TMB staff demand raising retirement age to 60
COIMBATORE, OCTOBER 28:
The All-India Bank Employees Association has sought support from its members and State federations to the demand of the Tamilnad Mercantile Bank Employees� Union for parity in retirement age to 60 instead of the present 58 years.
�This Tuticorin-headquartered bank with a network of about 400 branches and 3,200-plus employees and officers, though a member of IBA, is not part of our industry-level bipartite settlement.
�While most of the common service conditions and pay-scales are being implemented by this old scheduled commercial bank, the retirement age of employees at TMB is 58 against 60 in all other banks in India. The management has not relented to our demand to increase the retirement age to 60,� said AIBEA General-Secretary CH Venkatachalam.
Citing the RBI�s relaxation in the retirement age of Managing Directors/CEOs of private banks up to 70 years, Venkatachalam said, �It is quite obnoxious that the retirement age of ordinary employees and officers is kept at 58 instead of 60 at TMB.�
To press their demand in retirement age relaxation, the AIBEA, besides urging all bank unions to write to the MD of TMB, has called upon the members of Tamilnadu Bank Employees Federation to hold a dharna and mass rally before the head office of TMB at Tuticorin on November 8......
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Source:##http://www.thehindubusinessline.com/industry-and-economy/banking/tmb-staff-demand-raising-retirement-age-to-60/article6541900.ece##-Oct 28 ,2014
India needs independent Financial Resolution Authority: RBI panel
MUMBAI: India should have an independent Financial Resolution Authority (FRA) with sweeping powers over banks, insurers and brokerages � to prevent a contagion from sinking the financial markets, similar to what the US has evolved after the 2008 credit crisis, an experts' group has said.
Some of the tools to prevent any too big-to-fail institution wrecking the system include liquidation, purchase and assumption, bridge institution , good-bank and bad-bank , bail-in and temporary public ownership , it said. These are among the at least 38 major, and scores of minor, proposals floated by the group, headed by Finance Secretary Arvind Mayaram, and former deputy governor Anand Sinha, to prevent a meltdown similar to the one in US in September 2008 after the Lehman Brothers Holdings filed for the biggest-ever bankruptcy.
The FRA should be independent of regulators and the shareholders must bear the losses in case of failure , the committee says. "The aim of resolution is not to preserve the failing institution, but to ensure continuity of the functions that are critical for the financial system as a whole and limit any use of taxpayers' money," says the report submitted to the Reserve Bank of India Governor Raghuram Rajan. India, which escaped the global financial crisis without much of a scar because of its closed market, is evolving systems and institutions to prevent calamities such as in the US where the government bailed out Wall Street banks with tax payers' money.
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Source:http://timesofindia.indiatimes.com/Business/India-Business-May 03,2014
RBI switches 30 banks to risk-based supervision
MUMBAI: The Reserve Bank of India, scrapping its age-old practice of CAMELS inspection, has switched 30 banks to risk-based supervision, indicating what could be the beginning of the regulator's micro management of banks.
The CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and system & control) framework was developed in the early 1970s by the US Federal Reserve to assess the health of a bank.
Under this, banks were rated largely on financial parameters and performance. Post the 2008 global crisis, regulators across the world have begun shifting to risk-based supervision to ensure banks do not take undue risks to maximise profits and boost performance.
"In the inspection for the financial year 2014, the RBI identified 30 large private, foreign and public sector banks that were put through the risk-based supervision,'' said the MD and CEO of a private sector bank.
"Senior supervisory managers, or SSMs, from the RBI have been scrutinising the banks' books. They are focused on risk framework and capital comfort of the bank. They are looking at credit, market, operational and management risk. The SSMs are also studying the composition of bank boards and commenting on them,'' he said.
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Source:http://economictimes.indiatimes.com/news/economy-May 03,2014
Reserve Bank of India refuses overseas bond sale with bank guarantees
MUMBAI: Overseas bond sale planned by troubled firms with the backing of bank guarantees will be hit after the Reserve Bank of India curbed the practice and also laid out strict conditions for loans to overseas ventures which were used to pay back domestic loans. The central bank's efforts to curb what some called the 'evergreening of loans by stealth' could boost the number of defaults in India and also keep interest rates high given that troubled firms now have to borrow locally.
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Source:http://economictimes.indiatimes.com-May 01,2014
Reserve Bank of India, Finance Ministry in a war of words over bad loans at public sector banks
MUMBAI: Growing differences between the Reserve Bank of India and government over bad loans at public sector banks have led to a bitter exchange of notes between the banking regulator and the finance ministry that controls state-run lenders. Bad loans at staterun banks have gone up at a brisk pace, unlike their private-sector rivals and foreign banks. The RBI says this was because of reckless lending to corporates, an allegation that has not gone down well with the ministry which says the banks were only following government advice to help boost the economy.
In a discussion paper, titled 'Management and Governance Issues in Public Sector Banks' and presented to the government in March, the RBI said the sharp rise in bad loans cannot be just because of the downturn in the economy, and blamed what it called sub-optimal credit management among public sector banks for the problem. For public sector banks, the ratio of gross nonperforming assets � bad loans before making any provisions� to total loan book rose from 6.8 per cent in 2009 to 12.1 per cent in 2013. In the same period, the ratio for new private banks fell from 6.6 per cent to 5.3 per cent. Public sector banks control 70% of the market in terms of credit and deposits In its response defending PSU banks, the ministry said most private banks had stopped lending post global financial crisis in 2008 while PSU banks emerged as the only providers of big-ticker loans. It was at the instance of the government that PSU banks provided financial support to the manufacturing and infrastructure companies in order to give a boost to the economy, it said. To sum it up, the ministry said the huge bad loans or nonperforming assets with public sector banks were because they were willing to take the risk to support economic growth
The central bank was not convinced. It responded last week maintaining its stand that PSU banks have weak credit management skills. In response to the ministry's defensive letter, RBI noted that even if the PSU banks were lending at the instance of the government to boost the economy, they should have followed the principles of prudent lending which implied giving loans to to credit-worthy borrowers against adequate security as collateral.
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Source:http://economictimes.indiatimes.com/news/economy-May 01,2014
RBI signals it may not let rupee rise above 60 a dollar
MUMBAI: The Reserve Bank of India signalled that it will not let the rupee appreciate beyond 60 to the dollar as it shifts to consumer prices as a basis for calculating the real effective exchange rate or REER.
The central bank has released a new measure for REER based on the consumer price index or CPI. REER is the inflation-adjusted value of the currency factoring in inflation differentials among trading partners. Until recently, REER, an indication of the skew in exchange rates, was calculated on wholesale prices.
Using the new measure, an analysis by Yes BankBSE 0.65 % showed that at current levels, the rupee is very close to its fair value. By that token, if the rupee strengthens further, the Reserve Bank could step in and buy dollars to stabilise the currency. "If inflation stays at current levels then the exchange rate should stabilize at 60," the report said. The rupee currently trades at 60.40-60-80 levels.
"Amidst a clear mandate on elections and higher dollar inflows, fair value should improve further. However, in order to curb volatility, RBI is expected to allow the upturn only in a gradual fashion," said Shubhada Rao, chief economist, Yes Bank .
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Source:http://economictimes.indiatimes.com/markets/forex-April 30 ,2014
Banks wary of RBI norms on prepayment penalties
The Reserve Bank of India (RBI)�s proposal that banks refrain from levying penalties on customers for prepaying floating rate term loans has put lenders in a fix. They fear if corporate houses adhere to this, it will lead to asset-liability mismatches.
In its annual policy review on April 1, the central bank had proposed a ban on prepayment penalties. �Consumer protection is an integral aspect of financial inclusion. The Reserve Bank of India proposes to frame comprehensive consumer protection regulations based on domestic experience and global best practices. In the interest of their consumers, banks should consider allowing borrowers the possibility of prepaying floating rate term loans without any penalty,� RBI had said.
What baffled bankers was nowhere in the policy did RBI mention the step was for retail borrowers; also, it didn�t put a cap on prepayment. �There is already a ban on prepayment penalty on floating rate housing loans, a major chunk of retail floating loans. Allowing corporate houses to prepay their term loans without any penalty will create major asset-liability problems for banks,� said a senior official at a public sector bank.
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Source:http://www.business-standard.com/article/finance-May 01,2014
RBI to issue Rs 100, Rs 50 banknotes with 2014 printing year
The Reserve Bank of India (RBI) will shortly issue Rs 100 and Rs 50 denomination banknotes of 2014 printing year with rupee symbol in the Mahatma Gandhi series-2005.
"The Reserve Bank will shortly issue Rs 100 denomination banknotes incorporating symbol on the obverse and reverse, with inset letter L in both the numbering panels, in the Mahatma Gandhi Series-2005 bearing signature of Raghuram G Rajan, Governor, RBI," the apex bank said in a release.
Banknotes of Rs 50 denomination will be issued with similar features as of Rs 100 banknotes.
The year of printing '2014' would be printed on the reverse of the banknote, it said.
RBI said the design of these banknotes to be issued would be similar in all respects to Rs 100 and Rs 50 banknotes in the Mahatma Gandhi Series-2005 issued earlier.
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Source:http://www.financialexpress.com/news-May 01,2014
RBI panel moots centralised bill payment system
MUMBAI: A committee set up by Reserve Bank of India has suggested a mechanism for centralised bills payment system in the country, primarily by setting up two organisations - Bharat Bill Payment Services or BBPS and the Bharat Bill Payment Operating Units or BBPOUs.
The panel known as GIRO (Government Internal Revenue Order) Advisory Group or GAG, headed by IIT Bombay professor Umesh Bellur, was set up last October and was looking into GIRO-based electronic system. It is a centralised process that allows payments for utility bills, educational fees and insurance premium by just visiting the bank branch.
GAG has submitted its report to the central bank, recommending a tiered structure where BBPS will be the authorised standard setting body while the BBPOUs will be the authorised operational units, working in compliance with the standards set by the BBPS.
"The BBPS will function as a 'not-for-profit' organisation which has necessary experience in the payment systems space while the BBPOUs may be operated on commercial lines by existing entities in the bill payments space as well as new entities interested in this segment," RBI said in a release issued on Wednesday. The BBPS will also handle the settlement responsibilities arising out of the transactions in the system.
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Source:http://economictimes.indiatimes.com/news/economy-Apr 24,2014
Court stays curbs on foreign travel by bank officers
THIRUVANANTHAPURAM, MAY 2:
The Madras High Court has ordered an interim stay on a recent circular that took away leave travel concession facility to bank officers for journeys abroad.
�Having regard to the undertaking given by the petitioners and having regard to the rules position, there shall be an order of interim stay until June 12, 2014,� Justice S Nagamuthu observed.
Contentious order
This was in response to a writ petition moved by the All India State Bank Officers� Federation, Chennai, and All India Bank Officers Federation, New Delhi. The petitioners had sought an interim stay on a contentious circular of April 7 by the Chief Executive, Indian Banks� Association (IBA) read with the e-circular dated April 15 by Chairman, State Bank of India (SBI).
Representing the unions, D Thomas Franco Rajendra Dev gave an undertaking that if an interim stay is granted and later if the writ petition is dismissed, the amount paid to cover foreign/overseas travel to officers will be refunded by the individual officers concerned.
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Source:http://www.thehindubusinessline.com/companies-May 02,2014
To fast-track cheque-bounce cases, SC issues guidelines
With more than 40 lakh cheque-bounce cases choking the justice delivery system in the country, the Supreme Court has issued slew of guidelines, including issuance of summons through e-mails and completion of evidence within three months, to prevent further piling up.
A bench of Justices K S Radhakrishnan and Vikramjit Sen laid down guidelines to be uniformly followed by all magisterial courts dealing with cheque-bounce cases under pertinent provisions of the Negotiable Instruments Act for a �speedy and expeditious disposal�.
Directing for a day-to-day trial, the court said that a magistrate shall issue summons on the same day he receives a complaint, provided documents are in order. It held that a magistrate need not call a complainant twice for recording his statement, once at pre-summoning stage and another after issuance of summons, and taking an appropriate affidavit from him should suffice.
The summons should be issued immediately by post as well through e-mails. The court said that summons should apprise an accused that he could show up in the court and compound the offence on the same day.
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Reserve Bank of India puts fraud detection expert on United Bank of India board
Reserve Bank of India on Tuesday inducted its official, Pravathy Sundaram, to the board of United Bank of India (UBoI).
As per the Banking Companies (Acquisition & Transfer of Undertakings) Act 1970, the finance ministry nominated the official who holds a rank of chief general manager at the RBI's department of banking and operations, and replaced Surekha Marandi, another RBI official whose three-year term has come to an end, a notification filed with the exchange authorities by UBoI said on Tuesday.
Parvathy Sundaram is an expert on investigations relating to frauds in the banking sector. In December last, she represented RBI and presented a paper at the Bank Fraud � Annual Summit 2013 organised by Fintelekt. Besides, she has made several observations on various frauds in the financial sector in several meets like National Conference on Financial Fraud organised by industry body Assocham at New Delhi in July.
At the RBI, she introduced various norms for classifications and reporting of frauds that were later sent out to all scheduled commercial banks as a guiding note for their asset class.
The induction of Sundaram to the board of UBoI has occurred at a time when the finance ministry has conducted a forensic audit of the bank's books and with the central bank imposing a limit to which it could lend to a single borrower account. The Kolkata-based bank came under watchful eyes of the authorities after its chairman and managing director Archana Bhargava quit her post around the third week of February citing "health" reasons.
