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Banking News 27.01.2017

President Pranab Mukherjee's Speech

on the Eve of Republic Day: Full Text


The Press Trust of India

Published on January 25, 2017



New Delhi, January 25: On the eve of the 68th Republic Day of the nation, President Pranab Mukherjee addressed the nation today. In his speech, the President said our pluralism and social, cultural, linguistic and religious diversity are India's greatest strengths.


"Our tradition has always celebrated the 'argumentative' Indian; not the 'intolerant' Indian," President Pranab Mukherjee added.


He said that the government's demonetisation move, while immobilizing black money, may have led to temporary slowdown of economic activity. He added that "as more and more transactions become cashless, it will improve transparency of the economy."


Following is the full text of President Pranab Mukherjee's speech:


Fellow citizens:


1. On the eve of the sixty-eighth Republic Day of our nation, I extend warm greetings to all of you in India and abroad. I convey my special greetings to members of our Armed Forces, Para-military Forces and Internal Security Forces. I pay my tribute to the brave soldiers and security personnel who made the supreme sacrifice of their lives in defending India's territorial integrity and maintaining law and order.


Brothers and sisters:


2. When India attained freedom on 15th August 1947, we did not have an instrument of governance of our own. We waited till 26th January, 1950 when the Indian people gave to themselves a Constitution to secure for all its citizens, justice, liberty, equality, and gender and economic equity. We promised to promote fraternity, dignity of the individual, and unity and integrity of the nation.


On that day, we became the largest democracy of the world.


3. The faith and commitment of people gave life to our Constitution and our founding fathers, wisely and carefully, steered the new nation past its troubles of being a poor economy with huge regional imbalances and a vast citizenry deprived of even basic necessities.


4. It goes to the credit of the strong institutions of democracy built by our founders that for the last six and a half decades, Indian democracy has been an oasis of stability in the region troubled by unrest. From a population of 360 million in 1951, we are now a 1.3 billion strong nation. Even then, our per capita income has shown a ten-fold increase, poverty ratio has declined by two-thirds, average life expectancy has more than doubled, and literacy rate has shown a four-fold increase. We are today the fastest growing amongst the major economies of the world. We are the second largest reservoir of scientific and technical manpower, the third largest army, the sixth member of the nuclear club, the sixth member in the race for space, and the tenth largest industrial power. From a net food grains importing country, India is now a leading exporter of food commodities. The journey so far has been eventful, sometimes painful, but most of the times, exhilarating.


5. What has brought us thus far will take us further ahead. But we will have to learn to adjust our sails, quickly and deftly, to the winds of change. Evolutionary and incremental growth will have to accommodate rapid disruptions brought in by advances of science and technology. Innovation, more so inclusive innovation, will have to become a way of life. Education will have to keep pace with technology. In the race between man and machine, the winner will have to be job generation. The velocity of technology adoption will call for a workforce that is willing to learn and adapt. Our education system will have to join hands with innovation to prepare our youth for life-long learning.


Fellow citizens:


6. Our economy has been performing well despite the challenging global economic conditions. In the first half of 2016-17, it grew at a rate of 7.2 percent - same as that last year - showing sustained recovery. We are firmly on the path of fiscal consolidation and our inflation level is within comfort zone. Though our exports are yet to pick up, we have managed a stable external sector with sizeable foreign exchange reserves.


7. Demonetization, while immobilizing black money and fighting corruption, may have led to temporary slowdown of economic activity. As more and more transactions become cashless, it will improve the transparency of the economy.


Brothers and sisters:


8. Born in independent India, three generations of citizens do not carry the baggage of colonial past. These generations have had the privilege of acquiring education, pursuing opportunities and chasing dreams in a free nation. This sometimes makes it easy for them to take freedom for granted; to forget the price that extraordinary men and women paid to win this freedom; to forget that the tree of freedom needs constant care and nourishment. Democracy has conferred rights on each one of us. But along with these rights, come responsibilities which have to be discharged. Gandhiji said and I quote: "The highest form of freedom carries with it the greatest measure of discipline and humility. Freedom that comes from discipline and humility cannot be denied; unbridled license is a sign of vulgarity injurious alike to self and others" (unquote).


