Take note, it’s a fake............

Fake ancient currency notes and coins on sale at a shop near CST, threaten to dilute numismatists’ collection. Here’s what Mumbai Mirror team discovered…

If you have a penchant for collecting ancient coins and currency notes, you'd better arm yourself with a discerning eye to tell a fake apart from a genuine one. Seems there are a dime-a-dozen such fakes floating around, and gullible numismatists often get taken in. Or so we, at Mumbai Mirror, were told by someone who made an anonymous call to our office to tip us off.The caller goaded us to do something about how people, who are foxy at image-editing software, are diluting an ancient hobby."It's a shop near CST… opposite Café Shaheen on DN Road," the caller said. "It's a thriving market of fakes which pass off as ancient coins and notes." Before we could ask much, the line was disconnected. We took the tip. On Saturday, we sauntered into Global Coins and Stamps at the location that the caller had given us. Under an awning outside the shop, is a slew of coins. Feigning interest in the coins on display, we made small talk with the salesman who was ready with his salesman talk. He led us two flights of stairs, into the main shop which has a large number of stamps neatly pasted on a foolscap-sized chart. Lined up in sections, huge display boards make the stamps conspicuous. It was a hint of pride that the salesman proudly told us that the shop mostly deals in coins and stamps.  We looked at a currency note with the inscription 'East India Company'. "Absolutely authentic…" his spiel began, peppered with names of countries and ancient royalty. "Price only Rs 3,000, okay?" A bit of haggling helps. It's down to Rs 2,500. We pick up another currency note and wow at three coins. The notes are replete with watermarks and pictures of Her Majesty. The coins bear portraits of King George IV and the Queen. A Re 1 coin dated 1970. A Rs 50 note bearing serial number 786786 - a number considered holy. The salesman has made the bill. "It's Rs 6,000," he tells us. We bought three notes and four coins for Rs 3,100. Had we not bargained, it would have pinched our wallets for at least Rs 9,000. And thereon, we set upon the task to verify our prized possessions. The salesman refused to identify the shop owner or part with his boss's contact number. Another man said he was the 'custodian' of the shop who has been asked to 'take care' of the shop for two days in its owner's absence.  We left behind our calling cards, but did not receive any call from the owner. With the three notes and four coins, Mumbai Mirror visited currency expert Farokh Todywalla, who has been collecting ancient currency notes and coins since 1967. He has also conducted auctions of coins, tokens, medallions and paper money since 22 years. Without even having to take out a microscope to verify finer details of the note, he told us that all the fare we got from Global Stamps and Coins was fake. He then pulled out his catalogue of pictures of an array of original coins and notes to match what we had just bought. "Only a novice will buy these," was Todywalla's verdict. "Such coins are in demand during Diwali to be used as an offering. As most people do not know much about them, they get hoodwinked." Currency expert Asif T Zumkhawalla, author of the Standard Guide to Coin Collecting, said coin forgeries are increasing because of a limited supply and mintage of coins and the growing number of coin collectors. "There is an increase in demand for a limited variety of coins, and laws made by nations prevent export of coins considered archaeological treasures. This fans such forgeries," said Zumkhawalla. Instead of Reserve Bank of India, the fake note has ‘East India Company’ printed on it. The paper is a printout, not an ancient, frayed currency note. The ‘watermark seal’ is sharp an a print. Even the best preserved noet would have a part of it faded, this one doesn’t. An original note, unless fresh out of print, is not as bright and white as this appears. The coin marked as ‘1970’ was minted later and has sbeen tempered with. Moreover, a 1970 coin is heavier and, back then, the digit ‘7’ was scripted differently. The other two coins are bright and crude, designs are not sharp. Todywalla (holding the coins) doubted that they contain any silver. Even a newly minted coin bears the impression of the Emperor or Empress and would not be so crude. Every year, RBI mints coins of various denomination from 25 paise to Rs 10. A coin of each is preserved for posterity. These are available with the RBI for verification. RBI officials, who are experts in this field, help verify such coins. Also, the country’s apex bank has a museum where all coins ever minted are displayed.

