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Monday, November 13, 2017

No easy capital for PSBs, stick to reforms: Banking secy

Exhorting state-owned lenders to go in for reforms, Financial Services Secretary Rajiv Kumar today said the banks are not going to get easy money as part of the Rs. 2.11-lakh crore recapitalisation plan of the government.

Speaking to the media after the first ‘PSB Manthan’ here, he said the Rs. 1.35-lakh crore recapitalisation bonds will be front-loaded and the contours of the bonds are being decided at the level of the finance minister.

The banks will also be getting nearly Rs. 18,000 crore under the Indradhanush plan.

“Everything is linked to the reforms which each board will consider within a short time as to what kind of business and how they want to go ahead. It’s not an easy money which is going to come, that is the main point. It has to be followed with a whole lot of reforms,” the secretary said.

Kumar made the point that the reforms also include bank boards taking a stand and coming up with a clear plan on consolidation.

He emphasised that recapitalisation does not come on its own as it is followed and preceded by a whole lot of reforms.

As for the proposed recapitalisation bonds, he said the plan is to front-load them, meaning most of it would happen in the current year.

Last month, the government had unveiled a staggering Rs. 2.11-lakh crore two-year road map to bolster NPA-hit public sector banks, which includes recapitalisation bonds, budgetary support and equity dilution.

While announcing the government’s plan of capital infusion in public sector banks (PSBs) last month, Finance Minister Arun Jaitley had said it would be accompanied by reforms to enable the lenders to play a major role in the financial system and give a strong push to the job-creating MSME sector.

Giving details on the Manthan attended by top officials of PSBs and financial institutions, Kumar said discussions took place on reforms including strengthening of bank boards, resolution of non-performing assets and HR issues so that they do responsive and responsible banking in future.

Asked about credit growth, Kumar said banks have put forth suggestions in this regard at the meeting.

With strong fundamentals of the economy and growth getting back on track in coming months, he said banks are preparing themselves for credit offtake.

Under the Indradhanush road map introduced in 2015, the government had announced infusion of Rs. 70,000 crore in state- owned banks spread over four years to meet their capital requirements in line with global risk norms, known as Basel- III.

As per the plan, PSBs were given Rs. 25,000 crore in 2015 -16, and a similar amount has been earmarked for the following years. Besides, Rs. 10,000 crore each would be infused in 2017 -18 and 2018-19.

Source : Thehindubusinessline
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Debit, credit cards, ATMs will be redundant in 4 years: Niti CEO

Niti Aayog CEO Amitabh Kant today said debit and credit cards as well as ATMs will be redundant in next three-four years and people will use their mobile phones for financial transactions.

He further said that with India being a country where 72 per cent population is below 32 years of age, it will have an advantage over other regions like the US and Europe in terms of demographic dividend. “India will make credit cards, debit cards and ATMs technologically redundant in next 3-4 years and we all will be using mobiles for doing many transactions,” Kant said at Amity University Noida campus where he was felicitated with an honorary doctorate degree.

Kant said that India is the only country in the world with billion biometrics and as many mobile phones and bank accounts and therefore, in future, it will be the only nation which will make a lot of disruptions.

More financial transactions will be done on mobile phones and this trend is already rising spirally, he said. “India is growing at around 7.5 per cent per annum and it is an oasis of growth in the midst of a very barren economic landscape across the world but our challenge is to grow at even higher rates of 9-10 per cent,” Kant said.

He said that India is passing through a window of demographic transition, which rarely happens in history.

About “72 per cent of India is below the age of 32 and the population will keep getting younger and younger till 2040 while the population across America and Europe will keep getting older and older... We need a society which will constantly innovate, which will continuously disrupt,” the Niti Aayog CEO said.

Source : Thehindubusinessline
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Govt will pump more capital into public sector banks: Jaitley

Finance Minister Arun Jaitley said on Sunday that the government has decided to inject more capital into state-owned banks to strengthen the banking system and spur economic growth.

Last month, the government had unveiled a Rs.2.11 lakh crore two-year roadmap to bolster public sector banks hit by non-performing assets (NPAs), which includes recapitalisation bonds, budgetary support and equity dilution.

