Do not micromanage PSU banks, former RBI chief YV Reddy tells government

.........Reddy, whose conservative policies are widely regarded as having insulated India's financial system from the global economic meltdown of 2008, appeared to endorse the views of his successor Duvvuri Subbarao, who last week said the finance ministry should demonstrate exemplary corporate governance by exercising its ownership rights through bank boards.........

......Reddy also disagreed with one of his predecessors, C Rangarajan, who now heads the PMEAC, on the preconditions for issuing new bank licences.......

Read......... 

‘RBI serves the nation, not the Govt’

The Reserve Bank of India’s Governor has a responsibility to speak up. As a public servant, he owes his loyalty to the country and the Constitution — and not just to a government in transit, the Governor, Dr D. Subbarao, said. He was quoting the late I.G. Patel, a former RBI Governor, while speaking at the launch of a collection of the latter’s essays — Of Economics, Politics and Development...............

Read.........

Govt and RBI are not adversaries: Subbarao

....We are not adversaries and we share a common goal. And I think some disagreement is natural,” he said. “There are disagreements within the government and there are disagreements between the government, regulators and public policy institutions. In fact, I would worry if there is complete agreement.” ............

Read - BS

RBI official highlights problematic international regulations

G Padmanabhan, an Executive Director of the Reserve Bank of India, delivered a speech on July 13 in which he assessed the effects of global banking regulations on the Indian economy. Speaking at the Bankers Club in Raipur, Padmanabhan said that co-ordinated international regulations could create positive externalities for India, but might need to be changed to account for the needs of the domestic economy. "For instance, guidance on the conduct of the counter-cyclical capital buffer for India may require some adjustment," he said, explaining that the credit-to-GDP ratio was potentially problematic for credit growth in India.............

Read..........

Former RBI governor YV Reddy rules out stagflation for now

Dismissing fears of stagflation, Former Reserve Bank Governor Y V Reddy today said India is still one of the fastest growing large economies." "Where is the issue of stagflation? Though inflation is a concern but that does not mean that we are de-growing... still we are one of the fastest growing large economies," Reddy, who is credited with formulating policies that absorbed the shock emanating from 2008 global financial crisis, told........

Read.......

In an interview with The Wall Street Journal, Mr. Reddy says............

Without fixing fisc, reform is dangerous: YV Reddy

CBSE agrees to introduce financial education in school curriculum

The Central Board of Secondary Education or CBSE is likely to take the lead in introducing financial education in its post primary level curriculum after taking a leaf out of Reserve Bank of India's financial literacy goal. RBI recognises that basic knowledge about monetary aspects play a key role in financial inclusion and inclusive growth. Imparting financial education among the masses at the early stage of a life cycle can make a real difference in a country where many do not get the opportunity to study beyond school level. "This is truer in case of girl students. One must keep it in mind that for such students, this could be the last opportunity in life to get formal inputs on financial education," RBI said in a draft guidelines on financial education released on Monday..................

Read........

SEBI, RBI for financially aware and empowered India

Financial sector regulators, including RBI and Sebi, today proposed a nationwide survey for assessing financial inclusion and literacy in the country and educate 500 million adults, besides providing financial education to school children. The draft 'National Strategy for Financial Education' seeks to "create a financially aware and empowered India" and convert savers into investors. It pitches for a five-year action plan for financial literacy with initial focus on four sectors - banking, securities market, insurance and retirement planning..........

Read.........

Timely warning from RBI

.......Since the government isn’t particularly concerned about corporate governance when it comes to itself, RBI must be more assertive. Governor Subbarao’s message is loud and clear but if the government chooses not to hear, RBI must step in to protect the interests of banks. Meanwhile, Mittal would do well to limit his views to the boardroom.

Rerad - FE Editorial

Obituary

Mr. K. Gopinath Menon, Ex. NABARD/RBI passed away on 15.07.2012. Mobile: 98411-43577 / 94443-15937.