Mumbai Mirror 

Rising input cost, liquidity crunch hits SMEs growth

Rising input costs and liquidity crunch are creating hurdles in the growth of small and medium enterprises (SMEs) mainly engaged in apparel business, says a survey. Over 50% of the respondents participated in the survey of Indiamart.Com said that input costs have significantly increased. Indiamart.Com is a webportal of SME sector. It said that liquidity crunch is restricting growth of the sector as "funds are required to grow existing business, foray into international markets, invest in research and development". Besides, small and medium units are also facing problems in getting credit at easy and affordable rates from banks, it added. According to experts, the continuous monetary tightening by the Reserve Bank of India is one of the reasons for liquidity crunch in the market. The survey further said that SMEs must adopt modern technology to cut costs and enhance business operations. Micro, Small and Medium Enterprises contribute over 40% to the country's total exports, 45% to manufacturing output and 8% to the country's GDP. The sector employs about 60 million people.

Business Standard

Drifting back to gold standard - S.S.Tarapore

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Govt to hold consultations on new rules for stock exchanges

The government will begin tomorrow its consultations with various stakeholders regarding a new set of rules on how stock exchanges should be owned and run, proposed by a Sebi-appointed committee last year. Besides the exchanges, new ownership and governance rules have also been proposed by the committee, chaired by former RBI Governor Bimal Jalan, for other market infrastructure institutions like depositories and clearing corporations. After Sebi sought the government's stand on the proposals made by the Jalan panel in this regard, a committee has been set up with representation from the Ministry of Corporate Affairs, stock exchanges and industry bodies among others to study the proposed rules and suggest necessary changes. The new panel may begin its consultations tomorrow and would look to give its final recommendations by the next month, one of its members said. Chaired by Renuka Kumar, Joint Secretary in the Ministry of Corporate Affairs, the panel will have representatives from stock exchanges NSE and BSE, industry chambers, depositories NSDL and CDSL, as also accounting bodies like ICAI. The two new bourses, United Stock Exchange and MCX Stock Exchange, are also said to have been invited to nominate their members to the panel, but it could not be ascertained whether they have joined the committee. The implementation of the recommendations made by the Jalan panel has been pending for many months now. The panel has suggested sweeping changes in the way stock exchanges are owned and function and strongly recommended capping their profitability and not allowing them to get listed to safeguard their front-line regulatory role. The proposals generated intense debate and opposition has been raised to various proposals including non-listing of bourses and cap on profitability, terming them as measures that would push the investors away. Sebi had set up in January 2010 this committee for review of ownership and governance norms for market infrastructure institutions such as stock exchanges and the panel submitted its report to the regulator in November last year. Sebi had made the recommendations public on November 23, 2010 and invited public comments on the same till December 31. In the wake of stiff opposition to the proposals, Sebi later put the ball in the government's court on implementing these proposals. Sebi has now decided to take the proposals to its board only after hearing the final word from the union government. 'Review of ownership and governance of Market Infrastructure Institutions (MIIs)' has been still listed as one of the priority areas by Sebi among the steps it aims to take during the current fiscal towards "administering, supervising and inspecting" of these entities.

Business Standard

RBI finds deviations in SBI bridge loans to telecom cos

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A hike in time saves…

The former RBI Governor, Dr Y. V. Reddy, will be pleased by the conclusions of this paper. He strongly believes that you should carry an umbrella even on a sunny day, in case it rains.....
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Navrangpura police write to Sebi, RBI about ponzi operator

