The RBI clutches at straws

By extending priority sector target to foreign banks, RBI has displayed a lack of understanding

.........After nearly five decades of regulation over 50 banks with nearly 100,000 bank branches enforced with penalty and policy coercion (banks that don’t meet targets are not given new branch licences) the status of the priority sector is pathetic. A case in point being the 26 million small enterprises. These contribute 17% of the gross domestic product, 45% of manufactured output and employ 60 million people. Yet, credit availability to these enterprises is meagre. In fact, it is less than 10% of aggregate net bank credit..........

Read - Mint

New banking could use some old time culture - DR. N. A. MUJUMDAR

.....What is required today is the same " small borrower friendly" banking culture, unlike profit- making micro finance institutions ( MFIs). Public sector bankers should go beyond profit- making and try to upgrade the enterprises to which they lend - may be for farm or non- farm enterprises - and catapult the borrower into a higher income trajectory. Mere tokenism of making banking services physically accessible will not do. Profitability and social banking need to be blended. Financial inclusion in a meaningful sense thus warrants the same commitment on the part of the bankers, particularly public sectors bankers, that they displayed during the Lead Bank Programme.......

Read - FPJ

Over 100 aspirants line up for banking licence, seek clarity

RBI has been flooded with requests for interpretation of its rules for grant of new banking licences and for clarifications on the 'ambiguity' in various areas, as more than 100 entities have evinced initial interest in seeking permission to set up banks. RBI released its guidelines for licensing of new banks in February this year, asking the aspirants to submit their applications by July 1, 2013. Later, the central bank asked all the interested parties to seek any clarifications they might have on the issue by April 10, a deadline that ended last week. Sources close to the development said that more than 100 entities appear to be interested in applying for the licence, going by the quantum of clarifications sought from RBI in this regard...........

Read | Business Standard

An unfair appraisal system

..... Employees cannot be subject to any change in the policy guidelines with retrospective effect; it's against the rules of natural justice......

Read | Business Standard

Birla, Tata review use of parent branding for bank

...........A senior Birla official said they were looking at the option of not using the parent brand, following the interpretation by their lawyers of RBI's guidelines. Hence, they had sought the regulator's clarifications on using the brand name before April 10, when the deadline for seeking clarifications from the regulator on bank applications expired............

Read | Business Standard

Spreading banking

...The combination of a much lower transaction cost and the opportunity to greatly enhance banking reach has resulted in an increasing number of banks offering mobile banking services. This, in turn, coupled with the growing ubiquity of mobile phones has resulted in a very rapid growth in the number and value of mobile banking transactions taking place. According to RBI data released last week, the number of banking transactions doubled to 5.6 million between January 2012 and January 2013, while the value of these transactions more than trebled to R625 crore in January 2013 from R191 crore in January 2012. Now, the advantage of mobile banking for the banks is clear.............

Read - FE

Waiting at the bottom of a pyramid

.........More than seven years after the term was popularised by CK Prahalad, ‘bottom of the pyramid’ remains an exciting challenge and much like El Dorado continues to attract gold diggers, many of whom will vouch that it is more a myth than a reality. The industry, however, continues to view this opportunity with some suspicion but the government, perhaps out of political compulsions, continues to roll out schemes pushing money into rural India for the benefit of more than 700 million Indians. Under immense pressure from the Reserve Bank of India, banks have allocated significant resources and introduced the business correspondent model, which met with limited success......

Read - Hindustan Times

SBH opens regional office

The State Bank of Hyderabad (SBH), which became the first associate bank to cross Rs two lakh crore business in the last fiscal, unveiled its Regional Office (RO) here on Friday stressing its commitment to the eastern region States, particularly Odisha.......

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“RBI may go for two rate cuts by September”

......Core inflation is down and headline WPI (Wholesale Price Index) is somewhat comfortable. It is likely that the RBI will take advantage of this to push through two more rate cuts. We are certainly expecting one in May and, perhaps, one more in the first half of the financial year. After that, the base effect starts to work against inflation. Besides, the diesel price hikes will have considerable second round impact across sectors. In September, the inflation cycle reaches the bottom and will pick up again thereafter. Hence, the central bank may decide to go easy on rate cuts in the second half of the financial year...........

Read - ET

Ideas can not only ‘change your life’, but can destabilise financial sector!

My View on  "Bank for overseas
 Keralites mooted"

An All Women’s Bank from FM, another NRK(Non-Resident Keralites) Bank from Government of Kerala, probably an ‘All Kids’ Bank’ from someone else…what next? This is what RBI Governor told ‘Weekly’ in Mauritius:

“You need to improve your domestic savings in order to reduce dependence on foreign savings. You need to generate domestic savings. For that you need to have a competitive and efficient banking sector which can give a higher rate of return to the savers but at the same time give competitive rates of interest to the borrowers. That means that the net interest margins of the banks must be small. In other words, banks must be more effi cient in financial intermediation. If you accept that improving domestic savings is a challenge, the remedy lies in the banking sector becoming more efficient.” Are these ‘ideas’ in conformity with Governor’s view? 

