Some banking giants more powerful than central banks: ex-RBI guv

At a time when the financial sector is being blamed for much of the global economic crisis, former RBI Governor Y V Reddy has said that some financial conglomerates are more powerful than even the central banks. At the same time, Reddy has also flagged the issue of leading rating agencies and accounting firms enjoying an oligopolistic power over the markets, and said that some large international banks enjoy significant influence over political economy in several countries..........

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RBI least predictable among major Asian central banks

The Reserve Bank of India (RBI) has emerged as the least predictable central bank in Asia, ahead of Bank Negara Malaysia, the central bank of the South Asian nation. Data on central banks' policy actions compared with what was a consensus view of the market, Credit Suisse analysts have found that RBI has surprised the market in nearly 27% of the cases. The Philippine central bank, BSP, is at the other end of the spectrum, surprising the market in just about 14% of the cases...........

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Hunt for money in Assam wetland



People search for currency notes in a water body at Chachal in Guwahati on Monday

GUWAHATI: Known as a storehouse of various species of fish, the Silsako beel (wetland) near here has never disappointed fishermen who depend on it to eke out a living. The beel has always provided a steady source of income to them. But on Monday morning, it had something more to offer when some fishermen went there to net their day's catch - currency notes. As the news spread, thousands from the city's Chanchal area went to the spot and got engaged in a treasure hunt hoping to change their lives overnight. The area witnessed a festival-like ambience as hundreds of people started jumping into the water hoping to find money. Many even found Rs 500 and Rs 1,000 notes floating on the water mysteriously. "I saw some fishermen making a hue and cry in the water. I thought they found a big fish but later came to know that they have found some currency notes..........   

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Helping hand

The Reserve Bank of India wears two hats. It is the regulator of all banks; it is also the chief manager of government banks. If they continue to dominate the banking system without being the most efficient or customer-friendly, the credit must go, at least partly, to the RBI. When it sees an opportunity to send some profits the way of government banks, it is happy to oblige them. The latest instance of helpful market manipulation comes from the foreign exchange market...............

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RBI rules out equal treatment for NBFCs with banks

.....“NBFCs as a class of financial institutions are concentrated niche players, hence the CRAR (capital to risk weighted assets ratio) has been fixed at 15%, well above 9% for banks,” RBI said in a clarification. “NBFCs which describe themselves as ‘gold NBFCS’ are further exposed to the risk of having to deal in a specific commodity. Hence the risk is higher in them vis-a-vis all other NBFCs.” They can’t be compared with banks, even those that extend jewellery loans, as this may be a “minuscule portion of the balance sheet and all banks are diversified entities”, it said.......

 

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My View on "Bold economist"

This article takes me back to my own comments in Business Standard (August 11, 2011)as under:

"Vote for stability"

In these turbulent times, the timely decision by Centre to give a two-year extension to RBI Governor Dr Subbarao stands apart as a decisive vote for stability at the Central Bank. This will strengthen the RBI to pursue the right course it has been following in different areas of its responsibility. A change of guard at this juncture would have resulted in slowing down of the processes of change in areas like fighting inflation, forex reserves management, financial inclusion and outreach and transparency in policy prescriptions where Dr Subbarao has made perceptible progress. On his part, the Governor should take this opportunity to hasten the initiatives he has taken to make RBI a change agent in the economic development of the country. Beyond the mandated responsibilities, one expects RBI to do much more in the areas of financial inclusion, gold and wealth management (as part of its forex reserve management), revival of grass-root rural financial institutions like cooperatives and balanced economic development across regions by ensuring an appropriate realignment of the outreach of institutional infrastructure using financial sector reforms as a tool". One wishes tenures of positions where skills get sharpened on-job were longer and incumbents knew about it while joining.

 

- M.G.Warrier

My View on "Opening FD account"

On the basis of my experience,  I find that banks invariably find it easier to justify their procedures with their customers by passing on the buck to RBI. I am sure RBI would not have issued any such instructions. I would suggest that Seshan ask the bank to show him the relevant RBI instructions as I used to do.If in the unlikely event of any such instructions  having been issued by RBI, he should dissect them with his usual analytical ability and extraordinary clarity and take up with the RBI Customer Service Department.

- A.Chandramouliswaran.

ASSOCHAM welcomes the bold steps taken by RBI to shore up the falling rupee

ASSOCHAM welcomes the bold steps taken by RBI to shore up the falling rupee both in the long term as well as in the short term by raising ECB limit to US $ to 10 billion and investment by FIIs to US $ to 20 billion in G-Securities.............

