An RBI study on paddy crisis in Andhra Pradesh observed that the present structure of procurement is largely responsible for the failure to ensure minimum support price to farmers. It called for change in this system and revising the MSP to make paddy farming remunerative to the farmers. RBI's Department of Economic and Policy Research conducted the study after disturbing news of crop holiday and huge stocks of paddy lying unsold last year. “The present procurement structure allows overwhelming procurement of rice from millers and insignificant amount of paddy from farmers. There is a need for a change in the procurement policy of State Government to ensure MSP to farmers,” the 51-page report said. The study was done by Dr R.V. Ramana Murthy of University of Hyderabad and Dr Rekha Mishra of the RBI.................
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Tuesday, May 15, 2012
Reserve Bank of India Officers Interact With Management Students
The College of Management, Shri Mata Vaishno Devi University organised an interactive session with officials of Reserve Bank of India, Jammu on 27th April, 2012. The session was graced by Mr. John V. Guria – Research Officer, Department of Economic and Policy Research - RBI, Mr. R.K. Meena, Assistant General Manager – RBI and other two associates. Mr. John Guria briefed regarding the monetary policy for the year 2012-13 and other aspects of Indian economy...............
Only 2 of 6 members on RBI's technical committee wanted rate cut
..........According to the minutes of the meeting of the Technical Advisory Committee on Monetary Policy, four members thought that unless the supply side constraints were addressed and relevant measures were taken to revive investment activity, the reduction in the policy rate would not have any impact.............
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| RBI ACTIONS VS PANEL SUGGESTIONS | ||
| Month | TAC recommendations | RBI actions |
| Apr ’12 | Repo rate 4 members suggested pause | Rate cut by 50 bps |
| Cash reserve ratio Most member suggested no CRR cut | CRR unchanged | |
| Jan ’12 | Repo rate 3 members suggested rate cut by 25 bps 3 members suggested no change | Rate unchanged |
| Cash reserve ratio 2 members suggested cut by 25 bps 1 member suggested cut by 50 bps 2 members suggested no change 2 members suggested change only if necessary | Cut by 50 bps | |
| Oct ’11 | Repo rate 1 member suggested raise by 25 bps 5 members suggested no change | 25 bps hike |
| Statutory liquidity ratio 1 member suggested raise by 25 bps | No change | |
| Jul ’11 | Repo rate 1 member suggested raise by 25 bps 2 members suggested avoid rate increase 4 members suggested no change | 50 bps increase |
| Cash reserve ratio 1 member suggested raise by 25 bps | No change | |
| Apr ’11 | Repo & reverese repo rates 4 members suggested 25 bps increase in each rate 2 members suggested 50 bps increase in each rate | Each raised by 50 bps |
| Statutory liquidity ratio 1 member suggested 100 bps increase | No change | |
| Jan ’11 | Repo & reverse repo rates Most members suggested 25 bps increase in each rate 1 member suggested 50 bps increase in repo rate | Each raised by 25 bps |
| Cash reserve ratio 1 member suggested increase | No change | |
| Statutory liquidity ratio 1 member suggested increase | No change | |
| (TAC stands for Technical Advisory Committee on Monetary Policy) Source: Reserve Bank of India | ||
BS
Assam plans new cells to tackle Maoists, fake currency
........."The chief minister's Vigilance Cell and other agencies like the Bureau of Investigation of Economic Offices (BIEO) have already been working on this. The cell will also have officials from the Reserve Bank of India (RBI). We will also take help from the National Investigation Agency (NIA) over this,".............................
Obsessed with Basel III
This is with regard to ‘Basel III could trigger recession' by Mr K Kanagasabapathy “(Business Line, May 11). The new guidelines are far above what is required even under Basel III norms. Internationally, Basel III norms are to be implemented from 2019 whereas the RBI has prescribed that they should be through by 2018. Our banks do not make sub-prime loans. They lend based not only on tangible security but also repaying capacity. Our banks' deposits and resources are mostly used for government borrowings and government directed lending. Considering all these, there should be a relaxation at least for government banks. As for the government's resources to provide capital to banks, the latter's holdings can be diluted. This does not mean necessarily that the government will lose control, as it can continue to have majority voting rights.
- S Kalyanasundaram, Chennai (HBL)
Allowing MFIs to lend
RBI jurisdiction good but rules need working on
..............Assuming the Bill does go through and becomes legislation, however, RBI needs to do a lot to fix the rules so as to ensure MFIs get enough place to be able to function. After the crisis in Andhra Pradesh, RBI had asked the Malegam Committee to examine issues and to come up with workable solutions. Malegam had come up with recommendations early last year that, at the end of the day, were shaped by the public perception following the Andhra episode. So, it suggested a cap on MFI margins, credit bureaus, restrictions on the number of MFIs that could lend to one person, ceilings on loans to individuals, restrictions on the amount of consumption loans that could be given, and so on.................
