Portfolios of EDs w.e.f. June 16, 2011 till further orders

Shri V.K.Sharma                            

1. Customer Service Department

2. Department of Currency Management

3. Financial Markets Department

4. Rural Planning & Credit Department

Shri V.S.Das                  

1. Central Vigilance Cell

2. Department of Communication

3. Department of Payment & Settlement Systems

4. Financial Stability Unit

5. Right to Information Act (RIA) (also First Appellate  Authority)

6. Secretary’s Department

Shri G. Gopalakrishna            

1.  Deposit Insurance and Credit Guarantee Corporation

Shri H.R.Khan             

1. Foreign Exchange Department

2.  Internal Debt Management Department                     

Shri D. K. Mohanty           

1.Department of Economic Policy & Research

2. Department of Statistics & Information Management

3. Monetary Policy Department

Shri S. Karuppasamy               

1. Alternate Appellate Authority under RIA

2. Department of Expenditure & Budgetary Control

3. Premises Department

4. Urban Banks Department

Shri R.Gandhi           

1. Department of Administration and Personal Management (including  Rajbhasha)

2. Department of External Investments and Operations   

3. Department of Information Technology

4. Human Resources Development Department

Shri P.Vijaybhaskar           

1. Central Security Cell

2. Department of Banking Supervision

3. Department of Non-banking Supervision

     

Shri B.Mahapatra             

1. Department of Banking Operations & Development

2. Department of Government & Bank Accounts

3. Inspection Department

4. Legal Department

Muthoot Fin clears the air, says RBI probe is routine audit

While reports are doing the rounds that the Reserve Bank of India (RBI) has undertaken a probe on Muthoot Finance, one of the leading non banking finance company (NBFC) dismisses the buzz. George Alexander Muthoot, the company’s managing director says the alleged ‘probe’ is only ‘a routine audit inspection’ that is conducted by the RBI over the past years of its existence.  Further, he also dismisses any questions being raised by PSU banks on the methods adopted to raise funds by the company.

Below is a transcript of George Alexander Muthoot's interview with CNBC-TV18. 

Q: Would you clarify or confirm RBI’s probe into your company?

A: There is only a routine inspection by the RBI. In the last ten years of the company’s existence, about five or six time the RBI has done inspections, audits etc. There is nothing like a probe, it is just a routine inspection which has been done and it is over about three weeks back.

Q: Can you clarify that this probe is not with respect to any kind of irregularity and a general audit?

A: There is no irregularity and it was just a routine audit that usually RBI does periodically. It’s a routine RBI audit.

Q: There was a mention of using non-convertible debentures?

A: We have been using non-convertible debentures for last ten years. All NBFCs use this non-convertible secured debentures, these are non-convertible secured debentures and these are done on private placement basis. This is not done or sold to any broker, neither done through invitation, it is only given directly to customers who come and ask. Only customers who come to our office are given the opportunity and they subscribe to these. This is a route for getting money for the company.

Q: There are mentions questions being raised on the methods of raising money through gold bonds by a couple of competitors including some PSU banks. Is there some truth to that and could you clarify on that?

A: Gold bonds are just secured, non-convertible debentures. I have not heard any PSU banks questioning. We have been doing this all along, for last ten years. Moreover, most of all PSU banks lend to Muthoot. They provide loans of Rs 200-500-600 crore each to Muthoot.

Q: Do you completely deny the fact that there is any probe by the RBI?

A: Definitely, it’s only a routine audit. There has never been any probe. RBI has done a routine audit in few other NBFCs as well.

Q: Could you tell us how is business shaping up?

A: Business has been shaping up well. We have paid our advance tax today and we are doing fine.

