Former RBI Official Slams Rupee Policy

........In a rare instance of a former Reserve Bank of India official criticizing the bank, Rakesh Mohan said in an interview Wednesday that the lack of RBI intervention until the rupee's recent plunge are at the root of the country's current exchange-rate problems and, until recently, an acute shortage of cash in the domestic banking system. "We have had a policy of a managed float but without an exchange rate target" in the past, he said. "The rupee should reflect fundamentals and not the vagaries of capital flows.".....

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Read - Mohan Sees Little Rate Cut Impact

Role Model RBI officer no more.........

Shri M. Subramaniam, former Chief Officer, Department of Currency Management, left for his heavenly abode on Saturday i.e. on 7th July, 2012.

Shri V.K.Sharma, Executive Director when contacted overphone, described Shri Subramaniam as a role model officer of RBI.  Down memory lane, Shri Sharma said:-

“Mr. M. Subramaniam was, in every sense, truly a genius and a role model RBI officer – a peerless epitome and paragon of unmatched and unremitting calibre, intellect, professionalism, courage and conviction! He was the last word in the Indian foreign exchange knowledge and regulations space and strode it like a colossus!!”

Axiomatic Monetary Credibility

....The gold standard example is particularly illuminating because it shows how credible policies in certain areas lead to "incredible" policies in others. Because the gold peg was credibly sustained, price stability could not be credible. Shocks to the price level could not be controlled because there was no longer a specific mechanism to control prices. By similar logic, India's attempts to stop the devaluation of the rupee are not credible because there's no infinite forex intervention that can stop the rupee's slide without also contracting monetary policy. Given that the Reserve Bank of India has shown no signs it wishes to tighten monetary policy, the forex intervention is not credible because the mechanism is not infinite......

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RBI instructs banks to check notes

Jaipur : ....The RBI has issued instructions to ensure that there is no re-circulation of forged currency notes received by them. At the instance of RBI, banks have designated a nodal officer in every district who would be responsible for filing the FIR and advising the details to the RBI and other relevant agencies. It has also become mandatory for the banks to install note-counting machines and mechanised processing capability for the branches having a daily receipt of Rs 50 lakh and above. To remain one step ahead of the fraudsters, RBI is improving its coordination with the police, CBI, RAW and taking proactive steps to address the menace in the state. There are periodical enhancements in the security features of Indian bank notes........

Read - TOI

Big fish of fake currency racket slip through police net, small fry held

.......“I did not know that the money we were depositing had fake notes. My family and I suffered a lot because of the case. I obtained anticipatory bail and spent about Rs 2 lakh in the legal battle that went on for about a year. The judgment was, however, in my favour,” Shinde told The Indian Express. “High quality FICN are being circulated. It is difficult for the common man to identify these notes,” said advocate Sushil Mancharkar. Banks have stopped complaining against genuine customers, and inform the police only about suspicious persons. They now either destroy fake notes or cancel and return them to customers.

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Currency manipulators

........It is hence unfortunate that the December RBI circular prevents exporters/importers re-hedge the hedges, and banks have been asked not pass on the profits on cancelled contracts. Also, these companies have to take cash rate on such cancelled contracts.  It is pity that SMEs are hit badly by such directives, whereas hedge funds, speculators, big corporates and banks are making huge, unjustified profits. It is time the RBI acts against the manipulators; else, the SMEs, which contribute more than 75 per cent of global trade, will have to close shop.

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Little chance of rate cut on July 31: Parekh

...."Unless the Reserve Bank sees a trend that inflation is actually coming down, I don't see the Reserve Bank reducing interest rates,".........

Read - Deccan Chronicle

Jayaram Bhat gets second term as MD and CEO of The Karnataka Bank Limited

.....MANGALORE: P Jayarama Bhat, managing director and chief executive officer of city-based The Karnataka Bank Limited, who will be completing his first term in office by July 13, will step into the second term of 3 years on Saturday. The Reserve Bank of India has conveyed its approval for re-appointment of Jayarama Bhat as the managing director and CEO of the bank for further period of three years as proposed by Bank's board of directors........

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Rising interlinkage in financial system under RBI scanner

With insurance companies and mutual funds becoming the largest lenders to the banking system, the segments have become “vulnerable to the risk of contagion from the banking system”, according to the Reserve Bank of India...............

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My View on "Misunderstood macro adjustment"

A well-balanced analysis of the present policy scenario. Here again RBI may not be able to make the right noices or bring about changes suggested here unless there is strong fiscal policy support. First, our economic advisors in Delhi must convince GOI the need to augment the forex reserves and generally strengthen the balance sheets of major national level institutions including RBI and al public sector organisations including PSBs. Cash-rich private organisations should be made to take supportive measures. The governemnt should resist the temptation to depend on public sector organisations including RBI and PSBs for 'window-dressing' budget. These institutions should be allowed to plough back profits for developmental initiatives and for augmenting reserves.

-  M G Warrier

My View on "My View on "North shouldn’t block" - - M G Warrier

In their own selfish interest, those who are in charge of governance should reconcile to the fact that health of economy is dependent on a vibrant financial sector for which a central bank commanding respect from within the country and at international forums is a pre-requisite. For historic reasons RBI has been entrusted with several responsibilities which elsewhere are not part of central bank's role. RBI has been with GOI's support has been performing its role successfully. GOI should continue to ensure that RBI is not weakened. For the purpose it is essential to allow functional autonomy within the contours of the statute. While on the subject, the need for a strong balance sheet with adequate capital and reserves for RBI also has to be emphasised.