The Reserve Bank of India (RBI) has proposed opening of &quot;Islamic window&quot; in conventional banks for &quot;gradual&quot; introduction of Sharia-compliant or interest-free banking in the country.

Both the Centre and RBI are exploring the possibility of introduction of Islamic banking for long to ensure financial inclusion of those sections of the society that remain excluded due to religious reasons.

&quot;In our considered opinion, given the complexities of Islamic finance and various regulatory and supervisory challenges involved in the matter and also due to the fact that Indian banks have no experience in this field, Islamic banking may be introduced in India in a gradual manner.

&quot;Initially, a few simple products which are similar to conventional banking products may be considered for introduction through Islamic window of the conventional banks after necessary notification by the government.

&quot;Introduction of full-fledged Islamic banking with profit-loss sharing complex products may be considered at a later stage on the basis of experience gained in course of time,&quot; the RBI has told Finance Ministry in a letter, a copy of which was received in response to an RTI query filed by PTI.

Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam.

&quot;It is also our understanding that interest-free banking for financial inclusion will require a proper process of the product being certified as Sharia compliant will be required both on the asset and liability side and the funds received under the interest-free banking could not be mingled with other funds and therefore, this banking will have to be conducted under a separate window,&quot; it said.

The central bank&#39;s proposal is based on examination of legal, technical and regulatory issues regarding feasibility of introducing Islamic banking in India on the basis of recommendation of the Inter Departmental Group (IDG).

RBI has also prepared a technical analysis report which has been sent to the Finance Ministry.

&quot;In case it is decided to introduce Islamic banking product in India as suggested, RBI would require to undertake further work to put in place the operational and regulatory framework to facilitate introduction of such products by banks in India,&quot; the letter said.

(PTI)

Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam

The Reserve Bank of India (RBI) has proposed opening of "Islamic window" in conventional banks for "gradual" introduction of Sharia-compliant or interest-free banking in the country. Both the Centre and RBI are exploring the possibility of introduction of Islamic banking for long to ensure financial inclusion of those sections of the society that remain excluded due to religious reasons. "In our considered opinion, given the complexities of Islamic finance and various regulatory and supervisory challenges involved in the matter and also due to the fact that Indian banks have no experience in this field, Islamic banking may be introduced in India in a gradual manner. "Initially, a few simple products which are similar to conventional banking products may be considered for introduction through Islamic window of the conventional banks after necessary notification by the government. "Introduction of full-fledged Islamic banking with profit-loss sharing complex products may be considered at a later stage on the basis of experience gained in course of time," the RBI has told Finance Ministry in a letter, a copy of which was received in response to an RTI query filed by PTI. Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam. "It is also our understanding that interest-free banking for financial inclusion will require a proper process of the product being certified as Sharia compliant will be required both on the asset and liability side and the funds received under the interest-free banking could not be mingled with other funds and therefore, this banking will have to be conducted under a separate window," it said. The central bank's proposal is based on examination of legal, technical and regulatory issues regarding feasibility of introducing Islamic banking in India on the basis of recommendation of the Inter Departmental Group (IDG). RBI has also prepared a technical analysis report which has been sent to the Finance Ministry. "In case it is decided to introduce Islamic banking product in India as suggested, RBI would require to undertake further work to put in place the operational and regulatory framework to facilitate introduction of such products by banks in India," the letter said. (PTI)

Sharia banking: Reserve Bank of India proposes 'Islamic window' in banks

To try and ease the cash crunch following last week&#39;s decision to demonetise 500- and 1,000-rupee notes, the Indian&nbsp;government said Thursday that select petrol pumps would be allowed to dispense up to Rs 2,000 to customers against their debit or credit cards.

To start with, the facility will be available at 2,500 petrol pumps around the country.

&quot;It has been decided that an amount up to Rs 2,000 per day per person in cash can be dispensed against swiping of debit card from select petrol pumps where Point of Sale (PoS) machines of State Bank of India are already available,&quot; an official told Indian news agency PTI.

The facility will in time be extended to 20,000 petrol pumps.

(WION with inputs from PTI)

The facility will at first be available at 2,500 petrol pumps around the country, will in time be extended to 20,000

To try and ease the cash crunch following last week's decision to demonetise 500- and 1,000-rupee notes, the Indian government said Thursday that select petrol pumps would be allowed to dispense up to Rs 2,000 to customers against their debit or credit cards. To start with, the facility will be available at 2,500 petrol pumps around the country. "It has been decided that an amount up to Rs 2,000 per day per person in cash can be dispensed against swiping of debit card from select petrol pumps where Point of Sale (PoS) machines of State Bank of India are already available," an official told Indian news agency PTI. The facility will in time be extended to 20,000 petrol pumps. (WION with inputs from PTI)

Demonetisation: Swipe card at petrol pump, get up to Rs 2,000 cash

Indian Prime Minister Narendra Modi&#39;s 97-year-old mother Hiraba today visited a bank at her village in Gandhinagar, just like other citizens, and exchanged her old notes in view of the demonetisation of the high-value currency notes.

Accompanied by relatives, Hiraba, who was in a wheelchair, came to a branch of Oriental Bank of Commerce at Raisan village this morning and got notes worth Rs 4,500 exchanged.

She came to the bank with Rs 500 notes, got the mandatory form filled, put her thumb impression on the form and exchanged her money.

After receiving a new note of Rs 2,000, she also displayed it in front of the mediapersons, who virtually mobbed her as they sought her reaction.

Hiraba lives with Prime Minister Modi&#39;s younger brother Pankaj Modi in Raisan on the outskirts of Gandhinagar. 
The prime minister had visited his mother on September 17 this year to take her blessings on his 66th birthday.

Hiraba is known to lead a very simple life and travels in public transport. Last time when she visited Gandhinagar civil hospital for a regular check-up, she was seen going in an autorickshaw.

Modi had on November 8 announced scrapping of Rs 500 and Rs 1,000 notes to curb black money menace.

After the announcement, people have been queueing up at banks across the country to get their old high denomination notes exchanged for the new notes.

(PTI)

His nonagenarian mother is known to lead a very simple life and is even seen travelling in public transport often

Indian Prime Minister Narendra Modi's 97-year-old mother Hiraba today visited a bank at her village in Gandhinagar, just like other citizens, and exchanged her old notes in view of the demonetisation of the high-value currency notes. Accompanied by relatives, Hiraba, who was in a wheelchair, came to a branch of Oriental Bank of Commerce at Raisan village this morning and got notes worth Rs 4,500 exchanged. She came to the bank with Rs 500 notes, got the mandatory form filled, put her thumb impression on the form and exchanged her money. After receiving a new note of Rs 2,000, she also displayed it in front of the mediapersons, who virtually mobbed her as they sought her reaction. Hiraba lives with Prime Minister Modi's younger brother Pankaj Modi in Raisan on the outskirts of Gandhinagar. The prime minister had visited his mother on September 17 this year to take her blessings on his 66th birthday. Hiraba is known to lead a very simple life and travels in public transport. Last time when she visited Gandhinagar civil hospital for a regular check-up, she was seen going in an autorickshaw. Modi had on November 8 announced scrapping of Rs 500 and Rs 1,000 notes to curb black money menace. After the announcement, people have been queueing up at banks across the country to get their old high denomination notes exchanged for the new notes. (PTI)

Indian Prime Minister Narendra Modi's mother goes to bank to exchange notes

At present, the number of annual non-cash transactions per person in India stands at just six. According to the World Payments Report, Finland, with 451 non-cash transactions per person in 2013, is ranked first. The United States comes second with 390. China also had 50 non-cash transactions per person in 2013. Compared to India, China has pulled ahead in its attempt to switch to a non-cash economy.

The &lsquo;Pocket&rsquo; app of ICICI bank, Axis Bank&rsquo;s Axis pay, Bank of Maharashtra&rsquo;s MahaUPI, Federal Bank&rsquo;s Lotza are now available for downloading. These are the new Unified Payments Interface-enabled (UPI-enabled) apps launched on Playstore. In a few months&rsquo; time, these will be available on iOS as well. The National Payments Corporation of India (NPCI), which initiated and designed UPI, has approved 21 Indian banks to launch their UPI apps.

UPI, in a way, is a better and improved version of the present mobile/e-payment tool, IMPS (Immediate Payment Service). UPI enables an individual to transfer funds from one account to another in two simple steps. After downloading the app of any bank, UPI generates a virtual payment address (VPA) that is unique to each account. While transferring money to any other account, one just needs to know the VPA of that account. One needs to authenticate it with a password and it&rsquo;s done.

Similarly, if someone wants to buy a book online, the e-commerce site will ask for the purchaser&rsquo;s VPA to receive the amount, then authenticate the transaction with a password and complete the payment process. Thus, a person need not fill his/her card details or follow a two password and an OTP process for buying anything online. Similarly, there is no requirement of any account number, IFSC (swift) code, branch name, etc. for doing an account to account transfer.

Another important feature of UPI is that one doesn&rsquo;t need to use the app of the bank in which a person holds the account. The UPI app of any bank can be used for any account in another bank. One can also link multiple accounts in multiple banks to one UPI app.

The Interface will be in competition with the existing online tools such as Net banking, NEFT, RTGS, etc. and will increase the competition within the banks as well. This may improve the efficiency of the banks. However, with UPI, one can do a transaction to the tune of a maximum of 100,000 Indian Rupees ($1500 approximately).

Will it make the Indian economy cashless?

UPI is being perceived as a major step towards pushing India in the direction of a cashless economy. However, in order to use UPI, one needs to have a bank account. According to a report by the Bank of India, 41 per cent of the population in India does not access banking facilities, of which 40 per cent is in urban areas and 61 per cent in rural areas. New Delhi has recently launched a scheme called Jan Dhan Yojana that aims to bring banking to the masses. But while the number of accounts has increased, reports suggest that most of the new accounts are lying dormant.

Also, UPI requires one to have a smartphone, internet connection and basic digital literacy. Last year, this journalist went on a field survey in the central Indian state of Madhya Pradesh. The interaction was mainly with people of three income classes in villages just 20 kilometres from the city of Bhopal. People across the income classes carried smartphones but they had never heard about google or e-mail. The phone was just used for calling, messaging and watching videos on youtube. So, there is a large section of the Indian population which has bank accounts and smartphones but are not literate enough to use the UPI app.

