HIMALAYAN NEWS SERVICE : KATHMANDU: Reserve Bank of India (RBI) governor Dr D Subbarao is visiting Nepal on Friday in an invitation of central bank governor Dr Yubraj Khatiwada. "They will discuss issues of mutual interest and also issues relating to their part of the world and global issues," according to the RBI sources. During his two-day visit, Subbarao is speaking to bankers in Kathmandu on the first day. "This is basically a courtesy visit by RBI Governor on the invitation of our governor," informed spokesperson for Nepal Rasta Bank (NRB) Bhaskar Mani Gyanwali. "However, we can expect the governors to discuss the issues of common concern but there is no predetermined agenda for talks." However, the central bank can be expected to lobby for the permission to opening of branch of Nepali remittance companies in India to increase the flow of inflow of remittance from India. At present, RBI allows the remittance from India through its Indo-Nepal Remittance Facility that allows Nepali migrants to send up to 50,000 Indian Currency (IC) in a single transaction through its National Electronic Fund Transfer (NEFT) member Indian commercial banks to Nepal SBI Bank's account that then routes the remittance to the receiver through its branches or a designated money transfers. Despite the existence of the formal remittance facility most of remittance is entering in Nepal through non-banking channels like hundis so that millions of rupees go undocumented. Since no Nepali remittance companies operate in India Nepali migrant workers are not aware about the money transfer facilities. The another issue that might get discussed in the visit is the circulation of Rs 500 and Rs 1000 denomination Indian currency notes in Nepal. RBI does not accept these currencies from Nepal citing the rise of instances of counterfeit currencies from Nepal. The refusal of higher denomination has caused hassles for Indian tourists who carry cash while visiting Nepal. However, accepting the higher denomination currency from Nepal is not within the singular jurisdiction of Indian central bank as the decision has to be taken by the government. RBI is also apprehensive about accepting the higher denomination notes from Nepal due to risk of counterfeits in spite of the persuasion from the Nepal Rastra Bank. Subbarao took over as the 22nd governor of the Reserve Bank of India on September 5, 2008 for a three-year term. Prior to the appointment as RBI Governer, he was the finance secretary in the Ministry of Finance, Government of India.
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Tuesday, August 9, 2011
Keep an eye on SMS alerts
Chennai, Aug. 8 : The RBI's crackdown on fraud in Card Not Present (CNP) transactions ‘led to' an increase in the volume of CNP transactions, by giving remote users a greater sense of security, according to Mr. G. Padmanabhan, Executive Director, RBI. But, he feels, RBI's success on this front might have caused fraudsters to shift their focus to Card Present Transactions. In this connection Mr Padmanabhan cites the example of a scam in Hyderabad, where fraudsters posing as merchants offered mobile talk time worth Rs 250 against payment of Rs 50, on condition that only card payments would be accepted. The kiosk machine specially set up for this purpose was configured to prompt for PIN and print a charge slip indicating approval of the transaction by the bank. The Magnetic Stripe Card data and the PIN were captured from unsuspecting customers and later used to make counterfeit cards for withdrawal of cash. The same modus operandi was used at a petrol pump in Ranchi; only this time instead of mobile recharge vouchers, customers were offered car wash liquid and air freshener. The moral of the story is that it is safer to stick to the beaten track, that is, KYC-processed point of sale terminals; avoid shady nooks and corners.
RBI directive
More important, with effect from July 1, 2011, the RBI has instructed banks to send out SMS alerts for all card transactions, irrespective of the channel used; ATM, phone banking, Net banking, whatever. If an unauthorised transaction comes your way, sound the alarm. If you happen to be one of those who keeps the mobile switched off for extended periods of time, you can instead, ‘regularly at irregular intervals', check out the transactions which have taken place in your accounts. Not to look for transactions you have made, but to spot those you haven't. Of course, you still need to ensure that your bank has your mobile number on record, not someone else's. For it is to this number that it will send SMS alerts and one time passwords.
HBL
Past imperfect
Everyone has to deal with an uncertain future but for the Reserve Bank of India even the past is uncertain because data is revised after it is released, according to former governor Y V Reddy. The comment was significant because it comes just days after his successor and incumbent governor D Subbarao’s detailed speech on how revisions in data, like inflation and factory output, have made policy formulation difficult.
