Indian Banks

The Reserve Bank of India (RBI) is looking at “shadow banking” activities closely and will tighten regulations if needed.

“Next on the agenda is increasing the surveillance on shadow banking,” Anand Sinha, deputy governor of RBI, said on Monday while addressing a meet organised by the Associated Chambers of Commerce and Industry of India. Shadow banking refers to financial sector services beyond the active regulatory purview of central banks.

According to RBI, the unprecedented increase in shadow banking was a reason for the global financial crisis of 2008. Sinha added the central bank might tighten regulations if required.

Strengthening regulations on such businesses are being addressed in the Basel-III norms, proposed to become applicable from 2017-18.

Lately, non-banking finance companies (NBFCs) have attracted the central bank’s attention for various reasons. Sinha said, “We are pro-NBFC, but it being essentially a part of the shadow banking system, it has to be tightened under Basel-III norms.”

On capital adequacy under Basel-III, the deputy governor said while tough requirements were substantial, the incremental capital needed was not unusually large for Indian banks. RBI had released draft guidelines on Basel-III norms for Indian banks on December 30, 2011. The final norms are expected shortly, Sinha said on Monday.

According to the draft, banks would get time up to March 2017 to meet capital adequacy norms. He said, “Basel implementation has been made longer to ensure least disruption, as banks’ earnings are likely to come under pressure due to the higher capital requirements.” Banks would need to raise productivity to protect return on equity, he noted.

The deputy governor said the asset quality of banks was expected to improve, as the rise in non-performing assets may have peaked. Banks should allow restructuring of loans only after due consideration and analysis, he said.

On the recent change in several Indian banks’ rating outlook by Standard and Poor’s, he said: “They have cautioned us; we were aware of these factors.”

RBI has set up a committee to look into ways of developing a fixed rate loans model in the current interest rate environment.

Sinha said, “A variety of fixed interest rate loan products are imperative, considering that currently banks offer fixed rates on deposits and mostly floating rates on home loans, which expose borrowers to uncertain rate movements.”

Source:http://www.business-standard.com/india/news/rbi-may-tighten-shadow-banking-rules/473053/

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Reserve Bank of India (RBI) Recruitment of Assistants – Applications are invited for the post of Assistant in Reserve Bank of India (RBI/Bank) from Indian citizens subjects of Nepal and subjects of Bhutan and persons of Indian origin who have migrated from Pakistan, Myanmar, Sri Lanka and East African countries or Kenya, Uganda and United Republic of Tanzania with the intention of permanently settling in India and in whose favour Eligibility Certificates have been issued by Government of India.

City Wise Vacancies: Ahmedabad – 45, Bangalore - 45, Bhopal – 30, Bhubaneswar – 40, Chandigarh – 25, Chennai – 90, Guwahati – 40, Hyderabad – 45, Jaipur – 35, Jammu – 25, Kanpur & Lucknow – 45, Kolkata – 145, Mumbai – 225, Nagpur – 30, New Delhi – 65, Patna – 40, Thiruvananthapuram & Kochi – 30.

Educational Qualifications: At least a Bachelor’s Degree in any discipline with a minimum of 50% marks (pass class for SC/ST/PWD candidates) in the aggregate and the knowledge of word processingon PC. A candidate belonging to Ex-servicemen category should either be a graduate from a recognized University or should have passed the matriculation or its equivalent examination of the Armed Forces and rendered at least 15 years of defense service.

Application Fee: Rs.385/-. No fee is payable by SC/ST/PWD candidates. Fees once paid will not be refunded under any circumstances.

How To Apply: Candidates are required to apply online on or before 27th March 2012.

For Detailed Information: http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2502

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(RBI) governed by a centralboard of directors. RBI is owned Government of India. Applications are invited for the following post on contract basis in Reserve Bank of India (RBI) from Indian citizens, and certain other categories citizens.

Executive Interns - 200 posts (GEN-101, SC-30, ST-15, OBC-54) (PWD-06)
Age Limit : 21 to 30 years as on 01/07/2010
Qualification : A First Class Bachelor’s Degree with a minimum of 60% marks or an equivalent grade. SC/ST/PWD(HI/VH/OH) candidates having Second Class with a minimum of 50% marks or equivalent grade in Bachelor’s Degree examination.

