RBI yet to hear from EC on new bank licences: K C Chakrabarty
21 March 2014 12:32 AM GMT
‘I only know that the RBI has written to the EC seeking their views on this (issuing new bank licences). Whether they have replied or not I have no idea. Uptill yesterday, I had no information on that,’ Chakrabarty told reporters on the sidelines a function here.
A section of the media today reported, quoting an unnamed EC official, that it may not allow RBI to go ahead with the plan before the polls and that they need more clarity from the Mint Road on certain aspects. This is despite both Finance Minister P Chidambaram and Governor Raghuram Rajan expressing confidence that the EC would not have any issue on the topic as the bank licence was a process that started much before the poll season.
The process, in fact, began with the FY11 budget and was speeded up last July when 26 companies applied for entering the banking fray. Since then the Tatas and the Mahindras withdrew from their applications saying given the stringent criteria it would be better for them to continue with their NBFC services.
As many as 24 public and private sector applicants, including India Post, IFCI and large business houses such as the Anil Ambani group and the Aditya Birla group, have applied for bank licences. The RBI has reportedly written to the EC in the first week of March seeking its approval for its plan.
After the last RBI board meeting on March 7, Rajan had said that new bank licences would be issued in a few weeks after taking the EC on board. ‘My sense is, if all goes well, we should be able to do it in a few weeks,’ Rajan had told reporters. Rajan, however, added that the RBI would seek formal approval from the EC before issuing the licences as the model code of conduct is in force.
‘Look, we have to (seek) the formal approval from the EC that announcing the bank licences will be okay. A number of people have said it will, but it would be best that the process is formally approved by the EC,’ he had said, adding the process was started last year and was not a new proposal.
‘More banks importing gold can lower prices’
Mumbai: RBI Deputy Governor K C Chakrabarty has defended the decision to allow more banks to import gold, saying more players will lead to lower cost and help external balances. ‘If there is competition, gold will be imported at a lower cost. Whatever gold will be imported that will be cheaper, to that extent CAD will improve,’ he told reporters.
RBI has allowed more banks, including Axis Bank, Kotak Mahindra, and IndusInd Bank among others from the private sector space, to import gold. The government and the RBI had imposed tough measures to control gold imports, one of the primary causes of the current account deficit swelling to a record high USD 88.2 billion in 2012-13.
The government also increased customs duty on gold to 10 per cent from 4 per cent to discourage imports. According to sources, RBI has permitted Axis Bank, Kotak Mahindra Bank, IndusInd Bank and Yes Bank to import gold. These banks received permission to import gold under the 80:20 scheme from the RBI some time ago.
Under the 80:20 scheme introduced on August 14, nominated agencies could import gold on condition that 20 per cent of the shipment would be exported and the remainder kept for domestic use. Permission for subsequent imports would be given on fulfilment of the export obligation. Only six banks and three financial institutions were allowed to import gold under the 80:20 scheme.
No magic wand to bring UBI back on track: RBI
Mumbai: RBI Deputy Governor KC Chakrabarty on Thursday said that the Reserve Bank does not have any ‘magic wand’ to bring back United Bank of India on track and the troubled lender’s employees have to work hard to tide over the ongoing crisis.
‘We have no magic wand to bring the bank back on track. The bank people have to work hard,’ he told reporters here. Chakrabarty further said the staff of the Kolkata-based lender, which has been facing a slew of problems after its gross NPAs crossed 11 per cent in the December quarter, have to focus on improving asset quality, reduce operating expenses and mobilise more business. ‘We are only asking them to do good business,’ Chakrabarty said. The RBI had on Tuesday appointed its chief general manager Parvathy V Sundaram, who is reportedly an expert on detecting frauds, on the UBI board. In the past, it also ordered special audits at the state-run bank.
UBI posted a net loss of Rs 1,238 crore in the three months to December, during which its gross non-performing assets surged to Rs 8,546 crore from Rs 2,964 crore at the end of March last year. The bank has recovered Rs 400 crore in cash and has upgraded Rs 800 crore worth of accounts since then.
