Banking regulations need to be streamlined: Subbarao

Reserve Bank of India Governor D Subbarao  on Friday pitched for streamlining banking regulations, saying some were 'confusing' even though they served the banking system well.
On the existing arrays of laws in the banking sector, he favoured a single legislation to remove inconsistencies. Subbarao also asserted that the proposed financial sector reforms should be driven more by the sectoral regulator Reserve Bank of India than by a legislative panel.

Policy direction should drive the work of the proposed financial sector legislative reforms commission and not the other way around, Subbarao said.The RBI Governor was delivering the inaugural address at the two-day Bancon 2010, one of the premier annual bankers meets. He said there is an urgent need to streamline the plethora of regulations governing the banking system in the country. There is a whole lot confusing laws out there. But it has served the system well by helping maintain an orderly banking system.

The Banking Regulation Act has not only stood the test of time, but several of its provisions have all helped the Reserve Bank in preventing crises and maintaining financial stability", he said.

"But the recent global financial crisis has taught us that our regulations have to change according to the need of the time . . .", Subbarao said. Arguing that there is an urgent need for streamlining and fine-tuning the existing array of laws, the Governor said, we need to do so to level the playing field as the existing laws are uneven. A single legislation will bring about clarity and do away with the inconsistencies currently governing the banking system. "The prime motivation for rewriting the laws should be to integrate the various statutes, reflect the lessons from the (recent global financial) crisis and aid inclusive growth", Subbarao said. The global financial crisis threw up a number of areas requiring significant legislative action either because there is no legislation or because the prevailing legislation is inadequate, he said. Subbarao said the decision to set up a financial sector legislative reforms commission to rewrite and clean up the financial sector laws, to bring them in line with the requirements of the sector, was very timely and vital. However, the Governor was quick to add, "I have one caveat. It is important to recognise that bringing about policy changes or regulatory architecture cannot be the remit of a legislative reforms commission". "Such changes have to be debated as a prelude to the work of a commission so that the commission has a clear policy direction", the RBI Governor said."In short policy direction should drive the work of the proposed legislative commission and not the other way around", Subbarao said.

The country's 81 banks -- out of which 24 are state-run, 21 private and rest 34 are foreign banks, are governed by a number of laws. The current statutory arrangement we have is a baffling plethora of laws governing different segments of the banking industry, Subbarao said. He explained that while the nationalised banks are governed by the Banking Companies (Acquisition and Transfer of Undertaking) Acts of 1970 and 1980, State Bank of India  and its subsidiaries are governed by their respective statutes.

When it comes to private sector banks, he said they come under the purview of the Companies Act of 1956 and the Banking Regulation Act of 1949.He said foreign banks which have registered their documents with the registrar under Section 592 of the Companies Act are also banking companies under the Banking Regulation Act. The Governor said even certain provisions of the Banking Regulation Act have been made applicable to public sector banks. "Similarly, some provisions of the RBI Act too are applicable to nationalised banks, State Bank of India and its subsidiaries, private sector banks and foreign bank", he told the meeting. 

RBI to introduce plastic notes to address fake currency issue - Dr.Amarendra Sahoo

http://www.hindustantimes.com/audio-news-video/RBI-to-introduce-plastic-notes-to-address-fake-currency-issue/Article2-624561.aspx

Learning 2010

The Celebration of Learning 2010 had been organised to commemorate just that, the admission of 170 slum children to Delhi University and other institutes of higher education. And what a celebration it was. Asha was delighted to welcome honoured guests, all of whom have been incredible supporters of Asha’s Higher Education Programme. Mr K R Kamath, CMD, Punjab National Bank, HE Mr Peter Varghese, Australian High Commissioner, HE Mr Bob Hiensch, Ambassador of the Netherlands, HE Mr Kenneth Thompson, Ambassador of Ireland, HE Mr Rupert Holborow, New Zealand High Commissioner and Mr Sandip Ghose, Regional Director Reserve Bank of India, contributed words of wisdom and encouragement to our students after they heard the story of one such child who courageously explained his journey before the extraordinary gathering. 

SINGH INTERIM NABARD CHIEF

Rakesh Singh, additional secretary in the Department of Financial Services, took over the additional charge of chairman of the National Bank for Agriculture and Rural Development from Umesh Chandra Sarangi on Thursday. Singh, an IAS officer of 1978 batch from the Punjab cadre, would hold the charge till a new chairman is appointed. Interviews for the post took place on November 23. Sarangi, who took over on December 3, 2007, has been repatriated to the Maharashtra government.

