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Tuesday, November 6, 2012
RBI stamps its autonomy
Deputy Governor’s extension
....In any case, you can never reckon any senior appointment without considering the IAS babu. The Government’s decision not to renew the appointment of the current Deputy Governor (economist) straightaway, as it did in another case recently, and opting for selection is understandable. It would like someone in the post who can walk along with it on its chosen path, right or wrong. My guess is that the post will be filled by an IAS official with some minimum experience in an economic ministry, preferably from the South.......
Rural Banking: Still Miles To Go
.......Inclusive growth is the current compulsion of a sound public policy. True, there has been a convergence in the business interest of the banking community in financial inclusion. As the things stand today, India's banking sector is on the verge of becoming compliant with Basel III standards and the financial sector reforms are on. Though there has been weaknesses - undercapitalized commercial banks , problem ridden [ but potential ] cooperative banks - yet the very aspect of financial inclusion has been running well in tune with the financial sector reforms now underway. Financial inclusion is to be treated as a business investment. Banks are to move to the masses as a natural process of financial inclusion...........
DAV School qualifies to zonal final of RBI Quiz
The team from DAV Public School-Chandrasekharpur in the city has qualified to participate in the zonal final to be conducted in December 3-5 in Kolkata. The pre-quarter and quarter finals of the RBI inter-schoolquiz was conducted on Monday at the city-based Xavier Institute of Management. Arun Kumar Sahoo, the state energy minister was the chief guest on the occasion.
BS
Bank unions set the ball rolling for wage talks
Seek rise in wages and dearness allowance, better provisions for health, housing
The bugle for the 10th bipartite banking sector wage agreement has been sounded, with five employee unions giving charters of demands for wage revision and service conditions to the Indian Banks’ Association (IBA) last week. An official with IBA confirmed the initial interaction of the union representatives. The officers’ union would follow suit. IBA would have to secure the mandate of each bank to negotiate on their behalf. For this, banks would have to secure approvals from their boards of directors...........
Mutilated notes in rampant use in Vidarbha
AMRAVATI: Bad money drives out good. This principle by Sir Adam Gresham seems to befit with the present situation of Vidarbha region, especially in western Vidarbha where mutilated notes are rampant in use. Citizens are crying foul due to problems cropping up while dealing with mutilated notes.................
Chidu shows RBI who’s boss: Is this sweet revenge?
........Clearly, there is cause for suspicion that the ministry is trying to tell the RBI chief who’s boss after the snub it got over interest rates. The larger point is this: if the monetary authority is supposed to act independently of the executive, maybe it’s time to take supervision of the central bank away from the government and make it directly accountable to parliament. Putting the fox in charge of the henhouse is not a great idea.
From statement to commitment
......The fact of the matter is that the fiscal consolidation plan put out by the Union finance minister was not persuasive enough to goad RBI into acting on the policy rate. Although the finance minister’s statement was important and helped to clarify the position of the government, the consolidation path chosen is considerably more prolonged. Furthermore, the strategy and package of measures that will be adopted to achieve consolidation are not clear.........
Read - FE
RBI asks banks to migrate to latest version of web protocol
MUMBAI: The Reserve Bank today asked the banks to migrate to the latest version of Internet Protocol IPv6 from IPv4, preferably by December 2012. "Since migration to IPv6 is an eventuality that has to be accepted and managed proactively, government wants it to be done in a planned way rather than against time," RBI said in a notification. ........
SBI to accept cheques conforming to new standards from Jan
State Bank of India (SBI) today said it will from January 1 accept only those cheques which conform to new standards. The step has been taken as per the direction of the Reserve Bank of India. To meet the objective, SBI has asked all its branches to issue only with uniform features conforming to CTS 2010 standard cheques to their customers.....
From Jan 1, all non-CTS cheques will bounce
Starting January 1, 2013, banks will not accept cheques that do not conform to the new standards under the cheque truncation system (CTS). As per a directive from the Reserve Bank of India (RBI), all lenders are mandated to phase out all non-CTS cheques by the end of December.........
PNB to set up self-service counters at 500 branches
Punjab National Bank is aiming to set up 24-hour multi-function self-service counters at its 500 branches by March 2013. K.R. Kamath, chairman and managing director, said that the multi-function kiosks or e-lobbies would be equipped with cash deposit machine, cheque deposit machine, passbook printing machine and cash dispensers round the clock.......
RBI revises rating symbol of Fitch on name change
The Reserve Bank today said it has revised the rating symbols of Fitch India post the rating agency's change of name to India Ratings and Research Private Ltd (India Ratings). "...It has been decided to revise...To include the new name of the CRA viz. 'India Ratings and Research Private Limited (India Ratings) in place of the earlier name of the CRA viz. 'Fitch India'," RBI said in a notification.....
RBI curbs harmful, says Pinarayi
Communist Party of India (Marxist) State unit secretary Pinarayi Vijayan has said the attempt of the Reserve Bank of India (RBI) to take over control of the cooperative sector will spell disaster for the State’s cooperative movement, more so because the movement in Kerala has achieved greater credibility than those in other States.......
