RBI to defer putting lending, expansion curbs on PNB till Q1 results

Andhra Bank, Punjab and Sind Bank, and Canara Bank, too, are likely to make a similar presentation before the regulator

The Reserve Bank of India (RBI) may defer putting lending and expansion restrictions on Rs 143 billion fraud-hit Punjab National Bank (PNB) till the first-quarter results of 2018-19 are out.

The regulator has conveyed to the management of the bank in a recent meeting that it will examine, after looking at the June quarter results, whether PNB’s financial conditions warrant putting it under the prompt corrective action (PCA) framework.

“The regulator will take a call after the June-ended quarter results (are declared). The regulator has told PNB to improve recovery, shed risk-weighted assets, and focus on reducing expenditure till then,” an official said.

PNB, led by its Chief Executive Officer and Managing Director Sunil Mehta, made a presentation on its revival plan to the RBI last Monday, requesting the regulator to defer action under PCA till December, according to sources.

Most public sector banks (PSBs) declare their financial results for the April-June period between the end of July and beginning of August. So PNB may not face any business restrictions till at least August if the regulator has its way.

“Looking at the PCA framework, PNB, like a few other banks, fulfils a couple of important parameters to be added to the list. But PCA will not affect business operations as such. In the present situation, no bank is looking at aggressive credit growth, looking at branch expansion or aggressive hiring, and these are a few things that the banks have to go slow on under PCA,” said Karthik Srinivasan, senior vice-president—group head, financial sector ratings, Icra, adding, “it does not change life for any bank unless the RBI puts a specific lending restriction.” According to a recent report by Credit Suisse, with net non-performing assets (NPAs) over 8 per cent and common equity tier levels down to less than 6 per cent, PNB and Andhra Bank are likely candidates for PCA. Under RBI rules, fulfilling any of the three conditions — net NPA levels above 6 per cent, two years of consecutive losses, or the capital adequacy ratio below the regulatory requirement — could put banks under PCA. PNB suffered the highest ever loss by any domestic bank, at Rs 134 billion, mainly due to the Rs 143-billion swindle on account of fraudulent loans to jewellery firms belonging to Nirav Modi and Mehul Choksi and the RBI’s new provisioning norms. Last week, on the directives of the finance ministry, apart from PNB, Union Bank also met the regulator, urging a deferment of PCA by citing a revival plan.

Long queues again? ATMs go dry as many states face cash crunch: Top updates

Several states are facing a cash shortage despite currency flows in the economy at the pre-demonetisation level

A cash crunch has been reported in several states of India -- Karnataka, Maharashtra, Andhra Pradesh, Rajasthan, Uttar Pradesh, Madhya Pradesh and Telangana. People are facing a huge monetary crisis, with a majority of automated teller machines (ATMs) running out of cash. In Bihar's Patna several ATMs have gone 'out of service' causing inconvenience to the locals.

Taking stock of the situation, Union Finance Minister Arun Jaitley said: "We have reviewed the currency situation in the country; there is more than adequate currency circulation and it is available with the banks... a temporary shortage caused by the sudden and unusual increase in some areas is being tackled.

Here are the top developments in the crisis caused by a sudden shortage of cash across several states and what the government is saying:1. Life gets miserable for many Indians, especially traders: Despite the currency flow in the economy going back to the pre-demonetisation level, ATMs are going dry making life miserable for many residents, especially traders. Many are running from one ATM to another in search of currency notes.

ALSO READ: Demonetisation redux? ATMs again running dry across states amid cash crunch

2. Some ATMs not dispensing more than Rs 5,000: Only one ATM at State Bank of India’s branch had cash, but the machine was dispensing only up to Rs 5000 cash and that too only in the form of Rs 100 currency notes, according to The Times of India report.

The people in Delhi, on the other hand, said that most of the ATMs are dispensing only Rs 500 notes.

3.Hyderabad, Varanasi office-goers face troubles: In Hyderabad, office goers have told news agency ANI, that they have been unable to withdraw cash from ATMs in several parts of the city since yesterday. There are reports from Varanasi as well of people saying there is no cash at ATMs since yesterday, said TOI report.