But the UPI app may push several digitally and financially literate people to move more towards a world of cashless transactions. Also, in the long run, it may benefit small businesses such as corner stores, cloth shops etc. Currently, a fraction of the 10 million plus retailers in India accept card payments. As of today, only 0.6 million do. Since, both the number of transactions and the value of transaction in a small retail shop per day is low, it is expensive for them to maintain card payment gateway. However, with UPI, they can now easily do cashless transactions at a very low cost. According to a NPCI report, it is less than Rs 0.45 for each UPI transaction.

So, a cashless economy may be a distant dream as of now but a less-cash economy is certainly a distinct possibility.

How will it impact the e-wallet industry?

There are two types of e-wallets in India with their differing business models. One is like that of ItzCash that accepts physical cash at its centres, converts it into digital currency, safekeeping in a wallet and then transferring it to any part of the country. According to Naveen Surya, the managing director of ItzCash, &ldquo;Our businesses won&rsquo;t get affected due to UPI. We cater to the unbanked section of the population, mainly daily wage earners, agriculture labourers, etc. Since the prerequisite for using UPI is having a bank account, it won&rsquo;t affect us.&rdquo;

However, there are other types of e-wallets such as Paytm, freecharge, mobikwik, instamojo etc. where an individual transfers money from his bank account to the wallet to make payments for cab rides, movie tickets, etc. With UPI, people can easily bypass these e-wallets unless they have an incentive. The incentives mean discounts, rewards or cashbacks from the e-wallet companies. But that is unsustainable in the long run. Right now, NPCI has approved UPI only for banks.

According to Ruchir Kanakia, head, business development &amp; operations, Instamojo, &quot;It is too early to say what will be the impact of UPI on the mobile wallet industry. But UPI is better for sure. One does not need to give personal details to transact through UPI and it will hopefully bring more people online. How much it will impact us remains to be seen.&quot;

How many people know about UPI?

For the success of any new platform, awareness is essential. People should know about it. While WION was trying to contact banks for a quote, this reporter talked to five individuals of five different banks who were into retail banking. None of them knew about UPI. The retail bankers communicate with account holders in the banks and usually apprise them of new developments. So, it is important that all 21 banks first make their employees aware about UPI.

(ItzCash is part of Essel Group, the company that owns and operates WION and www.wionews.com)

&nbsp;

&nbsp;&nbsp;

At present, the number of annual non-cash transactions per person in India stands at just six

At present, the number of annual non-cash transactions per person in India stands at just six. According to the World Payments Report, Finland, with 451 non-cash transactions per person in 2013, is ranked first. The United States comes second with 390. China also had 50 non-cash transactions per person in 2013. Compared to India, China has pulled ahead in its attempt to switch to a non-cash economy. The ‘Pocket’ app of ICICI bank, Axis Bank’s Axis pay, Bank of Maharashtra’s MahaUPI, Federal Bank’s Lotza are now available for downloading. These are the new Unified Payments Interface-enabled (UPI-enabled) apps launched on Playstore. In a few months’ time, these will be available on iOS as well. The National Payments Corporation of India (NPCI), which initiated and designed UPI, has approved 21 Indian banks to launch their UPI apps. UPI, in a way, is a better and improved version of the present mobile/e-payment tool, IMPS (Immediate Payment Service). UPI enables an individual to transfer funds from one account to another in two simple steps. After downloading the app of any bank, UPI generates a virtual payment address (VPA) that is unique to each account. While transferring money to any other account, one just needs to know the VPA of that account. One needs to authenticate it with a password and it’s done. Similarly, if someone wants to buy a book online, the e-commerce site will ask for the purchaser’s VPA to receive the amount, then authenticate the transaction with a password and complete the payment process. Thus, a person need not fill his/her card details or follow a two password and an OTP process for buying anything online. Similarly, there is no requirement of any account number, IFSC (swift) code, branch name, etc. for doing an account to account transfer. Another important feature of UPI is that one doesn’t need to use the app of the bank in which a person holds the account. The UPI app of any bank can be used for any account in another bank. One can also link multiple accounts in multiple banks to one UPI app. The Interface will be in competition with the existing online tools such as Net banking, NEFT, RTGS, etc. and will increase the competition within the banks as well. This may improve the efficiency of the banks. However, with UPI, one can do a transaction to the tune of a maximum of 100,000 Indian Rupees ($1500 approximately). Will it make the Indian economy cashless? UPI is being perceived as a major step towards pushing India in the direction of a cashless economy. However, in order to use UPI, one needs to have a bank account. According to a report by the Bank of India, 41 per cent of the population in India does not access banking facilities, of which 40 per cent is in urban areas and 61 per cent in rural areas. New Delhi has recently launched a scheme called Jan Dhan Yojana that aims to bring banking to the masses. But while the number of accounts has increased, reports suggest that most of the new accounts are lying dormant. Also, UPI requires one to have a smartphone, internet connection and basic digital literacy. Last year, this journalist went on a field survey in the central Indian state of Madhya Pradesh. The interaction was mainly with people of three income classes in villages just 20 kilometres from the city of Bhopal. People across the income classes carried smartphones but they had never heard about google or e-mail. The phone was just used for calling, messaging and watching videos on youtube. So, there is a large section of the Indian population which has bank accounts and smartphones but are not literate enough to use the UPI app. But the UPI app may push several digitally and financially literate people to move more towards a world of cashless transactions. Also, in the long run, it may benefit small businesses such as corner stores, cloth shops etc. Currently, a fraction of the 10 million plus retailers in India accept card payments. As of today, only 0.6 million do. Since, both the number of transactions and the value of transaction in a small retail shop per day is low, it is expensive for them to maintain card payment gateway. However, with UPI, they can now easily do cashless transactions at a very low cost. According to a NPCI report, it is less than Rs 0.45 for each UPI transaction. So, a cashless economy may be a distant dream as of now but a less-cash economy is certainly a distinct possibility. How will it impact the e-wallet industry? There are two types of e-wallets in India with their differing business models. One is like that of ItzCash that accepts physical cash at its centres, converts it into digital currency, safekeeping in a wallet and then transferring it to any part of the country. According to Naveen Surya, the managing director of ItzCash, “Our businesses won’t get affected due to UPI. We cater to the unbanked section of the population, mainly daily wage earners, agriculture labourers, etc. Since the prerequisite for using UPI is having a bank account, it won’t affect us.” However, there are other types of e-wallets such as Paytm, freecharge, mobikwik, instamojo etc. where an individual transfers money from his bank account to the wallet to make payments for cab rides, movie tickets, etc. With UPI, people can easily bypass these e-wallets unless they have an incentive. The incentives mean discounts, rewards or cashbacks from the e-wallet companies. But that is unsustainable in the long run. Right now, NPCI has approved UPI only for banks. According to Ruchir Kanakia, head, business development & operations, Instamojo, "It is too early to say what will be the impact of UPI on the mobile wallet industry. But UPI is better for sure. One does not need to give personal details to transact through UPI and it will hopefully bring more people online. How much it will impact us remains to be seen." How many people know about UPI? For the success of any new platform, awareness is essential. People should know about it. While WION was trying to contact banks for a quote, this reporter talked to five individuals of five different banks who were into retail banking. None of them knew about UPI. The retail bankers communicate with account holders in the banks and usually apprise them of new developments. So, it is important that all 21 banks first make their employees aware about UPI. (ItzCash is part of Essel Group, the company that owns and operates WION and www.wionews.com)

India?s Unified Payment Interface: All you need to know

Four US investment banks promised British finance minister George Osborne on Thursday that they would help London keep its top spot as a global financial centre following the country&#39;s vote to leave the European Union. 
 
Since the June 23 referendum there have been fears of an exodus from the City of London if access to the EU&#39;s single market becomes significantly harder. Banks like JPMorgan have said they could move thousands of jobs. 
 
On Thursday JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley, as well as Britain&#39;s Asia-focused Standard Chartered said they would try to support London&#39;s financial sector. 
 
&quot;Today we met and agreed that we would work together ... with a common aim to help London retain its position as the leading international financial centre,&quot; the banks said in a joint statement with Osborne. 
 
The statement said no other city in Europe had capital markets as deep as those of London, but the banks made no commitment about keeping jobs in Britain. 
 
The French government pledged on Wednesday to make its tax regime for expatriates the most favourable in Europe in a landgrab for London banking business. 
 
Goldman Sachs and Morgan Stanley have denied speculation they were poised to shift London-based staff and operations to Frankfurt 
 
Jamie Dimon, the head of JPMorgan Chase, said before the referendum that the bank could have to move up to 4,000 staff from the UK in the event of a Brexit vote. 
 
On Wednesday, the municipal authority for the City of London, the district in the capital that is home to many large banks, said the government needed to ensure EU exit talks preserved financial services firms&#39; &quot;passporting&quot; rights that allow them to use London as a base for EU-wide activities. 
 
Osborne, who was senior figure in the failed campaign to keep Britain in the EU, has spent years trying to expand London&#39;s role as a global hub for trade in China&#39;s renminbi and India&#39;s rupee, as well as Islamic finance. 
 
On Tuesday, he met British domestic banks, whose share prices have tumbled since the Brexit vote, and encouraged them to make more funds available for UK lending after the Bank of England eased capital rules. 
 