Fellow citizens:


9. Youth today are brimming with hope and aspirations. They pursue their life goals, which they perceive will bring them fame, success and happiness, with single-minded devotion. They consider happiness as their existential objective, which of course is understandable. They search for happiness in the highs and lows of day-to-day emotions, and in the fulfilment of the objectives they have set for themselves. They look for a job as well as a purpose in life. Lack of opportunities leads to frustration and unhappiness which manifests itself in anger, anxiety, stress and aberrations in behaviour. This has to be dealt with by inculcating pro-social behaviour through gainful employment, active engagement with community, parental guidance, and empathetic response from a caring society.


Brothers and sisters:


10. One of my predecessors left on my table a framed quotation which reads (and I quote): "The object of government in peace and in war is not the glory of rulers or races but the happiness of the common man" (unquote). Happiness is fundamental to the human experience of life. Happiness is equally the outcome of economic and non-economic parameters. The quest for happiness is closely tied to sustainable development, which combines human well-being, social inclusion and environmental sustainability. We must make happiness and well-being of our people as the touchstones of public policy.


11. Many of the flagship initiatives of the government have been designed to promote the well-being of the society. The Swachh Bharat Mission aims at a Clean India by 2nd October, 2019 to coincide with the 150th Birth Anniversary of Gandhiji. Increased spending on programmes like MGNREGA is enhancing employment generation to rejuvenate the rural economy. Aadhaar, with its present reach of over 110 crore people, is helping in direct transfer of benefits, plugging leakages and improving transparency. The Digital India programme is creating a knowledge economy through universal provision of digital infrastructure and platforms for cashless economic transactions. Initiatives like Start-up India and Atal Innovation Mission are fostering innovation and new-age entrepreneurship. Under the Skill India initiative, the National Skill Development Mission is working on skilling 300 million youth by 2022.


Brothers and sisters:


12. It is my firm conviction that India's pluralism and her social, cultural, linguistic and religious diversity are our greatest strength. Our tradition has always celebrated the 'argumentative' Indian; not the 'intolerant' Indian. Multiple views, thoughts and philosophies have competed with each other peacefully for centuries in our country. A wise and discerning mind is necessary for democracy to flourish. More than the unison of ideas, a healthy democracy calls for conformity to the values of tolerance, patience and respect for others. These values must reside in the hearts and minds of every Indian; inculcating in them a temperament of understanding and responsibility.


Fellow citizens:


13. We have a noisy democracy. Yet, we need more and not less of democracy. The strength of our democracy is evidenced by the fact that over 66 percent of the total electorate of 834 million voted in the 2014 General Elections. The depth and breadth of our democracy sparkles in the regular elections being held in our panchayati raj institutions. And yet, our legislatures lose sessions to disruptions when they should be debating and legislating on issues of importance. Collective efforts must be made to bring the focus back to debate, discussion and decision-making.


14. As our Republic enters her sixty-eighth year, we must acknowledge that our systems are not perfect. The imperfections have to be recognized and rectified. The settled complacencies have to be questioned. The edifice of trust has to be strengthened. The time is also ripe for a constructive debate on electoral reforms and a return to the practice of the early decades after independence when elections to Lok Sabha and state assemblies were held simultaneously. It is for the Election Commission to take this exercise forward in consultation with political parties.


Fellow citizens:


15. In a fiercely competitive world, we have to work harder than ever to redeem the promises that we make to our people.


We have to work harder because our war on poverty is not yet over. Our economy is yet to grow at over 10 percent for an extended period of time to make a significant dent on poverty. One-fifth of our countrymen still remain below poverty line. Gandhiji's mission to wipe every tear from every eye still remains unfulfilled.


We have to work harder to provide food security to our people and to make the agriculture sector resilient to the vagaries of nature. We have to provide better amenities and opportunities to our people in villages to ensure a decent quality of life.


We have to work harder to provide enhanced employment opportunities to our youth through the creation of world-class manufacturing and services sectors. The competitiveness of the domestic industry has to be improved by focusing on quality, productivity and efficiency.


We have to work harder to provide safety and security to our women and children. Women must be able to lead their lives with honour and dignity. Children must be able to enjoy their childhood to the fullest.


We have to work harder to change our consumption pattern which has resulted in environmental and ecological de-gradation. We have to appease nature to prevent it from unleashing its fury in the form of floods, landslides and droughts.


We have to work harder because our pluralistic culture and tolerance are still being put to test by vested interests. Reason and moderation should be our guide in dealing with such situations.


We have to work harder to keep at bay the dark forces of terrorism. These forces have to be dealt with firmly and decisively. The forces inimical to our interests cannot be allowed to grow.


