London December 30, 2009, 17:29 IST
The administrators of the European operations of the failed Lehman Brothers will return assets worth over $11 billion to the investors.
More than 90 per cent of the affected investors at Lehman Brothers International Europe are in support of the plan to return the assets.
PricewaterhouseCoopers (PwC)-- whose partners are the administrators -- today said it got the support of over 90 per cent clients for the claim resolution agreement (CRA).
The CRA, a multilateral contract between Lehman Brothers Europe and its clients, governs the basis on which assets can be returned.
"Under these arrangements, the administrators expect to return over $11 billion of the client assets," PwC said in a statement.
Lehman Brothers Europe had some $32 billion of client assets as on September 15, 2008 -- the day, when its American parent firm Lehman Brothers filed for bankruptcy in the US. Since that date, $13.3 billion has been returned.
According to the statement, the agreement allows the failed financial titan to distribute the remaining trust property during 2010.
The collapse of the famed Lehman Brothers had worsened the financial turmoil in the US which pushed the global economy into a tizzy.
Wednesday, December 30, 2009
Borrowers make merry in 2009
Kumar Dipankar/PTI / New Delhi December 30, 2009, 15:57 IST
2009 was mostly bad news for countries, governments and individuals in terms of economic prosperity, but the year was the best in many years for borrowers as interest rates eased.
Much to the delight of borrowers, home and car loan rates came down to as low as 8 per cent, the lowest in six years, during the year.
As early as February, 2009, the country's largest lender State Bank of India introduced special home loan scheme offering loans at eight per cent and by the end of the year, other big names such as HDFC and ICICI Bank had joined the rate war.
The winner, however, was the borrower.
Even car loan rates came down to 8 per cent from as high as 14 per cent in some cases. Those who were in the habit of saving, however, suffered a rude shock when peak deposit rates fell in a phased manner by 400-600 basis points.
As far as Reserve Bank's (RBI) policy rates were concerned, they remained at the lowest level as part of an effort to perk up economy.
The repo rate, the rate at which banks borrow from RBI in exchange of government bonds, was at 4.75 per cent, reverse-repo at which the apex bank accepts deposits from banks at 3.25 per cent and Cash Reserve Ratio, the portion of cash banks park with the Reserve Bank, at 5 per cent.
"The year 2009 was quite eventful for banks and it showed the resilience of the system to a huge crisis in related markets," Bank of Baroda chairman and managing director M D Mallya said.
"As we move ahead, when we shun the impact of slowdown, I expect the bank credit growth to revive considerably, which may result in upward movement of lending rates as well."
Moreover, galloping inflation is also putting pressure on the central bank to tighten monetary stance, which hitherto has been dovish.
A hike in cash reserve ratio, the percentage of amount banks should keep with RBI, will help to mop up the excess liquidity, after which RBI could start raising repo rate and reverse repo rate to exit from the easy money regime, bankers said.
At present, there is enough liquidity in the system. RBI may actually start pumping out liquidity through a CRR hike by around 25-50 basis points in January, Jammu & Kashmir Bank chairman Haseeb Drabu said.
Such move by RBI would automatically signal hike in interest rates in the system.
Interestingly, the talks on consolidation in the public sector banks began during the year as the Finance Ministry held a discussion with leading PSU banks to explore the possibility of creating a few large banks through mergers and acquisitions.
Heads of five major PSU banks -- Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India and Bank of India -- attended the meeting called by Additional Secretary G C Chaturvedi in November.
Bankers expect the consolidation talks in the Indian banking system to gain momentum in 2010 both in public and private sectors, as it is warranted by evolving competition in the global banking space.
In a bid to strengthen the banking system, RBI proposed to increase provision coverage for the banks to not less than 70 per cent by September 2010. Increase in provision coverage could dent profits (mainly for SBI and ICICI Bank) in the next three-four quarters, an analyst said.
At the same time, a Reserve Bank panel recommended that loans should be given at interest rates that are linked to a defined minimum base rate instead of the present benchmark prime lending rate (BPLR) to ensure transparency.
Linking lending rates to base rate would address the concerns relating to growing sub-BPLR portfolio of banks, the RBI had said.
Under the proposed mechanism, all banks will be required to declare a base rate and charge interest rates over that depending upon the credit profile of the borrower and repayment period.
2009 was mostly bad news for countries, governments and individuals in terms of economic prosperity, but the year was the best in many years for borrowers as interest rates eased.
Much to the delight of borrowers, home and car loan rates came down to as low as 8 per cent, the lowest in six years, during the year.
As early as February, 2009, the country's largest lender State Bank of India introduced special home loan scheme offering loans at eight per cent and by the end of the year, other big names such as HDFC and ICICI Bank had joined the rate war.
The winner, however, was the borrower.
Even car loan rates came down to 8 per cent from as high as 14 per cent in some cases. Those who were in the habit of saving, however, suffered a rude shock when peak deposit rates fell in a phased manner by 400-600 basis points.
As far as Reserve Bank's (RBI) policy rates were concerned, they remained at the lowest level as part of an effort to perk up economy.
The repo rate, the rate at which banks borrow from RBI in exchange of government bonds, was at 4.75 per cent, reverse-repo at which the apex bank accepts deposits from banks at 3.25 per cent and Cash Reserve Ratio, the portion of cash banks park with the Reserve Bank, at 5 per cent.
"The year 2009 was quite eventful for banks and it showed the resilience of the system to a huge crisis in related markets," Bank of Baroda chairman and managing director M D Mallya said.
"As we move ahead, when we shun the impact of slowdown, I expect the bank credit growth to revive considerably, which may result in upward movement of lending rates as well."
Moreover, galloping inflation is also putting pressure on the central bank to tighten monetary stance, which hitherto has been dovish.
A hike in cash reserve ratio, the percentage of amount banks should keep with RBI, will help to mop up the excess liquidity, after which RBI could start raising repo rate and reverse repo rate to exit from the easy money regime, bankers said.
At present, there is enough liquidity in the system. RBI may actually start pumping out liquidity through a CRR hike by around 25-50 basis points in January, Jammu & Kashmir Bank chairman Haseeb Drabu said.
Such move by RBI would automatically signal hike in interest rates in the system.
Interestingly, the talks on consolidation in the public sector banks began during the year as the Finance Ministry held a discussion with leading PSU banks to explore the possibility of creating a few large banks through mergers and acquisitions.
Heads of five major PSU banks -- Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India and Bank of India -- attended the meeting called by Additional Secretary G C Chaturvedi in November.
Bankers expect the consolidation talks in the Indian banking system to gain momentum in 2010 both in public and private sectors, as it is warranted by evolving competition in the global banking space.
In a bid to strengthen the banking system, RBI proposed to increase provision coverage for the banks to not less than 70 per cent by September 2010. Increase in provision coverage could dent profits (mainly for SBI and ICICI Bank) in the next three-four quarters, an analyst said.
At the same time, a Reserve Bank panel recommended that loans should be given at interest rates that are linked to a defined minimum base rate instead of the present benchmark prime lending rate (BPLR) to ensure transparency.
Linking lending rates to base rate would address the concerns relating to growing sub-BPLR portfolio of banks, the RBI had said.
Under the proposed mechanism, all banks will be required to declare a base rate and charge interest rates over that depending upon the credit profile of the borrower and repayment period.
No Rate Hike for 6 Months- SBI
NEW DELHI: India Inc can rejoice. State Bank of India chairman OP Bhatt on Tuesday indicated that there will be no increase in interest rates for next six months despite inflationary pressure.
As inflation is rising, the speculation is rife that RBI might take measures to tighten the money supply, leading to hardening of interest rates, in its review of monetary policy in January. As the global economy is still in the grip of recession, industry captains feel that any hike in interest rates will affect the economic recovery in India.
Bhatt said there was surplus liquidity in the system and credit offtake was slowly picking up. This situation of liquidity surplus will force banks not to increase interest rates. Because of this surplus liquidity, banks have cut deposits rates. But they are not cutting the lending rates due to slow credit offtake, despite the speculation that RBI can increase key rates (repo or reverse repo) to contain inflation.
In the eight months of the current financial year till December 4, while the deposits with the commercial banks rose by 3,69,535 crore, credit offtake was only Rs 1,44,151 crore. This forced the banks to park around Rs 100,000 crore with the RBI at reverse repo rate of 3.25%.
When the interest rate condition was benign, SBI had cut its lending rates, particularly home loan rate. Bhatt claimed that the 8% interest rate on home loan announced by SBI had helped reviving real estate market. The buyers have started coming back and cement and steel sectors have also started improving, he said. In fact, SBI's decision to cut the rates forced other banks to follow suit, he added.
Bhatt does not think Indian economy had been affected by global recession. "The recession did not hit India the way it had affected European countries last year. There was only a slowdown in the growth rate which came down to 7% from 9%," he said.
Replying to a question on withdrawal of stimulus package by the government in the prevailing situation, Bhatt said it should not be taken back but 'phased out' in staggered manner.
Referring to the ongoing merger process of SBI associate banks, Bhatt said SBI is a major stakeholder in SBI associate banks like State Bank of Saurashtra and State Bank of Indore. "In fact, we did not have less than 75% stake in any of these banks and owned 100% in State Bank of Hyderabad and State Bank of Patiala which were with us for the last 50 to 60 years," he said.
State Bank of Saurashtra has merged while process was on in regard to State Bank of Indore, Bhatt said. The merger would improve SBI in terms of efficiency in operation, release of capital.
As inflation is rising, the speculation is rife that RBI might take measures to tighten the money supply, leading to hardening of interest rates, in its review of monetary policy in January. As the global economy is still in the grip of recession, industry captains feel that any hike in interest rates will affect the economic recovery in India.
Bhatt said there was surplus liquidity in the system and credit offtake was slowly picking up. This situation of liquidity surplus will force banks not to increase interest rates. Because of this surplus liquidity, banks have cut deposits rates. But they are not cutting the lending rates due to slow credit offtake, despite the speculation that RBI can increase key rates (repo or reverse repo) to contain inflation.
In the eight months of the current financial year till December 4, while the deposits with the commercial banks rose by 3,69,535 crore, credit offtake was only Rs 1,44,151 crore. This forced the banks to park around Rs 100,000 crore with the RBI at reverse repo rate of 3.25%.
When the interest rate condition was benign, SBI had cut its lending rates, particularly home loan rate. Bhatt claimed that the 8% interest rate on home loan announced by SBI had helped reviving real estate market. The buyers have started coming back and cement and steel sectors have also started improving, he said. In fact, SBI's decision to cut the rates forced other banks to follow suit, he added.
Bhatt does not think Indian economy had been affected by global recession. "The recession did not hit India the way it had affected European countries last year. There was only a slowdown in the growth rate which came down to 7% from 9%," he said.
Replying to a question on withdrawal of stimulus package by the government in the prevailing situation, Bhatt said it should not be taken back but 'phased out' in staggered manner.
Referring to the ongoing merger process of SBI associate banks, Bhatt said SBI is a major stakeholder in SBI associate banks like State Bank of Saurashtra and State Bank of Indore. "In fact, we did not have less than 75% stake in any of these banks and owned 100% in State Bank of Hyderabad and State Bank of Patiala which were with us for the last 50 to 60 years," he said.
State Bank of Saurashtra has merged while process was on in regard to State Bank of Indore, Bhatt said. The merger would improve SBI in terms of efficiency in operation, release of capital.
Tuesday, December 29, 2009
AIABOF to continue fight against bank merger plan
| BS Reporter / Kolkata/ Berhampur December 29, 2009, |
All India Andhra Bank Officers’ Federation (AIABOF) has strongly opposed the government’s move to consolidate and merge the public sector banks (PSB) in the country and vowed to fight against it.
Stating that the move will destabilize the public sector fabrics of the banks, the general secretary of the AIABOF K.Ramakoteswar Rao said the merger and consolidation of the PSBs was not necessary when almost all the banks were earning profit and making good business.
