Mumbai: Days after surprising the market by upping its short-term rates, Reserve Bank Governor, D Subbarao, on Wednesday said that the apex bank would continue its exit from the monetary stimulus to check high-inflation and ensure sustainable economic growth.
"If you have high inflation, you cannot have sustainable growth...it is better to take action now and
continue the exit strategy...in the near term, we may have to sacrifice growth. (But) the RBI believes that it was necessary to achieve sustainable growth," Subbarao said at a function here.
With a view to arrest the ballooning inflation, now above 8.5 per cent, the Reserve Bank last week hiked the repo, reverse repo rates (short-term lending and borrowing rates) by 0.25 per cent to 5 per cent and 3.5 per cent respectively.
In January, the central bank signalled the exit from its easy money stance by hiking the cash component banks have to park with the RBI at zero interest by 0.75 per cent to 5.75 per cent.
Subbarao said the Reserve Bank's actions have helped to contain the surge in inflation, which is a threat to the economic growth, but warned that demand-side pressures could build up in the economy furthe
Friday, March 26, 2010
RBI may further tighten policy: SBI Reuters
New Delhi: The chairman of India's top lender State Bank of India said on Tuesday the Reserve Bank could further tighten monetary policy if March inflation was uncomfortable, and that liquidity in the system was surplus.
"It depends on the next inflation number," O.P. Bhatt said, when asked if the RBI could tighten its policy in April.
"It depends on the next inflation number," O.P. Bhatt said, when asked if the RBI could tighten its policy in April.
Wednesday, March 24, 2010
GO FOR FINANCIAL INCLUSION-- FM OF INDIA
Bangalore/New Delhi: On a day when finance minister Pranab Mukherjee urged the bankers to change their mindset to reach out to the unreached and under-reached segments of the population, the State Bank of India (SBI) has sanctioned a term loan of Rs 200 crore to a Hyderabad-based microfinance institution Share Microfin Ltd.
Mukherjee had turned the heat on banks by saying that they would have to harness technology and innovate on low-cost business models to reach out to as many of the 6,00,000 villages across the country. Mukherjee was talking on the sidelines of a workshop on financial literacy in Bangalore. Later in Mysore he laid the foundation stone for a bank-note paper mill. RBI governor Subbarao who also attended the function in Bangalore, said the lead banks in each district has been asked to draw a road map by this month (March 2010) for ensuring that villages with a population of over 2,000 have access to financial services by March 2012. “All domestic, public and private sector commercial banks have agreed to come up with their specific, board approved financial inclusion plans (FIPs) by March 2010 to be rolled out over the next three years. These plans will have both qualitative and quantitative milestones,” said Subbarao. He also called for a survey and evaluation of the programmes at the grassroot level to draw up the best practices. “We need to study the link between financial literacy and financial inclusion and improved financial outcomes so as to understand which models have been effective,” Subbarao added.
“In this context, it will be useful to study successful experiments from NGOs (non-governmental organisations) such as Sewa (self-employed women’s association), which started a financial counselling training service for poor self-employed women, including a training for trainers,” Subba Rao said.
The RBI has asked the banks to include criteria on financial literacy and financial inclusion in the performance evaluation of their field staff. Stressing that technology had the potential to enhance the development of financial literacy, both as a delivery channel and as a learning process, Subbarao said technology could bridge distances for those living in rural and remote communities.
Meanwhile, the SBI beneficiary from Hyderabad, Share Microfin, said the term loan would help the microfinance company to promote agro, animal husbandry, micro, small and medium enterprises and cottage industry structures providing alternative and additional income to a large number of poor women in Chhattisgarh, Madhya Pradesh, Maharashtra, Karnataka, Tamil...
Mukherjee had turned the heat on banks by saying that they would have to harness technology and innovate on low-cost business models to reach out to as many of the 6,00,000 villages across the country. Mukherjee was talking on the sidelines of a workshop on financial literacy in Bangalore. Later in Mysore he laid the foundation stone for a bank-note paper mill. RBI governor Subbarao who also attended the function in Bangalore, said the lead banks in each district has been asked to draw a road map by this month (March 2010) for ensuring that villages with a population of over 2,000 have access to financial services by March 2012. “All domestic, public and private sector commercial banks have agreed to come up with their specific, board approved financial inclusion plans (FIPs) by March 2010 to be rolled out over the next three years. These plans will have both qualitative and quantitative milestones,” said Subbarao. He also called for a survey and evaluation of the programmes at the grassroot level to draw up the best practices. “We need to study the link between financial literacy and financial inclusion and improved financial outcomes so as to understand which models have been effective,” Subbarao added.
“In this context, it will be useful to study successful experiments from NGOs (non-governmental organisations) such as Sewa (self-employed women’s association), which started a financial counselling training service for poor self-employed women, including a training for trainers,” Subba Rao said.
The RBI has asked the banks to include criteria on financial literacy and financial inclusion in the performance evaluation of their field staff. Stressing that technology had the potential to enhance the development of financial literacy, both as a delivery channel and as a learning process, Subbarao said technology could bridge distances for those living in rural and remote communities.
Meanwhile, the SBI beneficiary from Hyderabad, Share Microfin, said the term loan would help the microfinance company to promote agro, animal husbandry, micro, small and medium enterprises and cottage industry structures providing alternative and additional income to a large number of poor women in Chhattisgarh, Madhya Pradesh, Maharashtra, Karnataka, Tamil...
