Pensioners Meet at CAB Pune

.......While welcoming the retirees O-in-C Shri Panigrahi mentioned that such meetings are opportunity to the administration of the College to interact with the senior retired colleagues and to invitee suggestions from them for improving the customers’ service. A lecture cum presentation from Dr. H.S.Deshmukh a renowned Uro-surgeon was also arranged .........

Read - ReTyred Express

Short term problems are easier to solve - Letter to Governor by P.R.R.Nayar

....That age is one of the decisive determinants for monetary relief – need for financial security increasing with each passing day – is clear from the Government’s benign treatment of its “very senior" pensioners.  A similar approach is both logical and possible in the RBI too even as things stand..........

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SCORING WITH CRICKET

What do bankers turn to if they have to make a succinct point? Cricket. RBI Governor Raghuram Rajan said the diverse analyst assessments of the Indian economy are akin to the oft-shifting stance of the fans towards the cricket team. Indian cricket fans are manic-depressive, he said in Boston. They elevate players to god-like status when the team performs well, ignoring weaknesses; but when it loses... every weakness is dissected. Last week, Bank of Baroda chairperson SS Mundra, commenting on its Q2 performance, said the bank had tried to play with a straight bat on a bouncy wicket, as he tried to explain the difficult market conditions. 
ET

Wrong signals

My View on  "Top 30 NPAs form one-third of total bad loans": 

The following issues need study in a wider context:

i) To the FM’s embarassment, October review revealed that one-third of all NPAs of PSBs were contributed by top 30 NPA accounts in each bank. There is still no indication that any action is under way, beyond 'monitoring'.

ii) While much ado is there about base rates, deregulation of savings bank interest rates did not add to the interest income of real SB account holders.

iii) The Net Interest Margins enjoyed by banks in India are among the highest in the world.

iv) The theory that ‘interest cost is not the major ingredient in project cost’ is interpreted to mean that small borrowers can afford to pay higher rates of interest.

v) Big depositors get preferential rates of interest and big borrowers get attractive terms for borrowing including special attention when their loans become NPAs.

vi) The impact of changes in base rates on ground level interest rates(both deposit and credit) administered by banks during the last 3 years needs a closer examination.

vii) The finance ministry’s recent linking of interest rates on festival season consumption loans to release of additional share capital to PSBs (Secretary Rajiv Takru made an open statement on the issue during 3rd week of October) has sent wrong signals to stakeholders in the banking sector. 

- M G Warrier, Mumbai

FAIR-WEATHER FRIENDS

When Duvvuri Subbarao described foreign banks as “fair-weather friends”, it was not clear what was the trigger. Nearly two years later, his successor Raghuram Rajan has provided the answer. During the peak of the credit crisis, the CEO of a foreign bank from New York called up its India head to transfer all funds to headquarters. Thankfully, when the local head consulted the RBI, he was told not to do so. They may just remain fair-weather friends. 
ET

Countdown begins for new bank licenses

........ However, we are to recall that, the Raghuram Rajan Committee, in 2008 pointed out that "the Indian banking sector is fragmented and there are too many small uncompetitive players in the system". This thought will take us to look at the prospect of RBI giving "conditional" licenses in 2014 to some of the applicants; in fact, we feel that this may be done in a phased manner! We do not know what the applicants have stated in their "Mission Statement"! It is possible that there may be some who may have proposed, (or indicated) their plans to take over or buy out some of the smaller banks in existence; or even have had 'secret' talks for mergers! Who knows, there may be someone, who wants to buy out the several cooperative banks in the country, who are scattered all over the place!.........

Read - Moneylife

Banks set up 24x7 self-service branches

............Customers can do real-time cash deposits, withdraw money, deposit cheques and get instant receipts, transfer funds, open fixed deposits and generate bank statements at these branches. These also offer account-related information through internet banking and video conference............

Read | Business Standard

Banking reforms

......Other weak sectors are non-banking financial companies and co-operative banks. Rajan will need strong political support to bring about the reforms that he wants to. Alongside, we require strong commercial banks to compete with multinational banks for which the amalgamation of PSBs is necessary......

Read - FE

Indian Banks Better than Foreign Peers on Basel

............Though RBI is yet to provide any guidelines for liquidity risk management, the guidelines as per the Basel document require banks to maintain greater liquidity and improve their ability to withstand liquidity stress. We believe that Indian banks are positioned fairly well to adapt to the new liquidity requirements, when they become applicable, given that the banks maintain an aggregate CRR and SLR level of around 30% of their deposit base..........

