“Financial Vandalism” in India, and a Way Forward

.......Just a few days earlier, the Reserve Bank of India (RBI) had announced new regulations affecting microfinance. Though these policies rolled back some harmful policies announced a few months back and helpfully clarified others, they also introduced a controversial new rule saying that microfinance institutions over a certain size would be subject to smaller margins than they were currently allowed between the rates they borrowed and lent at........

.....The second-to-last panel included Archana Mangalagiri of the RBI, calling in from Mumbai. She was evasive at times but was encouraging when she said that the government was willing to listen to arguments for reversing or at least refining recently announced policies if they proved to be impractical........

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Banking blues: Rise in NPA points to a rough ride ahead

...."The worst is over. Non-performing assets have plateaued and we do not see any acceleration . The NPA storm that had hit us in 2011 is now hitting other banks," .....

Read - ET

Banks bullish on microfinance post AP crisis, thanks to RBI rules

The microfinance sector has again started witnessing a flow of funds from banks — which had become hesitant in lending to micro lenders in 2011 — encouraged by the new set of regulations introduced by the Reserve Bank of India (RBI).........

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Year 2012 is quite unlike 1991, says Subbarao

A ballooning fiscal deficit, historical-high current account deficit, precarious balance of payments situation….Comparisons abound, but the Indian economy of year 2012 is quite unlike 1991 when it had threatened to default, says Reserve Bank Governor D. Subbarao........

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In India, the Three R's Are Being Joined by an 'F': Financial Literacy

....While the national policy is still a work in progress, other organizations are already launching like-minded efforts. The National Institute of Securities Markets (NISM) has been conducting a program called "Pocket Money" for the past few years. NISM functions as a public trust and has been established and funded by SEBI. The RBI has an interactive website centered on financial literacy for children and has produced comic books on the topic......

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New law to tackle cash economy recommended

....The panel said the laws which could be amended to further strengthen its provision to tackle black money include the Coinage Act 2011; RBI Act, 1934, Foreign Exchange Management Act, Indian Penal Code and Criminal Procedure Code. The committee, however, said there can be no single or omnibus law to deal with the menace.......

Read - BS

Counterfeit notes from ATMs or tellers: The latest position

The Reserve Bank of India (RBI), to its credit, has one of the best online adherences to the Right to Information (RTI) Act of India. Much of what you want to know has already been proactively declared, and existing circulars as well as guidelines are neatly arranged as well as very searchable. They also tend to be clubbed together by subject once or twice a year on the 1st of July and sometimes also on the 1st of January. The central bank is also very prompt in acknowledging and responding to RTI applications. Most of all, unlike certain other public authorities, the RBI tends not get stuck on technicalities like demanding small amounts of money for photocopying charges—especially when the postage used for said demands is more than the demand............

.....To sum it up, you have to ask your bank branch manager or the manager of the branch which holds responsibility for the ATM you use, whether the ATMs or tellers under their charge are in adherence with RBI’s circular DCM (FNV) No. 5063/16.02.22/2011-12 dated 9 May 2012. And if not, why not?

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Figuring it out

........Their combined impact would mean that Finance Minister P. Chidambaram and RBI Governor D. Subbarao may end up shooting in the dark when taking a call on the direction the economy must be given. For instance,........

Read - Indian Express

Banks extending only working capital loans

...According to data released by the Reserve Bank of India (RBI), CD issuance of bank has come down to just Rs 7,800 crore in the fortnight ended July 13 from a whooping Rs 81,460 crore issued in the preceding fortnight ended June 29......

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Corporate Debt Restructuring - issues and way forward - Dr.K.C.Chakrabarty

Address by Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India, at the Corporate Debt Restructuring Conference 2012, organized by Centrum Group, Mumbai, 11 August 2012

......Before concluding, I would like to emphasise that resources of the banking sector are precious and limited and they cannot be allowed to be used in an imprudent way. CDR is a necessity especially when economic upturn and downturn are a way of life and part and parcel of business cycles for individual companies. Corporate Debt Restructuring has been in existence for more than a decade in India, and this system has fulfilled its objectives to a large extent. It is a mechanism evolved for preserving......