Application Fee : Rs.100/- for General and OBC Candidates. No fee is payable by SC/ST/PWD candidates. Fee is payable by Demand Draft favouring Reserve Bank of India and payable at Mumbai only.

How To Apply : Eligible candidates apply Offline or Online. The Online can be submitted at RBI website only up to 23/08/2010, while office applications in the prescribed format or print-out can be submitted up to 30/08/2010 (06/09/2010 for candidates from far-flung areas and abroad). The application should be sent to The General Manager, Reserve Bank of India Services Board, Post Bag No.4618, Mumbai Central Post Office, Mumbai-400008 by ordinary post.

For details click here

Off line Application

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Any further hike in policy rates by the Reserve Bank of India(RBI) is expected to dampen the demand for the residential real estate segment due to the rising cost of home loans.

RBI recently hiked the repo and reverse repo rates by 25 basis points to check the spiraling inflation in the country. Any further rate hike is also expected as the RBI has hinted to do so in order to suck excess liquidity from the market.

However, the only silver lining for the real estate players is that banks are yet to raise home loan rates despite the hike in policy rates.

“In the post-hike scenario, we don’t see any kind of impact on demand for residential houses as banks are yet to raise rates. However, any further hike in policy rates is expected to put pressure on demand as banks will follow suit,” J C Sharma, managing director of Shobha Developers said.

He also said that as long as home loan rates stayed within single digit, the present demand would persist.

Presently, home loan rates are hovering in the range of 8-9 per cent with schemes of teaser loans floated by some banks.

“There is a clear indication by RBI of tightening rates and rolling back of stimulus package. However, it is yet to be seen how the policy rate hike is transformed into a rise in home loan rates,” H S Upendra Kamath, executive director, Canara Bank said.

He also said that though there would be some kind of a hike in housing loan rates, that would not be abrupt to destabilise the demand scenario.

In addition to home loan rates, policy rate hike will fuel higher lending rate by banks. So, real estate players with higher cost of funds are expected to pass this cost to the consumers, which in turn may see price rise in this segment.

As per a CRISIL report, residential market is expected to turn positive this year owing to improvement in affordability, steady economic growth and greater liquidity.

A research report of Fitch also notes that fundamentals of Indian real estate sector is improving as seen by better liquidity and improved demand in the residential segment. However, concerns of moderately adverse policies still remain as economic conditions become more stabilised, the report says.

“Demand from residential segment remains robust as of now and any rate hike will work as a deterrent for this sector. However, demand will not be substantially impacted,” Shailesh Kanani, an analyst of Angel Broking said.

He also said that real estate players had again started raising prices in residential segment, which could negatively impact demand scenario with further rate hike.

(BS)

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Reserve Bank of India (RBI) Deputy Governor Subir Gokarn on Monday said it needs to be ensured that banks do not take “undue risks” to meet the aimed financial inclusion.

“We have to try and ensure that this (financial inclusion) does not result in a disproportionate increase in the riskiness of banks’ balance sheets. As we go along, we need to try and make sure that this expansion is not resulting in undue risk. We need to ensure that banks are protected,” Gokarn said on the sidelines of the central bank’s outreach programme here.

Underscoring the importance of inclusive growth in the sector, Gokarn said, financial inclusion will be a key criterion for issuing new bank licences. As part of its platinum jubilee celebrations, RBI’s top officials are visiting non-urban areas to promote financial inclusion and spread awareness on banking.

The central bank’s outreach programme aims to evolve a sustainable banking model at the village level.

(BS)

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The Reserve bank of India (RBI) has asked banks to reveal more information on their market operations, including data related to top 20 depositors, 20 largest borrowers, exposure to four largest non-performing accounts and special purpose vehicles sponsored by them, for the current fiscal.

This, officials said, was to ensure the industry followed international best practices and to enhance transparency in banking operations. The disclosures are to be made part of the ‘Notes to Accounts’ in banks’ balance sheets.

“The central bank has been taking several steps from time to time to enhance transparency in operations of banks by stipulating comprehensive disclosures in tune with international best practices,” RBI said in a communication to bank chief executives.

Besides giving information on the total deposits of the 20 largest depositors, banks would have to reveal the share of these deposits in the total deposit base.

Banks would also have to provide an indication of distribution of advances, by revealing the share of 20 largest borrowers in total advances. They would also have to give details about exposure (credit plus investments) to 20 top customers, it said.

