Wednesday, May 13, 2009

RBI handed over 1,440 fake notes of various denominations to the police

Bhubaneswar Reserve Bank of India regional office handed over as many as 1,440 fake notes of various denominations to the police. The value of these notes amounts to Rs 3.07 lakh. These fake notes will be sent for examination.

The circulation of these notes has signified the State is providing ground to the market for the fake notes. Though it is neighboring Andhra Pradesh which is a transit route for such a trade

The RBI receives counterfeit notes from the people for exchange thus it handover the same with the local police every six months. After this case is lodged and on its basis investigation is initiated.

Previously a couple of years back, Malgodown Police in Cuttack had apprehended fake notes of Rs 3 lakh and arrested several persons in this connection. Police traced the ground of fake currency in Andhra Pradesh but later police lost track of the persons.

RBI draft guidelines make repossession of vehicles easier for banks

Couple of years ago, Prakash Kaur had moved the Supreme Court against a leading bank as bank had taken away his car on the grounds he was not repaying the loan. Bank argued that it took the vehicle in its custody because Kaur was not repaying the loan he had taken to buy the car.

The apex court gave judgment in favor of Kaur and many other such borrowers, but the judgment created a dilemma amongst the banks exactly when a bank can take away a borrower's vehicle.

Bankers reported that misinterpretations of the Supreme Court order bought repossessions (banking jargon for takeover of a vehicle or asset for which a person has taken a loan and is repaying it) to a halt as the judgment was "heavily biased in favor of the defaulting borrower."

Bankers stated after the regulatory clarification situation has improved and may give a boost to the auto lending activity.

On April 24, 2009 the Reserve Bank of India issued draft guidelines in which the NBFCs has been asked to include clauses in the loan document on the process and the conditions under which their vehicle can be repossessed in case of default.

Mahesh Thakkar, general secretary, Finance Industry Development Council (FIDC), pointed out the RBI guidelines has given a clear distinction between recovery agents and repossession agents, which the industry was looking for.

Thus the recovery agent is behind the defaulter, while the repossession agent is behind the underlying security, i.e. vehicle. He said, "We are repossession agents, often mistaken to be recovery agents and this created a problem for us in the last 3-4 years".

Govind Sankaranarayanan, chief financial officer, Tata Capital, pointed out, "The draft guidelines attempt to formalize the means with which repossession of secured asset can be done. We have always been having a clear clause in the loan document on the procedure for repossession."

When asked whether the RBI notification will provide a fillip to auto lending, Sankaranarayanan replied, "Now that there are formal guidelines from RBI, it will provide some degree of comfort to lend. It is a step in the right direction."

On the other hand the Indian Banks' Association (IBA) is in a process of issuing a clarification on the issue. When asked in case the IBA clarification is issued will there be increase in lending activity, the head of loans at a leading bank replied, "It should, because the financials will become easy on credit."

"We finance both old and new vehicles and the margins are very high in old-vehicle financing. With the code of conduct in place, even marginal cases will get clearance from the credit departments. This will definitely boost auto financing, especially for commercial vehicles."

Ramesh Ayer, managing director, Mahindra Finance, explained the confusion over how, when and who can repossess will now get removed. He said, "With the RBI guidelines, legally enforcing the document becomes easy. Also, when matters are taken to the court, the case will become stronger for us as all the clauses will now be clearly mentioned in the contract".

Tuesday, May 5, 2009

RBI requested to strengthen norms for the end use of bank credit to help micro units

Arjun Sengupta noted economist in its report had advised that RBI should direct banks to increase flow of funds to micro enterprises at reasonable rates just pushing in more liquidity in the system is not enough. He said there is need of strong norms for end use of bank credit.

The National Commission for Enterprises in the Unorganized Sector (NCEUS) pointed out, "Liquidity in itself will not solve the problem (faced by micro enterprises in getting credit) unless there are directive to banks on the end use of credit, in particular, more credit has to flow in favor of vast informal sector...." .

The NCEUS, headed by noted economist Arjun Sengupta, last week submitted its report on 'The Challenge of Employment in India - an Informal Economy Perspective' submitted said the recent policy measures to undertake the impact of the global meltdown have not been of much help for micro units.

Banks liquidity has witnessed the growth of Rs 45,28,277 crore in November 2008 from Rs 34,67,098 crore in March 2007 after RBI took steps to tackle the crisis.

In spite of lowering of prime lending rate, banks are not passing full benefits to the customers. Loans are given at a minimum of 16 per cent, to the micro and small units which are almost double the rate offered to large industries.

It stated, "There is an urgent need to reorient banking system and its goals in general and credit policy in particular ".

RBI to issue new Rs 100 notes with inset letter ‘R’

Soon Rs.100 denomination notes will be in circulation in the market. The Reserve Bank of India will be issuing a new Rs.100 denomination notes with inset letter `R’ in both numbering panels in Mahatma Gandhi series - 2005 bearing the signature of RBI Governor D Subba Rao.

Now the notes design will be similar in all respects to the notes in Mahatma Gandhi Series -2005 with additional new security features issued on August 24, 2005, except for the change in the inset letter. An official press release stated notes in the denomination of Rs.100 issued by the RBI in the past will continue to be a legal tender.

RBI handed over 1,440 fake notes of various denominations to the police

Bhubaneswar Reserve Bank of India regional office handed over as many as 1,440 fake notes of various denominations to the police. The value of these notes amounts to Rs 3.07 lakh. These fake notes will be sent for examination.

The circulation of these notes has signified the State is providing ground to the market for the fake notes. Though it is neighboring Andhra Pradesh which is a transit route for such a trade

The RBI receives counterfeit notes from the people for exchange thus it handover the same with the local police every six months. After this case is lodged and on its basis investigation is initiated.

Previously a couple of years back, Malgodown Police in Cuttack had apprehended fake notes of Rs 3 lakh and arrested several persons in this connection. Police traced the ground of fake currency in Andhra Pradesh but later police lost track of the persons.