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Banking News 10.03.2017

Banks can accept coloured notes,

but avoid dirtying them: RBI

 

Beena Parmar

The Moneycontrol News

Published on March 10, 2017

 

 

Mumbai, March 10:  The Reserve Bank of India on Thursday clarified that banks can accept colour-stained notes amid messages circulating on WhatsApp that public sector banks have been asked not to accept coloured Rs 2,000 and Rs 500 notes.

 

In a statement, the central bank, however, has dissuaded citizens from colouring or dirtying currency notes.

 

“It is true that we follow clean note policy and discourage people from abusing currency notes. But there is no instruction issued to banks saying they should not accept dirty notes,” the RBI said.

 

The directive assumes significance with Holi — the festival of colours — just around the corner. Every year, Holi celebrations — water balloons, jet sprays, etc — lead to soiling of the notes.

 

 

From E-Group, Banking-News

 

 

SBI Board Meeting to be held on

March 15, to consider fund raising

 

The Equity Bulls Online

Published on March 9, 2017

 

 

Mumbai, March 9:  A meeting of the central board of State Bank of India (SBI) is scheduled to be held on Wednesday, March 15, 2017 to consider and decide raising of funds through equity capital by way of FPO; Rights Issue; ESPS; ESOS; QIP; ADR; GDR and any other mode or a combination of these at the appropriate time.

 

Shares of State Bank of India was last trading in BSE at Rs.273.2 as compared to the previous close of Rs. 269.7. The total number of shares traded during the day was 22,53,195 in over 12,025 trades. The stock hit an intraday high of Rs. 273.8 and intraday low of 268.5. The net turnover during the day was Rs. 61,22,55,733.

 

 

From E-Group, Banking-News

 

 

‘Pellet guns’, used against Kashmir’s

stone-pelters, to guard SBI offices

 

Tanmay Chatterjee

The Hindustan Times, Kolkata

Published on March 10, 2017

 

 

Kolkata, March 9: Dogged by controversy, the 12-gauge pump-action shotgun, infamous as the “pellet gun” used against stone-pelters in Kashmir, is all set to guard the offices of the country’s largest bank, State Bank of India (SBI).

 

SBI authorities will buy as many as 11,000 of these five-shot compact weapons, made by the Indian Ordnance Factory at Ichapore, around 40 km north of Kolkata, and phase out the single and double-barrel 12-gauge shotguns that its security guards have been carrying for decades. Since the new gun can fire a variety of ammunition made in the popular 12-gauge calibre, bank guards can continue with the standard lethal ammunition they have used all these years.

 

For the record, the so-called “non-legal” ammunition responsible for the death and blinding in the Valley is issued only to security forces of the government.

 

For Rifle Factory Ishapore (RFI), the country’s oldest weapon manufacturing unit set up by the British and makers of several firearms including the INSAS assault rifle used by the army, paramilitary and police, the agreement with SBI has led to the single largest civilian contract. “We have produced the first batch. According to the agreement, we have to deliver 11,000 guns to SBI over a period of three years. These will be however be sold only through authorised gun dealers in every state,” Ratneshwar Varma, general manager, RFI, told HT.

 

SBI has 17,000 branches and more than 48,000 ATMs of its own across India. The numbers go up if one adds its sister banks.  “Each gun will retail for around Rs 75,000, inclusive of taxes,” said a dealer. The most popular among all types of shotguns used by civilians, police and military across the globe, the ‘pump-action’ is named so because every back and forth movement of the lever located beneath the barrel extracts an empty shell from the chamber and loads a fresh round from the tubular magazine. Thus, it is possible to load and fire in quick succession till the magazine is empty.

 

The civilian version has a 20-inch barrel that meets Arms Act regulations on non-prohibited weapons. The army version has an 18-inch barrel and is prohibited. Also, the new gun has been given a ferrous metal receiver and not the lighter aluminium one seen earlier. Interestingly, the gun has prominent front and back sights seen on rifles that fire single projectiles at much higher velocity and with pin-point accuracy.

