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readers a very happy and prosperous Diwali. Countdown has begun to celebrate the 2nd Anniversary of VITALINFO on 29th November 2012.......
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, November 12, 2012
Decimating Reserve Bank of India
It was in March 2012 that the Economist, London, showered praise on Reserve Bank of India ( RBI), " Judging by the numbers, RBI is among the world's best central banks. Its record on banking, growth and inflation is decent enough". The journal also gave credit to RBI for escaping Asian currency crisis of 1997 and the more recent global financial crisis of 2008. The Economist emphasised: " Relative to most Indian state bodies, the RBI has more brains, muscle and integrity. It is about the only institution in the country you never hear accused of graft". RBI has thus made us proud and one would have thought that the Government of India would make every effort to further strengthen the institution. Alas! This does not seem to be so. On the other hand, there are efforts to cut it down to its size and to decimate it. Perhaps rulers like sycophancy and nobody accuses RBI of being docile. In fact it is its independent thinking which has raised its stature to its present heights.........
.....Restricting RBI functions to monetary policy formulation and supervision of banks is neither logically sustainable nor practicable. It would serve no purpose except decimating RBI. The FSLRC would do well to revisit the whole range of issues involved........
In His Fight with Finmin, Subbarao Gets PM Support
.......The father of economic reforms, and a former central bank Governor, made no secret of where his sympathies lie in the duel between the finance ministry and the central bank over the direction of interest rates amid stubbornly high prices. Industry bodies have also been urging the RBI to cut rates to boost economic growth, which is likely to slide to 6% for the year ending March 31, 2013, compared with over 8% in 2010-11. “Central banks have to balance the compulsions of stimulating growth and controlling inflation,” Singh told titans of the corporate world assembled at The Economic Times Awards for Corporate Excellence. “Both are important. But we must recognise that lower inflation is good both for growth and for making growth more socially inclusive,” said Singh. “The Reserve Bank of India has sought to support a revival of growth by reducing the CRR successively over two quarters.”.........
India's central bank chief: a hawk flying solo against inflation
Indian central bank Governor Duvvuri Subbarao's standoff with a finance ministry that wants interest rates reduced sooner rather than later may prove the defining moment of his tenure. But while he wins plaudits for asserting the Reserve Bank of India's autonomy, Subbarao's policy draws mixed reviews...........
RBI staff take up cudgels against councillor
BHUBANESWAR: Residents of RBI residential staff quarters in Nayapalli are at loggerheads with the local councillor over plantation drive on the roadside. The RBI staff even said though they have got permission from the Bhubaneswar Municipal Corporation (BMC) to plant saplings along the boundary of their colony, the councillor did not allow them to do so. According to residents of RBI colony, people have been dumping garbage and...........
APSMFC in need of drastic overhaul
....The minorities welfare secretary has complained to RBI, seeking investigation and action against Vijaya Bank branches in connection with the fraud, and demanding recouping of defrauded amount to APSMFC. The secretary has also constituted two teams with audit officers drawn from various departments for auditing the accounts of the corporation and its district offices. The services of a chartered accountant have also been engaged for auditing the accounts of the corporation for the last four years......
RBI for standard definition of infrastructure
NEW DELHI, NOV 10:
Reserve Bank of India (RBI) will soon come out with a standard definition of infrastructure. Archana Mangalagiri, General Manager, RBI, said this at the India infrastructure Investment Forum here................
Demand for Ambedkar’s image on currency notes
Members of Dalit Liberation Movement of India (DLM), led by its national convenor, Dalit Pandian staged a demonstration in front of the Head Post Office here on Saturday placing a demand to the Union government to print images of B.R. Ambedkar on currency notes......
RBI pumps in more coins
Traders may not have to bicker with busy shoppers for loose change this festive season. On Saturday, Reserve Bank of India, Chennai region, pumped in coins worth nearly Rs. 30 lakh into busy trade hubs across the city. This is intended to meet the heavy demand ahead of Deepavali.......
Read - The Hindu
India's bane is policy paralysis, says Jalan
Risk management, a serious business
.....A very erudite speech on the topic “Managing currency and interest rate risks” was delivered by Harun R. Khan, Deputy Governor of the Reserve Bank of India, at a seminar in Bombay recently. Pointing out how financial market risks affected the real economy, he said that the big increase in volatility had induced uncertainty which, in turn, had a negative impact on the real economy as well. Financial and non-financial companies, unable to anticipate their future, are adopting a more cautious approach to their business planning and employment policies.......
Is Cash Reserve Ratio a national waste?