“Despite the global economic meltdown, the Indian banking industry is doing well and earning profit and there is no need to merge or consolidate the PSBs in the country” said the president of the AIABOF, N.Raja Gopal Reddy. “We oppose it and will fight against the government’s decision” said Rao. He was addressed at the conference of the Berhampur unit of the AIABOF here on Sunday. The Andhra Bank officers from different parts of Orissa and Andhra Pradesh attended the conference. The president of the AIABOF presided.
Fraud case against Yes Bank employee
Tuesday, December 29, 2009
In 2007 along with her superior approached Rajesh Rathi, a MD of Gandhinagar-based MGD Electronics, and suggested him to invest in mutual funds through the bank's wealth management services. He agreed and a total of Rs 1 crore was invested in four funds in December 2007. The mutual funds were in the name of the company.
When Rajesh came to know about the fraud he approached the police. But police refused to register a case. Then MGD Electronics moved the court. In view of this Gandhinagar court passed an order in a case of alleged forgery against Shruti Panchal. She had forged the signature of Rajesh Rathi, also prepared a duplicate company seal, changed bank mandates with forged signatures and the seal, and cash in money invested in mutual funds worth about Rs 66 lakh.
The court has also instructed the police to investigate other unnamed bank officers as there is possibility that she might have committed fraud with the help of other people. The court stated that people keep their money in banks as they find it safe, but due to such cases people can loose confidence in banks.
MGD Electronics has also filed a case against Yes Bank in consumer court. The next hearing of the case will be held on January 19.
Thursday, December 17, 2009
Bank Merger:Strike cripples banks partially
Sachin Dravekar, 17 December 2009,
NAGPUR: Banking services were partially affected on Wednesday
following the strike called by Left-affiliated unions All
India Bank Employees ofAssociation AIBEA and
All India Bank Officers Association (AIBOA).
The union has been protesting against the move to merge State
Bank of Indore with its parent organisation State Bank of India.
Though employees from clerical grade remained absent in large
numbers, as the AIBEA has prominent presence in this cadre,
routine transactions could be carried out partially with
the help of members of other unions. Institutions like Bank
of Baroda and Canara Bank, where AIBEA of AIBOA do not have
a sizeable presence, were seen working. So were the ATMs
of both private and public sector banks including those
affected by the strike.
Interestingly, the Bank of Maharashtra (BoM) kept a window
open to sell tickets for the December 18 one-day international
to be played at Nagpur.
Cheque clearing, which is the first casualty during such an event,
was partially effected during the strike. Out of the 50,000 cheques
on an average daily, 33,196 cheques were presented in the
Reserve Bank of India's (RBI's), national clearing cell on Wednesday. T
he cheques valued at Rs 150 crore in all, as against those
valuing Rs 200 crore being presented on a normal day.
The MICR centre, which assorts the cheques below Rs 1 lakh,
did not function at all. The centre run by Punjab National Bank (PNB),
processes around 50,000 cheques in a day. A trip around the regional
offices of PSU banks showed a skeletal staff manning the workplaces.
"Around 80% of staff is affiliated to the AIBEA, so the work has
almost come to a standstill," said an official at the Bank of India.
Source:pti
NAGPUR: Banking services were partially affected on Wednesday
following the strike called by Left-affiliated unions All
India Bank Employees ofAssociation AIBEA and
All India Bank Officers Association (AIBOA).
The union has been protesting against the move to merge State
Bank of Indore with its parent organisation State Bank of India.
Though employees from clerical grade remained absent in large
numbers, as the AIBEA has prominent presence in this cadre,
routine transactions could be carried out partially with
the help of members of other unions. Institutions like Bank
of Baroda and Canara Bank, where AIBEA of AIBOA do not have
a sizeable presence, were seen working. So were the ATMs
of both private and public sector banks including those
affected by the strike.
Interestingly, the Bank of Maharashtra (BoM) kept a window
open to sell tickets for the December 18 one-day international
to be played at Nagpur.
Cheque clearing, which is the first casualty during such an event,
was partially effected during the strike. Out of the 50,000 cheques
on an average daily, 33,196 cheques were presented in the
Reserve Bank of India's (RBI's), national clearing cell on Wednesday. T
he cheques valued at Rs 150 crore in all, as against those
valuing Rs 200 crore being presented on a normal day.
The MICR centre, which assorts the cheques below Rs 1 lakh,
did not function at all. The centre run by Punjab National Bank (PNB),
processes around 50,000 cheques in a day. A trip around the regional
offices of PSU banks showed a skeletal staff manning the workplaces.
"Around 80% of staff is affiliated to the AIBEA, so the work has
almost come to a standstill," said an official at the Bank of India.
Source:pti
Governors Of RBI- Mr D Subbarao
 | | Duvvuri Subbarao (born 11 August 1949) is a 1972 batch Indian Administrative Service (IAS) officer of Andhra Pradesh cadre. On 5 September 2008, he was appointed the 22nd Governor of Reserve Bank of India (RBI); his term will end in September 2011. Subbarao's hometown is Eluru, a small town near Vijayawada, Andhra Pradesh. He did his schooling from the Sainik School in Korukonda, Andhra Pradesh. He graduated in Physics[B.Sc Hons.] from Indian Institute of Technology Kharagpur (class of 1969) where he was the recipient of Director's Gold Medal. He received a [M.Sc] degree also in Physics from Indian Institute of Technology Kanpur. Subbarao topped the IAS examination in 1972 and was assigned the Andhra Pradesh cadre. He later did a Masters degree (MS) in economics from Ohio State University, United States and was a Humphrey Fellow at Massachusetts Institute of Technology. The years involved in each case are not publicly available at present. He later received a Ph.D. in Economics from Andhra University. The subject of his doctoral thesis at Andhra University is not publicly available at present; nor is the year of award. |
Tuesday, December 15, 2009
The Significance of the IMF-RBI Gold Sale
Much has been written in the last few days about the surprising purchase by the RBI (Reserve Bank of India) of some 200 tonnes of gold bullion, valued at about $6.7 billion, from the IMF (International Monetary Fund).
Is this really a significant event?
Judging by the price of gold since the announcement was made - up about $50 an ounce and showing no signs of stopping anytime soon - it certainly must have been significant.
But why?
The folks at the IMF, who, having long sought to rid themselves of some of their huge stash of gold bars in order to (purportedly) help balance their books and provide aid to underdeveloped countries, made a rather glib announcement about having put their financial house back in order, apparently unaware of how markets might react.
Being a fly-on-the-wall at IMF headquarters over the last few days would surely have provided some insight into this particular matter. However, it could well be that none of the economists and resident experts at the IMF even look at the price of gold, this metal having long ago lost its relevance in the minds of most bankers in a world full of paper money, fast computers, and sophisticated economic models that all failed so spectacularly over the last year.
Of course, the way the yellow metal is viewed by bankers and economists varies greatly depending upon what part of the world you are in. Surely, the Reserve Bank of India employs at least a few economists and they must have weighed in on the purchase.
Like the Chinese, they found the idea of more gold holdings to be irresistible.
We'll probably never know the many details that went into this decision. However, it certainly appears to be much more significant than the IMF conveyed in their press release.
A few thoughts as to why this is so are offered here.
The Delicious Timing of the Transaction
Had this deal been done, say, in March of next year or even during the last month or two of this year, markets would probably not have reacted as they did. As it was, within a few weeks of the IMF gold sale agreement being finalized in September, the gold sales began, wiping out an impressive half of the total authorized sale in very short order.
Since the IMF gold sales come under the umbrella of the recently renewed five-year European central bank gold sales agreement with a reduced cap of 400 tonnes per year (down from 500 tonnes per year in the prior agreement due to a dearth of sellers), the sale to India accounts for half of the entire 2009-2010 sales.
This is shown below in chart form, the IMF sales appended to the right of the graphic that appeared in the latest Gold Investment Digest from the World Gold Council.
After steady declines in recent years as European banks have reduced their gold sales, in comes the IMF to fill the void and - surprise! - the gold price skyrockets.
Prior to the sale, there was much speculation that China would be the first buyer but, obviously, the RBI beat them to the punch and, while the IMF may not have realized it, this was one of the key reasons why markets are now in a tizzy.
This is a clear demonstration of how anxious at least one central bank is to exchange their paper money for something more tangible and the RBI neatly side-stepped the problem that any large buyer always has - driving up the market price while making their purchases.
To their credit, the RBI ended up driving prices higher after they were done buying.
India Purchased the Gold at Market Prices
A back-of-the-envelope calculation shows that the Indian central bank is now already up more than $300 million since buying their 200 tonnes of gold.
This is probably not what the IMF folks thought would happen and you can imagine the raised eyebrows of the staff when working out the deal where they probably figured they had hit the exact top of the gold price surge and what suckers the Indians were.
Press reports indicate that the RBI made their purchases between October 19th and 30th at an average price of $1,045 an ounce and, though it looks like they paid too much based on the chart below, they're still way ahead.
The relatively simple math is as follows: A gain of $50 an ounce is about a five percent rise in the gold price and a five percent rise in the RBI's $6.7 billion is a gain of about $335 million.
Of course, the gold price could go up or down from here, but any smirks that appeared on the faces of IMF staff as they were signing the paperwork were, obviously, premature.
But, more importantly, what does this transaction say about the "value" of paper money and gold if a major central bank is so anxious to spend billions of dollars of the former to buy the latter at over $1,000 an ounce?
If the RBI felt strongly about boosting their gold reserves, why didn't they do it when gold traded at $400 or $500 an ounce a few years back, or even last year when it could be bought for between $800 and $900 an ounce?
European central banks have been selling the stuff for years at much lower prices and surely the Indian central bank could have boosted their reserves then. Why, they could even have bought some of the U.K.'s gold back in 1999 that was dumped on the market at $275 an ounce. Recall that Gordon Brown sold about half of England's 600 tonnes of gold at what is now known as the "Brown Bottom".
Removing the Sword of Damocles
Probably more important than any other factor in the IMF-RBI gold sale is the fact that the proverbial "Sword of Damocles" has been removed from the gold market after hanging there for years, suspended in mid-air, waiting to drop on any buyer of gold who was dumb enough to buy dumb 'ol gold coins when the IMF was about to flood the market with the stuff.
For years, Jim Rogers has been pointing to the looming IMF gold sales as the reason he thought the metal would underperform other commodities.
Well, it's still early, but initial indications are that, not only did the IMF gold sales not cause the gold price to plunge, these gold sales actually caused the price to soar.
Who would have known that when the IMF gold was finally offered up for sale that half of it would be gone within weeks and, more importantly, the buyer turned out to be someone other than the party that most market analysts were expecting.
For years, the prospect of European central banks and the IMF selling off their huge stockpiles of gold in the open market has been a big reason why buyers were understandably cautious. Analysts have been saying, "Even if the central banks stop selling, the IMF gold will be there to sate the appetite of buyers and that should keep a lid on prices."
So, the central banks have essentially stopped selling and now half the IMF gold is gone within weeks and China is probably already signing paperwork to buy the other half.
The Sword of Damocles is now gone, if it ever really was there.
A Sea Change in Central Bank Thinking
Perhaps the most provocative question that this gold sale has raised in the minds of other central bankers around the world is, "If India's buying, maybe we should be buying too".
As shown below, there are many countries that have woefully small gold reserves and, for better or worse, these same countries are also loaded to the gills with U.S. dollar denominated assets, some of which they'd now be more willing to exchange for gold bars after India has.
China, Japan, Russia, Taiwan and many other countries - mostly in Asia - are now sitting up in their chairs looking around at the other central banks in the world wondering who's going to be next to buy gold after India scored a cool $6.7 billion that quickly turned into a stash that is now worth $7.0 billion.
Surely, even the most dimwitted economists in Asian central banks are now tuned in to the rapidly changing landscape of global gold supply and demand.
While economists in the West may cling to their "money is just a unit of account and gold is nothing special" way of thinking, central bank staff half way around the world are now starting to look at things very differently after the events of this week.
If inflation begins to heat up in the months ahead, then we might just see central banks scramble to buy gold along with the rest of the world.
