Reserve Bank of India Governor Duvvuri Subbarao said the central bank needs to reduce inflation to 5 percent or lower. “We need to bring it down to more acceptable levels of 5 percent or even less than 5 percent,” Subbarao said today in a speech at Cornell University in Ithaca, New York........
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Wednesday, August 29, 2012
India's Central Bank Governor Refuses to Play Politics With Inflation
Dr. Duvurri Subbarao, Governor of the Reserve Bank of India, will appear at Asia Society in New York on Wednesday, August 29 at 6:30 p.m
.....The Reserve Bank of India, led by its Governor Duvurri Subbarao — who will appear at Asia Society in New York on Wednesday evening — has held firm arguing that high interest rates are needed given India's stubbornly high inflation rate. As the Deputy Governor of the bank said in an interview this month, "inflation risks" are trumping risks to growth. This is bankeres for saying that rates cannot be cut as long as prices remain high. Subbarao, a long time civil servant at the Indian finance ministry, was believed to have been chosen as central banker in 2008 because he was seen as being unlikely to buck his political masters. If so, he has proven the government wrong repeatedly and made it clear the task of fighting inflation will not be diluted by short-term political calculations.......
Jalan: Inflation Bigger Concern Than Growth
Inflation remains the bigger concern for India even as the near-term growth prospects of Asia's third-largest economy have deteriorated considerably since the beginning of the year, said Bimal Jalan, a former central bank Governor. His views echo those of the Reserve Bank of India, which has maintained a tight monetary stance even as it slashed its estimate on domestic growth for the fiscal year through March 2013.......
RBI says India's import cover reserves may fall further
Reserve Bank of India (RBI) Executive Director D K Mohanty on Tuesday said the country’s import cover reserves might fall further this financial year in the absence of capital inflows. At the end of March, India’s foreign currency reserves were at about seven months of import cover according to data from the central bank. The senior central bank official said financing current account deficit was becoming a problem since capital was not flowing in for a number of reasons. “But we want to maintain our lifestyle and consumption... So, we have to dip into the reserves. We are drawing from the reserves, we built in the pre-crisis period and since then we are not adding anything, it is coming down,” said Mohanty.....
RBI Shillong - Lensview
The 29th office of the Reserve Bank of India
RBI to launch Rs 1,000 notes with rupee symbol
Banknotes to bear signature of RBI Governor, Year of printing 2012 will be on reverse of banknote
...."The Reserve Bank of India will shortly issue Rs 1,000 denomination banknotes incorporating rupee symbol, with inset letter 'L', in both the numbering panels, in the Mahatma Gandhi Series-2005 with improved security features," ....
SBI officers protest against 7-day schedule
....... central government offices, secretariat and apex banks like RBI, Nabard etc are having 5-day week, where no difficulty is being experienced at their end. Besides employees' organisations in the banking industry are pleading for a 5-day week in the banking industry and the proposal is pending with the Indian Banks' Association,....
Read - TOI
Read - TOI
SBI chairman presses for abolition of cash reserve ratio or CRR
Pratip Chaudhari, chairman of SBI defended his views on CRR saying that when the Deputy Governor (Dr Chakrabarty) was a bank chairman, he was asking for the same......
New chief for Nabard AP region
....Nair, who began his career with Reserve Bank of India in 1980, moved to Nabard three years later. “Before joining the AP Regional Office, Shri. Nair headed a corporate level team in Mumbai," ....
Read - HBL
Read - HBL
Dr. K.C. Chakrabarty - Keynote address at Financial Conference on System...
Dr. K.C. Chakrabarty, Deputy Governor of RBI, addresses the keen audience at the Financial Conference on Systemic Risk organized by Great Lakes Institute of Management, Chennai.
Indiscreet at RBI
Years before Governor D. Subbarao came to the Reserve Bank of India, a predecessor had turned meetings with public sector bank chiefs into a sort of extended classroom session, with the latter at the receiving end. The meetings used to be dreaded by the then chiefs of the bank........