Ahmedabad: Navrangpura police have written letters to share market regulator Sebi and RBI seeking the details of the legal status of Imtsons Ltd, the largest Ponzi scheme operator of city. The police have asked the Sebi (Securities and Exchange Board of India) if it is mandatory for a company with more than 50 shareholders to register with it, Navrangpura police inspector Sarvaiya said on Saturday.Imtsons has 12,000 shareholders. Similarly, they have also sent a letter to RBI (Reserve Bank of India) asking if Imtsons Ltd has had registered with it as a non-banking firm, Sarvaiya added.  Meanwhile, Sebi officials said from Mumbai that they cannot take any action against Imtsons until investors filed a complaint with them.  Imtsons Ltd has allegedly raised Rs85 crore by promising investors returns of 10% per month or 120% per annum, but has not paid the same. Though it is feared that investors have lost their money, no police complaint has been filed as yet. On the other hand, Saiyad Imtiyaz Saiyed, managing director of Imtsons claims that the company will pay investors their money back by August this year.  The company has its office in Sakar VII building on Ashram Road.

DNA

Indian currency worth Rs 400 mn rots in Nepal bank

Indian currency worth Rs 400 million is rotting in Nepal Rashtra Bank (NRB). These notes are in the denominations of Rs 500 and Rs 1,000. As per the Currency Act of India, carrying Rs 500 and Rs 1,000 notes to Nepal is banned. These notes are seized in Nepal if found in any traveller's possession. The Indian move was aimed at cracking down on fake currency rackets and funding of terror activities, but it is affecting a large number of bona fide tourists, businessmen, who, in many cases are caught unaware. The former president of Federation of Nepalese Chamber of Commerce and Industry (FNCCI) Kush Kumar Joshi, told this newspaper, "There are thousands of Nepalis who live in India. While returning to Nepal, they face the big problem of carrying hard cash. They have to carry Indian currency of the denomination of Rs 100 or less, which is cumbersome." He said currency worth Rs 400 million is with the NRB, while much more is there with the local administration. The NRB has asked the Reserve Bank of India (RBI) to either take the money or allow it to keep it in its RBI account in Kolkata. "However, the Indian authorities have turned down both proposals. It is the currency Act of India, not of Nepal, which bans the circulation of Rs 1,000 and Rs 500 notes outside India. Once these notes are found outside, they become contraband money," he said.    "The FNCCI, on its part, requested the Nepal government to take steps to lift the ban. However, nothing has been done," said Joshi. Last year, Nagaland's Home Minister Imkong L. Imchen, who had gone to Kathmandu to attend a wedding, was forced to miss a flight to New Delhi after airport security detected that he was carrying nearly Rs 9 lakh in 500 and 1000-rupee notes. Many others had similar harrowing experiences. Though Kathmandu airport has put up a notice informing visitors that Rs 500 and Rs 1000 notes are banned in Nepal, it escapes the eye of most visitors. The RBI banned the use of these notes outside India about 11 years ago to prevent the circulation of fake Indian currency by an organised crime network reported to have its origin in Pakistani cities under the patronage of the ISI. The fake notes are either flown or transported by land routes to Nepal, sometimes through Bangladesh, and then sent to India via the open border between India and Nepal. Few tourists know that possessing Indian currency of even lower denominations can lead to arrests if they are not being carried by Indians or Nepalis.