In a pure fiat money system, there is nothing to back a national currency other than faith in the government that issues it and confidence in the central bank that prints it.
Oh yes, and the central bank's gold.
Even the IMF noted in a recent statement that its (still) massive gold reserves give its balance sheet a "fundamental strength".
Clearly, other central banks around the world, along with millions of investors, feel the need for this "fundamental strength" too.
Is this really a significant event?Judging by the price of gold since the announcement was made - up about $50 an ounce and showing no signs of stopping anytime soon - it certainly must have been significant.
But why?
The folks at the IMF, who, having long sought to rid themselves of some of their huge stash of gold bars in order to (purportedly) help balance their books and provide aid to underdeveloped countries, made a rather glib announcement about having put their financial house back in order, apparently unaware of how markets might react.
Being a fly-on-the-wall at IMF headquarters over the last few days would surely have provided some insight into this particular matter. However, it could well be that none of the economists and resident experts at the IMF even look at the price of gold, this metal having long ago lost its relevance in the minds of most bankers in a world full of paper money, fast computers, and sophisticated economic models that all failed so spectacularly over the last year.
Of course, the way the yellow metal is viewed by bankers and economists varies greatly depending upon what part of the world you are in. Surely, the Reserve Bank of India employs at least a few economists and they must have weighed in on the purchase.
Like the Chinese, they found the idea of more gold holdings to be irresistible.
We'll probably never know the many details that went into this decision. However, it certainly appears to be much more significant than the IMF conveyed in their press release.
A few thoughts as to why this is so are offered here.
The Delicious Timing of the Transaction
Had this deal been done, say, in March of next year or even during the last month or two of this year, markets would probably not have reacted as they did. As it was, within a few weeks of the IMF gold sale agreement being finalized in September, the gold sales began, wiping out an impressive half of the total authorized sale in very short order.
Since the IMF gold sales come under the umbrella of the recently renewed five-year European central bank gold sales agreement with a reduced cap of 400 tonnes per year (down from 500 tonnes per year in the prior agreement due to a dearth of sellers), the sale to India accounts for half of the entire 2009-2010 sales.
This is shown below in chart form, the IMF sales appended to the right of the graphic that appeared in the latest Gold Investment Digest from the World Gold Council.
After steady declines in recent years as European banks have reduced their gold sales, in comes the IMF to fill the void and - surprise! - the gold price skyrockets.Prior to the sale, there was much speculation that China would be the first buyer but, obviously, the RBI beat them to the punch and, while the IMF may not have realized it, this was one of the key reasons why markets are now in a tizzy.
This is a clear demonstration of how anxious at least one central bank is to exchange their paper money for something more tangible and the RBI neatly side-stepped the problem that any large buyer always has - driving up the market price while making their purchases.
To their credit, the RBI ended up driving prices higher after they were done buying.
India Purchased the Gold at Market Prices
A back-of-the-envelope calculation shows that the Indian central bank is now already up more than $300 million since buying their 200 tonnes of gold.
This is probably not what the IMF folks thought would happen and you can imagine the raised eyebrows of the staff when working out the deal where they probably figured they had hit the exact top of the gold price surge and what suckers the Indians were.
Press reports indicate that the RBI made their purchases between October 19th and 30th at an average price of $1,045 an ounce and, though it looks like they paid too much based on the chart below, they're still way ahead.
The relatively simple math is as follows: A gain of $50 an ounce is about a five percent rise in the gold price and a five percent rise in the RBI's $6.7 billion is a gain of about $335 million.
Of course, the gold price could go up or down from here, but any smirks that appeared on the faces of IMF staff as they were signing the paperwork were, obviously, premature.But, more importantly, what does this transaction say about the "value" of paper money and gold if a major central bank is so anxious to spend billions of dollars of the former to buy the latter at over $1,000 an ounce?
If the RBI felt strongly about boosting their gold reserves, why didn't they do it when gold traded at $400 or $500 an ounce a few years back, or even last year when it could be bought for between $800 and $900 an ounce?
European central banks have been selling the stuff for years at much lower prices and surely the Indian central bank could have boosted their reserves then. Why, they could even have bought some of the U.K.'s gold back in 1999 that was dumped on the market at $275 an ounce. Recall that Gordon Brown sold about half of England's 600 tonnes of gold at what is now known as the "Brown Bottom".
Removing the Sword of Damocles
Probably more important than any other factor in the IMF-RBI gold sale is the fact that the proverbial "Sword of Damocles" has been removed from the gold market after hanging there for years, suspended in mid-air, waiting to drop on any buyer of gold who was dumb enough to buy dumb 'ol gold coins when the IMF was about to flood the market with the stuff.
For years, Jim Rogers has been pointing to the looming IMF gold sales as the reason he thought the metal would underperform other commodities.
Well, it's still early, but initial indications are that, not only did the IMF gold sales not cause the gold price to plunge, these gold sales actually caused the price to soar.
Who would have known that when the IMF gold was finally offered up for sale that half of it would be gone within weeks and, more importantly, the buyer turned out to be someone other than the party that most market analysts were expecting.For years, the prospect of European central banks and the IMF selling off their huge stockpiles of gold in the open market has been a big reason why buyers were understandably cautious. Analysts have been saying, "Even if the central banks stop selling, the IMF gold will be there to sate the appetite of buyers and that should keep a lid on prices."
So, the central banks have essentially stopped selling and now half the IMF gold is gone within weeks and China is probably already signing paperwork to buy the other half.
The Sword of Damocles is now gone, if it ever really was there.
A Sea Change in Central Bank Thinking
Perhaps the most provocative question that this gold sale has raised in the minds of other central bankers around the world is, "If India's buying, maybe we should be buying too".
As shown below, there are many countries that have woefully small gold reserves and, for better or worse, these same countries are also loaded to the gills with U.S. dollar denominated assets, some of which they'd now be more willing to exchange for gold bars after India has.
China, Japan, Russia, Taiwan and many other countries - mostly in Asia - are now sitting up in their chairs looking around at the other central banks in the world wondering who's going to be next to buy gold after India scored a cool $6.7 billion that quickly turned into a stash that is now worth $7.0 billion.
Surely, even the most dimwitted economists in Asian central banks are now tuned in to the rapidly changing landscape of global gold supply and demand.While economists in the West may cling to their "money is just a unit of account and gold is nothing special" way of thinking, central bank staff half way around the world are now starting to look at things very differently after the events of this week.
If inflation begins to heat up in the months ahead, then we might just see central banks scramble to buy gold along with the rest of the world.
In a pure fiat money system, there is nothing to back a national currency other than faith in the government that issues it and confidence in the central bank that prints it.
Oh yes, and the central bank's gold.
Even the IMF noted in a recent statement that its (still) massive gold reserves give its balance sheet a "fundamental strength".
Clearly, other central banks around the world, along with millions of investors, feel the need for this "fundamental strength" too.
"Punjab Bank Fraud case"-Pakistan
HAMESH KHAN Update: Bank of Punjab Ex-CEO Hamesh Khan
Arrested in U.S.
10 December 2009.
The former President of Bank of Punjab (BoP)
Hamesh Khan has been arrested and detained
in the United States.
The United States Department of Justice (DOJ)
confirmed it to the Pakistani government.
The Bank of Punjab (BoP) had granted a loan of
Rs 9 billion to the Haris Steel Industries (HSI)
without fulfilling the legal requirements and the
HSI subsequently defaulted on the loan.
The bank then filed a petition against HSI
and made BoP ex-President accomplice in the
transaction – a charge its then President and
CEO Hamesh Khan denies to-date calling it
"witch-hunting" and "politically motivated".
The Spokesman of National Accountability Bureau (NAB),
Ghazni Khan, Thursday confirmed Hamesh Khan’s arrest
in the United States saying that the US Justice Department
had also informed the Pakistani government in writing of
his arrest and detention.
The Supreme Court of Pakistan had directed the federal
government to arrest or have arrested,
the former President of Bank of Punjab Hamesh Khan,
who is said to be involved in billions of rupees of
fraud case.
In pursuance of the Supreme Court orders, Islamabad
approached the Interpol and the US government for his
arrest, the NAB spokesman said.
Hamesh Khan was allegedly involved in Rs 9 billions
fraud, but he fled from the country in June this year
despite his name being on the Exit Control List (ECL)
of the Interior Ministry which bars people from leaving
the country.
Hamesh Khan would be brought back to the country after
completion of formal legal proceedings and important
documentations, the NAB spokesman said.
Earlier, on the directives of Supreme Court of Pakistan,
a special team of National Accountability Bureau (NAB)
arrested main culprits of PunjabBank Fraud case,
Sheikh Muhammad Afzal with his son Haris Afzal of
Haris Steel Mills through the use of Interpol from Kuala-Lumpur,
capital of Malaysia on November 16.
Other suspects industrialist Seth Yaqoob and his daughter
Irum Yaqoob have also been detained and their assets frozen.
(MAMOSA)
Source:desperses
Arrested in U.S.
10 December 2009.
The former President of Bank of Punjab (BoP)
Hamesh Khan has been arrested and detained
in the United States.
The United States Department of Justice (DOJ)
confirmed it to the Pakistani government.
The Bank of Punjab (BoP) had granted a loan of
Rs 9 billion to the Haris Steel Industries (HSI)
without fulfilling the legal requirements and the
HSI subsequently defaulted on the loan.
The bank then filed a petition against HSI
and made BoP ex-President accomplice in the
transaction – a charge its then President and
CEO Hamesh Khan denies to-date calling it
"witch-hunting" and "politically motivated".
The Spokesman of National Accountability Bureau (NAB),
Ghazni Khan, Thursday confirmed Hamesh Khan’s arrest
in the United States saying that the US Justice Department
had also informed the Pakistani government in writing of
his arrest and detention.
The Supreme Court of Pakistan had directed the federal
government to arrest or have arrested,
the former President of Bank of Punjab Hamesh Khan,
who is said to be involved in billions of rupees of
fraud case.
In pursuance of the Supreme Court orders, Islamabad
approached the Interpol and the US government for his
arrest, the NAB spokesman said.
Hamesh Khan was allegedly involved in Rs 9 billions
fraud, but he fled from the country in June this year
despite his name being on the Exit Control List (ECL)
of the Interior Ministry which bars people from leaving
the country.
Hamesh Khan would be brought back to the country after
completion of formal legal proceedings and important
documentations, the NAB spokesman said.
Earlier, on the directives of Supreme Court of Pakistan,
a special team of National Accountability Bureau (NAB)
arrested main culprits of PunjabBank Fraud case,
Sheikh Muhammad Afzal with his son Haris Afzal of
Haris Steel Mills through the use of Interpol from Kuala-Lumpur,
capital of Malaysia on November 16.
Other suspects industrialist Seth Yaqoob and his daughter
Irum Yaqoob have also been detained and their assets frozen.
(MAMOSA)
Source:desperses
Situation of fake currency ‘alarming’, says Pranab Mukherjee
15 December 2009,
NEW DELHI: Government today admitted that the problem of
fake currency was "alarming and dangerous" as some groups
are trying to destabilise the
Indian economy by injecting massive doses of counterfeit
notes in the country.
"There are two kinds of groups, one is of individuals working
for profits, but much more dangerous is the effort of injecting
massive doses of fake notes in the country, trying to destabilise
the economy," finance minister Pranab Mukherjee said in Rajya Sabha.
In his written statement, Mukherjee also admitted that the security
breaches of the notes were last updated in 2005 while a committee
has been set up in this regard.
"The situation is alarming," he said answering supplementaries
during Question Hour.
But, it would take another two years before upgraded security
features are included in the currency notes, the minister said.
He said it would be difficult to quantify counterfeit currency
in circulation. "It is anybody's guess," he said, adding that
as per 2005 figures there are 48.9 billion pieces (of genuine currency)
in circulation and of these 0.001 per cent could be fake.
There is no authentic information about fake currency.
Mukherjee said he was not an "alarmist" as finance minister.