Moneycontrol

Further rate hike will destabilise growth: Ficci

On the eve of credit policy review by the Reserve Bank of India (RBI), industry body Ficci today warned that any further hike in interest rates would "destabilise" industrial growth and weaken the economy. In a letter to RBI Governor D Subbarao, Chairman of Ficci Finance Committee Udayan Bose has said that recent evidence of slowdown in cement sales, dip in steel imports and increasing inventories of automobile, have all created a negative perception. With a "depressed" confidence level, the Corporate India is looking for clear direction and signposts that highlight growth measures. While successive interest rate hikes by the RBI since March 2010, have not been able to control inflation, "aggressive monetary tightening is having an adverse bearing on economic and industrial growth of the country". Another worrisome trend is the slowdown in growth of gross fixed capital formation. "The pace of investments is a key determining factor for overall growth, and once it loses momentum, it is difficult to bring it back," Bose said. Ficci's comments come in the wake of expectations of a rate hike by the RBI tomorrow, for the tenth time in the last 15 months, without much success in taming a stubbornly high inflation, recorded at 9.06% in May.

BS

3 lakh Mahila Agents against cut in commission

Thiruvananthapuram: About 90 per cent women members of three lakh national saving agents in the country were dissatisfied with various suggestions of the 'Committee on Comprehensive Review of National Saving Fund.' According to State National Savings Agents Association here today, ''recommendation of the 'Committee on Comprehensive Review of National Saving Fund' to reduce commission payable to Mahila Pradhan Agents from four to one per cent will affect lives of about three lakh agents in the country.'' A panel report in this regard was submitted by RBI Deputy Governor Shyamala Gopinath to Union Finance Minister Pranab Mukherjee a few days ago, they said.

Newspolitan

Bank deposits grow faster than advances

Higher interest rates on bank deposits continued to attract funds, as the deposit base of banks grew by around Rs 58,000 crore in the fortnight ended June 3. Banks disbursed loans worth around Rs 28,000 crore in the same period. According to data provided by the Reserve Bank of India (RBI), deposits grew 18.2 per cent annually, up from 17.37 per cent a fortnight ago. The data reflects the fact that the focus of banks has now shifted to strengthening the base of deposits. “At the moment, deposit growth is very important for banks, as the credit deposit ratio is already high, and going forward, banks would need a strong deposit base if they want to continue to lend,” said Hatim Brochwala, research analyst, Fortune Financials. Bank credit grew by 21 per cent annually as on June 3, down from 22 per cent a fortnight ago. “This reflects the impact of higher lending rates on credit demand has started to show,” Brochwala said. Most banks had increased their base rates after RBI’s policy rate rise of 50 basis points on May 3. The country’s largest lender, State Bank of India, had raised its base rate by 75 basis points, effective May 12. This was the second rate increase by the bank in a month. The base rates of most commercial banks currently range between 9.5 per cent and 10 per cent. With inflation still hovering above the comfort level, RBI is expected to continue the rate rise cycle longer than expected. Wholesale price index inflation stood at 9.06 per cent in May, up from 8.66 per cent in April. As a result, it is widely expected RBI would raise policy rates by 25 basis points in the mid-quarterly review on June 16. Additional rate increases are expected to hamper credit demand. “Credit growth would slow down further and would remain at around 19 per cent for the current financial year,” said Brochwala. RBI has projected a growth of 19 per cent in bank advances and 17 per cent in deposits by the end of the current financial year. In the last financial year, bank advances, at 21 per cent, exceeded RBI’s expectations, while deposits lagged at 16 per cent.

BS

RBI Governor Grapples With ‘Horror Show’

After India announced that headline inflation for May had reached 9.06%, economists were appalled. Credit Suisse bank, in a research note, called India’s May inflation print a “horror show.” Will this force Reserve Bank of India Governor Duvvuri Subbaro to spring for a larger interest rate increase at the central bank’s monetary policy review on Thursday?........

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'Reforms in skill development and training are crucial' - Narendra Jadhav, Member, Planning Commission

India’s growth story is supposed to scale a new high, with annual GDP growth of 9-9.5 per cent during the 12th Plan — provided skilled development and reforms in the education sector go hand in had. Edited excerpts of an interview by Sanjay Jog with Planning Commission member Narendra Jadhav on the subject:

India’s record in education, especially vocational education and skill development, is dismal compared with other countries. What is being done to address this?

