Accounting standards advisory panel reconstituted

.....This time around, there has been only minimal change to the constituents with as many as seven members of last year's panel getting re-appointed. The Presidents of all the three professional institutes — ICAI, Institute of Cost Accountants of India and Institute of Company Secretaries of India — are on the reconstituted panel. The members who got re-appointed are Mr P.R. Ravi Mohan, Chief General Manager of RBI (RBI nominee); Ms Usha Narayanan, Executive Director, Securities and Exchange Board of India; Mr Ashok Haldia (Assocham nominee); Mr S. Santhanakrishnan (CII nominee); Mr Sunil Gupta, Joint Secretary, Central Board of Direct Taxes; and Ms Renuka Kumar, Joint Secretary, Ministry of Corporate Affairs.................

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Tackling fake currency

The Reserve Bank of India has asked banks to ensure that fake notes are detected at the branch level to avoid inconvenience caused to the common man in case he unknowingly comes in possession of counterfeit notes. “It has already been stipulated that bank notes in the denomination of Rs 100 and above are processed through machines conforming to the standards/parameters prescribed by the Reserve Bank, before issuing them over their counters or through ATMs,” said the RBI in its annual policy statement................

Tackling fake currency - Indian Express

RBI has jumped the gun : S.S.Tarapore

There is a real threat of a resurgence of inflation, and the external sector indicators are not favourable. In this situation, monetary easing by the RBI was, perhaps, too much and too early..................

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Monetary policy

The two articles ‘RBI has jumped the gun' and ‘What is ‘aam aadmi' to make of RBI's gambit?' (Business Line, April 20) decipher the implications of a ‘caged' monetary policy for the economy and, more particularly, for the common man. One, top echelons in government pre-empt any manoeuvrability available to the RBI by explicitly stating the direction and extent of relaxation in monetary policy. Two, a soft repo rate leads to arbitrage operations by banks borrowing from the RBI and investing in certificate of deposits. Three, insensate window-dressing by banks contaminate parameters on which policies are built. It is time the political bosses started looking at grass-root level improvements. .

- M. G. Warrier, Thiruvananthapuram

In the middle of a muddle

.......Since according to that yardstick inflation is still with us and would possibly climb, it could be argued that the RBI, which is convinced that a hike in interest rates is the appropriate weapon against inflation, was pushed into cutting interest rates at this point. However, the muddle over policy seems to afflict the RBI as well. In its recent assessment of Macroeconomic and Monetary Developments over the last financial year, the central bank has also come out in favour of increases in petroleum product prices and other input prices to address the threat posed by “suppressed inflation”. That is, since the transmission of international prices is inevitable, imported inflation can only be suppressed and not avoided. And, if supressed, inflation is a threat. However, if that be the case, since further inflation is almost a certainty, the RBI’s by its own logic would be forced to reverse its interest rate reduction decision. Why cut interest rates then?.................

Read - The Hindu

A delicate balance

The Reserve Bank of India’s annual credit policy, considered as the second biggest economic event after the budget, has brought cheer on the faces of India Inc and the market, heralding a new era of hope for the government, which had almost halted on reforms of late. RBI Governor D. Subbarao has done the unthinkable, cutting interest rates to the tune of 0.5 per cent — the sharpest in three years and also nudged the bank CEOs to find a way to reduce rates. Clearly, the message is to deliver, pass on the rate cut immediately to home buyers, businessmen and investors, whose lacklustre performance has contributed in further slowing down of the economy.…….

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India economy to recover, more rate cuts seen: Reuters Poll

......Indeed, the RBI was still raising interest rates long after many others started cutting them, severely crimping growth and punishing the rupee. Other central banks like the U.S. Federal Reserve and the Bank of England, with interest rates at the zero barrier, have resorted to printing money to shore up their economies, with limited results thus far. With the repo rate at 8 per cent, the RBI still has room to cut. Even after the RBI's 50 basis point cut this week, economists now expect it to be lowered to 7 per cent by June next year instead of 7.5 per cent in the January survey............

Read - The Asian Age

Here’s how borrowers lose when govt orders banks to cut lending rates

……….The RBI has signaled to banks that it will take care of their liquidity needs. It has allowed banks to go below 2 percent of SLR (statutory liquidity ratio) to access standby funds (called MSF, or marginal standing facility) in case of desperate need. Banks are already running excess SLR of 5 percent, giving them a liquidity cushion of around Rs 3,00,000 crore. The natural path for banks to take given rate cuts and given access to liquidity is to reduce deposit rates first. Lower deposit rates will translate to steady to higher profits for banks, as lending rates will remain sticky for a while. Once loans come up for re-pricing, banks will lower loan rates if demand for loans at higher levels is low………………

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Lending rate cuts likely to put pressure on banks' margins

In the wake of the Reserve Bank of India’s (RBI) rate reversal signal, the ongoing and impending reductions in banks’ base rate — the benchmark lending rate to which all loans are linked — may deplete lenders’ margins. Especially those of public sector lenders, which had aggressively raised deposit rates only last month and which they have to service for at least a year. Banks that have cut their base rate after RBI’s move have also reduced deposit rates. However, the benefit of the latter cut would come with a lag; the effect of a loan rate cut would be felt immediately. It is difficult for banks to bring down deposit rates sharply when competing assets, such as small savings offer similar rates.………….

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The MSC bank gets banking license from RBI

PUNE: The Maharashtra State Cooperative Bank received banking license from the Reserve Bank of India on Thursday, 46 years after its establishment in 1966. The MSC bank is the apex co-operative bank of the three tier co-operative banking sector in Maharashtra. It is a major lender for agriculture and agri-business, mainly the sugar industry in the state. The bank is run by an administrator from May 2011, appointed on the advise of the RBI. The bank had to fulfil four conditions related to cash reserve ratio (CRR), statutory liquidity ratio (SLR), capital adequacy ration (CRAR) and net worth.  

ET

RBI to notify proposal allowing airlines to access foreign funds

New Delhi: The government on Thursday said it expects the Reserve Bank of India (RBI) to notify the budget announcement of allowing the cash-strapped Indian civil aviation sector to borrow up to $1 billion in external loans for a period of one year within seven days. “RBI is expected to issue a relevant circular or notification giving effect to the aforesaid budget announcement within seven days,” the Finance Ministry said in a statement.……………….

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Banks told to work out policy on lending against gold

The Finance Ministry has asked all public sector banks (PSBs) to come up with a policy for lending against the security of gold. This move comes in the wake of the RBI tightening the noose around gold loan companies............

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South Korea's Woori Bank sets up its first branch in India

South Korea-based Woori Bank, a part of the Woori Financial Group, has launched its first branch in India, at Chennai, to provide assistance to Korean companies in the country in corporate banking and to serve local clients. The Chennai branch would be the head office of Woori Bank in India. The bank, which is the second largest commercial bank in South Korea with its focus on corporate banking, has received in-principle approval from the Reserve Bank of India in June, 2011, to set up its branch in India. It has already infused around $35 million in India, said a senior executive from Woori Bank.……..

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