The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Friday, May 18, 2012
Modulated depreciation is salutary - S S Tarapore
Regulatory autonomy, not autarchy
....... In certain quarters in India, the importance of the role played by the Reserve Bank of India is overstated by equating it with that of the Election Commission — and, by implication, free and fair elections. As we have witnessed repeatedly in the West and in India, regulatory autonomy has not prevented frequent financial market failures, since market and credit risk were allowed to build up to systemic proportions................
Finance Minister Pranab Mukherjee to resolve wage revision issue of IDBI staff
........The Minister said as soon as the Budget session is over, he will call the IDBI Chairman and all concerned and try to arrive at an agreed solution. He said that so far no solution could be arrived at as the IDBI Employees' Association had been insisting on parity with RBI employees for most of the time. He said IDBI employees, unlike in other scheduled banks in public sector, have refused to negotiate with the Indian Bank Association to negotiate its wage issue...........
Anini hosts DCC meet
............K K Pandey expressed his apprehension on not only the low but decreasing CD ratio in the district from 29.68% in September 2011 Quarter to 23.27% in March 2012, and advised LDM to take steps for increasing CD ratio to the minimum national norms of 60%. The RBI officer also emphasized the need to create credit demand at the grass root level through line departments of State govt to improve the CD ratio while assuring the support of RBI in future deliberations. S Mukherjee, Manager RBI also spoke on currency chest.............
RBI asks BCs to operate from ultra small units in rural areas
"...It has been decided that BCs can operate from such Ultra Small Branches as their association with the branch will increase their legitimacy and credibility in the area and give people increased confidence to use their services," RBI said in a notification.................
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RBI staff concern over coin, notes distribution
.......Either coins supplied by RBI remain accumulated or are distributed only in bulk in preference to retail customers or small businessmen, who are mostly in need. This would only aggravate the crisis and people in cities would only rush to RBI counters even more. Strangely, RBI has sought to restrict entry of customers on specious pleas creating panic about shortage of coins. Even the Finance Minister has recently said that “currency distribution is a key sovereign function and among the primary functions of a central bank. “It is also the most visible of its functions, as it touches directly and immensely the common person.” The unions also referred to complaints from members of public with regard to supply bottlenecks. Unscrupulous people are already taking full advantage. If the RBI were to totally withdraw from the scene, it would only sound out racketeers who would be emboldened to carry in with their nefarious activity. This could lead currency management to anarchy, the unions said.
SKS Microfinance pins revival hopes on proposed law
The central bank, as the sole regulator, would cap interest rates and fees levied by microfinance companies under the new law, and also stipulate rules for debt collection
......SKS, backed by Sequoia Capital, forecasts relief from a Bill approved by Prime Minister Manmohan Singh’s cabinet last week that would enable the Reserve Bank of India (RBI) to regulate the industry......
Microfinance Bill will regulate the sector to death, to the joy of moneylenders
The Cabinet has cleared a proposed Bill empowering the Reserve Bank of India (RBI) to regulate all microfinance institutions (MFIs). A central legislation makes sense only to the extent that it over-rides draconian state-level laws. However, the Bill suffers from many infirmities. And it is unfortunate that these have been overlooked. The law, if enacted, is likely to kill small MFIs and hurt the sector that is struggling to stay afloat.....................
UCBs can offer higher rates on FCNR deposits
In order to attract more dollars into the country, the Reserve Bank of India on Thursday increased the interest rates on foreign currency deposits of non-resident Indians (FCNR-B) held in Urban Co-operative Banks (UCB). In the first week of May, the central bank had revised interest rates on such deposits held by scheduled commercial banks (SCB). The ceiling on one to three year foreign currency deposit rates in UCBs has been upped to 200 basis points above...............
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Exporters slam RBI order on foreign exchange
....Earnings in other currencies such as pound and Euro were normally used for meeting overhead and other expenses. Therefore, the RBI order would cause a great loss to the MSME sector, which does not have the skill to handle foreign exchange risk......
RBI opens additional counters for tax payers
......Rajeev Dwivedi, Deputy General Manager (Banking) of Reserve bank of India informed that facility for depositing income tax by cash or cheque was available at 145 branches of public sector banking including State bank of India and ...............
