Emerging Leaders : Duvvuri Subbarao, Governor, Reserve Bank of India

……When Subbarao took over as the Governor of the Reserve Bank of India (RBI), after a long career that ended as the senior most bureaucrat in the finance ministry, there were a few who saw the move as an attempt by the government to have greater influence over monetary policy. Though it is not unusual for former bureaucrats to head the RBI, the current Indian Prime Minister Manmohan Singh being the most famous example, it was speculated that Subbarao was given the job as he would be more accommodative of the government’s economic policy priorities………………..

……………Subbarao’s legacy is no doubt secured as the RBI Governor who successfully steered monetary policy during one of the most stressful periods in financial history. But Subba, as he is known to close friends, is unlikely to rest on his laurels. Several decades of experience as a public official are whispering in his ear to remain laser-focused on the several risks the Indian economy currently faces. The majority of Indians would now be thankful that, in Subbarao, the government picked one of the most able people to do that job. 

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Woori Bank launches first Indian branch

...........Commenting on the entry of Woori Bank in India, RBI Regional Director N S Vishwanathan said that Woori Bank will be the second foreign bank after the Bank of Ceylon that the RBI Chennai will be directly regulating and monitoring.

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Banks' inspection reports to come under RTI: Central Information Commission

…..The CIC's order came in a case pertaining to Kanpur-based United Mercantile Cooperative Bank Ltd. in its order, the CIC stated that the Reserve Bank of India (RBI) should disclose the audit report of the bank, because citizens have the right to know and not disclosing the report is "against the basic tenets of democracy and transparency". It was in July 2011 that one of the share-holders of the said cooperative bank, Ashwini Dixit, had sought the copies of the annual audit of the bank conducted by RBI. The bank had allegedly committed a fraud and the local newspapers had widely reported the matter. "The bank has not paid me even a single penny as dividend from 1997 to 2008," said Dixit. He had filed an RTI application with both the Urban Cooperative department and RBI. "I only wanted to know if the non-performing assets of the bank were going up every year, and what was RBI doing to curb that," said Dixit.…….

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RBI on call

In its latest recommendations on spectrum auctions, the Telecom Regulatory Authority of India wants the Department of Telecom (DoT) to consult the ministries of finance and law on various points of law and rules. This is standard, but the new point is that this time, DoT has also been told to seek the advice of the Reserve Bank of India (RBI), a reflection that the regulator is leaving nothing to chance. In the 170-page report, the Authority has highlighted the need for dialogue with RBI and the finance and law ministries on issues like safeguarding deferred payments by bidders, additional spectrum allocation, clearing funding roadblocks for telcos and revising the tax structure for the industry.

BS

S&P subtext: We don’t believe you Mr FM; so what’s next?

..... RBI Governor Duvvuri Subbarao, while putting up a brave defence of some of Mukherjee’s measures and reducing the repo rate by a higher-than-expected 50 basis points, did make it clear that he was, at best, hopeful of the government delivering on the numbers. “Like everyone else, we are also very concerned about the government delivering on that. Therefore, we reiterated the message this time about the importance of delivering on the 5.1 percent, in particular that the adjustment of subsidies is necessary, although not sufficient, for the delivery of the 5.1 percent,” Subbarao said earlier this month while unveiling the monetary policy for 2012-13…..

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Focus on growth

This is with reference to “S&P revised India outlook to negative” (Business Line, April 25). We might boast of a growing economy, but perhaps it is not. In the face of the economic slowdown prompted by rising interest rates, alarming fiscal deficit at 5.9 per cent of GDP and high inflation, Standard and Poor's downgrading of India's rating to negative, should not come as a surprise. A silver lining in the dark cloud, however, is a cut in key policy repo rate by 50 bps by the RBI in the recent Monetary Policy, which is likely to provide a fillip to growth. While banks have been mandated to cut the lending rates to pass on the benefits to the borrowers, the Government has a more responsible role to play in ensuring fiscal discipline..

- S. Umashankar, Nagpur (HBL)

Obituary

G. LAKSHMINARAYANAN, Retired Staff, Officer-RBI, Chennai Born - 6th October 1927 Passed away - 18th April 2012, Bangalore. Deeply mourned by L.Sriraman, Vasumathi Madhavan and L. Srinivasan Ph- 080-23646311

The Hindu

RBI ups housing loan limit to Rs 10 lakh for weaker section

…………"It has been decided to increase the limit from Rs 5 lakh to Rs 10 lakh for the bank loans extended to non-governmental agencies, approved by NHB for their refinance, for on-lending for the purpose of construction or reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers." the RBI said in a notification………………

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India to have comprehensive financial sector consumer protection legislation: RBI

India is examining the possibility of enacting a comprehensive financial sector consumer protection legislation the Reserve Bank of India said. Although India has a law for consumer protection it is not specifically for the financial sector consumers. Currently a bank customer can approach the banking Ombudsman, to resolve its dispute with the bank. This was indicated by the deputy governor K C Chakrabarty at a panel discussion on financial literacy and consumer protection at Washington recently………

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Banks used exotic means to hoodwink Reserve Bank

Banks adopted various ways to sell illegal and ‘exotic’ derivatives in their profit pursuit, bypassing the Reserve Bank of India’s (RBI) guidelines and causing losses of as much as Rs34,000 crore, which they then tried to cover up by forging documents, DNA investigations have found...........

