Yesterday, today and a little bit of tomorrow

Review of Bimal Jalan's book Emerging India: Economic Politics & Reforms

……….Part three covers quite extensively the banking space, which starts with a recollection of the Asian crisis and how we managed it through some conservative policies followed by the Reserve Bank of India (RBI). Though he sounds self-laudatory on occasion, he highlights some of the concerns at that time that are, quite ironically, also the issues that germinated the recent financial crisis — risk management, transparency, regulation and supervision, capital requirements and, most importantly, ethics. In a way, the RBI did display foresight in attempting to strengthen these inherent processes. The discussion on the virtues of a flexible exchange rate regime and caution against capital account convertibility, which distinguished India from the other Asian nations, has also been covered here……………..

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The facts, gentlemen

While cautioning economists and asking them to look at the facts instead of just going by economic theories at the IMF-Icrier “China and India—Sustaining High Quality Growth” conference in the capital, former RBI Governor YV Reddy had an interesting story. As a young man, he went to an astrologer who told him he had no hope of getting employment as he was uneducated, but he needn’t panic as, later in life, his father would bail him out. The 20-something Reddy told the astrologer he was wrong since, not only was Reddy quite educated, his father was long dead. This got the astrologer quite worried and he examined Reddy’s palm again and again, then said that since astrology never lies, it was obvious the palm wasn’t Reddy’s! 

FE

Bending, not bowing

The annual chat between the FM and the RBI Board of Governors has an equally significant lunch that follows it. But on Monday, as the policy mavens and a distinguished janata waited, the lunch time had to be repeatedly postponed. The reason was that the FM was busy in Parliament with the motion of thanks to the President. The delay, we were told, had nothing to do with the FM’s team’s disappointment with the delay in the rate cuts.

FE

Single-point ‘know-your-customer’ to ease form-filling headaches

......At present, each sectoral regulator — the Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (IRDA), the Reserve Bank of India (RBI), Pension Funds Regulatory and Development Authority (PFRDA) and the Forward Markets Commission has different KYC requirements.........

Read - Hindustan Times

The Good, the bad and the ugly

There was volatility and uncertainty due to major events on the domestic front. We had the IIP numbers, inflation for the month of February, the Railway Budget, Economic survey, RBI credit policy meet and the Union Budget. Due importance was given to the RBI policy and Union Budget...........

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RBI can't ignore impact on current a/c deficit: Reddy

Former RBI Governor YV Reddy says that monetary policy cannot ignore impact on aggregate demand and current account deficit. He said that the policy has to take care of inflation as well. "Now, if you don't impose excise duty then you'll have more fiscal deficit, which is also going to add to inflation. There are different ways and the underlying inflationary pressure, you don't increase the diesel price, then it may not show up. But, it'll have to show up somewhere else because somebody else will have to pay for it. So in the ultimate analysis, if painful actions have to be taken, by postponing painful actions, you are adding to under lying inflationary pressure which doesn't show up. My own sense is that the underlying inflationary pressure in India now is a lot more than what many people appreciate," he explains.

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Cases on fake currency notes reported from banks

.... “Some of the co-operative banks and small private banks do not have the facilities to detect fake currency notes. We are planning to make it compulsory at all the banks so that counterfeit currency notes cases can be detected easily,” said RBI officials.......

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Banking hours to be extended on March 30, 31 – RBI

MUMBAI (Reuters) - All regional offices of the Reserve Bank of India and branches of agency banks will extend banking hours on March 30 and 31 to facilitate receipt of government revenue even at late hours, the central bank said on Monday. The RBI will communicate details of a special clearing on March 31 to the banks separately, the RBI said. 

Moneycontrol

Annual Statistics Conference 2012 of the Reserve Bank of India

Opening Remarks by Shri Deepak Mohanty, Executive Director on March 17, 2012 at Chandigarh

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RBI asks banks to update al-Qaida list

...... "State and Central co-operative banks and regional rural banks are required to update the list of individuals/entities as circulated by the Reserve Bank and before opening any new account, it should be ensured that the name/s of the proposed customer does not appear in the list,"........

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Nabard seeks Rs 5,000 cr from Centre

........ The thrust of the financial inclusion programme is on electronic platform-based transactions. Nabard has begun work on establishing core banking solutions at more than 400 state and district central cooperative banks. It has roped in WIPRO and Tata Consultancy Services for rolling out CBS at its branches. The next phase would involve bringing about 53,000 primary agriculture credit societies on to this platform. Bakshi said this may help these to function as business correspondents in the future.

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Financial sector reforms a continuous process: YV Reddy

New Delhi : Financial sector reforms are a continuous process and fixed reforms agenda does not help in fast changing economic scenario, former RBI governor YV Reddy today said. "The financial sector reforms agenda has to serve the purpose of overall economic growth. That is one lesson from the global economic crisis," Reddy told reporters on the sidelines of conference on 'China and India: Sustaining High Quality Growth' here. Financial sector reforms should subserve the real economy, he said, adding that the world is changing fast and so are the macroeconomic conditions. Therefore, you should not have fixed reforms agenda and say some committee gave a report therefore we should do it. "Reform is a continuous process and it should be continuously evaluated, with the objective of improving the real economy," Reddy said. The conference was co-organised by the International Monetary Fund (IMF). Speaking on the occasion, IMF's Asia Pacific Department Director Anoop Singh said that India and China would lead the global economic growth in the coming years. 

