BHOPAL: A two-day UGC sponsored national seminar on Impact of multinationals on trade and commerce was inaugurated by P R Ravi Mohan, Regional Director RBI, Madhya Pradesh and Chattisgarh at the Bhopal School of Social Sciences on Tuesday. Dr S.K Khatik, dean of Barkatullah university, was the key speaker on the first day of the seminar..........
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.
Thursday, November 1, 2012
RBI eases way for plastic money
......The banking sector regulator on Tuesday accorded a general permission to banks for the issue of co-branded debit card and prepaid card, which till now had to be cleared by the RBI.......
Read - HT
RBIQ in Pune
Reserve Bank of India (RBI), CAB, Pune conducted an Inter-School Quiz (RBIQ) on October 31, 2012 from 09.00 am to 12.30 pm at MES Auditorium, Maharashtra Education Society, Bal Shikshan Mandir Campus, 131, Mayur Colony, Near HDFC Bank, Kothrud, Pune-411038. The Quiz was conducted with a view to create awareness and interest about the history and role of RBI, other banking and financial institutions, economics, current affairs, personalities and events that have contributed to the growth and progress of India over the years.
2.
RBIQ was informative and educational and helped build a connect
between RBI and the young student community to achieve dissemination of
financial literacy.
3.
The Quiz was conducted by popular quizmaster Mr Ryan Shaw. This
Quiz was for students studying in IX, X, XI & XII standards of schools
located in Pune City. 51 schools participated from across the city. The
following school team emerged as winner team from Pune Centre and will
participate in Zonal Final round of RBIQ:
Winning
team name: Kendriya Vidyalaya No. 1, Lohegaon,
Pune
Student
Name: 1. Ankit Kumar, Class XI
2. Avinash Parte, Class XI
Inaugural
Address was given by Shri B S Awari, District Education
Officer
Prizes to
the winning teams were given by Lieutenant Colonel Shashikant Jadhav, Commanding
Officer, 3 Mah Armd Sqn NCC Pune.
RBI acted wisely
Reserve Bank of India ( RBI) acted wisely by not cutting repo- rate. Repo- rate cut is advantageous for general public only if RBI ensures that banks pass on benefit to loan- takers, which is not the case in present ' free' economy where banks are at liberty to swallow benefits of repo- rate cut by not lowering interest- rates for old loan- takers. RBI should devise and revive policy of having uniform interest rates decided by RBI itself both for deposits and loans for all banks. Banks can compete through better service rather than through interest- rates. RBI can devise different types of interest- rates for different types of loans and deposits at least for public- sector banks. Presently different public- sector banks have different rates of interest even for deposits which keeps senior citizens confused which have only source of income as interest- earning from bank deposits. There are huge bargains in case of loan takers by banks. Such bargains can and should be stopped by formulating same rates of interest on loans which may be different for different types of loans both for existing and new loans. Presently banks lure new loan- takers through lower rates of interests, while old customers have to pay higher rates of interests. Free economy must not mean that people may be taken for ride by multinational banks which are acting just like ' East India Company' to make Indian citizens their financial slaves.
- Madhu Agrawal Delhi (FPJ)
Why are global PE firms bullish on corporate lending in India
.....According to an RBI-appointed committee headed by former Deputy Governor Usha Thorat, India has about 12,500 NBFCs. More than 70 per cent of NBFC assets are with those the RBI classifies as systemically important - NBFCs that do not take deposits and have more than Rs 100 crore capital. The number of such NBFCs jumped from 151 in March 2006 to 295 in March 2010, and their assets more than doubled to Rs 5.67 trillion from Rs 2.51 trillion. In its report submitted in August 2011, the panel says borrowing by NBFCs from banks has risen in the last few years. "That means transferring the risk to NBFCs, which have the freedom to lend to any sector," it says.
‘Interests’ of the growth brigade
.....In an interview to this paper, D Subbarao, when asked if the status quo on interest rates would not hurt the common man, simply and correctly identified low and stable inflation as a better condition for the common man. Interest rates do not affect the “common man” as much as inflation as any housewife will tell you. But it’s also clear that the RBI has to do something for growth, and there lies the problem.......
Tough stand
According to reports, RBI Governor Subbarao has not agreed for interest rate cut despite " prodding" by PC disappointing the industry. Well, it is the prerogative of the RBI also not to go by PC's views, just as it was earlier the prerogative of PC not to have gone by Subbarao's [as Finance secretary] recommendation on 2G pricing and stuck to his own views.
- V N Ramachandran Vadodara (FPJ)
Cut and thrust
To say that Finance Minister P. Chidambaram made a combative statement after RBI Governor D. Subbarao refused to cut rates on Tuesday will be to miss the wood for the trees. India’s economy is at a stage where the slide in growth is as compelling a concern as inflation..........