We are on a high growth path and for this to be sustainable, skill development and reforms in the education sector are crucial. If we do not put our house in order, the demographic dividend will turn into a nightmare. There is a three-fold framework in the form of a National Skill Development Council headed by the Prime Minister, a National Skill Development Coordination Board to coordinate 17 ministries engaged in skill development, headed by the deputy chairman of the Planning Commission, and the National Skill Development Corporation, a public-private partnership (PPP). This apart, state-level skill development missions have also been launched. Seven regional conferences have been held and there is widespread awareness at state level. The focus of the 12th plan is on faster, more inclusive and sustainable growth. The manufacturing sector, currently growing at around eight per cent, needs to grow at 11-12 per cent each year, so that there would be creation of at least two million jobs annually. For large employment generation, certain sectors such as textiles, gems and jewellery, food processing, leather and garments will have to be focused on. During the 12th Plan, it is expected that 1.2 per cent of GDP investment would be made in health, education and skill development. In addition 0.7 per cent GDP investment is expected in infrastructure, which includes irrigation, urban infrastructure and transportation. The total investment in infrastructure is expected to be even larger, with increased emphasis on PPP.

India’s track record of vocational education is also poor.

Emphasis is being given on massive vocationalisation of secondary education. Instead of the present format of such a training in 11th and 12th standards, consideration is being given to provide vocational education early on, say from the 9th and 10th standards. In 2007-08, a paltry two per cent went into formal vocational education and eight per cent was accounted for by on-the-job training and other informal ways. This is certainly not enough when compared with other countries; in Korea, it is 93 per cent. Just last week, at the meeting with state education ministers, the government has presented a draft National Vocational Education Qualification Framework, to provide horizontal and vertical mobility in vocational education. The government is also in the process of setting up a committee to look into provision of credit support from the banking sector for skill training. This is crucial, since the construction sector (real estate and infrastructure) has a potential to create as many as 35 million jobs during 2012-22. In addition, 11.8 million in health, 9.6 million in tourism and hospitality, and 9.2 million in information technology and IT-enabled services during the same period. Accordingly, the sector-wise plans for these sectors are being prepared by National Skill Development Corporation.

We also lack attention on apprenticeship programmes, compared with other countries. How are the government and the Commission looking at this?

The proportion of apprenticeship is merely 0.02 per cent, which means only 240,000 of the total population of 1.2 billion get an apprenticeship. In Germany, it is 75 per cent, Australia has 66 per cent and Singapore, 60 per cent. The apprenticeship programme is a spectacular failure. A committee headed by me had suggested amendments to the Apprenticeship Act of 1961. The amendments, when done, will give a much-needed fillip to apprenticeship. Further, we have 1,300 modular employment skills against 4,000 in China. We need to streamline funding. Besides, cluster-specific modular skills will be set up across the country. For example, an auto cluster could be planned in Chennai and a textile cluster in Surat.

What is the government doing on skill development for the excluded?

This is a critical issue. Incidentally, the National Advisory Committee chaired by Sonia Gandhi has recently set up a working group on the issue. A consultation with community-based organisations or non-government organisations is being arranged in July to discuss the issues and prepare a national policy for consideration of the government.

BS

Rate rise remains a done deal

Inflation remained elusive and stubborn at near double-digit levels for several months. Inflation in May, at above nine per cent, turned out to be yet another upside surprise. Pressures remained widespread, with food, energy and manufacturing prices all contributing in large quantum. Non-food manufacturing inflation – a commonly tracked proxy for core inflation – remained elevated at above seven per cent. The glimmer of hope was the relatively smaller revision in headline inflation in March. The Reserve Bank of India (RBI) has clearly said it would accord the highest priority to rein in rising prices and if required, it would do so at the cost of near-term growth. Of late, there has been a renewed bout of uncertainty and risk aversion in the western world. However, RBI currently does not have an option, but to focus on domestic concerns. A rise of 25 basis points (bps) in policy rates should be a done deal after the latest wholesale price index print. A 50-bps rise, however, would be a bit too harsh. The tone of the policy is likely to stay ultra-hawkish as well. However, in my view, it is almost impossible for the central bank to match the combination of ultra-hawkish action and tone, as was the case at its last month’s policy meeting (ultra-hawkish statement, 50-bps rate rise, 50-bps rise in savings bank rate, the introduction of marginal standing facility at 100 bps above the repo rate). Beyond June, we expect RBI to deliver another repo rate rise of 25 bps in the third quarter of 2011 before taking a pause.

