RBI Governor D Subbarao faces great dilemma as calls for a rate cut gets louder

They are three very different gentlemen in the same boat. One, known for his lung power, strong views and occasionally unfortunate choice of words, is a favourite of the media. You are tempted to believe him, but fear his views may be brushed aside later. 

The second has a towering personality and a baritone, complete with wavy hair and Marx-like beard. The man leaves you bewildered. 

The third, their boss, armed with a disarming sense of humour, is soft-spoken and transparent - perhaps too transparent that borders on being simplistic. It's entertaining listening to their divergent views on the same subject in the course of a fortnight.........

Read - ET

Will RBI governor D Subbarao now take momentum into high gear and cut rates?

...... Will he? Will he not? Two pithy questions best sum up the expectations from the Reserve Bank of India Governor as he prepares to review monetary policy on Monday......

Highlights and rationale of the recommendations of the working group to review the existing prudential guidelines on restructuring of advances

Keynote address of Mr B Mahapatra, Executive Director of the Reserve Bank of India, at the 

round table on the highlights and rationale of the working group to review the existing prudential guidelines on restructuring of advances by bank/financial institutions, organised by the Centre for Advanced Financial Research and Learning (CAFRAL), Mumbai, 13 September 2012

.......One group of commentors have expressed reservations on some of the recommendations of the working group; the other commentors, particularly the print media, have generally appreciated the recommendations. I, as the chairperson of the working group accept the brickbats and bouquets with all humility. I am grateful to CAFRAL for organising this round table and giving me an opportunity to explain the highlights and rationale of the recommendations of the working group.......

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My View on "Prepaid payment instruments yet to pick up: RBI"

Growth of prepaid payment instruments (PPIs) continues to be sluggish though non-bank entities also can issue them, said G. Padmanabhan, Executive Director, Reserve Bank of India......

Read - The Hindu

The payment system should be improved in such a way that it should gradually lead to elimination of corruption, black money and high denomination notes of Rs 500 and 1000.Prepaid instruments should be made compulsory in high value transaction areas like bullion and other commodity markets, whole sale markets in vegetables and fruits, scrap dealings, etc. Trails of transactions should not be the immediate objective although it may be the end result,as it may discourage many to switch over to PPIs. The efficiency of the Payment System should be one of the yard sticks to assess the inherent strength of the economy. This will also make Financial and banking inclusion a reality over a period. The economy will definitely get a boost if payment system is improved with all safety,speed and accuracy. With improved IT system, the efficiency of the Payment system can easily be targeted and achieved. Many of the present ills of the economy, the Payment system will prove to be a solution.

-  Dr.T.V.Gopalakrishnan

RBI ED's optimism along with the comments of Dr T V Gopalakrishnan give some hope about some changes and improvement in the payment system. Perhaps RBI and GOI could consider introducing new and innovative PPIs. Gold-backed Debit Cards could be one option. If a depositor agrees to maintain an average balance of a pre-decided amount, his account should be credited with gold of equivalent value.He should be in a position to withdraw cash, make payments and buy things using the card, but his balances in the account will vary with the price of gold any day. This is just an example. Similar instruments against commodities and services could be thought of.The present position of major portion of PPIs in sort of cash certificates is not very encouraging. As Dr TVG hints, PPIs should also become instruments for bringing transactions which will not otherwise get through formal channels get into banking system.

-  M G WARRIER

A cashless India

...... Over the period April 2006 -June 2010, currency has shown a yearly growth rate of 17 per cent. It is estimated that for 2009-10, the RBI incurred an annual cost of Rs 2,800 crore to just print the currency notes. This is 0.4 per cent of the total currency in circulation. The need to move towards a cashless payment economy is perhaps more in India because of the cost of printing, distributing and processing cash. This cost does not include the cost of storage, transportation, security, detection of counterfeits, etc . To the printing cost, if we were to add the cost of storage and maintaining these currencies through ATMs alone, the cost of printing and disbursing currency comes to approximately Rs 70 per person per year......

Read - BS

State ranks 4th in seizure of fake currency

Going by the number of FIRs registered in connection with seizure of counterfeit currency, Gujarat stands fourth among the states, an RTI query has revealed. Between 2009-10, over 480 instances of seizures were reported from the state, which is slightly less than those reported in Andhra Pradesh, Maharashtra and Uttar Pradesh, according to information given by the Reserve Bank of India (RBI) to a New Delhi-based RTI activist, Subhash Chandra Agarwal, recently.......

Read - Indian Express

RBI cautions public against fraudulent mails

.....The mail also informs the bank account holders about the RBI setting up a new 24x7 Centralised Monitoring Centre to monitor financial transaction flow from the internet banking account. "The RBI clarifies it has not sent any such mail and has not set up any 24x7 Centralised Monitoring Centre to monitor financial transaction flow from the internet banking account," it said....... 