 

“The 12-gauge No. 1 ammunition that banks buy, fire volleys of lead or steel balls that may cover an area of up to two feet after travelling a certain distance. The need to align front and back sights for precision shooting doesn’t really arise,” said a veteran shooter who examined the new shotgun. C Mohan Mitra, chief general manager of SBI, told HT: “The new guns will be given to our security guards who are posted according to requirement, which is essentially determined by the size and location of branches and the amount of cash they handle.”  Asked whether the guns would be given to security personnel deployed in crime-prone areas or Maoist-infested pockets, he said: “Not essentially. The amount of cash handled by a branch is important.”

 

 

From E-Group, Banking-News

 

 

Lok Sabha passes Maternity

Benefits (Amendment) Bill, 2016

 

The News Agencies

Published on March 9, 2017

 

 

New Delhi, March 9: Lok Sabha on Thursday passed the Maternity Benefit (Amendment) Bill, 2016 which interalia includes increasing maternity benefit to woman covered under the Maternity Benefit Act, 1961 from 12 weeks to 26 weeks up to two surviving children in order to allow the mother to take care of the child during his/her most formative stage, providing maternity benefit of 12 weeks to Commissioning mother and Adopting mother, facilitate “work from home” to a mother with mutual consent of the employee and the employer, making mandatory in respect of establishment having fifty or more employees, to have the facility of crèche either individually or as a shared common facility within such distance as may be prescribed by rules & also to allow four visits to the crèche by the woman daily, including the interval for rest allowed to her and every establishment to intimate in writing and electronically to every woman at the time of her initial appointment about the benefits available under the Act.

 

The bill was presented in the Lok Sabha by the Minister of State (IC) for Labour and Employment, Shri Bandaru Dattatreya. The Maternity Benefit (Amendment) Bill, 2016 has already been passed by the Rajya Sabha on 11th August,2016. These changes will have major impact on the health, well-being and growth of the future generation in the Country. It will have positive impact on women’s participation in labour force and will improve the work- life balance of the women workers. The Maternity Benefits (Amendment) Act, 2016 will come into the force only after the President’s assent.

 

 

From E-Group, Banking-News

 

 

Arun Jaitley to chair high-level meet with RBI

governor Urjit Patel on bank NPAs tomorrow

 

The Financial Express

Published on March 10, 2017

 

 

New Delhi, March 9 (PTI): Finance Minister Arun Jaitley will chair a high-level meeting with Reserve Bank officials tomorrow to address the issue of non-performing assets in the banking sector.

 

The meeting, which will also be attended by Financial Services Secretary Anjuly Chib Duggal, will discuss ways of resolution of stressed assets urgently, sources said.

 

While Chief Economic Advisor Arvind Subramanian had suggested setting up of a bad bank to deal with the problem of non-performing loans, Reserve Bank Deputy Governor Viral Acharya had floated the twin concept of Private Asset Management Company (PAMC) and National Asset Management Company (NAMC) for resolution of stressed assets.

 

As on September 30, 2016, gross NPAs of public sector banks rose to Rs 6.3 lakh crore as against Rs 5.5 lakh crore at the end of the June quarter. This works out to an increase of Rs 79,977 crore on a quarter on quarter basis.

 

Last month, Subramanian had said the idea of setting up a state-owned asset reconstruction company (ARC) or bad bank to deal with mounting NPAs is gaining traction and needs to be created quickly.

 

 

From E-Group, Banking-News

 

 

Mallya Guilty of Contempt ?

Supreme Court Reserves Order...

 

The Livelaw News Network

Published on March 9, 2017

 

 

New Delhi, March 9: Is Business tycoon Vijay Mallya guilty of contempt by repeatedly violating order to disclose his assets in India and abroad? The Supreme Court reserved its orders in the matter today.

