Bank of Baroda (BoB) on Monday (19 October) launched Chillr Mobile app that allows user to instantly transfer money to any contact in their phonebook.Bank of Baroda has partnered with with Chillr, an app launched by MobME, a Kochi-based technology firm.Chillr, a first-of-its kind application, is directly linked to the customer’s bank account and can transfer money to any person in India, once he/she downloads the app and registers.K. Venkateswarlu, General Manager, Digital Banking, Bank of Baroda stated, “The app is presently made available on Android platform and will be made available on IOS and Windows platform shortly. Utility bill & Merchant payments on Chillr app will be enabled for BOB customers soon.The sender selects the recipient from his contact list, enters the amount to be transferred and mPIN, and the receiver instantly gets the money in his bank account. Chillr makes the fund transfer easy and hassle-free.(BW Online Bureau)
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By Arshad Khan The first phase of the fourth edition of Yes Bank Transformation Series witnessed participation from 10,100 teams and 16,000 participants from premier business colleges across the world including Yale University, University of North Carolina, Asian Institute of Management Philippines, IIMs, FMS, XLRI, and S P Jain among others. The transformation series aims to provide the brightest young minds with an "Innovation Lab" for crowd sourcing breakthrough ideas which could transform this fast-evolving and critical sector of the Indian economy. Students participating in the event are given a challenge to analyse the dynamic environment of the financial service industry and chart out a strategic roadmap involving digital innovation in financing and payments for Professional's Bank of India (PBoI). To affirm the position of Transformation Series, an advisory council comprising of eminent personalities from across the world has been convened. The advisory council of Yes Bank Transformation Series comprises of Bibek Debroy — economist, member-NITI AYOG, Arvinder Gujral —director (APAC), Twitter, Sanjay Swamy — managing partner, Prime Venture Partners, Vikas Agnihotri — director, Goggle India, Chaitanya Kamat — CEO, Oracle Financial Services, Vipul Parekh — Founder, Bigasket.com among many. A total of 45 teams will be chosen basis rigorous evaluation for the upcoming campus rounds across India. After multiple rounds, the advisory council and senior Yes Bank executives, will extract the top 10 teams for the jury round. The jury will ponder on the proposed solutions by the teams and decide on the three winning teams. The three winning teams will receive prize worth Rs 5 lakhs and pre placement interview opportunity with Yes Bank.
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The Reserve Bank of India (RBI) is forecast to cut its main lending rate just once more over the next 18 months, despite weak inflation and a slowing economy, according to a Reuters poll. Weakening inflation and concern that a China-led global slowdown was weighing on Asia's third-largest economy pushed India's central bank to cut the repo rate to a 4 1/2-year low of 6.75 per cent last month, taking many by surprise. But the RBI is unlikely to move again any time soon, according to the poll of over 25 economists taken in the past week, and the next cut of 25 basis points won't come until the April-June 2016 quarter. September's cut reflected the RBI's "comfort with the path of inflation in the next 12-15 months, while recognizing the need to support the economy in an increasingly challenging global backdrop," wrote economists at Deutsche Bank. In his statement after the policy meeting, Governor Raghuram Rajan said the Bank chose to front-load policy easing due to widespread concerns about growth worldwide and in India. However, economists predict growth this fiscal year and next will be slower than estimated three months ago, just 7.5 per cent and 7.8 per cent respectively, although faster than China's, where growth will be 6.5 per cent in 2016. A July poll predicted a 7.6 per cent expansion this year and 8.2 per cent next, but those forecasts came before official data showed economic growth slowed to 7 per cent in the quarter ending in June. New Delhi is targeting 8 per cent over the next two years. "For India to meet its true potential, reforms will need to be bolder. Until then, GDP growth is likely to recover more gradually," Pranjul Bhandari, chief India economist at HSBC, wrote in a note. Despite the slowdown, India's economy remains a favourable destination for global investors, although reforms in taxation, land acquisition and labour markets are pending in parliament and political opposition has so far stalled them from coming into force. Oil prices have slumped over 50 per cent since June 2014 and inflation has cooled sharply in India, falling to 4.41 per cent in September from double-digit rates just two years ago. Inflation is likely to accelerate, the poll showed, limiting the RBI's scope to ease policy as aggressively as it did in 2015, when it cut the repo rate four times. Economists expect inflation to average 4.9 per cent to 5.5 per cent in each quarter until the end of next year, much lower than the RBI's January 2016 target of 6 per cent. It is also likely to meet Rajan's 5 per cent by March 2017 goal.(Reuters)