BS

Enough is enough, India Inc tells Reserve Bank

Most expect a 25 bps rate hike today, but want pause

If India Inc has its way, tomorrow should be the last of the interest rate rises by the Reserve Bank of India in this current cycle. Most are treating a 25 basis point increase in key policy rates in the mid-quarter review of the monetary policy as given, but say any further hike will just kill growth. Enough is enough”, said Videocon Chairman and Managing Director Venugopal Dhoot, adding a rate rise beyond this would slow down investments. Dhoot argued high interest rates in India as compared to other countries will lead to capital inflows into India. “That will mean appreciation of the rupee, which will hit exports. I think RBI will have to be mindful of that,” he said. In a letter to RBI Governor D Subbarao, the Federation of Indian Chambers of Commerce and Industry (Ficci) said further rise would affect business sentiment adversely and further dampen the pace of investments. According to Ficci, the GDP growth figures in the fourth quarter of 2010-11 have confirmed the slowing in sectors such as manufacturing and mining. “The pace of investments is a key determining factor for overall growth, and once it loses momentum, it is difficult to bring it back,” Ficci said. The country’s business leaders argued that inflation is being primarily driven by supply-side factors, for which monetary policy plays a limited role. On the other hand, a secular rise in the interest rates over the last 15 months has adversely affected industrial output and growth. Since March 2010, despite RBI raising interest rates on nine occasions, inflation stayed stubbornly high. Inflation, measured by the wholesale price index, was 9.05 per cent in May and what has worried analysts is the sharp increase in manufacturing prices which implies pick up in core inflation. “If the cost of borrowing goes up, they pass it on to us and that will affect investments. The last rate hike itself was very steep and it is already having an effect, as there has been a slowdown in investments,” said V Ashok, Group CFO, Essar. Representatives of the realty sector also want RBI to press the pause button. Says Pradeep Jain, Chairman, Parsvnath Developers, “Too many rate hikes will not augur well for the economy. It makes funds expensive, which hurts profitability of companies. Real estate sector supports 270 other industries. So, if this sector is affected other industries will also be impacted.” In its financial stability report published on Monday, the central bank had said while inflation is likely to stay at elevated level more moderation in growth may take place. But, industry captains also argue that rising rates is not a permanent solution. Anil Sureka, director (finance), Ispat Industries, said, “Raising interest rates is not the solution. RBI should look at some other solutions to control inflation as clearly, this isn’t working out,” he added.

'Our balance sheet has been cleaned up fully' - H S Upendra Kamath, CMD, Vijaya Bank

Though the Reserve Bank of India (RBI) has extended compliance time to September from March (for provisioning on bad loans), we completed the process by March. Our balance sheet has been......