 

Mallya, whose defunct Kingfisher Airlines owes more than Rs 9,000 crore to various banks, had left India on March 2, 2016. The bench asked Centre to brief it about modalities under which its order against Mallya could be enforced as he left country and living in UK

 

Attorney General Mukul Rohatgi, representing a consortium of 17 banks led by State Bank of India argued that Mallya did not disclose USD 40 million deal with Diageo to the court and alleged that he took the apex court for a ride and cared two hoots for the courts and said the government and the banks were taking all steps to bring him back.

 

Mallya’s lawyer claimed before the court that he has got no money to refund Rs 9,000 Crore loan as his entire asset been attached by government authority. The court had earlier asked Mallya to file his response to an allegation raised by a consortium of banks led by State Bank of India that he had transferred USD 40 million to his children in brazen violation of judicial orders. The banks also alleged that orders of Debt Recovery Tribunal and Karnataka High Court have been violated by Mallya by transferring 40 million USD to his children.

 

Mallya was being repeatedly pulled up by the apex court for not making full disclosure of his foreign assets It was on July 29 that the Supreme Court issued notice to Mallya on a petition filed by the banks consortium seeking initiation of contempt of court proceedings against him for non-disclosure of his assets despite a specific order from the bench three months ago.

 

The total attachment made by the Enforcement Directorate in this case has now shot up to Rs 8,041 crore. This is one of the largest attachment of assets made by ED in a PMLA case till now.

 

The agency had registered a money laundering case against him and others based on an FIR registered last year by the CBI. The Enforcement Directorate had on September last year seized properties, assets and shares, belonging to Mallya, worth Rs. 6,630 crore. The action against Mallya came after the CBI lodged a fresh case of cheating against him.

 

A group of banks, including the State Bank of India, had complained against Mallya, accusing him of cheating them out of Rs. 5,000 crore in loans. The banks had extended credit facilities to Mallya’s Kingfisher Airlines in 2010. The banks claim that Mallya and his company deliberately didn’t repay the dues. The matter is pending in the Supreme Court.

 

The total value of properties and assets seized by the Enforcement Directorate now stands at Rs. 8,044 cores. The agency has said that the seized assets were ‘proceeds generated out of criminal activity’ by Mallya.

 

 

From E-Group, Banking-News

 

 

Digital Economy: What is Modi government’s cashless drive all about?

 

The Financial Express

Published on March 10, 2017

 

 

Mumbai, March 10 (Reuters): India’s has launched a slew of electronic systems to encourage its 1.2 billion people to rely less on cash, and adopt digital services to buy everything from groceries to fuel. Here is an overview of India’s cash-less initiatives.

 

United Payments Interface (UPI)

 

The payments system was launched in August 2016 by state-run National Payments Corporation of India, but its adoption by banks and customers remained sluggish.

 

The real push for UPI came after Prime Minister Narendra Modi launched the flagship UPI app called BHIM on Dec. 30.

 

Most state and private lenders are now on the UPI platform, and the BHIM app has been downloaded more than 17 million times.

 

The UPI system allows users to create a unique virtual payment address, which looks like an email, and use it to send or receive money instantly. Each profile also has a distinct quick-response (QR) code that can be used to transfer money.

 

India/Bharat QR

 

A quick-response-code-based application that will allow people to pay and merchants to accept payments using a machine-readable label without having to use a card.

 

Global card network providers MasterCard Inc and Visa Inc have collaborated with the National Payment Corp of India on this system, which was unveiled last month.

 

Aadhar Pay

 

This is a payments service that uses India’s national biometric identity card and does away with the need for point-of-sales machines that are used to swipe credit and debit cards.

 

A merchant registering for Aadhar pay will link a phone to a biometric reader, allowing the user to make a payment using a finger print.

 

 

From E-Group, Banking-News

 

 

PM Narendra Modi’s goal of a cashless

India may be thwarted as digital drops

 

The Bloomberg

The Financial Express

Published on March 10, 2017

 

 

Digital transactions are dropping before next week’s deadline to lift all lingering caps on cash withdrawals, central bank data show.

