Mahashweta by Sudha Murthy

My first book by Sudha Murthy was Mahashwetha a very simple but beautiful book in such simple language that you actually fall in love with the writing. Sudha Murthy employs the hallmark of great Indian writers by writing in simple prose a beautiful story of a beautiful young girl from a village in Karnataka falling in love with a rich guy and then being scorned upon being visited by an illness which is seen as a curse by the poor thinking rural Indian folk. Her family also ditches her and at one point in the story, I thought Kamala Markandeya was writing the story, such was the depth of the suffering of the girl. The story moves onto Bombay and the attitudinal change amongst the people is remarkable because nobody in Bombay ever cares to question or doubt the girl for her illness. On one hand it shows Bombay as a caring city yet also as a fast moving metropolis where people hardly have time to even think and dwell upon other people's sufferings. Beautiful book by Sudha Murthy. Highly recommended  

penal charges on inoperative bank accounts

The RBI has clarified vide its circular dated 6th May, 2014 that banks are not permitted to levy penal charges for non maintenance of minimum balances in any inoperative account. 

Earlier such charges were allowed to be levied on normal savings bank accounts while no charges were to be levied on Basic Savings Bank accounts. On the normal savings bank accounts also the banks could levy penal charges only after informing the customers regarding the same at the time of opening bank accounts. 

But now the penal charges on all inoperative bank accounts has been eliminated. This is a measure towards better customer service by the banks. 

A copy of the RBI circular is to be found here i.e. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8867&Mode=0

Foreclosure charges/ pre-payment penalty banned

RBI has vide its circular dated 7th May 2014 immediately banned the foreclosure charges/ pre-payment penalty that was being levied by banks and financial institutions on pre-payment of loans by borrowers. This will be brought into effect immediately but will cover only loans with floating rate of interest and that too only for individual borrowers. 

Not clear why RBI has left our the fixed interest rate borrowers and commercial entities who borrow monies. 

It is a case of too little, too late from RBI. 

RBI should levy a fine of a few thousand crores on all the banks and financial institutions who have been levying these charges on borrowers for all these years and reimburse to the borrowers who have been so effected. 

The copy of the circular can be found here. 

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8868&Mode=0

Re-schedulement of ECBs - simplification of procedure

RBI has vide its circular dated simplified its procedure for re-schedulement of External Commercial Borrowings. The re-schedulement will now be allowed subject to the following conditions:

1. Changes, if any, in all-in-cost (AIC) is only on account of the change in average maturity period (AMP) due to re-schedulement of ECB and post re-schedulement, the AIC and the AMP are in conformity with applicable guidelines. There should not be any increase in the rate of interest and no additional cost (in foreign currency / Indian Rupees) should be involved.
2. The re-schedulement is allowed only once, before the maturity of the ECB.
3. If the lender is an overseas branch of a domestic bank, the prudential norms applicable on account of re-schedulement should be complied with.
4. The changes on account of re-schedulement should be reported to DSIM through revised Form 83.
5. The ECB should be in compliance with all applicable guidelines related to eligible borrower, recognised lender, AIC, AMP, end-uses, etc.
6. The borrower should not be in the default / caution list of RBI and should not be under the investigation of Directorate of Enforcement.

The re-schedulement facility will be available both on automatic and approval route ECBs. The copy of the RBI circular can be found here.

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8870&Mode=0 

FDI in pharma sector

RBI has clarified vide its circular dated 21st April, 2014 that in case of FDI in the pharma sector, “non compete clause” would not be allowed in the agreements except in special circumstances and that too only with the approval of the Foreign Investment Promotion Board. FDI is allowed in pharma sector upto 100% in greenfield investments under the automatic route and 10% in brownfield investments (i.e. investments in existing companies) with the government approval. 

The relevant RBI circular can be accessed here. 

http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/APDIR124NT0414.pdf