RBI has collective wisdom

My View on "Raghuram Rajan’s tandava spells death for economy": 

Growth and Inflation targeting are not incoherent but mutually reinforcing goals, although the basic parameter by which we measure growth - namely, the GDP - has serious limitations at this point of economic history more than ever. The policy rejig would depend on which Government comes to power and which policy direction they would take. RBI shall exercise its autonomy but only with the full support of the Government. It has become wont with some analysts to take on persons instead of institutions as in an institution like the RBI there is collective wisdom that unleashes the policies. It should however be admitted that over the years hypocrisy has taken precedence over transparency. Most institutions fail even to acknowledge responsible correspondence with several personal assistants ornating their administrative chambers. It is a cultural issue more than economic issue. 

- Dr.Yerram Raju

Which comes first - Egg or hen?

My View on "Fraudulent mails in RBI's name continue": 

Many of the recipients of such mail would have deposited money in the designated account. We may issue disclaimer from RBI, but the common man feels that RBI and Govt should do more than just issuing of disclaimers. There is someone who is using the name of RBI and duping people and the Central Bank and the Central / State Governments are not taking necessary steps or are waiting for the crime to take place before taking precautionary measures. It is not all that difficult to nail such miscreants. They will be asking these innocent people to deposit the amount (Rs15999 in this case) in a bank account. The beneficiary of such accounts will most likely be used as a money mule by such miscreants who will come to collect the money in cash after it has been deposited in bank account. So, with the help of police, the person coming for collecting cash will give a lead to the actual mastermind who is sending these mails. If this is followed in some of the cases, then such activities can be controlled and many innocent people’s hard earned money can be saved. But the moot question is, RBI won't act because this is the duty of Police and NOT RBI. The police will not act till the crime has taken place - means till someone has deposited money and did not receive his 4 crore and he makes a complaint to the police. In the entire process – criminals are flourishing and innocent common men are left with nothing but cursing the authorities. 

- Mukesh Kumar 

Need to move an Interlocutory Application

Dear Parab, 

With the grace of God life is ok. LIC Pensioners letter dt 12/4/2014 is addressed to present CJI whose tenure will be over by 27-04-2014 when Justice Lodha will assume charge as CJI. I do not expect any action on this letter. What action we should take for our pending issue of "pension updation" depends on what the Government has communicated to the RBI. I do not find exact text of this communication anywhere, not even in the latest Hitguj dt 15/4/2014. Is it possible to send the exact copy of full text of the above communication or copy of such communication has not been handed over the United Forum? If the RBI/GOI have not parted with the said communication, it will be necessary to move an Interlocutory Application (in Writ Petition No. 2403 of 2009 between AIRBREA, Mumbai and RBI & Anr, pending before the Bombay High Court,) inter alia, seeking direction for production of the said communication, as it has immediate relevance to the pending issues before Hon'ble Bombay High Court. This will also activate the case, where it can be shown how injustice is perpetuated against the pensioners by side tracking these issues by the RBI/GOI. Please discuss with colleagues and consider further action, since the FORUM has already rejected what is being offered by the RBI/GOI. 

Please also keep the following principles in mind: 

i.  ".....emolutions should not be seriously  out of line with those extended to Central Government

employees, or out of step with those paid to commercial banks." (para 29 -- chapter on # Special Position of the RBI as the Central Bank of the Country - the National Industrial Tribunal (Bank Disputes) Desai Tribunal - Former Chief Jusice Gujarat High Court = 1962.# 

ii. No staff or officer (serving or retired) of the RBI shall get any salary, emoluments, or other terms and conditions which is or are less favourable than to which he is entitled immediately before "cut off date" which the Central Board may approve for migrating to the proposal of the Government to RBI in the communication, the full text of which is not disclosed to the FORUM. {This is based on the principles in Sec. 54AA of RBI Act, 1934 as well as the IDBI Act, UTI Act, NABARD Act, NHB Act, etc etc,}

With regards, 

- M. A. Batki

Dear Shri Batki Sahab, 

Many thanks for your kind expressions. Yes I do agree with you that we have to necessarily observe external relativity (as also internal relativity) in the matters of emoluments as also monthly pension. I am only afraid that the the MoF is taking our pound of flesh by not giving equitable  treatment to us. Rather, they are giving step-motherly treatment to us. Unlike the Bank, one day we have to take on MoF  and knock the doors of justice for our demands are genuine.  Further, while attempting  to bring the pending Writ Petition on board, MoF made tall statement that GOI exchequer  is loser  on account of payment of revised pension to pre 1-11-1997 retirees. This shows their hidden agenda.  The pension fund of the Bank is to the tune of Rs. 8939.89 crores as per  the last closing  balance of the Bank. It is our fund and not that of MoF. Intention to bring this point to your kind notice is that MoF is totally prejudiced against us. As the Bank failed to defend, we have to take on them. I am thankful to you for giving your kind consent for sharing your views with RBItes. 

