.......Augmenting the Gold Proportion in RBI's Forex Reserves Quite apart from measures to mobilise domestic gold, the RBI should consider raising the proportion of gold in RBI's forex reserves from the present level of 9 to 20%. This makes eminent sense as it would diversify the risks as between holdings in major currencies- US dollar, Euro, yen and sterling- and gold. Such a composition of the reserves would enable a better preservation of the value of the forex reserves. It is noteworthy that China has embarked on an aggressive increase in the central bank's reserves of gold by 1,000 tonnes per year and in a few years, China's central bank will be the largest holder of gold.
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Monday, October 8, 2012
Regulating the regulators
......On the RBI, FSLRC is clear that “alongside this independence, an accountability mechanism needs to be set up.” The commission wants to review the laws related to monetary policy and draft a monetary policy law emphasising the issues of independence, enumerated objectives, enumerated powers, and accountability mechanisms. The RBI has been opposing the creation of an independent public debt management agency, another recommendation by the FSLRC. The commission is for carving this function out of the RBI and making it independent. It also mooted that three functions of the RBI be performed by distinct boards which oversee the three areas of work of monetary policy, payments regulation and supervision, and banking regulation and supervision. There are hints about the need to clip the wings of regulators. .....
‘RBI should also be merged later’
The approach paper suggests that there should be a unified regulator for the financial sector, but why is the Reserve Bank of India untouched?
For the time being, we feel that the RBI should be left as it is and should continue with its functioning. However, at a later stage, depending on how things work out under a unified regulator, RBI should also be merged........
Read - Hindustan Times
For the time being, we feel that the RBI should be left as it is and should continue with its functioning. However, at a later stage, depending on how things work out under a unified regulator, RBI should also be merged........
Read - Hindustan Times
Common Regulatory Platform is Fine, but why Keep Banks Out?
......The paper is critical of sector-specific regulatory structures as the
breeding ground of a number of problems, including regulatory arbitrage
and regulatory capture. It lists Sebi (securities markets), Irda
(insurance), FMC (commodities) and PFRDA (pensions) as regulators that
should be folded into a new unified financial agency. The RBI is the
obvious exception —the paper envisages the RBI’s bank regulatory
functions to continue as they are. If one steps back a bit and sees what
is being said here at a conceptual level then the Commission is
recommending a switch from the current vertical structure of regulation
to a horizontal one.......
Banks asked to review activity levels in financial inclusion accounts
.......As per 2011 census, about 58.7 per cent households had reported availing of banking facilities. Out of the 24.69 crore households, 14.48 crore reported availing themselves of banking services. Nearly 10 crore households were not using the services. To promote financial inclusion, the Reserve Bank has asked banks to drop the ‘no—frills’ tag from the basic saving accounts as the nomenclature has become a stigma.
Fast track
..... As for “fasting”, Rangarajan suggested a better idea would be for women to stop buying gold instead, since gold imports jumped sharply this year........
Read - BS
Reform or steps to manage crisis?
...............In a recent speech, Y.V. Reddy, former Reserve Bank of India Governor, has said zero current account deficit in the external sector over the medium term should be the cornerstone of macro-management. A 2% current account deficit has been treated as an average since the reform process began, though the actual deficit in high-growth years was close to 1%, Reddy has pointed out. In recent past, RBI Governor D. Subbarao and Planning Commission’s Deputy Chairman Montek Singh Ahluwalia have said a 3% current account deficit is manageable. According to Reddy, the deficit should be close to zero on average...........
My View on "NABARD and RBI"..........
GOI, particularly Ministry of Finance, has been in the recent past, showing a tendency to treat various regulatory and supervisory organisations which were constituted under independent statutes, as government departments. The tone and tenor of observations to the media and elsewhere by spokespersons of Finance Ministry point to this disturbing pattern of behavior. Allowing functional autonomy is essential for vibrant growth of institutional structure especially in the financial sector. A very healthy practice of mutual consultations, as in the case of GOI and RBI (Governor and FM meet before and where necessary after every review of monetary policy and budget formulation) has been ensuring avoidance of conflict in policy directions during the last six decades. The assertion of ‘ownership rights’ by GOI is of recent origin and the latest tendency to formalize this approach via legislative measures as in the case of NABARD will weaken the institutional system.