Addressing heads of state-owned banks at the ‘PSB Manthan’ here, Jaitley said the government has decided to put in more capital from the Budget, through bonds and banks’ equity expansion and “therefore, it is the country which is virtually going to pay to keep the banking system in good health.”

“You won’t find us interfering” in commercial transactions, but “when the system is making all these changes and all these monetary contributions in order to strengthen the banking system, we want a robust public sector banking system so that your ability to support growth itself increases,” the Finance Minister told the bankers.

MSME support

He further said one of the focus areas banks have taken up is to support MSMEs (micro, small and medium enterprises) because the sector, creating jobs and giving a boost to the economy, has no access to international finance or the bond market.

Jaitley told the bankers that the government is spending a lot of public money and foreign investment is coming in. “...We need the third engine also to fire and a robust private sector, MSME sector, so that the optimum growth rate, which we have the potential for, can be reached,” he said.

NPAs of PSBs had increased to Rs.7.33-lakh crore as of June 2017 from Rs.2.78-lakh crore in March 2015. In the last three-and-a-half years, the government has pumped in more than Rs.51,000-crore of capital into PSBs.

Source : Thehindubusinessline
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RBI seeks fresh applications for CFO post

The Reserve Bank has sought fresh applications from eligible candidates for the post of Chief Financial Officer (CFO).

This is the second time that the central bank has modified the original appointment notice issued in May this year.

“In view of modifications in eligibility criteria for the above-mentioned post, it has now been decided to accept fresh applications from applicants who had applied earlier in response to our advertisement No 6 & 6A/2016-17 dated May 15, 2017 for the said post (CFO),” according to the latest public notice by the RBI.

Accordingly, it said, the last date of receiving applications for the post of CFO from all eligible candidates will now be November 16, 2017.

The CFO, who will be of the rank of executive director, will be responsible for accurate and timely presentation and reporting of financial information of the central bank, and establish accounting policies and procedures and ensure compliance with regulations.

The CFO will also formulate the accounting policy of the bank, maintain the internal accounts and report financial results, and carry out corporate strategy functions like provident fund policies.

Till now, the central bank did not have a dedicated official handling the finance function, and the tasks were being carried out internally. The appointment is part a major organisational change being carried out by Governor Urjit Patel.

His predecessor Raghuram Rajan had pursued an idea of creating a chief operating officer for the apex bank but the government shot down the proposal as it involved changing the RBI Act. Rajan had also hired a slew of specialists from outside.

Source : Thehindubusinessline
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Not to pursue Islamic banking: RBI

The Reserve Bank of India has decided not to pursue a proposal for introduction of Islamic banking in the country. Replying to an RTI query, the central bank said the decision was taken after considering “the wider and equal opportunities” available to all citizens to access banking and financial services.

Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam. The issue of introduction of Islamic banking in India was examined by the RBI and the government of India, it said.

Source : Thehindubusinessline
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Mumbai to host Asian Bankers Association summit

For the first time, the nation’s financial capital will host the 34th annual conference of the Asian Bankers Association (ABA) this week.

The two-day conference will be held in the megapolis from November 16 and will be hosted by State Bank, with the theme of ‘Asia’s turn to transform’, SBI said.

The event is expected to see the presence of over 160 domestic as well as international bankers and Reserve Bank deputy governor Viral V Acharya will deliver the special opening address on the second day, a SBI spokesperson told PTI.

Founded in 1981, the ABA serves as a forum for advancing the cause of the banking industry and promote regional economic cooperation across the continent.

With around 80 members from 25 countries, the association holds conferences on issues of concern to the banking sector, policy advocacy discussions, and training programmes.

The this year’s summit will discuss the impact of the ongoing global downturn on the outlook of the Asian economies; economic consequences of the Brexit in March 2019 on Asia, the America-first policy of the Trump administration; implications of fintech on banks, among others.

Some of the key foreign speakers at the event include ADB’s Noritaka Akamatsu, Chikahisa Sumi of IMF and Cheng Cheng-Mount of Financial Supervisory Commission of Taiwan.

State Bank chairman Rajnish Kumar and Kotak Bank’s Uday Kotak will also address the meet.

Source : Thehindubusinessline
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