Read - ET

RBI and FII debt

The RBI top brass has been quite curious about why FIIs are still not buying Indian government debt despite yield difference. Some of those who met RBI in pre-policy meetings said the answer lies in the governor's CPI leaning. If CPI is going to be the yardstick for interest rates, then the central bank may not be done with rate hikes as yet. Investors would rather wait than invest knowing capital loss is for sure.

ET

Experts doubt CPI-based Inflation Indexed National Savings Certificates success amid surging prices

.........“RBI Governor Raghuram Rajan has mentioned the need for a product that offers a real rate of return several times. He believes that such a product  will divert investments from gold as a medium of saving. If IINSCs don’t succeed, there will be others that will follow suit,”...........

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Every anna counts

......One day, my uncle proudly displayed his ‘anna’ collection to his father’s friend. But when the friend broke the news that all those coins were worthless, my uncle was shattered; he began crying piteously. All the money he had saved by virtually starving became junk. When I see images on television of wailing people who have lost money at the hands of unscrupulous operators, I am reminded of my broken-hearted uncle, and of the need to exercise care with money..........

Read - HBL

Are cryptocurrencies the way of the future?

.....India is a potential hotspot for growth of cryptocurrencies and the community. It seems the cryptocurrencies user community in India has quite a strong base, exceeding 50K in number. But the regulatory body such as RBI seems far from regulating or accepting it. However, this has given an opportunity for the cryptocurrency community in India to expand, develop cryptocurrencies-related businesses in the space, and educate people on the opportunities for economic growth associated with cryptocurrencies.......

Read - The Hindu

NGO demands review of SKDRDP

.........Mr. Nayak said the SKDRDP received a sum of Rs. 2,600 crore at an interest rate of 8.5 per cent from NABARD (National Bank for Agricultural and Rural Development) and other banks while lending the same to self-help groups at a higher rate of 16 per cent. Money charged in excess of 12 per cent interest charged by nationalised banks should be returned the beneficiaries, he said. Dharmadhikari of Sri Kshetra Dharmasthala Veerendra Heggade recently defended the 16 per cent interest. Mr. Heggade said the SKDRDP has been permitted by the Reserve Bank of India to charge interest at 24 per cent........

Read - The Hindu

How pilgrims, and banks, progressed

.........What the Knights Templar got right was creating a monetary authority that people could trust. Essentially, this is what a central bank in a country, like the Reserve Bank of India (RBI), also does. But these days, besides just backing a currency and acting as the government’s official banker, central banks also control the total amount of money that is in circulation in a country. One such target is controlling inflation. One way to easily increase money supply is by just printing new currency notes. But printing notes at will is a risky business and too much too soon can suddenly spike the inflation rate. So central banks choose to control the interest rate instead..........

Read - The Hindu

Taxability of expatriate benefits: Some key issues

...........The ruling upheld that the tax paid by the employer on behalf of the employee constitutes a non-monetary perquisite in the hands of the employee, making it eligible for exemption under Section 10(10CC) of Indian Income Tax Act. As a result, the employer can pay tax on behalf of the employee on non-monetary perquisites with a single gross up instead of multiple gross up. The court further clarified that tax paid by the employer is also excluded from the definition of salary for the purpose of valuing accommodation benefit provided by the employer to the employee...........

Read - FE

Using Mobile Banking for New Microfinance Business Models

........BanKO is starting to blur the lines between microfinance and mobile banking. It is still very early days in our own business and for similar business models in general. But we have already begun to see good results from our work and we have learned a lot along the way. Exciting innovation can happen when elements of these two worlds begin to merge.

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Educated persons found lacking financial literacy, often!

............While there are various other aspects of financial literacy, it is important to equip oneself with bare minimum skills and knowledge necessary to become financially literate. Many investors end up losing their hard-earned wealth in the absence of financial literacy, so it is better that one equips oneself with financial literacy.

Read - Moneylife

Commercial paper issuances set to get boost as short-term rates ease

Issuances of Commercial Papers (CP) are set to get a get a boost as the Reserve Bank of India (RBI) has eased the system liquidity further due to which short-term rates are trading between the repo rate and the Marginal Standing Facility (MSF) rate. As per estimates of issue arrangers, CP coupon rates dropped by about 20 basis points since RBI's second quarter review of monetary policy on October 29.........

Read | Business Standard

REAL ESTATE SECTOR AGHAST OVER RBI’S HIKE IN REPO RATE

..........." Considering the overall economic situation and challenges being faced by the industry, we were looking forward to the reduction in repo rates, to ease the burden on the buyers and developers. The continuation of the policy to increase in repo rates in the monetary policy, to control the inflation, will further increase the problems of the developers who are grappling with high interest rates. We were hopeful that besides easing the liquidity, RBI will start addressing the industry concerns for growth and give the necessary impetus.” ...

Read - FPJ