Read - Indian Express
Read - Indian Express
10 reasons why Chidu’s petulance is uncalled for
Granted, there can be two views on whether the Reserve Bank Governor should have cut repo rates or not. Finance Minister P Chidambaram is free to hold his view, and so is D Subbarao. What is entirely regrettable is the finance minister’s petulant statement that growth is as big a challenge as inflation, and “if the government has to walk alone to face the challenge of growth, then we will walk alone.”.......
An eloquent policy that falls short
....Conclusion In the light of the above discussion it emerges that the RBI is in search for a monetary policy space through fiscal consolidation as a precondition. Going by the track record of the government, (particularly in a democracy with a deficit bias), prudent fiscal management is a misnomer. In this milieu, RBI has to create its own space to respond to growth. One way is to keep the rate constant, as it has been doing, but unfortunately this has not yielded the desired result. On the contrary this has resulted in a massive slowdown in growth and continued elevated inflation........
RBI does what a central bank should do
RBI does what a central bank should do. The RBI balanced its anti-inflationary stance against the need to support growth with its tactical policy easing through only a CRR cut of 25 bps. The RBI’s decision also takes into cognizance the growth-inflation dynamics as also the Government’s policy measures........
Read.......
Why India's Central Bank Resisted Pressure to Ease
......Gokarn says while he recognizes that the government is an important “stakeholder” in its monetary policy, the central bank will not lose sight of its prime objective to keep inflation under control. “The government is obviously an important stakeholder in the policy, and the RBI is quite sensitive to it, but we cannot ignore the fact that inflation is still high, and is likely to go up over the next three months,” Gokarn told CNBC on Wednesday............
Has Subbarao lost the opportunity to be a statesman?
..... I believe a symbolic cut in the policy rate by RBI would have strengthened his arm and also boosted business sentiment (to be sure, again, it wouldn’t have changed the environment much). I am also convinced it wouldn’t have taken us any closer or any farther from economic ruin than we already are. I am, therefore, inclined to consider the lack of any substantive action by RBI on Tuesday as a lost opportunity........
Will we see a rate cut in January?
.... So, a cautious Subbarao doesn’t want to take any more chances. This time around, he is convinced that the ministry is serious about fiscal consolidation, but he wants to see the results before acting. That’s fine, but if he sees inflation as a greater evil than slowing growth, what was the need to cut CRR? More money in the system can stoke inflation. One explanation could be that RBI considers CRR a liquidity tool and not a monetary tool. Which is why it has continuously been slashing CRR and infusing money into the system on top of its bond buying programme, the so-called open market operations. It has also slashed banks’ statutory liquidity ratio, or the percentage of deposits banks have to invest in government securities, to ensure banks have more money to support credit growth..........
Can Chidambaram walk the talk on fiscal consolidation?
When the Reserve Bank of India did not read any thing substantial in the two-page statement on fiscal consolidation, Finance Minister P. Chidambaram thought it was time for silence. But the silence after announcement of much hyped five-year road map for fiscal consolidation can speak volumes. The reason is simple. Everybody wants to know, first, how credible this road map is, second, what is the action plan for this fiscal consolidation and third, does history support Chidambaram’s optimism?........
Reserve Bank stirs, but isn’t shaken
...........It needs much greater coordination between fiscal and monetary policy. Indeed, past RBI statements have almost thrown the gauntlet to North Block, promising reciprocal action, in case of progress on the fiscal deficit. The September reform announcements from Delhi should have been taken as an early signal of commitment to reverse the fiscal slide...........
Read - Mint
Not much help from RBI even in 2013?
....Given the central bank’s guidance for monetary policy stance, Morgan Stanley in its research report said “We believe that policy rates would be on hold until the end of 2012 with easing to begin from 1Q2013.” It believes that even as inflation starts to ease from Q12013, it may remain above the RBI’s (Reserve Bank of India) comfort zone for longer. Hence, it expects policy easing to be limited to about 50-75 (basis points) bps in 2013......
CRR unlikely to be tweaked further
The cash reserve ratio (CRR) cannot be presumed to be the preferred tool to address liquidity tightness in December, Reserve Bank of India (RBI) Governor D Subbarao said on Wednesday........
By calling CRR a waste, SBI chief questions banking history
.....The, State Bank of India (SBI) Chairman Pradip Chaudhuri said: “I still hold that CRR is a waste for the economy.” For anyone who understands the basics of banking, and presuming that the chief of the largest bank in the country does, this is a statement that should not have been made. Let’s try and understand why.......
Read......
