....even as the Reserve Bank of India (RBI) nuances monetary policy to maintain the growth-inflation balance, manufacturing is likely to remain flat. The global contagion and the falling value of the rupee limit the RBI’s options to cut interest rates. As this newspaper has rightly pointed out, the solution to high inflation and low growth – stagflation – lies squarely with the government. RBI Governor D. Subbarao has, again rightly, identified the problem as supply-side – lack of reforms discouraging productive investment. Fiscal profligacy has fuelled inflation. Without fundamental economic reforms – cutting fuel subsidies, fast-forwarding infrastructure projects and reducing the fiscal deficit – no amount of monetary policy tinkering will tame inflation or spur GDP growth......
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.
Wednesday, July 11, 2012
Cooperative bank gets RBI licence
“The Reserve Bank of India has granted a banking licence to the Gulbarga District Central Cooperative Bank,” president of the bank Annarao Patil told ..........
Banking: All about exams, cadres in CWE (IBPS)
IBPS or Institute of Banking Personnel Selection acquired independent status in 1984. The credit to the initiative goes to the Reserve Bank of India (RBI) and the Nationalized Banks. Dr Manmohan Singh, who was the Governor of RBI at the time, became the first Chairman of the Governing Board of IBPS.........
Fake note biz thrives as RBI, cops play blame game
JAIPUR: Thanks to the lack of coordination between the Reserve Bank of India (RBI) and special operation group (SOG) of Rajasthan police, the fake currency business is thriving in the state. Both the department are playing blame game but shying from taking the responsibility to check the menace. A state level security committee set up to curb the flow of counterfeit notes in the market is defunct. Neither the officials of RBI nor the SOG remembers when the last meeting was held. The committee was constituted to work jointly so that inputs and technical expertise can be shared and cases can be resolved promptly..........
Fake currency swamps Pune market
....As per details obtained by The Indian Express under the RTI Act from Pune city police, 166 complaints of fake currency (under section 489 of IPC) were registered between January 2008 and April 2012. Of these, 141 were by banks in the city. C V R Rajendran, executive director, Bank of Maharashtra said, “FICN of over Rs 12 lakh were found in our banks last year. The money cannot be recovered; the bank is at a loss.” In January, Narayan Peth branch of the HDFC Bank lodged a complaint at Vishrambaug police station against unknown persons for depositing FICN of around Rs 4 lakh before December 2011. There were 54 fake notes of Rs 1,000 denomination, 728 of Rs 500 denomination and 38 of Rs 50 denomination..........
Watch out for currency manipulators
.....According to Dr Basu, the intention of the paper is not to explain how currency manipulation is done. There are numerous ways to do that and there are players who are masters at the game. But regulators in most countries do not acknowledge the presence of manipulators nor do they understand the way the manipulator strategises. Deciphering these methods could help the regulators curb currency fluctuations without disturbing free functioning of market forces. The RBI also appears to be thinking along similar lines. It had recently imposed limits on overnight open positions and intra-day open positions held by dealers in inter-bank forex market. This is among the first acknowledgement by the central bank that speculation could be one of the reasons for currency volatility......
Ploughing a profitable strategy
The Reserve Bank of India (RBI)'s approval to Jain Irrigation for setting up a non-banking financial company (NBFC) could help the company address various issues relating to high working capital and debt...........
‘Failure to build consensus’
.....How do you assess the Reserve Bank of India’s (RBI) measures to ensure capital flows by easing rules pertaining to external commercial borrowings (ECBs) and allowing foreign institutional investors (FIIs) to invest in government securities?
These measures have to be carefully examined because while speaking on the Finance Bill in the Lok Sabha I had said that not only was the current account deficit going beyond sustainable limits but what was even more worrisome was the fact that 70 per cent of the CAD, as per data available with me, was being financed by short-term debt. Commenting on a similar situation way back in 1991, Dr I.G. Patel said that short-term debt is like sudden death because if they don’t roll over and insist on repayment, you have to repay. So short-term debt is even worse than FII money..........
Borrowing time
....the RBI measures are designed to boost the short-term foreign fund flow through the debt route, besides helping to stem the slide in the external value of the rupee, which has lost over 25 per cent in the past one year. The high current account deficit, which is the difference between all foreign inflows and outflows, has made imports expensive and pushed the value of the external rupee on a downhill path....
