Volume XXX Number 48 August 31, 2015

Weeklies

BI – Business India

BusW – Business World

BusT – Business Today

CMar – Capital Market

EPW – Economic and Political Weekly

SE – Southern Economist

Eco – Economist

For(Asia) – Fortune AsiaCI – Corporate India

Newspapers

BS – Business Standard

ET – Economic Times

FE – Financial Express

FT – Financial Times

H – Hindu

HBL – Hindu Business Line

HT – Hindustan Times

IE – Indian Express

TI – Times of India

Mint – Mint

Classifications

Economy Banking Agriculture & Rural Development Industry Small Scale Industry

International Economics Labour & Personnel Management Management Miscellaneous Books

CONTENTS

A. ECONOMY 1

B. BANKING 3

C. AGRICULTURE & RURAL DEVELOPMENT 18

D. INDUSTRY 19

E. SMALL SCALE INDUSTRY 20

F. INTERNATIONAL ECONOMICS 21

G. MANAGEMENT 22

– 1 –

BANKERS' BRIEF Vol. XXX No. 48 August 31, 2015

ECONOMY"Ignore the turmoil, we're in good shape, assures Rajan" – RBI governor says market mayhem may be

a temporary phenomenon, asserts India's macroeconomic fundamentals much better than in 2013. Globalfinancial markets may be in turmoil but Indian investors shouldn't worry too much -that's the message fromReserve Bank of India Governor Raghuram Rajan, who took over the job two years ago at a time the rupeehad suffered a precipitous drop, then helped to nurse the currency back to health. A report. – (ET Aug 26,2015 p 1)

"India doesn't need to necessarily rush in with easing measures" – Edited excerpts from an interviewwith Jamie Fahy, Analyst, Global Macro Strategy and Asset allocation at Citi. – (Mint Aug 27, 2015 p 20)

"India to gain from global adjustment: Sinha" – Excerpts from an interview with Jayant Sinha, Minister ofState for Finance. – (TI Aug 25, 2015 p 15)

"India, a long from becoming a global growth engine: Rajan" – RBI Governor Raghuram Rajan has saidit will be 'a long time' before India can replace China as a growth engine for the global economy, even if itgrows at a faster rate. India is one-fourth to one-fifth of China size. Even if we can overtake China in termsof growth rates, the magnitude of the effect will be far smaller for a long time to come. A report. – (HBL Aug27, 2015 p 4)

"NCAER predicts 7.5% economic growth in FY16" – Economic think-tank NCAER has projected thecountry's economic growth at 7.5 per cent in the current fiscal. NCAER's annual model predicts that GDPgrowth rate (GDP market prices at 2011-12 prices) will grow at 7.5 per cent for 2015-16. – (FE Aug 22, 2015p 2)

"Rajan is right about economy but the Fed is losing control" – Though Indian macros are recovering, globalcues like China's slowdown & Fed slipping from targets pose a risk. A report. – (ET Aug 25, 2015 p 12)

"Ratings upgrade hinges on reform push: Moody's: Macroeconomic indicators have improved, sayscredit rating agency in new report" – Moody's Investors Service said it may upgrade India's sovereignrating if the government implements its reform agenda and sustains the recent improvement in inflation, fiscaland current account ratios. Currently, Moody's has a Baa3 rating on India with positive outlook. Since 2004,it has kept the rating at Baa3, the lowest investment grade, a notch above 'junk' status. A report. – (HBL Aug26, 2015 p 4)

"Turbulence is temporary, Jaitley assures investors: Fiscal deficit and inflation under control: FinMin"– On the day Dalal Street witnessed a carnage following China's economic worries, Finance Minister ArunJaitley tried to soothe frayed investor nerves by giving a pep talk on the economy and declaring that 'theturbulence is temporary'. He said the Indian economy is on track and held external factors responsible for thecurrent state of the market. A report. – (HBL Aug 25, 2015 p 4)

"Why the elephant is healthier than the Dragon" – China's economy is slowing sharply, creating a risk forthe global economy. Its debt is pegged at 282% of GDP by some estimates. And that is just one of itsproblems. Years of state-driven investments have created excess capacity in several sectors. India is in farbetter health. A graphical report. – (ET Aug 27, 2015 p 1)

Chhibber, Ajay – "Risk and opportunity" – India can capitalise on the China-led crisis if it is able to pursueeconomic reform. An article. – (IE Aug 26, 2015 p 9)

Rajadhyaksha, Niranjan – "Can India lean against the global economic storm?" – The prospect ofglobal economic instability has once again cast its long shadow over India. What lies ahead? India couldhardly take any advantage of the splendid global recovery in 1984. An article. – (Mint Aug 25, 2015 p 15)

Varma, Sonal – "WPI deflation: Good or bad?" – The net effect on the Indian economy stands out as morepositive for both growth and inflation. An article. – (HBL Aug 24, 2015 p 11)

– 2 –

CURRENCY MARKET"Letting the markets deal with the rupee" – RBI should step into the currency market only in case of

excessive volatility. The rupee could strengthen over the medium term - if there is a combination of a currentaccount surplus and strong capital inflows. A view. – (Mint Aug 24, 2015 p 22)

FOREIGN DIRECT INVESTMENT"FDI inflows up 6.5%" – Foreign Direct Investment (FDI) in the country increased by 6.5 per cent to $2.05

billion in June this year, according to official data. In June 2014, the FDI stood at $1.92 billion. However, inMay this year the country had received $3.85 billion in FDI. According to the data of the Department ofIndustrial Policy and Promotion (DIPP), FDI in the country grew by 31 per cent to $9.50 billion during Junequarter this fiscal, as compared to $7.23 billion in the same period last year. – (BS Aug 21, 2015 p 5)

FOREIGN EXCHANGE MARKET

– FOREIGN EXCHANGE RESERVES

"RBI may use forex reserves to curb volatility" – As the stock market tanked and the rupee sank to afresh two-year low, the Reserve Bank of India Governor Raghuram Rajan assured the financial markets thatthe central bank will have no hesitation in using the foreign exchange reserves to reduce volatility in thecurrency market. A report. – (HBL Aug 25, 2015 p 4)

FOREIGN EXCHANGE RATE"Rupee has appreciated against other currencies" – Edited excerpts from an interview with Rajiv Mehrishi,

Finance Secretary. – (Mint Aug 24, 2015 p 21)

"Rupee may appreciate to 64 a dollar by March: CRISIL" – Despite frequent global shocks upsetting therupee recently, there is a two-thirds probability of it appreciating to 64 per dollar by March 31, 2016 from 66.1now, if gradual improvement continues in the macro indicators such as low inflation and current accountdeficit, according to CRISIL Research report. – (FE Aug 27, 2015 p 2)

Tarapore, S S – "Who's afraid of rupee depreciation?" – Exchange rate management is shrouded inmystery. It conceals certain blunt truths, one of which is our overvalued currency. An article. – (HBL Aug 21,2015 p 8)

– FOREIGN EXCHANGE RESERVES

Sundaresan, B – "Banking on reserves to rescue rupee" – The RBI governor said he will use forexreserves to arrest rupees slide. How reserves are built and used. An article. – (HT Aug 26, 2015 p 15)

FOREIGN EXCHANGE RESERVES"Foreign exchange reserves rise by $1.09 bn" – The Reserve Bank of India (RBI)'s foreign exchange

reserves rose by $1.09 billion for the week ending August 14 to $354.43 billion, show data released. Foreigncurrency assets, a key component of foreign exchange reserves, rose $1.04 billion to $330.84 billion. Duringthe week gold reserves remained unchanged at $18.25 billion. For the week under review, the special drawingrights (SDRs) rose $35.4 million to $4.06 billion, while India's reserve position with the International MonetaryFund stood at $1.29 billion, recording a rise of $11.2 million. – (BS Aug 22, 2015 p 3)

FOREIGN PORTFOLIO INVESTMENTS

– MINIMUM ALTERNATE TAX (MAT)

"No MAT on FPIs prior to Apr '15: Shah panel: Govt likely to agree; big relief to investors" – A high-level panel that reviewed the legal aspects of minimum alternate tax (MAT) applicability on foreign portfolioinvestors (FPIs) recommended against such levy on the trading income of these investors for the periodbefore April 2015 and the government was favourably inclined to go by the advice, according to a seniorofficial. A report. – (FE Aug 22, 2015 pp 1, 2)

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INFLATIONBhalla, Surjit S – "Why inflation fell in India: Screen MPC contenders on the basis of how they

explain the past determinants and the future trend of inflation" – Deflation is likely to soon become amajor concern in India. My preliminary estimates suggest that y-o-y GDP deflator inflation in India, for theApril-June quarter, will be in negative territory. An article. – (FE Aug 26, 2015 p 6)

Chinoy, Sajjid Z – "Making sense of inflation in India" – Let us use the breathing space offered bydepressed global commodities to do house-cleaning of our own. An article. – (Mint Aug 24, 2015 p 23)

TAXATION

– GST

"GST will help curb domestic black money" – Edited excerpts from an interview with Anita Kapur,Chairperson, CBDT. – (HT Aug 21, 2015 p 15)

BANKING

GENERAL"The banking map of India" – A report. – (BS Aug 24, 2015 p 6)

"Trying times for banking sector, says Deputy RBI Governor" – The banking sector is going through'trying times', characterised by low credit growth, impairment of assets and low profitability, according to HR Khan, Deputy Governor of the Reserve Bank of India (RBI). – (HBL Aug 24, 2015 p 15)

