Shaking Up the Citadels

.....Many years ago, the government had contemplated abolishing the banking division in the ministry. YV Reddy — who was secretary of that division in the mid 90s — says, what is relevant is to make a distinction between ownership and sovereign functions. According to him, the banking division should be divided in a way that there should be a financial sector regulation division, which is entirely a sovereign function. “It is a political decision, but it should not erode the autonomy,” he says adding that this was something even the UK government went through. Perhaps, a review by Prime Minister Manmohan Singh, who is now in charge of the finance ministry, is in order now.......

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RBI needs to talk to GoI

.....it’s high time RBI and the finance ministry had a candid discussion instead of talking at each other through the media. If RBI isn’t going to cut rates in a meaningful manner till the government does its bit on easing supply constraints and on cutting expenditure, and the government isn’t going to do anything to ease supply constraints in a hurry, this seems to be the surest recipe for stagflation even if, as some argue, we’re not in stagflation at the moment.

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DCB Bank inaugurates new Corporate Office

DCB Bank (Development Credit Bank Limited) new Corporate Office was inaugurated by Mr. P Vijaya Bhaskar, Executive Director, Reserve Bank of India at a ceremony graced by Prince Rahim Aga Khan from Aga Khan Fund for Economic Development (AKFED), Mr. Sultan Allana, Director AKFED, Mr. Nasser Munjee, Chairman DCB Bank and Board of Directors DCB Bank. The new Corporate Office is located on the 6th floor of Peninsula Business Park in Lower Parel.......

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Counterfeit note makes senior citizen run from pillar to post

Nagpur : ........."There is hardly any chance of a fake note being given away from the bank's counter. Moreover, under any situation the customer should check all notes before leaving the counter," said the manager. Kardar is sticking to his claim that he got the note from BOI. "Banks should have a mechanism to verify notes at the counter itself. How can a lay man identify a fake note," he asks. President of the Nagpur branch of All India RBI Employees Association (AIRBEA), Bidyut Charaborty, said that if Kardar is to be believed then getting a fake note from a bank counter is indeed a matter of concern. Banks are supposed to thoroughly check the notes before keeping them at the counter. Banks must have verifying machines at counters though many do not install one, said a source in RBI.

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Private banking licences: Bank employees to go on all-India strike

Public sector bank employees will go on a two-day nation-wide strike from July 25 to protest against government's moves to grant banking licences to private business houses and closing down of rural branches......

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Policy rate alone not responsible for slow growth: Subbarao

....."The Reserve Bank maintains that interest cost is only one of the several factors that have dampened growth, and the increase in policy rate by the Reserve Bank alone cannot explain the investment slow down," ............

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RBI takes first steps to save consumers from exploitative investment schemes

The Reserve Bank of India has taken its first step to protect consumers from exploitative investment schemes by releasing a draft National Strategy for Financial Education on Monday.............

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Here’s what Subbarao has to say about inflation

........“I must hasten to add that sacrificing growth is only in the short-term. In the medium-term, there is no trade-off between growth and inflation,” the RBI Governor said. “There is a threshold level of inflation. Below the threshold, may be, there is a trade-off between growth and inflation. But above the threshold, there is definitely no trade-off between growth and inflation,” he said. However, the RBI governor said his views on inflation should not be read as a preview to the decisions to be taken in the quarterly monetary policy review on July 31.............

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Subbarao compares spiralling haircut costs and inflation

                                                  (The Telegraph)

Reserve Bank Governor Duvuuri Subbarao today cited his receding hairline and the high rates for his hair cut to make a point on inflation. He said he used to pay Rs 25 for a haircut 20 years ago which went up to Rs 50 even as his hair thinned. However, in recent times, though the hair growth has been almost nil, he is paying Rs 150 for a haircut. "Now when I have virtually no hair left, I pay Rs 150 for a haircut," the career bureaucrat-turned-central banker said to a laughter ................

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Read more........ Wondering why your barber charges high rates for hair cut? RBI governor shares the same concern


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Core inflation may not be true indicator: Subbarao

Reserve Bank of India (RBI) Governor D. Subbarao on Tuesday added a new dimension to the ongoing debate on what is the ideal measure of inflation that the Indian central bank should track while framing policy decisions, saying core inflation might not be a true indicator of price movement in Indian conditions.........................

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Can policymakers stomach another bout of food inflation?

.....India's wholesale and consumer price inflation levels are way above the Reserve Bank of India's comfort lines, central bank Governor Duvvuri Subbarao said on Monday. India's wholesale price index (WPI), the main inflation gauge, rose to a lower-than-expected annual 7.25% in June, its slowest rate since January, helped by moderation in fuel prices. The RBI's threshold level for inflation is around 5%, he said.......

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Make Zero CAD cornerstone of policy making: Reddy

New Delhi: With the current account deficit (CAD) overshooting 4 percent of GDP mark in 2011-12, former RBI Governor Y V Reddy Tuesday said India's medium-term economic growth strategy should be aimed to achieve zero CAD. "Zero current account deficit in medium term should be the cornerstone of the policy making," he said at the lecture of IPF, a partnership between NCAER and Washington based Brookings Institution..........

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The meaning of liquidity

What is the difference between leverage and high leverage? Ask Y V Reddy, former Reserve Bank of India (RBI) Governor, who was at his wittiest best at the Indian Overseas Bank’s platinum jubilee commemorative lecture. “Basically, leverage means others’ money and high leverage means that you are playing more with others’ money,” he said. And what does liquidity mean? “Liquidity has many meanings ... we have aggregate liquidity, then we have CRR [cash reserve ratio] and OMO [open market operations]. And, of course, in Hyderabad after 7 p m, liquidity means beer and whisky. That’s why we have important conferences at 5 o’clock,” he added.