A little help from others
When the first self-help groups (SHGs) were linked to banks in Udaipur in 1992, several high-profile visitors from the Reserve Bank of India, Indian Institute of Management, Ahmedabad, Swiss Agency for Development and Cooperation and National Bank for Agriculture and Rural Development (NABARD) flocked to the small village of Sakroda to ask the bewildered group of women about their experience with the Rs. 5,000 loan they had received from a local bank. Economist Ajay Tankha’s book on the SHG movement in India begins with this interesting nugget in a foreword written by Vipin Sharma, CEO of ACCESS Development Services, a company that offers microfinance and livelihood assistance..........
Supreme Court refuses to interfere with FDI
....The Supreme Court said on Monday that it would not interfere in policy decisions, even as the Centre informed it that the Reserve Bank of India had notified the amendments to the regulations permitting foreign direct investment in multi-brand retail.......
Why the Finance Minister and RBI Governor love NRIs
The economic problem in India has turned out to be a boon for the NRIs. With foreign investors pulling money out of India due to rising fiscal deficit and slowdown in GDP growth, rupee has been under severe pressure. It has seen considerable depreciation in last one year or so.........
Banks can undertake 'proprietary transactions' in bond mkt: RBI
The RBI today said banks can become members of stock exchanges to undertake "proprietary transactions" in the corporate bond market. "In order to further enhance transparency, it has been decided to permit Scheduled Commercial Banks (SCBs) to become members of SEBI approved stock exchanges for the purpose of undertaking proprietary transactions in the corporate bond market," the RBI said........
RBI must ensure that real returns from deposits are maintained at some minimum level
.....One of the criticisms that are often leveled against the Reserve Bank is that Indian inflation is largely structural and doesn't respond to high interest rates. The logic is that high rates won't easily control inflation, so you might as well lower them and look after growth. I'm not an economist and don't pretend to understand the underlying issues. However, from the point of view of a fixed income saver, the response to this argument is a strong "So what?" I don't care if inflation doesn't respond to low rates......
India should focus on growth, says Kaushik Basu
.........Do you think the steps taken are enough? The government has been emphasising fiscal consolidation, 5.3 percent. But if you look at the roadmap, it does not seem credible enough. That is the concern that various investors, including rating agencies, have expressed. Do you find this roadmap credible? Also the Reserve Bank of India has not taken it seriously. There has been a public face-off between the current Finance Minister and the RBI Governor. What are your views on the trade-off between the growth and inflation dilemma?...........
Delhi's Growth Blame Game
.....The Finance Minister is also undermining the central bank's independence. The RBI doesn't help matters by juggling multiple mandates and refusing to focus solely on prices, but at least Governor Duvvuri Subbarao has kept his distance from Delhi. He retires in less than a year though, and those vying to succeed him will surely look at this episode and ask if it pays to be as bold. The irony here is that the RBI only started operating independently when Mr. Chidambaram, in a previous stint atop the Finance Ministry in 1997, ended the practice of the central bank monetizing short-term government debt...........
Interesting CRR moves
........, though, banks are having a tough time attracting deposits and are understandably reluctant to cut rates beyond a point even though there may not be too much evidence of a strict correlation between bank rates and bank deposits. That means banks may need to take a small hit on their net interest margins (nims) for some period of time—it remains true Indian banks enjoy fatter margins than their counterparts in other countries and some compression wouldn’t hurt.
Read - FE Editorial
Disappointment on rate cut will linger
The Reserve Bank of India (RBI) disappointed bond markets by just cutting the CRR (Cash Reserve Ratio) by 25 bps in its policy review on October 30. The market was expecting at least a 25 bps repo rate cut, which the RBI did not oblige. The result of the policy disappointment was an upward shift in yield curves across segments. Government and corporate bonds and swap curves shifted up on the back of a status quo on repo rates.......
Major changes likely in gold loan norms soon
........There is some opaqueness about how many gold loan financiers decide interest rates or auction pledged jewellery, but all that is set to change. The Reserve Bank of India (RBI) will, in the next few days, make public the recommendations of an expert panel headed by K.U.B.Rao that, if accepted, could radically change the way Indian gold loan companies function and treat their customers, according to an RBI official, who did not want to be identified. The panel has made critical recommendations to encourage commercial banks and NBFCs to use tonnes of idle gold for productive purposes, while simultaneously stipulating strict norms for disbursing gold loans by NBFCs......
Single account for financial services
....the time has come to reconsider the relevance of a standalone demat and instead move to an integrated system, wherein bank details and demat details are reflected in a single account. The above concept could be extended to cover the entire spectrum of financial assets. At present, different financial assets are captured in separate silos, namely, banks account, demat account, pension fund account, insurance policies, and so on, reflecting the compartmentalised approach of the sectoral service providers......
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