The Tribune, Chandigarh, India

	RBI favours stringent entry norms for new banks Mumbai, August 27 The RBI today pitched for ‘stringent’ entry norms for new players while suggesting four- tier structure for the domestic banking industry. "It is important that the entry norms should be stringent so as to encourage entry by only well-qualified entities in order to improve the quality of the banking system and promote competition," the discussion paper titled ‘Banking Structure in India - The Way Forward’ said. The discussion paper is released at a time when the central bank is sifting through 26 applications seeking an entry into the fray. In the proposed four-tier system, the Reserve Bank has proposed a top tier consisting of 3-4 large banks with presence both in the country and outside, along with foreign bank branches. The tier two will consist of mid-sized banks with economy wide reach and will be followed by a category devoted to old sector private banks, regional rural banks and multi state cooperative banks, the RBI said. The final tier will consist of privately owned local banks and cooperative banks, it said. Interestingly, on consolidation the RBI stressed the need to take a "measured approach" based on synergies and insisted on not making it compulsory. "It has to be borne in mind that while consolidation of commercial banks with established synergies and on the basis of voluntary initiatives is welcome, it cannot be imposed on banks. A measured approach is to be made both on consolidation and global presence even if attaining global size is not imminent," it said. It said "differentiated licensing" for infrastructure financing, wholesale banking and retail banking is a "desirable step" and there is also a need to promote investment banking system. RBI said the discussion paper has been necessitated given the changing needs of the increasingly globalising economy, providing specialised services, deepening financial inclusion. The central bank had announced it will be floating this paper at its annual monetary policy announcement and added that committees, including one headed by incoming Governor Raghuram Rajan and the Narasimham Committee had talked of explicit policy on the same. The new bank guidelines issued in February this year also made a mention of the need for having an explicit policy on banking structure in the country. — PTI Four-tier structure Top tier will consist of of 3-4 large banks with presence both in the country and outside, along with foreign bank branches The tier-two will consist of mid-sized banks with economy wide reach The tier-three will be devoted to old sector private banks, regional rural banks and multi-state cooperative banks The final tier will consist of privately owned local and cooperative banks
	R-Cap to list proposed bank in three years: Ambani Mumbai, August 27 Exuding confidence in setting up a profitable banking venture, industrialist Anil Ambani today said the proposed bank will help lower Reliance Capital's debt to one-fourth of current levels and would be listed as a separate entity in three years. Addressing shareholders of Reliance Capital, the group's financial services arm, Ambani said immediate benefit of the proposed bank would be a reduction in the company's consolidated debt from Rs 20,000 crore to Rs 5,000 crore. "Apart from the long-term growth potential of the proposed bank as a profitable institution in itself, the immediate benefit to your company will be the reduction in our consolidated debt from approximately Rs 20,000 crore to Rs 5,000 crore, upon transfer of our Commercial Finance business to the proposed bank," Reliance Capital chairman said. The company, which is already present in a host of financial services businesses like insurance, mutual funds and brokerage, submitted an application for banking license in June to the RBI. R-Cap is one of the 26 entities that have applied for banking licence. Ambani said the banking foray would also help improve R-Cap's debt-equity ratio to "a most conservative level of 0.5-1, which is far lower than industry standards". Stressing that the company was adequately capitalised, Ambani said there were no plans to ask R-Cap shareholders for providing initial capital for the bank. "We presently have no plans to make a capital call, or ask you for money to invest in the bank, as your company is adequately capitalised. "However, at the end of three years, we intend to list the proposed bank, as per existing guidelines, and you may be assured we will fully explore all avenues to benefit our over 12 lakh shareholders at that time," Ambani said. R-Cap plans to focus on five major businesses - life insurance, general insurance, health insurance, asset management and banking - for future growth, he added. R-Cap has also proposed to partner with Japan's Sumitomo Mitsui Trust Bank and Nippon Life Insurance for its proposed banking venture, with 4-5 per cent stake to each of the two. RBI has decided to issue fresh banking licences after a decade and the other contenders in the race include Tatas, Aditya Birla group, L&T, India Post, LIC Housing Finance, Bajaj, Edelweiss, IDFC, IFCI, Indiabulls, India Infoline, Muthoot Finance, Religare, Shriram Capital, SREI Infra, UAE Exchange, Tourism Finance Corp of India and JM Financial. New licences are likely to be issued sometime next year. — PTI