Read - TOI

Supporting policy needed to lower business risks: Gokarn

Kochi: Regulators need to maintain a balance between regulation and innovation as per local requirements, RBI Deputy Governor Subir Gokarn said on Friday as he pitched for a supporting policy framework to lower business risks. Speaking at the three-day 'Emerging Kerala' investors meet, Gokarn said one of the constant watch points of regulators is to make sure that balance is maintained between regulation and innovation.........

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Assess strengths of State: Gokarn

Kochi : Inherent strengths of Kerala should be evaluated while evolving a long-term development strategy for the State, said Subir Gokarn, Deputy Governor, Reserve Bank of India (RBI). Addressing a session on financial services as part of the Emerging Kerala summit here on Friday, he called for measures to ensure meaningful financial inclusion. Barriers to growth and policy interventions should be studied for a proper perspective. Innovations driven by specific needs and the ability to scale up were important factors in the development scenario, but unbridled innovation would be harmful, he said..........

Read - The Hindu

Malegam Report to be implemented soon: RBI

Participating in a Punjab and Maharashtra cooperative bank event in Bombay H R Khan Deputy Governor of the RBI said the apex bank would soon implement the suggestions made by the Malegam Committee on the cooperative banks. The committee, among other things, has recommended a dual approach of having a board of directors   appoint a board of management to run the cooperative banks and a relaxation of entry norms for the cooperative banks in the areas not yet covered by banking services, the RBI deputy added.........

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Why monetary policy will not work?

......Come September 17, and Reserve Bank of India (RBI) will have a mid-quarterly review of monetary policy to take stock of the current liquidity scenario and inflation. This meeting has gained relevance after Thursday’s hike in diesel price by Rs 5 a litre and the cap on the use of subsidised cooking gas to six cylinders per year. Will this undermine RBI efforts to control inflation?......

Read - HBL

RBI hints at holding rates, says inflation top priority

Ahead of the mid-quarter review of the monetary policy on Monday, senior-most Reserve Bank of India Deputy Governor K.C. Chakrabarty today said the top priority is to keep inflation under control.......

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A bitter medicine

......Now that the Government has shown through its latest actions that it is serious about fiscal discipline, and the monsoon’s turnaround since August has also somewhat eased inflationary expectations, the RBI can afford to be more accommodative.

Read - HBL

All eyes on Mint Road, will Subbarao oblige?

......The man at the helm, RBI Governor D Subbarao, is surely feeling the heat, to do his bit......

Read - BS

Inflation spike means RBI won’t say ‘Subbarao khush hua..’

......The diesel hike will make RBI Governor a bit less testy, but the inflation spike may not be enough to smile and say: “Subbarao khush hua…”.  Given these circumstances, the RBI is likely to stay put. After all, a rate cut is not a quick fix, and even if it is, a quick fix is not a long-term solution.

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RBI's inaction on rate likely to continue

......."While Thursday's decision opens up a bit of room for RBI to act on September 17, we expect the RBI to remain on a pause mode given the extreme hawkish rhetoric on inflation in the recent past. RBI is likely to wait and..............

Read - BS

A wave of bold decisions: Has MMS got his mojo back?

......As India heads towards the weekend, there will be lots for analysts and the corporate sector to discuss ahead of Monday’s RBI meeting. One big point of discussion will have to centre around whether one of the architects of the 1991 reforms, the man who is now Prime Minister, has hit a purple patch once again.

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SBI sees no case for further CRR cut by RBI at present

...."CRR cut is a wish list for every bank. Any time CRR is cut, banks add to their bottomline. But if liquidity is the determining criterion, then I do not see a CRR cut....

Read - Business Today

Customers paying more for banking services

.....Data for the indices were compiled by the RBI on the basis of responses from 21 banks, of which 13 were in the public sector, four were private, two were foreign banks, one was a cooperative bank and one was a regional rural bank.

Read - HBL

RBI ranks Bengal among laggards in drawing FDI

......During the period under review, the Kolkata regional office of RBI, has received a paltry FDI proposal to the tune of R46 crore. The states which one step ahead of West Bengal is Kerala but with a huge difference, with RBI’s Kochi office recording FDI proposal worth R104 crore during the same period. While the apex bank’s Kolkata regional office caters to West Bengal, Sikkim and Andaman and Nicobar Islands, the Kochi regional office caters of Kerala and Lakshadweep. Following RBI’s Kolkata office is the Bhopal office, which caters to Madhya Pradesh and Chattisgarh, whose fresh FDI proposal records during April-June 2012 is slightly lesser at Rs. 35 crore.......

Read - Hindustan Times

2G scam: RBI Governor Subbarao to appear before JPC

 RBI Governor D Subbarao, who was the Finance Secretary when 2G licences were allocated, will appear before the Joint Parliamentary Committee examining the issue as a witness on Sept 18. He was the Finance Secretary between Apr 2007 and Sept 2008.......

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