http://www.sunday-guardian.com/

25p coin soon to be numismatist's delight

BANGALORE: When was the last time you used a 25-paise coin to buy anything? Come June 30, and you can save the 25-paise coin as a thing of the past, to tell your grandchildren about, like the anna that you never used. The government of India has decided to withdraw coins of 25 paise denomination and below from circulation with effect from June 30, 2011.  This development wouldn't be a major piece of news for GenY. But, for the older crowd, and numismatists, it is the end of an era. Fifty-three year old P Rammurthy reminisces about the time when 25 paisa was very much in use: "I used to have 4 annas or 8 annas (25 paise or 50 paise) in my pocket in my college days and the bus fare was 10 paise."  The RBI has instructed banks to arrange for the exchange of coins of denomination 25 paise and below. From June 30, the 50 paise coin will be the minimum legal tender.  Disappointed with the move to withdraw the denominations, freedom fighter from the city HS Doreswamy says that the government is "to blame". "The government, just to raise the standard of living, has devalued this denomination when actually the common man wouldn't mind using the 25 paise as currency," he says. He remembers that around the year 1920, he would get two dozen bananas for `naakaani' or twenty-five paise and 16 seers of rice (around 14kg) for a meagre Re 1. Numismatists can now look forward to buying sets of these now defunct coins as a collector's item.  The RBI has released a list of 45 banks that facilitate the exchange of 25 paise coins for valid currency of equal value. Coins will not be accepted for exchange in these banks post-June. Banks have been getting calls from people regarding confirmation of this exchange.  K Raghavan, manager of Canara Bank at MG Road branch, has so far been witness to two such people approaching the bank to exchange their soon-to-be-extinct coins. "There is still time till the end of next month so we can expect many people coming in to exchange their currency," he says.  From the way things are going, the 50 paise coin could be on the endangered coin list as people have a tendency to round up figures. Most people frown upon receiving or having to pay that extra half a rupee. There aren't many things that cost 50 paise either. After all, every other shop uses candies in lieu of 50 paise or even one rupee coins while returning change.

Savings a/c earned 3.5% interest in 1902

Incidentally, 109 years ago, when savings bank account was introduced in India, it had offered 3.5% interest......

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MSCB will soon get managing director

Minister for cooperatives Harshawardhan Patil said on Sunday that the state government has decided to appoint a managing director (MD) for the Maharashtra State Cooperative Bank (MSCB). The Reserve Bank of India (RBI) had recently dissolved the board of the MSCB and decided to appoint senior government officers as its administrators. Patil, who was in Pune, said: "The high-power committee has decided to appoint a full-time managing director for the MSCB." The managing director, according to Patil, will work along with the two administrators appointed by the RBI. The decision to appoint a managing director has been taken considering the fact that two administrators - agriculture and marketing principle secretary SK Goyal and planning secretary S Srivastava - are already burdened with the responsibility of their respective departments. Patil further clarified that state government is trying to bring back the MSCB on track. "The Maharashtra State Cooperative Bank has a bigger role in the state's development and the government is positively thinking about reviving it."  After the RBI appointed administrators for the MSCB, which is the principal funding agency for all the district cooperative banks in the state, the Nationalist Congress Party rapped its alliance partner -Congress - and termed it a political move. The RBI acted against the MSCB after it failed to stick to "banking prudence".

Hindusthan Times

There is a need to look at freeing savings rate

Foreign bank duo flash price warning

Foreign banking duo — Goldman Sachs and Barclays — have predicted in separate reports that inflation will remain high in India, which can force the Reserve Bank of India to continue with its tight monetary policy. This comes a day after finance minister Pranab Mukherjee said inflationary pressures might continue on account of high global commodity prices. According to Goldman Sachs, which is in the investment banking business in the country and has applied for a commercial banking licence, inflation will remain high this summer and the Reserve Bank is likely to hike interest rates by 75 basis points or more this calender year. “The April print and the February revision confirm our view that inflation will remain uncomfortably high for the RBI through the summer. We continue to expect an above consensus 75 basis points in rate hikes in the remainder of 2011,” Goldman said in its latest issue of “Asia Economics Data Flash”. Inflation in April stood at 8.66 per cent. It has remained above 8 per cent since January 2010.  Goldman further expects the RBI to hike its key policy rates by 25 basis points during its next mid-quarterly review on June 16. Barclays Capital, the investment banking division of Barclays Bank, says in a report that rising “core” inflation would prompt the central bank to turn extra-cautious in containing inflation in the current financial year.“We factor in a cumulative hike of another 50 basis points in the next two policy announcements,” the report said. However, Barclays Capital believes that increasing key rates will not do the needful.  “Inflation might not be influenced meaningfully by this rate increase alone, especially as persisting price pressures for agro commodities, metals and energy prices can potentially add to further spill over of inflation risks,” the report said. The RBI has hiked its short-term lending (repo) and borrowing (reverse repo) rates nine times since March 2010.