(Reuters)

The banks said they would work at helping London 'retain its position as the leading international financial centre'

Four US investment banks promised British finance minister George Osborne on Thursday that they would help London keep its top spot as a global financial centre following the country's vote to leave the European Union. Since the June 23 referendum there have been fears of an exodus from the City of London if access to the EU's single market becomes significantly harder. Banks like JPMorgan have said they could move thousands of jobs. On Thursday JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley, as well as Britain's Asia-focused Standard Chartered said they would try to support London's financial sector. "Today we met and agreed that we would work together ... with a common aim to help London retain its position as the leading international financial centre," the banks said in a joint statement with Osborne. The statement said no other city in Europe had capital markets as deep as those of London, but the banks made no commitment about keeping jobs in Britain. The French government pledged on Wednesday to make its tax regime for expatriates the most favourable in Europe in a landgrab for London banking business. Goldman Sachs and Morgan Stanley have denied speculation they were poised to shift London-based staff and operations to Frankfurt Jamie Dimon, the head of JPMorgan Chase, said before the referendum that the bank could have to move up to 4,000 staff from the UK in the event of a Brexit vote. On Wednesday, the municipal authority for the City of London, the district in the capital that is home to many large banks, said the government needed to ensure EU exit talks preserved financial services firms' "passporting" rights that allow them to use London as a base for EU-wide activities. Osborne, who was senior figure in the failed campaign to keep Britain in the EU, has spent years trying to expand London's role as a global hub for trade in China's renminbi and India's rupee, as well as Islamic finance. On Tuesday, he met British domestic banks, whose share prices have tumbled since the Brexit vote, and encouraged them to make more funds available for UK lending after the Bank of England eased capital rules. (Reuters)

After Brexit, London gets a little help from 4 US banks

Zimbabweans stayed at home on Wednesday and foreign banks and most businesses in the capital shut down, in one of the biggest protests against high unemployment, an acute cash shortage and corruption for nearly a decade. 
 
Evan Mawarire, a pastor whose social media movement #ThisFlag organised the &quot;stay-away&quot;, demanded that President Robert Mugabe fire corrupt cabinet ministers and scrap plans to introduce local bank notes or face a two-day shut-down next week. 
 
Wednesday&#39;s protest followed violent clashes between taxi drivers and police on Monday that led to the arrest of 95 people. It also coincided with a strike by doctors, teachers and nurses whose salaries had been delayed. 
 
A devastating drought has compounded economic hardships including high joblessness while an acute cash shortage has angered Zimbabwe&#39;s citizens. 
 
In a story quoting John Mangudya, the governor of Zimbabwe&#39;s central bank, the Financial Times reported on Wednesday that the African Export-Import Bank was arranging a seven-year loan of $986 million so Zimbabwe could pay back arrears to the World Bank. 
 
The FT quoted Mangudya as saying Zimbabwe hoped to pay off its arrears before the September board meetings of the International Monetary Fund and the African Development Bank, paving the way for IMF assistance to alleviate its cash crunch. 
 
African Export-Import Bank and IMF officials could not immediately be reached for comment. 
 
Campaign attracts thousands 
 
The 39-year-old Mawarire started the #ThisFlag campaign in April to protest against corruption, injustice and poverty. 
 
The campaign has attracted thousands of followers who have been speaking out against government excesses. Wednesday&#39;s protest was organised via Twitter, Facebook and WhatsApp. 
 
Mawarire&#39;s campaign includes a series of demands: for Mugabe to fire and prosecute &quot;known&quot; corrupt ministers, for government salaries to be paid on time and for police to remove roadblocks which most people say are posts for bribe taking officers. 
 
&quot;The ball is in your court,&quot; Mawarire wrote on his Facebook page. &quot;We are ready to close down again and this time we will add another day, Wednesday and Thursday. We are not playing and we ask you to take us seriously.&quot; 
 
Mugabe&#39;s spokesman, George Charamba, was not available to comment. 
 
State telecoms regulator POTRAZ said in a statement it would arrest people sending &quot;subversive&quot; messages that cause unrest. 
 
Mugabe, who has held power since Zimbabwe gained independence from Britain in 1980, was attending a scheduled meeting on Wednesday of his party ZANU-PF&#39;s politburo, the party&#39;s top executive organ. Party spokesman Simon Khaya-Moyo declined to say whether ZANU-PF would discuss the protests. 
 
In the volatile township of Mufakose, to the west of Harare, hundreds of youths barricaded roads to keep people from going to work, witnesses said. 
 
More than 40 people were arrested across Zimbabwe for blocking roads and disturbing the peace, said Charity Charamba, a police spokeswoman. Among them was a Belgian tourist held in the resort town of Victoria for unlawful protests, she said, correcting her earlier statement that an Australian had been detained. 
 
There was no need to call out the military, Charamba said. 
 
&quot;The military is not there because in our assessment, for now, the situation has not deteriorated (enough) to warrant the presence of the military,&quot; Charamba told reporters. 
 
Local units of Barclays and Standard Chartered shut their branches in central Harare. Clothing retailers Edgars Stores and Truworths closed stores. 
 
Siyaso, one of the biggest and oldest informal markets in Mbare township near central Harare, was also shut. Few vehicles were on the roads of the capital. Supermarkets like Pick&#39;n&#39;Pay, Ok Zimbabwe and Choppies reported little business. Government departments were open. 
 
Local private media said Zimbabweans in other major cities had also stayed at home, with most businesses closed. Zimbabwe last witnessed such a protest in April 2007. 
 
(Reuters)&nbsp;

In the country's biggest protest in a decade, people stay home and businesses close amid unemployment, cash shortage, corruption and drought

Zimbabweans stayed at home on Wednesday and foreign banks and most businesses in the capital shut down, in one of the biggest protests against high unemployment, an acute cash shortage and corruption for nearly a decade. Evan Mawarire, a pastor whose social media movement #ThisFlag organised the "stay-away", demanded that President Robert Mugabe fire corrupt cabinet ministers and scrap plans to introduce local bank notes or face a two-day shut-down next week. Wednesday's protest followed violent clashes between taxi drivers and police on Monday that led to the arrest of 95 people. It also coincided with a strike by doctors, teachers and nurses whose salaries had been delayed. A devastating drought has compounded economic hardships including high joblessness while an acute cash shortage has angered Zimbabwe's citizens. In a story quoting John Mangudya, the governor of Zimbabwe's central bank, the Financial Times reported on Wednesday that the African Export-Import Bank was arranging a seven-year loan of $986 million so Zimbabwe could pay back arrears to the World Bank. The FT quoted Mangudya as saying Zimbabwe hoped to pay off its arrears before the September board meetings of the International Monetary Fund and the African Development Bank, paving the way for IMF assistance to alleviate its cash crunch. African Export-Import Bank and IMF officials could not immediately be reached for comment. Campaign attracts thousands The 39-year-old Mawarire started the #ThisFlag campaign in April to protest against corruption, injustice and poverty. The campaign has attracted thousands of followers who have been speaking out against government excesses. Wednesday's protest was organised via Twitter, Facebook and WhatsApp. Mawarire's campaign includes a series of demands: for Mugabe to fire and prosecute "known" corrupt ministers, for government salaries to be paid on time and for police to remove roadblocks which most people say are posts for bribe taking officers. "The ball is in your court," Mawarire wrote on his Facebook page. "We are ready to close down again and this time we will add another day, Wednesday and Thursday. We are not playing and we ask you to take us seriously." Mugabe's spokesman, George Charamba, was not available to comment. State telecoms regulator POTRAZ said in a statement it would arrest people sending "subversive" messages that cause unrest. Mugabe, who has held power since Zimbabwe gained independence from Britain in 1980, was attending a scheduled meeting on Wednesday of his party ZANU-PF's politburo, the party's top executive organ. Party spokesman Simon Khaya-Moyo declined to say whether ZANU-PF would discuss the protests. In the volatile township of Mufakose, to the west of Harare, hundreds of youths barricaded roads to keep people from going to work, witnesses said. More than 40 people were arrested across Zimbabwe for blocking roads and disturbing the peace, said Charity Charamba, a police spokeswoman. Among them was a Belgian tourist held in the resort town of Victoria for unlawful protests, she said, correcting her earlier statement that an Australian had been detained. There was no need to call out the military, Charamba said. "The military is not there because in our assessment, for now, the situation has not deteriorated (enough) to warrant the presence of the military," Charamba told reporters. Local units of Barclays and Standard Chartered shut their branches in central Harare. Clothing retailers Edgars Stores and Truworths closed stores. Siyaso, one of the biggest and oldest informal markets in Mbare township near central Harare, was also shut. Few vehicles were on the roads of the capital. Supermarkets like Pick'n'Pay, Ok Zimbabwe and Choppies reported little business. Government departments were open. Local private media said Zimbabweans in other major cities had also stayed at home, with most businesses closed. Zimbabwe last witnessed such a protest in April 2007. (Reuters)

Zimbabwe shuts down to protest financial collapse

Call it the law of unintended consequences. A measure to save Greece from the abyss of a default and crashing out of the eurozone now holds its economy in a stranglehold, preventing its recovery. 
 
Cast back a year: the standoff between the Greek government of Prime Minister Alexis Tsipras and the EU and IMF over the terms of a new rescue plan for the country was reaching breaking point. 
 
The talks on a third bailout had been going nowhere since Tsipras took power in January after sweeping elections on an anti-austerity platform, and the EU and IMF warned the country&#39;s place in the eurozone was at risk if it didn&#39;t accept more spending cuts and tax hikes. 
 
Meanwhile, Greeks had been taking out more and more of their savings out of banks, with 20 per cent gone when during the night of June 26 to 27 Tsipras shocked the world by announcing he would put the bailout conditions to a referendum vote. 
 
In order to prevent a run on banks, Greece imposed capital controls, limiting cash withdrawals to 420 Euros ($465) per week. 
 
The restriction is still in place, and it&#39;s having a long-term impact on the economy. 
 
Consumption was down 1.3 per cent in the first quarter of this year compared with the same period in 2015, even though prices have been falling in Greece. 
 
Overall, the Greek economy, which had begun growing again at the end of 2014, shrank by 1.4 per cent in the first quarter of 2016. 
 
&#39;Who has 420 Euros?&#39; 
 
For many Greeks, the 420-Euro weekly limit was not too much of a brake on spending as they had already been progressively tightening their belts since Greece&#39;s first 110-billion-Euro international bailout in 2010. 
 
&quot;Families have cut their expenses so much these past years of the crisis that it didn&#39;t really create a problem ... who now has more than 420 Euros per week to spend?&quot; said Dimitris Sotiropoulos, a draftsman and father of three children. 
 
However, the impact has been greater on businesses, as trade figures show: imports plunged by 12.8 per cent and exports by 11.7 per cent. 
 
The controls, which hampered the ability to import goods and conduct business abroad, added to the &quot;tax pressure and collapse of the social security system&quot; of recent years, said Thanassis Kalabalikis, president of the Athens manufacturers&#39; federation. 
 