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Close the Casino

The efforts of regulators to cool India's real estate market seem to be paying off finally. Recorded home sales are down in Mumbai , Hyderabad and Bangalore; there's substantial oversupply - and softening prices - in the outskirts of Delhi.  Prospective homebuyers, repelled by the astronomical costs of real estate, are choosing to rent rather than buy. Smaller agents and brokers are being driven to other businesses to stabilise incomes. Many will read this as a sign of an impending slowdown, but that would be incorrect.  What's happening in the real estate market is the beginning of a slow process of realigning prices to meet real demand. The first institution to start worrying about India's sky-high real estate rates was the RBI , which cracked down on the sector three years ago with a series of steps, including curbs on overseas investments, higher risk weights and increased scrutiny for loans to the sector.  Rate hikes have followed, closing the gusher of easy money which lubricated the realty casino. Yet, there's a lot more that policymakers can do. Today, a series of archaic rules and regulations curtail the supply of urban land. This creates an artificial scarcity, forcing up land values.  Developers, in turn, price property according to the inflated underlying cost of land, rather than quality of construction. State governments and municipalities must quickly rewrite land use rules to make better use of land, bring prices down and reduce graft. Haryana, for example, has rules that allow for farmland to be reclassified for commercial or residential development if the owners so want. Reclassification, however, calls for more persuasion than just the negligible official fee. Neighbouring Delhi , now India's largest city, has vast tracts of land classified as farms or villages but is yet to notify land reclassification rules.  There are plenty of people waiting to develop their holdings willingly, yet we have the spectacle of governments in states like UP and Bengal trying to acquire land forcibly from unwilling farmers. Governments must stop coercive acquisition, and make it easy - and cheap - for willing sellers to convert land to whatever use they want to.

ET

A consumer’s guide to battle likely rate hike

The monetary policy announcement by the Reserve Bank of India (RBI) on Thursday is likely to impact the economy as well as your wallet. Financial Chronicle suggests the smartest thing you can do..................

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Reserve Bank of India (RBI) guidelines on Information security to Banks

Cyber Society of India (CySI), a non-profit organisation formed to create cyber law/security awareness organised an one-day workshop on cyber crimes and cyber security at University of Madras premises, Chennai. Mr N. S.Vishwanathan, Regional Director, Reserve Bank of India, Chennai inaugurated the workshop and also explained in brief the guidelines given by 'Gopalakrishna Commitee Report' to the banks on information security. Immediately after the inauguration, we interviewed Mr N.S.Vishwanathan, Regional Director, Reserve Bank of India in the corridors of the University on the 'Gopalakrishna Committee Report'. For the information of readers, Reserve Bank of India set up a working group in April 2010 under the chairmanship of Mr G Gopalakrishna, presently Executive Director of Reserve Bank of India to look into the various aspects of Information security and suggest guidelines to all the banks in India. Accordingly, the Committee submitted its report to RBI, who accepted the report. The Committee report was circulated to all the banks on 29th April 2011 for impelmentation. This 174 page report gives more responsibility on the banks to implement information security systems and also to educate the customers on ebanking.

Watch the video................

RBI says financial system stable; cautions on growth risks, inflation

The country’s financial system remains stable in the face of some fragilities observed in the global macro-financial environment, the Reserve Bank of India said in its Financial Stability Report (FSR) released here on Tuesday.  However, there are “downside risks to GDP growth” on account of some domestic and global factors and “inflation is likely to continue facing upward pressure”, it said. Sounding optimistic on the banking system, the RBI said, “a series of stress testing in respect of credit, liquidity and interest rate risks showed that banks remained reasonably resilient though their profitability could be affected significantly.”  Hinting at the possibility of a rate hike in June, it said growth is likely to moderate while inflation is likely to remain firm due to rising commodity prices. “This is expected to have an adverse impact on the fiscal consolidation process. Current account deficit is likely to remain elevated due to rise in imports resulting from higher oil and commodity prices, along with challenges of financing, as global conditions increase volatility in capital flows,” it said.

FE

RBI swoops down on wealth managers

Financial sector regulators are looking to up their ante against the mis-selling menace prevalent in the financial services and advisory space, and RBI’s list of 29 questions to scheduled commercial banks and their subsidiaries on wealth management services (WMS) and private banking is a first step in this direction.............

