Greece's fiscal mess, all thanks to Goldman Sachs: YV Reddy

Nobel laureate Joseph Stiglitz once said that if America had a central banker like YV Reddy it wouldn’t have been in such a mess. High praise has been showered on this former RBI Governor for the manner in which he regulated banks, raised rates and reserve requirements, imposed provisions and risk weights to shield the economy and the banking system from over heated asset markets. The tough task was to do it against wide spread opposition…….

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Bank asked to pay compensation for bond lost in transit

CHENNAI: For Dr Felix Ryan and his wife Jaya, pledging their RBI bond for a bank loan turned out to be more trouble than they expected. Even after repaying the loan amount with interest, the couple have not got the bond back from the bank. Concluding that this amounted to deficiency in service, the State Consumer Disputes Redressal Commission (SCDRC) has ordered that they be given compensation of Rs 35,000 and the bond document be returned to them. A bench of Justice M Thanikachalam, president, SCDRC, judicial member J Jayaram and member Vasugi Ramanan passed orders in the matter. According to his complaint, Dr Felix Ryan had pledged an RBI tax-free relief bond for Rs 1 lakh with HBL Global Private Limited, the marketing division of HDFC Bank Limited, and obtained a loan of Rs 80,000. Though he repaid the entire loan amount with interest on June 4, 2005 and requested the bank authorities to return the bond which was pledged, there was no response from them. Since he had repaid the loan, the bank had no right to hold back the pledged bond, he said. After a legal notice to the bank failed to yield results, the couple filed a complaint before the district consumer forum. In March, 2009, the forum ordered the bank to return the bond along with interest in addition to a compensation of Rs 30,000 and a penalty of Rs 5,000. The bank approached the state forum in an appeal against this order. For their part, representatives of the bank said they had returned the bond through a private courier service on December 23, 2005. They resisted the case saying the complaint was not maintainable as the courier service was not made a party in the case.

However, the bench observed that it was not the responsibility of the complainants to implead the courier service. Since it was the contention of the bank that they had sent the documents through the service, it was for them to proceed against the company, which they failed to do. Except for a number mentioned in the written version, no documents were filed to indicate that Ryan had received the delivery.

TOI

Former Economic Adviser passed away............

Dr.D.K.Bhatia, who retired as Adviser passed away on October 13, 2011.  He was 77.  On his last day he had gone to B K C in connection with a journal he was editing and sustained a massive heart attack. He is survived by his wife and three children. He had a wide circle of friends both in and outside RBI. Shockingly enough for me, Bhatia rang me up on 12th and we had decided to meet on Monday, the 17^th..................

May his soul rest in peace.

As reported by P.P.Ramachandran (via e-mail)

                                               

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A PhD in Economics from the Pennsylvania State University (USA) Dr. D.K. Bhatia had worked in various academic/teaching capacities in the US before returning to India. In India he served in various senior positions in the Reserve Bank of India (RBI) from which institution he retired as Economic Adviser. He also served as International Monetary Fund’s Advisor to Bank Indonesia (Central Bank), Jakarta during 1981-83. In his long career span he has supervised and handled several projects and surveys related to the Rural-Economic Issues in India. He had been a supervising member of the Annual Follow-up Rural Credit Surveys and All-India Rural Credit Survey, 1961-62 conducted by RBI during the years from (1958 to 1965) designed to understand and investigate the dynamics of rural credit flow in general, and especially in the regions of Gujarat (Bharuch, 1958), Kanpur (1959), Bihar Munger (1960), Western Uttar Pradesh (1961-1963). Dr. Bhatia was also involved in the conduct of an Irrigation System Study in the wake of then pressing food grains crisis; this survey focused on tube well irrigation in Deoria (UP) in 1959-60. Dr. Bhatia had a range of training experiences. He was deputed as a Member of Directing staff at XVI SEANZA (South East Asia, New Zealand and Australia) Central Banking course held in Dhaka (Bangladesh) from October-December, 1986. He served as a Group Leader in International Banking Summer School in September 1989 organised jointly by International Banking Council, and Indian Institute of Bankers. He served as a Convenor for the Sub-Group on Private Sector (Household) Saving for the 8th Five Year Plan, under the Chairmanship of Dr. C. Rangarajan who was then the Deputy Governor and later became Governor, Reserve Bank of India. In this experience in the Capital Market he served as RBI nominee on the Governing Board of the Bombay Stock Exchange (1989-1994). 