 

New Delhi, March 10 (Bloomberg): Prime Minister Narendra Modi’s plan to reduce country’s reliance on cash may go awry. Digital transactions are dropping before next week’s deadline to lift all lingering caps on cash withdrawals, central bank data show. Modi had shocked the nation Nov. 8 when he cancelled 86 percent of currency in circulation and pushed for electronic payments to boost transparency and fight graft.

 

Printing presses are churning out new bank notes and come Monday, Indians will be able to withdraw as much money as they like from their bank accounts as the Reserve Bank of India lifts the 50,000 rupee ($748) a week limit. Economists including Sonal Varma at Nomura Holdings Inc. predict India will recover from Modi’s cash shock by June and demand will rebound after that.

 

The $2 trillion economy is forecast to grow 7.1 percent in the year through March, the slowest pace since 2014 but among the fastest in the world. As much as 98 percent of all consumer payments were in cash, according to a PWC report in 2015.

 

Also, the government’s clampdown on cash lost the economy a few billionaires last year though the richest hardly saw their fortunes hit.

 

India dropped one spot to No. 4 on the Hurun Global Rich List as the nation lost 11 billionaires in 2016 while the world added 69. However, the 18 Indians among the top 500 billionaires saw their wealth drop just 1.5 percent, according to the Bloomberg Billionaires Index.

 

“The world today has 5,000 dollar billionaires, assuming that for every one we have found we have missed at least one,” Rupert Hoogewerf, chairman and chief researcher at Shanghai-based Hurun Report Inc. said in a statement. Changes in the list were triggered by a strong U.S. dollar together with gains in major stock markets, Brexit, Donald Trump’s election as U.S. president, a surge in property values in China and demonetisation in India, he said.

 

 

From E-Group, Banking-News

 

 

Robbing Peter to...

 

Editorial: The Statesman

Published on March 10, 2017

 

 

That Biblical allusion is certain to serve as a red rag to the saffron bull, yet it does add emphasis to the argument that good politics may make for poor economics ~ a point which will not be appreciated by Modi sarkar. For several months now has the Prime Minister and his fawning chorus been claiming how revolutionary and empowering have proved the no-frills ‘Jan Dhan’ bank accounts. Yet now the chairman of the State Bank of India describes them as a “burden”, and says the cost of carrying it justifies the bank re-introducing a system of penalties on “normal” account holders who do not ensure the maintenance of a minimum balance. “Today we have a lot of burden, such as we have 11 crore financial inclusion or Jan Dhan accounts. To manage such a large number of Jan Dhan accounts, we need some changes. We have considered many factors, and after analysing carefully we have taken this step,” Ms Arundhati Bhattacharya told a press conference in Mumbai, after being subjected to intense questioning on the fresh levies being imposed on holders of accounts in the nation’s largest bank ~ which serves as the showpiece of the sector at large. There is no need to quarrel with the argument that “our analysis have shown that most of the account holders maintain more than Rs.5,000 on a monthly basis, so they do not have to worry about any penalty” ~ it is the principle that tends to irk.

 

For it amounts to another instance of the government resorting to sleight-offhand tactics to make the citizen pick up the bill for its political largesse. Like all professional bankers, the SBI chief placed much stock in analysis, so the public (or at least SBI account holders) would wish to be enlightened on the extent to which the Jan Dhan accounts had been used to “bleach” black money in the immediate aftermath of 8 November 2016. There is no political “angle” to that query: Ms Bhattacharya had adroitly projected herself as the “defender of the faith” when society was thrown into demonetisation convulsions. Have the chickens come home to roost?

 

The short point is that many of the present government’s initiatives have only fleshed out Arun Shourie’s theory that its expertise was confined to “managing headlines”. Not long ago Mr Narendra Modi had sarcastically referred to his predecessor bathing under a raincoat when Dr Manmohan Singh had slammed demonetisation as “organised loot and legalised plunder”. After the SBI’s dubbing Jan Dhan accounts a “burden”, will the Prime Minister at least concede the point Dr Singh had made at his first press conference after joining the government ~ “too much politics has been played with the economy”.