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Office bearers scot-free as Nagpur District Central Cooperative Bank stares down the barrel
NAGPUR: With RBI setting a deadline of September 2012 for Nagpur District Central Cooperative Bank (NDCCB) to improve its financials, it is a race against time for the bank. As the management is busy compiling list of assets it can sell to garner funds, an inquiry that could have made the chairman and directors pay for the losses which led to the bank's troubles has been conveniently forgotten............
Why will RBI go for a rate cut in its July review?
.... Liquidity is expected to tighten in June due to first quarter advance tax payments. The higher than expected inflation for April 2012 will drive out any rate cut expectations in RBI's June policy review.
Bond yields will trend down post RBI policy review in June as liquidity situation will ease on the back of advance tax money coming back into the system while the country will have seen the onset of monsoons. Rate cut expectations will gain momentum for July as inflation is likely to keep its head down on weak commodity prices........
CPI-based inflation data: A good start, but a long road to stabilisation
.....The CPI also has an edge over the WPI, as it includes some services in the miscellaneous category like education, medical care, recreation & amusement, transport and communication, personal care and effects, and household requisites. However, for now, RBI would have to consider both the WPI and the CPI for policy decisions. Some economists even feel the WPI would have to be there even if the CPI stabilises, to gauge movement in wholesale prices. It would also offer a picture of production........
Understanding loan to value under new RBI norm
....The Reserve Bank of India has brought about many new directives and guidelines in order to curb speculation in the property market as the sector stands poised for a revival post recession recovery. One of the guidelines that has dampened the mood of real estate developers as well as prospective home buyers is the exclusion of stamp duty, registration fees and all other allied charges while calculating the loan to value when taking a home loan......
Growth vs inflation
Apropos the debate “Should policy focus on growth or inflation” (May 16), it is ably argued that growth with price stability is most desirable. However, it is equally important to maintain consistency and contain policy uncertainties to achieve robust economic growth and tackle inflationary expectations. Further, proper co-ordination between various policy authorities is needed to avoid a clash of interests.
- Raman Kumar Agrawalla, Bhubaneswar (BS)
RBI’s hands tied, need FIIs: PM advisor
Arguing that the uptick in inflation has “considerably diminished” the Reserve Bank of India’s legroom to intervene in the forex market to prop up the plunging rupee, the Prime Minister’s top economic advisor has called for “more proactive steps” to attract capital flows as the more viable way out of the crisis................
Rupee plunges to new low before RBI pulls it back
.....Most economists Mint spoke to said they are not revisiting their current forecast that the rupee would trade in the 52-55 to a dollar range over the next three months. The gyrations in the currency market are knee-jerk, they say. RBI deputy governor H.R. Khan had said on Wednesday that the central bank was keeping a close eye on the rupee, and “will take all steps to curb volatility”. He did not elaborate further. The RBI’s stated policy is to intervene only when the foreign exchange market becomes volatile rather than target a particular exchange rate.........
Rescuing the rupee: What RBI can do next
....In a special report, Deutsche Bank notes that the rupee has lost about 3 percent this month, which is in line with the fall in the value of of some other regional currencies, and even lower than some other emerging market currencies. Thank the RBI for that because were it not for a slew of central bank measures, the rupee would have fallen even further. Is there anything more the RBI can do? Yes, says the brokerage, noting that there are three further steps the central bank can take.....................
Weakening currency bane for RBI rate cut
The sharp decline of the rupee in the last one month may complicate things further for the central bank, in terms of lowering interest rates, as concern of imported inflation is set to weigh on Reserve Bank of India (RBI)’s decision making. With the country importing more than 80 per cent of its crude oil requirement, a weakening rupee will push up oil prices which will affect inflation............
The ropey rupee
......The RBI governor, Duvvuri Subbarao, remains in an unenviable position as he tries to devise polices to support the rupee while also facing the ongoing monetary policy dilemma. On the one hand, the dismal industrial production reading means that he will continue to face pressure from businesses to cut interest rates further. He appeared to succumb to such lobbying in April, when the central bank reduced the repo rate by 50 basis points to 8%. On the other hand, when considering the RBI’s determination not to undermine its credentials as a monetary institution unwilling to tolerate excessive price instability, it would be difficult to justify further monetary loosening when inflation is still so high......
Rupee: What exactly is RBI intervention?
In the wake of the rupee’s slide, there has been much talk about the RBI’s intervention in the currency markets to support the Indian currency, including a massive selloff of dollars. But what exactly is RBI intervention, how does it work and what impact can it have? Here’s a quick guide to understanding what tools the RBI has at its disposal and what it can do......................
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