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Decoding financial stability report

Most economists expect a 25 basis points hike in the policy rate, because wholesale price inflation stubbornly refuses to come down, in spite of the helpful impact of a high base

One of the objectives of making monetary policy announcements more frequent was, as the Reserve Bank of India’s December 2010 Financial Stability Report puts it, “to help manage expectations and reduce uncertainties”. That doesn’t seem to have helped on both counts. Inflationary expectations among households have kept on rising and, as for reducing uncertainties, the central bank added to it when it surprised the market by raising the policy rate by 50 basis points during its last monetary policy meeting. This time too, most economists expect a 25 basis points hike in the policy rate, because wholesale price inflation stubbornly refuses to come down, in spite of the helpful impact of a high base. But what is RBI’s thinking about the macroeconomy at present? Several clues are available in its latest, or June 2011 edition, of its Financial Stability Report. It’s pretty blunt and concise about its view. Here’s what it says : “On the domestic front, growth is likely to moderate while inflation is likely to remain firm because of rising commodity prices. This is expected to have an adverse impact on the fiscal consolidation process. The current account deficit is likely to remain elevated because of rise in imports resulting from higher oil and commodity prices, along with challenges of financing, as global conditions increase volatility in capital flows. High input prices and interest costs may result in downward pressure on margins of corporates. The aggregate impact of moderately paced global recovery, domestic growth moderation, upside risks to inflation and higher interest rates on the financial sector is likely to remain somewhat adverse during the year.” In a few simple words, the optimistic view in a section of the market that the second half of the year is likely to be better than the first has been effectively scotched. Growth is going to slow, while inflation is going to remain high. It won’t be stagflation because growth is still going to be pretty high, but we could call it “stagflation with Indian characteristics” or, perhaps more appropriately, moderate-growth-flation. The report says that inflation will face upward pressure from “fuller pass-through of oil and coal prices, higher subsidy expenditure of the government and rise in wages and raw material prices.” Add to that, the stickiness in food prices as a result of the masses, for the first time, being able to afford some decent food, thanks to the social security measures announced by the government. To be sure, RBI had said that inflation would remain high in the first half of the year and the 9% print in May would not surprise it. We could even argue, it’ll be pleased that growth is finally slowing, which is what it wanted. But what it wouldn’t be pleased about is the rise in inflation in non-food manufactured products, its proxy for core inflation. That suggests pricing power among firms is strong and so is demand. And it’s interesting that non-food manufacturing inflation is up at a time when commodity prices had fallen. The financial stability report contains what the central bank calls a “macroeconomic risk map” with six points. These risks are global, capital flows, inflation, fiscal, corporate and household. The difference between the June report and the December 2010 one is that while global risks have declined, inflation risks have increased. The rest of the factors have seen no change. But then, the June report also says that the fiscal deficit for the current year is likely to be much higher than projected this year, because of higher oil and fertilizer prices and consequently higher subsidies, a belief it shares with most of us, except the finance minister. That means higher borrowing by the government and, combined with RBI’s monetary tightening and the already high credit-deposit ratio with banks, it will result in even higher interest rates. What’s more, the financial stability report also mentions a few risks to the corporate sector, which has been borrowing cheaply abroad, without much thought about hedging its exposure. Companies had also raised money through foreign currency convertible bonds (FCCBs) during the boom years and it’s now time for payback, since many of their share prices are well below the conversion price. Says the report, “More than a few firms potentially face severe funding problems in the next two years which may not remain confined to their industries.” The accompanying chart shows the amount of FCCBs coming up for redemption in the next few years. So there we have it—slowing growth, high inflation, a squeeze in margins, high interest rates and risks from foreign borrowing—and there’s little reason to be optimistic about corporate earnings or about equities. As if that was not quite enough, the RBI also sees the risk of a further slowing of capital inflows. The report says, “Financing of CAD (current account deficit) is going to be a challenge as advanced countries begin exiting from their accommodative monetary policy stance. This could slow down capital inflows to EMEs (emerging market economies), including India, as investors rebalance their portfolios.” The only positive is that most of these fears have already been baked into equity prices.

