Soiled currency notes sully India’s image: RBI official

Panaji, June 17 (IANS) Here’s the Reserve Bank of India (RBI) way of improving the image of India – change the soiled and torn notes in circulation. According to a senior RBI official Friday, soiled, torn and faded currency notes were one of the worst ambassadors for the country, as far as tourists travelling to the country are concerned. ‘Goa being a prominent tourist place, it needs to get rid of these old notes. These stale notes are bad for the image of the country when they reach tourists,’ J.B.Bhoria, Regional Director of the RBI, told reporters on the sidelines of a function here. ‘Old notes are not only dirty-looking, they also carry germs and can spread disease. All banks should ensure that these notes should be replaced as soon as possible, especially in tourist areas,’ he said. ‘There was a time when foreign tourists used to be given notes stuck together with (adhesive) tape. A nice new, clean, crisp note gives a very good image of the country,’ Bhoria said.

News One

RBI Opens A Dedicated Urban Banks Department for Goa

The Reserve Bank of India on Friday opened an Urban Banks Department in Goa to attention the urban co-operative banking sector in the state of Goa. The Department has started functioning at the Reserve Bank of India, Panaji, Goa from June 17, 2011. Its functional jurisdiction will cover the entire State of Goa. The address and contact details of the department are:

The General Manager & Officer-in-Charge
Reserve Bank of India
Urban Banks Department
3A/3B, Third Floor, Sesa Ghor
Patto, Panaji 403 001
Tel. No.: 0832-2438656, 0832-2437693
Fax No.: 0832-2438657

The Goa office of the Reserve Bank started functioning in 1983 with only Foreign Exchange Department. The department catered to the need of exporters, foreign tourists, non-residents and others in Goa. A Rural Planning and Credit Department was added to the office on April 1, 2011, to facilitate rural credit and achievement of annual credit plan by banks as well as to achieve financial inclusion in the State, by better co-ordination with State Government, banks and others. However, the supervision of Urban Co-operative banks in Goa was being carried out by the Reserve Bank’s Mumbai Office.The Reserve Bank of India is entrusted with the responsibility of regulation and supervision of Urban Co-operative Banks under the regulatory provisions contained in the Banking Regulation Act, 1949 (As applicable to Co-operative Societies), the Reserve Bank of India Act, 1934 and other related statutes.

abclive.in 

Corporate data will talk and government will act now

"RBI is a major user of the data as it uses it to forecast credit and deposit rates by analysing corporate.......           

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Remit IT dues well in advance: RBI

CHENNAI: The Reserve Bank of India has urged Income Tax assessees in the city to remit their dues sufficiently in advance of the last date to avoid inconvenience. In a release, RBI Regional Director N.S. Vishwanathan stated: “The rush for remitting income tax dues to the RBI has been far too heavy towards the end of June and it becomes difficult for the bank to cope with the pressure of receipts, although additional counters to the maximum extent possible are provided for the purpose.” Consequently, the public are required to wait in queues at the bank for unnecessarily long periods.” He said that in addition to RBI, select branches of nationalised, private and public sector banks in the State were authorised to accept payment of dues in cash or by cheque.

Hindu

Financial inclusion must to maintain growth momentum says Finance minister Pranab Mukherjee

