PM's council wants govt to cut stake in banks to 51%

The Prime Minister's Economic Advisory Council has recommended phased dilution of government stake in public-sector banks, from 58 per cent to 51 per cent, and introduction of on-tap licensing of new banks. In a note prepared last week, the council, headed by C Rangarajan, said the stake reduction would help raise the additional capital required to implement the Basel III norms, meant to strengthen the banking system. Assuming no discount to market price, the government will be able to raise more than Rs 55,000 crore, the council has estimated, adding the pricing of shares should be attractive enough to bring in non-government shareholders. Making a strong case for abolishing the present system of "stop-go" licensing of new banks, the council has said it should be an ongoing process, in which licences can be given whenever the central bank feels an applicant meets the strict eligibility criteria. Apart from deepening the banking system, this will help reduce the fiscal impact of Basel III as the public-sector banks' share in incremental credit creation can be brought down from the current 70 per cent....Read more >> Click here

FinMin brings back lateral transfer of CMDs in govt banks

The finance ministry has shortlisted then names of executive directors who are likely to head public sector banks in 2014-15. Six public sector banks will see its chairmen and managing directors retiring in 2014-15, which are Bank of Baroda, Indian overseas bank, Canara Bank, Oriental Bank of Commerce, Vijaya Bank and United Bank of India. The selection panel comprising Anand Sinha, deputy governor, Reserve Bank of India and Rajiv Takru, secretary, financial services in the ministry of finance, among others, interviewed 19 executive directors last week. Sources indicate, Arun Srivastava, who is an ED in Bank of India has been identified to head Indian Overseas Bank, SK Kalra of Andhra Bank may get the charge of Canara Bank, BB Joshi of Bank of Baroda may head for OBC. Similarly, RK Goel of Central Bank of India may be given the charge of Vijaya Bank and MK Jain of Punjab & Sind bank may get the top job ion Kolkata-based United Bank...Read more >> Click here

Finance ministry remains silent on RBI's actions

As the RBI increased the repo rate by 25 basis points in its second quarter review, the Finance Ministry chose to remain silent. Neither the Finance Minister P Chidambaram nor the Economic Affairs Secretary Arvind Mayaram commented on the policy but officials Business Standard spoke to said that the finance ministry and the RBI were on the same page on this action. An official did not wish to be identified said, "The increase in repo rate by 25 basis points and cutting Marginal Standing Facility (MSF) was on the expected lines." The central bank reduced the MSF by 25 basis points from 9% to 8.75%. The repo rate has been increased from 7.5% to 7.75%. In the past the finance ministry had openly expressed its displeasure over repo rate increase or status quo maintained by the then RBI governor D Subbarao but the official said now the priorities have changed and finance ministry also realizes that taming inflation is also important along with GDP growth.

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FinMin relaxes norms for top jobs in govt banks

The finance ministry has relaxed the norms for selection of chairman and managing director in public sector banks which will now allow executive directors who were appointed merely couple of months back to appear in the interviews. Interestingly, the government has decided to interview the candidates as early as this week for vacancies that will arise not before August 2014 – after the general elections.  According to norms, candidate needs to complete one year as executive director to become eligible for chairman and managing director. However, the criteria for residual service of two years of a candidate have not been tweaked.

The finance ministry has also seems to have kept the communication made by the department of personnel and training (DoPT) conveying the observations and directions of the Appointment Committee of the Cabinet regarding appointment of top jobs in government banks and financial institutions – in abeyance and proceeded with the selection process.

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Bank on India Post

Since Independence, every move of the RBI has been aimed at development keeping in mind the welfare of the common man. In this connection, granting a banking licence to India Post will be a unique service to farmers, farm labourers and the rural poor, who feed the country but die of hunger. The huge number of farmers’ suicides should prompt us to enable faster financial inclusion as only 35 per cent of the population holds bank accounts. India Post is the best equipped to take this on, with over 1,53,000 post offices spread across the country, located not more than 2-3 km from each village. India Post has ready infrastructure, which can be quickly upgraded to meet the needs of a full-fledged bank branch in this age of solar power and satellite telecommunication. On the other hand, it would probably take decades for other applicants to open 1,53,000 branches.

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FM tells PSBs to step up NPA recovery

Blaming large borrowers for the increasing non-performing assets (NPAs) of public sector banks (PSBs), Finance Minister PChidambaram on Tuesday asked  lenders to monitor 30 big bad debt accounts each. He expressed concern that recoveries were not taking place at the desired pace and asked these banks to set up a division each to monitor the recoveries from prudentially written-off accounts.  Briefing the media after taking stock of PSBs’ performance, after a meeting with their chiefs, the minister said he disagreed  with those painting a dismal picture of the economy. He said banks had cleared 137 of 176 big pending projects, involving investment of at least Rs 250 crore each. The minister said he hoped NPAs were a "function of the economy" and would improve with the recovery in economic growth. "We are monitoring the top 30 NPA accounts in each bank. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting," Chidambaram said.