ALLAHABAD BANK"Allahabad Bank signed MoU with NHB" – Allahabad Bank currently celebrating 151st year of service to

the Nation, signed MoU on 22.08.2015 with National Housing Bank for implementation of Pradhan MantriAwas Yojna. – (BS Aug 27, 2015 p 11)

ANDHRA BANK"Services sector helps Andhra Bank's MSME growth" – Andhra Bank's strategy of laying stronger focus

on the services segment for MSME (micro, small and medium enterprise) credit has paid dividends. At a timewhen agriculture segment is impacted by the debt waiver schemes and mid and large corporate segment isstill under stress due to macro-economic scenario, MSME segment has posted strong growth for the bank.The bank also intends to add 450 new branches, all of which will be NextGen branches, during this fiscal.About three-fourth of the new branches will come up outside Seemandhra and Telangana states. A report.– (H Aug 20, 2015 p 16)

BANDHAN BANK"Bandhan Bank rural focus to aid poverty reduction, says FM" – A new bank - Bandhan Bank - was

born with a robust network of 501 branches and 1.43 crore accounts across 24 states, vowing to have aunique focus on the rural India and MSMEs and holding the promise to give a big fillip to financial inclusion.Launching the first full-fledged bank to start operations in the country in over a decade, finance minister ArunJaitley said it would fund lakhs of small and medium entrepreneurs, help create jobs and act as a response toagrarian poverty. A report. – (FE Aug 24, 2015 pp 1, 2)

"Bandhan joins Indian banking league with 501 branches" – Bandhan Bank has began operations as afull-fledged bank with 501 branches and 1.43 crore accounts across the country, becoming the newestmember of the estimated $2-trillion Indian banking industry. A report. – (BS Aug 24, 2015 p 6)

"Bandhan seeks to replicate microfinance success in banking" – Within a few months of the announcementin April last year that Bandhan Financial Services Pvt. Ltd will be awarded a licence to convert itself to abank, the microfinance institution handed piggy banks to all its borrowers-now around 6.7 million in number.

– 4 –

Field workers told them to accumulate their savings until Bandhan obtained all the clearances to launch full-fledged banking services. It's been a year since, says Chandra Shekhar Ghosh, Bandhan's managing director,and every borrower has by now saved at least Rs.1,000 to open a savings account. That a staggering Rs.670crore to start with, but only about a tenth of the amount that Bandhan is looking to raise in deposits in the firstyear of its operations as a bank. A 30% increase in Bandhan core business of microfinance is 'going to comeon its own'. A report. – (Mint Aug 22, 2015 pp 1, 12)

"Banking's new frontier: Bandhan Bank's tasks and opportunities" – An editorial. – (BS Aug 27, 2015 p 9)

"Borrowing norms: Bandhan Bank to seek RBI relaxation to repay bank loans" – Bandhan Bank,India's newest bank launched in Kolkata, will seek 'relaxation' from the Reserve Bank of India (RBI) torepay its bank loans on scheduled maturity and not immediately. Until now, Bandhan was a microfinanceinstitution which made tiny loans, borrowing from banks and multilateral funding agencies such as InternationalFinance Corp. (IFC) of the World Bank Group. Bandhan managing director Chandra Shekhar Ghosh said thelender will seek clearance from the central bank for the so-called grandfathering of bank loans so that theydidn't have to be repaid immediately. A report. – (Mint Aug 24, 2015 p 9)

"First bank to be set up in Bengal after 1947 to start ops on Monday" – Audacious journeys often beginfrom the most humble beginnings and Chandra Sekhar Ghosh's is no exception. When Union finance ministerArun Jaitley inaugurates Bandhan Bank, Ghosh will walk into the hall of fame of Bengali entrepreneurship asthis entity started by him will become the first bank to be founded in West Bengal since Independence. Thebank is starting its journey with 501 branches scattered over 27 Indian states, and according to Ghosh thenumber of branches will soon rise to 600. A report. – (HT Aug 23, 2015 p 7)

Bandyopadhyay, Tamal – "India gets a new bank" – After little more than a decade, a new private bank isborn in India - Bandhan Bank Ltd. This is the first bank to come up in eastern India after Independence. Anew bank is always welcome as a large slice of India's 1.2 billion population does not have access to formalbanking services. An article. – (Mint Aug 24, 2015 p 9)

Dutta, Indrani – "Bandhan set to rise in the eastern region" – The new bank will mark its footprint across27 States through 501 branches on its launch day. We are planning to have 35 per cent of branch network inplaces where banking facilities are absent, according to Chandra Sekhar Ghosh, MD & CEO, BandhanFinancial Services. An article. – (H Aug 22, 2015 p 16)

BANK OF INDIA"Bank of India Mudra Card launched" – Bank of India Mudra Card was launched by M O Rego, MD &

CEO. – (BS Aug 27, 2015 p 11)

CANARA BANK"Canara Bank bags prestigious global visa service quality performance award 2014" – This award is

recognition for Canara Bank for their consistent superior operating performance in areas that directly affectVisa cardholders and merchants across the world. – (Mint Aug 27, 2015 p 19)

DCB BANK"DCB Bank bets big on 'Zippi' online FD scheme" – DCB Bank is looking to acquire customers through

its 'Zippi' online fixed deposit scheme. This allows even non-DCB account-holders to start a fixed deposit,anywhere, anytime. Since the launch of this product in May this year, 20 per cent of the leads for the bankhas come from non-DCB customers. A report. – (HBL Aug 21, 2015 p 6)

HDFC BANK"HDFC Bank not to enter GIFT" – Even as its peers make a beeline to open shop at the GIFT City, HDFC

Bank Ltd. has said it is not keen to have a presence in the country's first international finance centre inAhmedabad. The bank feels its presence in global IFCs like Dubai, Bahrain and Hong Kong is enough to takecare of its overseas business. – (Mint Aug 24, 2015 p 10)

– 5 –

– DIGITAL BANKING

"Digital evangelism powers all-India change at HDFC Bank" – As the bank readies for virtual banking, itstares at 4G and beyond with even smoother pipelines, where account holders will be subjected to zerobuffering and have immediate interaction with a live bank representative, 24/7. A report. – (ET Aug 24, 2015 p 5)

ICICI BANK

– HOUSING FINANCE

"ICICI Bank offers mortgage guarantee to home loan seekers: Will allow increase in loan amount,extension of repayment period" – ICICI Bank has launched the country first Mortgage Guarantee-backed home loans for first-time borrowers in the affordable housing segment. 'ICICI Bank Extra HomeLoans' will allow a borrower to increase the loan amount by up to 20 per cent of the original amount, and alsogives the option to extend the repayment period up to 67 years of age. A report. – (HBL Aug 27, 2015 p 6)

IDBI BANK

– NON-PERFORMING ASSETS

"IDBI Bank not to sell bad loans to ARCs; cites low rates" – IDBI Bank's newly-appointed ManagingDirector and CEO, Kishor Kharat, is firming up a road map for the next three years ending March 2019. Thebank's board is expected to meet this week to finalise its future strategy. Soon after taking charge of the newassignment, Kharat in his communication to his employees had said that he wants the lender to emerge asone of the dominant players in the banking domain. Also he said for this, the bank would need greater clarityof purpose. It would also have to prioritise strategies to increase the bank efficiency. For starters, the bankdoes not plan to sell any of its bad loans yet. He added that at this juncture, it is not thinking of going to assetreconstruction companies (ARCs) because the ARC market is not very attractive and also because of thelow rates being offered in the market. A report. – (HBL Aug 26, 2015 p 6)

IDFC BANK"IDFC Bank taps top talent from HDFC Bank for retail: Co, which plans to start biz on Oct 1, is also

recruiting from ICICI Bank & Others" – IDFC Bank, which plans to begin business on October 1, hashired senior HDFC Bank executives to hammer out its retail strategy. Biju Pillai, Amit Kumar and BirendraSahu -heads of HDFC Bank's different business verticals at the time of leaving the bank -will now spearheadIDFC's retail assets and card business, branch banking and overall retail operations, respectively, accordingto the three people familiar with the development. A report. – (ET Aug 21, 2015 p 10)

INDIAN BANK"Indian Bank names TCV Subramanian as non-exec chairman" – Indian Bank said the Centre has appointed

T C Venkat Subramanian as part time non-official director and non-executive chairman in the bank for aperiod of three years. – (FE Aug 21, 2015 p 8)

PAYMENTS BANKS"All you need to know about payments banks: Workings, operations" – A report. – (Mint Aug 24, 2015 p 16)

RESERVE BANK OF INDIA

– AUTONOMY

Srinivasa-Raghavan, T C A – "Why not re-privatise the RBI?" – The present governor of the RBI, theincredible Raghuram Rajan, has always been a votary of central bank independence. So he seems to haveagreed to neuter the power of his own office over monetary policy by handing that power over to a committeedominated by government nominees. Will this make the RBI truly independent and, more importantly, mistake-proof. An article. – (BS Aug 22, 2015 p 8)