Archana Bhargava quit as UBI Chairperson & MD in February, opting for voluntary retirement. Bhargava took charge as CMD in April 2013 and her term was to have ended in February 2015. Finance Minister P Chidambaram had earlier this month said the government was committed to deal with UBI's case.
A section of the media today reported, quoting an unnamed EC official, that it may not allow RBI to go ahead with the plan before the polls and that they need more clarity from the Mint Road on certain aspects. This is despite both Finance Minister P Chidambaram and Governor Raghuram Rajan expressing confidence that the EC would not have any issue on the topic as the bank licence was a process that started much before the poll season.
The process, in fact, began with the FY11 budget and was speeded up last July when 26 companies applied for entering the banking fray. Since then the Tatas and the Mahindras withdrew from their applications saying given the stringent criteria it would be better for them to continue with their NBFC services.
As many as 24 public and private sector applicants, including India Post, IFCI and large business houses such as the Anil Ambani group and the Aditya Birla group, have applied for bank licences. The RBI has reportedly written to the EC in the first week of March seeking its approval for its plan.
After the last RBI board meeting on March 7, Rajan had said that new bank licences would be issued in a few weeks after taking the EC on board. ‘My sense is, if all goes well, we should be able to do it in a few weeks,’ Rajan had told reporters. Rajan, however, added that the RBI would seek formal approval from the EC before issuing the licences as the model code of conduct is in force.
‘Look, we have to (seek) the formal approval from the EC that announcing the bank licences will be okay. A number of people have said it will, but it would be best that the process is formally approved by the EC,’ he had said, adding the process was started last year and was not a new proposal.
‘More banks importing gold can lower prices’
Mumbai: RBI Deputy Governor K C Chakrabarty has defended the decision to allow more banks to import gold, saying more players will lead to lower cost and help external balances. ‘If there is competition, gold will be imported at a lower cost. Whatever gold will be imported that will be cheaper, to that extent CAD will improve,’ he told reporters.
RBI has allowed more banks, including Axis Bank, Kotak Mahindra, and IndusInd Bank among others from the private sector space, to import gold. The government and the RBI had imposed tough measures to control gold imports, one of the primary causes of the current account deficit swelling to a record high USD 88.2 billion in 2012-13.
The government also increased customs duty on gold to 10 per cent from 4 per cent to discourage imports. According to sources, RBI has permitted Axis Bank, Kotak Mahindra Bank, IndusInd Bank and Yes Bank to import gold. These banks received permission to import gold under the 80:20 scheme from the RBI some time ago.
Under the 80:20 scheme introduced on August 14, nominated agencies could import gold on condition that 20 per cent of the shipment would be exported and the remainder kept for domestic use. Permission for subsequent imports would be given on fulfilment of the export obligation. Only six banks and three financial institutions were allowed to import gold under the 80:20 scheme.
No magic wand to bring UBI back on track: RBI
Mumbai: RBI Deputy Governor KC Chakrabarty on Thursday said that the Reserve Bank does not have any ‘magic wand’ to bring back United Bank of India on track and the troubled lender’s employees have to work hard to tide over the ongoing crisis.
‘We have no magic wand to bring the bank back on track. The bank people have to work hard,’ he told reporters here. Chakrabarty further said the staff of the Kolkata-based lender, which has been facing a slew of problems after its gross NPAs crossed 11 per cent in the December quarter, have to focus on improving asset quality, reduce operating expenses and mobilise more business. ‘We are only asking them to do good business,’ Chakrabarty said. The RBI had on Tuesday appointed its chief general manager Parvathy V Sundaram, who is reportedly an expert on detecting frauds, on the UBI board. In the past, it also ordered special audits at the state-run bank.
UBI posted a net loss of Rs 1,238 crore in the three months to December, during which its gross non-performing assets surged to Rs 8,546 crore from Rs 2,964 crore at the end of March last year. The bank has recovered Rs 400 crore in cash and has upgraded Rs 800 crore worth of accounts since then.
Archana Bhargava quit as UBI Chairperson & MD in February, opting for voluntary retirement. Bhargava took charge as CMD in April 2013 and her term was to have ended in February 2015. Finance Minister P Chidambaram had earlier this month said the government was committed to deal with UBI's case.
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