&quot;Small entrepreneurs, who before the crisis were the backbone of the Greek economy, had already taken a blow from seven years of recession, and capital controls just added to the sluggishness,&quot; he said. 
 
Some 26,000 Greek businesses of all sizes have shut their doors since capital controls were introduced. 
 
For Panayiotis Petrakis, an economics professor at the University of Athens, &quot;limitations on the free flow of capital and the lack of liquidity are preventing the recovery of the economy and don&#39;t encourage confidence among investors.&quot; 
 
Greece finally clinched the 86-billion-Euro bailout at the end of July, helping to bring back a certain amount of economic stability, including by a recapitalisation of its battered banks at the end of the year. 
 
Low prices, black market 
 
The Greek government has relaxed the capital controls in recent months, in particular allowing higher withdrawals on funds returned from abroad. 
 
A commission is also in place to examine requests from businesses and individuals for transactions above transfer limits. 
 
However, experts worry that capital controls could remain in place to the end of the year, or even to mid-2017, given the experience of fellow Eurozone member Cyprus which took two years to lift capital controls it imposed during the height of its crisis in 2013. 
 
Louka Katseli, a former economy minister who now is the board chairwoman at the private lender National Bank of Greece, is among those who believes the capital controls will be lifted later rather than sooner. 
 
For that, she believes that three conditions need to be met: there are effective incentives for funds to return to the country, the problem of dodgy loans on bank balance sheets has been resolved, and most importantly Greece that receives a positive evaluation from its international creditors in a review later this year. 
 
The only advantage of the capital controls has been to encourage Greeks to use other means of payments when they can: bank transfers and card payments inside the country were not restricted. 
 
That would help reduce problematic tax evasion, if more Greek businesses install card terminals. 
 
&quot;People have adapted but not businesses, as the installation of card terminals has been a headache, because in addition to many bank commissions many indebted companies are in such a terrible state they don&#39;t have the right to install them,&quot; said Kalabalikis. 
 
The result has been, according to Sotiropoulos, that &quot;prices have fallen even more and fostered the black market&quot; as businesses are inclined &quot;to offer considerable discounts to get sales by not issuing a receipt and dodging the tax payments&quot;. 
 
(AFP)

To prevent a run on banks Greece limited cash withdrawals to 420 Euros per week, which is having a long-term impact on the economy

Call it the law of unintended consequences. A measure to save Greece from the abyss of a default and crashing out of the eurozone now holds its economy in a stranglehold, preventing its recovery. Cast back a year: the standoff between the Greek government of Prime Minister Alexis Tsipras and the EU and IMF over the terms of a new rescue plan for the country was reaching breaking point. The talks on a third bailout had been going nowhere since Tsipras took power in January after sweeping elections on an anti-austerity platform, and the EU and IMF warned the country's place in the eurozone was at risk if it didn't accept more spending cuts and tax hikes. Meanwhile, Greeks had been taking out more and more of their savings out of banks, with 20 per cent gone when during the night of June 26 to 27 Tsipras shocked the world by announcing he would put the bailout conditions to a referendum vote. In order to prevent a run on banks, Greece imposed capital controls, limiting cash withdrawals to 420 Euros ($465) per week. The restriction is still in place, and it's having a long-term impact on the economy. Consumption was down 1.3 per cent in the first quarter of this year compared with the same period in 2015, even though prices have been falling in Greece. Overall, the Greek economy, which had begun growing again at the end of 2014, shrank by 1.4 per cent in the first quarter of 2016. 'Who has 420 Euros?' For many Greeks, the 420-Euro weekly limit was not too much of a brake on spending as they had already been progressively tightening their belts since Greece's first 110-billion-Euro international bailout in 2010. "Families have cut their expenses so much these past years of the crisis that it didn't really create a problem ... who now has more than 420 Euros per week to spend?" said Dimitris Sotiropoulos, a draftsman and father of three children. However, the impact has been greater on businesses, as trade figures show: imports plunged by 12.8 per cent and exports by 11.7 per cent. The controls, which hampered the ability to import goods and conduct business abroad, added to the "tax pressure and collapse of the social security system" of recent years, said Thanassis Kalabalikis, president of the Athens manufacturers' federation. "Small entrepreneurs, who before the crisis were the backbone of the Greek economy, had already taken a blow from seven years of recession, and capital controls just added to the sluggishness," he said. Some 26,000 Greek businesses of all sizes have shut their doors since capital controls were introduced. For Panayiotis Petrakis, an economics professor at the University of Athens, "limitations on the free flow of capital and the lack of liquidity are preventing the recovery of the economy and don't encourage confidence among investors." Greece finally clinched the 86-billion-Euro bailout at the end of July, helping to bring back a certain amount of economic stability, including by a recapitalisation of its battered banks at the end of the year. Low prices, black market The Greek government has relaxed the capital controls in recent months, in particular allowing higher withdrawals on funds returned from abroad. A commission is also in place to examine requests from businesses and individuals for transactions above transfer limits. However, experts worry that capital controls could remain in place to the end of the year, or even to mid-2017, given the experience of fellow Eurozone member Cyprus which took two years to lift capital controls it imposed during the height of its crisis in 2013. Louka Katseli, a former economy minister who now is the board chairwoman at the private lender National Bank of Greece, is among those who believes the capital controls will be lifted later rather than sooner. For that, she believes that three conditions need to be met: there are effective incentives for funds to return to the country, the problem of dodgy loans on bank balance sheets has been resolved, and most importantly Greece that receives a positive evaluation from its international creditors in a review later this year. The only advantage of the capital controls has been to encourage Greeks to use other means of payments when they can: bank transfers and card payments inside the country were not restricted. That would help reduce problematic tax evasion, if more Greek businesses install card terminals. "People have adapted but not businesses, as the installation of card terminals has been a headache, because in addition to many bank commissions many indebted companies are in such a terrible state they don't have the right to install them," said Kalabalikis. The result has been, according to Sotiropoulos, that "prices have fallen even more and fostered the black market" as businesses are inclined "to offer considerable discounts to get sales by not issuing a receipt and dodging the tax payments". (AFP)

For Greeks, emergency economic measures feed today's crisis

Lloyds Banking Group plans to axe about 640 jobs, sources close to the matter said on Wednesday, as Britain&#39;s largest mortgage lender continues to scale back its branch network and workforce. 
 
All affected employees working in information technology and back-office roles and are being told of the decision on Wednesday, the sources said on condition of anonymity because they are not authorised to discuss the plans. 
 
Lloyds, who rescued in a 20.5 billion Pound ($27.4 billion) taxpayer bailout during the financial crisis, is in the midst of major restructuring as part of an aggressive cost-cutting programme. 
 
&quot;The continuation of the bank&#39;s major job loss programme will bring disappointment as staff feel they have already faced two years of endless workforce cuts,&quot; said Rob MacGregor, national officer at the Unite union. 
 
A statement from Lloyds said there will be a net reduction of 525 jobs where newly created roles are included. The bank also said it is closing 23 branches by October because customers increasingly bank online and more functions are automated. 
 
The bank, more than two thirds of the way through three-year plan to cut about a tenth of its workforce, could now consider deeper cuts than originally targetted because of the programme&#39;s swift progress, two separate sources said. 
 
The latest cuts coincide with the biggest upheaval for British banks since the financial crisis. 
 
British voters&#39; surprise decision, last week, to leave the European Union is forcing bank executives to reconsider business models amid uncertainty and earnings downgrades that prompted rattled investors to offload billions of pounds of shares. 
 
Sources close to Britain&#39;s government say it has put on hold plans to sell stakes in Lloyds because market volatility has made it too difficult to judge whether disposals represent value for taxpayers. 
 
The employees affected by Wednesday&#39;s job cuts work in cities including London, Edinburgh, Bristol and Manchester, the sources said. 
 
So far this year, Lloyds has announced plans to cut about 3,580 positions from its 75,000-strong workforce. 
 
The Unite union has said the drawn out process job losses are taking a toll on Lloyds staff, with three quarters of its employees reporting symptoms of stress and four out of every five working unpaid overtime every week. 
 
(Reuters)

Four out of every five employees at Lloyds, who received a $27 bailout in 2009, were reportedly working unpaid overtime every week

Lloyds Banking Group plans to axe about 640 jobs, sources close to the matter said on Wednesday, as Britain's largest mortgage lender continues to scale back its branch network and workforce. All affected employees working in information technology and back-office roles and are being told of the decision on Wednesday, the sources said on condition of anonymity because they are not authorised to discuss the plans. Lloyds, who rescued in a 20.5 billion Pound ($27.4 billion) taxpayer bailout during the financial crisis, is in the midst of major restructuring as part of an aggressive cost-cutting programme. "The continuation of the bank's major job loss programme will bring disappointment as staff feel they have already faced two years of endless workforce cuts," said Rob MacGregor, national officer at the Unite union. A statement from Lloyds said there will be a net reduction of 525 jobs where newly created roles are included. The bank also said it is closing 23 branches by October because customers increasingly bank online and more functions are automated. The bank, more than two thirds of the way through three-year plan to cut about a tenth of its workforce, could now consider deeper cuts than originally targetted because of the programme's swift progress, two separate sources said. The latest cuts coincide with the biggest upheaval for British banks since the financial crisis. British voters' surprise decision, last week, to leave the European Union is forcing bank executives to reconsider business models amid uncertainty and earnings downgrades that prompted rattled investors to offload billions of pounds of shares. Sources close to Britain's government say it has put on hold plans to sell stakes in Lloyds because market volatility has made it too difficult to judge whether disposals represent value for taxpayers. The employees affected by Wednesday's job cuts work in cities including London, Edinburgh, Bristol and Manchester, the sources said. So far this year, Lloyds has announced plans to cut about 3,580 positions from its 75,000-strong workforce. The Unite union has said the drawn out process job losses are taking a toll on Lloyds staff, with three quarters of its employees reporting symptoms of stress and four out of every five working unpaid overtime every week. (Reuters)

Lloyds to axe 640 jobs in cost-cutting drive

Former Moldovan Prime Minister Vlad Filat&nbsp;was sentenced today to nine years in prison for abuse of power, a charge his lawyer said was a politically motivated attempt to humiliate him. 
 
