Citizens' Issues
Large cash market main driver of corruption: RBI

If the cash component in the society goes down, it will help solve a lot of problems like the rampant corruption, monetary policy transmission issues and cash management for banks at the operational level, feels the central bank

Mumbai: Stating that the circulation of a large amount of cash in the economy leads to many problems, including corruption, Reserve Bank of India (RBI) Deputy Governor HR Khan on Thursday said the central bank is focused on bringing down the cash component in the economy, reports PTI.
"We want that we should move towards a less cash society. There is a need for the predominant cash in the society to go down," Khan told reporters at the sidelines of a Punjab & Maharashtra Cooperative (PMC) Bank event.
He said if the cash component in the society goes down, it will help solve a lot of problems like the rampant corruption, monetary policy transmission issues and cash management for banks at the operational level.
At present, the amount of cash circulating in the system is up to 14% of the gross domestic product (GDP), which makes the country one of the highest markets that has cash circulation, he said, stressing on the need to bring down the ratio.
Only Japan has such high levels of cash, he said, without giving a target on the ratio.
The remarks come at a time when there is a widespread angst in the society over rampant corruption, with repeated reports from the statutory auditor on alleged corruption only doubting the credibility of the government.
Khan said implementation of information and communication technology (ICT) solutions like mobile and online banking, core banking and electronic fund transfers can help bring down the reliance on cash.
Both the government and the RBI are taking efforts to bring down usage of cash, Khan said, citing the case of compulsory use of electronic fund transfers for all transactions above Rs25,000 adopted by the government. 
Asked if such a move, which is expected late in the night today (IST) will push up the commodity prices, he said, "that risk is always there." 
Meanwhile, Khan said the RBI will soon be implementing the suggestions of the Malegam committee on cooperative banks, once "legislative issues" around it get solved.




5 years ago

Perhaps, this is a vicious circle. Use of huge quantities of high denomination notes (Rs500 and Rs1000) may have a link with corrupt practices. Unaccounted payments in real estate deals are mostly in cash. But, there is no magic wand with law enforcers or regulators to prevent such practices, unless there is a political will to handle this. There are measures which could be tried, but such expensive and harsh measures may have credibility implications. Retaining cash beyond a level required for say, three days’ expenses, where banking services are easily accessible should be discouraged through incentives/disincentives. But, there was a time when BEST alone had lakhs of rupees in coins which banks were not able to accept as they did not have staff to count and accept the coins. Still, it is a welcome change that there is an open discussion on the issue.

Deccan Chargers reject lone bid, BCCI to decide team's fate on Saturday

The development has put the BCCI in a quandary as it was expecting Deccan Chargers to resolve its financial problems by finding a buyer for itself