Non-performing assets of the bank over the second and third quarter spiralled upwards to Rs 1727 crore after an initial net profit of Rs 45 crore in the first quarter (April-June 2013) of the current fiscal.***
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Source:http://www.dnaindia.com/money/Mar 19,2014
RBI's foreign exchange reserves in gold fall 15%
KOLKATA: Portfolio managers who have been losing money in the past year � be it on gold or fixed income securities � need not feel bad. They are in the company of Reserve Bank of India. The central bank's foreign exchange reserves in gold fell 15% in value between March and September last year, and the yield on reserves fell 2 basis points amid low interest rates across the developed world.
The RBI parks its foreign currency reserves with other central banks, Bank for International Settlements (BIS), overseas branches of commercial banks and sovereign and quasi-sovereign debt instruments.
Gold accounted for about 8% of the total foreign exchange reserves in value terms in September last year. The value of precious metals with RBI was $21.765 billion at the end of September last year, from $25.692 billion in March last year.
The RBI held 557.8 tonnes of gold, of which 265.5 tonnes are held abroad with the Bank of England and the Bank for International Settlements. Gold prices in India fell during the first half of last year on account of global softening of prices amid recession and a fall in demand for the yellow metal as a safe investment haven.
The foreign currency assets that are invested in multi-currency , multi-asset portfolios too have yielded less amid softening global interest rates. The rate of earnings on foreign currency assets slid to 1.45% during the July 2012 to June 2013 year from 1.47% during the July 2011-June 2012 period, the RBI said in a half-yearly report on foreign exchange reserves released a couple of days back.
About 63% of the central bank's total foreign currency assets of $248.8 billion was invested in securities at the end of September 2013. Another 35% was deposited with other central banks, BIS and the IMF and the balance 2% was with foreign commercial banks and funds placed with external asset managers.
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Source:http://articles.economictimes.indiatimes.com-Mar 18,2014
Exchange pre-2005 notes at any bank
The Reserve Bank of India has extended the deadline for the exchange of pre-2005 currency notes. It has asked the holders of such currency to exchange them by January 1, 2015. The earlier deadline was June 30. Thereafter, people would have had to produce identity proof to exchange more than 10 notes of Rs 500 and Rs 1,000.
In the recently released FAQs, the RBI said: �Banks have been advised to freely provide this exchange facility to all members of public, whether customer or non-customer.�
Here is a lowdown on the pre-2005 series banknotes and what the recall means.
What are the pre-2005 series banknotes?
The RBI issued Mahatma Gandhi series (MG series) 2005 banknotes in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000. These notes contain some additional or new security features as compared to the 1996 MG series. All banknotes issued before the 2005 MG series are called as pre-2005 series banknotes.
How can one distinguish the pre-2005 series banknotes?
Apart from the additional security features, the 2005 MG series banknotes have the year of printing on the reverse of the notes in the lower middle portion. Banknotes printed before 2005 do not have the year of printing on the reverse side and hence can be easily distinguished.
Why has RBI decided to withdraw pre-2005 series banknotes?
RBI decided to withdraw from circulation all banknotes issued prior to 2005 as they have fewer security features as compared to banknotes printed after 2005. The withdrawal exercise is in conformity with the standard international practice of not having multiple series of notes in circulation at the same time. The RBI has already been withdrawing these banknotes in a routine manner through banks. It is estimated that the volume of such banknotes (pre-2005) in circulation is not significant enough to impact the general public in a large way and the members of public may exchange the pre-2005 series banknotes at bank branches at their convenience.
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Source:http://indianexpress.com/article/business/banking-and-finance-Mar 17,2014
Much Awaited Banking Licenses to be Issued by Reserve Bank of India to Reshape the Banking Industry � finds Frost & Sullivan
Mumbai, Maharashtra, India
The next generation of banking structure will be the first step to a thousand mile journey to make India the third largest banking economy in the world. The issue of �on-tap� new banking licenses will prove to be a game changer for the Indian banking industry. The Bimal Jalan committee has already completed the process of selecting applicants for issues of new banking licenses expected to be announced by March 31st. Not only will it induce greater competition, but it will also stimulate the Indian banking industry that is lagging behind its global peers.
India indicates huge untapped potential for the banking industry. Banking assets to GDP ratio was recorded at 90 percent consistently for the last five years since 2009. This is low when compared to other developing countries and developed countries that have recorded much higher than 100 percent. Credit to GDP ratio in India is around 77 percent while banking credit to GDP was recorded at 52 percent. This is low among emerging and advanced economies in Asia that have a credit to GDP ratio of more than 100 percent. Credit growth in India is recorded between 15 percent and 17 percent for 2013 and is expected to slowdown in 2014. Financial inclusion (every citizen having access to basic banking services) is also low with only 35 percent of the total population having access to banking services. However, the industry stood strong in terms of capital adequacy, solvency, and profitability measures during and after the financial crisis despite increasing non-performing assets.
The Reserve bank of India (RBI) aims to boost these industry statistics via issuance of new banking licenses, especially financial inclusion statistics. While this step would improve the assets to GDP and credit to GDP ratio, whether financial inclusion would be achieved is debatable. The RBI has mandated new banks to open 25 percent of their branches in unbanked regions right from the beginning of its inception. Such unbanked regions have not been very attractive for bankers as the low transaction size does not compensate for the costs incurred in such areas.
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Source:http://businesswireindia.com/news/news-details-Mar 13,2014
Five public sector bankers in fray for RBI dy governor's post
The government has decided to interview five bankers - all from public sector banks - for the deputy governor's post at the Reserve Bank of India. Among the four deputy governors of RBI, one will fall vacant after K C Chakrabarty, who fills the slot of commercial bankers, retires in June.
K R Kamath, chairman and managing director of Punjab National Bank, Vijayalakshmi Iyer, chairperson and managing director of Bank of India, S S Mundra, chairman and managing director of Bank of Baroda, R K Dubey, CMD, Canara Bank, and M Narendra, chairman and managing director of Indian Overseas Bank will appear for the interview which will be conducted by the end of themonth.
Kamath has the spend the maximum period as chairman who was also the head of Allahabad Bank before taking the charge of the Delhi-based lender in October 2009. Kamath is also the chairman of Indian Banks' Association.
Iyer took charge of Bank of India in November 2012 and was an executive director of Central Bank of India earlier. Mundra was an executive director of Union Bank of India and was appointed as bank of Baroda's chairman in January 2013 while Narendra took charge of the Chennai-based lender in November 2010. He was the executive director of Bank of India before his present role.
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Source:http://www.business-standard.com/article/finance-Mar 19,2014
Why United Bank of India is in trouble
Kolkata: One day in late December, a retired executive of United Bank of India received a phone call from a branch manager of the bank he had served for over three decades, asking him to clear the modest interest overdue in a loan account for almost 90 days.
It was �a small account�, says the former banker, who did not want to be identified, and covered by a term deposit he had mortgaged, but the branch manager was insistent that the amount be paid.
On 7 February, the former United Bank executive realized why.
That day, United Bank reported a net loss of Rs.1,238.08 crore for the three months ended 31 December, against a net profit of Rs.42.2 crore a year ago, largely on account of bad loans, or non-performing assets (NPAs), being unearthed by special audits conducted on the instruction of the Reserve Bank of India. It provided Rs.2,260 crore for the bad loans.
The Indian banking system is loaded with stressed assets. Gross NPAs of 40 listed banks that have announced earnings for the December quarter rose 36% to Rs.2.43 trillion from Rs.1.79 trillion in the in the
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year-ago period. About Rs.4 trillion of loans is being recast by Indian banks both through the Reserve Bank of India�s (RBI�s) so-called corporate debt restructuring (CDR) mechanism, which involves lenders writing off some debt and rolling over some more, and on a bilateral basis between individual banks and borrowers.
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Source:http://www.livemint.com/Industry-Feb 19 ,2014
United Bank of India cuts lending rate by 0.25 per cent
State-owned United Bank of India has slashed base rate or minimum lending rate by 0.25 per cent.
"It has been decided to reduce the base rate of the bank from 10.50 per cent to 10.25 per cent with effect from March 24," United Bank of India said in a filing on the Bombay Stock Exchange.
All new loans, including home and car loans, would become cheaper by 0.25 per cent with reduction in base rate.
Shares of the United Bank of India was trading at Rs 28 per unit, up 3.70 per cent on BSE.
Earlier this month, another public sector lender Allahabad Bank raised base rate by 0.05 per cent to 10.20 per cent from 10.25 per cent.
In its Third Quarter Review of Monetary of Policy, the Reserve Bank of India in January raised the key repo rate to 8 per cent in a bid to curb inflation. The central bank's move was expected to translate into higher EMIs and push up borrowing costs for corporates.
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Source:http://businesstoday.intoday.in/story-Mar 18,2014
Bank branches running WinXP to be at risk
MUMBAI: The banking industry in India faces a huge security threat due to Microsoft's decision to withdraw support to Windows XP from April 8, 2014. Besides over 34,000 bank branches, WinXP is used by thousands of retailers in their point of sale terminals which would expose them to hackers.
According to a report by Ascentius Consulting, a large segment of Indian public sector banks embarked on the journey to move away from Windows XP, but may still be left with approximately 20-30% of their base on Windows XP even after April 2014. These banks may inadvertently take up considerable risk exposure. The report says that approximately 70% of rural public sector banks, 60% of semi-urban public sector banks, 40% of urban and metro PSBs use Windows XP as their operating system. The Ascentius report also highlights that overall over 34,000 branches of public sector banks will be at risk due to end of support for Windows XP.
"While Microsoft will be ending all technical assistance for Windows XP (including automatic updates and security patches), they have also confirmed that monthly Microsoft's Malicious Software Removal Tool (MSRT), which aligns with Microsoft's anti-malware engines and signatures, will remain available until July 14, 2015, but XP users will need to download the software from its website manually. Therefore, systems that continue to use XP after the deadline will face increased risks and interest from cybercriminals, particularly if new vulnerabilities are discovered in the OS," said Tarun Kaura, director, Technology Sales, India & SAARC at Symantec.
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Source:http://timesofindia.indiatimes.com/tech/tech-news-Mar 4,2014
Deficit worry? Banks told to remit TDS by month-end
MUMBAI, MARCH 18:
In a controversial move, the Finance Ministry has advised banks to remit the tax deducted at source (TDS) on salary, rent and credit of interest on deposits to the Government account by March-end, almost a month ahead of the designated due date.
Bankers say this advisory contradicts Income Tax Rules, which allow banks time up to April 30 to deposit TDS when the income or amount liable for TDS is credited or paid during the month of March. Moreover, it could raise the hackles of bankers and minority shareholders.
Desperate move?
According to market experts, this could be a desperate move by the Ministry to ensure that the �red line� Finance Minister P Chidambaram has drawn on the fiscal deficit is not crossed. Chidambaram had said the deficit would not exceed 4.8 per cent of GDP.
The TDS advisory, coupled with the Finance Minister�s request to public sector bank chiefs in October to ensure that dividend payable to the Government in 2013-14 is not less than the ?6,803 crore paid in 2012-13, could be aimed at shoring up Government finances.
State Bank of India, Bank of Baroda, Bank of India and Punjab National Bank had declared handsome interim dividends after announcing their third-quarter results. The Central Government, as the majority shareholder in these banks, is the main beneficiary of the dividends.
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Source:http://www.thehindubusinessline.com/economy/-Mar 18,2014
IBA wants free use of other-bank ATMs to end in metros
MUMBAI: Industry lobby Indian Banks Association (IBA) today said it has requested RBI to allow banks to charge customers in the metros to pay for accessing ATMs of other banks but continue with the current cap of five free transactions a month for rural customers.
"We have made our recommendations to the RBI that at least in the metros, the current five free usage of other bank ATMs be withdrawn so that every transaction on other bank ATM is chargeable. At the same time, the present set up be continued in rural areas," chief executive MV Tanksale told reporters here.
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Source:http://articles.economictimes.indiatimes.com/2014-03-14/news/-Mar 14,2014
Banks, Corruption and Crypto: Can Bitcoin Change India?
Last December, the Reserve Bank of India (RBI) issued a warning on digital currencies noting that the bank had not yet authorized any organisation in India to use cryptocurrencies as a method of payment.
As a result, several bitcoin exchanges in India suspended operations, and at least two were raided by government officials, including Buysellbitcoin.in.
Yet, just days later, a deputy governor of the RBI seemed reluctant to concede that it was the bank�s job to regulate digital currencies. Soon after, one exchange, Unocoin, was back in operation.
Additionally, around this time, Bitcoin Alliance India publicly asked the government to offer clear guidance on virtual currencies, which it has yet to do.
So with all these ups and downs, what�s really going on with bitcoin in India?
Corruption solution?
The reluctance of the Indian government to make decisions about virtual currencies may be merely because it doesn�t want to stifle innovation.
Or it could be because trustless systems could quite possibly eradicate corruption in the country. This is certainly one reason why there are many efforts to spread the word about bitcoin in India, including at several meetup groups in Bangalore.
Amith Nirgunarthy, an American living in India, has started an organization called iHeartBitcoins. His goal is to give away small amounts of cryptocurrency to the public and educate recipients on its use.
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Source:http://www.coindesk.com/-Mar 19,2014
Bank unions call for strike on Feb 10-11 after wage talks fail
The United Forum of Bank Unions on Monday called for a sector-wide strike on February 10-11, following the failure of talks on a rise in wages between an Indian Banks� Association team and representatives of bank employee unions.
C H Venkatachalam, general secretary of the All India Bank Employees Association, said banks had offered a 10 per cent wage increase, but the unions refused to accept the offer.