RBI’s non-performing asset projections for march ’12

RBI projected banks’ balance sheets for 2011-12 and finds that at end-March 2012, the level of gross non-performing assets (NPAs) will rise to 2.92% of advances, assuming the tighter provisioning requirements made by the central bank and 30% of standard restructured assets turning into NPAs

The June Financial Stability Report of the Reserve Bank of India (RBI) has a section on stress testing of banks. RBI projected banks’ balance sheets for 2011-12 and finds that at end-March 2012, the level of gross non-performing assets (NPAs) will rise to 2.92% of advances, assuming the tighter provisioning requirements made by the central bank and 30% of standard restructured assets turning into NPAs. While the profitability of banks is adversely affected under this baseline scenario, capital adequacy remains high. As the chart shows, it is only when NPAs rise by 50% or so that capital adequacy is affected.

Mint

OK, the stage is set for credit default swaps, but will/can they take off?

Ideally, the RBI and the FIMMDA must jointly constitute a standing committee, which can meet once a fortnight, to resolve market related issues to deepen the market......

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Food Bill could unleash new wave of inflation: Raghuram

Despite the Reserve Bank of India raising key policy rates nine times in just over a year, the headline inflation number remains stubbornly high. However, according to........

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Ahead of crucial RBI meet, Govt says inflation not alarming !!!!!!!!

25 bps rate hike most likely but will RBI squeeze more?

The Chairman of the Prime Minister's Economic Advisory Council, Dr. C Rangarajan, later said the figures were " upsetting" and more monetary and fiscal policy measures were needed to contain in inflation................Continue reading..................

FM calls for global action to end era of secretive banking

Finance minister Pranab Mukherjee called for creating a multi-lateral cooperation mechanism to prevent banking secrecy laws to deal with menace of black money. "While countries have accepted to end bank secrecy in general, some countries have agreed to do so only from a prospective date and are not willing to exchange past banking information," Mukherjee said, while addressing a seminar on international taxation jointly organised by his ministry and the Organisation for Economic Cooperation and Development (OECD). Mukherjee said transfer pricing poses problems with increase in cross border trade. Under transfer pricing mechanism, money is transferred from one jurisdiction to the other at a specified rate for goods and services exchanged between related entities. Multinational companies use transfer pricing to minimise their worldwide taxes, duties and tariffs. "The variety of inter-company transactions, increased global business restructuring and location of companies in various tax jurisdictions have brought several challenges to the tax administration on transfer pricing rules," he said. Under attack for inaction over black money allegedly stashed away in secret overseas bank accounts, the government has announced setting up of a panel to suggest ways to trace tax defaulters, reveal their identity to the public and recover taxes.

HT

Banks' reliance on market borrowings could impact liquidity: RBI

This increased reliance on borrowed funds raised concerns about the liquidity position of banks arising from growing maturity mismatches, in conjunction with a reduction in the share........

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RBI mid quarterly review needs to change policy to control inflation

Mocking the repeated assurances of the Finance Minister of the country to control inflation, India has seen its headline inflation in May rise to 9.06 per cent. This high rise is driven by an increase in prices of manufactured goods such as edible oil, textiles, sugar, paper products, etc. The rise has made it evident that the Reserve Bank would once again go for another round of raising interest rates at its mid-quarterly review slated for June 16. The RBI has in fact raised key policy rates nine times since March 2010.However it is mentionable that the wholesale price index (WPI) stood at 10.48 per cent during the same period a year ago while it was 8.66 per cent during the last month, as per the government data. The International Monetary Fund has already revised the growth projection of Asian countries, forecasting a downward trend of Indian’s growth. For 2011, the IMF has projected India’s growth to dip down to around 8% owing to high inflation and overall global economic turmoil created due to rising prices of commodity goods and oil. Though Finance Minister Pranab Mukherjee has repeatedly stated that the government is keeping a close watch on developments, both domestic as well as international and that they are keen in taming down inflation, the actual scenario shows the Reserve Bank and the Indian Finance Ministry has failed so far in controlling inflation. As understood, the lower growth projection of the country is due to RBI’s step of excessive increase in interest rates, that too repeatedly in the last fiscal. It is an absolute necessity for the Reserve Bank of India to undertake additional policy changes to tighten its grip on the economy. All eyes are now on the mid-quarterly review of the RBI scheduled on June 16.

Times of Assam