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Rs 1 L: The sum a depositor is legally entitled to if his bank goes bankruptBy Raghu MohanYou may have crores in your bank account, but did you know that as a depositor you are legally entitled to only Rs 1 lakh if your bank goes belly up? The colour of the bank ‘s capital (state-run, foreign, private or urban co-operative bank) is of no consequence. It’s a different matter that the political class may be shielded, and that Mint Road may not let things come to such a pass.For some time now, there has been a clamour that this cover be increased — the last revision was on 1 May 1993 to Rs 1 lakh. And the attendant debate is: should all banks be treated equally? Because all of them don ‘t have the same risk profile — some are good, others bad, and a few, downright poor.Change is under way. A Reserve Bank of India (RBI) committee chaired by Jasbir Singh favours what is known as a “differential premium system” for banks in India. Oh, and by the way, the entity that insures bank deposits is the Deposit Insurance and Credit Guarantee Corporation of India (DICGC), which is an arm of RBI set up in 1962, and Singh was its executive director.What’s the issue here?At its heart is the concept of ‘moral hazard’. Economist Paul Krugman described it as “any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly.” In the context of deposit insurance, you can have a situation wherein insured banks have an incentive to accept more risks, while the depositors loosen their monitoring of risk in the banks they hold the deposits in. And both glibly hold the view that costs emanating from the excess risk will be borne by the insurer or even the exchequer (taxpayer), and that the depository institution will not normally be allowed to fail.The RBI committee, therefore, felt that “a hike in cover without calibrating the premium rates to the risk profile of the insured banks only exacerbates the moral hazard. Recognising this, it has been felt that introduction of RBP (risk-based premium) may be taken up to make ground for considering raising the insurance cover from the present ceiling of Rs 1 lakh.”It’s not an altogether new concept. The Jagdish Capoor Committee on Reforms in Deposit Insurance in India (1999), and the Committee on Credit Risk Model (2006) constituted by DICGC, also recommended introduction of RBP for banks and urban co-operative banks. But it did not see forward movement, as co-operative banks and regional rural banks, which account for over 90 per cent of insured banks to the extent that there are more of these types of deposit-taking entities, were under what many will term “perpetual” restructuring until recently. So too, the absence of a robust supervisory rating for all insured banks, especially co-operative banks.So do you have the right to know the risk profile assigned to the bank where you keep your money? We now step into a delicate area.The Committee says the practice with different deposit insurance agencies is that, at the minimum, a basic rating framework with input variables and their weights is disclosed to the banks at large. “However,” it notes, “a bank’s actual rating is shared with only the bank concerned, the latter being important as a disclosure of rating in public may have negative consequences for a bank such as fears of bank runs if the rating is low on the scale”. It begs the question why do such weak banks even exist.Let’s view the weak-versus-strong-bank argument from the ownership perspective. Are state-run banks to be perceived as relatively less risk-prone? The Committee held that internationally, the preponderant view is that all safety-net tools should apply uniformly across all classes of institutions, and taxpayers’ money should not be used in resolving institutional problems. “In similar vein, implicit guarantees in the form of government ownership should not be given weightage in the risk-profiling of institutions”. The Committee also took note of the fact that, over time, government ownership of state-run banks “may be diluted substantially”. The Committee, therefore, recommended “that in all fairness, the rating system should, as far as possible, be ownership-neutral”.So why should stakeholders, and taxpayers in particular, remain in the dark about the exact risk status of a state-run bank that is weak, when the Committee itself notes that government ownership of these banks “may be diluted substantially”? Isn’t it better to quarantine weaker banks — whatever their hue — through “narrow banking”. Let them raise deposits and invest largely in government securities.(This story was published in BW | Businessworld Issue Dated 02-11-2015)