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Reform is not laundry list; focus on micros must: YV Reddy

Neither growth nor inflation should drive interest rate policy. The correct rate is one that promotes savings.

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Political aims too matter, RBI governor to economic advisors

D Subbarao has urged economic advisors to consider the government's political objectives while suggesting measures, turning around the old-school theory of giving unbiased apolitical advice...........

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Subbarao moots producer price index to measure inflation

The Reserve Bank of India on Tuesday mooted a producer price index (PPI) that would be able to measure inflation more accurately. According to Reserve Bank of India Governor D. Subbarao, the present ways of measuring inflation do not take into account cost escalations of...........

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Statistics and Statistical Analysis in RBI’s Work: Dr. D Subbarao

Address by Dr. D. Subbarao, Governor, Reserve Bank of India at the Sixth Annual Statistics Day Conference, Reserve Bank of India, Mumbai, July 17, 2012

......I want to reiterate that the Reserve Bank is deeply conscious of positioning itself as a knowledge institution. We place great store by the timeliness and accuracy of data and in the skill sets for analysing and interpreting that data. Oftentimes, the complex problems of the real world test the adequacy and the integrity of our data sets as also our ability to analyse and interpret them. We make best efforts to improve our data collection and analysis and to be mindful of the conceptual and measurement errors. We are not the best practice, but will spare no effort to reach the best practice, if not set the best practice itself. .........

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Why slowdown? RBI at sea; will probe

......"I have asked our economic research department to do a detailed study on the time-series relationship between real interest rate and investment activity. We expect to put out that report in the public domain in the next couple of months,"........

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Bankers express concern over decline in CD ratio

......Mr Vijaykumar A., Manager, RBI, Bangalore, said that declining trend in CD ratio is a worrisome factor. Bankers have not achieved CD ratio of 60 per cent, which is the benchmark prescribed by the RBI. Banks with less than 60 per cent CD ratio should accelerate lending. Disbursements in tertiary sector such as segments like housing and education needs improvement, he said.......

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Mad chase for GDP growth

..... large percentage of what our retailers offer is imported; including fruits and festival goodies. During the 1995 -2005 decade, according to the RBI report, blue-collared jobs in the organised sector in India declined! During the same decade, China created 72 million new factory jobs in their manufacturing sector, mainly for their unemployed rural youth. The problem is not the lack of enterprise amongst our people, but the complete mismanagement in handling the manufacturing sector.......

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India growth story clip dips to 7.5%, says RBI

....."Assessing India's potential growth rate, consistent with our objective of low and stable inflation, remains a challenge. In its annual report for 2009-10, the Reserve Bank had reported that the potential output of the Indian economy may have dropped from 8.5 % pre-crisis to 8% post-crisis,".......

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Micromanage now, regret later

The Reserve Bank of India (RBI) Governor has publicly cautioned the government against micromanaging public sector banks directly, explaining that the correct route through which the government as majority owner should work is the board, on which it has its nominees. Then, for good measure, he has added that this would be in line with good governance, in which the government could set an example! A limit of sorts was crossed recently when the government, or the department of financial services, first issued a letter to banks to limit their acceptance of certificates of deposit and bulk deposits and, on confronting a volley of protest from bank chiefs, held the instructions in abeyance. It is useful to trace the history of micromanagement ...............

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Maharashtra to provide loans to farmers through state co-op bank

Since the RBI has passed strictures against the district co-operative banks, the state government decided to provide loan to farmers through state co-operative bank................

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Are the entry barriers for companies to set up banks too high?

........Last week, the Reserve Bank of India (RBI) issued the gist of comments from various constituents and stakeholders as a prelude to announcing a new framework for new banking licences. One of the comments was on the entry capital. Whereas RBI’s discussion papers suggest a threshold of Rs 500 crore, some stakeholders say the limit should be raised to Rs 1,000 crore. There is a high order of prudence and analysis that seems to have gone into this suggestion. ........

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SBI to stop appointing individual business facilitators

...............The bank has asked individual facilitators to either upgrade into a business correspondent or associate themselves with institutions — like NGOs — to bring credibility in operations. SBI now suggests business facilitators to follow the business correspondent model in setting up customer service points and conducting banking operations through point-of-sale terminals, mobile phones or other such smart devices. In order to ensure greater financial inclusion, the Reserve Bank of India had in 2006 instructed banks to use the services of business correspondents and business facilitators. Business correspondents carry out much wider function, including that of disbursal of small value credit, collection of small value deposits, sale of third party products and receipt and delivery of small value remittances. SBI currently has a network of 30,000 such correspondents across the country.

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Establish standards for MFI independent directors as first step to ensure good corporate governance

The RBI and the Union Finance Ministry must provide clear guidelines on the appointment, roles, compensation and evaluation of independent directors for microfinance companies, critical for effective and ethical operations

As the Reserve Bank of India (RBI) and the Union Ministry of Finance (MoF) work hard on building a clear regulatory architecture for microfinance, they would do well to remember that an important cog in the whole scheme of things is to ensure good corporate governance on the ground. There can be no compromise on that as much of the Andhra Pradesh and Indian microfinance crisis of 2010 can be traced to poor............

 

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IUCB launches speedy loan recovery mission

Imphal, July 16 2012:In compliance with the directive of Reserve Bank of India (RBI), Imphal Urban Co-operative Bank (IUCB) has started its Speedy and Efficient Loan Recovery Mission from today........

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