We have to work harder to ensure the well-being of our soldiers and security personnel who protect us from internal and external threats.




We have to work harder because;

We are all equal children before our mother;

And our motherland asks each of us in whatever role we play;

To do our duty;

With integrity, commitment and unflinching loyalty;

To the values enshrined in our Constitution.


Jai Hind!



From E-Group, Banking-News



Demonetisation: People may get another

chance to deposit Rs 500, Rs 1000 notes


Mahua Venkatesh

The Hindustan Times

Published on January 27, 2017



New Delhi, January 26: The Reserve Bank of India may allow citizens another chance to deposit the scrapped Rs 500 and Rs 1,000 banknotes but the exchange would be for a limited sum, sources in the government and banking sector said on Wednesday.


The central bank has been flooded with queries and requests from people who failed to deposit all their money by the December 30 deadline, seeking relief, sources said. “The amounts are as small as Rs 2,000… the issue is being looked into and the advice would be to hold on to those notes as we are examining (opening) another window for these genuine people,” the source said.


Many people were discovering old currency notes tucked away somewhere. Interestingly, one of the queries was from a person who found a Rs 1,000 bill in a book. If allowed, deposits would only be for smaller sums to ensure that the window, which will be for a limited period, was not misused, sources said.


A government official said the amount expected from this window was minuscule. The government had set December 30 deadline for depositing junked bills in banks when Prime Minister Narendra Modi on November 8 announced the recall of the two high-value notes that accounted for 86% of the cash in circulation.


People can deposit old notes but only at RBI offices. They have to give a valid reason for missing the December 30 deadline. The RBI deadline ends March 31.


The demonetisation decision, aimed at fighting black money and fake currency, sucked Rs 15.4 lakh crore out of the system. The entire amount has come back into the banking system though the expectation was around Rs 2.5 lakh crore would not come back. It would have reduced the central bank’s liability, leading to a higher surplus for the exchequer. It would have also given the government headroom to spend on welfare schemes to ease the cash pain brought by demonetisation.



From E-Group, Banking-News



RBI survey sees decline in

overall business sentiment


The Business Line

Published on January 27, 2017



Demand outlook deteriorates, profit margin

expected to dip due to rise in raw material costs


Mumbai, January 26:  The Reserve Bank of India’s 76th round of Industrial Outlook Survey (IOS) indicated a decline in overall business sentiments in the January-March quarter of this fiscal (2016-17).  This round of the survey was conducted during October-December 2016. The survey elicited response from 1,221 manufacturing companies.


In respect of demand condition (order books and production), the outlook deteriorated, the survey said. Pressure from rise in cost of raw material was expected to bring down profit margin. Improved sentiments were expressed in pending orders, exports, and cost of finance.


Q3 assessment


As regards assessment of the October-December (Q3) quarter of this fiscal, the survey indicated slight moderation in sentiments with regard to demand. In respect of parameters such as order book, capacity utilisation and imports, the level of optimism was lower in Q3 than in July-September (Q2).


However, the respondents were somewhat more optimistic about export performance than in Q2 FY17, while the optimism on production remained unchanged.  Availability of finance from banks and other sources were perceived to have worsened in Q3. However, due to reduced pessimism about the cost of finance and raw materials, the sentiment on profit margin remained largely unchanged.


Overall, business sentiment of the Indian manufacturing sector, as inferred from the Business Expectation Index, deteriorated for the second successive quarter.



From E-Group, Banking-News



Taxing cash: CMs' panel suggestions

on digital economy are misguided


Editorial: The Business Standard

Published on January 27, 2017



Shortly before the Union Budget is to be presented, a panel of chief ministers, led by Andhra Pradesh Chief Minister N Chandrababu Naidu, has presented an interim report to the Centre suggesting various measures relating to the use of cash in India. The panel was constituted by Prime Minister Narendra Modi shortly after demonetisation was introduced last year, and also included the chief ministers of Odisha, Madhya Pradesh and Maharashtra.


Among its recommendations is that the Union Budget should include a banking cash transaction tax, or BCTT, on large transactions — of Rs 50,000 or above. Other recommendations from the panel included a subsidy to small merchants or non-income taxpayers to help them buy smartphones and that there be a cap on cash transactions in general, and that merchant discount rates or MDRs charged on digital payments be decreased. Several recommendations for the further use of Aadhaar were also included.