Govt report says 4 in every 1,000 notes are fake
The report, which is not in the public domain, also points a finger at Pakistan, saying its government officials are directly involved in the process of making and distributing large numbers of fake notes
New Delhi/ Mumbai: Four in every 1,000 currency notes in circulation in India are fake, amounting to as much as Rs. 3,200 crore in 2010, a confidential government report has found in a first-ever attempt to estimate the quantum of counterfeit notes in the country. The so-called white paper on the status of fake Indian currency notes, prepared jointly by the Intelligence Bureau, Research and Analysis Wing, Directorate of Revenue Intelligence and the Central Bureau of Investigation, says this seriously affects the “credibility of the rupee as legal tender”. Mint has reviewed a copy of the report that was submitted to the government in June. Fake currency is 0.0004-0.0012% of bank notes in circulation, it cites the Reserve Bank of India (RBI) as saying, which is four in every one million, much lower than the white paper estimate.
The central bank does not have an estimate of fake currency notes circulating in the country, an RBI spokesman said in an emailed response, adding that the banking regulator is not aware of the existence of any white paper on the subject. Indian bank notes are secure, RBI asserted. The report, which is not in the public domain, also points a finger at Pakistan, saying its government officials are directly involved in the process of making and distributing large numbers of fake notes. The Pakistan high commission in New Delhi declined to comment on the matter. Fake notes that flowed into India in 2010 from abroad were “in the range of Rs. 1,500-1,700 crore”, the white paper said. Total counterfeit currency in circulation amounted to Rs. 3,200 crore in 2010, it added. Experts said the amount of fake notes in circulation is a cause for concern. “From a monetary policy perspective, if growth in fake currency becomes too rampant, then it reduces the control of monetary policy over inflation by making the monetary actions less effective,” said D.K. Joshi, principal economist at rating agency Crisil Ltd. “This can have a destabilizing impact on the overall economy.” The incidence of fake notes in various countries has typically been lower than what the white paper has found in India. In Australia, counterfeit notes detected were around seven pieces per million notes in circulation in 2008-09, and in Canada, it was 76 per million in 2008, according to RBI data. As for the euro, there was roughly about one counterfeit detected for every 14,600 bank notes in circulation in 2008. “The importance of curbing fake currency is even more important in the current scenario, when RBI is fighting inflation and striving to curb growth in money supply,” said Saurabh Tripathi, a partner at Boston Consulting Group. India’s vulnerability to fake notes was highlighted in the 2011 International Narcotics Control Strategy Report prepared by the US state department. “India also faces an increasing inflow of high-quality counterfeit currency, which is produced primarily in Pakistan… (and) represents a threat to the Indian economy,” the report had said. The paper used for fake notes is made of 100% cotton rag and a security thread is inserted during the manufacturing process that replicates several other sophisticated features, making the currency nearly impossible to detect, the report said. “We are approaching international forums to make counterfeit notes equivalent to terror financing,” a government official in the cabinet secretariat said, requesting anonymity. “We have already approached FATF (Financial Action Task Force) and shared this report with the US and other countries that are helping us to fight acts of terrorism.” FATF is an international organization that combats money laundering and terrorist financing.
Mint
Fake currency trade is unabated in UP
The illegal trade of Fake Indian Currency Notes (FICNs) continues unabated in Uttar Pradesh, especially in districts bordering the Himalayan kingdom of Nepal. Since 2008, over Rs 9.5 crore in illegal tender have been seized in the state and 595 first information reports (FIRs) registered in these cases, which include incidence of fake currency found in automated teller machines (ATMs) of different banks.
BS
Finance ministry must be in the know of gold transactions, says CIC
Hearing an RTI appeal, chief information commission orders ministry to be the nodal body; Reserve Bank of India and finance ministry to submit affidavits in case of denial of any deals in the yellow metal.
At a time when popular and judicial pressure is building up on the government regarding investigation of scams and financial accountability, the babus have mastered the art of passing the buck and being elusive. The ministry of finance too, has been acting slippery in furnishing information to the public. However, RTI (Right to Information) activists have found a way to make the financial authorities accountable. While hearing an appeal by an RTI activist, the chief information commission (CIC) has ruled that the finance ministry must be the nodal body knowing the details of gold trade in India, and has asked the ministry and the RBI (Reserve Bank of India) to submit affidavits in case they deny the same. "Commission holds that it is the Ministry of Finance who would be the nodal ministry in respect of the subject matter. Therefore, the ministry of finance, through its secretary is directed to submit (an) affidavit signed by an officer not lower in rank of deputy secretary to give (an) affidavit that information is not held by the ministry or any of its entities. Similarly CPIO, Reserve Bank of India is directed to give a similar affidavit to the commission", the commission ruled on 14th July. The affidavits have to be filed within two weeks of receipt of the judgement. RTI applicant, Subhash Chandra Agrawal said, "I received the judgement yesterday, and I think it is the same with the ministry. I am expecting the information or the affidavits after fourteen days." Mr Agrawal had filed an RTI (Right to Information) application in May 2010 with the department of revenue, asking for details of gold sales and consumption happening in India, and estimates for unaccounted transactions. However, the CPIO of the department replied that such information is not held by them, following which Mr Agrawal filed the first appeal in September. Dissatisfied once again, Mr Agrawal went for a second appeal before the commission. "The RTI petition filed at the Department of Economic Affairs kept shunting between various public authorities including the RBI, Central Board of Direct Taxes (CBDT), Department of Revenue and Directorate of Enforcement with everybody transferring the petition to each other under Section 6(3) of the RTI Act", said Mr Agrawal. He said, "India being the largest purchaser of gold, sets the global trend. Unaccounted money is being largely invested in gold and silver. There is every possibility that money deposited in foreign banks now being transferred is responsible for sudden rise in prices of gold and silver."