– 6 –

STATE BANK OF INDIA"SBI working on low-cost model to take on emerging competition: Strengthening the business

correspondent channel, says Arundhati Bhattacharya" – State Bank of India (SBI) is 'working on' itslow-cost consumer touch points to take on payments banks. According to Arundhati Bhattacharya, Chairman,SBI, the bank intends to do this by strengthening the business correspondent (BC) model. The bank alreadyhas 56,000 business correspondents, and another 500 will be added to the unbanked gram panchayats in WestBengal soon. A report. – (HBL Aug 22, 2015 p 8)

– HUMAN RESOURCE MANAGEMENT

Mohan, Raghu – "Two birds, one stone" – SBI's move to seek the Centre's nod to offer 3 per cent of itsprofits to its staffers will not only help to retain and draw fresh talent to its desks but also break the strongholdof the unions on pay issues. An article. – (BusW 33(51) Jul 21, 2015 p 16)

– PERFORMANCE APPRAISAL

"SBI takes Harvard lessons for staff appraisal" – Apart from 40 modules of Harvard, SBI has internallydeveloped 500 e-modules for employees. A report. – (BS Aug 24, 2015 p 6)

– SME FINANCE

"Lending to SMEs hinges on good cash flow" – Apart from the standard norms based on paperwork forgranting loans to small and medium enterprises (SMEs); the State Bank of India is looking at cash flowstatements and good corporate governance while sanctioning loans to such entities. According to ArundhatiBhattacharya, Chairman, SBI, the method of doing business has changed. So, banks too need to change themindset while accessing loan applications. Today, the most important thing we look at while sanctioning aloan to an SME is the cash flow. – (HBL Aug 22, 2015 p 8)

SYNDICATE BANK

– MSME FINANCE

"Syndicate Bank focuses on augmenting credit flow to MSME sector and launches Syndmudra Card"– A report. – (BS Aug 25, 2015 p 17)

UNION BANK OF INDIA"Union Bank of India - festival offer" – With the onset of the festival season, Union Bank has more offering

for the customers in home loan and Vehicle loans. Bank has always kept focus on the needs of the customer.As such in order to bring smiles on face of the borrowers with our Happiness Mantra in the ensuing FestiveSeason, the Bank has completely waived processing charges under its Union Home & Union Miles scheme.Specially formulated for prospective Home and Car loan borrowers. (Union Home & Union Miles) Benefitto customers: Zero processing fees on Union Home & Union Miles. Period of Validity: 15th August, 2015 to31st March, 2016. – (HBL Aug 21, 2015 p 2)

– PAYMENTS BANKS

"Union Bank eyes tie-ups with payments banks" – Union Bank of India is in talks with some successfulpayments bank licence applicants to forge partnerships, according to Arun Tiwari, CMD of the bank. Paymentsbank would be a facilitator to a part of banking - we have got in touch with nine and are waiting for theirresponse. – (HBL Aug 25, 2015 p 10)

UNITED BANK OF INDIA"United Bank of India inks MoU with National Housing Bank" – In presence of Mr P Srinivas (MD &

CEO, United Bank of India), Mr Sriram Kalyanaraman (MD & CEO, NHB), and other senior officials, thetwo parties signed an MoU on 22nd August 2015, to implement the Interest Subvention Scheme known as'Credit Linked Subsidy Scheme (CLSS)' of Ministry of Housing and Urban Poverty Alleviation, GoI.– (Mint Aug 27, 2015 p 19)

– 7 –

VIJAYA BANK"Vijaya Bank's new non-exec chairman" – Gopalakrishnan Narayanan has joined Vijaya Bank as part-time

non-official director and non-executive Chairman. Narayanan, who served last as the Executive Director ofIndian Overseas Bank and superannuated in 2009, has vast experience spanning over 38 years in the Indianbanking sector. – (HBL Aug 21, 2015 p 6)

YES BANK"YES Bank set to re-appoint Rana Kapoor as MD" – Rana Kapoor has received Reserve Bank of India

approval for his re-apportionment as MD and CEO of the bank for 3 years. This will be effective fromSeptember 1, 2015 to August-end 2018. – (HBL Aug 26, 2015 p 6)

CHINA

– PEOPLE'S BANK OF CHINA

"China cuts rates again, lowers reserve ratio" – China fell back on its major levers to stem the biggeststock market rout since 1996 and a deepening slowdown, cutting interest rates for the fifth time since Novemberand lowering the amount of cash banks must set aside. The one-year lending rate will drop by 25 basis pointsto 4.6 percent, the Beijing-based People's Bank of China said on its website, while the one-year deposit ratewill fall a quarter of a percentage point to 1.75 percent. The required reserve ratio will be lowered by 50 basispoints for all banks to cover funding gaps. A report. – (FE Aug 26, 2015 pp 1, 2)

SINGAPORE"Singapore bank misspells 1st prez's name" – Singapore's central bank made an embarrassing gaffe by

misspelling the name of country first president Yusof Ishak on the packaging of newly-launched commemorativecurrency notes, forcing authorities to apologize. A report. – (TI Aug 22, 2015 p 18)

UK

– BANK OF ENGLAND

"Interest rates: The only way is up" – Tighter monetary policy is on the way. Borrowers tremble - but theend of cheap credit is not all bad news. An article. – (Eco 416(8950) Aug 8, 2015 pp 43-44)

USA"Amish banking: Nive gig" – Lessons from one of America's youngest lenders. An article. – (Eco 416(8952)

Aug 22, 2015 p 57)

"The Federal Reserve: The Tarullo show" – The Fed's broad but woolly powers give its senior officialsvast discretion. An article. – (Eco 416(8950) Aug 8, 2015 p 59)

Gilbert, Mark – "Fed has bigger worries than China" – There is evidence that monetary conditions in theUS have already tightened. An article. – (FE Aug 27, 2015 p 7)

– FEDERAL RESERVE

Lokeshwarri S K – "The Fed impact" – Come September, the Fed plans to hike interest rate. Here's how itwill affect various asset classes. An article. – (HBL Aug 24, 2015 p 2)

Summers, Lawrence – "The Fed looks set to make a dangerous mistake" – Raising rates this year willthreaten all of the central bank's major objectives. An article. – (FT Aug 24, 2015 p 11)

Tett, Gillian – "The Fed's productivity predicament" – Brace yourself to hear the phrase 'data dependent'- a lot - over the next month. With this week's release of the US Federal Reserve minutes reinforcingexpectations of a rate rise, perhaps as soon as September, Fed officials are at pains to stress that any finaldecision will depend on the macroeconomic data; and thus be 'data dependent'. An article. – (FT Aug 21,2015 p 9)

– 8 –

BANK CAPITALKapoor, Rana – "Bank capitalisation: Solving the insolvents" – An article. – (ET Aug 26, 2015 p 14)

– PUBLIC SECTOR BANKS

"Banks seek shareholders' nod for capital infusion" – Four public sector banks, including Punjab NationalBank (PNB) and Bank of Baroda (BoB), sought shareholders' approval for capital infusion of Rs.5,934 croreby issuing preferential shares to the government. – (H Aug 23, 2015 p 16)

Mohan, Raghu – "Banks' capital concern" – Basel-III calls for tonnes of capital to fuel state-run banks, butnot all of it can come from the Centre given the state of fisc. While a few good ones will be able to tap thebourses, many will not as the valuations are poor. The time for tough decisions is now. An article. – (BusW33(51) Jul 21, 2015 pp 50-58)

BANK LENDING

– PRIVATE SECTOR BANKS

"Private banks grow by cannibalising PSB projects: Why did they not lend during the crisis years of2008-09, asks SBI Chairman" – State-run lenders risk-taking during the crisis years has helped privatesector banks report healthy asset growth by 'cannibalising' the completed projects, according to ArundhatiBhattacharya, Chairman, State Bank of India. Why did the private sector not participate (in lending in 2008-09 during the period of the financial crisis)? Because they saw the risk and stayed out. Today why is theprivate sector growing at 22 per cent? Because they are cannibalising the completed projects at low costbecause risks have gone down. Indian banks have done a 'great job', which has benefited the country,especially given the low levels of capital that they receive. A report. – (HBL Aug 25, 2015 p 10)

BANKING REFORMS

– INDRADHANUSH

"PSU bank reforms fall short of expectations: Full autonomy that will help banks attract capital andtalent is still a long way off" – The stock market euphoria after Finance Minister Arun Jaitley announceda seven-pronged strategy to revamp public-sector banks - christened Indradhanush (rainbow) - proved short-lived. One brokerage house after the other started doubting the real impact of the package. Mumbai-basedAmbit Capital went to the extent of calling it old wine in a new bottle! The disappointment was not misplaced.A detailed look at its key elements shows the package is long on hype but short on content. The Bank BoardsBureau (BBB), which will now select the board members as well as the non-executive chairman of publicsector banks, too looks like a halfway house. A report. – (BS Aug 25, 2015 p 9)

Basu, Debashis – "3 problems with 7-point Indradhanush" – An article. – (BS Aug 24, 2015 p 9)

Narasimhan, C R L – "Big-bang? Hardly" – The revamping of the board of directors of banks is a proposalespoused by several groups, the last and most notable of them being the P J Nayak Committee. An article.– (H Aug 24, 2015 p 16)

Sabnavis, Madan – "Operation Indradhanush for PSBs" – Hopefully, banks will have the freedom to fixinterest rates based on their own commercial judgment. An article. – (FE Aug 21, 2015 p 10)

BANKING REGULATOR"Narrative now: India picking up" – Edited excerpts from an interview with Raghuram Rajan, Governor,

