Money & Banking
RBI aiming to ensure gold lending risks are controlled: Gokarn

RBI had asked banks to reduce exposure to NBFCs giving loan against gold and think this would control the risks in lending towards the precious metal

Chennai: The Reserve Bank of India (RBI) is only trying to ensure that risks of lending towards gold are "controlled" by its regulatory steps like tightening prudential norms, reports PTI quoting the central bank's Deputy Governor Subir Gokarn.
In major steps, RBI had asked banks to reduce exposure to NBFCs giving loan against the precious metal and set up a working group to suggest ways to deal with the issue.
It had also tightened the prudential norms to check excessive lending by NBFCs.
"I think what we have been focused on is that the risks in lending towards gold are controlled. That is the basis for our actions with respect to gold loan companies from some months ago," Gokarn said to a particular query by reporters on the sidelines of a conference here.
"We are not here to discourage or encourage anything. But we are sure that it should not build up into a systemic risk," he added.
Rising gold imports was held as one of the factors responsible for pushing the current account deficit (CAD) to a record high of 4.2% in last fiscal.
Last month, Finance Minister P Chidambaram while announcing approval to Rajiv Gandhi Equity Scheme to attract more retail investments in stock market, said: "It (scheme) will act as alternative financial instrument and encourage more people to invest in this instrument rather than gold, which is a dead instrument."


RBI aims to develop more efficient, integrated payment system

According to the central bank, payment systems will be driven by customer demands of convenience ease of use and access and in innovative e-payment products and capabilities

Mumbai: The Reserve Bank of India (RBI) aims to develop a more efficient and integrated payment system in the country, reports PTI.
In its 'Payment Systems In India: Vision 2012-15' document, RBI said the main focus is to provide a modern electronic payments system that is safe, simple and low-cost for use by all.
"Payment systems will be driven by customer demands of convenience ease of use and innovative e-payment products and capabilities," the RBI document said.
The regulatory policy stance will be oriented towards promoting a less cash/less paper society, it said.
RBI said it is to be achieved by nurturing a payment system that adequately serves the national and international transaction needs of the country.
The payment system initiatives taken over 2009-2012 have resulted in deeper acceptance and penetration of modern electronic payment system, it said.
Though cheque is still a dominant mode of payment, its share has come down from 65% to 52% in volume terms from 12% to 9% in value terms.
Payments in non-cash payments have shown an upward trend with electronic payments by the end of 2011-12, constituting 91% in terms of value (from 88% in 2009-10) and 48% in terms of volume (from 35% in 2009-10).
"Notwithstanding these accomplishments, cash remains the predominant payment mode in the country...The value of banknotes and coins in circulation as a percentage of GDP (12.04%) is very high in the country when compared to other emerging markets, like Brazil, Mexico and Russia," RBI said.
Likewise, non-cash transactions per citizen is very low in India (six transactions per inhabitant) when compared with other emerging markets.
The electronic payment products and services is concentrated to a large extent in the tier-I and tier-II areas and mostly to people having access to formal banking channels.
However, the section of unbanked and under-banked population in the country have missed the bandwagon of modern electronic payments system.
"The use of electronic payment instruments allows the unbanked to start building a transaction history, which can be a step towards initiating them towards financial inclusion." 
The modern electronic payment systems will also meet the payment needs such as remittances under the overall ambit of financial inclusion, RBI added further.




4 years ago

The way the RBI is going for development of the electronic payment systems might actually kill the usage of such instruments by customers. Banks incentivize the debit cardholders for example to spend at POS instead of withdrawing money from ATM. But RBI has been promoting free ATM usage by customers. As someone said recently ATMs are like milk bottles for children. It is difficult to move kids away from milk bottles if the practice goes on for more than what is necessary.
Also, unlike a prepaid telephone SIM card where the value is one cant remain connected without the phone and the SIM, a prepaid bank card or a prepaid payment card has no such compulsions. People can still do transactions by using cash. So, they don't see the need to first put the money in a prepaid card and then go and use it to buy things. Even if they do, whe do such people use the cards. The taxation laws of the country has resulted in a grey economy as big as possibly the white economy or maybe bigger. So, merchants don't want to show revenues lest the various tax departments come hounding for their pound of flesh. While it is easy to manage the taxmen with some under the table money if all transactions are in black, they won't be able to do it if they record such transactions or accept payments in card or other electronic forms.

