Why RBI Credit Policy is important?

Reserve Bank of India (RBI) Annual Policy Statement for the year 2008-09 announced on 29th April 2008.

We all know that RBI Credit & Monetary Policy directly impacts the banking and financial sector which include banks, financial institutions, NBFC’s, primary money market dealers and dealers in forex markets etc.

RBI Credit Policy also affects individuals & corporates. If RBI's policy results in tightening of money supply it affects borrowers more as banks become strict in lending. Also at times banks resort to increase in lending rates. However in such scenario depositors generally gain by increased deposit rates.

Main objective of RBI credit policy is to control inflation, ensure adequate supply of credit to encourage growth of the economy and maintain financial stability. If RBI policy today is able to even partly achieve the above objectives it will be for the good of all.

Comprehensive Guide for Doing Business in India

The Indian economy had been booming for the past few years. The adoption of the free market economy model has created great opportunities for foreign businesses. However, India continues to be ranked low on variety of indicators like Ease of Doing Business, Starting a Business, Dealing with Licenses, Employing Workers, Registering Property, Getting Credit, Protecting Investors, Paying Taxes etc.

In light of the above and the fact that the business scenario has witnessed sea changes in the last few years, Banknet has released the revised & updated second edition of its Bestselling publication 'Doing Business in India'.

The comprehensive & updated guide will be a useful tool for the foreign concerns planning to expand their businesses in India. This guide provides useful information on the complex business environment, aimed to help foreign businessmen and investors to develop a good understanding on key background knowledge for being successful in India.

“Doing Business in India” is available online on www.banknetindia.com

Merchant Bankers please note

Merchant bankers have been harrasing public issue applicants by forcing them to attach photocopies of PAN cards with the application forms. In most such cases the applicants have to return as they are not aware of such stipulation.

Thankfully, SEBI circular of 11th March 2008 has clarified that the practice of requiring public issue applicants to attach photocopies of PAN cards with the application form has not been mandated by SEBI and that the present SEBI (DIP) Guidelines only require the PAN number to be quoted in the application forms, irrespective of the size of the application.

SEBI has instructed Merchant Bankers to ensure that all collection agents/ centers /syndicate/ sub syndicate members etc., engaged in collecting application forms do not refuse to accept applications in the absence of photocopy of PAN card.

Economic survey favours more liberalization

Indian Economic Survey 2007-08– which is a report card on the Indian economy ahead of the Union Budget– has favoured more liberalization and reforms. The Survey contains Policy options which may not necessarily translate into actual policy, or form a part of the Union Budget due to pressures of government’s leftist allies . It however, provide clues to medium-term policy direction the government needs to take.

In case of insurance sector, the Survey recommended raising foreign equity share to 49 per cent, while prescribing 51 per cent foreign equity in a special category of insurance companies – those providing all types of insurance such as health and weather, to rural residents and for all agricultural related activities including agro-processing.

In the banking sector, the Survey favoured allowing 100 per cent FDI in greenfield private rural-agriculture banks. Such a bank would be free to set up any number of branches in any rural or semi-rural area, the Survey said, adding that it would be free to lend agriculture and allied sectors anywhere in the country and to any industry located in non-urban area.

Survey pushes for reviving the disinvestment process, which has been put on the back burner under communist pressure. Survey has asked the government to complete divestment of 5-10 per cent stake in previously identified profit making non-Navratna PSUs.

While advocating FDI in all retail trade, suggested allowing a share for foreign equity in all retail trade, and mooted 100 per cent foreign equity in foreign branded, specialised retail chains like luxury brands, consumer durables, and semi-durables.

Facing a slowdown in the face of a sluggish growth in developed economies, especially in the US, the government will need to find a way out to implement the policy options suggested by Economic Survey to sustain the 9 per cent rate of economic expansion.

why everybody pleased with railway budget?

Indian Railway Budget 2008-09 has been hailed as a good budget by most. One of the Industry/Trade associations has gone ahead and even called it a `Pragmatic, Progressive & Futuristic’ Budget. But why everybody is so pleased with this budget?

First the financial performance is very impressive. Gross Traffic Revenues at Rs 72,755 cr - 16% higher than the previous year and 2% higher than the Budget Estimates. Ordinary Working Expenses register savings of Rs 966 cr. Return on Capital is an all time high of 21 per cent.Cash Surplus before dividend expected to be a record Rs 25,000 cr.

Above all, in view of elections, Budget has taken care of all- the railways, the manufacturers, industries and above all the common man.

However to make Indian railways world class also need is to tackle issues like cleanliness, Technology upgradation, Upgrading skills of manpower and Emphasis on Implementation of plans in an effective and timely manner.

Opening bank account may become easier

Reserve Bank of India has clarified to banks that permanent correct address, means the address at which a person usually resides and can be taken as the address as mentioned in a utility bill or any other document accepted by the bank for verification of the address of the customer.

However,banks can also accept an identity document and a utility bill of the relative with whom the prospective customer is living along with a declaration from the relative that the said person (prospective customer) wanting to open an account is a relative and is staying with him/her. Banks can use any supplementary evidence such as a letter received through post for further verification of the address.

RBI has reitrated that the adoption of customer acceptance policy and its implementation should not result in denial of banking services to general public.

Mortgage Guarantee cos entry may soften home-loan rates

Finally Reserve Bank of India has allowed mortgage guarantee companies to commence the business of providing mortgage guarantee in India. Mortgage guarantee firms would provide guarantee to a home loan lending institution against default. This will provide a cushion to banks and financial institutions.

Since a mortgage guarantee company will provide guarantee against any default, bankers risks will go down. At present, bad loans account in home loan is quite low. So, the cost of buying insurance from the mortgage guarantee company may not be very high. This may result in decline in home loan rates and increase credit flow to the housing sector.

ATM Safety Rules

I feel that if few rules are followed when using ATM can help you crime prevention at or near ATMs when you withdraw , especially at night :


1. ATMs are located in well-lit areas that are highly visible to passing traffic;



2. Minimise your time at the ATM by having your card ready when you approach the machine;


3. Take a look around as you approach the ATM and if there's anything suspicious, don't use the machine at that time;


4. Once you've completed your ATM transaction, put your money away immediately and leave. It's best to count your money later;


5. If you don't feel comfortable using a particular ATM, consider continuing on to another branch or using off-street ATMs in banking lobbies;


(Source: ABA)