Finance minister Pranab Mukherjee said today the banking sector faces a huge challenge of financial inclusion with the trillion dollar Indian economy racing ahead on a high growth curve. “Financial inclusion is a major challenge before the banking sector and financial system at large. At the same time, it offers huge opportunities for the national economy to grow at a rate of 9 to 9.5 per cent during the 12th Five Year Plan,” he said while addressing ASSOCHAM’s National Banking Conclave titled ‘Challenges and Opportunities in a Trillion Dollar Economy.’ Mr Mukherjee said the government is deepening policy reforms, considering further liberalising foreign direct investment policy and addressing gaps in overall economic regulatory architecture so that banking services reach rural areas. “Newer perspectives and strategies towards financial inclusion are needed to reach un-banked and the under-banked sections of our country.” He said the Reserve Bank of India is in the process of issuing additional banking licenses to private sector players. Major steps are being taken to simplify and place administrative procedures concerning taxation, trade transfers on electronic interface – free of discretion and bureaucratic delays. This will set the tone for a newer, vibrant and more efficient economy, said the finance minister. A sound and resilient banking sector, well functioning financial markets, robust liquidity management along with payment and settlement infrastructure are seen as pre-requisites for financial stability. “Consolidation of banking services, consistently meeting the capital adequacy requirements, leveraging advanced technology, effectively managing human resources with a focus on pro-active leadership and re-skilling of human resources are emerging as major areas of concern of Indian banks that need to be addressed,” said Mr Mukherjee. Meanwhile, Mr Dilip Modi, president of The Associated Chambers of Commerce and Industry of India (ASSOCHAM), said financial services revenue from rural areas across the country could be 12 to 13 billion dollars by 2015. The opportunity presented by growing asset base is however confronted with several challenges, the most formidable being implementation of a time-bound financial inclusion strategy. “We must synergise financial inclusion with digital inclusion to ensure faster and cost-effective delivery of products and services.” He appreciated government efforts to regulate the micro-finance sector and ensure greater transparency while providing small ticket size loans to rural population at affordable interest rates. Chamber’s senior vice-president R.N. Dhoot said the Indian economy is poised to grow to a size of three trillion dollars and become the third largest worldwide by 2020. Banks will play a major role in the process by meeting capital requirements of all sectors of the economy. ASSOCHAM secretary general D.S. Rawat said India has the second highest number of financially excluded households in the world. About 40 per cent of the country’s population has bank accounts and only 10 per cent have any kind of life insurance cover while a meager 0.6 per cent has non-life insurance cover. Others present on the occasion were RBI's deputy governor K.C. Chakrabarty, member at the Planning Commission Narendra Jadhav, joint secretary (capital markets) at the finance ministry Thomas Mathew, vigilance commissioner J.M. Garg, chairperson of ASSOCHAM's national council for banking and finance M. Narendra, chairman and managing director of Indian Bank T.M. Bhasin, executive director of Vijaya Bank Subhalakshmi Panse, executive director of Bank of India N. Seshadri, and national leader and partner at Ernst & Young's global financial services division Ashvin Parekh.

http://www.orissadiary.com/ShowBussinessNews.asp?id=27326

In top echelons of RBI, a taste for Taleb

The Fiscal Stability Report released by the Reserve Bank of India earlier this week made headlines for all the insights it gave into the state of the Indian financial system. But away from all the analytics, the RBI Governor turned to the best selling author Nassim Nicholas Taleb and his book, ' Bed of Procrustes', to sum up the complexity of the markets and the challenge in monitoring and regulating the system. " Ensuring financial stability cannot be a formulaic rule- based task," Governor Duvvuri Subbarao wrote in the foreword to the 97- page report, which was released June 14. The endeavour for the policy makers, he said, should be to not get trapped in " commoditised ideas, reductive categories and prepackaged narratives" - trying to fit everything to ' The Bed of Procrustes'. It was a second instance in recent times that the RBI invoked the writings of Taleb, the Lebanese American philosopher, essayist and practitioner of mathematical finance. ' The Bed of Procrustes -- Philosophical and Practical Aphorisms' is a collection of aphorisms which express Taleb's ideas. In Greek mythology, Procustes was a bandit who abducted travellers, offered them a generous dinner and a special bed to spend the night. But he wanted the bed to fit the traveller to perfection. Those who were too tall had their legs chopped off with a sharp hatchet; those who were too short were stretched. Procurstes was eventually decapitated and " fitted" into his own bed. So it is in the real word today, explains Taleb. Humans get modified to fit technology, reality is blamed for not fitting into models built to explain the reality - with disastrous consequences. The aphorisms capture the idea - brevity, beauty and all - like this one: " Modernity's double punishment is to make us both age prematurely and live longer." Those facing the effects of the RBI punishment in form of repeated rate hikes could note this one from Taleb's book: " If your anger decreases with time, you did injustice; if it increases, you suffered injustice." The RBI referred to Taleb also on August 24 last year, when it cautioned against " black swans" emerging in the nature of global shocks that could transmit quickly to the domestic real economy. The remarks came as the RBI released its annual report for 2009- 2010. The " black swan" describes unexpected surprise events, like the rare black swan. The term was first popularised in the book of the same name by Taleb. A former RBI official said this is probably the first time that such references, interesting and explanatory in their own way, have appeared in what otherwise are detailed if dreary RBI documents and statements.

