RBI Central Board to meet in Jaipur

Reserve Bank Governor D. Subbarao will preside over the meeting of the Central Board of Directors of the bank in the Pink City on October 13. The meeting of the Central Board is taking place in the city after a gap of seven years. This will be the first meeting after the recent reconstitution of the board.

Briefing newspersons on the meeting, which will coincide with the launch of an exhibition on central banking titled ‘Newsibition', Reserve Bank of India Regional Director B.P. Kanungo said the RBI Governor would meet State Chief Minister Ashok Gehlot. He would also hold discussions with the members of the Rajasthan Chamber of Commerce and Industry. The development pace of Rajasthan and its banking related issues like credit flow, priority sector lending, loans to industry and to the education sector are likely to be discussed during the meeting between Dr. Subbarao and Mr. Gehlot. The RBI Regional Office also would present its report on the State's performance on the development front, Mr. Kanungo noted. Most of the 17 members of the Central Board of RBI, who include non-official directors such as scientist Anil Kakodkar, industrialists Azim Premji and Kumar Mangalam Birla, and social worker Ela Ramesh Bhatt, are likely to attend the meeting.

The exhibition, which will be inaugurated by Dr. Subbarao on October 12 evening at the Sudarshan Art Gallery of Jawahar Kala Kendra, will be on till October 30. Mr. Kanungo said the exhibition, “Mint Road Milestones”, will depict the milestones in the 75-year-old journey of the RBI. The material for the exhibition has been drawn from RBI archives, news paper reports and a vast collection of photographs. Mr. Kanungo said the exhibition, meant to enlighten and educate people, especially the youth, would present events from 1750 to the present times providing a broad overview of the developments in the nation's economic landscape.

HBL

Single window clearance to promote affordable housing mooted

New Delhi : Affordable housing and the steps needed to grow this market came in for detailed discussions at a roundtable organised in the Capital on Friday. The conference recommended single window clearance and special incentives to builders to promote affordable housing in the country. National Housing Bank and the Centre for Advanced Financial Research and Learning (CAFRAL) jointly organised the roundtable on ‘housing finance'. The need for real estate regulation to bring about greater transparency and credibility in the industry and as a measure to protect consumer interest was also emphasised in the meeting. Ms Usha Thorat, Director, CAFRAL, later told newspersons that CAFRAL, which has been promoted by RBI, would in the coming days undertake research in the area of ‘housing finance'.

HBL

‘Home loan cos must be allowed to levy prepayment charges’

...Banks have sought time to respond to the RBI proposal prohibiting recovery of pre-payment charges on floating rate loans....

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Renminbi must be convertible to be global currency: RBI

China's Renminbi should be freely convertible and its rate be market determined if it aspires to become world's reserve currency, replacing the US dollar, Reserve Bank Governor D Subbarao said today. He said that to be a global reserve currency it should be "freely convertible both of current and capital account ... its exchange rate must be determined by market forces of supply and demand." Subbarao said this during a discussion here on 'Will the Renminbi eclipse the dollar?' The aspiring global reserve currency should account for significant portion of global trade, he said. "Its (Chinese) financial markets must be open, deep and robust...and the policies of the country must inspire trust and confidence," Subbarao said while giving details of qualities desirable in any currency that wishes to replace US dollar. Moreover, the RBI chief further said that the issuing country should "accept the exceptional responsibility of maintaining sufficient liquidity in the country". Pointing out that India-China comparison has become a national obsession, Subbarao said, "for us in India, China means many things-- an object of envy, a challenge and then inspiration." Recalling the China's rapid economic progress, Subbarao said the country has demonstrated what is possible to do. "To that extent China is an inspiration. The task for us in India is to match up to that record, or even surpass it, but by doing it the Indian way," he said.

Moneycontrol

Financial inclusion: Innovative policy needed

....Mr Gokhale in his presentation on ‘Trends in Banking System' deliberated on the growth of banking industry owing to entry of corporates, despite the RBI making the guidelines stringent. .....

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Plastic money: Sign of modernising economy

........“Transition from the existing cash-based retail payments to cashless payments can occur by promoting payment through debit cards. This will require rationalising costs associated with the use of debit cards, making them more secure and conducting fo­cused financial education programmes for increasing public awareness. This transition would lead to saving currency management costs and generate valuable information on spending behaviour of the masses.”...........

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Is RBI’s Subbarao among world’s worst central bankers?