Chakrabarty had same views on CRR as a banker: SBI chief
....“What I want to say is that it’s just a view. When he (Chakrabarty) was a bank chairman, he was also of the same view (reducing the CRR),” Chaudhuri said. He made the remarks with a big smile, but the message was loud and clear......
CRR Row
The SBI chairman is reported to have said that CRR does not help anybody and is unfairly put on the banks, and has asked why it is not applied to insurance companies and mutual funds, which are also mobilising deposits from the public. The US has a required reserve ratio that is as high as 10% on transaction deposits above a certain limit on a graded scale against 4.75% in India. For fighting inflation, the central bank of China raised the reserve requirement several times during 2007-11. At one point, it was as high as 21.5%. Countries like UK are able to use open market operations (OMO) successfully to carry out monetary policy because of their developed financial markets. In India, due to constraints arising from lack of autonomy, the RBI has to use the OMO to groom the market for the flotation of government securities through buybacks, thus monetising fiscal deficit retroactively. Until this situation improves, it has to rely on CRR for having some control on money supply.
- A SESHAN (ET)
The SBI chairman has made a valid suggestion, and his view is shared by the entire banking industry. It was expected of the regulator to study this suggestion and not reply rudely. The RBI deputy governor has not only snubbed the SBI chairman, he has given a clear message to other heads of banks not to offer good suggestions to the RBI.
- P H SADEKAR (ET)
- A SESHAN (ET)
The Chairman of SBI has raised a question for debate as to why cash reserve ratio (CRR) cannot be phased out as it does not carry interest. Instead of having a healthy discussion on the statement, the remark of the Deputy Governor of RBI “either comply or do business elsewhere” is unfortunate. The RBI would do better to revisit its policy on CRR.
- Mariappan (HBL)
Outdated instrument
This is with reference to “Chakrabarty frowns at SBI chief’s views on CRR phase-out” (Business Line, August 28). It is unfortunate that a man of Chakrabarty’s stature made the remark. Many experts have opined that CRR has outlived its purpose. Most of the central banks have stopped using this instrument.Valuable capital is being immobilised by the RBI using an outdated instrument.
The public has a right to know the logic behind Chakrabarty’s statement.
- Vishnumurthy Adiga (HBL)
Rude Reply
The SBI chairman has made a valid suggestion, and his view is shared by the entire banking industry. It was expected of the regulator to study this suggestion and not reply rudely. The RBI deputy governor has not only snubbed the SBI chairman, he has given a clear message to other heads of banks not to offer good suggestions to the RBI.
- P H SADEKAR (ET)
This refers to “Phase out Cash Reserve Ratio” (Business Line, August 24). The SBI Chairman deserves to be complimented for questioning a notion that has outlived its utility. This issue has been analysed well in the article “Interest on CRR, a big mistake” (Business Line, August 24). Let us hope for more reforms that suit the changed economy.
- K. Gopalan (HBL) RBI norm to make banks shun loan securitisation
The securitisation market in India may shrink after the Reserve Bank of India (RBI) on August 21 curtailed credit enhancements on direct assignment deals (bilateral deals), whereby a loan which is sold from the books of an originator (often an NBFC, or a micro-finance institution or other financial institution) to an investor (often a bank, mutual fund or a private equity investor). This will result in fewer banks accessing the securitisation market to meet their priority lending targets. Banks are the biggest investors in this segment.........
Baby steps to bank reforms unlikely to bring cheer
....State banks also tend to be forgiving when corporate borrowers get into trouble, and a RBI deputy governor recently said India’s debt restructuring process is biased in favour of state banks and big borrowers. An RBI panel has proposed tighter rules around the process. “Occasionally there are concerns about the government exercising its ownership rights not through the established channels which is the board mechanism but outside of the board,” RBI Governor Duvvuri Subbarao said last month, responding to the government’s influence over state banks.......
Reduce variation in FD rates, RBI tells co-op banks
......."It has been observed that there are wide variations in the interest rates offered by banks on single term deposits of Rs 15 lakh and above and those offered on other deposits (i.E. deposits less than Rs 15 lakh) of corresponding maturities," RBI said in a notification to these banks........