So, whatever RBI is trying to do will need to be done with full assistance of the government machine ties. Not only the finance ministry but other ministries also need to come on board and promote a culture where cash is not the only medium of exchange.

Here comes the RBI thinking of keeping costs low. In their zeal of reducing the costs of electronic payments acceptance, they are making it unprofitable for banks to promote such usage of electronic payments medium. If they don't earn money or save costs from a particular initiative , they won't promote it. Innovation happens when there is a possibility of making profits. In a scenario where RBI thinks payments is a social service it is unlikely to result in investments by note rested parties to innovate.

Another factor resulting in muted growth in non cash payments is the increasing practice of surcharging by merchants accepting cards. Instead of treating costs of accepting payments as a core cost and factoring it in the costs of doing business, they discourage customers from paying by non cash means by levying an additional surcharge. This is due to the faulty understanding that accepting cash comes with zero costs. The government departments are the biggest culprit. Try making a card payment for the passport fees - the passport offices make you pay using bank notes and even write the denomination you paid on a register and take your signature. What a relic it is !!

The government keeps 7 percent of the NREGA related planets as cost of effecting payments and monitoring, the government doesn't want to pay for accepting card payments. IRCTC blatantly charges almost 2 percent to people using their website to book tickets and who want to use the convenience of cards to make the payment. Why? Hasn't the railways saved crores in costs by not setting more ticket counters, by having cleaner premises and lesser clouds?

So, there are a number of things which need to be accomplished at the same time. Like they say stars need to be aligned to achieve the objective of a less cash economy.

Rs5.25 crore bank van heist: Robber, wife arrested from Uttar Pradesh

Last Friday, the gang of robbers waylaid the bank's cash van, pinned down its security guard and shot him after he tried to snatch their weapons

New Delhi: One of the robbers allegedly involved in the sensational Rs5.25 crore bank van heist in south Delhi and his wife were arrested from Uttar Pradesh, reports PTI quoting police.


Hari Kishan and his wife Rashmi were apprehended from Banda, a senior police official said. With this seven persons have been arrested in connection with the last Friday's robbery.


Some cash has been recovered from them, the official said.


The gang had waylaid the cash van, pinned down a security guard and shot him after he tried to snatch their weapons.


They fled the spot in the cash van leaving behind the car in which they were following the vehicle. The guard later succumbed to bullet wound.


It was a raid at Harkishen's house in Khirki that helped police in its trail. The key of the looted cash van was recovered in his house.


Harkishen is the second person, who was allegedly involved in the actual robbery, to be arrested. One Deepak Sharma, who was with Kishan and others, was arrested earlier.


Two youths, who were allegedly involved in the planning were also arrested besides two relatives of a suspected robber who helped them in hiding a portion of the money.


Investigators have found out that four youths were spotted by some locals in Khirki with big boxes on Friday. A portrait of one of the suspects was sketched with their help.


From their description, police managed to get photographs of two criminals, which the eye-witnesses confirmed as those they saw robbing the van.


Several teams covered Hauz Rani and Khirki, and verified recently evicted tenants besides checking other details with property dealers.


Police on last Saturday managed to identify the house which was believed to have been used by the suspects. It belonged to Hari Kishan who had shifted recently and purchased it in his wife's name.


Raids were conducted at this house and from there, police managed to recover the keys of the cash van, which was abandoned by the gang. Some other documents were also seized from the spot which indicated that the suspects had visited and stayed there, the official said.


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