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Top 30 NPA accounts of PSU banks under govt scanner: Chidambaram

Concerned over defaults by big borrowers, Finance Minister P. Chidambaram today said that the Government is monitoring the top 30 NPA accounts in each PSU bank and asked the lenders to set up separate verticals to recover the money from written-off accounts. Talking to reporters after meeting the heads of PSU banks, the Minister said he hoped that non-performing assets (NPAs) are a “function of economy” and would improve with the recovery in economic growth. “We are monitoring the top 30 NPA accounts in each bank, each zone. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting,” Chidambaram said.

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FM to grill govt banks' chiefs tomorrow

Finance Minister P Chidambaram will take stock of public sector banks’ performance on Tuesday, to assess whether credit is being provided to productive sectors, selected sectors are being given a boost and if the lenders are reining in the growth of non-performing assets (NPAs). He will also review interest rates on non-resident Indian accounts, in focus to take advantage of the rupee’s depreciation. The meeting comes weeks after the government agreed to infuse additional capital into banks to generate demand in consumer goods. It will assess how the reduction in lending rates by banks in recent weeks has helped credit offtake in two-wheelers and consumer durables, as well as in other sectors. The public sector banks (PSBs) might be asked to give their estimates on the capital infusion they would need during the year. 

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Dept of Posts cuts banking fund proposal to Rs 623 cr

The Department of Posts (DoP) has lowered its estimate of funds that it needs to start banking operations to about Rs 623 crore from its earlier projection of about Rs 1,900 crore, sources said. The proposal for Rs 623 crore includes Rs 500 crore that is required as paid-up capital under the RBI’s new banking licence norms. The remaining amount is for infrastructure that is needed to comply with the new norms. The DoP has applied for a banking licence. The Reserve Bank of India is expected to issue licences to shortlisted entities in January 2014. “The DoP has lowered the proposal for funds it needs to start banking operations from about Rs 1,900 crore estimated earlier to about Rs 623 crore,” a government official told PTI.

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Amid slowing economy, FM to review impact of rate cut with banks

Amid the ongoing festive season, finance minister P Chidambaramwill take stock of public sector banks performance on October 22 to assess whether credit is being provided to productive sectors, selected sectors of the economy are given boost and the lenders are able to rein in NPAs at these difficult times. He will also review interest rates on NRI accounts, which are special focus of the authorities after to take advantage of the rupee depreciation. The meeting, which comes weeks after the government agreed to infuse additional capital into banks to generate demand in consumer goods, will assess how the reduction in lending rates by banks in the last few weeks has helped credit off-take in two- wheelers andconsumer durables as well as in other sectors. 

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Chidambaram to meet bank chiefs on Oct 22

Finance Minister P. Chidambaram will meet chief executives of public sector banks (PSBs) here on October 22. Indications are that he would review the performance of these banks at this meeting. Given the economic slowdown, Chidambaram is also expected to discuss the Government plan to infuse additional capital to help lower the borrowing cost for customers for purchase of two-wheelers and consumer durables. The recent factory output data for August 2013 showed weakness in the capital goods and consumer durables segments. Output in both these categories contracted. Budget 2013-14 had promised capital infusion of Rs 14,000 crore in various public sector banks. The Finance Ministry is yet to disburse this amount.

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Fraud against bank is offence against society: Supreme Court

Offences related to banking activities are not only confined to banks but have a harmful impact on their customers and society at large, the Supreme Court has said while asking courts not to show leniency to the accused in such cases.  A bench of justices S J Mukhopadhaya and Ranjan Gogoi said such offences involve moral turpitude and the accused should not be let off after refunding the money taken from the bank fraudulently. "The offences when committed in relation with banking activities including offences under Sections 420 (cheating), 471 (using forged document) have harmful effect on the public and threaten the well-being of the society. These offences fall under the category of offences involving moral turpitude committed by public servants while working in that capacity. 

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RBI to issue seven new bank licences, says FM

The suspense over the number of new banking licences to be issued by Reserve Bank of India has ended. Finance Minister PChidambaram said in Bangalore on Saturday that the RBI will shortly issue seven licences.  The announcement comes a day after RBI Governor Raghuram Rajan announced the names of the three members who will assist former RBI Governor Bimal Jalan in the external committee to vet the applications shortlisted by the central bank. The Jalan panel will propose the final slate to the RBI central board . Addressing a function at State Bank of Mysore, Chidambaram said the new banks should not try to become clones of existing banks. “We don’t want seven more clones. We don’t want the seven of them to look like each other with just a masthead bearing different names. 

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Reconsider bank licences for corporates: Finance panel to Govt

Congress heir-apparent Rahul Gandhi is rapidly emerging a headache for the Manmohan Singh Government than even the BJP Prime Ministerial candidate, Narendra Modi. On a day Gandhi stunned the Government by condemning its Ordinance to protect convicted lawmakers from disqualification as “wrong”, it has emerged that he also lent his weight to a Parliamentary panel’s report asking the Government to reverse another key initiative — the proposal to allow the private sector to run banks. 