Chennai: Debt-ridden Deccan Chargers' bid to find a buyer ended in an anti-climax today with the Indian Premier League (IPL) team rejecting the only bid they received, leaving the future of the beleaguered franchise uncertain, reports PTI.
Deccan Chronicle Holdings, the owner of Deccan Chargers, reportedly received a bid of Rs900 crore by PVP Venture Capitals but surprisingly chose to reject it at the auction as it considered the price and terms unsuitable.
The Board of Control for Cricket in India (BCCI) has now been forced to take a decision on the fate of Chargers at its Working Committee meeting in Chennai on 15th September.
"The price and terms of payments were not acceptable to Deccan Chargers. The BCCI assisted the Deccan Chargers and we also looked at the eligibility criteria, whether they are fit and proper. We found that the party was acceptable to us. After that it was between Deccan Chargers and the bidder, there the BCCI was not involved. But they informed us that the price and terms were not suitable, so they didn't accept it," BCCI President N Srinivasan told reporters.
Asked if a new tender will be floated since the lone bid has been rejected, Srinivasan said, "You have to ask Deccan Chargers, now it's upto them. The franchise is on (exist). The BCCI has issued a notice to the franchise to clear certain defects. We have given them some time, but that is between BCCI and the franchise."
The BCCI later issued a press release and said the Board had no role in Deccan Chargers' decision to reject the bid.
"The bid that was received by Deccan Chronicle Holdings Ltd met the BCCI's eligibility and suitability criteria. The bid was then reviewed by Deccan Chronicle Holdings Ltd who, in its discretion and with no role being played by BCCI, rejected the bid on the basis of the payment terms offered by the bidder," BCCI Secretary Sanjay Jagdale said in the release. 
"The Invitation to Tender that was announced on 6 September 2012 by Deccan Chronicle Holdings Limited, under the aegis of BCCI, concluded today under the observation of Mr Narvekar, appointed by the Mumbai High Court," said Jagdale.
The development has put the BCCI in a quandary as it was expecting the franchise to resolve its financial problems by finding a buyer for itself.
A top BCCI official indicated that the Chargers' contract could be terminated at the Working Committee meeting and a new tender could be floated. There was also a possibility that the PVP company could be given the team.
"We will discuss the entire issue now and see what can be done. It is now upto the Working Committee to take a final decision on the issue," the official said.
Another top BCCI official expressed surprise that the bid of Rs900 crore was rejected by Chargers.
"We are very surprised that a bid of Rs900 crore plus has been rejected by Chargers. We thought that for a company that is in financial mess, the offer was a good one as it would have helped them clear their players' payment from the last edition. I guess they are being governed by the banks and that is the reason for rejecting the offer," the official said.
On what will be the next step for the BCCI, he said, "We need to wait till 5pm on 15th September when the timeframe of one month given to Deccan Chargers ends. If they don't pay the players' salaries, obviously the team would cease to exist. In any case they did a very wrong thing by mortgaging a BCCI property (IPL team) to the bank."
According to IPL constitution, the BCCI has right to encash the bank guarantee and pay the players' salaries from it. There is a precedence when Kochi Tuskers Kerala team was disbanded and BCCI encashed the bank guarantee.
Deccan Chronicle Holdings purchased the Hyderabad franchise for Rs428 crore in 2008. At the auction, the base price was said to be around Rs750 crore.
The winning bidder had to meet BCCI's eligibility criteria and other requirements. This was the first time an entire IPL franchise has been put on the block by its owners, although Rajasthan Royals sold a small stake in 2009 to the actress Shilpa Shetty and her husband Raj Kundra.
According to the tender notice, which had appeared a few days' back in national newspapers, "under this invitation to tender issued by DCHL, the winning bidder will acquire from the DCHL on an "as is where is" basis the right to own and operate the IPL team currently known as Deccan Chargers, which is and will continue to be based in Hyderabad and which competes in the Indian Premier League and which has the opportunity (if applicable and subject to qualification) to compete in each and any CLT20 which is staged from 2013 onwards".
The term "as is where is" means that the new buyer will have to use the name Deccan Chargers and will have to clear the liabilities of the current owner.
According to the IPL constitution, 5% of the bidding amount will be acquired by the BCCI.
Earlier in June, DCHL had appointed investment banking institution, Religare to find a potential buyer but they were unable to find one, who would readily buy the team with its financial liabilities.


Reliance MF in distribution tie-up with IOB

As per the agreement, IOB will sell Reliance MF products through its 2,689 branches across the country

Mumbai: Reliance Mutual Fund, a part of Reliance Capital, on Thursday said it has entered into a distribution tie-up with Indian Overseas Bank (IOB), reports PTI.
As per the agreement, IOB will sell Reliance MF products through its 2,689 branches.
"This agreement would help us expand our customer base, especially in tier II and III cities, leveraging on the wide network of the bank," Sundeep Sikka, chief executive of Reliance Capital Asset Management said adding this tie-up will help the company reach around 24 million customers of IOB.
Referring to the distribution tie-up, IOB chairman and managing director M Narendra said, "This would enable the bank to operate as a financial super market and help in strengthening the relationship of the existing and potential customer base, providing an opportunity to cross-sell." 
Reliance MF manages around Rs1.4 lakh crore across MFs, government, government-sponsored public funds, managed accounts and hedge funds.


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