V Ramakrishna, chief executive officer, Indian Bank’s Association, said, “We are focussing on improving governance and compliance to ensure that it is good for the industry”.

According to new RBI norms banks have to give sector-wise break up of non-performing assets (NPAs). The four sectors are agriculture and allied sector; industry (micro & small, medium, and large), services and personal loans.

Banks have been providing information on advances and NPAs in presentation to analysts every quarter. Investors have been demanding information on the impact of the global economic slowdown on balance sheets, especially from the second half of 2008-09.

Roopa Kudva, managing director and chief executive officer, CRISIL said, banks’ NPAs would continue to rise as the economic growth started to recover and were likely to peak around 4.50 per cent. “What we are seeing right now is not confined to small and medium enterprises, and it is not something unexpected,” she said at a press meet today. In 2009, CRISIL had predicted that non-performing assets would rise to 5 per cent by March 2.

(BS)

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The Reserve Bank of India (RBI) has signed an agreement with the International Monetary Fund (IMF) to purchase notes worth up to $10 billion to improve the ability of the international lender to provide timely and effective balance-of-payment assistance to member countries.

IMF will issue the notes in the special drawing rights (SDR)-denominated form. The pact was a temporary bilateral arrangement for one year, which might be extended to two years, RBI said on Friday.

The pact is part of the international effort to support IMF’s lending capacity following the decision of the Group of 20 nations at its London Summit (held in April 2009) to treble IMF’s resources to $750 billion.

Generally, IMF will give a five-day notice to RBI about its intention to issues notes, including the amount. It will restrict issuance to a principal amount not exceeding SDR 500 million in any calendar week.

At the beginning of each quarter, IMF will also provide estimates for the amount for which notes will be issued during a three-month period.

Permanent increases in IMF’s resources are expected to take place through an increase in quotas and standing borrowing arrangements currently under negotiation.

(BS)

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While RBI readies to start issuing new banking licences and looking at criterion like increasing the net worth requirements, it would do well to look back at the Bank of Rajasthan case and see if it has learnt any lessons from it. And these involve looking at the history of those allowed to run banks where thousands of crores and more of public deposits are at stake. With the Bank of Rajasthan’s extraordinary general meeting last week resulting in P K Tayal, the bank’s largest shareholder, not getting re-elected as a director, RBI’s immediate worries may be over; but the details of whether Tayal, in fact, used his position to influence the bank’s lending will be known only after the special audit report by Deloitte Haskins and Sells is out by the end of the month — the bank, it turns out, didn’t even have credit committees to clear large loans, according to an interview given by its managing director and chief executive officer. That things had been going wrong at the bank, of course, is something RBI has suspected for some time and that is why, last November, the central bank appointed the new chief executive and managing director. Last week, acting upon a reference from RBI, stock market regulator Sebi found that, while professing to have reduced his shareholdings in the bank (from 44.2 per cent in June 2007 to 28.6 per cent in December 2009) in line with RBI directions, Tayal had actually increased his shareholdings to 55 per cent. This was done by transferring funds from Tayal group companies to the Yadav group of companies — the latter bought the bank’s shares and later transferred them to firms located in Silvassa at addresses which were the offices or manufacturing facilities of various Tayal group companies.

Two sets of issues come up. First, if this had been going on for a while, why is it that no RBI audit caught this? Two, this is not the first time Tayal has been the subject of serious investigations by the authorities. In 1996, for instance, the income tax authorities had alleged a group company had inflated bills of textile machinery by Rs 145 crore — when an audit was done at the behest of a financial institution, IFCI, the auditor said the company had said the vouchers for this amount had been destroyed in a fire and that some data relating to two Tayal companies had got corrupted in the computer. In 1998, the Central Economic Intelligence Bureau had found evidence of share transactions of the type Sebi has now discovered and pointed out the funds for these share transactions were provided by siphoning off money from group companies. All of this was known to RBI but instead of probing deeper, it just went by the book — when the matter was referred to the Department of Company Affairs, it fined the group Rs 58,000 (!) in keeping with the provisions of law and ended the matter. So, from RBI’s point of view, there was no pending case against Tayal. Given the facts of the Tayal case, and the manner in which investigations either drag on, get closed for political reasons or get settled with minor fines, RBI needs to take a larger view of the history of the groups being considered for banking licences, and also remember the principles that defined bank nationalisation in 1969, including delinking of industrial and finance capital.

(BS)

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