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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, June 29, 2012
D Subbarao dampens fiscal stimulus hopes
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....and he is now Dr.Sandip Ghose.........
VITALINFO extends Heartiest Congratulations to Ghose as he will now be known as Dr. Sandip Ghose........ Watch this space to read more tomorrow...........................
RBI is right, critics be damned : S S Tarapore
......In an unusually hard-hitting speech, at the Indian Merchants’ Chamber on June 19, 2012, Governor Dr D. Subbarao stressed that there was nothing inevitable about the India growth story and that achieving growth was a shared responsibility of the government, the RBI and economy managers. He emphasised that the blame game cannot go on; it was not good for anyone, particularly the majority of the population. The poor are vulnerable to inflation as it is a regressive tax which hurts the poor the most; their voice, silent as it is, must be heard. Governor Subbarao comes out fighting from his corner, and this speech will go down in the annals of RBI history as one of the most powerful and frank speeches by an RBI Governor. The matter will not end here, and the RBI should be ready for a battle of attrition. The RBI can take solace in the fact that it is doing the right thing, if it comes in for bitter attack; and conversely, doing the wrong thing, if praise is heaped on it........
RBI sounds a cautious note on algo trading
.......This is the first time a financial market regulator has revealed figures regarding the use of HFT or algo trading technology, which have been under a cloud globally. RBI has stressed the need to balance technological advancements with a pragmatic approach. “This assumes even more significance for India, as efforts are being made to increase retail participation in Indian securities markets to change the markets’ largely institutional character,” RBI said...............
RBI caps merchant discount rates for debit card transactions
.....The RBI said the cap on MDR would encourage all merchants to deploy card acceptance infrastructure and also facilitate acceptance of small value transactions. A lower MDR, with the expected increase in transaction volume on account of network effects, would result in a reasonable ROI for acquiring banks. Till now, the MDR for debit and credit cards was the same in India. Given the different nature of the two products, there is no rationale for having a similar MDR for debit and credit cards, the RBI release said.
No cheques: Govt, RBI want to checkmate paper money
.....Well, the good news is that the finance ministry wants to end our love affair with paper money. It has decreed that at least state-run banks must completely stop using cheques for the following purposes: payments to customers, staff, and vendors and suppliers. Moreover, “disbursement of loans and payments towards investments should be made only through the electronic mode,” reports The Economic Times. Simultaneously, the Reserve Bank of India (RBI) has put out a vision document whose goal is to reduce the use of paper money. Its vision is not to move to a cash-less society, but a “less-cash society”. (If you have trouble falling asleep, you can read the whole bally document here.) So, don’t fret too much of your bank suddenly raises charges on issuing cheque-books. They will justify it in the name of the RBI’s less-cash vision. Any excuse to charge you more. But it’s in a good cause.
‘I do not go to an ATM’
Mumbai, June 28: The RBI Deputy Governor, Dr K.C. Chakrabarty, brought the house down saying that he never used ATMs after hearing the number of complaints made by customers. While the ATM machine was one of the greatest innovations in the last 50 years in terms of technology products, it did have drawbacks. “It facilitates faster dispensation of cash provided the transaction is successful. Though there have been 98 per cent successful ATM transactions, there have been no failed transactions at a branch. So where is the evolution?” he exclaimed. “The problem faced by the aam aadmi today is ‘terrorisation of ATMs’. Some (ATM machines) will swallow your cards, some require only swiping; some require keys and some do not, some provide cash on the tray while some do not, and some do not return money…,” he quipped.
HBL
Banks must ensure better IT solutions for customers: RBI
The Reserve Bank of India Deputy Governor K C Chakrabarty told banks on Thursday that their “Focus of all innovation should be on the customer” and it should never be driven only by internal processes, systems or employees but customer satisfaction..........
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RBI Deputy Governor K C Chakrabarty differs with FinMin, opposes free e-fund transfer
MUMBAI: Within a fortnight of the Finance Ministry asking banks to make electronic fund transfers free of cost, RBI Deputy Governor K C Chakrabarty today said the banking regulator is firmly of the view that the plan should not be implemented as it is commercially unviable. "We firmly believe that anything that is free of charges can never be scaled up, it cannot be made robust unless there is commercial viability...I don't think anybody will be able to provide this service free of cost; this is just not possible," ...................