Moneylife
Economists hopeful of pause in rate rise cycle in September
The Reserve Bank of India (RBI) is likely to take a pause from raising rates in its next policy meet in September, as fears of a global economic slowdown and its cascading effects on the Indian economy intensified after Standard & Poor’s (S&P) downgraded the long-term debt rating of the US last week. On Friday, after the US market hours, S&P reduced its long-term credit rating of the US from AAAto AA+, raising concerns of another economic slowdown. With domestic demand already expected to shrink because of sharp rise in interest rates in the last 12 months, economists said RBI was expected to wait for some time to take stock of the situation before increasing rates further. The mellowing of commodity prices, especially of crude oil, is also expected to provide RBI some breathing space in its battle against inflation. “I do not see any more policy rate hikes by RBI if the oil prices cool off and if there is a double-dip as predicted in the US,” A Prasanna, chief economist of ICICI Securities Primary Dealership, told Business Standard. Besides downgrading of the US’ rating, the persistence of debt crisis in the euro zone has also added to the uncertainties in global economies. “Though the developments in Europe and US increase risks for the economy, easing global commodity prices is big plus. RBI may get room to tweak its policy stance and could take a pause,” said Brinda Jagirdar, head of economic research and general manager of State Bank of India. RBI has increased the policy rates 11 times in the last 16 months to combat inflation, at the cost of growth moderation. In its latest policy review in July, the central bank raised key rates by as much as 50 basis points. RBI Governor D Subbarao has also reiterated that the central bank’s monetary tightening stance will continue till inflation stays high. According to economists, however, softening of global commodity prices will ease the pressure on domestic inflation. “Our policy call that RBI will increase the repo rate by a further 25-50 basis points by March 2012 could be put to test in the event that commodity prices globally come down sharply and risk aversion is significant,” said Indranil Pan, chief economist, Kotal Mahindra Bank. While YES Bank continues to keep its 25-basis point policy rate rise forecast in September, its chief economist, Shubhada Rao, said rate rise action would depend on economic indicators like gross domestic product, industrial output growth and global commodity prices. “Volatility in markets will not be an adequate measure for RBI to change its monetary stance,” she said.
BS
FM to meet regulators to evaluate impact
Centre may have limited options to tackle lower trade and investment inflows following US debt rating downgrade and euro zone crisis. But, finance minister Pranab Mukherjee will shortly meet financial markets regulators to “evaluate the impact of international challenges” and devise medium term strategy to protect “offensive and defensive” Indian interests in foreign assets. Revaluing foreign assets following dollar and gold appreciation, continuation in dollar denominated investments and stock-taking on proposed equity sale of PSU shares in a volatile market are some of the issues that may figure prominently at the meeting between markets regulators and finance minister. RBI Governor D Subbarao, Securities and Exchange Board of India (Sebi) Chairman UK Sinha and Insurance regulator Irda chairman J Harinarayan are part of this high-level coordination committee on financial markets. This committee is now part of financial stability and development council chaired by Mukherjee.
Financial Chronicle
US sneezes, India catches a cold
A research note on Asian markets from Royal Bank of Scotland reads: "In India, the RBI Deputy Governor (Subir) Gokarn said over the weekend that a fall in commodity prices is likely to impact the pace of rate hikes and that the central bank remains concerned about managing liquidity in the economy, signaling a possible pause in the next policy meeting in September." That's respite number one.......
