RBI road map for rural banking

RBI Deputy Governor Subir Gokarn at Parakuchi village in Kamrup district on Sunday.

Guwahati, Dec. 12: The Reserve Bank of India (RBI) has drawn a road map to bring 2,327 villages in Assam with a population of over 2,000 under the banking system. The exercise would be completed by March 2012. RBI deputy governor Subir Gokarn said the RBI was committed to bring banks closer to people and was taking all steps to do the needful. Gokarn’s first visit to Assam brought him to Parakuchi village, 40km from Guwahati, in Kamrup district to inaugurate a financial outreach camp.  On the issue of directing private banks to set up facilities in rural areas, Gokarn said they could not direct the banks as there was always a question of viability. “If it is viable, they will come,” he said

Microfin pioneer Yunus lashes out at Indian outfits

BANGLADESHI microfinance pioneer Muhammad Yunus on Sunday attacked companies for “misusing and abusing” his original concept of helping the poor via small loans, after a backlash against profit-making lenders.   Mr Yunus admitted the reputation of microcredit had been tarnished by Indian commercial companies that charge high interest rates and use heavy-handed tactics to collect repayments.

Bimal Jalan Committee Report on stock exchanges sparks debate

The Bimal Jalan Committee report on stock exchanges is a good report and well-argued though the committee may have erred on the side of caution," Rajesh Chakrabarti, assistant professor ­finance,ISB,observed on Friday . Kicking off a panel discussion on the report held in the city,  Chakrabarti pointed out that the 5% cap, the maximum stake that individuals and corporations can hold in an exchange, was the rule in many countries. He also argued that stability and not mindless competition was more important. Competition, he said, could be sub-optimal and "haven't really done too much on Wall Street". An exchange chief's role was to bring ininvestors to trade at one place and increasing the number of exchanges could lead to greater fragmentation.

May increase rates if inflation doesn’t come within RBI’s comfort zone: Chakrabarty

With inflation still looming large, Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty today hinted the central bank was open to another increase in key policy rates.  During the previous policy review, Governor D Subbarao had indicated the chances of another rate increase were relatively low as inflation was moderate.  “The governor said it might not be necessary. That does not mean if there is a pause you cannot do it (raise rates). If it needs to be done, it can be done; that is his choice,” Chakrabarty said when asked if RBI was open to raising rates despite the pause indication in the November policy.  An accommodative monetary policy was not required at present due to the high growth rate, Chakrabarty said, on the sidelines of a Confederation of Indian Industry event at Kolkata today.

Release the Bhagat Singh coin series, appeals NGO

Chandigarh, Dec 10 – An NGO working to propagate the ideology of freedom fighter Bhagat Singh Friday appealed to Prime Minister Manmohan Singh to release of the currency coins commemorating the martyr. Members of All India Shaheed Bhagat Singh Brigade charged the central government with ‘unnecessarily delaying’ the circulation of these coins that were   minted in the denomination of Rs.100 and Rs. 5. In 2007, the government had announced to issue coins bearing the image of Shaheed-e-azam (great martyr) Bhagat Singh. We have checked with the Reserve Bank of India and found the coins were made in 2008 but till date, the authorities concerned have not given the green signal to bring these out in public,’ organisation chief Yadvinder Singh told reporters

SEBI calls for provisions to protect autonomy

The capital market regulator has sought provisions to ensure the autonomy of regulatory bodies. “It is imperative to make sure there are adequate supportive provisions in the laws and rules to maintain the autonomous character of these institutions,” said C B Bhave, chairman, Securities & Exchange Board of India (Sebi). Bhave’s statement comes close on the heels of a stand-off between the Reserve Bank of India (RBI) and ministry of finance on the issue of autonomy. Early this year, the central bank objected to an ordinance that gave a committee headed by the finance minister overriding powers in the event of inter-regulatory disputes

RBI to convene meet on microfinance institutions issue

The Reserve Bank of India (RBI) will convene a meeting of banks to gauge their stand in relation to microfinance institutions (MFIs) in the interim period between the submission of the Malegam committee report and its study by the bank. RBI Governor Duvvuri Subbarao told mediapersons here Thursday that the meeting might be held in the next two weeks though the final decision is yet to be taken.