Earlier, bank unions had announced plans for a two-day nationwide strike on January 20-21, followed by further strikes in February and March. They had urged the Indian Banks� Association and the government to resume wage-increase talks with a better offer and expedite the settlement at the earliest.
The two-day strike scheduled for January 20-21 was deferred, as the Indian Banks Association had raised its wage increase offer from the initial five per cent to 9.5 per cent.
On December 18, 2013, about a million bank employees went on strike, demanding early wage revision and opposing banking reforms.
The Indian Banks� Association argued banks couldn�t revise wages, as the economy was in bad shape.
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Source:http://www.business-standard.com/-Jan 28,2014
Frauds ripped public sector banks of Rs. 23,000 crore**
Public sector banks have cumulatively lost a massive sum of Rs. 22,743 crore due to cheating and forgery in the last three years alone, HT has found through a right to information RTI) reply.
Indian Overseas Bank is the worst hit with a loss of Rs. 3,200 cores as against State Bank of India (SBI) which lost Rs. 2,712 crore. Between April 2010 and September 2013, the number of bank fraud cases has shown a slight decrease yearly but the amount of money lost has been increasing year on year.
The number of fraud cases, for instance, came down to 2996 in April 2012 to March 13, from 3748 in April 2010 to March 2011, but the amount shot up to Rs. 10179.42 crore from Rs. 3275 crore.
The Reserve bank of India (RBI) issued detailed instructions to banks on July 2, 2012 containing details related to how banks should examine fraud cases and report them to CBI, the police and the special fraud investigation office (SFIO). Even after this, the money lost in fraud cases have increased. http://www.hindustantimes.com/Images/popup/2014/1/30-01-14-pg01a.jpg
Interestingly, by way of comparison, Indian Overseas Bank lost more to fraud than it earned in profits. It registered a net profit of 2848 crore between 2010 and 2013 but leaked Rs. 3200 crore for the same period.
For SBI, the blow was cushioned. It registered a profit of Rs. 39692 crore between April 2010 and September 2013. In the corresponding period, the bank lost Rs. 2712 crores to fraud.
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Source:http://www.hindustantimes.com/
-Jan 30,2014
Your home loan EMIs may rise as Reserve Bank hikes rate.
MUMBAI: The Reserve Bank of India hiked policy rates by 25 basis points on Tuesday, a surprise move that could lead to some banks hiking interest rates for home loans. However, two of the country's largest lenders � SBI and HDFC � ruled out any immediate increase. The RBI's decision will increase costs for those banks that rely on money markets for funds and may force them to raise their rates to maintain margins.
The good news for borrowers is that the central bank's governor, Raghuram Rajan, indicated that the current hike might be his last if retail inflation eases along expected lines. In a historic deviation, Rajan made it abundantly clear that his prime focus would now be the consumer price index (CPI) � which measures prices that affect the retail consumer � as opposed to the wholesale price index tracked by the RBI bank earlier.
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Source:HTTP://timesofindia.indiatimes.com-Jan 29,2014
Reserve Bank to withdraw all pre-2005 currency notes from circulation
MUMBAI: The Reserve Bank on Wednesday decided to withdraw all currency notes issued prior to 2005, including Rs 500 and Rs 1,000 denominations, after March 31 in a move apparently aimed at curbing black money and fake currencies.
"After March 31, 2014, it (RBI) will completely withdraw from circulation all bank notes issued prior to 2005. From April 1, 2014, the public will be required to approach banks for exchanging these notes," the RBI said in a statement.
The public can easily distinguish the currency notes issued before 2005 as they do not have the year of printing on reverse side. The year of printing in a small font is visible at the middle of the bottom row in notes issued after 2005.
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Source:http://timesofindia.indiatimes.com-Jan 22,2014
Unions welcome apex court verdict allowing pension benefits for dismissed staff
THIRUVANANTHAPURAM, JAN. 19:
The All-India Bank Employees� Association has said the Supreme Court judgment providing pension benefits for employees removed from service meets its long-pending demand.
�We hope the Indian Banks� Association and the Government will now take steps to suitably amend pension regulations based on the bipartite settlement of 2002,� said C. H. Venkatachalam, General-Secretary, AIBEA.
Giving the background, he said the 2002 settlement signed with the IBA governed disciplinary action and procedures to be taken by banks.
PUNISHMENTS ENVISAGED
It provides for various punishments for misconduct committed during the course of their employment.
Commensurate with the degree of misconduct, it envisages punishments such as warning; stoppage of future increments; reduction in pay; removal from service/compulsory retirement/discharge (with all retirement benefits); and dismissal from service.
Prior to this, in 1993, AIBEA had signed a settlement on extension of pension benefit to bank employees.
This settlement was repackaged as a common pension regulation in 1995 to govern the pension scheme for both employees and officers in the banks.
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Source:http://www.thehindubusinessline.com/-Jan 19 ,2014
Reserve Bank of India to digitise its old records
New Delhi, Jan 26 (PTI) To preserve delicate and brittle documents, the Reserve Bank will digitise old records running into 1.5 lakh pages and make them available online.
The archival records of the Reserve Bank of India publications are in the form of books, bound volumes and accession registers.
The objective is "digitising the documents using state-of -the-art scanning and meta-tagging methodologies and subsequent archival of the same with robust online search and query facilities," according to the central bank.
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Source:http://www.ptinews.com/news/-Jan 30,2014
Reserve Bank of India eases FDI exit rules
The Reserve Bank of India has eased rules for foreign direct investment (FDI), allowing exits subject to a lock-in period and without an assured return. This is expected to facilitate greater FDI flow.
Till now, a company could only issue equity shares or compulsorily and mandatorily convertible preference shares or debentures as eligible instruments under FDI policy. These instruments were not allowed any optionality clause, obliging a buyback of securities from the investor.
The permission to allow exit is subject to certain conditions. The lock-in period will be at least a year. If FDI regulations prescribe a higher lock-in, as the three-year norm in the defence and construction sectors, the higher duration applies. The lock-in shall be effective from the date on which shares or convertible debentures were allotted, RBI said
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Source:http://www.business-standard.com/article-Jan 10,2014
Reserve Bank to set up Depositor Education and Awareness Fund
The Reserve Bank of India (RBI), on Tuesday, said that it would establish a fund to be called �Depositor Education and Awareness Fund�, which would comprise unclaimed funds of depositors.
�Pursuant to the amendment of The Banking Laws (Amendment) Act, 2012, Section 26A has been inserted in the Banking Regulation Act, 1949, that empowers the Reserve Bank to establish a fund called Depositor Education and Awareness Fund,� said the RBI in a release, while issuing the draft of the scheme.
The RBI also invited comments on this scheme from all stakeholders, which should reach the central bank by February 5.
The Fund will be created by taking over inoperative deposit accounts which have not been claimed or operated for ten years or more or any deposit or any amount remaining unclaimed for more than 10 years within three months from the expiry of the period of ten years.
�The Fund would be utilised for promotion of depositors� interest and for such other purposes which may be necessary for the promotion of depositors� interests as specified by the Reserve Bank from time to time,� the RBI added.
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Source:http://www.thehindu.com/business/Industry/-Jan 21,2014
RBI panel suggests using consumer price index as inflation gauge
Mumbai: A panel formed by Reserve Bank of India (RBI) Raghuram Rajan has suggested that the central bank focus primarily on managing inflation, switching to consumer prices from wholesale prices in setting its inflation target and making monetary policy.
RBI�s original mandate has been to ensure price stability while keeping an eye on growth. The panel, headed by RBI deputy governor Urjit Patel, said in its report, unveiled on Tuesday, that the nominal anchor of monetary policy should be inflation based on the consumer price index (CPI).
�This nominal anchor should be set by the Reserve Bank as its predominant objective of monetary policy in its policy statements,� said the report posted on RBI�s website.
�The nominal anchor should be communicated without ambiguity, so as to ensure a monetary policy regime shift away from the current approach to one that is centred around the nominal anchor,� the report said.
The report also said monetary policy should be decided by a committee and the final decision be based on the majority of votes cast by committee members. At present, the monetary policy decision vests exclusively with the RBI governor, with a technical advisory committee making suggestions that are not mandatory for the central bank chief to follow.
If the suggestion is accepted, RBI will fall in line with developed country central banks, including the US Federal Reserve where a committee decides on monetary policy and consumer prices are the main inflation gauge.
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Source:http://www.livemint.com/-Jan 21,2014
Public sector banks may opt out of insurance broking model
Public sector banks may opt out of becoming insurance brokers, even as the finance ministry's deadline for taking up this model has expired. The senior officials of these banks are expected to express their concerns about this model to financial services secretary Rajiv Takru in a meeting today.
In December 2013, the finance ministry had sent a circular to the heads of the public sector banks to become insurance brokers, in order to boost penetration of products through their branch networks.
Senior officials said that banks are expected to convey their displeasure to Takru over the immediate nature of the circular. They would also ask for a longer period to implement these reforms, if at all they were mandatory.
�Though we understand that some insurers do not have banks to sell insurance, we also have agreements with our partners to enable exclusive access to the branch network. There could be an impact, both on our business and the existing partnerships, if insurance broking is made mandatory,� said the head of a public sector bank, who is a promoter of an insurance company.
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Source:http://www.business-standard.com/-Jan 28,2014
Reserve Bank of India selected CCIL as Legal Entity Identifier.
The Reserve Bank of India (RBI) selected the Clearing Corporation of India Ltd (CCIL) for issuing globally compatible legal entity identifiers (LEIs) on 6 January 2014.CCIL will act as a local operating unit for issuing globally compatible legal entity identifiers (LEIs )in India.
Legal Entity Identifiers (LEI) are a 20-character unique identity code assigned to entities which are parties to a financial transaction.
image Clearing Corporation of India Ltd (CCIL) will issue unique identifier codes to the eligible legal entities participating in financial markets across the globe on a non-profit cost recovery basis.
CCIL is recognised by the Regulatory Oversight Committee of the global LEI system and the unique identity codes issued by it will be accepted globally.
Once the infrastructure is set up, the LEI numbers will be mandatory for Over-the-Counter (OTC) derivative transactions. The implementation of the global LEI system is led by the Financial Stability Board (FSB).The functioning of CCIL as LEI will be under the regulation and oversight of the Reserve Bank of India.
About Clearing Corporation of India Ltd (CCIL)
The Clearing Corporation of India Ltd (CCIL) was set up in 2001 for providing exclusive clearing and settlement for transactions in Money and Foreign Exchange.
In 2013 the Reserve Bank designated CCIL as a critical Financial Market Infrastructure (FMI) for oversight.
Recently CCIL was granted the status of a Qualified Central Counterparty (QCCP).
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Source:http://www.jagranjosh.com-Jan 7,2014
Reserve Bank of India eases FDI exit rules
The Reserve Bank of India has eased rules for foreign direct investment (FDI), allowing exits subject to a lock-in period and without an assured return. This is expected to facilitate greater FDI flow.
Till now, a company could only issue equity shares or compulsorily and mandatorily convertible preference shares or debentures as eligible instruments under FDI policy. These instruments were not allowed any optionality clause, obliging a buyback of securities from the investor.
The permission to allow exit is subject to certain conditions. The lock-in period will be at least a year. If FDI regulations prescribe a higher lock-in, as the three-year norm in the defence and construction sectors, the higher duration applies. The lock-in shall be effective from the date on which shares or convertible debentures were allotted, RBI said.
After the lock-in period, a non-resident investor can exit without any assured return. For a listed company, the non-resident investor can get out at the market price prevailing at the stock exchanges. In the case of an unlisted company, an investor can exit in equity shares at a price not exceeding that arrived at on the basis of return on equity. Any agreement permitting a return linked to equity as explained shall not be treated as violation of FDI policy and the foreign exchange laws.
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Source:http://www.business-standard.com-Jan 10,2014
Decision-making, not policy changes, needed from Reserve Bank of India: Nachiket Mor
chiket Mor, chairman of the RBI committee on financial inclusion, believes it does not require major regulatory changes to implement his ideas. At a press briefing, explaining the recommendations of the committee, Mor said that specialised banks would serve well than each one providing every financial service. Excerpts:
Many experts believe the deadline of January 2016 is ambitious. Do you agree?
The target is, in some ways, based on our perception of Aadhaar. The big task of opening a bank account is verifying the customer, documents and so on. This is already being done by Aadhaar. The bank need not repeat it. But if you believe Aadhaar will not get done by 2015, then we could talk about extension. We have consulted with the UIADAI and the process looks quite good and on track.
At a time when there is already a process to give out fresh licences, do you think it was prudent to give out these recommendations?
The RBI has already put out an approach on differentiated licences, so it is not a new idea. We have a governor who is interested in moving fast. Please do not read too much into dates. We had been told, do not take too much time. We want fresh thinking, and that was his one-line mandate to us.
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Source:http://www.financialexpress.com-Jan 11,2014
Reserve Bank of India seeks overhaul of financial benchmarking methods.
The Reserve Bank of India (RBI) today suggested an overhaul of existing financial benchmarks, including steps to strengthen the quality, methodology and governance framework.
Apart from this, it also called for amending the statutes to empower RBI to determine the policy for benchmarks and issuing binding directions to all the agencies involved in the benchmark-setting process.
These suggestions are made in a 'Draft report of the committee on financial benchmarks' and sought public comments on the report by January 17.
The RBI had set up a committee under its Executive Director P Vijaya Bhaskar on June 28, 2013 with a mandate to study the various issues relating to financial benchmarks and to submit the report by December 31.