Filat was arrested during a parliamentary session last October after months of mass street protests over the disappearance of $1 billion from the banking sector, equivalent to one-eighth of the tiny ex-Soviet republic&#39;s economy. He denies any connection to the crime and all charges against him. 
 
Prosecutor Adriana Betisor, who had sought a sentence of 19 years, said the ruling, at the end of a closed trial, was &quot;too soft&quot;, and vowed to continue pursuing other cases against Filat connected to the banking fraud. 
 
&quot;He has pleaded not guilty, but his guilt is clear ... Investigations will continue in other areas,&quot; Betisor said. 
 
Filat&#39;s lawyer, Igor Popa, called the case &quot;a political, well-directed spectacle.&quot; 
 
&quot;Its goal was to destroy Filat as a person, in the most humiliating and crushing manner possible. We will seek a fair trial outside Moldova and will find a lawful ruling,&quot; he said. 
 
Filat, who served as prime minister from 2009 to 2013, is credited with putting Moldova on a pro-European path by signing an association agreement with the European Union. But an enduring economic crisis and perceived corruption in the ruling elite pushed his public trust rating into single digits. 
 
He says he has become a scapegoat over the banking scandal, which weakened Moldova&#39;s currency and damaged living standards in what was already Europe&#39;s poorest country. 
 
The crisis has held up the disbursement of valuable budget support from international lenders and highlighted the corrosive rivalry between oligarch groups in Moldova. 
 
The appointment of a new prime minister in January with close ties to Vladimir Plahotniuc, one of Moldova&#39;s richest and most unpopular public figures, angered opposition lawmakers and citizens, who wanted a snap parliamentary election. 
 
(Reuters)

Vlad Filat was arrested last October after months of mass street protests over the disappearance of $1 billion from banking sector

Former Moldovan Prime Minister Vlad Filat was sentenced today to nine years in prison for abuse of power, a charge his lawyer said was a politically motivated attempt to humiliate him. Filat was arrested during a parliamentary session last October after months of mass street protests over the disappearance of $1 billion from the banking sector, equivalent to one-eighth of the tiny ex-Soviet republic's economy. He denies any connection to the crime and all charges against him. Prosecutor Adriana Betisor, who had sought a sentence of 19 years, said the ruling, at the end of a closed trial, was "too soft", and vowed to continue pursuing other cases against Filat connected to the banking fraud. "He has pleaded not guilty, but his guilt is clear ... Investigations will continue in other areas," Betisor said. Filat's lawyer, Igor Popa, called the case "a political, well-directed spectacle." "Its goal was to destroy Filat as a person, in the most humiliating and crushing manner possible. We will seek a fair trial outside Moldova and will find a lawful ruling," he said. Filat, who served as prime minister from 2009 to 2013, is credited with putting Moldova on a pro-European path by signing an association agreement with the European Union. But an enduring economic crisis and perceived corruption in the ruling elite pushed his public trust rating into single digits. He says he has become a scapegoat over the banking scandal, which weakened Moldova's currency and damaged living standards in what was already Europe's poorest country. The crisis has held up the disbursement of valuable budget support from international lenders and highlighted the corrosive rivalry between oligarch groups in Moldova. The appointment of a new prime minister in January with close ties to Vladimir Plahotniuc, one of Moldova's richest and most unpopular public figures, angered opposition lawmakers and citizens, who wanted a snap parliamentary election. (Reuters)

Moldovan court jails ex-PM for 9 years for abuse of power

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London&#39;s financial centre was at risk of losing its prized &quot;EU passport&quot;. 
 
Banks based in London rely on a so-called EU passport to operate across the bloc&#39;s capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. 
 
The City of London will not be able to keep that passport if Britain leaves the EU&#39;s single market of trade in goods and services, Villeroy told France Inter radio. 
 
&quot;There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules,&quot; he said. 
 
&quot;It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market.&quot; 
 
Central banks are efficiently dealing with the fallout of Thursday&#39;s UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: &quot;The euro is a solid currency.&quot; 
 
&quot;What happened on Thursday is bad news, first of all for Britain,&quot; he said. &quot;Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy.&quot; 
 
Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. 
 
(Reuters)

Some London-based banks have said they would shift operations to the euro zone if Britain left the EU

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London's financial centre was at risk of losing its prized "EU passport". Banks based in London rely on a so-called EU passport to operate across the bloc's capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. The City of London will not be able to keep that passport if Britain leaves the EU's single market of trade in goods and services, Villeroy told France Inter radio. "There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules," he said. "It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market." Central banks are efficiently dealing with the fallout of Thursday's UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: "The euro is a solid currency." "What happened on Thursday is bad news, first of all for Britain," he said. "Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy." Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. (Reuters)

ECB's Villeroy: Brexit talks must be quick, City of London at risk of losing 'EU passport'

The Asian Infrastructure Investment Bank (AIIB) stressed its independence from China at its first annual meeting today, saying it plans to cooperate with other development banks and add new members, including Hong Kong.&nbsp; 
 
Chinese President Xi Jinping proposed the bank two years ago and it began operations in January, with 57 founding member countries and $100 billion in committed capital, which it plans to invest in projects across the region.&nbsp; 
 
The AIIB, which intends to invest $1.2 billion this year, said it is aiming to meet international standards of governance, although some members say there is still work to be done.&nbsp; 
 
And in response to concern that China, its biggest backer, will dominate, the AIIB said it answers to all its shareholders. 
 
&quot;China as much as other shareholders has been very supportive of the governance standards that we&#39;re setting and of the transparency around the bank&#39;s operations,&quot; AIIB vice president Danny Alexander said. 
 
AIIB&#39;s board approved its first four deals worth $509 million on Friday, with three projects co-financed with the World Bank, the Asian Development Bank, the United Kingdom Department for International Development and the European Bank for Reconstruction and Development.&nbsp; 
 
The co-financed projects are a slum renovation in Indonesia and highway construction in Pakistan and Tajikistan. A power grid upgrade project in Bangladesh will be solely AIIB financed. 
 
&quot;We are working on a number of additional projects and look forward to bringing them to our Board for its approval later this year,&quot; said AIIB President Jin Liqun. 
 
It is crucial for the AIIB to comply with multilateral agency procedures and rules, Chinese Vice-Premier Zhang Gaoli, said at the opening ceremony for AIIB&#39;s annual meeting.&nbsp; 
 
&quot;AIIB should learn from the successful experience of other multilateral agencies and forge close partnership with the World Bank, Asian Development Bank and other institutions,&quot; he said, a commitment which was echoed by the AIIB&#39;s Jin. 
 
The bank, with only 38 full-time staff, needs organization and procedures to be fleshed out, say members.&nbsp; 
 
&quot;The roles of the management and the Board should be more clearly defined. Over the past six months, the basic framework for operation took shape, but there is still much to be done,&quot; Korean finance minister and AIIB governor Ilho Yoo said, adding that it needs to develop its environmental and social framework.&nbsp; 
 
The bank&#39;s lean operation and flexibility as a new organization was a positive for the European Bank for Reconstruction and Development (EBRD), which is partnering on one of AIIB`s first deals.&nbsp; 
 
&quot;What impresses me is the efficiency they go about things. AIIB is a natural partner because they are willing and able to take risk, such as going into private public partnership structures,&quot; said Thomas Maier, the EBRD&#39;s managing director for infrastructure. 
 
Zhang also said that China will contribute $50 million to a new fund set up by the AIIB to support member countries with project preparations.&nbsp; 
 
The AIIB is looking to expand its numbers this year and will take applications for new members through the end of September. 
 
Hong Kong, despite being a special administrative region of China, has applied for membership, and Jin said he is confident Hong Kong will soon be a full member of the bank.&nbsp; 
 
Beijing has been looking for ways to support Hong Kong, which has been convulsed by political turmoil.&nbsp; 
 
(Reuters)

China, the biggest funder, addresses concern that it'll dominate the bank by insisting it's accountable to all shareholders

The Asian Infrastructure Investment Bank (AIIB) stressed its independence from China at its first annual meeting today, saying it plans to cooperate with other development banks and add new members, including Hong Kong. Chinese President Xi Jinping proposed the bank two years ago and it began operations in January, with 57 founding member countries and $100 billion in committed capital, which it plans to invest in projects across the region. The AIIB, which intends to invest $1.2 billion this year, said it is aiming to meet international standards of governance, although some members say there is still work to be done. And in response to concern that China, its biggest backer, will dominate, the AIIB said it answers to all its shareholders. "China as much as other shareholders has been very supportive of the governance standards that we're setting and of the transparency around the bank's operations," AIIB vice president Danny Alexander said. AIIB's board approved its first four deals worth $509 million on Friday, with three projects co-financed with the World Bank, the Asian Development Bank, the United Kingdom Department for International Development and the European Bank for Reconstruction and Development. The co-financed projects are a slum renovation in Indonesia and highway construction in Pakistan and Tajikistan. A power grid upgrade project in Bangladesh will be solely AIIB financed. "We are working on a number of additional projects and look forward to bringing them to our Board for its approval later this year," said AIIB President Jin Liqun. It is crucial for the AIIB to comply with multilateral agency procedures and rules, Chinese Vice-Premier Zhang Gaoli, said at the opening ceremony for AIIB's annual meeting. "AIIB should learn from the successful experience of other multilateral agencies and forge close partnership with the World Bank, Asian Development Bank and other institutions," he said, a commitment which was echoed by the AIIB's Jin. The bank, with only 38 full-time staff, needs organization and procedures to be fleshed out, say members. "The roles of the management and the Board should be more clearly defined. Over the past six months, the basic framework for operation took shape, but there is still much to be done," Korean finance minister and AIIB governor Ilho Yoo said, adding that it needs to develop its environmental and social framework. The bank's lean operation and flexibility as a new organization was a positive for the European Bank for Reconstruction and Development (EBRD), which is partnering on one of AIIB`s first deals. "What impresses me is the efficiency they go about things. AIIB is a natural partner because they are willing and able to take risk, such as going into private public partnership structures," said Thomas Maier, the EBRD's managing director for infrastructure. Zhang also said that China will contribute $50 million to a new fund set up by the AIIB to support member countries with project preparations. The AIIB is looking to expand its numbers this year and will take applications for new members through the end of September. Hong Kong, despite being a special administrative region of China, has applied for membership, and Jin said he is confident Hong Kong will soon be a full member of the bank. Beijing has been looking for ways to support Hong Kong, which has been convulsed by political turmoil. (Reuters)