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Camson Biotech, HDFC Bank in pact to take banking services to farmers

Camson Biotech has tied up with HDFC Bank to take banking services to over three lakh marginal farmers all over the country. By an agreement with the bank, its 3,000 dealers will be eligible to become business correspondent (BC) or business facilitators for the bank. BCs appointed in rural areas will execute all transactions that a customer avails of at bank branches. Currently, HDFC Bank has 460 BCs. The RBI has drawn detail guidelines for appointing BCs in a bid to reach banking services to remote rural areas..........

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Business correspondents: Bank boards must be made responsible for outsourcing

.....First, on its part, the Reserve Bank of India (RBI) must ensure that bank boards have a clear policy framework—with regard to outsourcing through BCs—that can be implemented in real time. And it is not a “cut and paste” policy document that I am talking about. I am referring to an outsourcing policy, with regard to BCs (and their sub-agents), where respective bank boards have thoroughly debated the pros and cons of various activities (to be outsourced) after understanding the attendant risks and benefits.........

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Costs of policy convolution

.....So, let us see what is happening. RBI holds interest rates steady. Private sector cost of borrowing does not come down. Public sector borrowing costs are held down by its bond purchases. Further, the public sector garners most of the savings and liquidity with its disdain for restraining spending and spending meaningfully. The government announces a hike in the minimum support price for agricultural produce, while consumer price inflation reigns above 10%. So, what we have is a central bank that cites inflation concerns and holds rates steady, but monetizes the budget deficit in record sums; a government that is supposedly pro-poor, but ensures double-digit inflation with its fiscal irresponsibility; investors (who are they?) who bid up stocks and sell the currency. Even a good criminal novel-writer could not have created such a convoluted set of circumstances, goals and actions......

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Costlier food, crude may have caused inflation

Rise in food and crude oil prices could have contributed to high in inflation in past two years despite tight monetary policy, says a RBI working paper. “Despite the monetary tightening by the RBI during 2010 and 2011, inflation remained high and this could be attributed to the structural component of food inflation as well as the surge in international commodity prices beginning the second half of 2010 and continuing into the first half of 2011,” the paper concluded.......

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RBI decisions are 'non-package': BJP

....."The four announcements made by RBI and Finance Ministry are a non-package. People were expecting a real package but the government has given non-package," .......

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Union Bank’s London arm to start operations by March

The London subsidiary of Union Bank of India is expected to be operational by March next year. The wholly owned subsidiary of Union Bank of India, UBI UK Ltd, has already received the Reserve Bank of India’s approval and was waiting for the local regulator’s approval, according to Mr D. Sarkar, Chairman and Managing Director............

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RBI, FinMin steps to boost Re, economy fail to impress market

In keeping with their promise to improve market conditions, the Finance Ministry and the RBI on Monday increased the amount of rupee-denominated debt that foreign investors can own in the Indian market. The slew of measures announced today could lead to greater capital flows on the debt side and also help arrest the slide in rupee, which has lost over 21 per cent against the dollar over the last one year, official sources said................

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‘Much ado about nothing’ said a note by a foreign bank, to its clients soon after the announcements by the Reserve Bank of India.........

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..........In other words, while the new moves announced on Monday may be a useful tactical response to the pressure on the rupee, the more strategic need is to raise the domestic savings rate through stronger public finances and lower inflation.

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..........."We will soon see a set of measures apart from what has also been announced, particularly, on implementation of large projects on which the Prime Minister has set up new mechanism to move things faster,” Ahluwalia told reporters after RBI announced measures to boost foreign funds inflow...........

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The Reserve Bank's measures to stem the rupee fall received mixed reactions with PMEAC Chairman C Rangarajan saying the steps will attract capital inflows and will have an impact on the currency while India Inc termed the steps as "minimal"..........

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Pranab Mukherjee and the art of dashing expectations

.....But coming as it did after a weekend of anticipation boosted by statements from both Mukherjee and the Prime Minister who commented on possible steps to stem the rupee slide, Monday’s moves by the government and RBI are being seen as hugely disappointing, and too little at a time when much more was needed. After all, as former RBI Governor Bimal Jalan used to repeat rather eloquently, monetary policy is also a lot about managing expectations. The government has sorely failed on that score.