"I cannot afford to be one," he said, adding that more cases are
being detected, showing high alertness of government agencies.
Source:PTI
Monday, December 14, 2009
CA in Rs 1K cr money laundering racket
By : raj kumar makkad on 13 December 2009
Mumbai: The income tax (IT ) department in a raid on a
chartered accountant (CA) last week unearthed a money
laundering racket running into over Rs 1,000 crore.
The CA, Mukesh Choksi, through his several companies
generated fake bills showing share transactions in the
name of his customers who wanted to convert their black
money into white. The department also recovered a
pay order of 1 million and came across another onetime
transfer of Rs 10 crore in a private bank account.
A senior I-T official said, Choksis modus operandi was
innovative. He referred to the previous days share transactions
from newspapers and shortlisted scrips that witnessed huge trading
on the bourses. He then created fake broker notes of
intra-day trading on select shares, since these are
not reflected in the demat accounts.
Director of Investigation (I-T ) E T Lukose told TOI,
We have to do a lot of work in this case.
I am not in a position to disclose further details.
Choksi operated from a tiny air-conditioned garage
in Santa Cruz (E). He managed the entire operations
with just five computers, the official added.
He floated around 26 companies through which he
falsely claimed to have carried out share
transactions with the customers.
These companies existed only on paper .
He operated across the country through his
agents, who were mostly CAs or I-T practioners,
the official said. The department has recovered
documents containing the names of the people who
availed of his services. We are yet to reach to
the beneficiaries , Lukose said.
The cash that came from the beneficiaries was deposited
in the bank accounts of one of Choksis companies.
A cheque towards the said amount isdeposited
into the account of his another company .
The second company issues a cheque in the name
of the beneficiary. The beneficiary shows the money
as gains made from the share transactions where Choksis
companies acted as share brokers.
Choksi deducted a commission
for the services rendered , a source said. In one transaction,
officials came across a cash deposit of Rs 10 crore
in the private bank account of his company in Karnatakas
Mandya branch. The money got transferred to another account
in Mumbai for issue of pay order in favour of a charitable
organsiation in Chennai. However, the transaction got cancelled
and the money was returned to the Mandya account and was withdrawn
on the same day. We are investigating this too, the senior official
said. Sources said that Choksi had come under the scanner
twice in 2001-02 and again four years later in
connection with similar transactions. SEBI had imposed
a ban on him from operating in the market.
Mumbai: The income tax (IT ) department in a raid on a
chartered accountant (CA) last week unearthed a money
laundering racket running into over Rs 1,000 crore.
The CA, Mukesh Choksi, through his several companies
generated fake bills showing share transactions in the
name of his customers who wanted to convert their black
money into white. The department also recovered a
pay order of 1 million and came across another onetime
transfer of Rs 10 crore in a private bank account.
A senior I-T official said, Choksis modus operandi was
innovative. He referred to the previous days share transactions
from newspapers and shortlisted scrips that witnessed huge trading
on the bourses. He then created fake broker notes of
intra-day trading on select shares, since these are
not reflected in the demat accounts.
Director of Investigation (I-T ) E T Lukose told TOI,
We have to do a lot of work in this case.
I am not in a position to disclose further details.
Choksi operated from a tiny air-conditioned garage
in Santa Cruz (E). He managed the entire operations
with just five computers, the official added.
He floated around 26 companies through which he
falsely claimed to have carried out share
transactions with the customers.
These companies existed only on paper .
He operated across the country through his
agents, who were mostly CAs or I-T practioners,
the official said. The department has recovered
documents containing the names of the people who
availed of his services. We are yet to reach to
the beneficiaries , Lukose said.
The cash that came from the beneficiaries was deposited
in the bank accounts of one of Choksis companies.
A cheque towards the said amount isdeposited
into the account of his another company .
The second company issues a cheque in the name
of the beneficiary. The beneficiary shows the money
as gains made from the share transactions where Choksis
companies acted as share brokers.
Choksi deducted a commission
for the services rendered , a source said. In one transaction,
officials came across a cash deposit of Rs 10 crore
in the private bank account of his company in Karnatakas
Mandya branch. The money got transferred to another account
in Mumbai for issue of pay order in favour of a charitable
organsiation in Chennai. However, the transaction got cancelled
and the money was returned to the Mandya account and was withdrawn
on the same day. We are investigating this too, the senior official
said. Sources said that Choksi had come under the scanner
twice in 2001-02 and again four years later in
connection with similar transactions. SEBI had imposed
a ban on him from operating in the market.
Barclays Bank Plc Banned from Issuing PNs: SEBI
12 December 2009
The Securities and Exchange Board of India (SEBI)
banned Barclays Bank Plc from issuing or otherwise
transacting in new Offshore Derivative Instruments (ODIs),
also known as participative notes, or PNs, for having previously
violated disclosure norms.
SEBI said the ban will be in effect “till such time as
Barclays satisfies SEBI that it has put adequate systems,
processes and controls in place to ensure true and correct
reporting of its ODI transactions to SEBI”.
It also directed Barclays to Promissory Notes
Bfurnish a certificate “from an auditor of international
standing” to this end.
ODIs or Promisory Notes are investment vehicles used
by overseas investors to buy into Indian stocks or derivatives
SEBI found irregularities in disclosures regarding
four ODIs issued on 15 December 2006, with shares of
Reliance Communications Ltd as underlying assets.
Barclays had reported these as being issued to UBS AG
when they were actually issued to Hythe Securities,
an entity regulated by the UK’s Financial Services Authority.
Subsequently, SEBI found that Hythe Securities had issued
them to Pluri Emerging Companies PCC Cell E Emerging Markets
Growth Fund. Here, too, SEBI found Barclays Bank guilty of
flouting rules, as issuers must report any onward issuance of ODIs.
A Barclays Bank spokesperson said the issue pertained to
Barclays Capital and said it was too late in the evening
to comment as they are yet to study the order.
The Securities and Exchange Board of India (SEBI)
banned Barclays Bank Plc from issuing or otherwise
transacting in new Offshore Derivative Instruments (ODIs),
also known as participative notes, or PNs, for having previously
violated disclosure norms.
SEBI said the ban will be in effect “till such time as
Barclays satisfies SEBI that it has put adequate systems,
processes and controls in place to ensure true and correct
reporting of its ODI transactions to SEBI”.
It also directed Barclays to Promissory Notes
Bfurnish a certificate “from an auditor of international
standing” to this end.
ODIs or Promisory Notes are investment vehicles used
by overseas investors to buy into Indian stocks or derivatives
SEBI found irregularities in disclosures regarding
four ODIs issued on 15 December 2006, with shares of
Reliance Communications Ltd as underlying assets.
Barclays had reported these as being issued to UBS AG
when they were actually issued to Hythe Securities,
an entity regulated by the UK’s Financial Services Authority.
Subsequently, SEBI found that Hythe Securities had issued
them to Pluri Emerging Companies PCC Cell E Emerging Markets
Growth Fund. Here, too, SEBI found Barclays Bank guilty of
flouting rules, as issuers must report any onward issuance of ODIs.
A Barclays Bank spokesperson said the issue pertained to
Barclays Capital and said it was too late in the evening
to comment as they are yet to study the order.
RBI to Tighten ECB Norms by Reintroducing Ceiling
12 December 2009
With improvement in the global credit markets and narrowing
of spreads, the Reserve Bank of India (RBI) decided today
to reintroduce the ceiling on interest rates that Indian
companies pay for external commercial borrowing.
The norms that take effect from January 2010, would permit
Indian companies to raise debt for three to five years by
paying up to 300 basis points above the London Inter-bank
Offered Rate (LIBOR). Those using the ECB window to raise
ECB-Bfunds for over five years would be allowed to pay up
to 500 basis points over Libor, RBI said in a communication
this evening.
RBI had lifted the restriction on ECBs in January, following
intensification of the global financial crisis after Lehman Brothers collapsed.
RBI also decided today to shut the special window that allowed
companies to buy back foreign currency convertible bonds to
reduce debt burden at the height of the global financial crisis.
The reintroduction of the cost ceiling and withdrawal of the
FCCB buyback facility are the latest in a series of rollbacks
RBI has introduced since the economic environment improved.
In late October, the central bank had decided to revert to
a statutory liquidity ratio of 25 per cent for Indian banks.
While the overall direction was to signal a check on excessive
inflows, RBI has eased ECB norms for telecom companies and
infrastructure-focused, non-banking finance companies.
In addition, companies engaged in the development of
integrated townships have been given another 12 months
(up to December 2010) to make use of the simplified norms
announced last year.
The simpler norms for telecom companies were an extension of
the October 2008 decision, when operators were allowed to use
ECBs to obtain 3G licenses. Now, they have been permitted to
use the route for payment of spectrum allocation, too.
A senior executive at a leading foreign bank said RBI was
signalling, through today’s moves, to check excessive flow
of capital into the country. “The high capital flows through
ECBs, FCCB and portfolio investment have pushed up the value
of the rupee against the US dollar. Another message is that
only high-quality companies should tap the overseas market,”
the executive said.
With improvement in the global credit markets and narrowing
of spreads, the Reserve Bank of India (RBI) decided today
to reintroduce the ceiling on interest rates that Indian
companies pay for external commercial borrowing.
The norms that take effect from January 2010, would permit
Indian companies to raise debt for three to five years by
paying up to 300 basis points above the London Inter-bank
Offered Rate (LIBOR). Those using the ECB window to raise
ECB-Bfunds for over five years would be allowed to pay up
to 500 basis points over Libor, RBI said in a communication
this evening.
RBI had lifted the restriction on ECBs in January, following
intensification of the global financial crisis after Lehman Brothers collapsed.
RBI also decided today to shut the special window that allowed
companies to buy back foreign currency convertible bonds to
reduce debt burden at the height of the global financial crisis.
The reintroduction of the cost ceiling and withdrawal of the
FCCB buyback facility are the latest in a series of rollbacks
RBI has introduced since the economic environment improved.
In late October, the central bank had decided to revert to
a statutory liquidity ratio of 25 per cent for Indian banks.
While the overall direction was to signal a check on excessive
inflows, RBI has eased ECB norms for telecom companies and
infrastructure-focused, non-banking finance companies.
In addition, companies engaged in the development of
integrated townships have been given another 12 months
(up to December 2010) to make use of the simplified norms
announced last year.
The simpler norms for telecom companies were an extension of
the October 2008 decision, when operators were allowed to use
ECBs to obtain 3G licenses. Now, they have been permitted to
use the route for payment of spectrum allocation, too.
A senior executive at a leading foreign bank said RBI was
signalling, through today’s moves, to check excessive flow
of capital into the country. “The high capital flows through
ECBs, FCCB and portfolio investment have pushed up the value
of the rupee against the US dollar. Another message is that
only high-quality companies should tap the overseas market,”
the executive said.
RBI is keeping a Vigil on Capital Inflows
13 December 2009
The Reserve Bank of India (RBI) allayed concerns about
capital inflows building an asset bubble and said it
is keeping a vigil on these.
“If there is too much liquidity, it has the potential
for asset price build-up,” RBI Governor D Subbarao said.
However, “every asset price build-up need not necessarily
result in a bubble”, he told reporters after a meeting of
RBI’s central board of directors here.
Subbarao said that capital inflows were in line with the
country’s requirement. The surge in capital Capital
Inflowflows was not like as what happened between 2006-08,
he said, adding “If and when there is excess of capital flows,
we will have to respond to that situation.”
Subbarao said it was not possible at this point of time to
speculate on what if anything the apex bank would do to contain
the quantum of capital inflows.
The RBI yesterday tightened the guidelines for corporates
raising resources from external commercial borrowings.
Subbarao said corporates were now able to raise resources
from non-debt sources. On loan growth, Subbarao said that
credit offtake would grow. He said non-food credit demand
had grown by 10.4 per cent.
On the ECB guidelines, Deputy Governor Shyamala Gopinath
said these were relaxed during the time of economic crisis.