In the name of NPA
Crores of rupees are being written off in several banks in the guise of non-recovery. The NPA accounts of other banks are taken over. Subsequently, these accounts are classified as NPA and written off. Some of these accounts are compromised paying paltry sums. Is the RBI willing to publish the quantum of such written-off accounts for the last five years?
- M T Thomas (HBL)
Bank mergers
With reference to “Fifth wheel of match making” (Business Line, August 27), the Finance Ministry’s changed stance of bringing bank mergers under the ambit of the Competition Commission of India is timely. At a time when policy makers are still after mega-mergers among public sector banks, notwithstanding the failure of big banks globally, keeping bank mergers out of the purview of the Competition Act is unethical and pro-cartelisation. The Government, the RBI and a section of bankers are for the merger of associate banks with SBI. Is this not creation of monopolies? By downsizing, cost is sought to be reduced. But in a country such as India, with 60 per cent of the populace financially excluded and only 5 per cent of villages with banking facility, bank mergers for pooling capital and big loan disbursements will not serve national interests. And this plan of bank mergers is part of a larger design that includes selling majority shares of PSBs to private entities, major foreign equity participation and outsourcing of basic banking services.
- K.S. Krishna (HBL)
Floating rate deposit not a good idea now
The deposit is meant to enable investors to benefit from rate hikes, but given that interest rates have peaked, the product’s timing isn’t right......
Read - Mint
Should Banks Be Allowed in Commodity Futures Trading?
.....By and large, Indian banks (both public and private) lack market knowledge and expertise to benefit from trading in commodity futures. The RBI has also expressed concern on the risks posed by domestic banks that lack expertise and skilled manpower to deal with such risky trading instruments........
Read......
Read......
Banks may get more time to meet priority sector target
The Reserve Bank of India (RBI) may relax some of the priority sector target for banks on a case-to-case basis but has asked the lenders to ensure the funds are reaching the beneficiaries. In a meeting with RBI Deputy Governor K C Chakrabarty on Tuesday, bankers voiced their concern on the revised priority sector lending norms that had excluded some sectors from the priority list...........
RBI may not relax priority lending
The Reserve Bank of India is unlikely to relax priority sector guidelines despite bankers pitching for easing of the norms. Though RBI officials met bankers on Tuesday to discuss issues faced by them and to seek feedback on the guidelines, bank chiefs are not optimistic about any major relaxation......
Read - Indian Express
Reforming India’s banks - Renu Kohli
.....the political privileges from public ownership of banks are far too many for any drastic change in ownership and control. Shareholding beyond 5% will require RBI’s sanction; the regulator can be trusted to ensure no single group or entity gets excessive control. Likewise, foreign domination concerns are overdone: Lessons learnt from the crisis—many foreign banks with significant presence in some countries suspended lending as their parents shrank balance sheets, exacerbating a credit squeeze—are well internalized by a cautious RBI. The proposed reforms will only contribute to the betterment of banks.
Suchitra Krishnamoorthi files complaint against HSBC bank
......Suchitra explained that HSBC follows the practice of obtaining blank LOIs (Letters of Intent) from their clients and filling them up on their own will. "Often, they don't even inform the client concerned. Obtaining blank LOIs is a clear violation of SEBI (Securities and Exchange Board of India) and RBI (Reserve Bank of India) guidelines, which state that every debit made by the bank on any client's behalf, must have the client's corresponding mandate and signature. Failure to do so is fraud," ..........
Existing banking licence policy may be reviewed
The RBI has received feedback on the review of the existing policy on the banking licence and according to our sources in the finance ministry say that they feel that the current policy is a comprehensive policy whereas you require different norms for mid-size, small and big banks,.....
RuPay card launched
....M. Vijaykumar, Lead District Officer, Reserve Bank of India, said SHG members should become retainers of the banks instead of defaulters......
Read - The Hindu
Discrepancies in Lakshmi Vilas Bank’s corporate governance and business practices: RBI
The banking regulator, Reserve bank of India, conducted an inspection of Lakshmi Vilas Bank (LVB) and found that the bank fell short in many accounts in its business practices and corporate governance standards........
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