BS

RBI allows foreign VCs to invest in equities via third parties

In its bid to deepen the equity and debt markets by attracting overseas funds, the Reserve Bank today allowed foreign venture capital investors to invest in securities through private arrangements or purchase from a third party....................

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RBI to FM

.....The problem is with the fiscal math for 2012-13 that the ministry is asking the rest of the world to believe in. Judging by the statement issued after the meeting, the RBI Governor has concerns on the fiscal consolidation.........

Read - FE Editorial

Unions divided over allowing biz correspondents to serve other bank customers

Move to allow business correspondent of one bank to serve customers of others has evoked mixed response from unions. While one bank union opposed it, another said that it does not have any problem if the business correspondent (BC) restricts itself to basic services. In a circular dated March 2, the RBI decided to permit interoperability of business correspondents (BCs) at the sub-agent or at retail outlet level, provided the technology available with the bank, which has appointed the BC, supports it............

Read - HBL

Subbarao Boosts RBI Transparency as India Bond Buying Climbs

The Reserve Bank of India’s tomes on interest-rate policy made Subir Gokarn despair when he was a Standard & Poor’s economist. Now a Deputy Governor, he’s part of the biggest communication overhaul in the bank’s 77-year history. “That really wasn’t the best way to do it,” Gokarn, 52, who joined the RBI in 2009, said in an interview in Mumbai last month. “Keep it short, keep it straightforward, so it takes five, 10 minutes to read and most people read it.”.............

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Budget points to lack of fiscal discipline

The critical policy week for the Indian economy — which included the Budget and RBI monetary review — proved to be a damp squib. The Budget did not take any credible steps on fiscal tightening, nor did the RBI reduce interest rates. However, RBI did effect a cut in the cash reserve ratio the week before..............

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Budget 2012: Fire fighting FM says interest rates may come down soon

The finance minister Pranab Mukherjee today held discussions with the board of the RBI. The finance ministry has indicated that it expects the central bank to reverse policy rates and help improve overall sentiment. Post the meeting, Mukherjee said that he would give due consideration to issues raised by the RBI board. Mukherjee also added that all efforts will be taken by the government to find a collective solution for problems facing the Indian economy...........

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Panel discuss oversight body for improved financial regulation

A panel of sectoral regulators headed by RBI Governor D Subbarao today discussed setting up an inter-regulatory body to improve supervision on the financial sector. The sub-committee of the Financial Stability Development Council (FSDC) also reviewed the development in the global economic and financial sector scenario, focusing on issues relating to potential systemic risks for India. "The Sub-Committee deliberated on a proposal for setting up an inter-regulatory forum for improved co-operation for effective supervision of Financial Conglomerates," the Reserve Bank said after the meeting..........

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The elusive policy mix

...... One of the reasons for the slow growth witnessed in the past year has been the adverse monetary and fiscal policy mix in the country. If there was one thing that the 2012-13 Budget was expected to redress, it was the adverse policy mix. The Reserve Bank of India (RBI)—both in its third quarter and mid-quarter review of monetary policy—had highlighted the importance of right fiscal conditions in shaping the inflation outlook and, implicitly, the speed of monetary loosening in the months ahead. Has the budget addressed this issue properly?.........

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Weak dollar flows, trade gap add to concern over inflation

 ........ If budget 2012-13 is expected to spur the Reserve Bank of India (RBI) to bring down interest rates, there is little evidence to support that presumption. RBI has already signalled its worries on the government’s gargantuan borrowing requirements that are hardly supportive of an interest rate reduction, as stated in the December mid-quarter monetary policy review..........

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FSDC panel mulls forum for financial conglomerates

......Significantly, the sub-committee, which is headed by RBI governor D Subbarao, also discussed a proposal for setting up an inter-regulatory forum for improved co-operation for effective supervision of financial conglomerates. ........

Read - Indian Express

Inflation will stabilise: Pranab

New Delhi : ......Interacting with the media after chairing the central board meeting of the Reserve Bank of India (RBI) here, Mr. Mukherjee said: “Couple of months, there will be fluctuations [in inflation] ... So I do hope that after couple of months it will stabilise”.......

Read - The Hindu

UBI gets nod to open office in Myanmar

United Bank of India, the designated Banker for Indo-Myanmar trade has got the Reserve Bank of India's nod for opening a representative office in Myanmar..........

Read - The Hindu

MFIs breathe easy with improved fund flow

........The normal situation in non-AP States, and clarity on the regulatory front (except in AP) with creation of Non-Banking Finance Company-MFIs by the Reserve Bank of India, allowing banks to buy loan portfolios from MFIs to meet priority sector obligations, have been driving this funding, say experts........

BusinRead - HBL

Why Sebi should re-open the Jalan committee report

........ it should not be forgotten that one of the main objectives behind the setting up of the committee was to frame clear policy regarding ownership of exchanges. This should be done sooner rather than later, especially given the complications that have arisen because of the lack of clear guidelines. Even so, the regulator has chosen not to frame new rules relating to the ownership and governance of stock exchanges. If the Sebi board had reservations about the recommendations of the Jalan committee, it could adopt the same approach it did with the new takeover code.................

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135 companies participate in IIMK final placements

.................Apart from major Indian and international companies across finance, marketing, operations, consulting, general management, IT and HR sectors, a slew of public sector undertakings figured in the recruitment drive at IIMK. They included ONGC, Power Finance Corporation, Power Grid and Bank of India. The Reserve bank of India and UTI also took part in the process.

Read - HBL