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As WPI inflation rate edged up to (-)4.54 per cent in September, India Inc lon Wednesday (14 October) said there is scope for banks to slash interest rates further and the green shoots of economic recovery are "visible". Expressing concern on the rise in prices of food articles, industry bodies said the government must take steps to ensure the prices of essential commodities remain in check. "Following the cut in the policy rate by RBI, several banks have revised downwards their base rate. However, there is room for further cuts in the lending rate by banks. "As the gains of a lower interest rate regime get transferred to both consumers and investors, demand would pick up and we hope this brings pricing power back into the hands of producers," Ficci president Jyotsna Suri said. WPI inflation rate rose marginally to (-)4.54 per cent in September, with pulses, vegetables and onion turning costlier, even as the overall deflationary trend persisted for the 11th month in a row. Assocham president Rana Kapoor said WPI inflation and IIP data indicate that "green shoots of economic activity might finally be becoming more visible". Moreover, he said, swift policy action is desired for reviving investments and business confidence. "Continuous negative growth of WPI inflation is facilitating the businesses in terms of increased price cost margins vis- -vis decreased cost of raw materials. Also there are signs of revival in demand scenario," PHD Chamber president Alok B Shriram said. "With inflation remaining on a comfortable trajectory, easy monetary policy stance would expand further in terms of more repo rate cuts as there is a strong need to boost demand in the economy," he added. The wholesale price index-based inflation was (-)4.95 per cent in August. It has been in the negative zone since November. In September last year, inflation was 2.38 per cent. Inflation in food articles inched up to 0.69 per cent in September, from (-)1.13 per cent in August. "The central and state governments need to take proactive steps to contain any further rise in prices of essential commodities like pulses and onions," Kapoor said. Onion and pulses turned dearer, with inflation at 113.70 per cent and 38.56 per cent, respectively, in September, as per official data released today. The rate of price rise in vegetables was at (-)9.45 per cent as against (-)21.21 per cent in August. Besides pulses and onion, the food items which became dearer in September were eggs, meat and fish (2.02 per cent), milk (2.16 per cent) and wheat (3.34 per cent). The Reserve Bank mostly tracks the consumer price index- based inflation for its monetary policy decisions. CPI, or retail inflation, for September rose to 4.41 per cent, from 3.74 per cent in the previous month.(PTI)
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Suchetana RayThe mess is getting bigger for Bank of Baroda with two agencies -- CBI and Enforcement Directorate (ED) -- swooping down on the Bank on Tuesday (13 October): .While ED has arrested 4 people in connection with the illegal remittance of foreign exchange from the Ashok Vihar branch of Bank of Baroda, CBI arrested 2 people. CBI’s probe so far shows that Rs 6,172 crore was laundered to Hong Kong using newly opened 59 current accounts of alleged shell companies masquerading as export-import entities. And based on this investigation, ED today arrested Kamal Kalra, Chandan Bhatia, Gurcharan Singh Dhawan and Sanjay Aggarwal. Top sources in the Directorate allege that Kalra allegedly works for HDFC Bank and all these individuals have been arrested for helping and abetting laundering of money. While CBI today arrested AGM and branch head of BoB in Ashok Vihar, SK Garg and foreign exchange division head, Jainis Dubey. CBI sleuths point out that this small branch in New Delhi has witnessed a surge in forex transactions, which continued for a year. The bank report claimed that forex business increased to Rs 21,528 crore in the 2014-15 fiscal as against Rs 44.98 crore in the year 2013-14. Sources in the investigating agency say that despite the huge increase in foreign exchange being remitted to alleged suppliers based out of Hong Kong, the Bank failed to obtain any report on these foreign suppliers. CBI raided the Ashok Vihar branch of Bank of Baroda in New Delhi last Saturday after the investigating agency decided to launch a probe into certain foreign remittances by the Bank. Sources allege that Rs 6172 crore has been illegally remitted to Hong Kong from Bank of Baroda. “This is a case of black money being siphoned out”, said a source in CBI on conditions of anonymity. Several private companies are also being probed in this connection. The Bank of Baroda stock has been reeling in trade for two consecutive days following these probes by agencies.