Reserve Bank of India. He said India is much better placed now to weather a global crisis than it was acouple of years ago. That is because of one big difference - we are actually quite healthy now. – (ET Aug 27,2015 p 8)

– 9 –

– CENTRAL BANKING

"RBI is no cheerleader for economy: Central bank role is not to boost market sentiments unduly,says Raghuram Rajan" – Rate cuts should not be seen as goodies that the central bank gives out stingilyafter much public pleading, according to Reserve Bank of India Governor Raghuram Rajan. Also, reiteratedRajan at FIBAC 2015, the annual FICCI-IBA Banking Conclave, the RBI is not a 'cheerleader' for theeconomy. By this I do not mean that the RBI does not want to do its utmost to see the economy do well. Farfrom it! What I mean is that it is not the role of the central bank to elevate sentiments unduly, to deliverbooster shots to the stock market so that it can soar for a while, only to collapse when reality hits. A report.– (HBL Aug 25, 2015 p 10)

BANKING TECHNOLOGY / INNOVATION

– IDRBT

"RBI Institute to organise banking 'app' contest in March" – If you can combine technological expertisewith innovation in banking applications, here is an opportunity to get recognised. IDRBT, an arm of the RBI,is conducting the first of its kind national competition to develop 'apps' for the banking and financial sector.– (HBL Aug 22, 2015 p 8)

BHARATIYA MAHILA BANK

– MERGER

"Bhartiya Mahila Bank's merger on top of agenda" – The proposed bank board bureau, once in place, islikely to take up the merger issue of the Bharatiya Mahila Bank on a priority basis. While there have beenreports that it may be merged with the State Bank of India, sources said the merger proposal of BMB wouldbe examined carefully before any decision is taken. A report. – (HT Aug 26, 2015 p 15)

CENTRAL BANKINGFisher, Peter – "Central bankers fret over liquidity but the real issue is borrowing" – Why are central

bankers so concerned with liquidity? Is this sympathy for the plight of the hard-working bond trader? It ismore likely they wonder if the lofty asset prices they have engineered with quantitative easing can be sustained.Foreigners can defend themselves but the future is defenceless. An article. – (FT Aug 20, 2015 p 20)

Rajadhyaksha, Niranjan – "Can Rajan do a Jalan?" – An article. – (Mint Aug 26, 2015 p 30)

CONSORTIUM LENDING"Banks may loan Rs.7,550 cr to JSW energy" – Commercial banks led by State Bank of India (SBI) are in

the final stages of closing a Rs.7,550 crore loan deal with JSW Energy, which would go down as one of thelargest loan borrowings by a corporate in the past year. Senior bank officials said JSW Energy is raising themoney to finance operations of the two power projects acquired from Jaiprakash Power. A report.– (ET Aug 24, 2015 p 7)

COOPERATIVE BANKING

– SARASWAT COOPERTIVE BANK

"Saraswat Bank to take 'considered view' on turning commercial" – Saraswat Cooperative Bank said itwill take a 'considered view' on turning into a commercial bank, following a RBI panel's recommendation toallow bigger ones from the sector to change their character. – (FE Aug 22, 2015 p 10)

– URBAN CO-OPERATIVE BANKS

"Large urban co-op banks will do well to convert into commercial banks: RBI: Says non-conversionwill restrict growth" – Urban co-operative banks (UCBs) registered under the Multi-state Co-operativeSocieties Act, 2002, with business size of Rs.20,000 or more, may have to convert themselves into commercial

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banks, otherwise their pace of growth could slow. Also, the majority of seats on the boards of all UCBsshould be reserved for depositors, say the recommendations of a high-powered Reserve Bank of Indiacommittee. The committee on UCBs, under the Chairmanship of R Gandhi, RBI Deputy Governor, said theconversion of large multi-state UCBs need not be de jure (according to law) compulsory and they cancontinue the way they are operating currently in terms of balance sheet/asset size. As of March 31, therewere 1,579 UCBs in the country. A report. – (HBL Aug 21, 2015 p 6)

DIGITAL BANKING"Banks must encourage adoption of digital banking if they are to maintain high-quality customer

service" – An editorial. – (FE Aug 27, 2015 p 6)

"Call for separate brand for online, digital banking" – To achieve long-term growth, public sector banksshould focus on younger, digitally active customers, according to Sushil Muhnot, Chairman, Bank ofMaharashtra. He said the banks should even consider launching a separate brand for such customers.– (HBL Aug 25, 2015 p 10)

Merwin, Radhika – "Are you appsolutely mobile?" – A host of new digital offerings now allow you to carryout payments and other financial activities using your smart phone. Author talks to some people for their takeon all things app. – (HBL Aug 24, 2015 p 4)

EDUCATIONAL LOANS"Centre launches student loan portal" – The government said it has a launched a website, vidyalakshmi.co.in,

for students seeking educational loans and that five banks including SBI, IDBI Bank and Bank of India haveintegrated their system with the portal. Vidya Lakshmi was launched on the occasion of Independence Day2015 for the benefit of students seeking educational loans, according to a Finance Ministry. A report.– (FE Aug 21, 2015 p 2)

EXECUTIVE APPOINTMENTS

– PUBLIC SECTOR BANKS

"FinMin issues norms for appointment of MDs & CEOs in 17 public sector banks: Officers will beselected from PSBs after interactions, appraisal reports" – A week after appointing two private sectorexecutives as Managing Directors and Chief Executive Officers in government-owned banks, the FinanceMinistry has now come out with guidelines for the selection of such officers for the remaining 17 publicsector banks (PSBs). These officers will be selected from within PSBs only. It is expected that Indian Bank,Andhra Bank and UCO Bank will be first set of PSBs to have MDs on the basis of the new guidelines. AFinance Ministry statement said that the selection process based on the new guidelines is to be initiated in thenext month. A report. – (HBL Aug 21, 2015 p 6)

Mehta, Sangita and Sinha, Shilpy – "CEO watch: Public sector banks' future five" – Prime MinisterNarendra Modi's government says banking reforms, christened 'Indradhanush', are the most important movesince bank nationalisation in 1969. Political interference is history, and boards are being professionalised.Authors profile the people who could make or break the nation's hope. * The diplomatic banker MelwynRego CEO & MD, Bank of India; * Go-getter who wears many hats Usha Ananthasubramanian CEO &MD, Punjab National Bank; * Accidental banker fought the odds Kishore Kharat CEO & MD, IDBI Bank;* Work round the clock Rakesh Sharma CEO & MD, Canara Bank; * Scaling every barrier P S JayakumarMD, Value and Budget Housing Corporation. An article. – (ET Aug 19, 2015 p 14)

FINANCIAL INCLUSION"Can banks see profit in financial inclusion?" – The Reserve Bank of India (RBI) has granted in-principle

approval to 11 entities to set up payments banks. The plan is to push for greater financial inclusion throughthese banks. The Jan Dhan scheme is also being scaled up. But is financial inclusion a profitable venture forbanks? A report. – (BS Aug 26, 2015 p 6)

– 11 –

"India ranks 9 in financial inclusion" – India ranked ninth out of 21 countries for its overall financial anddigital inclusion efforts, according to the 2015 'Brookings Financial and Digital Inclusion Project (FDIP)Report and Scorecard' that was launched. Brookings' experts analysed the financial inclusion landscape in 21countries including Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Pakistan and Zambia.Countries received scores and ranking based on 33 indicators spanning four dimensions: country commitmentmobile capacity, regulatory environment and adoption. – (Mint Aug 26, 2015 p 7)

FINANCIAL PRODUCTS"Mundra makes case for regulation of innovative financial products" – Making a case for regulation of

new financial products, RBI deputy governor S S Mundra said that innovations such as crowd-funding andcrypto-currencies should be monitored to avoid negative fallout. It is near impossible to regulate the behaviourand choices of individuals... hence, it will be more practical for the regulatory authorities to push for bringingin appropriate regulatory changes in their jurisdiction which would enable regulation of the aggregators'electronic dealing platform. RBI had first flagged concern against virtual currency or bitcoins in December2013. These virtual currencies are used for online transactions alone. Though it is not backed by any centralbank in the world, these currencies are traded on a number of exchanges, or are swapped privately. A report.– (FE Aug 26, 2015 p 8)

FOREIGN BANKING"Four foreign banks have applied to open local units: RBI" – Four foreign banks have applied to the

Reserve Bank of India (RBI) to set up local subsidiaries in the country, almost two years after the centralbank announced guidelines for these banks to open local units in the world's fastest growing major economy.Four have applied and some others are also in discussions, according to R Gandhi, RBI deputy governor incharge of banking regulations. RBI has promised 'near-national treatment' to foreign banks opening localsubsidiaries in India, which would allow them to open branches freely. – (Mint Aug 26, 2015 p 15)

– DBS BANK

"DBS set for soft launch of mobile banking in India" – Singapore's DBS Bank which has branches inmajor cities of India will soft launch its digital/mobile online banking in the country this week, according to atop official of the bank. – (FE Aug 25, 2015 p 10)

GOLD DEPOSIT SCHEME"Gold deposit scheme: banks still undecided on interest rate: Bankers pitch for interest rate subvention

to make the scheme a success" – With just two weeks to go for the launch government much-awaitedGold Deposit Scheme there seems no consensus on the rate of interest banks can afford to pay to make thisscheme a success. A report. – (HBL Aug 25, 2015 p 6)

