Markets need more information

....Until Dr Y V Reddy became its Governor, the RBI was fairly indifferent to the importance of public communication too. He, ably assisted by Rakesh Mohan, who was the economics deputy governor, completely changed the template. The RBI didn't make the transition because it loved the public. It did so because it realised how important it was to counter the rumours on which the financial markets depended in the absence of proper central bank communication. True, there is a lot that the RBI doesn't put out and there is a lot of scope to simplify the language in which it communicates during its policy reviews.....

Read............

RBI must innovate to manage crunch

We are a week away from the Reserve Bank of India’s (RBI) annual monetary policy for fiscal 2013. Two sets of critical data—factory output for February and inflation in March—will be released before the policy, and both have a bearing on its theme. At this point, what is crystal clear is that partial devolvement of the year’s first bond auction is not a happy omen, and the Indian central bank will have a challenging year ahead grappling with tight liquidity and a record government borrowing..........

Read.........

HYC form?

Regulations are at the top of my mind now. I am not running a small business but I just completed a set of forms that the Reserve Bank of India site tells me is to prevent money laundering. As per the euphemistically called KYC or ‘know your customer' norms, I am required to provide very confidential information, including account numbers, specimen signatures, photo, contact information, copies of passport, address proof, etc. all in one form. Clearly designed by somebody who hadn't had their first cup of coffee in the morning. I am threatened that my account will be frozen if I do not comply by a certain date. I have done this once before but bank rules require it to be updated regularly. I cannot for the life of me understand why my bank cannot selectively identify large customers prone to money transfers, a more likely group for money laundering. Moreover, all this information placed on one form lends itself to leakages, stolen identity, and so on. I couldn't find any report on whether any money laundering effort been prevented since these were instituted? At least till such a review is undertaken, the RBI may be better off calling this the HYC form, to stand for Harass Your Customer.

HBL

Inflation will hurt the Common Person - S.S.Tarapore

.....Ideally, the RBI should raise the present repo rate from 8.5 per cent to 9.5 per cent, though the RBI would then face extreme hostility from all economic agents. If it cannot face this heat, the least that the RBI should do is to retain the repo rate at 8.5 per cent and it certainly should not reduce the cash reserve ratio. If the RBI signals a reduction of the repo rate on April 17, 2012, the Common Person should immediately lock in all available funds into 2- 3 year deposits.......


Read......

Govt eases promotion rules for PSB officers

.... Human resource reforms in the state-run banks have been a major concern for the government and policymakers in the face of a high attrition. Besides lower compensation, slow promotion is also seen as a reason for high attrition. Reserve Bank of India governor D. Subbarao had said in late 2010 that there was a “good reason” to revisit the salary structure in government-owned banks to check losing talent to competitors in the private sector.........

Read............

Matter of concern

The picture presented by the Reserve Bank of India of the country’s current account deficit (CAD) is very disquieting. CAD is the difference between the export of goods and services and the foreign exchange outgo on imports and other payments. In the last quarter of 2011, the CAD was 4.3 per cent of the GDP and from last April to Decmber, it was 4 per cent. It was 2.7 per cent in 2010-11 and is now much higher than official projections. What is worrying is that it is more than the 3 per cent figure of the foreign exchange crisis period of 1990-91……………….

Read.............

Online fraudsters pose as RBI Governor

Online fraudsters have devised a new modus operandi to dupe gullible netizens, by sending emails, purportedly from none other than the Reserve Bank of India. Going a step further, not only the names of United Nations Secretary General Ban Ki-moon and RBI Governor D Subbarao are being used in the mails, purportedly being sent as 'payment notification', released by the RBI; but going a step further, the mails also carry D Subbarao's picture adding to their 'authenticity'. In return, the 'target' is asked to furnish all his personal and financial details and deposit a sum of few thousands rupees initially to avail a bounty of thousands of US Dollars..............

Read - Indian Express

Financial nightmare starts, RBI ban likely, Rs 400 Crores in arrears

...Possibly, the Reserve Bank of India may ban the State Government from drawing funds any time after April 19 . An official source informed The Sangai Express that on March 31, the last day of the financial year 2011-12, an amount of Rs 700 crores was drawn for different purposes including payment of salaries for employees.....

Read............

Widening current account deficit is a matter of concern, says Jalan

Expressing concern over the country's widening current account deficit (CAD), the former RBI Governor, Mr Bimal Jalan, has asked the government to take “tough decisions” to deal with the problem.........

Read.............

Fiscal policy support

This is with reference to “Fiscal indiscipline curbs RBI's options” (Business Line, April 6). Monetary policy initiatives will make sense only with implicit fiscal policy support. The Prime Minister and Finance Minister must look into three issues that have a bearing on the country's economic development. These are: Corruption and black money including balances held abroad; Forex Reserves Management. Enforcing austerity and prudence in recourse to import should not be seen as ‘controls'; Super-rich should be encouraged to be more participative in productive deployment of their resources and social security arrangements.

- M G Warrier, Thiruvananthapuram (HBL)

Rising and buzzing

.....Wide anticipations of rate cut by the Reserve Bank of India (RBI) in the April 17 policy meet amid expectation of a $1 trillion investment over the next five years are also fuelling sentiments. RBI has already pumped in Rs 80,000 crore worth of liquidity into the system through 125 basis points cut in cash reserve ratio in two tranches. The fall in interest rate is expected to help the capital-intensive sector to raise cheap loans......

Read........

‘Our asset portfolio is robust'

.....In an interview to Oommen A. Ninan, Chairman and Managing Director of Bank of Baroda (BoB), and Chairman of Indian Banks' Association, M. D. Mallya, says he is keeping his fingers crossed on the rates decision. The state-run bank gets a quarter of its business from international operations, which are growing at about 30-35 per cent. Excerpts:-

Read - The Hindu

The carrot and the stick

…..But perhaps rather than swapping the carrot of expected policy easing for the stick, and implied rebuke, of unchanged policy rates, RBI could maximize its increasingly limited room for manoeuvre by announcing a modest 25 bps repo rate cut while highlighting that any further rate actions await both the decisive action on subsides implied by the budget’s forecasts and an assessment of their inflationary impact. The decision is clearly finely balanced. What is clear, however, is that RBI has little scope for any significant easing of policy and that the radical reshaping of the policy mix that the Indian economy desperately needs can only be driven by fiscal policy rather than the central bank.

Read.........

The hidden Ponzi scheme : A.Seshan

…..The government is planning to set up a Public Debt Management Agency on the ground that the existing arrangement results in a conflict of interest for RBI. Then, can RBI continue to engage in buybacks with a view to providing liquidity to the market to subscribe to fresh issues of securities? Would it not be defeating the purpose inherent in stripping RBI of public debt management?......

Read...........

No significant exposure to euro zone: RBI

Policy makers need to be cautious about the indirect effects of the euro zone’s sovereign debt crisis on India, though the country’s banks do not have a significant exposure to these according to the Reserve Bank of India (RBI). Speaking at a seminar yesterday, RBI Deputy Governor Anand Sinha said, “The Indian corporate sector and banks had an exposure of about $206 billion as of June 2011, according to data provided by the Bank for International Settlement (BIS). Of this total, our exposure to European banks is not significant.”…….

Read...........

NREGS: Meghalaya to pay via smart cards

....“Under the financial inclusion goal of the RBI, NREGA payments have to be made mandatory through bank accounts and not as cash payments. This is to ensure transparency and promote technology-based banking. Most areas in the Northeast are un-banked. So, we are disbursing NREGA payment through individuals representing banks who visit remote villages.......

Read - Indian Express