The panel was set up in the aftermath of revelations that several key global benchmark rates like the Libor, Euribor of European Union, Tibor of Tokyo, etc were rigged by leading market operators like RBS, and several global standard setting bodies, national regulators.
This led to self-regulatory bodies reviewing the benchmark setting processes and coming out with wide ranging reforms to enhance the robustness and reliability of financial benchmarks.
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Source:http://www.financialexpress.com-Jan 4,2014.
RBI eases hedging rules for currency trading*
(Reuters) - The Reserve Bank of India (RBI) said on Monday it had eased rules for hedging foreign exchange exposures, allowing greater flexibility for cancelling and rebooking forward contracts.
The RBI is now allowing domestically-held forward contracts for all current as well as capital account transactions with a residual maturity of one year or less to be freely cancelled and taken out again, called rebooking.
Foreign investors will be allowed to rebook 10 percent of the value of cancelled contracts, up from nothing previously.
Before the changes domestic exporters could cancel and rebook up to 50 percent of the contracts booked in a financial year for hedging their contracted export exposures. Importers were are allowed to cancel and rebook up to 25 percent of contracts booked in a financial year.
These limits have been dropped.
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Source:http://in.reuters.com/-Jan 13,2014
Reserve Bank of India : RBI releases Report of the Committee on Comprehensive Financial Services for Small Business and Low Income Households
The Reserve Bank of India has today released on its website for public comments, the Report of the Committee on Comprehensive Financial Services for Small Business and Low Income Households from two members in this regard. The Comments may be emailed or sent by post to the Principal Chief General Manager, Rural Planning and Credit Department, Reserve Bank of India, Central Office, 10th floor, Shahid Bhagat Singh Marg, Mumbai 400 001 on or before January 24, 2014.
The Committee, while laying down its vision statement for financial inclusion and deepening, has suggested providing a universal bank account to all Indians above the age of eighteen years and has recommended a Vertically Differentiated Banking System with Payments Banks for Deposits & Payments and Wholesale Banks for credit outreach with relaxed entry point norms of `50 crore.
On priority sector, the Committee has recommended Adjusted Priority Sector Lending Target of 50 per cent against the current requirement of 40 per cent with sectoral and regional weightages based on the level of difficulty in lending. The Committee has also recommended risks and liquidity transfers through markets. In view of the fact that banks may choose to focus their priority sector strategies on different customer segments and asset classes, the Committee has recommended that the regulator provide specific guidance on differential provisioning norms at the level of each asset class. A bank's overall Non Performing Assets Coverage Ratio would therefore be a function of its overall portfolio asset mix.
On definition of Non-Banking Finance Companies (NBFCs), the Committee has recommended only two categories - one for core investment companies and another category for all other NBFCs. The Committee has advocated regulatory convergence between banks and NBFCs based on the principle of neutrality with regard to classification of non-performing assets and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 eligibility.***
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Source:http://www.4-traders.com-Jan 07,2014.
Banks seek leeway from RBI
Bankers seem to be finding it difficult to implement the Reserve Bank of India's (RBI's) new guidelines on identification and early resolution of stress, though they admit the move is in the right direction and will bring discipline among corporate borrowers as lenders.
Lenders have sought more time from the banking regulator, as they feel the 30-day stress-resolution norms are a bit too stringent. According to them, at least 60 days will be required to firm up the resolution mechanism, known as the Corrective Action Plan (CAP).
RBI's discussion paper on early recognition and resolution of financial distress has recommended that banks come up with a CAP in 30 days under a joint lenders' forum (JLF).
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Source:http://www.business-standard.com-Jan 06,2014.
Bank employees to go on strike on Jan 20 & 21
Bank employees across India are to go on a two-day strike on January 20 and 21, followed by further strikes in February and March 2014.
The decision was taken at a high power committee meeting of the United Forum of Bank Unions (UFBU) held in Hyderabad on Monday.
Speaking to Business Standard after the meeting, C H Venkatachalam, convener, UFBU and General Secretary, All India Bank Employees Association (AIBEA), said it was decided to urge the Indian Banks Association and government to resume talks with a better and reasonable offer of wage increase and expedite the settlement at the earliest. Talks between unions and banks had failed on December 14
�Failing which the UFBU has decided that there would be a 48-hour strike in banks on January 20 and 21 to be followed by further strikes in February and March,� he said.
The UFBU, apart from AIBEA, includes All India Bank Officers' Confederation, National Confederation of Bank Employees, All India Bank Officers' Association, Bank Employees Federation of India, Indian National Bank Employees Federation, Indian National Bank Officers Congress, National Organisation of Bank Workers and National Organisation of Bank Officers.
In a meeting it was decided to urge upon the Indian Banks Association and Government to resume the talks with a better and reasonable offer of wage increase and expedite the settlement at the earliest.
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Source:http://www.business-standard.com-Dec 24,2014
Banks express reservation over Finance Ministry diktat on selling insurance
MUMBAI: The bankers lobby is uncomfortable with the latest government diktat on the sale of insurance products. Reacting to New Delhi's directive that banks should sell covers of all insurance companies, banks said that the decision should be left to them.
In a letter to the Finance Ministry last week, Indian Banks' Association, which represents managements of commercial banks, has told the government that the board of each bank should have the discretion on whether it's branch offices should sell products of more than one insurance company.
As per the current model, each bank can sells product of just one life, one general and one health insurance to their customers.
However, in December, finance ministry reversed it. It set a deadline of January 15 for PSU banks directing them to sell covers of all insurance companies. The ministry's move was aimed at improving penetration, providing customers a choice and avoid instances of mis-selling.
In a meeting held last week in Mumbai, CEOs of many PSU banks were divided over the finance ministry diktat.
Large banks, which have already floated an insurance company in partnership with global insurance companies, have expressed reservation over it. "You can't have one size fit all formula. Each bank has its strengths and limitations," said chief of a commercial bank.
In a letter to the finance ministry IBA has pointed out that since many banks have exclusive tie-up with insurance companies it would make it difficult for all banks to follow their mandate.
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Source:http://articles.economictimes.indiatimes.com-Jan 2,2014
Banks may go for partial closing of ATMs at night
MUMBAI: Banks may go for partial shutdown of ATMs with low transactions as a security measure from next month. This was the outcome of a recent meeting of the Indian Banks' Association over the issue of providing security to ATMs, where banks decided that shutting down of machines, which get low traffic at night, was an option.
IBA has written to RBI, communicating its decision that banks will take a call on which low-traffic ATMs will be closed at night and will identify the machines where guards will be deployed, in addition to e-surveillance, depending on the risk perception. A night shut-down will lower labour costs as well as operating costs and reduce revenues marginally. IBA had called the meeting of member banks in light of the incident in Bangalore, where a woman was assaulted and seriously injured inside an unguarded ATM.
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Source:http://articles.economictimes.indiatimes.com-Dec 28,2013
Banks free to charge 'reasonable ATM fees': RBI
Mumbai: Amid growing clamour from banks to charge customers for transactions at ATMs to make them economically viable, RBI Deputy Governor K C Chakrabarty today said the regulator will have no objections if the lenders charge "reasonable fee" for such services.
"If banks charge a reasonable fee on ATM transactions then the RBI will have no objections," Chakrabarty, in charge of banking services at RBI, told reporters on the sidelines of an event here this evening.
The senior-most Deputy Governor said till now, no request has come from the banks to raise the fees for transacting at ATMs.
Ideally, the issue of charging customers for ATM usage should be left to competitive market forces and banks should be allowed the liberty to decide their own offerings, the commercial banker-turned-central banker said.
Following a brutal attack on a woman inside an ATM of Corporation Bank in Bangalore in November last, banks have been asked to ensure round-the-clock armed security at their cash dispensing kiosks.
This did not find favour with banks, who argued it would be unfeasible to have 24-hour security at ATMs.
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Source:http://profit.ndtv.com-Oct Jan 3,2014
Rely on transaction data to settle financial contracts: Reserve Bank of India
MUMBAI: A Reserve Bank of India-appointed panel has suggested that Indian money and currency markets use data provided by actual transactions to arrive at benchmarks used to settle financial contracts rather than rely on the traditional method of polling a few select brokers.
The panel, which is seeking to avoid embarrassments such as the rigging of Libor and exchange rates in Europe, has suggested that the RBI get a bigger role in monitoring the financial benchmarks and suitable legislation be brought in to provide the banking regulator a bigger role.
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Source:http://articles.economictimes.indiatimes.com-Jan 4,2014,2013
India's forex reserves rise to $295.71 billion as on Dec 27: Reserve Bank of India
MUMBAI: After declining for two weeks, India's foreign exchange reserves rose by $204.9 million to $295.71 billion in the week ended December 27 on the back of an increase in the core currency component, RBI said today.
The reserves had declined by $12.6 million in the previous reporting week to $295.50 billion.
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Source:http://articles.economictimes.indiatimes.com-Jan 3.2014
Most banks like SBI, ICICI and Axis Bank, fail to push RBI�s CPI-linked bonds
MUMBAI: Reserve Bank of India governor Raghuram Rajan may be trying his best to provide fair returns to savers through bonds linked to the consumer price index (CPI), but the message does not appear to have travelled across the banking system with many staff at branches remaining ignorant of the product.
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Source:http://articles.economictimes.indiatimes.com-Dec 30,2013
Reserve Bank plans to test-market plastic currency this year
You may be carrying plastic money in your wallet till now in the form of credit and debit cards but soon you will also have a Rs 10 plastic note by your side.
The Reserve Bank of India (RBI) is mulling over the introduction of plastic currency to resolve the issue of wear and tear of paper notes. Plastic notes will increase the life of a note.
RBI is planning a pilot project of Rs 10 notes and will print such notes worth Rs 100 crore.
It has completed the process of issuing tenders for this purpose.
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Source:http://www.dnaindia.com-Jan 3,2014
RBI eases norms for gold dore imports
The Reserve Bank of India, on Tuesday, partly eased restrictions on import of gold dore, by allowing refineries to import 15 per cent of their gross annual requirement in the first two months and the balance as per export performance.
�Refineries are allowed to import dore up to 15 per cent of their gross average viable quantity based on their licence entitlement in the first two months for making this available to the exporters on First in First out (FIFO) basis. Subsequent to this, the quantum of gold dore to be imported should be determined lot-wise on the basis of export performance,� the RBI said in a communications to banks.
In August, the RBI had imposed curbs on gold imports and linked it with exports. Accordingly, 20 per cent, of every lot of gold imported had to be exclusively made available for exports and the balance (80 per cent) for domestic use.
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Source:http://www.thehindu.com-Dec 31,2013
Banks set to oppose RBI diktat to install Aadhaar-enabled ATMs and point-of-sale terminals
MUMBAI: Another disappointment awaits the government. Leading banks are set to oppose the Reserve Bank of India diktat that all new ATMs and point of sale (POS) machines should be tailored to accept Aadhaar � one of the widely publicised ventures aimed at winning votes and changing the lives of millions.
Last week, senior bankers went into a huddle to list out the pitfalls of the central bank's directive, which they think is being rushed through without understanding the implications for banks.
On November 26 evening, an innocuous RBI communique to banks said that "all new card present infrastructure has to be enabled for both EMV chip and PIN and Aadhaar (biometric validation) acceptance". What it means is that any new ATM put up by a bank or POS machine (where a credit or debit card is swiped for payments) sold to a merchant establishment post November 26 must have biometric readers.
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Source:http://articles.economictimes.indiatimes.com-Oct **,2013
Reserve Bank of India releases Discussion Paper on Non-Performing Assets(NPA)
With the slowdown of the Indian economy, a number of companies/projects are under stress. As a result, the Indian banking system has seen increase in NPAs and restructured accounts during the recent years. Not only do financially distressed assets produce less than economically possible, they also deteriorate quickly in value. Therefore, there is a need to ensure that the banking system recognises financial distress early, takes prompt steps to resolve it, and ensures fair recovery for lenders and investors. This Paper outlines a corrective action plan that will incentivize early identification of problem cases, timely restructuring of accounts which are considered to be viable, and taking prompt steps by banks for recovery or sale of unviable accounts.
1.2 The main proposals are:
Early formation of a lenders� committee with timelines to agree to a plan for resolution.
Incentives for lenders to agree collectively and quickly to a plan � better regulatory treatment of stressed assets if a resolution plan is underway, accelerated provisioning if no agreement can be reached.
Improvement in current restructuring process: Independent evaluation of large value restructurings mandated, with a focus on viable plans and a fair sharing of losses (and future possible upside) between promoters and creditors.
More expensive future borrowing for borrowers who do not co-operate with lenders in resolution.
More liberal regulatory treatment of asset sales.
Lenders can spread loss on sale over two years provided loss is fully disclosed.
Takeout financing/refinancing possible over a longer period and will not be construed as restructuring.
Leveraged buyouts will be allowed for specialised entities for acquisition of �stressed companies�.
Steps to enable better functioning of Asset Reconstruction Companies mooted.
Sector-specific Companies/Private equity firms encouraged to play active role in stressed assets market.
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Source:http://rbi.org.in/-Dec 17,2013
Reserve Bank of India fixes rupee reference rate at 62.2420 against USD
Mumbai: The Reserve Bank of India (RBI) on Friday fixed the reference rate of rupee against US dollar at 62.2420 and the euro at 84.8774 as against 62.3800 and 85.2945 on Thursday.
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Source:http://post.jagran.com-Dec 20,2013
Mid-Quarter Monetary Policy Review: December 2013
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75 per cent; and
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL).
Consequently, the reverse repo rate under the LAF will remain unchanged at 6.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.75 per cent.
