Shri A.K.Pandey
General Manager & Officer-in-Charge
Reserve Bank of India
Jackson Gate Building, 2nd floor
Municipality Road, Lenin Sarani
Agartala 799 001
Tel : 0381 – 2381061 / 2381071
Fax : 0381 – 2381081
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Friday, May 20, 2011
Next Governor of RBI: Raghuram Rajan a candidate
Finance Minister Pranab Mukherjee is not inclined to extend the tenure of Reserve Bank of India Governor D Subbarao, sources said. Subbarao, who took over as the RBI’s 22nd Governor on September 5, 2008, was given a three-year tenure, extendable by another two years. His three-year tenure ends on September 4, 2011. Sources said Raghuram Rajan, honorary economic adviser to the Prime Minister since November 2008, is a prospective candidate. A former IMF chief economist, he is a finance professor at the University of Chicago. Others who may make it to the shortlist include Kaushik Basu, chief economic advisor, and R Gopalan, economic affairs secretary, both in the ministry of finance. Going by convention, the government does not set up a search panel or a selection committee to find a RBI governor. “The decision is taken between the finance minister and the Prime Minister,” said a source, who did not wish to be quoted. When Subbarao was appointed, Prime Minister Manmohan Singh and then Finance Minister P Chidambaram did discuss his candidature with Deputy Chairman Montek Singh Ahlulwalia and PM’s Economic Advisory Council chairman C Rangarajan. A source said that Mukherjee is against extending the tenure of any regulator or bank chairman. The latest instance of a regulator, whose extension was proposed by the ministry, but finally turned down by Mukherjee in favour of a fresh selection process, has been that of C B Bhave. LIC chairman TS Vijayan too did not get an extension. The source said Mukherjee had earlier indicated that the search process for a new candidate in regulatory bodies may begin not earlier than six months before the incumbent’s tenure ends. Names are being discussed now, and Raghuram Rajan, who has advised the PM on the global financial crisis and G20 meetings, is top in the reckoning.
Central Board meeting at Agartala
RBI:DIFFICULT TO DELIVER ON 4.6% FISCAL DEFICIT TARGET
Reserve Bank of India Governor Duvvuri Subbarao today said India would find it difficult to achieve its fiscal deficit target this year, unless it made adjustments to account for the rise in fuel and fertiliser prices. The comments sparked market concern that the government would need to step up borrowing to fund the gap. In Budget 2011-12, the government had announced a fiscal deficit target of 4.6 per cent of the gross domestic product. This was widely considered to be ambitious, after its 5.1 per cent deficit target for last year was met by high one-time revenues. “Since crude fertiliser prices have gone up since the Budget announcements, unless some adjustment is made, either on the expenditure side or the tax side, it is difficult to deliver on a 4.6 per cent target,” Subbarao said, after RBIs board meeting here. “It is difficult to say whether the government can deliver on a 4.6 per cent target. It depends on what decision they take and a number of issues --- the adjustment of fuel prices being the most important one,” he said, adding fighting inflation remained the central banks priority. The government had said it would borrow a gross `4.17 lakh crore in the current financial year, of which it would raise `2.5 lakh crore in the first half. Subbaraos comments, which came after the markets closed, raised concerns among bond dealers that the government would increase its borrowing in the second half of the current financial year. “The governors remarks on fiscal deficit raise doubts that borrowings in the second half of the current financial year could be increased. However, there should not be any impact on markets now, since the concern for the market is immediate supply. We will cross the bridge, as and when it comes,” said Manish Wadhawan, director and head (rates), HSBC India. Last June, the government had allowed state-run oil firms to fix the price of petrol, but had continued to control the prices of diesel, kerosene and cooking gas to shield the poor and try to tame inflation. Staterun oil firms increased petrol prices by about 8.6 per cent from Sunday, a record rise, that is expected to fuel inflation in the country. RBI had, on May 3, raised interest rates for the ninth time since March 2010, by a sharper-than-expected 50 basis points. It had also said fighting inflation was its priority, even at the expense of some shortterm growth. “This is our priority and I only want to reiterate what we said in the annual policy — that we need to bring inflation down to an acceptable level for growth to be sustainable,” Subbarao said. The wholesale price index has remained stubbornly high for months and rose 8.66 per cent annually in April. The prospect of higher energy prices would exert pressure on RBI to raise interest rates in June and maintain a hawkish stance. RBI expects inflation to stay high in the first half of the current financial year before easing to six per cent by the end of the year. |
CHEAP LIQUIDIT ON ITS WAY OUT
The Reserve Bank said it will discontinue special liquidity window from tomorrow and replace it with marginal standing facility ( MSF). " In the light of modified operating procedure of monetary policy introduced from May 3 and introduction of the marginal standing facility ( MSF), it has been decided to discontinue the second liquidity adjustment facility ( SLAF) on reporting Friday effective May 20, 2011," RBI said. Under the MSF facility, a bank can borrow up to 1 % of its total deposits from RBI to tide over liquidity problem. However, interest rate under the facility would be 100 basis points higher than the short- term lending ( repo) rate. The repo rate, which was increased this month by 50 basis points, stands at 7.25 %. As such, the rate charged under the MSF would be 8.25 %.