Financial sector players ask govt to perk growth
....This was the second meeting of Rangarajan in two days with key players or their representatives in the economy arena. On Monday, he had met officials from industry chambers, who among other things, pressed for easing of monetary policy by the Reserve Bank of India (RBI). However, Rangarajan had said RBI’s stance would depend on the behaviour of non-food manufacturing product inflation. On Monday, RBI expressed displeasure at banks not cutting interest rates despite the central bank lowering the repo rate, at which it lends money to other banks, by 50 basis points in April. The apex bank had also expressed concern at the slow pace of bank deposit growth. RBI, which opted not to change rates at the policy review last month, is scheduled to review the monetary policy on July 31.......
Seeking a magical repeat
......That still leaves the big task—getting the Indian economy back on a higher growth trajectory. Reserve Bank of India Governor D. Subbarao has already indicated that India can grow at only 7% without high inflation, around 1.5 percentage points than the trend rate before the global financial crisis....
Misunderstood macro adjustment
..... is a foregone conclusion that the RBI will need to increase its foreign reserves or India’s external liquidity ratios will worsen further. Such an outcome will raise more worries among sovereign credit rating agencies. However, the increase in foreign reserves will occur only when India begins posting overall BoP surpluses and the RBI intervenes to prevent rupee appreciation. India is not there as yet but the current adjustment to narrow the current account deficit via below-trend growth is a step in that direction........
My View on "North shouldn’t block"
Coordination and not confrontation is what is required between the Central govt and the Regulators particularly the Reserve Bank. All other regulators of the financial system should cooperate with the Reserve Bank and should be under the guidance and supervision of the Reserve Bank. Then only the so called Financial Stability can be achieved.
- Dr.T.V.Gopalakrishnan
PM knows best
Ths refers to the report “Time magazine dubs Manmohan ‘underachiever’” (July 8). It is Dr Manmohan Singh’s achievement that developed countries have started taking note of India, and are now getting panicky about India not following the LPG (liberalisation, privatisation and globalisation) prescription with the implicit obedience that they are used to from “pockets” like oil-rich countries or, for that matter, Singapore. No one knows better than Dr Singh that India cannot cut and paste policy initiatives tested in countries like Singapore or Switzerland (with less than 10 million population) or even the UK that has a developed infrastructure and 100 per cent literacy. The prime minister knows the problems of 1.2 billion people and if he is going slow on certain measures that will help the commercial interests of business and industry, but will make the poor poorer and the rich richer, you cannot put the entire blame on coalition compulsions. Incidentally, India’s GDP growth today is at a comfortable rate compared to the “developed” world.
- M G Warrier Thiruvananthapuram (BS)
A middle path to nowhere
...It is a complete paradox that today we are made to wonder about financial inclusion. The Singh legacy is particularly evident when it comes to policy (non-) response to the continuing saga of inflation. The response is one of ping-pong between Finance Ministry and the Reserve Bank of India (RBI). The Ministry thinks inflation control is primarily in the domain of RBI, by way of monetary tightening, while the RBI suggests that nothing can be done until the Ministry reins in fiscal deficit numbers......
No service tax on foreign remittances :Finmin
The government on Tuesday clarified that service tax cannot be levied on foreign currency remittances into India as the transaction is actually executed outside the country..........
RBI shatters Lavasa's debt recast hopes
Troubled real estate firm Lavasa's efforts to escape the stigma of bad debt suffered a jolt with the Reserve Bank of India rejecting a request to confer infrastructure status on its loans............
Irda opens the door to getting banks to focus on mis-selling
.....One reason for that has been the grand old man status of the Reserve Bank of India (RBI) that prevents younger and less powerful regulators from leaning on banks for violations linked to products that they regulate. The insurance regulator, it seems, has decided to bite the bullet. If the IndusInd case is a precursor, we should see the corporate agents named in the HDFC Standard Life case get penalized too.
But here is where the story gets interesting. Long-time RBI watchers say that banks will get help soon. Some quiet arm-twisting will happen and the Irda threat could melt away. It would be another lost opportunity if that were to happen. RBI should use the door that Irda has opened to push through more accountability at banks. Banks have emerged as large sellers of retail financial products........
Indian online travel agencies confident about customer security
.....The Reserve Bank of India (RBI) mandated an extra layer of authentication for online payment by credit and debit cards, 3D secure authentication, which requires a password provided by banks for online transactions, in August 2009.......