In a recent list of the world’s top central bankers by Global Finance magazine, Reserve Bank of India (RBI) Governor D Subbarao figures in the bottom 10. Is India’s chief inflation fighter all that bad, or is Global Finance off the mark? The magazine handed out grades from “A” to “F” to 36 of the world’s most influential central bankers, based on criteria like their ability to manage inflation and interest rates, encourage growth and maintain a stable currency. Subbarao got a “B-”, although his grade improved from last year’s “C”. While that was still better than Ben Bernanke, the US Federal Reserve chairman, who got a “C” (not surprising, though steady from last year), Subbarao was rated lower than at least 2o other bankers. China’s central banker earned a “B” (an improvement from “C” last year), while the European Central Bank’s outgoing president, Jean-Claude Trichet, got a “B-”, down from “A” last year. Given the state Europe is in, the latter is not surprising, but whether China’s central bank deserves a better rating is questionable since inflation is soaring and the yuan is sliding. So which central bankers got an A then? The answer: Australia, Lebanon, Israel, Malaysia, The Philippines and Taiwan.

Let’s get this straight: These six nations have the world’s best central bankers? It sounds ludicrious, to say the least.

The central banks of nations such as Lebanon and Israel can hardly be considered central to the world economy. Their performance on inflation or other parameters is possibly the result of local factors unrelated to what the central banker did. In fact, more often than not, because of their links to larger economies, these central bankers usually follow the trend set by their counterparts in larger economies. In the process, if their economies stay buoyant, they can’t always take credit for that, since they don’t take truly independent monetary policy decisions. Indeed, in a world of heavyweight international central bankers, none of six “A” rated bankers even matter. In fact, most of us wouldn’t even know the names of the central bankers from these countries. On the other hand, central bankers of countries such as the US, the eurozone and China can move global financial markets with just one single comment. Their actions don’t follow other nations; instead, they define policy for other countries. Since the global credit crisis of 2008, most of them have been grappling with the problems of rising inflation and slowing economic growth– without any solution in sight. Their inability to boost growth even with steep cuts in interest rates has caused their ratings to fall below other smaller-country bankers such as the Australia and Taiwan.

In India, the RBI Governor has been relentlessly trying to contain inflation with 12 interest rate hikes since March 2010. Yet headline inflation remains stubbornly above 9 percent, even as economic growth has slowed. He also remains the lone interest rate hawk at a time when most of his Asian peers are rapidly turning into doves. The fact that inflation has not been stamped out is primarily because of supply side issues, global commodity prices and the government’s indisciplined spending. Put another way, Subbarao’s low rating really belongs to Pranab Mukherjee – whose budget is out of control. In his defence, Subbarao has consistently kept local economic conditions in mind while determining monetary policy. It’s hard to see how his performance could be rated worse than the central bankers of Lebanon, Thailand or even Malaysia. Given the list of central bankers who got an “A”, Subbarao deserves a better rating than “B-”.

Firstpost

RBI planning to change design of currency notes

THANE: The Reserve Bank is considering to make changes in the design of currency notes, the central bank informed in reply to a RTI query of Bharatiya Banking Consumers Forum here. BBCF headed by Om Prakash Sharma had sought the information whether the government/RBI was going to change the design of the currency notes to which the RBI replied that it was under its active consideration. Sharma said that the RBI effects changes in the design of currency notes periodically and he sought a reply to find out the status of change in design this time. He said that he raised this issue against the background of many instances of counterfeiting of notes.

ET

RBI has balanced position on rates before Oct 25 meet: BoB

.... “We just have to wait and see what the RBI’s call is. Right now, I think it’s become a very balanced position,”..........

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Get back at the likes of Moody's

.....The Reserve Bank of India (RBI) has, till date, not allowed a single bank collapse to cause systemic economic damage through deft handling of the New Bank of India / Global Trust Bank mergers, under the stewardship of Governors like Dr. C. Rangarajan and Dr. Y. V. Reddy..........

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“Role of valuers vital to stabilise economy”

The role of valuers had become important in this age of globalisation and liberalisation. They had been playing a major role in stabilising the economy besides generating more revenues for the government, said P.K. Thiagarajan, national president, Institution of Valuers. He also recalled that the Reserve Bank of India (RBI) had made it mandatory for all banks to value their assets and securities every three years, thereby increasing the work of valuers. Addressing the inaugural session of a two-day national-level seminar on ‘Perspective view on asset valuation' organised here from Friday by the Madurai chapter of Institution of Valuers, he recalled the inception of the institution in 1968. It was registered under the Societies Act. It now had 22,500 members in 44 branches across the country. M. Krishnasamy, Commissioner-II, Income Tax Department, Madurai, said that valuation of an asset was an important milestone in the techno-legal process of the government.  Mr. Krishnasamy released the seminar book.

HBL

Banking on yesterday's standard

My recollection is of Aldington retorting when the Reserve Bank demanded the names of Indian account holders, “How do I know whether Mr Patel is Indian, Pakistani, British, Kenyan or Ugandan?”........

