Tax policy: Anxious time for depositors

......While RBI- government discussions are meant to be conducted behind closed doors, it is unfortunate that the top policy- makers in government have been voluminously articulating in the public, before the RBI's policy announcement, that the RBI should reduce its policy rates. In the event, if the policy decision turns out to be wrong the brunt of the blame should be on government......

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India lags developing countries in opening bank accounts

.....NPCI Managing Director and Chief Executive Officer A.P. Hota said it is wrong for the World Bank report to compare the African success with India. “In countries like Kenya, South Africa and Zambia, there are just one or two telecom companies who corner 70-80% of the market, so a Vodafone can be present everywhere in the country. But in India, there are 16-17 players and it is difficult for a single player to have that kind of network,” ......

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TJSB Sahakari Bank aims at Rs 10,000 cr business in FY13

..............Vaishampayan said that in the last financial year, the bank had opened 12 new branches in Maharashtra, Karnataka and Goa to tap more business. “We have received a green signal from the RBI to open 20 more new branches in financial year 2013,” he said, adding that the bank will invest a total of over Rs 12.50 crore in expanding its footprint...................

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Central registry to include all property deals

.......…pilot project for registering all properties would begin before March 2013, the National Housing Bank’s Chairman R V Verma told Business Standard. It will start with states already having an e-registry platform. The Reserve Bank of India, in a notification on May 19, 2011, had announced operation of a central registry, meant to have details of all properties against which loans had been taken.………

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Relief for old customers?

RBI has made a cut in repo rates for the benefit of loan-takers. But, usually, banks never pass on such benefits to existing loan-takers. On the other hand, these same banks immediately increase interest rates whenever there is an increase in the repo rate. Moreover, banks compete in offering lower interest rates to new loan takers, while earlier customers for similar loans have been paying much higher interest rates. The ideal is to fix uniform rates for all banks for various types of loans and deposits. But, even if such an ideal aspect ‘disturbs’ the new-era economic liberalisation, every bank should be directed to have non-bargainable interest-rates for different types of loans and deposits, same for old and new customers. For the repo rate cut as announced on April 17, 2012, RBI should, through a circular, direct all banks to pass on the benefit to their existing customers without waiting any request from them.

- Subhash Chandra Agrawal, New Delhi (FE)

MCA for allowing banks as aggregators on commixes

……….While the Reserve Bank of India (RBI) is still deliberating on the issue of allowing banks as direct hedgers in the commodities market (as institutional traders), MCA feels banks can be allowed to play the role of aggregator hedgers to increase volumes…………

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Shooting in the dark

.......Recently, the Reserve Bank of India (RBI) too has highlighted the implications of frequent and large data revisions on policymaking. Data revisions take place due to two reasons. First, is the .............

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Markets waiting to exhale

….The shift in monetary policy creates a potential trading opportunity. It could lead to a rally in the debt market, if RBI dares to follow through with further cuts. Funds dealing in medium- and long-term debt could see a jump in net asset values, or NAVs, through Q1 and Q2, 2012-13. Bond yields in the treasury market are straightening out though still tight and inverted at some tenures……

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Fuelling concern

.....The Reserve Bank of India's annual monetary policy (2012-13), unveiled on April 17, came as a shot in the arm for the three companies — IOC, BPCL and HPCL. “Fuel inflation moderated from over 15 per cent in November-December, 2011, to 10.4 per cent in March, 2012, even as global crude oil prices rose sharply, reflecting the absence of commensurate pass-through to domestic consumers. It is imperative for macroeconomic stability that administered prices of petroleum prices are increased to reflect their true costs of production,” the apex bank said.......

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Rate cut must be backed by simplification of the system

........ The RBI has virtually admitted that it has not succeeded in controlling inflation through the lone monetary policy measure. Had the good sense prevailed earlier, at least the contribution RBI has made towards the inflationary situation by making investments and business expenses dearer could have been avoided. The silver line is that RBI itself now realises its mistake. It even takes a part of the responsibility for slowdown in industrial and manufacturing growth. It also admits that fall in credit offtake was also the result of its 13-time rise in interest rates. The RBI analysis states that fall in Indian banks’ liquidity resulted because of its tight monetary policy.............

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Making sense of RBI’s ‘ gamble’ on growth

....RBI has decreased repo rates as it wants to kickstart the growth in the Indian economy, which as the numbers reveals is clearly slowing down. For example the growth numbers for the Indian economy has slipped from 7.7% in the first quarter, to 6.9% in the second quarter and further to 6.1% in the third quarter. Many believe that one of the reasons for this slowdown is the high interest rates prevailing in the economy. By reducing the repo rate by 50 basis points, RBI has indicated that it is tackling this issue of high interest rates..............

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Externalities of rate cut

The article ‘‘RBI has jumped the gun'' (Business Line, April 20) finds fault with the RBI for slashing interest rates by 50 basis points and points to the ‘real threat' of a resurgent inflation. The ground realities do not reflect the possibilities of such a situation. If banks concentrate on raising deposits and lending in March, it need not be interpreted as ‘window-dressing' but as an attempt to raise the performance level to present a better balance-sheet for the year. Being the financial year end, the efforts may also relate to reducing income-tax liabilities by some.

- T. R. Anandan (HBL)

Onus on Centre now

......the RBI has decided to send out a strong signal for monetary transmission. This, the Governor is convinced, can happen only through a decisive action — a 50 basis point cut in this instance. For another, the apex bank has discovered that liquidity tightening has been stronger than it had bargained for. Deepak Mohanty, Executive Director, admitted that the “liquidity has been much tighter” through the second-half of 2011-12................

Read - The Hindu

The debate about growth and deficits

It might be a little late in the day to write about the monetary policy announcement of April 17, but I am going to do it anyway. My defence is that it deserves a broader assessment than the standard “hawkish-versus-dovish” template affords……………

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Economy stares at an avalanche

…..However, with no clarity on fiscal consolidation and dormant inflation in the prices of fuel, electricity, coal, fertilisers and indirect taxes, RBI does see the risk of inflation spiking again, and hence limited the rates cuts. Which means lending rates would come down but only gradually, as and when the cost of funds for banks comes down……………..

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'India 2nd most confident country'

......."India has overtaken Japan to become the third-largest economy in terms of purchasing power parity (as per IMF report) and is heading for accelerated growth, following RBI cutting repo rate by 50 bps and inflation moderating to acceptable level," Ipsos India CEO Mick Gordon said. "This should provide some confidence to the overall sentiments and help in stimulating investment. If the inflation momentum eases in near future, it will give RBI more room to cut rates further to boost investments and growth," he added............

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We are also helping Europe to some extent

Do you think RBI’s inflation concerns are legitimate and another inflationary flare-up could lead to a reversal in its monetary policy stance?

Of course, from the demand side, the monetary policy is to be addressed keeping in view the inflationary situation in the system. There is inflationary pressure. Fortunately, manufacturing inflation has come down to 4.5%, core inflation has been reduced. That is why RBI could take the decision. But pressure is still there..............

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