VisVoice

Bail in Lenders and Depositors out? Lot of heat is generated over the proposed Section 52 of the FRDI Bill.  This section empowers the Resolution authorities to ‘cancel’, ‘modify’ or ‘change’ the form of liability of the institution or cancel the liability altogether.  In respect of Banks, the major liability is in the form of Deposits accepted from the Public, large and small.  Naturally everyone is worried whether the resolution adopted will ‘nullify’ the deposit, restrict/defer the liability to the depositor or will it convert the depositor into a shareholder in a stressed banking institution.  The government, the regulator, media and all persons keen to implement the Financial Reforms in the country join together to reassure that the depositors need not worry and they will be protected.  But when an act is passed giving powers to invoke ‘bail-in’, what is the guarantee that this will never be used? If it is used, what is the recourse available to deposi...

Kanungo CSC Report:  Some Critical Issues  The  Committee for 'Review of Customer Service Standards in RBI Regulated Entities'  (REs) headed by Shri Kanungo, former Deputy Governor, Reserve Bank of India (RBI) submitted its report to RBI on 24th April 2023. While most  of the recommendations show the way how RBI should regulate and how the REs should develop the customer service  as a enterprise-wide culture, some are reinforcing instructions already there. But there are some critical 'live' issues, that were merely outlined and left to the regulator to define and fine tune. I would like to detail, four such issues: Critical issues that need improvement: 1. Nomination : The committee has recommended that nomination in deposit accounts may be made mandatory (optional now in the hands of depositors) and nomination in all deposit accounts should be completed in 3 years. In this regard nomination in deposit accounts was brought in 1985, when banks were not comp...

  Wilful Defaulters/Fraud Accounts: Are the accounts untouchable? I. Compromise settlement permitted in willful defaulters'/fraud accounts:   Reserve Bank of India (RBI/Regulator) has come out with comprehensive regulatory framework governing compromise settlements and technical write-offs. The instructions are applicable to all the regulated entities (RES-s) (Commercial Banks, SFBs, NBFCs, etc.). The circular also covers compromise settlements, if entered into, with accounts classified as wilful defaulters or fraud . To ensure due diligence, transparency and uniformity, RBI laid down the following for compliance by all the REs: 1. Board approved policies, which lays down the processes (with factors like minimum ageing, deterioration in collateral value, etc.) that should be in place for considering compromise settlements with the borrowers as well as for technical write-offs. 2. In respect of compromise settlements, delegation of powers for such approvals rests with an ...

If I were a MPC member? RBI Monetary Policy Committee is meeting between 6th and 8th June 2023 to review the repo rate. Since its meeting in April 2023, there have been changes in the following factors, which usually play a major part in their discussions. 1. FED rate: FOMC raised the fund rate yet again (10th time) by 25 bps. in May 2023.. However, the toned down statement on tightening the rate further in future, did create an impression that a long pause is likely from now on. 2. Forex Reserves: Forex reserves now at USD 589 billion is comfortable to take care of more than 9 months import bills at present levels. 3. Crude Oil: The average price is less than USD 80   per barrel, which is the assumption used by RBI in its inflation projections for FY 2023-24. 4. CPI inflation: is less than the upper tolerance level of 6% within which RBI is mandated to keep it, for ensuring price stability. Especially the April 23 numbers at 4.7% is closer to the target level of 4% ...

  Desirable leadership styles ( F rom a sincere teammate ) 1. Be a Visionary, but more important, be a good listener. 2. Respect Protocol, but keep your doors open for anyone to enter, so that you get ground realities beyond the 'filtered news' reaching via protocol. 3. Identify the 'Yes Sir/Boss' people around you. Probe them once a while, with intriguing questions on business happening in the field. Helps them to get fine tuned, makes them understand what the boss wants and gives them a chance to be the real bridge between boss and others. 4. Compliment the staff in front of others. Reprimand them in person 5. No leader is an expert in all areas, the bank undertakes. Understand where you are a 'jack"and where, an expert. Lead from the front in areas you feel you are an expert. Aĺlow the experts in the team to lead, where you are a 'jack' and back them fully. 6. Never be of 'Nuisance' value when the team is executing well and the least thing it...