'Unlike in 1993, new banks will find it tougher now'
Read | Business Standard
'Govt, RBI steps resulted in improvement in NPA recovery
...........Besides, the government advised PSBs to take a number of new initiatives to increase the pace of recovery, to conduct special drives for recovery of loss assets, to put in place early warning system, to replace system of post dated cheques with Electronic Clearance System and to constitute a Board level Committee for monitoring of recovery, he added. "The steps taken by the government and RBI have resulted in year-on-year improvement in recovery of NPAs (non-performing assets) by PSBs," the Minister said..........
Rules relaxed for PSUs investing abroad
The Reserve Bank of India on Tuesday said Navratna Public Sector Undertakings — ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) — will be allowed to make overseas investments in the incorporated Joint Ventures/Wholly Owned Subsidiaries in the oil sector.....
High agri growth will help in arresting inflation: Industry
New Delhi: Indian industry Tuesday hoped that the projections given by the PM's economic advisory panel for farm sector growth will help in arresting inflation which would provide room to the RBI to cut interest rates. "We are particularly happy to note that agriculture is projected to grow above its trend rate in the current year, which augurs well for arresting inflationary expectations, providing necessary leg room for RBI to manoeuvre monetary policy in favour of growth"...........
Inflation vs inflation
...............The WPI and the new CPI have significantly diverged and, consequently, the debate between the pro- and anti-WPI viewpoints has not abated at all. With the RBI's recent and prospective interest rate cuts being very much in the spotlight, the softening in the WPI provides a rationale for these actions, while CPI inflation, still in double digits, cautions against them. The critical question is whether the divergence between the two indices is contributing to significant policy errors....................
Rangarajan says fisc’s done falling
.............. “Investment rate is estimated to be 35.8% of GDP in 2012-13. There has been a sharp decline in the productivity of capital as the incremental capital output ratio has shot up from its historical level of around 4 to much higher levels. It appears that investment capital accumulated in projects is not yielding commensurate output.”...............
Low inflation gives RBI more space to cut rates: Rangarajan
..........." Inflation at around 6 percent gives scope for rate cut," Rangarajan said. The central bank has been maintaining tight monetary policy for the last three years to contain inflation.However, he admitted that even at 6%, inflation was high and it needed to be reduced further. RBI Governor D Subbarao will announce the Monetary Policy Statement for 2013- 14 on May 3. Earlier this month, even Finance Minister P Chidambaram had favoured further interest rate cut by the Reserve Bank as headline inflation has softened................
The missing link in inflation theory
........For instance, to control inflation during economic expansion during 2005 lasting until 2007, RBI followed a contractionary monetary policy. The tighter credit policy of April 2007 was influential in reducing inflation rates from 6.7% to 3.5% within the next four months. But contractionary demand management policy may not be a good idea to control inflation especially when the cause of food price inflation is supply-side factors. What is required is the use of supply management policies like investment in suitable infrastructure, developing new technology to improve agricultural productivity and efficient supply chain management............
Assocham for quick action against rogue finance firms
Industry body Assocham on tuesday made a strong pitch for bringing the rogue finance companies to task for duping investors by promising abnormally high returns. "We want quick action to be taken against the rogue companies which are neither registered with SEBI nor having the RBI permission for collecting money from the public," Assocham National Vice-President Sunil Kanoria said.............
Chit fund scam: RBI, bank alerts in December ignored by WB govt
.............“We had informed the Reserve Bank of India (RBI) that we were not comfortable with the operations of the chit funds which offered above 40 per cent returns to the public, mainly in the rural areas. We have asked the state government to protect depositors’ interest,” said a banker who attended the SLBC meeting in December.............
Chit Funds or Cheating Schemes?
..... The Saradha incident also provides ammunition for policymakers to lean on the State governments to tweak their chit fund laws, to grant SEBI or RBI powers to seek information and inspect the books of chit funds. Financial institutions, as a class, are prone to the risk of ‘contagion’. Not only can the operational failure of an entity be transmitted to others, bad reputation too can fasten on just as well to other entities, to the detriment of the industry as a whole.............
More safety measures for funds transfer
....Once banks implement the measures that RBI has asked for, it could help curtail frauds. “A normal user will have a small list of beneficiaries, whereas a fraudster will typically try to add a number of beneficiaries to make subsequent tracking and recovery difficult. By capping both the number of beneficiaries and the amount, the extent of fraud can be limited,” ...........
Money laundering: HDFC Bk sings RBI's tune on systemic risk
........."While we had our own internal audit, we have ordered for a forensic investigation by consultancy firm Deloitte. At the same time, the regulator too is doing its own scrutiny. As of now, there is no transaction of this type (money laundering), which any of these audits receives. There is no systemic risk,".......
Predictably, the 30% bank does it again
.....HDFC Bank’s secret sauce for the metronomic consistency in profit growth is a tweaking of provisions. The bank maintains a “floating” provision on top of the regular loan-loss provision for specific bad assets. This buffer allows it to maintain net profit growth in its desired range. For the March quarter, the bank set aside a lower sum for bad loans. Despite that, its provision coverage ratio (for bad loans) is not much changed at 80%........
‘Pvt, foreign banks must say yes to education loans'
..... “Many times, directives of the RBI do not work. It is the inner appreciation and corporate philosophy that must include this. Hence, banks need to finance aggressively to educate people. Society attitude needs to change towards this.”........
SBI launches prepaid card with relaxed KYC norms
.....The card is an open loop prepaid card and will be available at all SBI branches. It can be used for cash withdrawal at any ATM of SBI and its associate banks free of cost and at other banks' ATMs for a fee. It can also be used at Point-of-sales (POS) terminals at merchant establishments, at any merchant site accepting VISA cards for e-commerce transactions. It can also be used as an add on card for existing account holders on VISA network. SBI already has 75,000 POS terminals and plans to double this number in a year..........
YES Bank launches Sustainability Series
......The Sustainability Series, conceptualized in association with UNEP FI (United Nations Environment Program Finance Initiative), GIZ (Gesellschaft fuer Internationale Zusammenarbeit GmbH) and RIRA (Responsible Investment Research Association), will aim to promote Sustainable Finance in India within the Financial Sector. The Sustainability Series was inaugurated by Reserve Bank of India (RBI) Deputy Governor Dr. K. C. Chakrabarty. While speaking at the inaugural function, Chakrabarty said, “Environmental viability is not independent from Financial Viability and one needs to innovate to find viability in Sustainability. Indian Banks play an important role and they need to approach sustainability not just from a reporting lens but in a holistic manner.”................
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