Hope RBItes note your views seriously.

With kind regards, 

- L.R.Parab

Discrimination amongst retirees neither just nor equitable

My View on "'Pay revision' and 'Pension updation' two sides of...": 

Shri A. Chandramouliswaran Sir would like some clarification- whether pay and pension revision should be in 'consonance' with GOI, once in 10 years.Otherwise, it would not be possible to ensure that all pensioners who have retired in the same grade but at different points of time, draw the same quantum of pension. I try to clarify /submit to the best of my knowledge. A letter published in the FPJ dated 05-10-2013 (reproduced) reflects the present/actual -pension drawn - position of -Civil-pensioners retired at different points of time.{ Defence pensioners are getting / going to get-once the formalities are complete effective from this month of April, 2014, OROP-same rank same pension depending on length of service in the same grade/rank etc} Unrectified pension anomaly-GOI There is an issue related to government pensioners that remains unresolved for over a decade: government pensioners not getting One Rank One Pension (OROP) based on length of qualifying service etc. This is a reasonable demand, as majority of the pre-2006 pensioners are living in low dignity compared to post-2006 pensioners in the midst of similar conditions of spiraling prices and skyrocketing inflation. Pre- 2006 pensioners have been granted pension as per the fitment formula – not less than 50% of the revised ( 2006) minimum pay and grade pay relevant to the scale of pay that the employee has retired (family pensioners- 30 percent). To mention by way of a single illustration : a pensioner who retired between Jan 1 , 1996 and December 31,2005 at the maximum of the scale corresponding to the 2006 scale of PB4: Rs 37000 to Rs 67000 plus grade pay of Rs 10000 is assured of Rs 27350 in pension and a family pension of Rs. 16410 as per fitment, as against Rs 38,500 and Rs 23,100 respectively drawn by a post 2006 retiree at the end scale- at maximum.

This kind of discrimination amongst retirees is neither just nor equitable. Such anomalies should be addressed at the very earliest. Kindly see below -added to the above letter in order to make the point clearer. 5th CPC revision in GOI :The fixation of pension was subject to the ' provision, in no case, shall be lower than 50% of the revised 1996 pay relevant to the scale of pay that the employee had retired. IF THE ABOVE MENTIONED PROVISO -NOT LESS THAN 50%..granted to old pensioners was not in the fitment formula : 

(A)The basic pension of Shri K. Ganesh, my neighbour, a pensioner retired in 1988 at the maximum in the 4th CPC scale-01-01-1986 (S-29 scale : the same relevant 2006 quoted in the letter : Rs.5900--Rs.7300) would have been Rs.7300/2=Rs.3650. He got pension revision as per 5th CPC(1996) and subsequently, in 2008, he got pension revision as per 6th CPC(2006). HIS revised basic pension is Rs.27350/- .He is not 'rotting' at the basic pension of Rs.3650/- (Although the basic pension of 'old' 1997, Nov. pay scales- RBI retirees and 2002, Nov. pay scales -RBI retirees is remaining unchanged/not revised but not 'rotting' as they get 228.96% and 144.54% dearness relief respectively and those retired in 2007, Nov. pay scales get 99.90% DR. 

(B)Shri M.P.Kulkarni retired in 1998 at the maximum in the 5th CPC-01-01-1996 (the same S-29 scale)---Rs.18400-Rs22400. His basic has been revised to Rs.27350/-.

A note posted in VITALINFO-'OROP@2007: Loud but logical' may be seen. 

- R.G.Nakhate

If it is really so than Association/Unions should drop demand of pension updation. 

1. Wage revision once is 5 years is always better compare to once in 10 years that too depends on the mercy of Govt. 

2.Pension updation in Govt. Of India is not statutory in nature and a result of a executive order(notification), What if govt. stops updating the pension for its employees in future.

