Why RBI Governor D Subbarao won't cut rates anytime soon

........"Structural inflation, and the middle class' demand for food, limits the RBI's ability to pursue easy monetary policy," said Chin Loo Thio, the Singapore-based regional strategist for BNP Paribas. "There is a limit to which the monetary policy can be effective." Deputy Governor Subir Gokarn himself poured cold water on any hopes of a sharp reduction in interest rates last week. "We started that process [of reducing interest rates] in April," Gokarn said in Hyderabad recently. "But if you look at our inflation projections in relation to what we consider as long-term or medium objective there are inflationary pressures. That in a sense limits the room that we have to reduce rates."..............

 

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Little chance of further rate cuts, says Indian Overseas Bank chief

NAGPUR: There is little chance of further rate cuts by the Reserve Bank of India (RBI), feels chairman of Chennai-based Indian Overseas Bank (IOB), M Narendra..............


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Inflation control should not eat away growth

.............Subba Rao, RBI Governor feels that rate hike is necessary to curb inflation. If inflation is due to excess money supply, then RBI Governor’s prescription is correct. But in the present context, food price hike is due to demand supply mismatch which in turn is due to wastage of food produced. Under the circumstances, an interest rate hike will not bring in the desired results. Only fiscal measures can bring the desired solution to the problem. Rate hike will only help the fixed deposit investors to enjoy more returns. But here again, the fixed deposit return can be eroded by high inflation and the investor is a net loser. But he has no choice.......................

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A silver lining in India's slowdown?

.........The RBI has continued to implement financial reforms to facilitate infrastructure financing, improve the transmission of monetary policy, and promote financial inclusion. If these positive signs are quickly followed by bolder government action, the recent slowdown would have a silver lining.

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The postman will bring loans, besides moneyorders!

The Department of Posts could give the yesteryear Hindi film song Daakiya Daak Laayaa (Postman has brought a letter) a new twist. The lyrics of the1970s song could well change to ‘Daakiya Loan Laayaa, Daakiya Kisht Leney Aayaa' (Postman has brought a loan, Postman has come to collect an instalment) if the Department's plans to set up a bank pan out. So, the postman will give you money, that is loan, even if you do not get a money order from your dear and near ones! ..........

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RBI to close down coin, currency counters

.........“If the RBI totally withdraws from the scene this will send a signal to the racketeers and the common people will be the worst victims. This will throw the entire currency management into a state of anarchy,” feared Thomas Joseph, convener, United Forum of Reserve Bank Officers and Employees and secretary, Reserve Bank Employees Association (RBEA). While the Central Bank will be shorn of one of its core functions, the move will also deprive the public of a valuable service enjoyed by them for decades.............

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My Views on "Plea not to close down RBI counters":

Sections 38 and 39 of the RBI Act make it obligatory on the part of GOI to put rupee coins into circulation through RBI and on RBI to supply different forms of currency to the public. It is intriguing that within a short period after heralding its intention to be part of GOI’s outreach programmes to ensure financial inclusion to every village, RBI is being persuaded by Centre to withdraw from one of its core functions. RBI withdrawing from the scene will immediately put banks under pressure and short-supply of currency and coins in cities will result in several unethical practices. No big research is needed to see that already under-staffed banks will not be in a position to fill the vacuum created by RBI’s withdrawal. Already there are pockets like bus depots and religious centres where coins are piling up waiting for bank staff to accept. In such a situation, banks will scare away customers approaching for exchange of notes and coins.

M G WARRIER, Thiruvananthapuram

My Views on "RBI not to interfere in bank service charges"

- A.Chandramouliswaran, Former Executive Director

While in a deregulated environment, it is oaky that RBI should not interfere in Bank charges. Nevertheless, they have to see, especially in new private sector banks, whether the charges are reasonable and they should counsel the banks when they find that the charges and the minimum balance required to be maintained,especially of the new private sector banks, are unreasonable. It is not so easy to change bank accounts when several transactions of the customer including online payments are linked to the bank.

Fake currencies found from ATM

MALDA (WB): Fake currencies, with the face value of over Rs one lakh, were found from two ATMs of a state-run bank in English bazar town of Malda district in the past two days.............

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India’s Mobile Banking Ekosystem

...........Agent networks are the main issue that mobile operators and banks need to get right if they are to turn branchless banking into a sustainable business. The Reserve Bank of India recently removed restrictions on agent exclusivity, so customers can now transact at customer service points of one bank even if their accounts are held at another bank. Such interoperability should mean greater efficiency and lower costs across the system............................

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Bharti Airtel and Axis bank collaborate on mobile money and banking services

.............The venture marks Airtel's second attempt to extend its mobile money capabilities into the banking market. The telco announced a joint venture with the country's largest bank, State Bank of India, last year, to a offer a complete suite of banking services via both the mobile platform and a state-wide network of branches and retail distribution outlets. However, the plans were scuppered by the Reserve Bank of India over the equity arrangements for the venture, which would have given the telco a stake in the banking business without recourse to a banking license.

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