Hindu

Deepak Parekh to head Financing Infrastructure panel

The committee was set up in November 2010 under the chairmanship of Rakesh Mohan, former Deputy Governor of RBI

The government has appointed eminent banker Deepak Parekh as the new Chairman of the high-level committee on Financing Infrastructure.The committee was set up in November 2010 under the chairmanship of Rakesh Mohan, former Deputy Governor of Reserve Bank of India. The committee was mandated to review existing policies and suggest necessary changes in the investment framework in the high-priority infrastructure sector............ 

Read........

Mobile-Enabled Savings via the Business Correspondent Model in India

........In India, microfinance institutions aren’t permitted to intermediate deposits, and regulators are encouraging the business correspondent model to further financial inclusion. The Reserve Bank of India (RBI) permitted banks to use the services of intermediaries who act as business correspondents (or agent) to provide banking services.We saw an opportunity to test the potential of the business correspondent approach as a means of scaling mobile savings services for the poor, working with our long-time partner, Cashpor, an MFI operating in two of India’s poorest states – Bihar and Uttar Pradesh.........

Read...........

RBI imposes Rs 5 lakh penalty on Karad Urban Co-op Bank

........According to RBI guidelines, urban co-operative banks are required to obtain prior permission from it for shifting to a different locality or municipal ward. The bank has been penalised for shifting its location in Sangli, Maharashtra without RBI permission, the circular said............

Read - ET

Why Subbarao will be watching the skies and a lot more

....But chances are, RBI governor Duvvuri Subbarao won’t oblige. After he stood firm and refused to cut rates at RBI’s 18 June mid-quarter policy review, sections of India Inc came up with predictable howls of protest. However, given Subbarao’s earlier statements explaining his stand, it’s difficult to envisage RBI will consider monetary easing just yet. And there’s good reason for not doing so.......

Read............

Post-WPI, Subbu will play more Baba Sehgal than Ilaiyaraaja

.....For Duvvuri Subbarao to make melody like Ilaiyaraaja a lot of things which are not under his control need to come together. Ilaiyaraaja has control over the people he works with. He can tell his musicians what to play. He can ask his singers to sing in a certain way. He can ask his lyric writer to write a certain kind of song. And so on. Subbarao does not have the same control over the other players in the economy. So, in the meanwhile, it is safe to say that try he might as much to make melody like Ilaiyaraaja, chances are he is more likely to come up with a song Baba Sehgal once made. It was called “Main Bhi Madonna”. Those who have heard the song will know that melody has never been “murdered” more.

 

Read.........

Growth trouble

.....There is trouble ahead for the Indian economy. On Monday, the International Monetary Fund (IMF) pared its growth forecast for the Indian economy this year to 6.1% from 6.8% earlier. On the same day, the governor of the Reserve Bank of India (RBI), D. Subbarao, said inflation continued to be above the central bank’s comfort zone. This is a clear hint that interest rates may not be brought down as quickly as the government and businesses want.........

Read - Mint

A 50 bps rate cut now better than 150 bps in Oct

The Reserve Bank of India (RBI) should use the lower-than-expected June inflation numbers to cut the repo rate by 50 basis points (bps) in its July 31 policy review. If the central bank waits for further confirmation of inflation trending down and growth coming off, it would be forced to cut rates by wider margins in its policy reviews in September and October. .......

Read..........

India’s twin-track inflation

.....Such a twin-track inflation problem creates complicated policy dilemmas. The Reserve Bank of India tracks core inflation—which excludes volatile food and fuel prices—very closely. It has been receding, mainly because the Indian economy is now growing below its potential. The trend in core inflation strengthens the case for lower interest rates.....

Read - Mint

Upside risks to inflation persist

....“We expect all policy rates to remain unchanged on July 31. Eventually, rates have to come down. But for this scenario to play out, India’s inflation has to sustainably decline at or below 6.5 per cent.”.....

Read - BS 

India inflation way above RBI's comfort level: Duvvuri Subbarao

.........."We are unelected...but we take decisions that affect the entire country. So, we must be very sensitive to rendering accountability for our actions and the results of those actions,".............

Read............