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It was Chidu who messed up the economy, not Pranab

......The right policies include cutting down subsidies, reducing fiscal and current account deficits, improving governance, keeping down inflation and giving enough leeway to the RBI to act independently. Unfortunately, Chidambaram failed to adopt the right policies, leading to India going back into time rather than going forward.......

.....Chidambaram tussled with then RBI Governor YV Reddy on capital controls as the governor saw all signs of a bubble forming. There was lack of governance, leading to the huge telecom 2G scam and the countless land scams. There were no tax reforms to increase the tax-GDP ratio. Chidambaram’s policies were given a thumbs up by corporate India that again failed to see a bubble leading to the accumulation of debt both in rupees and US dollars........

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RBI Chennai holiday on July 2

Chennai, June 25: The Reserve Bank of India has announced that its office in Chennai will remain closed for public transactions, including Government transactions, on July 2, on account of annual closing of accounts. All commercial banks and co-operative banks will, however, remain open on that day for transacting business, a release from the bank said. The Chennai Bankers Clearing House as also the clearing houses managed by commercial banks in other centres in Tamil Nadu will function as usual on July 2, it adds.  

HBL

Reminiscing Talwar

Apropos T N Ninan’s column “The ‘Talwar Amendment’” (Weekend Ruminations, June 23), here is another Talwar moment. R K Talwar had shown exceptional foresight and commitment in the early seventies by getting State Bank of India (SBI) to finance an agri-business venture, the first such project by any Indian bank. In the first half of 1976, a colleague from the Indian Institute of Management, Ahmedabad, and I were retained to advise Mr Talwar and his top-level team at SBI about the serious problems the firm faced back then and possible solutions. We concluded that the promoter’s errors of judgment in dealing with unforeseen circumstances were the root cause. We worked out a detailed nursing plan, with the promoter managing the company’s affairs under far stricter SBI oversight. Talwar accepted this, but Mr Natarajan, then third in the hierarchy, strongly opposed it. The cement company case was very much the talk of the SBI Head Office Executive Floor. I asked Talwar, who had grown very friendly in an avuncular sort of way, whether he was acting in a contradictory manner in the two cases. He firmly said no, it was a matter of intention behind the act and not the actor per se. Soon thereafter, Talwar was replaced by P C D Nambiar (who passed away recently) and Mr Natarajan became MD. SBI rejected our advice and instituted legal proceedings. The case went on for 17 long years. Mr Talwar took no part in it and remained in his Pondicherry exile. I had to brief many of his successors about the case. Finally, the promoter, who fought his own case, prevailed with his honour intact, but little else. The firm was wound up and his family faced penury and estrangement. SBI incurred huge legal costs, and agri-business finance earned an undeserved bad name.

- Shreekant Sambrani Vadodara

...and his legacy

The iconic banker, R K Talwar, as succinctly narrated by T N Ninan, displayed extraordinary courage by standing up to his political masters during his eventful career at SBI. Those who have worked in SBI are also aware of how Talwar resisted Sanjay Gandhi’s demand to finance Maruti Udyog (MU). It may be noted that Talwar did not like the way Gandhi short-circuited the proper channels in the Bank and directly approached the chairman to take up the application of MU. Talwar was a steadfast practitioner of the principles of corporate governance, employee empowerment and delegation much before the terms became buzzwords of modern-day management.

- K V Rao Bangalore

Now, file I-T returns at kiosk, mobile van near you

....The “mobile vans”, in smaller cities, will act as a “single window” for salaried and other small and marginal taxpayers. Metros and other big centres will have “tax kiosks”.These vans and kiosks, which will be stationed at one location for 1-2 days, will be manned by trained Tax Return Prepares who would help taxpayers in filing returns...........

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Odisha issues advisory against fictitious offers

...................These offers are generally made through letters, e-mails, mobile phones and SMSs. The RBI has advised general public to immediately register a complaint in the local police station and Cyber Crime Authorities whenever they come across such fraudulent offers, they said...............

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Vijaya Bank opens 171 ultra small branches in a day

Bangalore : Vijaya Bank announced the opening of 171 Ultra Small Branches in a single day on Monday, under Financial Inclusion (FI) in villages around the country. Vijaya Bank CMD H S Upendra Kamath inaugurated 100 Ultra Small Branches in FI villages of Mandya District, Karnataka. Other 71 branches were opened on the same day in other states. The bank has provided banking services to all the allotted 407 villages with population of above 2,000.

Deccan Herald

Can you use your mobile phone in bank?

State Bank of India and other banks insist that you cannot use your mobile phone inside banks. This is nonsense because there are no laws against it............

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