Banks misguiding investors on NPAs, says Chakrabarty
Mumbai, Jun 28: Mr K C Chakrabarty, Deputy Governor, Reserve Bank of India, on Thursday lambasted lenders for attributing their sudden fall in profits to migration to system recognised NPA generation saying this is tantamount to misguiding investors. “You have misguided your investors for the past five years by not giving your proper NPA (non—performing assets) figures,” he told a banking technology summit organised by the industry body CII here..............
Measuring sentiment
Like love, “sentiment” is an intangible and can’t really be measured. Its impact, however, is profound; when aroused, sentiment can completely overturn your life or, more prosaically, financial markets. While measuring sentiment accurately is, by definition, impossible, I like to put on my Don Quixote hat from time to time and tilt at such lovely curiosities. I’ve been doing that with the sentiment for the rupee and my ramblings may, perhaps, throw some light (or more confusion) on the subject.........
Looking Ahead: Staff crunch ahead, NIBM readies PG course via video-conferencing
.....The move is aimed at countering the likely shortfall of staff in the banking industry in the next few years as several officers holding top management positions in banks are retiring. Major private and government-run banks will be connected to training sessions that NIBM will run during a year long e-post graduate programme in banking and finance (PGPBF). The decision on launching the video-conferencing facility will be taken at the board meeting of NIBM likely to be held in July in Mumbai under the chairmanship of Reserve Bank of India (RBI) Governor D Subbarao. .......
To check speculation, RBI seeks curbs on currency futures
.....RBI is learnt to have raised the issue during a meeting of the sub-committee which is chaired by the central bank governor. In recent weeks, RBI has sought to clamp down on activities that could impact currency fluctuations and the proposal is also in that direction. The rupee has depreciated over 20% over the past 12 months and closed at 56.80 against the dollar, compared to Wednesday's close of 57.16......
RBI Executive Director weighs financial stability objective
.....Deepak Mohanty, an Executive Director at the Reserve Bank of India, delivered a speech on June 27 in which he discussed the importance of financial stability as an element of central bank mandates, but argued that price stability should remain the first priority. Speaking at a Central Bank of Nigeria board retreat in Cape Town, Mohanty said that the recent crisis has underlined the importance of central banks' financial stability role. However, "the challenge for a central bank is to achieve multiple objectives without losing credibility as a monetary authority solely responsible for price stability," he said..................
Concerns over asset quality of banks remain elevated: RBI
.... “Insurance companies and mutual funds are the major lenders in the Indian financial system with banks, especially public sector banks, being the major borrowers.” Banks, on the other hand, were considerably reliant on borrowings from these entities. As borrowings from mutual funds were largely short-term, the RBI said, “they could engender greater liquidity risks for the banking system.”...............
Reserve Bank Says India Is Facing Inflation, Growth Risk
............“Threats to stability are posed by the global sovereign debt problem and risk aversion, domestic fiscal position, widening current-account deficit and structural aspects of food inflation,”................
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Bank deposit and lending patterns continue to favour big cities
......Recent Reserve Bank of India data on deposits show that wealth is getting concentrated in the bigger cities and towns. At the end of December 2011, the top 100 Indian cities accounted for 69.4% of aggregate bank deposits............
'Need to educate public about perils of investing in gold'
Reserve Bank Deputy Governor KC Chakrabarty today said educating the common man about the speculative nature of gold investments is the key to bring down the high import of the precious metal which is straining current account and pulling down the rupee. "What will bring down gold imports is creating awareness in the society that gold is not a proper investment for the poor. It is a speculative investment. We need to change our culture," .....
Lowering capital controls can sometimes be a bad idea
.....Indian industry is operating near full capacity, going by capacity utilization and inventory data published by the Reserve Bank of India, but the situation described by the World Bank is closer to what we saw in 2008, when the Reserve Bank of India led by Y.V. Reddy went against the prevailing global consensus and argued for a policy to control capital inflows that threatened to worsen overheated in the Indian economy.......
India downgrade could hit banks' overseas funding: RBI
....The ability of Indian banks and corporates to borrow overseas could be hit if the country's sovereign rating is downgraded, the Reserve Bank of India said on Thursday, after recent cuts to the country's outlook by Fitch and Standard & Poor's. "A change in the current external rating of the country could have 'cliff effects', impacting both, the availability and the cost of foreign currency borrowing for Indian banks and firms," the RBI said in a report on financial stability...........