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Risks to prolonged slowdown have increased: A Balasubramanian

........In the last few years, fixed income schemes, including liquid funds, have seen a higher level of participation. This is partly due to the poor domestic economic conditions, as well as uncertainty in the global economy, especially Europe. On account of these, we have witnessed inflows into debt funds. We are in an extended easing period, which is likely to continue till December 2013. In this period, the Reserve Bank of India (RBI) will not only reduce the repo rate, but probably, also take the effective overnight rate to six per cent........

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Arrest the slippage

....Among official agencies, the Reserve Bank of India, in its July 31 policy statement, had trimmed its GDP forecast to 6.5 per cent from 7 per cent earlier. At the same time, the central bank had warned of many downside risks to growth and upside risks to inflation — factors that might well drag India’s economic growth even lower........

Read - The Hindu

Market observers anticipate further rate cuts

....Market expectations for monetary policy have demonstrated frequent and large swings in recent months. Inflation management has of late been the Reserve Bank of India's focus and the central bank remains cautious about delivering the next bout of rate cut just yet. "We feel that markedly sub-par growth, a softening in core inflationary pressures over the next six months, near-zero fiscal spending headroom, and likely only hesitant government policy initiatives to revive the economy will eventually lead to greater monetary accommodation in the coming months, in our view......

Read - TOI

Rediscovering the growth magic

.......A combined and well coordinated fiscal and monetary stimulus was feasible as there was policy space. The Reserve Bank of India had been raising interest rates to prevent overheating of the economy and inflation, which had shown upward movement, had come down and so the RBI could lower interest rates significantly.......

Read - The Hindu

Experts call inflation numbers a mirage, rule out rate cuts

........The unusual decline in reported vegetable prices, limited representation of higher sugar prices and a sharp fall in fuel inflation distorted the overall number. Much against market expectations, they also feel RBI is unlikely to cut rates based on a "transient fall" in inflation. Terming some of the numbers in the basket "a mirage, not an oasis," Sujan Hajra, chief economist at Anand Rathi Share & Stock Brokers, pointed out that ........

Read - ET

Inflation near 3-year low, RBI seen unmoved

.......In addition, core inflation, which excludes food and fuel prices, rose in July to 5.44 percent from 4.9 percent in June, economists estimated. These factors will push inflation higher again and make the Reserve Bank of India (RBI) cautious about relaxing its hawkish stance anytime soon, in contrast with central banks elsewhere that are seen easing policy to counter the global economic slowdown.....

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Such gloom; let economy bloom

.......The RBI is often blamed for hawkish monetary policies and high interest rates. It certainly has choked consumer demand and corporates are avoiding taking credit. The flip side is that this keeps the banks’ capital safe. Afflicted by large defaults by power sector and real estate companies, the RBI policy has insulated the banks from defaults by small lenders.It is a moot question whether the RBI should allow banks in the country to face more difficulties in the face of almost `450 lakh crore non-productive assets.......

 

Read - The Pioneer 

Indian banks' Pak foray stuck for want of guidelines

The government and the Reserve Bank of India (RBI) are yet to formulate guidelines on Indian banks' entry into Pakistan. Central banks of both countries have gone slow on working out regulatory issues including know your customer (KYC) norms..................

Read - Hindustan Times

ING Vysya Bank steps into gold loan business

ate sector ING Vysya Bank has stepped into the gold loan business to fund working capital needs of small and medium enterprises (SME) sector.........

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Credit card spend touches record high in first quarter

Credit card spending in the country touched a record high during the April- June quarter, thanks to innovative incentives offered by card issuers to their customers. In the first three months this financial year, consumers spent Rs 28,465 crore on their credit cards across point-of-sale (POS) terminals, latest data released by the Reserve Bank of India showed. On a sequential basis, spending on credit cards increased 9.9 per cent, its fastest rise in the past four quarters......

Read - BS