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RBI circular on non-promoter directors in `defaulter’ firms to be challenged, writes Raghu MohanExecutive directors (ED), managing directors and chairmen at state-run banks may well find life turning difficult. A raft of enquiries made by the Central Bureau of Investigation (CBI) into dodgy credit decisions at these banks have emboldened unions who are set to move court to bring the top personnel at these banks under “codified service rules". On the anvil is also a legal challenge to Reserve Bank of India (RBI) on its decision to exclude non-promoter directors from the list of wilful defaulters “except in the rarest of the rare” cases. As of now, unlike bank staffers up to the level of chief general managers who come under departmental rules, the top three in a state-run bank face no such scrutiny. It is partially explained by the fact that when someone is posted to the level of ED and above, he or she becomes an employee of the Government of India; until then, you are an employee of the bank you work for. “You may be enquired for acts of omission or commission under the IPC, by the Central Bureau of Investigation (even after retirement), but from within the bank, there are no checks and balances once you are posted as ED or higher”, explains Vishwas Utagi, general secretary-All India Bank Employees Federation (AIBEA). The issue has now come under sharp relief because of the feeling that junior officers at state-run banks are being harassed for acts done by their seniors who may have since moved up to ED and higher positions at other such banks (and who may have since retired). That junior officers (CGMs and below) and the bank are now left holding the can. Do You Believe This?The P J Nayak Report Committee to Review Governance of Boards of Banks in India (13th May 2014) refers to a working paper: `Are the Monitors Over-Monitored? Evidence from Corruption, Vigilance, and Lending in Indian Banks' (A. Banerjee, S. Cole and E. Duflo, per, Harvard Business School; 2007). It argues lending decisions of loan officers of state-run banks are impacted by fear of prosecution for corruption. The analysis is based on a standard event methodology to assess the impact of actions taken by the Central Vigilance Commission (CVC) on lending. It encompasses all commercial banks in India and covers the period between 1981 and 2003. What are the conclusions? Overall lending reduces dramatically in the branches that face CVC action; there is also a contagion effect as lending in branches located in close proximity to the affected branch also goes down; unlike many other transitory 'shocks', the impact of CVC action on lending is persistent; it takes slightly more than two years from the time of CVC action for lending to recover; and the impact of the consequent loan officer conservatism is predominantly felt by small borrowers, who are traditionally considered by banks as opaque and risky.For details click hereWhose Line Is It Anyway? A vast majority of the non-performing assets (NPAs) in the system and those referred to the Corporate Debt Restructuring Cell (CDR) did not become what they became overnight, but have festered around. Take the case of Kingfisher Airlines’ Rs 7,000-crore plus debt (it varies on who you seek out to know the truth!) -- the writing on the wall has been around for four years now, but till date save for United Bank of India (United Bank), not a single bank has moved to nail it as a wilful defaulter. Now it’s a different matter that the Calcutta High Court had observed that United Bank’s empowered committee which decides on who is a “wilful defaulter” had four members instead of three as per RBI norms. But that should not have stopped United Bank (they could have reconstituted the said Committee) or other banks’ (whose Committees were in compliance with Mint Road’s norms) from pressing ahead with their legal options. We now get to the legal challenge from the unions on RBI’s decision to exclude directors from the list of wilful defaulters. The directive (of 1st July 2014 and updated up to 7th January 2015) which came as an amendment to the central bank's master circular on wilful defaulters had said: “In view of the limited role of non-promoter and non-whole time directors (nominee and independent directors) in the management of a company's debt contracts, their names shall now be excluded from the list of wilful defaulters, except in the rarest circumstances which also have been specified in the master circular”. Mint Road had pointed to Section 2(60) of the Companies Act (2013) which defines an officer who is in default to mean only the following categories of directors: · Whole-time director· Where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified;· Every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings and who has not objected to the same, or where such contravention had taken place with his consent or connivance. “Therefore, except in very rare cases, a non-whole time director should not be considered as a wilful defaulter unless it is conclusively established that (i) he was aware of the fact of wilful