Fres Press Journal 

Chellanam achieves financially-included status

KOCHI: Chellanam village has achieved 100 percent financially-included status under the initiative of the Corporation Bank. To mark the occasion as well as the shifting of the local branch of the bank to a new premise, a function was held in Chellanam. The chief guest of the programme, declared the village 100 per cent financially-included. He distributed Smart Cards for branchless banking operations. K P Thankachan, president, Chellanam grama panchayat, distributed the hand-held terminal for BC operations. G J Raju, DGM, RBI, distributed loans under Corporation General Credit Card Scheme. K Ramamurthy, GM, Corporation Bank and A M M G Nair, zonal manager, were also present.

IBNLive    

On expected lines

.... The challenge of containing inflation and anchoring inflationary expectations persists. The RBI has in its recent policy statements clearly underlined the role of .........

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Growth drivers broadly remain in economy: Pranab

Growth drivers of India's economy broadly remain and fiscal profligacy at this time could be disastrous, Finance Minister Pranab Mukherjee said on Friday. The statement comes in the backdrop of the recent Reserve Bank of India (RBI) rate hike. Sacrificing growth, the RBI raised the short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points each to 7.50 and 6.50%, respectively.  Mukherjee endorsed RBI's stance stating, "We need to have price stability for sustaining growth in the medium term."  He said there is no room for further expansion in fiscal deficit now. "We have infused 3% of gross domestic product (GDP) to stimulate economy in the last three years." The RBI acknowledged that there is deceleration in some sectors, notably interest rate sensitive ones, such as automobiles. But it acknowledged that in the current circumstances, some short-run deceleration in growth may be unavoidable to bring inflation under control. Admitting inflation as a "major" concern, Mukherjee said, it will have implications on growth in medium-term. However, he added, the medium-term growth prospects of the economy remain buoyant. "The monetary steps may hurt growth if continued for some time," he said.

Moneycontrol

RBI says it has no magic wand to bring down inflation

NEW DELHI: After having raised its key policy rates 10 times in a year-and-a-half to check inflation, which remains stubborn, the Reserve Bank of India on Friday said it has no magic wand to bring down the rate of price rise.  "You all want that inflation should come down. Neither the ministry of finance nor the RBI has any magic wand to bring down inflation," RBI Deputy Governor K C Chakrabarty said at an Assocham meet here.  Inflation, as measured by the Wholesale Price Index (WPI), was over 9 per cent in May.  Despite RBI's monetary policy tightening regime and steps of the government, inflation continues to remain high. The central bank has projected inflation to be at around 6 per cent by March 2012.  The deputy governor said the current inflation is because of constraints in the supply chain and only increase in agricultural productivity and use of modern technology could check the rate of price rise.  "...instead of saying that RBI should bring down inflation, we must increase productivity and bring down the cost of services and that will only bring down inflation. Otherwise, it will not come down," he said.  Earlier, at the same event, Finance Minister Pranab Mukherjee said in the short-term moderating aggregate demand is critical to check inflation, which is "our major challenge".  He, however, admitted that anti-inflation monetary measures may impact growth.  RBI has been increasing key policy rates since March 2010 and the latest was Thursday's 25 basis points hike in short-term lending and borrowing rates.

TOI

India must cut cost of goods, services to tame inflation: K C Chakrabarty

NEW DELHI: India needs to bring down cost of services and production to control inflation, K.C. Chakrabarty, a deputy governor of the central bank, said on Friday. The Reserve Bank of India raised interest rates on Thursday for the 10th time in just over a year to combat stubbornly high inflation and signalled more increases to come even as growth in Asia's third-largest economy is slowing down.  Wholesale prices, India's main measure of inflation, rose more than 9 per cent in the year through May, much more than expected. Worryingly, the figures showed price pressures had spread from food and fuel to manufacturing.  