 

 

From E-Group, Banking-News

 

 

GDP growth reflects economic reality;

expected revisions likely to be modest

 

Saugata Bhattacharya

The Financial Express

Published on March 10, 2017

 

 

The national accounts for Q3 of FY17 have been extensively trolled, some questioning them as “too good to be true”. This article attempts to open up the conversation, shows some of the underlying constructs of the GDP, GVA metrics and plays the devil’s advocate on some others. The debate is not new, and has come up intermittently after the initial outburst when the new methodology for computing GVA was first unveiled in early-2015.

 

First, the System of National Accounts are a set of rules which are standardised across countries. India now conforms to global standards. [Remember the years when India’s growth data in the IMF’s World Economic Outlook (WEO) growth tables used to be designated with a footnote stating India’s GDP was a different construct? We are now in line with other countries’ accounting]. These rules are applied to a set of pre-specified data which are proxies for estimating the GVA segments. The Central Statistical Organisation does not have the discretion to pick and choose “appropriate” indicators.

 

As for the segment-specific estimates themselves, the hit to the Q3 GVA has largely been on precisely those sectors which a priori anecdotal narratives had pointed at: construction (2.7%), financial services and real estate (3.1%). But there was a “surprise”, too: one would have thought that the largest impact of the note-ban would be felt by the ‘trade, hotels, transport & communication’ segment— but it actually printed higher than expected. In retrospect, this should have been partially foreseen. In communication, Q3 was the quarter when a particular telecom company started operations with a splash. Growth of the number of telecom subscribers (the main proxy for the segment), steady at an average of 6% since mid-FY15, shot up to 11% in Q3. Communication has a weight of 1.8% in GVA. This is likely to have more than offset the presumed slowdown in the other sub-segments.

 

The standout growth was in the manufacturing segment (8.3%) which— demonetisation or otherwise— is largely perceived to be faltering, seen through the lens of the Index of Industrial Production (IIP) and partially through the tepid corporate results. The CSO press release for Q2 FY17 (as also PRs for many previous quarters) states that for the manufacturing segment, “the private corporate sector growth (which has a share of over 70% in the manufacturing sector) as estimated from available data of listed companies … The growth in quasi-corporate and unorganised segment which … has a share of around 22 percent … has been estimated using IIP of manufacturing”. That’s a combined 92% of manufacturing GVA.

 

We have tracked these metrics in comparison with the reported GVA manufacturing. The corporate GVA (of a sample of 1,858 companies) comprises both operating profits and salaries and wages, to obtain a measure closest in intent to value added. Manufacturing corporate GVA grew at 21.5% in nominal terms in Q3 FY17, driven largely by metals (steel in particular) and capital goods companies. Obviously, the key driver have been rising metals prices. The other major contributor were the upstream oil and gas companies. The weighted average of corporate GVA and the IIP—with the above mentioned weights—is 15%, higher than the reported 11.8% nominal manufacturing sector growth.

 

It’s the same story with the mining segment, with a reported growth of 11.4% nominal growth, up sharply from an average 2% growth in H1 FY17. And yes, there will be a spill over of the slowdown in Q4, which is indicated by the high 18% growth in change in stocks (inventories), which will need to be drawn down before full production resumes. But this is likely to be limited, with leading indicators of manufacturing activity (including PMIs) indicating a return to normalcy. What is a bit puzzling is that the high inventories growth in Q3 is in line with high growth in H1 and what this tells us of the supply-chain management.

 

Without question, these estimate have not picked up large swathes of the informal segments of manufacturing and the services sectors, which will be progressively revised downward with each ongoing revision. But even here, the drops will not be significant. The only estimate of the smaller, quasi-corporate entities is a study released by RBI last year of about 237,000 private limited companies. Net sales of these companies was only 46% of a set of 2,900 listed companies in FY15 and operating profits just 31%.