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London Lord Mayor Coming To Do Business With Mumbai

London's Lord Mayor Alderman Michael Bear will arrive here on a two-day visit Tuesday at head of a high-level business delegation offering British expertise in infrastructure, financial and other sectors, an official said Friday. Bear will meet Reserve Bank of India (RBI) deputy governor Subir Gokarn, Securities and Exchange Board of India (SEBI) chairman U.K. Sinha, Infrastructure Development Finance Co Ltd (IDFC) CEO Rajiv Lall, and Mumbai Metropolitan Region Development Authority (MMRDA) Metropolitan Commissioner Rahul Asthana, the British deputy high commission official said. The lord mayor, whose principal role is ambassador for all Britain-based financial and professional services, will address a Sea Trade Summit Wednesday. "India is establishing itself as a global economic superpower. It is well documented that it is aiming to spend $1 trillion on infrastructure development by 2017 to sustain the outstanding levels of economic growth seen over the past decade," Bear noted ahead of his visit.  Britain wants to be a key business partner with India to achieve this goal, he added.  The visit is the outcome of the announcements made by Prime Minister Manmohan Singh and his British counterpart David Cameron on the latter's visit to India last year to target doubling the bilateral trade to 24 billion pounds of $38.4 billion by 2015. A civil engineer and Master in Business Administration (MBA), Bear has worked on community development and infrastructure and financial projects around the world in the past 36 years.

http://www.daijiworld.com/news/news_disp.asp?n_id=118322

Concerned Mukherjee in touch with RBI officials to tackle inflation

New Delhi : Emphasising that inflation is a matter of grave concern, Union Finance Minister Pranab Mukherjee on Friday said he was keeping in touch with Reserve Bank of India officials so that they can find an adequate solution to curb it. "Definitely, it is a matter of grave concern, and we shall have to see that how it can be brought at a moderate level. I am constantly in touch with RBI and other experts in this area," Mukherjee told the media here. India's food price index rose 9.41 percent and the fuel price index climbed 14.69 percent in the year to September 24, government data on Friday showed. In the previous week, the fuel price index had risen by the same margin, while annual food inflation had stood at 9.13 percent. The primary articles index was up 10.84 percent, compared with an annual rise of 11.43 percent a week earlier. The RBI has raised interest rates a dozen times in the past 18 months, but headline inflation remains at more than twice the bank's comfort level, confounding expectations that it was coming to the end of its tightening cycle. The RBI lifted its policy lending rate, the repo rate, by 25 basis points to 8.25 percent last month, in line with expectations, in a campaign that has done more to slow growth than contain near double-digit inflation. Headline inflation in August accelerated to 9.78 percent, it's highest in more than a year, from 9.22 percent in July.

http://www.newstrackindia.com/newsdetails/244555

Core inflation build-up could prompt more rate hikes

If the monetary policy tightening initiated by the RBI since early last year was aimed at limiting the spread of input cost pressures to the broader economy, the measures seem to have been less than adequate. After a brief hiatus late last year, when the contribution of manufactured products to the overall headline inflation dipped from levels in the earlier months, the trend has reversed sharply. Since the beginning of this year, the contribution of manufactured non-food items to overall inflation has risen perceptibly. This surge in the manufactured non-food inflation, or core inflation, effectively signals the cascading of input cost pressures despite frantic attempts by the central bank to cool down prices by way of the 12 repo rate hikes since March last year. According to RBI data, while inflation remained high throughout, the underlying drivers changed during three distinct phases in the year. The changing inflation dynamics during 2010-11 was evident from changes in the weighted contribution to the overall WPI over three distinct phases. During the April-July 2010 period, the increase in WPI was quite significant and was largely driven by high food prices. In the second phase between August and November 2010, the magnitude of price rise was moderate but primary non-food articles witnessed strong price pressures even as the contribution of non-food manufactured products came down. During the third phase between December 2010 and July 2011, inflationary pressures rebounded strongly, driven largely by resurgent price pressures in the non-food manufactured products group, indicating a generalisation of price pressures. Though the headline inflation tells people the rate at which prices are currently rising, it is said to have a limited role in forming inflation expectations. Core inflation, or the long-term rate, carries considerable significance as a more accurate predictor of the future inflation rate. Rising core inflation thereby spells more bad news for policy makers.

HBL

Why the recent drop in net interest margins

..... As we are going to see some more hardening of interest rates in the next quarter even as growth in advances remains muted, it is time for nationalised banks to consolidate their balance sheet so that the yield on interest-earning assets remains competitive and the NPAs are contained............

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Kill inflation, or inflation theories?

If inflation must really be brought down, there's no substitute for blunt instruments — pulling in liquidity or impounding incomes...........

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