“Spreads had gone up at that point of time.” But with things
coming back to normal, the spreads had now narrowed.
“So we have reverted to what was there prior to the relaxation,”
Gopinath said.
The Reserve Bank of India (RBI) allayed concerns about
capital inflows building an asset bubble and said it
is keeping a vigil on these.
“If there is too much liquidity, it has the potential
for asset price build-up,” RBI Governor D Subbarao said.
However, “every asset price build-up need not necessarily
result in a bubble”, he told reporters after a meeting of
RBI’s central board of directors here.
Subbarao said that capital inflows were in line with the
country’s requirement. The surge in capital Capital
Inflowflows was not like as what happened between 2006-08,
he said, adding “If and when there is excess of capital flows,
we will have to respond to that situation.”
Subbarao said it was not possible at this point of time to
speculate on what if anything the apex bank would do to contain
the quantum of capital inflows.
The RBI yesterday tightened the guidelines for corporates
raising resources from external commercial borrowings.
Subbarao said corporates were now able to raise resources
from non-debt sources. On loan growth, Subbarao said that
credit offtake would grow. He said non-food credit demand
had grown by 10.4 per cent.
On the ECB guidelines, Deputy Governor Shyamala Gopinath
said these were relaxed during the time of economic crisis.
“Spreads had gone up at that point of time.” But with things
coming back to normal, the spreads had now narrowed.
“So we have reverted to what was there prior to the relaxation,”
Gopinath said.
RBI Circular on KYC Norms, AML Standards and Combating of Financing of Terrorism
Dec 13, 2009 RBI
RBI/2009-10/253 – December 10, 2009
RPCD.CO RRB.No 6557/03.05.28-A/2009-10
Know Your Customer (KYC) Norms/Anti-Money Laundering (AML)
Standards/Combating of Financing of Terrorism (CFT)
Please refer to our letter RPCD.CO.RRB.No.5451/03.05.28-A/2009-10 dated
November 16, 2009 on risks arising from the deficiencies in AML/CFT
regime of Iran,Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe.
2. Financial Action Task Force (FATF) has issued a further Statement
dated October 16, 2009 on the subject (copy enclosed).
3. Regional Rural Banks are accordingly advised to take into account,
risks arising from the deficiencies in AML/CFT regime of Iran,
Uzbekistan, Pakistan, Turkmenistan and Sao Tome and Principe.
4. Please advise the Principal Officer of your bank to acknowledge
receipt of this circular letter to our Regional office concerned.
Yours faithfully,
(A.K.Pandey)
General Manager
RBI/2009-10/253 – December 10, 2009
RPCD.CO RRB.No 6557/03.05.28-A/2009-10
Know Your Customer (KYC) Norms/Anti-Money Laundering (AML)
Standards/Combating of Financing of Terrorism (CFT)
Please refer to our letter RPCD.CO.RRB.No.5451/03.05.28-A/2009-10 dated
November 16, 2009 on risks arising from the deficiencies in AML/CFT
regime of Iran,Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe.
2. Financial Action Task Force (FATF) has issued a further Statement
dated October 16, 2009 on the subject (copy enclosed).
3. Regional Rural Banks are accordingly advised to take into account,
risks arising from the deficiencies in AML/CFT regime of Iran,
Uzbekistan, Pakistan, Turkmenistan and Sao Tome and Principe.
4. Please advise the Principal Officer of your bank to acknowledge
receipt of this circular letter to our Regional office concerned.
Yours faithfully,
(A.K.Pandey)
General Manager
Government steps forward to support public sector banks to merge
| 14-Dec-2009 |
| |
| Indian Finance Minister Pranab Mukherjee stated that Government will support public sector banks to merge, provided they fulfilled RBI and SEBI (Securities and Exchange Board of India) guidelines. “If someone decides to merge, if we see it is in conformity with our policy and if we find that parameters are being followed as per the SEBI and RBI guidelines”, then government would play a “supportive role”, he said in reply to a calling attention in the Lok Sabha. “The current policy of the government on consolidation leaves the initiative for consolidation to come from the management of the banks themselves, with the government playing a supportive role as the common shareholder,” he said, asserting that no directive on consolidation was being issued by the government or the RBI. The boards of the banks have to take a decision in this regard “based on the synergy levels of merging or consolidating entities”, he said. The attention motion was moved by CPI leader Gurudas Dasgupta who asked whether the government had taken any initiative “overtly or covertly” to merge various public sector banks resulting in “discontent” amongst the bank employees. Dasgupta gave the example of the move for merger of State Bank of India and State Bank of Indore. He also said the move was being opposed by the Madhya Pradesh government. He pointed out that there was no government interference in the normal day-to-day financial and commercial activities of the state-owned banks, he said, “We are giving them managerial autonomy. We cannot give them a directive that doesn’t merge.” Mukherjee said consolidation was a “continuous process” as mergers had occurred during “every regime”. Mentioning that the banking system had “undergone major changes” since nationalization, he said the State Banks of Travancore-Cochin, Bikaner and Saurashtra were doing a “good job” and were being optimistic to do better. Dasgupta said mergers would not only lead to monopoly and lower competition in the banking sector, it would also lead to dropping access to banking for the greater part of people. Source: Live Mint |
Saturday, December 12, 2009
The RBI may possibly order banks to limit their exposure in Mutual Funds
The Reserve Bank of India (RBI) maypossibly order banks to limit their exposure in mutual funds
and also prescribe norms for such investments, in order to
tighten exposure and deploying funds indirectly in sectors or
companies to which banks cannot lend directly due to exposure limits.
Source:RBI
Friday, December 11, 2009
HSBC set to buy RBS India assets
Deal already signed for businesses in China, Malaysia too;
actual acquisition depends on regulatory sanctions
Mumbai: The Hongkong and Shanghai Banking Corp. Ltd, or HSBC,
is set to acquire the retail and small and medium enterprises
business of Royal Bank of Scotland Plc, or RBS, in India, China
and Malaysia.
HSBC entered the bidding race for select Asian assets of RBS
in October after talks between Standard Chartered Bank Plc and
RBS broke down over differences on the valuation of assets.
According to an RBS official in India, both the banks have
already signed the deal and the actual acquisition depends on
regulatory approvals in three countries.
RBS has already approached the Indian central bank for approval.
The key to the success of the Indian part of the acquisition is
the Reserve Bank of India (RBI) clearance for transfer of RBS
branch licences to HSBC.
RBS has 31 branches in India and employs 10,000 people, following
its 2007 acquisition of the Asian operations of ABN Amro Bank NV.
ABN Amro continues to conduct business in India under its original
name despite the RBS takeover. That acquisition was made through a
consortium, along with Fortis group of the UK and Banco Santander
SA of Spain. HSBC, which had an asset base of Rs94,620 crore in March,
operates through 47 branches across India. It has three more branch
licences granted by RBI.
Citibank NA is the largest foreign bank in India with an asset base of
Rs1.05 trillion in March, followed by Standard Chartered Bank with
Rs97,492 crore.
In June, RBI had declined to transfer RBS branch
licences to a prospective buyer. The banking regulator
based its decision on the fact that the proposed transaction
is a portfolio sale and not a bank buyout.
“We have signed a deal to sell our retail and small and
medium enterprises business in India, China and Malaysia
to HSBC,” a senior RBS official told Mint on condition of
anonymity as the proposal is yet to receive the regulator’s
approval. “We have sent the India proposal to the Reserve Bank
of India for approval,” the official added.
RBI spokeswoman Alpana Killawala said the central bank has
no information regarding the deal.
HSBC spokeswoman Malini Thadani declined to comment.
Responding to an email query, Vasantha Kumar, head of marketing
and communications, ABN Amro Bank, said: “RBS is in ongoing
discussions for the remaining retail and small and medium
enterprises assets it has decided to sell in Asia and will
make further announcements, as appropriate, in due course.”
RBS is selling businesses designated as non-core in select
markets to raise funds even though it will continue and grow
the corporate and wholesale banking activities of ABN Amro.
Madan Menon, country head, global banking and markets, ABN Amro Bank,
said, “Post the sale, the RBS group in India will focus on its core
business—corporate banking, markets and treasury, equity capital markets,
merger and acquisitions, syndicated loans, debt capital markets, trade
finance and cash payments... For the retail and SME (small and medium
enterprises) businesses, India will be the third largest employer within
the RBS group in the world.”
In February, RBS declared that it would move its India retail and commercial
banking operations, which employ 2,500 people, into a for-sale, non-core division.
Morgan Stanley is advising RBS on the sale.
In August, Australia and New Zealand Banking Group (ANZ) acquired RBS retail and
commercial banking operations in Taiwan, Singapore, Indonesia and Hong Kong for
around $550 million (Rs2,569 crore). It also acquired the onshore global banking
and markets (GBM) and global transaction services (GTS) operations in the Philippines,
Vietnam and Taiwan (excluding securities).
The talks with Standard Chartered Bank failed as the latter was not willing to
offer a little more than $100 million for the retail and commercial banking assets
of RBS minus the branch licences.
In fact, Standard Chartered worked on two sets of valuations—one exclusively for
the assets and the other for the assets and branches. This is because there was no
guarantee that RBI would permit the transfer of branch licences.
“The entire deal rests on the transfer of branches and it depends on what stance
RBI takes,” said an investment banker on condition of anonymity as he is associated
with the deal.
“The quality of the consumer banking assets is bad hence the only attraction for
HSBC is the branch network that it could acquire through this deal. RBS is trying
to convince the Indian banking regulator to transfer some branch licences to
the prospective buyers so that its existing clients receive uninterrupted service,”
added the same banker.
In India, the branch network plays a critical role when it comes to valuation as
foreign banks do not find it easy to secure licences even though RBI is quite
liberal in granting them. Under World Trade Organization norms, RBI is required
to issue 12 branch licences annually. It typically issues around 18 licences every
year but foreign banks want more.
ABN Amro Bank’s profits for the fiscal year ended 31 March in India
dropped 93.09% to Rs19.39 crore. The bank has written off debt worth
Rs962 crore in fiscal 2009, an almost three-fold increase from the
previous year’s Rs360 crore. Its consumer banking operations posted
an operating loss of Rs230.77 crore at the end of March. The size of
its consumer banking assets is not known.
HSBC India’s net profit for the fiscal year ended
March 2009 rose 8% to Rs1,291 crore.
Source: Sandeep Bhatnagar / Mint
actual acquisition depends on regulatory sanctions
Mumbai: The Hongkong and Shanghai Banking Corp. Ltd, or HSBC,
is set to acquire the retail and small and medium enterprises
business of Royal Bank of Scotland Plc, or RBS, in India, China
and Malaysia.
HSBC entered the bidding race for select Asian assets of RBS
in October after talks between Standard Chartered Bank Plc and
RBS broke down over differences on the valuation of assets.
According to an RBS official in India, both the banks have
already signed the deal and the actual acquisition depends on
regulatory approvals in three countries.
RBS has already approached the Indian central bank for approval.
The key to the success of the Indian part of the acquisition is
the Reserve Bank of India (RBI) clearance for transfer of RBS
branch licences to HSBC.
RBS has 31 branches in India and employs 10,000 people, following
its 2007 acquisition of the Asian operations of ABN Amro Bank NV.
ABN Amro continues to conduct business in India under its original
name despite the RBS takeover. That acquisition was made through a
consortium, along with Fortis group of the UK and Banco Santander
SA of Spain. HSBC, which had an asset base of Rs94,620 crore in March,
operates through 47 branches across India. It has three more branch
licences granted by RBI.
Citibank NA is the largest foreign bank in India with an asset base of
Rs1.05 trillion in March, followed by Standard Chartered Bank with
Rs97,492 crore.
In June, RBI had declined to transfer RBS branch
licences to a prospective buyer. The banking regulator
based its decision on the fact that the proposed transaction
is a portfolio sale and not a bank buyout.
“We have signed a deal to sell our retail and small and
medium enterprises business in India, China and Malaysia
to HSBC,” a senior RBS official told Mint on condition of
anonymity as the proposal is yet to receive the regulator’s
approval. “We have sent the India proposal to the Reserve Bank
of India for approval,” the official added.