.....the system of CRR which gives no interest to banks on these deposits makes banks suffer financial loss. Let the CRR be an effective tool for monetary policy, but what is the harm in passing some of the earnings made by RBI on these CRR deposits? Else let us abolish this system. After all, there is no harm in regulator learning from regulated ones. While CRR may not be a national waste, it is indeed a drain on the resources of banks which is obtained from public........
CPI’s Achuthan asks RBI for all files related to Bharti-Walmart
Bharati Enterprises’ Vice-Chairman and Managing Director Rajan Bharti Mittal’s recent statement that the company had given “everything required” to the Reserve Bank of India (RBI) on its retail joint venture with US-based Walmart, has irked the Communist Party of India (CPI). Contesting Mittal’s statement, M.P. Achuthan, a CPI Member of Parliament, has written to RBI Governor D. Subbarao demanding a copy of the documents filed by Bharti, Walmart and Cedar Support Services Ltd (a unit of Bharti’s) with the RBI..........
RBI hails Gehlot Govt’s financial management
Jaipur: The Reserve Bank of India (RBI) has hailed the Rajasthan Government’s financial management and successful efforts for attaining goals targets of economy prescribed by the bank. A latest report the RBI has praised the steps and action taken by the state government under the leadership of Chief Minister-cum-Finance Minister Ashok Gehlot for overcoming the budgetary revenue deficit and restricting the fiscal deficit below the prescribed limits under the FRBM Act.........
Who next?
.....But this is not being written just to sing Mr Chidambaram’s praises. If he is to win acceptability for the top job, he needs to demonstrate that he can establish working relations with people of different political persuasions — remember that he had run-ins with state governments when he was home minister. He has a history of being prickly when faced with criticism, and not very tolerant of dissent, as he demonstrated recently by being peevish when the Reserve Bank did not do what he wanted, on interest rates. He also tends to micro-manage.......
RBI did it
This refers to the editorial “Will RBI do its bit?” (FE, October 30). The dire, uncertain condition of the Indian economy has been perfectly mirrored in the RBI’s quarterly survey. This editorial and the front page story “SBI capex loan crash mirrors investment strike at India Inc” told us the facts. Inflation will likely remain on a sticky path. Fiscal cliff of the US might reduce the growth rate of the developing world, including India. It’s good the current government seems on a reform path. Let’s hope that further dose of economic reforms will accelerate our economic growth.
- Shishir Sindekar, BYK College of Commerce, Nashik (FE)
.....As the popular saying goes—“No pain, no gain”—understandably, the policy initiatives taken might not bring cheer in the short term but definitely has the potential to turn the economy around in the medium to long term. In a nutshell, it is a well-documented policy aimed at striking a right balance between growth and inflation and take the economy on a higher growth pedestal.......
The ride will not be easy
.....Regarding rates, my best guess is a repo rate cut of 50 basis points in the fourth quarter, and for gradual rate cuts to continue in FY14. However, there is a risk that the Reserve Bank of India (RBI) continues its hawkish stance, given inflation is unlikely to move below its target level anytime soon. Hence, it might choose to continue to focus on liquidity management through other tools. RBI chief D Subbarao did at least state last week that easing could be possible in January........
How banks got the count wrong
Financial inclusion is the new mantra in banking. Taking the poorest of the poor along the banking channels and providing means to a meaningful life is an ideal goal. But whether it could be achieved under the existing system is a moot question. If at all it is achievable, how soon can it be done? Officially Ernakulam will be the first district in the country to win the unique distinction of being the first to achieve ‘meaningful financial inclusion’. It will be declared at a function to be chaired by RBI Governor here on November 22......
Read - The Hindu
Trouble at the bank
.....The pressure on the SBI and other leading public sector banks, including the PNB and Canara Bank, is the result of the huge loans these banks have been nudged to make in the infrastructure sector in the past few years amid a sliding domestic and global economy. They have had little chance of selling these loans to long-term infra financiers who are still being set up. ......
Don't reject educational loan applications, RBI tells banks
".......... Banks are advised not to reject any educational loan application for reasons that the residence of the borrower does not fall under the bank's service area," RBI said in a notification today.......
Maharashtra state co-op bank back in black
MUMBAI: A year after the Reserve Bank of India (RBI) dismissed the board of the Maharashtra State Cooperative Bank (MSCB) and appointed two state officials to run the bank citing high negative net worth, the apex bank has scripted a turnaround. The MSCB has wiped out its losses and has collected a net profit of nearly Rs 18 crore. A National Bank for Agriculture and Rural Development audit of the bank's 2009-10 balance sheet had revealed that its net worth had turned negative by Rs 140 crore on account of money set aside or provided for bad loans......