'RBI examining remittances made by Speak Asia'
The Reserve Bank of India (RBI) Governor, D. Subbarao, on Thursday said that the central bank was examining if the remittances made by Ponzi company Speak Asia were in order. Reacting to the Headlines Today expose on Speak Asia, Subbarao said though the RBI approval was not needed for current account transactions as commercial banks were authorised to do that, it was scrutinising the remittances made by the company. He said the RBI did not regulate multi-level marketing companies like, Speak Asia. He said the RBI has issued an advertisement alerting the public against falling prey to alluring offers. The RBI governor even sought the help of media to help the central bank in cautioning the public.
RBI plans branches in all seven states - Subbarao inaugurates Tripura unit
Agartala, May 19: The RBI plans to open branches in all the northeastern states in a phased manner for better co-ordination of banking operations. RBI governor D. Subbarao announced this during a news conference at Prajna Bhawan auditorium here today. Saying the RBI branch in Guwahati was a full-fledged one, he said, “The second branch that we have opened at Agartala will initially concentrate on rural planning, credit development and financial inclusion but gradually its mandate will be expanded and other important tasks will be entrusted with it.” Subbarao identified “credit-flow” in the Northeast as a major challenge and said the RBI would prioritise this as a major task to stimulate growth of industry, trade and commerce in the region. “Low CD (credit-deposit) ratio in the region is an area of concern. In case of Tripura, the CD ratio is 33 per cent against the national average of 73.6 per cent on March 31. Our target is to ensure that CD ratio in Tripura rises to 40 per cent at the end of this current financial year,” he said. He, however, said the task of raising CD ratio to 40 per cent would be a challenging task but the officers and executives in the nationalised banks have been instructed to reach the target. Subbarao said the branch expansion programme of RBI was on in full swing. It aims to bring all villages with a population of 2,000 or more under banking coverage either by setting up branches or by appointing individual correspondents with specific responsibilities for covering villages where there are logistic problems. “In Tripura, there are between 420 and 450 villages with 2,000 or more population and all of them will be brought under banking network in a phased manner. I have already asked nationalised banks operating here to set up 26 full-fledged branches by the end of the current financial year,” said the RBI governor. Subbarao said the RBI has issued a guideline that all bank branches having daily transaction of Rs 50 lakh or more should install a note-scanning machine to identify fake notes. “But the most important thing is for people to be vigilant. We are also carrying on an awareness programme to train people on how to distinguish between fake and genuine currency notes,” he said. He said inflation-control as an area of priority for the RBI. “We have kept strict watch on the inflation profile in the country and have initiated a series of measures.”
Mumbai's Dharavi slum a vibrant remittance hub: Banker
Panaji: It is Asia's biggest slum, located in the heart of Mumbai, but Dharavi is also a vibrant financial remittance hub and the Corporation Bank is planning to set up a branch there, a top bank official said Thursday. Speaking to reporters here, Mangalore-based Corporation Bank chairman and managing director Ramnath Pradeep said his bank planned to start a fullfledged branch there, but was struggling to find a legitimate land holding to lease out in the area. "I am looking for a place to start a branch there, but legality of the land there is becoming a problem," Pradeep said. Dharavi slum, which is located near the suburb of Bandra and has been the setting for several Bollywood as well as international films, is a commercial hub and remittances sent by workers residing and working in the slum amounts to a huge sum. "The small vendors are doing a lot of work there. There is a huge amount of remittances going out of Dharavi. Workers queue up to the local post offices in lines for two-three hours to send money to their homes in Uttar Pradesh and Bihar," Pradeep said, adding that the bank was keen on tapping this revenue potential. The bank has several schemes for the small vendors, which would suit the profile for an area like Dharavi, he said. Reckoned as one of the biggest slums in the world, Dharavi's population is pegged at over one million spread over 175 hectares. The Dharavi slum has been depicted in several films right from Mira Nair's "Salaam Bombay" and more recently Danny Boyle's "Slumdog Millionaire", amongst others.
