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 15, 2012
RBI most known regulator among Indians: Survey
The empire strikes back
.......It is true unconventional problems call for 'unconventional policies', as RBI governor D Subbarao put it in his speech on the occasion of the US Fed governor Ben Bernanke's visit last week. The problem is, unconventional policies could lead us deeper into the woods. Most newspapers interpreted Dr Subbarao's reference to Bernanke's policies as 'praise'. But a closer reading of his speech shows the governor was much more guarded, saying, "We will not know for many years whether the policy mix followed to manage the crisis is right." .......
Time for a national financial literacy policy
.....Investments by households have been more into either bank fixed deposits, riskfree government- backed securities and low- yielding instruments, or in non- financial assets. A majority of our households do not use modern financial markets. As per an RBI report, only 1.4% of household savings was invested in equity, mutual funds and debentures in 2003- 04. Though this went up to about 4% in 2005- 06, it is still very small. Unless the common person becomes a wiser investor and is protected from wrong doings, wealth creation for the investor and the economy will remain a distant dream. We need to convert a country of savers into a nation of investors.......
Micro credit and the financial system
.....The ordinance of Andhra Government is quite explicit. " Where as these SHGs are being exploited by private Micro Finance Institutions ( MFIs) through usurious interest rates and coercive means of recovery resulting in their impoverishment and in some cases leading to suicides…." The engagement of MFIs with borrower was shallow based on " touch and move on" business models, shorn of any development content. The small loan size and short duration of the loan do not enable most borrowers to do much except to ease liquidity problems. That is why Dr.Y V. Reddy, former Governor, RBI stated that Microfinance is India's subprime. " Ultimately, it is something like subprime lending": In fact there is evidence to show that profit- making MFIs were encouraging what were called " NINJA" loans - no income, no job and no assets - in the American financial crisis of 2008.......
Read - FPJ
Panel to study role of cooperative banks
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Bank union seeks fund for agriculture infrastructure
.....In a memorandum to Prakash Bakshi, Chairman of the National Bank for Agriculture and Rural Development (NABARD), who has been nominated as the Chairman for the Expert Committee on Short-term Cooperative Credit Structure, P.Balakrishnan, general secretary of the federation pointed out that in India the yield per acre is the lowest in the world. “Our farmers are not able to raise more than three tonnes per acre on an average either wheat or paddy, whereas in most of the Asian countries and the US, it is seven to 11 tonnes. Our farmers can grow more crops only if there is uninterrupted flow of water, and supply of good manure and good seeds, for which the Government should allocate substantially to ensure improvements in agriculture infrastructure”.......
Benchmarks may see further correction
....Already there are clamours for a rate cut from India Inc Even Finance Minister P. Chidambaram said the RBI and the Government must work in tandem to bring down interest rates. On its part, the RBI has so far been saying that targeting inflation would be its first priority. Recently, RBI Deputy Governor Subir Gokarn said the Government’s reform initiatives on growth and inflation would be considered while formulating Monetary Policy......
Let’s have banking licence on tap
............As a principle, the Indian banking regulator was not in favour of opening up the sector till February 2010, when former finance minister Pranab Mukherjee announced that a new set of private firms would be allowed to set up banks. RBI was, in fact, in favour of consolidation in the sector. After the budget announcement, the central bank got into action, but with reluctance. Which is why it took so long to prepare the draft licensing norms and, more than a year after the release of the draft norms, there is no sight of the final licensing norms. The reason behind this is well known. RBI wants the power to supersede the board of a rogue bank and this can be done by amending the Banking Regulation Act of 1949. Unless Parliament gives its nod to the amendment, RBI is unwilling to bet on a new set of banks run by industrial houses............
Firms speed up preparations for new licences, say analysts
The government’s intention to hasten issuing new bank licences has enthused some banking aspirants and analysts but many are still circumspect about the final outcome. The finance ministry is exploring ways to empower the Reserve Bank of India (RBI) to supersede the boards of banks that aren’t run properly, instead of waiting for the amendment to the Banking Regulation Act that can take a while, given the current political climate.........
New private banks
Apropos of the news story “RBI to allow four new banks” (FE, October 5), the decision should be first analysed against the performance of the existing new private sector banks that have been started over the last decade. It must be kept in mind that two banks—The Times Bank and The Global Trust Bank—were merged with other banks for different reasons. Unless the regulator, RBI, is given enhanced powers, giving licences to corporate groups, whether big or small, might not be good for our financial stability.
- Sudhir K Bhave, Mumbai (FE)
Financial advisers will need good credit score for licences
......the draft regulations required the entities seeking to get registered as investment advisers to submit details of their data processing capacity. Instead, they would now be required to submit details of their in-house and other research capabilities, the official said. The other changes to the draft regulations include the provision for appointing or authorising an ombudsman to resolve any dispute between the investment advisers and his/her clients, in addition to a dispute resolution mechanism through arbitration......
Mayaram Sees India Rate-Cut Room From Rupee Gain, Fiscal Steps
......“If the RBI is fully convinced that the steps that are being taken are credible and will result in something like that, then we hope that the RBI will be more benevolent with its policy,” Mayaram said. “It is not necessary for them to wait until March,” he said, adding they should signal before then that they will cut rates........
Read..................
Sahara judgment and beyond
......Regulation can be painful. When the Reserve Bank of India (RBI) asked non-banking finance companies (NBFCs) to get an investment grade rating in the late 1990s, there was a shake-out. Barring the soundest, many NBFCs had serious adjustment problems with the new regulatory regime. Again, when the government came down heavily on unincorporated entities — partnerships, sole traders — offering sky-high interest rates on deposits, it brought to a halt not only some unscrupulous deposit takers but even some businesses that have been in existence for long and served a useful purpose. There can be many.....
Banks also responsible for frauds through ATM
........Now an order of the Banking Ombudsman should bring cheer to consumers - it not only upholds the rights of consumers who are victim to such ATM frauds, but also rightly recognises the importance of CCTV footage in all such cases. Here, following a series of complaints alleging unauthorised debits through ATM transactions, the Ombudsman asked the banks to show the camera recording and found that in all the cases, a suspicious looking person with his face covered and having multiple cards was withdrawing money, till he cleaned out the account or the accounts were blocked by the customer or the bank...........
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