My View on "Indian Microfinance reputation still hurting from the Andhra Pradesh crisis"

The article is at best a reflection of what has happened. First of all Andhra Pradesh is not part of Central India but of South India. Be that apart, the author started with 82% high indebtedness of farming sector but failed to relate the micro finance to the farm sector because microfinance did not reach the farm sector in reducing or enhancing that debt burden. Interest burden reaching usurious levels in the name of easy access axed affordability on one hand and extortion practices on the other. In fact, Banks like ICICI, Citi etc also resorted to worse extortionary practices prior to the AP stepping into the shoes of regulator. What one should realise is that in the case of AP the player has become a regulator creating conflicting interest up front. This was preserved by the RBI's acceptance of Malegam Committee recommendations and accentuated by categorising MFI lendings under the priority sector category. The MFIs are either NBFCs or Companies registered under the Companies Act and therefore they are actually corporate borrowers. Therefore, whatever due diligence is to be done by Banks in lending to the corporates should have been done by them. Instead in their anxiety to achieve priority sector lending through arm chair lending with this window of micro finance opportunity available they went in for competitive populistic lending. This has set the micro finance sector to go for a toss. 

- Yerram Raju

India studying all options to fund current account gap: Rajan

........Rajan called for a clear distinction between the need to steady the rupee and the way forward for the Reserve Bank of India's monetary policy, in an interview to television channel CNBC-TV18....................

Read | Business Standard

Circular reasoning

I was having tea with Reserve Bank of India Governor D Subbarao a couple of weeks ago and one of the points, among many, he made was that it was getting treacherous for him to comment even on what he had for breakfast. The media and know-it-all analysts, like me, dissect even such innocent comments to fathom his thoughts on (these days) the rupee.............

Read | Business Standard

The ball is in RBI’s court - S.S.Tarapore

........In the ensuing few months, political economy constraints would prevent the Government from taking strong rectification measures. Hence, the Government should give the RBI a free hand to crush inflation with unequivocal monetary tightening. The Government must recognise that when there are political economy constraints, it is only monetary policy which can hold up the rear.

Read - HBL

Constrained by the impossible trinity

.......As to independent monetary policy, the recent focus on stabilizing the currency and more generally on mitigating external vulnerability has diluted the debate on using interest rates (and liquidity) to primarily address the growth-inflation trade-off. This shift, seemingly endorses the view that it might be necessary to sacrifice some more growth (over what might be required to control inflationary expectations) in the interest of stabilizing the rupee..........

Read - Mint

If something attached to the past is not very savory then don't be surprised: Takru

Banking aspirants with an inglorious past are unlikely to get a licence from the Reserve Bank of India for a foray into the sector. Past business record will be factored in for banking aspirants as scrutiny will be strict, financial services secretary Rajiv Takru told Business Standard. Internal scrutiny of RBI is underway and the next phase of external scrutiny is expected to begin soon. The statement from Takru comes at a time when the scrutiny is underway and this can give a major jolt to some of the aspirants who have applied for a licence...........

Read | Business Standard

Pratip Chaudhuri ko gussa kyoon aata hai?

Incidentally, both Subbarao and Chaudhuri are set to leave their respective offices in September

.......Chaudhuri’s latest outburst against RBI also stems from his concerns about liquidity. He has said RBI should have hiked the interest rates to raise money market rates instead of tightening liquidity. By tightening liquidity, RBI has been non-transparent in its approach. Globally, central banks only raise interest rates if they want to jack up money market rates. He said this as SBI chairman and not on behalf of the banker’s lobby—the Indian Banks’ Association—of which he is the honorary secretary. RBI has many tools it can use to raise rates and the kind of transparency that Chaudhuri expects may not necessarily be a virtue for any central bank. I wonder why Chaudhuri gets so upset with RBI measures and why he is so openly critical of them. Should a commercial banker be so open about criticizing RBI? What will happen if all other bankers take a leaf out of Chauduri’s book and start screaming from the rooftops?.............

Read - Mint

Rajan defends apex bank’s move to manage Re volatility

......Significantly, the chief economic adviser's comments come a day after State Bank of India chairman Pratip Chaudhuri had said the RBI should not choke liquidity but consider more transparent measures such as hiking interest rates in order to stabilise the domestic currency.............

Read - IE

Banks are hoping the RBI measures are temporary: Rajiv Takru

......One thing is clear. Banks will be able to lend only after taking into account the cost of finance. Every bank has to follow its own path. Some banks are lending banks, some are borrowing banks. That depends on their balance sheet position. Obviously this measure of RBI will tighten liquidity and to that extent make it a little more constrictive as far as the functioning of the financial institutions is concerned. It reduces the scope for banks to exercise too much discretion. The general impression I am getting from public sector banks, and we are not leaning on them at all in this matter... almost everybody thinks this is a temporary measure.............

