SBI chief Pratip Chaudhuri sticks to view on CRR
MUMBAI: State Bank of India Chairman Pratip Chaudhuri on Tuesday reiterated his demand for abolishing the cash reserve ratio (CRR) requirement on banks, a day after his original plea was summarily rejected by a top central bank official.
Chaudhuri, who last week created a stir by saying CRRrequirement should be done away with as it was costing banks some Rs 21,000 crore in interest, played down the regulator's terse response to his comments, saying they had triggered a debate. "We have started a debate on CRR in the public domain, so let that debate happen," Chaudhuri told ET, when asked for his reaction to RBI deputy governor KC Chakrabarty's response to his demand.
"If the SBI chairman is not able to do the business in this regulatory environment, he has to find out some other place," Chakrabarty was quoted as saying on Monday. The RBI mandates that banks keep 4.75% of their deposits in cash with it, locking up as much as Rs 2.5 lakh crore, which does not earn any interest.
Chaudhuri, who has been a crusader against CRR, repeated his case that it served no purpose, especially since banks already had 23% of their deposits parked in government bonds as statutory liquidity ratio (SLR). This, he argued, was more than enough to safeguard depositors and lenders in times of a liquidity crunch, making high CRR unnecessary.
"Why not completely abolish CRR? What is the purpose of CRR: to prevent banks from going into insolvency. You have 23% SLR requirement, which you can't give as collateral to raise any loan. So how does a CRR of 4.75% help?" he asked. A cut in CRR, it is argued, could help bring down the cost of funds for banks, which can be passed on to customers, who are feeling the pinch of high lending rates.
"Like when they reduced CRR last time, all banks reduced rates in some form or the other — while some lowered base rates, some lowered their spread," said Chaudhuri. The RBI reduced CRR by 75 basis points in two phases since April, following which most banks lowered their base rate. SBI reduced the spread on retail loans and on loans to small businessmen. Chaudhuri's demand, however, does not have the unstinted support of his peers.
"I understand where he (Chaudhuri) is coming from, but I don't necessarily subscribe to his views," said S Raman, CMD of Canara Bank. "I don't think CRR can be completely abolished in India given the high level of inflation."
THURSDAY, MAY 10, 2012
All is Not Well In Government Banks
| Loans to pharma companies turn bitter pill for banks |
| Loans of more than Rs 2,000 cr to Surya Pharma, Orchid Chem need restructuring |
| Manojit Saha / Mumbai Aug 15, 2012, 00:50 IST ( taken from newspaper Business Standard ) http://www.business-standard.com/india/news/loans-to-pharma-companies-turn-bitter-pill-for-banks/483322/ Loans to mid-sized pharmaceutical companies have turned bad for a slew of top public sector banks in the first quarter of this financial year. Some of the large lenders are set to restructure some of these, to avoid more slippage. North India-based Surya Pharmaceutical Ltd, flagship company of the Rs 1,700-crore Surya Corp, defaulted to State Bank of India, Punjab National Bank, Bank of India and Oriental Bank of Commerce in the quarter. While SBI had an exposure of Rs 460 crore, the total in this account that has become a non-performing asset (NPA) is close to Rs 1,000 crore.http://dkjain497091112006.blogspot.in/2012/05/all-is-not-in-government-banks.html |
THURSDAY, AUGUST 23, 2012
SBI Wants Easier NPA Norms, NO CRR OR Interest on CRR, No SLR to Increase Profit ,More Lending AND Comfortable Survival --More Free Fund More Loot and More Freedom
SBI is silent how such large volume of NPA Accumulated?
Who are responsible for concealment of NPA, for making lesser provisions and for inflating profit in the past decade or two?
Have they taken any action against erring top officials whose dirty policy for making their Balance Sheet attractive was in the same manner in which companies like Satyam Computers did?
Have they taken any action against bank officials who were involved in sanction of loans to bad business men and due to whose malicious intention the loan became bad and SBI suffered loss?
Have they punished any DGM or AGM or GM or CMD or ED for any of bad loan accounts because high values of loans are sanctioned only by top officials thought process at branch?
Ministry of Finance and Government of India acted against Satyam Computers to save Investors, but silent on Bankers who defrauded investors by their immoral and illegal acts?