US crisis may hit but also benefit India, says FICCI
New Delhi : India will be impacted in the short term because of the US sovereign debt crisis, but it will also benefit from the economic turmoil as softening crude prices will bring down inflation, prompting the Reserve Bank of India (RBI) not to hike rates, a leading industry lobby said Monday. 'One positive fallout of the rating downgrade, we feel, could be the Indian market perception that a possible decline in crude prices may signal a pause in RBI rate hikes, buoying investor sentiments,' the Federation of Indian Chambers of Commerce and Industry (FICCI) said in a statement. 'Additionally, the spreads between a US sovereign and Indian sovereign paper of comparable duration may decline, thus acting as an enabler to foreign institutional investors inflows into the country. This may have a sobering impact on the current account deficit, even though this may not be exactly desirable.' Global stock markets continued to fall Monday after top credit rating agency Standard and Poor's downgraded the US sovereign debt rating last Friday and cautioned of a further downgrade if the fiscal position of the country did not improve. As far as the impact of the crisis on the Indian economy, FICCI said some short-term impact would be seen in terms of market uncertainties. 'An uncertain global environment could, however, depress India's exposure to global markets (exports of goods and services, more than a quarter of India's GDP) and knock off percentage points from India's GDP growth,' the industry lobby said while outlining some of the risks.
Yahoo News
RBI may intervene to stem rupee volatility
NEW DELHI: Reserve Bank of India Governor D Subbarao may have shied away from intervening in the forex market for a majority of his term but, if needed, the central bank is ready to step in to avoid any volatility in the domestic market following the developments in the US and Europe. "In the immediate future, the Reserve Bank's priority is to ensure that adequate rupee and forex liquidity are maintained in domestic markets to prevent excessive volatility in interest rates and exchange rates," RBI said in a statement on Monday. The statement also sought to comfort the markets by saying that there was no strain on short-term interest rates and liquid reserves to meet the demand for forex even in stress scenarios. Sources indicated that the decision to be on full alert for a possible intervention was taken on Friday in the wake of the global markets' collapse. The RBI confirmed this. But developments on Monday did not warrant any action as the rupee closed at 44.97 to a dollar, compared to Friday's close of 44.73. In intra-day trade, it had declined to a low of 45.07, Reuters data showed. But trends in the futures market indicate that the rupee will decline to 45.11, while those in the non-deliverable forwards market put the value of the rupee against dollar at 45.25. Though the depreciation may not appear weak, a sharp movement either ways is something that RBI always wants to avoid as it destabilizes business. Besides, a steep depreciation would also stoke further inflationary pressures as imports would get more expensive. RBI typically intervenes by buying or selling dollars through banks, something that it has avoided for over two years now. During the 2008 financial crisis, its intervention had resulted in sucking out rupees from the system as the central bank pumped in dollar, and put further pressure on the funds available in the system. This time, however, liquidity is not so tight and an intervention, from trends available so far, is unlikely to put much pressure, sources said. "In anticipation of financial market turbulence related to the US debt ceiling impasse, the Reserve Bank made an assessment of the ability of the forex reserve portfolio to meet potential forex requirements in the event of significant capital outflows. This exercise indicated that there were sufficient liquid reserves to meet the demand for forex even in stress scenarios," RBI said in its statement on Monday. The idea was to calm market sentiments hit by the downgrade of US sovereign rating from AAA to AA+. "Developments relating to the US economy last week have significantly increased uncertainty about its prevailing condition... As Friday's market behaviour demonstrated, India is not insulated from such developments. It may, however, be noted that in the worst phase of the recent global financial crisis, the economy grew by 6.8%, suggesting high resilience emerging from domestic factors. While downside risks to growth may have increased in the wake of global developments, they are likely to have limited impact," it said. At the same time, it said that RBI would take all possible measures to "respond quickly and appropriately to the evolving situation".
TOI
RBI: Will ensure liquidity
“There has been substantial global risk aversion after the US downgrade. RBI, in on Monday’s statement, said it would respond if global uncertainty worsens, which means RBI is willing to change its stance. Still, it is too early to take a big call....
India is not insulated from global developments: RBI
...“As Friday's market behaviour demonstrated, India is not insulated from such developments. It may, however, be noted that in the worst phase of the recent global financial crisis, the economy grew by 6.8 per cent, suggesting high resilience emerging from domestic factors,” said the RBI.....
Continuously assessing impact of US crisis: RBI
"The RBI is closely monitoring all key indicators and will continuously assess the impact of global developments on rupee and forex liquidity and macro-economic stability. We will respond quickly and appropriately to the evolving situation," the central bank said....
Read..............
Forex Achievements has fabricated registration certificate to fool people warns RBI
The RBI has warned the public against placing money in any such company and advised investors to only deposit money in companies which are legally registered with the RBI and entitled to hold deposits. One should recheck on the RBI website for genuine certificates before falling into any attractive schemes, whose bitter truth is revealed in just a few months after its launch. Investors continue to learn their lessons the hard way!
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