The Telegraph

Nabard seeks to end political meddling in co-operative banks

NEW DELHI: Boards of co-operative banks controlled by local politicians may come under stricter scrutiny with the sectoral regulator finding many of them not being run properly. The move has finance ministry's backing.  "We are pressing for the 'fit and proper' criteria on the elected boards of all banks," said a senior official of the National Bank for Agriculture and Rural Development (NABARD). Nabard's 2009-10 annual report said nine state co-operative banks (SCBs) and 214 district central co-operative banks (DCCBs) where not being run properly. Various experts and committees have pointed to the lax overstight of cooperative banks because of multiple jurisdiction of states, the Reserve Bank of India, registrar of cooperatives and in the case of rural ones Nabard as well. "The fit and proper criteria will ensure that there are at least three professionals on the board with voting rights," said the official. Nabard is closely working with the states and the finance ministry. The Nabard moves come after the board of the 100 -year-old Maharashtra State Co-operative Bank was superseded by the state government on directions from the Reserve Bank of India. "One of the major reason for its failure was that the bank was unable to recover its non-performing assets because of political pressure from within the bank board," said a Nabard official. The total NPAs for the bank were at 500 crore in 2010. Ajit Pawar, senior NCP leader and son of Agriculture Minister Sharad Pawar was one of the board members in the bank. Out of the 44 directors on the bank board, 25 belong to NCP and rest were affiliated with some other political parties. A finance ministry official said that all steps would be taken so that there are no systemic issues in co-operative banks. "There is no agenda of the government against individuals. We are pursuing an overhaul in the financial sector through various legislation and reforms," he said. The sectoral regulator in 2010 had issued fresh guidelines 'on inspection of District Central Cooperative Banks, to ensure that steps are taken by the co-operative banks to induct professionals on their board. "Nabard will still continue to focus on the financial parameters. But corporate governance practices will determine if they would be eligible for any central support," the finance ministry official said. "Nabard has initiated training programmes for the board members. Routine on-and-off site inspections have been conducted to ensure all banks are following the norms," said UC Sarangi, ex-chairman Nabard, adding that further stress on corporate governance will strengthen the banks.

Economic Times

Wake-up call to the Centre from RBI

It is, however, necessary to understand the predicament of the RBI. Monetary policy and tools are not the sole devices to promote economic growth. Fiscal policy is a vital ingredient. These should work in tandem. Any disconnect will lead to unacceptable economic.........
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RBI allows FIIs to hedge investments under ASBA route

MUMBAI: The Reserve Bank today allowed foreign institutional investors (FIIs) to hedge foreign currency risks arising out of investment in IPOs made through ASBA route. "Initial Public Offers (IPO) related transient capital flows under the Application Supported by Blocked Amount(ASBA) mechanism, foreign currency-rupee swaps may be permitted to the FIIs," the RBI said. Foreign currency rupee swaps for hedging flows under ASBA, RBI said, will be available for 30 days only. The initiative is likely to facilitate FII investments under the ASBA route into equity market. Under the Application Supported By Blocked Amount (ASBA) facility, the application money of investors remains blocked in his bank account until the process of allotment of shares is completed. The Securities and Exchange Board of India (Sebi) had introduced ASBA facility for public offers first in September 2008 when retail investors were allowed to use it. The facility eliminates any delays related to refunds for the unallocated shares. Initially, it was offered to retail investors only and was given to other investors in 2009.