Corporation Bank to soon operate in Africa
PANAJI: The Mangalore-based Corporation Bank will soon be setting foot on African shores in its bid to expand its operations globally, a top bank official said Thursday. Addressing a press conference here, chairman and managing director of the public sector bank Ramnath Pradeep said Tanzania was one of the four African nations, where the bank was keen on setting up its business. "We have approached the Reserve Bank of India (RBI) for a licence to start operations in four African countries. I can name one, Tanzania. The rest of the countries, I cannot disclose at this time," he said. "African countries are developing and there are a lot of Indian companies and individuals who are setting up businesses there. Because of that fact there is already a sense of familiarity with the Indian clients and there are good business prospects," Pradeep said, adding that his bank was in the process of obtaining licences from the African nations for starting operations there. "Presently, we have a representative office in Hong Kong, which we want to upgrade to a full fledged banking operation," he said. The Corporation Bank has a nationwide network of 5,000 service outlets throughout India.
Cops have priorities other than chasing Abhay Gandhi
Expressing concerns over lack of awareness among people about the Ponzi schemes, Singh said that even after several advertisements by the Reserve Bank of India and other concerned agencies, people keep on being lured by non-financial institutes. "One should not fall for schemes like Ponzi and keep one's money safe," the DGP said.
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Give money time to grow
Stick to long-term investment with bank deposits, that will earn you more when rates fall in the coming months.
Read more......................RBI asks states to crack down on fake currency
Agartala, May 19 (IANS) The Reserve Bank of India (RBI) Thursday asked the state governments, specially those sharing international borders, to take stringent action against circulation of fake currency notes. “The state governments, particularly those states that share international borders, must be more vigilant and take tough steps to stop the menace of circulating of fake Indian currency,” RBI Governor Duvvuri Subbarao told reporters after the first-ever central board meeting of the country’s central bank here. He said that the union home ministry in association with the state governments and the security agencies must take appropriate steps to check the circulation of fake Indian currency notes in the market. “The banks have been asked to install note sorting machines to identify the fake, mutilated and soiled notes,” Subbarao said. He said efforts are being made to airlift the notes of small denomination and coins to all northeastern states. “The RBI is aware that the fake currency, shortage of notes of small denomination and coins are big problems in the northeastern region,” he said.
Banks flout RBI rules on retaining account numbers after the demise of a joint account-holder
2008, the apex bank had clearly specified the rules and regulations on the addition or deletion of a joint account-holder’s name under specific circumstances. However, this rule is not being followed
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Deregulating savings rates
According to the RBI paper, the savings bank deposit interest rate (SBDR) is the only interest rate that remains to be deregulated. As there are other administered interest rates, this is not entirely accurate. For instance, the small savings, pension and .......
Light up and the bus will come
Many years ago, when I still smoked and occasionally travelled by bus, it was well established that if you lit a cigarette, the bus would come almost immediately. Indeed, sometimes this was used as a means of accelerating the arrival of the bus. The Reserve Bank of India’s recent strong man hike in interest rates appears to have followed this rule .......
Continue reading..................RBI must opt for soft inflation targeting
Rangarajan, chairman of the Prime Minister’s Economic Advisory Council and former Reserve Bank of India (RBI) governor, said interest rates will continue to rise for some more time and the central bank should continue to take action until there are definite signs of inflation slowing. According to him, RBI must opt for soft inflation ........
