Credit card companies, often, dangle offers that seem irresistible. But most probably, they are not as profitable as they seem. The latest one: A no-interest period offer. This offer allows you to carry forward the outstanding amount, for a specific time without paying any interest. This may seem very attractive, as the bank is allowing free revolving credit. But there are a few factors that customers must keep in mind, or else they could end up losing money. ..............
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.
Monday, May 5, 2014
RBI seen to go on forex mop-up drive
........“It is not as if the forex market will wait for the RBI to buy the entire $80 billion. All it is looking for is a confirmation that the RBI has returned to the Jalan-Reddy policy of building forex reserves to guard against contagion,”.......
Economy & Currency Outlook: How much can Delhi do?
......This begs the question of whether rates can be cut if inflation remains high? Of course not. This is why Delhi needs to adopt the Urjit Patel committee's proposed inflation targeting framework to contain inflation expectations. In any case, there has been popular support for an inflation mandate for RBI ever since C Rangarajan's tightening brought inflation down to five per cent annually from eight per cent in the mid-1990s. Yet, given supply shocks, the inflation target itself needs to be sufficiently flexible to work. While ........
Bandhan Financial Services lowers lending rate by 50 bps
......The move may prompt Bandhan's rivals to review their interest rates. "Bandhan may have taken this decision from a forward-looking standpoint as it is now transforming itself into a bank and reconfiguring many aspects of its operations," said Alok Prasad, chief executive officer at Micro Finance Institutions Network (MFIN),
‘Bandhan will show that the poor are also bankable’
.......We will merge the existing microfinance business with the bank. But our thrust area will be medium and small scale sectors. Reaching the un-banked areas would be one of the biggest areas of opportunity. We will target the poor and the segment just above that. We would like to show that the poor can also be bankable. Our entire loan portfolio is directed at priority sectors and our recovery rate is 99.5 percent.......
Bandhan - Arrow out of bow
My View on "Bandhan to start banking operations 600 branches":
Kudos to Bandhan for taking steps to move forward with about 600 rural bank branches. A few but significant challenges for Bandhan MFI becoming Bandhan Bank would be:
Now providing microfinance is the main and only business of Bandhan MFI. But, providing microfinance will become one of the overall business segments of Bandhan Bank to comply with the Priority Sector Lending commitments of the RBI. So, more of those unbanked and underbanked may be forced to go back to informal sector particularly money lenders and big land lords. Financial Inclusion may also be only a show case activity instead of it being its main activity being carried on on a Mission mode.The staff of Bandhan MFI are paid relatively less than those offered for holding similar positions in banks. Once Bandhan Bank starts operating, the existing staff of MFI who would be transferred to Bandhan Bank would have to be paid higher salaries commensurate with that of their counter parts in the banking industry. We have the example of RRBs before us as it started with low cost banking but ended up paying salaries equivalent to the PS Banks and huge capital infusion year after year has become the norm. Bandhan Bank may also face similar situation in future. What could have been done by the RBI is that it would have issued a preferential licence to enable Bandhan MFI to function on the lines of Bancosol of Bolivia or Grameen Bank of Bangladesh so that it may not lose its character as a leading MFI in the country. Now it is like an arrow that has gone out of the bow and RBI will have little control on the formation of Bandhan Bank which would lose its MFI character if not in the short run, but certainly in the long run.
- Santhanam
Don’t expect much from new banks
........When the RBI framed the guidelines for new licences, it seemed to think that corporate houses with their deep pockets could make a big difference to competition. It is evident that the regulator has since become more wary about a host of concerns about their entry. It is not clear where corporate houses now stand. Are they free to apply for licences a little later? Or are they too welcome only under “differentiated licensing”. If the latter, it is doubtful that corporate houses will be interested.........
Spell out action taken in NPA scam: Bombay high court to CBI
...........The petitioner has alleged that RBI and the nationalised banks do not comply with the Banking Regulation Act, 1969, which mandates periodical submission of audit reports to the RBI. The same is not complied with in order to suppress the NPA scenario and shield the culprit beneficiaries working in collusion with the banking authorities, alleges the petition............
Cultivating NPAs
...........As of September 2012, according to an RBI working paper by Shashidhar Lokare, priority sector lending accounted for 31.1% of all gross advances but 41.7% of all NPAs; the figures for the non-priority sector were 68.9% and 58.3%, respectively. It is true that the figures will change once you take into account the relatively higher share of restructured assets for industry, but there can be little doubt priority sector lending is a big source of NPAs. More important, ................