- M.G.Warrier

Look beyond the gloss

...........Banks offer many ‘special’ privileges on special women’s accounts, right from lower minimum balance and extension of withdrawal limits, to free accident cover and concessional locker rates. For instance ICICI Bank’s Advantage woman savings account offers a zero balance facility and an air accident insurance of Rs. 50,000. The women’s savings account offered by HDFC offers accidental death cover of Rs 10 lakh, and accidental hospitalisation cover of Rs 1 lakh.........

Read - HBL

A tale of two economic downturns

Now that most people believe the economy is at or near the bottom during the current cycle, it would be interesting to compare a few current economic indicators to where they were at the bottom of the previous cycle in the early 2000s, after the end of the technology boom. But isn’t the current downturn, coming as it does after a global financial crisis, much worse than the slowdown after the tech wreck? ..........

Read - Mint

Cut the rates, never mind the spreads

..........With the pace of growth of deposits now having slowed to decade-lows, some banks have been compelled to up rates to be able to hold on to customers. So, at a time when banks should have been able to lower loan rates—in response to the signalling from the Reserve Bank of India (RBI)—they’re not doing so. In a sluggish economic environment, loan growth too has decelerated—though it continues to outpace the increase in deposits—and it might have helped if banks had been able to stimulate some demand............

Read - FE

Mismatch in maturity profiles of banks’ assets & liabilities - K.Sivaraman, Former Regional Director

......It would have been more interesting if the Report had provided the share of ultra short-term, wholesale and high-cost deposits. One guess is that the share of such deposits could be anywhere between 15 and 20 per cent of the total deposits. The other issue is whether strict compliance with KYC norms has been achieved in obtaining such deposits. This assumes importance in the context of the reports of alleged money laundering and role, if any, played by banks in this regard.......

Read - HBL

Economic revival not yet in sight

.....The pressure on the fisc and the worrisome current account deficit are negative factors for potential investors, domestic and foreign. Indeed, the situation is no better than the early ' 90s, when the government was forced to pledge gold with the Bank of England. The cushion of nearly $ 300 billion in forex reserves can evaporate quickly, should the pull- out by the FIIs gather speed. How to make India an attractive destination for foreign investment is the challenge for the economic policy- makers.....

Read - FPJ

Stable but critical

....... Although it is down slightly compared to last month, inflation is still above 10 per cent. As the Reserve Bank of India has been saying for some time, this significantly limits the monetary policy response to slowing growth. The ball is very much in the government's court, then, and the clock is running down very fast.

Read | Business Standard

Policy makers should react stronger to revive growth

.....S S Tarapore, former deputy governor of Reserve Bank of India warns, "The Exim policy cannot be a substitute for prudent monetary, fiscal and exchange rate policies. In the absence of shock therapy for dealing with inflation and CAD, there would be a major upheaval, as India would eventually face the ignominy of international censure." His prescription is that the RBI should buy when there are capital inflows to prevent an appreciation of the rupee and refrain from selling when there are outflows. "The upshot is that the rupee would depreciate as it indeed should. At the margin, it is preferable to have an undervalued rupee rather than an overvalued rupee", he says. ......

Read | Business Standard

Well-known industrialist R P Goenka passes away in Kolkata

....He was a past president of the Confederation of Asia-Pacific Chambers of Commerce & Industry and former chairman of the Board of  Governors of Indian Institute of Technology (IIT), Kharagpur. He had served in the past as a director on the Central Board of the Reserve Bank of India, General Insurance Corporation of India, Steel Authority of India Limited and Industrial Development Bank of India.............

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RBI to cancel licences of 26 loss-making cooperative banks

The Reserve Bank of India will shortly cancel licences of 26 loss-making cooperative banks, including 16 in Uttar Pradesh, Deputy Governor K C Chakrabarty today said. A capital of Rs 2,000 crore is required for running 16 cooperatives banks in the state and RBI may not cancel the licenses of these banks if the state government supports them, Chakrabarty told reporters on the sidelines of an event here.............

Read - IE

Coop Bank launches USBs at North Andamans

DIGLIPUR - 12 Apr 2013 : Under Door Step Banking services, the Andaman and Nicobar State Cooperative Bank (ANSCB) launched Ultra Small Branch (USB) at Radhanagar & Kishorinagar on 11th April, 2013 as per the Financial Inclusion Initiative (FII) of RBI...........

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