3. As on date some sizable allowances qualify for DA in Bank , what if these are excluded from the definition of Pay.It will result in reduction in salary of existing employees.

4. In commercial banks only non optees paid the price of option i.e. refund of employers share with interest and some extra money as trade off. Why should all employees pay the price for few non optees.

5. There may be a immediate decrease in pension amount if some allowances are left out.How wise will it be to take less pension today to get some benefit after 10 years.

6. Will it be possible to convince existing retirees to opt for a lesser pension in lieu of updation and present employees to give away their benefits which is going to affect their payments of loan EMI's, expenses of education of children etc.

7. Those joined bank after January 2012 has nothing to do with both option and updation. Why they should sacrifice their present pay and perqs for others?

This issue reached a stage where it will lead to loss to present employees to benefit retirees. It is best in the interest of all to drop this demand immediately and concentrate on revision of pay and perqs which are already due from November 2012. 

- Anonymous

LEAVE TRAVEL CONCESSION/HOME TRAVEL CONCESSION BAN ON VISIT TO OVERSEAS CENTERS AS PART OF LTC/HTC

.......Though these revised guidelines have been sent at the instance of Department of Financial Services, Government of India, it is in total violation of the spirit of bipartism. We have sent our protest letter to IBA requesting them to withdraw the revised guidelines, as we have already demanded the review of the Leave Travel Concession scheme........ 

Read..........

DEMAND FOR FIVE DAY WORKING WEEK IN BANKING INDUSTRY

......Our regulator, the RBI as well as Central and most of the State Govt. offices work only for five days and few have 2nd& 4th  Saturdays off. We humbly submit that the experience in the banking industry clearly establishes that by keeping the branches open for extended hours or all days does not lead to increase in business or accretion of new business. In 2009, when there was aggressiveness from new generation private sector banks for business, all the banks introduced 7 day banking and 8 to 8 banking. Within a year, all the banks wound up this experiment as there was low patronage and the cost to benefit ratio was unfavorable. With introduction of so many alternate channels of delivery due to IT initiatives, like ATMs, Internet banking, Mobile banking etc., majority of the customers in the metropolis, urban and semi urban areas have migrated to these for their normal banking needs..........

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That indelible identity

.........Manmohan was then the governor of the Reserve Bank of India. As soon as he learnt of the government’s decision on the commission’s recommendations, he flew to Delhi and met the prime minister. I had it from the most authoritative source that he told Indira Gandhi that the government’s decision would do more harm to the country than good; those states facing the most acute financial crunch because of the denial of the commission’s recommendation, funds for them, would be forced to come to the RBI and they would ask for more overdrafts. The RBI, taking account of the circumstances, would be morally bound to print notes and hand them over to the states in distress, thus ...........

Read - The Telegraph

Regulating capital account - some thoughts : H.R.Khan

.......In a capital scarce economy like ours, it is perhaps logical that there should be close monitoring of out-bound investments. The case for overseas direct investment (ODI) rests on permitting Indian entrepreneurs to exploit avenues for profitable investment abroad. With this in view, we have progressively liberalized the regulatory regime for ODI. But as in case of any investment, ODI must also yield returns over time. Notwithstanding not very satisfactory experience so far in respect of inflow of income from our investments abroad, an investor friendly regulatory regime continues in place. Recent changes in the ODI regulations no way seeks to dent...........

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RBI group wants use of Public Key Infrastructure for safe payment system

......As per the final report submitted by the group, all banks’ internet banking applications should mandatorily create authentication environment for password-based two-factor authentication as well as PKI-based system for authentication and transaction verification in online banking transaction. Besides that in online banking transactions, banks should provide the option to its customers for enabling PKI for its online banking transactions as optional feature for all customers. The group has also recommended that ..........

Read | Business Standard

Ways to Meet Basel III Capital Norms

.........The GoI could also attempt taking up the arduous task of improving investor perception of PSBs. Possibly, this could be achieved by making some structural changes in the process of making senior-level appointments at the PSBs and aligning the incentives of bank staff. Further, developing a framework to ensure timely resolution of problems concerning large accounts (not necessarily overdue accounts) and improving credit discipline among..............