RBI vs the govt: who will blink first?
......We seem to be moving towards stagflation, with growth at 5.3 percent and inflation (WPI) at more than 7 percent. In fact, CPI inflation for May came in at 10.36 percent, justifying the RBI’s latest stance. Even if the RBI had cut rates, there is doubt as to what extent banks would have followed it. Expectations of money printing abroad may have given the RBI some room to continue its crusade against inflation and resist pressure to cut rates immediately to ease liquidity. Also, as rightly mentioned by it, there is a risk of commodity prices rising and thus adding to inflationary pressures, if developed markets start printing money once again. The point is, how long would it wait for Quantitative Easing (QE) abroad, before finally succumbing to the pressure and cut rates? A game of brinksmanship seems to be going on in between the RBI and the government. Let’s see who blinks first.
Despite risks, India's financial system robust: RBI
.............."The financial system of the country remains robust despite increase in risks to stability primarily due to global risks and domestic macroeconomic conditions,"..............
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No direct risk to Indian banks from Eurozone: RBI
....The RBI felt the muted economic activity and difficulties abroad may lead to further deterioration in asset quality for banks but the situation is not alarming. The Basel-III capital adequacy norms to be implemented in phases by FY18, which aim at fortifying the capital bases of banks, may not hurt so much given our banks' strong capital adequacies but will throw up challenges,
PM takes charge of Finance — and how!
What a stunning difference taking over Finance Ministry has made to the persona of Dr Manmohan Singh! Seemingly clueless, listless and rudderless as Prime Minister, he has suddenly begun exhibiting verve and vigour, and morphed, in a manner of speaking, into a mouse that roars! He thumps the table and orders the mandarins of the Ministry, and the presiding deities of the Reserve Bank of India, Dr D. Subbarao; the Planning Commission, Dr Montek Singh Ahluwalia; and the Prime Minister’s Economic Advisory Council, Dr C. Rangarajan; to get cracking with the task of pulling the country out of the economic morass into which it has fallen.................
IndusInd Bank gets its first currency chest
.....Earlier, banks had to report the balances in the chest to the RBI at the close of each day. However, today typically the chests are linked up to the RBI that all transactions could be monitored by RBI real time...............
ATM operators struggle to pass on higher capital costs
............The operators of automated teller machines (ATMs) in India are unsuccessfully trying to convince ATM makers to charge per transaction as an increasing number of banks are outsourcing the entire process from purchasing to managing the machines...............
More inter-bank links warrant greater monitoring
....The Reserve Bank of India (RBI) on Thursday said “interconnectedness” among banks had risen in the last financial year and needed rigorous monitoring. “An analysis of the network of the Indian banking system reveals that the systemic importance of the ‘most connected’ banks has increased, warranting a closer monitoring of the banks,” said RBI in its fifth Financial Stability Report, released on Thursday......
Banks' gold coin imports a concern
...at a banking seminar on Thursday, RBI Deputy Governor K C Chakrabarty said investments in gold should be discouraged in the current scenario, and people should consider the change in their income levels before buying gold.....................
Elevated inflation, fiscal, current account deficits are serious concerns: RBI Governor
The Reserve Bank of India on Thursday expressed concern over the rapid rise in gold loan companies and that such firms, which are highly dependent on banks, could pose a risk to banks. In its Financial Stability Report released Thursday, the central bank also said it was worried about the placement of non-convertible debentures by gold loan companies. It also raised concers over high inflation and large fiscal and current account deficits..................
Foreign banks face Bharat challenges
......................And then, RBI released a ‘Discussion paper on the presence of foreign banks in India’ in early 2011. Apart from a more assured point of view regarding local incorporation for systemically important foreign banks, the Discussion paper does little to shake up the game for existing foreign banks. It does, however, change the rules of entry for new entrants by defining categories of banks that may not be eligible for the branch mode of presence.................
AP banks gearing up to complete rural coverage
.....The committee is now gearing up to open brick-and-mortar branches in all villages with population of over 5,000, as part of the nation-wide initiative unrolled by the Reserve Bank of India. The State requires 208 branches to cover all villages under this category..................
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