Tuesday, March 23, 2010
Capital Infusion in Indian Public Sector Banks
The Government plans to pump-in around Rs 9,000 crore into select state-run banks by April-May, in the first phase of its capital infusion programme announced in the Union budget, a top finance ministry official said.
"This (capital infusion into select PSBs) will be done by April-May in the first phase. We are looking at putting-in around Rs 9,000 crore," Financial Services Secretary, R Gopalan, said.
In the budget, the Government has earmarked Rs 16,500 crore for recapitalisation of state-run banks, to enable them maintain eight per cent Tier-I capital by March 31, 2011.
However, the Government is yet to decide which banks to infuse funds into and the amount for each bank, Gopalan said.
"That is something I cannot say. Calculations will have to go on now. We have to find out, as on March 31, what are the outstandings and CRAR. These issues have to be sorted out," Gopalan said.
While Gopalan would not divulge the names of banks likely to receive capital, it is widely expected that Bank of Maharashtra, Indian Overseas Bank, Uco Bank, Syndicate Bank, Dena Bank, among others, will make the list.
"This (capital infusion into select PSBs) will be done by April-May in the first phase. We are looking at putting-in around Rs 9,000 crore," Financial Services Secretary, R Gopalan, said.
In the budget, the Government has earmarked Rs 16,500 crore for recapitalisation of state-run banks, to enable them maintain eight per cent Tier-I capital by March 31, 2011.
However, the Government is yet to decide which banks to infuse funds into and the amount for each bank, Gopalan said.
"That is something I cannot say. Calculations will have to go on now. We have to find out, as on March 31, what are the outstandings and CRAR. These issues have to be sorted out," Gopalan said.
While Gopalan would not divulge the names of banks likely to receive capital, it is widely expected that Bank of Maharashtra, Indian Overseas Bank, Uco Bank, Syndicate Bank, Dena Bank, among others, will make the list.
public sector banks to open more branches in India
Public sector banks, both big and small, are together planning to open around 2,500 branches in smaller towns in the six months. This follows the liberal branch authorisation policy of RBI, by which banks, excluding foreign and rural regional ones, are free to open branches in tier 3 to tier 6 centres (with population of up to 50,000) without prior permission.
Banks have lined up plans to reach out to customers in remote unbanked areas, where almost 50% of new branches will be located.
The country’s largest bank, State Bank of India (SBI), is planning over 1,000 branches in areas falling in tier 3 to tier 6 centres. “We are now preparing our business plans and in next six months will open over 1,000 branches,’’ said a senior SBI official.
According to Punjab National Bank chairman & managing director KR Kamath, his bank is planning to open 450 branches during the next fiscal in rural areas with a population of less than 50,000.
“Of course, this move will be besides the 102 licences that RBI has already provided us for opening new branches. As we have a strong presence in the Indo-Gangetic belt and states like Punjab and Haryana, most of the new branches in rural areas will be opened in these areas,” he said..Bank of Baroda chief MD Mallya said he was planning to open 200 branches in the tier-3 and tier 4 cities over a period of six months. “This will include the total number of 368 branches we are planning to open during next fiscal,” he said.
Out of the 90 branches that UCO bank was likely to open within the next one year, 53 would be opened in tier 3 and tier 4 cities alone, said CMD SK Goel. “RBI’s new guidelines is all set to help a bank like ours to have stronger penetration in the rural parts of the country,” he added.
In its half yearly review of the annual monetary and credit policy announced in October, the central bank had liberalised the branch authorisation policy for domestic scheduled commercial banks. Under the liberalised policy, domestic scheduled commercial banks are free to open branches in tier 3 to tier 6 centres as identified in Census 2001 (with a population of up to 50,000) under general permission, RBI had said. Opening of branches by in tier 1 and tier 2 centres (with population of over 50,000) will, however,...
Banks have lined up plans to reach out to customers in remote unbanked areas, where almost 50% of new branches will be located.
The country’s largest bank, State Bank of India (SBI), is planning over 1,000 branches in areas falling in tier 3 to tier 6 centres. “We are now preparing our business plans and in next six months will open over 1,000 branches,’’ said a senior SBI official.
According to Punjab National Bank chairman & managing director KR Kamath, his bank is planning to open 450 branches during the next fiscal in rural areas with a population of less than 50,000.
“Of course, this move will be besides the 102 licences that RBI has already provided us for opening new branches. As we have a strong presence in the Indo-Gangetic belt and states like Punjab and Haryana, most of the new branches in rural areas will be opened in these areas,” he said..Bank of Baroda chief MD Mallya said he was planning to open 200 branches in the tier-3 and tier 4 cities over a period of six months. “This will include the total number of 368 branches we are planning to open during next fiscal,” he said.
Out of the 90 branches that UCO bank was likely to open within the next one year, 53 would be opened in tier 3 and tier 4 cities alone, said CMD SK Goel. “RBI’s new guidelines is all set to help a bank like ours to have stronger penetration in the rural parts of the country,” he added.
In its half yearly review of the annual monetary and credit policy announced in October, the central bank had liberalised the branch authorisation policy for domestic scheduled commercial banks. Under the liberalised policy, domestic scheduled commercial banks are free to open branches in tier 3 to tier 6 centres as identified in Census 2001 (with a population of up to 50,000) under general permission, RBI had said. Opening of branches by in tier 1 and tier 2 centres (with population of over 50,000) will, however,...
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