 

Border vigil intensified for fake bank notes

Jaipur: The Border Security Force has beefed up security along the international border in Rajasthan after receiving reports from intelligence agencies that there were likely to be large-scale attempts to smuggle counterfeit currency into the country through Rajasthan, Punjab and Jammu and Kashmir. The governor of the Reserve Bank of India (RBI), D. Subbarao, chairing a meeting of the bank's deputy governors and newly constituted board, noted that the problem of counterfeit currency had shown a marked increase. The central bank, the Finance Ministry and the Home Ministry were in the process of drawing up a comprehensive plan to stop the racket, he said. "The Indian laws will have to be amended to punish such persons who are involved in circulating counterfeit currency. The present law has many loopholes and it is difficult to prove that a person was involved in circulating counterfeit currency. The role of police and the law will have to be redefined to curb the circulation of the counterfeit notes." The RBI became vigilant after the National Investigation Agency alerted that fake currency notes were being printed at a government-owned printing press across the border.

http://gulfnews.com/news/world/india/border-vigil-intensified-for-fake-bank-notes-1.891876

PM meets top advisors to discuss current economic situation

Amid concerns over high inflation and dipping growth, Prime Minister Manmohan Singh today held informal confabulations with top economic advisors and officials to discuss the present economic situation. The meeting was attended by Reserve Bank Governor D Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia and PMEAC Chairman C Rangarajan, besides some senior officials. While there was no official word on what transpired at the meeting, sources said they informally deliberated on the current Indian and global economic scenarios. The informal meeting comes days ahead of the second quarter monetary policy review of the Reserve Bank of India (RBI) on October 25. The central bank has already raised interest rates 12 times in the last 18 months to tame rising prices. There are indications that RBI may continue with its current hard monetary stance in view of both headline and food inflation remaining close to the double-digit mark, much above the comfort level for the central bank.  "The meeting (with PM) is on the current economic situation. We will have a discussion on growth and inflation, and consider the policy options in this regard," Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan had said yesterday. Headline inflation stood at at 9.72% in September as food products, fuel and manufactured goods grew costlier, a development that is likely to prompt RBI to continue with its policy of monetary tightening.  Indian economy grew by 7.7% in the first quarter, the slowest growth in 18 months, against 8.8% in the same period of the previous fiscal. Industrial output also remained subdued for the second consecutive month in August, registering a growth of just 4.1%.

Moneycontrol

G20 Meeting

Financial Inclusion and Banks – Issues and Perspectives

Address by Dr. K.C. Chakrabarty, Deputy Governor, Reserve Bank of India at the FICCI – UNDP Seminar on “Financial Inclusion: Partnership between Banks, MFIs and Communities” at New Delhi on October 14 2011

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Inflation at 9.72%; rate hike on cards

With headline inflation perilously close to double digits, few expect the RBI to take a pause from its tightening cycle on October 25......

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Inflation expectations and RBI’s response

The central bank would have to signal that it is dedicated to a low and stable inflation environment in the economy. That would imply surprising the market with higher than expected rate hikes and build its credibility as an inflation hawk. RBI should follow through on its action, even if the economy faces short-term pain and slowdown on account of rising unemployment or falling output

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FIIs have not been running for the exit

...foreign institutional investors have not pulled out big money from the Indian market in this period is also corroborated by another set of data on international investments put out by the RBI....

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BofA Merill Lynch says RBI likely to halt rate hike - Business Today

..."There is growing consensus that sluggishness will persist longer than expected earlier. Concerns over the sovereign debt problem in the Euro area have added further uncertainty to the prospects of recovery," the RBI said in a statement.....

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