Inflation "very high", RBI hints at more monetary tightening
AGARTALA: Terming as "very high" the 8.6 per cent inflation, the Reserve Bank today hinted that it could take more policy actions in its review meeting next month. "8.6 per cent (headline inflation) is very high which needs to be brought down. We would study it and the matter would be reviewed on June 17 next," RBI Governor D Subbarao told reporters here after a board meeting which reviewed monetary and financial developments in the country. In its annual credit policy meeting earlier this month, Subbarao had made it clear that containing inflation would take precedence over growth, which its pegged at 8 per cent for 2011-12. Although RBI has already hiked the key policy rates nine times since March 2010, inflation has continued to remain at about nine per cent, which is much higher than the RBI's comfort zone of 5-6 per cent. Inflation came marginally down to 8.66 per cent in April from 9.04 per cent in March. Referring to the government's fiscal deficit target of 4.6 per cent for 2011-12, Subbarao said it would be difficult to achieve in view of the impact of rising crude oil and fertiliser prices in the international market. "It would be very difficult to attain the fiscal deficit target unless there is adjustment on expenditure or tax.. It depends on what decision they take and a number of issues, most importantly on the adjustment of fuel prices," he said. The government proposes to bring down the fiscal deficit to 4.6 per cent of GDP in the current fiscal, from 5.1 per cent in 2010-11. Earlier in the day, the RBI opened a sub-office office here with a view to expediting economic development of the North-East region. Stressing the need for financial literacy, Subbarao said, it would be launched in the entire north-eastern region to educate people about what facilities they could get from banks. He said about 6 lakh villages having population of more than 2,000 have no access to the banks and the RBI would endeavour to bring those habitations under coverage of banks by March 2012. When asked if he was aware about circulation of fake currencies in the north-east, Subbarao said he has advised banks to install machines in their branches to identify fake currencies. He also stressed the need for stringent police action against the racket of circulating fake currencies.
RBI Opens Sub Office in Agartala
Agartala.(ABC Live):The Central Board of Directors of the Reserve Bank of India met today at Agartala under chaired Dr. D. Subbarao, Governor, Reserve Bank of India. The Reserve Bank opened a sub-office in Agartala on the eve of its Board meeting. Shri Manik Sarkar, Hon’ble Chief Minister of Tripura inaugurated the sub- office along with Reserve Bank Governor Dr. D. Subbarao. Shri Badal Chaudhary, Hon’ble Finance Minister of Tripura and senior officers of the state, banks and RBI were present. While opening the new office of the Reserve Bank of India in Agartala, the Chief Minister stated that the State government had been and would cooperate in every manner to ensure that banking access is made available to the people in the State. He, however, lamented at the low credit/deposit ratio of banks, low credit flow to agriculture, low number of bank branches and inadequate manpower in these branches in the State. The Governor in his remarks pointed out that the Reserve Bank was sensitive to all the three issues and was taking appropriate steps to bring improvement in all the three areas. It had already decided to open its offices in all the North-Eastern States; he said and added that opening of an office in Agartala was a step in that direction. The Reserve Bank was also making efforts to enhance credit flow to the North-Eastern States. In the past few years, for instance, the Reserve Bank of India had announced a subvention scheme for opening branches in the North-East. Of the five branches which were agreed to be opened in Tripura, two branches were already opened and three more had been approved and would be opened as soon as security issues were resolved. He hoped that the issue would be resolved soon with the cooperation of the State government. The Governor pointed out that for faster development of the region, it was equally important to increase its credit absorptive capacity. For this purpose, it was equally necessary to introduce bankable schemes and open financial literacy and credit counselling centres in the region. He added that educating the population about banking facilities would also help generate demand for bank services and products. He urged the State Government to include finance in school curriculum to enhance financial literacy in the state. He stated that the Reserve Bank had developed material for this purpose which it would willingly share with the State government. Earlier, Dr. D. Subbarao, inaugurated the Electronic Clearing System (ECS) by putting through the first transaction at the Clearing House maintained by State Bank of India, Agartala. ECS is an efficient, secure and fast payment system that enables quick movement of payments and receipts and is especially beneficial for bulk payments like salary, pension, Government benefit payments like NREGA and utility payments. Shri A. Krishna Kumar, Managing Director, State Bank of India was present at the launch. At the special State Level Bankers Committee (SLBC) meeting held today, the following decisions were taken:
RBI to launch schemes for raising credit flow to northeast
The Reserve Bank of India (RBI) has asked banks to introduce bankable schemes and open financial literacy and credit counselling centres in the northeast to improve the credit flows to the region, its governor D. Subbarao said Thursday. "The RBI has intensified its efforts to enhance credit flow to the industry starved northeastern states," Subbarao told reporters after the first ever central board meeting of the apex bank here. "For faster development of the region, it was equally important to raise its credit absorptive capacity. For this purpose, the RBI has been encouraging banks to introduce bankable and viable schemes, open financial literacy and credit counseling centres in northeast." Subbarao, accompanied by four RBI deputy governors and top officials came to Agartala Wednesday and inaugurated a RBI’s first sub-office in Tripura capital and addressed at a seminar on financial inclusion. "To educate the people about the banking services and banking importance, 'financial literacy day' would be observed in one village in each blocks of northeast India," he said. "The RBI had announced a subvention scheme for opening new bank branches in the northeast. More and more credit to the agricultural and allied sectors must be increased in the region.” According to the RBI chief, the credit deposit ratio of the region is half of the national average which is 70. "The RBI has asked all the state governments to include finance in school curriculum to enhance fiscal literacy. It had developed material for this purpose which it would willingly share with the state governments," Subbarao said. About the dubious activities of unauthorised and unincorporated bodies and financial companies, the RBI governor has asked the people not to make any deposit to these institutions. "People and media should be more vigilant about the unrecognised financial institutions." Subbarao said that RBI has decided to open its sub-offices in six more northeastern states - Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura and Meghalaya - in a phased manner to improve the banking services to the region and to ensure banking access is made available to all people. Currently, RBI has a regional office in Assam’s main city of Guwahati.