- M G Warrier
SC overrules decision on cheques
The Supreme Court has overruled its own judgment regarding the law on bounced cheques. The Supreme Court as well as high courts have been following the wrong judgment in several cases under the Negotiable Instruments Act. Now it has turned the law around. In this case,..............
State-run banks to cut debit card usage fee
In a major fillip to e-commerce, state-run banks will soon lower fees for debit card transactions. The fee could be as low as Rs.2 per transaction and is expected to promote greater use of debit cards and a gradual reduction in cash purchases. The fee will be charged per transaction rather than as a percentage of the value of a purchase, as a massive proposed roll-out of point-of-sale (POS) terminals is expected to reduce costs........
HDFC Bank to double cash payment fees for credit cards
......The bank officials said there is a lot of manual work involved in branch-level transactions and that is the reason customers are asked to pay for these services. The move to hike these fees is in line with a strategy to encourage customers to use online mode and reduce cash handling and the related transaction processes at branches and ATMs, ......
RBI permits investment in Pakistan by India Inc
.......The RBI notification comes on a day when Indian External Affairs Minister S M Krishna is visiting Pakistan aimed at strengthening bilateral relations. "It has now been decided that the overseas direct investment by Indian parties in Pakistan shall henceforth be considered under the approval route," RBI said in a notification. The moves comes days after India allowed investment from Pakistan.......
The markets need a speed breaker
........The Reserve Bank of India’s (RBI’s) stance in its next credit policy could be crucial for animal spirits. A rate cut now could energise personal consumption during the upcoming festive season and if it’s passed on quickly, it could also help revive corporate investment plans. It’s an open question however, if the central bank will actually cut........
NBFCs defer fund-raising plans over interest rates' uncertainty
........“We will take a call once Reserve Bank of India (RBI) decides on interest rates. We have to see where the interest rates move if RBI reduces the key policy rates,”........
Ripple effects for banks as corporate loans turn bad
.......According to the Reserve Bank of India’ s latest financial stability report, asset quality concerns in the banking system persist as the growth in NPAs accelerated and continued to outpace credit growth........
Parekh panel suggestions premature: S K Goel
......The Reserve Bank of India has given a special dispensation to IIFCL. As against the 15 per cent capital adequacy for other non-bank finance companies, they have reduced the requirement for us to 12 per cent, in view of our government support. So, we might need around Rs 400 crore for next year............
Paucity of currency notes
I hope the Reserve Bank of India (RBI) doesn’t insist on replacing the Rs 10 note with its coin avatar. People still prefer currency notes to carrying coins. The RBI authorities must realise that it will only create problems in people’s day to day dealings. But it has taken a tough stand and seems to be on course to phasing out Rs 10 notes. Recently, there has been a shortage of Rs 10 notes and it appears the RBI has reduced its printing.
Banks are unable to provide a bundle of Rs 10 notes on specific request. Private banks are also not in favour of switching to coins. Due to high inflation, dependence on Rs 10 notes has increased. In fact, in many countries currency notes of 10-unit are exclusively available. Similarly, there is also a shortage of Rs 50 notes. I suspect the RBI has curtailed the printing of Rs 50 notes. I urge the RBI officials to consider public opinion in such matters.
- Amol Velankar (Pune Mirror)
Pakistan is main source of fake currency, Bangla conduit
........ "The Reserve Bank of India has informed (sic) that they have no estimate regarding increase in counterfeit currency in circulation." RBI spokesperson Alpana Killawala said, "There cannot be an estimate of fake currency in the economy. If one knew that, one would catch them and remove them from the economy. However, we have taken measures to create awareness among the public." As of now, the RBI, the Ministry of Finance, Ministry of Home Affairs, Central and state intelligence agencies and the Central Bureau of Investigation are working together to tackle the menace.........
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