..............This is not the first time that a proposal for a public sector asset reconstruction company has been floated. A similar proposal came up during the first NDA regime as well, at a time when Indian industry was going through a recession, and bad loans in the banking system had spiked. Thankfully, the proposal was nixed at that time and instead a new regulatory framework for ARCs was created by legislating the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act in 2002. That act led to the setting up of the............
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, July 21, 2014
RBI starts scrutiny of cos suspected of illegal money raising
..................Sources said the Reserve Bank of India (RBI) has begun analysing details of entities, which are believed to have raised money from the public illegally without getting registered as NBFCs. The cases are being pursued after reference from the Corporate Affairs Ministry to probe 34,754 companies (other than those registered with RBI). NBFCs are regulated by the RBI........
Andhra Pradesh to mortgage institutions
.......... The government has decided to mobilise funds without depending on RBI rules to implement the waiver of farm loans. Another option under consideration by the state government is issue of development bonds. Mobilisation of additional funds to implement waiver of farm loans has become a big problem for the Andhra Pradesh government........
Infra financing: Barking up the wrong tree
.........So, are good days here for banks and companies setting up infrastructure projects? I’ve a slightly different take on RBI’s two-pronged approach to prop up infrastructure financing and protect banks from asset-liability mismatches. Since there is no cap on maturity of bank loans and no bar on refinancing loans, there is nothing new about the 5:25 model. Banks are always encouraged to resort to take-out financing—a method of providing finance for longer duration projects by sanctioning medium-term loans with an understanding that the loan will be taken out of books of the financing banks after a certain number of years. The take-out financing model has not taken off. So, RBI has tweaked it and................
Differentiating to include
.............The thrust of the RBI's strategy now is to move from mandate to viability, which requires a completely different model to address those three critical factors. De-risking is the key element of the payments banks proposal, while local knowledge is what is supposed to differentiate the small banks. By drawing boundaries on what both types of institutions can do, a separate space is being carved out, which is under no real threat from the bigger players. This also encourages a range of players to try their hand at it. However, it must also be recognised that........
Niche banking
.........The move to licence payments banks is an acknowledgement of the scope for niche banking in India. You don’t need all banks to do the same thing; in fact, technology already permits financial inclusion to be achieved in ways other than through the opening of more brick and mortar branches in remote locations. What matters eventually is that the delivery of financial services is economical — mobile firms charge about 1 per cent against the 5 per cent for sending money through India Post — while ensuring customer protection and no risk to financial stability. The latter concern is largely addressed by the stipulation that depositor monies be invested in government bonds below one-year maturity. The ultimate objective should be to enable every Indian to have a safe and secure bank account. Such .........
Some players likely to stay away from second round of bank licensing
Doubts over financial viability of small and payment banks could keep away some players from the second round of bank licensing. The central bank's proposal to ring-fence new banking entities from any financial or non-financial services of the promoter could also play a spoilsport. The Reserve Bank of India on July 18 kicked off the differentiated banking licence regime by proposing, in its draft guidelines on small banks and payments banks, to allow the ..........
India's youngest bank Bandhan to empower women, rural folk
......Ghosh said RBI Governor Raghuram Rajan wants the new bank (Bandhan) to penetrate poverty-hit rural areas to promote lending and saving among farmers, small businesses and others whom traditional banks have been reluctant to serve. "Bandhan is a third generation bank. Instead of ATM (Automated Teller Machine), our 275,000 human teller machines have been in constant touch with the rural people, specially women." Ghosh said that he had all the time given emphasis on the "practicability of the business, whatever may be the volume of trade.".....
Bandhan gets 25,000 applications for 15 posts in proposed bank
...........On July 2, Bandhan, the microfinance institution, which recently got an in-principal nod from the Reserve Bank of India to start a bank, came up with an advertisement for 15 posts in the proposed bank. In nearly 17 days, the MFI has received more than 25,000 applications for the posts, according to C S Ghosh, chairman and founder, Bandhan. In addition, several top-notch executives of the corporate world expressed interest in joining the bank, informed Ghosh.........