RBI rejects banks' plea to recast part of MFI exposure
MUMBAI: The Reserve Bank of India (RBI) has rejected a request from banks to restructure securitised papers bought from microfinance institutions. In a notice to Indian Banks' Association (IBA), the regulator said securitised portfolio that banks have purchased from MFIs will not be considered for restructuring under special dispensation. The central bank did not give any reason for rejecting the plea. RBI, however, said loans given by banks in consortium to MFIs may be considered for restructuring. In securitisation, MFIs bundle up microloans while structuring debt papers around it. MFIs are estimated to have issued securitised papers worth 4,000 crore to banks. Banks lend to MFIs either directly or by purchasing securitised papers. A number of private banks, including ICICI Bank , had appealed to RBI to restructure securitised papers. However, some private banks and state-owned banks opposed it on grounds that reworking loans would hit financial ratios of MFIs. Under corporate debt restructuring, an indebted company is generally given relaxation in repayment schedule and interest rates, on conditions such as restrictions on new lending and borrowing. The corporate debt restructuring forum is estimated to be in talks with half a dozen MFIs to rework nearly 10,000-crore loans. Bankers against restructuring of securitised papers said if the central bank had allowed restructuring, it would not be deemed as true sale. Banks classify securitised papers purchased from MFIs as priority sector loan and not direct exposure to MFIs. However, those in favour said even as the portfolio is sold to banks, MFIs are servicing the loan on behalf of banks that hold the pass through certificate. After an ordinance issued by the Andhra Pradesh government last year to restrain new loans and recovery, microfinance institutions had requested banks to set up a fund to infuse liquidity into the cash-strapped system and sought the Reserve Bank of India's intervention to build the fund. As a special dispensation to MFIs to enable them to come out of stress, RBI allowed banks to classify loans given to MFIs as standard assets provided they are restructured before June 6, 2011.
People mourn the death of 25 paise
NEW DELHI: The decision of the Reserve Bank of India (RBI) to do away with coins of 25 paise and less with effect from June 30 left many people dealing regularly in these denominations at a loss across the country. Shop owners and street vendors in Patna expressed surprise on learning about the move on Thursday. "We need coins of small denominations because most medicines are not priced in round figures," said Ravi Sahu, a chemist on S P Verma Road. Street vendors, especially those dealing in items like betel, gutkha and beedis, also said they would be hit. "Many a time rickshaw-pullers come with Rs 1.25 and ask for five beedis. They want to utilize every paisa of their income. The decision will render their 25-paiseworthless," said Munnilal Sharma, a betel shop owner near Gandhi Maidan. The RBI has asked the public to exchange these coins at the branches of banks maintaining small coin depots or at its own offices at face value. Shyamlal, an aging rickshaw driver in Raipur, laughed when asked if he had any smaller coins. Athani Chawaani, bhikaari bhi nahi rakhte (even beggars don't keep 25 paise). Once the banks collect all the old coins of 25 paise and less, the central bank is expected to melt them. The government would then decide what to do with the metal. The move is likely to hit street children. "These children come with coins of 25 paise to buy lozenges. When 25-paise coins cease to be a legal tender, they will be saddened," said Mukesh Prasad, a roadside vendor near the Patna railway station. Lawrence Babu, general secretary of the Kerala State Private Bus Operators Federation said there was scope for confusion as buses in the state still had 75 paise tickets for students. "After concession, students are charged only 12% of the normal fare. We have already demanded the government that this be raised to 50%. A report on fare revision is pending before the state government and we are awaiting action on it." Director of the State Treasuries Department E K Prakash, however, said the move would have no impact on government transactions. "We already are under orders to round off the figures to the nearest denominator," he said.
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