However, people in Madhya Pradesh claimed that they have been facing a cash crunch for the last two weeks.

4. Govt's meeting with RBI on cash shortage across states: The finance ministry held a meeting with the Reserve Bank of India (RBI), banks, and state government officials on Thursday to take stock of cash availability after receiving complaints of the dearth of money in some states. The non-release of funds by the Centre is being cited as one reason for the cash crunch.

RBI Invites Applications For Medical Consultant (Part-time). Apply Now.

candidates can reach the Regional Director, Reserve Bank of India, Human Resource Management Department (Recruitment Section), Mahatma Gandhi Marg, Kanpur - 208001 on or before October 09, 2

The Reserve Bank of India (RBI) is inviting applications from the eligible for Medical Consultant on contract basis, with fixed hourly remuneration for dispensary of Reserve Bank of India located at Reserve Bank Officers’ Quarters, 4/277, Tilak Nagar, Kanpur. Number of vacancy is one for unreserved category. Interested candidates can reach the Regional Director, Reserve Bank of India, Human Resource Management Department (Recruitment Section), Mahatma Gandhi Marg, Kanpur - 208001 on or before October 09, 2017 till 05:15 P.M.

Eligibility Parameters:

• Applicant should possess MBBS degree of any recognized university by the Medical Council of India in the allopathic system of medicine.
• Applicants having post graduate degree in General Medicine can also apply.

Also Read : CAT 2017 UPDATE: Registration Date Extended, Admit Card & Exam Dates

Experience:

• The Applicant should have a minimum of 2 (two) years’ experience in any hospital or as Medical Practitioner. iv.
• The applicants having their own private dispensary or place of residence within a radius of 5 Kms. from the dispensary at the aforementioned Officers’ Quarters will be given preference

Pay: The pay (remuneration) will be on contract basis fixed with reference to the actual duty hours performed and will be all inclusive.

Applicants must keep in mind that the contract will be initially for a period of three years subject to review every year, which can be extended on such terms and conditions which are mutually agreeable to both the parties

Location: Reserve Bank Officers’ Quarters, 4 / 277, Tilak Nagar, Kanpur - 208002.

Working Hours: Monday to Friday: 05:30 P.M. to 06:30 P.M., Saturday: 12:15 P.M. to 01:15 P.M.

Pay or remuneration: ₹ 750/- per hour for the first three years of contractual service and ₹ 950/- per hour after completion of three years of contractual service. Out of total monthly remuneration a sum of ₹ 1000/- will be treated as conveyance expense. Reimbursement of mobile charges of ₹ 1,000/- per month will also be provided.(more)

'Demonetisation may have cost banks Rs 3,000 cr per day'

On Wednesday, the Reserve Bank of India (RBI) withdrew its previous directive that required deposits above Rs 5,000 in old currency notes be justified to two bank officers. To understand the impact of this move, Business Standard spoke to the HARVINDER SINGH, general secretary of the All India Bank Officers Confederation.

The Reserve Bank of India (RBI) has withdrawn its previous directive that required deposits above Rs 5,000 in old currency notes to be explained to bank officers. What do you make of this?

Breaking News : We have been pleading before RBI and Ministry of Finance that instructions issued for general public must be always clear. What was happening was that instructions issued through electronic media or notifications were reaching banks much later than when the people at large were coming to know. There was time gap between the implementation of the instructions issued by the RBI/government because when the instructions reach banks, they would have to modify their systems so that the instructions are implemented.

For example, one instruction came that we will permit withdrawal of 2.5 lakhs per family where there are marriages. Lot of conditionality were put. But these instructions were made viral during the mid of the day but actually these instructions were received by banks two days after. For these 2-3 days bank officers were facing a lot of problem.

Right from the day this policy of demonetization was declared we have been pleading with the RBI and government that you consult with us. We will give you the ground level problems. We will give you suggestions for smoother implementation. But no opportunity was ever granted to us.Read more.