Decision on new SEBI chairman by December end

Gokarn signals India may not cut Reserve Ratio to Ease Money

Reserve Bank of Deputy Governor Subir Gokarn today signaled the central bank will refrain from cutting the cash-reserve ratio to ease a crunch in the banking system that has driven bond yields to a one-month high. “The cash-reserve ratio clearly remains an option but we believe that our monetary stance is still anti-inflationary, we are still dealing with inflation,” Gokarn told reporters in New Delhi today. “We don’t want to send any mixed signals about a change in the monetary stance.”  The yields on 10-year government bonds reached the highest level in more than a month as banks borrowed an average 1 trillion rupees ($21.9 billion) a day from the central bank’s repurchase auction window in November, compared with 522 billion rupees a day in October, according to data compiled by Bloomberg.

“The RBI wants to wait and watch for the impact of its measures on liquidity before considering the CRR option,” said R.V.S. Sridhar, head of markets at Axis Bank Ltd. in Mumbai. “The liquidity shortage is quite tight and we would have liked the RBI to consider the CRR option more seriously.” The yield on the 7.80 percent note due May 2020 rose one basis point to 8.11 percent as of the 5 p.m. close in Mumbai, according to the central bank’s trading system. The price fell 0.29, or 29 paise, per 100 rupee face amount to 97.96.

“We are using instruments that will give us short-term control over liquidity without in any way compromising our stance,” Gokarn said. “We are using tactical measures like the statutory liquidity ratio.” Easing the statutory liquidity ratio, or the percentage of deposits banks must invest in government bonds, frees up as much as 500 billion rupees and has an “immediate impact,” he said.  The cash reserve ratio, or the proportion of money banks must set aside to meet prudential guidelines, is 6 percent. The Reserve Bank of India on Nov. 29 extended a facility to inject funds into the banking system and doubled the level of support to banks by relaxing a requirement to invest in bonds to ease the supply of money.

Disclose all fees in application form, says RBI

End of STD? BSNL brings national rates to local level

New Delhi: In a move that could trigger similar rate cuts from other service providers, Bharat Sanchar Nagar Ltd (BSNL) has brought its national long distance land-line tariffs at par with local land-line calls.  This impacts 32 million subscribers which includes BSNL’s 26.2 million land line subscribers as well as its 5.8 million WLL fixed line subscribers for whom STD calls, which used to cost 80 paise for two minutes, will now cost 80 paise for three minutes, or the same as BSNL’s existing local call rate.  These revised rates will be automatically available to all BSNL fixed line consumers across tariff plans but are not applicable to PCOs and for calls to special services.  This move is expected to dramatically increase the land-line traffic on BSNL’s network and substantially offset some of its losses, though company officials declined to reveal exact estimates.  BSNL’s local call rate is 80 paise for three minutes up to 300 calls, after which it goes up to Re 1 up to a maximum of Rs 1.20.

RBI Deputy Gov post: Delay surprises many

WHILE it is almost certain that Anand Sinha will succeed Usha Thorat as the next deputy governor of the Reserve Bank of India, the delay in announcing the appointment has surprised many people in Mint Street. If the appointment is delayed beyond February, Mr Sinha may just miss the bus as he is expected to retire by then. Such appointments, which are for at least a two-year term, are made before the candidate turns 60. In that case, the candidate for the post could be another Executive Director, HR Khan, who was also interviewed for the job.

RBI Governor stresses transparency in loans

RBI governor stresses transparency in loans TIMES NEWS NETWORK Pune: Reserve Bank of India (RBI) governor D Subba Rao said on Thursday that the RBI will ensure greater transparency in the loans sanctioned and disbursed by banks. "We will take steps to make lending procedures more transparent and bring accountability in bank lending," Rao told media on the sidelines of a function where he inaugurated the RBI centre for financial literacy and financial inclusion here. Every effort will be made to ensure that the flow of development finance reaches them who need it the most, Rao added. Rao’s statement assumes significance in the background of serious irregularities in housing loans that came to light on Wednesday in which banks and financial institutions are involved. The RBI Governor, however, said he would not respond to any media query other than about the event that he was attending. Rao also said the apex bank is seized of the concerns over the operations of microfinance institutions, especially in the governance and operational aspects. "We have appointed a committee to go into these issues and the report of this committee will come by the end of January 2011," he said. Rao said financial literacy and financial inclusion is a challenge that has to be shared by the entire banking industry. "We have advised banks to undertake their own campaigns to achieve the objective of higher financial literacy and greater financial inclusion. The centre in Pune is the second after the one started in Chandigarh and one more will be opened in Bangalore soon, Rao said. The Pune centre will organise workshops for capacity building in these two areas, besides undertaking studies to ascertain impediments to financial inclusion initiatives to aid policy formation. Apart from holding events for bankers and executives, it will also promote visits by school and college students, housewives and workers from the unorganised sector.