RBI spokeswoman Alpana Killawala said the central bank has
no information regarding the deal.
HSBC spokeswoman Malini Thadani declined to comment.
Responding to an email query, Vasantha Kumar, head of marketing
and communications, ABN Amro Bank, said: “RBS is in ongoing
discussions for the remaining retail and small and medium
enterprises assets it has decided to sell in Asia and will
make further announcements, as appropriate, in due course.”
RBS is selling businesses designated as non-core in select
markets to raise funds even though it will continue and grow
the corporate and wholesale banking activities of ABN Amro.
Madan Menon, country head, global banking and markets, ABN Amro Bank,
said, “Post the sale, the RBS group in India will focus on its core
business—corporate banking, markets and treasury, equity capital markets,
merger and acquisitions, syndicated loans, debt capital markets, trade
finance and cash payments... For the retail and SME (small and medium
enterprises) businesses, India will be the third largest employer within
the RBS group in the world.”
In February, RBS declared that it would move its India retail and commercial
banking operations, which employ 2,500 people, into a for-sale, non-core division.
Morgan Stanley is advising RBS on the sale.
In August, Australia and New Zealand Banking Group (ANZ) acquired RBS retail and
commercial banking operations in Taiwan, Singapore, Indonesia and Hong Kong for
around $550 million (Rs2,569 crore). It also acquired the onshore global banking
and markets (GBM) and global transaction services (GTS) operations in the Philippines,
Vietnam and Taiwan (excluding securities).
The talks with Standard Chartered Bank failed as the latter was not willing to
offer a little more than $100 million for the retail and commercial banking assets
of RBS minus the branch licences.
In fact, Standard Chartered worked on two sets of valuations—one exclusively for
the assets and the other for the assets and branches. This is because there was no
guarantee that RBI would permit the transfer of branch licences.
“The entire deal rests on the transfer of branches and it depends on what stance
RBI takes,” said an investment banker on condition of anonymity as he is associated
with the deal.
“The quality of the consumer banking assets is bad hence the only attraction for
HSBC is the branch network that it could acquire through this deal. RBS is trying
to convince the Indian banking regulator to transfer some branch licences to
the prospective buyers so that its existing clients receive uninterrupted service,”
added the same banker.
In India, the branch network plays a critical role when it comes to valuation as
foreign banks do not find it easy to secure licences even though RBI is quite
liberal in granting them. Under World Trade Organization norms, RBI is required
to issue 12 branch licences annually. It typically issues around 18 licences every
year but foreign banks want more.
ABN Amro Bank’s profits for the fiscal year ended 31 March in India
dropped 93.09% to Rs19.39 crore. The bank has written off debt worth
Rs962 crore in fiscal 2009, an almost three-fold increase from the
previous year’s Rs360 crore. Its consumer banking operations posted
an operating loss of Rs230.77 crore at the end of March. The size of
its consumer banking assets is not known.
HSBC India’s net profit for the fiscal year ended
March 2009 rose 8% to Rs1,291 crore.
Source: Sandeep Bhatnagar / Mint
Levying of user charges by SBI
State Bank of India (SBI) has reported that
no charges have been levied for cheque book,
minimum balance etc. at other branches.
A minor charge for deposit of cash at non-home
branch and updation of passbook at non-home
branch are levied by the bank as deposit of cash at
non- home branch amounts to remittance which the
customer would have paid for anyway by way of a draft.
Updation of passbook would also fall in the same category.
According to SBI no hardships are being faced by senior
According to SBI no hardships are being faced by senior
citizens and pensioners, especially since the bank can transfer
accounts to the nearest branch of the pensioner, if he so desires
without costs. The SBI constantly reviews all the various charges,
from time to time.
This information was given by Minister of State for Finance,
This information was given by Minister of State for Finance,
Shri Namo Narain Meena in written reply
to a question raised in Rajya Sabha today.
We stand on firm ground, no question of merger'-TMB MD
 |
 |
For the last 18 months, the bank was operating without a board. What has been the impact of this? What will be the focus of the new board?
With a truncated board, we were unable to take policy decisions, including on branch expansion and recruitments. Now, these will become our immediate focus.
What plans do you have for expansion and recruitments?
We have applied for 40 licences with the Reserve Bank of India. By the end of March 2010, the number of branches will go up to 257 from 215. The bank sees good potential in Mumbai, New Delhi, Kolkata and Gujarat and will focus on these markets. We also plan to foray into Madhya Pradesh and Chhattisgarh next year. We are also planning to recruit 500 people in the clerical cadre.
Any plans to foray into foreign countries?
The bank is planning an entry into Sri Lanka and Malaysia. The timing will be decided soon.
The bank was mainly recruiting from the Nadar community. Will there be any change in the recruitment policy?
Earlier, the bank was seen more as a community bank. The situation has changed now. We are going pan-India and would prefer to be called as everyone’s bank. Our recruitments will be merit-based.
You said the board would also look at an IPO.
The bank has been planning for an IPO for long. In the absence of the board, we couldn’t go ahead with the plan. The new board will decide about the issue, including the amount to be raised.
What is your assessment of the funds required by the bank?
With the constitution of the new board, the bank will be able to work out its plans for expansion. The additional capital required will be decided at an appropriate time.
Given the problems faced by the bank, it is being seen as an ideal candidate for a merger with another bank. Is this the best option?
Despite several problems, the bank has been performing well in all areas of operations. Now, these problems are coming to a logical end, giving us an opportunity to grow and enhance shareholders’ value. Mergers should be encouraged only between weak or unviable banks. Our bank has strong fundamentals and we have been making profits for the last 88 years. Our net worth was Rs 989 crore as on March 31, 2009, which is thrice than the minimum net worth of Rs 300 crore prescribed by the Reserve Bank of India. Our capital to risk assets ratio is 14.48 per cent, which is more than the required level of 9 per cent. Our return on assets is comfortable at 1.52 per cent as on March 31. The question of merger does not arise.
But do small banks have a future?
The regional focus of small banks has given them primacy in their area of operation. They are contributing to the economic growth of the country through their regional and rural presence. The business volume of small-sized banks has grown tremendously in the last decade. Still, tremendous opportunities exist in many areas. They need to exist with big banks to serve different sections of the society.
What will be your growth drivers?
Mainly small and medium enterprises, retail and manufacturing. Currently, our rate of interest is not competitive due to the high cost of funds. To address the issue, we are focusing on the current account, savings account (Casa) portfolio.
What is the bank’s cost of funds and Casa targets since larger and more efficient players have reached near 40 per cent levels for Casa?
The cost of funds is 7.70 per cent, which is in line with the industry average. The bank is looking at a Casa share of around 25 per cent this financial year and 30 per cent in 2010-11.
Bank staff plan on-day strike on Dec 16
11 Dec 2009, 1326 hrs IST,
MUMBAI: About 600,000 employees of India's banks
plan to go on a one-day strike on Dec. 16 to
protest the move to merge state-owned
banks.
"We are against any move for merger and consolidation
in the banking industry," C.H. Venkatachalam, general
secretary of All India Bank Employees Association (AIBEA)
told news agency.
"We term the move as closure of public sector banks," he said.
The employees were also protesting the ongoing move to merge
State Bank of Indore with its founder State Bank of India,
the country's largest bank, he added.
Earlier, Indian Banks Association, the apex banker's body,
said it got a notice from All India Bank Officers'
Association and AIBEA informing its members working
in state-owned, private and foreign banks would strike
work on Dec 16.
State-run Corporation Bank also informed stock exchanges
normal functioning in bank branches may be affected owing to the strike.
Source: REUTERS
MUMBAI: About 600,000 employees of India's banks
plan to go on a one-day strike on Dec. 16 to
protest the move to merge state-owned
banks.
"We are against any move for merger and consolidation
in the banking industry," C.H. Venkatachalam, general
secretary of All India Bank Employees Association (AIBEA)
told news agency.
"We term the move as closure of public sector banks," he said.
The employees were also protesting the ongoing move to merge
State Bank of Indore with its founder State Bank of India,
the country's largest bank, he added.
Earlier, Indian Banks Association, the apex banker's body,
said it got a notice from All India Bank Officers'
Association and AIBEA informing its members working
in state-owned, private and foreign banks would strike
work on Dec 16.
State-run Corporation Bank also informed stock exchanges
normal functioning in bank branches may be affected owing to the strike.
Source: REUTERS
Koda watches, reads news in jail, quietly
Sanjay Ojha, TNN 10 December 2009, 08:52pm IST
|
RANCHI: Former Jharkhand chief minister
Madhu Koda spent time in jail like any
other prisoner of the Birsa Munda Central
Jail at Hotwar here.
Allegedly involved in illegal investments
and hawala transactions worth Rs 4,000 crore,
Koda remained confined to his room in the upper
division ward where he was lodged around 7 pm on Monday.
An MP from Singhbhum, Koda was on Monday noon arrested
from Chaibasa by the state vigilance bureau in connection
with a disproportionate assets (DA) case. He was later
forwarded to 14 days' judicial custody by a vigilance
court in Ranchi.
The Hotwar jail's VIP ward has eight rooms.
Three are occupied by Koda's former cabinet colleagues
Enos Ekka, Harinarayan Rai and Kamlesh Kumar Singh who are
facing trial in DA cases in the local vigilance court.
Unlike the trio who regularly complain of ill health and
high blood pressure, Koda was normal. "His behaviour was
normal and he did not try to create a scene like his former
cabinet colleagues," said a jail official.
Koda woke up around 6.30 on Tuesday morning.
He later watched news on local TV channels and also
went through newspapers.
He was then examined by jail doctors. Reports of all the tests,
including blood pressure test, were normal, said jail
superintendent Deepak Vidyarthi.
After the medical examination, Koda returned to his room.
Unlike other high- profile undertrial prisoners, he had no
visitors during the day. Late in the afternoon, some of his
supporters came to meet him.
Meanwhile, the vigilance bureau has initiated the paper
work for taking him on remand for interrogation.
"Maybe tomorrow we will move the court seeking Koda's remand,"
DG (vigilance) Niaz Ahmed said on Tuesday.
Source:TOI-Ranchi
|
RANCHI: Former Jharkhand chief minister
Madhu Koda spent time in jail like any
other prisoner of the Birsa Munda Central
Jail at Hotwar here.
Allegedly involved in illegal investments
and hawala transactions worth Rs 4,000 crore,
Koda remained confined to his room in the upper
division ward where he was lodged around 7 pm on Monday.
An MP from Singhbhum, Koda was on Monday noon arrested
from Chaibasa by the state vigilance bureau in connection
with a disproportionate assets (DA) case. He was later
forwarded to 14 days' judicial custody by a vigilance
court in Ranchi.
The Hotwar jail's VIP ward has eight rooms.
Three are occupied by Koda's former cabinet colleagues
Enos Ekka, Harinarayan Rai and Kamlesh Kumar Singh who are
facing trial in DA cases in the local vigilance court.
Unlike the trio who regularly complain of ill health and
high blood pressure, Koda was normal. "His behaviour was
normal and he did not try to create a scene like his former
cabinet colleagues," said a jail official.
Koda woke up around 6.30 on Tuesday morning.
He later watched news on local TV channels and also
went through newspapers.
He was then examined by jail doctors. Reports of all the tests,
including blood pressure test, were normal, said jail
superintendent Deepak Vidyarthi.
After the medical examination, Koda returned to his room.
Unlike other high- profile undertrial prisoners, he had no
visitors during the day. Late in the afternoon, some of his
supporters came to meet him.
Meanwhile, the vigilance bureau has initiated the paper
work for taking him on remand for interrogation.
"Maybe tomorrow we will move the court seeking Koda's remand,"
DG (vigilance) Niaz Ahmed said on Tuesday.
