RBI’s Dec 16 policy review to take note of forex volatility

Bhubaneswar: The Reserve Bank of India (RBI) is hopeful that there would be some improvement in the foreign exchange volatility in coming days. “In view of the European Union Summit we are expecting that there would be some corrections in the value of rupee,” said RBI Deputy Governor Harun Rashid Khan. He said that the outcome of the summit would bring some comfort to the world economy.  “RBI policy review on December 16 would take note of the foreign exchange volatility besides the problem of inflation and the NPAs of banks,” Khan said on the sidelines of a regional seminar on securities market, organised by Bhubaneswar Stock Exchange, on Saturday. The deputy governor said that the euro zone crisis has its impact on the Indian economy. India used to get funds from European banks, he said and added, “Now that the European banks are in trouble, the funds flow to the country would be dried up.” The country's commerce is going to be affected as India's export to European countries is about 20 to 30% of its total exports.  There would flight of capital as the Foreign Financial Institutions (FIIs) would withdraw from the stock market. Commodity prices is going to be affected as the country is importing about 70 to 80% of its fuel requirements. The nation also is going to face the problem of contamination as India's global integration index has gone up over the years.  The seminar was addressed by Sebi executive director J Ranganayakulu, CSE MD & CEO Madhab Reddy, Nalco company secretary KN Ravindra, Bhubaneswar Stock Exchange chairman Vivek Pattanayak, and CEO Debraj Biswal. 

FE

As growth stalls, RBI will start cutting rates in early 2012

........ While the 6.9 percent figure was largely on expected lines given the signs of slowdown, all eyes are on Reserve Bank Governor Duvvuri Subbarao and Mint Road mandarins once again. The expectations are that, with investment slowing down, an unwinding of the interest rate cycle has now become an imperative. The Reserve Bank of India is to unveil its Mid-quarter Review of Monetary Policy on 16 December.........

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Noteworthy: Rs 500 minting up 17 fold in 10 yrs

There has been a fundamental change in what is sitting in an Indian's wallet: it's got more peach-pink and moss-green than ever before. The appetite for the big bills - Rs 1,000 and Rs 500 - is growing furiously. The figures tell the story. The number of Rs 500 notes minted across the country has grown almost 17 fold in the last decade, from 213 million pieces in 2000-2001 to 3,543 million pieces in 2009-10. The number of Rs 1,000 notes minted annually has grown nearly nine times, from 115 million in 2000-01 to 1,008 million in 2009-10. Today, there are fewer notes of Rs 20 and Rs 50, whether individually or collectively, than the total number of Rs 500 notes out there. These notes have quietly disappeared from automated teller machines with the value of every cash withdrawal rising. "Growth in the value of banknotes outpaced that of volume, reflecting the continuing compositional shift towards higher denomination banknotes, particularly 1,000 and 500," the RBI said in its annual report. RTI activist Manoranjan Roy, who sought information on the number of notes printed by the RBI, found that the big denomination notes are in huge demand. Economist Ajit Ranade tried to explain the demand pointing at the near double-digit inflation for the last two years. "The same lifestyle today requires 10-20% more money." he said. K Gayathri from the Institute of Social and Economic Change, Bangalore, added that the growing economy had put more money in people's hands, especially those from the manufacturing and service sectors. Consequently, spending too had gone up. Companies that run ATMs too say they are stocking more money in the machine trays as the "average ticket size" (simply put, the one time withdrawal) has ballooned from Rs 5,000 to Rs 7,000 approximately in the last three years. "Cost of living has gone up, the rise in our aspirations and desires push up demand for cash," said Mani Mamallan, chief marketing officer of C-H Technologies that manages ATMs for the State Bank of India. Currency in circulation is the largest component of reserve money and is primarily determined by demand. "There was acceleration in currency in circulation in 2010-11 due to increased demand due to economic growth, high inflation and low yield on deposits," said RBI officials. 

TOI

Obituary

Shri.Babul Sukumar passed away on 29-11-2011. He was Deputy General Manager in Central Pension Cell in B K C, Mumbai. He was born on 12-9-1953 and had served in several Offices of the Bank and in several centres. He was a truly genial and helpful Officer - especially at the time of getting the P J Gold Coins he was very helpful. He leaves behind hundreds of good friends in the Bank.

Shri.M.O.Jacob passed away in Trivandrum on December 5,2011. He was 85 years old. He retired on 31-12-1985. He held the post of the Secretary of the R B I Employees Association, Trivandrum for several decades.

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

At CMs’ meet, Munda flays delay in setting up of State Cooperative Bank

During a conference of the Union Finance Minister and Chief Ministers of eastern States in Kolkata on Saturday, Jharkhand Chief Minister Arjun Munda expressed concerns over the delay in establishing a State Cooperative Bank in the last 11 years. He complained that the two nodal agencies, RBI and NABARD, have not taken any step in this direction. Munda made two specific demands - the State Bank of India and Bank Of India must open a branch in Ranchi and these must be headed by a Chief General Manager and General Manager so that they can effectively coordinate with banks in Jharkhand for better financial inclusion. Munda said that due to absence of a State Cooperative Bank around 39 lakh farmers have been facing problems obtaining easy loans. “Only nine lakh farmers have a credit card while the rest are forced to approach moneylenders,” he said.  Munda requested Finance Minister Pranab Mukherjee to instruct public sector banks to provide loans to farmers assuring all support from the State Government. Stating that only 9,562 non-farmers in Jharkhand have been given loans, he said urgent steps must be taken by the Central Government in this regard.  Criticising the functioning of public sector banks in Jharkhand, Munda said that the banks are supposed to reserve at least one per cent of the total amount of loan to be given to poor under a differential rate of interest whereas it is merely 0.44 percent. He said that the percentage of loans given to weaker sections of society and the SC and ST has fallen from 8.7 per cent to 5.25 per cent during this fiscal year. He said most of the villages of Jharkhand having a minimum population of 2,000 should have been provided with banking facility under the financial inclusion scheme. “There are 1,541 such villages against which only 904 villages have been covered under the banking correspondence scheme. Even these are not working properly,” Munda said. 