	More pressure in store for rupee, says Barclays New Delhi, August 27 Emerging market currencies, including Indian rupee, are likely to remain under pressure, though depreciation is expected to slow from here, Barclays said in a research report today. According to the global financial services major, India is among those countries with “external vulnerabilities and questionable inflation targeting frameworks” along with Turkey, South Africa and Indonesia. Barclays is bearish on Turkish Lira, Indonesian Rupiah, South African Rand and the Indian Rupee. "We remain bearish on TRY, IDR, ZAR and INR for now, although we do not forecast steep currency sell-offs in any of these cases going forward," Barclays said. The report noted that domestic inflation pressures have driven some emerging market central banks, including Brazil's, into action and more central bank measures could follow, but added that "India's decision to tinker with capital controls only brought renewed funding pressures, setting an example for the rest of the emerging market space." Rupee has witnessed a significant fall in recent weeks, despite the RBI's efforts to stabilise the currency through monetary tightening measures. The rupee tumbled to an all-time intra-day low of 66 per dollar today on heavy month-end demand of the US currency from importers and banks amid sharp fall in the equity market. Earlier this week, Barclays in a separate report, had said India's efforts to curb imports, improve exports and attract greater remittances may help it almost fully fund its Current Account Deficit this fiscal. — PTI
	Gold hits 9-month high; glitters at Rs 32,000 New Delhi, August 27 Gold prices regained Rs 32,000 per 10 gram level after nine months in the national capital today on increased buying by stockists as rupee plunged to a historic low of 66-level. Gold surged by Rs 500 to Rs 32,000 per 10 gram, a level last seen on December 3 last year, as the rupee hitting a record low against the US currency made the dollar-priced metal costlier. Silver also rose for the third day by jumping Rs 800 to Rs 54,800 per kg on increased offtake by jewellers and industrial users. Bullion merchants said the precious metals surged after the rupee plunged to a new record low of 66 per dollar, raising fears the dollar-denominated metals would become costlier. They said shifting of funds from melting equity to rising bullion and a firm global trend further supported the uptrend, they said. The gold in London, which normally sets price trend on the domestic front here, climbed to more than two months' high by adding 0.46 per cent to $1,411 an ounce. — PTI
	Spectrum auction: TRAI to come up with reserve price soon Tribune News Service New Delhi, August 27 Telecom regulator TRAI is expected to come out with its recommendations on the valuation and reserve price for the third round of spectrum auction. During a meeting with the stakeholders and other telecom industry representatives here yesterday, TRAI chairman Rahul Khullar said, "The recommendations will come very shortly". Not wanting to give a timeline to the recommendations, which would form the base for setting up the base price for the next round of auction, Khullar said, "You can see our track record in the broadcasting sector". The recommendations are expected over the next 10-15 days as the government wants to go ahead with the next round of auction soon. The last day to submit comments on spectrum trading is August 29 and after that it will take 10-12 days to give the recommendations, reports said. Telecom Minister Kapil Sibal has already said the government is keen to go ahead with the next round of the auction as early as possible. The earlier two rounds of auction have proved to be a damp squib for the government as a result of the high base price for the spectrum. In July, the TRAI had invited comments on the quantity of spectrum that should be kept for auction, time that winner of airwaves should be given to roll out network and the method to be used for valuation and estimation of reserve price. The government is required to conduct the third round of spectrum auction to comply with a Supreme Court order that has directed it to put on the block entire spectrum freed from cancellation of 2G licences in February, 2012.