Read - ET

SBI says too early to introduce differential bank licences here

........However, SBI said in the report, there are certain key issues regarding priority sector lending and high concentration risk that need to be resolved before differentiated licences are given out. Differentiated licences could impact priority sector lending, as specialised institutions may not have to meet the extant targets for such lending, which is otherwise applicable to all commercial banks, it said. Also, differential banking licences in the area of corporate banking and infrastructure banking would need far more developed financial markets, it said............

Read - FPJ

Bandhan Financial Services leads push to get poor to banks

........“The issue is, how I can reduce the lending rate for the poor?” Ghosh said. “Reaching them is expensive. Bandhan is paying a large amount to banks to borrow the money we lend to poor people. The cost of funds which gets reduced and that benefit I can pass on to my customers.”..........

Read - Mint

RBI asks bank boards to review BCs operations, payments

..........While issuing guidelines for commercial banks to scale up the BC model, RBI said that insistence by banks on BCs to fully prefund their accounts even after considerably long business relationship has become a major impediment in scaling up operations of BCs. Also, delayed payment of remuneration of BCs and passing on the responsibility of insuring cash to BCs have been proving to be irritants in increasing the usage in large number of bank accounts opened. RBI said that boards of banks must review the operations of BCs ...........

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Sebi, RBI ready for market shocks on day of election results

 India’s financial regulators and stock exchanges have formed a special committee to ensure that sharp swings in financial markets on the day the results of the ongoing general elections come out (Friday, 16 May) do not cause any systemic or liquidity risks. The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) will jointly monitor and review risk management systems for the country’s financial markets through special stress tests for equity, currency and bond markets even as the results come out, according to two people familiar with the matter who asked not to be identified.............

Read - Mint

RBI may set new pricing norms for state debt in phases

.........Holders of state debt - which are largely made up of banks - could be pushed to mark them to market prices in several stages as opposed to in one go, the officials said, although they noted the RBI has not yet decided whether it will implement the proposal. The officials added the central bank is also considering adopting a uniform pricing method used for government bonds to sell state debt. Under this method,.........

Read | Business Standard

RBI panel suggests FRA to deal with failing institutions

.........The central bank constituted the working group in January 2013 under the chairmanship of then RBI Deputy Governor Anand Sinha, with Economic Affairs Secretary Arvind Mayaram as co-chairperson. The group recommended that the FRA can be set up by either converting the Deposit Insurance and Credit Guarantee Corporation (DICGC) or creating a new entity that will subsume the DICGC. "The mandate of FRA will be to resolve failed financial institutions and FMIs (other than those owned and operated by RBI) along with providing deposit insurance and protection to insurance policy holders and investors/clients within limits, if required at the resolution stage," the report said. It said with a view to detect problems ............

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Uncertain regulatory environment hurts gold loans in India

........“The adverse impact on financial flexibility following RBI regulations on private placement of debentures, revised RBI securitisation guidelines, removal of priority sector tag on loans backed by receivables of gold loan and cautious lender approach, have led to an uncertain regulatory environment that is hurting gold loans,'' said Vibha Batra at Icra Ratings. However, an analysis on the gold loan market in India has noted that the sector is set to grow at a compounded annual growth rate of 26.33% over the period 2012-2016. One of the key factors.............

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Banker Who Cares for Kids with Cancer

......... Jaideep Khanna, the 49-year-old country head of British bank Barclays, is on a mission to raise funds for the organisation, and at the same time quench his thirst for some adventure and stay fit. There are many not-for-profit organisations that fund cancer treatment, but this one provides accommodation for the family of those kids being treated for cancer..............

Read - ET

G. Gopalakrishna takes voluntary retirement from RBI

Mumbai: G. Gopalakrishna, the senior-most executive director at the Reserve Bank of India (RBI), has taken voluntary retirement to take charge as director of the Centre for Advanced Financial Research and Learning (Caferal), RBI said on Monday........

Read - Mint

Off the radar, FinMin gets a key adviser

Even while the Bharatiya Janata Party has moved the Election Commission to stop the appointment of the Lokpal and the next Army Chief midway through the election, the Centre has made a key appointment in the Finance Ministry.  Ila Patnaik, RBI Chair Professor at the National Institute of Public Finance and Policy and columnist, has been appointed Principal Economic Adviser, a post vacant since November 2013.............

Read - The Hindu