......Forget microfinance companies, even compared to
government-owned banks, the postal bank’s cost structure, if it assigns
some banking duties to postmen, will be lower. India Post wants the
government to sanction around . 1,300 crore for capital adequacy and to
hire more people. It should get the money. The RBI wants new banks to be
set up through
a wholly-owned non-operative financial holding company. So, the postal
bank will need to be corporatised. It should run on sound commercial
principles and at arm’s length from political masters..............
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, July 16, 2013
IndiaPost banking on a good idea
India Post planning to set up a bank is good news ( July 15). The postal department has ready made infrastructure, and the staff made redundant by closing of telegram services can be utilised for the proposed bank. The big post offices can very well convert a part of the space into a bank, with ATM services. At present, one can open a savings bank account in a post office, and a section of the staff is well- versed with this aspect of banking operations. India Post banks will be an instant hit, with the public. It will give good competition to nationalised banks as well as private banks.
- Deendayal M. Lulla (FPJ)
My View on "India Post: Private sector bank?".........
I am not sure whether this Government owned private sector bank would not lead to regulatory capture. There may be examples of the past countering such thinking. But the future cannot be judged by the past particularly in the context of encroachment into the autonomy of the central bank lately in the context of Financial super regulatory authority in the hands of the Ministry of Finance. Coming to India Post Bank, is there a likelihood of these behaving differently from PACS under the fold of DCCBs? Why should not the Government think of strengthening the PACS through technology and take on to systemic linkage with the secured Payments and Settlements system? Investments are huge but they are worthwhile at the moment and they can be brought into the supervisory and regulatory regime of the RBI back from the fold of NABARD to ensure financial stability.
- Yerram Raju
Some Surprise Contenders for RBI Governor
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The next Governor of the Reserve Bank of India will likely be the man who currently holds the job.............
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There’s a growing chance that Duvvuri Subbarao will stay on in his position for a while after his tenure expires on Sept. 4. Mr. Subbarao may get an extension of around a year, to ensure continuity and stability in monetary policy at a time when the economy is going through a rough patch and federal elections are around the corner, according to four....
Specialists wanted
............Sadly, one has seen a trust gap between Mint Road and North Block recently. This gap must be filled. However, to attain this objective the government must not compromise on the experience and, more importantly, the expertise of their preferred choice.
No target in mind on number of bank licences: RBI
...........“Post independence, we had a resolution to give attention to poverty alleviation. Our economic planning had poverty alleviation as a key plank...Still, these 40 odd years, efforts have not made serious dent. This indicates the enormous challenges that lie ahead for us in achieving financial inclusion,” he said. He also said that several new ideas and innovative approaches were required to achieve this goal. RBI Governor D. Subbarao was originally supposed to address the gathering at a central Mumbai college today, but Gandhi had to step-in as a last minute arrangement as the Governor rushed to New Delhi. He was also not able to make it to another engagement at a college in the city...........
RBI reiterates banks should use telemarketers registered under TRAI guidelines
...............It has come to the notice of RBI that many banks, financial institutions as also their franchisees are engaging telemarketers who are not registered with TRAI, for marketing their services and these unregistered telemarketers use their normal telephone connections for making commercial calls to customers registered in the National Customer Preference Register. This is resulting in a lot of customer grievance. ...........
RBI slaps fine on 22 banks for violating KYC/anti-money laundering norms
MUMBAI, JULY 15:
The Reserve Bank of India (RBI) has penalised 22 banks, including the country’s largest bank State Bank of India for violation of its instructions, among other things, on Know Your Customer (KYC)/Anti Money Laundering (AML) norms............
Here's how banks violated RBI norms on KYC
......It is noteworthy that Cobrapost.com, an online investigative magazine had carried out a series of sting operations on Indian banks. It had alleged of wide-spread infringement of KYC and ALM norms. Based on those allegations, the central bank formed an investigation committee and carried out a scrutiny among alleged lenders. Outcomes of the investigation actually prompted the RBI to act with (monetary) punishment measures.........
Banks face regulatory music
......Whether those, or for that matter even the higher order of penalties (the fines) will be a sufficient deterrent remains to be seen. The RBI would do well to release at least a synopsis of its findings in each individual case. As much as bankers, the general public ought to know what is happening in so many banks which truly represent all categories. It is evident that the breach of rules and regulations has been widespread, and no single category has been blamed entirely. Even at a preliminary level that implies the RBI’s even-handedness although some banks at the receiving end may not think so...........
FM Teaches Bank CMDs to Subvert RBI Rules
In the first news item, our Finance Minister, Mr Chidambaram asked banks in India to reduce their Base Rate. On the face of it, the news appeared to be a routine type as on number of earlier occasions too FM has cajoled banks to reduce their lending rates. However, this time FM asked for reduction in Base Rate (not lending rate). I was shocked as to me it appeared to be encouraging bank CMDs to flout the norms of RBI on base rate. I still remember that in 2010 when Base Rate was introduced by RBI, one of the major reasons for replacing the old BPLR was the fact that BPLR was not a transparent rate. Thus while introducing Base Rate, RBI laid down certain norms which banks have to follow on consistent basis so as to arrive at the Base Rate. Thus, as per RBI guidelines, Banks are required to follow strictly the norms laid down by each bank on consistent basis..........