China-backed AIIB seeks cooperation and new members, beyond 57 founding countries

With 51.9 per cent of the voters in the UK referendum voting for Brexit, the EU economy will have to gear up for massive changes

The European Union's chief concerns over Britain's vote to leave the group are political, but losing its second-largest economy will have a huge economic impact as well. Below are some of the main economic risks and benefits for the EU's remaining 27 members. BUDGET/ECONOMY Other members will have to fill in at least some of the shortfall from a lack of its contributions. Britain's total contribution to the EU budget for 2016 has been set at 19.4 billion euros ($21.4 billion), including its rebate and customs duties. It receives about 7 billion euros, mainly agricultural and regional subsidies, leaving a gap to fill of just over 5 per cent of the total EU budget. Germany, the EU's largest member, would inevitably have to provide the most extra cash. Germany's Ifo institute estimates that would be 2.5 billion euros. UniCredit says there would be manageable negatives for the euro zone, with a trade impact, a financial flight to safety and uncertainty possibly leading to tighter financial conditions and postponed investment. It would revise down its 2017 forecast for GDP to 0.5-1.0 per cent from the current 1.6 per cent. TRADE The rest of the European Union has a trade surplus of around 100 billion euros in goods with Britain, while Britain exports some 20 billion euros more in services than it imports, the same gap as for financial services. Many economists forecast Brexit would at least temporarily reduce UK growth, uncertainty hitting domestic demand and weakening the pound, with a resultant impact on EU goods exports to Britain, which make up some 2.6 per cent of rest-EU GDP in 2014. A UK "demand shock", linked also to a possible reintroduction of import tariffs, of 10 per cent could lead to a reduction of rest-EU GDP by 0.26 per cent. Brexit campaigners say the EU would want to agree a free trade deal with Britain even if the country left the bloc. However, Oliver Schulz, an economist at Citi, reasons that could play more into the hands of the EU given there tends to be more focus in trade deals on goods than on services, and financial services in particular. Switzerland, where financial services are a larger share of GDP than in Britain, has no general access to EU financial service markets and runs a financial services trade deficit with the bloc. The EU's main service export to Britain, tourism, is unlikely to be affected. INVESTMENT The United Kingdom is consistently the largest recipient of foreign direct investment in the European Union, according to UNCTAD data, with an average of some $56 billion per year in the 2010-2014 period. EU partners supply just under half of this. Some 72 per cent of investors in an EY study in 2015 cited access to the European single market as important to the UK's attractiveness to FDI. There is a risk some FDI would be diverted to other EU countries if Britain lost access to the EU single market. MIGRATION One of the main arguments for Brexit campaigners is to limit migration of workers from other EU countries, even though both Norway and Switzerland have had to accept free movement of people in return for access to EU internal markets. If Britain did cap immigration, it could have a negative impact on eastern European countries, from which some 1.2 million workers were in Britain in late 2015. The impact could be most acute in the countries with the most citizens in Britain - Poland (853,000 in 2014), Romania (175,000) and Lithuania (155,000). By contrast, other affluent western European countries, such as Germany, could as a result see higher inflows of EU migrants. This might be beneficial economically, if politically difficult. IRELAND, BENELUX HIT HARDEST? Research by the Bertelsmann Foundation sought to break down the impact by country and determined that the impact of a "soft exit" could be worse in Ireland than in Britain, based on their degree of trade dependence on Britain. The Benelux countries and Sweden would take the next biggest hits, while the impact on Germany would be very limited given that its auto and other manufacturing sectors have many other markets. The Belgian region of Flanders will suffer a 2.5 per cent decline in GDP, according to its premier Geert Bourgeois, who believes his region would be hit hardest after Ireland. DYNAMIC EFFECTS The Bertelsmann study also looks into "dynamic effects", such as a potential loss of productivity because a decreased openness to trade reduces international competition and lowers the incentive to improve competitiveness. With dynamic effects, the long-term impact on German GDP would range between 0.3 and 2 per cent below the value if Britain remained in the European Union. (Reuters)

From trade to migration: how Brexit may hit the EU economy

The European Union&#39;s banking watchdog will move from London to another European capital if Britain decides to quit the bloc in a referendum this week, its chairman said in an interview published on Sunday. 
 
Britain votes on June 23 on whether to stay in the 28-member bloc, a choice with far-reaching consequences for politics, the economy, defence and diplomacy on the continent. 
 
The London-based European Banking Authority (EBA), founded in 2011 as a reaction to the global financial crisis, operates as a pan-EU regulator, writing and coordinating banking rules across the bloc. 
 
&quot;If the British should decide to leave the EU, we actually would have to move to another European capital,&quot; Andrea Enria, head of the EBA, told the German newspaper Welt am Sonntag. 
 
While betting odds have consistently indicated a vote to remain in the EU, opinion pollsters have so far painted contradictory pictures of how Britons will vote. 
 
The EBA is currently working on an EU single rulebook aimed at ensuring a level playing field for all banks across the 28-country bloc&#39;s capital market. 
 
&quot;This work needs to be completed irrespective of the result of the referendum,&quot; said Enria, an Italian national. &quot;We must ensure that there are no different rules between the countries that have the euro and those that do not have it.&quot; 
 
Enria said the European banking sector was more stable now than five years ago, but there was still need for consolidation. 
 
&quot;If you look at the balance sheets of banks, you could actually ask yourself whether such low profitability and such low return on investment are sustainable in the long term,&quot; he said. 
 
Banks should speed up their efforts to deal with non-performing loans and change their internal business culture in order to avoid future scandals and fines, Enria said. 
 
That banks have hardly made any progress in these two areas is the reason why the European Central Bank (ECB) is struggling to boost lending and generate more growth despite its bond-purchase programme, he added. 
(Reuters)

European Banking Authority is making arrangements to shift head office in case Britain opts out of the European union, says EBA's chairman

The European Union's banking watchdog will move from London to another European capital if Britain decides to quit the bloc in a referendum this week, its chairman said in an interview published on Sunday. Britain votes on June 23 on whether to stay in the 28-member bloc, a choice with far-reaching consequences for politics, the economy, defence and diplomacy on the continent. The London-based European Banking Authority (EBA), founded in 2011 as a reaction to the global financial crisis, operates as a pan-EU regulator, writing and coordinating banking rules across the bloc. "If the British should decide to leave the EU, we actually would have to move to another European capital," Andrea Enria, head of the EBA, told the German newspaper Welt am Sonntag. While betting odds have consistently indicated a vote to remain in the EU, opinion pollsters have so far painted contradictory pictures of how Britons will vote. The EBA is currently working on an EU single rulebook aimed at ensuring a level playing field for all banks across the 28-country bloc's capital market. "This work needs to be completed irrespective of the result of the referendum," said Enria, an Italian national. "We must ensure that there are no different rules between the countries that have the euro and those that do not have it." Enria said the European banking sector was more stable now than five years ago, but there was still need for consolidation. "If you look at the balance sheets of banks, you could actually ask yourself whether such low profitability and such low return on investment are sustainable in the long term," he said. Banks should speed up their efforts to deal with non-performing loans and change their internal business culture in order to avoid future scandals and fines, Enria said. That banks have hardly made any progress in these two areas is the reason why the European Central Bank (ECB) is struggling to boost lending and generate more growth despite its bond-purchase programme, he added. (Reuters)

EU banking watchdog to leave London in case of Brexit

India&#39;s move to clean up the books of its banks saddled with $120 billion of sour loans will be largely unaffected by the decision of central bank chief Raghuram Rajan to step down, say bankers and government officials. 
 
As banks struggle with record levels of distressed assets, Rajan had set an ambitious March 2017 deadline for them to fully reveal the problem loans and make adequate provisions. 
 
An unprecedented asset quality review of banks ordered by the central bank led to reported bad loans surging more than 70 per cent in the six months to March. 
 
Rajan&#39;s decision to bow out in September has, however, raised questions on the fate of a clean-up seen as crucial to reviving new lending to support a nascent recovery in Asia&#39;s third-largest economy. 
 
Bankers and government officials said Rajan&#39;s successor may be less aggressive in fighting bad loans, but the general direction will remain the same. 
 
&quot;Having worked with eight (RBI) Governors, I have not seen any new incumbent turn an earlier policy, particularly relating to banks, on its head,&quot; said G. Padmanabhan, a former executive director at the RBI who currently chairs the board of third-biggest state-run lender, Bank of India. 
 
&quot;Second, and more important, this was not a one man decision and had the support of government as well,&quot; he said, although there could be some tweaks as the timeline was &quot;aggressive&quot; and banks&#39; capital needs had to be factored in. 
 
Shares in top lender State Bank of India have gained about 16 per cent since it reported March-quarter earnings on May 27, on hopes that the worst was behind it in terms of bad loans. The second biggest state-run bank, Bank of Baroda, is up about 12 per cent during that period. Two dozen lenders majority-owned by the Indian government hold the bulk of the soured loans. 
 
Deputy finance minister Jayant Sinha said recently it was prudent for the Reserve Bank of India to pursue its asset quality review of the banks, signalling government support for the clean-up. 
 
&quot;Investors of course like it. What Rajan and the RBI did was generally good, but I would say they were a bit too harsh,&quot; said one senior public sector banker, who still sees no clarity on how bad loans will be resolved. 
 
Others agree that the mechanics of resolving the issue still need to be clarified. 
 
In the absence of a strong system to buy bad loans from banks, deciding on haircuts and government capital infusion in banks may hobble resolution of the issue, said another senior banker with a state-run bank. 
 
Despite this, most remain confident that the RBI has already gone too far to reverse course. 
 
A senior policymaker who works closely with Rajan said the bank clean up exercise had been &quot;institutionalised&quot; and was on auto-mode, playing down any impact from Rajan&#39;s exit. 
 