Banking licence norms by Jan

RBI will be ready with its draft guidelines on new banking licences by January, governor D Subbarao said on Thursday. It will put a gist of feedback received on the new licence issue in its website shortly. The RBI central board has on Thursday discussed issues like initial capital for new banks and their likely business model, and how would the promoters capital be diluted after initial years. We received a broad spectrum of feedback and there is no clear-cut opinion one way or the other, Mr Subbarao said

RBI wants ideas on savings rate freeing

Reserve Bank of India governor D Subbarao today said the central bank was unsure about the impact if savings rates were deregulated and if it would make interest rates unstable. We will bring out a discussion paper soon on the (subject) and want banks to give suggestions on it,” he said. The central bank’s mid-term policy review had said the discussion paper would delineate the pros and cons of deregulating the savings deposit rates, which had remained unchanged at 3.5 per cent per annum since March 1, 2003. “There is a chance that once it comes, banks will abandon low-income household services. If interest rates go down, it will affect small savers and if it goes up, it may impact the costs of banks. We are not clear about its outcome,” Subbarao said. Adding: “If we talk about the positives, it may give additional flexibility for banks; they can come up with innovative products. Moreover, if interest rates go up, it will attract more savings and the apex bank will have a better idea of monetary policy transmission.”

INFLATION STILL ABOVE RBI’s COMFORT ZONE: SUBBARAO

Reserve Bank of India (RBI) Governor Duvvuri Subbarao today said inflation was still above the central bank’s tolerance level and it would revisit the gross domestic product (GDP) growth numbers in its quarterly policy in January.  RBI had earlier projected that the economy would grow 8.5 per cent in the financial year ending March 2011. “Inflation is coming down, but is still above RBI’s tolerance level. On the other hand, the growth is encouraging. RBI will revisit the growth numbers in its third quarter review,” Subbarao told reporters after a meeting with West Bengal Chief Minister Buddhadeb Bhattacharjee

Inflation expected to reduce

The central bank’s deputy governor, Subir Gokarn, today said inflation was expected to reduce in the coming months. And, that liquidity was a concern. “Though a crisis still prevails internationally, in the domestic front things are hopeful, as the GDP and IIP numbers were good in the second quarter. The most important thing is that overall inflation is showing signs of decline. Though some food items are still under pressure, even food inflation is expected to be down,” he said.

Microsoft introduces tracking protection on Internet Explorer

As the debate continues about a potential privacy system that would allow con- sumers to opt out of having their data collected online, Mi- crosoft Corp. on Tuesday an nounced a feature for the new- est version of Internet Explorer that would permit users to stop certain websites from tracking them. The feature, which will exist in Internet Explorer 9, avail- able next year, will let users limit the ability of third-party companies to track them on- line. The announcement comes less than a week after the Federal Trade Commission (FTC) advocated a “do not track“ mechanism that could be built into a browser and alert websites that a user did not want to be monitored.

Diesel, petrol price hike looming

With inflation worries easing, the minsterial panel on fuels could raise diesel prices by Rs 1-2 a litre next week in a bid to reduce losses of state-run oilmarketers and boost investor confidence ahead of a follow-on public offer from market leader IndianOil.

RBI to issue coins to commemorate Mother Teresa

The Reserve Bank of India (RBI) today said it would issue new Rs5 coins to commemorate the birth centenary of Nobel laureate Mother Teresa. "The Reserve Bank of India will shortly put into circulation coins of Rs5 with the theme, Birth Centenary of Mother Teresa," RBI said in a statement. The coins commemorating the founder of the Missionaries of Charity would be circular in shape and have a diameter of 23 millimeter, it added. Mother Teresa was born as Agnes Gonxha Bojaxhiu on August 26, 1910, in present-day Skopje in the Republic of Macedonia. Besides, the existing Rs5 coins will continue to be in circulation.

A question of control

This refers to the report “Govt tightens grip on RBI” (December 7). There is nothing unusual or objectionable if, in a democracy, the legislature wishes to have a say in policies that are implemented through various arms of the government. In this context, the government’s concern on the contours of the Reserve Bank of India’s (RBI) staff management is understandable. At the same time, this makes glaringly obvious the anxiety of a government that is losing its grip on governance and is, therefore, attempting to showcase some instances of making its boys obey.

The RBI Staff Regulations, 1948 and HR management of the central bank have stood the test of time and never been a cause of problems for the Centre. RBI’s central boards and governors have been consistently showing the maturity to consult the central government on important matters and, by and large, all finance ministers including the present prime minister have respected the RBI’s autonomy. The current impasse appears to be the result of some misunderstandings at lower levels. The earlier the issues are settled amicably before they affect individual egos, the better.