Healthy banking
With the removal of capital gains tax while converting a foreign bank branch to a wholly-owned subsidy, they should feel not only less taxing but also comfortable. Because they are protected from what is happening to the parent bank. Past experience confirms this advantage. RBI guidelines should make them on par with Indian bank branches. FDI restriction to 74% and divesting the balance should come as a boom for all concerned. And foreign bank branches should give a boost to competition for the health of the industry.
- Jacob Sahayam, Thiruvananthapuram (FE)
RBI imposes Rs 5 lakh fine on National Urban Cooperative Bank
..The monetary penalty has been imposed on the Delhi-based cooperative bank "for violation of the guidelines or instructions of the Reserve Bank of India on loans and advances to directors or relatives and firms or concerns in which they are interested," ...............
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Aadhaar: The story of mistrust and misuse
........This has evoked strong criticism from a top official from the Reserve Bank of India (RBI). Dr KC Chakrabarty, deputy governor, RBI, in a report said, “Aadhaar was to give ID to people without cards, but it is giving to those who don’t need one. Even if it signs up 500 million people in the next five to six years, and they are all people like you and me, it will not serve any purpose...................
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The going’s got a lot tougher
The Reserve Bank of India’s (RBI) recent decision of giving local exporters a fortnight to convert half of their foreign-exchange holdings into rupees is symptomatic of the anxiety gripping India’s macroeconomic managers. Any textbook primer would tell us that currency markets, pretty much like most commodities, are largely governed by the laws of demand and supply. Stronger demand for a currency will push up its price and vice versa. If the RBI has asked exporters to convert dollars to local currency, it would imply that the central bank expects the rupee to worsen....................
Use forex reserves to check slide, says Rangarajan
Inflation jump means monetary easing hard - Rangarajan
A higher-than-expected jump in April inflation makes it difficult for the RBI to moderate monetary policy, the prime minister's top economic adviser C. Rangarajan said on Monday...............
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No immediate cut in interest rates says Nomura
....According to Nomura, a global financial services company, the Reserve Bank of India (RBI) is not expected to cut the repo rate in June, as headline inflation is likely to remain high in the coming months, the current account deficit remains elevated and because fuel price hikes are still impending.......
Say hello to stagflation. It’s going to be with us for a long time
............The confusing signals sent by the IIP and inflation data will give the central bank much to think about. While poor industrial data demands another interest rate cut to juice the economy, the inflation figure will make the central bank wary about rushing into any reckless interest rate action. Overall, the numbers might force the RBI to hold steady on rates. To be sure, the prognosis of the economy at the moment does not look encouraging. A global slowdown, combined with a local slowdown and high inflation present a lethal mix for India’s straining economy. In the absence of any government steps to introduce significant econ0mic reforms, get set for a prolonged phase of stagflation, India.
RBI could go for two more rate cuts by December, but not in June: Shyam Srinivasan
Do you expect RBI to cut the repo rate again in June?
The situation is quite dynamic now. A rate cut will depend on how the inflation situation plays out. I don’t think it will be possible for RBI to cut rates immediately. While the central bank will maintain its stance of a lower-rate regime, I believe they will wait for more cues and monitor the inflation levels. For this calendar year, I expect two more rate cuts from RBI. But it may not happen in June...
Inflation spurts, more rate cuts unlikely
Further complicating policy choices for the Reserve Bank of India (RBI), headline inflation, riding on high food prices in April, unexpectedly accelerated to 7.23% from 6.89% a month ago, at a time when concerns over growth slowing down are mounting......................
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Inflation distorts India outlook
....Reserve Bank of India Governor Duvvuri Subbarao signalled last month that inflation might limit the room for further cuts after he slashed the benchmark rate by half a percentage point, flagging price risks from the fiscal deficit, energy costs and a weaker rupee.......
India Inflation Poses Dilemma for Central Bank
...........With India looking rather stagflationary at present, the RBI faces somewhat of a dilemma -- does it ease policy further on the basis that economic growth is very weak and core inflation soft or keep rates unchanged as it worries about headline inflationary pressures?" ........................
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Voice-recognition apps: No small talk this
........Sunny Rao of Nuance Communications, the speech recognition company currently powering Apple’s Siri in the iPhone 4S, claims this is a first-of-its-kind initiative in India, where voice solutions have been adopted by the judiciary to read out judgments in courts. Rao, who is the managing director (India and South East Asia) for the firm, also adds that Nuance’s voice solutions are also being used by the Income Tax Department, RBI and NABARD...................
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