&quot;He (Rajan) expedited things, but it was on the RBI&#39;s agenda,&quot; the official said, adding the clean-up was long overdue. 
(Reuters)

Indian banks remain unaffected by the country's central bank chief's sudden exit and focus on fixing sour loans worth $120 billion

India's move to clean up the books of its banks saddled with $120 billion of sour loans will be largely unaffected by the decision of central bank chief Raghuram Rajan to step down, say bankers and government officials. As banks struggle with record levels of distressed assets, Rajan had set an ambitious March 2017 deadline for them to fully reveal the problem loans and make adequate provisions. An unprecedented asset quality review of banks ordered by the central bank led to reported bad loans surging more than 70 per cent in the six months to March. Rajan's decision to bow out in September has, however, raised questions on the fate of a clean-up seen as crucial to reviving new lending to support a nascent recovery in Asia's third-largest economy. Bankers and government officials said Rajan's successor may be less aggressive in fighting bad loans, but the general direction will remain the same. "Having worked with eight (RBI) Governors, I have not seen any new incumbent turn an earlier policy, particularly relating to banks, on its head," said G. Padmanabhan, a former executive director at the RBI who currently chairs the board of third-biggest state-run lender, Bank of India. "Second, and more important, this was not a one man decision and had the support of government as well," he said, although there could be some tweaks as the timeline was "aggressive" and banks' capital needs had to be factored in. Shares in top lender State Bank of India have gained about 16 per cent since it reported March-quarter earnings on May 27, on hopes that the worst was behind it in terms of bad loans. The second biggest state-run bank, Bank of Baroda, is up about 12 per cent during that period. Two dozen lenders majority-owned by the Indian government hold the bulk of the soured loans. Deputy finance minister Jayant Sinha said recently it was prudent for the Reserve Bank of India to pursue its asset quality review of the banks, signalling government support for the clean-up. "Investors of course like it. What Rajan and the RBI did was generally good, but I would say they were a bit too harsh," said one senior public sector banker, who still sees no clarity on how bad loans will be resolved. Others agree that the mechanics of resolving the issue still need to be clarified. In the absence of a strong system to buy bad loans from banks, deciding on haircuts and government capital infusion in banks may hobble resolution of the issue, said another senior banker with a state-run bank. Despite this, most remain confident that the RBI has already gone too far to reverse course. A senior policymaker who works closely with Rajan said the bank clean up exercise had been "institutionalised" and was on auto-mode, playing down any impact from Rajan's exit. "He (Rajan) expedited things, but it was on the RBI's agenda," the official said, adding the clean-up was long overdue. (Reuters)

India seen pressing ahead with bank clean-up despite Rajan's exit

Burgeoning cases of non-performing assets (NPAs) and piling loan frauds have led banks to private detectives for conducting &#39;undercover&#39; operations to unearth hidden data against defaulters who have cheated them of crores of rupees before vanishing into thin air. 
 
With these cases having gained prominence recently in the wake of some huge defaults like those by Kingfisher Airlines and its owner Vijay Mallya, banks have brought out advertisements and approached private detective agencies to mine information against fraudsters. 
 
As per official records, a number of banks have sought empanelment of detective agencies with their assets recovery divisions to not only &quot;locate the missing/absconding NPA defaulter&quot; but also to &quot;ascertain their present occupation, income streams among others&quot;. 
 
A large public sector bank recently sought help to tackle the NPA menace and wants private sleuths to &quot;unearth uncharged properties of the defaulter for recovery action with the help of documentary evidences&quot;. 
 
&quot;We have been helping the banks on these issues for quite a few years now but this time there is pressure on them to catch not only the small but also the big fish. Private detective agencies are working on thousands of such case across the country. 
 
&quot;In order to ensure that the banks get vital information on defaulters and absconders, our agents are conducting undercover operations as we cannot go and just knock on the doors to obtain such information in these cases,&quot; Chairman of the Association of Private Detectives of India (APDI) Kunwar Vikram Singh told PTI. 
 
He said despite the job requiring special skills to conduct covert operations, the APDI&#39;s collective success rate in tracing bank defaulters has been as much as 90. He said absconders and fraudsters many a time exist &quot;right under the nose&quot; but under a changed identity. 
 
Singh said his detective firm Lancers Private Limited is at present working with banks like SBI, Bank of India and Bank of Patiala on such cases many of which have come to it in the recent past. 
 
A banker at a leading institution said a number of banks have sought help of the APDI in this regard in the recent past. 
 
&quot;The banks are up against some of the smartest brains when it comes to non-payment of loans and huge defaults. There is not much 
staff with any of us to physically get information against such entities and hence private detectives hold the key to this problem. 
 
&quot;It is ensured that when we bring on board a detective agency we enter into a confidentiality agreement with them called the NDA (Non-Disclosure Agreement) which mandates that such snoop information about the defaulter will be protected from any public disclosure,&quot; he said. 
(PTI)

The detectives have to locate the missing Non Performing Asset defaulters as well as determine their current occupation and income sources

Burgeoning cases of non-performing assets (NPAs) and piling loan frauds have led banks to private detectives for conducting 'undercover' operations to unearth hidden data against defaulters who have cheated them of crores of rupees before vanishing into thin air. With these cases having gained prominence recently in the wake of some huge defaults like those by Kingfisher Airlines and its owner Vijay Mallya, banks have brought out advertisements and approached private detective agencies to mine information against fraudsters. As per official records, a number of banks have sought empanelment of detective agencies with their assets recovery divisions to not only "locate the missing/absconding NPA defaulter" but also to "ascertain their present occupation, income streams among others". A large public sector bank recently sought help to tackle the NPA menace and wants private sleuths to "unearth uncharged properties of the defaulter for recovery action with the help of documentary evidences". "We have been helping the banks on these issues for quite a few years now but this time there is pressure on them to catch not only the small but also the big fish. Private detective agencies are working on thousands of such case across the country. "In order to ensure that the banks get vital information on defaulters and absconders, our agents are conducting undercover operations as we cannot go and just knock on the doors to obtain such information in these cases," Chairman of the Association of Private Detectives of India (APDI) Kunwar Vikram Singh told PTI. He said despite the job requiring special skills to conduct covert operations, the APDI's collective success rate in tracing bank defaulters has been as much as 90. He said absconders and fraudsters many a time exist "right under the nose" but under a changed identity. Singh said his detective firm Lancers Private Limited is at present working with banks like SBI, Bank of India and Bank of Patiala on such cases many of which have come to it in the recent past. A banker at a leading institution said a number of banks have sought help of the APDI in this regard in the recent past. "The banks are up against some of the smartest brains when it comes to non-payment of loans and huge defaults. There is not much staff with any of us to physically get information against such entities and hence private detectives hold the key to this problem. "It is ensured that when we bring on board a detective agency we enter into a confidentiality agreement with them called the NDA (Non-Disclosure Agreement) which mandates that such snoop information about the defaulter will be protected from any public disclosure," he said. (PTI)

Rising loan frauds drive banks to become detectives' alley in India

<div style="text-align: justify;">If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed. 
The invisible thread that links assets as diverse as gold, bank stocks, the Japanese Yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks &quot;adverse spill-overs to the global economy&quot;. 
With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets.&nbsp; 
So why will the will of one country&#39;s people in one referendum have such a profound impact on global markets? 
The answer is partly how inter-connected global markets are, and partly timing - the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support. 
Interest rates, yields 
 
Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the US&nbsp;Federal Reserve reversing its slow-starting tightening cycle, and European Central Bank and Bank of Japan rates going deeper into negative territory. 
Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks. 
 
Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JP Morgan. This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years. 
 
They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly &quot;safe haven&quot; assets. 
 
But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further. 
 
They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking. This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession. 
 
If &quot;core&quot; bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone &quot;periphery&quot; countries like Greece, Italy and Spain. 
 
Banks - Central and Commercial 
 
Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated. 
 
Euro zone banks are down 30 per cent this year, Japanese banks 35 per cent, UK banks 20 per cent, and US banks 10 per cent. 
 
Banks are also being squeezed by negative deposit rates. The ECB, Bank of Japan and Swiss National Bank all charge banks for depositing cash. 
 
It may even become cheaper for banks to put billions of yen, Euros or Francs of their customers&#39; cash in vaults- a possibility German lender Commerzbank is examining. 
 
As for central banks, any move deeper into the uncharted world of negative interest rates would be taken reluctantly. 
 
In the case of the ECB, declining yields would further cut the amount of bonds eligible for purchase as part of its quantitative easing stimulus programme. That would make its inflation target of just under 2 per cent much harder to achieve, in turn putting its credibility under even greater scrutiny. 
 
Financial Planning 
 
Just as the 2007-08 financial crisis was caused by unprecedented stress in the banking system, analysts fear Brexit fallout could again threaten to block the global financial system&#39;s plumbing. 
 
Banks have recovered from 2007-08, but stresses are already appearing in more obscure pockets of dollar-based FX and rates markets that are hitting levels more associated with periods of crisis. The premium for Dollars over Yen in the cross currency basis market is its highest in years. 
 
Spreads between Libor rates and overnight index swap (OIS) rates, broadly a measure of investors&#39; perception of credit risk in the banking system, are also widening. In normal conditions, Libor/OIS spreads should be virtually zero. 
 
Stocks 
 
World stocks are in their longest bull run in history that began on March 9, 2009. But Wall Street&#39;s peak was reached over a year ago, profit growth has slumped, and companies are reluctant to reinvest their record cash piles. 
 
European stocks are down 13 per cent this year, Japan down 20 per cent, and Wall Street is flat. Would they be able to withstand the political, economic and investment shock a Brexit would likely deliver, especially with risk appetite so fragile? 
 
Currencies 
 
Like 2008, a vote for Brexit would almost certainly increase demand for the pre-eminent currency in global trade, banking and financial market trading: the Dollar. 
 
Dollar credit to non-US banks stands at almost $10 trillion, according to the Bank for International Settlements, of which $3.3 trillion is in emerging markets. A stronger Dollar will increase the overall debt burden for these companies, and many emerging market countries, who would be forced to draw down their FX reserves to counter the expected capital outflow and downward pressure on their currencies. 
 
Japan&#39;s Yen, another safe-haven currency, would probably rise too, perhaps as much as 14 per cent, according to Goldman Sachs. This would not be welcome in Tokyo, where policymakers are struggling to kill off deflation once and for all, stoke inflation, reflate the economy and heal the banking system. A higher exchange rate would be damaging on all those fronts. 
 