Liquidity in RBI comfort zone ahead of policy review

.........Banks are yet to effectively pass on the rate cut of 50 basis points announced by RBI in April. Bankers were of the view that reduction in policy rates did not help much, as liquidity was tight and high cost of funds limited their scope for reducing lending rates. The central bank is scheduled to announce the first quarter monetary policy review on July 31. RBI had opted to hold rates in the mid-quarter policy review in June, citing upside risks to inflation.....

Read - BS

More EM central banks join the easing crew

.........Worries about a growth collapse are clearly gathering pace. So how much room do central banks have to cut rates? Compared with Europe or the United States, certainly a lot. And with the exception of Indonesia and Philippines, interest rates in most countries are well above 2009 crisis lows. But Deutsche Bank analysts, who applied a variation of the Taylor rule (a monetary policy parameter stipulating how much nominal interest rates can be changed relative to inflation or output), conclude that in Asia, only Vietnam and Thailand have much room to cut rates. Malaysia and China have less scope to do so and the others not at all (Their model did not work well for India).........

Read........

Indian Banks On Security Alert!

.....However, the good news is that the Reserve Bank of India has proactively directed banks to beef up their information security and risk management posture, outlining a number of checks in several categories to protect users’ information and money from cyber threats. Upadhya believes that it depends on how decision makers in the banking ecosystem can leverage technology to its fullest and ensure a secure enterprise.

Read.......

June inflation at 5-month low: India Inc clamours for rate cut, RBI unlikely to oblige

India's headline inflation fell to a five-month low in June, increasing the clamour for a cut in policy rates but the Reserve Bank of India governor D Subbarao quickly dashed hopes, saying it was still "way above the threshold"............

Read..........

New clients are a matter of interest for lenders

..........However, bankers say that if the RBI reduces rates in the monetary policy scheduled on July 31, they will pass on the benefit to the customers. “Unless RBI reduces rates banks will not be able to bring lending rates down. We will wait for RBI action," said S Raman, CMD, Canara Bank.

Read............

PM’s job plan fails to take off in J&K

........The Expert Group – headed by former RBI Governor, C Rangarajan – had also suggested to run special training programmes for university and professional college students in collaboration with industry sector under the “Udaan Scheme”.........

Read - Deccan Herald

SARFAESI Act and its impact

.....It would have been appropriate, say, for the RBI to have studied/ audited the financials and methods of operations of the ARCs and the reasons for the existing trust deficit between banks and ARCs before the ministry issued this direction. Besides, the definition of authorised officer given in the SARFAESI Act does not include ARC, though it can be an agent.........

Read...........

Killing Me Softly With His Song...

.....That the central bank was well cognisant about the fact was evident in the 2002 speech made by former RBI governor Y V Reddy. “The availability and easy access to different forms of financial savings on an extensive scale, particularly for women, to protect the traditional stree dhan (jewellery given to brides) will prove to be the most viable policy option to encourage non-gold form of savings,” said Reddy. Today, much of the central bank’s action is aimed at just doing that. Besides forcing banks to increase their rural penetration, the central bank has looked to curb lending against gold by capping interest rates and jacking up the capital requirement for gold-lending non-banking finance companies. Besides, it is also toying with the idea of banning banks from selling gold coins. But the market seems to be turning a blind eye to the fact. The truth is, gold is no longer a ‘safe haven’. It’s just another alternative asset class that has turned speculative in nature......

Read..........

Anand Sharma pitches for interest rate cut to boost growth, exports

With inflation easing marginally to 7.25 per cent in June, Commerce and Industry Minister Anand Sharma today pitched for cut in interest rate by RBI in its month-end policy review to boost both growth and exports. "The cost of the credit has to be low so that the Indian industry remains competitive in the global context,"............

Read.........

Stealing is as easy as A, T, M

......the police will write a letter to banks across the city, asking them to enforce RBI safety guidelines, which state that a unique PIN should be generated for every transaction. Although the RBI's guideline came quite some time ago, many banks are yet to implement them........

Read..........