No CRR cut impact
One wonders whether the cut in the cash reserve ratio (CRR) by the Reserve Bank of India is going to make any material change in the existing credit situation. In the quarterly review of developments, the central bank stated that the current credit slowdown largely indicates tepid demand conditions and distinctively lower credit expansion by public sector and foreign banks, partly reflecting their risk-aversion. Are the tepid demand conditions due to high interest rates, in which case a reduction thereof would have helped? The agriculture and export sectors are protected from interest rate changes due to subventions provided to banks by government. It is the industrial and service sectors that are mainly affected by changes. The big companies have been able to tap the commercial paper market on a large scale recently due to a fall in interest rates, besides accessing bank credit. It is the small and medium industries that have problems of credit, if one goes by anecdotal evidence. The increase in liquidity through the injection of Rs 175 billion is not a big deal for them. There are no detailed data available on credit conditions in the service sector.
- A Seshan Mumbai (BS)
Mint Road sees liquidity tight for a few more months
The Reserve Bank of India (RBI) Governor Duvvuri Subbarao and Deputy Governors Subir Gokarn and Anand Sinha had an interaction with analysts on Wednesday following the RBI’s move to cut the cash reserve ratio (CRR) by 25 basis points on Tuesday. Excerpts:........
Pragmatic stance
The second quarter monetary policy review has further reinforced the Reserve Bank of India’s credentials as a pragmatic inflation fighter, not swayed by either market expectations or overt signals from the Finance Minister favouring a cut in policy rates............
Read - The Hindu
Read - The Hindu
Do RBI Rate Cuts Matter?
To debate the relevance of the country's central
bank might seem facetious or plain dumb. But too much is being made of
the central bank's failure to cut policy rates. It is being accused of
being dogmatic on inflation, of not seeing the parlous state of growth.
All such passion stems from assuming that the RBI's policy rates matter
the way central bank action matters in the US or Europe. This assumption
is fatally flawed. The RBI is largely irrelevant to large swathes of
the economy............
Read - ET
Govt must cut spending: RBI Governor
........"All of us - not just RBI, but all stakeholders in the macroeconomic management - are concerned about the quantum of fiscal adjustment and also the quality of fiscal adjustment. International experience shows that fiscal adjustment that comes from expenditure compression is more sustainable than one that comes from tax increases," ......
Walk the talk, Mr. Finance Minister
.....So what are we talking here about the RBI not supporting the government in driving growth? If anything, the central bank has been extremely understanding of the government’s constraints and did its bit by “frontloading” a 50 basis point rate cut in April based on assurances by the government of reining in the fisc. It has also been regularly pruning the cash reserve ratio in order to free up liquidity, which in itself is a measure that can lead to a fall in interest rates. Remember, despite the tight leash on the policy rate by the RBI, inflation has remained sticky. Given its core mandate of inflation targeting, the RBI could certainly not be expected to loosen its policy. Dr. Subbarao deserves a round of applause for standing up to the government and remaining focused on the important job of reining in inflation. Cynics may say that given that he has only another year to go, he does not have to please anyone and could therefore afford not to bend. Yet, he has proved himself to be a worthy successor to Dr. Y.V. Reddy who in his time also staved off tremendous pressure from the government on the issue of cutting rates. Though reviled then for his hawkish stance, Dr. Reddy is today acknowledged as the man who kept the global financial turbulence from washing onto Indian shores. It is the karma of central bankers, not just in India, to suffer pressure from their governments but few have managed to hold their own as Dr. Reddy did then and Dr. Subbarao is doing now.......
P Chidambaram ko gussa kyon aata hai?
..........Why, then, did Chidambaram make his displeasure public? Viewed from the minister’s perspective, time is clearly running out for the UPA government. With very few days left before the 2014 Union Budget (which will bring its own set of compulsions for the FM) and the elections in Gujarat and Himachal Pradesh before that, the FM is, perhaps, keen to step on the accelerator in terms of whatever arsenal he has at his disposal to try and get the economy back on track and send out the right signals. Besides, by outlining his fiscal consolidation plan a day before the RBI policy, Chidambaram seemed keen to send out the message that the government was now doing its bit in spurring growth and was hoping RBI would chip in with a rate cut to complete the picture. But Subbarao’s reading was clearly different.......
It is RBI who is walking alone, not govt
........The RBI too is concerned about the poor. It thinks a rate cut will only help the industry. The poor will further get squeezed because of an inflation spiral, which a rate cut may give rise to. So let the critics of the RBI policy understand that it is not all text book economics. And let Chidambaram acknowledge that it is not the government who is walking alone, it is the RBI.
Ekla chalo
........This is where what the finance minister said about walking alone comes in, though it is not surprising that RBI Governor Subbarao didn’t take his deficit reduction promises seriously—as compared to a fiscal deficit target of 3.6% of GDP in FY07 as part of the original FRBM plan, the FM has now promised this in FY16...........
SHCIL-IDBI Bank merger
......SHCIL set up in 1986, promoted by IDBI and six other public financial and investment institutions. Besides custodial services to mutual funds and foreign institutional investors, it provides depository services to retail investors. It also has e-stamping facilities. Document management and insurance repository services are provided by subsidiary SHCIL Projects Ltd..
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