HOUSING FINANCE"Right on home prices, not on teaser loans: The RBI must revise its dislike of teaser loans" – An

editorial. – (ET Aug 26, 2015 p 14)

– TEASER LOANS

"SBI chief builds a case for 'teaser' home loans" – State Bank of India chief Arundhati Bhattacharyapitched for bringing back the so-called 'teaser' home loans. She underscored that in 2008 the 'teaser' plan hadpushed up demand for home loans and that this was acknowledged three years later by then Chief EconomicAdviser Kaushik Basu in the Economic Survey, saying that it was one of the tipping points. Today, the baserate is 9.70 per cent. I am told that real estate stock (unsold homes) is at a two-year high. I was wonderingif something of this kind can be allowed given that this is one of the loan portfolios where the NPAs (non-performing assets or bad loans) are the lowest, according to Arundhati Bhattacharya. A report. – (HBL Aug21, 2015 p 1)

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HUMAN RESOURCE MANAGEMENT

– PUBLIC SECTOR BANKS

"'Missing middle': HR challenge plagues public sector banks: Unable to pay competitive salaries,State-owned lenders face a vacuum at the mid-management level" – Faced with the difficulty ofpaying competitive salaries, the State Bank of India is recruiting some employees on contract at the juniorlevel, and using specialists to fill up critical mid-level vacancies. We have some difficulties in giving market-related salaries. What we are trying to do is to get some people directly from campuses on contract at thelower levels, according to SBI Chairperson Arundhati Bhattacharya. PSBs have been facing a human capitalchallenge for a while now, following a recruitment freeze in the 1990s, termed as the 'retirement decade' byformer RBI Deputy Governor K C Chakrabarty. These banks are staring at the imminent retirement of abouta quarter of the 1.5 lakh mid-level managers. They are due to retire over the next three years, creating a vastleadership vacuum. Promotions have taken place so rapidly because of the retirements at the top that thereare challenges in not only mid-management but even at the top level, since you are pushing people up too fast,according to Anil Khandelwal, former chairman of the Bank of Baroda. A report. – (HBL Aug 25, 2015 p 10)

INDIA POST

– PAYMENTS BANKS

"India Post in talks with BSNL to use its platform for payments bank" – India Post is close to striking apact with state-run telecom company Bharat Sanchar Nigam Limited (BSNL) to use its platform to roll outpayment bank services and launch them by March 2016. It is also open to aligning with private telcos likeBharti Airtel and Vodafone India. BSNL is our preferred partner but we are also in talks with Bharti Airteland Vodafone. We are in advance talks with BSNL. However, we are yet to work out operational issues,according to M S Ramanujan, member (banking), India Post. A report. – (FE Aug 25, 2015 p 7)

INDIAN FINANCIAL CODE"Gaps remain in draft fin code, says RBI dy guv" – The Reserve Bank of India has said that the draft

financial code released by the finance ministry based on recommendations of the financial Sector LegislativeReforms Commission has a lot of gaps in its effort to codifying regulatory objectives into simple rules. Thedraft code had run into controversy with both the finance ministry and the FSLRC headed by Justice Srikrishandisowning it. The latest critique of the report comes from RBI deputy governor H R Khan. A report.– (TI Aug 27, 2015 p 16)

INDUSTRIAL RELATIONS"Govt trying to diminish the status of PSBs: unions: PSBs are saddled with huge bad loans due to

corporate delinquency: Ch Venkatachalam" – The All-India Bank Employees Association has criticisedthe Reserve Bank of India granting licence to private companies to open payments banks as a move to boostprivate sector banks at the cost of their public sector counterparts. AIBEA General Secretary ChVenkatachalam said in a statement that the move would minimise the role of public sector banks and shrinktheir market share. In the name of banking reforms, he said, the government was trying to diminish the statusof PSBs and boost private banks. A report. – (HBL Aug 22, 2015 p 8)

KYC NORMS

– PUBLIC SECTOR BANKS

"JMB used a/cs in PSBs to fund terror module" – At least six accounts in four nationalised banks, spreadover four districts of West Bengal, were used by the Jamaat-ul-Mujahideen Bangladesh (JMB), a jihadigroup, to fund its module in the state, revealed an investigation by the Enforcement Directorate. The accountsused by the jihadists were created in nationalised banks violating KYC rules. The banks, where the accountswere opened, include State Bank of India, Corporation Bank, Bank of Baroda and Oriental Bank of Commerce,and the branches were spread across Burdwan, Birbhum, Murshidabad and Kolkata. – (ET Aug 24, 2015 p 3)

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MICROFINANCE"MFI loan portfolio rises 69% on loan size, customer base" – According to the latest issue of MicroMeter,

MFIN provided credit to over 3.11 cr clients as of June 30, 2015, an increase of 24% y-o-y. A report. – (FEAug 27, 2015 p 8)

– MAHARASHTRA

"Banker to the poor to advise state govt" – The State will soon get lessons in micro-financing from thefamed banker of the poor. The Bharatiya Janata Party (BJP) led state government has now invited MuhammadYunus, the famed Nobel Laureate founder of Bangladesh Grameen Bank to advise it on microfinance andsocial entrepreneurship. – (HT Aug 26, 2015 p 4)

MOBILE BANKING"Mobile banking: NPCI plans mobile platform as USSD flops" – Admitting that the USSD-based mobile

banking platform has not given the desired results, National Payments Corporation of India (NPCI) said it isworking on an alternative solution that will work on smartphones, but at reduced transaction costs. Currently,hardly about 40,000 transactions take place a day on the USSD (unstructured supplementary service datawhich is used in GSM mobiles) but we were thinking it could be a million a day, according to A P Hota,managing director and chief executive, NPCI. – (FE Aug 26, 2015 p 8)

"Youngest mobile banking population is in India" – With mobile-based services gaining traction across theworld, India is not far behind, especially in the field of mobile banking. A recent report prepared by KPMGsays the country has the youngest population of mobile banking users across the globe. A report. – (IE Aug22, 2015 p 15)

MOBILE WALLETSSampath, Pradeep – "What mobile wallets mean for consumers" – An article. – (FE Aug 27, 2015 p 11)

MONETARY POLICIESRiley, David – "Divergent monetary policies could imperil fragile global growth" – The Fed may try to

square the circle by raising rates next month. An article. – (FT Aug 25, 2015 p 24)

MONETARY POLICY"Aug 4 review: Rajan held out against rate-cut call: Majority of monetary policy panel members had

stressed weak demand, poor credit growth" – Reserve Bank of India Governor Raghuram Rajan choseto keep the policy repo rate steady in the August monetary policy review, despite majority of the members ofa panel on monetary policy recommending a reduction. Also, according to the 'Summary of the ElectronicConsultation with the Technical Advisory Committee on Monetary Policy: July 2015' - or the minutes of thepre-monetary policy meeting - members were of the view that downward adjustment of the nominal rupeeexchange rate could encourage exports, without adding to inflation or upsetting foreign investors. A report.– (HBL Aug 26, 2015 p 6)

"Interest Rates Likely to Soften: ICICI Bank CEO" – Kochhar says a lot of factors that determineinterest rates have come under control. RBI kept key lending rate and repo rate, unchanged at 7.25% in itsAugust 4 review. A report. – (ET Aug 19, 2015 p 11)

"Jaitley mounts pressure on RBI to cut rates" – Finance minister Arun Jaitley is stepping up pressure onthe RBI to cut rates as the economy struggles and price rises slow, with some bureaucrats working behindthe scenes to argue for an immediate cut of as much as 50 basis. A report. – (HBL Aug 21, 2015 p 6)

– INDIAN FINANCIAL CODE

"Cabinet note moved on monetary policy panel: Committee may have three government nominees and four fromthe RBI, with the governor as chairman" – The government has moved a cabinet note on the creation of amonetary policy committee (MPC) as part of plans to reset a framework for this in line with international best

– 14 –

practices. The committee is likely to have three government nominees and four from the Reserve Bank ofIndia, with the governor as chairman. There may not be any veto for the governor but the person will have acasting vote in case of a tie. A report. – (ET Aug 26, 2015 p 13)

"Monetary policy in India: Rajan in chains" – A proposal for a new rate-setting committee sparks a row. Anarticle. – (Eco 416(8949) Aug 1, 2015 pp 61-62)

NON-PERFORMING ASSETS"Address issue of retail NPAs too: BCG report" – There is an uptick in retail non-performing assets

(NPAs) and this merits the attention of banks with great urgency, according to a BCG report released on theoccasion of the annual FICCI-IBA Banking Conclave. While retail NPAs in gross terms came down from3.2 per cent in 2011 to 1.5 per cent in 2014, they edged up to 1.6 per cent in 2015. A report. – (HBL Aug 25,2015 p 10)

"Fix the politics, to fix banks' bad loans" – The biggest constraint on banks is bad politics. An editorial.– (ET Aug 24, 2015 p 12)

"NPAs to jump to 5.9% by March: Icra" – The banking sector is likely to end this fiscal with increased grossnon-performing assets at 5.3-5.9%, primarily due to withdrawal of the regulatory forbearance on restructuredadvances by the Reserve Bank from this April, according to ratings agency Icra. – (IE Aug 27, 2015 p 13)

