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Wednesday, February 8, 2012
RBI Governor's thought-provoking poser - B S Raghavan
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RBI’s Khan on curbing irresponsible behaviour in financial markets
Harun Khan, a Deputy Governor at the Reserve Bank of India, on February 6 said the unethical behaviour of financial professionals that contributed to the financial crisis has strengthened the case for increased education about social costs of crises. At the Interdisciplinary Seminar on Psychonomics in Mumbai, India, Khan said greed and fear played a big role in the way markets behaved during the recent global financial crisis, which caused severe damage to many economies around the globe. He said part of the reason was that finance and economics was being practised by a set of people who are often conditioned for self-interest and aimed to maximise utility irrespective of the welfare of others. "They were more mechanical in nature, probably due to the fact they specialised in science and technology, and with less or no input from humanities during their course of education," he said. "They had thus no compunction in mis-selling the products to unsophisticated investors and borrowers, thereby sowing seeds of disaster for households and the economy." Khan said this did not, however, absolve bankers of the unethical behaviour that ultimately led deep structural damage to the system and harmful social consequences. He argued there could be a strong case for conditioning of all those who join finance professions by way of values-based education and socially relevant experiences during their college days.
RBI Dy Guv underlines need for value-based education
Mumbai, Feb 7(PTI) The Reserve Bank Deputy Governor H R Khan has said there is a need for inculcating "value-based education" in students before they join the financial world as professionals. "There could be a case for conditioning of all those who join finance professions by way of value based education and socially relevant experiences during their college days," he said while speaking at a seminar at a city college yesterday. Khan said one should not evolve into "insensitive individuals" caring only for "short-term monetary gains" by putting ethics and moral values at stake. Such behaviour, he said, can disrupt financial systems by causing huge social and economic damages. Educational institutions have an important role to play in the process and injecting "individual morality and social ethics" aimed at responsible financial behaviour, he said.
MSN News
RBI direct banks to disclose the list of unclaimed
MUMBAI: The Reserve Bank of India (RBI) has directed banks to disclose the list of unclaimed and inoperative deposit account holders, in a bid to help some claimant trace their deposits. The RBI has told banks to disclose on its website names of the account holders and their address. In case the accounts are not in the name of individuals, RBI has said that the bank should provide the names of individuals authorised to operate the accounts. Over the last few decades, the unclaimed amount spread over 1.03 crore bank accounts, has risen to Rs 1,700 crore with India's largest bank, SBI and its associates topping the list with unclaimed deposits of 279.7 crore The list should provide a 'find' option which would enable public to search the list of accounts by name of the account holder. The list will includes names of depositors who have not operated their account for the last ten years. At the same time RBI has said that banks should not disclose details about the account number, its type and the name of the branch on its website. It may be recalled that finance ministry, in September 2011 had directed PSU banks to disclose names of inoperative account holders on their website in an attempt to bring about great transparency. however bank management resisted this move. Indian Banks' Association had written to the finance ministry that the move could be violation to Banking Regulations Act whereby they are not allowed to disclose the details of customers. In this case RBI has put the onus on banks to ensure that the claimants of the deposits are genuine. Banks are also required to inform public on its website about the process that they will have to follow to make a claim on deposit. RBI has said that banks will be required to complete the process by the end June 2012.
ET
Sovereign debt sustainability a political issue: Subbarao
.... "Sovereign debt sustainability is not like price stability. It is a political issue. How much debt the government raises and how they raise that debt, are a political issue and once central bank starts entering into that area, there is a risk not only that they might fail, but also crossing that line between apolitical central bank and a political function of raising debt,"................
Read...............RBI rate cuts timing dependent on fiscal deficit
RBI rate cuts timing dependent on fiscal deficit
..... "India's elephantine economy will continue to lumber on, but it is unlikely you will see it dancing in 2012,".......
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Third party ATMs on the anvil
Banks will no longer need to own and run their own ATMs with the Reserve Bank of India finally agreeing to banks’ demand to allow companies set up third party ATM networks. Banks will become a member of the third party network so that their customers can access it..............
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RBI warns against fake emails, calls
Stating that gullible investors have fallen prey to frauds by individuals impersonating as RBI employees, the apex bank said it never contacts people through unsolicited phone calls or emails asking for money or any other type of personal information. "Many residents have already become victims and have lost huge sums of money by falling for such fictitious offers. The public is advised to register their complaints with the local law enforcement agencies," the Reserve Bank said in a statement...........