The Centre should be congratulated for seeking broad-based inputs on how to take the push towards a less-cash economy forward. However, it seems the recommendations from this panel suffer, in part, from the very problems associated with demonetisation: A lack of clarity about objectives and a dismissal of possible collateral damage. The BCTT, for example, might severely inhibit economic activity. It has, after all, been tried before in the 2005-09 period. The then finance minister, P Chidambaram, had introduced this tax precisely to curb black money— but it did not prove particularly effective in that effort. That experience should have been learned from. However, other recommendations by the panel might be worthy of consideration. For example, the minimisation of cash transactions above a certain level. The suggested level of Rs.50,000 is debatable, however— the special investigation team on black money had suggested that limit be Rs.3 lakh. And an outright ban could be widely evaded where a marginal tax might not be.


The thinking behind many of these recommendations is generally problematic. A push to wards a less-cash, more digitised economy is welcome. However, this should not come at the cost of taxing those who are on the wrong side of the digital divide for any reason. If an efficient digital economy is to be built, then it will have to be done by making digital payments more convenient and attractive, not by using state power to prohibit or tax. Cash is not inherently evil, and policy should not treat it like it is. The government is right to incentivise digital payments and to remove stumbling blocks in the way of their adoption— for example, better regulation and a more market-friendly approach to MDRs is necessary so that digital payments are not as costly as they are currently. But, penalising those who may have no access to or understanding of digital transactions —and thus prefer to transact in cash—is not the answer. Thus, making digital payments mandatory for government-related transactions, for example, would be misguided. As would be using the current climate to make Aadhaar compulsory through the back door in a manner that would be in violation of Supreme Court rulings on the subject. Instead, the government must work to make digital payments more viable and attractive.



From E-Group, Banking-News



SBI General Insurance launches

long term 2-wheeler insurance


The Press Trust of India

Published on January 25, 2017



Mumbai, January 25 (PTI):  SBI General Insurance Company today said it has launched its Long Term Two Wheeler Insurance Policy-package providing cover for up to three consecutive years. The policy, which will be sold across State Bank of India group branches, offers comprehensive coverage for two- wheelers including damage to vehicle and third party property damage or bodily injury, a company statement said.


Since premium is paid upfront for three years, policy holders are protected from increase of third party premium or in any other taxes, it said. Other features of the policy include coverage for any third party permanent injury/death caused by the insured vehicle and personal accident cover for the owner/driver of the vehicle. Additionally, in case of third party liability any damage caused to the property (excluding vehicle) of some other individual by the insured vehicles covered up to Rs 1 lakh in case of two-wheeler.


"We are confident that our 'Long Term Two-Wheeler Insurance' policy will cater to all the needs of a rider, thus, creating a secure position for us within the two-wheeler insurance category," SBI General Insurance Head-Product Development, Puneet Sahni said. "The increased number of uninsured vehicles has become a serious concern for the industry. People usually find the process of renewal cumbersome or at times forget to renew their policies and it remains uncovered for third party risk as well," he added.


Some of the key features of the policy include long term policy for 2 or 3 years with discounted premium, zero impact of change in Third Party Liability Premium during the policy period and zero impact of change in Service Tax during the policy period, the statement said. Now, with SBI General Long Term Two-Wheeler insurance, individuals do not have to renew policy every year. This also offers the benefit of stability of Third Party Rates every year, resulting in significant savings, it added.



From E-Group, Banking-News



NRIs can exchange old notes till June 30:

A step by step guide


Adhil Shetty

The Money Control Online

Published on January 25, 2017



Mumbai, January 25: The demonetisation announcement on November 8 banning high denomination currency notes brought with it shock and surprise. Panic-stricken people thronged the banks to convert the defunct currency notes with new ones, demonstrating great urgency. Through the course of the 50 days, economics took the backseat while politics hogged the limelight, to the dismay of many.


While most Indians would have had the opportunity to exchange old notes through the banks, post offices and the RBI till December 30, it was indeed a good New Year gift for the NRIs as the RBI announced that they can handover the old notes for new ones at the central bank offices any time before June 30, 2017. This arrived as a blessing for NRIs who were out of the country during the exchange period from November 9 to December 30.


Let us see how the exchange exercise could be carried out by NRIs who still possess the banned currency notes.