(Reuters)</div>

World stocks are in their longest bull run in history that began on 9 March, 2009

If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed. The invisible thread that links assets as diverse as gold, bank stocks, the Japanese Yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks "adverse spill-overs to the global economy". With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets. So why will the will of one country's people in one referendum have such a profound impact on global markets? The answer is partly how inter-connected global markets are, and partly timing - the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support. Interest rates, yields Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the US Federal Reserve reversing its slow-starting tightening cycle, and European Central Bank and Bank of Japan rates going deeper into negative territory. Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks. Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JP Morgan. This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years. They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly "safe haven" assets. But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further. They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking. This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession. If "core" bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone "periphery" countries like Greece, Italy and Spain. Banks - Central and Commercial Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated. Euro zone banks are down 30 per cent this year, Japanese banks 35 per cent, UK banks 20 per cent, and US banks 10 per cent. Banks are also being squeezed by negative deposit rates. The ECB, Bank of Japan and Swiss National Bank all charge banks for depositing cash. It may even become cheaper for banks to put billions of yen, Euros or Francs of their customers' cash in vaults- a possibility German lender Commerzbank is examining. As for central banks, any move deeper into the uncharted world of negative interest rates would be taken reluctantly. In the case of the ECB, declining yields would further cut the amount of bonds eligible for purchase as part of its quantitative easing stimulus programme. That would make its inflation target of just under 2 per cent much harder to achieve, in turn putting its credibility under even greater scrutiny. Financial Planning Just as the 2007-08 financial crisis was caused by unprecedented stress in the banking system, analysts fear Brexit fallout could again threaten to block the global financial system's plumbing. Banks have recovered from 2007-08, but stresses are already appearing in more obscure pockets of dollar-based FX and rates markets that are hitting levels more associated with periods of crisis. The premium for Dollars over Yen in the cross currency basis market is its highest in years. Spreads between Libor rates and overnight index swap (OIS) rates, broadly a measure of investors' perception of credit risk in the banking system, are also widening. In normal conditions, Libor/OIS spreads should be virtually zero. Stocks World stocks are in their longest bull run in history that began on March 9, 2009. But Wall Street's peak was reached over a year ago, profit growth has slumped, and companies are reluctant to reinvest their record cash piles. European stocks are down 13 per cent this year, Japan down 20 per cent, and Wall Street is flat. Would they be able to withstand the political, economic and investment shock a Brexit would likely deliver, especially with risk appetite so fragile? Currencies Like 2008, a vote for Brexit would almost certainly increase demand for the pre-eminent currency in global trade, banking and financial market trading: the Dollar. Dollar credit to non-US banks stands at almost $10 trillion, according to the Bank for International Settlements, of which $3.3 trillion is in emerging markets. A stronger Dollar will increase the overall debt burden for these companies, and many emerging market countries, who would be forced to draw down their FX reserves to counter the expected capital outflow and downward pressure on their currencies. Japan's Yen, another safe-haven currency, would probably rise too, perhaps as much as 14 per cent, according to Goldman Sachs. This would not be welcome in Tokyo, where policymakers are struggling to kill off deflation once and for all, stoke inflation, reflate the economy and heal the banking system. A higher exchange rate would be damaging on all those fronts. (Reuters)

Tracing global market thread that could be unraveled by Brexit

Regulators in Hong Kong and Singapore have asked banks doing business there to disclose if they have dealings with entities and individuals named in the leaked &#39;Panama&nbsp;Papers&#39;&nbsp;which contained details on thousands of shell firms, people familiar with the requests said.

The leaked documents from&nbsp;Panama&nbsp;law firm Mossack Fonseca, which contained information on 214,000 offshore companies, revealed that Hong Kong was the most active centre in the world for the creation of shell firms, which have many legitimate purposes, but can also be used to hide assets&nbsp;and avoid taxes.

According to two sources familiar with the situation, the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) sent letters to the banks in April. The two central banks did not set a firm deadline for a reply, the sources said.

One source, who had seen the letter sent to Hong Kong banks, said the request asked about their dealings with a list of between 16 and 18 names.

The sources did not disclose which banks were written to nor the names on the lists.

Bankers operating in Hong Kong have told Reuters that the&nbsp;Panama&nbsp;Papers&nbsp;have triggered a massive compliance exercise there, with banks carefully combing through their accounts to ensure there are no problems.

HKMA said in a statement that it regularly collects information from banks on various issues or risks relating to anti-money laundering or counter-financing of terrorism, but it could not discuss details of its dealings.

MAS did not offer fresh comment but referred to its statement on May 10 that said it was reviewing the latest batch of information released on the&nbsp;Panama&nbsp;Papers.

&quot;If there is evidence of wrongdoing by any individual or entity in Singapore, we will not hesitate to take firm supervisory and enforcement action,&quot; they said then.

Reuters contacted several large banks operating under MAS and HKMA jurisdiction, but they declined to comment when asked if they had received letters.

According to the two sources, HKMA and MAS were trying to ascertain whether banks operating in their jurisdictions carried out due diligence and checked the source of funding when dealing with clients named in the&nbsp;Panama&nbsp;Papers, they said.

One source said some banks in Singapore had already responded to the MAS request.

The leak has put tax avoidance at the top of the global agenda by showing the extent to which tax havens have been used by politicians and businesspeople around the world.

Besides Hong Kong, Singapore and China were among the busiest office for Mossack Fonseca, which worked with more than 2,200 banks, law firms, corporate secretaries and other middlemen in the territory.

A portion of the leaked data released by the International Consortium of Investigative Journalists showed 51,295 offshore entities and 25,982 individuals linked to Hong Kong, and 4,188 entities and 33,290 individuals linked to China.

Some of the individuals in China routed their money through Hong Kong.

Mossack Fonseca&#39;s list of clients includes senior political figures such as Chinese President Xi Jinping&#39;s brother-in-law. Appearing on the list is not evidence of any wrongdoing. None has made any comment.

The requests by HKMA and MAS follow a series of measures taken by regulators in different parts of the world to crack down on irregularities by financial firms and undisclosed offshore wealth.

New York state&#39;s financial regulator last month told 13 foreign banks doing business there to hand over details about their dealings with a law firm in&nbsp;Panama&nbsp;that helped set up thousands of shell companies.

Many global private banks have put Asia at the centre of their growth strategy, hiring thousands of people and tapping new customer segments in a region expected soon to boast more billionaires than the United States.

Hong Kong and Singapore are two of the biggest centres for offshore wealth management in the region, which with 4.7 million individuals owning U.S.$1 million or more in liquid assets is the largest and fastest growing wealth region.

In a sign of regulatory crackdown against breaches of anti-money laundering rules, Singapore last week moved to shut Swiss bank BSI&#39;s operations there over its dealings with scandal-hit Malaysian fund 1Malaysia Development Berhad.

Hong Kong and Singapore regulators have asked banks to reveal if they have any links with those involved in the Panama Papers leak.

Regulators in Hong Kong and Singapore have asked banks doing business there to disclose if they have dealings with entities and individuals named in the leaked 'Panama Papers' which contained details on thousands of shell firms, people familiar with the requests said. The leaked documents from Panama law firm Mossack Fonseca, which contained information on 214,000 offshore companies, revealed that Hong Kong was the most active centre in the world for the creation of shell firms, which have many legitimate purposes, but can also be used to hide assets and avoid taxes. According to two sources familiar with the situation, the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) sent letters to the banks in April. The two central banks did not set a firm deadline for a reply, the sources said. One source, who had seen the letter sent to Hong Kong banks, said the request asked about their dealings with a list of between 16 and 18 names. The sources did not disclose which banks were written to nor the names on the lists. Bankers operating in Hong Kong have told Reuters that the Panama Papers have triggered a massive compliance exercise there, with banks carefully combing through their accounts to ensure there are no problems. HKMA said in a statement that it regularly collects information from banks on various issues or risks relating to anti-money laundering or counter-financing of terrorism, but it could not discuss details of its dealings. MAS did not offer fresh comment but referred to its statement on May 10 that said it was reviewing the latest batch of information released on the Panama Papers. "If there is evidence of wrongdoing by any individual or entity in Singapore, we will not hesitate to take firm supervisory and enforcement action," they said then. Reuters contacted several large banks operating under MAS and HKMA jurisdiction, but they declined to comment when asked if they had received letters. According to the two sources, HKMA and MAS were trying to ascertain whether banks operating in their jurisdictions carried out due diligence and checked the source of funding when dealing with clients named in the Panama Papers, they said. One source said some banks in Singapore had already responded to the MAS request. The leak has put tax avoidance at the top of the global agenda by showing the extent to which tax havens have been used by politicians and businesspeople around the world. Besides Hong Kong, Singapore and China were among the busiest office for Mossack Fonseca, which worked with more than 2,200 banks, law firms, corporate secretaries and other middlemen in the territory. A portion of the leaked data released by the International Consortium of Investigative Journalists showed 51,295 offshore entities and 25,982 individuals linked to Hong Kong, and 4,188 entities and 33,290 individuals linked to China. Some of the individuals in China routed their money through Hong Kong. Mossack Fonseca's list of clients includes senior political figures such as Chinese President Xi Jinping's brother-in-law. Appearing on the list is not evidence of any wrongdoing. None has made any comment. The requests by HKMA and MAS follow a series of measures taken by regulators in different parts of the world to crack down on irregularities by financial firms and undisclosed offshore wealth. New York state's financial regulator last month told 13 foreign banks doing business there to hand over details about their dealings with a law firm in Panama that helped set up thousands of shell companies. Many global private banks have put Asia at the centre of their growth strategy, hiring thousands of people and tapping new customer segments in a region expected soon to boast more billionaires than the United States. Hong Kong and Singapore are two of the biggest centres for offshore wealth management in the region, which with 4.7 million individuals owning U.S.$1 million or more in liquid assets is the largest and fastest growing wealth region. In a sign of regulatory crackdown against breaches of anti-money laundering rules, Singapore last week moved to shut Swiss bank BSI's operations there over its dealings with scandal-hit Malaysian fund 1Malaysia Development Berhad.

Asian regulators ask banks to reveal Panama Papers links - Sources

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