The Finance Ministry’s ambitious plan to allow the entry of industrial houses into the banking sector, a move which has been supported by both Prime Minister Manmohan Singh and Finance Minister P. Chidambaram, has been strongly opposed by the Parliament’s Standing Committee on Finance.

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DBT: Government transfers Rs 480-crore into 9 million accounts since January

 The government has transferred Rs 480 crore into nine million accounts since January 1 when the direct benefit transfer (DBT) scheme was rolled out. "It will take fair amount of time for the process to cover the large section. The process will never be completed for the reason that more and more beneficiaries will come into the system," DBT Mission Director S Sundareshan said on Tuesday. 

DBT has been launched for as many as 28 schemes in 121 districts. Approximately 20 schemes are scholarship schemes of various types, three are pension schemes, and balance miscellaneous. 

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Banks must be strict with wilful defaulters, Chidambaram says

Public sector banks should deal strictly with wilful defaulters to check non-performing assets (NPAs) while being sympathetic towards borrowers facing difficulties, Finance Minister P Chidambaram said today. 

"Genuine defaulters and wilful defaulters need to be dealt with separately. We have to be strict with wilful defaulters," Chidambaram said in an address to the Parliamentary Consultative Committee attached to his Ministry.  He said that bankers have been told to be sympathetic and have a "humane approach" towards genuine defaulters.  "This is time for hand-holding of borrowers who are facing difficulties, especially industry," he added.  The NPAs of public sector banks rose to 3.84 per cent of advances at the end of March from 2.32 per cent in March 2011. 

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Rupee beats Chidambaram to 68

The rupee has raced past Finance Minister P. Chidambaram to hit 68. Chidambaram has to wait another 19 days to turn 68. He was born on September 16, 1945. The currency today closed at 68.80 on heavy month-end demand for dollars from banks and oil importers amid a sharp fall in the domestic equity market. On August 1, 2012, Chidambaram took over the Finance portfolio after the incumbent Pranab Mukherjee became the President. Since then, the rupee has lost 23 per cent.

The rupee has tumbled not only against the dollar, but also against the euro and the pound. In fact, against the British pound, it is quoting at 106.8 and against the euro at 91.50. The slide in the rupee and equity markets was chiefly because of the growing likelihood of Western military action against Syria and fear that the Food Security Bill will further inflate the fiscal deficit.  hidambaram, however, claimed that the fiscal deficit would be contained at 4.8 per cent of GDP, as projected in the Budget.

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Post-offices in makeover mode to woo youth

“This almost looks like a plush branch of a private bank.” This is how Yellapragada Rajasekhar, a 24-year-old techie with TCS, reacted on entering a new-generation post-office inaugurated recently here. This is not an isolated case any longer.

After banks, age-old post-offices are now racing to attract the younger generation with a modern ambience. Across the country, many offices that have not even been whitewashed for decades are now being refurbished. “We have renovated 2,515 post-offices as on date, spending Rs 314 crore. 

The objective behind revamping is to connect with the younger generation,” a top executive at India Post headquarters in New Delhi told Business Line over the phone. More space for customers and staff, single-window counters and modernised mail sorting counters at the back-office are some of the upgrades you will find.

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Rupee undervalued, but no need for excessive pessimism: Chidambaram

With rupee falling by 5.5 per cent in five days, Finance Minister P Chidambaram today said the currency is undervalued and has overshot appropriate levels but sought to assuage investors asserting there is no need for “excessive and unwarranted pessimism”.

After maintaining silence for the whole of this week on rupee’s steady fall, Chidambaram addressed a press conference on a day when the rupee breached 65-mark against dollar to assert that there was no cause for panic and said stability will return to currency markets as government continues to promote investment and growth.

 “We believe that rupee is undervalued and has overshot what is generally believed to be a reasonable and appropriate level,” he said. Chidambaram, who earlier in the day held a three-hour long discussions with RBI Governor D Subbarao and his successor Raghuram Rajan, said, “There is no cause for panic that seems to have gripped the currency market and that is feeding into other markets.“We are confident that stability will return to these markets and we can get on with the task of promoting investment and growth.”

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In-principle approval for new banks by early next year

 The Government expects ‘in-principle’ approvals to be given for new banks by the first quarter of next year. This information was given by the Finance Ministry in the Lok Sabha on Tuesday.

NEW BANK LICENCES

The Reserve Bank of India has received 26 applications for new banking licences. “At the first stage, the applications will be screened by RBI to ensure prima facie eligibility of applicants, including the assessment of ‘fit and proper’ status of applicants,” Finance Minister P. Chidambaram said in a written reply to the Lok Sabha. He also said thereafter, the applications would be referred to a high-level advisory committee to be set up by RBI. In view of the processes involved, it is expected that ‘in-principle’ approvals for new banks will be given by the first quarter of 2014.

STEPS TO TAME RUPEE

On a question related to the weakening Indian currency, the Finance Minister said the Government had taken a number of steps to stem the rupee’s depreciation. “A number of steps have been taken to moderate demand of non-essential imports on April 12, 2013, enhance capital flows to augment supply of foreign exchange and curb speculation in the foreign exchange market to stem the rupee depreciation,” he said.

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