ET

Micro-finance loans have potential to grow exponentially across the country says Karnataka’s minister for rural development

.......... He said the recent RBI intervention by constituting Malegam Committee is a progressive step to regulate this sector and.......

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MFIs glad if RBI is the regulator

Last week we told you a finance ministry committee has recommended the Reserve Bank of India (RBI) as the sole regulator for the microfinance industry. And even though the central bank might find it quite a task to regulate the nearly 600 companies that make up the sector, CNBC-TV18’s Vineetha Athrey and Gopika Gopakumar learn that microfinance institutions (MFIs) on their part, are cheering the idea. Suresh Krishna, MD, Grameen Financial Services said, “If we have too many regulators then it's difficult to know what the industry is doing so it's better to have one regulator who will prescribe how MFIs need to operate.” And that one regulator could be the RBI. That is, if a central government bill on microfinance companies comes through. TheMFIs, themselves, are happy with the move as they feel this will ensure a uniform regulatory framework for the sector and avoid conflicts of interest between regulators. But, given the sheer size of the microfinance industry here in India, the question is whether the RBI has the bandwidth to regulate it. Samit Ghosh, Founder and MD, Ujjivan said, “Below a certain threshold limit RBI might outsource this to some other institution to directly oversee or industry associations like Saadhan to enforcing regulations. Also, industry experts say the recent Malegam Committee's recommendations would make it difficult for smaller MFIs to operate, making consolidation inevitable. This, in turn, could end up reducing the burden on the regulator. However, the key question before large microfinance companies that are considering acquisitions would be that, with the same set of customers borrowing from different companies. Acquisitions would not really translate to more number of customers. So, MFIs first have to consider whether there will be value-addition in biting the acquisition bait.

Moneycontrol

Rate hike may lower credit growth in banks: M. V. Nair

............... “Out internal view is that there would be further hike in repo and reverse repo rates by the RBI going forward to tame inflation,” .....................

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Fighting inflation

It is the failure of New Delhi to give a helping hand to the RBI in containing inflation. Of late, the Government has not been able to focus on managing the economy as it is faced with various other problems such as corruption, black money and the multitude of scams. Ministers are found busy sorting out issues with Baba Ramdev and the civil society and do not seem to be concerned with issues such as inflation, GDP growth, and so on. The damage caused to the economy is high and it is time the Government spends quality time with the RBI and comes out with some convincing solution to check inflation.

T. V. Gopalakrishnan (Business Line)

FM to meet RBI, NHB & PSU bank chiefs to talk rising rates, growth risks

Mumbai: In the back drop of rising interest rates and downward growth risks, finance minister Pranab Mukherjee has convened a meeting of all chiefs of public sector banks, Sidbi and India Infrastructure Finance Company (IIFC ) and regulators like Reserve Bank of India, National Housing Bank on July 8 to discuss the strategies to manage the dynamic situation “The finance minister wants to take stock of the situation on several issues linked to inflation and growth. We will give our views about the rising rates, credit growth, non performing assets and our possible performance in 2011-12. The overall situation remains very fluid,’’ said a chief of PSU bank. The minister will also check about the credit flows to the SME sector which has been affected by the spate of rate hikes. The other banking related issues which will be discussed in the forthcoming meeting includes credit flow to education, agricultural sector for which the government has announced subsidies. Also, the issue of financial inclusion, whose target has been revised upward recently, will deliberated in the meeting. Mukherjee recently while addressing the banks at the Indian Banks’ Association (IBA) in Mumbai had expressed his concern over the asset quality of the banks. “There is one area though, where I am little concerned. It is the issue of asset quality. During the year 2010-11, non performing assets (both gross and net) have increased as against the level in the previous year. It is important for the banks to constantly monitor and bring down the NPA to the previous level,” he had said, adding that the government had accorded high importance to financial inclusion to cover the entire gamut of financial services pertaining to savings, credit, insurance and transfers. DL Rawal, CMD, Dena Bank, said the banking industry was able to perform well during the last fiscal. But, this year the industry may not be able to achieve that much growth. “The reason for this is that the GDP growth is likely to be moderated to 7.8% to 8%, compared to the last fiscal’s 8.6%. Rate hike will also have its impact. Secondly, Casa in the industry may not increase that much as term deposits have become more lucrative now,” Rawal said. “Also, I do see some moderation in home loan portfolio this fiscal, Same thing may happen in infrastructure sector too,’’ he added. Bhaskar Sen, CMD, United Bank of India, also agreed that banks had performed better during the last fiscal. But, this year, the case will be different as the banks see lot of challenges on credit and deposit growth, asset quality and financial inclusion. Apart from the heads of all the state-owned banks including the associates of State Bank of India, chiefs of otherPSU organisations like Sidbi and IIFCL officials from the regulators like Reserve Bank of India, Nabard and National Housing Bank (NHB) will also be present during the meeting.