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RBI norms to take sheen out of gold loan business

….While the RBI regulations restricted the ability of NBFCs to leverage, the LTV rules do not cover commercial banks engaged in the gold loan business. This has made the business unattractive for NBFCs, analysts and industry officials said…..

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Over 130 government Web sites hacked during January-March 2012

...........As per the Reserve Bank of India, 2,232 Internet fraud cases involving Rs.1,234.94 lakh were registered in the year 2010 while Central Bureau of Investigation (CBI) registered two cyber crime cases involving Rs.17 lakh during 2010. ...........

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Reserve Bank of India putting in measures to prevent credit, debit card fraud

....... The guidelines issued in 2011 have a clear roadmap for moving towards more secure ways of credit/debit card transactions ultimately through Aadhar-based biometric authentication," says RBI spokesperson Alpana Killawala…………….

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NPCI seeks RBI nod to integrate mobile payment solutions

The National Payments Corporation of India (NPCI) has sought the Reserve Bank's approval to make the payment services provided by telecom companies and the mobile wallet services offered by banks work with each other, a senior official said today. "The idea is to make these different services inter- operable for the convenience of customers. We have approached the RBI to make payments services provided by various telcos work with each other. If we get the RBI approval, we will deploy the solution,"………….

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SBI launches virtual debit card called State Bank Virtual to curb online frauds

......The electronic card can be created by the account holder or customer using SBI's Net banking facility for ecommerce transactions. State Bank Virtual has a limited shelf life and can be used for only one transaction to limit the exposure of the account. It allows the user to create a virtual card for any online transaction and the person is not required to share details of the principal account on the merchant Website thus insulating the account from any possible fraud............

Read - Business Today

Time to act, not panic

......RBI has ensured adequate liquidity and there are few signs of local investors being crowded out by higher government-spend. And, as RBI Governor Duvvuri Subbarao pointed out last week, not only is India’s import cover much higher than it was in 1991 (this was in response to the refrain that 2012 was the new 1991), forex reserves are around 95% of external debt as compared to just 7% in 1990-91.......

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"CAGED" MONETARY POLICY"

We have a ‘caged’ Monetary Policy. Top echelons in government, by habit, pre-empt any maneuverability available to RBI Governor, by explicitly stating the direction and extent of relaxation in monetary policy, well before the announcement. The Finance Minister, through supportive fiscal policy should prepare a fertile ground for monetary policy to fructify. Independent of fiscal policy, RBI will not be able to achieve any perceivable results. Last 20 months or so we have seen the helplessness of the central bank. It is time our political bosses started looking at grass-root level improvements in availability of basic necessities and comforts. To start with, perhaps, government can follow the example of present RBI Governor, who speaks out his problems and constraints in the open, explains what he can do and is doing, almost at monthly intervals and reviews and audits the progress made in the financial sector as a result of policy interventions on an ongoing basis. He also doesn’t mince words when it comes to the expectations of the central bank from those responsible for evolving and implementing fiscal policy. Though they are all material and significant in the context of the country’s positioning in the comity of nations, the improvement in the per capita availability of mobile phones or the 5000km reach of ‘Agni 5’ or Koodamkulam being one among the largest 10 nuclear power plants in the world won’t satisfy the aam aadmi, till he finds a satisfactory answer to his problems of hunger and basic necessities.

-  M G WARRIER (ET)

The irrelevance of the base rate

........Instead, SBI has cut rates for auto loans and money given to small and medium enterprises (SMEs). Its current base rate continues to be lower than many other banks’ that have cut their base rate but its decision to leave the base rate untouched and cut loan rates for certain business raises a pertinent question, that of the efficacy of base rate..................

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MSCB plans diversification

Enthused after receiving banking licence from the Reserve Bank of India (RBI) last week after more than a century of operations, Maharashtra State Cooperative Bank (MSCB) plans to diversify into corporate financing. It would thus, be reducing lending to the cooperative sector, especially sugar and spinning mills.The 1906-founded bank has identified information technology, manufacturing and engineering, infrastructure, state electricity boards and renewable energy for funding.……..

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RBI clears appointment of P Rudran to head Arcil

The Reserve Bank of India (RBI) has cleared appointment of P Rudran to head the troubled company Arcil or Asset Reconstruction Company of India. Rudran's appointment comes amidst high profile exit by senior level officials who quit the company following the accounting practice questioned by the banking regulator………….

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Muthoot slows down gold loans after RBI norms

..... “RBI has formed a working group to analyse the impact of gold imports on financial stability and whether NBFCs extending gold loans have any role in influencing gold prices. The group is expected to submit its report by end-July 2012. We have also given our views to the working group. I’m sure that the apex bank will have a better understanding of the sector, once this report is submitted. We will wait till then before renewing our thrust on gold finance.”........

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