Crackdown: Now, Axis Bank suspends accounts of some jewellers, bullion dealers

The move is likely to curtail imports by the world's second-biggest gold consumer this month and could weigh on global prices already near their lowest level in ten months.

( Axis Bank branch closed during a raid by Income Tax officials in the Chandni Chowk in New Delhi )

Axis Bank, India's top importer of gold, has suspended the bank accounts of some bullion dealers and jewellers after two of its executives at a branch were arrested over alleged money laundering.

The move is likely to curtail imports by the world's second-biggest gold consumer this month and could weigh on global prices already near their lowest level in ten months.

"We have temporarily suspended transactions in a few current accounts as a part of a larger enhanced due diligence exercise being conducted on transactions post-demonetisation," the bank said in an e-mailed reply to questions from Reuters.

Prime Minister Narendra Modi scrapped 500-rupee and 1,000-rupee banknotes on Nov. 8 in a bid to flush out cash earned through illegal activities, or earned legally but never disclosed to tax authorities.

There have also been reports of people rushing to buy gold by paying as much as a 50 percent premium above official prices using their unaccounted money to skirt the note ban.

Axis did not directly comment on the arrests. Last week the Enforcement Directorate, a government agency that fights financial crime, said it had arrested two Axis bankemployees for allegedly helping launderers to buy goldwith the help of scrapped notes.

The bank said the suspended gold dealers' accounts will be restored over the next few days after an "enhanced due diligence process". (read more)

Related Articles:

• Axis Bank, country's top gold importer, suspends bullion dealers accounts
• Axis Bank denies report of threat to its banking license over alleged bank licence
• RBI denies plans to cancel Axis Bank's licence

Why PM Modi should ignore Subramanian Swamy's letter to sack Raghuram Rajan

Subramanian Swamy, BJP’s newly nominated member to the Rajya Sabha, recently said that Reserve Bank of India governor Raghuram Rajan should be removed from his post.

In a fresh salvo at Rajan, Swamy has written to Prime Minister Narendra Modi seeking immediate sacking of the former IMF Chief Economist while alleging he was "mentally not fully Indian" and has "willfully" wrecked the economy.

Following up his barb against Rajan at the end of Parliament session last week, Swamy yesterday wrote to Prime Minister seeking termination of Rajan's services with immediate effect.

According to Swamy, Rajan has hiked interest rates "in the garb of controlling interest inflation", which has "damaged the country", and that he was responsible for “unemployment and collapse of industrial activity".Read more.

Short-term loans to get cheaper

Come Friday, the benchmark rates are expected to be lower by 80-90 basis points (bps) for short-term credit as banks begin to price new loans on the basis of marginal cost of funds.

It will drive financially sound companies’ hunt for the best lending rate (for short-term credit) under the new regime, leading to some competition among banks.

This could also hit the issuance of commercial papers (CPs) as companies begin to avail of credit limits than to use the money market for short-term need, bank executives said.

The Reserve Bank of India (RBI) has prescribed the new system to improve transmission of monetary policy. TheRBI has cut key policy rate (repo rate) by 125 bps, since January 2015 to 6.75 per cent now.

Responding to the central bank’s actions, banks also reduced their benchmark lending rates (base rate) but not in same proportion. They have cut by 55-75 bps. They brought-down deposit rates by 85-100 bps in past 12 months, according to RBI data.Read More.

Govt may announce new interest rates on small savings schemes soon

The government is soon likely to announce rationalised interest rates on small savings schemes, enabling banks transmit the policy rate reduction by the Reserve Bank of India to borrowers.

According to sources, the finance ministry Arun Jaitley is seriously considering the suggestions made by various stakeholders, including banks and other ministries, and brought up during the pre-budget meetings with leading economists and experts, suggesting lower small savings rate.

Finance Minister Arun Jaitley had announced on September 29 that the Centre would review small savings schemes, rationalising and aligning their interest rates with the central bank's regime. This was the same day when RBI Governor Raghuram Rajan had cut policy rate by 50 basis points (bps) from 7.25 per cent to 6.75 per cent, bringing it to a total cut of 125 basis points for the calendar year 2015.