Be a more effective manager

DOERS DON’T ALWAYS MAKE GREAT managers. Such people are sincere. They progress at a normal rate, but can easily be replaced. To be an effective manager, a doer must have vision, be a people person and above all, be creative. TV Rao, professor of human resource and development at Indian Institute of Management Ahmedabad, offers several examples in his recent book ‘Managers Who Make a Difference’, to illustrate what qualities make an effective manager. He says that by communicating the company’s aspirations and culture to his subordinates, a manager could be more effective than others. An effective manager, he tells Dibyajyoti Chatterjee, is driven internally and does not leave things to chance, luck and other external factors.

1 Be action-oriented Your entire focus should be to achieve your goals — that is the key to earn credibility. Shantanu Prakash, MD & CEO of Educomp, an education company, says that when he started, his first office didn’t even have a fan. But that didn’t bother him. He was focussed on what he was doing. Today, Educomp is the largest education company in terms of market capitalisation. Unless a manger is target-driven, he cannot accomplish much.


2 Be a team person Managers who want to be different give more priority to the team’s goals over individual goals. This is based on a simple fact: if the teams don’t do well, the organisation won’t either. An effective manager has to have strong interpersonal skills to build a team. Such managers think beyond themselves and think of the larger perspective.


3 Do things differently Managers who make a difference are also creative. Training and HR programmes should be initiated to revive creativity among subordinates. Moreover, one needs to practise creativity constantly. Working in teams creates an atmosphere for innovation. Tata Steel is a case in point. Vice chairman B Muthuraman, transformed spectators into participants in the making of company’s strategies. Every week workers from various departments got together for a three-hour meeting with no one from the management. Thoughts from them were exhibited in an exhibition. The company saved Rs 700 crore in a single year through various such initiatives.


4 Manage time and talent No one is so fortunate as to be able to use all the talent he has. But one has to keep maximising the opportunities to use talent by managing one’s time. The key to time management is to allow yourself to use your competencies and delegate those tasks that others can do a lower cost. In today’s environment, human capital is a precious resource, and competencies of people need to be properly utilised.


5 Keep your integrity Never commit to do things that you cannot do, and do not say things you do not believe in to please others. It adds to the overheads of your company and affects you negatively in the long run. A manager shouldn’t just be value-driven himself, but should also inculcate values among those he works with. Moreover, he should work towards the values of the organisation.

Banks can easily bear cost of Financial Inclusion

BANKS CAN EASILY BEAR  COST OF FINANCIAL INCLUSION

‘Absence of a delivery system the main stumbling block’ RBI Deputy Governor K C Chakrabarty said financial inclusion was no longer a policy choice but a policy compulsion  While banks are seeking government support, at least partially, to fund their financial inclusion programmes, the Reserve Bank of India (RBI) thinks the lenders can bear the cost comfortably. It says the challenge is not funding but to have a viable business and delivery model based on information, communication and technology. “In reality, the truth is that without appropriate technology, they (banks) could not have done it (financial inclusion) even when willing. It is not their willingness but lack of ability to deliver which is coming in the way,” RBI Deputy Governor KC Chakrabarty said in Bhubaneswar on Saturday. “In reality, the cost can easily be borne by the banks. The overall cost of financial inclusion will not be more than `3,000-4,000 crore per year. State and central governments can obviously provide a helping hand. Thus, the basic problem is not cost or willingness but absence of a business model and an ICT-based delivery model,” he said. RBI is pushing banks to achieve financial inclusion and the initial plan is to provide basic banking services to villages with a population of above 2,000 in the next two years. The banks also need to plan to cover villages with population of less than 2,000 in an integrated manner over next three to five years. The objective is also to provide banking services to the entire population in urban and metro centers Chakrabarty said if the country was aiming for financial stability, economic stability and inclusive growth with stability, it was not possible without financial inclusion. “Financial inclusion is no longer a policy choice but a policy compulsion today. And banking is a key driver for inclusive growth,” he said. The regulator had asked banks to submit their financial inclusion plans, duly approved by the respective broads. According to the plans submitted by the banks, close to 2,00,000 business correspondents and customer service points to be deployed over the next two-anda-half years. In addition, more than 4,000 branches will be opened in unbanked villages, besides over 100 million nofrills accounts. “The banks will really have to gear up for implementation of these plans. The numbers look good and if we can successfully execute the plans, India can present a role model to the world,” Chakrabarty said.