default by the borrower by virtue of any proceedings recorded in the Minutes of the Board or a Committee of the Board and has not recorded his objection to the same in the Minutes, or (ii) the wilful default had taken place with his consent or connivance”. The unions’ contend that given the state of the dud-loan problem, all concerned on the board must be put under scrutiny, “more so as some wax eloquent on corporate governance”. The quality of deliberations at state-run banks is an eye-opener. The P J Nayak Committee to Review Governance of Boards of Banks in India (13th May 2014) noted a detailed scrutiny of board notes suggests that state-run banks’ boards focus inadequately on discussing long-term strategy. “The focus is more tactical and less strategic, such as the location of branches and ATMs. Moreover, the deliberations are driven from the vantage-point of compliance rather than business economics. There is generally weak evidence of the monitoring of measurable disaggregated business goals in relation to targets” In one bank, the taxi-fare reimbursement policy got the same coverage as its NPA recovery policy! Other non-strategic issues discussed include purchase of office premises at Bhopal and provision of leased residential accommodation to officers in six locations (their inclusion in board deliberation - absent in private sector banks - probably reflecting vigilance enforcement concerns). Other non-strategic issues discussed include the details of a lecture by a bank's boss at a college; and extensive coverage of the Finance Minister's visit to the bank! And given the pile of dud-loans, there should be extensive coverage of the Finance Minister's visit to these banks!!
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Finance Minister Arun Jaitley has made a strong case for raising shareholding of developing nations including India in the World Bank Group to reflect their share in the global economy and demanded a significant hike in the capital to meet growing financing needs. Stating that the demand for development finance continues to be very strong, he quoted a bank's report admitting inability to support elevated levels of lending beyond 2018. IFC - an arm of the World Bank - is already capital constrained. Also, there is the additional challenge of mobilising over USD 100 billion per year for climate finance. Speaking at the Plenary Meeting of the Development Committee here, he emphasised the need for bigger financing and implementation plans by the World Bank Group to achieve the Sustainable Development Goals (SDGs). India, he said, expects a dynamic formula for shareholding of World Bank to be finalised by Annual Meeting 2016. The formula should incorporate "elements which help enhance the voice, role and voting share of the developing countries and reflect their increased share in global GDP and their contribution to building the bank's reserves," he said. Jaitley said as the share of the developing and transitioning countries in the world GDP increases from 39 per cent in 2008-2010 to 49 per cent in 2013-15, "the shareholding realignment should reflect the same and be completed by 2017." Development Committee is the ministerial-level forum of the World Bank Group and the IMF for intergovernmental consensus-building on development issues. Jaitley represented the constituency consisting of the countries -- Sri Lanka, Bangladesh, Bhutan and India. India, Bangladesh and Bhutan are early dividend countries and are taking steps to leverage their demographic transition to achieve SDGs, he said. "The Executive Directors and the Bank should make an objective assessment of the financing needs of the SDGs. I am sure such assessment would call for a significant increase in the capital of the World Bank Group to meet the developmental objectives," he said. "I would like these resources to be mobilised from new and additional sources and not at the cost of ODA for poverty and shared prosperity goals. The IBRD financing which is non-concessional and does not flow from the donor resources should not get accounted for in 100 billion flow," he said. Economic Affairs Secretary Shaktikanta Das, who also attended the IMF-World Bank annual meeting here tweeted, "India called for governance reforms in both institutions to reflect growing share of developing countries in global GDP." Jaitley said that the country is firmly on the path of fiscal discipline and has contained the fiscal deficit at 4 per cent (lower than targeted) last year. Jaitley said that the FDI flows into the country have been robust. He cited reports in foreign media that during the last six months, India was the leading destination for investments in greenfield projects, demonstrating the high degree of confidence of the global investors. The financial and forex markets in the country are also stable, notwithstanding recent global volatility, the minister added. Other panelists included Joaquim Levy, Brazilian Finance Minister, and Martin Wolfe, a noted economic commentator. Wolfe complimented India on the management of public finances and the ability to continue with structural reforms, the statement said. The finance minister elaborated that the environment for reforms in the country is positive. He said that from cooperative federalism, the country is now moving towards competitive federalism, with various States undertaking key reforms to improve business climate, expedite clearances and promote investments. Jaitley explained that a few of the key reforms such as Goods and Services Tax and Bankruptcy law are high on the government's agenda. (PTI)