MG Warrier, Mumbai

First among equals

Reserve Bank of India employee representatives have objected to the finance ministry’s reported move to keep North Block informed of the salary structure and perks. However, a section of the market feels that the central bank should not be granted preferential treatment when other financial sector regulators such as the watchdog for the capital markets, insurance and pension are adopting the same practices. 

It’s fight to the finish for SBI top job

Lobbying is in full swing for the top job at the country’s largest bank, the State Bank of India , with its chairman OP Bhatt set to complete his term early next year. Some of the potential candidates, who also include CEOs of large state-owned banks, are ensuring that there are no problems on the vigilance front, which will help expedite the process.

Microfinance institutions under stress, not threat: RBI

Microfinance institutions (MFI) are an integral part of financial inclusion in India but are currently under some stress, Reserve Bank of India Deputy Governor Subir Gokarn said on Tuesday. "The MFI industry might be under little stress as the banks are finding it difficult to lend to them at this moment. But the system as a whole is not under threat," Gokarn told reporters on the sidelines of an outreach programme on the outskirts of Kolkata.

Govt tightens grip on RBI

Board meet to give govt final say on central bank’s staff-related matters.

The government is likely to have a final say on issues such as salary, service conditions, promotions and incentives of the Reserve Bank of India’s employees. These are, till now, under RBI’s own purview.  The government has been pressing RBI for three years to make its staff regulations statutory under Section 58 of the RBI Act, 1934, and bring it under the subordinate legislation of Parliament. According to sources, a resolution to this effect is expected to be approved at the board meeting scheduled this Thursday in Kolkata. RBI had so far been resisting the move. Recently, the government asked RBI to take its approval before finalising pay raises for the central bank’s employees. The regulator resisted and a compromise was agreed, under which RBI would ‘brief’ finance ministry officials about pay revisions before implementing these. However, the central bank insisted it would not seek government approval. “RBI is an autonomous body. If it gives in to the government demand to make staff regulation statutory, then all decisions on central bank employees, like service conditions and benefits, which are now taken by RBI will need government’s approval,” said Samir Ghosh, general secretary, All India Reserve Bank Employees’ Association. Ghosh has written letters to RBI Governor D Subbarao and other central board members, requesting they not sacrifice independence on staff matters. “The central government is very much insistent in this regard and desires to get it approved in the board meeting of the bank at the earliest. This, we apprehend, will further dilute the independent functioning of RBI and make it a subservient institution to the finance ministry,” Ghosh wrote to one of the board members. During the year, there were at least two instances when certain actions of the government had prompted Subbarao to highlight the importance of RBI’s autonomy. The first was over the ministry’s decision to refer all regulatory disputes on hybrid financial products to a committee headed by the finance minister. RBI also expressed its concern about the proposed Financial Stability and Development Council, on the reasoning that financial stability should be the exclusive mandate of the central bank.

RBI ASKS BANKS TO OPEN RESOURCE CENTRES FOR FINANCIAL INCLUSION

The Reserve Bank of India (RBI) has urged commercial banks to open financial inclusion resource centres throughout the country. These would work as a store-house of all relevant information pertaining to financial inclusion. “Though RBI is doing its bit by opening financial inclusion resource centres, it’s not enough. So, commercial banks should also open such centres as this is a good development and commercial proposition,” RBI Governor D Subbarao said on the sidelines of the launch of a financial inclusion resource centre here today.  The central bank, which has opened such centres in Pune and Chandigarh, was planning to open two more, one each in Kolkata and Mumbai, he added. RBI is pushing banks to provide basic banking services in villages with a population of 2,000 and above by 2012 and those with a population of less than 2,000 over the next three to five years.

“Both banks and state governments are majority stakeholders in the financial inclusion process. While this will ensure better governance in states due to better transparency, banks will get low-cost deposits to protect themselves from asset-liability mismatches,” he said.  He, however, added the financial inclusion process was slow in many regions and should be expedited.  Earlier, banks had submitted their financial inclusion plans to the regulator, according to which around 200,000 business correspondents and customer service points would start work over next two-and a-half years. Also, 4,000 branches in unbanked villages and 100 million no-frills accounts would be opened. Recently, RBI made a policy change by allowing for profit organisations to act as business correspondents to speed up financial inclusion. “Commercial banks should see financial inclusion as an opportunity rather than an obligation,” Subbarao said. He said technology should be used to meet financial inclusion targets.