RBI’s Subbarao: Overruling Advisers Difficult But Necessary

Sometimes leadership is listening to those around you. Sometimes it’s ignoring what you consider to be bad advice from those same people. In the case of Reserve Bank of India Governor Duvurri Subbarao, he decisively picked the latter last year, consistently bucking the recommendations of his Technical Advisory Committee on monetary policy. The committee is made up of economists, academics and former central bankers............

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Lakshmi Vilas Bank branch in Madhapur

Hyderabad, Feb. 14:  Lakshmi Vilas Bank has opened its new branch in Madhapur here on Tuesday. Lakshmi Vilas Bank now has a network of 38 branches and 76 ATMs spread across 18 districts of the State with a total business of Rs 2,056 crore. The branch was inaugurated by Ms Rosemary Sebastian, Chief General Manager, Reserve Bank of India, Hyderabad in the presence of Mr P R Somasundaram, Managing Director and Chief Executive Officer of Lakshmi Vilas Bank and others, according to a release. 

HBL

RBI to bring more NE people in banking service

Shillong, Feb 14 (PTI) Concerned at the slow progress of financial inclusion in North East, Reserve Bank of India will open offices in all major cities to push banking institutions to cover more people. "We have launched a financial outreach program in North-East in a very big way," RBI General Manager (Meghalaya) P Shyam Sunder told reporters. He said top RBI officials are going to villages personally to supervise developmental activities of banks in the region. Sunder said RBI would open offices in state capitals of Meghalaya, Nagaland, Mizoram, Manipur and Tripura. "There are many villages in which people do not have accounts with commercial banks. We want banks to promote them to open no-frill accounts just to have them included in banking," Sunder said. Further, RBI officials said the central bank moots at electronic payments of the popular government-sponsored MGNREGS and other payments to people to avoid harassment in the process. 

IBN Live

New security features embedded: RBI

SHILLONG: The Reserve Bank of India (RBI) on Tuesday said new security features have been embedded in currency notes to check the flow of fake Indian currency notes in the country. ”It was practically impossible for a layman to differentiate between genuine and fake currency notes and the RBI has adopted new security features on bank notes to deal with the menace of fake Indian currency notes,” RBI General Manager (Department of Expenditure & Budgetary Control) P Shyam Sundar told reporters. Sundar said “The quality of fake notes are so good, that the similarity between counterfeit and genuine currency is in the range of 90 to 95 per cent.” He, however, refused to name the places from where the fake notes have been pumped into the country, saying that the RBI has been integrating new security features in currency notes in a bid to check the “menace”. “Apart from regularly changing the design of the notes, we have also incorporated new security features in the notes. These measures would certainly help in curbing the menace,” Sundar said. He also said the RBI was working on augmenting the functioning of the security press apart from developing security paper for printing currency notes. The official informed that an office of the RBI would be soon established in Shillong. “We are likely to open the branch office by this April,” he said. “Once the office is established, the RBI would be in a better position to directly work with other banks and also to take active part in developing the state,” Sundar said while stressing on the need to bring in more people under the banking network. Currently, there are only two offices of the RBI in the region, Guwahati and Agartala. When asked about the shortage of coins in the State, Sunder said he was aware about this problem. “In fact, there is no shortage of coins. We would soon take corrective measures to see that the coins are being circulated in an even manner in various parts of the country,” he said.  

The Shillong Times

http://theshillongtimes.com/2012/02/15/new-security-features-embedded-rbi/

RBI guv offers roadmap to cut fiscal deficit. Will FM listen?

.......... Subbarao offered a simple plan for bringing the government’s finances back into shape. He suggested that in addition to offering a fiscal deficit estimate for the next year, Finance Minister Pranab Mukherjee should also prepare a medium-term roadmap to cut the fiscal deficit............

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Subbarao: Oil Is an Economic Problem Largely Out of India’s Control

............... There’s been a lot of talk about the Reserve Bank of India’s recent stance that it can’t cut interest rates until the government presents a solid plan for reducing the fiscal deficit. But there’s something else that could dash India Inc.’s hopes for easier credit: the price of oil.........

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Who's the boss?

Apropos “Regulating the regulators” (Raisina Hill, February 14), the finance ministry has many subtle ways of undermining the independence of the Reserve Bank of India (RBI) and nominating one more representative to the RBI board is one such move. There have been many instances in which the ministry has wielded its power. And when the RBI governor himself reports to the finance minister, where is the question of independence? Also, the ministry does not merely function as the prime shareholder of public sector banks. It has the final say in the appointment of CEOs of these banks. In fact, it is not even necessary to regulate the regulator (RBI). The banking regulator is already aware of its subservient role. Its independence will only be restored if the Centre honestly believes in doing so. Till then this will remain wishful thinking.

- K V Rao, Bangalore (BS)

Same difference

Guess what Indian Prime Minister Manmohan Singh, Italian Prime Minister Mario Monti and Greek Prime Minister Lucas Papademos have in common? For one, all three are economists and, for another, all three head coalition governments. Papademos and Singh have another point of similarity: both were governors of their respective central banks — Singh headed the Reserve Bank of India between 1982 and 1985 and Papademos was Governor of the Bank of Greece from 1994 to 2002. The major point of difference, of course, is that Monti and Papademos, both of whom took charge in November last year, head countries that are neck-deep in financial and economic crises. Singh doesn't have to face that problem as prime minister — he addressed that particular crisis as finance minister almost 21 years ago.