Read.........
Read.........
KYC norms violation: How 22 banks actually goofed up
.........In short, though on the face of it, banks did not violate anti money laundering norms, they were slack as for a KYC as well as other important norms goes. The truth is, a penalty of as much as Rs 3 crores is not a big deal for banks. The real question is why are banks unable to meet even basic norms like the customer identification process?
Banking after the sting
........The regulation of WMS has been sparse and vests with different agencies like the RBI, SEBI and the Insurance Regulatory and Development Authority. The need to bring decades-old regulatory rules up to date has been felt not just because of the tremendous growth in the volume and range of businesses that go under the broad category of WMS but also because as many as 25 banks, three prominent private banks earlier and very recently 22 banks, both public and private, were found guilty of stretching even these minimal rules and slapped with stiff fines............
Read - The Hindu
Bank CMDs & EDs Encourage Flouting of KYC Norms - RBI Sleeps
.........Who will bear the cost of such penalties. It is the poor public i.e. shareholders of these banks, as payment of such penalties will reduce profits and / or dividends. It is not going out of pockets of any CMD or Board Directors. In any other part of the world, strict action would have been taken against top brass too and Bank Boards would have been made accountable for such lapses. Basel too has such provisions for holding Board responsible for risk management. This episode has already dented the reputation of these banks. Can RBI spell who should be accountable if there is increased risk of reputation due to acts and omissions of bank officers at such a large scale?.............
The curious case of RBI’s guidelines
If you go to a doctor with a complaint, then you would expect that the treatment recommended reflects the diagnosis of the disease. If the doctor remains silent and starts treatment, even then you can figure out what is going on. A cast on your leg would imply a broken limb and not a viral fever. That’s a reasonable deduction. If one applies this principle to the Reserve Bank of India’s recent draft guidelines on wealth management services offered by banks, the deduction is nothing short of a puzzle..........
Becoming a bank is a natural progression for us: Sanjay Chamria
........We have strong presence in the rural and semi-rural markets, which are un-banked and under-banked to a great extent. Having an established network and business model, I don’t see our primary focus of serving the economically disenfranchised will change. Our existing pan-India deep presence along with our experience of serving the under-served is a major positive for us........
Need to wait and watch if decline in gold imports is sustainable: Subir Gokarn
...........This looks quite impressive and if it sustains, it will have a very significant impact on both the current account deficit and consequently the pressure on the rupee as we go forward. But we have got to wait and watch whether this is a sustainable decline. Obviously, there is some impact of both the fiscal measures and the potential measures, the restrictions of financing of imports and so on which will make a difference. One month's data is not enough to make a judgement..............
Stagflation - A.Seshan
The immediate solution to the problem of low growth and high inflation lies in short-term measures (“Stagflation ahoy,” Business Line, July 14). The emphasis, inter alia, on accelerating investment as an engine of economic growth is well founded in economic theory and practice. There are two points that need to be noted. Net, and not just gross, investment has to increase to raise the growth rate. The Twelfth Plan revealed the document referring to gross capital formation. Thus, the one-trillion dollar worth of infrastructure investment is a gross figure. We do not know how much it provides for the depreciation of the capacity of the existing assets. Second, most of the big-ticket projects will take time to yield results. In the meantime, money would have flowed into the economy with the inevitable consequence of inflation. What is needed is to make the best use of the favourable monsoon by launching an intensive agricultural programme with larger use of high-yielding seeds and fertilisers. A recent experiment by the Maharashtra Government in Mumbai to get vegetables from the wholesale markets and supply them to the public through cooperatives eliminating the middlemen was a resounding success. The consequent price reduction at the consumer level was around 50 per cent in many cases. It needs to be replicated on a wider scale throughout the country. The strong argument in its favour is that it will not involve any price subsidy except for the administrative expenditure. It will provide the needed shock to the inertial equilibrium of current inflation.
- A. Seshan, Mumbai (HBL)
- A. Seshan, Mumbai (HBL)
Grim news on all fronts for Indian economy - Charan Singh
............The RBI would unnecessarily be sinking the country’s hard-earned foreign exchange reserves to stabilize the rupee at a level where it does not belong. Further, the import cover of foreign exchange reserves is already low and should be preserved especially when short-term external debt is high. While the RBI is attempting to contain ‘so-called’ volatility in exchange rates, the correction was long overdue and should be allowed to carry through, at least now, though it is a late adjustment of yesteryears.............
A healthy financial system will strengthen the economy too - Dr.T.V.GOPALAKRISHNAN
............The need of the hour is to strengthen the economy with a strong financial system. The blame game between the RBI and the Government for the failure of the economy to perform should end and, instead, they should work together to turn the economy into a fast performing one keeping the financial system stable, strong and healthy..................
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