Source:TOI-Ranchi
Poor loan disbursement by banks in state
Abhay Singh,
11 December 2009, 05:32am IST
|
PATNA: Nationalised commercial banks operating in the state
have a stupendous task of meeting the target of loan disbursement
as part of annualcredit plan (ACP) during the current
fiscal since only 36.86% of the target has been achieved till September end.
This transpired during the 30th State Level Bankers' Committee
(SLBC) meeting held in a premier hotel here on Friday.
Deputy CM Sushil Kumar Modi, who is also the state's finance minister
, said that the target for loan disbursement under ACP was Rs 21,127.79 crore,
but loan worth only Rs 7,788.53 crore could be disbursed by the banks
till September during the current fiscal.
This has affected the Credit-Deposit (C-D) ratio of the state,
which has been showing a declining trend since the 2007-08 fiscal.
"We have asked the banks to raise the C-D ratio to 40% during the next
fiscal," Modi said, adding that the state's C-D ratio during the current
fiscal till September was 30.99%.
The total deposits made within the state in various nationalised
banks was Rs 93,244 crore till September end, while only Rs 30,412 crore
had been credited to people concerned. It means that the banks have
invested the remaining around Rs 63,000 crore outside the state.
Significantly, none of the private banks has disbursed even a single
penny as loan, Modi said and added the target regarding loan disbursement
for the ICICI bank was Rs 371 crore and for the HDFC Bank Rs 183 crore.
They, however, may have to change their policies with regard to loan
disbursement, given the strict directive of the government.
The volume of educational loan given to students had increased.
Till September 30 during the 2008-09 fiscal,
loans worth Rs 252 crore were given to 8,582 students,
but the corresponding figures during the current fiscal
were Rs 362 crore and 10,563 students. Modi said the bankers
agreed to lower the interest rate on loans given to girls by 1%.
Even as the volume of crop insurance on agricultural loans given to
farmers had increased, the quantum was still low. The target regarding
issuance of Kisan Credit Cards to farmers was 15 lakh, but only 4.72 lakh
farmers had got it till November.
Source:TOI-PATNA
11 December 2009, 05:32am IST
|
PATNA: Nationalised commercial banks operating in the state
have a stupendous task of meeting the target of loan disbursement
as part of annualcredit plan (ACP) during the current
fiscal since only 36.86% of the target has been achieved till September end.
This transpired during the 30th State Level Bankers' Committee
(SLBC) meeting held in a premier hotel here on Friday.
Deputy CM Sushil Kumar Modi, who is also the state's finance minister
, said that the target for loan disbursement under ACP was Rs 21,127.79 crore,
but loan worth only Rs 7,788.53 crore could be disbursed by the banks
till September during the current fiscal.
This has affected the Credit-Deposit (C-D) ratio of the state,
which has been showing a declining trend since the 2007-08 fiscal.
"We have asked the banks to raise the C-D ratio to 40% during the next
fiscal," Modi said, adding that the state's C-D ratio during the current
fiscal till September was 30.99%.
The total deposits made within the state in various nationalised
banks was Rs 93,244 crore till September end, while only Rs 30,412 crore
had been credited to people concerned. It means that the banks have
invested the remaining around Rs 63,000 crore outside the state.
Significantly, none of the private banks has disbursed even a single
penny as loan, Modi said and added the target regarding loan disbursement
for the ICICI bank was Rs 371 crore and for the HDFC Bank Rs 183 crore.
They, however, may have to change their policies with regard to loan
disbursement, given the strict directive of the government.
The volume of educational loan given to students had increased.
Till September 30 during the 2008-09 fiscal,
loans worth Rs 252 crore were given to 8,582 students,
but the corresponding figures during the current fiscal
were Rs 362 crore and 10,563 students. Modi said the bankers
agreed to lower the interest rate on loans given to girls by 1%.
Even as the volume of crop insurance on agricultural loans given to
farmers had increased, the quantum was still low. The target regarding
issuance of Kisan Credit Cards to farmers was 15 lakh, but only 4.72 lakh
farmers had got it till November.
Source:TOI-PATNA
Loan waiver for farmers-Hubli
10 December 2009, 09:28pm IST
|
Karnataka Vikas Grameena Bank general manager Vasudev
Kalakundri has stated that December 31 is the last
date for the farming section to avail of
benefits under the Central government's
Debt Waiver and Debt Relief Scheme.
In a press release, he has requested the eligible
farmers to contact KVGB branches from where they
have availed of loan and pay their share of 75% so as
to get the remaining 25% waived. He said KVGB has implemented
this scheme effectively in its operational area of nine
districts and more than 1.15 lakh farmers have availed of
the benefit so far.
Source:TNN
|
Karnataka Vikas Grameena Bank general manager Vasudev
Kalakundri has stated that December 31 is the last
date for the farming section to avail of
benefits under the Central government's
Debt Waiver and Debt Relief Scheme.
In a press release, he has requested the eligible
farmers to contact KVGB branches from where they
have availed of loan and pay their share of 75% so as
to get the remaining 25% waived. He said KVGB has implemented
this scheme effectively in its operational area of nine
districts and more than 1.15 lakh farmers have availed of
the benefit so far.
Source:TNN
5 years imprisonment for possession of fake notes-Goa
11 December 2009, 05:20am IST
|
MARGAO: The Margao district and sessions court on Thursday
sentenced one Mohamed Saifulla Sheikh,
to undergo five years simple imprisonment and
pay a fine of Rs 5,000 on charges of possessing counterfeit
currency notes.
The court had held him guilty under Section 489C of the
IPC (possessing counterfeit currency notes).
However, he was acquitted from the charges under
Section 489A (counterfeiting currency notes) and 489B
(using as genuine counterfeit currency notes).
According to the prosecution, Vasco police had arrested
Sheikh and his accomplice, a minor, with fake currency
with a face value of Rs 3 lakh on September 5, 2008.
The accused were taken into custody following a complaint
lodged by a medical store owner near Vasco railway station
who alleged that fake notes were exchanged by one of the
accused at his store.
Police suspected that the notes were
printed in Pakistan and smuggled to India .
Source:PTI
|
MARGAO: The Margao district and sessions court on Thursday
sentenced one Mohamed Saifulla Sheikh,
to undergo five years simple imprisonment and
pay a fine of Rs 5,000 on charges of possessing counterfeit
currency notes.
The court had held him guilty under Section 489C of the
IPC (possessing counterfeit currency notes).
However, he was acquitted from the charges under
Section 489A (counterfeiting currency notes) and 489B
(using as genuine counterfeit currency notes).
According to the prosecution, Vasco police had arrested
Sheikh and his accomplice, a minor, with fake currency
with a face value of Rs 3 lakh on September 5, 2008.
The accused were taken into custody following a complaint
lodged by a medical store owner near Vasco railway station
who alleged that fake notes were exchanged by one of the
accused at his store.
Police suspected that the notes were
printed in Pakistan and smuggled to India .
Source:PTI
Bank plaint on fake note deposits-GOA
11 December 2009, 05:18am IST
|
MARGAO/VASCO: Margao town police on Thursday registered a
case of deposit of fake currency to the tune of
Rs 35,500 on a complaint by ICICI bank.
The amount deposited is from February 2009 till date.
Police said that the complaint states that six notes
of Rs 1,000 denomination, 58 of Rs 500 and five notes
of Rs 100 that were deposited are fake.
Police said this is the fourth time within a year that the bank has lodged
a complaint of fake currency being deposited.
Meanwhile, the Vasco branch of ICICI bank detected counterfeit
currency notes totaling Rs 11,600, police said.
According to the police, Surekha Sequeira,
the ICMC currency test manager
of ICICI bank, lodged the complaint after
the fake notes were detected.
Source:PTI
|
MARGAO/VASCO: Margao town police on Thursday registered a
case of deposit of fake currency to the tune of
Rs 35,500 on a complaint by ICICI bank.
The amount deposited is from February 2009 till date.
Police said that the complaint states that six notes
of Rs 1,000 denomination, 58 of Rs 500 and five notes
of Rs 100 that were deposited are fake.
Police said this is the fourth time within a year that the bank has lodged
a complaint of fake currency being deposited.
Meanwhile, the Vasco branch of ICICI bank detected counterfeit
currency notes totaling Rs 11,600, police said.
According to the police, Surekha Sequeira,
the ICMC currency test manager
of ICICI bank, lodged the complaint after
the fake notes were detected.
Source:PTI
No clues in UCO Bank bank theft in Allahabad
10 December 2009, 09:34pm IST
|
ALLAHABAD: The district police are yet to make a breakthrough
in the Rs 17.85 lakh UCO bank theft case. Despite carrying out
raids and detention of suspects,
the police till were clueless till Thursday evening
about the criminals involved in the case.
Initial investigations revealed that it was a handiwork of a
professional gang having expertise in bank robberies.
The district police have contacted their Sultanpur, Agra,
Lucknow and Meerut counterparts where such incidents had
occurred earlier.
A senior cop told TOI that such gangs do not stay anywhere
for long. The thieves cut the strong room and two cabinets
to take out the money. Police, however, said that the bank manager
had gone to his house after locking the branch and found
cash missing from cash boxes.
Source:TOI Allahabad
|
ALLAHABAD: The district police are yet to make a breakthrough
in the Rs 17.85 lakh UCO bank theft case. Despite carrying out
raids and detention of suspects,
the police till were clueless till Thursday evening
about the criminals involved in the case.
Initial investigations revealed that it was a handiwork of a
professional gang having expertise in bank robberies.
The district police have contacted their Sultanpur, Agra,
Lucknow and Meerut counterparts where such incidents had
occurred earlier.
A senior cop told TOI that such gangs do not stay anywhere
for long. The thieves cut the strong room and two cabinets
to take out the money. Police, however, said that the bank manager
had gone to his house after locking the branch and found
cash missing from cash boxes.
Source:TOI Allahabad
Chennai HC asks banks to have quota at officer level
11 December 2009, 04:05am IST
|
CHENNAI: Recommending representation for SC/ST officers
in the higher echelons of nationalised banks, the Madras
High Court has directed at least
five nationalised banks to follow the rule of reservation
for promotion of SC/ST candidates to officer ranks.
A division bench comprising Justice Elipe Dharma Rao
and Justice CT Selvam, citing a central government memo
dated August 13, 1997, said: "When the Constitution has
given an extra protection to the underprivileged communities
so as to ensure equal opportunities as guaranteed by the
Constitution, the banks are not justified in sleeping over
the matter of providing reservations in promotions for a
decade with no good reason to offer."
The petitions and appeals were filed by the SC/ST employees
associations of various nationalised banks, seeking a direction
to the banks to provide reservation in promotions to officers
from scale I to scale VII as per the instructions issued by the
Centre.
The banks, however, said promotion to officer grade is on the
basis of merit-cum-seniority, to which reservation policy cannot
be made applicable. They claimed that reservation is applicable
only in the first instance where promotion is from the clerical
grade to the lowest rank in the officer grade.
The rule of reservation will not apply
even to the next scale of middle
management level in scale II position, they said. They also
argued that the efficiency of administration of banks would
suffer if the reservation policy is followed.
Rejecting the arguments, Justice Dharma Rao, writing the judgment
for the bench, said: "We are unable to understand such a sweeping
and generalised argument advanced on the part of the banks, as if
all the employees belonging to these underprivileged classes are
inefficient and not suitable for promotion.
When the Union of India has directed the
banks to follow the rule of reservation in promotions
in all cadres, as early as in the year 1997, there is no impediment for
the banks to implement the same. However, for no better reason to be
appreciated, the banks are adamant in not implementing the office memo."
Citing the bleak picture of only a very few SC/ST officers occupying
high positions, the bench said, "this defeats the very purpose of
reservation enshrined in the Constitution. We must remember that even
the SC/ST candidates, who are now serving in officer cadres, have
been promoted only by virtue of their long service and merit and not
by availing themselves of the rule of reservation in promotions, as
has been provided for under Article 16(4A) of the Constitution."
It then directed the banks to implement the rule of reservation
for promotions to all cadres in the banking sector, within eight weeks.