"State Bank calls for incentives to revive stressed loans: Citing difficulty in funding defaulters, SBI'sBhattacharya seeks a big push" – State Bank of India chairman Arundhati Bhattacharya sought incentivesfor banks to call a spade a spade when it comes to bad loans, even as the regulator and the government workto revive the banking system saddled with a mountain of non-performing assets. The moment you declare anaccount as NPA, giving further money to it, and this is required for stress assets, becomes almost impossible.A report. – (ET Aug 21, 2015 p 15)

Mukherjee, Deep Narayan – "Bad banks: NPA issue needs a govt-sponsored distressed asset fund"– The bad loans may be 'purchased' by SDAF from banks at face value. The SDAF will pay banks by issuingthem long-dated bonds (10-year-plus) at a near-zero interest rate. An article. – (ET Aug 19, 2015 p 14)

– ASSET RECONSTRUCTION COMPANIES

Goswami, Omkar – "When 'bad banks' work; when they don't" – India's asset reconstruction companiesare, at best, sideshows. Don't expect them to be white knights saving banks from their huge NPAs. Anarticle. – (BS Aug 21, 2015 p 10)

– INDRADHANUSH

"Indradhanush lacks major steps to recover NPAs" – The 'Indradhanush' programme of the Centre doesnot contain any major steps to recover NPAs (non-performing assets) in public sector banks (PSBs), accordingto All India Bank Officers' Confederation (AIBOC). A major part of NPAs of PSBs are in infrastructure,power and telecom sectors. When private sector banks had stayed away, PSBs had lent to these sectors.– (HBL Aug 24, 2015 p 15)

– PUBLIC SECTOR BANKS

"All-out battle launched to tackle bank bad loans, says Jaitley: Concerns of all the troubled sectorsare being addressed: Finance Minister" – Finance Minister Arun Jaitley is hoping that public sectorbanks will be able to control surging bad debts (non-performing assets) in the next few quarters. As on June30, NPAs had surged to over 6 per cent against 5.2 per cent at the end of March 31, 2015. The NPAs arewholly unacceptable. They reached this level partly because of indiscretion, partly because of inaction, andpartly because of the challenges some sectors of the economy are facing. He said an all-out effort has beenlaunched to bring the NPAs down. A report. – (HBL Aug 22, 2015 p 1)

"State-run banks eye asset sale to ARCs" – Union Bank of India, Corporation Bank and Bank of Maharashtraare planning to sell stressed loans aggregating to Rs.2,700 crore to asset reconstruction companies (ARCs).A report. – (HBL Aug 25, 2015 P.10)

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PAYMENTS BANKS"'Will pose challenges' to commercial banks: Competition likely to increase for small-value accounts,

say bankers" – The new payments banks are likely to impact commercial banks. They echoed the fearsexpressed by Arundhati Bhattacharya, SBI Chairman, who felt that these new banks will pose a threat to theexisting players with their ability to move money as well as compete for low-cost savings accounts. BusinessLinespoke to some commercial bankers to get their views. A report. – (HBL Aug 22, 2015 p 8)

"Banking on disruption: As in e-tail, how well payments banks will do is unclear" – An editorial. – (FEAug 21, 2015 p 10)

"Banks for the unbanked" – An editorial. – (H Aug 21, 2015 p 10)

"Merits of experimentation" – Diversity of payments bank models should aid their success. An editorial.– (BS Aug 21, 2015 p 11)

"New kids on the block" – With eleven players set to enter the fray, payments banks look set to disrupttraditional banking and boost inclusion. An editorial. – (HBL Aug 21, 2015 p 8)

"Payment banks a big step forward: They will improve access and slash costs" – An editorial. – (ETAug 21, 2015 p 12)

"Payments banks pose risk to market share of PSBs" – The proposed Payments Banks will increasecompetition for the public sector lenders and could also pose risks to their market share over the long-term,according to the Fitch Ratings. Their focus on smaller deposit holders and mobile banking will add to competitivepressures for public banks, and could potentially pose risks to their market share over the long- term. – (FEAug 21, 2015 p 8)

"Payments banks: RBI Governor, SBI chief not on the same page: Rajan sees a connect, Bhattacharyaespies a threat" – Reserve Bank of India Governor Raghuram Rajan and State Bank of India ChairmanArundhati Bhattacharya took opposing stands on the impact of payments banks on the traditional lenders. Idon't think these 11 new banks are a threat to the existing banks. These new banks will complement theexisting system by traversing the last mile. The reason for this is that there is nothing the universal bankscannot do that the payments banks can do. But there are some of the things that the payments banks can't dowhich the universal banks can, according to Raghuram Rajan, Governor, RBI. Why this payments bank is alittle worrisome is because they will be allowed to have savings deposits. What if they go for poaching rates,then many of the commercial banks could lose a portion of the deposits which are relatively lower priced sothat will take away the ability to transmit rates and give further loans at lower rates, according to ArundhatiBhattacharya, Chairman, SBI. A report. – (HBL Aug 21, 2015 p 1)

"Smaller, wider" – Payments banks could be game-changers, bring in genuine financial inclusion. An editorial.– (IE Aug 21, 2015 p 10)

Bhasin, Tinesh and Nair, Priya – "How will payments banks help you?" – Unbanked customers canexpect easier access to banking. An article. – (BS Aug 21, 2015 p 6)

Dugal, Ira – "An 'open sesame' moment for the Indian banking sector" – An article. – (Mint Aug 21,2015 p 21)

Kale, Sumita – "The payments banks revolution" – Small, no-frills banks have the potential to provideaccess to financial services for all Indians. An article. – (Mint Aug 25, 2015 p 31)

Kumar, Dhirendra – "Realising promise of payments banks" – The coming of a large number of paymentbanks will certainly increase competition and force everyone to be cheaper and better. An article. – (ET Aug24, 2015 p 8)

Kumar, Shinjini – "Payments banks and the new banking paradigm" – Perhaps it now makes sense torevisit the guidelines and explore payments and small banks under one umbrella, one for width and the otherfor depth. An article. – (ET Aug 26, 2015 p 16)

Mani, Vijay – "Looking for viable payments banks" – The formula for viability is to acquire and sustain alarge base of active customers at low marginal cost and progressively expand revenue from this base. Anarticle. – (Mint Aug 26, 2015 p 31)

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Merchant, Krishna – "The impact of payment banks on traditional ones" – Bharti Airtel Ltd, TechMahindra Ltd, Aditya Birla Nuvo Ltd, Cholamandalam Investment and Finance Co. Ltd and Reliance IndustriesLtd shares rallied morning as they were among the 11 entities which have received in-principle approval fromthe Reserve Bank of India (RBI) to start payment banks. An article. – (Mint Aug 21, 2015 p 18)

Mishra, Lalatendu – "Payments banks: Financial services technology holds the key to success: Mobileto evolve into virtual ATM, bank branch" – With a mobile wallet, one can buy things, pay for online andoff line purchases, transfer money, receive wages and government subsidies and deposit cash and withdrawmoney. Growing middle class with rising incomes who want convenience and are increasingly using theirmobile phones for payments, accessing banking services, and other financial transactions, according to JatinderAhuja, Head of India and South West Asia Business, Amdocs. An article. – (H Aug 26, 2015 p 16)

Roy, Subir – "A banking revolution" – What has happened in the last few weeks, and what will follow as aconsequence, will bring about a major change in the Indian banking scene - a change which has the potentialto be as big as bank nationalisation. If things play out the way the regulator, the Reserve Bank of India, hasplanned, the country will go a long way in taking banking to the majority of Indians who still remain outside itsfold. An article. – (BS Aug 26, 2015 p 9)

Sabnavis, Madan – "Banking solutions for the aam aadmi" – Payment banks can act as a vehicle forinclusive banking; but there are regulatory and technological concerns. An article. – (HBL Aug 21, 2015 p 8)

Tanksale, Mohan V and Singh, A Didar – "A welcome shake-up of the banking sector" – Paymentsbanks along with digital outreach will disrupt the status quo. But they will also serve the unbanked better. Anarticle. – (HBL Aug 24, 2015 p 16)

Titus, Mathew – "Delivering inclusion: Where do payments banks stand?" – An article. – (HBL Aug 25,2015 p 9)

– CHOLAMANDALAM

"The niche we will own is financial inclusion" – An interview with Vellayan Subbaiah, MD, CholamandalamInvestment and Finance. The Reserve Bank of India (RBI) granted in-principle nod to 11 entities to operatepayments banks. One among them was Cholamandalam Distribution Services Ltd, a wholly owned subsidiaryof the Rs.26,900-crore Murugappa Group's non-banking finance company (NBFC) arm CholamandalamInvestment and Finance. He talks about the strategies and the way forward for the new payments bank.– (BS Aug 21, 2015 p 6)

– ICICI BANK

"Payments banks will enhance financial ecosystem: Kochhar" – ICICI Bank managing director and chief executiveofficer Chanda Kochhar said the lender has tie-ups with two payments bank applicants that have receivedthe RBI's in-principle approval. Also she said we will watch the progress in both. We have (tie-ups) with Finoand Vodafone. – (FE Aug 21, 2015 p 8)

– INDIA POST

"India Post in talks with Telcos for Payments Bank" – Having secured the RBI's nod to set up a paymentsbank, the Department of Posts has said it is open for partnership in this new venture and is in talks with sometelecom companies. – (ET Aug 21, 2015 p 8)