Continue reading......... Finance ministry opposes RBI's view to stretch priority sectors lending list
... The finance ministry is opposing a Reserve Bank of India suggestion to widen the list of sectors eligible for priority sector lending......
Read................ No surprise on GDP, but ...
.....However, with easing of the rupee and global commodity prices remaining stable, it may be expected that the inflation rate will remain within range, so that RBI can work on the assumption of stability. The issue of course is when will RBI intervene to lower rates? It needs to be confident that there will not be a reversal in inflation and will pause till the first quarter of Q1-FY13 before taking such action........
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Spectre of sub 7% growth
....“If the RBI also shows its willingness to moderate interest rates over the coming (fiscal) year, it would be possible to return to the 8 per cent growth path.”.....
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The global risk on-off fireball
.... The recovery in the rupee is not really natural or necessarily sustainable; it is driven by a combination of the RBI’s desperate measures and global risk-on that has boosted portfolio inflows. The RBI should now consider changing tactic and intervene in the foreign exchange market to increase its foreign exchange reserves. This, in turn, will enhance its ability to better manage potential wild rupee swings. The merits of the hands-off exchange rate management notwithstanding, the RBI’s preference for this approach while also struggling with the combination of a large CA deficit and dependence on volatile capital inflows actually worsens to the very currency swings that the RBI reportedly tries to check.......
Read...........I am disappointed with the numbers: C Rangarajan
The Prime Minister’s Economic Advisory Council chairman C Rangarajan expects the final economic growth to be better than the advance estimates for this financial year. In an interview with Dilasha Seth, he says investments would pick up and inflation would fall in the next financial year, providing the Reserve Bank of India (RBI) the room to cut rates. He, however, does not see much scope for reining in the fiscal deficit in the remaining three months of this financial year. Edited excerpts:
Economic growth this financial year is calculated at just 6.9 per cent, very close to that in the crisis period of 2008-09. Do you expect a revision in this when the final numbers are out?
I am disappointed with the numbers. However, I have a feeling that when the numbers are revised, growth would be slightly higher. Agriculture growth would be higher than 2.5 per cent and manufacturing growth would also be better than 3.9 per cent, as the advance estimates are based on the low numbers in the first eight months. I expect GDP (gross domestic product) for 2011-12 to be between seven and 7.2 per cent.
The gross fixed capital formation, a proxy for investment, is estimated to fall to 11.95 per cent this financial year from 14.18 per cent in the previous one. Has RBI’s tight monetary stance killed investments?
The gross fixed capital formation rate has been lower than last year’s. But investments may pick up in the next financial year, as inflation is coming down, giving room to RBI to go for monetary easing. I expect capacity creation in the form of power, roads and infrastructure in the next year, as investments would pick up.
The gross fixed capital formation rate has been lower than last year’s. But investments may pick up in the next financial year, as inflation is coming down, giving room to RBI to go for monetary easing. I expect capacity creation in the form of power, roads and infrastructure in the next year, as investments would pick up.
Nominal GDP is estimated to come down this financial year, from the projected Rs 8.98 lakh crore to Rs 8.91 lakh crore. This would magnify fiscal deficit as a proportion of GDP. How do you see the fiscal deficit in 2011-12?
The deficit is going to be high. The effort should be to keep the excess —over the Budget estimate — as low as possible. I cannot give a number for the deficit. But in three months (January-March), I see some pick-up in revenue, as manufacturing increases. However, the anticipated expenditure may not come down. Overall, I feel there is little scope for controlling the deficit in 2011-12
The deficit is going to be high. The effort should be to keep the excess —over the Budget estimate — as low as possible. I cannot give a number for the deficit. But in three months (January-March), I see some pick-up in revenue, as manufacturing increases. However, the anticipated expenditure may not come down. Overall, I feel there is little scope for controlling the deficit in 2011-12
BS
ICICI Bank: Ready for lift-off?
.... That’s when Chanda Kochhar, managing director and chief executive of ICICI, decided that if the bank were to have any chance of a sunny future it would have to undertake some bold decisions—primarily, moving from a strategy of aggressive growth to no growth at all. “I had to make them (team members and colleagues) see that this was part of a bigger long-term strategy. So, consolidation for a period of two years was really in a way building the foundation for a growth period that we will start thereafter. We decided on no growth so that we can start growing in a much more profitable and sustainable manner,”......