 

Developing better surveys to track the informal sector remains a work in progress at CSO, and we wish this had been expedited. However, many improvements in data coverage are likely to come on line in the near future.

 

The author is senior vice-president and chief economist, Axis Bank. With contributions from Abhay More and Abhay Chavan.

 

 

From E-Group, Banking-News

 

 

WTO crisis?

Donald Trump may deal a knockout punch;

US disregard for multilateralism could spread elsewhere too

 

Amitendu Palit

The Financial Express

Published on March 10, 2017

 

 

For a long time, mega-RTAs such as the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP) were being argued to be major threats for the salience of the WTO. The US withdrawal from the TPP a few weeks ago was thought to have taken the wind out of the sails of mega-RTAs and revived the prospects of the WTO. But the just announced 2017 Trade Policy Agenda of the US—the first trade policy document of the Donald Trump administration—has created a crisis for the WTO that is much more serious than what the mega-RTAs had.

 

The Trade Policy Agenda emphasises that a major thrust of future US trade policy would be: ‘Resisting efforts by other countries – or Members of international bodies like the World Trade Organization (WTO) – to advance interpretations that would weaken the rights and benefits of, or increase the obligations under, the various trade agreements to which the United States is a party. (‘2017 Trade Policy Agenda and 2016 Annual Report’ of the President of the United States on the Trade Agreements Program; Page 2). The emphasis is strong and blunt, removing all scope of reading between the lines. The short point is that the US would no longer accept rulings of the WTO if those were inimical to its interests. The policy agenda also spells out that the Trump administration would firmly defend American sovereignty in trade policy issues. This makes it doubly clear that WTO’s rulings, particularly in disputes involving the US, would not necessarily lead to changes in US policies if such changes did not suit US interests.

 

The US reflections on the WTO need to be seen in light of a clear disregard on part of the Trump administration for multilateral and regional trade frameworks and preference for bilateral trade deals fixing reciprocal market-access on the US’s terms. It’s interesting that most American bilateral FTAs have already been doing so. Much of the TPP, too, has been negotiated in line with US interests and written in language identical to other US FTAs. Thus, while the Trump administration is maintaining the posture of its predecessors in getting the maximum for the US from deals it would negotiate, it is different in its disregard of regional and multilateral trade rules. Most ostensibly, it has little interest in projecting itself as committed to multilateral and regional initiatives. This is in contrast to the earlier US administrations, particularly the Obama administration, which, while ensuring US remains the major driver of global trade policy, didn’t abandon collective rule-making.

 

The US’s disregard for multilateral trade rules would have severe consequences for the WTO. If the world’s largest economy begins disrespecting the sanctity of WTO’s dispute settlement, it might encourage others to follow suit. The biggest risk is if countries begin valuing bilateral trade deals with the US so much that they drift away from the WTO. Considering the WTO as a slow, indecisive and fractured framework is not the same as walking away from it. The WTO has just got its biggest shot-in-the-arm in several years by implementing the Trade Facilitation Agreement (TFA) in goods. But it has hardly had time to rejoice. The US Trade Policy Agenda hits WTO where it hurts the most: the WTO’s credibility as an arbiter of trade friction. If national regulations remain un-impacted by it’s decisions on trade disputes, then the WTO practically becomes meaningless.

 

China has affirmed its faith in the WTO and the multilateral trade framework soon after the US went public with its trade policy. This was expected, as China would now be able to position itself, as opposed to the US, as a supporter of multilateralism and global trade order. This would enable it to attract considerable political capital, particularly support from poor and small economies, which depend critically on the WTO for increasing their shares in world trade. China might eventually be inclined to influence the working of the WTO in a manner that suits itself. China, too, while not taking on the WTO, would not be inclined to let the WTO decisions overpower its own rules and systems. What this might mean in the long-term is the US-C

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