Assessment
The outlook for global growth continues to remain moderate, with an uneven recovery across industrial countries. Activity in major emerging market economies (EMEs) barring China has decelerated on account of weak domestic demand, notwithstanding some improvement in export performance. While volatility in financial markets has receded, it could pick up again following the inevitable taper of quantitative easing in the US, given the large dependence of EMEs on external financing.
In India, the pick-up in real GDP growth in Q2 of 2013-14, albeit modest, was driven largely by robust growth of agricultural activity, supported by an improvement in net exports. However, the weakness in industrial activity persisting into Q3, still lacklustre lead indicators of services and subdued domestic consumption demand suggest continuing headwinds to growth. Tightening government spending in Q4 to meet budget projections will add to these headwinds. In this context, the revival of stalled investment, especially in the projects cleared by the Cabinet Committee on Investment, will be critical.
Retail inflation measured by the consumer price index (CPI) has risen unrelentingly through the year so far, pushed up by the unseasonal upturn in vegetable prices, double-digit housing inflation and elevated levels of inflation in the non-food and non-fuel categories. While vegetable prices seem to be adjusting downwards sharply in certain areas, the feed-through to much-too-high headline CPI inflation remains to be seen. Wholesale inflation has also gone up sharply from Q2 onwards, with upside pressures evident across all constituent components. High inflation at both wholesale and retail levels risks entrenching inflation expectations at unacceptably elevated levels, posing a threat to growth and financial stability. There are also signs of a resumption of high rural wage growth, suggesting second round effects that cannot be ignored. High and persistent inflation also increases the risks of exchange rate instability.
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Source:http://www.rbi.org.in/-Dec 18,2013
Reserve Bank of India to issue new currency of various denominations
KANPUR: The Reserve Bank of India will shortly issue new currency notes of various denominations. The new series of currency will be launched in Rs 100 and Rs 50 denominations. The RBI has also requested the people to submit soiled currency to banks or to RBI as these notes would not be acceptable after the ongoing financial year.
As per the information provided by the RBI, the organization would shortly issue Rs 100 domination currency incorporating the new rupee symbol and without any inset letter. All the new bank notes would bear the signature of Raghuram Rajan, Governor, RBI, India. The year of printing of the notes would be 2013.
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Source:http://articles.timesofindia.indiatimes.com-Dec 19,2013
Global bitcoin conference calls for Reserve Bank of India recognition
The Global Bitcoin Conference on Sunday sought for government intervention in the form of recognition and Reserve Bank of India's framework for greater adoption of the virtual currency in India, home to world's third largest internet users and largest software talent pool.
The conference said that the government and consumers will immensely benefit with the uncertainty being taken out of the bitcoin system.
"What we want here is a dialogue with the central bank for greater understanding of the system as well as what can be possibly regulated and what cannot be," said Sathvik V, MD of CoinMonk Ventures, one of the organisers of the event and a bitcoin exchange that sells and buys bitcoins. A lawyer from RBI has also attended the conference after a request from the organisers to understand the system better, but refused to offer any comments or identify himself.
Bitcoin has been acknowledged as a "legitimate currency" by the US lawmakers, which has resulted in value of the virtual currency shooting up to $1,000. The lawmakers and central bank in European Union have adopted a wait and watch policy, so has the RBI. In Germany, it is considered a private currency, while in China, it is considered a virtual commodity and transactions are taxed as such. In Switzerland, it is treated as a foreign currency and Canada already taxes gains on trade in bitcoins.
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Source:http://www.financialexpress.com-Dec 16,2013
Banks may not accept scribbled notes
KOLKATA: The Reserve Bank of India (RBI) has asked banks to classify all "unclean" currency notes - which have any sort of inscription or scribbling on them - as "unfit for reissue" from January 1, 2014, triggering intense speculation on social media platforms and on the street.
Indian currency notes, arguably, the dirtiest, most soiled and most perforated ones in the world. The Reserve Bank of India (RBI) is reversing the trend by pursuing aggressively its 'clean note policy.' The Central bank has asked all the banks that in the present system of mechanized processing of banknotes, 'inscriptions or scribbling on any part of the banknote would render it to be classified as unfit for reissue from January 1.
Social media platforms are rife with the rumor that banks would completely stop accepting all soiled notes, come 2014. So far, there has been no strong denial of these words. RBI officials only said that though banks would continue to accept soiled notes, the ones with most of the white space covered with scribbles would be considered "soiled and unfit for circulation". Banks have also been asked to train their staff to avoid writing anything on notes that reduce their life.
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Source:http://articles.timesofindia.indiatimes.com-Dec 17,2013
Banks' loan growth inches closer to Reserve Bank of India's FY14 estimate
MUMBAI: Banks' loan growth moved closer to the Reserve Bank of India's full-year projection, provisional data released by the RBI showed on Wednesday.
Bank loans grew around 13.8 per cent to Rs 76.94 trillion ($1.26 trillion), while deposits rose 11 per cent to Rs 58.43 trillion from March 22 to November 29, the provisional data showed.
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Source:http://articles.economictimes.indiatimes.com-Dec 11,2013
State Bank of India, HDFC slash home loan rates.
Two biggest housing financiers SBI and HDFC today cut home loan rates by up to 0.4 percent for new borrowers, a day after the Reserve Bank kept its key policy rates on hold. Women borrowers would get an additional 0.05 percent concession on card rates, SBI, country's biggest lender, said in a statement. SBI home loans will now be available under two slabs-- under Rs 75 lakh and above Rs 75 lakh . SBI loans of up to Rs 75 lakh would be available to fresh borrowers at 10.15 percent against the existing rate of 10.50 percent. For women borrowers, the rate of interest after an additional concession of 0.05 percent would be 10.10 percent for home loans of up to Rs 75 lakh. With regard to loans of above Rs 75 lakh, the new rate would be 10.30 percent. For women borrowers it is 10.25 percent. The new SBI rates would be effective from tomorrow. Country's largest housing finance company HDFC cut rates by 0.25 percent. "This is a limited period offer and is valid for all new applications submitted before January 31, and first disbursement taken by February 28, 2014," HDFC said in a statment. The new rates for HDFC home loans of up to Rs 75 lakh will be 10.25 percent as against the existing 10.50 percent. The Reserve Bank of India (RBI) in its monetary policy review yesterday kept short-term lending rate unchanged at 7.75 percent, while the cash reserve ratio (CRR) remained at 4 percent.
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Source:http://www.moneycontrol.com-Dec 19,2013
Refuse verbal loan orders and curb NPAs: Indian Bank's Association
NEW DELHI: In an attempt to stem the tide of rising bad loans at Indian lenders, a lobby group of banks has directed its members to ensure that their staff neither give nor act on verbal orders for sanctioning loans.
The Indian Bank's Association (IBA) issued the directive recently after the Central Vigilance Commission pointed out that junior executives at some banks were "coerced" to sanction loans on verbal orders from their superiors.
"During some vigilance complaints it was reported that loans were initially sanctioned on verbal orders," a senior government official said, confirming the IBA directive. "This had led to discrepancy as junior officers had claimed that they had sanctioned loans after receiving orders to expedite the case from senior authorities."
The official said the IBA move will not only instill better governance practices at banks but also check their rising non-performing assets or bad debts. According to the finance ministry, gross non-performing assets of state-run banks rose to 1.92 lakh crore, or 3.99% of their gross advances, in June from 1.64 lakh crore in March.
The IBA move also comes at a time when the Central Bureau of Investigation filed a case against a deputy managing director of the State Bank of India for allegedly accepting bribe to sanction a loan. An internal panel of the bank, however, said that the loan appears to have been sanctioned in the "ordinary course of business".
The finance ministry has taken a series of measures recently to curb non-performing assets of state-run banks.
It has asked banks not to lend further to business groups that have willfully defaulted on repayment of past loans.
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Source:http://articles.economictimes.indiatimes.com-Dec 16,2013
Day-long strike hits banking operations
Read more at: http://indiatoday.intoday.in/story/all-india-bank-employees-on-2-day-strike-over-wage-revision/1/331801.html
Banking operations were hit Wednesday as members of an umbrella employee union of 27 state-run banks went on a day-long strike across the country, demanding better wages and working conditions.
Even though ATMs were functional, operations like branch cash withdrawals, deposits and cheque clearances were particularly affected.
The impact of the strike was more evident in the eastern and southern sectors.
The strike was called by the United Forum of Bank Unions (UFBU), the umbrella organisation of five employees unions and four officers unions of state-run banks, which is demanding immediate wage revision and is also protesting against the ongoing banking sector reforms.
The bank unions called the strike after rejecting Indian Banks' Association's (IBA) offer of a 5 percent salary hike. According to UFBU, the last wage settlement in the banking sector expired in October 2012. However, the discussions on a revised settlement since one year have been inconclusive.
The strike hit banking services hard in the northeastern region. Shutters of almost all the ATMs in the region remained down.
Read more at: http://indiatoday.intoday.in/story/all-india-bank-employees-on-2-day-strike-over-wage-revision/1/331801.html
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Source:http://indiatoday.intoday.in-Dec 18,2013
Higher ATM security to push up bank costs, customers may foot the bill
MUMBAI: An attack last month on a woman at an automated teller machine (ATM) in Bangalore, which was captured on closed-circuit TV cameras, has led to demands for increased security at cash machine booths. While that could end up costing banks and their customers more in terms of increased staffing and better technology, getting armed security guards for all 1.65 lakh ATMs in the country may prove difficult.
Bankers expect the cost per transaction at ATMs to go up by around Rs 10 from Rs 4-5 now. "Additional security arrangements are going to increase the cost of operations of banks. This will be passed on to the customers," said the managing director and chief executive officer of a private sector bank who did not wish to be named.
The head of another private sector bank, however, wasn't sure customers would be willing to pay the price.
Meanwhile, the Maharashtra government is in discussions with banks and regulatory agencies to install functioning CCTV cameras inside and outside ATM booths without guards by January-end, said a senior Indian Banks' Association executive. It also wants posters removed from windows to ensure clear visibility, said the executive.
The measures were discussed at a December 4 meeting attended by Reserve Bank of India chief general manager R Keshavan, Maharashtra director general of police Sanjeev Dayal and other officials. States such as Karnataka and Tamil Nadu are also asking banks to put in place similar arrangements.
The central bank had asked the Indian Banks' Association to form a committee and draft norms with regard to the physical transfer of cash and the risks associated with outsourcing this and security work to third parties.
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Source:http://articles.economictimes.indiatimes.com-Dec 14,2013
Bankers-laud-proposal-for-incentives-on-"NPAs".
The RBI�s proposal to offer incentives for quick recognition and resolution of stressed accounts has found support among bankers. They agree that dealing with stressed assets early would ensure that the level of NPAs in the system will go down.
�We already have the special mention account (SMA) category in the bank and what has now been proposed is a further stratification of SMA categories. If we deal with stressed loans early in the day, our non-performing loans will be smaller. What it will do is ensure there is early resolution,� said SBI chairperson Arundhati Bhattacharya.
If the final norms are drafted exactly like the discussion paper, lenders may have to provide more than double of what they currently do, in certain cases. Even then, bankers seem to be positive of the effects these norms will have.
�This would bring better credit discipline, especially in case of accounts where there are a large number of bankers are involved. Strict guidelines would help both lenders and bankers,� said VR Iyer, CMD, Bank of India.
The paper discussed the possibility of allowing PE firms and other entities to take over stressed accounts and turn them around, while also receiving bank funding for such buyouts. Similarly, RBI has also stated that it proposes to discuss better norms of asset reconstruction companies (ARCs) and even allowing them to trade in NPAs. �We are talking to a number of ARCs and private equity firms. There is no question of not engaging these players,� SBI's Bhattacharya said.
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Source:http://www.financialexpress.com-Dec 19,2013
Public sector banks may have to set up insurance broking arms by February
Will have to sell policies of multiple insurers; scope for mis-selling will be less, says Rajiv Takru
MUMBAI, DEC. 16:
The Finance Ministry is planning to make it mandatory for public sector banks to float insurance broking arms by February and sell policies of multiple insurance companies, a top Finance Ministry official said.
At present, banks are allowed to tie up with only one insurance company and sell products of only that insurer under the corporate agency (bancassurance) channel.
�We will ensure that all insurance products are available through the one-lakh-plus bank branches. No renewals will be granted to existing corporate agency tie-ups of public sector banks and insurance companies,� said Financial Services Secretary Rajiv Takru.
The Finance Ministry, Takru said, will also urge private sector banks to become insurance brokers. �According to our assessment, chances of mis-selling will be less if banks become brokers��
According to the guidelines finalised by the Insurance Regulatory and Development Authority, as brokers, banks will have to cap business from their own group companies at 25 per cent for life insurance and a similar cap for non-life insurance business.
What this means is that banks cannot push products of their own group insurance companies beyond 25 per cent of the total annual sales.
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PSU banks' NPA menace: Union lists top defaulters
Bank employee unions are the latest group to put pressure on big private sector defaulters. The All-India Bank Employees unions today released the list of top 50 loan defaulters, who account for Rs 40,528 crore hole in public sector banks' books barring SBI and IDBI Bank. Topping the list is Kingfisher at Rs 2,673 crore; followed by Winsome Diamond at Rs 2660 crore. Other defaulters like Electrotherm India, Zoom Developers, Sterling Biotech, S Kumars owe more than Rs 1500 crore to these government banks. The head of employee's union says they are looking to release data of over 7000 accounts, which have defaulted on loans above crore rupees. Also Read: As bad loans mount, India gets tough on 'wilful' default CH Venkatachalam, general secretary, All-India Bank Employee's Association says: �There are 7295 names in which about Rs 68,000 crore loans are involved Rs 1 crore and above. That we will publish. Incentives are being given for corporate delinquents. In fact, about 3.25 lakh crore of which about Rs 2.70 lakh crore of bad loans are being restructured as good loans, as performing loans. These are all pertaining to the corporate people. Restructured loans CDR accounts are nothing but hidden NPAs. It's a volcano. Anytime the bomb can blast."