FE

Anomalies in forex transactions

The article “Dismantle the forex licence raj” (Business Line, June 17) is an eye-opener into the hurdles one has to face while effecting forex transactions.  The Foreign Exchange Management Act (1999) or FEMA, which became an Act on June 1, 2000, has been introduced as a replacement for the Foreign Exchange Regulation Act (FERA). One of the advantages of the liberalised era is freedom from various controls. The author has pointed out the various anomalies and contradictions that emanate from a “control mindset”, such as NRE accounts under “non-repatriable” and “repatriable” heads, declaration insisted by banks from individual customers transacting in forex, complexities in joint account of residents with non-residents, two separate yardsticks for Resident Foreign Currency accounts maintained within the country and abroad, proliferation of regulators for forex transactions, and so on. The above hurdles in individual forex transactions are indeed disheartening and, therefore, need elimination or modification. The author, an authority on forex transactions, has pinned hope on the Committee for Review of Procedures Relating to Foreign Exchange Facilities for individuals — Resident/Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).  The objective of the Committee under Ms K. J. Udeshi, former Deputy Governor, RBI, is to identify areas for streamlining and simplifying procedures so as to remove the operational impediments and assess the level of efficiency in the functioning of authorised persons.

Mathew Abraham (Business Line)

Fiscal policy and inflation

New Delhi now needs to take the initiative; it is better equipped to yank the economy out of the slowdown fears that have gripped it. Intelligent fiscal policy is the need of the hour, one that pursues fiscal consolidation ..........

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Bihar is best performing state, says RBI study

NEW DELHI: Contrary to popular belief, a Reserve Bank sponsored study today said Bihar (including Jharkhand) was the best performing state during 1980-2004, while Tamil Nadu lagged behind in terms of TFPG, a parameter that measures productivity of the organised manufacturing sector.  Although Bihar did well in terms of TFPG (total factor productivity growth), it faltered on employment generation, the study on 'Productivity, Efficiency and Competitiveness of the Indian Manufacturing Sector', conducted by the Development Research Group (DRG), a research wing of the RBI said. "The inter-state performance of TFPG of organised manufacturing sector indicates that Bihar (including Jharkhand) is the best performing state while Tamil Nadu is the worst performing state," it said.  Jharkhand was carved out of Bihar in November 2000. Referring the issue of employment generation, the report pointed out that good performance needed to be "juxtaposed with the fact that Bihar witnessed a negative growth rate of employment and Tamil Nadu witnessed a significant higher rate of employment."  The better performing states, according to the study, include Rajasthan and Andhra Pradesh. However, Gujarat and Punjab turned out to be bad performers.  The study, which covers 1981-2004, was conducted by Development Research Group (DRG), a research wing of the RBI, with a view to estimate productivity and efficiency of the manufacturing sector at industry and state levels. It has estimated efficiency of 449 companies.  The RBI-sponsored study also examined the path of efficiency and productivity in the context of economic reforms undertaken by the Indian manufacturing sector and provided a comparative view of the performance in organised and unorganised sectors. On the industry-wise TFPG performance of organised manufacturing sector, the study said Food, Beverages and Tobacco (FBT) industry was the worst performer while Machinery and Transport Equipment (MTE) industry did better than others.  

ET

Stressed bank of India

........But Bhatt's run-ins with RBI cost him dearly: he burnt bridges with the regulator and the Union government. As a consequence, he could not convince the government, which holds 59.40 per cent of SBI's equity, to approve a rights issue that could.....

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