Road map for PSU banks fund-raising by next month
..................Next month, the government will frame a draft Cabinet note on equity dilution in State Bank of India (SBI), the country's largest bank. "We have not yet decided on SBI stake dilution. We are preparing a road map at the moment (for raising capital by public sector banks)," Financial Services Secretary G S Sandhu said at a Canara Bank event here............
Move over, big brother
.............It is too early to say whether these mechanisms will challenge the role of the International Bank for Reconstruction and Development (IBRD) or the World Bank and the International Monetary Fund (IMF), which have been the bedrock of the Bretton Woods system under U.S. hegemony. But they at least serve as a reminder that the era of Western and American dominance of the world is ending, giving way to a more complex and diversified world order: the multiplex world. The move by BRICS, though outwardly economic in nature, has serious geopolitical undertones...............
Questions remain on viability of proposed payments banks
...While most agree there is space for such banks in India, the restrictions and conditions proposed have raised questions on whether the model would be a viable business proposition. Payments banks are a new category of banks envisaged to provide limited services such as accepting savings deposits and remittances, particularly in rural areas. One key concern will be profitability. This is because payments banks will not be allowed to lend, effectively cutting off interest income—the main income source for a bank—although remittance services are permitted and could become the main income stream. Again,...............
BRICS Bank: Taking shape despite the fluidity around
..........So what actually will it be? The beginning of the end of western control over global financial systems, or an idea that will collapse as its members start to fight amongst themselves? I’m biased, of course. Like the Chinese ambassador to India, and Raghuram Rajan, I believe that developed countries still owe a debt to emerging nations for the aftermath of the 2008 financial crisis, which they’ve refused to pay. I can still be objective though. .......
Bharatiya Mahila Bank races past Rs 1 crore deposits in just seven months
........Interestingly, all the loans have been taken by women but in case of account holders, women make 98% of the total as men also have opened accounts in the state's only women's bank. The officials believe that the interesting loan schemes including loans for opening beauty parlour and kitchen modernization along with traditional house, car and education loans and lower interest rates on loans are the reason for the banks increasing popularity among women............
Set to grow faster, but won't sacrifice profitability: ICICI Bank
.............Kochhar, who implemented her famous '4C-strategy' at the bank soon after taking charge as Managing Director and CEO of India's biggest private sector bank in 2009, also said that this strategy has worked well and a foundation has been put in place now for the bank to grow at a faster pace than industry. However, this growth won't be at the cost of profitability or by getting into a high-risk business model, Kochhar told............
Banker Who Believes Client is Always King
.........But the grueling experience taught him to be calm and to be in control of his emotions, virtues that have rewarded him well during a career working in every department of the banking business and building relationships with clients. Mehra’s IIM batch incidentally was a year senior to that of Raghuram Rajan, now the Reserve Bank of India Governor..............
HDFC, HDFC Bank merger buzz restarts
The buzz over a possible merger between HDFC and HDFC Bank,which was talked about a decade ago in the aftermath of the ICICI-ICICIBank merger, has once again resumed. All the pieces appear to be falling into place with the RBI classifying low value home loans as infrastructure lending, which is exempt from reserve requirements such as CRR and SLR. HDFC has been disbursing loans efficiently and maintaining growth despite its size, and its sheer scale now makes it a strategically important institution. There is also a thinking that such a big organization should now be regulated as a bank. Should a merger happen, the new entity will be the second most valuable company in India after ONGC, considering that the combined value of the two institutions at current market prices is well over Rs 3.5 lakh crore.
HDFC Securities launches 'e-Will' writing service
.............There has been tremendous response to this product and a large number of customers across the country are getting themselves registered because of convience factor everyday, he said. To begin with, he said, 'Do it Yourself Will Service' would be available to customers of HDFC Bank having customer base of 2.8 crore. HDFC Securities has 20 lakh users. However, this service would be extended to non-HDFC Bank customers later ..........
SBI asked to pay Rs. 8 lakh in damages
..........The district consumer disputes redressal forum (DCDRF)–North has directed State Bank of India (SBI) and its insurance company to pay a compensation of Rs. 8.68 lakh for pre-closing the insurance policies of a consumer without prior information.......
Saturday, July 19, 2014
Need reforms but with foundations intact - M.G.Warrier
My View on "Can the government and the RBI work together?":
- M.G.Warrier
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