"Plan on payments banks gets moving: Postal department sets ball rolling: Will finalise note forinvestment approval of Rs.300-400 crore; subsidiary to be created for the venture" – A day aftergetting a nod for setting up a payments bank, the department of posts (DoP) has begun to take this forward.Investment of Rs.300-400 crore will go into the venture, for which it has started preparing a note for approvalby the Public Investment Board (PIB). After PIB, approval will be sought from the Cabinet. A wholly-ownedsubsidiary will be carved out under DoP for a payments bank, to later become an umbrella entity for a fullbank. Professionals from the private sector will be hired, according to a senior official. A report. – (BS Aug21, 2015 p 6)

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– RELIANCE

"Payments bank licence to leverage telecom, retail biz: Ambani" – Reliance Industries chairman MukeshAmbani has said the proposed payments bank will leverage Reliance Jio's pan-India telecom network andReliance Retail's online and offline business model, to promote the digital ecosystem among all sections of thesociety across the country. Also he said the partnership with SBI will enhance product capabilities, create themost extensive distribution network in India and drive mass scale digital payments and banking adoption,through an 'easy to use' experience driven by technology. SBI will hold up to 30 per cent stake in the bank.– (IE Aug 22, 2015 p 16)

– TECH MAHINDRA

"Will use 'click & brick' model: Mahindra" – IT major Tech Mahindra said it will use 'click and brick'model to allow subscribers easy access to its payments bank services, in line with its efforts towards financialinclusion using technologies. – (FE Aug 21, 2015 p 8)

PROFITABILITY"Banks face a new burden as CASA takes a dip" – Profitability of banks does not only depend on what

interest rates they charge on loans, but more importantly, on how much they pay their depositors. Thecompetitiveness of any bank depends on how low it is able to keep cost of funds. The most importantcomponent of this is the so-called CASA, where CA stands for current account and SA, for savings account.These deposits are called low-cost since banks do not pay any interest on current account deposits. Onsavings accounts, most banks barring Yes Bank and Kotak Mahindra Bank pay 4% interest. A recent studyby Nomura shows that state-run banks are not only plagued by bad loans, but also sliding CASA. A graphicalreport. – (ET Aug 26, 2015 p 16)

PUBLIC SECTOR BANKS"PSBs may look at exit strategy from UTI MF" – Move to pare down exposure of state-run banks in non-

core assets and raise capital for core biz of lending: three PSBs now hold 55.5% stake in UTI AMC. PunjabNational Bank and Bank of Baroda hold 18.5% stake each in UTIMF. A report. – (ET Aug 21, 2015 p 11)

– GOVERNMENT'S STAKE

"Govt may pare stakes in some banks to 33%: Boards bureau & investment company steps towardprivatisation, says official" – The government is considering a proposal to privatise some state-ownedbanks in phases, according to official sources. A proposal for setting up a holding company two years downthe line will be the first step in this direction. The Bank Investment Company, which will replace the proposedBank Boards Bureau, may pare its stakes in public sector banks to 33 per cent. Privatisation is definitely onthe agenda, else we would not have talked about the Bank Investment Company, according to an official whodid not want to be named. A report. – (BS Aug 27, 2015 p 1)

RESERVE BANK OF INDIA

– AUTONOMY

"The Reserve Bank and the Government" – Is there a larger design in the disrespect this government isshowing towards institutions? An article. – (EPW 50(33) Aug 15, 2015 pp 7-8)

SMALL FINANCE BANKS"Small finance bank licences in Sept: Central bank got 72 applications; SFBs will not pose threat to

payments banks, says guv Rajan" – A day after approving the grant of payments bank licences, theReserve Bank of India said it will announce small finance bank licences in September, as part of its overallfinancial inclusion thrust that aims to bring banks to every corner of the country. A report. – (HT Aug 21,2015 p 16)

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SMARTWATCH BANKINGD'Monte, Leslie – "Growth driver: It's time for smartwatch banking" – Analysts say the growth potential is

immense and smartwatch banking can emerge as a category in itself. An article. – (Mint Aug 21, 2015 p 24)

SYSTEMICALLY IMPORTANT BANKS"RBI to name 'important' banks" – The Reserve Bank of India will release the names of banks it deems

'systemically important within 2-3 days, according to deputy governor R Gandhi. In July 2014 the RBI hadsaid four to six domestic lenders would be labelled 'systemically important', or the rough equivalent of too-big-to-fail in other countries. – (Mint Aug 26, 2015 p 7)

WAGE DEAL"Banks to shut on 2nd, 4th Saturdays" – Bringing cheer to lakhs of bank employees, the government has

accepted the long-pending demand of workers to declare second and fourth Saturdays holidays, with effectfrom September 1. – (TI Aug 21, 2015 p 17)

RBI CIRCULARS"Auction of Government of India Dated Securities" – (RBI Circular RBI/2015-2016/158 Ref.No.IDMD/

373/08.02.032/2015-16 dated 24.08.2015)

"Cash Withdrawal at Point-of-Sale (POS) - Enhanced limit at Tier III to VI Centres" – (RBI CircularRBI/2015-2016/164 DPSS.CO.PD.No.449/02.14.003/2015-16 dated 27.08.2015)

"Detection of Counterfeit Notes" – (RBI Circular RBI/2015-2016/162 DCM (FNVD) No. 776/16.01.05/2015-16 dated 27.08.2015)

"Foreign Direct Investment - Reporting under FDI Scheme on the e-Biz platform" – (RBI CircularRBI/2015-2016/157 A. P. (DIR Series) Circular No. 9 dated 21.08.2015)

"Grant of 'Certificate of Registration' - For carrying on the business of Credit Information - CRIFHigh Mark Credit Information Services Private Limited" – (RBI Circular RBI/2015-2016/161DBR.CID.BC.35/20.16.042/2015-16 dated 27.08.2015)

"Guidelines for Relief Measures by Banks in Areas affected by Natural Calamities" – (RBI CircularRBI/2015-2016/156 FIDD No. FSD.BC.12/05.10.001/2015-16 dated 21.08.2015)

" Implementation of Section 51-A of Unlawful Activities Prevention Act (UAPA), 1967- 19th and 20thUpdate dated August 17, and August 18, 2015 of Al-Qaida Sanctions Lis" – (RBI Circular RBI/2015-2016/159 DBR.AML.No.2723/14.06.001/2015-16 dated 24.08.2015)

"Security and Risk Mitigation Measures for Card Present and Electronic Payment Transactions -Issuance of EMV Chip and PIN Cards" – (RBI Circular RBI/2015-2016/163 DPSS.CO.PD.No.448/02.14.003/2015-16 dated 27.08.2015)

"Streamlining flow of credit to Micro and Small Enterprises (MSEs) for facilitating timely and adequatecredit flow during their 'Life Cycle'" – (RBI Circular RBI/2015-2016/160 FIDD.MSME & NFS.BC.No.60/06.02.31/2015-16 dated 27.08.2015)

AGRICULTURE & RURAL DEVELOPMENT

AGRICULTURAL FINANCETripathi, Ashutosh Kumar – "Credit for agricultural households: Growing inequity" – Policy and

institutional interventions during 2002-12 were more favourable for large farmers as compared to small andmarginal ones. An article. – (FE Aug 25, 2015 p 9)

– 19 –

REGIONAL RURAL BANKS"Govt puts on hold proposal to pay allowances to RRB employees" – About 82,000 regional rural bank

employees have been left in the lurch with the government holding back proposals to pay allowances to themeven as their peers in nationalised banks get it. Payments under the heads such as medical aid, leave fareconcession and transfer allowance form important part of their earnings but the government said it wouldreview it before taking a final decision, making a sizeable chunk of bank employees unhappy. India has over10 lakh bankers across the spectrum. – (ET Aug 26, 2015 p 9)

Mohan, Raghu – "The rural strike back!" – Nearly 1.25 lakh employees and officers of 36 RRBs spreadover 20,000 bank branches want to stop the banks' privatisation, and have threatened a two-day strike duringthe upcoming Monsoon Session of Parliament. An article. – (BusW 33(51) Jul 21, 2015 p 20)

RURAL SKILL DEVELOPMENT SCHEMES"Govt set to revamp rural skill development schemes" – The Narendra Modi led NDA is revamping the

skills programmes for rural India, planning to provide interest subsidy to make credit cheaper and remove acap on spending under the National Rural Livelihoods Mission. The move comes on the heels of the launchof Skills India, a national skills initiative. A report. – (ET Aug 24, 2015 p 11)

INDUSTRY

BOND MARKET

– CORPORATE BONDS

"Opportunities for corp bonds in finished infra space" – Excerpts from an interview with SujataGuhathakurta, Head of Debt Capital Markets at Kotak Mahindra Bank. – (FE Aug 27, 2015 p 8)

COMMODITY DERIVATIVES"Sebi approves new norms for commodity derivatives market" – The Securities and Exchange Board of

India (Sebi), which is set to regulate the commodity derivatives market, approved new norms for the country'scommodity derivatives market and its brokers. A report. – (Mint Aug 25, 2015 p 4)

CREDIT RATINGSampathkumar, D – "Do credit ratings really reveal all?" – Regulatory attention must focus on some

basic standards of disclosure so that stakeholders can take the right decisions. An article. – (HBL Aug 22,2015 p 6)

HOUSING PRICES"Rajan is right: Salaried class can't afford a house: Only double-income households can buy flats in