Where to exchange


As per the notification issued by the RBI on December 31, the old currency notes could be deposited at the central bank’s offices at Mumbai, Delhi, Kolkata, Chennai, and Nagpur. The facility will be available on all bank working days. The cap for NRIs will be as prescribed in the Foreign Exchange Management Act regulations, that is, Rs 25,000.


Requisite documents needed


If you are travelling to India during the period ending June 30, carry the demonetised currency notes with you as there is no other option. You are not allowed to nominate anyone else to carry for you, as third party tender is not allowed. Also, you cannot courier the cash, nor can you send the notes through the money exchange facility or use your bank to transfer money.


The most important documentation that you need is the customs declaration form. This document vouches for the Special Bank Notes (SBNs) you possess. This is a one-page declaration issued by the customs department at the airport stating the import of SBNs, their value, and count. The form will have the official stamp of the customs department. This declaration of the customs department is mandatory while depositing the notes at the designated offices of the RBI.


A false declaration can invite trouble. It can attract a fine of Rs 50,000 or five times the amount imported, whichever is higher. Apart from the customs declaration, NRIs possessing the banned currencies should also submit other documents to deposit the currency notes:


·         Original passport: The RBI will verify the passport to find out whether the person falls under the definition of NRI.


·         Immigration stamp in the passport: This is to vouch for the fact that the person concerned was abroad during the period between November 9 and December 30, 2016.


·         Alternative ID: Apart from the passport, another ID such as Aadhaar or PAN card should be also be produced before the RBI authorities.


·         Declaration: A declaration should also be submitted that the exchange facility was not availed earlier by the person concerned.


·         Statement by bank: A statement from the banks, wherever the NRI is an account holder, should be given stating that SBNs were not deposited in any of the banks between November 9 and December 30, 2016.


The amount permissible will be credited to the KYC compliant bank account of the NRI after due verification of the relevant documents.


The RBI decision to extend the exchange period for NRIs till June 30 is good news for those possessing the banned currencies. They should utilize the RBI window and deposit the defunct notes with relevant supporting documents at the earliest. There is nothing to panic about as long as the money being so deposited is clean money and all documentation is in place.



From E-Group, Banking-News



In Its Third Month, India’s

Cash Shortage Begins to Bite


Geeta Anand and Hari Kumar

The New York Times

Published on January 24, 2017



India’s cash shortage hits the poor and the economy


New Delhi, January 24: First, Mr Yashpal Singh Rathore’s marriage was delayed by his future in-laws, who, like most Indians, ran short of cash after Prime Minister Narendra Modi banned the country’s highest currency notes in November. Then the 29-year-old lost his job when the ensuing cash crunch hit demand for motorcycles and scooters sold by the company where he worked, Hero MotoCorp Ltd.


After that, the prospective in-laws refused to let the wedding go forward until he found another job.  “So I lost my job and I lost my marriage,” he said in an interview at a protest, where he shouted slogans with more than 100 red-flag-waving workers let go by Hero.


Mr Rathore is one among a large number of Indians — the precise number is not known — who have lost their jobs since Nov 8, when Mr Modi abruptly banned 86 per cent of the country’s currency in a bid to eliminate “black money”, money on which taxes have not been paid.


For the sake of secrecy, the government largely avoided printing replacement notes in advance. So, there has been an acute and protracted shortage of cash as the government struggles to catch up.


That, in turn, has proved economically damaging.


Exactly how harmful remains hard to determine, but the available data is not reassuring.


Demand for vegetables is declining because people do not have the money to pay for them, for example, and some service industries are reporting steep job losses.


The International Monetary Fund this month cut its projected growth rate for India by 1 percentage point for the current fiscal year, to 6.6 per cent. While the full impact is still difficult to discern, there is little doubt who is suffering the most. “This has actually hurt the poor enormously,” said Mr Nasser Munjee, chairman of DCB Bank and company director at HDFC Bank and Tata Motors.


The pain is hidden, for the most part. Accustomed to hardship, many who lost employment were at first convinced by Mr Modi’s speeches that their setbacks were transitory and, in the long run, would be worth the suffering.


But as the crisis drags on, with no end in sight, some are growing frustrated, they said during a series of interviews at protests and at daily labour gathering points.


Many of them, even children, are forced to go without fruit, vegetables and milk — now unaffordable luxuries. Most had not paid apartment rents and their children’s school fees in the months since the cash ban.


Many had sent their families back to their villages, and were ready to give up and follow if things did not turn around soon.

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