RBI's focus on inflation makes easing difficult: StanChart
.......Given the focus of inflation, which has clearly come out since the last policy, our expectations are reasonably well pared down now. The fact is liquidity has improved over the last few days. So it doesn't look therefore as if RBI will oblige us with either a rate cut or a CRR cut,".......
Banks not to witness shocks on account of bad loans: Chanda Kochhar
Dismissing concerns of rising bad loans, ICICI Bank Managing Director and CEO Chanda Kochhar today said that banking sector unlikely to witness any substantial shocks on account of NPAs and the focus in the current fiscal will be on restructuring of loans of mid-size companies.............
Bankers agree rate cut by RBI can't lower inflation, but still want it
Bankers agreed that inflationary conditions offered little room for lowering interest rates, but stuck to their demand for a rate cut, saying it was the only tool available to revive the "animal spirits" in the economy in the absence of policy action. In their customary pre-monetary policy meeting with Reserve Bank of India (RBI) Deputy Governor Subir Gokarn, bank chiefs also acknowledged that rate cut was not a panacea for the nation's economic ills...............
RBI, banks push each other to reduce rates
The Reserve Bank of India (RBI) on Monday asked banks to explain why across-the-board reductions in interest rates had not taken place despite the April 17 cut of 50 basis points in the key policy rate. On their part, banks asked RBI to cut both cash reserve ratio (CRR) and the repo rate by 25 basis points each so that liquidity can ease and lending rates can come down.............
Why bankers still harp on rate cut
.....after the last policy review, prior to which the clamour for a rate action got louder due to the dismal factory output data, RBI Governor reiterated his resolve to fight inflation, even at the cost of growth. Nothing much has happened to change the RBI’s stance since. On the contrary, there are indications that things are going to get more difficult towards the year-end due to scanty monsoon........
Rising interlinkage in financial system under RBI scanner
.....the failure of a bank with large borrowings from insurance and mutual funds segments may have significant implications for the entire system, the RBI says, hinting at a possible tightening of norms, especially on short-term borrowings. ........
No relaxation for textile debt recast
The Reserve Bank of India (RBI) will not allow any special dispensation for loans to be restructured by banks for the textile industry, as only 20 per cent of units in the sector are under stress. Industry representatives are to meet finance ministry officials on Friday to discuss the debt recast issue. In a recent meeting with bankers, top RBI officials said banks had to undertake a debt recast according to the norms that specify higher provisioning after restructuring of debt............
Bank licences: Focus on realty link
For corporates seeking bank licences, there is one key concern: how would the Reserve Bank of India interpret exposure to real estate activity? This was the highlight of corporate responses to draft guidelines announced by RBI earlier. The central bank on Tuesday published the responses to its draft guidelines stating that it would keep the suggestions and reactions in mind while framing the final guidelines.................
Redefining money guardians: Who should set up new banks
Bank aspirants in India Inc have asked for greater clarity on the central bank’s definition of promoters. In feedback to the Reserve Bank of India (RBI) in response to the draft norms on new banks, companies have also sought more clarity on various issues thereon, from corporate structure to priority sector targets. The draft norms were made public in August last year. These proposed several measures for considering applications to be issued a banking licence. Among these were the eligibility of promoters, the corporate structure, minimum capital requirement, corporate governance norms and business model, among others...........
New banking license: RBI gets feedback on draft guidelines
The Reserve Bank of India (RBI) on Tuesday put up comments/suggestions received from the related parties on the draft guidelines for new banking license in private sector, released on August, 2011. Those comments were received from general public, consultants, analysts, industrial / business houses, NBFCs and others. The regulator will consider the feedback before finalizing the guidelines............
Banking aspirants want to do away with holding co norm
.... The Reserve Bank Tuesday said many corporates interested in entering banking have called for doing away with the requirement of promoters wholly owning the proposed non-operative holding company (NOHC). "Doing so will diversify the shareholding structure of the NOHC and will improve corporate governance and avoid regulatory overlap," the RBI said in a release attributing the view to business houses, NBFCs and a federation.........
Post office bank proposal awaits RBI nod
The central government is awaiting the Reserve Bank of India (RBI)’s reply to the department’s proposal to float post office banks, according to Union minister of state for communication and information technology Sachin Pilot..........
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