Source:TOI
|
CHENNAI: Recommending representation for SC/ST officers
in the higher echelons of nationalised banks, the Madras
High Court has directed at least
five nationalised banks to follow the rule of reservation
for promotion of SC/ST candidates to officer ranks.
A division bench comprising Justice Elipe Dharma Rao
and Justice CT Selvam, citing a central government memo
dated August 13, 1997, said: "When the Constitution has
given an extra protection to the underprivileged communities
so as to ensure equal opportunities as guaranteed by the
Constitution, the banks are not justified in sleeping over
the matter of providing reservations in promotions for a
decade with no good reason to offer."
The petitions and appeals were filed by the SC/ST employees
associations of various nationalised banks, seeking a direction
to the banks to provide reservation in promotions to officers
from scale I to scale VII as per the instructions issued by the
Centre.
The banks, however, said promotion to officer grade is on the
basis of merit-cum-seniority, to which reservation policy cannot
be made applicable. They claimed that reservation is applicable
only in the first instance where promotion is from the clerical
grade to the lowest rank in the officer grade.
The rule of reservation will not apply
even to the next scale of middle
management level in scale II position, they said. They also
argued that the efficiency of administration of banks would
suffer if the reservation policy is followed.
Rejecting the arguments, Justice Dharma Rao, writing the judgment
for the bench, said: "We are unable to understand such a sweeping
and generalised argument advanced on the part of the banks, as if
all the employees belonging to these underprivileged classes are
inefficient and not suitable for promotion.
When the Union of India has directed the
banks to follow the rule of reservation in promotions
in all cadres, as early as in the year 1997, there is no impediment for
the banks to implement the same. However, for no better reason to be
appreciated, the banks are adamant in not implementing the office memo."
Citing the bleak picture of only a very few SC/ST officers occupying
high positions, the bench said, "this defeats the very purpose of
reservation enshrined in the Constitution. We must remember that even
the SC/ST candidates, who are now serving in officer cadres, have
been promoted only by virtue of their long service and merit and not
by availing themselves of the rule of reservation in promotions, as
has been provided for under Article 16(4A) of the Constitution."
It then directed the banks to implement the rule of reservation
for promotions to all cadres in the banking sector, within eight weeks.
Source:TOI
Govt to auction only 3 slots of 3G spectrum
11 December 2009, 01:58am IST
|
NEW DELHI: In a surprise move that could deprive
it of over Rs 5,000 crore in revenue, the government
has said the 3G telephony spectrum
available with it for sale currently could accommodate
only three operators.
A fourth slot has already been awarded to state-owned
MTNL (that operates in Delhi and Mumbai) and BSNL (rest of India).
It had earlier planned to auction spectrum to four private
bidders, in addition to the state-run firms.
The decision comes in the wake of the ministry of defence's
reluctance to vacate the designated spectrum (air waves) for
commercial use, official sources said, adding that the required notification would be issued soon.
The government has fixed the reserve price of spectrum
at Rs 3,500 crore for pan-India 3G spectrum and Rs 1,750 crore
for Wimax (wireless ineternet/broadband) and the auction is
scheduled to begin from January 14 next year.
The government had projected a revenue of Rs 25,000 crore
from the sale of spectrum, but this could now fall short of
estimates as it would have to forgo at least Rs 5,250 crore
due to cancellation of one slot.
Asked if the decision would require empowered group of ministers'
nod in view of the change, officials said it has been discussed by
the members and would be formally notified.
On ministry of defence refusing to vacate the spectrum, officials
said as per MoU with the department of telecom, 10 MHz of spectrum
was vacated immediately and another 10 MHz would be given by June, 2010.
Source:PTI
|
NEW DELHI: In a surprise move that could deprive
it of over Rs 5,000 crore in revenue, the government
has said the 3G telephony spectrum
available with it for sale currently could accommodate
only three operators.
A fourth slot has already been awarded to state-owned
MTNL (that operates in Delhi and Mumbai) and BSNL (rest of India).
It had earlier planned to auction spectrum to four private
bidders, in addition to the state-run firms.
The decision comes in the wake of the ministry of defence's
reluctance to vacate the designated spectrum (air waves) for
commercial use, official sources said, adding that the required notification would be issued soon.
The government has fixed the reserve price of spectrum
at Rs 3,500 crore for pan-India 3G spectrum and Rs 1,750 crore
for Wimax (wireless ineternet/broadband) and the auction is
scheduled to begin from January 14 next year.
The government had projected a revenue of Rs 25,000 crore
from the sale of spectrum, but this could now fall short of
estimates as it would have to forgo at least Rs 5,250 crore
due to cancellation of one slot.
Asked if the decision would require empowered group of ministers'
nod in view of the change, officials said it has been discussed by
the members and would be formally notified.
On ministry of defence refusing to vacate the spectrum, officials
said as per MoU with the department of telecom, 10 MHz of spectrum
was vacated immediately and another 10 MHz would be given by June, 2010.
Source:PTI
Rel Global, Airtel to build undersea cable
11 December 2009, 02:00am IST
|
NEW DELHI: A group of global telecom and technology
firms, comprising India's Reliance Globalcom and
Bharti Airtel, on Thursday signed an
agreement to build and operate a submarine cable
system with the world's highest capacity.
To be built at an estimated $400 million,
the Southeast Asia Japan Cable system (SJC)
would address broadband demand and sustain the
growth in data, web applications and Internet
traffic throughout Asia, a joint statement said.
The SJC system, measuring 8,300 km, will initially
link Singapore, Hong Kong, Indonesia, Philippines and
Japan, it added. The six-fibre-pair high-capacity submarine
cable system has a design capacity of 17 Terabits per
second (Tbps), and can be upgraded to 23 Tbps, the highest
capacity system ever built so far. The consortium includes
Globe Telecom (Philippines), Google (US), KDDI (Japan),
Network i2i, Reliance Globalcom (through FLAG Pacific Ltd,
Bermuda), Bharti Airtel and Telemedia
Pacific Inc Ltd (Hong Kong/Indonesia).
"We will now be uniquely positioned to provide to our
customers' voice, Internet and data services across the
entire Asian continent connecting the top 10 key business
markets in Asia Pacific," Reliance Globalcom President and
CEO Punit Garg said..
Source:PTI
|
NEW DELHI: A group of global telecom and technology
firms, comprising India's Reliance Globalcom and
Bharti Airtel, on Thursday signed an
agreement to build and operate a submarine cable
system with the world's highest capacity.
To be built at an estimated $400 million,
the Southeast Asia Japan Cable system (SJC)
would address broadband demand and sustain the
growth in data, web applications and Internet
traffic throughout Asia, a joint statement said.
The SJC system, measuring 8,300 km, will initially
link Singapore, Hong Kong, Indonesia, Philippines and
Japan, it added. The six-fibre-pair high-capacity submarine
cable system has a design capacity of 17 Terabits per
second (Tbps), and can be upgraded to 23 Tbps, the highest
capacity system ever built so far. The consortium includes
Globe Telecom (Philippines), Google (US), KDDI (Japan),
Network i2i, Reliance Globalcom (through FLAG Pacific Ltd,
Bermuda), Bharti Airtel and Telemedia
Pacific Inc Ltd (Hong Kong/Indonesia).
"We will now be uniquely positioned to provide to our
customers' voice, Internet and data services across the
entire Asian continent connecting the top 10 key business
markets in Asia Pacific," Reliance Globalcom President and
CEO Punit Garg said..
Source:PTI
Emaar calls off merger in Dubai
11 December 2009, 01:24am IST
|
DUBAI/NEW DELHI: In the backdrop of the debt crisis in the region,
Gulf real estate firm Emaar Properties has called off its proposed merger with
state-owned Dubai Holding, citing the deal is not "economically viable".
The move comes in the midst of realty firm Emaar-MGF, the Dubai entity's
JV with domestic company MGF Development, preparing an initial public
offering for over Rs 3,800 crore.
Emaar Properties has said the decision to cancel the proposed merger
with Dubai Holding was taken after intensive feasibility studies that
were undertaken by a group of international experts and economic analysts.
In a statement late Wednesday, Emaar noted the results of "these studies
proved that the proposed consolidation (with Dubai Holding entities)
discussed earlier was not economically viable in the current economic climate".
Last month, Dubai government shocked world markets after the government-owned
conglomerate Dubai World sought six more months to repay debts worth $59 billion.
The announcement not only dented investors' confidence but also sparked
fears of another financial turmoil. Emaar Properties is the developer of
the world's tallest building Burj Dubai
Source:PTI
|
DUBAI/NEW DELHI: In the backdrop of the debt crisis in the region,
Gulf real estate firm Emaar Properties has called off its proposed merger with
state-owned Dubai Holding, citing the deal is not "economically viable".
The move comes in the midst of realty firm Emaar-MGF, the Dubai entity's
JV with domestic company MGF Development, preparing an initial public
offering for over Rs 3,800 crore.
Emaar Properties has said the decision to cancel the proposed merger
with Dubai Holding was taken after intensive feasibility studies that
were undertaken by a group of international experts and economic analysts.
In a statement late Wednesday, Emaar noted the results of "these studies
proved that the proposed consolidation (with Dubai Holding entities)
discussed earlier was not economically viable in the current economic climate".
Last month, Dubai government shocked world markets after the government-owned
conglomerate Dubai World sought six more months to repay debts worth $59 billion.
The announcement not only dented investors' confidence but also sparked
fears of another financial turmoil. Emaar Properties is the developer of
the world's tallest building Burj Dubai
Source:PTI
Thursday, December 10, 2009
Dhanalakshmi Bank gets approval to raise FII limit
Kerala based Dhanalakshmi Bank Ltd has received
RBI approval to raise FIIs and NRIs percentage holding
in the bank to 49 per cent and 24 per cent respectively.
The Bank has informed the Bombay Stock Exchange
that RBI has not objected to the percentage holding
from 24 per cent and 10 per cent to 49 per cent
and 24 per cent respectively.
This has also been approved by the shareholders, the bank said.
The Thrissur headquartered bank was incorporated in 1927 by a
group of entrepreneurs with a capital of Rs 11,000 and
seven employees. It subsequently became a scheduled
commercial bank in 1977 and presently provides banking
products and services to both resident and Non Resident
Indians through its network of 250 branches and 78 ATMs.
The bank also plans to add a total of 66 branches and
380 ATMs across the country by this year end, the release said.
The bank has a total networth of over Rs 400 crore, deposits
worth Rs 4,969 crore and advances worth Rs 3,245 crore
as of March 2009. Its profit was Rs 57.45 crore in the last fiscal.
On the socio-economic front, the bank is a leading player in
dispensing microcredit among Kerala based banks, both
public and private.
At March end this year, it had an
outstanding of Rs 124.40 crore under micro credit, the release said.
Three arrested in Rs 3 crore bank fraud case
Thursday , Dec 10, 2009 at 0327 hrs
During investigation, it was found that the then bank manager,
M M Dewan, had masterminded the entire plan and the loan was
sanctioned against a false name.
Dewan, who was suspended recently after he was
found guilty in another crime, is absconding.
The Detective Department of the Kolkata police arrested
three persons on Wednesday on charges of duping a
nationalised bank of around Rs 1 crore.
The accused, Nanda Kishore Roy, Nanda Nayek
and Suprakash Bhattacharya — employees of
Dum Dum Ordinance factory — were produced
before the court and remanded in police custody till December 16.
A senior officer of the Detective Department
said the trio and 13 other employees of the
factory took a housing loan of Rs 1 crore for
constructing residential apartments on three premises
near Naktala and Garia.
They took the loan from the Lake Garden
branch of Canara Bank in 2004.
Since then, the clients had not deposited a
single EMI to the bank.
In 2008, the regional bank manager
lodged a complaint with the police against
Indranil Mondal — the promoter in whose
name the entire loan was sanctioned.
During investigation, it was found that the then bank manager,
M M Dewan, had masterminded the entire plan and the loan was
sanctioned against a false name.
Dewan, who was suspended recently after he was
found guilty in another crime, is absconding.
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