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(Source:http://www.moneycontrol.com-Dec 5,2013)
Fraud at public sector banks - A rampant occurrence?
The CBI has raided their homes and the State Bank of India has initiated an internal enquiry into the bribery charges leveled by the investigating agency against Shyamal Acharya, deputy managing director of SBI and KK Kumarah, former assistant general manager, in what is now being called the Rs 400 Cr bribes for loans graft case.
This is not the first time the ugly head of corruption has reared itself in the public sector banking space. In 2010, the CBI had busted a racket in which executives from large banks and finance companies like LIC, LIC Housing Finance, Central Bank of India and Punjab National Bank were arrested for allegedly accepting bribes in return for sharing confidential information.In mid 2011, Corporation Bank CMD Ramnath Pradeep was indicted by the CVC (Central Vigilance Commission) on charges of corruption.
In fact a report in The Hindu states that Chief Vigilance Officers of various government organizations have received as many as 48,554 complaints of alleged corruption between January and December 2012. Of these the highest were by the railway CVOs, only to be followed by banks with 7,336 complaints. More incriminating statistics that demonstrate public sector banks� susceptibility to commit fraud are readily available in the public domain, if only one were to look.
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Source:http://www.business-standard.com-Nov 27,2013
India's Top Loan Defaulters
For long it has remained the most closely guarded secret in Indian banking, the list of who are the top defaulters to the Indian banking system. Bankers citing the banking secrecy laws were loathe to revealing names, even as the write-offs shaved close to Rs 1.5 lakh crores off the profits of the banking sector over the last seven years.
On Wednesday (4 December), the All India Bank Employees Association publicised the names of almost 3500 willful defaulters above Rs 1 crore, which it claims it obtained from a list prepared and circulated among banks. RBI does collect, collate and share list of defaulters periodically with banks for better vigilance, according to an RBI official. BW did not independently verify the data.
Topping the AIBEA list is Kingfisher Airlines at Rs 2,673 crore. Vishwas Uthagi, vice president of the association admits that it is publicly known that the company has a much larger outstanding, pointing out that the numbers here could even be an understatement.
Winsome Diamond & Jewellry, which was in the news earlier in the year for defaulting after they managed to release securities given to banks comes next in the list with Rs 2,660 crore in loans not repaid. Electrotherm India, Zoom Developers, Sterling Biotech, and S Kumars Nationwide follow with amounts exceeding Rs 1,500 crore against each of them, according to the AIBEA.
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Source:http://www.businessworld.in/-Dec 5,2013
Reserve Bank of India fixes rupee reference rate at 61.6673 against dollar
Mumbai: The Reserve Bank of India on Friday fixed the reference rate of rupee against US dollar at 61.6673 and the euro at 84.2546 as against 61.6895 and 84.0690 on Thursday.In a press release issued by RBI, the exchange rates for the pound and yen against the rupee were quoted at 100.6472 and 60.40 per 100 yen, based on reference rates for the dollar and cross-currency quotes at noon.
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Source:"http://post.jagran.com/-Dec 8,2013
RBI proposes new capital rules for Indian banks too-big-to-fail
MUMBAI: India's central bank plans to introduce increased capital requirements by 2016 for banks regarded as too big to fail, and make them subject to greater regulatory oversight.
With the economy growing at its slowest rate in a decade, India's banking system is facing rising levels of stressed loans, with $100 billion, or about 10 per cent of the total, categorized as bad or restructured.
The Reserve Bank of India (RBI) released a draft of the new guidelines late on Monday, the same day as it issued proposals for counter-cyclical buffers, which would require banks to build reserves during periods of stability in order to weather more difficult times.
Domestic brokerage Motilal Oswal estimated the RBI could class at least 15 domestic banks, including ICICI Bank Ltd and Axis Bank Ltd, as domestic systemically important banks (D-SIBs).
"Banks with size of more than 2 per cent of GDP will be selected in the sample of banks," Motilal Oswal said in an email to clients.
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Source:http://timesofindia.indiatimes.com-Dec 3,2013Reserve Bank of India extended a refinance window of 5000 crore for the MSME
The Reserve Bank of India on 18 November 2013 opened a 5000 crore rupees refinance window for MSME sector, for a period of one year to ease the liquidity. The view of easing the liquidity stress to the Micro and Small Enterprises sector was taken by the RBI to provide refinance to the small Industrial Development Bank of India.
Basically the Micro and Small Enterprises sector is employment intensive and contributes significantly to exports. At present, the slowdown in the economy has resulted in the liquidity tightness in the MSEs in the manufacturing and services sector raising the need of liquidity support. The availability of the refinance facility will be till 13 November 2014. - See more at: http://www.jagranjosh.com/current-affairs/reserve-bank-of-india-extended-a-refinance-window-of-5000-crore-for-the-msme-1384854745-1#sthash.CelXGGtg.dpuf
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Why no rate hike, RBI asks banks
MUMBAI: The Reserve Bank of India has asked banks why they have not raised interest rates despite the central bank hiking policy rates twice since September 2013. The central bank has also expressed concerns over the increase in bank loans to commercial real estate, which is considered a "sensitive" sector susceptible to high price fluctuations.
Explaining pricing of loans and deposits, banks said supply of funds has improved and that RBI's rate hike has not had a significant impact on their cost of funds. The improvement in liquidity is reflected in the low rates in the inter-bank money market where overnight rates fell to 7.25%. Banks have also brought down their borrowing from RBI. The central bank had raised its repo rate-the rate at which it lends overnight funds to banks - on two occasions. The first time was on September 20 when it raised rates by 25 basis points and more recently on October 29 when it hiked by yet another 25 bps.
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Source:http://timesofindia.indiatimes.com-Nov 19,2013
RBI Directed Public Sector Banks to give loans to women SHGs at 7 percent -
The Reserve Bank of India (RBI) on 19 November 2013 directed Public Sector Banks (PSBs) to provide loans to women self-help groups (SHGs) at 7 per cent per annum to avail the benefit of interest rate subvention scheme under the Swarnajayanti Gram Swarozgar Yojana-Aajeevika (SGSY) scheme.
Salient features of RBI Notification
1.All women SHGs will be eligible for interest subvention to avail the credit upto 3 lakh Rupees at 7 per cent per annum.
2.PSBs will be subvented to the extent of difference between the Weighted Average Interest charged and 7 per cent subject to the maximum limit of 5.5 per cent, for the FY-2014.
3.This subvention will be available to all the PSBs on the condition that they make SHG credit available at 7 per cent in the 150 districts. - See more at: http://www.jagranjosh.com/current-affairs/rbi-directed-public-sector-banks-to-give-loans-to-women-shgs-at-7-percent-1384940659-1#sthash.yFoo24wg.dpuf
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Source:http://www.jagranjosh.com-Nov 20,2013
Subir Roy: Why public sector banks underperform
Indian banks are not in good shape. This is understandable during an economic slowdown - when the overall economic growth rate has dropped to around half of what was achieved in its heyday. As is inevitable in a slowdown, non-performing assets of banks are rising faster than the banks' ability to provide for them, which is leading to falling provisioning coverage for stressed assets. Balance sheet health is declining.
But what is more worrisome is that public sector banks, which have a 76 per cent market share, are worse off than the rest. In the last financial year, 2012-13, the new private sector banks provided a return on assets of 1.74 per cent, whereas public sector banks were nearly a full percentage point behind, at 0.78 per cent.
Things have gone worse in the current financial year, setting alarm bells ringing for the banking regulator, the Reserve Bank of India (RBI), which has promised new guidelines for recognition, resolution and recovery of loans in trouble. The easing of asset classification norms after the 2008 global financial crisis has "killed credit quality," says one central banker. "Things are quite out of control," says another, pointing to the volume of restructured loans.
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Cut banking channels of willful defaulters, says Reserve Bank of India
KOLKATA: : Reserve Bank of India deputy governor KC Chakrabarty said banks should cut all banking channels of willful defaulters to prevent rising loss of assets. Chakrabarty said banks should make use of the credit information bureau to share details of willful defaulters and shun them entirely.
"Close all their bank accounts. Don't allow them to do any banking transaction," Chakrabarty said in Kolkata at an event organised by MCC Chamber of Commerce & Industry. RBI has declared a war againt rising bad loans ever since Raghuram Rajan took charge as governor in early September.
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Source:Eeconomic Times-Nov 15,2013
Reserve Bank of India : Pay IT dues in advance at RBI or at authorised bank branches
The Reserve Bank of India has appealed to income tax assessees to remit their income tax dues sufficiently in advance of the due date. It has also stated that assessees can use alternate channels like select branches of agency banks or the facility of online payment of taxes offered by these banks. These will obviate the inconvenience involved in standing in long queues at the Reserve Bank offices.
It is observed that the rush for remitting Income - Tax dues through the Reserve Bank of India has been far too heavy towards the end of March every year and it becomes difficult for the Reserve Bank to cope with the pressure of issuing receipts although additional counters to the maximum extent possible are provided for the purpose
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Source:http://www.4-traders.com-Nov 18,2013
RBI directs PSU banks to give loans to women groups at 7%
Mumbai: The Reserve Bank of India (RBI) on Tuesday directed the public sector banks (PSBs) to provide credit to women self help groups (SHGs) at a rate of 7% per annum so as to get the benefit of interest subvention scheme under the Swarnajayanti Gram Swarozgar Yojana (SGSY)/Aajeevika scheme.
�PSBs will be subvented to the extent of difference between the weighted average interest charged and 7% subject to the maximum limit of 5.5%, for the FY14. This subvention will be available to all the PSBs on the condition that they make SHG credit available at 7% in the 150 districts,� the RBI said in a notification.
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Source:http://www.livemint.com-Nov 19,2013
PSBs� burden
The NPA problems of public sector banks are due to systemic deficiencies in their credit appraisal and loan recovery systems.
Reserve Bank of India officials are quite right in flagging the risks to public sector banks from mounting bad loans. Gross non-performing assets (NPAs) of these banks have doubled as a percentage of their advances over the last three years. At over 4 per cent, this number is twice that of private banks. Worse, PSB books don�t fully reflect the real magnitude of the problem. Restructured assets (loans rescheduled at the behest of the borrower) make up another 8 per cent of PSB portfolios. With banks making inadequate provisions against these, the loan write-offs, if they eventually turn bad, will make a significant dent on profits, draining them of precious capital.
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Source:http://www.thehindubusinessline.com-Nov 19,2013
Chakrabarty blames public sector banks for sitting on bad loans
MUMBAI, NOV. 16:
RBI Deputy Governor K.C. Chakrabarty on Saturday lambasted public sector banks for the rising bad loans, saying they sat on the �menace� far longer than their private sector counterparts.
In a well-researched presentation at Bancon 2013, an annual banking conference, the Deputy Governor also rubbished claims by banks that non-performing assets (NPAs), or bad loans, have been rising because of the economic slowdown.
On the theme of the Bancon 2013 � �Banks of the future: Gearing up to meet the emerging environment� � Chakrabarty said: �As a regulator, I do not have the luxury to talk about the banks of the future; I am more concerned about the future of the banks. One factor affecting the future of the banks is non-performing assets.�
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Source:http://www.thehindubusinessline.com/-Nov 16,2013
Moody�s maintains negative outlook on banking sector
MUMBAI, NOV 18:
The stock market may be rising but not the country�s stock. Global financial services firm UBS and credit rating agency Moody�s turned negative towards India and its banking system.
UBS downgraded India to �neutral� from �overweight� even as it upgraded China to �overweight�.
�We still like India at the micro level a lot,� UBS said, and added that a re-rating of China over the coming weeks is likely to make India �pale� by comparison.
Global ratings agency Moody�s Investors Service maintained its negative outlook on India�s banking system, reflecting the negative effects of currency volatility, persistent inflation and slowing economic growth.
�Asset quality will continue to deteriorate, particularly for public sector banks. At the same time, profitability will likely remain weak, limiting internal capital generation,� Moody�s said in the report.
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Source:http://www.thehindubusinessline.com-Nov 18,2013
Bank staff miffed over govt�s �casual approach� to wage talks
COIMBATORE, NOV. 9:
Bank employees have begun to voice their displeasure over what they call the Government's �casual� approach in settling their wage accord, which is overdue.
The 9th wage settlement expired in October 2012. A year has passed but negotiations have hardly taken off, said C.H. Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA).
The 10th bipartite talk between bank unions and Indian Banks Association (IBA) to decide on the quantum of wage increase for bank employees is currently on. Each settlement is valid for five years.
The current settlement would be valid from November 2012 to October 2017.
Rising discontent
IBA's slow approach has given rise to discontent among employees.
On the one hand, there has been a steep increase in living costs.
On the one hand, the Government arrived at a wage settlement for Central Government employees well before the expiry of the existing wage accord.
Venkatachalam said the United Forum of Bank Unions will decide on strike action soon to press for early settlement of wages.
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Source:http://www.thehindubusinessline.com-Nov 09,2013
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Reserve Bank of India Increased the Repo Rate by 25 Basis Points to 7.75 %from 7.50%
The Reserve Bank of India (RBI) on 29 October 2013 released the Second Quarter Review of Monetary Policy 2013-14.According the released statement by the RBI, the Repo rate increased by 25 basis points from 7.5 percent to 7.75 percent.RBI reduced the marginal standing facility (MSF) rate by 25 basis points from 9.0 percent to 8.75 percent with immediate effect.....