Economic Times

Go Slow on Debt Office Plan - JAIDEEP MISHRA

To hive off or not to do so, that seems to be the policy question in the here and now, when it comes to government debt and its proper management. The Reserve Bank of India has gone on record that it’s against the setting up of a separate debt management office by the Centre, so as to better manage the sovereign debt of the government as it’s supposed. It adds that only the central bank has the requisite expertise to smoothly manage volatility in the market for government securities, given limited absorptive capacity for such bonds.  Global experience does suggest a strong case for an independent debt management office. Yet, in the domain of policy, the mavens have shown that when there are nth number of distortions economy-wide, inducing one additional distortion can actually improve matters — read welfare — all round instead of making things worse. So for instance in the face of excessive volatility in the foreign exchange market, currency intervention by the central bank for the specific policy purpose, say, of preventing rapid hardening of the rupee would, other things remaining constant, generally be welfare enhancing across the board. And in a scenario of rising interest rates, slower growth in the offing and almost certainly a larger than budgeted deficit in governmental accounts in the works, it would make policy sense to keep the idea of independent debt management in abeyance for the present. Of course once we have a much lower fiscal deficit figure, more reasonable yields, and better expectations generally, there would be a sound case for hiving off debt management.  The point is that in the emerging scenario of decelerating growth trends, and higher governmental borrowings likely, it makes overall sense for the central bank to continue to manage government debt. There can be conflict of interest in continuing with the status quo, for sure. After all, the RBI’s role as monetary authority that indicates the cost of funds, read interest rates, its job as bank regulator, with amble suasionary powers to ask for heightened subscription of government securities, and its function as banker to the government can all clash and work at cross-purposes.  Hence the case for shifting debt management functions from the central bank, so as to avoid and resolve conflict of interest. There are other gains to be made with hiving off and institutional reform. The policy goal for an independent debt office is that it can well reduce the cost of debt, with reduced human resources and the specialised fanning out of operations, facilitate debt consolidation and rev up transparency in the bargain. However, such reform is best done when things are hunkydory both in the external economic environment and otherwise. Given that the policy setting has become all the more challenging of late, continuing with in-house management of government debt by the RBI — albeit implying an extra distortion — would actually be welfare enhancing overall. It would, for example, help harmonise the market borrowing programmes of both the Centre and the states, especially when the absorptive capacity of the market, denoting subscriber banks, is but limited. Note that the theory of the second best is precisely about finding optimal solutions in the presence of (price) distortions, which prevent the attainment of ideal solutions, or what the mavens call a Pareto optimum. In the particular instance of a stand-alone debt office, driving at an optimal ratio of price to marginal cost may well amount to taking very narrow a view of objectives.  Besides, it cannot be gainsaid that the RBI is very much in the thick of things in the government securities market and has finger on its pulse, complete with an array of instruments to tap funds at fine rates. Not so long ago, the market for government paper used to be rather opaque, operated basically via telephone calls, but is no longer so. And the point remains that there’s the vital need for closer coordination between the central bank and sovereign debt management for proper monetary policy and financial stability, in what seems like a wobbly macroeconomic policy scene. So a pause, for now, appears warranted. But in the medium term and beyond the RBI would surely need to shed its debt management role. As and when that happens, the central bank needn’t be exercised over loss of clout and so forth. The eventual hive off can only mean more focused central-bank operations. In any case, the fact remains that the monetary policy stance of the RBI has been evolving (and reforming) over time, particularly in the last decade or two. Note that the details on its monetary policy stance were made public only beginning with the policy statement of April 1996. Prior to that there was routine opacity, no doubt. Subsequently, the automatic monetisation of the fiscal deficit through the issue of ad hoc treasury bills was phased out. And effective April 1, 2006 the RBI did withdraw from participating in primary market auctions of government paper. The way ahead is more reforms and focus.

Economic Times

Relavance of the gold for the common person: S.S.Tarapore

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Now, Britain endorses Lagarde as new IMF chief

Britain endorsed French Finance Minister Christine Lagarde as an 'outstanding candidate' for IMF chief on Saturday, the first G7 country to officially back her as Dominique Strauss-Kahn's successor.......
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Policy rate hike by RBI: To what extent?

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