RBI needs to develop software to monitor banks’ functioning - Amitabh Ghosh, Former Governor

The Reserve Bank of India (RBI) needs to develop a software to monitor the banks and also interact with leading market players to keep track of the implementation of the financial regulations passed by it. These views were expressed by Amitabh Ghosh, former RBI Governor, at a panel discussion organised by the Indian Institute of Management, Lucknow during its annual leadership summit. Stressing on the need to regulate the financial sector, Ghosh cautioned against the over-regulation. He said the RBI has been passing regulations which are often ignored by the banks. “There is no meaning of instructions until they are implemented and it is not possible for the RBI to monitor the banks on a day-to-day basis,” said Ghosh. This is where a good IT system can play an important role, Ghosh opined. “The RBI should develop a software that captures all important day-to-day aspects of the bank, particularly the adverse aspects and the incumbents of the Central bank should take cognisance of the information. Only with such a monitoring system would it be possible for the RBI to control and regulate the sector,” he said.

DIN: New number must to file IT returns

New Delhi: Taxpayers will now have to procure a 'new number' for filing returns and making any communication with the Income Tax department.
   The unique Document identification number (DIN), on the lines of numbers like PAN and TAN, will be quoted on “every” income tax-related communication, including returns to be filed next year for the financial year 2010-11. According to the new guidelines brought out by the Central Board of Direct Taxes (CBDT), the DIN will be mandatory “in respect of every notice, order, letter or any correspondence” with the department, by the taxpayers.
   “The DIN will be generated by the I-T department and will be useful, essentially, for error-free filing of tax returns, claiming refunds and other communication with the department by the assesses,” a senior Finance Ministry official said.
   The ‘Aykar Sampark Kendras’ will hand out the DIN from this month, the official said. Assesses will not be put to any trouble, as the numbers will be generated and allotted by the department itself.
   I-T officials will also be allotted the numbers in order to streamline the process, the official said, adding, the number has to be produced thereon for every activity with the department. Taxpayers and tax collectors are currently required to quote Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) among others when returns are filed with the department.
   According to section 282B of the Income Tax Act that deals with DIN, if the document sent to the tax authority does not bear this unique computer-generated number then “such document, letter or any correspondence shall be treated as invalid and shall be deemed never to have been received.”
   DIN is aimed at bringing more transparency in tax administration as the whole exercise involves a number of documents. PTI

Interviews for new SEBI Chief on Dec. 3

The government may soon decide on the successor to CB Bhave, chairman, Securities and Exchange Board of India (Sebi), with a selection panel scheduled to hold final interviews on December 3. Among those shortlisted for the post, U K Sinha, chairman, Association of Mutual Funds in India, and corporate affairs secretary R Bandyopadhyay are said to be the top contenders, according to sources.  Sources said the committee could consider calling more candidates, apart from those already shortlisted. One such person could be K P Krishnan, currently secretary of the Economic Advisory Council to the Prime Minister and formerly a joint secretary in the capital market division of the Department of Economic Affairs under the finance ministry.  About half a dozen persons had been selected for the final interviews, but at least two of them – State Bank of India Chairman O P Bhatt and Reserve Bank of India Deputy Governor K C Chakrabarty – might not be interested in the position, sources said. The panel had zeroed on seven candidates at its last meeting, but some of them opted out.

Financial Inclusion: Plans and Perspectives of FFIs

Sandip Ghose, Regional Director, Reserve Bank of India, moderated the session Financial Inclusion: Plans and Perspectives of FFIs

Former Governor Dr.Reddy's book launched

Authoritative work: Y.V. Reddy, former Governor of the RBI, at the launch of his book on Saturday.

HYDERABAD: Renowned statistician C.R. Rao released the book “Global Crisis, Recession & Uneven Recovery” authored by Reserve Bank of India former Governor Y.V. Reddy on Saturday.
Published by Orient BlackSwan, the book offers a lucid explanation of the financial crisis and accounts for its consequences. In addition to bringing out the root causes of the global financial crisis, Dr. Reddy makes certain proposals for reform in the book. The work outlines the consequences of the crisis one of them being shift in the balance of economic power in favour of Asia while it also highlights the role of central banks in the evolution of the crisis as well as their role in the developing countries.
Releasing the book, a sequel to Dr. Y.V. Reddy's work India and the Global Financial Crisis: Managing Money and Finance, Prof. C.R. Rao said the financial crisis plunged several countries into recession and brought the major stock markets into a downward spiral, but Indian economy emerged much stronger and resilient post crisis. The book was a translating narrative of how the country avoided the crisis because of the foresight of Dr. Reddy who saw the financial crisis two years ahead and initiated steps accordingly.
Insurance Regulatory and Development Authority former chairman C.S. Rao recalled his association with Dr. Venugopal Reddy and said the timely measures by Dr. Reddy as the central banker had ensured that country overcame the crisis. RBI former Deputy Governor Usha Thorat outlined the various innovative schemes taken up by the former RBI Governor.