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Source:http://www.jagranjosh.com-Oct **,2013
Rajan unveils �five pillars� to strengthen banking system
Reserve Bank of India Governor Raghuram Rajan on Tuesday unveiled his five-point plan to overhaul the RBI's developmental measures over the next few quarters.
The first of the "five pillars" of the plan is clarifying and strengthening the monetary policy framework.....The second pillar is strengthening banking structure....The third pillar is broadening and deepening of financial markets and increasing their liquidity ....another pillar:Expanding access to finance to SMEs, the unorganised sector, the poor and remote areas ...The fifth pillar is to improve the system's ability to deal with corporate and financial institution distress ....
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Source:####-Oct **,2013
Public sector banks revise LTA norms in wake of scam
NEW DELHI: The government has revised norms governing leave travel allowance (LTA) for public sector banks in the aftermath of the leave travel concession (LTC) scandal.
Rajiv Takru, secretary department of financial services (DFS), told TOI that the department has issued revised norms for LTC for public sector banks. "We have told them what they can do and what they can't," Takru said.
Sources said a former chairman-cum-managing director (CMD) of one of the PSU banks, who had claimed a trip from Jaipur to Delhi via Brazil using LTC facility, could still face serious action though he has returned the excess money he had claimed.
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Source:"http://timesofindia.indiatimes.com-Nov 02,2013
Capital adequacy ratio of PSBs dip
As loan demand goes up, provision requirements also rise
The capital adequacy ratios of public sector banks in the country continue to shrink following a pick-up in credit demand and requirement of higher provisions in the wake of asset quality deterioration.
Most state-run lenders, that have announced their second quarter earnings so far, have reported a dip in their capital adequacy ratios in July-September period.
Bank of Baroda, the second largest state-run lender in the country, saw its capital adequacy ratio as per Basel II contracting to 12.32% at the end of September, 2013 from 12.70% a quarter ago and 12.91% a year earlier. The ratio also declined sequentially by 39 basis points when computed as per the new Basel III norms to 12.07%.
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Source:http://www.business-standard.com-Oct **,2013
NPAs of 10 public sector banks jump 62.5% to Rs 412 bn -
Net non-performing assets of 10 out of 25 public sector banks rose to Rs 411.92 billion for the June-September 2013 period, that is an increase of 62.5% or Rs 158.38 billion from Rs 253.54 billion as at September 30, 2012.
In percentage terms, net NPAs went up by 60 bps to 2.28% from 1.68% on aggregate level.
Allahabad Bank was worst hit with rise of 173 bps in net NPAs to 3.83%. Bank of Baroda reported a rise of 104 bps to 1.86%. It was followed by Bank of Maharashtra (88 bps), IDBI Bank (78 bps) and Syndicate Bank (74 bps).
While Canara Bank witnessed a rise of 65 bps in net NPAs, followed by Indian Bank (58 bps), Central Bank (56 bps) and Dena Bank (9 bps).
Bank of India was the only bank which witnessed a drop in net NPAs of 19 bps to 1.85%.
- See more at: http://www.myiris.com/newwsCeentre/storyShow.php?fileR=20131031174630199&secID=mostPopular&dir=2013/10/31#sthash.irlMW33b.dpuf
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Source:http://www.myiris.com/-Oct 31,2013
FinMin relaxes norms for CMD jobs in PSBs
The Union finance ministry has relaxed the norms for selection of a public sector bank�s chairman and managing director. Executive directors (EDs) appointed merely a couple of months earlier would now be allowed to appear in the interviews.
Earlier, one needed to have completed a year as ED. However, the criteria for residual service of two years of a candidate hasn�t been changed.
Interestingly, the government has decided to interview the candidates as early as this week for vacancies that will not arise before August 2014, after the general election. Also, the ministry seems to have kept aside the the communication made by the department of personnel and training on the observation of the Appointments Committee of the Cabinet (ACC) regarding appointment of top jobs in government banks and financial institutions. Among other things, a suggestion was made to revisit the requirement of residual service and introduction of a fixed tenure for the top post in PSBs.
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Source:####-Oct 29,2013
Small bank stocks rise on RBI Governor Raghuram Rajan�s M&A talk
MUMBAI: Stocks of mid-size and smaller banks rose on Monday after Reserve Bank of India governor Raghuram Rajan said that that the central bank would unveil new norms for the entry of foreign lenders which could even allow for the takeover of local banks.
Shares of Karnataka Bank, Lakshmi Vilas Bank, Dhanlakshi Bank and South Indian Bank surged between 10 per cent and 20 per cent on Monday after Rajan said in Washington over the weekend that the Reserve Bank would unveil a new policy framework for the entry of foreign banks in India. India has offered overseas banks the option of either operating as a subsidiary or purely as a branch with a carrot that those opting to enter the local markets as a full subsidiary would have greater freedom. "This is going to be a big opening because one could even contemplate taking over small Indian banks," he said in Washington.
Source:http://articles.economictimes.indiatimes.com/2013-10-15/news/43068596_1_foreign-banks-south-indian-bank-raghuram-rajan-Oct 15,2013
RBI appoints committee on mobile banking
Reserve Bank of India expects 5-5.5 pct growth in current fiscal
The Reserve Bank of India (RBI) today said the economy would grow by 5 to 5.5 per cent in the current fiscal, pinning its hopes on good farm output and improved exports.
"We have no reason to dispute the growth rate projected by the government at 5 to 5.5 per cent," RBI Governor Raghuram Rajan told reporters after a board meeting.
He based his optimism on expectations of a good kharif crop, improvement in exports and core sector performance data.
"...first estimate of kharif crop is significantly above the first estimate of last year. I think if we see some pick-up in exports...core sector is improving in performance. We would hope we would reach that range of 5 to 5.5 per cent," he said.
India's economic growth rate slipped to a decade low of 5 per cent in 2012-13 and declined to 4.4 per cent in the first quarter (April-June) of the current financial year.
Source:http://www.indianexpress.com/news/-Oct 04,2013
Reserve Bank of India relaxes trade credit norms
Relaxing norms to raise funds from abroad, the Reserve Bank today said now all types of companies can avail trade credit facility from overseas for import of capital goods.
"On a review, it has been decided to allow companies in all sectors to avail of trade credit not exceeding USD 20 million up to a maximum period of five years for import of capital goods as classified by Director General of Foreign Trade (DGFT)," RBI said in a notification.Earlier, only companies in the infrastructure sector were allowed to raise such trade credits.
RBI further said that the ab-initio contract period of 15 months for all trade credits has been relaxed to 6 months.***
Source:http://articles.economictimes.indiatimes.com-Sep 24,2013
New bank licences: RBI could ease initial equity capital requirement of Rs 500 crore**
NEW DELHI: The Reserve Bank of India may be open to relaxing the initial equity capital requirement of Rs 500 crore for setting up a bank if it fails to find enough "fit and proper" candidates during the screening process.
The intention is to allow a greater number of players qualify, a senior official involved with the process of issuing new bank licences said.***
Source:Economics Times-Sep 26,2013
India's Forex reserves jump by $2 bn to $277 bn**
India�s foreign exchange (Forex) reserves jumped by $2.03 billion to $277.38 billion for the week ended September 20, the biggest weekly gain in nearly two years, on the back of concessional swap facilities offered to banks by the Reserve Bank of India (RBI).
The Forex reserve has increased sharply for the second consecutive week. It had jumped by $544.7 million in the previous week.
According to RBI�s Weekly Statistical Supplement, the country�s foreign currency assets, the biggest component of the Forex reserves, increased by $1.97 billion to $249.22 billion for the week ended Sep 20.***
Source:http://www.thehindu.com/business/Economy/indias-forex-reserves-jump-by-2-bn-to-277-bn/article5179357.ece-Sep 28,2013
Festival stimulus: Cheaper loans from PSU banks for autos, durables**
The government has asked banks to cut interest rates to boost demand for vehicle and consumer durable loans in the festival season, which it hopes will revive growth in the economy.
Finance Minister P Chidambaram made the announcement within hours of meeting Reserve Bank of India Governor Raghuram Rajan on Thursday.
Some public sector banks can be expected to slash rates by 25 basis points from the current range of 10.5 per cent and above for loans to buy two wheelers, flat panel TVs, high-end mobiles and washing machines. The minister will be meeting the chiefs of these banks soon, it is understood.
Chidambaram said that to support the aggressive credit offers, he would provide additional capital for state-owned banks, but did not specify numbers. "The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two wheelers, consumer durables etc. at lower rates in order to stimulate demand," the finance ministry said in a statement.***
Source:http://www.indianexpress.com/news/festival-stimulus-cheaper-loans-from-psu-banks-for-autos-durables/1178186/-Oct 04,2013
Indian Bank gets new ED**
Mahesh Kumar Jain has joined Indian Bank as Executive Director.Prior to this, he was General Manager at Syndicate Bank�s largest Regional Office, Mumbai. He also headed various portfolios, such as treasury and international banking, as General Manager.
Earlier, he worked in Punjab National Bank�s operations, credit and risk management department. Jain is also a member of Indian Banks� Association�s steering committee on risk management, and member of IBA working group on implementation of Basel II and III.***
Source:http://www.thehindubusinessline.com/industry-and-economy/banking/indian-bank-gets-new-ed/article5186767.ece-Sep 30,2013
Corporation Bank Mangalore has new CMD in SR Bansal**
MANGALORE: SR Bansal has taken charge as chairman and managing director of Corporation Bank Mangalore on Saturday. Prior to taking over as chairman and managing director of city-based Corporation Bank, he was executive director of Punjab National Bank. Bansal a postgraduate in English, is a certified associate of Indian Institute of Bankers and an Associate of Indian Institute of Banking and Finance (AIIBF).
A seasoned banker with over 32 years of experience in various administrative and functional capacities at branches, regional offices, zonal offices and also at the head office level, he started his banking career as a direct officer recruit at Dena Bank in 1981 and went on to hold the office of the field general manager (North India) covering eight states. He was appointed as executive director of Punjab National Bank in June 2012. ***
Source:http://timesofindia.indiatimes.com/business/india-business/Corporation-Bank-Mangalore-has-new-CMD-in-SR-Bansal/articleshow/23585753.cms-Oct 05,2013
Companies failing to meet loan recast deadline may have to cede control**
Companies seeking easier terms on their loans face the prospect of ceding management control to lenders under a new scheme being considered by the finance ministry and the Indian Banks' Association (IBA).
Further, promoters of a company will have to pledge a minimum 40% of their equity holding with banks for loans to be restructured.And, if the promoter fails to deliver results within the time-frame stipulated in the loan restructuring agreement, banks will take over the company's management as in the case of software services company Satyam, which was later sold to Tech Mahindra.
The new approach was discussed earlier this week at a meeting between Financial Services Secretary Rajiv Takru and IBA, which represents state-owned and private sector banks. The finance ministry and banks under the umbrella of IBA have drawn up a list of troubled companies where the new rules will soon be applicable, a senior finance ministry official involved in the discussions told ET.
Banks are considering a change in management in case of five companies, said another person aware of the deliberations. Takru declined to comment on the outcome of the meeting, but said the exercise was meant to restore "order" in the financial sector. "We shall restore order through discussions and persuasion," he said.
New rules could be part of debt restructuring packages....
Source:http://articles.economictimes.indiatimes.com/2013-10-03/news/42664645_1_finance-ministry-secretary-rajiv-takru-indian-banks-Oct **,2013
Government's move to infuse Rs 14,000 crore into PSU banks may not spur two-wheeler demand
MUMBAI: The government's move to infuse Rs 14,000 crore into public sector banks to stimulate demand in the two-wheeler and consumer durables space is unlikely to have a major impact on spurring demand, say industry officials.
ET learns, in a two-wheeler financing market of Rs 1,000-1,200 crore a month, the share of PSU banks is a miniscule 3-5%. People tracking the sector say none of the banks have an active sourcing model of getting business in the two-wheeler space and even the process of getting a loan sanctioned can run up to 7 days to 30 days in some cases as against 2-3 days by private bankers and NBFCs
Source:####-Oct **,2013
RBI unexpectedly raises rates; trims rupee support steps
(Reuters) - Reserve Bank of India (RBI) Governor Raghuram Rajan surprised markets in his maiden policy review on Friday by raising interest rates to ward off rising inflation, while scaling back some of the emergency measures recently put in place to support the ailing rupee.
Rajan, who took office early this month amid worst economic crisis since 1991, increased the RBI's policy repo rate by 25 basis points (bps) to 7.50 percent, defying most forecasts that he would leave the rate on hold to bolster a sluggish economy.
As expected, the former IMF chief economist struck a hawkish tone on price pressures in Asia's third-largest economy.
He was non-committal about the direction of the next policy rate move but said he intends to continue withdrawing liquidity tightening steps that had been implemented to stabilise the currency as market conditions allow
Source:"http://in.reuters.com/article/2013/09/20/india-rbi-idINDEE98J02W20130920"-Sep 20,2013
Mid-Quarter Monetary Policy Review: September 2013
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic
situation, it has been decided to:
? reduce the marginal standing facility (MSF) rate by 75 basis points from 10.25
per cent to 9.5 per cent with immediate effect;
? reduce the minimum daily maintenance of the cash reserve ratio (CRR) from
99 per cent of the requirement to 95 per cent effective from the fortnight
beginning September 21, 2013, while keeping the CRR unchanged at 4.0 per
cent; and
? increase the policy repo rate under the liquidity adjustment facility (LAF) by 25
basis points from 7.25 per cent to 7.5 per cent with immediate effect.
Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent
and the Bank Rate stands reduced to 9.5 per cent with immediate effect. With these
changes, the MSF rate and the Bank Rate are recalibrated to 200 basis points above
the repo rate.
Source:"http://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/MQRS20134110EB1654.pdf"-Sep 20,2013
Lending Against Security of Single Product � Gold Jewellery
. The recommendations of the WG, in so far as they relate to NBFCs lending against the collateral of gold jewellery, have been broadly accepted by the Bank and it has been decided to issue guidelines as outlined below.
i. Appropriate Infrastructure for Storage of Gold Ornaments
It has been observed that branches of some NBFCs which are predominantly into lending (50% or more of the total financial assets) against gold jewellery lack the amenities for storage of the gold ornaments taken as collateral and often these have to be moved to larger branches where safe deposit vaults exist. This endangers the safety of the gold. It is therefore important that a minimum level of physical infrastructure and facilities is available in each of the branches engaged in financing against gold jewellery including a safe deposit vault and appropriate security measures for operating the vault to ensure safety of the gold and borrower convenience. Existing NBFCs should review the arrangements in place at their branches and ensure that necessary infrastructure is put in place at the earliest. No new branches should be opened without suitable storage arrangements having been made thereat. Applicants seeking registration as NBFCs from the Reserve Bank and which have a business plan to engage primarily in lending against the collateral of gold ornaments (such loans comprising 50 percent or more of their financial assets) will also have to ensure at the stage of submission of application for CoR that they have a proper infrastructure for storage and security at all places/branches of the company. No business of grant of loans against the security of gold can be transacted at places where there are no proper facilities for storage/security.
Source:"http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8418&Mode=0"-Sep 16,2013
Bank Rate
As announced in the Press Release 2013-2014/604 dated September 20, 2013, the Bank Rate stands adjusted by 75 basis points from 10.25 per cent to 9.50 per cent with effect from September 20, 2013.
2. All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised
Source:"http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8446&Mode=0"-Sep 20,2013
Change in Daily Minimum Cash Reserve Maintenance Requirement
it has been decided to reduce the minimum daily maintenance of the Cash Reserve Ratio from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning September 21, 2013.
Source:"http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8444&Mode=0"-Sep 20,2013
Stop banks from bidding for PSU bulk deposits: Finance ministry to RBI
NEW DELHI: In a somewhat unusual move, the finance ministry has asked the Reserve Bank of India (RBI) to address the issue of banks participating in bids called by cash surplus state-run firms for placing their bulk deposits.
The finance ministry has been trying to curb aggressive bidding for deposits by banks as it feels this pushes up cost of funds and eventually makes credit expensive. State-run companies are sitting on cash balances of nearly Rs 3 lakh crore. "Banks are forced to offer a higher rate because of the bidding process, often done informally," a finance ministry official said confirming that the issue has been raised with the RBI. The central bank is aware of the problem and had said even in its 2012-13 monetary policy statement that there was a wide variation in banks' retail and bulk deposits, which is unfair to retail depositors.
Source:"http://articles.economictimes.indiatimes.com/2013-09-16/news/42114509_1_bulk-deposits-finance-ministry-high-cost-deposits"-Sep 16,2013
Reform Process to Pump 14K Crore Boost Towards Public Sector Banks
A welcome note is in the air for an infusion of 14,000 Crore INR towards public sector banks within the next fortnight. The Financial Services Secretary Rajiv Takru informed this proposed move in New Delhi on September 19 of public sector banks and induce the use of the funds, a meet of bank chairmen would be held on September 27
Source:"http://www.rupeetimes.com/news/personal_loan/reform_process_to_pump_14k_crore_boost_towards_public_sector_banks_8544.html"-Sep 20,2013
Nationwide banks strike on 25 September 2013
The protest is against the Government�s proposal to merge public sector banks. They are also against the merger of Associate Banks with State Bank of India (SBI).
The All India Bank Employees Association (AIBEA) and the Bank Employees Federation of India have called for an all-India bank strike on September 25 to protest against the Government�s proposal to effect mergers among public sector banks. They are also against the merger of Associate Banks with State Bank of India (SBI).
Source:"http://www.moneylife.in/article/nationwide-banks-strike-on-25-september-2013/34559.html"-Sep 20,2013
RBI steps hit margins, Union Bank of India raises base rate by 25 bps
Public sector lender Union Bank of India on Friday raised its base rate by 25 bps to 10.25% from 10%. The new rates will be effective from September 2.
The bank increased its base rate, or the minimum lending rate, to protect its margins as cost of funds have climbed for all banks due to a raft of measures taken by the Reserve Bank of India last month to contain the steep fall of rupee. Union Bank's net interest margin fell to 2.63% in the June quarter down from 3.01% in the year ago period.
Private banks, including Yes Bank, ICICI Bank, HDFC Bank and Axis Bank, raised their base rate after RBI's measures, but public sector banks have been slow and only Andhra Bank had raised their base rate by 25 bps to 10.25% before Union Bank Larger PSU lenders like State Bank of India have indicated that they don't intend to raise rates as their wide retail deposit base has helped keep cost of funds in check.
Source:"http://www.financialexpress.com/news/rbi-steps-hit-margins-union-bank-of-india-raises-base-rate-by-25-bps/1165631"-Sep 07,2013
Videocon opted out of bank race, says Reserve Bank; firm denies
The race for new bank licences has taken a curious turn with the Reserve Bank of India announcing withdrawal of application by Value Industries, a subsidiary of Videocon Industries on Friday evening but it was denied by the group.
In a release placed on its website, RBI noted, "One applicant, viz Value Industries Limited, Aurangabad, has withdrawn its application." But Videocon Industries chairman and managing director Venugopal Dhoot told this newspaper he has no intention of quitting. "I am sure there is a mistake somewhere. Our application for the licence stands." He said his officials will take up the matter with the RBI on Saturday and expressed the hope the "mistake" will be rectified soon.
RBI also announced it had located one more application for bank licence, two months after the expiry of the deadline.
Source:"http://www.indianexpress.com/news/videocon-opted-out-of-bank-race-says-reserve-bank-firm-denies/1165842/"-Sep 07,2013
Reserve Bank of India asks Kerala temple boards about gold stocks
Read more at: http://indiatoday.intoday.in/story/reserve-bank-of-india-kerala-temple-boards-gold-stocks/1/305697.html
Temple boards in Kerala have received a letter from the Reserve Bank of India (RBI) seeking details of the stock of gold in their possession, a temple board official said on Thursday.
Sree Padmanabhaswamy temple
Sree Padmanabhaswamy temple
A top official of the famous Guruvayoor Devaswom Board said a letter has been received from the RBI seeking details of gold stocks it holds.
"I have passed on the letter to the managing committee of the temple, as all policy decisions are taken by the committee," the temple official, asking not to be identified, said.
The majority of temples in the state comes under the five different Devaswom Boards, of which the Travancore Devaswom Board is the biggest, with the famous Sabarimala temple falling within its jurisdiction.
Read more at: http://indiatoday.intoday.in/story/reserve-bank-of-india-kerala-temple-boards-gold-stocks/1/305697.html
Source:"http://indiatoday.intoday.in/story/reserve-bank-of-india-kerala-temple-boards-gold-stocks/1/305697.html"-Sep 05,2013
RBI Governor Concedes Missteps
It is rare for officials to admit that their policies have been less than perfect, but India�s central bank governor Duvvuri Subbarao did just that late Thursday, in his last public speech as head of the Reserve Bank of India.
Mr. Subbarao, whose five-year term as RBI governor ends Sept. 4, said the bank could have done a better job of explaining the intentions behind the various steps it has taken in the last three months to support India�s declining currency.
�There has been criticism that the Reserve Bank�s policy measures have been confusing and betray a lack of resolve to curb exchange-rate volatility,� Mr. Subbarao said at a lecture in Mumbai. He said that the RBI is unequivocally committed to curbing volatility in the rupee. �I admit that we could have communicated the rationale of our measures more effectively,� he added.
The Indian rupee has fallen nearly 20% against the U.S. dollar since May on fears that the U.S. central bank would soon withdraw its easy-money policies, and concerns about India�s wide current-account deficit.
Source:"http://blogs.wsj.com/indiarealtime/2013/08/29/indias-central-bank-governor-concedes-to-missteps/"-Aug 29,2013
Meet "The Guv": India's new central bank chief gets rock star welcome
(Reuters) - Less than 24 hours in the job and he has already been dubbed "The Guv" by a gushing Indian media and portrayed as a suave James Bond-like figure coming to the rescue of the country's crashing currency.
With the ink of his signature still drying on the oath that made him the 23rd governor of India's central bank on Wednesday, Raghuram Rajan, stunned investors by announcing a raft of measures aimed at shoring up the beleaguered rupee. His statement triggered a rally in the rupee and a surge in shares.
After weeks of reporting bad news on India's economic slowdown and tumbling currency, media breathlessly cheered the 50-year-old University of Chicago economist, giving him coverage normally reserved for Bollywood A-listers.
The "Name's Rajan, Game's Bond," punned India's leading business daily, the Economic Times, with a photo-edited picture on its front page of Rajan in an action pose and brandishing the fictional British spy's trademark Beretta pistol, albeit one made of rupee notes.
"Brilliant and bold. That's the takeaway from the first day first show of Raghuram Rajan," wrote Raghuvir Srinivasan, business editor of the Hindu, a leading English-language newspaper.
Source:"http://www.reuters.com/article/2013/09/05/us-india-economy-rajan-idUSBRE9840BK20130905"-Sep 05,2013
Raghuram Rajan takes over as 23rd Governor of Reserve Bank
***
Source:"http://www.indianexpress.com/picture-gallery/raghuram-rajan-takes-over-as-23rd-governor-of-reserve-bank/3331-1.html"-Sep 03,2013
Reserve Bank tightens norms for disbursal of home loans
The Reserve Bank of India today asked banks to link the disbursal of home loans to stages of construction of the property to protect the interests of buyers and contain the fallout of "innovative" housing financing schemes.
"In view of the higher risks associated with such lump-sum disbursal of sanctioned housing loans and customer suitability issues, banks are advised that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project/houses...," an RBI notification said.
Source:"http://profit.ndtv.com/news/your-money/article-reserve-bank-tightens-norms-for-disbursal-of-home-loans-326688"-Sep 03,2013
New RBI governor Raghuram Rajan warns of unpopular steps to fight crisis
Top economist Raghuram Rajan warned on Wednesday that he may have to take unpopular steps to tackle India's worst economic crisis in decades as he took over as the central bank's new chief.
Rajan, a former IMF chief economist, sought to reassure rattled markets, saying India faced tough challenges but was fundamentally sound, as policymakers battle a plummeting rupee and decade-low growth.
But in his first public comments after taking over as Reserve Bank of India (RBI) governor earlier on Wednesday, Rajan added that "some of the actions I take will not be popular", without detailing them.
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"The governorship of the central bank is not meant to win one votes or Facebook 'likes'. But I hope to do the right thing, no matter what the criticism, even while looking to learn from the criticism," he said in a televised statement.
Source:"http://www.hindustantimes.com/business-news/WorldEconomy/New-RBI-governor-Raghuram-Rajan-warns-of-unpopular-steps-to-fight-crisis/Article1-1117397.aspx"-Sep 04,2013
Raghuram Rajan takes charge as the Governor of the Reserve Bank of India
New Delhi: Dr. Raghuram Rajan, former chief economist at International Monetary Fund (IMF) and Chief Economic Advisior in Indian Government, takes over as the 23rd RBI Governor on Tuesday morning, a difficult assignment, from Duvvuri Subbarao.
The renowned economist, was acclaimed for predicting the 2008 global crisis, will plunge straight into a fire-fight situation as India battles a rapid fall in rupee, high inflation, low growth and burgeoning current account deficit (CAD).
Rajan has already said that he has no magic wand to face the challenges before the country but would deal with them one at a time. The appointment of Dr. Rajan as the RBI Governor was approved last month by the Prime Minister Manmohan Singh for a term of three years.
Source:"http://daily.bhaskar.com/article/MON-raghuram-rajan-takes-charge-as-the-governor-of-the-reserve-bank-of-india-4365784-NOR.html"-Sep 04,2013
Raghuram Rajan: 10 things to know about the new RBI governor
What you should know about the new RBI governor
Raghuram Rajan, 50, is the 23rd governor of the Reserve Bank of India. He has been appointed for a period of three years, and will take charge from D. Subbarao, who is exiting after an extended five-year term.This will be Mr. Rajan's second assignment in the country. He was appointed the Chief Economic Adviser to the Finance Ministry in August last year. He was the Economic Counselor and Director of Research (simply put, the chief economist) at the International Monetary Fund from September 2003 till January 2007.
Source:"http://www.ndtv.com/article/cheat-sheet/raghuram-rajan-10-things-to-know-about-the-new-rbi-governor-414462"-Sep 04,2013
"Never be afraid. Ultimately, you can�t die every day." - Justice (Retd) Chandru of the Madras High Court
Justice Chandru, a former judge of the Madras High Court, has one of the most prolific rates of disposal in the country. Through a tenure lasting close to six and a half years, he disposed of 90,000 cases. In this interview with Bar & Bench, the activist turned lawyer turned judge speaks about his student days, the two years of his life he spent travelling across Tamil Nadu and why he enjoys being a rebel.
Source:"http://barandbench.com/comment/43452#.UidzcNKqmM0" -Sep 02, 2013
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