IBA resists CBI plan to probe private banks

India’s premier investigative agency the Central Bureau of Investigation (CBI) is seen attempting to extend its turf to cover private banks and corporates which remain largely outside its investigative domain. The agency has sounded out the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA), which represents the interests of a multitude of banks, on whether private banks and corporates could be brought under the ambit of the investigative agency. CBI is now of the view that since private banks deal with public money, the onus is on the agency to check corrupt practices taking place in such institutions. IBA was of the view that CBI was not in tune with the nuances of banking. “Very often, a banker may take a commercial decision to grant a loan and the account holder may default due to various reasons such as a slowdown in the economy or the export-import policy and other reasons. This may not mean that the banker is in the wrong,” said a banker. There are other reasons for banks to resist the move. According to bankers, a probe undertaken by CBI drags on for long before the agency arrives at a logical conclusion. “Currently, as per the Banking Regulation Act and Prevention of Corruption Act, private entities are not covered under CBI. These two Acts will have to be amended to include private banks and corporates under CBI,” said former RBI executive director and now IBA chief legal advisor MR Umerji.

SBM logs into e-trading

Bangalore-based State Bank of Mysore on Wednesday launched e-trading services under which its customers will be able to access bank account, demat account and Internet trading account sitting at home. Initially, the facility is being offered through the designated branches of SBM at Bangalore, Mysore, Mumbai, Surat, Ahmedabad, Hyderabad and Chennai. The brokerage charges vary between 0.5 per cent and 1.5 per cent depending on the monthly turnover. The bank has tied up with SBI Cap Securities Ltd (SSL) for offering e-trading facility

Fed cut may prod RBI to soften rate regime

Bankers expect the Reserve Bank of India to soften its view on interest rates in the light of the US Federal rate cut. Domestic loans and overseas borrowing may become cheaper. “There may not be direct correlation between the US Federal Reserve action and the RBI’s moves. But the country is more tuned to global trends especially capital flows which has implications on exchange rate and relative difference in interest rates,” said a chairman of medium size public sector bank. S K Goel, chairman and managing director of UCO Bank, said the domestic interest rates could soften by about 50 basis points in the coming days. This also means reducing deposit rates to control cost.