  

Ex-DG V.Leeladhar chosen for National Banking Award

Udupi, Nov 27: Vittaldas Leeladhar, former deputy governor of Reserve Bank of India (RBI), has been chosen for the K K Pai National Banking Award for the year 2010-11.
V Leedhar, an engineering graduate, had initially joined Syndicate Bank. He later joined Corporation Bank, where he rose to become its general manager at a young age. Besides functioning as the executive director of Bank of Maharashtra, he worked as the chairman and managing director of Vijaya Bank and Union Bank of India, before being elevated to the position of deputy governor of Reserve Bank of India.
He also was the chairman of Indian Banks Association for a term. His interest in modern management techniques, knowledge, and pragmatic approach, have left behind an imprint wherever he has worked.
The above announcement was made by K K Ammannaya, secretary of K K Pai Trust, through a press release. A panel of juries have unanimously chosen Leedhar for the award, in recognition of his outstanding contribution in the fields of commercial banking, he said.

RBI plays an important role in strengthening the economy of the country

Vijay Kumar November 27, 2010 Udhampur/Jammu, November 27 (Scoop News) – Executive Director, Reserve Bank of India. Deepak Mohanty today said that RBI’s outreach programmes which started during its Plantinum Jubilee year were being continued with a view to deepening the penetration of financial inclusion and expanding the coverage of financial services to all sections and all regions of the country in a meaningful way, particularly to those at the bottom of the economic pyramid, and thus achieving the objective of inclusive growth. Deepak Mohanty was speaking in a function of awareness drive by Reserve Bank of India, Jammu office at village Bashat in Udhampur district here today. The programme was presided over by Deepak Mohanty Executive Director, Reserve Bank of India.
Deepak Mohanty further said that Bashat village was one of the 3 model villages chosen by RBI for outreach activities in the State for 100% Financial Inclusion during 2010-2011 by using Information and Communication Technology (ICT) for issuance of smart cards through the Business Correspondent (BC) model. The main aim was to achieve the objective of financial inclusion and providing doorstep banking services to the rural poor, small and marginal farmers, people of small means, women, etc. He also apprised the gathering that the biometric smart cards have inbuilt security
features and are therefore very safe for conducting transactions. The card holders would also get receipt for each transaction.
Earlier while welcoming the Chief Guest and other dignitaries to the programme, Regional Director for Jammu and Kashmir . Arnab Roy stated that during the last 75 years, Reserve Bank of India has played an important role in strengthening the economy of the country. He mentioned that during the Platinum Jubilee year (2009-10) of RBI it was decided to reach out to the remotest villages of the country for extending banking services thereto so that the common man is linked to the banks without actually visiting a bank branch through Information and Communication Technology (ICT) initiatives and intervention, using the Business Correspondent (BC) model. On the occasion. Mohanty and other dignitaries also distributed smart cards issued by J&K Bank Ltd and witnessed the activation/transactions through smart cards not only for the common villagers but also for NREGA beneficiaries. . Mohanty interacted with the common villagers while distributing smart cards and clarified their doubts. This was a new and unique experience for the villagers who showed great enthusiasm to get connected to the banks without visiting a ‘brick and mortar’ branch. He also emphasized the role of Financial Literacy and Credit Counselling Centres and advised the banks to open such centres for the benefit of people.
The programme was also attended by Additional District Development Commissioner, Udhampur . Ram Ratan, Executive Director, J&K Bank Ltd . Ashok Mehta and other senior government officials, bankers, teachers, students and a large number of villagers including women, senior citizens, NREGA beneficiaries and farmers. A cultural programme was presented by the school children before the dignitaries. The audience was familiarized with the history and functions of Reserve Bank of India through a film show. Films on features of genuine notes and on the functioning of the Banking Ombudsman were also shown for the benefit of the public. With the help of J&K Bank Ltd, a counter for exchange of soiled and mutilated notes and issuance of fresh notes and coins was set up at the venue which attracted a huge crowd. Literature highlighting the functions of RBI and on financial literacy and education was distributed to the students and other members of the audience.