Read - Mint

Monetary Problem, Real Solutions

The Reserve Bank of India (RBI) is trying to prop up a battered rupee by curtailing the funds that banks can lend one another. The chairman of India’s largest bank, the State Bank of India, Pratip Chaudhuri, feels this is a roundabout way to choke liquidity: the RBI, he says, could simply have hiked the repo rate, at which the central bank lends to banks. He is correct................

Read - ET

RBI’s solution for every problem

...................In order to be successful in managing current account by attracting foreign inflows when the industrial sector is far from buoyant and capital markets are faltering, it requires high degree of dexterity in managing growth and risk perception of investors. Will RBI’s recent move coupled with the announcements to be made in the monetary policy strengthen foreign investors’ confidence in the economy is a key question.........

Read - Mint

Manmohan Singh's 1991 Rupee brahma astra may boomerang to a junk rating

.....Manmohan Singh as a finance minister in the PV Narasimha Rao Cabinet depreciated the rupee by a quarter and set the stage for an economic recovery after a balance of payments crisis in 1991. But as the head of the state, he could hardly afford that now. Government policies and finances are caught in such a web that his brahma astra of 1991 may probably boomerang this time with a sovereign downgrade to junk...............

Read - ET

Small, medium diamantaires hope to get bank finance soon

......A state-level banking committee meeting was organised in the city in the presence of the leaders of diamond industry and the office-bearers of the Surat Diamond Association (SDA) to discuss the ways and means to increase credit flow in the small and medium enterprise (SME) sector in the diamond city on Wednesday...............

Read - TOI

Inmacs’ banking drive shows a rural tint

Mumbai: Inmacs Management Services, the little-known banking aspirant, seems to be laying its groundwork for banking pretty seriously. In its application to the Reserve Bank of India (RBI) earlier this month, the consultancy firm has proposed to open half of the proposed Arihant Bank’s branches in rural areas, a senior company official told dna. A surprise entry, this Gurgaon-based company, headed by chartered account Vinod Jain, is up against the likes of the Tatas, the Birlas and the Ambanis, and there are 26 aspirants jostling for this once-a-decade lottery............

Read - DNA

An enhanced banking experience for techies

A branch-less and staff-less technology-based Self Service Centre has come up at the Technopark here to provide techies round-the-clock access to banking without stepping out of the premises. Set up by Federal Bank, the modern hi-tech centre has been set up on a 200 sq ft area at the entry lobby of the Thejaswini building at the Technopark. With the new initiative, the techies can access all technology-enabled services of the bank without the physical presence of any staff. The centre, the first of its kind in the State, has become an instant hit, with the bank receiving 650 new accounts on the first day itself,..........

Read - The Hindu

Treading up Himalayas to avail of bank facility

People in Himachal Pradesh still have to trudge around five km in rugged, cold and inhospitable Himalayan terrain before they can avail of banking facility. This fact came to light in a charter of demands submitted by Mandi MP Pratibha Singh to union Minister of State for Finance Namo Narain Meena in New Delhi............

Read...........

Check your ‘26AS’ before filing tax returns this year!

Many taxpayers are receiving income tax notices asking them to pay tax in spite of the same being already paid, so please check your 26AS now and set your tax figures right before you file your tax returns..................

Read - DNA

RBI's gold imports restrictions: Back to 'Once upon a time in Mumbai

..............Within a month of introducing curbs, RBI withdrew the circular banning consignment imports for domestic use and 100% cash margin.These measures were considered too harsh which led to a sharp drop in imports.Gold imports fell by 80% of their May imports after imposition of these measures. After virtually crippling the industry, government has removed these norms but introduced new ones.Though not as bad as the earlier one, new norms will create a new set of problem both for the industry and government. ............

Read | Business Standard

Click & Save: Using Net Banking can Help You Avoid Many Fees

............When you can make payments within minutes through the net banking channel; spending time, effort and additional money to get a DD issued just does not make sense. Similarly, online fund transfer can also help you save on cheque leaves. Most banks levy a charge for issuing additional cheque books.................

Read - ET

Financial Inclusion: A Must For Equitable Growth - K C Chakrabarty

...........Sustainable high growth sans financial inclusion is next to impossible. Equally important is productivity and efficiency where financial sector intermediation is essential in order to bring all sections of society under the financial inclusion net.................

Read - Inclusion / April -June 2013 / Vol IV / Issue 2