BS

Banks oppose Irda norms on retailing policies

........ The draft guidelines give Irda the power to inspect the premises, books of accounts, records and documents of the bancassurance agent to check if the activities are carried in line with regulations. Banks are concerned that this will ensure that they are effectively under the supervision of two regulators, the Reserve Bank of India (RBI) and Irda......... 

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Subir Gokarn sees signs of accelerating growth in FY13

...... Speaking at the IIFL 2012 India Conference, Gokarn is witnessing signs that growth is getting back on track in this fiscal. "The baseline scenario is starting to show that the signs of growth are now bottoming out."………….

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Get fiscal house in order on priority basis, says Reserve Bank

…..On the fall in headline inflation, Gokarn said it was in line with the government’s trajectory. “It is expected to be about seven per cent by the end of this March. It will help us change of our stance on the monetary policy. The bank has already indicated that interest rates have peaked,” he added.The official, however, did not elaborate if this would prompt the RBI to begin policy rate in the near future..............

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RBI issues draft norms on White Label ATMs owned by non-banks

In a bid to accelerate the growth and wider spread of ATMs, the Reserve Bank today issued draft guidelines for permitting non-banking entities to set up, own and operate such money dispensing machines...............

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'RBI: The bank of the bankers'

.... In early 40’s, senior officials posts in RBI were filled up by the promotions from the existing staff and/or taking staff in deputation from the Imperial Bank of India. The final interview used to be held at central board of Directors at Calcutta. After partition officers from Karachi were asked to report to Mumbai office in 1947. When it came to women staff, there were hardly any on the Bank’s rolls on that time. The few who joined being mainly telephone operators. The first lady to be taken up for a clerical work joined in early forties and the first to be recruited directly as an officer was Miss Dharma Venkatraman who joined in March 1949. Gradually the numbers increased. According to a data women formed less than 8 per cent of the total staff in January 1968; which is around 18 per cent.......

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Weighing the better inflation measure

There’s a new consumer price index on the way, but monetary policy requires various other inputs, too

When the Reserve Bank of India (RBI) unveils its monetary policy review and the finance minister tables the Union Budget 2012-13 in Parliament next month, they would have one more set of inflation numbers to base their policies on. For the first time, India would come out with consumer price index (CPI)-based inflation data from February 21.............

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The inevitability of rate cuts

…..RBI has quite correctly said that its ability to cut rates is dependent on the ability of the government to cut its deficit. In other words, monetary policy can be more loose if fiscal policy is tighter. That suggests that the first cut will come only after the budget is presented in mid-March. .........

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A price balm for the economy

......One cannot rule out inflation returning, which then explains the RBI's obvious reluctance to ease its hard money stance. But the issue right now is about identifying the main problem confronting the Indian economy. And that perhaps is not inflation as much as the virtual drying up of investments...........

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Rate cuts a double-edged sword

.... SBI chairman is whistling in the dark just as are policymakers in New Delhi who believe that December's depressed output numbers can be handled by the simple expedient of interest rate reductions. The buck may have already been passed to Mint Road and the call for more action than cuts in CRR may reverberate increasingly in the coming days.But the RBI has probably pre-empted that sentiment. In its third quarter review it still moans the stickiness of inflation to justify its current rate policy. But its analysis of macroeconomic trends does more than just implicitly defend the status quo on interest rates.....

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RBI warns on bad loans, but says situation not alarming

.....“As we see it, the NPA problem has arisen because in the pre-crisis boom period there was an aggressive lending stance by the banks that was coupled with laxity in monitoring and proper due diligence. The NPAs have also risen because of the system-generated NPAs,”........

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Loans to commodity traders not farm credit

The Reserve Bank of India has objected to private banks classifying loans to commodity traders as part of the mandated farm credit, in a move aimed at ensuring that banks reach out to genuine farmers........

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We have not made any mistakes knowingly: V P Nandakumar

.......... The RBI has not sought a clarification from us, but it has given us a set of directions to comply with so as to rectify the matter. We have already complied with all those directions, and replied to RBI on this Monday. We will strictly comply with all the directions of RBI…………

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‘Flaws in recovery policy of banks’

Mumbai:The Reserve Bank of India (RBI) has found shortcomings in the recovery policy of a few banks. In an affidavit filed in the apex court on February 10, the finance ministry stated “in certain cases the value of security indicated in the settlement proposals is much less than the value arrived at the time of advance, indicating unrealistic valuation of security either at the time of sanction of the credit limit or at the time of compromise settlements.” The SC was hearing a PIL filed by Richie Shoaib Sequeira stating that there was no strict vigil by the finance ministry and RBI while writing off loans and onetime settlements. According to the plea, the finance ministry has not framed rules while writing off loans, which smack of corruption.  The affidavit mentioned that there were instances where a few banks did not have a separate recovery policy. “Sometimes, the net worth of the borrowers and guarantors had either declined drastically or become nil at the time of compromise indicating inadequate evaluation of the borrowers’ net worth at the time of sanction.” Although the security was available in many cases of compromise settlements, the bank had not made adequate efforts to realize the security and it did not examine the staff accountability in many cases, the affidavit said. The RBI does not have any control over the discretionary powers of the bank, the sworn statement said. 

TOI

Short-term deposits offer better returns than savings bank accounts

.....Offering high interest rates on savings bank is a good ploy to acquire new customers for a bank with a low customer base, but those looking to switch banks must take into consideration the cost and hassles of leaving their existing bank for a new one........

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