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By Suchetana Ray Top sources in CBI say that they are conducting searches in a branch of Bank of Baroda in New Delhi. This raid comes after the investigating agency decided to launch a probe into certain foreign remittances by the Bank. Sources allege that Rs 6,000 crore has been illegally remitted to Hong Kong from Bank of Baroda. “This is a case of black money being siphoned out”, said a source in CBI on conditions of anonymity. A private company is also being probed and raided in this connection. But CBI refuses to divulge more details at this point since the searches at various premises are still continuing. This is a case of yet another Public Sector Bank coming under CBI surveillance for illegal financial transactions. Last year in August CBI had registered a case against Syndicate Bank for taking bribe in return for loans. PTI added that accounts of about 60 companies opened at the Ashok Vihar branch of the bank are under scanner. The Enforcement Directorate has also registered a case and carried out searches in this connection.
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Standard Chartered's new Chief Executive Bill Winters plans to cut about 1,000 of the bank's most senior staff to reduce costs, according to a memo sent to staff, as he battles to revive the bank following a sharp drop in profits. The cull shows the scale of the overhaul Winters is planning at the Asia-focused bank, which he has said needs to speed up decision-making on costs, people and strategy, and improve its risk management and profitability. Winters said he planned to reduce by a quarter the number of staff graded in bands 1 to 4, the memo seen by Reuters said. Those bands cover bankers at director level and higher and include about 4,000 staff. "Our situation requires decisive and immediate action," Winters told staff. "Each member of the management team has a mission to drive through improvements in our returns and part of this will be further streamlining of our organisation." Winters, a former JP Morgan investment bank boss who took over in June after the ousting of predecessor Peter Sands, said the bank would also make disposals and cut clients. Disposals would be in areas where the bank was "not differentiated", or an activity or location "was not critical to a core strength." Standard Chartered shares were up 5.3 percent at 788.4 pence by 1310 GMT. The shares have rallied 26 percent in the last eight trading days amid optimism Winters can get on top of its problems, but are still down 42 percent since the start of 2014. Standard Chartered has had a troubled three years due to weakness in many of its key emerging markets, rising losses from bad loans in India, China and on commodities, as well as fines from U.S. regulators and strained relations with shareholders. "We lost some discipline during that time, leading to our recent problems with loan impairments and relatively high expenses," Winters said in the memo. He is expected to outline his plans to investors and staff in November or December. Sress TestMeantime there are concerns a test of its loan book against a theoretical Asian recession, being carried out by the Bank of England, could show it is short of capital. The results are due out on Dec. 1. Standard Chartered could have a $4 billion capital shortfall under the "stress test", analysts at Goldman Sachs said this week. But they said there was scope for the bank to restructure and release up to $6 billion of capital. Winters halved Standard Chartered's dividend in August and said the bank would raise capital from investors if needed. It said at that time it had cut 4,000 staff since the start of the year, reducing the total to about 88,000. Winters also said in the memo his plans were not all about cuts, and he had identified areas for investment, to make room for which the bank would cut the number of its clients. "We will focus on those clients who value our capabilities and compensate us accordingly. For others, we will be there when they need us but will withdraw resources in the meantime." Standard Chartered has also been fined more than $1 billion for breaching U.S. sanctions, including with Iran, and authorities there are still investigating some issues. Winters said the bank was making progress in improving its processes and systems, its behaviours and remediating past issues, and told staff any violations would not be tolerated. A spokesman said a note sent to staff by Winters this week said kick-starting performance was a priority. It said the bank had indicated in July there could be personnel changes to come. (Reuters)
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