The Pioneer

Bring banking services under Right to Service Act: Modi

PATNA: Bihar deputy chief minister Sushil Kumar Modi on Saturday urged the RBI to bring the banking service procedure under the provision of Right to Services Act so as to maintain transparency in disbursal of loans. Addressing a meeting of chief ministers of eastern states convened by Union finance minister in Kolkata, Modi said the banks keep loan applications pending for long and then reject them. The banks do not maintain a register about approval and non-approval of loans, he said and suggested computerization of loan application processing to reflect the delays on the part of the banks in disposing of the applications. According to Modi, the banks provided only 53% of the 15 lakh Kisan Credit Cards which they were asked by the central government to provide to farmers in Bihar in 2010-11. In the current financial year too, the rate of disbursal of KCCs is not satisfactory, Modi said and added the farmers should be provided ATM cards along with KCCs and the loan amount through the KCC should be increased from Rs35,000 to Rs50,000. The Centre has so far made available only Rs265.06 crore out of Rs595.64 crore required for revival of primary agriculture credit societies and cooperative institutions in Bihar, Modi said and complained to the Union finance minister about slow pace of computerization of district cooperative banks by the Nabard. Modi also suggested creation of Education Credit Guarantee Fund for providing education loans.

TOI

Pranab pleads for rural banks in east

... Earlier this week, the RBI Governor D. Subbarao at a meeting with Bengal chief minister Mamata Banerjee and finance minister Amit Mitra had also urged the state government to recapitalise the three RRBs...........

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ASSOCHAM emphasises need for overall review of definition of ‘priority sector’ lending

...... In a communication to the Nair Committee constituted by The Reserve Bank of India (RBI), the chamber said that there is a high degree of necessity to include sectors like infrastructure, logistics, health and services in the definition of ‘priority sector.’.........

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RBI wants stay on CIC order on Panipat resident's RTI plea

PANIPAT: Reluctant to reveal the names of top 100 bank loan defaulter businessmen of the country, the Reserve Bank of India (RBI) has filed a petition in the Delhi High Court, seeking a stay on the orders passed by the Central Information Commission (CIC). On November 15, CIC, while deciding a petition filed by local RTI activist P P Kapoor, had directed the RBI to provide him the names of defaulters by December 10 and upload these on the bank's website by December 31. In the petition, Kapoor had challenged the denial of information by the bank. Kapoor had sought the details from the bank in August last year, but was denied on the grounds that RBI held these in 'judiciary capacity'. However, the CIC directed the bank to post on its website complete information on all such industrialists as part of suo-motu disclosure mandated under Section 4 of the RTI Act before December 31 and asked it to update it every year. The RBI had objected to making the information public, saying "it is held by it in fiduciary capacity and disclosing it will adversely affect economic interest of the state". Information commissioner Shailesh Gandhi agreed that information was 'fiduciary in nature', but said that such exemption did not stand when there was larger public interest in the disclosure. After his RTI query was dismissed by the RBI, Kapoor filed the petition with the Central Information Commission, which on October 12 summoned the public information officer of the RBI to appear before it on November 8 with all relevant documents. The commission held a hearing on the said date, but the verdict was withheld. Kapoor said the information was sought by him in the larger public interest as revealing the names of the defaulters could force them to return the money of the public sector banks. 

TOI

How to get your Banking Problems Solved by Ombudsman

....Banking Ombudsmen participate in various awareness campaigns under Financial Inclusion and Literacy Programme and visit a number of villages in various Districts under respective territorial jurisdiction of the BOs. Participation in various important fairs and festivals in the State, face to face interaction with members of public at various places at block level, participating in seminars organised by Government of India in association with RBI are some of the other initiatives undertaken by the Officers of BOs.....

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Rs 2,150,000,000,000: that’s our gold import bill this year

............ In fact, the doughty Indian is stocking up on gold for the same reason the Reserve Bank of India (RBI) did in November 2009, when it bought 200 tonnes from the IMF – to preserve the value of wealth. With the future of the euro and the dollar uncertain, it made sense for the RBI to diversify. In its forex kitty, the best returns have come from gold..............

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Toss between safety & return

............ Interest rates seem to have peaked and going ahead, yields should stabilise. The Reserve Bank of India is not expected to carry out further rate hikes, as it can adversely affect growth. Therefore, if you’re looking to diversify your portfolio by adding a dollop of debt investments, ultra short-term income funds could be a wise choice.

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Banks lure gold buyers with plastic

.......Banks seem to be cashing in on the craze for gold by promoting credit and debit cards with such offers such as iPads. The strategy is paying off as buyers are happy swiping plastic cards at jewellery outlets...........

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Islamic Banking: Developed by Indians, flourishing in other countries

......... "The non-availability of an interest-free banking option has distanced many Muslims from banking products and services. The Reserve Bank of India (RBI) data report for March 2010 indicates that banking participation in Muslim- concentrated districts is below the national average. They lack in banking access, infrastructure availability and low credit-deposit (CD) ratio",..........

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