Banks find it easier to offload NPAs after RBI tweaks norm, says HSBC report
.........A sudden rush to sell distressed assets to asset reconstruction companies (ARCs) in Q4 could be attributed to the RBI allowing banks to write back the excess provisions made over the book value when the NPL is sold, says an HSBC report..........
Read - FE
Read - FE
Public or Private, Banks May Need Image Makeover
.......Banking may be perceived as staid or conservative, but their imagery shows a vivacity and vibrancy like any other consumer-facing category. And, now with the RBI opening up licences to newer players, it would be interesting to note if the new players follow their sub category codes or will they innovate. With penetration and share fight both being challenges in the category, it will be interesting to see the approaches that will be taken by the new players and how the older players will reposition themselves with a changing competitive landscape...........
RBI panel says don’t force banks to become to insurance brokers
...........The reluctance on the part of the RBI and banks is clearly visible in the latest report being prepared by an RBI panel. The RBI’s working group on bancassurance has suggested that no model should be unilaterally imposed on banks and that the choice of becoming a multiple corporate agent or a broker should be left to the respective banks and their boards. Under the existing regulations, a bank is allowed to distribute policies of one life and one non-life insurer as its corporate agency partner................
SBI's most luxurious bank 'Kohinoor Royale' opens account for minimum Rs 1 crore
........This innovative ‘by invitation’ only Branch of SBBJ, Kohinoor is a very unique concept for getting business of ultra HNIs, an area hitherto virtually untouched by PSU Banks. This is a specialized Branch, where the accounts shall be opened only by invitation. The Bank’s expectation shall be to have a minimum of seven figure business from all customers at this Branch. This outfit is being loosely called a ‘crorepati branch’. The branch has state-of-the-art outfit with royal ambience which is an instant attraction for intended customers. Kohinoor Royale Banking Centre at Jaipur is meant for Kohinoors of modern India. It has a five star ambience with ultra modern facilities. The Branch has a plush lounge named Deewane Khass, which consists of Rajkosh, the locker facility, Shringar, the dressing room, and Darbar, a conference room with video conference facility apart from personal business centers, cafeteria, and most comfortable sitting arrangements. The lounge has both music and TV channels for the entertainment of visiting customers...............
FinMin asks PSU banks to focus on mobilising CASA deposits
..........“Banks have been asked to cut down their reliance on bulk deposits. They need to focus on mobilising low-cost deposits. They should be focusing more on CASA (current account savings account),” Financial Services Secretary Gurdial Singh Sandhu told PTI. They should be aiming at 40 per cent CASA for improving their profitability, he said.......
Indian banks will have to raise Rs 3 lakh crore in external capital: IOB DGM
..........“It will be difficult for the government to find such a large amount to capitalise the public sector banks. The situation of the private sector banks will not be much different, leading to merger and consolidation of the banks,” he opined. RBI’s directive to implement the Basel III norms by 2018 March was also a big challenge, he said..........
JK Bank conducts financial literacy camps
...........In Budgam, the FLCC center Budgam organized a financial literacy camp at Boys Higher Secondary School (Budgam). A large number of students along with the faculty members participated in the camp, wherein the Facilitator FLCC Budgam educated the students about Saving Bank Account Schemes introduced by the Bank which cater to the requirements of student community drawing scholarships from the Government. The District Development Manager, NABARD, also apprised the participants about various income generating schemes under farm sector and self employment activities...............
Government writes to RBI, seeks higher borrowing limit for Exim Bank
.........In a letter to the RBI governor, the commerce secretary has asked for differential treatment from commercial banks and sought a higher borrowing limit for Exim Bank. "If Indian project exports are to compete with China on the basis of co-financing offered by Exim Bank, its leverage ratio may be raised from the present 10 times of NOF to at least 15 times of NOF," the letter said.
No Effect of Nabard's Fund Threat on Govt
The State Government has not shown any interest in completing rural infrastructure projects on time despite warning of the National Bank for Agriculture and Rural Development (Nabard) to shelve sanctioned projects which have remained incomplete beyond the stipulated time. The Nabard had sanctioned 385 projects of the Rural Development department under rural infrastructure development fund (RIDF) in eight tranches. The State Government had made a budgetary provision of `210 crore for these projects in 2013-14.......
Tamil Nadu and Gujarat finances: some pluses and minuses
..........A perusal of the report of the Reserve Bank of India, ‘State Finances: A Study of Budgets of 2013-14,’ published early this year, reveals that in the debt-Gross State Domestic Product (GSDP) ratio and the interest payments-revenue receipts ratio for the fiscal 2011-2012, Tamil Nadu was better placed than Gujarat. Also, be it the State’s Own Revenue......
Saturday, May 3, 2014
The West Can Learn From India's Central Banker
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