Read......... Dhanlaxmi Bank’s net profit surges 168 per cent
....In an official statement the bank said that PG Jayakumar, executive director, who has been with the bank for 34 years, has been given the charge of managing director and CEO at the board meeting in Mumbai on Monday. The board is seeking approval from the Reserve Bank of India (RBI)..............
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AIBEA demands Dhanalaxmi bank to merge with Public Sector Banks
Hyderabad, Feb 7 : The All India Bank Employees Association (AIBEA) today demanded the Reserve Bank of India (RBI) and the UPA government to take steps immediately to merge Dhanalaxmi Bank with one of the Public Sector Banks in the interest of the customers and employees and officers of the Bank. Informing this to UNI, AIBEA General Secretary C H Venkatachalam said for quite some time, the performance of the 85 years-old Kerala-Bbased private sector Dhanalaxmi Bank has been causing concern, notwithstanding the repeated statements of the Bank management that all was well with the Bank. He said in view of the deteriorating financial condition of the Bank, the Reserve Bank of India had directed a 15 point Monitorable Action Plan (MAP) and RBI has been closely monitoring the affairs of the Bank. Mr Venkatachalam said the main reason for the problems of the Bank was the management's attempt to convert this traditional Bank into an ambitious modern Bank. Many officials were appointed in the Bank with huge remuneration, unrelated to their capacity or the performance of the Bank. The name of the Bank was changed 'from Dhanalakshmi Bank to Dhanlaxmi Bank', he said and added the Corporate office of the Bank was unwarrantedly shifted from Thrissur in Kerala to Mumbai, he charged.
ASSOCHAM Says India’s Gold Imports are Unsustainable
..... The study follows a report by the Reserve Bank of India, which noted that the country’s current account deficit is a cause of concern because of its rigid gold and oil demand..........
Read...... Gold loan companies' shares crash on RBI's public deposit move
Shares of gold loan firms lost heavily on Tuesday after a Reserve Bank of India rap on a major entity, Manappuram Finance, for breaching the rules on raising money from the public........
Read............. Manappuram’s board to weigh move after RBI ban
....The charge against the company was that it was accepting deposits through an unregistered group firm, Manappuram Agro Farms. Company officials had stated that public deposits flowing into the accounts of Manappuram Agro were ‘under the customer’s own volition’ and that ‘it was an error of judgement’.......
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Insurance regulator to get independent advisor
......A finance ministry official said the proposed advisor might be appointed from the next financial year if the premium collection does not improve in the last quarter. “It is one of the possible ideas we are working on. He/she will directly report to the government and assist the regulator with policy decisions,” he added. However, the advisor will remain outside the board. This is because the board already has a government nominee. Also, induction of an additional board member will necessitate an amendment to the Irda Act, 1999. “At least to start with, the advisor will be outside the board, because amending the Act is a cumbersome process,” the official said. “The main idea is to bridge the gap between the ministry and the regulator.”..........
Read........Coop banks sign pact with TCS for CBS
The Gujarat State Cooperative Bank (GSCB) and 10 district central cooperative banks (DCCBs) have signed a service level agreement with Tata Consultancy Services (TCS) for core banking solutions (CBS). The decision, which is a part of the initiative taken by National Bank for Agriculture and Rural Development (Nabard)'s Gujarat region office, would provide efficient banking services to customers of cooperative banks in Gujarat. "This is expected to significantly enhance customer base in both rural and urban segments. Besides enabling faster services, the decision would open up newer possibilities of providing new cost-effective banking products and services to the farming community in particular," a statement issued by Nabard said. The agreement was signed on Tuesday in Ahmedabad. About 705 branches of these banks will be covered under CBS - Phase I. TCS will be the application service provider (ASP). Nabard has set the target of completing the entire project by December 31, 2012.
BS
Home loans may get cheaper with new mortgage guarantee company
The RBI had few years ago come out with separate regulations for mortgage guarantee
.........Home loans may soon come at better terms, with the concept of mortgage guarantee set to take off in the coming weeks. Mortgage guarantees will ensure softening of interest rates as well as more credit availability for retail home loan borrowers, Mr R. V. Verma, National Housing Bank Chairman, has said......
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