MONDAY, AUGUST 6, 2012How To Conceal NPA IS Still the Demand Of the DayThe need for stricter laws to report restructured loansCollected from News Paper "The Economic Times"
It is just over a week since an RBI-appointed Expert Group called for an early end to the present smoke and mirrors system of estimating (obfuscating?) non-performing assets (NPA) numbers, euphemistically termed 'regulatory forbearance'.
Yet, far from heeding the Group's suggestion, the government is reportedly contemplating exactly the opposite. Faced with the prospect of drought in large parts of the country, it wants to continue the existing practice of regulatory forbearance. This would enable banks to restructure their short-term crop loans, particularly those made to small and marginal farmers, without classifying them 'non-performing.' Under the existing guidelines, banks are required to set aside a certain amount of their profits as a cushion against the risk of default. Predictably, banks are required to set aside much more for sub-standard and doubtful or loss assets compared to standard assets since there is a greater probability that such loans will not be recovered. SATURDAY, AUGUST 4, 2012Government bank May Survive Only If They Become Fully PrivateRBI's Subbarao: Indian Government May Have to Change Public Sector Banking Structure
Published August 04, 2012
Dow Jones Newswires
India's government may have a tough decision to make and likely give up majority ownership in state-run banks if it is unable to help them increase capital requirements, the country's central bank governor cautioned Saturday.
The Reserve Bank of India's Duvvuri Subbarao said
 credit demand in India is set to rise over the years, led by structural shifts in the economy and increased needs of the manufacturing sector.
As such, Indian banks need an additional capital requirement of 1.6 trillion rupees ($28.70 billion) to INR1.75 trillion by 2018 under the new Basel III norms, he said.
MONDAY, JULY 30, 2012Present Position of Public Sector BanksPresent position of public sector banks is like this:
Biggest bank called as State bank has become number one in Gross NPA. Second ranking bank PNB and BOB have become second in gross NPA and a bank called as best performing bank which was pioneer in change management and which was targeting to be number one among state run bank other than SBI is now number one in Gross NPA and number one in volume of restructured advances.
MONDAY, JUNE 4, 2012Special Investigation Team
Indian economy is said to be rated as best economy in the world after China and is said to be decoupled with impacts of global recession. During last twenty years, reputed economists like Mr. Manmohan Singh, Mr. Montek Singh Ahulwalia, Mr. Pranab Mukherjee , Mr. Bimal Jalan and Mr. P Chidambram have framed best economic policies in the name of reformation , privatization, liberlisation and globalization .
Still from time to time person like Manmohan Singh use to say that India is passing through worst economic crisis and do not hesitate to prescribe some austerity steps to cope with the crisis. Similarly banks are managed by talented officials selected through merit channel and picked through best educational institutes and still Chief Executives of public sector banks and RBI considers that banks are critically sick and due to growing inherent weakness public sector banks are being downgraded by rating agencies and also by unbiased bankers.
http://danendrajain.blogspot.in/2012/06/special-investigation-team.html
SATURDAY, APRIL 28, 2012Why not Uniform Interest Rate
The war continues among banks on interest rate. After nationalization of banks in 1969, RBI used to decide rate structure for deposits and for lending uniformly applicable for all banks. But after adoption of reformation policy in the year 1991, RBI freed lending rates excepting loans upto Rs.2.00 lacs. In the name of competition, banks started rate war to attract high profile customers into their fold. Social banking concept and mass banking approach initiated through nationalization of banks have now become the history.
Common men are now neglected for all practical purposes. High profile customers have now become the heroes and bankers now run behind these heroes. Profit making has become the sole priority. Priority and neglected sector of the society has became the last option for government banks as well as private banks so far as the growth in business is concerned.. Lending for farmers has slowly been transferred to NGOs and Micro Finance Institute who have gradually started lending at higher rates, even higher than local money lenders. It is also true that in the name of poor, banks open Financial Inclusion branches and only open No Frill accounts to give direct credit of various aids and subsidies to real beneficiaries. I am unable to understand how poor people will get satisfaction and fight with their poverty merely by having a bank account until their real regular income rises.
WEDNESDAY, AUGUST 22, 2012Manipulation AND Restructuring are Still the KEYS for Bankers to Reduce NPA |
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