India's top 8 cities, except Mumbai" – When Reserve Bank of India Governor Raghuram Rajan askedreal estate developers to start reducing prices so that more people would be willing to buy, he was only statingthe obvious. According to real estate consultants, only double-income families can afford to buy a decent-sized flat (say, a 2 BHK flat with 1,000 sq ft of super built-up area) in India's top eight cities, except Mumbai.A report. – (BS Aug 22, 2015 pp 1, 3)

INSURANCE INDUSTRY"Irda chief urges firms to redesign products, offer simpler policies" – India's insurance regulator urged

the industry to redesign products, offer simpler policies and rebalance the utilization of premiums collectedfrom customers to enhance insurance penetration. A report. – (Mint Aug 22, 2015 p 5)

– 20 –

– CORPORATE GOVERNANCE

"IRDA to issue mgmt control guidelines soon: Regulator working on reinsurance guidelines, whichwill be out by Oct-end" – IRDA will come out with guidelines on management control under corporategovernance structure. There are five insurance companies that have applied for higher foreign direct investmentlimit, while seven to eight reinsurance companies have expressed interest in entering India, after the changein amendment to the Insurance Act. A report. – (ET Aug 22, 2015 p 6)

MUTUAL FUNDS"MF assets from small cities see sharp fall" – Investments in mutual funds (MFs) from beyond the country's

top 15 cities, B-15 in sector parlance, has been on a decline in recent months. Assets under management(AUM) from B-15 in July was Rs.2.04 lakh crore, 12.5 per cent down from May. And, the drop in B-15assets came when the overall sector's assets grew about 10 per cent, while that from the top 15 cities (T-15)outperformed the sector average, with growth of a little over 12 per cent to Rs.11.1 lakh crore, from Rs.9.9lakh crore earlier, according to the Association of Mutual Funds in India. A report. – (BS Aug 21, 2015 p 13)

SEBI"Every market misconduct, dubbed scam, has taken capital market back by 10 yrs" – Sebi chairman

UK Sinha defends relaxing of norms for listing start-ups, talks of steps the regulator has taken to boost retailinvestor confidence, says some of Sebi's rules are 'more stringent' than that of the Companies Act and arguesthat phone-tapping powers can be misused. An interview with Sebi chief UK Sinha. – (FE Aug 23, 2015 p 4)

"Finance ministry starts scouting for new Sebi chairman" – The finance ministry has put out a noticeinviting applications for the post of chairman of the Securities and Exchange Board of India (Sebi) as incumbentchairman U.K. Sinha will finish his five-year term in February 2016. A report. – (Mint Aug 27, 2015 p 4)

STOCK MARKET"Most wealth wiped out in 1 day" – China shock crashes markets; Sensex, Nifty post biggest fall in six-and-

a-half years; indices back to October 2014 levels; Rupees slide gathers pace. A report. – (BS Aug 25, 2015pp 1, 13)

SMALL SCALE INDUSTRY

ENTREPRENEURSHIP

– EMPLOYMENT

Raja, Atul – "Can entrepreneurship meet the job-creation challenge?" – According to the ministry ofcorporate affairs, about 1 lakh new companies were registered in India in 2014. So, entrepreneurship isgrowing. But the outcome of this positive trend will be tested by the number and quality of jobs created. Are1 lakh new businesses that create employment for an estimated 10 lakh people enough for India? When youconsider that India is adding 10 lakh people to the workforce each month - or crores looking for jobs in thenext 10 years - the urgency to address the problem starts assuming importance. An article. – (FE Aug 24,2015 p 12)

SMEs

– FINANCE

"Small and medium enterprises need funds to grow big" – A report. – (BS Aug 25, 2015 p 17)

– 21 –

INTERNATIONAL ECONOMICS

CHINA"The great Chinese economic chill: China is facing a crisis that won't vanish by applying the usual

nostrums" – The more China tries to postpone structural reforms, the greater will be the pain it will have tobear. A view. – (Mint Aug 26, 2015 p 30)

Anderlini, Jamil – "Weakened foundations" – Facing an economic slowdown, Beijing has found that itsonce-reliable tools to stimulate growth are losing their power. With policy options running low, its leadersbroke an old taboo and devalued the renminbi. An article. – (FT Aug 20, 2015 p 5)

Haass, Richard N – "The new 'two Chinas' question" – China wants the economic growth that capitalismproduces but without the downturns that come with it. An article. – (Mint Aug 26, 2015 p 31)

Palit, Amitendu – "Canvassing China: What's so spooky?: Macroeconomic fundamentals make it asafe economy with enough liquidity to fight adversities" – The problem is the world is not ready tobelieve that China can get as market-driven as the rest of the world. All are happy to accept and interact witha China that is halfway between controls and markets, since they have got used to doing so. An article. – (FEAug 26, 2015 p 6)

– CURRENCY DEVALUATION

"Cheaper yuan not a concern yet: Rajan: Says real worry is competitive devaluation" – Reserve Bankof India (RBI) governor Raghuram Rajan said that he would not be overly concerned if the depreciation ofthe Chinese currency held at the current level but added it could become 'worrisome' if this was the beginningof a longer-term depreciation process. 'The Chinese move does raise questions about the true strength of theChinese economy,' the governor remarked. A report. – (FE Aug 21, 2015 pp 1, 2)

"Currencies lose firepower as effective trade weapon" – When China's central bank last week triggeredthe two biggest single-day falls in the renminbi since the 1990s, plenty of people were keen to proclaim aresumption of the 'currency wars' that have been a feature of the global economy since the 2008 financialcrisis. But if Beijing's move prompted a predictable political response from veteran currency warriors inWashington and other capitals, it ignored what many trade economists see as an increasingly well-documentedfact - currencies are not the trade weapon they once were. A report. – (FT Aug 20, 2015 p 2)

Yongding, Yu – "China's daring depreciation" – The goal of the recent devaluation was to let the marketshave a say in determining currency valuation. An article. – (Mint Aug 21, 2015 p 31)

GREECEDixon, Hugo – "Greece may not need debt haircut" – This would involve giving it longer time to start

repaying its debt and finishing the job. Looking at debt to GDP ratios is not suitable to measure Greece's debtsustainability because its borrowings are mostly on concessionary terms. An alternative would be to look atits gross financing needs and its interest payments as a percentage of GDP. An article. – (FE Aug 21, 2015 p 10)

CAPITAL FLOWS

– FOREIGN EXCAHNGE RATE

Rajwade, A V – "Capital flows & exchange rates" – An article. – (Mint Aug 27, 2015 p 8)

CAPITAL OUTFLOWS"The world should fear an emerging market rout" – Developing countries need a stimulus to offset capital

outflows. An editorial. – (FT Aug 20, 2015 p 6)

– 22 –

ENVIRONMENT

– CLIMATE CHANGE

Rajamani, Lavanya – "Addressing loss and damage from climate change impacts" – The 21st Conferenceof the Parties to the United Nations Framework Convention on Climate Change, to be held in Paris from 30November 2015 to 11 December 2015, will need to resolve several long-standing issues pertaining to climate-induced loss and damage. This article lists the key issues relating to loss and damage. It then evaluates thepotential for and limits of legal claims relating to loss and damage in general international law so as tocontextualise their treatment in the climate negotiations. An article. – (EPW 50(30) Jul 25, 2015 pp 17-21)

Roy, Dunu – "A subaltern view of climate change" – In the context of the ongoing debate on climate changeand the policies that nation states need to adopt to limit the accumulation of greenhouse gases in the atmosphere,the author poses a relevant question: instead of asking what would happen to the world if everyone were toconsume energy at the level of the rich 'developed' American, we can now enquire why everyone is notconsuming at the level of the above-poor 'developing' Indian? He also suggests that the way the poor adapt,migrate and progress provides not just a sustainable approach to climate change but also one that addressesresource use. An article. – (EPW 50(31) Aug 1, 2015 pp 31-39)

FOREIGN EXCHANGE MARKETNinan, Oommen A – "Exchange rate to determine corporate profitability" – The fall in Yuan prompted

other countries to resort to competitive devaluation of their currencies to support their exports. If Chinesedepreciation holds around this level it should be fine. If it is more it will be worrisome. You could have tit fortat actions, according to Raghuram Rajan, Governor, RBI. An article. – (H Aug 24, 2015 p 15)

– ASIA

"Asian currencies: Plunging like it's 1998" – The rupiah and ringgit plumb depths unseen since the Asianfinancial crisis. An article. – (Eco 416(8950) Aug 8, 2015 pp 58-59)

MANAGEMENT

CORPORATE GOVERNANCEMarcus, Lucy P – "The better corporation" – Around the world, the corporte governance landscape is

shifting, as efforts to improve business practices and policies gain support and momentum. A view. – (MintAug 22, 2015 p 11)

CORPORATE SOCIAL RESPONSIBILITYRamswami, Vishala – "CSR begins at home" – Why corporates must help working women. An article.

– (HBL Aug 24, 2015 p 17)

LEADERSHIP"A leader has to be trusted by all employees" – Excerpts from an interview with Prabal Chakraborty, Vice-

President & Managing Director, Boston Scientific Company, India. – (HT Aug 27, 2015 p 19)

MANAGEMENT EDUCATION"Management education has become so expensive, it dissuades aspirants" – An interview with Abhijit

Bhaduri, Chief Learning Officer, Wipro. – (HT Aug 25, 2015 p 2)

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