'Pre-payment penalty should be reasonable'
The Reserve Bank of India (RBI) on Friday placed on its website the draft report of the ‘committee to assess the feasibility of introducing more long-term fixed interest rate loan products by banks’. The report has been placed for public comments. According to the recommendations, banks should charge Pre-payment penalty on fixed rate loan products to the extent of the amount due only, and not on the initial loan amount sanctioned as some banks are doing. It should also be reasonable. Moreover, the pre-payment penalty could be graded, based on the period after which the loan is repaid - like five years, 10 years and so on...........
Farming has no credit
...........When asked, a senior banker at a leading bank said, “Agriculture is an inconvenient necessity. Not only are bad loans in the sector high, but the amounts offered are very low. Our risk is not adjusted well. Not to mention the ever-present risk of waivers.” But banks have to meet the Reserve Bank of India (RBI) rules on priority-sector lending. The RBI mandates banks to give at least 18 per cent of their total loans to agriculture. Failure to do so invites the RBI’s displeasure........
Provide home loans with lower EMI: RBI
Banks should look at the possibility of introducing home loans with lower EMIs and higher repayment period of up to 30 years, according to the Reserve Bank of India. The RBI draft report on home loans has suggested that banks should introduce and popularise long-term fixed rate home loan with a provision of re-fixing the interest rate after period of seven to 10 years. At present, banks give home loans with a maximum tenure of 20 years.........
MP a better performing State: RBI Dy Guv
.....Chakrabarty further said he has been citing the example of Madhya Pradesh at various forums for the implementation of various developmental activities and rapid progress that the State is witnessing. Investments expected as a result of the Global Investors’ Summit present an opportunity for the banks to participate in the growth of the State. Financial Inclusion is very important for the development of the state. Amongst the thrust areas for the banks were Financial Inclusion, flow of credit to agriculture and MSE sectors, education loans and efficient management of NPAs, he added.......
SBI now has the largest overseas presence among Indian banks
Chidambaram chairs fifth FSDC meeting
New Delhi, Nov 10 (IBNS) The Fifth Meeting of the Financial Stability and Development Council (FSDC) was held here on Saturday under the Chairmanship of Union Finance Minister P. Chidambaram. The meeting was attended by Dr. D. Subbarao, Governor, RBI, U. K. Sinha, Chairman, SEBI, Yogesh Agarwal, Chairman, PFRDA, R.K.Nair, Member, IRDA, Dr. Arvind Mayaram, Secretary, Department of Economic Affairs, D. K. Mittal, Secretary, Department of Financial Services and other senior officials of the Ministry of Finance.....
Monitor end-use of subsidised crop loans, banks told
The Reserve Bank of India (RBI) said banks have failed to ensure the end-use of funds disbursed as crop loans and some borrowers were diverting such loans for other purposes. RBI has asked banks to strictly monitor end-use of short-term crop loans under the interest subvention scheme and make sure these are not used for any other purpose. RBI cautioned banks that crop loans not meeting this criteria will not be considered as agricultural loans..........
Govt, banks yet to meet targets
.....Despite clear cut instructions of RBI to ensure cent per cent financial inclusion in all 24 districts, till date only seven districts, namely Dumka, Jamtara, Pakur, Godda, Lohardaga, Hazaribag and Ramgarh, have been declared cent percent financially included. As per another guideline of the RBI, banks have been asked to extend banking facility to hamlets with a population between 1,600-2,000 and as many as 875 villages have been identified under the scheme.......
Post office discount is no golden deal
....Are we comparing apples with oranges? Is the gold sold by the post office and banks superior to that sold by retailers and hence can it command a higher price? The post office and banks advertise their trust value, and the high-quality and purity of the gold retailed by them. They stress upon the tamper-proof packaging and assayer certificate. But retailers maintain that the gold sold by them is also of similar high quality, with similar safeguards. In fact, retailers say that since the post office and banks only sell and do not buy back gold coins, many of these coins eventually find their way to retail stores, which in turn sell them. So, how can the purity and quality of the coins be any less, they ask......
All public, select private banks in Delhi to collect tax payments
........"It is observed that the rush for remitting income-tax dues into the RBI has been far too heavy towards the end of March/June/September/December and it becomes difficult for the RBI to cope up with the pressure of receipts although additional counters to the maximum extent possible are provided for the purpose," RBI said in a press release today........
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